thank you good morning it please the court my name is paul ray i'd like to reserve five minutes for rebuttal i represent appellant scott and kim tucker and their corporations the tuckers asked the court to reverse the summary judgment of the district court of nevada for the entered for the federal trade commission against the tuckers as to liability into the truth and lending act plain and under a federal trade commission act claim for damages for one point three billion dollars the tuckers requests the court to enter summary judgment for the tuckers on the truth in lending a claim and the tuckers also asked the court to dismiss the case for the f t c is failure to comply with its rule making requirements the relevant facts are as follows  most importantly each of the some three to five million payday loans it at issue in this case has a truth and lending act disclosure which accurately states the finance charge for the borrowers payment obligation and the so called box the factual history is that scott tucker's loan servicing companies provided loan services since two thousand and two to several online payday lender portfolios following an industry standard called the delaware model which provides for optional but automatic but optional loan renewal the industry and the tuckers successfully grew tucker service more than one million loans in two thousand and eleven alone which is the year before this action was filed and employed more than nine hundred people and issued more than five million loans from two thousand and eight to two thousand and twelve in the last year before the f t c filed this action two thousand eleven forty three percent of all the borrowers all the loans were made to returning customers the unauthorized automatic clearing house the transaction rate was only zero point three three zero percent and their internal complaint ratio was below one percent scott tucker's expert and a former f t c director of economics dr david sheff and found a ninety nine percent statistical correlation between the renewal conduct of repeat borrowers who clearly understood the loan terms and first time borrowers showing the statistical likelihood of customer confusion was minuscule from the sample of more than three million loans under teela and regulations e although the f of expectation different than the industry wide disclosure practices tucker and many others followed under the delaware model the one point three billion dollars judgment has crushed the tuckers financially the courts had reverse the district court about a summary judgment for at least two main reasons and some other reasons as well but first and most importantly the district court erred by misinterpreting the teela truth in lending act as requiring disclosure of financing loan obligation and this in this instance it's a subsequent extension which is an optional loan renewal by looking at the loan note and disclosure which has the four boxes on yes yes  and as i understand it the trial court held that the language was deceptive and why wasn't it deceptive if i has a tiny asterisk in the first line and then somewhere in the middle of the same paragraph there's another asterisk to decline the option of renewal you must select your payment options using the account summary link sent to you to your i don't believe it's deceptive at all well it says the finance charges ninety dollars but if you don't do anything you end up paying what six hundred something dollars if yes and most customers have preferred the automatic extension but the truth in lending act the law and regulation z require disclosure of the obligation and that's what the box does disclose is the finance charge for the obligation and the very next sentence the f t c talks i see your saying you  and the f t c certainly makes that a large point of your question and the f t c suggest that this is fine print or scrambled up information but in reality right at the truth in lending  regulations e require the finance charge of the obligation to be most prominent and it is most prominent and the very next disclosure and contractual statement is that if the customer declines to klein's the extension that then this this will apply and then if there's and then because that raises the question or could raise the question of what do you do to decline the extension then that's also provided and this discussion of it being fine print is as a red herring because the reality is the tiller box has to be larger so i can't comparison to the tiller box the rest of it has to be  smaller less prominently disclosed so figurative least someone can call anything fine print after that including one thing that's important to know in this in this case is this practice the delaware model as has been followed throughout the in the record that shows some fifteen or twenty other companies following this practice and it's because it does accurately disclose the obligation and that's why that is my first point as the truth in lending act requires accurate disclosure of the finance charge for the obligation and that's all it requires well just to be accurate contractually and so i understand just as a scan with questions doesn't valid question and i suppose the f t c could even make the argument i understand why they do but not the actions i understand that is if it accurately describes the obligation regardless how difficult it is for  yes and the likely to deceive part is another part of what your objecting about but again the point so the first point we probably are are clear you're clear about my first point is that the disclosure of the obligation is is required und to to your question about no matter how small the fine print no matter how it is in the loan document now i think if there was some unusually small print print that would apply there's