United States District Court, N.D. Illinois, Eastern Division
December 1, 2005.
KENNETH D. McCANE, Plaintiff,
AMERICA'S CREDIT JEWELERS, INC., d/b/a THE DIAMOND CENTER, Defendant.
The opinion of the court was delivered by: SUZANNE CONLON, District Judge
MEMORANDUM OPINION AND ORDER
Kenneth D. McCane brings a putative class action against
America's Credit Jewelers, Inc. ("ACJ"), doing business as The
Diamond Center, alleging violations of the Fair Credit Reporting
Act ("the FCRA"), 15 U.S.C. § 1681, et seq. Pursuant to Federal
Rule of Civil Procedure 12(b)(6), ACJ moves to dismiss the
complaint. For the reasons set forth below, the motion is granted
The following facts are drawn from the complaint. McCane is a
consumer residing in Illinois. He never initiated any credit
transactions with ACJ, a Delaware corporation with an office in
Illinois. Nor did he authorize ACJ to access his credit report.
But ACJ sent him a letter, offering a gold club card. Compl. Ex.
A. According to the letter, ACJ pre-approved him for a $5,000
line of credit. To receive the card, he would need to show a
valid identification and proof of income. The letter further
This offer is available to new customers who do not
currently have an open credit line with The Diamond
Center. You were selected to receive this offer
because your consumer report from Equifax met our
initial criteria. Final acceptance is subject to ability to meet our full eligibility requirements.
Annual percentage rate not to exceed 19.8%. If you
wish to opt-out of future offers, please write
Equifax Options, PO Box 740123, Atlanta, GA
30374-0123 or call 888-567-8688.
The letter provided no additional information about the card.
Based on this letter, McCane filed the present putative class
action. His complaint alleges ACJ's letter violates two FCRA
provisions: (1) 15 U.S.C. § 1681b(c)(1)(B)(i) by failing to make
a firm offer of credit; and (2) 15 U.S.C. § 1681m(d) by failing
to provide clear and conspicuous disclosures of consumers' rights
to prevent further unsolicited use of their credit reports.
ACJ moves to dismiss solely on the ground that § 1681m provides
no private right of action. McCane's § 1681b claims are
unaffected by this motion.
I. Motion to Dismiss Standard
In ruling on a motion to dismiss, the court must accept
well-pleaded allegations as true and draw all reasonable
inferences in favor of the nonmoving party. Cler v. Ill. Educ.
Ass'n, 423 F.3d 726, 729 (7th Cir. 2005). "A motion to dismiss
under Rule 12(b)(6) challenges the sufficiency of the complaint,
and dismissal of an action under the rule is warranted only if
`no relief could be granted under any set of facts that could be
proved consistent with the allegations.'" Id. (quoting DeWalt
v. Carter, 224 F.3d 607, 612 (7th Cir. 2000)). But a claim by an
individual to enforce a federal statute must be dismissed if the
underlying statute authorizes no private right of action. See
Slovinec v. DePaul Univ., 332 F.3d 1068, 1069 (7th Cir. 2003)
(per curiam). II. McCane's § 1681m Claims and ACJ's Motion
The FCRA aims to protect consumers' right to privacy.
15 U.S.C. § 1681(a)(4). Unless consumers initiate a transaction, their
credit reports may be accessed only in limited situations set
forth in § 1681b(c). One such situation is when a creditor
extends a "firm offer of credit" to a consumer.
