Premier Communications Network, Inc. v. Fuentes
| Decision Date | 26 July 1989 |
| Docket Number | 86-1534,Nos. 85-2869,s. 85-2869 |
| Citation | 880 F.2d 1096 |
| Court | U.S. Court of Appeals — Ninth Circuit |
| Parties | PREMIER COMMUNICATIONS NETWORK, INC., a California corporation, Plaintiff-Appellee, v. Edward FUENTES, Elvera Fuentes, individually and on behalf of all other persons similarly situated, Defendants-Counter Complainants-Appellants, v. PREMIER COMMUNICATIONS NETWORK, INC., Raymond Conley, H. Wayne Goodroe, Farrow, Schildhause, et al., Counter Defendants-Appellees. PREMIER COMMUNICATIONS NETWORK, INC., a California corporation, Plaintiff-Counter-Claimant Defendant-Appellant, v. Edward FUENTES; Elvera Fuentes, individually and on behalf of all other persons similarly situated, Defendants-Counter-Claimants-Appellees. |
Rita F. Gilmore and Barbara Clementino, Sedgwick, Detert, Moran & Arnold, David W. Evans, Long & Levit, San Francisco, Cal. and H. Wayne Goodroe, Farrow, Schildhause & Wilson, Oakland, Cal., for plaintiff-counter-claimant-defendant/appellee/appellant.
Rodney Shepherd and Richard E. Brown, Law Offices of Melvin M. Belli, Sr., San Francisco, Cal., for defendants/counter-claimants/appellants/appellees.
Appeal from the United States District Court for the Northern District of California.
Before HUG, SCHROEDER and ALARCON, Circuit Judges.
This case concerns actions taken by plaintiff, Premier Communications Network, Inc. ("Premier"), to prevent unauthorized viewing of the television entertainment program that it provides to subscribers by microwave transmission. The issues on appeal are (1) whether Premier is entitled to an injunction; (2) what the injunction may provide; (3) whether Fuenteses' counterclaim for damages resulting from the Premier's letter threatening legal action was properly dismissed because the letter was a privileged communication; and (4) whether Premier's due process rights were violated when the district court ordered it to send a curative letter offering refunds.
Premier is engaged in the business of marketing and distributing a private, commercial-free, pay television entertainment service to subscribers in the San Francisco Bay Area. The programming which Premier provides to its subscribers originates from the New York Studios of Home Box Office, Inc. ("HBO"). The programming is sent from New York by means of microwave radio frequencies as part of a system known as a multipoint distribution service ("MDS"). The microwave transmissions are relayed to mountain-top receiving stations. The transmissions are then relayed to, and received by, microwave antennae located at the customers' homes. Successful reception of the transmissions requires that the microwave antennae be pointed at the mountain-top stations, with a clear line-of-sight transmission path. A "down-converter," also located at the customer's home, is then needed to modulate the microwave frequency into a VHF frequency, which can then be displayed in intelligible form on a standard television set. Premier as the exclusive San Francisco Bay Area licensee for HBO's programming, provides the necessary microwave antennae and down-converters for its customers. Premier's sole source of revenue comes from the monthly fee that customers pay for the equipment rental and HBO transmission.
Defendants-Appellants, Edward and Elvera Fuentes, are individuals living in San Jose. They are not customers of Premier. However, they own microwave equipment that is capable of receiving Premier's HBO programming. They can view the programming because the microwave signals are not "scrambled" by HBO. The Fuenteses have admitted to watching HBO without paying. The microwave equipment also enables the Fuenteses legitimately to receive instructional television programming, such as that offered by the Roman Catholic Communications Corporation ("RCCC").
Because people, such as the Fuenteses, can watch HBO programming by simply buying their own microwave antennae, Premier has been losing potential revenue. In order to combat this unauthorized reception, Premier hired Raymond Conley and Associates ("Conley") to use electronic and photographic surveillance equipment to snoop around people's homes and find out who both (1) owned microwave antennae and (2) did not subscribe to HBO. A list of over 17,000 such names and addresses was then compiled for the Bay Area.
