Dish Network 2001 Annual Report Download - page 35

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breach of express warranty and violation of the California Consumer Legal Remedies Act, Civil Code §§ 1750, et.
seq., and the California Business & Professions Code §§ 17500, 17200. We have filed an answer and the case is
currently in discovery. Plaintiffs filed their Motion for Class Certification on January 21, 2002. Our response is due
on March 7, 2002, and the Court will conduct a hearing on class certification in early May 2002. It is too early in
the litigation to make an assessment of the probable outcome of the litigation or to determine the extent of any
potential liability or damages. We deny all liability and intend to vigorously defend the lawsuit.
Retailer Class Actions
We have been sued by retailers in three separate purported class actions. In two separate lawsuits filed in
the District Court, Arapahoe County, State of Colorado and the United States District Court for the District of
Colorado, respectively, Air Communication & Satellite, Inc. and John DeJong, et. al. filed lawsuits on October 6,
2000 on behalf of themselves and a class of persons similarly situated. The plaintiffs are attempting to certify
nationwide classes allegedly brought on behalf of persons, primarily retail dealers, who were alleged signatories to
certain retailer agreements with EchoStar Satellite Corporation. The plaintiffs are requesting the Courts to declare
certain provisions of the alleged agreements invalid and unenforceable, to declare that certain changes to the
agreements are invalid and unenforceable, and to award damages for lost commissions and payments, charge backs,
and other compensation. We intend to vigorously defend against the suits and to assert a variety of counterclaims.
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. filed a lawsuit in the United States District Court for the Eastern District of
Texas on September 25, 2000, on behalf of itself and a class of persons similarly situated. The plaintiff is
attempting to certify a nationwide class on behalf of sellers, installers, and servicers of satellite equipment who
contract with us and claim the alleged class has been “subject to improper chargebacks.” The plaintiff alleges 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 who own certain equipment related to the provision of satellite television service. On September 18,
2001, the Court granted our Motion to Dismiss for lack of personal jurisdiction. Plaintiff Satellite Dealers Supply
has moved for reconsideration of the Court’s order dismissing the case.
PrimeTime 24 Joint Venture
PrimeTime 24 Joint Venture filed suit against us during September 1998 alleging breach of contract,
wrongful termination of contract, interference with contractual relations, trademark infringement and unfair
competition. Our motion for summary judgment was granted with respect to PrimeTime 24’s claim of interference
with contractual relations and unfair competition. Plaintiff’s motion for summary judgment was granted with
respect to its approximate $10 million breach of contract claim for fees during the period from May 1998 through
July 19, 1998. It is too early to make an assessment of the probable outcome of the remainder of the litigation or to
determine the extent of any additional potential liability or damages.
Satellite Insurance
In September 1998, we filed a $219.3 million insurance claim for a constructive total loss under the launch
insurance policies covering EchoStar IV. The satellite insurance consists of separate substantially identical policies
with different carriers for varying amounts that, in combination, create a total insured amount of $219.3 million. Our
insurance carriers offered us a total of approximately $88 million, or 40% of the total policy amount, in settlement of
the EchoStar IV insurance claim. The insurers offered to pay only part of the $219.3 million claim because they
allege we did not abide by the exact terms of the insurance policy. The insurers also assert that EchoStar IV was not
a constructive total loss, as that term is defined in the policy. We strongly disagree and filed an arbitration claim
against the insurers for breach of contract, failure to pay a valid insurance claim and bad faith denial of a valid
claim, among other things. There can be no assurance that we will receive the amount claimed or, if we do, that we
will retain title to EchoStar IV with its reduced capacity. Based on the carriers’ failure to pay the amount we believe
is owed under the policy and their improper attempts to force us to settle for less than the full amount of our claim,
we have added causes of action in our EchoStar IV demand for arbitration for breach of the duty of good faith and
fair dealing, and unfair claim practices. Additionally, we filed a lawsuit against the insurance carriers in the U.S.