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Strubel v. Comenity Bank

United States District Court, S.D. New York

January 23, 2015

ABIGAIL STRUBEL, individually and on behalf of all others similarly situated, Plaintiff,
v.
COMENITY BANK, Defendant.

MEMORANDUM AND ORDER

P. KEVIN CASTEL, District Judge.

Plaintiff Abigail Strubel brings this putative class action individually and on behalf of consumers who use Victoria's Secret-brand credit cards. She alleges that Comenity Bank ("Comenity"), which issues the credit cards, violated the Truth in Lending Act, 15 U.S.C. § 1601, et seq. ("TILA"), and one of its implementing regulations by failing to adequately disclose certain consumer-rights policies. According to Strubel, Comenity failed to provide certain information set forth in a model form that was promulgated to ensure compliance with a TILA implementing regulation that is commonly known as Regulation Z, 12 C.F.R. § 1026.6.

Discovery in this case is now closed, and Comenity moves for summary judgment. The contents of Comenity's notice to consumers are undisputed. Because Strubel's claims are based primarily on minor, stylistic differences between the Model Form and Comenity's notice to consumers, Comenity's motion for summary judgment is granted, and judgment is entered in its favor.

BACKGROUND

Comenity issues private-label consumer credit cards branded for use at specific retailers, including a card line affiliated with Victoria's Secret. (Def. 56.1 ¶ 2; Pl. 56.1 Resp. ¶ 2.) On or about June 27, 2012, Strubel opened an account for a Victoria's Secret-brand credit card, which she used to purchase a $19.99 item of clothing. (Def. 56.1 ¶¶ 4-5; Pl. 56.1 Resp. ¶ 4-5.) When consumers open new accounts, they enter into a credit card agreement (the "Agreement") provided by Comenity. (Def. 56.1 ¶ 3; Pl. 56.1 Resp. ¶ 3.) It is undisputed that Strubel received the Agreement, which set forth terms and conditions for the card's use, including information on interest rates, charges, fees, and a disclosure of consumer rights. (Def. 56.1 ¶ 7; Pl. 56.1 Resp. ¶ 7.)

The Agreement included provisions that governed consumer challenges to certain charged items, which Strubel asserts were inadequate under TILA. One provision of the Agreement required that if a consumer gave written notice of a billing dispute, Comenity was obligated to reply within 30 days, unless it had already corrected the error. (Def. 56.1 ¶ 19; Pl. 56.1 Resp. ¶ 19.) Another stated that a consumer had the right not to pay for unsatisfactory goods and services if the consumer had made a good-faith effort to correct the problem with the merchant. (Def. 56.1 ¶ 20; Pl. 56.1 Resp. ¶ 20.) During all times relevant to this action, the Victoria's Secret-brand card did not offer an automatic-payment plan, and Strubel had no such plan on her account. (Def. 56.1 ¶ 15; Pl. 56.1 Resp. ¶ 15.)

The Agreement contained an arbitration provision and class action waiver, both of which a consumer could reject by submitting a signed, written notice to Comenity within 30 days. (Def. 56.1 ¶ 8; Pl. 56.1 Resp. ¶ 8.) Strubel sent notice to opt out of the arbitration and class action provisions in a letter dated July 16, 2012. (Def. 56.1 ¶ 9; Pl. 56.1 Resp. ¶ 9.) Among all consumers with a Victoria's Secret credit card, 72 have opted out of the arbitration and class action provisions. (Def. 56.1 ¶ 9; Pl. 56.1 Resp. ¶ 9.) According to the Complaint's class allegations, Strubel brings this action on behalf of all individuals who made an initial purchase with a Victoria's Secret card on or after June 27, 2012, and estimates that the class consists of more than 1, 000 persons. (Compl't ¶¶ 15, 17.)

In addition to her purchase on the day that she opened her account, Strubel used the card one other time, to buy $118.50 in merchandise in August 2013. (Def. 56.1 ¶ 13; Pl. 56.1 Resp. ¶ 13.) In her two purchases using the card, Strubel returned no items, had no billing disputes and paid in advance of the billing deadline. (Def. 56.1 ¶ 14; Pl. 56.1 Resp. ¶ 14.) Strubel testified in her deposition that she was injured because Comenity "prevented me from full exercise of my rights" under TILA. (Def. 56.1 ¶ 16; Pl. 56.1 Resp. ¶ 16.) She does not claim that she suffered actual damages, and seeks only statutory damages. (Def. 56.1 ¶ 16; Pl. 56.1 Resp. ¶ 16.)

SUMMARY JUDGMENT STANDARD

"Rule 56 allows a party to seek a judgment before trial on the grounds that all facts relevant to a claim(s) or defense(s) are undisputed and that those facts entitle the party to the judgment sought." Jackson v. Federal Express, 766 F.3d 189, 194 (2d Cir. 2014). Summary judgment "shall" be granted "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Rule 56(a), Fed.R.Civ.P. It is the movant's initial burden to come forward with evidence on each material element of its claim or defense, sufficient to demonstrate its entitlement to relief as a matter of law. Vt. Teddy Bear Co. v. 1-800 Beargram Co., 373 F.3d 241, 244 (2d Cir. 2004). In raising a triable issue of fact, the non-movant carries only "a limited burden of production, " but nevertheless "must demonstrate more than some metaphysical doubt as to the material facts, ' and come forward with specific facts showing that there is a genuine issue for trial.'" Powell v. Nat'l Bd. of Med. Exam'rs, 364 F.3d 79, 84 (2d Cir. 2004) (quoting Aslanidis v. U.S. Lines, Inc., 7 F.3d 1067, 1072 (2d Cir. 1993)).

