MEDIAONE OF DELAWARE, INC.
v.
E & A BEEPERS & CELLULARS
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The court granted the plaintiff's motion for a preliminary injunction, asset freeze, accounting, and expedited discovery, finding that the defendants violated federal law by manufacturing and selling unauthorized cable television decoder devices.
[1] A party seeking preliminary injunctive relief under the Communications Act must demonstrate a substantial likelihood of success on the merits, a substantial threat of irr…
[2] When a statute authorizes injunctive relief for violations, a plaintiff need only make a minimum showing of irreparable harm, and the absence of justification for violati…
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Join FLexlaw to unlock all legal intelligencePlaintiff, a cable operator, alleged that defendants manufactured and sold pirate decoder devices that illegally intercepted its scrambled cable signa…
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ORDER GRANTING PLAINTIFF’S MOTION FOR PRELIMINARY INJUNCTION, ACCOUNTING, EXPEDITED DISCOVERY AND ASSET FREEZE, INCLUDING RESTORATION OF FUNDS
GOLD, District Judge.
THIS CAUSE comes before the Court upon Plaintiffs, MediaOne of Delaware, Inc.’s (“Plaintiff’), Motion for Preliminary Injunction [D.E. #7]. Plaintiff seeks to enjoin Defendants from engaging in the manufacture, assembly, modification, import, export, sale or distribution of cable television decoder devices, in violation of the Communications Act of 1934, 42 U.S.C. §§ 553 and 605. Plaintiff also moves this Court for an Order freezing the assets of Defendants and expediting discovery. Additionally, Plaintiff requests that Defendants be ordered to provide an accounting and to restore funds appropriated subsequent to a seizure conducted by state law enforcement authorities.
This action alleges violations of 47 U.S.C. §§ 553 and 605. Jurisdiction is invoked pursuant to 28 U.S.C. § 1331 for actions arising under federal law, and the Court has pendent jurisdiction over the state law claims asserted in the complaint pursuant to 28 U.S.C. § 1367. Having carefully considered the arguments of the parties, supplemented by oral argument and testimony, and having reviewed the applicable law, and being otherwise advised in the premises, the Court concludes that Plaintiff has satisfied the standards prescribed by Rule 65 of the Federal Rules of Civil Procedure and §§ 553(c)(2)(A) and 605(e)(3)(B)© of the Communications Act, entitling it to injunc-tive relief as supported by the following facts and legal analysis.
I. Findings of Fact
Plaintiff, a Delaware corporation, is a multiple system cable operator. Pursuant to franchise agreements with various municipalities and political subdivisions, Plaintiff operates and maintains cable television systems to provide cable programming to its subscribers throughout the United States. Subscribers who request Plaintiffs services, pay a monthly fee. Plaintiffs private communication programming signal is not intended for public use.
Plaintiff offers subscribers programming “packages.” Basic programming'packages are billed at a flat rate. Subscribers may purchase, premium services, such as Cine-max, Home Box Office, and Showtime, for an additional fee. Pay-per-view programming, enabling subscribers to order individual movies, sporting events, and other entertainment, is available at a per event fee.
Plaintiff receives its premium programming from the originators of those services via satellite. These signals are then transmitted by Plaintiff to subscribers through a system of coaxial and/or fiberoptic cables. To prevent the interception of programming for which the subscriber has not paid, Plaintiff encodes, or “scrambles,” the . signals it transmits. In order to view these scrambled signals, subscribers are provided with a decoder device, which is incorporated into a converter. This device decodes the scrambled signals enabling the programming selected and purchased to be viewed clearly on the subscriber’s television set. Services not purchased by the *1351 subscriber remain scrambled and unviewa-ble.
The decoder devices provided by Plaintiff to its subscribers possess an “addressibility” feature. This feature, when attached, communicates with Plaintiffs central computer. The feature is essential for its billing of pay-per-view programs. Reception of a pay-per-view program is authorized when a command is sent from the central computer to the converter-decoder of the purchasing subscriber, which then decodes the otherwise scrambled picture of the pay-per-view program to be shown.
