United States v. Dish Network LLC

Citation75 F.Supp.3d 916
Decision Date11 December 2014
Docket NumberNo. 09–3073,09–3073
PartiesUnited States of America, and the States of California, Illinois, North Carolina, and Ohio, Plaintiffs, v. Dish Network LLC, Defendant.
CourtU.S. District Court — Central District of Illinois

Albert N. Shelden, California Attorney General's Office, San Diego, CA, Daniel Kadane Crane-Hirsch, Patrick R. Runkle, Sang H. Lee, United States Department of Justice, Washington, DC, Elizabeth A. Blackston, Illinois Attorney General, Springfield, IL, Michael S. Ziegler, Erin B. Leahy, Ohio Attorney General's Office, Columbus, OH, Gregory M. Gilmore, U.S. Attorney, Springfield, IL, Jeffrey Mark Feltman, Office of the Attorney General, Carbondale, IL, Kevin Anderson, North Carolina Department of Justice, Raleigh, NC, for Plaintiffs.

Catherine Emily James, Henry T. Kelly, Kelley Drye & Warren LLP, Chicago, IL, Damon William Suden, Kelley Drye & Warren, New York, NY, Edward Ellis Weiman, Kelley Drye & Warren LLP, Los Angeles, CA, Geoffrey W. Castello, III, Joseph A. Boyle, Lauri A. Mazzuchetti, Kelley Drye & Warren LLP, Parsippany, NJ, for Defendant.

OPINION

SUE E. MYERSCOUGH, U.S. District Judge:

This matter comes before the Court on Defendant Dish Network LLC's (Dish) Motion to Preclude the Expert Testimony of Dr. Yoeli (d/e 398) (Motion). For the reasons set forth below, the Motion is DENIED.

BACKGROUND

Dish sells satellite television programming and related services. Dish markets its services in several ways, including telemarketing. The Plaintiffs allege that Dish violated state and federal laws (“Do–Not–Call” or “DNC” Laws) governing: (1) outbound telemarketing calls to the telephone numbers of persons who have indicated that they do not want to receive such calls; and (2) telemarketing calls that convey a prerecorded message. Second Amended Complaint and Demand for Jury Trial (d/e 257) (Second Amended Complaint).

The Plaintiffs submitted several reports by Dr. Erez Yoeli, Ph.D., to support their claims. Dr. Yoeli is an economist employed by the Federal Trade Commission (FTC). Dr. Yoeli's reports contain analyses and opinions based on telemarketing call records from Dish, Dish's telemarketing vendors, and several of Dish's authorized retailers. Dr. Yoeli's reports relate to all twelve counts in the Second Amended Complaint.

Dish seeks to bar Dr. Yoeli's testimony because Dish argues that his analyses and opinions fail to meet the standard for admissible expert opinion evidence. See Fed. R. Evid. 702 ; Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993). Dish argues that Dr. Yoeli's testimony “lacks a reliable foundation, is based on fatally flawed factual assumptions, is irrelevant, and will not assist the trier of fact.” Motion, at 1.

The Plaintiffs argue that the Motion is untimely and should not be considered until after the pending cross-motions for summary judgment (d/e 341 and 346) are resolved. The Plaintiffs also argue that the Motion should be denied on the merits. The Court agrees that the Motion is untimely for purposes of summary judgment. The Court required Dish to file its motion for summary judgment by January 6, 2014, and its opposition to the Plaintiffs' motion for summary judgment by March 5, 2014. Text Order entered November 7, 2013; Text Order entered February 12, 2014. Dish filed the Motion on March 19, 2014. The Motion should have been filed with Dish's summary judgment motion, or with its opposition to the Plaintiffs' summary judgment motion. See Laborers' Intern. Union of North America v. Caruso, 197 F.3d 1195, 1197 (7th Cir.1999) (failure to raise an argument in a timely manner waives the right to raise it later to challenge summary judgment); Questar Pipeline Co. v. Grynberg, 201 F.3d 1277, 1289–90 (7th Cir.2000) (the principle of waiver applies to Daubert challenges.). The Court, however, will address the Motion on the merits because the Motion is timely for purposes of trial.

The Motion depends in large part on Dish's legal arguments regarding the federal Do–Not–Call Laws and the application of those laws to the federal claims in the Second Amended Complaint. The Court, therefore, will describe the relevant federal laws and regulations, summarize the federal claims, summarize Dr. Yoeli's analyses and opinions, summarize Dish's evidence regarding the National Do–Not–Call Registry (Registry) and telephone area codes, and then address the merits of the Motion.1

THE FEDERAL DO–NOT–CALL LAWS AND REGULATIONS

The relevant federal Do–Not–Call Laws are the Telemarketing Consumer Fraud and Abuse Prevention Act (Telemarketing Act) and the Telephone Consumer Protection Act (TCPA). 15 U.S.C. § 6101 et seq. ; 47 U.S.C. § 227. The Telemarketing Act authorizes the FTC to regulate telemarketing, and the TCPA authorizes the Federal Communications Commission (FCC) to regulate telemarketing. The FTC promulgated the Telephone Sale Rule promulgated by the FTC (TSR) under the Telemarketing Act, and the FCC promulgated its rule (FCC Rule) under the TCPA. TSR, 16 C.F.R. § 310.1 et seq. ; FCC Rule, 47 C.F.R. § 64.1200 et seq.

