Dish faces fines up to $24B in trial over il­le­gal robo­calls

The Denver Post - - FRONT PAGE - By Mar­garet Cronin Fisk

In a trial that opened Tues­day, four states and the U.S. Depart­ment of Jus­tice are seek­ing more than $24 bil­lion in fines from Dou­glas County-based Dish Net­work Corp. over il­le­gal tele­mar­ket­ing calls.

U.S. District Judge Sue My­er­scough in Spring­field, Ill., is hear­ing the case with­out a jury.

She al­ready has de­ter­mined that Dish made more than 55 mil­lion il­le­gal calls.

Now she will de­cide how many bad calls Dish is re­spon­si­ble for and whether it know­ingly broke the law.

Ac­cord­ing to a reg­u­la­tory fil­ing Dish made with the Se­cu­ri­ties and Ex­change Com­mis­sion in May, the fed­eral govern­ment is seek­ing up to $900 mil­lion in civil penal­ties and the states are seek­ing $23.5 bil­lion — about $848 mil­lion more than the com­pany’s mar­ket cap­i­tal­iza­tion at the close of trad­ing Tues­day.

Laws against phon­ing peo­ple on donot-call lists and us­ing recorded mes­sages al­low penal­ties of up to $16,000 per vi­o­la­tion.

“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.”

Dish said most of the calls were from al­most 10 years ago and that it has 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.

In 2009, Dish agreed to pay $5.99 mil­lion to 46 states, in­clud­ing Colorado, to set­tle claims of un­fair and de­cep­tive sales prac­tices re­lated to vi­o­la­tions of the Do Not Call Registry.

The Den­ver-Boul­der Bet­ter Busi­ness Bureau and the Colorado at­tor­ney gen­eral’s of­fice said at the time they had re­ceived a com­bined 13,190 con­sumer com­plaints against Dish over three years.

Ohio, Cal­i­for­nia, Illinois and North Carolina filed sep­a­rate cases against Dish that year and were not part of the set­tle­ment. It’s those cases that went on trial this week.

The govern­ment might call Dish co-founder Jim DeFranco as a wit­ness dur­ing the trial, which is sched­uled to take four weeks.

Dish told My­er­scough in a pre­trial court fil­ing that the $900 mil­lion penalty the U.S. is try­ing to im­pose is “far in ex­cess” of fines pre­vi­ously sought or ob­tained for tele­mar­ket­ing vi­o­la­tions.

The com­pany called the fine “shock­ing” af­ter a firm that placed most of the robo­calls to con­sumers on be­half of a re­tailer for Dish paid just $75,000.

The com­bined penal­ties of $12.2 mil­lion against those two com­pa­nies, amount­ing to 10 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 govern­ment’s first wit­ness Tues­day was a stayat-home mother of four from the Chicago sub­urb of Mid­loth­ian, Ill., who 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 the calls ended in March 2010. Skala also said the call­ers were po­lite and ended the calls quickly af­ter Skala ex­pressed her ir­ri­ta­tion.

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