Opinion
Civil Action No. 03-2476(JBS), Civil Action No. 03-2474(JBS), Civil Action No. 03-2477(JBS)
November 7, 2003
Marc E. Wolin, Esq., CARPENTER, BENNETT MORRISSEY, Newark, New Jersey, for Plaintiff
Jonathan J. Sobel, Esq., GALERMAN, TABAKIN SOBEL, Marlton, New Jersey, for Defendants
OPINION
This matter comes before the Court on the motions to dismiss of Defendants Connolly and Callahan in DIRECTV v. Needleman, et al. (03-CIV-2476); the motions to dismiss of defendants Gannon and Hunt inDIRECTV v. Gallagher, et al (03-CIV-2474); and a motion to dismiss of defendant D'Andrea in DIRECTV v. Clark, et al. (03-CIV-2477). The principal issue presented here is whether Plaintiff DIRECTV has stated a cause of action upon which relief may be granted under 47 U.S.C. § 605, 18 U.S.C. § 2511(1)(a), or 18 U.S.C. § 2512(1)(b). For reasons discussed herein, the motions to dismiss of all Defendants will be denied.
Plaintiff is under the impression that Defendant Ianelli has filed a motion to dismiss as well in DIRECTV v. Gallagher . However, the docket indicates that no such motion has been filed.
I. BACKGROUND
DIRECTV is a California-based company in the business of distributing satellite television broadcasts throughout the United States. Plaintiff's Complaint ("Compl.") ¶ 1. The programming is electronically scrambled by DIRECTV, and is transmitted from satellites to DIRECTV subscribers who receive the signals through the use of DIRECTV hardware including a small satellite dish, an integrated receiver, a DIRECTV access card, and cabling. Compl. ¶ 2. The DIRECTV access card unscrambles the signals for those programs paid for by the subscriber. Id.
A number of companies have engaged in the internet sale of illegal equipment designed to modify or circumvent DIRECTV's signal-scrambling technology, including Canadian Security and Technology. Compl. ¶ 3. Federal and state law enforcement authorities, with DIRECTV's cooperation, executed a writ of seizure upon a shipping facility used by Canadian Security and Technology. Id. Pursuant to this raid and other raids, DIRECTV obtained sales records listing sales of the illegal equipment to individuals, including many subscribers to DIRECTV programming. Id. According to those records, D'Andrea purchased illegal equipment, including an unlooper, which is designed for the theft of DIRECTV's satellite television programming. Compl. ¶ 10(a).
DIRECTV filed a lawsuit against a number of separate and distinct individual defendants, alleging that they purchased, possessed, and used illegal equipment designed for the purpose of stealing DIRECTV's satellite television programming, in violation of 47 U.S.C. § 605(a), 18 U.S.C. § 2511(1)(a), and 18 U.S.C. § 2152(1)(b). Before this Court now are five identical motions to dismiss pursuant to Fed.R.Civ.P. 12(b)(6).
II. DISCUSSION
A. Applicable Standard for Motion to Dismiss
Fed.R.Civ.P. 12(b) provides the applicable standard for a motion to dismiss. A motion to dismiss, pursuant to Fed.R.Civ.P. 12(b)(6), tests the legal sufficiency of the Complaint. Conley v. Gibson, 355 U.S. 41 (1957). A court must determine whether the party making the claim would be entitled to relief under any set of facts that could be established in support of his or her claim. Hishon v. King Spaulding, 467 U.S. 69, 73 (1984). In considering a motion to dismiss, all allegations in the complaint must be accepted as true and viewed in the light most favorable to the non-moving party. Rocks v. City of Philadelphia, 868 F.2d 644, 645 (3d Cir. 1989). When considering a motion to dismiss for failure to state a claim upon which relief can be granted, a court must "accept as true the factual allegations in the Complaint and all reasonable inferences that can be drawn therefrom." Allah v. Seiverling, 229 F.3d 220, 223 (3d Cir. 2000). A motion to dismiss may only be granted where the allegations fail to state any claim upon which relief can be granted. Morse v. Lower Merion School District, 132 F.3d 902, 906 (3d Cir. 1997). Dismissal is warranted "if it is certain that no relief can be granted under any set of facts which could be proved." Klein v. General Nutrition Cos., Inc., 186 F.3d 338, 342 (3d Cir. 1999).
