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DirecTV, LLC v. Spina

United States District Court, S.D. Indiana, Indianapolis Division

January 4, 2017

DirecTV, LLC, Plaintiff,
v.
Victor A. Spina, et al., Defendants.

          ORDER

          Hon. Jane Magnus-Stinson, Chief Judge

         This litigation involves claims by Plaintiff DirecTV, LLC (“DirecTV”) that Defendants Victor Spina, William Spina, and Martinsville Corral, Inc. (“MCI”) received and displayed DirecTV programming in two commercial establishments without proper authorization, through a residential account associated with Victor Spina. DirecTV alleged claims against MCI and the Spinas for violations of the Federal Communications Act and the Electronic Communications Privacy Act. On August 30, 2016, the Court denied a Motion for Sanctions filed by Defendants, granted DirecTV's Motion for Summary Judgment to the extent that it found that MCI is liable as a matter of law for violating 47 U.S.C. § 605, denied in part DirecTV's Motion for Summary Judgment to the extent that it found that genuine issues of material fact precluded summary judgment on DirecTV's vicarious liability claim against the Spinas under § 605, and denied in its entirety Defendants' Cross-Motion for Summary Judgment. [Filing No. 115.]

         On September 29, 2016, Defendants filed a Motion for Reconsideration of Ruling on Summary Judgment Motion. [Filing No. 119.] The motion is now fully briefed, and ripe for the Court's decision.

         I.

         Background[1]

         A. DirecTV's Business

         DirecTV is a direct broadcast satellite service, offering more than 225 channels of television and other programming to more than 20 million customers throughout the United States. [Filing No. 79-9 at 3.] The satellite programming DirecTV offers includes major cable networks, local stations, studio movies, special events programming, and a variety of sports and other special interest programming. [Filing No. 79-9 at 3.] DirecTV offers its television programming to residential and business customers on a subscription and pay-per-view basis only, and in order to receive the programming, each customer must obtain DirecTV satellite hardware which includes a small satellite dish and a DirecTV integrated receiver/decoder with a DirecTV Access Card. [Filing No. 79-9 at 3.] Each customer must also establish an account with DirecTV. [Filing No. 79-9 at 3.] DirecTV sells and distributes the satellite equipment necessary to receive DirecTV programming and, upon activation of the Access Card by DirecTV, the customer can receive and view the channels to which the customer has subscribed. [Filing No. 79-9 at 3.]

         DirecTV charges subscription fees for both residential and commercial programming, and commercial programming subscriptions are generally more expensive than residential subscriptions. [Filing No. 79-9 at 4.] Residential and commercial subscribers use the same satellite receiving equipment, however, which can lead to commercial establishments moving satellite receiving equipment from a residence to a commercial establishment in order to receive commercial programming at the lower residential programming rate. [Filing No. 79-9 at 4.] In order to combat commercial misuse of its programming signals, DirecTV uses investigators and auditors who help to identify commercial establishments that are unlawfully exhibiting DirecTV residential programming in a commercial setting. [Filing No. 79-9 at 4-5.]

         B. The Spinas' Involvement With MCI

         Defendants Victor Spina and William Spina are brothers and co-owners of MCI. [Filing No. 105-2 at 1.] Victor is the President of MCI, and William is the Vice President or Secretary. [Filing No. 79-20 at 2-3.] The only shareholders in MCI are Victor and William Spina. [Filing No. 79-20 at 3.] MCI is a franchisee of Texas Corral. [Filing No. 79-20 at 5.]

         In 2009, MCI opened Martinsville Texas Corral, a Texas Corral franchise and commercial bar/restaurant located at 610 Birk Road in Martinsville, Indiana. [Filing No. 105-1 at 1.] MCI opened a second Texas Corral franchise, Shelbyville Texas Corral, in 2011. [Filing No. 105-1 at 2.] Shelbyville Texas Corral was located at 2103 Intelliplex Drive in Shelbyville, Indiana. [Filing No. 105-1 at 2.] Both Martinsville Texas Corral and Shelbyville Texas Corral (collectively, the “Restaurants”) were located in buildings that had previously been restaurants. [Filing No. 105-1 at 1-2.] Neither Victor nor William managed the Restaurants. [Filing No. 105-1 at 5.] Rather, each restaurant has its own general manager. [Filing No. 105-1 at 5.] When MCI hired managers for the Restaurants, William made the hiring decisions. [Filing No. 79-20 at 7.]

