Who Can Sue in Federal Court After the Supreme Court’s Decision in TransUnion v. Ramirez?

Jul 1, 2021 | Blog

There’s something happening here.
What it is ain’t exactly clear.
©Cotillion Music, Inc. 1966

These opening lyrics from the classic song “For What It’s Worth,” written by Stephen Stills more than fifty years ago, aptly describe the state of the standing doctrine in the wake of the Supreme Court’s recent decision in TransUnion v. Ramirez. The Court decided that certain plaintiffs had no standing to sue, but defendants in information misuse claims should take no solace from that result. The Court’s majority opinion takes so many twists and turns and provides the bench and bar with such little guidance that Justice Clarence Thomas was moved to side with the Court’s three liberals in dissent.

The facts underlying this case are not in dispute, but the majority opinion makes it very clear that after this decision, a federal court’s subjective assessment of those facts will determine a plaintiff’s right to sue whether or not a federal statute provides for that right. TransUnion provided a report to a car dealer from whom plaintiff Sergio Ramirez sought to purchase an automobile. This report  stated that Mr. Ramirez’s name matched that of someone on the OFAC (terrorist) list. His application for a car loan was denied as a result. Mr. Ramirez brought suit under the Fair Credit Reporting Act for the false designation of him as a potential terrorist and sought certification of a class of individuals whom TransUnion had also falsely designated as potential terrorists. Of the over 8,000 putative class members, 1,853 had credit reports with the false designation sent to third-party creditors by TransUnion. The rest had the false designations as potential terrorists placed in their TransUnion credit reports, but the reports had not, by the time of trial, been disseminated to third parties. A jury found for the class and the Court of Appeals for the Ninth Circuit affirmed.

The Supreme Court, in a 5-4 decision, reversed as to the class members whose terrorist designations remained in the credit reports that had not yet been sent to third-party creditors. Justice Kavanaugh wrote for the majority that the cause of action provided in the Fair Credit Reporting Act for failing to ensure accuracy of information in the plaintiffs’ files was not sufficient to provide standing, the right to sue under Article III of the Constitution, because the injuries sustained were not sufficiently “concrete.” While Congress can provide a right to sue, he wrote, a federal court need not hear the case if the trial court deems that the injury suffered by the plaintiff doesn’t meet the definition of “concrete,” a term that over many years and dozens of judicial opinions has eluded clear delineation. And here is where the decision muddies the waters of standing: Justice Kavanaugh acknowledged that dissemination of information by itself can provide standing and so can a risk of future harm from that dissemination. The majority, though, concluded in this case that the risk of a false terrorist designation in a credit report did not provide a sufficiently grave risk.

This flummoxed Justice Thomas who wrote the primary dissenting opinion. He asked, “If receiving a letter identifying you as a terrorist is insufficient harm, one wonders what would be.” Justice Kagan, in her own dissenting opinion, was equally perplexed. She found it hard to follow the majority’s reasoning that there is a minimal risk of harm through a terrorist designation in a credit report prepared by a company whose business is selling those very reports to third parties. Perhaps worse, Justice Thomas viewed the majority opinion as usurping the rights of legislatures to determine how violations of statutes in which they have written a right of action are to be redressed.

Justices Thomas and Kagan observed that, in essence, the right to sue will henceforth be based on a federal court’s subjective interpretation of the facts of the case to ascertain whether the court should entertain the claim – putting the judiciary in precisely the same place it was before this case and that of its predecessor, Spokeo v. Robins, which was cited liberally by the majority and dissenting opinions. So, contrary to the lyrics of the song by Stephen Stills, one thing is clear after this decision: standing to sue will be determined subjectively, regardless of the text of federal statutes, for the foreseeable future. And if Justice Clarence Thomas could side with the Court’s liberals on the right to sue in federal court and write passionately in defense of that right, nothing should be taken for granted. Parties litigating standing should prepare accordingly.

If you have questions regarding rights to sue or objecting to lawsuits based upon standing, please contact Kenneth N. Rashbaum.