Court Opinion

ID: 3014413
Source: CourtListenerOpinion
Date Created: 2015-10-13 22:04:26.645813+00
Date Added: 2024-06-11T18:04:52.850798
License: Public Domain

Opinions of the United
2004 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit

3-22-2004

Miller v. Nissan Mtr
Precedential or Non-Precedential: Precedential

Docket No. 02-2432

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Recommended Citation
"Miller v. Nissan Mtr" (2004). 2004 Decisions. Paper 884.
http://digitalcommons.law.villanova.edu/thirdcircuit_2004/884

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                        PRECEDENTIAL

   UNITED STATES COURT OF                           Argued: February 11, 2003
          APPEALS
    FOR THE THIRD CIRCUIT                      (Opinion filed: March 22, 2004)

      Nos: 02-2432 & 02-2573                 Before: ALITO and M cKEE, Circuit
                                                        Judges, and
                                                SCHW ARZER, District Judge*
BRIAN S. MILLER; MICHAEL ROSE;
MICHELLE ROSE, H/W, ON BEHALF
   OF THEMSELVES AND ALL
            OTHERS
     SIMILARLY SITUATED                    DARRYL J. MAY, ESQ. (Argued)
                                           RAYMOND A. QUAGLIA, ESQ.
                   v.                      AMY B. CARVER, ESQ.
                                           Ballard Spahr Andrews & Ingersoll, LLP
 NISSAN MOTOR ACCEPTANCE                   1735 Market Street, 51st Floor
          CORP.                            Philadelphia, PA 19103
                                           Attorneys for Appellant/Cross-Appellee,
                                           NMAC
 Nissan Motor Acceptance Corporation
            ("NMAC"),                      CARY L. FLITTER, ESQ. (Argued)
                                           Lundy, Flitter, Beldecos & Berger, P.C.
             Appellant in No. 02-2432      450 N. Narberth Avenue
                                           Narberth, PA 19072

                                           MICHAEL D. DONOVAN, ESQ.
  Brian S. Miller; Michael Rose; and       Donovan Searles, LLC
           Michelle Rose,                  1845 Walnut Street
                                           Philadelphia, PA 19103
            Appellants in No. 02-2573
                                           Kirby, McInerney & Squire, LLP
                                           830 Third Avenue

 Appeal from the United States District
                  Court                         *
                                                 The Hon. William W. Schwarzer,
for the Eastern District of Pennsylvania   United States District Judge for the
         (Civ. No. 99-cv-04953)            Northern District of California, sitting by
  District Judge: Hon. Stewart Dalzell     designation.
New York, NY 10022                                  well as its disclosure requirement. 1
Attorneys for Appellees/Cross-                              The district court agreed with the
Appellants,                                         lessees’ disclosure claims. It also agreed
Miller and Rose                                     that the method for calculating an early
                                                    termination charge that was contained in
                                                    the leases violated the CLA reasonableness
                                                    requirement. However, it disagreed that
                OPINION                             the early termination charge actually paid
                                                    violated the CLA’s reasonableness
                                                    requirement.
McKEE, Circuit Judge.                                       We agree that the leases violated
        In these cross-appeals, we are              the CLA ’s disclosure requirements
presented with a number of questions                because the method for determining the
concerning certain requirements of the              early termination charges actually assessed
Consumer Leasing Act (“CLA”), 15                    was not contained in the respective leases.
U.S.C. §§ 1667-1667e, as they apply to              We also agree that the method for
automobile leases. As we will explain in            determining the early termination charges
some detail, when the plaintiffs/lessees            actually assessed did not violate the CLA’s
terminated their leases prior to the                reasonableness requirement. However,
expiration of the terms of their respective         since we conclude that the lessees had no
leases, the lessor required that they pay the       standing to challenge the early termination
balance of the remaining monthly                    charge that was never applied to them, we
payments due under their leases rather than         will not address lessees’ challenge to that
charge them the early termination fee in            formula.
accordance with a formula contained in                         I. BACKGROUND
their leases. The lessees paid that charge                  Brian Miller executed a 36-month
and then instituted suit claiming that the          closed-end lease with Nissan Motor
method for determining the early                    Acceptance Corporation (“NMAC”) for a
termination charges they actually paid              1997 Nissan Altima on December 26,
violated the disclosure requirements of the         1996. Pursuant to that lease he agreed to
CLA § 1667a. The lessees also claimed
that the early termination charge they
actually paid violated the substantive                 1
                                                         The lessees also asserted a number of
reasonableness requirements of CLA §
                                                    state law claims against the lessor.
1667b(b), and that the method for
                                                    However, as will be explained, those
calculating the early termination charge
                                                    claims are not before us because the
contained in their leases violated the
                                                    district court entered judgment under
substantive requirements of the CLA as
                                                    Fed.R.Civ.P. 54(b) as to the CLA claims
                                                    and suspended adjudication of the state
                                                    law claims.

                                                2
make monthly payments of $267 through                       and I have given you
December 1999. Michael and M ichelle                        [NMAC] 30 days written
Rose executed a 39-month closed-end                         notice. Except as otherwise
lease with NMAC for a 1996 Nissan                           provided in paragraph 22
Altima GXE on March 25, 1996. They                          [concerning NMAC’s
agreed to make monthly payments of                          acceptance of insurance
$237.87 through June 1999.2                                 settlement if the vehicle is
       Both leases contain a “Paragraph                     lost through theft o r
18,” captioned: “Early Termination                          destruction], if I terminate
Liability,” which provides in relevant part:                early, in addition to the
       At any time after 12                                 amounts indicated in items a
       monthly payments have                                through d of paragraph 17
       been paid, I [the lessee] may                        [“Termination Liability”], I
       terminate this lease on the                          must pay you an Early
       due date of a monthly lease                          Termination Charge which
       payment if this lease is not                         is determined as follows:
       in default as disclosed in                           First, all monthly lease
       paragraph 19 [“Default”],                            payments, which under the
                                                            terms of this lease, are not
                                                            yet due and the residual
  2                                                         value of the Vehicle are
    “A closed-end lease is a lease in which
                                                            discounted to present value
the lessee is not responsible for the
                                                            by the Constant Yield
difference if the actual value of the vehicle
                                                            Method at the rate implicit
at the scheduled end of the lease is less
                                                            in this lease (the “Adjusted
than the residual value, but the lessee may
                                                            Lease Balance”).        This
be responsible for excess wear and excess
                                                            amount is then reduced by
mileage charges and for other lease
                                                            the Realized Value (and
requirements.”      Applebaum v. Nissan
                                                            insurance) proceeds which
Motor Acceptance Corporation, 226 F.3d
                                                            you receive for the Vehicle.
214, 216 n.1 (3d Cir. 2000) (citation and
                                                            ...
internal bracket and quotations omitted).
In contrast, an open-end lease “is one in
                                                     NMAC refers to the formula in Paragraph
which the lessee’s liability at the end of the
                                                     18 as either the “paragraph 18 formula,” or
lease term is based on the difference
                                                     the “early termination formula.”
between the residual value and its realized
                                                            Miller and the Roses claim that they
value.” Id. at 223. The residual value of a
                                                     made inquiries and took actions with
vehicle is the projected value of the
                                                     respect to early termination of their
vehicle at the end of the lease that is
                                                     respective leases. Miller claimed that he
assigned at the beginning of the lease. Id.
                                                     telephoned NM AC in March 1999 to
at 222 (citation omitted).

