Written By ESR News Blog Editor Thomas Ahearn

On May 6, 2022, a class of consumers asked a California federal court to approve a $9 million settlement in a class action lawsuit that was once ruled on by the Supreme Court of the United States to settle claims that nationwide credit reporting agency (NCRA) TransUnion allegedly violated the federal Fair Credit Reporting Act (FCRA) by incorrectly labeling these consumers as terrorists, according to a report from TopClassActions.com.

TopClassActions.com reports that the lead plaintiff in the case of Ramirez v. TransUnion LLC filed the class action lawsuit in 2012 after he was prevented from buying a car after TransUnion mistakenly stated on a credit report that his name was found on the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) list of suspected terrorists and criminals. He argued TransUnion did not ensure accuracy as required by the FCRA.

“The settlement class includes 1,853 members about whom TransUnion delivered OFAC data to a third party between January and July 2011, as well as 6,332 individuals who can demonstrate publication of OFAC data to a third party through a claim. Each class member is entitled to a pro rata share of all the funds remaining in the settlement fund after payments of lawyers fees and administration fees,” TopClassActions.com reports

The case has a long history. In 2017, a California federal jury ruled TransUnion willfully violated the FCRA and awarded roughly $8 million in statutory damages and $52 million in punitive damages to 8,185 class members. TransUnion appealed, claiming the verdict could not stand since only the lead plaintiff suffered a “concrete injury” due to the company’s practices. The Ninth Circuit rejected that argument but reduced the payout.

On June 25, 2021, the Supreme Court ruled in the case of TransUnion LLC v. Ramirez that a plaintiff must suffer a “concrete harm” resulting from a defendant’s statutory violation of federal statute such as the FCRA to have sufficient standing to sue under Article III of the United States Constitution and that plaintiffs in a class action lawsuit also must prove that every class member has the standing to sue under Article III.

“To have Article III standing to sue in federal court, plaintiffs must demonstrate, among other things, that they suffered a concrete harm. No concrete harm, no standing,” Justice Brett M. Kavanaugh wrote in the majority opinion that reversed and remanded the case in a narrow 5 to 4 vote. Justice Kavanaugh was joined by Chief Justice John G. Roberts Jr. and Justices Samuel A. Alito Jr., Neil M. Gorsuch, and Amy Coney Barrett.

“No concrete harm, no standing. The 1,853 class members whose credit reports were provided to third-party businesses suffered a concrete harm and thus have standing as to the reasonable-procedures claim. The 6,332 class members whose credit reports were not provided to third-party businesses did not suffer a concrete harm and thus do not have standing as to the reasonable-procedures claim,” Justice Kavanaugh wrote in the opinion.

“The mere existence of inaccurate information, absent dissemination, traditionally has not provided the basis for a lawsuit in American courts. The plaintiffs cannot demonstrate that the misleading information in the internal credit files itself constitutes a concrete harm. The mere presence of an inaccuracy in an internal credit file, if it is not disclosed to a third party, causes no concrete harm,” Justice Kavanaugh concluded in the opinion.

The FCRA 15 U.S.C § 1681 was enacted by Congress in 1970 to promote the accuracy, fairness, and privacy of consumer information contained in the files of consumer reporting agencies (CRAs), protect consumers from the willful and/or negligent inclusion of inaccurate information in their consumer reports, and regulate the collection, dissemination, and use of consumer information, including consumer credit information.

Employment Screening Resources (ESR) – a service offering of ClearStar, a leading HR-technology company that specializes in background, drug, and medical screening – offers comprehensive background screening services that empower organizations to make informed hiring decisions that comply with federal FCRA, state, and local laws that regulate background checks. For more information, contact ESR today.

NOTE: Employment Screening Resources (ESR) – a service offering of ClearStar – reminds readers that allegations made in class action lawsuits are not proof a business or individual violated any law, rule, or regulation since they are in the pleading stage with no factual adjudications yet.

NOTE: Employment Screening Resources (ESR) – a service offering of ClearStar – does not provide or offer legal services or legal advice of any kind or nature. Any information on this website is for educational purposes only.

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