Joe Hand Promotions, Inc. v. Jacobson et al

Filing 32

MEMORANDUM OPINION AND ORDER: Defendants' motion for summary judgment 23 as to Jacobson, in his individual capacity, is granted, and the motion is denied on all other grounds. Signed on 6/8/12 by Magistrate Judge Dennis J. Hubel. (see formal order) (kb)

1
2
3

UNITED STATES DISTRICT COURT

4

DISTRICT OF OREGON

5

PORTLAND DIVISION

6
7 JOE HAND PROMOTIONS, INC.,
)
a Pennsylvania corporation,
)
8
)
Plaintiff,
)
No. 03:11-cv-00065-HU
9
)
vs.
)
10
)
RANDY JACOBSON, individually, and )
11 as the alter ego of PAR III, INC.,) MEMORANDUM OPINION AND ORDER
dba THE PORTERHOUSE RESTAURANT; and) ON MOTION FOR SUMMARY JUDGMENT
12 PAR III, INC., an Oregon domestic )
corporation, dba THE PORTERHOUSE )
13 RESTAURANT;
)
)
14
Defendants.
)
_____________________________
15
16
17 Samuel C. Justice
Attorney at Law
18 610 S.W. Alder Street, Suite 1000
Portland, OR 97205-3611
19
Attorney for Plaintiff
20
21
22 Terrence J. Slominski
David W. Venables
23 Slominski & Associates
7100 S.W. Hampton, Suite 101
24 Tigard, OR 97223
25

Attorneys for Defendants

26
27
28
1 - MEMORANDUM OPINION AND ORDER

1 HUBEL, Magistrate Judge:
2

The plaintiff Joe Hand Promotions, Inc. (“Joe Hand”) brings

3 this action under the Federal Communications Act of 1934, 47 U.S.C.
4 §§ 5531 and 6052 (the “FCA”), alleging the defendants Randy Jacobson
5 (“Jacobson”) and Par III, Inc. (“Par III”), doing business as the
6 Porterhouse Restaurant (the “Restaurant”), unlawfully exhibited the
7 “Ultimate Fighting Championship 93: Franklin v. Henderson Program”
8 (the “Program”) at the Restaurant on January 17, 2009.

Joe Hand

9 claims it paid for and received exclusive nationwide television
10 distribution

rights

for

the

Program,

and

it

entered

into

11 sublicensing agreements to show the Program with various commercial
12 enterprises
13 defendants

throughout
unlawfully

North

America.

intercepted,

Joe

published,

Hand

claims

the

exhibited,

and

14 divulged the Program for private financial gain without obtaining
15 a sublicense to do so from Joe Hand, in violation of the FCA. Joe
16 Hand also asserts a common-law claim for conversion of the Program.
17 Joe Hand seeks statutory damages up to $100,000 for the defendants’
18 violation of 47 U.S.C. § 605; statutory damages up to $50,000 for
19 the defendants’ violation of 47 U.S.C. § 553; compensatory damages
20
1

Section 553 prohibits the unauthorized reception or receipt
of “any communications service offered over a cable system, or
22 assisting in the unauthorized reception or receipt of such service.
47 U.S.C. § 553(a). Section 553 provides for a private right of
23 action for injunctive relief, damages, and attorneys’ fees to “any
aggrieved party who prevails.” 47 U.S.C. § 553(c).
24
2
Section 605 prohibits the unauthorized receipt, assistance in
25 receiving, transmitting, or assisting in transmitting, of communications by wire or radio. Prohibited practices include divulging
26 or publishing the intercepted communications for the benefit of the
recipient or of “another not entitled thereto.”
47 U.S.C.
27 § 605(a). Section 605 provides for a private right of action for
injunctive relief, damages, attorney’s fees, and costs. 47 U.S.C.
28 § 605(e).
21

2 - MEMORANDUM OPINION AND ORDER

1 to be proved at trial for conversion; and its attorney’s fees and
2 costs.
3

Dkt. #1.

The matter is before the court on the defendants’ motion for

4 summary judgment.

The defendants move for summary judgment on

5 three grounds, each of which is discussed below.
6
Standards

7
8

Summary judgment “should be rendered if the pleadings, the

9 discovery and disclosure materials on file, and any affidavits show
10 that there is no genuine issue as to any material fact and that the
11 movant is entitled to judgment as a matter of law.”
12 P. 56(c)(2).

Fed. R. Civ.

In considering a motion for summary judgment, the

13 court “must not weigh the evidence or determine the truth of the
14 matter but only determine whether there is a genuine issue for
15 trial.”

