McKenna v. First Horizon Home Loan Corp.

United States Court of Appeals
For the First Circuit

No. 06-8018

RALPH McKENNA ET AL.,

Plaintiffs, Appellees,

v.

FIRST HORIZON HOME LOAN CORP.,

Defendant, Appellant.

APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Reginald C. Lindsay, U.S. District Judge]
[Hon. Judith G. Dein, U.S. Magistrate Judge]

Before

Selya, Circuit Judge,
Stahl, Senior Circuit Judge,
and Howard, Circuit Judge.

Thomas M. Hefferon, with whom U. Gwyn Williams, Alisha R.
Bloom, and Goodwin Procter LLP were on brief, for appellant.
Robert B. Serino and Buckley Kolar LLP on brief for American
Bankers Association, American Financial Services Association,
America's Community Bankers, Consumer Bankers Association, Consumer
Mortgage Coalition, Housing Policy Council of the Financial
Services Roundtable, and Mortgage Bankers Association, amici
curiae.
Christopher M. Lefebvre, with whom Claude Lefebvre, P.C.,
Daniel A. Edelman, Heather A. Kolbus, and Edelman, Combs, Latturner
& Goodwin, LLC were on brief, for appellees.

January 29, 2007
 SELYA, Circuit Judge. This interlocutory appeal requires

us to explore, for the first time, the crossroads at which class-

action rules intersect with the rescission provisions of the

federal Truth in Lending Act (TILA), 15 U.S.C. §§ 1601-1667, and

its Massachusetts counterpart, the Massachusetts Consumer Credit

Cost Disclosure Act (MCCCDA), Mass. Gen. Laws ch. 140D. After

careful consideration of this nuanced terrain, we conclude that the

district court lacked the authority to certify a class of

residential borrowers who might potentially be eligible for

rescissionary relief. Consequently, we reverse the decision

appealed from, vacate the class certification order, and remand for

further proceedings.

I. BACKGROUND

In March 2004, the plaintiffs, Ralph G. McKenna, Glenroy

and Ilene Deane, and Christopher and Laurie Lillie, all

Massachusetts homeowners, filed a complaint in the United States

District Court for the District of Massachusetts alleging that the

defendant, First Horizon Home Loan Corporation (First Horizon), had

violated both the TILA and the MCCCDA in the course of various

Massachusetts home-refinancing transactions. Specifically, the

plaintiffs contended that First Horizon had inaccurately disclosed

information pertaining to consumers' statutory rescission rights

and, subsequently, had failed to respond appropriately to requests

for the rescission of residential refinancings. In the plaintiffs'

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view, these violations of the TILA and the MCCCDA entitled them to

rescission of their loans and statutory damages.

To that point, the action seems unremarkable. What makes

it unusual is that, in addition to their claims for individualized

relief, the plaintiffs asserted that First Horizon's practices had

victimized countless others. Based on this premise, they purposed

to sue on behalf of a class of Massachusetts consumers who had

received similar loans and similar (allegedly defective) notices of

rescissionary rights from First Horizon during a particular time

frame. With respect to the putative class, the plaintiffs sought

a declaration that any class member who elected to do so could

rescind his or her credit transaction with First Horizon at any

time during the extended three-year statutory default period

(notwithstanding the expiration of the shorter three-day period

described in the rescission notices). First Horizon denied the

material allegations of the complaint and resisted any suggestion

that class certification might be appropriate.

In due season, certain of the plaintiffs (McKenna and

Laurie Lillie) moved for class certification. See Fed. R. Civ. P.

23. First Horizon opposed the motion. The district court referred

the matter to a magistrate judge. After some skirmishing over the

definition of the class, the magistrate judge recommended, in a

clarifying report, that a class be certified as follows:

All natural persons who obtained non-purchase
money loans from First Horizon . . . on or

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 after April 1, 2003 and who received a Notice
of Right to Cancel in [a described] form . . .
where; (1) the loans were secured by the
borrower's Massachusetts residence; (2) the
loan was for purposes other than the initial
construction or acquisition of the residence;
and (3) all or part of the loan proceeds were
used to refinance a loan made by someone other
than First Horizon . . . . .

