On August 25, 2020 a federal judge in the U.S. District Court for the Southern District of New York certified a proposed class of consumers in the matter of McIntyre v. RealPage, Inc.[1] The Plaintiff’s proposed class included thousands of individuals whose consumer reports allegedly contained outdated eviction information. Defendant RealPage Inc. (“RealPage”), through its subsidiary On-Site, provides tenant screening services to landlords and property managers nationwide. RealPage advanced a number of arguments in its unsuccessful effort to oppose Plaintiff’s motion for class certification.
Background
The controversy sprang from multiple alleged inaccuracies in the consumer report that RealPage had prepared on Plaintiff when Plaintiff applied for housing in Philadelphia, PA. Plaintiff contended that the report RealPage prepared contained three separate inaccurate and/or out-of-date eviction proceedings. RealPage’s inclusion of this information on Plaintiff’s consumer report allegedly caused her to be rejected from the housing to which she had recently applied. According to Plaintiff, the first proceeding had been previously vacated over six months prior to the date Plaintiff’s report was generated. The second proceeding allegedly contained at least two separate inaccuracies, had been satisfied in full, and was out-of-date by approximately two and a half years as of the date the report was generated. The third proceeding concerned a complaint that had been withdrawn and, as of the date of Plaintiff’s report, was allegedly out-of-date by nearly six years. Plaintiff stated that documents reflecting the pertinent updates and accurate information concerning these proceedings were all filed on the respective publicly available case dockets “contemporaneously with their entry.”
According to Plaintiff, none of the eviction entries on her report contained any reference to satisfaction, vacatur, withdrawal, or otherwise indicated in any way that the proceedings had been resolved in a favorable manner. Plaintiff alleged that the out-of-date information contained in RealPage’s consumer reports was a result of the company’s sole reliance on aggregate, often inaccurate data that it purchases from LexisNexis (“Lexis”). Plaintiff contended that, rather than retrieving the actual underlying court records itself, RealPage purchased its eviction information from private third-party vendors. Plaintiff characterized this information as “merely a summary prepared by [RealPage’s] vendors that didn’t include all the information or the most up-to-date information available at courthouses or government offices where the records themselves are housed…” Plaintiff claimed that RealPage’s alleged exclusive reliance on this data was “willful and carried out in reckless disregard for consumers’ rights” as set forth under § 1681e(b) and 1681g(a) of the Fair Credit Reporting Act (“FCRA”).
In support of her claims that RealPage’s alleged sole reliance on Lexis’ data was reckless, Plaintiff pointed to how the “Big 3” credit reporting agencies terminated their regular collection of Lexis’ data following a regulatory investigation. This investigation concluded that the purchasing of “distilled, incomplete public records summaries” from Lexis “failed to meet minimum standards” expected of CRAs pursuant to the FCRA. Plaintiff argued that, while the Big 3 ceased using Lexis’ public records information in consumer reporting, many CRAs, including RealPage, continue to do so, and such practices represent an unjustifiably high risk of harm to consumers’ rights. Plaintiff suggested that Lexis “simply never bothered to spend the money to go back to the courts regularly” to review documents or obtain accurate source data. Plaintiff further contended that RealPage knew or should have known of the risk posed by its use of this type of data in generating consumer reports.
Dispute Statistics
Plaintiff bolstered its position with RealPage’s dispute statistics obtained through discovery in the litigation. Those statistics allegedly showed that out of 43,821 nationwide eviction disputes made by tenants between February 2017 and December 2019, 2,932 concerned “duplicates,” 19,393 had to be resolved fully in the consumers’ favor, and another 1,156 were resolved partially in the consumers’ favor. Taken together, Plaintiff argued that “over 50% of [RealPage’s nationwide eviction records] had to be corrected in whole or in part.” Plaintiff claimed that when limited disputes concerning Pennsylvania evictions RealPage’s error rate reached a staggering 88%.
