Last Friday, the Supreme Court of the United States ruled in favor of TransUnion, a credit reporting agency, in its challenge of a split Ninth Circuit decision affirming the certification of a class of consumers who alleged that the defendant failed to use reasonable procedures to ensure the accuracy of internally maintained credit files.
The opinion, delivered by Justice Kavanaugh, limited the number of Fair Credit Reporting Act (FCRA) claimants to those who demonstrated “concrete reputational harm,” and thereby had Article III standing.
The majority opinion, joined by Justices Alito, Barrett, Gorsuch, and Roberts, explained that named plaintiff Sergio Ramirez “learned the hard way,” that TransUnion had included misinformation about him in his credit report when he sought to buy a new vehicle. The dealership denied him after determining, via information supplied by TransUnion, that his name appeared on a “terrorist list.”
The district court certified a class of people who were similarly misclassified by TransUnion.
Out of the more than 8,000 member class, only 1,853 class members’ misleading credit reports were disseminated by the credit reporting agency to third-party businesses, the opinion stated.
Justice Kavanaugh focused on whether the class members had demonstrated concrete harm as required for constitutional standing. The court described reasons underlying the standing requirement and previous interpretations thereof. “Standing is not dispensed in gross; rather, plaintiffs must demonstrate standing for each claim that they press and for each form of relief that they seek,” the opinion noted.
In determining that more than three-quarters of the class did not have standing to sue, the closely divided court reasoned that “the mere presence of an inaccuracy in an internal credit file, if it is not disclosed to a third party, causes no concrete harm.”
In Justice Thomas’ dissent, joined by Justices Breyer, Kagan, and Sotomayor, he concluded otherwise. “TransUnion generated credit reports that erroneously flagged many law-abiding people as potential terrorists and drug traffickers,” he wrote. The dissent found fault with the majority’s reasoning because the decision to limit standing allegedly overrode Congress’s creation of FCRA legal rights that class members proved TransUnion had violated.
The plaintiff and class are represented by Robert H. Klonoff, Lieff, Cabraser, Heimann & Bernstein LLP, Ogilvie & Brewer LLP, Samuel Issacharoff, and Francis, Mailman & Soumilas P.C. TransUnion is represented by Kirkland & Ellis LLP.