no unusually small fine print in this contract th yes thank you for helping me bring it to my contacts yes and actually what happened here is the federal trade commission i'm sorry the district court took the federal trade commission's arguments and applied favorable inference is for the federal trade commission rather than for the non movement absolutely your honor and the statute is clear from the truth in lending act and i think we've covered that that's fifteen u s c section sixteen thirty four and the regulations z ray gun in middle district of alabama extensions on punch up loans or subsequent agreements not requiring additional disclosures so but as and also as to the point about the the likelihood of confusion which you raise also and this is our second argument you know barry i mean it's not beyond a reasonable doubt it's not even the probabilities it's just likely to receive isn't the pretty easy factual barrier to overcome by the f t c it could be in many situations but we don't believe this is the right situation for it and one of the main reasons is because in this case the problem was that the district court ignored the  expert and direct evidence of no likelihood of customer confusion from the net impression of the loan documents one of the things your honor may recall from the record made me see is that the magistrate judge made his own independent reading of the  agreement and ignored the other evidence of the likelihood of confusion of which there was much and under that stephan sic case there are a number of factors that can be considered and the tuckers presented original long term was what their original long term well the thing is there's ok there's three or five million of these or they can be different i think most common and i don't think it's even exactly in every single one i think the most common one is myself in a death spiral it was going to lead me to a nine hundred seventy five dollars payment well that is actually your first instinct was correct because it is another ninety dollars for an extension and actually ours are this version same thing that you did you decline if you declined the automatic extension you're out of it right from the first and every time there's an extension it's the same thing you can you can decline to extend it and what happens of physically is  the the the very persuasive unrebutted analysis of dr sheff in showing ninety nine percent correlation in payment renewal behavior between first time an experienced borrowers demonstrating an absence of confusion or deception at any level all the consumer what is the f t c provided ultimately recanted their initial positions and admitted they were not confused by the loan documents and the loan documents warnings and instead of viewing the loan documents that as a whole as i mentioned the magistrate judge just viewed one portion of one document and said i think that's all i need i don't really need to know what the net impression of the likelihood of confusion is and that's not the right standard and it's also either legally or as to the basic application of the summary judgment standard of considering the facts and drawing the inferences in favor of the non movement movement so the business the other stuff and factors that that were present were the business longevity the low customer complaint and chargeback ratios below one percent and the high repeat customer ratio which all indicated low likelihood of customer confusion but that the unreliable hearsay that i mentioned is the consumer witnesses which were each discredited and the magistrate himself said that the consumer plates were some complaints were sometimes triple hearsay and not identified by name he recognized that the consumer complaints should be viewed with caution because they've been created in anticipation of litigation have been truncated modified and subsequently corrected showing them not to be trustworthy but i thought he t relied on his own impression of the text to be misleading without the individual have the declarations he did and he ignored all the evidence about the likelihood of confusion know that's the stance that is about isn't the right test whether the objective consumer would be misled yes but that the evidence that's relevant isn't the opinion and for example there of those complaints that came i'm sorry i mean the writer of those complaints only seven hundred fifty of them were of this type of confusion that's out of three million transactions which is a amazingly low percentage just one tenth of one percent as the only example that they have and again what happened is the magistrate described the f t c as conduct of bait and switch by failing to disclose its change of material witnesses and this list of unreliable hearsay complaints which the f t c chose to rely on after discovery had cut off rather than disclosing the names of any of these consumers because all the consumers had been deposed so that they were not confused by that by any of the language and i see that my time maybe i should reserve for a bottle of one last question read this announcement on disclosure and understood and now we understand that if you don't send a notification in three days before the end of the period the loan will be automatically renewed with a new finance charge now if all of us understand that is not rather condescending for the court to find as a matter of law the consumer doesn't understand it isn't this what we're saying rather a a classist argument saying even though we understand by the fact that there was a problem there was no problem with the consumers in fact the for the for consumers that were imposed the problem really consumer is to read the contract before he signs the problem is not even reading even the even read in there the contract would not in fact