## In the



# U n ited S ta tes Co urt o f Ap p ea ls

F o rth eS e v e n th C ir cu it
N o. 07

- 1326 B RY AN A ND REW S an d S US AN A NDR EWS, P la intif fs-A pp ellees,

v.

C HEV Y C HASE B ANK, D ef endant-Appellant.

A pp eal from the United S t ates Di strictC our t fo r the E astern Di stricto f Wisc onsin
. No . 05 C454

—L ynnA delm an, Judg e.
A RGUED S EP TE MBE R 26, 2007

— D ECI DE D S EP TE MBE R 24, 2008

Befo re M A NI ON, E VANS, an d S YKES, C ircu it Judges . S YKES, Cir cu i tJudg e . I n this i nt erlocuto ry ap p eal, w e are cal l ed o n to answer o ne questi on: M ay a cl ass act i on be cer ti fi ed f orcl ai m s s eek i ng the r em edy o fr esci ssi on under th e Tr uth in Le ndi ngAct( “T I LA ”) , 1 5 U. S
. C
. § 1 635 ? The on l y t w o fe d er al a p p ella te co u rt s t o h av e a d d re ss ed th is questi on have answered “no , ” s e eM cKe nna v. Fi rs tHor izon H om eLo an Corp
. , 475 F.3d 41 8 (1s t C ir. 20 07 ); Ja me s v . Ho me2 N o. 07

- 1326 C onstr
. Co
. of M obil e, Inc. , 6 21 F
. 2d 72 7 ( 5th Ci r . 1980), a nd w e agree. T I L A ’s sta tu tory-da m ages rem ed y, § 1640(a)(2), s p e c i fi c a l l y r e fe r e n c e s cl a s s a c t i o n s ( b y p r o v i d i n ga d a mag es c ap) , b utTI LA ’ s r es ci ss i o n re m edy, § 16 35 , om i ts a ny re fer ence to cl ass act i ons. Thi s o m i ssi on, and th e fund am entali ncom patibi l i ty between the sta tutor y- re sci ssi on r emedy s etf o r thi n § 1 63 5 an d the c l as s f o r m o fa ct i o n, persuade us as a m att ero fl aw thatTI LA r esci ssi on cl ass a c t i o ns ma y n o tb e ma i nt a i ne d.

I . B a c kg r o und I n J une 200 4 pl ai nti ff s S usan and Bryan A nd re w s obta in ed a loa n from d efe n d an t C h ev y C h as e B an k, F.S.B ., a fed er ally ch ar te re d ba n k, to ref i n a n c e t h eir h om e in C e d a rb u r g, Wi s c o n s i n . B r y a n An d r ew s r u n s h i s o wn h om e-r em od elin g b u sin es s, an d th e A n d re w s a r e ex p er ien ce d m o r tg ag o r s, ha ving pr ev i o us l y ta k en o ut m any o r i g i na l a nd r efi na nc i ng m or tg ag e l o an s f o r v ar i o us re si denti aland i nvest m ent pr oper ti es. Thi s t i m e, they opted f ora unique type oflo an p ro du ct offer ed by Ch evy Cha se tha t al l o wed the m t o v ar y the i r pa y m en t, de pen di ng o n th ei r m o nthl y ca sh fl o w. Thi s “c as hflow pa y m en t opti on, ” a s C hevy Ch ase cal l ed i t, was m or e fl exibl e than a tr adit i onal fi xed- or adj ustabl e- ra te m or tga ge because it al l o wed the de bt o r t o c ho o se b etwee n m ulti pl e pay m en t opti ons. I t was al so m or e com ple x, with a pote nti altr ap f or th e unwar y . The de bt o r c o ul d pa y a monthl y min i m um p ay m en t at a low in te re st rat e fo r an init ial te rm ; un d er th is o pti o n, whi l e th e i nt er es t r at e woul d a dj us t m o nthl y, the m i ni m um paym ents w oul d r em ai n fi xed a t the low r ateN o. 07

- 1326 3 unti l the i ni ti alte rm expi re d orthe outstan d i ng ba l ance exceeded 11 0 per cent ofthe or i gi nal lo an (thr ough “ negati ve a m o r ti zati on”) , whi ch ev ere ve nto cc ur r ed fi r st
. The deb to r c o ul d a l so deci de t o m ak e pa y m en ts l ar g ertha n the m ini m um m ont hly p aym en t, p ay interest only based o n the ful l y i nde xe d ra te , pay a n a m o unts uffi ci en t to a m o r ti ze the l oan ove r 15 yea rs , or pay an am ount s uffi ci ent t o am or ti ze the l oan ove r 30 yea rs . Che vyCha se pr o vi ded pr el i min a ryd i sc l o su r es abo utthe l o ana nd, a t cl o sing, a n a dj us tabl e- r at e no te , a t r uth- i nl e nd ingdi s cl osur e s tat em ent ( “TI LD S”) , and an adj ustabl era te ri der. W hen the A nd re w s obtaine d the l oan, they though t that the m onthl y pay m ent andthe i nter estr ate we r e fi x e d f o r th e i n i t i a l t e r m o ffi v e y e a r s a n d b e c a me va r i ab l e th er ea fte r . Theywer e co r r ec t ab o utthe min i m um m o nthl y pa y m en t butno t ab o utthe i nt er es t r at e. The l o an ’ s di sc o unt ed ( o r “ te as er ”) i nt er es t r at e o f1
. 95 pe r ce nt appl i ed o nl y t o the fi r stmonthl y paym en t. Af te r tha t, the i nt erest r at e adj us te d e ve r y month, e ve n tho ug h the m i ni m um m onthl y pay m ent r em ain ed fi xed accor ding to th e initi al r ate. So as th e interest rate c lim bed , an eve ri ncre asi ng por ti on o fthe m i ni m um m onthl y pay m ent o f $7 01
. 21 was r equi r ed to c o ve r the i nt er es t. S o o n, the m i ni m um m onthl y pay m ent i tse l fbec am e insuffi ci ent t o co ve r the a cc r ue d i nt er es t, a nd the “ ne g at i ve a m o r ti za ti o n” fea tu re (ad d in g t h e u n p aid int er es t t o th e p rin c ip al) k i ck ed i n. I n A pri l 20 05 th e A nd re w s fi l ed thi s purpor ted cl ass - acti on l aw sui t a gainst Chevy Ch ase cl ai m i ng vi ol ati ons ofTI LA and see ki ng st atuto rydam age s under4 N o. 07

