“No Concrete Harm, No Standing:” US Supreme Court Decision Strengthens Quality Requirements For Fair Credit Reporting Act Claims | K&L Gates LLP

On June 25, 2021, the United States Supreme Court issued its decision in TransUnion LLC v. Ramirez, clarifying the nature of the harm sufficient to establish the quality of Article III to uphold a claim under the Fair Credit Reporting Act (FCRA).1 After Ramírez, plaintiffs seeking to bring an FCRA class action suit must establish concrete harm that is more than mere speculation, and they must do so for all class members with the requisite type of evidence required at each particular stage of the litigation. . The impact of holding Ramírez will likely extend to class issues beyond the FCRA context.

In Ramírez, a California dealership performed a credit check on the applicant when he and his wife sought to purchase a car.2 The credit check, provided by TransUnion, indicated a potential match between the complainant’s name and a name on a terrorist list maintained by the US Treasury’s Office of Foreign Assets Control (OFAC).3 Therefore, the plaintiff’s wife bought the car in her name rather than jointly with the plaintiff.4 The plaintiff sued, claiming that TransUnion had violated the FCRA when it failed (1) to follow reasonable procedures to ensure the accuracy of the information in its credit report, (2) to provide all of its information. credit report on request, and (3) provide a summary of its rights “upon each written disclosure[.]”5

The plaintiff sought to represent a national class of individuals allegedly located in a similar situation, and the Northern District of California certified a class of individuals who received a letter similar to the one TransUnion sent to the plaintiff stating that the name of the recipient potentially matched a name on OFAC. listing.6 Of the 8,185 people in the group, only 1,853 people had this information released to a third party.7 Nonetheless, the trial court ruled that all class members had standing under Article III, and ruled for the class on the merits of the FCRA’s claims.8 On appeal, the 9th Circuit (1) asserted that all members of the group had standing under Article III, (2) found that Ramirez’s claims satisfied the Fed. R.Civ. P. 23 typicality requirement for class certification, and (3) reduced the amount of punitive damages of the trial court.9

The United States Supreme Court granted certiorari to consider whether the 8,185 class members suffered sufficient factual prejudice to establish standing under Article III to pursue the three claims of the FCRA.ten The court began by reviewing its 2016 FCRA decision in Spokeo, Inc. v. Robins.11 In doing so, the Court (1) reiterated that in analyzing standing, a federal court “should assess whether the harm alleged to the plaintiff has a” close connection “to harm” traditionally “recognized as providing a basis for a claim. lawsuit in america courts[,]”12 and (2) rejected the proposition that “a plaintiff automatically satisfies the factual prejudice requirement whenever a statute grants a person a statutory right and seeks to authorize that person to bring an action to assert that person. law “.13 The light at Speak, the Court reaffirmed the need for a demonstration of “tangible harm” to justify standing under Article III.14 In addition, the Court recalled that a complainant must establish standing “with the manner and degree of proof required at the successive stages of the litigation”.15

The Court then focused its analysis on whether each of the members of the Ramírez class could establish concrete harm based on the inclusion of incorrect information from OFAC in their credit records.16 The Court found that the 1,853 class members whose credit reports were provided to third parties had suffered tangible harm.17 The Court considered that the transmission of erroneous derogatory information to third parties was closely linked to damage traditionally recognized as a ground for reparation, namely defamation.18

But the court found that the other 6,332 members of the group had not suffered concrete harm.19 By comparing the Ramírez to that of a libel claim, the Court noted that for these individuals there had been no “publication” of the allegedly erroneous facts because TransUnion had not provided the reports to any third party.20 The Court declared that “[t]The mere presence of an inaccuracy in an internal credit report, if it is not disclosed to a third party, does not cause any concrete harm.21 It also rejected the complainants’ argument that the risk of future harm resulting from erroneous information in credit files could constitute concrete harm for the purposes of Article III.22 In addition, the Court ruled that other than the named plaintiff, none of the class members had established concrete prejudice arising from the alleged failure to provide all information in the credit files at their request and to include summaries. the rights of claimants with every disclosure.23 As a result, the Court reversed and referred the case back to the 9th Circuit.24 In doing so, the Court did not consider the lower court’s rule 23 typicality analysis, concluding that “[o]In remand, the Ninth Circuit may first consider whether the class certification is appropriate in light of our conclusion on quality.25

Ramírez will reduce the ability of plaintiffs to maintain the FCRA class action lawsuit and other class actions in federal court. In Ramírez, the Court clarified what constitutes concrete prejudice for the purposes of Article III to maintain an FCRA claim and possibly other similar causes of action. Complainants can no longer establish the quality of Article III by simply alleging the possible risk of allegedly false or misleading information being disclosed to third parties. Thus, the ruling will serve to curb frivolous class actions that only speculate on the possibility of future harm. The decision also states that a court should consider the viability of standing for each member of the Article III group as part of the analysis of whether to certify a putative group. In addition, detention will circumscribe claims based on technical violations of the FCRA where a complainant cannot establish concrete harm resulting from the alleged violation. At the same time, while limiting private class litigation in federal courts, Ramírez is unlikely to reduce government enforcement actions to address legal wrongs.

1 No. 20-297, 2021 WL 2599472 (United States June 25, 2021).

2 Ramírez, 2021 WL 2599472, at * 4.

3 User ID.

4 User ID.

5 User ID. to * 5 (citing 15 USC §§ 1681e (b), g (a) (1), g (c) (2)).

6 User ID. (citing Ramirez v. TransUnion LLC, 301 FRD 408 (ND Cal. 2014)).

7 User ID.

8 User ID. (citing Ramirez v. TransUnion LLC, 2016 WL 6070490, at * 5 (ND Cal. October 17, 2016)).

9 User ID. (citing Ramirez v. TransUnion LLC, 951 F.3d 1008 (9th Cir. 2020)).

ten See username. to 6.

11 578 United States 330 (2016).

12 Ramírez, 2021 WL 2599472, at * 6 (citing Speak, US 578 at 341).

13 User ID. to * 8 (citing Speak, US 578 at 341).

14 See, for example, id.

15 User ID. to * 10 (citing Lujan v. Wildlife defenders, 504 US 555, 561 (1992)).

16 See username. at * 10-14.

17 User ID. At 11 o’clock.

18 See username. at * 10–11.

19 User ID. to * 14.

20 See username. to * 11–12.

21 User ID. at 12.

22 User ID. at * 13-14.

23 User ID. to 15.

24 See username. to * 16.

25 User ID. The Court refused to credit the plaintiff’s theory that the “internal publication” of the erroneous information “to the employees of TransUnion and to the salespeople who printed and sent the mailings that the members of the group received” could constitute tangible harm. . User ID. at * 12 n.6. The court’s statement may indicate that recent lower court rulings, such as the 11th Circuit ruling in Hunstein v. Preferred Collection & Management Services, Inc., 994 F.3d 1341 (11th Cir. 2021) (declaration of quality when the defendant transmitted information to the seller), are no longer viable.

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