Banking and Finance Law Daily $8M award against TransUnion affirmed; class members had standing at final-judgment stage
Friday, February 28, 2020

$8M award against TransUnion affirmed; class members had standing at final-judgment stage

By Paul A. Ferrer, J.D.

The Ninth Circuit affirmed an $8 million damage award against TransUnion, which had incorrectly placed terrorist alerts on the credit reports of thousands of consumers, each of whom had standing, but decreased the $52 million punitive-damage award by nearly 40 percent.

Each of the members of a class action against TransUnion for willfully violating the Fair Credit Reporting Act had standing on each of the class claims because TransUnion’s reckless handling of the terrorist alerts exposed them to a material risk of harm to their interests protected by the FCRA, the Ninth Circuit has held. The egregiousness of TransUnion’s procedures, which had previously been the subject of a Third Circuit decision against TransUnion, supported that TransUnion’s violations were willful and the jury’s award of $8 million in statutory damages. However, only a 4-to-1 ratio of statutory to punitive damages was constitutionally supportable, so the Ninth Circuit reduced the punitive-damage award from about $52 million to about $32 million. The court also concluded that the class representative’s claims were typical of the class (Ramirez v. TransUnionLLC, Feb. 27, 2020, Murguia, M.).

The class plaintiff represented thousands of consumers on whose credit reports TransUnion, knowing its conduct was illegal, had incorrectly placed terrorist alerts. The case went to a jury, which found TransUnion liable for three violations of the FCRA: (1) willful failure to follow reasonable procedures to assure accuracy of the terrorist alerts; (2) willful failure to disclose to the class members their entire credit reports by excluding the terrorist alerts from the reports; and (3) failure to provide a summary of rights. The jury awarded $8 million in statutory damages and $52 million in punitive damages. TransUnion appealed on various grounds, including that each of the class members, other than the class representative, lacked standing.

Standing. As a matter of first impression in the Ninth Circuit, the court held that every member of a class certified under Rule 23 of the Federal Rules of Civil Procedure 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. The court then concluded that each of the 8,185 class members had standing as to each of the claims against TransUnion under the FCRA because TransUnion’s reckless handling of Treasury Department information concerning specially designated nationals exposed every class member to a real risk of harm to their concrete privacy, reputational, and informational interests protected by the FCRA.

Willfulness. TransUnion also challenged the sufficiency of the evidence to show that it willfully violated the FCRA. An FCRA violation is willful when a credit reporting agency knowingly violates the statute or recklessly disregards its requirements. The court held that the evidence supported that TransUnion knowingly violated the FCRA by continuing to use the same procedures with regard to terrorist alerts for which it had already been reprimanded by the Third Circuit in an earlier case.

Rule 23 certification. The court also rejected TransUnion’s argument that the district court should not have certified the class because the claims of the class representative, who was denied credit and canceled a vacation because of the terrorist alert placed on his credit report, were atypical because his injuries were more severe than those suffered by the rest of the class. The court found that those differences did not defeat typicality because the class representative’s injuries arose from the same practice that gave rise to the other class members’ claims.

Damages. The FCRA permits a plaintiff to recover statutory damages between $100 and $1,000 for any willful violation, and the jury awarded $984.22 per class member, for a total of about $8 million. Based on TransUnion’s reckless conduct in falsely labeling thousands of consumers as potential terrorists without taking even basic steps to verify the accuracy of those labels, the court concluded that the jury’s award was reasonable and proportionate to TransUnion’s offenses. Despite the egregiousness of TransUnion’s behavior, however, the court concluded that a 4-to-1 ratio of statutory damages (which at $8 million was at the high end of what was permitted under the FCRA) to punitive damages was the most permitted by the Constitution. Accordingly, the court reduced the punitive damages award from $6,353.08 (about 6.45 times the amount of the statutory damages) to $3,936.88 per class member, which reduced the total amount of punitive damages payable by TransUnion by nearly $20 million.

The case is No. 17-17244.

Attorneys: James A. Francis (Francis & Mailman P.C.) for Sergio L. Ramirez. Paul D. Clement (Kirkland & Ellis LLP) for Transunion LLC.

Companies: Transunion LLC

MainStory: TopStory ConsumerCredit FairCreditReporting

Back to Top

Interested in submitting an article?

Submit your information to us today!

Learn More

Banking and Finance Law Daily: Breaking legal news at your fingertips

Sign up today for your free trial to this daily reporting service created by attorneys, for attorneys. Stay up to date on banking and finance legal matters with same-day coverage of breaking news, court decisions, legislation, and regulatory activity with easy access through email or mobile app.