United States District Court, M.D. North Carolina
THOMAS H. KRAKAUER, Plaintiff,
DISH NETWORK L.L.C., Defendant.
MEMORANDUM OPINION AND ORDER
Catherine C. Eagles, District Judge.
Systems Network, an agent of the defendant Dish Network, made
more than 50, 000 telemarketing calls on behalf of Dish to
phone numbers on the National Do Not Call Registry in 2010
and 2011. These calls violated the Telephone Consumer
Protection Act. Despite knowing that SSN had a history of
TCPA violations and was calling lists of numbers that it had
not “scrubbed” against the Registry, Dish allowed
SSN to continue to make telemarketing calls to sell Dish
services. While Dish promised forty-six state attorneys
general in 2009 that it would enforce TCPA compliance by its
marketers, Dish did nothing to monitor, much less enforce,
SSN's compliance with telemarketing laws. When it learned
of SSN's noncompliance, Dish repeatedly looked the other
with the jury's verdict that these calls violated the
TCPA and that SSN was Dish's agent, the Court finds that
SSN and Dish willfully and knowingly violated the TCPA. The
Court further concludes that it is appropriate to treble the
damages against Dish under 47 U.S.C. § 227(c)(5).
enacted the TCPA to curb abusive telemarketing practices that
threatened consumer privacy. See Mims v. Arrow Fin.
Servs., LLC, 565 U.S. 368, 372 (2012). Among other
things, the TCPA prohibits telemarketers from repeatedly
calling people who list their phone numbers on the National
Do Not Call Registry. Hannabury v. Hilton Grand Vacations
Co., 174 F.Supp.3d 768, 771 (W.D.N.Y. 2016). See
generally Mainstream Mktg. Servs., Inc. v. FTC, 358 F.3d
1228, 1234 (10th Cir. 2004) (“The national do-not-call
registry is a list containing the personal telephone numbers
of telephone subscribers who have voluntarily indicated that
they do not wish to receive unsolicited calls from commercial
telemarketers.”). People may register land-line and
wireless numbers on the Registry. Danehy v. Time Warner
Cable Enters., No. 5:14-CV-133, 2015 WL 5534094, at *4
(E.D. N.C. Aug. 6, 2015) (Gates, Mag. J.), adopted
by 2015 WL 5534285 (E.D. N.C. Sept. 18, 2015).
TCPA creates a private right of action for injunctive and
monetary relief for any “person who has received more
than one telephone call within any 12-month period by or on
behalf of the same entity in violation of the [TCPA]
regulations.” 47 U.S.C. § 227(c)(5); see
Hannabury, 174 F.Supp.3d at 771-72. The protections of
the TCPA related to the Registry only apply to residential
numbers; calls to businesses on the Registry are not
actionable under § 227(c). See 47 C.F.R. §
64.1200(c)(2) & (d) (referring to
TCPA is a strict liability statute and so it does not require
any intent for liability. Alea London Ltd. v. Am. Home
Servs., Inc., 638 F.3d 768, 776 (11th Cir. 2011). Treble
damages, however, are available for violations that occur
“willfully or knowingly.” Id.
2003, Dr. Thomas Krakauer, the plaintiff and class
representative, registered his residential number on the
Registry. Trial Tr. Jan. 11, 2017, Doc. 302 at 9:17-10:2
(testimony of Dr. Krakauer). Beginning in May 2009 and over
the next two years, SSN called Dr. Krakauer numerous times in
an effort to sell him Dish satellite television programming
and related services. See Id. at 12:3-:7,
17:22-18:5; Trial Tr. Jan. 13, Doc. 304 at 107:2-:22
(testimony of Anya Verkhovskaya). The calls continued even
after Dr. Krakauer complained to Dish about SSN's sales
tactics and after Dish placed Dr. Krakauer on its internal
do-not-call list and told SSN to do the same. See
15 at 7980-81, 8005.
