United States of America et al v. Dish Network LLC

Filing 521

OPINION entered by Judge Sue E. Myerscough on 10/9/2015. Plaintiffs' Motion for Sanctions against Defendant Dish Network, d/e 507 is ALLOWED IN PART and DENIED IN PART. (SEE WRITTEN OPINION) (MAS, ilcd)

E-FILED

Tuesday, 13 October, 2015 04:16:12 PM
Clerk, U.S. District Court, ILCD

IN THE UNITED STATES DISTRICT COURT
FOR THE CENTRAL DISTRICT OF ILLINOIS
SPRINGFIELD DIVISION
UNITED STATES OF AMERICA,
and the STATES OF CALIFORNIA,
ILLINOIS, NORTH CAROLINA,
and OHIO,
Plaintiffs,
v.
DISH NETWORK, L.L.C.,
Defendants,

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No. 09-3073

OPINION
SUE E. MYERSCOUGH, U.S. DISTRICT JUDGE:
This matter comes before the Court on Plaintiffs’ Motion for
Sanctions against Defendant Dish Network (d/e 507) (Motion). For
the reasons set forth below, the Motion is ALLOWED IN PART and
DENIED IN PART.
INTRODUCTION
The Plaintiffs allege that Defendant Dish Network, L.L.C.
(Dish) made or caused to be made millions of illegal telemarketing
calls in violation of the Telemarketing and Consumer Fraud and
Abuse Prevention Act, 15 U.S.C. § 6105 (Telemarketing Act); the
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Federal Trade Commission Act, 15 U.S.C. § 45 (FTC Act); the
Telephone Consumer Protection Act, 47 U.S.C. § 227 (TCPA); the
Federal Trade Commission (FTC) regulation entitled the
Telemarketing Sales Rule promulgated under the Telemarketing Act
and the FTC Act, 16 C.F.R. Part 310 (TSR); the Federal
Communications Commission (FCC) regulation promulgated under
the TCPA, 47 C.F.C. § 64.1200 (FCC Rule); and the laws of each
Plaintiff State. Second Amended Complaint and Demand for Jury
Trial (d/e 257) (Second Amended Complaint), Counts I through XII.
The Court has entered partial summary judgment. Opinion entered
December 12, 2014 (d/e 445) (Opinion 445), at 231-38, 75
F.Supp.3d 942, 1032-34 (C.D. Ill. 2014).
The FTC started its investigation of Dish as early as 2005. In
July 2005, the FTC served a Civil Investigative Demand (FTC
Demand) on Dish. The FTC Demand imposed a duty on Dish to
preserve and retain responsive documents. Opinion entered April
24, 2013 (d/e 279) (Opinion 279), at 5-7, 34-36, 292 F.R.D. 593,
603 (C.D. Ill. 2014). Plaintiff North Carolina served a similar
Demand for documents in March 2006 (North Carolina Demand).
Dish failed to retain in native electronic format responsive emails
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sent to and from Dish’s Retail Services Compliance Officer Reji
Musso, from August 2006 to April 2008 (Musso Electronic
Information). Dish’s counsel, however, stated in a letter to
Plaintiffs’ counsel that Musso kept responsive emails in paper files
in Dish’s possession (Dish Paper Files) and in the shared computer
drive containing files entitled “Retail Audit” and “TCPA” (Shared
Electronic Files). Dish gave Plaintiffs access to the Dish Paper Files
and the Shared Electronic Files during discovery.
On June 12, 2015, Dish received a hard drive taken from a
computer used by a former Order Entry Retailer that did business
as JSR Enterprises (JSR). Order Entry Retailers used telemarketing
to sell Dish products and services. See Opinion 445, at 57-58, 75
F. Supp.3d at 972. The documents on the hard drive contained
communications from Dish for the period from December 19, 2006,
to March 6, 2007 (JSR Data). The JSR Data contained information
and communications with JSR that were not produced in discovery
(Non-Disclosed JSR Data). The Non-Disclosed JSR Data included
additional emails from Musso that were not produced in discovery.
The Plaintiffs argue that the JSR Data show that Dish
produced only a small percentage of its communications with JSR
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from December 2006 to March 2007 and, by extension, with all
Order Entry Retailers. The Plaintiffs argue that Dish should be
sanctioned for failing to retain or produce most of its responsive
communications with all Order Entry Retailers. The Plaintiffs also
want sanctions for Dish’s counsel certification of the production of
Musso’s emails in Dish’s discovery responses.
For the reasons set forth below, the Court finds that the
Plaintiffs have been prejudiced by Dish’s failure to retain or produce
the Non-Disclosed JSR Data. The Court further finds sufficient
culpability on Dish’s part to sanction this failure. The Court
therefore sanctions Dish by taking as an established fact that Dish
had communications with all of its Order Entry Retailers that were
of the same substantive type and quantity as those contained in the
JSR Data. The request for additional sanctions is denied.
BACKGROUND
Dish had a duty to retain documents responsive to the FTC
Demand since receipt of the July 2005 FTC Demand. Opinion 279,
at 34, 292 F.R.D. at 603. The FTC Demand specifications of
responsive documents included the following:

Page 4 of 34

3.
The names, addresses, and telephone numbers of
all persons EchoStar has terminated or otherwise
disciplined for violating the Telemarketing Sales Rule or
company policies and procedures relating to
telemarketing, and the dates and the reasons for
termination or discipline;
4.
Notes, minutes, and other documents of meeting
relating to EchoStar’s monitoring and enforcement of any
person’s compliance with the Telemarketing Sales Rule;
....
6.
All emails, memorandum, notes, letters, or other
documents relating to Echostar’s monitoring and
enforcement of any person’s compliance with the
Telemarketing Sales Rule, including but not limited to,
warnings issued to any person marketing Dish Network,
and termination notices sent to any person marketing
Dish Network;
....
10. Documents sufficient to show all marketing
materials, directions, and support EchoStar provides to a
person who will be marketing or is marketing Dish
Network;
Defendant Dish Network L.L.C.’s Memorandum of Law in
Opposition to Plaintiffs’ Motion for Further Sanctions (d/e 518)
(Dish Memorandum), Exhibit, 3, FTC Demand, at 6-7. The FTC
Demand referred to Dish as EchoStar because Dish was known as
EchoStar Communications Corporation before it changed its name
on January 1, 2008. Opinion 445, at 2, 75 F.Supp.3d at 951.
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The March 2006 North Carolina Demand covered the following
similar documents:
all documents reflecting Dish Network’s policies or
procedures for complying with federal or state do-not-call
requirements, including but not limited to all pertinent
scripts, training materials, office manual, or written
guidelines or procedures that Dish Network provides to
persons that made telephone solicitations for or on behalf
of Dish Network.
Opinion 279, at 6-7, 292 F.R.D. at 596 (quoting Dish’s response to
North Carolina Demand).
In August 2006, Dish hired Musso as its Compliance Officer.
Musso monitored retailers’ compliance with their Retailer
Agreements with Dish. The standard Retailer Agreement with Dish
required retailers, including Order Entry Retailers, to comply with
state and federal law, including the TCPA and TSR. Musso,
therefore, monitored Order Entry Retailer compliance with
telemarketing laws and regulations, including the TSR. See
Opinion 445, at 62 and 82-83, 75 F.Supp.3d at 973 and 980.
Musso’s pertinent emails and other communications with Order
Entry Retailers, therefore, would have been responsive to the FTC
Demand, and Dish was obligated to retain those documents. See
Opinion 279, at 34-36, 292 F.R.D. at 603. Musso, however, did not
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start retaining her emails in native electronic format until April
2008.
The Plaintiffs filed this action on March 25, 2009. The
Plaintiffs served several discovery requests on Dish. On May 5,
2010, the Plaintiffs served a Second Document Request. The
Second Document Request requested the following documents
related to Dish’s efforts to monitor and enforce retailer compliance
with telemarketing laws, including the TCPA and the TSR:
12. All documents relating to compliance with,
monitoring compliance with, enforcing compliance with,
violations of, or suspected or alleged violations of,
telemarketing laws by you, your authorized dealers
(including Order/Entry entities), or any telemarketer or
any other entity selling Dish Network services.
13. All written policies and procedures relating to
compliance with, monitoring compliance with, enforcing
compliance with, violations of, or suspected or alleged
violations of, telemarketing laws by you, your authorized
dealers (including Order/Entry entities), or any
telemarketer or any other entity selling Dish Network
services.
14. All documents relating to investigatory, disciplinary,
enforcement, or legal actions you have taken in response
to violations or suspected or alleged violations of
telemarketing laws or of your policies or procedures
relating to telemarketing.
....
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21. All documents relating to monitoring and enforcing
compliance with telemarketing laws or any of your
policies relating to telemarketing.
Plaintiffs’ Motion for Evidentiary Sanctions Pursuant to FED. R.
CIV. P. 37 (d/e 201), Exhibit 39, Plaintiffs’ Second Request for
Production of Documents to Dish Network, LLC, ¶¶ 12-14, 21. Dish
generally resisted producing responsive information for retailers
other than Order Entry Retailers specifically referenced in the
Amended Complaint (d/e 5). The Plaintiffs moved to compel
production of Dish’s discovery responses as to all retailers. United
States Magistrate Judge Cudmore, retired, ordered Dish to produce
materials related to all retailers’ compliance with the TSR and the
TCPA. Opinion entered January 12, 2011 (d/e 80) (Opinion 80), at
8-9. See Motion, at 4 (“After Plaintiffs’ first motion to compel, the
Court overruled substantially all of Dish’s objections to the relevant
RFPs and interrogatories and directed Dish to respond fully as to all
compliance materials for all retailers and all time periods. Opinion
80, at 7-10.”).
After Judge Cudmore entered Opinion 80, the Plaintiffs
reviewed the Dish Paper Files. The Plaintiffs’ counsel traveled to
Dish’s offices in Colorado to review the Dish Paper Files. The
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Plaintiffs selected portions of the files for copying. The files selected
and copied contained over 1,100 emails to or from Musso during
the period from September 2006 to December 31, 2007. Dish
Memorandum, Exhibit 2, Declaration of Elyse Echtman dated
August 21, 2015, ¶ 3.
On June 6, 2012, counsel for the United States Patrick Runkle
wrote counsel for Dish regarding discovery disputes. Motion,
Exhibit 12, Letter from Patrick Runkle to Lauri Mazzuchetti dated
June 6, 2012. Counsel Runkle raised an issue about Musso’s
emails, “It also appears that Dish either did not preserve or had not
produced in native electronic format well over a year’s worth of
emails from Reji Musso’s email folders.” Runkle noted that Dish
produced only six emails from Musso from before January 2008
“compared with at least two dozen emails from her email folders
produced for the months of May 2008 and later.” Id., at 2.
On June 20, 2012, Counsel for Dish Joseph A. Boyle
responded to the June 6, 2012 letter. Motion, Exhibit 13, Letter
from Joseph A. Boyle to Patrick Runkle dated June 20, 2012 (June
20, 2012 Letter). Attorney Boyle responded that Dish produced the

