Sue E. Myerscough, UNITED STATES DISTRICT JUDGE.
This matter came before the Court on January 19, 2016, for a bench trial. The first phase of the bench trial was completed on February 17, 2016. The trial resumed on October 25, 2016. The Court heard testimony on October 25-27, 2016 and November 2, 2016. The Plaintiff United States appeared by Assistant United States Attorneys Patrick Runkle, Lisa Hsiao, and Sang Lee, and also by Federal Trade Commission Attorney Russell Deitch and Gary Ivens; the Plaintiff State of California appeared by Assistant Attorneys General Jinsook Ohta, Jon Worm, and Adelina Acuna; the Plaintiff State of Illinois appeared by Assistant Attorneys General Paul Isaac, Elizabeth Backston, and Philip Heimlich; the Plaintiff State of North Carolina appeared by Assistant Attorney General David Kirkman and Teresa Townsend; and the Plaintiff State of Ohio appeared by Assistant Attorneys General Erin Leahy and Jeff Loeser. The Defendant Dish Network, LLC (Dish) appeared by attorneys Peter Bicks, Elyse Echtman, John Ewald, Jamie Shookman, Shasha Zou, Louisa Irving, Joseph Boyle, and Lauri Mazzuchetti.
The Plaintiffs alleged twelve counts against Dish for violations of federal and state laws and regulations prohibiting certain outbound telemarketing calls (Do-Not-Call Laws). The term "Do-Not-Call" is also sometimes referred to as "DNC." The Plaintiffs allege that Dish violated the Telemarketing Consumer Fraud and Abuse Prevention Act (Telemarketing Act), 15 U.S.C. § 6101 et seq.; the Telephone Consumer Protection Act (TCPA), 47 U.S.C. § 227; the Telephone Sales Rule (TSR) promulgated by the Federal Trade Commission (FTC) pursuant to the Telemarketing Act, 16 C.F.R. Part 310; the Rule (FCC Rule) promulgated by the Federal Communications Commission (FCC) pursuant to the TCPA, 47 C.F.R. 64.1200 et seq.; the California Do-Not-Call Law, Cal. Bus. & Prof. Code § 17592(c); the California Unfair Competition Law, Cal. Bus. & Prof. Code § 17200; the North Carolina Do-Not-Call Law, N.C. Gen. Stat. § 75-102(a); the North Carolina Automatic Telephone Dialer Law, N.C. Gen. Stat. § 75-104; the Illinois Automatic Telephone Dialers Act (IATDA), 815 ILCS 305/1 et seq.; and the Ohio Consumer Sales Protection Act, Ohio Rev. Code §§ 1345.02 and 1345.03.
For the reasons set forth below, this Court enters judgment in favor of the Plaintiffs United States and the States of California, Illinois, North Carolina, and Ohio and against Defendant Dish on
The Court awards civil penalties and statutory damages in favor of the Plaintiffs United States and the States of California, Illinois, North Carolina, and Ohio and against Defendant Dish in Counts I, II, III, IV, V, VI, VII, VIII, IX, X, and XII of the Third Amended Complaint in the total sum of $280,000,000.00. The amount awarded in each Count is set forth below in the Conclusion.
The Court also enters a Permanent Injunction in favor of the Plaintiffs and against Defendant Dish Network, L.L.C. in the manner set forth in the separate Permanent Injunction Order filed with this Findings of Fact and Conclusions of Law.
The following constitutes findings of fact and conclusions of law for the issues remaining for trial. Fed. R. Civ. P. 52(a).
This case is complex and covers years of telemarketing by Dish and numerous related entities. The Court organizes the findings of fact under various headings. The organizational structure does not limit any findings to any particular issue. Unless otherwise indicated, all findings of fact may be relevant to all issues.
This Court has jurisdiction to hear the United States' claims in Counts I-IV pursuant to 28 U.S.C. §§ 1331, 1337(a), 1345, and 1355; Federal Trade Commission Act (FTC Act), 15 U.S.C. §§ 45(m)(1)(A), 53(b), 56(a), and 57(b); and the Telemarketing Act, 15 U.S.C. § 6105(a) & (b). The FTC authorized the Attorney General to commence this action on behalf of the United States pursuant to FTC Act § 56(a). This Court has jurisdiction to hear the Plaintiff States' TCPA claims in Counts V & VI pursuant to 28 U.S.C. §§ 1331, 1337(a), 1345, and 1355; and exclusive jurisdiction pursuant to TCPA, 47 U.S.C. § 227(g)(2). This Court has supplemental jurisdiction to hear the Plaintiff States' state law claims in Counts VII-XII pursuant to 28 U.S.C. § 1367(a).
Dish argues that the Plaintiff States lack standing to bring the TCPA claims alleged in Counts V and VI. A lack of standing is jurisdictional.
The TCPA § 227(g) authorizes the Plaintiff States to bring this action. Section 227(g)(1) states that when the State Attorney General, "has reason to believe that any person has engaged or is engaging in a pattern or practice of telephone calls or other transmissions to residents of that State in violation of this section or the regulations prescribed under this section," then "the State may bring a civil action on behalf of its residents." 47 U.S.C.A. § 227(g)(1). The Plaintiff States, therefore,
Several District Courts have considered whether unwanted calls made in violation of the TCPA cause concrete injury necessary to establish standing. Many of these District Courts have found that the annoyance and distress caused by unwanted calls established concrete injuries sufficient to establish standing. E.g.,
Each Plaintiff State further presented testimony from residents who personally suffered injury from unwanted calls by Dish or its related entities.
Dish has cited a District Court that found that receipt of unwanted telephone calls did not cause concrete injury necessary to established standing.
In 1980, Charles Ergen and James DeFranco formed Dish's predecessor corporation called Ecosphere Corporation (Ecosphere). Ecosphere sold and distributed large satellite dishes 12 feet in diameter designed to receive television signals.
In 1996, upon launching Dish Network, Dish went into direct competition with DirecTV, another provider of residential satellite pay television services. DirecTV started this type of service two years before Dish.
Dish marketed Dish Network programming through various means, including direct outbound telemarketing by Dish employees. Dish also retained companies to perform outbound telemarketing services for Dish (Telemarketing Vendors).
Dish divided its marketing structure into direct and indirect marketing, sometime referred to as direct and indirect "channels." The direct channel consisted of Dish in-house, or direct marketing, and marketing by Dish's Telemarketing Vendors. The Telemarketing Vendors were telemarketing companies hired by Dish to perform telemarketing services for Dish. The indirect channel consisted of marketing by all other entities authorized by Dish to market Dish Network programming. Within the indirect channel, Dish continued to use its network of retailers, called TVRO or Full Service Retailers, to sell Dish Network programming.
The indirect channel also included national retailers and telecommunications companies that marketed Dish Network programming, such as Radio Shack, Sears, and AT & T.
Dish also developed an indirect marketing program called the Order Entry Program. Through this program, Dish authorized marketing businesses to market Dish Network programming nationally. These marketing businesses secured consumers' offers to purchase Dish Network programming. Dish completed the sales solicited by these businesses. Dish provided and installed the satellite dishes and related equipment, and Dish provided the programming and related services. Dish called these marketing businesses Order Entry Retailers or OE Retailers.
The Plaintiffs' claims arise from: (1) Dish's direct telemarketing; (2) the telemarketing activities of Dish's Telemarketing Vendors EPLDT (also known as Libertad), and eCreek Solutions Group (eCreek); and (3) telemarketing activities of certain Order Entry Retailers.
In 1998, Dish began telemarketing Dish Network programming. Dish used an automatic dialer called a predictive dialer to make outbound telemarketing calls.
At the time that Dish began telemarketing in 1998, the TSR and FCC Rule prohibited sellers and telemarketers from initiating telemarketing calls to individuals who previously stated that they did not
Dish maintained an Internal Do-Not-Call List. Individuals could have their telephone numbers placed on Dish's Internal Do-Not-Call List by calling or writing Dish; by telling a Dish telemarketer during a sales call; by telling a Telemarketing Vendor telemarketer during a sales call; by registering on Dish's Internal Do-Not-Call List on Dish's website; or by calling a toll-free number. If the automatic dialer failed to connect a call recipient to a sales person within two seconds of the recipient's answer of the call, the automatic dialer played a prerecorded message that provided the toll-free number.
The FCC Rule also restricted making outbound telemarketing calls that played prerecorded sales messages to recipients of telemarketing calls. Calls that play prerecorded messages are called by several different names, including "robocalls," "prerecorded calls," "prerecorded messaging," "message broadcasting," "automated messaging," "automessaging," "AM," and sometimes "autodialer calls."
The FCC Rule allowed Prerecorded Calls to call recipients who had Established Business Relationships with the seller or telemarketer making the call, unless the recipient's telephone number was on the seller or telemarketer's Internal Do-Not-Call List.
47 C.F.R. § 64.1200(f)(5). Under this provision, a telemarketer had an Established Business Relationship with a call recipient who was a residential telephone subscriber under one of two conditions: (1) the call recipient made a purchase or engaged in a transaction with the seller within 18 months of the date of the call (Transaction-based Established Business Relationship); or (2) the call recipient made an inquiry or application for the seller's good or services within three months of the date of the call (Inquiry-based Established Business Relationship).
In 1987, States began establishing Do-Not-Call registries for state residents.
Dish directed almost all of its outbound telemarketing campaigns at residences rather than businesses.
Dish organized its telemarketing into different types of calling campaigns, depending on Dish's relationship with the intended recipients of the calls and the purposes of the calls. Campaigns that Dish intended to direct at current customers were called Average Revenue Per Unit (ARPU), Upsell, and Premium Upsell campaigns. These campaigns offered additional or upgraded programming or services to existing customers.
Campaigns directed at former customers were called "winback" campaigns. As the name implied, the campaigns sought to win back former customers. The calling lists in winback campaigns were supposed to consist of the telephone numbers of former customers who had their Dish service disconnected on the same day. Dish used disconnect dates to determine when the customer relationship ended.
Dish also directed calling campaigns at individuals who purchased Dish Network programming, but Dish did not complete installation and activation of the services. Some of these calling campaigns were called Canceled Work Order (CWO) campaigns.
Dish also conducted No Line of Sight (NLOS) and Held Work Order (HWO) calling campaigns. No Line of Sight campaigns were directed at individuals who agreed to purchase Dish programming, but the installer could not find a place to install the satellite dish that had a line of sight to receive the signal. Dish ran these calling campaigns to schedule a time for a field service manager to come out and see if he could find a line of sight to complete installation.
Campaigns directed at individuals who never indicated any interest in Dish programming or services were called "Cold Call" or "Target Marketing" campaigns.
Campaigns called LTS or Lead Tracking System campaigns were directed at individuals who were not Dish customers, but who came into contact with Dish and provided contact information. Dish presented very little competent evidence on how the Lead Tracking System was formulated or how calling lists were derived from the Lead Tracking System. Dish's Database Marketing Department maintained the Lead Tracking System and created the Lead Tracking System (or LTS) calling lists.
Several witnesses summarily testified that Lead Tracking System calling lists were made up of people who inquired about Dish Network programming. Dish presumed that it had an Inquiry-based Established Business Relationship with the recipients of these calls.
The only evidence from Database Marketing cited by the parties that discussed the make-up of the Lead Tracking System
By May 2002, Dish had developed a process to scrub certain calling lists. A calling list (or call list) was a list of numbers to be called for a calling campaign. The term "scrubbing" or "scrub" referred to removing from a calling list telephone numbers that could not legally be called under the particular circumstances. In 2002, Dish scrubbed certain calling lists against its Internal Do-Not-Call List and State Do-Not-Call Lists.
Dish had some problems with that scrubbing system. In May 2002, Dish was not scrubbing its calling lists against the Oregon State Do-Not-Call List and was still researching the requirements of the other States. Dish in-house attorneys knew that Oregon officials were investigating Dish's telemarketing. Dish in-house attorneys knew that the Oregon statute authorized a $25,000.00 per call penalty on willful violations. In May 2002, Dish temporarily stopped all telemarketing in Florida, Illinois, Oregon, and Colorado.
In June 2002, Dish limited its outbound telemarketing to residents in 25 states that did not have State Do-Not-Call Lists in effect.
In 2001, Congress authorized the FTC to promulgate regulations to establish a
TSR 16 C.F.R. § 310.2(o);
On September 29, 2003, Congress ratified the establishment of the Registry. Pub. L. 108-82, 117, codified at 15 U.S.C. § 6151. The Registry was scheduled to begin operations on October 1, 2003, but the start of operations was delayed to October 17, 2003.
The TSR and FCC Rule contained safe harbor provisions. Sellers and telemarketers who followed the safe harbor procedures would not be liable for certain illegal calls that resulted from errors or mistakes. The safe harbor provisions required, among other things, written procedures for implementing the requirement not to call persons whose telephone numbers were on the Registry, and maintenance of records documenting the use of a process to prevent telemarketing to persons whose numbers were on the Registry. The TSR safe harbor applied to Internal List Calls and Registry Calls. The FCC Rule safe harbor only applied to Registry Calls. 16 C.F.R. § 310.4(b)(3); 47 C.F.R. § 64.1200(c)(2)(i);
The 2003 amendments to the TSR also prohibited abandoning calls. An outbound telemarketing call is abandoned if the person answering a telemarketing call is not connected to a sales representative within two seconds of the person's completed greeting. 16 C.F.R. § 310.4(b)(1)(iv). A Prerecorded Call that is answered by a person is an abandoned call under the TSR because the person receiving the call is not connected to a sales representative, but to a recording.
On November 17, 2004, the FTC issued a Notice of Proposed Rulemaking (2004 Notice) to amend the TSR to add an additional safe harbor provision to allow some Abandoned Prerecorded Calls under limited circumstances. 69 Fed. Reg. 67287 (November 17, 2004). The proposed safe harbor amendment would have allowed a seller or telemarketer to make an Abandoned Prerecorded Call to a person with whom the seller or telemarketer had an Established Business Relationship only if the prerecorded message: (1) presented the person with the opportunity to communicate that he or she did not want to be called again within two seconds of the person's completed greeting (e.g., by pushing a number on the telephone keypad); (2) provided all required disclosures; and (3) otherwise complied with all applicable state and federal laws. 69 Fed. Reg. at 67289;
The FTC further stated in the 2004 Notice that the FTC would forbear from bringing enforcement actions for prerecorded calls that resulted in abandoned calls if the telemarketer complied with the proposed amendments to the safe harbor provisions:
69 Fed. Reg. at 67290. The FTC ultimately amended the TSR to allow Abandoned Prerecorded Calls only to persons with whom the seller had an Established Business Relationship and only with prior written consent.
Dish witness Russell Bangert opined that the TSR abandonment provisions did not clearly apply to Abandoned Prerecorded Calls.
In addition, Dish employees understood that Prerecorded Calls were prohibited.
In 2002, Dish began planning to adjust its telemarketing practices in light of the upcoming launch of the Registry.
In April 2003, Dish entered into a settlement with the state of Indiana for violations of Indiana's Do-Not-Call Law. In connection with that settlement, Dish entered into a court-approved Assurance of Voluntary Compliance (AVC).
In August 2003, the state of Missouri filed suit against Dish for violation of the Missouri Do-Not-Call Law.
In August and September 2003, the Working Group continued to put together a system to comply with the scheduled launch of the Registry on October 1, 2003. Dish in-house counsel Steve Novak suggested not making any outbound telemarketing calls to any number on the Registry, even if Dish had an Established Business Relationship with the potential call recipient.
Dish cited no evidence that the Working Group ever discussed the safe harbor provisions
Ultimately, Dish established two separate systems to address the launch of the Registry and the amended Do-Not-Call Laws generally. The first system addressed calling campaigns aimed at individuals who had Dish account numbers (Account Number Campaigns). The second system addressed campaigns aimed at individuals who never had an account with Dish, primarily Cold Calls and Lead Tracking System Calls.
The Account Number Campaigns included campaigns to existing Dish customers, such as Average Revenue Per Unit, Upsell, and Premium Upsell; campaigns to former customers, such as Winback; and campaigns to individuals who had agreed to purchase Dish Network programming, but did not complete the installation or activation. The last category included Canceled Work Order, No Line of Sight, and Held Work Order campaigns.
Bangert was in charge of scrubbing Account Number Campaign call lists. In 2006, Account Number Campaign scrubbing operations were organized into the Outbound Operations Department (Outbound Operations).
Outbound Operations also operated Dish's automatic telephone dialers in Englewood, Colorado, and Bluefield, West Virginia.
Other Dish departments sent proposed Account Number Campaigns to Outbound Operations with descriptions of the planned calling campaigns, proposed calling lists, and scripts.
Outbound Operations personnel reviewed the campaign descriptions and scripts to determine the type of campaign and the particular scrubbing process to use to remove telephone numbers that could not be called under the particular campaign.
At some point, Outbound Operations required two individuals in Outbound Operations to approve a campaign. Outbound Operations instituted this policy because a situation occurred in which a telemarketing campaign was allowed to make Prerecorded Calls.
Outbound Operations had no written policies or procedures for scrubbing lists for compliance with Do-Not-Call Laws.
In practice, Outbound Operations used three categories of scrubs: (1) "All DNC" or "All Scrub;" (2) "No DNC" or "No Scrub;" and (3) "Standard Scrub." The "All DNC" or "All Scrub" scrubbed proposed calling lists against all restricted lists, including Dish's Internal Do-Not-Call List, the Registry, State Do-Not-Call lists, and wireless telephone numbers. A separate provision of the TCPA not at issue in this case generally prohibited using an autodialer to call wireless telephone numbers without prior written consent. 47 U.S.C. § 227(b)(1)(A)(iii). Outbound Operations intended to apply the All Scrub to telemarketing campaigns directed to individuals with whom Dish concluded that it had no Established Business Relationship.
The "No DNC" or "No Scrub" only scrubbed calling lists for wireless numbers. Outbound Operations intended to apply the No Scrub to non-telemarketing campaigns such as collection calls, payment reminder calls, informational calls, or calls to schedule service.
The "Standard Scrub" scrubbed calling lists to remove telephone numbers on the Dish Internal Do-Not-Call List; numbers of residents in states in which the state law did not allow for an Established Business Relationship exception for calls to numbers on State Do-Not-Call Lists; and wireless numbers. Outbound Operations applied the Standard Scrub to telemarketing campaigns directed to current or former customers with whom Dish concluded that it had Transaction-based Established Business Relationships.
Dish employees manually reviewed the Dish files to determine whether Dish had a Transaction-based Established Business Relationship with current and former customers whose telephone numbers were listed in Account Number Campaigns. Dish formulated calling campaign lists based on this manual review. Dish employees, however, did not use the last dates that consumers paid for Dish Network programming to calculate the 18 month Established Business Relationship time period. Rather, Dish used "the disconnect date that was associated with the file name" to formulate these lists.
Dish ran some recurring outbound telemarketing campaigns. The largest recurring telemarketing campaigns were the trailing winback campaigns. Dish also ran recurring Average Revenue Per Unit campaigns to market premium channels or other additional services to current customers. Outbound Operations did not require detailed script reviews of these recurring campaigns.
Outbound Operations used software called "PDialer" to scrub Account Number Campaign calling lists.
Outbound Operations' unwritten practices allowed a scrubbed calling list to be called for a 15-day period from the date of the scrub. The 15-day limit addressed the possibility that the list would become out-of-date. A person who had a telephone number on a calling list could register that number on the Registry. The TSR and FCC Rule safe harbor provisions required a telemarketer to honor a registration on the Registry no later than 31 days after the registration was made. TSR 16 C.F.R. § 310.4(b)(3); FCC Rule 47 C.F.R. § 64.1200(c)(2)(i). Outbound Operations used a 15-day time limit to decrease the possibility that a telephone number on the scrubbed calling list would have been placed on the Registry more than 31 days before the call.
Outbound Operations checked scrub results manually. Outbound Operations inserted into proposed calling lists numbers that should be scrubbed by the process. Outbound Operations checked the results to confirm that the scrub properly removed those numbers.
Outbound Operations used disposition codes to keep track of responses to calls such as no answer, busy signal, answering machine, or answered call.
Outbound Operations was responsible for reviewing and approving Account Number Campaigns to customers interested in foreign language programming. Between 2007 and 2010, Dish employees made prerecorded calls to market foreign language programming in 15 Account Number Campaigns. The telemarketing messages were recorded in the language of the programming offered for sale. The translations of the message scripts show that the prerecorded messages were directed to existing Dish customers. The messages offered additional foreign language programming options. A total of 98,054 of these prerecorded calls were answered by individuals and resulted in Abandoned Prerecorded Calls in violation of the TSR.
Outbound Operations also monitored eCreek's operations.
Outbound Operations responded to consumer complaints regarding eCreek's telemarketing, but did not otherwise check eCreek for Do-Not-Call Law compliance.
In July 2010, Outbound Operations asked eCreek for a copy of its Do-Not-Call Law policy and procedures. Outbound Operations employee Dexter sarcastically questioned whether eCreek had policies and procedures.
Dish's second Do-Not-Call Law compliance system addressed Cold Call campaigns and Lead Tracking System campaigns. Database Marketing was responsible for operating the Do-Not-Call Law compliance system for these campaigns. Database Marketing also formulated the calling lists for these campaigns. Bangert testified Database Marketing incorporated the Do-Not-Call Law compliance process into the process that it used to formulate these calling lists.
Neither party presented any meaningful evidence on the process Database Marketing used to comply with the Do-Not-Call Laws. The scant evidence in the record indicates that Database Marketing may have used a lead management system referred to as CRM or a computer system called a Teradata System to perform these tasks.
Dish witness Russell Bangert testified that Database Marketing used the same scrubbing options as Outbound Operations. Bangert testified that Cold Call campaigns received an ALL DNC scrub and that Lead Tracking System campaigns received a Standard scrub.
Database Marketing sent the finished Lead Tracking System and Cold Call calling lists to Outbound Operations. Outbound Operations bypassed scrubbing these files with the PDialer and loaded the lists into the automatic dialer or sent these lists to eCreek.
In December 2007, Dish retained a company called PossibleNOW, Inc. (PossibleNOW) to assist it in complying with Do-Not-Call Laws.
PossibleNOW also maintained Dish's Internal Do-Not-Call List, Dish's copy of the Registry, and Dish's copies of State Do-Not-Call Lists.
Beginning in April 2008, PossibleNOW began maintaining a combined Internal Do-Not-Call List for Dish, eCreek, and certain Order Entry Retailers. Dish, eCreek, and participating Order Entry Retailers uploaded Internal Do-Not-Call Lists to PossibleNOW. T 617: 654-55 (Davis); T 627: 2573 (Dexter); T 628: 2975-76, 3027 (Montano); T 622: 1842 (Mills). Dish required Order Entry Retailers making 50 activations a month to submit Internal Do-Not-Call Lists to PossibleNOW.
PossibleNOW's scrubbing services also checked calling lists to determine whether telephone numbers were associated with individuals who had Established Business Relationships with Dish.
In approximately July 2010, Dish modified the PDialer to also use the last payment date to check for Transaction-based Established Business Relationships. Dish stopped presuming that it had a Transaction-based Established Business Relationship with all persons whose numbers were on campaigns directed to current customers and winback campaigns that were less than 18 months old. Dish added a field to its calling lists for a last payment date. Dish modified the PDialer to check for this field in a manner similar to the PossibleNOW process.
Dish did not add a field for inquiry dates to the PDialer. Dish employee Montano testified that one field was added for simplicity. Montano testified that inquiry dates, if applicable, were entered into the Last Payment Date field.
It is unclear whether Dish used PossibleNOW to scrub Lead Tracking System and Cold Call calling list. Witnesses testified that Outbound Operations scrubbed lists with the PDialer and then sent lists to PossibleNOW for a second scrubbing.
The Court found at summary judgment that Dish did not comply with the TSR or FCC Rule safe harbor.
The Court also barred Dish from producing evidence of scrubbing procedures that was not produced in discovery.
Beginning in October 2003, Dish personnel periodically discovered that Dish's direct telemarketing operations made Registry Calls and Internal List Calls. On October 7, 2003, Dish personnel tested the scrubbing process and discovered the process failed to remove numerous telephone numbers from the test call list that were on the Registry.
In February and May 2004, Dish personnel investigated consumer complaints and discovered that Dish made Internal List Calls.
In December 2005, Lead Tracking System calling lists were not being scrubbed because whatever process Database Marketing was using was not working.
In October 2006, Dish personnel investigated a consumer complaint and discovered Dish made a Registry Call.
In November 2007, Dish personnel investigated a consumer complaint and discovered that Dish made an Internal List Call. The investigators determined that the calling campaign was improperly scrubbed because the campaign was improperly classified as a non-telemarketing campaign.
In 2007, Dish conducted an internal audit of telemarketing calling records. The 2007 audit showed that Dish made 2,334, 5,324, and 3,405 Registry Calls in June, July, and August 2005 respectively. The 2007 audit also showed that Database Marketing campaigns "were scrubbed but the DNC records were not removed."
In 2009, Dish conducted another internal audit of its telemarketing call records. The audit showed that Dish made 291,000 Registry Calls from October to December 2008.
Outbound Operations also knew that eCreek made illegal Registry and Internal List Calls. Dexter testified that eCreek did a good job, but Outbound Operations personnel knew that eCreek's scrubbing process did not work effectively all the time.
By 2003, Dish had developed a website interface called the Order Entry (OE) Tool to facilitate the sale of Dish Network products and services by national companies such as Radio Shack and AT & T.
The Order Entry Tool prompted the sales person to ask a series of questions to offer the appropriate programming and services, secure the necessary information, and make the required disclosures to make the sale.
Once the customer's information was uploaded onto the Order Entry Tool, Dish performed the credit check, approved the sales, supplied all equipment, and performed the installation or arranged for the installation and activation of service. New customers paid Dish directly.
In 2003, Dish began the Order Entry (OE) program to expand the use of the Order Entry Tool beyond national companies like Radio Shack and AT & T. Under the Order Entry program, Dish authorized marketing businesses to use the Order Entry Tool to sell Dish Network programming.
Dish paid the Order Entry Retailers commissions called "incentives" for activations.
Order Entry Retailers could market nationally because Dish installed the satellites and related equipment. Existing TVRO Retailers could only market in the geographic areas in which the Retailer could deliver and install Dish satellites and related equipment.
Dish employees testified that Dish developed the Order Entry program to "leverage ... entrepreneurial resources... in the marketplace."
The Order Entry program generated large numbers of activations for Dish. By 2005, Order Entry Retailers passed Dish's direct marketing in producing activations. By 2007, Order Entry Retailers accounted for 30 percent of all of Dish's activations.
The number of companies in the Order Entry program was always relatively small. At its peak, Dish had approximately 80 Order Entry Retailers, compared to 8,000 TVRO Retailers at the same time.
The relationship between Dish and Order Entry Retailers was governed by a standard Retail Agreement. All Order Entry Retailers signed a substantially similar form Retailer Agreement.
Sections 7.1, 7.2, and 7.3 provided as follows:
Section 17.9 of the Retailer Agreement authorized Dish to audit Retailers on two days' notice:
The Retailer Agreement provided for automatic termination if an Order Entry Retailer violated the terms of the Retailer Agreement or "any applicable federal, state or local law or regulation."
The Retailer Agreement also contained a provision entitled Independent Contractor:
Order Entry Retailers represented themselves to the public as Dish authorized Retailers.
Order Entry Retailers set up their own facilities, purchased their own equipment, paid their own rents, hired and fired their own employees, secured their own leads and calling lists, wrote telemarketing scripts, and prepared marketing materials. Some Order Entry Retailers also sold other products, including competing services such as DirecTV programming.
Contrary to § 10.4 of the Retailer Agreement, Order Entry Retailers were not automatically terminated when they violated the terms of the Retailer Agreement or applicable law.
Dish's Sales Department ran the Order Entry program.
Dish Sales personnel knew that many Order Entry Retailers used outbound telemarketing to generate high volumes of activations.
The Sales Department was divided into two parts, Retail Sales and Retail Services. Retail Sales worked with Indirect Marketers to facilitate sales. Michael Mills was Vice President in charge of Retail Sales. Retail Services handled the payments to Indirect Marketers. Blake Van Emst was Vice President in charge of Retail Services.
Retail Sales employed Regional Sales Managers and Area Sales Managers (collectively Sales Managers), Account Managers or Account Representatives (Account Managers), and Field Sales Development Representatives ("Field Representatives" or "FSDRs"), all of whom visited locations that sold Dish through the indirect channel.
Account Managers and Field Representatives provided training and marketing materials on Dish products and services at Order Entry Retailer facilities.
Dish shared lead lists with Retailers on a few occasions.
Retail Sales employees' compensation, from Field Representatives and Account Managers up to Vice President Mills, was tied to the number of new activations generated by Indirect Marketers, including Order Entry Retailers.
The Retail Services division of the Sales Department included a Risk and Audit unit.
For the first several years of the Order Entry program, Dish made little or no effort to monitor or supervise Order Entry Retailers' sales methods. Risk and Audit audited Order Entry Retailers to detect fraud on Dish, and Dish terminated Order Entry Retailers for fraud.
Some of the Order Entry Retailers took advantage of the situation to engage in corrupt practices. The corrupt practices generated problems in at least six areas: fraud on Dish; deceptive, incomplete, or inaccurate representations made to consumers during telephone solicitations; Do-Not-Call Law violations; unauthorized use of third-party affiliates; high churn; and increasing consumer complaints.
