Opinion for the Court filed by Circuit Judge WALD.
WALD, Circuit Judge:
This case involves alleged violations of Title I of the Consumer Credit Protection Act, popularly known as the Truth-in-Lending Act (the Act), 15 U.S.C. § 1601 et seq., and of the Federal Reserve Board's (Board's) implementing Regulation Z, 12 C.F.R. § 226 et seq. It arose in 1972 from Oriental Building Association's (Oriental's)
Count II of the complaint, with which we are principally concerned here,
The district court, 455 F.Supp. 781 (D.C.) granted the Postows summary judgment on Count II, certified the case as a class action and awarded the class statutory damages. The court also awarded the class attorneys' fees based on the time spent both on Count II and on the unsuccessful Count I. We affirm the award of summary judgment to the Postows, and we uphold the class certification and the grant of attorneys' fees. We find the amount of statutory damages awarded to the class, however, to be excessive and remand for the entry of an order modifying that portion of the judgment below.
BACKGROUND
On August 14, 1972, the Postows entered into a sales contract with a building contractor to purchase a new house in Rockville, Maryland. The contract was conditioned
A few days later, the Postows applied to Oriental for a loan. On September 19, 1972, Oriental issued a "commitment letter" to the Postows in which Oriental agreed to loan the Postows the sum of $27,300 at 7 percent interest, secured by a first deed of trust on the property. The commitment was contingent upon the Postows providing the balance of the sale price at settlement and upon their timely payment of a $305.00 "stand-by" fee. Regarding that fee, the commitment letter stated:
J.A. 34. The Postows signed a copy of the commitment letter on September 26, 1972; Oriental received that signed copy and a check from the Postows for the $305 "stand-by" fee two days later. J.A. 147.
Settlement was completed on November 8, 1972. On that date, the Postows received for the first time the Truth-in-Lending disclosure statement required by the Act. The Postows executed the note, a deed of trust, and other documents necessary to convey title to the property and acknowledged receipt of the Truth-in-Lending disclosure statement at settlement.
ANALYSIS
The Act requires the disclosure of the finance charge and the separate disclosure of all other charges imposed on the borrower by the creditor as a condition of making a loan. It also requires disclosure of any default and late payment charges imposed by the creditor. The Act was designed to promote consumers' "informed use of credit" by the "meaningful" disclosure of credit charges and terms. 15 U.S.C. § 1601 (1976). Through passage of the Act, Congress intended to enable creditors "to compare more readily the various credit terms available to [them] . . . and to avoid the uninformed use of credit." Id.
I. TIME OF DISCLOSURE
The principal issue is whether the Act, as amplified by Regulation Z, required a written disclosure by Oriental of the terms of the credit extension at the time Oriental agreed to lend the $27,300 or at least sometime before the Postows paid the $305 forfeitable "stand-by" fee, or whether the requirements of the Act were satisfied by disclosure just prior to settlement. Section 129(a) of the Act sets forth those items that must be disclosed in an extension of consumer credit including residential mortgage loans; they include "[a]ll charges, individually itemized, which are included in the amount of credit extended but which are not part of the finance charge." 15 U.S.C. § 1639(a)(2) (1976). In the Postows' case this meant various closing costs amounting to $1,827.78.
All of these charges were "included in the amount of credit extended"
A. The Language of the Act and Regulation Z
Section 129(b) of the Act requires that "the [aforesaid] disclosures . . . shall be made before the credit is extended, and may be made by disclosing the information in the note or other evidence of indebtedness to be signed by the obligor." 15 U.S.C. § 1639(b) (1976). Regulation Z, 12 C.F.R. § 226.8(a) (1979), interpreting that section of the Act, provides:
(Emphasis supplied.) Regulation Z goes on to define when "the transaction is consummated" as "the time a contractual relationship is created between a creditor and a customer . . . irrespective of the time of performance of either party." Id. § 226.2(kk) (emphasis supplied).
