The United States Court of Appeals for the Seventh Circuit has upheld a lower court's ruling which found DISH Network liable for telemarketing violations (related to robocalls) conducted by its contracted agents.

The case has precedential value for the telemarketing of any service, such as retail energy

According to the Appeals Court, Dish had some 50 'order-entry retailers', which used phones to sell nationwide. The order-entry retailers took orders from customers and entered them directly into DISH’s computer system.

The lower court judge had concluded that the order-entry retailers were DISH’s agents, which made DISH responsible whenever any of these retailers called a person on any other retailer’s do-not-call list (or on DISH’s own). Due to the agency finding, the lower court judge found that DISH itself placed calls that violated the Rule

On appeal, DISH maintained that the district court legally erred when it interpreted the contract between the order-entry retailers and DISH, because, in part, the contract asserted that it does not create an agency relation

The Appeals Court rejected this argument

"[T]he district judge got it right. The contract asserts that it does not create an agency relation, but parties cannot by ukase negate agency if the relation the contract creates is substantively one of agency," the Appeals Court said

Quoting various provisions of the contract, the Appeals Court found that the contract gave DISH the right to control the order-entry retailers' performance. "These provisions gave DISH complete control over the order-entry retailers’ performance. What’s more, these retailers acted directly for DISH, entering orders into DISH’s system; they did not have their own inventory and were not resellers of any kind. Under normal principles, they were DISH’s agents notwithstanding the contractual disclaimer," the Appeals Court said

The Appeals Court next addressed whether DISH is liable as a principal for failing to ensure that it and all of its agents shared a single internal do-not-call list?

"The relevant portion of the Telemarketing Sales Rule, 16 C.F.R. §310.4(b)(1)(iii)(A), forbids calling a person who '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'. Because the order-entry retailers were DISH’s agents, DISH and the order-entry retailers were collectively one 'seller whose goods or services are being offered'. This meant that they had to act collectively; otherwise any household could receive endless calls peddling DISH’s service, as long as each came from a different order-entry retailer. (The calls from the order-entry retailers were made within the scope of their agency; we need not consider whether coordination is required when someone who is not acting as a traditional agent places a call,)" the Appeals Court said

DISH’s primary argument against liability is that the contracts told the order-entry retailers to follow all applicable laws.

Contrasting the case with precedent on this issue cited by DISH, the Appeals Court said, "DISH’s agents, by contrast, acted within their authority to sell TV service using phone calls, and those acts benefitted DISH. The district court found that DISH knew what the order-entry retailers were doing. That is enough for DISH to be liable for the order-entry retailers’ illegal calls under those federal and state laws that extend beyond the failure to coordinate internal do-not-call lists."

The Appeals Court also found that an 'established business relationship', which can be used for an exemption of the do-not-call list for a period of time, terminates when the customer ceases to purchase a service (in this case, the last payment date), and not when DISH disconnected the customer; service (a later date after payment stopped)

Due to its findings on other issues, the Appeals Court did not need to come to a conclusion about the meaning of 'cause' in the statutory provisions which makes it unlawful for a seller to 'cause a telemarketer to engage in' violations. 16 C.F.R. §310.4(b)

Link to opinion

No. 17-3111, USA v. DISH Network L.L.C.

Tags:
Sales & Marketing   Telemarketing  

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