Some Order Entry Retailers used various means to defraud Dish. Order Entry Retailers sometimes opened duplicate accounts for existing Dish customers to secure additional commissions. Order Entry Retailers sometimes closed current accounts and opened new accounts for existing customers to secure additional commissions. Order Entry Retailers sometimes submitted false information on the Order Entry Tool to secure Dish approval of customers who would not otherwise be approved for a Dish subscription. Order Entry Retailers sometimes submitted fake Social Security numbers. At least one Order Entry Retailer, American Satellite, Inc. (American Satellite or Am Sat), sometimes put $1.00 on prepaid debit cards and then falsely submitted numbers from the prepaid cards as the credit card numbers of new customers who did not have credit cards.
In addition to defrauding Dish, some Order Entry Retailers made false or misleading statements to consumers during sales presentations.
Order Entry Retailers also violated the Do-Not-Call Laws. Dish Retail Sales Vice President Mills knew that Order Entry Retailers could be a source of serious Do-Not-Call Law violations.
Order Entry Retailers also made Registry Calls and Internal List Calls. Some Order Entry Retailers did not maintain Internal Do-Not-Call Lists in direct violation of the TCPA. Some companies hung up on individuals who asked to be put on an Internal Do-Not-Call List and then called the individuals back in direct contravention to the call recipients' requests.
Some Order Entry Retailers hid their identities through a process called spoofing. Spoofing means falsifying identifying information. Telephone spoofing is a process by which the caller causes false identifying information to appear on the call recipient's Caller ID display and phone records.
Many Order Entry Retailers engaged third-party affiliates without authorization from Dish. The Retailer Agreement provided that Order Entry Retailers could not use third-party affiliates without prior approval from Dish. Many Order Entry Retailers disregarded this requirement. Many provided their Order Entry Tool Logins to individuals and call centers in this country as well as call centers in the Philippines or other countries. These third parties often made Do-Not-Call Law violations and used misrepresentations to sell Dish Network
Customers who purchased Dish Network Programming from these unscrupulous Order Entry Retailers often canceled their services. As a result, many of these Order Entry Retailers had high churn rates. Dish lost money on activations from Order Entry Retailers with high churn rates because Dish could not recoup over time its initial investment in equipment costs, installation costs, and promotional discounts.
The unscrupulous practices of largely unsupervised Order Entry Retailers also generated customer complaints. Dish had a long-term problem with consumer complaints about Order Entry Retailers.
Representatives of the Executive Resolution Team investigated complaints to ascertain the source of the call that sparked the complaint and whether the complaining consumer's telephone number was on the Registry. The Executive Resolution Team put the complaining consumer's telephone number on Dish's Internal Do-Not-Call List. If Dish direct marketing did not make the call, the Executive Resolution Team attempted to identify the Order Entry Retailer that made the call. In such instances, the Executive Resolution Team told the complaining customer that Dish did not make the call and told the consumer the identity of the Order Entry Retailer that made the call, if known. The complaint was then filed and marked resolved.
Dish dealt with Order Entry Retailers that generated consumer complaints on an ad-hoc, case-by-case basis.
Dish's basic approach in matters not involving fraud on Dish was to accept the excuse the Order Entry Retailer gave. For example, Satellite Systems repeatedly violated the Do-Not-Call Laws from 2002 to 2005. Satellite System's principal Alex Tehranchi repeatedly said he would stop the practice. Dish repeatedly accepted Tehranchi's excuses even though Tehranchi repeatedly demonstrated that he would not stop the practice.
In another example, Dish was told several times in the first eight months of 2005 that Order Entry Retailer Star Satellite was making illegal telemarketing calls. Dish did nothing. In October 2005, the office of a United States Congressman contacted Ahmed about Star Satellite making Registry Calls. In response, Ahmed yelled at Star Satellite's principle Walter Eric Myers and told Myers not to do it again. Ahmed took no other action to stop the illegal calls or to discipline Star Satellite.
Dish witnesses testified that Dish could not discipline an Order Entry Retailer based on isolated consumer complaints. They testified that Dish had to build a case to terminate an Order Entry Retailer or put an Order Entry Retailer on hold.
By mid-2006, the number of consumer complaints generated by Order Entry Retailers increased dramatically. Werner testified that consumer complaints went "crazy."
In August 2006, Retail Services added a Compliance Department to deal with problems associated with Order Entry Retailers in a more systematic way. Reji Musso was hired as Dish's Compliance Manager. Musso reported to Werner in Risk and Audit within Retail Services.
In September 2006 the Compliance Department started a Quality Assurance (QA) Program.
The Quality Assurance program required Order Entry Retailers to allow Field Representatives and Account Managers to listen to sales presentations, either live presentations at the Order Entry Retailer facility or recorded presentations provided by the Order Entry Retailers, and to score the presentations.
The Compliance Department also sent out updated disclosures that Retailers were required to give during sales presentations.
Musso also worked with the Legal Department, the Executive Resolution Team, and Dish's DNC Investigation Team to run a sting program. The sting program sought to identify Order Entry Retailers that generated consumer complaints, but hid their identities by spoofing or otherwise. Upon receiving a consumer complaint, Dish attempted to identify the responsible Order Entry Retailer. If the participating Dish Departments could not identify the Retailer, Dish representatives asked the complaining consumer to participate in the sting program. If the offending telemarketer called again, the participating consumer agreed to purchase Dish Network programming using a credit card provided by Dish along with specified identifying information. When the order came through on the Order Entry Tool, Dish could identify the Order Entry Retailer involved in the participating consumer's "sting" transaction.
Musso also established a systematic way to notify Order Entry Retailers about consumer complaints. The Compliance Department sent a letter explaining the complaint and requesting a response within seven days. The Compliance Department followed up every week. The Compliance Department placed the response in its files and forwarded copies to the Legal Department and executives within Retail Services and Retail Sales.
In 2007, the Compliance Department started the Partner Order Entry (POE) list. The POE list was a list of complaining consumers whose complaints had been unresolved after being escalated to the highest levels of Dish's consumer complaint resolution system. Compliance sent the POE list to Outbound Operations and all companies in the indirect channel, including all Order Entry Retailers. All Dish direct marketing and all entities in the indirect channel were to "suppress" telephone numbers on the POE list. Suppressing a telephone number meant that the number should not be called at all for any reason.
The Compliance Department also began supervising the use of third-party affiliates by Order Entry Retailers. In October 2006, the Sales Department started collecting information from the top eleven Order Entry Retailers on the use of affiliates. At least four of the top eleven admitted using third-parties to make telemarketing calls.
The Compliance Department had weekly meetings with Dish's Legal Department. The meetings covered all areas of Order Entry Retailer compliance, including telemarketing.
Even though Musso and the Compliance Department secured the information more systematically, Dish continued to respond to Order Entry Retailer misconduct through an ad hoc, case-by-case approach.
In November 2006, Musso suggested using more stings and imposing more fines on Order Entry Retailers. As she put it, "Anything to stop the madness ... so to speak."
Dish terminated some Order Entry Retailers after starting the Compliance Department. In February 2007, Dish announced that it had terminated three Order Entry Retailers for Do-Not-Call violations.
As a result of the on-going problems with corrupt practices, the Order Entry program had a negative reputation within Dish.
By 2008, Dish was also the subject of investigations for Do-Not-Call Law violations by the FTC and state consumer protections officials. Dish was also a defendant in several lawsuits brought by both individual consumers and state officials.
During this time frame in 2008 and 2009, Dish started to impose more control over the Order Entry program. Dish required Order Entry Retailers making fifty activations a month to send their Internal Do-Not-Call Lists to PossibleNOW for compilation into a combined Retailer Do-Not-Call List.
From October 2008 until March 2009, Dish terminated 40 Retailers, some of which were Order Entry Retailers, for defrauding Dish or for making misrepresentations to consumers.
By 2009, Dish used the Quality Assurance program for both Dish direct telemarketing calls and Order Entry Retailer calls. Dish scored telemarketing calls on 45 criteria. The Quality Assurance criteria focused on accurately describing Dish products and promotions (including any limitations on promotional pricing), and providing complete, accurate disclosures during sales calls. The Quality Assurance criteria also covered "right sizing" customers. Right sizing involved asking questions about the household television watching patterns to accurately evaluate the potential customer's needs in order to offer the appropriate Dish programming packages. The Quality Assurance program also sought to ensure that the sales agents interacted with the consumer in an appropriate, professional manner.
A Dish Business Rule required Order Entry Retailers to participate in the Order Entry Program.
By August 2009, Ahmed and Neylon wanted the Sales Department to emphasize Order Entry Retailer compliance with Quality Assurance program. Neylon wanted Field Representatives and Account Managers to be "110%" involved in improving Quality Assurance scores. Ahmed also stated that he would hold Account Managers responsible. Ahmed stated that he would not tolerate high churn or misrepresentations.
Thereafter, Dish Field Representatives, Account Managers, and Sales Managers worked with Order Entry Retailers to get and keep Quality Assurance scores over 90 percent. Field Representatives and Account Managers visited with Order Entry facilities to ensure compliance. Field Representatives and Account Managers coached Order Entry Retailers on how to improve Quality Assurance scores.
Sales Managers, Field Representatives, and Account Managers reviewed and rewrote scripts and ordered Order Entry Retailers to change sales procedures to keep scores up.
Dish could discipline Order Entry Retailers who did not comply with the Quality Assurance Program. Dish Sales Managers, at least, could withhold promotional offers from non-compliant Order Entry Retailers.
One Dish Sales Manager William (Brett) Mason asked Musso for contractual authority for the Quality Assurance Program. Mason quoted Retailer Agreement § 7.3 as a possible source of authority in the email. Section 7.3 required Order Entry Retailers to "take all actions and refrain from taking any action, as requested by [Dish] in connection with the marketing, advertisement, promotion and/or solicitation of orders for" Dish Network programming. Mason then stated that he could use the "absolute power" clause, but it was not his first choice. Musso confirmed that § 7.3 of the Retailer Agreement authorized the Quality Assurance program.
The Plaintiffs suggest that the "absolute power" clause was § 7.3 of the Retailer Agreement. Musso testified that the "absolute power clause" meant that Mason could tell the Retailer, "Because I said so."
Even with the purge of half of the Order Entry Retailers and the imposition of the revised Quality Assurance Program, Dish retained the ad hoc, case-by-case approach to Do-Not-Call Law violations. In 2009, a class-action law suit was filed against Dish
This Court found at summary judgment under Counts I and III that Dish violated the TSR by causing the following illegal calls by Order Entry Retailers: causing Dish TV Now to make 6,637,196 Abandoned Prerecorded Calls; causing Satellite Systems to make 381,811 Registry Calls; causing Star Satellite to make 43,100,876 Abandoned Prerecorded Calls; causing JSR to make 2,349,031 Registry calls; and causing American Satellite to make one Abandoned Prerecorded Call.
In late 2003 or early 2004, Dish TV Now became Dish's first Order Entry Retailer.
The same day, October 7, 2003, Hagen sent Ahmed a proposal in which he projected that within a year of operation, Dish TV Now would generate 27,000 Dish Network activations per month. Hagen represented in the proposal that Dish TV Now would use television advertising, direct mail, and online advertising to secure inbound telemarketing calls from interested customers.
Dish TV Now hired a company called Guardian Communications (Guardian) to make "press 1" Prerecorded Calls to market Dish Network programming. From May 2004 to August 10, 2004, Guardian made on behalf of Dish TV Now 6,637,196 Prerecorded Calls that were answered and
On August 2, 2004, Dish received a consumer complaint about Dish TV Now's prerecorded telemarketing calls.
On September 16, 2004, Ahmed sent Dish TV Now's principal Hagen an email which said,
Hagen responded,
Ahmed learned from the September 16, 2004, email that Dish TV Now engaged in outbound telemarketing. Ahmed further learned that Hagen misrepresented in the original marketing plan the methods that Dish TV Now would use to sell Dish Network programming. Dish, however, did not take any disciplinary actions against Dish TV Now.
Ahmed also did not check the accuracy of Hagen's representations about Dish TV Now's telemarketing practices, and so, did not learn that Hagen was lying about the use of Prerecorded Calls. Hagen told Ahmed that calls answered by a person were connected to a live sales agent. That was false. The calls were connected to a prerecorded press 1 message. Ahmed did nothing to check Hagen's explanation. He just accepted it and went on.
Dish TV Now continued operating as an Order Entry Retailer until January 2006. On or about December 20, 2005, Dish put Dish TV Now on hold for failure to promote Dish Network programming. While on hold, Dish TV Now could not place orders through the Order Entry Tool. Dish TV Now also had a high churn rate, almost double the Dish direct marketing churn rate. In January 2006, Dish terminated Dish TV Now as an Order Entry Retailer for high churn and failure to promote Dish Network. Dish TV Now produced 485 activations in 2002; 2,765 activations in 2003; 78,339 activations in 2004; and 41,688 activations in 2005.
In March 2002, Satellite Systems was a TVRO Retailer. Satellite Systems was making Prerecorded Calls. Dish's regional sales director Nick Meyers stated in an email that Satellite Systems' use of Prerecorded Calls "has caused a few concerning calls, but seems to be greatly outweighed by the results."
In June 28, 2004, Dish's co-founder and Chief Executive Officer Charlie Ergen received a Prerecorded Call from Satellite Systems offering DirecTV programming. Ergen contacted Ahmed about the call. Ahmed told Ergen that Satellite System was also a Dish Retailer and that Satellite System used "message broadcasting with [DirecTV] as their primary source to generate sales." At trial, Ahmed denied knowing that Satellite Systems used Prerecorded Calls.
Ergen asked why Dish could not copy Satellite Systems' technique. Ahmed directed Dish Regional Sales Manager Mike Oberbillig to contact Satellite Systems to ask for the script. Satellite Systems' principal Alex Tehranchi refused to give Dish the scripts and denied using Prerecorded Calls. Tehranchi stated that Satellite Systems was moving away from telemarketing.
In July 2004, Satellite System became an Order Entry Retailer.
In September 2004, Satellite Systems was averaging 9,000 DirecTV activations a month, but only 350 Dish Network activations a month. Ahmed raised the commission paid to Satellite System to increase Dish Network activations. Ahmed stated that Dish needed activations from Satellite Systems.
In November 2004, a Florida state court ordered Satellite Systems to pay $25,500 in civil penalties under its other name Vitana Financial Group, Inc. (Vitana) for violating Florida Do-Not-Call Laws.
In March 2005, Tehranchi and Vitana agreed to pay $15,000 in civil penalties to North Carolina for violating state Do-Not-Call Laws.
In October 2005, Dish again received notice that Satellite Systems was using Prerecorded Calls.
On or before September 21, 2006, Dish knew that Satellite Systems had been fined $25,500.00 for Do-Not-Call law violations.
In February 2007, two of Dish's stings identified Satellite Systems as violating Do-Not-Call Laws.
In September 2009, Dish's investigation of a consumer complaint showed Satellite Systems was making Registry Calls.
In 2010 and 2011, Satellite Systems made 381,811 illegal Registry calls.
By 2011, Dish had developed a standard letter to send out to consumers complaining about Satellite Systems' violations of Do-Not-Call Laws. The Dish legal department referred to the letter as the "standard go after SSN letter."
Star Satellite became a TVRO Retailer in March 2003. Walter Eric Myers (Myers) was in charge of Star Satellite. Myers previously ran TVRO Retailer called Tenaya Marketing (Tenaya). Tenaya did door-to-door sales primarily. Dish began penalizing Tenaya for high churn rates, so Myers arranged for his brother to start Star Satellite.
At some point in time, Dish representatives learned that Star Satellite was engaged in telemarketing. Dish representatives sent Myers parts of a script to use in these sales. Dish representatives wanted Retailers to make all of the required disclosures to consumers.
In May 2004, Star Satellite hired Guardian to make Prerecorded Calls on its behalf to sell Dish Network programming. Guardian started making prerecorded "press 1" telemarketing calls selling Dish products and services for Star Satellite. Myers used the name Tenaya in Star Satellite's dealings with Guardian. Myers did not tell Dish that Star Satellite used Guardian's services. Myers considered marketing methods to be trade secrets that he did not want to share with any competitor. Myers viewed Dish as a competitor because Dish had its own internal marketing department. Myers believed that he could choose the marketing methods because Star Satellite was a separate business from Dish.
In 2004, Star Satellite applied to be an Order Entry Retailer. Myers testified that he basically begged to be approved for the Order Entry program. Dish personnel asked Myers questions about proposed marketing methods. Myers represented that Star Satellite would primarily use direct mail, with some phone sales. Myers believed telemarketing carried a stigma. He suspected that Dish did not like telephone sales. Myers did not want scrutiny from Dish about whether Myers was complying with Do-Not-Call Laws.
Star Satellite became an Order Entry Retailer in late 2004 or early 2005. Star Satellite set up an office and call center in Provo, Utah. Star Satellite still engaged in door-to-door sales in the Los Angeles, California area.
Dish personnel trained Star Satellite staff on how to use the Order Entry Tool. Dish personnel provided a recommended script to use for telephone sales. Dish provided detailed disclosures to be read to customers during telephone sales. Dish representatives visited Star Satellite's call center in Provo, Utah, weekly. Michael Mills went to Star Satellite's offices a few times.
Star Satellite had Guardian make 400,000 to 600,000 "press-1" Prerecorded Calls a day.
Star Satellite greatly increased its sales as a result of the Prerecorded Calls. Myers told Dish personnel, "We're just doing a lot of phone sales and we're having a lot of success." Myers told Dish personnel that Star Satellite's calling lists were scrubbed for the Registry, but did not give any details on Star Satellite's telemarketing. Myers relied on Guardian to scrub the calling lists.
Dish personnel learned in the first half of 2005 that Star Satellite was using Prerecorded Calls. On January 25, 2005, Dish received a consumer letter complaining that Star Satellite was using Prerecorded Calls.
In May 2005, Dish Outbound Manager Bangert told Dish employee Mark Duffy that an Order Entry Retailer in Provo, Utah, was using "automated messaging." Bangert asked Duffy to pass the information on to Retail Services.
Duffy forwarded Bangert's email to Jeff Medina in Dish's Retail Escalations Department. Medina forwarded the email to Margot Williams in Retail Escalations. Medina wrote in his email, "Are these your boys again?" Williams responded to Medina,
In August 2005, an individual consumer sued Dish and Star Satellite for Star Satellite's use of Prerecorded Calls to sell Dish Network programming. Dish knew of the suit on August 12, 2005.
From July 30, 2005, to November 22, 2005, Star Satellite made 43,100,876 completed Abandoned Prerecorded Calls through Guardian selling Dish Network programming. The Court found at summary judgment that these calls violated the TSR.
In October 2005, Ahmed received a complaint from Congressman Fred Upton of Michigan about Star Satellite calling numbers on the Registry. Ahmed had a conference call with Star Satellite's principal Myers about this complaint. Ahmed was very upset about receiving a complaint from a Congressman. Ahmed told Myers not to violate the Do-Not-Call Laws. Ahmed used foul language and raised his voice at the meeting. According to Myers, Ahmed told Myers that he would shut Star Satellite down if he received another complaint like this.
Star Satellite stopped using Guardian on November 22, 2005.
On January 20, 2006, Star Satellite was terminated as Order Entry Retailer, but remained a TVRO Retailer.
In 2006, Jerry Grider, Shaun "Blaze" Gazzara, and Richard Goodale formed JSR Enterprises to sell Dish Network programming. The name JSR came from the initial from each man's first name.
Goodale asked Tchang how he could start his own company. Tchang referred Goodale to Shawn Portela. Portela formerly worked for Dish. Portela operated two Order Entry Retailers, Dish Nation and Cactus Concepts.
On August 10, 2006, Dish authorized JSR to be an Order Entry Retailer.
Mills, Oberbillig, Portela, and Tchang came to JSR's offices when it became an Order Entry Retailer. Goodale testified that Mills, Oberbillig, and Tchang all knew that JSR was going to use "press 1" Prerecorded Calls. Goodale testified that Mills and Oberbillig told him not to use the name of Dish Network in the prerecorded message.
Once JSR became an Order Entry Retailer, JSR purchased fifteen more autodialers. JSR had over 1,500 phone lines making prerecorded "press 1" telemarketing calls fifteen hours a day.
Based on all the evidence, the Court finds that Dish Representatives Tchang, Mills, and Oberbillig knew that JSR was using automatic dialers to make "press 1" prerecorded telemarketing calls. Dish knew from the high volume of connected calls that JSR was using automatic dialers to make outbound telemarketing calls. Numerous Dish Order Entry Retailers in
JSR's calling lists consisted of all published residential numbers in a selected geographical region. JSR secured copies of white pages in electronic format. JSR used call centers in the Philippines ("off-shore calling") and an automatic dialing facility in Texas to make "press 1" Prerecorded Calls. Goodale at one point testified that he knew JSR was calling numbers on the Registry.
From September through December 2006, Dish received several consumer complaints that JSR made Prerecorded Calls and Registry Calls. Dish also caught JSR five to seven times in stings violating Do-Not-Call Laws, including Registry Calls. Each time, the Dish Compliance Department or Legal Department notified JSR of the complaint.
Goodale, on behalf of JSR, provided an explanation for each complaint to Dish's Compliance Department or Legal Department.
Goodale testified that he told Musso in the Compliance Department what she wanted to hear without regard to its accuracy. He did not consider her to be of any importance at Dish.
Goodale's explanations to Musso sometimes admitted violations of the Do-Not-Call laws. Goodale sometimes blamed an off-shore affiliate, and sometimes admitted that JSR made an illegal call by mistake. Musso knew that using unauthorized affiliates violated the Retailer Agreement, and also knew that some of Goodale's explanations effectively admitted Do-Not-Call Law violations. On December 21, 2006 Neylon, Mills, and Musso exchanged a series of emails discussing JSR's unauthorized use of off-shore affiliates that were making illegal calls. Neylon asked a series of questions:
Mills responded that JSR was producing 1,500 to 2,000 activations per month. Mills also stated that JSR had stopped off-shore calling. Mills recommended against termination.
In January 2007, the Louisiana Attorney General's office contacted Dish about repeated telemarketing calls to an individual who had already asked to be put on the telemarketer's Internal Do-Not-Call List. The individual reported that the telemarketer hung up when she asked to be put an Internal Do-Not-Call List and called back repeatedly. Musso researched the complaint and determined that JSR had made the calls. Musso provided JSR contact information to the Louisiana Attorney General's office.
On January 17, 2007, Musso sent letter to JSR with list of five consumer complaints for Do-Not-Call Law violation.
February 8, 2007, Musso sent an email to her superiors which included a copy of a Missouri Attorney General press release. The press release announced that on December 7, 2006, a Missouri court issued a
JSR was terminated as an Order Entry Retailer on February 14, 2007.
After February 14, 2007, JSR continued to sell Dish Network programming through another Order Entry Retailer. Goodale did not identify the Order Entry Retailer that JSR worked through at this time. JSR quit operating in March 2007 when it stopped getting paid, either by Dish or the Order Entry Retailer through whom JSR worked.
From August 2006 through March 2007, JSR made 1,186,924 Internal List Calls to persons who were on Internal Do-Not-Call Lists of either Dish or a Telemarketing Vendor. Prior to August 10, 2006, JSR placed some of these calls as an affiliate of Dish Nation.
From July to December 2006, JSR made 2,349,031 Registry Calls that the Court found violated TSR at summary judgment.
JSR made some of these calls through Dish Nation prior to becoming an Order Entry Retailer on August 10, 2006.
From January to March 2007, JSR made 3,315,242 Registry Calls. Of these calls, JSR made:
JSR made at least some of these calls after February 14, 2007, through an unidentified Order Entry Retailer.
In September 2006, American Satellite made a Prerecorded Call to consumer Robert Parker at his residence on his home telephone. Parker answered the call while participating in a Dish sting operation. The sting identified American Satellite as the telemarketer making the call. The Court found at summary judgment that when Parker answered the call, the call became an Abandoned Prerecorded
In February 2007, Dish fined American Satellite $10,000 for Do-Not-Call Law violations.
In 2008, Manuel Castillo was a Dish Field Representative who visited American Satellite on behalf of Dish. At that time, Castillo left Dish to work for American Satellite. Castillo worked at American Satellite for less than a year. Castillo discovered that American Satellite was using a Philippine call center to make "press 1" Prerecorded Calls.
Castillo discovered that American Satellite also defrauded Dish in various ways. Dish required a consumer to have a credit card in order to qualify for Dish Network programming. American Satellite circumvented this requirement to make sales to individuals who did not have credit cards. American Satellite put $1.00 on prepaid debit cards. If a customer did not have a credit card, American Satellite sales personnel uploaded the numbers on one of the debit cards onto the Order Entry Tool, misrepresenting the numbers as the credit card number of a new customer.
Sometime in late 2008, American Satellite fired Castillo. Within a day or two of being fired, Castillo told Musso about American Satellite's fraudulent and illegal practices. Musso referred Castillo to a Dish internal auditor Bert Eichhorn. Castillo told Eichhorn that American Satellite was making Prerecorded Calls and making a massive number of calls to numbers on the Registry. Eichhorn, however, was not interested in Castillo's information about Do-Not-Call Law violations. He was interested in evidence that American Satellite was defrauding Dish.
Castillo testified that when he visited American Satellite as a Dish Field Representative he did not see anything to indicate that American Satellite was engaged in illegal telemarketing.
Dish Nation was an Order Entry Retailer operated by a former Dish employee Shawn Portela. The Plaintiffs take the position that Dish caused both JSR and Dish Nation to make all of the calls reflected in JSR's telephone records. However, the evidence does not support this position. From July 2006 through August 10, 2006, JSR ran its telemarketing calls through Dish Nation. Thereafter, JSR operated as a separate Order Entry Retailer until Dish terminated it on February 14, 2007. After February 14, 2007, JSR continued to operate through another Order Entry Retailer
The evidence also shows that Dish Nation made Abandoned Prerecorded Calls in 2007.
Plaintiffs, however, have not presented any evidence of that JSR made calls after February 14, 2007 through Dish Nation. The evidence only supports a finding that JSR made calls through Dish Nation from July 2006 until August 10, 2006. The evidence does not show that Dish Nation had any connection with the calls that JSR made after it became an Order Entry Retailer on August 10, 2006.
The evidence supports a finding that Dish allowed Dish Nation to use third party affiliates in 2006. Tchang knew that Dish Nation used affiliates. He told Goodale to operate JSR through one of Portela's Order Entry Retailers. The September 2006 Spreadsheet listed JSR and a company called Direct Promotions as Dish Nation affiliates. The September 2006 Spreadsheet said JSR worked under Dish "Nation's umbrella," and Direct Promotions was part of "Dish Nation's affiliate program."
The Plaintiffs presented the following telephone call records: (1) calls made by Dish from October 2003 through August 2007 (2003-2007 Calling Records), and from September 2007 through March 10, 2010 (2007-2010 Calling Records); (2) calls made by Guardian on behalf of Star Satellite and Dish TV Now; (3) calls made by JSR through JSR' automatic dialing operation in Texas, and (4) calls made by Satellite Systems.
In July 2005, the FTC sent Dish a Civil Investigative Demand (FTC Demand). The FTC Demand sought information regarding possible violations of the TSR and the
In response to the FTC Demand, Dish provided the 2003-2007 Calling Records, consisting of records of calls made from October 2003 through September 2005, December 2005 through December 2006, and January 2007 through August 2007. The cover letter accompanying the production for the October 2003 through September 2005 records stated, in part,
The Court finds that the transmittal letter from Dish in-house counsel Steele constitutes an admission by Dish that the 2003-2007 calling records produced were records of Dish's outbound telemarketing calls. Steele stated in her letter that the records provided with her letter were records of telemarketing calls. Steele was an agent of Dish at the time she made the statement, and the statement was within the scope of her agency. The transmittal letter, therefore, constitutes a non-hearsay admission of Dish that the 2003-2007 Calling Records were records of outbound telemarketing calls. Fed. R. Evid. 801(d)(2)(D).
Furthermore, the FTC Demand asked for records of "telemarketing calls made by EchoStar relating to the marketing of Dish Network." Dish responded by producing the 2003-2007 Calling Records. Dish's response implies that the records produced were records of telemarketing calls made by Dish (then known as EchoStar) "relating to the marketing of Dish Network."
Dish argues that the 2003-2007 Calling Records contained records of non-telemarketing calls. Dish relies on employee Bangert's testimony that he doubted that the 2003-2007 Calling Records were all records of telemarketing calls.
Bangert's speculation regarding the make-up of the 2003-2007 Calling Records has no probative value. Bangert had no personal knowledge of the content of the 2003-2007 Calling Records. Additionally, Bangert did not participate in preparing the response to the FTC Demand.
The existence of non-telemarketing calls in the 2007-2010 Calling Records may tend to show the 2003-2007 Calling Records may have included non-telemarketing calls. However, the probative value is slight. The two sets of records were produced at different times in response to different document demands. The 2007-2010 Calling Records also included campaign codes. The campaign codes indicated the purpose of the calls made during the particular campaign, such as telemarketing, collection, payment notice, scheduling, etc.
Dish's expert Taylor stated that he was told by Dish personnel that the 2003-2007 Calling Records included both inbound and outbound telemarketing call records.
