                                                                 [PUBLISH]

               IN THE UNITED STATES COURT OF APPEALS
                                                                    FILED
                       FOR THE ELEVENTH CIRCUIT          U.S. COURT OF APPEALS
                                                           ELEVENTH CIRCUIT
                       __________________________               FEB 22 2001
                                                            THOMAS K. KAHN
                              No. 99-13381                        CLERK
                       __________________________

                      D.C. Docket No. 95-01212-CV-A-N

JACQUELINE TURNER, on behalf of herself and all others similarly situated,

                                                             Plaintiff-Appellant,

      versus



BENEFICIAL CORPORATION, BENEFICIAL NATIONAL BANK, U.S.A.,

                                                           Defendant-Appellees.
                       __________________________

                  Appeal from the United States District Court
                      for the Middle District of Alabama
                       __________________________
                             (February 22, 2001)


Before ANDERSON, Chief Judge, TJOFLAT, EDMONDSON, BIRCH,
DUBINA, BLACK, CARNES, BARKETT, HULL, MARCUS and WILSON,
Circuit Judges.

BARKETT, Circuit Judge:
                  ON SUA SPONTE REHEARING EN BANC

      Jacqueline Turner brought this interlocutory appeal, pursuant to Federal

Rule of Civil Procedure 23(f), from the denial of class certification in her suit

alleging that defendant Beneficial Corporation, a.k.a. Beneficial National Bank,

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

federal Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1961 et

seq. (“RICO”), and also committed common law fraud in transactions related to its

financing of Turner’s purchase of a satellite dish.

      The district court determined that detrimental reliance was a necessary

element to each of Turner’s claims and, finding no detrimental reliance, denied

class certification. A panel of this Court affirmed the district court’s denial of class

certification on Turner’s claims except for the TILA claim for actual damages.

Finding itself bound by this Court’s earlier ruling in Jones v. Bill Heard Chevrolet,

Inc., 212 F.3d 1356, 1363 (11th Cir. 2000), that a plaintiff need not demonstrate

detrimental reliance on a lender’s misrepresentations in order to bring a claim for

actual damages under TILA, the panel vacated the district court’s denial of class

certification on that claim. See United States v. Hogan, 986 F.2d 1364, 1369 (11th

Cir. 1993) (“[I]t is the firmly established rule of this Circuit that each succeeding




                                           2
panel is bound by the holding of the first panel to address an issue of law, unless

and until that holding is overruled en banc, or by the Supreme Court.”).

      By vote of a majority of the judges in active service, we now rehear this

appeal en banc for the sole purpose of reconsidering the question of whether

detrimental reliance is an element of a TILA claim for actual damages. We find

that it is, vacate the panel’s ruling on that issue, and affirm the district court’s

denial of class certification as to all of Turner’s claims.1

                                        BACKGROUND

      This case arises out of Turner’s purchase of a satellite dish system from Star

Vision, Inc., prompted by a newspaper advertisement which indicated that monthly

charges for this service would be $39.95. The financing of the dish and the

monthly service were to be provided through an agreement between Beneficial

National Bank (“Beneficial”) and Star Vision by way of an “Excel” credit card

issued by Beneficial which could be used only to purchase goods and services from

Star Vision. When the satellite system was delivered, the invoice reflected a

monthly bill of $48.36, as did the Excel bill from Beneficial. With the Excel card,

Turner had received TILA disclosure statements, but Turner alleges that these




      1
          The panel’s disposition of all other issues is unaffected by this opinion.

                                                  3
disclosures failed to reveal the true cost of financing the purchase of the satellite

dish.2

         Although Turner concedes that she did not read Beneficial’s disclosure

statements at the time of receipt and therefore did not rely on them, she claims that

she is entitled to damages for Beneficial’s failure to provide disclosure statements

that complied with the requirements of the law under TILA. Beneficial does not

dispute Turner’s claim that the disclosures were improper. Instead it points out

that, because Turner did not read the disclosure statements, she did not rely upon

them to her detriment and thus could not have suffered actual injury as a result of

Beneficial’s TILA violation. The district court found that detrimental reliance is a

necessary element of Turner’s claim for actual damages under TILA and denied

class certification on that claim. We review class certification rulings for abuse of

discretion. Armstrong v. Martin Marietta Corp., 138 F.3d 1374, 1381 (11th Cir.

1998) (en banc). We review de novo the district court’s conclusions of law that

informed its decision to deny class certification. DeKalb County School Dist. v.

Schrenko, 109 F.3d 680, 687 (11th Cir. 1997).

