Laskaris v. Fifth Third Bank (In Re Fifth Third Early Access Cash Advance Litig.)

RECOMMENDED FOR FULL-TEXT PUBLICATION

Pursuant to Sixth Circuit I.O.P. 32.1(b)

File Name: 19a0105p.06

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

IN RE: FIFTH THIRD EARLY ACCESS CASH ADVANCE ┐

LITIGATION. │

___________________________________________ │

│

LORI LASKARIS; DANIEL LASKARIS; JESSIE │

MCQUILLEN; BRIAN C. HARRISON; JANET FYOCK; > No. 18-3390

WILLIAM R. KLOPFENSTEIN; ADAM MCKINNEY; │

DONALD E. ADANICH; LYN A. ADANICH; SCOTT D. │

LITTLE; DIANA HORN, on behalf of themselves and all │

others similarly situated, │

Plaintiffs-Appellants, │

│

│

v. │

│

FIFTH THIRD BANK, │

│

Defendant-Appellee.

┘

Appeal from the United States District Court

for the Southern District of Ohio at Cincinnati.

No. 1:12-cv-00851—Michael R. Barrett, District Judge.

Argued: January 29, 2019

Decided and Filed: May 28, 2019

Before: SUTTON, GRIFFIN, and LARSEN, Circuit Judges.

_________________

COUNSEL

ARGUED: Rachel Bloomekatz, GUPTA WESSLER PLLC, Washington, D.C., for Appellants.

Daniel R. Warren, BAKER & HOSTETLER LLP, Cleveland, Ohio, for Appellee. ON BRIEF:

Rachel Bloomekatz, GUPTA WESSLER PLLC, Washington, D.C., Hassan A. Zavareei, Anna

C. Haac, TYCKO & ZAVAREEI LLP, Washington, D.C., Stuart E. Scott, SPANGENBERG

SHIBLEY & LIBER LLP, Cleveland, Ohio, Jason K. Whittemore, WAGNER MCLAUGHLIN,

Tampa, Florida, for Appellants. Daniel R. Warren, Brett A. Wall, G. Karl Fanter, BAKER &

No. 18-3390 Laskaris, et al. v. Fifth Third Bank Page 2

HOSTETLER LLP, Cleveland, Ohio, for Appellee. J. Carl Cecere, CECERE PC, Dallas, Texas,

for Amicus Curiae.

GRIFFIN, J., delivered the opinion of the court in which SUTTON, J., joined, and

LARSEN, J., joined in part. LARSEN, J. (pg. 19), delivered a separate opinion concurring in

part and dissenting in part.

_________________

OPINION

_________________

GRIFFIN, Circuit Judge.

This putative class action concerns defendant Fifth Third Bank’s “Early Access” cash

advance loan program, a short-term lending option the bank offered to certain customers who

held eligible checking accounts with it. Fifth Third, as both lender and bank, had direct access to

borrowers’ checking accounts. It deposited Early Access loans straight into borrowers’ accounts

and then paid itself back automatically—plus a 10% “transaction fee”—after a direct deposit

posted or thirty-five days elapsed, whichever came first. The contract governing the program

disclosed the annual percentage rate (“APR”) as 120% in all cases.

Plaintiffs held checking accounts with Fifth Third and obtained Early Access loans,

which were paid back automatically fewer than thirty days later. They contend that the 120%

figure is false and misleading, pointing to the contract’s novel method for calculating APR—one

in which the APR is always the same regardless of the length of the loan. Calculated using a

more conventional method, in which the APR is tied to the length of the loan, plaintiffs assert

that the APR was in fact as high as 3650%.

Plaintiffs brought a variety of state and federal claims below, but this appeal is limited to

a single breach-of-contract claim under Ohio law. The district court granted Fifth Third’s Rule

12(b)(6) motion in relevant part and dismissed the breach-of-contract claim, holding that the

contract unambiguously disclosed the method for calculating APR despite admitting that the

result “may be misleading.” On review, we hold that the contract was ambiguous because it

provided two different descriptions of “APR” that are inconsistent with each other and cannot be

No. 18-3390 Laskaris, et al. v. Fifth Third Bank Page 3

reconciled. The first was a definition, lifted verbatim from a federal regulation, that describes

the APR as being “expressed as a yearly rate”; the second was the method used to calculate it,

which is not based on a year or any other time period. The ambiguity raises a question of fact

that should be resolved in the district court on remand.

I.

A.

Fifth Third is a state-chartered, federally insured bank headquartered in Ohio, with

branches in several states, including Ohio, Michigan, Kentucky, and Tennessee. “Early Access”

was a short-term “cash advance” program in which eligible customers who held checking

accounts with Fifth Third could obtain a loan up to $1000 deposited directly into their accounts.

