The Supreme Court ruled 5-4 Friday that consumers falsely labeled potential terrorists by a credit reporting agency could not seek damages unless they could prove injury.
Credit reporting agency TransUnion had incorrectly placed alerts in the credit files of 8,185 consumers labeling them potential terrorists in 2011, with 1,853 consumers having the false labels exposed to third parties, according to the ruling. The consumers launched a class-action lawsuit, with the lead plaintiff, Sergio Ramirez, alleging that he suffered embarrassment and hardship after he was denied a car loan due to the alert, The Wall Street Journal reported.
The plaintiffs won and a jury awarded over $60 million in damages to each consumer, with TransUnion appealing the decision.
The Supreme Court ruled Friday that only the 1,853 consumers whose reports were disseminated to third parties suffered a “concrete injury”, and therefore only they were entitled to damages. Consumers whose credit files were not distributed to third parties could not demonstrate injury, and therefore lacked standing to sue despite being labeled as potential terrorists.
“Because the plaintiffs cannot demonstrate that the misleading information in the internal credit files itself constitutes a concrete harm, the plaintiffs advance a separate argument based on an asserted risk of future harm,” Justice Brett Kavanaugh argued in the majority opinion.
“The risk of future harm cannot supply the basis for their standing,” Kavanaugh wrote. (RELATED: Supreme Court Rules In Favor Of Nestle, Cargill In Human Rights Lawsuit)
U.S. Supreme Court Associate Justice Brett M. Kavanaugh, who wrote the majority opinion in TransUnion LLC v. Ramirez. (Photo by Jabin Botsford – Pool/Getty Images)
TransUnion had introduced the OFAC Name Screen Alert in 2002, an optional service that matched the first and last name of consumers to a list of potential terrorists and criminals maintained by the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC). TransUnion would then place alerts on the credit files of matches, indicating they were potentially on the OFAC terrorist list, according to the ruling.
“TransUnion appreciates the Court’s decision in this important case,” a TransUnion spokesperson told the Daily Caller News Foundation. “We continually seek to enhance our processes to improve accuracy, including our Office of Foreign Assets Control (OFAC) processes.”
“The plaintiffs cannot demonstrate that the misleading information in the internal credit files itself constitutes a concrete harm,” Justice Kavanaugh wrote.
Justice Clarence Thomas dissented, arguing that TransUnion had violated the rights of consumers by placing the alerts in their files and therefore harmed them.
“No one disputes that the jury found that TransUnion violated each class member’s individual rights,” Justice Thomas wrote. “The plaintiffs thus have a sufficient injury to sue in federal court.”
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