UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK
December 22, 1972
Michael ROOTBERG, for himself and others similarly situated, Plaintiff,
AMERICAN EXPRESS COMPANY, Defendant
Ward, District Judge.
The opinion of the court was delivered by: WARD
WARD, District Judge.
This is a motion by the defendant, American Express Company (Amexco), for summary judgment pursuant to Rule 56, Fed.R.Civ.P. For the reasons hereinafter stated, the motion is granted.
The complaint alleges violation of the "Truth in Lending Act", 15 U.S.C. Section 1601 et seq.; breach of contract; and fraud. Jurisdiction is based on 15 U.S.C. Section 1640 and pendant jurisdiction. The underlying facts giving rise to this action are apparently not in dispute. The plaintiff, Michael Rootberg, was the holder of an Amexco Money Card, a charge card, which he used to purchase goods or services on four occasions while travelling in Yugoslavia in August, 1971. These sales were written up in local currency -- Yugoslav dinars. Amexco converted these dinar amounts to U.S. dollars, paid the Yugoslavian establishments in U.S. dollars, and billed Mr. Rootberg in U.S. dollars.
Mr. Rootberg contends that the conversion rate used by Amexco in three of these four transactions was too high and contained a hidden finance charge. Amexco, while denying that it used an improper rate of conversion, contends that even if it did so, such an overcharge is not a finance charge. Furthermore, Amexco contends that its Money Card transactions are not within the scope of the Truth in Lending Act. This Court has concluded that Amexco Money Card transactions are not covered by the Truth in Lending Act and is, therefore, constrained to grant defendant's motion for summary judgment. As the plaintiff's counsel conceded at oral argument, the pendant causes of action must be dismissed for lack of subject matter jurisdiction.
The "Agreement" between Amexco and its Cardholders provides for payment of charges upon receipt of periodic statements except for certain purchases as to which a deferred payment plan is available. In the latter case, the Cardholder signs an additional agreement at the time of purchase. There is also a legend on the statement that it is "PAYABLE IN FULL UPON RECEIPT OF STATEMENT." There is no evidence that Amexco did in fact, in spite of these provisions, permit its Cardholders to defer payment.
There is a good deal of ambiguity as to whether "credit" as defined in 15 U.S.C. Section 1602(e) applies to thirty-day accounts such as are offered by defendant.
The legislative hearings proceeding the enactment of this statute only add to the confusion.
However, it does seem clear that whatever the meaning of "credit" under the Act, the term "creditor" is defined under the Act so as to exclude plans such as the Amexco Money Card in which full payment is due upon presentation of the bill
Amexco does not regularly "arrange for the extension of credit for which the payment of a finance charge is required"
and is, therefore, not a creditor covered by the Act and is not required to make the disclosures described in 15 U.S.C. Sections 1631-41.
This is the interpretation of the Act made by the Senate Committee which had earlier reported the Truth in Lending Act.
Defendant's motion for summary judgment dismissing the complaint is granted.