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Dish Paper Files and the Shared Electronic Files that contained
Musso’s emails:
You acknowledge that you have received documents from
Ms. Musso after April 2008 . . . . You also acknowledge
that you have received emails and other documents . . .
from the Retail Audit files, and from the paper retailer
compliance documents. As you know, Ms. Musso
testified that emails and paper documents exchanged
between her department and the independent retailers
were preserved in the electronic and paper retailer files,
which have been produced. . . .
....
In August 2005, [Dish’s then Corporate Counsel]
Dana Steele had a conversation with Russell Deitch,
counsel for the FTC, which established that the scope of
the requests relating to independent retailers required
the names of the independent retailers, the names of the
retailers terminated for TSR violations, and notes
regarding the termination of dealers. . . . [T]he CID did
not trigger an obligation to preserve these individuals’
[including Musso’s] native email files. In any event, the
files as to retailers were maintained in the Retail Audit
and TCPA shared drive and hard copy retailer files and
were preserved and produced.
Id., at 7-8.1
FTC attorney Russell Deitch disputes that he had the
conversation with Steele described in the June 20, 2012 Letter.
Deitch states in his declaration:

1

The Plaintiffs do not dispute that the Shared Electronic Files contained Musso emails.

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On August 4, 2005 I had a telephone call with Dana
Steele, counsel for EchoStar. We discussed
Specifications 3, 4, and 6 of the CID. During the phone
call, I informed Ms. Steele that Specifications 3, 4, and 6
covered retailers and requested that EchoStar respond to
these documents requests by producing documents
relating to retailers. I did not limit the scope of the
documents to be produced to the names of independent
retailers, to the names of retailers terminated for TSR
violations, or to notes regarding the termination. I did
not waive the document retention obligations in the CID.
Reply in Support of Plaintiffs’ Motion for Further Sanctions (d/e
520) (Plaintiffs’ Reply), Exhibit 3, Declaration of Russell Deitch
dated September 8, 2015, ¶ 10. Neither party presented any
evidence about Steele’s recollection of the August 2005 conversation
with Deitch.
On December 12, 2014, the Court entered partial summary
judgment. Opinion 445, at 231-38, 75 F.Supp.3d at 1032-34.
Issues of fact remaining for trial include whether Dish had an
agency relationship with its Order Entry Retailers and Dish’s
knowledge of ongoing violations of telemarketing laws. See Opinion
445, at 181-91, 210, 226 and 228, 75 F.Supp.3d at 1015-18, 1025,
1030-31.
On June 12, 2015, Plaintiffs extracted a hard drive from a
computer located at JSR’s former headquarters. The hard drive
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was copied and examined. The hard drive contained a “deleted
items” folder which contained the JSR Data. See Motion, Exhibit
14, Declaration of Grace E. Garner, ¶¶ 3-6; Exhibit 11, Declaration
of Patrick Runkle, ¶¶ 5-9; Exhibit 1, Table of JSR Data (Plaintiffs’
Table).
The JSR Data consists of 38 documents identified by the
Plaintiffs as relevant and responsive. The Plaintiffs initially stated
that only four of these 38 documents were produced in discovery.
Dish responded that 25 of the 38 documents were produced in
discovery. See Plaintiffs’ Table; but see Dish Memorandum at 1 and
Exhibit 1 Table of JSR Data (Dish’s Table). The Plaintiffs amended
their position in their reply. The Plaintiffs’ Reply stated that 11 of
the 38 documents were produced in discovery. Plaintiffs’ Reply,
Exhibit 1, Rebuttal Table of JSR Data (Rebuttal Table), Items 1, 2,
11, 18, 19, 24, 25, 30, 31, 32, 38. The parties agree that at least
some of Musso’s emails in the JSR Data were not produced in
discovery. See Dish’s Table, Items 6 and 9; Rebuttal Table, Items 6
and 9.
Upon review of the JSR Data, the Plaintiffs brought this
Motion.
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ANALYSIS
The Plaintiffs ask for sanctions for failure to produce
responsive documents in violation of Opinion 80, or in the
alternative, for failure to preserve documents that should have been
retained under the FTC Demand and the North Carolina Demand.
The Plaintiffs ask this Court to impose as a sanction of, “taking as
established fact that Dish (1) had extensive knowledge of its
retailers’ telemarketing misconduct; and (2) exercised oversight and
control over OE retailer marketing activities.” Motion, at 20.
The Plaintiffs also assert that the June 20, 2012 Letter
contained an improper certification of the completeness of Dish’s
discovery production in violation of FTC Rule of Civil Procedure
26(g). The Plaintiffs ask for an additional sanction for this violation
of Rule 26(g) as follows:
(a) the costs associated with traveling to Colorado as well
as selecting and scanning the paper files in Dish’s
basement; (b) the costs associated with the processing of
the JSR hard drive; (c) attorneys’ fees for this motion;
and (d) attorneys’ fees for the 2012 meet and confer over
Dish’s failure to produce documents. Finally, Plaintiffs
request that Dish be censured over its discovery conduct.

