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THE SUPREME COURT AND STANDING,

PART II: TRANSUNION   

 By

 Prof. Anthony Michael Sabino  

In the opening installment of this two-part article on the Supreme Court’s continuing evolution of standing, we set forth the doctrine’s foundational maxims, including Spokeo v. Robins, and then turned to the first of two fresh landmarks, California v. Texas.  Today we analyze TransUnion LLC v. Ramirez, 594 U.S. ___ (No. 20-297) (June 25, 2021), the second of these newest precedents, and the one some might argue (with good reason) is the more significant of the duo.

Law Abiding Citizen   

TransUnion’s facts relate a rather pedestrian set of circumstances.  Sergio Ramirez and his wife decided to purchase a new car from a Nissan dealership near their California home. As a routine part of the sale, the dealership requisitioned a credit report from TransUnion, one of the “Big Three” credit reporting agencies in the United States.  The agency’s printout linked Ramirez to the watch list of terrorists, drug traffickers, and serious criminals maintained by the Treasury Department’s Office of Foreign Asset Control (“OFAC”).  Forced to complete the purchase in his spouse’s name, Ramirez subsequently demanded an explanation from TransUnion.

The credit reporting agency first sent Ramirez a copy of his credit report, accompanied by a summary of his legal rights, which he was entitled to under the federal Fair Credit Reporting Act. Yet this initial mailing failed to enclose the faulty OFAC alert.  In a subsequent letter, TransUnion enclosed the incorrect special notice, but omitted the required consumer rights summary.  Ramirez then commenced suit on behalf of himself and over 8,000 individuals allegedly damaged by similarly defective credit histories.  The Ninth Circuit affirmed a jury verdict awarding all the class members monetary relief (albeit after somewhat reducing a punitive damage award), and thereafter the matter came before the Supreme Court for review.

Standing and Separation of Powers 

The paramount question before the TransUnion Court was whether or not each and every class member had standing.  In order to resolve that issue, the majority almost immediately bifurcated the class into two components.  The first subset, including Ramirez, were allegedly victims of erroneous OFAC alerts sent to creditors.  The remaining class members, numbering over 6,000, claimed injury from defective credit reports internalized within the credit reporting agency’s database, yet never circulated to third parties.

Writing for the Court, Justice Kavanaugh first expounded on the role of standing in the constitutional scheme.  The doctrine’s purpose, he explained, is to restrict the federal judicial power to resolving only actual cases and controversies.  See U.S. Const., Art. III, sec. 2.  The majority succinctly pronounced that federal courts are confined to adjudicating only real controversies with real impact on real persons. Moreover, throughout every phase of litigation, plaintiffs must maintain a personal stake in the outcome.

As established by a legion of high Court precedents, most especially Spokeo, complainants must demonstrate that they have suffered a concrete, particularized injury, that the defendant is the likely cause of that harm, and that the injury can be judicially redressed.    And as to what injuries can be most readily categorized as concrete, TransUnion postulated that traditional physical and monetary harms are the most obvious, while certain intangible injuries, such as reputational harm and privacy violations, might also qualify.

Here the high tribunal drove home the following imperative: separation of powers not only animates the maxims of standing, it likewise requires federal judges to respect legislation promulgating statutory prohibitions, and their accompanying enforcement mechanisms.  Notably, a cogent parenthetical commented Congress has made that task more arduous over the last five decades, for reason of the legislators’ proclivity to enact “many novel and expansive causes of action.”

Notwithstanding any judicial deference to legislative prerogatives, Justice Kavanaugh explains that separation of powers does not authorize Congress to “simply enact an injury into existence, using its lawmaking power to transform something that is not remotely harmful into something that is.”  Left unrestrained, “Congress could authorize virtually any citizen to bring a statutory damages suit against virtually any defendant who violated virtually any federal law.”  Such an “expansive understanding of Article III would flout constitutional text, history, and precedent,” usurp the Executive Branch’s discretion as to what violations to prioritize and which lawbreakers to pursue, and, finally, empower unharmed parties and their attorneys to bring suit, a prospect to be avoided, indicated the majority, since private litigants are not accountable to the people, and, unlike elected officials, are not motivated to serve the public good.

TransUnion unequivocally proclaimed that the federal courts remain obligated to “independently decide whether a plaintiff has suffered a concrete harm under Article III.”  In sum, the high Court reiterated that an injury in law is not an injury in fact, and, therefore, it remains the obligation of each and every plaintiff in a particular action to demonstrate concrete harm.