The pleading requirements of the Federal Rules of Civil Procedure require that statements of claims for relief provide adequate notice, in a simple, concise and direct manner, of the claim showing that the pleader is entitled to relief. Fed.R.Civ.P. 8(a). Orders denying motions for a more definite statement were entered as to Defendant Connolly (September 18, 2003 Order of Magistrate Judge Ann Marie Donio), as to Defendant Callahan (September 23, 2003 Order of Magistrate Judge Ann Marie Donio), as to Defendant Gannon (October 17, 2003 Order of Magistrate Judge Ann Marie Donio), and as to Defendant Hunt (October 17, 2003 Order of Magistrate Judge Ann Marie Donio). No orders have been entered either denying or granting such motions as to Defendants Ianelli or D'Andrea.
B. Violation of 47 U.S.C. § 605
Plaintiff seeks damages for violations of 47 U.S.C. § 605. Defendants, however, assert that, according to applicable case law, there is no right of recovery under section 605. Section 605 states that a person violates the statute by "receiving," "assisting in receiving" or "intercepting" electronic transmissions without proper authorization. Accordingly, DIRECTV must prove that Defendants "received, assisted in receiving or intercepted" Plaintiff's satellite transmission to prevail under this count of the complaint.
Defendants argue that because the complaint alleges only that they purchased an unlooper from Canadian Security and Technology and "received or otherwise assisted in the unauthorized interception, reception, or exhibition . . . without authorization, in violation of 47 U.S.C. § 605(a)," see Compl. ¶ 21, Plaintiff has not established a claim of violation of section 605(a). Defendants argue that Plaintiff has failed to aver whether Defendants were a subscriber to DIRECTV. Instead, DIRECTV alleges nothing more than mere possession of the devices which would ostensibly enable Defendants to receive satellite transmissions; the pirate access device, itself, according to Defendants, would not be sufficient to receive satellite transmissions.
Though both Plaintiff and Defendants rely upon the Third Circuit's decision in TKR Cable Co. v. Cable City Corp., 267 F.3d 196 (3d Cir. 2001), Plaintiff's reading of that case seems most plausible. In TKR, the plaintiff provided "cable television services" to subscribers in central New Jersey. TKR, 267 F.3d at 197. The services involved transmitting signals from "Piscataway to the homes of its subscribers through a network of cable wiring and equipment." Id. Defendant, Cable City, sold cable television piracy decoders, that would enable purchasers of such equipment to intercept the cable signals and obtain premium and pay-per-view programming without paying for them. Id. at 198. After plaintiff learned of Cable City's conduct, it brought suit pursuant to 47 U.S.C. § 553 and 47 U.S.C. § 605. The district court found that Cable City's conduct violated both §§ 553 and 605, and awarded TKR statutory damages pursuant to § 605. Id. at 196-97. Cable City appealed, contending that § 605 did not apply to theft of cable "signals sent over terrestrial cable lines," and that § 553 is the "sole statutory remedy for cable piracy." Id. at 197.
Based on the historical background of §§ 553 and 605, in analyzing a § 605 claim, the Third Circuit focused on whether the pirated TKR signals were wire communications (i.e. cable) or radio communications (i.e. satellite). The facts established that TKR distributed some of its signals in a two-step process: first, some of its premium programming, such as HBO, originated with satellite signals transmitted from space to TKR's centralized facility in Piscataway; then TKR would send those signals over cable lines to a subscriber's residence. Id. at 203-04. TKR argued that although it transmitted signals to customers over cable lines, § 605 should apply because TKR originally obtained the signal from a satellite. Id. at 204. The Court rejected this argument, concluding that "[o]nce a satellite transmission reaches a cable system's wire distribution phase, it is subject to § 553 and is no longer in the purview of § 605." Id. at 207.
