High Court Weighs Class Curbs in TransUnion Terrorist List Case

The U.S. Supreme Court considered putting new limits on class action lawsuits as it weighed a $40 million award to thousands of consumers who were categorized as potential terrorists by the credit reporting firm TransUnion.

Hearing arguments by phone Tuesday, the justices questioned whether lower courts should have let the case go forward on behalf of 8,185 people, most of whom TransUnion says didn’t even know they were at risk of being identified to a creditor as a possible terrorist.

Business groups have been looking to the case as a way of scaling back expensive lawsuits, particularly those under federal laws including the Fair Credit Reporting Act that let consumers recover damages without showing they suffered any harm.

Justice Brett Kavanaugh was among those who questioned whether the suit could involve the more than 6,300 people whose listings as potential terrorists never went to a third party.

“I hadn’t thought risk of harm would get you standing for damages claims” in most cases, Kavanaugh said. He said the 1,800-plus people whose credit reports were disseminated had a stronger argument.

The fight stems from a product TransUnion developed in 2002 to match consumers’ names to people on the Treasury Department’s terrorist watch list. The lawsuit faulted TransUnion for using third-party software that relied on first-and-last-name searches, rather than a more accurate method. A jury sided with the consumers.

The lead plaintiff, Sergio Ramirez, discovered his listing when he filled out a credit application to buy a car from a Nissan dealership in California.

Sotomayor Support

TransUnion isn’t questioning Ramirez’s right to sue, but the company says other members of the class didn’t suffer the type of concrete injury required under the Constitution. TransUnion also contends Ramirez wasn’t a typical representative of the group, as required under the federal rules that govern class actions.

Ramirez got support from Justice Sonia Sotomayor, who suggested that any differences among the class members could be reflected in the amount of damages they receive.

“Mr. Ramirez’s claims were not subject to any unique defenses, and they were identical to every class member’s claims,” Sotomayor said.

The Biden administration is partially supporting Ramirez. A Justice Department lawyer told the justices Monday that, while all class members meet the constitutional test to sue, the lower courts should revisit whether Ramirez met the typicality requirement.

The case is TransUnion v. Ramirez, 20-297.

(Updates with excerpts from argument starting in fourth paragraph.)

To contact the reporter on this story:
Greg Stohr in Washington at gstohr@bloomberg.net

To contact the editors responsible for this story:
Elizabeth Wasserman at ewasserman2@bloomberg.net

Wendy Benjaminson

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