A Class Without Standing 

Returning to the case at bar, Justice Kavanaugh first reminds that standing is not dispensed in gross; rather, in a class action such as the matter at hand, each putative plaintiff “must maintain a personal stake in the dispute at all stages of the litigation.”  Satisfying that mandate posed “no trouble” for the subgroup of plaintiffs, typified by Ramirez, whose credit reports, including erroneous OFAC alerts, were put in the hands of various businesses.  Their harm was closely analogous to the well-known tort of defamation, and thus sufficiently concrete to bestow standing.

But for the other, over 6,000 class members, the majority opined they are “a different story.”  Their credit readouts, while fraught with misleading OFAC alerts, were never disseminated to potential creditors.  With defamation again serving as a touchstone, Justice Kavanaugh concluded that the “mere presence of an inaccuracy in an internal credit file, if it is not disclosed to a third party, causes no concrete harm.”  The high Court accordingly ruled that this subclass, comprising some two-thirds of the plaintiffs, lacked standing.

Now turning to certain additional causes of action, advanced on the basis of the deficient second mailings the credit reporting agency routed to Ramirez and his fellows, the majority handily disposed of those claims by once more differentiating the class members.  For those, like Ramirez, who had actually ready TransUnion’s defective correspondence, the harm inflicted upon those plaintiffs was concrete enough to earn them standing.  In sharp contradistinction, the other 6,000-plus class denizens failed to demonstrate concrete injury, for reason that they had “presented no evidence” they had so much as opened the envelopes containing the second notifications, much less read them.  Quoting directly from Spokeo, the supreme bench held fast to its maxims that Article III standing does not flow from bare procedural violations, untethered from concrete harm.

For its summation, TransUnion reiterated its core holdings: Ramirez and approximately one-third of his class fellows had demonstrated concrete harm, and, thereby, standing, each rooted in the credit reporting agency’s issuance of mistaken special alerts to third parties; the remaining two-thirds of the class, being unable to show cognizable injury, had failed to satisfy standing’s prerequisites.  And in a pithy turn of phrase, sure to resonate for years to come, Justice Kavanaugh proclaimed “[n]o concrete harm, no standing.”

A Surprising Dissent 

But there is a deal more to be said here regarding TransUnion.  Our discussion is incomplete until we examine the dissent, and not merely because this new landmark was decided by a slim 5-4 majority, nor because the Justices were divided, more or less, along the popular conception of ideological lines.  It is because the minority found a robust voice in Justice Thomas, who previously was just as vigorous as part of the coalition espousing the foundational Spokeo holding barely five years prior.

Demonstrating a dedication to separation of powers equal to that espoused by the majority, the august jurist criticized today’s holding as an affront to those ideals, because it “relieve[s] the legislature of its power to create and define rights.”  Quoting a statement made over two centuries ago by the legendary Justice Story, the learned dissent contended that, when the Legislative Branch devises a cause of action for a statutory violation, the infraction itself imports damage to the plaintiff, thereby justifying admittance to the federal forum.

Acknowledging that the majority had coined “a pithy catchphrase” summarizing standing, the esteemed Justice offered a pungent denouement; who could possibly think these plaintiffs suffered a concrete harm, and thereby satisfied the test for standing?  “Congress, the President, the jury, the District Court, the Ninth Circuit, and four Members of this Court.”

Only time will tell which of these sagacious and pointed declarations shall outshine the other.  But, as stated at the outset of today’s writing, we believe that, given its dedication to separation of powers, as so amply displayed by both the majority and dissenting opinions, combined with the absence of the political overtones which marred California v. Texas, TransUnion shall emerge as the more reliable of the high Court’ two newest additions to its standing jurisprudence.

Conclusion 

Now for our own coda.  Since the dawn of the Republic, the axioms of standing have worked to maintain the separation of powers. The doctrine never has been, nor ever shall be, a stagnant concept.  To the contrary, it continually evolves, that process sometimes accelerated by Congress’ enactment of novel statutory obligations, and concomitant causes of action to enforce same.  Given such, California v. Texas and TransUnion, significant as they may be, are no more than the Supreme Court’s latest iterations of standing’s vital precepts.  And they shall surely not be the last.  To be sure, good news for our system of ordered liberty.

Prof. Anthony Michael Sabino, partner, Sabino & Sabino, P.C., is also a Professor of Law, Tobin College of Business, St. John’s University.  Anthony.Sabino@sabinolaw.com.

