TCPA Violation

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7^th Circuit Court of Appeals

Case Name: United States of America, et al. v. DISH Network, L.L.C.,

Case No.: 17-3111

Officials: EASTERBROOK, KANNE, and BRENNAN, Circuit Judges.

Focus: TCPA Violation

After a bench trial that lasted five weeks and produced 475 typed pages of findings, a district judge concluded that DISH Network and its agents committed more than 65 million violations of telemarketing statutes and regulations. 256 F. Supp. 3d 810 (C.D. Ill. 2017) (183 printed pages). The penalty: $280 million. DISH does not challenge any finding of fact. This simplifies the appellate task, but legal issues remain.

DISH sold its satellite TV service through its own staff plus third parties. These fell into three categories. DISH hired “telemarketing vendors” to conduct campaigns on its behalf. It used thousands of “full service retailers” that sold, installed, and serviced satellite gear and service in their areas. Finally, it had some 50 “order-entry retailers”, which used phones to sell nationwide. The order-entry retailers took orders from customers and entered them directly into DISH’s computer system. DISH was responsible for installing the necessary equipment and received payments from the customers, remitting to the order-entry retailers a commission for each new customer. This appeal concerns the acts of DISH and four order-entry retailers: Dish TV Now, Star Satellite, JSR, and Satellite Systems Network.

The United States, California, North Carolina, Illinois, and Ohio filed suit against DISH, alleging violations of federal and state laws. The district court found that DISH and its agents violated the Telemarketing Sales Rule, 16 C.F.R. §310 (propagated under 15 U.S.C. §45, part of the Federal Trade Commission Act), the Telephone Consumer Protection Act, 47 U.S.C. §227, and related state laws. The appeal concerns the extent to which DISH had to coordinate do-not-call lists with and among these retailers or was otherwise responsible for their acts. The Telemarketing Sales Rule prohibits (i) calls to people who placed their names on the National Do Not Call Registry, (ii) calls to people who placed their names on a vendor’s internal do-not-call list, and (iii) “abandoned” calls (so named because a system that fails to put the consumer in contact with a live person within two seconds of the call connecting is deemed “abandoned”). See 16 C.F.R. §310.4(b)(1)(iii)(B), (A), and (b)(1)(iv). Those prohibitions give rise to most of the issues.

We start with DISH’s challenge to the district court’s conclusion that it caused violations of statutes and regulations just by hiring others to sell its services. One provision in the Rule makes it unlawful for a seller to “cause a telemarketer to engage in” violations. 16 C.F.R. §310.4(b). Neither the regulation nor any judicial decision addresses what “cause” means. Plaintiffs maintain, and the district court found, that “cause” occurs whenever an act plays any role in the chain of acts leading to a violation. On this understanding the very existence of DISH “causes” all violations by anyone who, in the absence of satellite TV, would be in some other line of work. DISH maintains, to the contrary, that “cause” means “proximate cause,” a phrase that excludes some effects that are remote from the violation. See Hemi Group, LLC v. New York City, 559 U.S. 1 (2010) (applying a proximate-cause approach to civil RICO).

The judgment of the district court is affirmed, except for its holding that DISH is liable for “substantially assisting” Star Satellite and its measure of damages. With respect to those matters, the judgment is vacated, and the case is remanded for further proceedings consistent with this opinion.

Affirmed in part. Vacated and remanded in part.

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Derek A Hawkins is trademark corporate counsel for Harley-Davidson. Hawkins oversees the prosecution and maintenance of the Harley-Davidson’s international trademark portfolio in emerging markets.