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JOE HAND PROMOTIONS, INC. v. RENNARD ST. ENTERPRIS

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA


January 28, 1997

JOE HAND PROMOTIONS, INC.
v.
RENNARD STREET ENTERPRISES, INC., et al.

The opinion of the court was delivered by: HUTTON

MEMORANDUM AND ORDER

 HUTTON, J.

 January 28, 1997

 Presently before this Court is the Motion of Defendants Lennon's Bar, Inc., James Lennon, and Gloria Lennon to Dismiss the Plaintiff's Complaint for Failure to State a Claim Upon Which Relief May be Granted.

 I. BACKGROUND

 The plaintiff, Joe Hand Promotions, Inc., was granted the right to distribute a championship prizefight boxing match broadcast nationwide on June 17, 1995, via closed circuit television. *fn1" The plaintiff entered into agreements with various entities in Pennsylvania to publicly exhibit the boxing match to their patrons.

 The plaintiff claims that on June 17, 1995, eighteen defendants *fn2" exhibited the boxing match at the time of its transmission even though they had not paid the required subscription fee. Therefore, on May 9, 1996, the plaintiff filed suit against these defendants in this Court, alleging that the defendants violated 47 U.S.C. § 605 by exhibiting the prizefight, without authorization. In addition, the plaintiff alleges claims of conversion and interference with prospective economic advantage.

 On July 19, 1996, three of the defendants, Lennon's Bar, Inc., James Lennon, and Gloria Lennon (collectively "the defendants"), responded by filing the instant motion to dismiss. In their motion, the defendants argue that the plaintiff's complaint must be dismissed because it fails to allege facts sufficient to plead a cause of action pursuant to 47 U.S.C. § 605. Additionally, they assert that the plaintiff lacks standing to bring the instant suit under 47 U.S.C. § 605. They also urge for the dismissal of the state law allegations, arguing that there is no reasonable basis for the Court to exercise supplemental jurisdiction.

 II. DISCUSSION

 A. Standard for Dismissal under Rule 12(b)(6)

 Federal Rule of Civil Procedure 8(a) requires that a plaintiff's complaint set forth "a short and plain statement of the claim showing that the pleader is entitled to relief . . . ." Fed. R. Civ. P. 8(a)(2). Accordingly, the plaintiff does not have to "set out in detail the facts upon which he bases his claim." Conley v. Gibson, 355 U.S. 41, 47, 2 L. Ed. 2d 80, 78 S. Ct. 99 (1957) (emphasis added). In other words, the plaintiff need only to "give the defendant fair notice of what the plaintiff's claim is and the grounds upon which it rests." Id. (emphasis added).

 When considering a motion to dismiss a complaint for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6), *fn3" this Court must "accept as true the facts alleged in the complaint and all reasonable inferences that can be drawn from them. Dismissal under Rule 12(b)(6) . . . is limited to those instances where it is certain that no relief could be granted under any set of facts that could be proved."

 Markowitz v. Northeast Land Co., 906 F.2d 100, 103 (3d Cir. 1990) (citing Ransom v. Marrazzo, 848 F.2d 398, 401 (3d Cir. 1988)); see H.J. Inc. v. Northwest Bell Tel. Co., 492 U.S. 229, 249-50, 106 L. Ed. 2d 195, 109 S. Ct. 2893 (1989). The court will only dismiss the complaint if "'it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations.'" H.J. Inc., 492 U.S. at 249-50 (quoting Hishon v. King & Spalding, 467 U.S. 69, 73, 81 L. Ed. 2d 59, 104 S. Ct. 2229 (1984)).

  B. Analysis of Plaintiff's Claims

 1. 47 U.S.C. § 605 Claim

 The defendants argue that the plaintiff's claims under 47 U.S.C. § 605 must be dismissed because the allegations are not pled in sufficient detail to put the defendants on notice as to the specific actions alleged to have given rise to the cause of action. Moreover, they assert that even if the plaintiff's complaint is pled in sufficient detail, the claim must be dismissed because 47 U.S.C. § 553 and not 47 U.S.C. § 605 applies to the interception and reception of a television broadcast transmitted directly by coaxial cable. The plaintiff rejects these arguments and maintains that its complaint is sufficiently pled, arguing that 47 U.S.C. § 605 applies to the direct reception of cable television signals.

