Allowable statutory damages under the Telephone Consumer Protection Act (TCPA) have a floor of $500 and, generally speaking, determining total damages is a simple math calculation. In the class action scenario, however, this damages number can become very significant very quickly. But a recent decision by the Ninth Circuit suggests that, in some circumstances, an award can be so large as to be deemed out of bounds. In Wakefield v. ViSalus, Inc., the Ninth Circuit remanded a $925M verdict in a TCPA class action back to the Oregon district court to assess whether the verdict was “so severe and oppressive that it violates ViSalus’s due process rights” and whether it should be reduced accordingly.
During the trial phase, a jury determined that between 2012 and 2015 ViSalus placed 1,850,440 automated calls to the class members and left pre-recorded messages without prior written consent. At $500 per call, the district court entered an order requiring ViSalus to pay $925,218,000 to the class. ViSalus filed a post-trial motion seeking a damages reduction that was denied by the district court.
On appeal, the Ninth Circuit panel acknowledged that the district court had little direction on whether or how to reduce an aggregate damages award when set by statute and determined this case was the rare situation where an aggregated statutory damages award could exceed constitutional limitations even though the per-violation amount does not and should be reviewed.
The panel relied heavily on two cases in assessing the constitutionality of the award. Looking first at Supreme Court precedent, the panel reviewed St. Louis, I.M. & S. Ry. Co. v. Williams, 251 U.S. 63 (1919), in which the court “declared that damages awarded pursuant to a statute violate due process only if the award is ‘so severe and oppressive as to be wholly disproportioned to the offense and obviously unreasonable.'” The panel noted it had relied on Williams before in considering due process issues in regards to a damages award.
The Ninth Circuit then revisited its case Six (6) Mexican Workers v. Arizona Citrus Growers, which set out the factors to be considered in reviewing a high damages award:
- the amount of award to each plaintiff,
- the total award,
- the nature and persistence of the violations,
- the extent of the defendant’s culpability,
- damage awards in similar cases,
- the substantive or technical nature of the violations, and
- the circumstances of each case.
904 F.2d 1301, 1309 (9th Cir. 1990). The court held that the Six Mexican Workers issue of reducing the damages per violation to an amount within a statutorily defined range, instead of applying the floor of $500 under the TCPA, did not lessen the applicability of the factors to this case.
The court ultimately concluded that an aggregated statutory damages award would only rarely meet the Williams standard when the per-violation amount does not violate due process; the award must be gravely disproportionate and unreasonable related to the legal violation. But given how mass communication capabilities have increased since the TCPA was passed, allowing for “hundreds of thousands of automated calls and trigger[ing] minimum statutory damages with the push of a button,” this case presented a situation where the award needed to be reassessed.
While this decision does not guarantee that a large TCPA class award will be reduced, it does provide companies with a strong basis with which to argue that a disproportionately large amount should be reviewed.