Amicus Curiae Brief — Campbell-Ewald Co. v. Gomez, 135 S. Ct. 2311 (2015) (No. 14-857)

Supreme Court brief2015

Ask Donna

What actually matters in this document.

Text

Supreme Coun, US]

FILED

JUL 23 2065

No. 14-857 OF THE CLERK

In the

Supreme Court of the Anited States

CAMPBELL-EWALD COMPANY,

Petitioner,

Vv.

JOSE GOMEZ,

Respondent.

On Writ of Certiorari to the United States

Court of Appeals for the Ninth Circuit

BRIEF FOR TRANS UNION LLC AS AMICUS

CURIAE IN SUPPORT OF PETITIONER

Michael O’Neil James C. Martin

Albert E. Hartmann Counsel of Record

REED SMITH LLP Colin E. Wrabley

10 S. Wacker Dr. Douglas C. Allen

Chicago, IL 60606 REED SMITH LLP

225 Fifth Avenue

Casey D. Laffey Pittsburgh, PA 15222

Nana Japaridze (412) 288-3546

REED SMITH LLP jcemartin@reedsmith.com

599 Lexington Ave.

New York, NY 10022

Counsel for Amicus Curiae

TABLE OF CONTENTS

INTEREST OF AMICUS CURIAE..................00-+-

SUMMARY OF ARGUMENT ..................ccccseeeeees

A. Consumer Reporting Agencies Like

TransUnion Play A Critical Role In

Our National Economy..........................0..+++

B. FCRA Class Actions Pose A Serious

Threat To TransUnion And Its Peer

Consumer Reporting Agencies ...................

C. Mootness Principles Engendered By

Offers Of Judgment Under Rule 68

Allow Consumer Reporting Agencies

To Expeditiously Resolve FCRA

D. Uncertified Class Actions Are Not,

And Should Not Be, Exempted From

Mootness Principles Engendered By

There Is No Basis In Rule 23,

Rule 68, Or The FCRA For

Exempting Uncertified Class

Actions From Mootness

Principles That Follow From

EE A a

‘3

There Is No Compelling

Reason For Exempting

Uncertified FCRA Class

Actions From Mootness

Principles That Follow From

ee iemeseiiionmnnie

CONCLUSION

TABLE OF AUTHORITIES

Cases

Amchem Prods., Inc. v. Windsor,

BE Wh, GI Cie Pcvccccccessccnscscesccenvesceees

Am. Express Co. v. Italian Colors Rest.,

133 S.Ct. 2304 (2013)..............cccessseseseees

Anderson v. CNH U.S. Pension Plan,

515 F.3d 823 (8th Cir. 2008)...................

AT&T Mobility LLC v. Concepcion,

Oe | eee

Bateman v. Am. Multi-Cinema, Inc.,

623 F.3d 708 (9th Cir. 2010)...................

Beaudry v. TeleCheck Servs., Inc.,

579 F.3d 702 (6th Cir. 2009)...................

Bell Atl. Corp. v. Twombly,

a ee

Benson v. Trans Union, LLC,

387 F. Supp. 2d 834 (N.D. Ill. 2005).......

Chathas v. Local 134 Inil Bhd. of Elec.

Workers,

233 F.3d 508 (7th Cir. 2000) (Posner,

| ee

Comer v. Cisneros,

37 F.3d 775 (2d Cir. 1994) .............ceeeees

Page(s)

oe 20-21

Damasco v. Clearwire Corp.,

662 F.3d 891 (7th Cir. 2011)..............

FTC v. TRW, Inc.,

628 F.2d 207 (D.C. Cir. 1980)............

Genesis Healthcare Corp. v. Symczyk,

Islam v. Option One Mortgage Corp.,

432 F. Supp. 2d 181 (D. Mass. 2006)

Klotz v. Trans Union, LLC,

246 F.R.D. 208 (E.D. Pa. 2007) .........

Knights v. Publix Super Markets, Inc.,

No. 3:14-cv-00720 (M.D. Tenn. Nov.

ils Se scnccnsceccensnnsnnemssntensedatnspeetesess

Lucero v. Bureau of Collection Recovery,

Inc.,

639 F.3d 1239 (10th Cir. 2011)..........

Marek v. Chesny,

— ) ) 4

McNulty v. Fed. Hous. Fin. Agency,

954 F Supp. 2d 294 (M.D. Pa. 2013),

aff'd (3d Cir. Mar. 18, 2014)..............

Molina v. Roskam Baking Co.,

No. 1:09-cv-475, 2011 U.S. Dist.

LEXIS 136460 (W.D. Mich. Nov. 29,

Murr v. Midland Nat Life Ins. Co.,

758 F.3d 1016 (8th Cir. 2014).............cceccecceeeeeeeee 24

Murray v. GMAC Mortg. Corp.,

434 F.3d 948 (7th Cir. 2006)...................0.004. 13, 14

Murray v. New Cingular Wireless

Servs., Inc.,

523 F.3d 710 (7th Cir. BOOG).......cccccccccoscscccessosceces 17

In re Nexium Antitrust Litig.,

ge 2 6 8 13

Ortiz v. Fibreboard Corp.,

Sy Ce I ciiicnsisnsiiineriicinsioniedinemmiianiceipnien 21

Parker v. Time Warner Entm’t Co., L.P.,

be be 15

Pettrey v. Enterprise Title Agency, Inc.,

584 F.3d 701 (6th Cir. 2009).............00....00002. 19, 24

Safeco Ins. Co. of Am. v. Burr,

gg REE ane nena 17

Sarver v. Experian Info. Solutions,

390 F.3d 969 (7th Cir. 2004)...........000.......ee eee 2,7

Shady Grove Orthopedic Assocs., P.A. v.

