Court Opinion

ID: 3038291
Source: CourtListenerOpinion
Date Created: 2015-10-13 22:58:14.80157+00
Date Added: 2024-06-11T09:42:59.440482
License: Public Domain

FOR PUBLICATION
  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

LAWRENCE FREEMAN; MICHAEL              
SCHERER, on behalf of themselves
                                             No. 04-56500
and all persons similarly situated,
              Plaintiffs-Appellants,
                                              D.C. No.
                                           CV-04-02374-RGK
                 v.
                                              OPINION
DIRECTV, INC.; ICG, INC.,
             Defendants-Appellees.
                                       
        Appeal from the United States District Court
           for the Central District of California
        R. Gary Klausner, District Judge, Presiding

                  Argued and Submitted
            June 6, 2006—Pasadena, California

                    Filed August 8, 2006

      Before: Stephen Reinhardt, Stephen S. Trott, and
          M. Margaret McKeown, Circuit Judges.

                   Opinion by Judge Trott

                            9031
9034              FREEMAN v. DIRECTV, INC.

                         COUNSEL

Jeffrey Wilens, Lakeshore Law Center, Yorba Linda, Califor-
nia, for the plaintiffs-appellants.

Michael E. Williams, Quinn Emanuel Urquhart Oliver &
Hedges, LLP, Los Angeles, California, for the defendants-
appellees.

                         OPINION

TROTT, Circuit Judge:

   This case requires us to determine whether sections of the
Electronic Communications Privacy Act (“ECPA”), 18 U.S.C.
§§ 2702 and 2707, provide for a private cause of action
against those who aid and abet, or conspire with, electronic
communications service providers in unlawfully disseminat-
ing the contents of electronic communications. The language
of §§ 2702 and 2707 identifies unambiguously who is subject
to liability. Furthermore, the legislative history and case law
is in accord with these sections’ clear directive. Accordingly,
we decline to read into the text of these code sections claims
                   FREEMAN v. DIRECTV, INC.                 9035
for secondary liability. Rather, we interpret the code to mean
what it plainly says.

                               I

   DirecTV is a provider of satellite digital television. To pro-
tect its service and prevent the unauthorized viewing of its
television programing, DirecTV encrypts its satellite trans-
missions. DirecTV actively pursues legal action against those
individuals involved in the unauthorized use, or in more com-
mon parlance, the pirating, of its encrypted transmissions.

   On June 24, 2003, DirecTV filed a lawsuit in Canada
against Daryl Gray. Gray operated a number of web sites
from his home in British Columbia, Canada. The web sites
allegedly offered information relating to the pirating of the
DirecTV signal. DirecTV’s complaint asserted that the web
sites provided information regarding all forms of “piracy tech-
nology” such as the use of equipment, software, and program-
ming codes, as well as “smart cards” specifically used to
access the DirecTV signal without paying for it. DirecTV
alleged also that one of the web sites—the “Pirate’s Den”—
run by Gray’s server located in his British Columbia home
provided an online meeting place for participants to discuss,
exchange, and post piracy technology information.

   Concerned with pirating activity, DirecTV applied to the
Supreme Court of British Columbia for an injunction and
order entitling DirecTV to seize Gray’s computers and the
data contained therein. On June 24, 2003, the court granted
DirecTV’s request, issuing what is referred to in Canada as an
Anton Piller Order. An Anton Piller Order operates as both an
injunction and a civil writ of seizure. Per this order, Gray was
enjoined from operating two web sites: www.dsschat.com and
www.piratesden.com. DirecTV was also able to enjoin Gray
from a number of other activities relating to the accessing or
facilitating of piracy technology or information.
9036               FREEMAN v. DIRECTV, INC.
   In addition, the order granted DirecTV the right to enter
Gray’s offices to “search for, examine, and remove or copy”
evidence of piracy-related activities including “the web sites,
databases contained therein, electronic storage media and
computer equipment.” The order entitled DirecTV to remove
or copy “any document, record, article, notes, information,
instructions, correspondence, sent and received, electronic
mail, howsoever stored, fixed, expressed or embodied . . . .”
The order also allowed DirecTV to designate an entity to be
responsible for accessing, recording, and processing the data.
DirecTV designated ICG, the other defendant-appellee, as
that entity.

