United States District Court, E.D. Missouri, Eastern Division
MEMORANDUM & ORDER
RICHARD WEBBER, SENIOR UNITED STATES DISTRICT JUDGE.
matter comes before the Court on Defendants Freeeats.com and
AIC Communications, LLC's Post-Trial Motion for Reduction
of Excessive Damages [ECF No. 458].
trial was conducted in this case from August 7, 2017, to
August 16, 2017. At the close of Plaintiffs' evidence,
the Court granted Plaintiffs' Motion for Judgment as a
Matter of Law against Defendants FreeEats.com and AIC
Communications, LLC (“Defendants”). The Court did
not determine damages at that time.
violations in this case involved the use of automated
telephone equipment for which the Telephone Consumer
Protection Act (“TCPA”) states a plaintiff may
recover either the actual monetary loss from a violation or
$500 in damages for each violation, whichever is greater. 47
U.S.C. § 227(b)(3)(B). Evidence in the case proved there
were 3, 242, 493 calls placed in violation of the TCPA.
Applying $500 per violation would result in a damages award
of $1, 621, 246, 500. Defendants ask the Court to reduce the
amount of damages to $324, 249, or $0.10 per call, arguing
the damages are so excessive, it violates the Constitution.
In support, Defendants cite three TCPA cases where damages
were reduced. Plaintiffs argue there is no constitutional
basis for a reduction of statutory damages, and even if there
was, this is not a case where damages should be reduced.
cases across the United States, defendants have challenged
the TCPA's damages provision under the due process clause
of the Fifth Amendment and as an excessive fine under the
Eighth Amendment of the United States Constitution. District
courts have rejected Eighth Amendment challenges to the
TCPA's damages provision, because the Eighth Amendment
applies to civil damages only when the government is
prosecuting the case or will receive a share of the damages.
Pasco v. Protus IP Sol., Inc., 826 F.Supp.2d 825,
836 (D. Md. 2011); Green v. Anthony Clark Int'l
Brokers, Ltd., No. 09 C 1541, 2010 WL 431673 at *5 (N.D.
Ill. Feb. 1, 2010); J2 Global Commc'ns, Inc. v.
Protus IP Sol., No. CV 06-00566 DDP (AJWx), 2008 WL
11335051 at *9 (C.D. Cal. Jan. 14, 2008). The Eighth
Amendment pertains to payment to a sovereign, not a private
party, as punishment for an offense. Green, 2010 WL
431673 at *5.
courts have also rejected challenges under the due process
clause and have held the statutory damages provision in the
TCPA, on its face, is constitutional. See Pasco, 826
F.Supp.2d at 835; Green, 2010 WL 431673;
Krakauer v. Dish Network, LLC, No. 1:14-CV-333, 2017
WL 2455095 (M.D. N.C. Jun. 6, 2017); Kenroe, Inc. v. Fax
Daily, Inc., 962 F.Supp. 1162 (S.D. Ind. 1997);
Accounting Outsourcing, LLC v. Verizon Wireless Pers.
Commc'n, 329 F.Supp.2d 789 (M.D. La. 2004);
Texas v. Am. Blastfax, Inc., 121 F.Supp.2d 1085
(W.D. Tex. 2000). Courts routinely cite to St. Louis, I.
M. & S. Ry. Co. v. Williams, 251 U.S. 63, 66-67
(1919), for the standard that statutory penalties violate due
process “only where the penalty prescribed is so severe
and oppressive as to be wholly disproportioned to the offense
and obviously unreasonable.” Courts are hesitant to
declare a statutory damages provision unconstitutional,
because Congress possesses “a wide latitude of
discretion to prescribe penalties for violations of [its]
laws, and those penalties, which often serve a deterrent
effect, are to be considered with due regard for the
interests of the public, the numberless opportunities for
committing the offense, and the need for securing uniform
adherence.” Pasco, 826 F.Supp.2d at 835
(citing Williams, 251 U.S. at 66-67). Specifically
in relation to the TCPA, the $500 per violation damages
provision is meant to address harms that are otherwise
unquantifiable such as invasions of privacy, unwanted
disruptions, tied-up phone lines, and wasted time spent
answering unwanted phone calls. Krakauer, 2017 WL
24455095 at *6.
