Guest Commentary By William Thomson, STINSON
Supreme Court Precludes Unharmed Class Members From Recovering for Technical Statutory Violations
an important decision in TransUnion LLC v. Ramirez limiting the ability of class action plaintiffs to seek huge damages awards for mere technical violations of statutes. Although the case arose under the Fair Credit Reporting Act, its impact is likely to be substantially broader, giving defendants — particularly those sued under consumer protection statutes — another arrow in their quiver for fighting off class actions.
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In TransUnion, 8,185 class members sued credit reporting agency TransUnion, claiming it had wrongly identified them as being on the Treasury Department’s OFAC list of terrorists, drug traffickers and other serious criminals. For 1,853 of these class members, TransUnion provided credit reports to potential creditors identifying the class members as being on the OFAC list. For the remaining 6,332 class members, however, although TransUnion wrongly identified them as
being on the OFAC list, it never actually published that information to anyone. Tus, for those class members, the court was leſt to resolve a legal koan: “if inaccurate information falls into a consumer’s credit file” but is never disseminated, “does it make a sound?” In other words, is “the mere existence of a misleading OFAC alert in a consumer’s internal credit file” a sufficient basis for the consumer to sue?
Had the court looked only to the text of the FCRA, it
might have answered “yes” — the FCRA requires credit reporting agencies to “follow reasonable procedures to assure maximum possible accuracy” and imposes significant statutory damages for each failure to comply, regardless of harm to the plaintiff. Applying the constitutional principle of standing, however, the court answered with a resounding “no.” Te court explained that a plaintiff — even an unnamed plaintiff in a class action — must show a tangible harm in order to
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