“No concrete harm, no standing”
In an important victory for small businesses, the U.S. Supreme Court recently curtailed “no-injury” class-action lawsuits. The NFIB Small Business Legal Center supported the defendant in this case and successfully argued in its brief that plaintiffs must be able to prove an actual injury to assert a claim in court.
NFIB Small Business Legal Center Joins to Represent Small Business Interests
The SBLC joined the U.S. Chamber of Commerce in filing an amicus brief supporting TransUnion. NFIB’s amicus argued that all members of a class-action lawsuit must have suffered a concrete injury, even for technical statutory violations, and that the District Court’s lenient approach to standing in consumer protection cases harms the judicial system and businesses by allowing unharmed individuals to participate in class actions. This approach has caused a flood of class-action litigation, hampering judicial efficiency and shaking down businesses more willing to settle than face protracted lawsuits.
SCOTUS Agrees with SBLC Brief
On June 25, 2021, the Supreme Court issued a decision, which held that plaintiffs must suffer “concrete harm” from a defendant’s statutory violations in order to have standing to sue in federal court. As the Court stated, “[n]o concrete harm, no standing.”
The Court concluded that only those 1,853 class members having their wrongful credit report information distributed to third parties suffered a concrete harm sufficient to establish standing to sue. This was due to the “close relationship” between the dissemination of wrongful information to third parties, and the tort of defamation at common law. Because the remaining 6,332 class members did not have their wrongful credit report information disseminated to third parties, they did not suffer a concrete harm.
For small businesses, the importance of this case can hardly be overstated. The Court has now made clear that technical violations of the FCRA will not provide the concrete harm required for standing.
But the more important question is to what extent the Court’s rationale applies to future lawsuits based on mere technical or procedural violations. There are other consumer protection statutes, like the Fair Debt Collection Practices Act and Telephone Consumer Protection Act, as well as other laws, where Congress has created a private right of action for statutory violations. The Court’s decision in TransUnion should limit the category of individuals who can sue based on these types of violations.
Updated July 9, 2021