Barbee Lyon, et al v. Chase Bank USA, N.A.

Filing

FILED OPINION (ALFRED T. GOODWIN, HARRY PREGERSON and MILAN D. SMITH, JR.) REVERSED AND REMANDED. Judge: ATG Authoring,. We decline to certify Appellants' pro- posed question to the Oregon Supreme Court regarding this claim because existing state precedent guides our decision. FILED AND ENTERED JUDGMENT. [7875564]

Case: 10-35230

08/30/2011

ID: 7875564

DktEntry: 33-1

Page: 1 of 24

FOR PUBLICATION

UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
BARBEE B. LYON and JOAN KRUSE,
Plaintiffs-Appellants,
v.
CHASE BANK USA, N.A.,
Captioned in original complaint as
JP Morgan Chase & Co.,
Defendant-Appellee.

BARBEE B. LYON and JOAN KRUSE,
Plaintiffs-Appellants,
v.
CHASE BANK USA, N.A.,
Captioned in original complaint as
JP Morgan Chase & Co.,
Defendant-Appellee.




No. 10-35230
D.C. No.
3:07-cv-01779-AC





No. 10-35846
D.C. No.
3:07-cv-01779-AC
OPINION



Appeal from the United States District Court
for the District of Oregon
John V. Acosta, Magistrate Judge, Presiding
Argued and Submitted
July 11, 2011—Portland, Oregon
Filed August 30, 2011
Before: Alfred T. Goodwin, Harry Pregerson, and
Milan D. Smith, Jr., Circuit Judges.
Opinion by Judge Goodwin
16531

Case: 10-35230

08/30/2011

ID: 7875564

DktEntry: 33-1

LYON v. CHASE BANK USA

Page: 2 of 24

16535

COUNSEL
Anna K. Sortun (argued), of Tonkon Torp LLP, Portland,
Oregon, for the plaintiffs-appellants.
John L. Langslet (argued), Michael J. Farrell, and Joan L.
Volpert, of Martin, Bischoff, Templeton, Langslet & Hoffman
LLP, Portland, Oregon, for the defendant-appellee.

OPINION
GOODWIN, Senior Circuit Judge:
This case originated with a misunderstanding regarding a
$645 charge on the credit-card bill of Appellant Barbee Lyon.

Case: 10-35230

16536

08/30/2011

ID: 7875564

DktEntry: 33-1

Page: 3 of 24

LYON v. CHASE BANK USA

Appellee Chase Bank USA, N.A. (“Chase”) misidentified the
basis for the charge but failed to respond to Lyon’s requests
for information about it. Chase continued to seek payment and
reported the debt as delinquent to credit agencies, despite
Lyon’s protest. In doing so, Chase admittedly violated multiple sections of the Fair Credit Billing Act (“FCBA”), 15
U.S.C. §§ 1666–1666j.
After unsuccessfully attempting to get a direct response
from Chase, Lyon and his wife filed this action in the District
of Oregon, alleging inter alia claims under the FCBA and
Oregon’s Unlawful Debt Collection Practices Act
(“UDCPA”), Or. Rev. Stat. §§ 646.639–.643. The trial court
dismissed the UDCPA claim and limited Lyon’s total recovery under the FCBA to $1000.
We reverse and remand for further proceedings. The trial
court erred in holding that Appellants failed to state a claim
under the UDCPA. We decline to certify Appellants’ proposed question to the Oregon Supreme Court regarding this
claim because existing state precedent guides our decision. As
to Lyon’s FCBA claims, the trial court erred in requiring evidence of detrimental reliance to support actual damages and
in limiting statutory damages for Chase’s multiple violations
of the FCBA to a single recovery. Finally, the trial court
abused its discretion in denying any award of attorneys’ fees
related to Lyon’s successful claim under the FCBA.
I.
A.

BACKGROUND

The Fair Credit Billing Act, FCBA

Congress enacted the FCBA in order to regulate billing disputes involving “open end consumer credit plans.” See 15
U.S.C. § 1666; Gray v. Am. Express Co., 743 F.2d 10, 13
(D.C. Cir. 1984) (“The Fair Credit Billing Act seeks to prescribe an orderly procedure for identifying and resolving disputes between a cardholder and a card issuer as to the amount

Case: 10-35230

08/30/2011

ID: 7875564

DktEntry: 33-1

LYON v. CHASE BANK USA

Page: 4 of 24

16537

due at any given time.”). If a credit-card holder sends a written notice disputing a charge within sixty days of receiving a
bill, the FCBA requires a credit-card issuer to acknowledge
the dispute within thirty days, investigate the matter, and provide a written explanation of its decision within ninety days.
15 U.S.C. § 1666(a); Am. Express Co. v. Koerner, 452 U.S.
233, 234–37 (1981).
“The creditor must send its explanation before making any
attempt to collect the disputed amount.” Koerner, 452 U.S. at
237; see also 15 U.S.C. § 1666(a)(3)(B). Further, “the card
issuer must notify the cardholder on subsequent statements of
account that he need not pay the amount in dispute until the
card issuer has complied with § 1666.” Gray, 743 F.2d at 14
(citing 15 U.S.C. § 1666(c)(2)). Additionally, “a creditor or
his agent may not directly or indirectly threaten to report to
any person adversely on the obligor’s credit rating . . . and
such amount may not be reported as delinquent to any third
party until the creditor has met [these] requirements.” 15
U.S.C. § 1666a(a). If a creditor fails to comply with any of
these provisions, it is subject to civil liability under 15 U.S.C.
§ 1640 and forfeiture of the disputed amount under § 1666(e).
B.

Oregon’s Unlawful Debt Collection Practices Act,
UDCPA

Oregon enacted the UDCPA to prohibit debt collectors
from using specific abusive practices. See Or. Rev. Stat.
§ 646.639(2) (stating that “[i]t shall be an unlawful collection
practice for a debt collector, while collecting or attempting to
collect a debt” to undertake actions such as to “threaten the
use of force or violence,” “[t]hreaten arrest or criminal prosecution,” or “[u]se profane, obscene or abusive language in
communicating with a debtor”).1 Specifically, Oregon
1

In so doing, the UDCPA mirrors another section of federal consumerprotection statutory scheme, the Fair Debt Collection Practices Act, which
prohibits much of the same conduct under federal law. See 15 U.S.C.
§ 1692d.

