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28 June 20218 minute read

"No concrete harm, no standing": Supreme Court issues major Article III standing opinion in TransUnion v. Ramirez

On Friday, the US Supreme Court, in TransUnion v. Ramirez, issued another significant ruling providing further guidance regarding Article III standing and, in particular, what additional harm plaintiffs must demonstrate when they allege violations of a statutory right. 

The 5 to 4 opinion, authored by Justice Brett Kavanaugh:

  • makes clear that allegations that a statute was violated do not, by themselves, create standing and that courts must separately consider whether a plaintiff suffered a concrete harm to have standing to seek damages
  • clarifies that prior statements that a risk of future harm could be sufficiently concrete were predicated on a claim for injunctive relief, but the test for evaluating claims of future harm in damages cases will require more and be different going forward
  • does not address the issue, on which the circuit courts are split, of whether a class may be certified that includes uninjured plaintiffs, emphasizing: “Every class member must have Article III standing in order to recover individual damages. ‘Article III does not give federal courts the power to order relief to any uninjured plaintiff, class action or not’” and
  • does not address the lower court’s ruling on typicality, which was also at issue on appeal, given its resolution of the standing issues. 

This ruling, which follows the 2016 Spokeo v. Robins decision on the same issue, is likely to have far-reaching consequences, given that class actions alleging purely procedural statutory violations continue to proliferate.

Background

Plaintiff Sergio Ramirez, in the course of purchasing a car, obtained a credit report from TransUnion which stated that his name was a possible match for a name on the Office of Foreign Assets Control (OFAC) watch lista list that typically contains the names of known terrorists and other serious criminals.  As a result, the car dealership refused to sell Mr. Ramirez the car.  He contacted TransUnion and requested a copy of his credit file.  TransUnion sent him his credit file and the statutorily required summary of rights; however, the mailing omitted any mention of the OFAC alert.  The next day, TransUnion sent him a second mailing, which included the OFAC alert but did not include the required summary of rights. 

Based on these events, Mr. Ramirez filed a putative class action alleging three violations of the federal Fair Credit Reporting Act (FCRA).

  • First, the plaintiff alleged TransUnion did not follow “reasonable procedures” to ensure the accuracy of the credit file (because the file mistakenly implied he was on the OFAC watch list).
  • Second, the plaintiff claimed TransUnion failed to provide him with all the information in his credit file, as the FCRA requires, because the first mailing he received did not mention the OFAC alert.
  • Third, the plaintiff asserted that TransUnion violated the FCRA by failing to provide him with the summary of his rights “with each written disclosure” because the second mailing did not include a summary of his rights. 

At the trial court, the parties stipulated that the class, as defined, included 8,185 members. The parties also stipulated that only 1,853 of the class members actually had their credit reports (which included a mistaken mention of the OFAC watch list) disseminated to potential creditors.  The remaining 6,332 class members were listed in internal TransUnion records as potentially being on the OFAC watch list, but that information was never disclosed to a potential creditor.

The jury awarded the class over $60 million in statutory and punitive damages.  On appeal, the Ninth Circuit reduced the damages award to approximately $40 million but held that all 8,185 class members had standing. 

The opinion

Framing the issue as “whether the 8,185 class members have Article III standing as to their three claims,” the Court held that only the 1,853 class members whose credit files were actually distributed had standing to pursue the first FRCA claim, and none of the class members, other than Mr. Ramirez, had standing to bring the other two FRCA causes of action.

“The question in this case,” the Court stated, “focuses on the Article III requirement that the plaintiff ’s injury in fact be ‘concrete’that is, ‘real, and not abstract.’”  Citing Spokeo, the Court noted that the concreteness inquiry “asks whether plaintiffs have identified a close historical or common-law analogue for their asserted injury.”

Importantly, although noting that Congress’s view is “instructive” when determining whether there is an injury in fact, the Court cautioned that Congress “may not simply enact an injury into existence, using its lawmaking power to transform something that is not remotely harmful into something that is.” 

It should now be clear that simply alleging a statutory violation, without more, is not enough to establish Article III standing:  “Congress’s creation of a statutory prohibition or obligation and a cause of action does not relieve courts of their responsibility to independently decide whether a plaintiff has suffered a concrete harm under Article III ….  For standing purposes, therefore, an important difference exists between (i) a plaintiff ’s statutory cause of action to sue a defendant over the defendant’s violation of federal law, and (ii) a plaintiff ’s suffering concrete harm because of the defendant’s violation of federal law.” 

Applying these principles to the first FCRA claim, the Court held that the 1,853 class members who had their credit reports distributed to creditors had suffered a concrete injury in fact because the alleged reputational injury was akin to the tort of defamation.  The remaining 6,332 class members, howeverwhose credit files were not released to potential creditorsdid not suffer any concrete injury:  “[T]he retention of information lawfully obtained, without further disclosure, traditionally has not provided the basis for a lawsuit in American courts, meaning that the mere existence of inaccurate information in a database is insufficient to confer Article III standing.”  The Court analogized this to a defamatory letter that, while insulting, was never sent.

Moreover, the Court rejected the plaintiffs’ argument that the 6,332 class members had standing because there was a risk of future harm given that their credit files might be disseminated in the future.  In support of their argument, the plaintiffs relied on statements in Spokeo and Clapper v. Amnesty Int’l USA that a material risk of harm could sometimes satisfy the concreteness requirement. The Court distinguished its prior decision in Clapper as applying to a claim for injunctive relief.  And, the Court clarified, “Spokeo did not hold that the mere risk of future harm, without more, suffices to demonstrate Article III standing in a suit for damages.”  Instead, the Court found “persuasive” TransUnion’s argument that “in a suit for damages, the mere risk of future harm, standing alone, cannot qualify as a concrete harmat least unless the exposure to the risk of future harm itself causes a separate concrete harm.”  The Court found that the plaintiffs did not demonstrate that the risk of harm materialized, that there was evidence of an independent harm, or that there was a factual basis for concluding that there was a sufficient risk of future harm.

As to the second and third FCRA claims, regarding the failure to provide the complete credit file and the omission of the summary of rights, the Court held the class did not have standing:  “The plaintiffs did not allege that they failed to receive any required information. They argued only that they received it in the wrong format.”

“Plaintiffs have not demonstrated that the format of TransUnion’s mailings caused them a harm with a close relationship to a harm traditionally recognized as providing a basis for a lawsuit in American courts….  Without any evidence of harm caused by the format of the mailings, these are bare procedural violation[s], divorced from any concrete harm.” 

“No concrete harm, no standing,” Justice Kavanaugh concluded.

Judge Clarence Thomas dissented, joined by Justices Stephen Breyer, Sonia Sotomayor, and Elena Kagan.  And Justice Kagan also issued a dissent, to which Justices Breyer and Sotomayor joined. 

Stay tuned as the courts continue to apply this decision and to grapple with new questions related to Article III standing in relation to class action litigation.  Find out more about the implications of this decision by contacting any of the authors or your DLA Piper relationship attorney.

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