On June 25, 2021, the United States Supreme Court issued its opinion in TransUnion LLC v. Ramirez (“Ramirez”), holding that all plaintiffs, to include absent class members, must demonstrate that they have suffered a concrete harm in order to have Article III standing to sue for damages.  Building off its decision in Spokeo v. Robins, LLC, the Court confirmed that even where Congress passes a law creating an individual cause of action, uninjured plaintiffs do not have standing to sue in federal court simply because that law is violated.  Justice Kavanaugh, writing for a 5-4 majority, summarized the Court’s holding in five simple words: “No concrete harm, no standing.”

As we discussed in our prior post, this case arose when a car dealership denied financing to Ramirez after pulling his TransUnion credit report, which incorrectly suggested that he was on the federal terrorist watch list (“OFAC”).  After Ramirez contacted TransUnion to remedy the issue, the credit reporting agency sent him several mailings relating to his potential OFAC status, which Ramirez claimed did not comply with the Fair Credit Reporting Act (“FCRA”).  Ramirez filed a putative class action against TransUnion based on its OFAC practices, seeking to represent approximately 8,185 similarly situated consumers.  At trial, a jury sided with Ramirez and the class, awarding them more than $60 million in damages, although this award was later reduced to $40 million by the Ninth Circuit.

In his majority opinion, Justice Kavanaugh explained that Article III’s concrete-harm requirement is essential to the Constitution’s separation of powers.  According to the majority, to do away with the “concrete harm” requirement would mean that Congress could “authorize virtually any citizen to bring a suit for statutory damages against virtually any defendant who violated virtually any federal law.”  The Court rejected such an expansive interpretation of Article III, holding that Congress may not “simply enact an injury into existence, using its lawmaking power to transform something that is not remotely harmful into something that is.”

When applied to the facts of this case, the majority determined that only 1,853 members of the class, those who had their credit reports actually sent to third parties, had suffered the kind of concrete harm that would give them standing to sue.  As for the remaining 6,332 class members, plaintiffs argued that they suffered a sufficient concrete injury based on the risk of future harm—i.e., by placing an inaccuracy on their credit report TransUnion exposed these class members to a risk that such information would be disseminated.  The Court rejected this argument, noting that the mere risk of future harm is not enough to demonstrate Article III standing.  Instead, a plaintiff must show that the risk of harm actually materialized or that they suffered some other injury (such as an emotional injury) because of the risk itself.  For similar reasons, the Court held that no class members had standing to sue on the two claims based on TransUnion’s failure to format their mailings consistent with the FCRA since there was no evidence introduced at trial demonstrating that any other plaintiff (other than Ramirez) had even opened their mailings, let alone suffered some sort of harm because of them.

Notably, the Court indicated that it was not addressing the distinct question as to “whether every class member must demonstrate standing before a court certifies a class.” In doing so, however, the Court cited to Cordoba v. DIRECTV, LLC, an Eleventh Circuit decision that requires district courts to review and consider under Rule 23(b)(3) before certification “whether the individualized issue of standing will predominate over the common issues in the case, when it appears that a large portion of the class does not have standing … and making that determination for these members of the class will require individualized inquiries.”  As such, defendants can (and should) challenge the standing of absent class members as early as practicable, especially where concrete injury to the majority of class members looks precarious from the outset.

Ultimately, Ramirez is a significant win, not just for TransUnion, but for all corporate defendants, particularly those who are consistently sued under consumer protection laws where concrete harm is notoriously difficult to establish on a class-wide basis.  This case provides class action defendants with another arrow in their quiver as they seek the dismissal of non-injury class actions.  At the very least, Ramirez will help to drastically reduce the size of the class that can receive damages at trial.