FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
TIMOTHY HAUK, on behalf of
himself and all others similarly
No. 06-56846
situated,
Plaintiff-Appellant,
D.C. No.
CV-05-00625-SVW
v.
OPINION
JP MORGAN CHASE BANK USA,
Defendant-Appellee.
Appeal from the United States District Court
for the Central District of California
Stephen V. Wilson, District Judge, Presiding
Argued and Submitted
October 22, 2008—Pasadena, California
Filed January 23, 2009
Before: Consuelo M. Callahan and Sandra S. Ikuta,
Circuit Judges, and William B. Shubb,*
Opinion by Judge Shubb
*The Honorable William B. Shubb, Senior United States District Judge
for the Eastern District of California, sitting by designation.
821
824 HAUK v. JP MORGAN CHASE BANK
COUNSEL
Michael D. Braun, Braun Law Group, P.C., Los Angeles, Cal-
ifornia; Matthew J. Zevin, Stanley, Mandel & Iola, L.L.P.,
San Diego, California, for the plaintiff-appellant.
Shirley M. Hufstedler, Robert S. Stern, and Nancy R.
Thomas, Morrison & Foerster L.L.P., Los Angeles, Califor-
nia; Angela L. Padilla and Geoffrey Graber, Morrison &
Foerster L.L.P., San Francisco, California, for the defendant-
appellee.
HAUK v. JP MORGAN CHASE BANK 825
OPINION
SHUBB, Senior District Judge:
Appellant Timothy Hauk appeals the district court’s grant
of summary judgment in favor of Appellee Chase Bank USA,
N.A.1 on his claims for violations of the Truth in Lending Act
(TILA), 15 U.S.C. §§ 1601-1667f; California’s Unfair Com-
petition Law (UCL), Cal. Bus. & Prof. Code §§ 17200-17210;
and California’s False Advertising Law (FAL), id. §§ 17500-
17509. We affirm the district court’s grant of summary judg-
ment on Hauk’s TILA claim but reverse and remand the dis-
trict court’s grant of summary judgment on his UCL and FAL
claims.
I. Factual and Procedural Background
In June 2003, Hauk opened a Chase credit card account and
received a Cardmember Agreement (“CMA”). After Hauk
had maintained his Chase account for about sixteen months,
Chase sent him a balance transfer offer (BTO) in October
2004. The BTO offered Hauk a promotional fixed annual per-
centage rate (APR) of 4.99% for any balances he transferred
to his Chase account. It also incorporated the terms of the
CMA and indicated that Chase could impose an increased rate
(“Non-Preferred APR”) in lieu of the promotional rate if
Hauk made a late payment to Chase or any of his other credi-
tors. During a telephone conversation with a Chase represen-
tative on or about October 11, 2004, Hauk transferred a
$10,200 balance with another creditor to his Chase account,
thereby accepting the BTO.
On Hauk’s October statement, Chase indicated the promo-
tional APR of 4.99% for transferred balances. When Hauk
received his November statement, however, he learned that
1
Chase contends it was erroneously sued as JP Morgan Chase Bank
USA.
826 HAUK v. JP MORGAN CHASE BANK
Chase had applied a Non-Preferred APR of 28.74% to his
account, resulting in a $241.60 finance charge. In response to
the increased rate, Hauk contacted Chase and was informed
that he was no longer eligible to receive the promotional
4.99% APR.
According to Chase, Hauk lost eligibility for the 4.99%
APR because of a late payment he had made to another credi-
tor about three months before he accepted the BTO. Specifi-
cally, in July 2004, Hauk had made his final mortgage
payment to Home Coming Funding (HCF) one day after the
thirty-day grace period, and HCF reported that Hauk’s
account was “30-days delinquent” to Experian, Inc., a credit
report agency.
