David Gambardella, et al., Plaintiffs-appellees, v. G. Fox & Co., Defendant-appellant, 716 F.2d 104 (2d Cir. 1983)

G. Fox & Co. (G. Fox), a department store chain, appeals from orders of the District Court for the District of Connecticut, Cabranes, J., granting Mr. and Mrs. David Gambardella summary judgment, and awarding them statutory damages of $100 and attorney's fees of $6,222, in their action against G. Fox alleging violations of federal and state truth-in-lending laws. The Gambardellas, Connecticut residents, have an open-end credit account with G. Fox. The Gambardellas allege that the monthly account statements G. Fox sent them between September 23, 1980 and September 22, 1981 violated the federal Truth in Lending Act (TILA), 15 U.S.C. §§ 1601 et seq., and coordinate Connecticut statutes, Conn.Gen.Stat. Secs. 36-393 et seq., in numerous respects. Judge Cabranes, on September 20, 1982, granted the Gambardellas summary judgment on two alleged violations, thus finding it unnecessary to rule upon four additional claims. We believe that G. Fox's account statements complied with applicable laws both in those points ruled upon by Judge Cabranes and those not ruled upon. We therefore reverse the judgment, vacate the award of attorney's fees, and remand with directions to dismiss the complaint.

Congress has authorized the Federal Reserve Board (FRB) to exempt from compliance with TILA, and with the implementing regulations promulgated by the FRB, 12 C.F.R. Secs. 226.1 et seq. (Regulation Z), "any class of credit transactions within any State" that the FRB determines to be subject to enforceable state law requirements "substantially similar" to federal disclosure requirements. 15 U.S.C. § 1633. Accordingly, the FRB in 1970 exempted from compliance with TILA and Regulation Z most classes of credit transactions in Connecticut, including open end credit accounts. 12 C.F.R. Sec. 226.55(e). Under the exemption the federal disclosure requirements applicable to Connecticut credit transactions are those imposed by Connecticut's Truth-in-Lending Act, Conn.Gen.Stat. Secs. 36-393 et seq., and implementing regulations promulgated by Connecticut's Banking Commissioner, except to the extent that state law requires disclosures not required by federal law. 12 C.F.R. Sec. 226.12(c) (2). See Ives v. W.T. Grant Co., 522 F.2d 749, 753 (2d Cir. 1975); Grey v. European Health Spas, Inc., 428 F. Supp. 841, 843 n. 1 (D. Conn. 1977). Since Connecticut law is the law applicable to the Gambardellas' claims, primary citation in this opinion will be made to Connecticut statutes and regulations, and parallel citations, in parentheses, will be made to the corresponding provisions of federal law. The federal and state laws are, however, substantially identical, and are directed toward the same goals, and thus judicial and administrative interpretations of TILA and Regulation Z are relevant here. See Bizier v. Globe Fin. Servs., Inc., 654 F.2d 1, 2 (1st Cir. 1981).

In 1980 Congress substantially amended TILA by enacting the Truth in Lending Simplification and Reform Act (TILSRA), passed as Title VI of the Depository Institutions Deregulation and Monetary Control Act of 1980, Pub. L. No. 96-221, Sec. 601, 94 Stat. 168 (1980). Because G. Fox issued all of the challenged account statements prior to TILSRA's effective date of October 1, 1982,¹  this case must be decided under TILA, Regulation Z, and Connecticut law as they stood prior to TILSRA's enactment.

A. Claims Ruled Upon.

1. Amount of Payment Necessary to Avoid Additional Finance Charges.

G. Fox imposes a monthly finance charge upon the average daily balance in its customers' accounts. The finance charge is assessed at a rate of 1.25% upon the sum of the customer's daily balances during the monthly billing cycle divided by the number of days in the cycle. No finance charge is assessed, however, if the customer's balance at the start of the billing cycle is $3 or less. G. Fox informs customers of its finance charge policy with disclosures on both the front and the reverse of its account statements.²  The front advises customers: "TO AVOID ADDITIONAL FINANCE CHARGES PAY THE NEW BALANCE IN FULL BY THE PAYMENT DUE DATE"; the reverse, however, discloses that "No FINANCE CHARGE is assessed in any billing period in which the 'Previous Balance' ... is $3 or less." The terms "new balance" and "previous balance" are defined by regulation. New balance is the account balance at the close, and "previous balance" is the account balance at the start, of a billing cycle. Sec. 36-395-6(b) (1) (i), (ix), (Sec. 226.7(b) (1) (i), (ix)). Because the balances in an account at the close of a given billing cycle, and at the start of the immediately succeeding cycle, are the same, a customer's "new balance" at the close of a cycle is carried into the next billing cycle as his "previous balance." When this relationship between "new balance" and "previous balance" is kept in mind, a contradiction between G. Fox's two disclosures becomes apparent. The front states without qualification that the "new balance" disclosed on the periodic statement must be paid in full to avoid additional finance charges in the subsequent billing period. The reverse, however, reveals that additional finance charges will not be assessed, even if no payment is made, if the "new balance" is $3 or less.³  The Gambardellas claim, and the district judge ruled, that this contradiction violates Connecticut regulations governing the disclosure of information in periodic statements.⁴  We disagree.

Creditors who maintain open-end credit accounts must, at the close of each billing cycle, provide their customers with account statements disclosing the information specified in Conn.Bank.Reg. Sec. 36-395-6(b) (1), (Sec. 226.7(b) (1)). The required disclosures must be made "clearly, conspicuously, in meaningful sequence, ... and at the time and in the terminology prescribed." Sec. 36-395-5(a), (Sec. 226.6(a)). The creditor may, if it chooses, include in its periodic statements additional information or explanations but such additional information may not be "stated, utilized or placed so as to mislead or confuse the customer or contradict, obscure or detract attention from the information required to be disclosed." Sec. 36-395-5(b), (Sec. 226.6(c)). The district judge did not determine whether Sec. 36-395-6(b) (1) requires disclosure of the amount of payment necessary to avoid additional finance charges. Instead, the judge ruled that the contradiction between G. Fox's statements rendered them "unclear and misleading," and placed them in violation of the regulations, regardless of whether disclosure was required or voluntary. We believe the judge should have determined, before making his ruling, whether Sec. 36-395-6(b) (1) required G. Fox to disclose the information at issue. As Sec. 36-395-5(a) & (b) establish different standards of review for required and additional disclosures, analysis of the Gambardellas' claim would have been facilitated by such a determination. We conclude that the amount of payment necessary to avoid additional finance charges is an additional, and not a required, disclosure.

