U.S. v. Thomas

• Court: U.S. District Court — Northern District of Illinois
• Writing for the Court: Amy J. St. Eve
• Citation: U.S. v. Thomas, 566 F.Supp.2d 821 (N.D. Ill. 2008)
• Decision Date: 15 July 2008
• Docket Number: No. 08 C 00184.,08 C 00184.
• Parties: Laura M. SWANSON, et al., Plaintiff, v. BANK OF AMERICA, N.A. and FIA Card Services, N.A., Defendants.

566 F.Supp.2d 821

Laura M. SWANSON, et al., Plaintiff, v. BANK OF AMERICA, N.A. and FIA Card Services, N.A., Defendants.

No. 08 C 00184.

United States District Court, N.D. Illinois, Eastern Division.

July 15, 2008.

Barry L. Kramer, Law Offices of Barry L. Kramer, Los Angeles, CA, Lawrence Walner, Michael S. Hilicki, Lawrence Walner & Associates, Ltd., Chicago, IL, for Plaintiff.

Brandon C. Fernald, Robert M. Dawson, Fulbright & Jaworski LLP, Los Angeles, CA, Katherine E. Licup, William J. McKenna, Jr., Foley & Lardner, Chicago, IL, for Defendants.

MEMORANDUM OPINION AND ORDER

AMY J. ST. EVE, District Judge:

Plaintiff Laura Swanson filed a Second Amended Complaint, on behalf of herself and all other similarly situated residents of the State of Illinois, alleging that Defendants Bank of America, N.A.'s ("the Bank") and FIA Card Services, N.A.'s ("FIA") retroactive application of interest rate increases violated the Truth in Lending Act ("TILA"), the Illinois Consumer Fraud & Deceptive Business Practices Act ("ICFA"), and unjustly enriched Defendants. Before the Court is Defendants' motion to dismiss Plaintiff Swanson's claims pursuant to Federal Rule of Civil Procedure 12(b)(6). For the following reasons, the Court grants Defendants' motion.

BACKGROUND

I. Relevant Facts

Plaintiff opened a credit card account with the Bank.¹ In connection with this account, Plaintiff received term agreements which indicated that Plaintiff had a $5,000 credit limit available on the account. (R. 41-6, at p. 2.) The agreements also noted that if Plaintiff twice exceeded the credit limit during a 12-month billing cycle, the Bank could increase the interest rate on the account. Id. Defendants' revised credit card term agreements state that each interest rate increase "will be effective as of the first date of the billing cycle in which the Default Rate is applied." (R. 41-6, at p. 2.) Plaintiff exceeded the credit limit in August 2007 and again in November 2007. (R. 41-7, at p. 2, 9.) As a result, Defendants increased the interest rate of Plaintiff's account from 18.24 percent to 32.24 percent, and applied the higher rate to the beginning of the November billing cycle that had just ended. (R. 34-1, at ¶¶ 12-13.) Due to the increase, Defendants added approximately sixty dollars in interest charges to Plaintiff's November bill. (Id. at ¶ 15.)

In her SAC, Plaintiff Swanson makes three claims against Defendants. She first alleges that Defendants violated TILA, specifically 15 U.S.C. § 1601(a), by failing to provide her with written notice of the specific rate increase before the increase became effective. (R. 34-1, at ¶ 25.) Second, Swanson alleges that Defendants were unjustly enriched by the retroactive rate increase, which Plaintiff Swanson argues was an illegal penalty. (Id. at ¶ 29.) Third, she alleges that Defendants violated the ICFA, specifically 815 ILCS 505/1, et seq., by engaging in unfair and deceptive practices. (Id. at ¶ 35.) Defendants have moved to dismiss the SAC, arguing that Plaintiff has failed to state a claim upon which relief may be granted, and that the state law claims are preempted by federal law.

ANALYSIS

I. Legal Standard on a Rule 12(b)(6) Motion

"A motion under Rule 12(b)(6) challenges the sufficiency of the complaint." Christensen v. County of Boone, Ill., 483 F.3d 454, 458 (7th Cir.2007). Under Fed. R.Civ.P. 8(a)(2), a complaint must include "a short and plain statement of the claim showing that the pleader is entitled to relief." This statement must "give the defendant fair notice of what the plaintiff's claim is and the grounds upon which is rests." Swierkiewicz v. Sorema N.A., 534 U.S. 506, 506, 122 S.Ct. 992, 152 L.Ed.2d 1 (2002) (quotation omitted). Under the federal notice pleading standards, a plaintiff's "factual allegations must be enough to raise a right to relief above the speculative level." Bell Atlantic v. Twombly, ___ U.S. ___, ___, 127 S.Ct. 1955, 1959, 167 L.Ed.2d 929 (2007). Put differently, a complaint must allege "enough facts to state a claim to relief that is plausible on its face." Bell Atlantic, 127 S.Ct. at 1974; see also Limestone Dev. Corp. v. Village of Lemont, Ill, 520 F.3d 797, 803 (7th Cir. 2008) (amount of factual allegations required to state a plausible claim for relief depends on complexity of legal theory). "[W]hen ruling on a defendant's motion to dismiss, a judge must accept as true all of the factual allegations contained in the complaint." Erickson v. Pardus, ___ U.S. ___, ___, 127 S.Ct. 2197, 2200, 167 L.Ed.2d 1081 (2007).

