Defendant's Attorney: Alan E. Schoenfeld, Wilmer Cutler Pickering Hale and Dorr LLP, New York, New York
(Arpit K. Garg, Wilmer Cutler Pickering Hale and Dorr, Washington D.C., with him on the brief), for Defendant-Appellee Chase Bank USA, N.A.
Steven M. McCartan, Shook, Hardy & Bacon LLP, Kansas City, Missouri, (Eric J.
Hobbs, Shook, Hardy & Bacon LLP, Denver, Colorado, with him on the brief), for
Defendant-Appellee American Express Centurion Bank.
Description: Malik Hasan ordered wine from Premier Cru Fine Wines (Premier Cru) and
paid with credit cards issued by Chase Bank USA, N.A. (Chase) and American
Express Centurion Bank (AmEx). Premier Cru declared bankruptcy while Hasan was
still waiting for delivery of wine that he paid nearly $1 million for. Hasan asserts that
under a provision of the Fair Credit Billing Act (FCBA), 15 U.S.C. §§ 1666–66j,
Chase and AmEx must refund his accounts the amount he paid for wine that Premier
Cru failed to deliver. But because we reject Hasan’s interpretation of that FCBA
provision—§ 1666i—we affirm the district court’s orders dismissing his complaints
against Chase and AmEx.
Hasan used his Chase and AmEx credit cards to purchase wine from Premier
Cru for future delivery: Hasan paid up front, and Premier Cru agreed to deliver the
wine sometime in the future. Premier Cru fulfilled some, but not all, of Hasan’s
orders. And in January 2016, Premier Cru declared bankruptcy. At that time, Hasan
had paid $689,176.92 with his Chase card and $379,153.72 with his AmEx card for
wine he never received.
Hasan asked both companies to refund his accounts for the undelivered wine
under § 1666i of the FCBA. Chase complied in part and credited Hasan’s account
$100,136.88.1 AmEx refused to credit Hasan’s account. So Hasan filed a lawsuit
against each company, seeking $589,040.04 from Chase and $379,153.72 from
Chase and AmEx each filed a motion to dismiss, arguing primarily that
because Hasan had fully paid the balance on his credit cards, he had no claim under
§ 1666i. The district court in Chase’s case ruled first, agreed with Chase’s
interpretation of § 1666i, and dismissed the case. The district court in AmEx’s case
adopted the statutory-interpretation reasoning of the earlier decision and dismissed
Hasan’s case. Hasan appeals.2
We review de novo a district court’s dismissal of a complaint for failure to
state a claim under Federal Rule of Civil Procedure 12(b)(6). Alvarado v. KOB-TV,
LLC, 493 F.3d 1210, 1215 (10th Cir. 2007). Likewise, we independently interpret
1 This was the amount of disputed charges that had occurred within 540 days
of Hasan’s demand letter. On appeal, Chase explains that this 540-day rule comes
from “interchange rules applicable to Hasan’s credit-card accounts.” Chase Br. 9 n.2.
In other words, “the bank could charge back through the payment networks” any
charges that a customer disputes within 540 days. Id. at 8. At oral argument, Chase
clarified that its decision to refund Hasan’s account was a voluntary accommodation
that wasn’t based on any statutory requirement in the FCBA.
2 We decide both of Hasan’s appeals in this opinion. As Hasan’s counsel
acknowledged at oral argument, both cases involve the same relevant facts and
statutes. United States v. Black, 773 F.3d 1113, 1115 (10th Cir. 2014).
Statutory interpretation begins with the words in the statute. Levorsen v.
Octapharma Plasma, Inc., 828 F.3d 1227, 1231 (10th Cir. 2016). The statute at issue
in this case, § 1666i, has two sections. The first makes credit-card issuers “subject to
all claims (other than tort claims) and defenses arising out of any transaction in
which the credit card is used as a method of payment or extension of credit.”