   The order provided that evidence seized from Gray was to
be held in the “custody of [DirecTV’s] solicitors pending the
trial of this action, or until such time this Court orders other-
wise.” The order also provided for the appointment of an
independent solicitor to carry out the terms of the seizure and
to take custody of the evidence. However, the independent
solicitor and DirecTV agreed independently that when the
order was executed, the evidence seized would be taken into
custody by the independent solicitor, not by DirecTV’s law-
yers. Finally, the order allowed for “any and all evidence
seized or delivered up pursuant to the order [to] be used in
subsequent civil proceedings commenced by DirecTV against
any third party, including, but not limited to proceedings
against [Gray’s] customers, suppliers, members, and subscrib-
ers.”

   On June 26, 2003, the Anton Piller Order was executed at
Gray’s residence in British Columbia, Canada. Gray’s com-
puter servers and hard drives containing electronic communi-
cations of individuals that had accessed Gray’s web sites were
seized and placed in the independent solicitor’s custody.

   Ultimately, the lawsuit between DirecTV and Gray was
resolved. In a separate agreement between Gray and DirecTV,
the evidence held by the independent solicitor was released to
                   FREEMAN v. DIRECTV, INC.                9037
DirecTV. Earlier in 2003, DirecTV filed a lawsuit in the
United States against Lawrence Freeman, for engaging in the
distribution of illegal signal theft devices. During the litiga-
tion against Freeman, in response to initial discovery requests,
DirecTV produced portions of the information gathered at
Gray’s residence. This information included the content of
communications posted on electronic message boards
accessed through Gray’s web sites. On March 16, 2004,
DirecTV and Freeman settled the lawsuit and entered into a
settlement agreement and release.

   On April 5, 2004, appellants, Freeman and Michael
Scherer, filed the underlying class action. In an amended
complaint, Scherer claimed that he, like Freeman, was a par-
ticipant on the message boards and web sites run by Gray.
Freeman and Scherer asserted that the sharing of data from
Gray to DirecTV was not authorized by the Anton Piller
Order because DirecTV had agreed that the evidence would
be in custody of the independent solicitor instead of Direc-
TV’s solicitors and that it was only released pursuant to the
agreement between Gray and DirecTV. Freeman and Scherer
claimed further that because there was a subsequent agree-
ment between Gray and DirecTV that allowed DirecTV to
receive the data from the independent solicitor, DirecTV con-
spired with and aided and abetted Gray in the disclosure of
the stored communications in violation of 18 U.S.C. § 2702.

   On June 7, 2004, DirecTV and ICG moved to dismiss the
action for failure to state a claim and in the alternative for
summary judgment. DirecTV and ICG argued that Freeman
and Scherer’s claims should be dismissed for three reasons: 1)
18 U.S.C. § 2702 does not provide for secondary liability
claims of conspiracy or aiding and abetting; 2) Freeman and
Scherer’s secondary claims were not properly pled; and 3) the
claims were barred under the Noerr-Pennington doctrine.

   On July 13, 2004, the district court granted the motion to
dismiss and ruled that the motion for summary judgment was,
9038               FREEMAN v. DIRECTV, INC.
therefore, moot. The district court granted the motion on the
basis of DirecTV and ICG’s first argument—that 18 U.S.C.
§ 2702 does not provide a basis for asserting conspiracy and
aiding and abetting claims. Freeman and Scherer timely
appealed that determination.

                               II

   A dismissal for failure to state a claim pursuant to Federal
Rule of Civil Procedure 12(b)(6) is reviewed de novo. See
Decker v. Advantage Fund, Ltd., 362 F.3d 593, 595-96 (9th
Cir. 2004). Thus, we review the matter anew, the same as if
it had not been heard before, and as if no decision previously
had been rendered. Ness v. Commissioner, 954 F.2d 1495,
1497 (9th Cir. 2002).

