There is a growing schism in the federal courts about whether and when Article III standing is required for absent class members.1 For suits commenced in federal court, the plaintiff must prove the elements of Article III standing.2 In class actions, courts usually assess whether the class representative, not absent class members, has standing.3 But some courts in recent years have ruled that if a class definition includes members who lack Article III standing individually, a class action cannot be maintained.4 Recently, in Ramirez v. TransUnion LLC,5 the Ninth Circuit held that standing for absent class members is required at the damages phase of a class action.6 But while the Ninth Circuit thought this outcome “clearly follow[ed]” from Supreme Court precedent and the Rules Enabling Act,7 none of the authorities it relied on mandates its holding. Moreover, the court’s ruling threatens the core representative function of the class action.
In February 2011, while trying to buy a car with his wife, Sergio Ramirez was told that the dealership would not sell him a car because he was on a “terrorist list.”8 A credit report prepared by TransUnion had “matched” Ramirez to two Specially Designated Nationals on a list maintained by the Department of the Treasury’s Office of Foreign Assets Controls (OFAC).9 Ramirez was identified as a potential match even though these individuals had different middle initials and birth years than Ramirez.10 Although the dealer eventually sold a car to Ramirez’s wife, the ordeal frightened and embarrassed him.11 Ramirez requested a copy of his credit report from TransUnion, but his report did not mention OFAC at all.12 The day after TransUnion sent the first report, it sent Ramirez a separate letter that included the OFAC alert.13 Unlike the first credit report, this new letter lacked a summary-of-rights form; as a result, Ramirez was unsure how to challenge the inclusion of the alert.14 Concerned, Ramirez canceled a family vacation, spoke with a lawyer, and successfully petitioned TransUnion to remove the OFAC alert from his report.15
In February 2012, Ramirez filed a putative class action against TransUnion alleging that TransUnion willfully16 violated the Fair Credit Reporting Act17 (FCRA).18 He brought three claims, arguing that TransUnion (1) did not “follow reasonable procedures to assure maximum possible accuracy of [consumers’ information],”19 (2) failed to disclose to consumers in their first reports that they were OFAC matches,20 and (3) did not include summary-of-rights forms in subsequent letters.21 Over TransUnion’s objections, the district court certified a class that included 8,185 people who had been mistakenly labeled as potential OFAC matches, requested their credit reports, and received the same two-part correspondence as Ramirez.22 Of these individuals, only 1,853 had their credit reports furnished to third parties.23 The jury found for the class on all three claims, awarding each class member $984.22 in statutory damages and $6,353.08 in punitive damages.24 The district court then denied TransUnion’s motions challenging the verdict.25
The Ninth Circuit affirmed in part, reversed and vacated in part, and remanded.26 Writing for the panel, Judge Murguia27 first considered TransUnion’s argument that the verdict had to be overturned because none of the class members, apart from Ramirez, had Article III standing.28 The court concluded — as a matter of first impression — that at the final judgment stage of a class action, Article III standing for each class member is required, but that the class members had standing in this case.29 The Ninth Circuit had previously concluded that plaintiffs need not demonstrate the standing of absent class members at the class certification and motion to dismiss stages,30 nor at the final stage of class actions seeking injunctive relief.31 However, the panel held that based on the Supreme Court precedents Town of Chester v. Laroe Estates, Inc.32 and Tyson Foods, Inc. v. Bouaphakeo33 and the Rules Enabling Act,34 parties must show Article III standing to recover a monetary award in their own names.35
After establishing that standing for each class member was required, the panel then assessed whether standing — particularly the “injury in fact” element36 — had been satisfied for each of the class’s claims, concluding that it had been.37 The panel laid out the Ninth Circuit’s two-step inquiry for “determining whether the violation of a statutory right constitutes [the type of] concrete injury” necessary for standing,38 asking (1) “whether the statutory provisions at issue were established to protect [the plaintiff’s] concrete interests” (rather than purely procedural rights), and if so, (2) “whether the specific procedural violations alleged . . . actually harm[ed], or present[ed] a material risk of harm to, such interests.”39
The court assessed each claim under this framework.40 Each satisfied Step 1 because “Congress enacted the FCRA, including [the ‘reasonable procedures’ requirement] ‘to protect consumers’ concrete interests.’”41 Similarly, the disclosure and summary-of-rights requirements of the FCRA “work together to protect consumers’ interests in having access to the information in their credit reports upon request and understanding how to correct inaccurate information in their credit reports upon receipt.”42 Step 2 was also satisfied: for the reasonable procedures claim, TransUnion’s violation was “severe”43 and risked harm by making credit reports readily available to third parties, sometimes without the consumers even knowing.44 Thus, all 8,185 class members had been harmed.45 For similar reasons, the Ninth Circuit ruled that the class members were harmed under the disclosure and summary-of-rights claims.46
The panel then turned to TransUnion’s other arguments. It rejected TransUnion’s contentions that Ramirez had failed to prove that TransUnion’s FCRA violations were willful47 and that Ramirez’s claims were not typical of the class’s claims.48 Finally, the panel addressed TransUnion’s claim that the jury’s damages awards were unconstitutionally excessive.49 It rejected TransUnion’s arguments relating to statutory damages but ultimately reduced the punitive damages award.50
Judge McKeown concurred in part and dissented in part. She agreed both that Article III requires all members of a damages class to have standing at trial and that the punitive damages award was excessive.51 But she asserted that only the 1,853 class members whose information was disclosed to a third party had standing to bring a reasonable procedures claim, and that only Ramirez had standing to bring the other two claims.52 Judge McKeown also argued that Ramirez was an atypical class representative.53
In creating a new rule requiring Article III standing for absent class members at the damages phase of a class action, the Ninth Circuit joined the minority side in the circuit split over absent class member standing.54 But the reasoning the Ninth Circuit supplied was flawed. While the panel claimed its holding “clearly follow[ed]”55 from Town of Chester and Tyson Foods, neither case, nor the Rules Enabling Act, mandates that Article III standing be shown for absent class members at the damages stage of a class action. The court’s contrary ruling risks undermining the core function of the class action.
