Freeman v. Directv, Inc.

• Decision Date: 08 August 2006
• Docket Number: No. 04-56500.,04-56500.
• Citation: 457 F.3d 1001
• Parties: Lawrence FREEMAN; Michael Scherer, on behalf of themselves and all persons similarly situated, Plaintiffs-Appellants, v. DIRECTV, INC.; ICG, Inc., Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

457 F.3d 1001

Lawrence FREEMAN; Michael Scherer, on behalf of themselves and all persons similarly situated, Plaintiffs-Appellants, v. DIRECTV, INC.; ICG, Inc., Defendants-Appellees.

No. 04-56500.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted June 6, 2006.

Filed August 8, 2006.

Jeffrey Wilens, Lakeshore Law Center, Yorba Linda, CA, for the plaintiffs-appellants.

Michael E. Williams, Quinn Emanuel Urquhart Oliver & Hedges, LLP, Los Angeles, CA, for the defendants-appellees.

Appeal from the United States District Court for the Central District of California; R. Gary Klausner, District Judge, Presiding. D.C. No. CV-04-02374-RGK.

Before STEPHEN REINHARDT, STEPHEN S. TROTT, and M. MARGARET McKEOWN, Circuit Judges.

TROTT, Circuit Judge.

This case requires us to determine whether sections of the Electronic Communications Privacy Act ("ECPA"), 18 U.S.C. §§ 2702 and 2707, provide for a private cause of action against those who aid and abet, or conspire with, electronic communications service providers in unlawfully disseminating the contents of electronic communications. The language of §§ 2702 and 2707 identifies unambiguously who is subject to liability. Furthermore, the legislative history and case law is in accord with these sections' clear directive. Accordingly, we decline to read into the text of these code sections claims for secondary liability. Rather, we interpret the code to mean what it plainly says.

I

DirecTV is a provider of satellite digital television. To protect its service and prevent the unauthorized viewing of its television programing, DirecTV encrypts its satellite transmissions. DirecTV actively pursues legal action against those individuals involved in the unauthorized use, or in more common parlance, the pirating, of its encrypted transmissions.

On June 24, 2003, DirecTV filed a lawsuit in Canada against Daryl Gray. Gray operated a number of web sites from his home in British Columbia, Canada. The web sites allegedly offered information relating to the pirating of the DirecTV signal. DirecTV's complaint asserted that the web sites provided information regarding all forms of "piracy technology" such as the use of equipment, software, and programming codes, as well as "smart cards" specifically used to access the DirecTV signal without paying for it. DirecTV alleged also that one of the web sites—the "Pirate's Den"—run by Gray's server located in his British Columbia home provided an online meeting place for participants to discuss, exchange, and post piracy technology information.

Concerned with pirating activity, DirecTV applied to the Supreme Court of British Columbia for an injunction and order entitling DirecTV to seize Gray's computers and the data contained therein. On June 24, 2003, the court granted DirecTV's request, issuing what is referred to in Canada as an Anton Piller Order. An Anton Piller Order operates as both an injunction and a civil writ of seizure. Per this order, Gray was enjoined from operating two web sites: www.dsschat.com and www.piratesden.com. DirecTV was also able to enjoin Gray from a number of other activities relating to the accessing or facilitating of piracy technology or information.

In addition, the order granted DirecTV the right to enter Gray's offices to "search for, examine, and remove or copy" evidence of piracy-related activities including "the web sites, databases contained therein, electronic storage media and computer equipment." The order entitled DirecTV to remove or copy "any document, record, article, notes, information, instructions, correspondence, sent and received, electronic mail, howsoever stored, fixed, expressed or embodied . . . ." The order also allowed DirecTV to designate an entity to be responsible for accessing, recording, and processing the data. DirecTV designated ICG, the other defendant-appellee, as that entity.

The order provided that evidence seized from Gray was to be held in the "custody of [DirecTV's] solicitors pending the trial of this action, or until such time this Court orders otherwise." The order also provided for the appointment of an independent solicitor to carry out the terms of the seizure and to take custody of the evidence. However, the independent solicitor and DirecTV agreed independently that when the order was executed, the evidence seized would be taken into custody by the independent solicitor, not by DirecTV's lawyers. Finally, the order allowed for "any and all evidence seized or delivered up pursuant to the order [to] be used in subsequent civil proceedings commenced by DirecTV against any third party, including, but not limited to proceedings against [Gray's] customers, suppliers, members, and subscribers."