The relevant question here is whether credit was "extended" when Oriental became obligated to make the loan and the Postows paid the "stand-by" fee which they would lose if they later decided not to borrow from Oriental. In our view, and in that of the district court whose construction of the statute we affirm, credit was "extended" at that point; a "transaction" was "consummated," a "contractual relationship" was created, and disclosure was required by the Act. Once the commitment letter was signed and the "stand-by" fee paid, Oriental could have been sued by the Postows if it refused to lend the money; the Postows would have forfeited their $305 if they had not subsequently borrowed the money from Oriental.
Oriental's arguments against this interpretation center first on language in the Act and in Regulation Z that allows the required disclosures to be made "in the note or other evidence of indebtedness to be signed by the obligor." 15 U.S.C. § 1639(b) (1976); see 12 C.F.R. § 226.8(a) (allowing disclosure in "[t]he note or other instrument evidencing the obligation"). This language is cited by Oriental to show that Congress and the Board meant only to require disclosures at some point before the ultimate sale or finance transaction is completed; in this case when both the borrower and the lender signed the mortgage note.
We disagree with that interpretation. We can find no indication that in authorizing
The legislative history of § 129(b) of the Act is consistent with this interpretation. As introduced in 1967, the bill provided for disclosures "prior to the consummation of the transaction." S.Rep. No. 392, 90th Cong., 1st Sess. 15 (1967) [hereinafter 1967 Senate Report]. This was changed by the Senate Banking and Currency Committee to require the disclosures "before the credit is extended." Id. In addition, the Senate Report added an additional authorization for such disclosures to be put in the note or other instrument of indebtedness itself or in a separate statement,
Id. at 7 (emphasis supplied).
In providing for disclosure in the note itself as the general rule, Congress and the Board seem to have indicated that a separate, earlier notice is not required as long as the borrower receives the required disclosure before becoming liable for a significant amount if he or she does not utilize the credit. In most consumer loans, the creditor does not become liable in any way until the note is signed, and disclosure in the note would thus be sufficient. If the note is not signed until after the borrower becomes liable, however, disclosure in the note would be untimely.
B. The Board Staff's Contemporaneous Construction of the Act and Regulation Z
"Public Information" letters are written by various officials and employees of the Board to inquiries regarding the statute and the Board's regulations. From June 1969 through July 1979, over 1350 of these Board staff letter responses have been made available for the staff's use and for public access in the Board's Office of Public Information; those letters are also available to the public in a commercial reporting service.
In March 1970—only months after the Act went into effect—a Public Information letter written by Kenneth A. Kenyon, then the Board's Deputy Secretary, specifically addressed whether disclosures were required before the payment of a forfeitable "stand-by" fee by a borrower not contractually bound to complete the ultimate transaction:
The Deputy Secretary's March 1970 letter—which has been in effect almost ten years—is the only administrative pronouncement directly on point. Courts frequently examine manuals, forms and advice issued to the public
Id. 100 S.Ct. at 794.
In Milhollin, the Board staff had issued an official staff interpretation (which has a special status under the 1976 amendments to the Act
Id. (emphasis in original). We therefore find Milhollin at least persuasive authority
Finally, our interpretation that the Act and Regulation Z required disclosure before the Postows paid the "stand-by" fee furthers the policy of the Act "to assure a meaningful disclosure of credit terms so that the consumer will be able to compare more readily the various credit terms available to him and avoid the uninformed use of credit." 15 U.S.C. § 1601 (1976). As this court expressly found in Bissette, "it would be preferable, from the Consumer's vantage point, to require disclosure well before the final formalities." 477 F.2d at 1247.
The realities of home financing practices underscore this concern. When a contract for the sale of a house is executed, the buyer usually leaves a forfeitable deposit with the seller to compensate for taking the house off the market until the buyer can locate the proper financing. If financing is unavailable, the buyer's deposit is typically refunded. If the buyer could obtain appropriate financing but does not, the buyer stands to lose the deposit with the seller. If disclosure is not made until the last moment before final settlement, the buyer is in a double bind and will be heavily pressured to take the credit, whatever the terms, in order not to lose both the deposit with the seller and the "stand-by" fee paid to the lender.
C. The 1974 Addition and the 1976 Repeal of § 121(c) of the Act
In spite of these considerations, Oriental argues that congressional actions after the passage of the Act, the promulgation of Regulation Z, and the events in question here undercut the district court's interpretation of § 129. In 1974, two years after the Postows' home purchase, Congress added subsection (c) to § 121 of the Act to require disclosure in real estate transactions "at the time the creditor makes a commitment with respect to the transaction."
