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United States v. Dish Network, L.L.C.

United States District Court, C.D. Illinois, Springfield Division

December 12, 2014

UNITED STATES OF AMERICA, and the STATES of CALIFORNIA, ILLINOIS, NORTH CAROLINA, and OHIO, Plaintiffs,
v.
DISH NETWORK, L.L.C., Defendant

Decided December 11, 2014,

As Amended February 13, 2015.

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For United States of America, Plaintiff: Albert N Shelden, LEAD ATTORNEY, CALIFORNIA ATTORNEY GENERAL'S OFFICE, San Diego, CA; Daniel Kadane Crane-Hirsch, LEAD ATTORNEY, Patrick R Runkle, U.S. DEPT OF JUSTICE, Washington, DC; Elizabeth A Blackston, LEAD ATTORNEY, ILLINOIS ATTORNEY GENERAL, Springfield, IL; Erin B Leahy, Michael S Ziegler, LEAD ATTORNEYS, OHIO ATTORNEY GENERAL'S OFFICE, Consumer Protection Section, Columbus, OH; Jeffrey Mark Feltman, LEAD ATTORNEY, OFFICE OF THE ATTORNEY GENERAL, Carbondale, IL; Kevin Anderson, LEAD ATTORNEY, NORTH CAROLINA DEPARTMENT OF JUSTICE, CONSUMER PROTECTION DIVISION, Raleigh, NC; Eric I Long, U.S. ATTY, Springfield, IL; Lisa K Hsiao, UNITED STATES DEPARTMENT OF JUSTICE, CIVIL DIVISION- OFFICE OF CONSUMER LITIGATION, Washington, DC.

For State of California, Plaintiff: Albert N Shelden, Jinsook Ohta, LEAD ATTORNEYS, CALIFORNIA ATTORNEY GENERAL'S OFFICE, San Diego, CA; Daniel Kadane Crane-Hirsch, LEAD ATTORNEY, Patrick R Runkle, U.S. DEPT OF JUSTICE, Washington, DC; Elizabeth A Blackston, LEAD ATTORNEY, ILLINOIS ATTORNEY GENERAL, Springfield, IL; Erin B Leahy, LEAD ATTORNEY, OHIO ATTORNEY GENERAL'S OFFICE, Consumer Protection Section, Columbus, OH; Jeffrey Mark Feltman, LEAD ATTORNEY, OFFICE OF THE ATTORNEY GENERAL, Carbondale, IL; Kevin Anderson, LEAD ATTORNEY, NORTH CAROLINA DEPARTMENT OF JUSTICE, CONSUMER PROTECTION DIVISION, Raleigh, NC; Michael S Ziegler, LEAD ATTORNEY, OHIO ATTORNEY GENERAL'S OFFICE, Consumer Protection Section, Columbus, OH.

For State of Illinois, State of Ohio, Plaintiffs: Albert N Shelden, LEAD ATTORNEY, CALIFORNIA ATTORNEY GENERAL'S OFFICE, San Diego, CA; Daniel Kadane Crane-Hirsch, LEAD ATTORNEY, Patrick R Runkle, U.S. DEPT OF JUSTICE, Washington, DC; Elizabeth A Blackston, LEAD ATTORNEY, ILLINOIS ATTORNEY GENERAL, Springfield, IL; Erin B Leahy, LEAD ATTORNEY, OHIO ATTORNEY GENERAL'S OFFICE, Consumer Protection Section, Columbus, OH; Jeffrey Mark Feltman, LEAD ATTORNEY, OFFICE OF THE ATTORNEY GENERAL, Carbondale, IL; Kevin Anderson, LEAD ATTORNEY, NORTH CAROLINA DEPARTMENT OF JUSTICE, CONSUMER PROTECTION DIVISION, Raleigh, NC; Michael S Ziegler, LEAD ATTORNEY, OHIO ATTORNEY GENERAL'S OFFICE, Consumer Protection Section, Columbus, OH.

For State of North Carolina, Plaintiff: Albert N Shelden, LEAD ATTORNEY, CALIFORNIA ATTORNEY GENERAL'S OFFICE, San Diego, CA; Daniel Kadane Crane-Hirsch, LEAD ATTORNEY, Patrick R Runkle, U.S. DEPT OF JUSTICE, Washington, DC; Elizabeth A Blackston, LEAD ATTORNEY, ILLINOIS ATTORNEY GENERAL, Springfield, IL; Erin B Leahy, Michael S Ziegler, LEAD ATTORNEYS, OHIO ATTORNEY GENERAL'S OFFICE, Consumer Protection Section, Columbus, OH; Jeffrey Mark Feltman, LEAD ATTORNEY, OFFICE OF THE ATTORNEY GENERAL, Carbondale, IL; Kevin Anderson, LEAD ATTORNEY, NORTH CAROLINA DEPARTMENT OF JUSTICE, CONSUMER PROTECTION DIVISION, Raleigh, NC; David N Kirkman, NORTH CAROLINA ATTORNEY GENERAL'S OFFICE, Consumer Protection Division, Raleigh, NC.

For Dish Network LLC, Defendant: Edward Ellis Weiman, KELLEY DRYE & WARREN LLP, Los Angeles, CA; Geoffrey W Castello, III, Ilona I Korzha, Joseph A Boyle, Lauri A Mazzuchetti, KELLEY DRYE & WARREN LLP, Parsippany, NJ; Henry T Kelly, KELLEY DRYE & WARREN, Chicago, IL.

OPINION

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Sue E. Myerscough, UNITED STATES DISTRICT JUDGE.

This cause is before the Court on Plaintiffs' Motion for Summary Judgment (d/e 341/402) (Motion 341/402) and Defendant Dish Network L.L.C.'s (Dish) Motion for Summary Judgment (d/e 346) (Motion 346) (collectively the Motions). The Plaintiffs seek summary judgment on eleven of twelve claims alleged in the Second Amended Complaint and Demand for Jury Trial (d/e 257) (Second Amended Complaint). Dish seeks summary judgment on all claims.