Our analysis necessarily begins with the express language of the statute and regulations. See Ford Motor Credit Co. v. Milhollin, 444 U.S. 555, 560, 100 S. Ct. 790, 794, 63 L. Ed. 2d 22 (1980). Section 36-404(b) (9) & (10) of the Connecticut General Statutes (15 U.S.C. § 1637(b) (9) & (10)), specifies the information creditors must reveal about additional finance charges. The statute is implemented in Conn.Bank.Reg. Sec. 36-395-6(b) (1) (ix), (12 C.F.R. Sec. 226.7(b) (1) (ix)) ("Section 9"), which requires disclosure of:

the closing date of the billing cycle and the outstanding balance in the account on that date, using the term "new balance", ... accompanied by the statement of the date by which, or the period, if any, within which, payment must be made to avoid additional finance charges, except that the creditor may, at his option, and without disclosure, impose no such additional finance charges if payment is received after such date or termination of such period.

Although this language clearly requires creditors to disclose (1) the closing date of the billing cycle, (2) the "new balance," and (3) the payment due date, neither it, nor any other provision of the state or federal regulations, expressly requires disclosure of the amount of payment necessary to avoid additional finance charges.

The absence of an express disclosure requirement in the regulations is significant, although not conclusive, evidence that disclosure is not required. Regulation Z "cannot speak explicitly to every credit disclosure issue," Milhollin, 444 U.S. at 560, 100 S. Ct. at 794, and courts therefore must be prepared, in appropriate cases, to infer from the statutory and regulatory schemes, and from TILA's underlying policies, disclosure requirements beyond those expressly stated in the regulations.

The regulatory scheme strongly suggests that disclosure of the amount of payment necessary to avoid finance charges is not required. Particular regard must be paid Sec. 36-395-6(b) (1) (v), (Sec. 226.7(b) (1) (v)), ("Section 5"), which requires creditors to disclose certain information about the methods used to compute finance charges. Section 5 requires disclosure of "each periodic rate ... that may be used to compute the finance charge, whether or not applied during the billing cycle, and the range of balances to which it is applicable," but provides that " [i]f a creditor does not impose a finance charge when the outstanding balance is less than a certain amount, the creditor is not required to disclose that fact or the balance below which no such charge will be imposed." The balance at or below which finance charges are not imposed is, of course, equivalent to the maximum balance which need not be paid to avoid additional finance charges. Section 5 thus expressly authorizes creditors to withhold, for purposes of the disclosure it requires, the information the Gambardellas claim is implicitly covered by Section 9.

Sections 5 and 9 are in part directed toward different goals. Customers can use the interest rates disclosed under Section 5 to check the accuracy of finance charges already assessed. In contrast, disclosure of closing and payment dates, and of the account "new balance," under Section 9 helps customers to avoid new finance charges, and not to review past charges. The Gambardellas claim that this distinction establishes the irrelevancy of Section 5 to the proper interpretation of Section 9. They argue that Section 9 is intended to reveal the information consumers need to avoid additional finance charges, and that the regulation's goal will be thwarted if Sections 5 and 9 are interpreted in tandem. We do not agree. Whatever policies lie behind Section 9, the very existence of the Section 5 exemption reveals that the FRB was aware, when it drafted the regulations, that some creditors do not impose finance charges upon small balances. We therefore must presume that the FRB's failure expressly to require disclosure in Section 9 reflects informed choice, and not oversight. Indeed, since Section 5 includes a proviso expressly exempting from disclosure information otherwise covered by the clear language of the regulation, and since Section 9, giving the language its ordinary meaning, does not require disclosure of the information exempted from Section 5, we conclude that the FRB did not intend to require disclosure.⁵ 

The policy behind TILA supports our interpretation of the regulations. Congress intended TILA to facilitate the informed use of credit by consumers, to protect consumers against inaccurate and unfair credit billing practices, and to enhance competition between credit extenders. See 15 U.S.C. § 1601. To these ends TILA requires creditors to disclose the information specified in the Act and Regulation Z. However, the "meaningful" disclosure TILA requires, Milhollin, 444 U.S. at 568, 100 S. Ct. at 798, should not be equated with complete disclosure of all credit terms of potential use to consumers. Instead, TILA requires the FRB to strike "a balance between 'competing considerations of complete disclosure ... and the need to avoid ... [informational overload].' " Id., quoting S.Rep. No. 73, 96th Cong., 2d Sess. 3 (1979), U.S.Code Cong. & Admin.News 1980, pp. 236, 281. The FRB could reasonably have determined, when drafting Regulation Z, that required disclosure of the amount of payment necessary to avoid additional finance charges would create more confusion than benefits. The potential for confusion becomes apparent when one considers the statement G. Fox would have to make to satisfy the Gambardellas. The statement the Gambardellas challenge, "TO AVOID ADDITIONAL FINANCE CHARGES PAY THE NEW BALANCE IN FULL BY THE PAYMENT DUE DATE," though generally accurate, is misleading to consumers who have "new balances" of $3 or less. Those consumers need not make any payment to avoid additional finance charges. G. Fox could correct the inconsistency by stating: "To avoid additional FINANCE CHARGES pay the New Balance in full whenever the New Balance is more than $3." This latter statement, however, undoubtedly would cause many consumers to believe that payment of all but $3 of the "new balance" would eliminate finance charges in the subsequent billing period. Such is not the case.⁶  Complete front-side disclosure would benefit only those few persons with new balances between $0 and $3. Beyond the deference we must give the regulations, we cannot say the FRB erred in declining to require disclosure of potentially confusing information that is of slight interest to a few consumers, and of importance to none.⁷  Cf. Pittman v. Money Mart, Inc., 636 F.2d 993, 995-96 (5th Cir. 1981) (Full disclosure of creditor's late charge policy not required where disclosure would unduly complicate statements provided to consumers).