Krakauer sued Dish in 2014, alleging that calls to him and
others violated the TCPA and that Dish was liable as
SSN's principal. Doc. 1; see Doc. 81 at 7. He
sought injunctive and monetary relief on behalf of a class of
all persons whose numbers were on the Registry but who
nonetheless received multiple telemarketing calls from SSN to
promote Dish between May 1, 2010, and August 1,
2011. Doc. 1 at pp. 10-11; see Doc. 47
at 1. After a class was certified, Doc. 111, and summary
judgment was largely denied, Doc. 113, the matter was tried
to the jury in January 2017. See Minute Entry
01/10/2017. The Court heard the evidence about willfulness at
the same time. See Doc. 222 at p. 6.
of agency, liability, and damages were submitted to the jury.
On the agency issue, the jury was instructed that the
plaintiffs must prove two things by the greater weight of the
evidence in order to reach an affirmative answer: first, that
SSN was Dish's agent, and second, that SSN acted in the
course and scope of that agency when it made the calls at
issue. Doc. 293 at 4-5. The jury was instructed only on
actual authority, including implied actual authority by
consent or acquiescence. Id. at 6-7.The jury answered
the agency issue in favor of the plaintiffs, finding that SSN
acted as Dish's agent when it made the calls at issue.
second issue, the plaintiffs had to prove four things by a
preponderance of the evidence: first, that the numbers of the
class members were listed on the Registry at the time of the
call; second, that after the number had been listed for at
least thirty days, SSN called the number at least twice
during any twelve-month period and made a telephone
solicitation on behalf of Dish; third, that the calls were
received; and fourth, that the numbers were residential at
the time of the call. Doc. 293 at 8. The jury answered this
liability question in favor of plaintiffs for all of the
calls. Doc. 292.
third issue, the plaintiffs asked for statutory damages and
did not seek actual damages. These statutory damages are
limited to no more than $500 per violative call. 47 U.S.C.
§ 227(c)(5)(B). The jury awarded $400 for each call.
the verdict, the parties submitted written closing arguments
on willfulness. Docs. 308, 312, 313, 317. Having considered
those briefs and all of the evidence, the Court now enters
these findings of fact and conclusions of law as to whether the
violations were willful and knowing.
Network is a satellite television provider that often uses
third-party marketers to get new customers. Dish had
contractual arrangements with these marketers, many of whom,
including SSN, solicited new customers for Dish through
telemarketing calls. SSN was an “Order Entry
Retailer” with direct access to Dish's computer
system. The OE Retailers collectively generated hundreds of
millions of dollars a year in revenue for Dish.
contract with SSN gave it virtually unlimited rights to
monitor and control SSN's telemarketing. In a settlement
agreement with dozens of state attorneys general in 2009,
Dish confirmed that it had this power over all of its
paper, Dish was committed to monitoring its marketers'
compliance with telemarketing laws and investigating
complaints of violations. In reality, however, Dish
repeatedly looked the other way when SSN violated the
telemarketing laws and when SSN disregarded contractual
duties related to compliance. Dish received numerous
complaints about SSN between 2004 and 2010 and was aware of
three lawsuits against SSN over its telemarketing calls that
resulted in monetary damages and injunctive relief. Dish knew
in May 2009 that SSN was not scrubbing all its call lists
against the Registry; it knew even earlier that SSN was not
maintaining call records. When Dish received complaints about
SSN and other marketers, the Dish compliance department did
nothing except attempt to identify the marketer that made the
call and, in the few cases when the marketer was identified,
refer the complaint to the marketer. SSN, for its part, sent
all complaints it received to Dish and “wait[ed] for
Dish to tell [us] what to do.” When individuals
complained, Dish disclaimed responsibility for the acts of
its marketers, including SSN, and made no effort to determine
whether SSN was complying with telemarketing laws, much less
to enforce such compliance.
The Relationship Between Dish and SSN
relationship with SSN dates to 2001, when it first signed an
agreement to have SSN market Dish services to new customers.