Dish sells satellite television programming and related services. Dish was known as Echostar Communications Corporation (Echostar) until it changed its name on January 1, 2008. Motion 341, Statement of Undisputed Fact (PSUF), ¶ 4. Dish markets its services in several ways, including telemarketing. Dish employees engage in telemarketing directly; Dish contracts with two telemarketing vendors eCreek Service Group (eCreek) and EPLDT-Ventus (EPLDT or Libertad) (collectively Telemarketing Vendors) to provide telemarketing services to Dish; and Dish contracts with authorized retailers (Retailers) to market Dish's products and services, and some of these authorized retailers engage in telemarketing to market Dish products and services. The Plaintiffs allege that Dish violated state and federal laws (" Do-Not-Call" or " DNC" Laws) governing: (1) outbound telemarketing calls to persons who have indicated that they do not want to receive such calls, and (2) outbound telemarketing calls that convey a prerecorded message.

On October 17, 2014, the Court heard oral argument on the Motions. The Plaintiff United States of America appeared by its attorneys from the U.S. Department of Justice Patrick R. Runkle, Lisa K. Hsiao,

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and Sang H. Lee, and, as of counsel, Federal Trade Commission attorney Russell Deitch; the Plaintiff State of California appeared by its attorney from the California Attorney General's Office Jin Ohta; the Plaintiff State of Illinois appeared by its attorney from the Illinois Attorney General's Office Paul A. Isaac; the Plaintiff State of North Carolina by its attorney from the North Carolina's Attorney General's Office David N. Kirkman; and the Plaintiff State of Ohio by its attorney from the Ohio Attorney General's Office Erin B. Leahy. Dish appeared by its attorneys Joseph Boyle, Henry T. Kelly, Lauri A. Mazzuchetti, and Damon W. Suden.

After careful consideration of the submissions of the parties and the arguments of counsel, the Court finds with respect to each count as follows:

Count I

The Plaintiff United States is entitled to partial summary judgment establishing Dish's liability with respect to the following outbound telemarketing calls for Dish products and services: (1) calls to telephone numbers on the National Do-Not-Call Registry (Registry), (a)1,707,713 calls on the 2007-2010 Dish call records, and (b) 2,386,386 calls that Dr. Yoeli determined were made to numbers on the Registry which Dish failed to dispute with any evidence; (2) 2,349,031 calls that Dish Retailer JSR Enterprises (JSR) made to numbers on the Registry; and (3) 381,811 calls that Dish Retailer Satellite Systems Network (Satellite Systems or SSN) made to numbers on the Registry. The United States is further entitled to partial judgment that Dish is not entitled to the safe harbor defense. Issues of fact preclude summary judgment for either party with respect to remedies for Dish's partial summary judgment liability under Count I or with respect to any other issue related to Count I.

Count II

The Plaintiff United States is entitled to partial summary judgment establishing Dish's liability with respect to the following outbound telemarketing calls for Dish products and services: (1) 903,246 calls to persons whose telephone numbers were on Dish's internal do-not-call list at the time of the call; and (2) 140,349 calls to numbers marked " DNC" by Dish Telemarketing Vendor eCreek. The United States is further entitled to partial judgment that Dish is not entitled to the safe harbor defense under the TSR. Issues of fact preclude summary judgment for either party with respect to remedies for Dish's partial summary judgment liability under Count II or with respect to any other issue related to Count II.

Count III

The Plaintiff United States is entitled to partial summary judgment establishing Dish's liability with respect to the following prerecorded outbound telemarketing calls for Dish products and services that constituted illegally abandoned calls: (1) 98,054 prerecorded calls made by Dish; (2) 43,100,876 prerecorded calls made at the direction of Dish Retailer Star Satellite, LLC; (3) 6,637,196 prerecorded calls made at the direction of Dish Retailer Dish TV Now; and (4) the one prerecorded call made by Dish Retailer American Satellite, Inc. (American Satellite). Issues of fact preclude summary judgment for either party with respect to remedies for Dish's liability under Count III.

Count IV

The Defendant Dish is entitled to partial summary judgment on that portion of Count IV that alleges that Dish provided substantial assistance or support to Retailer Dish TV Now even though dish knew or consciously avoided knowing that Dish TV Now was making prerecorded calls that constituted abandoned calls. Issues of fact

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preclude summary judgment for either party on any other issue related to Count IV.

Count V

The Plaintiff States are entitled to a finding under Federal rule of Civil Procedure 56(g) that: (1) Dish engaged in a pattern or practice of making outbound telemarketing calls for Dish products and services to residents of the Plaintiff States whose telephone numbers were on the Registry as reflected in the 2007-2010 Dish call records; and (2) Dish Retailers: JSR and Satellite Systems engaged in a pattern or practice of making outbound telemarketing calls for Dish products and services to residents of the Plaintiff States whose telephone numbers were on the Registry. The Plaintiff States are also entitled to partial summary judgment that Dish is not entitled to a safe harbor defense. Issues of fact preclude summary judgment for either party on any other issue related to Count V.

Count VI

The Plaintiff States are entitled to findings under Rule 56(g) that: (1) Dish engaged in a pattern or practice of making prerecorded outbound telemarketing calls for Dish products and services to residents of the Plaintiff states; and (2) Dish Retailers: Dish TV Now and Star Satellite engaged in a pattern or practice of making prerecorded outbound telemarketing calls for Dish products and services to residents of the Plaintiff states. Issues of fact preclude summary judgment for either party on any other issue related to Count VI.

Count VII

The State of California is entitled to a finding under Rule 56(g) that Dish made outbound telemarketing calls for Dish products and services to telephone numbers of California residents at a time when the numbers were on the Registry as reflected in the 2007-2010 Dish call records. Issues of fact preclude summary judgment for either party on any other issue related to Count VII.

Count VIII

The State of California is entitled to findings under Rule 56(g) that: (1) Dish made outbound telemarketing calls for Dish products and services to telephone numbers of California residents at a time when the numbers were on the Registry as reflected in the 2007-2010 Dish call records; and (2) Dish made prerecorded outbound telemarketing calls for Dish products and services to telephone numbers of California residents. Issues of fact preclude summary judgment for either party on any other issue related to Count VIII.

