Blanchard v. Directv, Inc.

• Decision Date: 29 October 2004
• Docket Number: No. B167729.,No. B168901.,B168901.,B167729.
• Citation: 123 Cal.App.4th 903,20 Cal.Rptr.3d 385
• Court: California Court of Appeals Court of Appeals
• Parties: Kevin BLANCHARD et al., Plaintiffs and Appellants, v. DIRECTV, INC. et al., Defendants and Respondents.

20 Cal.Rptr.3d 385

123 Cal.App.4th 903

Kevin BLANCHARD et al., Plaintiffs and Appellants, v. DIRECTV, INC. et al., Defendants and Respondents.

No. B168901.

No. B167729.

Court of Appeal, Second District, Division 3.

October 29, 2004.

Certified for Partial Publication.^*

Review Denied January 26, 2005.^**

Lakeshore Law Center and Jeffrey Wilens, for Plaintiffs and Appellants.

Quinn Emanuel Urquhart Oliver & Hedges, Dale H. Oliver, Michael E. Williams, Los Angeles, and Marc R. Rosner, Woodland Hills, for Defendants and Respondents.

ALDRICH, J.

INTRODUCTION

We are asked to apply the newly enacted Code of Civil Procedure section 425.17, subdivision (b), which expressly excludes public-interest lawsuits from the reach of anti-SLAPP¹ special motions to strike (§ 425.16).

DIRECTV sent demand letters to thousands of people who purchased certain devices that can pirate DIRECTV's television programming, requesting the recipients cease using the devices. Plaintiffs, recipients of these demand letters, filed their complaint against DIRECTV, alleging that the conduct of mailing the demand letters was an unfair business practice (Bus. & Prof.Code, § 17200 (the UCL)), a violation of plaintiffs' civil rights, and extortion. The trial court granted the special motion of DIRECTV to strike (Code Civ. Proc., § 425.16) plaintiffs' complaint and awarded DIRECTV attorney fees. Plaintiffs appeal.

Plaintiffs contend Code of Civil Procedure section 425.17, subdivision (b) protects their UCL claim from dismissal under the anti-SLAPP procedure. In the published portion of this opinion (parts I & II), we hold: (1) plaintiffs' UCL claim was not brought in the "public interest" and therefore is not entitled to protection under section 425.17, subdivision (b) from the anti-SLAPP special motion to strike; (2) with respect to the merits of the anti-SLAPP motion, the trial court did not err in granting DIRECTV's motion to strike and dismissing the complaint; (3) DIRECTV's demand letters are absolutely privileged under Civil Code section 47, subdivision (b).

In the unpublished portion of this opinion (part III), we hold: (4) the court did not abuse its discretion in fixing the attorney fee award. Accordingly, we affirm the judgment in all respects.

FACTUAL AND PROCEDURAL BACKGROUND

1. DIRECTV.

DIRECTV provides satellite television programming by subscription or on a pay-per-view basis to millions of households nationwide. To secure its system and prevent unauthorized reception of its programs, DIRECTV electronically scrambles, or encrypts, its satellite transmissions. DIRECTV also investigates and prosecutes "hackers" and "pirates," i.e., those who circumvent the encryption to obtain unauthorized use of the services.

With the aim of protecting its business interests, DIRECTV obtained several writs of seizure authorizing the United States Marshal to seize and impound products and business records from designers, manufacturers, and distributors of equipment used to decrypt and misappropriate DIRECTV's satellite signal. During the seizures, DIRECTV obtained customer lists identifying individuals who purchased decryption devices in response to advertising aimed at DIRECTV's subscribers. The devices enable users to steal DIRECTV's programming.

DIRECTV then sent demand letters to thousands of customers thus identified, explaining that use of illegal signal-theft equipment to gain access to DIRECTV's programming violated federal law (the Communications Act, 47 U.S.C. § 605 et seq. & the Wiretap Act, 18 U.S.C. §§ 2510-2521), and seeking cooperation of the letters' recipients to stop the pirating. The letters provided the recipients with an opportunity to resolve the matter by way of settlement before commencement of suit. Thereafter, DIRECTV filed federal lawsuits nationwide against more than 600 people who purchased the pirating devices.²

2. The class action lawsuit.

Plaintiffs³ are recipients of DIRECTV's demand letters. To solicit plaintiffs for this case, counsel searched Internet sites promoting satellite television piracy. Plaintiffs' complaint against DIRECTV⁴ alleges three causes of action: (1) violation of the UCL, (2) interference with civil rights (Civ.Code, § 52.1), and (3) extortion and duress.

