by Roger N. Heller
Picking up where the last decade left off, the 2020s are off to a fast developing and interesting start for class action practitioners in the Ninth Circuit, with the court already handing down several notable opinions addressing such important issues as personal jurisdiction, privacy law, class damages, punitive damages, and Article III standing.
At the intersection of several of these issues, is perhaps one of the most closely-watched cases of the year, Ramirez v. TransUnion LLC, — F.3d —, 2020 WL 946973 (9th Cir. Feb. 27, 2020), where the Ninth Circuit recently provided clarification regarding the application of Article III standing principles in the class action context.
The Ramirez case involved allegations that the defendant credit reporting bureau knowingly violated the Fair Credit Reporting Act (“FCRA”) by placing inaccurate “terrorist alerts” on consumers’ credit reports, failing to take reasonable steps to ensure the accuracy of the information, and incorrectly indicating to the consumers that the alerts had been removed from their credit reports when that was not the case. The plaintiff, on behalf of himself and a proposed class of others who had these false alerts on their reports, sought statutory and punitive damages under the FCRA. After the district court certified a litigation class pursuant to Federal Rule of Civil Procedure 23(b)(3), the case proceeded to a jury trial. After the trial, the jury found in favor of plaintiff and the class and awarded statutory damages and punitive damages. On appeal, the Ninth Circuit affirmed the jury’s award of statutory damages as “clearly proportionate to the offense and consistent with the evidence.” The court determined, however, that the jury’s punitive damages award—approximately 6.45 times the amount of the statutory damages—were excessive under the facts of the case and the standards articulated by the Supreme Court in BMW of N. Am., Inc. v. Gore, 517 U.S. 559 (1996), and ordered that the punitive damages be reduced by approximately 38% (i.e., to a ratio of 4:1). Ramirez, 2020 WL 946973, at *18-19.
Prior to addressing the damages issues, the majority tackled two important issues regarding Article III standing in the class context. First, the majority held that, at the motion to dismiss stage, class certification stage, and, for purposes of injunctive relief, at the judgment stage, only the representative plaintiffs must have Article III standing. Ramirez, 2020 WL 946973, at * 7. Second, the majority held that, at the final judgment stage of a class action, only those class members who can satisfy Article III standing requirements may recover monetary damages. Ramirez, 2020 WL 946973, at * 8.
It is probably fair to say that neither of these holdings significantly defied general expectations among class practitioners. As the Ramirez majority noted, the first holding followed prior Ninth Circuit authority on the issue. Id. at * 7 (citing In re Zappos.com, Inc., 888 F.3d 1020, 1028 n.11 (9th Cir. 2018); Melendres v. Arpaio, 784 F.3d 1254, 1262 (9th Cir. 2015), Bates v. United Parcel Serv., Inc., 511 F.3d 974, 985 (9th Cir. 2007) (en banc); Casey v. Lewis, 4 F.3d 1516, 1519–20 (9th Cir. 1993)). As for the second holding, the issue was essentially presented but not resolved by the Supreme Court in Tyson Foods, Inc. v. Bouaphakeo, 136 S.Ct. 1036 (2016). The requirement that class members must satisfy Article III to recover damages at the final judgment stage does not stray significantly from the practice, employed in certain types of class cases that go to trial, of utilizing a second phase or process (i.e., bifurcation) regarding the calculation and/or allocation of class members’ damages.
After addressing these doctrinal issues, the Ramirez majority conducted a detailed analysis of whether the recovering class members in the case at hand had Article III standing under the Supreme Court’s and Ninth Circuit’s respective decisions in Spokeo, concluding that each class member did, in fact, allege a concrete injury and had Article III standing. The majority emphasized the severe nature of the inaccurate information at issue and the corresponding risk of harm. Ramirez, 2020 WL 946973, at *8-14. The third member of the panel, who concurred in part and dissented in part, would have held that only those class members who had the false information disseminated to a third party had Article III standing. Id. at *23.
Looking ahead, while the generally fact-specific and claim-specific nature of the Article III standing and punitive damages inquiries may very well limit the direct applicability of Ramirez to other cases, class practitioners in the Ninth Circuit should expect to see Ramirez cited and quoted in their cases for the foreseeable future, particularly regarding the doctrinal issues. On the plaintiffs’ side, the confirmation in Ramirez regarding Article III standing standards at the pleading and class certification stages, and the majority’s analysis and application of Spokeo to claims involving risk of harm, may prove helpful. On the defense side, it is probably reasonable to expect an uptick in the filing of decertification motions at or around the time of trial, which was already becoming an increasingly standard procedural event for those class cases that go to or threaten to go to trial. Class practitioners on both sides should pay careful attention to the development of the law in this area.
Roger N. Heller, a Partner in the San Francisco office of Lieff Cabraser Heimann & Bernstein LLP, specializes in litigating consumer class actions.