To evaluate Hauk’s eligibility for promotional and Pre-
ferred rates, Chase performed monthly account reviews and
relied on information it received from Experian. Prior to send-
ing Hauk the October BTO, Chase had accessed his Experian
credit report in August and September 2004. If Chase had dis-
covered Hauk’s late payment to HCF during either of those
credit reviews and elected to impose a Non-Preferred APR
because of that late payment, Chase’s computer system would
have automatically cancelled any pending offers, including
the BTO. Chase, however, did not cancel the BTO before
Hauk accepted it, and Hauk’s account does not reflect Chase’s
knowledge of his late payment to HCF until the end of Octo-
ber.
Based on this information, Chase contends that it did not
discover Hauk’s late payment to HCF until after Hauk
accepted the BTO. Hauk, on the other hand, alleges that
Chase discovered his late payment to HCF in August or Sep-
tember but waited to apply a Non-Preferred APR until after
he accepted the BTO. Hauk also argues that, irrespective of
when Chase learned about Hauk’s late payment to HCF, the
CMA and BTO did not disclose that Chase could impose a
HAUK v. JP MORGAN CHASE BANK 827
Non-Preferred APR based on a late payment he made before
accepting the BTO.
Hauk filed his class action Complaint in state court on
March 25, 2005. In his First Amended Complaint filed less
than three months later, Hauk alleged claims for violations of
1) TILA; 2) UCL; 3) FAL; 4) California’s Consumers Legal
Remedies Act (CLRA), Cal. Civ. Code §§ 1750-1784; and 5)
the Fair Credit Reporting Act (FCRA), 15 U.S.C. §§ 1681-
1681x. Asserting jurisdiction under 28 U.S.C. § 1331, Chase
removed the matter to the United States District Court for the
Central District of California on July 11, 2005.
Chase moved for summary judgment on the grounds that
Hauk’s state law claims were preempted and that Chase’s dis-
closures defeated Hauk’s TILA and state law claims. After
providing for limited discovery, the district court granted
Chase’s motion for summary judgment on Hauk’s TILA
claim. With respect to Hauk’s UCL, FAL, and CLRA claims,
the district court found that the state law claims were not pre-
empted and deferred addressing the merits until the parties
conducted discovery on the question of when Chase first
learned of Hauk’s late payment to HCF. After additional dis-
covery and supplemental briefing, the district court granted
Chase’s motion for summary judgment on Hauk’s state law
claims, explaining that Chase’s disclosures defeated the
claims and that Hauk could not prove Chase had knowledge
of his late payment before he accepted the BTO. Hauk has
withdrawn his FCRA claim and does not appeal the district
court’s grant of summary judgment on his CLRA claim. Hauk
therefore appeals only the district court’s grant of summary
judgment in favor of Chase on his TILA, UCL, and FAL
claims.
II. Discussion
We review a district court’s grant of summary judgment de
novo, thereby applying the same standard as a district court.
828 HAUK v. JP MORGAN CHASE BANK
Laws v. Sony Music Entm’t, Inc., 448 F.3d 1134, 1137 (9th
Cir. 2006). Summary judgment is proper “if the pleadings, the
discovery and disclosure materials on file, and any affidavits
show that there is no genuine issue as to any material fact and
that the movant is entitled to judgment as a matter of law.”
Fed. R. Civ. P. 56(c). When determining whether a genuine
issue of material fact remains for trial, we must view the evi-
dence and all inferences therefrom in the light most favorable
to the non-moving party and may not weigh the evidence or
make credibility determinations. Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 255 (1986). We also review a district
court’s interpretation of state law de novo. Laws, 448 F.3d at
1137.
A. Hauk’s TILA Claim
[1] Congress enacted TILA “to assure a meaningful disclo-
sure of credit terms so that the consumer will be able to com-
pare more readily the various credit terms available to him
and avoid the uninformed use of credit, and to protect the con-
sumer against inaccurate and unfair credit billing and credit
card practices.” 15 U.S.C. § 1601. To effectuate TILA’s pur-
pose, a court must construe “the Act’s provisions liberally in
favor of the consumer” and require absolute compliance by
creditors. In re Ferrell, 539 F.3d 1186, 1189 (9th Cir. 2008);
see also Jackson v. Grant, 890 F.2d 118, 120 (9th Cir. 1989)
(“Even technical or minor violations of the TILA impose lia-
bility on the creditor.”).
