UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA ,I.nN 3 yjy
Deborah Wilson and Henrietta Holly,
on behalf of themselves and others
MEMORANDUM OF LAW IN OPPOSITION
Plaintiffs, TO DEFENDANTS’ MOTION FOR
SUMMARY JUDGMENT AND IN SUPPORT
vs. OF PLAINTIFFS MOTION FOR PARTIAL
Rental Research Services, Inc.,
a Minnesota Corporation,
Every year, Rental Research Services, Inc. (Rental Research) provides landlords with
reports on prospective tenants that can make or break a tenant’s chances of finding housing.
Inaccurate reports have caused individuals and their families to remain in temporary shelters or
in other unsuitable housing arrangements for extended periods. A number of Rental Research’s
practices violate federal and state law.
Defendant has filed a motion to dismiss all counts of the complaint under Rule 12(b)(6).
Defendant’s memorandum provides an incomplete and inaccurate description of the law as it
applies to tenant screening companies such as Rental Research. Because additional material is
added to the record this motion is properly a motion for summary judgment. Plaintiffs oppose
the defendant’s motion in all respects. Plaintiffs cross move for summary judgment on three of
the four issues raised by defendant’s motion for dismissal. Plaintiffs move for summary judgment
on the following issues:
1. The blanket release of any liability required by Rental Research as a precondition
for tenants viewing their records violates both federal and state law;
2. Defendant’s limitation of dispute statements to 100 words when defendant did not
assist in writing the statement violates federal law; each separate dispute is entitled
to a dispute statement; and
3. Defendant’s refusal to respond to complaints about errors contained in reports it
has ordered from other credit reporting agencies and assembled for sale to
subscribing landlords violates federal law.
Plaintiffs ask the court to hold that these practices are per se violations of Minnesota’s Tenant
Screening Act and the Fair Credit Reporting Act (FCRA) and should be permanently enjoined.
The fourth issue raised by defendant’s motion to dismiss deals with the practice of
reporting unlawful detainer proceedings based solely on the similarity of the name of the tenant
to the name of a defendant in the Minnesota district court unlawful detainer records. This
practice is referred to as reporting “possibles,” i.e. the unlawful detainer may or may not involve
the prospective tenant. Defendant’s motion to dismiss this count should also be denied. Plaintiffs
are not prepared to cross move for summary judgment on the issue of reporting “possibles” at
this time. Plaintiffs have not had any discovery in this case. It is anticipated that a motion for
summary judgment on this issue may be filed after Plaintiffs have obtained appropriate discovery.
Plaintiffs oppose Defendant’s motion because the facts demonstrate that Defendant’s
practices violate federal and state law. In the alternative, dismissal or summary judgment for
Defendant is premature because the record has not been developed. Plaintiffs should be
permitted time for discovery that will develop the record. Fed. R. Civ. P. 56(f).
1. Facts Related to Rental Research Operations
Rental Research Services, Inc. (Rental Research), a Minnesota Corporation, issues reports
to owners of rental property about prospective tenants. Lacking the opportunity to conduct
discovery the only information currently available to plaintiffs are reports and documents
provided to the named plaintiffs and information obtained from Rental Research’s own marketing
materials. These documents include a six page brochure describing reports provided by the
company to landlords, a letter from Paul Mikkelson “To the attention of owners and landlords”,
a sheet summarizing Rental Research’s various services, and a price list. A complete set of this
material is in the appendix.
Rental Research’s subscribing landlords, which include both large and small owners,
control more than 200,000 rental units in Minnesota. App. 1. Defendant gathers information
about tenants from Minnesota district court unlawful detainer files and other sources, and reports
the information to its subscribers. App. 3. Rental Research maintains extensive data bases on
Minnesota tenants. Id. Defendant furnishes subscribing landlords with its own application fomr
which is completed by prospective tenants when they contact the landlords about renting
apartments. App. 8.