 To resolve this controversy, this Court will first examine 47 U.S.C. §§ 553 and 605 to determine which section applies to the interception or reception of a television broadcast transmitted directly by coaxial cable. Following this determination, the Court will analyze the sufficiency of the plaintiff's allegations. If the plaintiff's allegations are sufficiently pled, then this Court will examine whether the plaintiff has standing to sue under 47 U.S.C. § 605.

 a. Analysis of 47 U.S.C. §§ 553 and 605

 To understand the issue at the heart of the instant controversy, it is helpful to first review the mechanics of the cable television industry. Television signals are transmitted in one of two ways: either through the air or over coaxial cable. *fn4" Television, whose signals are transmitted through the air is referred to as broadcast television, while television whose signals are transmitted over coaxial cable is referred to as cable television. Nevertheless, because of advances in technology, the distinctions between cable and broadcast television are becoming increasingly blurred. This overlap of technologies is due primarily to the role of commercial communication satellites in the television industry:

 

Communications satellites are fundamental to the distribution of television and cable transmissions. Satellite programmers sell their programming at wholesale rates to distributors, including cable companies. A cable company receives these signals at the cable system control center (the "headend"), and processes and retransmits the signals over coaxial cable to subscribers using closed circuit radio frequency transmissions.

 United States v. Norris, 833 F. Supp. 1392, 1394 (N.D. Ind. 1993), aff'd 34 F.3d 530 (7th Cir. 1994). Therefore, frequently a cable program is not a "pure" cable broadcast but is instead a hybrid broadcast, utilizing both broadcast and cable television technologies. *fn5" The problem with utilizing this hybrid approach, however, is that it gives non-subscribers two opportunities to intercept the cable broadcast. The non-subscriber may either intercept the cable broadcast from the satellite transmission to the cable system control center (the "headend") *fn6" or from the retransmission to subscribers over the actual coaxial cable network. *fn7" In either case, the non-subscriber is able to enjoy and use an cable service for which he did not pay. *fn8"

 To deter this unauthorized activity, Congress enacted 47 U.S.C. § 553 and 605. Section 553 was enacted thirteen years ago, as part of the Cable Communications Policy Act of 1984, specifically to remedy "a problem which was increasingly plaguing the cable industry--theft of cable services . . . ." Id. (quoting H.R. Rep. No. 934, 98th Cong., 2d Sess., 83, reprinted in 1984 U.S.C.C.A.N. 4720). This section provides that "no person shall intercept or receive or assist in intercepting or receiving any communications service offered over a cable system, unless specifically authorized to do so by a cable operator or as may otherwise by specifically authorized by law." 47 U.S.C. § 553(a) (1991). In other words, any person who intercepts a television broadcast intended to be distributed over a system of coaxial cables, may be held liable under Section 553.

 Section 605, on the other hand, was enacted over sixty years ago, as part of the Communications Bill of 1934, to prevent the pirating of radio and wire communications. United States v. Norris, 88 F.3d 462, 465 (7th Cir. 1996). Congress sought to prohibit certain types of unauthorized activities, which are set forth in the first four sentences of Section 605(a). The first sentence of Section 605(a) prohibits persons involved in the communications industry from divulging or publishing wire or radio communications:

 

Except as authorized . . . no person receiving, assisting in receiving, transmitting, or assisting in transmitting, any interstate or foreign communication by wire or radio shall divulge or publish the existence, contents, substance, purport, effect, or meaning thereof, except through authorized channels of transmission or reception, (1) to any person other than the addressee, his agent or attorney, (2) to a person employed or authorized to forward such communication to its destination, (3) to proper accounting or distributing officers or various communication centers over which the communication may be passed, (4) to the master of a ship under whom he is serving, (5) in response to a subpena [sic] issued by a court of competent jurisdiction, or (6) on demand of other lawful authority.

 47 U.S.C. § 605(a) (1991). The second sentence of this section prohibits any person from intercepting a radio communication and then divulging or publishing that communication:

 

No person not being authorized by the sender shall intercept any radio communication and divulge or publish the existence, contents, substance, purport, effect, or meaning of such intercepted communication to any person.

 Id. The third sentence prohibits any person from receiving a radio communication and using it for his own benefit or for the benefit of another:

 

No person not being entitled thereto shall receive or assist in receiving any interstate or foreign communication by radio and use such communication (or any information therein contained) for his own benefit or for the benefit of another not entitled thereto.

 Id. Finally, the fourth sentence of Section 605(a) prohibits any person from learning the contents of an intercepted radio communication and using that information for his own benefit, or the benefit of another person:

 

No person having received any intercepted radio communication or having become acquainted with the contents, substance, purport, effect, or meaning of such communication (or any part thereof) knowing that existence, contents, substance, purport, effect, or meaning of such communication (or any part thereof) or use such communication (or any information therein contained) for his own benefit or for the benefit of another not entitled thereto.

 Id.

