Free Motion to Consolidate Cases - District Court of Colorado - Colorado

Case 1:03-cv-00607-JLK

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UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Civil Action No. 05-cv-1295-EWN-PAC DOMINION VIDEO SATELLITE, INC., Plaintiff, v. ECHOSTAR SATELLITE L.L.C., Defendant. ______________________________________________________________________________ COMPLAINT ______________________________________________________________________________ Plaintiff Dominion Video Satellite, Inc. ("Dominion"), a Florida corporation, for its Complaint against Defendant EchoStar Satellite L.L.C. ("EchoStar"), states as follows: INTRODUCTION 1. Dominion seeks injunctive relief to preserve the status quo while it initiates an

arbitration to address EchoStar's breach of its contractual obligations to Dominion, and, after the arbitration panel issues its award, an order confirming the award as a judgment. JURISDICTION AND VENUE 2. Jurisdiction in this Court is proper under 28 U.S.C. § 1332(a)(1), because the

action is between citizens of different states and the amount in controversy exceeds $75,000, exclusive of interest and costs, and under 9 U.S.C. § 1 et seq. because the action is to enforce contractual provisions that require that disputes be resolved in mandatory binding arbitration.

Exhibit 1

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3.

Venue in this Court is proper under 28 U.S.C. § 1391(a) because EchoStar resides

in this judicial district. PARTIES 4. Dominion is a Florida corporation with its principal place of business at 3050

North Horseshoe Drive, Naples, Florida 34104. 5. EchoStar is a Colorado Limited Liability Company with its principal place of

business at 9601 Meridian Boulevard, Englewood, Colorado 80112. FACTUAL BACKGROUND A. Dominion's Agreement with EchoStar 6. Dominion is an FCC-licensed direct broadcast satellite ("DBS") provider,

authorized to transmit television programming from satellites to customers on the ground, who receive the programs using small dish antennas. 7. Dominion's FCC license authorizes it to broadcast from eight frequencies at the

61.5 degree orbital slot. 8. EchoStar owns and operates satellites housing multiple transponders, the devices

that receive signals transmitted from earth and retransmit them across a broad coverage area for reception by individual customer antennas. 9. EchoStar, like Dominion, is also authorized by the FCC to engage in direct

broadcast satellite transmissions, which it carries out under the "DISH Network" trade name. 10. On July 18, 1996, Dominion and EchoStar entered into a "Direct Broadcast

Service Transponder Lease, Channel Use and Programming Agreement" (the "Agreement").

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11.

Under the Agreement, Dominion acquired rights to use and/or lease transponders

on EchoStar satellites for the purpose of transmitting direct broadcast programming to Dominion customers, which it carries out under the "Sky Angel" network trade name. 12. The Agreement provides for Dominion's lease of eight transponders from

EchoStar on the EchoStar III satellite. 13. The EchoStar III satellite is situated at the 61.5 degree orbital slot, the location

from which Dominion is licensed by the FCC to broadcast. 14. In exchange for Dominion's rights under the Agreement, Dominion committed to

pay certain cash fees and to sublease back to EchoStar three of the leased transponders. This permits EchoStar to broadcast programming using the subleased transponders under the authority licensed by the FCC to Dominion. 15. Through operation of a December 9, 1996 amendment to the Agreement,

Dominion's obligations to make any further cash payments to EchoStar were nullified upon Dominion's sublease of three additional transponders to EchoStar. B. The Exclusivity Provisions 16. As part of the Agreement, EchoStar and Dominion agreed that the programming

EchoStar would broadcast on the DISH Network and that Dominion would broadcast on Sky Angel would be mutually exclusive. (Agreement § 8.1.) Specifically, Dominion is entitled to broadcast Christian programming on Sky Angel on an exclusive basis, and EchoStar is entitled to transmit all other types of programming on the DISH Network on an exclusive basis, but EchoStar is not permitted to transmit Christian programming on the DISH Network (subject to limited exceptions.) 3

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17.

