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Dish Network LLC v. Fun Dish, Inc.

United States District Court, N.D. Ohio, Eastern Division

December 12, 2017

DISH NETWORK, LLC Plaintiff,
v.
FUN DISH, INC. ET AL., Defendant.

          ORDER

          CHRISTOPHER A. BOYKO, UNITED STATES DISTRICT JUDGE

         This matter is before the Court on Plaintiff Dish Network LLC.'s Motion to Amend its Complaint and/or Motion to Join Firas Essa as Related Party Under Rules 15 and 20 (ECF # 582), Defendants' Opposition to Motion to Amend and Request for Sanctions (ECF # 591) and Defendants' Motion for Sanctions Under Rule 11 (ECF # 596). For the following reasons, Plaintiff's Motion to Amend is denied, and Defendants' Motions for Sanctions are granted, in part, and denied, in part.

         Plaintiff seeks to amend its Third Amended Complaint to add Firas Essa as a Defendant. Plaintiff alleges information has come to light demonstrating that Essa is the owner and alter ego of all the Defendants and is the ultimate wrongdoer.

         Defendants seek sanctions because the Court has previously determined no further amendments would be permitted. Defendants further allege Plaintiffs have engaged in sanctionable conduct by alluding to information obtained in the course of settlement negotiations as the source of their allegations against Essa. After a hearing on the record, the Court was satisfied that Plaintiff did not engage in sanctionable conduct arising from any improper use of confidential information.

         Procedural History

         On June 5, 2008, Plaintiff Dish Network, LLC filed its Complaint with the Court against Fun Dish, Inc. On July 17, 2008, Plaintiff filed an Amended Complaint alleging new facts and claims against Fun Dish, Inc. On August 28, 2008, Plaintiff filed for a Preliminary Injunction against Defendant seeking to enjoin Defendant's use of phone numbers which allegedly infringed on Plaintiff's trademark. On September 22, 2008, Defendant filed its Answer and Counterclaim to Plaintiff's Amended Complaint. On November 4, 2008, the parties submitted a Proposed Order for the Court's consideration. The Proposed Order sought permission to file a Second Amended Complaint by Plaintiff, adding two new Defendants. The Proposed Order contained the parties' agreement that the new Defendants would concede to the Court's personal jurisdiction and further agreed to Defendants' filing of an Amended Counterclaim. Plaintiff filed its Second Amended Complaint on November 7, 2008. The Court did not adopt the Proposed Order because on November 26, 2008, the parties filed an amended Stipulation which contemplated the filing of yet another amended complaint. On December 16, 2008, attorneys from DLA Piper LLP motioned the Court to appear pro hac vice as additional counsel for Plaintiff, which the Court granted. In doing so, DLA Piper stepped into the shoes of Plaintiff's original counsel regarding compliance with prior court orders and party agreements.

         During this time there were numerous filings including, but not limited to, motions for sanctions, discovery disputes, motions to strike and motions for extension of time; many of which were referred to a Magistrate Judge for resolution. On December 31, 2008, Plaintiff filed a Motion for Leave to File its Third Amended Complaint. Also, the parties were negotiating the resolution of the pending Motion for Preliminary Injunction, which was ultimately resolved by agreement of the parties.

         On April 13, 2009, the Court granted Leave to File the Third Amended Complaint but held that no further amendments would be permitted based on the fact that in less than a year Plaintiff had filed four separate Complaints delaying the prosecution of the action significantly. Plaintiff had substantial resources as a Fortune 500 company to investigate its claims from the beginning. More importantly, the Court's 2009 Order was also the result of the parties' agreement that Defendant would withdraw its opposition to the Third Amended Complaint in exchange for Plaintiff's agreement not to seek any further amendments. DLA Piper did not file any objections nor seek reconsideration of the Order on behalf of Plaintiff. In addition, nothing prevented Plaintiff from filing a separate lawsuit against Essa based on Plaintiff's allegations that he engaged in fraudulent conduct arising from his business relationship with Plaintiff.

         Plaintiff subpoenaed records from Firas Essa on November 14, 2008, that were directed in part to the alleged “fraudulent conduct of the Essas, and the identity of other witnesses and the consumers defrauded by the Essas.” (ECF # 91 pg. 4). In its pending Motion to Amend, Plaintiff seeks to add Firas Essa as a Defendant based on an alter ego theory of liability.

         Following a September 20, 2012 hearing on the record, the Court sanctioned Plaintiff, in part, for violating the Court's holding that no further amendments would be permitted. At the same time, the Court also sanctioned Defendants for their failures to produce Firas Essa for a deposition and ordered that deposition be conducted shortly thereafter. The parties subsequently deposed Essa.

         Plaintiff's Motion to Amend

         On August 29, 2017, Plaintiff filed its Motion to Amend, alleging newly discovered information from Nationwide Mutual Insurance Company along with Plaintiff's own extensive discovery “over many years.” According to Plaintiff, the newly discovered information confirms the alter ego nature and interconnectedness of the Defendant businesses and Firas Essa. Plaintiff seeks to assert all its remaining claims against Essa personally.

         Over the past two years, Plaintiff contends it has obtained information demonstrating Essa used his businesses, including Defendants, to pass-through millions in revenue, expenses and assets for his own personal benefit. The newly acquired evidence allegedly demonstrates Essa is the ultimate wrongdoer in Defendants' illegal business practices. This information was purportedly obtained when the Court permitted the intervention of Defendants' insurer, Nationwide, in December 2015, over Plaintiff's objection, delaying the trial that was set for 2016. As a result of the intervention, Nationwide produced multiple insurance policies which Plaintiff contends show the intertwined nature of Defendants' businesses. In fact, Plaintiff states the evidence demonstrates that Defendants were not separate entities, and instead, indicates that Defendants and various Essa family members are insureds or additional insureds on a number of Defendants' insurance policies.

         Furthermore, Plaintiff discovered statements made by Defendants' and Essa's accountant and former employees to the police in a criminal investigation of Essa, allegedly supporting Plaintiff's conclusion that Essa exercises complete control over the Defendant entities. In addition, operating expenses of Defendants' businesses were, in fact, personal expenses of Essa family members. Essa transferred his house to a trust after Defendant Dish 1 Up was added to this case as a Defendant. Essa pled guilty to felony charges related to moving monies out of Dish 1 Up. Other discoveries include payments from one Defendant to another, phantom employees on the books of Defendants and various Defendant entities operating as one business with Firas Essa exercising control over them.

         Plaintiff argues that amending at this late date will not prejudice Essa or Defendants since Essa has participated in the action since day one and the Fourth Amended Complaint would not seek to add new causes of action, but ...


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