United States District Court, N.D. Illinois, Eastern Division
MEMORANDUM OPINION AND ORDER
E. CHANG, UNITED STATES DISTRICT JUDGE
the latest installment in a years-long saga of litigation
between Jaime and Maria Castillo, El Bajio Enterprises,
G&G Closed Circuit Events (G&G for short), and
G&G's attorney, the Law Offices of Thomas P. Riley
(Riley for short). The conflict began when G&G accused
the Castillos of unlawfully broadcasting a boxing match at
their restaurant in violation of G&G's exclusive
commercial distribution rights. When G&G's settlement
demands proved futile, G&G initiated this lawsuit. R. 1,
Compl. The Castillos struck back with several
counterclaims, the current version looping in Riley as a
defendant. R. 178, Third Am. Counterclaim. At this point
(after years of disputes over discovery and liability),
G&G and the Castillos have both moved for summary
judgment on the issue of the Castillos' liability for
broadcasting the boxing match. R. 295, Castillo Mot. Summ.
J.; R. 304, G&G Mot. Summ. J. Meanwhile, G&G and
Riley have each moved to dismiss the Castillos' entire
Third Amended Counterclaim. R. 293, G&G Mot. Dismiss; R.
300, Riley Mot. Dismiss. For the reasons stated below, the
Castillos' motion for summary judgment is granted on
G&G's claim under 47 U.S.C. § 553, but otherwise
denied. G&G's motion for summary judgment is also
denied. Both motions to dismiss are granted, and the
Castillos' Third Amended Counterclaim is dismissed with
Summary Judgment Motions
deciding a motion for summary judgment, the Court views the
evidence in the light most favorable to the non-moving party.
Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,
475 U.S. 574, 587 (1986). Because G&G and the Castillos
have both moved for summary judgment, the Court will consider
the evidence in the light most favorable to each party to see
if the opposing party is entitled to summary judgment.
version of events is that G&G owns the commercial
distribution rights to a boxing match, Saul Alvarez v.
Austin Trout Championship Fight Program, which was
telecast nationwide on April 20, 2013. R. 306, G&G SOF
¶ 7. The Castillos obtained access to the fight
through their residential DirecTV account, and broadcast the
fight at their restaurant, La Pena. Id. ¶¶
8-11. Aaron Lockner, an investigator working on behalf of
G&G,  observed the fight through the window of
La Pena, and went into the restaurant to investigate. R. 320,
G&G Resp. Castillo SOF ¶ 46. Lockner wrote an
affidavit stating that he saw the fight being displayed on
three TVs in La Pena around 10:30 p.m. on April 20. G&G
SOF Exh. 9, Lockner Aff. The Castillos did not order the
fight from G&G, and did not obtain a commercial license
to broadcast it. G&G SOF ¶ 12.
Castillos admit that they showed the fight at their
restaurant, and that they never purchased a commercial
license from G&G. R. 324, Castillo Resp. G&G SOF
¶ 12; R. 297, Castillo SOF ¶ 42. But the Castillos
maintain that they were entrapped into showing the fight by
Aaron Lockner. See Castillo SOF ¶ 42. According
to the Castillos, on the night of the fight, an unknown
customer-who the Castillos now believe to be Lockner-asked
Jaime Castillo to change the channel to Showtime to put on
the fight. Id. The Castillos were able to show the
fight because (they maintain), DirecTV had mistakenly
installed residential programming at La Pena. Id.
¶ 43. (The fight was broadcast to residential customers
at no charge on April 20, so the Castillos presumably were
not prompted to pay for the programming when they put on the
fight at Lockner's request. See Castillo SOF
¶¶ 44, 46.) The Castillos further assert that
G&G encourages investigators like Lockner to engage in
dishonest behavior by paying them only if they provide signed
affidavits attesting to acts of piracy, by not
double-checking the investigators' assertions in their
affidavits, and by failing to verify other evidence provided
by the investigators, such as photos and videos. Castillo SOF
¶¶ 30-33, 38.
Summary Judgment Standard
judgment must be granted “if the movant shows that
there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.”