In light of the fact that the FTC Demand asked for outbound telemarketing records, Dish attorney Steele stated that the records she sent were records of telemarketing calls, and only minimal competent admissible evidence exists to the contrary, the Court finds that it is more likely than not that the 2003-2007 Calling Records were records of outbound telemarketing calls made by Dish or its Telemarketing Vendors.
The FTC sent the 2003-2007 Calling Records to InterImage, Inc. (InterImage), for processing. InterImage compared each calling record on 2003-2007 Calling Records that had a valid telephone number with the telephone numbers that had been on the Registry for at least 31 days at the date of the call.
Total Calls Hits In Record October 17, 2003-March 31, 2004 30,328,309 4,770,433 January 3-May 31, 2005 61,295,734 12,533,684 June 1-30, 2005 18,140,971 2,784,629 July 1-31, 2005 18,398,923 2,575,019 August 1-September 18, 2005 30,328,309 4,000,815 December 1, 2005-January 31, 2006 31,420,403 6,916,143 February 1-28, 2006 14,477,981 3,375,472 March 1-April 30, 2006 32,178,915 4,641,828 May 1-June 30, 2006 31,368,431 7,586,596 July 1-August 15, 2006 20,836,297 5,080,115 August 16-September 30, 2006 20,238,913 4,710,270 October 1-31, 2006 18,389,496 3,624,432 November 1-30, 2006 19,597,026 3,712,816 December 1-30, 2006 17,462,891 3,002,123 January 2-February 28, 2007 24,388,302 2,994,525 March 1-April 30, 2007 26,170,553 4,046,178 May 1-31, 2007 15,968,120 3,389,113 June 1-30, 2007 18,669,378 4,938,258 July 1-31, 2007 17,823,512 4,627,426 August 1-31, 2007 20,452,928 5,494,133 _________________ __________ _________ Totals 501,513,302 94,804,008
The InterImage Hits files (Hits Files) from the 2003-2007 Calling Records included at least some duplicate entries in which the same call was included two or more times.
Most of the InterImage Hits Files from the 2003-2007 Calling Records only identified the dates of calls, but not the times of calls.
The parties' experts Dr. Yoeli and John Taylor analyzed the Dish calling records for the period. Plaintiffs' expert Dr. Yoeli analyzed the InterImage Hits Files from the 2003-2007 Calling Records. Again, most of the Hits Files provided only the dates of the calls, but not the specific times of the calls. Dr. Yoeli decided to count all calls to the same number on the same date as one call.
The Plaintiffs did not rely on Dr. Yoeli's opinions with respect to the 2003-2007 Calling Records to prove their claims at trial.
Dish's counsel provided its expert Taylor with 581,401,271 calling records from October 17, 2003, to August 31, 2007. Dish provided 501,513,302 calling records to the FTC from this period pursuant to the FTC Demand, which made up the 2003-2007 Calling Records. Taylor removed duplicate entries ("de-duplicated") from the records provided to him. Taylor also removed records with invalid telephone numbers. Taylor eliminated 378,147 calls because the disposition codes indicated calls did not go through due to dialer errors. Taylor eliminated 231,966 calls because he was told that the disposition codes indicated that the calls were inbound telemarketing calls. Taylor eliminated 30,017 calls because the disposition codes indicated that the calls were non-telemarketing calls such as calls for collections or scheduling service.
Taylor opined that the remaining 3,220,602 remaining calls were made to persons whose telephone numbers were on the
No party presented any evidence regarding whether Dish had either a Transaction-based or Inquiry-based Established Business Relationship with any of the recipients of any of the calls in either the 2003-2007 Calling Records produced to the FTC or the 581,401,271 calling records provided to Taylor.
Dish produced the 2007-2010 Calling Records in discovery. The 2007-2010 Calling Records included campaign codes with each calling record. The campaign codes indicated the type of calling campaign. Dish representatives and the Plaintiffs' expert Dr. Yoeli worked together to identify the telemarketing campaign codes in the 2007-2010 Calling Records. Dish also provided Dr. Yoeli with the last payment date, if any, associated with each calling record, and the activation date, if any, associated with each calling record.
Dr. Yoeli analyzed the 2007-2010 Calling Records to identify the Registry Calls. Dr. Yoeli received the records in two sets, one with 357,058,136 call records and a second with 76,026,757 call records. Dr. Yoeli combined the two sets and removed any duplicates that were on both lists. Dr. Yoeli also removed any records with invalid telephone numbers. Dr. Yoeli then identified the call records that were on calling campaigns with telemarketing campaign codes. This process resulted in 134,295,177 call records with telemarketing calling campaign codes. Dr. Yoeli's report stated that he included campaigns with telemarketing or unknown campaign codes.
Dr. Yoeli sent the 134,295,177 call records to InterImage to find the total number of Registry Hits. Dr. Yoeli removed the duplicate records in the Registry Hits provided by InterImage. The result was 32.4 million Hits. Dr. Yoeli removed calls made to telephone numbers associated with accounts on which payments were made within 558 days immediately preceding the dates of the calls. The 558 day period is 18 times 31 days, representing the 18 month period in which a seller has a Transaction-based Established Business Relationship with a customer.
Dish representatives told Dr. Yoeli to use the activation date as an inquiry date.
Dish's expert John Taylor prepared a rebuttal report to Dr. Yoeli's analysis.
Taylor first looked at disposition codes for calls. Taylor opined that certain disposition codes indicated that calls did not violate the Do-Not-Call Laws:
Taylor also eliminated 62,679 calls in which the campaign code indicated that the calls were non-telemarketing calls, such as scheduling or confirming work orders.
Taylor then eliminated 1,265,359 calls in which the campaign codes indicated that the calls were made to current customers. Taylor stated that these calling records were associated with valid Dish account numbers and did not have disconnect dates. Taylor opined that Dish had a Transaction-based Established Business Relationship with the call recipients. Taylor did not use the last payment data that Dish provided to Dr. Yoeli because Taylor reviewed the data and found it to be unreliable.
Taylor eliminated 873,551 calls on Lead Tracking Systems calling campaigns. Taylor was informed that the Lead Tracking System contained telephone numbers of people who inquired of information regarding Dish Network programming and that Dish placed these calls within a day or two of each inquiry. Dish did not provide specific dates of inquiries to Taylor.
Taylor then eliminated 67 calls by applying the 558 day limit to calls with activation dates, but no payment date. Taylor opined that an activation was a transaction between Dish and a customer, and so, Dish had a Transaction-based Established Business Relationship with these customers for 18 months.
Taylor then eliminated 10,029 intrastate calls. Taylor testified that he eliminated these calls based on instructions from Dish's counsel.
Taylor opined that he could not eliminate 765,531 calls found by Dr. Yoeli to be Registry Calls that Dish did not have either Transaction-based or Inquiry-based Established Business Relationships with the intended call recipients.
On December 14, 2012, Dr. Yoeli prepared a revised report.
Taylor again prepared a response to Dr. Yoeli's revised report.
The United States moved for partial summary judgment on the 501,650 calls remaining at the end of Taylor's October 14, 2013 analysis. The United States also moved for partial summary judgment on
The Court entered partial summary judgment on all these calls. The Court explained that the TSR prohibited initiating telemarketing calls; therefore, dispositions codes showing wrong numbers, no English, or the failure of a phone to ring are not relevant. The violations occurred when the calls were initiated. The Court also explained that the TSR covered intrastate telemarketing calls. The Court also found that Dish failed to present evidence to show that the Lead Tracking System leads were in fact inquiry leads and that the calls were placed within three months of the consumers' inquiries. The Court entered partial summary judgment on 1,707,713 calls made by Dish or its Telemarketing Vendors.
The portions of the 1,707,713 calls made to telephone numbers with area codes associated with the Plaintiff States (Plaintiff State area codes) are as follows:
T 613: 209 (Yoeli). The Plaintiff States did not present evidence identifying intrastate calls made to numbers with area codes associated with them.
The parties stipulated at trial that the United States is seeking liability for a maximum of 1,634,702 additional Registry Calls from the 3,342,415 calls in the Yoeli July 2012 Call Set. The parties calculated the stipulated maximum of 1,634,702 calls by subtracting the 1,707,713 calls which the Court found to be TSR violations at summary judgment from the 3,342,415 calls in the Yoeli July 2012 Call Set.
The United States originally sought to establish liability for 2,864,896 additional Registry Calls from the Yoeli July 2012 Call Set.
Taylor testified at trial that all but 167,848 of the United States' stipulated maximum of 1,634,702 calls were either not telemarketing calls or were telemarketing calls to persons with whom Dish had a Transaction-based Established Business Relationship at the time of the call. Taylor testified that Dr. Yoeli erred in using an activation date as a date that a person inquired about Dish Network programming. Taylor opined that an activation date should be considered a customer transaction with Dish. He opined that the relevant time period in which Dish had a Transaction-based Established Business Relationship with such a customer was 18 months, not three months. Taylor opined that Dr. Yoeli erroneously included 96,100 calls in his counts due to this error. The United States conceded that the 96,100 calls should not be included as illegal telemarketing Registry Calls.
Taylor also opined at trial that the 1,265,359 calls to individuals on calling campaigns directed at current customers were calls to persons with Transaction-based Established Business Relationships with Dish. Taylor relied on the calling campaign name or code to identify calls made to current customers. Taylor stated that he was told that the intended recipients
Campaign names and codes based on disconnect dates are not a valid basis to determine Transaction-based Established Business Relationships. The TSR and FCC Rule define Transaction-based Established Business Relationship for customers as 18 months from the last purchase of goods or services. TSR 16 C.F.R. § 310.2(o); FCC Rule 47 C.F.R. § 64.1200(f)(5). Dish's experts Taylor and Kenneth Sponsler both agreed that the proper way to determine whether Dish had a Transaction-based Established Business Relationship with the intended call recipient was to measure from specific data points that would establish the date of the last purchase of goods or services by the intended call recipient.
If Taylor is correct that the date-of-last-payment information that Dish provided to Dr. Yoeli is unreliable, then no evidence presented shows the last dates purchase of goods or services by the intended recipients of Dish's telemarketing calls, and so, no evidence shows that Dish had any Transaction-based Established Business Relationships with any of its call recipients in the 2007-2010 Calling Records.
The Plaintiffs do not argue for such a finding. The Plaintiffs relied on Dr. Yoeli's use of the last payment data supplied by Dish. The Court, therefore, will give Dish the benefit of the doubt and credit the last payment data that Dish supplied in discovery. The Court notes that Taylor actually used the date-of-last-payment information. Taylor started with Dr. Yoeli's conclusions in the July 2012 Report and reduced the number of violations further by his various opinions, including the campaign codes. He therefore started with Dr. Yoeli's figures that were already reduced by the last payment date.
Dish's practice of using calling campaign names or disconnect dates, however, was not a reliable method of determining whether Dish had a Transaction-based Established Business Relationship with intended call recipients. Taylor's reliance on this method in his opinions was similarly not reliable was not based on sufficient facts and data.
The Court credits Taylor's opinion to exclude 42,716 calls as non-telemarketing calls based on disposition codes, and his opinion to exclude 62,679 calls as non-telemarketing calls based on campaign codes. The disposition codes cited by Taylor indicate that the 42,716 calls were received by businesses or were made for non-telemarketing purposes. Business and non-telemarketing calls are not covered by the TSR and the relevant portions of the TCPA. The campaign codes on which Taylor relies indicate that the 62,679 calls were made primarily in Held Work Order and Canceled Work Order campaigns. The testimony from Bangert, Davis, Dexter, and Montano was ambiguous concerning whether some of these calls were telemarketing calls designed to close pending sales or just scheduling calls. The Plaintiffs have the burden to prove that a call is a telemarketing call. Given the ambiguity, the Court will credit Taylor's opinion that the calls made in these campaigns were not telemarketing calls. The Court, therefore, finds that 1,433,207 of the remaining 1,634,702 in the Yoeli July 2012 Call Set were Registry Calls to persons whom Dish has not shown had a Transaction-based or Inquiry-based Established Business Relationships with Dish at the times of the calls. The figure 1,433,207 is the sum of the 167,848 calls on which Taylor offered no opinions to exclude from liability plus the 1,265,359 calls for which Taylor offered an opinion that had no probative value.
Plaintiffs' expert Dr. Yoeli also presented an opinion at trial regarding the portion of the 3,342,415 calls in the Yoeli July 2012 Call Set that were not ruled on by the Court at summary judgment. Dr. Yoeli compared the 3,342,415 call records in the Yoeli July 20-12 Call Set with a set of 4,075,766 call records that the Plaintiffs provided to him. The Plaintiffs told Dr. Yoeli that the set of 4,075,766 call records were the September 2007 to March 2010 call records analyzed by Taylor and on which the Court granted partial summary judgment.
Dr. Yoeli testified that of that of the 2,475,432 calls, the following calls were made to telephone numbers with area codes associated with the Plaintiff States:
The Court finds, however, that Dr. Yoeli's opinion about the 2,475,432 Registry Calls in the Yoeli July 2012 Call Set has no probative value. Dr. Yoeli used a sound methodology to isolate the call records that were not been ruled upon by the Court at summary judgment. He compared the 4,075,766 calls records with calls in the Yoeli July 2012 Call Set to identify those that were not in the 4,075,766 calls records. The data Dr. Yoeli used, however, was flawed. The Plaintiffs failed to prove or even adequately explain the source of the set of 4,075,766 call records provided to Dr. Yoeli. Dr. Yoeli's testimony and the quote from Yoeli Demonstrative Exhibit 2 both stated that the source was the calls from the 2007-2010 Calling Records on which the Court granted partial summary judgment. The Court entered partial summary judgment on at total of 1,707,713 call records from 2007-2010, not 4,075,766.
Dish's expert Taylor compared the 2007-2010 Calling Records with the Internal Do-Not-Call lists of Dish, Dish's Telemarketing Vendor eCreek, and the PossibleNOW combined Internal-Do-Not-Call List for Order Entry Retailers. PossibleNOW had collected these lists beginning in 2008 as part of its services for Dish. PossibleNOW combined all of the Order Entry Retailers' Internal Do-Not-Call Lists into a single combined list. PossibleNOW maintained the Dish Internal Do-Not-Call List and the eCreek Internal Do-Not-Call List separately. Taylor found that Dish made 903,246 Internal List Calls to numbers on the internal do-not-call lists of Dish and eCreek. The Court granted partial summary judgment in Count II for these calls.
The Court credits Taylor's opinion that Dish or its Telemarketing Vendors made 8,244,409 Internal List Calls to persons who previously stated that they did not wish to receive telemarketing calls by or on behalf of Dish Network.
Taylor testified that some overlap in the set of 903,246 calls found violations at summary judgment and the set of 7,321,163 calls to numbers on the Order Entry Retailer combined internal do-not-call lists.
Taylor also opined on the number of Internal List Calls that Dish and its Telemarketing Vendors made to telephone numbers with Plaintiff States area codes. Taylor opined that of the 903,246 Internal List calls on Dish's and eCreek's Internal Do-Not-Call Lists, 36,598 calls were made to telephone numbers with Ohio area codes.
The Court determined at summary judgment that Dish made an additional 140,349 Internal List Calls made to persons who told eCreek that they did not wish to be called by or on behalf of Dish.
Dr. Yoeli compared the 8,244,409 records of Dish's Internal List Calls with calls in the Calling Records from 2007 to 2010 that Dish provided to Taylor and were not part of the 501,650 calls previously identified by Taylor and on which the Court granted summary judgment.
Dr. Yoeli also found that, of the 2,386,386 calls in this set, the following were made to telephone numbers with area codes associated with the Plaintiff States:
Dr. Yoeli further broke down the calls to telephone numbers with Plaintiff States' area codes. Of the 71,853 calls made to numbers on the Dish internal do-not-call list:
T 613: 208 (Yoeli). Of the 2,314,533 call made to numbers on the Order Entry Retailers' internal do-not-call lists:
The Court credits Dr. Yoeli's opinions as demonstrating that Dish made the 2,386,386 telemarketing calls to persons whose numbers were on both Registry Calls and Internal List Calls to numbers on the internal do-not-call lists of Dish, the Telemarketing Vendors, or an Order Entry Retailer and that these calls were not previously found to be part of the 501,650 calls on which the Court granted summary judgment. The Court also credits Dr. Yoeli's opinions of the breakdown of the number of this set of calls made to numbers with area codes associated with the Plaintiff States.
The Court entered summary judgment finding that Dish was liable for making 98,054 prerecorded calls that were answered by a person. Such calls were Abandoned Prerecorded Calls in violation of the TSR.
Dr. Yoeli identified the number of these 98,054 Abandoned Prerecorded Calls that Dish made to telephone numbers with Plaintiff States' area codes:
The translations of the texts of the prerecorded messages used in the 98,054 calls show Dish's foreign language marketing group intended to direct the calls to existing Dish customers. Dish presented no other evidence to show that the recipients of these calls were current customers of Dish at the times of the calls, and no evidence of the number of months that elapsed between the dates that the recipients of these calls last paid Dish for Dish Network programming and the dates of the calls.
The Court found at summary judgment that Dish was liable for causing the following Order Entry Retailers to make the following telemarketing calls offering Dish Network programming in violation of the TSR:
Dr. Yoeli identified the number of the 43,100,876 Star Satellite calls that were made to telephone numbers with area codes associated with the Plaintiff States:
Taylor identified the number of the 381,811 Satellite Systems calls that were made to telephone numbers with area codes associated with the Plaintiff States:
Taylor identified the number of the 2,349,031 JSR Registry calls that were made in 2006 to telephone numbers with Plaintiff States area codes:
Taylor also found that JSR made 3,315,242 Registry Calls from January through March 2007.
Taylor identified the number of the 3,315,242 JSR Registry Calls that were made in 2007 to telephone numbers with Plaintiff States area codes:
Taylor found that in 2006, JSR made 416,221 telemarketing Internal List Calls to numbers on Dish's Internal Do-Not-Call List and 2,007 telemarketing Internal List Calls to numbers on the Internal Do-Not-Call Lists of Dish's Telemarketing
Taylor found that in 2006, JSR made 267,439 Internal List Calls to numbers on other Order Entry Retailers' Internal Do-Not-Call lists. Taylor found that from January to March 2007, JSR made 526,956 Internal List Calls to numbers on other Order Entry Retailers' Internal Do-Not-Call lists.
Taylor found that the JSR call records consisted of 12,853,478 dials of calls between July 2006 and March 2007 from JSR's autodialer facility in Texas.
The FCC Rule prohibited prerecorded telemarketing calls unless the seller had an Established Business Relationship with the intended recipient of the call. 47 C.F.R. § 64.1200(a)(2)(iv) (version in effect prior to October 16, 2012).
A prerecorded telemarketing call is an Abandoned Prerecorded Call under the TSR if a person answers the call because no live salesperson comes on the line. TSR 16 C.F.R. § 310.4(b)(1)(iv). Goodale estimated that four out of ten telemarketing calls made by JSR were answered by a person.
Dish has presented evidence about the operation of the Registry and about the
In March 2003, the FTC awarded a contract to AT & T to maintain the Registry.
AT & T hired a company called Targus as its subcontractor to perform a monthly review of the Registry, which included purging numbers that no longer belonged.
In December 2003, AT & T experienced what it labeled a "missing day problem." If a telemarketer downloaded an updated list of newly registered numbers called a "change list," the list did not include numbers that were registered the day of the download. If a telemarketer downloaded a full, updated Registry list rather than a change list, then the telemarketer did not experience this missing day problem. AT & T implemented fixes in January 2004 to address the problem.
On February 17, 2004, Targus notified the FTC for the first time that "Land lines are considered disconnected and are deleted and scrubbed from the registry only when the telephone number is reassigned which can occur anywhere from four weeks to over one year from the time the number is disconnected."
The FTC directed AT & T in the Vogt April 2004 Letter to start scrubbing disconnected numbers from the Registry, including disconnected wireless numbers. On May 21, 2004, the FTC accepted the methodology of only removing numbers that were both disconnected and reassigned.
In 2007, Congress enacted the Do-Not-Call Improvement Act. 15 U.S.C. § 6155. The Act mandates that each number on the National Registry remain indefinitely, unless the individual to whom the number is assigned requests removal, or unless the FTC removed the number as follows:
In conjunction with the 2007 legislation, the FTC submitted a report to Congress in 2008 regarding the accuracy of the Registry. As part of this report, the FTC analyzed a sample list of 20,000 numbers submitted by the Direct Marketing Association ("DMA"), which the DMA claimed "had been disconnected and reassigned since the time they had been registered." The FTC concluded that forty-two percent of these numbers should not have been considered as active registrations on the Registry.
In 2007, Lockheed Martin replaced AT & T as the FTC's contractor responsible for maintaining the Registry.
In November 2008, Lockheed Martin was rated on 16 performance categories. Lockheed had a 95 percent performance rating or better in 13 of the 16 categories. Lockheed had a 75.54 percent, 71.02 percent, and a 43.9 percent performance rating respectively in the other three categories.
In December 2011, Lockheed Martin delayed adding new registrations to the Registry. The delay occurred because the registrations were "locked in the technical background" of Lockheed Martin's system. As a result, Lockheed Martin took additional steps and additional time to place new numbers on the Registry. In February 2012, Lockheed Martin discovered that certain telemarketers did not receive the
Lockheed Martin used PossibleNOW as its subcontractor to perform list hygiene on the Registry.
In 2009, PossibleNOW estimated that thirteen percent of the National Registry is attributed to business landlines.
PossibleNOW made some mistakes in maintaining the Registry. In one instance, PossibleNOW mistakenly dropped 225,000 numbers from the Registry. PossibleNOW had accidentally populated incorrect dates in the course of updating the disconnect/reassign database. Richard Stauffer, CEO of PossibleNOW testified that this occurred as a result of human error. In correcting the issue, PossibleNOW missed 2,668 numbers that should have been added to the Registry.
In 2008, PossibleNOW inadvertently left approximately 10,000 numbers on the Registry that should have been removed. In March 2009, PossibleNOW accidentally dropped 16,000 numbers from the Registry.
PossibleNOW does not remove disconnected and reassigned wireless numbers from the Registry.
Voice over Internet Protocol (VoIP) telephone service providers are also not required to share their directory assistance data with the FCC.
In response, Plaintiffs' expert Dr. Yoeli took samples of calling records to determine the make-up of the types of telephone numbers that Dish and the Order Entry Retailers called. Dr. Yoeli took samples of the 2003-2007 Calling Records; the 2007-2010 Calling Records; Guardian's records of calls for Star Satellite (identified as Tenaya); Guardian's records of calls for Dish TV Now (identified as WOW TV); and JSR's calling records. Dr. Yoeli sent the sample to Stauffer of PossibleNOW. PossibleNOW maintains historical records of major directories for residential, business, and wireless telephone numbers.
Stauffer identified the type of telephone number for each sample as follows:
Dr. Yoeli reviewed Stauffer's results and opined as follows:
The Court finds that Dr. Fenili's opinion about the make-up of the Registry is of little or no probative. Dr. Fenili's opinions are only relevant if Dish and the Order Entry Retailers called a normal distribution of all types of numbers. Dish did not call a normal distribution. Dish called residential telephone numbers.
Order Entry Retailers Dish TV Now, JSR and Star Satellite also called residential telephone numbers. JSR called residential numbers from published white pages telephone directories.
Dr. Yoeli's samples show that Dish, Dish TV Now, JSR, and Star Satellite did not call a normal distribution of telephone numbers on the Registry. Almost none of the calls from any of the samples were made to identified business telephone or wireless numbers. A very large majority of the identified calls in every set were made to residential numbers.
The Court further finds that the preponderance of the evidence established Dish and the Telemarketing Vendors made telemarketing calls to residential telephone subscribers. Dish directed its telemarketing campaigns to sell Dish Network programming to residential customers, whether current, former, or prospective. Dish, further, knew the name and address of every person that Dish and its Telemarketing Vendors called. Dish scrubbed all calling campaigns to remove wireless numbers. The disposition codes in the Calling Records for 2007-2010 showed that approximately .2% of the calls were answered by businesses.
In addition, Taylor used the disposition codes to exclude the Dish calls answered by businesses from the Registry Calls in the Yoeli July 2012 Call Set and in the Registry Calls found by him in his October 13, 2014 Report. Thus, the calling records identified by Taylor on which the Court has found liability excluded calls to businesses.
The evidence also shows that Order Entry Retailers JSR and Star Satellite called residential telephone numbers. The standard Retailer Agreements only authorized Order Entry Retailers to sell Dish Network programming to residential customers. The Order Entry Tool could only be used to submit orders for residential programming packages to Dish. Goodale, Myers, and Baker testified that both JSR and Star Satellite, either directly or through Guardian, called residential telephone numbers in published telephone directories.
Dr. Yoeli's 2012 sampling data corroborates these witnesses' testimony. The 2012 samples show that the vast majority of the identified calls were directed to residential customers:
All of this evidence, taken as a whole, shows by a preponderance that Dish, its Telemarketing Vendors, and Order Entry Retailers JSR and Star Satellite placed the vast majority of their outbound telemarketing calls to residential telephone subscribers. The preponderance of the evidence shows that the telemarketing calls made by Dish, the Telemarketing Vendors, JSR, and Star Satellite at issue in this case were directed to residential telephone subscribers.
The percentage of residential calls to all calls in the samples was smaller.
These percentages would be accurate only if all of the unidentified numbers were not residential telephone numbers. The unidentified numbers, however, included unlisted landline residential numbers and unlisted VoIP residential numbers. Furthermore, numerous Dish witnesses, including Bangert, Dexter, and Davis, testified that Dish called residential numbers. Goodale, Myers, and Baker testified that JSR and Star Satellite called published residential numbers. Given this testimony, the actual percentage of residential numbers in the call records is far closer to the percentage of identified numbers.
Dish argues that Dr. Yoeli's sampling analysis is not probative because the samples are national samples rather than samples from each of the Plaintiff States. Dr. Yoeli's samples, standing alone, would not establish the number of calls that these telemarketers directed to residential telephone numbers because they are national samples. Dr. Yoeli's sampling, however, corroborates the other evidence, including the testimony of Dish witnesses Bangert, Dexter, and Davis, and others; the testimony of Goodale, Myers, and Baker; the terms of the Retailer Agreements which only authorized sales to residential customers; and the Order Entry Tool could only be used to place residential orders. All of this evidence, without the sampling, would be sufficient to establish that Dish and its Telemarketing Vendors, JSR, and Star Satellite made telemarketing calls to residential telephone numbers. Dr. Yoeli's national sampling corroborates this other evidence. The Court finds that it is more likely than not that the telemarketing calls made by Dish, the Telemarketing Vendors, JSR, and Star Satellite were directed to residential telephone subscribers.
The Plaintiff States have also established that it is more likely than not that Satellite Systems called residential telephone subscribers. The Retailer Agreement only authorized Satellite Systems sales to residential customers for Dish Network programming. The Order Entry Tool could only be used to place residential orders. Satellite Systems, therefore, only made money by calling residential telephone subscribers. Absent any contradictory evidence, the reasonable inference is that Satellite Systems called residential telephone subscribers. Dish has not presented any evidence showing that Satellite Systems called businesses or other non-residential numbers.
The Plaintiff States have further submitted post-trial the verdict entered January 19, 2017, in the class action suit brought by Plaintiffs' witness Dr. Krakauer.
The Court may take judicial notice of the verdict, transcripts, and filings in a public trial.
The verdict has some probative value. A jury heard evidence on the issue and determined that the call recipients were residential telephone subscribers. The probative value is limited, however, because the verdict is subject to review by the trial court under Federal Rule of Civil Procedure 59 and by the Court of Appeals. The verdict, however, is consistent with the terms of the Retailer Agreement and the design of the Order Entry Tool, which both limited sales to residential customers.
With or without the verdict in the Krakauer class action, the Court finds that the preponderance of the evidence shows that Satellite Systems called residential telephone subscribers.
The Plaintiff States alleged that Dish made illegal telemarketing calls directed at residential telephone subscribers residing in the Plaintiff States.
Dr. Yoeli and John Taylor both used telephone area codes to determine whether a call recipient resided in a Plaintiff State.
The Plaintiff States established at summary judgment that Dish engaged in a pattern and practice of making illegal telemarketing calls in violation of the TCPA to residents of the Plaintiff States. The evidence regarding the accuracy of area codes to prove telephone subscribers' states of residence was relevant to the appropriate amount of statutory damages or civil penalties under the various counts.
The North American Numbering Plan Administration (NANPA) assigns telephone area codes to geographic areas within each state, Puerto Rico, Canadian province and territory, and participating Caribbean nation or territory.
Technological changes in telephones allow a telephone customer to have a telephone number with area codes other than the one assigned to their states of residence. Wireless telephone account holders can either keep the same number if they move to other states, or may provide a wireless telephone for a relative or friend
The mobility of wireless telephones is not relevant in this case because Dish, its Telemarketing Vendors, and Order Entry Retailers Star Satellite, JSR, and Satellite Systems directed their calls to residential telephone subscribers, as discussed above. Dish also scrubbed calling lists for itself and its Telemarketing Vendors to remove wireless numbers, either directly or through PossibleNOW.
The evidence at the January and February 2016 trial proceedings showed a high correlation between area code and state of residence. Taylor agreed that prior to November of 2008, that the match between area codes and states of residence for residential landlines was 97 percent.