McKenna v. First Horizon Home Loan Corp., 429 F. Supp. 2d 291, 316

(D. Mass. 2006).1 The class definition contained certain

exclusions, not material here; it also provided that "no person

shall be excluded from the class simply because that person has

refinanced or paid off the subject loan." Id. Finally, the

magistrate judge's recommended order stipulated that, if the action

succeeded, class relief would take the form of a "declaration that

any class member who so desires may seek to rescind their

transaction." Id. (quoting plaintiffs' amended complaint). Should

such a declaration issue, members of the class who then elected to

rescind could proceed to seek reimbursement of amounts previously

paid, statutory damages, and attorneys' fees. See id. at 297.

First Horizon objected on divers grounds, but the

district court nonetheless adopted the magistrate judge's clarified

recommendation in full. See id. at 294. Undaunted, First Horizon

1
In a somewhat unorthodox arrangement, the magistrate judge's
original report and recommendation, her clarifying report and
recommendation, and the district court's adoption of the clarifying
report and recommendation are reported together in serial (but not
chronological) fashion. We therefore cite to these decisions as if
they constituted a seamless whole.

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sought interlocutory review of the class certification order

pursuant to Fed. R. Civ. P. 23(f). Because of the important and

unsettled legal issues involved and the substantial financial

impact that the order portended, we granted the Rule 23(f) petition

in the exercise of our discretion. See Waste Mgmt. Holdings, Inc.

v. Mowbray, 208 F.3d 288, 293-94 (1st Cir. 2000). We then issued

an expedited briefing schedule and heard oral argument on December

6, 2006.

II. THE STATUTORY SCHEME

We begin our odyssey through the class-action wilderness

by summarizing the statutory provisions that undergird the

plaintiffs' claims. Congress enacted the TILA in 1968 "to assure

a meaningful disclosure of credit terms" and "to protect the

consumer against inaccurate and unfair credit . . . practices." 15

U.S.C. § 1601(a). To accomplish this goal, the TILA requires

creditors to disclose, clearly and accurately, all the material

terms of consumer credit transactions. See Beach v. Ocwen Fed.

Bank, 523 U.S. 410, 412 (1998). When creditors transgress this

baseline rule, they are subject both to criminal penalties for

willful and knowing violations, see 15 U.S.C. § 1611, and to

debtors' claims for damages, see id. § 1640(a).

The TILA provides further protection to consumers by

guaranteeing them a three-day cooling-off period within which they

may, for any reason or for no reason, rescind certain types of

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credit transactions (including residential refinancings). See id.

§ 1635. Rescission essentially restores the status quo ante; the

creditor terminates its security interest and returns any monies

paid by the debtor in exchange for the latter's return of all

disbursed funds or property interests. See id. § 1635(b). If the

right to rescind is not adequately disclosed, however, the period

within which the debtor may elect to rescind is extended for up to

three years after consummation of the transaction. See Palmer v.

Champion Mortg., 465 F.3d 24, 27 (1st Cir. 2006); see also 12

C.F.R. § 226.23(a)(3). The plaintiffs claim that this elongated

rescission period applies in this case.

The rescission process is intended to be private, with

the creditor and debtor working out the logistics of a given

rescission. See Belini v. Wash. Mut. Bank, 412 F.3d 17, 25 (1st

Cir. 2005). Not all debtors who suspect (or know) that they have

been subjected to a TILA violation will choose to rescind, in large

part because rescission entails the return of loan proceeds to the

creditor. See Ralph J. Rohner & Fred H. Miller, Truth in Lending

¶ 12.08, at 881 (2000). If, however, a debtor elects to rescind,

the mechanics of rescission are uncomplicated: the debtor notifies

the creditor in writing of his or her desire to rescind, and the

creditor must respond to that election within twenty days. See 15

U.S.C. § 1635(b). During this response period, the creditor may

comply with the request, resist rescission entirely, or agree to

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rescission while seeking equitable modifications. See Rohner &

Miller, supra ¶ 8.04, at 648-49. Should disagreements ensue or

problems arise, either party may repair to a federal court. See

Large v. Conseco Fin. Svcg. Corp., 292 F.3d 49, 52-53 (1st Cir.

