Dino Broccoli is bitter about his legal tangle with EchoStar Communications Corp.
And he’s not the only one.
Broccoli worked for the company’s Dish Network as a technician in Maryland in 2000 and 2001.
He says a female human-resources director made uninvited and unwelcome sexual advances toward him, including sitting on his desk and pulling up her skirt, flashing one of her breasts and sending him inappropriate e-mails.
Broccoli said he repeatedly rebuffed her advances. In November 2001, he was fired by EchoStar in a restructuring.
Broccoli filed a sexual-harassment and retaliation lawsuit against EchoStar in December 2003, seeking $8 million, claiming the woman arranged for his termination in retaliation for rejecting her.
The case went to a jury trial in March 2005. Broccoli lost his claims of harassment and retaliation. He won $9,700 from the company on a claim for wages.
But it wasn’t a clean win for EchoStar, the nation’s second-largest satellite-TV company, based in Douglas County.
The federal judge in the case sanctioned EchoStar for destroying e-mails and other documents that might have supported Broccoli’s case, saying the company “clearly acted in bad faith.”
The judge’s sanction resulted in EchoStar paying Broccoli $37,000 for attorneys’ fees.
“I got hit over the head,” said Broccoli, 37, who now manages a health club in Maryland. “They got away with it.”
Tactics led to trouble
EchoStar’s aggressive legal tactics have often left foes licking their wounds. And EchoStar has sometimes gotten in trouble for those tactics.
EchoStar or its attorneys have been sanctioned three separate times by federal judges since 2004: for destruction of evidence in Broccoli’s case; for “unreasonable and vexatious” behavior in a contract dispute with a programmer; and for “conscious wrongdoing” in a case involving satellite insurance.
Separately, since 2001, EchoStar or its executives have been rebuked in separate cases before the Colorado Supreme Court, the Federal Communications Commission, a federal judge in Florida and an American Arbitration Association panel, according to court and regulatory records.
A legal-ethics expert – who at the request of The Denver Post reviewed the three cases in which EchoStar was sanctioned – said they appear to reveal a pattern by the company and some of its attorneys of “crossing the line” in their court conduct.
“Lawyers usually know where the line is and they often walk right up to it,” said University of Denver College of Law assistant dean Daniel Vigil. “But sometimes judges confirm that they crossed the line. It looks like that has happened a few times with EchoStar.”
David Moskowitz, EchoStar’s general counsel, declined to address specific cases but provided a statement.
“Of course not every judge and jury has sided with EchoStar, and we don’t win every case we are involved in, but we have a good track record and we are confident our actions are ethical and in the best interests of our customers and our shareholders,” he said.
Suits a “business strategy”
Like many large public companies, particularly those in the fast-paced technology and entertainment industries, EchoStar sues and is sued in the course of business.
Intel, Microsoft and Viacom, to name a few, have reputations as legal pit bulls. EchoStar and Viacom tangled in 2004 over programming fees for EchoStar to carry Viacom channels such as MTV and Comedy Central.
“EchoStar clearly uses litigation as a business strategy,” said Denver attorney Kevin Evans, who represented AXA Space Inc., a satellite insurer based in Bethesda, Md.
AXA and other insurers were sued by EchoStar in 2000 over a $200 million claim for a malfunctioning satellite.
“They don’t try to resolve things. It’s their position or they sue you,” said Evans.
A federal judge sanctioned EchoStar in that case for “conscious wrongdoing” for filing a conspiracy claim against AXA and other insurers without substantiation.
EchoStar was fined $30,000 by the judge. EchoStar dropped the suit against AXA and others in 2001.
Hardball litigation has been a central feature of EchoStar’s business strategy for more than a decade. EchoStar has sued former executives, business partners, competitors, vendors and insurers.
EchoStar retained more than 100 law firms during the 1990s, according to 2001 testimony by Moskowitz. The company spent more than $10 million on outside law firms in 2000, Moskowitz testified.
Moskowitz, who joined EchoStar in 1990 after four years at Denver-based homebuilder MDC Holdings, is central to the company’s legal strategy.
“As a multinational Fortune 300 company, it is inevitable that litigation arises from time to time,” he said in his statement Friday. “We try to resolve all matters amicably and avoid the expense of litigation.”
Sued its own law firm
EchoStar bet the company on a lawsuit in 1997, when it sued Rupert Murdoch’s News Corp. for $5 billion over a failed merger of satellite-TV operations. Before a trial, News Corp. settled. EchoStar gained control of a valuable satellite slot and other assets that allowed it to expand against industry leader DirecTV, which is now controlled by News Corp. EchoStar, with 15,000 employees, has more than 12 million subscribers compared with DirecTV’s 15 million.
Even in the News Corp. litigation, EchoStar sued its own law firm, Bartlit Beck Herman Palenchar & Scott, a Chicago-based firm with a Denver office.
EchoStar accused the firm of fraud and unethical conduct. The firm ultimately prevailed in arbitration.
An American Arbitration Association panel, which included a former chief Colorado Supreme Court justice, awarded Bartlit Beck $40.2 million and rebuked EchoStar for “egregious conduct.”
Among EchoStar’s infractions: delaying arbitration, which the parties had agreed to in their contract, by suing Bartlit Beck; and making claims of unethical conduct against the firm that ranged from overstated to “patently false.”
EchoStar attorneys also faced harsh criticism in Denver from a federal judge and appeals panel for their conduct in defending against a 2003 lawsuit from Dominion Video Satellite regarding an agreement to carry the company’s Christian programming.
Three EchoStar lawyers – longtime EchoStar advising counsel T. Wade Welch of Houston, his partner Ross Wooten and Denver attorney Todd Jansen – were sanctioned by a federal judge in 2004 for “unreasonable and vexatious” behavior.