Because the amount of payment necessary to avoid additional finance charges is not a required disclosure, G. Fox's reverse-side statement, "No FINANCE CHARGE is assessed in any billing period in which the 'Previous Balance' ... is $3 or less," must be treated as an additional disclosure reviewable under Sec. 36-395-5(b), (Sec. 226.6(c)). As an additional disclosure, the statement is a violation if it has been "stated, utilized or placed so as to mislead or confuse the customer or contradict, obscure or detract attention from the information required to be disclosed." This regulation states first that the creditor may not "mislead or confuse the customer." Second, it states that the additional disclosure may not "contradict, obscure or detract attention from" information required to be disclosed. Addressing the second prohibition first, it is readily apparent that G. Fox's reverse-side statement does not "contradict, obscure or detract attention from" any required disclosure. Section 9, (Sec. 36-395-6(b) (1) (ix)), supra, requires disclosure of only (1) the closing date, (2) the new balance, and (3) the payment due date. An additional disclosure of the circumstances in which additional finance charges are not assessed cannot impair the customer's understanding of the dates and balances disclosed under Section 9. Further, we believe that the first part of Sec. 36-395-5(b) proscribes only presentations of additional information that mislead or confuse the consumer in his understanding of information required to be disclosed. Accord, Stewart v. Ford Motor Credit Co., 685 F.2d 391, 394 (11th Cir. 1982); Fox v. Heilig-Meyers Co., 681 F.2d 212, 214 (4th Cir. 1982).⁸  The focus of TILA is upon the clear and conspicuous disclosure of information specified by statute and regulation. Section 36-395-5(b) should not be read to depart from the Act's basic pattern by authorizing courts to premise liability upon an unclear presentation of optional information.⁹  G. Fox's reverse-side statement certainly does not violate the regulation under our interpretation. Even if the statement confuses consumers about the payment necessary to avoid finance charges (and we doubt that it does), it could not possibly confuse or mislead anyone about the information G. Fox discloses under Section 9. Since, then, the only possible confusion relates to an additional, and not to a required, disclosure, no violation has occurred.¹⁰ 

2. Notice of Reverse-Side Disclosures.

A creditor may, if it chooses, place certain required disclosures upon the reverse of its periodic statements. 12 C.F.R. Sec. 226.7(c), (Sec. 36-395-6(c)). If a creditor exercises this option, as G. Fox has done, it must disclose that fact to consumers. Section 226.7(c) (4), (Sec. 36-395-6(c) (4)), provides:

If the creditor exercises any of the options [for reverse-side disclosure] provided for under this paragraph, the face of the periodic statement shall contain one of the following notices, as applicable: "NOTICE: See reverse side for important information" ...

Section 226.7(c) (4), as it appears in the Code of Federal Regulations, sets the word "NOTICE " apart from the remainder of the required notice by printing it in bold, italicized capitals. The remainder of the notice, in contrast, is not italicized and, with the exception of the capitalized "S" in "See," is printed in lower case. G. Fox printed the Sec. 226.7(c) (4) notice on the face of its periodic statements as follows: "NOTICE: SEE REVERSE SIDE FOR IMPORTANT INFORMATION". G. Fox thus printed the words used in Sec. 226.7(c) (4), but printed them in a different style. Not only did G. Fox fail to italicize "NOTICE," it printed the words following the colon in upper rather than lower case. The Gambardellas claim, and the district judge agreed, that the variance between G. Fox's print style and that found in Sec. 226.7(c) (4) violated TILA.¹¹  The district judge concluded that the use of the imperative word "shall" in Sec. 226.7(c) (4), together with the differentiation in print style between the required notice and the remainder of the regulation, indicates that "a creditor must print the required notice as it appears in the regulation, including its peculiar print and type characteristics." We disagree.

Several factors indicate that Sec. 226.7(c) (4) does not impose print style requirements. First, the FRB apparently states such requirements expressly when it intends to impose them. A different provision of Regulation Z, Sec. 226.6(a), provides:

[W]here the terms "finance charge" and "annual percentage rate" are required to be used, they shall be printed more conspicuously than other terminology required by this part and all numerical amounts and percentages shall be stated in figures and shall be printed in not less than the equivalent of 10 point type, .075 inch computer type, or elite size typewritten numerals ...

