SCOTUS fails to rule on Article III in FCRA lawsuit

On June 25, the Supreme Court address whether a violation of a federal law providing for a private right of action, without concrete prejudice, will give legal standing in federal court. In a 5-4 decision, the court overturned a Ninth Circuit ruling approving the award of damages to 6,332 class members claiming that TransUnion violated the Fair Credit Reporting Act by falsely labeling their credit reports as a “Potential match” with a name on the terrorist list. , drug traffickers and other criminals maintained by the Office of Foreign Asset Control (OFAC) of the US Treasury Department. See TransUnion, LLC v. Ramirez, n ° 20-297, sheet op. (United States June 25, 2021). These class members made up over 3/4 of the total class, but their claims were distinct in that TransUnion only reported their credit reports internally, without distributing the reports to potential creditors or any other. third.

Writing for the majority, Kavanaugh J. explained that the mislabelling, on its own, was not a “tangible injury” necessary to establish standing under Section III, because “the preservation information legally obtained, without further disclosure, has traditionally not provided the basis for legal action in US courts. TransUnion, Slip op. to 18. The risk of future harm resulting from a potential distribution was also not sufficient. Although the Court recognized that a person “exposed to a risk of future harm may seek a prospective injunction to prevent harm from occurring, … as long as the risk of harm is sufficiently imminent and substantial”, TransUnion, Slip op. at 20 (citation omitted), in this case, the plaintiffs only sought pecuniary damages. And Judge Kavanaugh explained: “The standing of a plaintiff to seek an injunction does not necessarily mean that the plaintiff has standing to seek retrospective damages.” Identifier. to 20.

This advice has potentially broad implications. The majority observed that “the mere existence of a deceptive OFAC alert in a consumer’s internal credit report” does not “constitute[] a concrete injury “, TransUnion, Slip op. at 18 years old ; there is no “historical analogue or common law where the mere existence of inaccurate information, the absence of dissemination, constitutes a concrete prejudice” identifier. (internal citation and quotation marks omitted); and “[a] a letter that is not sent hurts no one, no matter how insulting the letter is. So also here. username. at 19 years old. This language, and the strict construction of “concrete injury”, paves the way for plaintiffs seeking damages based on speculative assumptions (or even likely) future harm based on allegations that false information strength be published.

Nonetheless, in the first of the two dissenting opinions, Judge Thomas noted that the victory of TransUnion (and similar companies) may be “Pyrrhic” given that the majority opinion “did not prohibit Congress from creating statutory rights for consumers ”, and a jury concluded that the mislabelling of the credit reports of class members violated the Fair Credit Reporting Act. TransUnion, Slip op., Thomas, J., dissident, at 8, 18 n.9. As Justice Thomas noted, rather than banning such class actions altogether, the majority simply “ensured that state courts have exclusive jurisdiction” over them. User ID. at 6:00 pm 9. Therefore, States that do not have a requirement of representativeness similar to Article III should expect an increase in the number of class actions based on simple violations of the law.

The second dissent – written by Judge Kagan and joined by Judge Breyer and Judge Sotomayor – joins Judge Thomas’ dissent with a caveat. TransUnion, Slip op., Kagan, J., dissident, p. 1-3. In Thomas JA’s view, any violation of a statutory right could give rise to Article III standing, while Kagan JA argued that tangible prejudice is always necessary. User ID. at 3. Even so, Justice Kagan proposed that courts should rely on the judgment of Congress “in determining when something causes harm or risk in the real world”, and that “[o]validating an authorization to bring an action is appropriate when, but only when Congress could not reasonably have thought that an action would help to compensate or prevent the harm in question. ” User ID.

© 2021 Greenberg Traurig, LLP. All rights reserved. Revue nationale de droit, volume XI, number 180

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