Plaintiff Seeks Class Certification
Plaintiff moved for class certification, alleging that RealPage had acted willfully and in reckless disregard for its statutory duty under § 1681e(b). Because Plaintiff was alleging RealPage’s willful violations of the FCRA, it needed to demonstrate (1) inaccuracy in a consumer’s report and (2) a failure to follow reasonable procedures that is (3) knowing or reckless. A Plaintiff demonstrates that a CRA has acted recklessly when it shows a disregard for an unjustifiably high risk of harm that is either known or so obvious that it should be known. Thus, the court pointed out, “unlike with negligence claims, actual damages and causation are not elements of a willfulness claim.” With this backdrop, the court determined that RealPage’s records were sufficient to ascertain a class and to provide notice to an identifiable group” of similarly situated tenant applicants.
RealPage Opposes Class Certification
RealPage defended against class certification by arguing lack of “commonality” as required under Federal Rule of Civil Procedure 23. Specifically, RealPage argued that the proposed common questions of law and fact were “underinclusive and irrelevant” due to the individualized nature of generating consumer reports. Plaintiff replied by argued that that the common questions actually dealt with Defendant’s procedure to never obtain actual source data or docket information and to exclusively rely “without any audit” on public records vendors. The court determined that each of RealPage’s arguments against the various factors for class certification suffered from a fundamental misunderstanding of the elements of a willfulness claim. Ruling for the Plaintiff, the court held that the question concerned RealPage’s alleged “blanket reliance” on third party vendors to supply reports – was a question common to all proposed members.
RealPage advanced similar arguments in opposition to the Rule 23 “typicality” factor, suggesting that the individualized nature of class members’ claims rendered this element unsatisfiable. Plaintiff responded and the court agreed that RealPage again sought to “foist additional requirements” onto a FCRA willfulness claim in suggesting that individual analyses into causality and damages would be necessary. The court found that because Plaintiffs was seeking uniform statutory damages based on RealPage’s alleged willfulness, causation and actual damages were irrelevant. The court concluded that the issue typical to all class members’ claims was that RealPage used “the same vendor, LexisNexis, and accepted its reports at face value.”
Finally, in addressing the Rule 23 “predominance” and “superiority” requirements, RealPage doubled-down on its insistence that the individualized nature of the class members’ consumer reports and the information therein rendered class certification untenable. For instance, RealPage argued that a “highly-individualized review” of each report, the circumstances and timing of Lexis’ updates for each, and of the substantive content of each related court file would be required for every class member. The court rejected these arguments concluding that they “ignore Plaintiff’s theory of the case” – that RealPage uses “summary” eviction data from third parties and “does not prioritize adjudication updates.” Thus, the court found that each of the putative Plaintiffs’ success or failure depended on the same “core evidence and legal issues.”
Court Ultimately Sides with Plaintiff
The court analogized RealPage’s contentions to arguments made by the defendant in Feliciano v. CoreLogic Rental Property Solutions, LLC.[2] In that class action lawsuit the plaintiff alleged CoreLogic delayed in identifying and updating court records used in its consumer reports. The plaintiff alleged that such practices resulted in the CoreLogic’s issuing consumer reports containing inaccurately reported housing suits that had been resolved in the consumers’ favor. Like RealPage, CoreLogic argued that the “accuracy, timing and technique used to acquire…[the] data of each class member would require individualized class determinations.”
As in Feliciano, the McIntyre v. RealPage court rejected such arguments, holding that common evidence will be used to resolve the issues of law and fact. Plaintiff’s allegations contend that RealPage’s behavior is “systemic,” that is, that it manifests itself as a “practice or procedure” that consistently produces the same result – inaccurate consumer reports. Put simply, the court stated, “[w]hether Defendant’s blind acceptance of summary reports from its vendor…rises to the level of willful or reckless disregard for its duty…is the common issue.” The court concluded, that RealPage’s prospective liability did not turn on the “reasonableness of the errors” in the putative members’ reports, but on the “reasonableness of [its] collection practice, policy and procedure.”