The programming-exclusivity restriction on Dominion contains an exception,

which allows Dominion to broadcast up to 15 channels of family-friendly secular programming (the "Family Pack") if Dominion gives EchoStar 60-days notice of its intent to offer such programming, and EchoStar elects by written notice not to pursue the opportunity itself to provide this programming package directly to Dominion subscribers. (Agreement § 8.2.) C. The Family Pack dispute 18. On November 12, 2004, Dominion gave EchoStar written notice of its intent to

exercise its rights under Agreement Section 8.2 to broadcast a family-friendly package of nonChristian secular programming, and offered EchoStar the opportunity to broadcast the Family Pack to Dominion's customers. In the November 12 letter, Dominion listed the 15 programmers that it intended to broadcast, substituting certain programmers for those listed in the Agreement that had since stopped broadcasting or ceased to exist. 19. On January 13, 2005, Dominion followed up with an e-mail to EchoStar President

Charlie Ergen, again indicating Dominion's intention to proceed with Family Pack. By e-mail dated January 20, 2005, Ergen responded and indicated that EchoStar had no present intent to pursue Family Pack, stating that "we have not [sic] deal except the one we have, so we understand you will want to continue to look at all your options." Neither Ergen nor anyone at EchoStar objected to the specific programmers listed, or to Dominion's substitution of programmers to be broadcast in the Family Pack. 20. In reliance on EchoStar's decision not to pursue Family Pack and EchoStar's

CEO's acknowledgment that Dominion could continue to pursue all its options, Dominion began

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to enter into long-term contracts with certain programmers, including Fox News, the Hallmark Channel, and Home and Garden Television ("HGTV"). 21. On May 10, 2005, Dominion began broadcasting Fox News on the Sky Angel

satellite system. 22. On May 28, 2005, Dominion began broadcasting the Hallmark Channel, and on

June 2, 2005, the Hallmark Movie Channel, on the Sky Angel satellite system. 23. On June 17, 2005, Dominion entered into a programming agreement with HGTV,

which is scheduled to begin airing in August 2005 on the Sky Angel satellite system. 24. As part of the parties' historic and customary business procedure, when Dominion

makes programming changes, it also updates the identification moniker and other electronicprogramming guide ("EPG") data associated with each channel to reflect the new programming schedules. 25. This update is accomplished by Dominion giving notice to a third-party vendor,

Tribune Media Services ("Tribune"), which manages EPG transmissions for both EchoStar and Dominion. Tribune makes the relevant changes in the programming data and sends the new data to EchoStar for uplinking with the programming to the satellite. 26. The arrangement with Tribune to manage and update Dominion's EPG

information has been in place since the Agreement was signed in 1996, and EchoStar has never objected to or blocked any changes to the data. Indeed, Tribune has made changes to the electronic-programming information for Dominion's channels -- and EchoStar has uplinked these changes -- at least 60 times since the Agreement was signed. The information is refreshed and updated routinely. 5

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27.

After Dominion contacted Tribune to update the electronic-programming data for

the new channels being broadcast on Sky Angel as part of the Family Pack, Tribune made the changes. For the first time ever, EchoStar blocked the changed data from being uplinked to the satellite for transmission to Sky Angel subscribers. 28. EchoStar declared that, because it considers the manner in which Dominion is

broadcasting Family Pack to be inconsistent with the Agreement, it would not uplink the new EPG information as it has always done in the past. Instead, by letter dated June 15 2005, more than a month after the Family Pack broadcasts began, EchoStar flatly declared Dominion to be in breach and stated that EchoStar "will terminate the Agreement." 29. Dominion has attempted to address EchoStar's objections, first in written

communications and then by sending its representatives to Colorado to meet with EchoStar's General Counsel. 30. EchoStar, however, refuses to deviate from its position that Dominion is in breach

of the Agreement and that EchoStar intends to terminate the contract. 31. Consequently, on July 12, 2005, Dominion sent EchoStar its Demand for

Arbitration on this and other issues. 32. EchoStar refuses to defer termination of the Agreement pending arbitration.

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D.

Contractual Dispute Resolution Provisions 32. The Agreement provides that "[a]t the election of either party, any matter not

resolved amicably between the parties to the satisfaction of both parties shall be subject to mandatory binding arbitration, and the other party shall submit to arbitration." 33. The Agreement further provides that either party has "the right to obtain an order

or decree of .... specific performance, or a preliminary or permanent injunction (without the necessity of posting or filing a bond or other security) against the breach or threatened breach of any term or in aid of the exercise of any power or right granted in this Agreement, or any combination thereof, in any of the Courts of the United States or of any state or other political subdivision thereof." COUNT I ­ REQUEST FOR PRELIMINARY INJUNCTION IN AID OF ARBITRATION 34. Dominion incorporates the allegations contained in paragraphs 1 through 33 as if

fully set forth herein. 35. Because Dominion depends on use of the transponders on the EchoStar III

satellite to broadcast its Sky Angel service, if the Agreement is wrongfully terminated by EchoStar, then Dominion will have no broadcast outlet for its programming. 36. If Dominion is no longer able to broadcast its programming through the EchoStar

