Circuit Court Affirms Holding Reducing TCPA Award by 98%

By Joseph C. Wylie II, Molly K. McGinley, and Nicole C. Mueller

In Golan v. FreeEats.com d/b/a ccAdvertising et al., the Eighth Circuit recently affirmed a trial court’s decision to reduce a TCPA judgment by approximately 98% on the grounds that an aggregate award of approximately $1.6 billion was unreasonable and disproportionate to the offense, and therefore unconstitutional.  In so holding, the Eighth Circuit deviated from long-standing case law rejecting constitutional challenges to the amount of statutory damages allowed under the TCPA.  If the Eighth Circuit’s analysis is adopted more widely, it could bring a needed measure of rationality to awards under the TCPA.

The lawsuit stemmed from the promotion of Last Ounce of Courage, a film involving the themes of “faith, freedom, and taking a stand for American values.”  Veritas Marketing Group was engaged to market and distribute Last Ounce of Courage.  Veritas Marketing Group hired a political telemarketer, ccAdvertising, to conduct a telephone campaign to promote the film, which ultimately created a promotion voiced by Governor Mike Huckabee.  The recorded message was formatted as a poll, with questions on such topics as “American freedom and liberty” and “religious freedom”; after the polling questions, the call recipients were asked if they would like to hear more about Last Ounce of Courage and those who opted in with a “yes” heard an additional message promoting the film.

The phone calls were sent to phone numbers ccAdvertising already possessed, and ccAdvertising apparently believed that the calls did not violate the TCPA because it had prior consent from these recipients to be contacted about topics such as religious liberty.  Among the recipients were Ron and Dorit Golan, who received two phone calls but did not answer either one.  Instead, they received two answering machine messages, saying: “Liberty.  This was a public survey call.  We may call back later.”  The Golans field a class-action lawsuit in Missouri state court (subsequently removed to the United States District Court for the Eastern District of Missouri) against various parties including ccAdvertising.  Following trial, the court entered motion for judgment as a matter of law against ccAdvertising. 

ccAdvertising filed a post-trial motion for reduction of damages, arguing that the TCPA’s statutory damages of $500 per call for the 3,242,493 calls it made (totaling $1,621,246,500) was so excessive it violated the Due Process Clause of the Fifth Amendment.  The District Court concluded that the $1.6 billion award was “obviously unreasonable and wholly disproportionate to the offense” and reduced the damages to $10 per call for a total of $32,424,930.

In affirming the reduced award, the Eighth Circuit agreed with the plaintiff-appellant that “nothing in the relevant provision of the TCPA itself—which provides for recovery of ‘actual monetary loss’ or ‘$500 in damages’ per violation, whichever is greater—allows for the reduction of statutory damages.”  Opinion at *15 (quoting the 47 U.S.C. § 227(b)(3)(B)).  However, the Circuit Court also recognized the court’s “wide latitude of discretion” in setting statutory penalties and damages. 

Ultimately, the Eighth Circuit agreed with the District Court that statutory damages of $1.6 billion violated the Due Process Clause, finding that “$1.6 billion is a shockingly large amount” as compared to “the conduct of ccAdvertising [which] plausibly believed it was not violating the TCPA,” which was supported by the fact that ccAdvertising had obtained prior consent to call the recipients about religious liberty, a predominant theme of the film.  The court also called attention to the fact that only about 7% of the calls made it to the question that prompted the film promotion.  Golan is notable because, when faced with this question, other courts have held that the TCPA’s statutory damages do not violate the Due Process Clause.  See, e.g., McCall Law Firm, PLLC v. Crystal Queen, Inc., 335 F. Supp. 3d 1124 (E.D. Ark. 2018); Kenro, Inc. v. Fax Daily, Inc., 962 F. Supp. 1162 (S.D. Ind. 1997); Texas v. Am. Blastfax, Inc., 121 F. Supp. 2d 1085 (W.D. Tex. 2000).  In so holding, the Eighth Circuit rejected the Golans’ argument that it was bound to only consider the amount per violation and not the aggregate award as unsupported by the authority cited.