                                       DISCUSSION


         2
         Specifically, Turner contends that, pursuant to 15 U.S.C. § 1638, Beneficial should have
disclosed: (1) the number of payments; (2) the amount of each monthly payment; (3) the amount
financed; (4) the total finance charge; (5) the total of payments; and (6) the total sales price.

                                               4
       A court can certify a class only when the requirements of Rule 23(a) and at

least one of the alternative requirements of Rule 23(b) are satisfied. Jackson v.

Motel 6 Mutipurpose, Inc., 130 F.3d 999, 1005 (11th Cir. 1997). Turner maintains

that all of the requirements of Rule 23(a) are satisfied3 and that the class also

satisfies Rule 23(b)(3), which requires that questions of law or fact common to all

members of the class predominate over questions pertaining to individual

members. Finding that Turner’s inability to prove detrimental reliance precluded

her from satisfying the typicality and adequacy requirements of Rule 23(a)(3) and

(4), the district court refused to certify a class on Turner’s claim for actual damages

under TILA.

       The TILA provision governing actual damages reads:

       Except as otherwise provided in this section, any creditor who fails to
       comply with any requirement imposed under this part . . . with respect
       to any person is liable to such person in an amount equal to . . .
             (1) any actual damage sustained by such person as a
             result of the failure; . . . .

15 U.S.C. § 1640(a)(1) (1998).




       3
          A class may be certified if the following requirements are met: (1) numerosity: the class
is so numerous that joinder of all members is impracticable; (2) commonality: questions of law
or fact are common to the class; (3) typicality: the representatives of the class present claims or
defenses that are typical of the class; and (4) adequacy: the representatives of the class will fairly
and adequately protect the interests of the class. Fed. R. Civ. P. 23(a).

                                                  5
       In addition to allowing for actual damages, TILA provides three other

remedies for violations of its provisions. First, TILA empowers the Federal Trade

Commission as its overall enforcement agency, 15 U.S.C. §1607(c), and provides

other federal agencies with enforcement authority over specific categories of

lenders. 15 U.S.C. §1607(a). The enforcing agencies are authorized to require the

creditor to “make an adjustment to the account of the person to whom credit was

extended, to assure that such person will not be required to pay a finance charge in

excess of the finance charge actually disclosed or the dollar equivalent of the

annual percentage rate actually disclosed, whichever is lower.” 15 U.S.C. §

1607(e)(1).4 Second, TILA imposes criminal liability on persons who willfully and

knowingly violate the statute. 15 U.S.C. § 1611. Finally, TILA creates a private

cause of action for statutory damages, which may be assessed in addition to any

actual damages awarded. 15 U.S.C. § 1640 (a)(2)(A).

       As necessary, Congress has amended TILA to ensure that it provides for a

fair balance of remedies. Specifically, in 1974, Congress amended TILA to permit

private litigants, both as individuals and in class actions, to sue for any actual

damages sustained “as a result” of a TILA violation. 15 U.S.C. § 1640(a)(1). In


       4
         In other words, the enforcement agencies provide restitution to the victims of TILA
violations, but this remedy is limited “if it would have a significantly adverse impact upon the
safety or soundness of the creditor.” 15 U.S.C. § 1607(e)(3)(A).

                                                 6
1980, Congress further amended TILA, this time capping defendants’ liability for

statutory damages. TILA now provides that the ceiling on statutory damages in a

class action applies to all class actions arising out of the same TILA violation.

Truth in Lending Simplification and Reform Act of 1980, Pub. L. No. 96-221 §

615(a)(1), 94 Stat. 132 (March 31, 1980).5 Congress placed this ceiling on a

defendant’s statutory liability in a class action so that courts would no longer have

to “choose between denying class actions altogether or permitting multi-million

dollar recoveries against defendants for minor or technical violations.” McCoy v.

Salem Mortgage Co., 74 F.R.D. 8, 10 (E.D. Mich. 1976). Under this regime

statutory damages provide at least a partial remedy for all material TILA

violations; however, actual damages ensure that consumers who have suffered

actual harm due to a lender’s faulty disclosures can be fully compensated, even if

the total amount of their harm exceeds the statutory ceiling on TILA damages. In

this case we assume that the statutory ceiling has already been reached, and the


       5
         Under TILA Section 1640(a)(2)(A)(i), Turner would be entitled to individual statutory
damages equal to “twice the amount of any finance charge in connection with the transaction.”
However, as lead plaintiff in a class action, the entire range of statutory damages for the class are
limited to:
        such amount as the court may allow, except that as to each member of the class no
        minimum recovery shall be applicable, and the total recovery under this
        subparagraph in any class action or series of class actions arising out of the same
        failure to comply by the same creditor shall not be more than the lesser of
        $500,000 or 1 per centum of the net worth of the creditor; . . . .
15 U.S.C. § 1640(a)(2)(B).

