Dish Network Corp. v. ACE Am. Ins. Co.

• Decision Date: 23 December 2019
• Docket Number: 16-CV-4011 (ALC)
• Citation: 431 F.Supp.3d 415
• Parties: DISH NETWORK CORPORATION and Dish Network LLC, Plaintiffs, v. ACE AMERICAN INSURANCE CO. , Defendant
• Court: U.S. District Court — Southern District of New York

431 F.Supp.3d 415

DISH NETWORK CORPORATION and Dish Network LLC, Plaintiffs, v. ACE AMERICAN INSURANCE CO. , Defendant

16-CV-4011 (ALC)

United States District Court, S.D. New York.

Signed December 23, 2019

Matthew Goldstein, Lee Marc Epstein, Weisbrod Matteis & Copley PLLC, Philadelphia, PA, for Plaintiffs.

Adam I. Stein, Cozen O'Connor, New York, NY, Christopher Soran Clemenson, Cozen O'Connor, Denver, CO, Terri A. Thomas, Pro Hac Vice, Thomas M. Jones, Pro Hac Vice, Cozen O'Connor, Seattle, WA, for Defendant.

OPINION & ORDER

ANDREW L. CARTER, JR., United States District Judge:

This case concerns the duty of an insurance company to defend its insured in a lawsuit. Plaintiffs, DISH Network Corporation and DISH Network L.L.C. (collectively, "DISH") allege that Defendant ACE American Insurance Company ("ACE") had a duty to defend DISH in a series of lawsuits involving four major television networks. ACE, on the other hand, seeks to dismiss Plaintiffs' complaint and seeks declaratory relief concerning its obligation to defend DISH. The parties submitted cross-motions for summary judgment. DISH moves for partial summary judgment with respect to Count One of its amended complaint. ACE moves for summary judgment with respect to Plaintiffs' complaint and seeks declaratory relief. For the following reasons, DISH's motion is DENIED , and ACE's motion is GRANTED .

INTRODUCTION

DISH seeks recovery from ACE for expenses incurred in defending actions brought by the four major television networks which alleged breach of contract and various forms of copyright infringement. The parties dispute whether ACE's insurance policy with DISH covers the underlying lawsuits. Specifically, the operative question is whether DISH is in the business of "broadcasting" or "telecasting" within the plain meaning of its general liability insurance contract with ACE. Since the Court finds, for the reasons set forth below, that DISH was indeed in the business of "broadcasting" or "telecasting," the network lawsuits fall within an exclusion to ACE's insurance policy with DISH. Therefore, ACE does not have a duty to defend DISH.

BACKGROUND

I. Factual Background

The following factual summary consists of only undisputed material facts ("UMF"), unless otherwise indicated. These facts are, in significant part, copied from the parties' Rule 56.1 Statements. Where the facts are subject to legitimate dispute, they are construed in favor of the non-moving party. Tindall v. Poultney High Sch. Dist. , 414 F.3d 281, 284 (2d Cir. 2005).¹

In this action, DISH seeks recovery from ACE for expenses incurred in defending actions brought by the major television networks in connection with DISH's "Hopper" product, a digital video recording service whose play-back feature automatically and completely skipped advertisements within the television networks' copyrighted works. UMF ¶1. Commencing in or about May 2012, the four major television networks in the United States—ABC, CBS, Fox, and NBC—sued DISH, alleging breach of contract and various forms of copyright infringement and seeking to enjoin DISH from unlawful conduct under the Copyright Act, in particular DISH's marketing and distribution of the Hopper (the "Network Lawsuits"). Id. at ¶3. The four Network Lawsuits were:

i. DISH Network L.L.C. v. American Broadcasting Companies, Inc., et al. , No. 12-CV-4155 (S.D.N.Y.);

ii. CBS Broadcasting Inc., et al. v. DISH Network Corp., et al. , No. 12-CV-6812 (S.D.N.Y.);

iii. Fox Broadcasting Company, et al. v. DISH Network L.L.C., et al. , No. 12-CV-4529 (C.D. Cal.); and

iv. NBC Studios, LLC, et al. v. DISH Network Corp. et al. , No. 12-CV-4536 (C.D. Cal).

Id. at ¶44. These Network Lawsuits were all resolved without DISH paying any monetary settlements. Id. at ¶45. Accordingly, DISH is no longer seeking indemnification from ACE. Id. at ¶46.

DISH "is in the business of providing direct-to-the-home satellite television products and services to paying subscribers." Id. at ¶2. According to its Articles of Incorporation, it was formed for the purpose of engaging "in the business of satellite communications, including but not limited to Direct Broadcast Satellite communications; to own, sell, hold, lease, equip, maintain and operate transmission and receiving stations and any connection between any such stations, and to transmit, signals, and all matter and things of any kind, nature, and description whatsoever that may be transmitted." Id.

