The opinion of the court was delivered by: WERKER
The defendant, The Publishers Guild, Inc. (Guild), has moved for summary Judgment under Rule 56(c) of the Federal Rules of Civil Procedure on the ground that the material facts in this case do not present a genuine, triable issue of fact.
This action was commenced in July 1973 by the plaintiffs on behalf of themselves individually and on behalf of an alleged class of "all other persons similarly situated." The complaint alleges violations of the Federal Truth in Lending Act (Title I of the Consumer Credit Protection Act) 15 U.S.C. §§ 1601-1665, Regulation "Z" thereto, 12 C.F.R. § 226, and the New York Retail Installment Sales Act, New York Personal Property Law, McKinney's Consol. Laws, c. 41, §§ 401-419.
The violations claimed by plaintiffs allegedly arose from the Guild's "falsely representing that no finance charge or credit service charge is included in the cash price" of its installment sales contracts with plaintiffs and other members of their class, and from the Guild's failure to make those disclosures which are required by both the federal and state acts when a finance charge or credit service charge is imposed. By stipulation, the class action determination has been postponed pending decision on this motion.
Plaintiffs seek relief by way of an accounting, declaratory judgment, cancellation, refund, damages, restitution, recission, costs and attorneys' fees.
The following facts are undisputed:
In December 1972 Angela Manzina entered into an installment sales contract with the Guild for the purchase of eight periodicals and a dictionary. The contract used provides that the Guild deliver these to Manzina for a term of sixty months or five years. The cash price stated in the contract is $180. The total cash down payment is $9. The "deferred payment price" stated in the contract is the sum of the nine dollar cash downpayment and the total installment payments, $9 per month for 19 months or $180; "nothing the remaining months." A separate handling charge is specified for the dictionary, as is a late charge of $.25. The contract also contains this proviso:
It is understood and agreed that if payment on this contract should become more than 90 days past due, the full remaining balance may immediately become due and payable in full, to the holder.
Lastly, the contract states that there is "no finance charge and no credit service."
The Luis Cruz contract was entered into in October 1970. It provided for the delivery of three magazines over differing periods (one and one-half years of Cue, two years of Children's Digest, three years of Sport), and a dictionary for a cash price of $83.95 plus sales tax and a delivery charge of $2.30. The downpayment was $4.95 and the unpaid balance of $79.00 was to be paid at the approximate rate of $1.25 per week payable at the rate of $5 per month. There was to be "no finance charge." Like the Manzina contract, the Cruz contract also specified a late charge of $.25, and the immediate accrual of the balance due upon thirty days delinquency. Mr. Cruz defaulted on February 28, 1971. Defendant sued him in the Civil Court of the City of New York seeking $64 plus interest for "goods sold and delivered."
The form of contract used in Mr. Cruz's case was approved by Sheldon Feldman, Assistant Director for Special Statutes, Bureau of Consumer Protection of the Federal Trade Commission, by letter dated October 12, 1973. The letter stated in pertinent part:
I have reviewed the files thoroughly and it appears that the contracts submitted with your letter of February 9, 1971 comply with the provisions of the Truth In Lending Act. At that time the inquiry was considered closed . . . .
The Guild has been engaged in the business of selling publications for more than forty years. It does business in New York and several other states, selling different combinations of magazines and dictionaries which it denominates "publication packages." These differ in the number and types of periodicals offered, the length of subscription, and the type of dictionary. The publication packages are sold either for (1) cash, (2) short term installment contracts (at the same price as cash contracts) which state "no finance charge" and/or "no credit service charge," and/or "nothing in this office is free," or (3) long term installment sales contracts where the finance charges or credit service charges are specifically set forth as in note 1, supra.
The installment sales contract without finance or credit service charge has a lower deferred payment, a shorter time span, and fewer installments than the installment sales contract with such charge, the price difference being exactly equal to the stated finance charge. It is not ...