TILA entrusts the Federal Reserve Board with implementa-
tion of the Act, and the agency has imposed “even more pre-
cise” disclosure requirements via Regulation Z. Virachack v.
Univ. Ford, 410 F.3d 579, 581 (9th Cir. 2005); see also
Household Credit Servs., Inc. v. Pfennig, 541 U.S. 232, 238
(2004) (“Congress has expressly delegated to the Board the
authority to prescribe regulations containing ‘such classifica-
tions, differentiations, or other provisions’ as, in the judgment
of the Board, ‘are necessary or proper to effectuate the pur-
HAUK v. JP MORGAN CHASE BANK 829
poses of [TILA], to prevent circumvention or evasion thereof,
or to facilitate compliance therewith.’ ” (quoting 15 U.S.C.
§ 1604(a))) (alteration in original). Courts must defer to the
decisions of the Federal Reserve Board and cannot apply
“[t]he concept of ‘meaningful disclosure’ that animates TILA
. . . in the abstract.” Ford Motor Credit Co. v. Milhollin, 444
U.S. 555, 568 (1980); see also Anderson Bros. Ford v. Valen-
cia, 452 U.S. 205, 219 (1981) (“[A]bsent some obvious
repugnance to the statute, . . . [Regulation Z] should be
accepted by the courts, as should the Board’s interpretation of
its own regulation.”).
[2] Hauk’s account with Chase provided him with the use
of open-ended credit, rendering the disclosures in Subpart B
of Regulation Z controlling. See 12 C.F.R. § 226.2(a)(20).2
Because the BTO constituted a “credit device,” subdivision
226.9(b)(2) mandated the applicable disclosures in subsection
226.6(a). See Official Staff Comm., 12 C.F.R. § 226, Supp. I,
§ 226.9(b) cmt. 1. Specifically, subsection 226.6(a) required
that the BTO disclose the applicable APR and any increased
penalty rate that may apply “upon the occurrence of one or
more specific events, such as a late payment.” Id.
§ 226.6(a)(2) cmt. 11.
Regulation Z also required that Chase’s disclosures “reflect
the terms of the legal obligation between the parties.” 12
C.F.R. § 226.5(c). Pursuant to subsection 226.5(c), a disclo-
sure would have violated TILA if it inaccurately described the
creditor’s or cardholder’s rights or obligations as they existed
at the time the disclosure was made. DeMando v. Morris, 206
F.3d 1300, 1303 (9th Cir. 2000); see also Official Staff
2
Hauk also bases his TILA claim on sections 226.17 and 226.18 of Reg-
ulation Z, which are in Subpart C and apply only to closed-end credit
transactions. See id. § 226.2(a)(10) (defining closed-end credit to exclude
open-ended credit). Hauk’s reliance on section 226.5a is also misguided
because that section applies only to “a solicitation or an application to
open a credit or charge card account.” Id. § 226.5a(a).
830 HAUK v. JP MORGAN CHASE BANK
Comm., 12 C.F.R. § 226, Supp. I, § 226.5(c) cmt. 1 (“The dis-
closures should reflect the credit terms to which the parties
are legally bound at the time of giving the disclosures. The
legal obligation is determined by applicable state or other law
. . . [and] normally is presumed to be contained in the contract
that evidences the agreement.”).
[3] Here, while the BTO stated that Chase had sent Hauk
“balance transfer checks with a low 4.99% Fixed APR,” it
disclosed that Hauk may lose that rate upon the occurrence of
certain events. Specifically, a footnote on the first page of the
BTO stated, “This special rate applies only when you make
your required minimum payments by the payment due date
. . . and your Account is eligible for Preferred Customer Pric-
ing as described in the Terms of Offer.” On the reverse side
of the BTO, the Terms of Offer indicated that Hauk’s accep-
tance of the offer “will” result in the 4.99% APR until his bal-
ance is paid in full but expressly limited Hauk’s continued
eligibility for that rate:
Any promotional rate or regular Preferred Pricing
purchase APR may change to your Non-Preferred
APR if any minimum payment on any loan or
account of yours with us or your other creditors was
not made by the payment due date . . . .