Allstate Ins. Co.,

SEES FESS see eos 15

Spokeo, Inc. v. Robins,

No. 13-1339 (U.S.) (pending) ..................-.2200ec0000 13

Stillmock v. Weis Mkts., Inc.,

385 F. App’x 267 (4th Cir. 2010)... 28

In re Toys R Us—Del., Inc.—Fair &

Accurate Credit Transactions Act

(FACTA) Litig.,

295 F.R.D. 438 (C.D. Cal. 2014) ......0.... eee eee 16

In re Trans Union Corp. Privacy Litig..,

bs | if. | & | ees 28

Trans Union LLC v. FTC,

B36 U.S. 915 (2002)..........ceccscescecsesseseccessesees 14-15

Tyson Foods, Inc. v. Bouaphakeo,

No. 14-1146 (U.S.) (pending)......................... 13-14

Wal-Mart Stores, Inc. v. Dukes,

- § 4. & — § | SEE Een reeENnremnEES 21

Zaycer v. Sturm Foods, Inc.,

896 F. Supp. 2d 399 (D. Md. 2012).............-....000- 24

Statutes

II MEIN, ins sscliccianisgetahencediiindpenimindiainaimentiog 3

a 11

a ee SII cso scchscisicihidiisceteieiatigibenieiumciiiieaaalinonie 8

OT |g Eon nnrer ee Mra re 8

Sr ee I css niche nciiibccemenlindeaiianiiinns 2,8

ry On hiatal l

| | 8 RISES ER SEE ESR nense nero 17

15 U.S.C. § 1681b(b)(3) ..........0.-00ce-ceecoecoesceccescesseseeess 17

BE GETIG.. 5 BID ciccccscevececessvsssscscevsccescenssssssvcovenses 17

Oe TE Be ii etiecccsstccsvnsnscccenioncnnsesnsemnteeseninensssns 17

BD a OB BID sce cosecscccnscscevenseenivessvessnovseees 10, 25

15 U.S.C. § 1681o(a)............ scilesnsiionaisietauaniniedintnaniameiiiitl 10

le i BD sascteciesccecerensinctccunsesncnniiersconnsnieneeinn 10

BE VEE. Fe BEI GD ccctcccsccevcccscroscccsccscccesevccosscens 16

ee se iitnciacecvenssccesccssesesseccstnneewune 11

BS TARE. B Ee cose ccccccccccesccsscssessssseseses 11, 28

i ie ID tittnsccrececcnsenepinccsscninsinntsinonniemnnness 21

Rules

Pe ee I OO icecessesninictdivenicncenisnssiorinnineensinisesseemnngia 23

i Bile Gs io i cdnccrnncnnsusniccenrvencnssionsesccuinninnnenenseiioh 23

PE Fes GI FP Cb cccctccccecvcnsteceresecsscencsnnsvasonens 21-22, 23

Be Te Gh Bo Ge ite icecierccncescnesdininccsnpicsnesnsinsconsnsiinnd 18

8 RS 5 nee 18

Ns Gils SN Oh ii acnstseinntnnecsnstnnnonsesenennionnnminenvenmeseinn 23

Regulations

BB CBee FOG Wo nccccccccccsesssesesscesecscscssossovscenassesess 11

vill

Other Authorities

12 Charles Alan Wright & Arthur R.

Miller, Fed. Prac. & Proc. Civ.

§ BOO1 (2d ed. 2015) ...........c.cecececccccececcccscecssessceees 22

12 Charles Alan Wright & Arthur R.

Miller, Fed. Prac. & Proc. Civ.

8 ee 23

116 Cong. Rec. 36574-76 (Oct. 13, 1970) .........0000000.. 17

40 Years of Experience with the Fair

Credit Reporting Act: An FTC Staff

Report with Summary

Interpretations (July 2011),

available at

https://www.ftc.gov/sites/default/files

/documents/reports/40-years-

experience-fair-credit-reporting-act-

ftc-staff-report-summary-

interpretations/110720fcrareport.pdf ....... 9-10, 17

The Accuracy and Completeness of

Consumer Credit Reports, Prepared

Statement of the Federal Trade

Commission before the U.S. Sen.

Comm. on Commerce, Science and

Transp., Subcomm. on Consumer

Protection, Product Safety, and

Insurance, (May 7, 2013), available

https://www.ftc.gov/sites/default/files

/documents/public_statements/prepa

red-statement-federal-trade-

commission-discussing-most-recent-

commission-report-congress-

a iiecennctiantivnsiisscsnnaitednninsne 11

Consumer Financial Protection Bureau,

Key Dimensions and Processes in the

U.S. Credit Reporting System at 3

(Dec. 2012), available at

http://files.consumerfinance.gov/f/20

1212_cfpb_credit-reporting-white-

acs icheala nent aardialianidibiniobtciamminisil 7,8

Credit Reporting Agencies Reach

Settlement with State Attorneys

general Regarding Credit Report

Inaccuracies, Practical Law (June 2,

David D. Schein & James D. Phillips,

Holding Credit Reporting Agencies

Accountable: How the Financial

Crisis May Be Contributing to

Improving Accuracy in Credit

Reporting, 24 Loy. Consumer L. Rev.

ERR SE SESE LAS AS a ae ee ee 12

David L. Permut & Tamra T. Moore,

Recent Developments in Class

Actions: The Fair Credit Reporting

Act, 61 Bus. Law. 931 (2006) ..........0....0...00..00000.. 12

Federal Trade Commission, Report to

Congress Under Sections 318 and

319 of the Fair and Accurate Credit

Transactions Act of 2003 (December

2004) available at

http://www.ftc.gov/reports/facta/0412

The Irr.portance of the National Credit

Reporting System to Consumers and

the U.S. Economy: Hearing Before

the Subcomm. on Fin. Insts. &

Consumer Credit of the Comm. on

Fin. Servs., 108th Cong. 2 (May 8,

2003) (statement of Michael Staten),

available at

http://commdocs.house.gov/committe

es/bank/hba90837.000/hba90837_0.h

Michael E. Staten and Fred H. Cate,

The Impact of National Credit

Reporting Under the Fair Credit

Reporting Act: The Risk of New

Restrictions and State Regulation

(Financial Services Coordinating

EE EE A SS SER 2,7

Michael O’Neil, Privacy and

Surveillance Legal Issues, Leading

Lawyers on Navigating Changes in

Security Program Requirements and

Helping Clients Prevent Breaches —

The Transformation of the “Right to

Privacy” and its Unintended

Liability Consequences, 2014 WL

10441 (Aspatore Jan. 2014)............cccccceeee eee 15-16

INTEREST OF AMICUS CURIAE '

Trans Union LLC is a “consumer reporting

agency [CRA] that compiles and maintains files on

consumers on a nationwide basis,” as defined in

Section 603(p) of the Fair Credit Reporting Act

(“FCRA”), 15 U.S.C. § 168la(p). TransUnion’s

diverse work force includes over 4,000 individuals, in

30 countries, on 5 different continents. At its core,

TransUnion is a risk information solutions provider.

