Opinion ID: 612823
Heading Depth: 3
Heading Rank: 4

Heading: Statutory Damages for Multiple Violations of the FCBA

Text: Pursuant to 15 U.S.C. § 1640(a)(2), a creditor who fails to comply with any requirement imposed under the TILA, the FCBA, or the Consumer Leasing Act is liable for an award of statutory damages. [I]n the case of an individual action, the amount of the statutory penalty is twice the amount of any finance charge in connection with the transaction. 15 U.S.C. § 1640(a)(2)(A)(i) (2007). Under § 1640(g), however, Congress expressly limited a plaintiff's recovery for multiple violations of these statutes where the violations involved multiple failures to disclose. This subsection states: The multiple failure to disclose to any person any information required under [the TILA, the FCBA, or the Consumer Leasing Act] to be disclosed in connection with a single account under an open end consumer credit plan ... shall entitle the person to a single recovery under this section but continued failure to disclose after a recovery has been granted shall give rise to rights to additional recoveries. 15 U.S.C. § 1640(g) (2007). Chase contends that all of its FCBA violations are covered by § 1640(g) and that Lyon's recovery of statutory damages is therefore limited to a single penalty. There is no question that § 1640(g) applies to limit a plaintiff's recovery based on multiple failures to disclose credit terms specified by the TILA. See St. Germain v. Bank of Haw., 573 F.2d 572, 577 n. 7 (9th Cir.1977) (The failure to disclose the existence of an acceleration clause was only one of several violations of TILA alleged by plaintiff. Since multiple failures to disclose in any single credit sale transaction give rise to only one recovery (15 U.S.C. § 1640(g)) our resolution of the acceleration clause issue obviates the need to consider St. Germain's other claims.), abrogated in part on other grounds by Ford Motor Credit Co. v. Milhollin, 444 U.S. 555, 559, 100 S.Ct. 790, 63 L.Ed.2d 22 (1980). As discussed previously, however, the requirements of the TILA and the FCBA differ in ways that substantively affect the application of § 1640. [7] The determinative question here is whether the specific FCBA violations alleged by Lyon constitute failures to disclose required information covered by § 1640(g). This a question of first impression that has not been addressed by other circuits. [8] Based on the FCBA violations alleged here, we conclude that Lyon's recovery of statutory damages is not limited by § 1640(g). Lyon's complaint specifically alleges that Chase violated § 1666(a), (c), (e), and § 1666a(a) by (1) failing to provide a written explanation or clarification of the billing error, (2) making multiple attempts to collect the disputed charge, and (3) threatening to report, and actually reporting, the disputed charge to credit agencies. We first note that the relevant language of these FCBA subsections does not use the word disclosure. [9] Section 1666(a)(3)(B) requires a creditor who is timely notified of a billing dispute either to make appropriate corrections in the account of the obligor or to send a written explanation or clarification to the obligor. Section 1666(a)(3)(B) also requires that the creditor send the explanation or clarification prior to taking any action to collect the amount. Finally, § 1666a(a) states that a creditor or his agent may not directly or indirectly threaten to report to any person adversely on the obligor's credit rating or credit standing because of the obligor's failure to pay ..., and such amount may not be reported as delinquent to any third party until the creditor has met the requirements of [15 U.S.C. § 1666]. Accordingly, the language of the relevant FCBA subsections does not indicate Chase's violations would involve disclosures covered under § 1640(g). [10] If it intended to assert a right to the $645 charge, however, Chase would have been required under § 1666(a)(3)(B)(ii) to provide information, namely the written explanation or clarification of the billing dispute. While this subsection might be considered a disclosure requirement, Lyon alleges only a single violation of it. Therefore, even if we were to hold that violations of this specific provision were covered under § 1640(g), Chase's other violations of the FCBA would also have to be covered under § 1640(g) in order for statutory damages to be limited to a single penalty. The FCBA's requirements that a creditor not attempt to collect or to report a disputed debt as delinquent before satisfying its obligations under § 1666(a) are not violated simply