Every subscriber is required to sign a subscriber service agreement. App. 9. Rental
Research advises each subscriber of the need to comply with the FCRA in the subscriber service
agreement. App. 10. The subscriber agreement contains an express acknowledgement of the
application of the FCRA: “Subscriber agrees to comply fully and faithfully with the provisions
of the Fair Credit Reporting Act. 15 U.S.C. 5 1681 et seq., as those provisions may be from time
to time amended.” App. 10.’
Rental Research provides a variety of services, some of which are not described in
Defendant’s memorandum and are relevant to this case. Subscribers are given a choice of
services. App. 11 and 12. Subscribers purchasing an “Instant Inquiry” report receive information
about a prospective tenant gathered by Rental Research from unlawful detainer records and other
sources, including Rental Research’s own “problem renter” database, nationwide credit reporting
agencies, and newspaper reports of criminal convictions and sentences. App. 3. It orders a credit
report from TRW and includes it in the report to the landlord. App. 13 and 14. When
performing an “Instant Inquiry,” defendant searches its data bases for information about the
applicant, and tells the landlord, via the telephone, about information found. Defendant then
mails or faxes a hard copy of the report to the subscriber the same day. App. 3.
Rental Research issues Instant Inquiry reports to landlords without verifying whether the
information contained in the report is accurate. App. 6. The Instant Inquiry produces a list of
unlawful detainers that were filed against individuals with the same or similar name as the
applicants, without verifying whether it was the applicant who was the defendant in the unlawful
detainer cases. App. 6. Instant Inquiry contains a statement warning the landlord that the court
cases may not relate to the individual. App. 6.
’ Defendant’s suggestion that the applicability of the FCRA is a possible issue is
without merit. Defendant memorandum fnl. Tenant screening reports are clearly covered by
FCRA. See also Cotto v. Jenney 721 F. Supp. 5 (D. Mass. 1989); Cisneros v. U.D. Registry,
Inc., 39 Cal. App. 4th 548, 46 Cal Rptr. 2d 233 ( Ct. App. 1995) and cases cited therein.
Many of the claimed practices of Rental Research are similar to those of U.D.R. and other
tenant screening companies. App. 97-106. See fn. 3.
Rental Research encourages landlords to accept or reject tenants based on its Instant
Inquiry reports. Its brochure states:
“In some situations the report may be positive enough for you to approve the applicant
without further information, or conditionally approve pending rental references and job
verification. In other situations the report may be negative enough for you to deny the
applicant without further information. If you need more information to make you
decision, you can order our Verified Completion Report (VCR) to finish the job.” App.
As stated in the brochure, defendant also provides to subscribers another service, a
“Verified Completion Report” or VCR. App. 3. The VCR is a continuation of the Instant
Inquiry. App. 3 and 7. “It includes investigating and verifying rental history, employment, and
bank references to complete the application report.” App. 7. (emphasis added.) Defendant states
that “Our average (verified completion report) investigation takes 24 to 48 hours with unique
exceptions that could take much less or much more time.” App. 16. The VCR reviews unlawful
detainers reported on an Instant Inquiry and verifies those actually related to the prospective
tenant, App. 3 and 7. “We not only verify information, we investigate and report only
confirmed information. With this report you will be in position to make an informed rental
decision. App. 7. ( emphasis added)
Tenants who wish to review their Rental Research files are required to sign a release and
hold harmless agreement. App. 17. It releases defendant from “any liability.” App. 17.
2. Facts Pertaining to Plaintiffs and the Class.
The correspondence between Ms. Wilson and Rental Research is in App. 18-20. The
Instant Inquiry listed numerous unlawful detainers for Ms. Wilson. App. 21-26. Ten of the 12
reported cases had nothing to do with Ms. Wilson. Ms. Wilson concedes that two of the
unlawful detainers are hers. The circumstances of these cases are described in her affidavit.
App. 27 and 28. Ms. Wilson was evicted in the first case for non-payment of rent. She did not
receive a prior notice to vacate prior to the unlawful detainer. She paid the full amount claimed
due after she left. The second unlawful detainer was settled. The spelling of Ms. Wilson’s name
on these court files was determined by the plaintiff in the unlawful detainer. Ms. Wilson had no
control over the spelling. App. 40 and 41.
