disclosure, or use. /d. at 1027-28.

The Oceanic court questioned the continued vitality of Flowers, noting that it was
decided at a time when § 2520 contained language that directly mirrored the activities listed in
§ 2511, including procurement of another to intercept, disclose, or use another’s communication.
Id. at 1027. Subsequent to the decision in Flowers, Congress amended § 2520 to eliminate any
mention of civil liability based on procuring interception, disclosure, or use. The Oceanic court
attempted to capture the different situations by stating, “Clearly, § 2520 only confers a private
cause of action upon persons when the action is brought against parties that have violated the
provisions of §§ 2510-2521.” Jd. The court ignored the fact that this statement is not accurate
even in the limited context of § 2511 actions. The removal of the reference to procuring another
person to intercept, disclose, or use another’s communication from § 2520 was not accompanied
by a removal of analogous language from § 2511; a person who procures another to perform the
acts prohibited by § 2511 still faces criminal liability, even though the possibility of civil liability
has clearly been eliminated. Directv, Inc. v. Delaney, No. 03 C 3444, at 6 (N.D. Ill. Nov. 20,
2003).

However, the Oceanic court, in its subsequent discussion of a private right of action
under § 2512, took its preceding statement at face value. The court’s examination is limited
solely to the issue of whether the sale of cable descramblers, as opposed to some other device
more directly associated with wiretapping, constituted a violation of § 2512. The court
concluded that because a cable descrambler could be a device whose design “renders it primarily
useful for the purpose of surreptitious interception of wire, oral, or electronic communications,”

there must be a private right of action under § 2520 for violations of § 2512. /d. at 1028-29. The



“
e

the principle that intangible property can be converted under Illinois law, the object of the alleged
conversion was certain confidential information that the plaintiff obtained relating to a specific
property, 165 Ill. App. 3d 783, 791-92, 520 N.E. 2d 757, 763 (IIL. App. 1* Dist. 1987). The
plaintiff relied on this confidential information to offer a purchase price of $1,500,000 for the
property, but the plaintiff's agent disclosed the confidential information to the agent’s brother,
who then purchased the property for $1,600,000. /d. at 791, 520 N.E. 2d at 762.

While both Stathis and Conant clearly demonstrate that intangible property may
sometimes be the object of conversion under Illinois law, these cases are distinguishable on the
facts from the instant case. In Stathis and Conant, the plaintiffs were deprived of the ability to
benefit from the objects of the alleged conversions because the defendants had assumed full
control over the objects. Here, however, Directv has not been deprived of the ability to benefit
from its satellite signals, nor have the defendants assumed control, dominion, or ownership over
those signals. Thus, the court holds that Directv has failed to state a claim for conversion under
Tllinois law.

Conclusion

For the reasons stated above, the court grants the Motion to Dismiss Counts II and V,

filed by defendants Heil and Hannagan (Motion No. 18).

ENTER:

Spat (+A phen

IOAN HUMPHREY LEFKOW
United States District Judge

Dated: January 23, 2004



hy

Count II and Count III, Directv relies on 18 U.S.C. § 2520(a), which provides, in pertinent part,
that
[A]ny person whose . . . electronic communication is intercepted,
disclosed, or intentionally, 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.

In their motion to dismiss Count III, defendants contend that § 2520(a) does not provide a
private right of action for violations of § 2512. Defendants rely primarily on Flowers v. Tandy
Corp., 773 F.2d 585 (4" Cir. 1985). In Flowers, the Fourth Circuit held that § 2520(a)
“expressly limits those against whom private action lies to the person who ‘intercepts, discloses,
or uses... such communication.” /d. at 588. The court reasoned that a broad construction of
§ 2520(a) would support a civil action against those who violate § 2512 (manufacture, assembly,
possession, or sale of a prohibited device) but who do not actually intercept electronic
communications in violation of § 2511. Jd. at 589. The court held that the plain language of the
§ 2520(a) did not support such an outcome and, thus, held that § 2520(a) does not provide a
private cause of action for violations of § 2512. Id.

