Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_04-cv-03829/USCOURTS-cand-3_04-cv-03829-2/pdf.json

Parties Involved:
DIRECTV, Inc.
Plaintiff
Eric Lucchesi
Defendant

Document Text:

United States District Court

For the Northern District of California

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C04-3829 Report and Recommendation Page 1 of 10

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

DIRECTV, INC, et al.,

Plaintiffs,

v.

ERIC LUCCHESI,

Defendant.

________________________________/

No. C 04-3829 JSW (JL)

REPORT AND RECOMMENDATION RE

MOTION FOR DEFAULT JUDGMENT

The district court (Hon. Jeffery S. White) referred Plaintiff’s motion for default judgment

under Rule 55(b) Federal Rules of Civil Procedure to this Court for Report and

Recommendation as provided by 28 U.S.C. § 636(b) and Civil Local Rule 72.

This Court considered the record in this case and recommends that the district court

grant Plaintiff’s motion and enter judgment pursuant to either 47 U.S.C. § 605(e)(4) or 18

U.S.C. § 2520(a) in the amount of $10,000.00 and for attorney’s fees and costs in the amount

of $3,270.00 and interest pursuant to 28 U.S.C. § 1961(a) calculated from the date of entry of

judgment.

Factual Background

DirecTV (“Plaintiff”) is a California company which broadcasts satellite television and

other programming, with over 225 channels, to more than 10 million homes and businesses in

the United States. DirecTV has spent at least $1.25 billion developing this system. All

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United States District Court

For the Northern District of California

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C04-3829 Report and Recommendation Page 2 of 10

broadcasts are encrypted, or electronically scrambled, in order to prevent unauthorized

viewing. DirecTV provides access to its service on either a monthly subscription or pay-perview basis. A customer who buys one of these services receives a DirecTV Access Card and

other system hardware which, upon activation, allow the customer to view only those services

paid for. On or about September 10, 2002, DirecTV served a Temporary Restraining Order

and Impoundment Order, issued by the United States District Court for the Middle District of

Florida, on a business named TestSat.tv (“TestSat”). DirecTV obtained TestSat’s business

records on or about September 16, 2002 pursuant to the raid. These records showed that

Eric Lucchesi (“Defendant”) purchased from TestSat, on or about March 18, 2002, a Pirate

Access Device called a “Mikload.” The primary purpose of such a device is the unauthorized

viewing of encrypted television signals.

Procedural Background

The Summons and Complaint in this action were properly served on Defendant on

December 28, 2004. Defendant failed to appear or respond to the complaint and the Clerk

entered his default on January 31, 2005. Plaintiff made four claims in the original complaint:

violation of 47 U.S.C. § 605(a) unauthorized reception of satellite signals; violation of 18

U.S.C. § 2520(a) a private right of action for a violation of the criminal statute § 2511 for

unauthorized interception of electronic communications; violation of 47 U.S.C. § 605(e)(4) for

willful assembly or modification of devices or equipment; and conversion. Only the violations of

§ 2520 and § 605(e)(4) are asserted in Plaintiff’s Motion for Default Judgment. The claims for

a violation of § 605(a) and conversion are re-alleged in Plaintiff’s Supplemental Brief in

Support of Motion for Default Judgment. However, at oral argument, Plaintiff stated it no longer

asserts these claims.

Plaintiff initially filed approximately 20 lawsuits with multiple defendants which were

assigned to Judge Ware, who ruled that Joinder was improper and ordered each case to be

brought separately. Acknowledging the potential statute of limitations issue, the court found

that any separate action brought by DirecTV on or before August 26, 2004, would be deemed

Case 3:04-cv-03829-JSW Document 49 Filed 12/16/05 Page 2 of 10
United States District Court

For the Northern District of California

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C04-3829 Report and Recommendation Page 3 of 10

a continuation of the original action. The complaint in this case was filed with the court

September 10, 2004, after the extension mandated by Judge Ware. 

I. Motion for Default Judgment: FRCP 55(b)

Plaintiff requests that the court enter default judgment against Defendant pursuant to

Fed. R. Civ. P. 55(b)(2). 