                                                 7
sole issue presented is whether a plaintiff must show detrimental reliance on a

faulty TILA disclosure in order to be eligible for an award of actual damages.

      Most courts that have addressed the issue have held that detrimental reliance

is an element in a TILA claim for actual damages. See, e.g., Perrone v. General

Motors Acceptance Corp., 232 F.3d 433, 436-40 (5th Cir. 2000); Stout v. J.D.

Byrider, 228 F.3d 709, 718 (6th Cir. 2000); Peters v. Jim Lupient Oldsmobile Co.,

220 F.3d 915, 917 (8th Cir. 2000); Bizier v. Globe Financial Services, Inc., 654

F.2d 1, 4 (1st Cir. 1981) (dicta); Hoffman v. Grossinger Motor Corp., 1999 WL

184179, *4 (N.D. Ill. 1999); Brister v. All Star Chevrolet, 986 F. Supp. 1003, 1008

(E.D. La. 1998); McCoy, 74 F.R.D. at 12-13. This Circuit, however, has not joined

the courts that have so held. Ransom v. S & S Food Center, Inc. of Florida, 700

F.2d 670, 677 (11th Cir. 1983); see also Lopez v. Orlor, 176 F.R.D. 35, 40 (D.

Conn. 1997); Sutliff v. County Sav. & Loan Co., 533 F. Supp. 1307, 1313 (N.D.

Ohio 1982); In re Russell, 72 B.R. 855, 857 (Bankr. E.D. Pa. 1987).

      In Ransom, this Court affirmed the award of TILA actual damages to

members of the plaintiff class who paid excessive finance charges but who had not

alleged reliance. The plaintiff class in Ransom purchased food plans comprising a

bulk food order and a service contract designated as a “Food Freezer Service

Agreement” (“FFSA”). Although the FFSA provided warranties and services with


                                         8
respect to the food purchases, it also included a finance charge assessed whether

the purchase was made with cash or by credit. 700 F.2d at 671-72. The trial court

awarded the plaintiffs actual damages equal to the finance charge paid by each

class member in excess of the legally permissible finance charge. In addition, the

district court assessed statutory damages. Id. at 677. The Ransom Court rejected

the defendant’s contention that the plaintiffs could not show actual damages,

noting that

      the record discloses that each of the members of the class had signed
      contracts which were illegal but upon which they were ostensibly
      liable and which had not been voluntarily cancelled by the defendants
      prior to the trial. It was therefore clearly appropriate for the trial court
      to require a payment to each of the named members of the class of a
      cash amount that would offset their outstanding obligations which
      would otherwise remain collectable against them.

Id.

      It thus appears that the Ransom Court upheld the awarding of actual

damages without requiring a showing of detrimental reliance, although the Ransom

Court did not squarely address the issue, and it is not clear from the opinion that

the issue was actually raised. However, notwithstanding Ransom, the district

courts in this Circuit have imposed a detrimental reliance requirement for TILA

actual damages claims. See, e.g., Perry v. Household Retail Services, Inc., 180

F.R.D. 423, 433 (M.D. Ala. 1998); Barlow v. Evans, 992 F. Supp. 1299, 1310


                                           9
(M.D. Ala. 1997); Wiley v. Earl’s Pawn & Jewelry, 950 F. Supp. 1108, 1114-1117

(S.D. Ala. 1997); Adiel v. Chase Fed. Sav. & Loan, 630 F. Supp. 131, 133 (S.D.

Fla. 1986), aff’d, 810 F.2d 1051 (11th Cir. 1987). Complicating matters, this

Court affirmed Adiel in Adiel v. Chase Federal Savings & Loan, 810 F.2d 1051

(11th Cir. 1987), and several district courts in this Circuit treated this Court’s

affirmance of the district court’s decision in Adiel as calling into question the

continued viability of Ransom, despite the fact that Ransom was not discussed in

this Court’s opinion. See Barlow, 992 F. Supp. at 1309-10; Wiley, 950 F. Supp. at

1114-17.

      Specifically, in Adiel, the plaintiff class consisted of homeowners who had

adopted existing mortgages on the lots on which their homes were situated. The

loans had been executed by the builder of the homes to Chase Federal Savings and

Loan Association (“Chase”), and neither Chase nor the builder provided to the

homeowners the required TILA disclosures. 630 F. Supp. at 132. The plaintiffs

urged the district court to follow Ransom and to award both actual and statutory

damages, as the statute permits, but the district court required each member of the

class to prove that “he or she would have gotten credit on more favorable terms but

for the violation.” Id. at 133 (quoting McCoy, 74 F.R.D. at 12). The district court

also quoted approvingly language from a New York state court decision in which


                                           10
the state court required that a plaintiff claiming actual TILA damages must show

“that he relied on the inaccurate disclosure and thereby was effectively prevented

from obtaining better credit terms elsewhere.” Id. (quoting Vickers v. Home Fed.

