TRIAL LAWYERS FOR PUBLIC JUSTICE 
 

Consumer Rights 
 

Chisolm v. TranSouth Financial Corp. 

(U.S. District Court, E.D. Virginia) 

This state-wide class action on behalf of victims of a used car churning scheme alleges violations of the federal RICO statute, Virginia statutes, and common law fraud and conspiracy. Two of the three original defendants settled. The claims against the third defendant, TranSouth, had been dismissed by the district court twice, but were reinstated by the U.S. Court of Appeals for the Fourth Circuit in September 1996 and October 1998, respectively. The class has been certified, and discovery is ongoing. 

======================================== 

Press Release 
 
 

U.S. District Court Certifies Class Action in Federal Racketeering Suit 

Victims Can Pursue Claims Against TranSouth Financial Corporation for Used Car Loan Scam 

For Immediate Release: March 18, 1999 
For More Information Contact: Theresa Henige, TLPJ, 202-797-8600 
 

The U.S. District Court for the Eastern District of Virginia yesterday certified for class action treatment a federal racketeering lawsuit filed by Trial Lawyers for Public Justice (TLPJ) against TranSouth Financial Corporation. The suit charges TranSouth with engaging in a scheme that targeted unsuspecting consumers hoping to buy used cars on credit. U.S. District Court Judge Raymond Jackson's ruling now makes it possible for all 2,500 consumers cheated by TranSouth to pursue their racketeering claims against the company. 

"The District Court's decision is an important step in holding TranSouth accountable for its outrageous conduct," said TLPJ lead counsel Kieron Quinn of Baltimore, Maryland. "TranSouth wanted to force its victims to proceed on an individual basis, which would have probably prevented most of them from ever obtaining justice. With the court's ruling, however, all the class memberscan now join together to attack this fraudulent scheme under the federal racketeering statute, which permits victims to recover triple damages. This will help deter other companies from defrauding consumers in the first place." 

The case was originally filed against TranSouth and Charlie Falk's Auto Wholesaler, Inc., charging them with engaging in a used car loan scam. Charlie Falk's is the Tidewater, Virginia area's largest used car dealership. TranSouth and Charlie Falk's targeted low income consumers for this "revolving repossession" scheme, where Charlie Falk's sold used cars to customers at inflated prices and charged them interest rates as high as 36 percent. Documents discovered in the case show that TranSouth wanted consumers to default on their loans, and more than half of their customers did default on their loans in some years. 

If a consumer defaults on a loan, their car is repossessed, and then the car dealer may sell the car to someone else. If the car is sold for more money than the consumer had still owed on the car loan, the lender is required by law to pay back to the consumer any surplus monies made on the sale. Instead of following the law, however, TranSouth and Charlie Falk's cheated the consumers out of their equity in the cars. 

After initiating repossession, TranSouth would send a misleading "notice of private sale" to the customer. Instead of holding the promised legal sale, however, TranSouth merely transferred the car and note back to Charlie Falk's in a phony "sale," and doctored the books to list an artificially low price. Not only was no surplus ever paid to the consumer, but the phony "price" was used as a basis for a deficiency action against the customer by the dealership's own collection agency, JB Collection. Charlie Falk's would later resell the cars to new customers at prices that far exceeded the artificially low "repurchase" amount. In some cases, the same car was sold (or "churned") to several consumers. 

The class action complaint charged each of the defendants with violations of the federal Racketeer Influenced and Corrupt Organizations (RICO) statute, Virginia statutes, and common law fraud and conspiracy. But, in April 1994, the district court dismissed the claims against TranSouth. The court of appeals reversed the district court and reinstated the case on September 10, 1996. But the district court dismissed the case again on July 1, 1997. Once again, on October 5, 1998, the court of appeals reversed, saying "the complaint clearly alleges sufficient facts." 

While TranSouth continues to deny that the scheme violates the racketeering statute, the other defendants long ago reached a generous settlement with the plaintiffs. On October 14, 1994, TLPJ reached a settlement with Charlie Falk's and JB Collection. Under the terms of the settlement, approved by the court on January 23, 1995, both of those defendants agreed to forgive or forego action on over $10.5 million in defaulted loans, pay $400,000 to the consumer class, and establish and follow procedures more favorable to consumers in any future cases of default. 

TranSouth had opposed class certification in the case, arguing that no RICO suit could ever be certified as a class action because each plaintiff would have to separately prove that they relied upon TranSouth's misleading statements. The district court found that reliance was "easily ascertainable," however. In the course of its 24-page detailed opinion, the district court also held that "it would be both inefficient and difficult for the 2,500 putative class members with individually small claims to sue a large corporation like TranSouth in the absence of a class action." 

"This case is now more than five years old, but the consumers are only now getting close to obtaining justice from TranSouth," said TLPJ co-counsel Steve Swain of Clark & Stant in Norfolk. "While TranSouth is still fighting to avoid responding to most of our discovery requests in the case, this case is finally getting on track and moving toward trial." 

In addition to Quinn and Swain, TLPJ's legal team in this case includes TLPJ Staff Attorney F. Paul Bland, Jr., who argued the motion for class certification before the district court. Peter Herrrick of Stafford & Herrick in Chesapeake, Virginia; David Rubenstein of the Virginia Poverty Law Center; and G. Robert Blakey, a Professor of Law at Notre Dame are serving as co-counsel in the case. 

======================================== 

U.S. Appeals Court Again Reinstates Federal Racketeering Suit Against 
           TranSouth Financial Corporation For Used Car Loan Scam 

                  Racketeering Statute Can Be Used to Attack Consumer Fraud 
 

For Immediate Release: October 6, 1998 
For More Information Contact: Theresa Henige, TLPJ, 202-797-8600 
 

For the second time in three years, the U.S. Court of Appeals for the Fourth Circuit has reinstated a federal racketeering lawsuit filed by Trial Lawyers for Public Justice (TLPJ) against TranSouth Financial Corporation. The suit charges TranSouth with engaging in a scheme that targeted unsuspecting consumers hoping to buy used cars on credit. This is the second time that the Court of Appeals has reinstated the case after the U.S. District Court for the Eastern District of Virginia in Norfolk erroneously dismissed it. With yesterday's ruling, the victims of the used car loan scam will be able to pursue their racketeering claims against TranSouth. 

"The Fourth Circuit's decision is an important victory for TranSouth's victims and all consumers," said TLPJ Foundation President Joseph Power Jr., of Chicago's Power, Rogers & Smith. "Consumers will now be able to attack fraudulent schemes under the federal racketeering statute, which permits victims to recover triple damages. This will help to deter companies from defrauding consumers in the first place." 

The state-wide consumer class action was originally filed against TranSouth and Charlie Falk's Auto Wholesaler, Inc., charging them with engaging in a used car loan scam. Charlie Falk's is the Tidewater, Virginia area's largest used car dealership. TranSouth and Charlie Falk's targeted low income consumers for this "revolving repossession" scheme, where Charlie Falk's sold used cars to customers at inflated prices and charged them interest rates as high as 36 percent. Documents discovered in the case show that TranSouth wanted consumers to default on their loans, and more than half of their customers did default on their loans in some years. 

If a consumer defaults on a loan, their car is repossessed, and then the car dealer may sell the car to someone else. If the car is sold for more money than the consumer had still owed on the car loan, the lender is required by law to pay back to the consumer any surplus monies made on the sale. Instead of following the law, however, TranSouth and Charlie Falk's cheated the consumers out of their equity in the cars. 

After initiating repossession, TranSouth would send a misleading "notice of private sale" to the customer. Instead of holding the promised legal sale, however, TranSouth merely transferred the car and note back to Charlie Falk's in a phony "sale," and doctored the books to list an artificially low price. Not only was no surplus ever paid to the consumer, but the phony "price" was used as a basis for a deficiency action against the customer by the dealership's own collection agency, JB Collection. Charlie Falk's would later resell the cars to new customers at prices that far exceeded the artificially low "repurchase" amount. In some cases, the same car was sold (or "churned") to several consumers. 

The class action complaint charged each of the defendants with violations of the federal Racketeer Influenced and Corrupt Organizations (RICO) statute, Virginia statutes, and common law fraud and conspiracy. But, in April 1994, the district court dismissed the claims against TranSouth, holding that the plaintiffs had failed to allege that they had relied to their detriment on the notices of private sale that TranSouth mailed to them. The Court of Appeals reversed the district court and reinstated the case on September 10, 1996. 

But the district court dismissed the case again on July 1, 1997, holding that the plaintiffs had not pled their case with sufficient specificity. In an opinion dated October 5, 1998, the Court of Appeals once again reversed, saying "the complaint clearly alleges sufficient facts." 

While TranSouth continues to deny that the scheme violates the racketeering statute, the other defendants long ago reached a generous settlement with the plaintiffs. On October 14, 1994, TLPJ reached a settlement with Charlie Falk's and JB Collection. Under the terms of the settlement, approved by the court on January 23, 1995, both of those defendants agreed to forgive or forego action on over $10.5 million in defaulted loans, pay $400,000 to the consumer class, and establish and follow procedures more favorable to consumers in any future cases of default. 

"This case is more than four years old, but the consumers are still far from obtaining justice from TranSouth," said TLPJ lead counsel Kieron Quinn of Baltimore, Maryland. "In fact, TranSouth still hasn't even responded to most of our discovery requests in the case. We expect that this latest decision will get this case on track and moving toward trial. Further, we expect to try this case on a unified theory of class damages. If that is not permitted, we may just file up to 2,500 individual cases." 

TLPJ co-counsel G. Robert Blakey, a Professor of Law at Notre Dame who is a renowned expert on RICO, argued the latest appeal before the Fourth Circuit Court of Appeals in May. 

Peter Herrrick of Stafford & Herrick in Chesapeake, Virginia; David Rubenstein of the Virginia Poverty Law Center; Steve Swain of Clark & Stant in Norfolk; and TLPJ's F. Paul Bland, Jr. are serving as co-counsel in the case. 

