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D, a used-car dealer, provides purchase-money loans to its customers. D’s loans have a variable interest rate, which begins low, but increases dramatically during the repayment period. Some lawmakers consider this practice to be predatory; D and others like it lure buyers with the initial low rate (making for initial low payments), but these buyers often default on the loans when the interest rate goes up and the payments increase.
To protect consumers, Congress has passed a federal law that requires used-car dealers to disclose, in a standard format, both the interest rate and complete payment schedule for any variable-rate loan. If the dealer fails to make these disclosures, the law allows a borrower to sue the dealer in federal court for compensatory and punitive damages. To prevail, the plaintiff must prove: (1) the dealer withheld the required loan information (2) with the intent that the plaintiff would default on the loan, and (3) the plaintiff suffered damages as a result. The second element requires affirmative proof of intent; unlawful intent will not be presumed.
A buys a car from D, and D issues a variable-rate loan to A. After 18 months, A defaults, and D repossesses the car.
At about the same time, D sells a used truck to B, issuing B a variable-rate loan. B makes the payments for 20 months, but then, like A, defaults. D thus repossesses B’s truck. B has been using the truck to run a remodeling business; losing the truck forces B to close the business.
A and B file separate, timely lawsuits against D in the appropriate U.S. district court, invoking the new federal consumer-protection law. Venue and jurisdiction are proper in both cases. A seeks $1,000 in compensatory damages, which includes the cost of taking public transportation to get to and from work after losing the car. A also seeks $20,000 in punitive damages. B seeks $50,000 in compensatory damages for the failed business, together with $30,000 in punitive damages.
After the close of discovery, D moves for summary judgment in each case, arguing that A and B have produced no evidence that D intended for them to default. D supports each motion with an identical affidavit from its chief loan officer. Each affidavit states that D has never intended that its borrowers default, because D usually loses money when it must repossess a vehicle. The affidavit includes data showing what defaults and repossessions cost D.
Opposing the motion, both A and B file affidavits of their own, asserting that D did not provide the required information, and that both suffered damages when D repossessed their vehicles. The parties present no other evidence. The judge denies D’s motion in each case.
Later, A and B file a joint motion to consolidate their cases for trial. D opposes the motion, arguing: (1) the cases are too different to justify consolidation, and (2) consolidation will prejudice D at trial, because the presence of two plaintiffs might cause the jury to assume that D was engaged in widespread illegal practices.