838 F.3d 948
8th Cir.2016Background
- DISH Network subscribers (including Stokes and Felzien) lost access to Turner (Oct 21–Nov 20, 2014) and FOX News (Dec 21, 2014–Jan 15, 2015) channels during contract lapses; DISH continued hundreds of other channels and provided no monetary credits or refunds.
- Plaintiffs sued on behalf of a putative nationwide class alleging breach of contract and breach of the covenant of good faith and fair dealing; district court denied DISH’s motion to dismiss.
- Subscription Agreements consist of a Plan Agreement and a Residential Customer Agreement (RCA) signed by subscribers; both grant DISH broad discretion to change programming and prices.
- The RCA contains express disclaimers: Section 1.I. (no entitlement to any refund for deletion/rearrangement/changes of programming) and Section 7.A. (no liability for interruptions, delays, or failures to perform, including loss of access), and Section 7.F. (no liability for special, indirect, incidental, or consequential damages).
- District court certified two interlocutory questions under 28 U.S.C. § 1292(b); the Eighth Circuit reviewed de novo and reversed the denial of DISH’s motion to dismiss.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| 1. Is the Subscription Agreement illusory under Colorado law? | Stokes: The broad discretion and disclaimers render the promise illusory and unenforceable. | DISH: Parties substantially performed for years; partial performance supplies consideration, so contract is not illusory. | No — contract not illusory; partial performance and consideration suffice. |
| 2. Can the covenant of good faith and fair dealing require monetary relief for programming interruptions despite explicit contract disclaimers? | Stokes: DISH breached covenant by keeping subscriber payments and providing no credit/refund for paid channels not delivered. | DISH: Covenant cannot contradict explicit contract terms that preclude refunds/credits and disclaim liability for interruptions. | No — covenant cannot be used to override clear, unambiguous contractual disclaimers precluding monetary relief. |
Key Cases Cited
- Matrix Grp. Ltd. v. Rawlings Sporting Goods Co., 477 F.3d 583 (8th Cir.) (standard for de novo contract interpretation on appeal)
- Prescott v. Little Six, Inc., 387 F.3d 753 (8th Cir.) (standard for reviewing Rule 12(b)(6) dismissal)
- O’Hara Grp. Denver, Ltd. v. Marcor Housing Sys., Inc., 595 P.2d 679 (Colo. 1979) (partial performance cures apparent contractual discretion/illusory promise)
- Amoco Oil Co. v. Ervin, 908 P.2d 493 (Colo. 1995) (good faith covenant cannot contradict express contract terms)
- Flood v. Clearone Commc’ns, Inc., 618 F.3d 1110 (10th Cir.) (doctrine secures parties’ reasonable expectations; courts must not rewrite unambiguous contracts)
- USI Props. E., Inc. v. Simpson, 938 P.2d 168 (Colo. 1997) (court must enforce unambiguous contract language according to plain meaning)