Case: 10-35230

16538

08/30/2011

ID: 7875564

DktEntry: 33-1

Page: 5 of 24

LYON v. CHASE BANK USA

Revised Statutes § 646.639(2)(k) prohibits a debt collector
from “[a]ttempt[ing] to or threaten[ing] to enforce a right or
remedy with knowledge or reason to know that the right or
remedy does not exist.”
C.

The Circumstances of the Billing Dispute

In 2003, Barbee Lyon opened a Visa credit-card account
with Chase and identified his wife, Joan Kruse, as an authorized user. In September 2006, Lyon’s wallet was stolen, and
he notified Chase of the theft of the card. Lyon spoke with
Chase’s fraud department to identify fraudulent charges but
advised Chase that a pending $645 charge payable to Resorts
Advantage was a valid, authorized charge. Nonetheless,
Chase declined to make payment on this charge, and after
being contacted by Resorts Advantage, Lyon paid the debt
through a different credit card.
Unbeknownst to Lyon, Chase mistakenly credited his
account $645 during the process of resolving fraudulent
charges and issuing a new account number. To correct this
mistaken credit, Chase added a $645 charge to Lyon’s bill
months later, which it incorrectly identified as a transaction
with Resorts Advantage. After confirming that Resorts
Advantage had not been paid by Chase, Lyon disputed this
charge, not knowing that Chase was attempting to correct its
prior mistake. On April 16, 2007, Chase acknowledged
receipt of the billing dispute and notified Lyon that it was
investigating the matter and would write to respond to his
question.
Chase admits that it never sent a written explanation of the
charge and that it failed to respond to multiple letters Lyon
sent about the issue. Indeed, months after the original notification, Lyon independently determined that the mistaken
credit was the likely basis for the charge and specifically
asked Chase to confirm this. Chase again failed to respond.
Chase admits that it continued to attempt to collect the debt

Case: 10-35230

08/30/2011

ID: 7875564

DktEntry: 33-1

LYON v. CHASE BANK USA

Page: 6 of 24

16539

from Lyon and levied finance charges related to the debt.
Chase also admits that it reported to credit agencies a delinquency by Lyon in paying the debt.
D.

Procedural History

Lyon and Kruse filed this action in the District of Oregon,
alleging violations of the FCBA, a violation of the UDCPA,
defamation of their credit, and intentional infliction of emotional distress. Adopting the findings and recommendation of
the magistrate judge, the district court granted Chase partial
summary judgment. As to the UDCPA claim, the magistrate
judge found that “Plaintiffs have presented evidence which, if
believed by a trier of fact, could be reasonably viewed as constituting ‘coercive and abusive’ methods by Chase to collect
its debts from Plaintiffs.” Nonetheless, the court dismissed the
claim, deciding sua sponte that the language of the complaint
failed to state a claim under Oregon law. As to the FCBA
claims, the district court found that Kruse lacked standing, but
Lyon’s claims under the statute remained alive because Chase
had not contested his standing or FCBA-related allegations.
As to the tort actions, the district court found triable issues of
fact as to defamation but granted Chase summary judgment
on the emotional distress claim.
The parties subsequently agreed to proceed before the magistrate judge, who denied Appellants’ motion to amend their
complaint. Lyon, who is an attorney, had been representing
himself up to this point, but retained separate counsel in
December 2009 as the case neared trial. Chase then moved to
limit argument or evidence of its multiple violations of the
FCBA. While admitting it had violated the FCBA, Chase
argued that “Lyon is precluded from recovering separate statutory penalties for multiple technical violations.” The magistrate judge granted this motion in limine during an initial
pretrial conference without issuing a written order.

Case: 10-35230

16540

08/30/2011

ID: 7875564

DktEntry: 33-1

Page: 7 of 24

LYON v. CHASE BANK USA

Chase further moved to exclude evidence or argument
regarding Lyon’s right to recover actual damages, arguing
that Lyon suffered no out-of-pocket economic loss and that an
award of actual damages under the FCBA requires evidence
of detrimental reliance. The magistrate judge stated during the
pretrial conference that “Lyon’s [non-attorney] time and its
value does constitute an item of special or actual damage.”2
Nonetheless, the court held that Lyon had to provide evidence
of detrimental reliance in order to support an award of actual
damages resulting from Chase’s violations of the FCBA.
Because Lyon had not relied on information from Chase, as
Chase had provided none, the court granted the motion.
The magistrate judge subsequently allowed Chase to amend
its answer to admit liability under the FCBA up to a $1000
maximum statutory penalty. Accordingly, only Appellants’
defamation claim was presented to the jury, which rendered
a verdict in favor of Chase. Although the magistrate judge
entered judgment in favor of Lyon as to his FCBA claims, his
recovery was limited to $1000 in statutory damages and an
award of reasonable attorneys’ fees.
Lyon moved for an award of $37,087 in attorneys’ fees,
based on the work of his separate counsel before and during
trial in pursuing both the FCBA and defamation claims. While
finding the requested hourly rate reasonable, the court stated
that it would grant fees only for work related to Lyon’s
attempted recovery of multiple statutory penalties under the
FCBA, not for any other FCBA-related work. The court
found, however, that the billing statements presented in support of the fees did not separately identify “work related to
2

Filed within the district court docket, there is a partial transcript of the
pretrial conference at which the magistrate judge ruled on Chase’s motions
in limine. Official Court Transcript of Proceedings, District of Oregon
Case No. 07-1779, Docket No. 119 (April 9, 2010). As part of the district
court record, we rely on this transcript even though it has not been provided by the parties as part of the excerpts of record. See Fed. R. App. P.
10(a)(2).

Case: 10-35230

08/30/2011

ID: 7875564

DktEntry: 33-1

LYON v. CHASE BANK USA

Page: 8 of 24

16541

pursuing multiple statutory penalties for violations of the
FCBA.” The magistrate judge concluded that the billing statements therefore did not meet the level of specificity for fee
petitions recommended by the District of Oregon.3 On this
basis, the court decided that it was “unable to award such fees
because the billing statement is insufficiently specific.” The
magistrate judge then denied Lyon’s request for attorneys’
fees completely.
II.

