Supreme Court FCRA Decision May Limit 'No-Harm' Class Actions



​A June 25 Supreme Court decision that only plaintiffs who are concretely harmed may sue in federal court may help stop "no-harm" class actions in those courts.

"The court held that a mere risk of future harm cannot qualify as concrete harm and that to state a claim under the FCRA [Fair Credit Reporting Act], there must be actual dissemination of a consumer report to a third party," said Pamela Devata, an attorney with Seyfarth in Chicago. While the Supreme Court ruling in TransUnion LLC v. Ramirez may result in fewer "no-harm" class actions in federal court, Devata said, "we will likely see an uptick in state court filings."

We've gathered articles on the decision from SHRM Online and other trusted outlets.

Class Limited

Federal courts in California had awarded $40 million in damages to a class of 8,185 consumers the credit bureau TransUnion falsely labeled as potential terrorists on their credit reports. Only the 1,853 whose reports were disseminated to third-party business could bring claims under the constitutional limitation of lawsuits to "cases" and "controversies." The Supreme Court's decision is likely to increase the trend of filing class actions in state courts, where it typically is easier to bring such claims.

(The Wall Street Journal)

Impact on Employers

The decision may have a broad potential impact for employers beyond potential FCRA claims. Technical statutory violations may be insufficient to allow class members to sue. The decision could impact employers facing class actions in federal court involving privacy claims with statutory damages (such as biometric time-clock laws), certain Americans with Disabilities Act accessibility claims, or other state or local statutory claims involving statutory damages.

(Fisher Phillips)

Reliance on Prior FCRA Case

The Supreme Court relied in TransUnion on its Spokeo v. Robins decision, also a FCRA case. The TransUnion case did not involve any employment-related claims under the FCRA but bolsters the many opinions dismissing such claims for lack of standing—lack of sufficient harm to sue.

(Lexology)

Real Harm Required to Sue

In Spokeo, the Supreme Court ruled in 2016 that a mere technical violation of the law may not injure a plaintiff enough for him or her to be able to sue. There must be real harm to sue—or "concrete" harm, in the words of the court. "For employers facing class-action litigation from employees or former employees, where the harm alleged historically has been something very short of concrete, Spokeo gives defendants another weapon in the arsenal for defending against such claims," said Emily Keimig, an attorney at Sherman & Howard in Denver.

(SHRM Online)

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Standing Requirements Vary in State Court

Standing requirements vary from state to state. Plaintiffs probably won't have much success if they try to file federal statutory class actions based on consumer laws such as the FCRA in state courts that require concrete injuries. Nonetheless, Missouri law professor Thomas Bennett predicted that between 20 and 30 states—including populous states like California, Illinois, North Carolina and Missouri—will likely hear state-court class actions alleging federal statutory violations. However, Andrew Pincus, an attorney with Mayer Brown in Washington, D.C., said, "There are serious questions about whether these claims can be litigated in state court."

(Reuters)