Supreme Court Expands Standing Article III Requirements of Spokeo

Strong points

  • The US Supreme Court overturned a $ 40 million Fair Credit Reporting Act (FCRA) collective damages award against TransUnion, one of the “big three” credit reporting agencies.
  • Reversing an earlier decision of the United States Court of Appeals for the Ninth Circuit, the Supreme Court ruled in a 5-4 decision that 6,332 of the 8,185 certified members of the group lacked legal standing under Article III because TransUnion had not released their credit reports to third-party companies. during the relevant period.
  • The Supreme Court ruling has broad implications both for FCRA litigation, in particular, and for class actions, more generally, with the potential to resolve a split between appellate courts over breach of law. data and ransomware class actions.

In TransUnion LLC v. Ramirez, the United States Supreme Court overturned a collective compensation of $ 40 million under the Fair Credit Reporting Act (FCRA) against TransUnion, one of the “big three” credit reporting agencies. Decision 5-4, released on June 25, 2021, has broad potential implications for class certification and FCRA litigation going forward. While not the result of a data breach or ransomware event, the court ruling appears likely to impact class actions against cyberattacks brought without actual harm (such as identity theft. or financial loss).


The lead applicant, Sergio Ramirez, represented a certified class of 8,185 consumers who were on TransUnion’s OFAC Name Screen Alert (OFAC List). This database identifies a consumer’s name as a “potential match” with a name on a list of terrorists, drug traffickers and other serious criminals maintained by the Office of Foreign Assets Control (OFAC) of US Department of the Treasury. Ramirez learned of the OFAC list when a salesperson at a car dealership informed him that he could not buy a vehicle because his name was on a “terrorist list”.

A jury returned a verdict in favor of Ramirez and a class of consumers whose names were on the OFAC list and who had also received two letters from TransUnion, one of which did not contain information about the OFAC list and another containing OFAC information. but omitted a summary of the rights required by the FCRA. The United States Court of Appeals for the Ninth Circuit upheld the award, in the relevant part.

Supreme Court decision

Reversing the Ninth Circuit, the Supreme Court ruled that 6,332 of the 8,185 certified group members lacked standing under Article III despite their inclusion on TransUnion’s OFAC list because TransUnion did not have standing to bring proceedings under Article III. not released their credit reports to third party companies during the relevant period. To achieve this result, the Court relied on Spokeo, Inc. v. Robins, 578 US 330, 340, and concluded that these members of the group had not suffered sufficiently “concrete” prejudice to confer standing on Article III. According to this analysis of standing under Article III, a claimant must identify a close historical or common law analogue for the alleged harm. Physical, pecuniary and reputational damage can easily be qualified as concrete damage within the meaning of Article III. By analogy with the tort of defamation, which requires the “publication” of the defamatory statement, the court held that since TransUnion had not released the credit reports of 6,332 class members to third-party companies during during the relevant period, these members of the group have not demonstrated the concrete prejudice required to avail themselves of Article III.

As to FCRA’s claims based on TransUnion’s letters to class members, the court ruled that the 8,185 class members lacked standing under Article III because the plaintiffs failed to submit no evidence that a single member of the group, other than Ramirez, had opened the mailings or was confused, distressed or relied on the information in any way. The court ruled that even though the letters constituted technical violations of the FCRA, these simple procedural violations could not proceed without proof of concrete harm.

Potential implications

The Supreme Court’s ruling will have broad implications going forward both for FCRA litigation, in particular, and class actions, more generally.

As a possible boon for companies facing a class action lawsuit in the future, federal courts could take a closer look at whether the class members have identified a historical or common law analogue for the harm they claim. While this investigation does not require “an exact duplicate in American history and tradition,” it is not an “open invitation to federal courts to relax Article III on the basis of contemporary beliefs and evolving on the types of lawsuits to be heard by federal courts. ” If class members fail to demonstrate the type of physical, monetary or reputational harm traditionally associated with common law crimes, companies should consider a permanent challenge under Article III. Application of TransUnion seems particularly likely in cases resulting from data breaches and ransomware events. These class actions are frequently brought simply because the attacked company sends a notice required under state data breach notification laws. The courts have been divided on what counts as recognizable harm in this circumstance. TransUnion supports courts that have said that getting a data breach notification letter is not enough to open the doors of a federal courtroom, absent identity theft or economic damage.

On the other hand, as Justice Clarence Thomas suggests in his dissent, successful Article III standing challenges could simply shift class actions to state courts that have no requirements. comparable in quality to Section III, such as California and Michigan. In this regard, Justice Thomas notes that the majority opinion could be an empty victory for TransUnion, as it ensures that state courts will exercise exclusive jurisdiction over these types of class actions. While Justice Thomas expresses a valid concern, such a result begs the question whether Congress can create a cause of action that must be argued outside Article III courts because the cause of action protects plaintiffs who lack standing under Article III. Class action defendants facing federal claims in state court should consider whether this argument offers a useful defense.

With respect to FCRA disputes, in particular, the court’s decision is an open invitation to defendants to assert a permanent challenge in cases where the plaintiff’s credit report has not been released to potential creditors. Indeed, the court even rejected the plaintiffs’ argument that OFAC’s inaccurate information was “posted” internally to TransUnion and to the vendors who printed and mailed the mailings that the class members received. sufficient to confer standing.

However, the Court also offered the plaintiffs a fig leaf by raising the possibility (without deciding the issue) that a consumer could suffer tangible harm in the form of emotional or psychological harm simply by seeing inaccuracies on their own. credit report. This type of psychological harm, it argues, is analogous to that experienced by victims of intentionally inflicted emotional suffering.

Since the defendant in this case was a credit reporting agency, the implications of the court’s ruling for credit information providers, such as creditors, are less clear. For example, the Court had no reason to question whether providing consumer credit information to credit bureaus constitutes publication of the information in a manner sufficient to confer quality. Even so, the court suggests that providing information to credit bureaus might not be enough, noting that libel has historically required proof that the defendant “actually brought one idea to another’s perception” and therefore “that the document was actually read and not just processed.” It is not clear that information provided to credit bureaus is actually read by anyone unless and until it is published as a credit report and released at the request of the consumer or a potential creditor.

In short, the Supreme Court’s decision in TransUnion LLC v. Ramirez provides additional fodder to challenge standing and defeat class certification. But it remains to be seen whether this will simply move class actions to state courts with lower quality requirements.

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