On June 25, 2021, the United States Supreme Court held that class members who could not establish “concrete harm” flowing from alleged statutory violations of Federal Credit Report Act (“FCRA”) lacked Article III standing to seek relief in federal court. (Transunion LLC v. Ramirez, No. 20-297 (U.S. June 25, 2021).

Factual Background

Plaintiff alleged that Defendant TransUnion prepared a credit report on him that incorrectly identified him as possibly being on the terrorist watch list.  He learned of the alleged mistake after being denied a car loan.

Plaintiff then requested a copy of his credit file from TransUnion, which responded in two separate mailings.  The first mailing included his credit file and summary of rights under the FCRA, but it did not mention the terrorist watch list alert.  The second mailing included the alert, but did not include a separate summary of rights.

Plaintiff brought suit on behalf of himself and a putative class alleging that TransUnion violated the FCRA by failing to follow “reasonable procedures” to ensure that his and class members’ credit files were as accurate as possible.  He further alleged that TransUnion violated the “full file” disclosure requirements of the FCRA by providing copies of complete credit files and the required summary of rights in two separate mailings, instead of one.  Plaintiff argued this created a risk of future harm because class members were at risk of not learning about the alert and seeking correction.

Following a jury trial, the United States District Court for the Northern District of California awarded the class $60M in damages, holding that all individuals with incorrect information had standing to bring suit—not just those who had those reports transmitted.  The Ninth Circuit affirmed, but reduced the award to $40M, finding the punitive damages imposed by the District Court to be unconstitutionally excessive.

The Supreme Court’s Ruling

In a 5-4 decision, the Supreme Court overturned the Ninth Circuit’s ruling.  The Court held that a risk of future harm is not a cognizable injury sufficient to confer standing under Article III allowing a plaintiff to pursue monetary damages.  In so ruling, the Court observed that out of the 8,185 class members who had a report with an inaccurate terrorist watch list alert, only 1,853, including the Named Plaintiff, actually had their reports transmitted to a third party.  The Court noted that under the traditional tort of defamation, the mere existence of inaccurate information without dissemination was not actionable, and the majority of the class thus could not allege concrete harm.

This decision reinforces prior precedent that Article III standing requires a “concrete harm” even when there is a statutory violation and that “an injury in law is not an injury in fact.”  Ramirez at *2 (citing Lujan v. Defenders of Wildlife, 504 U. S. 555, 560–561 (U.S. 1992)).  Notably, the Court’s decision further applied this concept to the class action context, holding that every class member must be able to show this concrete harm that inures standing.  Thus, the Court concluded that the 1,853 class members whose credit reports actually were disseminated to third parties showed a concrete harm and had Article III standing, but the remaining 6,332 class members had no justiciable case or controversy.

Implications

The ruling is likely to lead to class actions where there is no concrete harm to be increasingly filed in state courts, particularly in states that have more permissive standing standards.

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Photo of Steven J. Pearlman Steven J. Pearlman

Steven J. Pearlman is a partner in the Labor & Employment Law Department and Co-Head of the Whistleblowing & Retaliation Group and the Restrictive Covenants, Trade Secrets & Unfair Competition Group.

Steven’s practice covers the full spectrum of employment law, with a particular…

Steven J. Pearlman is a partner in the Labor & Employment Law Department and Co-Head of the Whistleblowing & Retaliation Group and the Restrictive Covenants, Trade Secrets & Unfair Competition Group.

Steven’s practice covers the full spectrum of employment law, with a particular focus on defending companies against claims of employment discrimination, retaliation and harassment; whistleblower retaliation; restrictive covenant violations; theft of trade secrets; and wage-and-hour violations. He has successfully tried cases in multiple jurisdictions, and defended one of the largest Illinois-only class actions in the history of the U.S. District Court for the Northern District of Illinois. He also secured one of only a few ex parte seizures orders that have been issued under the Defend Trade Secrets Act, and obtained a world-wide injunction in federal litigation against a high-level executive who jumped ship to a competitor.

Reporting to boards of directors, their audit committees, CEOs and in-house counsel, Steven conducts sensitive investigations and has testified in federal court. His investigations have involved complaints of sexual harassment involving C-suite officers; systemic violations of employment laws and company policies; and fraud, compliance failures and unethical conduct.

