In United States v. Dish Networks, LLC., 2010 WL 376774 (C.D.Ill. 2010), the California Attorney General associated with Attorneys General from other states to sue Dish Networks for directly and through its authorized dealers (Dealers) and third parties, violating the Federal Trade Commission’s (FTC) Telemarketing Sales Rule (TSR), the Federal Trade Commission Act (FTC Act), the Telephone Consumer Protection Act (TCPA), and the Federal Communications Commission’s Rule (FCC Rule) that regulates telemarketing.  Dish Networks sought an order referring the matter for interlocutory appeal on numerous issues, including, among others issues, whether (a) “cause” under the TSR should be defined to impose strict liability on a seller for the telemarketing activity of a retailer regardless of whether the act constituting such “cause” related directly to a violation of the TSR; (b)  a seller’s mere compensation of third party retailers for their services, without more, is sufficient to constitute “substantial assistance” of a violation of the TSR under the Section 310.3(b);  (c) an “on behalf” of claim under the TCPA requires allegations of control and authority by the seller relative to the entity making a telemarketing call; and (d) the FTC has violated the APA by advancing its theories of “causation” and “substantial assistance” liability in this case. District Judge Scott held that: (1) the issues identified by Dish Network, other than the preemption issue, did not involve a controlling question of law as to which there is a substantial ground for differences of opinion; and (2) an immediate appeal of any of these issues, including the preemption issue, would not materially advance the ultimate termination of the litigation.


Judge Scott held that (a) “The FTC interpretation of the TSR was consistent with the plain meaning of the verb “cause”. This Court was obligated to defer to the FTC construction. Under the FTC interpretation, the Complaint stated a claim against Dish Network in Counts I and II for causing the TSR violations committed by the Dealers. The Court finds no substantial grounds for differences of opinion regarding the Court’s obligation to defer to the FTC in this instance.”; (b) “Count III of the Complaint alleged that Dish Network violated the TSR by providing substantial assistance to Dealers that were violating the TSR when Dish Network knew or consciously avoided knowing that the Dealers were violating the TSR. The Court found that Dish Network allegedly provided substantial assistance to the Dealers by paying them to engage in telemarketing. The Court sees no substantial basis for differences of opinion on this point. As the Court explained in the Opinion, a person provides substantial assistance to another person to perform an act when the first person pays the other person to perform the act. Id. Here, the Plaintiffs alleged that Dish Network paid the Dealers to perform the act of telemarketing.”; (c) “This Court agreed that the question of whether one person acts on behalf of another is a factual issue. Unlike EchoStar, Farmers, and Worsham, however, this case was not before this Court on summary judgment, so the parties did not present evidence. Dish Network will have the opportunity to present evidence to show that the Dealers, or other third parties, were not acting on its behalf. At this stage, the Court only determined that the Plaintiffs alleged enough to make it plausible that third parties acted on behalf of Dish Network.”; and (d) “Federal agencies, therefore, have the authority to interpret their own regulations without violating the APA. There are no substantial grounds for differences of opinion on this matter. The FTC has the authority to interpret the TSR without resorting to APA notice and comment procedures, and this Court must defer to that interpretation unless it is plainly erroneous or inconsistent with the regulation. Id. The FTC interpretations of “cause” and “substantial assistance” are not plainly erroneous or inconsistent with the TSR.”