On Thursday, May 30, the United States Court of Appeals for the Fourth Circuit upheld a $61 million verdict in the closely-watched Krakauer v. Dish Network, LLC class action, finding that “the district court properly applied the law and prudently exercised its discretion.” Krakauer v. Dish Network, Case No 18-1518, slip op. at 3 (4th Cir. May 30, 2019). The Fourth Circuit’s decision marks the culmination of five years of litigation in one of the highest profile Telephone Consumer Protection Act (“TCPA”) class cases in the nation, which is believed to set the record verdict in any civil TCPA case.
The Case Below
Krakauer brought a TCPA class action against Dish Network in 2014, alleging that he received telemarketing calls asking him to buy services from Dish Network. The calls were not from Dish Network directly, but from Dish Network’s vendor, Satellite Systems Network (“SSN”). Krakauer, who had submitted his phone number to the national Do-Not-Call registry in 2003, called Dish Network to complain and was placed on the company’s individual Do-Not-Call list.
Krakauer’s lawsuit alleged that the calls violated the TCPA and that Dish Network was liable as SSN’s principal. Judge Catherine C. Eagles of the Middle District of North Carolina granted Krakauer’s motion for class certification and subsequently modified the class definition throughout the litigation. By the time of trial in 2017, the class included: “[a]ll persons throughout the United States whose telephone numbers were listed on the federal Do Not Call registry for at least 30 days, but who received telemarketing calls from SSN to promote the sale of Dish satellite television subscriptions from May 1, 2010 to August 1, 2011.” Id. at 14.
The jury returned a verdict for Krakauer, finding that SSN acted as Dish Network’s agent when it made the calls at issue, awarding $400 per call. With more than 50,000 calls at issue, the damages totaled $20.47 million. But the damages did not stop there for Dish Network. Judge Eagles concluded that treble damages were necessary, citing Dish Network’s knowledge that SSN routinely flouted the TCPA, bringing the total award to $61 million.
Dish Network appealed to the Fourth Circuit, raising three arguments: (1) that the district court did not have jurisdiction over the class because of a lack of standing; (2) that class certification was improper; and (3) that liability for the calls should fall on SSN alone.
The Fourth Circuit’s Decision
In a unanimous opinion authored by Judge Wilkinson, the Fourth Circuit rejected each of Dish Network’s arguments in turn. The plaintiffs, according to the Court, could demonstrate standing easily, as they did “not seek redress for a procedural shortcoming, such as the defendant’s failure to keep accurate Do-Not-Call records.” Id. Their claims accrued “once a telemarketer disregards the registry and actually places multiple calls. Since that harm is both particular to each person and poses a concrete burden on his privacy, it is sufficient to confer standing.” Id.
Nor did the class run afoul of Rule 23, as the Court found the claim in the case to “be conducive to class-wide disposition.” Id. at 18. The class definition “hewed closely to the TCPA’s text,” despite Dish Network’s claims that the definition was overbroad. Id. And the Fourth Circuit cast aside Dish Network’s arguments that telephone subscribers are the only individuals who could bring suit, rather than any person who received a call, finding “no basis for imposing such a limit.” Id. at 19. With these “red herring[s] cast aside,” the Court found that the class readily met the requirements of Rule 23, with class-wide data providing the roadmap for certification. Dish Network contended that individualized inquiry was required, but the Fourth Circuit pointed to the district court’s consideration of the issues and Dish Network’s inability to show significant error in the data offered by the plaintiffs.
On the critical question of vendor liability, the Fourth Circuit found that the TCPA permits liability against a company “for calls made on its behalf, even if not placed by the company directly.” Id. at 25. The Court dismissed Dish Network’s arguments that its contract with SSN outweighed any evidence of an agency relationship between the parties, as well as Dish Network’s contention that “it occasionally instructed SSN to follow the law.” Id. at 28. The evidence that Dish Network “failed to respond . . . in any serious way” to concerns that SSN was not complying with its instructions as well as evidence that the company “profit[ed] handsomely from SSN’s sales tactics” supported the jury’s verdict. Id. at 29. The Court also affirmed the award of treble damages, noting “the half-hearted way in which Dish responded to consumer complaints.” Id. at 31.
TCPA plaintiffs’ attorneys will likely claim that there is a lot to like about the Krakauer decision. While plaintiffs’ attorneys have not regularly pursued big-ticket TCPA cases in in the Fourth Circuit, plaintiffs may believe that Krakauer puts the Fourth Circuit on the TCPA map – in an area where the Fourth Circuit has largely been silent. Although the Fourth Circuit affirmed the District Court’s ruling, its decision was limited to the facts and legal claims in that case. The Fourth Circuit did not address many of the issues that typically foil TCPA class actions, like individual issues of consent and revocation.
What Krakauer makes clear, though, is that companies can be held liable for calls from agents in certain situations. This further enhances the need for companies and their vendors to have robust TCPA compliance strategies.