Jan 05

SCOTUS To Address Standing of Class Members

The U.S. Supreme Court will soon hear argument in a Fair Credit Reporting Act (“FCRA”) class-action case out of the Ninth Circuit, Ramirez v. TransUnion LLC, 951 F.3d 1008 (9th Cir. 2020), cert. granted in part sub nom. TransUnion LLC v. Ramirez, Sergio L., No. 20-297, 2020 WL 7366280 (U.S. Dec. 16, 2020), that raises the question of whether all class members, and not just the class representative, must establish Article III standing to receive individual money damages at the final-judgment phase. Assuming, as the Ninth Circuit held, that all class members must show standing in these circumstances, the Supreme Court will likely revisit the specifics of Article III standing under the FCRA.

On December 16, 2020, the Supreme Court granted certiorari on the following question: “Whether either Article III or Rule 23 permits a damages class action where the vast majority of the class suffered no actual injury, let alone an injury anything like what the class representative suffered.” Cert. Pet., at i; see also TransUnion LLC v. Ramirez, Sergio L., No. 20-297, 2020 WL 7366280 (U.S. Dec. 16, 2020). The question comes to the Court after a jury awarded each of the 8,185 class members $984.22 in statutory damages and $6,353.08 in punitive damages under the FCRA, for a classwide verdict of about $60 million. Before trial, the district court certified a class consisting of individuals who had requested a copy of their credit report from TransUnion and received (during a six-month period) a letter incorrectly indicating that their name was a potential match to individuals who had been flagged for national security reasons. But unlike Mr. Ramirez, whose incorrect credit report had been accessed by a Nissan dealership, most of the class members did not have their reports disclosed to third parties.

After trial, TransUnion argued that the verdict should be set aside because only Mr. Ramirez, as the class representative, “suffered a concrete and particularized injury as a result of TransUnion’s unlawful practice.” Ramirez, 951 F.3d at 1017.  Mr. Ramirez responded that no member of the class other than the representative need show Article III standing.

In a case of first impression in the Ninth Circuit, the appeals court first ruled that “every member of a class certified under Rule 23 must satisfy the basic requirements of Article III standing at the final stage of a money damages suit when class members are to be awarded individual monetary damages.” Id. The court viewed its ruling as following from Supreme Court precedent, which the Ninth Circuit described as requiring that “all parties seeking to recover a monetary award in their own name . . . show Article III standing.” Id. at 1023.

Next, the court held that each class member suffered an Article III injury. Relying on the Supreme Court’s decision in Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016), the court concluded that the class had shown standing on its reasonable-procedures (to ensure informational accuracy) claim because “the nature of the inaccuracy is severe,” Ramirez, 951 F.3d at 1026, and TransUnion practices “ran a real risk of causing the uncertainty and stress that Congress aimed to prevent in enacting the FCRA,” id. Responding to TransUnion’s argument that a majority of the class members could not establish standing because their credit reports were never disseminated, the court noted that the fact that the reports were readily available for dissemination was sufficient—in other words, a risk of dissemination because the defendant made the incorrect reports readily available to third parties could support Article III standing. See id. at 1027. On the class’s other claims, the court ruled that standing had been shown based on a risk-of-harm theory. See id. at 1029–30.

Judge McKeown dissented on the standing issue, and would have held that, despite her agreement with the majority that all class members must show standing to obtain damages after trial, “no one but Ramirez and the class members whose information was disclosed to a third party had standing to assert a reasonable procedures claim, and only Ramirez had standing to bring the [other] claims.” Id. at 1038 (McKeown, J., concurring in part and dissenting in part). She observed that, under the FCRA, “[a]ny ‘concrete interest in accurate credit reporting’ is implicated only upon disclosure to a third party.” Id. at 1040. And in her view, there was no evidence at trial that showed “a serious likelihood of disclosure” for a majority of the class members. Id.

As Judge McKeown observed, “[a] class action jury trial is a high-stakes affair more common in cinema than an actual courtroom.” Id. at 1038. But when class action jury trials are resolved in the courtroom, this case illustrates, from the perspective of defense counsel, the danger of a court allowing a sympathetic, yet atypical, class representative to serve as the highlight of the trial when the majority of class members may have presented different stories. Time will tell how the Supreme Court chooses to deal with this danger, if it views it as a danger at all.

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