As one of the nation’s three nationwide CRAs

(Experian Information Solutions, Inc. and Equifax

Information Services, LLC are the others), it has

over 30 petabytes (1 million gigabytes) of

information associated with approximately one

billion consumers globally. TransUnion provides

tens of millions of consumer reports every month to

credentialed users for an identified permissible

purpose.

These items of information consist of

“tradelines” from credit grantors (“tradeline” is an

industry term for the current and _ historical

activities of a particular consumer’s account with a

particular credit grantor), and public record items

from public records’ sources. Each month,

l No party or counsel for a party authored any part of

this brief, and no person or entity other than amicus, its

members, or its counsel made a monetary contribution

intended to fund the preparation or submission of the brief.

The parties have consented to the filing of this brief.

TransUnion receives over one billion updates to the

items in its database. These updates come from

approximately 90,000 different sources (called

“furnishers”), including banks, credit card

companies, mortgage companies, collection agencies,

and other financial institutions. See also Benson v.

Trans Union, LLC, 387 F. Supp. 2d 834, 841 (N.D.

Ill. 2005) (noting vast scale of information received

and processed by TransUnion).

This massive bank of information serves

multiple private and public interests. Consumer

reports are used daily by employers, individuals,

financial institutions, and other commercial

enterprises in making credit, personnel, life-

management, hiring and other transactional

decisions across all channels of commerce. See

Sarver v. Experian Info. Solutions, 390 F.3d 969, 972

(7th Cir. 2004). They likewise are used by law

enforcement and counter-terrorist agencies in

locating suspected criminals. Michael E. Staten and

Fred H. Cate, The Impact of National Credit

Reporting Under the Fair Credit Reporting Act: The

Risk of New Restrictions and State Regulation

(hereinafter “The Jmpact”) at 28 (Financial Services

Coordinating Council 2003). As a result, CRAs play

a “vital role” in the national economy. 15 U.S.C.

§ 1681(a)(3).

In carrying out its diverse information-

providing functions, TransUnion is comprehensively

regulated by the FCRA, certain state counterparts to

the FCRA, and the Dodd-Frank Wall Street Reform

and Consumer Protection Act, 12 U.S.C. § 5301 et

seq. The regulations under the various statutory

schemes also are rigorously enforced by federal and

state agencies alike. And states have parens patriae

powers to sue under the FCRA on behalf of their

citizens.

The FCRA also allows individuals to sue for a

violation of any of its many provisions. Under the

FCRA, successful litigants can obtain statutory

penalties of up to $1,000 per violation, as well as

attorneys’ fees. And, just like the Telephone

Consumer Protection Act at issue here, the FCRA

provides for uncapped awards of statutory damages.

Over many years, the FCRA’s provisions have

been subject to varying interpretations by the

nations’ courts. Based on these decisions, the FCRA

can fairly be described as a waiting trap for the

unwary. Its many technical provisions are prone to

differing interpretation, making compliance difficult

to say the very least. To compound matters, where

CRAs are concerned, an alleged violation can be

replicated instantaneously and simultaneously over

thousands or even millions of transactions.

These compliance difficulties, coupled with the

available statutory damages and attorneys’ fees,

have forced TransUnion and other companies

regulated under the FCRA to confront a wave of

class action lawsuits. It is no exaggeration to say

that FCRA class action lawsuits have exploded in

recent years. And, as TransUnion knows all too

well, these lawsuits are expensive to defend and

materially and deleteriously impact the cost of doing

business and prov-ding reporting services.

Once an FCRA class action is filed, there is

enormous pressure to settle because of the

potentially catastrophic costs associated with class-

wide FCRA recoveries. Given that reality,

TransUnion has a substantial interest in legal

doctrines that promote the expeditious resolution of

class action lawsuits. Offers of judgment made

under Federal Rule of Civil Procedure 68, and the

mootness principles engendered by such offers where

an uncertified class is involved, provide one such

avenue for efficient resolution. Indeed, Rule 68

offers have their highest utility in the FCRA class

actions that threaten the greatest exposure—those

seeking solely statutory damages, which are

uncapped, for alleged willful violations—because the

class representative's maximum recovery can be

determined at the lawsuit’s outset and complete

relief can be promptly provided. TransUnion

accordingly files this amicus brief urging reversal of

the Ninth Circuit’s decision, which deprives target

defendants like TransUnion of this critical resolution

tool.

In urging this Court to reinforce the efficacy of

Rule 68, TransUnion hastens to add that the

application of mootness principles following a

complete offer of judgment does not pave the way for

a company to circumvent FCRA regulation or avoid

FCRA compliance. No CRA gains anything by

violating the statutory scheme, and if violations

occur, they must promptly be remedied to avoid the

costs associated with the FCRA lawsuits or

regulatory enforcement that are certain to follow.

Nor does the application of Rule 68 mootness

principles in uncertified class actions seeking

statutory damages spell the end of consumer class

actions under the FCRA, or anything close to it.

Rule 68 mootness principles apply only in those

limited circumstances where an offer of complete

relief can be calculated-and made, just as would be

true in any other action. Class actions brought

under the statute where that is not the case—for

example, where actual damages are sought—are not

susceptible to Rule 68.

On balance, the proper application of Rule 68's

mootness principles to uncertified classes serves only

to mitigate the enormous costs associated with serial

class actions where there is no actual injury. The

ability to contain those costs is essential to

TransUnion’s effective performance of its critical

position in the health of the nation’s economic

infrastructure.

SUMMARY OF ARGUMENT

TransUnion is under siege from class

lawsuits—most seeking uncapped statutory damage

awards for minor and inadvertent alleged FCRA

violations. In an effort to contain the escalating

costs of defending these FCRA class actions, when

appropriate, TransUnion relies on Federal Rule of

Civil Procedure 68 and the mechanism it provides

for prompt resolution of these lawsuits. Offers of

judgment under Rule 68 are particularly effective in

resolving FCRA suits seeking statutory damages

because the claimant’s potential recovery—

encompassing statutorily-determined damages and

attorneys’ fees—can be calculated and fully paid at

the outset of the dispute before further, unnecessary

attorneys’ fees are incurred litigating claims where

the plaintiff has not suffered or sought actual

damages.

