Directv Inc. v. Nicholas

• Decision Date: 13 April 2005
• Docket Number: No. 04-1845.,04-1845.
• Parties: DIRECTV INCORPORATED, Plaintiff-Appellant, v. Dennis NICHOLAS, Defendant-Appellee.
• Court: U.S. Court of Appeals — Fourth Circuit

403 F.3d 223

DIRECTV INCORPORATED, Plaintiff-Appellant, v. Dennis NICHOLAS, Defendant-Appellee.

No. 04-1845.

United States Court of Appeals, Fourth Circuit.

Argued: March 16, 2005.

Decided: April 13, 2005.

ARGUED: Howard Robert Rubin, Sonnenschein, Nath & Rosenthal, L.L.P., Washington, D.C., for Appellant. ON BRIEF: Ray Martin Kline, Raleigh, North Carolina, for Appellee. Jacqueline Sadker, Sonnenschein, Nath & Rosenthal, L.L.P., Washington, D.C., for Appellant.

Before WIDENER and SHEDD, Circuit Judges, and HAMILTON, Senior Circuit Judge.

Vacated and remanded by published opinion. Senior Judge HAMILTON wrote the opinion, in which Judge WIDENER and Judge SHEDD joined.

OPINION

HAMILTON, Senior Circuit Judge:

Using a "pirate access device," Dennis Nicholas allegedly intercepted the encrypted satellite transmissions of DIRECTV, a company that provides satellite television broadcasts. DIRECTV then filed this action seeking recovery under numerous laws, including 18 U.S.C. § 2511 and 18 U.S.C. § 2520.¹ In granting Nicholas' motion to dismiss, the district court held that DIRECTV could not maintain a civil action against Nicholas for his alleged interception of DIRECTV's encrypted transmissions. Because we conclude that the plain language of 18 U.S.C. § 2511 and 18 U.S.C. § 2520 allows for such an action to proceed, we vacate the district court's judgment and remand for further proceedings.

I

DIRECTV is a California-based company in the business of distributing satellite television broadcasts throughout the United States. DIRECTV relays digital transmissions from within the United States to satellites, which broadcast the transmissions back to Earth. DIREC-TV's satellite programming is received through the use of a fixed outdoor satellite dish, which connects by cable to an indoor satellite receiver, which is then connected by a cable to a conventional television set.

To prevent the unauthorized reception and use of DIRECTV's broadcasts by individuals who have not paid for DIRECTV's service, DIRECTV encrypts, i.e., digitally scrambles, its transmissions while the transmissions travel from the satellites to the indoor satellite receiver. Once the transmissions are in the receiver, an access card in the receiver decrypts the transmissions for viewing on the television set. DIRECTV activates an access card by giving it the information needed to decrypt DIRECTV's programming.

Despite the encryption technology used by DIRECTV to protect its transmissions, individuals within the United States and surrounding foreign countries have been involved in the development of devices (commonly referred to as "pirate access devices") that can surreptiously steal DIRECTV's transmissions. These pirate access devices have enabled individuals to access DIRECTV's satellite programming without proper payment to the company.

On September 12, 2003, DIRECTV filed a five-count complaint against Nicholas in the United States District Court for the Eastern District of North Carolina, in response to which Nicholas filed a motion to dismiss. In Count Two, the only count relevant to this appeal, DIRECTV alleged that it was entitled to damages under 18 U.S.C. § 2511 and 18 U.S.C. § 2520 because Nicholas illegally intercepted DIRECTV's encrypted transmissions.²

In an order dated January 20, 2004, the district court dismissed Count Two of Nicholas' complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) and later denied DIRECTV's motion for reconsideration. DIRECTV filed a timely notice of appeal.

II

The parties agree that the propriety of the district court's Rule 12(b)(6) dismissal turns on whether, under 18 U.S.C. § 2511 and 18 U.S.C. § 2520, DIRECTV can maintain a civil action against Nicholas for his alleged interception of DIRECTV's encrypted transmissions.

