US. Dist. LEXIS 6360, No. 03 C 8396 (N.D. Ill. Apr. 13, 2004) (Moran, J.); Directv, Inc. v.
Rath, 2004 U.S. Dist. LEXIS 6151, No. 03 C 50299 (N.D. Ill. Apr. 12, 2004) (Reinhard, J.);
Directy, Inc. v. Horn, 2004 U.S. Dist. LEXIS 8225, No. 03 C 7803 (N.D. Ill. May 6, 2004) (Der-
Yeghiayan, J.).

In contrast, however, other courts have found that § 2520 does allow a private right of
action for mere possession under § 2512 because of the language in § 2520 allowing a civil
remedy for use of a communication “in violation of this chapter.” See, e.g., Directv, Inc. v.
Dillon, 2004 U.S. Dist. LEXIS 7229, No. 03 C 8578 (N.D. Ill. Apr. 27, 2004) (Aspen, J.);
Directy, Inc. v. Dyrhaug, 2004 U.S. Dist. LEXIS 5008, No. 03 C 8389 (N_D. Ill. Mar. 26, 2004)
(Shadur, J.); Directv, Inc. v. Perez, 279 F. Supp. 2d 962 (N.D. Ill. 2003) (Coar, J.).

We are more persuaded by the majority’s interpretation of § 2520. The plain language of
§ 2520 indicates that a private cause of action may only be had after interception, disclosure or
use in violation of the Electronic Communications Privacy Act. Section 2512 criminalizes only
the production, sale or possession of equipment primarily useful for unscrambling protected
communications. These acts occur separately from interception and persons who engage in such
acts may never engage in violations of § 2520. Directv, Inc. v. Delaney, 2003 U.S. Dist. LEXIS
24262, at *10. Therefore, we conclude that there is no private right of action based on
allegations of mere possession of an unscrambling device in violation of § 2512.

Moreover, DirecTV has alleged that Dadamo violated 18 U.S.C. § 2511 in Count II.
Section 2511 criminalizes any intentional attempted interception or use of protected
communications. Thus, DirecTV may obtain relief under § 2511 if it can establish that Dadamo

used the unscrambling device to intercept DirecTV’s signals. This provides further support for



person commits a federal crime if he intentionally “manufactures, assembles, possesses, or sells
any electronic, mechanical, or other device, knowing or having reason to know that the design of
such device renders it primarily useful for the purpose of the surreptitious interception of wire,
oral, or electronic communications... .” 18 U.S.C. § 2512(1)(b). DirecTV asserts that it may
seek damages for Dadamo’s alleged violation of § 2512 pursuant to 18 U.S.C. § 2520, which
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... .” 18 U.S.C. §
2520(a).

Although the Seventh Circuit has not yet considered this issue, numerous courts in this
District have addressed it. The majority position is that § 2520 of the Electronic
Communications Privacy Act does not create a private cause of action based on mere possession
of an unscrambling device in violation of § 2512 because liability under § 2520 only arises ifa
defendant intentionally intercepts, discloses or uses a wire, oral or electronic communication in
violation of § 2511 of the Act, which punishes wrongful use of communications. See, e.g.,
Directv, Inc. v. Kamba, 2004 U.S. Dist. LEXIS 8937, No. 03 C 8402 (N.D. Ill. May 13, 2004)
(Manning, J.); Directv, Inc., v. Delaney, 2003 U.S. Dist. LEXIS 24262, No. 03 3444 (N.D. Ill.
Nov. 21, 2003) (Kocoras, J.); Directv, Inc. v. Castillo, 2004 U.S. Dist. LEXIS 8525, No. 03 C
3456 (NLD. Ill. Jan. 2, 2004) (St. Eve, J.); Directv, Inc. v. Bazzoli, 2004 U.S. Dist. LEXIS 801,
No. 03 C 3485 (N.D. Ill. Jan. 23, 2004) (Lefkow, J.); Directv, Inc. v. Hinton, 2004 U.S. LEXIS
6850, No. 03 C 8477 (N.D. Ill. Apr. 21, 2004) (Darrah, J.); Directv, Inc. v. Frey, 2004 U.S. Dist.

