16

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Reyes v. Lincoln Automotive Fin. Servs.

1



## In the 2



# United States Court of Appeals

3



## For the Second Circuit 4

________ 5

6

A UGUST T ERM

, 2016 7

8

A RGUED : A PRIL 4, 2017 9

D ECIDED : J UNE 22, 2017 10

A MENDED : A UGUST 21, 2017 11

12

No. 16

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‐ cv 13

14

A LBERTO R EYES

, J R

., 15

Plaintiff

‐ Appellant, 16

17

v. 18

19

L INCOLN A UTOMOTIVE F INANCIAL S ERVICES

, 20

Defendant

‐ Appellee. 21

________ 22

23

Appeal from the United States District Court 24

for the Eastern District of New York. 25

No. 15 Civ. 560

– Leonard D. Wexler, Judge

. 26

________ 27

28

Before: W ALKER

, J ACOBS

, and P ARKER

, Circuit Judges

. 29

________ 30

31

Plaintiff

‐ appellant Alberto Reyes, Jr., appeals a judgment of 32

the United States District Court for the Eastern District of New York 332 No. 16

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(Leonard D. Wexler, J .). Judgment was entered following the grant 1

of summary judgment to the defendant

‐ appellee, Lincoln 2

Automotive Financial Services (“Lincoln”), on Reyes’s claim for 3

damages stemming from Lincoln’s alleged violation of the 4

Telephone Consumer Protection Act (“TCPA”), Pub. L. No. 102

‐ 243, 5

105 Stat. 2394 (1991) codified at 47 U.S.C. § 227. Reyes leased an 6

automobile from Lincoln and, as a condition of the lease agreement, 7

consented to receive manual or automated telephone calls from 8

Lincoln. Lincoln called Reyes regularly after he defaulted on his 9

lease obligations, and continued to do so after Reyes allegedly 10

revoked his consent to be called. Reyes sued for damages under the 11

TCPA. The district court granted summary judgment for Lincoln, on 12

the basis that (1) the evidence of consent revocation was insufficient, 13

and (2) in any event the TCPA does not permit revocation when 14

consent is provided as consideration in a binding contract. We hold 15

that (1) Reyes did introduce sufficient evidence from which a jury 16

could conclude that he revoked his consent, but that (2) the TCPA 17

does not permit a consumer to revoke its consent to be called when 18

that consent forms part of a bargained

‐ for exchange. We therefore 19

AFFIRM the judgment of the district court. 20

________ 21

22

Y ITZCHAK Z ELMAN

, Marcus & Zelman, LLC, 23

Ocean, NJ, for Plaintiffs

‐ Appellees

. 243 No. 16

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J ESSICA L. E LLSWORTH (Morgan L. Goodspeed, on 1

the brief ), Hogan Lovells US LLP, Washington, 2

DC, for Defendants

‐ Appellants. 3

________ 4

5

J OHN M. W ALKER

, J R

., Circuit Judge : 6

Plaintiff

‐ appellant Alberto Reyes, Jr., appeals a judgment of 7

the United States District Court for the Eastern District of New York 8

(Leonard D. Wexler, J .). Judgment was entered following the grant 9

of summary judgment to the defendant

‐ appellee, Lincoln 10

Automotive Financial Services (“Lincoln”), on Reyes’s claim for 11

damages stemming from Lincoln’s alleged violation of the 12

Telephone Consumer Protection Act (“TCPA”), Pub. L. No. 102

‐ 243, 13

105 Stat. 2394 (1991) codified at 47 U.S.C. § 227. Reyes leased an 14

automobile from Lincoln and, as a condition of the lease agreement, 15

consented to receive manual or automated telephone calls from 16

Lincoln. Lincoln called Reyes regularly after he defaulted on his 17

lease obligations, and continued to do so after Reyes allegedly 18

revoked his consent to be called. Reyes sued for damages under the 19

TCPA. The district court granted summary judgment for Lincoln, on 20

the basis that (1) the evidence of consent revocation was insufficient, 21

and (2) in any event the TCPA does not permit revocation when 22

consent is provided as consideration in a binding contract. We hold 23

that (1) Reyes did introduce sufficient evidence from which a jury 244 No. 16

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could conclude that he revoked his consent, but that (2) the TCPA 1

