Dominion Video v. Echostar Satellite L.L.C.
| Decision Date | 07 December 2005 |
| Docket Number | No. 04-1465.,No. 05-1080.,04-1465.,05-1080. |
| Citation | 430 F.3d 1269 |
| Parties | DOMINION VIDEO SATELLITE, INC., Plaintiff-Appellee, v. ECHOSTAR SATELLITE L.L.C., f/k/a Echostar Satellite Corporation, Defendant-Appellant, Todd A. Jansen, T. Wade Welch, and Ross W. Wooten, Parties of Interest-Appellants. |
| Court | U.S. Court of Appeals — Tenth Circuit |
Submitted on the briefs:* Todd Jansen, Cockrell, Quinn & Creighton, Denver, CO; T. Wade Welch and Ross W. Wooten, T. Wade Welch & Associates, Houston, TX, for Defendant-Appellant.
Mark D. Colley and Cameron W. Fogle, Holland & Knight LLP, Washington, DC; Thomas D. Leland, Hale Friesen LLP, Denver, CO, for Plaintiff-Appellee.
Before TACHA, Chief Circuit Judge, BALDOCK, and O'BRIEN, Circuit Judges.
This case began in 2003 when Plaintiff-Appellee Dominion Video Satellite, Inc. ("Dominion") claimed that Defendants-Appellants EchoStar Satellite Corporation and Echosphere Corporation (collectively, "EchoStar") were in breach of a lease agreement between the parties and sought to have the matter arbitrated as required by the agreement. After holding hearings on the dispute, the arbitration panel found in favor of Dominion and granted it $2,438,178 in damages. Dominion moved the District Court to confirm the award, pursuant to the Federal Arbitration Act, 9 U.S.C. §§ 9 and 13. EchoStar vigorously opposed both the arbitration panel's decision as well as Dominion's motion to confirm by filing numerous motions and supporting memoranda. In October 2004, the District Court confirmed the arbitration award. It also determined that EchoStar had unreasonably and vexatiously extended the arbitration hearings and court proceedings. As a result, the District Court sanctioned counsel for EchoStar and awarded Dominion its costs, expenses, and attorneys' fees incurred in responding to EchoStar's frivolous motions. See 28 U.S.C. § 1927. EchoStar appeals the confirmation of the arbitration award; its counsel also appeals the fees and costs awarded to Dominion. We take jurisdiction of both appeals under 28 U.S.C. § 1291 and AFFIRM.
Both Dominion and EchoStar operate direct broadcast satellite systems ("DBS") that are licensed and regulated by the Federal Communications Commission. Dominion's network, known as "Sky Angel," offers predominantly Christian programming on approximately twenty channels. EchoStar's network, known as the "DISH Network," offers a wide variety of programming on over 500 channels. Prior to 1996, Dominion could not broadcast its Sky Angel network to DBS consumers because it did not own any satellites. At the same time, EchoStar could not meet its consumers needs because, although it owned a satellite, it did not own sufficient FCC broadcastings license rights to serve its market.
In 1996, Dominion and EchoStar executed a mutually beneficial contract entitled "Direct Broadcast Service Transponder Lease, Channel Use and Programming Agreement" ("Agreement"). Under the terms of the Agreement, EchoStar leases eight transponders1 from its broadcasting satellite to Dominion and in return Dominion subleases six of these frequencies back to EchoStar with accompanying FCC license rights. Thus, this Agreement gives Dominion a platform from which to broadcast the Sky Angel network and provides EchoStar increased capacity to serve its market.
As a result of this arrangement, DBS consumers who wish to subscribe either to EchoStar's DISH Network or to Dominion's Sky Angel network must purchase the same DISH-brand equipment. Therefore, to prevent the parties from competing for the other's customers, the Agreement includes a "Programming Exclusivity" provision that prohibits EchoStar from carrying Christian programs.
In December 2002, EchoStar began broadcasting several predominantly Christian channels on the DISH Network. After attempting to persuade EchoStar that the Programming Exclusivity provision prohibited such action, Dominion sued to enjoin EchoStar from broadcasting these programs. After three days of hearings, during which the District Court was thoroughly briefed on the merits of the underlying dispute, the District Court granted Dominion a preliminary injunction.2 In so doing, the District Court noted that EchoStar's arguments on the merits of the underlying contractual dispute—including claims regarding federal preemption, legal impossibility, res judicata, and purported violations of the First Amendment—were "disingenuous," "exceedingly fanciful," and based on "a gross contortion" of governing law. The District Court then ordered the parties to arbitrate their dispute in accordance with a binding arbitration provision in the Agreement.