                                                 3
request the amount he would owe if he              Paragraph 18 would have been. Miller
terminated his lease early. 3 Miller said          paid this lesser charge.
that a NMAC representative gave him a                      The Roses terminated their lease on
figure so high that he gave no                     March 23, 1999, less than three months
c o n s i d er a tion w hatever to e a r l y       before its scheduled expiration, by turning
termination. However, on March 4, 1999,            over their leased Nissan vehicle to a
NMAC mailed Miller a letter which                  Mitsubishi dealership as part of a trade-in
contained a quote that was considerably            for a Mitsubushi vehicle. NMAC did not
lower than the phone quote. The letter             apply the Paragraph 18 formula to the
stated that paying all of the remaining            Roses either. Rather, it only charged the
payments that would have been due under            sum of their two remaining monthly
the lease – $3,064.81, including taxes and         payments, which was less than the amount
disposition fees – would be a less                 they would have owed under the Paragraph
expensive option for Miller.                       18 formula. The Roses paid this charge
           Dissuaded in part by what he            “under protest.” It is agreed that the
considered two pricey early termination            method of paying early termination
quotes, Miller said that he decided not to         liability by paying only the amount of the
terminate his lease until November 1999.           remaining monthly payments is not
At that time, Miller terminated his lease in       contained in either lease agreement.
the process of trading-in the leased vehicle               Miller and the Roses (“the
for a new lease on another Nissan vehicle.         Plaintiffs”) claim that NMAC uses inflated
However, NM AC did not apply the                   residual values for its leased vehicles.
Paragraph 18 formula to that trade-in.             They contend that if NMAC had used
Instead, NM AC charged Miller only his             bona fide residual values and charged
final month’s lease payment, which was             them for early termination pursuant to the
less than the charge derived under                 Paragraph 18 formula, they would have
                                                   been charged less than they were actually
                                                   charged, or nothing at all, for early
  3                                                termination.     Their theory about the
   NM AC claims that Miller’s call was “a
                                                   inflated residual values is as follows:
lawyer-staged phone call rather that a bona
                                                           They submit that the early
fide early termination request.” NMAC’s
                                                   termination charges under the Paragraph
Reply Br. and Answering Br. as Cross-
                                                   18 formula are astonishingly high in part
Appellee, at 1. NMAC further claims that
                                                   because of NMAC’s undisclosed practice
Miller never had any intention of
                                                   of using inflated or “subvented” residual
terminating his lease in March of 1999 and
                                                   values in calculating lease payments.4,5
that Miller made the phone call to NMAC
from his lawyer’s office for litigation
purposes only. See NMAC’s Reply Br. at
                                                       4
13. According to NMAC, this whole                      A “subvented” residual value is one
lawsuit is a fabrication.                          which is raised in order to lower a

                                               4
They claim that the relationship between           artificially high residual value. This
the residual value and the lease payments          results in an artificially low estimate of the
is simple. The total payments over the life        amount of depreciation the car will
of the lease are determined by lease               experience during the term of the lease.
depreciation and lease charges. The lease          Put another way, NMAC assumes, for
charges are analogous to interest                  purposes of computing lease payments,
payments. The lease depreciation pays for          that the car will be worth more at the end
the depreciation of the leased vehicle over        of the lease (because it experienced less
the life of the lease and reflects that the        depreciation) than it actually expects will
car will be worth less at the end of the           be the case.
lease than it was at the beginning. The                    However, Plaintiffs claim that
less depreciation NMAC assumes the car             NMAC does not disclose that it inflates the
will undergo during the life of the lease,         residual values used to compute lease
the smaller the lease depreciation                 payments. They also claim that NMAC
component of the monthly lease payments            does not disclose the actual residual values
will be. In order to reduce lease payments         NMAC has assigned to the lessee’s car.
and price Nissan vehicles more                     Therefore, according to the Plaintiffs,
competitively with other manufacturers’            lessees can not ascertain if the assumed
cars, NMAC can, and does, use an                   residual value is inflated.
                                                           Plaintiffs concede, however, that
                                                   since NMAC is responsible for the
customer’s monthly payments under a                difference between the residual and
lease. NMAC’s Br. as Appellant, at 29              realized values (a “closed lease”), the
n.12. “A higher residual value results in          inflated residual values make no practical
less scheduled depreciation over the term          or economic difference to lessees whose
of the lease, and hence lower monthly              leases go to maturity. 6 However, they say
payments.” Id.                                     that a problem arises with inflated residual
    5                                              values when a lessee seeks to terminate the
      NMAC claims that, contrary to the
                                                   lease early. Under the Paragraph 18
Plaintiffs’ characterizations, subvention
(or inflating residual values) is not a
uniform practice. NMAC says that the
                                                      6
record clearly shows that there were                   In fact, the inflated residual values the
extraordinary variations in subvention             Plaintiffs complain of can dramatically
depending on, inter alia, the model car, the       advantage the lessee who holds his/her
lease term and date of the lease. NMAC’s           vehicle for the full term of the lease
Reply Br. at 22 n.4.        These claimed          because monthly payments during the
variations are not significant here because        course of the lease will be less than they
NMAC concedes that the residual values             would have been had the lessor based
under the Plaintiffs’ leases were                  monthly payments on a more realistic
subvented.                                         residual value.

                                               5
formula, the early termination charge is            payments through maturity would have
based, in part, on the difference between           been only $9,276.93. Pursuant to the
the assigned, though undisclosed, residual          Paragraph 18 formula, surrounding the car
value and the realized value upon the sale          two months early would have required the
of the vehicle.      Miller and the Roses           Roses to pay NMAC $1,801.07 more than
allege that under the Paragraph 18 formula          keeping it to the end of the term.
NMAC shifts to the early terminating                         Plaintiffs claim that even though
lessee the risk, otherwise borne by NMAC,           NMAC’s early termination formula
that the vehicle will turn out to be worth          recoups for NMAC the difference between
less than the residual value that was used          the residual value and the realized value of
to compute the lease payments.                      the car, NMAC’s controller admitted that
        According to Plaintiffs, where the          the cause of Nissan’s unrecouped
residual value is inflated, NMAC’s                  depreciation, if any, is not the early
contractual early termination formula               termination, but the terms of the lease
causes an early terminating lessee to pay           agreement itself.
more upon returning the car than if the                      Finally, Plaintiffs contend that the
lessee had made all of the payments for the         charges produced by NM AC’s early
full term of the lease. In Miller’s case, the       termination formula are so outrageously
early termination charge under the                  high that NMAC hesitated to apply the
Paragraph 18 formula as of November                 Paragraph 18 formula in their cases.
1999 (one month early) was $5,336.95.               Instead, NMAC demanded that Plaintiffs
Miller claimed that when added to the 35            pay the accelerated sum of all future,
monthly payments of $267 each that he               unearned lease payments, undiscounted,
had already paid ($9,345), NMAC’s                   even though NMAC got the cars back
Paragraph 18 formula called for him to pay          early. They claim that NMAC explained
a total of $14,681.95. Full performance             that its standard practice is to compute the
under the lease, in contrast, required Miller       early termination liability under the
to pay only $9,612. Accordingly, under              Paragraph 18 formula, compare it to the
the Paragraph 18 formula, Miller was                sum of all unearned lease payments due
required to pay $5,069.95 to return his car         under the lease as if the lessees held the
one month early.                                    car to term, then assess the lesser of the
        In the Roses’ case, the Paragraph 18        two charges. They call NMAC’s method
formula called for them to pay $2,282.28            of charging the early terminating lessee the
as a charge to terminate the lease early.           total of remaining lease payments the
When this charge is added to the monthly            “Alternative Charge” or “Alternative
payments they had already made, totaling            Formula.” 7 However Plaintiffs claim that
$8,796 ($237.87 x 37), the Roses would
have been required to pay a total of about
$11,078. Just two months later at the                    7
                                                        We will adopt the term “Alternate
natural end of their lease, their total
                                                    Formula” in referring to this method here.