Plaintiffs describe Early Access as a type of “payday” loan: a “small loan[] due on the

borrower’s next ‘payday.’” Fifth Third disputes this characterization, but admitted in the

program’s terms and conditions that Early Access “is an expensive form of credit . . . designed to

help our customers meet their short-term borrowing needs . . . . We do not recommend

continued use of the service.”

Early Access was different in that Fifth Third, the lender, also had access to its

customers’ checking accounts. When a customer requested a cash advance, Fifth Third

deposited the amount into that individual’s checking account. When a customer later received a

direct deposit of $100 or more, Fifth Third automatically deducted the amount of the loan from

the account, plus a “transaction fee” equal to 10% of the loan’s amount. Fifth Third did this even

if the deduction resulted in a negative balance on the account, though it did not charge an

overdraft fee for this transaction. Customers also had the option of making manual payments. If

the loan had not been repaid in full after thirty-five days, Fifth Third automatically deducted the

outstanding balance and the loan’s transaction fee from the account, even if no qualifying direct

deposit had posted. Thus, the term of the loan was always thirty-five days or shorter.

No. 18-3390 Laskaris, et al. v. Fifth Third Bank Page 4

Two documents explained the contours of the Early Access program: the “Summary of

Key Features and Terms & Conditions” and the “Frequently Asked Questions,” which were

incorporated into the terms and conditions by reference (collectively, “the contract”). According

to plaintiffs, the contract here was one of adhesion, as it was “drafted and imposed by Fifth

Third” and “presented to . . . customers on a ‘take it or leave it’ basis.” The contract explained

that “there is no interest charge associated with an Advance,” and customers are charged the

same 10% transaction fee regardless of the length of the term. It included several examples of

how this works in practice, including this one:

Lee Advanced multiple times in the week leading up to payday. She Advanced

$20 two times on Monday, $20 on Tuesday, and $40 on Thursday, for a total of

$100 in Fifth Third Early Access Advances prior to her next qualifying direct

deposit. When Lee receives her next qualifying direct deposit, the bank will

withdraw $110 as payment from her Associated Checking Account ($100 in Fifth

Third Early Access Advances and $10 in corresponding transaction fees).

In several places, the contract discussed the Early Access program’s “annual percentage rate”

(“APR”). This term is familiar to many consumers and widespread across the financial sector,

undoubtedly because the federal Truth in Lending Act (“TILA”), 15 U.S.C. § 1601 et seq., and

federal regulations “require[] lenders to make certain prominent disclosures when extending

credit, including the APR.” Rucker v. Sheehy Alexandria, Inc., 244 F. Supp. 2d 618, 622 (E.D.

Va. 2003); see Truth in Lending Regulations, Regulation Z, 12 C.F.R. § 226.1 et seq. TILA

specifically requires that lenders use the term “annual percentage rate.” 15 U.S.C. § 1638(a)(4).

One regulation defines “annual percentage rate [a]s a measure of the cost of credit, expressed as

a yearly rate.” 12 C.F.R. § 226.14(a). Another provides a bit more detail: “[t]he annual

percentage rate is a measure of the cost of credit, expressed as a yearly rate, that relates the

amount and timing of value received by the consumer to the amount and timing of payments

made.” 12 C.F.R. § 1026.22(a)(1).

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The contract described the APR for the Early Access program as follows:

The 120% APR also appeared on the monthly bank statements Fifth Third provided to its

customers. After clarifying its use of “APR” as an abbreviation for “Annual Percentage Rate,”

the contract explained that “[t]he APR is a measure of the cost of credit, expressed as a yearly

rate.” It also stated that “[w]e show the Annual Percentage Rate (APR) for Fifth Third Early

Access so our customers can compare the cost of using this product against other forms of

credit.” But the formula it provided for calculating APR is unique, arrived at by “dividing the

transaction fee by the Advance amount and multiplying the quotient by the number of statement

cycles within a year. For example, $100 Advance with a $10 transaction fee = $10/$100 = 0.1%

X 12 cycles = 120% APR.” The result is that the APR calculated this way is always 120%,

regardless of the length of the loan.

Plaintiffs all held checking accounts with Fifth Third, sought and obtained loans through

the Early Access program, and paid back their loans fewer than thirty days after receiving

No. 18-3390 Laskaris, et al. v. Fifth Third Bank Page 6

them—usually by automatic deduction when a direct deposit posted to their accounts. They

contend that Fifth Third’s disclosure of 120% APR is false and misleading because “Early

Access Loans carry a 120% APR only when repaid in [exactly] 30 days,” and in practice, the

APR is usually much higher, with an upper limit of 3650%. Plaintiffs assert that Fifth Third “has

made up a formula that always yields 120% and calls it the ‘APR,’ even though the 120%

number is completely arbitrary and bears no relation to the annual cost of the Early Access

credit.” They essentially accuse Fifth Third of running a “bait and switch” scheme, suggesting

that the listed APR is comparable to APRs shown by other lenders before changing the meaning

of “APR” in the contract to make its terms appear more favorable than they are. Similarly, amici

argue that the contract’s APR is not really an APR at all, because “a true APR must be tied to the

actual length of time the loan balance is outstanding.”