Count IX

The State of North Carolina is entitled to findings under Rule 56(g) that: (1) Dish made prerecorded calls using autodialing equipment to residents of North Carolina; and (2) Dish Retailers: Dish TV Now and Star Satellite made prerecorded calls using autodialing equipment to residents of North Carolina. Issues of fact preclude summary judgment for either party on any other issue related to Count IX.

Count X

The State of North Carolina is entitled a finding under Rule 56(g) that Dish made prerecorded calls using autodialing equipment to residents of North Carolina. Issues of fact preclude summary judgment for either party on any other issue related to Count X.

Count XI

The State of Illinois is entitled to findings under Rule 56(g) (1) that Dish made prerecorded calls using autodialing equipment to residents of Illinois; and (2) Dish Retailers: Dish TV Now and Star Satellite made prerecorded calls using autodialing equipment to residents of North Carolina. Issues of fact preclude summary judgment

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for either party on any other issue related to Count XI.

Count XII

Issues of fact preclude Dish's request for summary judgment of Count XII. The Plaintiffs do not seek summary judgment on Count XII.

The facts in this case are best understood in the context of the regulatory environment. The Court will describe the relevant federal statutory and regulatory framework first. The Court will then set forth the undisputed facts for purposes of the Motions. Each side also objects to evidence presented by the opposing side. The Court will address evidentiary objections before setting forth the facts. The Court may cite to a statement of undisputed fact if the statement is undisputed by all parties. In addition, the Court will cite to the page number on a document if the document has a page number. Some documents have no page numbers. If the document has no page number, the Court will cite to the page numbers assigned by the Court's CM/ECF docketing system.

FEDERAL FRAMEWORK

The relevant federal Do-Not-Call Laws are the Telemarketing Consumer Fraud and Abuse Prevention Act (Telemarketing Act) and the Telephone Consumer Protection Act (TCPA). 15 U.S.C. § 6101 et seq.; 47 U.S.C. § 227. The Telemarketing Act authorizes the FTC to regulate telemarketing, and the TCPA authorizes the Federal Communications Commission (FCC) to regulate telemarketing. The resulting overlapping regulations prohibit three types of telemarketing practices relevant here: (1) calling a person who has previously stated that he or she does not wished to be called by or on behalf of the seller whose goods or services are being offered for sale; (2) calling a person who has registered his or her telephone number on the National Do Not Call Registry (Registry); and (3) calling and delivering a prerecorded telemarketing message to the recipient of the call (hereinafter referred to as " prerecorded calls" or " robocalls" ). The Telemarketing Act, the TCPA, and the regulations thereunder address these three issues in slightly different ways.

A. THE TELEMARKETING ACT AND THE TSR

The Telemarketing Act directed the FTC to issue regulations to prohibit deceptive and abusive telemarketing acts or practices. 15 U.S.C. § 6102(a)(1). On August 23, 1995, the FTC complied and issued the TSR. 60 Fed.Reg. 43842 (August 23, 1995). The 1995 version of the TSR prohibited, among other things, a " telemarketer from initiating, or any seller to cause a telemarketer to initiate, an outbound telephone call to a person when that person previously has stated that he or she does not wish to receive such a call made by or on behalf of the seller whose goods or services are being offered." 16 C.F.R. § 310.4(b)(1)(iii)(A); see 60 Fed.Reg. at 43854-55. Section 310.4(b)(1)(iii)(A) did not state to whom the person must state that he or she did not wish to be called and did not state who must honor the statement.

The FTC subsequently explained that the do-not-call request under § 310.4(b)(1)(iii)(A) is " company-specific" and is designed to track the approach in the FCC Rule:

The " do-not-call" provision of the original Rule is company-specific: After a consumer requests not to receive calls from a particular company, that company may not call that consumer. Other companies, however, may lawfully call that same consumer until he or she requests each of them not to call. The effect of this provision is to permit consumers to choose those companies, if any, from which they do not wish to

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receive telemarketing calls. Each company must maintain its own " do-not-call" list of consumers who have stated that they do not wish to receive telephone calls by or on behalf of that seller. This seller-specific approach tracks the approach that the FCC adopted pursuant to its mandate under the TCPA.

Notice of Proposed Rulemaking, Amendments to the Telemarketing Sales Rule, 67 FR 4492, 4516 (January 30, 2002) (footnote omitted).

The 1995 version of the TSR also provided a safe harbor defense for sellers and telemarketers. The FTC explained in the FTC Statement of Basis and Purpose accompanying the 1995 TSR (1995 FTC Statement):

The safe harbor states that a seller or telemarketer will not be liable for such violations if: (1) it has established and implemented written procedures to comply with the " do not call provisions" ; (2) it has trained its personnel in those procedures; (3) the seller, or the telemarketer acting on behalf of the seller, has maintained and recorded lists of persons who may not be contacted; and (4) any subsequent call is the result of error.

60 Fed.Reg. at 43855. The parties refer to the " lists of persons who may not be contacted" as an " entity-specific do-not-call list" or an " internal do-not-call list."

The 1995 FTC Statement stated that a " rule of reasonableness" should control the application of the safe harbor defense:

If a company is complying in a reasonable manner with the requirements of the safe harbor, any true error should be excused. On the other hand, numerous purportedly " erroneous" calls to consumers who previously had asked not to be called may be a sign that the seller's adopted procedures are ineffective, and that the safe harbor should no longer be available.

60 Fed.Reg. at 43855.

The 1995 FTC Statement also addressed whether separate divisions of a company would be considered a single seller. The FTC stated that " distinct corporate divisions may be considered separate 'sellers.'" 60 Fed.Reg. at 48344. The FTC explained:

The determination as to whether distinct divisions of a single corporate organization will be treated as separate sellers will depend on such factors as: (1) whether there exists substantial diversity between the operational structure of the corporate organization and the division that is selling the goods or services that are the subject of the offer, or between that division and the other divisions of the corporation; or (2) whether the nature or type of goods or services offered by the division are substantially different from those offered by other divisions of the corporation or the corporate organization as a whole.

