Nfl Enterprises L.P. v. Sotirios and Restaurant Co., docket T-230-96

                    

Date: 19990714

Docket: T-230-96

BETWEEN:

     NFL ENTERPRISES L.P.

     Plaintiff

     - and -

     SOTIRIOS AND PETER RESTAURANT COMPANY LTD.

     c.o.b.a. J.J. KAPPS PASTA BAR & GRILL,

     774367 ONTARIO INC. c.o.b.a. LINO"S PIZZA PARLOUR RESTAURANT,

     719879 ONTARIO INC. c.o.b.a. PALMWOOD HOTEL, and

     RIVERSIDE TAVERN (NIAGARA) LTD. c.o.b.a. RIVERSIDE TAVERN

     Defendants

     - AND -

     Docket: T-2328-95

BETWEEN:

     NFL ENTERPRISES L.P.

     Plaintiff

     - and -

     1019491 ONTARIO LTD. c.o.b.a. WRIGLEY"S FIELD SPORTS BAR & GRILL,

     1099659 ONTARIO INC. c.o.b.a. GILMOUR"S SPORTS BAR & LOUNGE,

     358820 ONTARIO LTD. c.o.b.a. ROOKIE"S SPORTS CAFÉ,

     555858 ONTARIO INC. c.o.b.a. DUSTY"S SPORTS BAR,

     ROMAN COURT MOTOR INN LTD. c.o.b.a. HALFTIME SPORTS LOUNGE,

     750125 ONTARIO LTD. c.o.b.a. PURE PLATINUM,

     1104045 ONTARIO INC. c.o.b.a. TAILGATE CHARLIE"S ALLSTAR CAFÉ,

     1071005 ONTARIO LTD. c.o.b.a. RYAN"S NITE CLUB and/or

     ROADHOUSE SPORTS BAR & RESTAURANT,

     MARIO MARCELLO TORELLI c.o.b.a. THE OTHER SIDE SPORT BAR,

     1090362 ONTARIO LTD. c.o.b.a. CARTOONZ and/or CRAZY 8'S BILLIARD CLUB,

     1093884 ONTARIO LTD. c.o.b.a. CAHOOTS BAR & GRILLE,

     GORAN MALJKOVIC and MILICA MALJKOVIC c.o.b.a.

     SNEAKER"S BEACH TAVERN,

     SHIRLEY RUTH ENNIS and TRACEY ELIZABETH ENNIS

     c.o.b.a. BLACK CREEK RESTAURANT & TAVERN,

     816178 ONTARIO LTD. c.o.b.a. STUMPY"S PIER 44, and

     1006035 ONTARIO INC. c.o.b.a. HOGAN"S ROADHOUSE

     Defendants

     REPORT OF REFEREE

REFEREE DARREL V. HEALD

     Introduction

[1]      This reference relates to the quantum of damages suffered by the plaintiff as claimed in paragraphs 21(b) and (d) of the statement of claim herein. The reference also requires that I determine the amount of pre- and post-judgment interest "as provided by law" on the damages determined at the reference.

[2]      The plaintiff has been awarded damages against each of the defendants herein for the illegal decryption of "NFL Sunday Ticket" game telecasts contrary to the provisions of the Radiocommunication Act , R.S.C. 1985, c. R-2 as amended.

[3]      The plaintiff has also been awarded damages against each of the defendants for the display of NFL game telecasts contrary to the provisions of the Copyright Act, R.S.C. 1985, c. C-42 as amended.

[4]      Additionally, the Plaintiff has been awarded costs throughout the proceeding against each of the defendants herein and, in particular, against the defendant Palmwood Hotel on a solicitor and client basis.

[5]      At the reference before me, only one of the defendants was represented. That defendant was 750125 Ontario Limited, carrying on business as the Pure Platinum Restaurant.

[6]      All amounts payable herein are payable forthwith on the conclusion of the reference pursuant to the judgments of both the Court of Appeal and the Trial Division.

     The facts

[7]      The plaintiff is a limited partnership pursuant to the laws of the State of Delaware. The limited partners are the thirty-one member teams of the National Football League. The general partner is NFL Enterprises Inc., a Delaware Corporation. The National Football League (the NFL) is an unincorporated not for profit association pursuant to the laws of the State of New York. It is a joint enterprise of the 31 member clubs throughout the United States. It is in the business of exhibiting professional football games and scheduling those games. It generally administers the affairs of the league. It also owns the copyright in all Sunday afternoon NFL game telecasts which are telecast throughout Canada and the United States. The plaintiff is licenced by the National Football League to broadcast Sunday afternoon NFL game telecasts on a satellite service ("NFL Sunday Ticket"). Additionally, it is authorized and required, pursuant to the terms of its licence, to prosecute copyright violations, thereby defending the copyrights owned by the plaintiff.

[8]      The NFL Sunday Ticket satellite service provides to subscribers all NFL game telecasts which occur on each Sunday afternoon (excepting games subject to local "blackout" in the area where a subscriber resides). The telecast for a blacked out game is electronically blacked out, based on a subscriber"s address, on a subscriber by subscriber basis.

