Opposition Brief — Time Warner Entertainment Co. v. National Satellite Sports, Inc.

No. 01-866 —~“

Suptatne Cotte tem

FILED

JAN 10° 9nN0

IN THE

Supreme Court of the United States

oes

TIME WARNER ENTERTAINMENT COMPANY, L.P.,

D/B/A TIME WARNER CABLE,

Petitioner,

—

NATIONAL SATELLITE SPORTS, INC.,

Respondent.

ON PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES

COURT OF APPEALS FOR THE SIXTH CIRCUIT

BRIEF OF RESPONDENT

NATIONAL SATELLITE SPORTS, INC.

IN OPPOSITION TO PETITION FORA

WRIT OF CERTIORARI

MARCUS W. CORWIN MICHAEL J. DELL

SKIP M. KLAUBER Counsel of Record

MARCUS W. CoRWIN PA LAUREN FREEMAN-BOSWORTH

7777 Glades Road, Suite 208 KRAMER LEVIN NAFTALIS

Boca Raton, Florida 33434 & FRANKEL LLP

(561) 482-3636 919 Third Avenue

New York, New York 10022

(212) 715-9100

Attorneys for-Respondent

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(i)

COUNTER-STATEMENT OF THE QUESTIONS PRESENTED

1. When a magistrate judge orally grants summary

judgment that a company that, by contract, had rights only

to a closed circuit television feed and not to an HBO feed,

and indeed was contractually barred from suing for piracy

with respect to the HBO feed, lacked standing to sue under

47 U.S.C. § 605(a) for piracy of the HBO feed, and the

defendant did not even argue that the action would be

barred in the absence of that contractual prohibition, and

there is no basis to believe that the magistrate judge would

have so held, and any such holding would not have been

necessary to the decision, should the company be

collaterally estopped from bringing a different lawsuit

under 47 U.S.C. § 605(a) against the same defendant for

divulging the contents of a different communication when

an entirely different contract expressly gave the company

the right to seek legal redress for that conduct.

2. Whether a company with a proprietary interest in a

communication has standing to bring an action under 47

U.S.C. § 605 against a cable operator that divulged the

contents of the communication without authorization and

in derogation of that proprietary interest.

(ii)

RULE 29.6 LISTIN

Pursuant to Supreme Court Rule 29.6, Respondent

National Satellite Sports, Inc. states that it has no parent

corporation nor is there any publicly held company owning

ten percent or more of its stock.

(iii)

TABLE OF CONTENTS

Page

COUNTER-STATEMENT OF THE QUESTIONS

PRESENTED .......ccccccccccccccscccscccescsceceeeeccsssnsesenesseeses sil

RULE 29.6 LISTING.........:ccccssscsceeeesseressreneeseesesnnensneneeens ii

TABLE OF CONTENTS .........:cccccseeeeeessseeseeeeenereneaneneesernenes iii

TABLE OF AUTHORITIES............:-:eeeeseercsseseeeersesnerersenereees iv

PRELIMINARY STATEMENT ........-::seccecessesseseeerseeesetnnseeness 1

COUNTER-STATEMENT OF THE CASE ........::seeeeeeeeseeeseees 3

REASONS FOR DENYING THE WRIT ........-+--sseeeeeeeeeeeeeesees 9

1. Coach’s Corner does not estop NSS from

pursuing this litigation. ........---.-+ssseeeeseseerereeees >

Il. The Sixth Circuit correctly applied the plain

language of § 605, and its holding is entirely ’

consisteiit with both the legislative history and

the caselaw ON § 605.........ccccceeeeeeereneeeeeeeerennees 21

CONCLUSION. .........-cesessssccccesscsceeecesseserneeeeeesesssscenneseoes 30

(iv)

TAB RITI

CASES

Arab African Int'l Bank v. Epstein, 958 F.2d 532

(3d Cir. 1992), rev'd on other grounds,

ee Be ee Gas ED | hckcrstndisidecniatninitaades 14n.4

Baker Elec. Co-op v. Chaske, 28 F.3d 1466

ep RRR iaicrree Bc Soe eens Fe nee oe 14n.4

Bank of Guam v. Wiseman, No. 87-1799, 1990

WL 140521 (9th Cir. Sept. 27, 1990) 20... eeeeeeeee 19

Blonder-Tongue Labs., Inc. v. University of Ill. Found.,

i EE ciiattabicabincstncipeaeadininins 12-13

Chicago & Southern Air Lines v. Waterman S.S. Corp.,

Se ee Ue CN secteciiekteneniacbctniatedsetbontaiisesininied 16

Comair Rotron, Inc. v. Nippon Densan Corp..,

GD F.3G TSSS. COG. Gat. 1995) .ccececerioccesscccssevsees 15 n.4

Gelb v. Royal Globe Ins. Co.,

Pe Pee ae Ce i PE swidincdaccassaistatbcccevcnemnases 20

General Instrument Corp. v. Nu-Tek Elecs. Mfg.,

No. 93-CV-3854, 1996 WL 442790

(E.D. Pa. July 31, 1996), affd, 197 F.3d 83

ae i, SPE - cttascecaeebusaliedeinnsiigaichabieveinesbecichiemnndntsinees 24

Graver Tank & Mfg. Co. v. Linde Air Prods..,

ee a tae Ce etitisiinbesiiihcipncstininacteiinicrtenannaies 4n.1

Halpern v. Schwartz, 426 F.2d 102

Ge as EE witidetestnenetichtcnniinisiinniinciiniabubpivnieiiisdetitiiian 20

Hicks v. Quaker Oats Co.,

GG2 F.2d TESS CG Cae. WSBT) cnccceccvccccccescocenssee 14n.4

(v)

Hydranautics v. FilmTec Corp.,

204 F.3d BBO (Sth Cie. DOGO) cnvccccsvccccccccsscecccesssessees 10

Irving Nat'l Bank v. Law,

BO PAG T2i CAG Cie. BGG) .. cccrcerccccerccestsconvennsenies 19-20

Joe Hand Promotions v. D.M.B. Ventures, Inc.,

No. CIV A 93-2656, 1995 WL 328399 (E.D. La. May

TE, SD ccnindcctuntdtsichimsiniadbidldimaimnscsbuainienmibiabiaaan 27-28

Joe Hand Promotions v. Rennard St. Enters.,

975 F. Supp. 746 (E.D. Pa. 1997) ...............cceeees 24, 26

Johnson v. Watkins,

OE Pe Fee Ce Ce, FAO eicenivisitnnticmeanion 13

Leal-Rodriguez v. INS,

DID F.2e SEP C7 Cie. BOGE) ccicrectsdestnccsietsnnstnabssenss 19

MediaOne, Inc. v. E&A Beepers & Cellulars,

43 F. Supp. 2d 1348 (S.D. Fla. 1998) .........cceeccceeeees 24

Nagle v. Alspach,

SB P.BE TAL COG CW. AGGIE) sccccocinsscctceccssnotenensssossiderse 16

Natural Res. Def. Council v. NRC,

216 F.3d 1180 CDS. Gar, DOGG) cccccvcccccvssccssveceee. 17 n.6

Overseas Motors, Inc. v. Import Motors Ltd.,

375 F. Supp. 499 (E.D. Mich. 1974),

affd, 519 F.2d 119 (6th Cir. 1975) ......ccccccccsccsooseeeee 12

Peabody Coal Co. v. Spese,

syes 2 Fe, C+ Be. 4 eoeenenmne 14n.4

Richmond Screw Anchor Co. v. United States,

re ee ee CD snchiicscicadndacadinnavsdusiblsndinidin 17 n.6

(vi)