                              III

   Appellants, Freeman and Scherer, contend that the district
court erred in its determination that §§ 2702 and 2707 of the
ECPA do not create a cause of action for two secondary lia-
bility claims—aiding and abetting, or conspiring with an elec-
tronic communication service to disclose information.
Appellees, DirecTV and ICG, assert that the district court did
not err, and even if the court did err there are additional inde-
pendent grounds upon which we can affirm the dismissal.
DirecTV and ICG argue also that if dismissal is inappropriate,
we should grant its summary judgment motion that was also
before the district court. DirecTV and ICG’s alternative argu-
ments are not necessary. The district court was correct:
§§ 2702 and 2707 should not be interpreted to include second-
ary liability claims. Thus, dismissal was proper and there is no
reason for us to address DirecTV and ICG’s alternative argu-
ments.

                               A

   [1] The language of 18 U.S.C. §§ 2702(a)(1) and 2707(a)
is straightforward. Section 2702(a)(1) prohibits a “person or
                   FREEMAN v. DIRECTV, INC.                  9039
entity providing an electronic communication service to the
public” from “knowingly divulg[ing] to any person or entity
the contents of a communication while in electronic storage
by that service.” Section 2707(a) imposes civil liability for
violating that prohibition:

    [A]ny provider of electronic communication service,
    subscriber, or other person aggrieved by any viola-
    tion of this chapter in which the conduct constituting
    the violation is engaged in with a knowing or inten-
    tional state of mind 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.

Here, because it is uncontroverted that neither DirecTV nor
ICG was a provider of the electronic communications service
that stored the communications that are the basis of Freeman
and Scherer’s claims, the question is simply whether this stat-
utory language creates a private right of action for conspiracy
or aiding and abetting—a question of first impression.

   “The starting point for [the] interpretation of a statute is
always its language.” Cmty. for Creative Non-Violence v.
Reid, 490 U.S. 730, 739 (1989). “If the plain language of a
statute renders its meaning reasonably clear, [we] will not
investigate further unless its application leads to unreasonable
or impracticable results.” United States v. Fei Ye, 436 F.3d
1117, 1120 (9th Cir. 2006) (internal quotation marks and cita-
tion omitted).

   [2] The text of §§ 2702(a)(1) and 2707(a) does not use the
terms “conspiracy” or “aiding and abetting.” Nevertheless,
Freeman and Scherer argue that Congress intended to create
a cause of action for secondary liability when it included in
§ 2707 the term “engaged.” In essence, Freeman and Scherer
contend that a person or entity who aids and abets or who
9040                FREEMAN v. DIRECTV, INC.
enters into a conspiracy is someone or something that is “en-
gaged” in a violation.

   [3] We decline to give the term “engaged” the broad con-
struction urged by Freeman and Scherer. Freeman and
Scherer cite no authority, nor could we find any, that support
such an interpretation. Moreover, such broad construction is
contrary to the context in which the term is used. Section
2707 states that a person “aggrieved by any violation of this
chapter in which the conduct constituting the violation is
engaged in with a knowing or intentional state of mind may”
pursue a civil cause of action to recover from the person or
entity “engaged in that violation such relief as may be appro-
priate.” The term “engaged” is used twice; both times the
term is used in conjunction with “violation.” Section 2707
does not define the violation—it provides, under certain cir-
cumstances, the remedy for a person aggrieved by a violation
that is defined in other sections, such as § 2702. Because there
is no language in § 2702 suggesting secondary liability, we
find no textual support for Freeman and Scherer’s contention
that Congress explicitly provided for aiding and abetting or
conspiracy claims. We turn, therefore, to Freeman and
Scherer’s other arguments.

                                B

   Even if the plain language does not provide for secondary
liability, Freeman and Scherer contend that it is proper for us
to read implicitly secondary liability into §§ 2702 and 2707.
Freeman and Scherer argue that we should allow for second-
ary liability because it is consistent with the statute’s structure
and subject matter.

  Freeman and Scherer’s argument that secondary liability
should be read into §§ 2702 and 2707 fails for four reasons.
First, the language of these statutory sections is unambiguous
regarding the question of who may be subject to liability, and
thus there is nothing to “read into.” Second, there is nothing
                   FREEMAN v. DIRECTV, INC.                 9041
unreasonable about limiting liability to persons or entities pro-
viding an electronic communication service to the public.
Third, the legislative reports further confirm that Congress did
not intend to create secondary liability specifically with
regard to this subject matter. Fourth, in cases where courts
have implicitly read into a statute secondary liability claims,
the statutes being interpreted in those cases have been sub-
stantially broader than either §§ 2702 or 2707 and were
accompanied by legislative history suggesting approval of
such claims.

