The opinion of the court was delivered by: BRIEANT
The Court has for disposition motions to dismiss by defendants, and motions for summary judgment by plaintiff in each above entitled case. All motions to dismiss are based upon the ground that the complaints fail, respectively, to state claims upon which relief can be granted.
All three causes are so similar that these motions may be disposed of together. Plaintiff is a debtor to whom "revolving" consumer credit has been extended by all three defendants, which, for simplicity, may be characterized as Department Stores.
Plaintiff, suing under § 1640(e) of the Truth in Lending Act, 15 U.S.C. § 1601 et seq., seeks to recover for himself and for the members of three separate classes consisting of the numerous customers of the defendants' stores, statutory penalties, together with attorneys' fees and costs, because of claimed violations of the Act.
The facts are not disputed. There remains only the issue as to whether or not the procedures followed by the three different defendants, substantially identical, violate the Act.
Under plans generally called "revolving credit", defendants have a billing cycle by virtue of which each customer is billed monthly, after the closing date of his billing cycle.
Due to various delays and other reasons, the monthly bills are often mailed between 8 and 12 days after the closing dates of the billing cycle. The extent of such delay varies among defendants, and will vary from cycle to cycle, depending on delays in posting charges, caused by volume of sales, or by holidays, mechanical and human failures, weather, and other causes.
The plaintiff attacks this time lag as unreasonable and in violation of the Truth in Lending Act. Plaintiff and other customers are adversely affected by the delay, because the various credit plans provide a period of days within which free credit is available, and if the customer pays his entire bill within such free period (27 days in the case of Klein's) there will be no finance charge incurred. If he elects to pay only a proportionate installment of the principal, and does so within that period, a finance charge is assessed.
Defendants each admit the facts alleged, but assert, and the Court agrees, that neither the Act, nor the regulations adopted thereunder, and specifically Regulation z, 12 CFR § 226, contain any requirement that the defendants mail or deliver the bills within a specific period of time following the close of the customer's billing period, although cyclical billing on a basis of twelve times a year per customer is required, if any transaction occurs within the cycle.
Defendants have disclosed the time period within which payment may be made in full without a finance charge, and have computed such time period from the closing date of the billing period. In the case of Klein's the disclosure reads "if you pay the entire price of the goods purchased within 27 days of the billing date on your monthly statement, no finance charge will be assessed." Gimbels provides similarly with respect to a 25 day period, as does Sears, Roebuck & Co., 12 CFR § 226.7(a)(1).
How much of that free time will actually be enjoyed by the customer depends on how soon the defendant credit lenders deliver their bills to the postal service, and how soon the postal service delivers them to the customer. There is no legal requirement for any period free of finance charge.
The Federal Reserve Board of Governors has the power to adopt regulations to carry out the purposes of the Truth in Lending Act, and has done so. The Federal Trade Commission has the duty of enforcement with respect to the Act and the regulations. (15 U.S.C. § 1607; 12 CFR § 226.1.) Defendants are subject to Commission enforcement.
It is not charged in this case that the stores have been billing their customers on a basis intentionally contrived to prevent them from taking ...