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 аnd 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.,
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 bеtween 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 Excеl 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. 2
Although Turner concedes that she did not read Beneficial’s disclosure statements at the time of receipt and therefore did not rеly 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
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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 rеview class certification rulings for abuse of discretion.
Armstrong v. Martin Marietta Corp.,
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.,
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 hable to such рerson 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).
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 suсh 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 tо 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 1980, Congress further amended TILA, this time capping defendants’ liability for
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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 dollаr recoveries against defendants for minor or technical violations.”
McCoy v. Salem Mortgage Co.,
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.,
In
Ransom,
this Court affirmed the award of TILA actual damages to members of the рlaintiff 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 servicеs with respect to the food purchases, it also included a finance charge assessed whether the purchase was made with cash or by credit.
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 *1027 cash amount that would offset their outstanding оbligations 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 hаve imposed a detrimental reliance requirement for TILA actual damages claims.
See, e.g., Perry v. Household Retail Servs., Inc.,
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. ‘
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,
However, in the Eleventh Circuit case most clearly relеvant 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 defendant’s misrepresentations.
Jones,
We now reconsider whether detrimental reliance is required for a TILA clаim 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 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 aсtual 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.
Notes
. The panel's disposition of all othеr issues is unaffected by this opinion.
. 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.
. 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).
. 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).
. 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 creditоr 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).
. The
Jones
Court relied on
Charles v. Krauss Co., Ltd.,