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Muro v. Target Corp.

November 2, 2007


The opinion of the court was delivered by: Judge Rebecca R. Pallmeyer


Plaintiff Christine Muro received an unsolicited credit card in the mail. She found this so upsetting that, rather than simply cutting the card in two and discarding it, she filed this lawsuit against Defendants Target Corporation, Target National Bank, and Target Receivables Corporation (collectively, "Target"). Muro alleged that Target had violated two provisions of the Truth in Lending Act ("TILA"), 15 U.S.C. §§ 1601 et seq. (2000). The first provision prohibits the sending of unsolicited credit card offers ("Count I"), id. at § 1642, and the second requires that credit card offers be accompanied by certain enumerated disclosures ("Count II"), id. at § 1637. She also alleged several tort and contract claims under state law. Muro seeks to represent a class of similarly-situated plaintiffs.

Target defended against Muro's class claim for Count I on the grounds that it was legally entitled to send unsolicited Target Visa Cards ("TVCs") to its Target Gift Card customers, as a permissible substitution for their current cards. This court granted summary judgment in favor of Target on the substitution defense on Count I, denied class certification on that Count, and granted summary judgment in favor of Defendants on all of Muro's state law claims. Muro v. Target Corp., No. 04 C 6267, 2005 WL 1705828, at *13 (N.D. Ill. July 15, 2005). At the same time, the court ruled that Muro's personal claim under Count I survived summary judgment, because she alleged that Target had closed her account before sending her an unsolicited TVC, thus making the substitution defense inapplicable. Id. The court reserved ruling on whether class certification was appropriate as to Count II, asking the parties to provide further briefing on the question, and referred the case to Magistrate Judge Geraldine Soat Brown for discovery supervision.

Currently before the court are five matters. First, both Target and Muro have moved for summary judgment as to Count II, the TILA disclosure claim. Second, the court now considers whether a class should be certified as to Count II. Third, Muro has moved the court to reconsider its previous grant of summary judgment on Target's substitution defense. Fourth, Muro has filed objections to certain of the Magistrate Judge's discovery rulings. Finally, Target has filed an objection to Judge Brown's direction that Target produce seventy-nine documents over which it asserts privilege. For the reasons explained below, the court grants summary judgment in favor of Target on Count II, denies class certification on Count II, denies the motion to reconsider the earlier grant of summary judgment, overrules Muro's objections to Judge Brown's orders, and sustains in part Target's objection to her rulings on the privileged documents.


The court assumes that readers of this opinion are acquainted with the facts recited in its prior memorandum opinion and order, and in the prior orders of the Magistrate Judge. See Muro v. Target Corp., 243 F.R.D. 301, 303-05 (N.D. Ill. 2007) (Brown, Mag. J.); Muro v. Target Corp., No. 04 C 6267, 2006 WL 3422181, at *1-2 (N.D. Ill. Nov. 28, 2006) (Brown, Mag. J.); Muro, 2005 WL 1705828, at *1-3 (Pallmeyer, J.).

I. The Target Gift Card and the Target Visa Card

In 1998, Muro applied for a Target Guest Card, which is an in-store credit card that can only be used at Target Stores. (Muro Dep. 80:10-16.) She paid the balance in full in December of 1999 and asked Target National Bank (then known as Retailer's National Bank) to close her Target Guest Card account. (Id. at 16:3-20, 17:11-14, 29:9-22.) According to Muro, Target National Bank representatives told her that they would close the account, and although she never received a letter confirming that the account was closed, she never again received a bill for the Target Guest Card. (Id. at 19:1-18.)

More than four years later, on August 31, 2004, Muro received an unsolicited TVC in the mail. (Id. at 33:1-6, 34:2-21.) Target furnished the written disclosures required by the TILA in connection with this card, but did not organize them in a table. (Pl.'s LR 56.1 Resp. [142-2] ¶ 13; Defs.' LR 56.1 Resp. [151] ¶ 23.) Muro understood that she would need to activate the TVC before she could use it. (Muro Dep. 43:18-23.) She did not, in fact, activate the TVC, nor did she suffer any actual damages as a result of receiving it. (Id.; Pl.'s LR 56.1 Resp. ¶ 16.) Furthermore, Muro admits that she never paid a finance charge in connection with the TVC (Pl.'s Summ. J. Sur-Reply [178], at 6), and there is no evidence, nor has she suggested, that she ever used it. Nevertheless, Muro found receiving the unsolicited card to be "really upsetting," so she contacted an attorney and initiated this lawsuit. (Muro Dep. 36:9-22.)

