On July 18, a New Jersey district court ruled that a customer’s contract termination with a merchant does not also terminate the “established business relationship” (EBR) exception for purposes of the Telephone Consumer Protection Act (TCPA). The decision sheds light on an exception to the TCPA that likely will take on increasing importance, following the Supreme Court’s decision in Facebook v. Duguid.
Plaintiff Nathan Rowan alleged that he purchased a vehicle service agreement in 2020 and cancelled the contract a month later. Rowan contended that five months after he cancelled the contract, defendant US Dealer Services, Inc., which is authorized to market and sell vehicle service contracts, made five telephone calls to him. US Dealer Services described the calls as “win-back calls,” designed to market alternative products to Rowan. Rowan, however, had registered his telephone number with the national Do-Not-Call (DNC) registry and contended that the five calls violated the TCPA’s prohibitions on telephone solicitations to persons registered on the DNC.
At summary judgment, US Dealer Services argued that the EBR exception to the definition of “telephone solicitation” applied where Rowan made a purchase from an entity related to US Dealer Services within 18 months of its calls to Rowan. Rowan contended that his service agreement termination operated to terminate any EBR with US Dealer Services.
The court agreed with US Dealer Services, entering summary judgment in its favor. The court specifically found that the rules and regulations implementing the TCPA, specifically the Federal Communications Commission’s 2003 Final Rule and 2005 Final Order, “make two principles patently clear: (1) a company may call a customer for eighteen months after the termination of the commercial relationship; and (2) a customer may extinguish the [established business relationship] at any time by sending the company a do-not-call request.” Because Rowan’s termination letter did not explicitly request that the company stop calling him, terminating the contract alone did not extinguish the EBR. The court found that any contrary holding would render the exception superfluous, and granted summary judgment to US Dealer Services.
This opinion serves to clarify an important exception to the TCPA’s prohibitions that have not seen significant litigation, yet can provide a useful defense to DNC registry claims, particularly in class cases where potentially millions of dollars are at stake. Troutman Pepper will continue to monitor developments in TCPA litigation.