Oriental relies on the enactments and repeals of § 121(c) and § 6 to support its restrictive interpretation of the disclosure requirements as they existed in 1972 when the Postows purchased their house. Oriental in effect argues that the 1976 repeals of § 121(c) after it had been in effect only two months and § 6 of RESPA after only seven
We do not agree. Even assuming later congressional action could be relied upon as an aid to interpreting the Act as it was originally passed,
We thus conclude that the repeals of § 121(c) and § 6 in 1976 do not establish that the Board exceeded its authority either in 1969 by promulgating Regulation Z, which places the time of disclosure at "consummation" of "a transaction" or when "a contractual relationship" is established, or in 1970 when the Deputy Secretary's letter interpreted that regulation to mandate disclosure before the prospective borrower puts up a forfeitable "stand-by" fee. We therefore affirm the district court's ruling on Count II that the Act required the disclosures at issue here sometime before Oriental's commitment was secured by the Postows' payment of a "stand-by" fee. That ruling implements the overriding policy of the Act to allow a borrower to compare credit opportunities; it in no way conflicts with the language of the Act; it follows the spirit of this court's earlier Bissette opinion; most important, it reflects the Board staff's interpretation of Regulation Z.
III. THE ACT'S STATUTE OF LIMITATIONS
Section 130(e) of the Act imposes a one-year statute of limitations on actions to redress violations of the Act. The Postows accepted Oriental's loan commitment and returned a signed copy of the commitment letter to Oriental along with the $305 "stand-by" fee in late September 1972; settlement of the house sale was on November 8, 1972. The Postows filed their complaint in the district court on November 6, 1973.
Oriental argues that if the Postows' acceptance of its loan commitment and their payment of the "stand-by" fee is the point at which the disclosures required by the Act should have been made, Oriental's violation occurred in late September, 1972, more than one year before the complaint was filed. The Postows argue that a violation indeed occurred when they accepted Oriental's commitment and remitted the stand-by fee, but that the violation continued until they were provided the required disclosures at settlement, two days short of a year before the complaint was filed. The district court found in favor of the Postows on this issue, and we affirm that ruling.
Because no reported Truth-in-Lending case had dealt with this precise statute of limitations issue, the district court relied primarily on cases dealing with continuing violations in other areas of the law. It found the reasoning in those cases persuasive in light of the policies of this Act.
We agree. Hanover Shoe v. United Shoe Machinery Corp., 392 U.S. 481, 502 n.15, 88 S.Ct. 2224, 2236, 20 L.Ed.2d 1231 (1968), found that a private antitrust action, brought in 1955 and based on a continuing business practice begun in 1912, was not barred by a six-year statute of limitations because the challenged conduct "constituted a continuing and accumulating harm on Hanover." Accord Katz v. NLRB, 196 F.2d 411, 415 (9th Cir.1952) (continuing unfair labor practice); Schokbeton Products Corp.
We do not think that this recognition of the nondisclosure violation as a continuing one is at all inconsistent with our principal holding that disclosure must occur before the "stand-by" fee is paid. The borrower in a situation like that presented here retains legal freedom to change his or her mind on taking the lender's credit up to the time the note is signed. If the nondisclosures are viewed as serious enough, however, the borrower may well renege and be required to forfeit the fee. Furtherance of the goals of the Act thus mandates both a requirement of disclosure before the "stand-by" fee is paid and recognition that if disclosure is not then made, the violation continues up to the time of settlement.
IV. CLASS CERTIFICATION
Oriental objects to the class certification on the ground that the district court abused its discretion by relying solely on the Postows' allegations that a class action was appropriate. Oriental also alleges that the court erred as a matter of law in not later vacating the certification as improper since the final designation of the class and the sending of notice to the members occurred after the court granted the Postows' motion for summary judgment.