15 U.S.C. § 1681b(c)(1)(B)(i). In addition to satisfying the firm-offer
requirement, a creditor must make "a clear and conspicuous
statement" with the following details:
(A) information contained in the consumer's consumer
report was used in connection with the transaction;
(B) the consumer received the offer of credit or
insurance because the consumer satisfied the criteria
for credit worthiness [sic] or insurability under
which the consumer was selected for the offer;
(C) if applicable, the credit or insurance may not be
extended if, after the consumer responds to the
offer, the consumer does not meet the criteria used
to select the consumer for the offer or any
applicable criteria bearing on credit worthiness
[sic] or insurability or does not furnish any
(D) the consumer has a right to prohibit information
contained in the consumer's file with any consumer
reporting agency from being used in connection with
any credit or insurance transaction that is not
initiated by the consumer; and
(E) the consumer may exercise the right referred to
in subparagraph (D) by notifying a notification
system established under section 1681b(e) of this
15 U.S.C. § 1681m(d)(1). Under sections 1681n and 1681o,
consumers may file civil actions for violations of certain FCRA
provisions. McCane alleges ACJ violated both § 1681b and § 1681m.
ACJ argues that a private right of action to enforce § 1681m
was repealed by the Fair and Accurate Credit Transactions Act of
2003 ("the FACTA"), Pub.L. No. 108-159, 117 Stat. 1952 (2003).
Section 311(a) of the FACTA added subsection (h) to § 1681m.
See Pub.L. No. 108-159, § 311(a), 117 Stat. 1952, 1988-89.
Paragraph (8) of the amended § 1681m(h) reads: ENFORCEMENT
(A) No civil actions
Sections 1681n and 1681o of this title shall not
apply to any failure by any person to comply with
(B) Administrative enforcement
This section shall be enforced exclusively under
section 1681s of this title by the Federal agencies
and officials identified in that section.
15 U.S.C. § 1681m(h)(8) (emphasis added). Interpreting the term
"section" in its plain meaning, ACJ concludes § 1681 m(h)(8)(A)
eliminates the private right of action under the entire section;
as a result, McCane cannot sue for alleged § 1681m violations.
The court agrees with ACJ's interpretation.
III. Interpretation of the Term "Section" in § 1681m(h)(8)(A)
The first canon of statutory interpretation requires the court
to look to the language of the statute. United States v.
Miscellaneous Firearms, 376 F.3d 709, 712 (7th Cir. 2004). When
interpreting statutory language, the court "must presume that a
legislature says in a statute what it means and means in a
statute what it says there." Conn. Nat'l Bank v. Germain,
503 U.S. 249, 253-54 (1992) (citations omitted). If statutory
language is unambiguous, "then, this first canon is also the
last: `judicial inquiry is complete, except in rare and
exceptional circumstances.'" Rubin v. United States,
449 U.S. 424, 430 (1981) (quoting Tenn. Valley Auth. v. Hill,
437 U.S. 153, 187 n. 33 (1978)). Accordingly, the court may look beyond a
statute's express language to effectuate Congressional intent
only in two situations: (1) where the statutory language is
ambiguous; and (2) where a literal interpretation would thwart
the purpose of the overall statutory scheme or lead to an absurd
result. United States v. Tex-Tow, Inc., 589 F.2d 1310, 1313
(7th Cir. 1978). The term "section" in § 1681m(h)(8)(A) is unambiguous. As the
Supreme Court stated in Koons Buick Pontiac GMC, Inc. v. Nigh,
"Congress ordinarily adheres to a hierarchical scheme in
subdividing statutory sections." 125 S. Ct. 460, 467 (2004).
According to the hierarchical scheme, each statutory section,
such as § 1681m, is divided into: subsections (starting with
(a)), paragraphs (starting with (1)), subparagraphs (starting
with (A)), and clauses (starting with (i)). Id. This is
precisely the scheme Congress used to draft both the FCRA and the
FACTA. The newly-added subsection (h) demonstrates that Congress
carefully identified the various parts of § 1681m by using the
terms "section," "subsection," and "paragraph":
(h) Duties of users in certain credit transactions
(1) In general
Subject to rules prescribed as provided in paragraph
(6), if any person uses a consumer report in
connection with an application . . ., the person
shall provide an oral, written, or electronic notice
to the consumer in the form and manner required by
regulations prescribed in accordance with this
. . .
