District of Oregon Rejects Constitutional Challenge to Near-Billion-Dollar Damages Award for TCPA Violations

By King & Spalding

Oct 5, 2020

On August 14, the U.S. District Court for the District of Oregon issued an order rejecting defendant ViSalus, Inc.’s (“ViSalus”) constitutional challenge to a $925,220,000 verdict based on 1,850,436 prerecorded calls ViSalus allegedly made to members of a certified class in violation of the Telephone Consumer Protection Act (“TCPA”). The court’s decision is notable because it is one of the few decisions that has addressed the constitutionality of such a large statutory damages award in a TCPA case and because the court’s holding is inconsistent with a recent Eighth Circuit decision, which held that such aggregate statutory awards violate due process.

Plaintiff Lori Wakefield brought a putative class action for alleged violations of the TCPA on behalf of all individuals in the United States who, without their consent, received telephone calls from ViSalus promoting its products or services using an artificial or prerecorded voice. The court certified the class, and the case proceeded to a three-day jury trial. The jury returned a special verdict, finding in relevant part that ViSalus had made nearly two million prohibited calls to the class. Because the TCPA’s minimum statutory penalty is $500 per violation, ViSalus was liable for $925,220,000 in damages.
Post-verdict, ViSalus argued that the aggregate statutory award violated due process because it was “so severe and oppressive as to be wholly disproportionate to the offense and obviously unreasonable.” ViSalus urged the court to apply to statutory damages awards under the TCPA similar due process limits as those that apply to punitive damages awards. Such limits require courts to consider “the degree of reprehensibility of the defendant’s conduct,” the “ratio to the actual harm,” and the disparity between “the punitive damages award and the civil or criminal penalties that could be imposed for comparable misconduct.” See BMW of North America, Inc. v. Gore, 517 U.S. 559, 574–75 (1996). ViSalus’s argument relied heavily on the Eighth Circuit’s decision in Golan v. FreeEats.com, Inc., 930 F.3d 950 (2019), which affirmed the reduction of a $1.6 billion TCPA statutory damages award to $32 million ($10 per call) on due process grounds.
The district court rejected ViSalus’s argument, allowing the judgment to stand. The court noted that the Ninth Circuit has not addressed whether due process limits aggregate statutory damages in a class action. Accordingly, the court looked to ViSalus’s Eighth Circuit authority, which it ultimately rejected. In particular, the court challenged Golan’s reliance on the 1919 Supreme Court decision of St. Louis, I.M. & S. Ry. Co. v. Williams, noting that Williams had not addressed aggregate awards, but only the penalty for a single statutory violation when assessing due process. In other words, the focus of the due process inquiry should not be on the aggregate damages amount (nearly $1 billion), but instead on the penalty for a single violation ($500).
Applying this penalty-level analysis, the district court held that the TCPA’s minimum penalty of $500 per violation is constitutional and declined to reduce the aggregate award. In reaching this conclusion, the court explicitly rejected the proposition that “a constitutional penalty for a single violation becomes unconstitutional if the defendant commits the violation enough times.” Citing the Truth In Lending Act and Fair Debt Collection Practices Act, the court also noted that, if Congress had intended to cap aggregate TCPA awards, it would have done so in the statute.
Finally, the district court rejected as “arbitrary” ViSalus’s proposal to reduce the statutory award to $1 per call, noting that ViSalus had failed to provide any methodology to support this reduction. The court similarly criticized Golan and other courts’ failure to provide any explanation of how to reduce allegedly unconstitutional damages.
In recent filings, ViSalus has characterized the court’s decision as “a corporate death sentence” and noted its intent to seek relief from the Ninth Circuit. We will follow this case and report any further developments at the appellate level. In the meantime, this case serves as a stark reminder that uncapped aggregate damages present grave risks to class action defendants facing claims under the TCPA and other statutes providing for “per-violation” penalties.
The District of Oregon case is Wakefield v. ViSalus, Inc., case number 3:15-cv-01857, and you can read more here. The Eighth Circuit opinion in Golan v. FreeEats.com, Inc. is available here.