[00:00:06] Speaker 04: Good morning and welcome to the Ninth Circuit Court of Appeals. [00:00:08] Speaker 04: My name is Morgan Christen. [00:00:10] Speaker 04: I'm one of the judges on the circuit court. [00:00:11] Speaker 04: My chambers are in Anchorage, Alaska, but I'm delighted to be sitting this week in San Francisco with my colleague, two of my colleagues from the circuit court. [00:00:19] Speaker 04: My colleague on the right is, well, [00:00:21] Speaker 04: Your left is Judge Bress, whose chambers are here in San Francisco, and Judge Van Dyke on my left, your right, whose chambers are in Reno, Nevada. [00:00:32] Speaker 04: I have just a little bit of housekeeping before we begin. [00:00:35] Speaker 04: There are a number of cases in which, no, there aren't. [00:00:39] Speaker 04: There's just one case that we've submitted on the briefs. [00:00:42] Speaker 04: And I need to note for the record, case number 24-4911, we will not have argument in that case today. [00:00:52] Speaker 04: The first case on the oral argument calendar is 24-4498, Millikan versus Bank of America. [00:00:59] Speaker 04: Council, we are ready to hear your argument. [00:01:15] Speaker 02: Good morning and may it please the court. [00:01:17] Speaker 02: I'm Claire Tonnery here on behalf of Plaintiff Appellant Austin Millikan. [00:01:21] Speaker 02: I will attempt to reserve three minutes for Buttle. [00:01:24] Speaker 02: This case presents a straightforward question of statutory interpretation of the CARD Act, a law that Congress passed to curb abuses in the credit card industry, abuses including the practice of raising interest rates on credit card balances that were already incurred at a lower rate. [00:01:40] Speaker 02: This is something that Congress found to be an unfair, misleading, and deceptive practice that causes significant unavoidable injury to consumers. [00:01:50] Speaker 02: There are exceptions. [00:01:51] Speaker 02: but they are narrow in order to preserve and protect consumers from the abuses that motivated the Card Act in the first place. [00:01:59] Speaker 02: The exception that's at issue here is for rates that vary, quote, according to the operation of an index over which the creditor has no control. [00:02:09] Speaker 02: And this was designed to allow banks to pass on their own increased cost of borrowing to credit card consumers. [00:02:16] Speaker 04: When you talk about this being a case of statutory interpretation, right, I think you want us to be looking at B2? [00:02:24] Speaker 04: Correct. [00:02:25] Speaker 04: Okay. [00:02:25] Speaker 04: So the difficulty I have with your argument, this part of your argument, is that the statute speaks to an index that's not under the control of the creditor. [00:02:33] Speaker 04: Of course, you're talking about the prime rate, which is not under the control, and you don't argue that it is. [00:02:38] Speaker 04: I understand your argument to be that there's another variable at play here and that that is under Bank of America's control. [00:02:46] Speaker 04: That's correct. [00:02:47] Speaker 02: Oh, please go ahead. [00:02:50] Speaker 02: I was just going to say that we have two components to our statutory interpretation argument. [00:02:55] Speaker 02: And the first is that the Bank of America's practice doesn't meet that first portion, which is that their rates need to vary according to the operation of the index. [00:03:06] Speaker 02: And then the second argument is that their practices exceed the control limitations on banks. [00:03:15] Speaker 02: But please go ahead. [00:03:16] Speaker 04: Well, at the top of the argument, you said this is a case of statutory interpretation. [00:03:21] Speaker 04: I understand you're making an argument that this is a consumer protection statute and that the way that Bank of America is applying this variable interest rate is not consistent with consumer protection. [00:03:33] Speaker 04: But you're confusing me a little bit because my understanding is that you're focusing on the statutory interpretation. [00:03:40] Speaker 04: And I don't see anything in the statute that prevents Bank of America from doing what they're doing. [00:03:45] Speaker 02: Let me please explain. [00:03:50] Speaker 02: As to the first component, the changes to their interest rates need to be according to the operation of an index. [00:03:57] Speaker 02: We look at what the plain meaning of those terms is in that statute. [00:04:01] Speaker 02: So we do that