DISCUSSION

Arguing that the district court misconstrued the basis of
their UDCPA claim, Appellants first contend that the district
court erred in deciding that they failed to state a claim under
Oregon law. Further, they ask this court to certify the following question to the Oregon Supreme Court: “whether a creditor violates Oregon[’s] UDCPA when its attempt to collect a
debt is prohibited by [the] FCBA.” As to Lyon’s claims under
the FCBA, he contends that the magistrate judge erred by
requiring evidence of detrimental reliance to support actual
damages and by restricting statutory damages to a single penalty. Finally, Lyon argues that the magistrate judge abused his
discretion in denying any award of attorneys’ fees related to
his FCBA claims.
3

On the website for the District of Oregon, the district court has posted
a message regarding fee petitions, which states in relevant part: “Increasingly, the Court has reviewed fee petitions where all or a substantial part
of an attorney’s time for one day is billed as a ‘block’ without segregating
time for individual tasks. This makes assessing the reasonableness of the
time spent on a particular task extremely difficult. The Court recommends
that members of the bar record time spent on particular, individual tasks
and support their fee petitions with a level of documentation that allows
the Court, and opposing counsel, to adequately review the reasonableness
of the time spent on a single task.” U.S. District Court for the District of
Oregon, Message from the Court Regarding Fee Petitions,
http://www.ord.uscourts.gov/court-policies/message-from-the-courtregarding-fee-petitions (last visited July 6, 2011).

Case: 10-35230

16542

A.

08/30/2011

ID: 7875564

DktEntry: 33-1

Page: 9 of 24

LYON v. CHASE BANK USA

Standard of Review

While neither the magistrate judge nor the district court
identified the procedural basis for the sua sponte dismissal of
Appellants’ UDCPA claim, we construe the dismissal for failure to state a claim as being made under Rule 12(c) of the
Federal Rules of Civil Procedure. See Fed. R. Civ. P. 12(c)
(“After the pleadings are closed—but early enough not to
delay trial—a party may move for judgment on the pleadings.”); Dworkin v. Hustler Magazine, Inc., 867 F.2d 1188,
1192 (9th Cir. 1989) (noting that pre-answer dismissal for
failure to state a claim under Rule 12(b)(6) is “functionally
identical” to a post-answer dismissal under Rule 12(c)). We
review judgments on the pleadings made under Rule 12(c) de
novo. Ileto v. Glock, Inc., 565 F.3d 1126, 1131 (9th Cir. 2009)
(citing Fajardo v. Cnty. of L.A., 179 F.3d 698, 699 (9th Cir.
1999)). “ ‘A judgment on the pleadings is properly granted
when, taking all the allegations in the pleadings as true, [a]
party is entitled to judgment as a matter of law.’ ” Dunlap v.
Credit Prot. Ass’n, L.P., 419 F.3d 1011, 1012 n.1 (9th Cir.
2005) (per curiam) (quoting Owens v. Kaiser Found. Health
Plan, Inc., 244 F.3d 708, 713 (9th Cir. 2001)).
Because the magistrate judge’s rulings on Chase’s motions
in limine were based on statutory interpretation and Ninth Circuit precedent, we review these questions of law de novo. See
Wolfson v. Brammer, 616 F.3d 1045, 1053 (9th Cir. 2010);
Harper v. U.S. Seafoods LP, 278 F.3d 971, 973 (9th Cir.
2002). We review the denial of an award of attorneys’ fees for
an abuse of discretion. St. John’s Organic Farm v. Gem Cnty.
Mosquito Abatement Dist., 574 F.3d 1054, 1058 (9th Cir.
2009).
B.

Appellants’ Claim under the UDCPA

[1] As noted, Oregon enacted the UDCPA to prohibit debt
collectors in the state from using certain abusive collection
practices. See Or. Rev. Stat. § 646.639(2). Specifically,

Case: 10-35230

08/30/2011

ID: 7875564

DktEntry: 33-1

LYON v. CHASE BANK USA

Page: 10 of 24

16543

§ 646.639(2)(k)
prohibits
a
debt
collector
from
“[a]ttempt[ing] to or threaten[ing] to enforce a right or remedy with knowledge or reason to know that the right or remedy does not exist . . . .”
[2] Appellants’ complaint states that Chase “violated Oregon Revised Statutes [§] 646.639(2)(k) by attempting to collect a debt when it knew or had reason to know that its right
to do so did not exist.” In support, the complaint alleges that
Chase failed to comply with the requirement under 15 U.S.C.
§ 1666(a) that it provide a written explanation for a properly
disputed debt. The complaint further alleges that Chase was
prohibited under the FCBA from attempting to collect the disputed debt. It also alleges that Chase was prohibited under
§ 1666a from reporting the debt as delinquent to credit agencies. In short, Appellants’ UDCPA claim is predicated on
Chase’s violation of the FCBA and the federal statute’s
restrictions on Chase’s right to attempt to collect the debt or
report it as delinquent.
[3] In Isom v. Portland General Electric Co., 677 P.2d 59,
65 (Or. Ct. App. 1983), the Oregon Court of Appeals held that
plaintiffs stated a valid claim to relief under § 646.639(2)(k)
where a bill collector took actions related to their debts that
were prohibited by separate federal and state statutes. See also
Porter v. Hill, 838 P.2d 45, 49 (Or. 1992) (citing Isom as a
correct application of § 646.639(2)(k)). The plaintiffs in Isom
alleged that Portland General Electric (“PGE”) violated
§ 646.639(2)(k) because it “insisted on full payment [of utility
bills] instead of explaining the option of partial payment [as
required under Oregon Revised Statutes § 757.760(2)], . . .
asserted a right to plaintiffs’ full cash payment which, under
the Low Income Energy Assistance Act [42 U.S.C. §§ 8621
et seq.], they knew did not exist and terminated service
despite full payment.” 677 P.2d at 64. The court held “a jury
could find PGE attempted to or threatened to enforce the right
to terminate service when it had reason to believe that the
right to terminate was not available because plaintiffs quali-

