Sergio Ramirez was trying to buy a car at a Nissan dealership when he was informed that his name matched two names on a list of suspected terrorists and criminals with whom U.S. companies are barred from doing business. TransUnion had provided to the dealership both the credit report and the notification that Ramirez’ name matched names on the list. When Ramirez first obtained a copy of his TransUnion credit report, it did not show the alert. The alert was included, however, in the second report that TransUnion sent the next day. That version omitted a legally required summary-of-rights form, which informs consumers how to exercise their rights, including challenging credit report inaccuracies.
As one of thousands who were incorrectly placed on the list, Ramirez filed a class action under the Fair Credit Reporting Act (FCRA) and ultimately moved to certify a class. TransUnion objected, arguing that of the 8,185 individuals incorrectly labeled as potential terrorist matches, only 1,853 had their credit reports sold to third parties. Moreover, TransUnion argued that there was no evidence that any class member other than Ramirez had been denied credit because of the inaccurate alert. The district court certified the class. Following a jury trial, the court entered a judgment in favor of the class for $8.1 million in statutory damages and $52 million in punitive damages. The Ninth Circuit affirmed but reduced the punitive damages award.
The Supreme Court granted review to address questions left unanswered by its decision in Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016). In Spokeo, the Court held that plaintiffs must allege concrete injuries that are not “conjectural or hypothetical” and that a plaintiff cannot rely solely on non-compliance with legislative provisions to prop up a statutory privacy claim. Spokeo left open, however, whether standing may exist in cases arising from the distribution of erroneous information about a plaintiff. After Spokeo, federal courts have reached different results when addressing standing in data security and privacy cases.
The court heard oral argument in TransUnion LLC v. Ramirez on March 30, 2021. TransUnion argued that more than 6,000 members of the class lacked standing to sue because their erroneous credit reports were never accessed by prospective lenders. Plaintiff countered that that every class member was injured by the statutory violations, both because they were falsely flagged and because TransUnion did not adequately notify them of their rights as required.
The Court’s decision could greatly affect the scope of consumer privacy and data breach class actions in the future. It is common for class members in such class actions to be situated similarly to the more than 6,000 members of the Ramirez class who did not incur any actual harm under the traditional common law sense of the term. A decision is expected this summer.
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