60 Fed.Reg. at 43844.

The 1995 version of the TSR also prohibited assisting and facilitating violations of the TSR:

(b) Assisting and facilitating. It is a deceptive telemarketing act or practice and a violation of this Rule for a person to provide substantial assistance or support to any seller or telemarketer when that person knows or consciously avoids knowing that the seller or telemarketer is engaged in any act or practice that violates § § 310.3(a), (c) or (d), or § 310.4 of this Rule.

16 C.F.R. § 310.3(b). In promulgating § 310.3(b), the FTC selected the " knows or consciously avoids knowing" language over the alternative language of " knew or should have known." 60 Fed.Reg. 43842, at 48352. The FTC explained:

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The " conscious avoidance" standard is intended to capture the situation where actual knowledge cannot be proven, but there are facts and evidence that support an inference of deliberate ignorance on the part of a person that the seller or telemarketer is engaged in an act or practice that violates . . . this Rule.

60 Fed.Reg. at 48352 (footnote omitted).

On January 29, 2003, the FTC amended the TSR. 68 Fed.Reg. 4580 (January 29, 2003). The FTC amended the TSR pursuant to the 2001 amendments to the Telemarketing Act. See National Federation of the Blind v. F.T.C., 420 F.3d 331, 334-35 (4th Cir. 2005).

The amended 2003 TSR established the Registry. 16 C.F.R. § 310.4(b)(1)(iii). Telephone customers who do not wish to be called by sellers or telemarketers generally may place their telephone numbers on the Registry. Sellers and telemarketers may not call a person whose telephone number is on the Registry unless the seller or telemarketer has an Established Business Relationship (sometimes called " EBR" ) with the person or has prior written consent.

The Registry opened for registrations in June 2003 and was scheduled to take effect October 1, 2003. 68 Fed.Reg. 16238 (April 3, 2003). Interested parties immediately filed actions to challenge the FTC's authority to establish the Registry; however, on September 29, 2003, Congress resolved the question of the FTC's authority by ratifying the creation of the Registry. Pub. L. 108-82, 117, codified at 15 U.S.C. § 6151; see Mainstream Mktg. Servs., Inc. v. F.T.C., 358 F.3d 1228, 1250 (10th Cir. 2004). The Registry became operational on October 1, 2003, as scheduled.

The FTC Statement of Basis and Purpose accompanying the 2003 amendments to the TSR (2003 FTC Statement) stated that the Registry applied to both land lines and cellular phones:

The Commission intends that § 310.4(b)(1)(iii) apply to any call placed to a consumer, whether to a residential telephone number or to the consumer's cellular telephone or pager. Consumers are increasingly using cellular telephones in place of regular telephone service, which is borne out by the dramatic increase in cellular phone usage. The Commission believes that it is particularly important to allow consumers an option to reduce unwanted telemarketing calls to cellular telephones or to pagers because some cellular services charge the consumer for incoming calls, thus adding insult to injury when the consumer is charged for the unwanted telemarketing call to the consumer's cellular telephone.

68 FR 4580-01, at 4632-33 (January 29, 2003) (footnotes omitted).

Section 310.4(b)(1) of the 2003 TSR stated, " It is an abusive telemarketing act or practice and a violation of this Rule for a telemarketer to engage in, or for a seller to cause a telemarketer to engage in the following conduct:" Section 310.4(b)(1) then listed certain specific prohibited acts, including:

(iii) Initiating any outbound telephone call to a person when:
(A) That person previously has stated that he or she does not wish to receive an outbound telephone call made by or on behalf of the seller whose goods or services are being offered or made on behalf of the charitable organization for which a charitable contribution is being solicited; or
(B) That person's telephone number is on the " do-not-call" registry, maintained by the Commission, of persons who do not wish to receive outbound telephone calls to induce

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the purchase of goods or services unless the seller
(i) Has obtained the express agreement, in writing, of such person to place calls to that person. Such written agreement shall clearly evidence such person's authorization that calls made by or on behalf of a specific party may be placed to that person, and shall include the telephone number to which the calls may be placed and the signature of that person;
(ii) Has an established business relationship with such person, and that person has not stated that he or she does not wish to receive outbound telephone calls under paragraph (b)(1)(iii)(A) of this section; or
(iv) Abandoning any outbound telephone call. An outbound telephone call is " abandoned" under this section if a person answers it and the telemarketer does not connect the call to a sales representative within two (2) seconds of the person's completed greeting.

16 C.F.R. § 310.4(b)(1)(iii) & (iv) (footnote omitted). The 2003 TSR retained the prohibition against assisting and facilitating a violation of the TSR. 16 C.F.R. § 310.3(b).

The TSR defined " established business relationship," " person," " seller," " telemarketing," and " telemarketer" in relevant part, as follows:

(o) Established business relationship means a relationship between a seller and a consumer based on:
(1) the consumer's purchase, rental, or lease of the seller's goods or services or a financial transaction between the consumer and seller, within the eighteen (18) months immediately preceding the date of a telemarketing call; or
(2) the consumer's inquiry or application regarding a product or service offered by the seller, within the three (3) months immediately preceding the date of a telemarketing call.

. . . .

(w) Person means any individual, group, unincorporated association, limited or general partnership, corporation, or other business entity.
. . . .
(aa) Seller means any person who, in connection with a telemarketing transaction, provides, offers to provide, or arranges for others to provide goods or services to the customer in exchange for consideration.
. . . .
(cc) Telemarketer means any person who, in connection with telemarketing, initiates or receives telephone calls to or from a customer or donor.
(dd) Telemarketing means a plan, program, or campaign which is conducted to induce the purchase of goods or services or a charitable contribution, by use of one or more telephones and which involves more than one interstate telephone call. . . .

16 C.F.R. § 310.2(o), (w), (aa), (cc), and (dd). The TSR also exempted telemarketing calls " between a telemarketer and any business, except calls to induce the retail sale of nondurable office or cleaning supplies." 16 C.F.R. § 310.6(b)(7).