II. The Privilege Log Dispute

After deciding the first set of motions for summary judgment, the court referred this case to the Magistrate Judge for pretrial supervision. (Minute Entry [149].) Subsequently, an extensive discovery dispute arose, which generated two written opinions by the Magistrate Judge and two sets of objections from the parties. The court will briefly recount the history of this dispute, which concerns the validity of Target's claim that a group of documents are subject to the attorney-client privilege.

After Muro filed her Fourth Motion to Compel Production of Documents [157-1], the Magistrate Judge ordered Target to produce a privilege log that satisfied the requirements of Federal Rule of Civil Procedure 26(b)(5) as described in Allendale Mutual Insur. Co. v. Bull Data Systems Inc., 145 F.R.D. 84 (N.D. Ill. 1992). (Minute Entry [187], Dec. 22, 2005.) Target then produced a privilege log listing eighty-nine documents as privileged, all but four of which were e- mails. Muro, 243 F.R.D. at 304 n.3.

On March 13, 2006, Muro made another motion to compel the production of the documents listed on the log [216], arguing in part that Target had waived its privilege objections by failing to produce a privilege log until February 28, 2006. After finding that, whether or not Muro had received it, Target had timely produced the log in June of 2005,*fn1 the Magistrate Judge took the motion to compel under advisement, pending an in camera review of the allegedly privileged documents. (Minute Entry [223, hereinafter "2d Brown Order"], at 3, April 6, 2006.) Muro filed a timely objection to this ruling, urging that the Magistrate Judge had erred by failing to order production at that time (Pl.'s Objs. [231-2], at 7-9), as well as challenging numerous other rulings contained in the Magistrate Judge's minute orders of April 5-6, 2006.*fn2 (Id. at 2-6, 10-15; Minute Entry [222, hereinafter "1st Brown Order"], April 5, 2006; 2d Brown Order 1-3.)

Following her in camera review, Judge Brown concluded that although many of the documents listed might indeed be privileged, the log was inadequate. Muro, 2006 WL 3422181, at *3. Specifically, Target's log did not include information about the role of each author or recipient of the communications listed and did not indicate which communicants were attorneys. Id. Accordingly, Judge Brown ordered Target to submit a revised log so that she could rule on its privilege claims, warning Target that failure to comply with the order, including failure to adequately explain the role of each communicant, would result in an order compelling production. Id. at *6.

Target filed a revised privilege log [239], now claiming that only seventy-nine documents were privileged, see Muro, 243 F.R.D. at 304, and Muro renewed her motion to compel [240]. Target declined to respond to this motion, choosing instead to rest on the revised log. Id. at 304-05.

The Magistrate Judge then reviewed both the revised log and the itemized documents in camera, concluded that the log remained inadequate, and ordered production of all documents listed in the log. Id. at 310. In her opinion, Judge Brown listed four reasons for this decision. First, the log failed to separately itemize e-mails forwarded as part of an e-mail "string." Id. at 306-07. Second, many of the communications were sent to more than ten Target employees. Id. at 307-08. Third, the log did not include information about many recipients, because the log failed to specify who precisely received e-mails sent to mailing lists, and because some of the job titles listed on the log were insufficiently explanatory. Id. at 308. Finally, few of the documents listed included explicit limitations against further dissemination. Id. at 308-09.

Judge Brown ordered Target to produce all the documents listed on the log, without stating specifically whether this order was a sanction for defects in the revised privilege log, or it was based on a finding that the privilege did not attach to any of the documents. See 310. The Magistrate Judge did not find that Target had acted in bad faith in connection with the creation of the revised privilege log, and did not individually discuss each document listed in the log. See id. at 306-10. Target filed a timely objection to the Magistrate Judge's order. (Defs.' Objs. [251], at 1, June 21, 2007.)


I. Summary Judgment on Count II

First, this court considers the parties' cross motions for summary judgment on Muro's claim that Target sent her a credit card without making the required TILA disclosures. Summary judgment is appropriate when the evidence, viewed in the light most favorable for the non-moving party, presents no genuine issue of material fact, so that the movant is entitled to judgment as a matter of law. Abdullahi v. City of Madison, 423 F.3d 763, 769 (7th Cir. 2005).