On June 26, 2003, the Anton Piller Order was executed at Gray's residence in British Columbia, Canada. Gray's computer servers and hard drives containing electronic communications of individuals that had accessed Gray's web sites were seized and placed in the independent solicitor's custody.

Ultimately, the lawsuit between DirecTV and Gray was resolved. In a separate agreement between Gray and DirecTV, the evidence held by the independent solicitor was released to DirecTV. Earlier in 2003, DirecTV filed a lawsuit in the United States against Lawrence Freeman, for engaging in the distribution of illegal signal theft devices. During the litigation against Freeman, in response to initial discovery requests, DirecTV produced portions of the information gathered at Gray's residence. This information included the content of communications posted on electronic message boards accessed through Gray's web sites. On March 16, 2004, DirecTV and Freeman settled the lawsuit and entered into a settlement agreement and release.

On April 5, 2004, appellants, Freeman and Michael Scherer, filed the underlying class action. In an amended complaint, Scherer claimed that he, like Freeman, was a participant on the message boards and web sites run by Gray. Freeman and Scherer asserted that the sharing of data from Gray to DirecTV was not authorized by the Anton Piller Order because DirecTV had agreed that the evidence would be in custody of the independent solicitor instead of DirecTV's solicitors and that it was only released pursuant to the agreement between Gray and DirecTV. Freeman and Scherer claimed further that because there was a subsequent agreement between Gray and DirecTV that allowed DirecTV to receive the data from the independent solicitor, DirecTV conspired with and aided and abetted Gray in the disclosure of the stored communications in violation of 18 U.S.C. § 2702.

On June 7, 2004, DirecTV and ICG moved to dismiss the action for failure to state a claim and in the alternative for summary judgment. DirecTV and ICG argued that Freeman and Scherer's claims should be dismissed for three reasons: 1) 18 U.S.C. § 2702 does not provide for secondary liability claims of conspiracy or aiding and abetting; 2) Freeman and Scherer's secondary claims were not properly pled; and 3) the claims were barred under the Noerr-Pennington doctrine.

On July 13, 2004, the district court granted the motion to dismiss and ruled that the motion for summary judgment was, therefore, moot. The district court granted the motion on the basis of DirecTV and ICG's first argument—that 18 U.S.C. § 2702 does not provide a basis for asserting conspiracy and aiding and abetting claims. Freeman and Scherer timely appealed that determination.

II

A dismissal for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6) is reviewed de novo. See Decker v. Advantage Fund, Ltd., 362 F.3d 593, 595-96 (9th Cir.2004). Thus, we review the matter anew, the same as if it had not been heard before, and as if no decision previously had been rendered. Ness v. Commissioner, 954 F.2d 1495, 1497 (9th Cir.1992).

III

Appellants, Freeman and Scherer, contend that the district court erred in its determination that §§ 2702 and 2707 of the ECPA do not create a cause of action for two secondary liability claims—aiding and abetting, or conspiring with an electronic communication service to disclose information. Appellees, DirecTV and ICG, assert that the district court did not err, and even if the court did err there are additional independent grounds upon which we can affirm the dismissal. DirecTV and ICG argue also that if dismissal is inappropriate, we should grant its summary judgment motion that was also before the district court. DirecTV and ICG's alternative arguments are not necessary. The district court was correct: §§ 2702 and 2707 should not be interpreted to include secondary liability claims. Thus, dismissal was proper and there is no reason for us to address DirecTV and ICG's alternative arguments.

A

The language of 18 U.S.C. §§ 2702(a)(1) and 2707(a) is straightforward. Section 2702(a)(1) prohibits a "person or entity providing an electronic communication service to the public" from "knowingly divulg[ing] to any person or entity the contents of a communication while in electronic storage by that service." Section 2707(a) imposes civil liability for violating that prohibition:

[A]ny provider of electronic communication service, subscriber, or other person aggrieved by any violation of this chapter in which the conduct constituting the violation is engaged in with a knowing or intentional state of mind 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.

Here, because it is uncontroverted that neither DirecTV nor ICG was a provider of the electronic communications service that stored the communications that are the basis of Freeman and Scherer's claims, the question is simply whether this statutory language creates a private right of action for conspiracy or aiding and abetting—a question of first impression.

"The starting point for [the] interpretation of a statute is always its...