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DIRECTV, LLC v. Saylor

United States District Court, W.D. Virginia, Harrisonburg Division

November 25, 2014

DIRECTV, LLC, Plaintiff,
v.
ROBERT SAYLOR, et al., Defendants

For Directv, Llc, a California limited liability company, Plaintiff: John H. Jamnback, LEAD ATTORNEY, Yarmuth Wilsdon PLLC, Seattle, WA USA; Robert E Travers, IV, LEAD ATTORNEY, Williams Mullen - Virginia Beach, Virginia Beach, VA USA.

Robert Saylor, Defendant, Pro se, Park City, UT USA.

For Bruce Taylor, Ellicott City Cable Llc, a Maryland limited liability company, Defendants: Steve Michael Oster, LEAD ATTORNEY, PRO HAC VICE, Oster Law Firm, Washington, DC USA; William Warner Eldridge, IV, LEAD ATTORNEY, Eldridge and Nagy PLC, Harrisonburg, VA USA.

REPORT & RECOMMENDATION

Joel C. Hoppe, United States Magistrate Judge.

This matter is before me for a report and recommendation on pro se Defendant Robert Saylor's Motion to Dismiss the Amended Complaint for Improper Venue or to Grant Arbitration, ECF No. 36, and Defendants Bruce Taylor and Ellicott City Cable's Motion to Dismiss the Amended Complaint for Lack of Personal Jurisdiction, ECF No. 42. The parties have fully briefed the matters, making them ripe for determination, and the Court held oral argument on September 19, 2014. Having considered the parties' pleadings, supporting exhibits, briefs, oral arguments, and the applicable law, I respectfully recommend that the presiding District Judge DENY with prejudice Saylor's motion to dismiss for improper venue, DENY without prejudice Saylor's motion to compel arbitration, and DENY without prejudice Taylor and Ellicott City Cable's motion.[1] Additionally, I recommend that the Court stay this action to allow Saylor and DIRECTV, LLC to arbitrate the disputes between them.

I. Background

On December 6, 2013, Plaintiff DIRECTV, LLC (" DIRECTV"), a California limited liability company, filed suit in this Court against Robert Saylor (" Saylor"); Sky Cable, LLC (" Sky Cable"), a Virginia limited liability company; Bruce Taylor (" Taylor"); Ellicott City Cable, LLC (" ECC"), a Maryland limited liability company; and John Does 1-5. Compl. ¶ ¶ 1, 4-9, ECF No. 1. The case involves allegations of stolen DIRECTV programming and the unauthorized use of DIRECTV's intellectual property after DIRECTV and Sky Cable ended their long-running business relationship in the spring of 2011. See Amend. Compl. ¶ ¶ 1, 6, ECF No. 32.

A. The Amended Complaint

Because this case is before the Court on motions to dismiss, the facts alleged in the Amended Complaint must be taken as true and all reasonable inferences must be drawn in the plaintiff's favor. Warren v. Sessoms & Rogers, P.A., 676 F.3d 365, 373 (4th Cir. 2012). DIRECTV sells digital programming to residential and commercial customers throughout the United States. See id . ¶ 13. Most programming distributed by DIRECTV is first delivered to its broadcast centers in California and Colorado, where the signals are digitized, compressed, and encrypted before being transmitted to stationary orbiting satellites. Id. ¶ 15. The satellites then beam those encrypted signals back to " more than 20 million homes and businesses equipped with specialized DIRECTV receiving equipment." Id. ¶ ¶ 13, 16.

DIRECTV provides programming to multiple-dwelling unit (" MDU") residential and commercial properties using a Satellite Master Antenna Television (" SMATV") system. Id. ¶ ¶ 27, 32. " In an MDU system, DIRECTV's satellite signal is received through one or more satellite dishes mounted onsite and distributed to individual units within the building or adjacent buildings." Id. The infrastructure used to distribute these signals is sometimes called a " private cable system" because this system is not legally permitted to cross public rights-of-way. Id. ¶ 39.

The company ties its monthly SMATV fees to the type of programming that the MDU property owner (i.e., " the customer") orders and the number of " subscriber units" that have access to the programming. See id . ¶ ¶ 27-28. MDU properties may qualify for " [b]ulk television programming packages" that cost substantially less than comparable single-dwelling unit residential packages. Id. ¶ 20. Under the terms of the SMATV and MDU agreements, customers must identify the physical address of the property receiving DIRECTV programming, declare the number of subscriber units that will have access to the programming, and certify that the property is an MDU property eligible to receive DIRECTV programming. See id . ¶ ¶ 24, 29, 36. DIRECTV customers cannot receive, view, resell, retransmit, or rebroadcast programming at or to unapproved properties. See id . ¶ ¶ 25, 30, 37. Nor may SMATV and MDU customers charge their residents for " base package" DIRECTV programming " separate and apart from the rent charged" for the MDU property. See id . ¶ ¶ 21, 30, 32. DIRECTV separately bills residents who upgrade the basic DIRECTV programming and service options that are provided by the MDU property owner as an amenity. See id . ¶ 22.