We find the district court's class certification to have been a proper exercise of its discretion
A. The Law on Post-Judgment Class Certification
Count II of this case was certified as a Rule 23(b)(3) class action—i. e., one in which "the questions of law or fact common to the members of the class predominate over any questions affecting only individual members ...." Rule 23(c)(2) states that, in Rule 23(b)(3) class actions, each potential member of the class must be notified that he or she will be excluded from the class upon request by a specific date and that the judgment, "whether favorable or not," will include all class members not choosing to be excluded. Pursuant to Rule 23(c)(3), the judgment in a class action "shall specify or describe" those members who received notice and did not opt for exclusion from the class.
Subsections (b)(3) and (c)(3) were added to Rule 23 in 1966, as the Rules Advisory Committee explained, to avoid "one-way" intervention—i. e., allowing members of a Rule 23(b)(3) class the option of joining an action as plaintiffs after a favorable judgment on the merits while avoiding the res judicata effect of an adverse decision by not joining if the named plaintiffs have been unsuccessful. See 39 F.R.D. at 105.
The notice provisions of Rule 23 were discussed in Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 176, 94 S.Ct. 2140, 2152, 40 L.Ed.2d 732 (1974). That case involved the question whether the costs of notifying class action plaintiffs could be shifted to the defendant. The Court held that notification costs could not be shifted and found improper the district court's holding of a pre-judgment "mini-hearing" on the merits of a class action to apportion those costs between the parties. As part of its reasoning, the Court suggested the representative plaintiff "is thereby allowed to obtain a determination on the merits of the claims advanced on behalf of the class without any assurance that a class action may be maintained." Id. at 177-78, 94 S.Ct. at 2152.
Some courts subsequently construed Eisen and the requirements in Rule 23(c) to prohibit class certification and the sending of notice to a Rule 23(b)(3) class after, or simultaneously with, a decision on the merits of a case. E. g., Horn v. Associated Wholesale Grocers, Inc., 555 F.2d 270, 273-75 (10th Cir.1977); Peritz v. Liberty Loan Corp., 523 F.2d 349, 352-54 (7th Cir.1975). Those cases echo the Advisory Committee's 1966 concern about allowing potential class plaintiffs to choose whether to join an action after the merits have been decided, since they can opt to be bound by the judgment if it is favorable to the class, or not to be bound if the plaintiffs have lost.
These counts extrapolated from the suggestions in Eisen regarding the potential problems with post-judgment class certification. In fact, however, Eisen indicates that the plaintiffs there could have continued with their class action, despite the impropriety of the district court's mini-hearing, if they had notified the members of the class rather than attempted to shift part of the notification burden to the defendant. 417 U.S. at 179 & n.16, 94 S.Ct. at 2153 & n.16. Despite its rhetoric, the Eisen Court itself was thus not unduly concerned about class members joining after learning of the trial judge's view of the merits.
We find the reasoning of those opinions instructive. The Haas court noted, for example, that the strongest argument for construing Eisen to preclude post-judgment class certification is that pre-judgment certification and notice to the class are necessary to protect the defendant from future suits by potential members of the class. But that rationale disappears when the defendant himself moves for summary judgment before a decision on class certification. In such a situation, "the defendants . . assume the risk that a judgment in their favor will not protect them from subsequent suits by other potential class members, for only the slender reed of stare decisis stands between them and the prospective onrush of litigants." Haas, supra, 381 F.Supp. at 805.
More recent Supreme Court decisions have provided for appeal of a Rule 23(b)(3) class certification denial after a decision on the merits of an action. A necessary corollary to those cases is that if the denial of the class certification is reversed and remanded, the class may be certified after the entry of judgment. Those cases therefore demonstrate the Court's tolerance for allowing, in appropriate circumstances, potential class members the option of joining an action after the trial court has passed on the merits of the basic claim.
In United Airlines, Inc. v. McDonald, 432 U.S. 385, 97 S.Ct. 2464, 53 L.Ed.2d 423 (1977), for example, the Court held that a member of the putative class could intervene to appeal a class certification denial after a judgment on the merits favorable to the named plaintiffs individually. The McDonald majority expressed no concerns about the possibility of prejudice to the defendant even though Mr. Justice Powell dissented on the ground that the potential class member's delay in seeking intervention "was especially costly in this case." Id. at 401 n.4, 97 S.Ct. at 2473 n.4 (Powell, J., dissenting).
