Wakefield v. ViSalus, Inc.

• Docket Number: 21-35201
• Decision Date: 20 October 2022
• Citation: 51 F.4th 1109
• Parties: Lori WAKEFIELD, individually and on behalf of all others similarly situated, Plaintiff-Appellee, v. VISALUS, INC., a Nevada corporation, Defendant-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

51 F.4th 1109

Lori WAKEFIELD, individually and on behalf of all others similarly situated, Plaintiff-Appellee,

v.VISALUS, INC., a Nevada corporation, Defendant-Appellant.

No. 21-35201

United States Court of Appeals, Ninth Circuit.

Argued and Submitted May 11, 2022 Portland, Oregon

Filed October 20, 2022

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.

Before: Marsha S. Berzon, Richard C. Tallman, and Morgan Christen, Circuit Judges.

OPINION

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 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

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. , ––– U.S. ––––, 140 S. Ct. 2335, 2343, 207 L.Ed.2d 784 (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 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

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).

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 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 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)

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