Legal Blogs and Updates

A recent decision by the United States Supreme Court provides guidance for determining concrete harm as relates to standing to sue. As a result, complaints that cannot show an imminent injury similar to those traditionally recognized by American courts are expected to be precluded from moving forward in federal courts.

The case (TransUnion v. Ramirez, No. 20-297) involved a credit report product offered by TransUnion that would flag an individual’s name if it showed as a “potential match” to a name that the Department of the Treasury’s Office of Assets Control (“OFAC”) designated as prohibited from entering into certain transactions. When Sergio Ramirez attempted to finance a car purchase, TransUnion transmitted a consumer report to the dealership that included a flag because Ramirez’s name showed as a potential match. The dealership denied him credit. After Ramirez contacted TransUnion to request a copy of his consumer report, TransUnion mailed him a file disclosure that did not contain the OFAC flag. However, Ramirez later received a separate letter explaining that his name showed as a “potential match” to a name on OFAC’s list.

Ramirez filed a class action under the Fair Credit Reporting Act (“FCRA”), alleging: (1) TransUnion failed to maintain reasonable methods of ensuring the most accurate information was provided in its consumer reports; and (2) TransUnion’s failure to provide the OFAC notice disclosure in the same mailing and not providing a summary of rights with each mailing violated the FCRA. As to his injuries, Ramirez alleged that he was denied credit because of the notice; was embarrassed in front of his family; and had to cancel a planned vacation because of the event. The district court certified a class of 8,000 people. However, it was later revealed that Ramirez was the only member of the class who ever received the two mailings, let alone opened them. In ruling in favor of Ramirez on appeal, the Ninth Circuit held that these mailings would be “inherently shocking and confusing” to any of the class members if they were to open them. TransUnion sought review once again, and the Supreme Court granted certiorari.

This Court had to decide how federal courts are to determine whether an alleged injury is “concrete” enough to permit a case to proceed. In a 5-4 decision, the Court answered this question in two ways: (1) if an alleged injury bears a “close relationship” to causes of action that American courts historically and traditionally recognize as a basis to sue, the harm is sufficiently concrete; and (2) it is the role of the courts, not Congress, to decide this question. The Court specified that “every class member” must meet this heightened standard for a concrete harm. As a result, the Court rejected the remaining class members’ claims because the presence of the misleading information in their consumer report, without more, did not constitute a concrete injury.

The Court’s decision in Ramirez makes clear that more than a statutorily-provided right and cause of action (private or otherwise) is needed to have Article III standing in federal courts. The “close relationship” standard created by this decision will doubtlessly be debated by parties in many case types going forward, not just class actions. It also clarifies that the judiciary, not Congress, decides the issue of standing in cases filed in federal court.