DX 84. Around that time, SSN marketed for both Dish and
DirecTV, a Dish competitor. See, e.g., Dep. Tr. of
Bahar “Sophie” Tehranchi,  Doc. 327 at
72:16-73:12; Trial Tr. Jan. 11, Doc. 302 at 205:7-:9
(testimony of Amir Ahmed). In May 2004, Dish made SSN one of
its forty-five OE Retailers. See Trial Tr. Jan. 11,
Doc. 302 at 60:2-61:14 (Ahmed testimony). As an OE Retailer,
SSN could log directly into Dish's ordering system and
enroll new customers in Dish services. Id. at
60:10-:18. Around 2005, DirecTV terminated SSN and stopped
using them as a marketer. See Tehranchi Dep., Doc.
327 at 72:16-:22; Trial Tr. Jan. 12, Doc. 303 at 52:13-:21,
55:6-:8 (testimony of Reji Musso).
contract with SSN characterized SSN as an independent
contractor. JX 1 at ¶ 11. Dish did not own SSN or direct
its day-to-day operations. Trial Tr. Jan. 11, Doc. 302 at
228:20-229:8 (Ahmed testimony). SSN was a separate business
entity with its own payroll and management. See Id.
at 227:4-:14. In practice, Dish did not tell SSN who to
market to or require it to do any specific type of marketing,
like telemarketing. Id. at 226:12-:25; see
also Trial Tr. Jan. 13, Doc. 304 at 167:9-:12 (testimony
of James DeFranco).
did allow SSN to hold itself out as a Dish authorized
representative, and SSN could initiate the sales process on
Dish's behalf. See Trial Tr. Jan. 11, Doc. 302
at 60:2-:18 (Ahmed testimony); Trial Tr. Jan. 12, Doc. 303 at
24:21-25:5 (Musso testimony); JX 1 at ¶ 2.1. Dish paid
SSN on a weekly basis for each new customer that SSN signed
up for Dish services, once those services were activated.
Trial Tr. Jan. 12, Doc. 303 at 23:25-24:12 (Musso testimony).
During 2010 and 2011, all of SSN's revenue came from
payments from Dish for signing up new Dish customers.
See Tehranchi Dep., Doc. 327 at 121:17-:20.
terms of the contract between Dish and SSN showed that Dish
had the power to exercise complete control over SSN's
telemarketing and sales calls. The contract required SSN to
“take all actions and refrain from taking any action,
as requested by [Dish] in connection with the
marketing” of Dish services. JX 1 at ¶ 7.3. Dish
had absolute control over the type and cost of programming
packages that SSN could market. See Id. at
¶¶ 4-5. All the internal records SSN created while
conducting marketing on behalf of Dish were “the sole
and exclusive property” of Dish, even after the
Dish-SSN agreement ended. JX 1 at ¶ 7.4. SSN was
required to “continuously and actively” promote
Dish's products, and failure to do so was grounds for
termination. Id. at ¶¶ 2.3, 10.4. Dish had
absolute discretion to change SSN's compensation at any
time. Id. at ¶ 6.1.1; Trial Tr. Jan. 11, Doc.
302 at 114:5-:16 (Ahmed testimony). While SSN bought bulk
customer data to develop lists of people to call on behalf of
Dish, Dish controlled the companies from which SSN could buy
this data. See Tehranchi Dep., Doc. 327 at 55:5-:14.
contract also gave Dish nearly unlimited power to impose
additional requirements on SSN via “business
rules.” Dish could issue these business rules to SSN at
any time, for any reason, merely by sending an email or fax.
JX 1 at ¶ 1.7. If SSN failed to follow a business rule,
Dish could terminate the contract. See Id. at ¶
these business rules, Dish imposed several requirements
related to TCPA compliance. E.g., DX 1 at 7; DX 2;
DX 3 at 47. Dish required that marketers maintain records of
the telemarketing calls they made. E.g., DX 2. Dish
could require SSN to submit sales scripts to Dish for
pre-approval, and Dish monitored sales calls to be sure SSN
was offering Dish services on terms authorized by Dish.
