Joe Hand Promotions, Inc. v. Victor Yakubets & Cafe Nostalgie, Inc.

• Decision Date: 11 March 2014
• Docket Number: Civil Action No. 12–4583.
• Citation: 3 F.Supp.3d 261
• Parties: JOE HAND PROMOTIONS, INC., Plaintiff, v. Victor YAKUBETS and Cafe Nostalgie, Inc., Defendants.
• Court: U.S. District Court — Eastern District of Pennsylvania

3 F.Supp.3d 261

JOE HAND PROMOTIONS, INC., Plaintiff,

v.Victor YAKUBETS and Cafe Nostalgie, Inc., Defendants.

Civil Action No. 12–4583.

United States District Court, E.D. Pennsylvania.

Signed March 11, 2014.

Thomas P. Riley, Law Offices of Thomas P. Riley PC, South Pasadena, CA, for Plaintiff.

OPINION

PRATTER, District Judge.

In Joe Hand Promotions, Inc.'s (“Joe Hand”) Renewed Motion for Default Judgment (Docket No. 14), Joe Hand seeks statutory and enhanced damages for Cafe Nostalgie and Victor Yakubets's unlawful interception of cable programming under 47 U.S.C. § 553(a)(1); ¹ vicarious liability against Mr. Yakubets; and leave to move for attorneys' fees and costs. Because Joe Hand is entitled to damages, the Court grants the Motion as set out below. But to determine the appropriate amount, and who is liable therefor, the Court must consider several issues not yet addressed by the Third Circuit Court of Appeals and to which district courts have adopted a variety of approaches.

An unopposed motion for default judgment can be a tempting invitation to defer automatically to, or at least consider more charitably, the plaintiff's view of the law in addition to his allegations of fact. The invitation is all the more tempting because of the work-intensive paradox that results from declining it: While in our adversarial system, a court's acting sua sponte is the exception to the rule, a court evaluating a motion for default judgment must itself ask whether the plaintiff's complaint states claim(s) upon which relief can be granted. Where the complaint fails to state a claim, therefore, the paradox is that the defendant may have better luck by defaulting before an attentive (but unassisted) court than by engaging (and paying) a lawyer who, for one reason or another, fails to have the same causes dismissed early on with a Rule 12(b)(6) motion.

If, by contrast, the district court accepts the plaintiff's invitation and grants its imprimatur to the plaintiff's unchallenged legal theory, the court risks making bad law, even though that law is only persuasive authority, and even though the court is “confined from molar to molecular motions.” S. Pac. Co. v. Jensen, 244 U.S. 205, 221, 37 S.Ct. 524, 61 L.Ed. 1086 (1917) (Holmes, J., dissenting). This risk is especially dangerous where a region of the legal landscape is typified by defaults, for default judgments not only often result from one-sided proceedings, but also rarely weather the appellate scrutiny necessary to ensure the law's uniformity. The unintended consequence of different rules or applications to similar cases is not only the erosion of the principle that the rule of law comprises the justice of similar treatment for similar circumstances, but also the loss of one of the principal aims of the law: predictability or certainty, such that persons and entities, good or bad, may understand the law's limits and adjust their behavior accordingly. See Oliver Wendell Holmes, Jr., The Path of the Law, 10 Harv. L.Rev. 457, 459–60 (1897). As Justice Holmes explained, “Far the most important and pretty nearly the whole meaning of every new effort of legal thought is to make these prophecies more precise, and to generalize them into a thoroughlyconnected system.... The prophecies of what the courts will do in fact, and nothing more pretentious, are what [is] mean[t] by the law.” Id. at 457–58, 461–62. Where the appellate courts have little opportunity to map the contours of certain statutory terrain, as with 47 U.S.C. § 553 here, litigants must contend with district courts' differing measurements of the same topography. For good or ill, this Court sees its duties as including sowing seeds in the legal landscape so that its harvests will be better anticipated, if not better understood.

A survey of district court decisions on § 553 (and its satellite analog, 47 U.S.C. § 605) shows a variety of approaches to, and therefore outcomes under, the following questions presented in this case: First, how should “statutory damages” be measured under 47 U.S.C. § 553(c)(3)(A)(ii), which, when taken alone, reveals few of which factors should be considered? Second, what must a plaintiff prove—or allege, at the default judgment stage-to show that the defendant committed the § 553 violation “willfully and for purposes of commercial advantage or private financial gain,” § 553(c)(3)(B), and thus trigger the court's exercise of discretion to award the plaintiff so-called “enhanced damages”? And what factors should guide this decision? Finally, under what circumstances, if any, may an individual or entity be held vicariously liable for a violation of § 553, and how much is required to plead sufficiently such vicarious liability? And if a defendant is vicariously liable, is he jointly and severally liable?