                                                6
NMAC is not entitled to the accelerated            § 1667b(a) named after our decision in
sum of the remaining lease payments and            Applebaum v. Nissan Motor Acceptance
it is therefore not relevant that the              Corp., 226 F.3d 214 (3d Cir. 2000). Count
arbitrarily chosen Alternative Formula is          II alleges substantive violations of the
less than the charge under the Paragraph           CLA, 15 U.S.C. § 1667b(b),             and
18 formula.                                        Regulation M. Count III is a common-law
          II. DISTRICT COURT                       unjust enrichment claim against NMAC.
PROCEEDINGS                                        Count IV seeks declaratory and injunctive
        Plaintiffs filed a complaint and an        relief. Count V seeks damages, both
amended complaint as a class action, with          actual and treble, pursuant to the
the parties agreeing to determine liability        Pennsylvania Unfair Trade Practices and
before class certification. The essence of         Consumer Protection Law, 73 PA. C ONS.
the amended complaint is that NMAC                 S TAT. A NN. § 201-1 et seq. Count VI
violated the CLA by making the residual            seeks damages pursuant to Article 2A of
value one component of the equation by             the Uniform Commercial Code, alleging
which early termination liability is               that the early termination formula is a
calculated under the Paragraph 18 formula.         provision for liquidated damages that is
They claim that the formula thereby shifts         unreasonable as written.
to early terminating lessees, the risk that                Following discovery, the district
the residual value in the lease is                 court granted summary judgment to
overstated. They allege that the risk is           NMAC on a portion of Count II. The
ordinarily borne by NMAC under what                court found that the method of determining
purport to be “closed end leases.” The             early termination charges by charging
amended complaint alleged that this risk           Plaintiffs the remaining lease payments
shifting is unreasonable because it bears          was reasonable and, therefore, did not
no relationship to the harm that NMAC              violate the substantive provisions of the
incurs as a result of early termination. The       CLA, i.e., 15 U.S.C. § 1667b(b).
amended complaint also alleged that the            However, the district court also held that
inflated residual values used for lowering         the Paragraph 18 early termination formula
lessees’ monthly lease payments also               was unreasonable under CLA § 1667b(b).
violate the CLA.                                   Accordingly, the district court granted
        More particularly, Count I is a            summary judgment on that portion of
disclosure claim alleging that the                 Count II to Plaintiffs and awarded them
Paragraph 18 formula violates the                  statutory (as opposed to actual) damages of
disclosure requirements of the CLA, 15             $100.     The district court also entered
U.S.C. § 1667a and Federal Reserve                 summary judgment in favor of Plaintiffs
Regulation M, 12 C.F.R. § 213. The                 on Count I, the § 1667a disclosure claim,
Count I disclosure claim is referred to as         and on Count IV. It then suspended
an Applebaum claim, which is a CLA                 adjudication of Counts III, V and VI, the
disclosure claim brought under 15 U.S.C.           state law claims, and granted Rule 54(b)

                                               7
certification as to claims brought in Counts                enable the lessee to compare
I and II, the federal CLA claims. Miller v.                 more readily the various
Nissan Motor Acceptance Corp., No.                          lease terms available to him,
Civ.A. 99-4953, 2000 WL 1599244                             limit balloon payments in
(E.D.Pa. Oct. 27, 2000).                                    consumer leasing, enable
        Cross-appeals followed. However,                    comparison of lease terms
in a Bench Opinion, issued on September                     with credit terms where
24, 2001, we dismissed the appeals for                      appropriate, and to assure
lack of appellate jurisdiction after holding                meaningful and accurate
that the district court improvidently                       disclosures of lease terms in
granted Rule 54(b) certification. We                        advertisements.
reached that conclusion because the
federal claims certified by the district court          Id. at 217-18 (quoting 15 U.S.C. §
were inextricably intertwined with the               1601(b )).        “ The S enate Re p o rt
Count I disclosure claim which had not               accompanying the CLA explained that
been completely adjudicated. Miller v.               ‘[t]he purpose of the legislation is to
Nissan Motor Acceptance Corp., Nos. 01-              provide consumers with meaningful
1038/1114 (3d Cir. Sept. 24, 2001).                  information about the component and
        Thereafter, the district court fully         aggregate costs of consumer leases, so
adjudicated the Count I Applebaum                    they can make better informed choices
disclosure claim in favor of Plaintiffs and          between leases, and between leases and
once again granted Rule 54(b) certification          credit sales.’” Id. at 218 (citation omitted).
on the CLA claims. Both NMAC and the                         “The Federal Reserve Board has
Plaintiffs have filed appeals from that              been given the authority to issue rules
ruling.                                              implementing the CLA, see 15 U.S.C. §
   III. THE CONSUMER LEASING                         1604, and the Board has exercised that
ACT                                                  authority by promulgating ‘Regulation M,’
        “In 1976, in response to an                  12 C.F.R. § 213 et seq.” Id. “The Board’s
emerging trend toward automobile leasing,            staff has also issued official commentary
Congress passed the Consumer Leasing                 regarding these provisions.” Id. “In Ford
Act, 15 U.S.C. §§ 1667-1667e, as Chapter             Motor Credit Co. v. Milhollin, 444 U.S.
5 of the Truth in Lending Act (“TILA”),              555, 568 (1980), the Supreme Court
15 U.S.C. § 1607 et seq.” Applebaum, 226             instructed that the Board’s interpretation of
F.3d at 217.                                         the TILA and Regulation M should be
        The CLA was intended ‘to                     accepted so long as they are ‘not
        assure a meaningful                          irrational.’” Id.
        disclosure of the terms of                           The CLA contains a section
        leases of personal property                  captioned “Consumer lease disclosures”
        for personal, family, or                     that provides, in pertinent part, as follows:
        household purposes so as to                          Each lessor shall give a

