Keeping Tabs on the Ninth Circuit
August 25, 2022 - This Week at the Ninth

This Week at the Ninth: Signal Piracy and Supplemental Jurisdiction

antenna blog

This week, the Ninth Circuit examines the requirements for signal piracy liability under the Cable Communications Policy Act and Communications Act, and explains when courts must give notice before dismissing a state law claim on jurisdictional grounds.

The Court affirmed summary judgment against an entertainment distributor on its claims under the Cable Communications Policy Act and Communications Act alleging that a hookah lounge engaged in signal piracy in violation of those acts when it displayed a boxing match for its customers on a laptop via the internet.

The Panel: Judges McKeown, Ikuta, and Daniels (S.D.N.Y.), with Judge McKeown writing the opinion.

Key highlight: “We note that on their face, §§ 553 and 605 do not provide for an ‘Internet defense’ that automatically absolves an entity of liability, as the district court held. Rather, these statutes regulate specific methods of transmission. We affirm the district court’s grant of summary judgment for Wave because G&G failed to meet its burden of production to establish that Wave’s method of transmitting the fight comes within the ambit of §§ 553 of 605. The district court afforded G&G generous time to undertake additional discovery to provide the evidence necessary to ascertain the technical nature of the transmission at issue. Instead of taking that opportunity, G&G simply stopped the show and asked the district court to rule on the sparse record. Summary judgment for Wave was appropriate.”

Background:  G&G is a middleman distributor of entertainment display rights. It buys commercial distribution rights from entertainment producers and then sublicenses the rights to display televised sports and entertainment programs at commercial establishments such as bars, clubs, and restaurants. G&G purchased exclusive commercial distribution rights to a televised boxing match. But Wave Hookah, a hookah lounge in Van Nuys, California, displayed the fight to its customers without sublicensing the fight from G&G, by instead purchasing it from a digital media provider and playing it for guests on a laptop via the internet. G&G sued Wave under the Cable Communications Policy Act, 47 U.S.C. § 553 (:§ 553”) and the Communications Act, 47 U.S.C. § 605 (“§ 605”), alleging violations of those statutes’ prohibitions on displaying television programs without the right to do so—known as “signal piracy.” The district court granted summary judgment in favor of Wave, finding that §§ 553 and 605 did not regulate streaming over the Internet.

Result:  The Ninth Circuit affirmed on an alternative ground. It declined to reach the question of first impression about whether §§ 553 and 605 applies when the pirated program is transmitted via Internet streaming, although it noted that, on their face, §§ 553 and 605 do not provide for an “Internet defense” that automatically absolves an entity of liability. But it affirmed because G&G had not responded to Wave’s summary judgment showing by demonstrating that a genuine issue of material fact existed regarding whether Wave’s method of transmitting the fight comes within the ambit of those section. To be liable under § 553, the Court explained, Wave must have intercepted or received a communications service offered over a cable system without authorization. And to establish liability under § 605, Wave’s display of the fight must have been a “radio communication” or otherwise involved a satellite television signal. Yet G&G produced no evidence that would address whether the fight was relayed by way of a “facility, consisting of a set of closed transmission paths” or “provided to multiple subscribers within a community,” such that the fight could have been transmitted by way of a “cable system” within the meaning of § 553. Similarly, G&G produced no witnesses or documents to explain whether Wave’s display of the program involved a “transmission by radio of writing, signs, signals, pictures and sounds of all kinds” or otherwise involved a satellite transmission as would be required to establish liability under § 605. The district court had afforded G&G generous time to take discovery to ascertain the technical nature of the transmission at issue, but it had declined to do so, and so summary judgment for Wave was appropriate.

The Court holds that a district court declining to exercise supplemental jurisdiction over state law claims must provide plaintiff with notice and opportunity to respond before dismissal.

The panel: Judges M. Smith, Bade, and VanDyke, with Judge VanDyke writing the opinion.

Key highlight: “[I]t makes no sense to characterize any discretionary decision to decline supplemental jurisdiction as apparently lacking subject matter jurisdiction ‘on the face of the complaint’ and ‘obviously not curable’ . . . . The district court may be understandably reluctant to extend supplemental jurisdiction to combined ADA/Unruh Act cases for all the reasons given by the court, but the claims cannot be dismissed automatically without prior notice and an opportunity to respond.”

Background:  John Ho sued Frederick Russi, the proprietor of Pepe’s Mexican Restaurant in Brea, California, alleging that the restaurant’s parking and interior aisles were difficult to navigate in a wheelchair, in violation of federal and state accommodation laws. Ho sought damages, injunctive relief, and attorney’s fees under the Americans with Disabilities

Act and California’s Unruh Civil Rights Act. After Russi failed to respond to the complaint, Ho moved for default judgment. Citing the large influx of Unruh Act claims in federal court, the district court sua sponte declined to exercise supplemental jurisdiction over Ho’s state law claim and dismissed it without giving Ho an opportunity to respond.

Result:  The Ninth Circuit reversed and remanded. As the Court explained, a district court’s power to dismiss for lack of subject matter jurisdiction without notice “is not unlimited.” To start, the district court’s dismissal here was not actually jurisdictional because “whether a court has subject-matter jurisdiction over a claim is distinct from whether a court chooses to exercise that jurisdiction.” Because “it is indisputable that the District Court possessed supplemental jurisdiction” and “only faced the discretionary inquiry of whether to discontinue that jurisdiction,” it was required to provide notice and an opportunity to be heard before dismissal. 

In any event, the Ninth Circuit also concluded that the circumstances here would have warranted notice and hearing even if the dismissal had been purely jurisdictional. The Court previously recognized only two circumstances that do not require such notice and hearing: when the “parties have previously argued the issue of jurisdiction,” and when “lack of jurisdiction “appears on the face of the complaint and is obviously not curable.” Neither of those circumstances were present here—jurisdiction had not been briefed, and no defect was evident on the face of Ho’s complaint. To the contrary, a “federal court normally must assert supplemental jurisdiction when the combined state and federal claims form part of the same ‘case or controversy’ and share a ‘common nucleus of operative fact.’” Because “[t]he district court erred by not providing Ho an opportunity to argue supplemental jurisdiction before dismissing his claim,” the Ninth Circuit reversed and remanded.