SACREMENTO – TransUnion has been ordered to pay out approximately $60 million in damages after a California federal jury determined the credit-reporting company misidentified individuals as being on a federal watch list that includes potential terrorists and drug traffickers.

In the case of Ramirez v. TransUnion, the company was accused of violating provisions of the Fair Credit Reporting Act (FCRA) by not accurately providing information on consumers to lenders and other consumers. This resulted in a class-action lawsuit filed in 2012.

The final verdict was reached before a magistrate of the U.S. District Court for the Northern District of California.

According to Lexology and other reports on the verdict, the court held that TransUnion violated the FCRA by linking individuals to a list maintained by the U.S. Department of Treasury’s Office of Foreign Assets Control (OFAC) known as the Specially Designated Nationals and Blocked Persons List (SDN).

According to OFAC, the SDN list serves as a tool to complement the agency’s ability to levy financial sanctions on target individuals and countries.

“As part of its enforcement efforts, OFAC publishes a list of individuals and companies owned or controlled by, or acting for or on behalf of, targeted countries,” a description of the SDN list, published on OFAC’s website, states. It also lists individuals, groups, and entities, such as terrorists and narcotics traffickers designated under programs that are not country-specific. Collectively, such individuals and companies are called 'Specially Designated Nationals' or 'SDNs.' Their assets are blocked and U.S. persons are generally prohibited from dealing with them."

John Doherty, president of the Civil Justice Association of California (CJAC), told the Northern California Record that even if wrongdoing occurred, there needs to be a judicial balance.

“The courts are there for a reason,” he said. “It’s not that we want courts to go away. We just want courts to be fair and balanced. Of course, we are a little bit concerned that the judgment seems to be a little bit out there for the harm caused.”

Doherty mentioned that in cases like this, enforcement actions of all sorts shouldn’t be so scattered.

“There is this issue of multiple enforcement venues where the regulator levies a fine and people see that and sue to go after penalties and other damages,” he said. “I don’t have a message that says this is a problematic issue, but it does trouble us, in terms of the multiple venues and when the system can frequently penalize far in excess than the appropriate remedy for any harm caused.”

TransUnion offered a product to businesses that matched people to this list as a part of complete consumer reports that would be purchased by financial lenders and other firms and individuals who need access to such information.

According to the complaint, TransUnion’s alleged errors occurred when the leading plaintiff, Sergio L. Ramirez, was denied the ability to purchase a car by means of loan because a TransUnion consumer report indicated that he was a match to an individual found on the SDN list. This occurred in 2011. There are civil penalties that exceed $290,000 per transaction made for companies that conduct business with individuals, and other entities, found on the SDN list. Because of this, companies are given an incentive to avoid penalties and other regulatory actions by not doing business with these individuals.

Ramirez argued that TransUnion made no apparent effort to ensure accuracy in its consumer report on Ramirez. This became the case for several thousand other consumers, thus forming the class action against the firm.

A total of 8,185 people were members of the class action. Given the jury’s decision, each member of the class will be granted $984 in damages — per statutory requirements falling under the FCRA — with an additional $6,353 in punitive damages. 

After the verdict, TransUnion filed a motion July 19 to limit the damages awarded, arguing in part, that its income of $41 million at the time of the violations should be used as the benchmark for the award, instead of the statement read in court that identified the company as a "substantial contributor" to its parent company's $1.5 billion in shareholder equity. The motion seeks a ruling as a matter of law, or a retrial, or a remittance.

The judge has yet to rule on the motion.

In the case of Ramirez v. TransUnion, the plaintiff class was represented by attorneys from Anderson Ogilvie & Brewer LLP and Francis & Mailman PC, according to Law360. The same report indicates that counsel for TransUnion’s behalf came from lawyers from Strook & Strook & Lavan LLP and Sherman, Silverstein, Kohl, Rose & Podolsky.

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