         C. DirecTV Installation at the Restaurants

         When MCI opened the Martinsville Texas Corral in 2009, it wanted televisions in the restaurant so William contacted DirecTV's local office. [Filing No. 105-1 at 1.] DirecTV's representative at the local office was Craig Spencer, who installed DirecTV through his business, Superior. [Filing No. 105-1 at 1.] Superior is or was an authorized agent for DirecTV. [Filing No. 105-6 at 5-6.] Mr. Spencer and the Spinas went to school together, and have known each other for at least thirty years. [Filing No. 105-6 at 8; Filing No. 105-6 at 11.] Mr. Spencer agreed to outfit Martinsville Texas Corral with a DirecTV antenna and DirecTV receivers, and to set up a DirecTV subscription. [Filing No. 105-1 at 1.] Superior, through a subcontractor, completed the installation at Martinsville Texas Corral before the restaurant opened for business, and set up a subscription service. [Filing No. 105-1 at 1.] Mr. Spencer told William that “the subscription package he signed us up for was proper and appropriate for the restaurant, and that we were authorized to receive and display to the public the DirecTV signals at the restaurant….” [Filing No. 105-1 at 1.]

         In 2011, when MCI opened the Shelbyville Texas Corral, it again contacted Mr. Spencer to have DirecTV installed at the restaurant. [Filing No. 105-1 at 2.] Again, Superior had a subcontractor go to Shelbyville Texas Corral to install the DirecTV receivers before the restaurant opened for business. [Filing No. 105-1 at 2.]

         After the installations at the Restaurants were complete, MCI was using ten DirecTV receivers total: seven at Martinsville Texas Corral (six used for television, and one for music only); and three at Shelbyville Texas Corral (two used for television, and one for music only). [Filing No. 105-1 at 2.]

         D. DirecTV Investigates Usage of DirecTV Programming at the Restaurants and Discontinues Service

         In mid-2014, DirecTV engaged the services of an auditor, Kevin Karlak, to determine whether DirecTV satellite programming was properly being displayed at the Restaurants. [Filing No. 79-9 at 4-5.] On June 3, 2014, Mr. Karlak visited Martinsville Texas Corral and observed six television sets, with four of them exhibiting DirecTV satellite programming for public viewing. [Filing No. 79-9 at 5.] The four televisions were displaying DirecTV channel 212 - NFL Network programming - and Mr. Karlak also observed a DirecTV receiver behind a television, a DirecTV remote control, a DirecTV information banner or black banner at the top of the screen, and a DirecTV receiver with identification number 029417397394. [Filing No. 79-9 at 5.] At the time of Mr. Karlak's visit, there were other individuals (either customers or employees) in the restaurant. [Filing No. 79-3 at 00:37 seconds.][2]

         On June 4, 2014, Mr. Karlak visited Shelbyville Texas Corral and observed two television sets, with one of them displaying DirecTV satellite programming for public viewing. [Filing No. 79-9 at 5.] The television was displaying DirecTV channel 206 - ESPN programming - and Mr. Karlak also observed a DirecTV receiver under a television, a partial DirecTV receiver with identification number 247171, and the black DirecTV information banner at the top of the screen. [Filing No. 79-9 at 5.] At the time of Mr. Karlak's visit, there were other individuals (either customers or employees) in the restaurant. [Filing No. 79-6 at 00:24 and 00:33 seconds.][3]

         When DirecTV received the auditor's reports, it searched its records to determine whether the Restaurants had DirecTV commercial accounts and learned that they did not. [Filing No. 79-9 at 6.] DirecTV determined, however, that the receivers used in the Restaurants were associated with DirecTV residential account number 045448353, which is under the name Victor Spina for service at a residential address located at 785 East Timber Drive in Martinsville. [Filing No. 79-9 at 6.] Account number 045448353 was purchased at a residential rate. [Filing No. 79-9 at 6.]

         The invoices that DirecTV provided for account number 045448353 were addressed to Victor Spina, “For Service at: 785 E. Timber Dr. Martinsville, IN 46151-8391.” [Filing No. 105-1 at 3.] The invoices do not indicate whether the account is “residential” or “commercial” and, for the June 21, 2014 invoice, indicated that service was for ten televisions and totaled approximately $162 for monthly service.

         DirecTV's billing records also indicate that account number 045448353 was in Victor Spina's name, and list the address as 785 E. Timber Dr., Martinsville, IN. [Filing No. 79-8 at 2.] DirecTV's records list the following locations for the DirecTV receivers that are associated with account number 045448353: “living rm, office, kids rm, master bed, garage, basement, guest bed, kids rm, garage, and loft.” [Filing No. 79-8 at 11-16.] Neither the invoices nor DirecTV's billing records list MCI as the account holder, or list the addresses of either of the Restaurants. [See Filing No. 105-1 at 3; Filing No. 79-8.]

         On June 30, 2014, DirecTV discontinued programming service for account number ...


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