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Sky Cable, LLC v. Coley

United States District Court, Fourth Circuit

January 24, 2014

SKY CABLE, LLC, , Plaintiffs,
v.
RANDY COLEY, , Defendants.

MEMORANDUM OPINION

Michael F. Urbanski Michael F. Urbanski United States District Judge

This matter is before the court on DIRECTV, LLC’s (“DIRECTV”) motion for entry of judgment of minimum statutory damages for violations of the Communications Act, 47 U.S.C. § 605(a), found by the court in its rulings on July 11, 2013 and November 7, 2013. DIRECTV also seeks an award of prejudgment interest.

Cross-claim defendant Randy Coley and third party defendant East Coast Cablevision, LLC (collectively, “the Coley defendants”) assert that they are entitled to have a jury determine whether they fall within the so-called safe harbor provision of § 605(e)(3)(C)(iii), authorizing the court, in its discretion, to reduce the award of damages to not less than $250. The Coley defendants also contend that an award of prejudgment interest is inappropriate.

The court agrees with DIRECTV on both issues. The text of § 605(e)(3)(C)(iii) makes it clear that the safe harbor exception is vested in the discretion of the court and is thus not an issue to be decided by a jury. Moreover, there is no evidence in this case to suggest that the Coley defendants fall within the safe harbor exception. For many years, the Coley defendants knowingly collected programming revenue from more than 2000 subscriber units at the Massanutten Resort while reporting to DIRECTV the provision of service to only 168 units. The deception perpetrated by the Coley defendants is undisputed, and they have presented no evidence to suggest that they were not aware and had no reason to believe that their acts violated § 605. There is, in short, no evidence remotely suggesting that the Coley defendants fall within the safe harbor exception. As such, under the circumstances of this case, the court declines to exercise its discretion to reduce the damages award below the statutory minimum amount of damages sought by DIRECTV.

Further, the court will exercise its discretion to award prejudgment interest for the reasons set forth herein.

I.

On July 11, 2013, the court granted summary judgment against the Coley defendants, finding that their underreporting scheme violated § 605(a). Memorandum Opinion and Order (Dkt. #s 203, 204). On November 7, 2013, the court found the evidence undisputed that the Coley defendants engaged in 2, 393 violations. Memorandum Opinion and Order (Dkt. #s 213, 214). DIRECTV elected to recover statutory, rather than actual, damages, and the court concluded that the Coley defendants had a right to a jury trial on the issue of the amount of statutory damages to be awarded to DIRECTV within the range of $1, 000 to $10, 000 per violation. Following the Seventh Circuit’s ruling in BMG Music v. Gonzalez, 430 F.3d 888, 892 (7th Cir. 2005), the court noted that “[s]hould DIRECTV choose to seek only the minimum amount of statutory damages – $1, 000 per violation – there would be nothing left for a jury to decide, and summary judgment would be appropriate.” Memorandum Opinion (Dkt. # 213), at 2 n.2.

On November 26, 2013, DIRECTV did just that, electing to seek only the minimum amount of statutory damages in the amount of $1, 000 per violation. Motion for Judgment as a Matter of Law (Dkt. # 215). The Coley defendants filed an opposition brief, asking the court to reconsider its prior ruling and contending that “they are entitled to have a jury determine whether they qualify for the safe harbor in 47 U.S.C. § 605(e)(3)(C)(iii).” Defendants’ Memorandum in Opposition (Dkt. # 217), at 3.

