may please the court my name is roger mandel along with my co counsel martin woodward i represent appellant so when vsa to consumer customers of washington mutual these consumers briefs three major issues however due to time the consumer sufficiently pled that those cards constitute credit cards under seal and regulations e and that washington mutual violated for requirements of tiel and regulations the relating to those credit cards to disclosure requirement and to substantive record requirements before i begin that argument i'd like to provide you with a little historical context banks traditionally reviewed and decided whether to pay insufficient funds items on an individual basis paying some and not paying others in other words banks occasionally paid inadvertent overdraft on an ad hoc basis washington mutual's overdraft limit program is a revolutionary new product that is radically different from the traditional practice washington mutual represents that it will in a dozen fact hate each and every overdraft item up to a preset credit limit including overdraft created by a t m and debit cards and in fact contacts in mind i'd like to turn to the first part of my argument that washington mutual's a t m and debit cards under its overdraft limit program constitute credit cards under seal and regulations easy now in its order of the district court the not directly address this issue it simply it seems to assume that they were credit cards and went on to hold that two of the disclosure requirements had not been violated by washington mutual and if it appears the district court assumed that these cards constitute credit cards it was correct in that it some  proposition that washington mutual's payment of overdraft constitute the extension of credit ceiling and regulations even if i credit as and i quote the right to defer pay a man of debt or to incur debt and deferred payment honor there's as we know there's there's no way that if this is the exact simultaneous time that the overdraft is paid that a covering deposit is going to be made so washington mutual understands and agrees that for some period of time it will now owed that money by the customer so the customer owes money to washington mutual which is the dac so washington mutual while the customer to incur debt in i'm going to defer the payment because under the circumstances washington mutual reasonably expects that it will be some reasonable period of time perhaps days perhaps weeks before it's repaid by covering deposit but they're not well i don't know are they agreed to the for them or is that there are they the only written materials we have in the record they're promotional materials and those promotional materials indeed promote the use of overdraft in the form of credit they say don't worry if you don't have sufficient funds in your in your account you're covered and they're actually promoting it as a short term form of credit in their promotional materials and their expectation is that indeed people are aware of this now it's not something that's undisclosed it's something they promoted and they're aware that people will indeed may consciously decide to use credit by riding an insufficient funds check or using their a t m or debit card and expecting to repay that within a short period of time and crucially that falls exactly within the definition of credit in regulations see i also point out that the office of the comm for all of the currency in its interpretive letter number nine fourteen from august two thousand one said this and i quote an overdraft would be credit as debit cards constitute credit cards to you in regulations easy to find a credit card as and i quote any card that may be used from time to time to obtain credit because they can create overdraft which washington mutual will pay the a debit cards may be used from time to time to obtain credit i think the official staff commentary on regulations the which isn't titled the substantial deference really confirms this the commentary says that a debit card   mutual had issued the credit cards without the plaintiff requests yes sharing you can find that and paragraph sixty knowing of the class action complaint which you can find in the excerpts also seem to take the position that the bank could not have the permission or any agreement with the card holders to offset i guess that's what you're saying does the complaint  allege that there was no agreement your honor yes your honor i believe that that would be in paragraph seventy also found in the excerpts of records at page  consent now that gives rise to assist separate question but related and page four paragraph twelve there's a statement said don't worry we'll cover you an automatic protection or pay your checks were and our objective leave this earth even this leaving because of the that's misrepresent the legal obligation the bank undertook as a result of the formation of the deposit account contract not i read that as an affirmative statement that there was a contract between the bank and these deposits we are i think that what that's referring to is incense there's no allegation there's a formal written deposit contract but what we're saying is that a contract is in effect formed by their s u issuance of the written promotional materials in which they agreed to pay overdraft but so you can have a formation of an unwritten contract that so you say formation of the deposit account contract so the depositor never knows with the bank saying ever signs a deposit contract but there was a formation of such a contract at least by the practice of the parties and and perhaps oral and the written promotional material there obviously was some sort of contractual relationship but the important thing is it was a written contract are you saying there was a written contract who was not a written contract we are not alleging at this point that there was a formal written contract because there's no evidence of that and in the record  said that there was a written agreement by virtue of the promotional materials to pay overdraft and that governs the terms of the overdraft limit program but what's important has no where