Consumer protection – Fair Credit Reporting Act – Criminal history

Where a plaintiff has brought a complaint against a defendant a credit-reporting agency, the plaintiff’s claim under 15 U.S.C. §1681e(b) should not be dismissed, as the complaint plausibly claims (1) that the defendant’s tenant-screening report concerning the plaintiff was materially inaccurate because it contained records of his convictions but not a subsequent pardon, (2) that the defendant does not use “reasonable procedures to assure maximum possible accuracy” in its reports and (3) that the inaccuracies caused by the defendant’s failure to use reasonable procedures caused the plaintiff injury.

“This is an action challenging a credit-reporting agency’s use of an inaccurate criminal history in a tenant-screening report.

“In 2002, plaintiff Ramon Ortez, Jr., was convicted of several drug offenses under South Carolina law. He was sentenced to twelve years in prison. However, in 2021, he was pardoned of those crimes.

“In 2022, Ortez applied for housing at several apartment communities in Columbia, South Carolina. As a part of the application process, his prospective landlords requested and received tenant-screening reports from defendant RentGrow, Inc. RentGrow’s reports on Ortez contained records of his 2002 drug convictions, but not the subsequent pardon. His applications for housing were denied.

“Ortez has sued RentGrow and 10 unspecified defendants under the Fair Credit Reporting Act (‘FCRA’), 15 U.S.C. §1681 et seq., alleging that RentGrow failed to ‘use reasonable procedures to assure maximum possible accuracy’ in the reports, as the statute requires. 15 U.S.C. §1681e(b). The complaint also alleges that RentGrow and the 10 unspecified defendants failed to provide him with his complete file upon request, violating 15 U.S.C. §1681g(a). RentGrow has moved to dismiss the suit for failure to state a claim upon which relief can be granted. For the following reasons, the motion will be denied as to the §1681e claim and granted as to the §1681g claim. …

“Here, the complaint plausibly claims that the tenant-screening report was materially inaccurate. …

“To state a claim under §1681e(b), the complaint must also allege that the inaccuracy arose from the defendant’s failure to use reasonable procedures to ensure the accuracy of its reports. …

“Here, the complaint alleges sufficient facts to create a plausible inference that RentGrow does not use ‘reasonable procedures to assure maximum possible accuracy’ in its reports. 15 U.S.C. §1681e(b). According to the complaint, the plaintiff’s complete criminal history is available on South Carolina’s public criminal-history database, and is thus ‘easily verifiable.’ … The complaint also alleges that plaintiff’s criminal history in Broward County is similarly publicly available and verifiable, and that the record RentGrow reported to his prospective landlord was missing a final disposition. … Although other inferences are possible, those facts taken together support a plausible inference that RentGrow has not instituted reasonable procedures to ensure the accuracy of its reports, and that the failure was at least negligent. …

“Finally, to state a claim under §1681e(b), the complaint must allege that the inaccuracies caused by defendant’s failure to use reasonable procedures caused the plaintiff injury. Here, the complaint alleges that the inaccurate report caused the apartment communities to deny the plaintiff housing. … It further alleges that this denial of housing caused him lost earnings, emotional distress, and reputational damage. … It is certainly plausible that the plaintiff’s applications were rejected because of his serious criminal history. That is enough to plead an injury caused by the defendant’s alleged FCRA violation, even without a more detailed and specific account of his injuries. It is of course possible, as defendant argues, that the communities denied the applications for other reasons, or would have denied his applications even had they included his pardon. But at this stage, the court must ‘give the plaintiff the benefit of all reasonable inferences,’ and therefore the existence of alternative explanations do not undermine the plausibility of the complaint’s claim as a matter of law. …

“Accordingly, the complaint states a claim under §1681e(b) against RentGrow, and the motion to dismiss this count will be denied. …

“Here, the complaint does not allege a plausible violation of §1681(g). It alleges no facts stating or suggesting that plaintiff requested his file, and no details about how defendant responded to any request that might have happened. Instead, it simply alleges in conclusory terms that defendant ‘violated [§1681(g)] by failing to disclose [p]laintiff’s full file as requested including, but not limited, to all information in his file along with the sources of the information.’ … That is insufficient to ‘raise a right to relief above the speculative level,’ and therefore the motion to dismiss this claim will be granted. …”

Ortez RentGrow, Inc., et al. (Lawyers Weekly No. 02-468-24) (8 pages) (Saylor, C.J.) (Civil Action No. 24-10376-FDS) (Sept. 30, 2024).

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