Standing in consumer class actions: TransUnion LLC v. Ramirez

Credit reports dominate our financial lives. Access to credit credits, mortgages, bank accounts, and other financial tools are all determined by our credit histories or lack thereof. In the age of big data, it’s clear that the way credit histories are tracked may open consumers up to harm. However, consumers may be unable to turn to the courts for relief without the ability to show concrete harm.

In TransUnion LLC v. Ramirez (141 S. Ct. 2190), the Supreme Court weighed in on what consumer harm means in the context of the Fair Credit Reporting Act (FCRA).

Plaintiff Sergio Ramirez initiated a class action involving 8,184 other individuals against TransUnion LLC, claiming that the credit reporting agency violated the FCRA. The plaintiffs alleged that TransUnion mismatched their names with those on the Office of Foreign Asset Control’s (OFAC) list, which contains the names of terrorists, drug traffickers, and other wanted criminals. However, only the reports of 1,853 class members were disseminated to third parties. 

The Ninth Circuit upheld the District Court’s ruling that the 6,332 class members whose reports were not provided to third parties had standing under Article III to bring suit in federal court. The Supreme Court reversed in a 5-4 decision.

To have standing under Article III, a plaintiff must be able to show actual harm. The majority opinion, written by Justice Kavanaugh, indicates that courts must look to whether plaintiffs have suffered harm analogous to a traditionally recognized harm, even if there was a clear statutory violation. Per the majority, “an injury in law is not an injury in fact.”

In TransUnion, the Court found that most plaintiffs were unable to demonstrate actual harm because their information was not provided to third parties, which defeated the publication element needed for traditional harm of defamation. Moreover, the court rejected the plaintiffs’ argument that a mere risk of future harm would satisfy the standing requirement.

This case has far-reaching results for consumers and businesses:

• Consumers must demonstrate concrete harm, not just a technical legal violation, to have Article III standing.
• Every plaintiff in a class action must demonstrate Article III standing.
• The risk of future harm is not sufficient to create standing.

The case is TransUnion LLC v. Ramirez, No. 20-297, 2021 WL 2599472 (U.S. June 25, 2021).

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Rushing McCarl LLP helps California businesses resolve disputes, mitigate legal risks, and protect their rights.