Court Opinion

ID: 9469736
Source: CourtListenerOpinion
Date Created: 2023-08-05 02:47:39.790036+00
Date Added: 2024-06-11T17:41:32.151637
License: Public Domain

POOLE, Circuit Judge,
dissenting.
The majority today holds in effect that a credit practice need not be discriminatory to violate the Equal Credit Opportunity Act (the Act). Because this holding is contrary to the clear language and purpose of the Act, I respectfully dissent.

Applicability of § 202.7(c)

Although a close question, I agree with the majority that American Express supplementary cardholders are “contractually liable on an existing open end account” and are thus protected by 12 C.F.R. §■ 202.7(c). In support of its argument that supplementary cardholders are merely “authorized users” of an account, American Express *1241points out that its agreement with card-members specifically states that only one account — the Basic Card Account — is established and supplementary cardholders are granted the right to use that account. However, what controls is not American Express’s characterization of its credit system, but the rights granted to and liabilities imposed upon the supplementary cardholder. The majority correctly finds that the liabilities imposed upon supplementary cardholders are inconsistent with mere “authorized user” status.

Violation of § 202.7(c)

It is a fact that American Express can-celled appellant’s supplementary card after the death of her husband. Section 202.7(c), however, does not prohibit the termination of an account after a change in an applicant’s marital status; it prohibits only the termination of an account “on the basis of” such a change. Since the change in appellant’s marital status was not the basis for American Express’s decision to cancel her supplementary card, there has been no violation of § 202.7(c).
Under the terms of the agreement by which it issues both basic and supplementary cards, American Express reserves the right to cancel a supplementary card if the basic cardholder is unable or unwilling to meet all the obligations relating either to the supplementary card or to the basic card account. It was undisputed that American Express uniformly cancels both the basic card account and all supplementary cards issued thereon upon the death of the basic cardholder, since the basic cardholder’s death renders him or her unable to meet these obligations. This is a neutral policy, evenhandedly applied whatever the relationship between the basic and supplementary cardholders, i.e., whether they are brother and sister, mother and son, father and daughter, or husband and wife. The fact that in a particular case the death of the basic cardholder also changes the marital status of the supplementary cardholder is thus entirely incidental and immaterial to the basis for the cancellation of the supplementary card. See Haynsworth v. South Carolina Electric and Gas Co., 488 F.Supp. 565, 567 (D.S. Car. 1979). See also FRB letter of January 12, 1976, CCH Consumer Credit Guide 142,080.
The holding that the cancellation of appellant’s card under such circumstances was “on the basis of” the change in her marital status is a construction of § 202.7(c) that is clearly contrary to the language and the purpose of the Act.1 The Act prohibits only those credit practices that discriminate against an applicant on any of a number of enumerated bases, such as sex or marital status. 15 U.S.C. § 1691(a). In other words, a creditor may not treat an applicant differently with respect to credit decisions, all other facts being the same, because of his or her sex or marital status. See Markham v. Colonial Mortgage Service Co. Associates, 605 F.2d 566, 569 (D.C. Cir. 1979). The purpose of the Act is “to eradicate credit discrimination waged against women, especially married women whom creditors traditionally refused to consider for individual credit.” Anderson v. United Finance Co., 666 F.2d 1274, 1277 (9th Cir. 1982). The regulations promulgated by the Board of Governors of the Federal Reserve System, including § 202.7(c), must be consistent with the purposes of the Act. 15 U.S.C. § 1691b(a). Thus, while the Board is given discretion in determining whether a particular type of discriminatory credit practice is the type the Act was meant to prohibit, see Anderson v. United Finance, supra, 666 F.2d at 1277, the regulations may nevertheless prohibit only those practices that are in fact discriminatory.2
American Express’s practice is not discriminatory since cancellation of supple*1242mentary cards is an evenhanded and uniform consequence suffered by all supplementary cardholders and is not at all operative because of a change in a cardholder’s marital status. The majority’s holding thus does not contribute to the eradication of credit discrimination. Rather, it prevents American Express from treating all supplementary cardholders alike and instead forces it to give preferential treatment to those supplementary cardholders who happen to have been married to the basic cardholder. Such a result stands the Act on its head.
Since appellant’s supplementary card was not cancelled on the basis of the change in her marital status, there was no violation of § 202.7(c) or the Act.3 I would therefore affirm the district court’s grant of summary judgment in favor of American Express.

. The issue is not, as the majority states, whether the Board of Governors of the Federal Reserve System had the authority to promulgate § 202.7(c). Authority clearly exists to define as a discriminatory credit practice the termination of an applicant’s account on the basis of the death of his or her spouse. The issue is whether the majority’s interpretation of § 202.7(c), particularly the phrase “on the basis of,” is consistent with the purpose of the statute and the regulation.

. This court in Anderson held that, by violating 12 C.F.R. § 202.7(d)(1), a creditor had discriminated within the meaning of the Act. 666 F.2d *1242at 1277. The creditor had admitted that its practice was discriminatory and thus in violation of the regulation. It argued, however, that this “technical” violation did not result in a violation of the Act. Id. at 1276.
By contrast, American Express argues that its practice is not discriminatory and thus does not violate § 202.7(c). Anderson is therefore inapplicable to this case, since it in no way can be read to stand for the proposition that a credit practice need not be discriminatory to violate either the regulations or the Act.

. This is not to say that American Express’s practice is immune from attack under the Act or under § 202.7(c). Appellant could have challenged the practice on the ground that, though neutral on its face and as applied; it has a disproportionate impact on women whose marital status changes as a result of the death of the basic cardholder. See Cherry v. Amoco Oil Co., 490 F.Supp. 1026 (N.D. Ga. 1980); Vander Missen v. Kellogg-Citizens National Bank, 481 F.Supp. 742 (E.D. Wis. 1979). She could also have challenged American Express’s entire credit system as violative of the Act.