Fed.R.Civ.P. 56(a). A genuine issue of material fact exists
if “the evidence is such that a reasonable jury could
return a verdict for the nonmoving party.” Anderson
v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). In
evaluating summary judgment motions, courts must view the
facts and draw reasonable inferences in the light most
favorable to the non-moving party. Scott v. Harris,
550 U.S. 372, 378 (2007). The Court may not weigh conflicting
evidence or make credibility determinations, Omnicare,
Inc. v. UnitedHealth Grp., Inc., 629 F.3d 697, 704 (7th
Cir. 2011), and must consider only evidence that can
“be presented in a form that would be admissible in
evidence.” Fed.R.Civ.P. 56(c)(2). The party seeking
summary judgment has the initial burden of showing that there
is no genuine dispute and that they are entitled to judgment
as a matter of law. Carmichael v. Village of
Palatine, 605 F.3d 451, 460 (7th Cir. 2010); see
also Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986);
Wheeler v. Lawson, 539 F.3d 629, 634 (7th Cir.
2008). If this burden is met, the adverse party must then
“set forth specific facts showing that there is a
genuine issue for trial.” Anderson, 477 U.S.
G&G's Commercial Distribution Rights
threshold dispute is whether G&G actually owns the
commercial distribution rights to the Alvarez/Trout boxing
match. G&G asserts that it purchased the rights from
Showtime, and backs up this assertion with testimony from
G&G's president Nicholas Gagliardi. G&G SOF
¶ 7; G&G SOF Exh 4, Gagliardi Dep. 21:5-23:1; R.
308, Gagliardi Aff. ¶ 3. The Castillos, on the other
hand, argue that G&G's proof is insufficient to prove
that G&G owns the commercial rights to the fight.
See Castillo SOF ¶¶ 12-20; R. 296,
Castillo Summ. J. Br. at 4. The Castillos do not provide any
evidence to back up their suspicion that G&G
does not own the rights to the fight, choosing to point only
to oddities and inconsistencies in Gagliardi's testimony.
this kind of speculation about the truthfulness of the other
side's testimony would not be enough to defeat a motion
for summary judgment. See, e.g., Bell v.
Duperrault, 367 F.3d 703, 707 (7th Cir. 2004)
(“Inferences that are supported by only speculation or
conjecture will not defeat a summary judgment
motion.”). In this case, however, there is some reason
to be skeptical about Gagliardi's testimony. Gagliardi
states that he negotiated purchase of the rights via email
with someone named Jock McLean, who was then a vice president
for sports and event programming at Showtime Networks, Inc.
Gagliardi Aff. ¶ 3. Gagliardi testifies that it was the
usual practice to not have a written contract. Castillo SOF
Exh. 7, Gagliardi Dep. 22:2-5.
Gagliardi was also unable to produce the emails that
supposedly memorialized the agreement, or any other
documentation to confirm that the sale actually took place.
See id. 23:18-24:3. Gagliardi did explain the
missing emails by testifying that his computer files got
corrupted and the email was lost. Id. Gagliardi also
testified that he tried to reach out to McLean, his contact
at Showtime, and got no response. Id. 93:15-94:5. To
be sure, none of this is a smoking gun. It could very well be
true that Gagliardi's emails were indeed lost, and that
McLean no longer works at Showtime or just refused to respond
(though a subpoena would have required a response). Still, it
is odd that G&G would have no documentation of
its supposed rights to the programming. It is also strange
that Gagliardi's emails were apparently stored only as
files on one computer and could not be obtained from the
provider of the email service. But, on the other hand, the
Castillos provided no actual evidence to cast doubt on
Gagliardi's testimony, even though they could presumably
have backed up their theories by (as noted earlier)
subpoenaing records from Showtime, for example. Even an
absence of Showtime records would have been
probative to rebut Gagliardi's testimony.
end of the day, this is a close enough question to preclude
summary judgment right now. Taken in the light most favorable
to the Castillos, a reasonable jury could find, on
these facts, that there is enough circumstantial evidence to
disbelieve Gagliardi's testimony on ownership. This is an
example of a case where the gaps in a movant's
summary-judgment presentation cast enough doubt on an
asserted fact that the non-movant can reasonably point to the
absence of evidence as enough to raise a genuine issue.
