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SCOTUS Restricts Lawsuits In Federal Court For FCRA, FDCPA, TCPA And Other Statutory Violations

On June 25, 2021, the Supreme Court of the United States held that a plaintiff must suffer a concrete injury resulting from a defendant’s statutory violation to have Article III standing to pursue damages from that defendant in federal court. The Court also held that plaintiffs in a class action must prove that every class member has standing for each claim asserted and for each form of relief sought.

Justice Kavanaugh wrote the majority opinion, which was joined by Chief Justice Roberts as well as Justices Alito, Gorsuch, and Barrett. Justice Thomas, often considered the Court’s most conservative member, wrote a dissent joined by Justices Breyer, Sotomayor, and Kagan. Justice Kagan also wrote a separate dissent that was joined by Justices Breyer and Sotomayor.

The Court’s decision in TransUnion LLC v. Ramirez is available at: Link to Opinion.

The road to this momentous decision began at a car dealership where the plaintiff sought to finance the purchase of a vehicle. When running a credit check, the dealership received a TransUnion credit report indicating that the plaintiff’s name matched a name on a list of “specially designated nationals” maintained by the United States Department of Treasury’s Office of Foreign Assets Control. The OFAC list contains the names of terrorists, drug traffickers, and other serious criminals deemed to be a threat to national security. After seeing his credit report, the dealership refused to sell a car to the plaintiff.

The following day, the plaintiff called TransUnion to request a copy of his credit file pursuant to 15 U.S.C. § 1681g(a)(1). TransUnion fulfilled the request and included a copy of the CFPB’s summary of rights as required by 15 U.S.C. § 1681g(c)(2). The documents sent to the plaintiff omitted the OFAC alert, so the following day TransUnion sent the plaintiff a second letter explaining that his name potentially matched a name on the OFAC list. However, the second letter did not include the CFPB’s summary of rights.

The plaintiff subsequently filed suit against TransUnion, asserting three claims under the Fair Credit Reporting Act (FCRA): (1) that in utilizing the OFAC list, TransUnion failed to follow reasonable procedures to ensure the accuracy of information in violation of 15 U.S.C. § 1681e(b); (2) that by omitting the OFAC information from the credit file TransUnion initially mailed to plaintiff in response to his request, TransUnion failed to provide plaintiff with all information in his credit file in violation of § 1681g(a)(1); and (3) that by failing to include another copy of the summary of rights in the second mailing to plaintiff, TransUnion violated § 1681(c)(2). The plaintiff also asserted those three claims on behalf of a class of all people in the United States to whom TransUnion mailed a follow-up OFAC notice without a summary of rights — i.e., those who received a mailing like the second mailing received by the plaintiff. There were 8,185 people in the class, but only 1,853 of them had their credit reports sent to creditors during the relevant time period.

The plaintiff prevailed on all three claims at trial and the jury awarded over $60 million ($984.22 in statutory damages and $6,353.08 in punitive damages for each member of the class). On appeal, the Ninth Circuit agreed that all members of the class had Article III standing, but the circuit court reduced the punitive damages award to just under $4,000 per class member, which brought the overall award to roughly $40 million. The Supreme Court granted certiorari.

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