At&T Broadband v. Tech Communications, Inc., 03-11235.

• Decision Date: 30 August 2004
• Docket Number: No. 03-11235.,03-11235.
• Citation: 381 F.3d 1309
• Parties: AT&T BROADBAND, Plaintiff-Appellee, v. TECH COMMUNICATIONS, INC., an active Florida corporation, Richard Marmer, Defendants-Appellants, Mr. Beverage, Deli & Middle Eastern Delights, Inc., an active Florida corporation, Defendant.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1309

381 F.3d 1309

AT&T BROADBAND, Plaintiff-Appellee, v. TECH COMMUNICATIONS, INC., an active Florida corporation, Richard Marmer, Defendants-Appellants Mr. Beverage, Deli & Middle Eastern Delights, Inc., an active Florida corporation, Defendant.

No. 03-11235.

United States Court of Appeals, Eleventh Circuit.

August 30, 2004.

COPYRIGHT MATERIAL OMITTED

James K. Green, James K. Green, P.A., W. Grey Tesh, W. Grey Tesh, P.A., West Palm Beach, FL, Anthony J. Siciliano, Springfield, MA, for Defendants-Appellants.

Jeffrey R. Platt, Coman & Anderson, P.C., Naperville, IL, for Plaintiff-Appellee.

Appeal from the United States District Court for the Southern District of Florida.

Before BIRCH and WILSON, Circuit Judges, and DOWD^*, District Judge.

BIRCH, Circuit Judge:

This appeal presents an issue of first impression in this circuit: whether the Cable Communications Policy Act ("CCPA"), 47 U.S.C. § 553(c)(2)(A) (2001), empowers a district court to issue an ex parte order authorizing a freeze of assets or a search and seizure of property belonging to an alleged violator of the Act. After discovering that defendants-appellants¹ Richard Marmer and his company, Tech Communications, Inc. (collectively, "Marmer"), were selling "pirate" cable descramblers in violation of § 553(a)(1), plaintiff-appellee AT&T Broadband ("AT&T") filed suit against Marmer and sought an ex parte order freezing Marmer's assets and allowing AT&T to seize property related to its claims. The district court granted the order and we AFFIRM.

I. BACKGROUND

AT&T contends that Marmer is involved in the sale of illegal cable descrambling devices that allow buyers to receive AT&T's cable television programming for free. AT&T filed suit² against Marmer alleging violation of § 553(a)(1) of the CCPA, and, on the same day, filed an ex parte motion for, inter alia, an asset freeze and seizure of Marmer's business records.³ See R1-1, 5. As evidence of Marmer's illegal activity, AT&T submitted the affidavits of two AT&T security personnel: (1) Craig Frappier, AT&T's Manager of Security and (2) Jeffrey Marin, an AT&T Security Investigator.

Frappier's affidavit detailed AT&T's lost revenue due to the sale of illegal cable descramblers. Specifically, Frappier explained that AT&T provides its subscribers with a "decoder" that unscrambles its television signals so that AT&T cable subscribers can receive AT&T's television signals. R1-11 at ¶ 8. The decoders are programmed to authorize viewing of purchased services only. "Pirate" decoders, or descramblers, allow the possessor to receive all of AT&T's scrambled programming without payment. Id. ¶ 11.

Marin's affidavit indicated that Marmer's website, "cabletvdescramblers.net," offered for sale several illegal cable descrambling devices, including "The Matrix" and the "Coolbox Avenger X." R1-10 at ¶ 2. Marin, posing as an ordinary customer, ordered "The Matrix." The package arrived, carrying a return address belonging to a Mail Boxes, Etc. store. Marin connected "The Matrix" and found that it was capable of receiving all of AT&T's scrambled premium and pay-per-view services in a certain viewing area.

After searching through public records, Marin and Frappier discovered Marmer's home address—21407 Pagosa Court—and began observing activity outside his home. Marin followed Marmer from the Pagosa Court address to a warehouse-type facility at 960 South Deerfield Avenue. Marin observed Marmer "carrying a black bag consistent with the size and shape of [a] laptop computer." Id. ¶ 11. He also observed Marmer drive to the Mail Boxes, Etc. location listed as the return address for "The Matrix," where Marmer retrieved packages "consistent with the size and shape of the illegal Matrix descrambler that [Marin] purchased from [Marmer]." Id. ¶ 12. Marmer then traveled from the Mail Boxes, Etc. to the Deerfield Avenue warehouse, where he unloaded the packages and then loaded additional packages retrieved from the warehouse. After Marmer departed, Marin searched a garbage dumpster near the warehouse and found several items that he concluded were "consistent with the operation of an illegal descrambler sales company." Id. ¶ 14. This suit and the orders at issue followed.

