Fogie v. THORN Americas, Inc.

• Decision Date: 04 November 1996
• Docket Number: A-C,No. 95-3694,95-3694
• Citation: 95 F.3d 645
• Parties: Vickie FOGIE, Joan Leonard, and Angela Adams, on behalf of themselves and all others similarly situated, Plaintiffs/Appellees, v. THORN AMERICAS, INC. (formerly known as Rent-enter, Inc.) a Kansas corporation, and THORN EMI North America Holdings, Inc., a Delaware Corporation, Defendants/Appellants. Eighth Circuit
• Court: U.S. Court of Appeals — Eighth Circuit

Page 645

95 F.3d 645

Vickie FOGIE, Joan Leonard, and Angela Adams, on behalf of themselves and all others similarly situated Plaintiffs/Appellees, v. THORN AMERICAS, INC. (formerly known as Rent-A-Center, Inc.) a Kansas corporation, and THORN EMI North America Holdings, Inc., a Delaware Corporation Defendants/Appellants.

No. 95-3694.

United States Court of Appeals,

Eighth Circuit.

Submitted April 8, 1996.

Decided Sept. 6, 1996.

Rehearing and Suggestion for Rehearing

En Banc Denied Nov. 4, 1996. ^*

John C. Dods, Kansas City, MO, argued (Dennis R. Dow, Shannon L. Spangler, Kansas City, MO, and J. Patrick McDavitt, Minneapolis, MN, on the brief), for appellants.

Kay Nord Hunt, Minneapolis, MN, argued (Phillip A. Cole, Minneapolis, MN, David L. Ramp, New Brighton, MN, Seymour J. Mansfield and Richard J. Fuller, Minneapolis, MN, on the brief), for appellees.

Before McMILLIAN and FAGG, Circuit Judges, and BURNS, ^** District Judge.

JAMES M. BURNS, Senior District Judge.

Appellants THORN Americas, Inc. and THORN EMI North America Holdings, Inc. appeal the district court's ¹ order granting summary judgment for the plaintiff class and permanently enjoining appellants from entering into usurious "rent-to-own" consumer credit sales contracts. We have jurisdiction pursuant to 28 U.S.C. § 1292(a)(1). We affirm.

I. BACKGROUND

Appellant THORN Americas, Inc. operates a chain of stores that offer a variety of household goods for sale or lease. Appellant THORN EMI North America Holdings, Inc. owns all of the stock of THORN Americas, Inc. Appellants operate their stores under the business name "Rent-A-Center" and are collectively called "RAC" in this opinion. Appellees are individual members of a certified class who entered into rent-to-own transactions with RAC on or after August 1, 1990.

RAC leases household goods to its customers for a weekly or monthly rental term. At the end of the initial weekly or monthly rental period, the customer may renew the agreement for another term. The lease may be renewed at the end of each rental term. Full payment of the rental fee is required at the beginning of each term.

RAC uses a standard form contract for each renewable lease agreement. RAC entered into thousands of such contracts with members of the plaintiff class. The renewable lease agreements between RAC and the members of the plaintiff class are known interchangeably as "the rental purchase contracts" or "the rent-to-own contracts".

The standard rental purchase contract allows a class member to acquire ownership of an item by renewing the lease for a specified number of consecutive rental periods. In the standard form contract, this method of acquiring title is called "renewing the agreement to ownership". Items may also be purchased for cash on an immediate sale basis. ² However, the vast majority, if not all of RAC's business is conducted through rental purchase contracts.

The cash price of an item is set at 55% of the total payments necessary to purchase the item by renewing the agreement to ownership. The cash price of an item is prominently displayed on the item and is included in the standard form rental purchase contract. The difference between the total payments needed for renewal to ownership and the cash price is called the "cost of lease services". ³ The rental purchase contracts state the cost of lease services amount.

Appellees have successfully contended that the difference between the cash price and the total of payments to acquire title by renewing the agreement to ownership, i.e. the amount known as the cost of lease services, is actually entirely interest. Based on that central contention, the class members brought this action alleging that the rent-to-own contracts violated several state and federal statutes, including the Minnesota Consumer Credit Sales Act (CCSA), Minn.Stat. §§ 325G.15-.16, the Minnesota General Usury Statute, Minn.Stat. §§ 334.01-.03; and the federal Racketeer Influenced and Corrupt Organization statute (RICO), 18 U.S.C. § 1961.

The district court certified two questions to the Minnesota Supreme Court:

1. Are rent-to-own contracts consumer credit sales under Minn.Stat. § 325G.15?

2. Does the usury statute, Minn.Stat. § 334.01, apply to rent-to-own contracts?

On June 24, 1994, the Minnesota Supreme Court issued its opinions in Miller v. Colortyme, Inc., 518 N.W.2d 544 (Minn.1994) and Fogie v. Rent-A-Center, Inc., 518 N.W.2d 544 (Minn.1994). The Court answered both certified questions in the affirmative.

