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Stokes v. DISH Network, L.L.C. - 838 F.3d 948 (8th Cir. 2016)

Rule:

Under Colorado law, a contract is not illusory for lack of consideration where a party with seemingly unlimited discretion in performing has at least partially performed and thereby incurred a sufficient detriment to provide consideration.

Facts:

DISH Network, L.L.C. ("DISH"), was a Colorado corporation that sells satellite television access packages nationwide. DISH's "carriage" agreement with Turner Network Sales, Inc., expired on October 21, 2014, and was not renewed until November 20, 2014. DISH's carriage agreement with FOX News Network L.L.C. expired on December 21, 2014, and was not renewed until January 15, 2015. DISH subscribers who had selected programming packages that included popular Turner and FOX News channels did not have access to those channels during these interruptions. Though DISH continued to provide hundreds of other channels, it did not provide complaining subscribers any form of monetary relief for the Turner and FOX News interruptions. Neil Stokes and Craig Felzien, DISH subscribers since 2008 and 2000, respectively, commenced the present action on behalf of themselves and a putative nationwide class of DISH subscribers (collectively, "Plaintiffs") seeking monetary relief for the Turner and FOX News services interruptions. Applying Colorado law, as the DISH Subscription Agreements expressly provided, the district court denied DISH's motion to dismiss Plaintiffs' claims for breach of contract and breach of the covenant of good faith and fair dealing.

Issue:

  1. Under Colorado law, was the Subscription Agreement between Stokes and DISH, which was comprised of both a Digital Home Advantage Plan Agreement and a Residential Customer Agreement, illusory?
  2. Under Colorado Law, if the Subscription Agreement between Stokes and DISH, which was comprised of both a Digital Home Advantage Plan Agreement and a Residential Customer Agreement, was not illusory, may, in light of the express terms of the Subscription Agreement, the duty of good faith and fair dealing be applied to require DISH to provide any monetary relief when it deletes or changes programming for which subscribers have already paid?

Answer:

1) No. 2) No.

Conclusion:

The Court held that under Colorado law, the subscription agreement between the subscriber and the satellite television provider was not illusory because the agreement had been in effect for years when the service interruptions occurred, both parties had provided substantial performance of their respective contractual promises, and the provider continued to provide many uninterrupted channels to its subscribers. Moreover, the Court averred that under Colorado Law, the duty of good faith and fair dealing could not have been applied to require the provider to provide any monetary relief when it deleted or changed programming for which subscribers had already paid because the subscription agreement expressly provided that customers were not entitled to monetary relief for interruptions and performance delays resulting from the loss of the provider's access to the programming services it provided.

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