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Motion, at 20. The Court will address the failure to retain or
produce documents issue first, and then the Rule 26(g) certification
issue.
A. Failure to Retain or Produce
This Court previously set forth the legal standard for sanctions
for failure to produce or retain documents:
Plaintiffs seek sanctions pursuant to Federal Rule of
Civil Procedure 37(b) and 37(c). Rule 37(b) provides that
a court may order sanctions against a party who fails to
obey an order to provide or permit discovery, including
an order under Rule 26(f), Rule 35, or Rule 37(a). The
sanctions may include prohibiting the disobedient party
from introducing specific evidence, striking pleadings,
dismissing the action, or rendering a default judgment.
See Fed.R.Civ.P. 37(b)(2).
Rule 37(c) provides that a party who fails to provide
information or identify a witness as required by Rule
26(a) or Rule 26(e) may not use that information or
witness on a motion, at hearing, or at trial unless the
failure was substantially justified or is harmless. The
court may also impose other appropriate sanctions,
including those listed in Rule 37(b)(2)(A)(i)-(iv). See
Fed.R.Civ.P. 37(c)(1)(C).
It is within this Court discretion to determine
whether to sanction a party and the appropriate
sanction. Melendez v. Illinois Bell Tel. Co., 79 F. 3d 661,
671 (7th Cir. 1996). Any sanction imposed must be
“proportionate to the circumstance surrounding the
party’s failure to comply with discovery rules.” Melendez,
79 F. 3d at 672. When the sanction imposed is dismissal,
the Court must find bad faith, willfulness, or fault. E360
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Insight, Inc. v. Spamhaus Project, 658 F.3d 637, 642 (7th
Cir. 2011).
A court also has the inherent power to assess
sanctions for the failure to preserve or produce
documents. Zang v. Alliance Fin. Serv. of Ill., Ltd., 875 F.
Supp. 2d 865, 884, 885 n. 19 (N.D. Ill. 2012) (also noting
that the analysis under Rule 37 and the court’s inherent
power is essentially the same). Sanctions are appropriate
where (1) the party had a duty to preserve the evidence;
(2) the duty was breached; and (3) the other party was
harmed by the breach. Zang, 875 F. Supp. 2d at 885; see
also ChampionsWorld, LLC v. U.S. Soccer Federation,
276 F.R.D. 577, 582 (N.D. Ill. 2011) (noting as a fourth
factor that the breaching party’s willfulness, fault, or bad
faith caused the breach).
The mere fact that a party destroyed a document or
is unable to produce a document does not, standing
alone, warrant an inference that the document would
have contained information adverse to that party’s case.
Park v. City of Chicago, 297 F.3d 606, 615 (7th Cir.2002)
(to obtain an adverse instruction, the movant must show
the documents were destroyed in bad faith). Before this
Court will draw the inference that the missing documents
contained information adverse to Defendant, Plaintiffs
must demonstrate that Defendant “intentionally
destroyed the documents in bad faith.” Norman-Nunnery
v. Madison Area Technical College, 625 F.3d 422, 428-29
(7th Cir. 2010) (“The crucial element in a spoliation claim
is not the fact that the documents were destroyed but
that they were destroyed for the purpose of hiding
adverse information”).
Opinion 279, at 18-20, 292 F.R.D. at 599-600 (footnote omitted).
The Plaintiffs have established that Dish failed to produce or
retain some documents covered by the FTC Demand and subject to
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order to compel production in Opinion 80. Dish does not state
whether it did not retain the Non-Disclosed JSR Data or retained
these documents, but did not produce them. Under either
circumstance, the Plaintiffs have established that Dish either
breached its duty to retain documents under the FTC Demand or
breached its duty to produce documents in discovery.
The prejudice to Plaintiffs from Dish’s breach is an important
factor in determining whether to issue sanctions. A sanction under
Rule 37(b) must be proportional to the harm or prejudice.
Melendez, 79 F. 3d at 672. Sanctions for spoliation require a
demonstration of prejudice. Zang, 875 F. Supp. 2d at 885.
The Plaintiffs suffered some prejudice from the failure to
produce certain documents in the Non-Disclosed JSR Data. The
Musso December 20, 2006 email to JSR representative Richard
Goodale (Rebuttal Table Item 3) contains a material statement by
Musso. The relevant document contains two emails. Goodale sent
the first to Musso to report on his investigation of a consumer
telemarketing complaint. Goodale reported that the telemarketing
call came from a company called J&R Satellite, not JSR. Goodale
stated, “I know this sounds ridicules (sic) but it’s true.” Musso
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responded in the second email, “Richard, from where I sit, nothing
sounds ridiculous any more. I am going to send another email
shortly, another TCPA allegation. . .” Motion, Exhibit 2, at 1. Dish
produced Goodale’s email in discovery, but not Musso’s response.
Musso’s response is relevant to the business relationship between
Dish and JSR, which is relevant to the issue of agency. Musso’s
response is also relevant to Dish’s knowledge of consumer
telemarketing complaints regarding telemarketing law violations.
The parties disagree on the proper interpretation of Musso’s omitted
email, but the email is relevant and material. Dish’s failure to
retain or produce this email was prejudicial.
The January 17, 2007 email from Dish Business Development
Manager Chris Willis (Rebuttal Table Item 15) contains a material
statement by Willis. Willis asked a JSR representative for
information about the number of employees employed by JSR,
JSR’s method of marketing Dish products, and the length of
training given to new employee “prior to hitting the floor.” Willis
explained, “We are trying to put together some basic info regarding
our retailers. Thanks for your help.” Motion, Exhibit 2, at 16.
Willis’ request for information is relevant to the business
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relationship between Dish and its retailers and Dish’s knowledge of
the retailers’ marketing methods, which may be relevant to the
issues of agency and knowledge. The Plaintiffs point out that Dish
representatives have repeatedly asserted that Dish did not know
which retailers engaged in outbound telemarketing. See Motion, at
14-15. Willis’ email is relevant to assessing those statements.
The Plaintiffs, however, have failed to demonstrate that Dish
was obligated to produce Willis’ January 17, 2007 email. The
Plaintiffs base the Motion on Judge Cudmore’s order in Opinion 80
to produce documents related to all Dish retailers’ compliance with