Just this term in Deposit Guaranty National Bank of Jackson, Miss. v. Roper, 445 U.S. 326, 100 S.Ct. 1166, 63 L.Ed.2d 427 (1980), expressly involving Rule 23(b)(3), the Court extended this toleration even further. Relying upon McDonald and Coopers & Lybrand, the opinion of the Chief Justice for the Roper majority found that the district court's entry of judgment, based on a settlement offer, in favor of the named plaintiffs individually after denying them class action status did not render moot their appeal of the class certification denial.
Thus the present state of the law does not necessarily preclude class certification after a judgment on the merits in Rule 23(b)(3) class actions; it suggests there may be equitable reasons for allowing post-judgment certification in some cases. We believe this is such a case. The class was originally certified before summary judgment was granted to the Postows on Count II (though the members of the class were not correctly identified and notified until after then); Oriental moved for summary judgment after the Postows had agreed to stay discovery on the identity of the potential class members only until a decision on Oriental's motion to dismiss; and the notice to potential class members did not inform them as to the existence of any judgment in their favor, thus reducing substantially the "one way street" danger of post-judgment certifications.
V. STATUTORY DAMAGES
Oriental argues that the damages awarded to the class are excessive in light of the peculiar circumstances of the violation. We agree and for the reasons set out below modify that award.
Section 130 of the Act provides that creditors which violate any of its requirements are liable either for actual damages or for specified statutory damages. 15 U.S.C. § 1640 (1976). Since the class here stipulated it suffered no actual damages, we are concerned only with the Act's provisions for statutory damages.
For individual actions, § 130 limits statutory damages to twice the amount of the nondisclosed finance charge, with a minimum recovery of $100 and a ceiling of $1,000. Id. § 1640(a)(2)(A). For class actions, the allowable statutory recovery is "such amount as the court may allow." Id. § 1640(a)(2)(B). There is no minimum statutory recovery for class actions, but § 130 of the Act sets the maximum at the lesser of $100,000 or one percent of the creditor's net worth. Id. In setting class action awards the district court is specifically directed to
Id. § 1640(a).
As the Senate Banking, Housing and Urban Affairs Committee noted in reporting on amendments to § 130 in 1973, the purpose of the Act's civil remedies provisions was "to provide a meaningful incentive to comply with the law without relying upon an extensive new bureaucracy." 1973 Senate Report at 15. Most violations of the Act do not involve actual damages; "some meaningful penalty provisions are therefore needed to insure compliance." Id. (citations omitted). We thus reject, as did the district court, Oriental's argument that the award of any statutory recovery in the absence of
The district court considered each of the factors enumerated in § 130 as relevant to class action awards. First, the court acknowledged that the lack of actual damages militated against a high award, but concluded that whether the lack of actual damages "should be given overriding weight in this action can only be determined after consideration of the other relevant factors." J.A. 318.
It then considered the "frequency and persistency" of Oriental's violations and whether they were "intentional." The record indicates that Oriental's practice was to provide the Act's required disclosure statement on the day of settlement or in some cases before that time, but after the purchasers had signed the commitment letter and returned it to Oriental along with the "stand-by" fee. On that basis, the district court found that Oriental's violations of the Act's disclosure requirement were frequent and persistent. On the other hand, the district court found "there is no evidence that defendant wilfully intended to deceive consumers in violation of the Act." J.A. 319.
We agree with the district court that evidence of a defendant's predominant practice is relevant to the frequency and persistence of a violation and may be relevant to the defendant's intent. But if the defendant did not "persist" in the violations by "wilfully" continuing them after it knew or should have known they were proscribed by the Act, the frequency of the violation is less important. The record here is uncontradicted that Oriental received no oral or written objections to its disclosure policy until the Postows filed their complaint in November 1973. Furthermore, as even the district court recognized, a large award of damages would not act as a deterrent to the disclosure violations because, at least as of November 1976, the last home loan commitment Oriental had issued was in May 1973.