No notice shall be required from a person under this
(A) the consumer applied for specific material terms
and was granted those terms . . .; or
(B) the person has provided or will provide a notice
to the consumer under subsection (a) of this
section in connection with the transaction.
. . .
(A) No civil actions Sections 1681n and 1681o of this
title shall not apply to any failure by any person to
comply with this section.
(B) Administrative enforcement This section shall
be enforced exclusively under section 1681s of this
title by the Federal agencies and officials
identified in that section.
15 U.S.C. § 1681m(h) (emphasis added). Other parts of § 1681m
also show the use of the hierarchical scheme. See
15 U.S.C. § 1681m(d)(4) (referring to § 1681m as "[t]his section"); 15 U.S.C. § 1681m(f)(2) (referring to § 1681m(f) as "this
subsection" and to § 1681m(f)(1) as "paragraph 1");
15 U.S.C. § 1681m(b)(2)(A) (referring to § 1681m(b)(2)(B) as "subparagraph
B"). These clear references to "section" and "subsection" compel
the conclusion that the term "section" in
15 U.S.C. § 1681m(h)(8)(A) refers to § 1681m in its entirety; as a result,
private right of action under § 1681m is repealed.
This plain reading of § 1681m(h)(8)(A) does not lead to an
absurd result, nor does it thwart the overall statutory scheme.
It is true that Congress enacted the FCRA to protect consumers'
privacy rights. See 15 U.S.C. § 1681(a)(4). But the repeal of a
private right of action under § 1681m does not thwart this
purpose because the newly-added § 1681m(h) grants enforcement
authority to federal agencies. See 15 U.S.C. § 1681m(h)(8)(B).
Congress is free to design enforcement schemes as it sees fit.
And the court is not at liberty to second-guess Congress'
judgments. See EEOC v. Waffle House, Inc., 534 U.S. 279, 296
(2002) (judicial decisions should not "undermine the detailed
enforcement scheme created by Congress"). Moreover, other FACTA
provisions limit civil liabilities under the FCRA. See, e.g.,
Pub.L. No. 108-159, § 312(e)(1), 117 Stat. 1952, 1989-93
(barring private right of action under subsections (a) and (e) of
§ 1681s-2). For example, § 151(a)(1) of the FACTA adds
subsections (d) and (e) to § 1681g. Pub.L. No. 108-159, §
151(a), 117 Stat. 1952, 1961-64. The amended § 1681g(e)(6) bars
private lawsuits under "this subsection."
15 U.S.C. § 1681g(e)(6) (emphasis added). In addition to demonstrating that
the FACTA limits private right of action, this clear reference to
"subsection" in § 1681g(e)(6) suggests that if Congress intended
§ 1681m(h)(8)(A) to cover only § 1681m(h), it would have used the
term "subsection" there. Because the plain reading of § 1681
m(h)(8)(A) is consistent with the statutory scheme, the court's
inquiry must stop at interpreting statutory language. Rubin,
449 U.S. at 430. The plain reading of § 1681m(h)(8)(A) indicates that a private right of action is no
longer available under § 1681m. Therefore, McCane's § 1681m
claims must be dismissed.
IV. McCane's Arguments
McCane argues for interpreting the term "section" in §
1681m(h)(8)(A) to refer only to the newly-added subsection (h).
His arguments can be summed up in four prongs:
(1) the location of the statutory language repealing
a private right of action creates ambiguity;
(2) "section" is an ambiguous term;
(3) interpreting "section" to mean § 1681m renders
several other FCRA provisions superfluous; and
(4) interpreting § 1681m(h)(8)(A) to repeal a private
right of action contradicts both Congressional intent
and legislative history.
In several unrelated cases, this court has rejected similar
arguments. See Murray v. Cingular Wireless II, LLC, No.