The district court initially denied AT&T's ex parte request for an asset freeze pending a showing of the specific assets to be frozen. The district court also initially denied AT&T's ex parte request to seize certain of Marmer's property because AT&T "failed to show a likelihood that evidence will be destroyed or unavailable if such an order is not granted."⁴ R1-13 at 4. However, the district court granted AT&T's request for an injunction and enjoined Marmer from:

the sale, transfer, advertisement ..., movement and/or offer for sale, modification, manufacture, storage and distribution of cable television decoding devices and related equipment and/or the rendering of any assistance whatsoever in the sale, transfer, advertisement, movement, modification, manufacture, storage or distribution of such equipment ... [and] from destroying, altering, removing or secreting any of [Marmer's] books and records ... which contain information whatsoever concerning the business or finances of [Marmer] or otherwise reflect transactions of any kind involving Decoding Devices....

Id. at 2-3.

Two days later, on 15 November 2002, AT&T filed an emergency motion to supplement the record and modify the district court's initial denial of an asset freeze and seizure of property. AT&T submitted a supplemental affidavit from Frappier, and the affidavit of Daniel Lefkowitz, an attorney who represented another cable company in an identical, prior litigation. Frappier's supplemental affidavit stated that Marmer was cutting off suppliers' shipping labels and shredding documents. R1-14, Ex. B at ¶¶ 6, 9, 10, 14. "[B]ased on [his] extensive experience," Frappier stated his opinion that, "absent a seizure, [Marmer is] likely to ... destroy evidence." Id. ¶ 7. Lefkowitz's affidavit identified the need for ex parte seizures in cable piracy cases based on numerous examples of defendants in other cases who destroyed or transferred sales records, pirate decoders, and business assets once provided with notice of legal action. R1-14, Ex. C at 3-6.

Based on this evidence, the district court granted AT&T's emergency motion for an ex parte asset freeze and seizure of property on 18 November 2002. The district court stated that AT&T, with the assistance of United States Federal Marshals, was permitted to search Marmer's Pagosa Court and Deerfield Avenue addresses and

seize [and remove] any and all correspondence with customers, sales invoices, purchase orders, return forms, receipts, bank records, safe deposit box records, proceeds of sales, insurance policies, safes, shipping labels and tax returns of other business records, including all computer terminals, hard drives, servers, disks and tapes in their possession, which plaintiff reasonably believes contain or indicate the names or addresses of distributors, suppliers, manufacturers, and/or purchasers of Decoding Devices or any related equipment, or which contain, indicate or otherwise reflect or pertain to any transactions of any kind involving Decoding Devices or other business activities, and any and all Decoding Devices, and the illicit proceeds of the sales of such Decoding Devices.

R1-16 at 2. Marmer was also "restrained from transferring, removing, encumbering or permitting the withdrawal of any assets of property ... real or personal, tangible or intangible." Id. at 1-2. In addition, the district court ordered Marmer to "show cause ... why this Temporary Restraining Order should not be confirmed and a Preliminary Injunction entered." Id. at 4-5.

On 25 November 2002, the day before the scheduled "show cause" hearing, AT&T and Marmer filed a "Preliminary Injunction and Agreed Order," wherein Marmer consented to be "permanently enjoined and restrained" from participation in the distribution of cable descramblers. R1-23 at 1. Marmer also consented to the continuation of the asset freeze, with the stipulation that he could challenge its imposition at a later date. R1-22 at unnumb. 2-3. On 20 December 2002, Marmer filed a " Motion to Dissolve Asset Freeze" and a "Motion for Return of all Items Seized." R2-37, 40.

AT&T responded to Marmer's motions with another affidavit of Marin stating that, during the search of Marmer's residence, AT&T discovered several fake driver's licenses bearing Marmer's photograph but not his legal name. R3-68 at ¶ 7. AT&T also seized $97,900 in cash located "in a briefcase concealed under a stairwell behind a water heater." Id. ¶ 12. In addition, seized tax returns indicated that Marmer set up a new corporate identity to sell illegal cable descramblers every twelve months on average. Id. ¶¶ 4, 8.

The district court denied Marmer's motions. Regarding the property seizure, the district court found that probable cause justified the search of Marmer's warehouse facility and that the Leon⁵ good faith exception applied to the search of Marmer's residence.⁶ R3-85 at 1-2. Regarding the asset freeze, the district court concluded that, based on the information contained in Marin's second affidavit,⁷ Marmer "should not be allowed to use [his] remaining assets to further other cable theft enterprises." R3-91 at 1. The district court also noted that "[g]iven the showing of a likelihood that assets unfrozen would not be available to satisfy any damage award, unfreezing this aspect of the November 18th Order is premature at this time." Id. at 2. Marmer now appeals.

II. DISCUSSION

We first address whether we have jurisdiction over Marmer's appeal. After concluding in the affirmative, we state the proper standard of review. We then consider the district court's imposition of (and refusal to dissolve) the asset freeze, and, finally, we review the order permitting search and seizure of property from Marmer's residence ...