Solicitations are offers of credit, 8th U.S. Circuit Court of

St. Louis Daily Record & St. Louis Countian, Jun 20, 2008 by Donna Walter

A federal appeals court put an end to lawsuits claiming companies violate the Fair Credit Reporting Act by sending direct mail solicitations for loans.

The 8th U.S. Circuit Court of Appeals affirmed the decisions of two district court judges who entered judgments on the pleadings in favor of Countrywide Home Loans Inc. and Capital One Auto Finance Inc. The panel decision was unanimous.

The plaintiffs - Clayton R. Poehl against Countrywide and Diane C. Ludditt-Poehl against Capital One - said the solicitations were not firm offers of credit as the terms are defined by common law. The FCRA allows the use of consumer credit reports to offer credit to consumers.

Thursday's decision "simply affirms all of the other circuit court decisions that have come down in these cases over the last couple of years," said Chicago lawyer Linda B. Dubnow, the lead attorney for Capital One. It was "the final death knell" of lawsuits based on the argument that there was no firm offer of credit.

Charles A. Newman, a Bryan Cave attorney who represented Countrywide, said the effect of the decision "is to bring the 8th Circuit squarely in line with the majority view that these offers ... do constitute a firm offer of credit."

Joe D. Jacobson and his partners at Green, Jacobson & Butsch in St. Louis represented the plaintiffs in both cases. He said the firm settled "quite a few" of these cases while the consolidated appeal was pending. The firm also represents plaintiffs in similar cases where merchandise or a service is being of-fered. "There's really no credit involved, [so] those cases will still go forward," Jacobson said.

The plaintiffs argued, to no avail, that the common law must be used to define "offer."

Jacobson said the decision relied on by the 8th Circuit is flawed. Dixon v. Shamrock Financial Corp. was decided earlier this year by the 1st Circuit. "The court took the position that the only thing the statute is concerned about is the firmness of the solicitation and not whether the solicitation

is in fact an offer," he said.

The 8th Circuit found that Congress defined "firm offer of credit" to mean an offer of credit or insurance that will be honored if the consumer meets the criteria used to select the consumer for the offer. The law also allows companies to place further conditions on the offer - a key point in the court's analysis.

"Because FCRA 'specifically permits lenders to impose post-offer criteria that would be antithetical to the common law understanding of an "offer" as an immediately-acceptable set of terms,' reliance on common law notions of an 'offer' within the statutory definition is misplaced in this statutory scheme," Circuit Judge Diana E. Murphy wrote, citing Dixon.

The plaintiffs also alleged the solicitations contained no firm offer of credit because they contained no specific information about the terms, duration or interest rate of the loans. But the FCRA doesn't require specificity, the 8th Circuit said.

Circuit Judges Steven M Colloton and Bobby E. Shepherd concurred with Murphy's opinion.