                                                 8
        lessee prior to the           15 U.S.C. § 1667a(4) and (11). The CLA
        consummation of the           also contains a section captioned “Lessee’s
        lease a dated written         liability on expiration or termination of
        statement on which            lease” which provides, in pertinent part, as
        the lessor and the            follows:
        lessee are identified                 Penalties or other charges
        setting out accurately                for delinquency, default or
        and in a clear and                    early termination may be
        conspicuous manner                    specified in the lease but
        the following                         only at an amount which is
        information wit h                     reasonable in the light of the
        respect to that lease,                anticipated or actual harm
        as applicable:                        caused by the delinquency,
   ******************                         default or early termination,
(4) The amount of other                       the difficulties of proof of
charges payable by the                        loss, and the inconvenience
lessee not included in the                    or nonfeasib ilit y of
period ic payments, a                         otherwise obtain ing an
description of the charges                    adequate remedy.
and that the lessee shall be
liable for the differential, if       15 U.S.C. § 1667b(b). 8
any, between the anticipated
fair market value of the                     Regulation M, which was in effect
leased property and its
appraised value at the
termination of the lease, if             8
                                           The section of the CLA immediately
the lessee has such liability;
                                      preceding § 1667b(b) concerns a lessee’s
   ******************
                                      liability upon the expiration of an open-
(11) A statement of the
                                      end lease, i.e., one where the lessee’s
conditions under which the
                                      liability upon expiration is based on the
lessee o r l es so r m ay
                                      difference between residual and realized
terminate the lease prior to
                                      value. In such a lease, § 1667b(a)
the end of the term and the
                                      explicitly provides that “[t]here shall be a
amount or method of
                                      rebuttable presumption that the estimated
determining any penalty or
                                      residual value is unreasonable to the
other        charge       for
                                      extent that the estimated residual value
delinquency, default, late
                                      exceeds the actual residual value by more
payments, or early
                                      than three times the average payment
termination.
                                      allocable to a monthly period under the
                                      lease.” (emphasis added).

                                  9
at the time of the Plaintiffs’ leases,9             termination or end of the lease term, if
required that lessors’ disclosures “be made         such liability exists,” 12 C.F.R. §
clearly, conspicuously, in meaningful               213(g)(13).
sequence, and in accordance with the                            IV. DISCUSSION
further requirements of this section.” 12                   As noted, both sides to this dispute
C.F.R. § 213.4(a)(1). The Official Staff            have appealed the district court’s
Commentary for this provision explained             adjudication of the CLA claims. Briefly
that “clearly, conspicuously, and in                stated, the parties’ arguments are as
meaningful sequence” required “that the             follows:      NMAC argues (1) that the
d i sc l o su r e s be in a reaso n a b ly          district court’s grant of summary judgment
understandable form.” 12 C.F.R. Pt. 213,            on the CLA § 1667a disclosure claim (the
¶ 4(a)(1). The Commentary stated, “while            Applebaum claim) was error; (2) that
the regulation requires no particular               Plaintiffs do not have standing to
mathematical progression or format, the             challenge the Paragraph 18 formula; (3)
disclosures must be presented in a way that         but if they do have standing, that the
does not obscure the relationship of the            district court erred in ruling that the
terms to each other.” Id. Regulation M              Paragraph 18 formula for early termination
mandated that various disclosures be made           is unreasonable and violates the CLA §
with respect to lease provisions imposing           1667b(b).
an early termination penalty including: (1)                 Plaintiffs argue that the district
“[a] statement of the conditions under              court erred in finding that the formula
which the lessee or lessor may terminate            NMAC actually applied on early
the lease prior to the end of the lease term        termination, i.e., making them pay the
and the amount or method of determining             remaining lease payments due on their
the amount of any penalty or other charge           respective leases (referred to by NMAC as
for early termination, 12 C.F.R. §                  their “Unsatisfied Contract
213(g)(12), and (2) “[a] statement that the         Obligations”), 10 was reasonable and
lessee shall be liable for the difference           consistent with the CLA § 1667b(b).
between the estimated value of the                  Each argument is discussed separately
property and its realized value at early            below.
                                                        A. The § 1667a disclosure claims.
                                                            Count I of Plaintiffs’ amended
    9                                               complaint asserted three disclosure claims.
      Regulation M was revised in 1996.
                                                    Plaintiffs claim (1) that the “Alternative
Applebaum, 226 F.3d at 218 n.3.
                                                    Formula” NMAC charged for terminating
Although the revisions became effective
on October 31, 1996, compliance was
optional until October 1, 1997. Id. The
                                                        10
leases at issue here were entered into in                As recited earlier, Plaintiffs refer to
1996. All parties agree that the pre-               charges they actually paid as the
revision 1995 Regulation M is applicable.           “Alternative Formula.”

                                               10
early, i.e., having them pay the sum of the           to either (1) the full contract price,
remaining monthly payments on their                   disclosed as the Total of Monthly
respective leases, should have been                   Payments, or (2) if lessee terminated early,
disclosed in their leases; (2) that the               the monthly payments paid at time of
amount of the residual value should have              termination, plus an early termination
been disclosed; and (3) that the fact that            charge calculated under the Paragraph 18
under the Paragraph 18 formula, an early              formula. But, says NMAC, where the
terminating lessee would be responsible               monthly lease payments made prior to
for the difference between residual and               early termination, combined with the
realized value should have been disclosed.            Paragraph 18 formula early termination
  The district court granted summary                  charge would be greater than the disclosed
judgment in favor of the Plaintiffs on each           Total of Monthly Payments, the use of the
component of their disclosure claims.11               early termination charge would result in
1. The “Alternative Formula” claim.12                 NMAC receiving more than the leases’
        The district court found that NMAC            total contract obligation as measured by
violated § 1667a and Regulation M                     the Total of Monthly payments.
because it used a different early                     Therefore, says NMAC, when it relied
termination formula than disclosed under              instead on the Alternative Formula, it only
the lease. NMAC argues that was error                 received a sum equal to the Total of
because it claims that the amount that was            Monthly Payments, which does not violate
actually charged was readily ascertainable            either the CLA or Regulation M.
from what was disclosed.                                      Howev er,      g iv e n  NMAC’s
        CLA § 1667a(11) requires that a               disclosure obligation under the CLA, its
lessor provide a lessee with a statement              defense of this practice amounts to
setting forth, inter alia, “the amount or             nonsense. The issue is not whether the
method of determining any penalty or                  Alternative Formula produced an early
other charge for . . . early termination.” 15         termination charge that was reasonable
U.S.C. § 1667a(11). NM AC submits that                under § 1667b(b), but whether it was
the Alternative Formula was disclosed in              disclosed in the lease. Clearly, it was not.
the lease. It argues that, at the inception of        Nothing in the lease suggests that there are
Plaintiffs’ leases, in return for Plaintiffs’         two different methods by which NMAC
use of the leased cars, NMAC was entitled             can determine an early termination charge.
                                                       On the contrary, the lease provides that
   11
                                                      early termination charges are to be
     Our standard of review on an appeal              determined only in accordance with the
from the entry of summary judgment is                 Paragraph 18 formula. Therefore, we
plenary. Hines v. Consolidated Rail Corp.,            agree that NMAC violated § 1667a(11).
926 F.2d 262, 267 (3d Cir. 1991).                     See Channell v. CitiCorp Nat’l Servs., Inc.,
        12                                            89 F.3d 379 (7th Cir. 1996).
        Referred to by NMAC as the
                                                              In Channell, the lessor disclosed in
“Unsatisfied Contract Obligation.”