- 1326

T h e A n d re w s d id n o t se ek a ct u a l d a m a g es u n d er § 1 6 4 0 (a )(1). 1 § 1 6 4 0 ( a ) ( 2 ) , r e s c i s s i o n un de r § 1 6 3 5 , a nd a t t o r ne y s ’ f ees und er§ 16 40 (a) ( 3)
. The co m pla i nt al l ege d that c er tai n of 1 C he vy C ha se’s d is c lo su res w ere m isl ead ing or un clear, parti cul ar l y a s to w hetherthe i ni ti alinte re st ra te w as fi xed a nd wh e ther th e p a y men tp e r i o ds we r e p r o pe r l y s t a t e d. M or e s peci fi cally , theyal l ege d that ChevyChase’ s paym en t s c h ed u le w as n otsu fficie n tly d et aile d b e c au se it l i s t e d o nl y the fi r s ta nd l a s tp a y men tda t e s ; the y al so cl ai m ed th ata c o m put er - g en er at ed st amp o n th e to p o fo ne ofChevy Chase’ s di scl osur e for m s m ade the disc l osures m isleading. Thi s s tam p, theyas ser ted

— whi c h r e fe r r e d t o the no te as a “ W S Cashfl ow 5- Year Fi xed N ote I nter est R a t e : 1
. 9 5 0 %”

— coul d be und er sto od to identi fy the not e a s a fi xed-r ate not e. The di st r i ctc o ur t g r an te d s um m ary j udg m en t for th e A nd re w s, authori zi ng resc i ssi on and awardi ng at torneys’ fees , tho ugh i t deni ed t h eircl ai m f orst atuto rydam age s because Chevy Chase’ s TI LA vi ola tio ns were not thos e en um erated i n § 164 0(a), f or w hich statu tory d am ages are av aila b le. Se e Andre ws v. Che vy Chas eBank, FS B , 2 4 0 F
. R. D. 612 (E
. D
. W is. 2007). I n th e sam e orde r, th e d istrict cou rt gr anted the A nd re w s’ m oti on forcl ass cer ti fi cati on under Rule 23(b) ( 2) o fthe Fed eral R u l e s o f C ivi l P roc edu re, de clari ngtha t al l cl as s m embe r s woul d hav e the ri g htto r es cind th ei r mor tg ag es . The c er ti fi ed cl as s i nc l ude s an y o ne who obt ai ned a n a dj us t ab l e - r a t e mort gag e fro m Chevy Chase on a p rim ary residen ce bet w een A p ril20, 2004 , and J an ua ry 16, 20 07, and w ho r ecei ved a TI LD S f ro m Chevy ChaseN o. 07

- 1326 5

co nt aini nga ny o fthe l an g ua ge the c o ur t ha d f o und d e fi c i e n tu n d e r T I L A. I n its d ecisio n on class certifi cation, the d istri ct cou rt re l i ed heavi l y on the M ass achusett s di str i ct c ourtdeci si on i n M cKe nna . M cKe nna v. Firs tH or izon H om eLoan Corp. , 42 9 F. S up p. 2d 29 1, 29 6 ( D. M ass . 20 06)
. But that deci si on was re ver se d by the Court ofA pp eal s forthe Fi rs t Ci rcui t l ess th ant wo wee k s after t he c o ur t g r an te d c l as s ce r ti fi ca ti o n. M cKe nna , 475 F.3d at 420. A fter w e gran ted C he vy C ha se’s pet i ti o n f o r l ea ve to appea l pur su an t to Rul e 23 ( f ) , the dist ri ct c ourtag re ed to st ay i ts proce edi ngs. The co urt then i ssued a m em or and u m expl ai ni ng wh y i ts cl ass - cer ti fi cati on o rdersho uld s tand, despi te the r eve rs al of the di str i ct co ur t’ s dec i si o n in M cKe nna . Andre ws v. Che vy Chas eBank, FSB , 474 F
. Supp. 2d 1006 ( E.D. W i s. 2007 )
. A l so, r eco gni zi ng tha t i t had f ai l ed to co nsi der TI LA pro vis ions that p ro h ibit c er ta in d eb to rs from res c in d in g, see§ 1 63 5( e) , the cour t s tat ed that i t would l i kely nar ro w the d efin iti on o f th e cl as s, i fi ts c l as s- ce r tif ica ti o n de ci si o n s ur vi ve d the ap p ea l.

I I . Discussi on W e g ener al l y re vie w a gr ant o fcl ass cer ti fi cati on f oran ab us e o fdi sc r eti o n, b ut“ pur ely l eg al ” det er m i na ti o ns m ade i n supp or t o fthatdeci si on a re r evi ew ed de novo

. M ac ev. Van Ru Cr e di tCorp. , 109 F.3d 338 , 340 (7th C ir. 1997 )
. W hetherTI LA al l ows c l ai m s forr esci ssi on t o be m ai ntai ned i n a c l ass - acti on f or m at is an i ssue offi rs t im p re ss ion in o u r c irc u it, b u t th e F irs t a n d Fifth C irc u its , in add i tion t o Cali f or ni a’ s co urt ofappeal s, have hel d as a6 N o. 07