Having said that, a prompt motion from either side might be
granted for very limited and targeted discovery on Showtime,
even at this late date, to ascertain the truth of the
ownership issue. And, in any event, at the pretrial order
stage, the parties should consider whether a special
interrogatory would be helpful on this issue (the Court has
no firm thoughts on this as of yet). Also, depending on how
the evidence plays out at trial, the Court might consider a
motion for judgment as a matter of law on the issue.
See Fed. R. Civ. P. 50(a). But, at this point,
G&G cannot prevail on its summary judgment motion because
it has not established that a reasonable factfinder
must find that G&G owns the rights to the
Alvarez/Trout fight. Conversely, the Castillos also cannot
prevail on this issue right now, because a jury could
reasonably believe Gagliardi's testimony that he
purchased the rights.
Liability under 47 U.S.C. § 605
that G&G owns the rights to the fight, it would still
need to establish El Bajio and the Castillos' liability
under 47 U.S.C. § 605. Section 605(a) prohibits
different forms of satellite signal piracy. 47 U.S.C. §
605(a); see also J&J Sports Prods., Inc. v.
Mandell Family Ventures, LLC, 751 F.3d 346, 353 (5th
Cir. 2014). Section 605(a) is densely worded and not divided
into subparagraphs, so it is helpful to break the statute
down into sentences:
[Sentence 1] [N]o person receiving,
assisting in receiving, transmitting, or assisting in
transmitting, any interstate or foreign communication by wire
or radio shall divulge or publish the existence, contents,
substance, purport, effect, or meaning thereof, except
through authorized channels of transmission or reception, (1)
to any person other than the addressee, his agent, or
attorney, (2) to a person employed or authorized to forward
such communication to its destination, (3) to proper
accounting or distributing officers of the various
communicating centers over which the communication may be
passed, (4) to the master of a ship under whom he is serving,
(5) in response to a subpoena issued by a court of competent
jurisdiction, or (6) on demand of other lawful authority.
[Sentence 2] No person not being authorized
by the sender shall intercept any radio communication and
divulge or publish the existence, contents, substance,
purport, effect, or meaning of such intercepted communication
to any person.
[Sentence 3] No person not being entitled
thereto shall receive or assist in receiving any interstate
or foreign communication by radio and use such communication
(or any information therein contained) for his own benefit or
for the benefit of another not entitled thereto.
[Sentence 4] No person having received any
intercepted radio communication or having become acquainted
with the contents, substance, purport, effect, or meaning of
such communication (or any part thereof) knowing that such
communication was intercepted, shall divulge or publish the
existence, contents, substance, purport, effect, or meaning
of such communication (or any part thereof) or use such
communication (or any information therein contained) for his
own benefit or for the benefit of another not entitled
first sentence of Section 605 is not applicable, because it
regulates the behavior of communications personnel.
United States v. Norris, 88 F.3d 462, 465 (7th Cir.
1996). Sentences 2 and 4 also do not apply here, because they
target people who have “intercepted” satellite
communications themselves or received
“intercepted” communications from others.
“Intercept” means to “tak[e] or seiz[e] by
the way or before arrival at the destined place.”
Nat'l Satellite Sports, Inc. v. Eliadis, Inc.,
253 F.3d 900, 915 (6th Cir. 2001) (quoting Goldman v.
United States, 316 U.S. 129, 134 (1942), overruled
on other grounds, Katz v. United States, 389
U.S. 347 (1967)). In this case, there are no facts suggesting
that the Castillos “took” or “seized”
programming on its way to its intended destination. All
parties seem to agree that La Pena was the intended endpoint
of the DirecTV service at issue, and G&G does not argue
that improper use of residential programming in a commercial
establishment could be considered “interception.”
Indeed, G&G relies on the Court's analysis in Joe
Hand Promotions, Inc. v. Killeen, where the Court held
that using residential programming for a commercial
establishment was not “interception.” Joe
Hand Promotions, Inc. v. Killeen, 14-cv-3996 (N.D.
