Opinion
NO. 1:03-cv-00310-DFH-WTL, CASE NOS: 1:03-cv-0310, 1:03-cv-0312, 1:03-cv-0322, 1:03-cv-0323, 1:03-cv-0324, 1:03-cv-0778, 1:03-cv-0779, 1:03-cv-0780, 1:03-cv-0781, 1:03-cv-0782, 1:03-cv-0783, 1:03-cv-0785, 1:03-cv-0786, 1:03-cv-1086, 1:03-cv-1315, 1:03-cv-1320, 1:03-cv-1493, 1:03-cv-1617, 1:03-cv-1618, 1:03-cv-1620, 1:03-cv-1622, 1:03-cv-1751, 1:03-cv-1754, 1:03-cv-1762, 1:03-cv-1767, 1:03-cv-1856, 1:03-cv-1871, 1:03-cv-1873, 1:03-cv-1874, 1:03-cv-1884, 1:03-cv-1885, 1:03-cv-1909, 1:03-cv-1910, 1:03-cv-1943, 1:04-cv-0237, 1:04-cv-0253, 1:04-cv-0260, 1:04-cv-0247.
June 7, 2004
ENTRY ON MOTION FOR PARTIAL DISMISSAL
Plaintiff DirecTV, Inc. has filed these similar actions against individuals who allegedly purchased and used devices to intercept encrypted satellite television signals broadcast by plaintiff. Some of DirecTV's claims were dismissed after an earlier motion for partial dismissal by the defendants. See DirecTV, Inc. v. Beecher, 296 F. Supp. 2d 937 (S.D. Ind. 2003). In the remaining counts, DirecTV seeks relief under 47 U.S.C. § 605(a) for interception of copyrighted materials; under 18 U.S.C. § 2520 for interception of signals; under 47 U.S.C. § 605(e)(4) for assembly of interception devices; and under state law for fraud and deception.
The defendants in these cases have now moved jointly to dismiss Count Four, which seeks relief under 47 U.S.C. § 605(e)(4), and the remaining portions of Count Five, which seeks a civil remedy for criminal violations of Indiana Code § 35-43-5-6. As explained below, the court denies the defendants' motion to dismiss Count Four and grants the motion to dismiss the remaining portions of Count Five. This decision applies to all of the cases listed by cause number above.
Because defendants have moved to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure, the court must accept as true all factual allegations in the complaints and must give plaintiff the benefit of reasonable inferences from those allegations and from facts that might even be only hypothesized, so long as they are not inconsistent with those facts alleged in the complaint. E.g., Veazey v. Communications Cable, Inc., 194 F.3d 850, 853-54 (7th Cir. 1999) (remanding a dismissal). However, the issues presented here are straightforward issues of statutory interpretation that can be decided as a matter of law. See, e.g., United States v. Sutton, 337 F.3d 792, 802 (7th Cir. 2003) (statutory interpretation is matter of law); United States v. Thomas, 77 F.3d 989, 990 (7th Cir. 1996) (same).
I. Count Four — Assembly of Interception Devices
Count Four alleges that each defendant violated 47 U.S.C. § 605(e)(4) by manufacturing, assembling, or modifying a device, while knowing or having reason to know that the device was primarily useful for unauthorized decryption of direct-to-home satellite services. DirecTV alleges that it is a "person aggrieved" by the violations of § 604(e)(4), so that it can file civil actions under § 605(e)(3)(A) to remedy the violations. The defendants argue that DirecTV is not a "person aggrieved" because it is a direct-to-home satellite service rather than a distributor of satellite cable programming.
The underlying criminal statute here provides in relevant part:
Any person who manufactures, assembles, modifies, imports, exports, sells, or distributes any electronic, mechanical, or other device or equipment, knowing or having reason to know that the device or equipment is primarily of assistance in the unauthorized decryption of satellite cable programming, or direct-to-home satellite services, or is intended for any other activity prohibited by subsection (a), [shall be fined and/or imprisoned].47 U.S.C. § 605(e)(4). DirecTV has alleged that each defendant violated this criminal law. Section 605(e)(3) allows "[a]ny person aggrieved by any violation of subsection (a) or paragraph (4) of this subsection" to bring a civil action for injunctive and monetary relief.