in the petition does it allege that there was that any agreement included an agreement that they could offset the checking account with any credit card indebtedness now what you have to remember is that the offset poor vision is the standard rule and then a offset pursuant to a automatic debit plan agreed to in writing is an exception and the petitioner of the appellant's never pled the exception and washington mutual doesn't really even deny that violation of the offset prohibition and for them to bring up the exception of the written agreement exception obviously at the pleading stage they could only rely upon that if we had pled the exception well the consumers pledge that washington mutual issued unsolicited credit cards in violation of section six hundred forty two by adding the overdraft credit for each year to existing a t m debit cards and by issuing new cards with that feature and the district court simply ignore this allegation now washington mutual's responses decide to regulation eat it which in section two a five point twelve says that it and not feel in regulations e applies to credit cards which only which only provide for overdraft credit extensions but that's it but that applies only if the credit extension is pursuant to a preexisting agreement between the consumer and the financial institution now the consumers did attempt to plead such an agreement in connection with their claim that the overdraft charges constitute finance charges under teela but the district court held the consumers had not done so sufficiently so that puts this an either or situation if the court overrules the district whether these are finance charges as it relates to credit cards with the roof would be on the disclosure requirements whether disclosure requirements related to finance charges do or do not have to be given but as we'll see there are also disclosure requirements that form and what we'd like to point out the disclosure requirements is this there are three separate disclosure stipes of disclosures that have to be made set out in three different sections and regulations  in one section may require disclosures in credit and charge card applications in another section they require disclosures initial disclosure statements and in the third section may require disclosures in periodic statements now but the district court correctly held that the solicitor the disclosure requirements in applications and solicitations do not apply to washington mutual's cards because they only access overdraft lines of credit however the district court ignored the other two types of disclosures the periodic statement disclosures in the initial statement disclosures which are separate disclosures and which do not contain an exception for credit extensions that are overdraft lines of credit attached to an asset account and because the district court simply ignored these allegations it was an error in dismissing the first cause of action under teela now the initial disclosure statement a requirement has eight different disclosures fo them relate to finance charges and four of them do not and four of them do not but if the court finds that the overdraft charges are financed the school or finance charges then they violated these disclosures but even if they didn't there are still two disclosure that would be important number one the identification of other charges which may be imposed and their method of calculation and number two a statement of a customer's billing rights those apply even if the overdraft charges are not finance charges the consumers pled this violation the district court simply ignored it and it was an error in doing so periodic statements require ten different disclosures five relate to finance charges and five do not so even if the court finds that the overdraft charges are not finance charge there were still five disclosures that were required to be made the consumers pled this violation the district court simply ignored it and therefore was in error in violating in dismissing the the first cause of action and with that i agencies which have the greatest level of information and the greater at the greatest interest in the exact issues before this court have addressed the exact issue before this court and all of this is before the court that there was guidance issued but there was a formal process for taking comments on the guidance the extensive submissions to those regulatory agencies and then in february and may of last year final rules were issued addressing precisely the issue before this court say but rather are subject to the disclosure requirements as he said the truth in savings act regulation d d and this really doesn't need to go much beyond that don't we have to look at  six so we have to look at what happened what you know the regulatory situation at the time these folks were dealing with the banks and we may get some guidance from the agencies after the fact mumblings about what the long  we have to look at did the cia apply at that time as a matter of wall nothing about the truth in lending act has changed as a result of that guidance what you do have  interpretive instruction from the regulatory bodies that tell you how that statute is and how the truth in savings act and how programs like this should be viewed under the applicable laws that they are responsible for administering so it's not like you have a change in the law but what you do have is the benefit of the regulators who know more than anyone about this program's and have the greatest interest in these programs telling you how the law that exists is to be interpreted and so i don't think the timing actually makes a difference here if they were here arguing that regulation d d had been violated for example then the issue with the timing of when the changes would take effect obviously with the some relevance but what i would analogize the situation too is the following the a supreme court case that's decided construing teela that's decided between the time that those last two this brought and we stand here today that supreme court case tells us how if it's always been the same even if they have to change their view