Dish Network 2001 Annual Report Download - page 103

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ECHOSTAR COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – Continued
F–38
Retailer Class Actions
EchoStar has been sued by retailers in three separate purported class actions. In two separate lawsuits filed in
the District Court, Arapahoe County, State of Colorado and the United States District Court for the District of
Colorado, respectively, Air Communication & Satellite, Inc. and John DeJong, et. al. filed lawsuits on October 6, 2000
on behalf of themselves and a class of persons similarly situated. The plaintiffs are attempting to certify nationwide
classes allegedly brought on behalf of persons, primarily retail dealers, who were alleged signatories to certain retailer
agreements with EchoStar Satellite Corporation. The plaintiffs are requesting the Courts to declare certain provisions
of the alleged agreements invalid and unenforceable, to declare that certain changes to the agreements are invalid and
unenforceable, and to award damages for lost commissions and payments, charge backs, and other compensation.
EchoStar intends to vigorously defend against the suits and to assert a variety of counterclaims. It is too early to make
an assessment of the probable outcome of the litigation or to determine the extent of any potential liability or damages.
Satellite Dealers Supply, Inc. filed a lawsuit in the United States District Court for the Eastern District of
Texas on September 25, 2000, on behalf of itself and a class of persons similarly situated. The plaintiff is attempting to
certify a nationwide class on behalf of sellers, installers, and servicers of satellite equipment who contract with
EchoStar and claims the alleged class has been “subject to improper chargebacks.” The plaintiff alleges that EchoStar:
(1) charged back certain fees paid by members of the class to professional installers in violation of contractual terms;
(2) manipulated the accounts of subscribers to deny payments to class members; and (3) misrepresented to class
members who own certain equipment related to the provision of satellite television service. On September 18, 2001,
the Court granted EchoStar’s Motion to Dismiss for lack of personal jurisdiction. Plaintiff Satellite Dealers Supply has
moved for reconsideration of the Court’s order dismissing the case.
PrimeTime 24 Joint Venture
PrimeTime 24 Joint Venture filed suit against EchoStar during September 1998 alleging breach of contract,
wrongful termination of contract, interference with contractual relations, trademark infringement and unfair
competition. EchoStar’s motion for summary judgment was granted with respect to PrimeTime 24’s claim of
interference with contractual relations and unfair competition. Plaintiff’s motion for summary judgment was granted
with respect to its approximate $10 million claim of breach of contract claim for fees during the period from May 1998
through July 19, 1998. It is too early to make an assessment of the probable outcome of the remainder of the litigation
or to determine the extent of any additional potential liability or damages.
EchoStar is subject to various other legal proceedings and claims which arise in the ordinary course of
business. In the opinion of management, the amount of ultimate liability with respect to those actions will not
materially affect EchoStar’s financial position or results of operations.
Meteoroid Events
Meteoroid events pose a potential threat to all in orbit geosynchronous satellites including EchoStar’s DBS
satellites. While the probability that EchoStar’s satellites will be damaged by meteoroids is very small, that probability
increases significantly when the Earth passes through the particulate stream left behind by various comets.
Occasionally, increased solar activity poses a potential threat to all in-orbit geosynchronous satellites
including EchoStar’s DBS satellites. The probability that the effects from this activity will damage our satellites or
cause service interruptions is generally very small.
Some decommissioned spacecraft are in uncontrolled orbits which pass through the geostationary belt at
various points, and present hazards to operational spacecraft including EchoStar’s DBS satellites. The locations of
these hazards are generally well known and may require EchoStar to perform maneuvers to avoid collisions.