Dish Network 2015 Annual Report Download - page 168

DISH NETWORK CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued
F-64
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, which, on May 2, 2014, was
consolidated with the Jacksonville PFPF action. On December 13, 2013, City of Daytona Beach Police Officers and
Firefighters Retirement System voluntarily dismissed its claims without prejudice. On March 28, 2014, Iron
Workers District Council (Philadelphia and Vicinity) Retirement and Pension Plan voluntarily dismissed its claims
without prejudice.
On July 25, 2014, Jacksonville PFPF filed a second amended complaint, which added claims against George R.
Brokaw and Charles M. Lillis, as Director Defendants, and Thomas A. Cullen, R. Stanton Dodge and K. Jason
Kiser, as officers of the Company. Jacksonville PFPF asserted five claims in its second amended complaint, each of
which alleged breaches of the duty of loyalty. Three of the claims were asserted solely against Mr. Ergen; one claim
was made against all of the remaining Director Defendants, other than Mr. Ergen and Mr. Clayton; and the final
claim was made against Messrs. Cullen, Dodge and Kiser.
Our Board of Directors has established a Special Litigation Committee to review the factual allegations and legal
claims in these actions. On October 24, 2014, the Special Litigation Committee filed a report in the District Court
for Clark County, Nevada regarding its investigation of the claims and allegations asserted in Jacksonville PFPF’s
second amended complaint. The Special Litigation Committee filed a motion to dismiss the action based, among
other things, on its business judgment that it is in the best interests of the Company not to pursue the claims asserted
by Jacksonville PFPF. The Director Defendants and Messrs. Cullen, Dodge and Kiser have also filed various
motions to dismiss the action. In an order entered on September 18, 2015, the Court granted the Special Litigation
Committee’s motion to defer to the Special Litigation Committee’s October 24, 2014 report, including its finding
that dismissal of the action is in the best interest of the Company. The Court also held that, in light of granting the
motion to defer, the pending motions to dismiss filed by the individual defendants were denied without prejudice as
moot. On October 12, 2015, Jacksonville PFPF filed a notice of appeal to the Supreme Court of Nevada. We
cannot predict with any degree of certainty the outcome of these suits or determine the extent of any potential
liability or damages.
Personalized Media Communications, Inc.
During 2008, Personalized Media Communications, Inc. (“PMC”) filed suit against us; EchoStar and Motorola Inc.,
in the United States District Court for the Eastern District of Texas, alleging infringement of United States Patent
Nos. 5,109,414; 4,965,825; 5,233,654; 5,335,277 and 5,887,243, which relate to satellite signal processing. PMC is
an entity that seeks to license an acquired patent portfolio without itself practicing any of the claims recited therein.
Subsequently, Motorola Inc. settled with PMC, leaving us and EchoStar as defendants. On July 18, 2012, pursuant
to a Court order, PMC filed a Second Amended Complaint that added Rovi Guides, Inc. (f/k/a/ Gemstar-TV Guide
International, Inc.) and TVG-PMC, Inc. (collectively, “Gemstar”) as a party, and added a new claim against all
defendants seeking a declaratory judgment as to the scope of Gemstar’s license to the patents in suit, under which
we and EchoStar are sublicensees. On August 12, 2014, in response to the parties’ respective summary judgment
motions related to the Gemstar license issues, the Court ruled in favor of PMC and dismissed all claims by or against
Gemstar and entered partial final judgment in PMC’s favor as to those claims. On September 16, 2014, we and
EchoStar filed a notice of appeal of that partial final judgment. PMC’s damages expert had contended that we and
EchoStar are liable for damages ranging from approximately $500 million to $650 million as of March 31, 2012,
and subsequently modified such damages as ranging from approximately $150 million to $450 million, as of
September 30, 2014, which did not include pre-judgment interest and could be trebled under Federal law. On May
7, 2015, we, EchoStar and PMC entered into a settlement and release agreement that provides, among other things,
for a license by PMC to us and EchoStar for certain patents and patent applications and the dismissal of all of
PMC’s claims in the action against us and EchoStar with prejudice. On June 4, 2015, the Court dismissed all of
PMC’s claims in the action against us and EchoStar with prejudice.