LORI WAKEFIELD V. VISALUS, INC. ( 2022 )

FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS OCT 20 2022
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
LORI WAKEFIELD, individually and on No. 21-35201
behalf of all others similarly situated,
D.C. No. 3:15-cv-01857-SI
Plaintiff-Appellee,
v. OPINION
VISALUS, INC., a Nevada corporation,
Defendant-Appellant.
Appeal from the United States District Court
for the District of Oregon
Michael H. Simon, District Judge, Presiding
Argued and Submitted May 11, 2022
Portland, Oregon
Before: Marsha S. Berzon, Richard C. Tallman, and Morgan Christen, Circuit
Judges.
Opinion by Judge Tallman
1
SUMMARY *
Telephone Consumer Protection Act
The panel affirmed in part and vacated in part the district court’s judgment after
a jury trial in favor of the plaintiffs in a class action under the Telephone Consumer
Protection Act and remanded with instructions to reassess the constitutionality of a
statutory damages award.
Plaintiffs alleged that ViSalus, Inc., sent them automated telephone calls
featuring an artificial or prerecorded voice message without prior express
consent. During the relevant timeframe, the Federal Communications Commission
rules were amended to require, among other things, a written disclosure explicitly
stating that, by providing a signature and phone number, the recipient consented to
receive calls featuring an artificial or prerecorded voice. Because ViSalus did not
provide the required written disclosures before making the calls at issue, it petitioned
the FCC for a retroactive waiver of the written prior express consent rule. ViSalus
did not, however, plead prior express consent as an affirmative defense. The jury
returned a verdict against ViSalus, finding that it sent 1,850,440 prerecorded calls in
violation of the TCPA. Because the TCPA sets the minimum statutory damages at
$500 per call, the total damages award against ViSalus was $925,220,000. Nearly
two months later, the FCC granted ViSalus a retroactive waiver of the heightened
written consent and disclosure requirements. ViSalus then filed post-trial motions
to decertify the class, grant judgment as a matter of law, or grant a new trial on the
ground that the FCC’s waiver necessarily meant ViSalus had consent for the calls
made. Alternatively, ViSalus filed a post-trial motion challenging the statutory
damages award as being unconstitutionally excessive. The district court denied
these motions.
Affirming in part, the panel held that members of the plaintiff class had Article
III standing to sue because the receipt of unsolicited telemarketing phone calls in
alleged violation of the TCPA is a concrete injury in fact under Van Patten v.
Vertical Fitness Grp., 847 F.3d 1037 (9th Cir. 2017). The panel held that
TransUnion LLC v. Ramirez, 141 S. Ct. 2190 (2021), did not overrule Van Patten,
*
This summary constitutes no part of the opinion of the court. It has been
prepared by court staff for the convenience of the reader.
but rather reaffirmed the rule that an intangible injury qualifies as “concrete” when
(1) Congress created a statutory case of action for the injury, and (2) the injury has
a close historical or common-law analog.
The panel held that, when ruling on ViSalus’s motions to decertify the class, grant
judgment as a matter of law, or grant a new trial, the district court properly refused
to consider the FCC’s retroactive waiver. The panel explained that ViSalus waived
a consent defense, and no intervening change in law excused this waiver of an
affirmative defense.
The panel vacated the district court’s denial of ViSalus’s post-trial motion
challenging the constitutionality of the statutory damages award under the Due
Process Clause of the Fifth Amendment. The panel held that, in certain extreme
circumstances, the Williams due process test applies to aggregated statutory damages
awards even where the prescribed per-violation award is constitutionally
sound. Under this test, a damages award violates due process if it is so severe and
oppressive as to be wholly disproportionate to the offense and obviously
unreasonable in relation to the goals of the statute and the conduct the statute
prohibits. The panel held that constitutional limits on aggregate statutory damages
awards are reserved for circumstances in which a largely punitive per-violation
amount results in an aggregate that is gravely disproportionate to and unreasonably
related to the legal violation committed. Under Six Mexican Workers v. Arizona
Citrus Growers, 904 F.2d 1301 (9th Cir. 1990), relevant factors include the amount
of award to each plaintiff, the total award, the nature and persistence of the
violations, the extent of the defendant’s culpability, damage awards in similar cases,
the substantive or technical nature of the violations, and the circumstances of each
case. The panel remanded for the district court, guided by the applicable factors, to
reassess the constitutionality of the statutory damages award.
COUNSEL
Becky S. James (argued) and Lisa M. Burnett, Dykema Gossett LLP, Los Angeles,
California; Ryan J. Vanover, Dykema Gossett PLLC, Detroit, Michigan; for
Defendant-Appellant.
J. Aaron Lawson (argued) and Rafey S. Balabanian, Edelson PC, San Francisco,
California; Jay Edelson, Ryan D. Andrews, Benjamin H. Richman, and Ryan D.
Andrews, Edelson PC, Chicago, Illinois; Greg S. Dovel and Simon Franzini, Dovel
& Luner, Santa Monica, California; Scott F. Kocher, Forum Law Group LLP,
Portland, Oregon; for Plaintiff-Appellee.
TALLMAN, Circuit Judge:
Lori Wakefield, seeking to represent herself and a now certified class of
similarly situated individuals, initiated this action against ViSalus, Inc. under the
Telephone Consumer Protection Act (“TCPA”), alleging that ViSalus unlawfully
sent her and the other class members automated telephone calls featuring an
artificial or prerecorded voice message without prior express consent. See 47
U.S.C. § 227(b)(1). During the relevant timeframe, the Federal Communications
Commission (“FCC”) rules were amended to define “prior express consent” to
require, among other things, a written disclosure explicitly stating that, by
providing a signature and phone number, the recipient consented to receive calls
featuring an artificial or prerecorded voice. See 16 C.F.R. § 310.4(b)(1)(v)(a)(i).