Ritter v. Mount St. Mary's College, |

814 F.2d 986 (4th Cir. 1987) .......cceeeeeeeeeeeeees 14n.4

Schwager v. Fallas (In re Schwager),

DOG BEY cicccinenivibitintincinimcibidinitindinnnmeinn 15

Smith v. Cincinnati Post & Times-Star,

7S FAG FAD COR Gat. BOTS) cececcvcccccovvscevecseers 30 n.14

Staatsburg Water Co. v. Staatsburg Fire Dist.,

DET Cee FOO eres ROOD covreeesesecensicsineenmnscneeeenins 16

Television Signal Corp. v. Chapman,

No. C92-3732, 1993 WL 69179

ey ees SE, cas ED aciacbinickahabehchetnniedesiemencenen 26

Territory of Guam v. Borja, 93 F.2d 914

(9th Cir. 1992), amended (Jan. 20, 1993)................. 19

That’s Entertainment, Inc. v. J.P.T., Inc.,

S43 F. Supp. 99S (D. Md. 1993S) ...cccsscccrccesesecceees 28-29

Time Warner Cable v. Freedom Elecs..,

897 F. Supp. 1454 (S.D. Fla. 1995) 20.0.0... ceeeeeee 24

Time Warner Cable v. Googies Luncheonette, Inc.,

77 F. Supp.2d 485 (S.D.N.Y. 1999) ............000 25 n. 11

Time Warner Cable v. M.D. Electornics, Inc.,

901 POG TIO COG Gir. BOGS cceccevecscnvsiseticerecenss 25 n.11

Time Warner Cable v. Taco Rapido Rest.,

988 F. Supp. 107 (E.D.N.Y. 1997) ......25 n. 11, 26n.12

Time Warner Entertainment v, Worldwide Electronics, L.C.,

50 F. Supp.2d 1288 (S.D.Fla. 1999).25 n.11

Turney v. O'Toole,

898 F.2d 1470 (10th Cir. 1990) ......... ee. 14n.4

(vii)

In re Westgate-Cal. Corp.,

O42 F.SG 1174 (OG Ge. BGG]) cevrvcccccvscccevccecesevenvenes 18

Williams v. Ward,

SEG F.DS LEGS COSA. 3977) covcccecccccesccovesevvceneseesees 20

Yamaha Corp. of Am. v. United States,

DSL F.De BS COL, Gae, BOGE) covecececccesescesovesesesonseess 19

STATUTES

GP UDG, 5 GBD cecccenccesnecrerssesenssorecnsescenvaveveoncesenseeneet passim

Pe Wis FU, Fe ee ceconecsnnrcensnstntenicntipsnaunssencsveunccseseninigs iM 16

Ninth Circuit Local Circuit Rule 36-3(a) .....................000 19

MISCELLANEOUS

1B James W. Moore, Moore’s Federal Practice .443.10

16 Wright & Miller, Federal Practice & Procedure 1527

ETI canccetecdesunkicaadeipeiecioussenkeussessodecsibdieeeinemsscdeauteianret 3

Restatement (Second) Judgments § 27

EIEN VireidilistcocecaieiibenieidicenabapdamnaaiGialis 15, 17-18, 19, 20 n.8

Cable Communications Policy Act of 1984,

H.R. Rep. No. 98-934, 1984 U.S. Code

Catet: © AGE: NEWS SES cocninccessecsovevernesicoveevenvsesees 22

P.L. 100-67, Trademark Law Revision Act of 1988 -

Satellite Home Viewer Act of 1988,

H.R. Rep. No. 887(11), 1988

U.S. Code Cong. & Admin. News 5577, 5658 .........+0+ 22

j

‘

(1)

PRELIMINARY STATEMENT

National Satellite Sports, Inc. (“NSS”) respectfully asks

this Court to deny the petition of Time Warner

Entertainment Company, L.P. d/b/a Time Warner Cable

(“TW”) for a writ of certiorari because the petition does not

raise any issue meriting this Court’s review.

TW asserts that this appeal presents this Court with an

opportunity to resolve a conflict in the Circuits as to

whether a district court holding that is based on~-two

alternative grounds is a basis for collateral estoppel as to

both grounds. That assertion is incorrect and the unique

facts of this case do not squarely present that issue, for

several reasons. First, the magistrate judge did not clearly

make the alternative holding as to which TW seeks to estop

NSS and two other prerequisites of estoppel -- an identity

of issues and a full and fair opportunity to be heard -- are

not present. TW argues that a magistrate judge in a prior

lawsuit orally granted summary judgment that NSS did not

have standing under 47 U.S.C. § 605(a) to sue TW for

wrongfully transmitting an HBO network feed to a

commercial establishment both (a) because TW’s own

subsidiary’s contract that governed NSS’ rights to distribute

the event to commercial establishments by closed circuit

(“CCTV”) telecast expressly precluded NSS from bringing a

piracy action with respect to the HBO network feed and (b)

because 47 U.S.C. § 605 supposedly barred such standing

even in the absence of such a contractual bar. However,

TW did not even argue in its summary judgment motion in

that prior proceeding that NSS would not have had

standing to sue for the misuse of the HBO network feed

under that statute absent the language of the contract, and

the magistrate judge’s oral decision does not indicate that

he intended to so hold. Indeed, such a holding would have

made no sense since NSS’ rights derived from that contract

and in its absence NSS would not have had any rights at

(2)

all. In any event, the most TW could argue is that his

decision is unclear on that point.

Moreover, since TW did not even argue for such a

holding in that prior lawsuit, NSS did not have a full and

fair opportunity to litigate the issue. Furthermore, there is

not even close to an identity of issues between that case

and this case because NSS’ contract in this case is

diametrically different from the one in the prior

proceeding: the contract here expressly grants NSS the

right to pursue piracy claims with respect to all

“unauthorized use and exhibition of the telecast,” does not

distinguish between HBO and CCTV telecasts and does not

derive from TW itself. Accordingly, collateral estoppel

would be inappropriate here even if, as TW now argues,

clear alternative grounds for a trial court decision could be

a basis for estoppel as to both grounds.

Beyond that, the “conflict” in the Circuits is on its way

to disappearing as most Circuits have already adopted the

modern Restatement rule which is correct and consistent

with the Sixth Circuit’s decision here. Because the only

cases cited by TW in support of its contrary position are

outdated, dicta, or unpublished decisions, no meaningful

conflict exists.

TW’s second issue, that it cannot be liable to NSS under

47 U.S.C. § 605, also does not warrant the Court’s review.

Once again, TW misstates the issue. While TW asserts that

it mistransmitted “an entirely separate satellite feed” (TW’s

petition for writ of certiorari (“P”) 3), to a commercial

establishment to which NSS was authorized to transmit a

communication of the boxing match but TW was not, in

fact the signals that NSS and TW received in their

respective Ohio facilities both originated from the same

initial transmission of the communication, as the Sixth

Circuit found below. (Petitioner’s Appendix (“PA”) 3a).

Moreover, the application of § 605 in NSS’ favor by the

(3)

Sixth Circuit and the district court below are entirely

correct and consistent with the language of that statute, its

legislative history, and prior decisions of district courts

interpreting and applying that statute. As both courts

below found, NSS’ suit seeks to redress precisely the type of

improper divulging of the content of a communication

which Congress intended to remedy in the Communications

Act. The absence of any contrary judicial authority or

legislative history further establishes that this issue is, at

best for TW, not ripe for this Court’s review.

COUNTER-STATEMENT OF THE CASE

NSS and TW each obtained certain exclusive rights to

transmit the broadcast of a December 1996 boxing match

between Riddick Bowe and Andrew Golota. NSS’ contract

gave it the exclusive right to transmit the communication of

the boxing match to commercial establishments in Ohio;

TW’s contract granted it the exclusive right to transmit the

communication on a pay-per-view basis to its Ohio

residential customers. However, TW erroneously provided

the communication to Melody Lane Lounge, an Ohio

commercial establishment, through the TW residential pay-

per-view service, for a price substantially lower than NSS

charged commercial establishments. TW characterizes its

misconduct as merely “inadvertent” -- even though § 605 is

a strict liability statute -- but, as the Sixth Circuit found:

“Time Warner concedes that Sovacool [the TW employee

servicing the Melody Lane Lounge account] should have

recognized that the Melody Lane Lounge was a commercial

establishment and not a residence. The structure of the

building, an exterior identification sign, and neon beer

signs in the window made this obvious.” (PA 4a).

