        Jacqueline TURNER, on behalf of herself and all others similarly situated, Plaintiff-Appellant,
                                                       v.

         BENEFICIAL CORPORATION, Beneficial National Bank, U.S.A., Defendants-Appellees.

                                                 No. 99-13381.
                                        United States Court of Appeals,

                                               Eleventh Circuit.

                                                 Dec. 21, 2000.

Appeal from the United States District Court for the Middle District of Alabama. (NO. 95-01212-CV-A-N),
W. Harold Albritton, III, Judge.
Before CARNES and BARKETT, Circuit Judges, and POLLAK*, District Judge.

          BARKETT, Circuit Judge:

          Jacqueline Turner brings 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 ("Beneficial")

committed violations of 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.

                                               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 service would be $39.95. The

financing of the dish and the monthly service was to be provided through an agreement between Beneficial
National Bank 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 disclosures failed to reveal the true cost

of financing the purchase of the satellite dish.1
          Although Turner concedes that she did not read Beneficial's disclosure statements at the time of


    *
     Honorable Louis H. Pollak, U.S. District Judge for the Eastern District of Pennsylvania, sitting by
designation.
    1
      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.
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. Specifically,

Turner's complaint charged that Beneficial's failure to provide her with the correct disclosure forms violated

TILA (Count I) and the Racketeer Influenced and Corrupt Organizations Act ("RICO") (Count II) and
constituted fraud by suppression (Count III). She sought certification of a nationwide class as to her TILA

and RICO claims. She also sought certification of an Alabama subclass as to her fraud by suppression claim.

        In Count I of her complaint, Turner sought both statutory and actual damages under TILA. The

district court denied class certification on Turner's claim for statutory damages because Beneficial had already
paid out the maximum allowable statutory damages in settlement of another suit arising out of the same TILA

violation, and TILA bars any further class actions for statutory damages arising out of that same violation.

See 15 U.S.C. § 1640(a)(2)(B). The district court noted that Turner can still pursue statutory damages on her

individual TILA claim. Turner filed a separate appeal from the denial of class certification on her claim for

TILA statutory damages, but she has since moved to voluntarily dismiss that appeal.
         As to Turner's claim for actual damages under TILA, Beneficial did not dispute Turner's claim that
the disclosures were improper. Instead it pointed out that, because Turner did not read the disclosure

statement, she had not relied upon it 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 not only of her
damage claim under TILA but of her RICO and state fraud claims as well. Having determined that Turner

could not prove reliance, the district court denied class certification on all three claims, and this appeal

followed. We review class certification rulings for abuse of discretion. Armstrong v. Martin Marietta Corp.,

138 F.3d 1374 (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

         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 Multipurpose, Inc., 130 F.3d 999,

1005 (11th Cir.1997). Turner maintains that all of the requirements of Rule 23(a) are satisfied2 and that the


    2
   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
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. The district court refused to certify a

class on any of her causes of action because it found that Turner could not satisfy the typicality and adequacy

requirements of Rule 23(a)(3) & (4) because she could not prove detrimental reliance. Thus, the issue in this
appeal is whether detrimental reliance is a required element of a claim for actual damages under TILA, for

a RICO claim, and for a fraudulent suppression claim under Alabama law. We discuss each in turn.

1.       The TILA Claim
         The TILA provision directly relevant to this case is that governing actual damages:
         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). This provision must be understood in the context of TILA's general

regulatory scheme.
         In addition to actual damages, TILA provides three ways of remedying 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 "adjust 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).3 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.

         When TILA was originally enacted in 1968, it imposed no limit on statutory damages in class actions
and required that each successful plaintiff be awarded a minimum of $100 in damages. Consumer Credit

Protection Act of 1968, Title I, § 206(a), Pub.L. No. 90-321, 82 Stat. 146 (May 29, 1968). Congress amended



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).
     3
      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).
TILA's statutory damages provision in 1974 in order to "strike an appropriate balance between the advantages

of the class action as a vehicle of private enforcement and the need of creditors to avoid financial ruin."

Barber v. Kimbrell's, Inc., 577 F.2d 216, 223 (4th Cir.1978). Congress further capped defendants' liability

for statutory damages by providing 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. 168 (March 31, 1980). In the case of a class action, statutory

damages are now 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).4 Congress placed this ceiling on a defendant's statutory liability in any 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).

        While limiting statutory damages, Congress also amended TILA in 1974 to permit private litigants,

both as individuals and in class actions, to sue for actual damages sustained "as a result" of the TILA

violation. 15 U.S.C. § 1640(a)(1). While statutory and regulatory damages provide at least a partial remedy
for all material TILA violations, actual damages insure 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 take it that the statutory ceiling has already been reached,
and the 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. There is a conflict among various courts on this issue.

