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Court Rules on Credit Card Rate Hikes

The Supreme Court in separate rulings Monday gave employees more leeway in bringing illegal retaliation cases against employers and also provided credit card companies with protection from lawsuits based on rate increases.

At issue in the credit card case, known as Chase Bank v. McCoy, is an outdated federal regulation regarding whether credit card companies needed to inform customers of rate increases because of delinquency or default.

In 2009, the Federal Reserve Board implemented regulations specifying that credit card companies must provide 45 days' notice for rate increases resulting from delinquency or default, but the rules weren't that specific when James McCoy filed suit in 2006.

McCoy alleged in his lawsuit that Chase Bank illegally raised his rates without notifying him after he defaulted on his payments.

The Supreme Court unanimously ruled against McCoy in a 20-page decision, saying that Chase's notice of terms specifying the possibility of a rate increase in case of a default met the legal requirements at the time.

Justice Sonia Sotomayor wrote in an opinion for the court that federal regulations "did not require Chase to provide McCoy with a change-in-terms notice before it implemented the agreement term allowing it to raise his interest rate following delinquency or default."

As a result, the court ruled McCoy had no basis to bring a lawsuit against Chase.

While the issue may largely be moot because of the change in regulations in 2009, a victory for McCoy at the Supreme Court could have led to a flood of other lawsuits from people in a similar position to him under the old regulations.

In the employment case, the high court ruled that Eric Thompson could sue North American Stainless on the grounds that the company fired him in retaliation for his fiancee, who also worked at the company, filing a sex-discrimination case.

In an opinion written by Justice Antonin Scalia, the court ruled Thompson's right to file such a suit was protected under the landmark 1964 Civil Rights Act.

"We think it obvious that a reasonable worker might be dissuaded from engaging in protected activity if she knew that her fiancee would be fired," Justice Scalia wrote.

In 2003, Thompson's fiancee, Miriam Regalado, filed a sex-discrimination complaint with the Equal Employment Opportunity Commission against North American Stainless, a steel company, alleging she had twice been demoted because of her gender and that her pay was not on par with male employees.

Three weeks later, Thompson was fired.

The high court's ruling does not mean Thompson has won the case, but simply that he can pursue his lawsuit at the trial court level.

The court ruled 8-0 for Thompson. Justice Elena Kagan took no part the because in her previous job as solicitor general she took part in shaping the government's position in the case, known as Thompson v. North American Stainless. The Obama administration filed a brief in the case supporting Thompson's position.

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