A Supreme Court decision Friday about a class-action lawsuit against credit reporting agency TransUnion limits Congress’s power to determine who can file a federal lawsuit — by shifting more of that decision to the judicial branch.
The case centers on the Fair Credit Reporting Act of 1970, which created a way for consumers to file a lawsuit to recover damages for certain violations of law, in part to protect consumer privacy. The majority ruled, in a sharply divided 5-4 opinion, that some of the plaintiffs did not have the right to file the lawsuit.
In doing so, the majority delves into separation-of-powers issues between the three branches of government. And the court concludes that Congress can give people the right to file a lawsuit over violations of law, but ultimately the federal courts have the power to say whether those people can file those lawsuits.
“Congress may enact legal prohibitions and obligations. And Congress may create causes of action for plaintiffs to sue defendants who violate those legal prohibitions or obligations,” Justice Brett M. Kavanaugh wrote. “But under Article III, an injury in law is not an injury in fact. 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.”
To illustrate the point, Kavanaugh used an example of a factory that pollutes land in Maine. Nearby Maine residents could file a federal lawsuit alleging the Maine company violated environmental laws. But Hawaii residents could not file such a lawsuit, because they had not suffered any physical, monetary or other harm traditionally recognized as providing a basis for a lawsuit in American courts, Kavanaugh wrote.
In the TransUnion lawsuit, the court concluded that 1,853 of the class members had their credit reports disseminated to third parties with misleading alerts about them being potential terrorists or drug traffickers, a concrete injury that gives them the right to file the lawsuit.
The other 6,332 class members had those same misleading alerts in their credit files. But those reports were not disseminated, and therefore did not cause a concrete harm and give them the right to file the lawsuit, the majority found.
It is the same, “as if someone wrote a defamatory letter and then stored it in her desk drawer,” Kavanaugh wrote. “A letter that is not sent does not harm anyone, no matter how insulting the letter is.”
Justice Clarence Thomas, in a dissent joined by the three justices in the court’s liberal wing, wrote that despite Congress’s judgment that credit reporting agency misdeeds deserve redress, “the majority decided that TransUnion’s actions are so insignificant that the Constitution prohibits consumers from vindicating their rights in federal court."
Thomas wrote that this is the first time the Supreme Court has precluded Congress from creating legal rights that can be enforced in federal courts just because those rights deviate too far from the kind of cases the court has traditionally decided.
“According to the majority, courts alone have the power to sift and weigh harms to decide whether they merit the Federal Judiciary’s attention,” Thomas wrote. “In the name of protecting the separation of powers … this Court has relieved the legislature of its power to create and define rights.”
And Justice Elena Kagan, writing a separate dissent, said that the majority opinion has transformed the law about who can file lawsuits “from a doctrine of judicial modesty into a tool of judicial aggrandizement.”
“It holds, for the first time, that a specific class of plaintiffs whom Congress allowed to bring a lawsuit cannot do so under Article III,” Kagan wrote.
“Congress is better suited than courts to determine when something causes a harm or risk of harm in the real world,” Kagan wrote. “For that reason, courts should give deference to those congressional judgments.”
University of Texas law professor Steve Vladeck said the decision is “a real problem for Congress as it thinks about how to articulate new rights going forward.”
Under the Supreme Court's reasoning, for Congress to create a federal statutory right and authorize holders of that right to sue violators, the harm must go beyond just the invasion of their rights.
“So Congress will need to think carefully about how to ensure that violations of statutory rights produce tangible harms, something that's hard to do where the right is to particular procedures or processes,” Vladeck said.