United States District Court, N.D. Illinois, Eastern Division
June 22, 2004.
DIRECTV, Inc., Plaintiff,
JEFFREY ALTER, Defendant.
The opinion of the court was delivered by: ARLANDER KEYS, Magistrate Judge
MEMORANDUM OPINION AND ORDER
Currently before the Court is Defendant Jeffrey Alter's Motion
to Dismiss Counts III and V of Plaintiff DIRECTV, Inc.'s
Complaint. DIRECTV alleges that Mr. Alter purchased, possessed,
and used a device to decrypt and display DIRECTV's satellite
programming. In Count III of its Complaint, DIRECTV alleges that
Mr. Alter violated 18 U.S.C. § 2512 (West 2004), and in Count V,
DIRECTV contends that Mr. Alter is liable for conversions. For
the reasons set forth below, the Court grants Mr. Alter's Motion
in part, and denies the Motion in part.
DIRECTV provides direct satellite broadcast systems to close to
11 million subscribers. These subscribers pay monthly fees to
DIRECTV for access to approximately 225 television channels. To
prevent nonsubscribers from accessing its programming, DIRECTV
electronically encrypts its satellite transmissions. Subscribers receive specialized satellite receiving equipment, including a
DIRECTV Access Card, which unscrambles DIRECTV'S transmissions.
Various companies and individuals have manufactured and sold
devices that function like DIRECTV's Access Card, which has
enabled nonsubscribers to decrypt and view DIRECTV's programming
without paying for it. It is undisputed that the manufacture,
sale, and use of these devices is illegal and violates federal
law. See 47 U.S.C. § 605 (West 2004) (The Federal
Communications Act of 1934), and 18 U.S. §§ 2510-21 (West 2004).
(the Electronic Communications Privacy Act). DIRECTV alleges that
Mr. Alter unlawfully possessed and used one of these devices, and
seeks to recover civil damages from him stemming from this
"A motion to dismiss under Rule 12(b)(6) challenges the
sufficiency of a complaint for failure to state a claim upon
which relief may be granted." Johnson v. Rivera, 272 F.3d 519,
520-21 (7th Cir. 2001). The Court accepts all well pleaded
facts as true, and draws all reasonable inferences in favor of
Plaintiff. Jackson v. E.J. Brach Corp., 176 F.3d 971, 977-78
(7th Cir. 1999). Dismissal is appropriate only if Plaintiff
can prove no set of facts in support of a legally cognizable
claim. Lee v. City of Chicago, 330 F.3d 456, 459 (7th Cir.
Mr. Alter contends that, as to Counts III and V of the
Complaint, DIRECTV can prove no set of facts upon which relief
can be granted. Count III alleges that Mr. Alter violated
criminal statute 18 U.S.C. § 2512 and that DIRECTV is entitled to
a civil remedy for this criminal conduct, and Count V purports to
state a claim for conversion. DIRECTV's attempts to hold
individuals civilly liable under § 2512, and to state a cause of
action for conversion have divided the courts in this Circuit.
The Court joins its colleauges who have ruled that, while no
civil cause of action lies against individuals possessing
pirating devices in violation of § 2512, DIRECTV has stated a
cause of action for conversion.
A. No Civil Cause of Action Lies for Possession of Piracy
In Count III of its Complaint, DIRECTV seeks to hold Mr. Alter
civilly liable under 18 U.S.C. § 2512(1)(b) (West 2004) for the
mere possession of a pirating device. Section 2512 is a criminal
statute that prohibits the manufacture, possession, and
assembly of interception devices. The actual use of these
pirating products, by alleged purchasers such as Mr. Alter, is
proscribed by another criminal statute, 18 U.S.C. § 2511 (West 2004).*fn1
Congress saw fit to make certain violations of these statues
civilly actionable by enacting 18 U.S.C. § 2520 (West 2004).
Section 2520 provides, in pertinent part, that:
[A]ny 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.
18 U.S.C. § 2520 (West 2004).
The question then becomes, does a civil remedy lie for each and
every violation of the criminal offenses found "in this
chapter?" or are civil remedies available only to persons whose
communications are "intercepted, disclosed, or intentionally
used?" This specific question has split the courts in this
district, and Judge Filip has done an excellent job of outlining
the cases and analysis on both sides of the issue in DIRECTV,
Inc. v. Dale Ostrowski, et al., No. 03 C 8618 (May 11, 2004)
(listing relevant cases).
Courts finding that persons possessing pirating devices may be
held civilly liable have reasoned that the phrase "in violation
of this chapter" in § 2520 means that a civil remedy lies for any
and all violations of the statutes in this chapter. See. e.g.,
DIRECTV, Inc. V. Dillon, NO. 03 C 8578, 2004 WL 906104, at *2)
(N.D. Ill. April 27, 2004). Under this broad interpretation of
Section 2520, DIRECTV would have a civil remedy against
individuals found in possession of pirating devices in violation
of Section 2512.
