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CSC HOLDINGS, INC. v. J.R.C. PRODUCTS

December 17, 1999

CSC HOLDINGS, INC. PLAINTIFF,
v.
J.R.C. PRODUCTS, INC., ET AL.[FN1] DEFENDANTS.



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.

RELEVANT FACTS

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.

C. The Defendants

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

a. Redisi Sr.

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.

b. Redisi Jr.

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 ...


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