THIS CHANGES EVERYTHING—Second Circuit Holds that Contractual Consent Provisions Cannot be Revoked

This is the biggest TCPA news since the Omnibus—a silver bullet to defeat most revocation cases was hiding in plain sight the entire time.

It seems so obvious now.  A party cannot unilaterally modify the terms of a written contract to suit itself and so cannot revoke consent when the contract gives a business the right to call the number.  Of course that must be the law.  Why couldn’t we see it before?

Here’s the set-up: readers of this blog will recall that Judge Leonard D. Wexler of the Eastern District of New York last year granted summary judgment in Reyes v. Lincoln Automotive Financial Services, 2016 U.S. Dist. LEXIS 79838 (E.D.N.Y. June 20, 2016), a case  in which (it was held) a Plaintiff had failed to introduce sufficient evidence that he revoked consent to be called regarding his automotive lease.  Judge Wexler made much of the fact that Plaintiff had consented to receive calls via a written lease agreement.  He came dangerously close to holding that such bargained-for consent could not be unilaterally revoked, but predicated his grant of summary judgment in favor of  Defendant on Plaintiff’s lack of credible evidence that he revoked consent.

On appeal, the Second Circuit Court of Appeals held that Plaintiff had introduced plenty of evidence on the revocation issue but upheld the district court’s entry of judgment in Defendant’s favor because contractual consent provisions cannot be unilaterally withdrawn by the consumer.   See Reyes v. Lincoln Automotive Financial Services, 2017 U.S. Dist. LEXIS 11057 (2d Cir. June 22, 2017).  The analysis is clear and straightforward, and the result seems obvious in retrospect.  First, the Court acknowledged that both the Third Circuit in Gager v. Dell Financial Services, 727 F.3d 265 (3d Cir. 2013), and the Eleventh Circuit in Osorio v. State Farm Bank F.S.B., 745 F.3d 1242 (11th Cir. 2014), had considered the related issue of whether voluntarily-supplied consent can be revoked by consumers and had determined, under the common law, that it can be.  But, the issue before the court in Reyes was different.  There, Plaintiff had supplied his consent as part of a bargained-for contractual term, not as a mere voluntary, after-the-fact arrangement.  This, the Court held, made all the difference: “[w]e agree with the district court that 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 this must be the case because—as the Court put it— “[i]t is black-letter law that one party may not alter a bilateral contract by revoking a term without the consent of a counterparty.”  Wow and Eureka and wow again.  

The Court also rejected the argument that the TCPA changed these basic common law contract principles.  Instead, “[t]he text of the TCPA evidences no intent to deviate from common law rules in defining ‘consent’…”  Those common law rules, the Court found, recognize the irrevocability of consent embedded as a term of a contract between two assenting parties: “[t]he common law is clear that consent to another’s actions can ‘become irrevocable’ when it is provided in a legally binding agreement…” And, the Court would not read the TCPA to compel deviation from those well-tread rules in the absence of “express statutory language to the contrary,” which is, of course, missing from the TCPA.  In the Court’s view: “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 we find no indication in the statute’s text that Congress intended to deviate from this common-law principle…”

Summing matters up, the Court stated: “[a] party who has agreed to a particular term in a valid contract cannot later renege on that term or unilaterally declare it to no longer apply simply because the contract could have been formed without it.”  The end.

This is a real game changer.  Most industry participants already use some form of contractual consent provisions.  Until now they had largely been after-thoughts; a belt when most relied on presumed-consent suspenders and only called consumers on numbers that the consumer had provided directly.  Now, these contact terms have a real and important meaning.

It remains to be seen, of course, what other Circuit Courts of Appeals may do when this argument is next presented.  Hopefully, the D.C. Circuit takes note of the Second Circuit’s work and embeds the doctrine of Reyes deeply within its anticipated ruling on the FCC’s Omnibus to provide additional support.  Either way, however, the Reyes court has already done a fine job of distinguishing Osorio and Gager for TCPA defendants; it won’t take much imagination, therefore, for this powerful argument to be leveraged in courtrooms across the country.

 The Second Circuit’s decision is available here: Reyes v. Lincoln Automotive Financial Services.

 

Eric Troutman

Eric Troutman

Eric is one of the country’s prominent Telephone Consumer Protection Act (TCPA) defense attorneys, having served as lead defense counsel on over 30 nationwide TCPA class actions and having handled hundreds of individual TCPA cases. He also “wrote the book” on TCPA defense, having co-authored the nation’s first comprehensive practice guide on the subject. In addition, he has helped spearhead the banking industry’s push for TCPA clarity before the Federal Communications Commission and has assisted on numerous appeals addressing hot-button TCPA issues.

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