- 1326

m at te r o fl aw th at res c iss ion cla ss ac tio n s a re u n av aila b le u n d er T IL A
. Se eM cKe nna , 475 F.3d at42 7; Ja m es , 62 1 F
. 2d at 73 1; s e eal s o L aLi b e r t e v. Pac. M e r ca nt i l eBank, 53 C al. Rp tr. 3d 74 5 (C al. C t. A p p . 200 7), ce r t
. denied , 12 8 S. Ct. 39 3 (2007). TI LA was desi gned “to as sure a m eani ngful dis cl osur e o f cr edi t te r m s” t o the c o ns um er . § 1601(a)
. Cr edi to r s who vi ol ate the disc l osur e re quir em ents m ay be o rder ed to pay ac tu alda m ag es o r s ta tu to r y da m ag es , de pen di ngupo n the na tu r e o fthe v i o l at i o n. See § 1 64 0(a )(1) & (a)(2 ). In ce rt ain l o ant r an sa ct i o ns , TI LA al so pro vi des debt o r s wi tha r i g ht ofr esci ssi on

— a pro cess i n w hi ch the cre dit orterm i nates i ts se cur i tyi nt er es t an d r etur ns a ny pa y m en ts made bythe debtori n exchange f orthe debtor ’ s r etur n ofal l fund s o r proper t y r e c e i v e d fr o m t he c r e di t o r ( us ua l l y, the l o an p ro c ee d s). See § 1635
. Debto rs m ay re sci nd under TI LA by m i dn i ght o fthe thi rd busines s d ay afterthe tr ansact i on f or an y reason w ha tsoev er. See§ 1635 ( a). The thre e- day postcl osing “cool i ng off ” per i od i s e xtended ifthe cre dit or do es notde l i ve r the r equi r ed no ti ce o fthe r i g htt o r es cind and al l m ate ri aldi sclo su re s; i n that i nstance , the ri ght t o re sci nd co nti nues unti l the cre dit or provi des the re quir ed n o t i c e a n d d i s c l o s u r e s , o r u p t o th r e e y e a r s a ft e r c o n s u mm at ion of th e loa n, w h ich ev er oc c u rs first

. See § 1635(f)

. Resci nd i n g a l oan tr ansact i on under TI LA “ ‘ re quir es unw i nd i ng the transa cti on in i ts enti re ty and thus r equi re s re turni ng the bo rr owers to the posi ti on they o ccupie d pri or to the l oan agr eem ent. ’ ” Handy v. Anch or M or tgageC o rp. , 464 F. 3d 760, 7 65 ( 7th Ci r. 20 06) ( quoti ng B arre ttv. JP M orga n Cha s eBa n k, N. A. , 4 45 F.3d 874, 87 7 (6th C ir. 2006)).N o. 07

- 1326 7 TI LA r esci ssi on i s there f or e co nsi dered a p u re ly perso nal re m edy. Se e, e . g. , M cKe nna , 47 5 F
. 3d at 424- 25; Jam es , 62 1 F.2 d at73 1; L aL i b e rt e, 5 3 C al. R p tr . 3d at75 0-5 1. It is i nt en ded to o per at e pr i va te l y, a t l ea sti ni ti al l y, “ wi ththe cre dit or and debt or w or ki ng out the l ogi sti cs of a given re sci ssi on. ” M cKe nna , 47 5 F .3d at42 1; s e eal s o Be l i niv. Was h. M ut
. Bank, FA , 41 2 F .3d 17, 25 ( 1stCi r. 20 05)
. S ecti on 1 635 se ts f o r thc er ta i n de adl i ne s an d dut i es tha t a ppl y t o the cr edi to r upon r ec ei pt o fa no ti ce o fr es ci ss i o n fr o m the debtor( e. g. , r etur n ofea rnes t m oney, dow n p aym ent, o r o th erpa y m en ts , a nd i ni ti at i ngthe t er m i na ti o n o fthe secur i ty i nter est ) ; the sta tute, i n turn, speci fi es th e d uti es th ata ppl y t o the de bt o r ( e. g . , t en der i ngr eturn ofthe p ro p er ty or i t s rea so n ab le v alu e). See § 1635 ( b)

. These proce du re s a pp l y “ ex c ept wh en o ther w i se or dered bya cour t, ” id., m aking i t cl earthatwh en di sag reem ents o ve r the pa r ti cul ar s o fa g i ve n resc i ss i o n a r i se , the c ou rtm ay ta ilor t h e re m ed y t o th e c irc u m st an c es . W e n ot e in itia lly th at th e re sc iss ion rem ed y d es c rib ed in § 1 635 appears t o c o nte mpl a t e o nlyind i vi du alpro ceedi ngs; th e p er so n al c h ar ac te r of t h e rem ed y m ak es it p ro c ed u ra lly an d s ubs ta nt i ve l y uns ui te d t o de pl o y m en t i n a cl as s ac ti o n. Se eal s o R I CHA RD A. L O RD , 2 8 W I LL I S T ON ON C ONTRACTS § 70: 235 (4t h ed . 200 3) (n ot in g t h at m an y c on su m er -c re d it sta tutes r equ ire the i ndi vi dual b o r r o wert o make the d em an d for re sc iss ion ). Re sc iss ion is a h igh ly in d ivid u ali zed r em edy as a gener alm att er, and re sci ssi on under TI LA i s no exce pti on. The va ri ati ons i n the tr ansact i onal “unw i nd i ng” pr oce ss that m ay ar i se f ro m o ne r esci ssi on t o the ne xt m ake i t a n extr em el y poo r fit for t h e cl ass - acti on me c h a n i s m.8 N o. 07