The CMA also disclosed that, as a condition to remaining eli-
gible for Preferred rates, Hauk must “have made at least the
required minimum payments when due” on his account and
loans with Chase and his other creditors. By referencing any
late payments in the past tense (“was not made” and “have
made”), the BTO and CMA sufficiently disclosed that Hauk
could lose the promotional 4.99% APR if he had made a late
payment to any of his creditors.
As both parties recognize, the CMA and BTO did not give
Chase an unlimited right to impose a Non-Preferred APR
based on any past late payment. If Chase had learned of a late
HAUK v. JP MORGAN CHASE BANK 831
payment in a particular month and elected not to increase the
cardholder’s APR because of it, Chase arguably would have
waived its right to increase the cardholder’s APR in a subse-
quent month based on that same late payment.3 See Klein v.
Am. Luggage Works, Inc., 158 A.2d 814, 818 (Del. 1960)
(“Waiver is the voluntary relinquishment of a known right or
conduct such as to warrant an inference to that effect. It
implies knowledge of all material facts and of one’s rights,
together with a willingness to refrain from enforcing those
rights.”); accord AeroGlobal Capital Mgmt., L.L.C. v. Cirrus
Indus., Inc., 871 A.2d 428, 444 (Del. 2005).
Chase could not, however, be deemed to have waived its
right to impose a Non-Preferred APR based on a late payment
it discovered after it mailed the BTO, even if that late pay-
ment occurred before it mailed the BTO. See Klein, 158 A.2d
at 818 (“It is obvious that one cannot waive that of which he
had no knowledge at the time of the alleged waiver.”); see
also AeroGlobal Capital Mgmt., L.L.C., 871 A.2d at 444
(“[T]he standards for proving waiver under Delaware law are
‘quite exacting.’ . . . The facts relied upon to prove waiver
must be unequivocal.”) (citations omitted).
[4] Nonetheless, while Chase may have breached the CMA
if it knew of Hauk’s late payment before he accepted the
BTO, the injury Hauk suffered neither resulted from any lack
of TILA disclosures nor gave rise to a claim under TILA.
Unlike Hauk’s state law claims, TILA is only a “disclosure
statute” and “does not substantively regulate consumer credit
3
The CMA is governed by Delaware law and contemplates Chase’s
waiver of its rights:
[W]e may waive our rights, such as our right to enforce a Non-
Preferred rate on existing and new balances until paid in full or
to enforce any minimum Non-Preferred rate. However, if we do
waive any of our rights and there is another occurrence when you
do not meet the conditions described above to be eligible for Pre-
ferred rates, we may again impose a Non-Preferred rate up to the
Maximum Non-Preferred rate . . . .
832 HAUK v. JP MORGAN CHASE BANK
but rather ‘requires disclosure of certain terms and conditions
of credit before consummation of a consumer credit transac-
tion.’ ” Rendler v. Corus Bank, 272 F.3d 992, 996 (7th Cir.
2001) (citation omitted); see also Grimes v. New Century
Mortgage Corp., 340 F.3d 1007, 1011 (9th Cir. 2003) (Mc-
Keown, J., dissenting) (“The [plaintiffs] may indeed have
been duped by an unethical loan officer. Whether they have
a claim under [TILA] . . . is another matter. TILA focuses on
disclosure and does not serve as an umbrella statute for con-
sumer protection in real estate transactions. Rather, TILA is
designed to foster the informed use of credit by ‘assur[ing] a
meaningful disclosure of credit terms.’ ” (quoting 15 U.S.C.
§ 1601(a))) (third alteration in original); Szumny v. Am. Gen.