2002).

In addition to individual claims for rescission and

statutory damages, the TILA expressly acknowledges the potential

for damages class actions by capping statutory damages for a single

violation, repeated in multiple cases, at the lesser of $500,000 or

one percent of the creditor's net worth. See 15 U.S.C. §

1640(a)(2)(B). There is no comparable class-action provision in 15

U.S.C. § 1635 (the section of the TILA that deals with rescission).

Except for a modest variance in regard to the limitation

period — a variance that is of no consequence here — the MCCCDA

mirrors its federal counterpart. This is not an accident; the

Massachusetts legislature closely modeled the state law after the

TILA. See Lynch v. Signal Fin. Co., 327 N.E. 2d 732, 734 (Mass.

1975). It is, therefore, common ground that the MCCCDA should be

construed in accordance with the TILA. See In re Desrosiers, 212

B.R. 716, 722 (Bankr. D. Mass. 1997); Mayo v. Key Fin. Servs.,

Inc., 678 N.E.2d 1311, 1313 (Mass. 1997). Thus, even though the

parties agree that the rescission claims in this case invoke the

MCCCDA, they also agree that, given the congruence between the two

statutes, the TILA supplies the applicable rules of decision.

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III. ANALYSIS

We turn now to the operation of these statutes in the

class-action context. On appeal, First Horizon advances a wide-

ranging asseverational array. Its flagship claim is that the

district court erred in certifying the class because, as a matter

of law, class actions for rescission are unavailable under the TILA

(and, therefore, under the MCCCDA). The amici, whose assistance we

appreciate, have filed an erudite brief in support of this claim.

We start there.

We review orders granting or denying class certification

for abuse of discretion. See Tilley v. TJX Cos., 345 F.3d 34, 39

(1st Cir. 2003). "[A] district court abuses its discretion when a

relevant factor deserving of significant weight is overlooked, or

when an improper factor is accorded significant weight, or when the

court considers the appropriate mix of factors, but commits a

palpable error of judgment in calibrating the decisional scales."

Dopp v. Pritzker, 38 F.3d 1239, 1253 (1st Cir. 1994) (quoting

United States v. Roberts, 978 F.2d 17, 21 (1st Cir. 1992)). Within

this rubric, a district court necessarily abuses its discretion

when its decision or judgment depends upon an incorrect view of the

law. Rosario-Urdaz v. Rivera-Hernandez, 350 F.3d 219, 221 (1st

Cir. 2003). And, finally, a district court's answer to an abstract

legal question, even though made in the course of reaching a

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generally discretionary judgment, engenders de novo review. See

Tardiff v. Knox County, 365 F.3d 1, 4 (1st Cir. 2004).

The putative class in this case is aimed at clearing the

way for rescission claims. Thus, the principal issue before us is

whether TILA claims focused on rescission are maintainable in a

class-action format. This issue is one of first impression here.

The Fifth Circuit has addressed it, however, holding squarely that

rescission class actions are not maintainable under the TILA. See

James v. Home Constr. Co. of Mobile, Inc., 621 F.2d 727, 731 (5th

Cir. 1980).

The James court based its holding primarily on a

conclusion that Congress intended rescission to be a "purely

personal remedy" — a status inconsistent with the class-action

mechanism. Id. A number of district courts have echoed this

refrain. These courts have emphasized that rescission claims,

unlike damages claims, are not subject to any aggregate statutory

cap and, therefore, rescission class actions, if permitted, could

easily render a creditor insolvent. See, e.g., Gibbons v.

Interbank Funding Group, 208 F.R.D. 278, 285-86 (N.D. Cal. 2002).

