Opinion
Civil Action No. SA-04-CV-82 XR.
August 23, 2004
ORDER
On this date, the Court considered Defendant's Motion to Dismiss in the above numbered and styled case. After careful consideration, the Court will grant in part and deny in part the Motion to Dismiss (docket no. 3).
Plaintiff correctly notes that Defendant's 19-page motion is grossly in excess of the page limits of Local Rule CV-7. However, finding no harm from exceeding the page limit, the Court will address all of the issues in the motion. In the future, the Court admonishes Defendant's counsel to seek prior authorization before exceeding page limits.
I. Background
Plaintiff's revenues derive primarily from subscription fees paid by users of its satellite entertainment programming services. Plaintiff obtained sales records and other evidence from a business called EQStuff, Inc., which was suspected of selling equipment capable of pirating Plaintiff's communications. Plaintiff claims that the evidence shows that Defendant purchased a Pirate Access Device from EQStuff, Inc.Accordingly, Plaintiff sued Defendant on January 27, 2004, asserting causes of action under 47 U.S.C. § 605(e)(3)(C), 18 U.S.C. § 2511, 18 U.S.C. § 2512, 47 U.S.C. 605(e)(4), common law conversion, and Chapter 123 of the Texas Civil Practice and Remedies Code ("Chapter 123"). Defendant now moves to dismiss Plaintiff's claims under 18 U.S.C. § 2511, 47 U.S.C. 605(e)(4), and Chapter 123.
Defendant also moves to dismiss Plaintiff's claim under 18 U.S.C. § 2512 and for common-law conversion. However, while this motion was pending, Plaintiff voluntarily dismissed those claims. See docket nos. 11 16. Accordingly, Plaintiff's motion to dismiss those claims is moot.
II. Standard of Review
When a party files a Motion to Dismiss under Federal Rule of Civil Procedure 12(b)(6) (failure to state a claim upon which relief can be granted), a District Court may not dismiss "unless it appears certain that the plaintiff cannot prove any set of facts in support of her claim which would entitle her to relief." Benton v. U.S., 960 F.2d 19, 21 (5th Cir. 1992). In considering the motion, the Court may not "go outside the pleadings and must accept all well-pleaded facts as true, viewing those facts most favorably to the plaintiff." Scanlon v. Texas AM Univ., 343 F.3d 533, 536 (5th Cir. 2003).III. Analysis
In support of his motion to dismiss, Defendant contends: (1) that 18 U.S.C. § 2511 provides no express or implied civil remedies; (2) that Plaintiff lacks standing to seek relief under 47 U.S.C. § 605(e)(4); (3) that Plaintiff's Chapter 123 claim is preempted by federal copyright law; and (4) that Chapter 123's damages provision violates his constitutional right to due process of law.
A. 18 U.S.C. § 2511
Defendant claims that § 2511 "provide[s] no express or implied civil causes of action." Further, he claims that Plaintiff has failed to plead a claim upon which relief may be granted.
Under 18 U.S.C. § 2511(1)(a), Congress established criminal penalties for anyone who "intentionally intercepts, endeavors to intercept, or procures any other person to intercept or endeavor to intercept, any wire, oral, or electronic communication." Title 18 U.S.C. § 2520, a later section of the same chapter of the United States Code, provides that "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." (Emphasis added).
The statute states, in unequivocal terms, that an aggrieved party may recover in a civil action. Additionally, the Fifth Circuit Court of Appeals has stated that "Section 2520(a)'s plain, unambiguous language authorizes a civil action." Peavy v. WFAA-TV, Inc., 221 F.3d 158, 169 (5th Cir. 2000). Under the plain language of section 2520, those who may be held civilly liable include those who intercepted, disclosed, or intentionally used a communication, but not those who endeavored to intercept or procured any other person to intercept or endeavor to intercept a communication, despite the latter's inclusion in section 2511. Id. at 169-70.
Defendant contends that Plaintiff has claimed only that Defendant endeavored to intercept or procured another to intercept communications from Plaintiff, stating that "courts have required actual interception in civil actions under section 2520." However, Plaintiff's original and amended complaints both state that "DIRECTV alleges that Defendant intentionally intercepted, endeavored to intercept, or procured other persons to intercept electronic communications from DIRECTV." (Emphasis added). A plain reading of Plaintiff's complaint shows that actual interception is alleged, and thus the complaint states a claim under § 2520.
