Supreme Court limits class standing in FCRA suit
On June 25, the U.S. Supreme Court issued a 5-4 decision in TransUnion LLC v. Ramirez, holding that only a plaintiff concretely harmed by a defendant’s violation of the FCRA has Article III standing to seek damages against a private defendant in federal court. In writing for the majority, Justice Brett Kavanaugh reversed and remanded a 2020 decision issued by the U.S. Court of Appeals for the Ninth Circuit, which found that all 8,185 class members had standing to recover statutory damages due to, among other things, TransUnion’s alleged “reckless handling of information” from the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC), which, according to the appellate court, subjected class members to “a real risk of harm” when TransUnion erroneously linked class members to criminals and terrorists with similar names in a database maintained by OFAC. (Covered by InfoBytes here.) The 9th Circuit, however, did reduce punitive damages, explaining that, although TransUnion’s “conduct was reprehensible, it was not so egregious as to justify a punitive award of more than six times an already substantial compensatory award.” TransUnion filed a petition for writ of certiorari after the 9th Circuit denied its petition for rehearing.
The Court considered whether federal courts can certify consumer classes where the majority of class members have not alleged the type of concrete injury necessary to establish Article III standing, even if the named plaintiff suffered an injury meeting this bar. The parties stipulated prior to trial that only 1,853 members of the class had misleading credit reports containing OFAC alerts provided to third parties during the period specified in the class definition, whereas the remaining class members’ credit files were not provided to any potential creditors during that period. In applying the standing requirement of concrete harm, the majority concluded that the 6,332 class members whose credit reports were not provided to third parties did not suffer a concrete harm and thus did not have standing as to the reasonable-procedures claim. The majority further determined that even though all 8,185 class members complained about alleged formatting defects in certain mailings sent to them by TransUnion, only the lead plaintiff had demonstrated that the alleged defects caused him concrete harm, thus only he could move forward with those claims. According to the majority, the remaining class members failed to explain how the formatting error prevented them from requesting corrections to prevent future harm.
“The mere existence of inaccurate information, absent dissemination, traditionally has not provided the basis for a lawsuit in American courts,” the majority wrote, adding that while the Court “has recognized that material risk of future harm can satisfy the concrete-harm requirement in the context of a claim for injunctive relief to prevent the harm from occurring, at least so long as the risk of harm is sufficiently imminent and substantial,” in this instance the 6,332 class members have not demonstrated that the risk of future harm materialized.