On March 30, 2021, the United States Supreme Court heard oral argument in Transunion LLC v. Ramirez, No. 20-297, a case that could have far-reaching implications on absent class member standing, particularly where the injuries of these absent class members would be impossible or difficult to establish. The Court agreed to address whether 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 like what the class representative suffered.
The Court’s analysis will no doubt build on the precedent established in Spokeo v. Robins, which held that allegations of mere procedural violations were insufficient on their own to satisfy the Article III standing requirement and, instead, plaintiffs had to allege concrete injuries they suffered from those procedural violations. As the Court noted in Spokeo, which like Ramirez, dealt with alleged violations of the Fair Credit Reporting Act (“FCRA”), some procedural violations may result in no harm to a plaintiff, thereby precluding Article III standing. Now the Court will take up whether Spokeo’s concrete injury-in-fact requirements should be applied not just to a class representative, but also to absent class members.
The dispute in Ramirez began in early 2011, when Ramirez tried to finance the purchase of a car, only to find out that his credit report prepared by TransUnion listed him as a potential match to information listed on the United States Department of Treasury’s Office of Foreign Asset Control (“OFAC”) Database—a list of individuals or entities prohibited from doing business in or with the United States. Due to this disclosure, the dealership refused to sell Ramirez the car, but eventually agreed to sell the car to his Ramirez’s wife after she filled out a separate application.
In 2012, Ramirez filed a putative class action against TransUnion alleging its OFAC practices violated multiple provisions of the FCRA. The class in Ramirez consists of 8,185 consumers, among whom 1,853 had their credit reports sold to potential creditors during a six-month period used to define the class. The credit reports of the remaining 6,332 consumers were not sold during that period. At trial, Ramirez testified about his experience and the harms he suffered, but class counsel offered no evidence of any harm suffered by the class. The jury found for the class and awarded each class member $984.22 in statutory damages (just under the $1,000 FCRA statutory cap, totaling about $8 million classwide) and $6,353.08 in punitive damages (about $52 million classwide). On appeal, the Ninth Circuit reduced the putative damages award to $3,936.88 per class member (totaling about $32 million classwide), but otherwise affirmed the jury’s verdict.
In its Supreme Court briefing, TransUnion argued that bedrock law under Spokeo teaches that merely alleging a FCRA violation cannot establish an Article III injury. TransUnion also argued that even if the absent class members could satisfy Article III standing, class certification was inappropriate because Ramirez’s circumstances of having his car purchase denied differed vastly from the typical class member. Indeed, many class members never had their credit pulled by a potential creditor during the class period, nor did they even knew about the OFAC designation.
In response, Ramirez’s brief advocated for deference to the jury’s findings and asserted that the absent class members’ intangible injuries were concrete enough to establish Article III standing, likening them to the same types of injuries alleged in defamation cases. Ramirez argued that the focus of Rule 23(a)(3) typicality requirement is on the uniform conduct of the defendant, and not on whether the named plaintiff is unusually sympathetic.
Besides its potential impact on FCRA litigation specifically, the outcome of Ramirez could impact a broader array of cases alleging the mishandling of personal information more generally. At the federal level, for example, the Wiretap Act (as amended by the Electronic Communications Privacy Act of 1986), the Stored Communications Act, the Video Privacy Protection Act, the Fair Debt Collection Practices Act, and the Telephone Consumer Protection Act are all frequent sources of class-action claims in which the alleged harm is often a bare statutory violation or in which the harms suffered by a class representative can differ substantially from those experienced by the rest of the class. Likewise, state laws like the Illinois Biometric Information Privacy Act and the California Consumer Privacy Act function similarly to give rise to statutory damages claims where injury-in-fact is difficult to quantify, can differ substantially across a group of affected individuals, and is often de minimis.
