Scott E. Mollen

Landlord-Tenant—Plaintiff's Putative Class Action Alleged Credit Reporting Agency Violated Federal Fair Credit Reporting Act and NYS Fair Credit Reporting Act—Failing to Insure Accuracy of Tenant Data Before Selling Tenant Data to Landlords—Court Certified a Class

A plaintiff, on behalf of herself and other similarly situated, filed an action against a defendant, alleging violations of the Fair Credit Reporting Act (FCRA), 15 U.S.C § 1681 et seq., and under the New York Fair Credit Reporting Act (NYFCRA), General Business Law (GBL), Art. 25, §380 et seq. The plaintiff alleged that the defendant failed to "insure the accuracy of bulk tenant data before selling the data and resulting reports to prospective landlords, who rely on them to assess and screen potential clients." Plaintiff contended that "because of delays and deficient practices in collecting and updating the status of New York Housing Court (Housing Court) records reported to landlords, the defendant inaccurately reported that housing suits against tenants were ongoing, when in fact the suits had been favorably resolved in favor of the tenant." The plaintiff sought statutory and putative damages, plus legal fees.

The plaintiff had moved for class certification. The proposed class included "all persons who within two years prior to the commencement of this action (1) were the subject of a credit report prepared by (defendant); (2) prior to the issuance of the credit report, were a party in a Housing Court proceeding filed in New York State court, which had a disposition of dismissed, discontinued, or withdrawn; and (3) the (defendant's) credit report referenced the Housing Court proceeding but failed to include such disposition." The court granted the plaintiff's motion to certify class.

One source of the defendant's data consists of purchased electronic records from the NYS Office of Court Administration (OCA), relating to Housing Court proceedings, including proceedings based on nonpayment of rent and holdovers following termination of tenancy. The defendant described the collection as a "manual process, in which records are individually obtained by (defendant's) researchers and then updated for six months following collection."

Given the high volume of court records and technological limitations of "public access computers, defendant allegedly struggled to maintain current records." Housing Court cases are voluminous. In one month, 8,275 cases were filed. The data collection process was onerous, given "limited numbers of terminals, competition for access with other terminal users, terminal service outages, general unavailability of paper records, and delayed access to off-site paper record storage." The defendant's researchers "were often unable to stay current with respect to collection of newly-filed…housing court actions." In June 2017, the defendant started using "nationwide housing court data supplied by non-party LexisNexis Risk Data Management, Inc. (LexisNexis)."

The plaintiff asserted, inter alia that numerous Housing Court proceedings had been improperly reported as active, notwithstanding that the proceedings had been "dismissed, discontinued, withdrawn, or otherwise resolved favorably to the tenant." Plaintiff claimed that based on initial discovery, there are at least 2,600 potential class members.

The court explained that pursuant to Fed. R. Civ. P. 23(a), members of a class may bring suit as a class if "(1) the class is so numerous that joinder of all members is impracticable; (2) there are questions of law or fact common to the class; (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and (4) the representative parties will fairly and adequately protect the interests of the class."

The court reviewed the provisions of the FCRA and GBL §380-j(e). The FCRA establishes a duty that "whenever a consumer reporting agency prepares a consumer report it shall follow reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom the report relates." The GBL provides that "consumer reporting agencies shall maintain reasonable procedures designed to assure maximum possible accuracy of the information concerning the individual about whom the report relates" and that "every consumer or reporting agency shall maintain reasonable procedures designed to avoid violations of…this article…."

The court found that a plaintiff had suffered a "concrete and particularized injury and has standing to assert her claims" and that other members of the proposed class also had standing. The court also found that the "numerosity" requirement that the "number of class members is sufficiently large so that joinder of all members would make litigation needlessly complicated and inefficient" had been met.

The court further stated that the complaint raised "questions of law or fact common to the class." The court noted that "even a single common question of law or fact may suffice to satisfy the commonality requirement." Here there were a "number of common questions," including whether the defendant "maintained a uniform practice of publishing inaccurate Housing Court disposition statuses; whether such inaccurate reporting violates the FCRA and NYFCRA; whether the defendant followed reasonable procedures to ensure the accuracy of its records; whether the alleged conduct was willful; the appropriate amount of statutory damages; and the possible award of punitive damages."

The court rejected the defendant's argument that several individual issues preclude class certification. The defendant argued that individual issues included "variations in the timing of data," the "number of updates or audits to the file," "case-specific barriers, to information updates, such us the loss of terminal access;" and "variation in procedures adopted by different data collectors and vendors, including (defendant), LexisNexis" and a LexisNexis subcontractor. The court observed that all of the information resources were derived from the same Housing Court sources and the issues "ultimately address a single common uniform inquiry: whether defendant's information collection procedures were sufficient and reasonable." Thus, the court held that the commonality requirement was satisfied by the proposed class.

The court then found that the claims or defenses of the represented parties were "typical of the claims or defenses of the class." Additionally, it found that class counsel was qualified and class members did not have "antagonistic interests to one another." It also held that the proposed classes were "sufficiently cohesive to warrant adjudication by representation" and that the "common issues predominate individual issues."

The defendant asserted that individual issues, including the "accuracy of the individual reports and the willfulness of (defendant)—predominate." The defendant also argued that it's "methods have varied over time, creating an individualized question of reasonableness in each case." The court found that such arguments were not "persuasive." The court explained that to the extent that the reports' accuracy includes "differentiated determinations" present "straightforward issues apparent on the basis of documentary evidence." The court further stated that the extent that defendant "would seek to preemptively litigate any and all possible defenses, and the reasonableness of (defendant's) information aggregation procedures, these are merits issues not suited to class certification inquiry."

The court then held that a class action "represents a superior method of resolving" the subject controversary. It noted that use of the class action "will enable members of the class to prosecute claims even for relatively modest statutory damages." Moreover, the court held that the class is "ascertainable," i.e. the class is "sufficiently definite so that it is administratively feasible for the court to determine whether a particular individual is a member."

Contrary to the defendant's arguments, the plaintiff did not argue that the "records available at Housing Court public access terminals are intrinsically unreliable." The plaintiff alleged that the defendant had failed to develop "suitable procedures to access and update the information" and that is the "basis of the plaintiff's claim." The court opined that the "proposed class definitions fully encompasses the individuals identified in the list, and the words indicating the disposition of their cases." Thus, the court believed that the "identity of the prospective class members is…sufficiently definite."

Accordingly, the court held that the proposed class met the requirement for ascertainability. Thus, the court granted the motion to certify the class.

Feliciano v. CoreLogic Rental Property Solutions LLC, U.S. District Court, S.D.N.Y., Case No. 17 Civ. 5507, decided July 29, 2019, Hellerstein, J.

Scott E. Mollen is a partner at Herrick, Feinstein.