Miller v. Colortyme, Inc.

D.E.F. Investments, Inc. (D.E.F.) (defendant) operated several rent-to-own businesses in Minnesota. Under its rent-to-own contracts, D.E.F. offered weekly or monthly leases for consumer goods. D.E.F.’s customers could renew the leases after each rental period ended. If a customer renewed a lease for a specified number of rental periods, the customer would acquire ownership of the leased good. Delilah Miller and Craig Stenzel (plaintiffs) were D.E.F. customers who had entered into several rent-to-own transactions with D.E.F. A number of those transactions ended with Miller and Stenzel obtaining ownership of the leased goods. Under each contract, Miller and Stenzel could acquire the leased good for a total price that was much greater than the value of the good. For example, Stenzel entered into an agreement with D.E.F. to lease a television worth $470. Stenzel could acquire the television after paying 18 monthly payments of approximately $48, totaling over $850, or 78 weekly payments of $12.75, which totaled almost $1,000. Miller and Stenzel filed a class-action lawsuit against D.E.F. in Minnesota court, arguing that D.E.F. had violated several consumer-protection laws, including state usury laws. Minnesota’s usury law applied to consumer-credit sales and prohibited contracts that imposed an interest rate of over 6 percent. D.E.F. moved to dismiss Miller and Stenzel’s usury claim, arguing that the usury statute did not apply because its rent-to-own transactions were not consumer-credit sales. The district court granted summary judgment for Miller and Stenzel, holding that the rent-to-own transactions were usurious consumer-credit sales. The court of appeals reversed, finding that the rent-to-own transactions were not consumer-credit sales and were not usurious. Miller and Stenzel appealed.