On Friday, June 25, 2021, in a 5-4 decision, the United States Supreme Court reversed the Ninth Circuit and held the majority of the nearly 8,200 members of a certified class seeking claims under the FRCA against TransUnion lacked Article III standing because they had not demonstrated concrete injury. TransUnion, LLC v. Ramirez, No. 20-297, 2021 WL 2599472 (U.S. June 25, 2021).
Plaintiffs, a certified class of 8,185 members, initially filed suit in the Northern District of California, alleging violations of the Fair Credit Reporting Act (FRCA) against TransUnion, a credit reporting agency, for mistakenly labeling plaintiffs as “potential terrorists” in their credit files. The case went to trial, where the jury returned a verdict in favor of plaintiffs, awarding nearly $8 million in statutory damages and $52 million in punitive damages. TransUnion appealed to the Ninth Circuit Court of Appeals, who affirmed the district court’s holding that all of the class members had standing.[1] TransUnion again appealed and the Supreme Court granted certiorari. Several business organizations, including Facebook, Google, and eBay, filed amicus briefs supporting TransUnion’s position and urging the Supreme Court to narrow the types of privacy suits in which Article III standing is established.
In a 5-4 decision authored by Justice Kavanaugh, the Supreme Court held the majority of class members lacked standing for failure to demonstrate a concrete harm as to the “reasonable procedures” claim under the FRCA. In so holding, the Court emphasized that only 1,853 of the class members had their inaccurate reports actually disclosed to a third party. For the remaining 6,332 members, “[t]he internal [TransUnion] files were not provided to third-party businesses during the relevant period.” Id. at *3.
As stated succinctly by the Court: “No concrete harm, no standing.” Id. at *15.
The Court acknowledged its precedent that “risk of future harm can satisfy the concrete-harm requirement,” but noted that the risk must be “sufficiently imminent and substantial.” Id. at *12. As such, the Court concluded that the 6,332 plaintiffs had not demonstrated materialization of the risk of future harm because (1) their reports were not provided to third parties, and (2) they had not demonstrated any damage resulting from future risk, such as emotional harm, especially where it is unclear the majority of the 6,332 plaintiffs ever even knew of the inaccurate designations prior to the lawsuit. As a result, the Court concluded that all but 1,853 of the members lacked standing with regard to the reasonable procedures claim.
Further, with regard to the plaintiffs’ two additional claims regarding formatting defects in the reports, the Court held that none of the class members—except for representative Ramirez—had demonstrated the defects caused them concrete harm. Therefore, the Court held that all members except Ramirez also lacked standing as to those claims. In light of the Court’s holding regarding standing, the Court further noted the Ninth Circuit could consider in the first instance the appropriateness of class certification.
Justice Thomas wrote a scathing dissent, joined by three of the more liberal members of the Court. Thomas concluded his heated rejection of the majority opinion:
Ultimately, the majority seems to pose to the reader a single rhetorical question: Who could possibly think that a person is harmed when he requests and is sent an incomplete credit report, or is sent a suspicious notice informing him that he may be a designated drug trafficker or terrorist, or is not sent anything informing him of how to remove this inaccurate red flag? The answer is, of course, legion: Congress, the President, the jury, the District Court, the Ninth Circuit, and four Members of this Court.
Justice Kagan joined in Thomas’s dissent but also wrote separately, noting one qualification of her view with regard to overriding Congress’s authorization to sue.
The Court’s ruling in TransUnion v. Ramirez presents great implication in the uptick of legal claims alleging violation of privacy and consumer protection laws. For example, a pending Eleventh Circuit case, Hunstein v. Preferred (highlighted by The Rudnicki Firm last month), may be impacted by the Supreme Court’s ruling. There, a Petition for Rehearing is pending with regard to alleged violations of the FDCPA for disclosure of debt information to a third-party vendor only for printing and mailing to the debtor. The Court’s holding in TransUnion presents new considerations for the Eleventh Circuit in determining whether providing information to a third-party vendor only for printing and mailing to the debtor himself constitutes a concrete harm to establish Article III standing. Based upon the Court’s holding in TransUnion, the party petitioning for rehearing in Hunstein, a debt collection agency, can argue that provision of such information to a vendor only for the furtherance of the agency’s own collection efforts does not constitute disclosure giving rise to concrete harm to the plaintiff.
More information regarding the application of TransUnion will be forthcoming. Check The Rudnicki Firm’s online alerts to monitor the Court’s decision with regard to rehearing and any additional information on this case.
[1] The Ninth Circuit reversed and remanded the jury’s award of punitive damages, however, finding the ratio to statutory damages to be unconstitutionally excessive.