   As set forth above, §§ 2702 and 2707 work in tandem to
impose civil liability on a defined group for specific conduct.
Section 2702 identifies a particular group—“a person or entity
providing an electronic communication service to the public.”
Section 2702 then proscribes this defined group from taking
certain action—“knowingly divulg[ing] to any person or
entity the contents of a communication” being stored. Section
2707 allows for persons aggrieved by a violation of § 2702 to
file a civil action provided the violation is “engaged in” with
a “knowing or intentional state of mind.”

    [4] There can be no question upon whom Congress
intended to impose liability—it is spelled out in plain and
unambiguous language. When “a statute is precise about who
. . . can be liable” courts should not implicitly read secondary
liability into the statute. Doe v. GTE Corp., 347 F.3d 655, 659
(7th Cir. 2003); see also Fei Ye, 436 F.3d at 1120 (providing
that there is no reason for further investigation of clear and
unambiguous statutory language “unless its application leads
to unreasonable or impracticable results.”). In addition to
being unambiguous, the application of §§ 2702 and 2707’s
plain language is not unreasonable or impractical. While Free-
man and Scherer may argue over the policy justifications
involved, they have not identified anything unreasonable or
impracticable about limiting liability to that defined class.
Indeed, it is logical to impose liability on electronic communi-
9042                     FREEMAN v. DIRECTV, INC.
cations providers that disclose the content of the communica-
tions that they are storing.

   [5] There is also nothing unreasonable about limiting liabil-
ity to the class of individuals or entities named by Congress
in a statute. As the Supreme Court explained in Central Bank
of Denver N.A. v. First Interstate Bank of Denver, N.A., if
Congress intended to impose secondary liability by targeting
aiding and abetting action, it certainly knows how to do it.
511 U.S. 164, 177 (1994) (“If, as respondents seem to say,
Congress intended to impose aiding and abetting liability, we
presume it would have used the words ‘aid’ and ‘abet’ in the
statutory text.”).1 As pointed out by the Supreme Court, Con-
gress has done just that on at least two occasions. See , e.g.,
18 U.S.C. § 2 (imposing the general criminal aiding and abet-
ting statute); 7 U.S.C. § 192(g) 1988 ed. and Supp. IV (civil
aiding and abetting provision found in the Packers and Stock-
yards Act). There is no explicit provision in §§ 2702 and 2707
or anywhere else in the ECPA, providing for secondary liabil-
ity. Accordingly, it is reasonable to conclude that Congress
knew what it was doing by not including such claims.

   [6] In short, we find no support for the argument that sec-
ondary liability should be imposed. Thus, where as here, the
statutory sections are clear about upon whom they are impos-
ing liability and there are no unreasonable or impracticable
results, we consider ourselves precluded from substituting our
judgment of what would be a good law for that of Congress’s
expressed will. Our statutory analysis is, therefore, complete,
and we have no need to investigate further. Fei Ye, 436 F.3d
1
    In Central Bank, the Supreme Court examined § 10(b) of the Securities
Exchange Act of 1934 and concluded that the statute did not reach second-
ary actors, such as those who aid and abet violations of the securities laws.
511 U.S. at 177. Freeman argues that this holding is limited to the securi-
ties law context. However, it is the Supreme Court’s approach to interpret-
ing the statute, not the actual statute itself, that is significant. Thus, the fact
that the court was interpreting a different act of Congress—the Securities
Exchange Act—is inconsequential.
                   FREEMAN v. DIRECTV, INC.                 9043
at 1120; see also Connecticut Nat. Bank v. Germain, 503 U.S.
249, 253-54 (1992) (“When the words of a statute are unam-
biguous, then, this first canon is also the last: the judicial
inquiry is complete.”).

