Burr & Forman

06.29.2021   |   Blog Articles, Consumer Finance Litigation

Supreme Court Holds Class Members Must Show Concrete Harm

On June 25, 2021, in a 5-4 decision, the Supreme Court held that the individual members of a class “must demonstrate, among other things, that they suffered a concrete harm” in order to have Article III standing to recover individual damages in a class action. [1]

In TransUnion LLC v. Ramirez, — S. Ct. —-, 2021 WL 2599472 (2021), a certified class of over 8,000 people alleged TransUnion LLC (“TransUnion”) violated the Fair Credit Reporting Act (“FCRA”) by failing to use reasonable procedures to ensure the accuracy of its credit files. [2] The allegations arose after TransUnion placed alerts on the class members’ credit files because their names were “potential matches” to names on a list of terrorists, drug traffickers, and other serious criminals maintained by the United States Treasury Department’s Office of Foreign Assets Control (“OFAC”). [3]

At the time the litigation arose, TransUnion provided a “Name Screen Alert” that used a third-party to run a consumer’s first and last name against the OFAC’s list. [4]  “If the consumer’s first and last name matched the first and last name of an individual on OFAC’s list, then TransUnion would place an alert on the credit report indicating that the consumer’s name was a ‘potential match'” to someone on the OFAC list. [5] TransUnion did not compare any other consumer data to the data on the OFAC list, which resulted in “many false positives.” [6]

Sergio Ramirez, the named plaintiff, was one such false positive. Ramirez’s TransUnion credit report contained an alert stating “***OFAC ADVISOR ALERT – INPUT NAME MATCHES NAME ON THE OFAC DATABASE.” [7] Because of this alert, a car salesman refused to sell a car to Ramirez.[8] Ramirez subsequently sued TransUnion alleging, among other things, that “TransUnion, by using the Name Screen product, failed to follow reasonable procedures to ensure the accuracy of the information in his credit file.”[9] Ramirez sought statutory and punitive damages. [10] Eventually, the Northern District of California certified a class consisting of 8,185 individuals who had OFAC alerts placed on their TransUnion credit files. [11]

Though the alerts were placed on each class member’s TransUnion credit file, TransUnion only disseminated reports reflecting these alerts for 1,853 of the class members. [12] The files for the remaining 6,332 class members were not provided to any third-party businesses during the relevant time period. [13] The Supreme Court, therefore, was asked to determine whether all of the class members had Article III standing to pursue their claims against TransUnion. [14]

The Court found that the 1,853 class members whose TransUnion credit reports included OFAC alerts and were distributed to third-parties had suffered a concrete harm sufficient for Article III standing, but the remaining 6,332 class members whose information was not distributed did not. [15] Justice Kavanaugh, writing for the majority, explained that to establish standing, “a plaintiff must show (i) that he suffered an injury in fact that is concrete, particularized, and actual or imminent; (ii) that the injury was likely caused by the defendant; and (iii) that the injury would likely be redressed by judicial relief.” [16] The Court further determined that “[e]very class member must have Article III standing in order to recover individual damages.” [17]

Operating under the assumption that TransUnion’s OFAC Name Screen Alert violated the FCRA’s reasonable procedures requirement, the Supreme Court found that the 1,853 individuals whose TransUnion credit reports were distributed to third-party businesses suffered a concrete injury because the distribution of those credit reports had a “close relationship” to the tort of defamation. [18] The remaining 6,332 class members whose credit reports were not distributed, however, did not suffer a concrete harm because the OFAC alerts associated with their files were never published and “[p]ublication is ‘essential to liability’ in a suit for defamation.'” [19]  Accordingly, the Court found that the remaining 6,332 class members did not have the standing to pursue their claims against TransUnion.

In concluding that the only class members with standing were the 1,853 individuals whose credit reports were distributed to third-parties, the Court dramatically decreased the size of the class and remanded the case for further proceedings. While it remains to be seen how courts will implement the Supreme Court’s standing requirements in other class action cases, this decision will likely have a significant impact on future class certification decisions.


[1] TransUnion LLC v. Ramirez, — S. Ct. —-, 2021 WL 2599472, at *3 (2021).

[2] See generally id.

[3] See generally id.

[4] See id. at *4.

[5] Id.

[6] See id.

[7] Id. at *4.

[8] See id.

[9] Id. at *5.

[10] Id.

[11] See generally id.

[12] See id. at 3.

[13] See id.

[14] See id. at *6.

[15] See id.

[16] Id. at *6.

[17] Id. at *10.

[18] See id. at *10–11.

[19] Id. at *11 (quoting Restatement of Torts § 577, Comment a, at 192.).

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