05C1334, Dkt. No. 51 (N.D. Ill. Nov. 2, 2005) (Judge Manning);
Pietras v. Curfin Oldsmobile, Inc., No. 05C4624, 2005 WL
2897386, at *4 (N.D. Ill. Nov. 1, 2005) (Judge Conlon); Perry v.
First Nat'l Bank, No. 05C1470, 2005 U.S. Dist. LEXIS 23100, at
*3 (N.D. Ill. Sept. 13, 2005) (Judge Gettleman); Murray v.
Household Bank (SB), N.A., 386 F. Supp. 2d 993, 999 (N.D. Ill.
2005) (Judge Gettleman); Murray v. Cross Country Bank, No.
05C1252, 2005 WL 2644961, at *1 (N.D. Ill. Aug. 15, 2005) (Judge
Zagel). Nonetheless, the court carefully considers McCane's
arguments and finds them unpersuasive.
A. Location of the Statutory Language
McCane points to the location of the "[n]o civil action"
provision buried in subparagraph (8)(A) of subsection (h).
15 U.S.C. § 1681m(h)(8)(A). He asserts that if Congress meant to
repeal the private right of action for the entire § 1681m, it would have
designated a separate subsection (i) for this purpose. The
illogical location of the statutory language, he concludes, makes
the term "section" ambiguous. The location of the statutory
language, however, says nothing about the meaning of the term
"section." No rule of statutory interpretation requires the court
to ignore an unambiguous term in favor of an inference based on
the term's location.
Citing Bailey v. United States, 516 U.S. 137 (1995), McCane
argues that the location of the statutory language indicates that
it is intended to modify only subsection (h). It is true that
Bailey requires courts to interpret statutory language
according to "its placement and purpose in the statutory scheme."
Id. at 143. But the inference the Bailey court drew from the
location of statutory language is different from the one McCane
suggests here. In Bailey, the Supreme Court interpreted the
term "use" in 18 U.S.C. § 924(c)(1), which imposes a five-year
prison term upon a person who "uses or carries a firearm" while
trafficking drugs. Id. at 139. Because "uses" is located near
"carries," the Court inferred that each term must "have a
particular, nonsuperfluous meaning." Id. at 147. While drawing
the inference to differentiate between "uses" and "carries" is
appropriate, twisting the term "section" in § 1681m(h)(8)(A) to
mean "subsection" is not. The meaning of "section" does not
shrink simply because it is placed in a subparagraph. Thus,
McCane's reliance on Baily is inapposite.
McCane's argument based on Koons fares no better. In Koons,
the Supreme Court analyzed whether a newly-added clause to a
subparagraph in the Truth in Lending Act ("the TILA") affected
the meaning of the rest of the subparagraph. Koons Buick Pontiac
GMC, Inc., 125 S. Ct. at 466. Holding that the subparagraph
remained unaffected, the majority opinion turned not on the
location of the statutory language, but on the plain meaning of
"subparagraph" under the hierarchical scheme. See id. at
467-68. Thus, Koons offers McCane no aid.
McCane also cites two cases from other jurisdictions: Hecla
Mining Co. v. United States, 909 F.2d 1371 (10th Cir. 1990), and
Rump v. Aetna Casualty & Surety Co., 710 A.2d 1093 (Pa. 1998).
These cases are not binding on this court, nor do they support
his argument. In Hecla, the Tenth Circuit analyzed whether a
federal agency's interpretation of a statute was reasonable.
Hecla Mining Co., 909 F.2d at 1376. Upholding the agency's
interpretation, the Tenth Circuit held the location of the
statutory language created an ambiguity. Id. at 1377. But this
holding does not require courts to find ambiguity in every
imperfectly-placed statutory provision. As discussed above, both
the plain language of § 1681m(h)(8)(A) and the clear use of the
hierarchical scheme preclude a finding of ambiguity. Thus,
Hecla is inapplicable.
