FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
JAMES A. MCCOY, on behalf of
himself and all others similarly
No. 06-56278
situated,
Plaintiff-Appellant, D.C. No.
v. CV-06-00107-JVS
ORDER AND
CHASE MANHATTAN BANK, USA,
OPINION
National Association,
Defendant-Appellee.
On Remand from the United States Supreme Court
Filed August 19, 2011
Before: Richard D. Cudahy,* Harry Pregerson, and
Michael Daly Hawkins, Circuit Judges.
Opinion by Judge Hawkins
*The Honorable Richard D. Cudahy, Senior Circuit Judge for the Sev-
enth Circuit, sitting by designation.
11021
MCCOY v. CHASE MANHATTAN BANK 11023
COUNSEL
Barry L. Kramer, Law Offices of Barry L. Kramer, Los Ange-
les, California, for the plaintiff-appellant.
Noah A. Levine, Wilmer Cutler Pickering Hale and Dorr,
New York, New York, and Daniel S. Volchok, Wilmer Cutler
Pickering Hale and Dorr, Washington, D.C., for the
defendant-appellee.
11024 MCCOY v. CHASE MANHATTAN BANK
ORDER
The Opinion and Dissent filed March 16, 2009, and appear-
ing at 559 F.3d 963 (9th Cir. 2009), are withdrawn. They may
not be cited as precedent by or to this court or any district
court of the Ninth Circuit.
OPINION
HAWKINS, Senior Circuit Judge:
James A. McCoy (“McCoy”) brought this action on behalf
of himself and others similarly situated against Chase Man-
hattan Bank, USA, N.A. (“Chase”), alleging Chase increased
his interest rates retroactively to the beginning of his payment
cycle after his account was closed to new transactions as a
result of a late payment to Chase or another creditor. He
claimed that the rate increase violated the notice requirements
of the Truth in Lending Act (“TILA”), 15 U.S.C. §§ 1601-
1615, because Chase failed to give notice of the increase until
it had already taken effect. He also asserted violations of state
law, claiming that the Delaware Banking Act did not autho-
rize discretionary post-default rate increases, but only rates of
interest that “vary in accordance with a schedule or formula.”
5 Del. C. § 944.1
In our prior decision, McCoy v. Chase Manhattan Bank,
USA, 559 F.3d 963 (9th Cir. 2009), we reversed the dismissal
of most of McCoy’s federal and state claims. We concluded
McCoy had stated a federal claim for violation of TILA and
Regulation Z, 12 C.F.R. § 226, for Chase’s failure to give
notice of a discretionary interest rate increase due to con-
sumer default. 559 F.3d at 967-69. We also concluded that
1
Pursuant to the National Bank Act, as Chase’s home state, Delaware
law governs the interest rate charged by Chase and the methodology used
to determine that rate. 12 U.S.C. § 85.
MCCOY v. CHASE MANHATTAN BANK 11025
McCoy had successfully stated several state law claims for
violation of Delaware law because the decision to increase
rates upon default was discretionary and not based on a
“schedule or formula.” Id. at 970-71 (reversing claims for
declaratory relief, reformation, and damages for imposing an
illegal penalty).
[1] Appellees sought Supreme Court review of our deci-
sion, and in Chase Bank USA, N.A. v. McCoy, 131 S. Ct. 871
(2011), the Court reversed our decision with respect to the
federal claim and remanded for further proceedings.2 We now
withdraw our prior opinion, and, consistent with the Supreme
Court’s ruling, affirm the district court’s dismissal of
McCoy’s first cause of action (violation of the TILA for fail-
ure to notify of rate increase), as well as his sixth cause of
action (breach of contract for failure to notify him “of any
change if required by applicable law”).3
[2] Although the Supreme Court decision did not specifi-
cally address our ruling on McCoy’s state law claims, we can-
not ignore the significant legal developments in this regard
since the time we issued our prior opinion.4 Two federal
appellate courts have reached a contrary conclusion regarding
2
The Court deferred to an interpretation of Regulation Z advanced by
the Board of Governors of the Federal Reserve System in an amicus brief
filed with the Court, but recognized that “the Ninth Circuit did not have
the benefit of briefing from the Board.” 131 S. Ct. at 880 n.7.