B.

Plaintiffs William R. Klopfenstein and Adam McKinney filed a complaint against Fifth

Third in the United States District Court for the Northern District of Ohio. Their case was

eventually transferred to the Southern District of Ohio and consolidated, pursuant to Federal

Rule of Civil Procedure 42(a)(2), with four other cases that also originated elsewhere. Plaintiffs’

post-consolidation amended complaint asserted eighteen causes of action, some on behalf of the

entire proposed class and others on behalf of proposed state-specific subclasses. Relevant to this

appeal, Count One pleaded violations of TILA and Regulation Z, and Count Four pleaded breach

of contract.1 Specifically, Count Four alleged that Fifth Third breached the terms of the Early

Access Loans contract “by charging Plaintiffs and the other Class members APRs in excess of

120% on Early Access Loans,” and “by failing to provide an accurate APR summary for Early

Access Loans on monthly bank statements.”

Fifth Third moved to dismiss the complaint pursuant to Federal Rule of Civil Procedure

12(b)(6). The district court granted Fifth Third’s motion in part and dismissed every claim

except Count One. Klopfenstein v. Fifth Third Bank, No. 1:12-cv-851, 2015 WL 1468382, at *1

(S.D. Ohio Mar. 30, 2015). In its brief discussion of the breach-of-contract claim, the court

1While the complaint did not specify in which state’s laws it bases the breach-of-contract claim, the

contract’s choice-of-law provision makes clear that Ohio law applies.

No. 18-3390 Laskaris, et al. v. Fifth Third Bank Page 7

noted that the APR provision “may be misleading because not every transaction is paid in twelve

cycles,” but concluded that the contract was “unambiguous in [its] explanation as to the method

for calculating the APR.” Id. at *7. Because plaintiffs did not dispute that they were charged the

10% transaction fee regardless of the length of their loans, the district court found that no breach

occurred and dismissed the claim. Id.

Plaintiffs sought reconsideration pursuant to Federal Rule of Civil Procedure 59(e). After

holding a status conference and discussing a possible settlement agreement with the parties, the

court denied the motion as moot, subject to refiling. The parties then engaged in discovery and

“extensive [c]ourt-mediated settlement discussions.” In re Fifth Third Early Access Cash

Advance Litig., No. 1:12-cv-851, 2018 WL 1521771, at *1 (S.D. Ohio Mar. 28, 2018). The

parties also entered into a “preliminary Memorandum of Understanding” to settle the case. Id.

Once discovery revealed that the contract claim’s damages were much higher than expected—

and “exponentially higher than the potential TILA damages due to TILA’s statutory caps”—

settlement negotiations stalled and the parties were ultimately unable to reach an agreement. Id.

Plaintiffs then moved for the entry of a final judgment with respect to only the dismissed

breach-of-contract claim, pursuant to Federal Rule of Civil Procedure 54(b). This rule “permits

immediate appellate review of a district court’s judgment even though the lawsuit contains

unresolved claims.” GenCorp, Inc. v. Olin Corp., 390 F.3d 433, 442 (6th Cir. 2004). Fifth Third

opposed the motion. After finding that the TILA and breach-of-contract counts were sufficiently

distinct, and that there was no just reason for delay, the district court granted plaintiffs’ motion,

certified the breach-of-contract claim for entry of a final judgment, and stayed the rest of the case

pending appeal. Early Access Litig., 2018 WL 1521771, at *2–4.

II.

Fifth Third argues that the district court improperly certified the dismissed breach-of-

contract claim as a final judgment under Rule 54(b). If Fifth Third is correct, then this court

lacks jurisdiction to review the merits of this appeal. Lowery v. Fed. Express Corp., 426 F.3d

817, 820 (6th Cir. 2005). Appellate jurisdiction under 28 U.S.C. § 1291 is limited to “final

decisions” and, “[f]or the most part, a district court’s decision counts as ‘final’ only if it takes

No. 18-3390 Laskaris, et al. v. Fifth Third Bank Page 8

care of all claims and all parties in the case.” Adler v. Elk Glenn, LLC, 758 F.3d 737, 739 (6th

Cir. 2014) (Sutton, J., concurring). If a case involves multiple claims or parties, however, a

district court may “direct entry of a final judgment as to one or more, but fewer than all, claims

or parties only if the court expressly determines that there is no just reason for delay.” Fed. R.

Civ. P. 54(b). Rule 54(b) thus allows immediate appellate review of some claims while the rest

of the case remains in the district court. “This exception pays tribute to the reality that the

benefits of immediate appeals on occasion exceed the costs.” Adler, 758 F.3d at 739 (Sutton, J.,

concurring).