Playboy Enters., Inc. v. Welles, 279 F.3d 796, 800 (9th

16 Cir. 2002) (citing Abdul-Jabbar v. General Motors Corp., 85 F.3d
17 407, 410 (9th Cir. 1996)).
18

The Ninth Circuit Court of Appeals has described “the shifting

19 burden of proof governing motions for summary judgment” as follows:
20
21
22
23
24
25
26
27
28

The moving party initially bears the burden of
proving the absence of a genuine issue of
material fact. Celotex Corp. v. Catrett, 477
U.S. 317, 323, 106 S. Ct. 2548, 91 L. Ed. 2d
265 (1986). Where the non-moving party bears
the burden of proof at trial, the moving party
need only prove that there is an absence of
evidence to support the non-moving party’s
case. Id. at 325, 106 S. Ct. 2548. Where the
moving party meets that burden, the burden
then shifts to the non-moving party to
designate specific facts demonstrating the
existence of genuine issues for trial. Id. at
324, 106 S. Ct. 2548. This burden is not a
light one.
The non-moving party must show
more than the mere existence of a scintilla of
evidence.
Anderson v. Liberty Lobby, Inc.,
3 - MEMORANDUM OPINION AND ORDER

1

477 U.S. 242, 252, 106 S. Ct. 2505, 91 L. Ed.
2d 202 (1986). The non-moving party must do
more than show there is some “metaphysical
doubt” as to the material facts at issue.
Matsushita Elec. Indus. Co., Ltd. v. Zenith
Radio Corp., 475 U.S. 574, 586, 106 S. Ct.
1348, 89 L. Ed. 2d 528 (1986). In fact, the
non-moving party must come forth with evidence
from which a jury could reasonably render a
verdict in the non-moving party’s favor.
Anderson, 477 U.S. at 252, 106 S. Ct. 2505. In
determining whether a jury could reasonably
render a verdict in the non-moving party’s
favor, all justifiable inferences are to be
drawn in its favor. Id. at 255, 106 S. Ct.
2505.

2
3
4
5
6
7
8
9

10 In re Oracle Corp. Securities Litigation, 627 F.3d 376, 387 (9th
11 Cir. 2010).
Discussion

12
A.

13
14

Corporate Veil

The defendants argue Joe Hand has not shown Jacobson had any

15 involvement in the alleged showing of the Program, and in any
16 event, he cannot be held individually liable for Par III’s actions
17 solely on the basis that he is president of the corporation.

Joe

18 Hand responds that Jacobson is listed on records of the Oregon
19 Secretary

of

State

as

the

registered

agent,

president,

and

20 secretary of Par III, Inc., with no other individual being listed
21 as an officer or shareholder of the corporation.

Joe Hand asserts

22 Jacobson is solely responsible for the day-to-day operations of the
23 corporation (and, therefore, the Restaurant), giving rise to “an
24 inference that the corporation is his alter ego[.]” Dkt. #26 (Pl’s
25 Memorandum), p. 3 (citing Jacobson’s Declaration, Dkt. #24); see
26 Dkt. #24, Jacobson’s Declaration, ¶

2 & attachment).

Joe Hand

27 claims, therefore, that issues of fact exist regarding Jacobson’s
28
4 - MEMORANDUM OPINION AND ORDER

1 involvement in showing the Program, precluding summary judgment.
2 Id.
3

The defendants rely on State ex rel. Neidig v. Superior

4 National Insurance Co., 343 Or. 434, 173 P.3d 123 (2007), in which
5 the Oregon Supreme Court discussed in detail the elements required
6 to pierce the corporate veil.

The analysis begins with the Oregon

7 Supreme Court’s decision in Amfac Foods v. International Systems,
8 294 Or. 94, 108-09, 654 P.2d 1092, 1101-02 (1982), where the court
9 explained an “exception to the rule of shareholder immunity”:
10
11
12
13
14
15
16
17
18
19
20
21
22

“We state the exception to the rule as
follows: When a plaintiff seeks to collect a
corporate debt from a shareholder by virtue of
the shareholder’s control over the debtor corporation rather than on some other theory, the
plaintiff must allege and prove not only that
the debtor corporation was under the actual
control of the shareholder but also that the
plaintiff’s inability to collect from the corporation resulted from some form of improper
conduct on the part of the shareholder. This
causation requirement has two implications.
The shareholder’s alleged control over the
corporation must not be only potential but
must actually have been exercised in a manner
either causing the plaintiff to enter the
transaction with the corporation or causing
the corporation’s default on the transaction
or a resulting obligation. Likewise, the
shareholder’s conduct must have been improper
either in relation to the plaintiff’s entering
the transaction or in preventing or interfering with the corporation’s performance or
ability to perform its obligations toward the
plaintiff.”

23 Neidig, 343 Or. at 454, 173 P.3d at 135 (emphasis added; quoting
24 Amfac, supra).
25

The Neidig court noted the Amfac test, “although easily

26 stated, may not be easily applied. . . .

Indeed, each part of the

27 test - control, wrongful conduct, and causation - can present close
28 legal and factual questions that must be considered in reaching the
5 - MEMORANDUM OPINION AND ORDER

1 ultimate equitable determination as to whether the corporate veil
2 can be pierced.”
3 omitted).

