Opinion ID: 222219
Heading Depth: 4
Heading Rank: 3

Heading: Express Preemption Clause

Text: While we have determined the savings clause applies with respect to the Rees-Levering Act's post-repossession notice requirements because it is a state law regarding rights to collect debts, 12 C.F.R. § 7.4008(e)(4), our inquiry does not end there. Viewing the regulation as a whole, as discussed above, the savings clause does not act independently. Instead, the savings clause is viewed in conjunction with the express preemption clause in Section 7.4008(d). The district court erred when it held the Rees-Levering post-repossession notices were expressly preempted  that notices were disclosures and credit-related documents under the terms of Section 7.4008(d)(2)(viii).
With little fanfare, the district court stated the Rees-Levering post-repossession notice standards are undoubtedly disclosure requirements. We disagree. When performing statutory interpretation, words are uniformly presumed, unless the contrary appears, to be used in their ordinary and usual sense, and with the meaning commonly attributed to them. Caminetti v. United States, 242 U.S. 470, 485-86, 37 S.Ct. 192, 61 L.Ed. 442 (1917). Because OCC regulations carry the same weight as federal statutes, this interpretation rule is equally applicable here. Hillsborough Cnty. v. Automated Med. Labs., Inc., 471 U.S. 707, 713, 105 S.Ct. 2371, 85 L.Ed.2d 714 (1985). Applying the rule, disclosure is commonly defined as a revelation, or an act of disclosing or expos[ing] something that had previously been kept secret. Merriam-Webster's Dictionary of Law (1996); American Heritage Dictionary of the English Language (4th ed.2000). On the other hand, a notice is a notification or communication of a fact, claim, demand, or proceeding, Merriam-Webster's Dictionary of Law (1996), or information about a future event; warning; announcement... advance notification of intention to end an arrangement, contract. Collins English Dictionary  Complete & Unabridged (10th ed.2009). While subtle, these differences are significant. Comparing the initial loan documents Aguayo signed, and the post-repossession documents U.S. Bank sent to Aguayo, these words would not be used interchangeably. That is, we would not say the document describing the initial terms of a loan is a notice, nor would we say a post-repossession document requiring payment is a disclosure. Rather, it would be exactly the opposite. The term disclosure is commonly used to refer to an informational statement of terms prior to entering a transaction; something a borrower like Aguayo would have received when signing the contract. A notice, on the other hand, is a specific communication of a claim or demand submitted to a party in the course of, or at the conclusion of, a transaction, much like the document Aguayo received demanding payment after the repossession of his car. The district court erred by glossing over this distinction, summarily concluding that documents containing certain information about how to redeem or reinstate the secured property are undoubtedly disclosure requirements. Aguayo, 658 F.Supp.2d at 1232. The first page of the U.S. Bank document sent to Aguayo clearly indicates that it is a Notice, not a disclosure, of the plan to sell the car, and goes on to state a warning and a conditional demand that even if the bank sells the car, he may still owe U.S. Bank money. This makes sense because it certainly could not have been a revelation to Aguayo that U.S. Bank planned to sell the repossessed car and it was most certainly a warning about a future event that evidences U.S. Bank's intent to end the contractual relationship  all of which supports the conclusion that this was a notice, not a disclosure. Attached to the Notice was the Redemption Letter at issue. The letter contains two boxes with itemized amounts, detailing the respective amounts Aguayo could have paid U.S. Bank to either reinstate his contract or redeem the car. The letter also contains warnings that if he chose to do neither, he may be subject to suit and liable for any remaining deficiencies after the car is sold. This letter, instead of being an offer or disclosure of terms, is simply a more detailed demand for payment as stated in the first page of the Notice  either Aguayo pays one calculated amount to continue the relationship in accordance with the existing contract terms, or he pays a different amount to satisfy the existing contract and end the relationship. If he fails to do either, the car will be sold and Aguayo would be required to pay any deficiency. This usage of notice is supported by the relevant sections of the UCC. U.S. Bank admits that the UCC, as uniformly adopted and codified in state law, is not subject to preemption. OCC Interpretive Letter No. 1005. The UCC requirements for repossession, which were adopted by California, explicitly require the secured party to send a notification, not a disclosure, prior to selling collateral. See UCC §§ 9-611-9-614; Cal. Com.Code §§ 9611-9614.