THE SUPREME COURT AND STANDING,

PART I: CALIFORNIA V. TEXAS     

By

Prof. Anthony Michael Sabino  

            Since the Founding, the doctrine of standing has assured that the federal courts “decide only the rights of individuals,” Marbury v. Madison, 5 U.S. (1 Cranch) 137, 170 (1803), avoid hypotheticals, and refrain from issuing advisory opinions.  A formidable guardian of separation of powers, standing confines the Article III branch to exercising the judicial power alone, while concomitantly prohibiting any incursions into the realms of the Legislative and Executive Branches.

While recent decades have seen many iterations of the doctrine, its essential maxim remains unchanged: to stand before a federal jurist, the plaintiff must demonstrate that she has suffered a concrete and particularized injury, said harm was likely caused by the defendant, and a court can redress the alleged injury.  Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992).  And a bare five years ago, the U.S. Supreme Court refined this axiom by placing emphasis upon standing’s absolute requirement of a “concrete and particularized injury,” as distinguished from a mere statutory violation.  Spokeo v. Robins, 578 U.S. 330, 340-41 (2016).

Now, in the term just completed, the high Court has twice elaborated upon the foundations of these maxims.  The Justices’ first postulation was California v. Texas, 594 U.S. ___ (No. 19-840) (June 17, 2021), the much ballyhooed (and, some would say, anticlimactic) holding arising from the still-controversial Affordable Care Act, while the high tribunal’s second refinement is found in TransUnion LLC v. Ramirez, 594 U.S. ___ (No. 20-297) (June 25, 2021), a far more prosaic controversy invoking provisions of the federal Fair Credit Reporting Act.

This duo of new landmarks has significant ramifications for the continued evolution of the doctrine of standing, and so, in order to do right by both pronouncements, this article shall fittingly be in two parts.  This installment commences with a necessary revisiting of Spokeo, the lineal parent of these latest decisions, followed by an analysis of California v. Texas, and its somewhat unique features.  Part Two of this writing shall exposit TransUnion, and conclude with a reconciliation, if possible, of these most recent additions to the pantheon of standing jurisprudence.

Spokeo—The Contemporary Cornerstone 

Our opening paragraphs aptly demonstrate that standing doctrine is replete with significant precedents, some timeless, and some more recent.  From that bounty, the fairly modern landmark of Spokeo is properly regarded as the foremost precursor to the Supreme Court’s latest pronouncements.

Spokeo’s facts are simple.  The petitioner, a corporate entity which compiled personal information valuable to employers in vetting potential hires, had in its database a profile that described the respondent as mature, educated, and affluent.  But there was one problem; this information was inaccurate. Notwithstanding that Spokeo’s data portrayed Robins in the most complimentary of terms, he alleged injury therefrom, and sued pursuant to a federal fair credit reporting statute which entitled him to a measure of statutory damages for inaccuracies in his credit file.

In holding that Robins was sans standing, the Supreme Court affirmed that injury-in-fact, the doctrine’s foremost element, is a constitutional prerequisite, which “a bare procedural violation, divorced from any concrete harm,” cannot satisfy.  Moreover, stated the Court, “Congress cannot erase Article III’s standing requirements.”  This constitutional precept, wrote Justice Alito, plays an irreplaceable role in separation of powers, by “ensur[ing] that federal courts do not exceed their authority.”

Of further note here is the concurring opinion of Justice Thomas, significant for its reaffirmation that standing demands a plaintiff demonstrate “a concrete, individual harm” distinguishing her from the general population, a postulation which shaped the Court’s most recent landmarks.  Our brief review of Spokeo concluded, we may now turn our full attention to the first of the high Court’s two latest applications of the venerable doctrine of standing.

California v. Texas—Individuals Without Standing

To quote Justice Alito in dissent, California v. Texas is the third installment in an “epic…trilogy.”  Fortunately, we are absolved of the need to regurgitate most of that convoluted tale, given our prior analyses of the instant controversy’s path to the high Court.  See A.M. Sabino & J.N. Sabino, “Fifth Circuit Decision Primes SCOTUS Test for Affordable Care Act,” 263 New York Law Journal p.4, cl.4 (February 19, 2020), and A.M. Sabino & J.N. Sabino, “Anticipating Another Supreme Court Test for the Affordable Care Act,” 261 New York Law Journal p. 4, cl. 4 (January 24, 2019).  Yet it must be remembered that the case at bar, much like its forebears, pivoted upon the Affordable Care Act’s “individual mandate,” and, more so, the repeal of the tax penalty which once enforced that statutory edict.