Certification of a claim under Rule 54(b) has two steps. “First, the district court must

expressly direct the entry of final judgment as to one or more but fewer than all the claims or

parties in a case. Second, the district court must expressly determine that there is no just reason

to delay appellate review.” Gen. Acquisition, Inc. v. GenCorp, Inc., 23 F.3d 1022, 1026 (6th Cir.

1994) (cleaned up). “We review de novo the district court’s conclusions on the first inquiry and

for abuse of discretion the district court’s finding of no just reason for delay.” EJS Props., LLC

v. City of Toledo, 689 F.3d 535, 537 (6th Cir. 2012).

A.

Determining whether the district court “direct[ed] entry of a final judgment as to one or

more, but fewer than all, claims” is trickier than it sounds, because in this context, “claim” is a

term of art. As the district court explained, the parties’ “dispute centers on whether the contract

claims and the TILA claim should be considered a single ‘claim.’” Early Access Litig., 2018

WL 1521771, at *2. Here we apply the “operative facts” test, which defines a “‘claim’ under

Rule 54(b) ‘[as] the aggregate of operative facts which give rise to a right enforceable in the

courts’ even if the party has raised different theories of relief.” Olin Corp., 390 F.3d at 442

(quoting Gen. Acquisition, 23 F.3d at 1028). In applying this test, we examine the causes of

action as pleaded in the complaint and consider whether they “seek to recover for the same

underlying injury.” Lowery, 426 F.3d at 821. While remaining mindful that Rule 54(b)

represents an exception to “the historic federal policy against piecemeal appeals,” Sears,

Roebuck & Co. v. Mackey, 351 U.S. 427, 438 (1956), this court has also cautioned against

No. 18-3390 Laskaris, et al. v. Fifth Third Bank Page 9

applying the operative facts test “too broadly,” Planned Parenthood Sw. Ohio Region v. DeWine,

696 F.3d 490, 501 (6th Cir. 2012).

Fifth Third chiefly relies on Lowery v. Federal Express Corp. in support of its argument

that the breach-of-contract and TILA counts represent a single “claim.” 426 F.3d 817. In that

case, we dismissed an appeal certified under Rule 54(b) where the two counts in question were

for breach of contract under Tennessee law and retaliation under Title VII. Id. at 821. After

noting that it is easy to imagine a case in which those two causes of action could involve separate

legal rights, the court found that, as pleaded, “both causes of action arose out of the same

aggregate of operative facts and seek to recover for the same underlying injury.” Id.

Specifically, “the contractual promise was that [the] plaintiff would not be retaliated against for

filing the grievance. That is, the alleged breach was the retaliation.” Id.

This case is different in two critical respects. First, the TILA and breach-of-contract

counts stem from different acts or omissions of Fifth Third. In breach-of-contract actions, Ohio

law requires, unsurprisingly, that a plaintiff prove a defendant’s breach. Samadder v. DMF of

Ohio, Inc., 798 N.E.2d 1141, 1147 (Ohio Ct. App. 2003). The complaint alleges that Fifth Third

breached by charging plaintiffs APRs higher than 120% on their Early Access Loans and by

failing to provide accurate APR summaries on plaintiffs’ monthly bank statements. TILA

“requires creditors to provide borrowers with clear and accurate disclosures of terms dealing

with things like finance charges, annual percentage rates of interest, and the borrower’s rights.”

Beach v. Ocwen Fed. Bank, 523 U.S. 410, 412 (1998); see 15 U.S.C. § 1631. A cause of action

under TILA arises when a defendant fails to make these disclosures, Beach, 523 U.S. at 412, and

plaintiffs’ complaint here alleges as much. Thus, “[t]he TILA claim does not involve the

obligations created by the underlying contract.” Maddox v. Ky. Fin. Co., 736 F.2d 380, 382 (6th

Cir. 1984) (discussing Whigham v. Beneficial Fin. Co. of Fayetteville, 599 F.2d 1322 (4th Cir.

1979)); see also Lea v. Buy Direct, L.L.C., 755 F.3d 250, 253 (5th Cir. 2014) (“TILA is a

disclosure law designed to protect consumers and does not implicate the duty of subsequent

performance on the relevant contract or contracts.” (internal quotation marks omitted)). While

the breach-of-contract claim focuses on the amount of money that Fifth Third charged plaintiffs,

the TILA claim is based on different conduct: failure to make required disclosures.

No. 18-3390 Laskaris, et al. v. Fifth Third Bank Page 10

Second, each count seeks to recover damages that stem from separate injuries. In a

breach-of-contract action under Ohio law, a plaintiff must prove “damages or loss resulting from

the breach,” Claris, Ltd. v. Hotel Dev. Servs., LLC, 104 N.E.3d 1076, 1083 (Ohio Ct. App.