II. Exhibits

Defendants have asked the Court to consider various exhibits in connection with their motion. In a typical 12(b)(6) motion, the Court does not consider documents extrinsic to the complaint. See Fed. R.Civ.P. 12(d); ABN AMRO, Inc. v. Capital Int'l Ltd., No. 04 C 3123, 2007 WL 845046, at *3 (N.D.Ill.2007) (Filip, J.). The Seventh Circuit teaches, however, that a district court may consider extrinsic exhibits if the documents are both referred to in the complaint and are also central to the plaintiff's claims. See Tierney v. Vahle, 304 F.3d 734, 738-39 (7th Cir.2002); see also Venture Assoc. Corp. v. Zenith Data Sys. Corp., 987 F.2d 429, 431 (7th Cir.1993); ABN AMRO, 2007 WL 845046, at *4. Of course, to be considered at the 12(b)(6) stage, the documents must also be indisputably authentic. See Tierney, 304 F.3d at 738; see also ABN AMRO, 2007 WL 845046, at *5. Defendants have asked the Court to consider three types of documents in connection with their motion.

First, Defendants have asked the Court to consider statements reflecting Plaintiff's account balances. (R. 41-4; R. 41-7.) These statements are referenced in the SAC, and the facts contained within these statements, particularly the change in interest rates and the number of defaults, are important to Plaintiff's claims. (R. 34-1, at ¶ 11.) Moreover, the authenticity of these documents is not questioned. (R. 34-1, at ¶ 11.) As such, the Court will consider the account statements.

Defendants next ask the Court to consider a credit card term agreement entered into by Plaintiff and the Bank. (R. 41-2; R. 41-3.) Although the SAC is silent as to Swanson's receipt of the agreement, the Court may consider extrinsic documents in a 12(b)(6) motion where the documents are implicitly referenced within the complaint. Tierney, 304 F.3d at 738-39; see also Cortec Indus., Inc. v. Sum Holding L.P., 949 F.2d 42, 48 (2d Cir.1991) (considering stock purchase agreement in a fraud case); McCabe v. Crawford & Co., 210 F.R.D. 631, 639 n. 4 (N.D.Ill.2002) (Castillo, J.) (considering truck rental agreement). Here, Plaintiff Swanson's receipt of the agreement is fundamental to— and as discussed below, fatally undermines —Plaintiff's allegation that Defendants failed to provide advance notice of the complained of interest rate increase. (R. 34-1, at ¶¶ 9, 25, 36.) Moreover, Plaintiff tacitly admits that she received the agreement, thus the Court accepts its authenticity. (R. 45-1; Pl.'s Resp. to Def.'s Mot. for Dismissal, at p. 4.) The Court will consider the agreement.

Defendants have also asked the Court to consider a supplemental agreement reiterating many of the same terms as the initial agreement. (R. 41-5; R. 41-6.) Although the supplemental agreement is not explicitly referenced in the SAC, receipt of the documents is implicitly acknowledged. (R. 45-1; Pl.'s Resp. to Def.'s Mot. for Dismissal 4-5.) These documents too are central to Plaintiff's claims regarding notice of the interest rate increase, and Plaintiff does not question the authenticity of the revised agreement. The Court will consider the supplemental credit card term agreement.

III. Plaintiff's Truth In Lending Act ("TILA") Claim

A. Subject Matter Jurisdiction

Although Plaintiff's SAC seeks to invoke only the Court's diversity jurisdiction pursuant to 28 U.S.C. § 1332(d), the Court has federal question jurisdiction over Plaintiff's federal TILA claim. 28 U.S.C. § 1331 ("The district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States."); see, e.g., Cunningham v. Nationscredit Fin. Servs. Corp., 497 F.3d 714, 717 (7th Cir.2007); Boyd v. Phoenix Funding Corp., 366 F.3d 524, 529 (7th Cir.2004) ("It is clear that the federal truth-in-lending claim falls within the federal-question jurisdiction of the court.").

B. TILA Requirements

TILA was designed to, among other things, protect consumers in credit transactions by requiring strict disclosures from lenders. 15 U.S.C. § 1601(a), et seq; Household Credit Servs. v. Pfennig, 541 U.S. 232, 236, 124 S.Ct. 1741, 158 L.Ed.2d 450 (2004); see also Hamm v. Ameriquest Mortg. Co., 506 F.3d 525, 528 (7th Cir. 2007). In analyzing Plaintiff's TILA claim, the Court looks to the language of the statute, the implementing regulation, and the relevant Board Staff Commentary. See Hamm, 506 F.3d at 528. Congress has expressly delegated to the Federal Reserve Board (the "Board") the authority to prescribe regulations—including "Regulation Z," 12 C.F.R. § 226.1, et seq.—to effectuate the purposes of TILA. Pfennig, 541 U.S. at 238,124 S.Ct. 1741. The Court must "pay particular heed" to the Board's Official Commentary when interpreting TILA, and "[u]nless demonstrably irrational, [the Board's] staff opinions construing the Act or Regulation should be dispositive." Hamm, 506 F.3d at 528 (citing Ford Motor Credit Co. v. Milhollin, 444 U.S. 555, 565, 100 S.Ct. 790, 63 L.Ed.2d 22 (1980)).

TILA and Regulation Z govern openend credit plans, like Plaintiff Swanson's credit card account. See Pfennig, 541 U.S. at 235, 124 S.Ct. 1741; Benion v. Bank One, 144 F.3d 1056, 1057-58 (7th Cir.1998) (Posner, J.). Under TILA, a creditor must provide the consumer with an "initial disclosure" which, among other things, discloses the circumstances under which the creditor may increase the consumer's interest rates. 12 C.F.R. § 226.6(a)...