Wakefield and other class members (“Plaintiffs”) had signed up with
ViSalus to purchase or sell purported weight-loss products. When their interest as
customers or promoters waned, ViSalus sought to get their continued participation
through targeted robocalls. Wakefield then brought federal statutory claims in
response to these calls.
Because ViSalus did not provide the required written disclosures to
Plaintiffs before making the calls at issue, ViSalus petitioned the FCC for a
retroactive waiver of the written prior express consent rule. ViSalus did not,
however, plead prior express consent as an affirmative defense. After a three-day
2
trial the jury returned a verdict against ViSalus, finding that it sent 1,850,440
prerecorded calls in violation of the TCPA. Because the TCPA sets the minimum
statutory damages at $500 per call, the total damage award against ViSalus was
$925,220,000.
Nearly two months later, the FCC granted ViSalus a retroactive waiver of
the heightened written consent and disclosure requirements. ViSalus then filed
post-trial motions to decertify the class, grant judgment as a matter of law, or grant
a new trial on the ground that the FCC’s waiver necessarily meant ViSalus had
consent for the calls made. Alternatively, ViSalus filed a post-trial motion
challenging the $925,220,000 statutory damages award as being unconstitutionally
excessive. The district court denied these motions, and ViSalus timely appealed.
We have jurisdiction pursuant to 28 U.S.C. § 1291 and we affirm the district
court’s refusal to decertify the class, grant judgment as a matter of law, or grant a
new trial, but we reverse and remand to the district court for further proceedings
regarding the constitutionality of the nearly one-billion-dollar statutory damages
award.1
1
ViSalus filed a motion requesting the panel to take judicial notice of
(1) the FCC’s notice seeking public comment on ViSalus’s petition for retroactive
waiver; (2) Wakefield’s petition for reconsideration submitted to the FCC; and (3)
the FCC’s order denying Wakefield’s petition for reconsideration. ViSalus argues
that notice should be taken of these documents because they are public records
3
I
A
“Americans . . . are largely united in their disdain for robocalls,” and the
Federal Government has received a “staggering” number of complaints about
robocalls in recent years. Barr v. Am. Ass’n of Pol. Consultants, Inc., 140 S. Ct.
2335, 2343 (2020). In response to the public’s disdain for these calls, and the
“nuisance” and “invasion of privacy” that they produce, Congress passed the
Telephone Consumer Protection Act of 1991 (“TCPA”). Pub. L. 102-243, § 2(5),
(6), (10), 105 Stat. 2394 (1991). Under the TCPA, it is unlawful for any person to
initiate a telephone call using any “automatic telephone dialing system or an
artificial or prerecorded voice” without the “prior express consent” of the recipient.
47 U.S.C. § 227(b)(1)(A). Recipients of calls that violate the TCPA can sue “to
recover for actual monetary loss from such a violation, or to receive $500 in
damages for each such violation, whichever is greater.” Id. § 227(b)(3)(B).
The TCPA is enforced by the FCC, which is authorized by statute to enact
rules to implement the law. See, e.g., id. § 227(b)(2). The TCPA does not define
maintained by the FCC and are relevant to whether Plaintiffs were prejudiced by
ViSalus’s failure to raise a consent defense before trial. Because we conclude that
ViSalus waived a consent defense, see infra, Part II.B, this motion is DENIED as
moot.
4
the phrase “prior express consent.” The FCC’s Orders and Rulings interpret and
clarify the term.
Prior to October 2013, the Orders and Rulings provided that the TCPA’s
prior express consent requirement was satisfied if the recipient voluntarily
provided the caller with his or her phone number to use for a purpose related to the
subject of the calls. See Van Patten v. Vertical Fitness Grp., LLC, 847 F.3d 1037,
1044–46 (9th Cir. 2017) (interpreting In the Matter of Rules & Regulations
Implementing the Tel. Consumer Prot. Act of 1991, 7 FCC Rcd. 8752 (1992)). But
in 2012, the FCC issued a new rule, effective October 16, 2013 (“2012 Rule”), that
required all requests for a recipient’s express consent to include, among other
things, a clear and conspicuous written disclosure informing the recipient that by
providing a telephone number and signature, the person authorizes the caller to
deliver telemarketing calls using an automatic telephone dialing system or an
artificial or prerecorded voice. 16 C.F.R. § 310.4(b)(1)(v)(a)(i); see also In the
Matter of Rules & Regulations Implementing the Tel. Consumer Prot. Act of 1991,
27 FCC Rcd. 1830, 1863 (2012). 2
2
The full text of Section 310.4(b)(1)(v) defines an abusive
telemarketing act or practice to include any outbound telephone call with a
prerecorded message except when:
In any such call to induce the purchase of any good or
service, the seller has obtained from the recipient of the
5
Shortly after the 2012 Rule was issued, two entities petitioned the FCC for
guidance on whether written consents obtained prior to the 2012 Rule’s effective
date were valid even if the writing did not specifically authorize the use of a
prerecorded voice or include other information required by the 2012 Rule. See In
the Matter of Rules & Regulations Implementing the Tel. Consumer Prot. Act of
1991, 30 FCC Rcd. 7961, 8012–14 (2015). In its order of June 18, 2015, the FCC
acknowledged some ambiguity in its 2012 Rule and granted the two petitioners a
retroactive waiver of the Rule. Id. at 8014–15. In short order, seven more entities
petitioned for, and were granted similar retroactive waivers for failure to comply
with the 2012 Rule. See In the Matter of Rules & Regulations Implementing the
Tel. Consumer Prot. Act of 1991, 31 FCC Rcd. 11643 (2016).
call an express agreement, in writing, that: (i) The seller
obtained only after a clear and conspicuous disclosure
that the purpose of the agreement is to authorize the
seller to place prerecorded calls to such person; (ii) The
seller obtained without requiring, directly or indirectly,
that the agreement be executed as a condition of
purchasing any good or service; (iii) Evidences the
willingness of the recipient of the call to receive calls that
deliver prerecorded messages by or on behalf of a
specific seller; and (iv) Includes such person’s telephone
number and signature.
