$500 a Call Not an Immutable Sum Where TCPA Multiplier Yields Billions
When you make 3,242,493 phone calls in violation of the Telephone Consumer Protection Act (TCPA) – even when “American freedom and liberty” are involved – the potential statutory damages mount up – to $1,621,246,500 to be exact. Doing the simple TCPA math, at $500 per call, that was the exposure of telemarketer ccAdvertising (“ccA”).
But thank God for the good old Due Process Clause in the Fifth Amendment to the U.S. Constitution. In Golan v. FreeEats.com, Inc., doing business as ccAdvertising et al., it afforded ccA a $490/98% per TCPA call discount.
Back in September 2012, ccA conducted a telephone marketing campaign to promote the religious film Last Ounce of Courage. Formatted as a poll – with questions on topics such as “American freedom and liberty” and “religious freedom” – after hearing two polling questions, the call recipients were asked if they would like to hear more about the movie. A “yes” answer triggered a message from former Arkansas Governor Mike Huckabee, announcing when the film would hit the theaters and promoting a web site where one could see a trailer and audience reactions. ccA thought it was OK TCPA-wise because it had prior consent to call the 3.2 million recipients about religious liberty. But remember the “scope of consent” doctrine.
Mr. and Mrs. Golan got two such messages and filed a class action suit for TCPA violations against ccA and others involved with the film and marketing campaign, including one Dr. James R. Leininger, who helped finance the movie.
Before trial, the Golans first had to take an earlier trip to the Eighth Circuit to confirm that they had standing to bring the action, with the Court finding that “even the brief messages qualified as ‘telemarketing’ in violation of the TCPA because their underlying purpose was to promote a product or service.”
A jury trial ensued in August of 2017. At the close of the evidence, the District Court granted the Golan’s motion for judgment as a matter of law against ccA. The jury returned a verdict in favor of the other defendants, including Dr. Leininger.
Staring a $1.6 billion TCPA bill in the face, ccA filed a post-trial motion for reduction of damages. And the District Court said, “$10 per call please,” – a mere $32,424,930. The Golans headed back to the Eighth Circuit.
Before getting to the damages reduction, the Circuit Judge Grasz and his colleagues dispensed with two issues – one raised sua sponte and the other raised by the Golans.
First, the Court quickly concluded that the intervening Supreme Court decision in Spokeo, Inc. v. Robins did not change its view on the standing question – two messages equaled a “concrete injury” under that ruling and thus, the Golans had standing.
Second, the panel addressed the Golan’s assertion that the District Court had abused its discretion by refusing to give the jury their preferred instruction on direct liability against Dr. Leininger. The Court disagreed, finding that the instruction “did not accurately state the law because it would allow direct liability [under the TCPA] even where the defendant did not ‘initiate’ the calls.” “‘Active oversight of or control over’ the TCPA violation” or even “personal authorization” did not equate to call initiation – “meaning the person ‘takes’ the steps necessary to physically place a telephone call.”
Last but not least, the Court addressed the District Court damage discount. The Court conceded that “nothing in the relevant provision of the TCPA itself…allows for the reduction of statutory damages.” Statutory damages under the operative provision of the TCPA “may only be reduced if the award would be unconstitutional. The Eighth Circuit, reviewing de novo as would be in the case of punitive damages, agreed that the TCPA-mandated statutory damages of $1.6 billion would violate the Due Process Clause of the Fifth Amendment to the Constitution because the award is “so severe and oppressive as to be wholly disproportioned to the offense and obviously unreasonable.” In fact, in a somewhat sympathetic tone, the Court compared the amount to the conduct of poor ccA, which “plausibly believed” it had consent and the harm to the recipients “was not severe” (only 7% of the calls made it to the third question about the film).
The Golans’ argument that the Court could not consider the aggregate award, but only the amount per violation, fell on deaf ears. And what about the reasonableness of the $490/98% per call discount? Well, the Golans did not challenge that the reduced amount should have been more. The Eighth Circuit noted that if they had “a district court’s decision of what alternative amount to award may well call for a more deferential standard of review…”
So there. Just another routine day for the Bill of Rights in TCPAWorld.