Opinion
Civil Action No. SA-03-CV-1079 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 deny the Motion to Dismiss (docket no. 19).
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 businesses called Digital Source Solutions and the Computer Shanty, which were suspected of selling equipment capable of pirating Plaintiff's communications. Plaintiff claims that the evidence shows that Defendant purchased a Pirate Access Device from one of the businesses.
Accordingly, Plaintiff sued Defendant, 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 Chapter 123.
Defendant also moves to dismiss Plaintiff's claim for common-law conversion. However, while this motion was pending, Plaintiff voluntarily dismissed that claims. See docket no. 31. Accordingly, Plaintiff's motion to dismiss this claim 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
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.
A. 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 denies Defendant's Motion to Dismiss (docket no. 19). Defendant's due process objections to Chapter 123 are premature and the Court denies them without prejudice.