======================================== 

http://www.tlpj.org/tlpjf/briefs/51543_1.htm 

BRIEF US 5TH CIRCUIT 
 
 
 _____
                                                 
                                             IN THE
                                                 
                                     United States Court of Appeals
                                                 
                                    FOR THE FOURTH CIRCUIT
                                                 
                                       RECORD NO. 00-1944
                                              _____
                                                 
                            TRANSOUTH FINANCIAL CORPORATION, et al.,
                                                 
                                            Appellant,
                                                 
                                               v.
                                                 
                                         NORA CHISOLM,
                                                 
                                             Appellee
                                              _____
                                                 
                              OPPOSITION TO TRANSOUTH’S PETITION
                                    FOR WRIT OF MANDAMUS
                                                 
                                         Filed August 7, 2000
                                             ______
                                                 
F. Paul Bland, Jr.
Trial Lawyers for Public Justice
1717 Massachusetts Avenue, N.W., Suite 800
Washington, D.C.  20036
(202) 797-8600
 
Kieron F. Quinn                                               
Richard S. Gordon
Quinn, Gordon & Wolf
40 West Chesapeake Ave., No. 408    
Baltimore, Maryland  21204                 
(410) 825?2300           

                                       TABLE OF CONTENTS
                                                                                                                                                  PAGE
 
TABLE OF AUTHORITIES............................................................................................................ iii
 
COUNTER STATEMENT OF THE ISSUES PRESENTED............................................................ 1
 
COUNTER STATEMENT OF STANDARD OF REVIEW............................................................. 1
 
SUMMARY OF ARGUMENT........................................................................................................ 2
 
STATEMENT OF FACTS............................................................................................................... 8
 
I.          STATEMENT OF FACTS................................................................................................... 8
 
II.         STATEMENT OF PROCEDURAL FACTS...................................................................... 17
 
ARGUMENT................................................................................................................................. 25
 
1.                 THE DRASTIC AND EXTRAORDINARY REMEDY 
      OF MANDAMUS IS NOT AVAILABLE IN THESE CIRCUMSTANCES..................... 25
 
II.         THE DISTRICT COURT’S DECISION TO CERTIFY 
      THE CLASS IS PLAINLY CORRECT.............................................................................. 34
 
      A.        DESPITE TRANSOUTH’S STATEMENTS TO THE 
            CONTRARY, THE DISTRICT COURT HAS NOT
            “CONCLUSIVELY” RESOLVED THE ISSUE OF 
            JUSTIFIABLE RELIANCE, BUT HAS INSTEAD 
            LEFT THE ISSUE TO BE TRIED TO THE JURY................................................. 34
 
      B.         TRANSOUTH’S POSITION THAT THE SEVENTH 
            AMENDMENT ALWAYS BARS ANY CLASS ACTION 
            IN ANY RICO CASE WOULD REQUIRE THIS COURT 
            TO DISAPPROVE OF THE HOLDINGS IN MORE 
            THAN A SCORE OF REPORTED CASES........................................................... 36
       
      C.        THE U.S. SUPREME COURT HAS REJECTED TRANSOUTH’S 
            POSITION THAT CLASS ACTIONS ARE IMPERMISSIBLE IN ALL 
            COMMON LAW FRAUD CASES    38
 
      D.        TRANSOUTH’S CONSTITUTIONAL ARGUMENT 
            IS ROOTED IN ITS CONTINUING REFUSAL TO 
            ACCEPT THIS COURT’S TWO EARLIER RULINGS 
            IN THIS CASE ON RELIANCE........................................................................... 40
 
      E.         THIS COURT SHOULD PLACE NO WEIGHT UPON TRANSOUTH’S 
            ATTACK ON THE TESTIMONY OF CURTIS GOODWIN            41
 
III.       THERE IS NO CONFLICT BETWEEN SUBCLASSES HERE........................................ 46
 
            1.                 THERE IS NO CONFLICT BETWEEN SUBCLASSES 
            A AND B, AS THE U.C.C. DOES NOT PERMIT 
            TRANSOUTH TO USE A PHONY BID PROCESS TO 
            EITHER STEAL SURPLUSES OWED OR TO PURSUE 
            CLASS MEMBERS FOR FRAUDULENT DEFICIENCY JUDGMENTS............ 46
 

       B.        THERE IS NO CONFLICT BETWEEN SUBCLASSES 

            A AND B ON THE ONE HAND, AND SUBCLASS C 
            ON THE OTHER HAND, BECAUSE THE U.C.C. 
            DOES NOT PERMIT A SECURED PARTY TO SEND 
            OUT A FRAUDULENT NOTICE MERELY BECAUSE 
            IT WILL TRANSFER COLLATERAL TO ANOTHER 
            PARTY (THAT WILL THEN BECOME THE SECURED PARTY) 
            THAT WILL ULTIMATELY SELL THE CAR...................................................... 50
 
CONCLUSION............................................................................................................................. 55

                                     TABLE OF AUTHORITIES
 
CASES
 
Amchem Products, Inc. v. Windsor, 521 U.S. 591 (1997) ............................................ 6, 30, 38, 39
 
Arenson v. Whitehall Convalescent & Nursing Home, Inc., 164 F.R.D. 659 
      (N.D.Ill. 1996) ................................................................................................................... 37
 
In re Beard, 811 F.2d 818 (4th Cir. 1987), citing In re Ralston Purina Co., 
      726 F.2d 1002 (4th Cir. 1984) ........................................................................................... 26
 
Broussard v. Meinecke Discount Muffler Shops, Inc., 155 F.3d 331 
      (4th Cir. 1988) ..................................................................................................................... 2
 
In re Catawba Indian Tribe, 973 F.2d 1133 (4th Cir. 1992) ......................................................... 26
 
Central Wesleyan College v. W.R. Grace & Co., 6 F.3d 177 (4th Cir. 1993) ................................. 1
 
Chisolm v. TranSouth Fin. Corp., 95 F.3d 331 (4th Cir. 1996) ............................................. passim
 
Chisolm v. TranSouth Fin. Corp., 164 F.3d 623 (1998)
      (unpublished decision) ................................................................................................... 10, 20
 
Chisolm v. TranSouth Fin. Corp., 184 F.R.D. 556 (E.D. Va. 1999) ...................................... passim
 
Cook v. Hayden, 183 Va. 203 (1944) ........................................................................................... 35
 
Cope v. Metropolitan Life Ins. Co., 696 N.E.2d 1001 (Ohio 1998) .............................................. 39
 
Dept. of Economic Dev. v. Arthur Andersen & Co., 683 F. Supp. 1463 
      (S.D.N.Y. 1988) .................................................................................................................. 2
 
Dornberger v. Metropolitan Life Ins. Co., 182 F.R.D. 72 
      (S.D.N.Y. 1998) ................................................................................................................ 37
 
 

Duhaime v. John Hancock Mut. Life Ins. Co., 177 F.R.D. 54 
      (D. Mass. 1997) ................................................................................................................. 39
 
Falk v. TranSouth, 296 CV 828 (E.D. Va) ................................................................................... 23
 
Fallert Tool & Engg. Co. v. McClain, 579 S.W.2d 751 
      (Mo. Ct. App. 1979) .......................................................................................................... 49
 
Fogie v. Rent?A?Center, 867 F. Supp. 1398 (D. Minn. 1993) ....................................................... 37
 
In re First Fed'l Sav. & Loan Ass'n of Durham, 
      860 F.2d 135 (4th Cir. 1988) ......................................................................................... 8, 26
 
In re Ford Motor Co., 27 U.C.C. Rep. Serv. 1118 (FTC 1979) 
      rev'd on other grounds, Ford Motor Co. v. FTC, 
      673 F.2d 1008 (9th Cir. 1981) ........................................................................................... 54
 
Garner v. Healy, 184 F.R.D. 598 (N.D. Ill. 1999) ......................................................................... 37
 
Gary v. Sheahan, 188 F.3d 891 (7th Cir. 1999) rehrng denied,
      1999 U.S. App. LEXIS 25192 (7th Cir. October 7, 1999).................................................. 28
 
Heastie v. Community Bank of Greater Peoria, 125 F.R.D. 669 
      (N.D. Ill. 1989) .................................................................................................................. 37
 
Hoban v. USLife Credit Life Ins. Co., 163 F.R.D. 509 
      (N.D. Ill. 1995) .................................................................................................................. 37
 
Hoxworth v. Blinder, Robinson & Co., , 980 F.2d 912 
      (3rd Cir. 1992) ................................................................................................................... 36
 
Iron Workers Local Union No. 17 Ins. Fund v. Philip Morris, Inc., 
      182 F.R.D. 523 (N.D. Ohio 1998) ............................................................................... 12, 37
 
Johnson v. Rohr?Ville Motors, Inc., 189 F.R.D. 363 (N.D. Ill. 1999) ............................................ 37
 
Joncek v. Local 714 Int'l Bhd. of Teamsters Health and Welfare Fund, 

      1999 U.S. Dist. LEXIS 14853 (N.D. Ill. Sept. 3, 1999) ..................................................... 37
 
LILCO v. Transamerica Delaval, Inc., 648 F. Supp. 988 (S.D.N.Y. 1986) .................................. 29
 
Longden v. Sunderman, 123 F.R.D. 547 (N.D. Tex. 1988) .......................................................... 37
 
Mace v. Van Ru Credit Corp., 109 F.3d 338 (1997) .................................................................... 39
 
Martin v. Williams, 194 Va. 437 (1952) ....................................................................................... 35
 
Matlack, Inc. v. Hupp Corp., 57 F.R.D. 151 (E.D. Pa. 1972) ....................................................... 29
 
McDonnell Douglas Fin. Corp. v. Pennsylvania Power & Light Co., 
      849 F.2d 761 (2nd Cir. 1988) ............................................................................................ 28
 
McMahon Books, Inc. v.  Willow Grove Assoc., 108 F.R.D. 32 
      (E.D. Pa. 1985) .................................................................................................................. 37
 
Morse v. Bankers Life & Cas. Co., 2000 U.S. Dist. LEXIS 2211 
      (N.D. Ill. Feb. 23, 2000) .................................................................................................... 37
 
In re Prudential Ins. Co. Am. Sales Practice Litig. Agent Actions, 
      148 F.3d 283 (3d Cir. 1998), cert. denied, 
      Krell v. Prudential Ins. Co. of Am., 525 U.S. 1114 (1999) .............................................. 39
 
In re Rhone?Poulenc Rover, Inc., 51 F.3d 1293 (7th Cir. 1995) ........................................ 29, 30, 31
 
Rhoten v. United Virginia Bank, 269 S.E.2d 781 (Va. 1980) ................................................. 51, 52
 
Rodriguez v. McKinney, 156 F.R.D. 112 (E.D. Pa. 1994) ............................................................. 37
 
Scholes v. Tomlinson, 145 F.R.D. 485 (N.D. Ill. 1992) ................................................................. 37
 
Smith v. MCI Telecomm. Corp., 124 F.R.D. 665 (D. Kan. 1989) ................................................. 37
 
Somerville v. Major Exploration, Inc., 102 F.R.D. 500 
      (S.D.N.Y. 1984) ................................................................................................................ 38

 
Stewart v. Associates Consumer Discount Co., 183 F.R.D. 189 
      (E.D. Pa. 1998) .................................................................................................................. 37
 
In re Synthroid Mktg. Litig., 188 F.R.D. 287 (N.D. Ill. 1999) ....................................................... 37
 
Trautz v. Weisman, 846 F. Supp. 1160 (S.D.N.Y. 1994) .............................................................. 37
 
U.S. v. 9,947.71 Acres of Land, 220 F. Supp. 328 (D. Nev. 1963) ............................................... 29
 
In re Virginia Beach, 42 F.3d 881 (4th Cir. 1994), 
      quoting Kerr v. United States District Court, 426 U.S. 394 (1976) ................................. 26
 
Walco Inv. v. Thenen, 168 F.R.D. 315 (S.D. Fla. 1996) ............................................................... 37
 
Waste Management Holdings, Inc. v. Mowbray, 208 F.3d 288 
      (1st Cir. 2000) ................................................................................................................... 28
 
Wells v. McDonough, 1998 U.S. Dist. LEXIS 4441 
      (N.D. Ill. Mar. 23, 1998) .................................................................................................... 39
 
STATUTES AND RULES
 
U.S. Constitution, Seventh Amendment..................................................................................... passim
 
The Racketeer Influenced and Corrupt Organizations Act ("RICO"), 
      18 U.S.C. §§ 1962(a) and 1962(d) ............................................................................. passim
 
Fed. R. Civ. P. 23(b)(3) ................................................................................................................... 6
 
Fed. R. Civ. P. 23(f) ................................................................................................................ passim
 
Va. Code Ann. § 8.9?504........................................................................................................ passim

                               COUNTER STATEMENT OF THE ISSUES PRESENTED
 
1.                 HAS TRANSOUTH DEMONSTRATED THAT THE DISTRICT COURT COMMITTED “A JUDICIAL
      USURPATION OF POWER,” AS THIS COURT HAS REQUIRED AS A PREREQUISITE TO THE GRANT OF A
      WRIT OF MANDAMUS IN THE CLASS CERTIFICATION CONTEXT?  (NO.)
 
