Second Circuit Denies Petition to Rehear Decision Holding that the TCPA Does Not Permit a Consumer to Unilaterally Revoke Consent Given in a Bilateral Contract

On October 20, 2017, the Second Circuit Court of Appeals denied a petition for panel rehearing, or in the alternative, for rehearing en banc of its decision in Reyes v. Lincoln Automotive Financial Services, 861 F. 3d 51 (2d Cir. 2017). By denying the petition for rehearing, the Second Circuit implicitly affirmed its holding that the TCPA does not permit a party to a bilateral contract to unilaterally revoke a contractual provision in which the party consented to receive calls.

In the underlying appeal, the plaintiff, Alberto Reyes, Jr. ("Reyes"), argued that the defendant, Lincoln Automotive Financial Services ("Lincoln"), violated the TCPA by continuing to call him after Reyes revoked his consent to receive calls. Reyes's initial consent to receive calls arose from a lease agreement he signed with Lincoln. The lease agreement included a provision stating Reyes consented to "contact by manual calling methods, prerecorded or artificial voice messages, text messages, emails and/or automatic telephone dialing systems." Id. at 53-54 (internal citations omitted). Reyes argued that he revoked this consent by sending Lincoln a letter requesting "no telephone contact be made . . . to [his] cell phone." Id. at 54 (internal citations omitted). Lincoln, nonetheless, continued to call Reyes. Reyes claimed that Lincoln violated the TCPA by continuing to call him after he revoked his consent to receive calls.

The Second Circuit acknowledged that other circuit courts and the FCC previously determined prior express consent could be revoked under the TCPA but found the facts in Reyes to be distinguishable. The Court noted that other circuit court and FCC opinions addressing revocation of consent under the TCPA considered whether a consumer who freely and unilaterally consented to be called could later revoke his consent. In Reyes, however, the Court was asked to determine whether a party could unilaterally revoke consent to receive calls when the consent was given as "bargained-for consideration in a bilateral contract." Id. at 56.

The Second Circuit explained that, though consent can often be revoked, consent to another's actions that is part of a legally binding agreement can become irrevocable. Pursuant to the common law of contracts, a contract only has legal effect when both parties consent to every provision of the contract, including changes to the contract. Thus, one party cannot alter the terms of the contract without the consent of the other party. The Second Circuit, therefore, determined that without "express statutory language to the contrary," the Court could not "conclude that Congress intended to alter the common law of contracts" through the TCPA. Id. at 58. As a result, the Court held that the TCPA did not permit Reyes to unilaterally revoke the consent he provided in his lease agreement.

Reyes also argued he should be permitted to unilaterally revoke his consent to receive calls because the relevant consent provision was not an essential term of the lease agreement. The Court disagreed and explained that "a contractual term does not need to be 'essential' in order to be enforced as part of a binding agreement." Id. at 58. Because contract law permits parties to "bind themselves to any terms, so long as the basic conditions of contract formation (e.g., consideration and mutual assent) are met," the Court concluded that "[a] party who has agreed to a particular term in a valid contract cannot later . . . unilaterally declare it to no longer apply simply because the contract could have been formed without it." Id. (citations omitted). Thus, the Second Circuit concluded that regardless of whether the consent provision was essential to Reyes's lease agreement, Reyes could not decide that the provision no longer applied without first obtaining Lincoln's consent.

Finally, Reyes argued that the remedial nature of the TCPA required any ambiguities in the statute to be construed for the protection of consumers from unwanted telephone calls. The Second Circuit found no ambiguity in the TCPA's use of "consent" and rejected Reyes's ambiguity argument.

Following the decision, Reyes filed a petition for a rehearing with the Second Circuit. The Court denied Reyes's petition, thereby confirming its conclusion that the language of the TCPA cannot be stretched to allow a party to revoke consent to receive calls when the consent was given as part of a bilateral contract.

"Second Circuit Denies Petition to Rehear Decision Holding that the TCPA Does Not Permit a Consumer to Unilaterally Revoke Consent Given in a Bilateral Contract" written by Kristen Watson and Katherine West

Posted in: TCPA
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