                               C

   [7] Even if we were to accept Freeman and Scherer’s invi-
tation to consider the policy goals and legislative history,
there is nothing about those goals or history that contradicts
our determination that Congress intended to limit liability to
providers of electronic communication services. Freeman and
Scherer’s argument that the ECPA aims to protect the privacy
of electronic communications is true, but inconsequential.
Such broad goals tell us nothing about how Congress decides
to accomplish a particular task.

   [8] Furthermore, the legislative history, like the language of
the statute, is clear. The Senate Report describing the applica-
tion of § 2702 states,

    The application of section 2702(a) generally prohib-
    its the provider of a wire or electronic communica-
    tion service to the public from knowingly divulging
    the contents of any communication while in elec-
    tronic storage by that service to any person other
    than the addressee or intended recipient.

S. Rep. 99-541, 1986 U.S.C.C.A.N. 3555, 3591 (emphasis
added). Like the language of the statute sections, there is
nothing ambiguous about this directive, which only identifies
providers of electronic communication services that are stor-
ing electronic communications. Other provisions in the report
also indicate the same restrictiveness. The very next para-
graph in the record, describing the application of the immedi-
ately preceding section, states that liability is “limited to
providers of wire or electronic communications services.” S.
Rep. 99-541, 1986 U.S.C.C.A.N. 3555, 3591.
9044               FREEMAN v. DIRECTV, INC.
   Perhaps most telling is that nothing in the legislative his-
tory of § 2702 even hints at allowing claims for aiding and
abetting or conspiracy. Thus, because we do not apply a
“ ‘dog that didn’t bark’ theory of statutory construction to
reach a contradictory interpretation of unambiguous text,” we
conclude that Freeman and Scherer’s legislative and textual
arguments are without merit. See Patenaude v. Equitable Life
Assurance Soc’y of United States, 290 F.3d 1020, 1025 (9th
Cir. 2002); Am. Tobacco Co. v. Patterson, 456 U.S. 63, 68
(1982) (“[A]bsent a clearly expressed legislative intention to
the contrary, [the statute’s] language must ordinarily be
regarded as conclusive.”) (internal quotations marks and alter-
ations omitted).

                               D

   [9] Freeman and Scherer are right to point out that there is
no blanket prohibition on secondary liability where Congress
does not use the magical words, “aid and abet.” However, the
cases they rely on do not support their claim that such liability
is part of the ECPA in this case. This lack of support is best
illustrated by Freeman and Scherer’s reliance on Boim v.
Quranic Literacy Inst. and Holy Land Found. for Relief and
Dev., 291 F.3d 1000 (7th Cir. 2002). In Boim, the Seventh
Circuit recognized an implicit aiding and abetting cause of
action in an international terrorism statute. Id. at 1011. The
plaintiffs, parents of a United States student killed by Hamas,
attempted to bring a secondary liability claim against the
defendants, a group it asserted was laundering money for
Hamas. Id. at 1002. The district court denied the defendant’s
motion to dismiss the claim because it found the anti-
terrorism statute that was the basis for the action provided
implicitly for aiding and abetting liability. Id. at 1007. The
Seventh Circuit upheld the district court determination. Id. at
1021. Relying on Boim, Freeman and Scherer argue that
§§ 2702 and 2707, like the anti-terrorism statute, is suffi-
ciently broad to include secondary liability. This argument is
not persuasive.
                   FREEMAN v. DIRECTV, INC.                 9045
   [10] First, unlike the present circumstance, the anti-
terrorism statute in Boim did not clearly impose liability on a
limited “class of defendants.” Id. at 1010. Rather, it created
liability for all individuals committing “international terror-
ism” and broadly defined terrorism as any activity that “in-
volve[s] violent acts or acts dangerous to human life.” Id. at
1009-10. The Seventh Circuit latched on to the word “in-
volve,” finding that “involvement” includes “many levels of
participation” and was therefore ambiguous. Id. at 1009.
Faced with an ambiguous term, the Seventh Circuit looked to
legislative history and specific testimony in the record where
Congress stated that it intended to impose liability “at any
point along the causal chain of terrorism.” Id. at 1011 (citing
S. Rep. 102-342, at 22 (1992)). Moreover, the legislative his-
tory indicated that a specific goal of the statute was to “inter-
rupt, or at least imperil, the flow of money” to terrorist
organizations—the act that was the basis for the claim. Id. at
1011. Here, the ECPA provides a private cause of action
against individuals or entities who “engaged in” a violation of
its terms. 18 U.S.C. § 2707. However, unlike the broad lan-
guage of the terrorism statute in Boim, which reached anyone
“involved” in any act of international terrorism, the plain lan-
guage of § 2702 reaches a more specified and limited class—
providers of electronic communications services. Moreover,
because the term “involved” was ambiguous, the court in
Boim looked to legislative history, which provided specific
support for secondary liability. Here, there is no ambiguity
and no legislative history indicating that Congress had such
expansive intentions. Rather, the language and the legislative
history of the ECPA are clear and unambiguous; neither
reaches beyond the limited class of defendants identified in
the statute. Thus, we conclude that Boim is inapposite and,
therefore, not a basis for reading secondary liability into
§§ 2702 and 2707.