within the constraints that this is narrowly construed because it's an exception to a remedial statute. [00:04:07] Speaker 02: But even putting that aside, there are multiple lines of authority that show that the statutory phrase [00:04:14] Speaker 02: according to the operation of, and the regulatory phrase due to, mean that the bank cannot increase rates before the index increases. [00:04:22] Speaker 04: You're sweeping in the way they apply the primate with those words, right? [00:04:26] Speaker 04: You're sweeping that in, is my understanding. [00:04:27] Speaker 02: Exactly. [00:04:28] Speaker 02: Yep. [00:04:29] Speaker 02: OK. [00:04:29] Speaker 02: Exactly. [00:04:30] Speaker 02: And so specifically, the case law shows that the phrase according to the operation of an index means that it's determined solely by that index and no other variable. [00:04:42] Speaker 02: We've cited multiple cases to that effect and Bank of America has not rebutted them or distinguished them in any meaningful way because those cases were interpreting the exact phrases or almost substantially similar phrases as a matter of law. [00:04:57] Speaker 02: So those cases are applicable here and they show that the index needs to be the variable, outside variables cannot come in to the equation. [00:05:08] Speaker 02: Case law also makes clear that the phrase [00:05:11] Speaker 02: the regulatory phrase, due to, signifies causation. [00:05:14] Speaker 02: And of course, we all know that a cause must precede its effect. [00:05:19] Speaker 02: And so, in other words, the index increase has to precede the bank's increase to meet the variable rate exception. [00:05:25] Speaker 02: And this just fundamentally makes sense, because there's a temporal aspect, and it's critical to how an index operates, which again is the statutory language, needs to operate according to the index. [00:05:39] Speaker 02: An index is not just a percentage rate in a vacuum. [00:05:42] Speaker 02: It has a temporal component as well. [00:05:45] Speaker 02: So when the Wall Street Journal publishes the prime rate, it gives the effective date of the rate. [00:05:51] Speaker 02: But Bank of America's practices disregard this temporal component. [00:05:55] Speaker 04: Sometimes that can benefit the consumer and sometimes not. [00:05:58] Speaker 04: It depends on whether the rate goes up or down. [00:06:01] Speaker 04: That's correct, but the CARD Act is concerned solely with increases. [00:06:04] Speaker 04: Right, which is why it seems to me your strongest argument is that this is really at bottom a consumer protection statute. [00:06:11] Speaker 04: Can I ask you, what weight do we put on the commentary for the Consumer Financial Protection Bureau? [00:06:20] Speaker 04: How does that factor in? [00:06:22] Speaker 02: There are only a few aspects of the commentary that bear on the exceptions, and the commentary is entirely consistent. [00:06:32] Speaker 02: I would point the court to the commentary to point 55B that talks about applying interest rates that have an effective date, changes to the rate, and specifically says that banks cannot apply [00:06:52] Speaker 02: interest rates back date them before the effective date of a change in the interest rates. [00:06:57] Speaker 04: I'd like to ask you about that example if I could. [00:07:01] Speaker 04: It talks about this hypothetical where, is that what you're referring to, where rate jumps from 15% to 18% on June 15th. [00:07:08] Speaker 04: And this, you know, the hypothetical example says that the bank will be free to apply the higher interest rate not before June 15th because the rate didn't change. [00:07:18] Speaker 04: So they apply the 15 percent, the lower rate up till June 15th and the higher rate going forward. [00:07:23] Speaker 04: That's why I'm asking the question. [00:07:24] Speaker 04: I have two questions about that. [00:07:26] Speaker 04: One is how much weight do we give that commentary and the other is it's a little on an iPad, it's a little disembodied. [00:07:32] Speaker 04: So I can't tell whether that commentary is specific to the provision that we're interpreting. [00:07:39] Speaker 02: That commentary pertains to all of the exceptions to the Card Act. [00:07:42] Speaker 02: So it's an overarching piece of commentary. [00:07:46] Speaker 02: I will point out that throughout the other commentary, including everything that Bank of America cites, there's not a single example that indicates that a bank can