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Recent Developments in Class Actions: Federal Courts’ Application of Ramirez

Last year, class action practitioners waited anxiously for the U.S. Supreme Court’s decision in TransUnion LLC v. Ramirez (“Ramirez”).  Would the Court impose stringent new standing requirements for class relief?  Or would the Court defer to Congress’ judgment on what constitutes harm for which private plaintiffs may seek relief in federal court?  The result was somewhat mixed.  And so far, California federal courts have tended to apply Ramirez somewhat narrowly.

TransUnion LLC v. Ramirez

Sergio Ramirez is the named plaintiff in a class of over 8,000 aggrieved individuals who sued the credit reporting agency, TransUnion, under the Federal Credit Reporting Act’s (“FCRA”) private right of action.  The gist of plaintiffs’ claims is that TransUnion negligently provided false and damaging information to third-party businesses — specifically, TransUnion flagged class members as “potential matches” to names identified in the U.S Treasury’s database of terrorists, drug traffickers and other notorious criminals.  Plaintiffs further alleged that when they requested their credit reports, TransUnion did not provide the disclosures required under the FCRA.

Before trial, the parties stipulated that TransUnion had disseminated credit reports that contained the misleading “red flag” information with respect to 1,853 class members (about 23 percent of the class).  The jury found TransUnion liable and awarded the entire class economic damages of approximately $8 million and punitive damages of approximately $52 million.  The Ninth Circuit affirmed but reduced the punitive damages to about $32 million.

The Supreme Court reversed the judgment, finding that most of the Ramirez class lacked standing.  Justice Kavanaugh distilled the rule in the opening paragraph of the opinion:

To have Article III standing to sue in federal court, plaintiffs must demonstrate, among other things, that they suffered a concrete harm.  No concrete harm, no standing.  Central to assessing concreteness is whether the asserted harm has a “close relationship” to a harm traditionally recognized as providing a basis for a lawsuit in American courts — such as physical harm, monetary harm, or various intangible harms including (as relevant here) reputational harm.

The Court went on to explain that while “due respect” should be paid to Congress’ legislative judgment to enact laws that provide for a private right of action, it was the province of federal courts to decide whether a plaintiff’s purported injury was sufficient to establish Article III standing.  In other words, just because Congress says a plaintiff has a valid civil claim if he or she can meet certain criteria, the federal courts have the final say on the threshold question of standing.
Applying this rule, the Court determined that the only class members with standing were those whose false credit reports actually had been disseminated.  The Court reasoned that the injury suffered by these class members had a “close relationship” to the reputational harm associated with the tort of defamation.  Such reputational damage qualified as a “harm traditionally recognized as providing a basis for a lawsuit in American courts.”  
The Court concluded, however, that the remaining class members — those who had not proven that their false credit reports had been shared with third-party businesses — lacked standing.  Since there had been no “publication,” there was no reputational harm.  Plaintiffs’ claim of “future harm” was insufficient to establish standing in action for damages, notwithstanding any private right of action for erroneous credit reporting that exists under the FCRA.  Nor was there Article III standing for any “informational injury” for technical violations under the FCRA.  As Justice Kavanaugh repeated in the closing paragraph of his opinion, “No concrete harm, no standing.”  And in the view of the Court, a violation of a legal right created by federal law, without more, is not enough to qualify as a “concrete harm” for plaintiffs seeking monetary damages.

California District Courts’ Application of Ramirez
Not surprisingly, defendants immediately seized on Ramirez as a new tool to stop class actions in their tracks on standing grounds.  Two such early efforts were unsuccessful.  In Ruiz v. Celsius Holdings, Inc., plaintiffs filed a putative class action against a beverage manufacturer, alleging that the defendant’s energy drink labels misled consumers into believing the products contained the fruits depicted.  Sometime after the plaintiffs filed their opposition to the defendant’s motion to dismiss but before the defendant filed its reply, the Supreme Court handed down the Ramirez decision.  In its reply, the defendant argued that Ramirez required a more rigorous analysis of standing and that plaintiffs did not allege a sufficiently concrete injury.  The plaintiffs sought leave to file a sur-reply to address Ramirez.  No need, said the district court.  Ramirez, it found, was “easily” distinguishable because plaintiffs had adequately alleged a “monetary form in the form of overpayment” for an energy drink that they mistakenly believed contained fruit.  Judge Curiel rejected the notion that Defendant’s allegations of overpayment were insufficiently “conclusory.”  