The plaintiff class then brought its motion for partial summary judgment seeking declaratory and injunctive relief. On September 28, 1995, the district court issued its order enjoining appellants from entering into credit sales transactions within the State of Minnesota which bear interest in excess of the maximum rate permitted under Minnesota law. The district court's order also declared the rental purchase contracts to be consumer credit sales contracts subject to the Minnesota General Usury Statute. It declared that the rental purchase contracts constitute "unlawful debt" as defined under RICO. Finally, the district court declared the rental purchase contracts void ab initio and set forth a formula and procedure for determining money damages.

II. Scope of Review

We must resolve issues relating to the jurisdiction of this court at the outset. We have jurisdiction to review the district court's issuance of the injunction under 28 U.S.C. § 1292(a)(1) which provides for appeal of interlocutory orders granting or refusing to grant injunctions. Our jurisdiction under section 1292(a)(1) also extends to the remainder of the appealed order to the extent the injunction is "interdependent with" the remainder of the appealed order. In re Federal Skywalk Cases, 680 F.2d 1175, 1180 (8th Cir.), cert. denied, 459 U.S. 988, 103 S.Ct. 342, 74 L.Ed.2d 383 (1982); Union Nat. Bank of Little Rock v. Federal Nat. Mortg. Ass'n, 860 F.2d 847, 852 (8th Cir.1988). Under this standard, we have jurisdiction to review all portions of the order that are dependent on the resolution of the issues necessarily resolved in reviewing the injunction order. Union Nat. Bank v. Federal Nat. Mortg. Ass'n, 860 F.2d at 852. In other words, in addition to the injunction order, we may review other issues only if they are "inextricably bound up" with the injunction. Marathon Oil Co. v. United States, 807 F.2d 759, 764 (9th Cir.1986), cert. denied, 480 U.S. 940, 107 S.Ct. 1593, 94 L.Ed.2d 782 (1987). We need not undertake a review of issues whose resolution is not necessary to effectively review the injunction. Mille Lacs Band of Chippewa Indians v. State of Minn., 48 F.3d 373, 375 (8th Cir.1995).

We must determine the extent to which each issue RAC has appealed is relevant to, or interdependent with, or inextricably bound up with the injunctive relief granted in this case.

First, the propriety of the summary judgment in favor of the plaintiff class on its usury claim is properly before us on appeal, because the district court's determination that the rental purchase agreements are usurious is the very basis of the injunction. Second, the issues surrounding the time-price doctrine and appellants' constitutional claims are properly before us because the district court's rejection of these defenses was a necessary predicate to entry of the injunction.

The remaining issues are more problematic. RAC asks us to review the district court's finding that the rental purchase agreements satisfy the "unlawful debt" element of RICO. The district court retained jurisdiction to make determinations on the remaining elements of the RICO claim. In the interest of avoiding piecemeal appeals, it would be appropriate to review the RICO claim in its entirety after a final judgment has been rendered. Gardner v. Westinghouse Broadcasting Co., 437 U.S. 478, 480, 98 S.Ct. 2451, 2453, 57 L.Ed.2d 364 (1978). Furthermore, it is not necessary to determine whether the rental purchase contracts satisfy the "unlawful debt" element of the RICO claim in order to effectively review the injunction order. Accordingly, we decline to exercise jurisdiction to review this ruling. Mille Lacs Band, 48 F.3d at 375; Union Nat. Bank v. Federal Nat. Mortg. Ass'n, 860 F.2d at 852; Marathon Oil Co. v. United States, 807 F.2d at 764.

For the same reasons, we decline to review the district court's order establishing the formula for calculating money damages and the procedure by which class members are to assert claims for money damages. The district court retained jurisdiction to determine damages in this case. It is appropriate to avoid piecemeal appeals by deferring review of these issues until final money judgments have been entered. Gardner v. Westinghouse Broadcasting Co., 437 U.S. at 480, 98 S.Ct. at 2453. In addition, we do not find it necessary to resolve these issues in order to effectively review the injunctive relief granted here. Issues regarding the proper method for calculating damages are not inextricably bound up with the injunction issued here. Mille Lacs Band, 48 F.3d at 375; Union Nat. Bank v. Federal Nat. Mortg. Ass'n, 860 F.2d at 852; Marathon Oil Co. v. United States, 807 F.2d at 764.

III. Standards of Review

We review a grant of summary judgment de novo. Hardin v. Hussmann Corp., 45 F.3d 262, 264 (8th Cir.1995). We will affirm if the evidence, when viewed in the light most favorable to the non-moving party, demonstrates that there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Id.; Bashara v. Black Hills Corp., 26 F.3d 820, 823 (8th Cir.1994).

Our review of the grant or denial of a permanent injunction is confined to the determination of whether the district court abused its discretion. International Ass'n of Machinists and Aerospace Workers v. Soo Line R. Co., 850 F.2d 368, 374 (8th Cir.1988) (en banc), cert. denied, 489 U.S. 1010, 109 S.Ct. 1118, 103 L.Ed.2d 181 (1989)....