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

292 F.R.D. 593, 85 Fed. R. Serv. 3d 843, 2013 WL 1749930, 2013 U.S. Dist. LEXIS 58442
Procedural entryThis page is a short order in United States v. Dish Network, L.L.C.. Read the opinion of the Court — 75 F. Supp. 3d 916
District Court, C.D. Illinois·Decided April 24, 2013·No. No. 09-3073·Published

Opinion

OPINION

SUE E. MYERSCOUGH, District Judge.

This cause is before the Court on the Motion for Evidentiary Sanctions Pursuant to Federal Rule of Civil Procedure 37 (Motion for Sanctions) (d/e 201) filed by Plaintiffs United States of America and the States of California, Illinois, North Carolina, and Ohio. The Motion is GRANTED IN PART and DENIED IN PART.

Defendant’s conduct during discovery has been, at times, evasive, obstructive, and willful. Therefore, the following sanctions are appropriate: (1) 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; (2) a finding that the Zee Sports Campaign contained a direct or indirect sales message and was conducted for commercial purposes; and (3) an instruction advising the jury that Defendant failed to preserve evidence relevant to the litigation, documents relevant to the sharing of telemarketing leads with retailers were destroyed, and that the jury may, but does not have to, infer that the destroyed evidence was not favorable to Defendant.

I. INTRODUCTION

In the Motion for Sanctions, Plaintiffs assert that Defendant has failed to produce information, despite a court order requiring that it do so. Therefore, Plaintiffs ask that the Court impose evidentiary sanctions so that Defendant is not rewarded for its failure to comply with its discovery obligations.

The material requested by Plaintiffs includes: (1) documents about how Defendant created and scrubbed certain calling campaigns (the parties sometimes refer to this information as “data trails”); (2) information (e.g. recordings and scripts) related to the Zee Sports free preview weekend campaign1; and (3) information about Defendant providing telemarketing leads (also referred to as lead lists2 ) to its retailers. Plaintiffs ask the Court to (1) preclude Defendant from introducing any evidence about the creation or scrubbing of the telemarketing campaigns covered by Plaintiffs’ Sixth Request for Production of Documents Nos. 2 and 3, or, in the alternative, give an adverse inference instruction that Defendant did not scrub the campaigns against the National Do-Not^Call Registry or against Defendant’s internal do-not-call list; (2) find as an established fact that the Zee Sports campaign contained a direct or indirect sales message and was conducted for commercial purposes; and (3) find as an established fact that “during the time period covered by this case, Dish had a practice of sharing telemarketing leads with retailers, but the extent of the practice is impossible to discern because Dish destroyed [596]*596evidence about it” or, in the alternative, an adverse inference instruction that the evidence Defendant destroyed would have shown that Defendant shared telemarketing leads with its retailers, but that the extent of the practice is impossible to discern due to the missing evidence. See Pis.’ Motion (d/e 201); Reply (d/e 234).

II. BACKGROUND

A Background Related to the Duty to Preserve

In July 2005, the Federal Trade Commission (FTC) sent Defendant a Civil Investigation Demand (Demand). According to the Demand, the scope of the investigation was as follows:

To determine whether unnamed telemarketers, sellers, or others assisting them have engaged or are engaged in (1) unfair or deceptive acts or practices in or affecting commerce in violation of Section 5 of the Federal Trade Commission Act ... and/or (2) deceptive or abusive telemarketing acts or practices in violation of the Commissions’ Telemarketing Sales Rule, 16 C.F.R., part 310, including but not limited to the provision of substantial assistance or support—such as mailing lists, scripts, merchant accounts and other information, products or services—to telemarketers engaged in unlawful practices.

Pis.’ Ex. 1 (d/e 201-1).

The Demand requested, among other things, Defendant’s call records, documents related to its telemarketing compliance, “[djocuments sufficient to show all marketing materials, directions, and support [Dish] provides to a person who will be marketing or is marketing Dish Network,” and documents sufficient to support a claim that Defendant has not violated the Telemarketing Sales Rule. See Pis.’ Ex. 1 (Demand), pp. 6-7 (d/e 201-1). The Demand provided that Defendant shall retain all documentary material used to prepare responses to the specifications of the Demand. The Demand also ordered that Defendant suspend any routine procedures for document destruction and retain relevant documents:

You shall retain all documentary material used in the preparation of responses to the specifications of this [Demand]. The FTC may require the submission of additional information or documents at a later time during this investigation. Accordingly, you should suspend any routine procedures for document destruction and take other measures to prevent the destruction of documents that are in any way relevant to this investigation during its pendency, irrespective of whether you believe such documents are protected from discovery by privilege or otherwise.

Pis.’ Ex. 1, pp. 2-3.

In March 2006, North Carolina served a demand on Defendant asking for “all documents reflecting Dish Network’s policies or procedures for complying with federal or state do-not-call requirements, including but not limited to all pertinent scripts, training materials, office manual, or written guidelines or procedures that Dish Network provides to persons that make telephone solicitations for or on behalf of Dish Network.” See Pis.’ Ex. 2 (Defendant’s response to North Carolina’s March 17, 2006 Investigative Demand) (d/e 201-2).

B. Plaintiffs File This Lawsuit

On March 25, 2009, Plaintiffs filed this lawsuit. On April 30, 2009, Plaintiffs filed an Amended Complaint (d/e 5). In Counts I, II, and III, Plaintiffs allege that Defendant violated the Telemarketing Sales Rule (16 C. F.R. §§ 310.4, 310.3). Counts IV and V allege violations of the Telephone Consumer Protection Act (47 U.S.C. § 227). In Counts VI, VII, VIII, IX, X, and XI, each state Attorney General seeks relief under each state’s respective statutes that prohibit these forms of telephone solicitations. All proceedings related exclusively to Telephone Consumer Protection Act matters are currently stayed. See Opinion (d/e 86) (staying the Telephone Consumer Protection Act matters so that the Federal Communications Commission can resolve the administrative complaint asking the Commission to interpret the phrase “on behalf of’).

Defendant has raised several affirmative defenses. See Answer (d/e 26). One of those affirmative defenses includes the Telemarketing Sales Rule’s Safe Harbor provisions. See Answer (d/e 26), citing 16 C.F.R. [597]*597§ 310.4(b)(4)(i) (providing that a seller or telemarketer is not liable for violating § 310.4(b)(l)(iv) if the seller or telemarketer has certain measures in place); see also Opinion, p. 3 n.

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United States v. Dish Network, L.L.C., 292 F.R.D. 593, 85 Fed. R. Serv. 3d 843, 2013 WL 1749930, 2013 U.S. Dist. LEXIS 58442 (C.D. Ill. 2013).

292 F.R.D. 593 (United States v. Dish Network, L.L.C.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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