Most courts that have addressed the issue have held that 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. (N.D.Ill.1999); Brister v. All Star Chevrolet, Inc., 986 F.Supp. 1003, 1008

(E.D.La.1997); McCoy, 74 F.R.D. at 12-13. This Circuit is aligned with the minority of courts that have


    4
    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."
reached the opposite conclusion. Ransom v. S & S Food Center, Inc. of Florida, 700 F.2d 670 (11th

Cir.1983); see also Lopez v. Orlor, 176 F.R.D. 35 (D.Conn.1997); Sutliff v. County Savings & Loan Co.,

533 F.Supp. 1307 (N.D.Ohio 1982); In re Russell, 72 B.R. 855 (Bankr.E.D.Pa.1987).

        In Ransom, the 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 respect to the food

purchases, it also included a finance charge assessed whether the purchase was made with cash or by credit.

Id. at 671-72. The trial court found that the plaintiffs had suffered 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 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.
         Notwithstanding Ransom, the district courts in this Circuit have imposed a reliance requirement.

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

1117 (S.D.Ala.1997); Adiel v. Chase Fed. Sav. & Loan, Ass'n, 630 F.Supp. 131, 133 (S.D.Fla.1986), aff'd,

810 F.2d 1051 (11th Cir.1987). Several district courts in this Circuit have treated this Court's affirmance of

Adiel as calling into question the continued viability of Ransom. Barlow, 992 F.Supp. at 1309-10; Wiley,

950 F.Supp. at 1114-17. Beneficial likewise urges that, to the extent that Ransom supports the proposition

that a plaintiff need not show detrimental reliance in order to sustain a TILA claim for actual damages, it has

been overruled by Adiel. First, we note that a second panel of this Court cannot overrule a prior panel. See

Cohen v. Office Depot, Inc., 204 F.3d 1069, 1076 (11th Cir.2000); United States v. Hogan, 986 F.2d 1364,

1369 (11th Cir.1993). Second, we do not find that Adiel attempted to overrule or even distinguish Ransom.

        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, 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 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 Federal Savings & Loan Ass'n of East Rochester, 62

A.D.2d 1171, 1172, 404 N.Y.S.2d 201, 202 (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." Adiel, 810 F.2d at 1055. The opinion did not address the issue of reliance. Adiel 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.

        More relevantly, in Jones v. Bill Heard Chevrolet, Inc., 212 F.3d 1356 (11th Cir.2000), this Court

directly rejected a defendant's argument that a TILA claim for actual damages fails if the plaintiff cannot

demonstrate reliance on the defendant's misrepresentations. 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, the 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 (citing Charles v.

Krauss Co., Ltd., 572 F.2d 544, 546 (5th Cir.1978)).5 The opinion in Charles does not state whether the

plaintiff sought actual or statutory damages, but in stating that reliance is not a factor in TILA claims, Charles

cites to McGowan v. King, Inc., 569 F.2d 845, 848 (5th Cir.1978). McGowan noted that "[t]he basis of


    5
     In Bonner v. Prichard, 661 F.2d 1206, 1209 (11th Cir.1981) (en banc), the Eleventh Circuit adopted
as binding precedent all Fifth Circuit decisions handed down prior to the close of business on September
30, 1981.
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 848-49.

However, the McGowan court also concluded that once such a failure to disclose is shown, "the court must

award [the plaintiff] the statutory penalty." Id. at 849 (citing Grant v. Imperial Motors, 539 F.2d 506, 510-

511 (5th Cir.1976) (emphasis added)), and the Fifth Circuit awarded only statutory damages in that case. Id.

at 850.

          Beneficial argues that the Jones Court erred in relying on case law relating to claims for statutory

damages under TILA in finding that there is no requirement that a plaintiff demonstrate detrimental reliance

in order to be entitled to actual TILA damages. We agree with Beneficial, and with the other Courts of

Appeals that have addressed the issue, that the plain language of TILA's actual damages provision requires
a showing of detrimental reliance as part of any claim for actual TILA damages.6 However, we are bound
by the holding of the first panel of this Court to address an issue of law, unless and until that holding is

overruled en banc or by the Supreme Court. Hogan, 986 F.2d at 1369. As we recently noted,

          the prior panel precedent rule is not dependent upon a subsequent panel's appraisal of the initial
          decision's correctness. Nor is the operation of the rule dependent upon the skill of the attorneys or
          wisdom of the judges involved with the prior decision—upon what was argued or considered. Unless
          and until the holding of a prior decision is overruled by the Supreme Court or by the en banc court,
          that holding is the law of this Circuit regardless of what might have happened had other arguments
          been made to the panel that decided the issue first.