TW now asserts that NSS received the communication

of the match via “an entirely separate satellite feed.” (P 3).

Actually, as the Sixth Circuit found, “the signals that NSS

and Time Warner received in their respective Ohio facilities

(4)

both originated from the same initial transmission. . .-.”

(PA 3a).' Moreover, TW is bound by the joint “Stipulations

of Undisputed Facts” that “Main Events created one signal

consisting of both audio and video content, which was

transmitted ... from the venue to the transmission station.”

(Joint Appendix submitted to the Sixth Circuit (“JA”) 388);

see also 16 Wright & Miller, Federal Practice & Procedure §

1527 (1990).

NSS thereafter discovered that Melody Lane Lounge

received the transmission of the communication of the

boxing match from TW. NSS sued Melody Lane Lounge, its

owners and TW for violating 47 U.S.C. § 605 (“the Act”).

Melody Lane Lounge and its owners settled with NSS. TW

and NSS then cross-moved for summary judgment. The

district court entered summary judgment in favor of NSS.

Following a bench trial on damages, TW appealed to the

Sixth Circuit and argued that: 1) collateral estoppel barred

NSS’ claim; 2) in the alternative, NSS lacked standing

under 47 U.S.C. § 605; and 3) in any event, NSS failed to

establish a violation of that statute. The Sixth Circuit

affirmed the decision. of the district court in favor of NSS.

TW argued below that the magistrate judge’s oral grant

of summary judgment in a prior lawsuit, National Satellite

Sports, Inc. v. Lyndstalder, Inc. d/b/a/ Coach’s Corner, No.

5:97 CV 2039 (N.D. Ohio July 13, 1998) (“Coach’s

Corner”), should collaterally estop NSS from pursuing this

litigation. Coach’s Corner arose from a fact pattern that is

only superficially similar. In Coach’s Corner, Time Warner

1 TW’s disagreement with this and other factual findings is not an

appropriate basis for certiorari. See Graver Tank & Mfg. Co. v. Linde

Air Prods. Co., 336 U.S. 271, 275 (1949) (the Supreme Court is not

“a court for correction of errors in fact finding”).

(5)

Sports (“TWS”), a division of TW, itself granted Joe Hand

Promotions limited exclusive rights to distribute closed

circuit (“CCTV”) telecasts of HBO live boxing events to

commercial establishments. Joe Hand sublicensed to NSS

the right to sell CCTV telecasts of several fights to

commercial establishments in various states, including

Ohio, and a boxing match between Evander Holyfield and

Bobby Czyz. TW retained the exclusive right to distribute

the communication of that match to its residential

customers through its HBO service. However, TW provided

HBO service of the fight to Coach’s Corner, a commercial

establishment in Ohio. NSS sued TW under 47 U.S.C.

§ 605.

The Coach’s Corner litigation turned on NSS’ standing

under the particular terms of the governing contract

between TWS and Joe Hand. The contract dealt differently

with the CCTV telecasts and TW’s own HBO telecasts. With

respect to the former, it barred Joe Hand from

“commenc[ing] or settl[ing] any claim or litigation arising

out of [any] alleged piracy, use or proposed use of the

CCTV telecast of the Events” without notifying TWS and

giving it and HBO the opportunity to be involved in

resolving the claim. (JA 263). With respect to the latter,

the contract absolutely barred piracy litigation: “Neither

you nor your sublicensees shall have any right to act on

behalf of either TWS or HBO or to commence or settle any

claim or litigation regarding the HBO feed, signal or

telecast.” (JA 263). TW argued in its summary judgment

motion: “NSS’s proprietary interest is defined by the

agreements which grant the interest. The interest granted

to NSS includes certain rights and excludes other rights.

One of the rights excluded is NSS’s ability to sue for cable

television piracy.” (JA 254). TW’s reply brief also centered

its standing argument on the particular terms of the

governing contract, citing contractual language that NSS

did not “have any right . . . to commence or settle any claim

or litigation regarding the HBO feed, signal or telecast.” (JA

(6)

296). TW reiterated this contractual argument in its point

entitled “Plaintiff is Not a ‘Person Aggrieved’ Under § 605”:

“the undisputed fact that Coach’s Corner received the signal

carrying the Event from TWE [TW] considered in light of the

plain terms of the TVLA [the TWS-Joe Hand agreement],

mandates this Court’s finding that plaintiff has NO rights to

suit for the alleged interception.” (JA 296-297) (emphasis

added, capitals in original). |

At oral argument TW again emphasized that NSS “was

granted whatever rights it has pursuant to contract. And as

a result of those contracts, whatever standing it has to sue

for those proprietary rights it derived from the contracts

themselves. . . . It’s clear by each of the contracts that are

relevant to this transfer of rights that National Satellite

Sports has no rights and it never did.” (JA 95) (emphasis

added). Counsel concluded his argument by again noting

“the very explicit language that licensees and sublicensees

had no right to pursue any type of action to the HBO feed

and that National Satellite Sports had no right to pursue

any action founded in piracy for any of the feeds.” (JA 97).

In short, TW never even argued that NSS would not be an

“aggrieved person” under 47 U.S.C. § 605(d)(6) even in the

absence of the limitations in the governing contract.

The Coach’s Corner magistrate judge orally granted

TVs motion for summary judgment from the bench. He

explained: “I view this decision as expressly limited to the

facts and circumstances presented in this case.” (PA 64a).

“(NSS’] effort to overcome the language of the contract

does not create a material fact for trial.” (PA 65a). The

magistrate judge then spent the equivalent of three

transcribed pages analyzing the terms of the contract.

Turning to § 605, he followed the definition of a “person

aggrieved” with just two sentences. In the first, he found,

obviously based on the contract, “In this case, I don’t think

there is any dispute that the communication at issue was

the HBO network feed and not the closed circuit television

(7)

feed which was what . . . National Satellite had an interest

in.” (PA 66a). The second sentence was his conclusion:

“(ajnd based upon that, those undisputed facts, plaintiff

has failed to state a Section 605 claim as an aggrieved

person.” (PA 66a).

The district court in this action granted NSS’ motion for

summary judgment, and found no merit in TW’s arguments

that Coach’s Corner precluded NSS from litigating this case;

that NSS was not an “aggrieved” person within the

meaning of § 605 and therefore lacked standing; and that

NSS could not demonstrate that TW violated the Act.

Specifically, the court found that “[d]jefendant’s assertion

that plaintiffs claim is collaterally estopped by a prior

determination in another case is not well-taken.” (PA 36a).

The court reasoned: “[t}he court in that case first

concluded, at the summary judgment stage, that National

Satellite had failed to state a claim because it had entered

into a contract, the terms of which specifically provided

that National Satellite had no right to pursue a piracy

action.” (PA 37a). The “second basis for the holding was

not essential to the judgment, since, in the court’s view, the

contractual language clearly barred the action.” (PA 37a).

In contrast to Coach’s Corner, the contract governing NSS’

rights in this lawsuit expressly authorized NSS “to monitor

and/or police for unauthorized use and exhibition of the

telecast within its territory and to seek legal redress for any

damages that it may suffer as a result of said unauthorized

use” and did not restrict NSS’ rights to its own CCTV

telecasts. (JA 135). The court also found that TW failed to

show that there was a “full and fair opportunity” in Coach’s

Corner to litigate the issue of whether NSS would have

lacked standing under § 605 even absent the language of

the TWS-Joe Hand contract, as would be required for

collateral estoppel. (PA 38a). The court observed that

“(djefendant points to nothing in the record to support [its]

conclusion” that there was a full and fair opportunity.

