The U.S. Supreme Court’s threat to gut Article III “standing” rights in class action lawsuits is more insidious than the justices seem to understand

 

The city of SeaTac passed a measure in 2013 requiring all employees either working inside the Seattle-Tacoma International Airport and those entities (hotels, parking lots, rental cars and restaurants) just outside the airport to be paid a minimum wage of $15-an-hour. The Port of Seattle had opposed the measure, as did all airlines and vendors. There was a temporary injunction that prevented the measure from going into effect, and it’s opponents  argued that the wage should only apply to entities outside of the airport that were actually part of the city; the airport itself was “owned” and operated by the Port of Seattle, not by the city, and thus had sole jurisdiction over what happened inside of it.

I continued to work at the airport for another eight months after measure had been slated to go into effect before moving on to my next “adventure.”  Two years after the measure was passed, the state Supreme Court ruled that the measure was legal and enforceable within the airport, and that the pay raise not only be applied immediately, but retroactively, meaning that back pay would be owed to everyone who was working at the airport after the measure was supposed to go into effect. 

I wasn’t paying attention to the news about this, and thus was I surprised to receive a letter from a law firm informing me that my name had previously been included as a plaintiff in a class action lawsuit against the Port, and a settlement had been reached, and that I should expect a check for back pay. But I never heard back from them for almost a year and forgot about it, until one day I received a check for $2,800 after taxes withheld, the equivalent of the $3-an-hour extra I should have been paid over an 8 month period.

More recently I was notified by another law firm which informed me that my name was included as a plaintiff in a class action lawsuit against a credit rating company which had its data base hacked into and millions of “customers”—whether they knew they were or not—had their personal data exposed to theft. I later received a “share” of the eventual settlement—about $21. I never cashed it, and seem to have mislaid it, but despite its lack of size in the dollars sense, what it represented should be of concern to everyone, since it appears that the U.S. Supreme Court is ready to block people like me from having “standing” in class action lawsuits such as these, and thus not entitled to compensation.

A case before the court questions whether persons who are not personally aware that some harm was done to them due to deliberate negligence or intent, or cannot “prove” that harm was done even if the actions did in fact expose them to harm, then those persons cannot be legally part of a class action lawsuit, be used to create a class action lawsuit, or receive compensation.

That is what is at stake in a current case before the U.S. Supreme Court, TransUnion LLC v. Ramirez.  The case stems from an incident in February, 2011 when Sergio Ramirez attempted to purchase a car for his wife. After a credit check, Ramirez was told by the Nissan dealership that they were disallowed from selling him a car because his name was  on a “terrorist” watch list by the U.S. Treasury Department’s Office of Foreign Assets Control. Although the dealer eventually agreed to sell a car under his wife’s name, Ramirez was refused a copy of the report claiming he was a “terrorist.”

Ramirez found that the company that generated the report was TransUnion, and he attempted to contact them and discuss the issue, but TransUnion claimed that there was no OFAC alert on his credit report. When Ramirez finally did receive a copy of his credit report, it include instructions on how to change inaccurate information. Ramirez soon received another letter, this time one that did report the “terrorist” match. TransUnion eventually did remove the OFAC alert. But upon the discovery that TransUnion had falsely placed OFAC alerts on the credit reports of more than 8,000 people, Ramirez filed a class action lawsuit against the company in 2012. A jury found TransUnion liable and awarded $60 million in statutory and punitive damages.

TransUnion appealed the case to the Ninth Circuit Court. It claimed that Article III of the Fair Credit Reporting Act should not be interpreted as meaning that a class action lawsuit for damages can be instituted if only a few of the named plaintiffs suffered “actual injury.” In other words, those person who did not knowingly suffer harm even if they were exposed to harm because of faulty actions do not have “standing” in a class action lawsuit and cannot be included in such for damages.

Of course many people may have in fact have been harmed by TransUnion’s actions, but did not know it (like not being approved for a loan or a new credit card), but this would be a case of “what you don’t know won’t hurt you”—even if in fact it did. The Ninth Circuit saw through TransUnion’s slippery argument, and ruled that all the people listed in the class action lawsuit had “standing” because they had suffered “material risk of harm to their concrete informational interests.” 

The court found that because the potential for harm was present because of TransUnion’s falsely placing (mostly) foreign-sounding names on their terrorist watch “alerts” without bothering to confirm that as “fact,” the potential risk of “severe harm” was enough to trigger sanction under Article III of the Fair Credit Reporting Act. TransUnion claimed that the harm done to Ramirez was not “typical,” but the court ruled that the harm done to Ramirez because of TransUnion’s false and defamatory reporting should in fact be seen as “typical" as defined by the Federal Rule of Civil Procedure 23. 

But in this week’s oral arguments, only Justice Sonia Sotomayor seemed concerned about TransUnion’s actions and the need to keep Article III in place to force credit reporting companies to maintain accurate credit reports. On the other hand, none of the other justices seemed to believe that harm was done to anyone whose name was falsely placed on TransUnion’s “terrorist” list. Chief Justice Roberts claimed that “potential” didn’t mean the same as “actual,” even though TransUnion did in fact cause actual harm to more than 8,000 people by labeling them as “terrorists” to any third-party that chose to look at their credit scores—and at least 1,800 were shown to have been "accessed" for credit inquiries. It is absurd to believe that over a period of several years until it was stopped by the Ramirez case that these defamatory “alerts” were not noted  by third parties for informational purposes that did determine if someone is a “credit risk.”

The other justices, like Thomas, Coney Barrett, Kavanaugh and Kagan all seemed to ignore the intent of the law and what the FCRA was meant to control, which was to prevent false and harmful credit reporting such as that which TransUnion willfully did, even if out of sheer laziness.

Ramirez’s attorney Samuel Issacharoff was often frustrated by the seeming indifference of the justices to the harm caused by TransUnion; in his final argument he noted the “Never has this court found Article III to remove jurisdiction for retroactive damage claims when Congress has created the private cause for action. It is difficult to imagine a fact pattern more at the heart of the statutory zone of interest or one that is more uniform across the class. All were listed improperly. Ramirez’s claims were not only typical of the other Sergio Ramirezes, they were identical to a group put in harm’s way of TransUnion’s uniform course of conduct.”

It is clear from this statement that TransUnion arbitrarily placed any mostly Hispanic or Muslim name on their “terrorist” list if they “matched” a name on the Treasury Department’s “list” without bothering to find out if the person’s they placed on the list was actually the person in question—and there were more than 8,000 such persons who were falsely claimed to be “terrorists” by TransUnion. Is the fact that Ramirez is Hispanic have something to do with the justices’ attitude in the case? Is private prejudice against certain groups sufficient to cause to kill the rights of all of us from the trepidations of rogue operators like credit reporting companies that operate in secret and you never know what harm they have caused until you discover it by “accident”?