Directv, Incorporated v. Raul Pernites

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 04-2483
DIRECTV, INCORPORATED,
Plaintiff - Appellant,
versus
RAUL PERNITES,
Defendant - Appellee,
and
JOHN MENHART; MICHAEL BASSHAM; DAVID CURTIS;
CURTIS EDWARDS; STAN MARSH; SOPHIA MITCHELL;
BILL PHOTINOS; DAVID RANDALL,
Defendants.
Appeal from the United States District Court for the Eastern
District of Virginia, at Norfolk. Rebecca Beach Smith, District
Judge. (CA-03-386)
Submitted: August 31, 2006 Decided: September 21, 2006
Before MICHAEL, MOTZ, and DUNCAN, Circuit Judges.
Vacated and remanded by unpublished per curiam opinion.
Howard Robert Rubin, Christian Stephen Genetski, SONNENSCHEIN, NATH
& ROSENTHAL, LLP, Washington, D.C., for Appellant. Raul Pernites,
Appellee Pro Se.

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Unpublished opinions are not binding precedent in this circuit.
See Local Rule 36(c).

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PER CURIAM:
DIRECTV appeals a district court’s order accepting a
magistrate judge’s recommendation inter alia to dismiss DIRECTV’s
claims under 18 U.S.C. §§ 2511(1), 2520 (2000), and under 47
U.S.C.A. § 605(e)(4) (West 2001). On appeal, DIRECTV challenges
the court’s dismissal of these two claims. We vacate and remand.
In the context of a default judgment, “‘[t]he defendant,
by his default, admits the plaintiff’s well-pleaded allegations of
fact” so a court must “determine whether the well-pleaded
allegations in [plaintiff’s] complaint support the relief sought in
th[e] action.” Ryan v. Homecomings Fin. Network, 253 F.3d 778, 780
(4th Cir. 2001) (internal citations omitted). “[A] defendant’s
default does not in itself warrant the court in entering a default
judgment. There must be a sufficient basis in the pleadings for
the judgment entered.” Nishimatsu Constr. Co. v. Houston Nat’l
Bank, 515 F.2d 1200, 1206 (5th Cir. 1975). Further, a “defendant
is not held to admit facts that are not well-pleaded or to admit
conclusions of law.” Id.
With respect to DIRECTV’s claim under 18 U.S.C. § 2511
and § 2520, the district court accepted the magistrate judge’s
conclusion that DIRECTV did not have a cognizable claim, finding
that the legislative history of the Wiretap Act indicated that the
statute was not intended to protect commercial satellite services
from surreptitious interceptions by private individuals. While

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this appeal was pending, we issued an opinion in DIRECTV, Inc. v.
Nicholas, 403 F.3d 223 (4th Cir. 2005), which is dispositive of
this claim. In Nicholas, we specifically concluded that DIRECTV
could maintain a cause of action under 18 U.S.C. § 2511 and § 2520
against a private individual for the alleged interception of its
encrypted satellite transmissions. See also DIRECTV, Inc. v.
Pepe, 431 F.3d 162 (3d Cir. 2005) (same). Accordingly, because the
district court erred in dismissing DIRECTV’s claim under 18 U.S.C.
§ 2511 and § 2520, for failure to state a claim, we vacate the
judgment and remand with respect to this claim.
With respect to 47 U.S.C.A. § 605(e)(4), the district
court held that § 605(e)(4) is intended to cover sellers and
manufacturers of intercepting devices, not end users, and
accordingly dismissed the count for failure to state a claim. In
DIRECTV v. Robson, 420 F.3d 532 (5th Cir. 2005), the Fifth Circuit
rejected the district court’s construction that § 605(e)(4) exempts
individual users. 420 F.3d at 543-44. Specifically, the court
held § 605(e)(4) pertains to commercial as well as individual
users. Id. at 544. We find the reasoning in Robson persuasive and
accordingly conclude that § 605(e)(4) does not categorically exempt
individual users. We offer no opinion at this time on whether
Pernites’ alleged actions in removing and inserting pirate access
devices and/or inserting illegally programmed access cards into
valid DIRECTV receivers qualify as “assembly” and/or “modification”

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within the meaning of § 605(e)(4). Accordingly, we vacate judgment
on this claim also and remand to the district court for an
opportunity to consider in the first instance whether the evidence
is sufficient to demonstrate assembly or modification within the
meaning of § 605(e)(4).
We dispense with oral argument because the facts and legal
contentions are adequately presented in the materials before the
court and argument would not aid the decisional process.
VACATED AND REMANDED

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