Id., 343 Or. at 455, 173 P.3d at 136 (citations

The court quoted with approval from Fletcher Cyclopedia

4 of the Law of Corporations § 41.10, 143-47 (2006 rev.), noting
5 Fletcher “derives from the cases a three-part inquiry that is
6 consistent with Amfac, to-wit:
7

“While the factors that will justify
piercing the corporate veil vary from jurisdiction to jurisdiction, a number of courts
will disregard the existence of a corporate
entity when the plaintiff shows: (1) control,
not merely majority or complete stock control,
but complete domination, not only of the
finances, but of policy and business practice
in respect to the transaction so that the
corporate entity as to this transaction had at
the time no separate mind, will or existence
of its own; (2) that such control was used by
the defendant to commit fraud or wrong, to
perpetrate the violation of a statutory or
other positive legal duty, or to commit a
dishonest and unjust act in contravention of
the plaintiff’s legal rights; and (3) that the
aforesaid control and breach of duty proximately caused the injury or unjust loss.”

8
9
10
11
12
13
14
15
16

17 Neidig, 343 Or. at 455 n.16, 173 P.3d at 136 n.16 (quoting
18 Fletcher, supra).
19

Stated another way:

20

To pierce the corporate veil, . . . plaintiff
must make a prima facie showing that the
individual defendants controlled the corporations, that they engaged in improper conduct
in their exercise of control, and that their
improper conduct caused plaintiff’s inability
to obtain an adequate remedy from the corporation.

21
22
23
24

25 Aero Planning Int’l, Inc. v. Air Assoc., Inc., 94 Or. App. 143,
26 145, 764 P.2d 610, 612 (1988) (citing Rice v. Oriental Fireworks
27 co., 75 Or. App. 627, 633, 707 P.2d 1250, 1255 (1985)).
28 Planning,

the

plaintiff

alleged

6 - MEMORANDUM OPINION AND ORDER

the

individual

In Aero

defendants

1 improperly commingled the accounts and affairs of the corporate
2 defendants, “undercapitalizing them and ‘milking’ their assets,”
3 apparently to the point that the corporations could not respond to
4 a judgment.

Aero Planning, 94 Or. App. at 146, 707 P.2d at 612.

5 The court found, however, the plaintiff had failed to establish
6 that, “as between the shareholders and the defendant corporations,
7 the shareholders disregarded the corporate entities.”
8

Id.

In the present case, Jacobson has submitted a Declaration in

9 which he states he “had no involvement in any alleged showing of a
10 UFC event on January 17, 2009, at the Porterhouse Restaurant.”
11 Dkt. #24, ¶ 4.

Joe

Hand has offered no contrary evidence.

12 Likewise, it has offered no evidence that raises an issue of fact
13 regarding Jacobson’s personal involvement in causing Joe Hand to be
14 unable to collect a judgment against the corporation. Joe Hand has
15 failed to meet its burden to “designate specific facts demon16 strating the existence of genuine issues for trial.”

In re Oracle

17 Corp., 627 F.3d at 387. Therefore, the defendants’ motion for
18 summary judgment as to Jacobson, in his individual capacity, is
19 granted.
20
B.

21
22

Timeliness

The defendants argue Joe Hand’s FCA claims are untimely under

23 both

Federal

Rule

of

Civil

Procedure

4(m),

and

the

FCA,

as

24 interpreted by this court in Kingvision Pay-Per-View Ltd. v. Shilo
25 Inn, 05-cv-1065-HU, Dkt. #18, Findings & Recommendation (D. Or.
26 Mar. 1, 2006) (Hubel M.J.), adopted at Dkt. #25 (D. Or. Apr. 26,
27 2006) (Redden, J.).
28
7 - MEMORANDUM OPINION AND ORDER

1

Joe Hand responds that the Complaint was timely filed.

It

2 asserts the filing deadline fell on a legal holiday - Martin Luther
3 King Day, January 17, 2011 - and the Complaint was filed the next
4 day, as allowed by “Federal Rule of Civil Procedure 6(c)” [sic]3.
5

In Kingvision, I noted the FCA does not, itself, contain a

6 limitations

period

for

private

actions

7 violations of the “anti-piracy provisions.”

by

non-carriers

for

I analyzed relevant

8 case law, and concluded the federal Electronic Communications
9 Privacy Act (ECPA) is most analogous to the FCA, and the ECPA’s
10 two-year statute of limitations is appropriate for private actions
11 brought under the FCA’s anti-piracy provisions.

My analysis was

12 adopted by Judge James A. Redden of this court, who applied the
13 two-year statute of limitations in a similar case. See Kingvision,
14 supra.
15

Nothing has occurred to change that analysis here.

The two-

16 year statute of limitations in the analogous ECPA is appropriately
17 applied to Joe Hand’s Complaint.