In this case, the signals are communicated solely through satellite transmissions, which means that the signals travel from the space satellite directly to the satellite dish at a person's home, with no intervention on the part of DIRECTV. See Compl. ¶¶ 1-2. Unlike theTKR case, there is no cable distribution system present here. The Third Circuit held that it was "Congress' view that § 605 is directed solely at radio transmissions to the extent reception or interception occurs prior to or not in connection with' cable distribution, and that § 553 applies to theft of all signals being transmitted over a cable system." TKR, 267 F.3d at 206-07.
The Third Circuit also recognized that "[t]he wires that connect a home satellite dish to the living room television arguably constitute facilities incidental to the transmission. However, the entire cable transmission infrastructure of a city or suburban area, a structure that provides a foundation for a significant business . . . cannot be considered a mere instrumentality to transmission." Id. at 202. The complaint here is clear that DIRECTV's services include a "broadcast satellite system [that is delivered]. . . to more than 10 million homes," and that it sends its signal programming to those homes via "satellite transmissions," and that the recipient of the signals must obtain a "small satellite dish." Compl. ¶¶ 1-2. Such claims of satellite piracy are thus controlled by § 605.
Finally, Plaintiff's complaint alleges more than mere possession of the device. While it is true, as Defendants assert, that DIRECTV has pled that Defendants possessed unloopers, it has also pled that "defendants have received and/or assisted others in receiving DIRECTV's satellite transmissions of television programming without authorization, in violation of 47 U.S.C. § 605(a)." Compl. ¶ 21.
Therefore, accepting all allegations of the complaint as true, DIRECTV's claim under § 605 should survive a motion to dismiss.
C. Violation of 18 U.S.C. § 2511(1)(a)
The plain language of § 2511(1)(a) indicates that a person violates the statute if they intentionally "intercept," "endeavor to intercept," or "procure any other person to intercept or endeavor to intercept" an electronic communication. Here, DIRECTV has alleged more than mere possession of an illegal acess device by Defendants.
In addition to the allegations that Defendants purchased and received the device, DIRECTV alleges that:
By using Pirate Access Devices to decrypt and view DIRECTV's satellite transmissions of television programing, Defendants intentionally intercepted, endeavored to intercept, or procured other persons to intercept or endeavor to intercept, DIRECTV's satellite transmission of television programming, in violation of 18 U.S.C. § 2511(1)(a)[; and]
Defendants possessed and used Pirate Access Devices, knowing or having reason to know that the design of such devices renders them primarily useful for the purpose of surreptitious interception of DIRECTV's satellite transmissions of television programming, and that such devices, or any component thereof, have been or will be sent through the mail or transported in interstate commerce, in violation of 18 U.S.C. § 2512(1)(b).
Compl. ¶¶ 25, 29 (emphasis added). Clearly, Plaintiff's wording of its complaint, when viewed in the light most favorable to plaintiff, survives a motion to dismiss by Defendants.
Defendants cite to DIRECTV v. Karpinsky, 269 F. Supp.2d 918 (E.D. Mich., June 17, 2003) ("Karpinsky I"), to support the assertion that civil liability is limited to affirmative acts of interception. However, on July 31, 2002, the U.S. District Court vacated the portion ofKarpinsky I that applied to DIRECTV's claims and reinstated all of them.See DIRECTV, Inc. v. Karpinsky, 274 F. Supp.2d 918 (E.D. Mich., July 31, 2003) ("Karpinsky II"). Karpinsky II plainly establishes, as a matter of law, that all of the claims asserted by DIRECTV are cognizable. Karpinsky II, 274 F. Supp.2d at 922. As Plaintiff argues, if such claims remain viable after taking discovery, then the claims must be cognizable at the pleading stage as well and thereby survive a motion to dismiss.
In support for the proposition that DIRECTV's complaint should survive a motion to dismiss, Plaintiff additionally points to 18 U.S.C. § 2520(a), which authorizes a civil claim for relief, based on violations of 18 U.S.C. § 2511(1)(a) and 2512(1)(b). 18 U.S.C. § 2520(a) states:
Except as provided in section 2511(2)(a)(ii), any person whose wire, oral, or electronic communication is intercepted, disclosed, or intentionally used in violation of this chapter may in a civil action recover from the person or entity, other than the United States, which engaged in that violation such relief as may be appropriate.
