Brothers v. First Leasing

Citation724 F.2d 789
Decision Date14 March 1984
Docket NumberNo. 82-4584,82-4584
PartiesPatricia Ann BROTHERS, Plaintiff-Appellant, v. FIRST LEASING, and Does 1 through 20, inclusive, Defendants-Appellees.
CourtUnited States Courts of Appeals. United States Court of Appeals (9th Circuit)

William T. Murphy, Law Offices of Chris A. Schaefer, San Rafael, Cal., for plaintiff-appellant.

Pamela R. Grove, Ralph Mendelson, Davis, Young & Mendelson, Alameda, Cal., for defendants-appellees.

Appeal from the United States District Court for the Northern District of California.

Before ALARCON, CANBY, and REINHARDT, Circuit Judges.

REINHARDT, Circuit Judge:

The district court dismissed plaintiff's claim that her application for an automobile lease had been denied on the basis of sex or marital status in violation of the Equal Credit Opportunity Act (ECOA), 15 U.S.C. Secs. 1691-1691f (1982). The sole issue on appeal is whether the ECOA applies to consumer leases. We hold that it does.

In January 1982, plaintiff-appellant, Patricia Ann Brothers, attempted to lease an automobile for her personal use from defendant-appellee, First Leasing. 1 First Leasing required Brothers to submit a completed "Application for Lease Credit," which was to provide First Leasing with information with which to evaluate her financial condition.

Brothers informed First Leasing that she intended to lease the automobile in her own name rather than jointly with her husband, James A. Garske. 2 Nonetheless, First Leasing insisted that Brothers include on the "Application for Lease Credit" information concerning Mr. Garske's financial history. In addition, First Leasing required Mr. Garske, as well as Brothers, to sign the application. Brothers submitted the application signed by her husband, with the requested information about his finances. First Leasing then obtained TRW Credit Reports on Brothers and her husband. Mr. Garske's credit report indicated that he previously had filed for bankruptcy.

In a form entitled "Statement of Credit Denial, Termination, or Change," which complies with the requirements of the ECOA, see 15 U.S.C. Sec. 1691(d) (1982), and is almost identical to the form suggested in the ECOA regulations, see 12 C.F.R. Sec. 202.9(b)(2) (1983), First Leasing rejected Brothers' application. The "principal reason" given for the denial of Brothers' lease credit application was her husband's previous bankruptcy. The form used by First Leasing also contained a statement that the ECOA bars "creditors from discriminating against credit applicants on the basis of sex [or] marital status."

Brothers filed a claim against First Leasing that alleged that (1) the requirement that Mr. Garske sign her lease credit application, and (2) the denial of her application because of his credit record, constitute unlawful discrimination on the basis of sex or marital status under the ECOA, 15 U.S.C. Sec. 1691(a)(1). Contending that the ECOA does not apply to leases, First Leasing moved under Fed.R.Civ.P. 12(b)(6) to dismiss the action for failure to state a claim upon which relief can be granted. The district court held that the lease was not covered by the ECOA and granted the motion. We reverse. 3


The Equal Credit Opportunity Act (ECOA) is Title VII of the Consumer Credit Protection Act, 15 U.S.C. Secs. 1601-1693r (1982). As amended, the Consumer Credit Protection Act is a comprehensive statute designed to protect consumers by requiring full disclosure of financial terms in most credit transactions, making unlawful the use of certain unethical practices in the garnishment of wages and debt collection, regulating the transfer of funds by electronic means, and prohibiting discrimination in credit transactions. As originally passed in 1974, Title VII, the ECOA, prohibited discrimination by any creditor "against any applicant, with respect to any aspect of a credit transaction ... on the basis of ... sex or marital status." 15 U.S.C. Sec. 1691(a)(1). Congress later amended the ECOA to add prohibitions against discrimination on the basis of race, color, religion, national origin, and age. Pub.L. No. 94-239, 90 Stat. 251 (1976). The ECOA, on its face, applies to all "credit transactions."

The Consumer Credit Protection Act requires disclosure in various types of financial transactions. Title I, the Truth in Lending Act (TILA), 15 U.S.C. Secs. 1601-1666j (1982), 4 enacted in 1968, requires full disclosure of credit terms by a creditor prior to entering into consumer loans or "credit sales" of property or services. The Consumer Leasing Act (CLA), 15 U.S.C. Secs. 1667-1667e (1982), subsequently enacted 5 as a subchapter of the Truth in Lending Act, 6 requires lessors to meet similar disclosure requirements prior to entering into consumer leases. 7

Both the enactment of the requirement for financial disclosure in consumer lease transactions and the amendment of the ECOA to include discrimination based on characteristics other than sex and marital status occurred in 1976. Although both bills were considered by the same committees in the House and Senate and were adopted on the same day, Congress did not include any specific reference to leases in the amendments to the ECOA. First Leasing contends that this failure indicates a Congressional intent not to include leases within the reach of the ECOA.

