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Dish Network L.L.C. v. Hatley

United States District Court, W.D. North Carolina, Statesville Division

May 25, 2017

DISH NETWORK L.L.C., ECHOSTAR TECHNOLOGIES L.L.C., and NAGRASTAR LLC, Plaintiffs,
v.
LONNIE HATLEY, Defendant.

          ORDER

          Richard L. Voorhees United States District Judge

         BEFORE THE COURT is Plaintiffs' Motion for Default Judgment (the “Motion”) (Doc. 7) against Defendant, which was filed on August 2, 2016. Defendant did not respond to the Motion.

         I. BACKGROUND

         Defendant was personally served (Doc. 6) with Plaintiffs' Complaint (Doc. 1) on June 17, 2016, but did not file an Answer or respond otherwise. Plaintiffs filed a Motion for Entry of Default on July 12, 2016 (Doc. 7), and the Clerk filed Entry of Default the same day. (Doc. 8) Accordingly, the allegations of Plaintiffs' Complaint (Doc. 1), excluding those pertaining to damages, are deemed admitted by Defendant. Id.

         Plaintiffs filed this action on May 25, 2016, alleging that Defendant circumvented Plaintiffs' security technology and intercepted the copyrighted satellite television programming broadcast by Plaintiff DISH Network L.L.C. (“DISH Network”) without paying the required subscription fee. (Doc. 1, at 2). DISH Network is a multi-channel video provider that delivers video, audio, and data services to approximately 14 million customers throughout the United States, Puerto Rico, and the U.S. Virgin Islands via a direct broadcast satellite system. (Doc. 1, at 3). DISH Network uses high-powered satellites to broadcast, among other things, movies, sports, and general entertainment services to consumers who have been authorized to receive such services after payment of a subscription fee or, in the case of a pay-per-view movie or event, the purchase price. Id.

         The works broadcast by DISH Network are copyrighted, and DISH Network has the authority of the copyright holders to protect the works from unauthorized reception and viewing. Id. DISH Network programming is digitized, compressed, and scrambled prior to being transmitted to multiple satellites located in geo-synchronous orbit above Earth. Id. The satellites, which have relatively fixed footprints covering the United States and parts of Canada, Mexico, and the Caribbean, relay the encrypted signal back to Earth where it can be received by DISH Network subscribers who have the necessary equipment. Id. The necessary equipment consists of receivers, dish antennae, and other digital equipment supplied by Plaintiff EchoStar Technologies, L.L.C., as well as smart cards and other proprietary security technology systems supplied by Plaintiff Nagrastar LLC. (Doc. 1, at 3-4).

         Plaintiffs received the records of a confidential informant who oversaw and managed the sale of subscriptions to a pirate television service called NFusion Private Server (“NFPS”). (Doc. 1, at 2); see also (Doc 10-2, at 2) (explaining agreement between Plaintiff Nagrastar LLC and confidential informant). Each subscription consists of a passcode that enables access to the NFPS servers, which transmit DISH Network's proprietary control word- or “keys”-over the Internet to the subscriber's receiver, allowing a subscriber to decrypt DISH Network's satellite signal and view DISH Network programming without permission. (Doc. 1, at 2). This form of piracy is referred to as “control word sharing, ” “Internet key sharing, ” or more simply “IKS.” (Doc. 1, at 5).

         The records obtained by Plaintiffs demonstrated that, on or about January 1, 2012, Defendant purchased at least two subscriptions for IKS services provided by NFPS, each believed to be valid for a one-year period of time. (Doc. 1, at 6). These services allowed Defendant to decrypt DISH Network's satellite signal and view DISH Network programming without a subscription. Id. On August 2, 2016, Plaintiffs submitted further evidence with their Memorandum in Support of Motion for Default Judgment (Doc. 10) showing that Defendant utilized online forums to gain technical assistance needed to maintain access to IKS services in October and November of 2014. (Doc. 10-3, at 8-33).

         Plaintiffs' Complaint asserts three independent causes of action. (Doc. 1, at 7-9). Count I asserts that Defendant willfully, and for the purpose of commercial advantage or private financial gain, circumvented an access control measure in violation of the Digital Millennium Copyright Act, 17 U.S.C. § 1201(a)(1). (Doc. 1, at 7-8). Count II asserts that Defendant willfully, and for the purpose of commercial advantage or private financial gain, received satellite signals without authorization in violation of the Federal Communications Act, 47 U.S.C. § 605(a). (Doc. 1, at 8). Count III asserts that Defendant intentionally, and for tortious and illegal purposes or for commercial advantage or private financial gain, was intercepting satellite signals in violation of the Electronic Communications Privacy Act, 18 U.S.C. §§ 2511(1)(a) and 2520. (Doc. 1, at 8-9).

         In Plaintiff's Motion for Default Judgment, Plaintiffs seek default judgment against Defendant for Count III alleged in the Complaint. (Doc. 9, at 1). Plaintiffs seek relief in the form of an award of statutory damages in the amount of $10, 000 and a permanent injunction enjoining Defendant's activities regarding the piracy of DISH Network programming. Id. Provided that this Court awards the requested relief, Plaintiffs then request that Count I and Count II be dismissed with prejudice so final judgment may be entered. (Doc. 10, at 13). On August 2, 2016, Defendant was served by first-class mail at the address where he received personal service of Plaintiffs' pleadings with both Plaintiffs' Motion for Default Judgment (Doc. 9, at 2) and Plaintiffs' Memorandum in Support of Motion for Default Judgment (Doc. 10, at 14).

         II. STANDARD OF REVIEW

         Plaintiff's motion for default judgment is governed by Rule 55 of the Federal Rules of Civil Procedure. Fed.R.Civ.P. 55. Upon a showing that a party against whom judgment is sought has failed to plead or otherwise defend, the clerk must enter the party's default. Fed.R.Civ.P. 55(a). On July 12, 2016, the Clerk did file an Entry of Default in this case as to Defendant. (Doc. 8). After the clerk has entered a default, the plaintiff may seek a default judgment. See Fed. R. Civ. P. 55(b). The entry of a default judgment is left to the sound discretion of the court, and no party is entitled to a favorable entry of default judgment as a matter of right. See Black v. F & S, LLC, 2008 U.S. Dist. LEXIS 100577, at *6 n.6 (W.D. N.C. 2008) (Voorhees, J.) (citing United States v. Ragin, 113 F.3d 1233, 1997 U.S. App. LEXIS 11827, at *5 (4th Cir.1997)); Draper v. Coombs, 792 F.2d 915, 924 (9th Cir.1986)). See also Advantage Media Group v. Debnam, 2011 U.S. Dist. LEXIS 62678, at *3 (M.D. N.C. 2011); EMI April Music, Inc. v. White, 618 F.Supp.2d 497, 505 (E.D. Va. 2009); S.E.C. v. Lawbaugh, 359 F.Supp.2d 418, 421 (D. Md. 2005).

         III. DEFAULT JUDGMENT

         This Court is authorized by Fed.R.Civ.P. 55(b)(2) to enter default judgment against Defendant, who was personally served (Doc. 6) and has otherwise not participated at any step in this litigation. A consequence of the clerk's entry of a default is that “the factual allegations of the complaint, except those relating to the amount of damages, will be taken as ...


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