On June 25, 2021, the U.S. Supreme Court issued a decision in TransUnion LLC v. Ramirez, 141 S.Ct. 2190 (U.S. 2021), ruling largely in favor of the credit reporting company. The 5-4 decision, approved by the conservative wing of the Court (minus Justice Clarence Thomas), appears to usurp Congress’ authority to create legally actionable rights.
What Did the TransUnion Lawsuit Allege?
Plaintiffs filed a class-action lawsuit against TransUnion claiming that the credit agency falsely labeled 8,185 individuals as terrorists or national security threats on their credit reports. The lawsuit asserts that TransUnion’s slipshod reporting violated the Fair Credit Reporting Act (“FCRA”), which regulates the credit reporting industry. Among other things, the FCRA is intended to prevent credit reporting agencies from making false reports. The FCRA provides individuals a private right of action – i.e., the right to sue – any credit reporting agency that violates the provisions of the Act. Because it is difficult to quantify the harm caused by false credit reporting, the FCRA provides consumers the option to seek statutory damages in the range of $100 to $1,000 for each violation.
With respect to 1,853 class members, TransUnion issued false credit reports to third parties like potential employers or lenders. As to the other 6,332 class members, the false information remained in the credit files – in violation of the FCRA – but this defamatory material was not sent to third parties.
What Was the Main Issue on Appeal to the Supreme Court?
The question presented to the Supreme Court was whether class members who were wrongfully identified as potential terrorists and who were at risk of having such false accusations communicated to decision-makers like employers and lenders had standing to sue under Article III of the Constitution. Prior Supreme Court decisions have concluded that the risk of harm is sufficient to provide standing to sue and would typically satisfy the requirement that a plaintiff establishes that they have suffered a so-called “injury in fact”.
“Injury in fact” refers to the “invasion of a legally protected interest that is concrete.” This does not extend to injuries that are “conjectural nor hypothetical.” Defendant TransUnion claimed that no “concrete” damage was caused by its missteps, arguing that the improper labeling of individuals as terrorists did not directly lead to “real world” harm.
Plaintiffs maintained that TransUnion had “concretely” harmed the entire class by creating conditions that put them at risk of injury.
What’s the Court’s Decision and What Does it Mean?
First the good news. All nine Justices in TransUnion LLC agreed that under the standard elucidated in Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016), the 1,853 class members whose inaccurate credit reports were disseminated by TransUnion “have demonstrated concrete reputational harm and thus have Article III standing to sue on the reasonable-procedures claim.” (Emphasis added). As the majority stated:
Various intangible harms can also be concrete. Chief among them are injuries with a close relationship to harms traditionally recognized as providing a basis for lawsuits in American courts. Id., [578 U.S. 330] at 340–341, 136 S.Ct. 1540. Those include, for example, reputational harms, disclosure of private information, and intrusion upon seclusion.
TransUnion LLC, 141 S. Ct. 2190, 2204 (2021) (citations omitted). Further, the Supreme Court explained that the types of reputational harms that confer standing should not be limited to the precise injuries recognized at common law, but rather should be construed more broadly. The Court stated:
In looking to whether a plaintiff’s asserted harm has a “close relationship” to harm traditionally recognized as providing a basis for a lawsuit in American courts, we do not require an exact duplicate. The harm from being labeled a “potential terrorist” bears a close relationship to the harm from being labeled a “terrorist.” In other words, the harm from a misleading statement of this kind bears a sufficiently close relationship to the harm from a false and defamatory statement.
Id. at 2209.
Now the bad news. The majority opinion, authored by Justice Kavanaugh, sided with TransUnion with respect to the 6,332 class members whose credit files were not disseminated to third parties. The Court reasoned that publication of the false information was “a fundamental requirement of an ordinary defamation claim” at common law. Id. at 2210 n. 6. Therefore, these class members lacked standing to sue, despite having false information on their credit files.
Plainly, TransUnion limits the ability of individuals to get compensation from companies who violate their legally protected rights under the FCRA. Few would argue that being identified as a terrorist by a major credit reporting agency isn’t harmful. But the Supreme Court thinks more is needed for “concrete” injury.
Ultimately, this ruling may have a bigger impact on class actions brought in federal courts than it does in state courts, but the ruling is significant for both consumers and companies. It could have a broader impact on other class actions related to accessibility claims, the Americans with Disabilities Act, and others.
Be proactive about your rights as a consumer
Individual consumers often feel powerless against major corporations. That’s why class actions can be helpful. When you believe you’ve been manipulated, abused, mistreated or otherwise harmed by a large company, take control over your situation by learning more about your legal options.