telemarketing laws. Motion, at 4. The Willis January 17, 2007
email did not relate to compliance with telemarketing laws. Willis
was the Business Development Manager. He was taking a survey
for his office to put together “some basic info” on Dish retailers.
This Willis email related to business development, not regulatory
compliance. Dish may have been obligated to retain this email
under Specification 10 of the FTC Demand, quoted above
(“Documents sufficient to show all marketing materials, directions,
and support EchoStar provides . . . .”), but Plaintiffs have failed to
show that Dish violated Opinion 80 by failing to produce this Willis
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email. The Plaintiffs, therefore, have not shown prejudice from the
failure to produce this document.
Four documents in the Non-Disclosed JSR Data are emails in
which Dish representative threatened to discipline JSR for violating
Dish’s rule against getting an existing Dish customer to open a new
Dish account through JSR. This type of transaction may have
involved poaching a customer of an existing Dish retailer or reselling the same Dish products and collecting a second commission.
Rebuttal Table, Items 8, 14, 15, 16, 20. Dish had a rule against
such practices. Like the Willis January 17, 2007 email, these
emails may be relevant to show the business relationship between
Dish and its retailers, but the emails do not concern compliance
with telemarketing laws. Plaintiffs have failed to show that Dish
violated Opinion 80 by failing to produce these documents.
Much of the information in the remaining twenty-one
documents in the Plaintiffs’ list of Non-Disclosed JSR Data was
disclosed in discovery. The documents can be put into four
categories:
1. Eight of these documents were POE notices to put a particular
consumer on the retailers’ internal do-not-call list. Plaintiffs’
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Table, Items 7, 12, 33-38; see Opinion 445, at 84, 75
F.Supp.3d at 981. Musso testified in her deposition that Dish
sent out such POE notices to all Order Entry Retailers, and
she provided a spreadsheet of POE notices that her office
distributed. Dish Memorandum, at 7 and Exhibit 15 POE
Spreadsheet exhibit to Musso Deposition. The Plaintiffs also
received copies of other POE notices in discovery. See e.g.,
Motion, Exhibit 18, POE notice bearing Dish discovery Bates
Stamp numbers; Dish Memorandum, Exhibit 22, Eighteen
POE notices sent in 2006 and 2007 bearing Dish discovery
Bates Stamp numbers.
2. Eleven of these documents were produced in discovery, but
without the transmittal information contained in the JSR
Data. Rebuttal Table, Items 4, 5, 12, 21, 23, 26, 27, 28, 29,
33, and 34. Some of the versions of these documents
produced in discovery omitted the transmittal cover email;
others omitted the “TO:” field in the transmittal to indicate the
recipients of the document; others omitted the email header
that would have identified the sender, recipient, and date sent.
These eleven documents include training manuals, an
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instruction manual for Dish’s website called the “Order Entry
Tool,” newsletters called “Fact Blasts,” and information on
promotional marketing programs such as a program called a
“Bounty Offer.” Three of the documents (Items 12, 33, and 34)
are POE notices discussed in paragraph 1. See Opinion 445,
at 57-60, 75 F.Supp.3d at 972 (description of Order Entry
Tool).
3. Dish produced in discovery drafts of two of these documents.
Rebuttal Table, Items 7 and 37. The bodies of the drafts were
identical or almost identical to the final versions in the JSR
Data. The two documents are POE notices discussed in
paragraph 1.
4. Dish did not produce seven of these documents in any form in
discovery, but disclosed in discovery the substantive topics
contained in the documents. The documents included Musso
emails regarding putting a consumer on retailer do-not-call
lists, Musso’s email about JSR’s use of a telemarketing call
center in the Philippines, training materials, an email to
schedule a training visit, and an email about an investigation
of consumer complaints by the state of Louisiana. Rebuttal
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Table, Items 6, 9, 10, 13, 17, 35, 36. Two of these documents
(Items 35 and 36) are POE notices discussed in paragraph 1.
The Plaintiffs argue that they were prejudiced by Dish’s failure
to retain or produce these documents. The Plaintiffs argue that
Dish’s omission in discovery of transmittal information such as the
“TO:” fields on emails or the transmittal emails, was prejudicial.
The Plaintiffs argue that the transmittal information was relevant to
show the degree of Dish’s involvement and control of telemarketing
practices by Order Entry Retailers. Dish also argues that Dish’s
failure to retain or produce final versions rather than drafts was
prejudicial because a draft does not prove the content of a final
version or that a final version even existed. Plaintiffs’ Reply, at 4-6.
The Court agrees that Plaintiffs suffered some prejudice from
the failure to retain or produce transmittal information and final
versions of the two drafts. The issue of agency is a factual issue
that may depend, at least in part, on the manner in which Dish
related to JSR as one of the Order Entry Retailers. See Opinion
445, at 181-91, 75 F.Supp.3d at 1015-18. Proof that Dish sent
these communications to JSR is relevant to the nature of their
business relationship, and so, to the issue of agency at least.
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The Plaintiffs also argue that the JSR Data indicates that Dish
failed to retain or produce hundreds of similar documents. The
Plaintiffs argue that the JSR Data show that 71 percent (27 out of
38) of the documents sent to JSR from December 19, 2006, to
March 6, 2007 were not retained or produced.2 The Plaintiffs argue
that Dish did not retain or produce a similar percentage of all
documents sent to Order Entry Retailers generally for the entire
time that Dish operated the Order Entry Retailer program. See
Motion, at 8.
The JSR Data do not support such an extrapolation or
inference about Dish’s handling of other documents sent to JSR or
the other Order Entry Retailers. The Plaintiffs make no showing
that the JSR Data constitutes the universe of all documents that
Dish sent to JSR from December 19, 2006 to March 6, 2007, or
even a representative sample of all such documents. Dish may or
may not have sent many other documents to JSR during this period
that may or may not have been otherwise produced in discovery.
The JSR data, therefore, does not show the percentage of
communications sent between Dish and JSR that were not
2