DIRECTV also contracts with local dealers, called System Operators, to install and maintain " satellite television infrastructure at MDUs and to solicit residential MDU customers for DIRECTV." Id. ¶ 19. Defendant Sky Cable was an authorized DIRECTV dealer between 1998 and 2011, and defendant Saylor was Sky Cable's president during that time. Id. ¶ ¶ 5, 6, 40.

Sometime around spring 2006, Saylor and Sky Cable began helping property owners in Kansas, Maryland, and states unknown set up infrastructure and fraudulent DIRECTV accounts in order to resell programming to their residents. See generally id . ¶ ¶ 40, 43-53, 54-68, 69-83. Saylor and Sky Cable " concocted a scheme whereby companies would be able to obtain special programming packages from DIRECTV at discounted rates by misrepresenting both the type of properties that the programming would be distributed to and the number of viewers that would be accessing the programming." Id. ¶ 41. Taylor and ECC " acted in concert" with Saylor and Sky Cable in furtherance of the scheme to defraud DIRECTV and to unjustly enrich themselves. See id . ¶ ¶ 56, 58-60, 62-66, 68, 70, 72-79, 81.

1. The Taylor Village & Waverly Gardens Accounts

Taylor and ECC hired Saylor and Sky Cable " to set up a system to deliver satellite television programming" to two of Taylor's residential developments in Maryland. Id. ¶ 55; see also id . ¶ ¶ 54-57, 59, 69-70, 73. In March 2006, the defendants submitted documents to DIRECTV in order to set up a Commercial SMATV account for " Taylor Village" in Ellicott City. Id. ¶ 56. Taylor Village's SMATV Agreement certified that " only 100 subscriber units" at 4100 College Avenue, Ellicott City, Maryland, would have access to DIRECTV programming. Id. ¶ ¶ 56, 58.

According to DIRECTV, the documents actually listed two physical addresses[2] for Taylor Village in Ellicott City, neither of which " is a 100 unit SMATV eligible property." Id. ¶ 57. Saylor, Sky Cable, Taylor, and ECC intended at the time to set up an unauthorized private cable system and ultimately supplied programming to " well in excess of 100 units" in " numerous additional buildings" throughout the Taylor Village development. Id. ¶ 58. Taylor Village's SMATV Viewing Agreement was signed by Taylor on behalf of ECC and listed " Robert Saylor as the authorized installer." Id. ¶ 56. Documents submitted later list Saylor or his purported employee as the " authorized officer/agent for Taylor Village." Id. ¶ 57 (internal quotation marks omitted). At least some of the " account documentation concerning the Taylor Village SMATV account was submitted to DIRECTV by fax by defendant Sky Cable from its location in Elkton, Virginia." Id.

Saylor and Sky Cable also helped Taylor and ECC set up at least one fraudulent MDU account for Taylor Village around April 2006. Id. ¶ 59. The MDU bulk application(s) contained " inaccurate addresses and misleading information" that led DIRECTV to believe its " MDU programming was being supplied to MDU-approved properties." Id. Taylor and ECC also granted " Sky Cable . . . the ROE [right of entry] to service the MDU [system] at Taylor Village" in a written agreement dated March 31, 2006. Id. The defendants used this system to provide " programming through a private cable system for a variety of buildings and residences within Taylor Village, which [they] resold to the occupants and residents." Id. ¶ 60.

Taylor and ECC " made regular monthly payments to DIRECTV" on the Taylor Village accounts between April 2006 and July 2012. Id. ¶ 66. " At the times and on the dates they made each payment, [Taylor and ECC] failed to inform DIRECTV that its programming was being used to supply television content to additional viewers at [unauthorized] locations." Id. Saylor and Sky Cable " assisted and counseled [Taylor and ECC] with regard to multiple false representations and omissions in furtherance of . . . [their] scheme to defraud DIRECTV through redistribution and resale of the DIRECTV programming obtained through the SMATV and MDU accounts." Id. ¶ 62; accord id . ¶ 65 (alleging that the named defendants " intentionally and fraudulently misrepresented to DIRECTV the location where DIRECTV receiving equipment would be installed and maintained[] and how the programming would be distributed"). The Taylor Village " accounts were actively managed by the Defendants by Sky Cable from its offices in Elkton, Virginia." Id.

Saylor and Sky Cable also helped Taylor and ECC set up fraudulent MDU and SMATV accounts for a property called " Waverly Gardens" [3] in Woodstock, Maryland. Id. ¶ ¶ 69, 70, 73. ECC, with Saylor and Sky Cable's guidance and assistance, submitted an MDU application that caused DIRECTV to believe its bulk programming would be supplied to 108 subscriber units at an MDU-eligible property at 10801 Enfield Drive, Woodstock, Maryland. Id. ¶ ¶ 72, 73. The defendants instead " used the MDU systems to provide programming through a private cable system for a variety of buildings and residences in the general vicinity of the Waverly Gardens apartment building, which [they] resold to the occupants and residents." Id. ¶ 74; accord id . ¶ ¶ 75-76.