He said they filed lengthy briefs and motions with no merit.
EchoStar appealed, but the appellate panel, calling the appeal “frivolous,” upheld the sanctions and a $2.4 million arbitration award in Dominion’s favor.
In sanctioning the lawyers, the judge said they had “presented the saddest day that I have seen in my many years in this court,” and that their conduct “doesn’t even meet law-school student behavior.”
Last month, a Texas jury awarded TV recording-device maker TiVo $74 million in its patent-infringement lawsuit against EchoStar.
EchoStar pledged to try to overturn the verdict, and failing that, to appeal.
CEO Ergen fabulously rich
EchoStar is headed by co-founder, chairman and chief executive Charlie Ergen, who is known for tight-fisted control over costs to keep the company’s position as a low-price competitor in the satellite-TV industry.
He couches that in a folksy, customer-service manner.
In March, the company’s Dish Network satellite service celebrated its 10th anniversary during “Charlie Chat,” an informal TV program on Channel 101 hosted by Ergen and company executive and co-founder Jim DeFranco.
DeFranco quipped that the set and production quality of the chats haven’t improved in 10 years. Ergen replied that EchoStar doesn’t spend a lot of money on the show because “we don’t want to raise your rates.”
Ergen, meanwhile, has become fabulously wealthy. With a net worth of $6.7 billion, he is the 80th-richest person in the world, according to Forbes magazine. He is Colorado’s richest resident by far, ahead of better-known moguls such as Philip Anschutz and John Malone .
His fortune is almost completely tied up in the value of EchoStar, which has a market capitalization of $14 billion. That may explain why EchoStar fights so hard.
But even neighbors of the Ergen-controlled Telluray Ranch in southwestern Colorado have felt the wrath in court.
Telluray Ranch is a 6,200-acre cattle ranch in rural Ouray County between the Uncompahgre and San Juan national forests amid rugged peaks and river valleys.
In the early 1990s, Ergen wanted to build a road across his neighbors’ properties to access Telluray.
The neighbors banded together and sued Telluray and Ergen, a dispute that went through the state court system for the better part of a decade.
The Colorado Court of Appeals ruled in Telluray’s favor last year.
“From the get-go, this case has been pure harassment of the homeowners” by Telluray, said attorney John Steel, who represented property owners. “We’ve spent years of effort and hundreds of thousands of dollars for nothing.”
Staff writer Greg Griffin can be reached at 303-820-1241 or at ggriffin@denverpost.com.
Quotes from cases in which EchoStar has been sanctioned or admonished in the past five years:
“We find EchoStar’s appeal of the confirmation of the award to be frivolous.”
U.S. Court of Appeals, 10th Circuit, Dec. 7, 2005, in Dominion Video Satellite Inc. vs. EchoStar Satellite LLC
“The evidence of a regular policy at EchoStar of ‘deep-sixing’ nettlesome documents and records (and of management’s efforts to avoid their creation in the first instance) is overwhelming. … EchoStar clearly acted in bad faith.”
U.S. District Judge Andre M. Davis, District of Maryland, Aug. 4, 2005, in Dino J. Broccoli vs. EchoStar Communications Corp.
“This … doesn’t even meet law-school student behavior.” EchoStar’s attorneys “have presented the saddest day that I have seen in my many years in this court.”
U.S. District Judge John L. Kane, District of Colorado, Jan. 18, 2005, in Dominion Video Satellite Inc. vs. EchoStar Satellite LLC
“EchoStar’s action rises to the level of conscious wrongdoing.”
U.S. District Judge Marcia S. Krieger, District of Colorado, Feb. 4, 2004, in EchoStar Satellite Corp. vs. Brockbank Insurance Services Inc. et al.
“It appears that … (Charlie) Ergen and David Moskowitz, when confronted with the prospect of cutting off network programming to hundreds of thousands of subscribers, elected instead to break Mr. Ergen’s promise to the court.”
U.S. District Judge William P. Dimitrouleas, Southern District of Florida, June 10, 2003, in CBS Broadcasting Inc. et al. vs. EchoStar Communications Corp.
“The evidence demonstrates that EchoStar’s communication was misleading and coercive.”
Supreme Court of Colorado, Jan. 22, 2002, in Air Communication & Satellite Inc. vs. EchoStar Satellite Corp.
“Our overall conclusion is that the charges of misconduct made here by EchoStar are precisely the kind of litigation tactic condemned by … Colorado’s Rules of Professional Conduct.”
American Arbitration Association panel, Denver, Oct. 29, 2001, in Bartlit Beck Herman Palenchar & Scott vs. EchoStar Communications Corp.
“EchoStar failed in its duty of candor … We admonish EchoStar for this abuse of process and caution EchoStar to take greater care.”
Federal Communications Commission, Washington, Aug. 2, 2001, in EchoStar Satellite Corp. vs. Young Broadcasting Inc.
EchoStar response
“We take pride in conducting our business ethically at all levels. As a multinational Fortune 300 company it is inevitable that litigation arises from time to time. We try to resolve all matters amicably and avoid the expense of litigation. Some companies see litigation simply as an economic equation. If settlement is less expensive than litigation, they will choose to settle.
“In contrast, when we believe our actions are proper, where others are attempting to exploit the legal system to their advantage unjustly, or when the consequence of settling would harm our customers, we are willing to litigate as a matter of principle even where settlement would be less expensive.
“Of course not every judge and jury has sided with EchoStar, and we don’t win every case we are involved in, but we have a good track record and we are confident our actions are ethical and in the best interests of our customers and our shareholders.”
– David Moskowitz, executive vice president and general counsel for EchoStar
