Dish Network 2013 Annual Report Download - page 168

DISH NETWORK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
F-58
On October 29, 2013, the Bankruptcy Court dismissed all of the claims against LBAC and us in Harbinger’s
complaint in their entirety, but granted leave for LightSquared to file its own complaint in intervention. On
November 15, 2013, LightSquared filed its complaint, which included various claims against us, EchoStar, Mr.
Ergen and SPSO. On December 2, 2013, Harbinger filed an amended complaint, asserting various claims against
SPSO. On December 12, 2013, the Bankruptcy Court dismissed several of the claims asserted by LightSquared and
Harbinger. The surviving claims include, among others, LightSquared’s claims against SPSO for declaratory relief,
breach of contract and statutory disallowance; LightSquared’s tortious interference claim against us, EchoStar and
Mr. Ergen; and Harbinger’s claim against SPSO for equitable disallowance. These claims proceeded to a non-jury
trial on January 9, 2014, which concluded on January 17, 2014. The parties are in the process of post-trial briefing
and a hearing for closing arguments has been set for March 12, 2014.
We intend to vigorously defend this proceeding and cannot predict with any degree of certainty the outcome of this
proceeding or determine the extent of any potential liability or damages.
LightSquared Transaction Shareholder Derivative Actions
On August 9, 2013, a purported shareholder of the Company, Jacksonville Police and Fire Pension Fund
(“Jacksonville PFPF”), filed a putative shareholder derivative action in the District Court for Clark County, Nevada
alleging, among other things, breach of fiduciary duty claims against the members of the Company’s Board of
Directors as of that date: Charles W. Ergen; Joseph P. Clayton; James DeFranco; Cantey M. Ergen; Steven R.
Goodbarn; David K. Moskowitz; Tom A. Ortolf; and Carl E. Vogel (collectively, the “Director Defendants”). In its
operative amended complaint, Jacksonville PFPF claims that Mr. Ergen breached his fiduciary duty to the Company
in connection with certain purchases of LightSquared debt by SPSO, an entity controlled by Mr. Ergen, and that the
other Director Defendants aided and abetted that alleged breach of duty. The Jacksonville PFPF claims allege that
(1) the debt purchases created an impermissible conflict of interest and (2) put at risk the LBAC Bid, which as noted
above has been withdrawn. Jacksonville PFPF further claims that most members of the Company’s Board of
Directors are beholden to Mr. Ergen to an extent that prevents them from discharging their duties in connection with
the Company’s participation in the LightSquared bankruptcy auction process. Jacksonville PFPF is seeking an
unspecified amount of damages. Jacksonville PFPF dismissed its claims against Mr. Goodbarn on October 8, 2013.
Jacksonville PFPF sought a preliminary injunction that would enjoin Mr. Ergen and all of the Director Defendants
other than Mr. Goodbarn from influencing the Company’s efforts to acquire certain assets of LightSquared in the
bankruptcy proceeding. On November 27, 2013, the Court denied that request but granted narrower relief enjoining
Mr. Ergen and anyone acting on his behalf from participating in negotiations related to one aspect of the LBAC Bid,
which as noted above has been withdrawn.
Five alleged shareholders have filed substantially similar putative derivative complaints in state and federal courts
alleging the same or substantially similar claims. On September 18, 2013, DCM Multi-Manager Fund, LLC filed a
duplicative putative derivative complaint in the District Court for Clark County, Nevada, which was consolidated
with the Jacksonville PFPF action on October 9, 2013. Between September 25, 2013 and October 2, 2013, City of
Daytona Beach Police Officers and Firefighters Retirement System, Louisiana Municipal Police Employees’
Retirement System and Iron Worker Mid-South Pension Fund filed duplicative putative derivative complaints in the
United States District Court for the District of Colorado. Also on October 2, 2013, Iron Workers District Council
(Philadelphia and Vicinity) Retirement and Pension Plan filed its complaint in the United States District Court for
the District of Nevada. None of the plaintiffs in these actions is seeking a preliminary injunction.
On October 11, 2013, Iron Worker Mid-South Pension Fund dismissed its claims without prejudice. On October
30, 2013, Louisiana Municipal Police Employees’ Retirement System dismissed its claims without prejudice and, on
January 2, 2014, filed a new complaint in the District Court for Clark County, Nevada. On December 13, 2013,
City of Daytona Beach Police Officers and Firefighters Retirement System voluntarily dismissed its claims without
prejudice. The United States District Court for the District of Nevada has stayed the action by Iron Workers District
Council (Philadelphia and Vicinity) Retirement and Pension Plan until April 16, 2014.