A court may not enter judgment by default against an unrepresented minor, an

incompetent person, or a person in military service. FRCP 55(b)(2), (e). Defendant is not

currently in the military according to his Military Status Report. Plaintiff asserts that Defendant

is not an infant or incompetent person “[u]pon personal knowledge” of Plaintiff’s Attorney

Kimberly Colombo. (Colombo Dec. at 1).

By defaulting a defendant admits to the well-pleaded factual allegations of the

complaint except for those regarding the amount of damages. FRCP 8(d). TeleVideo

Systems, Inc. v. Heidenthal, 826 F.2d 915, 917-918 (9th Cir. 1987), Geddes v. United

Financial Group, 559 F.2d 557, 560 (9th Cir. 1977).

Default judgment is not mandatory, rather, the district court has discretion to enter

default judgment against a defendant. Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980)

Factors the court may consider to determine if default judgment is appropriate include: (1) the

possibility of prejudice to the plaintiff; (2) the merits of plaintiff’s substantive claim; (3) the

sufficiency of the complaint; (4) the sum of money at stake in the action; (5) the possibility of a

dispute concerning material facts; (6) whether the default was due to excusable neglect, and

(7) the strong policy underlying the Federal Rules of Civil Procedure favoring decisions on the

merits. Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986). 

A. Section 2520

1. Liability under Section 2520 for a Violation of Section 2511

Plaintiff seeks statutory damages against Defendant for illegal interception of an

electronic communication in violation of 18 U.S.C. § 2511(1)(a) of the ECPA. Section

2511(1)(a) of the ECPA states that “any person who intentionally intercepts, endeavors to

intercept, or procures any other person to intercept or endeavor to intercept, any wire, oral, or

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United States District Court

For the Northern District of California

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1 Plaintiff has submitted appropriate evidence to show that Defendant did purchase and use the Mikload

device. Additionally, in Judge Ware’s original order, there is the basic assumption that, if the device was purchased,

it was in fact used. Judge Ware requires no additional evidence to support this showing, citing DirecTV, Inc., v.

Huynh, 318 F. Supp. 2d, 1122, 1128 (M..D. Ala. 2004) and DirecTV, Inc. V. Getchel, 2004 WL 1202717, 1 (D.

Conn. May 26, 2004) for this proposition. 

C04-3829 Report and Recommendation Page 4 of 10

electronic communication [commits a federal criminal offense] . . . .” 18 U.S.C. § 2511.

Pursuant to Judge Ware’s order all claims brought under 18 U.S.C. § 2511, a criminal statute,

are considered brought under 18 U.S.C. § 2520(a). Section 2520(a) creates a private right of

action for any person “whose wire, oral, or electronic communication is intercepted.” 18

U.S.C. 2520(a). The Ninth Circuit holds that satellite transmissions are electronic

communications protected under the ECPA. “A person who views satellite television

programming by use of a modified descrambler and a satellite dish ‘intentionally intercepts’

the satellite television signal, which is an ‘electronic communication.’” U.S. v. Lande, 968 F.2d

907, 909 (9th Cir. 1992). A defendant who views unauthorized satellite television by use of a

modified descrambler is in violation of the ECPA.

Plaintiff alleges, and by default Defendant admits, that on or about March 18, 2002,

Defendant purchased a Pirate Access Device known as a “Mikload” from a vendor called

TestSat. According to Jaime Sichler, Supervisor of DirecTV’s End-User Development Group,

the device purchased by Defendant is primarily designed for unauthorized access to DirecTV

satellite programming without payment.(Sichler Dec. at 2). There are no legitimate

commercial or private uses for the device. (Sichler Dec. at 2). By default Defendant admits

that he purchased and used a device with the sole purpose of illegally intercepting DirecTV’s

encrypted satellite television in violation of §2511 allowing recovery for DirecTV under §

2520.1

Although some courts disagree, the Ninth Circuit holds that the interception and viewing

of encrypted satellite television, is a violation of the ECPA. Lande 968 F.2d at 910-911. By

default Defendant admits to the purchase and use of a device with the purpose of intercepting

DirecTV’s programming. This is a violation of §2511 which creates a private right of action for

Plaintiff under §2520.

