- U.S. and four states seek record penalties for illegal calls
- Company claims proposed punishment far exceeds similar cases
Dish Network Corp. says the almost $900 million in federal fines it faces for alleged telemarketing violations is “shocking” after a firm that placed most of the robocalls to consumers on behalf of a retailer for the satellite TV company paid just $75,000.
But that’s not the half of it. In a trial that started Tuesday, four states that joined the U.S. in suing Dish seek as much as $23.5 billion in fines, about $848 million more than the company’s market capitalization at the close of trading.
The judge who is hearing the case without a jury already has determined that Dish made more than 55 million illegal calls. Laws against phoning people on do-not-call lists and using recorded messages allow penalties on a per-violation basis. U.S. District Judge Sue Myerscough in Springfield, Illinois, will decide how many bad calls Dish is responsible for and whether it knowingly broke the law.
“The damages add up very very quickly,” said Linda Goldstein, a lawyer at Manatt, Phelps & Phillips LLP who represents companies in consumer-protection cases. “It’s been pretty rare where courts have awarded the maximum that they could but one can never predict these things.”
The government may call Dish co-founder Jim DeFranco as a witness during the trial, which is scheduled to take four weeks.
Dish told the judge in a pretrial court filing that the penalty the U.S. is trying to impose is “far in excess” of fines previously sought or obtained for telemarketing violations.
Dish said most of the calls complained about are from almost 10 years ago and that it’s improved its compliance since then.
“DISH has long taken our compliance to the telemarketing laws seriously, has and will continue to maintain rigorous telemarketing compliance policies and procedures, and has topped multiple independent customer service surveys along the way,” the company said in a statement.
Dish is accused by the Federal Trade Commission and the states of Illinois, California, North Carolina and Ohio of violating two U.S. laws, the Telemarketing Sales Rule and the Telephone Consumer Protection Act.
The government’s first witness Tuesday was a stay-at- home mother of four from the Chicago suburb of Midlothian, Illinois, who he said she received Dish sales calls in early 2010 when she was dealing with the death of her mother.
“I told them no more calls,” said Lisa Skala, 36, who had been a Dish customer from 2006 to November 2008. “Please stop calling me.”
She said signed up for a government do-not call registry in 2007 and filed complaints about the Dish calls in February and March 2010.
“It was really frustrating," she testified.
Under cross-examination from Dish attorney Peter Bicks, Skala acknowledged that
she answered only three calls from Dish and that they ended in March 2010. Skala also said the callers were polite and ended the calls quickly after Skala expressed her irritation.
Dish said in a recent regulatory filing that the federal government intended to seek as much as $900 million in penalties and the states indicated that they are aiming for $23.5 billion in penalties.
Dish said in a filing that the U.S. was satisfied with dramatically lower fines against one of its retailers and the telemarketing firm responsible for the vast majority of the robocalls at issue in the trial. The combined penalties of $12.2 million against those two companies, amounting to 10 cents to 15 cents per call, were reduced to $225,000 based on their inability to pay, Dish said.
The U.S. has publicized “those penalty sums as tough and appropriate to punish the defendants and deter others from engaging in similar wrongful conduct,” according to the filing.
The case is U.S. v. Dish Network LLC, 09-cv-03073, U.S. District Court, Central District of Illinois (Springfield).