The Ninth Circuit’s decision below deprives

companies such as TransUnion of this valuable

resolution tool, and does so without a firm footing in

controlling law. Nothing in Rule 68 or Federal Rule

of Civil Procedure 23 or the FCRA itself purports to

exempt uncertified class actions from the effect of

Rule 68 offers of judgment, much less the strictures

of Article III of the Constitution. Further, as

explained more fully below, there are good reasons,

grounded in established law, for applying Rule 68’s

mootness principles to uncertified FCRA class

actions.

ARGUMENT

A. Consumer Reporting Agencies Like

TransUnion Play A Critical Role In Our

National Economy.

In December 2012, the Consumer Financial

Protection Bureau reported that the three national

CRAs “each maintain credit files on over 200,000,000

adults and receive information from approximately

10,000 furnishers of data.” Consumer Financial

Protection Bureau, Key Dimensions and Processes in

the U.S. Credit Reporting System (hereinafter “Key

Dimensions”) at 3 (Dec. 2012), available at

http://files.consumerfinance.gov/f/201212_cfpb_credit

-reporting-white-paper pdf.”

Using this compiled information, TramsUnion

and the other two national CRAs furnish more than

1.5 bilhon consumer credit reports annually.

Federal Trade Commission, Report to Congress

Under Sections 318 and 319 of the Fair and Accurate

Credit Transactions Act of 2002 at 8-9 (December

2 See also Sarver, 390 F.3d at 972 (noting that one

CRA “processes over 50 million updates to trade

information each day”); Staten and Cate, The Impact,

supra, at 1-2 (the credit reporting system “deals in huge

volumes of data ~ over 2 billion trade line updates, 2

million public record items, an average of 1.2 million

household address changes a month, and over 200 million

individual credit files”).

2004) (more than 1.5 billion consumer reports

furnished annually) available at

http://www.ftc.gov/reports/facta/041209factarpt.pdf;

see also Key Dimensions, supra, at 3 (“On a monthly

basis, furnishers provide information on over 1.3

billion credit accounts .or other ‘trade lines”). As

Congress has acknowledged, this consumer reporting

system is an “elaborate mechanism” for investigating

and evaluating a consumer’s credit worthiness,

standing, and capacity. 15 U.S.C. § 1681(a)(2).

By performing this “elaborate” information-

gathering and reporting function, as Congress itself

has acknowledged, the CRAs serve a “vital role” in

the national economy. Id. at § 1681(a)(3). Indeed,

our entire “bamking system is dependent upon fair

and accurate credit reporting.” Id. at § 1681(a)(1).

To underscore the point, in a hearing before

the Subcommittee on Financial Institutions and

Consumer Credit, Michael Staten, then Professor of

Management and Director of the Credit Research

Center at Georgetown Universitys McDonough

School of Business, stated that the United States

credit reporting system is the “the most robust credit

reporting system in the world.” The Importance of

the National Credit Reporting System to Consumers

and the U.S. Economy: Hearing Before the Subcomm.

on Fin. Insts. & Consumer Credit of the Comm. on

Fin. Servs., 108th Cong. 2 (May 8, 2003) (statement

of Michael Staten), available at

http://commdocs. house.gow/committees/bank/hba908

37.000/hba90837_0.htm. As a result, he continued,

the consumer and mortgage-credit markets in the

United States have achieved:

[O]ne, widespread access to credit

across the age and income spectrum;

two, relatively low-interest rates on

secured loans, such as autos and home

loans; three, exceptionally broad

access to open and unsecured lines of

credit, such as bank credit card-

products; and four, relatively low

default rates across al! types of

consumer loans.

Id.

As befits any business dealing with private

financial information, TransUnion and other CRAs

are closely and comprehensively regulated, most

particularly by the detailed provisions in the FCRA.

See FTC v. TRW, Inc., 628 F.2d 207, 208-09 (D.C.

Cir. 1980) (CRAs are “comprehensively regulated by

the provisions of the FCRA”); Islam v. Option One

Mortgage Corp., 432 F. Supp. 2d 181, 185 (D. Mass.

2006) (noting the FCRA’s “elaborate regulatory

structure”). Under the FCRA, CRAs are required to

establish reasonable procedures to ensure that they

report, with maximum possible accuracy, consumer

information only to those with a legitimate need for

it. 40 Years of Experience with the Fair Credit

Reporting Act: An FTC Staff Report with Summary

Interpretations (hereinafter “40 Years”) at 28 (July

2011) (providing a complete list of the duties

imposed on CRAs), available at

https://www.ftc.gov/sites/default/files/documents/rep

orts/40-years-experience-fair-credit-reporting-act-ftc-

staff-report-summary-

interpretations/110720fcrareport.pdf.

The FCRA permits consumers to sue CRAs for

the violation of “any requirement imposed under”

the FCRA. 15 U.S.C. §§ 1681n(a), 1681o(a). Where

a CRA has been “negligent in failing to comply with

any requirement,” the FCRA expressly provides for

an award of “any actual damages sustained by the

consumer as a result of the failure,” as well as an

award of attorneys’ fees. Id. at § 1681lo(a). Where a

CRA is found to have “willfully” violated “any” of its

statutory duties, it is liable for “actual damages” or,

alternatively, “damages of not less than $100 and

not more $1,000,” and punitive damages, as well as

attorneys fees. Id. at § 1681n(a).

The FCRA _ authorizes administrative

enforcement by both federal and state agencies. See

id. at § 1681s. A total of eight federal agencies—

including the Federal Trade Commission and the

Consumer Financial Protection Bureau—have

enforcement authority over the FCRA. In addition

to injunctive relief, federal agencies can seek

monetary payments and penalties, and states have

parens patriae powers to bring suits on behalf of

their citizens for monetary damages. Md. at

§§ 1681s(a)(2)(A), (c)(1)(B). Independent of the

FCRA, the Consumer Financial Protection Bureau

has, under the ODodd-Frank Act, extensive

supervisory and additional enforcement authority

over the consumer reporting industry. See 12 U.S.C.

§ 5514; 12 C.F.R. Part 1090.