The defendants’ unauthorized

18 interception and transmission of the Program allegedly occurred on
19 January 17, 20094, which would make the filing deadline January 17,
20
21

3

The actual applicable subsection is (a)(1)(C), rather than
“6(c).” Compare Fed. R. Civ. P. 6(a)(1)(C) with Fed. R. Civ. P.
22
6(c).
23
4
The Affidavit of investigator Steve Wilson submitted by Joe
24 Hand contains a discrepancy regarding the date the Program
allegedly was shown. On page one, Wilson states he saw the Program
25 being shown on January 17, 2007; on page two, he states the date
was January 17, 2009.
At oral argument, Joe Hand’s counsel
26 indicated Wilson’s deposition has been taken, and Wilson explained
this was a scrivener’s error; the correct date was 2009. Neither
27 party has submitted a copy of the deposition to the court, but the
defendants do not argue that the 2007 date was anything other than
28 a scrivener’s error. For purposes of the defendants’ motion for
8 - MEMORANDUM OPINION AND ORDER

1 2011.

See Dkt. #26-1; Fed. R. Civ. P. 6.

Under Federal Rule of

2 Civil Procedure 6, if the last day of the period falls on “a
3 Saturday, Sunday, or legal holiday, the period continues to run
4 until the end of the next day that is not a Saturday, Sunday, or
5 legal holiday.” Fed. R. Civ. P. 6(a)(1)(C).

January 17, 2011, was

6 a legal holiday; as a result, the filing period continued to run
7 until the end of the day on Tuesday, January 18, 2011 - the date
8 this case was filed.

Therefore, the case was filed within the

9 applicable statute of limitations, and the defendants’ motion for
10 summary judgment based on a violation of the statute of limitations
11 is denied.
12

The defendants also assert a second timeliness argument, based

13 on Joe Hand’s failure to serve them within 120 days after the
14 Complaint was filed.

The case was filed on January 18, 2011, and

15 a Scheduling Order was entered by the court.

On June 29, 2011,

16 when no timely service of process had been made within 120 days as
17 required by Federal Rule of Civil Procedure 4(m), the court entered
18 an order requiring Joe Hand to show cause by July 28, 2011, why the
19 case should not be dismissed for failure to prosecute.

Dkt. #4.

20 In response, Joe Hand’s counsel submitted a letter outlining his
21 efforts to locate and serve the defendants, and to attempt to
22 obtain a waiver of service.

Dkt. #5.

The court accepted counsel’s

23 explanation of his failure to effect service of process, and set a
24 new service deadline of September 16, 2011.
25

Dkt. #6.

When, once again, service had not been made by the deadline,

26 the court entered another Order to Show Cause, directing Joe Hand
27
summary judgment, I accept the explanation that the date discre28 pancy was the result of a scrivener’s error.
9 - MEMORANDUM OPINION AND ORDER

1 to show cause by October 26, 2011, why the case should not be
2 dismissed for failure to prosecute.
3 Hand’s
4 October

counsel
12,

had

2011,

Summonses
Dkt.

#8;

Dkt. #7.

issued
the

to

In response, Joe

the

defendants

defendants
were

served

on
on

5 October 13, 2011, Dkt. ##9-1 & 9-2; and Joe Hand filed a written
6 response to the court’s Show Cause Order on October 26, 2011,
7 discussing efforts to determine, in advance of service, whether the
8 defendants were represented by counsel, and to obtain waivers of
9 service.

Dkt. #9.

The court reviewed Joe Hand’s response to the

10 Show Cause Order, found that good cause had been shown, and ordered
11 the case to proceed.
12

Dkt. #10.

The defendants argue the court erred in failing to dismiss the

13 case when Joe Hand failed to effect service of process earlier.
14 They argue there was no showing of good cause for Joe Hand’s
15 failure to effect service prior to the original deadline, and the
16 court should reverse its order finding good cause had been shown.
17 The defendants claim Joe Hand’s failure even to get Summonses
18 issued until October 12, 2011, showed a lack of diligence in
19 prosecuting the action.

They further argue, without citation to

20 any supporting authority, that the court lacked authority to extend
21 the date for service a second time without good cause, and they
22 claim Joe Hand lacked good cause for its failure to effect service
23 of process sooner.
24

Dkt. #25, pp. 24-26.

The defendants rely on Federal Rule of Civil Procedure 4(m),

25 which provides, in pertinent part:
26
27
28

If a defendant is not served within 120 days
after the complaint is filed, the court - on
motion or on its own after notice to the
plaintiff - must dismiss the action without
prejudice against that defendant or order that
10 - MEMORANDUM OPINION AND ORDER

1
2

service be made within a specified time. But
if the plaintiff shows good cause for the
failure, the court must extend the time for
service for an appropriate period. . . .

3
4 Fed. R. Civ. P. 4(m).

On both occasions, the court found Joe Hand

5 had shown good cause for its failure to effect service on the
6 defendants sooner.

Joe Hand was attempting to avoid the costs of

7 personal service by requesting a waiver, pursuant to Federal Rule
8 of Civil Procedure 4(d).
9 unsuccessful,

Joe

Hand

When those efforts ultimately proved
had

Summonses

issued

and

served

the

10 defendants personally.
11

The court finds no reasons to disturb its prior rulings that

12 Joe Hand had shown good cause for failure to effect service sooner.
13 Further, the court rejects the defendants’ argument that the time
14 to effect service may only be extended once under Rule 4(m).