“This hardly satisfies defendant’s burden of demonstrating

(8)

to the Court that there was such a ‘full and fair opportunity

to litigate’ the issue.” (PA 38a). The district court also

squarely rejected TW’s arguments for an overly narrow con-

struction of § 605. (PA 39a). Finally, the court found TW

was liable to NSS under § 605(a) because “[t]here can...

be a violation of § 605(a) in the context of a cable televi-

sion communication even if the violator receives a

communication signal that it is legally entitled to receive, if

it then diverts or sends the communication to an entity that

is not entitled to the communication.” (PA 39a-40a). The

district court awarded NSS statutory damages, together

with costs and attorneys’ fees, for this violation of § 605.

The Sixth Circuit affirmed on all three grounds. With

respect to collateral estoppel, the Court of Appeals

extensively reviewed both the factual issues and the

language of the oral ruling in Coach’s Corner. TW argued

that the magistrate judge’s decision in Coach’s Corner was

based on two alternative, but independent grounds, and

that the Sixth Circuit should follow an out-dated “rule” that

in such circumstances collateral estoppel attaches to both

grounds of the trial court’s decision. However, the Sixth

Circuit reasoned that in light of the particular

circumstances of that oral ruling, it was not “necessary to

fully resolve this issue [of whether the modern Restatement

rule is the better rule} at the present time.” (PA 13a). The

court emphasized that the “oral ruling in Coach’s Corner

transcribes into only a two-paragraph conclusory statement

regarding NSS’s claim under § 605, which was far

overshadowed by the balance of its three-page discussion

outlining the contractual obstacles that prevented NSS from

suing TW.” (PA 13a). The court concluded that the

“Coach’s Corner’s secondary hoiding that NSS failed to state

a claim under § 605 was thus not necessary to the granting

of TW’s motion for summary judgment.” (PA 13a).

Accordingly, “NSS is not bound by the decision in Coach’s

Corner.” (PA 15a).

(9)

On the § 605 issues, the Sixth Circuit extensively

analyzed the language of the statute, the legislative history,

and the applicable caselaw. The court concluded: “we find

no merit in Time Warner’s argument that NSS does not

have standing to sue under § 605.” (PA 21a). The district

court’s interpretation [of standing under § 605] is

consistent with the legislative history of § 605(d).” (PA

17a). Moreover, “(limiting the availability of civil actions

... is inconsistent with the intent of Congress as expressed

in the [1984 and 1988 amendments] ... Both

[amendments] were intended to expand the scope of

protection provided by the Communications Act, not limit

it.” (PA 18a). The court also held that § 605 “protects both

the transmission and its contents,” and that TW and NSS

“had proprietary interests in the transmission of the content

of the boxing match.” (PA 23a). TW violated § 605(a) by

divulging the communication through an electronic channel

to an entity other than the addressee intended by the

sender. (PA 26a-27a).

REASONS FOR DENYING THE WRIT

I. Coach’s Corner does not estop

NSS from pursuing this litigation.

This case hinges on unique factual circumstances which

make it an inappropriate vehicle to address the question

TW seeks to raise of whether a trial court decision based on

two alternative holdings should be given preclusive effect

as to both. TW contends that an alternative ground for the

magistrate judge’s oral grant of summary judgment in

Coach’s Corner was that NSS was not a “person aggrieved”

within the meaning of 47 U.S.C. § 605(a) even if one were

to ignore the terms of the governing contract which denied

NSS the right to pursue the piracy claim at issue. TW

cannot meet its burden to show that there was, and it is

inconceivable that the magistrate judge intended to make,

such an independent, alternative ruling, particularly when

(10)

that issue was never even raised before that court.

Moreover, TW cannot satisfy two of the other prerequisites

for collateral estoppel -- an identity of issues and a full and

fair opportunity to be heard. Even if one were to disregard

these dispositive deficiencies in TW’s argument, this case

would be inappropriate for certiorari because there is no

reason to depart from the Sixth Circuit’s well-reasoned

decision that collateral estoppel does not bar this litigation.

There is little conflict on the issue of the preclusive effect of

a prior trial court decision where that decision rests on two

independent, alternative grounds. Rather, the clear trend

is to follow the modern Restatement rule which is

consistent with the decision in this case. The only Circuit

cases citing the old, contrary rule do so in dicta, or are out-

dated or unpublished decisions. Accordingly, this Court

should deny TW’s petition.

1. “The party asserting preclusion bears the burden of

showing with clarity and certainty what was determined by

the prior judgment.” Hydranautics v. FilmTec Corp., 204

F.3d 880, 885 (9th Cir. 2000) (internal quotations

omitted); see also 1B James W. Moore, Moore’s Federal

Practice .443[5S-.1] (the issue for which estoppel is sought

must clearly have been necessary to the prior judgment).

TW cannot meet that burden here.

It is inconceivable that the magistrate judge held or

intended to hold that NSS lacked standing under the

statute irrespective of the language of the governing

contract, much less that any such holding was necessary to

the outcome of Coach’s Corner. Indeed, since NSS’ rights

derived from that contract, such a holding would have been

nonsensical. The magistrate judge found that “[NSS’] effort

to overcome the language of the contract does not create a

material issue of fact for trial” because NSS was governed

by a contract which expressly provided that NSS had no

right to pursue a piracy action with respect to the HBO

feed. (PA 65a). Although the magistrate judge did say that

(11)

there was a second ground for his decision -- namely the

language of § 605 -- his statutory ruling was also based on

the specific terms of that contract. Thus, his statement that

“there is [not] any dispute that the communication at issue

was the HBO network feed and not the closed circuit

television feed which was what Joe Hand and then

subsequently National Satellite had an interest in” is drawn

directly from the contract. The magistrate judge’s next

sentence that, “based upon that, these undisputed facts,

plaintiff has failed to state a Section 605 claim as an

aggrieved person,” is therefore also clearly based on the

language of the contract. The magistrate judge never

intimated that absent the limiting language in that contract,

NSS would still have lacked standing to sue under § 605.

TW never even presented that position to the magistrate

judge, either in its briefs or at oral argument.

Moreover, the district court below correctly held that

TW “has not demonstrated, as it must, that the

determination of this particular issue was essential to the

[prior] judgment.” The “second basis for the holding

{standing under the statute] was not essential to the

judgment, since, in the court’s view, the contractual

language clearly barred the action.” (PA 37a). Since the

only basis for the magistrate judge’s decision that is clear is

that NSS lacked standing under the particular terms of the

applicable contract, TW has failed to meet its burden of

showing that the Coach’s Corner judge made an

independent, alternative holding with respect to standing

under the statute that would be applicable in the

circumstances of this case.

2. TW has also failed to meet its burden of establishing

an identity of issues, which is another basic prerequisite of

collateral estoppel. Coach’s Corner did not raise the same

issues as are present here, because it involved a different

contract which expressly precluded NSS from suing for any

communication of the HBO telecast, which was the

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communication at issue, while here the contract expressly

authorizes NSS to sue concerning any piracy or

unauthorized use or exhibition of the telecast within its

territory. Thus, there is no basis for TW’s glib statement

that the only difference between Coach’s Corner and this

case is supposedly that they involve a different boxing

match and a different bar. (P 6-7). TW only briefly refers

to the critical difference in the two contracts, in a cursory

footnote. (P 7 n.2). However, “[i]f particular issues in the

two suits differ in any significant way, a _ prior

determination of one is simply irrelevant to a later

determination of the other.” Overseas Motors, Inc. v. Import

Motors Ltd., 375 F. Supp. 499, 519 (E.D. Mich. 1974), affd,

519 F.2d 119 (6th Cir. 1975). Coach’s Corner decided only

that under the contract applicable in that case, NSS did not

have the right to assert a claim with respect to the improper

transmission of the HBO telecast at issue in that litigation.

Accordingly, TW has failed to establish that Coach’s Corner

involved an identity of issues.”

