O'Dowd v. South Cent. Bell, 83-3208

• Decision Date: 09 April 1984
• Docket Number: No. 83-3208,83-3208
• Citation: 729 F.2d 347
• Parties: Rose Marie O'DOWD and George O'Dowd, Plaintiffs-Appellants, v. SOUTH CENTRAL BELL, Defendant-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 347

729 F.2d 347

Rose Marie O'DOWD and George O'Dowd, Plaintiffs-Appellants, v. SOUTH CENTRAL BELL, Defendant-Appellee.

No. 83-3208.

United States Court of Appeals Fifth Circuit.

April 9, 1984.

Kim M. O'Dowd, New Orleans, La., for plaintiffs-appellants.

Jones, Walker, Waechter, Poitevent, Carrere & Denegre, Raymond J. Salassi, Jr., Mitchell F. Crusto, New Orleans, La., for defendant-appellee.

Appeal from the United States District Court for the Eastern District of Louisiana.

Before REAVLEY, TATE and GARWOOD, Circuit Judges.

TATE, Circuit Judge:

The plaintiffs, Rose Marie O'Dowd ¹ and George O'Dowd ("the O'Dowds"), brought suit under the Equal Credit Opportunity Act ("the Act"), 15 U.S.C. Sec. 1691 et seq. (1976), against the defendant South Central Bell Telephone Company ("South Central") to recover damages resulting from alleged violations of the Act. The district court dismissed by summary judgment the O'Dowds' claim upon finding, inter alia, (1) that the O'Dowds, a white couple, had no cause of action under the Act because they did not fall into a legally-recognized minority protected by the Act, and (2) that, if entitled to notice of "adverse action" under the Act, the statement of the reasons therefor supplied by South Central was adequate to satisfy the statutory requirement. We affirm, agreeing with the district court as to the latter holding, and finding that, under the undisputed showing, no discrimination affecting the Act's protected classifications was implicated, whether or not a non-minority applicant has a cause of action under the Act.

Context Facts

George O'Dowd, a well-respected white ² lawyer, and his wife had enjoyed residential telephone service supplied by South Central over twenty years previously. At the time this service was installed, no deposit was required by South Central. Through carelessness, O'Dowd was tardy in payment of his monthly telephone bill four times during the year preceding September 1980. The precipitating fact of this litigation arises out of South Central's notice to O'Dowd in September 1980 that, "due to [his] past payment record," a $100 deposit would be required and the telephone service disconnected if the deposit was not received in forty-five days. O'Dowd protested the demand, and South Central disconnected the service, whereupon he paid the deposit under protest and secured re-installation of his residential telephone service. (The deposit was subsequently refunded to him, with interest.)

The O'Dowds subsequently filed this action for damages, alleging two causes of action: I. The first cause of action was based upon a violation of the Act "in denying credit on the bases of race, sex, creed, and/or other invalid or discriminatory basis," 15 U.S.C. Sec. 1691(a)(1), ³ arising out of South Central's treatment of customer-applicants in the allegedly predominately black population of their "366" area exchange; II. The second cause of action was based upon an additional violation by South Central of the Act's requirement that "[e]ach applicant [for credit] against whom adverse action is taken shall be entitled to a statement of reasons for such action from the creditor." 15 U.S.C. Sec. 1691(d)(2) (1976). ⁴

I. The Discrimination Claim under Section 1691(a)(1)

The O'Dowds do not claim that they themselves were discriminated against on the grounds of "race, color, religion, national origin, sex or marital status, or age," 15 U.S.C. Sec. 1691(a)(1) (quoted at note 3 supra ), but rather that they were damaged as a result of South Central's discriminatory policies against customer-applicants in the "366" exchange (which the O'Dowds, a white couple, allege to have a large number of black and elderly customer-applicants). This cause of action would depend, for its predicate, upon a showing that South Central did not enforce a similar deposit-requirement, when presented with tardiness in payment, with regard to other exchange areas that were predominately white or predominately inhabited by younger persons.

We need not face the issue posed by the O'Dowds, however--that, contrary to the district court holding, not only members of Act-protected classifications, but also other applicants for credit damaged as a result of discrimination against the protected classifications, ⁵ have a cause of action under the Act--because here, under the undisputed showing, South Central's request for a deposit was made pursuant to a standard policy applicable to all exchange areas serviced by it, and that, moreover, the exchange "366" area reflected a racially and sexually diverse "microcosm" reflecting South Central's entire customer population.