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United States District Court

For the Northern District of California

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C04-3829 Report and Recommendation Page 5 of 10

2. Statute of Limitations

Section 2520(e) states that, “[a] civil action under this section may not be commenced

later than two years after the date upon which the claimant first has reasonable opportunity to

discover the violation.” In consideration of this, in his initial order, Judge Ware found that any

separate action brought by DirecTV on or before August 26, 2004, would be deemed a

continuation of the original action. This case was filed September 10, 2004, after the

extension allowed by Judge Ware. Plaintiff alleges Defendant purchased the device from

TestSat March 18, 2002. 

Plaintiff was first able to reasonably discover the purchase on September 16, 2002,

when it obtained TestSat’s business records pursuant to a Temporary Restraining Order

served on TestSat September 10, 2002. Taking the date of reasonable discovery as the date

that DirecTV received TestSat’s business records this court finds that the complaint was filed

within the statute of limitations. 

Plaintiff argues that the statute of limitations should be tolled based on a theory of

continuing violation of the ECPA. Defendant continued to use the Mikload and intercept

DirecTV’s programming until April 2004 when DirecTV was able to interrupt the data stream.

Plaintiff also contends that the statute of limitations is an affirmative defense that Defendant

admits to by default. Given that Plaintiff can adequately support its contention that this claim

was properly filed within the statute of limitations these other arguments are unnecessary. 

B. Liability under Section 605(e)(4)

Plaintiff also claims that Defendant is liable for a violation of 47 U.S.C. § 605(e)(4) by

assembling or modifying a device for use in the unauthorized interception of DirecTV’s

satellite broadcast. “Any person who manufactures, assembles, modifies, imports, exports,

sells, or distributes any electronic, mechanical, or other device or equipment, knowing or

having reason to know that the device or equipment is primarily of assistance in the

unauthorized decryption of satellite cable programming, or direct-to-home satellite services

[violated the statute] . . . .” 47 U.S.C. §605(e)(4).

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United States District Court

For the Northern District of California

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C04-3829 Report and Recommendation Page 6 of 10

Some courts find that in order to show a violation of § 605(e)(4) a plaintiff has the

burden of proving three elements: (1) the defendant distributed or sold equipment; (2) the

equipment primarily assisted in decrypting satellite signals; and (3) the defendant knew or had

reason to know that the equipment primarily aided the unauthorized use of such signals. See

DirecTV, Inc., v. Hendrix, 2005 WL 757562 (N.D.Cal. 2005); DirecTV, Inc., v. Little, No. CV03-2407, RMW U.S. Dist. LEXIS 16350 at 17 (N.D.Cal.). According to some courts the

purpose of § 605(e)(4) is to target upstream manufacturers and distributors of Pirate Access

Devices. See e.g. Hendrix at *4. 

In DirecTV v. Oliver, 2005 WL 1126786 (N.D. Cal.), a recent case in this district

factually similar to this case, the Defendant was sued for a violation of § 605(e)(4) for the

purchase of one Pirate Access Device. The court found that the act of installing and activating

the device did not constitute the type of manufacturing and distribution the statute is meant to

prohibit. Id. at *4. Because “[t]here must be a sufficient basis in the pleadings for the judgment

to be entered,” id. citing Nishimatsu Const. Co., Ltd. V. Houston Nat. Bank, 515 F.2d 1200,

1206 (5th Cir. 1975), the court found insufficient to state a claim under § 605(e)(4) Plaintiff’s

assertions that by inserting a Pirate Access Device into a valid DirecTV Receiver Defendant

engaged in the unlawful assembly or modification of a that device. A sufficient basis in the

pleadings would require that a plaintiff allege that a defendant acted as an upstream

manufacturer or distributor. Id.

In this case, as in Oliver, Plaintiff claims that “by removing and inserting Pirate Access

Devices . . . or inserting illegally programmed Access Cards into valid DIRECTV Receivers,

Defendant engaged in the unlawful assembly or modification of devices primarily of

assistance in the unauthorized decryption of satellite programming.” (Complaint at 6). 