The court rejected RealPage’s arguments that individualized inquiries (such as whether a particular report impacted a class member’s leasing outcome) would be necessary to establish causation and the amount of damages to which each class member would be entitled. The court reiterated that RealPage “conflates an FCRA…willfulness claim with a negligence claim.” As discussed supra, Plaintiffs need not demonstrate causation, and because Plaintiffs are seeking uniform statutory damages, analyses concerning actual damages are unnecessary.[3]
Rejecting RealPage’s final attempt to defeat certification of the nationwide class, the court declined to adopt the reasoning of Bristol-Myers Squibb[4], determining that RealPage’s argument that the court lacked personal jurisdiction over out-of-state class members was inapplicable. The court held that, (in agreement with other Third Circuit courts) Bristol-Myers Squibb’s limited holding regarding mass torts should not, absent binding precedent to the contrary, be expanded to apply to class actions.
Court Stays Case Pending Outcome of TransUnion v. Ramirez
RealPage’s fight is far from over. In fact, on February 17, 2021, the court stayed the case pending the outcome of the U.S. Supreme Court’s ruling in TransUnion v. Ramirez. [5] The issue in that case is whether Article III of the Constitution or Federal Rule of Civil Procedure 23 permits a damages class action where the vast majority of the class suffered no actual injury, let alone an injury anything like what the class representative suffered. If decided in TransUnion’s favor the decision would provide RealPage with a strong argument that Plaintiff’s “no injury” class should be decertified. Specifically, RealPage would argue that the court should not have certified the class without having determined whether each class member had suffered real and concrete harm due to inaccurate or out-of-date information in a report. For example, a consumer who qualified for an apartment despite an inaccuracy in their report could not be included in the class, especially if they were unaware of the inaccuracy.
PBSA’s Amicus Brief
The Professional Background Screening Association (PBSA) along with The Consumer Data Industry Association and The National Consumer Reporting Association filed an amicus brief in support of RealPage’s petition for appeal.[6] PBSA made excellent arguments against the court’s decision to certify the class which will likely be raised again if RealPage ultimately loses and appeals. PBSA argued that class treatment is not appropriate for claims brought under Section 1681e(b) of the FCRA, which requires consumer reporting agencies to follow reasonable procedures to assure maximum possible accuracy when reporting consumer information. An essential element to any Section 1681e(b) claim requires that the plaintiff (and, in a class case, every putative class member) show an actual inaccuracy on his or her consumer report. Thus, the very nature of Section 1681e(b) requires fact-intensive, individualized inquiries as to whether any particular report contained an inaccuracy and, if it did, whether such inaccuracy was the result of a failure by the defendant to follow reasonable procedures. PBSA argued that the district court glossed over these individualized issues and erroneously focused on the fact that RealPage utilized public records summaries purchased from Lexis.
PBSA argued that the potential impact of the district court’s decision to certify the class without considering the requisite individualized proof under Section 1681e(b) could result in a flood of new FCRA class action claims against background screeners. PBSA pointed out that the district court’s decision provided an unwarranted incentive for future litigants to attempt to turn any garden variety single plaintiff individual action into a class action.
[1] McIntyre v. RealPage, Inc., No. 18-3934, 2020 U.S. Dist. LEXIS 153885 (E.D. Pa. Aug. 25, 2020).
[2] 332 F.R.D. 98 (S.D.N.Y. 2019)
[3] Further, it is well-established that individualized inquiries concerning damages, particularly those involving statutory damages, do not undermine predominance. See In re Suboxone, 421 F. Supp. 3d 12, 65 (E.D. Pa. 2019); Soutter v. Equifax Info. Servs., LLC, 307 F.R.D. 183, 217 (E.D. Va. 2015).
[4] Bristol-Myers Squibb v. Superior Court of California, San Francisco County, 137 S. Ct. 1773, 1777-78 (2017).
[5] Trans Union LLC v. Sergio L. Ramirez, 951 F.3d 1008 (9th Cir. 2020), cert. granted in part, No. 20-297, 2020 WL 7366280 (U.S. Dec. 16, 2020).
[6] See, Document 7 in Case # 20-8035.