Jordan, Claudine W. v. Toyota Motor Credit ( 2001 )

In the
United States Court of Appeals
For the Seventh Circuit
No. 00-2327
Claudine W. Jordan, on behalf of herself
and a class of others similarly situated,
Plaintiff-Appellant,
v.
Toyota Motor Credit Corporation,
Defendant-Appellee.
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 97 C 6697--Ann Claire Williams and James B. Moran,
Judges.
Argued November 27, 2000--Decided January 9, 2001
Before Bauer, Posner, and Easterbrook, Circuit Judges.
Easterbrook, Circuit Judge. Five years ago we
held that a consumer lease need not explain the
"sum-of-the-digits method" for computing an early
termination charge; it is enough to give the
method’s name. Channell v. Citicorp National
Services, Inc., 89 F.3d 379, 382-83 (7th Cir.
1996). The portion of the Truth in Lending Act
applicable to leases, see 15 U.S.C. sec.1667a,
requires the lessor’s method for determining any
early termination charge to be disclosed in a
"clear and conspicuous manner". Emphasizing the
word "manner," Channell concluded that the
required information must stand out but need not
be simple enough for ordinary customers to grasp.
In the current case a class of auto lessees
contends that a lease’s reference to the
"constant-yield method" of calculating an early
termination charge is too abstruse to be "clear."
Plaintiffs allow that the language is
"conspicuous" but deny that it is "clear" unless
the average consumer can understand how the
method works. Judge Williams thought this
argument foreclosed by Channell and dismissed the
claim. 1999 U.S. Dist. Lexis 2553 (N.D. Ill. Feb.
24, 1999). After Judge Williams joined this
court, what was left of the case fell to Judge
Moran, who dismissed the remaining allegations,
2000 U.S. Dist. Lexis 5960 (N.D. Ill. Apr. 25,
2000), producing an appealable judgment.
Plaintiffs recognize that Channell is against
them and ask us to overrule that decision. We
decline, and not only because of stare decisis.
Channell noted that the Federal Reserve (which
has regulatory authority under the TILA) had
proposed a regulation that would explicitly
permit lessors to disclose a method by giving its
name rather than the details of its calculation.
Since Channell, that regulation has been adopted.
See 12 C.F.R. Part 213.4(g) (2000) and the
Official Staff Commentary. The Federal Reserve
recognized that a name may be superior to a
narration, for application can be complex--a
point exemplified by the constant-yield method,
which employs the calculus (while the sum-of-the-
digits method is algebraic). Lessees who know the
name of the method can use that knowledge to
engage in comparison shopping; rival lessors can
trumpet the benefits of their methods. (The
constant-yield method is more favorable to
lessees than is the sum-of-the-digits method.) We
agree with Applebaum v. Nissan Motor Acceptance
Corp., 226 F.3d 214, 220 (3d Cir. 2000), that the
word "clear" could mean "easily understood" or
some variant. See also Smith v. Cash Store
Management, Inc., 195 F.3d 325, 327-28 (7th Cir.
1999). Still, this does not lead us to depart
from the conclusion of Channell that how far to
go in the direction of requiring complex concepts
to be presented in easy-to-follow language (if
that is possible at all) is a question for the
Federal Reserve. Cf. Smith v. Check-N-Go of
Illinois, Inc., 200 F.3d 511 (7th Cir. 1999). The
Fed has so far blessed disclosure by name,
because it believes that nothing better is
achievable at acceptable cost. That decision is
entitled to judicial respect. Applebaum held that
a reference by name to the "constant-yield
method" satisfies the TILA and the Fed’s
regulations, even if the average consumer hasn’t
a clue what the "constant-yield method" entails.
Still, plaintiffs insist, even if we adhere to
Channell and follow Applebaum (as we do),
Toyota’s lease flunks the TILA because it does
more than give the method’s name. Two lengthy
paragraphs attempt to explain how Toyota
calculates early-termination charges. We say
"attempt" because the paragraphs are incomplete;
they do not use the language of calculus and so
are doomed to miss the mark. Plaintiffs filed
affidavits from a mathematician and a person with
experience in the auto industry who conclude that
it is not possible to use the language of the
lease as a step-by-step formula that leads to a
precise calculation of the early-termination
charge; the affiants slogged through the lease’s
language but in the end each had to draw on some
personal knowledge to complete the exercise. Even
if using an unelaborated name is proper,
plaintiffs insist, a gobbledygook explanation of
that method entitles them to damages.
This supposes, however, that a better
explanation is available, and that Toyota chose
to obfuscate when it could have clarified. At
oral argument plaintiffs’ counsel conceded that
he had been unable to come up with a better
explanation; we can’t think of one either, other
than using equations that would flummox all but
a handful of readers. Perhaps a lessor could not
only satisfy its statutory obligation but also
assist consumers by giving, not an exegesis, but
the location of a site in the Internet that would
perform the calculations for any inquiring
lessee. Neither the TILA nor the Fed’s
regulations call for information to be delivered
electronically, however. Because the written
paragraphs are no worse than the unelaborated
name (they do not throw readers off the scent),
and because both the name and the exposition will
prove equally indigestible to most lessees,
adding the explanation did not produce a
violation of the TILA.
Affirmed