Fin., 246 F.3d 1065, 1070 (7th Cir. 2001) (“ ‘A creditor’s
substantive rights are still governed by state law; [TILA]
merely classifies those rights for disclosure purposes.’ ”).
The legislative history from Congress’s enactment and
amendment of TILA is consistent with the language of the
statute limiting its scope to disclosure. See S. Rep. No. 392,
at 1 (1967) (“The basic purpose of the truth in lending bill is
to provide a full disclosure of credit charges to the American
consumer. The bill does not in any way regulate the credit
industry . . . .”); H.R. Rep. No. 1040 (1967), as reprinted in
1968 U.S.C.C.A.N. 1962, 1963 (“Title I, the truth in lending
and credit advertising title, [does not] regulate[ ] the credit
industry . . . . It provides for full disclosure of credit charges,
rather than regulation of the terms and conditions under which
credit may be extended.”); S. Rep. 100-259, at 3 (1987), as
reprinted in 1987 U.S.C.C.A.N. 3936, 3938 (“The Committee
believes that early disclosure of relevant cost information,
coupled with widespread publication of the costs of different
cards, will help remedy the problem of enabling consumers to
shop around for the best cards.”).
[5] Consequently, while an inaccurate disclosure that itself
breaches a credit agreement may also violate TILA, see Hub-
bard v. Fidelity Fed. Bank, 91 F.3d 75, 79 (9th Cir. 1996), the
HAUK v. JP MORGAN CHASE BANK 833
breach of a credit agreement based on conduct independent of
the disclosures does not necessarily give rise to a TILA claim.
Hauk nonetheless argues that misleading disclosures can
violate TILA and that Chase’s disclosures were misleading
because the BTO offered him a promotional rate even though
Chase knew of his past late payment and intended to impose
the Non-Preferred APR after he accepted the offer. Indeed,
the Third Circuit has held that a disclosure that is adequate
when viewed in isolation could still be misleading, and
thereby give rise to a TILA claim, if the creditor’s undis-
closed intent was inconsistent with its disclosure. Rossman v.
Fleet Bank (R.I.) Nat’l Ass’n, 280 F.3d 384, 399-400 (3d Cir.
2002); accord Clark v. Troy & Nichols, Inc., 864 F.2d 1261,
1266 (5th Cir. 1989) (Thornberry, J., dissenting). Specifically,
the court concluded that, even though the creditor’s initial “no
annual fee” disclosure was accurate in the “narrowest of
senses,” the creditor’s alleged intent to impose an annual fee
six months later rendered the initial disclosure misleading and
gave rise to a TILA claim. Rossman, 280 F.3d at 400.
The Third Circuit’s expansive reading of Regulation Z
appears to have originated with its general premise that TILA
prohibits “not only literal falsities, but also misleading state-
ments.” Id. at 391 (citing Taylor v. Quality Hyundai, Inc., 150
F.3d 689, 692 (7th Cir. 1998); Smith v. Chapman, 614 F.2d
968, 977 (5th Cir. 1980)). While a misleading statement may
violate TILA, Wilson v. Credithrift of Am., Inc., No. 3, 659
F.2d 122, 124 (9th Cir. 1981), our circuit has neither rejected
nor adopted the blanket proposition that a misleading state-
ment violates TILA. Instead of determining whether a particu-
lar disclosure is “misleading” in the abstract, our circuit has
focused on subsection 226.5(c)’s requirement that disclosures
“reflect the terms of the legal obligation between the parties”
and the requirements in other relevant subsections of Regula-
tion Z or TILA.
The Third Circuit, in contrast, did not rely on a particular
provision of TILA or Regulation Z to support its conclusion
834 HAUK v. JP MORGAN CHASE BANK
that a disclosure could violate TILA based on a creditor’s
undisclosed intent to act contrary to the disclosure. In holding
that a lender’s intent may render a disclosure misleading, the
court focused on the difficulty a cardholder would face upon
receipt of a change-in-terms notice imposing a new annual fee
if the cardholder had already accumulated a high balance and
could not pay off the balance to avoid the fee. Rossman, 280
F.3d at 397-99. Congress, however, has already vested
responsibility for determining whether Regulation Z should
require additional disclosures to protect against such hard-
ships exclusively with the Federal Reserve Board:
The concept of “meaningful disclosure” that ani-
mates TILA, cannot be applied in the abstract.
