Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

GARLAND v. MOBIL OIL CORPORATION

March 28, 1972

NORMAN M. GARLAND, ON BEHALF OF HIMSELF AND ALL OTHERS SIMILARLY SITUATED, PLAINTIFF,
v.
MOBIL OIL CORPORATION, A NEW YORK CORPORATION, DEFENDANT.



The opinion of the court was delivered by: McLAREN, District Judge.

MEMORANDUM OPINION AND ORDER

This matter arises on cross-motions for partial summary judgment.*fn1 Garland, a gasoline credit card customer of defendant Mobil Oil ("Mobil") alleges that various actions by Mobil violated the Truth in Lending Act, 15 U.S.C. § 1601-65 (1970) (hereinafter "Act") and that other actions by it violated the Illinois Uniform Deceptive Trade Practices Act, Ill.Rev.Stat., ch. 121 1/2, §§ 311-17 (1969) (hereinafter "Uniform Act").*fn2 Garland sues on behalf of himself and all other similarly situated holders of Mobil credit cards for damages and equitable relief.

On the Truth in Lending Act issue, the Court finds for defendant and dismisses Count 1 of the complaint. However, the Court holds that defendant has violated the Illinois Uniform Deceptive Trade Practices Act and directs that a pretrial conference be held for discussion of further proceedings on the issue of relief under Count 2 of the complaint.

The basic facts are stipulated. Garland, a Mobil credit card holder since January 1967, purchased products from defendant's dealers during the period July 11, 1969*fn3 to November 10, 1969 and charged the purchases on his credit card. He was billed by Mobil in August, September, October and November of 1969.

Like the credit card application and the credit card, each monthly statement indicated that "payment [was] due on receipt of this statement." Each monthly statement also contained the legend that "past due amounts may incur a monthly service charge at 1 1/2%."

These two notices become significant in light of Mobil's change of procedures for collection of delinquent accounts. Prior to July 11, 1969, Mobil imposed a service charge of 1 1/2% upon a credit card customer in each consecutive month in which the balance owed by the customer was 60 days past due and amounted to $10.00 or more. On July 11, 1969, Mobil temporarily discontinued the levy of all late payment charges on its cardholder accounts and decided to refund all such charges levied between July 1 and July 11.*fn4 From July 11 to August 22, Mobil levied no charges of any kind on cardholder accounts.

On August 22, 1969, Mobil initiated a practice of imposing a single "late payment charge" upon a credit customer who owed $25.00 or more for over 90 days. The delinquent customer's credit was terminated and a request made for the return of his credit card when this late payment charge was imposed. No notification was issued to customers regarding this change in credit practice. An additional unpublicized change was effected on February 5, 1970, from which date Mobil discontinued the practice of refunding late charges upon the reinstatement of credit which had been terminated. Finally, on October 1, 1970, Mobil revised its credit card system and, with notice, began assessing a finance charge of stated percentages on outstanding minimum monthly balances.

Count 1 of Garland's amended complaint asserts that Mobil has extended to Garland and others similarly situated "consumer credit" under an "open end credit plan," which terms are defined in the Truth in Lending Act,*fn5 without disclosing to Garland or others the information required by the Act to be disclosed in periodic open end billing statements. 15 U.S.C. § 1637. The Act's disclosure requirements are supplemented by Federal Reserve Regulation Z (hereinafter "Reg. Z")*fn6 promulgated thereunder.*fn7

Count 2 alleges that Mobil violated the Illinois Uniform Deceptive Trade Practices Act, supra, by maintaining the legend on its bills that past due accounts would incur a service charge, when in fact no service charge was being imposed for past due balances less than $25.00 and no monthly service charge for past due balances of $25.00 or more from August 22, 1969 to October 1, 1970.

Turning first to the Truth in Lending Act, this is a disclosure statute which seeks to promote the informed use of credit by requiring disclosure of information concerning the cost of credit and the terms on which credit will be extended. 15 U.S.C. § 1601.*fn8 The Act and Reg. Z apply only to persons who in the ordinary course of business regularly extend credit for which the payment of a finance charge is required. 15 U.S.C. § 1602(f). Each of these creditors is required to give clear and conspicuous information "to each person to whom consumer credit is extended and upon whom a finance charge is or may be imposed. . . ." 15 U.S.C. § 1631(a).

Thus, a creditor under the Act is one who regularly extends credit for which the payment of a finance charge is or may be required. If a creditor regularly extends such credit, then he must make the disclosures referred to in 15 U.S.C. § 1631(a) to all of his credit customers under the particular credit plan, whether or not a finance charge is actually imposed on each customer under the plan.*fn9

Applying the terms of the Act to the facts at hand, Mobil did not impose a finance charge from July 11, 1969 to August 22, 1969. From the latter date to October 1, 1970, it imposed a "late payment charge," which is not deemed to be a "finance charge."*fn10 Accordingly, during this period, Mobil was not a creditor covered by the Act, and thus it was not required to disclose the information described in 15 U.S.C. § 1631-41. The warning contained in Mobil's monthly statements that late payment might result in the imposition of a monthly service charge does not alter Mobil's status under the Act.

Count 2 of the amended complaint alleges that Mobil violated the Illinois Uniform Deceptive Trade Practices Act, Ill.Rev.Stat., ch. 121 1/2, §§ 311-17 (1969), by maintaining the following legend on its monthly statements from July 11, 1969 to October 1, 1970: "past due amounts may incur a monthly service charge at 1 1/2%." Garland contends that this threat of a monthly service charge constituted a deceptive trade practice because Mobil did not impose any service charge on past due accounts from July 11, 1969 to August 22, 1969, and from August 22, 1969 to October 1, 1970, it imposed only a one-time late payment charge upon those customers whose 90-day past due balances were $25.00 or more.

Section 2 of the Uniform Act (Ill.Rev.Stat., ch. 121 1/2, § 312) proscribes eleven specifically defined deceptive trade practices. The twelfth subsection prohibits "any other conduct which similarly crea ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.