2018), and “the amount of damages awarded must correspond to injuries resulting from the

breach,” Textron Fin. Corp. v. Nationwide Mut. Ins. Co., 684 N.E.2d 1261, 1266 (Ohio Ct. App.

1996). But “[a] plaintiff in a TILA case need not prove that he or she suffered actual monetary

damages in order to recover the statutory damages and attorney’s fees.” Purtle v. Eldridge Auto

Sales, Inc., 91 F.3d 797, 800 (6th Cir. 1996). “Rather, the TILA claim enforces a federal policy

regarding disclosure by invoking a penalty.” Maddox, 736 F.2d at 382. Plaintiffs’ complaint

tracks these differences, requesting not only actual damages, but also statutory damages,

attorney’s fees, and costs under TILA. In this way, the damages sought in each count are

grounded in different places.

To be sure, each count is not entirely divorced from the other. For example, the

complaint alleges that Fifth Third “breached the contract by failing to provide an accurate APR

summary for Early Access Loans on monthly bank statements.” Similarly, the TILA count

alleges that Fifth Third “did not provide accurate and meaningful APR disclosures to Plaintiffs

regarding Early Access Loans.” But claims can be separate for the purposes of Rule 54(b)

“despite the presence of some overlap,” and under the operative facts test, the differences

between plaintiffs’ TILA and breach-of-contract counts as pleaded “sufficiently outweigh what

they have in common.” DeWine, 696 F.3d at 502. “Because each count involves distinct facts

relating to separate injuries, each count is a separate claim for purposes of Rule 54(b).” Id.

B.

While Fifth Third challenges only the first part of the district court’s ruling on

certification, we must review the entire decision to determine whether this court has appellate

jurisdiction. See Lowery, 426 F.3d at 820. Determining whether there is no just reason for delay

under Rule 54(b) “requires the district court to balance the needs of the parties against the

interests of efficient case management.” Gen. Acquisition, 23 F.3d at 1027. This court has

provided the following, non-exhaustive list of factors that a district court should consider:

No. 18-3390 Laskaris, et al. v. Fifth Third Bank Page 11

(1) the relationship between the adjudicated and unadjudicated claims; (2) the

possibility that the need for review might or might not be mooted by future

developments in the district court; (3) the possibility that the reviewing court

might be obliged to consider the same issue a second time; (4) the presence or

absence of a claim or counterclaim which could result in set-off against the

judgment sought to be made final; (5) miscellaneous factors such as delay,

economic and solvency considerations, shortening the time of trial, frivolity of

competing claims, expense and the like.

Id. at 1030 (quoting Corrosioneering, Inc. v. Thyssen Envtl. Sys., Inc., 807 F.2d 1279, 1283 (6th

Cir. 1986)).

Here, the district court discussed each of the above factors, applied them to this case, and

determined that they weighed in favor of certifying the breach-of-contract claim. Early Access

Litig., 2018 WL 1521771, at *3. The court also addressed the miscellaneous factors, noting that

“the possibility of settling a claim may tip the balance in favor of a partial final judgment under

Rule 54(b).” Id. (citing Curtiss-Wright Corp. v. Gen. Elec. Co., 446 U.S. 1, 8 n.2 (1980)).

Because plaintiffs had moved for reconsideration of the breach-of-contract claim’s dismissal—

and had “remained steadfast in their position that this Court was incorrect in [that] ruling”—and

in light of the extensive settlement discussions undertaken by the parties, the district court found

that “if a judgment on the breach of contract claims would facilitate the settlement of the case, it

serves efficient judicial administration by conserving judicial time and limited litigation

expenses.” Id. Finally, the court explicitly found that there was “no just reason for delay.” Id.

The district court did not abuse its discretion in balancing these issues. It “explicitly

weighed the non-exhaustive list of factors we have provided for determining whether to find just

reason for delay” and reached a reasonable conclusion based on that analysis. DeWine, 696 F.3d

at 503. Accordingly, we conclude that the district court’s certification under Rule 54(b) was

proper, and we have jurisdiction to consider the merits of this appeal.

III.

We review de novo a district court’s ruling on a Rule 12(b)(6) motion. Kaminski v.

Coulter, 865 F.3d 339, 344 (6th Cir. 2017). Accepting all allegations in the complaint as true,

and drawing all reasonable inferences in plaintiffs’ favor, Gavitt v. Born, 835 F.3d 623, 639–40

No. 18-3390 Laskaris, et al. v. Fifth Third Bank Page 12

(6th Cir. 2016), we “must determine whether the allegations plausibly state a claim for relief,”

Segal v. Fifth Third Bank, N.A., 581 F.3d 305, 308 (6th Cir. 2009) (citing Ashcroft v. Iqbal, 556

U.S. 662, 678 (2009)). “However, ‘a legal conclusion couched as a factual allegation’ need not

be accepted as true.” Kaminski, 865 F.3d at 344 (quoting Bell Atl. Corp. v. Twombly, 550 U.S.