3. TW has not met its burden of establishing that NSS

had a “full and fair opportunity” to litigate in Coach’s

Corner whether it would have had standing to sue under 47

U.S.C. § 605’a) in the absence of the contractual

prohibition applicable in that case. “[T]he requirement of

determining whether the party against whom an estoppel is

asserted had a full and fair opportunity to litigate is a most

significant safeguard,” and thus must pass muster

“procedurally, substantively, and evidentially.” Blonder-

Tongue Labs., Inc. v. University of IIL Found., 402 U.S. 313,

2 The Sixth Circuit below did not address the significant difference in

the contracts in its erroneous finding on the identity of issues prong

of the collateral estoppel test.

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(13)

329, 333 (1971). “[T)he application of collateral estoppel

has been narrowly tailored to ensure that it applies only

where the circumstances indicate the issue estopped from

further consideration was thoroughly explored in the prior

proceeding.” Johnson v. Watkins, 101 F.3d 792, 795 (2d

Cir. 1996).

Here, the issue of standing under § 605 irrespective of

the TWS-Joe Hand contract was never even presented by

TW in Coach’s Corner, much less “thoroughly explored” in

that proceeding. TW never argued that NSS would not

have had an interest in the communication of the HBO feed

to a commercial establishment irrespective of the contract.

To the contrary, TW’s briefs in Coach’s Corner focused on

the particular terms of the contract: “NSS’s proprietary

interest is defined by the agreements which grant the

interest. The interest granted to NSS includes certain rights

and excludes other rights. One of the rights excluded is

NSS’s ability to sue for cable television piracy.” (JA 254).

NSS responded to those arguments that “the first step in

the process of determining whether a party has rights to

commence an action is to refer to the language employed in

the agreements between the parties.” (JA 157). NSS

similarly framed its arguments on standing under § 605 in

terms-of its contractual rights, contending that the issue

was “whether a contractual clause imposing a condition

must be satisfied in order to deny standing.” (JA 156). At

oral argument, TW similarly focused on the TWS-Joe Hand

contract, asserting that NSS had “whatever rights it has

pursuant to contract. And as a result of those contracts,

whatever standing it has to sue for those proprietary rights

it derived from the contracts themselves.” (JA 95). As the

district court correctly held, TW “points to nothing in the

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record to support this conclusion [that NSS had a full and

fair opportunity].” (PA 38a).°

Accordingly, TW cannot establish three of the four

prerequisites for collateral estoppel, any one of which

would be a sufficient independent basis to support the

finding that collateral estoppel did not preclude NSS from

pursuing this litigation.

4. Only if TW could establish an identity of issues, a

full and fair opportunity to litigate them in the prior

proceeding, and an alternative and independent holding

that was necessary for the prior decision could TW reach

the question it now seeks to present to this Court. Even

then, however, certiorari should be denied because the

Sixth Circuit’s denial of estoppel was correct and consistent

with the clear trend among the Circuits to follow the

modern rule, as set forth in the Restatement (Second)

Judgments § 27 (comment i). The Restatement provides

that, with respect to trial court judgments: “[i]f a judgment

... is based on determination of two issues, either of which

standing independently would be sufficient to support the

result, the judgment is not conclusive with respect to either

issue standing alone.” Restatement (Second) Judgments §

27 (cmt. i). At least seven other Circuits follow this

modern rule.* The Seventh Circuit characterized this

% The Sixth Circuit erroneously disagreed with the district court's

determination that the full and fair opportunity prong was not met.

* See, e.g., Arab African Int'l Bank v. Epstein, 958 F.2d 532, 535 (3d

Cir. 1992), rev'd on other grounds, 10 F.3d 168 (3d Cir. 1993); Ritter

v. Mount St. Mary’s College, 814 F.2d 986, 993 (4th Cir. 1987); Hicks

v. Quaker Oats Co., 662 F.2d 1158, 1166-67 (Sth Cir. 1981);

Peabody Coal Co. v. Spese, 117 F.3d 1001, 1008 (7th Cir. 1997) (en

banc); Baker Elec. Co-op v. Chaske, 28 F.3d 1466, 1475-76 (8th Cir.

1994); Turney v. O'Toole, 898 F.2d 1470, 1472 n.1 (10th Cir. 1990);

(15)

modern Restatement rule as the “general rule on issue

preclusion.” Schwager v. Fallas (In re Schwager), 121 F.3d

at 177, 183 (Sth Cir. 1997).

The contrary rule advocated by TW would waste

judicial resources by promoting frivolous and unnecessary

appeals in cases where a party recognizes that one inde-

pendent ground for a trial court decision is correct, even

though a second ground may be erroneous. See, e.g.,

Restatement (Second) Judgments § 27 (comment i) (a

contrary rule “might be responsible for increasing the

burdens of litigation of the parties and the courts rather

than lightening those burdens”).° This case illustrates the

absurd potential consequences of TW’s proposal. TW’s rule

would have forced NSS to pursue an entirely useless appeal

in Coach’s Corner on an issue (whether it would have had

standing absent the contractual limitation on its right to

pursue piracy claims) that was not even clearly an

alternative ground for the magistrate judge’s decision,

solely to protect itself against possible future collateral

estoppel consequences, even though, in the words of the

Sixth Circuit, “while [NSS] might have won the ‘battle’ over

§ 605, NSS would almost surely have lost the ‘war’ in being

unable to overcome the contractual prohibition on

commencing litigation against Time Warner.” (PA 12a-

13a). TW concedes this outcome: “It is true that, if one of

Comair Rotron, Inc. v. Nippon Densan Corp., 49 F.3d 1535, 1538

(Fed. Cir. 1995).

* TW’s only support for its wholly speculative argument that “the

expense in terms of judicial economy is markedly lower” under its

proposed rule than under the modern Restatement rule, is an article

which fails to cite any empirical evidence or any other authority to

support its conclusory assertion. (P 16).

(16)

the alternative grounds is unassailable, an appellant is

unlikely to obtain a reversal.” (P 16).

The New York Court of Appeals aptly explained why it

would be ludicrous to require an appeal under these

circumstances: “it would be . . . fundamentally unfair to

give preclusive effect to a determination where the only

incentive to litigate stems from its potential collateral

effects. Such a ruling would ill serve the litigation-limiting

purposes of collateral estoppel; it would simply encourage

overlitigation at an earlier stage.” Staatsburg Water Co. v.

Staatsburg Fire Dist., 527 N.E.2d 754, 757 (N.Y. 1988).

Indeed, such an appeal would likely draw sanctions under

Fed. R. App. P. 38. That is exactly what happened in Nagle

v. Alspach, 8 F.3d 141 (3d Cir. 1993), where the Third

Circuit imposed sanctions under Rule 38 on appellants who

challenged only two of the four conclusions relied on by the

district court to support its grant of summary judgment.

Because the lower court judgment would be affirmed even

if the Court of Appeals held for the appellant on both of the

appealed grounds, the Third Circuit found that “[t)his

appeal therefore never had any possibility of resulting in a

reversal and is frivolous.” Id. at 145. Moreover, because

even a finding for the appellant on such an alternative

ground would have no effect on the ultimate outcome of

the case, the filing of such an appeal would be tantamount

to seeking an impermissible advisory opinion. See Chicago

& Southern Air Lines v. Waterman S.S. Corp., 333 U.S. 103,

113-14 (1948). This shows that it is nonsense for TW to

argue that “preclusion cannot be withheld on the theory

that it is unfair to bind the losing litigant to a holding that,

in the presence of an unassailable alternative holding,

cannot successfully be appealed. Alternative grounds can

be appealed, and a losing litigant has every incentive to do

so.” (P 2).

The concern that alternative holdings do not necessarily

reflect the same thoughtful consideration further militates

(17)

in favor of the modern Restatement rule. Once again, this

case provides a persuasive illustration of this fact. The

magistrate judge in Coach’s Corner devoted a mere three

sentences of his oral opinion to the statutovy standing issue,

and he received no briefing or oral argument on the issue.