LEXIS 6366, No. 03 C 3476 (N.D. Ill. Apr. 14, 2004) (Zagel, J.); Directv, Inc. v. Hauser, 2004



the Court’s conclusion that there is no private right of action for mere possession in violation of §
2512. Accordingly, we grant the motion to dismiss Count III of DirecT V’s complaint.
Il. Common - Law Conversion

Dadamo also has asserted that Count V of DirecTV’s complaint should be dismissed
because DirecTV has failed to state a cause of action for conversion. To state a claim for
conversion under Illinois law, a plaintiff must allege: (1) a right to the property; (2) the plaintiff's
right to the immediate, absolute and unconditional possession of the property; (3) the defendant’s
unauthorized and wrongful assumption of control, dominion or ownership over the property; and
(4) a demand by the plaintiff for possession of the property. See Cirrincione v. Johnson, 184 Ill.
2d 109, 114 (1998). Dadamo argues that DirecTV has failed to properly allege any of these
elements.

Dadamo relies mainly on language from the Illinois Supreme Court decision, In Re
Thebus, 108 Ill. 2d 255 (1985). In that case, the court stated that an action for conversion
ordinarily “lies only for personal property which is tangible, or at least represented by or
connected with something tangible.” 108 Ill.2d at 260 (quoting 18 Am.Jur.2d Conversion § 9, at
164 (1965)). Dadamo asserts that the property at issue in this case — satellite signals — are
intangible, and therefore, it is impossible for him to exert absolute dominion or controj over
them. Dadamo further asserts that he cannot exert absolute contro] over these signals because
DirecTV broadcasts them all over the world, and even unlawful interception would not deprive
DirecTV from controlling these signals or its customers from receiving them.

The Illinois Appellate Court has reached conflicting results on the issue of whether an

action for conversion must involve tangible property. In Bilut v. Northwestern University, 296


Minute Qrder Form (06/57)

es

United States District Court, Northern District of Illinois

Name of Assigned Judge Sitting Judge if Other
or Magistrate Judge Wayne R. Andersen than Assigned Judge
CASE NUMBER 3C 8614 DATE 6/17/2004
CASE Directv, Inc. vs. Mark A. Dadamo
TITLE
[In the following box (a) indicate the party filing the motion, e.g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature
MOTION: of the motion being presented.)
DOCKET ENTRY:
(1) Oo Filed motion of [ use listing in “Motion” box above.]
(2) Oo Brief in support of motion due
(3) a Answer brief to motion due . Reply to answer brief due.
(4) im} Ruling/Hearing on set for at
(5) a Status hearing[held/continued to] [set for/re-set for] on set for at
(6) Q Pretrial conferencefheld/continued to] [set for/re-set for] on set for at
{7) o Trial[set for/re-set for] on at
(8) a [Bench/Jury trial] [Hearing] held/continued to at
(9) a This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]
OOFRCP4(m) OLocal Rule 41.1 CFRCP41(a)(1) CI) FRCP41(a)(2).
(0) «@ [Other docket entry] Enter MEMORANDUM, OPINION AND ORDER: Motion [13-1] to
dismiss Counts III and V of Directv’s complaint is granted.
ald [For further detail see order attached to the original minute order.]
No notices required, advised in open court.
No notices required, umber of notices
Notices mailed by judge’s staff. SUN 18 2004
Notified counsel by telephone. e docketed
wv | Docketing to mail notices,
Mail AO 450 form. mone) bccling tops initials
Copy to judge/magistrate judge. /
courtroom ae us LYRA nose Senet
TSA deputy’s AGS a
initials Sa mr
Date/tinne, received in
(ln seat Clots Office aang etna
Te



Ill. App. 3d 42 (1st Dist. 1998), the court restated the principle that an action for conversion lies
only for tangible personal property. 296 Ill. App. 3d at 52. However, the court recognized an
action for conversion of intangible assets in Stathis v. Geldermann, Inc., 295 Ill. App. 3d 844,
856 (1st Dist.1998) (holding that the plaintiff could state a claim for conversion of ownership and
control of a corporation in a corporate merger). See also Conant v. Karris, 165 Ill. App. 3d 783
(Ist Dist. 1987) (holding that confidential information could be the subject of conversion).