Defendants base their motion to dismiss Count Four on the statutory definition of the term "any person aggrieved":
the term "any person aggrieved" shall include any person with proprietary rights in the intercepted communication by wire or radio, including wholesale or retail distributors of satellite cable programming, and, in the case of a violation of paragraph (4) of subsection (e), shall also include any person engaged in the lawful manufacture, distribution, or sale of equipment necessary to authorize or receive satellite cable programming.47 U.S.C. § 605(d)(6). Defendants maintain that this definition limits those who may be an "aggrieved person" under § 605(e)(4), and that the absence of any reference to "direct-to-home satellite services" in the definition means that DirecTV cannot be an "aggrieved person" under § 605(e)(4). Defendants point out that § 605(e)(4) refers to the unauthorized decryption of both "satellite cable programming" and "direct-to-home satellite services," while the definition of "any person aggrieved" refers only to satellite cable programming," without mentioning "direct-to-home satellite services." In 1996, Congress added the reference to "direct-to-home satellite services" to subsection (e)(4), but it made no similar addition to the definition in subsection (d)(6). Pub.L. No. 104-104, § 205(a). From the difference in statutory language, defendants infer that Congress chose to limit civil actions for violations of § 605(e)(4) to claims by those who manufacture, distribute or sell equipment for "satellite cable programming," but not equipment for "direct-to-home satellite services."
The parties agree that DirecTV has properly alleged standing as an aggrieved party for alleged violations of § 605(a) since it is a "person with proprietary rights in the intercepted communication by wire or radio" within the meaning of the first clause of § 605(d)(6).
Defendants' argument is not persuasive. First, there is no apparent reason why Congress might have chosen to draw such a distinction. More important, though, is the text of the statute. The definition of "any aggrieved person" in § 605(d)(6) is not written as a complete and exhaustive definition. The provision uses the phrases "shall include" and "shall also include." These phrases show that the universe of "aggrieved persons" is not limited to those identified in the specific definition.
The defendants invoke the statutory canon " inclusio [or expressio] unius est exclusio alterius" (the inclusion or expression of one implies the exclusion of others). That canon does not apply here, where the definition of "persons aggrieved" uses the open-ended, instructive term "include" rather than the more definitive term "means." The term "include" shows Congress's intent to provide a starting-point guideline for defining a "person aggrieved." Judge Dowd of the Northern District of Ohio and the Sixth Circuit took exactly this approach to § 605(d)(6) in National Satellite Sports, Inc. v. Eliadis, Inc., 253 F.3d 900, 912 (6th Cir. 2001), affirming 65 F. Supp. 2d 662, 667 (N.D. Ohio 1999). The National Satellite case affirmed summary judgment in favor of a satellite broadcast company against Time Warner, which had violated § 605(a) by selling an unauthorized boxing broadcast to a commercial bar, in violation of National Satellite's rights. As Judge Dowd wrote, "the statute provides that `the term "any person aggrieved" shall include any person with proprietary rights in the intercepted communication . . .' See 47 U.S.C. § 605(d) (emphasis added). It does not state that only such persons are `aggrieved' for purposes of § 605." 65 F. Supp. 2d at 667. Writing for the Sixth Circuit in affirming, Judge Gilman pointed out that this analysis was consistent with the history of the 1988 legislation that added the statutory definition. The House committee report described the purpose of the change as "expanding standing to sue," indicating that congressional intent was that the definition of "persons aggrieved" not be limited to the categories specifically identified in § 605(d)(6). 253 F.3d at 912, quoting H.R. Rep. No. 100-877(II), at 28, reprinted in 1988 U.S.C.C.A.N. 5638, 5657. The concept of an "aggrieved person" is familiar from standing law, and Congress ordinarily does not define the term. It chose to add a definition to § 605 to make clear that it intended for the term to be expanded, without attempting to develop an exhaustive definition.
This conclusion does not mean that DirecTV will necessarily prevail at trial on Count Four. Assuming it can show that an individual defendant violated § 605(e)(4), DirecTV will still need to prove, not merely allege, that it is an "aggrieved person." At the pleading stage, however, Count Four is sufficient. Defendants' motion to dismiss is denied with respect to Count Four.
II. Count Five — Fraud and Deception
Count Five seeks relief under Indiana law, which provides a civil remedy for certain criminal acts. Indiana Code § 35-43-5-6 provides that a "customer who utilizes any device or scheme to avoid being assessed for the full amount of services received from a utility or a cable TV service provider commits a Class B infraction." Indiana Code § 35-43-5-6.5 makes it a Class D felony to manufacture, distribute, sell, lease, or offer for sale or lease a device or kit designed to intercept or decode transmissions by a cable television system without full payment. Indiana Code § 34-24-3-1 provides a civil remedy with treble damages for a number of criminal acts, including the violation of Indiana Code § 35-43-5-6 and § 35-43-5-6.5.
Defendants argue that Count Five should be dismissed on three grounds: (a) DirecTV failed to allege that defendants were "customers" within the meaning of the statute, (b) DirecTV is not a "utility" or "cable TV service provider" within the meaning of the statutes, and (c) the claims are preempted by the federal Copyright Act, 17 U.S.C. § 301.
