Dish Co-Founder Says Robocallers Hid Violations From Company

  • U.S., four states seek $24.4 billion in telemarketing trial
  • Contractors who made millions of robocalls fired, Dish says

Dish Network Inc. never knew its contractors were violating do-not-call laws by placing millions of robocalls to consumers, the satellite TV distributor’s co-founder testified at a trial where four states and the federal government are seeking more in fines than the company’s worth.

“They hid it from us,” Dish Executive Vice President James DeFranco testified at the trial in Springfield, Illinois. Had Dish known about the illegal calls, “we would have taken action,” he said.

“Dish could have done more, couldn’t it?” Lisa Hsiao, a U.S. Justice Department lawyer, asked DeFranco.

“I don’t know if we could have done more,” he replied.

The U.S. and the states are seeking more than $24 billion in fines in a nonjury trial for violations of do-not-call rules. Dish has a market value of $22 billion.

The judge who is hearing the case has already determined that Dish made more than 55 million illegal calls.

The Dish trial comes amid an explosion of lawsuits over do-not-call violations filed against social media, health-care, communications and other companies, Bloomberg Intelligence Analyst Matthew Schettenhelm reported. Lawsuits under the federal Telephone Consumer Protection Act expanded from 14 in 2008 to more than 2,000 in 2015.

Violation Penalties

Laws against phoning people on do-not-call lists and using recorded messages allow penalties on a per-violation basis. The Telephone Consumer Protection Act allows damages of $500 a call or text, which can be tripled for violations made knowingly.

The federal Telemarketing Sales Rule allows penalties of $11,000 for each violation before Feb. 9, 2009, and $16,000 per violation after that. Dish is accused of violating both laws in the case filed in 2009.

U.S. District Judge Sue Myerscough will decide how many bad calls Dish is responsible for and the amount of fines. The trial, which started Jan. 19, is expected to last four weeks.

Typical Fines

Typically, the amount of fines sought or issued haven’t been close to the per-call values, Dish said in court papers. In a recent claim against Caribbean Cruise Lines, which alleged “billions of robocalls,’’ a settlement called for a $7.7 million penalty, with all but $500,000 suspended, Dish told the judge in a November filing.

Dish contends contractors and subcontractors made more than 90 percent of the bad calls and any calls by Dish itself were inadvertent. The offending contractors were fired when Dish learned of the illegal activity, the company said in court papers.

Dish knew of complaints about the improper calls, Hsiao said to DeFranco at the trial.

“There were complaints but it was hard to tell where they were coming from’’ because the contractors often had multiple clients, DeFranco said.

Dish “had no way to control the day-to-day operations” of these contractors, DeFranco said under questioning from company lawyer Peter Bicks.

Video Shown

DeFranco warned retailers that all do-not call laws must be followed, according to a 2007 video Bicks showed the court.

“You’ll get in trouble from us, but that’s the least of your problems,” DeFranco said on the video. Later, he said in the video, “We are not flexible at all on this.”

Bicks asked DeFranco about testimony earlier this week from retailers who said Dish applied intense pressure to sell subscriptions.

“Absolutely not true,” DeFranco said. Everything was done professionally, he said.

Dish is accused by the Federal Trade Commission and the states of Illinois, California, North Carolina and Ohio of violating the U.S. Telemarketing Sales Rule, as well as the Telephone Consumer Protection Act. The U.S. is seeking $900 million in damages, while the states are asking for $23.5 billion.

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.

They’re also massively larger than the fines paid by the two contractors who made most of the calls on behalf of Dish. One firm paid $75,000; the other $150,000.

The case is U.S. v. Dish Network LLC, 09-cv-03073, U.S. District Court, Central District of Illinois (Springfield).

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