for the loan. Here the defendants did not.
The "exception to the plain meaning rule [is] the `rare case
[in which] the literal application of a statute will produce a
result demonstrably at odds with the intentions of its
drafters.'" Pittway Corp. v. United States, 102 F.3d 932, 936
(7th Cir. 1996) (quoting United States v. Ron Pair Enterprises,
Inc., 489 U.S. 235, 242, 109 S.Ct. 1026, 103 L.Ed.2d 290
(1989)). Requiring the lender to disclose the existence of the
security would not be contrary to the intentions of the drafters.
Congress enacted TILA "`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 billing and credit card practices.'"
Walker v. Wallace Auto Sales, Inc., 155 F.3d 927, 930 (7th Cir.
1998) (quoting 15 U.S.C. § 1601(a)); see also Brown v.
Marquette Sav. & Loan Ass'n, 686 F.2d 608, 612 (7th Cir. 1982)
(Congress enacted TILA to "provide information to facilitate
comparative credit shopping and thereby the informed use of
credit by consumers.").
It would in fact frustrate the purpose of TILA and the
intention of Congress to read the act to say that a "security"
that for some reason failed to rise to the level of a "security
interest" need not or may not be disclosed in the consumer loan
context. To so read the law would be particularly inapposite if
the reason that the postdated check used to secure a payday loan
failed to be a security interest was because the loans were made
to precisely those most desperate for credit and lacking in other
collateral. Essentially, that would mean reading the law to say
that Congress protected the propertied, whose collateral can be
in some sense "properly" secured, but allowed predators a field
day to deceive and mislead the poorest and weakest in our
The defendants ask me, if I find that they took a security
interest in the check, to hold that the plaintiffs must prove
actual damages and are not entitled to statutory damages because
they have not violated the disclosure requirement, § 1638(a)(9),
but merely the conspicuous segregation requirement, § 1638(b)(1),
a violation of which does not merit statutory damages. See Brown
v. Payday Check Advance, 202 F.3d 987, 991 (7th Cir. 2000). If I
accepted this argument, I would have already granted the
defendants' motion to dismiss. Instead, I discussed it detail and
rejected it in my opinion denying that motion. See Van Jackson,
193 F.R.D. at 548-49. There I held that the required information
about the check as security or security interest had not been
disclosed at all for various reasons, not merely or mainly
because of the lack of conspicuous segregation:
(1) The defendants placed the statements outside the federal
(2) themselves excluded the statements from the list of "our
disclosures to you," so their own evidence shows that the
required information was not disclosed;
(3) The statements were written in obscure, hard-to-read, and
inaccessible legalistic jargon;
(4) The purported "disclosures" were buried in subordinate
clauses at the end of these opaque and convoluted sentences; and
(5) The major clauses and headings of these sentences would not
alert a reader that a disclosure of a security interest or a
security was forthcoming, and so the sentences were misleading.
Some of these problems, most notably (1) and (4), might also
constitute a violation of the conspicuous segregation
requirement, and the defendants have admitted this violation in
their motion to dismiss. But as I held in my previous opinion
denying that motion, statements suffering from the enumerated
defects also fail to "disclose"
the required information in any meaningful way. As I noted there,
"`disclosure' [means] . . . `opening up to view, revelation,
discovery, exposure.' The treatment of required information about
the security does not qualify as opening up to view, revelation,
discovery, or exposure." Id. at 549 (citing United States v.
Bank of Farmington, 166 F.3d 853, 860 (7th Cir. 1999))
(quoting 4 Oxford English Dictionary 738 (2d ed. 1989) (qui
tam context)). Because there was no disclosure, and because there
was either a security interest taken in the postdated checks or a
security that was required to be disclosed under the statute, the
defendants are liable for violation of § 1638(a)(9).
Accordingly, I DENY the defendants' summary judgment motion and
GRANT the plaintiffs' summary judgment motion. Statutory damages