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8/8. The U.S. Court of Appeals (9thCir)
issued its
opinion [15 pages in PDF] in Freeman v. DirecTV, a class action alleging
violation of the Electronic Communications Privacy Act (ECPA). The Court of Appeals affirmed
the dismissal by the District Court. It and held that there is no secondary liability for
violation of §§ 2702 and 2707 of the ECPA, which bar an electronic communication service
provider from divulging electronic communications, and provide a private right of action
for violation of the bar.
Introduction. The Court of Appeals' opinion is based on a plain
reading of the statute, which clearly imposes the bar on divulging
communications only upon the electronic communication service provider. The
Court of Appeals declined to infer any secondary liability.
This case involves a frivolous class action against DirecTV for obtaining from the
operator of a satellite signal piracy message board, the contents of communications of that
message board, following the bringing of a legal action, and pursuant to a court order
authorizing seizure. Nevertheless, this case is far reaching. This opinion holds that
there is no secondary liability under §§ 2702 and 2707. § 2702 also serves as the
basis for criminal liability for divulging the contents of electronic communications.
Moreover, the Court of Appeals suggested in dicta that there is no secondary
liability for violation of any section of the ECPA.
Preventing satellite signal pirates from brining frivolous class action suits
against the companies from which they are stealing signals is hardly noteworthy.
However, there are other circumstances in which someone might conspire with an
electronic communication service provider to obtain the contents of
communications for which there are strong policy arguments for imposing civil or
criminal liability upon both the service provider and the conspirator. This
holding precludes the imposition of such secondary liability.
It should also be noted that § 2702 is drafted differently from
18 U.S.C. § 2511,
which bars both wiretapping and procuring another to wiretap, and then bars
subsequent disclosure of the fruits of the wiretap. It provides criminal and
civil liability for any person who "intentionally intercepts, endeavors to
intercept, or procures any other person to intercept or endeavor to intercept,
any wire, oral, or electronic communication" or who "intentionally discloses, or
endeavors to disclose, to any other person the contents of any wire, oral, or
electronic communication, knowing or having reason to know that the information
was obtained through the interception of a wire, oral, or electronic
communication in violation of this subsection".
Background. DirecTV is a direct broadcast satellite (DBS) service provider. It
uses conditional access technology that encrypts its satellite transmissions. It then
provides its paying customers with access cards that decrypt these satellite transmissions.
Numerous persons, who do not wish to pay for DBS service, use equipment, software, and
programming codes to obtain pirated access to DBS service, which is barred by
statute. DirecTV frequently takes legal
action against distributors of these piracy technologies.
Lawrence Freeman, a plaintiff in the present action, has previously been sued
by DirecTV for distribution of illegal signal theft devices.
Freeman also posted communications on electronic message boards
operated by Daryl Gray in British Columbia, Canada. Gray operated web sites that
provided an online meeting place for participants to discuss, exchange, and post
DBS piracy technology information.
In a previous lawsuit, DirecTV sued Gray in
Canada. DirecTV prevailed, obtaining both an injunction, and a civil writ of
seizure. The Canadian writ allowed DirecTV 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 writ also allowed DirecTV to remove or copy "any
document, record, article, notes, information, instructions, correspondence,
sent and received, electronic mail, howsoever stored, fixed, expressed or
embodied". It further allowed DirecTV to designate an entity for this purpose.
DirecTV designated ICG, which is also a party to the present appeal.
The order further allowed DirecTV to use "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 subscribers."
DirecTV obtained copies of Freeman's communications as a result of execution of this writ.
District Court Proceeding. Freeman filed a complaint in
U.S. District Court (CDCal) against
DirecTV and ICG, seeking class action status, alleging that DirecTV's seizure of
his communications pursuant to the Canadian Court order violated the ECPA. An
amended complaint identified Michael Scherer as a second named plaintiff.
The plaintiffs asserted that the ECPA was violated because of the manner in
which the seized material was divulged and held. They assert that it is
significant that when the servers and hard drives were seized, they were placed
in the custody, not of DirecTV's attorneys, but an independent solicitor.
The District Court dismissed for failure to state a claim, on the grounds that 18 U.S.C.
§ 2702 does not provide a basis for asserting conspiracy and aiding and abetting claims. See,
order [PDF].
Statute.
18 U.S.C. § 2702(a)(1) provides the general prohibition. It states that "Except
as provided in subsection (b) -- (1) a person or entity providing an electronic
communication service to the public shall not knowingly divulge to any person or entity
the contents of a communication while in electronic storage by that service".
18 U.S.C. § 2707(a) provides a private right of action for violation of the prohibition.
It states that "Except as provided in section 2703(e), any provider of electronic
communication service, subscriber, or other 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, 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."
The statute prohibits a provider of an
electronic communication service from divulging communications. In the present
case, Gray is the provider of the electronic communications service. He is not
the defendant. DirecTV and ICG are not the providers of the electronic
communications service. But, they are the named defendants. They are the deep pockets.
Court of Appeals. The Court of Appeals affirmed.
Freeman's argument is that DirecTV is liable under the statute for aiding and abetting
the violation of the statute by Gray. Yet, neither § 2702(a)(1) nor § 2702(a)(1)
contains a reference to either "conspiracy", "aiding and abetting", or
similar conduct.
The Court of Appeals wrote that "There is no explicit provision in §§ 2702 and
2707 or anywhere else in the ECPA, providing for secondary liability. Accordingly, it is
reasonable to conclude that Congress knew what it was doing by not including such
claims." The Court of Appeals wrote that it would not infer secondary liability.
The Court of Appeals held that "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
language of §§ 2702 and 2707, such an implied interpretation is not supported by
legislative history or case law."
The Court of Appeals added that "Even if we were to accept
Freeman and Scherer's invitation 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."
Hence, the Court of Appeals affirmed the judgment of the
District Court dismissing the complaint for failure to state a claim.
There are other issues not addressed in the present opinion. For
example, DirecTV also argued that Freeman's "claims were barred under the
Noerr-Pennington doctrine". The Court of
Appeals wrote that since it affirmed the judgment of the District Court on the
grounds relied upon by the District Court, "DirecTV and ICG’s alternative
arguments are not necessary."
Also, there is no mention in the Court of Appeals opinion regarding where this case
arose. The provider of the electronic communication service (Gray) was in Canada, as were
his servers. The order authorizing seizure of the communications was issued by a Canadian
court. The seizure of the communications took place in Canada.
This case is Lawrence Freeman and Michael Scherer v. DirecTV,
Inc. and ICG, Inc., U.S. Court of Appeals for the 9th Circuit, App. Ct.
No. 04-56500, an appeal from the U.S. District
Court for the Central District of California, Judge Gary Klausner presiding,
D.C. No. CV-04-02374-RGK. Judge Stephen Trott wrote the opinion of the Court of
Appeals, in which Judges Stephen Reinhardt and Margaret McKeown joined.
The plaintiffs are represented by
Jeffrey Wilens, of the
Lakeshore Law Center, who has filed other complaints against DirecTV, seeking
class action status, under a variety of legal theories. See, for example, RICO
complaint [PDF] and unfair competition
complaint [PDF]. See
also, Wilens' DirecTV
web page.
The defendants are represented by
Michael
Williams of the Los Angeles office of the law firm of
Quinn Emanuel.
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Caprio (at right) joined the PFF in April of 2006
as a Executive Vice President, and a Senior Fellow. Before that, he was the Department of
Commerce's Chief Privacy Officer and acting Assistant Secretary for Technology Policy.