Miller v. Nissan Motor Acceptance Corp.

Opinions of the United
2004 Decisions States Court of Appeals
for the Third Circuit

3-22-2004

Miller v. Nissan Mtr
Precedential or Non-Precedential: Precedential

Docket No. 02-2432

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"Miller v. Nissan Mtr" (2004). 2004 Decisions. Paper 884.
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 PRECEDENTIAL

UNITED STATES COURT OF Argued: February 11, 2003
APPEALS
FOR THE THIRD CIRCUIT (Opinion filed: March 22, 2004)

Nos: 02-2432 & 02-2573 Before: ALITO and M cKEE, Circuit
Judges, and
SCHW ARZER, District Judge*
BRIAN S. MILLER; MICHAEL ROSE;
MICHELLE ROSE, H/W, ON BEHALF
OF THEMSELVES AND ALL
OTHERS
SIMILARLY SITUATED DARRYL J. MAY, ESQ. (Argued)
RAYMOND A. QUAGLIA, ESQ.
v. AMY B. CARVER, ESQ.
Ballard Spahr Andrews & Ingersoll, LLP
NISSAN MOTOR ACCEPTANCE 1735 Market Street, 51st Floor
CORP. Philadelphia, PA 19103
Attorneys for Appellant/Cross-Appellee,
NMAC
Nissan Motor Acceptance Corporation
("NMAC"), CARY L. FLITTER, ESQ. (Argued)
Lundy, Flitter, Beldecos & Berger, P.C.
Appellant in No. 02-2432 450 N. Narberth Avenue
Narberth, PA 19072

MICHAEL D. DONOVAN, ESQ.
Brian S. Miller; Michael Rose; and Donovan Searles, LLC
Michelle Rose, 1845 Walnut Street
Philadelphia, PA 19103
Appellants in No. 02-2573
Kirby, McInerney & Squire, LLP
830 Third Avenue

Appeal from the United States District
Court *
The Hon. William W. Schwarzer,
for the Eastern District of Pennsylvania United States District Judge for the
(Civ. No. 99-cv-04953) Northern District of California, sitting by
District Judge: Hon. Stewart Dalzell designation.
New York, NY 10022 well as its disclosure requirement. 1
Attorneys for Appellees/Cross- The district court agreed with the
Appellants, lessees’ disclosure claims. It also agreed
Miller and Rose that the method for calculating an early
termination charge that was contained in
the leases violated the CLA reasonableness
requirement. However, it disagreed that
OPINION the early termination charge actually paid
violated the CLA’s reasonableness
requirement.
McKEE, Circuit Judge. We agree that the leases violated
In these cross-appeals, we are the CLA ’s disclosure requirements
presented with a number of questions because the method for determining the
concerning certain requirements of the early termination charges actually assessed
Consumer Leasing Act (“CLA”), 15 was not contained in the respective leases.
U.S.C. §§ 1667-1667e, as they apply to We also agree that the method for
automobile leases. As we will explain in determining the early termination charges
some detail, when the plaintiffs/lessees actually assessed did not violate the CLA’s
terminated their leases prior to the reasonableness requirement. However,
expiration of the terms of their respective since we conclude that the lessees had no
leases, the lessor required that they pay the standing to challenge the early termination
balance of the remaining monthly charge that was never applied to them, we
payments due under their leases rather than will not address lessees’ challenge to that
charge them the early termination fee in formula.
accordance with a formula contained in I. BACKGROUND
their leases. The lessees paid that charge Brian Miller executed a 36-month
and then instituted suit claiming that the closed-end lease with Nissan Motor
method for determining the early Acceptance Corporation (“NMAC”) for a
termination charges they actually paid 1997 Nissan Altima on December 26,
violated the disclosure requirements of the 1996. Pursuant to that lease he agreed to
CLA § 1667a. The lessees also claimed
that the early termination charge they
actually paid violated the substantive 1
The lessees also asserted a number of
reasonableness requirements of CLA §
state law claims against the lessor.
1667b(b), and that the method for
However, as will be explained, those
calculating the early termination charge
claims are not before us because the
contained in their leases violated the
district court entered judgment under
substantive requirements of the CLA as
Fed.R.Civ.P. 54(b) as to the CLA claims
and suspended adjudication of the state
law claims.

2
make monthly payments of $267 through and I have given you
December 1999. Michael and M ichelle [NMAC] 30 days written
Rose executed a 39-month closed-end notice. Except as otherwise
lease with NMAC for a 1996 Nissan provided in paragraph 22
Altima GXE on March 25, 1996. They [concerning NMAC’s
agreed to make monthly payments of acceptance of insurance
$237.87 through June 1999.2 settlement if the vehicle is
Both leases contain a “Paragraph lost through theft o r
18,” captioned: “Early Termination destruction], if I terminate
Liability,” which provides in relevant part: early, in addition to the
At any time after 12 amounts indicated in items a
monthly payments have through d of paragraph 17
been paid, I [the lessee] may [“Termination Liability”], I
terminate this lease on the must pay you an Early
due date of a monthly lease Termination Charge which
payment if this lease is not is determined as follows:
in default as disclosed in First, all monthly lease
paragraph 19 [“Default”], payments, which under the
terms of this lease, are not
yet due and the residual
2 value of the Vehicle are
“A closed-end lease is a lease in which
discounted to present value
the lessee is not responsible for the
by the Constant Yield
difference if the actual value of the vehicle
Method at the rate implicit
at the scheduled end of the lease is less
in this lease (the “Adjusted
than the residual value, but the lessee may
Lease Balance”). This
be responsible for excess wear and excess
amount is then reduced by
mileage charges and for other lease
the Realized Value (and
requirements.” Applebaum v. Nissan
insurance) proceeds which
Motor Acceptance Corporation, 226 F.3d
you receive for the Vehicle.
214, 216 n.1 (3d Cir. 2000) (citation and
...
internal bracket and quotations omitted).
In contrast, an open-end lease “is one in
NMAC refers to the formula in Paragraph
which the lessee’s liability at the end of the
18 as either the “paragraph 18 formula,” or
lease term is based on the difference
the “early termination formula.”
between the residual value and its realized
Miller and the Roses claim that they
value.” Id. at 223. The residual value of a
made inquiries and took actions with
vehicle is the projected value of the
respect to early termination of their
vehicle at the end of the lease that is
respective leases. Miller claimed that he
assigned at the beginning of the lease. Id.
telephoned NM AC in March 1999 to
at 222 (citation omitted).

