On June 22, 2017, in Reyes v. Lincoln Automotive Financial Services, the U.S. Court of Appeals for the Second Circuit agreed with Hogan Lovells attorneys representing the defendant and held that the Telephone Consumer Protection Act (“TCPA”) does not permit a consumer to revoke her consent to be called when that consent forms part of a bilateral contract. The Second Circuit’s precedent-setting decision, if adopted by other courts, may have far-reaching implications for how companies draft their contracts and service agreements and structure their TCPA compliance approaches.
The plaintiff in Reyes expressly agreed to receive autodialed calls and prerecorded messages as a term of his automobile lease agreement. After the parties executed the agreement and the plaintiff began using the vehicle under the lease, the plaintiff stopped making the required lease payments. When the lender placed calls to inquiry about and potentially help cure the delinquency, the plaintiff claimed he could revoke his consent to be called. The plaintiff then filed suit under the TCPA.
The Second Circuit held that plaintiff’s consent was irrevocable because that consent was a term of the existing contractual agreement. In reaching this conclusion, the court relied on a fundamental principle of contract law: mutual assent is required to revoke a term to a bilateral agreement. A party may not unilaterally modify a contract, as the plaintiff tried to do here. The court found “no indication in the [TCPA’s] text that Congress intended to deviate from this common–law principle in its use of the word ‘consent.’” Accordingly, the court found that plaintiff’s attempt to unilaterally rewrite the terms of the lease agreement was a legal nullity.
Notably, the court distinguished two other federal appeals court decisions—Gager v. Dell Financial Services and Osorio v. State Farm Bank—that had addressed certain TCPA consent revocation scenarios. Those decisions were inapplicable, the Second Circuit reasoned, because they addressed a different question: “whether the TCPA allows a consumer who has freely and unilaterally given his or her informed consent to be contacted can later revoke that consent.” In contrast to the scenarios in those cases—in which courts based consent on the provision of a phone number in the context of a business relationship—the contract in Reyes explicitly made consent to be contacted a term of the agreement, thereby making the plaintiff’s consent irrevocable under black-letter contract law.
Looking ahead, companies should review their contracts and service agreements for potential TCPA exposure and revise accordingly. They should also review their calling practices for full TCPA compliance.