backdate rate increases before the index increase. [00:08:02] Speaker 02: And if there was, Your Honor, [00:08:05] Speaker 02: it would conflict with Congress's intent and plain language in the CARD Act. [00:08:08] Speaker 02: And that, of course, controls... So you're coming up on three minutes. [00:08:10] Speaker 04: So could you answer the other part of my question? [00:08:12] Speaker 04: And then I want to get out of the way, because there may be other questions from the other judges. [00:08:16] Speaker 04: But how much weight do we give that commentary? [00:08:19] Speaker 02: I think we give the weight that's persuasive. [00:08:22] Speaker 02: But of course, this court has to make its best interpretation of the plain language of the statute as the first instance. [00:08:28] Speaker 02: And so I think that that is absolutely what controls here. [00:08:30] Speaker 04: OK, you wanted to save some time. [00:08:32] Speaker 04: Let me just check to address. [00:08:33] Speaker 03: Maybe if I just have one question. [00:08:35] Speaker 03: So how do you think this should actually operate? [00:08:37] Speaker 03: Because the rate is going up and down every day. [00:08:40] Speaker 03: So should the credit card rate, therefore, also change every day? [00:08:45] Speaker 02: No, Your Honor, I don't think that that's accurate. [00:08:47] Speaker 02: The prime rate is not going up and down every day. [00:08:50] Speaker 02: It's published, but the changes are not very frequent at all. [00:08:55] Speaker 02: We've got 11 increases in the span of, I think, under a year and a half. [00:09:00] Speaker 02: that are at issue in this case. [00:09:03] Speaker 03: But when the statute says according to the operation of an index, what point in time do you want that key to? [00:09:10] Speaker 03: Because your position is it can't be keyed to the last day of the month if the billing cycle begins earlier in the month. [00:09:18] Speaker 03: So what should it be keyed to? [00:09:19] Speaker 02: So, Your Honor, it can be keyed to they can essentially take the temperature of the index at any point prior to what they're going to. [00:09:29] Speaker 02: implement the changes. [00:09:31] Speaker 02: And the regulations and the guidance make that pretty clear. [00:09:34] Speaker 02: They can choose to pick a date at the end of the month, whatever it is. [00:09:39] Speaker 02: But our contingent in this case, what's essential is that it cannot be applied to balances before, and this could be up to 90 days before, before the actual rate increases. [00:09:54] Speaker 02: So it's the backdating component relative to the change in the index and the application of it that's the problem here. [00:10:00] Speaker 03: So on your view, why wouldn't it, I mean, if the rate was set, just say on day one and the rest of the billing cycle goes forward and then the rate goes down, the published rate goes down, would you not claim that your clients should get the lower rate as the rate goes down over the course of the billing cycle? [00:10:22] Speaker 02: The CARD Act doesn't give, certainly consumers would prefer that the rate goes down immediately, but the CARD Act only is concerned with increases. [00:10:29] Speaker 02: And we're concerned here only with retroactive backdating of increased rates. [00:10:37] Speaker 02: And the regulations also make clear that the bank can either apply the change in the rate on the day that it occurs, so that could be mid-cycle, or the regulations protect the bank's ability to make that change in the next billing cycle. [00:10:53] Speaker 02: And they're not precluded from taking advantage of those changes. [00:10:57] Speaker 02: There is no similar provision for backdating the rate increases. [00:11:01] Speaker 02: Unless your honors have any other questions, I'll reserve the rest of my time. [00:11:04] Speaker 04: That's okay for now. [00:11:06] Speaker 04: Thanks. [00:11:07] Speaker 04: Okay. [00:11:07] Speaker 02: Thank you. [00:11:08] Speaker 04: That's right. [00:11:09] Speaker 04: When you come back, you can plan that. [00:11:10] Speaker 04: We'll put two minutes on the clock. [00:11:12] Speaker 04: I took a lot of your time with questions. [00:11:24] Speaker 01: Good morning, your honors. [00:11:25] Speaker 01: May it please the court? [00:11:26] Speaker 01: I'm Danielle Morris of Melvin Meyers. [00:11:28] Speaker 01: I'm here on behalf of Bank of America, the APOLE. [00:11:31] Speaker 01: Without the variable rate exception, the CARD