Sergio Ramirez v. Transunion LLC
951 F.3d 1008
9th Cir.2020Background
- TransUnion sold an "OFAC Advisor" product that flagged consumers as potential matches to the Treasury Department’s Specially Designated Nationals (SDN) list using a vendor’s name-only matching software, leading to false terrorist-type alerts on thousands of credit reports.
- After receiving consumer requests for their files (Jan–Jul 2011), TransUnion sent (a) redacted credit-report mailings with the OFAC alert removed and (b) separate OFAC letters that named the alleged matches but did not include the FCRA summary-of-rights or clear dispute instructions.
- Sergio Ramirez (representative) was denied credit at a dealership after an OFAC alert appeared on a report; he and 8,184 others were included in a certified Rule 23(b)(3) class. Parties stipulated 8,185 class members; 1,853 had reports requested by potential creditors.
- A jury found TransUnion willfully violated 15 U.S.C. §§ 1681e(b), 1681g(a)(1), and 1681g(c)(2), awarding statutory and punitive damages (total ≈ $60M). TransUnion appealed.
- The Ninth Circuit (majority) held that every class member must satisfy Article III standing at the final damages stage for claims seeking individual monetary awards; it found all 8,185 class members had standing, affirmed willfulness and statutory damages, but reduced punitive damages to a 4:1 ratio (remanding to set punitive damages at $3,936.88 per class member).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Who must have Article III standing to recover class damages? | Only the named representative (Ramirez) needs standing for the class. | Every class member must have standing at the final damages stage. | Every Rule 23 class member must show Article III standing to recover individual money damages at final judgment. |
| Injury-in-fact from §1681e(b) (reasonable procedures) | TransUnion’s name-only matching and dissemination created a material risk of reputational, privacy, and economic harm to all class members. | No concrete injury absent actual disclosure to a third party; mere creation/storage is insufficient for most class members. | All class members suffered a material risk of harm given the severity of the inaccuracy, TransUnion/Accuity access, and the reports’ purpose to be disseminated; standing satisfied for all. |
| Injury-in-fact from §§1681g(a) and 1681g(c)(2) (disclosure and summary of rights) | Sending a redacted report plus a separate OFAC letter without a summary-of-rights created a real risk of harm and deprived consumers of the ability to learn and dispute the alert. | Absent evidence that absent class members opened/read the letters or suffered reliance, the violations are only bare procedural errors for most. | The court found the disclosure and omission of the summary posed a material risk to the FCRA-protected informational interests of all class members; standing satisfied. |
| Willfulness and damages (including punitive) | TransUnion acted willfully and recklessly after Cortez and OFAC warnings; statutory and significant punitive damages are appropriate. | TransUnion had reasonable legal views and changed practices; punitive award is excessive and duplicative. | Willfulness and statutory damages affirmed; punitive damages excessive—reduced to 4:1 ratio (punitive remanded to $3,936.88 per member). |
Key Cases Cited
- Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016) (Article III requires a concrete injury; statutory violation alone may not suffice)
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992) (three-part standing test: concrete injury, causation, redressability)
- Cortez v. Trans Union, LLC, 617 F.3d 688 (3d Cir. 2010) (OFAC alerts are subject to the FCRA; failure to verify matches was actionable)
- Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47 (2007) (willfulness standard: knowing or reckless violation; objectively unreasonable statutory interpretation supports recklessness)
- Town of Chester v. Laroe Estates, Inc., 137 S. Ct. 1645 (2017) (parties seeking separate monetary relief must have Article III standing)
- State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408 (2003) (guideposts for reviewing punitive damages: reprehensibility, ratio, comparable penalties)
- BMW of N. Am., Inc. v. Gore, 517 U.S. 559 (1996) (earlier guidepost framework for punitive-damages excess review)