(emphasis supplied). Section 226.7(c) (4) contains no language similar to that emphasized above. Where an administrative agency has "carefully employed a term in one place and excluded it in another," the "usual canons of statutory construction" counsel that the term not be implied where excluded. Marshall v. Western Union Tel. Co., 621 F.2d 1246, 1251 (3rd Cir. 1980). The FRB's use of express print style requirements in Sec. 226.6(a), and its omission of such terms from Sec. 226.7(c) (4), thus suggests that the district judge misread Sec. 226.7(c) (4). Second, neither Regulation Z nor the Connecticut regulations have themselves consistently used the print style the Gambardellas claim is mandatory. The FRB promulgated Regulation Z in 1969. The required notice, as then stated, and as first codified in Sec. 226.7(c) (3) in 1970, was printed as: "NOTICE: See reverse side for important information." The FRB added italics in 1976 without explanation. The Connecticut regulations, between 1969 and 1979, printed the required notice as it first appeared in Regulation Z. See Sec. 36-395-6(c) (3) (1970). Connecticut did not, between 1976 and 1979, add to Sec. 36-395-6(c) (3) the italics the FRB added to Sec. 226.7(c) (4) in 1976. Beginning in 1979, and continuing thereafter throughout the time period relevant to this case, Connecticut printed the required notice as: "Notice: see reverse side for important information." See Sec. 36-395-6(c) (4) (1979). The Connecticut regulation, so printed, differed from the federal in failing both to capitalize the "s" in "see," and to capitalize and italicize "Notice." States granted exemptions under 15 U.S.C. § 1633 must insure that creditors "make required disclosures and deliver required notices in form, content, and terminology as prescribed" in Regulation Z. Sec. 226.50(c) (2) (iii) (emphasis supplied). Accordingly, if Sec. 226.7(c) (4) requires creditors to print the notice provision in a specific form, Connecticut should have italicized "NOTICE" after 1976, and should not have amended its regulation in 1979 to create further distinctions between it and Sec. 226.7(c) (4). Although Connecticut's failure to track the federal regulation could be accidental, the FRB's failure in 1976 to explain why it italicized "NOTICE" suggests that it also did not view a change in print style as a substantive amendment. Lastly, the FRB in 1969 issued a pamphlet entitled "What You Ought to Know About Federal Reserve Regulation Z--Truth in Lending Consumer Credit Cost Disclosure." The FRB intended the pamphlet to help creditors comply with the new regulations, and included in it model forms covering a variety of disclosure issues. The model form which illustrated a possible format for periodic statements issued in connection with open-end credit accounts printed the notice provision as: "NOTICE: SEE REVERSE SIDE FOR IMPORTANT INFORMATION." In 1969, as noted above, Regulation Z printed the notice provision as "NOTICE: See reverse side for important information." The FRB thus printed the notice provision differently in the model form than in the regulations.¹²  We conclude that the FRB did not interpret Sec. 226.7(c) (4) to impose print style requirements.

The cases, administrative rulings, and FRB public information letters cited by the Gambardellas do not support their claim. Although FRB Public Information Letter No. 477 (May 19, 1971) does indicate that creditors cannot vary the wording of the notice required by Sec. 226.7(c) (4), it nowhere suggests that the regulation's print style is mandatory.

The FRB intended Sec. 226.7(c) (4) to inform consumers of the presence of reverse side information. The Gambardellas argue that if Sec. 226.7(c) (4) is interpreted not to impose print style requirements, creditors will use print styles inappropriate to the regulation's purpose. They argue that the print style used in Sec. 226.7(c) (4), because it italicizes and capitalizes "NOTICE," and uses lower case letters in the remainder of the provision, draws the consumer's attention to the word "NOTICE " and causes him to read the notice provision. They claim that other print styles, such as that used by G. Fox, may not adequately highlight the word "NOTICE" and are less likely to make the consumer aware of the notice provision. The Gambardellas' argument has no merit. Because creditors must make required disclosures "clearly" and "conspicuously," Sec. 226.6(a), (Sec. 36-395-5(a)), and because the Sec. 226.7(c) (4) notice is a required disclosure, it is unnecessary to read print style requirements into Sec. 226.7(c) (4) to insure adequate disclosure of the notice provision. Instead, whatever print style a creditor adopts must disclose the notice provision clearly and conspicuously. We are satisfied that the print style G. Fox adopted satisfied that standard. G. Fox printed the notice provision all in capitals at the bottom of its periodic statements, and used type as large and dark as most upon the page. A consumer who examined his periodic statement with any care could not fail to see the notice provision. We thus find that G. Fox complied with Sec. 226.7(c) (4).

B. Claims Not Ruled Upon.

Because proof of multiple violations in a single periodic statement does not increase the plaintiff's recovery, Conn.Gen.Stat. Sec. 36-407(g), (15 U.S.C. § 1640(g)), the district judge found it unnecessary to decide all of the Gambardellas' claims. Instead, after granting the Gambardellas summary judgment on two claims, he declined to rule upon the four claims remaining. Since we, in turn, have reversed the grants of summary judgment, we proceed to consider the four claims not ruled upon below. We see no reason for a remand. Where, as here, the language and format of the periodic statement are undisputed, and the sole issue is whether required disclosures have been made clearly and conspicuously, or whether additional disclosures confuse or mislead, the court may appropriately decide the plaintiff's claims as raising issues of law. See Ives v. W.T. Grant Co., 522 F.2d 749, 759 (2d Cir. 1975) (affirming grant of summary judgment to truth-in-lending plaintiff and rejecting defendant's argument that district court erred in failing to hold evidentiary hearing); contra, Barber v. Kimbrell's, Inc., 577 F.2d 216, 221 (4th Cir.), cert. denied, 439 U.S. 934, 99 S. Ct. 329, 58 L. Ed. 2d 330 (1978). We see little chance that a remand would produce competent evidence, other than the documents themselves, relevant to the Gambardellas' claims. Cf. Enright v. Beneficial Fin. Co. of N.Y., 527 F. Supp. 1149, 1156 (N.D.N.Y.1981). For that reason, and because the parties have fully briefed the additional claims, we have reviewed the claims and find that all four lack merit.

1. Failure to Use Dollar Signs.

G. Fox prints two horizontal columns at the top of its periodic statements. The top column, reading from left to right, contains the terms "Previous Balance," "Finance Charge," "Purchases," "Payments," "Credits," and "New Balance." The second column, located directly beneath the first, contains blank spaces into which G. Fox inserts the appropriate monetary amounts for each customer at the close of a billing cycle. Each of the amounts so inserted appears directly beneath a descriptive heading in the top column, e.g., "Previous Balance." The amounts are separated from one another by arithmetical symbols indicating that "Previous Balance" plus "Finance Charge" plus "Purchases" minus "Payments" minus "Credits" equals "New Balance." G. Fox does not precede the numbers in the second column with dollar signs ($). Similarly, further down on the statements, G. Fox prints monetary amounts without dollar signs under the headings "Average Daily Balance," "Past Due Amount," and "Minimum Payment." G. Fox does use dollar signs in disclosing, at the bottom of the statements, certain facts about the past month's finance charge. There, G. Fox prints dollar signs before the actual amounts of the finance charge and of the minimum finance charge, if any, and the range of balances to which differing periodic rates may be applicable.

