In a much-watched decision involving the hotbed issue of consent under the Telephone Consumer Protection Act (TCPA), the U.S. Court of Appeals for the Second Circuit has ruled that consent may not be revoked when it was originally provided as a term of a contract. In Reyes v. Lincoln Automotive Financial Services, the Second Circuit becomes the first federal appellate court to hold that a consumer's attempt to revoke consent for purposes of the TCPA was invalid under common law contract principles.
In Reyes, the Plaintiff had entered into an automobile lease with the Defendant. As part of the lease agreement, Mr. Reyes expressly consented to receive telephone calls from Defendant, including text messages and other calls made via an automatic telephone dialing system or using a prerecorded voice to Plaintiff's cell phone. These types of calls are typically unlawful under the TCPA absent prior express consent. After allegedly missing payments on the car loan, the Defendant began calling Plaintiff to collect on the loan. The Plaintiff sent a letter to Defendant purporting to revoke his consent to be contacted by Defendant on his cell phone. Defendant continued to make calls to Plaintiff after the date of the alleged letter, thus setting the stage for Plaintiff's claims under the TCPA.
Prior to the Second Circuit's decision in Reyes, at least two other circuit courts (the Third Circuit in Gager v. Dell Financial Services and the Eleventh Circuit in Osorio v. State Farm Bank F.S.B.) as well as the Federal Communications Commission in its 2015 Omnibus Ruling had determined that prior express consent is revocable under the TCPA. However, the Second Circuit distinguished these prior holdings by noting that they did not consider circumstances where consent had been granted via contract. The Reyes Court drew this distinction stating:
"Reyes's appeal presents a different question, which has not been addressed by the FCC or, to our knowledge, by any federal circuit court of appeal: whether the TCPA also permits a consumer to unilaterally revoke his or her consent to be contacted by telephone when that consent is given, not gratuitously, but as bargained-for consideration in a bilateral contract."
Citing basic common law principles of contract law, the Second Circuit concluded the TCPA does not permit such revocation, stating:
"...the TCPA does not permit a party who agrees to be contacted as part of a bargained-for exchange to unilaterally revoke that consent, and we decline to read such a provision into the act."
Whether a consumer has provided and/or revoked his or her consent has been a central issue in TCPA litigation throughout the country in recent years, and such litigation continues to overwhelm federal courts. The Reyes decision has been received as a major victory for businesses who have been defending this onslaught of TCPA litigation for more than a decade.
Where valid contract terms exist, the Reyes decision could give TCPA defendants a critical additional argument to defeat plaintiffs' claims where plaintiffs have asserted they opted out of previously-provided consent. All consumer-facing businesses, creditors, or any company that communicates with customers via telephone, text, or other means should consult with counsel to determine whether their contract terms are adequately drafted under these circumstances.
We will continue to monitor TCPA litigation for ongoing developments, including whether other circuit courts adopt the Second Circuit's rationale.
A copy of the Reyes decision can be found here.
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