For years, federal courts relied on the U.S. Supreme Court’s decision in Spokeo v. Robins, 578 U.S. 330 (2016), to ascertain whether a federal plaintiff demonstrated “concrete harm” such that his claims conferred Article III standing. However, the Spokeo standard was sufficiently vague, resulting in a circuit split regarding what constitutes “concrete harm.” In June 2021, the Supreme Court addressed this split in its TransUnion v. Ramirez, 141 S. Ct. 2190 (2021) (TransUnion) decision by attempting to clarify the Spokeo standard for “concrete harm.” In a 5-4 decision authored by Justice Brett Kavanaugh, the Supreme Court unequivocally rejected “the proposition that ‘a plaintiff automatically satisfies the injury-in-fact requirement whenever a statute grants a person a statutory right and purports to authorize that person to sue to vindicate that right,’” 141 S. Ct. at 2205 (quoting Spokeo, 578 U.S. at 341). The court emphasized that “an important difference exists between a plaintiff’s statutory cause of action to sue a defendant over the defendant’s violation of federal law, and a plaintiff’s suffering concrete harm because of the defendant’s violation of federal law.” The latter is required to satisfy Article III standing to confer federal jurisdiction: “Only those plaintiffs who have been concretely harmed by a defendant’s statutory violation may sue that private defendant over that violation in federal court.” As Kavanaugh succinctly stated: “No concrete harm, no standing.”
TransUnion was viewed as a significant win for financial institutions and the defense bar thought it would reduce the number of federal lawsuits, particularly from plaintiffs who alleged purely statutory violations. However, despite the Supreme Court’s clarification in TransUnion, courts are still reaching different conclusions on what constitutes concrete harm, and a new circuit split is already emerging, particularly with respect to intangible harms, such as economic or emotional distress, and informational harms.
For example, the U.S. Court of Appeals for the Second Circuit has acknowledged that while stress, anxiety and mental anguish are harms that may support Article III standing, a statutory violation with a “perfunctory allegation of emotional distress, especially one wholly incommensurate with the stimulant, is insufficient to plausibly allege constitutional standing.” See Maddox v. Bank of New York Mellon, 19 F.4th 58, 63 (2d Cir. 2021). Post-TransUnion and Maddox, courts within the Second Circuit have consistently held that conclusory allegations of loss of credit, mental and emotional distress, confusion and injury to credit worthiness are insufficient to confer Article III standing. See, e.g., Demarattes v. Enhances Recovery, 2022 WL 4121217, at *4 (E.D.N.Y. Sept. 9, 2022) (holding that on the plaintiff’s FCRA claim, allegations of “loss of credit, loss of ability to purchase and benefit from credit, increased interest rate, loss of mortgage loans, the mental and emotional pain, anxiety, anguish, humiliation, and embarrassment of credit denials, … are vague, conclusory, and akin to the injuries found insufficient by other courts in this circuit.”); Nojovits v. Ceteris Portfolio Services, 2022 WL 2047179, at *1 (E.D.N.Y. June 7, 2022) (dismissing the complaint for lack of jurisdiction for failure to demonstrate injury-in-fact in response to the court’s order to show cause, where allegations of “emotional distress, including but not limited to, fear, anxiety, stress, increased heart rate, and difficulty with sleep” were insufficient to establish standing); Gross v. TransUnion, 2022 WL 2116669, at *1 (E.D.N.Y. June 13, 2022) (“The only allegations that could support standing in the complaint are that plaintiff suffered an ‘injury to his credit worthiness,’ ‘increased difficulty obtaining credit,’ and ‘embarrassment, humiliations, and other emotional injuries.’ … Without more, these conclusory allegations are insufficient” to confer Article III standing on the plaintiff’s FCRA claims). Moreover, in the Second Circuit, an allegation of “informational harm” without “downstream consequences” based on not receiving certain information is insufficient for Article III purposes. See Laufer v. Ganesha Hospitality, 2022 WL 2444747, at *2 (2d Cir. July 5, 2022).
Likewise, the Fifth Circuit also has held that plaintiffs do not have Article III standing where their claim of an informational injury “lacked downstream consequences.” See Campaign Legal Center v. Scott, 49 F.4th 931, 938 (5th Cir. 2022). Further, in analyzing Article III standing under TransUnion, the Fifth Circuit noted that an injury is only concrete if it has a “close relationship” to injuries that courts have recognized as concrete. See Perez v. McCreary, Veselka, Bragg & Allen, 45 F.4th 816, 822 (5th Cir. 2022). In deciding, how close is close enough, the Fifth Circuit recognized that the focus must be “on types of harms protected at common law, not the precise point at which those harms become actionable.” Thus, in the Fifth Circuit, a plaintiff can only establish Article III standing upon showing that “the type of harm he’s suffered is similar in kind to a type of harm that the common law has recognized as actionable.” Without that, plaintiff lacks standing. Applying this standard, allegations of future risk of harm, confusion, lost time and informational injury are not the type of harm sufficient to confer Article III standing. See also Norwood v. United Medical Recovery, 2022 WL 4088-81 (N.D. Miss. Sept. 6, 2022) (holding plaintiff’s allegations that she was misled and confused by the debt collection letter or spent time and effort deciphering the letter do not amount to an injury in fact).
