Consumer Finance Insights
July 6, 2021

Supreme Court Provides New Guidance on Class Member Standing

On June 25, 2021, the United States Supreme Court issued a decision in Transunion v. Ramirez that provides further guidance on the thorny issue of class member standing.  The case involved a class of 8,185 individuals whose Transunion credit reports contained an alert incorrectly labeling them as potential terrorists because their first and last names matched names on a list maintained by the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) of terrorists, drug traffickers, and other serious criminals.  Plaintiff Ramirez and the class sued Transunion for failure to maintain reasonable procedures to ensure the accuracy of their credit files.  They separately claimed that a pair of mailings Transunion sent the class alerting them of this unfortunate error were unlawful due to formatting defects in the letters.

On the reasonable-procedures claim, the Court distinguished between the 1,853 class members (including the named plaintiff Ramirez) whose credit reports containing the misleading information were provided to third parties, and the 6,332 remaining class members whose credit reports were never shared with others.  The Court had “no trouble” concluding that the 1,853 class members “suffered a harm with a ‘close relationship’ to the harm associated with the tort of defamation:  false information tending to harm the reputation of these 1,853 individuals was published to third parties.  This “concrete injury” provided them with Article III standing to pursue their reasonable-procedures claim.

On the other hand, the Court held that the remaining 6,332 class members did not have standing to pursue their reasonable-procedures claim because they suffered no concrete injury, as the misleading information contained in their credit files was not shared with anyone.  Using the “close relationship” test, the Court explained that a mere future risk of dissemination did not bear a “close relationship” to any harm traditionally recognized as providing a basis for a lawsuit.  Without publication, a “close relationship” to the tort of defamation could not be established.  The Court recognized the possibility that plaintiffs in other cases might seek to establish Article III standing by claiming an emotional distress injury based on the risk of future harm.  The Court did not take any position on this question, however, as the 6,332 class members did not claim any emotional distress injury, nor were they “even aware of the misleading information.”

As to the formatting-error claims resulting from the dual mailings, the Court held that only named-plaintiff Ramirez had standing to pursue these claim.  At trial, no evidence had been presented that “a single other class member so much as opened the dual mailings,” “nor that they were confused, distressed, or relied on the information in any way.”  This amounted to only a “bare procedural violation” insufficient to confer Article III standing, as the class members had “not demonstrated that the format of TransUnion’s mailings caused them a harm with a close relationship to a harm traditionally recognized as providing a basis for a lawsuit in American courts.”

While the decision should further complicate litigants’ efforts to establish class member standing in some cases—especially those involving risk of future injury or mere informational injury—the potential impact of the decision at the class certification stage was blunted by a footnote that the Court does not “address the distinct question whether every class member must demonstrate standing before a court certifies a class.”  Even so, in cases where class member standing can only be resolved through individualized inquiries that predominate over common questions, some courts may find support in Transunion to deny certification of the class.  LenderLaw Watch is closely monitoring how lower courts apply Transunion, particularly at the class certification stage of proceedings.

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