In June 2006, Saylor, Sky Cable, Taylor, and ECC, acting in concert, submitted documents to DIRECTV in order to set up a Commercial SMATV account for Waverly Gardens. Id. ¶ 70. The documents again certified that " only 108 subscriber units" at Waverly Gardens would have access to DIRECTV programming. Id. ECC's New Customer Information Form listed the property's physical address at 10801 Enfield Drive in Woodstock, Maryland. Id. However, " the contact name for [this] property is listed as Robert Saylor, and the billing address submitted by the Defendants for the property was 315 W. Spotswood Trail, Elkton, Virginia." Id. ¶ 71. " At the time they were established, the[] accounts for Waverly Gardens were actively managed by the Sky Cable Defendants from its offices in Elkton, Virginia." Id. ¶ 77.

Taylor and ECC also made regular monthly payments to DIRECTV for services provided under Waverly Gardens' SMATV and MDU accounts. See id . at ¶ 81. According to DIRECTV, neither Taylor nor ECC informed the company that its programming was being supplied or resold " to additional buildings and viewers at [unauthorized] locations" within or near the Waverly Woods development. Id.; see also id . ¶ 76. Waverly Gardens' accounts were still open when DIRECTV filed its Amended Complaint on May 27, 2014. See id . ¶ ¶ 75, 81.

2. The Ideatek Account

Saylor and Sky Cable also assisted another company in fraudulently obtaining DIRECTV services. In 2007, Saylor was " retained as a consultant" for a company called Ideatek in Buhler, Kansas. Id. ¶ 42. Saylor " directed" and " advised . . . Ideatek to submit a fraudulent application to DIRECTV claiming that MDU programming would be supplied" to a qualifying residential property. Id. ¶ 43. To that end, Ideatek submitted an application " with a phony address including 75 sequential apartment or suite numbers so it would appear to DIRECTV that the MDU programming would be supplied" to several units within one building. Id.

DIRECTV approved Ideatek's MDU application and use of a " single head end" to provide its bulk programming to these units. Id. ¶ ¶ 44, 50. Ideatek instead " provided DIRECTV programming to over 450 customers primarily in single family homes spread out over more than 20 miles, " which caused its cable television infrastructure to unlawfully cross public rights-of-way. Id. ¶ 44.

Ideatek, Saylor, and Sky Cable did not inform DIRECTV that its bulk programming was being supplied to single-family homes at locations not authorized by DIRECTV. Id. ¶ 51. DIRECTV discovered Saylor's role in this alleged scheme to defraud DIRECTV after a billing dispute with Ideatek. Id. ¶ 52. DIRECTV settled its dispute with Ideatek out of court. See Pl. Br. in Opp. at 4 n.3, ECF No. 43.

3. Continued Use of DIRECTV's Name & Trademarks

DIRECTV terminated its business relationship with Saylor and Sky Cable in spring 2011. See Amend. Compl. ¶ ¶ 6, 84-85. In letters dated March 14, 2011, and March 17, 2011, DIRECTV instructed Saylor and Sky Cable to immediately stop using " any and all DIRECTV trademarks, service marks, [and] trade names, " or doing anything that might indicate that Sky Cable was still an authorized DIRECTV dealer or sales agent. Id. ¶ ¶ 84, 85. As of May 27, 2014, Saylor and Sky Cable continued " to hold [themselves] out to the public as authorized sales agents for DIRECTV" by using DIRECTV's name, trademarks, and service marks on Sky Cable's website. Id. ¶ 86. They have been doing this without DIRECTV's consent " [s]ince at least April 13, 2011." Id.

4. The Counts

DIRECTV names Saylor in his personal capacity as a defendant in all eight counts of the Amended Complaint. Counts One through Six concern Saylor's role in a scheme to enrich himself, his company, and his clients by defrauding DIRECTV and stealing the company's satellite television programming. See Amend. Compl. ¶ ¶ 40-41 (summarizing Saylor's conduct), 88-92 (Count 1, violating 47 U.S.C. § 605(a)), 93-98 (Count 2, violating 18 U.S.C. § 2511(1) (a)), 99-105 (Count 3, fraud), 106-10 (Count 4, unjust enrichment), 111-13 (Count 5, common-law conspiracy), 114-17 (Count 6, statutory business conspiracy). Counts Seven and Eight allege that Saylor used DIRECTV's name and trademarks in violation of 15 U.S.C. § § 1114 and 1125(a). See id . ¶ 1; see also id . ¶ ¶ 84-87, 119-27 (Count 7), 129-32 (Count 8). Defendants Taylor and ECC are named in Counts One through Six only.

II. Discussion

A. Saylor's Motion


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