Time Warner Entertainment v. Worldwide Electronics

• Decision Date: 26 January 1999
• Docket Number: No. 98-6118-CIV.,98-6118-CIV.
• Citation: 50 F.Supp.2d 1288
• Parties: TIME WARNER ENTERTAINMENT/ADVANCE-NEWHOUSE PARTNERSHIP d/b/a Time Warner Cable, Plaintiff, v. WORLDWIDE ELECTRONICS, L.C. d/b/a Worldwide Electronics, Nationwide Electronics, Inc. d/b/a Nationwide Electronics, Alan Marks, Lewis Schneiderman, Susan Marks a/k/a Susan Mann, Audrey Schneiderman, John Does 1-10, Jane Does 3-10, Unidentified Corporations 1-10 and Unidentified Business Entities 1-10, Defendants.
• Court: U.S. District Court — Southern District of Florida

50 F.Supp.2d 1288

TIME WARNER ENTERTAINMENT/ADVANCE-NEWHOUSE PARTNERSHIP d/b/a Time Warner Cable, Plaintiff, v. WORLDWIDE ELECTRONICS, L.C. d/b/a Worldwide Electronics, Nationwide Electronics, Inc. d/b/a Nationwide Electronics, Alan Marks, Lewis Schneiderman, Susan Marks a/k/a Susan Mann, Audrey Schneiderman, John Does 1-10, Jane Does 3-10, Unidentified Corporations 1-10 and Unidentified Business Entities 1-10, Defendants.

No. 98-6118-CIV.

United States District Court, S.D. Florida.

January 26, 1999.

Ronald E. D'Anna, Mattlin & McClosky, Boca Raton, FL, Daniel J. Lefkowitz, Patrick Sullivan, Jericho, NY, for Plaintiff.

Frederick A. Cary, The Cary Law Firm, Rancho Santa Fe, CA, for Defendants.

ORDER GRANTING PLAINTIFFS MOTION FOR SUMMARY JUDGMENT

RYSKAMP, District Judge.

THIS CAUSE came before the Court upon the plaintiff, Time Warner Entertainment/Advance Newhouse Partnership d/b/a Time Warner Cable's ("TWEAN" or "plaintiff") motion for summary judgment on its claims against some of the defendants under the Cable Communications Policy Act of 1984, as amended (47 U.S.C. § 553). The defendants Worldwide Electronics, L.C. ("Worldwide"), Nationwide Electronics, Inc. ("Nationwide"), Alan Marks ("Marks") and Lewis Schneiderman ("Schneiderman"), against whom the motion was directed, responded and TWEAN thereafter replied. The parties subsequently waived oral argument and the Court considers the motion ripe for adjudication.

As set forth below, the Court grants summary judgment to TWEAN with respect to its claims under 47 U.S.C. § 553(a)(1) against Worldwide, Nationwide, and Marks,¹ and grants recovery to TWEAN and against the defendants, jointly and severally, of its actual damages and defendants' profits pursuant to 47 U.S.C. § 553(c)(3)(A)(1), the additional sum of $50,000.00 in enhanced damages under 47 U.S.C. § 553(c)(3)(B), a permanent injunction pursuant to 47 U.S.C. § 553(c)(2)(A) against these defendants, and an award of attorneys' fees and costs in this action pursuant to 47 U.S.C. § 553(c)(2)(C). The Court will subsequently schedule a conference to address the parties' submissions with respect to determination of the precise amount of actual damages suffered by TWEAN, the defendants' profits, and the attorneys' fees and costs to be awarded.

I. BACKGROUND

The largely undisputed facts most relevant to TWEAN's claims for relief under 47 U.S.C. § 553² are as follows:

A. The Plaintiff and its Business

TWEAN operates cable television systems throughout the United States pursuant to franchises awarded to it by various governmental entities and has an approximate total of 7.5 million subscribers. TWEAN offers cable television programming to subscribers who request and pay for the same. See Mahoney Aff. ¶ 3. TWEAN's Albany, New York system has been primarily responsible for bringing and prosecuting this action.

TWEAN's programming is offered to its subscribers in "packages" of programming services, such as Basic and Standard, which a subscriber may select and receive at a monthly rate. Subscribers may also elect to purchase one or more "premium" programming services, such as Cinemax, Home Box Office and Showtime, for an additional monthly charge per service. Id. ¶ 4. TWEAN also offers Pay Per View programming, a service enabling subscribers to purchase individual movies, sporting events, or other entertainment for a per event fee over and above the subscriber's regular monthly subscription fee. Id. ¶ 5. Each subscriber is entitled to receive only that level of programming and services that he or she selects and purchases. Id. ¶ 6.

