U.S. Supreme Court Issues Pivotal Article III Standing Opinion, Reversing $40 Million Judgment in FCRA Class Action

King & Spalding

On June 25, 2021, the Supreme Court issued a decision in TransUnion LLC v. Ramirez, a highly anticipated appeal that we previously covered in our March and December issues last year. In a 5–4 opinion, the Supreme Court reversed and remanded the Ninth Circuit’s judgment in favor of a class asserting claims under the Fair Credit Reporting Act (“FCRA”), holding that significant portions of the class had not demonstrated that they had standing to pursue their claims. In so doing, the Supreme Court drew upon its prior precedent in Spokeo v. Robins to further clarify the “concreteness” requirement for Article III standing, particularly as applied to intangible harms flowing from statutory violations. Significantly, the Court held that the mere risk of future harm—without more—cannot constitute concrete harm in a suit for damages, absent evidence that the risk of future harm actually materialized or that the class members were independently harmed by their exposure to the risk itself.

  • Plaintiff brought a putative class action against TransUnion for including in Plaintiff’s credit file an alert indicating that he might be on the U.S. Treasury Department’s Office of Foreign Assets Control’s (“OFAC”) list of Specially Designated Nationals (“SDNs”) prohibited from doing business in the United States.
  • Plaintiff brought claims under the FCRA, alleging that (1) TransUnion failed to maintain reasonable procedures for assuring maximum possible accuracy when preparing a consumer report about him and (2) it failed to disclose the OFAC-related information and to provide him with a summary of his rights in the consumer disclosure it provided to him.
  • At trial, the parties stipulated that TransUnion disseminated consumer reports containing the challenged OFAC information on only 1,853 of the 8,185 class members (as opposed to only maintaining allegedly inaccurate information about consumers in TransUnion’s own files). Plaintiff did not offer any evidence that the class members were actually injured beyond his own experiences. A jury found in favor of Plaintiff and the class and assessed $60 million in classwide damages, finding that TransUnion willfully violated its obligations under the FCRA. On appeal, the Ninth Circuit affirmed the bulk of the district court’s rulings, with the exception of a reduction in punitive damages (resulting in an amended judgment of roughly $40 million).
    • Notably, however, the Ninth Circuit agreed with TransUnion that “every member of a class certified under Rule 23 must satisfy the basic requirements of Article III standing at the final stage of a money damages suit when class members are to be awarded individual monetary damages”—a previously unsettled issue in the Ninth Circuit (and certain other circuits as well).
  • On appeal, the Supreme Court reversed the judgment, and in so doing clarified the definition of “concrete injury” that was left unsettled in the Court’s previous opinion in Spokeo.
  • The Supreme Court began its analysis by expressly holding that “every class member must have Article III standing in order to recover individual damages.”
    • The Court declined, however, to address the distinct question of whether every class member must demonstrate standing at the class certification stage—an issue that has divided courts of appeals.
  • Moreover, the Court reiterated that class member standing must be shown at every stage of the litigation, “with the manner and degree of evidence required at the successive stages of the litigation.” And standing must be shown “for each claim that [class members] press and for each form of relief that they seek.”
  • The Supreme Court also clarified Spokeo’s language stating that a “risk of real harm” can be sufficient to confer standing in some circumstances. The Court agreed with TransUnion’s argument that “in a suit for damages, the mere risk of future harm, standing alone, cannot qualify as a concrete harm—at least unless the exposure to the risk of future harm itself causes a separate concrete harm.” As the Court explained, “[n]o concrete harm, no standing.” Accordingly, a risk of real harm must either (1) materialize into the actual harm, or (2) cause some independent harm to confer standing.
    • Applying its standing analysis to the case at hand, the Court held that only those 1,853 class members whose inaccurate reports were disseminated had standing to pursue a reasonable-procedures claim under the FCRA. In contrast, the other 6,332 class members lacked standing because their consumer reports were not disseminated to third parties and because Plaintiff had presented no evidence of any independent harm (e.g., emotional distress) visited on these class members.
  • On the FCRA disclosure claims, the Supreme Court held that an “asserted informational injury”—like the denial of information to which one has a legal right—“that causes no adverse effects cannot satisfy Article III.” In other words, the failure to provide information—even if required by a federal law—is not enough on its own to confer standing. Plaintiffs must show some additional harm resulting from the deprivation of information, such as—like the Court noted—emotional distress.
  • Because the class members (other than the named plaintiff) had not demonstrated that they suffered any “downstream consequences”—such as confusion, distress, or a hindrance in their ability to correct erroneous information before it was sent to a third party—the Supreme Court held that they did not have standing to bring their disclosure claims.
  • Justice Thomas—in a dissent joined by Justices Breyer, Sotomayor, and Kagan—took issue with the majority’s pronouncement that “under Article III, an injury in law is not an injury in fact.” Rejecting the notion that the Court “should be in the business of second-guessing private rights,” Justice Thomas opined that the majority’s approach undermined separation-of-powers principles by rendering federal courts the sole arbiters of whether legal rights created by Congress can be enforced in federal court. In a footnote, he observed that the majority’s decision may amount to a “pyrrhic victory for TransUnion,” as state courts could ultimately become the exclusive forum to adjudicate these types of class actions, even though the statutory rights at issue are creatures of federal law.
  • Echoing Spokeo, the Supreme Court’s decision in Ramirez reiterated that a plaintiff seeking to establish standing based on a statutory violation must show that the violation resulted in real harm beyond the mere invasion of a legal right. Ramirez also underscores the evidentiary burden plaintiffs face in damages cases predicated upon an increased risk of future harm. For instance, the Court approvingly cited language from Judge McKeown’s dissenting opinion in the Ninth Circuit, which concluded that a material risk of concrete harm could not be presumed because Plaintiff failed to present evidence establishing “a serious likelihood of disclosure.” Finally, while the Court left open the question whether absent class members must prove standing at the class certification stage, courts ought to consider the evidence needed to answer that ultimate question in assessing Rule 23(b)(3)’s predominance requirement.
  • You can read the Supreme Court’s opinion here.

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