A Springfield federal judge has placed Dish Network on the hook for a fine of more than $280 million for alleged violations of federal telemarketing law, even though the violations were committed by third-party contractors. And other companies should take note of the judge's ruling, said a lawyer who specializes in defenses against similar legal actions.
On June 5, U.S. District Judge Sue Myerscough of the U.S. District Court of the Central District of Illinois penalized the company $283 million because its contractors violated the Telephone Consumer Protection Act (TCPA) and the Telemarketing Sales Rule (TSR).
That ruling followed a $60 million penalty ordered by a judge in North Carolina just weeks earlier.
The Central Illinois action was brought by the U.S. Justice Department and the attorneys general of Illinois, California, Ohio and North Carolina.
Dish Network was defended in that case by attorneys with the firms of Orrick Herrington & Sutcliffe, of N.Y.; and Kelley, Drye & Warren, with offices in Parsippany, N.J., Chicago and Los Angeles.
In the Central Illinois District case, in essence, Dish was held ultimately responsible for telemarketer actions even if it was unaware those telemarketers were indeed its agents.
"It’s pretty remarkable,” said attorney Eric Troutman of Dorsey & Whitney in Costa Mesa, Calif. “Dish was held liable for tens of millions of pre-recorded telemarketing calls placed by third-parties even though it never placed those calls directly and actually firmly urged its order entry retailers not to make such calls on its behalf."
Troutman noted Dish was held liable for calls placed by third-party authorized dealers merely because the numbers dialed appeared on a different dealer’s internal do-not-call list, and even though Dish "never called numbers on its own internal DNC, had a process in place to avoid calling numbers on the National DNC without an exemption and did not make any pre-recorded calls to live phone recipients itself.”
Troutman said the court expected “sophisticated” companies such as Dish to know and comply with complex law and remain up-to-date on rules and regulations.
“Although the record shows that Dish struggled mightily to keep up with the FTC and FCC’s evolving rules on telemarketing, the court hammered it for failing to contemplate that calls answered by live call recipients might constitute 'abandoned calls' under the FTC’s amended (rules)," Troutman said. "Sellers may be held responsible for illegal calls placed by third-parties that market goods and services on their behalf, especially where the seller has the right to control the third parties and the benefit of the calls flows primarily to the seller.”
Troutman, a TCPA defense attorney with some notable national decisions to his name, has led the defense against more than 30 national TCPA class actions and co-authored the first national comprehensive guide on the subject. He said, “good faith and mere compliance with industry standards” will not protect companies from liability, and penalties can break corporate piggy banks.
“Regulators can (penalize) up to $16,000 per violation,” he said. “Dish faced total penalties exceeding $700 billion owing to the extraordinarily high statutory penalties available under the Telecommunications Act. Compared to the maximum penalty (Dish) faced, the court let Dish off with a slap on the wrist.”
He said Dish will appeal, but companies should hire outstanding counsel to protect themselves.
“Assuring proper line of sight between vendors placing marketing calls is now essential to assure that internal DNC lists are being shared and scrubbed across vendors,” he said. “(Take) proper note (of) call abandonment and pre-recorded calls (and) double-check scrub processes to assure compliance with TSR’s exemptions before calling numbers on the National DNC. 'This is how everyone else is doing things' is no defense. Regulators can still come after you.”