TWEAN encodes or "scrambles" the signals for specific programming services, and provides its subscribers who purchase such programming with converter-decoder devices. These devices decode the scrambled signals so that the programming selected and purchased by a particular subscriber can be viewed clearly on the subscriber's television set. Programming services not purchased remain scrambled and therefore cannot be viewed on the subscriber's television set. Id. ¶ 9. It is possible, however, for a dishonest individual to install an unauthorized or "pirate" decoder/converter unit or "descrambler" (one programmed to descramble all programming services) onto plaintiff's cable system in order to receive all of TWEAN's scrambled premium and Pay Per View programming services, without authorization and without making payment therefor. Id. ¶ 11.

TWEAN's system is "addressable," which means that the converter-decoder TWEAN provides to a subscriber is programmed by a central computer to authorize viewing of only those programming services purchased by that subscriber. Each subscriber who purchases services that are scrambled will have his or her decoder programmed by the TWEAN central computer to receive only those services selected and purchased. Id. ¶ 12.

B. The Defendants and their Business

Defendants Worldwide, Nationwide, Marks and Schneiderman, who conducted business at 4400 West Hillsboro Blvd., Suite # 3, Coconut Creek, Florida, were engaged in the business of selling cable television decoders or descramblers for profit. See Marks Tr. at 13, 19-23. Marks testified that he and Schneiderman were the owners of Nationwide and Worldwide. Id. at 4, 8-9.

Defendants advertised and marketed their products to the plaintiff's cable television subscribers, including but not limited to those serviced by its Albany system, via newspapers, magazines with nationwide circulation, and the Internet, and sold their converter-decoders to persons who called their "800" number and indicated that they were purchasing the devices for use on the plaintiff's cable television system. See generally Allen Aff.

C. The Plaintiff's Investigation of Defendants

In or around November of 1997, the defendants' pirate decoder sales operation came to the attention of TWEAN. Mahoney Aff. ¶ 13. TWEAN's Albany, New York division retained A.C.I. Investigations, Inc. ("ACI") to investigate the defendants and their business. Id.; Allen Aff. ¶ 3.

In brief, ACI's investigation consisted of several telephone calls to the defendants, the purchase of three pirate decoders (which the investigator specified would be used in TWEAN's Albany, New York system), and surveillance at the defendants' business location. See generally Allen Aff. During the surveillance at the defendants' place of business, ACI observed numerous daily pickups and deliveries by both Federal Express and United Parcel Service of packages which appeared to contain pirate decoding devices. The decoders purchased by TWEAN's investigators were subsequently tested and found to be capable of descrambling and permitting viewing of all of TWEAN's scrambled programming services, including premium and Pay Per View services. Mahoney Aff. ¶ 14-16.

D. The Present Action

TWEAN's Albany, New York system thereafter took the lead in bringing this action on behalf of TWEAN against the defendants for injunctive relief and monetary damages on account of their manufacture and/or sale and distribution of pirate decoders. At the outset of this action, TWEAN sought on an ex parte basis and this Court granted, a temporary restraining order (the "TRO") which, inter alia, directed the U.S. Marshal Service to seize the defendants' business records and stock of pirate decoding devices from their business location. The TRO also provided for a restraint on assets pending decision in this action, as well as a prohibition against defendants' future sales of pirate decoding devices. This relief was thereafter confirmed after a hearing in the Court's preliminary injunction dated February 26, 1998.

E. The Defendants' Position Regarding TWEAN's Summary Judgment Motion

The defendants concede that they sold non-addressable, fully descrambling cable television decoding devices for use on cable systems. Marks Tr. at 20-21. Their position, generally, is that they lacked the intent to assist in the interception of cable television programming services. This position is supported primarily by their use of disclaimers, which advised decoder purchasers that the devices were not to be used illegally. See Def.s' Reply to Pl.s' Mot. for Summ. J. at 3-4; Hr'g Tr. at 2-3; 19-20.³

II. LEGAL STANDARD

Federal Rule of Civil Procedure 56(c) sets forth the standard governing summary judgment. In its most basic form, summary judgment is appropriate where there is no genuine issue of material fact in dispute and the moving party is entitled to judgment as a matter of law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) ("the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact.") (emphasis in original). An issue of fact is material if it might affect the outcome of the suit under the governing law. Id. at 248, 106 S.Ct. 2505. An issue of material fact is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id.

The party seeking summary judgment bears the initial burden of demonstrating the absence of a genuine issue of material fact. Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970). Once the moving party has met its burden, the party opposing summary judgment may not simply rely on the pleadings or mere denials of the allegations. Rather, the opposing party must adduce some evidence showing that material facts are in issue. Anderson, 477 U.S. at 256, 106 S.Ct. 2505. "Rule 56(c) therefore requires a non-moving party to go beyond the pleadings and by [its] own affidavits or by the depositions, answers to interrogatories, and admissions on file designate specific facts showing that there is a genuine issue for trial." Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); See also Matsushita...