Meaningful disclosure does not mean more disclo-
sure. Rather, it describes a balance between “com-
peting considerations of complete disclosure . . . and
the need to avoid . . . [informational overload.]” And
striking the appropriate balance is an empirical pro-
cess that entails investigation into consumer psychol-
ogy and that presupposes broad experience with
credit practices. Administrative agencies are simply
better suited than courts to engage in such a process.
Ford Motor Credit Co., 444 U.S. at 568-69 (citations omitted)
(alteration and omissions in original); accord Household
Credit Servs., Inc. v. Pfennig, 541 U.S. 232, 243-44 (2004).
[6] As the Supreme Court has emphasized, when neither
Congress nor the Federal Reserve Board has elected to require
a particular disclosure, such as a disclosure about a creditor’s
intent, a court should not impose that disclosure requirement:
[L]egislative silence is not always the result of a lack
of prescience; it may instead betoken permission or,
perhaps, considered abstention from regulation. In
that event, judges are not accredited to supersede
Congress or the appropriate agency by embellishing
HAUK v. JP MORGAN CHASE BANK 835
upon the regulatory scheme. Accordingly, caution
must temper judicial creativity in the face of legisla-
tive or regulatory silence.
Ford Motor Credit Co., 444 U.S. at 565; see also id. at 562
(declining to “stretch [ ] provisions [of Regulation Z] beyond
their obvious limits to construe them as a mandate for [a par-
ticular] disclosure”). Similar to the creditor’s undisclosed
intent in Rossman, TILA did not require Chase to disclose its
supposed intent to take an action at odds with the CMA. See
Clark, 864 F.2d at 1264 (“[TILA] does not provide a cause of
action when a lender engages in ‘bait and switch’ techniques.
. . . The disclosures made by [defendant] were accurate with
respect to the offered terms. The fact that [defendant] may not
have intended to loan money under the stated terms does not
make their disclosures with respect to the stated terms inaccu-
rate.”).
[7] We hold that a creditor’s undisclosed intent to act
inconsistent with its disclosures is irrelevant in determining
the sufficiency of those disclosures under sections 226.5,
226.6, and 226.9 of Regulation Z. Accordingly, because
Chase’s disclosures complied with TILA and Regulation Z,
the district court properly granted summary judgment against
Hauk on his TILA claim.
B. Hauk’s UCL and FAL State Law Claims
[8] California’s UCL has a broad scope that allows for “vi-
olations of other laws to be treated as unfair competition that
is independently actionable” while also “sweep[ing] within its
scope acts and practices not specifically proscribed by any
other law.” Kasky v. Nike, Inc., 45 P.3d 243, 249 (Cal. 2002).
It “defines ‘unfair competition’ to mean and include ‘any
unlawful, unfair or fraudulent business act or practice and
unfair, deceptive, untrue or misleading advertising and any act
prohibited by” the FAL. Id. (quoting Cal. Bus. & Prof. Code
§ 17200). As relevant to this case, the FAL renders it unlaw-
836 HAUK v. JP MORGAN CHASE BANK
ful for a defendant to “induce the public to enter into any obli-
gation” based on a statement that is “untrue or misleading,
and which is known, or which by the exercise of reasonable
care should be known, to be untrue or misleading.” Cal. Bus.
& Prof. Code § 17500.4
[9] The California Supreme Court has explained, however,
that conduct affirmatively authorized by another statute may
provide a defendant with a safe harbor from UCL liability:
“Although the unfair competition law’s scope is sweeping, it
is not unlimited. . . . When specific legislation provides a
‘safe harbor,’ plaintiffs may not use the general unfair compe-
tition law to assault that harbor.” Cal-Tech Commc’ns, Inc. v.
