Ramirez v. TransUnion LLC, 022720 FED9, 17-17244
| Opinion Judge | MURGUIA, CIRCUIT JUDGE |
| Party Name | Sergio L. Ramirez, Plaintiff-Appellee, v. TransUnion LLC, Defendant-Appellant. |
| Attorney | Paul D. Clement (argued), Erin E. Murphy, Robert M. Bernstein, and Matthew D. Rowen, Kirkland & Ellis LLP, Washington, D.C.; Julia B. Strickland, Stephen J. Newman, Christine E. Ellice, and Jason Yoo, Stroock & Stroock & Lavan LLP, Los Angeles, California; for Defendant-Appellant. James A. Franci... |
| Judge Panel | Before: M. Margaret McKeown, William A. Fletcher, and Mary H. Murguia, Circuit Judges. McKEOWN, Circuit Judge, concurring in part and dissenting in part: |
| Case Date | February 27, 2020 |
| Court | United States Courts of Appeals, U.S. Court of Appeals — Ninth Circuit |
Argued and Submitted February 14, 2019 San Francisco, California
Appeal from the United States District Court for the Northern District of California, No. 3:12-cv-00632-JSC Jacqueline Scott Corley, Magistrate Judge, Presiding
Paul D. Clement (argued), Erin E. Murphy, Robert M. Bernstein, and Matthew D. Rowen, Kirkland & Ellis LLP, Washington, D.C.; Julia B. Strickland, Stephen J. Newman, Christine E. Ellice, and Jason Yoo, Stroock & Stroock & Lavan LLP, Los Angeles, California; for Defendant-Appellant.
James A. Francis (argued), John Soumilas, David A. Searles, and Lauren KW Brennan, Francis & Mailman P.C., Philadelphia, Pennsylvania; Andrew J. Ogilvie and Carol McLean Brewer, San Francisco, California; for Plaintiff-Appellee.
Andrew J. Pincus, Archis A. Parasharami, and Daniel E. Jones, Mayer Brown LLP, Washington, D.C.; Steven P. Lehotsky and Warren Postman, U.S. Chamber Litigation Center Inc., Washington, D.C.; for Amicus Curiae Chamber of Commerce of the United States of America.
Before: M. Margaret McKeown, William A. Fletcher, and Mary H. Murguia, Circuit Judges.
SUMMARY
[*]
Fair Credit Reporting Act
The panel affirmed in part and reversed and vacated in part the district court's judgment against credit reporting agency TransUnion LLC following a jury trial in a consumer class action brought under the Fair Credit Reporting Act.
TransUnion, aware that its practice was unlawful, incorrectly placed terrorist alerts on the front page of the consumers' credit reports and subsequently sent the consumers confusing and incomplete information about the alerts and how to get them removed. The jury assessed $60 million in damages for three FCRA violations: (1) willful failure to follow reasonable procedures to assure accuracy of the terrorist alerts in violation of 15 U.S.C. § 1681e(b); (2) willful failure to disclose to the class members their entire credit reports by excluding the alerts from the reports in violation of § 1681g(a)(1); and (3) willful failure to provide a summary of rights in violation of § 1681g(c)(2).
Affirming in part, the panel held that every member of a class certified under Fed.R.Civ.P. 23, rather than only the class representative, 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 panel concluded that each of the 8, 185 class members had standing on each of the class claims because TransUnion's reckless handling of information from the Department of the Treasury's Office of Foreign Assets Control exposed every class member to a real risk of harm to their concrete privacy, reputational, and informational interests protected by the FCRA. As to the reasonable procedures claim, distinguishing a decision of the D.C. Circuit, the panel held that the violation of a statutory right constituted a concrete injury under the test set forth in Robins v. Spokeo Inc., 867 F.3d 1108 (9th Cir. 2017). The panel held that each class member also established standing on the disclosure and summary-of-rights claims.
The panel rejected TransUnion's arguments regarding the sufficiency of the evidence, Rule 23 certification, and statutory damages. The panel held that TransUnion was not entitled to judgment as a matter of law or to a new trial on the ground that plaintiff failed to prove the willfulness of TransUnion's FCRA violations. The panel held that the district court did not abuse its discretion in finding that the class representative's claims were typical of the class's claims and in certifying and refusing to decertify the class. In addition, the jury's award of statutory damages near the high end of the range was clearly justified.
Reversing and vacating in part, the panel held that the punitive damages award was excessive in violation of constitutional due process. The panel remanded with instructions to reduce the punitive-damages award from $6, 353.08 per class member to $3, 936.88 per class member.
