The following is a case update written by the Hon. Meredith Jury (U.S. Bankruptcy Judge, C.D. CA., Ret.), analyzing a recent decision of interest:
The United States Court of Appeals for the Third Circuit (the Circuit) recently vacated and remanded a denied class certification motion pertaining to consumer requests for disclosures under the Fair Credit Reporting Act. In doing so, the Circuit affirmed that the plaintiffs had Article III standing, but vacated the portions of the district court rulings which found insufficient predominance and superiority to certify the class because that court misread the requirements for disclosures to consumers provided by § 1681g of the FCRA. Kelly v RealPage, Inc., 2022 WL 3642113 (3rd Cir. August 24, 2022).
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Appellants Kevin Kelly and Karriem Bey’s rental applications were denied based on inaccurate consumer reports generated by a Consumer Reporting Agency (CRA), RealPage, Inc., which specializes in providing property managers with consumer reports, called “Rental Reports,” to help them evaluate their prospective tenants. RealPage collected public-record information, including criminal records and eviction filings, from third-party vendors and used it to compile the reports. RealPage would not correct the reports at Appellants’ request unless they obtained proof of the error from its sources, but it would not disclose those sources despite requests for disclosures from Appellants. Because the inaccurate reports caused each Appellant problems in obtaining rental housing, they sued RealPage in district court, claiming it violated its obligation under the FCRA to disclose “all information in the consumer’s file upon request” and “[t]he sources of th[at]information,” as required by § 1681g(a). They also requested certification of a class of consumers with similar disclosure claims.
After finding that Appellants had Article III standing because RealPage’s failure to disclose source information was cognizable as an “informational injury” that conferred standing on Appellants under Spokeo, Inc. v Robins, 578 U.S. 330 (2016), the district court denied class certification because it determined that the general class for which certification was sought was overbroad since it included both direct requests for reports from potential class members as well as indirect requests from consumers, made when those consumers received courtesy copies of the property managers’ Rental Reports. It also ruled that § 1681g disclosures were not required because Appellants requested to see their “consumer reports,” not their “files” as designated in § 1681(a).
Appellants appealed this ruling to the Circuit, which affirmed they had Article III standing but also affirmed that the general class was overbroad because it included indirect requests which did not compel full disclosures. However, it concluded that a subclass of direct requesters could be carved out for certification. Then, significantly, the Circuit reversed the denial based on the consumers requesting “reports” rather than “files.” The Circuit also reversed the district court’s erroneous findings regarding class ascertainability, a ruling which this review will not cover.
RealPage challenged the Article III standing issue because of the subsequent Supreme Court ruling on the issue in TransUnion LLC v Ramirez, 141 S. Ct. 2190 (2021). The Circuit rejected the assertion that TransUnion affected these Appellants’ standing because the Supreme Court there recognized that an “informational injury,” where a plaintiff alleges that she “failed to receive…information” to which she is legally entitled, is sufficiently concrete to confer standing. Id. at 2202, 2214. This pronouncement – along with the fact the Appellants had alleged an injury in fact because the failure to disclose the sources made it impossible for them to prove the inaccuracy of the sources’ reports, leading to the use of the inaccurate reports to deny their rental applications – conferred Article III standing on them.
The Circuit also agreed with the district court that the general class was overbroad because it included not only consumers who made direct requests for their reports to RealPage but also consumers who had received courtesy copies of their reports from the rental managers and had indirectly sought their reports as a result of those courtesy copies. It made a distinction between direct requests, which were definitively covered by § 1681g, and indirect requests, which the Circuit concluded were not covered by § 1681g, a ruling of first impression by the Circuit. However, because the Appellants had sought certification of a subclass, which would include only those making direct requests, the Circuit vacated the denial as to that subclass.
The district court had also found a lack of predominance because the purported class included consumers who had made a direct request for their “consumer reports,” as well as those whose direct request was for their “files.” Since the language in § 1681g required CRAs to disclose “all information in the consumer’s file at the time of the request,” the district court concluded the word “file” was critical. The Circuit rejected that there was a material difference in such requests. Although it recognized that the terms were defined differently in the FCRA, the Circuit concluded that “the defining characteristic of § 1681g is not whether the consumer uses the word ‘file’ or ‘consumer report,’ or even ‘records’ or ‘information’; it is that the consumer is the one who makes the request. As a matter of common sense, a consumer’s request for ‘my consumer report’ effectively requests all the information the CRA is authorized to disclose under the statute, and under § 1681g, that includes among other things, all of the information in the consumer’s file and the sources of that information.”
Reaching that conclusion, the Circuit vacated the denial of class certification based on predominance and superiority and remanded for further considerations.
The Third Circuit recognized the purpose behind the enactment of the FCRA and saw this case as an opportunity to support the policies. Here, that was not hard to do, at least for Appellants and a presumptive class that had similar experiences with RealPage and had made direct requests for disclosures. Their rental applications had been denied based on erroneous information in the reports, yet they were thwarted in their efforts to obtain the source information which was critical to their ability to challenge and correct the reports. Moreover, these parties were able to show a concrete injury as result of the disclosure failures. In addition, dancing on the head of a pin to deny them a remedy for asking for reports rather than files was antithetical to the remedies which the FCRA was enacted to protect. An important distinction for those who practice in the area of class certification under FCRA, however, is that disclosures required from an indirect request as opposed to a direct request are not the same.
This review was written by the Hon. Meredith Jury (U.S. Bankruptcy Judge, C.D. CA., Ret.), a member of the ad hoc group. Thomson Reuters holds the copyright to these materials and has permitted the Insolvency Law Committee to reprint them. This material may not be further transmitted without the consent of Thomson Reuters.