In the

United States Court of Appeals
              For the Seventh Circuit

No. 08-3322

L AURA M. S WANSON, individually
and on behalf of a class,
                                        Plaintiff-Appellant,
                            v.

B ANK OF A MERICA, N.A., and
FIA C ARD S ERVICES, N.A.,

                                      Defendants-Appellees.


                 On Petition for Rehearing


                 D ECIDED A PRIL 24, 2009




  Before E ASTERBROOK, Chief Judge, and K ANNE and
E VANS, Circuit Judges.
  E ASTERBROOK, Chief Judge. Our opinion in this appeal,
released on March 19, 2009, held that issuers of credit
cards may increase interest rates at the start of a billing
cycle, without giving separate notice to borrowers, when
contracts with the borrowers authorize the rate increase.
We rejected Laura Swanson’s argument that 12 C.F.R.
2                                               No. 08-3322

§226.9(c) requires at least 15 days’ notice before a rate
of interest may change. While our opinion was at the
printer, a panel of the ninth circuit came to a contrary
conclusion. McCoy v. Chase Manhattan Bank, USA, N.A.,
2009 U.S. App. L EXIS 5380 (9th Cir. Mar. 16, 2009). Swanson
has filed a petition for rehearing, contending that we
should follow the ninth circuit and eliminate the
conflict among the circuits.
  Before McCoy issued, every federal judge (trial or ap-
pellate) who had analyzed this subject had concluded
that §226.9(c) requires notice of a change in contractual
terms, but not of a lender’s decision to invoke its rights
under terms already in the contract. Like these other
judges, we acknowledged that §226.9(c) is ambiguous
and that its reference to “terms” could mean the rate
of interest, as well as terms of a contract, but we
thought that the Federal Reserve Board’s commentary—
both to the existing regulation, and accompanying a
proposed change in the regulation—shows that the
Bank had the better of the argument. See Anderson
Bros. Ford v. Valencia, 

, 212–13, 217 (1981);
Ford Motor Credit Co. v. Milhollin, 

(1980).
And, although ambiguity may plague the regulation and
the commentary, there is no ambiguity in the contract. It
takes more than a vague regulation plus cloudy com-
mentary to displace a contract.
  One of the courts that had reached this conclusion
was—the ninth circuit. Evans v. Chase Bank USA, N.A., 267
Fed. App’x 692 (9th Cir. 2008). True, Evans is a
nonprecedential decision, see Fed. R. App. P. 32.1, and
No. 08-3322                                                 3

therefore did not bind the panel in McCoy. But
nonprecedential decisions should be used only when the
legal issue is clear enough that all reasonable judges
will come out the same way. The panel in Evans must
think that the result of the panel in McCoy is unreasonable.
What’s more, there was a persuasive dissent in McCoy
written, as it happens, by a judge of this circuit sitting
by designation. McCoy, 2009 U.S. App. L EXIS 5380 at
*25–*46 (Cudahy, J., dissenting). If there is a conflict in
need of resolution, it is among judges of the ninth
circuit rather than between the seventh and the ninth.
And any conflict is of short duration: a new 12 C.F.R.
§226.9(g), which takes effect on July 1, 2010, clears up the
ambiguity in the current regulation and commentary.
  The majority in McCoy placed particular emphasis
on comment 3 to §226.9(c). As our opinion did not dis-
cuss that comment—Swanson had relied almost exclu-
sively on comment 1, mentioning comment 3 only in
passing—a few words are in order. It is helpful to set
out the pertinent portions of comments 1 and 3, so that
the reader may see the differences.
    1. Changes initially disclosed. No notice of a change
    in terms need be given if the specific change is set
    forth initially, such as: Rate increases under a
    properly disclosed variable-rate plan, a rate in-
    crease that occurs when an employee has been
    under a preferential rate agreement and terminates
    employment, or an increase that occurs when the
    consumer has been under an agreement to main-
    tain a certain balance in a savings account in order
4                                               No. 08-3322

    to keep a particular rate and the account balance
    falls below the specified minimum. In contrast,
    notice must be given if the contract allows the
    creditor to increase the rate at its discretion but
    does not include specific terms for an increase (for
    example, when an increase may occur under the
    creditor’s contract reservation right to increase
    the periodic rate). . . .
    3. Timing—advance notice not required. Advance
    notice of 15 days is not necessary—that is, a notice
    of change in terms is required, but it may be
    mailed or delivered as late as the effective date
    of the change—in two circumstances:
        If there is an increased periodic rate or any
        other finance charge attributable to the con-
        sumer’s delinquency or default . . . .
The majority in McCoy thought it “clear” that comment 3
requires notice contemporaneous with a change in the
rate of interest and therefore prevents a bank from in-
creasing the rate on the first day of the billing cycle
during which the bank invokes its contractual right to
charge a higher rate. But, as Judge Cudahy observed at
*38–*41, comment 1 deals with whether a separate notice
is required, while comment 3 addresses when notices
that are required by the regulation (as understood in
comment 1) must be sent. Nothing in comment 3, which
says that notice need not be “advance” in defined cir-
cumstances, provides that notice is required in the first
place. The majority in McCoy replaced with ellipses the
language in comment 3 showing that it concerns timing
No. 08-3322                                              5

of notice otherwise required. Strategic omissions do not
make comment 3 a “clear” directive that overrides a
contract specifying when a higher rate of interest will
take effect.
  Our opinion concluded that Swanson’s state-law
claims fall with her federal claims. Her petition for re-
hearing observes that McCoy reinstated claims under
state law. For the reasons given in our original opinion,
the only possible state claim would rest on Delaware
banking law, because 12 U.S.C. §85 prohibits one state
(here, Illinois) from overriding interest rates that are
lawful in the state where a national bank is based (here,
Delaware). Delaware permits banks to change interest
rates in ways allowed by contract. “Without limitation,
a permissible schedule or formula . . . may include pro-
vision in the agreement . . . for a change in the periodic
percentage rate . . . applicable to all or any part of out-
standing unpaid indebtedness . . . upon the happening
of any event or circumstance specified in” the agreement.
5 Del. Code §944. The ninth circuit asserted that §944
does not authorize a bank to make discretionary changes
in a borrower’s rate of interest, because discretion
differs from a “schedule or formula”. Yet the statute
does not say that only a “schedule or formula” may be
used, nor does any decision of a Delaware court. The
statute tells us that the bank’s authority depends on its
contracts. Section 944 permits a bank to make changes
that are authorized by agreement with its customer. The
changes that Bank of America made were expressly
authorized by its contract with Swanson, so the Bank
6                                              No. 08-3322

has complied with §944 and may not be held liable
under Illinois law.
  The petition for rehearing is denied. No judge has called
for a vote on the petition for rehearing en banc, which
therefore is denied.




                          4-24-09