If he intended to give an advisory opinion as to whether

NSS would have had standing absent the applicable

contractual restrictions, he certainly did not say so clearly.

Rather than directly address these important issues, TW

attempts to draw an analogy between collateral estoppel

and stare decisis. However, the Supreme Court and Circuit

caselaw relied upon by TW rest on a crucial distinction

between an alternative decision of the Supreme Court or an

appellate court, and that of a trial court, a distinction TW

glosses over.° Those cases merely support the

Restatement’s companion to the rule at issue here. The

Restatement provides that alternative holdings of an

appellate court are entitled to preclusive effect, while those

of a trial court are not. Compare Restatement (Second)

Judgments § 27 comment o with comment i. _ This

® For instance, the one circuit case cited by TW to support its

contention that stare decisis applies to alternative holdings

specifically limits the application of that rule to holdings by an

appellate court. Natural Res. Def. Council v. NRC, 216 F.3d 1180,

1189 (D.C. Cir. 2000). Similarly, the case upon which TW relies to

suggest a general proposition that stare decisis applies as much to

secondary holdings as to primary holdings arises in the context of

the Supreme Court, not a trial court. See Richmond Screw Anchor Co.

v. United States, 275 U.S. 331, 342 (1928). Courts have emphasized

the importance of the holdings of this Court: “even if the [Supreme]

Court’s reliance on two independent grounds rendered each dictum,

we would still be bound by its interpretation ... since carefully

considered language of the Supreme Court, even if technically

dictum, generally must be treated as authoritative.” Natural Res.

Def- Council, 216 F.3d at 1189 (internal quotations omitted).

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distinction is supported by a sound policy rationale. The

primary reason for the rule with respect to trial court

determinations is the concern about encouraging frivolous

appeals. In contrast, because certiorari is granted by this

Court only rarely and in particularly compelling cases, a

circuit court is generally effectively the court of final

decision, thereby minimizing policy concerns about

encouraging unnecessary appeals from decisions of that

court.

5. Another independent reason for denying the writ is

that although TW attempts to point to a conflict in the

Circuits, the overwhelming trend in the circuit courts is to

follow the modern Restatement rule. The Third, Fourth,

Fifth, Seventh, Eighth, Tenth and Federal Circuits follow

this rule, whereas TW argues that only three Circuits (the

D.C., Second and Ninth) follow the out-dated rule. (P 12).

However, the decisions cited by TW do not evidence any

meaningful conflict, are easily distinguishable from this

case and in some cases may not remain good law.

For example, the Ninth Circuit decisions relied on by

TW fail to support its argument that there is a meaningful

conflict. In re Westgate-Cal. Corp., 642 F.2d 1174 (9th Cir.

1981), was decided prior to the publication of the Second

Restatement of Judgments in 1982, which takes a position

on this issue that is contrary to that of the First

Restatement. Moreover, the Ninth Circuit’s cursory

decision does not explain the reasoning for its choice of a

collateral estoppel rule, but merely asserts that it is

following the “established rule,” based on a citation to an

earlier version of Moore’s Federal Practice. 642 F.2d at

1176-77. However, as the Sixth Circuit noted below, the

current version of Moore’s Federal Practice “describes the

[Second] Restatement’s view as the ‘new and ‘modern’

rule.” (PA 12a). The only other support TW cites for its

contention that the Ninth Circuit continues to follow the

old rule is Bank of Guam v. Wiseman, No. 87-1799, 1990

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WL 140521, at *2 (9th Cir. Sept. 27, 1990) (unpublished),

an unpublished decision which, pursuant to Local Circuit

Rule 36-3(a), is “not binding precedent.” See also Territory

of Guam v. Borja, 983 F.2d 914, 917 (9th Cir. 1992),

amended (Jan. 20, 1993); Leal-Rodriguez v. INS, 990 F.2d

939, 946 (7th Cir. 1993).’

The District of Columbia Circuit’s decision in Yamaha

Corp. of America v. United States, 961 F.2d 245 (D.C. Cir.

1992), does not establish any meaningful conflict. Yamaha

involved a completely different collateral estoppel issue.

There, in the prior litigation, the Ninth Circuit affirmed the

district court’s decision based on only one of the two

alternative grounds for the lower court decision. The

District of Columbia Circuit thus addressed the applicatility

of collateral estoppel only where two alternate grounds are

appealed and the appellate court ruled only on one of

them. This situation is addressed in a completely different

section of the Restatement (Second) Judgments. Compare

§ 27 comment o, which is entitled “Effect of an appeal,”

with comment i entitled “Alternative determinations by

court of first instance.” Accordingly, Yamaha’s statement

concerning the collateral estoppel rule at issue here was

merely dicta, and had no bearing on any of the issues

actually before that court.

Nor does the Second Circuit case law cited by TW show

that that Circuit follows a conflicting rule. TW relies on

three Second Circuit cases. Irving Nat'l Bank v. Law, 10

F.2d 721 (2d Cir. 1926), was decided nearly eighty years

ago, and since then, the Second Circuit has followed the

7 The Ninth Circuit’s rule also prohibits citation of an unpublished

decision to any of the courts of that Circuit.

(20)

contrary modern rule. See, e.g., Halpern v. Schwartz, 426

F.2d 102 (2d Cir. 1970). Williams v. Ward, 556 F.2d 1143

(2d Cir. 1977), recognized that the conclusion in Halpern,

which was subsequently codified in the modern

Restatement rule, that “an issue not essential to the prior

judgment may not have been afforded the careful

deliberation and analysis normally applied to essential

issues’ is a real one in some circumstances,” but held that

under the particular facts of Williams such a concern did

not exist. Jd. at 1154. The third Second Circuit case relied

on by TW also does not show a meaningful conflict. Like -

Yamaha, Gelb v. Royal Globe Ins. Co., 798 F.2d 38 (2d Cir.

1986), addressed a completely different issue of the

application of collateral estoppel where there was an

appeal in the prior litigation. The Second Circuit defined

the collateral estoppel issue as follows: “We must therefore

determine the collateral estoppel effect of an adverse

District Court finding that was explicitly not reviewed but

was necessary to a conviction that was said to have been

affirmed.” Gelb, 798 F.2d at 44. Accordingly, any

statement about the collateral estoppel effect of an

unappealed decision resting on two alternative grounds

was dicta.

In short, contrary to._TW’s contention that there is a

complete split of authority, there is an overwhelming trend

towards the modern Restatement rule, with only dicta and

out-dated or unpublished Circuit decisions supporting the

prior rule.®

8 TW cites commentators who it claims are “likewise in disagreement”

with the modern rule. (P 13 & n.5). For example, TW compares

Restatement (Second) Judgments § 27 cmt. i (1982) with the First

Restatement, which took a contrary view. But this merely shows

that the authors of the Restatement have changed their position to

(21)

6. TW attempts to bolster its “conflict” argument by

claiming that the Sixth Circuit actually created a new

approach. That argument is belied by the decision itself.

The Sixth Circuit did not say that it was creating a new rule

of collateral estoppel. To the contrary, the court stated that

“Cwle find NSS’s point persuasive,” based on the reasoning

of the Restatement and the many other Circuits following

that rule. (PA 12a).?

II. The Sixth Circuit correctly applied the plain language of

§ 605, and its holding is entirely consistent with both

the legislative history and the caselaw on § 605.

The Court of Appeals below correctly found that NSS

had standing in this action to sue as a “person aggrieved”

under § 605, that TW is liable for violating that section, and

that the type of improper divulging of the content of a

communication in which TW engaged is precisely what

Congress intended to remedy when it enacted the

Communications Act. The clear language of the

Communications Act, together with its legislative history

and the caselaw interpreting § 605 mandate the holdings

the one adopted by most courts. TW similarly cites a 1942 article

written by one of the reporters of the First Restatement, but that

article has no bearing on NSS’ position that sixty years later, courts

have adopted the Second Restatement rule.

