By Amy Howe
on March 29, 2021
at 12:24 p.m.
Almost five years ago, the Supreme Court ruled Spokeo against Robins, the case of a Virginia man who alleged that an Internet database company had violated the Fair Credit Reporting Act by publishing inaccurate information about him. The judges ruled that simply claiming that a law has been violated is not enough to have a stand – that is, a legal right of action. Instead, a plaintiff must demonstrate an infringement that is both concrete and specific, even if it is not necessarily a tangible one. On Tuesday in TransUnion against Ramirez, the judges will examine how these requirements apply to class actions.
The Treasury Department’s Foreign Assets Control Office publishes a list of people known as Specially Designated Nationals who U.S. companies may not do business with because they are believed to pose a threat to the country’s national security or economy. TransUnion, one of the three largest credit bureaus in the United States, offered a product called the OFAC Name Screen to notify credit check companies when a person’s first and last name matched a name on the OFAC list .
The case in the Supreme Court began 10 years ago when Sergio Ramirez and his wife went to a Nissan dealership in Dublin, California to buy a car. After the couple completed a loan application, a credit check revealed that Ramirez’s name matched two names on the OFAC list – neither was actually Ramirez. Because of the warning, the dealer recommended Ramirez’s wife only to buy the car on her behalf, which the couple had decided. Ramirez later said he was “embarrassed, shocked and scared” that the OFAC alarm was revealed in front of his wife and father, who was also with them at the dealership.
Ramirez contacted TransUnion the day after his visit to the dealership to request a copy of his credit report. Ramirez received the credit report in the mail in an envelope that also contained a summary of his rights. In a second envelope, Ramirez received a letter (without a rights summary) stating that his name was considered a “potential match” with those in the OFAC database. Due to concerns about the potential impact of the OFAC warning, Ramirez canceled a planned trip to Mexico. After Ramirez contacted TransUnion again, the OFAC warning was removed from Ramirez’s credit reports in the future.
Ramirez went to federal court in California where he filed a class action lawsuit alleging that TransUnion had deliberately violated the fair credit reporting law by including the erroneous OFAC warnings in consumer credit reports and sending out misleading and incomplete mailings, such as he had received it. with the OFAC warnings. Ramirez asked the district court to certify a class of consumers who had received two separate mailings about their credit report and the OFAC alert in the first half of 2011 – just over 8,000 people in total.
TransUnion urged the district court to reject Ramirez’s proposed class certification. The company argued that while some class members may have suffered the type of injury the constitution requires in order to sue, there is nothing in the definition of the class to ensure that all of them do so. Receiving only two letters from TransUnion is not a real violation, especially if it cannot be guaranteed that a recipient has opened the letters at all. TransUnion also alleged that the unusual circumstances in Ramirez’s case, where he learned of the OFAC warning while at a car dealership with his wife and father-in-law, prevented him from meeting federal regulations requirements for In class actions, the claims of the class representative are typical of the claims of the class.
The District Court rejected TransUnion’s arguments and upheld the class. The case was then put on hold until the Spokeo Supreme Court ruled, but then allowed the proceedings to continue. A jury awarded each of the 8,184 class members almost all of the statutory damages the FCRA allows – just under $ 1,000 each – and over $ 6,000 per class member punitive damages, for a total of over $ 60 million.
TransUnion appealed to the US Court of Appeals for the 9th Circuit, which reduced punitive damages but upheld the jury’s verdict, resulting in more than $ 40 million in prize money. TransUnion then asked the Supreme Court to take up the case, which the judges agreed to at the end of last year.
Arguments of the parties
TransUnion claims that every member must stand in a class. In this case, TransUnion emphasizes, the only thing the class members have in common is that they have been sent mailings indicating that they “may match” a name on the OFAC list with no evidence that they even opened it and even read the mailings. Nothing in the Supreme Court cases, according to TransUnion, indicates someone has suffered an injury that enables them to sue “if the information was disclosed but in an incorrectly colored envelope or (as here) in two Envelopes are provided [than] one.”
Even if all class members could show an injury, TransUnion continues, the class still cannot continue in its current form as Ramirez’s injury – the embarrassment of having been to a match in front of family members and having to cancel a vacation – is “wild” atypical ”compared to other class members who“ suffered at most one technical breach and minor confusion in the privacy of their own four walls ”.
TransUnion concludes with the warning that the 9th circuit decision “provides a roadmap for generating oversized awards: Find a plaintiff who has sustained real injuries, forego providing evidence of actual damage and instead seek legal and punishable damage in the Names of a significant class that have suffered only one foot defect; to repeat.”
Ramirez throws down his own allegations at TransUnion, telling the judges that the company is really looking for “a revision of strategic decisions that went wrong”. During the trial, Ramirez said, TransUnion never objected to Ramirez’s testimony, submitted no testimony from other members of the class and “agreed to a process whereby the jury awarded each class member a single amount of legal damages.”
But in any case, continues Ramirez, the class has been properly certified. First, he points out, all class members suffered the same injury: “TransUnion falsely labeled them terrorists” – they didn’t get two envelopes when they should have received one. Such an infringement is analogous to defamation in early English and American law, suggests Ramirez – which, as the Spokeo Supreme Court has indicated, qualifies non-pecuniary infringement rather than the kind of “concrete” damage required to stand .
Second, Ramirez said, his claim was indeed typical of that of the class. Ramirez accuses TransUnion of taking a “goldilocks” approach – largely on the grounds that a class representative’s allegations cannot be too strong or too weak – that no court has ever endorsed. However, Ramirez counters that it only requires that the claims be similar as they are. Ramirez insists that he has not sought compensation for the denial of credit or the embarrassment he suffered from the Nissan dealer. Instead, he makes it clear, all claims in the case arise from how TransUnion has treated all class members.
“Friends of the court” weigh in
The United States has submitted a “Friend of the Court” letter that represents a middle ground. Acting US Attorney General Elizabeth Prelogar agrees with Ramirez that class members are entitled to make their claims. But the United States is urging the judges to invalidate the 9th Circle decision and send the case back for another look as they failed to consider whether Ramirez’s claims, given his injuries, were truly typical of the class.
The dispute reflected the high stakes and attracted about a dozen “Friends of the Court” letters on each side of the case. In a brief endorsement from TransUnion, the Retail Litigation Center warns judges that a ruling for Ramirez could open the floodgates to other class action lawsuits alleging corporate defendants violated federal and state laws, even if members of the class were not injured. Such lawsuits, the RLC warns, can result in “defendants and extortionate settlements being deprived of due process in order to avoid potential existential liability”.
On the other side of the case, the Electronic Frontier Foundation paints a very different picture in its brief support for Ramirez. Judges are told that companies like Google and Facebook are collecting huge amounts of data that “can be used to reveal a user’s most intimate and sensitive personal information and secrets”. As the volume of information increases, according to EFF, so do the “risks associated with the unrestricted compilation of such data”, with “serious consequences for many consumers” in areas ranging from housing and employment to immigration. The rule put forward by TransUnion and its supporters would, according to the EFF, “affect the ability of consumers to hold companies accountable for the violations caused by companies failing to properly process sensitive consumer data”.
This post was originally published on Howe on the Court.