Case: 10-35230

16544

08/30/2011

ID: 7875564

DktEntry: 33-1

Page: 11 of 24

LYON v. CHASE BANK USA

fied for legislatively mandated relief.” Id. at 65 (emphasis
added).
[4] Under the analysis adopted in Isom, Appellants have
stated a valid claim for relief under § 646.639(2)(k). Pursuant
to the requirements imposed under the FCBA, Chase did not
have the right to attempt to collect the disputed charge or to
report it to credit agencies as delinquent without first providing a written explanation. See 15 U.S.C. §§ 1666(a), 1666a(a);
Koerner, 452 U.S. at 237. By asserting rights through the
actions of its collections agents when it had reason to know
of the relevant restrictions imposed by the FCBA, Chase
could be found to have violated Oregon Revised Statutes
§ 646.639(2)(k). Because this result is controlled by Isom, we
conclude that certification of Appellants’ proposed question
to the Oregon Supreme Court is unwarranted, and deny the
motion on this basis.4 See Or. Rev. Stat. § 28.200 (stating that
the Oregon Supreme Court may answer certified questions of
law only when “there is no controlling precedent in the decisions of the Supreme Court and the intermediate appellate
courts of this state”); see also Estrella v. Brandt, 682 F.2d
814, 817 (9th Cir. 1982) (“An intermediate state appellate
court decision is a ‘datum for ascertaining state law which is
not to be disregarded by a federal court unless it is convinced
by other persuasive data that the highest court of the state
would decide otherwise.’ ” (quoting West v. A.T.&T. Co., 311
U.S. 223, 237 (1940)).
[5] The district court erred by suggesting that “Plaintiffs
premise their Oregon UDCPA claim on the fact that there was
no underlying debt, which allegations do not invoke the
4

We note, however, that the parties have not addressed whether every
separate provision of the FCBA at issue here could support separate violations of § 646.639(2)(k). Because this issue was not raised before the trial
court, we deny this motion without prejudice to subsequent certification
should unaddressed aspects of Appellants’ claim prove distinguishable
from our holding here.

Case: 10-35230

08/30/2011

ID: 7875564

DktEntry: 33-1

LYON v. CHASE BANK USA

Page: 12 of 24

16545

UDCPA’s coverage.” The district court is correct that
§ 646.639(2)(k) does not protect against efforts to collect a
nonexistent debt. See Porter, 838 P.2d at 48–49 (“The statute
proceeds from the assumption that a debt does (or might) exist
and prohibits the debt collector from using unfair practices to
collect it. Nothing in the statute evidences a legislative concern with the existence or amount of the underlying debt, as
distinct from the use of abusive methods to pressure debtors
to pay their debts.”). There is no allegation in the complaint,
however, that suggests the disputed $645 amount was not
owed at all. To the contrary, the complaint includes a letter
Lyon sent to Chase in which he asks it to confirm what we
now know to be correct: that the $645 charge was added to
his bill in order to correct a mistaken $645 credit Chase had
previously applied. In determining whether a complaint states
a plausible claim to relief, a court must “ ‘accept the plaintiffs’ allegations as true and construe them in the light most
favorable to plaintiffs.’ ” N.M. State Inv. Council v. Ernst &
Young LLP, 641 F.3d 1089, 1094 (9th Cir. 2011) (quoting
Gompper v. VISX, Inc., 298 F.3d 893, 895 (9th Cir. 2002)).
Seen in the light most favorable to the Appellants, the allegations in the complaint suggest that the $645 was owed due to
the mistaken credit, but that Chase failed to provide the
required clarification of the charge and was therefore prohibited from attempting to collect it or report it as delinquent.
[6] Because this conduct by Chase violates the FCBA
whether or not the debt was owed, Appellants’ claim does not
violate the decision in Porter. See 838 P.2d at 48–49. The
Oregon Supreme Court held that § 646.639(2)(k) should be
“read to prohibit certain methods of collecting a debt, such as
enforcing a right collateral to the debt in order to pressure the
debtor to pay the debt.” Id. at 49. Congress’s clear intent in
adopting the FCBA was to prevent a creditor from simply
ignoring a billing dispute when attempting to collect a debt.
See 15 U.S.C. § 1601(a) (stating that the purpose of the statute
is “to protect the consumer against inaccurate and unfair
credit billing and credit card practices”). The ultimate validity

Case: 10-35230

16546

08/30/2011

ID: 7875564

DktEntry: 33-1

Page: 13 of 24

LYON v. CHASE BANK USA

of a disputed charge does not relieve a creditor of the obligations and restrictions imposed under the FCBA. Accordingly,
the statute’s restrictions fit within Porter’s interpretation of
§ 646.639(2)(k) as “prohibit[ing] certain methods of collecting a debt.” 838 P.2d at 49. We therefore reverse the district
court’s dismissal of Appellants’ UDCPA claim and remand
this claim for further proceedings.
C.

Actual Damages Resulting from Violations of the
FCBA

[7] Chase admits that it violated the FCBA by failing to
provide a written explanation in response to Lyon’s billing
dispute. See 15 U.S.C. § 1666(a). Chase further admits that
because no explanation was provided, it also violated the
FCBA by attempting to collect the disputed charge and
reporting it as delinquent to credit agencies. See 15 U.S.C.
§§ 1666(a)(3)(B), 1666a(a). Pursuant to 15 U.S.C.
§ 1640(a)(1), a creditor who fails to comply with “any
requirement” imposed under the FCBA is liable for “any
actual damage sustained by [the plaintiff] as a result of the
failure.” The magistrate judge found that Lyon’s loss of personal time in trying to resolve the disputed charge “constitute[d] an item of special or actual damage.”5 Chase argues,
however, that Lyon cannot recover actual damages because
Ninth Circuit precedent requires evidence of detrimental reliance for any such recovery under § 1640(a)(1). We hold that
evidence of detrimental reliance is not required to support an
award of actual damages resulting from violations of 15
U.S.C. § 1666 or § 1666a.
5

Chase has not directly contested this finding, and we will not address
it sua sponte. As an alternative basis on which we might affirm, however,
Chase contends there is insufficient evidence to support an award of actual
damages. This factual claim contradicts the magistrate judge’s finding.
Due to the limited evidentiary record presented here, we cannot evaluate
Chase’s argument and decline to address it. Cf. Canyon Cnty. v. Syngenta
Seeds, Inc., 519 F.3d 969, 975 (9th Cir. 2008) (noting that we may affirm
a dismissal of relief on “any ground supported by the record”).

