Federal Trade Commission v. DirecTV Inc. et al.

Northern District

U.S. District Judge Haywood S. Gilliam Jr.

Defense Lawyers: Chad S. Hummel, Clayton Friedman, Bridget Johnsen, Ryan Sandrock, Matthew Light, Benjamin Mundel, Sidley Austin LLP; Jeffrey M. Tillotson, Tillotson Law; Pete Marketos, Reese Marketos LLP

Plaintiffs' Lawyers: Eric D. Edmondson, Jacob A. Snow, Erika R. Wodinsky, Kenneth H. Abbe, Stacy R. Procter, Boris Yankilovich, Federal Trade Commission

Federal regulators accused DirecTV Inc. of deceptive advertising regarding the conditions of its introductory pricing for program packages. They sought nearly $4 billion in restitution and injunctive relief.

Following a bench trial before U.S. District Judge Haywood S. Gilliam Jr., the court entered partial judgment and in October the parties agreed to dismiss the complaint with prejudice. Federal Trade Commission v. DirecTV Inc. et. al., 15-CV1129 (N.D. Cal., filed March 11, 2015).

Chad S. Hummel of Sidley Austin LLP, DirecTV's lead litigation counsel, said the case was notable for his client's big monetary exposure and for the novel legal issues presented.

They included the standard for proving consumer deception when a defendant offers legitimate services advertised truthfully across multiple media and is alleged to have made inadequate but not false disclosures.

Also at issue was the question of how consumers can provide express informed consent to deal terms in online transactions.

"The FTC simply did not have the evidence to support its claims," Hummel said. "This was the first time the FTC ever lost a trial in a 9th Circuit courtroom -- after we litigated like hell for five years."

The FTC's lead counsel, Eric D. Edmondson, did not return a message seeking comment. An FTC spokesman, Mitch Katz, did not comment.

Jeffrey M. Tillotson of Tillotson Law, representing DirecTV, cross-examined the government's survey expert, who sought to show that consumers were misled.

"We had a very savvy judge who was extremely knowledgeable about surveys," he said.

"We directed our cross points to demonstrate the shortcomings of their surveys, which contained methodological flaws," Tillotson added. "Judge Gilliam recalled details from a rebuttal report, and that was great for us."

Hummel said, "Our Sidley team worked with leading advertising and marketing experts from the Wharton School and Yale to design our own unique consumer surveys to prove that consumers exposed to the challenged ads did not take away false impressions and knew the terms of the DirecTV deals when they completed the subscription process on the web or over the phone."

Pete Marketos, who cross-examined the FTC's damages expert, said a striking exchange came when the expert admitted he had not yet done a key calculation.

"They wanted $4 billion, so you'd expect this important analysis to have been done," he said. "The judge turned to him and said. 'Well, we're in trial. When would you plan to do it?' The whole courtroom went silent. And 20 minutes later, we were moving for dismissal."

-- John Roemer