In TransUnion v. Ramirez, the Supreme Court substantially narrowed a class action suit against the credit reporting agency TransUnion, holding that only class members who suffered a concrete harm due to TransUnion’s practices had standing to sue under the Fair Credit Reporting Act. The case is important because it confirms that plaintiffs must demonstrate they suffered an actual injury in order to sue under a consumer protection law that provides a private right of action.  A statutory violation is not enough to support standing under Article III of the Constitution.

TransUnion is a credit reporting agency that compiles personal and financial information about individual consumers to create consumer reports.  TransUnion then sells those reports to entities such as banks, landlords and car dealerships that request information about the creditworthiness of consumers.  Beginning in 2002, TransUnion introduced a service called OFAC Name Screen Alert.  OFAC is the U. S. Treasury Department’s Office of Foreign Assets Control. OFAC maintains a list of “specially designated nationals” who threaten America’s national security.  Individuals on the OFAC list are terrorists, drug traffickers, or other serious criminals.

A class of 8,185 individuals with inaccurate OFAC alerts on their credit reports sued TransUnion under the Fair Credit Reporting Act. The plaintiffs claimed that TransUnion failed to use reasonable procedures to ensure the accuracy of their credit reports, as obligated by FCRA.  For 1,853 of the class members, TransUnion provided the misleading reports to third-party businesses. The credit files of the other 6,332 class members were not disseminated to third parties.  The district court ruled that all class members had Article III standing on the statutory claims and a jury awarded damages of more than $60 million. A divided panel of the Ninth Circuit affirmed.

The Supreme Court held that only plaintiffs concretely harmed by a defendant’s statutory violation have standing to seek damages against that private defendant in federal court.  Article III standing requires a concrete injury even in the context of a statutory violation.  The Court rejected the proposition that a plaintiff automatically satisfies the injury-in-fact requirement whenever a statute grants a person a statutory right and purports to authorize that person to sue to vindicate that right.  “An injury in law is not an injury in fact.”

Applying these principles, the Court had no trouble concluding that the 1,853 class members suffered a concrete harm that qualifies as an injury in fact.  TransUnion’s dissemination of their credit reports to third parties bears a close relationship to the common law tort of defamation. In contrast, the 6,332 class members whose internal TransUnion credit files were not disseminated to third parties did not suffer a concrete harm.

TransUnion v. Ramirez could have important consequences for class action suits under other consumer protection laws.  The decision signals the Supreme Court’s willingness to limit the rights of plaintiffs to seek monetary damages for technical violations of statutes enacted by Congress.  Plaintiffs should head the refrain “No concrete harm, no standing” when considering whether to bring suit.

Authors: Rudy E. Verner

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