16 C.F.R. § 310.4(b)(1)(v)(A)(i–iv).
6
B
Defendant-Appellant ViSalus is a multi-level marketing company that sells
purported weight-loss products direct to consumers. ViSalus’s success depends on
individuals signing up with ViSalus as either “customers” who only purchase
products, or “promoters” who can also earn rewards by referring ViSalus products
to new customers. Promoters and customers become part of the ViSalus network
by completing an enrollment application. During the relevant time, these
applications asked individuals to voluntarily provide a phone number to ViSalus.
The enrollment applications varied as to what communication options they
provided applicants. Some applications provided checkboxes to indicate the
applicant’s communication preferences—for example, for email, phone, or text
message communications; some provided a check box where the applicant could
indicate a desire to “receive communications from ViSalus regarding special
discounts and promotions;” and some provided no checkbox for communication
preferences at all. None contained any written disclosures that the applicant was,
by responding to inquiries about receiving communications, consenting to future
automated or prerecorded calls from ViSalus.
ViSalus often communicated with its customers and promoters who had
provided a phone number. ViSalus would call promotors for the purpose of
7
sharing promotions, updates, and news, and it would call customers to inform them
about current sales and special promotions.
From 2012 to 2015, ViSalus began systematically placing telephone calls as
part of what it termed a “WinBack” campaign, designed to entice former promoters
and customers to return to or reactivate their ViSalus memberships by offering
promotional pricing on ViSalus products. These calls were initially placed by an
“outreach team.” By 2015, to increase the efficiency of ViSalus’s “outreach,” the
company turned to a “Progressive Outreach Manager” automated system that
allowed it to make tens of thousands of calls with the push of a button. A large
volume of the calls placed using this system featured pre-recorded messages.
Lori Wakefield enrolled to be a ViSalus promoter in 2012, and voluntarily
provided her phone number to ViSalus on her enrollment application. After
discontinuing her relationship with ViSalus a few months later and receiving
written confirmation of the termination of the relationship in March of 2013,
Wakefield had no further contact with the company until April 2015, when she
received five prerecorded audio messages from ViSalus on her home phone as part
of the WinBack Campaign.
C
Wakefield instituted this lawsuit in October 2015, alleging that ViSalus had
violated the TCPA by sending unsolicited telemarketing calls featuring artificial or
8
prerecorded voices without her prior express consent. 3 ViSalus answered the
complaint, alleging that Wakefield could not make out a claim under the TCPA.
ViSalus did not plead that it had consent for the calls it made to Plaintiffs.
After a brief class discovery period, Wakefield moved to certify her TCPA
claims for class treatment. The district court thereafter granted the motion in part,
and certified a class including:
All individuals in the United States who received a
telephone call made by or on behalf of ViSalus: (1)
promoting ViSalus’s products or services; (2) where such
call featured an artificial or prerecorded voice; and (3)
where neither ViSalus nor its agents had any current
record of prior express written consent to place such call
at the time such call was made.
Following certification, ViSalus amended its discovery answers regarding
consent. Roughly two weeks later—and nearly two years after Wakefield first
filed her complaint—ViSalus petitioned the FCC for a retroactive waiver of the
2012 heightened prior express consent requirements. In that petition, ViSalus
asserted that it should be granted a retroactive waiver because it was “similarly
situated” to the nine other petitioners who had already received waivers. ViSalus
3
Wakefield also pleaded that ViSalus had violated regulations
establishing the Do Not Call Registry, 47 U.S.C. § 227(c), and Oregon’s Stop
Calling Law, Or. Rev. Stat. § 646.
9
did not immediately inform either the Court or Wakefield that it had filed the
petition with the FCC.
Nearly nine months after requesting the retroactive waiver, ViSalus brought
to the district court’s attention that it intended to raise consent as a defense at trial.
The district court responded that ViSalus had waived a consent defense by failing
to plead the defense in its answer, and instructed ViSalus to file a motion to amend
its answer if it wanted to raise the issue at trial. ViSalus did file a motion to amend
its answer, but then later withdrew the motion, stating “ViSalus does not claim that
. . . Plaintiff’s or the class’s claims are barred by them giving ViSalus prior express
written consent.”4
The case went to trial in April 2019. Wakefield presented her case over
three days. ViSalus declined to put on any evidence of its own, and instead argued
in closing that Wakefield had not proven her case by a preponderance of the
evidence. The jury returned a verdict against ViSalus, finding that it had placed
1,850,440 calls in violation of the TCPA. Because the TCPA sets minimum
statutory damages at $500 per call, the court ordered ViSalus to pay “an aggregate
4
ViSalus instead stated that it intended to offer evidence of consent to
show that damages should not be trebled. The district court later barred ViSalus
from presenting evidence of consent at the trial, holding that whether damages
should be trebled was an issue reserved for the court, not the jury.
10
amount not to exceed $925,218,000” for the class, and $2,000 for Wakefield
herself.
Nearly two months after the jury issued its verdict, the FCC approved
ViSalus’s petition for a retroactive waiver of the prior express consent rule for all
calls made on or before October 7, 2015. In the Matter of Rules & Regulations
Implementing the Tel. Consumer Prot. Act of 1991, 34 FCC Rcd. 4851, 4856
(2019). ViSalus filed notice with the district court the next day, alerting the court
to the FCC’s decision. ViSalus then moved the district court to decertify the class
and grant judgment as a matter of law, or, alternatively, to grant a new trial on the
ground that the FCC waiver necessarily meant ViSalus had consent for the calls
made. ViSalus additionally filed a motion challenging the “astronomical” statutory
damages award of $925,220,000 as unconstitutionally excessive.