3
request the amount he would owe if he Paragraph 18 would have been. Miller
terminated his lease early. 3 Miller said paid this lesser charge.
that a NMAC representative gave him a The Roses terminated their lease on
figure so high that he gave no March 23, 1999, less than three months
c o n s i d er a tion w hatever to e a r l y before its scheduled expiration, by turning
termination. However, on March 4, 1999, over their leased Nissan vehicle to a
NMAC mailed Miller a letter which Mitsubishi dealership as part of a trade-in
contained a quote that was considerably for a Mitsubushi vehicle. NMAC did not
lower than the phone quote. The letter apply the Paragraph 18 formula to the
stated that paying all of the remaining Roses either. Rather, it only charged the
payments that would have been due under sum of their two remaining monthly
the lease – $3,064.81, including taxes and payments, which was less than the amount
disposition fees – would be a less they would have owed under the Paragraph
expensive option for Miller. 18 formula. The Roses paid this charge
Dissuaded in part by what he “under protest.” It is agreed that the
considered two pricey early termination method of paying early termination
quotes, Miller said that he decided not to liability by paying only the amount of the
terminate his lease until November 1999. remaining monthly payments is not
At that time, Miller terminated his lease in contained in either lease agreement.
the process of trading-in the leased vehicle Miller and the Roses (“the
for a new lease on another Nissan vehicle. Plaintiffs”) claim that NMAC uses inflated
However, NM AC did not apply the residual values for its leased vehicles.
Paragraph 18 formula to that trade-in. They contend that if NMAC had used
Instead, NM AC charged Miller only his bona fide residual values and charged
final month’s lease payment, which was them for early termination pursuant to the
less than the charge derived under Paragraph 18 formula, they would have
been charged less than they were actually
charged, or nothing at all, for early
3 termination. Their theory about the
NM AC claims that Miller’s call was “a
inflated residual values is as follows:
lawyer-staged phone call rather that a bona
They submit that the early
fide early termination request.” NMAC’s
termination charges under the Paragraph
Reply Br. and Answering Br. as Cross-
18 formula are astonishingly high in part
Appellee, at 1. NMAC further claims that
because of NMAC’s undisclosed practice
Miller never had any intention of
of using inflated or “subvented” residual
terminating his lease in March of 1999 and
values in calculating lease payments.4,5
that Miller made the phone call to NMAC
from his lawyer’s office for litigation
purposes only. See NMAC’s Reply Br. at
4
13. According to NMAC, this whole A “subvented” residual value is one
lawsuit is a fabrication. which is raised in order to lower a

4
They claim that the relationship between artificially high residual value. This
the residual value and the lease payments results in an artificially low estimate of the
is simple. The total payments over the life amount of depreciation the car will
of the lease are determined by lease experience during the term of the lease.
depreciation and lease charges. The lease Put another way, NMAC assumes, for
charges are analogous to interest purposes of computing lease payments,
payments. The lease depreciation pays for that the car will be worth more at the end
the depreciation of the leased vehicle over of the lease (because it experienced less
the life of the lease and reflects that the depreciation) than it actually expects will
car will be worth less at the end of the be the case.
lease than it was at the beginning. The However, Plaintiffs claim that
less depreciation NMAC assumes the car NMAC does not disclose that it inflates the
will undergo during the life of the lease, residual values used to compute lease
the smaller the lease depreciation payments. They also claim that NMAC
component of the monthly lease payments does not disclose the actual residual values
will be. In order to reduce lease payments NMAC has assigned to the lessee’s car.
and price Nissan vehicles more Therefore, according to the Plaintiffs,
competitively with other manufacturers’ lessees can not ascertain if the assumed
cars, NMAC can, and does, use an residual value is inflated.
Plaintiffs concede, however, that
since NMAC is responsible for the
customer’s monthly payments under a difference between the residual and
lease. NMAC’s Br. as Appellant, at 29 realized values (a “closed lease”), the
n.12. “A higher residual value results in inflated residual values make no practical
less scheduled depreciation over the term or economic difference to lessees whose
of the lease, and hence lower monthly leases go to maturity. 6 However, they say
payments.” Id. that a problem arises with inflated residual
5 values when a lessee seeks to terminate the
NMAC claims that, contrary to the
lease early. Under the Paragraph 18
Plaintiffs’ characterizations, subvention
(or inflating residual values) is not a
uniform practice. NMAC says that the
6
record clearly shows that there were In fact, the inflated residual values the
extraordinary variations in subvention Plaintiffs complain of can dramatically
depending on, inter alia, the model car, the advantage the lessee who holds his/her
lease term and date of the lease. NMAC’s vehicle for the full term of the lease
Reply Br. at 22 n.4. These claimed because monthly payments during the
variations are not significant here because course of the lease will be less than they
NMAC concedes that the residual values would have been had the lessor based
under the Plaintiffs’ leases were monthly payments on a more realistic
subvented. residual value.

5
formula, the early termination charge is payments through maturity would have
based, in part, on the difference between been only $9,276.93. Pursuant to the
the assigned, though undisclosed, residual Paragraph 18 formula, surrounding the car
value and the realized value upon the sale two months early would have required the
of the vehicle. Miller and the Roses Roses to pay NMAC $1,801.07 more than
allege that under the Paragraph 18 formula keeping it to the end of the term.
NMAC shifts to the early terminating Plaintiffs claim that even though
lessee the risk, otherwise borne by NMAC, NMAC’s early termination formula
that the vehicle will turn out to be worth recoups for NMAC the difference between
less than the residual value that was used the residual value and the realized value of
to compute the lease payments. the car, NMAC’s controller admitted that
According to Plaintiffs, where the the cause of Nissan’s unrecouped
residual value is inflated, NMAC’s depreciation, if any, is not the early
contractual early termination formula termination, but the terms of the lease
causes an early terminating lessee to pay agreement itself.
more upon returning the car than if the Finally, Plaintiffs contend that the
lessee had made all of the payments for the charges produced by NM AC’s early
full term of the lease. In Miller’s case, the termination formula are so outrageously
early termination charge under the high that NMAC hesitated to apply the
Paragraph 18 formula as of November Paragraph 18 formula in their cases.
1999 (one month early) was $5,336.95. Instead, NMAC demanded that Plaintiffs
Miller claimed that when added to the 35 pay the accelerated sum of all future,
monthly payments of $267 each that he unearned lease payments, undiscounted,
had already paid ($9,345), NMAC’s even though NMAC got the cars back
Paragraph 18 formula called for him to pay early. They claim that NMAC explained
a total of $14,681.95. Full performance that its standard practice is to compute the
under the lease, in contrast, required Miller early termination liability under the
to pay only $9,612. Accordingly, under Paragraph 18 formula, compare it to the
the Paragraph 18 formula, Miller was sum of all unearned lease payments due
required to pay $5,069.95 to return his car under the lease as if the lessees held the
one month early. car to term, then assess the lesser of the
In the Roses’ case, the Paragraph 18 two charges. They call NMAC’s method
formula called for them to pay $2,282.28 of charging the early terminating lessee the
as a charge to terminate the lease early. total of remaining lease payments the
When this charge is added to the monthly “Alternative Charge” or “Alternative
payments they had already made, totaling Formula.” 7 However Plaintiffs claim that
$8,796 ($237.87 x 37), the Roses would
have been required to pay a total of about
$11,078. Just two months later at the 7
We will adopt the term “Alternate
natural end of their lease, their total
Formula” in referring to this method here.

