Supreme Court Rejects Trans Union Appeal

The Supreme Court has refused to hear Trans Union’s arguments that sale of consumer information generated from credit data is protected by the first amendment. The decision marks the end in the decade-long fight between the Federal Trade Commission and the Chicago-based information bureau over interpretation of the Fair Credit Reporting Act.

Trans Union has not used data from its credit files to generate marketing lists in more than a year, and so the decision will not materially affect its current operations. But the decision by the court not to hear the case could pave the way for several class action lawsuits filed on behalf of consumers, and sets the stage for further inquiry into free-speech protections for commercial speech.

The court did not give a reason for refusing to hear the case. Based on an earlier Supreme Court decision, the 1994 Appeals Court ruling held that Dun & Bradstreet reports did not qualify as free speech. The reason was that the reports contained false information.

“It is questionable whether this precedent has any place in the context of truthful, nondefamatory speech,” Kennedy wrote. Neither the FTC nor the lower courts gave any indication that there was any incorrect information in Trans Union’s lists.

Kennedy also called the FTC’s decision to ban target marketing lists under the FCRA “nonsensical” because lists suitable for credit and insurance offers that involve prescreening are still acceptable. Prescreened offers, wrote Kennedy, entail “the disclosure of detailed credit performance information.”

He continued, “Release of this information is far more invasive of consumer privacy than release of the names and addresses contained in [Trans Union’s] target marketing lists.” By refusing to hear the case, the High Court allowed a 2001 appeals court decision against Trans Union to stand.

Kennedy noted that if that 2001 ruling is accepted by other courts, Trans Union could face statutory damage liability of up to $190 billion in the pending class action lawsuits, based on the FCRA’s provision allowing between $100 and $1,000 for each willful violation.

Most courts have discretion to accept the appeals court decision and to preclude further argument, or to allow Trans Union to fight the class action suits on a court-by-court basis.

“I don’t think any [of the class-action lawsuits] have been certified,” Clark Walter, Trans Union spokesperson said. If any are, “We will defend ourselves vigorously.”

“We have been out of the business of using individual level credit data for more than a year, but we still felt that it was important for us to pursue this case as long as possible,” Jan Davis, executive vice president at Trans Union said.

Trans Union recently debuted a new marketing database, which is compiled from non-credit sources, including public record homeowner information, self-reported data and census findings.

Beyond Trans Union’s fortunes, others see the decision as having a chilling effect on commercial free speech.

“I think the Trans Union position raised important questions about the extent to which congress and the FTC can regulate truthful [commercial] speech,” said Anne P. Fortney, a Washington, DC-based attorney with Lovells law firm.

Fortney represents the Consumer Data Industry Association, which filed a friend-of-the-court brief on behalf of Trans Union.

“To decide that information of this kind–people’s names and public facts–gets no first amendment protection reduces the reach of free speech in a way that undermines the marketplace of ideas,” said Lawrence H. Tribe, a constitutional law professor at Harvard University who served as counsel for Trans Union’s petition to the Supreme Court.

Tribe continued, “[Kennedy’s] dissent puts very powerfully the reasons why the case should have been heard. [Trans Union] will not go quietly into the good night. They have options in fighting off the class action suits.”

Tribe, who was called in to argue the case’s First Amendment ramifications, will not serve as counsel to Trans Union on the class action or other matters.