The Gambardellas claim that G. Fox violated the regulations by failing to print dollar signs before all monetary amounts. They argue that dollar signs are needed clearly to disclose that the figures appearing on a customer's statement refer to dollar amounts, and that the absence of such signs rendered G. Fox's disclosure of monetary amounts unclear or confusing, in violation of Sec. 36-395-5(a) & (b), (Sec. 226.6(a) & (c)). They argue that G. Fox's use of dollar signs at the bottom of its statements, but not elsewhere, enhances the potential for confusion.

We see no merit in this ridiculous claim. There is no express regulatory requirement that creditors precede monetary amounts with dollar signs, nor do we see any realistic possibility that G. Fox customers would fail to realize which numbers appearing on their statements refer to dollar amounts. Each of the figures the Gambardellas claim should have been preceded by a dollar sign stands by itself, apart from any text, under a column heading which can reasonably be read only to refer to an amount of money. Under these circumstances dollar signs were not required. See Household Consumer Discount Co. v. Payne, 62 Ohio App.2d 181, 405 N.E.2d 729 (1978); GAC Fin. Corp. of Spokane v. Burgess, 16 Wash. App. 758, 558 P.2d 1386 (1977).¹³ 

2. Use of "CR" Symbol.

G. Fox uses the symbol "CR" in several places on its periodic statements. The central portion of the statements consists of five vertical columns headed, from left to right, "Date," "Reference No.," "Store/Dept No.," "Description of Dept," and "Amount." G. Fox reports receipt of a payment by printing the word "Payment" under "Description of Dept," and printing the amount of payment, followed by "CR," under "Amount." If the consumer has received a credit during the billing period, G. Fox identifies the store department which granted the credit, e.g., "Career Separates," under "Description of Dept," and under "Amount" prints the amount of the credit followed by "CR." Finally, if the consumer's "Previous Balance" or "New Balance" is a credit balance, G. Fox prints the amount of the balance, followed by "CR," under the appropriate heading at the top of the statement.

G. Fox thus uses "CR" to denote payments, credits, and credit balances. The Gambardellas claim that G. Fox's multiple use of "CR" drains the symbol of meaning and renders the disclosures it accompanies unclear and confusing, in violation of the regulations. We disagree.

The regulations require creditors to disclose their customers' balances at the start and at the close of the billing cycle, and appropriately to identify credit balances. Conn.Bank.Reg. Sec. 36-395-6(b) (1) (i) & (ix), (Sec. 226.7(b) (1) (i) & (ix)). G. Fox has complied with this requirement. It discloses starting and closing balances under the headings "Previous Balance" and "New Balance." It identifies credit balances by appending "CR" to the amount stated, and by explaining on the reverse of its statements that " [t]he symbol 'CR' when appearing with a balance indicates a credit balance." FRB Public Information Letter No. 1027 (April 15, 1976) states that the symbol "CR," placed before or after a balance amount, appropriately identifies a credit balance if the disclosure statement explains the symbol's meaning. G. Fox employed the format approved in Letter No. 1027, and its use of "CR" to denote credit balances must be upheld.

G. Fox appends "CR" to amounts recorded as payments or credits because all such amounts result in credits (as opposed to debits) to the customer's account. The symbol "CR" is thus meant not to distinguish payments from other credits, but merely to inform the consumer that the amount recorded redounds to his benefit. Creditors must, however, separately disclose payments and credits, and must specifically identify all such amounts. Sec. 36-395-6(b) (1) (iii), (Sec. 226.7(b) (1) (iii)). The issue, therefore, is whether G. Fox's use of "CR," as an accounting symbol, in connection with both payments and credits violates its duty to make clear and separate disclosures. We conclude that it does not.

G. Fox specifically identifies payments on its statements by printing "Payment" directly opposite the amount recorded in the "Amount" column. The "CR" symbol appended to the recorded amount is therefore unlikely to cause a consumer to believe that credit has been granted for some reason other than payment. G. Fox discloses credits other than payments by identifying the department that granted credit opposite the amount recorded. Although G. Fox does not print the word "credit" directly opposite credit amounts separately recorded in the center of the form, it does print, under the heading "Credits" at the top of the form, the total amount of credits for the billing period. A consumer who doubts the nature of a recorded item may thus compare the amounts of the items separately recorded to the total amount stated under "Credits." Such cross-checking should easily distinguish credit items from payments.

3. Disclosure of Minimum Finance Charge.

Section 36-396-6(b) (1) (iv), (Sec. 226.7(b) (1) (iv)), requires disclosure of all finance charges, including any minimum finance charge, assessed during the billing period. G. Fox assesses a minimum finance charge of 50cents upon the accounts of those of its Massachusetts and Rhode Island customers who had an average daily balance of $3 to $34 during the billing perioD. Conn. Gen.Stat. Sec. 42-133c limits the interest rates creditors may charge on open-end credit accounts. The practical effect of Sec. 42-133c is to prohibit minimum finance charges in Connecticut, and G. Fox does not impose such charges in Connecticut. G. Fox uses the same disclosure form for the periodic statements it sends customers in Connecticut, Massachusetts, and Rhode Island. At the bottom of the form G. Fox prints:

[ ] FINANCE CHARGE is due to a minimum charge of $ .

On periodic statements sent Massachusetts and Rhode Island customers who have been assessed a minimum finance charge, G. Fox places an "x" in the box to the left of the words "FINANCE CHARGE" and writes the amount of the charge after the dollar sign at the end of the sentence. Periodic statements sent Connecticut customers always leave blank both the box at the beginning of the sentence and the space at the end.