The district court denied ViSalus’s motions. First, the court noted that “for
nearly two years now, ViSalus has known that it petitioned the FCC for a
retroactive waiver, yet ViSalus decided to forego any argument or development of
the record on what the consequences would be if the FCC ultimately granted
ViSalus’s request.” The court pointed to ViSalus’s express disclaimer of any
consent defense and observed that ViSalus had never asked for a stay pending the
FCC’s resolution of its petition. The court also observed that the FCC’s grant of a
retroactive waiver was reasonably foreseeable because it had previously granted
11
nine such waivers to similarly situated companies. Accordingly, the district court
refused to consider the FCC waiver, finding that ViSalus’s failure to assert a
consent defense at trial was unreasonable and that excusing this failure would be
prejudicial to Plaintiffs, who were unable to take discovery on the issue.
Second, the district court refused to reduce the statutory damages award.
The court noted that no Ninth Circuit precedent existed to guide lower courts in
reducing statutory damages awards that are found to be unconstitutionally
excessive. The court further reasoned that it was within Congress’s discretion to
fix damages for a violation of the TCPA at $500, and that due process did not
require the court to consider the constitutionality of the statutory damages award in
the aggregate. This appeal timely followed.
II
ViSalus raises three issues on appeal: (1) whether Plaintiffs can establish a
concrete injury in fact under Article III; (2) whether ViSalus’s failure to assert a
consent defense at trial is excused because the FCC’s retroactive waiver
constituted an intervening change in law; and (3) whether the $925,220,000
aggregate damages award violates due process because it is unconstitutionally
excessive. We address each issue in turn.
12
A
ViSalus argues for the first time on appeal that Wakefield and other
members of the certified class lack Article III standing to sue. We review this
issue de novo, see Carroll v. Nakatani, 342 F.3d 934, 940 (9th Cir. 2003), and hold
that Plaintiffs have standing to bring this suit.
Article III limits federal judicial power to “Cases” and “Controversies,” U.S.
Const. art. III, § 2, and the Article III standing doctrine “limits the category of
litigants empowered to maintain a lawsuit in federal court to seek redress for a
legal wrong.” Spokeo, Inc. v. Robins, 578 U.S. 330, 338 (2016). To show Article
III standing, “[t]he plaintiff must have (1) suffered an injury in fact, (2) that is
fairly traceable to the challenged conduct of the defendant, and (3) that is likely to
be redressed by a favorable judicial decision.” Id. A plaintiff establishes an injury
in fact if the plaintiff suffered “‘an invasion of a legally protected interest’ that is
‘concrete and particularized’ and ‘actual or imminent, not conjectural or
hypothetical.’” Id. at 339 (quoting Lujan v. Defs. of Wildlife, 504 U.S. 555, 560
(1992)). An injury qualifies as “concrete” if it is “real” rather than “abstract”—
that is, “it must actually exist.” Id. at 340.
Here, ViSalus contends that Plaintiffs lack standing because Wakefield
“failed to meet her burden to prove any class member suffered a concrete injury in
fact resulting from ViSalus’s alleged violation of the TCPA.” But Plaintiffs allege
13
an injury from the receipt of unwanted telephone calls, and we have previously
held in Van Patten v. Vertical Fitness Group that the receipt of “[u]nsolicited
telemarketing phone calls” is “a concrete injury in fact sufficient to confer Article
III standing.” 847 F.3d at 1043; see also Chennette, et al. v. Porch.com, Inc., et
al., No. 20-35962, slip op. at 7 (9th Cir. Oct. 12, 2022).5 Plaintiffs therefore have
standing.
ViSalus begrudgingly acknowledges, as it must, that under Van Patten the
receipt of telephone calls in alleged violation of the TCPA is a concrete injury for
Article III purposes. ViSalus nevertheless insists that Van Patten no longer
controls in light of the Supreme Court’s recent decision in TransUnion LLC v.
Ramirez, 141 S. Ct. 2190 (2021). We are unpersuaded.
In TransUnion, the Supreme Court reaffirmed the preexisting rule that an
intangible injury qualifies as “concrete” when that injury bears a “close
relationship to harms traditionally recognized as providing a basis for lawsuits in
American courts.” Id. at 2204; see also Spokeo, 578 U.S. at 340 (“In determining
5
Many of our sister circuits have reached the same conclusion. See
Cranor v. 5 Star Nutrition, LLC, 998 F.3d 686, 690–92 (5th Cir. 2021); Gadelhak
v. AT&T Servs., Inc., 950 F.3d 458, 461–63 (7th Cir. 2020); Golan v.
FreeEats.com, Inc., 930 F.3d 950, 958–59 (8th Cir. 2019); Melito v. Experian
Mktg. Sols., Inc., 923 F.3d 85, 93–94 (2d Cir. 2019); Krakauer v. Dish Network,
LLC, 925 F.3d 643, 653 (4th Cir. 2019); Susinno v. Work Out World Inc., 862 F.3d
346, 350–52 (3d Cir. 2017); but see Salcedo v. Hanna, 936 F.3d 1162, 1169–73
(11th Cir. 2019).
14
whether an intangible harm constitutes injury in fact, both history and the judgment
of Congress play important roles.”). TransUnion therefore strengthens the
principle that an intangible injury is sufficiently “concrete” when (1) Congress
created a statutory cause of action for the injury, and (2) the injury has a close
historical or common-law analog. 141 S. Ct. at 2204–07. This approach is the
very same one we applied in Van Patten, when we looked to the Restatement of
Torts’ discussion of privacy torts and the widespread recognition among states of
the right to privacy as evidence of a common-law analog to privacy violations.
847 F.3d at 1043. We also considered Congress’s judgment that such violations
are “legally cognizable injuries” when creating a remedy for unsolicited calls under
the TCPA. Id. (quoting Spokeo, 578 U.S. at 340). Our analysis in Van Patten
therefore not only survives TransUnion—it is strengthened by it.