does not permit a consumer to revoke its consent to be called when 2

that consent forms part of a bargained

‐ for exchange. We therefore 3

AFFIRM the judgment of the district court. 4

BACKGROUND 5

In 2012, Reyes leased a new Lincoln MKZ luxury sedan from a 6

Ford dealership. 1 Lincoln financed the lease. In his lease application, 7

Reyes provided several personal details, including his cellular phone 8

number. The lease itself contained a number of provisions to which 9

Reyes assented when finalizing the agreement. One provision 10

permitted Lincoln to contact Reyes, and read as follows: 11

12

You [Reyes] also expressly consent and agree to Lessor 13

[Ford], Finance Company, Holder and their affiliates, 14

agents and service providers may use written, electronic 15

or verbal means to contact you. This consent includes, 16

but is not limited to, contact by manual calling methods, 17

prerecorded or artificial voice messages, text messages, 18

emails and/or automatic telephone dialing systems. You 19

agree that Lessor, Finance Company, Holder and their 20

affiliates, agents and service providers may use any 21

email address or any telephone number you provide, 22

now or in the future, including a number for a cellular 23

phone or other wireless device, regardless of whether 24

you incur charges as a result. 25

1 “Lincoln Automotive Financial Services” is a registered trade name of

Ford Motor Credit Company LLC, and not an independent company.5 No. 16

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1

At some point after the lease was finalized, Reyes stopped making 2

his required payments. As a result, on multiple occasions, Lincoln 3

called Reyes in an attempt to cure his default. 4

Reyes disputed his balance on the lease, and also claims that 5

he requested that Lincoln cease contacting him. Reyes asserts that on 6

June 14, 2013, he mailed a letter to Lincoln in which he wrote: “I 7

would also like to request in writing that no telephone contact be 8

made by your office to my cell phone.” Lincoln contends that it 9

never received Reyes’s letter, or any other request to cease its calls. 10

At his deposition, Reyes testified to mailing the letter to the P.O. box 11

listed on Lincoln’s invoices and produced a copy of the letter that 12

did not bear an address or postmark and referenced an incorrect 13

account number. Despite his alleged revocation of consent, Lincoln 14

continued to call Reyes. Following the close of discovery, Lincoln’s 15

attorney confirmed that Lincoln had called him 141 times with a 16

customer representative on the line, and had called him with pre

‐ 17

recorded messages an additional 389 times. 18

On February 6, 2015, Reyes filed a complaint against Lincoln 19

in the Eastern District of New York, alleging violations of the TCPA 20

and seeking $720,000 in damages. 2 On June 20, 2016, Judge Wexler 21

2 Reyes also initially sought damages under the Fair Debt Collection

Practices Act (“FDCPA”), but abandoned those claims prior to summary6 No. 16

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granted summary judgment to Lincoln, holding that (1) Reyes had 1

failed to produce sufficient evidence from which a reasonable jury 2

could conclude that he had ever revoked his consent to be contacted 3

by Lincoln, and (2) that, in any event, the TCPA does not permit a 4

party to a legally binding contract to unilaterally revoke bargained

‐ 5

for consent to be contacted by telephone. 6

Reyes now timely appeals both rulings. 7

DISCUSSION 8

A district court’s grant of summary judgment is reviewed de 9

novo

. Gallo v. Prudential Residential Servs., Ltd. P ʹ ship

, 22 F.3d 1219, 10

1224 (2d Cir. 1994). On a motion for summary judgment, the court 11

must “resolv[e] all ambiguities and draw[] all permissible factual 12

inferences in favor of the party against whom summary judgment is 13

sought.” Burg v. Gosselin, 591 F.3d 95, 97 (2d Cir. 2010). Summary 14

judgment is appropriate only “if the movant shows that there is no 15

genuine dispute as to any material fact and that the movant is 16

entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). All 17

legal conclusions by a district court are reviewed de novo

. United 18

States v. Livecchi

, 711 F.3d 345, 351 (2d Cir. 2013) (per curiam). 19

On appeal, Reyes contends (1) that he introduced sufficient 20

evidence to create a triable issue of fact as to whether he placed 21

judgment because Lincoln is not a “debt collection agency” within the

meaning of the FDCPA. Only his TCPA claims remain.7 No. 16

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Lincoln on notice of his revocation of consent; and (2) that the TCPA, 1

