Opinion
2:04CV00061TC.
July 29, 2004
ORDER
Plaintiff DIRECTV, Inc. brought this action against Defendants for various violations of federal communications laws prohibiting the interception of satellite transmissions. The case is currently before the court on Defendant Michael Mostert's Motion to Dismiss. For the reasons set forth below, Mr. Mostert's motion is denied.
Background
DIRECTV provides television programming for a fee to homes and businesses in the United States with a satellite broadcasting system. DIRECTV broadcasts a satellite signal that its customers receive using a small satellite dish and a receiver with an access card. Access cards are small cards with a programmable computer chip embedded in them. DIRECTV encrypts its transmissions so only those with valid access cards — those programmed to unscramble the encrypted signals — can view its satellite signals.
DIRECTV's encryption system has not proven to be totally effective, however, in preventing unauthorized users from receiving and viewing DIRECTV's transmissions. Certain companies and individuals have developed, offered for sale, and sold devices which receive and unscramble DIRECTV's signal without using DIRECTV's satellite dish, receiver, or access card. These devices are called "Pirate Access Devices." Users of Pirate Access Devices can receive and view DIRECTV's programming without buying DIRECTV's hardware or paying DIRECTV a monthly fee.
In January of 2002, DIRECTV, with the help of the United States Marshals Service, served writs of seizure on EQ Stuff, Inc., a company that sold Pirate Access Devices. In the material that was seized were records allegedly showing that the Defendants in the present suit bought Pirate Access Devices from EQ Stuff, Inc. DIRECTV has brought this lawsuit claiming that Defendants have, through their use of Pirate Access Devices, violated federal communications laws.
With his present motion, Mr. Mostert asks the court to dismiss DIRECTV's third claim for relief, which is based on Mr. Mostert's alleged violation of 18 U.S.C. § 2511.
Mr. Mostert supports his motion with the Declaration of John Fisher, a former DIRECTV employee. DIRECTV moved to strike the Declaration of Mr. Fisher on the basis that it provides no information relevant to Mr. Mostert's motion. The court grants DIRECTV's motion and strikes the Fisher declaration.
Analysis
I. Motion to DismissMr. Mostert argues that DIRECTV's claim that he violated 18 U.S.C. § 2511 ("§ 2511") must fail because under 18 U.S.C. § 2520(c) ("§ 2520"), damages are only allowed for the illegal receipt and viewing of non-encrypted signals, not encrypted signals such as those DIRECTV broadcasts. DIRECTV responds that Mr. Mostert ignores § 2520(c)(2), which provides damages for a broader range of violations, including the illegal receipt and viewing of encrypted signals.
Legal Standard.
"A complaint should not be dismissed `unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.'" Ledbetter v. City of Topeka, Kan., 318 F.3d 1183, 1187 (10th Cir. 2003) (quotingConley v. Gibson, 355 U.S. 41, 45-46 (1957)). "In deciding a motion to dismiss under Rule 12(b)(6), the federal courts generally `should not look beyond the confines of the complaint itself.'" Bell v. Fur Breeders Agric. Co-op., 348 F.3d 1224, 1230 (10th Cir. 2003) (quoting MacArthur v. San Juan County, 309 F.3d 1216, 1221 (10th Cir. 2002), cert. denied, 539 U.S. 902 (2003)).
Sufficiency of DIRECTV's Claim that Mr. Mostert Violated 18 U.S.C. § 2511.
The Omnibus Crime Control and Safe Streets Act of 1968, as amended by the Electronic Communications Privacy Act of 1986, 18 U.S.C. § 2510-2522 (the "Act"), imposes criminal liability for intentionally intercepting communications. Although it is a criminal statute, the Act allows private parties to enforce its criminal provisions under certain circumstances.
Specifically, under 18 U.S.C. § 2511(1)(a), violations are committed by any person who: "(a) intentionally intercepts, endeavors to intercept, or procures any other person to intercept or endeavor to intercept, any wire, oral, or electronic communication[.]" 18 U.S.C. § 2511(1)(a).
Section 2520(a) provides for a private right of action for violations of the Act, including § 2511(1)(a):
Except as provided in section 2511(2)(a)(ii) [which is not at issue here], 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.18 U.S.C. § 2520(a).
Pursuant to a suit brought under this private-right-of-action provision, § 2520(b) grants the court discretion to award the following types of relief:
1) such preliminary and other equitable or declaratory relief as may be appropriate; (2) damages under subsection (c) and punitive damages in appropriate cases; and (3) a reasonable attorney's fee and other litigation costs reasonably incurred.18 U.S.C. § 2520(b).
In turn, § 2520(c) provides for damages in (1) cases involving receipt and viewing of non-encrypted signals, and (2) all other cases. The first part of this damages provision — § 2520(c)(1) — reads:
(1) In an action under this section, if the conduct in violation of this chapter is the private viewing of a private satellite video communication that is not scrambled or encrypted . . ., then the court shall assess damages as follows:
(A) [for first-time violators], the court shall assess the greater of the sum of actual damages suffered by the plaintiff, or statutory damages of not less than $50 and not more than $500[; or]
(B) [if the person is a repeat violator], the court shall assess the greater of the sum of actual damages suffered by the plaintiff, or statutory damages of not less than $100 and not more than $1000.18 U.S.C. § 2520(c)(1) (emphasis added).
