In a previous blog, I wrote about Plaintiff Sergio Ramirez, who was trying to buy a car in 2011 and found out that he was incorrectly put on a “terrorist list” by TransUnion LLC (“TransUnion”), one of the three major credit bureaus. Ramirez had sued on behalf of himself and 8,184 other TransUnion users who were also wrongfully designated. Ramirez alleged that TransUnion violated the Fair Credit Reporting Act (FCRA) “by placing the false alerts on their credit reports and later sending misleading and incomplete disclosures about the alerts.” A jury found in favor of the case and each class member was awarded $984.20 in statutory damages and $6,353.08 in punitive damages.
TransUnion appealed, in part because the class members (not including Ramirez) lacked standing. The Ninth Circuit held that “each member of a class certified under Rule 32 must satisfy the bare minimum of Article III standing at the final judgement stage of a class action in order to recover monetary damages in federal court.” The Ninth Circuit also held that each class member had requisite standing to obtain damages, even though about 3/4 of the class members did not have their reports disclosed to third parties. The court had found standing in that TransUnion violated the class members’ statutory rights under the FCRA.
On December 16, 2020, TransUnion filed a writ of certiorari, meaning that all Justices have an opportunity to state their views on the case and raise any questions or concerns they may have. The court granted this petition.
On March 30, 2021, the Supreme Court will hear the arguments on whether a damages class action is permitted by Article III of the Constitution or Rule 23 of the Federal Rules of Civil Procedure where the majority of the class has suffered no actual injury. This will be the first time the Supreme Court will apply the rulings of Spokeo, which held that plaintiff “cannot satisfy the demands of Article III by alleging a bare procedural violation,” to an entire class.
The Supreme Court’s ruling would make it difficult for larger companies subject to a variety of laws and regulations to defend against class actions. Other companies such as Google, eBay, and several others, have filed a brief in support of TransUnion. They argue that the services provided “are often target for claims under the federal and state laws that confer private rights of action and contain statutory damages provisions similar to the provisions in the FCRA including the Wiretap Act, the Stored Communications Act, the Video Privacy Protection Act, and the Telephone Consumer Protection Act.” If the ruling is in TransUnion’s favor, this could aid those companies in defending against damages claims based only on statutory violations.
The Supreme Court’s decision could also affect the settlement process inherent in the litigation of class actions. The U.S. Chamber of Commerce and the National Federation of Independent Businesses filed an amicus brief arguing that affirming the Ninth Circuit’s holding “would embolden [enterprising] lawyers to seek out atypical clients in order to leverage their uniquely sympathetic experiences into a multi-million-dollar damages award or settlement – all based on technical statutory violations.” In their view, upholding the lower court’s ruling would encourage settlements even more so than class actions already do.
The Supreme Court’s forthcoming decision will have significant implications on defenses to class actions, and could possibly expand liability for companies most often entangled in class actions with plaintiffs that have tenuous claims based only on statutorily created rights of action.