Neither the law nor the facts support the Coley defendants’ position. The only case cited by defendants, Feltner v. Columbia Pictures Television, Inc., 523 U.S. 340 (1998), does not hold that a statutory provision granting the court the discretion to reduce the award of damages to a nominal amount requires that the issue be submitted to a jury. Indeed, Feltner holds to the contrary. In Feltner, the Court held that no statutory right to jury trial exists where the statute references determination of damages within a range the court considers just. 523 U.S. at 346 (“The word ‘court’ in this context appears to mean judge, not jury.”). To be sure, Feltner holds that the Sixth Amendment guarantees a right to have a jury determine the amount of damages within a statutory range. Consistent with Feltner, the court ruled that the Coley defendants had a right to have a jury fix the amount of damages within the statutory range set out in 47 U.S.C. § 605(e)(3)(C)(i)(II). As DIRECTV has elected to seek only the low end of the damages range set by Congress, there is nothing further in this case for a jury to decide. The Coley defendants cite no cases suggesting that the court’s ability to reduce the damages award to a nominal level under § 605(e)(3)(C)(iii)’s safe harbor provision implicates the Sixth Amendment.

Moreover, there is no evidence to support application of the nominal damages safe harbor provision in this case. As exhaustively detailed in the court’s July 11, 2013 summary judgment opinion, (Dkt. # 203), the Coley defendants paid for and were only authorized to provide DIRECTV programming to 168 subscribers. Fully cognizant of that fact, over the course of many years, the Coley defendants provided DIRECTV programming to more than 2, 000 unauthorized units at the Massanutten Resort. For these thousands of unauthorized units, the Coley defendants paid DIRECTV nothing. In a Rule 30(b)(6) deposition taken in connection with the bankruptcy proceedings of East Coast, Randy Coley testified that he knew the billings from DIRECTV were understated since 2004, yet he kept billing and collecting subscriber fees from more than 2, 000 unauthorized customers until 2011. Jamnback Decl. (Dkt. # 166-8), Ex. 9 at 208. Plainly, Randy Coley’s admission precludes any rational fact finder from concluding that he was not aware and had no reason to believe that his acts violated § 605(a).

The Coley defendants have offered no evidence to suggest that the safe harbor applies to them. In DIRECTV, Inc. v. Adkins, 320 F.Supp.2d 474, 477 (W.D. Va. 2004), the court concluded that the “burden lies on the defendants to show that they had no reason to believe that their conduct was unlawful, not on DIRECTV to show the contrary.” Id. (citing Don King Prods./Kingvision v. Lovato, No. C-95-2827 (TEH), 1996 WL 682006, at *2 (N.D. Cal. Nov. 15, 1996)). As the court in Joe Hand Promotions, Inc. v. D.M.B. Ventures, Inc., Civ. A. No. 93-2656, 1995 WL 683847 (E.D. La. Nov. 14, 1995), noted, the legislative history of the safe harbor provision reflects that a “[c]ourt should exercise this discretion only ‘in those rare instances of ignorance of the law on the part of one adjudged to have violated it.’” Id. at *2 (quoting 130 Cong. Rec. 31, 875 (Statement of Sen. R. Packwood), reprinted in 1984 USCCAN, at 4750-51).

As in Adkins, the Coley defendants “have provided no evidence to shed any light on their awareness or lack thereof as to the illegality of their conduct.” 320 F.Supp.2d at 477. This complete failure of proof by the Coley defendants, combined with the evidence submitted by DIRECTV as to the scope of the scheme and Randy Coley’s awareness of the gross underreporting of DIRECTV subscribers, provides no basis for the court, or for that matter, a jury, to conclude that the Coley defendants lacked knowledge of their violations. As the court concluded in Adkins, “[t]he evidence as a whole does not show that the defendants violated § 605[ ] without knowing that their conduct was unlawful, and a reduction of damages is therefore not appropriate.” Id. In short, given the length and magnitude of the underreporting scheme perpetrated by the Coley defendants in this case and their failure to adduce any evidence to suggest a lack of knowledge on their part, an award of nominal damages under the safe harbor provision would be entirely inappropriate, and the court declines to exercise its discretion to do so.

Accordingly, given DIRECTV’s election to claim the minimum amount of statutory damages, the court will enter judgment against Randy Coley and East Coast Cablevision LLC, joint and severally, in the amount of two million, ...


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