Dish Network, L.L.C. v. Del Carmen

DISH NETWORK, L.L.C., NAGRASTAR LLC, Plaintiffs, v. ARNOLDO DEL CARMEN, Defendant.

SA-19-CV-01171-DAE

UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF TEXAS SAN ANTONIO DIVISION

March 13, 2020

REPORT AND RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE

To the Honorable United States District Judge David A. Ezra:

This Report and Recommendation concerns the Motion for Default Judgment filed by Plaintiffs Dish Network LLC and Nagrastar LLC [#8]. The motion was referred to the undersigned for disposition on January 31, 2020. The undersigned has authority to enter this recommendation pursuant to 28 U.S.C. § 636(b)(1)(B). For the reasons set forth below, it is recommended that Plaintiffs' Motion [#8] be GRANTED.

I. Jurisdiction

This court has diversity jurisdiction over this action under 28 U.S.C. § 1331 because this action alleges violations of the Digital Millennium Copyright Act, 17 U.S.C. § 1201, et seq., the Federal Communications Act, 47 U.S.C. § 605, et seq., and the Electronic Communications Privacy Act, 18 U.S.C. § 2511, et seq. (Compl. [#1] at ¶ 4.)

II. Procedural History

Plaintiffs DISH Network LLC and Nagrastar LLC ("Plaintiffs") filed this action against Defendant Arnoldo Del Carmen ("Defendant") on September 27, 2019, alleging that Defendant has been trafficking in server passcodes that are designed and used solely for purposes of circumventing Plaintiffs' security system and receiving DISH Network's (hereinafter "DISH") satellite broadcasts of copyrighted television programming without payment of the required subscription fee. (Compl. [#1] at ¶ 7.) Plaintiffs further contend that Defendant personally used server passcodes to decrypt DISH's satellite signal and view its programming without authorization. (Id.) According to Plaintiffs, these acts violate the Digital Millennium Copyright Act, the Federal Communications Act, and the Electronic Communications Privacy Act. (Id.) By this action, Plaintiffs seeks a permanent injunction restraining and enjoining Defendant and all persons acting on his behalf from trafficking in server passcodes and intercepting satellite transmissions without authorization, as well as other related injunctive relief, and actual and punitive damages, costs, and fees. (Id. at 10-13.)

The record reflects that Defendant was served with Plaintiffs' Summons and Complaint on October 5, 2019, making his answer due on October 28, 2019 [#5]. To date, Defendant has failed to file an answer or otherwise make an appearance in this case. Plaintiffs moved for a Clerk's Entry of Default, which was granted and entered on December 16, 2019 [#7]. Plaintiffs now move for a Final Default Judgment against Defendant on Counts I and II of their Complaint, which allege violations of the Digital Millennium Act ("DMCA") and the Federal Communications Act ("FCA").

In order to ensure that Defendant received a copy of Plaintiffs' Motion for Default Judgment, as well as an opportunity to cure his default, the Court ordered the District Clerk's Office to mail a copy of the motion to Defendant at his address on record, and further ordered Defendant to respond to the motion on or before February 25, 2020 [#9]. The District Clerk's Office mailed a copy of the pertinent court filings via first-class mail and certified mail, return receipt requested, to Defendant's addresses on file [#10]. The Court received confirmation of delivery on February 10, 2020 [#11]. Defendant has not filed a response to Plaintiffs' motion or made an appearance in this action, and all of the Court's deadlines to do so have expired.

III. Legal Standard

"When a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend, and that failure is shown by affidavit or otherwise, the clerk must enter the party's default." Fed. R. Civ. P. 55(a). Once default has been entered, the court may enter a default judgment against the defaulting defendant upon motion by the plaintiff. See Fed. R. Civ. P. 55(b); N.Y. Life Ins. Co. v. Brown, 84 F.3d 137, 141 (5th Cir. 1996). In considering a motion for default judgment, the court accepts as true the well-pleaded allegations of facts in the complaint (except regarding damages) but must determine whether those facts state a claim upon which relief may be granted. See Matter of Dierschke, 975 F.2d 181, 185 (5th Cir. 1992) (stating that a defaulting party is deemed to have admitted all well-pleaded allegations of the complaint); United States ex rel. M-Co. Constr., Inc. v. Shipco Gen., Inc., 814 F.2d 1011, 1014 (5th Cir. 1987). Thus, for a plaintiff to obtain a default judgment, "[t]here must be a sufficient basis in the pleadings for the judgment entered." Nishimatsu Constr. Co., Ltd. v. Houston Nat'l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975); see Lewis v. Lynn, 236 F.3d 766, 767 (5th Cir. 2001) ("[A] party is not entitled to a default judgment as a matter of right, even where the defendant is technically in default.") (quoting Ganther v. Ingle, 75 F.3d 207, 212 (5th Cir. 1996)).

