Court Opinion

ID: 7798266
Source: CourtListenerOpinion
Date Created: 2022-08-05 15:12:00.611639+00
Date Added: 2024-06-11T16:28:46.441588
License: Public Domain

IN THE SUPREME COURT OF THE STATE OF NEVADA

                PLUMBERS LOCAL UNION NO. 519                           No. 81704
                PENSION TRUST FUND; AND CITY
                OF STERLING HEIGHTS POLICE AND
                FIRE RETIREMENT SYSTEM,
                DERIVATIVELY ON BEHALF OF
                NOMINAL DEFENDANT DISH
                NETWORK CORPORATION,                                        FILE
                Appellants,
                                                                            AUG 04 2022
                vs.
                CHARLES W. ERGEN: JAMES                                  ELIZABETH A. BROWN
                                                                       CLERK 0 SU REME COURT
                DEFRANCO; CANTEY M. ERGEN;                             aY

                STEVEN R. GOODBARN; DAVID K.
                MOSKOWITZ; TOM A. ORTOLF; CARL
                E. VOGEL; GEORGE R. BROKAW;
                JOSEPH P. CLAYTON; GARY S.
                HOWARD; DISH NETWORK
                CORPORATION, A NEVADA
                CORPORATION; AND DISH
                NETWORK SPECIAL LITIGATION
                COMMITTEE COUNSEL,
                Respondents.

                                       ORDER OF AFFIRMANCE

                            This is an appeal from a district court order dismissing a
                shareholder derivative action after granting a motion to defer to a special
                litigation committee's determination that the clanns should be dismissed.
                Eighth Judicial District Court, Clark County; Elizabeth Goff Gonzalez,
                Judge.
                            Appellants, Plumbers Local Union No. 519 Pension Trust Fund
                and City of Sterling Heights Police and Fire Retirement System, are
                shareholders in nominal appellant DISH Network Corporation.               They

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                        instituted a derivative suit on DISH's behalf against certain DISH
                        directors, Charles Ergen, James DeFranco, Cantey Ergen, Steven
                        Goodbarn, David Moskowitz, Tom Ortolf, Carl Vogel, George Brokaw,
                        Joseph Clayton and Gary Howard (the respondent DISH directors), alleging
                        that the respondent DISH directors either knew of and sanctioned or
                        willfully ignored third-party DISH retailers' violations of the Federal
                        Telephone Consumer Protection Act (TCPA) and a 2009 Assurance of
                        Voluntary Compliance (AVC) between DISH and the attorneys general of
                        46 states. DISH's board of directors formed a Special Litigation Committee
                        (SLC), which investigated the respondent DISH directors' conduct, issued a
                        report determining that the suit was not in DISH's best interests, and
                        moved to terminate it. The district court conducted an evidentiary hearing
                        on the limited question of the SLC's qualifications (i.e., whether the SLC
                        was independent and conducted a good faith and thorough investigation),
                        after which it found that the SLC was qualified and dismissed the derivative
                        suit with prejudice based on the SLC's report. This appeal followed.
                                    Appellants seize on a footnote in the district court's dismissal
                        order in which the court suggests that, while it found the SLC qualified
                        under a preponderance of the evidence standard, it would not have reached
                        that conclusion under a question-of-material-fact standard. Appellants
                        note that in In re DISH Network Derivative Litigation, 133 Nev. 438, 442-
                        43, 401 P.3d 1081, 1087-88 (2017) (hereinafter Jacksonville), this court
                        endorsed the New York Court of Appeals' more deferential approach for
                        assessing SLC qualifications in Auerbach v. Bennett, 393 N.E.2d 994 (N.Y.
                        1979), over that of the Delaware Supreme Court in Zapata Corp. v.
                        Maldonado, 430 A.2d 779 (Del. 1981).        Under a traditional Auerbach
                        framework, "a reviewing court must scrutinize the record to determine

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                whether a genuine issue of material fact exists as to the committee's
                independence, good faith and procedural fairness."          Hasan v. CleveTrust

                Realty Inv'rs, 729 F.2d 372, 376 (6th Cir. 1984); see also Will v. Engebretson
                & Co., 261 Cal. Rptr. 868, 873 (Ct. App. 1989) (collecting cases). But the
                Jacksonville majority did not use a summary judgment standard, to which
                de novo review would apply on appeal. Instead, it endorsed review by the
                district court of the SLC's qualifications and report under a preponderance
                of the evidence standard, and reviewed the district court's determination
                deferentially. 133 Nev. at 444 & n.2, 401 P.3d at 1088 & n.2.
                            Jacksonville    has   established   for    itself a "position[]    of

                permanence in this court's jurisprudence." Miller v. Burk, 124 Nev. 579,
                597, 188 P.3d 1112, 1124 (2008).       And the summary footnote in which

                appellants ask us to reconsider the Jacksonville majority's approach in
                favor of that described in the dissent, see 133 Nev. at 453, 401 P.3d at 1094
                (Pickering, J., concurring in part and dissenting in part), does not provide
                sufficient reasoning to break with stare decisis and reconsider our holding
                in Jacksonville. See Miller, 124 Nev. at 597, 188 P.3d at 1124.
                            The district court did not abuse its discretion when, applying a
                preponderance    of   the   evidence   standard,      it   accepted   the   SLC's

                qualifications and report. Two disinterested directors' who are not subject
                to personal liability in the underlying suit, served on the SLC. And the
                SLC's voting structure required that at least one of these disinterested
                directors agree in the outcome; indeed, both disinterested directors stood

                      'Respondents appear to concede that at least one SLC member—
                director Brokaw—was interested in the report's outcome. See Hansen
                Plumbing & Heating of Nev., Inc. v. Gilbert Dev. Corp., 97 Nev. 642, 643,
                638 P.2d 76, 76 (1981) (treating the failure to file an answering brief as a
                confession of error).
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                   behind the SLC report's recommendations.       The disinterested directors'
                   sworn statements as to their limited connections with the respondent DISH
                   directors and the preeminence of their personal and professional integrity
                   likewise weigh against finding structural bias inherent in the SLC. Finally,
                   indicia of thoroughness—including the sheer volume of documents reviewed
                   and broad scope of the SLC's authorizing charter—support the district
                   court's determination that the SLC's process was both in good faith and
                   sufficient. See Jacksonville, 133 Nev. at 450, 401 P.3d at 1092.
                               For all these reasons we therefore AFFIRM the district court's
                   dismissal of the derivative suit. It is so ORDERED.

                                           Parra guirre

                   Hardesty                                   Stiglich

                                              J.                                       ,
                   Cadish                                     Silver

                   Pickering   I                              Herndon

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   47 A    , 74,
                cc:   Hon. Elizabeth Goff Gonzalez, District Judge
                      Lansford W. Levitt, Settlement Judge
                      Robbins Arroyo LLP
                      Robbins Geller Rudman & Dowd, LLP/San Diego
                      O'Mara Law Firm, P.C.
                      Hone Law
                      Sugarman & Susskind, P.A.
                      Vanoverbke, Michaud & Timmony, P.C.
                      Leverty & Associates Law, Chtd.
                      Sullivan & Cromwell, LLP/New York
                      Young, Conaway, Stargatt & Taylor, LLP
                      Greenberg Traurig, LLP/Las Vegas
                      Kemp Jones, LLP
                      Holland & Hart LLP/Las Vegas
                      Eighth District Court Clerk

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