A TransUnion Supreme Court Victory Could Help CRAs Defeat “No Injury” Class Actions

On March 30, 2021, the U.S. Supreme Court will hear oral arguments in TransUnion v. Ramirez. [1] The issue before the Court in this Fair Credit Reporting Act case is whether Article III of the Constitution or Federal Rule of Civil Procedure 23 permits a damages class action where the vast majority of the class suffered no actual injury, let alone an injury anything like what the class representative suffered. If decided in TransUnion’s favor the decision could provide credit reporting agencies with a valuable tool to defeat “no injury” FCRA class action lawsuits.

A real-world example illustrates how. Last August the U.S. District Court for the Southern District of New York certified a class of consumers in McIntyre v. RealPage, Inc. [2] The class included thousands of individuals whose consumer reports allegedly contained inaccurate and outdated eviction records obtained from LexisNexis (“Lexis”) by RealPage subsidiary On-Site (“On-Site”). On February 17, 2021, the McIntyre Court stayed the case pending the outcome of the U.S. Supreme Court’s ruling in TransUnion v. Ramirez.

Background on McIntyre v. RealPage

On-Site provides tenant screening services to landlords and property managers nationwide. Plaintiff, who claimed to have been denied housing due to inaccurate and outdated eviction records in On-Site’s report, alleged On-Site violated § 1681e(b) of the FCRA by relying on summary information purchased from Lexis as opposed to the most up-to-date information available at courthouses where the records themselves are housed. Plaintiff claimed On-Site’s exclusive reliance on this data was “willful and carried out in reckless disregard for consumers’ rights”, entitling her and the class to statutory damages of from $100 to $1,000 per class member, plus attorneys’ fees.

McIntyre Court Grants Class Certification

On-Site opposed plaintiff ‘s motion for class certification by arguing that Rule 23’s “typicality” requirement could not be satisfied due to the individualized nature of each class member’s claim. The court rejected this argument finding that On-Site had attempted to “foist additional requirements” onto a FCRA willfulness claim in suggesting that individual analyses into causality and damages would be necessary. The court found that because plaintiff was seeking uniform statutory damages based on On-Site’s alleged willfulness, causation and actual damages were irrelevant. The court concluded that the issue typical to all class members’ claims was that On-Site used “the same vendor, LexisNexis, and accepted its reports at face value.” The court pointed out, “unlike with negligence claims, actual damages and causation are not elements of a willfulness claim.”

A Favorable TransUnion Decision Would Reduce Class Exposure for CRAs

TransUnion argues that the vast majority of class members in its appeal fail to satisfy Article III standing because they did not suffer the requisite constitutional “concrete harm,” as established by the Supreme Court in Spokeo, Inc. v. Robins. [3] That decision made clear that a plaintiff cannot “allege a bare procedural violation [of the FCRA], divorced from any concrete harm, and satisfy the injury-in-fact requirement” of Article III. Rather, the injury at issue must be “real,” and not merely “abstract” or speculative.

Applied to McIntyre v. RealPage, Inc., the argument is that the Court should not have certified the class without having determined whether each class member had suffered real and concrete harm due to inaccurate or out-of-date information in a report. For example, a consumer who qualified for an apartment despite an inaccuracy in their report could not be included in the class, especially if they were unaware of the inaccuracy.

Conclusion

The Supreme Court’s ruling in TransUnion v. Ramirez could substantially reduce class action exposure for background screeners and other CRAs to “no injury” FCRA class action lawsuits. Upholding Spokeo’s “concrete harm” requirement would insulate CRAs from liability to class members alleging hypothetical harm that could have occurred, but never did.

[1] 951 F.3d 1008 (9th Cir. 2020), cert. granted in part, No. 20-297, 2020 WL 7366280 (U.S. Dec. 16, 2020).

[2] No. 18-3934, 2020 U.S. Dist. LEXIS 153885 (E.D. Pa. Aug. 25, 2020).

[3] 136 S.Ct. 1540, 1548-50 (2016)