6
NMAC is not entitled to the accelerated § 1667b(a) named after our decision in
sum of the remaining lease payments and Applebaum v. Nissan Motor Acceptance
it is therefore not relevant that the Corp., 226 F.3d 214 (3d Cir. 2000). Count
arbitrarily chosen Alternative Formula is II alleges substantive violations of the
less than the charge under the Paragraph CLA, 15 U.S.C. § 1667b(b), and
18 formula. Regulation M. Count III is a common-law
II. DISTRICT COURT unjust enrichment claim against NMAC.
PROCEEDINGS Count IV seeks declaratory and injunctive
Plaintiffs filed a complaint and an relief. Count V seeks damages, both
amended complaint as a class action, with actual and treble, pursuant to the
the parties agreeing to determine liability Pennsylvania Unfair Trade Practices and
before class certification. The essence of Consumer Protection Law, 73 PA. C ONS.
the amended complaint is that NMAC S TAT. A NN. § 201-1 et seq. Count VI
violated the CLA by making the residual seeks damages pursuant to Article 2A of
value one component of the equation by the Uniform Commercial Code, alleging
which early termination liability is that the early termination formula is a
calculated under the Paragraph 18 formula. provision for liquidated damages that is
They claim that the formula thereby shifts unreasonable as written.
to early terminating lessees, the risk that Following discovery, the district
the residual value in the lease is court granted summary judgment to
overstated. They allege that the risk is NMAC on a portion of Count II. The
ordinarily borne by NMAC under what court found that the method of determining
purport to be “closed end leases.” The early termination charges by charging
amended complaint alleged that this risk Plaintiffs the remaining lease payments
shifting is unreasonable because it bears was reasonable and, therefore, did not
no relationship to the harm that NMAC violate the substantive provisions of the
incurs as a result of early termination. The CLA, i.e., 15 U.S.C. § 1667b(b).
amended complaint also alleged that the However, the district court also held that
inflated residual values used for lowering the Paragraph 18 early termination formula
lessees’ monthly lease payments also was unreasonable under CLA § 1667b(b).
violate the CLA. Accordingly, the district court granted
More particularly, Count I is a summary judgment on that portion of
disclosure claim alleging that the Count II to Plaintiffs and awarded them
Paragraph 18 formula violates the statutory (as opposed to actual) damages of
disclosure requirements of the CLA, 15 $100. The district court also entered
U.S.C. § 1667a and Federal Reserve summary judgment in favor of Plaintiffs
Regulation M, 12 C.F.R. § 213. The on Count I, the § 1667a disclosure claim,
Count I disclosure claim is referred to as and on Count IV. It then suspended
an Applebaum claim, which is a CLA adjudication of Counts III, V and VI, the
disclosure claim brought under 15 U.S.C. state law claims, and granted Rule 54(b)

7
certification as to claims brought in Counts enable the lessee to compare
I and II, the federal CLA claims. Miller v. more readily the various
Nissan Motor Acceptance Corp., No. lease terms available to him,
Civ.A. 99-4953, 2000 WL 1599244 limit balloon payments in
(E.D.Pa. Oct. 27, 2000). consumer leasing, enable
Cross-appeals followed. However, comparison of lease terms
in a Bench Opinion, issued on September with credit terms where
24, 2001, we dismissed the appeals for appropriate, and to assure
lack of appellate jurisdiction after holding meaningful and accurate
that the district court improvidently disclosures of lease terms in
granted Rule 54(b) certification. We advertisements.
reached that conclusion because the
federal claims certified by the district court Id. at 217-18 (quoting 15 U.S.C. §
were inextricably intertwined with the 1601(b )). “ The S enate Re p o rt
Count I disclosure claim which had not accompanying the CLA explained that
been completely adjudicated. Miller v. ‘[t]he purpose of the legislation is to
Nissan Motor Acceptance Corp., Nos. 01- provide consumers with meaningful
1038/1114 (3d Cir. Sept. 24, 2001). information about the component and
Thereafter, the district court fully aggregate costs of consumer leases, so
adjudicated the Count I Applebaum they can make better informed choices
disclosure claim in favor of Plaintiffs and between leases, and between leases and
once again granted Rule 54(b) certification credit sales.’” Id. at 218 (citation omitted).
on the CLA claims. Both NMAC and the “The Federal Reserve Board has
Plaintiffs have filed appeals from that been given the authority to issue rules
ruling. implementing the CLA, see 15 U.S.C. §
III. THE CONSUMER LEASING 1604, and the Board has exercised that
ACT authority by promulgating ‘Regulation M,’
“In 1976, in response to an 12 C.F.R. § 213 et seq.” Id. “The Board’s
emerging trend toward automobile leasing, staff has also issued official commentary
Congress passed the Consumer Leasing regarding these provisions.” Id. “In Ford
Act, 15 U.S.C. §§ 1667-1667e, as Chapter Motor Credit Co. v. Milhollin, 444 U.S.
5 of the Truth in Lending Act (“TILA”), 555, 568 (1980), the Supreme Court
15 U.S.C. § 1607 et seq.” Applebaum, 226 instructed that the Board’s interpretation of
F.3d at 217. the TILA and Regulation M should be
The CLA was intended ‘to accepted so long as they are ‘not
assure a meaningful irrational.’” Id.
disclosure of the terms of The CLA contains a section
leases of personal property captioned “Consumer lease disclosures”
for personal, family, or that provides, in pertinent part, as follows:
household purposes so as to Each lessor shall give a