Applying the test from TransUnion and Van Patten to the facts of this case,
Plaintiffs have suffered a concrete injury in fact. First, Congress has created a
statutory cause of action allowing Plaintiffs to sue. See 47 U.S.C. § 227(b)(1), (3).
Second, Plaintiffs have asserted an injury with a close historical and common-law
analog, since the receipt of unsolicited phone calls closely resembles traditional
claims for “invasions of privacy, intrusion upon seclusion, and nuisance.” Van
15
Patten, 847 F.3d at 1043.6 Because the receipt of “unsolicited telemarketing phone
calls” is “a concrete injury in fact,” id., Plaintiffs have Article III standing to sue.7
B
ViSalus argues that the district court erred in refusing to consider the FCC’s
retroactive waiver when ruling on ViSalus’s motions to decertify the class, grant
judgment as a matter of law, or grant a new trial. Because ViSalus waived a
consent defense and no intervening change in law excuses this waiver, we
disagree.
6
See also Cranor, 998 F.3d at 691–92 (discussing common-law public
nuisance); Gadelhak, 950 F.3d at 462 (drawing a comparison to intrusion upon
seclusion); Golan, 930 F.3d at 959 (discussing the law of nuisance); Melito, 923
F.3d at 93 (agreeing with the comparison in Van Patten and Susinno to nuisance,
intrusion upon seclusion, and privacy invasion torts); Krakauer, 925 F.3d at 653(discussing intrusion upon seclusion as an example of long standing private law
protections for “privacy interests in the home”); Susinno, 862 F.3d at 351–52
(focusing on intrusion upon seclusion); cf. Restatement (Second) of Torts § 652B
(Am. L. Inst. 1977) (discussing intrusion upon seclusion).
7
ViSalus also argues that standing is lacking because Plaintiffs
consented to ViSalus’s telephone calls, and “there is no harm that traditionally
serves as the basis for litigation in American courts that is analogous to receiving a
telephone call for which one consented.” But determining whether Plaintiffs
consented to ViSalus’s calls requires an analysis of the merits of Plaintiffs’ TCPA
claim. See Van Patten, 847 F.3d at 1044 (“Express consent is . . . an affirmative
defense for which the defendant bears the burden of proof.”). Because the
“threshold inquiry into standing ‘in no way depends on the merits,’” Whitmore v.
Arkansas, 495 U.S. 149, 155 (1990) (quoting Warth v. Seldin, 422 U.S. 490, 500
(1975)), this argument fails.
16
As a preliminary matter, the district court properly concluded that ViSalus
had waived a consent defense. “Express consent is . . . an affirmative defense for
which the defendant bears the burden of proof,” Van Patten, 847 F.3d at 1044, and
a “defendant’s failure to raise an ‘affirmative defense’ in his answer effects a
waiver of that defense.” In re Adbox, Inc., 488 F.3d 836, 841 (9th Cir. 2007); see
also Fed. R. Civ. Pro. 8(c). Here, ViSalus did not raise consent as a defense in its
answer. And although ViSalus filed a motion to amend its answer to assert this
defense, ViSalus withdrew that motion and did not seek to amend again.
The district court also properly concluded that the FCC’s grant of ViSalus’s
petition did not excuse ViSalus’s waiver of its consent defense. When a defendant
fails to adequately plead an affirmative defense “an exception to the waiver rule
exists for intervening changes in the law.” Big Horn Cnty. Elec. Co-op., Inc. v.
Adams, 219 F.3d 944, 953 (9th Cir. 2000) (citing Curtis Publ’g Co. v. Butts, 388
U.S. 130, 142–43 (1967)). For this exception to apply, however, the defendant
must show that the defense, if timely asserted, would have been futile under
binding precedent. Bennett v. City of Holyoke, 362 F.3d 1, 7 (1st Cir. 2004). This
requirement rests on the principle underlying the intervening change in law
exception, that a “waiver” requires the “intentional relinquishment or abandonment
of a known right,” United States v. Olano, 507 U.S. 725, 733 (1993) (quoting
Johnson v. Zerbst, 304 U.S. 458, 464 (1938)), and a defendant cannot be deemed
17
to waive the right to assert a defense if the defendant reasonably did not know the
defense was available at the time of the purported waiver. Accordingly, the
exception for an intervening change in law only “protect[s] those who, despite due
diligence, fail to prophesy a reversal of established adverse precedent.” GenCorp,
Inc. v. Olin Corp., 477 F.3d 368, 374 (6th Cir. 2007).
Here, ViSalus does not qualify for protection under the intervening change
in law exception. Even if the FCC’s retroactive waiver of the 2012 Rule did
constitute a change in law, ViSalus always reasonably knew, or should have
known, that the FCC was quite likely to grant its petition. As the district court
concluded, the nine waivers the FCC previously granted “foreshadowed the FCC’s
decision to grant ViSalus’s petition such that ViSalus was not taken by surprise
when its petition was granted.” Aware of these prior waivers, ViSalus knew that a
consent “defense was fairly available.” Bennett, 362 F.3d at 7. Yet ViSalus made
no effort to assert the defense, develop a record on consent, or seek a stay pending
the FCC’s decision. In the words of the district court,
[t]his was not an instance in which a court, or, in this
case, an agency, deviated from longstanding precedent in
creating new law. Rather, the FCC, consistent with its
string of nine prior waivers, granted ViSalus’s petition
for waiver just as ViSalus requested. ViSalus got exactly
what it asked for.
Moreover, if ViSalus was truly unsure about whether or when the FCC
would grant its Petition, then it should have asked the district court to stay the
18
litigation pending the FCC’s ruling. Instead, ViSalus made the strategic litigation
decision to proceed to trial and defend on the ground that Plaintiffs had not proven
their prima facie case by a preponderance of the evidence. Whether or not
ViSalus’s choice was wise with the benefit of hindsight, Federal Rules 50 and 59
do not exist to overturn “informed and presumptively strategic decisions on
appeal.” See GenCorp, 477 F.3d at 374 (discussing the intervening-change-in-law
exception in the context of Rule 60(b)(6)).
