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March 2021: Class Action Litigation Update

March 17, 2021
Business Litigation Reports

Supreme Court to Consider New Standing Requirements for Class Actions

Who must satisfy standing requirements in the final stage of a class action, and what are those requirements? The Supreme Court granted certiorari in December on a Ninth Circuit opinion that tackled these questions. Its decision may transform current rules on standing in class actions. The case is set for argument on Tuesday, March 30, 2021. 

In Ramirez v. TransUnion, a class of consumers sued a credit reporting agency that erroneously placed terrorist alerts on class members’ credit reports in purported violation of the Fair Credit Reporting Act (FCRA). Ramirez v. TransUnion LLC, 951 F.3d 1008, 1016 (9th Cir. 2020), cert. granted in part sub nom. TransUnion LLC v. Ramirez, 2020 WL 7366280 (U.S. Dec. 16, 2020). TransUnion acknowledged the named plaintiff suffered a concrete, particularized injury. Id. at 1017. But TransUnion argued that other class members failed to meet the “irreducible constitutional minimum showing of harm that Article III standing requires.” Id. The Ninth Circuit agreed, and in an important decision held the following: (1) as an issue of first impression, it held that “every member of a class certified under Rule 23 must satisfy the basic requirements of Article III standing at the final stage of a money damages suit when class members are to be awarded individual monetary damages;” Id (emphasis added); (2) the class members had indeed met the standing requirements under Spokeo II. Id. at 1024-25; Cert. Pet. App. at 16-18; (3) that the class was properly certified; and (4) class-wide damages were properly awarded. TransUnion appealed the last three points in the Ninth Circuit opinion.  Cert. Pet. App. at 16-18. 

Importantly, the unanimous holding that every class member must satisfy Article III standing requirements at the monetary damages stage, a matter of first impression for the Ninth Circuit, is not up on appeal because plaintiffs did not contest this holding. Ramirez, 951 F.3d at 1016. Appellant TransUnion focused much of its petition on the second (non-unanimous) holding, that all class members in Ramirez had standing . See Cert. Pet. App. at 16-18. The Court’s decision here will be the latest in a line of precedent spawned by Spokeo II, which held that merely breaching a statute does not confer standing by right. Id. at 1017, 1024 (citing Spokeo, Inc. v. Robins (Spokeo II), 136 S. Ct. 1540 (2016)). Finally, TransUnion also contested damages on the basis that they violate the Due Process Clause, and appealed the grant of class certification on the basis that the Rule 23(a) typicality requirement was not met. See Cert. Pet. App. at 16-18 But the Court’s decision on damages and typicality are less likely to have national import. Id. Ultimately, class action litigators should watch what the Court says on the standing issue, which will have wide ramifications on who in a class needs to show standing and whether the showing has been made.

Although neither Appellant nor Respondent allot many words to the Circuit Court’s first conclusion, this holding is noteworthy because of the potential to create a new standing requirement for claimants at the final stage of a class action. See generally Cert. Pet. App., Cert. Pet. Resp. The Ninth Circuit has previously held that only a representative plaintiff needs standing at earlier stages and in the final stage of class actions seeking injunctive relief. Ramirez, 951 F.3d at 1023 (citing In re, Inc., 888 F.3d 1020, 1028 n.11 (9th Cir. 2018); Bates v. United Parcel Serv., Inc., 511 F.3d 974, 985 (9th Cir. 2007)). Ramirez marks the first time this Circuit held that each member must have standing before receiving individual monetary awards at the final judgment stage. Id. at 1023. In its reasoning, with which the dissenting judge concurred, the Circuit Court noted that this decision “clearly follows from Supreme Court precedent, as well as the fundamental nature of our judicial system,” since holding otherwise would “transform the class action—a mere procedural device—into a vehicle for individuals to obtain money judgments in federal court even though they could not show sufficient injury to recover those judgments individually.” Id. at 1023-24, 1038.

The bulk of Appellant’s argument lays in the second holding. To reach its conclusion in favor of plaintiffs in Ramirez, the Ninth Circuit applied a two-part test it established in Spokeo III, its decision on remand after Spokeo II. Id. at 1025-26 (citing Robins v. Spokeo, Inc. (Spokeo III), 867 F.3d 1108, 1111 (9th Cir. 2017)). This inquiry, which determines when a statutory violation creates an injury sufficient for standing, first asks whether the relevant provision was established to protect the plaintiff’s concrete interests and not “purely procedural rights.” Id. If yes, a court then assesses whether the violations actually caused harm or presented a material risk of harm. Id. The court in Ramirez followed this test to conclude that plaintiffs’ standing was clear because “the fact that [Appellant] made the reports available to numerous potential creditors and sufficient to show a material risk of harm to the concrete interests of all class members.” Id. at 1028. But Appellant disagrees. Cert. Pet. App. at 18-19. In its Supreme Court briefing, the credit agency cited Spokeo II to argue that plaintiffs failed to show that the violation actually caused harm or a material risk of harm. Cert. Pet. App. at 18-19 (citing Spokeo II, 136 S.Ct. at 1550.) Appellant also cited favorably to the Ninth Circuit dissent, which found that whether any other class member “suffered the adverse consequences that befell [the class representative]” was “pure conjecture” Cert. Pet. App. at 25 (citing Ramirez, 951 F.3d at 1041 (McKeown, J., dissenting in part)).  

Of significance are the unique underlying facts of this case. As the circuit court in Ramirez noted, the credit union’s conduct was “reprehensible,” and it was “unsurprising that a jury was ‘incensed’ by [its] flippant placement of terrorist alerts on consumer credit reports and its constant refusal to take responsibility or acknowledge the harm it has caused.” Id. at 1037-38. But also notable, as the dissent highlights, is the “missing...evidence related to other members of the class, a deficiency that cannot be cured by speculation.” Id. at 1038 (J. McKeown, dissenting). 

How these particularities will impact the Court’s reasoning remains unclear.  But keep an eye out for whether the Court addresses standing requirements for class members at the final stage of a class action. And expect the court to revisit standing for statutory-based class actions it addressed in Spokeo four years ago.