By defaulting Defendant admits to these contentions. Under the test laid out in Little

and Hendrix this would not be a violation of § 605(e)(4) because Defendant is not acting as

an upstream manufacturer or distributor. Plaintiff submits evidence to show that Defendant

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C04-3829 Report and Recommendation Page 7 of 10

actively engaged in conversations on piracy websites for the purpose of learning how to

modify an Access Card. For this evidence to be sufficient under Oliver it must show that

Defendant acted as an upstream manufacturer or distributor. Defendant’s internet

conversations indicate that he is an individual user learning how to personally use a device,

not a manufacturer or distributor. 

Plaintiff argues that the three-pronged test is an incorrect interpretation of the language

of § 605(e)(4). Citing DirecTV, Inc. v. Robson, 420 F.3d 532 (5th Cir. 2005), Plaintiff asserts

that this test ignores the statutory language specifically prohibiting assembly and modification,

added in a 1988 amendment to the section. Plaintiff contends also that the Little and Hendrix

decisions incorrectly rely on International Cablevision, Inc. v. Sykes, 75 F.3d 123 (2nd Cir.

1996) and Allarcom Pay Television, Ltd. v. General Instrument Corp., 69 F.3d 381 (9th Cir.

1995), in formulating the test. Both of these appellate courts were asked to determine only if

the distribution of a device was a violation of § 605(e)(4), and not whether modification would

similarly be a violation. Plaintiff argues the restriction of the statute to sellers and distributors is

inappropriate in this case. 

Defendant admits to modification of a Pirate Access Device by his default as

evidenced by his internet communications. The question before this court is whether to follow

the reasoning of the Fifth Circuit, and find that an individual modifying one device is in violation

of § 605(e)(4), or to follow the reasoning of multiple other courts that focus on up-stream

manufacturers and distributors, not end-users. Given the plain language of the statute this

Court agrees with the reasoning of the Fifth Circuit and finds that an individual user may be

liable under § 605(e)(4) for modification of a Pirate Access Device for personal. Defendant

admits by default to the modification and assembly of a Pirate Access Device. Because it is

unnecessary to allege that Defendant is an upstream manufacturer or distributor liability is

appropriate under this section.

C. Damages

Damages are appropriate under § 2520. Section 2520(c)(2) states that “in any other

action under this section, the court may assess as damages whichever is the greater of (A)

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2 Plaintiff calculates its actual damages as $5,828.22. This is 774 days multiplied by $7.53, the daily

charge for a DirecTV high-end legitimate user.

C04-3829 Report and Recommendation Page 8 of 10

the sum of the actual damages suffered by the plaintiff and any profits made by the violator as

a result of the violation;2 or (B) statutory damages of whichever is the greater of $100 a day for

each day of violation or $10,000.00.” Plaintiff’s complaint and subsequent Motion for Default

Judgment request $10,000.00 statutory damages. Plaintiff calculates the per diem charge to

be $77,400.00 which is $100.00 per day for a total of 774 days, the amount of time between

Defendant’s purchase date and the date DirecTV was able to deactivate the device. Some

courts find that any grant of damages is discretionary and not mandatory. DirecTV v.

Grosman, 2005 WL 1230791, 2 (N.D. Cal. 2005); DirecTV v. Brown, 371 F.3d 814, 817 (11th

Cir. 2004). 

Plaintiff requests statutory damages, not actual damages, for a violation of §605(e)(4).

Damages are appropriate under 47 U.S.C. § 605(e)(3)(C)(i)(II) which provides for “statutory

damages in a sum not less than $10,000, or more than $100,000, as the court considers just”

for a violation of § 605(e)(4). Plaintiff requests $10,000.00 statutory damages total, which can

be found under either § 605(e)(4) or §2520. Plaintiff does not request separate damages for

violations of the different statutes.