Both Ms. Wilson and Ms. Holly asked Rental Research to verify the accuracy of
information. App. 18-20 and 29-3 1. Both were told that Rental Research would not do anything
with complaints about information reported. App. 13 and 14. Ms. Holly also disputed
information regarding the former contract for deed vendor’s claim that she still owed him money
after statutory cancellation. App. 29-3 1. Rental Research called the vendor a second time who
said she owed even more money than was claimed in the first contact. App. 32. Ms. Holly then
sent Renal Research a dispute statement, noting seven errors in her report. Without her
knowledge or approval Rental Research codified her statement, editing it to 100 words.
Reports that contain numerous “possible” unlawful detainer filings create serious problems
for tenants and the agencies attempting to help them. Waheedah Shabazz is a family advocate
and case manager in St. Stephen’s Housing Services Department in Minneapolis. App. 33a. She
has had experience with inaccurate tenant screening reports. Id. Ms. Shabazz reports that
inaccurate tenant screening reports have a significant impact on a person’s ability to secure
housing. App. 33b-35. Inaccurate reports cause a breakdown of the trust between St. Stephen’s
staff, the client and the potential landlord. App. 33b-34. Ms. Shabazz states: “In the end,
inaccurate tenant screening reports rob tenants of self-esteem. Every rejected apartment
application, even those based on inaccurate tenant screening reports, damages a homeless person’s
hope for the future. Tenants dogged by inaccurate reports will not find housing until they find
the landlord who is willing to go that extra mile to believe the report is false or give the tenant
time to fix the report, and finding that landlord takes patience and energy that many homeless
people do not possess.” App. 35. People who cannot correct reports quickly enough lose the
apartment and remain homeless. Id. Inaccurate tenant screening reports cause tenant to waste
limited dollars on rejected applications. Id.
Amy Lary White is an assistant program director at ELIM Transitional Housing. App.
36. Ms. White oversees a housing program that seeks to place families in permanent private
housing. App. 36. Ms. White has had experience with the difficulties caused by inaccurate
tenant screening reports, particularly the problems caused by the report of possibles using
common names. App. 36-39. Ms. White describes in detail the significant efforts that have to
be made to correct the erroneous impression created by inaccurate tenant screening reports. Id.
Susan Daigle, supervisor of the Hennepin County Housing Court has submitted an
affidavit describing the housing court and its record keeping. App. 40-50. The housing court
file is set up using the name as spelled by the landlord. App. 41. Paper records are only
retained at the housing court office for 18 months and then are moved to off-site storage. App.
41. Hennepin County sells on-line computer access to tenant screening companies. App. 41-42.
Ms. Daigle reports that the Housing Court receives complaints daily from tenants about
information provided to prospective landlords that they believe is inaccurate. This information
comes from tenant screening companies such as Rental Research, not the Housing Court. App.
I. Legal Standard
Defendants have filed a motion to dismiss under Rule 12(b)(6). Plaintiffs have submitted
affidavits in opposition to the motion to dismiss that include matters outside the pleadings. Rule
12(b)(6) provides that to the extent the court decides to consider matters outside the complaint
in ruling on a motion pursuant to Rule 12(b)(6), the motion shall be treated as one for summary
judgment and disposed of as provided in Rule 56. The affidavits submitted by plaintiffs convert
the defendant’s motion to dismiss on these issues to a motion for summary judgment. Hirrill v.
Merriweather, 629 F.2d 490 (8th Cir. 1980).
Defendant has objected to discovery while its motion to dismiss is pending. App. 18.
Although discovery (request for production of documents, request for admissions) was served
upon defendants prior to the removal of this case to federal court, no response has been made
to discovery. App. 19. Plaintiffs have cross moved for summary judgment on issues where the
parties do not dispute the facts. Plaintiffs have not moved for summary judgment on issue of
whether Rental Research’s practice of reporting possibles violates state and federal law.