Any violation of the TSR constituted an unfair and deceptive act or practice in or affecting commerce in violation of § 5(a) of the Federal Trade Commission Act (FTC Act). FTC Act § § 5(a) and 18(d)(3), codified at 15 U.S.C. § § 45(a) and 57a(d)(3); Telemarketing Act 15 U.S.C. § 6102(c). The FTC may authorize the Attorney General to bring actions on behalf of the United States against anyone violating § 5(a)

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of the FTC Act. The United States may seek injunctive relief and, in appropriate cases, civil penalties. FTC Act § § 5(m), 13(b), and 16(a)(1), codified at 15 U.S.C. § § 45(m), 53(b), 56(a)(1). The United States has brought this action pursuant to FTC authorization under these provisions.

The 2003 amendments to the TSR also amended the safe harbor provisions to cover calls to persons whose telephone numbers are on the Registry or on an internal do-not-call list.[1] The 2003 TSR safe harbor provisions provided in relevant part:

(3) A seller or telemarketer will not be liable for violating § 310.4(b)(1)(ii) and (iii) if it can demonstrate that, as part of the seller's or telemarketer's routine business practice:
(i) It has established and implemented written procedures to comply with § 310.4(b)(1)(ii) and (iii);
(ii) It has trained its personnel, and any entity assisting in its compliance, in the procedures established pursuant to § 310.4(b)(3)(i);
(iii) The seller, or a telemarketer or another person acting on behalf of the seller or charitable organization, has maintained and recorded a list of telephone numbers the seller or charitable organization may not contact, in compliance with § 310.4(b)(1)(iii)(A);
(iv) The seller or a telemarketer uses a process to prevent telemarketing to any telephone number on any list established pursuant to § 310.4(b)(3)(iii) or 310.4(b)(1)(iii)(B), employing a version of the " do-not-call" registry obtained from the Commission no more than thirty-one (31) days prior to the date any call is made, and maintains records documenting this process;
(v) The seller or a telemarketer or another person acting on behalf of the seller or charitable organization, monitors and enforces compliance with the procedures established pursuant to § 310.4(b)(3)(i); and
(vi) Any subsequent call otherwise violating § 310.4(b)(1)(ii) or (iii) is the result of error.

16 C.F.R. § 310.4(b)(3). The safe harbor did not apply to violations of the call abandonment provision, § 310.4(b)(1)(iv), or the assisting and facilitating provision, § 310.3(b).

The TSR, as promulgated in 2003, had no provision specifically addressing the use of prerecorded calls. The use of a recording constituted the abandonment of a call under § 310.4(b)(1)(iv) because the telemarketer only played a prerecorded message; no human telemarketer came on the line within two seconds of the time that the person called completed his or her greeting. See F.T.C. v. Asia Pacific Telecom, Inc., 802 F.Supp.2d 925, 929-30 (N.D.Ill. 2011); The Broadcast Team, Inc. v. F.T.C., 429 F.Supp.2d 1292, 1301-02 (M.D. Fla. 2006).

On November 17, 2004, the FTC issued a Notice of Proposed Rulemaking to amend the TSR to add an additional safe harbor provision to allow some use of prerecorded calls under limited circumstances. 69 Fed.Reg. 67287 (November 17, 2004) (2004 Notice). The proposed safe harbor amendment would have allowed a seller or telemarketer to use a prerecorded call in outbound telemarketing to a person with whom the seller or telemarketer had an Established Business Relationship and only if the prerecorded message: (1) within two seconds of the person's completed greeting, presented the person with the opportunity to communicate that he or she did not want to be called again (e.g., by pushing a number on the telephone keypad); (2) provided all

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required disclosures; and (3) otherwise complied with all applicable state and federal laws. 69 Fed.Reg. at 67289.

The FTC further stated in the 2004 Notice that the FTC would forbear from bringing enforcement actions for prerecorded calls that complied with the proposed amendments to the safe harbor provisions:

Therefore, the Commission has determined that, pending completion of this proceeding, the Commission will forbear from bringing any enforcement action for violation of the TSR's call abandonment prohibition, 16 CFR 310.4(b)(1)(iv), against a seller or telemarketer that places telephone calls to deliver prerecorded telemarketing messages to consumers with whom the seller on whose behalf the telemarketing calls are placed has an established business relationship, as defined in the TSR, provided the seller or telemarketer conducts this activity in conformity with the terms of the proposed amended call abandonment safe harbor.

69 Fed.Reg. at 67290. On August 29, 2008, the FTC completed the proposed rulemaking and amended the TSR. Final Rule Amendments, 73 Fed.Reg. 51164 (August 29, 2008). The amendment added a specific clause addressing the use of prerecorded calls to the prohibitions in § 310.4(b)(1). The additional provision prohibited using prerecorded telemarketing calls unless the seller or telemarketer had an Established Business Relationship with the person called and the person called gave prior written consent to receive such calls. 16 C.F.R. § 310.4(b)(1)(v).[2] The amendments became effective on December 1, 2008. The FTC announced that, as of December 1, 2008, the FTC would end its 2004 policy of forbearing enforcement against certain prerecorded calls. 73 Fed.Reg. at 51164.

On February 15, 2008, Congress passed the Do-Not-Call Improvements Act of 2007 (Improvements Act). Pub. L 110-87, codified at 15 U.S.C. § 6155. Congress provided in the Improvements Act that telephone numbers placed on the Registry would stay on the Registry indefinitely unless and until: (1) the individual to whom the number is assigned requested removal; or (2) the telephone number had been disconnected and reassigned. 15 U.S.C. § 6155(a) and (b). Congress directed the FTC to " periodically check . . . national or other appropriate databases" to determine whether numbers have been disconnected and reassigned. 15 U.S.C. § 6155(b). Section 6155 further stated that the FTC could " remove invalid telephone numbers from the registry at any time." Id.

