conversion in Stathis, the Plaintiff was unable to control or benefit from the abject of the

conversion (the corporation) and the Defendant had full control of the object of the conversion.

the same is true in the case from which Stathis drew the principle that intangible property can be

converted under Hinois law, That case, Conant v. Karris, 520 N.£.2d 757 (Ill. App. Ct. 1987),
was a lawsuit between two real estate developers. 520 N.E.2d at 758-59, The object of the
alleged conversion in Conant was certain confidential information that the plaintiff obtained
tclating to a specific property. Id. at 763. Plaintiff relied on this confidential information to offer
a purchase price of $1,500,000 for the property; Plaintiff's agent disclosed the confidential
information (which was contained on a computer printout) to the agent’s brother, who then

purchased the property for $1,600,000. Id. at 762. It is not clear whether the Court in Conant

beld that the confidential information (intangible) or the printouts containing the confidential
information (tangible) was the actual object of conversion. But what is clear is that the plaintiff

in Conant was deprived of the ability to obtain any benefit from the object of the alleged

conversion,

While the Illinois cases do not present an unbroken principle that intangible property can
never be the abject of conversion under Illinois law, there is a vast distance between those few
Iltinois cases which permit recovery for conversion of intangible property and the Plaintiff's
theory here, In every Illinois conversion case involving intangible property, the Plaintiff has
been deprived of the ability to benetit from the object of the alleged conversion. In this case,
DirecTV continued to benefit from its encrypted satellite television signal during the entirety of
these Defendants alleged wrongful misappropriation. The Illinois courts have not broadencd the

common law tort of conversion so far as to permit the Plaintiff to recover on this theory.


565 N.E. 2d 881, 885 (LI. App. Ct. 1990). “The basis of the tort was considered to be an
interference with possession of a chattel, or with the right to immediate possession.” Id, at
885. 86,

While the historical foundation of the tort would lead to a conclusion that only tangible
property (chattels) could be the object of conversion, the case law in I!linois is somewhat unclear
on the current principle. In 1985, the IMinois Supreme Court clearly held that a conversion action
lics only for “personal property which is tangible, or at least represented by or connected with
something tangible.” nrc Thebus, 483 N.E.2d 1258, 1260(IIL. 1985) (quoting 18 Am. Jur. 2d
Conversion sec, 9, al 164 (1965)). In a more recent case relating to alleged conversion of
academic rescarch, the Illinois Appellate Court reaffirmed the tangible property principle: “Our
supreme court has stated that an action for conversion lies only for personal property that is
tangible or at least represented by or connected with something tangible.” Bilut v. Northwestem
University, 692 N.E.2d 1327, 1334 (Ill. App. Ct, 1998) (citing In re Thebus, 483 N.E. 2d 1258
(1985)).

There is, however, at least one Nlinois case that appears to recognize actions for

conversion of intangible assets as legally cognizable. Sec Stathis v. Geldermann, Inc., 692

N,E.2d 798, 807 (Ill. App. Ct, 1998), The court in Stathis announced for the first (and only) time
in Ulinois that “parties may recover for conversion of intangible assets. See Conant _v. Karis, 520
N.E.2d 757 (1987) (holding that plaintiff could state a claim for conversion of confidential

information), The plaintiff in Stathis alleged that the defendant deprived him of his ownership

and control of a corporation in a corporate merger/takeover transaction. Sce Id, After the alleged

‘In Iinois courts, this would be only persuasive and not controlling precedent because
the Illinois Supreme Court has not abrogated the clear principle that only tangible property is the
proper object of conversion suits. In Re Thebus, 483 N.E.2d 1258 (Ill, 1985).


CONCLUSION

For the reasons given above, the Motions to Dismiss Count V filed by Defendant Jay
Prassel and Defendant Andrew Puccinelli are granted.

Enter:

David H. Coar
United States District Judge

Dated: November 10, 2003



1 Minate Oypr beam (rt

United States District Court, Northern District of Ilinois

cd Judge David H. Coar Sitting Judge if Other
or Magistrate Judge than Assigned Judge
CASE NUMBER 03 C 3442 DATE 11/10/2003

Directv, Inc. vs. Patel, et al.