McCane's reliance on Rump is also misplaced. In Rump, the
Supreme Court of Pennsylvania held that the term "paragraph" in
an insurance statute referred to the entire paragraph. Rump,
710 A.2d at 1096. In reaching its conclusion, Rump adhered to
the plain meaning of "paragraph" and the hierarchical scheme, but
offered no discussion on the location of the term in question.
See id. Therefore, Rump weakens, rather than supports,
McCane's argument. See id. ("determination of this issue
centers on an analysis of the controlling statutory language").
McCane asserts that in its prior decisions, the court failed to
consider the impact of the location of statutory language. Pl.
Mem. 7. This is not true. Pietras carefully considered similar
arguments on the location of the statutory language. See
Pietras, 2005 WL 2897386, at *5. The court held that "the
allegedly illogical location of the elimination language does not
justify departure from giving the statutory language its plain
meaning." Id. B. "Section" as an Ambiguous Term
McCane asserts that "section" has been used to refer to
paragraphs or subparagraphs in Black's Law Dictionary and case
law. He concludes that "section" must be ambiguous in the FCRA.
His conclusion is flawed because the meaning of "section" in
other contexts has no bearing on whether the term "section" in
the FCRA is ambiguous. The court must interpret "section" in the
context of the FCRA. See Bailey, 516 U.S. at 145 ("`the meaning
of statutory language, plain or not, depends on context"'
(quoting Brown v. Gardner, 513 U.S. 115, 118 (1994)). What
"section" means in other contexts cannot control the court's
McCane also asserts that the issue before the court is similar
to that in Graham County Soil & Water Conservation District v.
United States ex rel. Wilson, 125 S. Ct. 2444 (2005). This
assertion is incorrect. In Graham County, the Supreme Court
decided whether the limitations period in § 3731(b) of the False
Claims Act applied to actions under § 3730(h). Id. at 2447.
Section 3730 sets forth the enforcement scheme for § 3729
violations making false claims for payments to the United
States; under § 3730(h), employees who assist in investigations
of suspected violations by their employers may sue for
retaliation resulting from their assistance. 31 U.S.C. § 3730.
Section 3731(b) prescribes the limitations period: "(b) A civil
action under section 3730 may not be brought (1) more than 6
years after the date on which the violation of section 3729 is
committed." 15 U.S.C. § 3731(b) (emphasis added). A plain reading
indicates that a six-year limitations period applies to all §
3730 actions. But applying the onset date of § 3729 violations to
§ 3730(h) actions is impracticable because retaliation actions
based on suspected violations often do not have onset dates.
Given this problem, the Court found § 3731(b) ambiguous. Graham
County, 125 S. Ct. at 2449. McCane fails to point to any similar problems that may
result from the plain-meaning interpretation of the term
"section" in § 1681m(h)(8)(A). Thus, the rationale in Graham
County is inapplicable.
C. Superfluous Provisions
McCane argues that interpreting "this section" to mean the
entire § 1681m would render § 1681m(c), § 1681m(h)(7), and §
1681s-2(c) superfluous. The court is mindful of the canon
preferring an interpretation that does not render statutory
provisions superfluous. McClain v. Retail Food Employers Joint
Pension Plan, 413 F.3d 582, 587 (7th Cir. 2005). But this
preference is not absolute. Lamie v. United States Trustee,
540 U.S. 526, 536 (2004) ("[s]urplusage does not always produce
ambiguity"). In Lamie, the Supreme Court adopted a plain
reading of a statute notwithstanding that it rendered a related
Where there are two ways to read the text [the term
in question] . . . is surplusage, in which case the
text is plain; or [the term] is nonsurplusage . . .,
in which case the text is ambiguous applying the
rule against surplusage is, absent other indications,
inappropriate. We should prefer the plain meaning
since that approach respects the words of Congress.
