Legal Document

541 U.S. 232 HOUSEHOLD CREDIT SERVICES, INC., ET AL.v.PFENNIG. No. 02-857. Supreme Court of United States. Argued February 23, 2004. Decided April 21, The Truth in Lending Act (TILA) regulates, inter alia, the disclosures that credit card issuers must make to consumers, 15 U. S. C. § 1637(a), and provides consumers with a civil remedy for creditors' failure comply, 1640. Among other things, creditor's periodic balance statement consumer include "[t]he amount any finance charge," 1637(b)(4), which is defined as an "payable directly or indirectly by [consumer], imposed creditor incident extension credit," 1605(a). Section 1604(a) expressly gives Federal Reserve Board (Board) expansive authority prescribe regulations containing "such classifications, differentiations, provisions" as, Board's judgment, "are necessary proper effectuate [TILA's] purposes . , prevent circumvention evasion thereof, facilitate compliance therewith." Regulation Z interprets 1605(a)'s "finance charge" definition exclude "charges exceeding limit" (over-limit fees). Respondent holds issued one petitioner financial institutions interest. Although parties' agreement set respondent's limit at $2,000, she was able charges limit, subject $29 over-limit fee each month her exceeded $2,000. While monthly billing disclosed fees, not included part consistent Z. filed suit alleging petitioners violated TILA failing classify fees charges," but District granted petitioners' motion dismiss on ground specifically excludes such fees. Sixth Circuit reversed, holding exclusion conflicts plain language. Noting, first, that, remedial statute, be liberally interpreted favor court then concluded this case were "incident credit" therefore fell squarely within 1605's That conclusion turned distinction drew between unilateral acts default, would generate default resulting from consumer, would. Held: unreasonable interpretation 1605. Pp. 238-245. (a) Because respondent does challenge under issue binding regulations, faces only two questions. It asks, whether "Congress has spoken precise question issue," Chevron A. Inc. v. Natural Resources Defense Council, Inc., 467 837, 842, courts, well Board, "must give effect unambiguously expressed intent Congress," id., 842-843. However, whenever Congress "explicitly left gap [implementing] agency fill," agency's regulation "given controlling weight unless [it is] arbitrary, capricious, manifestly contrary statute." Id., 843-844. 238-239. (b) itself explicitly address are definition. did attempt clarify scope critical term credit." phrase to" clear substantial (as opposed remote) connection required antecedent its object, cf. Holly Farms Corp. NLRB, 517 392, 402, n. 9, it cannot standing alone, includes Moreover, examination TILA's related provisions, full text 1605 itself, casts doubt Circuit's interpretation. A open-end plan may incur types charges—finance "other plan." §§ 1637(a)(1)-(5). fall into category, recognition least categories establishes contemplate all made considered charges." And where addresses defines them "in 1637(c)(1)(B)(iii), rather than Furthermore, none specific examples comparable Thus, 1605(a) is, best, ambiguous. 239-242. (c) Z's charge[s]" no way "the cost excluding less relevant determining number payments, including do automatically recur when defaults agreement. latter circumstance, they can reasonably characterized penalty defaulting agreement, decision reasonable. Despite rational adopt uniform rule penalties lower adopted case-by-case approach contingent act "unilateral." prove unworkable creditors and, more importantly, lead significant confusion who decipher if charge properly recalling details particular transaction caused him exceed his limit. In most cases, even know facts, nature authorization given merchant. Here, accomplished objectives forth 1604(a)'s broad delegation rulemaking clear, easy apply (and enforce) highlights determined consumer's decisions. 242-245. 295 F. 3d 522, reversed. THOMAS, J., delivered opinion unanimous Court. 1 CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR SIXTH CIRCUIT. 2 Seth P. Waxman argued cause petitioners. With briefs Louis R. Cohen, Christopher Lipsett, Richard Pepperman II, William G. Porter. 3 Barbara B. McDowell States amicus curiae urging reversal. brief Solicitor General Olson, Assistant Attorney Keisler, Deputy Clement, Matthew D. Roberts, James V. Mattingly, Jr., Katherine H. Wheatley. 4 Sylvia Antalis Goldsmith respondent. John T. Murray, Joseph Brian K. Murphy.* 5 JUSTICE THOMAS 6 enacted (TILA), 82 Stat. 146, order promote "informed use consumers. 1601(a). To end, disclosure provisions seek ensure "meaningful terms." Ibid. Further, delegated enact appropriate advance purpose. 1604(a). We certiorari, 539 957 (2003), decide Z, fees) conclude not, accordingly, we reverse judgment Appeals Circuit. 