The

15 defendants’ motion for summary judgment is denied on this basis.
16
C.

17
18

Conversion

The defendants argue Joe Hand cannot show conversion occurred

19 under Oregon law, and even if the Program was shown, which they
20 deny, its showing would constitute “‘no more than a trespass which
21 may be compensated by the actual damage inflicted upon the owner,
22 which would be covered by the reasonable value of the use to which
23 it was put.’”

Dkt. #25, p. 5 (quoting Jeffries v. Pankow, 112 Or.

24 439, 448, 229 P. 903, 905 (1924)).
25

Joe Hand responds, first, that whether its “action is properly

26 styled conversion or trespass . . . matters less under notice
27 pleading than it would under Oregon law.”

Dkt. #26, p. 3.

Joe

28 Hand asserts the defendants are on notice of the nature of the
11 - MEMORANDUM OPINION AND ORDER

1 claim, and can respond to it.

Id.

Second, Joe Hand argues the

2 defendants’ actions do, in fact, meet the elements of conversion
3 under Oregon law.

And third, Joe Hand asserts the defendants are

4 relying on an inappropriate definition of “chattel,” taken from the
5 Oregon definition applicable to lien statutes. Joe Hand claims the
6 definition upon which the defendants rely “is not a statutory
7 definition of chattel for purposes of conversion.”

Id.

However,

8 Joe Hand offers no alternative definition for “chattel” that it
9 claims the court should apply in this case.
10

Oregon defines the tort of conversion as the “‘intentional

11 exercise of dominion or control over a chattel which so seriously
12 interferes with the right of another to control it that the actor
13 may justly be required to pay the other the full value of the
14 chattel.’” Becker v. Pacific Forest Industries, Inc., 229 Or. App.
15 112, 116, 211 P.3d 284, 287 (2009) (quoting Restatement (Second) of
16 Torts § 222A (1965); citing Mustola v. Toddy, 253 Or. 658, 664, 456
17 P.2d 1004, 1007 (1969)).

The Becker court listed the following

18 nonexclusive factors to be considered in determining whether a
19 conversion has occurred:
20
21
22
23
24
25
26
27
28

“(2)
In determining the seriousness of the
interference and the justice of requiring the
actor to pay the full value, the following
factors are important:
“(a) the extent and duration of the
actor’s exercise of dominion or
control;
“(b) the actor’s intent to assert a
right in fact inconsistent with the
other’s right of control;
“(c) the actor’s good faith;
“(d) the extent and duration of the
resulting interference with the other’s
right of control;
“(e) the harm done to the chattel;
“(f) the inconvenience and expense
caused to the other.”
12 - MEMORANDUM OPINION AND ORDER

1
Id. (citing Mustola v. Toddy, 253 Or. 658, 666, 456 P.2d 1004, 1008
2
(1969)); accord Scott v. Jackson County, 244 Or. App. 484, 499-500,
3
260 P.3d 744, 752 (2011); Briggs v. Lamvik, 242 Or. App. 132, 255
4
P.3d 518 (2011).

The Becker court noted that no one of these

5
factors is considered dispositive.

Id. (citing Beall Transport

6
Equipment Co. v. Southern Pacific, 186 Or. App. 696, 707, 64 P.3d
7
1193 (2003)).
8
An actor can even commit conversion unknowingly, “if the actor
9
mistakenly believes that he or she is acting legally with respect
10
to the other person’s property, . . . and even if the actor
11
innocently acquires the property from a knowing converter.”

In re

12
Conduct of Martin, 328 Or. 177, 184-85, 970 P.2d 638, 642 (1998)
13
(citing Hemstreet v. Spears, 282 Or. 439, 579 P.2d 229 (1978);
14
Fredeen v. Stride, 269 Or. 369, 525 P.2d 166 (1974)).
15
Here, the parties disagree as to whether the Program con16
stituted a “chattel” that was capable of being converted.

The

17
defendants rely on the definition of “chattel” that applies in the
18
case of statutory liens; i.e., “movable objects that are capable of
19
being owned, but does not include personal rights not reduced to
20
possession but recoverable by an action at law or suit in equity,
21
money, evidence of debt and negotiable instruments.” ORS § 87.142.
22
Joe Hand argues this definition does not apply for purposes outside
23
the statutory lien context.
24
“A chattel is ‘[m]ovable or transferable property; personal
25
property; esp. a physical object capable of manual delivery and not
26
the subject matter of real property.’”

Rapacki v. Chase Home

27
Finance LLC, 797 F. Supp. 2d 1085, 1092 (D. Or. 2011) (Hernandez,
28
13 - MEMORANDUM OPINION AND ORDER

1 J.) (quoting Black’s Law Dictionary 268 (9th ed. 2009)).
2 federal

jurisdictions

3 constitutes
4 contexts.

a

have

“chattel”

considered

for

the

conversion

question

purposes

Several
of

in

what

various

Historically, it was only tangible property that could

5 be converted.

