United States v. Beneficial Corp.

Decision Date01 June 1980
Docket NumberCiv. No. 79-1393.
Citation492 F. Supp. 682
PartiesUNITED STATES of America, Plaintiff, v. BENEFICIAL CORP. and Beneficial Management Corp., Defendants.
CourtU.S. District Court — District of New Jersey

Michael L. Barrett, Dept. of Justice, Washington, D.C., for plaintiff.

Warren L. Dennis, Washington, D. C., McCarter & English, Newark, N. J., by Francis E. P. McCarter, for defendants.

OPINION

SAROKIN, District Judge.

This matter is presently before the Court on defendant's motion for partial summary judgment. On May 8, 1978, the United States initiated the underlying suit against Beneficial Corporation and Beneficial Management Corporation (hereinafter "Beneficial"), alleging violations of §§ 1691-1691f of the Equal Credit Opportunity Act (hereinafter "ECOA" or the "Act"), Pub.L. No. 94-239, 90 Stat. 251 et seq., 15 U.S.C. § 1691 et seq. (1976) and its implementing provision, Regulation B, 12 C.F.R. § 202. The complaint more specifically alleged that Beneficial had discriminated against credit applicants on the basis of marital status and age and further had failed to supply rejected applicants with the required notice.1 To rectify these alleged violations, the United States seeks not only injunctive relief but also money damages on behalf of individuals not party to this suit. In its answers to interrogatories, the United States specified that such monetary relief would include damages for pain and suffering, emotional harm, inconvenience, loss of civil rights and out-of-pocket losses. Subsequently, on November 19, 1979, Beneficial filed the present motion for partial summary judgment claiming that, as a matter of law, the Government has no statutory authority to seek legal money damages.2

Section 1691e(h) of the ECOA, which is at the center of this controversy, defines the authority of the Attorney General in the following manner:

"When a matter is referred to the Attorney General pursuant to subsection (g) of this section, or whenever he has reason to believe that one or more creditors are engaged in a pattern or practice in violation of this subchapter, the Attorney General may bring a civil action in any appropriate United States district court for such relief as may be appropriate, including injunctive relief."
15 U.S.C. § 1691e(h) (emphasis added). The narrow issue before this Court is whether the phrase, "such relief as may be appropriate, including injunctive relief," should be construed as a grant of authority to the Attorney General to seek money damages for non-parties. In order to resolve that issue, this Court has considered the following factors: the plain meaning of the disputed phrase, the legislative history of the ECOA, the total enforcement structure of the ECOA, the circumstances surrounding its enactment and the case law construing similar statutes.3 Transamerican Mortgage Advisors, Inc. v. Lewis, 444 U.S. 11, 100 S.Ct. 242, 246, 62 L.Ed.2d 146 (1979); Cannon v. University of Chicago, 441 U.S. 677, 688 n. 9, 99 S.Ct. 1946, 1953 n. 9, 60 L.Ed.2d 560 (1979); Cort v. Ash, 422 U.S. 66, 78, 95 S.Ct. 2080, 2087, 45 L.Ed.2d 26 (1975). Having done so, the Court concludes that § 1691e(h) of the ECOA does not grant the Attorney General authority to seek legal money damages on behalf of non-parties.

The Government contends that the plain-meaning of the disputed phrase compels a finding that the Attorney General is empowered to seek legal money damages. It further contends that the phrase "appropriate relief" is generally construed as encompassing such damages. The Court finds both arguments to be unpersuasive. It is recognized that the word "including" clearly connotes enlargement and, therefore, the phrase implicates a type of relief in addition to injunctive. Argosy Limited v. Hennigan, 404 F.2d 14, 20 (5th Cir. 1968). It is not clear, however, whether Congress intended the additional relief to be in the form of other equitable remedies, i. e., declaratory judgment, affirmative action order, or to be in the form of legal remedies, i. e., money damages. Further, the Court finds the contention that "appropriate relief" necessarily includes legal damages is not generally supported by case law.4