ACE issued Excess Commercial General Liability Policy No. XSL G25531309 to DISH for the period August 1, 2011 to August 1, 2012 (the "2011 Policy"). Id. at ¶15. This Policy included two coverages. Coverage A was for "Bodily Injury and Property Damage Liability" and Coverage B was for "Personal and Advertising Injury." Coverage B provided that: "[ACE] will pay the insured for the ‘ultimate net loss’ in excess of the ‘retained limit’ because of ‘personal and advertising injury’ to which this insurance applies." Id. at ¶15. "Advertisement" for the purposes of Coverage B was defined as "a notice that is broadcast or published to the general public or specific market segments about your goods, products or services for the purpose of attracting customers or supporters." Id. at ¶61. Coverage B, however, was subject to several exclusions. The exclusion at issue here is Exclusion j ("Media Exclusion"), which provided that "[t]his insurance does not apply to: ... ‘Personal and advertising injury’ committed by an insured whose business is: (1) Advertising, broadcasting, publishing or telecasting." Id.

After DISH tendered the Network Lawsuits for a defense, ACE denied coverage by way of four letters—one for each of the Lawsuits. Id. at ¶47. Among the reasons given by ACE for disclaiming coverage was that "Exclusion j. of Coverage B [the Media Exclusion] further precludes coverage for any ‘personal and advertising injury’ if the insured is involved in the business of broadcasting or telecasting. This exclusion precludes coverage as DISH is involved in the broadcasting of the [Network] signal." Id. at ¶25. DISH and ACE dispute whether ACE relied on other Exclusions and rationales in denying DISH coverage under the 2011 Policy. Id. at ¶48.²

After ACE denied coverage, the parties entered into a standstill and tolling agreement to allow an opportunity for both sides to examine their respective positions and to determine whether there was a potential for avoiding litigation. Id. at ¶50. DISH alleges that ACE breached this standstill and tolling agreement by commencing an action in the United States District Court for the District of Colorado captioned ACE American Insurance Company v. DISH Network Corporation et al. , 16-CV-1280 (D. Colo.) (the "Colorado Action"), before the expiration of the agreed-upon standstill period. Id. at ¶51. On October 28, 2019, the parties filed a Stipulation of Partial Voluntary Dismissal, agreeing to dismiss with prejudice Counts IV, V, and VI of DISH's Amended Complaint (ECF No. 12), which all related to ACE's alleged breach of the standstill and tolling agreement. ECF No. 172.

The parties proceeded with pre-trial discovery and, with discovery complete, submitted the cross-motions for summary judgment currently before the Court.

II. Procedural Background

On May 28, 2016, DISH filed a complaint against ACE seeking a declaratory judgment that ACE has a duty to defend and indemnify DISH, and for breach of contract based on the 2011 Policy. ECF No. 1. DISH filed an amended complaint on June 7, 2016, which added claims based on the alleged breach of the standstill and tolling agreement between the parties. ECF No. 12. DISH then filed a motion for a temporary restraining order and preliminary injunction seeking to enjoin ACE from pursuing the Colorado Action, and this Court heard argument on that motion on June 24, 2016. The Court then denied the preliminary injunction without prejudice due to the parties' intentions to submit additional briefing. ECF No. 100. The parties submitted additional briefing in support and in opposition to DISH's motion for a preliminary injunction. On August 10, 2017, this Court granted DISH's motion to enjoin ACE from prosecuting the Colorado Action. ECF No. 119.

ACE answered DISH's complaint on August 31, 2017 and filed a counterclaim asking for a declaratory judgment that ACE has no duty to defend and indemnify DISH in the Network Lawsuits. ECF No. 120. DISH filed its answer to ACE's counterclaim on September 21, 2017. ECF No. 121. The Court denied DISH's request for leave to file a motion for judgment on the pleadings and ordered the parties to continue with discovery. ECF No. 134. ACE and DISH then submitted cross-motions for summary judgment on March 18, 2019. ECF Nos. 151, 154. The parties submitted their respective oppositions to the cross-motions on April 26, 2019. ECF Nos. 162, 165. The Court then denied the parties' request for oral argument. ECF No. 170.

Finally, as noted above, on October 28, 2019, the parties submitted a stipulation of voluntary dismissal, dismissing Counts IV, V, and VI of the amended complaint (ECF No. 12), which all dealt with the alleged breach of the standstill and tolling agreement. ECF No. 172. The Court granted this stipulation of voluntary dismissal and ordered that Counts IV, V, and VI be dismissed with prejudice pursuant to Rule 41(a)(1)(A)(ii) of the Federal Rules of Civil Procedure, with each party to bear its own attorneys' fees, costs, and expenses. ECF No. 173.

LEGAL STANDARD

Summary judgment is appropriate where "there is no genuine issue as to any material fact and "the moving party is entitled to a judgment as a matter of law." Cortes v. MTA New York City Transit , 802 F.3d 226, 230 (2d Cir. 2015) (quoting Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 247–48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) ) (internal quotation marks omitted); see also Fed. R. Civ. P. 56(a). Material facts are facts that may affect the outcome of the case. Anderson...