Opinion ID: 610806
Heading Depth: 2
Heading Rank: 1

Heading: The Events and the Lawsuit

Text: 6 In 1990, Cablevision had received information that Sykes was selling cable television black boxes, i.e., devices that would permit subscribers to view programs broadcast on premium channels without paying Cablevision for these services. Accordingly, in October 1990, Cablevision sent a private investigator, Sandra Helsel, to Sykes's place of business, where she told Sykes she wanted to purchase a cable television black box. Before selling the device to her, Sykes ascertained that she lived in Tonawanda rather than Buffalo, which made a difference as to the type of decoding device she would need. He sold her a black box for $250 and gave her an instruction sheet on how to connect it to a video recorder and a television set. Later testing by Helsel proved that the device decoded Cablevision's scrambled signals. 7 Helsel also told Sykes she had a friend in Buffalo who might be interested in purchasing such a device if the black box Helsel had just purchased worked well. Sykes promptly gave Helsel, without charge, a yellow tag for her friend and instructed her how to install it in the friend's cable box in Buffalo. He said it would allow reception of all channels except Disney. Helsel tape-recorded the entire conversation with Sykes. 8 In December 1990, Cablevision commenced the present action, asserting that Sykes's sale to Helsel violated, inter alia, 47 U.S.C. §§ 553(a)(1) and 605(e)(4). The complaint principally requested declaratory, injunctive, and monetary relief under 47 U.S.C. § 553(c) (1988) and id. § 605. Under § 605(e), Cablevision requested (a) actual damages plus Sykes's profits on the sales of all such unauthorized decoding devices, or, alternatively at Cablevision's election, statutory damages in the amount of $100,000 for each such violation, and (b) costs and attorneys' fees. After obtaining a preliminary injunction prohibiting Sykes from making any further unlawful sales of decoders, Cablevision moved for summary judgment. The motion was supported by, inter alia, an affidavit by Helsel, describing her visit to Sykes's shop, as summarized above, and attaching a transcript of the recorded conversation with Sykes. Helsel also stated that when she asked Sykes for a guarantee that the device she purchased would work, he stated that he had  'at least [a] thousand'  such devices and that if the one she bought did not work it could be exchanged. (Affidavit of Sandra Helsel, dated April 30, 1991, p 7.) 9 In opposition to the motion, Sykes submitted an affidavit in which he admitted selling the black box to Helsel in October 1990, but stated that he had purchased it several months earlier for approximately $250 at the behest of a special agent of the Federal Bureau of Investigation (FBI), with the understanding that the FBI would reimburse him for it. Sykes turned the unit over to the agent, who returned it to Sykes a few days later, saying that he had taken it to Cablevision for testing and that it did indeed decode Cablevision's signals. According to Sykes, the agent said he would check to see whether money was available to reimburse Sykes but was unsuccessful: 10 5. Several months later, after checking with the [agent] on several occasions and being told again in each instance that monies were not available for reimbursement, he told me that there would be no monies available to reimburse me. I then sold the unit to [Helsel]. 11 6. I accrued no profit, nor do I have employees or agents or a network to manufacture or distribute or supply in any way the unit involved. 12 (Affidavit of John Sykes, dated July 12, 1991, pp 5, 6.) Sykes's position was that he had made the sale to Helsel only so that he would not sustain a loss. He denied being in the business of selling black boxes and denied having told Helsel that he had additional black boxes for sale. 13 Sykes also presented an affidavit from FBI Special Agent Glen C. Reukauf, which in part confirmed Sykes's affidavit, though it placed Sykes's acquisition of a decoding device for Reukauf in 1987 rather than in 1990. Reukauf stated that from 1984 to sometime in 1987, Sykes had occasionally obtained information for him to assist in investigations into violations of federal statutes prohibiting wire fraud and the interception of wire and electronic communications. According to Reukauf, in 1987 Sykes advised him that certain local individuals had developed a device to descramble an encryption scheme recently adopted by Cablevision, and Sykes furnished Reukauf with such a black box. Reukauf gave the box to one of Cablevision's investigators, who in turn gave it to a Cablevision technician for testing. Cablevision then returned the device to the detective, who returned the box to Reukauf, informing him that it did decode Cablevision's signal. Reukauf stated that he returned it to Sykes in the belief 14 that the black box had been loaned to Mr. Sykes by someone who was involved in the illegal distribution of cable television decoders. It was your affiant's belief at that time, that Mr. Sykes would return the black box to the original distributor. 15 Your Affiant was unaware at that time, that Mr. Sykes had purchased the black box with his personal funds. Mr. Sykes was never authorized by your Affiant, or anyone from the FBI, to resell the aforementioned cable television decoder, in an effort to recoup the funds which Mr. Sykes had expended for the purpose of purchasing the decoder. 16 (Affidavit of Glen C. Reukauf, sworn to August 28, 1991, p 8.)In a decision dated February 5, 1992 (Summary Judgment Decision), the district court denied Cablevision's motion for summary judgment, stating, in pertinent part, as follows: 17 The fact that Mr. Sykes sold the box to Ms. Helsel is not contested, and it was clear from her affidavit that Sykes knew what the device was, what it would do, and that he clearly intended to violate the law. 18 Summary Judgment Decision at 4. The court concluded, however, that there were questions of fact as to when and how the black box had come into Sykes's possession. It stated that [i]f in fact [Sykes] acted in behalf of the government in obtaining the device, there may be a good defense to this action. There must be a trial or hearing to resolve this material fact which is in dispute. Id. 19