Plaintiffs made this argument using its original position that only four of the 38 documents were
produced. The Court revised the argument to reflect Plaintiffs’ revised position in its Reply.

Page 23 of 34

produced. The JSR Data does not contain the information
necessary to allow the Court to draw inferences or extrapolate
conclusions about Dish’s handling of other documents. The JSR
Data only demonstrates that these 38 particular documents existed
and several of these documents should have been retained and
produced in discovery, but were not. The Plaintiffs have suffered
some prejudice thereby.
Dish is sufficiently culpable to merit sanctions. A
proportionate sanction is appropriate under Rule 37 upon a finding
of fault. See Macneil Automotive Products, Ltd. v. Cannon
Automotive Ltd., 715 F.Supp.2d 786, 800 (N.D. Ill. 2010). A finding
of fault is appropriate when a party fails to act in an objectively
reasonable manner. Long v. Steepro, 213 F.3d 983, 987 (7th Cir.
2000). Dish makes no attempt to explain why it failed to produce
the responsive documents in the JSR Data pursuant to Opinion 80.
Given the lack of any explanation for its failure, the Court finds that
Dish acted in an objectively unreasonable manner in its failure to
produce the responsive documents. The Court finds sufficient fault
to sanction Dish for its failure to produce the responsive documents
in the Non-Disclosed JSR Data.
Page 24 of 34

After careful consideration, the Court determines that an
appropriate sanction is to take as an established fact that Dish had
communications with all of its Order Entry Retailers that were of
the same substantive type and quantity as those contained in the
JSR Data. The Court recognizes that the JSR Data is not a
representative sample, but the question before the Court is the
appropriate proportionate sanction. Finding that Dish sent and
received communications of the same type and quantity with the
other Order Entry Retailers remedies the prejudice in an
appropriate and proportional way. The primary prejudice to
Plaintiffs comes from the content of the Musso December 20, 2006
email and the failure to produce the transmittal information. The
Plaintiffs state that the Musso December 20, 2006 email reflected
her attitude about telemarketing violations.3 Failing to produce the
email prejudiced the Plaintiffs because the Plaintiffs could not
conduct additional discovery to determine whether Dish had similar
communications with other Order Entry Retailers. The Plaintiffs
could not question Musso about whether she sent similar emails to
other Order Entry Retailers. The Plaintiffs also could not use the
3

Dish interprets Musso’s comments differently. Such disputes may be addressed at trial.

