On The Case

Revenge of the robocall recipients: Jury finds marketer ViSalus liable for 1.8 million calls

(Reuters) - The key moment in a three-day class action trial accusing the nutritional supplement marketer ViSalus of violating the Telephone Consumer Protection Act came early, according to Greg Dovel of Dovel & Luner, whose firm led the trial for the class. As the second witness to testify, named plaintiff Lori Wakefield, who signed up in 2012 to sell ViSalus products but quickly ended her affiliation with the company, told jurors last week that she had received four automated calls from ViSalus on her home telephone line.

ViSalus lawyers from Quarles & Brady pressed her hard about those alleged calls. “They really wanted to establish that she did not receive prerecorded calls,” Dovel told me. “But at the end of her testimony, everyone knew she did.”

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Class counsel from Dovel’s firm and Edelson considered Wakefield’s testimony crucial. ViSalus, represented by Quarles & Brady and Miller Nash Graham & Dunn, denied using an automated phone system for marketing calls, and jurors had indicated in voir dire that they wanted to hear Wakefield describe the calls she received. “It would have been a tremendous blow if the jury found she had no proof of her claims,” Dovel said.

Jurors believed Wakefield. On Friday, the Portland, Oregon, jury of seven women and one man concluded that Wakefield received four phone calls from ViSalus that violated the TCPA – and that the class Wakefield represents had received a grand total of 1.85 million improper robocalls.

Statutory damages for TCPA violations are $500 per call, exposing the privately-owned ViSalus to statutory damages of about $925 million. Those potential damages could be trebled if U.S. District Judge Michael Simon of Portland determines that ViSalus, which once claimed annual revenue of $1 billion, deliberately breached the TCPA.

ViSalus lead counsel John O’Neal said in an email that the company believes the class failed to prove essential elements of its claim, noting that jurors said on their verdict sheet that they could not delineate between calls made to residential landlines and those made to cellphones. O’Neal said that jury finding will be at the heart of ViSalus’ post-trial briefs challenging the verdict and urging the judge not to award any damages.

The company has also argued that Judge Simon should have excluded plaintiffs’ analysis of how many automated calls were at issue in the case and that individual questions about the calls overwhelm classwide issues.

“Whether there will even be a damages award, whether the class should now be decertified as a result of the jury’s answers, and motions for judgment in favor of defendant will be the subject of further proceedings in the coming weeks and months,” he said. “Using a sports analogy, we are at best at half-time in this case.”

If Judge Simon were to award only statutory damages for all of ViSalus’ allegedly improper calls, the judgment would be not just the largest in TCPA history but also the biggest-ever judgment in a privacy case, said class counsel Rafey Balabanian of Edelson. “The company was banking on the idea that a jury wouldn’t give credence to privacy claims,” he said. “Defendants underestimated how much the public cherishes privacy.”

ViSalus conceded long before trial that the company used an automated phone system to place autodialed calls. The class alleged the company used the robocalling systems to contact promoters who had stopped selling its products. An in-house expert from Edelson used ViSalus’ own data, according to Dovel, to figure out how many calls went through to residential landlines or mobile phones belonging to the approximately 800,000 onetime ViSalus promoters in the class.

ViSalus argued at trial that it used automated calls not for marketing but only to contact customers whose credit cards were declined. Defense lawyer O’Neal said in an email that the distinction is critical because the TCPA does not preclude all automated calls but does prohibit certain forms of telemarketing.

Jurors never heard recordings about credit-card declinations, though. What they did hear were recordings of marketing calls. (ViSalus contended the recordings were made for training purposes.)

Nor did the jury hear any direct defense testimony. Right before trial, ViSalus filed a notice suggesting that it would call cofounder Blake Mallen, who had not previously been deposed by class counsel, as a witness. The company opted not to call him. Plaintiffs’ lawyer Dovel said he regarded that decision as a sign that ViSalus was worried about cross examination. “Going in, as in any case that gets tried, we thought we could easily have lost,” Dovel said. “It all came together in those three days of trial. Going into closing arguments, I knew we had the jury.”

ViSalus counsel O’Neal said the company did not need to call Mallen because Wakefield and the class failed to prove their case. “ViSalus believed that it didn’t do anything wrong, and that (Wakefield) did not put in sufficient evidence as part of her case in chief to sustain any of her class claims or to keep the class certified in post-trial proceedings,” he said in an email.

O’Neal also disputed class counsel Balabanian’s theory that ViSalus underestimated public attitudes about robocalls. Quite to the contrary, he said: “We expected that (Wakefield) would have a significant advantage in a jury trial - she could readily play on the public’s general dislike of telemarketing,” he said by email. “During jury selection every person of the prospective panel expressed comments on that. That’s a tough challenge for a defendant accused of making telemarketing calls.”

One thing is clear from the jury’s verdict in the ViSalus case: It’s going to be tougher in the future for defendants to make cheap deals to settle TCPA class actions. Courts have grown resistant to toothless settlements that don’t compensate class members. And firms like Edelson are willing to go to trial. Sure, it’s easy to place millions of phone calls using an automated dialing system. But if you misuse the system, those statutory damages add up fast.

(This article has been corrected. An earlier version mis-identified the Portland federal judge presiding over the class action.)

Reporting By Alison Frankel