Shuman v. Standard Oil Co. of California

• Decision Date: 27 June 1978
• Docket Number: No. C-77-0270 SW.,C-77-0270 SW.
• Court: U.S. District Court — Northern District of California
• Parties: Barbara SHUMAN et al., Plaintiffs, v. STANDARD OIL COMPANY OF CALIFORNIA, Defendant.

453 F. Supp. 1150

Barbara SHUMAN et al., Plaintiffs, v. STANDARD OIL COMPANY OF CALIFORNIA, Defendant.

No. C-77-0270 SW.

United States District Court, N. D. California.

June 27, 1978.

JoAnn L. Chandler, Nancy L. Davis, Mary C. Dunlap, Joan Messing Graff, Equal Rights Advocates, Inc., San Francisco, Cal., for plaintiffs.

Pillsbury, Madison & Sutro, W. R. Buxton, Terrence A. Callan, William S. Mailliard, Jr., Stephen P. Chambers, San Francisco, Cal., for defendant, Standard Oil Co. of California.

MEMORANDUM AND ORDER DENYING DEFENDANT'S MOTION FOR PARTIAL SUMMARY JUDGMENT

SPENCER WILLIAMS, District Judge.

Defendant Standard Oil Company of California (SOCAL) brings this motion for partial summary judgment in its favor dismissing with prejudice all of plaintiffs' claims for damages. After hearing on the matter and careful consideration of the briefs and arguments of counsel the court denies defendant's motion.

FACTUAL BACKGROUND

The undisputed facts before the court show plaintiff Barbara Shuman twice applied for a Chevron National Travel Card and was twice denied credit. At the time of her first application in November of 1975, Shuman listed income in excess of $1,000 per month and gave two credit card references (American Express and Shell Oil), as well as bank references for checking and savings accounts. She also indicated that she was 30 years of age and had no dependents. The application form contained blanks for spousal information, but did not indicate that the information was optional. It also offered the applicant a choice of titles for the addressing of correspondence (Mr., Mrs., Miss, Ms., other) without indicating the selection was non-mandatory. Her second application, made in January of 1977, again indicated income in excess of $1,000 per month, two credit card references (BankAmericard and Mastercharge) and checking and savings accounts.

All applications for Chevron National Travel Cards are initially evaluated by a computer that assigns weighted scores to the information provided by the applicant. Approximately 25% of all applications are automatically accepted or rejected on the basis of this initial scoring. Applications which the computer does not automatically accept or reject are scored "obtain a credit report." Once such a report has been obtained the application is either approved or disapproved based upon the information contained therein.

Shuman's first application was scored "obtain a credit report." SOCAL claims her application was denied because the credit report did not disclose that she had one year on the job and two credit items active in the file for one year. The credit report, however, did convey the information that her marital status was divorced or separated. It is not known at this time what weight was given to the information in her credit file. Her second application was automatically rejected by the computer because the weighted score was too low. Aside from these two unsuccessful attempts to obtain a Chevron National Travel Card, Shuman had never been denied credit.

This action was filed under the Equal Credit Opportunity Act, 15 U.S.C. § 1691 et seq., hereinafter cited as ECOA, alleging that Shuman and the class she claims to represent have been discriminated against by SOCAL on account of their sex and/or marital status. The complaint prays for undetermined actual damages and the statutory maximum punitive damages.

EQUAL CREDIT OPPORTUNITY ACT

The Equal Credit Opportunity Act, 15 U.S.C. § 1691(a), provides in pertinent part that it, "shall be unlawful for any creditor to discriminate against any applicant, with respect to any aspect of a credit transaction . . . on the basis of . . . sex or marital status." Section 1691e makes any creditor who violates the Act liable to the aggrieved applicant for any actual damages sustained by the applicant individually or as a member of a class. A more significant incentive for compliance, however, is found in § 1691e(b) which provides, "any creditor . . . who fails to comply with any requirement imposed under this subchapter shall¹ be liable to the aggrieved applicant for punitive damages in an amount not greater than $10,000 . . . except that in the case of a class action the total recovery under this subsection shall not exceed the lesser of $500,000 or 1 per centum of the net worth of the creditor." The statute directs the court in determining punitive damages to consider, among other relevant factors, "the amount of any actual damages awarded, the frequency and persistence of failures of compliance by the creditor, the resources of the creditor, the number of persons adversely affected, and the extent to which the creditor's failure of compliance was intentional."