They also have noted the absence of any necessity for deployment of

the class-action vehicle in this context due to the availability of

substantial monetary recoveries and attorneys' fees in individual

rescission cases. See, e.g., Jefferson v. Sec. Pac. Fin. Servs.,

Inc., 161 F.R.D. 63, 68-70 (N.D. Ill. 1995).

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 This case law notwithstanding, the question is not free

from doubt. Some district courts, like the court below, have

certified TILA rescission classes on the theory that nothing in the

language of the TILA expressly prohibits the maintenance of

rescission class actions. See, e.g., Rodrigues v. Members Mortg.

Co., 226 F.R.D. 147, 153 (D. Mass. 2005); McIntosh v. Irwin Union

Bank & Trust, Co., 215 F.R.D. 26, 32-33 (D. Mass. 2003); Williams

v. Empire Funding Corp., 183 F.R.D. 428, 435-36 (E.D. Pa. 1998).

We follow James and hold today that, as a matter of law,

class certification is not available for rescission claims, direct

or declaratory, under the TILA (and, thus, under the MCCCDA). We

ground this holding primarily on our conclusion that Congress did

not intend rescission suits to receive class-action treatment.

"In determining congressional intent, we employ the

traditional tools of statutory construction, including a

consideration of the language, structure, purpose, and history of

the statute." Estey v. Comm'r, Me. Dep't of Human Servs., 21 F.3d

1198, 1201 (1st Cir. 1994). Thus, we begin the present inquiry

with the TILA's text.

Class actions are specifically addressed in the section

of the TILA relating to damages. See 15 U.S.C. § 1640(a)(2)(B).

There is, however, no comparable mention of the class-action

mechanism in the section that deals with rescission. See id. §

1635. We long have recognized that, under ordinary circumstances,

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the inclusion of a specific provision in one part of a statute and

the exclusion of the same sort of provision in another part of the

same statute should be treated as deliberate. See United States v.

Green, 407 F.3d 434, 443 (1st Cir. 2005). Consequently, the

variation in the treatment of class actions in the two relevant

sections of the TILA strongly suggests that Congress did not intend

to include a class-action mechanism within the compass of section

1635. See id.; see also Duncan v. Walker, 533 U.S. 167, 173 (2001)

(applying this principle of statutory construction in an analogous

context).

Of course, the class-action provision in the TILA's

damages section is in the nature of a cap. Thus, the exclusion of

any mention of class actions from the rescission provision could

conceivably lead to one of two conflicting conclusions: Congress

either may have intended rescission to be totally unavailable as a

class remedy in the TILA milieu or it may have intended rescission

class actions to be available unrestrainedly in TILA cases, not

subject to any special limiting conditions. We find the first

alternative much more likely.

It is nose-on-the-face plain that unrestricted class

action availability for rescission claims would open the door for

vast recoveries. First Horizon estimates that its exposure in this

case, should the district court's class certification order remain

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intact, would be approximately $200,000,000.2 This is considerably

in excess of the cap (the lesser of $500,000 or one percent of net

worth) that Congress painstakingly established for damages class

actions. See 15 U.S.C. § 1640(a)(2)(B). The notion that Congress

would limit liability to $500,000 with respect to one remedy while

allowing the sky to be the limit with respect to another remedy for

the same violation strains credulity.

Here, moreover, we have the benefit of confirmatory

evidence of Congress's intent. In Rodash v. AIB Mortg. Co., 16

F.3d 1142 (11th Cir. 1994), the Eleventh Circuit held that a

creditor's TILA violation justified rescission of a mortgage loan.

See id. at 1147. Responding to that decision, Congress enacted a

moratorium on class actions for what it characterized as relatively

minor violations (including the selection of an incorrect form for

disclosure of rescission rights — the precise type of violation at

issue here). See Truth in Lending Class Action Relief Act of 1995,

Pub. L. No. 104-12, § 2, 109 Stat. 161, 161-62. Congress proceeded

to amend the TILA to provide higher tolerance levels for what it

viewed as honest mistakes in carrying out disclosure obligations.