8
 lessee prior to the 15 U.S.C. § 1667a(4) and (11). The CLA
consummation of the also contains a section captioned “Lessee’s
lease a dated written liability on expiration or termination of
statement on which lease” which provides, in pertinent part, as
the lessor and the follows:
lessee are identified Penalties or other charges
setting out accurately for delinquency, default or
and in a clear and early termination may be
conspicuous manner specified in the lease but
the following only at an amount which is
information wit h reasonable in the light of the
respect to that lease, anticipated or actual harm
as applicable: caused by the delinquency,
****************** default or early termination,
(4) The amount of other the difficulties of proof of
charges payable by the loss, and the inconvenience
lessee not included in the or nonfeasib ilit y of
period ic payments, a otherwise obtain ing an
description of the charges adequate remedy.
and that the lessee shall be
liable for the differential, if 15 U.S.C. § 1667b(b). 8
any, between the anticipated
fair market value of the Regulation M, which was in effect
leased property and its
appraised value at the
termination of the lease, if 8
The section of the CLA immediately
the lessee has such liability;
preceding § 1667b(b) concerns a lessee’s
******************
liability upon the expiration of an open-
(11) A statement of the
end lease, i.e., one where the lessee’s
conditions under which the
liability upon expiration is based on the
lessee o r l es so r m ay
difference between residual and realized
terminate the lease prior to
value. In such a lease, § 1667b(a)
the end of the term and the
explicitly provides that “[t]here shall be a
amount or method of
rebuttable presumption that the estimated
determining any penalty or
residual value is unreasonable to the
other charge for
extent that the estimated residual value
delinquency, default, late
exceeds the actual residual value by more
payments, or early
than three times the average payment
termination.
allocable to a monthly period under the
lease.” (emphasis added).

9
at the time of the Plaintiffs’ leases,9 termination or end of the lease term, if
required that lessors’ disclosures “be made such liability exists,” 12 C.F.R. §
clearly, conspicuously, in meaningful 213(g)(13).
sequence, and in accordance with the IV. DISCUSSION
further requirements of this section.” 12 As noted, both sides to this dispute
C.F.R. § 213.4(a)(1). The Official Staff have appealed the district court’s
Commentary for this provision explained adjudication of the CLA claims. Briefly
that “clearly, conspicuously, and in stated, the parties’ arguments are as
meaningful sequence” required “that the follows: NMAC argues (1) that the
d i sc l o su r e s be in a reaso n a b ly district court’s grant of summary judgment
understandable form.” 12 C.F.R. Pt. 213, on the CLA § 1667a disclosure claim (the
¶ 4(a)(1). The Commentary stated, “while Applebaum claim) was error; (2) that
the regulation requires no particular Plaintiffs do not have standing to
mathematical progression or format, the challenge the Paragraph 18 formula; (3)
disclosures must be presented in a way that but if they do have standing, that the
does not obscure the relationship of the district court erred in ruling that the
terms to each other.” Id. Regulation M Paragraph 18 formula for early termination
mandated that various disclosures be made is unreasonable and violates the CLA §
with respect to lease provisions imposing 1667b(b).
an early termination penalty including: (1) Plaintiffs argue that the district
“[a] statement of the conditions under court erred in finding that the formula
which the lessee or lessor may terminate NMAC actually applied on early
the lease prior to the end of the lease term termination, i.e., making them pay the
and the amount or method of determining remaining lease payments due on their
the amount of any penalty or other charge respective leases (referred to by NMAC as
for early termination, 12 C.F.R. § their “Unsatisfied Contract
213(g)(12), and (2) “[a] statement that the Obligations”), 10 was reasonable and
lessee shall be liable for the difference consistent with the CLA § 1667b(b).
between the estimated value of the Each argument is discussed separately
property and its realized value at early below.
A. The § 1667a disclosure claims.
Count I of Plaintiffs’ amended
9 complaint asserted three disclosure claims.
Regulation M was revised in 1996.
Plaintiffs claim (1) that the “Alternative
Applebaum, 226 F.3d at 218 n.3.
Formula” NMAC charged for terminating
Although the revisions became effective
on October 31, 1996, compliance was
optional until October 1, 1997. Id. The
10
leases at issue here were entered into in As recited earlier, Plaintiffs refer to
1996. All parties agree that the pre- charges they actually paid as the
revision 1995 Regulation M is applicable. “Alternative Formula.”

10
early, i.e., having them pay the sum of the to either (1) the full contract price,
remaining monthly payments on their disclosed as the Total of Monthly
respective leases, should have been Payments, or (2) if lessee terminated early,
disclosed in their leases; (2) that the the monthly payments paid at time of
amount of the residual value should have termination, plus an early termination
been disclosed; and (3) that the fact that charge calculated under the Paragraph 18
under the Paragraph 18 formula, an early formula. But, says NMAC, where the
terminating lessee would be responsible monthly lease payments made prior to
for the difference between residual and early termination, combined with the
realized value should have been disclosed. Paragraph 18 formula early termination
The district court granted summary charge would be greater than the disclosed
judgment in favor of the Plaintiffs on each Total of Monthly Payments, the use of the
component of their disclosure claims.11 early termination charge would result in
1. The “Alternative Formula” claim.12 NMAC receiving more than the leases’
The district court found that NMAC total contract obligation as measured by
violated § 1667a and Regulation M the Total of Monthly payments.
because it used a different early Therefore, says NMAC, when it relied
termination formula than disclosed under instead on the Alternative Formula, it only
the lease. NMAC argues that was error received a sum equal to the Total of
because it claims that the amount that was Monthly Payments, which does not violate
actually charged was readily ascertainable either the CLA or Regulation M.
from what was disclosed. Howev er, g iv e n NMAC’s
CLA § 1667a(11) requires that a disclosure obligation under the CLA, its
lessor provide a lessee with a statement defense of this practice amounts to
setting forth, inter alia, “the amount or nonsense. The issue is not whether the
method of determining any penalty or Alternative Formula produced an early
other charge for . . . early termination.” 15 termination charge that was reasonable
U.S.C. § 1667a(11). NM AC submits that under § 1667b(b), but whether it was
the Alternative Formula was disclosed in disclosed in the lease. Clearly, it was not.
the lease. It argues that, at the inception of Nothing in the lease suggests that there are
Plaintiffs’ leases, in return for Plaintiffs’ two different methods by which NMAC
use of the leased cars, NMAC was entitled can determine an early termination charge.
On the contrary, the lease provides that
11
early termination charges are to be
Our standard of review on an appeal determined only in accordance with the
from the entry of summary judgment is Paragraph 18 formula. Therefore, we
plenary. Hines v. Consolidated Rail Corp., agree that NMAC violated § 1667a(11).
926 F.2d 262, 267 (3d Cir. 1991). See Channell v. CitiCorp Nat’l Servs., Inc.,
12 89 F.3d 379 (7th Cir. 1996).
Referred to by NMAC as the
In Channell, the lessor disclosed in
“Unsatisfied Contract Obligation.”