3
The parties were given an opportunity to provide supplemental briefing
on the impact of the Supreme Court decision and various other legal
developments affecting this case. McCoy concedes that the first and sixth
causes of action are precluded by the Supreme Court’s decision.
4
This court routinely considers the effect of intervening developments
on matters still pending before this court. See, e.g., Kawashima v. Holder,
615 F.3d 1043, 1051 (9th Cir. 2010) (reconsidering initial opinion(s) in
light of subsequent circuit and Supreme Court decisions); see also Leslie
Salt Co. v. United States, 55 F.3d 1388, 1393 (9th Cir. 1995) (court is free
to reconsider previously decided questions if there has been an intervening
change in law, new evidence has surfaced, or the previous disposition was
clearly erroneous).
11026 MCCOY v. CHASE MANHATTAN BANK
the interpretation of Delaware Banking Act § 944. In Swanson
v. Bank of America, 563 F.3d 634, 636 (7th Cir. 2009), the
Seventh Circuit criticized our conclusion:
The ninth circuit asserted that § 944 does not autho-
rize a bank to make discretionary changes in a bor-
rower’s rate of interest, because discretion differs
from a “schedule or formula.” Yet the statute does
not say that only a “schedule or formula” may be
used, nor does any decision of a Delaware court. The
statute tells us that the bank’s authority depends on
its contracts. Section 944 permits a bank to make
changes that are authorized by agreement with its
customer. The changes that Bank of America made
were expressly authorized by its contract with Swan-
son, so the Bank has complied with § 944 and may
not be held liable under Illinois law.
In Shaner v. Chase Bank USA, N.A., 587 F.3d 488, 494 (1st
Cir. 2009), the First Circuit similarly reasoned:
Shaner claims section 944’s provisions are not satis-
fied here, arguing that Chase’s card agreement did
not provide a “schedule or formula” because the
choice to increase the APR was discretionary with
Chase. But the agreement explicitly made the discre-
tionary increase contingent upon a default in pay-
ment; the Delaware banking statutes themselves say
that the rate is to be “established in the manner pro-
vided in the agreement,” Del.Code Ann. tit. 5, § 943,
and that a “schedule or formula” includes “provision
in the agreement . . . for a change in the [APR] . . .
contingent upon the happening of any event or cir-
cumstance specified in the plan,” id. § 944; and the
Delaware State Bank Commissioner in an amicus
brief confirms that the banking statutes permit Chase
to reserve discretion as to whether to charge the
maximum default rate.
MCCOY v. CHASE MANHATTAN BANK 11027
[3] These subsequent decisions alone would give us pause
regarding our prior interpretation of § 944, but, in addition,
the Delaware legislature apparently agrees with the First and
Seventh Circuits’ interpretation of the provision. In response
to the circuit conflict, the Delaware legislature enacted a clari-
fying amendment to § 944, adding the italicized sentence to
the end of the section:
If the agreement governing the revolving credit plan
so provides, the periodic percentage rate or rates of
interest under such plan may vary in accordance with
a schedule or formula. . . . Without limitation, a per-
missible schedule or formula hereunder may include
provision in the agreement governing the plan for a
change in the periodic percentage rate or rates of
interest . . . contingent upon the happening of any
event or circumstance specified in the plan, which
event or circumstance may include the failure of the
borrower to perform in accordance with the terms of
the plan. Nothing herein precludes a bank from
charging or reserving a right to charge, by discre-
tion or otherwise, a rate lower than any maximum
rate provided for in any schedule or formula.
5 Del. C. § 944 (emphasis added), as amended by 77 Del.
Laws, ch. 279, § 1 (2010).
McCoy would have us ignore this clear direction alto-
gether, or contort its meaning beyond recognition. McCoy
argues that we should disregard the 2010 amendment because
it should not be applied retroactively. While there is a pre-
sumption against retroactivity when there is a substantive
change in the law, see A.W. Fin. Servs., SA v. Empire Res.,
Inc., 981 A.2d 1114, 1120 (Del. 2009), the amendment here
does not alter the meaning of § 944 but merely clarifies the
meaning of the prior language, to the extent the former provi-
sion was ambiguous and leading to conflicting results in the
courts. 1A Norman J. Singer & J.D. Shambie Singer, Suther-
11028 MCCOY v. CHASE MANHATTAN BANK
land Statutes and Statutory Construction, § 22.31 (7th ed.
