Court set to examine Article III Standing prerequisite for uninvolved class participants in litigation cases
The U.S. Supreme Court has agreed to hear the case of TransUnion LLC v. Ramirez, a class action that arises from allegations that credit reporting giant TransUnion placed inaccurate alerts on the credit reports of plaintiff Sergio Ramirez and over 8,000 class members. The alerts incorrectly matched their names with individuals on the U.S. Department of the Treasury's Office of Foreign Asset Control (OFAC) list.
Ramirez filed a putative class action claiming that TransUnion's OFAC alert practices violated various provisions of the Fair Credit Reporting Act (FCRA). The district court certified the class of all 8,000 consumers, and a jury awarded Ramirez and the class $60 million in statutory and punitive damages.
However, the 9th Circuit Court of Appeals held that each member of a class certified under Rule 23(b)(3) must establish Article III standing at the final judgment stage of a class action in order to recover monetary damages. This ruling means that most class members, who did not receive, open, or read a notice from TransUnion making them aware of the OFAC alert on their credit reports, may not be able to recover damages.
The question before the Supreme Court is whether Article III or Rule 23 of the Federal Rules of Civil Procedure permits a damages class action where most class members experienced no actual injury. TransUnion argues that the 9th Circuit's decision allows a highly atypical plaintiff to recover massive damages on behalf of thousands of uninjured class members.
TransUnion also points to federal appellate court rulings holding that a mere risk of dissemination of customer data retained in violation of a federal statute or the mere receipt of an allegedly deficient disclosure is insufficient to confer standing. More than 75 percent of the proposed class did not have a credit report disseminated to a third party during the class period.
The Supreme Court's guidance is needed as district courts have failed to address the standing inquiry as to absent class members until the final judgment stage. If the Supreme Court rules in favour of TransUnion, it could have implications for the use of the class action device to leverage the risk of aggregate statutory damages despite actual injury to class members. The decision may also affect similar class actions in the future.
The 9th Circuit's ruling is limited to the entry of a classwide damages judgment following a jury trial of class claims certified under Rule 23(b)(3) and does not alter the showing required at the class certification stage or other early stages of a case. The Supreme Court's decision in TransUnion LLC v. Ramirez is expected later this year.