After quickly concluding the Rees-Levering notice requirements are disclosures under Section 7.4008(d)(2)(viii), the district court considered whether such a notice is an other credit-related document. Aguayo, 658 F.Supp.2d at 1232. Relying again on the analysis in Crespo, the district court held the Rees-Levering notice requirements were expressly preempted because the post-repossession notice was a credit-related document. Id. at 1233. The pertinent section of the OTS regulation in Crespo preempts state laws pertaining to: (9) Disclosure and advertising, including laws requiring specific statements, information, or other content to be included in credit application forms, credit solicitations, billing statements, credit contracts, or other credit-related documents and laws requiring creditors to supply copies of credit reports to borrowers or applicants. 12 C.F.R. § 560.2(b). Holding that a post-repossession notice is an other credit-related document, Crespo stated: [T]he purpose of such a notice is to notify a debtor that his or her credit was revoked and that the collateral with which the debtor secured the credit is being sold, as well as to inform the debtor what he or she needs to pay in order to restore his or her credit. Crespo, 580 F.Supp.2d at 623. There is no doubt that the OCC regulation at issue here is similar to the language in Crespo. For comparison, the operative part of the OCC regulation states: (viii) Disclosure and advertising, including laws requiring specific statements, information, or other content to be included in credit application forms, credit solicitations, billing statements, credit contracts, or other credit-related documents. 12 C.F.R. § 7.4008(d)(2)(viii). The question then is whether the other credit-related documents language, both standing alone and when read with the other sections of Section 7.4008, was intended to preempt debt collection notices. Generally, all the words used in a list should be read together and given related meaning when construing a statute or regulation. Schreiber v. Burlington N., Inc., 472 U.S. 1, 8, 105 S.Ct. 2458, 86 L.Ed.2d 1 (1985) (quoting Sec. Indus. Ass'n v. Bd. of Governors, FRS, 468 U.S. 207, 218, 104 S.Ct. 3003, 82 L.Ed.2d 158 (1984)). The choice and arrangement of words in the OCC regulation, starting with [d]isclosure and advertising and followed by including, indicate that the later words are meant to be examples of types of disclosure and advertising  two words that generally mean to present information to the public, particularly before or in the process of consummating a transaction. The next terms listed  credit applications and solicitations, credit contracts and billing statements  are all documents that embody a credit application, solicitation, and ongoing lending relationship between a lender and borrower. The final clause, other credit-related document[], seems to act as a catch-all term to describe any other documents that may be used in an ongoing lending relationship. In contrast, the Rees-Levering notification at issue was sent after the lending relationship had ended  the car had been repossessed, the lender was preparing to sell it, and the lender's primary concern was now recovery of a debt. U.S. Bank was no longer advertising, disclosing, or offering terms upon which it would like to strike a deal with Aguayo. Rather, it was simply stating the debt owed and attempting to collect that amount from Aguayo. Had the OCC wanted to expand the term other credit-related document to debt collection notices, it certainly could include a clear indication of its intent to do so. As discussed above, the OCC's discussion of its implementation of Section 7.4008 makes clear that the OCC specifically contemplated exemption of debt collection from preemption. There is no reason to now second guess the OCC's choice of terms. Review of the OTS regulation language analyzed in Crespo, and relied on by the district court, provides additional support that the inclusion of other credit-related documents was not meant to include post-repossession notices, but instead was intended to refer to documents commonly used in establishing and maintaining an ongoing credit relationship. Unlike the OCC section, the similar OTS regulation provides additional context for that term, stating, other credit-related documents and laws requiring creditors to supply copies of credit reports to borrowers or applicants. 12 C.F.R. § 560.2(b)(9) (emphasis added). Unlike the preceding terms, the additional and laws requiring ... clause is not set off by commas to indicate it was meant to be a separate category but was meant to be read together with other credit-related documents. Traditionally, credit reports are obtained or supplied at the creation of a credit relationship and perhaps offered to a credit applicant when he or she is refused credit. See 12 C.F.R. pt. 202, app. C. There is little basis for supplying a credit report to an individual whose property has already been repossessed and whose lending relationship has ended. Though the court in Crespo did not consider this additional language or whether it modified the other credit-related documents term, it is difficult to discern an intent to extend the meaning of other credit-related documents to post-repossession notices when viewed in context with the other listed documents. Reading the express preemption and savings clauses together, we conclude that the Rees-Levering post-repossession notices are not preempted under the regulation's vague terms disclosure and other credit-related documents in light of the savings clause that clearly exempts a state's rights to collect debts. The district court's broad reading of the terms disclosure and other credit-related documents would effectively preempt any document related to debt collection, something the OCC was acutely aware of when deliberately choosing the final language of the preemption rule to save such state laws. See 69 Fed.Reg. at 1912.