Considering the Eitel factors, damages are appropriate in this case. Plaintiff properly

alleges a violation of § 2520 and a violation of § 605(e)(4). The complaint is sufficient and the

claim appears to be meritorious. There is no apparent excusable neglect, nor is there any

strong policy argument which requires a decision on the merits. Given that Plaintiff provides

significant evidence to support their claim it is unlikely that a serious dispute over material

facts could develop. Finally, without judicial intervention, Plaintiff will be unable to collect the

$10,000.00 in damages that Congress deems appropriate under either of the statutes

discussed. 

D. Attorney Fees and Interest

Plaintiff also seeks attorney fees, which are recoverable under § 2520(b)(3) and §

605(e)(3)(B)(iii). Plaintiff requests $3,270.00 in attorney fees. Plaintiff supports the fee request

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United States District Court

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C04-3829 Report and Recommendation Page 9 of 10

with a declaration by Brandon Q. Tran, an attorney with Buchalter, Nemer, Fields & Younger,

representing Plaintiff in this matter. Plaintiff submits billing records to support a request for

$922.50 in pre-filing fees. (Exh. E to Colombo Dec.). Plaintiff submits no additional billing

records to support the motion preparation fees of $787.50 and the appearance fees of

$1,560.00

Finally, Plaintiff requests interest pursuant to 28 U.S.C. § 1961. Section 1961(a) allows

for interest “on any money judgment in a civil case recovered in a district court . . . . Such

interest shall be calculated from the date of the entry of the judgment, at a rate equal to the

weekly average 1-year constant maturity Treasury yield . . . for the calendar week preceding

the date of the judgment.” Given that money damages are appropriate, interest from the date

of judgment is likewise appropriate. 

II. Judicial Notice: Federal Rules of Evidence, Rule 201(d)

Plaintiff requests that this Court take judicial notice pursuant to Federal Rules of

Evidence, Rule 201(d), of the Temporary Restraining Order served on TestSat operated by

Jeff Ambler, an injunction requiring Mr. Ambler to submit all business records to DirecTV, and

an order on Defendant’s motion for summary judgment in an unrelated case, DirecTV, Inc. v.

Puccinelli, U.S.D.C. (D. Kan.), Case No. 03-2287-GTV. The Restraining Order and the

injunction both provide evidentiary support for Plaintiff’s claim. The motion for summary

judgment, however, is a legal analysis in a similar yet unrelated case. Given that Plaintiff

successfully argues its claims above, there is no apparent need to take judicial notice of an

unrelated case in a different jurisdiction.

III. Conclusion

This Court recommends to the district court that default judgment be granted pursuant

to 18 U.S.C. § 2520 which allows for a private right of action for a violation of § 2511. Plaintiff

properly alleges, and by defaulting Defendant admits, that he intentionally 

intercepted Plaintiff’s scrambled satellite broadcast in violation of the statute. 

As to 47 U.S.C. § 605(e)(4) this Court recommends that default judgment be granted.

Some courts find that, because the statute is focused on up-stream manufacturers and not

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C04-3829 Report and Recommendation Page 10 of 10

end-users, modifying a Pirate Access Device for personal use is not a violation. This Court

finds persuasive the reasoning of the Fifth Circuit which interprets the plain language of the

statute as concluding that any modification of the device, which is supported by evidence and

Defendant admits to by default, is a violation of § 605(e)(4). 

An award of $10,000 statutory damages is justified pursuant to either statute. 

Attorney fees may be awarded under § 2520(b)(3) or § 605(e)(3)(B)(iii). Attorney fees

are appropriate given that Plaintiff properly alleges a claim under § 2520 and § 605(e)(4).

This Court recommends granting attorney fees in the amount of $3,270.00.

This Court recommends granting interest pursuant to 28 U.S.C. § 1961 which allows for

post-judgment interest on any money judgment in a civil case recovered in a district court. 

This Court recommends taking judicial notice of only the restraining order and

injunction served on the operator of TestSat and not of DirecTV, Inc. v. Puccinelli, a similar

yet unrelated case.

Respectfully submitted,

DATED: December 16, 2005

__________________________________

 JAMES LARSON

 Chief United States Magistrate Judge

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