The district court granted South Central summary judgment on this claim. Initially, the party seeking summary judgment must demonstrate the absence of a genuine issue of material fact and the appropriateness of judgment as a matter of law. Adickes v. S.H. Kress and Company, 398 U.S. 144, 157, 90 S.Ct. 1598, 1608, 26 L.Ed.2d 142 (1970). South Central presented various showings demonstrating that the basis for the deposit request to the O'Dowds was a pattern of lateness in payments (four times) during the previous twelve months. Presented by South Central for consideration on the motion for summary judgment were, inter alia, the affidavit of Beryle S. Ramsey, ⁶ a supervisor handling accounts in the "366" telephone exchange area, and the deposition of Shari Hinojosa, ⁷ the service representative who handled the request from the O'Dowds of the deposit. These factual submissions were sufficient to demonstrate, unless controverted, that South Central's deposit request was based upon a non-discriminatory motive, i.e., the O'Dowds' tardiness in payment of the telephone bill, and in accordance with a non-discriminatory general practice of requiring deposits in such instances.

Fed.R.Civ.P. 56(e) provides that, once motion for summary judgment is supported by affidavits and other evidence, "an adverse party may not rest on the mere allegations or denials of his pleading, but his response, by affidavits or as otherwise provided by this rule, must set forth specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e).

The O'Dowds' allegation that the deposit request was made on the basis of impermissible discrimination is refuted by the undisputed factual showing. The O'Dowds assert that South Central discriminates against "366" area applicants because the racial composition and age of the area's population indicate that residents in the area are a bad credit risk. When pressed for the factual basis of the allegation, however, O'Dowd was unable to identify his source. ⁸ Further, O'Dowd admitted to having missed due dates in paying his telephone bills, and he admitted having received from South Central at least three "late" notices.

In short, the O'Dowds failed to produce any "specific facts," Fed.R.Civ.P. 56(e), to show there was a genuine factual issue with regard to South Central's undisputed showing of legitimate non-discriminatory reasons for the action taken, and that would tend to substantiate the O'Dowds' claims regarding the demography of the "366" area or the disparate treatment by South Central of customer-applicants in the area. Accordingly, the grant of summary judgment in favor of South Central was correct. McKenzie v. U.S. Home Corp., 704 F.2d 778, 779 (5th Cir.1983); White v. United Parcel Service, 692 F.2d 1, 3 (5th Cir.1982).

II. The Adequate-Explanation-Failure Cause of Action Under Section 1691(d)(3)

The Act affords a cause of action for damages against any creditor "who fails to comply with any requirement" imposed by the Act. 15 U.S.C. Sec. 1691e (emphasis added). The plaintiffs allege that they are entitled to damages for South Central's failure to comply with the requirements of 15 U.S.C. Sec. 1691(d)(3).

For present purposes, without necessarily so deciding, we accept the O'Dowds' contentions

(a) that South Central's new requirement that the O'Dowds furnish a deposit for continued credit service, after twenty years of such service without deposit, was an "adverse action" within the statutory definition as "a change in the terms of an existing credit arrangement," 15 U.S.C. Sec. 1691(d)(6), which thus entitled them to a "statement of reasons" for such adverse action, Sec. 1691(d)(2), (quoted at note 4 supra ), that would contain "the specific reasons for the adverse action taken," Sec. 1691(d)(3), (quoted at note 4 supra ), and

(b) that Sec. 1691(d), which was added to the Act by a 1976 amendment, required a creditor to notify any "credit applicant" ⁹ of an adverse action and of the "specific reasons" therefor, Sec. 1691(d)(2), (3)--not just those within the classifications of race, gender, etc. protected against credit discrimination by the Act. See, e.g., Fischl v. General Motors Acceptance Corporation, 708 F.2d 143 (5th Cir.1983) (apparently accepting, without discussion, this construction of the Act).

As previously noted, pursuant to a standard policy, South Central sent a notice of its adverse action (i.e., requiring a deposit for continuation of credit), explaining the reason as "due to your [O'Dowd's] past payment record." The O'Dowds claim that this notice did not meet the statutory requirement that the notice contain "the specific reasons for the adverse action taken." 15 U.S.C. Sec. 1691(d)(3).

Before summarizing the present facts with more specificity, in the light of which we hold that the adverse-action notice did meet the statutory requirement, it is appropriate that, first, we advert to the statutory purposes designed to be served by this notice requirement. As explained in the Senate Report accompanying the 1976 notice-provision, which originated in the Senate and was added to the Act by the 1976 amendment:

The requirement that creditors give reasons for adverse action is, in the Committee's view, a strong and necessary adjunct to the antidiscrimination purpose...