In 1959, in the context of the criminal prosecution

6 of a defendant for “conversion” to his own use of the labor and
7 services of a member of the armed forces during duty hours, the
8 Ninth Circuit discussed the “ordinary sense of the word ‘convert,’”
9 and what type of property may be converted.

The court observed

10 that the “words ‘converts’ and ‘conversion’ really have their
11 origin in the law of torts . . . [and] imply a dealing with goods
12 or personal chattels . . . limited to ‘any tangible chattel.’”
13 Chappell v. United States, 270 F.2d 274, 277 (9th Cir. 1959)
14 (quoting Harper & James, The Law of Torts, § 2.13).

The court

15 noted Messrs. Harper and James had explained, “‘Any tangible
16 chattel may be the subject of conversion. . . .

Intangible

17 property relations may not be converted except in the case of an
18 action against a corporation for conversion of shares and in those
19 situations in which the owner of a document is, as such, entitled
20 to the advantages of the intangible relation.’”
21 277

n.6.

The

Chappell

court

accepted

the

Id., 270 F.2d at
proposition

that

22 “intangible property relations may not be converted, as that term
23 is commonly used.”
24

Id., 270 F.2d at 277.

The Chappell court cited, with approval, Olschewski v Hudson,

25 262 P. 43 (Cal. Ct. App. 1927), where the court considered whether
26 a list of laundry customers was a chattel capable of conversion.
27 Id., 270 F.2d at 278.

The Olschewski court likened the customer

28 list to “the good will of a business,” and found a conversion
14 - MEMORANDUM OPINION AND ORDER

1 action “was not intended to reach so intangible, uncertain, and
2 indefinite a property right.” Olschewski, 262 P. at 45.

The court

3 observed,

the

further,

that

“[t]he

very

meaning

of

word

4 ‘conversion,’ as it is used in this sense, is to ‘change into
5 another form, substance or state; to transform, or change, as in
6 law, the wrongful appropriation to one’s own use of the goods of
7 another.’

The

very

definition

of

the

word

presupposes

the

8 existence of tangible goods or chattels in a form capable of being
9 changed or transformed, turned over, delivered, or appropriated for
10 the use and benefit of the wrongdoer.”

Id.

The Olschewski court

11 noted conversion, or trover, operates on “‘property capable of
12 identification as being the actual property or thing wrongfully
13 taken and converted.’”

Id. (quoting Kerwin v. Balhatchett, 147

14 Ill. App. 561, 566 (1909)).
15 action

“lies

only

for

The court concluded that a conversion

the

wrongful

appropriation

of

goods,

16 chattels, or personal property which is specific enough to be
17 identified, and not to such indefinite, intangible, and uncertain
18 property rights as the mere good will of a business, or trade
19 secrets, or a newspaper route, or a licensed market stall for
20 transacting trade.”
21

Olschewski, 262 P. at 46.

As the nature of property interests began to change, so, too,

22 did the law relating to the type of property that is capable of
23 conversion.

Over forty years ago, the United States Court of

24 Appeals for the District of Columbia Circuit observed the “tradi25 tional rule . . . that conversion will lie only for the taking of
26 tangible property, or rights embodied in a tangible token necessary
27 for the enforcement of those rights,” had been “relaxed in favor of
28 the reasonable proposition that any intangible generally protected
15 - MEMORANDUM OPINION AND ORDER

1 as personal property may be the subject matter of a suit for
2 conversion.”

Pearson v. Dodd, 410 F.2d 701, 708 n.34 (D.C. Cir.

3 1969) (citations omitted); accord United States v. Collins, 56 F.3d
4 1416, 1419 (D.D.C. 1995) (citing Pearson).

Recently, the Ninth

5 Circuit similarly observed that “[v]irtually every jurisdiction”
6 has, to some degree, discarded the traditional limitation that
7 applied conversion actions only to tangible goods.

Kremen v.

8 Cohen, 337 F.3d 1024, 1030 (9th Cir. 2003) (interpreting California
9 law; holding plaintiff could maintain an action for conversion of
10 an internet domain name).
11

The Oregon courts do not appear to have considered whether an

12 intangible right, such as Joe Hand’s license to distribute the
13 Program, constitutes a “chattel” capable of being converted, nor
14 have the Oregon courts ever expressly excluded intangible personal
15 property from the definition of a “chattel” for purposes of a
16 conversion action.

In the context of property tax laws, Oregon

17 statutes define what constitutes “intangible personal property,”
18 distinguishing such property from “‘[t]angible personal property’
19 [which] includes but is not limited to all chattels and movables.
20 . . .”

ORS § 307.020(1).

21 inter alia, “contract

Intangible personal property includes,

rights.”

ORS

§

307.020(1)(a)(F).

In

22 general, “intangible personal property is not subject to assessment
23 and taxation.”

