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New Federal Appeals Court Ruling Provides Ray of Sunshine for TCPA Defendants: Contractual Consent to Receive Calls Cannot be Revoked

06.23.17

Alan D. Wingfield

Chad R. Fuller

Virginia Bell Flynn

Lawsuits under the Telephone Consumer Protection Act (TCPA) have become the second most common form of consumer protection claim brought in federal court. Many of these lawsuits are premised on the idea that a consumer has the absolute right to revoke previously given consent to receive calls. A calling party could be subject to statutory damages of up to $1,500 per call made after such revocation.

On June 22, 2017, in a ray of sunshine for TCPA defendants, the U.S. Court of Appeals for the Second Circuit ruled that the right to revoke is not absolute. Reyes v. Lincoln Automotive Financial Services, No. 16-2104 (2d Cir. June 22, 2017). Instead, the Second Court held 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 we decline to read such a provision into the act.” Hence, if the parties’ contract contains a provision granting a party the right to place calls to a telephone number, then that right cannot be unilaterally revoked by the called party.

This ruling is of considerable importance in reducing the burgeoning TCPA litigation risk associated with outbound calling, as many types of consumer contracts do or could contain such provisions. For example, in Reyes, the consumer agreed to receive calls in an application for a lease of a new vehicle.

This decision at first blush appears at odds with decisions made by two other Circuit Courts as well as the Federal Communications Commission (FCC), the federal agency with interpretative authority over the TCPA. The Third and Eleventh Circuits had ruled that a consumer who has voluntarily provided a number to a calling party and thereby agreed to receive calls had the right to revoke that consent. See Gager v. Dell Fin. Servs., LLC, 727 F.3d 265, 270 (3d Cir. 2013); Osorio v. State Farm Bank, F.S.B., 746 F.3d 1242, 1255 (11th Cir. 2014). In 2015, the FCC issued a Declaratory Ruling to the effect that a consumer has a right to revoke consent by any reasonable means, and the calling party could not impose any conditions on how the consumer’s right to revoke consent must occur. Rules and Regulations Implementing the Tel. Consumer Prot. Act of 1991, Declaratory Ruling and Order, FCC 15-72, CG Docket No. 02-278, WC Docket No. 07-135, ¶ 141 (rel. July 10, 2015) (“2015 Order”). None of these decisions, however, specifically addressed the fact pattern described in Reyes. (The FCC’s ruling that a consumer can revoke using any reasonable means, along with other TCPA-expanding interpretations, is on appeal to the D.C. Circuit Court of Appeals. A decision is expected at any time. See ACA International v. FCC, No. 15-1211 (D.C. Cir. filed July 10, 2015)).

The Second Circuit noted that neither prior Circuit Court decisions nor the FCC actually resolved the issue of whether a consumer who had provided consent as part of a contract could revoke. The Reyes Court held that under well-established common law understanding of the word “consent” that consent that is bargained for, supported by consideration, and embodied in a contract cannot be unilaterally withdrawn. The Court held that the plain meaning of the TCPA should prevail over contrary policy arguments.

This decision should be consulted by defendants facing TCPA lawsuits where contractual consent clauses may exist – not only in the Second Circuit but in other jurisdictions as well. Moreover, this decision raises an immediate issue for businesses of all types who enter into contracts with consumers: do the contract documents have TCPA consent language, and, if so, is the language adequate?

© TROUTMAN SANDERS LLP. ADVERTISING MATERIAL. These materials are to inform you of developments that may affect your business and are not to be considered legal advice, nor do they create a lawyer-client relationship. Information on previous case results does not guarantee a similar future result.

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