A charge for the program is documented and generated by the central computer when the corresponding purchase order and authorization command for viewing the program is received and acted upon through the addressibility function of the subscriber’s converter. If a converter de-scrambles the pay-per-view programming, but is not addressable by Plaintiffs computer, the subscriber using that device will receive all cablecasted signals, including premium and pay-per-view programs without charge.
Scrambling is the primary security method used by cable operators, including Plaintiff, to prevent receipt of cable transmissions by subscribers who have not paid for the services. However, it has become possible for persons to install an unauthorized, or “pirate,” decoder device or “de-scrambler” onto Plaintiffs cable system and to receive all of Plaintiffs scrambled programming, without authorization or paying therefor. Without gaining the subscriber’s permission to conduct an on-site inspection, Plaintiff cannot detect or prevent the illegal interception of its programming via pirate descramblers.
Defendant George Lee owns or operates Defendant Media Tech International, and is an officer or employee of Defendant Videotron Incorporated, a Florida corporation. Defendant Arturo Morales, employed by Defendant Videotron Incorporated, operates or is employed by Defendant E & A Beepers Corporation, a Florida corporation conducting business as E & A Beepers & Cellulars.
Plaintiff alleges that Defendants have engaged in the business of modifying and manufacturing pirate decoder devices. Defendants sell these unauthorized cable television decoders and descramblers, capable of illegally intercepting Plaintiffs scrambled signals, for a profit. Defendants have sold and have assisted in the distribution of these unauthorized devices with the specific knowledge and intent that the devices will be used to intercept and receive Plaintiffs scrambled signals by persons not authorized or paying for Plaintiffs services. Defendants’ conduct, in modifying, manufacturing, selling, and distributing the pirate decoders, is violative of §§ 553 and 605 of the Communications Act, and § 812.15(4)(b)(l) of the Florida Statutes.
Upon information communicated by the Metro Dade Police Department of an imminent search and seizure at Defendants’ facilities, Plaintiff became aware of Defendants’ illicit enterprise. Defendants had been the subjects of a sting operation conducted by state and local law enforcement, who had been investigating Defendants’ operations for several months. The investigation revealed that Defendants were operating a large-scale pirate decoder modification and sale business. Defendants’ premises, which were held out to the public as distributors of electronics, were used as fronts for Defendants’ illegal decoder business. Through this multi-agency investigation, it was discovered that Defendants sold their devices to over-the-counter customers,' and filled a substantial amount of telephone orders received from throughout the United States as a result of nationwide advertising.
One of Plaintiffs Revenue Protection and Signal Security managers was present during the seizure at Defendants’ businesses. While on the premises, he observed several rooms containing modified decoding devices and components and numerous decoder modification tools. He la *1352 ter saw unmodified devices, descrambled chips, copies of advertisements, and computerized sales records. Although some of the advertisements stated that Defendants did not sell the illegal devices in Florida, sales records reflecting Florida purchases and sales to areas serviced by Plaintiff were observed. Some of this equipment was capable of intercepting Plaintiffs scrambled signals. Much, but not all, of the property on Defendants’ premises relative to the unauthorized manufacture and sale of pirate decoders was seized by the police. In addition to the seizure of the pirate decoders, business records and proceeds of decoder sales on the premises, Defendants’ assets were ordered frozen. However, Plaintiff learned that subsequent to police intervention, Defendant Lee had issued himself a check in the amount of $130,000.
Subsequent to the seizure on September 1, 1998, Plaintiffs filed - a complaint and moved, on an ex parte basis, for a temporary restraining order, enjoining Defendants’ further sales of its devices, requesting a restraint be placed on Defendants’ assets, and seeking other relief. This Court found that, based on the verified complaint and affidavits submitted by Plaintiff, it did not appear that there was immediate and irreparable injury, or that loss of damage would result to Plaintiff before Defendants could be heard in opposition. Therefore, Plaintiffs motion for an ex parte order was denied. Instead, Plaintiff was directed to serve the complaint and motion for preliminary injunction on Defendants. Defendants were directed to expedite their responses, after which a hearing was scheduled.'