2
The $200,000,000 estimate appears to be based on a recovery
of approximately $22,000 for each of the estimated 8,900 members of
the putative class. As the plaintiffs point out, this estimate may
be high. But even if only five percent of the class members elect
to rescind and recover only an average of $10,000 apiece, First
Horizon would be liable for $4,450,000. That figure would still
dwarf the $500,000 ceiling placed on damages class actions.

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See Truth in Lending Act Amendments of 1995, Pub. L. No. 104-29, §

3, 109 Stat. 271, 272-73.

In taking this step, Congress made manifest that although

it had designed the TILA to protect consumers, it had not intended

that lenders would be made to face overwhelming liability for

relatively minor violations. A key proponent of the legislation

expressed an awareness, acknowledged by others during the floor

debate, that the "threat of wholesale rescissions present[s] a real

danger to our modern system of home financing." 141 Cong. Rec.

S14566, 14567 (statement of Sen. D'Amato). The amendments, Senator

D'Amato stated, were specifically "intended to curtail the

devastating liability that threaten[s] our housing finance system."

Id. The senator attributed that prospect — "devastating liability"

— to the onslaught of suits demanding "the most draconian remedy

available under Truth in Lending — rescission." Id. Viewed

against this backdrop, it becomes readily evident that providing

higher tolerance levels for minor violations was "critical to

avert[ing] what could [have] be[en] a financial disaster in the

mortgage industry." Id. at 14568 (statement of Sen. Mack).

The personal nature of the rescission remedy gives this

legislative history a compelling quality. The highly

individualized character of this process and the range of

variations that may occur render rescission largely incompatible

with a sensible deployment of the class-action mechanism.

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 The plaintiffs attempt to blunt the force of this

reasoning both directly and indirectly. In a frontal assault on

what we have gleaned from the legislative history, they point out

that Congress, in the 1995 amendments, acted to limit the contours

of the TILA's compilation of substantive violations rather than to

restrict available remedies. From this, they reason that

Congress's actions are not evidence of an intent to circumscribe

rescission liability.

This is wishful thinking. While Congress did not spell

out that class actions were forbidden in the rescission context, it

is risky business to attribute much significance to congressional

inaction. See Estey, 21 F.3d at 1206. What we know, to a virtual

certainty, is that Congress was responding to a troubling decision:

Rodash. See 141 Cong. Rec. S14566, 14567 (statement of Sen.

Sarbanes) ("The Rodash problem arose from a court decision last

year in which small violations of the disclosure requirements of

the Truth in Lending Act triggered the right of rescission provided

by the act."). That decision was a merits decision, not a class

certification decision. Amendment of the TILA's substantive

provisions was a predictable reaction to Rodash — one that promised

to ameliorate "the threat of wholesale rescissions." Id. Every

indication is that Congress, while making no provision for class

actions in the rescission context, intended to keep at bay the

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ominous prospect of large-scale liability that would be inherent in

rescission class actions.

The plaintiffs' indirect attempt to avoid an adverse

construction of the TILA begins with the Supreme Court's statement

that "[i]n the absence of a direct expression by Congress of its

intent to depart from the usual course of trying 'all suits of a

civil nature' under the Rules established for that purpose, class

relief is appropriate in civil actions brought in federal court."

Califano v. Yamasaki, 442 U.S. 682, 700 (1979) (quoting Fed. R.

Civ. P. 1). Building on this foundation, they posit that because

Congress did not express such an intent in the text of the TILA's

rescission provision, rescission class actions are permissible.

The problem, however, is that the plaintiffs wrest the

quoted statement from its contextual moorings. When viewed within

its natural environment, the Yamasaki Court's pronouncement is not

in conflict with our construction of the TILA. We explain briefly.