The resulting overlapping regulations prohibit three types of telemarketing practices relevant here: (1) calling a person who has previously stated that he or she does not wish to be called by or on behalf of the seller whose goods or services are being offered for sale; (2) calling a person whose telephone number is registered on the Registry; and (3) calling and delivering a prerecorded telemarketing message to the recipient of the call (hereinafter referred to as a “prerecorded call”). The Telemarketing Act, the TCPA, and the regulations thereunder address these three issues in slightly different ways.

I. The TSR

On August 23, 1995, the FTC issued the TSR. 60 Fed.Reg. 43842 (August 23, 1995). The 1995 version of the TSR prohibited, among other things, a “telemarketer from initiating, or any seller to cause a telemarketer to initiate, an outbound telephone call to a person when that person previously has stated that he or she does not wish to receive such a call made by or on behalf of the seller whose goods or services are being offered.” See 60 Fed.Reg. at 43854–55.

The 1995 version of the TSR also provided a safe harbor defense for sellers and telemarketers:

The safe harbor states that a seller or telemarketer will not be liable for such violations if: (1) it has established and implemented written procedures to comply with the “do not call provisions”; (2) it has trained its personnel in those procedures; (3) the seller, or the telemarketer acting on behalf of the seller, has maintained and recorded lists of persons who may not be contacted; and (4) any subsequent call is the result of error.

60 Fed. Reg. at 43855. The parties refer to the “lists of persons who may not be contacted” as an “entity-specific do-not-call list” or an “internal do-not-call list.”

On January 29, 2003, the FTC amended the TSR. 68 Fed.Reg. 4580 (January 29, 2003). The FTC amended the TSR pursuant to the 2001 amendments to the Telemarketing Act. See National Federation of the Blind v. F.T.C., 420 F.3d 331, 334–35 (4th Cir.2005).

The amended 2003 TSR established the Registry. 16 C.F.R. § 310.4(b)(1)(iii). Telephone customers who do not wish to be called by sellers or telemarketers generally may place their telephone numbers on the Registry. Sellers and telemarketers may not call a person whose telephone number has been on the Registry for at least 30 days unless the seller or telemarketer has an Established Business Relationship2 with the person or has prior written consent.

The Registry opened for registrations in June 2003 and was scheduled to take effect October 1, 2003. 68 Fed. Reg. 16238 (April 3, 2003). Interested parties immediately filed actions to challenge the FTC's authority to establish the Registry; however, on September 29, 2003, Congress resolved the question of the FTC's authority by ratifying the creation of the Registry. Pub.L. 108–82, 117, codified at 15 U.S.C. § 6151 ; see Mainstream Mktg. Services, Inc. v. F.T.C., 358 F.3d 1228, 1250 (10th Cir.2004). The Registry became operational in October 2003.

The FTC Statement of Basis and Purpose accompanying the 2003 amendments to the TSR (2003 FTC Statement) stated that the Registry applied to both land lines and wireless or cellular phones:

The Commission intends that § 310.4(b)(1)(iii) apply to any call placed to a consumer, whether to a residential telephone number or to the consumer's cellular telephone or pager. Consumers are increasingly using cellular telephones in place of regular telephone service, which is borne out by the dramatic increase in cellular phone usage. The Commission believes that it is particularly important to allow consumers an option to reduce unwanted telemarketing calls to cellular telephones or to pagers because some cellular services charge the consumer for incoming calls, thus adding insult to injury when the consumer is charged for the unwanted telemarketing call to the consumer's cellular telephone.

68 FR 4580, at 4632–33 (January 29, 2003) (footnotes omitted).

Section 310.4(b)(1) of the 2003 TSR stated, “It is an abusive telemarketing act or practice and a violation of this Rule for a telemarketer to engage in, or for a seller to cause a telemarketer to engage in the following conduct:” Section 310.4(b)(1) then listed certain specific prohibited acts, including:

(iii) Initiating any outbound telephone call to a person when:
(A) That person previously has stated that he or she does not wish to receive an outbound telephone call made by or on behalf of the seller whose goods or services are being offered or made on behalf of the charitable organization for which a charitable contribution is being solicited; or(B) That person's telephone number is on the “do-not-call” registry, maintained by the Commission, of persons who do not wish to receive outbound telephone calls to induce the purchase of goods or services unless the seller
(i) Has obtained the express
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