The opinion of the court was delivered by: WILLIAM HART, Senior District Judge
MEMORANDUM OPINION AND ORDER
In this putative class action, plaintiff Gloria Munoz alleges
that defendant Seventh Avenue, Inc. violated a provision of the
Truth in Lending Act ("TILA"), 15 U.S.C. § 1642, which provides
in part: "No credit card shall be issued except in response to a
request or application therefor." Plaintiff contends that a
Seventh Avenue catalog that she received contained an unsolicited
credit card. Defendant contends it was an offer of credit that
did not constitute a credit card as that term is used in § 1642.
Presently pending is defendant's motion to stay pending
arbitration or, alternatively, a motion to dismiss the complaint for failing to state a claim upon which
relief may be granted.
The motion to stay pending arbitration must be decided first
since this court should not consider the merits of the § 1642
claim if the issue should instead be before an arbitrator. It is
undisputed that the order form sent to plaintiff had an
arbitration provision on the reverse side. It is a broadly
written provision applying to "[a]ll disputes, claims, or
controversies arising from or relating to these rules or the
relationships which result from this purchase contract."
Plaintiff does not disagree with defendant's contention that, if
enforceable against plaintiff, the arbitration provision would
apply to plaintiff's claim. Plaintiff, however, disputes its
applicability to any claim of plaintiff because plaintiff never
entered into any agreement with defendant. Whether a contract
exists between the parties is an issue for the court to decide,
not the arbitrator. Sphere Drake Insurance Ltd. v. All American
Insurance Co., 256 F.3d 587, 589-91 (7th Cir. 2001).
Plaintiff states in an affidavit:
2. At no time did I agree, in writing or otherwise,
to the resolution of any claims against Seventh
Avenue, Inc., through binding arbitration.
3. At no time did I enter into any agreement at all
with Seventh Avenue, Inc. On the contrary, I am
complaining that they sent me a credit card without any agreement from me, or
request by me.
There is no allegation or contention by defendant that plaintiff
purchased any item from the catalog or requested any credit that
Since plaintiff never accepted any offer that was made by
defendant, there is no basis for finding that plaintiff agreed to
arbitrate any dispute she has with defendant. See Gibson v.
Neighborhood Health Clinics, Inc., 121 F.3d 1126, 1130 (7th Cir.
1997); Schacht v. Beacon Insurance Co., 742 F.2d 386, 390 (7th
Cir. 1984). See also Colfax Envelope Corp. v. Local No.
458-3M, 20 F.3d 750, 754 (7th Cir. 1994). Defendant has not
alleged or pointed to any sufficient basis for finding that
plaintiff agreed to arbitrate the parties' dispute. Defendant's
motion for a stay will be denied. The merits of the motion to
dismiss will be considered.
On a Rule 12(b)(6) motion to dismiss, plaintiff's well-pleaded
allegations of fact are taken as true and all reasonable
inferences are drawn in plaintiff's favor. Leatherman v. Tarrant
County Narcotics Intelligence & Coordination Unit, 507 U.S. 163,
164 (1993); Stachon v. United Consumers Club, Inc.,
229 F.3d 673, 675 (7th Cir. 2000). A complaint need not set forth all
relevant facts or recite the law; all that is required is a short
and plain statement showing that the party is entitled to relief.
Fed.R.Civ.P. 8(a); Anderson v. Simon, 217 F.3d 472, 474 (7th
Cir. 2000), cert. denied, 531 U.S. 1073 (2001); Scott v. City
of Chicago, 195 F.3d 950, 951 (7th Cir. 1999); Doherty v. City
of Chicago, 75 F.3d 318, 322 (7th Cir. 1996). A plaintiff in a
suit in federal court need not plead facts; conclusions may be
pleaded as long as the defendant has at least minimal notice of
the claim. Fed.R.Civ.P. 8(a)(2); Scott, 195 F.3d at 951;
Albiero v. City of Kankakee, 122 F.3d 417, 419 (7th Cir. 1997);
Jackson v. Marion County, 66 F.3d 151, 153-54 (7th Cir. 1995).
It is unnecessary to plead facts that would negate an affirmative
defense. Alvarado v. Litscher, 267 F.3d 648, 651-52 (7th Cir.