Plaintiff argues that even assuming, arguendo, that DIRECTV has alleged nothing more than possession, Defendants' motion to dismiss should still be denied because the plain language of § 2520 states that "except as provided in § 2511(2)(a)(ii)," a civil remedy exists for any "violation of [the Act]." Had Congress intended to exempt violations of § 2512(1)(b) from civil remedy, Plaintiff argues, it would have included language to that effect in § 2520, as it did for § 2511(2)(a)(ii).
D. Violation of 18 U.S.C. § 2512(1)(b)
Defendants also move to dismiss Count III, arguing that no private cause of action is available for the violation of 18 U.S.C. § 2512 (a criminal statute). Although Title 18 of the United States Code is generally considered to constitute the criminal code, 18 U.S.C. § 2520, a portion of the Electronic Communications Privacy Act ("ECPA"), provides for private causes of action in limited situations. Defendants claim the instant case is not one of those situations.
Defendants argue that the plain language of 18 U.S.C. § 2520(a) makes clear that the Electronic Communications Privacy Act provides a private cause of action when a party's electronic communication is intercepted, disclosed, or intentionally used, but not for mere possession of a device. Section 2520(a) states in relevant part:
Except as provided in section 2511(2)(a)(ii), any person whose wire, oral, or electronic communication is intercepted, disclosed, or intentionally used in violation of this chapter may in a civil action recover from the person or entity which engaged in that violation such relief as may be appropriate.18 U.S.C. § 2520(a).
Until very recently, a majority of courts followed the Fourth Circuit Court of Appeals in Flowers v. Tandy Corp., 773 F.2d 585 (4th Cir. 1985), which held that the ECPA does not provide a private cause of action against those who posses an intercepting device in violation of § 2512. Flowers reasoned that the plain language of § 2520(a) does not provide a civil remedy against one who merely possessed an intercepting device, since only those "whose wire, oral or electronic communications is intercepted, disclosed, or intentionally used in violation" of the Act may seek civil relief. Flowers, 773 F.2d at 588-89. The Third Circuit has not addressed the issue.
Various district courts have agreed with Flowers . See e.g. , DirecTV, Inc. v. Childers , 2003 WL 21782295, *2 (M.D. Ala. July 29, 2003); DirecTV, Inc. v. Cardona , 2003 WL 21910578, * 7 (M.D. Fla. July 8, 2003); DirecTV, Inc. v. Amato , 2003 WL 21537206, *3 (E.D. Va. June 20, 2003); AGES Group, L.P. v. Raytheon Aircraft Co., Inc. , 22 F. Supp.2d 1310, 1315 (M.D. Ala. 1998).
In DirecTV, Inc. v. Dougherty, Civ. No. 02-5576, slip op. at 3-4 (D.N.J. Oct. 8, 2003), however, Judge Freda Wolfson held that Plaintiff has adequately shown that the recently developed majority view is that § 2520(a) does allow for the recovery of damages against one who possesses an intercepting device. Judge Wolfson wrote, "it appears that the majority position, and the better view, is that the ECPA allows for recovery of civil damages against one who possesses an intercepting device in violation of § 2512." Id. at 4.
Numerous recent (unpublished) decisions by district courts around the country have implicitly or explicitly rejected Flowers by finding that § 2520(a) does subject possessors of intercepting devices to civil liability. DirecTV, Inc. v. Cino , Civ. No. 03-2430 (D.N.J. September 17, 2003) (Judge Cooper); DirecTV, Inc. v. Crothers , Civ. No. 03-2432 (D.N.J. September 17, 2003) (Judge Cooper); DirecTV, Inc. v. Gatsiolis , Civ. No. 03-3534 (N.D. Ill. August 27, 2003); DirecTV, Inc. v. Karpinsky , Civ. No. 02-73929 (E.D. Mich. July 31, 2003); DirecTV, Inc. v. Megar , Civ. No. 03-20247 (S.D. Fla. July 2, 2003); DirecTV, Inc. v. Diaz , Civ. No. 6:03-cv-232-Orl-31JGG (M.D. Fla. June 27, 2003); DirecTV, Inc. v. Gibson , Civ. No. 3:03-cv-398-J-16HTS (M.D. Fla. June 27, 2003); DirecTV, Inc. v. Drury , Civ No. 8:03-CIV-850-T-17-TGW (M.D. Fla. June 26, 2003); DirecTV, Inc. v. LaAndy , Civ. No. H-03-0836 (S.D. Tex. June 17, 2003); DirecTV, Inc. v. Gonzalez , Civ. No. 03-80376-CIV-HURLEY (S.D. Fla. May 25, 2003); DirecTV, Inc. v. Garcia , Civ. no. 03-20452 (S.D. Fla. May 21, 2003); DirecTV, Inc. v. Calamanco , Civ. No. 024102-MWB (N.D. Iowa Jan. 21, 2003).