2011) (“If the amendment was enacted soon after controver-
sies arose about interpretation of the original act, it is logical
to regard the amendment as a legislative interpretation of the
original act . . . .”); Walls v. Dept. of Corr., 663 A.2d 488
(table), 1995 WL 420801, at *1 (Del. July 3, 1995) (“Where
the legislature passes an amendment shortly after a contro-
versy arises as to the meaning of the original statute, the
amendment may be construed as a clarification of prior
law.”).
Moreover, if the import of this addition to the statute were
somehow unclear, the synopsis of the bill erases any doubt
that the amendment is a clarification rather than a substantive
change:
This Act provides a clarifying amendment to § 944
of Title 5 of the Delaware Code, and does not
change the meaning of the existing statute. The Act
clarifies that a schedule or formula providing for a
maximum rate of interest under a revolving credit
plan does not preclude a bank or licensed lender reg-
ulated by the State Bank Commissioner from charg-
ing or reserving the right to charge, by discretion or
otherwise, a rate lower than any maximum rate pro-
vided for in any schedule or formula. The clarifica-
tion is prompted by a conflict in recent court
decisions construing this section.
S.B. 216, 145th Gen. Assembly (Del. 2010) (emphasis
added). See LeVan v. Independence Mall, Inc., 940 A.2d 929,
932 n. 13 (Del. 2007) (“‘The synopsis of the [legislative bill
is] a proper source from which to glean legislative intent.’ ”)
(alteration in original) (quoting Carper v. New Castle County
Bd. of Educ., 432 A.2d 1202, 1205 (Del. 1981)).
McCoy alternatively argues that § 944 as clarified nonethe-
less requires the rate increase to be in accordance with some
MCCOY v. CHASE MANHATTAN BANK 11029
“schedule or formula” and that Chase fails to satisfy this
requirement. But the statute clearly indicates that a “permissi-
ble schedule or formula” can include a provision to change
the interest rate “contingent upon the happening of any event
or circumstance specified in the plan,” which may include
borrower default. 5 Del. C. § 944. In our prior opinion, we
reasoned that there was no “schedule or formula” because the
cardmember agreement did not specify whether Chase was
required to actually increase the rate in the event of default,
and, if so, by how much, leaving the increase “discretionary.”
559 F.3d at 970. The amendment speaks to precisely this
point, clarifying that banks are free to charge, by discretion or
otherwise, a rate lower than any maximum rate provided for
in the agreement.5 See also Shaner, 587 F.3d at 494.
[4] As Delaware law permits the actions taken by Chase—
to raise interest rates in the event of default, if it so chooses,
by an amount determined in its discretion up to the maximum
rate permitted by the cardmember agreement—the district
court correctly concluded that McCoy’s second, third, and
fourth state law causes of action are foreclosed.
Finally, as we explained in our prior opinion, McCoy’s
fifth cause of action fails to state a claim for consumer fraud
under 6 Del. C. § 2513(a) because Chase openly and
expressly notifies cardholders of the actions it reserves the
right to take in the event of a default. McCoy’s seventh cause
of action fails to state a claim for breach of an implied duty
of good faith because the contract already contained an
express obligation for Chase to provide notices as required by
law, and “where the subject at issue is expressly covered by
5
To the extent that McCoy argues § 944 requires there to be some rate
increase, we find no support for this proposition in the text of the provi-
sion, which clearly favors discretion on the bank’s part to impose no
increase, some increase, or the maximum increase in interest rate permit-
ted by its contract; no increase is merely one form of a decision to charge
a rate “lower than any maximum rate,” as explicitly permitted by § 944.
11030 MCCOY v. CHASE MANHATTAN BANK
the contract . . . the implied duty to perform in good faith does
not come into play.” Dave Greytak Enters., Inc. v. Mazda
Motors of Am., Inc., 622 A.2d 14, 23 (Del. Ch. 1992).
[5] Thus, because none of McCoy’s claims survives, the
district court properly dismissed the entire action with preju-
dice. The judgment of the district court is therefore
AFFIRMED.