L.A. Cellular Tel. Co., 973 P.2d 527, 541 (Cal. 1999).5 The
safe harbor “rule does not, however, prohibit an action under
the unfair competition law merely because some other statute
on the subject does not, itself, provide for the action or pro-
hibit the challenged conduct. To forestall an action under the
unfair competition law, another provision must actually ‘bar’
the action or clearly permit the conduct.” Id.
[10] Chase’s compliance with TILA’s disclosure require-
ments provides a safe harbor with respect to Hauk’s UCL
claims based only on the sufficiency of Chase’s disclosures.
See Rubio v. Capital One Bank (USA), N.A., 572 F. Supp. 2d
1157, 1168 (C.D. Cal. 2008) (finding that a disclosure that
complies with TILA comes within the UCL’s safe harbor).
4
On appeal, Chase argues for the first time that Hauk lacks statutory
standing under section 17240 of the UCL and section 17535 of the FAL.
“Absent exceptional circumstances, we generally will not consider argu-
ments raised for the first time on appeal, although we have discretion to
do so.” In re Am. W. Airlines, Inc., 217 F.3d 1161, 1165 (9th Cir. 2000)
(citations omitted). There are no exceptional circumstances to warrant
consideration of this argument.
5
Plaintiff incorrectly contends that Chase did not assert the safe harbor
rule below. Although the district court did not discuss the safe harbor rule
in its orders, Chase raised the argument in its memorandum in support of
its motion for summary judgment.
HAUK v. JP MORGAN CHASE BANK 837
TILA did not, however, authorize Chase to subsequently take
an action at odds with the disclosures it made (i.e., impose a
Non-Preferred APR based on a right it had already waived).
Similarly, Chase cannot rely on the UCL’s safe harbor if it
should have known about Hauk’s late payment before he
accepted the BTO because TILA did not clearly permit dis-
closures based on inadequate information. Cf. 12 C.F.R.
§ 226.5(c) (“If any information necessary for accurate disclo-
sure is unknown to the creditor, it shall make the disclosure
based on the best information reasonably available and shall
state clearly that the disclosure is an estimate.”). Therefore, if
Chase knew or should have known about Hauk’s late payment
to HCF before Hauk accepted the BTO, Chase cannot rely on
TILA to bring its conduct within the UCL’s safe harbor.6
[11] The evidence Hauk submitted establishes a genuine
issue of material fact with respect to whether Chase knew or
should have known about Hauk’s late payment to HCF before
Hauk accepted the BTO. Neither party was able to produce
direct evidence from Chase’s or Experian’s computer systems
that unequivocally establishes when Experian first noted
Hauk’s late payment to HCF on his credit report. Hauk none-
theless produced sufficient circumstantial evidence to support
the inference that Chase knew or should have known of his
late payment before he accepted the BTO.
First, Experian’s employee repeatedly testified that HCF
reported Hauk’s late payment to Experian in August 2004.7
6
Chase’s knowledge for purposes of Hauk’s UCL and FAL claims must
be assessed up until the date Hauk accepted the BTO because, according
to Chase, its decision to apply a Non-Preferred APR at any point before
that date would have automatically cancelled any pending offers, includ-
ing the BTO.
7
During her deposition, the Experian employee confirmed at least eight
times that Experian received notice of Hauk’s late payment to HCF in
August. After a break, she appears to limit her testimony to explain that
the credit reports reveal only the month in which HCF indicated it submit-
ted the information to Experian (not necessarily the month Experian
received the information from HCF). The employee’s testimony after the
break neither negates her prior testimony nor renders that testimony inher-
ently untrustworthy.
838 HAUK v. JP MORGAN CHASE BANK
Second, Hauk submitted a copy of his Experian credit report
from March 2005, which included entries that two creditors
had reported to Experian in that same month, suggesting that
Experian immediately reported any information it received.
