Court Refuses to Reduce $925M in Aggregate Statutory Damages

The District of Oregon recently found that a $925,220,000 damages award was not unconstitutionally excessive, reasoning that due process does not limit the aggregate statutory damages that can be awarded in a class action lawsuit under the TCPA. Wakefield v. ViSalus, Inc., No. 3:15-cv-1857, 2020 WL 4728878 (D. Or. Aug. 14, 2020).

As we previously explained, when the trial court denied the plaintiff’s request for treble damages, the jury in the Wakefield case found that the defendant had violated the TCPA by placing 1,850,436 telemarketing calls. Id. at *1. Because the TCPA’s minimum statutory penalty is $500 per violation, the defendant faced aggregate damages of $925,220,000. Id. at *2.

The defendant argued that such an award would violate due process, as it would be “‘so severe and oppressive as to be wholly disproportioned to the offense and obviously unreasonable.’” Id. (quoting St. Louis, I.M. & S. Ry. Co. v. Williams, 251 U.S. 63, 66-67 (1919)). The trial court recently rejected that argument, allowing a nearly billion-dollar judgment stand. Id. at *6.

The trial court found that the Ninth Circuit’s decision in Bateman v. American Multi-Cinema, Inc., 623 F.3d 708 (9th Cir. 2010) did not decide whether due process limits aggregate statutory damages in class actions. The trial court then rejected the approach of the Eighth Circuit, which focuses on the “‘absolute amount of the award, not just the amount per violation.’” Id. at *3–4 (quoting Capitol Records, Inc. v. Thomas-Rasset, 692 F.3d 899, 910 (8th Cir. 2012)).

The trial court instead conducted a “penalty-level analysis” that considered whether the fine for a single statutory violation is constitutional. Id. at *3 (citing Williams, 251 U.S at 64). Finding that the per-violation penalty is constitutional, it declined to reduce the aggregate penalty “simply because [the defendant] committed almost two million violations.…” Id. at *4. Such a proposition would, in its view, “effectively immunize illegal conduct if a defendant’s bad acts crossed a certain threshold.” Id.

The court found support for this in the plain language of the TCPA, which “does not limit aggregate damages, does not limit the number of actions that may be brought against a single defendant, and does not suggest any circumstances under which a court could award less than the minimum statutory damages.” Id. at *5. But that of course ignores that nothing in the statute mentions aggregating damages in a class action, and it is abundantly clear from the legislative history that Congress believed that claims would be pursued individually in small claims court. The court found otherwise, presuming from little more than the year of the statute’s passage that Congress must have “expected class actions to be available when it enacted the statutory damages provision of the TCPA.” Id.

The court concluded by holding that, even if due process did require that the aggregate award be reduced, the defendant’s proposed method of reduction—to reduce damages to no more than $1 per violation—would be arbitrary. Id. The court noted that the Defendant had not directed it to any Ninth Circuit authority on how to reduce damages that are unconstitutionally excessive. Id. That should not have been surprising, though, given the court’s earlier conclusion that there was no precedent on this particular point. The court then noted that the Seventh Circuit has instructed its lower courts to “consider the harm caused by the defendant’s violations” but found that the defendant in this case had merely insisted that this was “barely a $2 million dollar case.” Id. at *6. Because the defendant had not tied that $2 million figure “to the harm suffered by class members,” the court found that it had no record from which it could reduce damages in a principled way. Id.

This case serves as yet another cautionary tale regarding the potentially catastrophic aggregate damages that are available in class actions under the TCPA and other “gotcha” statutes.