However, as noted, although procuring other persons to intercept electronic communications is a criminal violation under § 2511, it does not form the basis for a civil cause of action under § 2520. Id. Similarly, language concerning endeavoring to intercept is absent from § 2520. Section 2520 only applies to "illegal interception, disclosure, or use." Accordingly, to the extent Plaintiff seeks civil relief under § 2520 for Defendant's alleged endeavoring to intercept or procurement of others to intercept or endeavor to intercept, there is no claim upon which relief may be granted.
The Northern District Court of Texas has also held that endeavoring to intercept, like procurement, does not state a civil cause of action under § 25 20. DirecTV v. Hoverson, 319 F. Supp. 2d 735, 737 (N.D. Tex. 2004).
B. 47 U.S.C. 605(e)(4)
Defendant contends that Plaintiff lacks standing to bring an action under 47 U.S.C. § 605(e)(4). Under this statute, there are a wide range of activities relating to satellite cable programming and direct-to-home satellite services that may lead to fines and imprisonment. The Fifth Circuit discussed the breadth of 47 U.S.C. 605(e)(4) in U.S. v. Harrell, 983 F.2d 36 (5th Cir. 1993), a criminal case. The Fifth Circuit held that "[i]t challenges reason that the statute would not include the prohibition of subscribed individual television programming." Id. at 40. The Court discussed congressional intent when passing the statute, including "stiffening applicable civil and criminal penalties" and "expanding standing to sue." Id. at 39. In a direct parallel to the present case, the Court held that "it is clear that the statute pertains to commercial as well as individual users, including those with their own satellite dishes." Id. at 40.Section 605(e)(3)(A) establishes a civil action for violations of 605(e)(4). To bring a civil action, one must be "a person aggrieved" by the violation of subsection (e)(4). 47 U.S.C. § 605(e)(3)(A). An aggrieved person "shall include any person with proprietary rights in the intercepted communication by wire or radio, including wholesale or retail distributors of satellite cable programming, and, in the case of a violation of paragraph (4) of subsection (e) of this section, shall also include any person engaged in the lawful manufacture, distribution, or sale of equipment necessary to authorize or receive satellite cable programming." 47 U.S.C. § 605(d)(6). Plaintiff alleges that it is a person aggrieved by Defendant's violation of § 605(e)(4).
Section 605(e)(4), the criminal provision, expressly mentions "satellite cable programming" and not "direct-to-home satellite services," while the definition of any person aggrieved only mentions the former. Defendant argues that the exclusion of "direct-to-home satellite services" from the definition of person aggrieved evidences that Congress intended to preclude such providers from bringing causes of action.
In denying a similar motion, Judge McBryde of the Northern District of Texas stated:
[T]he court has concluded that § 605(d)(6) is not a true definition but, instead, merely is a description of two categories of persons who come within the broad term `any person aggrieved.' . . . Congress's choice of words supports the court's conclusion that Congress did not intend to restrict the term `any person aggrieved' to the categories of persons that follow the words `shall include.' . . . The words `shall include' normally `convey the conclusion that there are other items includable, though not specifically enumerated in the statute.'DirecTV v. Hoverson, 319 F. Supp 2d 735, 739 (N.D. Tex 2004). The Court agrees with this construction and concludes that Plaintiff may be an aggrieved person under § 605(e)(3)(A) with standing to bring a civil action for a violation of § 605(e)(4).
C. Chapter 123 of the Texas Civil Practice Remedies Code
Under Texas law, a "party to a communication" may sue a person who "intercepts, attempts to intercept, or employs or obtains another to intercept or attempt to intercept the communication." TEX. CIV. PRAC. REM. CODE § 123.002. Communication is defined as "speech uttered by a person or information including speech that is transmitted in whole or in part with the aid of wire or cable." Id. § 123.001(1). A plaintiff who successfully establishes a cause of action under Chapter 123 is entitled to injunctive relief, "statutory damages of $10,000 for each occurrence," "actual damages in excess of $10,000," punitive damages, attorney's fees, and costs. Id. § 123.004. Defendant claims that Chapter 123 is preempted by federal law and that its damages provisions violate his constitutional right of due process of law.
