This section contains the nature of the case and procedural background.

Taylor (P) bought a new Hyundai Accent in July 1995. They bought an extended warranty from the dealer. It cost $1,395. The TILA disclosure form that was included, stated under 'Amounts Paid to Others for You,' an entry reporting $1,395 paid to the warranty provider. The dealer, Quality (D) assigned the entire installment contract to Bank One Chicago D3. The story in Smith's (P1) case is practically identical, except that she bought her car from DeSi Auto Sales (D1). P1's TILA form showed $799 'Paid to Others for You' for an extended warranty, and her installment contract was assigned to Guardian National Acceptance Corporation (D4). Ps allege that the 'Amounts Paid to Others for You' were false. Neither D nor D1 paid the full amount to the warranty provider. Ps also alleged that D3 and D4 were sophisticated players in the lending market who must have known that the statements on the TILA forms were false. Ps sought damages under the TILA, 15 U.S.C. § 1641(a). Both district courts ruled D3 and D4. Ps' relied on the FTC's 'Holder Notice.' In 1975, the Federal Trade Commission (FTC) issued a regulation requiring sellers to include the following words on consumer credit contracts: NOTICE -ANY HOLDER OF THIS CONSUMER CREDIT CONTRACT IS SUBJECT TO ALL CLAIMS AND DEFENSES WHICH THE DEBTOR COULD ASSERT AGAINST THE SELLER OF GOODS OR SERVICES OBTAINED PURSUANT HERETO OR WITH THE PROCEEDS HEREOF. RECOVERY HEREUNDER BY THE DEBTOR SHALL NOT EXCEED AMOUNTS PAID BY THE DEBTOR HEREUNDER. D3 and D4 argue that a 1980 amendment to TILA trumps the Holder Notice.

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