Dish Network 2001 Annual Report Download - page 31

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29
Item 3. Legal Proceedings
Fee Dispute
We had a contingent fee arrangement with the attorneys who represented us in prior litigation with The
News Corporation, Ltd. The contingent fee arrangement provides for the attorneys to be paid a percentage of any net
recovery obtained by us in the News Corporation litigation. The attorneys asserted that they might be entitled to
receive payments totaling hundreds of millions of dollars under this fee arrangement. We consistently maintained
that the demand significantly overstated the amount to which the attorneys might reasonably be entitled.
During mid-1999, we initiated litigation against the attorneys in the Arapahoe County, Colorado, District
Court arguing that the fee arrangement was void and unenforceable. In December 1999, the attorneys initiated an
arbitration proceeding before the American Arbitration Association. The litigation was stayed while the arbitration
proceeded. The arbitration hearing concluded on October 11, 2001. During the four week arbitration hearing, the
attorneys presented a damage model for $56 million. We asserted even that amount significantly overstated the
amount to which the attorneys might reasonably be entitled. During closing arguments, the attorneys presented a
separate damage calculation for $111 million to the arbitration panel.
On November 7, 2001, the arbitration panel awarded the attorneys approximately $40 million for its
contingency fee under the fee agreement. In the award, the arbitration panel also dismissed our claims against the
attorneys that we had initiated in the Arapahoe County, Colorado, District Court. Pursuant to the award,
approximately $8 million was to be paid within 30 days of the award with the balance to be paid in equal quarterly
principal installments over four years, commencing February 1, 2002. Interest is to be paid at the prime rate
(calculated as the average amount for each relevant year as published daily in the Wall Street Journal), compounded
annually.
On November 30, 2001, we filed a motion to vacate the award on the following grounds: (1) the award as
issued violates public policy and cannot be enforced; and (2) the Panel exceeded its authority under Colorado
Revised Statutes Section 13-22-214(1)(a)(III). Alternatively, we requested that the Arapahoe County District Court
modify the award to correct a calculation error. The attorneys have opposed our motion to vacate. The motion
remains pending before the District Court in Arapahoe County, Colorado. There can be no assurance that we will
succeed in our effort to vacate or modify the arbitration award.
WIC Premium Television Ltd.
During July 1998, a lawsuit was filed by WIC Premium Television Ltd., an Alberta corporation, in the
Federal Court of Canada Trial Division, against General Instrument Corporation, HBO, Warner Communications,
Inc., John Doe, Showtime, United States Satellite Broadcasting Company, Inc., us, and two of our wholly-owned
subsidiaries, Echosphere Corporation and Dish, Ltd. EchoStar Satellite Corporation, EDBS, ETC, and EchoStar
Satellite Broadcasting Corporation were subsequently added as defendants. The lawsuit seeks, among other things,
interim and permanent injunctions prohibiting the defendants from activating receivers in Canada and from
infringing any copyrights held by WIC.
During September 1998, WIC filed another lawsuit in the Court of Queen’s Bench of Alberta Judicial
District of Edmonton against certain defendants, including us. WIC is a company authorized to broadcast certain
copyrighted work, such as movies and concerts, to residents of Canada. WIC alleges that the defendants engaged in,
promoted, and/or allowed satellite dish equipment from the United States to be sold in Canada and to Canadian
residents and that some of the defendants allowed and profited from Canadian residents purchasing and viewing
subscription television programming that is only authorized for viewing in the United States. The lawsuit seeks,
among other things, interim and permanent injunctions prohibiting the defendants from importing hardware into
Canada and from activating receivers in Canada, together with damages in excess of $175 million.