MOTION:

(In the fotinwing box (a) indicate the party tiling the motion, c.g... plaintiff, defendant, ‘rd party plaintiff, and (b) state briefly the nature
of the motion being presented.|

DOCKET ENTRY:

(1) o Filed motion of [ use listing in “Motion” box above.]
Q) ao Brief in support of motion due
(3) a] Answer brief to motion due . Reply to answer brief due. _
(0) o Ruling/Hearing on set for at
(5) mn Status hearing[held/continued to] [set for/re-set for] on set for at
(6) a Pretrial conference[held/continued to] [set for/re-set for] on set for at_. .
(7) QO Trial[set for’re-set for] on at
(8) u [Bench’Jury trial] (Hearing) held/continued to at
(Y) o ‘This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]
OFRCP4(m) ClLocal Rule 41.1 CO FRCP41(a)(1) 0 FRCP41(4j(2).
(10) i | [Other docket entry] For the reasons given in the attached memorandum opinion, the Motions to Dismiss
Counts Ill and V [Doe. 15, Doc. 16] are granted in part, )
(11) [For further detail see order attached to the original minute order,]
¥7 | No notices required, advised in apen cau, Document
Number
No noices required
Lge, nites of notices
Notices mailed hy judge's stat! Ni 12 703
Notified counsel by telephane. . sf

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Mail AQ 450 form,

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

DIRECTY, Inc., )
) No. 03 C 3442
Plaintiff, )
) HONORABLE DAVID H. COAR
Y. )
)
DAVE PATEL, et al. }
)
)
Defendants. )

MEMORANDUM OPINION AND ORDER

Plaintiff DirecTV, Inc. filed this lawsuit against cight defendants in May 2003. Two of
those Defendants, Andrew Puccinelli and Jay Prassel, have now moved to dismiss counts LI] and
V of Plaintiff's Complaint. The Motion to Dismiss Count II was denied on September 30, 2003,
but the Court ordered a briefing schedule on the Motion to Dismiss Count V. Briefing on the
issue is now complete and it is ripe for decision,

DISCUSSION

Plaintiff DirecTV, Inc. (“PlaintifF’ or “DirecTV” filed a five count complaint against all
defendants. ‘This lawsuit is part of a massive nationwide litigation campaign that DirecTV is
undertaking to prolect its satellite cable television system against piracy. 1n Count V of this
Complaint, DirecTV alleges that these Defendants “unlawfully converted Defendant's property
for their own commercial use and benefit.” Pl. Comp. | 47. The object of the alleged conversion
is DirecTV’s encrypted satellite signal

Under Illinois law, a cause of action for conversion requires proof of the following

clements: “(1) a right in the property; (2) the right to immediate, absolute, and unconditional

Ke


possession of the property; (3) defendant's unauthorized and wrongful assumption of control,
dominion, or ownership over the property; and (4) a demand for possession.” Stathis v.
Geldermann, Inc., 692 N.E.2d 798, 806 (TH. App. Ct. 1998).

Nefendants argue that Plaintiff cannot state a cause of action for conversion under [Ilinois
Jaw because the object of the conversion is not tangible property. In response, the Plaintiff
wrongly asserts that Defendant is “without any caselaw to support his position” and rightly
asserts that “other jurisdictions have found otherwise" with respect to conversion of satellite
signals, Resp. Mot. Dismiss Counts Il & V, at 10. In their motions, both defendants cited to
INinois cases for the proposition that conversion in Illinois is only available for tangible property.
The other jurisdictions (Massachusetts and California) that Plaintiff highlights provide relevant
precedent, but it is far from controlling. On what amounts to a common law conversion claim
filed in federal court, the court will apply the law of the jurisdiction in which it sits, which for
this court is Illinois. In the two federal cases that Plaintiff cites, the district courts applied the
state law of the jurisdictions in which they sil to support recovery on a conversion theory. See

Quincy Cablevision, Inc. v. Sully’s Bar, Inc,, 650 F, Supp, 838, 849 (D. Mass. 1986) (holding

that Massachusetts law permits recovery for conversion of satellite signals); Don King
Productions/Kingvision y. Lovato, 911 F. Supp. 419, 423 (N.D. Cal. 1995) (holding that

Cah fornia law permits recovery for conversion of satellite signals). While the law of these other
states supports Plaintiff's position here, the Plaintiff has failed to provide any analysis of the

requirements of Tlinois law. Since it is Illinois law that will govern, the Court will proceed with

its own analysis of Illinois law,
Conversion in Ilinois is “based on the common law tort of trover, which originated as a

remedy against the finder of lost goods who refused to return them.” General Motors v. Douglas,