This week a federal judge in North Carolina ordered Dish Network LLC (“Dish”) to pay treble damages in the amount of $61.5 million, or $1,200 per call, to class members in a Telephone Consumer Protection Act (“TCPA”) action against Dish, Krakauer v. Dish Network L.L.C., Case No. 1:14-cv-00333, as a result of marketing efforts made by Dish’s contractor, Satellite Systems Network (“SSN”). Under the TCPA, treble damages are available in the court’s discretion for violations that occur “willfully or knowingly.” Since the court found that Dish “willfully and knowingly” violated the TCPA, Dish was ordered to pay three times the $20.5 million jury verdict (calculated at a rate of $400 per call) against Dish (previously discussed here).
The Court found that Dish’s contract with SSN gave Dish “virtually unlimited rights to monitor and control” the third-party vendor’s telemarketing activities. Furthermore, the court stated that in a 2009 settlement agreement that Dish entered with several state attorneys general, Dish confirmed that it had this power over its marketers. Nevertheless, the court concluded that Dish failed to monitor and control SSN’s compliance with telemarketing laws.
Based on Dish’s conduct, the court determined that Dish had willfully and knowingly violated the TCPA. The Court also found that SSN’s violations of the TCPA were willful and knowing, and ruled under agency principles that SSN’s willful and knowing violations could be imputed to Dish for purposes of trebling damages.
Recognizing the discretionary nature of treble damages, the court concluded that an award of treble damages was appropriate because of “the need to deter Dish from future violations and the need to give appropriate weight to the scope of the violations.” The court relied heavily upon its finding that “Dish did not take seriously the promises it made to forty-six state attorneys general” and its repeated failure to address TCPA violations of its telemarketer when the contract allowed Dish to monitor compliance.
As this case demonstrates, companies can face substantial liability, including treble damages, based on the actions of third party contractors. This further highlights the need to consider TCPA compliance when retaining third parties, and in appropriate circumstances monitoring third-party compliance on an ongoing basis.