Similarly, in Mastel v. Miniclip, the district court concluded that Ramirez did not dictate a finding that the plaintiff class members lacked standing.  The plaintiffs in Mastel asserted that the defendant software company’s game application violated their privacy rights by collecting their personal data without permission.  The defendant argued that the plaintiffs were seeking recovery for the same type of vague, ephemeral injury that ran afoul of the “no concrete harm, no standing” rule established by Ramirez.  Not so, said the district court.  Whereas Ramirez was concerned with defamation, the plaintiffs in Mastel sought redress for invasion of privacy.  And whereas some segment of the class in Ramirez did not prove the necessary element of publication, the plaintiffs in Mastel had adequately alleged all of the elements of “intrusion upon seclusion,” which qualified as an action that American courts had historically recognized.

Judge Curiel again confronted the standing issues raised by Ramirez in Victorino v. FCA US LLC, but this time in the context of a motion to decertify class.  The class in Victorino asserted various claims based on purported defects in Dodge Dart vehicles.  After the class had been certified and after defendant’s unsuccessful motion for summary judgment, the defendant sought to decertify the class based on the newly-decided Ramirez.  The defendant argued that under Ramirez plaintiffs must affirmatively prove Article III standing, which they had failed to do.  The trial court disagreed, finding that the class had met its burden required at the pretrial phase of the case.  The court pointed out that the plaintiffs had raised genuine issues of material fact with regard to standing in successfully opposing the defendant’s motion for summary judgment.  Further, the class had put forth evidence to show that common questions predominate.  The class was not required to show at the certification stage that it would prevail on the merits with respect to any aspect of its claims, including whether and to what extent the class had suffered a concrete injury.  Merits issues would be decided at trial and not before; Ramirez, which was decided after a full trial, did not say otherwise, according to the trial court.

The Ninth Circuit’s Application of Ramirez
In March 2022, the Ninth Circuit issued its decision in Taliford v. Experian Information Solutions, Inc., which involved FCRA claims similar to those at issue in Ramirez.  The outcome, however, was not the same.  The Taliford plaintiffs claimed that in the wake of a data breach the defendant credit reporting agency failed to provide all the disclosures required by the FCRA.  In a procedural twist, it was the plaintiffs who argued they lacked Article III standing and that their putative class action should be remanded to state court.  Citing Ramirez, plaintiffs argued that their case could not be heard in federal court because they were seeking to vindicate a “legal harm” (violations of the FCRA) as opposed to a tangible, concrete injury.  The Ninth Circuit disagreed, finding that “plaintiffs here have alleged a sufficiently concrete injury” because the incomplete data deprived them of the opportunity to correct any inaccuracies in their credit reports.  

Interestingly, Taliford’s standing analysis relies in some measure on the principle that courts should defer to Congress:

Where, as here, Congress has identified a concrete interest deserving of protection, a violation of procedure may demonstrate a sufficient “risk of real harm” to the underlying interest to establish concrete injury without the “need to allege any additional harm beyond the one Congress has identified.”

And while Ramirez acknowledged that Congress should be given “due respect” in its determination of which injuries give rise to federal causes of action, the Supreme Court made clear that the courts must undertake their own analysis of whether the harm is sufficiently concrete.  Taliford arguably declines to engage in this type of second-guessing.