The first indication, apart from the 1970 interpretation of the Federal Reserve Board's Deputy Secretary discussed above, that the Act's disclosures were required at commitment (so long as a stand-by fee was paid) was arguably this court's Bissette opinion which issued five months after the actions giving rise to the Postows' complaint. Although we do not countenance Oriental's apparent disregard of, or at least unfamiliarity with, that 1970 interpretation, we do recognize its relative obscurity among the hundreds of Public Information letters. We can find on this record no other possible indication of persistent, willful violation of the Act.
As the district court concluded, other possible relevant factors—i. e.., the extent of Oriental's resources and the number of persons adversely affected by its actions—"do not weigh heavily toward exacting a severe penalty from the defendant." J.A. 320. Oriental's net worth as of December 1976 was only $4.4 million. Furthermore, a majority, 64, of the 105 members of the class chose to be excluded.
To summarize, there are five factors relevant to the class action award here: (1) the absence of actual damages, (2) the frequency and persistence of Oriental's actions, (3) Oriental's resources, (4) the number of people adversely affected, and (5) whether Oriental acted intentionally. The court below found only the "frequency and persistence" standard weighed in favor of a substantial
We conclude that the district court abused its discretion in awarding one-half of the statutory maximum in the face of its own finding that only one of the factors specified in the statute as justifying a substantial award was involved in this case. In most instances we would remand to the district court for a redetermination of the appropriate statutory damages for the class since we should assume that responsibility ourselves only in extraordinary circumstances. However, as a federal appellate court, we have specific statutory authority to "affirm, modify, vacate, set aside or reverse any judgment, decree or order of a court" properly before us and to remand "and direct the entry of such appropriate judgment ... as may be just under the circumstances." 28 U.S.C. § 2106 (1976) (emphasis supplied). When there are "guidelines establishing the basic elements of the award," as in this case, making it as easy for the appellate court to compute damages as the trial court, modification of a damage award on appeal is appropriate Simpson v. United States, 322 F.2d 688, 693-94 (5th Cir.1963).
We conclude that a reduction of the statutory damages award is appropriate here. There are specific statutory factors or guidelines which must be considered in class action damage awards under the Act, and there are no material disputed issues of fact as to how those guidelines apply here. Furthermore, a remand would unduly delay final resolution of this seven year old controversy. Finally, the district judge who handled this matter for more than four years, and who we would presume to be in a better position than we to exercise discretion over an award of damages because of his familiarity with the parties and the case, has unfortunately died since issuing the opinion and orders now under review. Any district judge to whom the case might be assigned on remand would be no more familiar with the case than we are, therefore a major reason for our usual deference to a district judge's reevaluation of damages on remand is not present. We emphasize that we are not establishing any precedent for appellate redetermination of statutory damage awards under the Act that goes beyond the special facts and circumstances here.
Because only one of the factors enumerated in the Act augurs for an award of any damages, we modify the district court's award of one-half of the maximum statutory recovery to a sum that allows the same recovery as the statutory minimum of $100 per person for individual actions, a total of $4,100. Under the circumstances here, we think that is the most equitable way to compute an award of statutory damages.
VI. ATTORNEYS' FEES AND OTHER COSTS
Section 130(a)(3) allows the recovery, "in the case of any successful action to enforce
Oriental challenges the attorneys' fee award on two principal grounds: (1) Section 130's allowance of attorneys' fees for successful borrowers but not creditors is an unconstitutional denial of due process and equal protection, both on its face and as applied here; and (2) the class should not be awarded attorneys' fees for time spent on Count I, the issue on which Oriental was awarded summary judgment.
The district court ruled correctly that the creditor/debtor relationship at issue here involves no "fundamental" interest of creditors in securing their debts, and the statute does not create a suspect classification of lenders that can only be upheld in the face of a compelling governmental interest. See United States v. Kras, 409 U.S. 434, 445-46, 93 S.Ct. 631, 637-38, 34 L.Ed.2d 626 (1973). Thus, only a rational justification need exist for the Act's distinction between successful borrower and lender litigants.
