On June 25, 2021, the U.S. Supreme Court issued its opinion in Ramirez v. Trans Union, holding that the 8,185 class members had Art. III standing for some but not all of their claims under the Fair Credit Reporting Act (FCRA).  Relying largely on its opinion in Spokeo v. Robins, also a FCRA case, the Court reversed the judgment, and with it, the award of $40 million in damages to the class members.¹  The case does not involve any employment-related claims under the FCRA (e.g., violations of the so-called “stand-alone” disclosure requirement), but bolsters the many opinions dismissing such claims for lack of standing.

Background

The named plaintiff went to a dealership to buy a car.  After the dealership ran a credit check, the salesman told the plaintiff that it could not sell a car to him because he was on a “terrorist list.”  Specifically, the credit report, which had been prepared by the defendant credit bureau, stated on the first page that the plaintiff’s name “matched” two names on the Office of Foreign Assets Control (OFAC) database.  Merchants that conduct business with somebody on the OFAC database face severe penalties and fines.  In fact, the plaintiff was not a terrorist.  However, the salesman did not take any further steps to verify whether the plaintiff was on the OFAC list.  The salesman ultimately agreed, though, to sell the car to the plaintiff’s wife.

A few weeks later, the plaintiff requested a copy of his credit report from the defendant.  The copy the defendant provided did not include the OFAC statement.  The defendant then sent a separate letter stating that the plaintiff’s name potentially matched information listed on the OFAC database.  The plaintiff testified that the information the defendant sent to him failed to clarify whether the OFAC information had been removed.  Concerned about the consequences of a possible OFAC match, the plaintiff cancelled an international vacation he had planned with his family.

The Lower Court Opinions

The plaintiff sued on behalf of himself and 8,000-plus other individuals, claiming that the defendant violated the FCRA by placing inaccurate information on their credit reports² and sending misleading and incomplete disclosures about the OFAC alerts.³  The trial court in San Francisco certified a class that ultimately prevailed on their claims at trial.  The verdict was for over $60 million, including punitive damages.  The Ninth Circuit affirmed, holding that all of the class members had standing for all of their claims, even though the defendant only sent the credit reports of some class members to third parties (1,853 of the 8,185 class members).  The Ninth Circuit, however, reduced the award to $40 million because the punitive damages were too high.⁴

The Inaccurate Credit Reporting Claim

After reviewing the legal standard governing Art. III standing, the Court turned to the question of standing for the 1,853 class members (including the plaintiff) whose reports were disseminated to third-party businesses.  The Court noted that the parties assumed the defendant had violated the statute as to all the class members.  Thus, the only question the Court considered was whether the violation caused a concrete injury-in-fact.  The Court ruled these class members had standing, reasoning that the harm resulting from the statutory violation was closely associated with the traditional tort of defamation.  On the other hand, the other 6,332 class members all lacked standing because Trans Union merely maintained the inaccurate information in its database (i.e., its internal credit files) without sharing it with anyone else.  This was similar, the Court explained, to writing a defamatory letter without sending it to anyone else.

The Disclosure Claim

The Court ruled no class member other than the named plaintiff had standing to assert the disclosure claim.  The Court reasoned there was simply no evidence in the record that even one other class member suffered any concrete harm from receiving information in separate envelopes (e.g., was confused or distressed by the formatting).

Takeaways

The case involves FCRA claims against a credit bureau, not an employer.  The Court also skirted the question whether all class members must demonstrate standing before a class is certified.  And the Court did not take the opportunity to revisit the standard for “typicality” in class actions.  Such FCRA claims against employers, however, are continuing to spike.⁵  Thus, the Court’s opinion reinforcing its holding in Spokeo that Art. III standing is required even for violations of federal law, including federal statutes, bolsters the many opinions dismissing such claims against employers for lack of standing.⁶  (The Court was not asked to consider, and did not consider, whether a FCRA claim that cannot proceed in federal court due to the lack of standing still can proceed in state court.  State and federal courts have concurrent jurisdiction over FCRA claims.  Some but not all states have standing requirements akin to Art. III of the U.S. Constitution.)