- 1326 A co urt’ s ce rt i fi cati on o fa cl ass o fper son s en titl ed to see k re sci ssi on w oul d b e j ust the beginning. Eac h cla ss m embe r i ndi vi dual l y woul d ha ve the opt i o n o fe xe r ci sing h is or h er righ t t o re sc in d , an d n otal l c las s m em b er s w ill w ant t o do so bec au se it r equi re s r etur ni ng the l oan pr i nc iple in exc ha ng e f o r the r el ea se o fthe l i ena nd a ny in te re st or ot her paym ents. Ind ivid u al c on tr ov er sie s w ou ld er up t a nd l i kel y continue because “the equi tabl e nature of re sci ssi on g ener al l y e nti tl es the affecte d c re dit or to j ud i ci al co ns i der at i o n o fthe i ndi vi dualc i r cumstances o fthe pa r t i c ul a r t r a ns a c t i on. ” M cKe nna , 475 F. 3d at 427 n. 6. A c c or d in gly , a h os t o f ind ivid u al p ro c ee d in gs w ou ld alm ost certa inly foll ow i n th e w ake of th e c ertification of a c l a s s wh o s e l o a n t r a n s a c t i o n s a r e r e fe r a b l e t o r e s c i s s i o n . As w e h a v e n o t e d, § 1 6 3 5 ( b ) p r o v i de s tha t“ [ t ] he p r o c edures presc r ib e d b y thi s s ub s e c t i o n s ha l l a pp l y e xc e ptwh en o the r wi s e o r de r e d b y a c o ur t, ” s ug g e s t i ngtha tthe r e med y m ust pro ceed o n a c ase-by- case bas i s. I n shor t, the re sci ssi on re m edypr es cr ibe d b y TI LA i s pr o ce dur al l y a nd su b st an tiv ely inc om p at ible w ith th e c las s-a c tio n d ev ice
. I t i s t rue, as the A nd re w s point o u t, th at T I LA does not expli ci tl y prohibi tthe us e o fa c l as s ac ti o n f o r r escissio n. T h e S u p r em e C ou rt has said th at “[i] n th e absen ce of a d ire ct e xpressi on byCongr ess o fi ts i ntent to depart fro m the usualco urse of tr yi ng ‘al l suits of a ci vi l n atur e’ under th e R u le s e s t a b lish ed for t h at p u rp os e, cla ss relie f is ap p ro p ria te in c ivil ac tio n s b ro u gh t in fed er al c ou rt .” Cali f ano v. Yam as aki, 442 U
. S. 682, 700 (19 79) (quoti ng F ED . R. C IV . P. 1). Som e d istri ct cou rts ha ve en d ed their i nq uiry th e r e a n d c e r t i fi e d r e s c i s s i o n c l a s s e s u n d e r T I L A. Se e, e . g. , In re A m eriquest M o rtga ge C o . M o rtgage L end in g P rac ticesN o. 07

- 1326 9 Li t ig. , N o. 05

- CV

- 7097, 20 07 W L 12025 44 ( N
. D. I l l

. A pr. 23 , 2007 ); Latham v . R es ident ial Loa n C trs. o f A m . , Inc. , N o. 03 C 70 94 , 200 4 W L 10 93 3 1 5 (N .D . I ll. M ay 6, 20 04 ); H i ckey v . Gre atW
. M or tgageCorp. , 15 8 F.R .D
. 60 3 (N .D . I ll. 19 94 ); see a lso M cKe nna , 47 5 F
. 3d at 423 ( l i sting ca ses )
. But TI LA is en tir ely d iffer en t fro m th e jur isd ict ion al s ta tu te atiss u e in Yam as aki

. Yam as aki con cern ed a statu te settin g forth th e proc ed ure by w hi ch j ud i ci alr evi ew o fan a dm i ni str at i ve deci si on coul d b e o bt aine d. 4 42 U. S
. a t 69 8. The Co ur t r ej ec te d the ar gum ent that the statute ’ s la nguage author i zi ng a sui t for j ud i ci alr evi ew by“a ny i nd i vi du al ” m eant that i nd i vi du al su its on ly

— no t cl as s ac ti o ns

— c ou ld be br ou gh t. Id. at 698- 99. The Court h eld thatthi s “ any ind i vi du al ” l anguage , w ith ou t m or e , d id n otp re c lu d e t h e u se of cla ss ac tio n s in th is c at eg or y of s u it. Id. at 700. W hi l e a n expres s e xcepti on m i ght b e e xpected i n the context ofa j uri sdic ti onalst atute speci fyi ng the r ule s bywh i ch j ud i ci alr evi ew m ay be sought, we thi nk § 1635 i s qui te differ ent. TI LA ’ s r esci ssi on re m edy “i s wri tte n w i th the go alo fm aking the r esci ssio n pr o ce ss a pr i va te o ne , wor ked o utb etwee n c r edi to r a nd debtorwithout the i nter venti on o fthe cour ts. ” B elini, 412 F. 3d at 25. The l ack ofan expli ci t pr ohibi ti on a gainst c l ass a c t i o ns i n § 1 6 3 5 i s n o tdi s po s i t i v e. S e eM cKe nna , 47 5 F
. 3d at 425- 26. Clas s a cti ons a resp eci fi ca l l y ment i o ne d i n the TI LA pro vi si on a dd re ssing cl ai m s fordam age s. See § 1640(a)( 2) ( B)
. The r e, Co ng r es s es tabl i sh ed a ca p o fthe l ess ero f$5 00, 000 or1 perce nt of the cre dit or ’ s net worth on the t ota l r eco ver y o f dam age s i n cl ass act i ons. Because vast10 N o. 07

- 1326

r ec o ve r i es ar e a l so po ss ibl e f o r r es ci ss i o n c l ai m s ( he r e, the A n d re w s e st im at e t h at C h ev y C h as e’s liab ility co u ld am ount t o “perhaps $210 m i l l i on”) , the absence o fa si m i l ar cap i n § 1 635 str ongl y s ugges ts th at c lass act i ons ar e no t av ai l ab l e for re sc i ss i o n. See B a tes v. U nited Sta tes , 522 U
. S. 23, 29