Muro claims that Target has violated both §§ 1637(a) and (c). (Am. Class Action Compl. [19] ¶¶ 30-35.) Section 1637(a) requires that a creditor make certain enumerated disclosures "before opening" a credit card account. By contrast, § 1637(c) requires a different set of enumerated disclosures in connection with any "applications or solicitations" for credit card accounts. Finally, § 1640 places limits on who may bring a private action to enforce §§ 1637(a) and (c).*fn3

A. Muro's Claim Under § 1637(a)

Target is entitled to summary judgment on the § 1637(a) claim, because Muro has admitted that "where [there was a] duty of disclosure under the Truth in Lending Act" in connection with the credit card Muro received, "Target furnished the required disclosures." (Pl.'s LR 56.1 Resp. ¶ 13.) In her Local Rule 56.1 Response, Muro goes on to contend that those disclosures were not "in the tabular format required by 12 C.F.R. § 226.5a." (Pl.'s LR 56.1 Resp. ¶ 13.) Although this contention is relevant to her § 1637(c) claim, it has no bearing here; tabular format is required in disclosures accompanying applications and solicitations for credit card accounts, see 15 U.S.C. § 1637(c), 12 C.F.R. § 226.5(a)(3) (2007), but not for initial disclosures relating to the opening of a credit card account, see 15 U.S.C. § 1637(a), 12 C.F.R. § 226.6. Thus, Muro has admitted that all necessary § 1637(a) disclosures accompanied the credit card sent to her by Target.

Muro contends, however, that these disclosures came too late to satisfy the § 1637(a) requirement that all disclosures occur "before the opening" of a credit card account. (Pl.'s Summ. J. Resp. [142-3], at 13; Pl.'s Summ. J. Sur-Reply [178], at 5-6.) The basis of this contention appears to be Muro's theory that an "account" was opened before Target sent the credit card. Target, by contrast, claims that an account would only have been opened if Muro had activated that card, which never occurred. (Defs.' Summ. J. Mem. [114], at 4.) Neither party cites any authority for these assertions, and although both parties have made conclusory statements about this issue,*fn4 neither has offered a legal argument on the topic, so the court proceeds without the benefit of useful input from the parties.

Neither § 1637, nor the definition section of the TILA, 15 U.S.C. § 1602, nor Regulation Z, 12 C.F.R. §§ 226.2, 226.6, provide any definitions clarifying when an "account" has been "opened" for the purposes of the TILA. Nor have either the Supreme Court or the Seventh Circuit provided guidance on this question. Regulation Z does make it clear that initial disclosures must be furnished before a consumer makes any transaction under the credit plan, 12 C.F.R. § 226.5(b)(1), but this does not foreclose the possibility that an account is opened (and disclosure obligations attach) before that time. See Lirtzman v. Spiegel, Inc., 493 F. Supp. 1029, 1033 (N.D. Ill. 1980) (holding that initial disclosures must occur at"some time beforethe first transaction takes place," but leaving open the question of how much earlier that should be) (internal citations and punctuation omitted).

Although there is no binding authority on this issue, those commentators who have addressed the matter have concluded that an account is not "opened" until the consumer has accepted a credit offer and become bound by its terms. Thus, both the Federal Reserve Board's Official Staff Commentary and the treatise Truth in Lending state that disclosures are timely if they are made "before the customer becomes obligated on the plan." Official Staff Commentary on Regulation Z §226.5(b)(1), in Elizabeth Renuart & Kathleen Keest, Truth in Lending app. C, at 812 (5th ed. 2003); Renuart & Keest, supra, at § 5.5.2.

The few courts to consider the issue have reached similar conclusions. Thus, the Kansas Supreme Court has held that disclosures are timely if they are made while a consumer still may choose to opt out and accept a different offer of credit. Super Chief Credit Union v. Gilchrist, 653 P.2d 117, 125 (Kan. 1982). Similarly, the Third Circuit has observed that the initial disclosure requirement is usually satisfied, in a credit card agreement, "by providing the disclosures along with the card." Rossman v. Fleet Bank (R.I.) Nat'l Ass'n, 280 F.3d 384, 390 (3d Cir. 2002) (citing S. Rep. No. 100-259, at 3 (1988), reprinted in 1988 U.S.C.C.A.N. 3936, 3938). Finally, the Southern District of New York has held that disclosures provided at the time that a consumer signs a credit agreement are timely. Stein v. JP Morgan Chase Bank, 279 F. Supp. 2d 286, 292-93 (S.D.N.Y. 2003). Thus, the existing authorities strongly support the reading that an account is not "opened" until the customer has acted to bind herself to its terms.

The strongest contrary argument is that this court is bound to construe the TILA liberally, in order to effectuate its goal of meaningful disclosure. See Valencia v. Anderson Bros. Ford, 617 F.2d 1278, 1282 (7th Cir. 1980), rev'd on other grounds, 452 U.S. 205 (1981). The court's duty, however, is not to give broad construction mindlessly, but rather to apply constructions that further the goal of the statute, which is to promote "the informed use of credit" by ensuring that consumers are aware of the costs of credit and able to meaningfully compare different credit offers. See 15 U.S.C. ยง 1601(a). So long as a consumer is given proper disclosures before binding herself, this statutory purpose is ...

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