support of their argument TCPA damages are unconstitutional,
many defendants have cited to cases overturning punitive
damages awards. The Supreme Court has held punitive
damages may violate the due process clause when an award is
“grossly excessive.” BMW of N.A., Inc. v.
Gore, 517 U.S. 559, 568 (1996). The Supreme Court
focused on whether a person receives fair notice of severity
of the penalty that may be imposed. Id. at 574.
Another concern the Supreme Court has articulated is the wide
discretion juries have in choosing amounts and that juries
will use their verdicts to express biases against defendants.
State Farm Mut. Auto Ins. Co. v. Campbell, 538 U.S.
408, 417 (2003). District courts have declined to extend the
reasoning about punitive damages to statutory damages,
because defendants have ample notice of the amount and there
is no discretion for juries to apply. Kenroe, 962
F.Supp. at 1165; see also Phillips Randolph Enter., LLC
v. Rice Fields, No. 06 C 4968, 2007 WL 129052 (N.D. Ill.
Jan. 11, 2007); Accounting Outsourcing, LLC, 329
F.Supp.2d at 808-809. The Eighth Circuit has also
differentiated between statutory damages and punitive
damages. Capital Records, Inc. v. Thomas-Rasset, 692
F.3d 899, 907 (8th Cir. 2012) (finding the guideposts
established to determine if punitive damages are
constitutional are not applicable to statutory damages awards
and “would be nonsensical if applied to statutory
damages.”). Therefore, the Court will not apply the
punitive damages standard to the statutory damages at issue
various district courts have found the TCPA is
constitutional, on its face, the Court was unable to find any
district courts who determined a specific TCPA damages award
was unconstitutional. Several district courts that determined
the statutory damages provision is constitutional did not
address the issue of whether a specific damages award was
constitutional because of the procedural postures of the
cases. Birchmeier v. Caribbean Cruise Line, Inc.,
302 F.R.D. 240, 256 (N.D. Ill. 2014) (A damages award may be
reduced after a class has been certified, not before.);
Pasco, 826 F.Supp.2d at 835 (Premature to determine
whether a hypothetical damage award would accord with due
process because a factual dispute remained.); Green,
2010 WL 431673 at 6 (Declined to determine if the damages
award was excessive if a class was certified because at the
time, it was an individual action.); Centerline Equipment
Corp., 545 F.Supp.2d at 777 (Premature, at the motion to
dismiss stage, to determine if a hypothetical damages award
might be constitutionally excessive.); J2 Global
Comm'ns, Inc., 2008 WL 11335051 at *9 (The issue of
whether statutory damages are excessive will be ripe after
issuance of a verdict.).
courts have reduced damages awards in TCPA cases. In
Texas v. American Blastfax, Incorporated, plaintiff,
the state of Texas, brought suit against defendants, American
Blastfax, Incorporated and two of its officers and directors.
164 F.Supp.2d 892, 894 (W.D. Tex. 2001). The district court
held defendant Blastfax had violated the TCPA by sending
unsolicited intrastate fax advertisements. Id. at
894. Defendants presented evidence the average cost of
receiving an unwanted fax is seven cents per page.
Id. at 900. Although it stated the TCPA provides for
liquidated damages of $500 for each violation, the district
court found it would be inequitable and unreasonable to award
that amount for each violation. Id. Instead, the
district court interpreted the provision as providing for
“up to” $500 per violation. Id. The
district court found a reasonable award was seven cents per
violation, which it trebled because defendants' conduct
was willful and knowing, for a total amount of $495, 375.