Steven was recognized as Lawyer of the Year for Chicago Labor & Employment Litigation in the 2023 edition of The Best Lawyers in America. He is a Fellow of the College of Labor and Employment Lawyers.  Chambers describes Steven as an “outstanding lawyer” who is “very sharp and very responsive,” a “strong advocate,” and an “expert in his field.” Steven was 1 of 12 individuals selected by Compliance Week as a “Top Mind.” Earlier in his career, he was 1 of 5 U.S. lawyers selected by Law360 as a “Rising Star Under 40” in the area of employment law and 1 of “40 Illinois Attorneys Under Forty to Watch” selected by Law Bulletin Publishing Company. Steven is a Burton Award Winner (U.S. Library of Congress) for “Distinguished Legal Writing.”

Steven has served on Law360’s Employment Editorial Advisory Board and is a Contributor to Forbes.com. He has appeared on Bloomberg News (television and radio) and Yahoo! Finance, and is regularly quoted in leading publications such as The Wall Street Journal.

The U.S. Chamber of Commerce has engaged Steven to serve as lead counsel on amicus briefs to the U.S. Supreme Court and federal circuit courts of appeal. He was appointed to serve as a Special Assistant Attorney General for the State of Illinois in employment litigation matters. He has presented with the Solicitor of the DOL, the Acting Chair of the EEOC, an EEOC Commissioner, Legal Counsel to the EEOC and heads of the SEC, CFTC and OSHA whistleblower programs. He is also a member of the Sedona Conference, focusing on trade secret matters.

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Edward “Eddie” C. Young is a senior counsel in the Labor & Employment Law Department and a member of the following Firm practice groups: Restrictive Covenants & Trade Secrets; Discrimination, Harassment & Title VII; and Whistleblowing & Retaliation.

Eddie represents employers in all…

Edward “Eddie” C. Young is a senior counsel in the Labor & Employment Law Department and a member of the following Firm practice groups: Restrictive Covenants & Trade Secrets; Discrimination, Harassment & Title VII; and Whistleblowing & Retaliation.

Eddie represents employers in all aspects of employment law, with a concentration on litigating complex employment disputes of all types before federal and state courts throughout the country, the U.S. Equal Employment Opportunity Commission, state and local human rights commissions and arbitral tribunals (e.g., FINRA and AAA).  In particular, Eddie has successfully litigated employment-related disputes alleging breach of non-compete agreements, theft of trade secrets, discrimination, sexual harassment, whistleblower retaliation, wage and hour violations, including employee misclassification claims, breach of contract, defamation, fraud and other business-related torts.  Eddie has obtained a world-wide injunction to enforce a client’s non-competition restriction on a former executive, successfully defended a client through summary judgment and appeal against retaliation claims brought by a former General Counsel, represented Fortune 500 companies in defense of high-profile harassment claims associated with the #metoo movement, and provided representation to several professional sports leagues.  He also has significant appellate experience, including successfully representing clients before the U.S. Circuit Court of Appeals for the First, Second and Seventh Circuits, as well as before the United States Supreme Court.  Eddie often draws on his litigation experience to help clients avoid the courtroom by effectuating positive change in the workplace through impactful training, counseling and developing robust employment policies.

Working in a wide range of industries, Eddie represented clients in food services, financial services, medical devices, telecommunications, higher education, sports, retail, real estate and others.

Eddie has been recognized as “One to Watch” by Best Lawyers in America since 2021 and as a “Rising Star” by Super Lawyers since 2017. He also regularly advises clients, writes and speaks on cutting-edge legal issues, including the use of Artificial Intelligence in the workplace, and legal issues arising from the collection and use of employee biometric information.

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Prior to joining Proskauer, Eddie was a cum laude graduate from Loyola University Chicago School of Law. He also obtained a Master’s Degree in Human Resources and Industrial Relations from Loyola University Chicago Graduate School of Business. He began his practice at a national management-side employment law firm, and has also worked in the corporate human resources department of a national tax consulting firm and as a Fellow with the Illinois Human Rights Commission.