construed in light of its broad remedial purpose to protect 2

consumers from unwanted phone calls, does permit a party to 3

revoke consent to be called, even if that consent was given as part of 4

a contractual agreement. 5

6

I. Whether Reyes revoked his consent to be contacted 7

was a triable issue of fact 8

As a preliminary matter, we agree with Reyes that the district 9

court’s finding that he did not revoke his consent to be contacted by 10

telephone was improper on summary judgment. This material issue 11

of fact was in dispute and raised a jury question. Reyes testified in a 12

sworn deposition that he mailed a letter to Lincoln revoking his 13

consent; submitted an affidavit to that effect; and introduced a copy 14

of the letter as evidence in defending Lincoln’s motion for summary 15

judgment. The district court discounted this evidence as 16

“insufficient,” because Reyes “does not recall the address that he 17

mailed the Letter to,” and because “he has no record that the Letter 18

was actually sent to Defendant.” The district court also noted that 19

Lincoln sent a letter to Reyes on December 1, 2014, stating that it had 20

never received any revocation of consent from Reyes. 21

The district court’s conclusion that Reyes did not revoke his 22

consent rested on an impermissible assessment by the court of 238 No. 16

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Reyes’s credibility. See Anderson v. Liberty Lobby, Inc.

, 477 U.S. 242, 1

255 (1986) (“Credibility determinations, the weighing of the 2

evidence, and the drawing of legitimate inferences from the facts are 3

jury functions, not those of a judge

. . . [when] he is ruling on a 4

motion for summary judgment.”). Reyes introduced two separate 5

forms of sworn testimony asserting that he had mailed a letter 6

revoking his consent to be called, and Lincoln responded in turn that 7

it had never received the letter. Adverse parties commonly advance 8

“conflicting versions of the events” throughout the course of a 9

litigation. Jeffreys v. City of N.Y.

, 426 F.3d 549, 553

‐ 54 (2d Cir. 2005) 10

(quoting Rule v. Brine, Inc., 85 F.3d 1002, 1011 (2d Cir. 1996)). In such 11

instances, on summary judgment, the district court is required to 12

“resolv[e] all ambiguities and [draw] all permissible factual 13

inferences in favor of the party against whom summary judgment 14

[is] sought.” Burg, 591 F.3d at 97. “[T]he judge must ask

. . . not 15

whether

. . . the evidence unmistakably favors one side or the other 16

but whether a fair

‐ minded jury could return a verdict for the 17

plaintiff on the evidence presented.” Jeffreys

, 426 F.3d at 553 (quoting 18

Anderson, 477 U.S. at 252). Under this standard, the district judge 19

erred in concluding that no reasonable jury could find that Reyes 20

revoked his consent, when Reyes introduced sworn testimony to the 219 No. 16

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contrary. 3 Whether that testimony was reliable was a question of fact 1

for the jury. See id

. 2

3

II. Under the TCPA a party is not able to revoke consent 4

that is a term in a prior contract 5

We next turn to the district court’s determination that the 6

TCPA does not permit Reyes to unilaterally revoke his consent. 7

Congress enacted the TCPA to protect consumers from 8

“[u]nrestricted telemarketing,” which it determined could be “an 9

intrusive invasion of privacy.” Mims v. Arrow Fin. Servs., LLC

, 565 10

U.S. 368, 372 (2012) (internal quotation marks and citation omitted) 11

accord Gager v. Dell Fin. Servs., LLC

, 727 F.3d 265, 268 (3d Cir. 2013). 12

To mitigate this problem, the act prohibits, subject to narrow 13

exceptions not pertinent here, any person within the United States 14

from “initiat[ing] any telephone call to any residential telephone line 15

using an artificial or prerecorded voice to deliver a message without 16

the prior express consent of the called party.” 47 U.S.C. 17

§ 227(b)(1)(B). The TCPA also authorizes the Federal 18

Communications Commission (“FCC”) to promulgate rules and 19

3 Whatever impact the use of the wrong account number may be

reasonably assumed to have on Reyes’s attempt at revocation, the district

court did not rely on that fact.10 No. 16

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regulations in order to further implement the act’s provisions. 47 1

U.S.C. § 227(b)(2). 2

While the act requires that any party wishing to make live or 3

prerecorded calls obtain prior express consent, the statute is silent as 4

to whether a party that has so consented can subsequently revoke 5

that consent. Two of our sister circuit courts have ruled that a party 6

can revoke prior consent under the terms of the act. In Gager v. Dell 7

Financial Services

, the Third Circuit held that the plaintiff, who 8

consented to be called in an application for a line of credit that she 9

submitted to the defendant, was permitted to later revoke that 10

consent after receiving harassing calls upon her default on the loan. 11

727 F.3d at 267

‐ 68. The court reasoned that “consent,” as defined 12

under the common law, is traditionally considered to be revocable. 13

Id

. at 270. Moreover, permitting consumers to revoke consent would 14

further Congress’s purpose in enacting the TCPA, which was “ to 15

protect consumers from unwanted automated telephone calls.” Id

. at 16

271. The Eleventh Circuit, in Osorio v. State Farm Bank F.S.B

., adopted 17

the Third Circuit’s reasoning and held that the plaintiff in that case, 18

who had consented to receive calls from the defendant in an 19

application for a State Farm credit card

, could revoke her consent. 20

746 F.3d 1242, 1253 (11th Cir. 2014). In 2015, the FCC relied on these 21

two cases in ruling that “prior express consent” is revocable under 22

the TCPA. See In the Matter of Rules & Regulations Implementing the 2311 No. 16

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Tel. Consumer Prot. Act of 1991

, 30 F.C.C. Rcd. 7961, 7993

‐ 94 (2015) 1

(hereinafter “2015 FCC Ruling”). 2

Gager

, Osorio

, and the 2015 FCC Ruling considered a narrow 3

question: whether the TCPA allows a consumer who has freely and 4

unilaterally given his or her informed consent to be contacted can 5

later revoke that consent. See Osorio

, 746 F.3d at 1253; Gager

, 727 6

F.3d at 270. Reyes’s appeal presents a different question, which has 7

not been addressed by the FCC or, to our knowledge, by any federal 8

circuit court of appeal: whether the TCPA also permits a consumer 9

to unilaterally revoke his or her consent to be contacted by telephone 10

when that consent is given, not gratuitously, but as bargained

‐ for 11

consideration in a bilateral contract. 12

Reyes contends that the same principles that the FCC and the 13

Third and Eleventh Circuits relied on in their previous rulings apply 14

to this situation as well. He argues that (1) under the common law 15

definition of the term, which Congress is presumed to have adopted 16

when it drafted the TCPA, any form of “consent” (whether 17

contractual or not) is revocable by the consenting party at any time; 18

and (2) permitting parties to revoke their consent to be called is 19

consistent with the remedial purpose of the TCPA, which was 20

designed by Congress to afford consumers broad protection from 21

harassing phone calls. 2212 No. 16

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We agree with the district court that the TCPA does not 1