 An analysis of these prohibitions reveals two important observations, which are relevant to the instant dispute. The first observation is that although any person may violate the prohibitions of the second, third, and fourth sentences of Section 605(a), only legitimate communication personnel may violate the prohibitions of the first sentence. General Instrument Corp. of Del. v. Nu-Tek Elecs. & Mfg., Inc., 1996 U.S. Dist. LEXIS 4946, No. CIV.A.93-3854, 1996 WL 402511, at *3-4 (E.D. Pa. Apr. 12, 1996). The second observation is that only the first sentence penalizes the unauthorized publication of both "wire communications" and "radio communications." Id. The other three sentences only penalize activities involving "radio communication." Id. In other words, even though anyone can be held liable for publishing a "radio communication," only legitimate communication personnel may be held liable for publishing a "wire communication."

 To determine whether the defendants are liable under Section 605 for the unauthorized publication of a cable television broadcast, it is first necessary to determine whether that cable television broadcast is a "radio communication" or a "wire communication." Under the United States Code, "wire communication" is defined as:

 

the transmission of writing, signs, signals, pictures, and sounds of all kinds by aid of wire, cable, or other like connection between the points of origin and reception of such transmission, including all instrumentalities, facilities, apparatus, and services (among other things, the receipt, forwarding, and delivery of communications) incidental to such transmission.

 47 U.S.C. § 153(a) (1991) (emphasis added). On the other hand, the Code defines "radio communication" as:

 

the transmission by radio of writing, signs, signals, pictures, and sounds of all kinds, including all instrumentalities, facilities, apparatus, and services (among other things, the receipt, forwarding, and delivery of communications) incidental to such transmission.

 47 U.S.C. § 153(b) (1991) (emphasis added).

 Under these definitions, a "pure" cable television broadcast, one transmitted only over coaxial cable, is a "wire communication." Consequently, only legitimate communication personnel may be held liable for publishing this broadcast under Section 605. All other persons who publish this "pure" cable broadcast are only liable under Section 553. These definitions fail, however, when a cable broadcast originates from a satellite transmission and then is retransmitted over a coaxial cable network. If the broadcast is a "radio communication" because it originated from a satellite transmission, then Section 605 will hold any person who publishes the broadcast liable. If, on the other hand, the broadcast is a "wire communication" because it is distributed over a coaxial cable network, then only Section 553 will hold non-communication personnel who publish the broadcast liable. If, however, the broadcast is both a "radio communication" and a "wire communication", then the publisher of the cable broadcast is liable under both Sections 553 and 605. It is this dilemma which has been at the forefront of the federal courts' current debate about the application of Section 553 and 605 to cable television broadcasts.

 Some courts, like the United States Court of Appeals for the Second Circuit, have determined that an expansive reading and application of Section 605 is warranted. International Cablevision, Inc. v. Sykes, 75 F.3d 123, 131-132 (2d Cir.), cert. denied sub nom., Noel v. International Cablevision, Inc., 136 L. Ed. 2d 217, 117 S. Ct. 298 (1996). In International Cablevision, Inc. v. Sykes, the court of appeals reached its conclusion after reviewing the House Report's section-by-section analysis of Section 553, and discovering that, "'Nothing in [ § 553] is intended to affect the applicability of existing Section 605 to theft of cable service, or any other remedies available under existing law for theft of service.'" Id. at 132 (quoting H.R. Rep. No. 934 at 83, reprinted in 1984 U.S.C.C.A.N. 4720). Based on this one sentence, the court determined that,

 

the continued transmission of radio signals via cable after their receipt at the headend of a cable television system can be regarded as the "receipt, forwarding and delivery of [radio] communications . . . incidental to [the transmission]" of the pictures and sounds transmitted by those communications within the meaning of § 153(b).

 Id. at 131. In other words, the court held that a cable broadcast was a "radio communication" as long as the cable transmission originated as a radio signal. *fn9" Id. Therefore, under the Sykes court's interpretation, Section 605 will hold any person liable for the unauthorized publication of a cable television broadcast, which originated as a radio transmission. Id. Section 553, on the other hand, will only protect in-house cable television programming, that did "not involve any radio-originated communications." Id. at 131 n.5; accord TCI Cablevision of New England v. Pier House Inn, Inc., 930 F. Supp. 727, 734 (D.R.I. 1996).

