BY MATTHEW VADUM February 11, 2021 Updated: February 11, 2021
Google LLC and Facebook Inc. have asked the Supreme Court in an upcoming case to make it more difficult for prospective class-action plaintiffs to sue them in court.
The friend-of-the-court brief, which also includes eBay Inc., the Computer and Communications Industry Association, the Internet Association, and the Technology Network, was filed in TransUnion LLC v. Ramirez, which is scheduled for oral argument on March 30.
These “friends of the court” describe themselves in the brief as “proven innovators that continue to generate valuable technology through significant investments in research and development,” and that are “especially susceptible to abusive, no-injury class action litigation similar to the matter before the Court.”
The companies’ “products serve large numbers of users” and those “large user pools make it financially lucrative for plaintiffs’ counsel to identify individuals who allegedly have suffered an atypical injury for which a statute supplies a private right of action and statutory damages.”
Class-action suits begin with a lead plaintiff, who, serving as a representative of a larger group, stands in for anywhere from hundreds to thousands of other individuals in circumstances that are similar, but not necessarily identical.
In 2011, Sergio Ramirez and his wife tried to purchase an automobile. The car dealer obtained a credit report on both would-be buyers, but the report from TransUnion, a consumer credit reporting company, indicated that his name matched one on a terrorist watchlist maintained by the Office of Foreign Assets Control (OFAC) in the U.S. Department of the Treasury. The dealership refused to sell Ramirez the car so his spouse purchased it by herself.
Afterward, Ramirez asked TransUnion for a copy of his credit report but it didn’t contain the OFAC warning. The agency later sent him a copy of the OFAC notice that associated him with two individuals who had different middle initials and dates of birth. The document offered no procedure for challenging incorrect information.
Ramirez retained an attorney who had the OFAC alert deleted from his credit report and then initiated a potential class-action lawsuit claiming TransUnion violated the Fair Credit Reporting Act. The court ruled in favor of the more than 8,000 class members, finding that each member should receive $984 in statutory damages, and $6,350 in punitive damages.
TransUnion argued on appeal that Ramirez’s case wasn’t representative of the class, most of whom suffered no specific harm from the agency’s behavior. The 9th Circuit Court of Appeals upheld the lower court’s ruling in February 2020 but roughly halved the punitive damages. TransUnion asked the Supreme Court to review the case and on Dec. 16, 2020, it agreed to do so. The company is arguing that the U.S. Constitution and the Federal Rules of Civil Procedure prevent a class from litigating unless its members can demonstrate an actual injury.
Silicon Valley is interested in the case because it could be affected by the outcome at the Supreme Court.
When a small group of plaintiffs discovers its members have suffered privacy- or data-related harm at the hands of Big Tech, this can lead many more users to discover that they too have experienced similar harm. The technology companies want the evidentiary bar raised so that every member of the would-be class is required to show similar injuries.
Such a requirement might have prevented the biometric privacy case Facebook settled last month in Illinois from getting off the ground, according to Ars Technica.
In the Land of Lincoln, about 1.6 million Facebook users will receive around $340 each from Facebook after it settled a case in which it was accused of violating a state law by collection of facial-recognition data from users without their consent.
“This is money that’s coming directly out of Facebook’s own pocket,” U.S. District Judge James Donato reportedly said. “The violations here did not extract a penny from the pockets of the victims. But this is real money that Facebook is paying to compensate them for the tangible privacy harms that they suffered.”