B. THE TCPA AND THE FCC RULE

The TCPA prohibited certain types of telephone calls, including telephone calls to a residential telephone line " using an artificial or prerecorded voice to deliver a message without the prior express consent of the party called . . . ." 47 U.S.C. § 227(b)(1)(B). The TCPA further directed the FCC to " initiate a rulemaking proceeding concerning the need to protect residential telephone subscribers' privacy rights to avoid receiving telephone solicitations to which they object." 47 U.S.C. § 227(c)(1). The TCPA also authorized State Attorneys General to bring actions on behalf of the residents of such states for violations of the TCPA or the regulations promulgated thereunder. Each Attorney General could seek injunctive relief and secure actual damages or $500 per

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violation, or both. The Attorneys General could also recover treble damages if the defendant willfully or knowingly violated the TCPA. 47 U.S.C. § 227(g).[3]

The FCC promulgated a rule (FCC Rule) to implement the TCPA. 47 C.F.R. § 64.1200 et seq.; see 47 U.S.C. § 227(c). The FCC promulgated the original version of the FCC Rule in 1992. 57 Fed.Reg. 4833-01 (October 23, 1992). The FCC Rule prohibited, among other things, any person or entity from initiating a telemarketing telephone call, " to any residential line using an artificial or prerecorded voice to deliver a message without the prior express written consent of the called party . . . ." 47 C.F.R. § 64.1200(a)(3). The original FCC Rule included an Established Business Relationship exception that allowed such prerecorded calls if the call " is made to a person with whom the caller has an established business relationship at the time the call is made." 47 C.F.R. § 64.1200(a)(2)(iv) (version in effect prior to October 16, 2012). The Established Business Relationship exception was removed by the 2012 amendments to § § 64.1200(a)(2) and (a)(3). 77 Fed.Reg. 34233, at 13471 (June 11, 2012); 77 Fed.Reg. 66935 (November 8, 2012) (correcting the effective date to October 16, 2012).

The FCC Rule also required any person making a telemarketing call to a residential telephone subscriber to maintain an internal do-not-call list:

(d) No person or entity shall initiate any call for telemarketing purposes to a residential telephone subscriber unless such person or entity has instituted procedures for maintaining a list of persons who request not to receive telemarketing calls made by or on behalf of that person or entity.

47 C.F.R. § 64.1200(d). The FCC Rule stated that " the person or entity on whose behalf the telemarketing call is made will be liable for any failures to honor the do-not-call request." 47 C.F.R. § 64.1200(d)(3). The FCC Rule also required specific procedures, including having a written policy and providing training for maintaining an internal do-not-call list. 47 C.F.R. § 64.1200(d)(1)-(6).

On July 25, 2003, the FCC amended the FCC Rule to prohibit any person or entity from initiating a telemarketing call to a " residential telephone subscriber" who registered his or her telephone number on the Registry. 47 C.F.R. § 64.1200(c)(2). 68 Fed.Reg. 44144 (July 25, 2003). The FCC Rule further provided, " Such do-not-call registrations must be honored for five years." 68 Fed.Reg. at 44177. The amendment became effective on October 1, 2003. Id. at 44144. The FCC subsequently amended the FCC Rule on July 14, 2008, to state, " Such do-not-call registrations must be honored indefinitely, or until the registration is cancelled by the consumer or the telephone number is removed by the database administrator." 73 Fed.Reg. 40183 (July 14, 2008). The FCC made the change to comport with the Do-Not-Call Improvements Act of 2007.

The FCC Rule contained a safe harbor provision for calls made to residential telephone subscribers on the Registry. The safe harbor provided:

(2) . . . Any person or entity making telephone solicitations (or on whose behalf telephone solicitations are made) will not be liable for violating this requirement if:
(i) It can demonstrate that the violation is the result of error and that as

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part of its routine business practice, it meets the following standards:
(A) Written procedures. It has established and implemented written procedures to comply with the national do-not-call rules;
(B) Training of personnel. It has trained its personnel, and any entity assisting in its compliance, in procedures established pursuant to the national do-not-call rules;
(C) Recording. It has maintained and recorded a list of telephone numbers that the seller may not contact;
(D) Accessing the national do-not-call database. It uses a process to prevent telephone solicitations to any telephone number on any list established pursuant to the do-not-call rules, employing a version of the national do-not-call registry obtained from the administrator of the registry no more than 31 days prior to the date any call is made, and maintains records documenting this process.
. . . .
(E) Purchasing the national do-not-call database. It uses a process to ensure that it does not sell, rent, lease, purchase or use the national do-not-call database, or any part thereof, for any purpose except compliance with this section and any such state or federal law to prevent telephone solicitations to telephone numbers registered on the national database. It purchases access to the relevant do-not-call data from the administrator of the national database and does not participate in any arrangement to share the cost of accessing the national database, including any arrangement with telemarketers who may not divide the costs to access the national database among various client sellers;

47 C.F.R. § 64.1200(c)(2)(i). The FCC Rule safe harbor did not apply to calls to numbers on an internal do-not-call list or to prerecorded calls.

The FCC Rule defined a seller as " the person or entity on whose behalf a telephone call or message is initiated for the purpose of encouraging the purchase or rental of . . . goods, or services, which is transmitted to any person." 47 C.F.R. § 64.1200(f)(7).

The FCC Report and Order issued in connection with the 2003 amendments discussed whether a subscriber to a wireless telephone service could be considered a residential subscriber for purposes of the FCC Rule. In the Matter of Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, CG Docket No. 02-278, F.C.C. 03-153 (July 3, 2003) (FCC Report and Order), ¶ ¶ 34-36. The FCC found that many consumers elect to use a wireless telephone as their residential phone service. Id., at ¶ 35. The FCC determined that these wireless customers should receive the benefits of the protections of the FCC Rule. Based on this analysis, the FCC concluded that wireless customers could register their wireless telephone numbers on the Registry:

Therefore, we conclude that wireless subscribers may participate in the national do-not-call list. As a practical matter, since determining whether any particular wireless subscriber is a " residential subscriber" may be more fact-intensive than making the same determination for a wireline subscriber, we will presume wireless subscribers who ask to be put on the national do-not-call list to be " residential subscribers." Such a presumption, however, may require a complaining wireless subscriber to provide further proof of the validity of that presumption should we need to take enforcement action.

