925 F.3d 265
6th Cir.2019Background
- Fifth Third Bank offered an "Early Access" short-term cash-advance program that deposited loans directly into customers' checking accounts and automatically debited repayment plus a 10% transaction fee on the next qualifying direct deposit or after 35 days.
- The contract and monthly statements disclosed an APR of 120% and defined APR as "a measure of the cost of credit, expressed as a yearly rate," but provided a formula that divides the transaction fee by the advance and multiplies by the number of statement cycles per year — a method that always yields 120% regardless of loan term.
- Plaintiffs (account holders who repaid loans in under 35 days) sued, alleging the 120% APR disclosure is false and misleading because, when annualized conventionally for short terms, the APR can be much higher (examples up to ~3650%).
- The district court dismissed the breach-of-contract claim, concluding the contract unambiguously disclosed the APR-calculation method; plaintiffs obtained Rule 54(b) certification of that dismissal and appealed.
- The Sixth Circuit considered (1) whether it had jurisdiction to hear the appeal (Rule 54(b) certification) and (2) whether the contract was ambiguous on the meaning of "APR" under Ohio law.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Rule 54(b) certification creating appellate jurisdiction was proper | The breach claim was separable from TILA claims and certification is appropriate to allow immediate review | The breach and TILA claims arise from the same operative facts and thus cannot be separately certified | Court: Certification proper; claims sufficiently distinct in operative facts and damages, and district court did not abuse discretion on "no just reason for delay" |
| Whether the contract unambiguously defined APR such that no breach occurred | The contract's conventional annualization (APR tied to loan term) is inconsistent with the bank's formula; the dual descriptions render the contract ambiguous | The contract plainly defined APR by its stated formula and repeatedly disclosed the flat 10% transaction fee — no breach because plaintiffs were charged the disclosed fee | Court: Contract ambiguous as a matter of law because it both (a) defines APR as a "yearly rate" and (b) supplies a formula untethered to loan term; ambiguity raises factual issues for the district court on remand |
Key Cases Cited
- GenCorp, Inc. v. Olin Corp., 390 F.3d 433 (6th Cir. 2004) (explaining Rule 54(b) framework and operative-facts test)
- Lowery v. Fed. Express Corp., 426 F.3d 817 (6th Cir. 2005) (Rule 54(b) dismissal where multiple counts arose from same operative facts)
- DeWine v. Planned Parenthood Sw. Ohio Region, 696 F.3d 490 (6th Cir. 2012) (guidance on applying operative-facts test and weighing overlap vs. separateness)
- Beach v. Ocwen Fed. Bank, 523 U.S. 410 (1998) (explaining TILA's focus on disclosure obligations separate from contract performance)
- Sunoco, Inc. (R & M) v. Toledo Edison Co., 129 Ohio St.3d 397, 953 N.E.2d 285 (Ohio 2011) (contract interpretation: give effect to every provision and interpret contract as whole)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (standard for evaluating pleadings on Rule 12(b)(6))
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (pleading standard requiring plausible claim)