Sav. & Loan Assoc., 62 A.D.2d 1171, 1172, 404 N.Y.S.2d 201, 202 (Sup. Ct.

1978)).

      On appeal, the plaintiffs argued that the district court had erred in ruling that

“to recover actual damages, each class member must show that but for the [TILA]

violation, better credit on more favorable terms would have been obtained.” Adiel,

810 F.2d at 1053. This Court affirmed the ruling of the district court, stating only

that the district court “did not abuse its discretion in awarding statutory damages

rather than actual damages.” Id. at 1055. Therefore, the opinion did not address the

issue of reliance. Indeed, in Adiel we only determined that the district court need

not award actual damages when it has already provided a remedy through statutory

damages and has taken into account, in considering the amount of statutory

damages to award, the fact that no actual damages had been awarded. Id. at 1054-

55.

      However, in the Eleventh Circuit case most clearly relevant to the issue

before us, this Court directly rejected a defendant’s argument that a TILA claim for

actual damages fails if the plaintiff cannot demonstrate detrimental reliance on the


                                          11
defendant’s misrepresentations. Jones, 212 F.3d at 1363 n.7. The defendant car

dealership in Jones led its customers to believe that they were paying $2,495 to the

General Motors Corporation for an extended service contract. In fact only $290

went to General Motors, while the dealer kept $2,205 as an “upcharge.” Id. at

1358-59. In Jones, this Court stated, “we reject Heard Chevrolet’s contention that

Plaintiff’s TILA claim fails because Plaintiff cannot demonstrate reliance on its

misrepresentations.” Id. at 1363, n.7.6

       We now reconsider whether detrimental reliance is required for a TILA

claim for actual damages. We note that the statute provides that a plaintiff is

entitled only to “any actual damages sustained . . . as a result” of a TILA violation.

15 U.S.C. § 1640(a)(1). We find that this language indicates that the statute’s

authors intended that plaintiffs must demonstrate detrimental reliance in order to be


       6
          The Jones Court relied on Charles v. Krauss Co., Ltd., 572 F.2d 544, 546 (5th Cir.
1978), to support this proposition. The Charles case is also considered part of the jurisprudence
of this circuit. See Bonner v. Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981) (en banc)
(indicating that the Eleventh Circuit adopted as binding precedent all Fifth Circuit decisions
handed down prior to the close of business on September 30, 1981). On closer examination, we
find that the opinion in Charles does not state whether the plaintiff sought actual or statutory
damages. However, in stating that reliance is not a factor in TILA claims, the Charles Court
cites to McGowan v. King, Inc., 569 F.2d 845, 848 (5th Cir. 1978). In McGowan, the Fifth
Circuit notes that “[t]he basis of Section 1640(a) liability is the failure to disclose information
required to be disclosed; there is no requirement that the plaintiff himself be deceived in order to
sue in the public interest.” Id. at 849. However, the McGowan Court also concludes that once
such a failure to disclose is shown, “the court must award [the plaintiff] the statutory
penalty,”and the Fifth Circuit awarded only statutory damages in that case. Id. at 849-50
(emphasis added). As shown, these cases additionally complicate the standard in the Eleventh
Circuit for a TILA actual damages claim.

                                                 12
entitled to actual damages under TILA. The legislative history behind the 1995

amendments to TILA supports our reading of the actual damages provision. It

states:

          Section 130(a) of TILA allows a consumer to recover both actual and
          statutory damages in connection with TILA violations. Congress provided
          for statutory damages because actual damages in most cases would be
          nonexistent or extremely difficult to prove. To recover actual damages,
          consumers must show that they suffered a loss because they relied on an
          inaccurate or incomplete disclosure.

H.R. Rep. No. 193,104, 104th Cong., 1st Sess. (1995). The legislative history

emphasizes that TILA provides for statutory remedies on proof of a simple TILA

violation, and requires the more difficult showing of detrimental reliance to prevail

on a claim for actual damages. To the extent that Jones, and possibly Ransom,

hold otherwise, they are overruled. We hold that detrimental reliance is an element

of a TILA claim for actual damages, that is a plaintiff must present evidence to

establish a causal link between the financing institution’s noncompliance and his

damages.

                                      CONCLUSION

          For the foregoing reasons, the district court’s denial of class certification on

Turner’s TILA claim for actual damages is

AFFIRMED.



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