                                                 11
its car lease that its early termination                     NMAC argues that Applebaum was
formula used the “Rule of 78s” to compute            wrongly decided because the model forms
the amount of unearned interest to be                promulgated by the Federal Reserve Board
credited upon early termination of a                 at the time the leases were entered into did
consumer lease. However, instead the                 not require disclosure of the residual value.
lessor used the actuarial method. Id. at             However, Applebaum is binding on this
383. The court of appeals held that this             panel and controls.13 Accordingly, we
violated the CLA even though the                     hold that NMAC violated § 1667a by not
undisclosed method benefitted the lessee.            disclosing the residual value of Plaintiffs’
Id. Similarly, in Highsmith v. Chrysler              leased cars.
Credit Corp., 18 F.3d 434 (7th Cir. 1994),                    3. The differential claim.
the lessee brought a disclosure claim                        In their amended complaint,
against the lessor for omitting from its             Plaintiffs alleged that NMAC violated §
disclosed early termination formula certain          1667a(4) because NM CA did not disclose
elements that were used to reduce the                that they, as lessees, would be liable for
amount of the early termination formula.             the difference between the residual and
Id. at 438. The court of appeals ruled that          realized values under the early termination
the lessor’s failure “to disclose any portion        formula. Section 1667a(4) requires “clear
of the formula that a lessor actually used           and conspicious” disclosure, inter alia, of
for calculating the early termination                the fact “that the lessee shall be liable for
charge, will give rise to a technical                the differential, if any, between the
violation of the disclosure provision found          anticipated fair market value of the leased
in 15 U.S.C. § 1667a(11) and Regulation              property and its actual appraised value at
M.” Id. at 439.                                      the termination of the lease, if the lessee
   2. The residual value (Applebaum)                 has such liability.” 15 U.S.C. § 1667a(4).
claim.                                               The district court found that the
        In Applebaum, we held that the               “anticipated fair market value of the leased
“requirement to disclose in a ‘clear and             property . . . at the time of termination” is
conspicuous manner’ the method of                    the residual value and that the “fact of the
determining the amount of an early                   liability for the differential is disclosed.”
termination charge [under the CLA and                2000 WL 1599244 at *14-15. However,
Regulation M] includes the obligation to             the district court also found that NMAC
disclose the value of a variable, such as            must disclose the residual value at the
residual value, that is used in calculating          inception of the lease.
the charge.” 226 F.3d at 223 (emphasis                       This holding is nothing more than
added). It is undisputed that Plaintiffs’
leases did not disclose the residual value of
their leased vehicles. Consequently, the                 13
                                                           See, IOP 9.1; Jaguar Cars, Inc. v.
district court found that NMAC’s leases
                                                     Royal Oaks Motor Car Co.., 46 F.3d 258,
violated the CLA.
                                                     266 n.6 (3d Cir. 1995).

                                                12
the logical extension of its analysis of the         court that Plaintiffs did not have standing
residual value claim, viz., that Applebaum           to challenge the Paragraph 18 formula for
requires disclosure of the residual value.           early termination because the formula was
In any event, NMAC argues, as it did on              not applied to them. As noted, they were
the residual value claim, that the district          charged only the sum of the remaining
court’s holding on the differential value            payments under their respective leases.
claim was error because Applebaum was                        The district court rejected NMAC’s
wrongly decided. However, as noted,                  standing argument. It held:
Applebaum is binding, and we therefore                       It is certainly true that
reject NMAC’s argument.                                      neither Miller nor the Roses
        We thus affirm the district court’s                  paid an early termination
grant of summary judgment to Plaintiffs on                   charge that was directly
Count I.                                                     c a l c u la t e d u s i n g th e
   B. The § 1667b(b) reasonableness                          Paragraph 18 fo rmu la.
claims.                                                      However, we cannot ignore
       1. Standing to Challenge the                          the fact that the amount that
Paragraph 18 Formula.                                        the Roses and Miller paid
        In Count II of their amended                         did result indirectly from the
complaint, Plaintiffs alleged, inter alia,                   Paragraph 18 calculation.
that the Paragraph 18 formula violated the                   The undisputed evidence
reasonableness requirements of §                             shows that NMAC decided
1667b(b).14 NMAC argued in the district                      what to charge early
                                                             te r m i n a ti n g l e s s ee s ,
                                                             including Miller and the
  14                                                         Roses, by calculating both
       As noted earlier, § 1667b(b) provides:
                                                             the sum of the remaining
                                                             payments charge and the
         Penalties or other charges
                                                             Paragraph 18 formula, and
         for delinquency, default or
                                                             then selecting the lesser of
         early termination may be
                                                             these actually to levy upon
         specified in the lease but
                                                             the lessee. Thus, while the
         only at an amount which is
                                                             dollar figure Miller and the
         reasonable in the light of the
                                                             Roses paid was not arrived
         anticipated or actual harm
         caused by the delinquency,
         default or early termination,
         the difficulties of proof of                15 U.S.C. § 1667b(b).
         loss, and the inconvenience
         or nonfeasib ilit y of
         otherwise obtain ing an
         adequate remedy.

                                                13
               at using Paragraph                  2000 WL 1599244 at *23 (emphasis in
               1 8 , t h e a m o u nt              original). After holding that Miller and the
               derived from the                    Roses had standing, the district court held
               Paragraph         18                that the Paragraph 18 formula for early
               c a l c u l a t i o n               termination was unreasonable under §
               nevertheless helped                 1667b(b).        Not unexpectedly, in its
               to determine what                   appeal, NMAC renews its argument that
               they in fact paid. If               the Plaintiffs do not have standing to
               the Paragraph 18                    challenge the Paragraph 18 formula
               formula had resulted                because it was not applied to them when
               in a number lower                   they terminated their leases.
               than the sum of the                         “In essence the question of standing
               remaining payments,                 is whether the litigant is entitled to have
               then the Paragraph                  the court decide the merits of the dispute
               18 formula amount                   or of particular issues.” Trump Hotels &
               would have been                     Casino Resorts, Inc. v. Mirage Resorts
               levied on them.                     Inc., 140 F.3d 478, 484 (3d Cir. 1998)
                                                   (quoting Warth v. Seldin, 422 U.S. 490,
            We therefore find that                 498 (1975)). “Standing ‘subsumes a blend
        NMAC’s position that the                   of constitutional requirements and
        Paragraph 18 formula was                   prudential considerations.’” Id. (quoting
        not used to calculate the                  Valley Forge Christian College v.
        Roses’ and M iller’s liability             Americans United for Separation of
        is without merit. Thus, to                 Church and State, Inc., 454 U.S. 464, 471
        the extent that the Paragraph              (1982)). “Obviously, satisfying the Article
        18      formula         was                III ‘case or controversy’ requirement is the
        unreasonable under the                     ‘irreducible constitutional minimum’ of
        CLA, [Miller and the Roses]                standing.” Id. (quoting Lujan v. Defenders
        suffered injury thereby and                of Wildlife, 504 U.S. 555, 560 (1992)).
        have standing to pursue                            Article III constitutional
        their claim.15                                     standing contains three
                                                           elements: (1) the Plaintiff
                                                           must have suffered an injury
   15                                                      in fact – an invasion of a
     This court exercises “plenary review
                                                           legally protected interest
of standing . . . issues, but review[s] for
                                                           which is (a) concrete and
clear error the factual elements underlying
                                                           particularized and (b) actual
the district court’s determination of
                                                           or imminent, not conjectural
standing.” General Instrument Corp. v.
                                                           or hypothetical; (2) there
Nu-Tek Electronics & Mfg., Inc., 197 F.3d
                                                           must be a causal connection
83, 86 (3d Cir. 1999).