Principally for reason of that legislative revision, California v. Texas “proceed[ed] no further than standing.”  Writing for the Court, Justice Breyer opined that Congress had left behind nothing more than “textually unenforceable language” when it erased the Act’s tax penalty, and, in so doing, simultaneously eradicated the ability of the individual plaintiffs to fairly trace back any allegedly unlawful conduct to the defendants.  Without “possible Government action that is causally connected to the plaintiffs’ injury,” the high tribunal found it was impossible for the complainants to satisfy standing’s second, irreducible requirement.

States Lacked Fairly Traceable Injuries 

The causes of actions advanced by the plaintiff states fared no better; the high Court similarly ousted the sovereigns’ claims for lack of standing.  Dividing the allegations of the states into categories of indirect and direct injury, the majority examined first the arguments that the ACA channeled individuals into state-run insurance pools, thereby indirectly imposing increased health insurance costs upon the sovereigns.

The high tribunal reasserted its earlier holding that, without the bona fide threat of a tax penalty, these jurisdictions could not fairly trace their purported injuries to unlawful conduct by the defendants.  Justice Breyer then expounded upon the shortcomings of the sovereigns’ “counterintuitive theory of standing,” insisting that “far stronger evidence” was needed to meet the rigorous test for Article III standing.  In sum, the majority held “the States have not demonstrated that an unenforceable mandate will cause their residents to enroll in valuable benefits programs that they would otherwise forgo.”

The Court disposed of the states’ direct injury allegations with even greater celerity.  Notwithstanding the sovereigns’ complaint that the ACA imposed numerous and expensive recordkeeping and similar requirements upon them, the majority remained unpersuaded that the states had demonstrated an injury fairly traceable to the defendants. Consistent with its earlier explications, the supreme tribunal faulted the plaintiff sovereigns for conjoining their various claims to the now-unenforceable individual mandate.  Given that not a single member of this diversified body of complainants had demonstrated a “concrete, particularized injury fairly traceable to the defendants’ conduct,” the Supreme Court directed that all claims be dismissed.

Still, one cannot depart California v. Texas without according due respect to its supplementary opinions. As he did in Spokeo five years prior, Justice Thomas assented to the Court’s newest standing landmark.  Yet the veteran jurist was constrained to comment that the outcome here was driven primarily by the “particular claims the plaintiffs chose to bring,” and their subsequent failure to “trace a clear connection between an injury and unlawful conduct.”

In contradistinction, Justice Alito’s dissent was unabashedly critical of the decision, labelling it a “remarkable holding…based on a fundamental distortion of our standing jurisprudence.” The author of Spokeo set forth in great detail the ACA’s “expensive and burdensome obligations….[as] backed by substantial enforcement mechanisms,” including the threat of significant financial penalties (which, unlike the individual mandate’s now-repealed tax penalty,  were still extant).  The learned dissent unreservedly concluded that the complaining sovereigns had amply demonstrated concrete and particularized injuries, which could be redressed by judicial action.  Consequently, their standing to maintain the case at bar “turns on traceability.”  Justice Alito found that essential prerequisite easily met, for reason that “[t]he state plaintiffs have shown that they are the object of potential federal enforcement actions if they do not comply with costly and burdensome obligations that the ACA imposes.”  The dissent strenuously argued those mandates, enforceable by the national government, are “sufficient to establish standing.”

Lastly, the erudite dissent explains that the high Court “has long resisted efforts to transform ordinary merits questions into threshold jurisdictional questions by jamming them into the standing inquiry.”  Justice Alito expressed regret that the majority was, in his estimation, converting the traceability inquiry from a standing question into a merits issue.  In a final rebuke, Justice Alito characterized the majority’s reasoning as “a patent distortion of the traceability prong of our established test for standing.”

The last stated gives us pause in assessing the stature of California v. Texas in the jurisprudential domain of standing.  It would be easy, and ostensibly accurate, to label the case at hand as nothing more than a statement of the Court’s current wisdom lauding concrete, traceable injury as the doctrine’s first two axioms.  Yet such a facile categorization would ignore the serious questions raised by the dissent.  At this time, we think it best to forbear from relying excessively upon this latest proclamation, especially in light of the extraneous controversy which overshadowed this proceeding.  Instead, we think it better to take the measure of California v. Texas in conjunction with the high bench’s other pronouncements on standing, most especially TransUnion, which shall be the subject of our next installment on the Supreme Court’s continued evolution of its standing jurisprudence.

Prof. Anthony Michael Sabino, partner, Sabino & Sabino, P.C., is also a Professor of Law, Tobin College of Business, St. John’s University.  Anthony.Sabino@sabinolaw.com.