For these reasons, we hold that the district court did not err in refusing to
consider the FCC’s retroactive waiver of the 2012 Rule when ruling on ViSalus’s
motions.
C
ViSalus last argues that the Due Process Clause of the Fifth Amendment
requires a reduction of the $925,220,000 statutory damages award. Whether a
damages award violates due process is a question of law that we review de novo.
See Swinton v. Potomac Corp., 270 F.3d 794, 802 (9th Cir. 2001).
ViSalus does not challenge the TCPA’s statutory framework as to the $500
amount for a single violation; several courts have held that the TCPA’s $500 civil
remedy in isolation does not violate due process on a per violation basis. 8 Instead,
8
See, e.g., Centerline Equip. Corp. v. Banner Pers. Serv., 545 F. Supp.
2d 768, 777–78 (N.D. Ill. 2008); Acct. Outsourcing, LLC v. Verizon Wireless Pers.
19
ViSalus argues that even if the TCPA’s statutory penalty of $500 per violation is
constitutional, an aggregate award of $925,220,000 in this class action case is so
“severe and oppressive” that it violates ViSalus’s due process rights.
Juries and legislatures enjoy broad discretion in awarding damages. The due
process clauses of the Constitution, however, set outer limits on the magnitude of
damages awards. In recent years, numerous cases have outlined criteria for
evaluating when punitive damages awarded by a jury exceed constitutional
limitations. See, e.g., TXO Prod. Corp. v. All. Res. Corp., 509 U.S. 443 (1993);
BMW of North America v. Gore, 517 U.S. 559 (1996); State Farm Mut. Auto. Ins.
Co. v. Campbell, 538 U.S. 408 (2003). How the Constitution limits the award of
statutory damages is less developed.
Such constitutional due process concerns are heightened where, as here,
statutory damages are awarded as a matter of strict liability when plaintiffs are
unable to quantify any actual damages they have suffered from receiving the
robocalls. See Parker v. Time Warner Ent. Co., 331 F.3d 13, 22 (2d Cir. 2003);
see also Alea London Ltd. v. Am. Home Servs., Inc., 638 F.3d 768, 776 (11th Cir.
2011) (“[The] TCPA is essentially a strict liability statute.”). Under this strict
Commc’ns, L.P., 329 F. Supp. 2d 789, 808–10 (M.D. La. 2004); Texas v. Am.
Blastfax, Inc., 121 F. Supp. 2d 1085, 1090–91 (W.D. Tex. 2000); Kenro, Inc. v.
Fax Daily, Inc., 962 F. Supp. 1162, 1165–67 (S.D. Ind. 1997).
20
liability standard, a court must evaluate an award of statutory damages “with due
regard for the interests of the public, the numberless opportunities for committing
the offense, and the need for securing uniform adherence” to the statute. St. Louis,
I. M. & S. Ry. Co. v. Williams, 251 U.S. 63, 67 (1919).
Over a century ago, the Supreme Court declared that damages awarded
pursuant to a statute violate due process only if the award is “so severe and
oppressive as to be wholly disproportioned to the offense and obviously
unreasonable.” Williams, 251 U.S. at 67. The Supreme Court first announced the
principle that statutory damages may exceed constitutional limitations in certain
extraordinary circumstances in a case prior to Williams, Waters-Pierce Oil Co. v.
State of Texas. 212 U.S. 86, 111 (1909). Waters-Pierce observed “[t]he fixing of
punishment for crime or penalties for unlawful acts against its laws is within the
police power of the state. We can only interfere with such legislation and judicial
action of the states enforcing it if the fines imposed are so grossly excessive as to
amount to a deprivation of property without due process of law.” Id.Williams, reviewing the award of damages under an Arkansas statute
prescribing penalties for railroads and other common carriers for charging more
than the lawfully provided rate, extended the logic of Waters-Pierce beyond
excessive civil fines to general statutory damages. Williams, 251 U.S. at 66.
Williams also directed that the constitutional inquiry focus on extreme cases, the
21
proportionality of the award to the “offense” in light of the statute’s goals, and the
overall reasonableness of the award. Id. at 66–67. And Williams stressed that a
constitutional limit would be found only in the rare cases in which the award was
“severe and oppressive,” emphasizing the “wide latitude” possessed by legislatures
in setting statutory penalties and the important government powers inherent in
doing so. Id. at 66–67. Williams ultimately upheld the damages award at issue,
holding the award not “wholly” disproportionate or “obviously” unreasonable in
light of the statute’s important purpose of “securing uniform adherence to
established passenger rates” as well as the “numberless opportunities for
committing the offense.” Id. at 67.
We have recognized the application of Williams to statutory awards on a
per-violation basis, holding “[a] statutorily prescribed penalty violates due process
rights ‘only where the penalty prescribed is so severe and oppressive as to be
wholly disproportioned to the offense and obviously unreasonable.’” United States
v. Citrin, 972 F.2d 1044, 1051 (9th Cir. 1992) (quoting Williams, 251 U.S. at 66–
67). In Citrin, we applied the Williams test to a statutory award of $113,479.11 for
a single violation. Id. at 1051. We reasoned that in the context of the statute at
issue, which specified damages for noncompliance with the terms of a federal
scholarship program placing early-career medical professionals in underserved
areas, the award was “not so unreasonable that [it] violate[s] due process” given
22
“the resources necessary to find a [replacement] doctor to practice” in those
locations. Id.
Since Citrin, courts in this and other circuits have grappled with the
constitutionality of statutory damages awards challenged in the aggregate where
the award is unusually high because of either the large number of violations at
issue in a single dispute or, most relevant to this case, the aggregation of damages
in class action litigation. See, e.g., Golan, 930 F.3d at 962–63; Parker, 331 F.3d at
22; Montera, 2022 WL 3348573, at *4–5.9 In Bateman v. American Multi-
Cinema, Inc., 623 F.3d 708, 723 (9th Cir. 2010), we reserved the question whether
an aggregated statutory damages award could violate due process. We now hold
that, pursuant to Williams, aggregated statutory damages awards are, in certain
extreme circumstances, subject to constitutional due process limitations.