II.         WHETHER THE SEVENTH AMENDMENT FORBIDS CLASS ACTION TRIALS IN ALL RICO AND
      COMMON LAW FRAUD CASES?  (NO.)
 
III.       WHETHER A DISTRICT COURT RULING THAT A JURY MAY (OR MAY NOT) INFER JUSTIFIABLE
      RELIANCE FROM CIRCUMSTANTIAL EVIDENCE TO BE PRESENTED AT TRIAL IS A “CONCLUSIVE
      DETERMINATION” OF THE ISSUE THAT VIOLATES THE SEVENTH AMENDMENT?  (NO.)
 
IV.       WHERE A CLASS OF PLAINTIFFS ALLEGES THAT A BANK AND A USED CAR DEALER ENGAGED IN
      BOGUS “SALES” OF REPOSSESSED CARS AND THEN LATER ACTUALLY SELLING THE CARS AT A
      HIGHER PRICE, IS THERE A CONFLICT BETWEEN A SUBCLASS WHICH ALLEGES THAT THE
      CONSPIRATORS STOLE THE SURPLUS THAT SHOULD HAVE BEEN PAID TO THEM FOR WHOM THE
      ACTUAL SALE PRICE EXCEEDED THEIR DEBT, AND THE OTHER SUBCLASS WHICH ALLEGES THAT
      THE CONSPIRATORS PURSUE FRAUDULENT DEFICIENCY ACTIONS AGAINST THEM?  (NO.)
 
                                COUNTER STATEMENT OF STANDARD OF REVIEW

      It is well established law in this Circuit that class certification decisions are reviewed for abuse of discretion.  See Central
Wesleyan College v. W.R. Grace & Co., 6 F.3d 177, 185 (4th Cir. 1993) (“District courts have ‘wide discretion in deciding
whether or not to certify a proposed class,’ and their decisions ‘may be reversed only for abuse of discretion.’”) (“Because the
district court specifically considered the manageability problems this suit could create, we will reverse only if we are convinced
that the court was ‘clearly wrong’ in conditionally certifying the class.”) (citations omitted).[1]  TranSouth’s statement that a de
novo standard applies is plainly incorrect.  Nothing in Broussard v. Meinecke Discount Muffler Shops, Inc., 155 F.3d 331 (4th
Cir. 1988), to which TranSouth cites, supports TranSouth’s assertion.  Furthermore, as this Brief will establish in Part I of the
argument, a writ of mandamus will only issue in the class certification context if the district court commits “a judicial usurpation of
power,” a far higher standard than TranSouth’s proposed de novo review.  
                                    SUMMARY OF ARGUMENT

      TranSouth Financial Corp. (“TranSouth”) petitions this Court to grant the extraordinary and drastic remedy of mandamus,
in order to hear an interlocutory appeal of the District Court’s denial of a motion to reconsider TranSouth’s motion to decertify the
class in this case.[2]  TranSouth’s petition is without merit and should be denied for the following several reasons.  Not the least of
those reasons is the fact that much of TranSouth’s rationale is based on an attack on Curtis Goodwin as a class representative
which is entirely moot as a consequence of the District Court’s ruling on Mr. Goodwin.  

      First, this Court has held that a writ of mandamus is only available in extreme circumstances in the class certification
context, and has placed a very heavy burden on those seeking a writ of mandamus.  This burden is particularly heavy where, as
here, this Court has already recognized that the respondent has a very strong case on the merits, the district court’s decision is
based upon a review of a great deal of evidence, and where the delay of an interlocutory appeal would prejudice one party.  After
all, this case is more than seven years old and the petition for writ of mandamus comes within six weeks of the formerly scheduled
beginning of trial.[3]  This is the fifth time that this case has come before this Court in the last seven years (including TranSouth’s
second Rule 23 petition that remains pending), and this Court should not permit this attempted appeal to proceed.  In the oral
argument on the first appeal, the late Judge Hall of this Court described TranSouth’s scheme as “pernicious,” and the Court’s
eventual opinion in that appeal held that it was “readily apparent” that if the plaintiffs’ allegations were true (as this brief will
establish they have since been shown to be), TranSouth should be held “responsible for its actions.”  Chisolm v. TranSouth Fin.
Corp., 95 F.3d 331, 338 (4th Cir. 1996) (hereafter termed “Chisolm I”).  An extra interlocutory appeal at this stage would not
serve that end.[4]

      Furthermore, TranSouth’s petition should not be granted because the District Court’s decision is proper and well within its
discretion.  TranSouth claims that the District Court has violated its Seventh Amendment rights by “determin[ing] as a matter of
law” the question of reliance against it for all class members.  E.g., Petition at 1.  In making this argument, TranSouth completely
mischaracterizes the District Court’s rulings.  The District Court has not resolved the justifiable reliance issue at all, much less as a
matter of law, but has merely held that the jury may hear and draw conclusions from circumstantial evidence on the issue in one
phase of the trial, with the understanding that those conclusions may be challenged by rebuttal evidence at a later phase.   The fact
is that the District Court has performed a Herculean task of protecting TranSouth’s opportunity to contest the reliance issue in this
complex and intricate trial, and TranSouth’s description of the Order outlining this plan is a distorted and unfair cartoon image of
the Order.
      Further, TranSouth’s argument amounts to the following: a plaintiff bringing RICO claims and consumer fraud claims must
show reliance, reliance may only be established through individual trials under the Seventh Amendment, and thus any class action
trial in any RICO or consumer fraud case violates the Seventh Amendment.  This sweeping argument would require this Court to
disapprove of more than a score of reported cases where federal courts have certified class actions in RICO cases.  The District
Court found here, as dozens of courts have found in similar cases, that class members would have no realistic remedy if they were
forced to proceed on an individual basis.  TranSouth’s proposed rule would ensure that most of the victims of even the most
egregious frauds would be denied any effective remedy.  

      TranSouth’s proposed Seventh Amendment rule is also plainly wrong as applied to consumer fraud claims.  Most recently,
the United States Supreme Court in Amchem Products, Inc. v. Windsor, 521 U.S. 591, 624 (1997), declared that the
predominance of common issues requirement under Rule 23(b)(3) “is a test readily met in certain cases alleging consumer or
securities fraud. . . .”  TranSouth thus asks this Court to rule that no case involving reliance may ever be certified, where the
Supreme Court has held that such cases are “readily” certifiable.  
      TranSouth’s sweeping Seventh Amendment argument also doggedly relies upon a definition of reliance – that only active
steps taken by a party can constitute reliance – that this Court has rejected twice previously in this case.  Faced with TranSouth’s
same argument in 1995 and then again in 1997, this Court has repeatedly held that to prove reliance plaintiffs need only prove that
they relied “on the apparent legitimacy and legality of the operation,” Chisolm I, 95 F.3d at 339.[5]  

      Finally, TranSouth claims that a conflict exists between the subclasses in this case. TranSouth’s motion stems from an
argument about the requirements of the U.C.C. that is wildly in error.  The central allegations of this case (now proven by the
sworn testimony of numerous employees of the defendants and the plain language of defendants’ own documents) are that instead
of properly selling their repossessed cars in a public auction or other legitimate method, TranSouth and Charlie Falks Auto
Wholesalers (“Falk”, originally a codefendant that has since settled by forgiving more than $10 million in debts and paying out
hundreds of thousands of dollars in cash) had a secret deal whereby phony “bids” were made to create a bogus below-market
“sale price” for the cars.  TranSouth and Falk then used the phony “bid” prices to cheat many class members by, inter alia,  (a)
not paying them the surplus funds generated when the cars were later sold for more than the class members ever actually owed;
and/or (b) recovering fraudulent deficiency payments from the class members.

      Plaintiffs contend that both results are illegal under the U.C.C.  It is illegal to use phony bids to cheat consumers out of
their surplus, and it is also illegal to use phony bids as a basis to collect fraudulent deficiency judgments.  TranSouth, however,
claims that the U.C.C. cannot prohibit both types of cheating.  According to TranSouth, it must be permissible under the U.C.C.
to either cheat consumers through phony deficiency judgments or refuse to pay legally owed surpluses.   This argument is plainly
wrong, and does not begin to justify the granting of an extraordinary and drastic remedy that would permit an interlocutory appeal
and lead to further delay in this seven year old case two months before trial.
                                      STATEMENT OF FACTS
      This case was brought under the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. §§ 1962(a)
and 1962(d), against a used car dealer (Falk), a collection agency (JB Collections, Inc., termed "JB"), and a finance company
(TranSouth).  The action arose out of a "revolving repossession" or "churning" scheme to defraud that netted the defendants
millions of dollars of illegal profits. 
I.          STATEMENT OF FACTS.
      This case involves an ten step scheme carried on by TranSouth, operating in concert with Falk:
      First, used cars were sold to customers by Falk.  Falk also arranged financing with TranSouth.  Interest rates were set as
high as 36%. 

      Second, the loans were “assigned” by Falk to TranSouth.  However, under the terms of a repurchase agreement, upon
default by a customer, Falk was required to buy back every loan at full value.  TranSouth’s documents establish that it enjoyed a
high profit from its business with Falk and experienced no risk, despite the many repossessions.[6] 

      Third, after default by a customer, TranSouth initiated repossession of the car.  A substantial number of customers – as
many as 50% in 1993 – did default.  TranSouth’s documents establish that it knew that a high percentage of consumers would
default, that it wanted Falk to have more repossessions, E.g., Letter from Dennis Kraft to Charles Falk, Sr., November 19, 1992,
Attachment at 8-10.  TranSouth was intimately familiar with the role and the importance of repossessions in CFAW’s business. 
See Memo from B.D. Sessoms to J.J. Overby, December 11, 1989, Attachment at 12 (“[CFAW] has abnormal repos due to the
poor quality of the paper; however, he repurchases the repos and paid us over $140,000 in repos in November alone. . . .  He has
a quality operation and reconditions and resells the repos. Unlike most dealers, he understands repos and manages them rather
than them managing him.”); Memo from Phil Hutchinson to J.J. Overby, November 22, 1989, Attachment at 13 (“I feel Charlie
[Falk, Sr.] has a perceived idea of how many dollars he is going to pay out towards repossessions monthly based on sales, etc.”);
Memo from Craft to Credit Committee, April 11, 1990, Attachment at 1.  