ORS § 307.030(2); see, e.g., Northwest Natural Gas

24 Co. v. Dept. of Revenue, 19 Or. Tax 367, 374, 2007 WL 4127669, at
25 *4 (Or. Tax Reg. Div. Nov. 19, 2007) (“[I]t could be said that the
26 statute defining intangible personal property [had], in essence,
27 operative effect in that ORS 307.030 had established the funda28 mental rule that intangible personal property was generally not
16 - MEMORANDUM OPINION AND ORDER

1 subject to tax[, and] [t]herefore, a statute defining some property
2 as intangible had the operative effect of rendering that property
3 exempt from taxation.”

Emphasis in original.); Gall v. Dept. of

4 Revenue, 19 Or. Tax 188, 191 n.3, 2006 WL 3487425, at *1 (Or. Tax
5 Reg. Div. Nov. 22, 2006) (“Tangible property is defined as ‘all
6 chattels and movables,’ as opposed to intangible property, which
7 includes,

to name

a

few

examples,

shares of

8 software, goodwill, and trade secrets.
9

stock,

computer

ORS 307.020.”).

In Reynolds v. Schrock, 197 Or. App. 564, 107 P.3d 52 (2005),

10 rev’d on other grounds, 341 Or. 338, 142 P.3d 1062 (2006), the
11 Oregon Court

of

Appeals

had

occasion to

consider

whether

an

12 unrecordable security interest in real property that arose from a
13 settlement agreement between two adversaries was a chattel subject
14 to conversion.

The court observed, “Often, the ‘chattel’ that is

15 the subject of a conversion action is tangible personal property.”
16 Reynolds, 197 Or. App. at 578, 107 P.3d at 60 (citations omitted).
17 The court’s use of the word “often” suggests that sometimes, the
18 “chattel” subject to conversion will not be “tangible personal
19 property.”

The Reynolds court cited a specific exception to the

20 general rule, noting that in 1938, “the Oregon Supreme Court . . .
21 recognized

that

an

unrecorded

mortgage

on

land

to

secure

an

22 existing debt is also a ‘chattel’ capable of being converted; thus,
23 a mortgagor states a claim for conversion when the mortgagee sells
24 the burdened property to a third party, so as to deprive the
25 mortgagor of its security interest in the property.” Reynolds, 197
26 Or. App. at 578, 107 P.3d at 60-61 (citing Conley v. Henderson, 158
27 Or. 309, 325, 75 P.2d 746, 753 (1938)).

However, the Reynolds

28 court held the “unrecordable security interest” at issue in the
17 - MEMORANDUM OPINION AND ORDER

1 case actually never came into being; it was contingent on events
2 that never occurred, rendering it only a “potential security
3 interest” that was not a chattel capable of conversion.
4 197 Or. App. at 579, 107 P.3d at 61.

Reynolds,

See also Willamette Quarries,

5 Inc. v. Wodtli, 308 Or. 406, 413, 781 P.2d 1196, 1201 (1989) (“This
6 court has also held that ‘[o]ne must be entitled to immediate
7 possession of a chattel before he [or she] can successfully contend
8 that the actor’s failure to yield possession constitutes con9 version.’”) (quoting Artman v. Ray, 263 Or. 529, 531, 501 P.2d 63,
10 64

(1972),

in

turn

citing

Restatement

(Second),

Torts

§

225

11 (1965)).
12

It thus appears there is no controlling precedent in the

13 decisions of the Oregon appellate courts as to whether the type of
14 property at issue here would fall within the definition of a
15 “chattel” capable of conversion.

Nevertheless, I find it likely

16 the Oregon courts would conclude that a license or contractual
17 right to receive a transmitted signal; to rebroadcast the signal;
18 and to determine when, where, and by whom the program contained
19 within the signal can be displayed or exhibited, constitutes a
20 chattel that can be converted.

This holding is consistent with

21 courts’ treatment of the evolving state of property and property
22 rights.

As Justice Stevens once observed, “The human condition is

23 one of constant learning and evolution - both moral and practical.
24 Legislatures implement that new learning; in doing so they must
25 often revise the definition of property and the rights of property
26 owners.”

Lucas v. South Carolina Coastal Council, 505 U.S. 1003,

27 1069, 112 S. Ct. 2886, 2921, 120 L. Ed. 2d 798 (1992) (Stevens, J.,
28 dissenting).
18 - MEMORANDUM OPINION AND ORDER

1

I find it likely the Oregon courts would concur with decisions

2 from other jurisdictions holding rights such as those claimed by
3 Joe Hand in this case are subject to conversion.

See, e.g., J&J

4 Sports Productions, Inc. v. Gamino, slip op., 2012 WL 913743, at *4
5 (E.D. Cal.

Mar.

