A Judge for the United States District Court for the Middle District of North Carolina issued an opinion imposing triple damages—totaling over $61 million—against Dish Network, L.L.C. for willful violations of the Telephone Consumer Protection Act (TCPA).
In a 30-page opinion released on May 22, 2017, Judge Catherine Eagles concluded that triple damages were appropriate because of Dish Network’s failure to monitor its agent, Satellite Systems Network (SSN), who made over 50,000 calls to individuals listed on the National Do Not Call Registry. The decision came after a January 2017 jury trial in which the jury found Dish Network liable and awarded damages of over $20 million. During the jury trial, Judge Eagles received evidence questioning whether Dish Network’s conduct reached the standard to impose triple damages. The TCPA allows a court, in its discretion, to treble the statutory damage amount of $500 per violation to $1,500 upon a showing that a party “willfully or knowingly violated” the relevant provisions of the TCPA. 47 U.S.C. § 227(c)(5).
As of October 2008, Dish contractually required its telemarketers to “scrub” their call lists of numbers on the National Do Not Call Registry and maintain records of the scrubbing using a service from PossibleNow, a compliance vendor. SSN, however, failed to comply with its contractual obligation and failed to utilize the required scrubbing technology.
According to the Court:
[SSN], 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 way.
Because the Court concluded that Dish was aware of SSN’s failure to appropriately use the scrubbing services, yet neglected to stop SSN from making calls on its behalf, Dish was not only liable, but had willfully violated the TCPA. The Court expressed little hesitation in imposing triple damages on Dish, finding that its shoddy compliance efforts resulted in knowing violations of the TCPA.
The Court’s opinion includes scathing indictments of the Dish compliance team’s failure to ensure its telemarketers complied with the rules. The compliance failures included:
- “A circular and ineffective compliance program” in which Dish forwarded complaints to the telemarketers and the telemarketers forwarded complaints to Dish, but where no one took responsibility to investigate the complaints of unwanted calls.
- “Dish’s department was not set up to monitor marketers for Registry compliance.”
- “The compliance department never looked at SSN’s call records or checked behind SSN to confirm that SSN was scrubbing its lists.”
- “PossibleNow offered to audit Dish’s marketers for TCPA compliance for a fee of $1,000 to $4,500 per marketer. Dish did not buy any of these options for any marketer or force any marketer to buy it themselves.”
- “The Dish compliance department dismissively referred to people who filed TCPA lawsuits or who regularly complained about TCPA violations as a type of ‘harvester’ or ‘frequent flyer’ who ‘tended to make a living placing TCPA complaints.’”
While Judge Eagles was, no doubt, offended that Dish Network did not maintain better compliance programs in light of its commitment to 46 state attorneys general to do so, the decision provides three key lessons that are relevant to every in-house compliance team:
- Maintaining continuous supervision and engagement with agents performing telemarketing is expected, even when contractual terms impose compliance obligations on the telemarketing firms;
- Establishing processes to effectively investigate consumer complaints with an eye towards identifying and rectifying any potential compliance failures by agents; and
- Implementing effective third-party auditing processes is a best practice to mitigate potential exposure to triple damages if a TCPA violation does occur.