Supreme Court to consider Article III standing for class members

In TransUnion, LLC v. Ramirez, the U.S. Supreme Court is poised to address an issue of critical importance to class action practitioners: what do plaintiffs' counsel have to show to establish the standing of absent class members? The court granted TransUnion's petition for certiorari on the question of "[w]hether either Article III or Rule 23 permits a damages class action where the vast majority of the class suffered no actual injury, let alone an injury anything like what the class representative suffered."

Class representative Sergio L. Ramirez sued under the Fair Credit Reporting Act, claiming a credit check by TransUnion incorrectly stated he was listed on the Treasury Department's Office of Foreign Assets Control database. Ramirez v. TransUnion, LLC, 951 F.3d 1008, 1016-17 (9th Cir. 2020). OFAC keeps a list of individuals, including terrorists, with whom U.S. companies cannot engage in business for national security reasons. The TransUnion credit report received by a car dealership from which Ramirez sought to finance a vehicle falsely flagged Ramirez as being on the OFAC list, and he was denied credit as a result. Ramirez sued on behalf of himself and more than 8,000 others alleged to be falsely identified on credit checks as individuals flagged by OFAC. The plaintiffs argued that TransUnion did not ensure accuracy by cross-checking the names on OFAC's database's list with other information. The district court certified a class under Federal Rule of Civil Procedure 23 and denied TransUnion's motion to decertify. A jury awarded the class more than $60 million in damages, including $984.22 in statutory damages and $6,353.08 in punitive damages per class member. The 9th U.S. Circuit Court of Appeals upheld the district court's award of statutory damages, but reduced the amount of punitive damages from $52 million to $32 million.

The Supreme Court's granting of certiorari gives it the opportunity to address a question left unanswered in Spokeo Inc. v. Robins, 136 S. Ct. 1540, 1542 (2016). In Spokeo, the Supreme court found that, to have standing under Article III of the U.S. Constitution, a class representative seeking to recover statutory damages must show a concrete injury that is more than a "bare procedural violation, divorced from any concrete harm." The court did not address whether the concrete injury requirement applies just to the named representative plaintiff or also to class members in a certified class action.

TransUnion argues in its brief that: (1) plaintiffs must prove a concrete injury for all class members; and (2) plaintiffs failed to prove such injury because they did not offer evidence of an actual or imminent concrete and particularized injury for any of the 8,184 absent class members. Only 1,853 class members had their credit reports containing the false OFAC information disclosed to a third party, while there was no evidence that anyone saw the remaining approximately 6,300 class members' credit reports with the OFAC flag. The 9th Circuit concluded that Article III standing requirements applied to each class member, agreeing with TransUnion's first argument.. But the panel, comprised of 9th Circuit Judges Mary Murguia, William Fletcher and Margaret McKeown, found that class members had established standing on the basis that the misleading reports were "available" to lenders, which created "a material risk of harm." Judge McKeown dissented from this part of the panel's ruling, reasoning that only the 1,853 members whose information was actually disseminated suffered a concrete injury.

The Supreme Court could choose to sidestep the issue of Article III standing and, instead, decide the case on the basis of Rule 23's "typicality" requirement, which requires the claims or defenses of the class representative be typical of class members. In TransUnion's brief before the Supreme Court, TransUnion points out that more than three-quarters of class members never had their credit reports sent to a third party, and, of those that did, there was no evidence that any had credit denied as a result. Although this fact was noted by the 9th Circuit, the panel ultimately found that Ramirez still fulfilled the typicality requirement because Ramirez's injuries, even if more severe than other class members', arose from the same course of conduct and were based on the same legal theory. TransUnion argues that the 9th Circuit was wrong in defining typicality so broadly, and that typicality should, instead, be focused on whether class members suffered the same injury. In this case, TransUnion argues, Ramirez's injuries were unique and atypical, which resulted in an outsize and unfair award for the entire class.

When the Supreme Court previously addressed Article III standing in Spokeo, the decision requiring a concrete injury for class representative standing was reached 6-2. The court's composition has changed since that decision, with the addition of Justices Neil Gorsuch, Brett Kavanaugh, and Amy Coney Barrett. Justice Barrett's replacement of Justice Ruth Bader Ginsburg, who dissented in Spokeo, may offer the starkest contrast. Whether the court decides to narrow Article III standing by requiring a concrete injury for all class members, or determines the case based on Rule 23, the ultimate decision in Ramirez could have wide-ranging implications on plaintiffs' ability to bring a class action suit in federal court. Oral argument is set for March 30. 