      Fourth, TranSouth then sent false and misleading “notices of private sale” to its customers.[7]  The notices fraudulently
suggest that a genuine legal “sale” was to take place on the date identified.[8]  In addition, the notices did not provide any
information that would suggest to any of the class members that anything was wrong or improper about the supposed sales, nor do
the notices contain any information from which a class member could deduce that TranSouth's overall operation was in any way
illegitimate.  Because TranSouth was contractually bound to transfer the cars back to Falk, it was a violation of law for TranSouth
to send the required notices.  Falk should have sent these notices, but did not.  Instead, it was TranSouth that sent the notices and
then effected the illegal “sale” back to Falk.  TranSouth’s documents show that TranSouth’s reason for issuing these “notices of
private sale” was that doing so was a “precondition to reassignment of contracts to Falk.”  See Memo from Armstrong to
McKinney, January 22, 1992, Attachment at 14.  
      Fifth, TranSouth and Falk would then engage in a phony bid process.  The crucial documents best setting this out are the
notorious “20th of the Month Reports.”   The number of Falk repossessions was enormous and some standardized procedure had
to be constructed.   Therefore, each month TranSouth would send to Falk a list of each of the cars that had been repossessed
during the prior month on a form known as a “20th of the Month Report.”  An illustrative 20th of the Month Report is included in
the Attachment at 16.  That list, which had to reach Falk by the 20th of the month in which payment was expected (hence the
name), contained the following columns:  Name, Vehicle, Lot # (identifying to which of Falk’s used car lots the repossessed car
had been taken to), ID # (representing the last four digits of the VIN), Repo-Expenses, Net Payoff (the balance owed on the
account minus an accrued interest), Total Payoff (the net payoff plus repossession expenses), “BID”, Stock #, and Notes (used to
note whether force placed insurance was added to the customer’s account).

      TranSouth and Falk then held a “sale” or “disposition” of the vehicle.   According to the testimony of  TranSouth’s branch
managers, the “BID” column, was the only column left blank when the “20th of the Month Reports” were sent from TranSouth to
Falk.  Working off of the “20th of the Month Report,” TranSouth and Falk filled in the “BID” column with the number that, for
purposes of further enforcing the security agreement, would constitute the required sale or disposition under Va. Code Ann. §
8.9-504.  Timothy Doe, Falk’s business manager, described the auction or sale that would take place at TranSouth’s office, and
the process that brought about the disposition of the Class members’ repossessed cars:  
      A.        Our wholesalers went, Mr. Falk and his several people who work for him.  They place a bid on the car. 
            TranSouth either accepts it or rejects it.  If they accepted it, we bought the car.
 
            *          *          *
 
      Q.        With whom did you deal at TranSouth?
 
            A.        The manager.
 
            *          *          * 
 
            Q.        When you attended this sale, were other purchasers there?
 
            A.        No.
 

            Q.        It was always someone from TranSouth and someone from [Falk] and no one else; is that correct?
 
      A.        Correct.
 
Doe depo., 2/14/97 at 44, 48, 51, Attachment at 17-20 (emphasis added). 
       The TranSouth Branch Managers described a variation on the process for filling in the “BID” column.  Branch Managers
Hairfield, Bowser-Jordan and Powell testified that the “BID” column was filled in when an executive of Falk telephoned the
Branch.  For example, Hairfield, who was a TranSouth Branch Manager from 1991-92 stated as follows:
      We would be given a bid, and what a bid would tell me was that the unit was going to be paid off.  If I got a bid
      on a unit, then I needed to get the repo title work and reassignment for the – for the note to be paid off on it; so
      we weren’t spending time – hours and hours – getting paperwork ready for units we weren’t going to be paid off
      on. 
 
Hairfield depo. at 38-39, Attachment at 21-24.  See also Bowser-Jordan depo. at 16, Attachment at 26; Powell depo. at 52,
Attachment at 30.  
      Whether the bidding took place in person or by telephone is immaterial.  The Branch Managers each agreed that a “bid”
was placed by Falk, and only by Falk, and that Timothy Doe was one of the individuals from Falk that they would deal with in this
regard.  Hairfield depo. at 39, Attachment at 23; Bowser-Jordan depo. at 42, Attachment at 28; Powell depo. at 55, Attachment at
31.  

      Although actually a sham, the bogus “bid” was portrayed to the world by TranSouth and Falk as the “sale or disposition”
required by Virginia’s U.C.C. §8.9-504.
      Sixth, the cars were resold by Falk.  Falk then put the car back on his lot and resold the car to the next victim always at a
price which far exceeded the phony bid and often at a price which exceeded that imposed on the first victim.  The second victim
had the same high chance of default and, if that happened, the car would then go through the process again.  Despite its
protestations to the contrary, it is clear that TranSouth’s executives were entirely aware of how Falk operated.[9]

      Seventh, the “bid” was represented to be the U.C.C. sale for purposes of a deficiency action.   The scheme to cheat the
customer didn’t end with stripping a customer of her car, her down payment, her equity and her surplus.   JB Collections, a d/b/a
division of Falk, would take the customer file returned from TranSouth, and the bogus “bid” from the 20th of the Month Report,
and send the customer a collection letter demanding payment of a sum calculated by deducting the phony bid (described as
“Amount Derived From Sale”) from the debt owed at the time of default, describing the difference as a “deficiency,” and
threatening suit.[10]

      Eighth, sometime later, Falk Paid TranSouth under Section III of the Repurchase Agreement.  The Repurchase
Agreement is included in the Attachment at 37 to 45.  Under the Repurchase Agreement, Falk had to pay TranSouth the full
amount calculated in the “Total Payoff” column (this column added any repossession expenses to the net amount owed by the
customer at the time of default).  This was always done well after the “bid” process during which Falk “bought” the car from
TranSouth.  Doe depo. 2/14/97 at 44, Attachment at 18.  In fact, this payment happened typically “by the last day of the month
following the repossession.”  Hairfield depo. at 39, Attachment at 33.  
      Ninth, the conspirators failed to pay class members any surplus they were owed.  When a class member's car was
repossessed, TranSouth was required by law to pay the customer any surplus between the price for which the car was sold and
the amount the customer still owed to TranSouth.  Va. Code Ann. § 8.9-504 (2) (Michie 1991).  By using the phony and artificially
low “sales prices” from the supposed sales, rather than the price Falk paid TranSouth or the actual price Falk received when it
resold the car to another customer, TranSouth avoided paying any surpluses to class members.
      Tenth, JB (Falk’s wholly-owned collection agency) illegally used the phony sales prices as the basis for deficiency actions
against the customers in the Virginia District Court.

      The upshot of this scam was a large?scale tortious theft of the victims’ property.  The class members lost thousands of
dollars because, while TranSouth fraudulently purported in its notices to be acting within its legal rights, TranSouth in fact had a
better deal with Falk.  Whatever the cars were worth in the market upon default, TranSouth conspired with Falk to see that the
victims did not receive that value either as a credit on the debt or as a payment of surplus.  The victims lost their cars, their equity
in the cars, and any surplus monies resulting from the repossession sale.[11]  Instead, all of that money went to the defendants. 
To top it off, the class members also saw their credit effectively ruined.
      TranSouth’s Petition, like most of its efforts of the last two years, are aimed at preventing these defrauded consumers
from having access to the class action mechanism, in the understanding that without class action treatment most of the consumers
will never have any remedy for TranSouth’s scheme.
II.         STATEMENT OF PROCEDURAL FACTS.

      This case was filed on Thursday, June 17, 1993, more than seven years ago, and when it was filed it got considerable local
publicity in the newspapers and on television.  On Friday, June 18, the manager of  TranSouth’s Smith Avenue Branch, Charles
McKinney, was called by Charlie Falk and they discussed the news articles about the case.  That branch had been virtually
dedicated only to TranSouth’s business with Falk, who was TranSouth’s largest dealer customer.  Immediately after that
conversation McKinney called the President of TranSouth, Dennis Craft, and discussed the case with him.[12]  Over the following
two day weekend, TranSouth was caught throwing a number of large silver bags of its files into a dumpster that did not belong to
it, next to the TranSouth Smith Avenue Branch.  
      Stephen B. Quick was an individual who worked for CBN Scenic Design, a neighbor of TranSouth, which leased the
dumpster into which many of these bags had been dumped.  Mr. Quick had also read about the case.  When he looked in one of
the large bags that had fallen out of his company’s dumpster he discovered Falk/TranSouth customer files.  Mr. Quick called one
of Plaintiffs’ attorneys, whose identity he had learned from the Virginia Pilot article on the lawsuit.  Quick Affidavit, Attachment
at 49.  A handful of the documents were recovered, though most were lost by having been taken to the landfill.  
      Plaintiffs went to Court seeking an emergency order, which became a Consent Decree.  That Decree states in pertinent
part:

      Defendants TranSouth Financial Corp., JB Collection Corp. and Charlie Falk’s Auto Wholesale, Inc. are
      prohibited from destroying, tampering with, altering in any way, or removing any and all documents,
      books, records, computer tapes; computer data or computer archives pertaining to putative class members
      in this case, specifically including but not limited to documents pertaining to sale, repossession, or repossession
      sales, any subsequent resale and calculations of any surplus or any deficiency resulting from the repossession of
      any putative class members’ automobile.  The Court considers this material to be potentially pertinent both on
      substantive issues and on the question of class certification.  Destruction of this evidence may severely
      prejudice plaintiffs and the class.  If the evidence is lost or destroyed, it is irretrievable and the harm to
      plaintiffs in such case is, by definition, irreparable. 
 
Attachment at 50 (emphasis added).
 
      The District Court dismissed the case in May of 1994.  Falk and JB then settled the case with the class, leaving TranSouth
as the only defendant.  “Falk's and JB agreed to forgive approximately $10 million in deficiency judgments and to pay $400,000 to
the class and its attorneys.  The companies also agreed to conduct all future dispositions of repossessed automobiles in compliance
with Virginia law.”  Chisolm I, 95 F.3d at 335.   In connection with this settlement, the District Court certified this class in 1994. 
It found that numerosity, typicality, commonality and adequacy of representation were all present, and a money damage class
settlement was effected, administered, and seamlessly distributed to those who filed claims.

