Housing Clinic Files SCOTUS Amicus Brief

On March 17, 2021, the Foreclosure Track of the Housing Clinic at Yale Law School filed an amicus brief with the Supreme Court in the class action lawsuit TransUnion, LLC v. Ramirez in support of the consumer respondent.

In its brief, the Clinic argued that mismarking individuals as terrorists or drug dealers on their credit reports is a particularized injury to class members under Article III of the Constitution and the Fair Credit Reporting Act. The brief highlights how these marked credit reports almost entirely affected marginalized individuals, including people of color and noncitizens.

The Clinic filed its brief along with the Center for Consumer Law and Economic Justice at UC Berkeley and the progressive think tank Demos. The Supreme Court will hear argument in the case on March 30, 2021.

In 2008, TransUnion began marketing a product that matched potential consumers to the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) Specially Designated Nationals List (SDN List), a list of individuals understood to pose threats to national security and who are barred from doing business in the United States. The list contains names of terrorists and known drug traffickers, according to the brief.

The brief states that TransUnion contracted with a third party that utilized an error-prone methodology to match consumer names to OFAC SDN List entries. Consumers were matched on the basis of only their names and sometimes only their last names and first initials. As a result, individuals were systematically misidentified on their credit reports as being terrorists or drug dealers on the SDN list. TransUnion argues that a misplaced OFAC alert on a credit report does not in itself cause a real injury if that report was not sent to a prospective lender; therefore it argues that not all class members had Article III standing to sue.

“TransUnion claims that only a few of the mismarked credit reports were disseminated, but they only recorded how many were disseminated during a very short period of time. In reality, all of the mismarked credit reports were probably released at least twice, based on the rate of dissemination during the short period when TransUnion actually kept track,” said Morgan Savige ’22, a student in the clinic. “Even so, dissemination by itself is not the only harm.”

The clinic’s brief refutes that the incorrect OFAC alert is not a concrete injury by pointing to the severe, particularized, and unique harms that people of color and noncitizens may suffer as the direct result of an erroneous OFAC alert on their credit reports.

“I am glad our brief was able to bring these important topics to the attention of our Supreme Court. To say that a false accusation of terrorism or drug trafficking does not inherently constitute harm is blatantly dishonest,” said clinic member Nicole Cabanez ’22.

The clinic’s brief argues that people of color were uniquely likely to be misidentified under this system for two interwoven reasons. First, individuals from Latin American and Middle Eastern countries comprise a large percentage of the OFAC SDN list. The result is that individuals of either ethnicity are more likely than others to be misidentified on the basis of their names matching a name on the SDN List. Second, individuals of Hispanic and Arabic ethnicity are also more vulnerable to misidentification under a solely name-based matching system. These communities exhibit greater degrees of a phenomena known as “name clustering,” the degree to which names repeat themselves in a particular population, according to the clinic. For instance, the brief states that just 26 surnames covered a quarter of the Hispanic population in the 2012 census, with 16.3 percent of people reporting one of the top 10 names. These two factors together imply that people of color were uniquely vulnerable to being misidentified under this methodology.

The clinic also explained that these individuals were also vulnerable to particularized harms resulting from their position as common subjects of racial and ethnic stereotypes, harms that are unique to noncitizens in the process of adjusting or transitioning their status, or harms that may result from restricted access to traditional credit systems. The brief argues that a marked credit report could cause harm to victims’ health and achievement due to the risk of stereotype threat.

Housing Clinic members Cabanez and Savige worked on the brief, along with supervisors Nathan Baker Clinical Professor of Law J.L. Pottenger, Jr. ’75 and George W. and Sadella D. Crawford Visiting Clinical Lecturer in Law Jeff Gentes.

“I am so proud to be part of this effort. Morgan and Nicole brought their passion and academic rigor to bear on this brief, marshaling together both a slew of studies and their insight. I am especially proud because no other amici dealt with these important issues,” said Gentes.

The Housing Clinic, part of the Jerome N. Frank Legal Services Organization (LSO), is the hub for consumer law at the law school. Different tracks of the clinic fight foreclosures, defend evictions, and bring fair housing civil rights cases combatting economic and racial segregation.