Page 25 of 34

transmittal information from the JSR Data to ask a Rule 30(b)(6)
deponent whether Dish distributed such documents to Order Entry
Retailers generally. Failing to produce these documents denied the
Plaintiffs this opportunity.
Taking as an established fact that Dish had communications
with all of its Order Entry Retailers generally that were of the same
substantive type and quantity as those contained in the JSR Data
the JSR Data alleviates these harms. The Court will take as a fact
at trial that such communications occurred. The Court will
consider the fact of these communications along with the other
evidence presented by the parties at trial.
The Plaintiffs ask the Court to find Dish acted in bad faith and
impose more severe sanctions for spoliation of evidence. The
Plaintiffs ask the Court to take as proven that Dish had extensive
knowledge of telemarketing violations and exercised oversight and
control over Order Entry Retailers. The Plaintiffs effectively ask the
Court to impose a sanction that would resolve one of the major
issues left for trial, Dish’s knowledge of violations, and would
resolve a critical element of the issue of agency, Dish’s right to
control the telemarketing activities of the Order Entry Retailers.
Page 26 of 34

See Opinion 445, at 181-91, 210, 226 and 228, 75 F.Supp.3d at
1015-18, 1025, 1030-31.
Sanctions for spoliation require a demonstration of bad faith.
Norman-Nunnery, 625 F.3d at 428-29. To establish bad faith, the
Plaintiffs must show that Dish destroyed documents to hide adverse
evidence. Bracey v. Grondin, 712 F.3d 1012, 1019 (7th Cir. 2013).
In this case, the Court does not find evidence of bad faith, and so,
declines to impose more severe sanctions suggested by the
Plaintiffs.
The Plaintiffs argue that Dish’s failure to retain in native
electronic format the Musso Electronic Information proves bad
faith. The Court disagrees. If Dish were intentionally hiding
Musso’s emails, it would have done a better job. Rather, Dish
produced many Musso emails from before April 2008 in paper form.
Plaintiffs copied over 1,100 of these paper emails from this period.
Dish also produced Musso’s emails in the Shared Electronic Files.
Musso also started retaining her emails in native electronic format
in April 2008, almost a year before the case was filed. Dish also
provided other information about Musso’s interactions with Order
Entry Retailers. See e.g., Opinion 445, at 82-84, 107-09, 112-13,
Page 27 of 34

75 F.Supp.3d at 980-81, 989, 991. Finally, the JSR Data contained
only three Musso emails that were not produced in discovery.
Under these circumstances, the failure to keep Musso’s emails in
native electronic format before April 2008 does not show bad faith.
Dish also failed to produce the Willis January 17, 2007 email
and the four emails concerning JSR’s attempts to sell Dish products
to existing customers. These documents may have related to the
issues of agency and knowledge, but were not related to compliance
with telemarketing laws. Opinion 80 required production of
documents related to compliance. The Court cannot say that Dish
acted with bad faith in not producing these documents pursuant to
Opinion 80.
Dish produced much of the information in the remaining
twenty-one documents that make up the Plaintiffs’ Reply list of
Non-Disclosed JSR Data. If Dish were acting in bad faith, it would
have hid this information better. Dish’s failure to produce the
transmittal evidence for these documents was prejudicial and
merits a sanction for fault under Rule 37, but not a finding of bad
faith.

Page 28 of 34

The Plaintiffs cite three cases in which Dish was sanctioned
for either failing to preserve or destroying evidence. See Motion, at
10-11 (citing Broccoli v. Echostar Communications Corp, 229
F.R.D. 506, 511 (D. Md. 2005); VOOM HD Holding LLC v. EchoStar
Satellite L.L.C., 939 N.Y.S.2d 321, 326 (N.Y. App. Div. 2012); Air
Communications & Satellite, Inc. v. EchoStar Satellite LLC, No.
2000-cv-3130 (State of Colorado District Court, April 2, 2010). The
Plaintiffs argue that these cases put Dish on notice of the
importance of preserving evidence. One or more of these cases may
have provided some notice to Dish about preserving documents.
The Broccoli case, in particular, in 2005 may have provided some
notice. These cases, however, do not show that Dish attempted to
hide the information contained in the JSR Data. Absent proof of
such intent, the Court will not find that Dish acted in bad faith.
The Court will not impose the more severe sanction suggested
by the Plaintiffs for the failure to retain or produce documents in
the JSR Data.
B. Request for Sanctions under Rule 26(g)
The Plaintiffs seek sanctions under Rule 26(g) for the June 20,
2012 letter sent by Dish’s counsel. Rule 26(g) states that every
Page 29 of 34

discovery request, response, or objection must be signed by an
attorney of record for a represented party such as Dish. The
signature constitutes a certification:
(1) Signature Required; Effect of Signature. . . . By
signing, an attorney . . . certifies that to the best of the
person’s knowledge, information, and belief formed
after a reasonable inquiry:
A) with respect to a disclosure, it is complete and
correct as of the time it is made; and
B) with respect to a discovery request, response, or
objection, it is:
(i)

consistent with these rules and warranted by
existing law or by a nonfrivolous argument for
extending, modifying, or reversing existing law,
or for establishing new law;

(ii)

not interposed for any improper purpose, such
as to harass, cause unnecessary delay, or
needlessly increase the cost of litigation; and

(iii)

neither unreasonable or unduly burdensome
or expensive, . . . .