11
its car lease that its early termination NMAC argues that Applebaum was
formula used the “Rule of 78s” to compute wrongly decided because the model forms
the amount of unearned interest to be promulgated by the Federal Reserve Board
credited upon early termination of a at the time the leases were entered into did
consumer lease. However, instead the not require disclosure of the residual value.
lessor used the actuarial method. Id. at However, Applebaum is binding on this
383. The court of appeals held that this panel and controls.13 Accordingly, we
violated the CLA even though the hold that NMAC violated § 1667a by not
undisclosed method benefitted the lessee. disclosing the residual value of Plaintiffs’
Id. Similarly, in Highsmith v. Chrysler leased cars.
Credit Corp., 18 F.3d 434 (7th Cir. 1994), 3. The differential claim.
the lessee brought a disclosure claim In their amended complaint,
against the lessor for omitting from its Plaintiffs alleged that NMAC violated §
disclosed early termination formula certain 1667a(4) because NM CA did not disclose
elements that were used to reduce the that they, as lessees, would be liable for
amount of the early termination formula. the difference between the residual and
Id. at 438. The court of appeals ruled that realized values under the early termination
the lessor’s failure “to disclose any portion formula. Section 1667a(4) requires “clear
of the formula that a lessor actually used and conspicious” disclosure, inter alia, of
for calculating the early termination the fact “that the lessee shall be liable for
charge, will give rise to a technical the differential, if any, between the
violation of the disclosure provision found anticipated fair market value of the leased
in 15 U.S.C. § 1667a(11) and Regulation property and its actual appraised value at
M.” Id. at 439. the termination of the lease, if the lessee
2. The residual value (Applebaum) has such liability.” 15 U.S.C. § 1667a(4).
claim. The district court found that the
In Applebaum, we held that the “anticipated fair market value of the leased
“requirement to disclose in a ‘clear and property . . . at the time of termination” is
conspicuous manner’ the method of the residual value and that the “fact of the
determining the amount of an early liability for the differential is disclosed.”
termination charge [under the CLA and 2000 WL 1599244 at *14-15. However,
Regulation M] includes the obligation to the district court also found that NMAC
disclose the value of a variable, such as must disclose the residual value at the
residual value, that is used in calculating inception of the lease.
the charge.” 226 F.3d at 223 (emphasis This holding is nothing more than
added). It is undisputed that Plaintiffs’
leases did not disclose the residual value of
their leased vehicles. Consequently, the 13
See, IOP 9.1; Jaguar Cars, Inc. v.
district court found that NMAC’s leases
Royal Oaks Motor Car Co.., 46 F.3d 258,
violated the CLA.
266 n.6 (3d Cir. 1995).

12
the logical extension of its analysis of the court that Plaintiffs did not have standing
residual value claim, viz., that Applebaum to challenge the Paragraph 18 formula for
requires disclosure of the residual value. early termination because the formula was
In any event, NMAC argues, as it did on not applied to them. As noted, they were
the residual value claim, that the district charged only the sum of the remaining
court’s holding on the differential value payments under their respective leases.
claim was error because Applebaum was The district court rejected NMAC’s
wrongly decided. However, as noted, standing argument. It held:
Applebaum is binding, and we therefore It is certainly true that
reject NMAC’s argument. neither Miller nor the Roses
We thus affirm the district court’s paid an early termination
grant of summary judgment to Plaintiffs on charge that was directly
Count I. c a l c u la t e d u s i n g th e
B. The § 1667b(b) reasonableness Paragraph 18 fo rmu la.
claims. However, we cannot ignore
1. Standing to Challenge the the fact that the amount that
Paragraph 18 Formula. the Roses and Miller paid
In Count II of their amended did result indirectly from the
complaint, Plaintiffs alleged, inter alia, Paragraph 18 calculation.
that the Paragraph 18 formula violated the The undisputed evidence
reasonableness requirements of § shows that NMAC decided
1667b(b).14 NMAC argued in the district what to charge early
te r m i n a ti n g l e s s ee s ,
including Miller and the
14 Roses, by calculating both
As noted earlier, § 1667b(b) provides:
the sum of the remaining
payments charge and the
Penalties or other charges
Paragraph 18 formula, and
for delinquency, default or
then selecting the lesser of
early termination may be
these actually to levy upon
specified in the lease but
the lessee. Thus, while the
only at an amount which is
dollar figure Miller and the
reasonable in the light of the
Roses paid was not arrived
anticipated or actual harm
caused by the delinquency,
default or early termination,
the difficulties of proof of 15 U.S.C. § 1667b(b).
loss, and the inconvenience
or nonfeasib ilit y of
otherwise obtain ing an
adequate remedy.

13
 at using Paragraph 2000 WL 1599244 at *23 (emphasis in
1 8 , t h e a m o u nt original). After holding that Miller and the
derived from the Roses had standing, the district court held
Paragraph 18 that the Paragraph 18 formula for early
c a l c u l a t i o n termination was unreasonable under §
nevertheless helped 1667b(b). Not unexpectedly, in its
to determine what appeal, NMAC renews its argument that
they in fact paid. If the Plaintiffs do not have standing to
the Paragraph 18 challenge the Paragraph 18 formula
formula had resulted because it was not applied to them when
in a number lower they terminated their leases.
than the sum of the “In essence the question of standing
remaining payments, is whether the litigant is entitled to have
then the Paragraph the court decide the merits of the dispute
18 formula amount or of particular issues.” Trump Hotels &
would have been Casino Resorts, Inc. v. Mirage Resorts
levied on them. Inc., 140 F.3d 478, 484 (3d Cir. 1998)
(quoting Warth v. Seldin, 422 U.S. 490,
We therefore find that 498 (1975)). “Standing ‘subsumes a blend
NMAC’s position that the of constitutional requirements and
Paragraph 18 formula was prudential considerations.’” Id. (quoting
not used to calculate the Valley Forge Christian College v.
Roses’ and M iller’s liability Americans United for Separation of
is without merit. Thus, to Church and State, Inc., 454 U.S. 464, 471
the extent that the Paragraph (1982)). “Obviously, satisfying the Article
18 formula was III ‘case or controversy’ requirement is the
unreasonable under the ‘irreducible constitutional minimum’ of
CLA, [Miller and the Roses] standing.” Id. (quoting Lujan v. Defenders
suffered injury thereby and of Wildlife, 504 U.S. 555, 560 (1992)).
have standing to pursue Article III constitutional
their claim.15 standing contains three
elements: (1) the Plaintiff
must have suffered an injury
15 in fact – an invasion of a
This court exercises “plenary review
legally protected interest
of standing . . . issues, but review[s] for
which is (a) concrete and
clear error the factual elements underlying
particularized and (b) actual
the district court’s determination of
or imminent, not conjectural
standing.” General Instrument Corp. v.
or hypothetical; (2) there
Nu-Tek Electronics & Mfg., Inc., 197 F.3d
must be a causal connection
83, 86 (3d Cir. 1999).