Dish's employees disclosed for the first time at the January and February 2016 trial proceedings that Dish had possession of information that could verify the state of residency of the individuals that it called. Montano testified that Dish had address information on every intended recipient of the telemarketing calls that made by Dish and its Telemarketing Vendors eCreek and EPLDT (Dish Telemarketing Call Recipients).
The Court determined that Dish should have produced this address information in discovery. The Court ordered Dish to produce this address information in supplemental discovery (Supplemental Discovery). The Court further continued the trial to October 25, 2016, to allow completion of the Supplemental Discovery.
During the Supplemental Discovery, Dish produced eleven different sets of data containing address and telephone number information of Dish Telemarketing Call Recipients (Address Data Sets). On May 26, 2016, Dish's counsel sent an email to Plaintiff California's counsel regarding the production. One of the Address Data Sets (data set 10) contained data from a credit reporting agency TransUnion and another (data set 11) contained marketing data company Speedeon. Dish's counsel stated that Dish secured cold call lists from a marketing database operated by credit reporting agency Equifax. Counsel stated that Equifax sold the relevant database to a company named Epsilon. Epsilon no longer retained such information prior to 2011. Dish secured and produced substitute data from TransUnion and Speedeon.
Counsel for Plaintiff States sent an email to Dish's counsel asking for a description of Address Data Sets 1-9. Plaintiffs' counsel stated that Plaintiffs stated that they understood that the final two Address Data Sets, sets 10 and 11, were data from TransUnion and Speedeon.
Dish's counsel responded by email.
On July 7, 2016, Plaintiffs' expert Dr. Yoeli issued his report. Dr. Yoeli relied on the 11 Address Data Sets produced by Dish; the May 26, 2016 Email, the June 10, 2016 Email, and the June 22, 2016 Email, and the information regarding the list of geographical assignment of telephone area codes by the NANPA.
Dr. Yoeli made the following assumptions about the time period when address information in any Address Data Set was valid (Valid Address). If the Address Data Set included a type of beginning date and ending date (
Dr. Yoeli did not consider the different descriptions of the beginning and ending dates in the Address Data Sets, such as location_begin and location_end in Sets 1 and 1A, the Eff date and Exp date in Set 6, or the "I" and "D" dates in Set 11. Dr. Yoeli testified that those different descriptions were not material to his analysis.
Dr. Yoeli also used seven sets of call records admitted at the initial phase of the trial in January and February 2016 (Call Record Sets). The Call Record Sets contained records of telemarketing calls that Dish made from September of 2007 through March of 2010. The first two Call Record Sets made up the Yoeli July 2012 Call Set. The remaining Call Record Sets were the calls records on which the Court granted partial summary judgment as violations of the TSR. The third, fourth, and fifth Call Record Sets were the No English, Uncompleted, and Inquiry calls records. The sixth Call Record Set, called Taylor, contained the 501,650 call records identified by Taylor in his October 2013 Report. The seventh set, called AM Calls, contained Dish's 98,054 Abandoned Prerecorded Calls.
Dr. Yoeli identified the calls in the Call Records made to telephone numbers with area codes assigned to the Plaintiff States by the NANPA (Relevant State Call Records).
Dr. Yoeli compared the telephone numbers in the Relevant State Call Records with the Valid Addresses associated with those telephone numbers at the times of the calls to determine the extent to which the state of residence in the Address Data Sets agreed with the state assigned to the telephone numbers' area codes by NANPA. Dr. Yoeli identified the times that all Valid Addresses in any of the Address Data Sets matched the NANPA area code geographic assignment (All States Match) and the times that at least one Valid Address in any of the Address Data Sets matched the NANPA area code geographic assignment (Any States Match). The All States Match showed NANPA assigned-state for area codes and state of residency matched 82% to 98% of the time. The Any
Dr. Yoeli concluded, "My analysis shows that, for all Call Sets and All Plaintiff States, the percentage of calls to addresses in the Plaintiff State was at least 82%." PX 1466,
Dr. Yoeli erroneously failed to analyze the data in Address Data Set 1A in his Report. Dr. Yoeli testified that Address Data Set 1A contained about a 10 percent increase in the new data not already included in the other Address Data Sets. T 710:128-29 (Yoeli). Dr. Yoeli assumed that Dish combined Address Data Sets 1 and 1A before providing them to the Plaintiff States. Yoeli testified that he subsequently reviewed the information in Address Data Set 1A and concluded that the data did not change his conclusions materially.
Dr. Yoeli also testified that the Address Data Sets contained multiple addresses for the same telephone number, but the addresses were generally all in one state, "[T]he bulk of the data are for people who never move out-of-state." T 710:149 (Yoeli). Dr. Yoeli testified that the percentage of cases in which that data showed that people moved from one state to another state was 13 percent.
The Court credits Dr. Yoeli's All State Match analysis as probative of the connection between area code and states of residence. The analysis cross-checked states of residency against all the Address Data Sets and only counted as matches those calling records in which the state and area code matched in every Valid Addresses that appeared in all Address Data Sets. The cross-checking meant that the information in the various Address Data States corroborated each other. The corroboration confirmed that the match of state of residency and area code was more likely than not accurate. The All States Match analysis supports Dr. Yoeli's opinion that Call Sets and All Plaintiff States, the percentage of calls to addresses in the Plaintiff State was at least 82%.
The conclusion is further supported by Dr. Yoeli's observation that almost all of the consumers who had the telephone numbers in the Call Sets simply did not change states of residence. Only 13 percent of them changed states of residence. Dr. Yoeli's observation is further supported by U.S. Census data that 5.6 percent of the American population moved to a different state during the five-year period from 2005 to 2010, an average of 1.1 percent per year.
Dish presented the expert opinions of Rebecca Kirk Fair. Kirk Fair holds an MBA in finance and applied economics.
Much of Kirk Fair's opinions are speculative and not based on her expertise in analyzing large data sets. She based much of her opinions on the relative reliability of the address information in the 11 Address Data Sets. Kirk Fair opined on the reliability of each Address Data Set based on the descriptions in the June 22, 2016 Email.
Kirk Fair also criticized Dr. Yoeli's use of dates in the Address Data Sets to decide when the address information in a particular call record was valid. Her criticisms have some validity. In particular, Kirk Fair is correct to question Dr. Yoeli's assumption that addresses are valid indefinitely if the Address Data set has no end date of any kind.
Kirk Fair also criticized Dr. Yoeli for failing to consider the types of calls and their relationships to data sets.
Kirk Fair offered her own alternative analysis of the data. She used a method she called "triangulation." Kirk Fair "triangulated" or looked for logical consistencies and inconsistencies between the data in light of her opinions of the purpose
Kirk Fair prepared an alternative analysis of the address data and call records using her triangulation method.
One aspect of Kirk Fair's triangulation analysis, however, was helpful to the Court as the finder of fact. Kirk Fair's triangulation analysis showed only one state of residence associated with a telephone anywhere from 69 to 99 percent of the time, depending on the Call Record.
Kirk Fair agreed that when a person initially received a residential telephone number, the NANPA geographic assignment of the area code in the number would agree with the subscriber's residency.
The preponderance of the evidence also proves that area codes indicate the states of residency of the residential telephone subscribers to whom Order Entry Retailers
The Plaintiff States also argue area codes show the residency of the intended recipients of Satellite Systems telemarketing calls at issue in this case. The Plaintiff States rely on Taylor's spreadsheet of the 381,811 illegal Registry Calls initiated by Order Entry Retailer Satellite Systems.
Almost all of these records had corresponding addresses in the respective Plaintiff States addresses:
The Court finds that the Plaintiff States have failed to show that this calculation can be applied to remaining calls in the 381,811 call records. The Plaintiff States presented no evidence that the 214,376 call records that had addresses were either a random sample or otherwise representative sample of the 381,811 call records. The Plaintiff States needed expert testimony or some other competent evidence to show that the information about the 214,376 call records could be applied generally to all of the 381,811 call records.
The address information in the Taylor Satellite Systems Spreadsheet is sufficient to establish by a preponderance of the evidence the states of residency for holders of the telephone numbers with specific records that included addresses. The Plaintiffs have failed to present necessary to show that anything more can be drawn from this information.
Dish presented testimony by Taylor regarding the 1,707,713 Dish telemarketing calls from 2007-2010 on which the Court granted partial summary judgment. Dish presented this testimony for the limited purpose of addressing the appropriate amount of civil penalties. Dish's culpability is a relevant factor in awarding civil penalties under at least the TSR.
Taylor prepared the October 14, 2013 Report in response to Dr. Yoeli's December 14, 2012 Revised Report.
Taylor then eliminated calls that were made within 558 days of the latter of the last payment date or the activation date. A total of 18,643,695 Registry calls remained. Taylor found that with respect to these calls: (1) Dish had no record of any payments or activations associated with the intended recipients of these calls; or (2) Dish's records showed that the last payments (or activations if Dish had no subsequent payment records) were more than 558 days before the dates of these calls.
Taylor then eliminated 943,240 calls that were on Lead Tracking System calling campaigns. Taylor again relied on representations from Dish personnel that the Lead Tracking System calling campaigns were calls to inquiry leads made within a day or two of the inquiry.
Taylor then eliminated 532,261 calls because the disposition codes indicated that the telephones of the intended recipients did not ring. The remaining Registry calls totaled 17,168,194.
Taylor then eliminated 41,417 calls because the disposition codes indicated that the calls were calls to businesses or were non-telemarketing calls, such as related to payment reminders. The remaining Registry Calls totaled 17,126,777.
Taylor then eliminated 76,740 calls because the disposition codes stated wrong number or no English. The remaining Registry Calls totaled 17,050,037.
Taylor then eliminated 13,792,511 calls because the campaigns "were only dialed to current customers or former customers
Taylor then eliminated 2,755,876 calls because "Quality Assurance testing" found that the calls were part of non-telemarketing campaigns. The resulting Registry calls totaled 501,650. Taylor opined that he had no basis that these 501,650 Registry Calls were permitted under the Do-Not-Call Laws. The Court granted partial summary judgment on the 501,650 Registry Calls from Taylor's analysis in this October 2013 Report.
A number of Taylor's opinions for excluding calls from the set of calls that violated the Do-Not-Call Laws are legally incorrect or are not supported by any evidence in the record. Taylor excluded 532,261 calls which did not ring the intended recipients' phones, and 76,740 calls that were wrong numbers or to individuals who did not speak English. The Court rejected similar opinions by Taylor at summary judgment.
Taylor excluded 943,240 calls on Lead Tracking System calling campaigns. This opinion is premised on Dish's representations to Taylor that Lead Tracking System calling campaigns are calls to inquiry leads within a day or two of the inquiry.
Taylor excluded 13,792,511 calls because those calls were part of Dish calling campaigns with codes that indicated that the campaigns directed toward current customers or customers who made a payment within 18 months (558 days) of the dates of the calls. As the Court has already explained, calling campaign codes and names are not a reliable method of determining whether Dish had a Transaction-based Established Business Relationship with a customer. Taylor's October 2013 Report demonstrates the lack of reliability of calling campaign names. Taylor identified 18,643,695 telemarketing calls directed to individuals for whom Dish had either: (1) no records of activations or payments, or (2) Dish's records showed that the last payments or activations associated with those records were more than 558 days (or 18 months) before the dates of the calls.
After eliminating Taylor's opinions that have no probative value, Taylor's October 2013 Report supports the finding that from 2007 to 2010, Dish made at least 15,846,402 Registry Calls to individuals with whom Dish had not shown that the calls were made either within three months of inquiries about Dish Network programming, or within 18 months of the intended recipients' last transactions with Dish.
At trial, Taylor revised his opinions from the September 20, 2012 Report (PX 26). The Plaintiffs submitted Taylor's opinions to the Court at summary judgment, and the Court relied on those opinions when it entered partial summary judgment against Dish on 1,707,713 calls in the records of Dish's telemarketing calls in the years 2007-2010.
Taylor opined in the September 20, 2012 Report that certain of the 3,342,415 calls that Dr. Yoeli found to illegal Registry Calls were not violations for various reasons. When Taylor opined that a portion of the 3,342,415 calls were not illegal Registry Calls for a particular reason, he removed or "eliminated" them from the total. Taylor testified that he used a "waterfall" analysis in his assessment. Taylor testified that the waterfall method meant that when he eliminated a set of calls for one reason, he subtracted those calls from the total calls before he considered other reasons for eliminating calls. In this case, Taylor eliminated 309,931 calls because the phones of the intended recipients of the calls did not ring. He subtracted the 309,931 calls from the 3,342,415 calls in the Yoeli July 2012 Call Set to produce a remainder of 3,032,484 calls. He followed
Taylor did not consider whether a call could be eliminated for more than one reason. The Court rejected Taylor's opinions that telemarketing calls were not illegal Registry Calls if the intended recipients' telephones did not ring, if the recipient of the call did not speak English, if the call was intrastate, or if call was part of a Lead Tracking System campaign (collectively Rejected Reasons).
Taylor testified that if he had considered multiple reasons for excluding calls, many more calls would have been eliminated. Taylor opined at trial that the following numbers of calls that he eliminated for Rejected Reasons would also have been eliminated for alternative reasons:
T 633: 3269-73 (Taylor).
Taylor's opinions regarding the 16,107 calls for work orders and the 4,280 calls for other non-telemarketing reasons may have some merit. Montano's trial testimony that he changed his mind may provide some basis to consider a lesser degree of culpability by Dish for these calls. Dish did not present Montano's revision of his opinions regarding calling codes at summary judgment, however, so any argument to avoid liability based on Montano's trial testimony is waived.
Taylor's other revised opinions have no probative value. Dish failed to present competent evidence regarding the formation and scrubbing of the Lead Tracking System calling lists. Dish, therefore, failed to present any evidence to show an Inquiry-based
The evidence regarding 26,077 calls to leads Dish received from the EP Homes website does not establish the dates that consumers made any inquiries or opt-ins on the EP Homes website. The evidence, therefore, does not show that the telemarketing calls were within three months of the inquiries.
Taylor opined that the recipients of the remaining sets of 106,708 calls, 3,559 calls, and 78,947 calls all had Transaction-based Established Business Relationships with Dish because the calls were part of certain calling campaigns. As discussed above, Dish calling campaign names were not a reliable indicator a Transaction-based Established Business Relationship. Taylor's October 2013 Report showed that Dish made at least 13,792,511 calls to people who had not purchased Dish Network programming for at least 18 months, but who were erroneously included in calling campaigns with names that indicated that Dish had Transaction-based Established Business Relationships with them.
Taylor also again offered at trial his opinion that 873,551 of the calls from the 2007-2010 calls for which Dish was liable at summary judgment were not illegal because the calls were made as part of Lead Tracking System calling campaigns.
Taylor's opinions about the effect of his waterfall analysis technique and his use of Rejected Reasons, at best, show that the 1,707,713 Registry calls for which Dish was found liable may have included 16,107 work order calls and 4,280 non-telemarketing calls. Taylor's waterfall analysis did not affect the accuracy of his conclusions with respect to the remaining 1,687,326 calls. The Court will only consider this analysis for purposes of determining the appropriate amount of monetary relief.
Taylor also testified about a detailed analysis of the 501,650 illegal Registry Calls found at summary judgment based on his October 2013 Report. Dish provided Taylor with the calls records of all the campaigns in which the 501,650 calls were made. Taylor broke down the 501,650 illegal Registry Calls into the number made in each specific campaign. Taylor calculated the percentage of the calls in each campaign that were found to be part of the 501,650 illegal calls.
Taylor's Tables have no probative value. Taylor's Tables only considered the 501,650 calls from his October 2013 Report found to be violations at summary judgment. Taylor did not include in his calculations the 15,846,402 Registry Calls in his October 2013 Report that he erroneously excluded. Taylor's Tables, therefore, are not probative of the percentage of Registry Calls in any particular campaign.
Dish's financial condition is relevant to the determination of appropriate monetary relief. The Court must consider Dish's ability to pay and its ability to continue operating when determining an appropriate civil penalty under § 5 of the FTC Act in Counts I-IV. 15 U.S.C. § 45(m)(1) (C). The Court must further consider whether an award would be excessive in violation of due process.
Dish's Annual Report for the period ending December 31, 2016, shows that Dish's parent holding company, Dish Network Corporation (Dish Corp.) had a net worth of approximately $28 billion ($28,091,847,000.00); and for 2016, Dish Corp. had total gross revenues of approximately $15 billion ($15,094,562,000.00) and net after-tax income of approximately $1.4 billion ($1,449,853,000.00), or $3.12 per share.
Dish Corp. also had cash and cash equivalents (cash) of approximately $5.3 billion ($5,323,7255,000.00) as of December 31, 2016.
On August 8, 2016, Dish Corp. completed a private unregistered offering of $3 billion ($3,000,000,000.00) of convertible notes due in 2026. The notes carry an interest rate of 3.375%.
As of December 31, 2015, Dish Corp. had a net worth of approximately $22.9 billion ($22,886,710,000.00), and had total revenues for 2015 of approximately $15 billion ($15,068,901,000.00) and net after-tax income of approximately $747 million ($747,092,000.00).
The 2015 annual income reflected a payment of a penalty of approximately $516 million ($515,555,000.00) to the FCC because two affiliates of Dish Corp., Northstar Wireless and SNR Wireless, failed to complete the purchase of a portion of wireless spectrum for which the two affiliates were the successful bidders at an FCC auction. Dish Corp. owned an 85% interest in Northstar Wireless and SNR Wireless.
Dish had net after-tax income of approximately $1.5 billion ($1,515,907,000.00) in 2011; $945 million ($944,693,000.00) in 2013; and $807 million ($807,492,000.00) in 2014.
As of the time of trial, Dish had approximately $1 billion ($1,000,000,000.00) per month in operating expenses.
Dish made several large one-time payments in the last five years. In 2015, Dish paid $515,555,000.00 to the FCC discussed above. In 2012, Dish paid $700 million ($700,000,000.00) to a company called Voom HD Holding, LLC (Voom), to settle a contract dispute.
The Court bifurcated the trial in this proceeding. The Court continued the trial on issues regarding injunctive relief to the October and November 2016 trial dates. Both parties attempted to present evidence regarding Dish's current operations. Dish attempted to submit evidence of its current practices to show that it is complying
The Plaintiffs sought to produce evidence of new consumer complaints. The Court barred this evidence because the Plaintiffs did not seek leave of Court and the prejudice to Dish from the late disclosure.
The Plaintiffs presented the testimony of David Torok. At the time of trial, Torok had recently retired from the FTC. Before his retirement, Torok was an Associate Director of the FTC's Bureau of Consumer Protection. Torok participated in the launch of the Registry and in the original TSR rulemaking proceeding. Torok later managed the division that ran the Registry and the Consumer Sentinel database of consumer complaints.
Torok testified that prior to the launch of the Registry, consumers were clamoring for help because of unwanted telemarketing calls. Internal Do-Not-Call Lists did not work because even if consumers told one telemarketer not to call, another would. State registries were uneven in their effectiveness.
The FTC staff was surprised by consumer response to the launch of the Registry in 2003. Fifteen million consumers registered telephone numbers in the first five days. Within two months of the launch, 40 million consumers had registered their telephone numbers. Currently, 226 million numbers are registered on the Registry. The number of registered telephone numbers has grown every month. About 100 consumers per month remove their telephone numbers from the Registry.
The FTC continues to receive complaints about illegal telemarketing calls. The FTC receives 200,000 to 300,000 complaints on the Registry complaint system every month. Torok opined that these complaints are the just tip of the iceberg, that the total violations are much higher. Torok testified that consumers are particularly upset about the proliferation of Prerecorded Calls, which he called robocalls.
Torok opined that Registry enforcement, including injunctive relief, was critical. Torok opined that enforcement actions stopped the violator, sent a message to other violators to deter similar practices, and sent a message to consumers that the government was responsive to their complaints and problems. Torok opined that failure to grant injunctive relief would defeat these law enforcement goals and send a bad message to consumers.
Dish witnesses opined on the likely impact of the Plaintiffs' proposed injunction on Dish and its Retailers. The Plaintiff United States submitted a proposed injunction in its pretrial submissions.
The Dish employees opined that these proposed injunctive provisions would cause Dish to lose all of its Retailers and many customers and would impair Dish's ability to get new customers. Under Proposed Injunction § II, Dish could not take any orders from any Retailer because all TVRO and Order Entry Retailers have for several years used the same computer system called Axiom to place orders.
Also, several Dish witnesses testified the ban on telemarketing in Proposed Injunction § I would harm all Retailers, not just Order Entry Retailers. These witnesses testified that TVRO Retailers commonly call customers on the phone. TVRO Retailers return messages from existing and prospective customers inquiring about Dish Network programming. Existing customers contact TVRO Retailers about upgrades or changes in service. Prospective customers leave messages about purchasing Dish Network programming. The ban on all telemarketing would prohibit TVRO Retailers from calling these people back. The Dish witnesses testified that the ban on telemarketing would harm these TVRO Retailers' ability to maintain and develop customers. Several Dish employees opined that the TVRO Retailers would stop selling Dish Network programming and might go out of business, depending on whether the companies could stay in business marketing other products and services.
Dish employees testified that the Order Entry Retailers would stop selling Dish Network programming if the telemarketing ban went into effect. Dish employees opined that many of those Order Entry Retailers would go out of business.
Joshua Slater, a senior vice president of an Order Entry Retailer, Infinity Sales Group, testified that the proposed injunction would put Infinity Sales Group out of business. He testified that Dish sales were 85 percent of Infinity Sales Group's business. He testified that 400 people at Infinity Sales Group would lose their jobs.
Slater said that Infinity Sales Group would be affected by a ban on telemarketing even though Infinity Sales Group engaged inbound telemarketing. Customers may call to inquire about Dish Network, but want to think about the available programming before making a decision. Customers may also call and leave a message requesting a callback. Slater testified that inbound telemarketers, such as Infinity Sales Group, need to be able to call the prospective customer back. Such calls would be telemarketing calls.
Dish employees further opined that Retailers would not work with Dish if they were subject to unannounced inspections by federal government officials pursuant to Proposed Injunction § III. Dish employees opined that such inspections would be intimidating and would hurt the reputation of the business under inspection.
Dish employees opined that large numbers of people would lose their jobs if these provisions of the Proposed Injunction were put in effect. Dish employees estimated that TVRO Retailers accounted for 20 percent of Dish's business, and Order Entry Retailers accounted for 25 percent of Dish's activations.
Finally, CompliancePoint Senior Vice President and General Manager Kenneth Sponsler testified that PossibleNOW and its wholly-owned subsidiary CompliancePoint could perform these telemarketing compliance expert services called for in Proposed Injunction § II A. and B. Sponsler testified that he felt that provision sought to punish PossibleNOW for some reason. He testified that another company would need to invest large amounts of time gaining the necessary expertise to perform the services called for in the Proposed Injunction.
The testimony from the Dish witnesses regarding the possible effects of the Proposed Injunction was speculative, and the witnesses had some bias. Most of the witnesses are Dish employees involved in marketing or Outbound Operations. Witness DeFranco is the co-founder and currently Director and Executive Vice President and, so, has a personal interest the protecting Dish from any restrictive injunction.
Still, some of the Dish witnesses' testimony has some merit. A total telemarketing ban would prohibit anyone in Dish or a Retailer from returning phone calls about purchasing or upgrading Dish Network programming. The ban on taking orders from any Retailer that used the Order Entry Tool's successor Axiom would effectively terminate all Dish Retailers. The requirement to fire any Retailer that made on violation of any Do-Not-Call Laws could be harsh in some circumstances.
Dish witnesses DeFranco and Montano also testified about their attitudes toward illegal telemarketing and the effect on consumers. DeFranco testified that Dish understood the importance of complying with the Do-Not-Call Laws:
Dish's Outbound Operations Manager Montano, however, testified that illegal telemarketing calls in violation of the Do-Not-Call Laws do not harm consumers:
The parties presented the testimony of three additional experts, Kenneth Sponsler, Debra Green, and Dr. Avery Abernethy, Ph.D. The Court makes the following findings regarding these opinions.
Green opined that Dish's practices did not meet industry standards with respect
In addition to testifying as a fact witness in the injunctive phase of the trial, Kenneth Sponsler also testified as an expert witness. Sponsler is an expert on the telemarketing industry standards.
Sponsler also testified about an audit he conducted of Dish's direct marketing practices in May 2010. Dish did not disclose any expert opinions of Sponsler regarding this audit in discovery. The audit itself, however, was admitted into evidence at trial without objection.
Sponsler's audit may say something about Dish's practices after May 2010. The audit, however, was superficial and was based in large part on hearsay interviews with Dish employees.
Sponsler also mentioned in his testimony that some sellers who currently engage telemarketing firms are limiting their monitoring or supervising of telemarketers to avoid findings that the telemarketers are the sellers' agents.
Dr. Abernethy is an economist who has studied the telemarketing industry and the impact of Do-Not-Call Laws on that industry. Dr. Abernethy opined that the Registry is over-inclusive because the FTC Improvements Act of 2007 required the FTC to keep telephone numbers on the Registry until the numbers are both disconnected and reassigned.
The Court finds that Dr. Abernethy's opinion is of little or no probative value. The portion of this case related to the Registry is concerns calls made to persons whose numbers were on the Registry. Dr. Abernethy did not offer any opinion at trial regarding telemarketing calls made to persons whose numbers are on the Registry; he only opined on the injury that may result from calls that were not made.
The Plaintiffs allege twelve Counts against Dish. The Court first makes conclusions of law regarding liability for each Count. The Court then makes conclusions of law regarding Dish's liability for monetary relief. The Court finally makes conclusions of law regarding the Plaintiffs' requests for a permanent injunction.
The Plaintiff United States alleges in Count I:
Dish asserts that all claims based on the Registry are unenforceable because "the Registry violates the First Amendment, both facially, and as applied to Dish."
The Seventh Circuit has held that Do-Not-Call Registry laws do not violate the First Amendment.
Dish argues that the Seventh Circuit did not consider the gist of Dish's First Amendment as-applied challenge. Dish argues that its First Amendment rights were violated because "the Registry was not effectively cleaned."
15 U.S.C. § 6155. Dish argues that the FTC's subcontractor PossibleNOW is not removing from the Registry disconnected and reassigned wireless numbers because the national databases do not include directory information about wireless numbers. Furthermore, Dish argues that the national databases do not include directory information for 25 percent or more of the VoIP telephone lines. As a result, Possible-NOW is not removing from the Registry many disconnected and reassigned VoIP telephone numbers.
Dish argues that, "the Registry and its implementing regulations are not narrowly tailored because the Registry was not properly cleaned of numbers that DISH and other commercial entities had a right to contact."
The Court still concludes that the Seventh Circuit's decision in
Moreover, even assuming that
To establish the first claim in Count I, the United States must prove that Dish initiated outbound telemarketing Registry Calls. To establish the second claim in Count I, the United States must prove the additional element that Dish caused a telemarketer to initiate outbound Registry Calls. Dish agrees that it is responsible for the actions of its Telemarketing Vendors eCreek and EPLDT, but denies that Dish caused the actions of any Retailer.
The Court determined at summary judgment that the undisputed facts established that Dish and its Telemarketing Vendors made 1,707,713 illegal Registry Calls reflected in the 2007-2010 Calling Records.
The Plaintiffs presented evidence at trial that Dish made millions of calls to persons whose telephone numbers were on the Registry from October 2003 to September 2007. The 2003-2007 Calling Records contain 501,513,302 telemarketing call records, and 94,804,008 of the telemarketing calls reflected in those records were made to persons whose numbers were on the Registry for at least 31 days at the times of the calls. The statute of limitations for the United States' claims is five years. The case was filed on March 25, 2009, so the statute extends back to March 25, 2004.
Dish argues that the 2003-2007 Calling Records do not accurately indicate the total number of calls because the 2003-2007 Calling Records contain duplicate records of the same calls. The Court agrees. The June 2005 InterImage Hits Files contained duplicate records of the same call to the same number on the same day at the same time.
The June 2005 Hits File showed duplicates because that particular Hits File showed the date and times of the calls. Most of the InterImage Hits Files included the dates of the calls, but did not include the times. The InterImage Hits Files contained many instances of multiple calls to the same number on the same date.
Taylor opined that from March 2004 to August 2007 Dish made 3,632,468 calls were made to persons whose numbers were on the Registry after disregarding his opinions that had no probative value. Taylor worked from a slightly different call set than the 2003-2007 Call Records produced in response to the FTC Demand. Taylor also did not identify the number of calls after March 25, 2004, to persons on the Registry.
Dish did not present any evidence to show that it had an Established Business Relationship with any of the call recipients from October 2003 to September 2007. The Established Business Relationship exception is an affirmative defense, and Dish has the burden of proof on this issue.
The Court concludes that it is more likely than not that from March 25, 2004 to August 31, 2007, Dish made millions illegal Registry Calls in violation of the TSR, but the United States failed to prove the number of calls with sufficient certainty to impose an civil penalties for specific calls. Dish did not prove that it had an Established Business Relationship with the recipients of any of these calls.