In this manner we avoid the pitfalls that plague too
quick a turn to the more controversial realm of
The preference for avoiding surplusage must yield here because
its application would lead to absurd results. If the court
interpreted the term "section" in § 1681m(h)(8)(A) to mean
"subsection," it must give the same meaning to other references
to "this section" in § 1681m. Two of the references appear in §
1681m(c), which McCane seeks to save:
(c) Reasonable procedures to assure compliance No person shall be held liable for any violation of
this section if he shows by a preponderance of the
evidence that at the time of the alleged violation he
maintained reasonable procedures to assure compliance
with the provisions of this section.
15 U.S.C. § 1681m(c) (emphasis added). Interpreting these two
references to mean "this subsection" would make no sense because
§ 1681m(c) itself provides no rules for compliance or violation.
Given this absurd result, the court cannot adopt McCane's
suggestion just to give meaning to three superfluous provisions.
Superfluous provisions are not unusual. See Germain,
503 U.S. at 253 ("[r]edundancies across statutes are not unusual events in
drafting"). McCane does not argue that these superfluous
provisions lead to any confusion in interpreting the FCRA.
Therefore, the court must adhere to the first canon of statutory
interpretation and give the term "section" its plain meaning.
See Lamie, 540 U.S. at 536.
D. Congressional Intent and Legislative History
McCane argues that because FACTA's legislative history is
silent about repealing a private right of action under § 1681m,
Congress must not have meant to affect such a sweeping change.
This argument has merit only if the statutory language is
ambiguous. Not surprisingly, all four cases he cites in support
of this argument involve ambiguous statutory language. See Koons
Buick Pontiac GMC, Inc., 125 S. Ct. at 463
("[l]ess-than-meticulous drafting [of the TILA] . . . created an
ambiguity"); United States v. Turcotte, 405 F.3d 515, 522 (7th
Cir. 2005) (interpreting the ambiguous analogue provision in the
Controlled Substances Act); United States v. Hodge,
321 F.3d 429, 437 (3d Cir. 2003) (same); United States v. Vickery,
199 F. Supp. 2d 1363, 1368 (N.D. Ga. 2002) (same). Because the term "section" in the FACTA is
unambiguous, McCane's reliance on these cases is misplaced.
The Supreme Court has repeatedly held that the absence of
legislative history is not a proper basis for ignoring the
unambiguous statutory language chosen by Congress. See, e.g.,
Morales v. TWA, Inc., 504 U.S. 374, 385 n. 2 (1992)
("legislative history need not confirm the details of changes in
the law effected by statutory language before we will interpret
that language according to its natural meaning"). Where the term
"section" is not ambiguous and its plain reading does not lead to
an absurd result, the court must not resort to legislative
history. See Exxon Mobil Corp. v. Allapattah Servs, Inc.,
125 S. Ct. 2611, 2626 (2005) ("the authoritative statement is the
statutory text, not the legislative history or any other
McCane decries the loss of "an important right of action"
resulting from a plain-meaning interpretation of §
1681m(h)(8)(A). Pl. Mem. 3, 11. But the court cannot "soften the
import of Congress' chosen words even if . . . the words lead to
a harsh outcome." Lamie, 540 U.S. at 538. In Lamie, the
Supreme Court interpreted a Bankruptcy Code provision that
contained an "apparent legislative drafting error." Lamie,
540 U.S. at 530. The provision was "awkward, and even ungrammatical."
Id. at 534. The Court nonetheless interpreted the provision in
its plain meaning and refused to inquire into legislative
history. Id. at 542 ("[i]f Congress enacted into law something
different from what it intended, then it should amend the statute
to conform it to its intent"). Section 1681m(h)(8)(A) contains no
drafting error; the court must, a fortiori, give this
subparagraph its plain meaning. See id. Without a private right
of action, McCane can still seek redress for § 1681m violations
through federal agencies. This result is neither harsh nor
unjust. Accordingly, his arguments on Congressional intent and
legislative history must fail. CONCLUSION
For the reasons set forth above, ACJ's motion is granted in
part. McCane's § 1681m claims are dismissed with prejudice.
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