Several considerations support the application of the Williams constitutional
due process test to aggregated statutory damages awards even where the prescribed
per-violation award is constitutionally sound. First, although Williams did not
address an aggregated damages award, the logic of the case does not turn on the
amount of the per-violation penalty. 251 U.S. at 66–67. Rather, Williams suggests
9
At least one California district court has discussed application of the
Williams test to an aggregated damages award in the TCPA context. See Perez v.
Rash Curtis & Assocs., No. 4:16-CV-03396-YGR, 2020 WL 1904533, at *9 (N.D.
Cal. Apr. 17, 2020).
23
a general reasonableness and proportionality limit on damages awarded pursuant to
statutes, taking into account statutory goals. Williams imposes a constitutional
limit on damages that are “so severe and oppressive” as to no longer bear any
reasonable or proportioned relationship to the “offense.” Id. at 67. Williams did
not consider an “offense” narrowly; rather, the Court evaluated the importance of
the proscribed conduct (overcharging fares) and the likelihood of violations, which
the Court found to be high, noting the “numberless opportunities for committing
the offense.” Id. Thus, evaluation of an award’s relationship to the “offense”
requires consideration of the statute’s public importance and deterrence goals. An
aggregated award could, like a per-violation award, be wholly disproportioned to
the prohibited conduct (and its public importance) and greatly exceed any
reasonable deterrence value. Thus, where aggregation has resulted in
extraordinarily large awards wholly disproportionate to the goals of the statute,
Williams implies a constitutional limit may require reduction.
Second, the goals of a statute in imposing a per-violation award may become
unduly punitive when aggregated. And statutory penalties, unlike jury awards, are
not generally disaggregated by purpose. Indeed, most statutes combine deterrence,
compensatory, and punitive goals into a single lump sum per violation: “Although
statutory damages amounts might be calculated in part to compensate for actual
losses that are difficult to quantify, they are often also motivated in part by a
24
pseudo-punitive intention to ‘address and deter overall public harm.’” Parker, 331
F.3d at 26 (Newman, J., concurring) (quoting Texas v. Am. Blastfax, Inc., 121 F.
Supp. 2d 1085, 1090 (W.D. Tex. 2000)).
Compensation and deterrence aims can be overshadowed when damages are
aggregated, leading to damages awards that are largely punitive and untethered to
the statute’s purpose. In Parker, the Second Circuit observed that aggregated class
action damages and per-violation statutory penalties were both intended, in part, to
create incentives for litigation. Coupled, they have the capacity to “expand the
potential statutory damages so far beyond the actual damages suffered that the
statutory damages come to resemble punitive damages.” Id. at 22; see also
Montera, 2022 WL 3348573, at *1 (“The statutory damages in this case veer away
from serving a compensatory purpose and towards a punitive purpose”).
We have similarly observed that deterrence and compensation rationales lose
force in certain large, aggregated awards. In Six (6) Mexican Workers v. Arizona
Citrus Growers, for example, we reviewed an aggregated damages award in a class
action lawsuit for violations of the Farm Labor Contractor Registration Act
(“FLCRA”) and found that the individual awards exceeded both “what was
necessary to compensate any potential injury from the violations” and the awards,
in the aggregate, exceeded “that necessary to enforce the Act or deter future
violations.” 904 F.2d 1301, 1309 (9th Cir. 1990). In short, aggregation can, in
25
extreme circumstances, result in awards that may greatly outmatch any statutory
compensation and deterrence goals, resulting in awards that are largely punitive.
Where a statute’s compensation and deterrence goals are so greatly
overshadowed by punitive elements, constitutional due process limitations are
more likely to apply. Although we decline to apply the Supreme Court’s tests
developed in the line of cases including BMW of North America, 517 U.S. 559, and
State Farm, 538 U.S. 408, outside the context of a jury’s award of punitive
damages, by analogy these cases teach that where statutory damages no longer
serve purely compensatory or deterrence goals, consideration of an award’s
reasonableness and proportionality to the violation and injury takes on heightened
constitutional importance. See TXO Prod. Corp., 509 U.S. at 458 (noting that
“reasonableness” is the focus of a due process inquiry regarding punitive
damages); BMW of North America, 517 U.S. at 580–81 (discussing the “ratio”
between a punitive damages award and the “actual harm inflicted on the plaintiff”
as measured through compensatory damages—one of three factors important to a
due process evaluation of a punitive damages award issued by a jury).
We thus conclude that the aggregated statutory damages here, even where
the per-violation penalty is constitutional, are subject to constitutional limitation in
extreme situations—that is, when they are “wholly disproportioned” and
“obviously unreasonable” in relation to the goals of the statute and the conduct the
26
statute prohibits. Williams, 251 U.S. at 67. As with punitive damages awarded by
juries and per-violation statutory damages awards, a district court must consider
the magnitude of the aggregated award in relation to the statute’s goals of
compensation, deterrence, and punishment and to the proscribed conduct.
Six Mexican Workers provides further guidance for determining whether a
particular statutory damages award is disproportionately punitive in the aggregate.
904 F.2d at 1309. In that case, we adopted the factors the Fifth Circuit identified in
Beliz v. W.H. McLeod & Sons Packing Co. to evaluate liquidated damages awards:
1) the amount of award to each plaintiff, 2) the total
award, 3) the nature and persistence of the violations, 4)
the extent of the defendant’s culpability, 5) damage
awards in similar cases, 6) the substantive or technical
nature of the violations, and 7) the circumstances of each
case.
Id. at 1309 (quoting Beliz v. W.H. McLeod & Sons Packing Co., 765 F.2d 1317,
1332 (5th Cir. 1985)).