The legislation at issue here was specifically designed by Congress to be enforced through private citizen suits. See 1973 Senate Report at 14; McGowan v. Credit Center of North Jackson, Inc., 546 F.2d 73, 77 (5th Cir.1977); Sosa v. Fite, 498 F.2d 114, 121 (5th Cir.1974). The district court correctly relied upon Christiansburg Garment Co. v. EEOC, 434 U.S. 412, 98 S.Ct. 694, 54 L.Ed.2d 648 (1978), and Alyeska Pipeline Co. v. Wilderness Society, 421 U.S. 240, 95 S.Ct. 1612, 44 L.Ed. 141 (1975), in concluding
The district court also correctly rejected Oriental's argument that the award of attorneys' fees to the Postows should be reduced because they were unsuccessful as to Count I. The Postows argued in Count I that Oriental's requirement of owners' title insurance was illegal, but they did not—indeed under the Act they could not—attack that requirement directly. The Act only requires the disclosure of lending costs to borrowers; it neither prohibits nor allows charges of any kind.
Thus, the gravamen of the Postows' complaint in Count I was not that Oriental required owners' title insurance but rather that Oriental failed properly to disclose that requirement to them.
Oriental attempts to argue that two separate injuries were alleged here, relying, inter alia, on the fact that the Postows chose to describe their assertions in separate counts. In fact, this lawsuit was but a single "action" within the meaning of § 130(a)(3). It was, in substance, a claim that Oriental failed to properly disclose required charges, in a single transaction, leading to a single injury (the inability to "shop around" for better terms) and resulting in a right to a single recovery. Indeed, § 130(g) of the Act makes explicit the plaintiffs' limitation to a single claim for recovery, no matter how varied the violations:
15 U.S.C. § 1640(g) (1976) (emphasis supplied).
In this case, Counts I and II alleged "multiple failure[s]" to disclose costs but these multiple failures gave rise to grounds only for a single "action" alleging a right to recover statutory damages. As the district court noted, had the Postows prevailed on Count I, they could not have been more "successful" in their pursuit of damages then they were on the basis of Count II. We therefore conclude that the district court did not err in awarding reasonable attorneys' fees based on the time spent litigating Count I as well as Count II.
Id.
CONCLUSION
For the foregoing reasons, we affirm the court below insofar as it awarded summary judgment to Oriental on Count I and to the Postows on Count II. We also affirm the district court's decision on the statute of limitations issue, its certification of Count II as a class action, as well as its award of attorneys' fees and the denial of the Postows' claim for reimbursement of expert witness fees and miscellaneous costs. We reverse the district court's award of statutory damages, however, and remand for the entry of judgment in the amount of $100 for each of the 41 members of the class and for an appropriate determination on the Postows' claim for reimbursement of deposition costs.
Affirmed in part, reversed in part, and remanded.
FootNotes
Section 106(e) of the Act expressly exempts "title insurance" from those costs which must be included in the finance charge, but the Postows attempt to draw a distinction between "owners'" title insurance and "lender's" title insurance, arguing that only the latter is included in the exemption. We can see no basis in language, logic or the law for such a distinction.
Alternatively, the Postows argue that Oriental's requirement of owners' title insurance violated state law. As interpreted by the Board, charges for requirements imposed in violation of state law are not bona fide; Regulation Z has interpreted § 106(e) to exempt only charges which are bona fide; therefore the Postows again argue that the charge was not exempt under § 106(e) and should have been separately disclosed as part of the finance charge. Maryland law, however, only prohibits a requirement that insurance be purchased from a particular agency or broker; it does not prohibit a requirement that insurance be purchased. Md. Ann.Code, art. 48A, § 228(a). The evidence in the record establishes that the Postows were free to purchase owners' title insurance from any agent they wished. Thus the Maryland law was not violated by Oriental's requirement, and the necessary premise of the Postows' argument fails.
H.R.Rep. No. 1040, 90th Cong., 1st Sess. 25 (1967).
The staff continues to respond by correspondence to specific requests for guidance. Since the addition of § 130(f) to the statute, however, such correspondence typically contains this caveat: "This is an unofficial staff interpretation of Regulation Z, limited in its applicability to the facts and issues discussed above." None of the earlier staff letters, including the Deputy Secretary's March 1970 letter, had such a disclaimer.
