Willful or Knowing Violation of the TCPA: Treble Damages and What Businesses Should Know

A U.S. District Court signaled that deterrence was a significant factor in awarding treble damages in a Telephone Consumer Protection Act ("TCPA") lawsuit. The United States District Court for the Middle District of North Carolina Judge Catherine C. Eagles (the "Court") denied to reduce or set aside a $61 million judgment against Dish Network LLC ("Dish") for violating the TCPA.[1] Businesses should pay attention to this case because TCPA lawsuits are attractive to class action plaintiffs' counsel due to the statutory damages, $500 per violation (that is per call/text) or up to triple the amount for "willful or knowing" violations – which could mean a whopping $1,500 per violation. The TCPA statute leaves it up to the court to decide what is a knowing or willful, so any time a court finds a knowing or willful violation it could make it easier for other plaintiffs to get large awards. The two issues before this Court were (i) whether the recent judgment of the United States District Court for the Central District of Illinois in United States v. Dish Network, LLC, No. 3:09-3073 (C.D. Ill.) ("Illinois Action"), constitutes res judicata (the principal that a final judgment on the merits of an action prevents the parties from relitigating issues) and (ii) in light of the Illinois Action, whether the damages award of $1,200 per violation (tripled from $400 awarded by the jury), here, is excessive and duplicative under the Due Process Clause.

In June, the Illinois Action filed by the federal government and certain states, resulted in a $280 million civil penalty against Dish. This $280 million was actually a reduced amount, which the Illinois court based on 20 percent of Dish’s annual 2016 profits. The Illinois court stated that this "is a small percentage of the $2.1 billion requested by the Plaintiffs and a miniscule fraction of maximum possible penalties and damages." However, here, in the North Carolina Court's decision earlier this month, the Court rebuked Dish's arguments to avoid the treble damages stating that Dish committed legal gamesmanship and continued over a long period of time to violate the TCPA. The crux of this Court's decision relied heavily on deterring Dish from committing future TCPA actions "and to give appropriate weight to the scope of the violations." Explaining its reasoning, the Court stated:

"The treble damages here reflect the reprehensibility of a telemarketer’s conduct in repeatedly invading the privacy of thousands of consumers on the Registry when that telemarketer has a long history of ignoring its responsibilities under federal law, repeatedly broke its promise to numerous state Attorney Generals that it would monitor and enforce compliance with the telemarketing laws, and willfully violated the TCPA thousands of times. See Doc. 338 at 10-12, 14-15, 17-20. The treble damages are not 'grossly excessive,' but necessary for deterrence in light of Dish’s actions."

The Court did not agree with Dish's characterization of the treble damages award as unlawfully punishing Dish based on past compliance issues. The Court stated that the trial evidence made it clear that the noncompliance "continued over the course of many years," and that "Dish’s past violations make Dish’s violative conduct here more reprehensible and increase the need for deterrence."

Regarding the res judicata argument, the Court listed several actions that Dish took during the proceedings and generally stated that "Dish never moved to dismiss, asked for a stay, sought a transfer, or otherwise informed the Court that the Illinois Action was duplicative of or identical to the class members’ claims." The Court also stated that ". . . Dish resisted the plaintiffs’ efforts to apply collateral estoppel, represented to the Court that the Illinois Action 'involve[ed] a different statute, different issues, and different plaintiffs,' and agreed that the Illinois Action would not bind the plaintiffs in this case." It determined that "Dish should not 'gain [a] tactical advantage' when it is the one who has changed its tune on the res judicata issue." (quoting Matter of Super Van, Inc., 92 F.3d 366, 371 (5th Cir. 1996))

Repeating the notion of deterrence, the Court stated that "Dish has presented no evidence to this Court that the size of the judgment in the Illinois Action will affect its financial situation in a way that will provide sufficient deterrence" and then the court analyzed Dish's profits. "It is not , 'grossly excessive' to require Dish to pay treble damages for the more than 50,000 willful violations it committed, given the nature of the privacy interests repeatedly invaded and Dish’s continuing disregard for those interests, the extent of the violations, and the need to advance reasonable governmental interests in deterring future violations. Ex rel. Drakeford, 792 F.3d at 389."

What businesses should know.

So, what do these decisions mean for businesses that make marketing calls or text messages?

According to one Circuit Court, "the intent for treble damages does not require any malicious or wanton conduct, but rather is satisfied by merely 'knowing' conduct."[2] Courts have found that willful or knowing include when a company continued to call even after a customer filed lawsuit alleging the calls violated the TCPA[3], where the company knew that it was calling wrong person but continued calling regardless of that knowledge (which was another action against Dish)[4], and continuing to call a mobile phone to try to collect debt even after plaintiff informed the company that it had the wrong number[5].

On the other hand, a court found that the caller was not willful or knowing when the company did not know that the telephone number was assigned to a cellular telephone[6]; in addition, it is not always easy for plaintiffs to prove to the court that the violation was willful or knowing, and, according to some courts, the plaintiff must allege facts or present evidence to show knowledge or willfulness.[7]

Here, the North Carolina Court seems to want to deter what it perceives as a bad actor from making unwanted telemarketing calls to consumers, while the Illinois court made sure that the judgment was not so high as to put Dish out of business and stated that "Payment of the award will not unreasonably affect Dish’s ability to operate." Both of these could be seen as a positive sign for certain companies. Under the North Carolina Court's logic companies that have never been subject to a TCPA suit or action would be less likely to be found to be subject to the treble damages award. In addition, taking a company's finances into account, as the Illinois court did, could save certain companies from financial ruin.

However, if other courts follow the North Carolina Court's reasoning that deterrence is a key factor in determining whether to apply treble damages, this could lead those courts to find that defendants willfully or knowingly violated the TCPA, and could mean bigger awards. With these large awards and the fact that willful or knowing is left up to the court's discretion, is it even more important that businesses ensure that its calls and texts are TCPA compliant. For most companies the best way to do this is to educate the business and marketing teams with a set of compliance guidelines specifically tailored to their business.

[1] Krakauer v. Dish Network, LLC, No. 1:14-CV-333, 2017 WL 4417957 (M.D.N.C. Oct. 3, 2017).

[2] See Alea London Ltd. v. Am. Home Servs., Inc., 638 F.3d 768, 776 (11th Cir. 2011).

[3] See King v. Time Warner Cable, 113 F. Supp. 3d 718, 727 (S.D.N.Y. 2015).

[4] See Moore v. Dish Network L.L.C., 57 F. Supp. 3d 639, 657 (N.D.W. Va. 2014).

[5] See Olney v. Progressive Cas. Ins. Co., 993 F. Supp. 2d 1220, 1227 (S.D. Cal. 2014); see also Harris v. World Fin. Network Nat. Bank, 867 F. Supp. 2d 888, 894–95 (E.D. Mich. 2012).

[6] See Strauss v. CBE Grp., Inc., 173 F. Supp. 3d 1302, 1311 (S.D. Fla. 2016), reconsideration denied, No. 15-62026-CIV, 2016 WL 4402270 (S.D. Fla. June 8, 2016).

[7] See id; see also Lary v. Trinity Physician Fin. & Ins. Servs., 780 F.3d 1101, 1106–07 (11th Cir. 2015).