DirecTV fights restraining order
The company is appearing in Los Angeles Superior Court to plead its case against a temporary restraining order a judge there placed on it last week.
The restraining order postpones a March 4 deadline that DirecTV set for its independent dealers to sign amendments to their contracts with the digital broadcast satellite company or face termination of their dealerships. Lawyers representing DirecTV dealers in a class-action lawsuit against the company say DirecTV's actions, along with a notice about changes to the company's dispute resolution policy, could limit the participation of dealers in the suit.
The lawsuit, filed in October, alleges DirecTV has unfairly withheld commissions and residual payments from independent dealers, and seeks more than $300 million in damages. DirecTV sells its satellite TV equipment and services through a network of thousands of independent dealers and big retailers such as Circuit City and Radio Shack.
"DirecTV has systematically used accounting methods that withhold sums of money that dealers are entitled to," said Allen Stewart, a lawyer representing the plaintiffs with the law firm Baron & Budd. "Dealers end up being charged back for amounts they don't owe."
DirecTV declined to comment on the case.
At the hearing Friday, Los Angeles Superior Court Judge Victoria Chaney will decide whether or not to further extend the deadline for signing the amendments, said Stewart. Also under consideration is whether or not DirecTV must change the content of the amendments and notices, in particular a notice pertaining to the company's new dispute resolution policy that requires dealers to file compensation disputes with DirecTV by June 30 or waive the right to claim disputed pay in the future, according to Stewart.
DirecTV told the court at a hearing Monday that neither the amendments nor the notice about the dispute resolution policy is intended to limit dealers' right to recourse, said Stewart.
More than 1,000 dealers may have already signed and retuned the amendments, according to Stewart. The amendments are just the latest of many changes DirecTV has made to contracts with its dealers over the last several years that have progressively eroded dealers' rights, said Stewart.
"You have a whole lot of unhappy DirecTV dealers out there that are in a very difficult situation," said Stewart. "These are mom-and-pop dealers that don't want to lose their livelihoods. The amendments leave dealers with less and less, while DirecTV threatens to terminate agreements if dealers don't sign them."
DirecTV has been scaling back its network of independent dealers recently. The company terminated agreements with more than 4,000 dealers in October and said it intends to terminate another 1,200 at the end of the month. The company has 30,000 "points of retail," according to DirecTV spokesman Robert Mercer. That includes independent retailers and each national retail store that carries its products.
Mercer said the terminations are part of the normal business review process and are aimed at enhancing the performance of its retail network. The American Satellite Dealers Association, a group formed last year to address the compensation complaints of DirecTV dealers, has a different view.
"I really think the independent dealer is a thing of the past as far as DirectTV is concerned," said James Vidouria, president of the American Satellite Dealers Association. "But the sad thing is it's the independent dealer, the mom-and-pop shops, that made them what they are today."
Friday's court arguments come as DirecTV parent Hughes Electronics and rival EchoStar Communications are seeking regulatory approval for a proposed $27.6 billion merger that would give the combined company about 16.7 million subscribers. The merger, which would create a satellite TV company bigger than any cable TV rival, is expected to face close regulatory scrutiny.