Last week, the Second Circuit Court of Appeals, in Reyes v. Lincoln Automotive Financial Services, held that contractual consent—once given—cannot be unilaterally revoked. The landmark Telephone Consumer Protection Act (TCPA) case gives a potent tool against the flood of TCPA cases based on the revocation of consent, at least for businesses with well documented relationships with their customers.
In reaching its ultimate conclusion, the Reyes court acknowledged the seemingly contrary case law from the Courts of Appeal for the Third and Eleventh Circuits. According to Reyes, Gager v. Dell Fin. Servs., LLC (Third Circuit) and Osorio v. State Farm Bank, F.S.B. (Eleventh), as well as the 2015 FCC Declaratory Ruling which relied on Gager and Osorio, “considered a narrow question: whether the TCPA allows a consumer who has freely and unilaterally given his or her informed consent to be contacted [to] later revoke that consent.” Reyes “present[ed] a different question . . . : whether the TCPA also permits a consumer to unilaterally revoke his or her consent to be contacted by telephone when that consent is given, not gratuitously, but as bargained-for consideration in a bilateral contract.”
The key to framing the question in this light comes from the distinction “between tort and contract law. In tort law, ‘consent’ is generally defined as a gratuitous action . . . .” On the other hand, “[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.” In addressing the policy arguments mounted by Reyes, the Court declined to step into a role it found more suited for Congress:
We are sensitive to the argument that businesses may undermine the effectiveness of the TCPA by inserting ‘consent’ clauses of the type signed by Reyes into standard sales contracts, thereby making revocation impossible in many instances. . . . But this hypothetical concern, if valid, is grounded in public policy considerations rather than legal ones; if the abuse came to pass, it would therefore be ‘for the Congress to resolve—not the courts.’
Reyes adds more weight to the already existing incentive for businesses to capture written consent. However, it is not panacea for TCPA liability. First, at present, it is confined to the Second Circuit. Second, it applies to those businesses who have a contractual relationship with the plaintiff. Third, plaintiffs may argue—like they would in fighting arbitration—that the call must relate to or fall within the scope of the contract and the consent provision under which a business seeks to invoke Reyes. Fourth, certain scenarios, like debt collection, may fall outside of Reyes. While consent already transfers from a business relationship to debt collection activities, that is a revocable form of consent. Reyes arguably makes that consent non-revocable if contracted. However, a plaintiff may argue that a contractual default and the subsequent election to pursue default remedies terminates the contract.
In light of the above, businesses may want to consider just how broad their consent language is in their contracts and just how they may seek to capture a written relationship in as many instances as possible. Undoubtedly, TCPA defendants will look to Reyes when able and plaintiffs will push back. Monitoring how and if the decision gains traction across the country will be one of the more important TCPA trends for the second half of 2017.