The 2007-2010 Calling Records show that, in addition to the 1,707,713 illegal calls determined at summary judgment, Dish made an additional 1,433,207 illegal Registry Calls in violation of the TSR. Dr. Yoeli opined that the Yoeli July 2012 Call Set of 3,342,415 calls in the 2007-2010 Calling Records were Registry Calls to persons who did not have an Established Business Relationship with Dish. The Court entered summary judgment on 1,707,713 calls made by Dish and its Telemarketing Vendors from September 2007 to March 2010. The United States stipulated that the maximum number of additional violations in Count I for this time period was 1,634,702. The stipulated number of 1,634,702 calls was the remaining calls after subtracting the 1,707,713 calls from the Yoeli July 2012 Call Set of 3,342,415 calls.
The United States conceded that 96,100 of the 1,634,702 calls were made to persons who activated service with Dish within 18 months of the dates of the calls. As such, Dish had an Established Business Relationship with these call recipients. These calls were not violations.
Dr. Yoeli opined that the remaining 1,538,602 calls were all telemarketing calls made to persons whose numbers were on the Registry. Dish presented evidence that 105,395 of the 1,538,602 calls were non-telemarketing
Dr. Yoeli opined that the remaining 1,433,207 were all telemarketing calls made to persons whose numbers were on the Registry. Dish presented no evidence to contradict Dr. Yoeli's opinion with respect to these calls. Therefore, the 1,433,207 calls were illegal Registry Calls in violation of the TSR.
Dish attempted to prove that 1,265,359 of these calls were made to persons who had an Established Business Relationship with Dish. Dish failed to meet its burden on this defense. Taylor opined that Dish had a Transaction-based Established Business Relationship with these calls recipients because the calls were on current customer calling campaigns or because Dish had no disconnect date. These factors are not reliable evidence of a Transaction-based Established Business Relationship for the reasons stated in the Findings of Fact. Dish had the burden to prove the Established Business Relationship exception.
The United States presented evidence that Dish made an additional 2,386,386 illegal calls to numbers in the 2007-2010 Calling Records because the call recipients' telephone numbers were also on the Internal Do-Not-Call Lists of Dish, its Telemarketing Vendors, or one of its Order Entry Retailers. A seller or telemarketer may not call a person who has stated that he did not wish to be called even if the seller or telemarketer has an Established Business Relationship with the person. TSR 16 C.F.R. §§ 310.4(iii)(A) and (B). The 2,386,386 calls are also included in Count II because the calls violated both the probation against Registry Calls and Internal List Calls.
Dish is liable for a total of 5,527,306 telemarketing calls (1,707,713 plus 1,433,207 plus 2,386,386) to persons whose numbers were on the Registry at the times of the calls in violation of the TSR from September 1, 2007 to March 12, 2010. The 2,386,386 calls also are included in Count II totals below. The court in its equitable discretion, will not impose a double recovery of civil penalties for violation of the TSR in Counts I and II for the 2,386,386 calls.
The United States must show that the Order Entry Retailers made telemarketing Registry Calls and that Dish caused the Order Entry Retailers to make those calls. To prove the latter element, the United States must show that (1) Dish retained the Order Entry Retailers, (2) Dish authorized the Order Entry Retailers to market Dish products and services, and (3) the Order Entry Retailers violated the TSR by initiating Dish telemarketing calls to numbers on the Registry.
The Court finds that Dish caused JSR to make 3,315,242 additional Registry Calls in violation of the TSR. Taylor's analysis of the call records show that JSR made these calls from January 2007 through March 2007. The evidence shows that JSR made these calls as an Order Entry Retailer until Dish terminated JSR on February 14, 2007. Thereafter JSR made these calls as an affiliate of another Order Entry Retailer. Goodale testified that JSR continued to operate after February 14, 2007 by using the login of another Order Entry Retailer. Goodale did not identify the other Order Entry Retailer.
The United States claims that Dish is liable for causing Order Entry Retailer Dish Nation to make the same 5,664,273 calls that Dish caused JSR to make. However, the United States failed to show that Dish Nation caused all of these calls. The evidence shows that JSR worked through Dish Nation before August 10, 2006, when JSR became an Order Entry Retailer.
In summary, Dish is liable for the following violations of the TSR in Count I:
2003-2007: Millions of calls, but specific number was unproven September 1, 2007, to March 12, 2010 5,527,306 calls JSR calls caused by Dish 5,664,273 calls Satellite System Calls caused by Dish 381,811 calls _____________________________________ ___________________ Total 11,573,390 calls
As noted above, the Court, in its discretion, will not impose a double penalty under the TSR in Counts I and II for 2,386,386 of the calls that are subject to liability in both Counts.
The United States alleges in Count II:
To establish the first claim in Count II, the United States must prove that Dish initiated outbound telemarketing telephone calls to persons who previously stated that they did not wish to be called by or on behalf of Dish. To establish the second claim in Count II, United States must prove that Dish caused an Order Entry Retailer to initiate an outbound telemarketing telephone call to persons who previously stated that they did not wish to be called by or on behalf of Dish. Dish again agrees that it is responsible for the actions of its Telemarketing Vendors eCreek and EPLDT.
The undisputed evidence at summary judgment showed that Dish made 903,246 Internal List Calls to persons who told Dish or its Telemarketing Vendors that they did not wish to be called by or on behalf of Dish. The Court further found that the undisputed evidence showed that Dish was liable for 140,349 Internal List Calls made to persons who told eCreek that they did not wish to be called by or on behalf of Dish.
The United States seeks to prove that Dish is liable for 7,321,163 additional Internal List Calls that Dish made to persons who told one or more Order Entry Retailers that they did not wish to be called by or on behalf of Dish. The Court found at summary judgment that the United States needed to show that Dish had an agency relationship with the Order Entry Retailers in order to establish liability for these
The United States asks for reconsideration of the Court's determination that the United States must show an agency relationship with the Order Entry Retailers in this Count. The Court denies that request. The TSR states that the seller is liable for a call made to a person when, "[t]hat person previously has stated that he or she does not wish to receive an outbound telephone call made by or on behalf of the seller whose goods or services are being offered...." 16 C.F.R. § 310.4(b)(1)(iii)(A). The TSR does not define to whom the statement must be made. The FTC, however, stated that a do-not-call request was "company-specific" and that the FTC intended § 310.4(b)(1)(iii)(A) to track the approach of the FCC Rule.
The Court further noted at summary judgment that the United States relied on an FCC interpretation of the "on behalf of" language to support its interpretation of § 310.4(b)(1)(iii)(A).
The United States no longer relies on the 2003 FCC Statement, but it now asserts a new interpretation of § 310.4(b) (1)(iii)(A) based on complaints filed in four cases, including this one.
The United States has proven that Dish had an agency relationship with the Order Entry Retailers to telemarket Dish Network programming. The Court discussed agency principles in the summary judgment opinion.
This Court set forth the applicable legal principles of express agency:
In this case, Dish and the Order Entry Retailers agreed that the Order Entry Retailers would act for Dish to market Dish Network programming nationwide. The standard Retailer Agreement authorized Order Entry Retailers to market Dish Network programming and present offers to purchase to Dish for Dish's approval.
Dish also retained extensive authority to control the marketing of its programming and services by Order Entry Retailers. Section 7.3 of the Retailer Agreement gave Dish the authority to control all aspects of marketing of Dish Network programming.
Dish began exerting that control in 2008 and 2009. Dish required Order Entry Retailers to provide their Internal Do-Not-Call Lists to PossibleNOW to be included in a combined Order Entry Retailer Internal Do-Not-Call List. Dish also required certain Order Entry Retailers to use PossibleNOW's scrubbing services. In later part of 2008 and the first part of 2009, Dish fired 40 Retailers for fraud and making misrepresentations to customers. In 2009, Dish fired over half of the Order Entry Retailers for fraud and high churn and required the rest to comply with the more extensive Quality Assurance program or be terminated. Dish's Compliance Manager Musso stated that the Quality Assurance program was authorized by § 7.3 of the Retailer Agreement.
Thereafter, Dish increased the monitoring and control of Order Entry telemarketing. Field Representatives and Account Managers visited Order Entry Retailers on a weekly basis and monitored telemarketing calls. Dish scored Order Entry Retailer telemarketing calls on 45 criteria. The criteria included "right sizing" questions to determine the Dish Network programming that they were to offer the
Sales Managers on occasion: (1) coached Order Entry Retailers on how to increase scores, (2) changed Order Entry Retailer sales procedures, (3) revised sales scripts, and (3) prescribed the work flow of an Order Entry Retailers that did not use a formal telemarketing script. Sales Managers could discipline Order Entry Retailers that did not comply. Sales Managers could withhold Dish programming offers and could restrict access to the Order Entry Tool.
Finally, Dish Sales Managers had the authority to use the "absolute power" clause. That is, Dish Sales Managers had the authority to tell Order Entry Retailers what to do simply, "because I said so."
Dish argues that Dish did not control marketing methods by Order Entry Retailers because Order Entry Retailers wrote their own scripts and secured their own leads. The evidence shows, however, that Dish representatives revised scripts and required Order Entry Retailers to follow the revisions. Dish also on rare occasions provided scripts and also provided lead lists to Order Entry Retailers. This evidence shows that Dish had the authority to provide leads and to provide scripts. The fact that Dish may rarely have exercised these indicia of authority to control does not matter. The issue for purposes of agency analysis is the existence of the authority, not the actual use of the authority.
Dish argues that § 7.3 of the Retailer Agreement did not give Dish the authority to control the Order Entry Retailers' marketing of Dish Network programming. The Court disagrees. Section 7.3 states that Order Entry Retailers "shall take all actions and refrain from taking any action, as requested by EchoStar in connection with the marketing, advertisement, promotion and/or solicitation of orders for Programming and the sale of DISH DBS Systems." Musso cited § 7.3 as authority for the Quality Assurance program. Dish exerted extensive control over Order Entry Retailers through the Quality Assurance program. The plain language of § 7.3 and the Dish's actions beginning in September 2006 and especially after 2008 show that Dish had extensive authority to control the Order Entry Retailers' marketing of Dish Network programming. The after-the-fact, self-serving testimony by several Dish witnesses to the contrary is not credible and does not disprove the actual control exerted by Dish.
Dish also argues that Order Entry Retailers were completely separate companies and as such were independent contractors. Dish cites § 11 of the Retailer Agreement that stated that Order Entry Retailers were independent contractors. Dish also relies on numerous statements by Dish employee witnesses and principles of Order Entry Retailers such as Goodale and Myers to show that Order Entry Retailers ran their own businesses independently from Dish.
Dish argues that even if the Order Entry Retailers were marketing agents, their illegal telemarketing practices were not within the scope of their authority. The Court again disagrees. The concept of scope of authority is broad. An agent has authority to act to further the principal's objectives, "as the agent reasonably understands the principal's manifestations and objectives."
Dish cites
Dish argues that it could not have honored the Order Entry Retailers' Internal Do-Not-Call Lists because it did not have the lists until 2008 when it began requiring certain Order Entry Retailers to give their Internal Do-Not-Call Lists to Possible-NOW. This argument proves too much. If Dish had the authority to require Order Entry Retailers to give Dish access to their Internal Do-Not-Call Lists in 2008, then Dish had the authority to secure access to the Lists in 2003 and 2004 when the Order Entry program began. Dish should have done so. Dish's failure to secure the Internal Do-Not-Call Lists before 2008 does not absolve Dish from responsibility. The Court finds that Dish is liable for 7,321,163 illegal Internal List Calls made to persons who told Order Entry Retailers that they did not wish to receive telemarketing calls on behalf of Dish.
From August 2006 through December 2006, JSR made 418,228 Internal List Calls to persons who stated to Dish or the Telemarketing Vendors that they did not wish to receive telemarketing calls by or on behalf of Dish. From January through March 2007, JSR made 768,696 Internal List Calls to persons who stated to Dish or the Telemarketing Vendors that they did not wish to receive telemarketing calls by or on behalf of Dish. The United States proved that Dish caused these calls to be made. JSR made the calls before August 10, 2006, through Order Entry Retailer Dish Nation. JSR made the calls as an Order Entry Retailer from August 10, 2006, until Dish terminated JSR on February 14, 2007. Thereafter, JSR made the calls through another Order Entry Retailer authorized by Dish to market Dish Network programming.
JSR made some of these calls as an agent of Dish. JSR was an agent of Dish as an Order Entry Retailer from August 10, 2006, until Dish terminated JSR on February 14, 2007. Prior to August 10, 2006, JSR made the calls through Dish Nation. JSR acted as a subagent of a Dish Order Entry Retailer when it made the calls prior to August 10, 2006. Dish can be held liable for the acts of a subagent.
However, Dish disputes that JSR was a subagent of Dish. The Retailer Agreement, § 7.2, did not allow Order Entry Retailers to use third party affiliates or subagents without Dish's prior approval. Dish personnel, however, knew that JSR worked through Dish Nation before becoming an Order Entry Retailer. Dish was also aware that Dish Nation used third-party affiliates. Dish personnel referred to "Dish Nation's affiliate program" and to JSR working under "Dish Nation's umbrella."
The evidence does not establish that Dish allowed JSR to work as subagent
Dish is liable for calls made by Dish or its agents to persons who previously told Dish or its agents that they did not wish to receive such calls.
In 2010 and 2011, Satellite Systems made 22,946 Internal List Calls to persons who previously told Dish that they did not wish to receive such calls. Satellite Systems was Dish's agent for purposes of marketing Dish Network programming at the time. Dish is liable for causing Satellite Systems to make these calls in violation of the TSR.
In 2010 and 2011, Satellite Systems made 42,990 Internal List Calls to persons who previously told an Order Entry Retailer that they did not wish to receive such calls. Satellite Systems and the other Order Entry Retailers were Dish's agents for purposes of marketing Dish Network programming at the time. Dish is liable for causing Satellite Systems to make these calls in violation of the TSR.
In summary, Dish is liable for Dish is liable for the following violations of the TSR in Count II:
Dish Calls on Dish Internal List 903,246 calls Dish Calls on eCreek DNC List 140,349 calls Dish Calls on Order Entry Lists 7,321,163 calls JSR 2006 Calls on Dish Internal List 418,228 calls JSR 2006 Calls on Order Entry Lists 267,439 calls Satellite Systems Calls on Dish Internal List 22,946 calls Satellite Systems Calls on Order Entry Lists 42,990 calls _____________________________________________ _______________ Total 9,116,361 calls
Dish is also liable for a portion of the 1,295,652 (768,696 plus 526,956) Internal List calls that JSR made in 2007, but the Plaintiffs did not prove the number of those calls made before February 14, 2007, while JSR was an agent of Dish. In addition, the Court, in its discretion, will not impose a double penalty under the TSR in Counts I and II for the 2,386,386 calls that are subject to liability in both Counts. The total violations are so large and the amount of the potential civil penalty is so high that the Court finds that one penalty for each call is sufficient in this case.
Count III alleges:
The Court found at summary judgment that Dish was liable for making 98,054 Abandoned Prerecorded Calls in violation of the TSR.
The Court found at summary judgment that Dish was liable for causing: (1) Star Satellite to make 43,100,876 Abandoned Prerecorded Calls in violation of the TSR; (2) Dish TV Now to make 6,637,196 Abandoned Prerecorded Calls in violation of the TSR; and (3) American Satellite for making one Abandoned Prerecorded Call in violation of the TSR.
Dish caused JSR to make these Abandoned Prerecorded Calls for the same reasons Dish caused JSR to make the Registry Calls proven in Count I. The United States is not required to prove an agency relationship to establish liability for abandoned calls. The United States must only prove that Dish caused JSR to make the abandoned calls. TSR 16 C.F.R. § 310.4(b)(iv). Dish authorized Dish Nation to make calls and to use JSR to make calls before August 10, 2006. Dish authorized JSR to make calls from August 10, 2006 until February 14, 2007. Dish authorized the unidentified Order Entry Retailer to make calls and thereby to use JSR to make these abandoned calls from February 14, 2007, until JSR stopped operating in March 2007. The Court finds that Dish is liable for causing JSR to make 1,285,379 abandoned calls in violation of the TSR.
The United States argues that Goodale's estimate supports liability for 5,141,391 Abandoned Prerecorded Calls. However, the testimony from Montano, Dexter and Taylor, however, indicates that Goodale's estimate may overstate the number of completed calls. Given the disagreement, the Court finds that the most conservative estimate meets the preponderance standard on this issue. All four witnesses agreed that at least 10 percent of the calls would have been answered. The Court, therefore, finds that Dish is liable for the conservative number of 1,285,379 Abandoned Prerecorded Calls.
The United States also seeks to prove that Dish caused Order Entry Retailer Dish Nation to make the same 1,285,379 abandoned calls that JSR made. The United States has proven that Order Entry Retailer Dish Nation acted with JSR to make the abandoned calls before August 10, 2006. JSR made calls through Dish Nation before JSR became an Order Entry Retailer. The United States failed to prove that JSR continued to work through Dish Nation after it became an Order Entry Retailer or after February 14, 2007, when Dish terminated JSR's Retailer Agreement. The United States has established that Dish caused Dish Nation to make many abandoned calls through JSR. The United States, however, has not proven the number of abandoned calls Dish caused Dish Nation to make through JSR before August 10, 2006.
The United States proved at summary judgment that Dish caused American Satellite to make one Abandoned Prerecorded Call.
In summary, Dish is liable for the following abandoned calls in violation of the TSR:
Dish AM calls 98,054 calls Star Satellite calls 43,100,876 calls Dish TV Now calls 6,637,196 calls American Satellite call 1 call JSR calls 1,285,379 calls _______________________ ________________ Total 51,121,506 calls
In addition, Dish caused American Satellite to make more abandoned calls, but the number of such calls has not been proven. The 43,100,876 Star Satellite calls also are subject to liability under the TSR in Count IV. The Court, in its discretion, will not impose a double penalty under the TSR in Counts III and IV for these calls. The total violations are so large and the amount of the potential civil penalty is so high that the Court finds that one penalty for each call is sufficient in this case.
Count IV alleges:
To establish the claims in Count IV, the United States must prove "(1) that the [Order Entry Retailers] were violating the TSR; and (2) Dish knew or consciously avoided knowing that the [Order Entry Retailers] were violating the TSR, but still kept paying the Dealers to continue the violations."
The Court entered partial summary judgment in favor of Dish on the United States' claim that Dish provided substantial assistance to Dish TV Now.
The United States has established that Star Satellite violated the TSR by making prerecorded calls that were answered and abandoned in violation of the TSR, 16 C.F.R. § 310.4(b)(1)(iv). The evidence also proves that it is more likely than not that Dish knew about Star Satellite's
Dish was repeatedly put on notice that Star Satellite was making prerecorded telemarketing calls. The most telling evidence is that Dish's Outbound Operations' Manager Bangert knew about Star Satellite's prerecorded calls. Bangert relayed the message through Dish employee Mark Duffy to the Retail Services Escalations Department. Jeff Medina of the Retail Services Escalations Department commented to Margot Williams of Retail Services Escalations, "Are these your boys again?" Retail Services Escalations did nothing. The activations kept coming, and Dish Sales Department employees kept meeting their quotas and getting their bonuses, and Dish kept paying Star Satellite to keep making prerecorded calls that were abandoned when answered. The Court finds that the United States has proven that Dish violated TSR § 310.3(b) by providing substantial assistance to Star Satellite even though Dish knew or consciously avoided knowing that Star Satellite was making abandoned telemarketing calls in violation of TSR § 310.4(b)(1)(iv).
Dish argues that Star Satellite hid its use of prerecorded calls from Dish. The evidence shows that Star Satellite's principal Myers tried to hide Star Satellite's use of prerecorded calls. Myer, however, believed that Dish knew about the use of prerecorded calls. The evidence also shows that Dish knew of the practice anyway and did nothing about it.
Dish argues that the United States improperly seeks to impose liability on Dish in Count IV for the same 43,100,876 calls for which the Court found Dish liable in Count III at summary judgment. The Court disagrees. Dish's actions violated both sections of the TSR, and the United States is entitled to bring claims under both sections.
The United States asks the Court to impose civil penalties for Dish's violations of the TSR. Dish's violations of the TSR are treated as violations of a rule promulgated under the FTC Act regarding unfair or deceptive acts or practices. 15 U.S.C. § 6102(c)(1). A violation of such a rule promulgated under the FTC Act is considered an unfair or deceptive act or practice in violation of § 5 of the FTC Act. 15 U.S.C. §§ 45(a) and 57a(1)(B). The United States is entitled to seek civil penalties for violation of such a rule committed "with actual knowledge or knowledge fairly implied on the basis of objective circumstances that such act is unfair or deceptive and is prohibited by such rule." FTC Act § 5(m)(1)(A), 15 U.S.C. § 45(m)(1)(A).
This Court previously stated, "A person also commits a knowing violation if, under the circumstances, a reasonable, prudent person would have known of the existence of the rule and that his or her acts or omissions violated the rule."
To establish actual knowledge or knowledge fairly implied, the United States must show that, "the defendant or its agent have some knowledge, actual or constructive, of the requirements of the [rule] such that it can be concluded that the defendant or its agent knew or should have known that his conduct was unlawful."
The maximum civil penalty is $11,000 for each violation before February 9, 2009, and $16,000 for each violation after that date.
Dish personnel knew that the Registry and the TSR prohibited Registry Calls unless Dish had Established Business Relationships with the intended call recipients. Dish went to great lengths to prepare for the launch of the Registry. Dish developed a scrubbing process for Account Number Campaigns to limit Registry Calls.
Dish personnel also knew from as early as 2004 that Dish direct telemarketing was making illegal Registry Calls. Beginning in 2004, Dish received numerous consumer complaints about illegal Registry Calls. Dish conducted audits in 2007 and 2009 and found in three-month periods in 2005 and 2008, Dish made thousands of illegal Registry Calls. Dish personnel further knew that eCreek's scrubbing process did not work correctly sometimes. Dish, therefore, knew that Registry Calls were generally prohibited by the TSR and knew that its outbound telemarketing procedures resulted in Registry Calls in violation of the TSR.
In addition, Dish used ineffective methods to determine whether it had a Transaction-based Established Business Relationship with current and former customers. Dish knew that the TSR provided that a Transaction-based Established Business Relationship existed if the call recipient purchased goods or services from Dish within the 18 months immediately preceding the date of the call. 16 C.F.R. § 310.2(o). Dish personnel did not follow the clear language of the TSR. Dish personnel did not check the dates that intended call recipients paid Dish for Dish Network programming to determine if Dish had Transaction-based Established Business Relationships. Dish personnel looked to lists of current customers and disconnect dates. According to Taylor's analysis of Dish's calling records from 2007-2010, Dish thereby made over 15 million illegal Registry Calls to persons who had not paid Dish for more than 18 months. Dish did not have Transaction-based Established Business Relationships with these individuals.
Dish is a sophisticated multi-billion dollar business operation. Dish personnel knew the TSR definition of an Established Business Relationship. The definition set the 18-month period from the date of the last purchase or financial transaction. Such an enterprise would have known to determine whether a call recipient purchased goods or services from it within the last 18 months by checking the last date a call
Dish personnel also knew that Dish could not call persons on the Lead Tracking System if the telephone number was on the Registry. Dish had the burden to show that it had an Inquiry-based Established Business Relationship to avoid liability. Dish failed to meet its burden of proof. Dish failed to present competent evidence of how it formulated the Lead Tracking System calling campaigns.
Moreover, the scant evidence about the Lead Tracking System indicates that the Lead Tracking System included contact information for any persons who provided such information to Dish for almost any reason.
Dish, therefore, made the millions of illegal Registry Calls from March 25, 2004 to September 2007, and 3,140,920 illegal Registry Calls recorded from September 2007 to March 2010 with knowledge or knowledge fairly implied that it was making calls in violation of the TSR. Dish made an additional 2,386,386 Registry Calls that were also illegal Internal List Calls. The Court will discuss liability for these calls in connection with Count II.
Dish presented numerous witnesses who testified that Dish acted in good faith and never intentionally made an illegal call. Dish's expert Kenneth Sponsler further opined that Dish met industry standards. Neither good faith nor compliance with industry standard is a defense. The issue is whether Dish knew the requirements of the TSR and knew or should have known that its outbound telemarketing practices resulted in illegal Registry Calls. The evidence shows that Dish knew the terms of the TSR and knew or should have known that their outbound calling procedures resulted in Registry Calls to persons who did not have Established Business Relationships with Dish. The fact that Dish employees acted in good faith when they knowingly made such calls or that industry standards would allow such illegal calls is not a defense.
The only applicable defense is the TSR safe harbor defense. Dish's expert Sponsler acknowledged as much in his testimony.
Dish knew the TSR prohibited causing telemarketers to make Registry Calls, Internal List Calls, and abandoned calls. 16 C.F.R. § 310.4(b)(1). Dish also had knowledge fairly implied under objective circumstances it could be held liable under the TSR for causing the actions of telemarketers that it authorized to sell its programming and services through telemarketing. Dish was a sophisticated enterprise with knowledgeable counsel. Dish put together the Working Group a year ahead of time to prepare for the TSR. Under these objective circumstances, Dish would have known that it would be liable for telemarketers' actions. In 2004, the FTC published a Guide for complying with the TSR which alerted Dish to its responsibility for its Order Entry Retailers:
A sophisticated enterprise in Dish's position with Dish's legal staff would have known that the FTC Guide stated that the seller was ultimately responsible for the actions of its telemarketers, "unless it could demonstrate that it monitored and enforced Do Not Call compliance and otherwise implemented its written procedures."
Dish argues that it should not be held vicariously liable for actions of Order Entry Retailers because they were independent contractors. However, Dish's liability for causing the acts of its Order Entry Retailers is not vicarious liability. Rather, sellers cause telemarketers to make Registry Calls, Internal List Calls, and abandoned calls by retaining and authorizing Retailers to market the sellers' products.
Vicarious liability, however, may be an alternate basis for imposing liability on sellers such as Dish for the acts of agents.
The TSR civil penalty provisions require not only proof of the illegal acts, but proof of knowledge or knowledge fairly implied under objective circumstances that the acts violated the TSR. The knowledge of the agent about a matter material to an agent's duties is imputed to the principal unless the agent is acting adversely to the principal.
Dish argues that the Order Entry Retailers were acting adversely to Dish because they were using illegal methods and because they had high churn rates.
Dish also cites a case involving an employer-employee relationship to argue that the United States must prove that Order Entry Retailers received the knowledge of their illegal acts while acting within the scope of authority and that they had a duty to speak to Dish.
General agency principles do not apply to impose vicarious liability for punitive damages on the principal for the acts of its agents done within the scope of the agency. Under the agency law of the United States and the Plaintiff States, a principal is vicariously liable for punitive damages awarded for the actions of its agents if the principal or a manager of a corporate principal knew of the actions or later ratified the actions.
Restatement (Third) of Agency § 7.03 comment e states that with respect to a statute that authorizes a penalty, "unless the language of the statute itself resolves the question, the determination should reflect the purpose of the statute." The Court directed the parties to submit supplemental briefing to address whether agency law regarding a principal's liability for punitive damages for the actions applied to the claims for monetary relief in this action.
Upon careful consideration of the parties' supplemental submissions on this issue and the Court's research, the Court concludes that, in light of the purpose of the FTC Act, the special agency rules for punitive damages do not apply to liability for civil penalties under § 5(m) of the FTC Act. The FTC Act serves a markedly different purpose than punitive damages. Punitive damages punish egregious or outrageous conduct done with evil motive or reckless disregard for the rights or interest of others.
Congress enacted the FTC Act to establish an expert administrative body to stop unfair and deceptive practices in the marketplace.
Congress added civil penalties to ensure compliance with FTC cease and desist orders and FTC regulations, not to punish egregious or outrageous conduct. Section 5(m) does not require proof of outrageous or egregious violations. That section only requires knowledge or knowledge fairly implied under objective circumstances that the acts in question violated the applicable rule. Congress made culpability a factor in determining the amount of penalties, but not to determining liability for penalties.
Applying agency punitive damages principles to FTC Act § 5(m) civil penalties would interfere with the Congressional goals of effective enforcement. Sellers would have incentives to avoid monitoring telemarketers so that they could assert a defense of no actual knowledge to TSR and FTC Act claims for civil penalties. The TCPA requirement to show an agency relationship between seller and telemarketer has already discouraged some sellers from monitoring telemarketers. These sellers have avoided implementing Do-Not-Call monitoring or enforcement procedures over telemarketers in order to assert a defense of no agency to TCPA claims.
The Supreme Court has determined in the context of Title VII of the Civil Rights Act of 1964 that agency law principles do not apply to statutory claims when the agency law would frustrate Congressional purposes. The Supreme Court stated that applying common law agency principles in Title VII punitive damages "would reduce incentives for employers to implement antidiscrimination programs.... Dissuading employers from implementing programs or policies to prevent discrimination in the workplace is directly contrary to the purposes underlying Title VII."
Pursuant to these legal principles, Dish acted with knowledge fairly implied when it caused JSR to make 2,349,031 illegal Registry Calls in 2006. Dish retained JSR as an Order Entry Retailer to market Dish Network programming. Dish authorized JSR to conduct telemarketing. Under the objective circumstances of this case, Dish knew or should have known that it was liable under the TSR for causing JSR's illegal Registry Calls. Dish did not provide JSR with written Do-Not-Call compliance procedures. Dish is liable for civil penalties for causing JSR to make these illegal Registry Calls.
