Transunion v. Ramirez

July 20th, 2021 | Angela Preston, Senior Vice President and Counsel, Corporate Ethics and Compliance with Tammy Glover Fowler, Compliance Associate

On June 25, 2021, the US Supreme Court reversed the judgment of the Ninth Circuit Court of Appeals in the case of Transunion LLC v. Ramirez and remanded it for further proceeding consistent with its opinion.

To recap, the case involved an individual (Ramirez), along with a class of 8,185 other members, who sued Transunion under the Fair Credit Reporting Act (FCRA) for failing to use reasonable procedures to ensure the accuracy of information in their credit files.

The plaintiffs’ initial argument was that information indicating a possible name match on the US Treasury Department’s Office of Foreign Assets Control (OFAC) terrorist watch list was included in the credit files. The plaintiffs claimed that use of a name match alone did not meet the FCRA standard for accuracy. In addition, the plaintiffs complained that their credit files were improperly formatted with incomplete information (OFAC information omitted). Transunion then provided the file a second time, but did not include the Summary of Rights.

While the District Court ruled that 8,185 class members, including Ramirez, had Article III standing on all 3 claims, meaning, “concrete harm” was imposed, and awarded $40 million in punitive damages, the US Supreme Court reversed the Ninth Circuit’s court decision.

The US Supreme Court addressed what constitutes “concrete harm” for purposes of Article III standing, and whether class members could pursue recovering damages. The court applied the fundamental standing requirement of “concrete harm”, stating, “Only plaintiffs concretely harmed by a defendant’s statutory violation have Article III standing to seek damages against that private defendant in federal court.”

Among the class member’s credit files, 1,853 contained inaccurate OFAC terrorist alerts which were sent to third parties; therefore, those members could claim harm, as these actions resemble defamation. The fact that the credit files were improperly formatted did not cause any harm or limit their ability to dispute the information in their credit files.

The court found that since the remaining 6,332 class member’s credit files that contained OFAC terrorist alerts were not sent to third parties, they did not have a valid claim of concrete harm and similarly, the fact that the credit files were improperly formatted did not cause any harm or limit their ability to dispute the information in their credit files.

The US Supreme Court’s decision stated that individuals (plaintiffs) are not charged with enforcing a defendant’s compliance with the law. The violation of a law is not evidence of injury, and If there is no concrete harm, there is no standing.

The plaintiffs also argued that the “risk of future harm” established Article III standing, but the US Supreme Court dispensed the argument and agreed with Transunion that the risk must materialize in the form of actual harm in order to establish “concrete harm”.

The decision may limit “no harm” class actions in federal court, but employers can expect the potential for FCRA claims to continue or even increase in state courts.

The full text of US Supreme Court case can be found here: Transunion v Ramirez.

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