Second Circuit Holds that Contractually-Given Consent Cannot be Revoked Under TCPA

by Goodwin

On June 22, 2017, the Second Circuit decided Reyes v. Lincoln Automotive Financial Services, No. 16-2104—a decision which is a win for the TCPA defense bar.  In Reyes, the Second Circuit held that, once a consumer consents to be contacted as part of a valid contract, the consumer may not unilaterally revoke that consent and bring an action under the TCPA if he or she continues to be contacted by the other contracting party.

In Reyes, the plaintiff, Alberto Reyes, Jr., agreed to lease an automobile from Lincoln Automotive Financial Services.  Reyes, No. 16-2104 at 2.  As one of the lease terms, Mr. Reyes consented to receive manual or automated telephone calls from Lincoln.  Id.  After Mr. Reyes defaulted on his lease payments, Lincoln began calling him regularly, and did not stop doing so when Mr. Reyes allegedly revoked his consent to be called.  Id.  Mr. Reyes filed suit under the TCPA, but the district court granted summary judgment in Lincoln’s favor, concluding in part that the TCPA does not permit a consumer to unilaterally revoke consent where the consent is given as part of a bargained-for exchange.  Id.  In its opinion released on June 22, 2017, the Second Circuit affirmed that holding.

The TCPA prohibits any person in the United States from “initat[ing] any telephone call to any residential telephone line using an artificial or prerecorded voice to deliver a message without the prior express consent of the called party.”  Id. at 9 (quoting 47 U.S.C. § 227(b)(1)(B)).  However, the Second Circuit observed that, despite this prohibition, the TCPA does not state the circumstances in which consent, once given, may be withdrawn.  Id. at 10.  To answer that question, the court turned to the common law definition of the word “consent.”  The court found that, at common law, whether consent is revocable differs depending on whether the term is used in tort or in contract.  In tort, “‘consent’ is generally defined as a gratuitous action, or ‘[a] voluntary yielding to what another proposes or desires,’” and may be revoked at any time.  Id. at 11-12.  In contract, however, “consent” is something that can be bargained for, in exchange for consideration, and thereby becomes “irrevocable” as part of an agreement between contracting parties.  Id. at 12-14.  Where such consent exists in the contractual context, it is part of the consideration for the contract, and therefore may not be revoked unless there is some evidence that the party who gave consent is released from his or her obligations under the contract (e.g., by mutual agreement of the parties).  Id. at 14.  Based on this analysis of consent in the context of contract law, the Second Circuit upheld the district court’s summary judgment award to Lincoln, finding that the TCPA did not allow Mr. Reyes to unilaterally withdraw his contractually-given consent to be contacted, and that there was insufficient evidence for a jury to conclude that Mr. Reyes effectively revoked his consent under the lease with Lincoln.  Id. at 2.

In so holding, the Second Circuit distinguished similar precedent from the Third and Eleventh Circuits, as well as a 2015 ruling by the FCC (currently on appeal to the D.C. Circuit), which held that consumers could revoke their consent to be contacted at will, and that post-revocation contact with consumers could give rise to liability under the TCPA.  See id. at 9-11; Gager v. Dell Fin. Servs., LLC, 727 F.3d 265, 268 (3d Cir. 2013); Osorio v. State Farm Bank, F.S.B., 746 F.3d 1242, 1253 (11th Cir. 2014); In the Matter of Rules & Regulations Implementing the Tel. Consumer Prot. Act of 1991, 30 F.C.C. Rcd. 7961, 7993-94 (2015) appeal filed in ACA International v. FCC, No. 15-1211 (D.C. Cir. July 10, 2015).  The Second Circuit distinguished those decisions on the basis that, in those cases, the consumers gratuitously consented to be contacted and therefore could withdraw their consent at will (i.e., the Second Circuit reasoned that the tort definition of “consent” applied in those cases).  Reyes at 11.  This was in contrast to the facts in Reyes, where the plaintiff’s consent to be contacted was part of a contractual bargained-for exchange.  Id.

Though it remains to be seen whether other circuits will follow the Second Circuit’s parsing of the definition of “consent,” the Reyes decision at least has the potential to put the brakes on some TCPA litigation, which has lately become increasingly commonplace.  In light of this new holding, defendants in TCPA lawsuits should be sure to review their documentation to see whether the plaintiff(s) in their cases agreed contractually to be contacted. LenderLaw Watch will continue to monitor TCPA developments and bring you updates as they occur.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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