§ 1666i(a). This broadly worded first section, though, is “[s]ubject to the limitation
contained in subsection (b).” Id. And subsection (b) limits the amount of a
cardholder’s claims or defenses to “the amount of credit outstanding with respect to
[the disputed] transaction at the time the cardholder first notifies the card issuer . . .
of such claim or defense.” § 1666i(b). This case turns on this limitation—
specifically, on the meaning of “credit outstanding.”
The FCBA defines “credit” as “the right granted by a creditor to a debtor to
defer payment of debt or to incur debt and defer its payment.” § 1602(f). In other
words, when a creditor extends “credit” to someone, the person receiving the “credit”
now has a debt to the creditor. Id. The credit granted and the debt owed are two sides
of the same transaction. The FCBA doesn’t define “outstanding,” but it’s an adjective
meaning “[u]npaid” or “uncollected.” Outstanding, Black’s Law Dictionary (10th ed.
2014). So “the amount of credit outstanding” is the amount of credit extended by the
card issuer that the cardholder hasn’t yet paid back. Stated differently, a cardholder’s
claim under § 1666i is limited to whatever amount of the debt remains unpaid.
Here, Chase and AmEx extended “credit” to Hasan when he used his credit
cards to buy wine. Chase and AmEx paid Premier Cru for the wine and granted
Hasan the right to defer paying them that amount. See § 1602(f). So the amount of
credit “outstanding” was whatever Hasan hadn’t yet paid to Chase and AmEx for the
wine. But Hasan specifically alleged in his complaint that he paid both Chase and
AmEx in full for his wine purchases. So there was no “credit outstanding” relating to
the wine purchases. And because recovery under § 1666i is limited to the “amount of
credit outstanding,” Hasan could recover nothing under that statute.
Attempting to avoid this result, Hasan offers a different interpretation, urging
that “in the context of purchases for future delivery ‘the amount of credit outstanding
with respect to such transaction’ means the aggregate payments by the cardholder to
the card issuer on account of the subject purchase transaction(s) until the purchased
goods/services are delivered by the merchant.” Aplt. Br. 10 (quoting § 1666i(b)). He
points to the remainder of § 1666i(b), which describes how to determine the amount
of credit outstanding by applying “payments and credits” first to late charges, then to
finance charges, and then to purchases made with the card. According to Hasan,
because the second sentence of § 1666i(b) combines the terms “payments and
credits” and discusses applying them to an account, “credit” in this statute actually
means “payment.” And although Hasan doesn’t make it explicit, what’s
“outstanding” in this argument is the delivery of the wine. So under Hasan’s
reasoning, the “credit outstanding” refers to the payments he made to Chase and
AmEx for wine, which are outstanding because the wine hasn’t been delivered.3 Of
course, this doesn’t work because the payments themselves aren’t outstanding; Hasan
made his payments. It’s the delivery of wine that hasn’t occurred.
Further, Hasan’s argument ignores and contradicts both (1) the statutory
definition of “credit” that we discuss above, and (2) the FCBA’s definition of
“creditor.” First, a “credit” in the FCBA is the right to defer payment; it isn’t a
payment itself. § 1602(f). Hasan recognizes that the FCBA defines “credit” and
offers an unconvincing argument about why that definition doesn’t apply here. He
suggests that if “credit” is equivalent to accumulated cardholder debt—which it is,
according to the § 1602(f) definition—then the discussion in § 1666i(b) about
applying “payments and credits” to an account doesn’t make sense. But § 1666i(b)
discusses applying “payments and credits to the cardholder’s account.” § 1666i(b)
(emphasis added). This plural use of the word “credit,” in the context of the words
that follow it, appears to have a different meaning than the use of the singular
“credit” earlier in the same provision. See Yates v. United States, 135 S. Ct. 1074,
1085 (2015) (stating that neighboring words can give more precise content to the
3 Hasan further supports his textual argument with references to how Chase
and AmEx refer to payments and credits in their monthly billing statements. He
claims that both companies use the word “credit” to mean “payment.” But the manner
in which Chase and AmEx use the word “credit” in their billing statements isn’t
relevant to determining the meaning of the phrase “credit outstanding” in § 1666i(b).
