TransUnion v. Ramirez: Supreme Court Considers Significant Class Certification Issue


The outcome of the case could have a significant impact on class action certifications.

3/30/2021 14:00

By David Schultz and Justin Penn

Hinshaw & Culberston LLP

The U.S. Supreme Court on Wednesday held oral arguments in a case that could have a significant impact on the ability to certify a class action. The case is TransUnion v. Ramirez, which is a class action under the Fair Credit Reporting Act.

The issue before the court is whether certification of a class is appropriate when it is not clear if most of the class members were injured and, in particular, were injured in the same manner as the named plaintiff class representative. The case has been closely watched, especially in the consumer law area where it often is difficult to determine if the class members were injured. ACA International filed an amicus brief in the Supreme Court in support of TransUnion’s arguments.

This case started after Sergio Ramirez sued TransUnion for failing to verify the names of individuals who had alerts added to their credit reports indicating they may be on the terrorist watch list. When he tried to purchase a car, his credit application was flagged for matching two names that were on the watch list.

Ramirez claimed TransUnion violated the FCRA, and the district court granted certification of a class of similarly situated individuals.

The rulings in this case have been significant to date.

After a trial, a jury awarded $60 million to the class members. TransUnion appealed to the U.S. Court of Appeals for the 9th Circuit. That court reduced the verdict to $40 million. However, it agreed that class certification was proper. It held that the harm Ramirez incurred represented the same injury suffered by all the putative class members. It made this ruling even though the evidence showed that 75% of the class was unaware of the alerts put on their credit reports.

The verdict and the class certification ruling drew a great deal of attention, and TransUnion successfully appealed to the Supreme Court. The court agreed to consider a specific issue: whether either Article III or Rule 23 permit a class action seeking damages where most of the class has suffered no actual injury, let alone an injury anything like what the class representative suffered.

The case is the next step in Article III law (sometimes referred to as a Spokeo issue) and focuses on standing for the class members.

Ramirez was the only case on the court’s docket for March 30, and the argument was done remotely. As has become customary in remote arguments during COVID-19, the attorneys were questioned by the chief judge and then each judge in order of seniority.

There was tough questioning by most judges to both sides. The comments focused on the typicality element, i.e., whether plaintiff was typical of the putative class. Some of the judges seemed to contend there were typical claims and defenses between plaintiff and the class and questioned if that was sufficient. Some judges recognized that the damages may not be typical, but there were questions on whether that mattered in deciding to certify the class.

A few judges seemed favorable to the TransUnion side and a few seemed favorable to Ramirez’s arguments. Many of the judges focused on whether the concerns about the common issues on damages could be addressed by eliminating the 75% of class members who were unaware of the alerts.

However, it is hard to predict how a case will be decided based on the questioning alone. We almost surely will get a ruling before July 4 and it will be a significant case to consumer class actions.

Several significant entities filed amicus briefs in the Supreme Court.

As stated, ACA added its voice to the record in support of TransUnion’s legal position and to bring to the Supreme Court’s attention ACA members’ concerns regarding expansive and abusive use of class litigation, particularly in cases involving statutory damages like those contained in the Telephone Consumer Protection Act and the Fair Debt Collection Practices Act.

Other significant parties that filed briefs included eBay, Facebook, Google, Home Depot and the U.S. Chamber of Commerce.

Recently we have seen what the 7th Circuit did to FDCPA cases when it applied the Article III standards to the named plaintiffs, dismissing six cases in the past two months. If the Supreme Court in Ramirez agrees with TransUnion’s arguments, it could make certifying a class much more difficult, especially in the consumer arena.

Schultz is a partner at Hinshaw & Culbertson’s Chicago office. Penn is a partner at the firm’s offices in Chicago and Los Angeles.

  • For more information on FCRA compliance, check out ACA International’s FCRA Compliance Guide for Debt Collection.
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