In any event, TW’s contention that a primary/secondary distinction

rule is unworkable because it is not clear ignores the reality of many

decisions. It is well-settled that only holdings, and not dicta, are

binding precedent. Thus, courts and parties regularly examine court

decisions to determine the actual holding versus mere dicta, despite

the fact that in many cases, it is not entirely clear what is a holding

versus dicta. TW does not cite any evidence that distinguishing a

primary ground from a secondary ground would be any more

difficult.

(22)

below and there are no cases nor any legislative history

that are inconsistent with these holdings. They do not raise

any issues meriting this Court’s review.

1. NSS is a “person aggrieved” and had standing to sue

TW under §§ 605(e)(3)(A) and 605(d)(6) whether or not

NSS had a proprietary interest in the communication that

TW divulged to Melody Lane Lounge. In any event, NSS

did have a proprietary interest and the communication was

intercepted within the meaning of the statute.

Congress designed the Communications Act to provide

“both prosecutors and civil plaintiffs [with] the legal tools

they need to bring piracy under control.” P.L. 100-67,

Trademark Law Revision Act of 1988 - Satellite Home Viewer

Act of 1988, H.R. Rep. No. 887(11), 1988 U.S. Code Cong. &

Admin. News 5577, 5658. Congress amended the statute in

1984 and 1988 to further deter theft of cable service. The

1984 amendments added to § 605 subsections (b)-(e) to

address “a problem which is increasingly plaguing the cable

industry - the theft of cable service.” Cable Communications

Policy Act of 1984, H.R. Rep. No. 98-934, 1984 U.S. Code

Cong. & Admin. News 4655, 4720. This piracy threatened

legitimate satellite dealers and programmers who would

otherwise receive payments for their programming. 1984

U.S. Code Cong. & Admin. News at 4702. As amended, §

605(e)(3)(A) of the Act provides that “[a]ny person

aggrieved by any violation of subsection (a) ... or

paragraph (4) may bring a civil action in a United States

district court.” Section 605(d)(6) defines the term “any

person aggrieved” as follows:

the term ‘any person aggrieved’ shall include

any person with proprietary rights in the

intercepted communication by wire or radio,

including wholesale or retail distributors of

satellite cable programming, and, in the case

of a violation of paragraph (4) of subsection

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(e) of this section shall also include any

person engaged in the lawful manufacture,

distribution, or sale of equipment necessary to

authorize or _ receive satellite cable

programming. (emphasis added).

TW argued below that the 1984 and 1988 amendments

adding § 605(d)(6) to the Act supposedly somehow

narrowed the class of persons with standing to sue under

§ 605(e)(3)(A), an argument the Sixth Circuit squarely

rejected because it “flies in the face of Congress’s explicit

interest in ‘expanding standing to sue’ under the Act.” (PA

18a) TW appears to back away from this argument in its

petition and now concedes that the purpose of the 1988

amendment was to expand standing by making clear that it

included wholesale or retail distributors of satellite cable

programming. (P 21 n.14).

Nevertheless, TW continues to argue that the statutory

language “any person aggrieved” does not mean what it

says.'° TW cites cases applying other statutes with similar

language (P 21-23), but none of them requires a different

decision here. The language of § 605, together with the

caselaw and legislative history of this Act make clear that

the Sixth Circuit and the district court below properly

rejected TW’s argument that NSS lacked sanding and that

TW was not liable.

10

TW’s convoluted argument that “standing is appropriate only for

parties with a reasonable expectation to that effect” (P 23), is

circular. Both courts below found that NSS has standing under the

clear language of the statute and that the statute was designed to

protect NSS from this type of piracy. Accordingly, NSS certainly

would have a reasonable expectation of having standing under the

Act.

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As the Sixth Circuit found, the legislative history of the

1988 amendment states that one of its purposes is

“expanding standing to sue.” (PA 18a). The Sixth Circuit

had “previously recognized Congress’s intent to expand

rather than contract the reach of the Communications Act

when it amended § 605.” (PA 19a). Other courts, too,

have found that this legislative history mandates a broad

interpretation of standing. See, e.g., MediaOne, Inc. v. E&A

Beepers & Cellulars, 43 F. Supp. 2d 1348, 1353 (S.D. Fla.

1998). There is absolutely no evidence that Congress

intended to narrow standing by adding § 605(d)(6).

TW’s interpretation of “any person aggrieved” is also

refuted by the statutory language itself, for at least four

reasons. First, as the Sixth Circuit held, the term “include”

in the statute is not exclusive as a matter of plain language.

(PA 17a)(“[t]he district court held that the use of the word

‘include’ in the statutory phrase ‘any person aggrieved shall

include any person . . .” does not mean that only persons

who meet that definition have standing to sue. We

agree.”); accord General Instrument Corp. v. Nu-Tek Elecs.

Mfg., Inc., No. 93-CV-3854, 1996 WL 442790, at *5 (ED.

Pa. July 31, 1996), affd, 197 F.3d 83 (3d Cir. 1999).

Second, by TW’s logic only wholesale or retail

distributors of satellite cable programming could sue. That

would be an absurd result since § 605(6) covers all wire or

radio communications. See, e.g., Joe Hand Promotions v.

Rennard St. Enters., 975 F. Supp. 746, 752 (E.D. Pa. 1997).

Moreover, if TW’s interpretation wére correct, then the only

persons with standing to sue for violation of § 605(e)(4)

would be persons “engaged in the lawful manufacture,

distribution or sale of equipment necessary to authorize or

receive satellite cable programming.” But TW itself,

although not falling within that category, has sued under

§ 605(e)(4), arguing that it was a “person aggrieved,” and

obtained relief. See Time Warner Cable v. Freedom Elecs.,

897 F. Supp. 1454, 1459 (S.D. Fla. 1995). Accordingly,

(25)

TW should be judicially estopped from taking a different

position now.

Third, TW concedes that § 605(d)(6) affords standing

“to entities seeking to combat unauthorized interceptors’

acts of communications piracy.” (P 25). Here, TW was not

authorized to divulge the contents of the communication to

Melody Lane Lounge under the clear language of 47 U.S.C.

§ 605(a). TW was not free (or, in the language of the

statute, it did not have an authorized channel of

transmission) to divulge the contents to everyone in its

cable system."

Fourth, even if this Court were to adopt TW’s

construction of § 605(d)(6), NSS would still have standing

because it had a proprietary interest in the communication,

as the Sixth Circuit found. (PA 23a). NSS is not a

“stranger” that had only “some indirect economic interest in

the communication’s content.” (P 24). Rather, NSS had a

proprietary interest in the communication of the content of

the boxing event to commercial establishments in Ohio.

That right is of significant economic value to NSS, as the

district court below found: “[p]Jiracy of programming poses

"| It is ironic that TW which has extensively used this statute and the

cable piracy statute to prosecute others objects that NSS has been

forced to utilize the statute to protect its interests. See, e.g., Time

Warner v. M.D. Electronics, Inc., 101 F.3d 278 (2d Cir. 1996); Time

Warner v. Googies Luncheonette, Inc., 77 F. Supp.2d 485 (S.D.N.Y.

1999); Time Warner Cable v. Taco Rapido Restaurant, 988 F. Supp.

107 (E.D.N.Y. 1999); Time Warner Entertainment v. Worldwide

Electronics, L.C., 50 F. Supp.2d 1288 (S.D. Fla. 1999). Indeed, the

proliferation of lawsuits filed bears witness to the extensive

problems which NSS faces as a result of piracy and why courts must

use the full power of this statute to deter and prevent any and al!

forms of intercepted or misdirected communications.

(26)

a serious threat to the business interests of National

[Satellite Sports], whose income depends primarily on its

status as an exclusive licensee. Piracy also poses a threat to

the goodwill of National’s customers, who are less willing

to pay for services if their competition is able to get them

free through piracy.” (PA 5la). See also Joe Hand

Promotions v. Rennard Street Enterprise, 975 F. Supp. at

752. Moreover, the communication was “intercepted”

within the meaning of the statute.

