Comcast of Illinois, X v. Platinum Electronics

Page 957

336 F.Supp.2d 957

COMCAST OF ILLINOIS X, LLC, an Illinois Limited Liability Company, Plaintiff, v. PLATINUM ELECTRONICS, INC. a Nebraska Corporation; Steven M. Abboud, individually; Patrick B. Finn, individually; and Manual J. Varra, individually, Defendants.

No. 8:03 CV 195.

United States District Court, D. Nebraska.

September 23, 2004.

Jeffrey R. Platt, Coman, Anderson Law Firm, Chicago, IL, Mark E. Novotny, Lamson, Dugan Law Firm, Omaha, NE, Maureen Ann Beck, Coman, Anderson Law Firm, Chicago, IL, Michele E. Young, Lamson, Dugan Law Firm, Omaha, NE, for Plaintiff.

J. William Gallup, Gallup, Schaefer Law Firm, Omaha, NE, for Defendants.

MEMORANDUM AND ORDER

BATAILLON, District Judge.

INTRODUCTION

The plaintiff, Comcast of Illinois X, has sued the defendants for declaratory, injunctive and monetary relief, claiming it is owed $175,109.98 as compensation for the illegal manufacture, modification, and sale/distribution of cable television "pirate" decoders (hereafter "cable descramblers") by the defendants and $50,000.00 in enhanced damages. The defendants contend that the manufacture, modification, and sale/distribution of the cable descramblers constitutes legal conduct and that it is only the customer's illegal use of their products which is prohibited. The defendants further assert that they never actually defrauded or intended to defraud anyone.

Before me now are two matters. The first is the plaintiff's (hereafter, "Comcast") motion for summary judgment, Filing No. 70, which is supported by a brief, indexes of evidence, and reply brief, Filing Nos. 71, 72, and 83. Defendant Steven M. Abboud (hereafter, "Abboud") has filed a motion and brief opposing summary judgment, Filing No. 79, which is supported by an affidavit, Filing No. 80. Abboud, proceeding pro se, is the only defendant to respond to this summary judgment motion.¹

The second matter before me is the plaintiff's motion, Filing No. 87, asking the court to order defendant Abboud to show cause why he should not be held in contempt for his failure to comply with the court's order regarding an asset freeze. The plaintiff alleges that on October 9, 2003, Abboud encumbered a piece of real property subject to the asset freeze by taking out a $175,000 construction loan and conveying the property as collateral for the loan.

After careful consideration of the facts of the case and the filings and other related documents, I find that Comcast's motion for summary judgment should be granted; a judgment of $225,109.98 should be entered against the defendants; full costs, including reasonable attorney's fees, should be awarded; and the defendants should be permanently enjoined from the manufacture, modification, and/or sale or distribution of cable descramblers pursuant to 47 U.S.C. § 553(c)(2)(A).

Further, the court orders defendant Abboud to appear on the date set below to show cause why he should not be held in contempt for an alleged violation of the court's prior order freezing the defendants' assets.

STANDARD OF REVIEW

On a motion for summary judgment, the question before the court is whether the record, when viewed in the light most favorable to the nonmoving party, shows that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Mansker v. TMG Life Ins. Co., 54 F.3d 1322, 1326 (8th Cir.1995). Where unresolved issues are primarily legal rather than factual, summary judgment is particularly appropriate. Id.

The burden of establishing the nonexistence of any genuine issue of material fact is on the moving party. Fed.R.Civ.P. 56(c); Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970). Therefore, if the moving party does not meet its initial burden with respect to an issue, summary judgment must be denied notwithstanding the absence of opposing affidavits or other evidence. Adickes, 398 U.S. at 159-60, 90 S.Ct. 1598; Cambee's Furniture, Inc. v. Doughboy Recreational Inc., 825 F.2d 167, 173 (8th Cir.1987).

Once the moving party meets its initial burden of showing there is no genuine issue of material fact, the nonmoving party may not rest upon the allegations in the pleadings but rather must set forth specific facts, by affidavit or other evidence, showing that a genuine issue of material fact exists. See Fed.R.Civ.P. 56(e); Chism v. W.R. Grace & Co., 158 F.3d 988, 990 (8th Cir.1998). The party opposing the motion cannot merely show some metaphysical doubt as to the material facts, but must show "there is sufficient evidence to support a jury verdict" in the party's favor. Id. Rule 56(c) "mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

Facts are viewed in the light most favorable to the nonmoving party, but in order "to defeat a motion for summary judgment, the nonmoving party cannot simply create a factual dispute; rather, there must be a genuine dispute over those facts that could actually affect the outcome of the lawsuit." Carter v. St. Louis University, 167 F.3d 398, 401 (8th Cir.1999) (citing Ghane v. West, 148 F.3d 979, 981 (8th Cir.1998)). "A court does not weigh evidence or make credibility determinations." Kenney v. Swift Transp. Co., 347 F.3d 1041, 1044 (8th Cir.2003).

