The Supreme Court limits claims by some who are falsely labeled terrorists by credit agencies

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The Supreme Court on Friday set new limits on who can sue a credit bureau for mistakenly calling it a terrorist, ruling that only those whose reports have been sent to a company have legal standing.

“No concrete damage, no reputation,” said the court in a 5-4 decision from Judge Brett M. Kavanaugh.

The verdict overturns most of a $ 40 million jury verdict against TransUnion for a botched plan to put “warnings” on names that match those of terrorists, drug traffickers, and others on the Treasury’s watch list.

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The company did not inform consumers that they were on the watch list. And, as Kavanaugh said, “Thousands of law-abiding Americans happen to share a first and last name with one of the terrorists, drug traffickers, or felons on the government watch list.

The flawed list came to light in 2011 when Sergio Ramirez went to a Nissan dealership in Dublin, California and told him he couldn’t buy on credit because his name was on the government’s “terrorist list”. His name was similar, but not identical, to anyone else on the list.

The reveal led to a class action lawsuit on behalf of 8,185 people who, in violation of their Fair Credit Reporting Act, had such false information in their credit files.

It resulted in a jury trial with Ramirez and the $ 40 million verdict against the company.

But in the TransUnion vs. Ramirez case, the Supreme Court overturned that ruling, saying that only “the 1,853 class members whose credit reports have been submitted to third-party companies have suffered specific damage and are reputable.”

The ruling marks a victory for companies and others trying to limit class action lawsuits. Chief Justice John G. Roberts Jr. and Judges Samuel A. Alito Jr., Neil M. Gorsuch, and Amy Coney Barrett made up the majority.

Judge Clarence Thomas drafted a strong dissent, which was followed by the liberal judges of the court.

“You just have to tap into common sense to know that receiving a letter identifying you as a potential drug dealer or a terrorist is harmful,” said Thomas. “Even more so when it comes to information in the context of a credit report, the sole purpose of which is to prove the trustworthiness of a person.”

He argued that Congress had given consumers a legal right to sue for false credit reports and that nothing in the Constitution prevented such claims from being heard in court.

“In the name of protecting the separation of powers, this court has released the legislature from its power to create and define rights,” wrote Thomas. “Even assuming this court should question private rights, it’s a pretty strange case that Congress has gone too far. TransUnion’s misconduct here is exactly what has long deserved an appeal. “

This story originally appeared in the Los Angeles Times.



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