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Eighth Circuit Court Reverses Dish Suit Decision

MVPD subs are not entitled to refunds for channels blacked out during retrans or programming carriage disputes if they have signed a contract that precludes such refunds.

That is according to the Eighth Circuit U.S. Court of Appeals, whose baseline message to subs appeared to be: Read the fine print before signing up.

In an Oct. 4 decision, the Eighth Circuit court reversed a district court's refusal to grant Dish's motion to dismiss a class action suit over the loss of Turner and Fox News channels in a carriage impasse.

Dish had said the plaintiffs did not have grounds to seek refunds, and the Eighth Circuit agreed, pointing to the following contract language:

"You are not entitled to any refund because of deletion, rearrangement or change of any programming, programming packages or other Services," and "Neither we nor our third-party billing agents will be liable for any interruption in any service or for any delay or failure to perform, including without limitation, if such interruption, delay or failure to perform arises in connection with the termination or suspension of DISH network's access to all or any portion of services."

The district court had ruled that if Dish can't be held liable for the interruption of any or all of its channels for any length of time, the contract is "illusory."

The Eighth Circuit disagreed, saying that an illusory contract was unenforceable from the outset, while in this case the contract had been in force for many years before the Turner and Fox blackouts and both parties had provided "substantial performance," i.e. Dish had been delivering most or all of its channels and subs had been paying their bills. A contract is not illusory (under Colorado law at least) when a party with "seemingly unlimited discretion in performing has at least partially performed."

Having concluded the contract was not illusory, the Eighth Circuit proceeded to the question of whether if it was not illusory, does Dish still have some duty "of good faith and fair dealing" to provide relief when it deleted programming for which subs had paid. Under Colorado law, there is an implied duty of good faith and fair dealing, but that does not trump "terms and conditions" a party (in this case the sub) has bargained for, said the court.

“[I]mplied duty of good faith and fair dealing ‘requires that a party vested with contractual discretion exercise that discretion reasonably.’”

"DISH’s duty to exercise its discretion to change programming in good faith cannot be the legal basis for a claim to monetary relief that is precluded by unambiguous terms of the Subscription Agreement," the court ruled, concluding that the district court had improperly converted the good faith covenant into an additional contract term.