544, 555 (2007)).

“To establish a claim for breach of contract, a plaintiff must prove: (1) the existence of a

contract, (2) performance by the plaintiff, (3) breach by the defendant, and (4) damages or loss

resulting from the breach.” Claris, 104 N.E.3d at 1083. Under Ohio law, contract interpretation,

including a determination as to whether a contract is ambiguous, is a question of law. Envision

Waste Servs., LLC v. Cty. of Medina, 83 N.E.3d 270, 275 (Ohio Ct. App. 2017). Courts should

interpret contracts “so as to carry out the intent of the parties, as that intent is evidenced by the

contractual language.” Lutz v. Chesapeake Appalachia, L.L.C., 71 N.E.3d 1010, 1012 (Ohio

2016) (quoting Skivolocki v. E. Ohio Gas Co., 313 N.E.2d 374, 376 (Ohio 1974)). In doing so,

we examine the contract “as a whole” and attempt to “give effect to every provision.” Sunoco,

Inc. (R & M) v. Toledo Edison Co., 953 N.E.2d 285, 292, 295 (Ohio 2011). “Common words . . .

will be given their ordinary meaning unless manifest absurdity results, or unless some other

meaning is clearly evidenced from the face or overall contents of the instrument. Technical

terms will be given their technical meaning, unless a different intention is clearly expressed.”

Foster Wheeler Enviresponse, Inc. v. Franklin Cty. Convention Facilities Auth., 678 N.E.2d 519,

526 (Ohio 1997) (citation and internal quotation marks omitted).

But if a contract’s “language is unclear, indefinite, and reasonably subject to dual

interpretations or is of such doubtful meaning that reasonable minds could disagree as to its

meaning,” then it is ambiguous as a matter of law. Cadle v. D’Amico, 66 N.E.3d 1184, 1188

(Ohio Ct. App. 2016) (internal quotation marks omitted). “If ambiguity exists . . . the meaning

of a contract is a question of fact.” Books A Million, Inc. v. H & N Enters., Inc., 140 F. Supp. 2d

846, 854 (S.D. Ohio 2001) (citing Amstutz v. Prudential Ins. Co. of Am., 26 N.E.2d 454 (Ohio

1940)).

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A.

Plaintiffs assert that Fifth Third breached the contract “by charging [them] APRs in

excess of 120% on Early Access Loans.”2 Fifth Third disagrees, contending that “[t]he agreed-

upon meaning of the APR disclosure is set forth in the contract,” and Fifth Third’s conduct

adhered to that definition. Thus, the meaning of the term “APR” is central to this dispute. As

discussed above, the contract explains the term “APR” in two ways. First, it states that “APR is

a measure of the cost of credit, expressed as a yearly rate,” a verbatim recitation of the APR

definition found in Regulation Z. See 12 C.F.R. § 226.14(a). Then, it explains that “[t]he

Annual Percentage Rate is calculated by dividing the transaction fee by the Advance amount and

multiplying the quotient by the number of statement cycles within a year. For example,

$100 Advance with a $10 transaction fee = $10/$100 = 0.1% X 12 cycles = 120% APR.”

Plaintiffs argue that these two definitions of the same key term are inconsistent because the

actual formula does not produce an APR that is “expressed as a yearly rate.” Instead, it always

produces an APR of 120%, regardless of the length of the loan term, and, in this way, it is

untethered to a year or any other time period.

Plaintiffs provide numerous examples comparing results from the contract’s APR

formula with results from a different formula for calculating APR that is “expressed as a yearly

rate.” Plaintiffs do not explicitly provide their alternate formula, but from the complaint’s

examples, it is easy to discern. Their formula (1) divides the finance charge by the principal loan

amount, (2) multiplies the quotient of that by the number of days in a year, (3) divides the

product of that by the number of days in the loan term, and (4) multiplies the quotient of that by

100 to get a percentage.3 The result is what the loan would look like if it were extrapolated to be

2As mentioned above, the complaint also alleges that Fifth Third “breached the contract by failing to

provide an accurate APR summary for Early Access Loans on monthly bank statements.” But plaintiffs’ briefs

barely mention the monthly statements and do not include any argument specific to them or that breach-of-contract

theory. “We have repeatedly held that a party forfeits any allegations that lack developed argument.” Jones Bros.,

Inc. v. Sec’y of Labor, 898 F.3d 669, 677 (6th Cir. 2018). To the extent that this alternate theory is a part of this

appeal at all, plaintiffs have thus forfeited it.

3The Consumer Federation of America, which has filed an amicus brief in this case, includes a publication

on its web site that advocates using this formula in the context of payday loans. Arkansans Against Abusive Payday

Lending, How to Calculate the Interest Rate on Payday Loans, https://consumerfed.org/pdfs/AAAPL-How-to-

Calculate-Interest-Rate.pdf (last visited Apr. 9, 2019).