   [11] Freeman and Scherer’s reliance on Quigley v. Rosen-
thal, 327 F.3d 1044 (10th Cir. 2003), is similarly unpersua-
sive. In Quigley, the trial court allowed jury instructions on
9046              FREEMAN v. DIRECTV, INC.
both agency and conspiracy under a different portion of the
ECPA (18 U.S.C. § 2511) that, like §§ 2702 and 2707, does
not explicitly provide for secondary liability. Id. at 1062-64.
However, because the jury was given a general verdict form
that did not require the jury to identify which legal theory—
agency or conspiracy—was the basis for its finding that the
ECPA was violated, it was impossible for the Tenth Circuit
to tell “whether the alleged improper instructions on conspir-
acy warranted a reversal of the jury’s [ECPA] verdict.” Id. at
1064. The Tenth Circuit resolved the conspiracy issue by
turning to the standard of review—plain error, because no
objection was made at trial. Id. at 1063-64. The Tenth Circuit
concluded:

    After review, we conclude that the [appellant] has
    failed to satisfy this extremely high burden [plain
    error]. The [appellant] cannot credibly refute the
    plaintiffs’ assertions that it acquiesced in the plain-
    tiffs’ conspiracy theory and the district court’s con-
    spiracy instruction. Further, the [appellant] has failed
    to cite any case that holds that a person or entity can-
    not violate the federal wiretap act by joining with
    others in a conspiracy.

Id. Although one might argue that the Tenth Circuit would
allow for a conspiracy claim to be read into the § 2511 of the
ECPA, the Tenth Circuit does not definitively say it would or
provide any meaningful rationale, other than lack of case law,
for why it might allow for such a claim.

   [12] Regardless of whether the Tenth Circuit had made
such a conclusion, it would mean very little to § 2702—a
completely different section of the ECPA. Furthermore, the
portion of the ECPA at issue in Quigley—§ 2511—is not as
textually limiting as §§ 2702 and 2707. Section 2511 imposes
liability on “any person” and then lists a number of prohibited
actions. Section 2702 by contrast identifies a particular group
—electronic service providers—and then specifies the limited
                   FREEMAN v. DIRECTV, INC.                9047
circumstance that, as a result of § 2707, will subject that par-
ticular group to liability.

   Thus, while mildly supportive of Freeman and Scherer’s
general proposition, Quigley is far from being persuasive.
Moreover, this indirect support is heavily outweighed by the
explicit language of §§ 2702 and 2707 and the accompanying
legislative report language, as well as case law that declines
to implicitly read into a statute secondary liability when the
statute does not so provide.

                              IV

   [13] We hold, therefore, that the unambiguous language of
18 U.S.C. §§ 2702 and 2707 limits liability to providers of
electronic communication services that knowingly divulge the
contents of those communications while being stored by that
provider. We reject Freeman and Scherer’s to read implicitly
into these statutory provisions claims for conspiracy or aiding
and abetting. In addition to being contrary to the plain lan-
guage of §§ 2702 and 2707, such an implied interpretation is
not supported by legislative history or case law. Accordingly,
we affirm the district court’s order dismissing Freeman and
Scherer’s complaint.

  AFFIRMED.