Alternatively, Dish is liable because JSR was Dish's agent or subagent for telemarketing Dish Network programming in 2006. Dish was liable for JSR's actions within the scope of the agency. JSR's Registry Calls were within the scope of the agency. Dish and JSR knew that making telemarketing calls to persons whose numbers were on the Registry violated the TSR. One of JSR's partners, Goodale, knew JSR was making illegal Registry Calls. Goodale knew that his partners did not scrub calling lists to remove numbers on the Registry. This knowledge is imputed to Dish. Furthermore, Dish received consumer complaints that JSR was making Registry Calls. Dish acted with knowledge fairly implied under objective circumstances when its agent JSR made 2,349,031 illegal Registry Calls in 2006.
Dish acted with knowledge fairly implied when it caused JSR to make 3,315,242 illegal Registry Calls in 2007. Dish retained JSR as an Order Entry Retailer to market Dish Network programming. Dish authorized JSR to conduct telemarketing through February 14, 2007. Dish retained the other Order Entry Retailer through which JSR conducted telemarketing after February 15 and March 2007. Under the objective circumstances of this, case Dish knew or should have known that it was liable under the TSR for causing JSR's illegal Registry Calls either directly as an Order Entry Retailer or through the other Order Entry Retailer. Dish did not provide any Order Entry Retailer with written Do-Not-Call compliance procedures. Dish is liable for civil penalties for causing JSR to make these illegal Registry Calls.
Dish is vicariously liable for the millions of calls that JSR made as Dish's agent until Dish terminated JSR as an Order Entry Retailer on February 14, 2007. JSR knew it was making Registry Calls and that such calls were illegal. This knowledge is imputed to Dish. Thereafter, JSR made the calls through March 2007 through an Order Entry Retailer. The United States has not shown that Dish had knowledge of these calls or authorized JSR to act as a sub agent when it made these calls. The United States has proven that Dish vicariously liable under agency principles when it acted with knowledge fairly implied through its agent JSR to make millions of Registry calls in 2007, but the United States has not proven the number of calls.
Dish acted with actual knowledge or knowledge fairly implied when it caused Satellite Systems to make 381,811 Registry
Alternatively, Dish is vicariously liable for its agent Satellite Systems' 381,811 illegal Registry Calls. Dish knew Registry Calls violated the TSR. Dish further knew that Satellite Systems was making these illegal calls. Dish consciously decided to do nothing about it. Dish told injured consumers to go after Satellite Systems. Dish therefore is liable for civil penalties for these calls.
Dish acted with knowledge or knowledge fairly implied under objective circumstances when Dish and its Telemarketing Vendors made 903,246 Internal List Calls between September 2007 and March 2010 to persons who previously stated to Dish or one of the Telemarketing Vendors that they did not wish to receive telemarketing calls by or on behalf of Dish. Dish personnel clearly knew that it was not supposed to call individuals who told Dish or its Telemarketing Vendor that they did not wish to receive telemarketing calls by or on behalf of Dish. Dish has maintained an Internal Do-Not-Call List since 1998. Dish further required its Telemarketing Vendor eCreek provide Dish with its Do-Not-Call requests. Telemarketing Vendor EPLDT used Dish's dialers and put its Do-Not-Call requests onto Dish's Internal Do-Not-Call List directly. Dish personnel also knew from its investigations of consumer complaints and its internal audits that it made calls to persons on Internal Do-Not-Call Lists. The Court finds that a person in Dish's position would have known that it was making these illegal calls.
Dish acted with knowledge or knowledge fairly implied under objective circumstances when Dish made 140,349 Internal List Calls between September 2007 and March 2010 to persons who previously stated to Dish's Telemarketing Vendor eCreek that they did not wish to receive telemarketing calls by or on behalf of Dish. Again, Dish personnel knew that Dish was not supposed to call individuals who told its Telemarketing Vendor that he or she did not wish to receive telemarketing calls by or on behalf of Dish. Dish further had eCreek provide Dish with Do-Not-Call requests made to eCreek. Dish personnel also knew from its investigations of consumer complaints that it made calls to persons on Internal Do-Not-Call Lists. The Court finds that a person in Dish's position would have known that it was making these calls.
Dish acted with knowledge or knowledge fairly implied under objective circumstances when Dish and the Telemarketing
Dish argues that it should not be subject to civil penalties for these calls because Dish could not have known that this Court would find that it was obligated to honor do-not-call requests made to Order Entry Retailers. Dish argues that the question of whether it had to honor do-not-call requests to Order Entry Retailers was undecided until the Court made these findings of fact and conclusions of law. Dish argues that the fact that Plaintiffs had to prove an agency relationship with Order Entry Retailers was unknown until the Court entered partial summary judgment. Dish argues that a person in its position in 2004 to 2010 would not have known that it had to honor do-not-call requests to Order Entry Retailers.
The Court disagrees. Dish knew that it had to honor do-not-call requests made to its telemarketing agents. Dish set up procedures to honor Do-Not-Call requests made to its agents eCreek and EPLDT. The Court's conclusion that Order Entry Retailers were Dish's marketing agents was based on well-established principles of agency law. Under the objective circumstances of this case, a reasonable person in Dish's position would have known that Order Entry Retailers were marketing agents. Such a person would have known not to call people who told Order Entry Retailers not to make telemarketing calls by or on behalf of Dish. Dish is liable for civil penalties on these 7,321,163 calls.
Dish acted with knowledge or knowledge fairly implied when Dish caused JSR to make 418,228 Internal List Calls in 2006 to persons who stated to Dish or the Telemarketing Vendors that they did not wish to receive telemarketing calls by or on behalf of Dish. JSR was Dish's agent or subagent for telemarketing Dish Network programming in 2006. Dish knew that making telemarketing calls to persons who stated that they did not wish to be called by or on behalf of Dish violated the TSR. Dish further knew that its agents had to honor Do-Not-Call requests made to Dish.
Dish acted with knowledge or knowledge fairly implied when Dish caused JSR to make hundreds of thousands of Internal List Calls from January through February 14, 2007, to persons who stated to Dish or the Telemarketing Vendors that they did not wish to receive telemarketing calls by or on behalf of Dish. JSR was Dish's agent or subagent for telemarketing Dish Network programming. Dish knew that making telemarketing calls to persons who
Dish acted with knowledge or knowledge fairly implied when Dish caused JSR to make 267,439 Internal List Calls in 2006 to persons who stated to Order Entry Retailers that they did not wish to receive telemarketing calls by or on behalf of Dish. JSR was Dish's agent or subagent for telemarketing Dish Network programming from July 2006 to February 14, 2007. The other Order Entry Retailers were also Dish's marketing agents. Dish knew that making telemarketing calls to persons who stated that they did not wish to be called by or on behalf of Dish violated the TSR. Dish further knew that its agents had to honor Do-Not-Call requests made to Dish or its other agents.
Dish acted with knowledge or knowledge fairly implied when Dish caused JSR to make hundreds of thousands of Internal List Calls from January through February 14, 2007, to persons who stated to Order Entry Retailers that they did not wish to receive telemarketing calls by or on behalf of Dish. JSR was Dish's agent or subagent for telemarketing Dish Network programming from July 2006 to February 14, 2007. Dish knew that making telemarketing calls to persons who stated that they did not wish to be called by or on behalf of Dish violated the TSR. Dish further knew that its agents had to honor do-not-call requests made to Dish or its other agents. The United States proved that JSR made 526,956 such calls from January through March 2007, but the United States did not prove the number made while JSR was an agent of Dish prior to February 14, 2007.
Dish acted with knowledge or knowledge fairly implied when Dish caused Satellite Systems to make 22,946 telemarketing calls to persons who stated to Dish that they did not wish to receive telemarketing calls by or on behalf of Dish. Satellite Systems was Dish's agent for telemarketing Dish Network programming. Dish knew that making telemarketing calls to persons who stated that they did not wish to be called by or on behalf of Dish violated the TSR. Dish further knew that its agents had to honor do-not-call requests made to Dish or its other agents.
Dish acted with knowledge or knowledge fairly implied when Dish caused Satellite Systems to make 42,990 telemarketing calls to persons who stated to Dish that they did not wish to receive telemarketing calls by or on behalf of Dish. Satellite Systems was Dish's agent for telemarketing Dish Network programming. Dish knew that making telemarketing calls to persons who stated that they did not wish to be called by or on behalf of Dish violated the TSR. Dish further knew that its agents had to honor do-not-call requests made to Dish or its other agents.
Dish acted with knowledge or knowledge fairly implied when it made 98,054 Abandoned Prerecorded Calls that were answered by a person and abandoned those calls in violation of TSR 16 C.F.R. § 310.4(b)(4)(iv) Dish personnel knew that Prerecorded Calls were illegal. The FTC stated in 2003 and 2004 that Prerecorded Calls that were answered by a person were abandoned calls in violation of the TSR.
Dish argues that courts disagree on this issue. Dish cites
Dish also notes that the FTC stated in 2006 that some individuals criticized the abandonment provision as ambiguous.
A sophisticated business enterprise in Dish's situation with both in-house and outside counsel would have known that Prerecorded Calls that were answered were Abandoned Prerecorded Calls that violated the TSR. The evidence also proves that Dish personnel in fact knew that Prerecorded Calls were illegal. Dish's arguments to the contrary are not persuasive.
With this knowledge, Dish made the Prerecorded Calls, and 98,054 of the calls were answered. A person in Dish's position would have known that these calls violated the TSR. Dish Outbound Operations personnel knew such calls were prohibited. Dish is liable for civil penalties for these calls. Dish acted with knowledge and knowledge fairly implied under objective circumstances.
Dish acted with knowledge or knowledge fairly implied based on objective circumstances when it caused Dish TV Now to make 6,637,196 Abandoned Prerecorded Calls that were answered by a person and abandoned in violation of the TSR. Dish TV Now was an Order Entry Retailer. Dish caused Dish TV Now to engage in telemarketing because Dish retained Dish TV Now as an Order Entry Retailers and authorized Dish TV Now to engage in telemarketing Dish Network programming. Dish took no step to enforce or monitor Do-Not-Call compliance. Under the objective circumstances in this case, a person in Dish's position knew or should have known that Prerecorded Calls that were answered by a person were abandoned calls in violation of the TSR. Dish is liable for civil penalties for these calls. Dish is, therefore, liable for civil penalties for causing Dish TV Now to make these illegal Abandoned Prerecorded Calls.
Alternatively, Dish is liable for civil penalties for the actions of its agent Dish TV Now. Dish's agent Dish TV Now made these Abandoned Prerecorded Calls through Guardian. Dish TV Now's knowledge of these Abandoned Prerecorded Calls is imputed to Dish. Under these circumstances Dish is alternatively liable for its agents' illegal calls.
Alternatively Dish is liable for civil penalties for the actions of its agent Star Satellite. Star Satellite was an agent of Dish when it had Guardian make these Prerecorded Calls. As Dish's agent, Star Satellite knew that Guardian was making Prerecorded Calls on its behalf. Dish also knew that Star Satellite made these Prerecorded Calls. Dish knew or reasonably should have known that Prerecorded Calls that were answered by a person were abandoned calls in violation of the TSR. Dish is, alternatively, liable for civil penalties for these actions of its agent Star Satellite.
Dish acted with actual knowledge or knowledge fairly implied when it caused JSR to make 1,285,379 Prerecorded Calls that were answered by a person and Abandoned Prerecorded Calls in violation of the TSR. Dish caused JSR and the other Order Entry Retailers through which JSR worked to engage in telemarketing because Dish retained them as Order Entry Retailers and authorized them to engage in telemarketing Dish Network programming. Dish had actual knowledge that Star Satellite was making Prerecorded Calls. Vice President Mills, Regional Sales Manager Oberbillig, and Dish Representative Tchang knew from the beginning that JSR was making "press 1" prerecorded telemarketing calls. Dish, therefore, knew that JSR was making Prerecorded Calls to sell Dish Network programming. A person in Dish's position would have known that when individuals answered those calls, the calls would become Abandoned Prerecorded Calls in violation of the TSR. Dish is liable for civil penalties for these calls.
Alternatively, Dish is liable for the Abandoned Prerecorded Calls that JSR made as Dish's agent. JSR was an agent or subagent of Dish when it made many of these Prerecorded Calls prior to February 14, 2007. Dish personnel knew its agent JSR was making Prerecorded Calls. Dish knew or reasonably should have known that Prerecorded Calls that were answered by a person were Abandoned Prerecorded Calls in violation of the TSR. The United States, however, did not prove the number of calls that were made before February 14, 2007. Under the agency analysis, Dish is liable for penalties for these Abandoned Prerecorded Calls, but the number of calls that JSR made while Dish's agent has not been proven.
Dish acted with knowledge or knowledge fairly implied when it caused American Satellite to make the one Abandoned Prerecorded Call proven at summary judgment, and also, many more Abandoned
Dish also acted with actual knowledge when it caused American Satellite to make many more Abandoned Prerecorded Calls. Castillo told Musso and Eichhorn that American Satellite was making Prerecorded Calls. Dish knew or reasonably should have known that Prerecorded Calls that were answered by a person were Abandoned Prerecorded Calls in violation of the TSR. The United States has not proven the number of such Abandoned Prerecorded Calls that it caused American Satellite to make.
Alternatively, Dish is liable for civil penalties for the actions of its agent American Satellite. American Satellite was an Order Entry Retailer and, so, an agent of Dish. As Dish's agent, American Satellite knew that it was making Prerecorded Calls, including the one call proven at summary judgment. This knowledge is imputed to Dish. Under the objective circumstances, a person in Dish's position knew or should have known that the call was an Abandoned Prerecorded Call in violation of the TSR. Dish is liable for civil penalties for this action of its agent American Satellite. Dish is also liable for civil penalties for the many more abandoned calls that American Satellite made, but the number of such calls has not been proven.
Dish acted with knowledge when it provided substantial assistance to Star Satellite after it knew that Star Satellite was using Prerecorded Abandoned Calls to sell Dish Network programming and continued to pay them and do business with them as an Order Entry Retailer. Dish is liable for civil penalties for providing substantial assistance to Star Satellite to make the 43,100,876 Abandoned Prerecorded Calls in violation of the TSR 16 C.F.R. § 310.3(b). The Court, however, determines that it will impose only one civil penalty for these calls even though the United States proved liability in both Count III and Count IV. The total violations are so large and the amount of the potential civil penalty is so high that the Court finds that one penalty for each call is sufficient in this case.
Dish argues, alternatively, that the violations should be counted as one continual refusal to comply with the TSR rather than separate violations for each call. In cases of a continual refusal to comply with an FTC rule, the FTC Act authorizes a penalty of up to $11,000.00 per day before February 9, 2009, and $16,000.00 per day thereafter. 15 U.S.C. § 45(m)(1)(C). The continual violation provision may apply when a party continues to violate the FTC Rule but the number of violations is unclear.
The daily penalty may be appropriate for the millions of illegal calls that Dish made or caused with knowledge or knowledge fairly implied under objective circumstances of this case, but the number of which the United States did not prove with sufficient certainty. The United States, however, did not ask for such an additional penalty so the Court will not award such a sum. The maximum possible penalty for the proven calls is so large that an additional daily penalty is not necessary to serve the interests of justice.
The FTC Act directs the Court to consider several factors when determining the appropriate penalty, including the ability to pay and to continue to do business. 15 U.S.C. § 45(m)(1)(C). Dish's ability to pay and to continue to do business will depend, in part, on the amount of penalties and statutory damages that are appropriate under the other Counts in this case. The Court determines the appropriate amount of the penalties or statutory damages for all Counts below after determining liability generally and liability for penalties or statutory damages in the remaining Counts.
Count V is the first of two claims brought by the Plaintiff States for violations of TCPA. Count V alleges in pertinent part:
Count V contains two parts: (1) Dish allegedly engaged in a pattern or practice of making telemarketing calls to residents of the Plaintiff States who registered their residential telephone numbers on the Registry; and (2) Retailers acting on Dish's behalf allegedly engaged in a pattern or practice of making telemarketing calls to residents of the Plaintiff States who registered their residential telephone numbers on the Registry. The statute of limitations is four years under the TCPA, and so, the period of liability extends back to March 25, 2005. 28 U.S.C. § 1658;
Dish again agrees that the Telemarketing Vendors were acting on its behalf. Dish disputes that the Order Entry Retailers were acting on its behalf.
In 2006 and 2007, Dish made the following Registry Calls to telephone numbers with area codes associated with the Plaintiff States:
The Plaintiff States rely on Taylor's analysis for these numbers. The numbers are less than the numbers of Registry Calls Dr. Yoeli found were made to numbers with Plaintiff States' area codes after
The preponderance of the evidence established that the intended call recipients Registry Calls were residential telephone subscribers and residents of the respective Plaintiff States associated with the respective area codes. Dish is liable for these Registry Calls in Count V for violation of the FCC Rule and the TCPA.
The Court found at summary judgment that Dish was liable for making 1,707,713 Registry Calls for which Dish did not prove an Established Business Relationship exception. The portion of the 1,707,713 calls made to telephone numbers associated with the Plaintiff States were:
The preponderance of the evidence established that the intended call recipients Registry Calls were residential telephone subscribers and residents of the respective Plaintiff States associated with the respective area codes. Dish is liable for these Registry Calls in Count V for violation of the FCC Rule and the TCPA.
The Court found in Count I above that Dish made an additional 2,386,386 Registry Calls that were also Internal List Calls. As explained above, the Order Entry Retailers were agents of Dish for telemarketing purposes. Dish, therefore, is liable for failing to honor the Internal Lists of the Order Entry Retailers as well as its own Internal List and eCreek's Internal List. As a result, Dish could not have an Established Business Relationship exception for any of these Registry Calls. The portion of the 2,386,386 calls made to Plaintiff States area codes were:
The preponderance of the evidence established that the intended call recipients Registry Calls were residential telephone subscribers and residents of the respective Plaintiff States associated with the respective area codes. These Registry Calls violated the FCC Rule and the TCPA and Dish is liable for them as alleged in Count V.
The Plaintiff States, unlike the United States, do not seek to impose liability for these calls separately as Internal List Calls. The Court therefore will award statutory damages for these violations in this Count because the award would not result in a double recovery by the Plaintiff States for these calls under the FCC Rule and the TCPA.
The Plaintiff States failed to prove the source of the set of 4,075,766 calls records which they provided Dr. Yoeli to perform his analysis on this point. The Plaintiff States failed to prove that Dish was liable for those calls in the 2,475,432 call records made to Plaintiff States' area codes. This set of calls was subject to the parties' stipulation to proportionately reduce the number of calls for which Dish would be
This Court entered partial summary judgment that Dish caused JSR made 2,349,031 Registry Calls in 2006 in violation of the TSR.
JSR also made 3,315,242 Registry Calls from January through March 2007. For the reasons stated above, the Plaintiffs failed to show that JSR was an agent or subagent of Dish after Dish terminated JSR on February 14, 2007, and failed to prove the number of Registry calls made before February 14, 2007. The Plaintiff States, therefore, proved that JSR made illegal Registry Calls as an agent of Dish in 2007, and made some of those calls to residential telephone subscribers in the Plaintiff States, but they failed to prove the number of violations for which Dish would be liable.
This Court entered partial summary judgment that Dish caused Satellite Systems made 381,811 Registry Calls in 2010 and 2011 in violation of the TSR.
The preponderance of the evidence showed that of these calls the number of calls made to residential telephone subscribers of the respective Plaintiff States.
In summary, Dish is liable to the Plaintiff States for Registry Calls in violations of the FCC Rule and TCPA in Count V as follows:
California 2003-2007 Calling Records 266,514 calls 1,707,713 TSR Summary Judgment Calls 216,867 calls 2,386,386 Registry and Internal List Calls 302,983 calls JSR Calls 473,102 calls Satellite Systems Calls 24,100 calls __________________________________________ _______________ Total 1,283,566 calls
Illinois 2003-2007 Calling Records 112,116 calls 1,707,713 TSR Summary Judgment Calls 83,895 calls 2,386,386 Registry and Internal List Calls 118,289 calls JSR Calls 369,384 calls Satellite Systems Calls 10,048 calls __________________________________________ _____________ Total 693,732 calls
North Carolina 2003-2007 Calling Records 85,093 calls 1,707,713 TSR Summary Judgment Calls 52,961 calls 2,386,386 Registry and Internal List Calls 97,785 calls JSR Calls 18,250 calls Satellite Systems Calls 7,290 calls __________________________________________ _____________ Total 261,379 calls
Ohio 2003-2007 Calling Records 98,207 calls 1,707,713 TSR Summary Judgment Calls 77,991 calls 2,386,386 Registry and Internal List Calls 95,275 calls JSR Calls 129,004 calls Satellite Systems Calls 12,803 calls __________________________________________ _____________
Total 413,280 calls
Grand Total for all Registry Call Violations in Count V California 1,283,566 calls Illinois 693,732 calls North Carolina 261,379 calls Ohio 413,280 calls Grand Total for Count V 2,651,957 calls
Count VI alleges, in pertinent part:
The Court entered partial summary judgment that Dish and its Telemarketing Vendors made 98,054 Abandoned Prerecorded Calls in that were answered by persons, and so, were abandoned calls in violation of the TSR.
These were Prerecorded Calls and the preponderance of the evidence shows that the intended recipients were residential telephone subscribers of the respective Plaintiff States. The Plaintiff States have established a prima facie case for liability for these calls for violation of the FCC Rule and TCPA as alleged in Count VI.
Dish asserts that the Prerecorded Calls did not violate the FCC Rule or TCPA because Dish had a Transaction-based Established Business Relationship with the intended recipients. Dish has the burden to prove this exception to liability.
The Court entered partial summary judgment that Dish was liable for causing Order Entry Retailers Dish TV Now, Star Satellite, JSR, and American Satellite to make Abandoned Prerecorded Calls that were answered and became abandoned calls in violation of the TSR.
The Court found at summary judgment that Dish caused Star Satellite to make 43,100,876 Abandoned Prerecorded Calls between July and November 2005. The portion of the 43,100,876 calls that Star Satellite made to telephone numbers with Plaintiff States area codes were:
For the reasons stated above, the preponderance of the evidence shows that Star Satellite was Dish's agent for telemarketing when it made these calls, the intended recipients of the calls were residential telephone subscribers, and the intended recipients resided in the Plaintiff States associated with the recipients' respective area codes. Dish is liable for these calls made in violation of the FCC Rule and the TCPA, as alleged in Count VI.
Dish is liable for Prerecorded Calls made in violation of the FCC Rule and TCPA in Count VI as follows:
California Dish and Telemarketing Vendor Calls 23,020 calls Star Satellite Calls 5,727,417 calls ___________________________________ _______________ Total 5,750,437 calls
Illinois Dish and Telemarketing Vendor Calls 5,830 calls Star Satellite Calls 2,660,066 calls ___________________________________ _______________ Total 2,665,896 calls
North Carolina Dish and Telemarketing Vendor Calls 2,283 calls Star Satellite Calls 1,716,457 calls ___________________________________ _______________ Total 1,718,740 calls
Ohio Dish and Telemarketing Vendor Calls 1,759 calls Star Satellite Calls 3,419,175 calls ___________________________________ _______________ Total 3,420,934 calls
Grand Total for violations in Count VI California 5,750,437 calls Illinois 2,665,896 calls North Carolina 1,718,740 calls Ohio 3,420,934 calls ______________ ________________ Grand Total 13,556,007 calls
The TCPA authorizes the Plaintiff States to recover $500 per violation. 227 U.S.C. § 227(g). Each illegal call is a separate violation, and if a call violates two or more subsections of the TCPA, the call constitutes two or more violations, one for each subsection violated.
Dish argues that the Court should interpret the TCPA to allow an award "up to" $500 per violation the Plaintiff States. At least one district court has accepted this argument.
The Plaintiff States have proven the following TCPA violations by Dish and its agents Star Satellite and JSR for each Plaintiff
California: 1,283,566 illegal calls in Count V
5,750,437 illegal calls in Count VI
Illinois: 693,732 illegal calls in Count V
2,665,896 illegal calls in Count VI
North Carolina: 261,379 illegal calls in Count V
1,718,740 illegal calls in Count VI
Ohio: 413,280 illegal calls in Count V
3,420,934 illegal calls in Count VI
Total : 16,207,964 illegal calls in Count VI
At $500 per call, the award would be approximately $8.1 billion ($8,103,982,000.00).
An award of $8.1 billion would be excessive and in violation of due process. A statutory award violates due process "only where the penalty prescribed is so severe and oppressive at to be wholly disproportioned to the offense and obviously unreasonable."
The Plaintiff States argue that the Court should order a remittitur prior to entertaining a due process challenge. The Court disagrees. A remittitur is a procedure used in jury trials. The remittitur offers the plaintiff the choice of accepting a lower damage amount that the one awarded by a jury or a new trial on damages.
The Plaintiff States argue in the alternative that the Court should first entertain the Plaintiff States' voluntary offer to remit the damages award before entertaining the constitutional issues. The case cited by the Plaintiff States involved a situation in which the district court erred by ordering no civil penalties in the circumstances in which the statutory amount was excessive.
Furthermore, the Fourth Circuit did not address a situation in which the plaintiff did not offer to remit the statutory amount. The Plaintiff States have not offered to remit the statutory damage award in Counts V and VI. Plaintiffs North Carolina offered to remit the amounts in Counts IX and X.
In this case, the statutory damages calculation in Counts V and VI exceeds $8.1 billion. That is "wholly disproportionate to the offense and obviously unreasonable."
The TCPA provides that the Court may increase the damage award up to $1,500 per violation for a knowing violation. 47 U.S.C. § 227(g)(1). Because the award in excess of $8.1 billion violates due process, the Court will not exercise its discretionary authority to increase the award. The Court, therefore, will not address the split of authority on the requirements to prove knowing violations (
Count VII alleges a claim under the California Do Not Call Law. Cal. Bus. & Prof. Code § 17592(c). Section 17592(c) provides, in relevant part, "no telephone solicitor shall call any telephone number" on the California do-not-call list. The California Do-Not-Call List consists of the California numbers on the Registry. A copy of the California Do-Not-Call List is current if it was obtained from the FTC no more than three months prior to the date of the call. Cal. Bus. & Prof. Code § 17592(a)(2). California's Established Business Relationship exception tracks the TSR and FCC Rule's requirement that such relationships exist for 18 months after the last purchase. Cal. Bus. & Prof. Code § 17592(e)(4). Count VII alleges in pertinent part:
Dish argues that this claim, and any claim brought by the Plaintiff States that relies on calls made to numbers on the Registry, fails because the Registry violates the First Amendment for the reasons Dish raised in connection with the United States' claims in Count I. The Court rejects this argument for the reasons given above in connection with Count I.
Dish and its Telemarketing Vendors made the following illegal Registry Calls to telephone numbers with California area codes more than 93 days (i.e. more than three months) after registration on the Registry:
Yoeli set of 2,386,386 calls; 296,640 calls Taylor's set of 501,650 calls; 42,019 calls Taylor's set of not completed calls; 33,970 callsTaylor's set of wrong number, no English calls; 1,955 calls Total 374,584 calls
The "not completed calls" and "wrong number, no English calls" are the calls with California area codes that Taylor erroneously eliminated from the Yoeli July 2012 Call Set.
The preponderance of the evidence shows that the intended recipients of these calls were California residents. Dish is liable for making 374,584 Registry Calls in violation of Cal. Bus. & Prof. Code § 17592(c) as alleged in Count VII.
The Plaintiff States did not present evidence on the number of Registry Calls made by Order Entry Retailers JSR and Satellite Systems that were more than three months after the telephone numbers with California area codes were registered on the Registry. The Plaintiffs, therefore, did not prove the number of calls made by JSR and Satellite Systems for which Dish would be liable under Count VII.
California law provides a safe harbor affirmative defense:
Cal. Bus. & Prof. Code § 17593(d). Dish failed to prove this affirmative defense. Dish failed to present sufficient competent evidence of the procedures used to formulate or scrub Lead Tracking System calling lists and, so, failed to show any illegal Registry calls were accidental or violated procedures. Furthermore, Dish failed to use the last dates of purchase to calculate Transaction-based Established Business Relationships for the Account Number Campaigns. As a result, Dish did not use proper procedures to formulate these calling lists and called millions of numbers on the Registry illegally. Those illegal calls were not accidental. Finally, Dish failed to identify any particular calls that were accidentally made. Some Dish witnesses testified in generalities that accidents happen, and some witnesses indicated that some problems arose when Dish transferred all Account Number Campaign scrubbing to its headquarters in Colorado, but no witness testified that certain calls were accidentally made. Dish failed to prove this affirmative defense. Dish is liable for at least 374,584 calls that violated § 17952 of the California Business & Professions Code.
Count VIII alleges a claim for unfair competition under California Business and Professions Code § 17200,
In this case, Plaintiff California borrowed from the TCPA violations in Counts V and VI, the violations of § 17592(c) in Count VIII, and also violations of California Civil Code § 1770(a)(22)(A). Section 1770(a)(22)(A) prohibits making Prerecorded Calls "without an unrecorded, natural voice first informing the person answering the telephone of the name of the caller or the organization being represented, and either the address or telephone number of the caller, and without obtaining the consent of that person to listen to the prerecorded message."
Count VII alleges, in pertinent part:
Dish is liable for making, either directly or through its agents the Telemarketing Vendors and JSR, 1,283,566 Registry Calls in violation of the TCPA, as proven in Count V. Dish is liable for making, either directly or through its agents the Telemarketing Vendors and Star Satellite, 5,750,437 prerecorded telemarketing calls in violation of the TCPA, as proven in Count VI. Dish is liable for making, either directly or through its agents Telemarketing Vendors, 374,584 Registry Calls as proven in Count VII.