Courts within the Ninth Circuit are not applying TransUnion consistently. Some California district courts have agreed with the Second and Fifth circuits by holding that mere allegations of confusion, mitigation costs and emotional distress are insufficient to establish Article III standing. See Nunley v. Cardinal Logistics Management, 2022 WL 5176867 (C.D. Cal. Oct. 5, 2022); I.C. v. Zynga, 2022 WL 2252636, at * 10 (N.D. Cal. Apr. 29, 2022) (“the risk of harm which caused the asserted costs and stress is too conjectural such that they cannot qualify as concrete injuries of fact.”). However, unlike the Second and Fifth circuits, even post-TransUnion, some courts within the Ninth Circuit also have held that alleging a statutory violation is sufficient to confer Article III standing. For example, in Pena v. Experian Information Solutions, 2022 WL 14049542 (C.D. Cal. Oct. 24, 2022) the district court held that because Section 1681g of the Fair Credit Reporting Act was “established to protect concrete interests of privacy and accuracy in the reporting of consumer credit information, and not merely procedural rights,” the statute itself protected a plaintiff’s concrete interests (as opposed to purely procedural rights). Further, a plaintiff’s allegation of nondisclosure of information “presents a material risk of harm to his concrete interest in fair and accurate reporting,” where plaintiff alleged that defendant published consumer reports to third parties containing false OFAC hit information and that he would have “tried to correct his consumer file if his disclosure had been accurately provided to him.” Similarly, in Guarnieri v. Be Money, 2022 WL 11381916 (C.D. Cal. Oct. 18, 2022), the district court held that the Electronic Funds Transfer Act, codified at 15 U.S.C. Section 1693, was “established to protect consumers from errant and unauthorized money transfers” and therefore, the “interests sought to be protected by the requirements of [the act] at issue are ‘concrete’ and not purely ‘procedural rights’ in that they protect consumers against the risk of fraudulent loss in electronic fund transfers.
Like the Second, Fifth and Ninth circuits, courts within the Third Circuit have held that under TransUnion, allegations of confusion without more are insufficient to confer Article III standing. See Rodriguez-Ocasio v. I.C. System, 2022 WL 16838591 (D.N.J. Nov. 8, 2022); Day v. GC Services Partnership, 2022 WL 449381, at *3 (D.N.J. Sept. 23, 2022). Similarly, informational harms that have no “downstream consequences” or “adverse effects” caused by the statutory violation do not confer Article III standing. See Rabinowtiz v. Alltran Financial, 2022 WL 16362460 (D.N.J. Oct. 25, 2022). In contrast, however, allegations of anxiety, emotional distress, and loss of privacy from fear of public disclosure can be sufficient to confer Article III standing. See Rauhula v. Greater New York Mutual Insurance, 2022 WL 16553382 (E.D. Pa. Oct. 31, 2022). In the data breach context, allegations of a substantial risk of identity theft or fraud – meaning a “realistic danger of sustaining a direct injury”—are also sufficient to confer Article III standing. See Clemens v. ExecuPharm, 48 F.4th 146, 153, 155-56 (3d Cir. 2022).
Finally, courts in the Tenth and Eleventh circuits have applied TransUnion differently. For example, in Ozuna v. Budget Control Services, 2022 WL 1619684 (D. Col. Mar. 1, 2022), the district court of Colorado noted that TransUnion “requires that the intangible harm be similar in kind, as opposed to similar in degree, to the harm addressed by a common-law cause of action.” The district court held plaintiff had Article III standing because her claim that defendant violated the FDCPA by utilizing a misrepresentation when collecting a debt, at its core, relates to improper abuse and deception to coerce payment from debtors, resulting in “intangible harm that is clearly aligned with the historical common-law torts of fraud and misrepresentation.” Ozuna, 2022 WL 1619684, at *4; see also Lupia v. Medicredit, 8 F.4th 1184, 1191 (10th Cir. 2021) (where plaintiff disputed ownership and amount of debt, allegation that defendant made one allegedly harassing telephone call was sufficient to establish Article III standing because “that phone call poses the same kind of harm recognized at common law—an unwanted intrusion into a plaintiff’s peace and quiet”).
In Laufer v. Arpan, 29 F.4th 1268 (11th Cir. 2022), the Eleventh Circuit held that although the plaintiff’s “frustration and humiliation” bear no “close relationship” to any traditional common-law cause of action, plaintiff still established standing because “because she claims not only that she suffered illegal discrimination but also that the discrimination resulted in ‘frustration and humiliation’ and a ‘sense of isolation and segregation’” from the alleged violation of the Americans with Disabilities Act and, therefore, she adequately pled a concrete, stigmatic injury. Id. at 1274-75. Because the plaintiff’s “emotional injury is her emotional injury, it affects her ‘in a personal and individual way’ and is therefore sufficiently particularized.’” Similarly, in Pharms v. Nat’l Credit Systems, 2022 WL 2346623 (S.D. Ga. June 29, 2022), the Southern District of Georgia rejected the plaintiff’s theory that the tangible harms (economic damages and a degraded credit score) were sufficient for Article III standing, but found that plaintiff’s intangible reputational harm had a “‘close relationship’ to the common law tort of defamation,” and therefore was sufficient to confer standing.
Based on these cases, one thing is clear—the federal courts’ interpretation of TransUnion will continue to evolve, particularly as the plaintiffs bar continues to assert new and creative allegations of harm to attempt to sufficiently allege a concrete injury. While the Supreme Court likely thought TransUnion would clarify the standard to confer Article III standing, given the emerging new circuit split, the question of what constitutes concrete harm will inevitably head back to the nation’s highest court to resolve the inconsistencies in applying TransUnion.
“The Aftermath of 'TransUnion v. Ramirez': An Emerging Circuit Split,” by Diana M. Eng, Andrea M. Roberts, and Alina Levi was published in the New Jersey Law Journal on January 3, 2023.
Reprinted with permission from the January 3, 2023, edition of New Jersey Law Journal © 2023 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited.