16‐2104‐cv Reyes v. Lincoln Automotive Fin. Servs.

1

2 In the 3 United States Court of Appeals 4 For the Second Circuit 5 ________ 6 7 AUGUST TERM, 2016 8 9 ARGUED: APRIL 4, 2017 10 DECIDED: JUNE 22, 2017 11 12 No. 16‐2104‐cv 13 14 ALBERTO REYES, JR., 15 Plaintiff‐Appellant, 16 17 v. 18 19 LINCOLN AUTOMOTIVE FINANCIAL SERVICES, 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: WALKER, JACOBS, and PARKER, Circuit Judges. 29 ________ 30 _______ * The Clerk of Court is directed to amend the caption as shown above. 2 No. 16‐2104‐cv

1 Plaintiff‐appellant Alberto Reyes, Jr., appeals a judgment of

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

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

4 of summary judgment to the defendant‐appellee, Lincoln

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

6 damages stemming from Lincoln’s alleged violation of the

7 Telephone Consumer Protection Act (“TCPA”), Pub. L. No. 102‐243,

8

(1991) codified at

. Reyes leased an

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

10 consented to receive manual or automated telephone calls from

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

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

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

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

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

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

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

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

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

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

21 that consent forms part of a bargained‐for exchange. We therefore

22 AFFIRM the judgment of the district court.

23 ________ 3 No. 16‐2104‐cv

1 2 YITZCHAK ZELMAN, Marcus & Zelman, LLC, 3 Ocean, NJ, for Plaintiffs‐Appellees.

4 JESSICA L. ELLSWORTH (Morgan L. Goodspeed, on 5 the brief), Hogan Lovells US LLP, Washington, 6 DC, for Defendants‐Appellants.

7 ________ 8 9 JOHN M. WALKER, JR., Circuit Judge:

10 Plaintiff‐appellant Alberto Reyes, Jr., appeals a judgment of

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

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

13 of summary judgment to the defendant‐appellee, Lincoln

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

15 damages stemming from Lincoln’s alleged violation of the

16 Telephone Consumer Protection Act (“TCPA”), Pub. L. No. 102‐243,

17

(1991) codified at

. Reyes leased an

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

19 consented to receive manual or automated telephone calls from

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

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

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

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

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

25 and (2) in any event the TCPA does not permit revocation when 4 No. 16‐2104‐cv

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

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

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

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

5 that consent forms part of a bargained‐for exchange. We therefore

6 AFFIRM the judgment of the district court.

7 BACKGROUND

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

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

10 Reyes provided several personal details, including his cellular phone

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

12 Reyes assented when finalizing the agreement. One provision

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

14

15 You [Reyes] also expressly consent and agree to Lessor 16 [Ford], Finance Company, Holder and their affiliates, 17 agents and service providers may use written, electronic 18 or verbal means to contact you. This consent includes, 19 but is not limited to, contact by manual calling methods, 20 prerecorded or artificial voice messages, text messages, 21 emails and/or automatic telephone dialing systems. You 22 agree that Lessor, Finance Company, Holder and their 23 affiliates, agents and service providers may use any 24 email address or any telephone number you provide,

1“Lincoln Automotive Financial Services” is a registered trade name of Ford Motor Credit Company LLC, and not an independent company. 5 No. 16‐2104‐cv

1 now or in the future, including a number for a cellular 2 phone or other wireless device, regardless of whether 3 you incur charges as a result. 4 5 At some point after the lease was finalized, Reyes stopped making

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

7 called Reyes in an attempt to cure his default.

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

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

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

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

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

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

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

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

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

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

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

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

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

21 recorded messages an additional 389 times.

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

23 in the Eastern District of New York, alleging violations of the TCPA 6 No. 16‐2104‐cv

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

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

3 failed to produce sufficient evidence from which a reasonable jury

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

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

6 party to a legally binding contract to unilaterally revoke bargained‐

7 for consent to be contacted by telephone.

8 Reyes now timely appeals both rulings.

9 DISCUSSION

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

11 novo. Gallo v. Prudential Residential Servs., Ltd. Pʹship,

,

12 1224 (2d Cir. 1994). On a motion for summary judgment, the court

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

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

15 sought.” Burg v. Gosselin,

(2d Cir. 2010). Summary

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

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

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

2 Reyes also initially sought damages under the Fair Debt Collection Practices Act (“FDCPA”), but abandoned those claims prior to summary judgment because Lincoln is not a “debt collection agency” within the meaning of the FDCPA. Only his TCPA claims remain. 7 No. 16‐2104‐cv

1 legal conclusions by a district court are reviewed de novo. United

2 States v. Livecchi,

(2d Cir. 2013) (per curiam).

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

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

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

6 construed in light of its broad remedial purpose to protect

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

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

9 a contractual agreement.

10

11 I. Whether Reyes revoked his consent to be contacted

12 was a triable issue of fact

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

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

15 telephone was improper on summary judgment. This material issue

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

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

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

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

20 judgment. The district court discounted this evidence as

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

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

23 was actually sent to Defendant.” The district court also noted that 8 No. 16‐2104‐cv

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

2 never received any revocation of consent from Reyes.