State and federal governments have wielded

these enforcement powers aggressively in recent

years. The Federal Trade Commission “has brought

over 30 actions to enforce the FCRA against CRAs,

users of consumer reports, and furnishers of

information to CRAs,” and in 2013 announced that

“[vjigorous enforcement of the FCRA is a high

priority for the Commission.” The Accuracy and

Completeness of Consumer Credit Reports, Prepared

Statement of the Federal Trade Commission before

the U.S. Sen. Comm. on Commerce, Science and

Transp., Subcomm. on Consumer Protection, Product

Safety, and Insurance at 5 (May 7, 2013), available

https://www.ftc.gov/sites/default/files/documents/pub

lic_statements/prepared-statement-federal-trade-

commission-discussing-most-recent-commission-

report-congress-under/130507fcra.pdf.

In addition, and again by way of example, the

attorneys general of 31 states recently announced a

multi-million dollar settlement of FCRA and similar

state statutory claims alleged against TransUnion

and other consumer reporting agencies. See Credit

Reporting Agencies Reach Settlement with State

Attorneys general Regarding Credit Report

Inaccuracies, Practical Law (June 2, 2015). The

settlement includes various monitoring

requirements and imposes a series of requirements

on the reporting agencies to ensure compliance.

B. FCRA Class Actions Pose A _ Serious

Threat To TransUnion And Its Peer

Consumer Reporting Agencies.

Apart from state and federal enforcement

actions, because of the intricacies in the regulatory

scheme, TransUnion and the other national CRAs

have become targets for private FCRA class actions

as well. See, e.g., David D. Schein & James D.

Phillips, Holding Credit Reporting Agencies

Accountable: How the Financial Crisis May Be

Contributing to Improving Accuracy in Credit

Reporting, 24 Loy. Consumer L. Rev. 329, 339 (2012)

(“The advent of information sharing over the

internet, the recent lending and mortgage crisis, and

the rise in popularity and proliferation of

advertisements from independent credit bureaus

has Jed to a sharp rise in CRA litigation.”); David L.

Permut & Tamra T. Moore, Recent Developments in

Class Actions: The Fair Credit Reporting Act, 61 Bus.

Law. 931, 931 (2006) (noting the “proliferation of

class action lawsuits brought under” the FCRA that,

“combined with certain class action-friendly

provisions of FCRA—such as the availability of fee

shifting and statutory damages, and the lack of a

class action damages cap—have ... push(ed] the

FCRA to the forefront of consumer financial services

class litigation”).

The explosion of FCRA class actions comes as

no surprise. For one thing, in some jurisdictions,

there is no apparent requirement that plaintiffs

show any actual damages from the defendants’

technical violation of the FCRA. See, e.g., Bateman

uv. Am. Multi-Cinema, Inc., 623 F.3d 708, 718-19 (9th

Cir. 2010); Beaudry v. TeleCheck Servs., Inc., 579

F.3d 702, 705-07 (6th Cir. 2009); Murray v. GMAC

Mortg. Corp., 434 F.3d 948, 953 (7th Cir. 2006); but

see Spokeo, Inc. v. Robins, No. 13-1339 (U.S.)

(pending) (considering “[wjhether Congress may

confer Article III standing upon a plaintiff who

suffers no concrete harm, and who therefore could

not otherwise invoke the jurisdiction of a federal

court, by authorizing a private right of action based

on a bare violation of a federal statute”). For

another, many courts will certify classes when they

include some—or even many—class members who

suffered no harm, and therefore would lack standing

to sue had they brought the case themselves. See,

e.g., In re Nexium Antitrust Litig., 777 F.3d 9, 25, 31-

32 (1st Cir. 2015) (affirming certification despite fact

that the class consisted of thousands who were not

injured); but see Tyson Foods, Inc. v. Bouaphakeo,

No. 14-1146 (U.S.) (pending) (considering “[w]hether

a class action may be certified when the class

contains hundreds of members who were not injured

and have no legal right to any damages”).

The ease with which even “no-injury” FCRA

class actions can be certified has magnified the

already-serious threat those lawsuits pose to

TransUnion and the consumer reporting industry.

The potential class-wide liability in such suits is

staggering, particularly because the FCRA lacks an

express statutory cap on damage awards. See

Bateman, 623 F.3d at 718; Murray, 434 F.3d at 953.5

Bateman is typical of this catastrophic exposure.

There, the defendant faced a $290 million liability

just for including more than 5 digits of account

numbers on credit card receipts—even though the

complaint contained no allegation of any actual

harm. Bateman, 623 F.3d at 710-11. Similarly, as

Justices Kennedy and O’Connor noted in Trans

Union LLC v. FTC, 536 U.S. 915 (2002), TransUnion

faced a potentially “crushing” multi-billion dollar

liability in an FCRA class action for violating the

FTC’s “nonsensical” decision to ban the disclosure of

names and addresses on “target marketing lists’—

and despite the fact that TransUnion was expressly

permitted to disclose “detailed credit performance

information, including bill payment history[,]” which

3 Moreover, in Bateman and Murray, the Ninth and

Seventh Circuits both rejected the defendants’

contentions that the possibility of “annihilating damages”

in “no injury’ FCRA class actions precluded class

certification. Bateman, 623 F.3d at 718-19; Murray, 434

F.3d at 953-54.

disclosure was “far more invasive of consumer

privacy....” Jd. at 917 (Kennedy, J., dissenting).

As this Court and others also have

acknowledged, the in terrorem effect of these

extraordinary damage exposures provides a strong

compulsion to settle even baseless claims. See AT&T

Mobility LLC v. Concepcion, 131 S. Ct. 1740, 1752

(2011) (when faced with “even a small chance of a

devastating loss,” defendants will feel significant

“pressure[]” to settle even “questionable claims”);

Bell Atl. Corp. v. Twombly, 550 U.S. 544, 559 (2007)

(expensive litigation “will push _ cost-conscious

defendants to settle even anemic cases”); Shady

Grove Orthopedic Assocs., P.A. v. Allstate Ins. Co.,

559 U.S. 393, 445 n.3 (2010) (Ginsburg, J.,

concurring) (“When representative plaintiffs seek

statutory damages, pressure to settle may be

heightened because a class action poses the risk of

massive liability unmoored to actual injury.”); see

also Parker v. Time Warner Entm’t Co., L.P., 331

F.3d 13, 22 (2d Cir. 2003) (aggregated statutory

damages claims can produce “an in terrorem effect

on defendants, which may induce unfair

settlements”); Michael O’Neil, Privacy and

Surveillance Legal Issues, Leading Lawyers on

Navigating Changes in Security Program

Requirements and Helping Clients Prevent Breaches

— The Transformation of the “Right to Privacy” and

its Unintended Liability Consequences, 2014 WL

10441, at *6 (Aspatore Jan. 2014) (“The impact of

federal statutes that allow the award of statutory

damages for violations that cause no harm is

exponentially multiplied by the class-action

mechanism of Federal Rule of Civil Procedure 23.”).