The Gambardellas claim that the quoted sentence, when included in periodic statements sent Connecticut customers, breached G. Fox's duty clearly to disclose finance charges. They say that the sentence could confuse Connecticut consumers about the applicability of minimum charges. We cannot agree. Blank-box formats are in common use on many kinds of forms, financial and otherwise, to indicate the applicability of various options stated on the forms. In Official Staff Interpretation No. FC-0081, 42 Fed.Reg. 31,430 (June 3, 1977), the FRB approved a creditor's proposal to use a blank-box format in a consumer loan form. See also Griggs v. Provident Consumer Discount Co., 680 F.2d 927, 931 n. 4 (3rd Cir.) (blank-box format did not violate TILA), vacated on other grounds, --- U.S. ----, 103 S. Ct. 400, 74 L. Ed. 2d 225 (1982). Of course, the FRB, in Official Staff Interpretation No. FC-0081, did not give unqualified approval to all blank-box formats, and courts must, in each case, consider whether the creditor's particular format clearly disclosed required information. Here, we are satisfied that disclosure was clearly made. A consumer would most likely read a G. Fox periodic statement in which both the box at the beginning and the blank at the end of the sentence were left empty to mean that no minimum finance charge had been imposed. Moreover, G. Fox dispels any possible confusion by printing on the reverse of its statements: "For residents of Connecticut ..., there is no minimum FINANCE CHARGE." The sentence at issue did not breach G. Fox's duties under Sec. 36-395-6(b) (1) (iv).

The Gambardellas also claim that because Connecticut prohibits minimum finance charges, G. Fox may not include the sentence in periodic statements sent Connecticut consumers. They argue that the Act prohibits a creditor from claiming to employ practices that are unlawful in the consumer's state. Courts have been unable to agree whether a disclosure statement which claims a right or interest prohibited by state law violates the Act. Compare Tinsman v. Moline Beneficial Fin. Corp., 531 F.2d 815 (7th Cir. 1976) (violation), with Pennino v. Morris Kirschman & Co., 526 F.2d 367, 371 (5th Cir. 1976) (no violation). See Veney v. First Virginia Bank-Colonial, 535 F. Supp. 181, 183-190 (E.D. Va. 1982) and cases discussed therein. But if the Act does prohibit such claims (a question we need not address), there surely is no violation if the creditor restricts its claim to those consumers against whom the claimed right or interest may lawfully be asserted. Where a creditor's multi-state disclosure form clearly indicates that an interest lawful in only some states is not claimed where it is prohibited, the consumer's rights are not misstated and no basis for liability exists. Such is the situation here. G. Fox's periodic statements clearly reveal that Connecticut accounts are not subject to minimum finance charges.¹⁴ 

4. Disclosure of Rates Used to Compute Finance Charge.

Conn.Bank.Reg. Sec. 36-395-6(b) (1) (v), (Sec. 226.7(b) (1) (v)) requires disclosure of: [E]ach periodic rate, using the term "periodic rate" or "rates", that may be used to compute the finance charge, whether or not applied during the billing cycle, and the range of balances to which it is applicable, and the corresponding annual percentage rate determined by multiplying the periodic rate by the number of periods in a year.

G. Fox applies a monthly interest charge of 1.25% to all of its Connecticut accounts, regardless of the amount of the balance. On Massachusetts and Rhode Island accounts, however, G. Fox applies different interest rates to different ranges of balances. The application of different rates to different ranges of balances is called a "break rate" system. G. Fox uses the same form for the periodic statements it sends Connecticut, Massachusetts, and Rhode Island customers. The form is designed to accommodate disclosure of a break rate system that employs two different interest rates. When completed and sent to Connecticut customers, who are not subject to break rates, the form appears as follows:

 THAT PORTION OF THE ANNUAL AVERAGE DAILY BALANCE PERIODIC PERCENTAGE UP TO OR EQUAL TO RATE RATE $.00 1.25% PER BILLING 15% CYCLE THAT PORTION OF THE ANNUAL AVERAGE DAILY BALANCE PERIODIC PERCENTAGE IN EXCESS OF RATE RATE $.00 1.25% PER 15% BILLING CYCLE

G. Fox thus tells Connecticut consumers that the portion of their balances up to or equal to $0 is subject to a periodic rate of 1.25%, and to an annual rate of 15%. It also discloses that the same rate is applied to balances exceeding $0. The Gambardellas claim that G. Fox has breached its Sec. 36-396-6(b) (1) (v) duty clearly to disclose periodic and annual rates. They argue that G. Fox's statement regarding the interest rate applied to balances up to or equal $0 is inaccurate and misleading. We agree with the Gambardellas that the statement is inaccurate since, in fact, G. Fox does not impose finance charges (or pay interest) on credit balances. We find, however, that any technical inaccuracy in the statement is unlikely to mislead consumers, and that G. Fox's disclosure of periodic and annual rates, though hardly made in a model format, is sufficient under the law.

FRB Public Information Letter No. 651 (Dec. 15, 1972), states that the "range of balance" disclosure required by Sec. 226.7(b) (1) (v) is "intended to show the break point where there was more than one rate applicable to the account." The Letter informed a creditor proposing to apply a single periodic rate that it was not required separately to disclose ranges of balances. Similarly, FRB Public Information Letter No. 1108 (September 1, 1978), states that Sec. 226.7(b) (1) (v) requires more than one annual percentage rate disclosure "only when different periodic rates are applied to different ranges of balances." These letters indicate that G. Fox was not required to make more than one disclosure of periodic and annual rates in Connecticut, but they do not, we think, indicate that G. Fox was prohibited from doing so. Instead, the inquiry must be whether G. Fox clearly and conspicuously disclosed periodic and annual rates. We think that it did. G. Fox's two disclosures state, in effect, that the same interest rates are applied to balances up to or equal to $0 as to balances greater than $0. A consumer is therefore unlikely to believe, the range of balance disclosures notwithstanding, that more than one periodic or annual rate will be applied to his account. G. Fox prints the following statement immediately above the portion of the form reproduced above: "FINANCE CHARGE OF $ is the result of the application of the following periodic rate(s)." The parentheses surrounding the "s" in "rate(s)" implicitly informs the consumer that only one periodic rate may be applicable. Finally, to the extent that G. Fox's statement concerning balances equal to or less than $0 is inaccurate, it implies that finance charges are assessed on credit balances. Few, if any, consumers are unaware that finance charges are imposed on amounts they owe the company, and not on amounts the company owes them.

