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One of the biggest issues credit card companies are facing in the courts these days has been decided in their favor with one of the smallest of opinions by a judge who is well known for being terse. In a two-page memorandum with a one-page order, Senior Judge John P. Fullam of the U.S. District Court for the Eastern District of Pennsylvania dismissed a claim under the Truth in Lending Act in Roberts v. Fleet Bank, a class action suit in which the plaintiff claimed she was falsely promised a “fixed” rate of 7.99 percent only to see the rate raised to 10.5 percent one year later. Fleet’s lawyers — Burt M. Rublin, Alan S. Kaplinsky and John C. Grugan of Ballard Spahr Andrews & Ingersoll — argued that the promise of a “fixed” rate was not false since the term “fixed” simply means that the interest rate is not “variable.” And the disclosures in Fleet’s application made it perfectly clear that the terms of the credit card, including the interest rate, could be changed “at any time.” But a large team of plaintiffs’ lawyers insisted their case was a good one since TILA is a law that courts construe liberally in favor of consumers, and Fleet’s solicitation materials seemed to promise that the interest rate was “fixed” at 7.99 percent. Leading the plaintiffs’ team were attorneys Marc H. Edelson, Jerrold B. Hoffman and Alan V. Klein of Hoffman & Edelson in Doylestown, Pa., along with Ira Neil Richards and Gary M. Goldstein of Rodriguez & Richards in Philadelphia. They were joined on the briefs by attorneys Roberta D. Liebenberg of Fine Kaplan & Black and Jonathan Shub of Sheller Ludwig & Badey, both in Philadelphia; Andrew B. Spark of Sarasota, Fla.; and Kenneth A. Wexler of Chicago. Fleet’s lawyers argued that the case was very similar to Rossman v. Fleet Bank in which federal Judge Bruce W. Kauffman of the U.S. District Court for the Eastern District of Pennsylvania in January dismissed a TILA claim where the plaintiffs said they were promised a credit card with no annual fee only to have one imposed just six months later. Kauffman found that the TILA has a narrow scope and requires only that banks disclose all of the terms that will apply to credit card holders on the day they receive the card. “If as alleged, Fleet lured consumers into opening credit card accounts with relatively favorable terms while intending to switch those terms shortly thereafter, then Fleet unquestioningly engaged in wrongdoing. But wrongdoing alone does not automatically trigger application of the TILA’s provisions,” Kauffman wrote. Kauffman found that Fleet’s disclosures in the solicitations it sent to consumers in late 1999 were “accurate with respect to the terms offered at that time; the fact that Fleet allegedly intended to change those terms in the near future did not render the disclosures inaccurate for purposes of the TILA.” Fleet’s lawyers argued that the Rossman case was “on all fours” with the Roberts case. “As Judge Kauffman correctly held in Rossman, TILA only requires accurate disclosures of the credit terms to which the consumer is contractually bound at the time of the provision of the disclosures,” they wrote in their brief. But plaintiffs’ lawyers argued that a jury could look at Fleet’s offer and find that it violated TILA. “By labeling a rate as ‘fixed’ and by telling consumers that it ‘will be’ 7.99 percent, defendants conveyed a credit offer different from the one that they now claim was offered,” the plaintiffs’ team wrote. In Fleet’s letter, the plaintiffs said, the bank promised that the 7.99 percent rate “is NOT an introductory rate. It won’t go up in just a few short months.” But defense lawyers argued that the plaintiffs’ entire case was premised on the solicitation letter — which has nothing to do with the actual TILA disclosures — and that the disclosures were completely accurate since they said the rate could change at any time. Judge Fullam sided with the defense and adopted Judge Kauffman’s reasoning in Rossman. “The preliminary disclosure statement sent to plaintiff at the same time as the solicitation letter informed her that the defendant reserved the right to change the interest rate, upon due notice. The credit card agreement, which plaintiff signed (after her application had been received and approved) also contained an express provision giving the defendant the right to change the interest rate,” Fullam wrote. And with one more sentence, Fullam dismissed the only federal claim in the case. “Therefore, defendant did not violate the disclosure requirements of the Truth in Lending Act or any other provisions of that statute,” Fullam wrote.

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