Summary judgment is only appropriate on this issue after plaintiffs have had a fully opportunity
to conduct discovery. Dismissal prior to discovery would be premature. First Chicago
International v. Untied Exchange Co. Ltd., 836 F.2d 1375, 1381 (D.C. App. 1988).
To the extent that plaintiffs’ are opposing defendant’s converted motion to dismiss as a
defendant’s motion for summary judgment and are not filing their own motion for summary
judgment, plaintiffs as the party opposing the motion for summary judgment are entitled to have
all facts viewed in light most favorable to it and all reasonable inferences which may be drawn
from the facts. SlreZl v. U.S. 680 F.2d 545, cert denied 459 U.S. 989 (8th Cir. 1982). The
inference arises in connection with defendant’s motion regarding the reporting of “possibles.”
Plaintiffs are entitled to the inference that the report of possibles is inherently inaccurate to
misleading. For the three issues where plaintiffs have cross-moved for summary judgment the
legal question before the court is whether there are disputed material facts. ColEins v. Nugle, 892
F.2d 489 (6th Cir. 1989).
II. Statutory Framework
A. The FCRA Legislative History and Purpose
The principle federal statute involved in this litigation is the Fair Credit Reporting Act
(FCRA), 15 U.S.C. 9 1681-168t. The FCRA, enacted in 1971, regulates the activities of credit
reporting agencies, the users of reports, and provides rights to consumers affected by such
reports. Tenant reports compiled by tenant screening companies such as Rental Research are
consumer reports under the FCRA. Cotto v. Jenny, 721 F.Supp. 5 (D. Mass. 1989); Cisneros v.
U.D. Registry, Inc., 39 Cal. App. 4th 548, 560, 46 Cal Rptr. 2d 233 (1995).
There are two types of reporting that Congress sought to regulate through the FCRA. The
first is a consumer credit reporting service that furnishes information on the credit worthiness of
individuals to credit-grantors. 15 U.S.C. § 1981a(d). T he second is investigatory in nature and
prepares data files on the personal lives of individuals. 15 U.S.C. § 168 la(e). Only the first type
of report is relevant for this motion. Credit bureau reports are usually limited to a credit history
of an individual that includes information on existing credit obligations and payment performance
as well as public record information concerning suits, liens, outstanding judgments, marriage and
divorces. Hearings on S 823 before the Subcomm. of Financial Institutions of Senate Banking
and Currency Comm., 9lst Cong. 1st Sess. 91(1969).
The FCRA’s purpose is to “require that the consumer reporting agencies adopt reasonable
procedures for meeting the needs of commerce for consumer credit, personnel, insurance, and
other information in a manner which is fair and equitable to the consumer, with regard to the
confidentiality, accuracy, relevancy and proper utilization of such information.” 15 U.S.C.
§ 1681(b). (emphasis added) See also S. Rep. 139 9lst Cong. 2nd Sess. (1970). Sen. Proxmire,
the sponsor of the FCRA said that the purpose of the bill was first to correct the abuse of
inaccurate or misleading information. He described the problem as follows:
Perhaps the most serious problem in the credit reporting industry is the problem of
inaccurate or misleading information. There have been no definitive studies made of just
how accurate is the information in the files of credit reporting agencies. But even if it
is 99 percent accurate--and I doubt it is that good--the 1 percent inaccuracy represents
over a million people. While the credit industry might be satisfied with a l-percent error,
this is small comfort to the 1 million citizens whose reputations are unjustly maligned.
Moreover the composition of the 1 million is constantly shifting. Everyone is a potential
victim of an inaccurate credit report. If not today, then perhaps tomorrow. 115 Cong.
Rec. 2411 (1970). App. 52.
Credit bureaus such as Rental Research must comply with this mandate by following “reasonable
procedures to assure maximum possible accuracy” in the preparing of reports. § 1681(e)(b). In
furtherance of this goal, the Act provides certain consumer rights. “Any consumer reporting
agency or user of information which is negligent in failing to comply with any requirement
imposed under this subchapter which includes § 168 le(b)] with respect to any consumer is liable
to that consumer” for actual ( images and costs and attorney fees. 15 U.S.C. 5 16810. Any
consumer reporting agency or user of information that willfully fails to comply with any
requirement imposed under the subchapter is liable for actual damages, punitive damages, and
costs and attorney fees. 15 U.S.C. § 1681n.