14
 between the injury even when the Plaintiff has
and the conduct alleged redressable injury
complained of – the sufficient to meet the
injury has to be fairly requirements of Article III,
tracea ble to the the federal courts will not
challenged action of adjudicate abstract questions
the defendant and not of wide public significance
the result of which amount to
independent action g e n e r a liz e d gr ie van c e s
of some third party shared and most
not before the court; appropriately addressed in
and (3) it must be the representative branches;
likely, as opposed to and (3) the Plaintiff’s
merely speculative, complaint must fall within
that the injury will be the zone of interests to be
r e d r e ss e d by a protected or regulated by the
favorable decision. statute or constitutional
guarantee in question.
Id. at 484-85 (citing Lujan, at 560-61).
“In addition to the ‘immutable Id. (quoting Valley Forge Christian
requirements of Article III,’ the federal College, 454 U.S. at 474-75) (internal
judiciary has also adhered to a set of quotation marks omitted).
prudential principles that bear on the In light of these general principles,
question of standing.” 16 Id. at 485 we agree that the claim that the Plaintiffs
(quoting Bennett v. Spear, 520 U.S. 154 lack standing to challenge the Paragraph
(1997)). These principles are: 18 formula has considerable force. They
(1) the Plaintiff generally never paid the early termination charge
must assert his own legal pursuant to the Paragraph 18 formula.
rights and interests, and Therefore, they were not harmed by it,
cannot rest his claim to even assuming it is unreasonable and
relief on the legal rights or violates § 1667b(b). They nevertheless
interests of third parties; (2) suffered no “injury in fact” because of it.
Although there is a paucity of case
law on the issue of standing in this context,
16 two cases support NMAC’s position, viz.,
Article III constitutional standing is a
Kedziora v. Citicorp Nat’l Servs., Inc., 780
threshold issue that must be addressed
F.Supp. 516 (N.D.Ill. 1991), aff’d sub
before considering issues of prudential
nom. in relevant part, Channell v. Citicorp
standing. Joint Stock Society v. UDV
Nat’l. Servs., Inc., 89 F.3d 379 (7th Cir.
North America, Inc., 266 F.3d 164, 175
1996), and Highsmith v. Chrysler Credit
(3d Cir. 2001).

15
Corp., 18 F.3d 434 (7th Cir. 1994). In that proposition. County of Oakland was
Kedziora, the lessees defaulted on their 60- an antitrust case and the standing issue
month car lease after 22 months and discussed therein centered on the contours
thereby incurred a substantial termination of the Illinois Brick doctrine.17 Quite
charge. However, they attempted to simply, the question raised in County of
challenge the reasonableness of an early Oakland – whether an intermediate user
termination formula applicable to defaults who pays illegal antitrust overcharges that
within the first 12 months of the lease are passed along to end users has antitrust
under § 1667b(b). The district court held standing – has nothing to do with the issue
that the lessees lacked standing to
challenge the formula applicable within
the first 12 months because it “caused him 17
In Illinois Brick Co. v. Illinois, 431
or her no actual injury because it never
U.S. 720, 730-731 (1977), the Court held
became applicable to him or her.” 780
that persons who are not direct purchasers
F.Supp. at 523. In Highsmith, the court of
from the defendant antitrust violator
appeals held that a lessee who had not
cannot maintain an antitrust action. In
terminated his lease, or even alleged that
Illinois Brick, it was alleged that concrete
he intended to terminate his lease, had no
block manufacturers had engaged in a
standing to challenge the reasonableness of
conspiracy to fix the price of concrete
an early termination provision in his car
block. The concrete block manufacturers
lease because “the early termination clause
sold the concrete block to masonry
has not been applied to him and he has
contractors who, in turn, sold the concrete
suffered no harm from it.” 18 F.3d at 437.
block to general contractors, who used the
Both of these cases, although not on all
concrete block to build masonry structures
fours with Plaintiffs’ suit, lend support to
which were incorporated into buildings
NM AC’s argument.
which the general contractors sold to the
Plaintiffs initial standing argument
State of Illinois. The Court held that the
is that, because their leases contained the
State of Illinois could not bring an antitrust
Paragraph 18 formula, they were bound by
action against the concrete block
it and therefore they have standing to
manufacturers wh ose p rodu ct was
challenge it. They cite County of Oakland
incorporated into the buildings it bought.
v. City of Detroit, 866 F.2d 839, 845 (6th
That holding is based largely upon the
Cir. 1989), which they say stands for the
difficulty of establishing the extent to
proposition that “[a] contracting party has
which an indirect purchaser was actually
standing to challenge the reasonableness of
injured by the underlying antitrust
a clause which, by its terms, applies to him
violation and the difficulty inherent in
as enforcement vel non may cause him
prorating the fixed-price overcharge
economic harm.” Miller/Roses’ Br. as
among the number of entities in the chain
Appellees, at 17. However, we do not
of manufacture and distribution. 431 U.S.
believe that County of Oakland stands for
at 732-733.

16
of whether a lessee who pays an early of class certification and a finding that the
termination charge has standing to early termination provision violated the
challenge a formula for calculating an disclosure requirements of the CLA.
early termination fee that was never Therefore, the magistrate judge’s standing
applied to him/her. discussion does not have much force. In
Plaintiffs also look to two other fact, we believe that it is plainly wrong.
cases to support their standing. However, Article III constitutional standing requires
neither case supports their argument. In that an injury in fact must be “actual or
Lundquist v. Security Pacific Automotive imminent, not conjectural or speculative.”
Financial Servs. Corp., 1992 WL 475651 Trump Hotels, 140 F.3d at 484 (citation
(D.Conn. June 9, 1992), aff’d 993 F.2d 11 omitted). The magistrate judge’s
(2d Cir. 1993), the lessee filed a class discussion in Lundquist is purely
action challenging, inter alia, the speculative. The magistrate judge
reasonableness of an early termination reasoned that: if the lessee decides to
provision in an automobile lease. The default and if she returns the car, she
lessor moved to dismiss the § 1667b(b) would be liable for the early termination
reasonableness challenge under Rule charges. Damage was, therefore, neither
12(b)(6), arguing that because the lease actual nor imminent.
had not been terminated, the lessee lacked The second case Plaintiffs rely upon
standing because she had not suffered any is Johnson v. Steven Sims Subaru, Inc.,
injury. A magistrate judge held that the U.S. Dist. Lexis 11694 (N.D.Ill. 1993).
lessee did have standing because Plaintiffs claim that Johnson holds that a
[t]he Plaintiff is a party to lessee has standing to challenge early
the lease and bound by its termination provisions in his/her auto lease
terms. If the Plaintiff before suffering adverse consequences.
decides to default on the Johnson does, in fact, say that. 1993
lease, she will be subject to U.S.Dist.Lexis 11694, at *5-11. The
t h e e a r l y t e r m i n ati o n lessee in Johnson, like the lessee in
charges. There is an Lundquist, had not terminated the lease.
immediate threat of injury to However, the lessee in Johnson had
her because if she returns written a letter to the lessor saying that she
the car she would be subject wanted to terminate early but could not
to those allegedly afford the early termination charges. A
unreasonable charges. magistrate judge found that the lessee had
standing because if the lessee actually
1992 WL 475651 at *6. A district court terminated her lease she would become
judge adopted the magistrate judge’s liable for the early termination charges.
reasoning. However, the court of appeals However, we believe that
did not discuss the standing issue on Johnson’s standing analysis is just as
appeal. Rather, it affirmed both the denial speculative as Lundquist’s. We fail to see

