The Telephone Consumer Protection Act ("TCPA") has two main pillars that provide private rights of action—the right for called or texted parties to sue you for alleged damages. The first pillar, Section 227(b), deals with autodialed, prerecorded, and artificial voice calls. The second, Section 227(c), concerns telephone solicitations to residential telephone subscribers who have placed their numbers on the National Do-Not-Call Registry and company-specific do-not-call requests. You can read more about those two pillars here. One of the common mistakes we see our "commercial litigator" defense-counsel peers making in TCPA cases is going along with the Plaintiff's lawyers' assumption that every TCPA regulation violation carries a private right of action. That's not true. The other is that damages negotiations for alleged DNC violations should start at $500 per violation. Not true either.
In Watson v. Manhattan Luxury Autos., Inc.,1 the United States District Court for the Southern District of New York highlighted one of the major differences between the private rights of action provided by Sections 227(b) and (c): 227(b) sets a minimum statutory damages amount of $500, while under 227(c), the amount of statutory damages is discretionary. Thus, if a plaintiff wins on a 227(b) claim, he or she is automatically entitled to a minimum of $500/violation (subject to due process limits at scale). But if a plaintiff wins on a 227(c) claim, the court or jury could elect to award the plaintiff only $1/violation, because in Subsection 227(c) Congress clearly provided for damages "up to" $500 per violation. Below we discuss the court's holding and the importance of discretionary statutory damages.
Waston v. Manhattan Luxury Autos., Inc.
In Watson, the plaintiff brought a 227(c) claim against the defendant. That section of the TCPA allows a person who has received more than one violating call within the prior 12-month period to "receive up to $500 in damages for each" violation.
The plaintiffs argued that courts have no discretion when awarding damages for a 227(c) claim and must, at a minimum, award $500/violation. The court correctly disagreed. It held that the plaintiff could "recover up to $500/violation," with the jury making that damages determination.
In explaining its holding, the court compared the language of 227(c) and 227(b). 227(b) allows a person who has received a violating call "to receive" $500/violation. The court correctly pointed out that the "up to" language included in 227(c), which is absent from 227(b), is "discretionary language that makes clear that plaintiffs may be awarded less than" $500/violation for a 227(c) claim.
Importance of Watson
If you find yourself the defendant in a TCPA case involving a 227(c) claim, or one of the myriad targets of a would-be litigant threatening to sue if you don't offer them a sufficiently generous private pay-off, it is important to remember Watson's lesson: the amount of statutory damages potentially available to the plaintiff is discretionary, up to $500. This is especially important if the case is filed as a class action. For example, if the class constitutes 1,000 people, each of whom received two allegedly violating calls (because DNC claims require more than one violation in a 12-month window), that means the court or jury has the discretion to award between $0 and $1,000,000 (assuming, of course, they have a private right of action for that specific violation, they can prove it, etc. etc.). But if the case involved a 227(b) claim, the court or jury has to award $1,000,000 ($500/violation), at a minimum (subject, again, to due process caps).
Under both 227(b) and 227(c), the court has the discretion to increase the damages up to triple the amount initially awarded, if it finds that defendant committed the violation(s) willfully or knowingly. This highlights the importance of complying with the TCPA when making any calls, especially when making autodialed or prerecorded/voice message calls. The good news is the Eleventh Circuit just struck down the FCC's new one-to-one consent rule (here you can read about that decision). For these purposes, the next time you get the demand letter or complaint that simply assumes the bidding starts at $500, Watson is a great reminder of why we push back.
Footnote
1. 20 Civ. 4572 (LGS), 2025 U.S. Dist. LEXIS 13042 (S.D.N.Y. Jan. 24, 2025).
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