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March 13, 2013

Government Can Add Claim That Dish Network Violated Telemarketing Sales Rule by Calling Names on Company's Own Do-Not-Call List

By Jeffrey May, J.D.

In a federal/state enforcement action challenging satellite television provider Dish Network LLC's telemarketing practices, the Department of Justice should have been permitted to amend its complaint to allege that Dish violated the entity-specific do-not-call provision of the FTC's Telemarketing Sales Rule (TSR), even though the motion to file the second amended complaint came shortly before fact discovery was set to close. A magistrate judge's decision, denying the motion for leave to file the second amended complaint on the ground that the undue delay in filing the proposed amendment would prejudice Dish, was vacated (FTC v. Dish Network LLC, March 12, 2013, Myerscough, S.).

After the magistrate judge denied the request to amend the complaint to add the new claim, the FTC filed an action against Dish, raising essentially the same claim. In that action, which was filed more than three years after the filing of the original action, the FTC alleged that Dish violated the entity-specific do-not-call provision of the TSR by calling people who had previously stated that they did not wish to receive telemarketing calls made by or on behalf of Dish.

Although the FTC's action did not have to be dismissed based on res judicata, on the doctrine against claim splitting, or on statute of limitations grounds—as the provider contended—the federal district court in Springfield, Illinois, decided to dismiss that second action without prejudice and grant the Justice Department leave to amend the first action.

The Justice Department adequately justified the delay, according to the court. Moreover, any prejudice the provider would suffer by allowing the new claim could be remedied by reopening discovery on the issue.

The delay in filing was due to Dish's purported delay in confirming the findings in the government's analysis of the provider's call records. The Justice Department reasonably sought and waited for confirmation and additional discovery responses from Dish before seeking leave to amend, the court explained. Once it became clear that Dish was not going to respond, the Justice Department sought leave.

The court also explained that Dish would not suffer undue prejudice by adding the claim, because the issue of the provider's compliance with its own internal do-not-call lists was already part of the first action. Dish's primary defense to the plaintiffs' claim that it made calls to numbers on the national do-not-call list was that it had an established business relationship for that phone number. However, the court explained, Dish cannot assert an established business relationship for calls to numbers where the owner of the number requested to be placed on Dish's internal do-not-call list.

As for delay, resolution of the entire case was already delayed because certain issues were referred to the Federal Communications Commission. Dish asked for the stay in May 2012.

The court had set the case for a three-week jury trial beginning April 8, 2014. Commending the attorneys "for their extremely helpful arguments and exemplary briefing of the issues," the court called on the parties to attempt to reach an agreement regarding scheduling and reminded them that the magistrate judge was available for mediation.

The cases are No. 12-3221 and No. 09-3073.

Attorneys: Gary Lester Ivens for FTC. Daniel S. Blynn (Kelley, Drye & Warren, LLP) for Dish Network LLC.

Companies: Dish Network LLC

MainStory: TopStory ConsumerProtection Privacy IllinoisNews FederalTradeCommissionNews

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