Dish Network 2003 Annual Report Download - page 32

27
entered into an Assurance of Voluntary Compliance with the states which ended their investigation. The states have
released all claims related to the matters investigated.
Retailer Class Actions
We have been sued by retailers in three separate purported class actions. During October 2000, two separate lawsuits
were filed in the Arapahoe County District Court in the State of Colorado and the United States District Court for the
District of Colorado, respectively, by Air Communication & Satellite, Inc. and John DeJong, et al. on behalf of
themselves and a class of persons similarly situated. The plaintiffs are attempting to certify nationwide classes on
behalf of certain of our satellite hardware retailers. The plaintiffs are requesting the Courts to declare certain provisions
of, and changes to, alleged agreements between us and the retailers invalid and unenforceable, and to award damages
for lost incentives and payments, charge backs, and other compensation. We are vigorously defending against the suits
and have asserted a variety of counterclaims. The United States District Court for the District of Colorado stayed the
Federal Court action to allow the parties to pursue a comprehensive adjudication of their dispute in the Arapahoe
County State Court. John DeJong, d/b/a Nexwave, and Joseph Kelley, d/b/a Keltronics, subsequently intervened in the
Arapahoe County Court action as plaintiffs and proposed class representatives. We have filed a motion for summary
judgment on all counts and against all plaintiffs. The plaintiffs have filed a motion for additional time to conduct
discovery to enable them to respond to our motion. The Court has not ruled on either of the two motions. 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. (“SDS”) filed a lawsuit against us in the United States District Court for the Eastern
District of Texas during September 2000, on behalf of itself and a class of persons similarly situated. The plaintiff was
attempting to certify a nationwide class on behalf of sellers, installers, and servicers of satellite equipment who contract
with us and who allege that we: (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, the ownership of certain equipment related to the provision of our satellite television
service. During September 2001, the Court granted our motion to dismiss. The plaintiff moved for reconsideration of
the Court’s order dismissing the case. The Court denied the plaintiff’s motion for reconsideration. The trial court
denied our motions for sanctions against SDS. Both parties perfected appeals before the Fifth Circuit Court of Appeals.
On appeal, the Fifth Circuit upheld the dismissal for lack of personal jurisdiction. The Fifth Circuit vacated and
remanded the district court’s denial of our motion for sanctions and instructed the district court to decide the issue again
and to issue a written opinion, which it had failed to do the first time. It is not possible to make a firm assessment of
the probable outcome on that issue or to determine the extent of any recovery of sanctions.
StarBand Shareholder Lawsuit
On August 20, 2002, a limited group of shareholders in StarBand filed an action in the Delaware Court of Chancery
against EchoStar and EchoBand Corporation, together with four EchoStar executives who sat on the Board of
Directors for StarBand, for alleged breach of the fiduciary duties of due care, good faith and loyalty, and also against
EchoStar and EchoBand Corporation for aiding and abetting such alleged breaches. Two of the individual
defendants, Charles W. Ergen and David K. Moskowitz, are members of our Board of Directors. The action stems
from the defendants' involvement as directors, and EchoBand's position as a shareholder, in StarBand, a broadband
Internet satellite venture in which we invested. On July 28, 2003, the Court granted the defendants’ motion to
dismiss on all counts. The Plaintiffs have since filed a notice of appeal. Oral argument on the appeal was held on
January 6, 2004. EchoStar is waiting for the decision on appeal to the Delaware Supreme Court. It is not possible to
make a firm assessment of the probable outcome of the appeal or to determine the extent of any potential liability or
damages.
Shareholder Derivative Action
During October 2002, a purported shareholder filed a derivative action against members of our Board of Directors in
the United States District Court of Clark County, Nevada and naming us as a nominal defendant. The complaint
alleges breach of fiduciary duties, corporate waste and other unlawful acts relating to our agreement to (1) pay Hughes
Electronics Corporation a $600.0 million termination fee in certain circumstances and (2) acquire Hughes’ shareholder
interest in PanAmSat. The agreements to pay the termination fee and acquire PanAmSat were required in the event