Krakauer v. Dish Network: Fourth Circuit Affirms $61 Million Do Not Call Class Judgment and Vicarious Liability for a Retailer's Calls

The bottom line: Do Not Call claims under 47 U.S.C. § 227(c)(5) are well suited to class treatment, any "person" who receives the calls can sue, and contract disclaimers will not defeat agency when the principal exercises real control.

Background

Dr. Thomas Krakauer had registered his number on the National Do Not Call Registry in 2003. Beginning in 2009, Satellite Systems Network (SSN), a firm that at the time marketed only Dish, called him to sell Dish services. He complained to Dish and was placed on its internal list.

The district court certified a class of persons whose numbers were on the Registry for at least 30 days and who received SSN telemarketing calls promoting Dish from May 1, 2010 to August 1, 2011. A jury found SSN was Dish's agent and awarded $400 per call. The court found the violations to be willful and knowing, and trebled the damages. After a claims process, final judgment was issued for 18,066 class members.

The decision

Judge Wilkinson wrote the opinion, joined by the other members of the panel, Judge King and District Judge Berger, sitting by designation.

1. Standing. Applying Spokeo, the court held that the class definition, which tracked § 227(c)(5), described a concrete injury. A claim requires multiple unwanted calls to a residential number the recipient had registered to avoid such calls. That harm resembles the privacy interests protected by the tort of intrusion upon seclusion. The court rejected the argument that each plaintiff must prove every element of a common law tort.
2. Not limited to subscribers. The private right of action covers any "person" who "received" violative calls. Congress referred to "subscribers" elsewhere in the statute but not here. A spouse who answers a call to a number the other spouse registered can sue.
3. Class certification. Because the cause of action requires only a registered number and two calls in a year, with statutory damages, common issues predominated. Class members were ascertainable from call records and residential data. The court called Dish's uninjured class member argument a "red herring" given the correct reading of the statute.
4. Agency. Federal statutes incorporate common law agency principles. The contract gave Dish broad authority over SSN's operations, SSN used Dish's name and logo, and Dish had told 46 state attorneys general in a Voluntary Compliance Agreement that it had authority over its retailers' compliance. Witnesses testified Dish knew of SSN's violations and took no meaningful action. A contractual disclaimer of agency was not controlling. As the court put it, "If the parties want the benefits of an independent contractor relationship, they have to actually have one."
5. Treble damages. The district court properly found willful and knowing violations on two independent grounds: imputing the agent's willful conduct to Dish, and Dish's own conscious disregard. The district court described Dish's claimed ignorance as "willful ignorance."

Why it matters

The decision shows that sellers who rely on third party telemarketers bear real risk when compliance exists only on paper.

Practical takeaways

1. Monitor vendors actively, including call audits and complaint tracking, and act on what you find.
2. Do not rely on independent contractor language while exercising extensive operational control.
3. Treat consumer complaints as compliance signals, not just customer service issues.
4. Scrub against the Registry and internal lists, and keep records supporting any established business relationship.

Read the Fourth Circuit's opinion in Krakauer v. Dish Network.