Pitfalls Remain in Determining Personal-Data Class Action Standing

The U.S. Supreme Court resolved some lower court confusion around how to assess Article III’s injury-in-fact requirement in lawsuits for statutory damages when it decided TransUnion LLC v. Ramirez last summer.

But the operative word is “some.”

There’s no doubt now that a risk of future harm isn’t sufficiently concrete to support a claim for damages, although it might be for injunctive relief. And it’s clear that a plaintiff’s theory of harm, even if legislatively recognized, must closely resemble a traditionally recognized cause of action.

But under what circumstances is a plaintiff’s theory of statutory harm sufficiently analogous “in kind” to a traditionally recognized cause of action to satisfy constitutional requirements? Unclear.

Progress

The Seventh Circuit made some headway Feb. 2 with a decision in a pair of cases addressing when disclosure of information to a third party amounts to “publication” for purposes of standing to bring claims under the Fair Debt Collection Practices Act.

Although TransUnion dealt with claims under the Fair Credit Reporting Act, the common law analogue in the Seventh Circuit cases—which had been consolidated for appeal—was similarly defamation.

In both cases, the defendant collection companies failed to advise TransUnion that the plaintiffs disputed their alleged debts.

There was no question in either case that the consumers demonstrated dissemination of false information to a third party, so the only issue, the court said, was whether TransUnion “understood the defamatory significance” of the reports.

It concluded that it did.

TransUnion’s assessment of the plaintiffs’ creditworthiness would have taken into account whether the debts were disputed or not, and that’s “enough to show that TransUnion understood the significance of the report,” the court said.

The Supreme Court’s decision in TransUnion doesn’t demand that a plaintiff “come forward with additional evidence of publication” where third-party dissemination is clear, the Seventh Circuit said.

The high court’s dicta in footnote 6—listing cases that involved liability for dictating defamatory information to stenographers—doesn’t demand anything more, the appeals court said.

The cases cited in footnote 6 were concerned with whether the stenographer “was simply mechanically transmitting the words or whether she perceived or understood the defamatory significance of what was dictated,” the court said.

“Reading was a proxy for understanding rather than just mechanically transmitting information, but was not always required.”

Under TransUnion, dissemination to a third party who “understands” it is, without more, sufficient to show publication, the court said.

Although the court held the plaintiffs in both cases had standing, it allowed only one of the cases to proceed. In Ewing v. Med-1 Solutions LLC, summary judgment in favor of the defendant was affirmed after the appeals court agreed the defendant’s error was the result of human error and occurred despite adequate procedures.

In the other case, Webster v. Receivables Performance Management LLC, which the Seventh Circuit revived, the defendant stopped checking its fax inbox that it once used to receive communications about debtor disputes without advising the public that it would no longer do so.

Read more: Debtor’s Suit Over Collector’s Failure to Report Dispute Revived

Gotta Hear This

The Eleventh Circuit said on Feb. 3 that that it will require oral argument before it can resolve similar standing questions presented in Hunstein v. Preferred Collection & Management Services.

As you may recall from our Jan. 4 litigation newsletter, the Eleventh Circuit vacated the panel’s second, fractured post-TransUnion decision in that case sua sponte and granted en banc review in November of last year.

That appeal involves a lawsuit alleging that Preferred Collection violated the Fair Debt Collection Practices Act when it shared the plaintiff’s personal information—including information about his debt for his minor son’s medical care—with its letter vendor.

As the U.S. District Court for the Western District of Wisconsin recently observed, lower courts across and within jurisdictions are divided “on whether disclosure to a third party provider of clerical services has a close relationship to a common law tort,” so the ruling could be broadly influential—or even give rise to a near-immediate post-TransUnion circuit split.

This feature appeared in this week’s Bloomberg Law—Litigation newsletter. Bloomberg Law subscribers may sign up here.