Pegasus, NRTC Lose Damage Claim

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A federal judge has ruled that Pegasus Communications Corp. and the National Rural Telecommunications Cooperative have no right to compensatory or punitive damages in their ongoing litigation with DirecTV Inc.

The direct-broadcast satellite provider also has no contractual obligations to provide Pegasus with service after its current agreements expire, U.S. District Court Judge Lourdes Baird ruled.

Pegasus said it held the right of first refusal over whether DirecTV would continue to provide service once the current arrangements expire.

Baird, who presides in the U.S. District Court for the Central District of California, made the summary judgment during May 22 pre-trial rulings.

Pegasus, which resells DirecTV service, filed suit in 1999. That litigation now includes a number of different claims by all parties over the terms of a 1992 contract between the NRTC and DirecTV for distribution of satellite-delivered services to locales in the rural U.S.

For instance, Pegasus and the NRTC (on behalf of a class of its members) have sued to claim that DirecTV breached its obligations to provide premium programming, launch fees and advanced services to both parties.

DirecTV wants $50 million in damages from a counterclaim that Pegasus breached a joint marketing agreement.

The rulings also prevent Pegasus's attempt to recover damages under California's business and professions code.

Further, the NRTC can't receive damages from DirecTV even if it proves the contract was breached, unless it can also prove the breach was the result of an intentional action at the highest executive levels of DirecTV, according to Baird's rulings.

Both sides said they were pleased. The core issue will proceed to a June 3 jury trial — an outcome that has always been Pegasus' hope, the company said in a prepared statement. DirecTV is pleased that Pegasus's damage claims, which could have reached $150 million, were found unwarranted, according to a statement issued by the DBS provider.

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