For these reasons, in order to grant Joe Hand's Motion, the Court both surveys the legal terrain and discusses several approaches to the issues posed in an attempt to provide reasoned guideposts rather than Delphic pronouncements.

I. FACTUAL AND PROCEDURAL HISTORY

Joe Hand, an international closed-circuit distributor of sports and entertainment programming, purchased the exclusive nationwide commercial distribution rights to broadcast the boxing match “The Big Challenge”: Adamek v. Grant (“the Match”) on August 21, 2010. Joe Hand then spent substantial sums marketing the Match to commercial establishments, some of which purchased sublicenses from Joe Hand to exhibit the Match to their customers.

Café Nostalgie is a restaurant in Philadelphia, Pennsylvania. On the night of August 21, 2010, without such a sublicense, Café Nostalgie intercepted and broadcast the Match to its patrons on four televisions, as observed by Joe Hand's investigator, Daniel Szlezak. SeeHand Aff. ¶ 7 (Docket No. 8); Szlezak Aff. (Docket No. 7–3). Because Café Nostalgie's reception of the Match was unlicensed, the interception violated either 47 U.S.C. § 553(a)(1) (“Unauthorized interception or receipt” of “any communications service offered over a cable system”) or 47 U.S.C. § 605(a) (“No person not being authorized by the sender shall intercept any radio communication and divulge or publish the existence, contents, substance, purport, effect, or meaning of such intercepted communication to any person....”). See also generally Joe Hand Promotions, Inc. v. Yakubets, No. 12–4583, 2013 WL 5224123 (E.D.Pa. Sept. 17, 2013).

Joe Hand subsequently brought suit against Cafe Nostalgie and Victor Yakubets, who is identified on Café Nostalgie's Liquor Control Board License as President, Secretary/Treasurer, Director, Stockholder, and Manager/Steward, and who Joe Hand thus alleges had the right and ability to supervise the activities of Cafe Nostalgie and its employees. Althoughboth Mr. Yakubets and Cafe Nostalgie appear to have been properly served, see Yakubets, 2013 WL 5224123, at *1, they failed to appear or answer Joe Hand's Complaint, and the Clerk of Court entered their default, seeFed.R.Civ.P. 55(a). Joe Hand then moved for default judgment under 47 U.S.C. § 605 and the tort of conversion (Docket No. 7), seeFed.R.Civ.P. 55(b)(2).

The Court concluded that because Joe Hand did not allege or subsequently show how Cafe Nostalgie intercepted the Match (i.e., by satellite or cable), Joe Hand could proceed only under 47 U.S.C. § 553, which governs cable transmissions:

[W]here a plaintiff's complaint pleads claims under both §§ 553 and 605, but at the default judgment stage the plaintiff can prove neither with individual specificity, then § 553 will be applied. A presumption in favor of § 553 is the more principled and persuasive approach. Because a defendant cannot violate both sections with the same conduct—“§ 605 encompasses the interception of satellite transmissions” whereas “[o]nce a satellite transmission reaches a cable system's wire distribution phase, it is subject to § 553 and is no longer within the purview of § 605,” TKR Cable Co. v. Cable City Corp., 267 F.3d 196, 207 (3d Cir.2001)—... the substantive law itself forces a determination of which statute applies. But the enigmatic approach of awarding damages under “either statute,” even if expedient or practical, cannot be the general rule. For one, the syllogism that proves that a plaintiff violated either § 553 or § 605 lacks sufficient bandwidth to allow the plaintiff to proceed under § 605: if § 553 did not exist, neither would the syllogism, and such plaintiffs would be entitled to nothing.

Second, the fact that § 553(c)(3)(A)(ii)'s and § 605(e)(3)(C)(i)(II)'s damage ranges sometimes overlap cannot support the adoption of a categorical rule that damages may be awarded under either.... Additionally, while costs and attorneys' fees must be awarded under § 605, the court may decline to award them under § 553.

In addition, the presumption that § 553 applies absent any evidence of interception by satellite is a more principled approach. The fundamental principle that a plaintiff in a civil lawsuit must prove his case by a preponderance of the evidence dictates that if he can present only insufficient evidence of a particular wrong, he should not be entitled to relief. Although it may be clear from the facts alleged, and accepted as true on a motion for default judgment, that a violation of either § 605 or § 553 must have occurred, in such a situation the plaintiff has not discharged that burden of proof with respect to either. If they had a choice, plaintiffs in every such case would elect to proceed under § 605: its damage range is higher than § 553's, and it applies upon each violation. But in each such case, the plaintiff will have failed to allege a necessary element of § 605(a), to wit, radio transmission by satellite. See47 U.S.C. § 605 (“No person not being authorized by the sender shall intercept any radio communication and divulge or publish the existence, contents, substance, purport, effect, or meaning of such intercepted communication to...