Case: 10-35230

08/30/2011

ID: 7875564

DktEntry: 33-1

LYON v. CHASE BANK USA

Page: 14 of 24

16547

[8] Chase mistakenly suggests—and the magistrate
appears to have accepted—that our holding in Gold Country
Lenders v. Smith (In re Smith), 289 F.3d 1155, 1157 (9th Cir.
2002) (per curiam), applies to Lyon’s claims under the FCBA.
In re Smith addressed whether a plaintiff could recover actual
damages under § 1640(a)(1) based on a creditor’s violations
of the Truth in Lending Act (“TILA”) under § 1638(a)(3) and
(4) for failing “to conspicuously disclose and define the
‘finance charge’ and ‘annual percentage rate’ ” of a credit
transaction. 289 F.3d at 1156. We held that a bankruptcy
claimant could not recover actual damages because she failed
to present evidence of her detrimental reliance on the inadequate financing terms presented to her at the time of the loan
agreement. Id. at 1157. Agreeing with the other circuits that
have addressed the issue, we concluded that without evidence
of detrimental reliance, the claimant could not satisfy the causation element necessary to support actual damages under
§ 1640(a)(1):
We join with other circuits and hold that in order to
receive actual damages for a TILA violation, i.e., “an
amount awarded to a complainant to compensate for
a proven injury or loss,” Black’s Law Dictionary 394
(7th ed. 1999) (emphasis added), a borrower must
establish detrimental reliance. Without any evidence
in the record to show that Smith would either have
secured a better interest rate elsewhere, or foregone
the loan completely, her argument must fail—she
presents no proof of any detrimental reliance, i.e.,
any actual damage.
Id. (citing Turner v. Beneficial Corp., 242 F.3d 1023, 1028
(11th Cir. 2001) (en banc) (addressing class claim to actual
damages based on TILA disclosure violations and holding
“that detrimental reliance is an element of a TILA claim for
actual damages, that is a plaintiff must present evidence to
establish a causal link between the financing institution’s noncompliance and his damages”); Perrone v. Gen. Motors

Case: 10-35230

16548

08/30/2011

ID: 7875564

DktEntry: 33-1

Page: 15 of 24

LYON v. CHASE BANK USA

Acceptance Corp., 232 F.3d 433, 436–40 (5th Cir. 2000)
(addressing class claim to actual damages based on TILA disclosure violation and disclosure violations under the Consumer Leasing Act, which also relies on § 1640 for civil
liability); Stout v. J.D. Byrider, 228 F.3d 709, 718 (6th Cir.
2000) (affirming denial of class certification based in part on
TILA disclosure violations because individual reliance on disclosures precluded certification); and Peters v. Jim Lupient
Oldsmobile, Co., 220 F.3d 915, 917 (8th Cir. 2000) (addressing failure to adequately disclose commission related to sale
of insurance policies as required under the TILA at
§ 1638(a)(2)(B)(iii))). We subsequently reapplied this holding
in McDonald v. Checks-N-Advance, Inc. (In re Ferrell), 539
F.3d 1186, 1192 (9th Cir. 2008) (per curiam), another action
involving the TILA’s specific disclosure requirements under
§ 1632(a) and § 1638(a) related to finance charges.
[9] Notably, In re Smith—as well as the out-of-circuit
decisions that it follows— involves TILA violations, not violations of the FCBA. While the FCBA is technically an addition to the TILA, both statutes are part of the larger statutory
scheme of the Consumer Credit Protection Act, 15 U.S.C.
§§ 1601–1693r.6 Although both statutes rely on § 1640 to
delineate civil liability, they differ in ways that affect the
application of § 1640. Accordingly, Chase’s suggestion that
6

The broader Consumer Credit Protection Act includes the Truth in
Lending Act, 15 U.S.C. §§ 1601–1665e; the Fair Credit Billing Act, 15
U.S.C. §§ 1666–1666j; the Consumer Leasing Act, 15 U.S.C.
§§ 1667–1667f; the Credit Repair Organizations Act, 15 U.S.C.
§§ 1679–1679j; the Fair Credit Reporting Act, 15 U.S.C. §§ 1681–1681x;
the Equal Credit Opportunity Act, 15 U.S.C. §§ 1691–1691f; and the Electronic Funds Transfer Act, 15 U.S.C. §§ 1693–1693r. Rouse v. Law
Offices of Rory Clark, 603 F.3d 699, 706 (9th Cir. 2010). Many of the provisions within the Consumer Credit Protection Act overlap, relying upon
each other as well as agency regulations promulgated to implement them.
Indeed, Judge Kleinfeld recently referred to this series of statutes as being
“like Russian matryoshka dolls, stacked one within another.” Edwards v.
Wells Fargo & Co., 606 F.3d 555, 557 n.7 (9th Cir. 2010).

