Introduction

On June 25, 2021, the US Supreme Court in TransUnion LLC v. Ramirez held in a 5-4 decision that certain members of a class action lawsuit, whose inaccurate credit reports were not provided to third parties, did not suffer a “concrete” injury sufficient to confer Article III standing. This case builds upon the Court’s 2016 decision in Spokeo, Inc. v. Robins, where the Court first addressed the concrete injury that must be suffered in order to have standing to bring suit under the FCRA. Importantly, while Spokeo’s holding that a bare procedural violation is insufficient to demonstrate a “concrete and particularized” injury still stands, the Court in TransUnion clarified that (1) a concrete injury is a “physical, monetary, or cognizable intangible harm traditionally recognized” as providing grounds for relief; and (2) that the “material risk of harm” alone is not a concrete injury unless that risk of harm materializes into an actual harm or a plaintiff is independently harmed by the material risk itself.

Background

The case involves a class action lawsuit against TransUnion for the claims of 8,185 individuals.  TransUnion is a well-known credit reporting agency that compiles personal financial information about consumers to create reports for interested third parties. In 2002, TransUnion created an add-on service to its credit reports called the Office of Foreign Assets Control (OFAC) Name Screen Report. When a business opted to access this service, TransUnion would check the consumer’s first and last name against a list of individuals designated as terrorists, drug traffickers, or other serious criminals kept by the Treasury Department’s Office of Foreign Assets Control. If the consumer’s name matched a name on the list, TransUnion would place an alert on that consumer’s credit report. The OFAC Name Screen Report service led to false positives for the plaintiffs, and they brought claims against TransUnion for inaccurate credit reporting under the FCRA.

While all 8,185 individuals in the class had inaccurate OFAC alerts in their credit file, only 1,853 members of the class had their reports sent to third parties. The question for the Court was whether all 8,185 members of the class had suffered an injury-in-fact sufficient for standing under Article III of the Constitution. Specifically, the Court addressed whether all plaintiffs in the class suffered a “concrete” injury. The Court defined a concrete injury as one in which a plaintiff has a “close relationship” to a “physical, monetary, or cognizable intangible” harm “traditionally recognized” as providing grounds for relief.

The High Court’s Decision

The Court held that, although the entire class had a cause of action under the FCRA, only those whose reports had been sent to third parties suffered such an injury. The Court reasoned that, for those plaintiffs who had their reports sent to third parties, their harm was closely analogous to the reputational harm associated with defamation, a harm traditionally recognized as concrete. On this point, the Court emphasized that mere creation of the inaccurate reports, without dissemination, would not constitute a concrete injury, as earlier cases emphasized the necessity of publication in defamation actions.

While the Court expanded upon Spokeo’s definition of a concrete injury in general, it also appeared to walk back Spokeo as it relates to claims of mere “risk of harm.” The Court explained that, in order for a future risk to be a concrete injury, plaintiffs must demonstrate either that (1) the risk materialized, such as by having the inaccurate reports sent to third parties, or (2) that they were independently harmed by the risk itself, such as by suffering an emotional injury as a result of the risk. The plaintiffs in TransUnion failed to do either. The Court acknowledged that, for plaintiffs seeking injunctive relief, a future risk of harm may be grounds for relief if the risk is substantial, but the plaintiffs here were seeking damages alone. For these reasons, the Court held that the remaining 6,332 plaintiffs had not suffered a concrete injury.

Finally, using similar reasoning, the Court rejected the plaintiffs’ argument that they were injured by TransUnion’s incorrectly formatted mailings sent to the plaintiffs regarding their credit reports.

Key Takeaways

The Court’s decision has implications not only for plaintiffs seeking relief under the FCRA, but for all plaintiffs and defendants in federal court, particularly in class-action cases. The key takeaways are:

• The Court reiterated that a plaintiff does not automatically have standing simply because of a statutory violation, as “an injury in law is not an injury in fact.” Noting that while Congress can elevate certain harms into legally cognizable ones, it may not “enact an injury into existence.”

• A plaintiff must show that they suffered a “real, and not abstract” harm, whether a tangible harm such as physical or monetary damage, or intangible such as a reputational or privacy harm.

• Even a “material risk of harm” must be shown to be true “harm” to establish standing under TransUnion, either by demonstrating that the risk materialized into an actual harm, or by showing that the risk of harm itself caused a concrete injury. This standard may be more flexible for plaintiffs seeking injunctive relief.