have been clear to consumers at the time consumers are brought to the transaction having in mind that the most important things in well there it was called the sugar box because it was a credit card but it's the exact same concept in rubio the sugar box said that the rate for the credit card could be raised under one of three conditions one two three somewhere else in the contract said the interest rate for the credit card can be raised without any conditions and this court said no you cannot use other terms in the contract certainly ones that i have that are not as clear as these to modify what was in the tele box the whole reason why we need t the interest rate because you're paying ninety dollars for two weeks what i understand how the calculation works but isn't that a warning that if i sort of extending this and looking if you start extent in this that's the whole problem if we have no problem with per se it's that the consumers need to know that these are automatic renewals that tell a box to reflect one term you get three hundred dollar loan you pay ninety dollars in two weeks what the consumer actually did none of this is disputed that's why it's perfect for summary judgment what they actually did is what's reflected on the very next page of the district court's decision which is they automatically renewed and instead of the consumer instead of paying ninety dollars in the pay six hundred seventy five dollars or three hundred dollar loan unless within three days before the end of the period the consumer and the communications think i don't wish to renew and then that his bank versus capital one bank for whatever i'm sorry but for whatever reason i'm looking through the alphabetical list page the in it's on page thirty six it's a page vi the very first  as far as telus concerned rubio forecloses their argument what's in the tele box is the terms of the of the of the extension of credit here they said they will charge ninety dollars instead they charge six hundred  seventy five dollars and they cannot justify the six seventy five buy things that are not in the tele box but that is not the only violation there is a section five violation which the district court both judges the m judge and the district judge on on the view found that the net impression of their note disclosures is funny that that's on a motion for summary judgment the net compression is deceptive as a matter of law no reasonable jury could find the bar or could should that be done by a jury it if it needed to be done by will you do with that with with the expert testimony of of the defendant in this case saying that there was no such a that is not at all what the expert said your honor up first of all the entire expert opinion is built on a false premise the premise being if i may explain part of it we did you object under dog good principles and the district court sustain your objection and strike the testimony of the expert witness the district but the district judge then then what you saying is you because the court said that the entire expert expert opinion is built on a false premise that's why it could not accept it one of the the in fact not one the primary  struck that evidence from the the termination what it said it was not in fact it could not it could not defeat the net impression that was the end even though the court did that without objection punting no we argued we argued the point your honor that the that the expert opinion is built on a false premise they'd also had different you know other problems with methodology but more importantly the main problem only promise for that for the expert opinion was a false premise so we pointed that out to the district court and the district court rejected it properly and the false premise was the false premise is that those that are courts repeat customers must have known the terms of the loan the problem with that is twofold one it is the repeat customers assumes that customers knew they were going back to the same company there is no evidence that that's the case defendants used civet seven different trade names to extend their credits and so you go and get a three hundred dollars on the first time from the metal on the repeat customers must have known the rates and terms doesn't sound to me like a false premises sounds to me like an arguable premise that some people might say this is circumstantial evidence they knew what they were there are repeat customers and that those repeat customers must have known the terms of the loan that's why they came back right but the definition of repeat customer itself does not reflect the facts the consumers did not know they were being repeat customers they did not knew they were going back to the same company because they used seven different trade names in other words if i borrowed three hundred dollars from a merrill loan one of their trade names and then i went back and borrowed three hundred dollars from five hundred cash fast cash another one of their of their companies their expert considered those to be a repeat customers but the customer didn't know that they were going back to the same company that's one assumption is the record reflects that more than ninety four i think more than ninety five percent of the of the defendants customers in fact did not come to them through their own websites they came to them from third party generators the generators so that's yet another level so when i go if i google i want a payday loan and i'll get company x company x takes my information passes it on to one of the seven different portfolios for defendants and i get from the defendants congratulations you've been approved for three hundred dollars then consumer had no idea they were going to the defendant duped and that they paid six hundred seventy five dollars instead of three