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