2001); Tregenza v. Great American Communications Co.,
12 F.3d 717, 718 (7th Cir. 1993), cert. denied, 511 U.S. 1085 (1994);
Wade v. Henderson, 2002 WL 15697 *1 (N.D. Ill. Jan. 4, 2002).
It is also true, however, that a plaintiff can plead herself out
of court by alleging facts showing there is no viable claim.
Jackson, 66 F.3d at 153-54; Tregenza, 12 F.3d at 718; Early
v. Bankers Life & Casualty Co., 959 F.2d 75, 79 (7th Cir. 1992).
Attaching actual documents to the complaint will override
inconsistent descriptions of those documents alleged in the body
of the complaint. See In re Wade, 969 F.2d 241, 249 (7th Cir.
1992); Beam v. IPCO Corp., 838 F.2d 242, 244-45 (7th Cir.
1988). Documents that are referred to in the complaint and that are
central to a claim that is made may be considered even if not
attached to the complaint. Duferco Steel Inc. v. M/V Kalisti,
121 F.3d 321, 324 n. 3 (7th Cir. 1997); Venture Associates Corp.
v. Zenith Data Systems Corp., 987 F.2d 429, 431 (7th Cir. 1993);
Minuteman International, Inc. v. Great American Insurance Co.,
2004 WL 603482 *1 (N.D. Ill. March 22, 2004); Hebein ex rel.
Berman v. Young, 37 F. Supp.2d 1035, 1038-39 (N.D. Ill. 1998).
Plaintiff has alleged that a credit card was sent to her.
However, she also attached to the complaint a copy of the page of
the catalog that she contends included the credit card. Attached
to defendant's motion to dismiss are additional pages of the
catalog. These additional pages may be considered because the
document is central to plaintiff's allegations. Plaintiff does
not object to consideration of the additional pages nor contend
that the copy is inaccurate. To the extent the catalog itself
shows that no credit card was included, that must be taken as
true instead of plaintiff's conclusory allegation that a credit
card was sent.
Plaintiff contends that a page of the Seventh Avenue catalog
that was sent to her includes a credit card. That page is
reproduced on the next page of this opinion. [EDITORS' NOTE: CATALOG IS ELECTRONICALLY NON-TRANSFERRABLE.] The order form provided with the catalog also contains the
account number, the statement that "YOUR ACCOUNT IS
PRE-APPROVED!," and that plaintiff could charge up to $1000.00
and pay only $35 a month. The order form provides three payment
options when ordering: (1) pay by a general credit or debit card;
(2) enclose a check or money order; or (3) "CHOOSE 'N CHARGE
Bill me monthly according to the easy payment plan terms and
conditions on the back of this order form." There is also an
"express order form" that only permits charging to the Choose 'N
Charge account and again contains the account number, that the
account is pre-approved, and references to making no payment now
and being billed monthly.
The reverse side of the order form contains terms that are
customary for credit card accounts. It also contains the
following statement, which is not highlighted in any way. "All
credit orders are subject to credit approval. Terms of The Offer:
Information contained in a consumer report on you received from a
credit reporting agency was used by us in connection with this
offer of credit. This offer was made because that report
indicated you satisfied the criteria for credit-worthiness used
to select consumers for this offer. You may receive an account
with a credit line ranging from a minimum of $50.00 up to the
amount stated in this offer, or a higher amount specified by us." Section 1642, which is part of TILA, prohibits the issuance of
a credit card absent a prior request or application from the
consumer. See 15 U.S.C. § 1642; 12 C.F.R. § 226.12(a);*fn1
Swift v. First USA Bank, 1999 WL 350847 *2-4 (N.D. Ill. May 21,
1999). Under the Fair Credit Reporting Act ("FCRA"), a credit
reporting agency may provide a creditor with a list of
unsolicited consumers who meet certain credit criteria and the
creditor may send firm offers of credit that are conditional on
the consumer satisfying certain criteria. See
15 U.S.C. § 1681b(c)(1)(B), 1681a(1), 1681m(d)(1); Kennedy v. Chase
Manhattan Bank USA, NA, 369 F.3d 833, 839-841 (5th Cir. 2004);
Tucker v. New Rogers Pontiac, 2003 WL 22078297 *2-5 (N.D. Ill.
Sept. 9, 2003).
Defendant contends its offer constituted a firm offer of credit
and plaintiff does not argue otherwise, only noting that whether
the mailing constituted a firm offer of credit is irrelevant.
