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Appeal 'to the Bitter End'

Dish TCPA Damages Could Prompt Tighter Third-Party Monitoring

The record $280 million decision against Dish Network for Do Not Call violations could prompt similarly situated companies to pay much closer attention to the practices of third-party marketers they hire, Telephone Consumer Protection Act compliance lawyer Christine Reilly of Manatt Phelps told us Tuesday. Dish said it plans to appeal, while government enforcers said the penalty should cause other lawbreakers to take notice. The litigation brought by the FTC and several states and now the "catastrophic" amount of penalties and damages signal to companies using third-party agents to make telemarketing calls that they "need to be careful about what it is they're doing," Reilly said.

Dish surely will appeal the ruling "to the bitter end," not only because of the size of the damages themselves but because of the costs that would come from having to do the tighter monitoring and regulating of third-party telemarketing firms, Reilly said.

The FTC, DOJ and states "will continue to bring enforcement actions against Do Not Call violators,” said acting Chairman Maureen Ohlhausen. The case "sends a clear message to businesses that they must comply with the Do Not Call rules,” said acting Assistant Attorney General Chad Readler of DOJ's Civil Division.

Telemarketing practices likely will remain an active area of litigation for the foreseeable future, said Spencer Waller, director-Institute for Consumer Antitrust Studies, Loyola University Chicago School of Law. He said that's due to some aggressive telemarketing companies -- often located offshore -- that don't care about rules, small firms that don't know the rules, and some companies that turned a blind eye to what third-party telemarketing firms do. "We're far from TCPA compliance," he said.

U.S. District Judge Sue Myerscough of Springfield, Illinois, in a 475-page order (in Pacer) Monday, rejected Dish arguments that the court should interpret TCPA to allow awards to plaintiff states of $500 or less, saying that violates congressional TCPA language. But $500 per call for 16.2 million illegal calls would mean an $8.1 billion award, which would be "wholly disproportionate to the offense and ... might put Dish out of business," the order said, also using that logic to not exercise discretionary authority to increase the award. Instead, Dish was ordered to pay a $168 million civil penalty to the U.S. plus $112 million in civil penalties and statutory damages to plaintiff states California, Illinois, North Carolina and Ohio. Myerscough also issued a permanent injunction (in Pacer) Monday ordering Dish, either directly or through telemarketers, to not call people who said they don't want such calls. The injunction also laid out various terms for Dish outbound calls, such as prohibiting it from failing to have a representative speak within two seconds of the person's answer of the call.

The penalties "radically and unjustly exceed, by orders of magnitude, those found in the settlements in similar actions, notably against DirecTV, Comcast and Caribbean Cruise Lines," Dish said in a statement. "The Court is holding DISH responsible for telemarketing activities conducted by independent third-parties, including in circumstances where such third-parties intentionally hid their telemarketing efforts from DISH." It said it has "long taken its compliance with 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 $280 million was a record amount in Do Not Call litigation, with the $168 million awarded to the federal government the largest-ever civil penalty obtained for a violation of the FTC Act, the FTC said Tuesday.