Cases asserting only technical violations of

the FCRA—violations that cause no tangible harm to

consumers—still generate the same heightened

pressure to settle. See, e.g., In re Toys R Us—Del.,

Inc.—Fair & Accurate Credit Transactions Act

(FACTA) Litig., 295 F.R.D. 438 (C.D. Cal. 2014)

(approving class settlement that could potentially

award the class $391.5 million and granting class

counsel $458,602.54 in attorneys’ fees even though

“no putative class member had alleged any actual

injury”); Knights v. Publix Super Markets, Inc., No.

3:14-cv-00720 (M.D. Tenn. Nov. 12, 2014) (court

approved settlement of $6.8 million to settle claim

for inclusion of extraneous language on a disclosure

form).

Unfortunately for TransUnion and the other

national CRAs, there is no readily apparent way to

shut down this threat.4 The FCRA’s myriad

regulatory provisions, burdened by multiple, highly-

‘ Nor is the threat limited to CRAs. The FCRA also

strictly regulates “furnishers” of information to the CRAs,

and “users’—including employers—of the reports that

CRAs issue. 15 U.S.C. §§ 1681s-2(a) (“furnishers”),

1681b(f), 1681m (“users”), and 1681b(b)(2) and b(b)(3)

(employers).

technical subparts—the statute contains no fewer

than 31 separate sections, 145 subsections, and

approximately 34,000 words—present exceedingly

difficult compliance challenges.5 This Court has

noted as much, pointing out the FCRA’s “less-than-

pellucid” text and the “dearth of guidance” on its

proper construction. Sa/feco Ins. Co. of Am. v. Burr,

551 U.S. 47, 70 (2007). And, even “recklessness” is

enough to satisfy the FCRA’s willfulness standard

for recovering statutory damages (id. at 68-69)—and

that includes “something more than negligence but

less than knowledge of the law’s requirements.”

Murray v. New Cingular Wireless Servs., Inc., 523

F.3d 719, 726 (7th Cir. 2008). Inevitably, good faith

mistakes are made _ regarding the FCRA’s

requirements and, just as inevitably, class action

lawsuits follow.

To protect the health of its risk-information-

delivery business, TransUnion must look for ways to

forestall the extraordinary costs associated with this

spate of class action lawsuits. When appropriate,

offers of judgment under Federal Rule of Civil

Procedure 68, made to the representative of an

uncertified class, provide a vehicle for just such an

5 See 40 Years, supra, at 28 (providing a complete

list of the duties imposed on CRAs). Congress itself has

acknowledged ambiguities in the FCRA since the time it

was enacted. See 116 Cong. Rec. 36574-76 (Oct. 13,

1970).

expeditious resolution. But the utility of those offers

plainly is imperiled by the Ninth Circuit’s decision

under review in this case.

C. Mootness Principles Engendered By

Offers Of Judgment Under Rule 68 Allow

Consumer Reporting Agencies To

Expeditiously Resolve FCRA Class

Actions.

Rule 68 provides that, “[ajt least 14 days

before the date set for trial, a party defending

against a claim may serve an opposing party an offer

to allow judgment on specified terms, with the costs

then accrued.” Fed. R. Civ. P 68(a). If the offeree

serves written notice accepting the offer within 14

days of being served, “either party may then file the

offer and notice of acceptance,” and “[t}]he clerk must

then enter judgment.” Jd. As an additional

incentive for settlement, Rule 68 states that the

offeree must pay litigation costs incurred after an

unaccepted offer was made “[i]f the judgment that

the offeree finally obtains is not more favorable than

the unaccepted offer.” Fed. R. Civ. P. 68(d).

Thus, when defendants like TransUnion are

targeted in a putative FCRA class action suit

seeking only quantifiable statutory (but not actual)

damages, and before any class is certified, they will

extend a Rule 68 offer of judgment to compensate the

named plaintiff fully for his or her individual claims,

including reasonable costs or attorneys’ fees as

provided for in the FCRA. In most instances, the

plaintiff either rejects the offer of judgment outright

or simply lets it expire.

Having made the offer, defendants move to

dismiss plaintiff's individual claims on the basis of

mootness because there is no longer a live case or

controversy. With the proposed representative

having received complete relief, the claims of the

uncertified class are moot as well. See Genesis

Healthcare Corp. v. Symezyk, 133 S. Ct. 1523, 1529

(2013) (holding that “[plaintiff's] suit became moot

when her individual claim became moot, because she

lacked any persona! interest in representing others

in the action” prior to the case reaching the FLSA’s

equivalent of class certification); Damasco v.

Clearwire Corp., 662 F.3d 891, 896 (7th Cir. 2011)

(“To allow a case, not certified as a class action and

with no motion for class certification even pending,

to continue in federal court when the sole plaintiff no

longer maintains a persona! stake defies the limits

on federal jurisdiction expressed in Article III.”);

Pettrey v. Enterprise Title Agency, Inc., 584 F.3d 701,

703 n.1 (6th Cir. 2009) (settlement of class

representatives’ individual! claims before certification

mooted class claims); Anderson v. CNH U.S. Pension

Plan, 515 F.3d 823, 826-27 (8th Cir. 2008) (class

claims moot where “claims of all named plaintiffs ...

were satisfied before the district court’s ruling on

class certification”); Comer v. Cisneros, 37 F.3d 775,

798 (2d Cir. 1994) (“[I]f the claims of the named

plaintiffs become moot prior to class certification, the

entire action becomes moot.”).

As the foregoing cases recognize, there are a

number of sound reasons to bring mootness

principles to bear when a bona fide offer of complete

relief is made to the plaintiff in an as yet uncertified

FCRA class action.

