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Second Circuit Denies Rehearing in Key TCPA Case

Businesses that have not already done so should consult with counsel regarding "consent to be called" provisions in their consumer contracts in the wake of the decision by the U.S. Court of Appeals for the Second Circuit denying a rehearing in Reyes v. Lincoln Automotive Financial Services.

The Reyes decision marked a turning point in Telephone Consumer Protection Act (TCPA) litigation by holding that consent to be called under the TCPA cannot be revoked when that consent is part of the bargained-for exchange memorialized in the parties' contract. In Reyes, an automobile-lease agreement expressly authorized the lessor to contact the lessee using prerecorded or artificial-voice messages, text messages, emails, and/or automatic telephone-dialing systems.

Relying on the bilateral nature of contract law—where one party cannot unilaterally alter a contract term without the mutual assent of the other party—the Second Circuit reasoned that TCPA consent cannot be unilaterally revoked by the consumer when the consent is provided as part of a bargained-for exchange.

Although the Second Circuit is the only circuit court to directly address this issue, the 2014 decision of the U.S. Court of Appeals for the 11th Circuit in Osorio v. State Farm Bank, in which the court stated that the plaintiffs were free to orally revoke consent "in the absence of any contractual restriction to the contrary," suggests that it would have reached the same conclusion.

The consent in Osorio was implied when the plaintiff's roommate orally provided the plaintiff's cell phone number to the defendant—not as part of a bargained-for agreement. As such, the case held that consent can be revoked, but it did so in a different context—when consent was given gratuitously, rather than as part of a bargained-for exchange.

Copyright © by Ballard Spahr LLP


About this Author

Kaplinksy, partner, New York, finance

Alan S. Kaplinsky is Co-Practice Leader of the firm's Consumer Financial Services Group, which has more than 115 lawyers. Mr. Kaplinsky devotes his practice exclusively to counseling financial institutions on bank regulatory and transactional matters, particularly consumer financial services law, and defending financial institutions that have been sued by consumers in individual and class action lawsuits and by government enforcement agencies. Visit Mr. Kaplinsky's profile in Wikipedia.

Culhane, Ballard, Partner

John L. Culhane, Jr., is known for his work advising on interstate direct and indirect consumer and residential mortgage loan and leasing programs, through both traditional brick-and-mortar facilities and e-commerce. Before joining Ballard Spahr, Mr. Culhane was associate counsel with Mellon Bank, N.A.; associate counsel with Bank of America NT&SA; and senior attorney (section chief) with the National Credit Union Administration, the federal agency regulating federal credit unions.

Mr. Culhane addresses issues involving licensing, advertising and marketing, application processing, privacy, disclosure, pricing, substantive terms, servicing, collection, portfolio sales, and securitization. His regulatory practice includes preparing clients for banking agency and CFPB compliance examinations and assisting in the defense of attorney general investigations and banking agency and CFPB enforcement actions. His clients have ranged from a multibillion-dollar bank holding company, to one of the nation's largest residential mortgage lenders, to a leading provider of financial institution forms and documentation. Mr. Culhane is a member of the firm's Fair Lending Task Force.

Daniel McKenna, Ballard Spahr Law Firm, Philadelphia, Litigation Attorney

Daniel JT McKenna devotes his practice to privacy and data security, consumer financial services, and mortgage banking litigation.

Mr. McKenna's privacy practice focuses on new product and process design, privacy impact assessments and audits, privacy management and policy, incident planning, incident response and notification, third-party and vendor management, privacy counseling, regulatory comments, and litigation. His clients include banks, loan service providers, health care providers, manufacturers, colleges and universities, and member...

Scott Pearson, Ballard Spahr Law Firm, Los Angeles, Business Litigation Attorney

Scott Pearson focuses his practice on the defense of regulatory enforcement actions and class actions, other complex business litigation, and regulatory compliance counseling. Martindale-Hubbell rates Mr. Pearson "at the highest level of professional excellence." He has been called "a true expert in complex litigation and consumer class actions" and "a no-nonsense bulldog lawyer who is highly respected by his peers and the judiciary."

Prominent companies regularly entrust Mr. Pearson with matters involving bet-the-company exposure or extreme...

Jenny Perkins, Ballard Spahr Law Firm, Philadelphia, Consumer Finance Litigation Attorney

Jenny N. Perkins regularly handles complex commercial litigation, with particular experience in consumer finance litigation and defending individual and class action lawsuits brought by consumers in the areas of federal and state consumer protection laws and mortgage banking. In addition, Ms. Perkins handles commercial litigation involving breach of contract, breach of fiduciary duty, and professional negligence claims. In June 2013, Ms. Perkins was second chair for a case in which the team received a federal jury verdict on behalf of an insurance broker client after a...