Judge Wolfson reasoned as follows: A suit may be brought under § 2520(a) by "any person whose wire, oral or electronic communication is intercepted, disclosed, or intentionally used in violation of this chapter." Id. (citing 18 U.S.C. § 2520(a)). The quoted phrase, Judge Wolfson continued, confers standing on plaintiffs, rather than limits the potential class of defendants. See DirecTV, Inc. v. Gatsiolis, Case No. 03-CV-3534, slip op. at 4 (N.D. Ill. August 27, 2003). Anyone who violates a provision of the ECPA is a potential civil defendant. Id. The only exception to civil liability is specifically referenced in § 2520(a): providers of wire or electronic communication may furnish information to law enforcement officials without being subject to liability, "as provided in section 2511(2)(a)(ii)." Thus, Judge Wolfson found persuasive Plaintiff's argument that if Congress had intended to exempt from civil liability those who violated § 2512, it would have specifically listed that exception in § 2520(a), along with the exception for § 2511(2)(a)(ii). This Court agrees that Plaintiff, as a party alleging that its electronic communications have been intercepted or used, states a direct cause of action against Defendants who allegedly possessed an intercepting device in violation of § 2512. Where Congress has passed a remedial statute such as ECPA and created a private cause of action having an explicit exception inapplicable here, and where Plaintiff alleges that it is an aggrieved party lying within the statutory standing conferred by Congress to redress a violation of that act, the purposes of the statute are served by private civil enforcement of the type sought here.
Therefore, here too, accepting all allegations of the complaint as true, DIRECTV's allegations under 18 U.S.C. § 2512 state a claim upon which relief may be granted.
III. CONCLUSION
For the reasons expressed in this Opinion, Defendants' motions to dismiss pursuant to Fed.R.Civ.P. 12(b)(6) will be denied. The accompanying Order will be entered.
ORDER
This matter having come before the Court upon Defendants Connolly and Callahan's motions to dismiss in DIRECTV v. Needleman, et al. (03-CIV-2476) [Docket Item Nos. 27-1 and 38-1], Defendants Gannon and Hunt's motions to dismiss in DIRECTV v. Gallagher, et al. (03-CIV-2474) [Docket Item Nos. 26-1 and 20-1], and Defendant D'Andrea's motion to dismiss in DIRECTV v. Clark, et al. (03-CIV-2477) [Docket Item No. 23-1] pursuant to Fed.R.Civ.P. 12(b)(6); and the Court having considered the parties' submissions, and the Oral Arguments of counsel, and for the reasons stated in the Opinion of today's date; and for good cause shown;
IT IS this _____ day of November, 2003 hereby
ORDERED that Defendants Connolly and Callahan's motions to dismiss inDIRECTV v. Needleman, et al. (03-CIV-2476) [Docket Item Nos. 27-1 and 38-1] shall be, and hereby are, DENIED ; and
IT IS FURTHER ORDERED that Defendants Gannon and Hunt's motions to dismiss in DIRECTV v. Gallagher, et al. (03-CIV-2474) [Docket Item Nos. 26-1 and 20-1] shall be, and hereby are, DENIED ; and
IT IS FURTHER ORDERED that Defendant D'Andrea's motion to dismiss inDIRECTV v. Clark, et al. (03-CIV-2477) [Docket Item No. 23-1] shall be, and hereby is, DENIED .