SCOTUS Rules on TransUnion v. Ramirez Class Action: "We Decide If It’s a Federal Case, Not Congress."

Jocelyn D. Larkin, Executive Director

The Supreme Court released its decision in TransUnion LLC v. Ramirez today. The case involved the appeal of a jury verdict in favor of over 8000 consumers whom the crediting reporting agency identified on their credit reports as potential matches to names on a government terrorist list. Plaintiff Sergio Ramirez had alleged three claims against TransUnion under the Fair Credit Reporting Act.  In a 5-4 ruling by Justice Kavanaugh, the Court held that only those class members whose credit reports were actually disseminated to third parties (~1800 or 25% of the class) had an injury that would establish Article III standing. As a result, the judgment was vacated and remanded. 

On the one hand, the outcome is hardly surprising. The conservative majority has once again limited access to the federal courts for consumers to challenge corporate malfeasance, erecting ever higher threshold procedural hurdles. On the other hand, the decision holds some interesting surprises, including a full-throated defense of the rights of the injured consumers by the dissenting Justice Thomas, joined by Justices Breyer, Kagan, and Sotomayor. The decision is well worth a close read. 

For background on the case, you can read David Nahmias’s post about the case here.

While the majority opinion limited access to the federal courts for consumers to challenge corporate malfeasance, the decision included a full-throated defense of the rights of the injured consumers by the dissenting Justice Thomas, joined by Justices Breyer, Kagan, and Sotomayor.

The Majority Opinion – The majority’s analysis turned on its holding that, even where Congress has created statutory rights for a consumer to seek redress for injuries to them personally, those rights will not satisfy Article III standing unless the plaintiff’s injury has a “close historical or common-law analogue.” Slip Op. at 9. Here, the Fair Credit Reporting Act required that TransUnion “follow reasonable procedures to assure maximum possible accuracy” and there was little dispute that it had failed to do so. The Court agreed that, for the 1800 class members whose false credit reports were disseminated to third-parties, their injury was analogous to the “reputational harm associated with the tort of defamation.” Id. at 16. The Court rejected TransUnion’s argument that labeling consumers as a “potential match,” rather than “match,” was not defamatory, because not technically false. Id. at 17.

The remaining class members, whose false credit reports were not disseminated, could not show injury-in-fact because common law defamation requires publication. To reach this conclusion, the Court relied heavily on a stipulation that purported to concede that the credit reports of this group were not published to third parties during a six-month time window. The Court acknowledged that these class members may well have had their reports released during the four-year class period, but concluded that plaintiffs failed to carry their burden to establish standing for those class members.

The Court also rejected that these class members had standing because of the “imminent risk” of harm – i.e. that their highly defamatory credit reports were very likely to be accessed. The majority held that the likelihood of future harm might establish standing for a claim for injunctive relief, but not one for damages so no “concrete” injury has occurred.

The class had also asserted claims tied to the incomplete and misleading disclosures that TransUnion provided to them, in violation of its obligations under the Act. Ignoring the findings of the jury, the majority recast the illegal disclosures as merely “formatting violations.” Slip Opinion at 25. Needless to say, those disclosures did not give rise to Article III standing either. Justice Thomas had a thing to say about that.

No Ruling on When Class Members Must Demonstrate Standing ­– Fortunately, the majority expressly did not reach “the distinct question whether every class member must demonstrate standing before a court certifies a class.”  Slip Op. at 15 n.4 (citation omitted). 

SCOTUS didn’t rule on the typicality issue, remanding class certification back to the Ninth Circuit.

No Ruling on Typicality – The Court had also granted certiorari on a second question raised by TransUnion: whether the class representative, Sergio Ramirez, did not have claims “typical of the claims of the class,” for Rule 23 purposes, because his story was particularly sympathetic.  The majority chose not to reach that question either in light of its ruling on standing.  “On remand, the Ninth Circuit may consider in the first instance whether class certification is appropriate in light of our conclusion about standing.”

Justice Thomas’s Dissent – Justice Thomas would find that all of the class members had standing because they alleged and proved violations of individual rights for which Congress has provided a private right of action. He found this “a rather odd case” for the Court to be “in the business of second-guessing private rights” since TransUnion’s “misconduct here is exactly the sort of thing that has long merited legal redress.” Thomas Dissent at 13. While the majority invoked the separation of powers to limit federal court jurisdiction, Justice Thomas highlighted that the decision does just the opposite:  “According to the majority, courts alone have the power to sift and weigh harms to decide whether they merit the Federal Judiciary’s attention. In the name of protecting the separation of powers, . . . this Court has relieved the legislature of its power to create and define rights.” Thomas faults the majority for reframing the notice violations as “formatting errors,” in light of the Seventh Amendment’s protection of the jury’s fact-finding. After highlighting the majority’s numerous analytical errors, he notes: “one need only tap into common sense to know that receiving a letter identifying you as a potential drug trafficker or terrorist is harmful.”  Id. at 17. 

File It in State Court! – Justice Thomas finished up with a tantalizing footnote, suggesting that the “decision might actually be a pyrrhic victory for TransUnion.” He reasoned that consumers are free to enforce statutory rights created by Congress in state courts, which are not encumbered by “the limitations of a case or controversy or other federal rules of justiciability even when they address issues of federal law.” Thomas Dissent at 18 (citation omitted). Defendants will be “unable to seek removal to federal court” and “state courts will exercise exclusive jurisdiction over these sorts of class actions.”  Id. 

Justice Kagan’s Dissent – Addressing the point that the “risk of dissemination” was too speculative, Justice Kagan asked: “why is it so speculative that a company in the business of selling credit reports to third parties will in fact sell a credit report to a third party?” Kagan Dissent at 2. Justice Kagan had only one quibble with Justice Thomas’s dissent. While he would confer standing for any violation of an individual right created by Congress, Justice Kagan reiterated that Article III still requires concrete harm.