While these cases do not settle the issue of whether intangible property may be the
subject of conversion, we need not address this issue since DirecTV never was deprived of the
ability to benefit from its encrypted signals. In both Stathis and Conant, the plaintiffs were
entirely deprived of the ability to benefit from the property of the alleged conversions, Unlike
the plaintiffs in those cases, DirecTV has not alleged that it was unable to access or control its
signals, or that its transmissions to lawful subscribers were in any way affected by Dadamo’s
alleged wrongful interception. On the contrary, DirecTV continued to benefit from its
transmitted signals throughout Dadamo’s alleged interception. Therefore, DirecTV has not
properly alleged an action for conversion under Illinois law. Accordingly, we grant the motion to
dismiss Count V of DirecTV’s complaint.

CONCLUSION
For all of the foregoing reasons, the motion to dismiss Counts [IJ and V of DirecTV’s

complaint is granted.

(J. - CX
¢ Wayne R. Andersen
United States District Judge

pac uae 17, 2004



IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION D Bee
DIRECTV, INC., ) Ju ETED
) N 48 2004
Plaintiff, )
) No. 03 C 8614
vy. )
) Wayne R. Andersen
MARK A. DADAMO, ) District Judge
)
Defendant. )

MEMORANDUM, OPINION AND ORDER

Plaintiff DirecTV, Inc. (“DirecTV”) has filed a five-count complaint against Mark
Dadamo alleging violations of provisions of the Federal Communications Act of 1934, as
amended, 47 U.S.C. § 605, and the Electronic Communications Privacy Act, 18 U.S.C. §§ 2510-
2521, as well as conversion under Illinois law. Dadamo has moved to dismiss Counts III and V
of the complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). For the following
reasons, we grant the motion to dismiss.

BACKGROUND

For purposes of this motion, the following facts are taken as true. DirecTV is one of the
nation’s leading direct satellite broadcast systems distributing digitalized audio and video signals
to approximately 11 million subscribers nationwide. DirecTV’s satellite transmissions are
encrypted to prevent unauthorized viewing of its programming. These transmissions may be
lawfully viewed only by subscribers who have purchased specialized receiving equipment from
DirecTV or on a pay-per-view basis. DirecTV’s satellite receivers contain an access card
developed specifically for the DirecTV satellite system. This access card stores information and

permits DirecTV’s customers to view the programming for which they have paid.

Ky


In its complaint, DirecTV alleges that various companies and individuals have engaged in
the sale and manufacture of devices designed to unscramble DirecTV’s encryption measures
allowing purchasers to view DirecTV’s programming without paying subscription or pay-per-
view fees. In Count Ill of its complaint, DirecTV claims that it is entitled to civil remedies for
Dadamo’s alleged possession of such an unscrambling device in violation of 18 U.S.C. § 2512 of
the Electronic Communications Privacy Act. Count V of DirecTV’s complaint is based on
Dadamo's alleged conversion of DirecTV’s satellite signals. Dadamo has moved to dismiss both
claims pursuant to Federal Rule of Civil Procedure 12(b)(6).

STANDARD OF REVIEW

In ruling on a motion to dismiss, the Court must accept all factual allegations in the
complaint as true and draw all reasonable inferences in favor of the plaintiff. Szumny v. Am.

Gen. Fin., Inc., 246 F.3d 1065, 1067 (7th Cir. 2001). The purpose of a motion to dismiss is not
to decide the merits of the challenged claims but to test the sufficiency of the complaint. Weiler
v. Household Fin. Corp., 101 F.3d 519, 524 n.1 (7th Cir. 1996). A court will grant a motion to
dismiss only if it is impossible for the plaintiff to prevail under any set of facts that could be
proven consistent with the allegations. Forseth v. Village of Sussex, 199 F.3d 363, 368 (7th Cir.
2000).

DISCUSSION
L Private Right of Action under 18 U.S.C. § 2512

In his motion to dismiss, Dadamo has asserted that Count III of DirecTV’s complaint
should be dismissed because there is no civil cause of action for possession of equipment under

18 U.S.C. § 2512 of the Electronic Communications Privacy Act. This section provides that a