Strubel v. Comenity Bank

• Decision Date: 23 November 2016
• Docket Number: August Term, 2015,Docket No. 15-528-cv
• Citation: 842 F.3d 181
• Parties: Abigail Strubel, individually and on behalf of all others similarly situated, Plaintiff–Appellant, v. Comenity Bank, Defendant–Appellee.
• Court: U.S. Court of Appeals — Second Circuit

842 F.3d 181

Abigail Strubel, individually and on behalf of all others similarly situated, Plaintiff–Appellant,

v.Comenity Bank, Defendant–Appellee.

Docket No. 15-528-cv

August Term, 2015

United States Court of Appeals, Second Circuit.

Argued: November 19, 2015

Decided: November 23, 2016

Brian Lewis Bromberg (Jonathan R. Miller, Bromberg Law Office, P.C., New York, New York, and Harley J. Schnall, Law Office of Harley J. Schnall, New York, New York, on the brief), Bromberg Law Office, P.C., New York, New York, for Plaintiff–Appellant.

Martin C. Bryce, Jr. , Ballard Spahr LLP, Philadelphia, Pennsylvania, for Defendant–Appellee.

Mary McLeod, General Counsel, To-Quyen Truong, Deputy General Counsel, John R. Coleman, Assistant General Counsel, and Nandan M. Joshi, Counsel, for Amicus Curiae Consumer Financial Protection Bureau, Washington, D.C.

Before: Kearse, Raggi, and Wesley, Circuit Judges.

Reena Raggi, Circuit Judge:

Plaintiff Abigail Strubel initiated this putative class action against defendant Comenity Bank ("Comenity") to recover statutory damages for alleged violations of the Truth In Lending Act ("TILA"), Pub. L. No. 90–321, 82 Stat. 146 (1968) (codified as amended at 15 U.S.C. §§ 1601 et seq. ). On this appeal from an award of summary judgment in favor of Comenity, Strubel argues that the United States District Court for the Southern District of New York (P. Kevin Castel, Judge ) erred in concluding that she failed, as a matter of law, to demonstrate that four billing-rights disclosures made to her by Comenity in connection with Strubel's opening of a credit card account violated the TILA. Comenity defends the district court's judgment on the merits but, for the first time on appeal, also challenges Strubel's standing to maintain this action. We conclude that Strubel fails to demonstrate the concrete injury required for standing to pursue two of her disclosure challenges and, therefore, we dismiss those two TILA claims for lack of jurisdiction. While Strubel adequately establishes standing to pursue her two remaining disclosure challenges, we agree with the district court that those challenges fail as a matter of law. Accordingly, we affirm summary judgment in favor of Comenity on those TILA claims. Further, because Strubel's claims do not survive, we also affirm the district court's denial of her cross-motion for class certification as moot.

I. Background

The following facts are either undisputed or viewed in the light most favorable to Strubel.

On June 27, 2012, Strubel opened a Victoria's Secret brand credit card account, using the card to purchase a $19.99 article of clothing.¹ The credit card agreement provided by Comenity to Strubel disclosed certain consumer rights under amendments to the TILA effected by the Fair Credit Billing Act, Pub. L. No. 93–495, 88 Stat. 1500 (1974).

One year later, on June 27, 2013, Strubel filed this putative class action, seeking statutory damages under the TILA for alleged defects in the aforementioned disclosures.² Specifically, Strubel faulted Comenity for failing clearly to disclose that (1) cardholders wishing to stop payment on an automatic payment plan had to satisfy certain obligations; (2) the bank was statutorily obliged not only to acknowledge billing error claims within 30 days of receipt but also to advise of any corrections made during that time; (3) certain identified rights pertained only to disputed credit card purchases for which full payment had not yet been made, and did not apply to cash advances or checks that accessed credit card accounts; and (4) consumers dissatisfied with a credit card purchase had to contact Comenity in writing or electronically. See J.A. 21–22.³

At the close of discovery, Comenity moved for summary judgment, and Strubel cross-moved for class certification. The district court granted Comenity's motion, concluding that Strubel's claims failed as a matter of law, and it denied Strubel's certification motion as moot. See Strubel v. Comenity Bank , No. 13–cv–4462 (PKC), 2015 WL 321859, at *8 (S.D.N.Y. Jan. 23, 2015).

This timely appeal followed.

