June 30, 2017Client Alert

Second Circuit Limits Withdraw of Consent in Contracts Under TCPA

The Telephone Consumer Protection Act (TCPA) was created to protect consumers from unrestricted telemarketing. Thus, the TCPA prohibits (subject to narrow exceptions) any person within the United States 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.” 47 U.S.C. § 227(b)(1)(B) (emphasis added). Violators of the TCPA can be sued for between $500 and $1,500 for each call made without such prior express consent. However, the TCPA is silent regarding whether such prior express consent can be revoked. In 2015, the Federal Communications Commission (FCC), the agency authorized to promulgate rules and regulations to implement the TCPA, held that consumers who freely give informed consent may revoke it under “any reasonable means.” As such, several individuals have sued companies, alleging that despite initially giving express consent, he or she had subsequently revoked consent, thus making post-revocation calls a violation the TCPA. Such allegations have been successful in creating disputes of fact between the parties regarding whether consent was in fact revoked, which often leads to prolonged litigation. The Second Circuit’s recent decision in Reyes v. Lincoln Automotive Financial Services, No. 16-2104-cv, draws a distinction between unilateral consent and consent given as a term of a bilateral contract. This decision arguably gives companies a new tool to use against certain litigants alleging revocation by finding that the TCPA does not permit withdrawal of consent as part of a bargained–for exchange in a bilateral contract.

In Reyes, the plaintiff (Reyes) had leased a new car from defendant (Lincoln). As part of the lease Reyes had provided his cell phone number. Additionally, in the lease he consented to Lincoln contacting him on his cell phone and contacting him using a prerecorded message. Specifically the provision read as follows:

You [Reyes] also expressly consent and agree to Lessor [Ford], Finance Company, Holder and their affiliates, agents and service providers may use written, electronic or verbal means to contact you. This consent includes, but is not limited to, contact by manual calling methods, prerecorded or artificial voice messages, text messages, emails and/or automatic telephone dialing systems. You agree that Lessor, Finance Company, Holder and their affiliates, agents and service providers may use any email address or any telephone number you provide, now or in the future, including a number for a cellular phone or other wireless device, regardless of whether you incur charges as a result.

After signing the lease, Reyes stopped making payments and thus, the company made repeated calls to Reyes requesting payment. Reyes testified that he sent a written letter to Lincoln revoking consent. Lincoln disputed that it had ever received the withdrawal of consent. The plaintiff sued for damages under the TCPA, alleging that the company did not have consent for the post-revocation calls.  

Reviewing a decision on summary judgment, the Second Circuit found that while there was sufficient evidence to support that Reyes had revoked consent, the TCPA does not permit a party who agrees to be contacted as part of a bargained–for exchange to unilaterally revoke that consent. The Second Circuit distinguished its decision from decisions of other courts, specifically the Third and Eleventh Circuits, as well as from the 2015 FCC Order, finding that those opinions address a different question: whether the TCPA permitted revocation of consent by a consumer who had freely and unilaterally given his or her informed consent to be contacted. In other words, unilateral consent could be revoked but consent given as part of a bargained-for exchange could not be revoked. Thus, the Second Circuit reasoned that Reyes's consent to be contacted by telephone was not provided gratuitously but was included as an express provision of a contract to lease an automobile and that under such circumstances, “consent,” as that term is used in the TCPA, is not revocable.

While the Second Circuit’s ruling is currently only binding to cases in Connecticut, New York and Vermont, the ruling and reasoning will surely spawn similar arguments to combat TCPA revocation cases around the country. Undoubtedly, standards for consent and revocation will continue to be key issues in TCPA cases.

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