Thereafter, Dominion filed a demand for arbitration with the American Arbitration Association and sought monetary and injunctive relief. The dispute was heard by an arbitration panel composed of three members who were selected in accordance with the Agreement: one panel member was selected by each of the parties, and these two panelists selected a third "neutral" member. The panel opted to bifurcate the proceedings—it would first resolve the issue of contractual interpretation and then, if necessary, it would address the question of damages. In the first proceeding, in March 2004, EchoStar raised the same arguments the District Court had called "disingenuous," "exceedingly fanciful," and based on "a gross contortion" of governing law. The panel unanimously decided that EchoStar's broadcast of certain Christian channels violated the Programming Exclusivity provision of the Agreement. It issued a final award to that effect (which the panel called a "partial final award" because it had yet to resolve the damages issue). The panel then scheduled a remedies hearing.
In the partial final award, the panel issued certain directives to the parties to prevent future breaches of the Agreement. EchoStar, however, refused to comply with those directives. As a result, Dominion moved the District Court to confirm the partial final award. Notwithstanding the well-established rule that a district court may vacate an arbitration award only in the narrowest of circumstances — such as fraud, corruption, and manifest disregard of controlling law — EchoStar opposed Dominion's motion and moved to vacate the partial final award. In that motion, EchoStar again argued that federal preemption, legal impossibility, and the First Amendment prohibited confirmation of the award.
While the District Court was considering Dominion's motion to confirm the partial final award, the arbitration panel held the remedies hearing. In September 2004 it issued a unanimous final award, which included an award of $2,438,178 for past economic harm suffered by Dominion. Dominion moved the District Court to confirm the final award, and EchoStar again filed an opposition brief and a motion to vacate the final award. Dominion's brief in opposition to EchoStar's motion to vacate included a request that the District Court sanction EchoStar under 28 U.S.C. § 1927 by awarding Dominion its fees and costs incurred defending against EchoStar's motions to vacate.
The District Court scheduled a consolidated hearing on October 20, 2004 to hear all the pending motions. At the hearing, EchoStar defended their decision to again raise the previously rejected arguments, including the federal preemption and First Amendment contentions. The District Court confirmed both arbitration awards and granted Dominion's motion for sanctions. It then made an oral ruling that Dominion The ruling was incorporated into a written judgment on October 22.
On October 29, Dominion sent a letter to EchoStar's counsel listing the fees it had incurred in seeking confirmation of the panel's award. The letter stated Dominion was "attempt[ing] to reach agreement on the amount of fees and costs to be paid by EchoStar" and explained that it would need EchoStar's response by November 3 in order to meet the deadline established by the District Court. EchoStar failed to respond to Dominion's letter in any way.
On November 5, Dominion filed a motion with the District Court seeking $62,686.02 in attorneys' fees. As it had done at nearly every stage of the proceedings, EchoStar responded with a motion in opposition and a supporting brief.3 During a hearing on the matter, the District Court called this case "the most glaring example of the wisdom of having [§ 1927]." It ordered three attorneys for EchoStar — co-Appellants Todd A. Jansen, T. Wade Welch, and Ross W. Wooten — to pay Dominion's requested fees. It then ordered the attorneys to pay an additional $750 to Dominion for attorneys' fees incurred in preparing for the hearing that could have been avoided if EchoStar had responded to Dominion's October 29th request for attorneys' fees.
EchoStar, through Mr. Jansen, Mr. Welch, and Mr. Wooten, now appeals the District Court's order confirming the arbitration awards. Mr. Jansen, Mr. Welch and Mr. Wooten also appeal the District Court's imposition of $63,436.02 in attorneys' fees and costs under § 1927.
Judicial review of arbitration panel decisions is extremely limited; indeed, it has been described as "among the narrowest known to law." Bowen v. Amoco Pipeline Co., 254 F.3d 925, 932 (10th Cir.2001) (quotation omitted). Under § 10 of the Federal Arbitration Act, a court may vacate an arbitration award "in certain instances of fraud or corruption, arbitrator misconduct, or `where the arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final, definite award upon the subject matter submitted...
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