Review of TransUnion’s decision ordered by SCOTUS

The Supreme Court overturned a $ 9.7 million judgment against Rocket Mortgage, LLC (formerly Quicken Loans) and ordered the Fourth Circuit Court of Appeals to reconsider its decision in light of TransUnion LLC v. Ramirez (2021). Read on to find out more.

First of all, a little background. As a reminder, any party wishing to sue in federal court must have standing under Article III, which requires that a claimant be able to demonstrate: (1) factual prejudice; (2) the injury was caused by the conduct of the defendant; and (3) the damage can be expected to be remedied by a favorable court decision.

In TransUnion v. Ramirez, the Supreme Court reconsidered the question of what constitutes “de facto prejudice” within the meaning of Article III, five years after its important position in Spokeo, Inc. v. Robins, 136 S. Ct. 1540. In doing so, the Supreme Court held that “[o]Only plaintiffs concretely aggrieved by the statutory violation of a defendant have standing to seek damages against this private defendant in a federal court under Article III. (emphasis added). The Court reiterated that “Article III in order to act requires tangible harm even in the context of a violation of the law” and that it was not true that “a complainant automatically satisfies the harm requirement. indeed whenever a law grants a person a statutory right and purports to authorize that person to take legal action to assert that right. As the Court explained, “[a]n prejudice in law is not prejudice in fact. (emphasis added). The court’s opinion resolved a circuit split on whether an increased risk of future harm could constitute harm in fact sufficient to confer standing.

At the start of last year, the fourth circuit of Alig c. Quicken Loans Inc., 990 F.3d 782 (4th Cir. 2021) upheld the class certification of a district court and the entry of a summary judgment in favor of a class of plaintiffs of 2,769 West Virginia homeowners who have refinanced their mortgages with Rocket Mortgage. The plaintiffs alleged that the pressure tactics used by Rocket Mortgage and a valuation management company, Title Source, Inc., constituted breach of contract and unreasonable inducement under the West Virginia Consumer Credit and Protective Act. Specifically, the plaintiffs alleged that Rocket Mortgage and Title Source pressured appraisers to appraise the plaintiffs’ homes above fair market value.

In Alig, Rocket Mortgage argued that the plaintiffs lacked standing because they were not injured and instead benefited from obtaining the loans. The Fourth Circuit disagreed, arguing that the plaintiffs had paid for ratings of independent houses and instead received ratings tainted by the tactics of Rocket Mortgage and Title Source. This financial harm, according to the Fourth Circuit, “is actually a classic and paradigmatic form of harm.[.]This was sufficient for the purposes of Article III.

Rocket Mortgage last fall asked the Supreme Court to reconsider that decision, which resulted in the conditional certification of Fourth Circuit of a class of thousands of mortgage refinancing applicants and paved the way for them to recoup 3,500 $ each in statutory damages for their claims that the company illegally put estimates of the value of their homes on appraisal claim forms.

Rocket Mortgage argued in the Supreme Court that this “fundamentally unfair” ruling was inconsistent with its earlier ruling in Ramírez, which Rocket Mortgage said supported the proposition that all member of the group must be concretely harmed by an alleged violation of the law.

The Supreme Court granted this request on Monday. The Court ruled that “[t]Certiorari’s motion for writ is granted. The judgment is set aside and the case is returned to the United States Court of Appeals for the Fourth Circuit for further consideration in light of TransUnion LLC v. Ramirez. “No further analysis for this result was provided.

© Copyright 2022 Squire Patton Boggs (US) LLPNational Law Review, Volume XII, Number 11

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