by a failure to provide information. While Chase's failure to correct the account or provide a written explanation of the disputed charge is a predicate for its further violations, Chase would not have committed multiple violations of the FCBA absent the affirmative steps it took to collect and report on the disputed charge. Collection actions and adverse credit reports simply cannot be construed as failures to disclose required information. See 15 U.S.C. § 1640(g). Accordingly, these violations of the FCBA are not subject to the single-recovery limitation under § 1640(g). Chase's argument that § 1640(g) applies uniformly to any violation of the FCBA simply ignores the language and structure of § 1640, which narrows the application of the single-recovery provision to a subset of violations involving failures to disclose. In construing a statute we are obliged to give effect, if possible, to every word Congress used. Reiter v. Sonotone Corp., 442 U.S. 330, 339, 99 S.Ct. 2326, 60 L.Ed.2d 931 (1979); see also Clark v. Capital Credit & Collection Servs., 460 F.3d 1162, 1175 (9th Cir.2006) (applying rule of statutory interpretation that statutes should not be construed in a manner which robs specific provisions of independent effect) (citation and internal quotation marks omitted). Subsection 1640(a)(2)  which outlines the statutory penalty amounts for any requirement imposed  does not indicate that a creditor who committed multiple violations of the FCBA is liable only for a single statutory penalty. To the contrary, § 1640(g) indicates that the single-recovery limitation applies to only a subset of these violations that involve failure to disclose to any person any information required under the covered statutes. To read the single-recovery limitation as applying to any requirement of the FCBA would ignore the language of § 1640(g) restricting this limitation to disclosure violations. Further, [w]e start with the premise that `the words of a statute must be read in their context and with a view to their place in the overall statutory scheme.' Am. Bankers Ass'n v. Gould, 412 F.3d 1081, 1086 (9th Cir.2005) (quoting Food & Drug Admin. v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 133, 120 S.Ct. 1291, 146 L.Ed.2d 121 (2000)). Our goal in interpreting a statute is to understand the statute `as a symmetrical and coherent regulatory scheme' and to `fit, if possible, all parts into a ... harmonious whole.' Id. (quoting Brown & Williamson Tobacco Corp., 529 U.S. at 133, 120 S.Ct. 1291). Congress could have uniformly applied the single-recovery limitation by including it at § 1640(a)(2), where the range for statutory penalties is specified. Congress did not do so. By codifying the single-recovery limitation in a separate subsection at § 1640(g), Congress underscored its application to a particular subset of the requirements imposed under the relevant statutes, namely those dealing specifically with disclosures. Finally, Chase's argument that allowing separate statutory penalties for its multiple violations of the FCBA will lead to a flood of consumer-created claims is without merit. The FCBA violations supporting liability here are the direct result of Chase's own business conduct. These violations cannot be attributed to Lyon, who simply sought an explanation that should be reasonably expected even without statutory requirements. Even if we were to agree with Chase's policy concern, we do not have the authority to rewrite § 1640 in order to shield Chase from statutory damages resulting from its multiple violations of the FCBA. We note that the statute already limits a creditor's liability where errors are timely corrected, 15 U.S.C. § 1640(b), where violations were unintentional, § 1640(c), or where a creditor made a good-faith effort to comply with the statute, § 1640(f). Chase has not sought to invoke any of these protections. While § 1640 does not cap statutory damages for multiple non-disclosure violations of the FCBA, Chase itself can control the extent of its future liability by simply adhering to the requirements imposed by Congress. For these reasons, we hold that Lyon's recovery of statutory damages resulting from Chase's multiple violations of the FCBA is not limited to a single statutory penalty under § 1640(g). We therefore reverse the magistrate judge's order as to statutory damages and remand for further proceedings. While Chase admitted violating the FCBA as alleged in the complaint, we note that Chase has not admitted the number of violations or the factual basis for its violations. These issues will have to be addressed on remand.