July 10, 2017

Courts Rule Individual Cannot Unilaterally Break TCPA Contract Agreement

A federal Court provided some much needed clarity on the Telephone Consumer Protection Act (TCPA), a 25-year-old law meant to address unwanted telemarketing calls that, today, plaintiffs’ lawyers love to exploit due to its potential for massive attorneys’ fees.

In the case of Reyes v. Lincoln Automotive Financial Services, the plaintiff, Alberto Reyes, Jr., leased a new Lincoln MKZ luxury sedan that included an express consent for the company to contact him during the term of the lease.

After signing the agreement, Reyes allegedly sent a letter to the dealership revoking his consent to be contacted at the telephone number provided, and in turn filed a TCPA lawsuit seeking $720,000 in damages. But the federal court in the Eastern District of New York found that “the TCPA does not permit a party to a legally binding contract to unilaterally revoke bargained-for consent [to be contacted] by telephone.”

Now the Second Circuit Court has affirmed this position, with a ruling that stands in stark contrast to previous rulings in Third and Eleventh Circuit Courts.

The key difference between this decision and previous rulings is that Reyes provided consent as an express provision of his legal agreement with Lincoln, which falls within contract law; previous Circuit rulings considered consent agreements that were not part of a company’s contractual bargain. 

For example, in the case examined by the Third Circuit, Gager v. Dell Fin. Services, the customer had merely listed her cellular phone number on an application with Dell, which is not considered a binding contract.

The TCPA has become one of the most lucrative lawsuits brought by plaintiffs’ lawyers today. TCPA lawsuits in 2016 were among the fastest growing types of class action cases filed. A violation can cost anywhere from $500 to $1,500 per citation, and with today’s ubiquitous cellphone presence, it is easy to see how a few citations quickly lead to a big payday. Reyes’ attempt to turn contact between him and his car’s manufacturer into $720,000 is further evidence of this.

But the court’s decisions in this case are encouraging, and it is due time that the courts uniformly recognize and delineate between abusive telemarketer calls and honest business communications. It is now up to Congress to resolve some other outstanding issues as related to the TCPA, such as the type of technologies regulated under the quarter-century old statute. Congress must also ensure companies are not subject to needless litigation each time they pick up the phone or send a text message to their consumers.

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