Case: 10-35230

08/30/2011

ID: 7875564

DktEntry: 33-1

LYON v. CHASE BANK USA

Page: 16 of 24

16549

all precedent related to the TILA applies with equal force to
the FCBA is an oversimplification of the relevant statutes.
Because “[t]he purpose of the TILA is to promote the
‘informed use of credit’ by consumers,” Anderson Bros. Ford
v. Valencia, 452 U.S. 205, 219 (1981) (quoting 15 U. S. C.
§ 1601), the TILA’s requirements principally focus on disclosures that creditors must make when offering credit. See 15
U.S.C. § 1601(a) (“It is the purpose of this subchapter 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,
and to protect the consumer against inaccurate and unfair
credit billing and credit card practices.”); 15 U.S.C. § 1637(a)
(enumerating “[r]equired disclosures” to be made by a creditor to a consumer before an open end consumer credit account
can be opened, including disclosures related to billing disputes); 15 U.S.C. § 1638(a) (enumerating “required disclosures” to be made by a creditor for other consumer credit
transactions). The FCBA, on the other hand, does not mandate
disclosures to be made before credit is offered, rather it outlines procedures and limitations to be followed by creditors
during a billing dispute involving an already opened consumer account. See 15 U.S.C. §§ 1666–1666j. Indeed, while
a creditor must disclose some of its obligations under the
FCBA before opening an open end consumer credit account,
these disclosure requirements are contained within the TILA.
See 15 U.S.C. § 1637(a)(7), (b)(10).
[10] Whether “detrimental reliance” has anything to do
with causation to support an award of actual damages resulting from violations of the FCBA appears to be a question of
first impression. We conclude that applying such a requirement to the FCBA violations admitted here would distort the
analysis of causation and thereby contradict the purpose of
§ 1640(a)(1). As noted, § 1666(a)(3)(B) requires a creditor
who is timely notified of a billing dispute to either “make
appropriate corrections in the account of the obligor” or “send
a written explanation or clarification to the obligor.” Chase

Case: 10-35230

16550

08/30/2011

ID: 7875564

DktEntry: 33-1

Page: 17 of 24

LYON v. CHASE BANK USA

did neither and then undertook collection actions prohibited
by the statute if it did not meet this obligation. See 15 U.S.C.
§§ 1666(a)(3)(B), 1666a(a). There is simply no relevant disclosure or conduct under these circumstances that Lyon could
have relied upon. Thus, Lyon’s lack of detrimental reliance is
immaterial to a determination of whether Chase’s violations
resulted in actual damages. If Chase’s argument were to be
followed in cases of defiant refusal to comply with
§ 1666(a)(3)(B), the bank has discovered that silence is truly
golden.
To require evidence of detrimental reliance on an unmade
explanation would necessarily bar recovery of actual damages
because such evidence could never exist. Consumers cannot
rely on unmade explanations, and creditors could simply
avoid actual damages under the FCBA by never responding
to billing disputes—the exact conduct the statute aims to prevent. Such an irrational requirement would contradict the
express language of § 1640(a)(1) that a civil plaintiff can
recover actual damages resulting from any violation of the
FCBA. See Anderson v. United States, 803 F.2d 1520, 1523
(9th Cir. 1986) (stating courts have an “ ‘obligation to so construe federal statutes so that they are consistent with each
other,’ ” quoting Get Oil Out! Inc. v. Exxon Corp., 586 F.2d
726, 729 (9th Cir. 1978)). Accordingly, we hold that evidence
of detrimental reliance is not required to support an award of
actual damages resulting from violations of 15 U.S.C. § 1666
or § 1666a. We reverse the magistrate judge’s order denying
an award of actual damages resulting from Chase’s FCBA
violations and remand this issue for further proceedings.
D.

Statutory Damages for Multiple Violations of the
FCBA

[11] Pursuant to 15 U.S.C. § 1640(a)(2), a creditor who
fails to comply with “any requirement imposed” under the
TILA, the FCBA, or the Consumer Leasing Act is liable for
an award of statutory damages. “[I]n the case of an individual

Case: 10-35230

08/30/2011

ID: 7875564

DktEntry: 33-1

LYON v. CHASE BANK USA

Page: 18 of 24

16551

action,” the amount of the statutory penalty is “twice the
amount of any finance charge in connection with the transaction.” 15 U.S.C. § 1640(a)(2)(A)(i) (2007).
[12] Under § 1640(g), however, Congress expressly limited a plaintiff’s recovery for multiple violations of these statutes where the violations involved “multiple failures to
disclose.” This subsection states:
The multiple failure to disclose to any person any
information required under [the TILA, the FCBA, or
the Consumer Leasing Act] to be disclosed in connection with a single account under an open end consumer credit plan . . . shall entitle the person to a
single recovery under this section but continued failure to disclose after a recovery has been granted
shall give rise to rights to additional recoveries.
15 U.S.C. § 1640(g) (2007).
[13] Chase contends that all of its FCBA violations are
covered by § 1640(g) and that Lyon’s recovery of statutory
damages is therefore limited to a single penalty. There is no
question that § 1640(g) applies to limit a plaintiff’s recovery
based on “multiple failures to disclose” credit terms specified
by the TILA. See St. Germain v. Bank of Haw., 573 F.2d 572,
577 n.7 (9th Cir. 1977) (“The failure to disclose the existence
of an acceleration clause was only one of several violations of
TILA alleged by plaintiff. Since multiple failures to disclose
in any single credit sale transaction give rise to only one
recovery (15 U.S.C. § 1640(g)) our resolution of the acceleration clause issue obviates the need to consider St. Germain’s
other claims.”), abrogated in part on other grounds by Ford
Motor Credit Co. Milhollin, 444 U.S. 555, 559 (1980). As
discussed previously, however, the requirements of the TILA

Case: 10-35230

16552

08/30/2011

ID: 7875564

DktEntry: 33-1

Page: 19 of 24

LYON v. CHASE BANK USA

and the FCBA differ in ways that substantively affect the
application of § 1640.7
The determinative question here is whether the specific
FCBA violations alleged by Lyon constitute failures to disclose required information covered by § 1640(g). This a question of first impression that has not been addressed by other
circuits.8 Based on the FCBA violations alleged here, we conclude that Lyon’s recovery of statutory damages is not limited
by § 1640(g).
7