Cohen, 204 F.3d at 1076.

          In any case, while the Fifth Circuit precedents upon which Jones relies may not clearly apply to a

case involving TILA actual damages, Jones does. Under Jones, the law of this Circuit does not require that

a plaintiff asserting a claim for actual damages under TILA demonstrate reliance. This panel is convinced

that, to the extent that Jones, and possibly Ransom, so hold, they are wrongly decided, and this should be

rectified by the en banc Court. Until that occurs, however, we are bound to follow the law of this Circuit.

Accordingly, we find that the district court erred in holding that detrimental reliance is an element of a TILA
claim for actual damages.

2.        The RICO Claim
          In Count II of her complaint, Turner alleged that the crime underlying her RICO claim was a pattern


     6
     The legislative history behind the 1995 amendments to TILA lends further support to our reading of
the actual damages provision: "To recover actual damages, consumers must show that they suffered a
loss because they relied on an inaccurate or incomplete disclosure." H. Rep. No. 193, 104 Cong., 1st
Sess. (1995).
of mail and wire fraud in violation of 18 U.S.C. §§ 1341 & 1343. A plaintiff alleging mail or wire fraud as

the predicate act for a RICO violation must show not only that the mail or wire fraud statutes have been

violated but that he has "suffered injury as a result of the violation." Pelletier v. Zweifel, 921 F.2d 1465, 1499

(11th Cir.1991). The Pelletier Court noted that the Supreme Court requires that a civil RICO plaintiff must

show that he or she was injured by reason of the defendant's acts of deception. Id. (citing Sedima, S.P.R.L.

v. Imrex Co., Inc., 473 U.S. 479, 496, 105 S.Ct. 3275, 87 L.Ed.2d 346 (1985)). Moreover, as we stated in

Pelletier, this Circuit has held

         that a plaintiff has standing to sue under section 1964(c) only if his injury flowed directly from the
         commission of the predicate acts. This means that, when the alleged predicate act is mail or wire
         fraud, the plaintiff must have been a target of the scheme to defraud and must have relied to his
         detriment on misrepresentations made in furtherance of that scheme.
921 F.2d at 1499-1500 (internal citation omitted). This substantive requirement applies to class actions.

Andrews v. AT&T Co., 95 F.3d 1014, 1023-25 (11th Cir.1996). Accordingly, we conclude that the district

court did not err in finding that reliance is an element of a RICO claim and in denying class certification on
that basis.

3.       The State Fraud Claim
         In order to establish a claim for fraudulent suppression, Turner must show that Beneficial knowingly

suppressed a material fact that it had a duty to disclose and that, as a result of that suppression, Turner was

induced to act or to refrain from acting, suffering damage as a proximate result. Ex parte Household Retail

Serv., Inc., 744 So.2d 871, 879 (Ala.1999). See also, McGriff v. Minnesota Mutual Life Ins. Co., 127 F.3d

1410, 1415 (11th Cir.1997) ("Under Alabama law, to succeed on a claim of fraudulent suppression, [plaintiff]
must show that [defendant] failed to disclose a material fact, thereby creating a false impression on which

[plaintiff] relied, believing it to be true, which proximately caused damages.").
         In a recent case involving a fraud by suppression claim, the Alabama Supreme Court stated that the

duty to disclose, "applicable in the case alleging suppression, is analogous to the element of reliance

applicable in the case alleging a misrepresentation." Ex parte Government Employees Ins. Co., 729 So.2d

299, 305 (Ala.1999). Turner argues that this statement means that she can establish her fraud by suppression

claim without showing reliance, so long as she can establish that Beneficial breached its duty to disclose.

However, the Alabama Supreme Court has since clarified that a plaintiff's "justifiable reliance" is an essential

element of a fraudulent suppression claim. Household Retail Serv., 744 So.2d at 879. As Turner cannot

demonstrate that she relied on Beneficial's faulty disclosure statements, we conclude that the district court
correctly found that Turner cannot satisfy Rule 23's typicality and adequacy requirements.

                                               CONCLUSION
        For the foregoing reasons, the district court's denial of class certification on Turner's RICO and fraud

by suppression claims is AFFIRMED. The order of the district court, denying class certification on Turner's

TILA actual damages claim is VACATED, and the case is REMANDED for further consideration in light

of this opinion.
        AFFIRMED IN PART, VACATED AND REMANDED IN PART.