of it so i don't think the supreme court is a very good analogy to mere mortals well i would submit that we all have to live with the supreme court and that's bad fiction and that does guide this but that's a little off point but my point being is that i don't think it matters i mean the fact is you've got regulators they're the ones who really know these statutes have a view they've expressed that view in learned detail they've addressed exactly the issues that the plaintiffs here and appellants here have argued before this court all of that was considered all of it rejected and the regulator thought let me take a moment and respond to some of the points that have been made here i mean there's obviously extensive briefing on the very complex regulatory scheme that we're dealing  with mr mandela started his comments by saying that this product is somehow radically different from anything that's been considered before well that just is not the case the guidance here is very helpful the guidance talks about overdraft limit programs just like the program before this court and the guidance recognize course with time with computerization with automation the nature of all of our banking into posit transactions have changed but the guidance puts together lunch together and treats the same what i would call traditional overdraft of the type that used to exist when i first started you know with a checking account with those that exist now which are much more automated and computerized hopefully not intentionally but but the point is that these regulatory bodies have taken into account that times yes times have changed but they've concluded that the historic  traditional overdraft protection programs are really what's been automated now and there can be treated the same the distinctions they drop and this is really very important when we get to the next point which is whether there's been an extension of credit is the difference between an overdraft program an overdraft limit program like the type that washington mutual's alleged to have and a line of credit which is something different that is a contractual commitment with terms that essentially allows you not essentially that fully allows you to borrow money from the bank to cover your checks and it has a repayment plan it has terms it has interest all of that is addressed in the guidance right up front and if that distinction is the driver here going to mr mandela's point this is not an extension of credit and that is absolutely clear and the reason for that is that it's not credit in the first place because there is no right an exhibit properly before this court which is very clear that immediate repayment is required here that's not the same as a right to defer payment a right to defer payment is the document the distinction between a line of credit and an overdraft program as contemplated in the guidance as well as the case law would be completely obliterated i mean obviously as appellants point out in their some time must pass between the overdraft and when you replenish the count that time may be as little as a minute because when there's an overdraft you may immediately transfer money into your account but deferring payment contemplates some sort of a written understanding that there is a schedule for student to which payment can be made over a period of time ok what if this is not an request and that there was this right of the bank to take money from another account to pay off the overdraft well let me start with whether t credit card because you don't get into any of those requirements unless you have a credit card that's right and we break this issue but i'm telling simply a credit card is a card that may be used to obtain credit and this is only a debit card that you are correct deposit account which has an overdraft limit feature on it it is not a credit relationship for the reasons that i've articulated as well as those in our brain are that much you use a debit card that takes money out of your account and if you use it to well that's quite a fascinating argument because in their own briefs they can see that immediate is the same as a reasonable period of time that's their position but i can't remember if they cite webster's for that or whether think it's just in the nature of opining by the lawyers but they say lose your debit card privileges and overdraft limit privileges but that's what happens if you don't get that right but they don't charge interest they would not be charging interest on that it's not for you this interest it's a processing fee it is a fee for overdrafting your account just like the cases that series in the series of mississippi cases which are the only authority before this court something we believe obviously that they can be dismissed at the pleading stage we believe that everything that the district court needed to decide are needed for its decision was before it and i think that the district court's opinion makes that the district without belaboring each point because it's in the record you know the district court concluded this was the finance charge to come to that conclusion the district court relied on the statements that were before the court  exhibits a and b to the complaint which recites that the fee is the same whether an item is paid or returned the district court relied on plaintiff's own allegations with respect to whether there is an agreement or not an agreement with respect to the covering of overdrawn checks again as well as the statement which makes clear that the decision of whether to honor or not is one of discretion because again paid our return that gives the the thank the option to not honor overdraft my the promotional materials do not constitute a written agreement is arca sition even though they say that they will do well i'm not sure that that's what they say we could disagree we could disagree on that with the promotional material so just that there promotional materials and then you get bank statements that say we don't have to honor them they say pay to return the use of the most from the serials like an offer from a themselves allege i mean the plaintiffs themselves