Tort/Negligence – Cable Piracy – Boxing Match – Strict Liability – LLC’s Principals – Damages – Conversion

Joe Hand Promotions, Inc. v. Double Down Entertainment, LLC (Lawyers Weekly No. 002-063-14, 18 pp.) (Margaret Seymour, Sr.J.) 0:11-cv-02438; D.S.C.

Holding: Even though defendants paid their cable carrier to gain access to plaintiff’s boxing match, defendants did not pay plaintiff for the license required to show the match at defendants’ commercial establishment.

Summary judgment for plaintiff. Plaintiff must elect between the statutory remedy for cable piracy and the common law remedy for conversion. Plaintiff is also awarded attorney’s fees.

Section 553 provides, “No person shall intercept or receive or assist in intercepting or receiving any communications service offered over a cable system, unless specifically authorized to do so by a cable operator or as may otherwise be specifically authorized by law.” Section 553 is a strict liability statute and precludes a good faith defense. Thus, when considering a § 553 claim, knowledge is only relevant when assessing damages.

Plaintiff owned the exclusive commercial rights to “Ultimate Fighting Championship 103: Rich Franklin v. Vitor Belfort” (the Program), plaintiff did not sublicense these commercial rights to defendants, and defendants broadcasted the Program in their commercial establishment. Based on these undisputed facts, the court finds that defendants’ broadcast of the Program violated § 553.

To the extent defendants provide evidence of payment of a $44.99 fee to Comporium Communications for the Program, this evidence does not absolve defendant Double Down of liability under § 553. Indeed, because plaintiff owned the exclusive commercial rights to the Program, Comporium Communications could not lawfully authorize the defendants to broadcast the Program in their commercial establishment.

Thus, the court finds that defendant Double Down intercepted or received a communications service offered over a cable system without being “specifically authorized to do so by a cable operator or as may otherwise be specifically authorized by law” in violation of § 553. As such, summary judgment is appropriate on plaintiff’s § 553 claim against defendant Double Down.

Defendants contend that plaintiff cannot recover against the individual defendants because plaintiff “seeks to pierce the corporate shell as to those Defendants” without demonstrating the necessary factors to pierce the corporate veil in South Carolina. However, with respect to individual liability in a piracy action pursuant to 47 U.S.C. § 553, the appropriate inquiry is whether the individual defendants authorized the violation or had both a right and ability to supervise the violations and a strong financial interest in such activities.

In defendants’ responses to plaintiff’s requests for admission, defendants admit that “[the Program] was televised … with the intent of meeting the desires or interest of the clientele … [and] [b]y meeting those desires and interest … [the defendant LLC] … hoped, among other ends, to serve its customers and received profits therefrom. The undisputed evidence indicates that the individual defendants had the right and ability to supervise the broadcast of the Program and had a financial interest in the broadcast of the Program. Summary judgment is appropriate on plaintiff’s § 553 claim against the individual defendants.

Nationwide, courts have used various methods of determining an appropriate amount of statutory damages. The Fourth Circuit has not addressed any of these methods. South Carolina district courts have often used an iteration of the license fee to calculate appropriate damages.

The court finds that an award totaling three times the applicable license fee (here, $1,100) effectively promotes deterrence in this instance. Accordingly, the court finds that $3,300 is an appropriate statutory damage award.

There is no evidence in the record that defendants advertised the broadcast of the Program, charged an admission fee or premiums for food and drink, or received substantial unlawful monetary gains from broadcasting the Program. However, defendants conceded that they had, on one previous occasion, aired a closed-circuit program without paying the license fee. Based on defendants’ prior engagement in similar conduct, the court finds that an enhanced damages award is merited to promote deterrence.

There is no evidence to support three of the four enhanced-damages factors, and the record only evidences one prior violation. Accordingly, the court finds that a nominal award of $100 is an appropriate enhanced damage award.

The court finds that an award of costs and reasonable attorneys’ fees pursuant to 47 U.S.C. § 553(c)(2)(C) is appropriate in this action to promote deterrence.

Undisputed evidence indicates that plaintiff owned the exclusive license to the Program, and defendants unlawfully violated plaintiff’s rights by broadcasting the Program without paying the license fee. The evidence is thus sufficient to show that defendants are liable for conversion. As such, summary judgment is appropriate on plaintiff’s conversion claim.

Generally, the damages for conversion of personal property amount to the value of the property with interest. In similar scenarios, courts have interpreted this value to encompass the amount that a defendant would have had to pay for a commercial sublicense to legally air the program. Here, the applicable licensing fee for defendants’ establishment would have been $1,100.

However, recovery under both § 553 and the tort of conversion would result in an impermissible double recovery for the same loss. Plaintiff must elect between recovery on the § 553 claim and the conversion claim.