A. "Customer"
Indiana Code § 35-43-5-6 applies only to a "customer who utilizes any device or scheme to avoid being assessed for the full amount of services received. . . ." Indiana Code § 35-43-5-1(f) defines "customer" as "a person who receives or has contracted for a utility service." (Emphasis added.) Defendants argue that DirecTV failed to allege that they were customers of DirecTV, but a person can fit within the statutory definition by simply stealing the services provided by a utility so long as that person is in receipt of the services. No prior contractual relationship is needed. Also, DirecTV's pleading was sufficient to give defendants fair notice of this claim.
B. Utility or Cable TV Service Provider
Indiana Code § 35-43-5-6 applies to the use of devices or schemes to avoid paying the full amount due for "services received from a utility or cable TV service provider." DirecTV does not seem to be a cable TV service provider, but it can easily be a utility for this purpose. Indiana Code § 35-43-5-1(q) defines a "utility" for these purposes as "a person who owns or operates, for public use, any plant, equipment, property, franchise, or license for the production, storage, transmission, sale, or delivery of electricity, water, steam, telecommunications, information, or gas." DirecTV operates equipment for public use for the transmission and delivery of telecommunications and information.
C. Federal Copyright Preemption
In DirecTV, Inc. v. Beecher, 296 F. Supp. 2d 937, 944 (S.D. Ind. 2003), this court found that DirecTV's state law claims in Count Five for theft and conversion were preempted by federal copyright law because those claims did not require proof of any extra element beyond what would be needed to prove a claim for federal copyright infringement. At that time, the court did not address the fraud and deception branches of Count Five because defendants had not moved to dismiss on that basis. Defendants have now done so.
Section 301(a) of Title 17 of the United States Code provides:
On and after January 1, 1978, all legal or equitable rights that are equivalent to any of the exclusive rights within the general scope of copyright as specified by section 106 in works of authorship that are fixed in a tangible medium of expression and come within the subject matter of copyright as specified by sections 102 and 103, whether created before or after that date and whether published or unpublished, are governed exclusively by this title. Thereafter, no person is entitled to any such right or equivalent right in any such work under the common law or statutes of any State.
The Seventh Circuit has explained: "This provision sets forth two conditions that both must be satisfied for preemption of a right under state law: First, the work in which the right is asserted must be fixed in tangible form and come within the subject matter of copyright as specified in § 102. Second, the right must be equivalent to any of the rights specified in § 106." Baltimore Orioles, Inc. v. Major League Baseball Players Ass'n, 805 F.2d 663, 674 (7th Cir. 1986); see also Bucklew v. Hawkins, Ash, Baptie Co., LLP, 329 F.3d 923, 934 (7th Cir. 2003) (finding that state law claim for punitive damages for conversion of copyrighted computer program was preempted by § 301(a)).
The parties here agree that DirecTV's satellite broadcasts were of material that was copyrighted and "fixed in tangible form," so the issue is whether the rights DirecTV asserts under state law are equivalent to the rights specified in 17 U.S.C. § 106. Accordingly, each state law claim must require proof of an "extra element" that makes the state law claim distinct from a federal copyright infringement claim. United States ex rel. Berge v. Board of Trustees of Univ. of Alabama, 104 F.3d 1453, 1463 (4th Cir. 1997); DirecTV, Inc. v. Beecher, 296 F. Supp. at 944.
DirecTV has not identified any extra element that would need to be proved to establish the state law claims for fraud or deception above and beyond what would be needed to establish a federal copyright infringement claim. Accordingly, under the standards applied by the Seventh Circuit, the state law claims in Count Five are preempted.
On this issue, DirecTV has suggested that the decision in Quincy Cablesystems, Inc. v. Sully's Bar, Inc., 650 F. Supp. 838, 848 (D. Mass. 1986), shows there is an extra element because DirecTV is the broadcaster rather than the content provider. In Quincy Cablesystems, both a local cable system and a content provider brought claims for conversion against a tavern that used a satellite dish to intercept signals intended only for the cable system. The district court held that the content provider's claim for conversion was preempted by § 301(a) because that claim did not require proof of any elements beyond what would be needed to prove a copyright claim. 650 F. Supp. at 849-50. The district court did not find that the local cable system's conversion claim was preempted, but only because the defendants did not argue that the claim was preempted. Id. at 850 n. 6.
DirecTV also suggests that there should be no preemption because Congress and other states have enacted a number of statutes dealing with satellite broadcasts, in addition to the established copyright laws. The existence of other federal laws and different state laws does not satisfy DirecTV's burden to show an extra element on its Indiana law claims. Accordingly, the court grants defendants' motion to dismiss the remaining state law claims in Count Five.
Conclusion
Accordingly, defendants' motion to dismiss Count Four is denied; and defendants' motion to dismiss the remaining state law claims of fraud and deception in Count Five is granted.
So ordered.