Class Ascertainability

Consumers Receive a Victory in Recent Third Circuit Ruling on Informational Injuries and Class Ascertainability

A recent ruling from the U.S. Court of Appeals for the Third Circuit has provided consumers with more ability to challenge consumer reporting agencies (CRA) for violations of the Fair Credit Reporting Act (FCRA). The appeals court ruled in favor of the consumers attempting to file a class action against a CRA. In this case, the CRA allegedly failed to provide the sources of its information, removing two significant obstacles consumers have found in the Supreme Court’s ruling in TransUnion LLC. v. Ramirez.

The two lead plaintiffs were denied apartment rental leases in this case due to allegedly inaccurate background check reports. Upon disputing the information with the CRA, they learned that they must supply proof from the sources of the information that it was incorrect. However, the files concerning the plaintiffs provided by the CRA did not disclose these third-party sources the plaintiffs needed to correct their reports.

As a result, the two plaintiffs initiated a putative class action against the CRA, alleging violations of the FRCA. Most notably, they claimed a violation of the FCRA’s requirement that CRAs provide the consumer with their files upon request. The plaintiffs sought certification of a class of over two million consumers who had received a report without source information and a subclass of consumers who directly requested their files from the CRA without source information.

However, the district court declined certification for both classes. The court ruled that, though the plaintiffs had the standing to sue, it would not be administratively possible to ascertain who would qualify as a class member for either class. According to the judge, this would require examining each class member’s file individually to determine whether consumers’ files contained information from third parties and if consumers had requested this information.

However, both sides appealed this ruling. The prospective class appealed the denial of certification while the CRA argued that the plaintiffs had suffered no “concrete” injury, thus, had no standing to sue. Upon appeal, the Third Circuit overturned the lower court ruling, siding with the plaintiffs.

In its ruling, the Third Circuit found that the subclass of consumers had the standing to sue. In addition, the Third Circuit rejected the CRA’s argument that, in light of TransUnion LLC. v. Ramirez, an informational injury could not be regarded as a “concrete” injury to establish standing. In addition, the appeals court found that the class would be ascertainable. The court emphasized how viewing an individual’s records would prove as simple as a “yes or no” review to determine whether files contained third-party information. The Third Circuit thus remanded the case to the trial court to reconsider the class certification decision.

This decision represents a substantial boon for consumers. For example, it shows consumers may take more effective action to protect their right to accurate and complete information from background reporting agencies. In addition, this emphasizes their ability to dispute information or request their files.

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