Whether the Postows were initially principally concerned with Count I rather than Count II is irrelevant to the determination of whether the common legal and factual issues in Count II predominated over the individual issues in that count. It would have been preferable if the district court had explained why it concluded that the common issues in Count II predominated over the individual Count II issues, rather than simply making that finding as it did here. But on the facts of this case we cannot conclude that was an abuse of discretion. Neither was it an abuse of discretion for the court not to explain why the absence of actual damages did not preclude a finding that proceeding as a class action on Count II was superior to other alternatives. As the Senate Committee on Banking, Housing and Urban Affairs stated in 1973, regarding the later amendments to § 130 specifically allowing class actions in Truth-in-Lending cases, "remedies [under the Act] should not be restricted to actual damages. As the Committee pointed out last year, `most Truth-in-Lending violations do not involve actual damages ....'" S.Rep.No. 278, 93d Cong., 1st Sess. 15 (1973) [hereinafter 1973 Senate Report].
496 F.2d at 762 (footnote omitted).
Katz was followed by Haas, a post-Eisen decision which directly addressed the issue here and found Eisen not controlling:
381 F.Supp. at 805.
The principal district court opinion under review was issued on March 14, 1975, granting Oriental's motion for summary judgment on Count I, denying Oriental summary judgment on Count II, and certifying Count II as a class action. On March 31, 1975, Oriental moved for reconsideration of the district court's class certification of Count II on the ground that, in the June 1974 hearing on Oriental's motion to dismiss, the district court foreclosed argument on certification. From the bench on the day Oriental's motion for reconsideration was argued, the district court granted an oral motion of the Postows' lawyer for summary judgment as to Count II; that was reaffirmed in a written order the next day. That written order also certified the court's summary judgment rulings on both counts for interlocutory appeal under 28 U.S.C. § 1292(b) and vacated that part of the March 17, 1975 opinion certifying Count II as a class action, pending the interlocutory appeal. The Postows then unsuccessfully moved for reconsideration, specifically bringing Eisen to the district court's attention and offering to withdraw their lawyer's oral motion for summary judgment pending a recertification of the class and notice to its members. This court later denied, as untimely filed, Oriental's petition for leave to file an interlocutory appeal and in December 1975 the district court recertified the class.
At a status conference the district court held on the class notice issue in February 1976, Oriental argued that Eisen precluded class certification, and shortly thereafter Oriental moved to vacate the class action recertification. In March 1976 the district court denied Oriental's motion to vacate the class recertification, concluding that Eisen's comments about the perils of post-judgment certification "address quite different interests than are here at stake." Focusing on Oriental's first filing a motion to dismiss, then on its moving for a stay of discovery relating at least in part to identification of the class, and finally on its voluntarily moving for summary judgment before the court decided its pending motion to dismiss or reached a determination on the class certification issue, the district court concluded that Oriental's actions effectively constituted a waiver of the Rule 23(c) protections. Shortly thereafter, the court approved a notice to be sent to potential class members which did not state that the Postows had prevailed on Count II. The notice in fact recited that those electing to be excluded from the class would not be bound by a judgment "whether favorable or not," and there was a similar disclaimer that those who did not ask to be excluded would be bound "whether [the court's ruling was] favorable or not." J.A. 217. Potential class members were allowed to write the Postows' lawyer for further information, and he was directed to answer in writing only after obtaining court approval of the response, but there is no indication in the district court record that any potential class members wrote the Postows' lawyer or otherwise were informed of the court's ruling on the merits for the Postows before deciding whether to be excluded or to join the action.
In Nye, the Court refused to uphold a statute which "work[s] an arbitrary, unequal and oppressive result ... which shocks the sense of fairness the Fourteenth Amendment was intended to satisfy ...." 260 U.S. at 44-45, 43 S.Ct. at 59. The statute invalidated in Nye required a successful defendant on appeal to pay his adversary's appellate attorneys' fees if the plaintiffs ultimate recovery exceeded what the defendant initially tendered as payment before the litigation began. As the Nye Court remarked: "[W]hat we have here is a requirement that the carrier shall pay the attorneys of the claimant full compensation for their labors in resisting its successful effort on appeal to reduce an unjust and excessive claim against it. This we do not think is fair play." Id. at 47, 43 S.Ct. at 60. That result bears no analogy to this case.
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