Directv, Inc. v. Cavanaugh

• Decision Date: 18 November 2003
• Docket Number: No. 03-60001.,03-60001.
• Parties: DIRECTV, INC., a California Corporation Plaintiff/Counter-Cavanaugh, v. Brian CAVANAUGH, Cavanaugh/Counter-Plaintiff, v. Hughes Electronics, Third-Party Cavanaugh.
• Court: U.S. District Court — Eastern District of Michigan

Page 825

321 F.Supp.2d 825

DIRECTV, INC., a California Corporation Plaintiff/Counter-Cavanaugh, v. Brian CAVANAUGH, Cavanaugh/Counter-Plaintiff, v. Hughes Electronics, Third-Party Cavanaugh.

No. 03-60001.

United States District Court, E.D. Michigan.

November 18, 2003.

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Bradley H. Darling, Norman C. Ankers, Honigman, Miller, Detroit, MI, for Plaintiff and Counter-Defendant.

Fredrick W. Jensen, Jr., Allegan Law Offices, Allegan, MI, for Defendant, Third-Party Plaintiff and Counter-Claimant.

OPINION AND ORDER OF THE COURT

BATTANI, District Judge.

Before the Court are DIRECTV's and Cavanaugh's motions for summary judgment. Cavanaugh moves for summary judgment as to DIRECTV's claims of unauthorized signal reception in violation of 47 U.S.C. § 605(a), 18 U.S.C. §§ 2511-12, and Michigan common law. DIRECTV, for its part, moves for summary judgment of Cavanaugh's counterclaims of: (1) extortion and conspiracy to commit extortion under 18 U.S.C. § 876; (2) violations of the Fair Debt Collections Practice Act ("FDCPA"), 15 U.S.C. § 1692, and the Michigan Fair Collection Practices Act, M.C.L. § 339.901; (3) violation of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1962; (4) violations of the Michigan Consumer Protection Act ("MCPA"), § 445.911 et seq.; (5) fraud and misrepresentation; and (6) defamation. Both motions are GRANTED in part and DENIED in part.

I. BACKGROUND

DIRECTV is in the business of distributing television broadcasts through encrypted satellite transmissions. To access DIRECTV's television programming legally, customers must purchase a DIRECTV access card and receiver. Several companies have engaged in the sale of equipment that illegally modifies or circumvents DIRECTV's encryption technology. In the spring of 2001, DIRECTV conducted a civil raid of the shipping facility used by one of these companies, White Viper Technologies. Through this enforcement action, DIRECTV obtained records listing the sale of piracy devices to thousands of private individuals including Cavanaugh. It is undisputed in this case that Cavanaugh purchased the piracy device, was a DIRECTV subscriber, and possessed a DIRECTV receiver.

DIRECTV initiated a program called the End User Development Group ("EUDG") to target the individuals who purchased signal theft devices. EUDG sent approximately 100,000 nearly identical demand letters informing individuals suspected of signal piracy that DIRECTV had obtained the sales records of the equipment and was contemplating litigation. Furthermore, the EUDG letters warned that federal and state statutes imposed fines of up to $10,000 per use of signal theft equipment to gain unauthorized access. The EUDG letters explained the statutory regime prohibiting signal theft was "[s]o strict...that Congress has made the mere possession of signal theft equipment a violation of federal law in certain circumstances." (emphasis in the original).

The two EUDG letters received by Cavanaugh indicated DIRECTV was willing to forego litigation if he agreed within two weeks to: (1) surrender any signal theft devices in his possession, (2) execute a written statement that he would not take part in further unauthorized reception of DIRECTV's programming; and (3) pay a non-negotiable amount in settlement. According to Cavanaugh, EUDG instructed its investigators to demand payment of $3,500 per individual regardless of the facts or circumstances of each case. Cavanaugh also alleges DIRECTV utilized this settlement "strategy" to force individuals to subscribe to lengthy subscription packages as a condition for settlement.

II. STANDARD OF REVIEW

Federal Rule of Civil Procedure 56(c) authorizes the Court to grant summary judgment "if the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." There is no genuine issue of material fact if there is no factual dispute that could affect the legal outcome on the issue. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). In other words, the movant must show he would prevail on the issue even if all factual disputes are conceded to the non-movant. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).

III. CAVANAUGH'S MOTION FOR SUMMARY JUDGMENT

Cavanaugh requests the Court to find, as a matter of law, that he cannot be held liable for violating the Electronic Communications Privacy Act ("ECPA"), because the relevant provisions of the statute, 18 U.S.C. § 2511 and 18 U.S.C. § 2512, are criminal in nature and do not authorize a civil remedy. In addition, Cavanaugh contends he is entitled to summary judgment on all of DIRECTV's claims because DIRECTV has failed to present any direct evidence that he intercepted DIRECTV's satellite programming using the piracy device as required by the ECPA.

