Would-Be TCPA Plaintiff Cannot Unilaterally Revoke Contractual Consent to be Called

The Eleventh Circuit has joined the Second in holding that consent to be called using an autodialer and/or prerecorded messages, given as part of a contract, cannot be unilaterally withdrawn.  Medley v. DISH Network, LLC, 2020 WL 2092594 (11th Cir. May 1, 2020).

Linda Medley entered into a 24-month agreement with DISH Network to receive satellite television services for a monthly fee.  The agreement included an option to enroll in the “DISH Pause” program, which would temporarily suspend satellite services and add the suspended months to the end of the contract term.  As part of the agreement, Medley gave DISH her cell phone number and authorized the company to contact her regarding her account, or to recover any unpaid obligation—including by use of an automated or predictive dialing system and/or using prerecorded messages.

Nearly halfway through the contract term, Medley enrolled in the “Pause” program, under which she would be billed $5/month during the “Pause” period.  Two months later, she filed a Chapter 7 bankruptcy petition, listing $831.74 in unsecured debt owed to DISH but without identifying the DISH agreement as an executory contract.  The bankruptcy court entered a discharge order discharging Medley’s debts, including the $831.74.  DISH wrote that amount off, but continued to bill Medley the Pause fee of $5/month, which she did not pay.

DISH sent Medley an e-mail attempting to collect the Pause fees.  Medley’s bankruptcy counsel responded to the e-mail, indicating that the law firm represented her “with regard to her debts generally . . . including the above-listed account.”  The letter also referred to the TCPA and said that any prior consent to be called “is hereby forever revoked consistent with the Florida and federal law.”  After receiving that letter, DISH sent Medley four more collection e-mails and made six automated calls to her cell phone.  When Medley’s “Pause” period ended, DISH disconnected her account for nonpayment and adjusted her balance to zero.

Medley sued DISH, claiming that DISH violated the TCPA by using an automatic telephone dialing system and/or prerecorded messages, and that it violated the Florida Consumer Collection Practices Act (“FCCPA”) by contacting her about an alleged debt knowing that she was represented by counsel and that the debt had been discharged in bankruptcy.  The district court granted DISH’s motion for summary judgment on both claims.  The district court found that the monthly “Pause” debt, as opposed to the $831.74 debt, had not been discharged (and was not within the scope of Medley’s bankruptcy counsel’s representation), and that Medley could not unilaterally revoke the consent to be called that she had given as part of a bargained-for exchange in the DISH contract.  Medley appealed.

The Eleventh Circuit, in an opinion written by Judge Ashley Royal visiting from the Middle District of Georgia and joined by Judge Jill Pryor and Judge Grant, affirmed summary judgment in DISH’s favor on the TCPA claim.  Following the Second Circuit’s reasoning in Reyes v. Lincoln Automotive Financial Services, 861 F.3d 51 (2d Cir. 2017), the court held that Medley could not unilaterally revoke the consent she had given in the parties’ contract.  “We have expressly stated that ‘an “agreement is a manifestation of mutual asset on the part of two or more persons” . . . [I]t is black-letter contract law that one party to an agreement cannot, without the other party’s consent, unilaterally modify the agreement once it has been executed.’”  So Medley, having consented as part of the parties’ contract to be contacted by autodialer and to receive prerecorded messages, could not unilaterally change the terms of the agreement.

The court rejected Medley’s argument that Osorio v. State Farm Bank, F.S.B., 746 F.3d 1242 (11th Cir. 2014), and rulings by the Federal Communications Commission required a different result.  Osorio, the court noted, concerned oral revocation of consent given “gratuitously” as part of a credit application—not as part of a bilateral contract.  And the FCC’s orders concerning revocation of consent likewise did not address “consent given in a legally binding agreement.”

As to the FCCPA claim, the court reversed, first concluding that the district court was wrong to conclude that Medley’s “Pause” debt was not discharged.  Section 365 of the Bankruptcy Code provides that an executory contract is deemed rejected if the trustee does not assume or reject the contract within a specified time period.  The trustee in Medley’s case never assumed or rejected the DISH contract, but the district court nevertheless declined to deem the contract rejected because Medley had not listed the contract as an executory contract in her bankruptcy schedules.  The Eleventh Circuit held that this was error.  Medley’s schedules did disclose DISH as a creditor, so the trustee knew of the parties’ relationship.  DISH, for its part, knew about the bankruptcy, but failed to object to the dischargeability of its breach-of-contract claim.  And there was no evidence that Medley intentionally concealed the existence of the agreement.  (Here, the court cited the Fifth Circuit’s decision in In re the Matter of Provider Meds, L.L.C., 907 F.3d 845 (5th Cir. 2018), for the proposition that Section 365’s presumption is conclusive where there is no suggestion of intentional concealment.)

Because rejection constitutes a breach of the contract immediately pre-petition, the court continued, DISH had a pre-petition claim for breach of contract based on Medley’s failure to pay the Pause fees.  But that claim was discharged when the bankruptcy court entered the discharge order.  Having determined that the district court based its judgment as to the FCCPA claim on an erroneous conclusion as to the status of the Pause debt, the Eleventh Circuit remanded the case for determination whether DISH had the actual knowledge required for FCCPA liability and/or was entitled to the statute’s bona fide error defense.

On May 22, 2020, Medley filed a petition for panel rehearing.

Posted by Valerie Sanders.

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