January 24, 2018

One Step Forward, One Step Back? Reyes's Impact on TCPA Claims

Courts continue to chip away at the reach of the Telephone Consumer Protection Act (TCPA). In Reyes v. Lincoln Automotive Financial Services, the Second Circuit recently held that consumers cannot revoke consent to receive telephone calls if that consent was included as bargained for consideration in a contract.  Although a clear win for the defense bar, Reyes’s impact has been overstated. A closer look at the decision reveals that Supreme Court review, and additional guidance, is needed to temper the broad reach and draconian penalties of the TCPA.

Case Background and District Court Judgment

Alberto Reyes, Jr. leased a 2012 Lincoln MKZ luxury sedan from a Ford dealership, with financing provided by Lincoln Automotive Financial Services. The lease contained the following provision:

You [Reyes] also expressly consent and agree to Lessor [Ford], Finance Company, Holder and their affiliates, agents and service providers may use written, electronic or verbal means to contact you. This consent includes, but is not limited to, contact by manual calling methods, prerecorded or artificial voice messages, text messages, emails and/or automatic telephone dialing systems. You agree that Lessor, Finance Company, Holder and their affiliates, agents and service providers may use any email address or any telephone number you provide, now or in the future, including a number for a cellular phone or other wireless device, regardless of whether you incur charges as a result.

Reyes fell behind on his payments, and Lincoln called him 530 times. Reyes sued Lincoln in the Eastern District of New York, alleging violations of the TCPA and seeking $720,000 in damages. After the close of discovery, Lincoln moved for summary judgment. The district court granted summary judgment for Lincoln, finding that 1) Reyes did not introduce sufficient evidence to create a material issue of fact that he revoked consent, and 2) in any event, Reyes could not revoke consent because he had given consent as consideration in a binding contract.

The Second Circuit Decision

On appeal, the Second Circuit disagreed with the district court on the sufficiency of Reyes’s evidence, finding that Reyes’s testimony that he revoked consent created a material issue of fact for a jury to decide. But the Second Circuit agreed with the district court’s ruling that Reyes could not revoke consent because it was a part of his contract with Lincoln. The Second Circuit attempted to distinguish its decision from the Federal Communications Commission’s 2015 order and decisions of the Third Circuit (in Gager v. Dell Financial Services) and the Eleventh Circuit (in Osorio v. State Farm Bank F.S.B.) by reasoning that the FCC and Osorio and Gager courts did not consider whether the TCPA allows a consumer to unilaterally revoke consent given as bargained-for consideration in a bilateral contract.

The Second Circuit pointed to common-law principles, drawing a distinction between contract and tort, to conclude that consent can become irrevocable when it is provided in a legally binding agreement. The Second Circuit also rejected Reyes’s contention that his consent to be contacted was revocable because it was not an “essential term” of the lease. Compellingly, the Court stated, “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. Contracting parties are bound to perform on the terms that they did agree to, not what they might have agreed to under different circumstances.” As a result, the Second Circuit affirmed the judgment of the district court.

Reyes Implications for the Courts, Plaintiffs and Defense

The Reyes decision marks a clear win for parties defending TCPA claims, especially in the Second Circuit. It is and will be cited by defense counsel across the country, as many finance companies, banks, retailers and similar businesses already have terms in their consumer contracts that give them permission to call customers.

That said, the decision is not the silver bullet that some are claiming. First, and despite the Second’s Circuit’s attempt to assert otherwise, Reyes may create a circuit split. In Gager, the district court mistakenly read consent into the parties’ agreement even though it was not a written term of the contract. Nonetheless, the Third Circuit discussed the argument, explaining:

First, Dell asserts that basic principles of contract law should preclude Gager from revoking her prior express consent. In short, Dell posits that a creditor will want to know in advance whether a  credit applicant will consent to automated phone calls and that this knowledge is part of the “consideration” that the applicant offers in support of her application. Although Dell is correct that the level of contact that a debtor will consent to may be relevant to the negotiation of a line of credit, the ability to use an autodialing system to contact a debtor is plainly not an essential term to a credit agreement. More importantly, Dell's argument that its contractual relationship with Gager somehow waives her rights under the TCPA is incorrect. The fact that Gager entered into a contractual relationship with Dell did not exempt Dell from the TCPA's requirements. As discussed above, she retained the right to revoke her prior express consent.

While the discussion was likely dicta, the Third Circuit’s analysis still seems to contradict the reasoning in Reyes.

Perhaps more troubling, at least in the short run, is the Reyes conclusion that Mr. Reyes could create a material issue of fact through nothing more than self-serving testimony, joining certain of its sister circuits. With uncapped damages between $500 and $1,500 per call, TCPA cases can be extremely lucrative for plaintiffs and their counsel. Many, if not most, TCPA cases are filed with nothing more than plaintiff’s claim that he or she revoked consent. Reyes provides support for the argument that plaintiff’s testimony alone can create a material issue of fact sufficient to survive summary judgment, regardless of what evidence is presented by the defendant. While one can hope that most of plaintiffs’ bar would be unwilling to push a case to trial solely on their client’s uncorroborated and contradicted testimony, the fact that courts may not grant summary judgment is itself powerful negotiating leverage.  Reyes adds to that leverage, at least in cases that do not involve contractually bargained-for consent.


Reyes represents a court’s common-sense recognition that one party to a contract cannot retroactively void unfavorable terms of that contract. While helpful, that contrasts with analysis of the Third Circuit in Gager. In addition, by deciding that Reyes’s self-serving and uncorroborated testimony was enough to create a material issue of fact that precluded summary judgment, the Second Circuit provided TCPA plaintiffs with additional negotiating leverage in the seemingly endless revocation lawsuits filling up dockets nationwide. So, while Reyes should prove helpful for defendants with consent provisions in their contracts, especially in the Second Circuit, it does little to stem the tide of TCPA claims nationwide.

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