Justices appear inclined to curb standing in credit-reporting class action

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Justices appear inclined to curb standing in credit-reporting class action

Argument analysis

By Amy Howe


at 4:56 pm

Samuel Issacharoff argues for Sergio Ramirez (Art Lien)

The Supreme Court on Tuesday appeared to be advocating a middle ground in a dispute over the rules that restrict when consumers can bring class action lawsuits against businesses. Some judges suggested that a class action lawsuit filed by 8,000 members against TransUnion, one of the country’s three largest credit reporting companies, should be significantly narrowed down – but not entirely.

The TransUnion v. Ramirez was filed by a California man who bought a car at a Nissan dealership only to mistakenly learn that his name matched two names on a list of suspected terrorists and criminals US companies are banned from doing business with. The man, Sergio Ramirez, then reached out to TransUnion, which sent both the credit report to the Nissan dealer and a notice that Ramirez’s name matches the names on the list maintained by the Treasury Department’s Foreign Wealth Control Office . TransUnion sent Ramirez two separate mailings – which in his opinion were inconsistent with federal consumer protection laws – reiterating that his name was viewed as a “potential match” with two in the OFAC database. He sued the company on behalf of more than 8,000 people identified as potential matches who received a similar pair of mailings over a six month period in 2011.

The question in the present case is whether the lower courts should never have allowed it to be a class action. The case boils down to a “no harm, no foul” question, as some judges put it at Tuesday’s hearing, because there is no evidence that every member of the class has suffered the real harm that would have caused them legal Granted right to sue, known as standing, even if a federal law has been technically violated? After over 90 minutes of debate, it appeared that some judges might be willing to split the difference.

Attorney Paul Clement argued on Tuesday on behalf of TransUnion, which was heard in the Supreme Court after the U.S. Court of Appeals for the 9th Circuit upheld a jury award of more than $ 40 million against TransUnion in the class action lawsuit . Clement told the judges that the class suffered from two separate problems. First, he claimed, not all of them confessed. He noted that members of the class will receive thousands of dollars in damages even if they didn’t know they were hurt in the first place until they get the check, simply because TransUnion instead turned them their credit report and the OFAC alert in two Envelopes sent from one. Second, Clement went on to say that even if everyone in the class had to complain, the unusual circumstances of Ramirez’s case were “totally atypical and unrepresentative of the average class member”. As a result, Clement concluded that he was unable to meet the requirement set out in federal class action laws that the claims of the person representing the class were typical of the claims of the class.

However, Clement encountered questions on both counts. Even some of the court’s more conservative judges seemed to agree with Ramirez that at least the 1,800 or so class members whose personal information was given to someone else was not about “no harm, no foul.” Justice Samuel Alito addressed this issue early on, asking Clement if someone would suffer mental injury if a third party saw that a person had been flagged as a potential OFAC match. Alito continued on that question and addressed the issue of possible legal remedies should the Supreme Court agree that the district court should have certified a smaller class instead.

Judge Neil Gorsuch weighed a few minutes later and returned to the subject of the 1,800 or so people whose information had been disclosed. Under the early English and American Libel Act, Gorsuch said, publication was believed to result in violation. Why shouldn’t that be true in this case, asked Gorsuch, enough to give these classmates a position?

Justice Brett Kavanaugh also seemed to suggest that he was inclined to give TransUnion only a partial win. If we can agree with you on the 6,000 or so class members whose information has not been made public, but not the 1,800 whose information has been made public, he asked Clement, what instructions should the Supreme Court issue to the lower courts when the case returns?

Two of the court’s liberal judges were skeptical of Clement’s allegations on another point – the idea that Ramirez could not serve as the named plaintiff because he was not typical of the average class member. Judge Stephen Breyer suggested that it was too late for TransUnion to ask that question now. Unless TransUnion’s attorneys objected to the proceedings, Breyer asked for efforts to introduce information about the particular circumstances under which Ramirez learned of the inaccurate OFAC warning – at a car dealership in front of his wife and father-in-law. that it had nothing to do with the “typical” injury suffered by members of the class?

Justice Sonia Sotomayor also raised this issue, telling Clement that the federal class action lawsuit rule requires “typical claims and defenses”. Ramirez has the same claims as everyone else, she said: They have all been identified as OFAC games because of the flaws in TransUnion’s procedures, and they have all received the same two mailings from TransUnion. TransUnion’s real objection, Sotomayor continued, is to cause various types of damage and harm, which is not covered by the rule. “I only see this as an experimental error,” concluded Sotomayor, “not as an error in the certification of the class.”

Samuel Issacharoff, law professor at New York University, argued on behalf of Ramirez that all members of the class suffered the same “concrete damage” that they had shown in court. “To be classified as a potential OFAC match is not a trivial mistake like” a wrongly reported zip code “”, emphasized Issacharoff. “It is the scarlet letter of our time” and “banishes people from the market”.

But despite the apparent sympathy of several judges for the class members whose personal information was actually disclosed, some of the same judges appeared doubtful that other members of the class had suffered real harm when their information was not disclosed. Alito asked Issacharoff about a hypothesis in which TransUnion had a computer program to tag anyone whose first and last name match a name on the OFAC list. Would anyone reported by the program be harmed, Alito asked, even if there was no query about that person? Alito continued this line of thinking and asked Issacharoff for an analogy in which a lawsuit could be brought about a risk in the past, although the plaintiff did not know the risk at the time.

Gorsuch was also skeptical, pointing to the Supreme Court cases involving conspiracies. They rely on the idea that TransUnion has released information about the majority of class members within the company without disclosing it to others, he told Issacharoff. But according to our case law, “which usually suggests that what happens in a company does not count for conspiracy purposes,” continued Gorsuch, “wouldn’t it be strange to speak of a publication in a company” as infringement?

Kavanaugh quoted his former colleague, Judge David Tatel, of the U.S. Court of Appeals for the District of Columbia Circuit, to express his doubt that most class members were entitled to seek damages if their information had not been released. “When inaccurate information falls into a database,” said Kavanaugh, “does it make a noise?” Tatel’s answer, Kavanaugh pointed out, was “no”. Kavanaugh seemed to agree; We’ll know more by summer.

This post was originally published on Howe on the Court.