The opinion of the court was delivered by: Castillo, District Judge.
MEMORANDUM OPINION AND ORDER
The plaintiff, CSC Holdings, Inc. ("Cablevision"), seeks
injunctive relief and monetary damages against seven business
defendants and nine individual defendants (collectively
"defendants") for the alleged sale of "pirate" cable television
decoders in violation of the Cable Communications Policy Act of
1984, 47 U.S.C. § 553, and various state laws. Currently before
the Court is Cablevision's motion for summary judgment on the
claims brought under § 553, and a cross motion for summary
judgment by two of the individual defendants. The Court grants
Cablevision's summary judgment motion as to the liability of all
defendants except Anthony Recchia, who we dismiss from the case.
We deny the Redisis cross motion for summary judgment.
The following facts are derived from the parties' Local General
Rule 12 statements and evidentiary materials submitted to the
Court in connection with the pending summary judgment motions.
A. The Plaintiff and Its Business
Cablevision provides cable television services in New York,
Connecticut, Massachusetts, New Jersey, Ohio and Michigan. It
offers a variety of programming packages to its subscribers,
including basic, premium and pay-per-view services. Cablevision's
subscribers receive a "converter," which changes cable signals
into viewable programming. To prevent subscribers from receiving
services that they have not paid for, Cablevision encodes or
scrambles the signals for its premium and pay-per-view
programming. Only those subscribers who purchase these services
are provided with a converter containing a "decoder."
Cablevision's programming, however, can be illegally received by
nonsubscribers with the use of a "pirate decoder," which
unscrambles encoded programming.
B. The Plaintiff's Investigation of the Defendants
In March 1998, Cablevision commenced an investigation to
determine if the defendants were selling pirate decoders in
Cablevision's system areas. The initial investigation consisted
of reviewing information from public filings regarding the nature
of the defendants' businesses and their principals. Cablevision
also took photographs at the defendants' business locations and
obtained discarded business documents which suggested that the
defendants were selling pirate decoders. The public filings
indicated that Teleview, Inc. ("Teleview"), Omega Holdings LLC
("Omega Holdings"), J.R.C. Products, Inc. ("JRC"), Rec-Tec
Electronics, Inc. ("Rec-Tec"), and C & G Electronics, Inc. ("C &
G"), were doing business at the same location and were
fundamentally the same business. Furthermore, a Cablevision
investigator purchased six pirate decoders by phone from the
defendants between March 3, 1998 and
May 13, 1999. Cablevision found that these decoders were able to
descramble all of Cablevision signals.
Based on this evidence, we granted Cablevision's ex parte
request for a temporary restraining order, a preliminary
injunction, expedited discovery, an order freezing the
defendants' assets, an accounting, and a seizure order. (R. 6,
Minute Order of May 28, 1999.) Pursuant to this order, on June 2,
1999, United States Marshals seized fifteen pirate decoders from
the defendants' business. Cablevision tested the pirate decoders
and all but one was capable of descrambling encoded cable
television signals. The Marshals also seized computers and
numerous documents including inventory lists, sales records,
customer correspondence, internal memoranda, sales flyers,
invoices, employee charts, and payroll checks.
1. The Business Defendants
a. Teleview Distributors Inc., Teleview, and Omega Holdings
Teleview Distributors, Inc. ("Teleview Distributors"),
Teleview, and Omega Holdings were functionally one business,
located at 1520 Commercial Drive, Elgin, Illinois, operating
under different names. The business, under its various names,
sold pirate decoders to customers residing in Cablevision's
franchise areas, and advertised their decoding devices as "bullet
proof," meaning their use could not be detected by the cable
company. The business first operated under the name of Teleview
Distributors, then Teleview, and finally Omega Holdings. The name
change was discovered when, during its investigation, Cablevision
called Teleview's 800 number, ordered a pirate decoder, and was
told to make the money order payable to Omega Holdings.
b. Omega Holdings and Omega of Elgin
In November 1998, all of Omega Holdings' assets were sold to
Omega of Elgin. These assets included furniture, fixtures, tools,
office supplies, telephones and computers which were sold "as
is." None of the records on the computers were deleted, and sales
records from Omega Holdings remained on the computers sold to
Omega of Elgin.
While the Redisi defendants contest that there was a "transfer
of business" between Omega Holdings and Omega of Elgin, they
admit that Frank Redisi, Sr. ("Redisi Sr."), was responsible for
selling Omega Holdings' assets to Omega of Elgin, including the
sales records on the computers. In a letter dated November 6,
1998, Frank Redisi, Jr. ("Redisi Jr.") instructed Redisi Sr. to
liquidate all of Omega Holdings' assets and to "use any proceeds
to satisfy any unpaid taxes, debts, to vendors, customers,
attorneys, etc. If there are any funds remaining, do with them as
you wish." At the time of the sale, both Redisi Sr. and Redisi
Jr. had ownership interests in Omega Holdings.
c. Omega of Elgin, JRC, Rec-Tec, and C & G
Omega of Elgin, JRC, Rec-Tec, and C & G were functionally the
same business. They were located at 139, 141, 143 West River
Road, Elgin, Illinois; they shared facilities, equipment and
inventory; and they all sold pirate decoders to customers
residing in Cablevision's franchise areas.
Documents seized on June 2, 1999 demonstrate that Omega of
Elgin, JRC, Rec-Tec and C & G had common employees and officers
including many of the named individual defendants. These
documents include Omega of Elgin's weekly payroll checks and JRC
employee hour charts for 1999, which both list defendants James
Recchia, Frank Recchia, Joann Recchia, Elisa Recchia and Nora
Villalobos as employees. Further, corporate records establish
common management: a JRC Small Business Corporation 1998 document
identifies defendants James Recchia, Frank Recchia, and Robert
Recchia as JRC shareholders, a Rec-Tec Corporation Book lists
Robert Recchia as President
and Director, and a C & G Corporation Book lists Frank Recchia as
President and Secretary. Frank Recchia, James Recchia, Joann
Recchia and Nora Villalobos also worked for Teleview
Distributors, Teleview and/or Omega Holdings.
2. The Individual Defendants
Redisi Sr. admits that he had an ownership interest in Teleview
Distributors, but, relying on the Fifth Amendment, refused to
answer questions regarding his relationship to Teleview and Omega
Holdings. Testimony by his son, Redisi Jr., and information taken
from public record, however, prove that Redisi Sr. had an
ownership interest in, and earned income from, Teleview and Omega
Holdings, as well as Teleview Distributors.
Redisi Jr. testified that he and Redisi Sr. were owners of
Teleview in November 1992 when Redisi Jr. was charged with
violating § 553; that he and his father were the sole owners of
Teleview between 1993 and 1995; and that either he or his father
received the highest income from Teleview and Omega Holdings. He
also admitted that the equipment sold by Teleview Distributors,
Teleview and Omega Holdings was intended to enable customers to
receive illegal cable services.
Redisi Sr. admits liquidating Omega Holdings' assets, including
the computers with Omega Holdings' sales records, by selling them
to Omega of Elgin and JRC in November 1998. Redisi Sr. also
admits performing professional bookkeeping work for Omega of
Elgin and JRC between December 1998 and April 1999.
Redisi Jr. worked for Teleview Distributors from 1990-93, for
Teleview from 1993-95, and for Omega Holdings from 1995-98.
Redisi Jr. admits that Teleview Distributors, Teleview and Omega
Holdings were "illegal businesses" which sold pirate ...