Metropolitan News-Enterprise


Tuesday, August 28, 2001


Page 5


Court of Appeal Reinstates Class Action Over ‘Same-as-Cash’ Promotion


By a MetNews Staff Writer


A class action charging a major credit card issuer with deceiving customers by promising 90-day “same as cash” financing under a program that actually required minimum monthly payments was reinstated yesterday by this district’s Court of Appeal.

Div. Four overturned an order by Los Angeles Superior Court Judge Aurelio Munoz, who ruled that Robert J. Prata’s claims against Bank One were too dissimilar from those of other consumers to support a representative cause of action under the unfair competition law.

Prata claims he was a victim of a fraudulent revolving credit program that he agreed to join in 1997. After purchasing stereo equipment from a retail store, Prata alleges, his attention was called to an advertisement for the Bank One program.

Based on the ad and the store representative’s representations, Prata claims, he believed that he could pay for his purchases within 90 days and incur no finance charges at all. But he was later told that in order to avoid interest charges, he had to make two monthly minimum payments, then pay the balance before the 90 days was up.

Prata didn’t make the monthly payments and was billed for interest and fees, despite having paid the principal on time. He disputed the charges and was reported to collection agencies.

He sued Bank One for fraud, breach of contract, bad faith, and defamation. He also pled a cause of action for restitution and injunctive relief on behalf of the general public, pursuant to the UCL.

Munoz granted the bank’s motion for summary adjudication on the UCL cause of action. He reasoned that a representative cause of action was inappropriate given that Bank One had promoted the program in 19 separate advertisements, entered into 300,000 separate transactions, and had provided many of the consumers with a program agreement and disclosures specifying the details of the program, even if Prata didn’t get those documents.

But Justice Norman L. Epstein, writing for the Court of Appeal, said a representative action was appropriate.

If, as alleged, Bank One used false advertising to encourage participation in the program, a class remedy is called for under the UCL, the justice explained. The statute only requires a showing of unfair or deceptive practices, and does not compel a showing of reliance or actual damages, Epstein noted.

The justice reasoned that “given the nature of petitioner’s challenge, there is no need to examine each consumer transaction to establish a violation of” the UCL.

“The issue is, instead, whether the program as a whole was likely to mislead because it advertised financing as the ‘Same-As-Cash’ while in fact minimum payments were required even when the initial 90-day period had not run and because fees and interest charges would be incurred if these minimum payments were not made,” Epstein wrote.

Attorneys on appeal were Patricio T. D. Barrera for the plaintiff, Deputy Attorneys General Ronald Reiter and Joseph Ragazzo for the state, as amicus on behalf of the plaintiff, and  Robert S. Stern, John Sobieski, and Camilo Echavarria of Morrison & Foerster for the defendant.

The case is Prata v. Superior Court, Bank One RPI, B146925.


Copyright 2001, Metropolitan News Company