Last June, the Supreme Court issued a noteworthy decision in the TransUnion v. Ramirez case, holding that the vast majority of an 8,000-plus member Fair Credit Reporting Act (FCRA) class lacked standing because they had not suffered a concrete injury. TransUnion LLC v. Ramirez, 141 S. Ct. 2190 (2021). On February 3, after returning to the District Court with a significantly reduced class, the parties filed a notice with the court indicating they have now reached a class settlement. Though the details of the settlement are not yet public, this settlement comes after more than a decade of litigation, which resulted in notable rulings that have redefined litigants’ approach to FCRA claims.
As Troutman Pepper has previously reported, the Ramirez suit arose from a product offered by TransUnion, which attached a “potential match” alert to the credit files of individuals with names matching a name designated by the Department of the Treasury’s Office of Assets Control (OFAC) as individuals restricted from certain transactions for national security reasons (e.g., terrorists, drug traffickers, etc.). The named plaintiff, Sergio Ramirez, alleged he suffered actual injury when the OFAC “potential match” alert resulted in him being denied a car loan. Unlike Ramirez, however, a majority of the putative class members (over 75%) did not allege that TransUnion sent any inaccurate information to any creditor; instead, it was only alleged that the “potential match” alert was attached to their credit files and stored in TransUnion’s database, which could have been transmitted to a creditor upon request. In addition to asserting that TransUnion failed to follow reasonable procedures to ensure maximum possible accuracy by including the “potential match” alert in consumers’ credit files, Ramirez also alleged TransUnion violated the FCRA’s requirement to provide consumers, upon request, with all information in their files. This claim arose from TransUnion’s alleged practice of sending information regarding the OFAC “potential match” alert in a separate mailing from the full file disclosure letter upon the consumer’s request for a file disclosure.
The District Court initially certified a national class for the FCRA claims and a California subclass for an injunctive relief claim arising under the California Consumer Reporting Agencies Act. Ramirez v. Trans Union, LLC, 301 F.R.D. 408 (N.D. Cal. 2014). At trial, a jury awarded Ramirez and the class members $8 million in statutory damages and $52 million in punitive damages. On appeal, the Ninth Circuit affirmed certification and the statutory damages award, but reduced the punitive damages award to $32 million. Ramirez v. TransUnion LLC, 951 F.3d 1008 (9th Cir. 2020). Regarding the reasonable procedures claim, even though most of the class members could not allege their credit file with an OFAC alert was ever transmitted to a third party, a divided Ninth Circuit panel held a “material risk of harm” existed, sufficient to establish Article III standing simply because TransUnion had compiled the allegedly false information in its database and could have disseminated it upon request. The Ninth Circuit further held every class member suffered an injury by receiving the nonconforming disclosures since the separate credit file and OFAC-alert mailings were “inherently shocking and confusing.”
Ramirez and the class’s success, however, was greatly reduced by the Supreme Court. In June 2021, the Court held that Ramirez and the small portion of the class members whose reports with the “potential match” alert had been disseminated, had suffered a concrete injury sufficient to confer Article III standing, but that the remaining class members had not. The Court held that the mere existence of the OFAC alert in their credit files, without proof of dissemination, did not constitute a concrete injury. Further, the Court held that a mere risk of future harm that never materializes, standing alone, does not constitute a concrete injury. Regarding the disclosure claims, the Court held that none of the class members other than Ramirez had suffered a concrete injury, as there was no evidence that any class member other than Ramirez had opened the mailings, suffered confusion or distress, or that they would have tried to correct their files if they had received the mailings in the proper format. As such, the Court held that these claims asserted nothing more than “bare procedural violation[s], divorced from any concrete harm,” insufficient to confer standing. See Spokeo v. Robins, 136 S. Ct. 1540, 1549 (2016).
With the size and scope of the class substantially reduced by the Court’s decision, the parties returned to the District Court for further proceedings. On February 3, after engaging in mediation, the parties notified the District Court that they had reached a class settlement in principle. Although the terms of that settlement are not public yet, observers of this long running and high-profile case will surely be interested to see the end result. Troutman Pepper will continue to provide updates as more information is made available.