Chase largely relies on cases applying § 1640(g) to multiple violations
of the TILA, again suggesting that the FCBA and the TILA are indistinguishable. See, e.g., Jackson v. Columbus Dodge, Inc., 676 F.2d 120, 121
(5th Cir. 1982); Turner v. Firestone Tire & Rubber Co., 537 F.2d 1296,
1297–98 (5th Cir. 1976); Tinsman v. Moline Beneficial Fin. Co., 531 F.2d
815, 819 (7th Cir. 1976). For the reasons discussed, these TILA cases are
inapposite to a determination of whether § 1640(g) applies to multiple violations of the FCBA.
8
The parties have identified three out-of-circuit district court cases that
have addressed the application of § 1640(g) to violations of the FCBA.
See Belmont v. Assocs. Nat’l Bank (Del.), 219 F. Supp. 2d 340, 343–46
(E.D.N.Y. 2002) (finding that § 1640(g) did not apply to FCBA violations
under § 1666 and § 1666a); Tweedy v. RCAM Title Loans, LLC, 611 F.
Supp. 2d 603, 606–607 (W.D. Va. 2009) (finding that § 1640(g) did apply
to FCBA violations under § 1666b(a)); Gengo v. Target Nat’l Bank, No.
H-06-340 (S.D. Texas Jun. 13, 2007) (unpub.) (finding that § 1640(g) did
apply to multiple undefined FCBA violations, which the district court
characterized as “failing to respond to billing error notices”). The district
court in Belmont suggested that its analysis conflicts with the circuit decisions in Murray v. Amoco Oil Co., 539 F.2d 1385, 1387 n.4 (5th Cir.
1976) (per curiam) and Strange v. Monogram Credit Card Bank, 129 F.3d
943, 947 (7th Cir. 1997). These cases are not relevant to the question here,
however. In Strange, the Seventh Circuit held that the minimum and maximum penalty specified under § 1640(a)(2)(A)(ii) applies to violations of
§ 1666. 129 F.3d at 947. Although multiple violations of § 1666 were
alleged, id. at 944–45, the plaintiff did not appeal the award of only a single statutory penalty, and the Seventh Circuit never addressed the applicability of § 1640(g). In Murray, the Fifth Circuit referenced § 1640(g) in
only a brief footnote, stating in dicta that § 1640(g) would limit the plaintiff’s recovery for alleged multiple failures to send monthly billing and
finance statements as required under the TILA pursuant to § 1637(b). 539
F.2d 1385, 1387 n.4. Accordingly, we do not address these decisions.

Case: 10-35230

08/30/2011

ID: 7875564

DktEntry: 33-1

LYON v. CHASE BANK USA

Page: 20 of 24

16553

[14] Lyon’s complaint specifically alleges that Chase violated § 1666(a), (c), (e), and § 1666a(a) by (1) failing “to provide a written explanation or clarification of the billing error,”
(2) making “multiple attempts to collect the disputed charge,”
and (3) “threatening to report, and actually reporting, the disputed charge” to credit agencies. We first note that the relevant language of these FCBA subsections does not use the
word “disclosure.”9 Section 1666(a)(3)(B) requires a creditor
who is timely notified of a billing dispute either to “make
appropriate corrections in the account of the obligor” or to
“send a written explanation or clarification to the obligor.”
Section 1666(a)(3)(B) also requires that the creditor send the
explanation or clarification “prior to taking any action to collect the amount.” Finally, § 1666a(a) states that “a creditor or
his agent may not directly or indirectly threaten to report to
any person adversely on the obligor’s credit rating or credit
standing because of the obligor’s failure to pay . . . , and such
amount may not be reported as delinquent to any third party
until the creditor has met the requirements of [15 U.S.C.
§ 1666].” Accordingly, the language of the relevant FCBA
subsections does not indicate Chase’s violations would
involve disclosures covered under § 1640(g).10
9

There is a single use of the word “disclosure” within § 1666(a), where
the statute details the requirements for a valid notice of dispute by the
obligor to the creditor. Even this use of the word “disclosure” refers to the
requirements imposed by the TILA at § 1637(a)(7) regarding billing statements, however. The word “disclosure” is used nowhere else within
§ 1666 or § 1666a.
10
We further note that the section of the Consumer Credit Protection
Act that defines the terms used throughout both the TILA and the FCBA
does not indicate that the subsections at issue here involve a “material disclosure.” See 15 U.S.C. § 1602(u) (2007) (defining a “material disclosure”
as “the disclosure, as required by this subchapter [15 U.S.C. §§ 1601 et
seq.], of the annual percentage rate, the method of determining the finance
charge and the balance upon which a finance charge will be imposed, the
amount of the finance charge, the amount to be financed, the total of payments, the number of and amount of payments, the due dates or periods
of payments scheduled to repay the indebtedness . . . .”). The statute provides no definition for a non-material disclosure.

Case: 10-35230

16554

08/30/2011

ID: 7875564

DktEntry: 33-1

Page: 21 of 24

LYON v. CHASE BANK USA

[15] If it intended to assert a right to the $645 charge, however, Chase would have been required under
§ 1666(a)(3)(B)(ii) to provide information, namely the “written explanation or clarification” of the billing dispute. While
this subsection might be considered a disclosure requirement,
Lyon alleges only a single violation of it. Therefore, even if
we were to hold that violations of this specific provision were
covered under § 1640(g), Chase’s other violations of the
FCBA would also have to be covered under § 1640(g) in
order for statutory damages to be limited to a single penalty.
[16] The FCBA’s requirements that a creditor not attempt
to collect or to report a disputed debt as delinquent before satisfying its obligations under § 1666(a) are not violated simply
by a failure to provide information. While Chase’s failure to
correct the account or provide a written explanation of the disputed charge is a predicate for its further violations, Chase
would not have committed multiple violations of the FCBA
absent the affirmative steps it took to collect and report on the
disputed charge. Collection actions and adverse credit reports
simply cannot be construed as failures to disclose required
information. See 15 U.S.C. § 1640(g). Accordingly, these violations of the FCBA are not subject to the single-recovery
limitation under § 1640(g).
[17] Chase’s argument that § 1640(g) applies uniformly to
any violation of the FCBA simply ignores the language and
structure of § 1640, which narrows the application of the
single-recovery provision to a subset of violations involving
failures to disclose. “In construing a statute we are obliged to
give effect, if possible, to every word Congress used.” Reiter
v. Sonotone Corp., 442 U.S. 330, 339 (1979); see also Clark
v. Capital Credit & Collection Servs., 460 F.3d 1162, 1175
(9th Cir. 2006) (applying rule of statutory interpretation that
“statutes should not be construed in a manner which robs specific provisions of independent effect”) (citation and internal
quotation marks omitted). Subsection 1640(a)(2)—which outlines the statutory penalty amounts for “any requirement

