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CBS INC. v. PENNSYLVANIA RECORD OUTLET

December 14, 1984

CBS INC., WARNER BROS. RECORDS INC., ATLANTIC RECORDING CORPORATION, ELEKTRA/ASYLUM/NONESUCH RECORDS, WEA RECORDS, B.V., POLYGRAM RECORDS, INC., SIRE RECORDS COMPANY and QUINCY JONES d/b/a QUEST RECORDS, Plaintiffs,
v.
PENNSYLVANIA RECORD OUTLET, INC. and PENNSYLVANIA RECORD OUTLET, INC. d/b/a THE RECORD OUTLET and/or RECORD OUTLET, NORTON KALINSKY, and GEORGE KALINSKY, Defendants



The opinion of the court was delivered by: MANSMANN

 This matter comes before the Court on Plaintiffs' Motion for Civil Contempt and also for findings by this Court following a hearing on the ex parte seizure of various infringing recordings. For the reasons and to the extent set forth below, the Plaintiffs' Motion is granted. Accordingly, in conformity with this Opinion, the Plaintiffs are awarded $57,000 as well as reasonable attorneys' fees and costs attributable to the contempt aspect of this matter.

 The following Findings of Fact are the result of hearings held in connection with the Plaintiffs' Motion for Civil Contempt on September 19, 20, and 25, 1984 as well as the October 29, 1984 hearing regarding the ex parte seizure of infringing recordings on October 19, 1984.

 FINDINGS OF FACT

 1. Plaintiffs in this action are various corporate entities which are engaged in the business of producing, manufacturing, distributing and selling sound records of which they own the United States copyrights and/or the distribution rights for the recordings at issue. Defendant Pennsylvania Record Outlet, Inc. ("Record Outlet") is a Pennsylvania corporation with seven stores engaged, inter alia, in the retailing of sound recordings. Defendant Norton Kalinsky is the treasurer of Record Outlet, and his brother, Defendant George Kalinsky, is its vice-president. *fn1" Both brothers are involved in the day-to-day operations of Record Outlet.

 2. On August 23, 1984 the parties appeared before this Court for a hearing on Plaintiffs' Motion for a Preliminary Injunction. At that time Norton Kalinsky admitted to the importing of various copyrighted recordings from Canada on behalf of Record Outlet, in violation of 17 U.S.C. ยง 602, which provides in pertinent part:

 
importation into the United States, without the authority of the owner of copyright . . . of copies or phonorecords of a work that have been acquired outside the United States is an infringement of the exclusive right to distribute copies of phonorecords. . . .

 3. On that date before the Court, the parties discussed and negotiated a Consent Decree and Defendants were aware of its provisions at that time, although the final written version was not signed by parties and filed until August 31, 1984. However, as of August 23, 1984, the Defendants were enjoined from the further importation and/or sale of Plaintiffs' copyrighted recordings, and were otherwise clearly aware of the prohibitions and terms of the Consent Decree.

 4. The consent decree also provided, inter alia :

 
[3](b) Within ten days hereof, defendant shall furnish to plaintiffs' attorneys a statement under oath listing by title and number of units all phonorecords made outside the United States which reproduce sound recordings covered by United States copyrights, or exclusive distribution rights under copyright, owned by any of the plaintiffs and which have been imported into the United States or acquired by defendant, all such phonorecords which have been sold by defendant, and all such phonorecords which remain in defendants' possession, together with copies of all invoices, purchase orders, customs documents, and other documentation regarding defendants' purchase and importation of those phonorecords.
 
(c) Defendant may try, within the next twenty days, to make arrangements to return any such phonorecords remaining in its possession to the foreign vendors from which defendant purchased them. If defendant makes any such arrangements, it shall notify plaintiffs' attorneys, and the return of the phonorecords concerned to the foreign vendor or vendors will be effected by defendant at defendant's expense under plaintiffs' supervision in such manner as plaintiffs may deem appropriate to assure themselves that the phonorecords have actually been returned to those vendors. All such phonorecords which have not been returned, as prescribed in the preceding sentence, within the period of twenty days from the date of this Order shall be surrendered by defendant to the plaintiffs, without compensation for destruction.
 
(d) As used herein, "Phonorecords" includes, but is not limited to, disks, cassettes and any other configurations.
 
4. Damages are hereby awarded to the plaintiffs against the defendant in the amount of $5,000.00, to be paid by defendant to plaintiffs in equal monthly installments of $500.00 commencing on January 1, 1985 with subsequent payments due the first day of each month thereafter until the total amount is paid. However, this award of damages, and plaintiffs' acceptance of defendant's offer to pay such amount of damages, is based upon defendant's representations to the Court and to plaintiffs on August 23, 1984 concerning the quantities of certain of the phonorecords in question which defendant has imported and sold, reflected in the attached listing. If those representations later are determined to be substantially inaccurate, the Court, on application by plaintiffs setting forth such inaccuracies, will entertain a request for additional damages, including reasonable attorneys' fees and costs, in accordance with the provisions of Title 17 of the United States Code.

 5. Thereafter, on September 14, 1984 Plaintiffs filed their Motion for Civil Contempt, claiming, inter alia, that Defendants had blatantly and flagrantly violated the Consent Decree. Plaintiffs subsequently filed a Motion for a Writ of Seizure, seeking the seizure, impoundment and destruction of the alleged offending recordings. *fn2"

 6. A hearing on both motions was held September 19, 1984, and after Plaintiffs demonstrated post-decree sales, a Writ of Seizure was issued. This hearing was continued on September 20, 1984, and on September 25, 1984 the hearing on Plaintiffs' Motion for Civil Contempt was continued.

 7. By letter dated October 8, 1984, Defendants' counsel advised Plaintiffs' counsel that Defendants had discovered an additional 223 offending recordings (including 67 Culture Club recordings) *fn3" and offered them for inspection. This list also included: 30 Carole King, 45 Jane Fonda and 81 miscellaneous recordings.

 8. On October 19, 1984 Plaintiffs applied for an ex parte writ of seizure, contending that various infringing records were observed at Defendants' warehouse. It was not the 223 recordings set forth in paragraph 7 above which was the subject of the motion, but rather some 800-900 Canadian recordings, 130 of which were estimated to be Quiet Riot recordings. The Court granted the motion, issued the Writ of Seizure and scheduled a hearing on the seizure.

 9. On October 29, 1984 a hearing on the October 19, 1984 ex parte seizure was held. The facts demonstrated at the hearings before this Court pertinent to the contempt and seizure issues are set forth below.

 10. On September 19 and 20, 1984 a hearing was held in connection with Plaintiffs' Motion for Contempt and for a Writ of Seizure. The following demonstrates that various records were actually sold by Defendants' various stores after the Consent Decree was in effect:

 
(a) On September 5, 1984, Lauren Carlson, on behalf of Plaintiffs, purchased the Prince "Purple Rain" album from the downtown Record Outlet Store. When she approached the clerks in the store and asked for the Prince album, she was handed a Canadian album from behind the check-out counter.
 
(b) On September 7, 1984, Michael Kraski, an employee of Plaintiff CBS, purchased various Canadian recordings from the Oakland Record Outlet store. Specifically, he purchased the Jacksons' "Victory" cassette and the Culture Club "Colour By Numbers" cassette. *fn4"

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