Act prohibits applying increased interest rates to purchases and balances that were due and owing before the rate increased. [00:11:41] Speaker 01: That's without the variable rate exception. [00:11:44] Speaker 01: That's in section 1661 I1, which says, [00:11:48] Speaker 01: In general, in the case of any credit card account under an open end consumer credit plan, no creditor may increase any annual percentage rate, fee or finance charge applicable to any outstanding balance except as permitted by the variable rate exception. [00:12:04] Speaker 01: The one thing that Bank of America agrees with the appellant about is that this is an issue of statutory interpretation and specifically the variable rate exception, the text of the variable rate exception permits the conduct that Bank of America is alleged to have taken here. [00:12:18] Speaker 01: The text of that exception, the increased rate is in accordance with a credit card agreement that provides for changes in the rate according to operation of an index that is not under the control of the creditor and that is available to the public. [00:12:32] Speaker 01: Bank of America's credit card agreement describes precisely how it applies changes to the interest rate. [00:12:37] Speaker 01: It's in ER pages 34 and 35. [00:12:41] Speaker 01: The index that triggers Bank of America's interest rate is the U.S. [00:12:44] Speaker 01: prime rate. [00:12:45] Speaker 01: which Appellant does not allege is under the control of the bank, and the U.S. [00:12:49] Speaker 01: prime rate is available to the public published in the Wall Street Journal. [00:12:53] Speaker 01: The only issue is whether the fact that Bank of America uses the prime rate as of the last date on which it's published in the month to apply to the balances applicable to that credit card each day for the same billing cycle in which that rate changed. [00:13:10] Speaker 01: Appellant argues that [00:13:11] Speaker 01: according to operation of an index means that a card issuer can apply the new rate to the card balance, but only as of the date of that rate change, cannot apply it to any pre-existing balances. [00:13:24] Speaker 01: If Congress had meant that the increased rate could apply only as of a particular date, regardless of the bank's ability to choose the index based on a particular date in the month, [00:13:35] Speaker 01: it could have and would have said so. [00:13:37] Speaker 01: It did not do that. [00:13:38] Speaker 01: There is no provision in the variable rate exception that says, for example, you may increase the rate provided that the rate change goes into effect as of the date that the index is published. [00:13:49] Speaker 03: So in response to the backdating argument, your point is this whole thing is an exception for outstanding balances? [00:13:57] Speaker 03: That's what this covers? [00:13:58] Speaker 01: Precisely, Your Honor. [00:14:00] Speaker 01: The variable rate exception is an exception that allows rate changes under certain circumstances. [00:14:10] Speaker 01: There's a rate change and then there's a temporal limitation on when that rate change goes into effect. [00:14:15] Speaker 01: The variable rate exception addresses the rate change, not the temporal effect. [00:14:20] Speaker 01: The temporal effect is set in the statute itself from which the provision 1666 I-1, which says [00:14:28] Speaker 01: you cannot apply increased rates to previously existing balances except. [00:14:33] Speaker 01: So the except is here's how you have to change the rate. [00:14:36] Speaker 01: And they say you can trigger it off of the US prime rate, which is done here, as long as you're not controlling that rate and you tell people what you're going to do, which Bank of America did. [00:14:47] Speaker 01: They triggered off the prime rate. [00:14:48] Speaker 01: They followed the variable rate exception. [00:14:51] Speaker 01: And what Congress said was when you do that, temporally, you can apply that rate [00:14:57] Speaker 01: to the previous charges. [00:14:58] Speaker 01: So you want us to look at subpart A of the statute? [00:15:02] Speaker 04: Both, Your Honor, subpart A and subpart B. Subpart A is what says that we're talking about, the universe we're talking about is the universe in which a rate may change as to an outstanding balance. [00:15:12] Speaker 01: Correct. [00:15:12] Speaker 01: And so that's the important context to keep in mind here, which is to say, we are giving you circumstances in