Finally, it is undisputed that Chase reviewed Hauk’s credit
report on August 16 and September 19, 2004. Taken together,
this evidence supports the inference that Experian received
notice of Hauk’s late payment to HCF in August and indi-
cated it on his credit report that month, and thus Chase either
discovered or should have discovered his late payment when
it reviewed his credit report in August or September.
Hauk also established that Chase’s computer system auto-
matically creates a memo of a late payment only in the event
that Chase elects to apply a Non-Preferred APR. Conse-
quently, if Chase decided that a late payment “was not a mate-
rial change in the credit profile” justifying imposition of a
Non-Preferred APR, Hauk’s account would not reflect this
decision. The lack of notation in Hauk’s file about his late
payment until the end of October thereby gives rise to two
possible inferences: 1) that Chase did not discover the late
payment until noting it in his file in October; or 2) that Chase
discovered the late payment in a prior month, but decided not
to impose a Non-Preferred APR and thereby waived its right
to do so. On a motion for summary judgment, this court can-
not weigh the merit of these inferences, but must adopt the
inference that is most favorable to the non-moving party—in
this case, the latter inference. See Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 255 (1986) (“Credibility determinations,
the weighing of the evidence, and the drawing of legitimate
inferences from the facts are jury functions, not those of a
judge, whe[n] he is ruling on a motion for summary judgment
. . . . The evidence of the non-movant is to be believed, and
all justifiable inferences are to be drawn in his favor.”) (cita-
tion omitted).
Taking all inferences in favor of Hauk, a reasonable jury
could find that Chase knew or should have known about
HAUK v. JP MORGAN CHASE BANK 839
Hauk’s late payment to HCF before he accepted the BTO. See
id. at 248 (“[A dispute is genuine] if the evidence is such that
a reasonable jury could return a verdict for the nonmoving
party.”). As Chase concedes, this factual dispute is material to
Hauk’s UCL and FAL claims and enables Hauk to withstand
summary judgment on those claims. See id. (a fact is material
if it “might affect the outcome of the suit under the governing
law”).
Specifically, if Chase knew or should have known about
Hauk’s late payment, but waited to apply a Non-Preferred
APR until after he accepted the BTO, Chase’s conduct may
give rise to a UCL claim. See State Farm Fire & Casualty Co.
v. Superior Court, 53 Cal. Rptr. 2d 229, 235 (Cal. Dist. Ct.
App. 1996) (“asserting a contractual right one does not have”
may constitute an unfair business practice), abrogated on
other grounds by Cal-Tech Commc’ns, Inc., 973 P.2d at 564.
The conduct may also give rise to fraudulent UCL and FAL
claims because a cardholder receiving the BTO could likely
be deceived into believing that Chase would not later apply a
Non-Preferred APR based on a late payment it had waived.
See id. at 235 (“[T]he ‘fraud’ contemplated by section
17200’s third prong bears little resemblance to common law
fraud or deception. The test is whether the public is likely to
be deceived.”) (citations omitted); People v. Dollar Rent-A-
Car Sys., Inc., 259 Cal. Rptr. 191, 197 (Cal. Dist. Ct. App.
1989) (“In order to recover under [the FAL], it is necessary
to show only that members of the public are likely to be
deceived.”); see also Lavie v. Procter & Gamble Co., 129
Cal. Rptr. 2d 486, 492-93 (Cal. Dist. Ct. App. 2003) (applying
the “reasonable consumer” standard).
[12] Accordingly, because a genuine issue of material fact
remains with respect to Hauk’s state law UCL and FAL
claims, we reverse the district court’s grant of summary judg-
ment in favor of Chase on those claims. For the reasons stated
above, however, we affirm the district court’s grant of sum-
mary judgment in favor of Chase on Hauk’s TILA claim. As
840 HAUK v. JP MORGAN CHASE BANK
a federal claim no longer gives rise to subject matter jurisdic-
tion, we recognize that the district court may decline to exer-
cise supplemental jurisdiction under 28 U.S.C. § 1367(c)(3).
AFFIRMED IN PART, REVERSED IN PART, AND
REMANDED.
Each party shall bear its own costs.