The U.S. Court of Appeals for the Second Circuit recently held, in Reyes v. Lincoln Automotive Financial Services, that the Telephone Consumer Protection Act (TCPA) "does not permit a consumer to revoke its consent to be called when the consent forms part of a bargained-for exchange." In doing so, the Second Circuit noted that the question presented had not been addressed previously by the Federal Communications Commission (FCC) or, to the court's knowledge, by any federal court of appeals.
The plaintiff in Reyes leased a motor vehicle from a dealership "and, as a condition of the lease agreement, consented [in the lease agreement] to receive manual or automated telephone calls from" the lessor, its assignee, and certain other persons. The lessee asserted that he subsequently revoked his TCPA consent in writing after he ceased making lease payments but continued to receive calls from the defendant.
The district court granted summary judgment to the defendant, holding that no reasonable jury could have concluded that the consent had been revoked and, in any event, "the TCPA does not permit a party to a legally binding contract to unilaterally revoke bargained-for consent to be contacted by telephone." On appeal, the Second Circuit unanimously held that the lessee had introduced sufficient evidence from which a jury could conclude that he had revoked his consent. It nevertheless affirmed the judgment, holding that the TCPA does not permit revocation of consent obtained contractually as part of a bargained-for exchange.
Statutory Construction Analysis. The court stated initially that, while the TCPA generally prohibits any person from "initiat[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," the statute is silent with respect to whether consent can subsequently be revoked. The court noted, however, that the Third Circuit, in Gager v. Dell Financial Services, had previously held that consent contained in a credit application was revocable because consent is traditionally understood to be revocable at common law and permitting revocation would further the purpose of the TCPA. The Eleventh Circuit followed the reasoning of Gager in Osorio v. State Farm Bank, F.S.B., a decision involving consent reflected in an insurance application. Relying on these appellate decisions, in its 2015 Declaratory Ruling, the FCC concluded that "prior express consent" is revocable under the TCPA.
The Second Circuit stated, however, that these authorities had only considered "whether the TCPA allows a consumer who has freely and unilaterally given his or her informed consent to be contacted to later revoke that consent." It explained that Reyes presented a different question—"whether the TCPA also permits a consumer to unilaterally revoke his or her consent to be contacted … when that consent is given, not gratuitously, but as bargained-for consideration in a bilateral contract."
In a well-reasoned decision, the Second Circuit squarely rejected the plaintiff's argument "that the same principles that the FCC and the Third and Eleventh Circuits relied on in their previous rulings apply to this situation as well." As a threshold matter, the Second Circuit agreed with its sister circuits that a court must infer that Congress means to incorporate the established common law meaning of a term "unless the statute otherwise dictates." After noting that the "text of the TCPA evidences no intent to deviate from common law rules in defining 'consent,'" the court explained that consent is not always revocable under the common law.
Gratuitous Consent. The Second Circuit explained that "consent" is defined in tort law as a gratuitous or voluntary yielding to what another proposes or desires. The Second Circuit observed that the plaintiffs in Gager (Third Circuit) and Osorio (Eleventh Circuit) had "provided such voluntary consent to be contacted by furnishing the telephone number to businesses in connection with loan and insurance applications, respectively." This type of consent, which was neither given in exchange for consideration nor incorporated into a binding contract, was held to be revocable by the consenting party at any time. This court noted that this result, which the 2015 FCC ruling confirms, is consistent with Restatement (Second) of Torts § 892A(5), which says that "[u]pon termination of consent its effectiveness is terminated."
Contractual Consent. The court explained, however, that the rule is otherwise under the common law of contracts—"[t]he common law is clear that consent to another's actions can 'become irrevocable' when it is provided in a legally binding agreement, … in which case any 'attempted termination is not effective.'" More pointedly, the court stated that it is "black-letter law that one party may not alter a bilateral contract by revoking a term without the consent of a counterparty." The court therefore reasoned that, "[a]bsent express statutory language to the contrary," it could not conclude that Congress intended to alter the common law of contracts to permit the unilateral revocation of a TCPA consent.
The court also rejected the contention that the TCPA consent was not an "essential term" of the vehicle lease agreement, explaining that this argument was misplaced. Under the law of contracts, noted the court, "essential terms" denotes terms that are necessary to ensure that an agreement is sufficiently detailed to be legally enforceable. The court explained, however, that "a contractual term does not need to be 'essential' in order to be enforced as part of a binding agreement,' and it is "a fundamental rule of contracts that parties may bind themselves to any terms, so long as the basic conditions of contract formation (e.g., consideration and mutual assent) are met."
In this case, the plaintiff's consent to be contacted by telephone "was not provided gratuitously; it was included as an express provision of a contract to lease an automobile from Lincoln." Under these circumstances, the Second Circuit stated, "'consent,' as that term is used in the TCPA, is not revocable."
No Lack of Clarity. The court next addressed the plaintiff's argument that any ambiguities in the text of the TCPA must be construed to further the statutory purpose of protecting consumers from unwanted telephone calls. The court explained that this argument also was misplaced because there was no lack of clarity in the statutory use of the term "consent." To the contrary, the court stated that it was "well-established at the time that Congress drafted the TCPA that consent becomes irrevocable when it is integrated into a binding contract," and there is "no indication in the statute's text that Congress intended to deviate from this common-law principle in its use of the word 'consent.'"
While the court expressed its sensitivity to the argument that the effectiveness of the TCPA might be reduced by the insertion of consent provisions into standard-form contracts, it noted that "this hypothetical concern, if valid," is based on public policy considerations that are for Congress to resolve. Accordingly, the court stated that it was "not free to substitute [its] own policy preferences for those of the legislature by reading a right to revoke contractual consent into the TCPA where Congress has provided none."
In holding that "the TCPA does not permit a consumer to revoke [his or her] consent to be called when that consent forms part of a bargained-for exchange," the Second Circuit rejected the plaintiff's incomplete explication of the common law concerning the revocation of consent, and his invitation to use an asserted statutory purpose to override unambiguous statutory text. Its decision is a model of clarity that contains a compelling explanation of why a TCPA consent obtained contractually should not be subject to unilateral revocation. Defense counsel should assert Reyes and its rationale in TCPA litigation involving attempted revocation of consent that was obtained contractually. Businesses whose contracts do not already contain a TCPA consent should incorporate one into their contracts.