- 30 ( 1997 ) ( “W here Congr ess includes par ti cul ar l anguage i n one sect i on of a sta tute but o m i ts i t in another sect i on o fth e sam e Act, i t i s g ener al l y pr esum ed that Congre ss acts i ntenti onal l y a nd purposel y i n the dispar ate i ncl usi on or excl usi on. ”) ( i nter nal quotati on m ar ks om i tte d ); see also D un ca n v . Wa lk er, 53 3 U.S
. 16 7, 173 ( 2001 ) ( wher e Con g r es s di st i ng ui sh ed be twe en “s ta te ” an d “fed eral” review i n related sub sect ions, th at stat ut ory c on te x t s u gg es ts th at C on gr es s w ou ld h av e e x p licit ly m en tioned “fede ral” revi ew i f it int en d ed to i nc lud e it)
. This dir ect contr astbetw een the te xt o fTIL A ’ s dam age s a nd r e s c i s s i o n pr o v i s i o ns c a nn o tbe i g no r e d. Se eM cKe nna , 475 F. 3d at 424. I t i s o fc o ur se p ossibl e ( as o urdi ss en tingc o l l ea g ue su g g es t s ) th atthi s di ffer en ce i n TI LA ’ s r emedi alpr o vi si o ns could b e un de r s t o o d t o mea n tha tT I LA’ s r e s c i s s i o n r e med y m ay be pu rs ued on a clas s ba si s, witho ut any l i abi l i ty l i m i t. Bu t we ag ree w ith the Fi rs t Ci rcui t that “ [ t] he not i on that Cong re ss w oul d l i m i t l i abi l i ty to $500 , 000 w i th r espectto one re m edy w hi l e al l owing the sky to be the l i m it w i th re sp ec t t o an ot h er fo r th e sa m e v iola tio n st ra in s c re d u lity .” Id. W e thin k th e p resen ce ofa cap on class-action recovery in T I L A ’s d am ages p rovisi on, the ab sen ce of anyr efer ence ata l l t o c l as s r ec o ve r y i n i ts r es ci ss i o n pr o vi sion, an d the m echani cs o fthe re sci ssi on p ro cess spel l ed out i n § 1 635, al l poi nt m or e pl ausibl y t o the opp osi te i nter preta ti on: thatN o. 07

- 1326 11 TI LA’ s r e s c i s s i o n r e med y

—b y i t s t e r ms a n i nd i v i du a l i z e d, r e s t o r a t i v e r a the r th a n c o mpe ns a t o r y r e med y

— i s j ust that, a purel y i n d i v i d u al rem edy thatm ay not be purs ued on b eh alf ofa c las s. The 1995 am endm ents to TI LA co nfi rm thi s inter preta
tio n, as t h e F irs t C irc u it’s w e l l

- re as on ed op in ion in M cKe nna note d. I n that yea r, C ongr ess li m i ted the pote nti al f o r e xpa ns i ve TI LA l i ab i l i tyb y t empor ar i l y s us pen di ng class a ct i o ns f o r r el at i ve l y min o r v i o l at i o ns ( i nc l udi ng so m e i nv o l vingr es ci ss i o n r i g ht s) a nd the n b y i nc r ea sing th e to l er an ce l ev el s f o r ho ne st, min o r mis ta k es i n c ar r y i ng ou t d isc los u re ob liga tio n s. See Truth i n L en d ing Cl ass A cti ons Rel i efA ct of 1995 , Pub. L. N o. 10 4- 12, § 2, 10 9 S tat
. 161, 16 1- 62; Truth in Lend i ng Act A m endm ents of19 95, Pub

. L. No. 1 04

- 29 , § 3 , 1 09 St at
. 27 1, 27 2- 73
. The se a ct i o ns w er e ta ke n in r es p on se t o th e E lev en th C irc u it’s d ec isio n in Rodas h v
. AIB M or tgageCo. , 1 6 F .3d 1142 (11th Cir. 1994), whi chha d he l d tha t a cr edi to r ’ s m i no r TI LA v i o l at i o ns tr igg er ed a d eb to r’s righ t t o re sc in d

. See R AL PH J. R OH NE R & F R ED H. M IL LER, T RUT H I N L EN DI NG ¶6. 01[ 2] ( R o b e r tA. Co o ke ta l

. e ds

. , 2 0 0 0 )
. “In t a k i ngth i s st e p, Co ng r e s s ma de m ani festthatalthough ithad desi gned the TI LA to pro tect consum er s, it had not i ntended that l enders w oul d be m ade to f ace ove rwhelm i ng l i abi l i ty f or r el ati vel y m i nor vi ol ati ons. ” M cK enn a, 475 F. 3d at 424. The Andr ews a l so m ake ana r g um en t fl o wi ngfr o m the l anguage o fthe “additi onalr el ief” s ubsect i on o f§ 1635 , and the at torney’ s fees subse cti on o fTI LA ’ s dam age s pr o vi si on, § 16 40
. S ec ti o n 1 63 5( g ) pr o vi des tha t “[ i ] n a ny acti on in w hi ch i t i s dete rm i ned that a cr edi torhas vi ol ate d12 N o. 07