      Plaintiffs appealed TranSouth’s dismissal to this Court, which reversed the District Court in Chisolm I.  TranSouth argued
to this Court that to meet the reliance requirement, plaintiffs must allege that they took affirmative steps in response to
TranSouth’s notices. Instead, Chisolm I held that to allege reliance under RICO, plaintiffs need only allege that they had assumed
that the “liquidation of the collateral was proceeding legally and legitimately, thus influencing them to accept the process without
question. . . .”  95 F.3d at 339. 
      After remand, the District Court again dismissed the case, holding that plaintiffs had not alleged reliance with sufficient
particularity.  On appeal, TranSouth again made reliance its principal argument.  This Court again reversed.  Chisolm v.
TranSouth Fin. Corp., 164 F.3d 623 (1998) (unpublished decision).
      Upon remand, plaintiffs renewed their motion for class certification.  Plaintiffs put extensive documentary evidence before
the District Court to establish that TranSouth’s scheme was uniform with respect to each class member.  These documents
included 35 selected Notices of Sale, Attachment at 52-86, 35 Warrants in Debt, Attachment at 87-121, 35 Selected Installment
Sales Contracts, Attachment at 122-156, the Repurchase Agreement that governed TranSouth and Falk’s relationship with respect
to all class members, and more than a dozen documents and excerpts from deposition testimony establishing TranSouth’s
knowledge of and participation in Falk’s illegal activities.  TranSouth submitted no evidence in opposing the motion for class
certification.

      After extensive briefing and oral argument, on March 15, 1999 the District Court certified the class.  Chisolm v.
TranSouth Fin. Corp., 184 F.R.D. 556 (E.D. Va. 1999).  The District Court concluded, after a “rigorous analysis” into whether
the requirements of Rule 23 had been met, id. at 560, that “the legal injury allegedly sustained by the individual consumers flows in
each instance from a common nucleus of operative facts. . . .”  Id. at 562.  The District Court set forth a detailed plan for how
reliance could be proven as a predicate to class membership.  Id. at 563.  It found that “[t]he ‘churning’ scheme utilized uniform
documents and a single cohesive plan.  The litigation would rely on the same evidence, factual documents and legal issues of
conspiracy, enterprise, RICO and Uniform Commercial Code requirements.”  Id. at 565.  The District Court concluded that “it
would be both inefficient and difficult for the 2500 putative class members with individually small claims to sue a large corporation
like TranSouth in the absence of a class action.”  Id. 
      Following this opinion, TranSouth petitioned this Court under Rule 23(f) to take an interlocutory appeal of the class
certification order, and this Court declined.

      Following that denial, the parties engaged in extensive discovery for some months.  A number of discovery disputes were
raised before the District Court and resolved by the Court.  On one occasion, for example, the District Court held that TranSouth’s
filing of literally hundreds of written discovery requests aimed at absent class members was “oppressive.”  Attachment at 157. 
On another occasion, TranSouth refused to respond to any interrogatories or any requests for production whatsoever until two
business days before a scheduled hearing on a motion to compel, at which time it came forward with limited answers.  
      TranSouth claims in its Petition that “to date, TranSouth has been permitted to depose in detail only” two of the named
plaintiffs.  Petition at 22.  The fact is that TranSouth has deposed each of the named plaintiffs.  After the depositions were over,
TranSouth’s counsel apparently thought of a number of additional questions that it wished it had also asked, and sought to take
additional follow-up depositions.  As any District Court would do, the District Court here decided – after receiving extensive
briefing containing lengthy excerpts of the depositions conducted – that it would not allow multiple depositions of the same
witnesses.  August 5, 1999 Order, Attachment at 159-161.   TranSouth’s offhand depiction of this reasonable decision as unfair
should not elicit any sympathy from this Court.

      In 1999 TranSouth reported in response to Plaintiffs’ discovery requests that, notwithstanding the spoliation order
described above,  it had not retained any usable computer records of its Falk transactions.  TranSouth acknowledged that its
counsel had created a computer database of the same information in the course of related litigation against Falk (Falk v.
TranSouth, 296 CV 828 (E.D. Va)).  Although TranSouth put information from that database into evidence in Falk v.
TranSouth, it asserted in this case that the database was now “work product” to which the Plaintiffs would not be given access.
      Given the lack of TranSouth’s computerized data, in June 1999 Plaintiffs subpoenaed Falk’s customer database and its
hard copy files of the Class’ transactions.  Not to be outdone in spoliation, Falk filed a motion to quash and an affidavit of its
Business Manager, Tim Doe, to the effect that (1) all Falk has left is a “corrupted” electronic database; and (2) the hard copy files
have been so altered as to be unreasonable to reconstruct.[13]
      Thereafter the parties then filed cross motions for summary judgment on a variety of issues.  The District Court denied all
of these motions, except that it granted TranSouth’s motion to grant judgment against plaintiffs’ claims under the Virginia
Consumer Protection Act.  

      TranSouth then filed a motion to decertify the class, and an opposition to plaintiffs’ proposed trial plan.  In a very lengthy
opinion and order denying the former motion, the District Court set out a detailed and carefully crafted trial plan, and broke the
class down into several subclasses.  “Subclass A,” which the plaintiffs identify as the “Deficiency Damages Subclass,” includes all
those class members who paid Falk any amount on an alleged deficiency.  “Subclass B,” the Surplus Damages Subclass, includes
those victims “whose cars were repossessed, were sold for a surplus, and who never received payment or credit upon the
surplus.”  May 12th order at 33.  “Subclass C,” the Statutory Damages Subclass, is composed of every class member identified in
the March 1999 certification order.
      The District Court then structured a trial that would proceed before a jury in Phase I, then before a Special Master while
the jury recessed, and then before the same jury (after it had been recalled) in Phase II.  May 12th order at 43 and 46.  The
District Court specified that “The jury is present to decide issues of fact.”  May 12th order at 23, n. 11.  The Special Master
would calculate individual damages and make recommendations as to some of the Subclass members’ individualized issues that
“need[] litigation.”  May 12th order at 22-23.  “The Court believes that any lingering issues could be appropriately addressed in this
manner, including the question of affirmative defenses.”  Id. at 22.  

      After the parties have designated those recommendations of the Special Master that they wish to challenge, the District
Court’s order contemplates that the jury would be recalled to consider the Report and Recommendation of the Special Master and
any factual matters raised in connection with it.  The jury may make its own determination as to whether to accept the Report and
Recommendation of the Special Master, and any findings within that item.  The District Court is still tightly controlling the trial
plan.  In its most recent order (of August 2, 2000) the Court stated its disapproval of some features of Plaintiffs’ trial plan and
indicated that it would require modification of it.  
      In sum, the procedural history of this case is extensive.  As the District Court stated in its July 5th order at 16, “this case
has the dubious distinction of being among the longest-pending cases in this District, having over five hundred filings detailed in an
eighty-seven page docket.  This Court has conducted over thirty hearings and conferences on this matter, as well as an untold
number of telephone conferences.”
                                                                   ARGUMENT
1.                 THE DRASTIC AND EXTRAORDINARY REMEDY OF MANDAMUS IS NOT AVAILABLE IN THESE
      CIRCUMSTANCES.
 
      TranSouth suggests that mandamus is readily available for review of class certification decisions, but the law is plainly to
the contrary in this Circuit.  

      As a general matter, “[i]t well established that the remedy of mandamus ‘is a drastic one, to be invoked only in
extraordinary situations.’” In re Virginia Beach, 42 F.3d 881, 884 (4th Cir. 1994), quoting Kerr v. United States District Court,
426 U.S. 394, 402 (1976).  “There must be no other adequate means of relief available, and the petitioner must demonstrate that
its right to issuance of the writ is ‘clear and indisputable.’”  Id; see also In re First Fed’l Sav. & Loan Ass’n of Durham, 860
F.2d 135, 138 (4th Cir. 1988) (“Mandamus is not favored except in extraordinary situations.”) (citing Allied Chemical Corp. v.
Daiflon, Inc., 449 U.S. 33, 34 (1980)).  “A writ of mandamus will not issue when all that is shown is that the district court abused
its discretion when making the challenged ruling.”  In re Beard, 811 F.2d 818, 826 (4th Cir. 1987), citing In re Ralston Purina
Co., 726 F.2d 1002, 1003 (4th Cir. 1984).  TranSouth carries a “heavy burden” in bringing this petition, Beard, 811 F.2d at 826,
and “[c]ourts are extremely reluctant to grant a writ of mandamus.”  Id. at 827.
      This Court has been particularly unwilling to grant a writ of mandamus in class certification decisions.  In In re Catawba
Indian Tribe, 973 F.2d 1133 (4th Cir. 1992), this Court denied a petition for a writ of mandamus in just such a setting.  This Court
began by reiterating that the petition sought “an extraordinary and drastic remedy,” 973 F.2d at 1135, and then elaborated:

      The very power of the writ of mandamus demands that its availability be limited to narrow circumstances lest it
      quickly become a shortcut by which disappointed litigants might circumvent the requirements of appellate
      procedure mandated by Congress.  Accordingly, the courts have established a standard for the grant of a writ of
      mandamus sufficiently demanding to prevent its discriminate use.  
 
Id.  
 
      This Court then explained that mandamus is uniquely disfavored in the context of class certification decisions:  
      Further, when mandamus is sought to compel an act normally committed to the discretion of the district court the
      petitioner faces an even more rigorous standard.  “[B]efore the writ should issue in a case in which the matter at
      hand is entrusted to the discretion of the district court the district court’s abuse of discretion must amount to the
      ‘judicial usurpation of power.’”. . .
 
      Second, the decision whether to certify a class pursuant to Fed. R. Civ. P. 23 clearly is one committed to the
      “broad discretion of the district court. . . .  Consequently, the Tribe must make the most difficult showing, that of
      an abuse of discretion amounting to the usurpation of the judicial power, before mandamus will lie to replace the
      district court’s decision.
 
973 F2d. At 1136 (citations omitted).  In short, TranSouth must bear a truly heavy burden of establishing that the District Court
committed a “judicial usurpation of power” by not decertifying the class in this case.  As this brief will establish below, TranSouth
has not approached meeting this burden.

      TranSouth’s Petition should also be denied in light of the great disruption that it will cause to this litigation.  The First
Circuit has stated in the Rule 23 (f) context, that “interlocutory appeals should be the exception, not the rule,” explaining that “[b]y
their nature, interlocutory appeals are disruptive, time-consuming, and expensive.”  Waste Management Holdings, Inc. v.
Mowbray, 208 F.3d 288, 294 (1st Cir. 2000).  The Seventh Circuit made the same point in the Rule 23(f) context in Gary v.
Sheahan, 188 F.3d 891 (7th Cir. 1999):  
      Interlocutory appeals are rare, because they may disrupt progress of the case. . . .  Rule 23(f) permits the Court
      of Appeals to accelerate appellate review; to ensure that there is only one window of potential disruption, and to
      permit the parties to proceed in confidence about the scope and stakes of the case thereafter, the window of
      review is deliberately small.
 