It is true that G. Fox's disclosure of periodic and annual rates could be improved upon. G. Fox could simply inform Connecticut consumers that finance charges are assessed on the average daily balance at a periodic rate of 1.25% and an annual rate of 15%, whenever the average daily balance is greater than $0. The multi-state disclosure form adopted by G. Fox does convey that information to Connecticut consumers, but requires the consumer to exercise some degree of care and study. Obviously, G. Fox's disclosure concerning balances less than or equal to $0 is meaningless and could be deleted without loss. TILA, however, does not require perfect disclosure, but only disclosure which clearly reveals to consumers the cost of credit. See Dixon v. D.H. Holmes Co., 566 F.2d 571 (5th Cir. 1978). Because the statements G. Fox sent Connecticut consumers, read as a whole, clearly disclosed periodic and annual rates, the imperfections in format did not violate the law.

Accordingly, we reverse the judgment, vacate the award of attorneys' fees, and remand the case with directions to dismiss the complaint.APPENDIX

NOTE: OPINION CONTAINS TABLE OR OTHER DATA THAT IS NOT VIEWABLENOTE: OPINION CONTAINS TABLE OR OTHER DATA THAT IS NOT VIEWABLENOTE: OPINION CONTAINS TABLE OR OTHER DATA THAT IS NOT VIEWABLENOTE: OPINION CONTAINS TABLE OR OTHER DATA THAT IS NOT VIEWABLE

NEWMAN, Circuit Judge, concurring:

I concur in the Court's judgment and in all portions of Judge Lumbard's opinion except Part A.1. concerning the claim that G. Fox failed to disclose, or misleadingly disclosed, the amount of the payment necessary to avoid additional finance charges. In the majority's view, no violation occurred because, under its construction of the Truth in Lending Act (TILA), 15 U.S.C. § 1637(b) (10) (1976), and Regulation Z, 12 C.F.R. Sec. 226.7(b) (1) (ix), p. 593 (1982) (pre-October 1, 1982, version), a creditor must notify a customer only of the date by which payment must be made to avoid finance charges, but not the amount of such payment. In my view, that construction is at odds with both common sense and the interpretation of the Federal Reserve Board, and I write separately to set forth the basis of my disagreement with that construction. Nevertheless, I agree, for reasons explained below, that the defendant's disclosure of the payment necessary to avoid finance charges was not in violation of TILA.

The front side of the printed billing form sent by defendant G. Fox & Co. to the plaintiffs contains this statement: "To avoid additional FINANCE CHARGES pay the new balance in full by the payment due date." The reverse side contains this statement: "No FINANCE CHARGE is assessed in any billing period in which the 'Previous Balance' ... is $3 or less...." In the District Court the parties assumed that the practice of G. Fox was to impose a finance charge in the billing cycle that followed receipt of a bill unless the "previous balance" listed on that bill was $3 or less. While the case has been pending in this Court, the parties have learned that the policy of G. Fox is in fact somewhat more generous to customers: no finance charge is imposed if the previous balance is $3 or less, or if the customer pays all but $3 of his new balance, or if the average daily balance is $3 or less.

The majority opinion, viewing the case solely on the facts as they were thought to exist in the District Court, observes that the statement on the front side of the bill is "generally accurate," at 110, though "misleading to customers who have 'new balances' of $3 or less." Id. The majority then concludes (1) that, under TILA and Regulation Z, the amount of payment necessary to avoid additional finance charges is not a required disclosure and that (2) misleading statements that concern only non-required information do not violate the Act. I disagree with the first of these interpretations.¹ 

One of the disclosures TILA requires a creditor to make in a bill under an open-end consumer credit plan is "the date by which ... payment must be made to avoid additional finance charges." 15 U.S.C. § 1637(b) (10) (1976), 12 C.F.R. Sec. 226.7(b) (1) (ix), p. 593 (1982) (pre-October 1, 1982, versions).²  Purporting to defer to the expertise of the Federal Reserve Board (the Board), the majority reads this language rigidly to mean that a creditor must disclose only the date by which payment must be made to avoid additional finance charges but not the amount of the payment that must be made to avoid such charges. If we had no guidance from the Board, I would challenge that construction, since it seems odd, to say the least, to require a creditor to tell a customer when he must make a payment but not what payment he must make. Indeed, it is difficult to imagine how a creditor could tell a customer when to pay without also telling him the amount to pay. An instruction to make an unspecified payment by a specified date would hardly be informative.

Fortunately the Board has made explicit what common sense would tell us is the proper way to construe the payment date provision. On May 5, 1980, the Board proposed a revised version of this provision, requiring the following disclosure:

(11) Free-ride period. The date by which ... the new balance must be paid in order to avoid the imposition of finance charges. If only a portion of the new balance need be paid to avoid a finance charge, that amount must be disclosed....

12 C.F.R. Sec. 226.5(c) (11) (proposed), 45 Fed.Reg. 29702, 29738 (May 5, 1980). Significantly, the Board noted that this proposal involved "no substantive change" in the existing regulation, 12 C.F.R. Sec. 226.7(b) (1) (ix), p. 593 (1982), which governs this case. 45 Fed.Reg. 29712. Thus, in the view of the Board, the payment date provision has always meant that the creditor must disclose the amount of payment necessary to avoid a finance charge; if the full amount of the new balance must be paid, the date by which such payment must be made is required to be disclosed, and if "only a portion" of the new balance must be paid, "that amount must be disclosed." The final version of the revised payment date provision combines the date and amount disclosures by requiring disclosure of " [t]he date by which ... the new balance or any portion of the new balance must be paid to avoid additional finance charges." 12 C.F.R. Sec. 226.7(j), p. 837 (1982).