permit a party who agrees to be contacted as part of a bargained

‐ for 2

exchange to unilaterally revoke that consent, and we decline to read 3

such a provision into the act. As an initial matter, Reyes is correct 4

that when Congress uses a term, such as “consent,” that has 5

“accumulated [a] settled meaning under

. . . the common law, a 6

court must infer, unless the statute otherwise dictates, that Congress 7

means to incorporate the established meaning of th[at] term[].” 8

Neder v. United States, 527 U.S. 1, 21 (1999) (citation omitted). The text 9

of the TCPA evidences no intent to deviate from common law rules 10

in defining “consent,” and the FCC and other federal appellate 11

courts have applied the common law definition of the term when 12

interpreting the act. See Gager

, 727 F.3d at 270; 2015 FCC Ruling at 13

*7961 (holding that permitting “unwanted texts and voice calls is 14

counter

. . . to common

‐ law notions of consent”). 15

“Consent,” however, is not always revocable under the 16

common law. A distinction in this regard must be drawn between 17

tort and contract law. In tort law, “consent” is generally defined as a 18

gratuitous action, or “[a] voluntary yielding to what another 19

proposes or desires.” Black’s Law Dictionary (10th ed. 2014); see also 20

Gager

, 727 F.3d at 270 (“Under the common law understanding of 21

consent, the basic premise of consent is that it is given voluntarily.” 22

(internal quotation marks omitted)). In Gager and Osorio the 2313 No. 16

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plaintiffs provided such voluntary consent to be contacted by 1

furnishing their telephone numbers to businesses in connection with 2

loan and insurance applications, respectively. See Gager

, 727 F.3d at 3

267; Osorio

, 746 F.3d at 1247; see also Rules and Regulations 4

Implementing the TCPA

, 7 F.C.C. Rcd. 8752, 8769 (1992) (ruling that 5

the “knowing[]” release of a phone number to a third party 6

constitutes “express consent” to receive telephone calls from that 7

party under the TCPA). The courts in those cases found, and the 8

2015 FCC ruling confirmed, that consent of this kind, which is not 9

given in exchange for any consideration, and which is not 10

incorporated into a binding legal agreement, may be revoked by the 11

consenting party at any time. This conclusion is well

‐ supported by 12

common law authority, which counsels that “ [u]pon termination of 13

consent its effectiveness is terminated .” R ESTATEMENT (S ECOND ) OF 14

T ORTS § 892A(5) (A M

. L AW I NST

. 1979). 15

Reyes’s consent to be contacted by telephone, however, was 16

not provided gratuitously; it was included as an express provision of 17

a contract to lease an automobile from Lincoln. Under such 18

circumstances, “consent,” as that term is used in the TCPA, is not 19

revocable. The common law is clear that consent to another’s actions 20

can “ become irrevocable” when it is provided in a legally binding 21

agreement, R ESTATEMENT (S ECOND ) OF T ORTS § 892A(5) (A M

. L AW 22

I NST

. 1979), in which case any “attempted termination is not 2314 No. 16

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effective,” id. at cmt. i. See also 13

‐ 67 C ORBIN ON C ONTRACTS § 67.1 1

(2017) (noting that “ a party who is under a legal duty [to perform a 2

contractual obligation] by virtue of its assent” has the burden to 3

prove that that duty was discharged by some subsequent event, 4

such as recission by “mutual agreement” or by the exercise of a 5

contractual right to terminate). This rule derives from the 6

requirement that every provision of a contract—including any 7

proposed modification—receive the “mutual assent” of every 8

contracting party in order to have legal effect. Dallas Aerospace, Inc. v. 9

CIS Air Corp.

, 352 F.3d 775, 783 (2d Cir. 2003) (“[F]undamental to the 10

establishment of a contract modification is proof of each element 11

requisite to the formulation of a contract, including mutual assent to 12

its terms.” (internal quotation marks and citation omitted)). It is 13

black

‐ letter law that one party may not alter a bilateral contract by 14

revoking a term without the consent of a counterparty. See 15

R ESTATEMENT (S ECOND ) OF C ONTRACTS § 287 cmt. a (A M

. L AW I NST

. 16

1981) (requiring “assent by the other party” before a proposed 17

alteration to a contract becomes valid). Yet reading the TCPA’s 18

definition of “consent” to permit unilateral revocation at any time, 19

as Reyes suggests, would permit him to do just that. Absent express 20

statutory language to the contrary, we cannot conclude that 21

Congress intended to alter the common law of contracts in this way. 22

See Neder, 527 U.S. at 21

‐ 23. 2315 No. 16

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Reyes also argues that his consent to be contacted is revocable 1