Hasan also provides a letter from an accounting firm opining that Hasan has correctly
interpreted the statute. This letter is similarly irrelevant; we interpret statutes de
novo, and while other interpretations may be interesting or even useful, they aren’t
phrase at issue).
Second, a “creditor” under the FCBA is one who “regularly extends . . .
consumer credit” or “honors [a] credit card and offers a discount which is a finance
charge.” § 1602(g). So Chase and AmEx are “creditors” who extended “credit” to
Hasan by granting him the right to defer payment on his wine purchases. See
§ 1602(f), (g). Confusingly, under Hasan’s interpretation, he extended “credit”
(apparently to Premier Cru) when he made payments for future wine deliveries, and
that credit remains “outstanding” until the wine is delivered. But there is no “credit”
between Hasan and Premier Cru because no payment has been deferred, and the
deferral of payment is part of the definition of credit. See § 1602(f). Further, Hasan is
not a “creditor” under the FCBA’s definition—he doesn’t regularly extend consumer
credit or honor credit cards. See § 1602(g). So Hasan’s proposed interpretation of
“credit outstanding” doesn’t work in light of the clear statutory definitions of “credit”
Hasan nevertheless insists that his reading is more consistent with the purpose
of the FCBA. The FCBA is a remedial statute and should be construed broadly to
protect consumers, but that doesn’t give this court license to read into the statute
something that isn’t there. See Johnson v. Riddle, 305 F.3d 1107, 1117 (10th Cir.
2002). Hasan asks us to draw a distinction between transactions in which the
merchant delivers goods immediately and those in which the merchant delivers goods
in the future. But § 1666i doesn’t contain different rights for different types of
transactions. Cf. Ali v. Fed. Bureau of Prisons, 552 U.S. 214, 228 (2008) (“We are
not at liberty to rewrite the statute to reflect a meaning we deem more desirable.”).
Hasan also points out that a person who didn’t pay off his or her credit card would
have more recourse than he does in this particular situation and argues that he
shouldn’t be penalized for responsibly paying his credit-card bills in full each month.
That may be true, but as Chase points out, Hasan would have been in the same
position had Congress not passed this statute. “In the pre-credit-card world, if Hasan
had fully paid a merchant but the merchant later failed to deliver the promised goods,
he would have had only one remedy: to affirmatively sue the merchant.” Chase Br.
24. Hasan’s remedy lies in Premier Cru’s bankruptcy proceedings, not with Chase
The plain language of the FCBA forecloses Hasan’s claims against Chase and
AmEx. Section 1666i(a) provides that cardholders can assert non-tort claims and
defenses against the card issuer. But any such claim is expressly limited to “the
amount of credit outstanding with respect to [the disputed] transaction.” § 1666i(b).
Hasan fully paid off both of his credit cards. So “the amount of credit outstanding
with respect to” the undelivered wine is $0, and Hasan has no claim against Chase or
AmEx under this provision of the FCBA. § 1666i(b). Because we decide Hasan’s
claims on this ground, we need not address his argument that § 1666i(a) creates an
affirmative right of action for cardholders against card issuers.4 Regardless of
whether such a right exists, Hasan has no claim because there is no “credit
outstanding” related to the wine transactions. Additionally, because Hasan’s claims
fail under § 1666i(b), we need not consider whether he has satisfied the geographical
requirement of § 1666i(a)(3).
* * *
4 Some district courts have held that it does not. See, e.g., Beaumont v.
Citibank, No. 01 Civ. 3393(DLC), 2002 WL 483431, at *5–7 (S.D.N.Y. Mar. 28,
2002) (finding that FCBA is structured to facilitate withholding of payment by
cardholder; if card issuer sues for payment, cardholder can use § 1666i in a defensive
Outcome: We affirm the orders dismissing Hasan’s complaints.