Home Credit inquiry No harm, no fault: Supreme Court restricts the quality of Article III to require that all group members in fact suffer a tangible injury | Wilson Sonsini Goodrich & Rosati

No harm, no fault: Supreme Court restricts the quality of Article III to require that all group members in fact suffer a tangible injury | Wilson Sonsini Goodrich & Rosati



On June 25, 2021, the United States Supreme Court ruled TransUnion v. Ramirez, which ruled that even when a law has been violated and that law provided for a private right of action, plaintiffs still need tangible harm in order to have standing to bring a lawsuit in federal court. In this case, the legal framework in question is the Fair Credit Reporting Act (FCRA). While this case arises in the context of the FCRA, its outcome is likely to have a significant impact on many areas of class action lawsuits where the concreteness of the harm is at issue, such as data breach litigation. .


In 2002, TransUnion began offering a product that sorted the names of individuals against the United States Treasury Department’s Office of Foreign Assets Control database (OFAC list), which tracks known terrorists, drug traffickers and others who pose a threat to national security. It is generally illegal to do business with the people on the list.1 When TransUnion’s product found a matching first and last name, it automatically added an alert to individuals’ credit records, producing numerous false positives. “Thousands of law-abiding Americans share a first and last name with one of the terrorists, drug traffickers or serious criminals on the OFAC list.”2 In 2011, Sergio Ramirez was among those affected when a dealership refused to sell him a car. When he requested his credit report from TransUnion, the company first mailed him his file and a summary of entitlements, but no information about the OFAC alert. TransUnion then sent a second letter regarding the OFAC alert but did not include a summary of rights.

Mr. Ramirez brought a class action lawsuit against TransUnion for statutory and punitive damages, alleging three FCRA violations: 1) TransUnion, in deploying the OFAC filtering product, failed to follow reasonable procedures to ensure the ” accuracy of his credit report;3 2) TransUnion did not provide all of the information in its credit file;4 and 3) TransUnion failed to provide a summary of rights “with each written disclosure”.5 Of the 8,185 group members who had misleading credit records, Mr. Ramirez was the only one to be denied credit due to the OFAC alert. He and 1,852 group members had their credit reports disclosed to third parties, while the other 6,332 did not. All group members received similar mailings.

At trial, TransUnion opposed certification of the group on the basis of standing, but the U.S. District Court for the Northern District of California certified the group and the jury returned a verdict awarding approximately $ 60 million. legal and punitive damages to the group. On appeal, the U.S. Court of Appeals for the Ninth Circuit upheld, but reduced punitive damages, bringing the overall amount to around $ 40 million. The Supreme Court granted certiorari on the quality issue to answer 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 ‘injury similar to that suffered by the representative of the group’.6


Regarding the reasonable procedures claim, the court ruled that only class members whose information was disclosed to third parties had standing. As to the two mailing claims, the court ruled that only Mr. Ramirez had standing.

Over time, the Court established limits on Article III standing, requiring a review to determine whether the claimant suffered tangible harm, among other things. No concrete injury, no standing. In determining whether the alleged injuries were real, the Court relied on its earlier decision in Spokeo vs. Robins, focusing the analysis on the question of whether “the alleged harm is closely related to harm traditionally recognized as providing a basis for legal action in US courts”7-a common law analogue. Concrete damage can include physical and pecuniary damage, as well as intangible damage such as damage to reputation.

With respect to the Reasonable Procedures claim, the Plaintiffs argued that the 1,853 Class Members whose information was disclosed to third parties suffered prejudice as a result of the dissemination of misleading credit reports which are closely related to the prejudice of defamation. TransUnion replied that prejudice was different from defamation because credit reports were “only misleading and not literally bogus”8 as required in libel cases. The Court noted that the close relationship test does not require an exact copy and therefore the harm caused by misleading information “carries a sufficiently close relationship”9 to harm because of false information.

For the other 6,332 members of the group, the Court could not find a common law analogue for misleading information without publication. He looked at libel, slander and slander, but it was not enough as the harm caused by these torts stems from the posting and none of the other members of the group saw their information shared with a third party. The plaintiffs also argued that the other class members were at significant risk of future prejudice, relying on Speak. However, the Court rejected this argument, holding that if the risk of future the prejudice may be sufficient to qualify for an action for injunctive relief, an unrealized risk is insufficient prejudice for damages. With respect to the 6,332 group members, OFAC’s misleading alerts were not disclosed and did not result in a denial of credit.ten Thus, the Court concluded that the 1,853 class members whose information was disclosed to third parties had standing to claim reasonable procedures, while the other 6,332 did not.

Likewise, the Court found that the majority of the group did not have standing in respect of the FCRA’s two claims for improper mail format, as they did not allege that they had suffered prejudice from the fact of violation of the law. Since risk alone is not enough to sue for damages, the court ruled that Mr. Ramirez was the only member of the class to demonstrate harm caused by the improper mail format.

In so ruling, the Court confirmed that the ability of Congress to provide a private right of action does not amount to the tangible hardship required for standing in Federal Court. In other words, a law cannot eliminate the need for a standing investigation. “Article III does not give federal courts the power to order reparations to uninjured plaintiffs”, so tangible harm is necessary for all plaintiffs, “collective action or not”.11

These developments show that the investigation of the existence of standing will be a crucial and factual determination. While the court ruling may limit potential exposure in federal court, it may also prompt state lawmakers to extend private rights of action.

[1]31 CFR pt. 501, App. A (2020).

[2]2021 WL 2599472, at * 4.

[3]See 15 USC § 1681e (b).

[4]Identifier. to 1681g (a) (1).

[5]Identifier. to 1681g (c) (2).

[6]TransUnion petition for a writ of certiorari.

[7]Spokeo vs. Robins, 578 US 330, 341 (2016).

[8]2021 WL 2599472, at * 11.


[10]Notably, the plaintiffs did not provide evidence that these class members were aware of OFAC’s misleading alerts (ruling out any allegation that the risk created a separate injury similar to emotional distress).

[11]Tyson Foods, Inc. v. Bouaphakeo, 577 US 442, 466 (2016).


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