Other courts have found that plaintiffs with similar

claims have standing. See, e.g., Joe Hand Promotions v.

Rennard Street Enterprise, 975 F. Supp. at 753 (“plaintiff is

an aggrieved person for purposes of Section 605, because it

has a proprietary right to the distribution of the HBO

broadcast. Therefore, if it can prove that the defendant

received the boxing matches directly from the satellite,

rather than the coaxial cable network, the plaintiff has

standing to sue under Section 605.”); Television Signal

Corp. v. Chapman, No. C92-3732, 1993 WL 69179, at *2

(N.D. Cal. Mar. 3, 1993) (“Viacom clearly has standing to

bring suit as a ‘person aggrieved.’ ... by its .... licensing

agreements, Viacom acquired the exclusive rights to

telecast Fight No. 1 and Fight No. 2 in the Northern

California area [through- HBO and pay-per-view]. .. .

Viacom would certainly have standing to bring suit for any

unauthorized interception of the fight in this area”).

12 To the extent that TW suggests that its “inadvertent” conduct should

not render it liable, such an argument is inapplicable because, as

noted, TW was at fault. Moreover, Section 605 is a strict liability

statute. TW itself has benefited from this. See, e.g., Time Warner

Cable v. Taco Rapido Rest., 988 F. Supp. 107, 111 (E.D.N.Y. 1997).

In any event, TW cannot plausibly contend that it was innocent

given that the installer had been in the bar and seen that it clearly

(27)

2. The courts below also correctly found that TW

violated § 605(a) when it transmitted the communication

of the event to an entity to which TW was not authorized to

transmit it. The Act does not exempt from liability entities,

such as TW, that are authorized to transmit the

communication to some recipients, if they do so to others.

TW’s argument to the contrary rests on a single

unsupported assertion: that Congress could not have

intended NSS to “be within the zone of interests protected

by the first sentence of Section 605(a), simply because [it

has] some _ indirect economic. interest in _ the

communication’s content.” (P 24). That speculation is

baseless. | Moreover, NSS’ economic interest in the

communication’s content is not indirect. TW apparently

disagrees (P 23-24) with the fact finding of the courts

below that the signals NSS and TW received in their

respective Ohio facilities both originated from the same

initial transmission of the communication. That

disagreement is not a basis for certiorari.

TW’s petition also ignores that, in_ similar

circumstances, other courts have reached consistent

interpretations of § 605, even though this caselaw was cited

by the Sixth Circuit below. (PA 25a-26a). For example, Joe

Hand Promotions v. D.M.B. Ventures, Inc., No. CIV. A. 93-

2656, 1995 WL 328399 (E.D. La., May 31, 1995), involved

similar facts. There, Cox Cable acquired the right to

distribute a boxing match in New Orleans to residential

did not appear to be residential. TW was wrong to allow this

account to be established and to continue as residential; any

wrongful act which resulted cannot be subsumed or excused under a

guise of innocence. Similarly, no cable company should be allowed

to escape liability for similar acts.

a

—

(28)

customers by pay-per-view. Joe Hand Promotions had the

exclusive right to distribute the match to commercial

establishments in New Orleans. Joe Hand discovered that

four commercial establishments showed the match without

authorization, and sued both the cable company and the

commercial establishments under § 605. The court ruled in

favor of Joe Hand, and found no basis for the arguments

Time Warner attempts to make here. For example, the

court disagreed with Cox Cable’s contention that cable

companies are entitled to an implicit exemption from

liability -- which is essentially Time Warner’s argument

here: 1) the fifth sentences of § 605 (a) and (b) exempt

specified persons and communications from the reach of

the statute, and cable companies are not among the listed

exemptions; 2) § 605(a) applies to persons legitimately

receiving, assisting in receiving, transmitting, and assisting

in transmitting interstate communications by wire and

radio, and courts have “uniformly held” that this includes

satellite signals; 3) the legislative history does not even

suggest that Congress intended to exempt cable companies;

and 4) there is a “strong policy against implied

exemptions.” Id. at **3-4. The court also rejected the cable

company’s argument -- also advanced by Time Warner here

-- that it should escape liability because it did not willfully

provide unauthorized programming to a commercial

establishment, because “liability under Section 605(a) does

not require a showing of intent or specific knowledge. The

statute provides that ‘no person’ shall receive, intercept, or

assist in the unauthorized interception of radio and wire

communications.” Id. at *4.

The court in That’s Entertainment, Inc. v. J.P.T., Inc.,

843 F. Supp. 995 (D. Md. 1993), similarly found § 605

standing and liability based on another analogous fact

pattern. The plaintiff there had purchased the exclusive

licensing rights to the live closed circuit television

broadcast of a boxing match in commercial establishments;

other entities had the exclusive right to broadcast the event

(29)

to private, residential cable subscribers on a pay-per-view

basis. A commercial establishment showed the broadcast

through the residential pay-per-view service. The court

granted summary judgment to That’s Entertainment,.

finding a violation of § 605(a). The Court held that “[e]ven

assuming, as these defendants contend, that there was no

‘interception’ here because [the bar] was ‘authorized’ by

[the residential distributor] to receive the Event on a pay-

per-view basis, defendants still have violated the Act

because they clearly were not authorized to broadcast the

Event to the patrons of a commercial establishment .. .

[§ 605(a)] clearly proscribe[s] the unauthorized divulgence

or use of communications which have been ‘received’

legally for certain purposes.” Id. at 999.

Accordingly, the clear statutory language, legislative

history, and caselaw interpreting and applying § 605, all

support the decisions of the Sixth Circuit and the district

court below.

3. TW erroneously labels the Sixth Circuit’s decision

“unprecedented” (P 18), in an attempt to obscure the fact

that this issue is simply not appropriate or ripe for this

Court’s review.’ As discussed above, TW simply ignores

13 TW’s contention that this is properly a state law contract claim is

similarly unavailing. NSS did not have a contract with TW. TW

would have promptly moved to dismiss any lawsuit premised on a

theory that NSS was somehow an intended third party beneficiary of

TW’s contract to license the event to its residential customers via

pay-per-view and was thus liable for improperly transmitting it to a

customer outside the scope of its contract. TW does not cite any

caselaw in support of its contention that this should be a contract

issue. Moreover, even if a state law claim existed, the

Communications Act was designed to protect against the wrongful

use of a communication and gives NSS a cause of action against TW

here.

(30)

that other courts have, on similar fact patterns, reached

consistent interpretations of § 605, and have found liability

in these situations. The fact that the Sixth Circuit expressly

followed this precedent is hardly cause for this Court’s

review. Indeed, TW does not and could not point to any

conflict on these issues, rendering the issues, at best for

TW, premature for this Court’s review.’* Because the

decisions below were correct, there is no conflict among

courts and the issues involved here are limited, this Court

should deny the writ.

CONCLUSION

For all of the foregoing reasons, Respondent

respectfully requests that this Court deny the Petition.

Dated: January 9, 2002

Respectfully submitted,

MARCUS W. CORWIN MICHAEL J. DELL

SKIP M. KLAUBER Counsel of Record

MARCUS W. CORWIN PA LAUREN FREEMAN-BOSWORTH

7777 Glades Road, Suite 208 KRAMER LEVIN NAFTALIS

Boca Raton, Florida 33434 & FRANKEL LLP

(561) 482-3636 919 Third Avenue

New York, New York 10022

(212) 715-9100

14 Although TW cites Smith v. Cincinnati Post & Times-Star, 475 F.2d

740 (6th Cir. 1973), in a footnote, the Sixth Circuit below

distinguished its prior decision in Smith both because it was decided

prior to the 1984 and 1988 statutory amendments and on its facts.

(PA 24a).