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Groundbreaking: Eighth Circuit Confirms TCPA Statutory Damages Were Unconstitutional

The Eighth Circuit Court of Appeals has released a much-anticipated decision in Golan v. FreeEats.com, Inc, a TCPA case involving the promotion of a movie, Last Ounce of Courage, using a message recorded by former Arkansas Governor Mike Huckabee.  At the conclusion of a jury trial in August 2017, a jury in Missouri found that the defendants violated the TCPA by making 3.2 million advertising calls without prior express consent, producing an award of $1.6 billion in damages based on the TCPA's $500-per-message statutory damages provision.  Following trial, the court granted a motion to reduce the damages to $32 million, the equivalent of only $10 per message, concluding that the damages were so outrageous as to violate the Constitution's Due Process protections.

At the time of oral argument in the appeal, it appeared that the three-judge panel of the Eighth Circuit considering the appeal was likely to agree that the trial court was warranted in deviating from the TCPA’s $500-per-message statutory damages.  The Eighth Circuit how now done just that, agreeing with the trial court’s conclusion that the $1.6 billion award of damages violated Due Process:

We agree with the district court that the statutory damages here of $1.6 billion violate the Due Process Clause. To state the obvious, $1.6 billion is a shockingly large amount. Compare that to the conduct of ccAdvertising. It plausibly believed it was not violating the TCPA. It had prior consent to call the recipients about religious liberty, and a predominant theme of Last Ounce of Courage is religious liberty. Moreover, only the recipients who voluntarily opted in during the call heard the message about the film. The call campaign was conducted for only about a week. And the harm to the recipients was not severe — only about 7% of the calls made it to the third question, the one about the film. Under these facts, $1.6 billion is “so severe and oppressive as to be wholly disproportioned to the offense and obviously unreasonable.”

As we discussed last year, there has started to emerge a trend in which trial courts are willing to reduce the TCPA’s statutory damages  when the statutory damages produce an unreasonable result in class action cases.  Golan breaks new ground, however, because it is the first federal appellate court to confirm that, in litigation between private parties, TCPA damages can be shockingly excessive and, thus, unconstitutional.  This decision gives trial courts additional flexibility to reduce damages awards in TCPA litigation between private parties and opens a new battle front for litigants. 

If other appellate courts follow the Eighth Circuit's lead and agree that trial courts can reduce damages in TCPA cases, it may help to alter the calculus of defendants who have been forced to settle TCPA claims that, while weak on their merits, presented an unacceptable risk of catastrophic damages if the case was lost at trial.  While the pressure to settle even weak TCPA claims will no doubt continue to exist, unless and until Congress fixes the TCPA by imposing a damages cap, Golan helps to level the playing field a bit.

Copyright © 2019 Womble Bond Dickinson (US) LLP All Rights Reserved.

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Partner

Companies rely on David Carter to guide them in Telephone Consumer Protection Act (TCPA) compliance matters and to defend them against allegations of TCPA violations. He has represented both closely held and publicly traded companies facing TCPA claims with potential liability in excess of $500 million. David runs the TCPA Defense Force whose mission is to reduce TCPA risk, allowing companies to communicate with consumers responsibly and without fear of legal consequences.

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