In Spokeo, Inc. v Robins (2016), the Supreme Court ruled that a named plaintiff must allege concrete harm in order to have standing to bring an action under Article III on behalf of a putative class. But district courts have since varied in interpretation Spokeo’s whereas a “risk of real damage” may be sufficiently concrete to satisfy Article III.
All eyes are therefore now on the upcoming decision of the Court in TransUnion LLC v Ramirez, which can provide guidance on what the court means by “risk of actual harm,” and may affect or restrict the types of people who can participate in class actions. The decision is likely to inform defense strategies at all stages of the class action lawsuit against large corporations, including financial institutions.
In 2002, TransUnion developed a product to filter the names of US consumers against those on a list maintained by the US Office of Foreign Asset Controls (OFAC). If a consumer’s first and last name matched those of someone on the list, TransUnion would add an alert to the consumer’s credit report regarding the “potential match”. Named plaintiff Sergio Ramirez alleged he suffered actual injury in the form of denial of credit and embarrassment after a Nissan dealership refused to sell him a car based on a TransUnion credit report with an OFAC alert. Additionally, after requesting his credit report from TransUnion, Ramirez received two letters that did not clearly inform him of his rights with respect to the alert.
Ramirez brought a putative class action lawsuit against TransUnion under the Fair Credit Reporting Act. Ramirez, however, did not limit his definition of putative class to consumers who had suffered alleged injuries similar to his as a result of OFAC’s disclosure of alerts to third parties. Instead, he defined the putative class more broadly as all people who had requested their credit report from TransUnion and had received similar mailings from OFAC. Following the discovery, the parties clarified that more than 75% of the proposed class had in fact not had a credit report containing an OFAC alert shared with a third party. The district court nonetheless certified the class as defined by Ramirez, dismissing TransUnion’s objections that absent members of the group lacked status and that Ramirez’s unique injuries made him atypical of the class.
At trial, Ramirez testified at length about his unique injuries. Virtually no evidence was presented regarding injuries to the absent group members. For example, no evidence was presented that any of the 25% of group members whose credit reports containing OFAC alerts had been shared with third parties were denied credit or were even aware of a such disclosure. There was also no evidence that any an absent student was confused or affected by the TransUnion mailings. Nonetheless, the jury awarded the class $ 60 million in legal and punitive damages.
A Ninth Divided Circuit reduced the amount of punitive damages, but confirmed the opposite. The majority considered that there was a “risk of actual harm” sufficient to Spokeo, simply because the group member’s credit records were designed to be disclosed at all times, and because the TransUnion letters were “inherently shocking and confusing” and left the group members “completely in the dark” on the line. way of contesting OFAC alerts. The majority further argued that Ramirez met the Fed’s typicality requirement. R. Civ. P. 23 because all of the class members’ claims were based on the same conduct and legal theories, even though Ramirez’s injuries were different and / or more complex.
Arguments before the Supreme Court and potential ramifications
The Supreme Court granted certiorari to determine “whether Article III or Rule 23 permits a class action for damages where the vast majority of the group has suffered no actual harm, let alone harm similar to that which the representative of the group suffered ”. Thus, not only is the Court in a position to clarify Spokeo’s “Risk of actual harm”, it was also asked to explain what standing to bring and class certification means when classes are defined broadly to include people who have suffered harm or risk significantly different from those of the designated applicant.
There are many ways the court could provide advice on these issues, which could impact how future class actions will be litigation.
During oral argument, several judges appeared to grapple with whether a class member’s previous exposure to a risk of harm should qualify him, even though the harm in question was never caused. materialized. Some judges (including Judge Alito, Spokeo’s author) suggested that a mere risk of harm should not justify the absence of certain knowledge of risk by members of the group sufficient to cause emotional distress. If the Court adds some form of knowledge element to Spokeo, it could provide a basis for further defenses and objections on the part of defendants at the oral argument and collective certification stages.
The typicity problems presented by this case are also important. The text of Rule 23 does not prima facie require that a named applicant have wounds typical of those in its class (it only says “claims or defenses”), so a decision informing the typicality prerequisite could provide a new basis for defendants to challenge certification.
© 2021 Greenberg Traurig, LLP. All rights reserved. Review of national legislation, volume XI, number 150