At the October 8, 1998 hearing, the parties were afforded the opportunity to brief the issues raised in the record, and to present witnesses and evidence. Upon adjournment, the parties were permitted to file memoranda summarizing their positions and arguments. A review of all submissions supports the grant of relief which Plaintiff requests.
II. Discussion and Analysis
The Communications Act prohibits: (1) the manufacture and/or sale of converter-decoders with the specific knowledge or intent that the device will be used for the unauthorized interception and reception of cable television programming signals, 47 U.S.C. § 553(a)(1); and (2) the manufacture, assembly, modification, import, export, sale or distribution of such devices, knowing or having reason to know that they will be used primarily in the unauthorized interception or reception of cable programming signals. 47 U.S.C. § 605(e)(4). Each individual device sold, manufactured, assembled, or distributed in contravention of these sections is a separate violation. See id.
Having discovered Defendants’, illicit and infringing enterprise, Plaintiff has applied for preliminary injunctive relief under §§ 553 and 605. These sections authorize a court to enter “permanent injunctive relief on such terms as it deems reasonable to prevent or restrain violations” of the statutes. 47 U.S.C. §§ 553(c)(2)(A) and 605(e)(3)(B)(i). Plaintiff believes this relief is necessary to ensure that Defendants cannot cause the destruction or disappearance of relevant evidence and dissipation or misappropriation of their assets prior to adjudication of Plaintiffs claims on the merits. At the hearing, Plaintiff presented competent evidence that Defendants engaged in activities prohibited by §§• 553 and 605.
Defendants’ attempt at rebutting Plaintiffs evidence and allegations was unconvincing. Rather than explaining the presence of the illegal devices, Defendant has tried to dismiss Plaintiffs meritorious claims on the ground that Plaintiff lacks standing to bring this action. Specifically, Defendants argue that, since Plaintiff has not demonstrated that any subscribers to Plaintiffs services has used devices manufactured or sold by Defendants to gain unauthorized access to Plaintiffs premium and pay-per-view services, Plaintiff is not a “person aggrieved” under § 553, and *1353 therefore is not entitled to the relief provided in that section.
Defendants’ challenge to Plaintiffs standing is unpersuasive. Section 553(c)(1) specifically provides that “any person aggrieved by any violation of subsection (a)(1) of this section may bring a civil action in a United States District Court....” “Any person aggrieved” is defined, in part, in § 605(d)(6) as “any person engaged in the lawful manufacture, distribution, or sale of equipment necessary to authorize or receive satellite cable programming.” Courts are instructed to construe the term “any person aggrieved” broadly. See Joe Hand Promotions v. Rennard Street Enterprises, 975 F.Supp. 746, 753 (E.D.Pa.1997) (quoting reference omitted). In view of Plaintiffs proprietary interest in the lawful manufacture and distribution of its cable programming devices, Defendants’ unauthorized manufacture and distribution of decoders with the possibility of intercepting Plaintiffs signals in violation of §§ 553 and 605, and the definition of the term and broad construction that must be given, Plaintiff is a “person aggrieved” by Defendants’ conduct in violation of the Communications Act, and is thereby authorized to institute this action against Defendants. See Time Warner Cable of New York City v. Barnes, 13 F. Supp. 2d 543, 548 (S.D.N.Y.1998). Plaintiff, having standing to bring this action, must illustrate its entitlement to injunctive relief.