Congress expressly decided not to extend any rule making authority to the Federal Trade
Commission (FTC) or any other agency under the FCRA. 115 Cong. Rec. 33411 (1969);
Hearings on S. 823, Subcommittee on Financial Institutions of the Senate Banking and Currency
Committee, 9lst Cong. 1st Sess. 2 (1969). However, the FTC has issued an official staff
commentary on FCRA. The Official Staff Commentary is not a rule or regulation. Although
the courts are not required to give it judicial deference, the Commentary is entitled to substantial
weight. Yonter v. Aetna Finance Co., 777 F. Supp. 490 (E. D. La. 1991). The Commentary was
promulgated after publication in the Federal Register with an opportunity for public comment.
The Commentary reflects the policy of the primary federal agency that enforces the FCRA. A
copy of the Commentary is included in App. 55-77.
B. Minnesota Tenant Screening Act.
In addition to the FCRA, the Minnesota Tenant Screening Act, MINN. STAT. 9 504.29 et
seq., adopted in 1989, also regulates Rental Research. Unlike the FCRA, the Minnesota Tenant
Screening Act deals exclusively with tenant screening services, a subset of the credit reporting
industry. The Minnesota Act provides that compliance with the FCRA shall be deemed
compliance with Minnesota Law. MINN. STAT. § 504.3 1. While the Minnesota Tenant Screening
Act is not as comprehensive as the FCRA, it does emphasize the importance of certain
obligations. There are no reported cases on the Minnesota Tenant Screening Act.
III. The release required by Defendant as a condition of viewing a tenant’s file violates
the FCRA and the Minnesota Tenant Screening Act.
Defendant argues that the FCRA (and by reference the Minnesota Tenant Screening Act)
allows it to require consumers to sign a release of liability as a precondition for consumers
viewing their reports. Def. Memorandum at 9-10. Defendant’s assertion that either law
authorizes it to use blanket release of liability language is wrong.
The facts are undisputed. The release used by Rental Research is titled “Individual file
disclosure release and hold harmless agreement.” App. 17. The release language reads in part,
“Reviewer agrees to release and hold Rental Research Services Inc. harmless from any liability
as a result of disclosure of my file with Rental Research Services, Inc.” (emphasis added). The
release recognizes no exceptions; it is a blanket release.
The FCRA provides only qualified immunity, not complete immunity, to Rental Research.
The blanket immunity sought in the release is not permitted by the FCRA. Congress gave
reporting agencies limited immunity in section 168 lb(e) to balance the FCRA’s requirements for
disclosure. See Watson v. Credit Bureau, Inc., 660 F. Supp. 48 (S.D. Miss. 1986); Hearings on
S. 823, Subcommittee on Financial Institutions of the Senate Banking and Currency Committee,
91st Cong. 1st Sess. at 104.
The waiver language of any liability used by Rental Research goes well beyond the
limited qualified immunity provided by the FCRA. The waiver denies the existence of any
possible liability under the FCRA. The FCRA explicitly authorizes actions by consumers for
willful noncompliance and negligent noncompliance. $j 1681n & o. The blanket release used
by defendant forces the consumer to waive all FCRA claims. It leaves the unmistakable and
wrong impression that the consumer has no legal recourse against Rental Research. It is
misleading and deceptive.