As the district court noted, Six Mexican Workers addressed a somewhat
different issue than the one we face here: the case dealt with the reduction of
damages per violation to an amount within a statutorily defined range. Id. at 1309–
11. The FLCRA—the statute at issue in Six Mexican Workers—did not
contemplate punitive penalties in the calculation of liquidated damages. Id. at
1309 (citing Alvarez v. Longboy, 697 F.2d 1333, 1340 (9th Cir. 1983)). But many
statutes, like the one at issue here, set a statutory floor for damages, as opposed to a
27
range, and in doing so, reflect punitive as well as compensatory and deterrence
goals. This distinction does not undermine the relevance of the Six Mexican
Workers factors to the constitutional due process test. Six Mexican Workers points
courts to factors to help assess proportionality and reasonableness and so can guide
trial courts in determining when an award is extremely disproportionate to the
offense and “obviously” unreasonable. Williams, 251 U.S. at 67.
We stress that only very rarely will an aggregated statutory damages award
meet the exacting Williams standard and exceed constitutional limitations where
the per-violation amount does not. Legislatures are empowered to prescribe purely
punitive penalties for violations of statutes. In Williams, the Supreme Court made
clear that the statutory damages at issue were “essentially penal, because [they are]
primarily intended to punish the carrier for taking more than the prescribed rate”
and yet the statute was “not contrary to due process of law” because “the power of
the state to impose fines and penalties for a violation of its statutory requirements
is coeval with government.” 251 U.S. at 66 (quoting Mo. Pac. Ry. Co. v. Humes,
115 U.S. 512, 523 (1885)). The Supreme Court, consistent with this reasoning, has
long upheld statutory provisions imposing double or triple damages. See, e.g.,
Overnight Motor Trans. Co. v. Missel, 316 U.S. 572, 584 (1942). Thus, just
because an aggregate award becomes predominantly punitive does not render it
constitutionally unsound.
28
Constitutional limits on aggregate statutory damages awards therefore must
be reserved for circumstances in which a largely punitive per-violation amount
results in an aggregate that is gravely disproportionate to and unreasonably related
to the legal violation committed. Were that not so, applying the Williams test to
reduce aggregated statutory awards would overstep the role of the judiciary and
usurp the power of the legislature. Legislatures, in designing statutes, decide
whether to set a floor or a ceiling for damages and often do so expressly in their
text.10 We are constrained by a statute’s language and interpret statutes with
awareness that Congress could have enacted limits as to damages, including in
large class action litigation, provided discretion to courts to award damages within
a given range, or limited liability in any number of ways.
In Bateman, for example, we noted that “the [Fair and Accurate Credit
Transactions Act (“FACTA”)] does not place a cap on . . . damages in the case of
class actions, does not indicate any threshold at which courts are free to award less
than the minimum statutory damages, and does not limit the number of individuals
that can be certified in a class or the number of individual actions that can be
10
Compare The Fair Debt Collection Practices Act, 15 U.S.C. § 1692k
(a)(2)(A–B), setting a ceiling for damages of $1,000 per individual and “$500,000
or 1 per centum of the net worth of the debt collector” if aggregated in a class
action, with the TCPA, 47 U.S.C. § 227(b)(3)(B), enacting a floor of $500 per
specified violation and not specifying a cap as to aggregated damages; see also
Alvarez, 697 F.2d at 1339–40 (interpreting the FLCRA, 7 U.S.C. § 2050(a) to
impose a $500 ceiling on damages per plaintiff per violation).
29
brought against a single merchant.” 623 F.3d at 718. “In the absence of such
affirmative steps to limit liability,” we held, “we must assume that Congress
intended FACTA’s remedial scheme to operate as it was written.” Id. at 722–23.
As a result, we concluded that to refuse to follow the statute’s text, in that instance
by limiting class action availability to avoid “‘enormous’ potential liability,” would
“subvert congressional intent.” Id. at 723. Because the appropriate penalty for
statutory violations is a legislative decision best left to Congress, courts should
disregard the plain statutory language directing damages and allowing class action
and other aggregation only in the most egregious of circumstances. 11
In the context of the TCPA, Congress permitted recipients of unsolicited
telemarketing calls to “recover for actual monetary loss from such a violation, or to
receive $500 in damages for each such violation, whichever is greater.” 47 U.S.C.
§ 227(b)(3)(B). Congress thus set a floor of statutory damages at $500 for each
violation of the TCPA but no ceiling for cumulative damages, in a class action or
otherwise. Yet, in the mass communications class action context, vast cumulative
damages can be easily incurred, because modern technology permits hundreds of
thousands of automated calls and triggers minimum statutory damages with the
push of a button.
11
Again, Bateman left open the question whether aggregated statutory
damages could be subject to constitutional due process limitations. 623 F.3d at
723.
30
The district court here did not reduce the $925,220,000 statutory damages
award in part because there was little Ninth Circuit authority directing a district
court on how it should analyze damages that may be unconstitutionally excessive
and appropriately reduce them. But Six Mexican Workers does provide some
guidance, and we have endeavored in this opinion to provide more. Because the
court did not apply the Williams test or Six Mexican Workers factors to determine
the constitutionality of the damages award in this case, we remand so the court
may assess in the first instance, guided by these factors and this opinion, whether
the aggregate award of $925,220,000 in this class action case is so severe and
oppressive that it violates ViSalus’s due process rights and, if so, by how much the
cumulative award should be reduced.
IV
We AFFIRM the district court’s denial of ViSalus’s motions to decertify the
class, grant judgment as a matter of law, or grant a new trial, and VACATE and
REMAND the district court’s denial of ViSalus’s post-trial motion challenging the
constitutionality of the statutory damages award to permit reassessment of that
question guided by the applicable factors. Each party shall bear its own costs.
AFFIRMED in part; VACATED in part; and REMANDED with instructions.
31