Ill.Dec. 22, 2015), ECF No. 80 at 9-10. Nor does G&G
argue that anyone else “intercepted” the
programming before the Castillos exhibited it. Sentences 2
and 4 of Section 605 do not apply.
leaves the third sentence: “No person not being
entitled thereto shall receive or assist in
receiving any interstate or foreign communication by radio
and use such communication (or any information therein
contained) for his own benefit or for the benefit of another
not entitled thereto.” 47 U.S.C. § 605(a)
(emphasis added). So, the question for summary judgment is
whether a reasonable factfinder could find the
Castillos were “entitled” to receive the Alvarez/
Trout fight, or, if not, whether the factfinder would
have to find that the Castillos were not
entitled to receive the programming.
have generally held that Section 605(a) imposes strict
liability. See, e.g., J&J Sports
Productions, Inc. v. Jorkay, LLC, 2013 WL 2629461, at *2
(E.D. N.C. June 11, 2013) (collecting cases finding that 47
U.S.C. § 605 imposes strict liability for violations).
Because Section 605 imposes strict liability, courts
generally grant summary judgment to plaintiffs if there is
undisputed evidence that the defendant exhibited satellite
programming without authorization, even when the defendants
argue that the violation was caused by mistaken installation
of residential programming at a commercial establishment.
See, e.g., J&J Sports Productions, Inc. v.
Dabrowski, 2015 WL 9304347, at *3 (N.D. Ill. 2015);
Joe Hand Promotions, Inc. v. Zani, 2013 WL 5526524,
at *2 (N.D. Ill. Oct. 7, 2013); Joe Hand Promotions, Inc.
v. Ol' River Hideaway, LLC, 2016 WL 590251, at *3
(W.D. Tex. Feb. 11, 2016); Eliadis, 253 F.3d at
case is different. The Castillos have offered evidence that
their alleged violation of the statute was actually
caused by the purported rights-holder's agent.
The Castillos testified that Jaime only turned on the fight
because Aaron Lockner- who at the time was investigating
potential violations on G&G's behalf-asked them to
turn it on. Castillo SOF ¶ 42. According to Jaime,
Lockner even directed Jaime to the channel where the fight
could be found. Id. Assuming that this version of
events is true (which the Court must do in deciding
G&G's summary judgment motion), and assuming that
Lockner was acting within the scope of his agency, there was
no violation of Section 605. If the rights-holder (or the
rights-holder's agent) asks someone else to turn on their
proprietary programming, then the rights holder is
effectively giving permission for the program to be
shown-which means that the exhibitor would be, in the
terminology of Sentence 3, “entitled” to show the
program. Cf. Eliadis, 253 F.3d at 917 (holding that
a party who was contractually authorized to receive and relay
a communication was “entitled” to receive and use
the communication under Section 605). In this case, the
Castillos maintain that Lockner, G&G's agent, asked
Jaime Castillo to turn on the program, implicitly granting
him permission to do so. This permission means that the
Castillos became “entitled” to receive and show
the boxing match when Lockner asked them to turn it on.
See 47 U.S.C. § 605(a), Sentence 3. This result
makes sense: it would be bizarre if G&G's agents
could effectively cause violations of Section 605 and then
collect from their unwitting victims. A reasonable factfinder
could decide that this is exactly what happened to the
Castillos, so G&G's motion for summary judgment is
said, the Castillos are not entitled to summary judgment
either. The crucial fact dispute about whether or not Lockner
asked Jaime to turn on the program could go either way: a
reasonable jury could find that Lockner is credible, and that
the boxing match was already playing when he
arrived. If the match was already playing when
Lockner walked in, then the Castillos are liable under
Section 605 (so long as G&G owned the commercial
distribution rights). In addition to this factual dispute,
there are also some fact questions about Lockner's
relationship with G&G, and whether he was acting within
the scope of his agency when he (allegedly) asked the
Castillos to turn on the Alvarez/Trout fight. All of these
disputed fact issues prevent the Court from granting summary
judgment to the Castillos on the Section 605 claim.
there is liability under Section 605, the Castillos will be
individually liable for the violation. Courts generally hold
that an individual is liable under Section 605 if she had a
right and ability to supervise the violation and had a
financial interest in it. J&J Sports Productions,
Inc., 2015 WL 9304347, at *4. The Castillos admit that
they are co-owners of El Bajio Enterprises, which does
business as La Pena, that they were both at the restaurant on
the night the fight was shown, and that they both had the
right and ability to supervise the goings-on at the
restaurant. Castillo Resp. G&G SOF ¶¶ 3, 19.
The Castillos had an obvious financial interest ...