Supreme Court Limits FCRA Standing in TransUnion v. Ramirez

This morning the Supreme Court released its decision in TransUnion v. Ramirez. The decision reveals that although Justice Thomas has jumped off the bandwagon, the Court's majority is continuing its project of expanding its Article III standing doctrine as an obstacle to suits in federal court. This time, the Court holds explicitly that even when Congress has conferred a private right on consumers, and a cause of action to enforce it, consumers cannot pursue a claim in federal court unless the Court agrees that the deprivation of that statutory right is a genuine injury.

The case was brought by a class of over 8000 consumers who learned when they requested their credit files that TransUnion had erroneously, and negligently, flagged them as potential terrorists, in violation of its obligations under the Fair Credit Reporting Act (FCRA).  The district court certified the class and the case went to trial, and the class won a damages award that ultimately came to $40 million. The Ninth Circuit affirmed, but the Supreme Court reversed, holding that class members lacked standing unless TransUnion had sent their credit reports, with the erroneous terrorist flag, to potential creditors. Only about a fourth of the class met that criterion; the rest, according to the majority, suffered no "concrete injury" when TransUnion's credit files falsely labeled them potential terrorists.

The Supreme Court's majority opinion, written by Justice Kavanaugh, agreed with the plaintiffs that when TransUnion "provided third parties with credit reports … that labeled the class members as potential terrorists, drug traffickers, or serious criminals," the class members suffered a harm closely related to the reputational injury that supports common-law defamation claims. But other class members were merely subjected to a "risk of future harm," and a "speculative" one at that, which was not enough to  constitute the concrete injury necessary for standing.

The majority further rejected the argument that the deprivation of the class members' personal rights under FCRA was itself an injury sufficient for standing. The majority instead characterized TransUnion's violations as noncompliance with "regulatory law" rather than infringement of personal rights, and insisted that "Congress may not authorize plaintiffs who have not suffered concrete harms to sue in federal court simply to enforce general compliance with regulatory law."

Justice Thomas, once a leading voice in the Court's imposition of ever-stricter standing requirements, filed the main dissent, joined by the Court's three remaining "liberal" Justices, Breyer, Sotomayor, and Kagan. Sounding themes first advanced in his concurring opinion in Spokeo, Inc. v. Robins, Justice Thomas's dissent argues that, with the result in this case, the Court's standing jurisprudence has gone off the rails. In Thomas's view, a plaintiff asserting a violation of a personal right conferred by Congress necessarily has suffered an injury sufficient to support a claim for damages. He argues that an additional showing of concrete injury beyond that provided for in a statute is required for standing only when Congress allows individuals to sue to vindicate "public rights," as in administrative law cases challenging an agency's promulgation of a rule.

Justice Thomas further asserts that the harms in this particular case "are exactly the sort of thing that has long merited legal redress." Cataloguing the many injuries TransUnion's conduct inflicted on the class, Thomas insists that "one need only tap into common sense to know that receiving a letter identifying you as a potential drug trafficker or terrorist is harmful."  He concludes: "Ultimately, the majority seems to pose to the reader a single rhetorical question: Who could possibly think that a person is harmed when he requests and is sent an incomplete credit report, or is sent a suspicious notice informing him that he may be a designated drug trafficker or terrorist, or is not sent anything informing him of how to remove this inaccurate red flag? The answer is, of course, legion: Congress, the President, the jury, the District Court, the Ninth Circuit, and four Members of this Court."

Unusually, the liberals who joined Justice Thomas's opinion added a brief additional dissent, written by Justice Kagan, suggesting that they might not go quite as far as he in recognizing that every claim of deprivation of a personal right necessarily involves a sufficient concrete injury for standing, though such a claim should suffice "in all but highly unusual cases."

The decision strikingly demonstrates the vast difference between a 6-3 ideological divide on the Court and a 5-4 one. With a 5-4 split, even a single defection from the majority bloc usually swings the Court's decision toward what is more typically the minority. With a 6-3 cushion, the majority can lose even one of its usually most steadfast members and still carry the day. Two years ago it would have been virtually unthinkable that the Court would conclude plaintiffs lacked standing if Justice Thomas thought they did. No more. 

Finally, it's worth pointing out that the result in TransUnion could have been worse. TransUnion had argued strenuously that it is a "non-negotiable" requirement that all members of a certified class have standing, and that the failure of that requirement necessarily requires decertification of the class and vacatur of the judgment in its favor. But even after concluding that more than three quarters of the class lacked standing, the Supreme Court did not, as TransUnion had requested, direct the courts on remand to decertify the class completely and deprive even the injured members of their share of the judgment. Instead, it remanded for the Ninth Circuit to consider the "appropriate" course of action. That in itself should go a long way toward defanging defendants' arguments that a class is irrevocably tainted if any of its members turn out to be uninjured. And as Justice Thomas also noted, the decision does nothing to bar plaintiffs who have FCRA claims but don't satisfy the majority's concrete-injury requirement from suing: They just have to go to state courts, which aren't bound by Article III limitations. As Justice Thomas explained, that "may leave state courts … as the sole forum for such cases, with defendants unable to seek removal to federal court." Be careful what you wish for, TransUnion.