188 F.3d at 893 (emphasis added).  See also McDonnell Douglas Fin. Corp. v. Pennsylvania Power & Light Co., 849 F.2d
761, 764 (2nd Cir. 1988).  TranSouth would have this Court effectively throw this principle out the window.  This Court should be
particularly mindful of the prejudicial effects upon these plaintiffs of further delay.  This case was filed in June of 1993, more than
seven years ago, and has already three times been before this Court through no fault of the plaintiffs.  If TranSouth gains yet
another lengthy delay by engineering yet another appeal, plaintiffs’ ability to establish their case – which depends in part upon the
recollections of unsophisticated consumers about transactions and events now eight or more years in the past – will suffer still
further.  Courts have often refused to permit permissive interlocutory appeals under § 1292(b), by analogy, where such an appeal
would further delay a case that had already been pending for a long time.  See LILCO v. Transamerica Delaval, Inc., 648 F.
Supp. 988, 991 (S.D.N.Y. 1986) (“As for materially advancing the ultimate termination of this litigation, an interlocutory appeal is
more likely to delay its conclusion.  The roots of this case date back more than ten years.”); Matlack, Inc. v. Hupp Corp., 57
F.R.D. 151, 159 (E.D. Pa. 1972) (denying § 1292(b) interlocutory appeal where the case was already 8 years old and “would be
even older when it returned from the Court of Appeals”); U.S. v. 9,947.71 Acres of Land, 220 F. Supp. 328, 337 (D. Nev. 1963)
(refusing to certify order for § 1292(b) interim appeal where case had been pending for many years and a “final determination
should not be delayed for the additional time it would take for an interim appeal under the above section.”).
      While TranSouth does not mention this Court’s leading precedent dealing with petitions for a writ of mandamus arising out
of a class certification decision, In re Catawba Indians, it repeatedly cites to In re Rhone-Poulenc Rover, Inc., 51 F.3d 1293
(7th Cir. 1995).  The holding in that extraordinary and very different case tells little about the law applicable to this case.  

      First, the Seventh Circuit was dealing with an issue – the appropriateness of class action treatment in mass tort personal
injury actions – that the U.S. Supreme Court has said has no bearing on cases such as this one.  Rhone-Poulenc, like Amchem
Products, Inc. v. Windsor, 521 U.S. 591 (1997), involved an effort to recover damages from a number of different companies for
a wide variety of different personal injuries on a nationwide class action basis introducing extraordinarily complex choice of law
issues.  The Seventh Circuit’s conclusion that such a class plainly could not be certified is consistent with the Supreme Court’s
holding in Achem.  For “consumer fraud” cases such as this one, however, the Supreme Court explicitly directed in Amchem that
class actions (such as this one) may “readily” be certified.[14]

      This case involves a pernicious but relatively simple scheme based upon standard form documents that operates in the
same way toward all class members; it involves only one defendant; and it involves the laws of only one state, not 50.  The case
should hardly be less like Rhone-Poulenc.  Rhone-Poulenc involved “an abuse of discretion that can fairly be characterized as
gross, very clear, or unusually serious.”  51 F.3d at 1295.  In this case, as noted below, TranSouth claims that the District Court
abused its discretion by doing something that more than twenty other federal appellate and trial courts have done: certify a RICO
case as a class action despite the defendants’ assertions that individual reliance barred such a ruling.
      Rhone-Poulenc is also easily distinguished because the Seventh Circuit was principally concerned there that the order
certifying the class would permit the plaintiffs to secure a large recovery even though they had an extremely weak case on the
merits:
      A notable feature of this case, and one that has not been remarked upon or encountered, so far as we are aware,
      in previous cases, is the demonstrated great likelihood that the plaintiffs’ claims, despite their human appeal, lack
      legal merit.  This is the inference from the defendants’ having won 92.3 percent (12/13) of the cases to have gone
      to judgment.
 
51 F.3d at 1299.  This represents a remarkably sharp contrast with this case, where TranSouth has been clearly demonstrated to
be enmeshed in a system of bogus “bids” used to steal surplus auto sales funds and to generate fraudulent deficiencies.

      As this Court has stated in connection with the proximate cause issue, “it is readily apparent that” TranSouth should be
held “responsible for its actions.” Chisolm I, 95 F.3d at 338.  At the time that this Court made this determination, the only thing
before the Court was plaintiffs’ allegations.[15]  In the succeeding years, however, despite TranSouth’s repeated destruction of
documents, discovery has unearthed evidence that the scam is far worse than was originally alleged.  The following evidence has
come to light:
¡                 Both the testimony of TranSouth and Falk employees cited above, as well as documents cited above from both companies,
      establish beyond question that the two companies engaged in a phony bid process with no legitimate business purpose. 
¡                 TranSouth’s internal documents demonstrate that top officials at TranSouth knew of the phony bid process, and knew that
      the bid prices had no bearing on actual values.[16] 

¡                 While top TranSouth officials have unvaryingly denied under oath having the faintest inkling that this bogus bid process
      existed, their subordinates have all repeatedly confirmed that each of these officials was entirely aware of this process.
¡                 As noted above, TranSouth’s internal documents establish that it actually desired to force its consumers into default
      because the repossession process had become so profitable. 

Under these circumstances TranSouth’s reliance upon Rhone-Poulenc is unfounded.  That case, and others like it, involve Courts
of Appeals looking for ways to overturn class certification orders in cases that appear to have no substantive merit.  In this case,
by contrast, this Court has already spoken directly to the pernicious nature of the scheme, and the evidence that has come to light
has greatly strengthened the already strong case for liability.
II.         THE DISTRICT COURT’S DECISION TO CERTIFY THE CLASS IS PLAINLY CORRECT.
 
      A.        DESPITE TRANSOUTH’S STATEMENTS TO THE CONTRARY, THE DISTRICT COURT HAS NOT
            RESOLVED THE ISSUE OF JUSTIFIABLE RELIANCE, “AS A MATTER OF LAW,” BUT HAS
            INSTEAD LEFT THE ISSUE TO BE TRIED TO THE JURY.
 
      TranSouth’s Seventh Amendment argument begins with the premise that “without notice, evidence or a hearing, the court
determined as a matter of law that these class members relied on the mailings.”  Petition at 1.  TranSouth’s argument does not
accurately describe the District Court’s rulings, however.  The District Court has found that Plaintiffs have adequate evidence to
put the question of justifiable reliance to the jury, but it has not resolved this question:
      The Court’s May 1999 ruling does conclude that those class members who meet the Subclass A and B definitions
      may be said to have relied.  It is not a determination that the reliance is per se reasonable.  The question of
      reasonableness is a matter which must await trial.  The additional factors Defendant argues now are issues for
      rebuttal.  
 
July 5th Order at 11 (TranSouth Petition Addenda at 66).
 

      TranSouth also misdescribes the District Court’s decision as a presumption of reliance.  As the District Court explained, it
was not compelling a finding of reliance but was permitting a jury to infer (or not infer) reliance from circumstantial evidence:
      This is not so much a showing of presumed reliance as it is a showing of demonstrated reliance via circumstantial
      proof.  The Court notes that common law fraud in Virginia sets “[t]he burden . . . upon the one alleging it, and if it
      is not strictly and clearly proven as alleged, by circumstantial or direct evidence, no relief will be granted.” 
      Martin v. Williams, 194 Va. 437, 445-46 (1952).  Fraud cannot be presumed, but reliance may be demonstrated
      by circumstantial or direct evidence, indeed, “[c]ircumstantial evidence is not only sufficient, but in most cases is
      the only proof that can be adduced.”  Cook v. Hayden, 183 Va. 203, 209 (1944).  “Moreover, ‘A transaction
      may of itself and by itself furnish the most satisfactory proof of fraud, so conclusive as to outweigh the answer of
      the defendant and even the evidence of witnesses.’” Id.
 
May 12 Order at 36 n. 24.  Thus, the District Court has not “conclusively resolved” a factual dispute without notice or evidence,
as TranSouth’s unfair lampoon of the District Court claims, but it has merely held that the jury may be given the opportunity to
hear circumstantial evidence and possibly infer a finding of reliance from the evidence.  Nothing in this approach violates the
Seventh Amendment.
 
 

      B.         TRANSOUTH’S POSITION THAT THE SEVENTH AMENDMENT ALWAYS BARS ANY CLASS
            ACTION IN ANY RICO CASE WOULD REQUIRE THIS COURT TO DISAPPROVE OF THE
            HOLDINGS IN MORE THAN A SCORE OF REPORTED CASES.      
      TranSouth’s Petition sets out a neat tautology designed to show that the Seventh Amendment requires that a defendant in
a RICO or consumer fraud case must necessarily be permitted to individually try its defenses on reliance against every single
plaintiff, and thus that RICO class actions are always unconstitutional.  Petition at 11.   But the facts set forth above and the prior
rulings of this Court described in Part II-D below establish that this case presents the strongest possible case for the certification
of a class in a RICO and consumer fraud context.  TranSouth’s argument that class certification cannot be granted under these
circumstances is basically an argument that class certification may never be granted in any RICO or consumer fraud case.  
 

      Such a categorical rule may be in TranSouth’s interests, but it is certainly not the law. This sweeping position runs afoul of
a remarkable number of cases where courts have done precisely what TranSouth says is impossible: constitutionally handle RICO
cases on a class action basis.  In fact, courts have regularly certified classes in RICO actions despite concerns raised by
defendants about the question of reliance.  See, e.g., Hoxworth v. Blinder, Robinson & Co., 980 F.2d 912 (3d Cir. 1992);
Morse v. Bankers Life & Cas. Co., 2000 U.S. Dist. LEXIS 2211 (N.D. Ill. Feb. 23, 2000); Joncek v. Local 714 Int’l Bhd. of
Teamsters Health and Welfare Fund, 1999 U.S. Dist. LEXIS 14853 (N.D. Ill. Sept. 3, 1999) ; In re Synthroid Mktg. Litig., 188
F.R.D. 287 (N.D. Ill. 1999); Johnson v. Rohr-Ville Motors, Inc., 189 F.R.D. 363, 370 (N.D. Ill. 1999); Garner v. Healy, 184
F.R.D. 598 (N.D. Ill. 1999); Stewart v. Associates Consumer Discount Co., 183 F.R.D. 189, 197 (E.D. Pa. 1998); Iron
Workers Local Union No. 17 Ins. Fund v. Philip Morris, Inc., 182 F.R.D. 523, 536-37, 539-41 (N.D. Ohio 1998); Dornberger
v. Metropolitan Life Ins. Co., 182 F.R.D. 72, 79-81 (S.D.N.Y. 1998); Arenson v. Whitehall Convalescent & Nursing Home,
Inc., 164 F.R.D. 659, 664 (N.D.Ill. 1996); Walco Inv. v. Thenen, 168 F.R.D. 315, 337 (S.D. Fla. 1996); Hoban v. USLife Credit
Life Ins. Co., 163 F.R.D. 509, 515 (N.D. Ill. 1995); Trautz v. Weisman, 846 F. Supp. 1160 (S.D.N.Y. 1994);  Rodriguez v.
McKinney, 156 F.R.D. 112, 117 (E.D. Pa. 1994); Fogie v. Rent-A-Center, 867 F. Supp. 1398, 1404 (D. Minn. 1993); Scholes v.
Tomlinson, 145 F.R.D. 485, 493 (N.D. Ill. 1992); Heastie v. Community Bank of Greater Peoria, 125 F.R.D. 669 (N.D. Ill.
1989); Smith v. MCI Telecomm. Corp., 124 F.R.D. 665, 679 (D. Kan. 1989); Longden v. Sunderman, 123 F.R.D. 547, 555
(N.D. Tex. 1988); McMahon Books, Inc. v. Willow Grove Assoc., 108 F.R.D. 32 (E.D. Pa. 1985); Somerville v. Major
Exploration, Inc., 102 F.R.D. 500, 504 (S.D.N.Y. 1984).
      TranSouth would have this Court announce a sweeping rule of law that disapproved of the holdings in each and
every one of these cases.  TranSouth offers no explanation reconciling its theory and these holdings.
      C.        THE U.S. SUPREME COURT HAS REJECTED TRANSOUTH’S POSITION THAT CLASS ACTIONS
            ARE IMPERMISSIBLE IN ALL COMMON LAW FRAUD CASES.
 
