Dish Network 2004 Annual Report Download - page 123

ECHOSTAR COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – Continued
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 filed a motion for additional time to conduct discovery
to enable them to respond to our motion. The Court granted a limited discovery period which ended November 15,
2004. The Court is hearing discovery related motions and we expect the Court to follow with a briefing schedule for
the motion for summary judgment. It is not possible 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. The Fifth Circuit vacated and remanded the District Court’s denial of
our motion for sanctions. The District Court subsequently issued a written opinion containing the same findings. The
only issue remaining is our collection of costs, which were previously granted by the Court.
StarBand Shareholder Lawsuit
During August 2002, a limited group of shareholders in StarBand, a broadband Internet satellite venture in which
we invested, filed an action in the Delaware Court of Chancery against us 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 us 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 our position as a
shareholder, in StarBand. During July 2003, the Court granted the defendants’ motion to dismiss on all counts. The
Plaintiffs appealed. On April 15, 2004, the Delaware Supreme Court remanded the case instructing the Chancery
Court to re-evaluate its decision in light of a recent opinion of the Delaware Supreme Court, Tooley v. Donaldson,
No. 84,2004 (Del. Supr. April 2, 2004). Plaintiffs filed a motion to amend their complaint which was denied by the
Court. The Plaintiffs appealed the denial of their motion to amend and the appeal is pending. It is not possible to
make a firm assessment of the probable outcome of the litigation or to determine the extent of any potential liability
or damages.
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