Ergen, Dish On Dangerous Legal Trajectory

(Satellite Business News) — So sports fans, does it seem like on many days the name of this publication [Satellite Business News] should be changed to The Dish Network Lawsuit Update?

Week after week, month after month, year after year, it is hard to remember a time during which Dish Network was not participating in a high-profile lawsuit or legal dispute. Sure, it is not unusual for major companies, in all business segments, to be party to dozens of lawsuits at any given moment. Suits involving vendors, contracts, payments, ex-employees, retailers, consumers, state and federal laws governing almost anything, and other issues are commonplace for big companies these days. That is just the norm in this litigious society, and image-conscious companies with deep pockets are regular targets of lawsuits.

But it just seems different with Dish Network. The lawsuits it has been involved in go well beyond the typical type of legal disputes companies must deal with. The legal brawls — especially regarding things such as programming contracts and business relationships — are just more nasty in tone, and touch on issues involving corporate ethics and practices, than almost any other company in America that has not been branded an out-and-out crook.

The two telemarketing law cases Dish Network has lost so far this year have brought that into focus, and seemed to highlight the company’s long history of business dealings. To be fair, Dish Network is not the only company to be charged with violating the telemarketing protection laws intended to prevent unwanted calls to homes who have registered their number on do-not-call lists. DirecTV, Comcast, and other industry companies have been the subject of similar complaints and government investigations.

Likewise, as it widely known, it can be very difficult to control outside telemarketing firms, whose live or die on the number of sales they can make through outbound calls. But when two federal judges, in the course of a few weeks, basically say a company knew its internal telemarketing employees and outside telemarketing vendors were violating the law and did nothing to stop them, it is a whole other matter.

And when two individual federal judges, in separate cases, question whether a company remotely cares if it is violating the law — any law —  it is far more than business as usual.

In one case, the judge ruled Dish Network showed “disregard for the law.” In the other, the judge wrote Dish Network “willfully and knowingly violated” the law and has displayed “a sustained and ingrained practice of violating the law.” Federal judges can be egotistical and verbose. But they just do not use language like that in civil cases without a deep belief in how a company has acted over the years and in the case before them. It just does not happen.

Some may argue that violating telemarketing protection laws should not be viewed as the most heinous act on earth. But that attitude also may have played a role in the two recent telemarketing decisions. When a judge writes she “is convinced that at least some in Dish [Network] management do not believe that Dish [Network] really did anything wrong or harmed anyone with these millions and millions of illegal calls,” she is essentially accusing the company of being all too willing to break the law in the pursuit of profits.

And in this instance, that comment appeared aimed at one specific person: Dish Network Chairman Charles William Ergen. And that might be the far more consequential takeaway from these two cases than anything else. Though judges are supposed to consider the facts in the case before them in a vacuum, they rarely do. Judges are people, too, and the reputation of a company has to creep in to their view of that firm in a case.

And that may be more of a threat to Dish Network’s future than just losing two more lawsuits.

Could it be that a reputation for not caring about the law, or the rules, or core corporate ethics has enveloped Dish Network and is catching up to it? Think about it. Dish Network has been sanctioned several times by courts over ethical violations like failing to keep records pertaining to a case, or even destroying them.

It has been sanctioned several times in the past for how it conducts its legal affairs — though not recently, it should be noted. Then there are the losses in copyright and patent cases. And the charges in the FCC auction rule case. And the fact that most of Dish Network’s past attempts to enter into new and significant partnerships — like with News Corp. and GM/Hughes — have ended up in corporate divorce court.

All combined, these things paint a picture, and it’s not a pretty one, or an ordinary one even in the rough and tumble world of American business. No doubt Ergen believes that this type of characterization of his companies is unfair and unjustified.

And it is perhaps testament to his business acumen that fines, case loses, settlements and other similar payments that probably top $3 billion by now when taking the most recent awards into account might not be that much of a financial hit to Dish Network and Echostar since they have a combined market cap of close to $37 billion. Not to mention that Ergen is among the 50 richest people in the world.

So, sports fans, is Charlie Ergen the poster-executive for the old cliché of someone who is laughing all the way to the bank? Or can most everyone — federal judges and the majority of the industry included — be wrong about Ergen and the way his companies operate? On that count, the jury, literally and figuratively, seems to have reached a verdict.

Bob Scherman is the editor and publisher of Satellite Business News, an independent trade publication. Scherman has covered the satellite TV, cable, and related businesses for almost 35 years. Comments on this column can be sent to [email protected].