                                              14
              between the injury                            even when the Plaintiff has
              and the conduct                               alleged redressable injury
              complained of – the                           sufficient to meet the
              injury has to be fairly                       requirements of Article III,
              tracea ble to the                             the federal courts will not
              challenged action of                          adjudicate abstract questions
              the defendant and not                         of wide public significance
              the result of                                 which             amount       to
              independent action                            g e n e r a liz e d gr ie van c e s
              of some third party                           shared             and     most
              not before the court;                         appropriately addressed in
              and (3) it must be                            the representative branches;
              likely, as opposed to                         and (3) the Plaintiff’s
              merely speculative,                           complaint must fall within
              that the injury will be                       the zone of interests to be
              r e d r e ss e d by a                         protected or regulated by the
              favorable decision.                           statute or constitutional
                                                            guarantee in question.
Id. at 484-85 (citing Lujan, at 560-61).
        “In addition to the ‘immutable                 Id. (quoting Valley Forge Christian
requirements of Article III,’ the federal            College, 454 U.S. at 474-75) (internal
judiciary has also adhered to a set of               quotation marks omitted).
prudential principles that bear on the                      In light of these general principles,
question of standing.” 16        Id. at 485          we agree that the claim that the Plaintiffs
(quoting Bennett v. Spear, 520 U.S. 154              lack standing to challenge the Paragraph
(1997)). These principles are:                       18 formula has considerable force. They
        (1) the Plaintiff generally                  never paid the early termination charge
        must assert his own legal                    pursuant to the Paragraph 18 formula.
        rights and interests, and                    Therefore, they were not harmed by it,
        cannot rest his claim to                     even assuming it is unreasonable and
        relief on the legal rights or                violates § 1667b(b). They nevertheless
        interests of third parties; (2)              suffered no “injury in fact” because of it.
                                                            Although there is a paucity of case
                                                     law on the issue of standing in this context,
   16                                                two cases support NMAC’s position, viz.,
     Article III constitutional standing is a
                                                     Kedziora v. Citicorp Nat’l Servs., Inc., 780
threshold issue that must be addressed
                                                     F.Supp. 516 (N.D.Ill. 1991), aff’d sub
before considering issues of prudential
                                                     nom. in relevant part, Channell v. Citicorp
standing. Joint Stock Society v. UDV
                                                     Nat’l. Servs., Inc., 89 F.3d 379 (7th Cir.
North America, Inc., 266 F.3d 164, 175
                                                     1996), and Highsmith v. Chrysler Credit
(3d Cir. 2001).

                                                15
Corp., 18 F.3d 434 (7th Cir. 1994). In              that proposition. County of Oakland was
Kedziora, the lessees defaulted on their 60-        an antitrust case and the standing issue
month car lease after 22 months and                 discussed therein centered on the contours
thereby incurred a substantial termination          of the Illinois Brick doctrine.17    Quite
charge. However, they attempted to                  simply, the question raised in County of
challenge the reasonableness of an early            Oakland – whether an intermediate user
termination formula applicable to defaults          who pays illegal antitrust overcharges that
within the first 12 months of the lease             are passed along to end users has antitrust
under § 1667b(b). The district court held           standing – has nothing to do with the issue
that the lessees lacked standing to
challenge the formula applicable within
the first 12 months because it “caused him              17
                                                          In Illinois Brick Co. v. Illinois, 431
or her no actual injury because it never
                                                    U.S. 720, 730-731 (1977), the Court held
became applicable to him or her.” 780
                                                    that persons who are not direct purchasers
F.Supp. at 523. In Highsmith, the court of
                                                    from the defendant antitrust violator
appeals held that a lessee who had not
                                                    cannot maintain an antitrust action. In
terminated his lease, or even alleged that
                                                    Illinois Brick, it was alleged that concrete
he intended to terminate his lease, had no
                                                    block manufacturers had engaged in a
standing to challenge the reasonableness of
                                                    conspiracy to fix the price of concrete
an early termination provision in his car
                                                    block. The concrete block manufacturers
lease because “the early termination clause
                                                    sold the concrete block to masonry
has not been applied to him and he has
                                                    contractors who, in turn, sold the concrete
suffered no harm from it.” 18 F.3d at 437.
                                                    block to general contractors, who used the
 Both of these cases, although not on all
                                                    concrete block to build masonry structures
fours with Plaintiffs’ suit, lend support to
                                                    which were incorporated into buildings
NM AC’s argument.
                                                    which the general contractors sold to the
        Plaintiffs initial standing argument
                                                    State of Illinois. The Court held that the
is that, because their leases contained the
                                                    State of Illinois could not bring an antitrust
Paragraph 18 formula, they were bound by
                                                    action against the concrete block
it and therefore they have standing to
                                                    manufacturers wh ose p rodu ct was
challenge it. They cite County of Oakland
                                                    incorporated into the buildings it bought.
v. City of Detroit, 866 F.2d 839, 845 (6th
                                                    That holding is based largely upon the
Cir. 1989), which they say stands for the
                                                    difficulty of establishing the extent to
proposition that “[a] contracting party has
                                                    which an indirect purchaser was actually
standing to challenge the reasonableness of
                                                    injured by the underlying antitrust
a clause which, by its terms, applies to him
                                                    violation and the difficulty inherent in
as enforcement vel non may cause him
                                                    prorating the fixed-price overcharge
economic harm.” Miller/Roses’ Br. as
                                                    among the number of entities in the chain
Appellees, at 17. However, we do not
                                                    of manufacture and distribution. 431 U.S.
believe that County of Oakland stands for
                                                    at 732-733.