Courts finding that no civil remedy lies for mere possession of
pirating devices have hung their hats on Congress' decision to
list only three offenses interception, disclosure, and use
and to include the phrase "which engaged in that violation."
These courts interpret the "that violation" language as limiting
civil redress to only the three criminal activities ie,
intercepting, disclosing, and intentionally using pirating
devices specifically listed in § 2520. See, e.g., DIRECTV,
Inc. v. Maraffino, No. 03-3441, 2004 WL 170306, at *3 (N.D. Ill.
Jan. 23, 2004) ("As a matter of grammar and sentence structure,
the phrase `that violation' must refer to the interception,
disclosure, or intentional use of a communication . . .")
This Court is persuaded by the reasoning in those decisions
holding that civil damages are not available for offenses not
listed in Section 2520. See DIRECTV, Inc. v. Dale Ostrowski, et
al., No. 03 C 8618 (May 11, 2004). Because the Court finds that
civil remedies are limited to the specific violations set forth
in Section 2520 the illegal interception, disclosure, and/or intentional use of wire, oral, or electronic communications
DIRECTV cannot recover for the mere possession of these devices.
Therefore, the Court grants Defendant's Motion to Dismiss Count
III of the Complaint.
B. Plaintiff States a Cause of Action for Conversion
Count V of Plaintiff's Complaint alleges that Mr. Alter's
unlawful interception of DIRECTV's program is tantamount to
common law conversion. To state a claim for conversion, DIRECTV
must allege the following: 1) it has a right to the property; 2)
it has an absolute, unconditional right to the immediate
possession of the property; 3) it made a demand for possession;
and 4) that Mr. Alter wrongfully and without authorization
assumed control, dominion, or ownership over the property.
Cirrincione v. Johnson, 703 N.E.2d 67, 70 (Ill. 1998).
Mr. Alter argues that DIRECTV cannot state a cause of action
for conversion because satellite signals are not tangible, and
the Illinois Supreme Court has ruled that only tangible property
and assets can be the subject of a conversion action. In re
Thebus, 483 N.E.2d 1258, 1260 (Ill. 1985). In Thebus, the
Illinois Supreme Court stated that "the subject of conversion is
required to be an identifiable object of property of which the
plaintiff was wrongfully deprived." Id.
Courts in this district have split on whether Illinois law, pursuant to Thebus, requires tangible personal property in
order for an action for conversion to lie. Compare DIRECTV, Inc.
v. Hinton, No. 03 C 8477, 2004 WL 856555, at *4 (N.D. Ill. April
21, 2004) with DIRECTV, Inc. v. Dillon, No. 03 C 8578, 2004 WL
906104, at *4 (N.D. Ill. April 27, 2004). After carefully
reviewing these decisions, this Court is persuaded that
intangible property can be the subject of an action for
conversion. See DIRECTV, Inc. v. Dale Ostrowski, et al., No. 03
C 8618 (May 11, 2004).
First, Judge Kocoras carefully notes that the Illinois Supreme
Court's decision in Thebus does not hold that an action for
conversion cannot lie for intangible property. See DIRECTV, Inc.
v. Delaney, No. 03 C 3444 (Nov. 20, 2003). Thus there is no
precedent directly barring such actions under Illinois law.
Next, Illinois appellate court decisions issued after Thebus
indicate that an action for conversion may, in fact, lie for
intangible property. See Conant v. Karris, 520 N.E.2d 757 (Ill.
App. 1987) (finding that confidential information may be the
subject of conversion); Stathis v. Geldermann, Inc.,
692 N.E.2d 798, 807 (Ill.App. 1998) (stating that "parties may recover for
conversion of intangible assets."); Bilut v. Northwestern
University, 692 N.E.2d 1327 (Ill.App. 1998) (conversion could
lie for the plagiarism of ideas in a research paper). These cases
persuaded the Seventh Circuit that there is a "trend" in state
courts to protect against the misuse of business information via conversion. FMC Corp. v. Capitol Cities/ABC, Inc.,
915 F.2d 300, 305 (7th Cir. 1990) (noting that there is no reason "why
there might not be conversion of intangible property.")
Finally, the Court is persuaded by Judge Filip's thoughtful
analysis of this issue in DIRECTV v. Dale Ostrowski, No. 03 C
8618 (May 11, 2004), and his conclusion that neither a tangible
property, nor full deprivation of the benefits of that property
are required in order to state a claim for conversion. Therefore,
the Court denies Mr. Alter's Motion to Dismiss Count V of
In conclusion, the Court finds that, although no civil remedy
lies for merely possessing the pirating equipment in question,
DIRECTV may be able to prove a set of facts entitling it to
recover for common law conversion. Therefore, Mr. Alter's Motion
is Granted as to Count III of the Complaint, and Denied as to
Count V of the Complaint.