Recent Trend Suggests Exorbitant TCPA Damages Could be Reduced Through Due Process Clause
When it comes to the TCPA, there is no statutory limitation or “cap” on the amount of damages that can be awarded for each violation. The TCPA provides for statutory damages of the greater of the “actual monetary loss from such a violation, or $500 in damages for each such violation.”
If the violation was done willfully or knowingly, the damages could spike to $1,500 per violation. There is also no prohibition against bringing class action claims. And the TCPA is a strict liability statute, a rare type of federal law that imposes liability even if the company’s violations are accidental.
The TCPA’s strict liability and uncapped statutory damages provisions result in litigation where companies may be liable for exorbitant amounts of hundreds of millions of dollars.
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However, as a practical matter, those who violate the TCPA could not be required to pay such hefty costs. Indeed, recent case law developments suggest that, if TCPA defendants go all the way through trial and are found to have violated the TCPA, they may have an opportunity to argue that under due process, the court should reduce the award.
Even though the TCPA provides for an award of $500 (“or greater” if actual damages are proven), scholars have argued that an award of $500 for receiving a single unwanted text message violates due process, as the award is far too punitive in nature (See, e.g., Sidak, Gregory J., Does the Telephone Consumer Protection Act Violate Due Process As Applied?, 68 FLA. L. REV. 1403 (2016)). And these arguments are starting to gain some traction in the courts as well.
The following decisions have concluded that, under certain circumstances, the statutory damages of $500 per message are either unreasonable or unconstitutional as applied:
- In Texas v. American Blastfax, the court concluded that $500 per fax would be “inequitable and unreasonable,” even though the faxes were sent in knowing violation of the TCPA. Instead, the court decided to award $0.07 per fax and then trebled the damages to account for the willful conduct. Thus, rather than an award of $2.34 billion, the court awarded $459, 375.
- In Maryland v. Universal Elections, the State of Maryland brought an action against a company for making unauthorized prerecorded calls to 112,000 citizens on election day. The violations were found to be knowing violations of the TCPA, which could have produced damages of $168 million. Even without trebled damages, the award would have totaled $34 million. The court found that even an award of $34 million was disproportionate and it also rejected the state’s request for a reduced award of $10 million. Instead, the court concluded that a judgment of $1 million was more proportionate to the size of the company and the defendants’ presumptive ability to pay.
- In United States v. Dish Network, LLC, the U.S. government and several states brought TCPA claims against Dish Network for placing calls to numbers on the national do-not-call list. The plaintiffs asked for damages of $2.1 billion, citing Dish’s repeated prior violations of the TCPA and its violation of consent decrees relating to those prior violations. All of the claims combined could have resulted in damages of $783 billion, however, the court ultimately awarded $280 million in damages, representing approximately 20 percent of its after-tax profits for 2016.
- In Golan v. Veritas Entertainment, LLC, the court evaluated whether the statutory award of $1.16 billion for making over 3 million unauthorized robocalls was unconstitutional. In that case, the court had decided the merits on summary judgment, so the evidence was clear that TCPA violations had occurred. And while the court concluded that the TCPA’s $500 statutory damages provision was not unconstitutional, its application in this particular case created an outcome that was “unreasonable and wholly disproportionate to the offense,” such that its unaltered application violated the defendant’s due process rights. Accordingly, rather than award damages of $500 per call, the court awarded damages of $10 per call, yielding a total award for plaintiffs of $32 million.
- In Nece v. Quicken Loans, Inc., the court did not actually have to rule on this issue but signaled an agreement with the reasoning regarding a possible due process violation if the award was too punitive in nature, by stating: “Of course, several impediments almost certainly foreclose a judgment for “multiple billions of dollars” in this unexceptional TCPA action. See, U.S. CONST. amend V.”
Therefore, following this rationale, it could be argued that there are several bases upon which a TCPA defendant could request a reduction in the award against it. Some bases that seem reasonable to consider include:
- Being a first-time TCPA offender;
- Being a small business and/or nonprofit organization;
- No willful or knowing violation of the TCPA.
It will be interesting to follow this trend and how it evolves as courts continue to analyze specific cases and award damages under the TCPA. This would allow defendants to identify available routes to request reduction of an award.
Inspired by TCPA Defense Force