FACTS

Comcast owns and operates cable television systems in forty-one states across the nation. Filing No. 71, Def.'s Brief at 2, ¶ 4 (hereafter, "Filing No. 71"). Comcast offers cable television programming to customers (hereafter, "subscribers") who request and pay for such services. Comcast's programming is offered to subscribers in "packages" of programming service, such as Basic and Standard, which subscribers receive for a monthly subscription fee. Id. at ¶¶ 6, 7. Subscribers may select additional premium programming services, such as Home Box Office, Showtime, and Cinemax, for additional monthly fees.² Id. at ¶ 8. Also, Comcast offers Pay Per View programming, a service which allows subscribers to purchase individual sporting events, movies, or other entertainment for per-event charges in addition to the monthly subscription fee.³ Id. at 2, ¶ 9. Each subscriber is entitled to receive only the level of programming that they purchase. Id.

Comcast encodes or "scrambles" its programming signals and provides its subscribers with addressable devices known as "converter boxes." Id. at 3, ¶ 13. These converter boxes connect to the subscriber's television set and decode the scrambled signals so that the programming selected and purchased by the subscriber can be viewed clearly. Id. at ¶ 16. Programming services which are not purchased remain scrambled and cannot be viewed on the subscriber's television set. Id. However, an individual can install an unauthorized "pirate" cable descrambler onto Comcast's cable system which allows the subscriber to receive all cable programming services, including premium and Pay Per View programming, without purchasing them. Id. at ¶ 20.

Comcast's system is "addressable," meaning that the converter box which Comcast provides to a subscriber is programmed by a central computer to enable viewing of only those programming services purchased by that subscriber. Id. at ¶ 17. Comcast's computer programs each subscriber's converter box so that it receives only purchased services. Id.

The defendants operated Platinum Electronics, Inc.,⁴ which exists primarily to sell and distribute cable descramblers. Defendant Abboud is the registered agent for Platinum Electronics. Filing No. 79, Abboud's Filing No. 79 at 7, ¶ 31 (hereafter, "Filing No. 79"). The defendants advertised and marketed their products via the Internet at http://www.platinumelectronics.com. Filing No. 71 at 5, ¶ 29. In February 2003, Comcast discovered that the defendants were selling cable descramblers compatible with its Illinois system. On February 11, 2003, John Schramm, a Special Project Auditor/Investigator employed by Comcast, logged onto the defendants' Web site and ordered a Global Universal Cable Box for $217.00. Id. at 6, ¶¶ 28, 32-34. The defendants' Web site advertised that all its decoders were "100% bullet proof."⁵ Id. at 5, ¶ 29.

On February 14, 2003, a box containing a VM 4000+ descrambler was delivered via UPS to Schramm, with Platinum Electronics' return address. Id. at 6, ¶ 35. The box also contained an invoice from Platinum Electronics, an instruction manual, a "CATV Owners Manual," and a disclaimer which in part read: "AS A USER: I will not use any cable product purchased from Platinum Electronics by myself or my company, for the purpose of decoding or viewing unauthorized premium cable channels or avoiding rightful payment to any cable company." Id. at 7, ¶ 39. Schramm tested the descrambler on Comcast's Illinois cable system that day and found it could descramble all of Comcast's scrambled programming services, including premium and Pay Per View services. Id. at 7, ¶ 40.

A review of Platinum Electronics' bank records reveals that from October 2002 through April 2003, the total revenue from the sale of cable descramblers was $175,109.98.⁶ Id. at 8, ¶ 43.

DISCUSSION

A. 47 U.S.C. § 553

The Cable Communications Act (hereafter, "the act") prohibits anyone from intercepting or assisting others in intercepting communications services offered over a cable system. 47 U.S.C. § 553(a)(1). Put simply, the act is designed to "protect the revenue of television cable companies from unauthorized reception of their transmissions." United States v. Coyle, 943 F.2d 424, 427 (4th Cir.1991). The prohibition against "assisting" in intercepting unauthorized transmissions includes the illegal manufacture and sale of "pirate"...