II. Discussion

A. Statutory and Regulatory Framework

The TILA was enacted in 1968 to " ‘protect consumers against inaccurate and unfair credit billing and credit card practices' and promote ‘the informed use of credit’ by ‘assuring a meaningful disclosure’ of credit terms." Vincent v. The Money Store , 736 F.3d 88, 105 (2d Cir. 2013) (alterations omitted) (quoting 15 U.S.C. § 1601(a) ). The TILA promotes this goal largely by "imposing mandatory disclosure requirements on those who extend credit to consumers in the American market." Mourning v. Family Publ'ns Serv., Inc. , 411 U.S. 356, 363, 93 S.Ct. 1652, 36 L.Ed.2d 318 (1973). The TILA provision codified at 15 U.S.C. § 1640(a) affords consumers a cause of action for damages—including statutory damages⁴ —against a creditor who fails to comply with certain enumerated statutory provisions, including, as pertinent here, 15 U.S.C. § 1637(a)(7). That provision requires creditors to provide credit card holders (referred to as "obligors") with "[a] statement, in a form prescribed by regulations of the Bureau[,] of the protection provided by sections 1666 and 1666i of this title to an obligor and the creditor's responsibilities under sections 1666a and 1666i of this title." 15 U.S.C. § 1637(a)(7). The "Bureau" referred to in this text is the Consumer Financial Protection Bureau (hereinafter "CFPB" or "Bureau"), which is statutorily empowered to prescribe regulations and to publish model disclosure forms to carry out the TILA's purposes. See id. § 1604(a)–(c).⁵ The protection and responsibilities detailed in §§ 1666 and 1666i generally pertain to claimed billing errors and unsatisfactory purchases. We discuss them in more detail herein as pertinent to resolving the issues on this appeal.

The CFPB's regulatory interpretations of and addenda to the TILA are collectively known as "Regulation Z," which is codified at 12 C.F.R. Part 1026. The Supreme Court has afforded Chevron deference to Regulation Z, insofar as it reflects reasonable agency interpretations of ambiguities in the TILA. See Household Credit Servs., Inc. v. Pfennig , 541 U.S. 232, 238–39, 124 S.Ct. 1741, 158 L.Ed.2d 450 (2004) (citing Chevron, U.S.A., Inc. v. Nat. Res. Def. Council, Inc. , 467 U.S. 837, 842, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984) ); Vincent v. The Money Store , 736 F.3d at 105–06.⁶

As pertains to the statement mandated by § 1637(a)(7), Regulation Z states in part that a creditor must provide a consumer to whom it issues a credit card with "[a] statement that outlines the consumer's rights and the creditor's responsibilities under [regulatory] §§ 1026.12(c) and 1026.13 and that is substantially similar to the statement found in Model Form G–3(A) in appendix G to this part." 12 C.F.R. § 1026.6(b)(5)(iii). Referenced regulatory §§ 1026.12(c) and 1026.13 largely reiterate statutory §§ 1666i and 1666, respectively. Meanwhile the "substantially similar" requirement strives to implement statutory § 1637(a)(7)'s mandate for a creditor statement "in a form prescribed" by Bureau regulations consistently with statutory § 1604(b)'s admonition that "[n]othing in this subchapter may be construed to require a creditor ... to use any such model form." Thus, the formal staff interpretation states that "[c]reditors may make certain changes in the format or content of the forms and clauses and may delete any disclosures that are inapplicable to a transaction or a plan without losing the Act's protection from liability," provided the changes are not "so extensive as to affect the substance, clarity, or meaningful sequence of the forms and clauses." 12 C.F.R. pt. 1026, supp. I, pt. 5, apps. G & H(1). Formatting changes, however, "may not be made" to Model Form G–3(A). Id.

Strubel claims that Comenity's four challenged disclosures violate 15 U.S.C. § 1637(a)(7) because they impermissibly deviate from Model Form G–3(A).

B. Standing

Comenity argues that Strubel cannot maintain her TILA claims because she lacks constitutional standing. See U.S. Const. art. III, § 2. Although Comenity challenges Strubel's standing for the first time on appeal, because standing is necessary to our jurisdiction, we are obliged to decide the question at the outset. See Jennifer Matthew Nursing & Rehab. Ctr. v. U.S. Dep't of Health & Human Servs. , 607 F.3d 951, 955 (2d Cir. 2010).

To satisfy the "irreducible constitutional minimum" of Article III standing, a plaintiff must demonstrate (1) "injury in fact," (2) a "causal connection" between that injury and the complained-of conduct, and (3) a likelihood "that the injury will be redressed by a favorable decision." Lujan v. Defs. of Wildlife , 504 U.S. 555, 560–61, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992) (internal quotation marks omitted). Comenity argues that Strubel fails to satisfy the first requirement: injury in fact. To demonstrate injury in fact, a plaintiff must show the "invasion of a legally protected interest" that is "concrete and particularized" and "actual or imminent, not conjectural or hypothetical." Id. at 560, 112 S.Ct. 2130 (internal quotation marks omitted).

1. The Legal-Interest Requirement of Injury in Fact

We easily conclude that Strubel satisfies the legal-interest requirement of injury in fact. As already detailed, 15 U.S.C. § 1637(a)(7) obligates a creditor to make specified disclosures "to the person to whom credit is to be extended." Congress's authority to create new legal interests by statute, the invasion of which can support standing, is beyond question. See Warth v. Seldin , 422 U.S. 490, 500, 95 S.Ct. 2197, 45 L.Ed.2d 343 (1975) (recognizing that injury required by Art. III may be based on "statutes creating legal rights" (internal quotation marks omitted)); accord Lujan v. Defs. of Wildlife , 504 U.S. at 578, 112 S.Ct. 2130 (recognizing Congress's authority to "elevat[e] to the status of legally cognizable injuries concrete, de facto injuries that...