Dish is also liable under § 17200 for the violations of § 1770(a)(22)(A). California proved that Dish or its agents Telemarketing Vendors eCreek and EPLDT and Order Entry Retailers Star Satellite and JSR made these Prerecorded Calls in violation of § 1770(a)(22)(A). The penalties for violation § 17200 are cumulative to each other. Thus, Dish may be liable twice under § 17200 for Prerecorded Calls if the calls violated both § 1770(a)(22)(A) and the TCPA and FCC Rule.
Dish argues that § 1770(a)(22)(A) does not impose liability for the acts of Order Entry Retailers. Dish argues that § 1770(a)(23) specifically authorizes liability for third parties, but § 1770(a)(22)(A) does not. Dish argues that § 1770(a)(22)(A), therefore, is limited to Dish's actions. The Court disagrees. Section 1770(a)(23)(B) establishes an affirmative defense for a third party unless the person who violated § 1770(a)(23)(A) was an agent of the third party or the third party knew of the illegal act. Section 1770(a)(22) contains no similar defense to third party liability. Businesses are liable for the unlawful acts of their agents.
Dish argues that it is entitled to an Established Business Relationship defense under § 1770(a)(22) for the 23,020 calls that it made directly or through the Telemarketing Vendors. Section 1770(a)(22)(B) provides for such a defense:
Cal. Civ. Code § 1770(a)(22)(B). This defense requires proof that the intended call recipient was a customer or had an established relationship with Dish. This portion of the California Civil Code does not define either "customer" or "established relationship."
Dish argues that the translations of the sales scripts show that the intended recipients were customers. The translations show that the calls offered new foreign language programming packages to existing customers. This evidence tends to show that the calls were made to individuals who were at some time customers of Dish. That evidence was not sufficient proof under Count VI because the FCC Rule requires a call to be within 18 months of the last purchase, and the script text did not prove the last purchase date. California section 1761 does not require that the call to be within any certain time period since the last transaction, only that the person be a customer. Given the language of § 1761, the Court finds that Dish has a
In summary, Dish is liable for unfair competition by committing the following illegal calls in violation of California Business & Professions Code section 17200:
Violation of TCPA proven in Count V 1,283,566 calls
Violation of TCPA proven in Count VI 5,750,437 calls
Violation of Cal. Bus. & Prof. Code § 17592(c)
proven in Count VII 374,584 calls
Violation of Cal. Civ. Code §§ 1770(a)(22)(A) 5,727,417 calls
Total 13,136,004 calls
Dish is liable for making directly or through its agents 13,136,004 calls in violation of § 17200 in Count VIII.
Pursuant to California Business & Professions Code § 17593(a)(2), California may recover for each violation proven under Count VII a civil penalty up to the penalties available under § 5(m) of the FTC Act, up to a maximum of $11,000 per violation for each violation before February 9, 2009, and $16,000 for each violation thereafter. In addition, California may recover a separate penalty of up to $2,500.00 for each violation. Cal. Bus. & Prof. Code §§ 17200, 17536(b). California may recover for each violation proven under Count VIII a civil penalty of up to $2,500.00. Cal. Bus. & Prof. Code § 17206(b). The penalties are cumulative. Cal. Bus. & Prof. Code §§ 17205 and 1734.5. A defendant is subject to multiple penalties if he or she violates multiple statutes that authorize such penalties.
These statutes also impose strict liability without any proof of intent.
California courts have determined that these civil penalties are not akin to punitive
In light of the
California has proven 374,584 violations of Count VII and 13,136,004 violations of Count VIII. The maximum possible penalties for Count VII would be $11,000 per violation prior to February 9, 2009, and $16,000 thereafter; plus $2,500 per violation. The maximum possible penalties for Count VIII would be $2,500 per violation. The total maximum possible civil penalty exceeds $37.8 billion ($37,896,894,000.00).
Plaintiff North Carolina alleges violations of the North Carolina Do-Not-Call Law that prohibits Registry Calls to North Carolina residents whose telephone numbers were on the Registry. Count IX alleges in part:
The Court previously explained the structure of the North Carolina statute,
For the reasons stated in the Court's discussion of Count V, North Carolina proved that Dish and its agents JSR and Satellite Systems made 261,379 Registry Calls to numbers with North Carolina area codes after March 25, 2005. The preponderance of the evidence further establishes that intended recipients were residential telephone subscribers and residents North Carolina. The 261,379 calls violated § 75-102.
Section 75-102(d) also requires telemarketers to "implement systems and written procedures to prevent further telephone solicitations to any telephone subscriber... whose telephone number appears in the "Do Not Call" Registry." Dish did not have written procedures for scrubbing Account Number Campaigns to remove from its calling lists telephone numbers on the Registry. Dish, therefore, also violated § 75-102(d).
Dish argues that it is entitled to Transaction-based and Inquiry-based Established Business Relationship defenses to these calls. The North Carolina uses the same definitions of Transaction-based and Inquiry-based Established Business Relationships as the TCPA and TSR, with the same 18-month and three month time periods respectively. N.C. Gen. Stat. § 75-101(5). The analysis in the Count V TCPA Registry call claims, therefore, applies here, and Dish is not entitled to either Established Business Relationship defense for any of these 261,379 Registry Calls.
North Carolina alleges a claim in Count X for violation of it Do-Not-Call Law that prohibits use of an automatic dialer to place unsolicited prerecorded calls. N.C. Gen. Stat. § 75-104. Count X alleges in part:
For the reasons stated in the Court's discussion of Count VI, North Carolina proved that Dish and its agent Star Satellite made 1,718,740 Prerecorded Calls to numbers with North Carolina area codes. The preponderance of the evidence further establishes that the intended recipients were residential telephone subscribers and residents North Carolina. The 1,718,740 calls violated § 75-104.
North Carolina authorizes civil penalties for the violations in Counts IX and X as follows: "Five hundred dollars ($500) for the first violation, one thousand dollars ($1,000) for the second violation, and five thousand dollars ($5,000) for the third and any other violation that occurs within two years of the first violation." N.C. Gen. Stat. § 75-105(a)(2). North Carolina established that Dish is liable for 261,379 Registry Calls in violation of N.C. Gen. Stats. § 75-102 in Count IX, and 1,718,740 Prerecorded Calls in violation of N.C. Gen. Stat. § 75-104 in Count X. Under § 75-105(a)(2), the statutory penalty applies to violations that occurred within two years of the first violation.
In Count IX, the Registry Calls in the 2003-2007 Calling Records would be subject to civil penalties if the calls were made within the first two years within the statute of limitations, from March 25, 2005 to no later than March 24, 2007. North Carolina used Taylor's analysis to show that Dish made 85,093 calls between January 2006 and August 2007. These calls are within the two-year window for civil penalties authorized by the § 75-105. This number does not include the Dish direct marketing Registry Calls made during the remainder of 2007, but this is the only number proven with reasonable certainty. North Carolina is also entitled to recover civil penalties on the 18,250 Registry Calls that Dish's agent JSR made to North Carolina residents in 2006 and 2007. These calls were also within the two-year window for civil penalties. North Carolina is entitled to recover civil penalties on 103,343 Registry Calls in Count IX.
All of the Star Satellite 1,716,457 Prerecorded Calls to North Carolina residents were made from July to November 2005. All of these calls were within the statute of limitations and within two years of each other. North Carolina is entitled to recover civil penalties on all these calls. Dish presented evidence at summary judgment that Dish's Prerecorded Calls to North Carolina area codes occurred between September 2007 and March 2008.
Section 75-105 states that the penalty would be reduced to $100.00 for each violation within two years of the first violation if Dish "can show that that the violations are the result of a mistake and ... [Dish] complied with" § 75-102(d). Section 75-102(d) requires telephone solicitors to implement "systems and written procedures" to prevent Registry Calls and Internal List Calls, to train its own sales staff, to monitor and enforce compliance by its own sales staff and by independent contractors, to record consumers' do-not-call requests, and to maintain Internal Do-Not-Call Lists. N.C. Gen. Stat. 75-102(d). Dish did not have written procedures to scrub Account Number Campaign calling lists to prevent Registry Calls or Internal List Calls. Dish presented no competent evidence on the procedures Dish's Database Marketing used to scrub Lead Tracking System and Cold Call calling lists. Dish, therefore, is not entitled to this reduction in the penalty under § 75-102(d).
Section 75-105 imposes the penalty on telephone solicitors. The definition of telephone solicitor means:
N.C. Gen. Stat. Ann. § 75-101(10). Dish's liability as a telephone solicitor extends by this definition to telemarketing performed by its agents. Because the statute extends liability to the actions of agents, special rules limiting a principal's liability for punitive damages do not apply.
The calculated amount of civil penalties under § 75-105(a)(1) is $516.7 million ($516,706,500.00) for Count IX and $8.6 billion ($8,582,276,500.00) for Count X, for a total of $9.1 billion ($9,098,938,500.00).
Plaintiff Illinois alleges a claim for violation of the Illinois Automatic Telephone Dialers Act (IATDA), 815 ILCS 505/2Z. Count XI alleges in part:
Section 505/2Z prohibits playing or causing to be played a prerecorded message by an autodialer without prior consent. Illinois only seeks liability for the 5,830 Prerecorded Calls that Dish or its Telemarketing Vendors placed to telephone numbers with Illinois area codes. Dish concedes that it is responsible for calls made by Telemarketing Vendors. The Court, therefore, does not need to decide the meaning of "cause" under the IATDA.
For the reasons stated in Count VI above, Illinois proved a prima facie case that 5,830 prerecorded telemarketing calls to numbers with Illinois area codes. The preponderance of the evidence further establishes that intended recipients were residential telephone subscribers and residents Illinois.
The IATDA contains an Established Business Relationship exception. The prohibition against autodialer Prerecorded Calls "shall not apply" to "calls made to any person with whom the telephone solicitor has a prior or existing business relationship." 815 ILCS 305/20(a)(2). The IATDA does not define the term "existing business relationship."
Dish argues that the translations of the sales scripts show that the intended recipients were Dish customers. The translations show that the calls offered new foreign language programming packages to existing customers. This evidence tends to show that the calls were made to individuals who were at some time customers of Dish. The evidence was not sufficient proof under Count VI because the FCC Rule requires a call to be within 18 months of the last purchase and the script text did not prove the last purchase date. The IATDA defense in § 305/20(a)(2) does not require that the call to be within any certain time period since the last transaction, only that the person be a customer or have a relationship. Given the language of § 305/20(a)(2), the Court finds that Dish has a valid defense for these 5,830 calls under 815 ILCS 305/20(a)(2) of the IATDA. Dish is entitled to judgment on Illinois's claims in Count XI.
Plaintiff Ohio alleges a claim in Count XII under the Ohio Consumer Sales Practice Act (OCSPA), Ohio Rev. Code § 1345.01 et seq. Count XII alleges in part:
In addition, the Final Pretrial Order provides that Ohio also alleges:
Dish did not challenge in the Final Pretrial Order Ohio's additional claim based on Internal List Calls on the grounds that the theory was beyond the matters alleged in the Third Amended Complaint. Rather, Dish addressed the substance of the additional basis for the claim:
The OCSPA prohibits unfair and deceptive practices in consumer transactions:
Ohio Rev. Code § 1345.02(A). The OCSPA also prohibits unconscionable acts or practices in consumer transactions:
Ohio Rev. Code § 1345.03(A). The statute of limitations is two years, and so, extends back to calls made after March 25, 2007.
The OCSPA uses the terms "supplier" and "consumer transaction." A "consumer transaction" includes both the solicitation and the sale of goods or services "to an individual for purposes that are primarily personal, family, or household...." Ohio Rev. Code § 1345.01(A). The Retailers Agreements only authorized Order Entry Retailers to sell Dish Network programming to residential customers, and the Order Entry Tool only could be used to place orders for residential service. Further, Dish and its Telemarketing Vendors almost always used outbound telemarketing to sell Dish programming to residential customers. Therefore, the solicitation and sale of Dish Network programming by Dish, its Telemarketing Vendors, and the Order Entry Retailers were consumer transactions to Ohio residents were consumer transactions under the OCSPA.
A "supplier" includes a person "in the business of effecting or soliciting consumer transactions." Ohio Rev. Code § 1345.01(C). Dish, the Telemarketing Vendors, and the Order Entry Retailers were suppliers under the OCSPA when they made outbound telemarketing calls to sell Dish Network programming to Ohio residents.
Courts have held that failing to record a Do-Not-Call request on an internal do-not-call list and failing to honor a prior Do-Not Call request constitutes an unfair or deceptive practice in violation of the OCSPA.
For the reasons stated in Counts V and VI, the preponderance of the evidence shows that the intended recipients of 41,788 Internal List Calls were Ohio residents and were residential telephone subscribers. Dish is liable for these illegal calls under Count XII in violation of the OCSPA.
Ohio also asks the Court to find that the 77,991 Registry Calls and 1,759 Prerecorded Calls made by Dish and its Telemarketing Vendors to telephones with Ohio area codes also were unfair, deceptive, or unconscionable acts and practices in violation of the OCSPA. Ohio only asks for a judgment on the Registry Calls to Ohio residents that were included in the 1,707,713 calls that the Court found violated the TSR at summary judgment. Ohio does not seek relief for any other calls made by Dish or any calls made by Order Entry Retailers in Count XII. No issues related to Dish's liability for the acts of Order Entry Retailers exist in Count XII.
A violation of the TCPA is not by itself proof of a violation of the OCSPA.
The OCSPA does not define "unfair," "deceptive," or "unconscionable." The OCSPA includes a list of acts that are deceptive but the list is not exhaustive or exclusive. Ohio Rev. Code § 1345.02(B). The acts on the non-exhaustive list involve situations in which the consumer believes material facts about the transaction are true, when in fact, they are not.
The scope of deceptive acts covered by the OCSPA is broader than the non-exhaustive list. "The boundaries of illegality under OCSPA must remain flexible because it is impossible to list all methods by which a consumer can be misled or deceived."
The OCSPA does not contain a list of acts that are unfair. The OSCPA, however, directs the Court to look to the FTC Act for guidance in interpreting § 1345.02(A) prohibition against unfair and deceptive acts:
Ohio Rev. Code Ann. § 1345.02(C).
The FTC Act provides that an act is not unfair unless "[the act] is likely to cause substantial injury to consumers which is not reasonably avoidable by consumers themselves and not outweighed by countervailing benefits to consumers or to competition." 15 U.S.C.A. § 45(n);
The OCSPA includes a list of unconscionable acts, but again, the list is not exhaustive or exclusive. Ohio Rev. Code § 1345.03(B). The listed acts cover situations in which the supplier has a marked advantage over the consumer and takes advantage of that unequal position to the consumer's detriment. E.g., Ohio Rev. Code § 1345.03(B)(1) ("[T]he supplier has knowingly taken advantage of the inability of the consumer reasonably to protect the consumer's interests because of the consumer's physical or mental infirmities, ignorance, illiteracy, or inability to understand the language of an agreement.").
The listed unconscionable acts all must be done knowingly. The implication is that a supplier must act knowingly to commit an unconscionable act under the OCSPA. To act knowingly, the supplier must know the impact of his behavior on the consumer, or know that his behavior was proscribed.
After careful review of the facts and applicable law, the Court Concludes that Dish's Registry Calls were unfair acts. Registry Calls injure consumers because the supplier calls a consumer who registered his or her telephone number specifically because he or she did not want such calls, and the seller is on notice from the Registry that the consumer does not want the call, but calls anyway. Every such unwanted call causes some injury, "Every call uses some of the phone owner's time and mental energy, both of which are precious."
The Court also concludes that the 1,759 Prerecorded Calls made by Dish and the Telemarketing Vendors were unfair. Prerecorded telemarketing calls injure consumers because there is no live person on the other end of the line:
The consumers could not reasonably avoid the injury in this case because Dish controlled whether to place the calls. The evidence before the Court shows no countervailing economic benefit. Dish witness Ahmed testified that these types of sales tactics did not produce good customers and led to high churn rates that cost Dish money.
Ohio has established that Dish violated the OCSPA when it made 41,788 Internal Calls from September 2007 to March 2010. Each call was a separate violation.
Under the OCSPA, the Court may assess civil penalties as follows:
Ohio Rev. Code § 1345.07(D). Section 1345.05(A)(3) provides:
Ohio Rev. Code § 1345.05.
The Attorney General made judgments available as early as 2000 that stated that making calls to people who previously stated that they did not want to receive such calls was unfair and deceptive in violation of Ohio Revised Code § 1345.02.
Dish claims that it is entitled to an affirmative defense to civil penalties under Ohio Rev. Code § 1345.11. Section 1345.11 states that "no civil penalties shall be imposed" if "a supplier shows by a preponderance of the evidence that a violation resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adopted to avoid the error." Ohio Rev. Code § 1345.11(A). Ohio objects to Dish raising this affirmative defense. Plaintiffs' Proposed Responsive Conclusions of Law (d/e 682), at 5. Ohio objects because Dish did not raise the defense in its Answer or in its proposed conclusions of law in the Final Pretrial Order.
The pretrial conference and pretrial order "are vital parts of the procedural scheme created by the Federal Rules of Civil Procedure."
Dish also argues that Ohio is only entitled to a maximum penalty of $25,000.00. Dish cites two opinions from the Ohio Courts of Common Pleas in which the courts assessed penalties on companies that engaged in years of unfair and deceptive practices. These courts assessed one penalty of $25,000.00 for each type of unlawful practice.
The OSCPA "is a remedial law designed to provide various civil remedies to aggrieved consumers and must be read liberally."
In summary, Dish is liable for the calls set forth in the tables below. The tables also list the number of calls for which Dish is liable for monetary relief, either civil penalties or statutory damages.
Calls by Dish from March 25, 2004 through August Millions of
31, 2007 calls, but
specific
number
unproven
Calls by Dish from September 1, 2007 through 3,140,920
March 12, 2010
Calls by Dish Order Entry Retailer and agent JSR in 2,349,031
2006
Additional Calls by Dish Order Entry Retailer and Millions of
agent JSR from January 1, 2007 to February 14, calls, but
2007 specific
number
unproven
Calls by Dish Order Entry Retailer and agent Satellite 381,811
Systems
Calls by Dish to persons on Dish's internal do-not-call 903,246
list
Calls by Dish to persons on eCreek's internal do-not-call 140,349
list
Calls by Dish to persons on Order Entry Retailers' 7,321,163
do-not-call lists
Calls by Dish Order Entry Retailer and agent JSR in 418,228
2006 to persons on Dish's internal do-not-call list
Calls by Dish Order Entry Retailer and agent JSR Millions of
from January through February 14, 2007, to persons calls, but
on Dish's internal do-not-call list specific
number
unproven
Calls by Dish Order Entry Retailer and agent JSR in 267,439
2006 to persons on Order Entry Retailers' internal
do-not-call lists
Calls by Dish Order Entry Retailer and agent JSR Thousands
from January through February 14, 2007 to persons of calls, but
on Order Entry Retailers' internal do-not-call lists specific
number
unproven
Calls by Dish Order Entry Retailer and agent Satellite 22,946
Systems to persons on Dish's internal do-not-call list
Calls by Dish Order Entry Retailer and agent Satellite 42,990
Systems to persons on Order Entry Retailers' internal
do-not-call lists
Calls by Dish Order Entry Retailer and agent Dish Included in
Nation JSR calls
Abandoned calls by Dish 98,054 Abandoned calls by Dish Order Entry Retailer and 6,637,196 agent Dish TV Now Abandoned calls by Dish Order Entry Retailer and 43,100,876 agent Star Satellite (calls counted once for civil penalties) Abandoned calls by Dish Order Entry Retailer and 1,285,379 agent JSR Abandoned call by Dish Order Entry Retailer and 1 agent American Satellite
Additional abandoned calls by Dish Order Entry Many, but Retailer and agent American Satellite specific number unproven Abandoned calls by Dish Order Entry Retailer and Included in agent Dish Nation JSR calls
Calls by Dish Order Entry Retailer 43,100,876 and agent Star Satellite (calls counted once for civil penalties)Total TSR Violations subject to monetary relief: 76 66,109,628 calls [Editor's Note: The preceding image contains the reference for footnote76 ]
At $11,000.00 per violation, the maximum amount of civil penalties would be over $727 billion ($ 727,205,908,000.00). The actual maximum penalty is higher than this figure because some of the violations occurred after February 9, 2009, when the maximum penalty per violation was $16,000.00.
California calls in 2003-2007 Registry Calls 266,514 California calls in 1,707,713 TSR Summary 216,867 Judgment Registry Calls California calls in 2,386,386 Registry and Internal 302,983 List Calls California calls in JSR Registry Calls 473,102 California calls in Satellite Systems Registry Calls 24,100 California Total 1,283,566
Illinois calls in 2003-2007 Registry Calls 112,116 Illinois calls in 1,707,713 TSR Summary Judgment 83,895 Registry Calls Illinois calls in 2,386,386 Registry and Internal List 118,289 Calls Illinois calls in JSR Registry Calls 369,384 Illinois calls in Satellite Systems Registry Calls 10,048 Illinois Total 693,732
North Carolina calls in 2003-2007 Registry Calls 85,093 North Carolina calls in 1,707,713 TSR Summary 52,961 Judgment Registry Calls North Carolina Calls in 2,386,386 Registry and 97,785 Internal List Calls North Carolina calls in JSR Registry Calls 18,250 North Carolina calls in Satellite Systems Registry 7,290 Calls North Carolina Total 261,379
Ohio calls in 2003-2007 Registry Calls 98,207 Ohio calls in 1,707,714 TSR Summary Judgment 77,991 Registry Calls Ohio calls in 2,386,386 Registry and Internal List 95,275 Calls Ohio calls in JSR Registry Calls 129,004 Ohio calls in Satellite Systems Registry Calls 12,803 Ohio Total 413,280
California 1,283,566 Illinois 693,732 North Carolina 261,379 Ohio 413,280 Grand Total of Violations in Count V 2,651,957
California calls in Dish and Telemarketing Vendor 23,020 Prerecorded Calls California calls in Star Satellite Prerecorded Calls 5,727,417 California Total 5,750,437
Illinois calls in Dish and Telemarketing Vendor 5,830 Prerecorded Calls Illinois calls in Star Satellite Calls 2,660,066 Illinois Total 2,665,896
North Carolina calls in Dish and Telemarketing 2,283 Vendor Prerecorded Calls North Carolina calls in Star Satellite Calls 1,716,457 North Carolina Total 1,718,740
Ohio calls in Dish and Telemarketing Vendor 1,759 Prerecorded Calls Ohio calls in Star Satellite Calls 3,419,175 Ohio Total 3,420,934
California 5,750,437 Illinois 2,665,896 North Carolina 1,718,740 Ohio 3,420,934 Grand Total for Count VI Violations 13,556,007Total TCPA Violations: 16,207,964
At $500.00 in statutory damages per violation for knowing violations, the maximum statutory damages award would be approximately $8.1 billion ($8,103,982,000.00).
2007-2010: Yoeli Set of 2,386,386 Registry Calls 296,640 2007-2010: Taylor's Set of 501,650 Registry Calls 42,019 2007-2010: Taylor's Set of Not Completed Registry 33,970 Calls 2007-2010: Taylor's Set of Wrong Number, No 1,955 English Registry Calls Total 374,584
Violations of TCPA Proven in Count V 1,283,566 Violations of TCPA Proven in Count VI 5,750,437 Violations of Cal. Bus. & Prof. Code § 17592(c) 374,584 Violations of Cal. Civ. Code § 1770(a)(22)(A) 5,727,417 Total 13,136,004
The maximum possible penalties for Count VII would be $11,000 per violation prior to February 9, 2009, and $16,000 thereafter; plus $2,500 per violation. The maximum possible penalties for Count VIII would be $2,500 per violation. The total maximum possible civil penalty for California's claims in Counts VII and VIII exceeds $37.8 billion ($37,896,894,000.00).
North Carolina Registry Calls within 2 years of the 103,343
first violation proven Registry
Calls subject
to civil
penalties
North Carolina Prerecorded Calls within 2 years of 1,716,457
the first violation proven Prerecorded
Calls subject
to civil
penalties
The civil penalties for the violations in Counts IX and X are $500 for the first violation, $1,000 for the second violation, and $5,000 for the third and any other violation that occurs within two years of the first violation. The calculated penalty would be approximately $9.1 billion ($9,098,938,000.00). North Carolina has offered to voluntarily remit the penalty to $100 per violation or approximately $182 million ($182,980,000.00).
No Violations Proven 0
Ohio Internal List Calls by Dish and Telemarketing 41,788
Vendors Violations
subject to
civil
penalties.
The maximum civil penalty is $25,000.00 per violation. The total possible penalty in Count XII exceeds $1 billion (41,788 × $25,000.00 = $1,044,700,000.00). Ohio suggests 1 percent of the maximum, or $10.4 million ($10,447,000.00), as an appropriate penalty.
Counts I-IV TSR Maximum Civil Penalties $727,205,908,000.00 Counts V-VI TCPA Calculated Statutory 8,103,982,000.00 Damages Counts VII-VIII Maximum Civil Penalties 37,896,894,000.00 Counts IX-X Calculated Civil Penalties 9,098,938,000.00 Count XI No Violations 0.00 Count XII Maximum Civil Penalties 1,044,700,000.00 Total Maximum Possible Penalties and $783,350,422,000.00 Statutory Damages
United States' Suggested Penalty for TSR $ 900,000,000.00 Counts I-IV Plaintiff States' Suggested Statutory 1,000,000,000.00 Damages for TCPA Counts V-VI California's Suggested Penalty for Counts 100,000,000.00 VII-VIII North Carolina's Suggested Penalty for 182,980,000.00 Counts IX-X Ohio's Suggested Penalty for Count XII 10,447,000.00 Total Suggested Penalties and Statutory $2,193,427,000.00 Damages
DeFranco's testimony that a $20 million $ 20,000,000.00 penalty would "be a lot of money" and "more than a slap on the wrist."T 621:1548 (DeFranco) .
The appropriate amount of monetary relief in each Count depends, in part, on the relief awarded in the other Counts. The Court will address the factors for determining the amount of relief in the Counts I-X and XII and then determine the appropriate amount of monetary relief for these Count.
The FTC Act sets forth factors the Court must consider in setting the appropriate amount of civil penalties within the statutory maximum:
15 U.S.C. § 45(m)(1)(C). The Court considers these factors in order.
Dish's culpability is significant. Dish has some level of culpability for its direct marketing and a significantly higher level of culpability for the illegal calls made through its Order Entry program.
Dish made efforts to follow the Do-Not-Call Laws in its Account Number Campaigns. Dish set up a system to scrub Account Number Campaigns through the PDialer. In 2008, Dish started using PossibleNOW's services and software to provide an additional scrub. These efforts weigh in favor of finding that Dish had limited culpability for the calls made in its Account Number Campaigns.
Dish, however, failed to prove that it made similar efforts with its Lead Tracking System and Cold Call campaigns. Dish claimed that it had an Inquiry-based Established Business Relationship with the persons whose numbers were on Lead Tracking System campaigns because these individuals inquired about Dish Network programming. Dish had the burden to prove Established Business Relationship exceptions. Dish failed to demonstrate that the Lead Tracking System was limited to people who inquired about Dish Network programming. Dish presented almost no competent evidence regarding how Lead Tracking System calling lists were formulated. Dish failed to show that it had Established Business Relationships with the persons on the Lead Tracking System.
Dish also failed to present competent evidence to show how Lead Tracking System and Cold Call calling lists were scrubbed. The lack of evidence leaves the Court with no basis to conclude that Dish made any efforts to remove numbers that were on the Registry or on Internal Do-Not-Call Lists from the Lead Tracking System and Cold Call calling lists. The failure of Dish to present competent evidence to show effort to make its Lead Tracking System and Cold Call campaigns comply with the TSR weigh in favor of finding culpability for the illegal calls in these campaigns.
In addition, Dish made millions of illegal calls in Account Number Campaigns because Dish used an unreliable method to determine whether it had Transaction-based Established Business Relationships with current and former customers. The TSR definitions stated that a Transaction-based Established Business Relationship existed for 18 months immediately after the customer's last payment or financial transaction. Dish's expert Sponsler testified that a Transaction-based Established
Dish's failure to read and properly apply the TSR definitions for Established Business Relationships was a serious error that should have been avoided. This error resulted in millions and millions of illegal calls. Dish's inability to read and follow the TSR demonstrates a lack of care that weighs in favor of finding some level of culpability for the Account Number Campaign calls made by Dish and its Telemarketing Vendors.
Dish presented Taylor's testimony at trial in an attempt to show that it had little culpability for the 1,707,713 calls that the Court found were illegal calls to numbers on the Registry at summary judgment. As explained in the Finding of Facts, the vast majority of these calls were violations. Taylor showed that, at best, 20,387 canceled work order and other non-telemarketing calls may not have been violations.
In addition, Dish made many more illegal calls than those on which the United States has sought liability. Taylor concluded in his October 14, 2013 Report, PX 16, that Dish made 501,650 Registry calls for which Taylor could not find a basis to exclude from liability. The United States asked, and the Court found liability for these calls. Taylor, however, erroneously eliminated at least 15,846,402 calls from liability for reasons that were not supported by the evidence. These 15,846,402 illegal calls show that Dish's errors caused many more illegal calls than those on which the United States secured a finding of liability. The actual magnitude of the illegal conduct speaks to more a significant level of culpability.
