Zimmerman v. HBO Affiliate Group
| Decision Date | 06 January 1988 |
| Docket Number | No. 87-1241,87-1241 |
| Citation | 834 F.2d 1163 |
| Parties | , 10 Fed.R.Serv.3d 97, RICO Bus.Disp.Guide 6818 ZIMMERMAN, John G., on behalf of himself and all others similarly situated v. HBO AFFILIATE GROUP, ACS Enterprises, Inc., Hometheatre, Inc., Video Consultants, Inc., Home Box Office, Inc., Conley and Wanning, Inc., Conley, Raymond W., and Wanning, Matthew. Appeal of John G. ZIMMERMAN. |
| Court | U.S. Court of Appeals — Third Circuit |
William B. Lytton, III (argued), Harold E. Kohn, Robert J. LaRocca, Victor P. Barall, Kohn, Savett, Klein & Graf, P.C., Arline Jolles Lotman, Law Offices of Arline Jolles Lotman, Philadelphia, Pa., for appellant.
Howard D. Scher (argued), Patrick T. Ryan, Andrew N. Rothseid, Montgomery McCracken, Walker & Rhoads, Philadelphia, Pa., for appellees, HBO Affiliate Group, ACS Enterprises, Inc., Home Theatre, Inc. & Video Consultants, Inc.
Robert D. Joffe (argued), Cravath, Swaine & Moore, New York City, John G. Harkins, Barbara W. Mather, Pepper, Hamilton & Scheetz, Philadelphia, Pa., Marc J. Apfelbaum, Rosemary Q. Barry, Cravath, Swaine & Moore, New York City, of counsel; for appellee, Home Box Office, Inc.
Before: GIBBONS, Chief Judge, and MANSMANN and ALDISERT, Circuit Judges.
The principal question presented in this case is whether the defendant cable television companies, in demanding monetary compensation in settlement of asserted legal claims against persons whom the defendants accused of having illegally received microwave television signals, were seeking to collect a "debt" within the meaning of the Fair Debt Collection Practices Act, 15 U.S.C. Sec. 1692 et. seq. (Supp. II 1978) ("FDCPA"). We also consider whether the allegation, that a letter which threatened legal action in the event of nonpayment was extortionate in nature, states a claim of injury to the plaintiff's "business or property" under the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C.A. Secs. 1961-1968 ("RICO"). Finally, we must determine whether the plaintiffs are entitled to a declaration that The Federal Communications Act is not violated by mere possession of an antenna capable of unauthorized reception of HBO's programming.
The district court dismissed the complaint for lack of a substantial federal claim, and we will affirm.
In reviewing a motion to dismiss under Rules 12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure, we accept the facts of the complaint as true and characterize the facts most favorably to the plaintiff as follows. Defendants Home Theatre, Inc., ACS Enterprises and Video Consultants, Inc. (the "Affiliates") have franchise agreements with defendant Home Box Office, Inc. ("HBO") authorizing them to distribute HBO's video programming service to individual subscribers in the Philadelphia area. The video programming is transmitted by means of microwave signal which is received through specially tuned antennae and converter equipment. Subscribers pay a monthly fee for the service. However, anyone having a proper antenna and converter can receive the programming without paying for it.
In early 1985, the Affiliates undertook a campaign to prevent signal "piracy" in their service area. During February and March of 1985, the Affiliates published in Philadelphia area newspapers various advertisements which showed a picture of a police van and stated: "If you are illegally receiving HBO, soon this will be the only free ride for HBO thieves." The publications also stated that illegal reception of HBO signals carries a penalty of up to a $50,000 fine and two years in prison, and stated in bold face type: "To Avoid Prosecution, Call Before March 15, 1985."
During March and April of 1985, the Affiliates contacted Conley and Wanning, Inc. ("C & W") to discuss the possibility of conducting an anti-theft campaign in the Philadelphia area similar to those previously conducted elsewhere by C & W. On October 24, 1985 the Affiliates formed the HBO Affiliate Group (the "Affiliate Group") for the purpose of funding and carrying out the anti-theft campaign. The Affiliate Group immediately entered into an agreement with C & W, under which C & W was to develop and effectuate the campaign subject to the supervision of the Affiliate Group.
The complaint further alleges that HBO was informed of the Affiliates' plan to conduct the campaign, was aware of C & W's method of operation and chose not to restrict the activities of the Affiliates or monitor the campaign.