                                               16
of whether a lessee who pays an early              of class certification and a finding that the
termination charge has standing to                 early termination provision violated the
challenge a formula for calculating an             disclosure requirements of the CLA.
early termination fee that was never               Therefore, the magistrate judge’s standing
applied to him/her.                                discussion does not have much force. In
       Plaintiffs also look to two other           fact, we believe that it is plainly wrong.
cases to support their standing. However,          Article III constitutional standing requires
neither case supports their argument. In           that an injury in fact must be “actual or
Lundquist v. Security Pacific Automotive           imminent, not conjectural or speculative.”
Financial Servs. Corp., 1992 WL 475651             Trump Hotels, 140 F.3d at 484 (citation
(D.Conn. June 9, 1992), aff’d 993 F.2d 11          omitted).       The magistrate judge’s
(2d Cir. 1993), the lessee filed a class           discussion in Lundquist is purely
action challenging, inter alia, the                speculative.       The magistrate judge
reasonableness of an early termination             reasoned that: if the lessee decides to
provision in an automobile lease. The              default and if she returns the car, she
lessor moved to dismiss the § 1667b(b)             would be liable for the early termination
reasonableness challenge under Rule                charges. Damage was, therefore, neither
12(b)(6), arguing that because the lease           actual nor imminent.
had not been terminated, the lessee lacked                 The second case Plaintiffs rely upon
standing because she had not suffered any          is Johnson v. Steven Sims Subaru, Inc.,
injury. A magistrate judge held that the           U.S. Dist. Lexis 11694 (N.D.Ill. 1993).
lessee did have standing because                   Plaintiffs claim that Johnson holds that a
       [t]he Plaintiff is a party to               lessee has standing to challenge early
       the lease and bound by its                  termination provisions in his/her auto lease
       terms.       If the Plaintiff               before suffering adverse consequences.
       decides to default on the                   Johnson does, in fact, say that. 1993
       lease, she will be subject to               U.S.Dist.Lexis 11694, at *5-11. The
       t h e e a r l y t e r m i n ati o n         lessee in Johnson, like the lessee in
       charges.       There is an                  Lundquist, had not terminated the lease.
       immediate threat of injury to               However, the lessee in Johnson had
       her because if she returns                  written a letter to the lessor saying that she
       the car she would be subject                wanted to terminate early but could not
       to those allegedly                          afford the early termination charges. A
       unreasonable charges.                       magistrate judge found that the lessee had
                                                   standing because if the lessee actually
1992 WL 475651 at *6. A district court             terminated her lease she would become
judge adopted the magistrate judge’s               liable for the early termination charges.
reasoning. However, the court of appeals                      However, we believe that
did not discuss the standing issue on              Johnson’s standing analysis is just as
appeal. Rather, it affirmed both the denial        speculative as Lundquist’s. We fail to see

                                              17
any Article III injury-in-fact based solely               whether the charges they actually paid
on a lessee saying that she prefers to                    were reasonable, “the district court
terminate a lease and then refraining from                necessarily had to consider whether the
doing so.18         Moreover, Johnson is a                lease formula itself violated the CLA by
m a g i s t r a t e j u d g e ’ s R e p o r t a nd        residual-risk shifting or otherwise.”
Recommendation, which, as NMAC is                         Miller/Roses Br. as Appellees, at 18.
quick to point out, a district court judge in             Therefore, conclude the Plaintiffs, the
the district where Johnson was decided,                   Paragraph 18 formula was applied to them
has noted was never adopted by the district               because NMAC charged them the balance
court. The suit was settled before the                    of lease payments due under the lease only
district court ruled on objections that were              after comparing the Paragraph 18 formula
filed.         NMAC’s Reply Br. at 26-27                  to the balance of lease payments due.
(quoting Demitropoulos v. Bank One                        Consequently, they contend that they have
Milwaukee, N.A., 915 F.Supp. 1399, 1415                   standing to challenge the reasonableness of
n.14 (N.D.Ill. 1996).                                     the Paragraph 18 formula.
          Plaintiffs make a number of                             We disagree. We do not believe
additional arguments which they claim                     that the district court necessarily
demonstrate their standing to challenge the               considered whether the Paragraph 18
Paragraph 18 formula. First, they argue                   formula violated the CLA in determining
that they have standing to challenge the                  whether the charges they actually paid for
Paragraph 18 formula because the formula                  early termination were reasonable. The
was used as a “benchmark” in determining                  district court merely noted that, because
whether the early termination charges                     NMAC compared the charges under the
actually paid were reasonable. And, argue                 Paragraph 18 formula to the charges under
Plaintiffs, if the Paragraph 18 formula was               the remaining payments method, the
used as a “benchmark” to determine                        charges Plaintiffs actually paid resulted
                                                          indirectly from the Paragraph 18 formula.
                                                           That is not the same as holding that the
  18                                                      Paragraph 18 formula actually violates the
     Our fairly narrow view of the standing
                                                          CLA.
issue here is confined to the specific
                                                                  Moreover, the fact that NMAC
context of consumer car leases. Issues of
                                                          compared the charges under the Paragraph
standing can arise in so many varied
                                                          18 formula to the charges under the
settings that we think it appropriate to
                                                          remaining payments methods does not
caution that our analysis ought not be
                                                          mean that the Paragraph 18 formula was
automatically extended to other situations
                                                          indirectly applied to the Plaintiffs. On the
where the possibility of injury may be
                                                          contrary, the fact that NM AC chose not to
sufficiently real to support standing, both
                                                          charge Plaintiffs an early termination fee
in the Article III context and the prudential
                                                          based on the Paragraph 18 formula
sense, even though no actual injury has yet
                                                          actually shows that the Paragraph 18 was
been inflicted.

                                                     18
not applied to Plaintiffs.                            the remaining payments method. 2000
        Second, Plaintiffs argue that they            WL 1599244 at *22. That along with
have standing to challenge the Paragraph              allegations and averments by both parties
18 formula because they alleged and                   allowed the district court to conclude that
produced evidence that if they had                    the Plaintiffs had standing because the
received an honest residual value, instead            amount charged under the remaining
of NMAC’s inflated one, the Paragraph 18              payments method indirectly resulted from
formula would have yielded a figure lower             the Paragraph 18 formula.
than the charge they paid under the                         Moreover, an allegation that the
remaining payments method, i.e., the so-              Paragraph 18 formula would have
called Alternative Formula charge. They               generated a lower termination charge than
claim that the district court found that had          the remaining payments if NMAC had
NMAC used an accepted industry standard               used an accurate residual value method
for the residual, specifically something              does not prove standing.      As recited
called the “Auto Lease Guide,” the early              above, the fact that NMAC used the
termination charge under the Paragraph 18             remaining payments method because it
formula would have been $300 less than                was lower than the Paragraph 18 formula
the sum of the remaining payments under               shows that the Paragraph 18 formula was
Miller’s lease. They also claim that the              not applied to them and, therefore, they
district court found that had NMAC used               have no standing. As noted above, injury
the “revenue-neutral residual” for the                can not be conjectural.         Essentially,
Roses, the Paragraph 18 formula would                 Plaintiffs are relying upon a hypothetical
have been $438.79, rather than the $480.00            to manufacture standing. We will not now
remaining payments meth od they                       speculate about the amount of early
ultimately paid. Accordingly, Plaintiffs              termination charges that would have been
contend that they demonstrated harm from              produced using different residual values.
NMAC’s use of both the Paragraph 18                          Third, Plaintiffs argue that they
formula and the remaining payments                    have standing because, in March 1999,
method, and therefore have standing to                Miller obtained a phone quote from
challenge the reasonableness of the                   NMAC of over $3,000 for the cost of
Paragraph 18 formula under § 1667b(b).                terminating his lease about 9 months
        These calculations do not prove               early. Miller claims that the district court
standing. In the first place, Plaintiffs are          found that after receiving the $3,000 early
being disingenuous in stating what the                termination quote, he decided not to
district court found. All that the district           terminate until November 1999.
court did in its standing discussion is recite        However, the district court never made any
that Plaintiffs claimed that had NMAC                 such finding. The district court merely
used different residual values, the                   recited that Miller made a phone call to
Paragraph 18 formula would have                       obtain an early termination quotation. 2000
produced a lower termination charge than              WL 1599244 at *2. In any event, Miller