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

4 consent rested on an impermissible assessment by the court of

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

,

6 255 (1986) (“Credibility determinations, the weighing of the

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

8 jury functions, not those of a judge . . . [when] he is ruling on a

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

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

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

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

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

14 litigation. Jeffreys v. City of N.Y.,

, 553‐54 (2d Cir. 2005)

15 (quoting Rule v. Brine, Inc.,

(2d Cir. 1996). In such

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

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

18 inferences in favor of the party against whom summary judgment

19 [is] sought.” Burg,

. “[T]he judge must ask . . . not

20 whether . . . the evidence unmistakably favors one side or the other

21 but whether a fair‐minded jury could return a verdict for the

22 plaintiff on the evidence presented.” Jeffreys, 426 F.3d at 553 (quoting

23 Anderson,

). Under this standard, the district judge 9 No. 16‐2104‐cv

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

2 revoked his consent, when Reyes introduced sworn testimony to the

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

4 for the jury. See

5

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

7 that is a term in a prior contract

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

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

10 Congress enacted the TCPA to protect consumers from

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

12 intrusive invasion of privacy.” Mims v. Arrow Fin. Servs., LLC, 565

(2012) (internal quotation marks and citation omitted)

14 accord Gager v. Dell Fin. Servs., LLC,

(3d Cir. 2013).

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

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

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

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

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

20 § 227(b)(1)(B). The TCPA also authorizes the Federal

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. 16‐2104‐cv

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

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

(b)(2).

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

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

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

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

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

9 Financial Services, the Third Circuit held that the plaintiff, who

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

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

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

13 727 F.3d at 267‐68. The court reasoned that “consent,” as defined

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

15 Id. at 270. Moreover, permitting consumers to revoke consent would

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

17 protect consumers from unwanted automated telephone calls.” Id. at

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

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

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

21 application for auto insurance, could revoke her consent.

1242, 1253 (11th Cir. 2014). In 2015, the FCC relied on these two cases

23 in ruling that “prior express consent” is revocable under the TCPA. 11 No. 16‐2104‐cv

1 See In the Matter of Rules & Regulations Implementing the Tel. Consumer

2 Prot. Act of 1991, 30 F.C.C. Rcd. 7961, 7993‐94 (2015) (hereinafter

3 “2015 FCC Ruling”).

4 Gager, Osorio, and the 2015 FCC Ruling considered a narrow

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

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

7 later revoke that consent. See Osorio, 746 F.3d at 1253; Gager, 727

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

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

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

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

12 when that consent is given, not gratuitously, but as bargained‐for

13 consideration in a bilateral contract.

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

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

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

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

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

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

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

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

22 designed by Congress to afford consumers broad protection from

23 harassing phone calls. 12 No. 16‐2104‐cv

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

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

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

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

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

6 “accumulated [a] settled meaning under . . . the common law, a

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

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

9 Neder v. United States,

(1999) (citation omitted). The text

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

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

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

13 interpreting the act. See Gager,

; 2015 FCC Ruling at

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

15 counter . . . to common‐law notions of consent”).

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

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

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

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

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

21 Gager,

(“Under the common law understanding of

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

23 (internal quotation marks omitted)). In Gager and Osorio the 13 No. 16‐2104‐cv

1 plaintiffs provided such voluntary consent to be contacted by

2 furnishing their telephone numbers to businesses in connection with

3 loan and insurance applications, respectively. See Gager,

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

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

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

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

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

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

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

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

12 consenting party at any time. This conclusion is well‐supported by

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

14 consent its effectiveness is terminated.” RESTATEMENT (SECOND) OF

15 TORTS § 892A(5) (AM. LAW INST. 1979).

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

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

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

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

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

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

22 agreement, RESTATEMENT (SECOND) OF TORTS § 892A(5) (AM. LAW

23 INST. 1979), in which case any “attempted termination is not 14 No. 16‐2104‐cv

1 effective,” id. at cmt. i. See also 13‐67 CORBIN ON CONTRACTS § 67.1

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

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

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

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

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

7 requirement that every provision of a contract—including any

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

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

10 CIS Air Corp.,

(2d Cir. 2003) (“[F]undamental to the

11 establishment of a contract modification is proof of each element

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

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

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

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

16 RESTATEMENT (SECOND) OF CONTRACTS § 287 cmt. a (AM. LAW INST.

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

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

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

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

21 statutory language to the contrary, we cannot conclude that

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

23 See Neder, 527 U.S. at 21‐23. 15 No. 16‐2104‐cv

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

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

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

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

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

6 Brookhaven Hous. Coal. v. Solomon,

, 593 (2d Cir. 1978) (“If

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

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

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

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

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

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

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

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

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

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

(2d Cir. 2014)

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

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

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

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

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

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

23 Contracting parties are bound to perform on the terms that they did 16 No. 16‐2104‐cv

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

2 circumstances.

3 Reyes counters that because the TCPA is a remedial statute

4 enacted to protect consumers from unwanted telephone calls, any

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

6 See Atchison, Topeka & Santa Fe Ry. Co. v. Buell,

, 562

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

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

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

10 Staten Island Sav. Bank,

, 149 (2d Cir. 2000) (“[I]t is our

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

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

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

14 statute must contain an actual ambiguity to construe in the

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

16 the term “consent.” It was well‐established at the time that Congress

17 drafted the TCPA that consent becomes irrevocable when it is

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

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

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

21.

22 We are sensitive to the argument that businesses may

23 undermine the effectiveness of the TCPA by inserting “consent” 17 No. 16‐2104‐cv

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

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

3 Skinner v. Bluestem Brands, Inc., No. 3:14‐CV‐256‐CWR‐FKB,

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

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

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

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

8 Elec. Co.,

(2d Cir. 1962) (en banc). We are not free to

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

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

11 Congress has provided none.

12 CONCLUSION

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

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

15 district court.