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To have U.S. Const. art. III standing to sue in federal court, plaintiffs must demonstrate, among other things, that they suffered a concrete harm. No concrete harm, no standing. Central to assessing concreteness is whether the asserted harm has a close relationship to a harm traditionally recognized as providing a basis for a lawsuit in American courts—such as physical harm, monetary harm, or various intangible harms including reputational harm.
TransUnion LLC was a credit reporting agency that compiled personal and financial information about individual consumers. Beginning in 2002, TransUnion introduced an add-on product called OFAC Name Screen Alert. When a business opted into the Name Screen service, TransUnion would conduct its ordinary credit check of the consumer, and it would also use third-party software to compare the consumer's name against a list maintained by the U. S. Treasury Department's Office of Foreign Assets Control (OFAC) of terrorists, drug traffickers, and other serious criminals. If the consumer's first and last name matched the first and last name of an individual on OFAC's list, then TransUnion would place an alert on the credit report indicating that the consumer's name was a “potential match” to a name on the OFAC list. At that time, TransUnion did not compare any data other than first and last names. A class of 8,185 individuals with OFAC alerts in their credit files sued TransUnion under the Fair Credit Reporting Act for failing to use reasonable procedures to ensure the accuracy of their credit files. The plaintiffs also complained about formatting defects in certain mailings sent to them by TransUnion. The parties stipulated prior to trial that only 1,853 class members had their misleading credit reports containing OFAC alerts provided to third parties during the 7-month period specified in the class definition. The internal credit files of the other 6,332 class members were not provided to third parties during the relevant time period. The District Court ruled that all class members had Article III standing on each of the three statutory claims. The jury returned a verdict for the plaintiffs and awarded each class member statutory damages and punitive damages. A divided panel of the Ninth Circuit affirmed in relevant part.
Did all the members of the class have Article III standing on the statutory claims?
The court held that only 1,853 of the class members had U.S. Const. art. III standing to sue a credit reporting agency under 15 U.S.C.S. § 1681e(b) for failing to use reasonable procedures to ensure the accuracy of credit files. Those class members' credit reports, which contained alerts that labeled the class members as potential terrorists, drug traffickers, or serious criminals, were disseminated to third parties, resulting in a concrete injury in fact. However, the remaining 6,332 class members, whose credit files contained misleading alerts but whose credit information was not provided to any third parties during the class period, lacked standing because the mere presence of an inaccuracy in an internal credit file, if it was not disclosed to a third party, caused no concrete harm. Accordingly, judgment was reversed and the case was remanded.