....
(3)Sanction for Improper Certification. If a
certification violates this rule without substantial
justification, the court, on motion or on its own, must
impose an appropriate sanction on the signer, the
party on whose behalf the signer was acting, or both.
The sanction may include an order to pay the
reasonable expenses, including attorney's fees, caused
by the violation.
Page 30 of 34

Fed. R. Civ. P. 26(g) (emphasis in the original).
To meet the requirements of Rule 26(g) the attorney must
make an inquiry before signing the certification. The inquiry must
be reasonable under the circumstances. In appropriate cases, the
attorney may rely on statements of his client and information from
other attorneys in the case:
In making the inquiry, the attorney may rely on
assertions by the client and on communications with
other counsel in the case as long as that reliance is
appropriate under the circumstances. Ultimately what is
reasonable is a matter for the court to decide on the
totality of the circumstances.
Fed. R. Civ. P. 26(g) Advisory Committee Notes to the 1983
Amendments.
Sanctions for violation of Rule 26(g) are mandatory. Rojas v.
Town of Cicero, Ill., 775 F.3d 906, 909 (7th Cir. 2015). An attorney’s
letter to opposing counsel that makes representations about a
discovery production, such as the June 20, 2012 Letter, is subject
to the requirements of Rule 26(g). See Phinney v. Paulshock, 181
F.R.D. 185, 204 (D.N.H. 1998).
The Plaintiffs argue that Dish’s counsel Boyle improperly
certified Dish’s production of Musso’s emails in violation of Rule
Page 31 of 34

26(g). The relevant portions of the June 20, 2012 Letter concern
the production of Musso’s emails in discovery, not the other
documents in the JSR Data.
Attorney Boyle represented in the June 20, 2012 Letter that
Musso kept her emails with retailers in paper form in the Dish
Paper Files, and those files were produced. Boyle represented that
Dish was not obligated to retain Musso’s emails in native electronic
format under the terms of the FTC Demand. Boyle finally
represented that, “In any event, the files as to retailers were
maintained in the Retail Audit and TCPA shared drive and hard
copy retailer files and were preserved and produced.” June 20,
2012 Letter, at 8.
The Court finds that Boyle’s certification was made on
reasonable inquiry under the circumstances and did not violate
Rule 26(g). Boyle relied on Musso’s statements under oath at her
deposition that she retained her emails with Order Entry Retailers
in paper files and in the Shared Electronic Files. The Court finds
that Boyle could reasonably rely on a sworn statement of Musso, a
representative of his client, Dish, who by her position would have
personal knowledge of the matter is question.
Page 32 of 34

Boyle also relied on information he received about a
conversation between Dish Corporate Counsel Steele and FTC
attorney Deitch. Boyle was informed that attorneys Steele and
Deitch agreed to modify the scope of the FTC Demand to limit the
information Dish had to produce and retain about Order Entry
Retailers. Under this modified scope, the FTC Demand did not
cover matters such as Musso’s communications with Order Entry
Retailers. For purposes of Rule 26(g) Boyle could reasonably rely on
the information that he received about a conversation between
Dish’s corporate counsel and the responsible FTC attorney about
the scope of the FTC Demand.
The Plaintiffs present Deitch’s declaration to establish that he
did not agree to any modification of the scope of the FTC Demand.
The issue, however, is not whether Steele and Deitch agreed to
modify the scope of the FTC Demand. The issue is whether Boyle
made the certification in the June 20, 2012 Letter to the best of his
knowledge and belief after reasonable inquiry. Fed. R. Civ. P. 26(g).
Boyle could reasonably “rely on assertions by the client and on
communications with other counsel in the case as long as that
reliance is appropriate under the circumstances.” Fed. R. Civ. P.
Page 33 of 34

26(g) Advisory Committee Notes to the 1983 Amendments. Attorney
Boyle could reasonably believe that Dish’s Corporate Counsel and
the FTC attorney on the FTC investigation could agree to modify
aspects of the FTC Demand. Under the totality of the
circumstances, the Court finds that Boyle made a reasonable
inquiry before signing the June 20, 2012 Letter. The Court finds
that Boyle did not violate Rule 26(g).
CONCLUSION
THEREFORE Plaintiffs’ Motion for Sanctions against
Defendant Dish Network (d/e 507) is ALLOWED IN PART and
DENIED IN PART.
Enter: October 9, 2015

/s Sue E. Myerscough
UNITED STATES DISTRICT JUDGE

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