The majority attaches significance to the fact that the final version of section 226.7(j) omits the separate sentence, which had appeared in proposed section 226.5(c) (11), requiring disclosure when only a portion of the new balance must be paid. In the majority's view, the deletion of this separate sentence implies a decision not to require such disclosure. 716 F.2d at 109 n.5. I would not draw that inference for two reasons. First, an interpretation that reads the amount of required payment out of section 226.7(j) is so contrary to common sense that it should be resisted if any other construction is possible. Second, the Board attaches no such significance to the revision of its wording of proposed section 226.5(c) (11). On December 5, 1980, the Board published a revised version of proposed section 226.5(c) (11), renumbering it as section 226.7(k). 45 Fed.Reg. 80699 (1980). That revision deleted the second sentence of proposed section 226.5(c) (11), combining its content into a slightly expanded version of the first sentence. The commentary to the December 5, 1980, draft makes no mention of this revised wording. Since the Board's commentary to its proposed and final versions of Regulation Z always notes, and explains the reasons for, any substantive change from an earlier proposed version, the absence of explanation indicates that no change of substance had occurred. Significantly, on April 7, 1981, when the Board published the current version, renumbered as section 226.7(j), which virtually tracked proposed section 226.7(k), it explicitly noted that this final version was "substantially the same" as the then existing section 226.7(b) (1) (ix). 46 Fed.Reg. 20860 (1981).

The Supreme Court has instructed us to heed the Board's views, expressed in connection with the revision of Regulation Z, to the extent that they explain the meaning of TILA and the original version of Regulation Z. See Anderson Bros. Ford v. Valencia, 452 U.S. 205, 101 S. Ct. 2266, 68 L. Ed. 2d 783 (1981). I therefore conclude that, as a general rule, TILA requires a creditor to disclose the amount of payment necessary to avoid finance charges.

Since, in my view, the amount of the necessary payment is a required disclosure, I must consider the issue, not reached by the majority, whether the G. Fox disclosures concerning the necessary payment were in violation of TILA. On the facts as presented in the District Court, Judge Cabranes concluded that there was a violation because of the apparent contradiction between the front-side and reverse-side statements concerning the payment needed to avoid finance charges. In the plaintiffs' view, the facts as the parties now understand them to be show that the front-side statement itself violates TILA by informing the customer that he must pay his new balance in full to avoid finance charges, whereas in fact a finance charge will not be imposed if the customer pays all but $3 of his bill. That is surely a plausible contention, but it is refuted by the explicit authority that Regulation Z confers on a creditor not to disclose the fact that it imposes no finance charge on small balances.

Regulation Z provides:

If a creditor does not impose a finance charge when the outstanding balance is less than a certain amount, the creditor is not required to disclose that fact or the balance below which no such charge will be imposed.

12 C.F.R. Sec. 226.7(b) (1) (v) n. 9a, p. 593 (1982) (pre-October 1, 1982, version).³  The evident purpose is to permit a creditor to forgo charging interest on small balances without the need to inform customers of this generosity. It seems obvious that the non-disclosure permission is closely related to the forgoing of interest: if all customers were told that they need not pay the last $3 of their bill to avoid finance charges, it is reasonable to think that many would withhold the last $3, thereby making it less likely that the creditor could afford to forgo imposing interest charges on the few who now do so. The Federal Reserve Board apparently believes that creditors can adopt their own de minimis rules without disclosure.

At first glance, non-disclosure of the amount below which no finance charge will be imposed may seem inconsistent with the requirement of disclosure of the amount of payment necessary to avoid finance charges. But an interpretation is available that accords meaning to both provisions. The disclosure requirement, in its currently applicable version, requires notification of the date by which "the new balance or any portion of the new balance" must be paid to avoid finance charges. 12 C.F.R. Sec. 226.7(j), p. 837 (1982). That means that if, for example, a customer's new balance is $300, the creditor must inform him that he must pay either the entire balance or some portion of it (for example, one-third) by the due date to avoid finance charges in the next billing cycle. Creditors frequently require prompt payment of at least some stated fraction of an outstanding balance. At the same time, the non-disclosure permission allows a creditor, without notice, to forgo finance charges on small balances, below a certain amount. The Board is entitled to think that a customer needs to know whether he must pay all or some stated fraction of his bill to avoid incurring finance charges, but need not know that his failure to pay the last $3 of his bill, or the maintenance of a balance of less than $3, will not subject him to finance charges.⁴ 

Plaintiffs contend that the non-disclosure permission concerning small balances applies only to a creditor's decision not to impose a finance charge on a small balance in a current billing cycle and does not entitle a creditor to withhold the fact that no finance charge will be imposed in a subsequent billing cycle if the balance in that cycle is brought below a certain amount. In their view, a G. Fox customer is entitled to know that he can pay all but $3 of his new balance and still avoid finance charges on his purchases in the next billing cycle. I disagree. The wording of the non-disclosure permission in Regulation Z refers to forgoing finance charges when the "outstanding balance" is below a certain amount, making no distinction between a "new balance" in a current billing cycle and the customer's balance during the next billing cycle after making a payment. And the wording permits non-disclosure of the balance below which a finance charge "will" not be imposed. Moreover, it would make little sense to permit a creditor to conceal the fact that it does not impose finance charges on new balances of less than $3 and still require disclosure of the fact that finance charges will not be imposed when a customer's payment brings his outstanding balance down to $3. In both instances, interest is not being charged on small balances, and the Board does not require disclosure of that fact.

I conclude, therefore, that G. Fox did not violate TILA when it disclosed that payment of the new balance would avoid additional finance charges without informing the plaintiffs of the fact, now known, that finance charges would not be imposed if all but $3 of the new balance was paid. And, since G. Fox did not have to disclose any aspect of its willingness to forgo finance charges on balances under $3, it did not violate TILA, on the facts as known in the District Court, by disclosing on the reverse side of its bill one of the circumstances under which it would do so. Since the regulation permits a disclosure that full payment is necessary to be contradicted by an undisclosed policy of not imposing finance charges on small balances, it is not violated by a partial disclosure of that policy.

For these reasons I conclude that G. Fox's billing statement did not violate the payment date provision of TILA and therefore concur in the judgment and in all portions of Judge Lumbard's opinion except Part A.1.