Dish Network Corporation v. Ace American Insurance Company

Background

DISH Network Corporation and DISH Network L.L.C. sought reimbursement from ACE American Insurance Company for expenses incurred defending four lawsuits brought by ABC, CBS, Fox, and NBC. Those lawsuits concerned DISH’s Hopper digital video recording service, whose playback feature automatically skipped advertisements in the networks’ copyrighted works. The network lawsuits alleged breach of contract and copyright infringement. They ended without DISH paying monetary settlements, so DISH was no longer seeking indemnification.

DISH had submitted the network lawsuits to ACE for a defense under an excess commercial general liability policy covering August 1, 2011, to August 1, 2012. The policy included coverage for certain personal and advertising injuries, including copyright infringement in an advertisement. But Exclusion j, known as the media exclusion, stated that the insurance did not apply to personal and advertising injury committed by an insured whose business was advertising, broadcasting, publishing, or telecasting. ACE denied coverage, primarily relying on that exclusion.

The parties filed cross-motions for summary judgment, which asks whether the undisputed facts and governing law require judgment without a trial. DISH sought partial summary judgment on Count One of its amended complaint. ACE sought summary judgment on DISH’s complaint and a declaration that it had no duty to defend or indemnify DISH. Before this opinion, the parties had stipulated to dismissal with prejudice of Counts IV, V, and VI, which concerned the alleged breach of their standstill and tolling agreement.

Choice of Law

ACE argued that Colorado law applied, while DISH argued for New York law. The court applied New York choice-of-law rules because the case was in federal court based on diversity jurisdiction. It found no actual conflict between New York and Colorado law concerning an insurer’s duty to defend or the interpretation of insurance contracts. Because the substantive rules would not produce different legal standards relevant to the dispute, the court applied New York law.

Media Exclusion

Under New York law, an unambiguous insurance provision receives its plain and ordinary meaning. The court found that “broadcasting” and “telecasting” were not ambiguous merely because the parties interpreted them differently. The policy did not give those terms a special statutory or industry definition, so the court consulted dictionary definitions and ordinary usage.

The court concluded that DISH’s transmission of television programming by satellite to subscribers fit the ordinary meaning of broadcasting. The court rejected DISH’s argument that a subscription service could not be broadcasting because it was not free or available to everyone. In the court’s view, the ordinary meaning of broadcasting did not exclude fee-based transmissions to a more limited group of the public.

The court also rejected DISH’s reliance on the network lawsuits’ descriptions of DISH, the policy’s business classifications, and federal communications law. The court said Exclusion j concerned DISH’s actual business and conduct, not how the underlying lawsuits characterized that business. It also found no indication that the policy’s industry classifications or federal regulatory definitions controlled the meaning of “broadcasting” or “telecasting.” Because the terms were unambiguous, the court did not use outside evidence or interpret the policy against ACE under the rule that sometimes resolves ambiguity against the drafter.

The court considered earlier related proceedings involving similar insurance exclusions but held that those decisions were not binding on this court. It also declined to bar DISH from litigating the issue under issue preclusion, a doctrine that can prevent a party from relitigating an issue already decided. The court nevertheless reached the same conclusion on the policy’s meaning independently.

Ruling

Judge Andrew L. Carter, Jr. denied DISH’s motion for partial summary judgment and granted ACE’s motion for summary judgment on its counterclaim seeking a declaration that ACE was not obligated to defend DISH in the network lawsuits. The court dismissed DISH’s claims and directed the Clerk to terminate the motions and close the case. The opinion did not state that the dismissal of DISH’s claims in this ruling was with or without prejudice.