Premier then hired the Oakland law firm of Farrow, Schildhause, Wilson & Rains ("FSW & R"), 1 which sent out form letters on July 31, 1984 to the 17,000 individuals on the list. The letters stated that a survey had shown that the recipients were engaged in unauthorized viewing of HBO in violation of California and Federal law, and that a civil suit seeking an injunction and damages would soon be filed. The letters demanded, inter alia, that the recipients (1) pay $300 as settlement; (2) take down their microwave antenna; and (3) stop unauthorized watching of HBO. 2
The Fuenteses then brought suit in state court on August 8, 1984, against Premier, Conley, and others, alleging tortious conduct. Premier instituted the present separate action on August 17, 1984, in Federal District Court against the Fuenteses. Premier asked for defendant class certification of the 9,000 people who did not respond to the settlement letter. The district court has not ruled on the certification of this class. Premier prayed for permanent injunctive relief, a declaration that the Fuenteses had violated 47 U.S.C. Sec. 605 (Supp. III 1985), and damages. The Fuenteses filed an answer and counterclaim against Premier, Conley, FSW & R and others, alleging that they had violated, inter alia, 18 U.S.C. Sec. 1962(c) (1982) ("RICO"), perpetrated fraud, caused emotional distress, and invaded their privacy. The Fuenteses also sought class certification. The Fuenteses' counterclaim was dismissed. Later, Premier moved for summary judgment on the issue of permanent injunctive relief, and this was granted. These matters form the basis of the Fuenteses' Appeal No. 85-2869.
After the injunction was granted, Premier sent out another form letter to the remaining 9,000 suspected pirates, which repeated the demands of the first letter. 3 However, the second letter informed its recipients that they were defendants in the Fuentes lawsuit, even though no defendant class had ever been certified, and even though only the Fuenteses were affected by the summary judgment order. The court was overwhelmed with public inquiries, and after an emergency status conference, Judge Aguilar ordered that a curative letter be sent, allowing payers of the settlement claims to get their money back, if they so desired. Premier and the others contend that this order, requiring possible return of money it had acquired, violated their due process rights. This is the subject of the Premier's Appeal No. 86-1534.
We have appellate jurisdiction under 28 U.S.C. Sec. 1292(a)(1) (1982) to consider the portion of the appeal dealing with the permanent injunction. Premier's motion for class certification remains under submission, and Premier's claim for damages against the Fuenteses has not been determined; thus, there is no final judgment as to all claims involved in this action. However, we have appellate jurisdiction to consider the other issues raised in this appeal because of the certification of the district court under Fed.R.Civ.P. 54(b).
Premier alleged that the Fuenteses, in their unauthorized reception of HBO, violated section 705 of the Communications Act of 1934 (current version at 47 U.S.C. Sec. 605 (Supp. III 1985)). The Fuenteses admit to unauthorized reception, but they claim that 47 U.S.C. Sec. 605 does not apply to their conduct. The district court granted summary judgment in favor of Premier.
We review a grant of summary judgment de novo. Darring v. Kincheloe, 783 F.2d 874, 876 (9th Cir.1986). The appellate court must determine, viewing the evidence in the light most favorable to the nonmoving party, whether there are any genuine issues of material fact and whether the district court correctly applied the relevant substantive law. Ashton v. Cory, 780 F.2d 816, 818 (9th Cir.1986).
The Ninth Circuit has already decided, in a case similar to the one before us now, that the unauthorized reception of unscrambled MDS transmissions of subscription home television entertainment is a violation of 47 U.S.C. Sec. 605. California Satellite Systems v. Seimon ("Benvenuti "), 767 F.2d 1364, 1366-67 (9th Cir.1985). The Fuenteses' arguments as to why section 605 does not apply to their conduct are the same as those raised and deemed insufficient in Benvenuti. Thus, viewing the evidence in the light most favorable to the Fuenteses, the district court, after applying the relevant substantive law, as expressed in Benvenuti, correctly granted summary judgment as to the violation of 47 U.S.C. Sec. 605.
On October 28, 1985, the district court based on a summary judgment granted a permanent injunction that prohibited the Fuenteses from receiving Premier's microwave signals without authorization. The injunction also required the Fuenteses to remove their microwave antenna and related equipment. 4 Fuenteses contend that this injunction is ambiguous and infringes on their first amendment rights.
We review the district court's grant of permanent injunctive relief for an abuse of discretion or application of erroneous legal principles. SEC v. Goldfield Deep Mines Co., 758 F.2d 459, 465 (9th Cir.1985). However, challenges to an injunction on specificity grounds pursuant to Fed.R.Civ.P. 65(d) are reviewed de novo. United States v. Holtzman, 762 F.2d 720, 726 (9th Cir.1985). Fed.R.Civ.P. 65(d) "requires the language of injunctions to be reasonably clear so that ordinary persons will know precisely what action is proscribed." Id. Furthermore, "injunctive relief should be no more burdensome to the defendants than [that] necessary to provide complete relief to the...
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