17
any Article III injury-in-fact based solely whether the charges they actually paid
on a lessee saying that she prefers to were reasonable, “the district court
terminate a lease and then refraining from necessarily had to consider whether the
doing so.18 Moreover, Johnson is a lease formula itself violated the CLA by
m a g i s t r a t e j u d g e ’ s R e p o r t a nd residual-risk shifting or otherwise.”
Recommendation, which, as NMAC is Miller/Roses Br. as Appellees, at 18.
quick to point out, a district court judge in Therefore, conclude the Plaintiffs, the
the district where Johnson was decided, Paragraph 18 formula was applied to them
has noted was never adopted by the district because NMAC charged them the balance
court. The suit was settled before the of lease payments due under the lease only
district court ruled on objections that were after comparing the Paragraph 18 formula
filed. NMAC’s Reply Br. at 26-27 to the balance of lease payments due.
(quoting Demitropoulos v. Bank One Consequently, they contend that they have
Milwaukee, N.A., 915 F.Supp. 1399, 1415 standing to challenge the reasonableness of
n.14 (N.D.Ill. 1996). the Paragraph 18 formula.
Plaintiffs make a number of We disagree. We do not believe
additional arguments which they claim that the district court necessarily
demonstrate their standing to challenge the considered whether the Paragraph 18
Paragraph 18 formula. First, they argue formula violated the CLA in determining
that they have standing to challenge the whether the charges they actually paid for
Paragraph 18 formula because the formula early termination were reasonable. The
was used as a “benchmark” in determining district court merely noted that, because
whether the early termination charges NMAC compared the charges under the
actually paid were reasonable. And, argue Paragraph 18 formula to the charges under
Plaintiffs, if the Paragraph 18 formula was the remaining payments method, the
used as a “benchmark” to determine charges Plaintiffs actually paid resulted
indirectly from the Paragraph 18 formula.
That is not the same as holding that the
18 Paragraph 18 formula actually violates the
Our fairly narrow view of the standing
CLA.
issue here is confined to the specific
Moreover, the fact that NMAC
context of consumer car leases. Issues of
compared the charges under the Paragraph
standing can arise in so many varied
18 formula to the charges under the
settings that we think it appropriate to
remaining payments methods does not
caution that our analysis ought not be
mean that the Paragraph 18 formula was
automatically extended to other situations
indirectly applied to the Plaintiffs. On the
where the possibility of injury may be
contrary, the fact that NM AC chose not to
sufficiently real to support standing, both
charge Plaintiffs an early termination fee
in the Article III context and the prudential
based on the Paragraph 18 formula
sense, even though no actual injury has yet
actually shows that the Paragraph 18 was
been inflicted.

18
not applied to Plaintiffs. the remaining payments method. 2000
Second, Plaintiffs argue that they WL 1599244 at *22. That along with
have standing to challenge the Paragraph allegations and averments by both parties
18 formula because they alleged and allowed the district court to conclude that
produced evidence that if they had the Plaintiffs had standing because the
received an honest residual value, instead amount charged under the remaining
of NMAC’s inflated one, the Paragraph 18 payments method indirectly resulted from
formula would have yielded a figure lower the Paragraph 18 formula.
than the charge they paid under the Moreover, an allegation that the
remaining payments method, i.e., the so- Paragraph 18 formula would have
called Alternative Formula charge. They generated a lower termination charge than
claim that the district court found that had the remaining payments if NMAC had
NMAC used an accepted industry standard used an accurate residual value method
for the residual, specifically something does not prove standing. As recited
called the “Auto Lease Guide,” the early above, the fact that NMAC used the
termination charge under the Paragraph 18 remaining payments method because it
formula would have been $300 less than was lower than the Paragraph 18 formula
the sum of the remaining payments under shows that the Paragraph 18 formula was
Miller’s lease. They also claim that the not applied to them and, therefore, they
district court found that had NMAC used have no standing. As noted above, injury
the “revenue-neutral residual” for the can not be conjectural. Essentially,
Roses, the Paragraph 18 formula would Plaintiffs are relying upon a hypothetical
have been $438.79, rather than the $480.00 to manufacture standing. We will not now
remaining payments meth od they speculate about the amount of early
ultimately paid. Accordingly, Plaintiffs termination charges that would have been
contend that they demonstrated harm from produced using different residual values.
NMAC’s use of both the Paragraph 18 Third, Plaintiffs argue that they
formula and the remaining payments have standing because, in March 1999,
method, and therefore have standing to Miller obtained a phone quote from
challenge the reasonableness of the NMAC of over $3,000 for the cost of
Paragraph 18 formula under § 1667b(b). terminating his lease about 9 months
These calculations do not prove early. Miller claims that the district court
standing. In the first place, Plaintiffs are found that after receiving the $3,000 early
being disingenuous in stating what the termination quote, he decided not to
district court found. All that the district terminate until November 1999.
court did in its standing discussion is recite However, the district court never made any
that Plaintiffs claimed that had NMAC such finding. The district court merely
used different residual values, the recited that Miller made a phone call to
Paragraph 18 formula would have obtain an early termination quotation. 2000
produced a lower termination charge than WL 1599244 at *2. In any event, Miller

