9th Circuit TCPA Ruling Opens 'Crack' Against Large Verdicts
A 9th U.S. Circuit Court of Appeals decision Thursday in the Telephone Consumer Protection Act case Wakefield v. ViSalus (docket 21-35201) could lead to smaller verdicts in a variety of such lawsuits because it affirms that lower courts should analyze and reduce damage awards that are “unconstitutionally excessive.”
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The three-judge panel remanded a $925,220 million TCPA judgment to the district court to determine whether it's “so severe and oppressive that it violates ViSalus’s due process rights.” The ruling is “a crack in the door” for defense attorneys battling large verdicts based on language in the TCPA that can assess damages of up to $500 per call, said Kelley Drye attorney Becca Wahlquist. Limiting such awards should be reserved for circumstances “in which a largely punitive per-violation amount” results in damages that are “gravely disproportionate” and unrelated to the actual legal violations, wrote Judge Richard Tallman in the unanimous opinion. Judges Marsha Berzon and Morgan Christen also sat on the panel. Attorneys for ViSalus and the plaintiffs didn't comment.
With this ruling, arguments that a TCPA verdict is unconstitutional will have to be considered by courts in the 9th Circuit, attorneys said. "Until the ViSalus ruling, these arguments never had much traction. Now, in the Ninth Circuit at least, they are the law of the land,” attorney Eric Troutman posted. Such arguments will become more common in any case involving aggregated damages, said Wahlquist. The ruling also underscored the 9th Circuit's previous holdings that a single phone call or text message is enough to give a person standing to bring suit, Wahlquist said. The receipt of unsolicited telemarketing calls is “a concrete injury” conferring standing, said the majority opinion. That holding is a split from rulings in the 11th Circuit (see 2210130080).
The case involves automated phone calls from Nevada-based ViSalus to a number of consumers and whether the company had consent to send them. A U.S. District Court in Nevada jury found that ViSalus sent 1,850,400 calls violating the TCPA, which at the statutory damage rate of $500 per call, totaled an award of nearly $1 billion. Two months after the verdict, the FCC granted ViaSalus a waiver of the written consent rules, and ViaSalus filed motions that this waiver meant it had consent for the calls and should be given a new trial, and also that the damages were unconstitutionally high.
The lower court denied them both, but Thursday the 9th Circuit ruled that the district court must consider the constitutionality of the verdict. An aggregated award could be “wholly disproportioned to the prohibited conduct (and its public importance) and greatly exceed any reasonable deterrence value,” said the opinion. The 9th Circuit denied ViSalus’ arguments about consent because the company didn’t raise them earlier in the case, even though it applied for the FCC waiver, and numerous other companies had already been granted such waivers. “Yet ViSalus made no effort to assert the defense, develop a record on consent, or seek a stay pending the FCC’s decision,” wrote Tallman.
To decide whether a verdict is unconstitutionally high, lower courts should take guidance from previous 9th Circuit case Six Mexican Workers v. Arizona Citrus Growers, Tallman wrote. In that case, which concerned abuse of farm laborers, the court evaluated damages using seven factors that include the award amount to each plaintiff, damages in similar cases and the extent of the defendant’s culpability.
Those factors won’t immediately mean damages will be lower, but the court’s ruling provides room for defenses to argue they should, Wahlquist said. “The vastness of an appropriate TCPA award under these 7 factors is going to be in the eye of the beholder,” wrote Troutman. The ruling could also make it more difficult to certify large-volume TCPA class cases because defense attorneys could argue that a class contains so many people it would likely produce an unconstitutional verdict, Troutman said in an interview.
After the 9th Circuit ruling, the ViSalus case will initially proceed in Nevada district court, but Wahlquist told us it will likely end up back before the 9th Circuit, as either the plaintiff or defendant is likely to appeal the lower court’s ruling on the constitutionality of the verdict.