The issue, then, is whether the ECOA applies only to the Truth in Lending Act or to the Consumer Leasing Act as well. We are aware of no other case in which a court has addressed this question.


"In construing a statute in a case of first impression, the courts look to the traditional signposts for statutory interpretation: first, the language of the statute itself; and second, its legislative history and the interpretation given it by its administering agency ...." Turner v. Prod, 707 F.2d 1109, 1114 (9th Cir.1983). "[T]he legislative and administrative histories are usually pursued in an effort to ascertain something more important, the purpose of Congress in enacting a specific piece of legislation. If a court can ascertain that purpose, it is usually dispositive of an issue of statutory construction." Id. at 1121 (citations omitted); see id. at 1114-21; see, e.g., Rose v. Lundy, 455 U.S. 509, 517-18, 102 S.Ct. 1198, 1202-03, 71 L.Ed.2d 379 (1982); Chapman v. Houston Welfare Rights Organization, 441 U.S. 600, 608, 99 S.Ct. 1905, 1911, 60 L.Ed.2d 508 (1979); United States v. Sisson, 399 U.S. 267, 297-98, 90 S.Ct. 2117, 2133-34, 26 L.Ed.2d 608 (1970); United States v. Bacto-Unidisk, 394 U.S. 784, 799, 89 S.Ct. 1410, 1418, 22 L.Ed.2d 726 (1969); Unexcelled Chemical Corp. v. United States, 345 U.S. 59, 64, 73 S.Ct. 580, 583, 97 L.Ed. 821 (1953).

The use of the broad term "credit transactions" in the ECOA does not, by itself, answer the question whether consumer leases are covered by the Act, although a literal reading of the language supports the view that they are. See United States v. Little Lake Misere Land Co., 412 U.S. 580, 593, 93 S.Ct. 2389, 2397, 37 L.Ed.2d 187 (1973) (recognizing "the inevitable incompleteness presented by all legislation"); G. Gilmore, The Ages of American Law 96-97 (1977) ("Statutory language--like any other kind of language--almost always presents alternative possibilities of construction."). On the one hand, the lease obligation that Brothers would have incurred under the automobile lease falls within the ECOA's definition of "credit." 8 So would the obligations incurred under most consumer leases. Moreover, the credit investigation engaged in by First Leasing is specifically included within the Federal Reserve Board's definition of "credit transaction." 9 On the other hand, it appears that the Consumer Credit Protection Act did not require disclosure in lease transactions until the enactment of the CLA in 1976, see note 5 supra, even though the term "credit transactions" appeared prior to that time in some parts of the Truth in Lending Act. On this basis, a strong argument can be made that (1) the use of the term "credit transactions" is not conclusive with respect to the issue before us, and (2) the ECOA, did not, at least initially, apply to consumer leases.

We think it unclear whether the ECOA applied to consumer leases between 1974, when it was first enacted, and 1976, when the CLA was adopted. However, we need not resolve that academic question since we conclude that whether or not the ECOA applied prior to the enactment of the CLA, it applies now.

Although "credit transactions" might in some contexts lend itself to a narrow interpretation, we cannot give it such a construction in the ECOA in view of the overriding national policy against discrimination that underlies the Act and in view of the current structure of the Consumer Credit Protection Act, the umbrella statute. We must construe the literal language of the ECOA in light of the clear, strong purpose evidenced by the Act and adopt an interpretation that will serve to effectuate that purpose. See Addison v. Holly Hill Fruit Products, Inc., 322 U.S. 607, 617, 64 S.Ct. 1215, 1221, 88 L.Ed. 1488 (1944) ("If legislative policy is couched in vague language, easily susceptible of one meaning as well as another ... we should not stifle a policy by a pedantic or grudging process of construction."); Fong v. Immigration and Naturalization Service, 308 F.2d 191, 195 (9th Cir.1962) (quoting Addison v. Holly Hill Fruit Products ). In fact, "[i]t is a well-established canon of statutory construction that a court should go beyond the literal language of a statute if reliance on that language would defeat the plain purpose of the statute." Bob Jones University v. United States, --- U.S. ----, 103 S.Ct. 2017, 2025, 76 L.Ed.2d 157 (1983); see United Steelworkers v. Weber, 443 U.S. 193, 201, 99 S.Ct. 2721, 2726, 61 L.Ed.2d 480 (1979) (quoting Holy Trinity Church v. United States, 143 U.S. 457, 459, 12 S.Ct. 511, 512, 36 L.Ed. 226 (1892)).

Preliminarily, we note that there is...

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