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for a term of one year, or “annualized,” and the cost of credit remained the same across that

longer term.

For example, the complaint alleges that plaintiff “Fyock borrowed an Early Access Loan

in the amount of $650.00 from her Early Access account. Fourteen days later . . . Fyock received

a direct deposit and Fifth Third debited $715.00 to repay this Early Access Loan. This resulted

in an APR of approximately 260%.” Plugged into plaintiffs’ formula (and rounded to the

hundredths place), the numbers look like this:

65

× 365

650 × 100 = 260.71%

14

What this result attempts to explain is that charging $65 to borrow $650 for fourteen days is the

cost-of-credit equivalent of charging $1694.64 to borrow the same amount for a whole year. Of

course, the terms of the Early Access program don’t allow a loan to be outstanding for that long,

and even if they did, the “transaction fee” does not increase over time in the way that other types

of lending charges, like compound interest, might. But APR and other required disclosures have

value because they allow consumers “to compare more readily the various credit terms

available . . . and avoid the uninformed use of credit.” 15 U.S.C. § 1601(a). “Annualizing” the

cost of credit is APR’s method of doing so.

Returning to the above example from the complaint, calculating the APR using the

formula provided in the contract yields a different result than plaintiffs’ formula:

65

× 12 = 120%

650

In another example, “[plaintiff] McKinney borrowed an Early Access Loan in the amount of

$200. Three days later . . . McKinney received a direct deposit and Fifth Third debited $220 to

repay that loan. This resulted in an APR of approximately 1,217% . . . .” Again, the numbers

plug into plaintiffs’ formula thus:

No. 18-3390 Laskaris, et al. v. Fifth Third Bank Page 15

20

× 365

200 × 100 = 1216.67%

3

Using the formula in the contract yields a result different from the above, but identical to the

result from the first example:

20

× 12 = 120%

200

This extreme example shows a tenfold difference in APR between the two formulas, with the

APR from the contract yielding a number that appears much more favorable to the consumer.

But the formula from the contract can also result in a higher APR than the formula used

by plaintiffs. If a customer borrowed $100 and a direct deposit never posted to his checking

account, Fifth Third would automatically deduct $110 thirty-five days later, resulting in APR of

about 104% using plaintiffs’ formula:

10

× 365

100 × 100 = 104.29%

35

Meanwhile, the contract’s formula yields the same result as before, this time, overstating the

APR compared to the other formula:

10

× 12 = 120%

100

B.

These examples demonstrate that the contract’s formula for calculating APR is static, and

always the same regardless of the length of the loan. Loans with lengths of three, fourteen, and

thirty-five days all receive APRs of 120%. Hence, any APR produced using the contract’s

formula cannot be “expressed as a yearly rate.” Definitions for “yearly” include “pertaining to a

year or to each year” and “computed or determined by the year,” and the parties do not dispute

No. 18-3390 Laskaris, et al. v. Fifth Third Bank Page 16

that the word is inextricably tied to a period of a time. Webster’s Unabridged Dictionary 2201

(2001).

In addition to providing an explicit definition, the contract contains other indications that

the APR is tied to a year’s time. First, the term “APR” itself includes the word “annual,” which

is defined as “[o]ccurring once every year; yearly,” or “[o]f, relating to, or involving a period of

one year.” Black’s Law Dictionary 109 (10th ed. 2014). Its presence provides further support to

the contract’s promise that the APR would be “expressed as a yearly rate.” Of course, Fifth

Third must include the term “annual percentage rate” in order to comply with TILA’s

requirements, but that does not mean that the word should be assigned any less meaning or

importance as a matter of contract interpretation. The contract does not inform customers that

this disclosure is mandatory either. To the contrary, it states that APR is included “so our

customers can compare the cost of using this product against other forms of credit.” Second, the

contract’s formula includes as a factor “the number of statement cycles within a year.” This

detail is perhaps the most misleading of all, signaling to customers that the APR formula is

somehow tied to a yearly rate when it is not.

The contract also includes a mathematical error in one of its examples explaining how the

APR formula works in practice. The Terms and Conditions document contains the following

language: “[f]or example, $100 Advance with a $10 transaction fee = $10/$100 = 0.1% X 12

cycles = 120% APR.” But 10 divided by 100 equals 0.1, not 0.1% or 0.001 as it would be

expressed without a percentage sign. And 0.001 times 12 equals 0.012 or 1.2%, not 120% as the

example states. Fifth Third acknowledged the error at oral argument, but dismissed it as a “typo”

stemming from “transposing from percentage to decimal points.” In any case, by describing

APR in another inconsistent way, this error adds to the uncertainty surrounding the contract’s

purported meaning of the term.

