Chase Bank USA, N. A. v. McCoy
131 S. Ct. 871
| SCOTUS | 2011Background
- Regulation Z requires initial disclosure of each periodic rate and, later, notices when terms change; pre-2009, changes due to delinquency could be implemented without prior notice in some cases.
- McCoy, holder of a Chase credit card, alleged Chase raised his interest rate after delinquency and applied it retroactively without prior notice.
- Chase’s cardholder agreement allowed a discretionary rate increase up to a maximum Non-Preferred rate upon default, to be applied to existing and new balances.
- The District Court dismissed, and the Ninth Circuit reversed in part, holding notice was required before such a rate increase took effect.
- The Supreme Court granted certiorari to resolve whether notice was required before implementing the contractual rate increase, given Regulation Z’s text and guidance from the Board.
- The Court ultimately held that, under the pre-2009 Regulation Z, notice was not required before implementing the rate increase authorized by the agreement.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a rate increase under a contract term requires change-in-terms notice | McCoy: yes, elements of notice apply | McCoy: Chase’s increase is within initial terms; no change notice required | Ambiguous text; deference to Board interpretation applies |
| Whether the Board’s amicus interpretation warrants deference under Auer | agrees with Ninth Circuit’s view favoring notice | Board interpretation supports no pre-notice | Deference to Board interpretation warranted; aligns with pre-2009 regulation |
| Whether Official Staff Commentary resolves the ambiguity | Commentary supports notice when discretion exists | Commentary largely replicates ambiguity; not controlling | Commentary does not override Board amicus interpretation; deference given |
Key Cases Cited
- Auer v. Robbins, 519 U. S. 452 (1997) (deference to agency interpretations of its own regulation)
- Coeur Alaska, Inc. v. Southeast Alaska Conservation Council, 557 U. S. _ (2009) (agency interpretation when regulation is ambiguous)
- Ford Motor Co. v. Milhollin, 444 U. S. 555 (1980) (deference when question governed by regulation with ambiguity)
- Christensen v. Harris County, 529 U. S. 576 (2000) (deference only when regulation is ambiguous, not when unambiguous)
- Gonzales v. Oregon, 546 U. S. 243 (2006) (no deference where regulation closely tracks statute; different context)
- Swanson v. Bank of America, N. A., 559 F.3d 653 (7th Cir. 2009) (division among circuits on Regulation Z interpretation)