A fact is material if it "might affect the outcome of the suit under the governing law, " meaning that "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby. Inc., 477 U.S. 242, 248 (1986). The Court must view the evidence in the light most favorable to the non-moving party and draw all reasonable inferences in its favor, granting summary judgment only when no reasonable trier of fact could find in favor of the nonmoving party. Costello v. City of Burlington, 632 F.3d 41, 45 (2d Cir. 2011); accord Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 585-88 (1986). In reviewing a motion for summary judgment, the court may scrutinize the record, and grant or deny summary judgment as the record warrants. Rule 56(c)(3), Fed.R.Civ.P. In the absence of any disputed material fact, summary judgment is appropriate. Rule 56(a), Fed. R. Civ. P.

"A party opposing summary judgment does not show the existence of a genuine issue of fact to be tried merely by making assertions that are conclusory or based on speculation." Major League Baseball Properties, Inc. v. Salvino, Inc., 542 F.3d 290, 310 (2d Cir. 2008) (citations omitted); see also Anderson, 477 U.S. at 249-50 (summary judgment "may be granted" if the opposing evidence is "merely colorable" or "not significantly probative") (citations omitted). An opposing party's facts "must be material and of a substantial nature, not fanciful, frivolous, gauzy, spurious, irrelevant, gossamer inferences, conjectural, speculative, nor merely suspicions." Contemporary Mission. Inc. v. U.S. Postal Serv., 648 F.2d 97, 107 n.14 (2d Cir. 1981) (internal quotation marks and citation omitted).

DISCUSSION

TILA promotes consumers' "informed use of credit" by requiring that creditors provide "meaningful disclosure of credit terms." See 15 U.S.C. § 1601(a); Chase Bank USA, N.A. v. McCoy, 131 S.Ct. 871, 874 (2011). The statute grants rulemaking authority to the Consumer Financial Protection Bureau ("CFPB") and, previously, to the Board of Governors of the Federal Reserve. 15 U.S.C. §§ 1604(a), 12 U.S.C. § 5581(b)(1). "Pursuant to this authority, the Board promulgated Regulation Z, which requires credit card issuers to disclose certain information to consumers." Chase, 131 S.Ct. at 874.

Regulation Z grows out of a TILA provision providing that "[b]efore opening any account under an open end consumer credit plan, the creditor shall disclose to the person to whom credit is extended" certain categories of information. 15 U.S.C. § 1637(a). Among these required disclosures is "[a] statement, in a form prescribed by regulations of the [CFPB] of the protection provided by sections 1666 and 1666i of this title to an obligor and the creditor's responsibilities under sections 1666a and 1666i of this title." Id . § 1637(a)(7). These sections of TILA respectively address the correction of billing errors, the regulation of credit reporting and card issuers' obligations for unresolved transactions. 15 U.S.C. §§ 1666, 1666a, 1666i.

Regulation Z requires creditors to provide consumers with a statement of billing rights. 12 C.F.R. § 1026.6(b)(5)(iii). The creditor-issued statement must "outline[ ] the consumer's rights and the creditor's responsibilities under §§ 1026.12(c) and 1026.13, " and in it, the "creditor shall disclose, to the extent applicable" the information in a notice "substantially similar to the statement found in Model Form G-3(A) in appendix G to this part." 12 C.F.R. § 1026.6(b)(5)(iii). The text of Model Form G-3(A) (the "Model Form") provides instructions for consumers who identify a mistake on their statement, an explanation of what the card issuer must do after receiving notice of the mistake, and describes consumers' rights in the event that they are dissatisfied with a purchase. (See Compl't Ex. C.)

Unlike some other federal courts of appeals, the Second Circuit has not adopted a strict liability standard for TILA. It has observed that TILA is intended to impose civil liability only for "significant violations." Turner v. Gen'l Motors Acceptance Corp., 180 F.3d 451, 457 (2d Cir. 1999); see also Kahraman v. Countrywide Home Loans, Inc., 886 F.Supp.2d 114, 122 n.6 (E.D.N.Y. 2012) (distinguishing Second Circuit authority from circuits "that impose a strict liability interpretation of TILA's disclosure requirements...."). "District courts in this circuit have largely also dismissed purely technical claims." Schwartz v. HSBC Bank USA, N.A., 2013 WL 5677059, at *8 (S.D.N.Y. Oct. 18, 2013) (Engelmayer, J.) (collecting cases). This Court is unaware of any authority in this Circuit that has held a card issuer may be liable solely for deviating from the Model Form, as opposed to liability for neglecting the substantive disclosure requirements of TILA or Regulation Z.

According to Strubel, Comenity violated TILA because the Agreement failed to provide information in a format substantially similar to that of the Model Form. Her complaint identifies five different areas of Comenity's disclosures that, she claims, materially fail to satisfy the terms of Regulation Z, as reflected by the Model Form. Comenity moves for summary judgment as to each of them.

The Court concludes that the Agreement's terms are consistent with the requirements of Regulation Z and TILA. Moreover, in one instance, Strubel's claim is premised on a TILA provision that is inapplicable to the repayment options ...


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