• Paul Peter Nicolai

No Concrete Harm, No Standing

The U.S. Supreme Court decided that plaintiffs seeking to pursue a Fair Credit Reporting Act (FCRA) class litigation must establish concrete harm that is more than just speculative. They must do so for all class members with the type of evidence called for at each stage of litigation. The impact will likely extend to class standing issues beyond the FCRA.


Here, a California dealership ran a credit check on the plaintiff when he and his wife sought to purchase a car. The credit check indicated a potential match between the plaintiff’s name and a name appearing on a list of terrorists maintained by the U.S. Treasury’s Office of Foreign Assets Control (OFAC). As a result, the plaintiff’s wife bought the car in her name rather than jointly with the plaintiff. The plaintiff sued, asserting an FCRA violation.


The plaintiff sought to represent a nationwide class of similarly situated individuals. The district court certified a class of individuals who received a letter similar to one sent to the plaintiff indicating the recipient’s name potentially matched a name on the OFAC list. Of the 8,185 individuals in the class, only 1,853 individuals had had this information disseminated to a third party. Nevertheless, the trial court held that all class members had standing. It ruled for the class on the merits of the FCRA claims.


On appeal, the 9th Circuit affirmed.


The U.S. Supreme Court reviewed the question of whether all 8,185 class members had suffered an injury-in-fact sufficient to establish standing to pursue the three FCRA claims.


It said that in analyzing standing, a federal court should assess whether the alleged injury to the plaintiff has a ‘close relationship’ to a harm ‘traditionally’ recognized as providing a basis for a lawsuit. It rejected the proposition that a plaintiff automatically satisfies the injury-in-fact requirement whenever a statute grants a person a statutory right and authorizes that person to sue to vindicate that right.


The Court re-emphasized the need for showing concrete harm to justify standing.


The Court focused on whether each of the members of the class could establish concrete harm based on the inclusion of erroneous OFAC information in their credit files.

The Court found that the 1,853 class members whose credit files were provided to third parties had suffered a concrete harm. It reasoned that the transmission of the erroneous derogatory information to third parties bore a close relationship to a harm traditionally recognized as a basis for relief, namely, defamation.


The Court found the remaining 6,332 class members had not suffered a concrete harm. The Court emphasized that for these individuals, there was no publication of the allegedly erroneous facts because the reports were not provided to any third parties. The Court said the mere presence of an inaccuracy in an internal credit file, if not disclosed to a third party, caused no concrete harm.


It rejected the argument that the risk of future harm from the erroneous information in the credit files was concrete harm. The Court also ruled that, other than the named plaintiff, none of the class members had established concrete harm from the failure to provide all information in the credit files upon their request and to include summaries of plaintiffs’ rights with each disclosure.


This decision will curtail the ability of plaintiffs to maintain FCRA and other class litigation in federal court. The Court has provided clarity as to what is concrete harm for purposes of standing to maintain a FCRA claim and likely other similar causes of action.


Plaintiffs can no longer establish standing by alleging the possible risk that supposedly false or misleading information may be disclosed to third parties. The decision also says a court should consider the viability of individual class members’ standing as part of the analysis of whether to certify a class.


The decision will also circumscribe claims based on technical violations of FCRA where a plaintiff cannot establish a concrete harm resulting from the supposed violation. While curbing private class litigation in federal court, the decision is unlikely to curtail government enforcement actions.