The Affiliate Group and C & W then undertook to identify unauthorized users of the HBO signal. The effort involved visual inspection of the exterior of homes in the Philadelphia area and the collection of photographs of homes to which were affixed "unauthorized" antennae apparently capable of receiving the HBO signal. In some instances, electronic devices were employed to determine whether these antennae were in fact being used to receive the signal at the time of observation. From that survey, the defendants compiled a list of names and addresses of persons suspected of receiving HBO programming without a subscription.
On or about January 10, 1986 plaintiff Zimmerman and other members of the putative class received in the mail a letter which the plaintiff alleges was drafted by C & W, approved by the Affiliate Group and signed by their counsel. The plaintiff also alleges that the franchise agreements contained language impliedly giving the Affiliates the right to use the name HBO in sending the letter. 1 On or through the envelope were visible the following statements: "Open Immediately--Pending Legal Action," and "Violation of Federal Law." The letter read as follows:
In recent weeks, areas of Philadelphia have been subjected to a photographic and electronic survey in a search for violators of Section 705 of the Federal Communications Act of 1984.
Be advised that the above-mentioned property is listed as maintaining an unauthorized microwave antenna which is tuned to and receiving the private, home entertainment programming of Home Box Office (HBO).
After repeated warnings over the past few years, this illegal reception can no longer be tolerated in the Philadelphia area.
This violation is punishable by civil damages of up to $10,000. The companies I represent, known as the HBO Affiliate Group, have the exclusive right to authorize reception of the HBO signal. Consequently, they have instructed me to file suit in U.S. Federal District Court on January 27, 1986, seeking maximum damages against those who fail to comply in full with the terms of this letter.
Your name is currently on the list of potential defendants in this action. In order to be eliminated from this litigation, the following three steps must take place on or before January 24, 1986:
1. IMMEDIATELY remove the unauthorized equipment.
2. Sign the enclosed agreement to stop your illegal reception of the HBO signal.
3. Return this agreement with your check or money order for $300 made payable to the HBO AFFILIATE GROUP no later than January 24, 1986. A return envelope is enclosed for this purpose. This amount is considered to be an out of court settlement of all prior and present claims against you. THIS SETTLEMENT OFFER IS NOT NEGOTIABLE.
You will also find enclosed the most recent Public Notice from the Federal Communications Commission regarding this matter. Read this enclosure carefully in order to settle any questions you may have about the unauthorized reception of HBO's MDS signal in the Philadelphia area.
We repeat, this is your only opportunity to settle this matter for the amount stated. Following the initiation of Federal Court litigation on January 27, 1986, the out of court settlement will be dramatically increased.
Approximately 5,600 persons received the letter although only 200-300 homes had actually been electronically monitored and, of those monitored, approximately 1/3 had produced no reading or data of any kind. The remaining recipients of the letter were selected due to the presence on their homes of antennae assertedly capable of receiving the HBO signal. Plaintiff Zimmerman has no antenna on his roof. Wires from an antenna on his neighbor's roof run into Zimmerman's house but are not connected to anything. Other members of the putative class do not have an antenna of any kind or have a "ham radio" antenna for which they are licensed.
The defendants collected approximately $150,000 from recipients of the letter.
The plaintiff filed this action on January 24, 1986, seeking damages as well as injunctive relief and requesting certification of a class of all persons who received the defendant's letter of January 10, 1986. The complaint charged the defendants with violations of the Fair Debt Collection Practices Act, 15 U.S.C. Sec. 1692 et seq. ("FDCPA"); and the Racketeer Influenced and Corrupt Organization Act, 18 U.S.C.A. Secs. 1961-1968 ("RICO"). The district court had jurisdiction under 28 U.S.C. Sec. 1331 to review the complaint. The complaint also included pendant state claims under the Pennsylvania Unfair Trade Practices and Consumer Protection Law, 73 P.S. Sec. 201-1 et seq. and regulations promulgated thereunder, and additional counts charging common law fraud, intentional infliction of emotional distress and invasion of privacy.
The district court granted the plaintiff's motions for a temporary restraining order and later for a preliminary injunction restraining the defendants from filing individual lawsuits as threatened in the letter and ordering the money already collected by the defendants to be held in escrow pending further order of the court.
In March of 1986, the plaintiff filed an amended complaint with an added count requesting a declaration that the defendants had improperly construed the Federal Communications Act, 47 U.S.C. Sec. 605, to make mere possession of...
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