hundred right now they go back to what they thought was a different company and that company says yes i'll charge you ninety dollars for the three hundred dollar loan is the schumer box it's the same thing you can to change the terms in the tele box with other terms in the contract that are outside because that defeats the purpose of saying by law you need to put the important terms in the box so the consumers can see it so it's not a should have been in the box then in terms of your interpretation i'm sorry ron what you did not have been in the bar the instead of ninety it should have been six hundred seventy five instead of three hundred ninety dollars it should have been one hundred seventy five dollars because these terms that they put in these are not the terms of the of the agreement in fact the only way a consumer  three days before the end of the term they required him to sign your honor new authorization for their automatic withdrawal from the bank they'd required node signature list but that's not a new agreement then others that's another notification the three days and then tender the three hundred ninety dollars is in our contractual relationship ended that's not what you're on because you cannot you don't tender the cash they made part of that i permit it to be withdrawn right which itself was a violation of a separate point i'm going to contractually bound whatever correct exactly if you if you if you in fact manage to find the way to stop the renewal and you signed the agreement that then now they can only withdraw three hundred ninety as opposed to nine seventy five then yes that's the end of your application but that's not what was in the agreement that's not what that's not what was in the  be saying when a person contracts to take a loan only certain terms and not all the terms apply to him that's as far as the tale of violation is concerned let me be very careful here there are a second violation that the entire judgment impression of that to be deceptive and my question is should the judges have found what the pressure was as a matter of law on a motion to summary judgment when there was at least proffered some contrary evidence by the non nonmoving party and the both judges found that there was no reasonable chance that that would happen and the question is should we agree with of judges yes we rely on the same arguments  cases that it brings under thirteen b it distributed to consumers almost four hundred million dollars three hundred and ninety some million dollars back to consumers in consumer redress of compared to that it sent six hundred fifty thousand dollars back to treasury so the idea that because that was one of the main arguments in coke as for why the f c c is discords month was was penalty because often it goes to treasury what here in the f t c is case less then less than one percent of spuds zero point two percent of what the f t c collects goes back to treasury and it only goes to treasury if there was no way to identify the consumers or there was no admit there was no way to administer the beatrice i doubt seriously you're going to get one hundred percent performance on returning to every single consumer but that's as close as it gets what happens to those that you can't reach what happens to those funds what typically in the order that the court enters in this order for example the court said the money if you cannot return the money to the consumers you could be able to use some of the money for consumer related education as long as it's related to the same practice in other words educate consumers about the practice and if there is anything left over then you have to send it to and to summarize and i think you're on your honor's hit the key issues that there was expert testimony that created and genuine issue material fact over for the the effect of and whether the net impression of the contract terms was likely to deceive consumers there was no dobber objection there's also no expert testimony whatsoever from the the  c the comment about sixty eight percent is clearly an analysis of the facts and so if that one argument even applied it would show grounds for reversal further what should have been in the box that was one of the last comments that was the f t c addressed and that was something that we tried to get the f t c to commit to below this is the first time in the case they've done that where they've said what should be in the box very noncommittal up to now and we got a specific number of six seventy five or nine seventy five that counsel gave but if those numbers would have been put in the box it would have been that would have been deceptive and likely to confuse and would have been accurate because it would not have accurately stated the finance charge for the obligation which is my first point and under the truth in lending act that's that's what has to be in that box is the disclosure of the finance charge for the obligation and that's where the error was in the truth in lending act ruling of summary judgment and because this is this is actually the focus of the f t c that's why we also argued that under the rule making authority trying to change it to say that well as we just heard that there would there would be a obligate or a disclosure of the finance charge which is not actually what the obligation is that would be a big change and so also the other for the focus of that is the this does rule under the truth in lending act that would also actually would implicate koch asked as to the statute of limitations which would be one year under the truth in lending act the the whole promise of the f t c is that a violation of the truth in lending act is a violation of the f t c act but it's not and well it would be if it were a violation but in this situation because the obligation is accurately