A federal judge in Oregon, Hon. Michael H. Simon, has recently upheld a $925 million statutory damages award against health supplement maker ViSalus for its violation of the Telephone Consumer Protection Act (“TCPA”)—making this the largest TCPA damages award to date.
The underlying class action against ViSalus alleged the company placed nearly 2 million unsolicited robocalls nationwide to advertise its weight-loss and dietary products. The class argued that the robocalls constituted unlawful telemarketing practices and violated the TCPA, and after a three-day trial in April of 2019, a jury agreed.
Violation of the TCPA carries significant statutory fines of $500 to $1,500 per unwanted call or text, which historically has been a heavy enough penalty to incentivize Defendants to quickly settle or dismiss disputes rather than proceed to trial. The award in ViSalus demonstrates the risk of going to trial, where the damages were calculated based off the lowest range of statutory damages: $500 per violation, multiplied by 1,850,440 violations found by the jury.
ViSalus challenged the award as constitutionally excessive. It argued that the excessive damages award far outweighed the harm caused by the robocalls, and therefore should be reduced to less than a dollar per violation based on the high volume of calls at issue. In his decision, Judge Simon rejected ViSalus’s Fifth Amendment due process argument, holding that the number of violations should not impact the penalty rate. In analyzing what amount of fine would be sufficient to deter future violations, Judge Simon refused to go any lower than the statutory minimum in order to reduce the award. Judge Simone wrote that “the jury found ViSalus committed a stratospheric number of TCPA violations” so it “is no surprise that the TCPA’s constitutionally-valid minimum penalty of $500 for each violation has catapulted ViSalus’s penalty into the mesosphere.”
Judge Simon’s indifference to the shock-value of the award has not been shared by other courts, including the Eighth Circuit which had affirmed the reduction of TCPA statutory damages from $1.6 billion down to $3.2 million, so that the fines only came out to $10 per violation. ViSalus has made statements that it will plan to appeal this case to the Ninth Circuit, which has not yet addressed the question of whether due process limits aggregate statutory damages in a class action. Both Plaintiffs and Defense counsel will be surely be watching to see what precedent the Ninth Circuit sets.