Case: 10-35230

08/30/2011

ID: 7875564

DktEntry: 33-1

LYON v. CHASE BANK USA

Page: 22 of 24

16555

imposed”—does not indicate that a creditor who committed
multiple violations of the FCBA is liable only for a single
statutory penalty. To the contrary, § 1640(g) indicates that the
single-recovery limitation applies to only a subset of these
violations that involve “failure to disclose to any person any
information required” under the covered statutes. To read the
single-recovery limitation as applying to any requirement of
the FCBA would ignore the language of § 1640(g) restricting
this limitation to disclosure violations.
Further, “[w]e start with the premise that ‘the words of a
statute must be read in their context and with a view to their
place in the overall statutory scheme.’ ” Am. Bankers Ass’n v.
Gould, 412 F.3d 1081, 1086 (9th Cir. 2005) (quoting Food &
Drug Admin. v. Brown & Williamson Tobacco Corp., 529
U.S. 120, 133 (2000)). “Our goal in interpreting a statute is
to understand the statute ‘as a symmetrical and coherent regulatory scheme’ and to ‘fit, if possible, all parts into a . . . harmonious whole.’ ” Id. (quoting Brown & Williamson Tobacco
Corp., 529 U.S. at 133). Congress could have uniformly
applied the single-recovery limitation by including it at
§ 1640(a)(2), where the range for statutory penalties is specified. Congress did not do so. By codifying the single-recovery
limitation in a separate subsection at § 1640(g), Congress
underscored its application to a particular subset of the
requirements imposed under the relevant statutes, namely
those dealing specifically with disclosures.
[18] Finally, Chase’s argument that allowing separate statutory penalties for its multiple violations of the FCBA will
lead to a flood of consumer-created claims is without merit.
The FCBA violations supporting liability here are the direct
result of Chase’s own business conduct. These violations cannot be attributed to Lyon, who simply sought an explanation
that should be reasonably expected even without statutory
requirements.
Even if we were to agree with Chase’s policy concern, we
do not have the authority to rewrite § 1640 in order to shield

Case: 10-35230

16556

08/30/2011

ID: 7875564

DktEntry: 33-1

Page: 23 of 24

LYON v. CHASE BANK USA

Chase from statutory damages resulting from its multiple violations of the FCBA. We note that the statute already limits
a creditor’s liability where errors are timely corrected, 15
U.S.C. § 1640(b), where violations were unintentional,
§ 1640(c), or where a creditor made a good-faith effort to
comply with the statute, § 1640(f). Chase has not sought to
invoke any of these protections. While § 1640 does not cap
statutory damages for multiple non-disclosure violations of
the FCBA, Chase itself can control the extent of its future liability by simply adhering to the requirements imposed by
Congress.
For these reasons, we hold that Lyon’s recovery of statutory damages resulting from Chase’s multiple violations of
the FCBA is not limited to a single statutory penalty under
§ 1640(g). We therefore reverse the magistrate judge’s order
as to statutory damages and remand for further proceedings.
While Chase admitted violating the FCBA as alleged in the
complaint, we note that Chase has not admitted the number of
violations or the factual basis for its violations. These issues
will have to be addressed on remand.
E.

Attorneys’ Fees under the FCBA

[19] Pursuant to 15 U.S.C. § 1640(a)(3), “in the case of
any successful action to enforce” a creditor’s liability under
the FCBA, the plaintiff is also entitled to “a reasonable attorney’s fee as determined by the court.” There was no dispute—
even before this appeal—that Lyon’s FCBA claims were successful and that he is entitled to recover reasonable attorneys’
fees under § 1640(a)(3). An award of attorneys’ fees under
§ 1640(a)(3) is properly calculated through a lodestar analysis, in which the court determines a reasonable rate and multiplies it by the number of attorney hours reasonably expended
on the case. See generally Caudle v. Bristow Optical Co., 224
F.3d 1014, 1028–29 (9th Cir. 2000).

Case: 10-35230

08/30/2011

ID: 7875564

DktEntry: 33-1

LYON v. CHASE BANK USA

Page: 24 of 24

16557

[20] While accepting Lyon’s proposed rate as reasonable,
the magistrate judge determined that Lyon could only recover
fees for specific aspects of his FCBA claims. Following our
decision here, however, Lyon has succeeded on all aspects of
his FCBA claims pursued up to this point in the litigation.
Accordingly, Lyon is entitled to recover reasonable attorneys’
fees incurred for all work undertaken in pursuit of his FCBA
claims up to now, including those fees incurred as part of this
appeal. We therefore reverse the magistrate judge’s order and
remand the issue of attorneys’ fees for further proceedings.
Although Lyon has now conceded that he may not recover
fees incurred during the trial—which involved only the unsuccessful defamation claim—he is entitled to recover a portion
of those fees incurred for pre-trial tasks that related to both his
FCBA and defamation claims. See Hensley v. Eckerhart, 461
U.S. 424, 434–35 (1983); Traditional Cat Ass’n v. Gilbreath,
340 F.3d 829, 833–35 (9th Cir. 2003).11 The fee award may
be reduced if Lyon’s renewed request is supported only by
block-billing statements of the relevant activity, although a
fee award cannot be denied on this basis. See Mendez v. Cnty.
of San Bernardino, 540 F.3d 1109, 1128–29 (9th Cir. 2008);
Welch v. Metro. Life Ins. Co., 480 F.3d 942, 948–49 (9th Cir.
2007). These issues will have to be addressed on remand.
III.

CONCLUSION

For the foregoing reasons, we REVERSE and REMAND
this case for further proceedings.
11

Although it may be difficult to apportion recoverable attorney work
and non-recoverable attorney work, the inherent difficulty of this relatedness analysis is not a basis upon which a trial court may deny an award
of attorneys’ fees. See Gilbreath, 340 F.3d at 834–35; Gracie v. Gracie,
217 F.3d 1060, 1050 (9th Cir. 2000) (“We hold, however, that the impossibility of making an exact apportionment does not relieve the district
court of its duty to make some attempt to adjust the fee award in an effort
to reflect an apportionment. In other words, apportionment or an attempt
at apportionment is required unless the court finds the claims are so inextricably intertwined that even an estimated adjustment would be meaningless.”).