490 F.Supp. 1026 (N.D.Ga. 1980), Civ. A. C78-574, Cherry v. Amoco Oil Co.

Docket Nº:Civ. A. C78-574
Citation:490 F.Supp. 1026
Party Name:Cherry v. Amoco Oil Co.
Case Date:June 11, 1980
Court:United States District Courts, 11th Circuit, Northern District of Georgia

Page 1026

490 F.Supp. 1026 (N.D.Ga. 1980)

Claire CHERRY, Plaintiff,



Civ. A. No. C78-574A.

United States District Court, N.D. Georgia

June 11, 1980

Page 1027

Lawrence L. Aiken, Atlanta, Ga., for plaintiff.

Earle B. May, Jr., Judson Graves, Jones, Bird & Howell, Atlanta, Ga., for defendant.


ORINDA DALE EVANS, District Judge.

The above-captioned case was tried to the Court sitting without a jury on April 29-30, 1980. Having considered the evidence adduced at the trial, together with the briefs and arguments of counsel, the Court finds in favor of Defendant Amoco Oil Company. Specifically, the Court finds and concludes as follows: 1


Plaintiff is a white woman who resides in a predominately non-white residential area in Atlanta, Georgia. She applied for but was denied a gasoline credit card by Defendant Amoco Oil Company. She seeks damages 2 under the Equal Credit Opportunity Act, 3 which provides in part that it is unlawful for a creditor to discriminate against a credit applicant on the basis of race. She contends the reason for rejection of her application was race-related and that as such, said denial is proscribed by the Act.

Defendant Amoco Oil utilizes a complex computerized system to evaluate credit card applications. The system takes into account 38 objective factors in scoring each application, including level of income, occupation, and Amoco's prior credit experience

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in the U. S. Postal Service zip code area where the applicant resides. The information provided with respect to each of the 38 factors is scored by the computer. Credit is granted to those who receive a passing aggregate score; it is automatically denied to others.

Amoco's testimony indicated that its scoring system assigns a low rating to those zip code areas in which it has had unfavorable delinquency experience. Of those Atlanta zip code areas bearing the prefix 303--, 4 low ratings were assigned to all predominantly non-white zip code areas 5 as well as to many predominantly white areas. Plaintiff's zip code area, 30310, was assigned a rating of 1, the least desirable rating on a scale of 1 to 5. 6 The evidence showed without dispute that if Plaintiff lived in a zip code area rated 3 or above, and all other information including level of income shown on her application had remained constant, she would have been granted a credit card by Amoco.

Plaintiff asserts that Amoco's utilization of zip code ratings is racially discriminatory. She contends she has standing 7 to complain of such discrimination because she was adversely affected by it; to wit, she lives in a predominantly non-white zip code area which has been low-rated by Amoco's system.

Plaintiff produced two witnesses, herself and a sociologist. Plaintiff's testimony established that she received a letter from Amoco indicating her application had been turned down; the letter specified that one of the reasons was "our previous credit experience in your immediate geographical area." 8 Plaintiff testified she was humiliated and embarrassed by rejection of her credit card application. She further testified she subsequently has had to reveal this denial on other credit applications, but there was no testimony that she has been denied other credit. In short, Plaintiff presented no testimony of actual damages, unless the statutory term "actual damages" is to be interpreted by the Court as permitting an award of damages for mental anguish.

Plaintiff's other witness testified he had received from Plaintiff's counsel a list of those Atlanta zip code areas bearing a 303 prefix which were rated 1 or 2 by Amoco, along with information as to credit application acceptance rate in each area. He then compiled, based on estimates derived from 1970 census data, percentage estimates of non-white population in each of these areas. These two sets of percentages were then correlated on a scattergram he prepared (Plaintiff's Exhibit 5, Figure 4). As may be seen from an examination of the scattergram, it shows a significant correlation between acceptance rate/percentage of white population or conversely, rejection rate/percentage of non-white population.

Defendant Amoco produced witnesses who opined that the methodology used by Plaintiff was faulty for various reasons.

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Amoco claimed the scattergram was based on incorrect demographic data and that even assuming the correctness of the data reflected in the scattergram, it did not prove anything about relationship between use of zip code ratings and rejection of black credit applicants, because (1) it made the unsupported assumption that the reason for rejection was the applicant's residence in his particular zip code area and (2) it made the unsupported assumption that Amoco's applicant pool for each zip code area reflected the racial composition of the population as a whole.


The Equal Credit Opportunity Act, 15 U.S.C. s 1691, was originally passed in 1974 to prohibit credit discrimination based on sex and marital status. It was...

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