When a $32 Million Loss is Actually a Win

In a recent Opinion in the case of Golan v. Veritas Entertainment, LLC, Judge E. Richard Webber of the District Court for the Eastern District of Missouri found that the TCPA’s statutory damages of $500 per call was unconstitutional under the facts of that case. At $500 per violation, the statutory minimum, the class action judgment against the Defendant would have been over $1.6 Billion. The Court found that this amount of damages would be “unreasonable and wholly disproportionate to the offense” and it therefore reduced the damages to $10 per call, a total of $32 Million.

The Defendants, which include freeeats.com and AIC Communications, were involved in a six-day telemarketing campaign in which millions of autodialed calls were placed without consent.  The Court found that the Plaintiff had proven 3.2 million TCPA violations.  Defendants filed a motion to reduce excessive damages.

In granting the Motion, the Court reviewed case law from across the country and noted that the TCPA’s statutory damages provision had repeatedly been determined to be constitutional on its face.  Although the Court could not find any cases in which a specific damages award was unconstitutional, it did find that other courts had reduced the amount of statutory damages for other reasons.  Judge Webber concluded that, although the TCPA’s damages clause is constitutional, a specific award may be unconstitutional if it is “so severe and oppressive as to be wholly disproportioned to the offense and obviously unreasonable.”  Applying that analysis, the Court found an award of $10 per call, rather than $500 per call, to be appropriate in this case.

The Decision acknowledges that a reduction below the statutory minimum of $500 is rare and readers should not expect these arguments to prevail in any but the most outrageous circumstances.  However, this could open the door for arguments in cases with sympathetic facts or where the damages award would be devastatingly large.  As always, marketing practices should be thoroughly vetted and questions should be directed to experienced counsel.