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CSC Holdings, Inc. v. Redisi

October 29, 2002


Appeals from the United States District Court for the Northern District of Illinois, Eastern Division. No. 99 C 3516--Ruben Castillo, Judge.

Before Ripple, Diane P. Wood, and Williams, Circuit Judges.

The opinion of the court was delivered by: Diane P. Wood, Circuit Judge


For over a decade, Frank Redisi, Sr. and his son, Frank Redisi, Jr., operated a variety of business entities in the Chicago suburbs that manufactured cable television decoders, which allow one to view all of a cable provider's scrambled premium or pay-per-view programming free of charge. From 1992 to 1999, the Redisis sold thousands of decoders to customers of the plaintiff CSC Holdings, Inc., which refers to itself as Cablevision here. In May 1999, Cablevision brought suit for violations of the Cable Communications Policy Act of 1984, 47 U.S.C. § 553, and secured a temporary restraining order and asset freeze against the Redisis and their businesses. The district court found against the Redisis on summary judgment and after a damages trial awarded Cablevision over $29 million. On appeal, the Redisis assert a statute of limitations defense and also contest numerous discovery rulings and the district court's damages determination. We reverse and remand for further proceedings.


The Redisis began selling their illegal wares sometime before 1990, initially operating under the name of Teleview Distributors, Inc. By January 1991, FBI agents were investigating the Redisis' activities and meeting with leaders of the cable television industry, including Robert Astarita, Cablevision's Senior Vice-President of Corporate Security, to discuss the problem of cable theft. At one point in 1991, Astarita sent Teleview Distributors a letter indicating that he had evidence that some of the products Teleview Distributors was selling might be capable of descrambling Cablevision's signal and that, if so, it should cease and desist immediately. The Redisis failed to respond to the letter.

On November 4, 1992, the FBI served a search warrant on Teleview Distributors, obtaining substantial evidence of wrongdoing and shutting down the business. As a direct result, Redisi, Jr. pleaded guilty to one count of violating 47 U.S.C. § 553. The FBI kept Astarita apprised of its progress in fighting cable theft through at least 1995; in particular, it gave him updates on the investigation and the criminal charging of Redisi, Jr.

Cablevision claims that after November 1992, it believed that the Redisis had turned from their life of crime, but this proved not to be the case. They very quickly resumed operations and later incorporated as Omega Holdings (owned by the Redisis) and Omega of Elgin (owned by Redisi, Sr.) and shared facilities, equipment, and inventory with various other companies selling decoders (owned by defendants who have settled out of the case). Between November 1992 and May 1999, the Redisis through various corporate identities and affiliates sold 2,756 decoders to probable Cablevision customers.

Cablevision began a serious investigation of the Redisis in March 1998, in the course of which it made six undercover purchases of decoders that descrambled all of its programming over the course of the next year. On May 26, 1999, Cablevision filed a motion for a temporary restraining order and asset freeze and sought monetary and injunctive relief. The district court enjoined the Redisis from selling any decoders, froze the Redisis' personal and corporate assets, and directed the U.S. Marshal to seize business records and computers.

When the Redisis appeared in court, they moved unsuccessfully to have the action dismissed. The district court instead granted a preliminary injunction on June 24 and set a briefing schedule under which discovery was to close on September 10. The defendants served written discovery requests on the plaintiffs in July but did not notice any depositions at that time. Cablevision moved for summary judgment on July 29.

On Friday, August 27, the Redisis' attorney noticed depositions for five Cablevision employees to be conducted on the first three days of September. Astarita was scheduled to be deposed on the morning of September 2, six days after the notice was sent. Cablevision informed the Redisis that it would produce four of the employees but would not produce Astarita, representing that he had no knowledge of events relating to the case that could not be gained from the other four witnesses. The district court then denied the Redisis' motion to compel Astarita's deposition, finding that the Redisis had produced no evidence of relevance and that the expedited discovery request would be unduly burdensome to Astarita.

On Friday, September 3, one week before the close of discovery, the Redisis again noticed a deposition for Astarita. Cablevision refused to comply with this notice, and the Redisis then sought reconsideration of their original motion to compel. They produced affidavits from FBI agents indicating that Astarita, and thus Cablevision, knew of the Redisis' actions as early as 1991 and had engaged in extensive discussions with the FBI between 1993 and 1995. They further represented that this fact was important to their statute of limitations defense. The district court denied this motion as well on the ground that the deposition was "not relevant." In December 1999, it granted Cablevision's motion for summary judgment as to liability in its entirety, rejecting the Redisis' statute of limitations defense.

Damages discovery led to a repeat of many of the disputes from the liability phase. After deposing Joseph Flaim, Cablevision's principal damages witness, the Redisis moved to bar Flaim's damages analysis (on the ground that it was based on undisclosed materials) and requested an extension of discovery. The district court denied both motions but did order Cablevision to provide the Redisis with a summary of its damages calculations and supporting materials other than its customer lists. Flaim testified as to his damages analysis at trial, which the district ...

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