While the legislative history of the ECOA lends some insight into the proper construction of the phrase, it is not explicit enough to dispose of the issue. The ECOA was enacted in October 1974 in response to increasing discrimination against female credit applicants.5 S.Rep. No. 589, 94th Cong., 2d Sess., 2 reprinted in (1976) U.S.Code Cong. & Admin.News, pp. 403, 403. The Act, in its original form, prohibited discrimination on the basis of sex or marital status6 in any aspect of a credit transaction.7 15 U.S.C. § 1691 (Supp. V 1975). Congress amended the ECOA only five months after its enactment. Equal Credit Opportunity Act Amendments of 1976, 15 U.S.C. § 1691 (Supp.1977) (hereinafter "Amendments"). It was as a result of the Amendments that the Attorney General's provision, § 1691e(h) was added to the Act.8 Unfortunately, neither the hearings9 nor the congressional report10 regarding the Act or the Amendments explicitly define the type of relief the Attorney General would be authorized to seek. Three observations, however, can be gleaned from the legislative history. First, legal money damages were never discussed in the context of the Attorney General's provision. Second, the relief that was discussed in regard to that provision was either equitable relief or monetary relief as an adjunct to equitable relief such as the award of back pay under Title VII as a form of restitution.11 Finally, Congress was resolute and clear that regardless of the addition of the Attorney General's provision, the private cause of action was to remain the chief enforcement tool of the Act.12 S.Rep. No. 589, supra, at 13.

Analysis of the total enforcement network of the ECOA is useful in determining the proper construction of § 1691e(h). The extensive nature of that network provides the aggrieved credit applicant with numerous avenues of redress.13 This Court, therefore, is reluctant to imply a remedy where one is not explicitly granted and may not be necessary. Further, the specificity of the other enforcement provisions, within the Act makes it difficult for this Court to accept the contention that Congress, while intending legal money damages in § 1691e(h), inadvertently failed to specify such.14

Although there is at this time a paucity of precedent with respect to the ECOA, analysis of the enforcement network of the analogous Fair Housing Act, Title VIII of the Civil Rights Act of 1968, 42 U.S.C. § 3601 et seq. (hereinafter "FHA"), has resulted in similar conclusions. The FHA contains a "pattern and practice" provision, 42 U.S.C. § 3613, similar to the one presently at issue.15 In addition, the FHA has an equally extensive and specific enforcement scheme.16 It has been held that based on the structure of the enforcement scheme of the FHA, authority for the Attorney General to seek legal money damages should not be judicially implied. Northside Realty Associates v. United States, 605 F.2d 1348, 1357-58 (5th Cir. 1979); United States v. Simon, No. 76-2885, memorandum decision at 2 (E.D.Pa. Jan. 31, 1978) aff'd o. b. 612 F.2d 575 (3d Cir. 1979); United States v. Jefferson Mortgage Corp., No. 76-694, letter op. at 5 (D.N.J. Oct. 6, 1977). Applying the same analysis to the ECOA, this Court is persuaded that in light of Congressional silence, there is no need to imply an additional remedy under the ECOA. If Congress had intended the Attorney General to have such authority, it would have so specified.17

There are other holdings from the FHA cases that this Court has found instructive and has relied upon in establishing the foundation for its holding in the instant case.18 The FHA holdings refute many of the premises which the Government urges this Court to apply regarding the ECOA. First, there is a distinction between remedies which are appropriate to actions at law and those which are appropriate to actions in equity. Curtis v. Loether, 415 U.S. 189, 195-97, 94 S.Ct. 1005, 1008-09, 39 L.Ed.2d 260 (1974). The type of relief which Congress intended in § 3613 of the FHA, which is very similar to § 1691e(h) of the ECOA, is clearly equitable relief.19United States v. Mitchell, 580 F.2d 789, 792-93 (5th Cir. 1978); United States v. Long, 537 F.2d 1151, 1154 (4th Cir. 1975), cert. denied, 429 U.S. 871, 97 S.Ct. 185, 50 L.Ed.2d 151 (1976); United States v. Simon, supra, No. 76-2885, memorandum decision at 2; United States v. Jefferson Mortgage Corp., supra, No. 76-694 at 4. Monetary relief given as an adjunct to equitable relief, i. e., an award of back pay in a Title VII employment discrimination case, is a restitutionary equitable remedy. Restitution in a Title VII case, therefore, does not establish precedent for an award of general legal damages in other areas of civil rights litigation. Curtis v. Loether, 415 U.S. at 197, 94 S.Ct. at 1009; United States v. Mitchell, 580 F.2d at 792-93; United States v. Long, 537 F.2d at 1154-55; United States v. Jefferson Mortgage Corp., supra, No. 76-694 at 4. Finally, allowing the Attorney General to seek legal money damages is not required to effectuate the purpose of the legislation, when a private cause of action is available and policy considerations are not sufficient to imply such a grant in view of Congressional silence. Northside Realty Associates v. United States, 605 F.2d at 1356; United States v. Jefferson Mortgage Corp., supra, No. 76-694 at 5.

The circumstances which existed at the time § 1691e(h) was being debated and finally enacted are disputed by the parties. The parties agree that the Court must consider the status of the law as it existed at the time of the enactment of the legislation as opposed to after-acquired insight and further, that the legislators are presumed to be cognizant of the most recent judicial decisions. Cannon v....

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