The Yamasaki Court was interpreting a jurisdictional

statute that explicitly delineated the procedure through which an

individual could obtain judicial review of an administrative

decision. See id. at 698 n.12. An argument was made that the

statute's authorization of suit by "any individual" evinced an

intent on Congress's part to provide judicial review on a case-by-

case basis and not by means of class actions. Id. at 698-99. The

Court rejected this argument, explaining that jurisdictional

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statutes often speak in terms of individual plaintiffs and that the

use of such terminology, without more, does not create an exemption

from the usual class-action rules. Id. at 700.

This case is quite different. The TILA's rescission

provision "is written with the goal of making the rescission

process a private one, worked out between creditor and debtor

without the intervention of the courts." Belini, 412 F.3d at 25.

Unlike the statute at issue in Yamasaki, the TILA contains no

language describing the process by which parties may sue in federal

court to enforce rescission rights. We would not expect Congress

expressly to exempt from class-action rules a process for which it

never fully delineated an individual right of action.3

Last — but not least — we note that the TILA already

includes significant incentives for creditor compliance with its

strictures, thus casting serious doubt on the need for a class-

action mechanism with respect to rescission.4 The statute grants

3
We add, moreover, that even though it is not memorialized in
the text of the statute, we find an express congressional intent to
exempt rescission actions from class treatment in the TILA's
structure and its legislative history. Cf. Yamasaki, 442 U.S. at
699 & n.13 (implying that legislative history may properly inform
judicial analysis on such an issue); Walsh v. Ford Motor Co., 807
F.2d 1000, 1009-10 (D.C. Cir. 1986) (reviewing legislative history
for this purpose).

4
One indicator of the effectiveness of these incentives is
that First Horizon already has responded to complaints about the
disputed notice and has stopped using it in home-refinancing
transactions.

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substantial enforcement authority to the federal agencies with

jurisdiction over lending institutions, see 15 U.S.C. § 1607(a),

including the power to impose substantial monetary penalties for

each violation (and even greater penalties for patterns of

misconduct), as well as the power to suspend and remove directors

and officers. See 6 Alba Conte & Herbert B. Newberg, Newberg on

Class Actions § 21:1, at 405 (2002); see also 12 U.S.C. §§ 1818(e),

1818(i).

Moreover, debtors enjoy an array of private remedies.

Most notably, they may pursue rescission claims on their own — a

course of action that the TILA facilitates. Should a debtor follow

this course, his or her monetary recovery is apt to be sizable.

This case illustrates the point. First Horizon estimates that

putative class members stand to recover between $15,000 and $25,000

each. Although the plaintiffs try to downplay the overall financial

impact of a class action like this one, deeds speak louder than

words. The plaintiffs' attorneys, in an effort to recruit

additional claimants, have placed advertisements holding out the

prospect of recoveries of up to $50,000 per person. Figures on

this order of magnitude, when combined with the attorneys' fees

normally awarded to successful plaintiffs in TILA rescission cases,

see Belini, 412 F.3d at 25; see also 15 U.S.C. § 1640(a)(3), afford

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a powerful incentive to debtors to sue individually if a creditor

refuses to honor a timely, well-founded rescission request.5

The plaintiffs have a fallback position. Even if

rescission class actions simpliciter are unavailable under the

TILA, they insist that the case at hand escapes that prohibition

because the members of the putative class, by definition, do not

seek rescission as such but merely seek a declaration of rights

referable to rescission. See, e.g., Williams, 183 F.R.D. at 435-

36. This bit of legal legerdemain does not get the plaintiffs very

far.

In the final analysis, the professed distinction between

a suit for a declaratory judgment that rescission is possible and

a suit for rescission simpliciter elevates form over substance.

See Gibbons, 208 F.R.D. at 285. Both of the primary reasons for

denying class treatment to actual rescission claims — Congress's

manifest intent to shield residential lenders from crushing

liability and the highly personal nature of the rescission remedy

— apply with equal force to the proposed formation of declaratory

rescission classes. Indeed, the patent insubstantiality of the

distinction between declaratory and non-declaratory rescission

claims is vividly illustrated by the district court's certification

5
Of course, should aggrieved debtors wish to sue
collaboratively, a class action for statutory damages is available
to them, subject, however, to the statutory cap. See 15 U.S.C. §
1640(a)(2)(B).