When interpreting statutes, we start with the plain language. Lamie v. United States Tr., 540 U.S. 526, 534, 124 S.Ct. 1023, 157 L.Ed.2d 1024 (2004). "It is well established that when the statute's language is plain, the sole function of the courts — at least where the disposition required by the text is not absurd — is to enforce it according to its terms." Id. (citation and internal quotation marks omitted). In interpreting the plain language of a statute, "[w]e give the words of a statute their ordinary, contemporary, common meaning, absent an indication Congress intended them to bear some different import." Williams v. Taylor, 529 U.S. 420, 431, 120 S.Ct. 1479, 146 L.Ed.2d 435 (2000) (citation and internal quotation marks omitted.) We also abide by "the cardinal rule that statutory language must be read in context [because] a phrase gathers meaning from the words around it." Gen. Dynamics Land Sys., Inc. v. Cline, 540 U.S. 581, 596, 124 S.Ct. 1236, 157 L.Ed.2d 1094 (2004) (citation and internal quotation marks omitted).

Under 18 U.S.C. § 2511(1)(a), it is unlawful to intentionally intercept, endeavor to intercept, or procure any other person to intercept or endeavor to intercept, any wire, oral, or electronic communication. Id. § 2511(1)(a). "Intercept" is defined as "the aural or other acquisition of the contents of any wire, electronic, or oral communication through the use of any electronic, mechanical, or other device." Id. § 2510(4). An "electronic, mechanical, or other device" is defined as "any device or apparatus which can be used to intercept a wire, oral, or electronic communication." Id. § 2510(5). Finally, the term "electronic communication" is defined as "any transfer of signs, signals, writing, images, sounds, data, or intelligence of any nature transmitted in whole or in part by a wire, radio, electromagnetic, photoelectronic or photooptical system that affects interstate or foreign commerce." Id. § 2510(12). A violation of § 2511(1)(a) can result in a fine and/or up to five years' imprisonment. Id. § 2511(4)(a).

There appears to be no dispute that the government could criminally proceed against Nicholas for his alleged conduct. It is undisputed that satellite television transmissions constitute electronic communications under § 2510(12). See United States v. Splawn, 982 F.2d 414, 416 (10th Cir.1992) (en banc) (collecting cases). Moreover, the act of using a device to decrypt encrypted satellite television transmissions unquestionably falls under the definition of "interception" as defined in § 2510(4). See United States v. Herring, 993 F.2d 784, 786 (11th Cir.1993) (en banc) (collecting cases). Thus, under the plain language of the statutes, using a pirate access device to intercept the encrypted satellite transmissions of a satellite television provider constitutes a violation of § 2511(1)(a).

The rub in this case is whether an individual victim of a § 2511(1) violation can bring a civil action against a § 2511(1) violator. Section 2520(a) provides:

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 or entity, other than the United States, which engaged in that violation such relief as may be appropriate.

18 U.S.C. § 2520(a). Subsection (b) states that "appropriate" relief includes: "(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." Id. § 2520(b). Subsection (c) provides two different methods for computing damages in § 2520 actions. Cf. Nalley v. Nalley, 53 F.3d 649, 651 (4th Cir.1995) (noting that § 2520(c) "provides two different means of computing damages, depending on the type of [the] underlying violation"). The first method is set forth in subsection (c)(1) and states:

(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 or if the communication is a radio communication that is transmitted on frequencies allocated under subpart D of part 74 of the rules of the Federal Communications Commission that is not scrambled or encrypted and the conduct is not for a tortious or illegal purpose or for purposes of direct or indirect commercial advantage or private commercial gain, then the court shall assess damages as follows:

(A) If the person who engaged in that conduct has not previously been enjoined under section 2511(5) and has not been found liable in a prior civil action under this section, 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.

(B) If, on one prior occasion, the person who engaged in that conduct has been enjoined under section 2511(5) or has been found liable in a civil action under this section, 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). The second method for computing damages is set forth in subsection (c)(2) and states:

(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.

Id. § 2520(c)(2).

In our view, the plain language of the statutes decidedly favors DIRECTV and provides it a cause of action. As evinced by the plain language of the section, § 2520(c) provides two methods of computing damages. One method is applicable to interceptions of transmissions that are not encrypted. The other method is applicable to all other actions, including those that intercept encrypted satellite transmissions....