III satellite, it will no longer be able to provide the services for which its customers pay a monthly charge, and will go out of business, causing it irreparable and irreversible injury. 37. Because EchoStar has declared a contract breach and threatened to terminate the

Agreement, Dominion has elected pursuant to the Agreement to arbitrate the underlying dispute through an arbitration to be administered by the American Arbitration Association ("AAA"). If 7

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the Agreement is terminated and Dominion stops operating while an arbitration proceeding is ongoing, any award in Dominion's favor would be an empty victory, further causing Dominion irreparable harm. 38. Dominion is substantially likely to succeed in showing that its broadcast of

secular family-friendly programming pursuant to Agreement Section 8.2 is authorized and proper, and that EchoStar's letter threatening termination is itself a breach of the Agreement. 39. Dominion is also likely to succeed in showing that EchoStar's refusal to allow

updated EPG transmissions for the new channels being broadcast on Sky Angel is a breach of the Agreement. 40. The harm to Dominion of allowing EchoStar to violate the Agreement and evade

arbitration far outweighs the harm of an injunction to EchoStar. 41. An injunction compelling EchoStar to continue performing its obligations under

the Agreement in the same manner it has since 1996 will not adversely affect the public interest. 42. An injunction to preserve the status quo in aid of arbitration requires that

EchoStar continue to perform its obligations under the Agreement, specifically including allowing updates to Dominion's programming and EPG information for all of its channels. 43. No bond is required, because the parties agreed that if one party has breached the

Agreement, the other party has the right to seek "a preliminary or permanent injunction (without the necessity of posting or filing a bond or other security) against the breach or threatened breach ...." Moreover, there is no financial risk to EchoStar associated with a requirement that it continue with longstanding practice pending arbitration.

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WHEREFORE, Dominion respectfully asks that the Court enter preliminary injunctive relief under Fed. R. Civ. P. 65 requiring that EchoStar continue its performance under the Agreement while the Parties' resolve their disputes through the contractually agreed dispute resolution procedure. COUNT II ­ REQUEST FOR REFERRAL TO ARBITRATION AND CONFIRMATION OF ARBITRATION AWARD 44. Dominion incorporates the allegations contained in paragraphs 1 through 43 as if

fully set forth herein. 45. The Parties' Agreement requires that, at either party's election, disputes be

resolved through an AAA-administered arbitration. 46. Under 9 U.S.C. § 3, the Court has the authority to refer this matter to binding

arbitration in accordance with the Parties' Agreement. 47. Under 9 U.S.C. § 9, the Court has the authority to confirm any award entered in

arbitration and to enter such an award as an order of judgment of the Court. 48. Dominion has sent EchoStar a Notice of Arbitration demanding arbitration on the

issues underlying the current dispute over the broadcast of secular family-friendly programming on Sky Angel, and other issues. WHEREFORE, Dominion respectfully asks that the Court refer this matter to arbitration in accordance with the Parties' Agreement, and retain jurisdiction over this matter to confirm any arbitration award as a judgment. REQUEST FOR RELIEF WHEREFORE, Dominion respectfully requests that the Court enter preliminary injunctive relief under Fed. R. Civ. P. 65 requiring that EchoStar continue its performance under 9

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the Agreement while the Parties' resolve their disputes through the contractually agreed dispute resolution procedure, that the Court refer this matter to arbitration in accordance with the Parties' Agreement and retain jurisdiction to confirm any arbitration award as a judgment, and that the Court grant Dominion any additional relief to which it is entitled and which the Court deems appropriate. DATED: July 12, 2005 Respectfully submitted, s/Thomas D. Leland, Esq. Thomas D. Leland, Esq. Hale Friesen, LLP 1430 Wynkoop Street, Suite 300 Denver, Colorado 80202 Telephone: (720) 904-6000 Fax: (720) 720-904-6006 Email: [email protected] and Mark D. Colley, Esq. Cameron W. Fogle, Esq. Holland & Knight LLP 2099 Pennsylvania Avenue, N.W. Suite 100 Washington, D.C. 20006 Telephone: (202) 955-3000 Fax: (202) 955-5564 Email: [email protected] Attorneys for Plaintiff Dominion Video Satellite, Inc. Plaintiff's Address: 3050 North Horseshoe Drive Naples, Florida 34104 10