Although the Act has been in force since October of 1975 only one reported case has interpreted its provisions, Carroll v. Exxon Company, USA, 434 F.Supp. 557 (E.D.La. 1977), and that case does not address the problem of damages under the ECOA. In the absence of decisional law the court must look to the legislative history and analogous statutes to determine the nature and measure of actual damages flowing from a wrongful denial of credit and to determine what conduct by a defendant will trigger punitive damages.

Actual Damages

SOCAL relies exclusively on statements made by Shuman in her deposition to establish that she suffered no actual damages. Noting Shuman admitted the motivation for her first application was convenience, the circumstances resulting in her second application were accidental, and she had no idea how her damages would be calculated, SOCAL concludes there is no record evidence to support a claim for damages, particularly where Shuman was perfectly free to buy Chevron products and services by paying cash.

Shuman admitted in her deposition that she and her former spouse, four to six years prior, had voluntarily terminated three other gasoline credit cards because she "didn't like the idea of not knowing at any particular moment exactly how much money they had." For a period of from four to six years following termination of these credit cards plaintiff never used credit for either automobile repairs and maintenance or gasoline purchases. Shuman also stated she applied for a Travel card in 1975 because she "felt it would be convenient to be able to use it on occasion" and that her reapplication in 1977 was "pretty much accidental." By these selected excerpts SOCAL attempts to demonstrate Shuman had no particular need or desire for a Travel card. However, Shuman also explained at her deposition she had applied for a Chevron card because she parked her car in a Chevron garage and a credit card would have reduced the number of trips she needed to make to the bank for cash. Furthermore, because she had a Shell Oil Company credit card she purchased products from that company which she surmised might have been more expensive than or inferior to Chevron products which she did not buy because she did not have a Chevron credit card.

SOCAL's arguments properly go the amount of Shuman's damages, not their existence. As plaintiff observes, "it is always true that if one has the cash, the products can be purchased, without credit. The denial which is actionable and for which damages are appropriate redress is the denial of credit, not the denial of products and services." Plaintiffs' Memorandum of Points & Authorities at 2. Credit has an independent worth in our economy. But, precisely because "credit has ceased to be a luxury item," congress passed the ECOA to establish "as clear national policy that no credit applicant shall be denied the credit he or she needs and wants on the basis of characteristics that have nothing to do with his or her creditworthiness." 1976 U.S. Code Cong. & Admin. News at 405.

It takes little imagination to realize certain wrongful denials of credit will have far more onerous consequences than others, and, therefore, will generate far more substantial damages. In rudimentary terms, a home mortgage is more valuable than a gasoline credit card. However, the court is not prepared to rule the value of a gasoline credit card is de minimis as a matter of law. Convenience has some value as does increased purchasing power and protection for emergencies. Plaintiff has placed these losses in issue and is entitled to attempt to prove the amount of their worth at trial.

Shuman also argues she may recover compensation for embarrassment, humiliation and mental distress occasioned by the alleged wrongful denial of credit. Her argument likens the ECOA to Title VIII of the Civil Rights Act of 1968, 42 U.S.C. § 3605, which proscribes discrimination on account of race, color, religion, sex or national origin in loans or other financial assistance for housing. Title VIII, like the ECOA, gives the aggrieved applicant a cause of action for actual and punitive damages, 42 U.S.C. § 3612(c), and it has been interpreted to provide compensation for embarrassment, humiliation and mental distress. Smith v. Anchor Building Corp., 536 F.2d 231, 236 (8th Cir. 1976); Williams v. Matthews Co., 499 F.2d 819, 829 (8th Cir. 1974), cert. den. 419 U.S. 1021, 1027, 95 S.Ct. 495, 42 L.Ed.2d 294; Jeanty v. McKey & Poague, Inc., 496 F.2d 1119, 1121 (7th Cir. 1974); Seaton v. Sky Realty Company, Inc., 491 F.2d 634, 636 (7th Cir. 1974); Steele v. Title Realty Co., 478 F.2d 380, 384 (10th Cir. 1973).

The analogy to Title VIII is persuasive since both acts are statutory remedies for denial of civil rights. Furthermore, it would be inconsistent with the congressional purpose of eliminating invidious discrimination to ignore the emotional harm often flowing from it by limiting the aggrieved applicant to out-of-pocket losses. All the same, the court will not presume such damages have occurred. Neither the likelihood of such injuries nor the difficulty of proving them is so great as to justify deviation from the rule that compensation will not be provided...