- 1326 th is section, in ad d iti on to resc issi on th e cou rt m ay aw ard re l i efunde r s ec ti o n 1 64 0, ” th ati s, da m ag es . § 1 63 5(g). Section 1640(a)(3), i n tu rn, p rovide s tha t attorn ey’s fees are re cove rabl e in a success ful act i on to enfo rce § 1640 l i abi l i ty ( i
. e. , l i ab i l i tyf o r da m ag es ) “ o r i n a ny a ct i o n in w hi cha perso n is d et er m i ned to have a r i ght o fr esci ssi on under se c tio n 16 35 .” § 16 40 (a)( 3). T h e A n d re w s c on te n d th at th is par al l elus e o fthe phr ase “ i n a ny a ct i o n” i n § 1 63 5( g ) a nd § 16 40 ( a) ( 3) mean s tha t r es ci ss i o n i s av ai l ab l e “in a ny acti on, ” incl ud i ng cl ass act i ons. There i s no support f orthis nove l ar gum ent, wh i ch r est s on a fa ul tyr ea di ngo f§ 1 63 5( g ) a nd § 1 64 0( a) ( 3) , t r ea ting § 1 635( g) as the cente r ofallr em edi alr el i efava i l abl e under TI LA
. S ecti on 1635( g) is a s i m ple r em edi alcr oss - re fer ence; i t provi des that r esci ssi on pl ai nti ff s m ay al so see k dam age s u n d er § 16 40 . I t d oe s n o m or e. Se c tio n 16 40 (a)( 3) s im p ly pr o vi des tha t at to r ne y ’ s fee s a r e r ec o ve r ab l e i n a s ucc es sful acti on f ordam age s o r a s u c c es sfu l ac tio n fo r r e s c i ss ion . I t d oe s n o m or e. T h e u se o ft h e p h ra se “in an y a c tio n ” in th es e p rovi si ons car ri es no m eaning f orthe questi on o f w h et h er T IL A p er m its res c iss ion cla ss ac tio n s. Fin ally , w e n ot e t h at cr ea tin g a circ u it s p lit ge n er ally r e qu i r e s qui t e s o l i d j u s t i fi c a t i o n; we do n o tl i g ht l y c o nc l ud e that our si ste r ci rcui ts ar e w ro ng. H er e, the A nd re w s hav e not persuaded us that the Fi rs t a nd Fi fth Ci rcui ts have m i si nter prete d the o perat i ve provi si ons ofTI LA
. W e no w j oi n thos e ci rcui ts i n concl ud i ng tha t TI LA ’ s r esci ssi on re m edy, § 1635 , m ay n ot be pu rs ued on a cl ass bas i s. M cK enn a, 47 5 F .3d at42 7; Ja m es, 62 1 F .3d at73 1. We n o t e f o r c o mp l e t e n e s s th a tth e fu n d a me n t a l i n c o mpat ibi l i tyb etwee n the r es ci ss i o n r emed y u nd erTI LA a ndN o. 07

- 1326 13

The A n dr e ws s u g g e s tth a to u r r e v i e w i s l i mi t e d t o the 2 que s t i on ofwhethe r TI LA per m i t s the c er t i fi c at i on ofa class of rescission p lain tiffs, arg u ing tha t w e m ay no t con sid er o n this i nt er l oc ut or y a ppea l w he the r a r es c i s s i on c l as s c oul d s at i s fy the re q u ir em e n ts o f R u le 23 . T o th e c o n tr a ry , u n d er R u le 23 (f), app el lat e c ourts m ay grant a disc ret ionary i nter locut ory app eal a n d m a y c o n s i d e r th o se is su e s r e l a t e d to a d i st r i c tc o u r t ’s ce rt ific a t io n d ec isi o n . S eeC HARLES A LA N W RIG HT & A RT HU R R. M I LLER, F EDERAL P RACTI CE & P ROCEDURE § 1 8 0 2 .2 (3 d ed . 20 0 5 ); se e al so In re Lora zepam & C l or azepate A nti t rus tLi t ig. , 289 F. 3d 98, 106 ( D. C. Ci r . 2 0 0 2 ) ( ho l di ng tha t“ r e vi e w i s l i m i t e d t o i ss ues thatr el at e t o c l as s c er t i fi c at i on” )
. Acc or di ngl y, the i s s ue of w he the r a rescission class m eets the requ ir e m e n t s of R u le 23 is p re ci se ly w ith in o u r p u rv ie w . In reLor azepam , 289 F. 3d at106- 07. T h e s a me i s no tt r u e , ho we v e r , o fth e An dr e ws ’ r e q u e s tth a twe revie w the dist ri ct court’ s f ail ure to cer ti fy a cl ass f or sta tu tory dam ages. The di s t ri c tc our tden i ed s t atut or y dam age s an d the re f or e ne ver r eached the i s s ue ofc l as s c er t i fi c at i on f or statu tor y d am ag es. the c l ass - acti on devi ce r ai ses se ri ous ques ti ons as to w h et h er a TIL A re sc iss ion c las s cou ld ev er b e p ro p er ly certifi ed un d er F e d e r a l R ule of CivilProced ure 23(b). A 2 Rul e 2 3(b) ( 2) cl as s m ayb e m aint aine d when“ f i nal i nj unctiv e re lief or co rre sp on d in g d ec lar at or y relief is ap p ro p riate r espect i ng the cl ass as a w hol e. ” F ED . R. C IV . P. 23 ( b) ( 2) (em p h as is a d d ed ); se e Je ff erson v. Ingers oll Int’ l, Inc. , 195 F. 3d 894, 89 7- 98 ( 7th Ci r. 19 99) ( noti ng Rul e 2 3( b) ( 2) ’ s r equi re m ent o f“fi nal r el i ef”)
. A s w e have exp l ai ned, a decl ar ati on of a “r esci ssi on cl ass ” w ou ld only init iatea proce ss of ind i vi du alr esc iss ion ac tio n s. Sig n ifica n t in d ividualas pects ofthe re m edy, varyi ng w i th each consum er ’ s l oan tr ansac-14 N o. 07

- 1326 ti o n, woul d r emai n t o b e wor k ed o utb efo r e ea cho fthe tr an sa ct i o ns c o ul d b e unwou nd. Ra th ertha n s et tl i ngthe l ega l r el ati on s at iss ue, a j ud i ci aldecl ar ati on i n thi s s i tuati on w oul d be e sse nti al l y a dvis or y. Se eG i b b ons v. Int e r b ank Fun di ng Grou p , 2 08 F
. R. D. 2 78 , 28 5 ( N
. D. Cal