Concurring in part and dissenting in part, Judge McKeown agreed with the majority that Article III and the Rules Enabling Act require all members of a damages class to have standing at trial, and so the 1, 853 class members whose inaccurate information was disclosed to a third party had standing to assert a reasonable procedures claim. Judge McKeown also agreed that the punitive damages award was impermissibly excessive. She dissented in part because, in her view, no one but the class representative and the class members whose information was disclosed to a third party had standing to assert a reasonable procedures claim, and only the class representative had standing to bring the disclosure and summary-of-rights claims.
OPINION
MURGUIA, CIRCUIT JUDGE
This case asks us to resolve whether a class of consumers may sue and recover damages from a credit reporting agency pursuant to the Fair Credit Reporting Act ("FCRA"), where the agency-aware that its practice was unlawful- incorrectly placed terrorist alerts on the front page of the consumers' credit reports and subsequently sent the consumers confusing and incomplete information about the alerts and how to get them removed.
The United States Department of the Treasury's Office of Foreign Assets Control ("OFAC") maintains a list of Specially Designated Nationals ("SDNs"), i.e., individuals who are prohibited from transacting business in the United States for national security reasons. Because merchants who transact with an SDN can face harsh fines, TransUnion LLC ("TransUnion"), one of the three largest credit reporting agencies, saw a business opportunity in developing a product for its clients that "matched" consumers' names to individuals on the OFAC list.
In producing these purported matches, TransUnion coordinated with a third-party vendor and used a software that conducted basic first-and-last-name searches-despite having the capability to conduct more accurate searches and despite having been put on notice by another circuit court in 2010 that this practice violated the FCRA. As a result, TransUnion inaccurately added OFAC alerts to the front page of the credit reports of thousands of consumers. When consumers began discovering the alerts and trying to have them removed, TransUnion both sent them confusing information falsely suggesting that the alerts had been removed and withheld information about how to dispute the alerts. TransUnion's practice triggered significant concern among affected consumers, such that a number of them contacted the Department of the Treasury directly to inquire about the terrorist labels.
The consumers brought this class action against TransUnion pursuant to the FCRA, and a jury assessed $60 million in damages for three willful violations of the statute. In this appeal, TransUnion claims that the verdict cannot stand because only Sergio Ramirez, the representative plaintiff, suffered a concrete and particularized injury as a result of TransUnion's unlawful practice. According to TransUnion, the other thousands of class members whose credit reports contained the inaccurate terrorist alerts and received the confusing and incomplete mailings did not suffer the irreducible constitutional minimum showing of harm that Article III standing requires. Ramirez, on the other hand, argues that the class members do not need to demonstrate standing at all because, in a class action, only the representative plaintiff must have standing. The issue of who must show standing in a class action at the final stage of a damages suit is a question of first impression in this circuit.
For the reasons explained below, we hold that every member of a class certified under Rule 23 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.1 Therefore, the dispositive question in this case is whether each of the 8, 185 class members had standing on each of the class claims. We conclude that they did. We also reject TransUnion's arguments regarding the sufficiency of the evidence, Rule 23 certification, and statutory damages. However, we hold that the punitive damages award is excessive in violation of constitutional due process. We reduce the punitive-damages award from $6, 353.08 per class member to $3, 936.88 per class member, but otherwise affirm the verdict and judgment.
I. Background
A. Factual History
In February 2011, Sergio Ramirez went to a Nissan car dealership with his wife and father-in-law to purchase a car. After the Ramirezes selected a car and negotiated the terms, the dealership ran a joint credit check on Ramirez and his wife. But once the dealership obtained the credit reports, the salesman told Ramirez that Nissan would not sell the car to Ramirez because he was on "a terrorist list."
The credit report had been prepared by TransUnion, one of the nation's three largest consumer reporting agencies ("CRA"). The report contained the following statement on the first page: "***OFAC ADVISOR ALERT - INPUT NAME MATCHES NAME ON THE OFAC DATABASE[.]" The report also listed the names and birthdates of the two prohibited Specially Designated Nationals who purportedly "matched" Ramirez: Sergio Humberto Ramirez Aguirre (born 11/22/1951) and Sergio Alberto Cedula Ramirez Rivera (born 01/14/196*). The report indicated that Ramirez's middle initial was "L" and his birth year was 1976.
The salesman refused to take further steps to verify whether Ramirez was in fact on the OFAC list. He also refused to provide Ramirez a copy of...
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