The contract thus provides multiple descriptions of “APR” that are inconsistent with one

another. What complicates things is that one is a definition while another is a formula; the two

are naturally expressed in different ways. One might say, for example, that “compound interest”

is defined as “interest paid on both the principal and the accrued interest.” Webster’s

No. 18-3390 Laskaris, et al. v. Fifth Third Bank Page 17

Unabridged Dictionary 420 (2001). But the method of calculating compound interest might look

like this4:

𝑟 𝑛𝑡

𝐴 = 𝑃 (1 + )

𝑛

A reasonable person would recognize that the two don’t mean exactly the same thing, but would

expect them to be consistent. Here, there is no way for the contract’s definition of APR to be

consistent with the formula it provides.

Fifth Third makes no attempt to explain how the contract’s method of calculating

APR can be “expressed as a yearly rate.” In fact, Fifth Third’s counsel confirmed at oral

argument that the contract’s calculation of “APR has nothing to do with borrowing the money on

a yearly basis.” Instead, Fifth Third stresses that “the Early Access contract unambiguously

provided for a flat transaction fee of 10 percent” and that the “calculation of the APR merely

reflected, and did not change, the flat transaction fee” Fifth Third asks us to conclude from these

premises that the contract is unambiguous as a matter of law. But this interpretation would

require us to ignore the contract’s definition of APR as “a measure of the cost of credit,

expressed as a yearly rate.” Because we must “give effect to every provision,” we cannot

endorse an interpretation that would read language out of the contract entirely. Sunoco,

953 N.E.2d at 295.

C.

No interpretation of the contract can give effect to one definition that specifies that APR

is “expressed as a yearly rate” while also giving effect to a formula that precludes such an

expression. Because the term “APR” as it appears in the contract is “reasonably susceptible of

more than one interpretation,” it is ambiguous as a matter of law. Santana v. Auto Owners Ins.

Co., 632 N.E.2d 1308, 1313 (Ohio Ct. App. 1993). And because “the meaning of the ambiguous

language is a question of fact,” SPG, Inc. v. First St. Dev., L.L.C., 64 N.E.3d 340, 347 (Ohio Ct.

App. 2016), it should, “in the first instance, be decided by the district court,” Roth Steel Prods. v.

4See Compound Interest Calculator, https://www.calculator net/compound-interest-calculator html (last

visited Apr. 9, 2019).

No. 18-3390 Laskaris, et al. v. Fifth Third Bank Page 18

Sharon Steel Corp., 705 F.2d 134, 153–54 (6th Cir. 1983). Accordingly, we do not address the

parties’ arguments concerning latent ambiguity and other factual issues. We also decline to

consider the parties’ numerous arguments based on TILA and Regulation Z. That claim is not

before us and we take no position as to its merits.

IV.

For these reasons, we reverse the district court’s judgment and remand for further

proceedings consistent with this opinion.

No. 18-3390 Laskaris, et al. v. Fifth Third Bank Page 19

_________________

OPINION

_________________

LARSEN, Circuit Judge, concurring in part and dissenting in part. I join Part II of the

majority opinion, which concludes that we have jurisdiction to consider the merits of this appeal.

I depart, however, from my colleagues when it comes to the reading of the parties’ contract.

Under Ohio law, parties are free to define the terms in a contract as they see fit, even

those that otherwise have well-understood common or technical meanings, so long as the parties’

intent is clear. See Foster Wheeler Enviresponse, Inc. v. Franklin Cty. Convention Facilities

Auth., 678 N.E.2d 519, 526 (Ohio 1997). The parties’ intent “is presumed to reside in the

language they chose to employ in the agreement.” Id. The contract here defines Annual

Percentage Rate (APR) in an idiosyncratic but abundantly clear manner. At all times, the

contract expressly ties the APR to the transaction fee and the borrower’s statement cycles. The

remainder of the contract explains, no fewer than ten times, that the cost of the loan is a flat, 10%

transaction fee. The contract also clearly explains that the 10% transaction fee is assessed

without regard to the length of time the loan remains outstanding. All plaintiffs were charged the

10% transaction fee—nothing more, nothing less.

Federal law may require that terms like APR be defined and disclosed in a particular

way; and to the extent that such requirements apply here, plaintiffs’ recourse lies in their Truth in

Lending Act (TILA) claim. See Beach v. Ocwen Fed. Bank, 523 U.S. 410, 412 (1998)

(recognizing that the TILA “requires creditors to provide borrowers with clear and accurate

disclosures of terms dealing with things like . . . [APRs]” and provides for “statutory and actual

damages traceable to a lender’s failure to make the requisite disclosures”). But plaintiffs got the

benefit of their bargain, and so their breach of contract claim fails. See JNT Props., LLC v.

Keybank Nat’l Ass’n, 981 N.E.2d 804, 806–07 (Ohio 2012).

For these reasons, I respectfully dissent in part.