First, as petitioners brief comprehensively

explains, offers of complete relief moot individual

and class claims alike under fundamental Article III

“case or controversy” principles because there is no

live dispute remaining. Indeed, the mooting effect of

an offer of complete relief applies whether the offer

is called a “Rule 68 offer of judgment” or not given a

label at all. What matters is the substance of the

offer, and if it provides everything the plaintiff could

conceivably recover were the case to proceed to

judgment—in other words, it reflects the defendant’s

“unconditional[ | surrender[ | and only [ | plaintiffs

obstinacy or madness prevents her from accepting

total victory” (Genesis Healthcare, 133 S. Ct. at 1536

(Kagan, J., dissenting)}—then the controversy is

dead and there is nothing left for the court to do but

enter judgment. Chathas v. Local 134 Intl Bhd. of

Elec. Workers, 233 F.3d 508, 512 (7th Cir. 2000)

(Posner, J.) (“{I}f the defendant has thus thrown in

the towel there is nothing left for the district court to

do except enter judgment.”).

Second, apart from Article III’s jurisdictional

bar, the application of mootness principles

underscores that Rule 23 is a rule of procedure only;

the Rule does not—and cannot—alter the result that

the substantive law requires. See, e.g., Amchem

Prods., Inc. v. Windsor, 521 U.S. 591, 612-13 (1997)

(“Rule 23’s requirements must be interpreted in

keeping with Article III constraints”). Not only is

there no legal basis for exempting class actions from

otherwise applicable substantive law—the Rules

Enabling Act and this Court’s precedents forbid it.

See Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541,

2561 (2011) (holding that the Rules Enabling Act’s

proscription against “interpreting Rule 23 to

‘abridge, enlarge or modify any substantive right,’

{barred certification] on the premise that Wal-Mart

wil] not be entitled to litigate its statutory defenses

to individual claims”) (citing 28 U.S.C. § 2072(b);

Ortiz v. Fibreboard Corp., 527 U.S. 815, 845 (1999)).

Third, the application of mootness principles

in the context of an uncertified class action also

serves Rule 68’s core purposes. That is, Rule 68 is

intended to facilitate and encourage settlement and

thereby to avoid the needless expenditure of public

and private resources. Marek v. Chesny, 473 U.S. 1,

5 (1985); see also Fed. R. Civ. P 68 advisory

committee’s note (“These provisions should serve to

encourage settlements and avoid protracted

litigation”); 12 Charles Alan Wright & Arthur R.

Miller, Fed. Prac. & Proc. Civ. § 3001 (2d ed. 2015)

(“It is roundly agreed in the courts that Rule 68 was

intended to encourage settlements and avoid

protracted litigation[.]”).

In sum, the continued vitality of Rule 68 offers

of judgment in the context of uncertified class

actions aligns with fundamental jurisdictional

principles, established limits on the provisions of

Rule 23, and judicial efficiencies. There is every

reason to recognize and preserve these benefits.

D. Uncertified Class Actions Are Not, And

Should Not Be, Exempted From Mootness

Principles Engendered By Rule 68 Offers.

While there are sound reasons supporting the

application of mootness principles engendered by

Rule 68 in the context of uncertified classes, there is

no basis to find that uncertified class actions—

including, specifically, FCRA class actions seeking

statutory damages for willful violations—should be

exempted from those mootness principles.

1. There Is No Basis In Rule 23, Rule

68, Or The FCRA For Exempting

Uncertified Class Actions From

Mootness Principles That Follow

From Rule 68 Offers.

To begin with, by its plain terms, Rule 68

operates regardless of the type of federal court

action. See Fed. R. Civ. P 68. In particular, nothing

in the Rule suggests it does not apply, or applies

more restrictively, in the context of putative class

action claims. Instead, the rule refers generally to

any offers made to “a party defending against a

claim[.]” Jd.; see also 12 Charles Alan Wright &

Arthur R. Miller, Fed. Prac. & Proc. Civ. § 3001.1 (2d

ed. 2015) (stating that exempting class actions from

Rule 68 “is inappropriate” given that there is no

language in the Federal Rules limiting the

application of Rule 68).

This construction is bolstered by Rules 1 and

81 of the Federal Rules of Civil Procedure. Rule 1

provides that all Rules govern “all civil actions and

proceedings,” except as stated in Rule 81, and Rule

81 makes no mention of excluding putative class

actions under Rule 23 from the reach of Rule 68.

Fed. R. Civ. P. 1; see Fed. R. Civ. P. 81; see also

Lucero v. Bureau of Collection Recovery, Inc., 639

F.3d 1239, 1244 (10th Cir. 2011) (“[NJo express

statement in the rules limits the application of rule

68 in class action complaints.”) (citation and internal

quotation marks omitted).

Turning next to Rule 23, there is no basis for

an exemption from operative mootness principles

there either. Nothing in the Rule’s various subparts

suggests that result. See Fed. R. Civ. P 23. Nor

does such an exemption arise from the nature of a

class action either. There is no “right” to bring a

‘ass action, see, e.g., Am. Express Co. v. Italian

Colors Rest., 133 S.Ct. 2304, 2309-10 (2013)

(reasoning that “congressional approval of Rule 23

[does not] establish an entitlement to class

proceedings for the vindication of statutory rights|,]”

and “there is no evidence of such an entitlement in

any event”), and the dismissal or resolution of

putative class claims before class certification

happens as a matter of course if the substantive law

provides for such a dismissal.

For example, prior to any grant of class

certification, the named plaintiff is always free to

accept a settlement offer in exchange for dismissing

the action. See Pettrey, Inc., 584 F.3d at 703 n.1;

Anderson, 515 F.3d at 826-27. In addition, of course,

a targeted defendant can move to dismiss a putative

class action complaint prior to certification if the

putative class representative fails to state a legally

viable claim or lacks standing to sue. See, e.g., Murr

uv. Midland Nat1 Life Ins. Co., 758 F.3d 1016 (8th

Cir. 2014) (affirming summary judgment for

defendant issued prior to class certification);

McNulty v. Fed. Hous. Fin. Agency, 954 F. Supp. 2d

294 (M.D. Pa. 2013), affd (8d Cir. Mar. 18, 2014)

(granting motion to dismiss for failure to state a

claim prior to certification); Zaycer v. Sturm Foods,

Inc., 896 F. Supp. 2d 399, 409 (D. Md. 2012)

(granting motion to dismiss for lack of standing and

rejecting plaintiffs argument that certification is

antecedent to standing). In these scenarios, the

courts permit the action to be disposed of because a

class has not yet been certified and, as such, does not

yet exist.

