The right of plaintiffs to sue for technical violations of the Fair Credit Reporting Act (FCRA) and other federal privacy laws has been the subject of much class litigation in recent years. The U.S. Supreme Court addressed this increasingly salient issue in Spokeo, Inc. v. Robins, 578 U. S. 330 (2016). “‘Article III standing requires a concrete injury even in the context of a statutory violation,’” the Spokeo Court explained.
Now, the Court has held in a sharply divided 5-4 decision that consumers whose inaccurate credit files were released to third parties by a credit reporting agency suffered a concrete reputational injury and, therefore, had standing to bring claims that the credit reporting agency failed to ensure the accuracy of its credit records. TransUnion LLC v. Ramirez, No. 20-297 (June 25, 2021). However, consumers whose inaccurate credit reports were not disseminated to third parties did not suffer cognizable harm and lacked standing to sue.
The takeaway: “A statutory violation, without more, will not allow an individual entrance to federal court,” note Stephanie L. Adler-Paindiris, co-leader of the firm’s General Litigation Practice Group, and Jason Selvey, a principal in the firm’s Chicago office who regularly defends FCRA cases. In their analysis of the Court’s decision, they write: “TransUnion should strengthen arguments regarding standing in certain employment cases and class actions. In recent years, many employment class actions have been premised on technical statutory violations. Examples include actions alleging defective FCRA notices issued when conducting preemployment background checks, defective COBRA election notices, and violations of state privacy laws. Employers defending such actions may be able to show that some or all of the employees alleging these mere technical violations have not suffered any concrete harm and, therefore, their claims should be dismissed.”