This article previously appeared on The Consumer Financial Services Blog and is republished here with permission.
The U.S. District Court for the Western District of New York recently held that claims under the federal Telephone Consumer Protection Act (TCPA), 47 U.S.C. § 227, et seq., are penal in nature and therefore do not survive the death of a plaintiff.
In so ruling, the Court held that the TCPA’s provision of damages in the amount of $500 per phone call, which could be trebled up to $1,500, is “wholly disproportionate to the harm suffered.”
Of note, the Due Process Clause of the Fourteenth Amendment of the U.S. Constitution prohibits the imposition of “grossly excessive or arbitrary punishments on a tortfeasor,” and “courts must ensure that the measure of punishment is both reasonable and proportionate to the amount of harm to the plaintiff and to the general damages recovered.” See, e.g., State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408 (2003); BMW of N. Am. v. Gore, 116 S. Ct. 1589 (1996).
A copy of the opinion in Hannabury v. Hilton Grand Vacations Company, LLC is available at: Link to Opinion.
A plaintiff filed a putative class action against a timeshare vacation rental company for allegedly making two unsolicited phone calls to the plaintiff’s cell phone in attempt to sell him timeshare properties. The plaintiff alleged that the defendant used an auto-dialing system to call his cell phone, and that the defendant called twice within 12 months while he was listed on the do-not-call registry.
The plaintiff passed away on Dec. 19, 2015. At the time of his death, the plaintiff had not moved to certify the class.
The plaintiff’s estate filed a motion to substitute the plaintiff’s estate in place of the plaintiff in the action. The defendant opposed the motion, arguing that the TCPA claims did not survive the plaintiff’s death.
As you may recall, the TCPA prohibits parties from making telephone calls to a cell phone using an “automatic telephone dialing system.” 47 U.S.C. § 227(b)(I)(A). In addition, the TCPA prohibits parties from calling a number on the Federal Communications Commission’s do-not-call registry. 47 U.S.C. § 227(c)(5).
The Court began its discussion determining whether state or federal law governed the issue in this motion to substitute. The Court focused on the Supreme Court of the United States’s ruling in Mims v. Arrow Fin. Servs., LLC, 132 S. Ct. 740 (2012), that held that federal courts retain their federal-question jurisdiction over private TCPA claims and therefore federal law governs private TCPA claims in federal court.
The Court then turned to the test for survivorship. The test for survivorship turns on whether the claims are primarily penal or remedial in nature. The Court noted that claims that are remedial in nature survive a plaintiff’s death, but those that are primarily penal do not.
The Court looked to three factors to determine if a civil action is penal or remedial for the purpose of survivability: “(a) whether the purpose of the TCPA claim is to redress individual wrongs or wrongs to the public; (b) whether recovery runs to the individual or to the public and; (c) whether the recovery is disproportionate to the harm suffered.”
Turning to the first factor, whether the purpose of the TCPA claim is to redress individual wrongs or wrongs to the public, the Court found that the purpose of a private action under the TCPA is to redress wrongs to the public, and to deter such conduct.
The Court also noted that the plaintiff did not seek damages for actual monetary loss as a result of receiving the alleged phone calls. As the plaintiff did not seek redress for individual wrongs but rather for wrongs to the public, the Court found the first factor suggests the TCPA claims are penal.
As for the second factor, whether recovery runs to the individual or to the public, the Court found that damages under the TCPA run to the recipient of the alleged call, and not to the public. Thus, the Court held, the second factor suggests the TCPA claims are remedial.
As to the third factor, whether the recovery is disproportionate to the harms suffered, the Court found that a $500 award, which could be trebled up to a total of $1,500, is “wholly disproportionate to the harm suffered.” The Court noted that disproportion of damages deters conduct that violates the TCPA, and also encourages bringing an action to redress violations. Thus, the Court held that the third factor suggests the TCPA claims are penal.
In weighing these factors, the Court held that TCPA claims are penal in nature and do not survive the plaintiff’s death.
Due to the abatement of the TCPA claims, the injunction additionally sought by the plaintiff no longer would benefit him or his estate and is therefore moot.
Lastly, the Court found that as the class was never certified, the plaintiff’s claims were moot, which in turn meant that the entire action becomes moot.
Accordingly, the Court denied the plaintiff’s motion to substitute as the TCPA claims did not survive his death, and dismissed the action as moot.