Dish further argues that violations as percentage of all of Dish's calls was very small. Dish relies on Taylor's Tables, DTX 626A through 626D, to show that the vast majority of Dish's calling campaigns had very few illegal calls. Dish also relies on Taylor's opinion that an error rate of 5% or less indicated that the calling list was properly scrubbed to remove numbers that should not be called. Taylor's Tables, however, are only based on the 501,650 calls from his October 14, 2013 Report on which the Court granted summary judgment. Taylor's Tables do not take into account the 15,846,402 additional calls in those calling campaigns that violated the TSR. In light of all these additional violations, Taylor's Tables tell the Court little or nothing about the percentage of all of Dish's calls that violated the TSR.
Dish also relies extensively on Sponsler's 2010 audit. The audit says nothing about Dish's culpability. The violations occurred from March 2004 to March 2010. Sponsler only made findings in the audit about Dish's practices in May 2010. The audit also says nothing about the process Database Marketing used to process Lead Tracking System and Cold Call calling lists to comply with the Do-Not-Call Laws. The audit was also at a "high," i.e. superficial, level. Sponsler did not audit calling records to see the rate of errors in Dish's calling processes. The audit is not probative of Dish's culpability for the calls for which Dish is liable.
The Court concludes that Dish's handling of its direct telemarketing requires a finding of some culpability. Outbound Operations Department took many steps to scrub Account Number Campaign calling lists, but Dish failed to properly determine whether Dish had Transaction-based Established Business Relationships with current and former customers. Dish presented no competent evidence of Dish's efforts
Dish bears significant culpability for the reckless manner in which Dish operated the Order Entry Program before August of 2006, and to a lesser extent thereafter. Dish initially hired Order Entry Retailers based on one factor, the ability to generate activations. Dish cared about very little else. As a result, Dish created a situation in which unscrupulous sales persons used illegal practices to sell Dish Network programming any way they could. By 2006, Dish admitted it was overwhelmed with consumer complaints about these operators. Dish started to address the mess in the second half of 2006, but by 2009, Dish's own legal department still viewed the Order Entry program as fraught with illegal and shady practices. In late 2008 and early 2009, Dish fired 40 Retailers for defrauding Dish and lying to potential customers over the phone. As part of this purge, in 2009, Dish cut the number of Order Entry Retailers from 76 to 32. Dish sowed the wind and reaped the whirlwind when it decided to hire anybody that could get on the phone and bring in activations by whatever means possible.
Part of that whirlwind was the millions and millions of illegal calls in violation of the TSR. The United States has proven that Dish TV Now, Star Satellite, JSR, Satellite Systems, and American Satellite made 54,505,896 illegal calls in violation of the Do-Not-Call Law, including the TSR. The United States has also proven that Order Entry Retailers JSR, American Satellite, Dish Nation, United Satellite, Vision Satellite, LA Activations, and Atlas Assets made many more illegal "press 1" prerecorded telemarketing calls to sell Dish Network programming. Based on the volume of Abandoned Prerecorded Calls made by Star Satellite, Dish TV Now, and JSR, the Court finds it more likely than not that these other operators made hundreds of millions more. Dish's reckless decision to use anyone with a call center without any vetting or meaningful supervision demonstrates a disregard for the consuming public.
The evidence shows some history of Do-Not-Call Law violations before March 25, 2004. Dish made calls to Oregon residents without scrubbing against the Oregon state Do-Not-Call list. In 2003, Dish entered into an Assurance of Voluntary Compliance with Indiana to comply with Indiana Do-Not-Call Laws, and Dish was sued by Missouri for Do-Not-Call Law violations. The history shows that Dish had on-going problems complying with Do-Not-Call Laws even before the Registry launched. The history also shows that Dish understood the potential penalties for Do-Not-Call Law violations could be substantial.
The evidence also shows that Dish has a significant ability to pay a penalty. Dish is worth $28 billion. Dish's net after tax income, or profits, for 2016 was approximately $1.4 billion. Dish also has consistently made net after tax income between $700 million and $1.5 billion since 2011. Dish has the ability to pay a significant percentage of its annual profits as a penalty.
Dish would be able to pay a significant percentage of its net after-tax income as a penalty and continue operating. Dish has repeatedly demonstrated an ability to make large one-time payments and still maintain operations. In 2015, Dish paid over $515 million to the FCC because its affiliates bid on the wireless spectrum, but they failed to complete the purchase of some spectrum on which they bid. In 2011, Dish agreed to pay TiVo $500 million in settlement of a patent suit. Dish paid a lump sum of $300 million to TiVo as an initial payment on this settlement. In 2012, Dish paid $700 million to Voom to settle a contract dispute. Dish continued to operate and continued to increase its profits while making these payments. In light of this evidence, Dish can pay a penalty of a significant percentage of its profits and still continue operating.
Dish claims that it is cash-poor because it has invested large portions of its net after tax profits in wireless spectrum to keep the company competitive. Dish's plea of poverty borders on the preposterous. Dish has made net after tax profits of $700 million to 1.5 billion annually for the past several years, and it has had no problems paying the substantial penalties and settlements discussed above. Dish cannot avoid liability because its current business plan calls for buying illiquid assets in the form of broadband spectrum. Dish has the assets and ability to pay the appropriate penalty for its illegal conduct.
Dish has presented evidence that the United States, either directly or through FTC, entered into numerous civil penalty settlements with various companies for violations of the TSR. The United States entered into a stipulated judgment against Star Satellite in the amount of $4,373,768 for the same 43,100,876 calls at issue here. The United States entered into a stipulated judgment with Guardian for $7,892,242 for the approximately 49,000,000 calls it made for Star Satellite and Dish TV Now at issue here. The terms of the stipulated judgment against Star Satellite suspended all but $75,000 of the penalties. The terms of the stipulated judgment against Guardian suspended all but $150,000 of the penalties.
The FTC entered into a stipulated judgment against Dish TVRO Retailer New Edge Satellite for $570,000 in civil penalties, but suspended all of the penalties. The FTC entered into a stipulated judgment against Order Entry Retailer Planet Earth Satellite in the amount of $7,094,354 but suspended all but $20,000 of the penalties. The FTC entered into a stipulated judgment against Caribbean Cruise Line, Inc., for $7,730,000 in civil penalties for making 12 to 15 million illegal calls. The United States entered into a stipulated judgment against Comcast Corporation in the amount of $900,000 in civil penalties for TSR violations. The United States alleged that Comcast Corporation made over 900,000 illegal calls. The United States entered into a stipulated judgment against DirecTV for $2,310,000.00 in civil penalties for TSR violations. The United States alleged that DirecTV was responsible for 1,050,007 calls. Dish argues that fairness requires a penalty commensurate with the penalties awarded in these cases.
These settlements are worth little or no consideration in the calculations of civil penalties in this case. Parties who settle negotiate a settlement sum to avoid the time and costs of litigation. The parties also negotiate a settlement to avoid the risk of a judgment in a fully litigated matter. The plaintiff avoids the risk of a judgment in favor of the defendant, and the defendant avoids the risk of liability from a
Assuming arguendo that settlements have some probative value, the parties have not admitted any details about the activities of any of the defendants in these settled matters except Star Satellite and Guardian. The Court, therefore, has no basis to compare those cases to this one.
The parties have presented evidence about Star Satellite and Guardian. Dish argues that Star Satellite and Guardian were more culpable that Dish. The Court disagrees. Dish created the situation that allowed Star Satellite and Guardian to act. If Dish had not started the Order Entry program, or if Dish had adequately monitored and supervised the Order Entry program, Star Satellite and Guardian would have never made millions and millions of illegal calls to sell Dish Network programming. Dish's creation of the largely unsupervised Order Entry program and its indifference to the consequences of its actions makes Dish more culpable than either Star Satellite or Guardian.
Dish also presents no evidence about Star Satellite or Guardian's ability to pay a penalty. The ability to pay is a statutory factor that the Court must consider. Dish, thereby, failed to present the necessary evidence to compare these cases.
Dish notes that the FTC issued statements in several of these cases indicating that the settlement amount of civil penalties was the proper penalty under the circumstances. However, the opinion of a party in a case, even the FTC, is not controlling and does not indicate the amount of penalties that a court would have entered if the case had been fully litigated.
Dish argues that it will be punished for exercising its right to trial if the penalties exceed an amount that is consistent with these settlements. This is incorrect. Parties settle to avoid the possible results of full litigation. The parties did not settle here. As a result, the Court must give both parties the right to try the case to a fully litigated judgment. Dish is not being punished for trying the case rather than settling.
Dish argues that an award of civil penalties for the 43,100,876 Prerecorded Calls by Star Satellite and the 6,637,196 Prerecorded Calls by Dish TV Now is barred by the doctrine of res judicata. The doctrine of res judicata holds that once a party has fully litigated a claim, the party cannot litigate the claim again against the same party or their privies. Res judicata, however, does not bar separate actions against joint wrongdoers. The claim against each wrongdoer is a separate and distinct claim for purposes of res judicata.
The calculated amount of more than $8.1 billion in statutory damages under the TCPA is "wholly disproportioned to the offense and obviously unreasonable."
Dish renews its arguments that one call may not be subject to multiple statutory damages and penalties even if the call violates multiple statutes and rules. Dish is again incorrect. An act that violates multiple statutes may be liable for multiple awards of statutory damages and penalties.
The Plaintiff States again argue for a remittitur or a voluntary reduction by them. As discussed above a remittitur is not appropriate because this is not a jury trial, and the Plaintiff States did not offer a voluntary reduction. The relevant factors used in the FTC Act § 5(m) support the awarding of a significant penalty.
The amount of civil penalties for Count VII is governed by California Business and Professions Code §§ 17536 and 17592(c). The amount of civil penalties for Count VIII is governed by California Business and Professions Code § 17206. Section 17592(c) states that the amount civil penalties under that provision is governed by the same factors as the penalties under FTC Act § 5(m) discussed in Counts I-IV above. The California Business and Professions Code §§ 17536 and 17206 set forth the same factors for setting the appropriate penalties:
Cal. Bus. & Prof. Code §§ 17206(b) and 17536(b) (statutory language is identical in each).
The statutory factors in §§ 17206(b) and 17536(b) weigh in favor of a significant penalty. Dish's persistent misconduct was serious, and the number of violations in California was enormous. From 2003 to 2010, Dish called hundreds of thousands of California consumers who registered their phones on the Registry. The message was clear: these consumers did not want to be annoyed and bothered by incessant telemarketing calls, but Dish made over hundreds of thousands of such calls anyway. The cumulative injury of hundreds of thousands
Dish also hired Star Satellite as its telemarketing agent. Star Satellite bombarded California households with over 5.7 million Prerecorded Calls "that many recipients find obnoxious because there's no live person at the other end of the line."
Dish's disregard for Star Satellite's telemarketing practices also contributed to the millions of illegal calls. By spring 2005, Dish knew that Star Satellite was making Prerecorded Calls to market Dish Network programming. Several consumers complained about these calls. Dish's dialing operations manager Bangert knew. He reported the matter to Retail Services. Jeff Medina in Dish's Retail Escalations forwarded the email to Margot Williams in Retail Escalations. Medina joked, "Are these your boys again?" Retail Services was already well aware of Star Satellite's practices. Dish did nothing to stop the practice. In August 2005, Dish was sued because of Star Satellite's Prerecorded Calls. Dish did nothing. Dish could have prevented millions of illegal calls, but did nothing. This failure to act demonstrates a disregard consumers and the law that merits a significant penalty.
Finally, Dish has significant net worth in excess of $28 billion, and net after tax profits of more than $1.4 billion in 2016. Dish has a track record of net after tax profits in this range. Dish's pleas of being cash poor are not persuasive. A significant penalty is appropriate under the statutory factors in §§ 17206 and 17536. Dish's arguments to the contrary are not persuasive.
North Carolina also does not set forth statutory factors for setting the level of civil penalties. The amount of civil penalties under the statutory calculations is approximately $9.1 billion. As explained above this amount is wholly "disproportioned and obviously unreasonable" under the circumstances in violation of due process.
The Court will again apply the statutory factors for civil penalties under the FTC Act § 5(m) as a meaningful framework for assessing penalties in these Counts. For the reasons stated above regarding these factors in Counts I-IV, a significant penalty is appropriate. The amount of the penalty will be set below along with the other claims.
Ohio does not set forth statutory factors for determining the amount of civil penalties.
After careful consideration of all the relevant factors, a total award of civil penalties
The amount represents a significant penalty for the millions and millions of Do-Not-Call Law violations caused by Dish over years and years of careless and reckless conduct. The amount reflects Dish's culpability for failing to read and follow the TSR and TCPA in its direct telemarketing and for enabling unscrupulous telemarketers in its Order Entry program to violate Do-Not-Call Laws on a massive scale and injure enormous numbers of consumers.
A total award of 20 percent of Dish's annual 2016 profits, is a small percentage of the $2.1 billion requested by the Plaintiffs and a miniscule fraction of maximum possible penalties and damages. The Court limited the monetary relief because Dish made some efforts to avoid violations in its direct marketing and took some actions after mid-2006, and particularly in 2009 when this suit was filed, to monitor its Order Entry Retailers. The $280,000,000.00 award is consistent with all the relevant circumstances.
The total award is not onerous. Payment of the award will not unreasonably affect Dish's ability to operate. Dish pays operating expenses approximately $1 billion a month, $12 billion annually. The award of $280,000,000.00 will constitute a one-time 2.3 percent increase in those annual expenses. Dish also will retain 80 percent of its annual profits for payment of principal of any indebtedness or for investment into its ongoing operations. As noted above, Dish paid substantially higher penalties and settlements in the recent past, including more than $515 million to the FCC in 2015. Dish has been able to pay such sums and maintain operations. Dish's pleas of poverty and lack of cash are unpersuasive in light of these facts.
The Plaintiffs ask for $2.1 billion in penalties and statutory damages, or approximately 150 percent of Dish's annual profits. This amount could materially affect Dish's ability to continue operations. Such an award would not put Dish out of business, but could adversely affect the many individuals who work for Dish and other companies that do business with Dish.
A total monetary award of $280,000,000.00 is also appropriate in light of other matters that justice may require. Dish caused millions and millions of violations of the Do-Not-Call Laws, and Dish has minimized the significance of its own errors in direct telemarketing and steadfastly denied any responsibility for the actions of its Order Entry Retailers. The injury to consumers, the disregard for the law, and the steadfast refusal to accept responsibility require a significant and substantial monetary award. The total award of $280,000,000.00 meets these requirements.
The Court hereby imposes penalties against Dish and in favor of the Plaintiffs United States, California, and Ohio; and awards statutory damages to Plaintiffs States and North Carolina and against Dish, as follows: 60 percent of the total monetary award, or $168,000,000.00, to the United States as civil penalties in Counts I-IV; 30 percent, or $84,000,000.00, to the Plaintiff States as proportionate and reasonable statutory damages in Counts V and VI; 6 percent, or $16,800,000.00, to California as civil penalties in Counts VII and VIII; 3 percent, or $8,400,000.00, to North Carolina as proportionate and reasonable statutory damages in Counts IX and X; and 1 percent, or $2,800,000.00, to Ohio as civil penalties in Count XII. The Court apportioned the majority of the
Dish is jointly and severally liable to the Plaintiff States for the reasonable and proportionate statutory damages of $84,000,000.00 in Counts V and VI. The Plaintiff States shall divide the statutory damages in Counts V and VI proportionately to the number of violations in each state: 43.4 percent or $36,456,000.00 to California; 20.7 percent or $17,388,000.00 to Illinois; 12.2 percent or $10,248,000.00 to North Carolina; and 23.7 percent or $19,908,000.00 to Ohio.
The Plaintiffs asks for a permanent injunction pursuant to FTC Act § 13(b), 15 U.S.C. § 53(b), TCPA 47 U.S.C. § 227(g)(2); Cal. Bus. & Prof. Code §§ 17204 and 17593; N.C. Gen. Stat. § 75-105(a) and 7-14; and OCSPA Ohio Rev. Code § 1345.07(A)(2). The parties focus their arguments primarily on whether the United States is entitled to a permanent injunction.
The United States seeks an injunction pursuant to the proviso in the FTC Act § 13(b) which states: "Provided further, That in proper cases the Commission may seek, and after proper proof, the court may issue, a permanent injunction." FTC Act § 13(b),15 U.S.C. § 53(b) (emphasis in the original) (Permanent Injunction Proviso). Violations of the TSR are considered violations of a rule promulgated under the FTC Act. Violations of such rules are unfair and deceptive acts or practices in violation of FTC Act § 5(a). 15 U.S.C. §§ 45(a), 57a(1)(B) and 6102(c)(1). The United States may pursue the remedies available under the FTC Act for these violations, including injunctive relief under the Permanent Injunction Proviso.
The Permanent Injunction Proviso authorizes the Court to issue a permanent injunction in a "proper case."
To establish a right to a permanent injunction, the United States must meet the "public interest" test for injunctive relief. This standard applies to actions by the federal government to enjoin violations of federal statutes in the public interest.
Dish argues that the Plaintiffs also must prove scienter in order to secure an injunction. The
Dish argues that the traditional four-part test for injunctive relief in private actions of irreparable harm, no adequate remedy at law, success on the merits, and a balance of the equities applies to the United States' claim for a permanent injunction. This is incorrect. The Seventh Circuit specifically held in
Dish appeals to other language in FTC Act § 13(b) which authorizes temporary injunctive relief during pending administrative proceedings. The temporary injunctive relief provision in § 13(b) does not apply because the Permanent Injunction Proviso is a separate and distinct authorization for permanent injunctive that is independent of the temporary relief provisions.
Dish also cites
The Plaintiff States seek an injunction under the TCPA 47 U.S.C. § 227(g)(2). Section 227(g)(2) contains language very similar to the Permanent Injunction Proviso, "Upon a proper showing, a permanent or temporary injunction ... shall be granted without bond." 47 U.S.C. § 227(g)(2). Both statutes authorize the government to secure an injunction to in the public interest. The similar language and purpose supports the inference the TCPA authorizes the Plaintiff States to secure an injunction under the public interest test.
The public interest test is also the appropriate standard for injunctive relief under California Business & Professions Code §§ 17204 and 17593; North Carolina General Statutes §§ 17-105(a) and 17-14; and Ohio Revised Code § 1345.07(A)(2).
The Plaintiffs have established that Dish, its Telemarketing Vendors, and its Order Entry Retailers violated the applicable Do-Not-Call Laws millions and millions of times. The Plaintiffs have also proven millions more violations, although have not proven the specific amount for these additional violations. The additional violations include Dish's Registry Calls in the 2003-2007 Calling Records. Dr. Yoeli found 2,919,321 calls that were both Registry Calls and Internal List Calls after March 25, 2004. Dr. Yoeli assumed all calls in one day on the calling records were one violation. This was a very conservative assumption. Some of those records reflected multiple illegal calls. The additional Do-Not-Call Law violations also include the millions of calls that JSR made between January 1, 2007 and the day Dish terminated it on February 14, 2007. In addition, many Order Entry Retailers made illegal press 1 Abandoned Prerecorded Calls, including Satellite Systems, LA Activations, United Satellite, American Satellite, Vision Satellite, Dish Nation, and Atlas Assets. This evidence shows that Dish and its agents made many millions more illegal calls that the specific calls proven. The vast quantity of illegal calls provides substantial proof that a reasonable likelihood of future illegal calls without an injunction.
In many cases, Dish knew Order Entry Retailers were violating the Do-Not-Call Laws and did nothing. Dish knew that Satellite Systems made prerecorded abandoned calls as early as 2002. Dish knew Satellite Systems was making Prerecorded Calls in 2004 and made it an Order Entry Retailers anyway. Dish knew in 2005 that Satellite Systems was continuing to make Prerecorded Calls. Dish knew in August 2005 that United Satellite was making illegal Abandoned Prerecorded Calls in August 2005 and allowed the practice to continue for another year.
In August 2006, Dish started the Compliance Department to limit Dish's exposure for liability from Retailer practices. The Compliance Department systematically documented complaints and secured responses. The Compliance Department apparently had some success in reducing the use off-shore affiliates to telemarket Dish Network. Dish's actions to discipline Order Entry Retailers for Do-Not-Call Law violations, however, remained ad hoc and inconsistent. By 2009, Dish's Legal Department still considered the Order Entry program to be rife with shady, illegal activity.
Any real changes came in late 2008 and 2009. Dish fired numerous Retailers, cut the number of Order Entry Retailers, and instituted changes in the Quality Assurance program. These changes corresponded with mounting pressure from investigations by the FTC and state consumer protection officials. Ultimately, these investigations led to this suit being filed in March 2009 and Dish settling with the remaining 46 states in July 2009 by entering into the Assurance of Voluntary Compliance with them. This evidence shows that Dish reacted to pressure from law enforcement. The evidence supports the conclusion that the pressure needs to be maintained to keep Dish's marketing personnel from reverting to their practice of trying to get around the rules.
The Court is also seriously concerned with the most recent evidence showed that Dish continued to show little or no regard for consumer complaints about Order Entry Retailers' practices. The Satellite System calling records showed that Satellite Systems made 381,811 Registry Calls in 2010 and 2011. Dish received so many complaints that the Legal Department prepared a standard go after Satellite Systems letter. Dish's response to these consumers was essentially: go away, it's not our problem, go after Satellite Systems. Dish's denial of responsibility and lack of regard for consumers are deeply disturbing and support the inference that it is reasonably likely that Dish will allow future illegal calls absent government pressure.
In contrast, Dish's direct marketing channel did not demonstrate such a disregard for the Do-Not-Call Laws. The direct channel established the Working Group to prepare for the launch of the Registry. Outbound Operations scrubbed Account Number Campaigns to avoid Do-Not-Call violations. The scant competent evidence, however, failed to show what Dish's Database Marketing did to ensure that Lead Tracking System and Cold Call calling campaigns complied with the Do-Not-Call Laws. In 2008, PossibleNOW began assisting Dish's direct marketing with Do-Not-Call Law compliance.
The evidence, however, shows that responsible Dish personnel in direct telemarketing channel did not read the TSR or FCC Rule carefully. There is no evidence that the Working Group attempted to establish the necessary documentation to comply with the safe harbor provisions of either the TSR or the FCC Rule. Dish personnel knew that Dish made mistakes,
Dish personnel also did not read the Established Business Relationship provisions carefully. Dish personnel did not follow the language of the TSR and FCC Rule and calculate Transaction-based Established Business Relationship exceptions from the last date of purchase or other financial transaction. Dish hired Possible-NOW in 2008 and learned that its Transaction-based Established Business Relationship procedures were flawed, but Dish did not correct the problem for another two years. This lack of care indicates that a reasonable likelihood that future illegal calls will occur without an injunction.
Finally, the Court is convinced that at least some in Dish management do not believe that Dish really did anything wrong or harmed anyone with these millions and millions of illegal calls. Outbound Operations Manager Montano stated that he did not think anyone was really harmed by the millions of illegal calls:
True, DeFranco testified that Dish "gets it" and now takes telemarketing laws very seriously.
Dish presented extensive evidence and made extensive arguments about the balance of the equities. The arguments, however, address aspects of the Plaintiffs' proposed injunction rather than whether to issue an injunction. The Court must give great weight to the public equities. Congress determined that harassing unwanted telemarketing calls injure consumers. The 15,000,000 Americans who registered numbers on the Registry in the first five days after the Registry opened, and the 40,000,000 who registered numbers in the first two months, agreed with Congress. The 226 million who have registered their telephone numbers also agree.
The Court may include appropriate prophylactic provisions in an injunction to ensure that future violations will not occur.
The Court will set the parameters of the appropriate injunction, not the Plaintiffs or Dish. The injunction must ensure that the illegal Registry Calls, Internal List Calls, and Prerecorded Calls will not happen in the future. The injunction will take into account Dish's concerns that certain of Plaintiffs' proposed injunctive provisions will drive Dish or its retailers out of business. The primary goal of the injunction, however, is preventing future illegal activity, not saving Dish from incidental or consequential financial pain to achieve that goal.
The Court will not impose an immediate ban on Dish's telemarketing as proposed by the Plaintiffs. Rather, the Court will require Dish, its Telemarketing Vendors, and major Retailers (Primary Retailers) to comply with the safe harbor provisions of the TSR and the FCC Rule. The Primary Retailers shall consist of every Dish Retailer that, during the calendar year 2016, or any subsequent calendar year, has either (1) produced 600 activations or (2) has directly or indirectly used automatic dialing equipment. The safe harbor provisions are designed to ensure compliance with the Do-Not-Call Laws and to allow for inadvertent errors. Requiring compliance with the safe harbor provisions, therefore, will meet the Plaintiffs' justified need for a mechanism to ensure compliance and avoid the potentially dire consequences of a complete telemarketing ban. If Dish cannot demonstrate that Dish, its Telemarketing Vendors, and the Primary Retailer are in compliance with the safe harbor provisions of the TSR and FCC Rule, the Court will bar Dish from accepting activations from the non-complying source.
Limiting the prophylactic aspects of the injunction to Primary Retailers will address Dish's concern that the Injunction Order would affect every Retailer's call to return a customer's call. The prophylactic aspects of the Injunction Order will only affect major Retailers or Retailers who use automatic dialing equipment. The Injunction Order will also prohibit any Retailer from violating the relevant Do-Not-Call Laws.
The Court, further, will not include the Plaintiffs' proposal to require Dish to terminate a Primary Retailer for a single mistake as long as the Primary Retailer is complying with the TSR and FCC Rule safe harbor provisions. Compliance with the safe harbour provisions will minimize errors and, so, meet the Plaintiffs' desire for future compliance. The Plaintiff United States' counsel indicated that Dish would not need to terminate a Retailer who made a mistake if the retailer was complying with the safe harbor provisions.
The Plaintiffs implied that Dish hid the fact that all Retailers now used the Axiom system.
The Court will adopt the Plaintiffs' proposed requirement that Dish employ a telemarketing compliance expert to formulate a long-term plan to ensure compliance with the Do-Not-Call Laws and to provide status reports. The reports will include an updated list of Primary Retailers that made 600 activations in a calendar year or used automatic dialing equipment in a calendar year. Such Retailers will become Primary Retailers required to comply with the safe harbor provisions of the TSR and FCC Rule.
The Court, however, will not follow the Plaintiffs' suggestion to bar PossibleNOW or CompliancePoint from serving as the telemarketing compliance expert. PossibleNOW performed services for both sides and PossibleNOW representatives testified for both sides. The Court is not convinced that these services tainted PossibleNOW to make it unable to serve as a telemarketing compliance expert. Moreover, the Plaintiff United States' counsel indicated in his cross-examination of Sponsler on this issue that the United States would have no objection if PossibleNOW performed this role as a subcontractor.
Lastly, the Court will include a provision that any Plaintiff make unannounced inspections of Dish, its Telemarketing Vendors, or Primary Retailers, but will require a prior ex parte application to this Court and Court approval for such inspection. An ex parte application to inspect a Dish facility must demonstrate probable cause necessary for administrative warrants to believe that Dish is violating the Injunction Order, the plan developed by the telemarketing compliance expert, the TSR, TCPA, FCC Rule, or any of the State statutes at issue. An ex parte application to inspect a Telemarketing Vendor or Primary Retailer must demonstrate probable cause necessary for administrative warrants to believe that the subject of the requested inspection is violating the TSR, TCPA, FCC Rule, or any of the State statutes at issue. The ex parte application must state with reasonable specificity for administrative inspections the location to be inspected and the information sought from the inspection. Requiring prior application alleviates any Fourth Amendment concerns, or other concerns, regarding the reasonableness of any inspection.
Dish presented no evidence regarding any other provision in the Plaintiffs' proposed injunctions. The Court has reviewed the provisions and has adopted those provisions that the Court found to be reasonable and appropriate to ensure Dish's ongoing compliance with the Do-Not-Call Laws at issue.
THEREFORE this Court enters judgment in favor of the Plaintiffs United States and the States of California, Illinois, North Carolina, and Ohio and against Defendant Dish Network L.L.C. on Counts I, II, III, V, VI, VII, VIII, IX, X, and XII of the Third Amended Complaint and judgment in favor of Plaintiff United States and against Defendant Dish Network L.L.C. on the claim that Defendant provided substantial assistance to Star Satellite as alleged in Count IV of the Third Amended Complaint, and judgment in favor of Defendant Dish Network L.L.C. and against the United States on the claim that Dish Network, L.L.C. provided substantial assistance to Dish TV Now as alleged in Count IV of the Third Amended Complaint. The Court enters judgment in favor of Defendant Dish Network L.L.C. and against Plaintiff State of Illinois on Count XI of the Third Amended Complaint.
The Court awards the following monetary relief in favor of the Plaintiffs United States and the States of California, Illinois, North Carolina, and Ohio and against Defendant Dish Network L.L.C.:
As additional necessary and appropriate relief, the Court further hereby enters a Permanent Injunction in favor of the Plaintiffs and against Defendant Dish Network, L.L.C. in the manner set forth in the separate Permanent Injunction Order entered herewith.
All pending motions are denied as moot. This case is closed, except to the extent that the Court retains jurisdiction to enforce the Permanent Injunction.