[9]      The defendants operate taverns, bars and restaurants in the Niagara Falls - St. Catharines region of southwestern Ontario. At their premises they have each displayed to the public (on their premises) NFL game telecasts during the 1995, 1996, 1997 and 1998 football seasons.

[10]      The game telecasts relevant to this proceeding are all game telecasts of the NFL Buffalo Bills football team. The home games of the Buffalo Bills attract the majority of their attendance from western New York State and southwestern Ontario. Those home games are "blacked out" if a game is not fully sold out more than 72 hours prior to kick-off time.

[11]      "NFL Sunday Ticket" takes the telecasts of the 13 games played every Sunday throughout the United States, packages them onto a satellite signal and "fires" it up to a satellite that comes down to anyone wishing to subscribe. Individuals or businesses can be subscribers to Sunday Ticket.

[12]      However, there are also illegal subscribers. These may be individuals or taverns who have given a false address outside of the local area. They are showing a game that is otherwise completely blacked out. The plaintiff characterizes this class of damage as Sunday Ticket Lost Revenue. The second class of damage relates to the amount the average fan would spend on novelties, drinks and food - concession revenue. The third class of damages relates to the "ripple effect" of most bar owners following the initiators due to the competitive nature of the business.

     analysis

[13]      My approach in this assessment will be "... to keep in mind that the objective is a broadly equitable result. Mathematical exactitude is neither required nor obtainable." ¹ I have also found persuasive the view expressed by Prothonotary Hargrave where he states: "In summary, it is not improper to calculate damages and profit in a rough and ready manner, particularly if the necessity to do so is the result of omissions on the part of defendants to attend and to protect their interests by providing appropriate information and documents." ²

     the quantum of damages, interest, and legal costs

[14]      The principal witness for the plaintiff on this issue was Mr. Anthony R. Davidson, C.A. Mr. Davidson specializes in litigation support, expert witness services and the calculation of damages. I found him to be a credible witness indeed. Accordingly, I adopt the following summary based on the evidence given by him:

Damages	Ryan"s Nite Club	Pure Platinum	Palmwood Hotel
Lost Gate/Concession Revenue	$103,579	$ 32,120	$ 75,696
Lost Sunday Ticket Direct Licence Fees	$ 8,100	$ 10,800	$ 14,575
Lost Sunday Ticket Indirect Licence Fees	$ 24,300	$ 32,400	$ 43,725
Prejudgement Interest	$ 8,589	$ 3,377	$ 7,268
Post Judgement Interest	$ 6,119	$ 3,389	$ 1,005
Legal Costs & Disbursements	$ 16,653	$ 19,112	$ 31,235
Total	$167,340	$101,198	$173,504

     the question of exemplary damages

[15]      Mr. Radojcic, counsel for the defendant Pure Platinum, submitted that I did not have the power to award exemplary damages. I do not agree with this submission. The Federal Court of Appeal decided in the case of Imperial Oil Ltd. et al. v. Lubrizol Corp. et al. ³ that the Court has power to award exemplary damages but only after it has concluded that the general damages awarded were insufficient for punishment and deterrent purposes.

[16]      On the basis of the quantum to be awarded, counsel for the plaintiff has a problem. His submission was that "...the exemplary award should be enough that they recognize the Court was unhappy, enough that they recognize that what they are doing is really wrong, you know? ... Maybe it is a naive view that it will have more of an impression on people if the Court imposes something and twenty percent is out of the air. It could be fifteen, it could be twenty-five. We recognize it is entirely discretionary in the Court. ... So we didn"t take the thought process much beyond that."

[17]      Accordingly, it seems clear that I have jurisdiction to award exemplary damages. However, on this record, I can find no evidence to support such an award. For these reasons, no award of exemplary damages is given.

     the defence of the defendant750125ontario ltd (pure platinum)

[18]      This is an interesting defence. While agreeing that the defendants herein were in the business of showing football games in a party atmosphere, counsel submitted that his clients were in reality in the business of drinks and dancers-exotic entertainment. An added incentive was a favourable exchange rate. His submission in general was that his client was in a completely different business from the other defendants. In his view, blacked-out football games had a de minimis impact on Pure Platinum and, likewise, Pure Platinum had a de minimis impact on the plaintiff.

[19]      I did not find the evidence adduced by Pure Platinum on this issue to be particularly persuasive or credible. As a consequence I do not agree that the blacked-out football games had a de minimis impact on Pure Platinum or that Pure Platinum had a de minimis impact on the plaintiff. My view of the evidence persuades me that the customers at Pure Platinum were, in essence, football fans desiring to view blacked-out football games. They may have had other interests but those were of a secondary nature.

     the question of costs

[20]      At the conclusion of the hearing herein, counsel agreed that the question of the costs of the reference could be addressed subsequent to the filing of this report.

Referee

OTTAWA, Ontario

__________________

¹ See Cadbury Schweppes Inc. v. FBI Foods Ltd. 83 C.P.R. (3d) 289 at p. 330 (S.C.C.).

² See Society of Composers, Authors and Music Publishers of Canada v. 348803 Alberta Ltd. et al. (1997) 79 C.P.R. (3d) 449 at p. 455.

³ 67 C.P.R. (3d) page 1.