      As noted above, TranSouth has also suggested that the Seventh Amendment bars class action trials in all common law
fraud cases.  While the Supreme Court has not addressed the Seventh Amendment issue directly, the Court did state in the
Amchem case that “predominance is a test readily met” in consumer fraud cases, plainly indicating that class action treatment was
common and far from problematic in those settings.   521 U.S. at 625. This language cuts directly against TranSouth’s allegation
that no class action may ever be certified in a case involving reliance.
      In addition to supporting plaintiffs’ position on the predominance question, the Supreme Court's decision in Amchem also
strongly supports the plaintiffs’ position on the superiority of the class action mechanism in a case such as this one: 

      “The policy at the very core of the class action mechanism is to overcome the problem that small recoveries do not
      provide the incentive for any individual to bring a solo action prosecuting his or her rights.  A class action solves this
      problem by aggregating the relatively paltry potential recoveries into something worth someone's (usually an attorney's)
      labor.”  Mace v. Van Ru Credit Corp., 109 F.3d 338, 344 (1997). 
 
521 U.S. at 617.  The Supreme Court's guidance is clearly applicable to this case.  All parties in this case understand that the vast
majority of plaintiffs will not be able to individually litigate their claims against TranSouth.  Consequently, TranSouth is not seriously
claiming that hundreds of individual suits are superior to a class suit as a means of resolving this dispute.  Instead, TranSouth is
seeking to ensure that there are few if any suits against it, and that plaintiffs are denied any remedy.

      During the years since Amchem was decided, a number of federal and state courts have faithfully applied the Court’s
guidance in Amchem that class actions are available in consumer cases.  See, e.g., In re Prudential Ins. Co. Am. Sales Practice
Litig. Agent Actions, 148 F.3d 283, 314-15 (3d Cir. 1998), cert. denied, Krell v. Prudential Ins. Co. of Am., 525 U.S. 1114
(1999); Wells v. McDonough, 1998 U.S. Dist. LEXIS 4441, at *18-20 (N.D. Ill. Mar. 23, 1998); Duhaime v. John Hancock
Mut. Life Ins. Co., 177 F.R.D. 54, 64 (D. Mass. 1997); Cope v. Metropolitan Life Ins. Co., 696 N.E.2d 1001, 1009 (Ohio
1998).  TranSouth’s proposed new rule of law would require this Court to disapprove of the results in each of these cases, as well
as many others like them.
      D.        TRANSOUTH’S CONSTITUTIONAL ARGUMENT IS ROOTED IN ITS CONTINUING REFUSAL TO
            ACCEPT THIS COURT’S TWO EARLIER RULINGS IN THIS CASE ON RELIANCE.
 
      TranSouth’s Seventh Amendment arguments begin with the premise that reliance may only be shown through individual
direct testimony, because reliance is inherently an active and highly personalized issue.  Accordingly, TranSouth argues that class
certification is inappropriate even in a case such as this, which the District Court found, in its discretion, involved a scheme that
operated, in the dark, uniformly with respect to each class member, and was based upon identical written documents for each
class member.  

      In this case, this Court found that the Notices that give rise to the mail fraud allegations play only a limited role in the
scheme to defraud.  As quoted above, this Court analogized them to the structure supporting a guillotine, instead of the blade. 
Accordingly, this Court has previously held that only passive reliance need be shown in this case.  TranSouth has twice vigorously
insisted to this Court that the reliance element requires the taking of an active step and that a plaintiff’s failure to act meant
nothing, and twice this Court has flatly rejected TranSouth’s position.  This Court held in Chisolm I and re-affirmed in Chisolm II
that class members need only show that the Notices led them to believe that the sales of their cars were taking place legally and
legitimately, and thus that they did not take any action that they otherwise might have taken to protect their interests.  
      In its petition for a writ of mandamus, TranSouth continues to defy this Court’s holding and to insist that passive reliance is
not sufficient.  Petition at 23 (“Courts refuse to presume anything from the failure to act, except in securities fraud cases founded
on a ‘fraud on the market theory.’”).  In short, TranSouth’s petition for a writ of mandamus is not so much a plea for this Court to
overturn the District Court as it is for this Court to overturn its own two previous decisions in this case.  TranSouth still does not
accept, acknowledge or respect that this Court has twice previously rejected TranSouth’s arguments and held that the plaintiffs in
this case need not prove the sort of active reliance that is necessary in some other types of RICO and consumer fraud cases.
      E.         THIS COURT SHOULD PLACE NO WEIGHT UPON TRANSOUTH’S ATTACK ON THE TESTIMONY
            OF CURTIS GOODWIN.

      TranSouth bases a great deal of its argument on an attack upon the credibility and motives of Curtis Goodwin, a class
member whom the plaintiffs’ proposed as a representative of Subclass A.  Petition at 18 to 22.  This attack is without merit and
should be disregarded.  
      First, this issue is essentially moot, as the District Court already addressed this issue at the same time that TranSouth was
asking this Court to handle the issue via an interlocutory appeal.  Prior to filing the instant petition for a writ of mandamus,
TranSouth filed a lengthy motion with the District Court asking it to disapprove of Mr. Goodwin as a named class representative. 
The District Court did not endorse or accept any of TranSouth’s factual arguments about reliance, but found that, for a technical
reason related to the precise definition of the subclass, Mr. Goodwin was not an adequate class representative:
      The Court, however, finds that proposed named Plaintiff Curtis Goodwin fails to meet the definitional requirement of
      Subclass A and accordingly is an inappropriate representative.  In short, Goodwin has not endured a deficiency judgment,
      which is a pre-requisite to Subclass A membership.
 
Order of August 2, 2000 at 5.  In its attempt to simultaneously litigate factual issues before the District Court and this Court on an
interlocutory/mandamus basis, TranSouth has entirely jumped the gun.

      In any case, TranSouth’s point – that Mr. Goodwin’s testimony supposedly proves that he did not rely in part upon
TranSouth’s notice, and thus that the jury should not be allowed to find that anyone else relied in part upon that notice – is not
supported by the full transcript of Mr. Goodwin’s deposition.  Indeed, TranSouth’s quotations from Mr. Goodwin are extremely
selective, and it asks this Court to draw inferences from a very small part of the record.  For example, TranSouth’s discussion of
Mr. Goodwin’s testimony omits the following crucial passage:
      Q.        And why didn’t you think you needed to talk to a lawyer?
      A.        Because I thought that they would go through with the sale and I’d get a fair price for the car, thought everything
            was 100 percent.
 
Goodwin Deposition at 53, Attachment at 189.  In that answer, Mr. Goodwin swore to having relied in precisely the sense that this
Court defined the term in Chisolm I, 95 F.3d at 338 (“In order for the scheme to succeed, the appellants needed to be convinced
that the ‘private sales’ referenced in the TranSouth notices were legitimate.  Had an appellant’s suspicion been aroused, she might
have inquired further or – worse – retained a lawyer to investigate the matter.”).

      TranSouth’s rendition of Mr. Goodwin’s deposition not only skips over the key elements of Mr. Goodwin’s testimony, it
also omits the actions of TranSouth’s counsel.  This is significant, because on several occasions TranSouth’s counsel interrupted
Mr. Goodwin’s testimony just as he began to move towards the issue of reliance, and prevented him from speaking directly to the
point.  When Mr. Goodwin was asked what he recalled about TranSouth’s notice of sale, for example, the following exchange
took place:
      Q.        What else do you recall that it said?
 
      A.        The car will be sold at an auction, and at that time I was thinking the car was going to be sold and, you know, like
            I said – 
 
      Q.        No, no.  I’m going to get in a minute to what you thought, but I want you to first tell me what you recall the letter
            told you other than the fact that the car would be sold.
 
Deposition at 45-46, Attachment at 190-191.  The “minute” never came when Mr. Goodwin was asked to complete his answer or
speak to his thoughts.  Thus, TranSouth’s counsel interrupted Mr. Goodwin before the could say what he “thought” (a question of
central concern to determining reliance), but then led the questioning away from the issue.  Later, counsel again interrupted Mr.
Goodwin when he was addressing the issue of reliance, and again sought to limit his testimony:
      Q.        During this time period did you ever seek to talk with a lawyer?
 
      A.        At the time I thought everything was being done.
 
      Q.        Well, that’s not my question.
 
            .     .    .
 
      Q.        Did you ever seek to talk to a lawyer?  That’s a yes or a no.  Either you did or you didn’t.

Deposition at 52, Attachment at 188.  The upshot is that TranSouth’s selective quotations from Mr. Goodwin’s repeatedly
interrupted deposition are unreliable at best.  
      TranSouth’s argument that Goodwin made the deficiency payments only because he was concerned about his security
clearance is simply inaccurate.  Goodwin did not state that he made the deficiency payments solely because he did not want to
jeopardize his security clearance.  Rather, Goodwin stated that, upon learning of the deficiency balance – and believing that he
owed a deficiency on his TranSouth contract – he started and continued to make deficiency payments.   In a clear statement to
this effect, which was omitted from TranSouth’s objections,  Goodwin explained that he paid Falk on the deficiency amount
because he believed that he “owed the man money.”  Deposition at 70, Attachment at 192.  

      Goodwin continued to make payments on the deficiency allegedly owed because he was concerned that Falk, JB
Collections and TranSouth would file suit against him again, and that this would effect the security clearance at his job.  This
concern on Goodwin’s part, however, is not (as TranSouth argues) adverse to finding that Goodwin relied upon the overall
legitimacy of the TranSouth, JB Collections and Falk mailings; rather, it supports this finding.  TranSouth cannot escape the fact
that Goodwin – like every other class member who made a deficiency payment – believed that a bona fide U.C.C. repossession
sale would take place and that a fair price would be recovered at the auction.  Deposition at 52-53, Attachment at 188-189.  Had
he not believed that everything described in the TranSouth Notice of Public Sale was “100 percent,” Goodwin would have hired a
lawyer.  Deposition at 52-53, Attachment at 188-189.  
      Nothing in the Seventh Amendment requires this Court to take away from the jury the matter of the conclusions to be
drawn from this testimony, or to hear an interlocutory appeal on that subject.
III.       THERE IS NO CONFLICT BETWEEN SUBCLASSES HERE.
 
