Miller v. European American Bank
| Decision Date | 15 April 1996 |
| Docket Number | No. 95 Civ. 8010 (RWS).,95 Civ. 8010 (RWS). |
| Citation | 921 F. Supp. 1162 |
| Parties | David MILLER, on behalf of himself and all others similarly situated, Plaintiffs, v. EUROPEAN AMERICAN BANK and Malcolm A. Hall, Defendants. |
| Court | U.S. District Court — Southern District of New York |
COPYRIGHT MATERIAL OMITTED
Robert B. Silver & Associates, New York City (Robert B. Silver, of counsel), Boies & Boies, San Diego, CA, for Plaintiffs.
Hall Dickler Kent Friedman & Wood, New York City (James E. Daniels, Jeffrey M. Tamarin, of counsel), for Defendants.
Plaintiff David Miller ("Miller") brought this class action alleging, inter alia, that Defendants, European American Bank ("EAB") and Malcolm A. Hall ("Hall"), had made fraudulent and misleading mass mailing offers to him and to members of the general public, inducing him to sign up for and use EAB-issued credit cards, in violation of the Truth in Lending Act ("TILA"), 15 U.S.C. § 1601, and Regulation Z promulgated thereunder, 12 C.F.R. § 226 et seq., and in violation of state law. Defendants have moved to dismiss Miller's TILA claim pursuant to Federal Rule of Civil Procedure 56 on the grounds that it is time-barred, or in the alternative, pursuant to Rule 12(b)(6), Fed. R.Civ.P., on the grounds that Miller has failed to state a claim upon which relief could be granted. Defendants have also moved pursuant to 12(b)(1), Fed.R.Civ.P., to dismiss for lack of subject matter jurisdiction over the state claims.
For the reasons herein stated, the motion to dismiss with respect to the federal claim for failure to state a claim is granted. The motion to dismiss for lack of subject matter jurisdiction with respect to the state claims is also granted.
Plaintiff Miller is a resident of Missouri.
Defendant EAB is a chartered bank with its headquarters and principal place of business in Uniondale, New York.
Defendant Hall resides in Missouri and was the Vice President for Consumer Credit Product Development at EAB.
Miller filed his Complaint in this action on September 20, 1995, and an Amended Complaint on November 20, 1995. On January 17, 1996, EAB and Hall filed their notice of motion. Oral argument was waived by stipulation of the parties, and the matter was deemed fully submitted on March 20, 1996.
Beginning as early as March 1994, EAB and Hall undertook a mass mailing to hundreds of thousands of members of the public, including Miller, soliciting the use of "pre-approved" EAB Visa and MasterCards. As an inducement to enrollment, EAB offered all those who signed up for the EAB credit card a Certificate for a free TWA air ticket (the "EAB Offer"). The EAB Offer stated in bold face type:
Send for your TWA MasterCard today and receive a FREE ROUND-TRIP COMPANION TICKET. Use this certificate to take someone with you, free, with the purchase of a first class, business class, or comfort class fare (excluding Cairo and Tel Aviv; offer good until March 31, 1995).
The Offer contained no other restrictions and did not indicate that any would apply to the use of the Companion Ticket.
In reliance on the Offer, Miller applied for, received and used the EAB credit card. After his application was processed, Miller received a Certificate. However, in addition to the restrictions mentioned in the EAB Offer, there were also additional restrictions placed on the Certificate's use. The Certificate contained the following restrictions as to travel dates:
Blackout dates: Domestic — November 23, 27 and 28, 1994; December 15, 1994 through January 8, 1995. International — No travel permitted July and August; December 15, 1994 through January 8, 1995.
The companion ticket also contained the following additional restrictions:
In addition, the certificate restricted its use to those persons travelling with "full fare" passengers.
Since Miller had purchased a discounted round-trip ticket to France, he was unable to use the Companion Certificate because of the "full fare" restriction. As a result, Miller was unable to take a companion with him to France in July, greatly diminishing, he alleges, the value of the Companion Certificate as represented in the offer.
In considering a motion to dismiss pursuant to Rule 12(b)(6), the Court presumes the factual allegations of the complaint to be true and draws all factual inferences in the plaintiff's favor and against the defendant. See Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 1686, 40 L.Ed.2d 90 (1974); Cosmas v. Hassett, 886 F.2d 8, 11 (2d Cir.1989); Dwyer v. Regan, 777 F.2d 825, 828-29 (2d Cir.1985). Accordingly, the factual allegations set forth and considered herein are taken from Miller's Amended Complaint and do not constitute findings of fact by the Court. In determining the sufficiency of the Amended Complaint, consideration is limited to its factual allegations. See Valmonte v. Bane, 18 F.3d 992, 998 (2d Cir.1994).
Rule 12(b)(6) imposes a substantial burden of proof upon the moving party. A court may not dismiss a complaint unless the movant demonstrates "beyond a doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." H.J. Inc. v. Northwestern Bell Tel. Co., 492 U.S. 229, 249-50, 109 S.Ct. 2893, 2905-06, 106 L.Ed.2d 195 (1989); Hishon v. King & Spalding, 467 U.S. 69, 73, 104 S.Ct. 2229, 2232-33, 81 L.Ed.2d 59 (1984); Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-102, 2 L.Ed.2d 80 (1957).
The mandatory disclosure requirements for open-end consumer credit plans are governed by TILA and enumerated in 15 U.S.C. § 1637(a). They include, inter alia:
The disclosure requirements for direct mail credit card applications and solicitations are governed by 15 U.S.C. § 1637(c), which provides in pertinent part that:
Taking Miller's factual allegations to be true, as is required on a motion to dismiss under Rule 12(b)(6), EAB and Hall have not violated the letter of § 1637.
However, the TILA's disclosure requirements need not be read with total literalness. In Gambardella v. G. Fox & Co, 716 F.2d 104, 108 (2d Cir.1983), our Court of Appeals stated that "the absence of an express disclosure requirement in the regulations is significant, although not conclusive, evidence that disclosure is not required." Yet the courts, "must be prepared, in appropriate cases, to infer from the statutory and regulatory schemes, and from TILA's underlying policies, disclosure requirements beyond those expressly stated in the regulations." Id.
Looking first, then, to the statutory and regulatory schemes, TILA is very specific about its scope. None of the requirements under either 15 U.S.C. § 1637(a) or § 1637(c) purports to govern promotional inducements unrelated to credit terms such as the EAB companion certificate offered to Miller. The disclosure of terms and conditions on the use of free gifts, designed specifically to induce customers to enter into credit card agreements, clearly does not fall under the mandatory disclosure requirements covered by the TILA.
Regulation Z adds nothing to the statutory language. The general disclosure requirements are governed by 12 C.F.R. §§ 226.5 and 226.6. The items subject to disclosure are essentially the same as those found under 15 U.S.C. §§ 1637(a) and 1637(c), and deal specifically with finance charges, interest rates, consumer rights and creditor responsibilities regarding billing matters, grace periods, cash advance fees, late fees and over-credit-limit fees. Terms and conditions affecting the use of travel certificates do not fall within the TILA's regulatory scheme.
Thus, the only alternative way to bring Miller's claim under the TILA is if it is within the purpose of the statute to regulate offers which accompany credit card solicitations. 15 U.S.C. § 1601(a) provides in pertinent part that the purpose of credit card disclosures is:
to assure a meaningful disclosure of credit terms so that the consumer will be able to compare more readily the various credit terms available to him and avoid the uninformed use of credit, and to protect the consumer against inaccurate and unfair...
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