Plaintiff is correct. No provision of the FCRA permits firm
offers of credit to an unsolicited consumer to be accompanied by
the issuance of a credit card. Nor does TILA contain any such
exception to § 1642. Thus, even if defendant's mailing qualified
as a firm offer of credit under the FCRA, § 1642 was violated if
that firm offer was accompanied by the issuance of a credit card. Thus, the issue as to the merits of
plaintiff's § 1642 claim is whether the form with an account
number that was included in the catalog was an issued credit card
as that term is used in TILA.
The statute defines a "credit card" as meaning "any card,
plate, coupon book or other credit device existing for the
purpose of obtaining money, property, labor, or services on
credit." 15 U.S.C. § 1602(k). The term "credit device" is not
further defined. Regulation Z defines "credit card" as meaning
"any card, plate, coupon book, or other single credit device that
may be used from time to time to obtain credit."
12 C.F.R. § 226.2(15).
Defendant argues that the piece of paper that is claimed to be
a credit card in this case does not qualify as such because it
does not meet the standards for a credit card as defined by the
American National Standards Institute (ANSI) and International
Organization for Standardization (ISO), including standards as to
thickness, having a magnetic strip, and using a 16-digit account
number. The statutory definition of credit card, however, is
broader than the ANSI and ISO standards. The statutory definition
refers to "any card," not just a specific type of card. Moreover,
the statutory definition is not limited to a card; it also
includes any plate, coupon book, or credit device as long as it
is used to obtain cash, property, or services on credit. The particular shape or format of the device
is of little import.
Defendant relies on United States v. Callihan, 666 F.2d 422
(9th Cir. 1982), which considered whether transporting a
fraudulently obtained or stolen credit card in violation of
15 U.S.C. § 1644(b), a criminal provision of TILA, included the act
of communicating fraudulently obtained credit card account
numbers via telephone. Callihan, 666 F.2d at 423-24, held that
this use of account numbers did not qualify as transportation of
a credit card. "We hold . . . that the term `credit card' as used
in section 1644 means the small, flat tablet upon which a credit
card account number is imprinted, but does not mean that number
alone." Id. at 424. Callihan, however, simply relied on the
plain language "credit card," which is contained in § 1644
itself. Callihan did not consider that "credit card," as used
in § 1644, is defined in § 1602(k). Thus, Callihan failed to
consider that, for purposes of TILA, Congress had defined "credit
card" more broadly than its plain and common usage. Also,
Callihan was considering transportation of a credit card, not
issuance or use. Additionally, since considering the criminal
provision of TILA, Callihan applied the rule that criminal
statutes should be construed with lenity. See id. at 424. In
the present case, a civil provision of TILA is under
consideration. Therefore, a different rule applies, which is to liberally construe a remedial statute in order to serve its
remedial purpose, which means liberally construing TILA in favor
of a consumer such as plaintiff. Roberts v. Fleet Bank (R.I.),
342 F.3d 260, 267 (3d Cir. 2003); Schnall v. Marine Midland
Bank, 225 F.3d 263, 267 (2d Cir. 2000).
Although not cited by either party, a subsequent Fourth Circuit
case rejected Callihan's conclusion that a credit card account
number did not qualify as a credit card as that term is used in §
1644. See United States v. Bice-Bey, 701 F.2d 1086, 1091-92
(4th Cir.), cert. denied, 464 U.S. 837 (1983). Bice-Bey
involved fraudulently using a credit card in violation of §
1644(a). In Bice-Bey, the court expressly considered §
1602(k)'s definition of credit card. The Fourth Circuit
considered the rule of lenity, but also noted that it needed to
be "mindful" of its "obligation not to defeat the congressional
purpose in creating a federal crime." Id. at 1092. The Fourth
Circuit rejected an "overliteralistic" reading of the statute.
Id. "The core element of a `credit card' is the account number,
not the piece of plastic. As this case illustrates, the `credit
card' can be used over the telephone without the seller ever
seeing the plastic card itself. The credit numbers Bice-Bey used
were not hers and she had no authorization to use them. If she
obtained them by ascertaining secretly the numbers belonging to
Matthews and Bernstein, she was in effect stealing or fraudulently obtaining the essential element of the cards. In any
event, by representing credit ...