Reversing a lower court ruling, the Eight Circuit Court of Appeals decreed earlier this month that subscribers of multichannel video program distributors are not entitled to refunds of monthly fees for channels which are blacked out during retransmission disputes.
The appellate decision represents a victory for DISH Network in its legal challenge against a district court’s ruling to allow a class action lawsuit against the direct broadcast satellite service provider to proceed. In the case at hand, customers of DISH Network filed suit against the company after a pair of channels offered by DISH went dark for 30 days as a result of retransmission disputes that took place in late 2014 and early 2015. Arguing that they had paid for the channels in question as part of an advertised bundle, the plaintiffs maintained that DISH was obligated to credit affected customers for the missing pieces of the bundle, otherwise the entire monthly service was based on an illusory promise that made DISH’s underlying contract with its customers unenforceable.
Ruling against DISH’s motion for dismissal of the class action suit, the district court held that, if DISH could not be held liable for the interruption of any or all of its channels for any length of time as specified in the company’s customer service contract, provisions of that contract that refuse refunds due to “deletion, rearrangement or change of any programming” were illusory and were therefore unenforceable. On appeal, however, the Eighth Circuit overturned the district court decision on grounds that illusory contracts are unenforceable from the outset. Because DISH’s contract with affected customers had been in force for years before the channels in question were blacked out, the three-judge panel determined that DISH had provided “substantial performance” to these customers prior to the carriage dispute which resulted in the blackout. As such, the panel decreed that, because DISH had “at least partially performed,” DISH’s service contract with customers was not illusory and related contract terms denying refunds for loss of programming were therefore enforceable. Although representatives of the plaintiffs declined comment, a DISH spokesman said, “we are pleased with the court’s decision.”