A company that managed the ownership rights of a film hired a company to promote and market the film. There were approximately 3.2 million telephone calls made over a short period of time that delivered a prerecorded audio message from former Arkansas Governor Mike Huckabee.
The two plaintiffs received two voice messages and subsequently initiated class action litigation, alleging violations of the Telephone Consumer Protection Act (“TCPA”) against the film’s financier, the marketing company and others involved in promotional efforts.
A district court held that the named plaintiffs possessed standing but reduced the damages awarded from $1.6 billion ($500 per call) to $32 million ($10 per call). Interestingly, the district court refused to provide a jury instruction on the financier’s personal liability.
The case was appealed to the Eighth Circuit – which had already ruled on a prior appeal in the case that the named plaintiffs had standing. However, given recent judicial developments with respect to TCPA jurisprudence, the Eighth Circuit opined that “[t]he harm to be remedied by the TCPA was ‘the unwanted intrusion and nuisance of unsolicited telemarketing phone calls and fax advertisements.’”
Specifically, the Eighth Circuit considered a standing analysis under the Supreme Court’s Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016) opinion, and held that the “harm here was the receipt of two telemarketing messages without prior consent,” which harm “bear[s] a close relationship to the types of harms traditionally remedied by tort law, particularly the law of nuisance.”
On the damages issue, the Eight Circuit pointed out that the TCPA does not expressly permit a reduction of damages. Rather, the TCPA provides for monetary damages “up to $500” per violation thereof. However, the court held that damages may still be reduced if they are unconstitutional. Thus, the Eighth Circuit held that statutory damages of over $1.6 billion violate the constitutional due process considerations, as they would be “so severe and oppressive [as] to be wholly disproportioned to the offense and obviously unreasonable.”
The court also held that “to be held directly liable, the defendant must be the one who ‘initiates’ the call. . . . TCPA liability in this context generally does not extend to sellers who do not personally make the phone calls at issue, but only includes the telemarketers acting on behalf of those sellers.”
Read the opinion, here.
Experienced FTC attorneys can assist digital marketers with avoiding related violations, including unfair or deceptive acts or practices under the Federal Trade Commission Act.
Richard B. Newman is an FTC CID attorney at Hinch Newman LLP. Follow him on Twitter @ FTC Attorneys.
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