First, Town of Chester’s holding is not clearly applicable to class actions, where the named plaintiff has already requested relief on behalf of the class. Town of Chester dealt with an intervenor-of-right that asserted the original plaintiff “could not adequately represent [the intervenor’s] interest.”56 In summarizing its holding, the Supreme Court declared, “an intervenor must meet the requirements of Article III if the intervenor wishes to pursue relief not requested by a plaintiff.”57 The Court then provided further clarification: “if [the intervenor] is ‘seeking additional damages in [its] own name,’ ‘at that point, an Article III inquiry would be required.’”58 Thus, crucial to the Court’s requirement of an Article III assessment was a party whose interests were allegedly inadequately represented by the plaintiff and who affirmatively sought relief different from that sought by the party with Article III standing.
These factors are inapplicable to Ramirez. To be sure, damages in Ramirez were awarded on a per-class-member basis: thus, adding or subtracting class members would change the defendant’s liability, seemingly implicating different relief.59 But unlike the plaintiff and intervenor in Town of Chester, who each focused only on attaining relief for themselves and did not seek damages for the other party,60 Ramirez’s original suit sought relief on behalf of everyone in the class.61 Moreover, the claims alleged by Ramirez were the same across the class.62 Even the damages awarded were the same for every member of the class,63 and absent class members neither objected to the damages awarded nor alleged that Ramirez could not adequately represent their interests.64 The Ninth Circuit should have considered these differences when applying Town of Chester to absent class members.
Second, Tyson Foods provides little definitive guidance on whether standing is required for absent class members. The panel quoted Chief Justice Roberts’s concurrence in Tyson to assert that federal courts cannot order relief to uninjured plaintiffs;65 thus, it became necessary to examine Article III standing for absent class members seeking a monetary award.66 But there are a few problems with using Chief Justice Roberts’s concurrence as precedent. First, concurrences generally use reasoning different from that of corresponding majority opinions and lack binding precedential value.67 Moreover, Tyson was a 6–3 decision, and even without Chief Justice Roberts, the opinion of the Court would still retain a majority.68 But most importantly, the Court explicitly did not address the question of whether absent class members needed Article III standing in Tyson.69 Since the Supreme Court did not rule on this question, the Ninth Circuit panel incorrectly characterized its rule as “clearly follow[ing]” from Supreme Court precedent.70
Third, Rule 23 does not “modify any substantive right” under the Rules Enabling Act: rather, it simply allows federal courts to hear representative actions involving rights that individually might not be justiciable in federal court. Standing to sue is a jurisdictional limit on federal courts.71 As the Supreme Court explained in Spokeo v. Robins,72 “[standing] doctrine developed . . . to ensure that federal courts do not exceed their authority.”73 The jurisdictional limit of standing is distinct from there being a substantive legal wrong: after all, even when plaintiffs might not have standing to bring federal law claims in federal court, state courts can hear those cases.74 In Ramirez, TransUnion undisputedly violated every class member’s statutory rights: what remained was whether federal courts have jurisdiction to vindicate those rights.75 But providing a different way to vindicate a right does not “modify” or “enlarge” it within the meaning of the Rules Enabling Act.76 Therefore, the Rules Enabling Act provides no independent support for absent class members needing standing in damages class actions.
Neither precedent nor the Rules Enabling Act required the Ramirez court’s new rule. And ultimately, the rule threatens the core representative function of class actions. In class actions, named plaintiffs represent a passive group of class members. This saves resources by letting “an issue potentially affecting every [class member] be litigated in an economical fashion.”77 Requiring plaintiffs to provide evidence of absent class members’ standing risks transforming a class action into many individual suits, creating “unnecessary prosecution of separate actions.”78 In Ramirez, the parties were lucky that they could stipulate the facts pertaining to absent class members’ injuries.79 But in a future case with smaller claims, requiring a plaintiff to obtain that information may prove to be an insurmountably costly barrier to the suit. Only time will tell if the Supreme Court maintains the typical approach to analyzing standing in class actions, or if the expansive new rule in Ramirez sways them into looking more closely at absent class members.