See Tehranchi Dep., Doc. 327 at 66:7-67:1,
67:13-68:5 (discussing script submitted to Dish and referring
to PX 22); PX 22; PX 15 at 7991, 8055 (notice that Dish would
monitor SSN's calls). Beginning in October 2008, Dish
required that all marketers “scrub” their call
lists of numbers on the Registry and maintain scrubbing
records, using a service from another business, PossibleNow.
DX 5. When Dish traced a complaint to a marketer, it
routinely asked for the date that SSN had scrubbed the
number. E.g., PX 15 at 7988.
2010, the OE Retailers as a whole enrolled over a million new
Dish customers per year. Trial Tr. Jan. 11, Doc. 302 at
89:12-:17 (Ahmed testimony); see PX 89 at 14. The
average customer pays Dish about $80 per month, see
Trial Tr. Jan. 13, Doc. 304 at 193:25-194:2 (DeFranco
testimony), meaning that the new customers enrolled by OE
Retailers created in the ballpark of $960 million in new
annual Dish revenue per year. Neither Dish nor the plaintiffs
offered evidence of the specific number of activations that
resulted from SSN's sales calls or of Dish's net
sales or profits from those new customers, though SSN appears
to have produced only a small percentage of Dish's
activations. Trial Tr. Jan. 11, Doc. 302 at 199:14-:18
(testimony by Mr. Ahmed that SSN accounted for “less
than one-tenth of a percent” of Dish's 2011 budget
for new customers); Trial Tr. Jan. 13, Doc. 304 at 177:15-:20
(similar testimony by Mr. DeFranco).
History of Complaints and Lawsuits
early on in the relationship with Dish, SSN's
telemarketing was a recurring source of TCPA complaints and
compliance problems. Dish received TCPA complaints about SSN
numerous times: about illegal prerecorded calls in 2005;
violations of do-not-call lists in 2009 and 2010; and other,
unspecified complaints in 2005, 2006, and 2008. See,
e.g., PX 15 at 7988, 8005, 8006, 8035, 8037, 8046; PX
addition to the specific complaints in the record, Dish
managers themselves repeatedly characterized SSN as a
compliance problem. In July 2004, Amir Ahmed, Dish's
national sales manager, told others at Dish that he was
“hearing a lot of complaints on [SSN] on telemarketing
calls to customers.” PX 503 at 1. Just a few months
later, however, Mr. Ahmed told a subordinate to recruit SSN
to sell more of their products and less of DirecTV's,
noting that he “[n]eed[s] activations” and had
gotten “additional economics” for SSN, despite
“issues related to sales.” PX 656 at 1. About a
year later, in September 2005, Dish's corporate counsel
acknowledged in an internal email that SSN was a problem:
We know that SSN is using autodialers and automessages.
[SSN's owner] has been warned time and again . . . that
these activities could violate the law. Last time, Teranchi
[sic] blamed a “rogue employee, ” who he claimed
was terminated, but the activities continue. . . . SSN is a
problem because we know what he is doing . . . .
was also aware that telemarketing by SSN and its predecessor
was the target of legal action. In 2004, Florida fined
Vitana, a d/b/a of SSN, see Trial Tr. Jan. 11, Doc.
302 at 164:15-:18 (Ahmed testimony), for telemarketing to
people on Florida's do-not-call registry, and a Florida
court issued a permanent injunction. PX 191. In March 2005,
the North Carolina Attorney General settled a lawsuit against
SSN with a permanent injunction enjoining SSN from using
prerecorded calls and from calling people in North Carolina
on the National Do Not Call Registry. PX 186. In 2006, after
the manager of Dish's compliance office learned of the
two injunctions, see, e.g., PX 15 at 8002, she did
not do any follow-up investigation on or monitoring of SSN
and “didn't have any reason to be concerned”
because she purportedly believed SSN ...