Consumer Finance Insights
December 8, 2016

Second Circuit Finds No Standing, Affirms Summary Judgment on TILA Claims

On November 23, 2016, the Second Circuit issued its opinion in Strubel v. Comenity Bank, a putative Truth in Lending Act (TILA) class action with both standing and substantive TILA implications.  In Strubel, the plaintiff challenged the disclosures Comenity provided in connection with a retail store credit card.  The opinion summarizes the plaintiff’s central arguments as being:  1) that Comenity failed to disclose to consumers that they had a limited time to stop payment if they selected an automatic payment plan; 2) that Comenity failed to disclose that it was required to acknowledge a claimed billing error within 30 days and report if any correction had been made; 3) that Comenity inadequately disclosed that certain rights pertaining to purchases for which full payment had not been made did not apply to cash advances or checks; and 4) that Comenity failed to disclose that consumers who were dissatisfied with purchases were required to inform it in writing.  Slip Op. at 5.  On appeal, the plaintiff argued that summary judgment had been inappropriately granted to Comenity Bank because of these failures and because the disclosures that were provided did not mirror those provided as examples in TILA’s implementing regulation, Regulation Z.  In response, Comenity reiterated its position that its disclosures were sufficient under TILA and Regulation Z, and it also argued, for the first time on appeal, that the plaintiff lacked standing to sue under Spokeo v. Robbins.

The Second Circuit first considered the standing question.  After a lengthy discussion of standing jurisprudence (including the familiar Lujan elements of “injury in fact,” “causal connection” and “likelihood of redress”), the court explained that the plaintiff failed to establish the concrete-injury element on two of her four claims.  As to her claim that Comenity failed to disclose the plaintiff’s obligation to provide a timely stop-payment notice in connection with an automatic-payment plan, the Second Circuit concluded that the plaintiff lacked standing because Comenity did not offer an automatic payment plan in connection with the credit card she obtained and she did not agree to any such automatic-payment plan.  Slip Op. at 19.  As to her claim that Comenity failed to disclose its error-notification obligations, the court held that the plaintiff never raised any billing errors and could not claim that she would have acted differently had a disclosure been made.  Slip Op. at 23.

By contrast, the court concluded that the plaintiff had standing to challenge Comenity’s disputed purchases and purchase dissatisfaction disclosures because those disclosures “serve[d] to protect a consumer’s concrete interest in ‘avoid[ing] the uniformed use of credit,’ a core object of the TILA.”  Slip Op. at 17.  The Second Circuit affirmed summary judgment in favor of Comenity because the allegedly missing material was either meaningfully addressed by Comenity’s disclosures or expressly not required by Regulation Z.

Although Strubel is factually dependent, it provides important insight into the Second Circuit’s interpretation of Spokeo as well as its interpretation of TILA’s substantive disclosure requirements.

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