Id. at 901.
Court will not apply the reasoning of American
Blastfax to this case. The TCPA statute clearly states
the damages are $500 per violation for violations using
automated telephone equipment. 47 U.S.C. § 227(b)(3)(B).
Another provision in the TCPA, which applies to violations of
the do-not-call list, does allow for damages up to
$500 per violation. 47 U.S.C. § 227(c)(5). If Congress
intended damages for an automated telephone equipment
violation to be up to $500, instead of $500, it could easily
have done so as it did for do-not-call list violations. Thus,
the Court does not find the reasoning of American
next case which reduced damages for TCPA violations is
Maryland v. Universal Elections, Incorporated, 862
F.Supp.2d 457 (D. Md. 2012). The state of Maryland brought a
civil enforcement action against Universal Actions,
Incorporated and two individuals, alleging defendants
violated the TCPA by making 112, 000 prerecorded telephone
calls to residents on Election Day. Id. at 459. The
district court found defendants violated the TCPA.
Id. at 463-464. The base damages award could have
been $34, 000, 000 and could have exceeded one hundred
million dollars if trebled, because the violations were
knowing. Id. at 464. The state of Maryland requested
$10, 424, 550. Id. at 465. The district court
awarded $1, 000, 000. Id. at 466.
district court reasoned “a $10 million penalty is
disproportionate to the size of the company and the
defendants' presumptive ability to pay.”
Id. However, the district court specifically
explained it was not suggesting a $10 million award was
necessarily unconstitutional. Id. In determining a
$1 million award was appropriate, the district court found
the defendants “knowingly violated the TCPA with the
express purpose of suppressing the votes of a minority group
in a contested statewide gubernatorial election” and
“his actions damaged public faith in the democratic
process that is at the core of our system of
government.” Id. at 466-467. The facts and
circumstances of this case are far different from those
currently before the Court, which limits the applicability of
the District of Maryland's reasoning.
third case is United States v. Dish Network, LLC,
No. 09-3073, 2017 WL 2427297 (C.D. Ill. Jun. 5, 2017).
Plaintiffs, the United States and the States of California,
Illinois, North Carolina, and Ohio, alleged defendant, Dish
Network, LLC, violated the TCPA, as well as several state
laws and regulations, by placing telephone calls to telephone
numbers on the do-not-call list. Id. at *1. After a
bench trial, the Central District of Illinois entered
judgment in favor of the plaintiffs and against the
defendant. Id. Plaintiffs asked for a damages award
of $2.1 billion. Id. at *139. The district court
awarded civil penalties and statutory damages of $280, 000,
000, approximately 20 percent of the defendant's
after-tax profits for 2016, finding this amount was
“appropriate and constitutionally proportionate,
reasonable, and consistent with due process.”
Id. The district court further reasoned “[t]he
amount represents a significant penalty for the millions and
millions of Do-Not-Call violations caused by Dish over years
and years of careless and reckless conduct.”
Id. Finally, the district court stated “[t]he
injury to consumers, the disregard for the law, and the
steadfast refusal to accept responsibility require a
significant and substantial monetary award.”
Id. at 140. This case also has limited applicability
to the situation before the Court because no evidence was
presented about Defendants' profits in any given year.
three cases which have reduced TCPA damages awards, only
Dish Network, LLC, found the damage reduction
comported with due process. Id. at 139. The other
cases did not reduce damages under the Constitution. However,
that does not foreclose the Court's ability to reduce the
damages award to comport with due process. The Court's
review of the applicable case law, supra, indicates
the TCPA's statutory damages clause is constitutional,
but a specific damages award may be unconstitutional if it is
“so severe and oppressive as to be wholly
disproportioned to the offense and obviously
unreasonable.” Capital Records, Inc. v.
Thomas-Rasset, 692 F.3d 899, 907 (8th Cir. 2012). With
little else to provide guidance, the ...