The operative complaint alleges "the demands constitute extortion." The complaint also alleges the following: none of the pieces of electronic equipment triggering the demand letters is contraband or illegal. "At most, they are pieces of hardware that have many innocent uses, but which under certain circumstances and if certain other conditions are met, could (in knowledgeable hands) be used to receive unauthorized satellite transmissions." (Original italics.) DIRECTV sent demand letters to every name found on customer lists without first ascertaining whether the letter recipients actually possessed the hardware and used it in some improper fashion. The purpose of the demand letters was to intimidate and coerce the recipients into forfeiting the equipment and to extort money. Many of the statements contained in the demand letters were false, misleading, or deceptive. For example, the letter repeatedly implies that, unless the recipient settled, DIRECTV would seek monetary damages and "the recipient could face civil and criminal prosecution." The demand letters also contained "[a] list of demands which ... must be met in timely fashion" or DIRECTV threatened to "`initiate legal proceedings[,]'" and "`abandon its attempts to negotiate.'"

The complaint further alleges that a secondary demand letter was sent to some of the plaintiffs several weeks or months later. The second letter reiterated the accusations of piracy and stated that, unless the recipient contacted the sender within days, a lawsuit would be filed based on a draft complaint that was enclosed with the letter.

Plaintiffs' complaint alleged that the conduct of sending the demand letters (1) violated the UCL, (2) interfered with plaintiffs' exercise of their civil right to be from personal insult, defamation, and injury to their personal relations (Civ.Code, § 52.1), and (3) constituted extortion and duress.

3. The special motion to strike pursuant to the anti-SLAPP statute.

DIRECTV filed its special motion to strike the complaint in its entirety pursuant to Code of Civil Procedure section 425.16, commonly referred to as the anti-SLAPP statute. DIRECTV asserted first that the complaint arose from DIRECTV's demand letter, which letter was sent in anticipation of litigation and was thus an exercise of DIRECTV's constitutional right to petition to seek redress of grievances protected by the anti-SLAPP statute. (§ 425.16.) Second, DIRECTV asserted, plaintiffs could not carry their burden to show a reasonable probability of success on the merits of their lawsuit because DIRECTV's demand letter was immune from liability under the litigation privilege. (Civ.Code, § 47, subd. (b).)

Plaintiffs opposed the special motion to strike by addressing only the second prong of the two-part test under Code of Civil Procedure section 425.16. They presented evidence in an attempt to show a prima facie case with respect to all three causes of action. On the issue of DIRECTV's affirmative defense of the litigation privilege, plaintiffs asserted they had evidence to create a triable issue about its applicability. In particular, they attempted to show that (1) not all of the devices are used for illegal purposes; (2) the records that DIRECTV seized did not indicate how the devices would be used; (3) many demand letters were sent after the statute of limitations had run; and (4) the only judgments DIRECTV had obtained so far in their federal litigation on the demand letters across the United States were default judgments.

DIRECTV responded by submitting, through a request for judicial notice, excerpts from DIRECTV, Inc. v. Derek E. Trone, et al., 209 F.R.D. 455 (C.D.Cal. 2002), in which the United States District Court for the Central District of California granted DIRECTV's motion for partial summary judgment against a manufacturer and seller of signal theft devices in violation of the Communications Act (47 U.S.C. § 605(e)(4)). The court in Trone ruled, while the electronic devices might be used for lawful purposes that the issue under the Communications Act is "whether [the defendant] knew, or had reason to know, that the devices were `primarily of assistance' in the unauthorized decryption of direct-to-home satellite system." (47 U.S.C. § 605(e)(4).) DIRECTV also submitted a copy of the writ to the United States Marshal to seize "Any and all devices ... and [a]ny other hardware device designed or intended for the purpose of circumventing DIRECTV's conditional access system."

4. The trial court's ruling.

The trial court granted DIRECTV's anti-SLAPP motion. (Code Civ. Proc., § 425.16.) The court found that all of plaintiffs' claims arose from the demand letters, which "[t]he parties agree ... constitute protected communications" in furtherance of DIRECTV's right of petition under the United States and California Constitutions.

The burden then shifted to plaintiffs to show a probability that they would prevail on their claims. The trial court found that DIRECTV's demand letters were absolutely protected by the litigation privilege (Civ.Code, § 47, subd. (b)) because the letters were sent in good faith, serious contemplation of litigation. After sending the demand letters, the court noted, DIRECTV filed more than 600 lawsuits. Accordingly, the trial court granted DIRECTV's anti-SLAPP motion.

After the court awarded DIRECTV attorney fees in the amount of $97,222.10, plaintiffs' appeals ensued. (Code Civ. Proc., § 425.16, subd. (j).)

DISCUSSION

I. The newly enacted exception to the anti-SLAPP motion (Code Civ. Proc., § 425.17).

Plaintiffs argue that the newly enacted Code of Civil Procedure section 425.17 applies to the present case. Hence, even if their entire complaint were previously...