 Other courts, like the United States Court of Appeals for the Seventh Circuit, have explicitly rejected this expansive interpretation. Norris, 88 F.3d at 469. In United States v. Norris, the court of appeals meticulously analyzed the statutes' legislative history and the Sykes decision. Id. at 464-69. The Norris court concluded that "the fatal difficulty with the Second Circuit's analysis . . . [was] that it plucked one sentence of § 553(a)'s legislative history out of context and assigned that sentence a meaning completely at odds with the context." Id. at 468. To avoid this pitfall, the Seventh Circuit chose not to emphasize this one sentence, but instead read it with the rest of the House Report. *fn10" Id. Based on this reading, the court of appeals concluded that:

 

The only plausible, consistent interpretation . . . is that Congress intended for § 605 to apply to the unlawful interception of cable programming transmitted through the air, while it intended for § 553 to apply to the unlawful interception of cable programming while it is actually being transmitted over a cable system.

 Id. at 469. Therefore, under the Norris court's interpretation, any person who publishes a cable broadcast transmitted through the air without authorization, is liable under Section 605. Id. However, only legitimate communications personnel are liable under Section 605 for publishing a cable broadcast actually transmitted over coaxial cable. Id. Section 553 is the exclusive remedy for all other persons who publish that cable broadcast. Id.

 The United States Court of Appeals for the Third Circuit, has yet to examine the interplay between Sections 553 and 605. An examination of the decisions of other courts in our circuit, reveal that the issue is still unresolved. Compare Nu-Tek Elecs., 1996 U.S. Dist. LEXIS 4946, 1996 WL 402511, at *4 (holding section 605 inapplicable to interception of cable communications) with TKR Cable Co. v. Cable City Corp., 1996 U.S. Dist. LEXIS 11941, 1996 WL 465508 (D.N.J. Jul. 29, 1996) (holding sections 553 and 605 applicable to unlawful interception of cable television programming over a cable network) and General Instrument Corp. of Delaware v. Lake Sylvan Sales, Inc., 1993 U.S. Dist. LEXIS 16828, No. CIV.A.93-3856, 1993 WL 496588 (E.D. Pa. Nov. 30, 1993) (same). But see Comcast Cablevision of Philadelphia v. Olsen, 1995 U.S. Dist. LEXIS 12091, No. CIV.A.94-1215, 1995 WL 498717 (E.D. Pa. Aug. 22, 1995) (holding section 605 inapplicable to interception of cable communications), vacated in part, No. CIV.A.94-1215 (E.D. Pa. Apr. 4, 1996) (holding section 605 applicable to interception of coaxial cable transmissions originating as radio transmissions, in light of Sykes decision). Furthermore, a review of other district court opinions from around the nation suggests that the disagreement among the courts in our circuit is not atypical. Compare Don King Prods./Kingvision v. Lovato, 1996 U.S. Dist. LEXIS 17632, No. CIV.A.95-2827, 1996 WL 682006 (N.D. Cal. Nov. 15, 1996) (holding sections 553 and 605 applicable to unlawful interception of cable communications) with Spencer Promotions, Inc. v. 5th Quarter Enter., Inc., 1996 U.S. Dist. LEXIS 8686, No. CIV.A.94-0988, 1996 WL 438789 (N.D. Cal. Feb. 21, 1996) (holding section 605 applicable to interception of satellite cable broadcasts and section 553 applicable to interception of coaxial cable broadcasts). See also That's Entertainment, Inc. v. Anciano's Inc., 1996 U.S. Dist. LEXIS 13010, No. CIV.A.94-7199, 1996 WL 514989 (N.D. Ill. Sept. 6, 1996) (holding section 605 inapplicable to wire transmission of pay-per-view boxing event); Pier House Inn, Inc., 930 F. Supp. at 838 (adopting Norris rationale and holding section 605 applicable to interception of satellite cable broadcasts and section 553 applicable to interception of coaxial cable broadcasts); Time Warner Cable of New York City v. Freedom Elecs., Inc., 897 F. Supp. 1454 (S.D. Fla. 1995) (holding sections 553 and 605 applicable to interception of coaxial cable broadcasts).

 After reviewing the relevant case law, this Court is convinced that the interpretation set forth by the United States Court of Appeals for the Seventh Circuit, which to date has been adopted by one other United States District Courts, is consistent with Congress's intent. Therefore, this Court concludes that because a television signal transmitted through the air is a "radio transmission," any person may be held liable under 47 U.S.C. § 605 for the unauthorized reception and publication of cable programming transmitted through the air. On the other hand, because a television signal transmitted over coaxial cable is a "wire communication," only legitimate communication personnel may be held liable for publishing a cable broadcast while it is actually being transmitted over a system of coaxial cables under 47 U.S.C. § 605. All other persons who publish a cable broadcast while it is actually being transmitted over a system of coaxial cables, however, may only be held liable under 47 U.S.C. § 553(a).