                                                 19
never explains how a lessee has standing              early termination charges at all, but were
to challenge an early termination fee                 extra contractual charges imposed by
simply because he/she obtains a quotation             NMAC. Therefore, because they were
of the early termination fee.              See        imposed extra-contractually, they contend
Highsmith, 18 F.3d at 437 (suggesting that            that the district court should have analyzed
Plaintiff must at least allege that he intends        the Alternative Formula charges under
to terminate his lease in order to obtain             basic contract law and the Uniform
standing).                                            Commercial Code (“UCC”).
        Fourth, and finally, Plaintiffs                       However, this argument is
suggest that because they have standing to            conceptually flawed from the outset. The
assert disclosure claims under § 1667a of             claims that are the subject of these Rule
the CLA, they have standing to assert                 54(b) appeals are the Plaintiffs’ federal
substantive claims under § 1667b of the               claims that NMAC’s leases violated the
CLA. However, standing to assert § 1667a              CLA. Because Plaintiffs challenged the
disclosure claims does not establish the              Alternative Formula charges under the
injury required to assert substantive claims          CLA, we fail to see the relevance of state
under § 1667b. A Plaintiff may have                   contract law and/or the UCC, and
standing to challenge certain practices, but          Plaintiffs have offered no authority to
not others. See Pryor v. Nat’l Collegiate             convince us their reliance on state law is
Athletic Ass’n., 288 F.3d 548, 561 (3d Cir.           proper. Indeed, if taken to its logical
2002).                                                conclusion, their argument suggests that
 2. Reasonableness of the Alternative                 their Alternative Formula claim is really a
Formula Charge.                                       state law claim and not a federal law claim
        The Alternative Formula charges               at all. In addition, Plaintiffs appear to be
that NMAC assessed were the two                       trying to force the non-disclosure of the
remaining months lease payments in the                Alternative Formula under § 1667a(11)
case of the Roses and the one month                   into a substantive violation under §
payment remaining in the case of M iller.             1667b(b) using the wedge of contract law.
The district court found that these “early                    In any event, Plaintiffs argue that if
termination charges” were reasonable                  the district court had analyzed the
under § 1667b(b). 2000 WL 1599244 at                  Alternative Formula charges under UCC
*31-32. In their cross-appeal, Plaintiffs             and/or contract law damages standards,
argue that was error.                                 they should have been granted summary
        They first argue that the district            judgment. They argue that, under those
court erred by analyzing the Alternative              standards, it was NMAC’s burden to offer
Form ula under t h e § 1 6 6 7 b(b)                   proof it was damaged by their early lease
reasonableness standard because the                   terminations and the surrender of their
Alternative Formula was not disclosed in              vehicles before the leases had expired. In
the lease.       In Plaintiffs’ view, the             their view, the Alternative Formula charge
Alternative Formula charges were not                  was a liquidated damages formula and,

                                                 20
therefore, the party seeking to enforce the           both recover the leased property and
liquidated damages has the burden of                  accelerate the remaining monthly
establishing the reasonableness of the                payments under the lease. Rather, a lessor
formula. See Finkle v. Gulf & Western                 must chose between those two remedies.
Mfg. Co., 744 F.2d 1015, 1021 (3d Cir.                In support of that proposition, they cite to
1984). However, since NMAC offered no                 Finkle, 744 F.2d at 1021-1022. Finkle
proof of harm, Plaintiffs claim NMAC did              does say that a lessor cannot both recover
not establish the reasonableness of the               the leased property and accelerate the
liquidated damages.                                   m onthly paym ents .                  However ,
        Moreover, their claim that NMAC               Finkle concerned a commercial property
offered no proof of harm is incorrect. The            lease and refers to a principle applicable to
district court expressly found that                   c o m m e r c i a l p r o p e r t y le a s e s i n
“NM AC’s harm. . . is the loss of the                 Pennsylvania.             Mo reover, Finkle
remaining monthly payments and the car is             concerned non-renewal options under a
returned for disposition sooner than                  lease for a commercial property.
NMAC expected, thereby resulting in                   Depreciation is not a factor in that context.
earlier than expected disposition costs and           However, depreciation is a driving factor
risks.”     2000 WL 1599244 at *32                    under vehicle leases such as the ones
(emphasis in original). The district court            before us here.
found that the Alternative Formula charge                     Finally, Plaintiffs argue that even if
was reasonable “in light of” that actual              the district court was correct that the
harm. Id. Plaintiffs do not bother to                 Alte r na tive For mula c ha rg e w as
mention the district court’s finding that             reasonable under § 1667b(b), the charges
NMAC suffered this harm.                              should have been discounted to present
        NMAC counters by arguing that it              value. According to Plaintiffs, without
was not its burden to prove that the                  discounting the Alternative Charge to
Alternative Formula charges were                      present value, NMAC would be recovering
reasonable.       NMAC claims it was                  interest on sums that had already been
Plaintiffs’ burden to prove that the charges          repaid, putting NMAC in a better position
were unreasonable under § 1667b(b)                    than if the lease had been fully performed.
standards. See Kedziora, 780 F.Supp. at               In the abstract, Plaintiffs are correct.
535 n.12 (Plaintiffs who seek to avoid                Absent discounting, NMAC is receiving
enforcement of lease term bear burden of              unearned interest or rents. However, the
proof). Plaintiffs respond by arguing that            district court properly addressed this
even if it is their burden to demonstrate             argument in its opinion:
unreasonableness, they have done so.                          The Roses terminated their
They contend that even though they turned                     lease two months early, and
their cars in prior to the expiration of their                Miller only one month early,
leases, NMAC is not entitled to charge                        and the discounting of the
them anything, because a lessor cannot                        monthly payments would

                                                 21
              logically be done at                 that amounted only to a “couple of bucks.”
              the rate implicit in                     Plaintiffs do not dispute this.
              the lease, pursuant to               Consequently, we agree with the district
              Paragraph 18. The                    court’s conclusion that the de minimis
              rate implicit in the                 overage resulting from NMAC’s failure to
              R ose leas e w a s                   discount to present value does not make
              5.99%, and the rate                  t h e Alt ernative Fo rmula C harg e
              implicit in the Miller               unreasonable under § 1667b(b).
              lease was 7.6%.                                     V. CONCLUSION
              Thus, just as                                 For all of the above reasons, we
              N M A C ’ s                          will affirm the district court’s grant of
              representative Robin                 summary judgment to Plaintiffs on their
              Norris testified, the                Count I disclosure claims and on Count
              gain to NM A C                       IV. We will also affirm the grant of
              resulting from its                   summary judgment to NMAC on the
              p r a c t ic e o f n o t             reasonableness of the Alternative Formula
              discounting was “a                   component of Count II. However, we will
              couple of bucks” as                  reverse and vacate the grant of summary
              to the Rose and                      j u d g m e n t t o P l a in t i f fs o n t h e
              Miller leases. This                  reasonableness of the Paragraph 18 early
              slight overage is de                 termination formula component of Count
              m inim is and not                    II for lack of standing.
              enough, in the cases
              of Miller and the
              Roses, to render the
              early termin ation
              charge unreasonable
              in light of the harms
              to NMAC arising
              f r o m t h e e a rl y
              termination pursuant
              to § 1667b(b).

2000 WL 1599244 at *32.             NMAC
claims that it gained only a “couple of
bucks” as a result of not discounting
because the Plaintiffs’ remaining payments
consisted almo st entirely o f the
depreciation that had not yet been paid. It
was the interest or rent charge component

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