Hasan v. Chase Bank USA, N.A.
880 F.3d 1217 (2018)
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Rule of Law:
Under the Fair Credit Billing Act, 15 U.S.C. § 1666i, a cardholder's ability to assert claims against a credit card issuer for a merchant's non-performance is limited to the 'amount of credit outstanding' for that transaction. A cardholder who has fully paid their credit card balance for a transaction has no 'credit outstanding' and therefore cannot recover from the issuer.
Facts:
- Malik Hasan used his Chase and American Express (AmEx) credit cards to purchase wine from Premier Cru Fine Wines for future delivery.
- Hasan paid both Chase and AmEx in full for these wine purchases.
- The total amount paid for the undelivered wine was $689,176.92 on the Chase card and $379,153.72 on the AmEx card.
- In January 2016, Premier Cru declared bankruptcy before delivering all of the wine Hasan had purchased.
Procedural Posture:
- Malik Hasan filed separate lawsuits against Chase Bank and American Express in federal district court seeking refunds for undelivered wine.
- Both Chase and American Express filed motions to dismiss for failure to state a claim, arguing Hasan's claims were barred because he had paid his credit card balance in full.
- The district court in the Chase case granted the motion to dismiss.
- The district court in the American Express case, adopting the reasoning from the Chase case, also granted the motion to dismiss.
- Hasan (appellant) appealed both dismissals to the U.S. Court of Appeals for the Tenth Circuit.
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Issue:
Does a cardholder have a claim against a credit card issuer under 15 U.S.C. § 1666i for a merchant's failure to deliver goods if the cardholder has already paid the credit card balance for that transaction in full?
Opinions:
Majority - Moritz, Circuit Judge
No. A cardholder does not have a claim against an issuer under § 1666i if the credit card balance for the disputed transaction has been fully paid. The court's reasoning is based on a plain-language interpretation of the statute. Section 1666i(b) explicitly limits a card issuer's liability to 'the amount of credit outstanding with respect to [the disputed] transaction.' The Fair Credit Billing Act defines 'credit' as the right to defer payment of a debt, and 'outstanding' is commonly understood to mean 'unpaid.' Therefore, 'the amount of credit outstanding' refers to the portion of the debt owed to the card issuer that the cardholder has not yet paid back. Because Hasan alleged in his complaints that he had paid both credit card companies in full, there was no 'credit outstanding,' and his recovery under the statute is zero. The court rejected Hasan's argument that 'credit outstanding' should be interpreted to mean payments made for goods that are outstanding (i.e., undelivered), as this contradicts the clear statutory definitions.
Analysis:
This decision clarifies the scope of consumer protection under the Fair Credit Billing Act, narrowly interpreting the remedies available against credit card issuers. It establishes that § 1666i primarily serves as a shield for cardholders to withhold payment for disputed goods, not as a sword to recover funds already paid to the issuer. The ruling reinforces a plain-meaning approach to statutory interpretation, even for remedial statutes, and highlights a potential gap in protection for consumers who pay their credit card bills before receiving future-delivery goods. This precedent limits the liability of financial institutions in disputes between consumers and merchants, placing the risk of merchant failure on the consumer once the credit card bill is paid.