Directv argues that § 2520 provides a private cause of action for any “violation of this
chapter,” which includes § 2512. Directv seeks support for this view in Oceanic Cablevision,
Inc. v. M.D. Elec.,77\ F. Supp. 1019 (D. Neb. 1991). In Oceanic, the court was faced with a
12(b)(6) challenge to two counts of a complaint against a distributor of cable descramblers: one
premised on § 2511 and another premised on § 2512. In its analysis of the viability of the § 2511

count, the court concluded that the plaintiff had not stated a cognizable claim because the

distributor was not alleged to have engaged in any of the activities listed in § 2520—interception,


nd

court reached this conclusion without any further analysis of whether such a sale was equivalent
to an interception, disclosure, or intentional use of a communication in violation of the statute.
Delaney, No. 03 C 3444, at 6-7.

Later courts have followed in Oceanic’s footsteps, relying on the erroneous statement in
that opinion that a violation of any of the provisions of the Wiretap Act allow for the potential of
civil recovery under § 2520. See Directv v. EQ Stuff, Inc., 207 F. Supp 1077, 1084 (C.D. Cal.
2002); Directv, Inc. v. Gatsiolis, No. 03 C 3534, 2003 WL 22111097, at *4 (Sept. 10,
2003)(Coar, J.). This conclusion is contrary to the plain language of the statute. Section 2520(a)
authorizes relief only for a person “whose wire, oral or electronic communication is intercepted,
disclosed, or intentionally used in violation of this chapter.” Thus, the private right of action
attaches only after the fact of interception, disclosure or use in violation of the Wiretap Act.
Delaney, No. 03 C 3444, at 7. After this initial act is complete, the aggrieved party may pursue
civil remedies against the person who “engaged in that violation.” As a matter of grammar and
sentence structure, the phrase “that violation” must refer to the interception, disclosure, or
intentional use of a communication in violation of this chapter referred to earlier in the sentence.
Directv v. Beecher, --- F. Supp. 2d --- , 2003 WL 23094715 (S.D. Ind. Nov. 7. 2003). Section
2512 criminalizes only the production, sale, or possession of devices whose primary purpose is to
perform the interception. These acts occur separate and apart from any actual interception, and
persons who engage in them may not engage in violations cited in § 2520—interception,
disclosure, or use prohibited by the Wiretap Act. Delaney, No. 03 C 3444, at 7-8. Thus, this

court finds that § 2520 does not confer a private right of action for violations of § 2512.



“ United States District Court, Northern District of Illinois

Name of Assigned Jud th if
vor Magatrate Judge Joan H. Lefkow “han Amigned Judge
CASE NUMBER 03 C 3441 DATE 1/23/2004
CASE Directv vs. Maraffino, et al.
TITLE

{nthe following box (a) indicate the party filing the moti
of the motion being Present Ke

€.8» plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature
MOTION: oh

DOCKET ENTRY: i !

qd) Qo Filed motion of [ use listing in “Motion” box above.]

Q) Oo Brief in support of motion due___. ih |

@) Oo Answer brief to motion due___. Reply to answer brief due

(4) Oo Ruling/Hearing on setfor at

(5) QO Status hearing[held/continued to] [set for/re-set for] on setfor at

(6) a Pretrial conference[held/continued to] [set for/re-set for]on___—ssetfor_——s at. Ss
(o) a Trial[set for/re-set for]on__—__—at

(8) o [Bench/Jury trial] [Hearing] held/continued to___at

(9) im} This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to)

OFRCP4(m) (Local Rule 41.1. CIFRCP41(aX1) CFRCP41(a)(2).

ao [Other docket entry] _ Enter Memorandum Opinion and Order. Defendants Heil and Hannagan’s
motion [18-1] to dismiss Counts III and V is granted. Defendants Heil and Hannagan are dismissed from
this action without prejudice and plaintiff may file and serve separate lawsuit naming them as defendants
within 14 days of this order.

ay @ {For further detail see order attached to the original minute order.]

No notices required, advised in open court.

] |

pod
No notices required, he
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oY | Notices mailed by judge’s staff.

