Thursday, March 7, 2013

Cable Theft Litigation May be Coming to Your Neighborhood

Lawyers and companies look for innovative ways to create revenue streams. This may involve suing a lot of people for big damages and then settling for relatively small amounts (still large enough to hurt). The most appropriate claims for this kind of sue ‘em, scare ‘em, settle ‘em and move on style of lawsuit generally involve statutory damages and attorney fee provisions.   The mass RIAA lawsuits against individuals downloading music files was the first wave of this phenomenon that I became aware of.

The copyright infringement statute at issue provides for statutory damages ranging from $750 to $150,000 per work. Title 17 USC §504. An important point about statutory damages, you generally don’t need to prove actual damages. If you can prove infringement, you can go for actual damages, but generally, statutory damages are higher and easier to prove.

The RIAA music downloading lawsuits weren’t so much about generating a revenue stream for the music industry. Rather, they were aimed at scaring the bejeesus out of downloaders and uploaders. But they got smart people thinking and you started to see mass lawsuits against downloaders of movies like the hurt locker. Then you saw lawsuits against downloaders of porn (shaming and scaring people into settlements) and an outfit called Righthaven that went after bloggers and others posting scraps from copyrighted newspapers.

Lately, I've seen another type of lawsuit. It involves alleged cable piracy. In California, the relevant statute is Code of Civil Procedure section 593d:
Any person who violates this section shall be liable in a civil action to the multichannel video or information services provider for the greater of the following amounts:  (1) Five thousand dollars ($5,000).  (2) Three times the amount of actual damages, if any, sustained by the plaintiff plus reasonable attorney's fees.  A defendant who prevails in the action shall be awarded his or her reasonable attorney's fees.
You'll note, the statute provides for $5,000 in statutory penalties and reasonable attorneys fees. Usually, the attorney will attempt to stack multiple violations and seek $5,000 per violation. Before he files the complaint, you'll probably receive a threatening letter, which contends you've been caught engaging in cable piracy and it'll contend you are liable for $10, 20, or $30 plus thousand dollars unless you contact them right away and settle. If you don't settle, you may end up facing an actual lawsuit. Often, you'll see a cluster of these lawsuits in a community. They'll sue maids, cooks, grandmothers and try and force them into agreeing to a payment stream of $100 a month over period of five or so years. Or they might take a lump sum of $2,500 or whatever they can get.

You usually won't deal with the actual attorney in these early stages, but some other individual who'll send you copies of the "inspection reports" that prove you pirated their client's cable television. You may live in an apartment building or condo community with a central cable box. The industry files hundreds of these lawsuits throughout the state. Most of them end in default judgments being taken against the defendants.

California's cable theft statute, Section 593d(a)(1), provides the state law rule governing possession and use of unauthorized and unlawfully modified cable television signal decoders as follows:
Any person who, for the purpose of intercepting, receiving, or using any program or other service carried by a multichannel video or information services provider that the person is not authorized by that provider to receive or use, commits any of the following acts is guilty of a public offense: 
(1) Knowingly and willfully makes or maintains an unauthorized connection or connections, whether physically, electrically, electronically, or inductively, to any cable, wire, or other component of a multichannel video or information services provider's system or to a cable, wire or other media, or receiver that is attached to a multichannel video or information services provider's system.
 The California statute is modeled on the relevant federal statutes. In most cases, there won't be a lot of state authority on whatever statute is relevant to your state. But you can turn to federal authority to interpret these statutes. In any event, to establish their claims against each defendant (usually, the cable company will sue everyone in a particular household), the company must prove three elements for its cause of action under Section 593d: (1) offending conduct (2) performed "knowingly and willfully," (3) which was done for a specified unlawful purpose.

In the case of California, the applicable statute of limitations for violations of Section 593d is one year. Code Civ. Proc. § 340(a); DirecTV, Inc. v. Webb, 545 F.3d 837 (9th Cir. Cal. 2008) [one year statute of limitations for civil violations of California’s Piracy Act]; Menefee v. Ostawari, 228 Cal. App. 3d 239, 243 (1991) [Claims based upon statutes which provide for mandatory recovery of damages additional to actual losses incurred, such as treble damages, are considered penal in nature, and thus  are governed by the one-year limitations period under Section 340]. The attorney suing you will likely actually sue for three years or so and argue that the longer statute of limitations is applicable.

Another issue that will arise both in state and federal litigation. The cable company will contend that it is entitled to statutory damages for each violation that it chooses to allege. You'll want to argue that this is wrong. For a state claim, you might point to a bankruptcy case in which the Court detailed why a party cannot obtain more than one award of statutory damages for multiple alleged violations of Section 593d. Comcast of L.A., Inc. v. Sandoval (In re Sandoval), 341 B.R. 282 (Bankr. C.D. Cal. 2006). In Comcast of L.A., Inc. v. Sandoval, the plaintiff sought $30,000 in damages against the defendant. Cf. Cmty. Tv Sys. v. Caruso, 284 F.3d 430 (2002) (construing 47 USC § 605 (the Federal statute on which California's Section 593d is modeled) and finding defendants liable for a single award of statutory damages attributable to the purchase and installation of a single descrambler device); Comcast of L.A., Inc. v. Sandoval (In re Sandoval), 341 B.R. 282 (2006) (construing Section 593d and finding plaintiff would only be entitled to a single $5,000 award of statutory damages).

If you didn't steal any cable and want to defend yourself, these kind of claims are defensible. It's going to depend on the particular facts and circumstances. You'll want an attorney. Courts aren't always familiar with these statutes and cable counsel is going to argue things that are flat out wrong. The other reason you'll want an attorney, there are some very powerful procedural devices that are available depending on the particular company and the specific facts of your case, which can result in an early dismissal or a nominal settlement.

One thing to keep in mind, the company may sue everyone in your household. But Section 593d requires that the defendant “knowingly and willfully” acted. The cable company has to prove as to each defendant that he or she “knowingly and willfully” made or maintained an unauthorized connection for the purpose of receiving unauthorized cable television. This is not a strict liability statute where a wife or husband, a child or babysitter, a guest or roommate is liable for a violation of this statute by virtue of another’s willful and knowing action. The cable company has the burden of proof as to each fact the existence or nonexistence of which is essential to the claim for relief or defense as against each defendant. Evid. Code § 500; Sargent Fletcher, Inc. v. Able Corp., 110 Cal.App.4th 1658, 1668 (2003).

Because you can get your attorney fees if you win the case, you might be able to find an attorney who will take this sort of claim on pro bono. A good place to start is your local county level bar association. Of course the reverse is true, if you lose the case, you'll be liable for their fees. Sometimes, you can defeat three of the claims against a household and end up losing one claim. The nice thing is you can argue for your attorney fees as to those defendants who prevailed. It may offset the claim where you lose.

Good luck if you do get one of these collection letters. If you're guilty of stealing cable, try to settle early for a smaller amount. If you're innocent, then contact an attorney and marshal your evidence.

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