District Court Overrules Magistrate’s Order Compelling Prior Complaint Information and Related Data in TCPA Class Action

Quicken Loans scored a victory earlier this week when Judge Steven D. Merryday sustained its objection to a magistrate judge’s order compelling production of every shred of documentation in any form about every do-not-call request that Quicken received. See Nece v. Quicken Loans, Inc., No. 8:16-cv-2605-T-23CPT, 2018 U.S. Dist. LEXIS 31346 (M.D. Fla. Feb. 27, 2018).

Quicken was successful in large part because it supplied declarations laying out the extreme burden and cost that a production of this magnitude would place on it.  Quicken established that it could only comply with the request by undertaking a manual search of the requested information, which “would ‘cost hundreds of thousands of dollars (and potentially more),’ would ‘consume hundreds of hours of Quicken Loans’ computer and team member hours,’ and would ‘take many months (if not longer) to complete.’” See Nece, 2018 U.S. Dist. LEXIS 31346 at * 7. The District Court’s decision essentially denied Plaintiff from further discovery and ordered Plaintiff to file its certification motion by mid-April.

Aside from this important holding, in another significant part of the decision – which is hidden in two sentences and a footnote – Judge Merryday alluded that he would likely find that the damages provision of the TCPA violated the Fifth Amendment Due Process clause if it resulted in billions in exposure:

“Nece’s counsel (that is, the prospective class counsel) boldly asserts that the judgment against Quicken in this action “could be multiple billions of dollars.” (Doc. 79 at 10) Of course, several impediments almost certainly foreclose a judgment for “multiple billions of dollars” in this unexceptional TCPA action. See, e.g., U.S. Const. amend V.3

3  See also J. Gregory Sidak, Does the Telephone Consumer Protection Act Violate Due Process as Applied?, 68 Fla. L. Rev. 1403 (2016).”

It is telling that the Judge cites to Gregory Sidak’s article. Gregory Sidak is a Stanford-educated economist and attorney who has been working at the intersection of law and economics for over 35 years. In his article, “Does the Telephone Consumer Protection Act Violate Due Process As Applied?,” he estimates that a recipient’s actual harm is “generally to be between 6.8 cents and 70.87 per violating communication [under the TCPA].” His article argues that the “remainder of the TCPA’s statutory damages is purely punitive. Thus, the punitive component of the TCPA’s statutory damages is between 706 and 22,058 times the actual harm that a violating communication imposes on the recipient.”

Sidak concludes by urging lower courts to “take seriously the possibility that the TCPA’s statutory damages violate the Due Process Clause of the Fifth Amendment as applied.” Judge Merryday clearly has taken notice.

This is in line with the recent ruling in Golan v. Veritas Entertainment, LLC, No. 4:14CV000069 ERW, 2017 U.S. Dist. LEXIS 144501 (E.D. Mo. Sept. 7, 2017), in which the Court reduced a TCPA damages award totaling $1.6BB to a “mere” $32MM in reliance on Constitutional due process principles. Dorsey’s TCPA czar Eric Troutman discussed that decision at some length previously here.

Other courts should start taking notice and closely scrutinize the awards given in TCPA actions given the large exposure and the lack of injury.

Eric Troutman

Eric Troutman

Eric is one of the country’s prominent Telephone Consumer Protection Act (TCPA) defense attorneys, having served as lead defense counsel on over 30 nationwide TCPA class actions and having handled hundreds of individual TCPA cases. He also “wrote the book” on TCPA defense, having co-authored the nation’s first comprehensive practice guide on the subject. In addition, he has helped spearhead the banking industry’s push for TCPA clarity before the Federal Communications Commission and has assisted on numerous appeals addressing hot-button TCPA issues.

Nicole Su

Nicole Su

Nicole is an associate in the firm’s Southern California office. Her practice focuses on commercial and financial services litigation with emphasis in the Telephone Consumer Protection Act (TCPA).

Nicole approaches her practice in a pragmatic manner. She understands that the clients’ goals and needs are central to advocating successfully on their behalf. She is passionate about helping her clients resolve their concerns in an effective and efficient manner.

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