A. Legal Standard for Preliminary Injunction
Entitlement to preliminary in-junctive relief requires the movant to demonstrate: (1) a substantial likelihood of success on the merits; (2) a substantial threat of irreparable harm if the injunction is not granted; (3) the threatened injury to the movant outweighs any potential harm to the party being enjoined; and (4) that granting the injunction would not be adverse to the public interest. See American Red Cross v. Palm Beach Blood Bank, Inc., 143 F. 3d 1407, 1410 (11th Cir.1998). Although courts are not confined to fixed quantitative parameters for applying the factors necessary for determining the propriety of injunctive relief, the issuance of a preliminary injunction is an extraordinary equitable remedy which should not 'be granted absent a clear showing -that the moving party has met its burden. See Cafe 207 v. St. Johns County, 989 F. 2d 1136, 1137 (11th Cir.1993). The primary justification for granting a preliminary injunction is to preserve the court’s ability to render a meaningful decision and provide an effective remedy after a trial on the merits. See Tefel v. Reno, 972 F.Supp. 623, 633 (S.D.Fla.1997). Findings made on an application for a preliminary injunction are not controlling at a later hearing to impose a permanent injunction. See E. Remy Martin & Co., S.A. v. Shaw-Ross Int’l Imports, Inc., 756 F. 2d 1525, 1527 n. 1 (11th Cir.1985).
Moreover, when authority for the issuance of “statutory” injunctive relief is provided by legislative enactment, Plaintiff, as an aggrieved party is entitled to such relief upon a showing that Defendants violated the statute without regard to the traditional equitable prerequisites of injunctive relief. See, e.g., Burlington Northern R.R. Co. v. Department of Revenue, 934 F. 2d 1064, 1074-75 (9th Cir.1991); Storer Communications, Inc. v. Mogel, 625 F.Supp. 1194, 1202 (S.D.Fla.1985). With these tenets in mind, and under the factual circumstances of this case and the law interpreting violations of the Communications Act, it is apparent that Plaintiff has satisfied the requirements necessary for a preliminary injunction to issue.
1. Substantial Likelihood of Success
The statement of the facts set forth above indicates a substantial likelihood that Plaintiff will succeed on the merits of its complaint. Plaintiff presented uncon-troverted evidence that Defendants were in possession of devices used for the sole purpose of assisting in the unauthorized interception of cable programming services provided by cable operators, including *1354 Plaintiff. This clear violation of the Communications Act was recognized by Florida authorities, who, subsequent to a lawful search of Defendants’ premises, uncovered substantial evidence of violations which the statute was designed to prevent.
The devices in Defendants’ possession had non-addressibility features to undermine Plaintiffs ability to track unauthorized interception. These features, which defeat security measures of cable operators, clearly show Defendants had the intent to assist in the theft of cable programming services. Although, as Defendants argue, Plaintiff has not yet substantiated its claim that some of the devices in fact intercepted Plaintiffs signals, a lack of evidence of unauthorized access would only affect the amount of actual damages recoverable by Plaintiff. It does not, as Defendants suggest, act as a bar against success on the merits of a claim for violations of the Communications Act and all recovery available thereunder. Thus, the Court finds Plaintiffs have satisfied their burden of showing a likelihood of success on the merits.
2.Substantial Threat of Irreparable Injury
Nearly all courts agree that a party seeking injunctive relief need only make a minimum showing of irreparable harm where the nonmovant has violated a statute that authorizes the issuance of injunctions. See, e.g., Gresham v. Windrush Partners, Ltd., 730 F. 2d 1417, 1423 (11th Cir.1984); see also EEOC v. Cosmair, Inc., 821 F. 2d 1085, 1090 (5th Cir.1987); Intermedia Partners Southeast v. QB Distributors L.L.C., 999 F.Supp. 1274, 1283 (D.Minn.1998); Time Warner Cable of New York City v. Freedom Electronics, Inc., 897 F.Supp. 1454, 1460 (S.D.Fla.1996) (“several federal courts have held that absence of justification for violation of clear statutory rights virtually eliminates the necessity of showing irreparable harm”).
. Plaintiff has sufficiently demonstrated that Defendants, having been found to have unauthorized decoders in their possession and for which they were criminally charged, violated a “clear statutory right.” Moreover, the fact that the precise quantity of damages suffered by Plaintiff as a result of Defendants’ unlawful activities may be difficult or impossible to calculate, indicates that Plaintiff lacks an adequate remedy at law for Defendants’ acts. See id. Therefore, justification exists for finding that the irreparable harm element supporting an application for a preliminary injunction has been satisfied.
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