IV. Analysis

The record in this case establishes that Defendant failed to plead or otherwise defend against Plaintiffs' claims. Defendant was served with a copy of Plaintiffs' Complaint but failed to answer or otherwise respond. The undersigned therefore finds that the Clerk properly entered default, and Plaintiffs are entitled to default judgment on Counts I and II of their Complaint because the facts alleged in Plaintiffs' Complaint as to these two claims state a claim upon which relief can be granted.

A. Allegations in Plaintiffs' Complaint

Plaintiffs' Complaint alleges the following: DISH uses high-powered satellites to broadcast television programming to millions of subscribers in the United States who pay DISH a subscription fee to receive such programming, or in the case of a pay-per-view program, the purchase price. (Compl. [#1] at ¶ 8.) NagraStar provides smart cards and other proprietary security technologies that form a conditional access system. (Id.) DISH contracts for and purchases the right to broadcast the television programming shown on its platform from networks, motion picture distributors, pay and specialty broadcasters, sports leagues, and other rights holders. (Id. at ¶ 9.) The works broadcast by DISH are copyrighted, and DISH and NagraStar have the authority of the copyright holders to protect the works from unauthorized reception and viewing. (Id. at ¶ 10.)

DISH programming is digitized, compressed, and scrambled prior to being transmitted to multiple satellites located in geo-synchronous orbit above Earth. (Id. at ¶ 11.) The satellites, which have relatively fixed footprints covering the United States and parts of Canada, Mexico, and the Caribbean, relay the encrypted signal back to Earth where it can be received by DISH subscribers that have the necessary equipment. (Id.) A DISH satellite television system consists of a compatible dish antenna, receiver, smart card (which in some instances is internalized in the receiver), television, and cabling to connect the components. (Id. at ¶ 12.) DISH provides receivers, dish antenna, and other digital equipment for the DISH system; NagraStar supplies the smart cards and other proprietary security technologies that form a conditional access system. (Id.) Each DISH receiver and NagraStar smart card is assigned a unique serial number that is used by DISH when activating the equipment and to ensure the equipment only decrypts programming the customer is authorized to receive as part of his subscription package and pay-per-view purchases. (Id. at ¶ 13.) Together, the DISH receiver and NagraStar smart card convert DISH's encrypted satellite signal into viewable programming that can be displayed on the attached television of an authorized DISH subscriber. (Id. at ¶ 16.)

A form of satellite piracy—i.e. the unauthorized reception, decryption, or viewing of a pay-tv signal—exists that goes by several names, including "control word sharing," "Internet key sharing," or more simply "IKS." (Id. at ¶ 17.) With IKS, once piracy software is loaded onto an unauthorized receiver, the end user connects the receiver to the Internet via a built-in Ethernet port or an add-on dongle. (Id. at ¶ 18.) The Internet connection automatically updates piracy software on the receiver and contacts a computer server that provides the necessary control words. (Id.) The computer server, called an "IKS server," has multiple, subscribed NagraStar smart cards connected to it, and thus the ability to provide the control words. (Id. at ¶ 19.) Access to an IKS server typically requires a valid passcode. (Id.) Once access has been obtained, control words are sent from the IKS server over the Internet to an unauthorized receiver, where they are used to decrypt DISH's signal and view programming without paying a subscription fee. (Id.)

IKSRocket is a subscription-based IKS service, whereby members purchase a subscription to the IKS service to obtain the control words that are used to circumvent the DISH and NagraStar security system and receive DISH's satellite broadcasts of television programming without authorization. (Id. at ¶ 20.) Digital TV is a Dominican Republic company that sold subscriptions to IKSRocket ("IKS Server Passcodes"). (Id. at ¶ 21.) Digital TV provided DISH and NagraStar with copies of its business records pertaining to Defendant. (Id.) Digital TV's records show that Defendant purchased at least 46 IKS Server Passcodes within the statute of limitations for each claim that Plaintiffs are bringing against Defendant. (Id.) Each IKS Server Passcode that Defendant purchased is believed to have been valid for one year. (Id.)

Plaintiffs plead on information and belief that Defendant re-sold certain IKS Server Passcodes that he purchased from Digital TV. (Id. at ¶ 22.) These IKS Server Passcodes enabled Defendant's customers to access the IKSRocket service using an unauthorized receiver loaded with piracy software. (Id.) Each time that the customer...