The TransUnion decision is helpful for industries targeted by class action attorneys, as it should reduce the potential for large settlements based on the risk of future harm. However, regulatory risk and state class action risks are somewhat increased by this decision. Unlike plaintiffs’ attorneys, state and federal regulators’ incentive to bring cases is untouched by the lack of personal financial gain from speculative damages claims. Indeed, the regulators may see the diminishment of private class actions as a reason to step up government oversight. But with the potential for increased attention under FCRA (and similar statutes like the Fair Debt Collection Practices Act), the government also will be limited in the amount of damages they can claim. While we may see an increase in activity in these areas, the size of the damages awards may be more closely tied to harm that consumers actually suffered.
Similarly, class actions under state laws may increase, as many states have consumer protection laws that provide for standing under a broader range of circumstances than what is provided by Article III in federal court. For example, the California Consumer Privacy Act gives standing to a claim arising from a data breach where the plaintiff shows that their unencrypted or nonredacted personal information (as defined in the statute) was accessed, stolen or disclosed due to a company’s failure to implement and maintain reasonable security procedures and practices. A plaintiff does not need to show that they were actually harmed. Under that statute, a plaintiff is entitled to recover statutory damages ranging from a minimum of $100 to a maximum of $750 per violation, or actual damages, whichever is greater.
This case is a good reminder to revisit your firm’s consumer complaint response practices. After the TransUnion decision, programs to redress consumer harm on an individual basis may inoculate you against expensive class actions. It is also a good reminder to know and understand the statutes in the jurisdictions where you are doing business. To read more click here.