A month after Taliford was issued, the Ninth Circuit, sitting en banc, addressed Article III standing for class members again in Olean Wholesale Grocery Cooperative, Inc. v. Bumble Bee Foods LLC (“Olean”).  In Olean, the putative class asserted price-fixing claims and various antitrust claims against tuna suppliers.  In support of class certification, plaintiffs presented an economist’s opinion that each of the class members suffered a negative “antitrust impact.”  The defendants countered with a rebuttal expert’s opinion that 28 percent of the class suffered no material harm.  The district court granted the motion for certification, finding that the plaintiffs’ evidence was “capable” of showing that all class members suffered harm but leaving that ultimate determination for trial.  After a three-judge panel reversed, the Ninth Circuit agreed to hear the case en banc.

The Ninth Circuit affirmed the district court’s certification of the class, finding that the trial court correctly limited its evaluation of the evidence to whether it was capable of establishing that class members were harmed (and therefore had standing), as opposed to deciding whether the evidence actually proved that each of the class members had suffered economic harm.  The issue of class members’ standing, therefore, would be left for the trier of fact.  But the Ninth Circuit used the occasion of Olean to go one step further — in a footnote, it announced a new rule that a class seeking injunctive relief may be certified even if it is established that some of the class members lack standing, overruling Mozza v. American Honda Motor Co.

Some may have read Judge Kavanaugh’s stern rhetoric, “no concrete harm, no standing” as heralding a new regime of more stringent requirements for standing in class actions.  But so far that has not been the case, at least as federal courts in California have interpreted Ramirez.  The courts here have read Ramirez as applicable to its specific features, focusing on the fact that it was decided after a full trial and that the class claims were akin to defamation.  If the Supreme Court expected its pronouncements in Ramirez to be read more broadly, it may soon take up one of the class actions involving standing issues that are winding their way through the courts.

TransUnion LLC v. Ramirez, 141 S. Ct. 2190, 210 L. Ed. 2d 568 (2021).
Ramirez, 141 S. Ct. at 2200.
Id. at 2201-02.
Id. at 2202.
Id. at 2200.
Id. at 2204.  
In his dissent, Justice Thomas criticized the majority’s reasoning, remarking, “In the name of protecting the separation of powers…this Court has relieved the legislature of its power to create and define rights.”  Id. at 2221 (Thomas, J., dissenting).
Id. at 2208-09.
Id. at 2208.
Id. at 2209-10.
Id. at 2214.
Ruiz v. Celsius Holdings, Inc., No. 3:21-CV-00128-GPC-KSC, 2021 WL 5811264 at *1 (S.D. Cal. July 28, 2021).
Id.at n. 3.
Id.at *3.
Mastel v. Miniclip SA, 549 F. Supp. 3d 1129, 1138 (E.D. Cal. 2021).
Id. at 3.
Id. at 1138. While the district court found that plaintiffs had standing, the complaint was dismissed on its merits.
Victorino v. FCA US LLC, No. 16 CV 1617-GPC (JLB), 2021 WL 4124245 at *1 (S.D. Cal. September 9, 2021).
Id. at *3.
Id. at *4.
Id. at *4-5.
Taliford c. Experian Information Solutions, Inc., 26 F. 4th 1092, 1095-96 (9th Cir. 2022).
Id. at 1095.
Id. at 1100.
Id. citing Robins v. Spokeo, Inc., 578 U.S. 330, 341-42 (2016).
Another curious aspect of Taliford is that it ultimately dismissed the action on the grounds that the FCRA did not require the defendant to provide the consumer information about which the plaintiffs complained.  So the theoretical injury was concrete because it arose out of a violation of a right created by Congress, but what plaintiffs had alleged was not an actual violation of the law.
31 F.4th 651 (2022).
Id. at 670.
Id. at 675.
Id. at 676.
Id. at 672.
Id. at 667.
The dissent criticized this approach as impractical and unfair because class certification is tantamount to victory for the plaintiffs, who can reasonably expect to extract a large settlement from defendants hoping to avoid a class action trial.  Id. at 686.
Id. at n. 32.
666 F.3d 581, 594 (9th Cir. 2012).

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