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Second Circuit: You Cannot Withdraw Contractually Given Consent

TCPA ruling in conflict with prior case law

In Reyes v. Lincoln Automotive Financial Services (decided on June 22, 2017), the Second Circuit Court of Appeals ruled that when a consumer consents to receive autodialed or prerecorded calls in a written agreement, he or she may not subsequently revoke that consent.

In this case, the plaintiff, Reyes, signed an automobile lease in which he consented to receive autodialed calls should he fail to make the lease payments. When he stopped making payments, Reyes received over 500 calls. He tried to revoke his consent both verbally and in writing, a tactic that is permitted in some jurisdictions, notably the Third and Eleventh Circuits.  

Eventually, Reyes filed suit in the Eastern District of New York, seeking over $700,000 for violations of the Telephone Consumer Protection Act (TCPA). His case was dismissed on a summary judgment motion, and he appealed to the Second Circuit. 

The Second Circuit affirmed the ruling on the basis that Reyes’ attempts to revoke his consent were ineffective. According to the published opinion, “the TCPA does not permit a consumer to revoke its consent to be called when that consent forms part of a bargained‐for exchange… 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.” 

Other than Do Not Call violations,there are three main categories of TCPA claims related to unwanted telephone calls: telemarketing calls, debt collection calls and calls to telephone numbers that have been reassigned. Because the Second Circuit ruling was based on consent as a contractually-bargained-for provision, the Reyes decision will have the greatest effect on debt collection calls, which generally involve a written agreement. The other two categories do not generally involve a contract between the caller and the call recipient.  

While there is now arguably a split between the rulings of the Second Circuit and two other circuits (the Third and the Eleventh), this issue may not necessarily require a Supreme Court determination. First, the Second Circuit (unconvincingly) attempted to distinguish the facts from the other circuits' cases, meaning the Supreme Court may not see any conflict between circuits at all. Second, as this ruling is based on contract law, the issue of whether a consent can be revoked is a principle that can be determined under state law as easily as federal common law, in which case Supreme Court intervention would not be necessary.

TAKEAWAY: The Second Circuit appears to have put itself in conflict with prior rulings from the Third and Eleventh Circuits which allow consent to be withdrawn. While the safer course of action is to honor post-contracting opt-out requests, when drafting contracts in which debt collection efforts are foreseeable, it should be made explicit that consent to receive autodialed or prerecorded calls are bargained-for (but not required) consideration.