Renters Settle Class Action Over Outdated Credit Reports

Renters Settle Class Action Over Outdated Credit Reports
by Gavin Broady
Law360, New York (October 25, 2012, 2:34 PM ET)

A housing consumer credit service agreed Wednesday to pay more than $1 million to settle a nationwide class action brought in New York by jilted renters claiming it violated the Fair Credit Reporting Act by reporting outdated court judgments to landlords.

On-Site Manager Inc. and lead plaintiff Dawn Massey submitted a class action settlement agreement Wednesday detailing a deal in which On-Site Manager Inc. would establish a nearly $1.1 million fund that would distribute $150 to each of the 7,261 class members who say the company violated the Fair Credit Reporting Act by reporting civil judgments and records of arrest that either were more than seven years old or had surpassed the statute of limitations.

“This settlement agreement is intended by the settling parties to fully, finally and forever resolve, discharge and settle on behalf of the entire class the released claims,” the motion said. “The settling parties have engaged in extensive arms-length settlement negotiations with the assistance of the court, and have determined that the terms of this settlement agreement constitute a fair and reasonable compromise.”

The settling class represents all persons subject to a consumer report within two years prior to the June 2011 initiation of the action that included either outdated civil action records filed anywhere in the country that did not result in a judgment; that were filed in Arizona, Pennsylvania, Nevada and Mississippi and resulted in an eviction judgment; or were filed in New York and resulted in an eviction judgment with no monetary award, according to the motion.

On-Site also agreed to pay up to $405,000 in attorneys' fees to class counsel Fishman & Mallon LLP as well as a $15,000 incentive award paid to Massey, according to the motion.

The suit stems from a New York eviction proceeding launched against Massey in 2002, of which she was unaware because she had already moved out of the apartment to which the notice was mailed. As a result, default judgment was entered against her.

More than eight years later, Massey says she sought to rent a Queens, N.Y., apartment, but the management company rejected her application and advised that it had done so because she had received a “decline” recommendation from On-Site in a report that noted the outdated eviction judgment.

The FCRA prohibits consumer reporting agencies from reporting civil judgments and records of arrest that either are more than seven years old or have surpassed the statute of limitations, whichever is longer.

In certifying the class in August, U.S. District Judge Brian M. Cogan excluded plaintiffs who had received monetary judgments in New York from the class, as these judgments were good for 20 years under New York law and thus had been properly reported under the FCRA.

On-Site generates approximately 60,000 reports per month for landlords on criteria such as financial status and litigation history, ultimately recommending that applicants be approved, declined or approved with conditions, according to the ruling.

While On-Site says it has made efforts to limit information culled from housing court histories to those less than seven years old, it conceded that in January 2011 it became aware of a software flaw that allowed it to report outdated claims, a flaw it claims to have fixed by August 2011, according to the ruling.

Representatives for the parties were unavailable for comment Friday.

Massey is represented by James B. Fishman and Kevin Christopher Mallon of Fishman & Mallon LLP.

On-Site is represented by Brett A. Scher of Kaufman Dolowich Voluck & Gonzo LLP.

The case is Massey v. On-Site Manager Inc., case number 1:11-cv-02612, in the U.S. District Court for the Eastern District of New York.

--Editing by Rebecca Flanagan