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Id., at ¶ 36 (footnote omitted); see also 68 Fed.Reg. at 44147. The FCC incorporated by reference into the FCC Rule this analysis from FCC Report and Order:

(e) The rules set forth in paragraph (c) and (d) of this section are applicable to any person or entity making telephone solicitations or telemarketing calls to wireless telephone numbers to the extent described in the Commission's Report and Order, CG Docket No. 02-278, FCC 03-153, " Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991."

47 C.F.R. § 64.1200(e).

During the pendency of this case, this Court directed the parties to file a joint petition before the FCC to secure a declaratory ruling on the meaning of the term " on whose behalf," used in the applicable provisions of the TCPA and the FCC Rule. Opinion entered February 4, 2011 (d/e 86), at 10 (McCuskey, J., retired). The parties complied with the instruction. On May 9, 2013, the FCC issued a Declaratory Ruling. In the Matter of the Joint Petition Filed by Dish Network LLC, et al. Concerning the Telephone Consumer Protection Act (TCPA Rules), 28 FCC Rcd. 6574 (May 9, 2013) (FCC May 9, 2013 Order). The FCC determined that the phrases " on behalf of," " on whose behalf," and similar language in the TCPA imposes vicarious liability on a seller " under federal common law principles of agency for violations of either section 227(b) or section 227(c) that are committed by third-party telemarketers." Id. at 6574. The FCC further declared that a seller's vicarious liability may be based on " a broad range of agency principles, including not only formal agency, but also principles of apparent authority and ratification." Id., at 6583.[4]

C. STATE DO-NOT-CALL LAWS

Most states enacted their own Do-Not-Call Laws. The supplemental state law counts in the Complaint are based on the Do-Not-Call Laws and other consumer protection laws of the Plaintiff States. See Complaint, Counts VI-XII. The Court will discuss the state laws applicable to the Complaint in the analysis of these Counts.

EVIDENTIARY ISSUES

The parties challenge much of the opposing parties' evidence presented in connection with the Motions. The Court will resolve these challenges before setting forth the facts. The Court addresses the Plaintiffs' challenges first.

A. PLAINTIFFS' EVIDENTIARY OBJECTIONS

1. Montano Declaration

The Plaintiffs object to the Declaration of Joey Montano dated January 6, 2014. Dish Initial Exhibits (d/e 348), Dish Exhibit (DX) 2, Declaration of Joey Montano (Montano Declaration DX 2); Plaintiffs' Opposition to Defendant's Motion for Summary Judgment (d/e 378) (Plaintiffs' Opposition 378), at 167-68. The Plaintiffs argue that this declaration is not based on personal knowledge and contains statements concerning Dish's operations before Montano worked for Dish. See Fed.R.Civ.P. 56(c)(4). Montano states in his declaration that he is the Resource Manager for Dish. He states that he is in charge of outbound telephone call operations. Montano Declaration DX 2, at ¶ 2. Montano states, " I make this declaration

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based on my personal knowledge of the facts set forth herein, and/or based upon information provided to me in company documents and/or through communications with company personnel in the ordinary course of my duties and/or at my request." Id. ¶ 1.

A corporate representative can provide a declaration based on personal knowledge even if that personal knowledge is based on a review of the corporation's business records and if the declarant's position within the corporation makes him competent to testify on the matters set forth in the declaration. See Carson v. Perry, 91 F.3d 138, 1996 WL 400122, at *1 (5th Cir. 1996). Such a declarant may rely on business records to testify as to matters that occurred before his tenure at the corporation. See Alloc, Inc., v. Pergo, L.L.C., 2010 WL 3808977, at *8 (E.D. Wis. September 23, 2010). The Court, therefore, will consider the Montano Declaration in connection with the Motions.

Much of the Montano Declaration, however, consists of self-serving conclusions that Dish complied with various aspects of the Do-Not-Call Laws and regulations. The Court will not consider these self-serving conclusions and opinions. See Drake v. Minnesota Mining & Mfg. Co., 134 F.3d 878, 887 (7th Cir. 1998). Montano also makes statements about the procedures related to Dish's preparation of lists of telephone numbers to be called in telemarketing campaigns (" call lists," " calling lists," or " campaign lists" ). This Court has already barred all such evidence that was not provided in discovery. Opinion entered April 24, 2013 (d/e 279) (Opinion 279), at 43-44. Montano executed the declaration on January 6, 2014, long after discovery closed. See Montano Declaration DX 2, at 7. His statements on this topic are, therefore, barred.

2. Hearsay Objection to Documents

The Plaintiffs object to many of the documents submitted by Dish in support of Motion 346 because Dish failed to provide foundation evidence to demonstrate that the exhibits fit within an exception to the hearsay rule.[5] The Court generally agrees with the Plaintiffs' objection. Material submitted to support or oppose a summary judgment motion must be admissible at trial. Fed.R.Civ.P. 56(c). Dish generally does not present or cite any foundational testimony necessary to establish that the documents on which it relies are admissible under an exception to the hearsay rule.

Dish argues vigorously in its reply brief that the documents all fit within an exception to the hearsay rule. Defendant Dish Network L.L.C.' S Reply in Support of its Motion for Summary Judgment (d/e 396) (Dish Reply 396), at 70-73. In the cases cited by Dish, however, the party submitted an affidavit or other evidence to establish the hearsay exception for the document, or the opposing party waived the objection. See e.g., Wheeler v. Sims, 951 F.2d 796, 804-05 (7th Cir. 1992) (objection waived); DataQuill Ltd. v. Handspring, Inc., 2002 WL 31870560, at*1-*2 (N. D. Ill. December 23, 2002) (affidavit and deposition testimony established foundation for hearsay exception). The authorities cited did not simply assume the documents fit within a hearsay exception. The Court, therefore, will not consider a document to which Plaintiffs object for the truth of the matter asserted unless the document is not hearsay or sufficient evidence has been presented to establish that the document fits within an exception to the hearsay rule.