distinguish i believe in paragraphs twelve to nineteen in the complaint that i may have the numbers wrong i think that's right between the promotional materials and the contract they admit that there's a deposit contract they say that the one of the flaws in the promotional materials is that they don't accurately represent what the legal obligation of washington mutual is and that somehow the contract varied that and it's that allegation in part that the court relied on so i mean it is our view is that there was enough before the court but i'd like to say one more thing about that which is i'm two of the issues raised today and in the three things were not raised appellants before the court the law and specifically these are the issues with respect to initial disclosures and periodic statement disclosures those were not briefed before the trial court and as we point out in our papers they're not properly before this the same questions or if we were to agree with you that the twenty one dollars charge by the bank or in a section is not a finance show then there would to leave court for failure to move a trial or with regard to these offsets well that the offset issue only comes up in the event that the transactions are subject to the truth in lending act of begin with and it's our position that they are not subject to the truth in lending act because they're not credit cards ok all right and then we get down to the other reasons by the way that that's also true even if they were subject to the tr only used to work you see it still works the same way you well know what i'm saying is it doesn't work the same way there's no question that the process has been automated what i'm saying though is that the regulatory agencies that are responsible for this exact function at banks you know the o c c the fed the o t s all recognized in the guidance that yes the process has been modernized yes just think it computerized but we're going to treat this the same way as it's always been treated and for the purposes of determining whether there's a finance charge in fact it doesn't matter because the written agreement aspect still is the same there's no written agreement to honor for it doesn't matter whether you have a traditional process or a modern process but the but going i think the the guidance is the touchstone here and the guidance makes clear that the old fashioned way and the newfangled way i do the same for the purpose of analyzing the regulations that the distinction now is really do you have a formal line of credit or do you have an overdraft program and here we have an overdraft limit we don't have a line of credit situation because there's no terms for  regulations e nor the official staff commentary puts a minimum length of time on the period of deferral in order for this to be considered the extension of credit now the promotional materials you say repay immediately well so immediately contemplates some period of time a reasonable period of time one of the circumstances maybe maybe hours maybe days maybe weeks may even be the months but there's a period of deferment and that says that there has to be an interest charge or a finance charge on that in fact you have charge cards which are defined as the next allowing the extension of credit without a finance charge american express was a classic charge card in the old day and yet it subject it's a credit card for purposes of all these disclosure requirements even though the contemplation is that it will be paid back every month without the imposition of a finance charge now i think what really makes this clear is that regulations e explicitly says that due on demand debt due on demand notes are the extension of credit and are covered by teela now obviously view on demand notes are in essence immediately they can be with even the most  deferment they can be called yet they are still credit and i think that's very important of course they have no response to the office of the comptroller of the currency which in two thousand and one said that the payment of overdraft is the extension of credit statement disclosures and has the initial statement disclosures in some part be of teela so we did bring that up to the district court let me conclude by addressing this argument that somehow the adoption of regulation d governing provision on overdraft limit programs forecloses our credit card argument three responses to that number one nowhere in the rule did the federal reserve board address the specific issue of whether any a t m and debit card that systematically allow overdraft constitute credit cards under teela fact nothing in the rule indicates the federal reserve board specifically consider that argument second as we've seen regulations e and the official staff commentary to regulations easy to find credit cards so as to clue these a t m and debit cards under the overdraft limit program the board cannot conceivably overturn the congressional statute its own regulations the in its own official staff commentary in its comments relating to a nother rule and another statute for what the board was deciding in regulation d d was how to regulate what it considered to be typical overdraft programs explicit disclaimer of the obligation to pay all overdraft so it said because of this there was no written agreement to pay overdraft and it noted that regulations already excluded the payment of overdraft if there was no written agreement to pay them so what i was addressing was programs that were not already covered under regulations e and not already covered under regulation d d and deciding how are we going to regulate them and decided under regulation d d what it did not address was programs that were already under regulations eat that if you had an agreement in writing to pay overdraft which we alleged wasn't touching that in the end it didn't port to address its credit cards if a t m and debit cards already constituted credit cards under teela it didn't purport to address that so in regulating it was it was purporting to regulate something other than what plaintiffs have alleged and for that reason we don't think that their final guidance for