. 2 00 2) ( “Wi th

out any r esci ssi on r equests , n orsubse quent denia l s by defe nd ants, i t i s no t a t a l l cl earthata j usti ci abl e co ntro
ve r sye xi st s be twe enthe c l ass a nd de fen dan ts
. ”)
. The resciss io n rem ed y i s so i nh eren tly person al that a cou rt cannot ventu re fu rther w hi l e a dd re ssing the pl ai nti ff s a s a c las s; it c an d o n o m or e t h an sim p ly d ec lar e t h at a c er ta in gr oup ofpl ai nti ff s hav e the r igh t to init iater es ci ss i o n, and that i s no t a f or m o f“fi nal ” decl ar atoryr el i efunder R ule 23(b)(2). Lik ew i se, to cer ti fy a cl ass und erRule 23 ( b) ( 3) , co m m on que st i o ns o f l aw a nd f ac t m us t pr edo m i na te o ve r que st i o ns affecting i nd i vi du alm em ber s, and the cl ass - acti on devi ce m us t be s upe r i o r t o o th ermeth o ds o fa dj udi ca tingthe contr ove rs y. The A nd re w s s tr ain t o m eetthe predom i natio n an d su p er iorit y re q u ire m en ts h er e. Se e, e . g. , In reM ex. M oney Tr ans

f e rLi t ig. , 2 67F
. 3d 74 3, 746 ( 7th Ci r . 20 01 )
. I fthe cl ass cer ti fi cati on o nl y s er ves to gi ve ri se to hund re ds or th o us an ds o f i ndi vi dualpr o ce eding s r equi r i ngi ndi vi dual l y t ai l or ed re m edi es, it i s hard to se e ho w co m m on i ssues predom i nate orhow a cl ass act i on would be the sup er ior m eans to adj udi c a te the c l ai m s. The A nd re w s a cknowle dge that the di str i ct c ourtwil l be cal l ed u p on, i fthe cl ass cer ti fi cati on i s uphel d, to est abl i sh i nd i vi du alr esci ssi on proce du re s that wil l bo th m eetthe needs o fea ch cl ass m em berand ass i st Ch evyChas e in re cove ring the l oan p rin c ip al on ea c h tra n sa c tio n w ith ou t ris kin g t h e im m ed i-N o. 07

- 1326 15 ate l oss o f i ts secur i ty i nter est
. U nd erthes e ci rcum sta nces, pr o c e e di nga s a cl a s s t o “ un wi nd ” h un dr e ds o r tho us a nd s o fi ndi vi dual credi t tr an sa ct i o ns woul d no t pr o m o te the pri m ar y purpose s o fthe cl ass -actio n m echani sm : j ud i ci al ec on om y a n d effic ien c y. Se eM cKe nna , 475 F. 3d at 42 7; see al s o 1 A LB A C ONTE & H ERBERT B. N EW BERG , N E WB E R G ON C LASS A CT ION S § 1 :1 , a t 3 (4 th ed . 200 2) (“ A cla ss ac tio n is a pr o ce dur alde vi ce . . . tha t ca n a cc o m pl i shs i g ni fi ca nt j ud i ci al ec on om i es. ”)
. U si ng a cl ass act i on t o re sol ve a m ult i tude ofi nd i vi du al, var i ed re sci ssi on cl ai m s i s nei ther “eco nom i cal ” no r “effi ci ent” i n any sense o ftho se ter m s. The A nd re w s ar gue that a cl ass acti on is superi or because i t i s the o nl y r eal i sti c m eans f orr eco ver y. But they do no t di spu te tha t unde r TI LA a pre va i l i ngdebt o r w i tha typ ical loan can exp ect to receive over $50,000, plus att orney’ s fees and cos ts, i n a r esci ssi on a cti on a nd that m a n y d e b to rs d o in fac t b rin g re sc iss ion cla im s. Sim p ly pu t, TI LA r esci ssi on i s no t the so rto fr em edy that w oul d not o ther w ise be soughtunl ess the cl ass - acti on m echani sm were avai l abl e. Forthe f or ego i ng r eas ons, we hol d as a m att ero fl aw that a cl ass act i on f orthe re sci ssi on r em ed y u n der TI LA m ay n otbe m a i n ta in ed . Th e jud gm en t o f th e d ist ric t c ou rtis ther ef or e R EVER S ED , a n d the ca se i s R EMAND ED with instru ctions to vacate the class-cert ification ord er.16 N o. 07

- 1326 E VANS, Cir cu i tJudg e, d iss en tin g. T h e m ajorit y a c kn ow ledges that the And re w s/ Ch evyChase m or tga ge l oan ag r ee m en t was “ co m p lex, wi tha po te nt i alt r ap f o r the un w ary.” W ith th at stat em en t, Icertainly a gree. T he l oan ’s se d u c t i v e S i r e n c a l l o f a 1
. 9 5 p e r c e n t i n t e r e s t r a t e wi th a fi ve- yea r fi xed m onthl y pay m ent o f$7 01. 21

— the r eal i m pli cati ons ofwh i ch w er e not fully expla i ned as r equi re d b y th e T r u th i n Le n d i n gAc t( T I L A)

— w as a bo obytr ap wa i t i n gt o e x p l o d e . An d e x p l o d e i td i d

. S o th e An d r e ws fi l ed th i s su i t o n b eh al fo fthe m se l ve s an d o th er s who answ er ed the Si re n cal l

. The dist ri ct cour t cer ti fi ed the case as a cl ass act i on s eek i ng r esci ssi on, but i ts or der w as sta yed pend i ng the o utcom e of thi s inter l ocuto ryappeal