3. Opinion 279

This Court sanctioned Dish for failing to produce in discovery documentation about

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its process for preparing calling lists. This Court ordered, in relevant part, " Defendant is precluded from using at summary judgment or at trial any documents or information about the creation and scrubbing of telemarketing campaign lists that it did not provide to Plaintiffs in discovery." Opinion 279, at 43-44. The Plaintiffs object to many of Dish's statements of undisputed fact on the ground Dish attempts to rely on evidence that is barred by this sanction. Some of their objections have merit; others do not. For example, the Plaintiffs sometimes object to Dish relying on deposition testimony. E.g., Plaintiffs' Opposition 378, at 35 (Response to Dish Statement of Undisputed Fact (DSUF) ¶ 53). Such testimony clearly was produced in discovery and so is not barred by Opinion 279. The Court, however, will not consider evidence that is submitted in violation of Opinion 279.

4. Best Evidence Rule

Plaintiffs object to many of Dish's statements of undisputed fact on the grounds that Dish is attempting to rely on oral testimony to prove the contents of a writing in violation of the Best Evidence Rule, Fed.R.Evid. 1002. Dish responds that it is presenting the oral testimony to which the Plaintiffs object only to prove the declarant or deponent's firsthand knowledge of an event, not to prove the contents of any writing. Dish Reply 396, at 74-75. The Court will consider the evidence submitted by Dish for the limited purposes cited by Dish. The Court will not consider the evidence to prove the contents of a document.

5. John Taylor Declaration dated February 5, 2014, and revised June 12, 2014

The Plaintiffs ask the Court not to consider the last declaration from Dish's expert John Taylor. Declaration of John Taylor dated February 5, 2014, revised June 12, 2014 (d/e 441) (Taylor Declaration DX 238). This Court agrees that the Taylor Declaration DX 238 is largely inadmissible. Dish submits this declaration as expert testimony. Admissible expert testimony must be based on sufficient facts and data; must be the result of reliable scientific or technical principles and methods; and those principles must be reliably applied to the facts of the case. The expert must also have scientific, technical, or other specialized knowledge that will help the trier of fact understand the evidence and determine the fact in issue. Fed.R.Evid. 702.

Paragraphs 1 and 2 of the Taylor Declaration DX 238 contain no opinions. Taylor describes his background and the materials he reviewed. Paragraphs 3-10 consist largely of legal opinions regarding how the Do-Not-Call Laws apply to the facts in this case. Taylor states opinions about how these laws apply to telemarketing calls made to wireless numbers. Taylor states opinions about the applicability of the Do-Not-Call Laws to calls to business numbers. He states opinions about his interpretation of TSR and FCC Rule provisions regarding the Registry and the effect of calls to numbers on the Registry. In addition to the legal opinions, Taylor repeats factual generalizations about telephone area codes found in other authority cited elsewhere by Dish. Such legal opinions and factual generalizations are not the result of reliable scientific or technical principles and methods and will not aid the trier of fact. The Court will not consider them under Rule 702. See Jimenez v. City of Chicago, 732 F.3d 710, 721 (7th Cir. 2013) (" As a general rule, accordingly, an expert may not offer legal opinions." ).

Dish agrees that paragraphs 3-10 do not contain any expert opinions. Dish explained

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that Taylor included the paragraphs as background, " The substance of these paragraphs were not discussed in Mr. Taylor's expert reports because they are not the substance of Mr. Taylor's expert opinion -- these paragraphs are predicate information included to give context to Mr. Taylor's subsequent testimony." Reply in Support of Motion to File Corrected DX-238 (d/e 428), at 3-4. The Court, therefore, will not consider the first ten paragraphs of Taylor Declaration DX 238 for any purpose other than background. The paragraphs have no probative value to prove or disprove any matter.

Paragraph 11 of Taylor Declaration DX 238 concerns 15 telemarketing campaigns that Dish conducted in which it used prerecorded calls. Taylor disputes whether the Plaintiffs' evidence is sufficient to establish that the calls were directed to residential customers. Dish, however, already conceded that the calls were directed to consumers who purchased Dish programming, " There is no dispute that each of the fifteen prerecorded message campaigns at issue, which were dialed between September 2007 and November 2008, were directed to DISH customers who were, at the time of the calls, existing subscribers of DISH service." Defendant Dish Network L.L.C.'s Memorandum of Law in Support of its Motion for Summary Judgment (d/e 349) (Dish Memorandum 349), at 168-69. Because identity of the recipients of these phone calls is not in dispute, Taylor's opinions regarding the sufficiency of the Plaintiffs' evidence are immaterial.

Plaintiffs object to paragraphs 17, 20, 29, 30 and 35 of Taylor Declaration DX 238. In these paragraphs, Taylor recites information provided to him by Dish representatives concerning the meaning of the code names of various calling campaigns. Based on information provided by Dish representatives, Taylor states that the code names of the calling campaigns indicate that the calls were made to customers with Established Business Relationships with Dish, or the calls were made for collection or some other non-telemarketing purpose. In each of these paragraphs, Taylor merely recites hearsay information provided to him by Dish employees; he is not rendering an expert opinion that will help the finder of fact. Therefore, the Court will not consider these opinions. See Loeffel Steel Prods. v. Delta Brands, Inc., 387 F.Supp.2d 794, 808 (N.D.Ill. 2005).

Taylor also recites legal conclusions in several paragraphs of Taylor Declaration DX 238 that certain calls were proper or were not " violative" of any law or Rule. Such legal conclusions are not appropriate expert testimony in this context. See Jimenez, 732 F.3d at 721. The Court will also disregard these paragraphs.

B. DISH'S EVIDENTIARY OBJECTIONS

1. Dish Employee Statements in Documents Produced by Dish

Dish objects to Plaintiffs' submission of numerous internal Dish documents and emails to support Motion 341. Dish produced these documents in discovery. Dish objects on the grounds of hearsay and lack of foundation. The Court overrules Dish's objections. The Plaintiffs do not need to present foundation evidence to establish authenticity because Dish produced the documents in discovery. Documents produced by the opposing party during discovery may be treated as authentic. Fenje v. Feld, 301 F.Supp.2d 781, 809 (N.D.Ill. 2003).

The Plaintiffs generally cite the documents at issue for statements in the documents made by Dish employees or agents. ...


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