1. Preemption
One of the goals of federal copyright law is to create a uniform enforcement mechanism to protect and enforce intellectual property rights. Daboub v. Gibbons, 42 F.3d 285, 288 (5th Cir. 1995). Because uniformity is a goal, federal copyright law preempts a large number of other claims. Id. To determine if a claim has been preempted, the Court examines (1) whether the cause of action is within the subject matter of copyright, and (2) whether the cause of action protects equivalent rights to "any of the exclusive rights of a federal copyright." Id. at 288-89.
Defendant's claim of preemption fails on the first prong of the test. Federal copyright law protects "original works of authorship" encompassing works conveyed through a wide range of media. 17 U.S.C. § 102(a). In its response, Plaintiff correctly argues that its claim is based on rights to "broadcast signals," not any original works. Although Plaintiff does broadcast works that are protected by copyright law, the act of broadcasting them is not the subject matter of copyright.
In Daboub, after discussing the proper test for preemption, the Fifth Circuit analyzed a Ninth Circuit case with similar facts to the case before the Court. Id. at 289 (construing G.S. Rasmussen Assoc., Inc. v. Kalitta Flying Serv., 958 F.2d 896 (9th Cir. 1992)). In Rasmussen, the Ninth Circuit acknowledged that claims for copying copyrighted material fall in the exclusive domain of federal copyright law; however, the Court held that claims for the wrongful use of copyrighted material are not preempted. 958 F.2d at 904. In Daboub, the Fifth Circuit distinguished Rasmussen because the claim in Daboub was for copying copyrighted material itself instead of using copyrighted material. Daboub, 42 F. 3d at 289. The Daboub Court held that the state law claims were preempted because the case centered around actual copying. Id. at 289-90.
The central issue in a claim under Chapter 123 is the alleged interception or acquisition of speech or information including speech, which may include copyrighted information, not the copying of copyrighted material. This claim is not preempted by federal copyright law.
2. Due Process Violations
Defendant argues that the $10,000 statutory damages available to plaintiffs for a violation of Chapter 123 violates his constitutional right of due process. He claims that there are no actual damages to Plaintiff upon which to base compensatory damages, and because there are no actual damages, all of the $10,000 fine is punitive in nature. Based on United States Supreme Court precedent holding punitive damages to compensatory damages ratios of 145:1 and 500:1 to be unconstitutional deprivations of due process, Defendant argues that the $10,000 fine is also unconstitutional as its ratio of punitive damages to compensatory damages is "infinite." See State Farm Mutual Ins. Co. v. Campbell, 538 U.S. 408, 425 (2003); BMW of N. Am., Inc. v. Gore, 517 U.S. 559, 586-87 (1996).
Plaintiff seeks actual damages in its complaint and Defendant has not established that Plaintiff has suffered no actual damages. It is possible that statutory damages could violate due process if "the penalty prescribed is so severe and oppressive as to be wholly disproportionate to the offense and obviously unreasonable." St. Louis, Iron Mt. S. Ry. Co. v. Williams, 251 U.S. 63 (1919). And it may be that a statutory damages provision that grossly exceeds any actual damages would violate due process as "an irrational and arbitrary deprivation of the property of the defendant." Campbell, 538 U.S. at 429. At this point, however, these concerns are hypothetical, given that Defendant's mere allegation that Plaintiff has suffered no actual damages does not make it so, and thus the Court is unable to determine whether the ratio between actual and statutory damages is disproportionate. At this early stage of proceedings, Defendant's due process objections are premature. In addition, even if the statutory damages violate due process, that does not defeat Plaintiff's Chapter 123 claim in toto, and thus it would not warrant granting a motion under Rule 12(b)(6) for failure to state a claim. Accordingly, the Court denies Defendant's due-process challenge to Plaintiff's claim under Chapter 123 without prejudice to Defendant re-urging the objection if and when Plaintiff succeeds on its Chapter 123 claim and seeks statutory damages.
IV. Conclusion
The Court grants in part and denies in part Defendant's Motion to Dismiss (docket no. 5). The Court grants the motion to dismiss solely with regard to Plaintiff's claims relating to procurement of others to intercept communications and endeavoring to intercept communications under 18 U.S.C. § 2511 because there is no civil cause of action for these acts. Defendant's due process objections to Chapter 123 are premature and the Court denies them without prejudice.