 b. Sufficiency of Plaintiff's Allegations

 In this case, the plaintiff merely pleads that the defendants published the closed-circuit *fn11" boxing match to their patrons. It does not allege how the closed-circuit broadcast was being distributed, or whether the defendants published the cable programming directly from the coaxial cable system or from the satellite transmission. Without these critical facts, this Court cannot determine from the scantly pled allegations of the complaint whether Section 553 or Section 605 affords the plaintiff a cause of action against the defendants. Therefore, this Court concludes that the plaintiff's pleadings are insufficient to maintain a cause of action under 47 U.S.C. § 605. Accordingly, this claim is dismissed against the defendants. *fn12"

 2. State Law Claims

 In its complaint, the plaintiff alleges that the defendants are liable for conversion and interference with prospective economic advantage. The defendants urge for a dismissal of these state law claims, because there is no reasonable basis for the Court to exercise supplemental jurisdiction.

 Pursuant to § 1367, this Court may exercise supplemental jurisdiction over state law claims. However, the Court may decline supplemental jurisdiction if:

 

(1) the claim raises a novel or complex issue of

 State law,

 

(2) the claim substantially predominates over

 the claim or claims over which the district court has original jurisdiction,

 

(3) the district court has dismissed all claims

 over which it has original jurisdiction, or

 

(4) in exceptional circumstances, there are other

 compelling reasons for declining jurisdiction.

 28 U.S.C. § 1367(c). The Court may properly decline to exercise supplemental jurisdiction and dismiss the state claims if any one of these applies. See Growth Horizons, Inc. v. Delaware County, 983 F.2d 1277, 1284 (3d Cir. 1993).

 The Courts in this district "ordinarily decline to exercise supplemental jurisdiction over state law claims when the federal claims are dismissed." Eberts v. Wert, 1993 U.S. Dist. LEXIS 10932, 1993 WL 30411, *5 (E.D. Pa. Aug. 9, 1993), aff'd, 22 F.3d 301 (3d Cir. 1994) (table). In the instant case, this Court has dismissed the plaintiff's federal cause of action. Thus, it is appropriate to decline to exercise supplemental jurisdiction over the remaining state law claims.

 Accordingly, this Court dismisses all of the plaintiff's claims against defendants Lennon's Bar, Inc., James Lennon, and Gloria Lennon.

 C. Claims Against Remaining Defendants

 A district court may dismiss all or part of a complaint sua sponte if the procedure used to raise the issue is a fair one. Bowman v. United States, 1995 U.S. Dist. LEXIS 16286, No. CIV.A.95-5863, 1995 WL 650239, at *1 (E.D. Pa. Nov. 1, 1995); see Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1357 at 301 (2d ed, 1990) ("Even if a party does not make a formal motion, the court on its own initiative may note the inadequacy of the complaint and dismiss it for failure to state a claim as long as the procedure employed is fair."). Moreover, a district court may grant summary judgment sua sponte if it gives notice and an opportunity to oppose summary judgment. Otis Elevator Co. v. George Washington Hotel Corp., 27 F.3d 903, 910 (3d Cir. 1994).

 In this case, this Court has determined that the plaintiff's pleadings are insufficient to maintain a cause of action under 47 U.S.C. § 605, and has declined to exercise supplemental jurisdiction over the plaintiff's state law claims. Therefore, logic dictates that if the complaint fails for one defendant, it must fail for the remaining defendants.

 The plaintiff has known since the filing of the instant motion that this Court could dismiss its complaint for failing to state a claim upon which relief may be granted. Additionally, the plaintiff has known that the answers of defendants Ralph Ziegler, Ralph Ziegler t/a Blue Room, Galway's Pub, Ltd., David Galway, and Wilhelmina Galway explicitly set forth failure to state a claim upon which relief may be granted as a defense. *fn13" Accordingly, this Court will dismiss all of the plaintiff's claims against all of the defendants. However, in the interest of justice, this Court, pursuant to Federal Rule of Civil Procedure 15(a), will allow the plaintiff twenty (20) days to amend its complaint to conform with this Court's opinion.

 An appropriate Order follows.

 ORDER

 AND NOW, this 28th day of January, 1997, upon consideration of the Motion of Defendants Lennon's Bar, Inc., James Lennon, and Gloria Lennon to Dismiss the Plaintiff's Complaint, IT IS HEREBY ORDERED that the Defendants' Motion is GRANTED.

 IT IS FURTHER ORDERED that:

 (1) all of the claims set forth in the Plaintiff's Complaint are DISMISSED ... against all Defendants; and

 (2) the Plaintiff shall have twenty (20) days from the date of this Order to amend its Complaint.

 BY THE COURT:

 HERBERT J. HUTTON, J.


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