In a significant case for class action litigants, the Supreme Court is expected to resolve a circuit split over the standing requirements applicable to absent class members, and weigh in on the circumstances – if any – under which statutory violations can be deemed to give rise to Article III injury for such class members. The Supreme Court’s holding may have far-reaching implications for many varieties of class actions, including consumer protection and data privacy suits.

In TransUnion LLC v. Ramirez, Dkt. No. 20-297, the credit reporting agency seeks to decertify a Fair Credit Reporting Act (“FCRA”) class action and vacate a $40 million judgment. TransUnion contends that the district court erroneously certified a class of consumers in which the named plaintiff’s injuries were “atypical” and the “vast bulk of the class suffered no Article III injury at all.”[1] The Supreme Court will hear argument on March 30, 2021.

TransUnion v. Ramirez Facts

TransUnion is a bit of a unicorn, both because it is one of the rare class actions to be litigated to a jury verdict and because it involves a named class representative with an unusually sympathetic story. However, it is similar to many other class actions in that the named plaintiff purports to assert statutory claims on behalf of thousands of absent class members, who may have suffered no concrete injury at all.

The litigation arose from a very unfortunate case of mistaken identity. Sergio Ramirez was in the middle of a car purchase when the dealership ran his credit and learned that according to TransUnion’s credit check, his name was a potential match to the Office of Foreign Assets Control list (“OFAC”). This OFAC match alert meant that Mr. Ramirez might be subject to economic and trade sanctions or be on a terrorist watchlist. Embarrassed, Mr. Ramirez was unable to purchase a car that day, and his wife finalized the transaction in her name without him. After Mr. Ramirez repeatedly called TransUnion representatives, TransUnion mailed Mr. Ramirez two letters acknowledging that OFAC information may incorrectly appear on his credit report; while one letter informed him how to seek clarification, the other one—in apparent violation of FCRA requirements—did not.[2] Although he ultimately managed to have TransUnion remove the incorrect OFAC alert from his credit report, Mr. Ramirez had to cancel an international family vacation while he straightened out the misunderstanding.

Mr. Ramirez sued TransUnion for FCRA violations and moved to represent all other consumers that TransUnion had mistakenly labeled as potential OFAC matches.[3] Of the 8,100 consumers whom TransUnion had so labeled, however, only about 1,800 consumers—less than a quarter of the class—had had the mistaken information disseminated to a third party. What is more, there was no evidence that any absent class members had been denied credit, as Mr. Ramirez had. The district court nevertheless certified all 8,100 consumers as a class, concluding that they had all been subject to the same FCRA violations.[4] The district court concluded that Mr. Rodriguez’s “standing is adequate for purposes of the class,” and that, accordingly, no separate showing of standing was necessary for absent class members. The court also briefly noted, in the alternative, that TransUnion’s procedural violations created a “risk” to absent class members that was sufficient to satisfy Article III standing.[5]

At trial, Mr. Ramirez was the sole class member to offer evidence about his alleged injury: he testified that he suffered embarrassment at the dealership, continuously worried that his name appeared on a criminal watchlist, and subsequently canceled an international vacation with his family.[6] The jury ruled in his favor. More remarkable, however, was the fact that they found in favor of the entire class, and awarded statutory and punitive damages to all 8,100 members, despite the lack of evidence that anyone other than Mr. Ramirez had suffered injury due to the purported statutory violation. The judgment totaled over $60 million.[7]

On appeal, the Ninth Circuit Court of Appeals denied TransUnion’s motion to decertify the case, affirmed the judgment against TransUnion, and reduced the total award from $60 million to $40 million. The Ninth Circuit disagreed with the district court’s conclusion that Mr. Ramirez’s injuries conferred standing on absent class members, and held that “every member of a class . . . must satisfy the basic requirements of Article III standing at the final stage of a money damages suit,” i.e., each absent class member must have suffered his or her own injury-in-fact.[8] But the Court was extraordinarily lenient in its application of the prevailing standards for “injury-in-fact,” and concluded that all absent class members could satisfy the standard because TransUnion had “created a risk of harm” to the entire class when it prepared inaccurate reports and “made them readily available to third parties.”[9] The Court of Appeals thus concluded that all members of the class—even those whose reports were never actually disseminated to third parties—had standing.

The Standing Requirements of Absent Class Members

TransUnion presents an important opportunity for the Supreme Court to address an issue that has split the courts of appeals—the showing that proponents of class certification must make to establish that absent class members have Article III standing.[10] The Court held in Robins v. Spokeo that Article III of the United States Constitution requires that a plaintiff demonstrate an “injury in fact” that is “concrete and particularized” and “actual or imminent, not conjectural or hypothetical.” A plaintiff who “allege[s] a bare procedural violation, divorced from any concrete harm” does not satisfy this requirement. Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1547-49 (2016). While some courts have applied Spokeo rigorously to absent class members, others have not.

In the case before the Supreme Court, TransUnion does not dispute that Mr. Ramirez himself satisfies the injury-in-fact requirement. But it contends that the absent class members’ complaints of “inaccurate information lying dormant in a file” do not.[11] As TransUnion emphasizes, these absent class members did not prove denial of credit or even dissemination to third parties. Nevertheless, the Ramirez jury singularly focused on the named plaintiff’s “atypically unpleasant experience” and awarded large sums to class members who “suffered at most a technical violation and some minor confusion.”[12] And the Ninth Circuit’s conclusion that the mere “risk of harm” constituted an injury-in-fact stretched Spokeo beyond recognition.

Statutory Violations and “No Injury” Class Actions

TransUnion’s trial loss and appeal exemplifies the dangers of class certification where the absent class members have shown no injury and rely only on statutory penalties. Though it is black letter law that “bare procedural violations” of a statute do not, in and of themselves, give rise to Article III standing, many state and federal statutes nevertheless purport to impose liability and statutory penalties for such “bare procedural violations.” And as we have covered previously on this blog, some courts of appeals—including the Ninth Circuit—have conflated “bare procedural violations” with a showing of concrete injury for absent class members. The most egregious recent examples of this phenomenon have occurred in the context of data privacy, but courts have also been somewhat inconsistent on the classwide injury and damages required in consumer protection suits (see our prior coverage of this issue here, here, and here).

The Supreme Court’s decision to take up TransUnion’s appeal suggests that additional guidance is on the way on these issues. Given the Court’s current composition, we are hopeful that the Court will make clear that absent class members must satisfy the Article III standards set forth in Spokeo, and show that they suffered more than a “bare procedural violation” to recover damages.

The Supreme Court is expected to issue a ruling before the end of the 2021 Term. We will monitor this case closely and provide further updates.