SCOTUS says tangible injury is required to appear in Federal Court

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On June 25, 2021, the United States Supreme Court ruled that class members who could not establish “tangible harm” arising from alleged violations of the Federal Credit Report Act (“FCRA”) did not have standing. seek redress in federal court under Article III. Transunion LLC v. Ramirez, n ° 20-297 (United States June 25, 2021)).

Factual background

The plaintiff alleged that the defendant TransUnion prepared a credit report on him which incorrectly identified him as possibly on the terrorist watch list. He learned of the alleged error after being refused a car loan.

The applicant then requested a copy of his credit report from TransUnion, which responded in two separate mailings. The first mailing included his credit report and the FCRA entitlement summary, but it did not mention the Terrorist Watchlist alert. The second mailing included the alert, but did not include a separate summary of rights.

The plaintiff brought an action on its own behalf and on behalf of a putative group alleging that TransUnion violated the FCRA by failing to follow “reasonable procedures” to ensure that its credit records and those of the members of the group were as well. precise as possible. He further alleged that TransUnion violated FCRA’s “complete file” disclosure requirements by providing copies of complete credit files and the required fee summary in two separate mailings, instead of one. The plaintiff argued that this created a risk of future harm because the class members might not be informed of the alert and request a correction.

Following a jury trial, the U.S. District Court for the Northern District of California awarded the group $ 60 million in damages, ruling that anyone with incorrect information had standing to sue, not just those to whom these reports had been forwarded. The Ninth Circuit confirmed, but reduced the award to $ 40 million, ruling that the punitive damages imposed by the district court were unconstitutionally excessive.

The Supreme Court’s decision

In a 5-4 decision, the Supreme Court overturned the Ninth Circuit decision. The Court held that a risk of future harm is not sufficient identifiable harm to confer Article III standing for a claimant to claim pecuniary damages. In that decision, the court observed that of the 8,185 group members who had a connection with an inaccurate terrorist watch list alert, only 1,853, including the named requester, actually had their reports forwarded to a third party. The Court noted that under the traditional tort of libel, the mere existence of inaccurate information without dissemination was not prosecutable, and the majority of the group could therefore not allege concrete harm.

This decision reinforces a precedent that standing to bring proceedings under Article III requires “tangible harm” even where there is a violation of the law and that “harm in law is not harm in law. made “. Ramírez to * 2 (citing Lujan v. Wildlife defenders, 504 US 555, 560-561 (US 1992)). Notably, the Court’s decision further applied this concept to the context of class actions, concluding that all The group member must be able to show this concrete prejudice that causes standing. Thus, the Court concluded that the 1,853 class members whose credit reports were in fact released to third parties presented tangible harm and had standing under Article III, but the remaining 6,332 class members had no litigation or controversy.

Implications

The ruling is likely to lead to class actions when there is no concrete harm to increasingly file in state courts, especially in states that have more permissive permanent standards.

© 2021 Proskauer Rose srl. Revue nationale de droit, volume XI, number 183


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