TransUnion LLC v. Ramirez: Divided Supreme Court Holds No Concrete Harm in Being Labeled a Terrorist; Dissenters Argue Violation of Private Rights Confers Standing

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Is receiving a letter from one of the “big three” credit reporting agencies identifying you as a “potential” drug trafficker or terrorist sufficiently harmful to establish a “real injury” under Article III of the U.S. Constitution? If not, how about being flagged as a “potential” child molester? Or as a racist? Or finding out that your credit score was reduced because of your race? In TransUnion v. Ramirez, No. 20-297, 594 U.S. __ (Jun. 25, 2021) (“TransUnion”)(slip op. available here) Justice Thomas, joined by three other dissenting justices of the United States Supreme Court, seriously posed these questions in a critique of the majority opinion’s take on Article III standing. Thomas, J., dissenting, slip op. at 17.

In TransUnion, Sergio Ramirez visited a Nissan dealership to buy a car. After he and his wife picked out the car and negotiated a price, the dealership ran a credit check on them. Nissan refused to sell Mr. Ramirez the car because his name was on a “terrorist list.” Slip op. at 4.

Mr. Ramirez is not a terrorist. The U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) maintains a list of “specially designated nationals,” which largely includes terrorists and drug traffickers. Slip op. at 3. TransUnion’s credit check product flags anyone with the same first and last name as a person on the OFAC list, without comparing any other data. Id. at 4. The next day, Mr. Ramirez demanded a copy of his credit file. The mailing he received from TransUnion did not mention that his credit file contained the OFAC alert. In a subsequent second mailing, TransUnion informed him in a letter that his name was mentioned as a potential match to names on the list. Id. at 5.

Mr. Ramirez filed a class action alleging violations of the Fair Credit Reporting Act (“FCRA”) on behalf of himself and a class of 8,185 individuals with OFAC reports in their credit files. For 1,853 of the class members, TransUnion provided misleading credit reports to third-party businesses. The internal credit files of the other 6,332 class members were not provided to third-party businesses. Slip op. at 1-2. The United States District Court for the Northern District of California certified the class, and a jury awarded statutory and punitive damages totaling more than $60 million to the class. The Ninth Circuit affirmed, but reduced the punitive damages award, reducing the total award to approximately $40 million. 

The Supreme Court granted certiorari. The Court held that the 1,853 class members (including plaintiff) whose credit reports were provided to third-party businesses suffered a “concrete” harm and therefore had Article III standing. However, the Court held that the remaining 6,332 class members, whose credit reports were not provided to third-party businesses, did not. Slip. op. at 27. The Court analogized that for these class members “the plaintiffs’ harm is roughly the same, legally speaking, as if someone wrote a defamatory letter and then stored it in her desk drawer. A letter that is not sent does not harm anyone, no matter how insulting the letter is.” Id. at 19. The Court concluded, “[n]o concrete harm, no standing.” Id. at 27.

In the dissent, Justice Thomas retorted that “no concrete harm, no standing” “may be a pithy catchphrase, but it is worth pausing to ask why ‘concrete’ injury in fact should be the sole inquiry” in determining whether an injury is sufficient to establish standing. Thomas, J., dissenting, slip op. at 9. Justice Thomas examined how the law has historically distinguished between the enforcement of private rights and the enforcement of public rights by individuals. For example, an individual suing for violation of a private right – such as trespass on his land – needed only to allege the violation. Courts typically did not require any showing of actual damage. But an individual suing for violation of a duty owed broadly to the whole community, “such as the overgrazing of public lands,” had to show individual damage. Id. at 5. In the view of the minority, by violating the duties owed to individual class members under the FCRA, TransUnion violated the private rights of the 6,332 class members, who “thus have a sufficient injury to sue in federal court.” Id. at 8.

After all, “one need only tap into common sense to know that receiving a letter identifying you as a potential drug trafficker or terrorist is harmful,” which is “[a]ll the more so when the information comes in the context of a credit report.” Thomas, J., dissenting, slip op. at 17. This, however, was insufficient to establish a real injury for Article III standing here, which leaves one to wonder “what could rise to that level.” Id.  

Authored by:
Robert Friedl, Senior Counsel