which you can apply increased rates to outstanding balances. [00:15:23] Speaker 01: These are those circumstances. [00:15:24] Speaker 03: So the plaintiffs say, well, listen, you could really extend the billing cycle, including up to 90 days. [00:15:29] Speaker 03: And there's maybe a lot of fluctuation in the rate that would happen over that period. [00:15:34] Speaker 03: And would that be a problem? [00:15:37] Speaker 01: It wouldn't be a problem because the [00:15:40] Speaker 01: Safeguard on that is that billing cycles can't exceed 90 days. [00:15:44] Speaker 01: At the time that the CARD Act was implemented, we saw in the congressional history that there were banks that were using 90-day billing cycles. [00:15:52] Speaker 01: And while that's still permitted, many of them, such as Bank of America, have shifted to a shorter billing cycle. [00:15:58] Speaker 01: It's more consumer-friendly. [00:15:59] Speaker 01: It is more consumer-friendly when rates increase to use a 30-day billing cycle. [00:16:03] Speaker 01: When rates decrease, obviously not. [00:16:06] Speaker 01: And as Your Honor pointed out, this [00:16:10] Speaker 01: Practice applies regardless of whether the rate increases or decreases. [00:16:13] Speaker 01: So I do believe that there is a safeguard to protect against an abusive effect here that was set in place to say that billing cycles can't exceed 90 days. [00:16:24] Speaker 01: They don't exceed 30 days here. [00:16:27] Speaker 01: That's the practice that is challenged. [00:16:29] Speaker 01: But I do believe that Congress saw that 90 days was an effective limiter there, and the CFPB implemented regulations to that. [00:16:37] Speaker 03: So the 90-day limit comes out of regulation? [00:16:39] Speaker 01: Out of regulation, yes. [00:16:41] Speaker 01: That's a CFPB regulation. [00:16:45] Speaker 00: Well, so on accordance with, it seems like there's like three different interpretations. [00:16:50] Speaker 00: That seems to be the key part of the statute. [00:16:55] Speaker 00: It seems like their position is in accordance with means has to happen after. [00:16:59] Speaker 00: So temporarily it has to happen after. [00:17:02] Speaker 00: Accordance with, at the other extreme I think, at the other extreme would just be like nothing at all, but ignore that. [00:17:08] Speaker 00: The other extreme would be in some agreement you say we will pick the rate we want to use from the past 10 years and we will change it in accordance with that, right? [00:17:22] Speaker 00: But you're not doing that either. [00:17:23] Speaker 00: Excuse me, you're kind of in the middle. [00:17:25] Speaker 00: You're saying you have a almost like algorithmic automatic where you tie to a rate. [00:17:32] Speaker 00: You just don't tie to a rate necessarily that's always in the future. [00:17:34] Speaker 00: So that seems to be kind of in the middle. [00:17:37] Speaker 00: So if you have these three positions, accordance with would just mean, yeah, we're doing it in accordance with. [00:17:43] Speaker 00: We're picking a rate out of the prime rate. [00:17:44] Speaker 00: And say your agreement said you could do that just randomly. [00:17:47] Speaker 00: We pick the one we want to pick. [00:17:49] Speaker 00: Which is not what you're doing. [00:17:51] Speaker 00: Or theirs has to be the rate as of that day that you can't ever backdate a rate. [00:18:01] Speaker 00: And the other would be you can pick a rate and you have a formula. [00:18:04] Speaker 00: And you tell them what the formula is, that seems to be your position, and so it can be backdated if you want to call it that. [00:18:10] Speaker 00: Why is your position the best of those three alternatives to pick? [00:18:14] Speaker 01: It is the best of those three alternatives because it is the one that most facilitates explaining to a consumer what is being done in the credit card agreement so that they can make an informed decision about whether they want to use that credit card. [00:18:26] Speaker 00: Is your position that you couldn't, you're not doing this, but that you couldn't have an agreement that says, [00:18:32] Speaker 00: We will pick the prior, we're going to pick a rate, so it's a published rate, and we're going to tell you what we're going to do, but we will pick a rate that is the rate we want to pick from the past three years, say, right, which presumably you'd always pick the rate that was most favorable to you, the highest rate. [00:18:49] Speaker 00: Would that be, you know, so it wouldn't, yours is, yours may be backdated, but it's at least it moves, you know, the same, whereas if you did that, you'd just be kind of getting the, would that be in accordance with or not, do you think? [00:19:01] Speaker 01: I think it depends, Your Honor, and there's a piece of your hypothetical that may be critical here. [00:19:07] Speaker 01: It would not be permissible, under our reading of the statute, for a bank to change what it picks kind of on a whim. [00:19:17] Speaker 01: It would not be permissible, and I think the commentary suggests it would not be permissible. [00:19:20] Speaker 00: That's what I'm getting at. [00:19:21] Speaker 00: As I'm saying, it still would in theory be in accordance with, because you would be pulling a prime rate. [00:19:27] Speaker 00: how much backdating, to use their language, you were using, or how much forward dating, would kind of be at the bank's whim? [00:19:34] Speaker 00: And in your position, it sounds like, yeah, that would not be in accordance with, because there would not be an identifiable formula that the consumer would know. [00:19:45] Speaker 00: Is that why? [00:19:46] Speaker 01: It is certainly not the bank's position that it would be permissible for the bank to be able to change the dates on which it is tying to the index. [00:19:54] Speaker 00: So your argument turns on that in accordance with, [00:19:59] Speaker 00: It is in accordance with when, even if it's backdated to use their phrase, as long as it's a consistent sort of the way that it's consistent. [00:20:10] Speaker 00: So it's your position that what if you, we will do it in accordance with the prime rate of six months ago, six months ago from the last day of your billing cycle. [00:20:21] Speaker 00: Could you do that? [00:20:22] Speaker 01: I think if the hypothetical is that the contract says, [00:20:26] Speaker 01: We will always trigger off of the index rate as of the date six months prior to. [00:20:31] Speaker 01: I think that would be permissible because. [00:20:35] Speaker 00: So the temporal thing, they say you just got a temporal component. [00:20:41] Speaker 00: I think your answer to that would be, well, as long as we're consistent and we tell you what we're always going to do, I mean, you could say the prime rate plus 10 or something if you wanted to. [00:20:52] Speaker 01: I think we're talking about two separate temporal issues. [00:20:57] Speaker 01: One is the date as of which we can look at the index. [00:21:01] Speaker 01: And the other is the date as of which we can apply the increased interest rate. [00:21:06] Speaker 01: It is not the bank's position that we would [00:21:09] Speaker 01: be able to apply the increased interest rate forever back in time. [00:21:14] Speaker 01: We're only applying the increased interest rate to the balances in that single billing cycle. [00:21:20] Speaker 01: So I think to answer your honor's previous hypothetical, we could [00:21:27] Speaker 01: say we're always going to trigger off the index as it exists on January 30th. [00:21:33] Speaker 01: Let's say we're only going to pick one for the year. [00:21:35] Speaker 01: But when we make that change, we're going to apply it to the balances that we're owing the entire billing cycle during which we made that change. [00:21:44] Speaker 00: Because your view is that would be in accordance with, but it would not be in accordance with if you just got to randomly pick the one that, I mean you'd still have some constraint on your decision making because you'd have to be tied to some prime rate, you couldn't just go pick a number out of the air, but you think accordance with has got to be tied to have a formula, a previously disclosed formula that tells you, and the length of time [00:22:08] Speaker 00: doesn't matter so much as to whether you're picking a date three months earlier, three months later, as long as it's consistent. [00:22:16] Speaker 01: That's correct. [00:22:16] Speaker 01: It must be clearly disclosed to the consumer, and it must be consistent so that the consumer can make an educated decision about how their card is going to operate. [00:22:29] Speaker 04: It looks like you are over your time and we're out of questions. [00:22:32] Speaker 04: But we want to thank you for your presentation. [00:22:33] Speaker 04: We're just going to put two more minutes on the clock as rebuttal for opposing counsel. [00:22:38] Speaker 04: Thank you, Your Honors. [00:22:38] Speaker 04: Thank you. [00:22:47] Speaker 02: Thank you, Your Honor. [00:22:50] Speaker 02: I think that Your Honor began to key into some of the problems here, which is that while Bank of America says that it doesn't do certain things or that maybe some things are limited, it doesn't have a limiting principle in its statutory interpretation. [00:23:02] Speaker 02: It could be 90 days backdated, they admit, so nothing in their statutory construction puts any guardrails on that. [00:23:10] Speaker 00: But the phrase... Well, I think their argument was, if you follow... There are guardrails in the sense that I think their position is you could be 90 days different, you can be six months different, you could pick one prime rate as a specific day every year and apply that for the whole year. [00:23:25] Speaker 00: Those would all be in accordance with, but what they are disclaiming that they would be able to do is just randomly or, you know, at their discretion, maybe not random, at their discretion, pick the rate they want. [00:23:38] Speaker 00: And so that would not, in their view, be in accordance with. [00:23:41] Speaker 00: But as long as there's a formula that tells the consumer, we're going to pick on the one three months earlier, or that that is in accordance with. [00:23:48] Speaker 00: Why is that not? [00:23:50] Speaker 00: OK. [00:23:50] Speaker 02: So again, Your Honor, I think that that gets to the separate issue of how they pick which rate they're going to apply. [00:23:58] Speaker 02: But we are concerned with a different problem, which is when they apply. [00:24:03] Speaker 02: that rate change. [00:24:04] Speaker 00: Right. [00:24:04] Speaker 00: And so I think their argument is that in a court and you're fitting that idea that has to be only forward in the phrase in accordance with. [00:24:14] Speaker 02: Correct. [00:24:15] Speaker 02: And that's because it's in accordance with the operation of an operation of means how the index as a functional matter, how it operates. [00:24:25] Speaker 02: how it fluctuates, and there are two components to how the index operates. [00:24:29] Speaker 00: An index would... Well, I think their argument is that it's keyed off of it, right, in a predictable manner. [00:24:35] Speaker 00: That's how they're reading. [00:24:36] Speaker 00: And it doesn't seem that that's a crazy way to read in accordance with, as opposed to not only in accordance with, but it has to be always, it can never be applied before. [00:24:49] Speaker 02: So again, the case law is pretty clear that they could have used other phrases that would be much looser, like the ones Bank of America is advocating for here. [00:25:00] Speaker 02: Tied to is an example. [00:25:02] Speaker 02: But the language the Congress chose is according to the operation of. [00:25:07] Speaker 02: And all of this court's case law and others interpret those as strict phrases. [00:25:12] Speaker 02: And because, again, it's a consumer protection statute, the exception also needs to be interpreted narrowly. [00:25:17] Speaker 02: If I may, I just want to point out and be crystal clear that the strict interpretation we're advocating for still gives full effect to the variable rate exception. [00:25:27] Speaker 02: Banks can still raise interest rates on outstanding balances. [00:25:31] Speaker 02: They can just do so prospectively from the time that the [00:25:36] Speaker 02: Prime rate increases and it can pass on all of its increased cost of borrow. [00:25:40] Speaker 03: Why would that be in the strict conformity? [00:25:42] Speaker 03: It seems to me if what you're saying is right, then this other mechanism might also not be okay either, because if it's going to be strict, it would seem it would have to rise and fall in real time. [00:25:55] Speaker 02: So as to the decreases, Your Honor, again, the CARD Act doesn't regulate decreases or mandate decreases. [00:26:01] Speaker 02: This provision only pertains to increases. [00:26:03] Speaker 02: But there's also a separate specific regulation that allows them to postpone decreases or increases to the next billing cycle. [00:26:12] Speaker 02: There's just no regulatory exception, much less statutory exception, that allows them to backdate increases. [00:26:18] Speaker 02: I see that I'm well out of time. [00:26:20] Speaker 02: Thank you. [00:26:20] Speaker 02: Yes, thank you for your arguments. [00:26:21] Speaker 04: We'll take that case under advisement and go on to the next case on the calendar.