As expected, Ramirez drew many amicus briefs, including one from the Electronic Frontier Foundation (“EFF”) and another from a group of large technology companies and the Communications Industry Association, and Technology Network (the “Tech Amici”), which seem to square off against each other in a ring adjacent to the center stage currently occupied by the parties. The Tech Amici make the point that “no-injury” class actions against large technology companies are often used to extract eye-popping settlements that appear to have little to do with any class member’s injury-in-fact and are instead mostly a vehicle for enriching class counsel. The Tech Amici contend that the costs of these lawsuits are reaching the point that they threaten the availability of the free or low-cost services technology companies often provide. In contrast, the EFF emphasizes the sensitivity of the information held by companies like the Tech Amici, the responsibilities that come with holding such vast amounts of data, and that when personal information is incorrect, misused or unprotected, consumers face harm, whether that harm is tangible (as it was for Ramirez) or intangible (as it was for the rest of the class). Splitting the difference between these two positions is the amicus brief filed by the United States in support of neither party, which argues that, while it is possible for someone like Ramirez who has suffered atypical harms to still serve as a class representative, the Ninth Circuit erred in failing to consider: (a) whether the proof Ramirez presented at trial substantially and accurately advanced the claims of the class or only his own; and (b) how the jury’s choice of an appropriate statutory-damages award for each class member would depend on individualized proof.
During oral argument held on Tuesday morning, Justices questioned counsel for TransUnion, Ramirez, and the United States Department of Justice as amicus curiae, attempting to flesh out their respective positions on the standing and typicality issues. Justice Kagan posed a hypothetical to counsel for TransUnion asking whether a class of people exposed to a certain carcinogen found in the drinking water, which has been shown to result in cancer in those exposed 50% of the time, would have Article III standing? Counsel for TransUnion conceded standing in that situation, but argued that it in order to be analogous to this case it would have to be a “weird” type of carcinogen that would allow a person to know whether the 50% cancer risk had materialized or not prior to filing the lawsuit. Adding to Justice Kagan’s hypothetical, Justice Barrett asked whether a person would lose their standing if they filed a lawsuit only to find out later that they were part of the non-cancerous 50% at some point during the case—indicating that such a result would be “odd since we normally determine standing at the outset.” Counsel for TransUnion countered that Justice Barrett’s hypothetical case would likely be dismissed on mootness or lose on the merits.
Chief Justice Roberts posed an alternative hypothetical, asking counsel for Ramirez to assume that Congress passed a law that creates a cause of action for statutory damages to anyone driving within a quarter mile of a drunk driver. Chief Justice asked whether a plaintiff, who was determined to be driving within a quarter mile of a drunk driver, but was not aware about the drunk driver until several days later, would have Article III standing. Ramirez’s counsel argued there would be standing in that scenario, although it would depend on whether there was “a material risk” of harm and whether Congress intended to deter such risky behavior.
These questions foreshadow the inevitable need for the Court to grapple with the theoretical limits of the typicality doctrine in its opinion, while distinguishing it from similar rules on standing and ripeness, for example.
Several of the Justices were keenly interested in what a reversal of the Ninth Circuit’s ruling would mean for the 6,332 class members whose credit reports were not sold during the relevant time- period. Counsel for TransUnion emphasized that the class should be decertified, but that reversal would not mean “they absolutely positively don’t have injury.” Instead, they would need to bring their claims individually (or potentially as part of a class that could meet the parameters for typicality as elucidated by the Court in this case).
Based on their questions regarding TransUnion’s typicality argument, both Justices Breyer and Sotomayor seem to view Ramirez’s atypical damages as “trial error” and not as an error in certifying the class. Justice Sotomayor noted that TransUnion did not object to the testimony of Ramirez, did not seek testimony from other (less-harmed) class members, nor did they ask for verdict forms that would let the jury apportion different awards for varying degrees of harm.
Lastly, Justice Kavanaugh seemed to be troubled by the potential infringement of no-injury plaintiffs on the prosecutorial power of the federal government, who is ultimately responsible for enforcing federal law in an attempt to deter wrongful behavior. This concern is likely shared by Justice Thomas, who referenced his concurring opinion in Spokeo in which he thoroughly analyzed the development of private versus public rights through common law courts.
Although too early to predict how the Court will rule, we will continue to provide updates as the Court considers the case, and will offer an extensive analysis of the Court’s decision once it is published.