The mootness principles evoked by Rule 68

reach the same outcome through application of a

different—but no less fundamental—aspect of our

substantive law. And, there is no corresponding

aspect of our substantive law that allows for an

exception where Rule 23 is invoked but a class is not

yet certified. A complaint containing class

allegations holds no _ special immunity from

prudential and substantive principles that apply to

actions without those allegations.

Finally, looking at the FCRA, nowhere in its

34,000 words does it indicate that bona fide Rule 68

offers of judgment cannot operate specifically to

moot a putative FCRA class action seeking statutory

damages. As noted (supra at 10), it provides for

$100-1,000 in statutory damages per class member

for willful violations, plus the possibility of punitive

damages and attorneys’ fees. 15 U.S.C. § 1681n(a).

Such an award exceeds the actual harm that most

consumers experience from FCRA violations,

suggesting an intent by Congress to encourage

individual suits and their resolution. This statutory

structure—which Congress enacted long before the

explosion of consumer class litigation—does not

reflect the intent to create a scheme that provides for

class-wide resolution. The FCRA reflects, instead,

Congress’s intent to create a remedial scheme that

encourages individual suits and settlements—not

aggregate litigation that multiplies damages

exposure to a degree that threatens a company’s

very existence.

As a result, any effort to foreclose application

of the mootness principles triggered by bona fide

offers of judgment under Rule 68, made in the

context of an uncertified class, has no grounding in

Rule 68, Rule 23, or the FCRA itself. There is, in

fact, no indication in any of these statutory

provisions that Rule 68 should not retain its utility

where an uncertified class action in concerned.

2. There Is No Compelling Reason For

Exempting Uncertified FCRA Class

Actions From Mootness Principles

That Follow From Rule 68 Offers.

Those courts and commentators who oppose

the recognition of mootness principles where bona

fide Rule 68 offers are made and rejected by the

named representatives of an uncertified class believe

strongly in the utility of consumer class actions.

Based on that strongly-held belief, they condemn the

“picking off” of class representatives as an unseemly

procedural gambit that contravenes Rule 23’s

consumer protection function. From both a legal and

practical standpoint, there are a number of problems

with this line of reasoning.

First, on the legal side, there is nothing

untoward about the application of mootness

principles following a bona fide Rule 68 offer of

judgment made to the named representative of an

as-yet uncertified class. Such an offer eliminates

any case or controversy and the dismissal] that

follows is grounded in Article III of the Constitution

and the prudential conservation of public and

private resources.

Nor does Rule 23, in its provisions or

application, provide for any kind of fundamental

right that should be elevated to negate what

controlling substantive law compels. There is, as

noted, no right to bring a class action and a class

action does not create any rights either. On the

contrary, a class action is a procedural device that

must yield when our substantive law so dictates.

There likewise is nothing in the language of Rule 23

suggesting it is exempt from Rule 68 or the salutary

benefits that Rule 8 confers.

Second, on the practical side, applying

controlling mootness principles poses no categorical

threat to consumers, particularly where a reticulated

statute like the FCRA is concerned. For one thing,

the threat of successive FCRA class action lawsuits

seeking massive damages will remain, and that is

incentive enough to strive for statutory compliance.

The fact that “the FCRA requires that a court award

a successful plaintiff attorneys’ fees[,]” however,

“dispel[s] the notion that a class action is the only

way for alleged victims of violations to being

vindicated. Klotz v. TransUnion, LLC, 246 F.R.D.

208, 217 (E.D. Pa. 2007); see also Molina v. Roskam

Baking Co., No. 1:09-cv-475, 2011 U.S. Dist. LEXIS

136460, *17 (W.D. Mich. Nov. 29, 2011) (noting that

the FCRA’s attorneys’ fee provision “furnishes an

adequate incentive for individual plaintiffs” to bring

claims); Stillmock v. Weis Mkts., Inc., 385 F. App’x

267, 282 (4th Cir. 2010) (“There is no shortage of

incentives for consumers to bring individual suits

under” the FACTA amendments to the FCRA). And

indeed, the threat of individual FCRA claims

likewise is real. See, e.g., In re Trans Union Corp.

Privacy Litig., 741 F.3d 811, 814 (7th Cir. 2014)

(noting the more than 70,000 individual FCRA suits

filed against TransUnion in Texas state court).

Moreover, any instances of noncompliance

with the FCRA that are systemic and widespread—

the type of noncompliance that a class action would

undoubtedly address—are likely to trigger a lawsuit

by one of the many agencies charged with enforcing

FCRA’s regulations. State parens patriae lawsuits

could be filed as well. 15 U.S.C. § 1681s(c)(1)(B). As

noted (supra at 10-11), state and federal regulators

have extensive powers to enforce statutes like the

FCRA—and they are active in doing so.

At the same time, recognizing that Rule 68

offers can moot class claims does nothing to deter

individual claimants from obtaining relief to which

they are entitled. For starters, only offers of

complete relief can moot a representative plaintiffs

claims, so a Rule 68 offer is not available in any class

action cases where actual damages cannot be fully

accounted for pre-certification. Mooting a class

representative’s claims pre-certification also has no

preclusive effect on the claims of any other potential

claimant. Genesis Healthcare, 133 S. Ct. at 1531

(observing that while settlement may foreclose

putative plaintiffs from having their rights

vindicated in the named plaintiffs suit, they “remain

free to vindicate their rights in their own suits”).

Those individuals remain strongly incentivized to

bring their own FCRA lawsuits precisely because

their costs of litigating are fully recoverable. And

they also can pursue claims for injunctive relief that

will serve to put an end to the allegedly offending

practice for the benefit of those who elect not to sue.

Given the magnitude of the threat posed by

class and individual litigation, moreover, target

defendants, such as TransUnion, cannot afford to

stand pat. Of course, no company sets out to violate

the FCRA and expose itself to uncapped statutory

liability. But where a violation is uncovered,

ignoring it is not an option. On the contrary, the

most cost-effective strategy a company can employ is

an immediate, categorical fix to stem the threat of

continuing violations.

From TransUnion’s perspective, therefore,

there is no compelling need to declare that

uncertified consumer class actions must be exempted

from the mootness principles that a bona fide Rule

68 offer would otherwise evoke. This Court should

reverse the Ninth Circuit and so hold.

CONCLUSION

For the reasons discussed above, TransUnion

respectfully urges this Court to reverse the judgment

of the court of appeals.

Respectfully submitted,