“What’s it to you?” Supreme Court’s TransUnion v. Ramirez Opinion Limits Article III Standing for Class Action Plaintiffs in Federal Court

September 15, 2021

Types : Alerts

The first Supreme Court decision to confront Article III standing in five years can be summarized in just five words: “no concrete harm, no standing.” If you missed the highly anticipated 5-4 TransUnion LLC v. Ramirez opinion released on June 25, 2021, be advised that the concrete-harm requirement articulated in Spokeo, Inc. v. Robins remains alive and well—particularly in the class action context. Indeed, under TransUnion, damages classes cannot include members who cannot show they suffered concrete injuries. Rather, the majority opinion author Justice Brett Kavanaugh explained that each and every class member must individually establish a personal and actual injury.  In other words, “plaintiffs must be able to sufficiently answer the question: ‘What’s it to you?’”

Many are hailing TransUnion as a victory for class action defendants because it reaffirmed—and arguably heightened—federal standing requirements under Article III.  But, as Justice Thomas cautioned in dissent, this victory may turn out to be a “pyrrhic” one.  While TransUnion undoubtedly closed the federal court door for many plaintiffs, it may also have opened a window into state courts, where Article III is not binding and, in some states, broader standing principles may permit such claims to be heard.

Plaintiffs’ Claims Against TransUnion

Like the landmark 2016 Spokeo, Inc. v. Robins decision that preceded it, TransUnion arises in the context of the Fair Credit Reporting Act (“FCRA”).  The FCRA requires that credit reporting agencies—like credit reporting giant TransUnion—report consumer information in a truthful and non-misleading way.  Here, the class claimed that TransUnion inaccurately flagged class members as appearing on a national security government watchlist for individuals suspected of serious crimes like terrorism and drug trafficking.

The credit report that TransUnion generated when the named plaintiff, Sergio Ramirez, attempted to purchase a car at a California Nissan dealership demonstrates this designation’s impact.  When the dealership received Mr. Ramirez’s report and saw that he was a “potential match” with a name on the government watchlist, it refused to sell him a car.

Mr. Ramirez filed a class action on behalf of 8,185 individuals whose TransUnion credit reports also displayed similarly misleading designations in violation of the FCRA, though many of those plaintiffs’ reports were never actually transmitted to a third party.  Nevertheless, the Northern District of California certified the class, whom a jury awarded $52 million in punitive damages and $8 million in statutory damages.  While the Ninth Circuit Court of Appeals reduced the punitive damages award, it affirmed the class certification, specifically finding that the plaintiffs satisfied the requirements for Article III standing.

Defining Concreteness After Spokeo

The Supreme Court reversed and remanded, underscoring that each plaintiff’s injury must be sufficiently “concrete,” not just a statutory violation.  Congress may not “enact an injury into existence[,]” Justice Kavanaugh explained, as the existence of a legislatively created private right of action is only “instructive” for purposes of analyzing whether an injury is satisfactorily “concrete.”  Rather, concreteness turns on the relationship between an alleged injury and other types of harm that traditionally have created a right of action.

Applying its own guidance, the majority TransUnion opinion subsequently divided plaintiffs into two sub-categories based on the harm (or lack thereof) that each plaintiff actually suffered.  Of the 8,185 total claimants, 1,853 plaintiffs were issued reports containing the misleading designation which were later provided to third-parties.  The Court found that those plaintiffs suffered a sufficiently concrete injury.  But the Court found no concrete injury for the remaining 6,332 plaintiffs, whose reports were never disseminated.  According to the majority, the risk of future harm was simply “too speculative” to confer standing.  As Justice Kavanaugh analogized, “[a] letter that is not sent does not harm anyone, no matter how insulting the letter is.”

A “Pyrrhic” Victory Warning

In a dissent joined by Justices Kagan, Breyer, and Sotomayor, Justice Thomas argued that the violation of each class member’s private rights under the FCRA constituted an injury sufficient to confer Article III standing.  The majority opinion, he felt, placed too demanding a requirement on the doctrine.  Justice Thomas warned that the opinion may not be the blessing defendants might envision, cautioning that TransUnion may simply shift analogous class action suits from federal to state courts.  Specifically, Justice Thomas observed:

Today’s decision might actually be a pyrrhic victory for TransUnion. The Court does not prohibit Congress from creating statutory rights for consumers; it simply holds that federal courts lack jurisdiction to hear some of these cases. That combination may leave state courts—which “are not bound by the limitations of a case or controversy or other federal rules of justiciability even when they address issues of federal law,” ASARCO Inc. v. Kadish, 490 U. S. 605, 617 (1989)—as the sole forum for such cases, with defendants unable to seek removal to federal court.

In fact, even before TransUnion, an increasing number of state courts have looked to their own standing principles to hear claims that a federal court rejected for lack of standing under Article III.  If Justice Thomas’ prediction bears out, that number will only continue to rise.

This is especially true considering that many class action lawsuits brought under laws besides the FCRA also implicate these same standing questions.  Federal courts across the country have already begun applying TransUnion to other federal statutes that, like the FCRA, purport to create private rights of action for statutory violations.  At the same time, state courts are simultaneously assessing the viability of these same claims under their own standing principles.  As this complex and ever-shifting landscape develops, class action lawyers must ensure they have the most up-to-date information about which plaintiffs have standing to assert which claims in which courts.


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