            2.                 THERE IS NO CONFLICT BETWEEN SUBCLASSES A AND B, AS THE U.C.C. DOES NOT
            PERMIT TRANSOUTH TO USE A PHONY BID PROCESS TO EITHER STEAL SURPLUSES OWED
            OR TO PURSUE CLASS MEMBERS FOR FRAUDULENT DEFICIENCY JUDGMENTS.
 

      As set forth above, the central allegations of this case (now proven by the sworn testimony of numerous employees of the
defendants and the plain language of defendants’ own documents) are that instead of properly selling the repossessed cars in a
public auction or by other legitimate method, TranSouth and Falk had a secret deal whereby phony “bids” were made to create a
bogus “sale price” for the cars.  The phony “bid” prices were then used to cheat many class members by, inter alia,  (a) not
paying them the surplus funds they were owed when the cars were actually sold for more than the class members owed; and/or
(b) recovering fraudulent deficiency payments from the class members.   Plaintiffs contend that both results are illegal under the
U.C.C.  It is illegal to use phony “bids” to cheat consumers out of their surplus, and it is also illegal to use phony “bids” as a basis
to collect fraudulent deficiency judgments.
      Applying an Alice in Wonderland logic, TranSouth claims that the U.C.C. “cannot” prohibit both types of cheating. 
According to TranSouth, it “must” be permissible under the U.C.C. to either cheat consumers through phony deficiency judgments
or refuse to pay legally owed surpluses. 
      Such an interpretation of Plaintiffs’ claims in this case is plainly wrong.  Without restating all of Plaintiffs’ allegations, 
which have been laid out exhaustively above, this case is based upon a fraudulent scheme cooked up between TranSouth and Falk
to cheat the class members (that is, all class members), out of the equity in their cars, their rights under the U.C.C. and any
surplus to which they may have been entitled.    

      In order to recover statutory damages for Subclass C, Plaintiffs need only demonstrate that TranSouth was the “secured
creditor” under the U.C.C. at the time that a misleading or bad faith “notice” is sent or at the time of the phony “bid” process.  All
persons to whom the misleading notices were sent are eligible for statutory damages.  Court's May 12, 2000 Order at 53. 
TranSouth has never in seven years attempted to deny that it was TranSouth’s unwavering policy to send out these notices
simultaneously with the repossession.   
      On the other hand, in order to recover surplus damages on a class-wide basis, Plaintiffs need to demonstrate that
TranSouth conspired or participated in the RICO and/or fraud scheme and that the sale of the class’ cars off of Falk’s lot after
completion of the phony “bid” process, was the only true “marketplace sale” for purposes of measuring surplus damages.  These
arguments are consistent and, contrary to TranSouth’s claims, in line with Plaintiffs’ theory of the case since day one.
      Moreover, TranSouth’s argument completely ignores the role of conspiracy in this case.  As the District Court explained
in its July 5th opinion, at 5-6:
      Defendant’s argument is premised upon a belief that Subclass B must argue that the disputed transaction was not
      a sale, but a transfer under a repurchase agreement to permit Subclass B to recover.  This belief is based on two
      erroneous assumptions: (1) that Subclass B may only recover damages if the Charlie Falk disposition is
      characterized as a U.C.C. Article 9 sale and (2) that Subclass B will assert that the Charlie Falk sale was a
      U.C.C. Article 9 sale.
 

      However, Subclass B is eligible to recover under the multiple RICO claims, the U.C.C. claim, and the common
      law conspiracy claim.  Under the U.C.C. claim, the members of Subclass B may seek actual damages or
      statutory minimum damages.  “Surplus damages” is a term of art relating to the U.C.C. claim, representing one
      form of actual damages: surplus funds generated when a secured party disposes of a vehicle for an amount
      greater than the debt owed.  Under the RICO and common law conspiracy claims, Subclass B may recover
      actual damages (which may be calculated in the same manner as surplus damages) sustained as the result of the
      alleged conspiracies, necessarily including the actions of alleged co-conspirators, here Charlie Falk and JB
      Collections.
 
(footnote omitted).

      Numerous other courts have joined the District Court in holding that co-conspirators are liable even if they did not
perpetrate the scheme themselves; all that is necessary to saddle a co-conspirator with liability is for the co-conspirator to have
actual or constructive knowledge of the illegal act and accept the benefits of the act.   See Fallert Tool & Engg. Co. v.
McClain, 579 S.W.2d 751, 755 (Mo. Ct. App. 1979) (holding that “even in the absence of a principal-agent or partnership
relationship, a party not actually making the representation is liable if he accepted the benefits of the transaction and had either
actual or constructive knowledge at the time of the act, or at the time he accepted the benefits, that an illegal act had been
committed); Williams v. Aetna Finance Co., 700 N.E.2d 859, 868 (Ohio 1998) (“All those who, in pursuance of a common plan
or design to commit a tortious act, actively take part in it, or further it by cooperation or request, or who lend aid or encouragement
to the wrongdoer, or ratify and adopt the wrongdoer’s act done for their benefit, are equally liable.”) (quoting Prosser & Keeton
on Torts (5th ed. 1984) 323, Section 46).
       B.        THERE IS NO CONFLICT BETWEEN SUBCLASSES A AND B ON THE ONE HAND, AND SUBCLASS
            C ON THE OTHER HAND, BECAUSE THE U.C.C. DOES NOT PERMIT A SECURED PARTY TO
            SEND OUT A FRAUDULENT NOTICE MERELY BECAUSE IT WILL TRANSFER COLLATERAL TO
            ANOTHER PARTY (THAT WILL THEN BECOME THE SECURED PARTY) THAT WILL
            ULTIMATELY SELL THE CAR.
 
      TranSouth argues that there is a conflict between the members of Subclasses A and B on the one hand, and the members
of Subclass C on the other.  TranSouth bases this argument upon the premise that it is not possible for both of the following two
things to occur: (a) TranSouth repossesses a class member’s car, as the “secured creditor” under the U.C.C., and then sends out
a fraudulent notice to class members that violates the U.C.C.; and (b) at a later point, after the phony “bid” process has been
completed and after Falk has taken possession of both the car and the loan documents, Falk becomes the “secured creditor” under
the U.C.C., such that it is subject to the rules of the U.C.C. at the time that it (still later) sells the car off the lot to some new
person.

      TranSouth’s argument is plainly wrong.  TranSouth begins with the odd notion that a party’s status as “secured creditor”
under the U.C.C. is permanent and immutable.  If TranSouth is the secured creditor at one point in time, it insists, that means that
Falk could not become the secured creditor at another point in time.  Naturally, TranSouth cites no authority for this premise,
which is flatly wrong.
      It is not at all inconsistent with Plaintiffs’ previous factual and legal positions for the Plaintiffs to argue to the jury that
both TranSouth and Falk served as the “secured party” in the fraud scheme, albeit at different phases of the scheme.  In fact, it is
a settled issue under Virginia law that TranSouth’s status as a secured creditor in this matter turns on timing and relationship
between the parties – that is, when it carried out the critical steps of the scheme in relation to the transfer and/or sale of the
victims’ cars and commercial paper.  Rhoten v. United Virginia Bank, 269 S.E.2d 781 (Va. 1980).  In Rhoten, the Supreme
Court of Virginia was asked to decide whether the delivery by a bank of a consumer good (a mobile home), after repossession, to
an insurer (AMI) (which insured the bank against loss to a default in the terms of the original installment sale security agreement),
was more in the nature of a “sale or other disposition” under  Va. Code Ann. § 8.9-504(1) or a “transfer of collateral”  under Va.
Code Ann. § 8.9-504(5).   Although the Court needed more to decide the ultimate issue, the Court framed the issue as follows:

      This holding necessitates consideration of . . . whether the delivery by the bank of the mobile home to AMI was a
      “sale or other disposition” or a “transfer.”  If the transaction was a “sale or other disposition” under § 8.9-504 (3),
      previously quoted, then notice to Rhoten was required.  If the transaction was a “transfer” under § 8.9-504 (5),
      then the requirement of notice was obviated. . . .  The question of whether the Bank’s delivery of the mobile
      home to AMI constituted a “transfer” or a “disposition” turns upon the relationship between the Bank
      and AMI.
 
269 S.E.2d at 785-786 (emphasis added).  Accord 10 Anderson Uniform Commercial Code §9-504:176 (1999 revision)
(determination of whether a “transfer” or a “disposition” was effected depends on the facts of the individual case). 
      Thus, the respective liability under the U.C.C. of TranSouth or Falk depends upon which is the “secured creditor” at any
particular point in the churning scheme.  This temporal facet flatly refutes TranSouth’s argument that there is a factual conflict
between the claims being asserted by the subclasses, because TranSouth was the secured creditor in the transaction when it sent
out the fraudulent and false Notices of Sale.  TranSouth also was the “secured creditor” at the time of the “disposition” of
Plaintiffs’ cars under the phony “bid” scheme, and at a time when TranSouth was required to dispose of the cars in a
commercially reasonable manner.

      Based upon the documentation and other evidence before the District Court in previous motions, including Plaintiffs’
Motion for Partial Summary Judgment, we know that Falk and TranSouth disposed of the victims’ cars during a phony “bid”
process that took place around the 20th of the month following the month of repossession.   It is also alleged that the “bid” process
was used by Falk and TranSouth both to give the appearance that a bona fide U.C.C. “disposition” had taken place as well as to
calculate the bogus deficiency that Falk later used as the basis for a suit in Virginia General District Court.  Thus, although it was
a sham, the bogus “bid” was portrayed to the world by TranSouth and Falk as the “sale or disposition” required by Virginia’s
U.C.C. 
      When, after the bogus “bid” process, TranSouth assigned the underlying RISC – i.e., the commercial paper – to Falk as
part of the sham protocol set forth in the Repurchase Agreement, Falk, in furtherance of the fraud scheme, became the “secured
creditor.”  It represented itself to the debtor as the “secured creditor” and sued in Virginia’s General District Court as the
“secured creditor” entitled to seek a deficiency against the debtors, and in particular, the members of Subclasses A and B. 

      Falk also was the secured creditor when the only true marketplace sale of the vehicle took place – that is, when Falk put
the car back on his lot and resold the car to the next victim of the scheme (always at a price which far exceeded the phony “bid”
and often at a price which exceeded that imposed on the first victim).  This sale off of Falk’s lot was the only true “marketplace
sale” that occurred for purposes of measuring surplus damages.  See In re Ford Motor Co., 27 U.C.C. Rep. Serv. 1118 (FTC
1979) rev’d on other grounds, Ford Motor Co. v. FTC, 673 F.2d 1008 (9th Cir. 1981).  
      Plaintiff Laura Richard’s case demonstrates these timelines and the shifting roles of TranSouth and Falk:
      Laura Richards
       o   Car purchased and financed through TranSouth             May 7, 1991
            (TranSouth is Secured Creditor)
 
       o   Car repossessed 
            (TranSouth is Secured Creditor)                                   Early June 1992 
 
       o   Notice of Private Sale sent by Transouth                                   June 4, 1992
            (TranSouth is Secured Creditor)
 
       o   Date that right of redemption
      expired according to Notice of 
      Private Sale                                                                                          June 18, 1992
            (TranSouth is Secured Creditor)