16,

2012)

(“exclusive

right

to

distribute

a

6 broadcast signal to commercial establishments constitutes a ‘right
7 to possession of property’ for purposes of conversion.”) (citing
8 Don King Prods./Kingvision v. Lovato, 911 F. Supp. 419, 423 (N.D.
9 Cal. 1995); DIRECTV, Inc. v. Pahnke, 405 F. Supp. 2d 1182, 1189
10 (E.D. Cal. 2005)); DirecTV, Inc. v. Cantu, 2004 WL 2623932, at *2
11 (W.D. Tex. Sept. 29, 2004) (noting other courts have “found that
12 broadcast signals are valuable property in and of themselves and
13 that plaintiffs may obtain damages for wrongful interception of
14 these signals without resort to the Copyright Act”) (citing cases
15 from the Eastern District of New York; and the Eighth Circuit Court
16 of Appeals, applying South Dakota law); DIRECTV, Inc. v. McCool,
17 339 F. Supp. 2d 1025, 1038 (M.D. Tenn. 2004) (holding DirecTV’s
18 encrypted satellite signals “are comparable to the confidential
19 telephone authorization codes used by MCI,” and are capable of
20 conversion; citing Lovato, supra); In re Marriage of Langham and
21 Kolde, 153 Wash. 2d 553, 564-65, 566, 106 P.3d 212, 218 (2005)
22 (finding stock options are chattels capable of conversion; citing
23 definition of “a chattel personal” in Black’s Law Dictionary 251
24 (8th ed. 2004), which defines the term as a “tangible good or an
25 intangible right (such as a patent)”; observing that “[t]he older
26 approach to conversion is misguided when applied to intangible
27 property”); but see DirecTV, Inc. v. Chorba, 2005 WL 3095067, at *2
28 n.3 (M.D. Pa. Nov. 18, 2005) (citing another unreported decision
19 - MEMORANDUM OPINION AND ORDER

1 from the same court, holding “satellite broadcast signals are not
2 tangible property subject to conversion under Pennsylvania common
3 law”); Miller v. Hehlen, 209 Ariz. 462, 104 P.3d 193 (2005)
4 (holding

a

customer

list

was

neither

tangible

property,

nor

5 “intangible property merged with a document in the same sense as a
6 stock certificate or an insurance policy,” and therefore, the
7 customer list did not constitute a chattel subject to conversion).
8

The Tennessee Court of Appeals, in Freedom Broadcasting of TN,

9 Inc. v. Tenn. Dept. of Rev., 83 S.W.3d 776 (Tenn. Ct. App. 2002),
10 made some illuminating observations about the character of broad11 cast signals.

The case arose from the plaintiff taxpayers’ appeal

12 from denial of their application for “an industrial machinery
13 exemption from taxes on certain broadcasting equipment,” pursuant
14 to Tennessee law.

An ALJ found that rather than “producing

15 tangible personal property,” the taxpayers provided a service, and
16 therefore,

the

17 exemption.

Id., 83 S.W.3d at 778. The chancery court reversed the

18 ALJ’s

decision,

19 exemption.
20

taxpayers

holding

were

the

not

entitled

taxpayers

to

were

the

requested

entitled

to

the

The Tennessee Department of Revenue appealed.

The appellate court affirmed the chancery court’s decision.

21 The court noted the Tennessee Code defines “tangible personal
22 property” as “‘personal property, which may be seen, weighed,
23 measured, felt, or touched, or is in any other manner perceptible
24 to the senses.’”

Id., 83 S.W.2d at 783 (quoting Tenn. Code § 67-6-

25 102(29)).

court

The

observed

that

many

characteristics

of

26 broadcast signals are measurable; for example, the signals’ fre27 quency and amplitude.

The signals also are perceptible to the

28 senses of anyone who has the appropriate receiver. The court held,
20 - MEMORANDUM OPINION AND ORDER

1 “Because the signals are capable of measurement and perceptible to
2 the senses, the broadcast signals, like electricity, meet the
3 definition of tangible personal property.”
4

Id.

In the present case, Joe Hand possessed a license or contract

5 right to the broadcast signal containing the Program.

I find

6 persuasive the Tennessee court’s conclusion that a broadcast signal
7 is, in some sense, tangible property.

Joe Hand was contractually

8 entitled to determine when, where, and by whom the broadcast signal
9 containing the Program could be displayed to the viewing public.
10 An unauthorized showing of the Program would result in an exercise
11 of dominion or control over the broadcast signal constituting a
12 “failure to

yield

possession.”

I

find, therefore,

that the

13 broadcast signal was subject to conversion, and Joe Hand can
14 maintain its conversion action.

As a result, the defendants’

15 motion for summary judgment on the conversion claim is denied.
16
CONCLUSION

17
18

In conclusion, the defendants’ motion for summary judgment as

19 to Jacobson, in his individual capacity, is granted, and the motion
20 is denied on all other grounds.
21
22

IT IS SO ORDERED.
Dated this __7th___ day of June, 2012.

23
/s/ Dennis J. Hubel
24
25

Dennis James Hubel
Unites States Magistrate Judge

26
27
28
21 - MEMORANDUM OPINION AND ORDER