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of the instant class as a Rule 23(b)(3) class. See McKenna, 429 F.

Supp. 2d at 296-97. A Rule 23(b)(2) class ordinarily is used when

broad, class-wide injunctive or declaratory relief is appropriate.

See Allison v. Citgo Petro. Corp., 151 F.3d 402, 412 (5th Cir.

1998); Holmes v. Continental Can Co., 706 F.2d 1144, 1155 (11th

Cir. 1983).

If more were needed — and we doubt that it is — the

justifications for class treatment are significantly diminished

when the remedy sought is a declaration of the right to rescind.

Among the primary rationales behind the class action mechanism are

judicial economy and efficiency. See 1 Conte & Newberg, supra §

1:1, at 3. Here, as the district court observed:

[P]laintiffs only seek a declaration that the
notices of rescission . . . violate TILA, and
thus that each member of the class is entitled
to seek rescission. Should the Court declare
that, indeed, plaintiffs are entitled to seek
rescission because of certain infirmities in
the TILA disclosure documents, then each class
member, individually, and not as a member of
the class, would have the option to exercise
his or her right to seek rescission. As to any
member of the class who triggered the statutory
right to rescission, [the] defendants would
have, in turn, the opportunity to exercise
their rights to cure under TILA.

McKenna, 429 F. Supp. 2d at 304 (quoting Williams, 183 F.R.D. at

435). In other words, absent class members would have the same

right to seek rescission after a declaratory judgment was rendered

as they had previously. Thus, should the need arise for an absent

class member to resort to the courts for enforcement of his or her

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right to rescind, the declaratory judgment would serve that end no

more effectively than would a non-class-action suit brought by named

plaintiffs alleging identical TILA violations. So viewed, a class

declaratory judgment would work against judicial economy and

disserve efficiency concerns.6

To say more would be supererogatory. For the reasons

elucidated above, we hold that class certification is unavailable

as a matter of law for TILA rescission claims (including declaratory

rescission claims).

IV. CONCLUSION

We summarize succinctly. Given the unavailability of

class-action treatment for rescission claims (including declaratory

rescission claims) under the TILA and, thus, under the MCCCDA, we

reverse the district court's class certification decision, vacate

its class certification order, and remand the case for further

proceedings consistent with this opinion. We take no view on

whether the district court, if requested to do so, may or should

6
Although the point is not before us, see Eisen v. Carlisle &
Jacquelin, 417 U.S. 156, 177-78 (1974), we question whether a
declaratory judgment is an appropriate remedy even for the named
plaintiffs. For one thing, a declaratory judgment plainly would
not settle the controversy. That is a basis for questioning the
appropriateness of declaratory relief. 10B Charles Alan Wright et
al., Federal Practice and Procedure § 2759, at 543 (3d ed. 1998).
The controversy almost certainly would continue notwithstanding a
declaration that the named plaintiffs were entitled to rescind.
After all, the equitable nature of rescission generally entitles
the affected creditor to judicial consideration of the individual
circumstances of the particular transaction. See Rohner & Miller,
supra ¶ 8.04, at 649.

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attempt to certify a damages class. We point out, however, that any

such certification would bring into play the statutory cap. See 15

U.S.C. § 1640(a)(2)(B).

We need go no further.7 Judgment shall enter as provided

herein, and costs shall be taxed in favor of First Horizon.

So Ordered.

7
Because we vacate the class certification order on the ground
stated, we need not address First Horizon's other arguments,
including arguments that general declaratory relief is unavailable
under the TILA; that absent class members lack standing to seek a
declaratory remedy; that certification of the instant class fails
to meet the requirements limned in Fed. R. Civ. P. 23 (especially
the superiority requirement of Rule 23(b)(3)); and that debtors who
have paid off or refinanced their loans should have been excluded
from the putative class.

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