A. The Electronics Communications Privacy Act Claims

Cavanaugh first challenges DIRECTV's ability to bring a civil suit under 18 U.S.C. §§ 2511 and 2512. Cavanaugh argues these provisions are criminal in nature and do not provide for a civil remedy. Together with § 2520, § 2511 provides for liability when satellite signals are actually intercepted. Section 2512, in contrast, penalizes the mere possession of signal theft devices that have been sent through interstate commerce. Therefore, allowing a private cause of action under § 2512 would considerably broaden the civil enforcement scope of the ECPA, as it would entitle companies like DIRECTV to relief based on mere possession of signal theft devices.

18 U.S.C. § 2511(1)(a) reads:

[A]ny person who. .. intentionally intercepts, endeavors to intercept, or procures any other person to intercept or endeavor to intercept, any wire, oral or electronic communication ... shall be...subject to suit...

(emphasis added).

18 U.S.C. § 2512(1)(b) provides, in pertinent part:

[A]ny person who intentionally ... manufactures, assembles, possesses, or sells any ... device, knowing or having reason to know that the design of such device renders it primarily useful for the purpose of the surreptitious interception of ... electronic communications, and that such device ... has been or will be sent through the mail or transported in interstate ... commerce ... shall be fined under this title or imprisoned not more than five years, or both.

(emphasis added).

18 U.S.C. § 2520(a) indicates:

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 ... which engaged in that violation such relief as may be appropriate ...

(emphasis added).

There is significant disagreement among district courts currently handling DIRECTV litigation as to the extent the ECPA provides for a private cause of action. While all the courts appear to agree § 2520 authorizes a civil cause of action under § 2511, there is a split in authority as to whether § 2520 authorizes a cause of action under § 2512. Compare Flowers v. Tandy Corp., 773 F.2d 585, 589 (4th Cir.1985) (finding no civil remedy for violations of § 2512) with DIRECTV, Inc. v. Calamanco, Case No. 5:02-CV-4102-MWB, 2003 WL 21956187, at *2 (N.D.Iowa Jan.21, 2003) (finding civil remedy for violations of § 2512).

On the one hand, a variety of district courts have found a civil remedy exists for § 2512. See Oceanic Cablevision, Inc. v. M.D. Electronics, 771 F.Supp. 1019 (D.Neb.1991); DIRECTV, Inc. v. Drury, Case No. 8:03-CIV-850T17-TGW, 2003 WL 22245388, at *3 (M.D.Fla. June 26, 2003). Most notably, the Oceanic Cablevision court held a private remedy existed for violations of § 2512 because "the 1986 amendments to §§ 2510-2521 broadened § 2512 to prohibit the selling of devices capable of use in the surreptitious acquisition of electronic communications." 771 F.Supp. at 1028. The court believed the legislative history of the Communications Act of 1986 reflected Congress' intent to address the malicious interference with satellite transmissions and home viewing of pirate satellite transmissions. Id. at 1029 (citing S.Rep. No. 541, 99th Cong., 2d Sess. 6-7, reprinted in 1986 U.S.Code Cong., & Admin.News 3555,3560-61).

Several courts have found Oceanic Cablevision to be persuasive without conducting an independent review of the statutory language of § 2520. See, e.g., DIRECTV, Inc. v. EQ Stuff, Inc., 207 F.Supp.2d 1077, 1084 (C.D.Cal.2002) (adopting the Oceanic Cablevision holding without examining the tension between §§ 2511 and 2512). At least one judge appears to have adopted Oceanic Cablevision's broad interpretation of § 2520 almost entirely on policy grounds. DIRECTV, Inc., v. Perez, Case No. 03 C 3504, 2003 WL 22038403, at *2 (N.D.Ill. Aug.27, 2003); DIRECTV, Inc. v. Gatsiolis, Case No. 03 C 3534, 2003 WL 22111097 at *2 (N.D.Ill. Sept.10, 2003). The Perez court noted:

While this interpretation does provide a rather broad ability to bring the private right of action, granting this right of action decreases the burden on already overextended federal prosecutors to pursue criminal convictions under this statute. Moreover, potential plaintiffs whose electronic communications are being intercepted are equipped with the incentives to initiate litigation to protect their private interests. Granting that class of plaintiffs a broad right of action will help to guarantee the collapse of the manufacture, distribution, and use network for interception of electronic communications.

2003 WL 22111097, at *2.

On the other hand, the Fourth Circuit and the majority of district courts have found no authorization under § 2520 for a private suit based on mere...