EFFECTIVE DATE OF CALIFORNIA MINIMUM PAYMENT DISCLOSURE LAW STAYED
The U.S. District Court for the Eastern District of California has enjoined the enactment of California Civil Code Section 1748.13A, postponing the July 1, 2002 effective date of the law until at least November 8, 2002, when a continued hearing will be held. Section 1748.13A requires certain language and information regarding minimum payments to be included on billing statements credit card issuers provide to their cardholders.
The stay follows a request for a preliminary injunction filed by several banks and trade associations, including Chase Manhattan, Citibank, First USA, Household and MBNA America, the American Bankers Association, America’s Community Bankers, Consumer Bankers Association, Independent Community Bankers of America and the National Association of Federal Credit Unions. The industry representatives argued that the law is unenforceable on the basis of (i) federal preemption (for national banks and credit unions) and (ii) violation of the so-called “dormant Commerce Clause” ( i.e., that the law unconstitutionally places an undue burden on interstate commerce).
In weighing the plaintiffs’ likelihood of success on the merits of these two issues, however, the court found that the parties had not supplied sufficient information for the court to make the highly fact-sensitive analysis required. The court requested specific evidence of costs incurred by and burdens imposed on the plaintiffs as well as the benefits that will accrue to the citizens of California. Consequently, the court authorized discovery and the filing of supplemental briefs in preparation for a November 8, 2002 continued hearing on the motion for a preliminary injunction.
For more information regarding this Alert or copies of any documents, contact Mike Tomkies at (614) 628-1603 or [email protected] .