19
never explains how a lessee has standing early termination charges at all, but were
to challenge an early termination fee extra contractual charges imposed by
simply because he/she obtains a quotation NMAC. Therefore, because they were
of the early termination fee. See imposed extra-contractually, they contend
Highsmith, 18 F.3d at 437 (suggesting that that the district court should have analyzed
Plaintiff must at least allege that he intends the Alternative Formula charges under
to terminate his lease in order to obtain basic contract law and the Uniform
standing). Commercial Code (“UCC”).
Fourth, and finally, Plaintiffs However, this argument is
suggest that because they have standing to conceptually flawed from the outset. The
assert disclosure claims under § 1667a of claims that are the subject of these Rule
the CLA, they have standing to assert 54(b) appeals are the Plaintiffs’ federal
substantive claims under § 1667b of the claims that NMAC’s leases violated the
CLA. However, standing to assert § 1667a CLA. Because Plaintiffs challenged the
disclosure claims does not establish the Alternative Formula charges under the
injury required to assert substantive claims CLA, we fail to see the relevance of state
under § 1667b. A Plaintiff may have contract law and/or the UCC, and
standing to challenge certain practices, but Plaintiffs have offered no authority to
not others. See Pryor v. Nat’l Collegiate convince us their reliance on state law is
Athletic Ass’n., 288 F.3d 548, 561 (3d Cir. proper. Indeed, if taken to its logical
2002). conclusion, their argument suggests that
2. Reasonableness of the Alternative their Alternative Formula claim is really a
Formula Charge. state law claim and not a federal law claim
The Alternative Formula charges at all. In addition, Plaintiffs appear to be
that NMAC assessed were the two trying to force the non-disclosure of the
remaining months lease payments in the Alternative Formula under § 1667a(11)
case of the Roses and the one month into a substantive violation under §
payment remaining in the case of M iller. 1667b(b) using the wedge of contract law.
The district court found that these “early In any event, Plaintiffs argue that if
termination charges” were reasonable the district court had analyzed the
under § 1667b(b). 2000 WL 1599244 at Alternative Formula charges under UCC
*31-32. In their cross-appeal, Plaintiffs and/or contract law damages standards,
argue that was error. they should have been granted summary
They first argue that the district judgment. They argue that, under those
court erred by analyzing the Alternative standards, it was NMAC’s burden to offer
Form ula under t h e § 1 6 6 7 b(b) proof it was damaged by their early lease
reasonableness standard because the terminations and the surrender of their
Alternative Formula was not disclosed in vehicles before the leases had expired. In
the lease. In Plaintiffs’ view, the their view, the Alternative Formula charge
Alternative Formula charges were not was a liquidated damages formula and,

20
therefore, the party seeking to enforce the both recover the leased property and
liquidated damages has the burden of accelerate the remaining monthly
establishing the reasonableness of the payments under the lease. Rather, a lessor
formula. See Finkle v. Gulf & Western must chose between those two remedies.
Mfg. Co., 744 F.2d 1015, 1021 (3d Cir. In support of that proposition, they cite to
1984). However, since NMAC offered no Finkle, 744 F.2d at 1021-1022. Finkle
proof of harm, Plaintiffs claim NMAC did does say that a lessor cannot both recover
not establish the reasonableness of the the leased property and accelerate the
liquidated damages. m onthly paym ents . However ,
Moreover, their claim that NMAC Finkle concerned a commercial property
offered no proof of harm is incorrect. The lease and refers to a principle applicable to
district court expressly found that c o m m e r c i a l p r o p e r t y le a s e s i n
“NM AC’s harm. . . is the loss of the Pennsylvania. Mo reover, Finkle
remaining monthly payments and the car is concerned non-renewal options under a
returned for disposition sooner than lease for a commercial property.
NMAC expected, thereby resulting in Depreciation is not a factor in that context.
earlier than expected disposition costs and However, depreciation is a driving factor
risks.” 2000 WL 1599244 at *32 under vehicle leases such as the ones
(emphasis in original). The district court before us here.
found that the Alternative Formula charge Finally, Plaintiffs argue that even if
was reasonable “in light of” that actual the district court was correct that the
harm. Id. Plaintiffs do not bother to Alte r na tive For mula c ha rg e w as
mention the district court’s finding that reasonable under § 1667b(b), the charges
NMAC suffered this harm. should have been discounted to present
NMAC counters by arguing that it value. According to Plaintiffs, without
was not its burden to prove that the discounting the Alternative Charge to
Alternative Formula charges were present value, NMAC would be recovering
reasonable. NMAC claims it was interest on sums that had already been
Plaintiffs’ burden to prove that the charges repaid, putting NMAC in a better position
were unreasonable under § 1667b(b) than if the lease had been fully performed.
standards. See Kedziora, 780 F.Supp. at In the abstract, Plaintiffs are correct.
535 n.12 (Plaintiffs who seek to avoid Absent discounting, NMAC is receiving
enforcement of lease term bear burden of unearned interest or rents. However, the
proof). Plaintiffs respond by arguing that district court properly addressed this
even if it is their burden to demonstrate argument in its opinion:
unreasonableness, they have done so. The Roses terminated their
They contend that even though they turned lease two months early, and
their cars in prior to the expiration of their Miller only one month early,
leases, NMAC is not entitled to charge and the discounting of the
them anything, because a lessor cannot monthly payments would

21
 logically be done at that amounted only to a “couple of bucks.”
the rate implicit in Plaintiffs do not dispute this.
the lease, pursuant to Consequently, we agree with the district
Paragraph 18. The court’s conclusion that the de minimis
rate implicit in the overage resulting from NMAC’s failure to
R ose leas e w a s discount to present value does not make
5.99%, and the rate t h e Alt ernative Fo rmula C harg e
implicit in the Miller unreasonable under § 1667b(b).
lease was 7.6%. V. CONCLUSION
Thus, just as For all of the above reasons, we
N M A C ’ s will affirm the district court’s grant of
representative Robin summary judgment to Plaintiffs on their
Norris testified, the Count I disclosure claims and on Count
gain to NM A C IV. We will also affirm the grant of
resulting from its summary judgment to NMAC on the
p r a c t ic e o f n o t reasonableness of the Alternative Formula
discounting was “a component of Count II. However, we will
couple of bucks” as reverse and vacate the grant of summary
to the Rose and j u d g m e n t t o P l a in t i f fs o n t h e
Miller leases. This reasonableness of the Paragraph 18 early
slight overage is de termination formula component of Count
m inim is and not II for lack of standing.
enough, in the cases
of Miller and the
Roses, to render the
early termin ation
charge unreasonable
in light of the harms
to NMAC arising
f r o m t h e e a rl y
termination pursuant
to § 1667b(b).

2000 WL 1599244 at *32. NMAC
claims that it gained only a “couple of
bucks” as a result of not discounting
because the Plaintiffs’ remaining payments
consisted almo st entirely o f the
depreciation that had not yet been paid. It
was the interest or rent charge component

22