7 * Respondent, Sharon Pfennig, initially Household Credit Services, (Household), MBNA America Bank, N. A., now interest through acquisition Household's portfolio. terms "over-limit fee" 8 substance form offering "open end plans" (a accounts) suffer damages result comply 1640.1 When enter plan, provide cycle there outstanding due. 1637(b). account's period, 1637(b)(8), added account during itemized show amounts, any, due application percentage rates amount, minimum fixed 1637(b)(4). person whom extended, "[c]harges limit." See 12 CFR 226.4(c)(2) (2004) (Regulation Z). although imposition $2,000 charge." 9 On August 24, 1999, complaint Southern Ohio behalf purported nationwide class charged assessed alleged allowed putative members their limits, thereby subjecting Petitioners TILA, alleged, charges" "misrepresented true members. Class Action Complaint C2-99 815, ¶¶ 34-39, App. Pet. Cert. A39-A40. moved pursuant Rule Civil Procedure 12(b)(6) (2004). agreed dismiss. 10 appeal, argued, agreed, explicit language first noted 528 (CA6 2002). 528-529. Appeals' consumers' requests additional credit, predetermined grant. Under reasoning, constitute 530-531. complaint, however, "allowed [her] and/or thousand dollars," A39, ¶ 34, putting actions category held because "made [respondent] over above `credit limit,'" 35, condition clearly unmistakably 3d, 530. Based reading allegations, limited "those instances knowingly permits holder imposes 532, 5.2 II 11 [TILA], previously recognized [Board] played pivotal role `setting [TILA] motion. .'" Ford Motor Co. Milhollin, 444 555, 566 (1980) (quoting Norwegian Nitrogen Products States, 288 294, 315 (1933)). Indeed, designated staff primary source truth-in-lending law." S., 566. As Co., twice since passage intention clear: providing good-faith defense rules 88 1518, codified 1640(f), second, expanding conform "any approval official employee System duly authorized interpretations approvals," 90 197, amended, 1640(f). 566-567. regulations. faced ask issue." 842 (1984). If so, agency, Congress." 13 "all charges, payable Appeals, "`[i]n ascertaining meaning look statutory issue, design statute whole.'" 529-530 K mart Cartier, 486 281, 291 (1988)). failed examine surrounding 1605, before reaching conclusion. have had "granted [respondent's] request resulted limit," rested primarily characterization led case.3 14 case, supported facts complaint. exceeds original 35. true, direct purchase fact time officially calculated. regardless practices, perfectly reasonable characterize obtaining violating thus erred resting solely transactions, compelled definitions others could disagree. Certainly, how characterized, some credit. But, conjunction with" implies "does place beyond debate extent connection." 403, (1996) (internal quotation marks omitted). words, required. unlike term, 16 statute. — category. But See, e. g., 1605(a)(2) ("[s]ervice carrying charge"); 1605(a)(3) (loan similar charge); 1605(a)(6) (mortgage broker fees).4 17 our prior discussion indicates, best ambiguous, neither nor answer. acknowledge addressed excluded definition, B 18 implementing "is courts procedurally defective, arbitrary capricious substance, Mead Corp., 533 218, 227 (2001). 19 226.4 following: 20 "(1) Application applicants actually extended. 21 "(2) Charges actual unanticipated late payment, delinquency, occurrence. 22 "(3) institution paying items overdraw account, payment upon writing. 23 "(4) Fees participation annual basis. 24 "(5) Seller's points. 25 "(6) Interest forfeited reduction law deposit used security 26 "(7) [Certain real estate.] 27 "(8) Discounts offered induce cash, check, means, provided section 167(b) Act." 226.4(c) (emphasis added). 28 emphasize "disclosures decisions, events occurring after initial choice," goals particularly enhanced regulatory relating changes obligations effects obligation." 45 Fed. Reg. 80649 (1980). decisions reflects understanding "[m]eaningful mean disclosure," instead "describes `competing considerations complete need avoid [informational overload].'" 568 Rep. 96-73, p. (1979)). (e. might decision, rationally these recurring breaches surely 29 ignored warning "judges ought refrain substituting own interstitial lawmaking [Board]." supra, 568. Putting aside lack textual support approach, rule, "unilateral" (but renegotiated still fee) based fundamental misunderstanding workings industry. explained below, "authorization" point-of-sale represent final determination system suited identify instantaneously accurately transactions. Brief Governors Amicus Curiae 00-4213 (CA6), pp. 7-9. 30 [to] adjustments exceptions setting 31 so ordered. Notes: Briefs ofamici reversal American Bankers Association et al. Drew Days III, Beth Brinkmann, M. Galanter; Schlenk Cordray, Mark Fischer, McClure Sandmann. An plan" "reasonably contemplates repeated prescribes computed unpaid balance." 1602(i) sought monetary relief, affirmed Court's dismissal claim 1640(f) conformity promulgated Board. 532-533 defend reasoning abandoned principal argument appeal— Instead, maintains challenged cover extensions theory raise opposition accompanied cross-petition, seeNorthwest Airlines, County Kent, 510 355, 364 (1994), decline consider here. Additionally, excepting otherwise see (charges type cash transaction);ibid. (fees third-party closing agents); 1605(d)(1) perfecting interests); 1605(e) secured property), appears term.

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