because that consent was not an “essential term” of his lease 2

agreement with Lincoln. This argument is meritless. In contract law, 3

“essential terms” are those terms that are necessary in order to lend 4

an agreement sufficient detail to be enforceable by a court. 5

Brookhaven Hous. Coal. v. Solomon

, 583 F.2d 584, 593 (2d Cir. 1978) (“If 6

essential terms of an agreement are omitted or are phrased in too 7

indefinite a manner, no legally enforceable contract will result.”). 8

For example, a contract for the sale of goods must contain terms 9

such as the quantity of goods to be sold and the price at which they 10

will be purchased. But a contractual term does not need to be 11

“essential” in order to be enforced as part of a binding agreement. It 12

is a fundamental rule of contracts that parties may bind themselves 13

to any terms, so long as the basic conditions of contract formation 14

(e.g., consideration and mutual assent) are met. Chesapeake Energy 15

Corp. v. Bank of N.Y. Mellon Trust Co.

, 773 F.3d 110, 114 (2d Cir. 2014) 16

(noting the common law rule that a “ contract should be construed so 17

as to give full meaning and effect to all of its provisions ” (alterations, 18

internal quotation marks and citation omitted) (emphasis added)). A 19

party who has agreed to a particular term in a valid contract cannot 20

later renege on that term or unilaterally declare it to no longer apply 21

simply because the contract could have been formed without it. 22

Contracting parties are bound to perform on the terms that they did 2316 No. 16

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agree to, not what they might have agreed to under different 1

circumstances. 2

Reyes counters that because the TCPA is a remedial statute 3

enacted to protect consumers from unwanted telephone calls, any 4

ambiguities in its text must be construed to further that purpose. 5

See Atchison, Topeka & Santa Fe Ry. Co. v. Buell, 480 U.S. 557, 562 6

(1987) (holding that when interpreting broad remedial statutes, 7

courts should apply a “standard of liberal construction in order to 8

accomplish [Congress’s] objects” (citation omitted)); E.E.O.C. v. 9

Staten Island Sav. Bank, 207 F.3d 144, 149 (2d Cir. 2000) (“[I]t is our 10

duty to interpret remedial statutes broadly.”). A liberal reading of an 11

ambiguous term might favor a right to revoke contractual consent. 12

But for the remedial rule of statutory interpretation to apply, the 13

statute must contain an actual ambiguity to construe in the 14

consumer’s favor, and we find no lack of clarity in the TCPA’s use of 15

the term “consent.” It was well

‐ established at the time that Congress 16

drafted the TCPA that consent becomes irrevocable when it is 17

integrated into a binding contract, and we find no indication in the 18

statute’s text that Congress intended to deviate from this common

‐ 19

law principle in its use of the word “consent.” See Neder

, 527 U.S. at 20

21. 21

We are sensitive to the argument that businesses may 22

undermine the effectiveness of the TCPA by inserting “consent” 2317 No. 16

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clauses of the type signed by Reyes into standard sales contracts, 1

thereby making revocation impossible in many instances. See, e.g., 2

Skinner v. Bluestem Brands, Inc.

, No. 3:14

‐ CV

‐ 256

‐ CWR

‐ FKB, 2015 WL 3

4135269, at *3 (S.D. Miss. July 8, 2015). But this hypothetical concern, 4

if valid, is grounded in public policy considerations rather than legal 5

ones; if the abuse came to pass, it would therefore be “for 6

the Congress to resolve—not the courts .” Atl. City Elec. Co. v. Gen. 7

Elec. Co.

, 312 F.2d 236, 244 (2d Cir. 1962) (en banc). We are not free to 8

substitute our own policy preferences for those of the legislature by 9

reading a right to revoke contractual consent into the TCPA where 10

Congress has provided none. 11

CONCLUSION 12

We have considered Reyes’s remaining arguments, and we 13

find them meritless. We therefore AFFIRM the judgment of the 14

district court. 15