Notified counsel by telephone. | d

Docketing to mail notices. Lund 9 dalaasia sn
Mail AO 450 form, ;
Copy to judge/magistrate judge, 8gie § We: 12 NYE Ww
wo coon br o3-oa7rg
inuials f Date/time received in
1) central Clerk's Office



“4

2. Common-Law Conversion

Defendants also move to dismiss Count V, which purports to state a claim for common-
law conversion of its property. To state a claim for conversion, Directv must allege that it has a
right to the property, it has an absolute and unconditional right to the immediate possession of
the property, it has made a demand for possession, and defendants have wrongfully and without
authorization assumed control, dominion, or ownership over the property. Cirrincione v.
Johnson, 184 Ill. 2d 109, 114, 703 N.E. 2d 67, 70 (Il. 1998). Defendants argue that the property
at issue in this case—“digitized video and audio signals”— are not a proper subject for a
conversion claim. Defendants rely on a statement of the Illinois Supreme Court in Jn re Thebus
that “an action for conversion lies only for personal property which is tangible, or at least
represented by or connected with something tangible.” 483 N.E. 2d 1258, 1260 (Ill. 1985). Ina
more recent case relating to alleged conversion of academic research, the Illinois Appellate Court
reaffirmed the principle that “conversion lies only for personal property that is tangible or at least
represented by something tangible.” Blut v. Northwestern University, 296 Ill. App. 3d 42, 52, 692
N.E. 2d 1327, 1334 (I. App. 1* Dist. 1998).

However, in at least one case, an Illinois court has stated explicitly that “parties may
recover for conversion of intangible assets.” Stathis v. Geldermann, Inc., 295 Ill. App. 3d 844,
856, 692 N.E. 2d 798, 807 (Ill. App. 1" Dist. 1998). The plaintiff in Stathis alleged that the
defendant deprived him of his ownership and control of a corporation in a corporate
merger/takeover transaction. See id. After the alleged conversion, the plaintiff was unable to
control or benefit from the object of the conversion (the corporation) and the defendant had full

control over the object of the conversion. In Conant v. Karris, the case from which Stathis drew



UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION 7 S 7 ~ 7}

SAN 2 6 2004

DIRECTY, INC., )
)
Plaintiff, )
) Case No. 03 C 3441
) Judge Joan Humphrey Lefkow
TONY MARAFFINO, et al., )
)
Defendants. )

MEMORANDUM OPINION AND ORDER

Plaintiff Directv, Inc. (“Directv”), a direct broadcast satellite television system, has filed a
five-count complaint against defendants for allegedly purchasing by mail and possessing and/or
using equipment capable of receiving and decrypting Directv’s satellite broadcast signal without
permission from or payment to Directv. Count III of the complaint alleges that defendants
violated provisions of 18 U.S.C. § 2512 and is brought under 18 U.S.C. § 2520. Count V of the
complaint alleges common-law conversion, Defendants Jeff Heil and Jerome Hannigan
(hereinafter “‘defendants”) now move to dismiss Counts Ii and V. For the reasons stated below,
the court grants the motion.

Legal Standard

A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) challenges the

sufficiency of the complaint for failure to state a claim upon which relief may be granted.

General Elec. Capital Corp. v. Lease Resolution Corp., 128 F.3d 1074, 1080 (7" Cir. 1997).

| AX



Dismissal is appropriate only if it appears beyond a doubt that the plaintiff can prove no set of

facts in support of his claim that would entitle him to relief. Conley v. Gibson, 355 U.S. 41, 45-

46 (1957); Kennedy v. Nat'l Juvenile Det, Ass'n, 187 F.3d 690, 695 (7" Cir. 1999). In ruling on

the motion, the court accepts as true all well pleaded facts alleged in the complaint, and it draws
|

all reasonable inferences from those facts in favor of the plaintiff. Jackson v. E.J. Brach Corp.,

176 F.3d 971, 977 (7" Cir. 1999), Zemke v. City of Chicago, 100 F.3d 511, 513 (7" Cir. 1996).

Discussion

1, Private Right of Action under 18 U.S.C, § 2512

Count III seeks to recover damages for alleged violations of 18 U.S.C. § 2512(1)(b). This
section provides that a person commits a federal crime if he intentionally

manufactures, assembles, possesses, or sells any electronic, mechanical, or other

device, knowing or having reasons 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 . . . .”
Directv also alleges in Count I] that the defendants actually intercepted Directv’s
communications in violation of 18 U.S.C. § 2511. Accordingly, Count II constitutes an
independent cause of action only if Directv can recover for the defendant’s mere possession (or
manufacture, possession or sale) of a prohibited device, without proof that the defendant
participated in actual interception, disclosure, or use of an electronic communication, See
Directv v. Beecher, --- F. Supp. 2d ---, 2003 WL 23094715, at *1 (S.D. Ind. Nov. 7, 2003).

Section 2512 is a criminal statute and by itself does not allow a private party to recover

damages for behavior that violates its terms. To support its claim for civil remedies on both