“ViSalus got exactly what it asked for”—Court Refuses to Unwind Potential $925MM TCPA Verdict in Stinging Ruling Rejecting Decertification Bid
You know that scene in the Dark Knight Rises where Bane tells Batman that there “can be no [true] despair without hope?” I never really understood it—in fact I thought the notion rather dull— until now.
Imagine falling victim to the largest TCPA verdict in history—up to $925MM—only to seemingly have your sins washed away by the grant of a retroactive waiver of liability. And then experiencing the despair of having that victory ripped from you upon a finding that you had waived the applicable defense.
I hesitate to even tell this tale. But I have a responsibility to TCPAWorld. And so I proceed.
First the lesson— if I’ve said it once I’ve said it a thousand times—move to stay cases pending FCC proceedings. Most often when we are discussing stays pending FCC rulings we are discussing primary jurisdiction stays in relation to the FCC’s Public Notice TCPA proceeding. But as one Defendant just found out—in spectacular fashion—failing to move to stay a case pending any potential FCC ruling in your favor might have a truly disastrous effect—to the tune of $925MM in potential damages.
Followers of TCPAWorld.com already know well the saga of ViSalus in the epic battle against Edelson, PC and a certified class in Wakefield v. Visalus, Inc. In short, a class of pre-recorded message recipients was certified on the theory that none of the class members had consented to receive the telemarketing messages. At the time the Defendant asserted various arguments—mostly involving ascertainability—in a bid to defeat certification. With Defendant having virtually conceded that the messages were left without appropriate consent, however, the court certified the class in June, 2017.
In September, 2017—a couple months after the case was certified—ViSalus filed a petition with the FCC seeking a retroactive waiver of its obligation to collect express written consent for customers for whom it already had consent—just not consent that was “up to snuff” under the FCC’s new rules. Despite filing the petition, ViSalus (apparently) did not update any of its disclosures or discovery responses or pleadings to assert a potential consent defense and did not—and here’s the key—seek to stay the case pending the outcome of the FCC’s consideration of its petition.
With no request to stay the case, it barreled on to trial in April, 2019 resulting in a breathtaking jury verdict—that you read about first here on TCPAWorld.com—that ViSalus had made 1,850,436 prerecorded telemarketing calls without consent and in violation of the TCPA. As the TCPA mandates a $500.00 per call minimum statutory award—subject to due process limitations—the jury’s verdict could sustain a judgment as high as $925MM. (The Plaintiff’s request to treble this award to an eye-popping ~$2.8BB was mercifully denied in June, 2019.)
Many of the calls underlying the verdict, however, related to the timeframe for which ViSalus had sought a waiver of liability from the FCC. You see where this is headed.
On June 13, 2019, the FCC granted ViSalus’ request for a retroactive waiver of liability respecting many of the phone calls underlying the verdict against it. Although the parties disagreed as to the scope of the retroactive waiver, there was no dispute that at least some of the calls underlying the verdict had just been washed away by the FCC and that alone—it seemed—gave ViSalus the ammunition it needed to decertify the class, at minimum, and seek a new trial on new evidence.
That sets the table for yesterday’s ruling in Wakefield v. Visalus, Inc., Case No. 3:15-cv-1857-SI, Doc. No. 344 (D. Or. Aug. 21, 2019)(Wakefield IV). There the court duly considered the record and flat refused to decertify the class post-trial owing to ViSalus’ perceived failure to properly assert the consent defense to begin with.
Taking up the issue of the retroactive waiver first—for, verily, ViSalus raised numerous arguments in favor of decertification— the Court determined that ViSalus had sat on its consent defense too long and thereby waived it, snatching away the apparent victory afforded by the FCC. Framing the issue succinctly: “Although ViSalus knew that it had applied for a retroactive waiver from the FCC as early as September 2017, and knew that the FCC previously had granted waivers to many petitioners similarly situated to ViSalus, ViSalus did not plead consent as an affirmative defense, the parties did not conduct discovery on the issue of consent, and consent was not at issue in the jury trial.” Among its many perceived omissions, however, the Court’s most stinging jab is a brief declarative:
ViSalus never asked to stay the litigation pending the FCC’s ruling on ViSalus’s petition.
From there it was a short walk to concluding ViSalus had waived its defense of consent: “ViSalus was not diligent when it failed to raise the consent defense earlier, with full knowledge that its application with the FCC was pending. Had ViSalus been diligent, the Court would have had the advantage of a developed record on the issue of whether ViSalus obtained written consent. The relevant precedent, here the FCC’s previous orders granting waivers to at least nine similarly situated petitioners, foreshadowed the FCC’s decision to grant ViSalus’s petition such that ViSalus was not taken by surprise when its petition was granted… Its failure to raise the consent issue given the likelihood that the FCC would grant its waiver petition was unreasonable, and Plaintiff would be unfairly prejudiced by being denied the opportunity to take discovery on the issue of consent and argue to the jury why ViSalus did not, in fact, obtain written consent.”
In a short and extremely painful sentence:
The Court holds that ViSalus has waived reliance on the affirmative defense that it obtained prior written consent from class members and will not consider the FCC’s recent order as a basis to decertify the class.
I need some Advil. Maybe some bourbon.
But the ruling goes on.
The second ray of hope ViSalus had to work with was a convoluted jury form in which the jurors wrote in that they “could not tell” how many calls were made to landlines vs. cell phones. This seemed to be a critical thread that could be pulled by defense lawyers to unravel any potential judgment—but alas, this hope too was dashed in Wakefield IV. As the court put it: “that further distinction is not relevant.” This is so because “[u]nder the TCPA, liability attaches to any call made either to a residential landline or to a cellular telephone, so ViSalus would be equally liable for calls made to either kind of telephone. Similarly, the statutory damages do not differentiate between calls made to residential landlines and cellular telephones.” So it mattered not, in the court’s view, what type of phone was being called.
But what about the fact that the TCPA’s restriction on calls to landlines pertain to residential lines only? Doesn’t the difference between cell phones and landlines necessarily matter because if there is no way to identify landlines there can be no way to identify business landlines and hence the judgment is overinclusive?
Short answer—not on the record before the Court. Plaintiff had introduced evidence that ViSalus obtained phone numbers by requesting only home numbers and cell phones. In the Court’s view the jury could reasonably infer that all class members honestly provided only their residential lines in response to this form. And there was no contrary evidence presented. As the Court put it— “ViSalus has only speculated that some class members might have used their home telephone lines for primarily business purposes.”
The Court also makes short work of ViSalus’ argument that the messages were not telemarketing in nature, did not actually play, or were subjectively desired by class members. On each of these points the Court found that the evidence supporting ViSalus’ position simply was not sufficient to disturb the verdict.
So what next? Well ViSalus still have one very obvious arrow left in its quiver—the due process argument recently affirmed by the Eighth Circuit in Golan. Notably ViSalus raised the issue of crippling damages as an assault on the superiority of the class action vehicle to resolve the claims at issue but—as the court noted— “ViSalus has not [yet] asked this Court for a remitter, or to reduce the award if it is unconstitutionally excessive…” That seems to be an open door to raise Golan—then again it may be some sort of suggestion that ViSalus has once again failed to properly (timely?) raise a key defense. Let’s hope its not the latter.
For now it remains to be seen whether ViSalus can yet unwind this judgment. Golan offers yet a bit more hope, but then again, we all know what Bane has to say about that.