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Goldman v. First National Bank of Chicago

decided: March 2, 1976.

STEVEN GOLDMAN, ON HIS OWN BEHALF AND ON BEHALF OF A CLASS CONSISTING OF ALL OTHER FIRST BANKAMERICARD CARDHOLDERS SIMILARLY SITUATED, PLAINTIFF-APPELLANT,
v.
THE FIRST NATIONAL BANK OF CHICAGO, DEFENDANT-APPELLEE



Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 71 C 1653 PRENTICE H. MARSHALL, Judge.

Stevens, Circuit Justice,*fn* Swygert, Circuit Judge, and Kunzig, Judge.*fn**

Author: Swygert

SWYGERT, Circuit Judge.

This appeal presents two questions: whether the trial court's refusal to allow this action under the Truth in Lending Act*fn1 to proceed as a class action was an abuse of discretion, and whether in plaintiff-appellant Steven Goldman's individual suit before a different judge, the court erred in holding that the statutory limitations period contained in the Act barred Goldman's action.*fn2

The limitations question was decided by way of summary judgment for the defendant and against the plaintiff on Counts I, II and III of the amended complaint, each charging violations of the Act, and a dismissal of Counts IV, V and VI, each based on Illinois law and brought pursuant to pendent jurisdiction. The plaintiff Goldman applied to the First National Bank of Chicago for a BankAmericard credit card on April 3, 1970. The application was on a printed form prepared by the Bank. A part of the form was entitled, "Disclosure Statement As Required by the Federal Truth-in-Lending Act."*fn3 The application also included the Bank's contract with its cardholders. Among the provisions were the following:

3. Customers will be furnished monthly statements for all purchases and borrowings made with Customer's (BankAmericards). Customers will pay such statements by remitting to the issuer or the Bank through which his BankAmericard is issued within 25 days after billing date.

4. In respect to credit purchases, the aggregate of all finance charges shall not exceed 1 1/2% per month of the outstanding principal balance per month of the outstanding principal balance owing during the billing period. Finance charges shall commence 25 days from billing date.

The plaintiff's application was approved by the Bank in April of 1970 and his credit card was sent to him shortly thereafter. The plaintiff used his card initially on July 1, 1970 and continued to make purchases during the remainder of the year. Each billing statement included the following information:

PAYMENT INFORMATION

4. . . . "FINANCE CHARGE" at the rate of 1 1/2% per month for "MERCHANDISE PURCHASES" is charged to your account on your next billing date (see stub on reverse side) unless the "NEW BALANCE" on this statement is paid in full within 25 days after your billing date.

The plaintiff paid the balance in full on each billing statement he received from September 1970 through January 1971 within the specified twenty-five day period and thereby did not incur any finance charges; as to the plaintiff's check for his February 8, 1971 billing statement, however, it shows that it was not received until March 9, 1971. Because the payment had not been made within the twenty-five day "free ride" period, a finance charge of $1.19 was imposed by the Bank on its March 8 billing statement. The plaintiff alleges that this sum represented a finance charge for the period from February 9 to March 8, 1971 at the rate of 1.5 percent per month. Referring to that part of the credit card agreement form which states "finance charges shall commence 25 days from billing date," Goldman states the appropriate finance charge would have been thirteen cents, representing charges for the three days between the end of the twenty-five day period and the March 8 billing date.

The plaintiff brought his suit under the Truth in Lending Act on behalf of himself and a class of BankAmericard credit cardholders similarly situated.

I

We first address the question of the denial of class determination. The district court concluded that Goldman did not meet the requirements of any of the subsections of Rule 23(b) of the Federal Rules of Civil Procedure. That rule requires that the court determine first if the standards for maintenance of a class action are met under Rule 23(a),*fn4 and, if they are, then the plaintiff, in addition, must demonstrate that:

(1) the prosecution of separate actions by or against individual members of the class would create a risk of

(A) inconsistent or varying adjudications with respect to individual members of the class which would establish incompatible standards of conduct for the party opposing the class, or

(B) adjudications with respect to individual members of the class which would as a practical matter be dispositive of the interests of the other members not parties to the adjudications or substantially impair or impede their ability to protect their interests; or

(2) the party opposing the class has acted or refused to act on grounds generally applicable to the class, thereby making appropriate final injunctive relief or corresponding declaratory ...


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