. Today, the m aj or i ty h ol ds that the c ase m ay not continue aga i nst the m or tga gee bankas a cl as s acti on f orr esci ssi on. W i th that concl usi on, Icannotag re e. A t thi s point i n ti m e, o ur ca se prese nts tw o questi ons: ( 1) W hat di d C ongr ess inte nd ?; and (2) ifits i ntent cannot be a scer tai ned w i th ce rt ai nty, wh o shoul d pay the pr i ce o f an am bi guous sta tute? A s Ise e i t, the answ er s to both que st i o ns f av o r a ffi r m i ngthe di st r i ctc o ur t’ s dec i si o n. Assu m i ngi t ca n be f ai r l y i den ti fi ed, c o ng r es si o na l i nt en t i s the to uchstone. A s the m aj or i ty re cogni zes , we m ust fi rs t st ar t w i th th e s ta tu to ry lan gu ag e it se lf. If th e s ta tu te is unam bi guous, i t co ntro l s, and a c ourthas no business substi tuti ng i ts vi ew o fgo od pol i cy f orthato fCongr ess . I nd eed, unam bi guous l a ngua ge m ust be gi ven e ffect unle ss i t produces re sul ts that ar e “ absur d.” Se eEvans ex re l
. Evans v. Led erle La bo rato ries , 167 F.3 d 1 1 0 6, 1111 ( 7th Cir. 1999); U ni t e d S t at e s v. Thom as , 77F. 3d 98 9, 9 92 ( 7th Ci r . 1 99 6)
. TheN o. 07

- 1326 17

m aj o r i tyf o und the l an g ua g e of 15 U
. S
. C. § 1 63 5 ambi g uo us , a nd s o i t l o o k ed t o ev i den ce bey o nd the s ta tu to r y t ex t to deter m i ne co n gr es sio nal i ntent. That i s no t nec ess ar y. T I L A do es d i s t i n g u i s h b e t we e n c l a i ms f o r d a ma g e s an d claim s for rescission, bu t th e d isti nc tion d oes not su p p ort the m aj or i ty’ s co ncl usi on. The f act that ther e i s a cap o n dam age s i n cl ass acti ons m ay, i n the abst ra ct, su ggest Congre ss soughtto shi el d l enders f ro m m ass i ve l i abi l i ty. Bu t we don’taddress the m att eri n the abst ra ct. Con gress w ro te a st at u te , an d if it sou gh t t o fu rt h er su c h a p olic y in the r esci ssi on co ntex t, w e shoul d assum e i t would have s a i d s o . T h e maj o r i t y s h r u g s o fft o o l i g h t l y th e S u p r e me Cou r t’ s co m m an d

— “[ i ] n the abse nce ofa dir ect express i on by Congre ss ofi ts i ntent to depart fro m the usual co urse o f tr yi ng ‘ al l sui ts ofa ci vi l natur e’ under th e R u les est ablish ed for t h at p u r p o se , clas s re lief is a p p ro p ria te in c ivil acti ons bro ught i n federa l co urt. ” Cali f ano v. Yam as aki, 44 2 U .S. 68 2, 70 0 (1 97 9) (q u ot in g F ed . R. C iv. P . 1 ) . A n d th is re su lt c an be sq u ar ed w ith th e ide a th at T IL A res c iss ion is a per sonal re m edy. A ffi rm i ng the dist ri ct cour t would not m ea n a ut o m at i c r es ci ss i o n o fe a c hc l a ss mem be r ’ s l o an . The dist ri ct c ourto nl y hel d that “ each cl ass m em berm ay re sci nd i fhe or s h e w i shes to do so

. ” Andre ws v. Che vy Chas eBank, FS B , 24 0 F. R. D. 612, 622 ( E.D. W i s. 20 07)
. W hat r e s c i s s i o n wo ul d l o o kl i k e f o r e a c h i n d i v i d u a l c l a s s me mber

— the “ unw i nd i ng” pr oce ss th e m aj or i ty descr ibes

— m aywel l pr o ve t o o c o m pl i ca te d t o s at isfy the Rul e 23 d ictate s i n a g i ve n c as e. Buttha t do es no t m ea n a TI LA r e s c i s s i o n c l a s s a c t i o n mayn o tb e ma i nt a i ne d a s a m at t e rof l aw .18 N o. 07

- 1326 I fwe su ppo se tha t th e statut e i s ambi g uo us

— i t m ay or m ay not author i ze cl ass acti ons f orr esci ssi on

— th e m aj ori ty’ s co ncl usi on is st i l l i n doubt. A l though the m aj or i ty thi nks i t cl earthatr esci ssi on cl ass act i ons a re notautho

ri zed, that constr ucti on take s m or e than a l i ttl e m ass aging. If th e s ta tu te is u n c lea r, th e q u es tio n be c om es : W h o s h ou ld p ay th e p rice ofCon gress’s slopp y d rafting? T he m aj ority’ s de c i s i o n pla ces the b ur de n o n the v i c t i ms o fa T I LA vi ol ati on, not on the perpetr ato r of the vi ol ati on . Tr ue, w i thhol ding the cl ass acti on m echani sm is not the s am e a s precl ud i ng r el i efal tog ether, but i t s ti l l st ands as a pro cedu ra l o bsta cl e. I fCongr ess i ntended t o precl ud e r esci ssi on cl as s ac ti o ns , i t sh o ul d a m en d the st atut e an d c o r r ec t th e er ro r its elf. W h en a c ou rtcle an s u p C on gr es s’s m es s, it on ly en c ou ra ge s p oo r d ra ftin g. A n d if th e c ou rtge ts it w r o ng

— a ha zard of j ud ici al guessw ork

— th ena l l s uffer. Ratherthan f or ci ng a s tatute t o furthera pol i cy vi si on that m ay orm ay not be s hare d by Congr ess , i t i s b et te r to ac k no wl edg e am bigui tya nd c o ns true the s ta tu te i n the way mos t su ppo r te d b y the s ta tu te ’ s langu ag e an d i n a f ashi on that pr ote cts the innocent, notthe gui l ty. F o r the se r ea so ns , Idi ss en t f r o m the maj o r i tyo pi ni o n.

9- 24- 08