The second part of the damages provision — § 2520(c)(2) — is much broader, however, and would seem to allow damages for the receipt and viewing of encrypted signals such as those at issue here. Section 2520(c)(2) reads:
(2) In any other action under this section, the court may assess as damages whichever is the greater of —
(A) the sum of the actual damages suffered by the plaintiff and any profits made by the violator as a result of the violation; or
(B) statutory damages of whichever is the greater of $100 a day for each day of violation or $10,000.18 U.S.C. § 2520(c)(2) (emphasis added). With the underlined language, § 2520(c)(2) allows damages for violations other than those spelled out in § 2520(c)(1).
In sum, under § 2520(c)(1), which applies to the receipt and viewing of unscrambled or unencrypted signals, damages are available in the range of $50 to $500 for first time violators, or in the range of $100 to $1000 for repeat violators. In contrast, § 2520(c)(2) allows damages in the amount of (1) actual damages, or (2) $100 per day of violations, or $10,000, whichever is greater. With its broad language, § 2520(c)(2) would allow damages for the receipt and viewing of encrypted signals.
The legislative history supports this conclusion. The Senate Report on the Electronic Communications Privacy Act of 1986 makes clear that § 2520(c)(2) is the general rule, while § 2520(c)(1) is a narrow exception that allows for lower damages when the stolen signal is unscrambled or unencrypted:
Proposed subsection 2520(c) provides a method for the computation of damages. The general rule is set out in paragraph (2) of subsection (c). The court may assess damages consisting of whichever is the greater of (A) the sum of the plaintiff's actual damages and any profits the violator made as a result of the violation; or (B) statutory damages of whichever is the greater of $100 a day or $10,000.
An exception from that general rule is set out in proposed paragraph (1) of subsection 2520(c). This exception applies if the violation consists of the private or home viewing of an unencrypted or unscrambled private satellite video communication or if the communication is an unencrypted or unscrambled radio communication that is transmitted on frequencies allocated under subpart D of part 74 of the FCC rules, and the conduct is not for one of the enumerated bad purposes.
S. Rep. No. 99-541, at 27 (1986) (emphasis added) reprinted in 1986 U.S.C.C.A.N. 3555, 3581.
The court in In re DIRECTV, 2:03CV00027BO (E.D.N.C. Jan. 20, 2004) (hereinafter "North Carolina"), however, reached an opposite conclusion. There, the court found that § 2520(c) provided damages only for violations involving unscrambled or unencrypted signals. North Carolina, 2:03CV27BO, slip op. at 7. The court stated:
Section 2520(c) clearly identifies two worlds of satellite communication — one encrypted and the other not — and applies damages only to violations of communications that are not scrambled or encrypted. In this case, Plaintiff utilizes an encrypted satellite signal and employs advanced conditional access technology specifically to maintain the encryption. Indeed, the dispute in this case revolves around Defendants' alleged attempts at decrypting Plaintiff's encrypted satellite signal. Therefore, this Court finds that Plaintiff may not allege a violation of § 2511 by asserting a private cause of action under § 2520, as § 2520 applies only to private satellite video communication that is not scrambled or encrypted.Id.
But two other courts have reached a different conclusion than the court in North Carolina. In In re DIRECTV, INC., CASES, 2004 WL 1490092 (N.D. Texas, July 1, 2004) (hereinafter "Texas"), the court rejected the argument that Mr. Mostert makes here, that § 2520(c) only allows damages for stealing unscrambled or unencrypted signals. InTexas, the court stated:
Defendants contend that plaintiff cannot recover damages under this statute because a private right of action exists only if the intercepted video communication is not scrambled or encrypted. This argument ignores the plain language of section 2520(c). Where the alleged violation of the statute involves the private viewing of a private satellite video communication that is not scrambled or encrypted and is not for a tortious or illegal purpose or for purposes of direct or indirect commercial advantage or private commercial gain, recovery is limited to [that provided by] § 2520(c)(1). The statute further provides: "In any other action under this section, the court may assess as damages whichever is the greater of — . . ." § 2520(c)(2). "Any other action" clearly encompasses the interception of a scrambled or encrypted signal.Texas, 2004 WL 1490092 at *2-3 (emphasis added).
In DIRECTV v. Barnes, 302 F. Supp.2d 774 (W.D. Mich. 2004), the defendant relied on the North Carolina decision in support of his argument that § 2520(c) only allows damages for stealing unscrambled or unencrypted signals. Barnes, 302 F. Supp.2d at 781 n. 5. But the Barnes court rejected the defendant's argument and found that the plain language of § 2520(c)(2) allows damages for violations involving scrambled or encrypted signals.Id.
For the above reasons, the court DENIES the Motion to DISMISS.
SO ORDERED.