NICOLE PORZENHEIM—On June 25, 2021, a divided Supreme Court issued its opinion in TransUnion LLC v. Ramirez. The highly anticipated decision addressed whether the plaintiffs had Article III standing to pursue class action claims. At first glance, the Court’s answer appeared simple—no concrete harm, no standing. But, the consequences for class action litigants are far from simple.
The class members in the case allege violations of the Fair Credit Reporting Act (“FCRA”). Congress enacted FCRA to promote accuracy and fairness of credit reporting and to require consumer reporting agencies, like TransUnion, to adopt reasonable procedures that ensure confidentiality and accuracy of information. The 8,185 class members allege that TransUnion “failed to follow reasonable procedures to ensure the accuracy of information” in the class members’ credit files when the credit reporting agency inaccurately flagged the files as belonging to potential terrorists.
The majority opinion, authored by Justice Kavanaugh and joined by Chief Justice Roberts, Alito, Gorsuch, and Barret, concluded that TransUnion’s failure to follow reasonable procedures was insufficient on its own to establish Article III standing. However, TransUnion’s dissemination of the inaccurately flagged credit reports of 1,853 class members was sufficient to establish standing.
The Court looked to both history and precedent in reaching that conclusion. The federal judiciary has the power, under Article III, to resolve cases and controversies in which a plaintiff has a personal stake and suffered a concrete injury in fact. The alleged tangible or intangible harm must have a “close relationship to a harm traditionally recognized as providing a basis for a lawsuit in American court.”
The Court concluded that the 1,853 class members had standing because they suffered reputational harm when the inaccurate information was shared with third parties. But, what about the other 6,332 class members whose information was inaccurate yet not shared? Those class members suffered a risk of real harm, but the risk had not yet materialized so as to cause a concrete injury. Thus, they lacked standing.
Because the case arose from a statutory violation, the majority discussed whether “a plaintiff automatically satisfies the injury-in-fact requirement whenever a statute grants a person a statutory right and purports to authorize that person to sue to vindicate that right.” Congress has the power to create statutes like the FCRA to protect consumers from perceived harms. However, the majority argued that such power “does not relieve courts of their responsibility to independently decide whether a plaintiff has suffered a concrete harm.” Thus, a statutory violation, without a concrete harm, is insufficient to establish standing.
This decision has already had wide-ranging impacts in matters beyond the FCRA. In the month immediately following the decision in TransUnion, the number of lawsuits filed alleging violations of consumer privacy statutes decreased. Specifically, FCRA claims were down 13.3% from the prior month, while Fair Debt Collection Privacy Act (“FDCPA”) and Telephone Consumer Protection Act (“TCPA”) claims were down 10.3% and 27.8%, respectively. The percentage of those claims that were putative class actions have also steadily declined in each category since the decision.
These statistics indicate that the Court’s holding in TransUnion may have narrowed the entrance through which consumer plaintiffs can enter federal courts, especially class action plaintiffs. So, where do they go from here? Justice Thomas, in his dissent, indicated that state courts may be the only answer. Citing precedent, he recognized that states “are not bound by the limitations of case or controversy or other federal rules of justiciability even when they address issues of federal law.”
While state courts may provide a venue, they too are limited. About half of state courts mirror the federal courts’ views of standing while the other half “have adopted a looser view of standing that does recognize violations of the law as redressable harms.” Therefore, it appears that TransUnion has also narrowed the entrance through which consumer plaintiffs can enter state courts.
In a footnote, the Court acknowledged that it failed to “address the distinct question whether every class member must demonstrate standing before a court certifies a class.” This omission evokes several important questions: Must all class members have standing? Just the named plaintiffs? Just one named plaintiff? Just a majority of class members? Is proof of standing needed at the pleadings stage? At class certification? After class certification? At trial? The questions seem to be endless, and the available answers are limited.
In an attempt to parse through some of these issues, recent decisions in lower courts intimate that the manner and degree of evidence required to show standing may be dependent on the stage of litigation. And because the issue of standing can be raised at any point in litigation, it is possible that the answer to these outstanding issues may be a dreadful “it depends.” Unfortunately, only time and future court rulings will tell. Until then, the answer is simply “no concrete harm, no standing.”