The qualified immunity granted by the FCRA is limited to specific causes of action. It
only applies to actions and proceedings in the nature of defamation, invasions of privacy and
negligence. 15 U.S.C. !j 1681h(e). There is no qualified immunity from liability for any of these
tort actions if the conduct involves malice. Id. Torts other than defamation, invasions of privacy
or negligence are still permitted under FCRA. Pulver v. Avco Fin. Services, 182 Cal App.3d 622,
227 Cal Rptr. 491 (1986).
The Federal Trade Commission obtained a consent order prohibiting a credit agency from
requiring consumers to sign a standard form release that includes a disclaimer of liability as a
precondition to viewing files. MIB Inc. 101 FTC 415 (1983). App. 78-90. The release language
that the FTC ordered MIB to stop using was much less sweeping. It read:
Except as to false information furnished with malice or willful intent to injure and except
as to liability for willful noncompliance or for negligent noncompliance as in the Federal
Fair Credit Reporting Act (FCRA), I release the MIB and its members and any person
who furnishes information to MIB or its members from any claims or suits based on any
information disclosed as a result of this request. 101 F.T.C. at 420. App. 82.
MIB, Inc., was required to stop requiring any release from consumers. Unlike MIB, the release
language used by Rental Research does not acknowledge the existence of any liability. It is even
more deceptive than that used by MIB, Inc.
The blanket release also violates FCRA and MTSA by imposing conditions for release
of information beyond those established by statute. Rental Research has a statutory obligation
under the FCIL4 and the Minnesota Tenant Screening Act. MINN. STAT. 9 504.30 to release files
once it has obtained proof of a consumer’s identification. It cannot impose additional
preconditions on disclosure. The FCRA states that an agency “shall” provide information and
cannot refuse to provide information until the consumer meets other preconditions created by the
agency. 15 U.S.C. § 1681g. Similarly, the Minnesota Tenant Screening Act states that the
agency “must make the disclosure” MINN. STAT. § 504.30 Subd. 1. A tenant screening agency
cannot require the signing of a release as a condition of disclosure.
Defendant’s requirement that tenants sign a blanket release as a precondition to the
required disclosure violates both the Minnesota Tenant Screening Act and the FCRA. Defendant
should be enjoined from requiring this release and should be required to notify consumers who
have signed the release of its lack of legal effect.
IV. Rental Research’s Practice of Limiting and Editing Disputed Statement Violates
FCRA & MTSA.
Defendant argues that when it summarized the Holly dispute statement it “assisted” Ms.
Holly thereby entitling Rental Research to limit her statement to 100 words. Defendant’s mem
at 13. The facts are not disputed. Defendant “codified” Ms. Holly’s dispute statement to 100
words. App. 91 and 92. She did not request Rental Research’s assistance in writing the dispute
statement. App. 29-3 1.
The Federal Act provides that a consumer may request a reporting agency to reinvestigate
information in order to determine the accuracy of a disputed item. 15 U.S.C. § 1871i(l). If the
reinvestigation does not resolve the dispute, the consumer may file a brief statement setting forth
the nature of the dispute. 15 U.S.C. § 1681i(b). If a reporting agency assists the consumer in
writing a clear summary of the dispute, the statement may be limited to one hundred words for
each disputed item of information. Id. Where the agency does not assist the consumer, there
is no explicit length of statement although the statute describes it as a “brief’ statement. It is a
FCRA violation if an agency represents that the statement must be limited to 100 words (unless
the agency assists the consumer). MIB, Inc. 101 FIG 415, 423 (1983)(consent decree.) The
dispute statement is important because it gives the consumer an opportunity to explain their side
and place users on notice of potential problems with the report. Hearing on S. 823,
Subcommittee on Financial Institutions of the Senate Banking and Currency Committee 11 a-b,
9lst Cong., 1st Sess. (1969). The Defendant can only limit a consumer’s dispute statement if
they “assist” the consumer. 15 U.S.C. § 1681i(b), MIB, Inc., 101 FTC 415, 423 (1983).
Defendants did not assist Ms. Holly but instead unilaterally rewrote her statement.
Ms. Holly disputed her contract for deed vendor’s assertion that she still owed him money
after statutory cancellation. App. 29-3 1.’ Defendant went back to the vendor. App. 32.
Verification requires Rental Research to confirm the accuracy of the information from some other
source. The practice of returning to only to the original source for verification is inconsistent
with the requirement of the FCRA. If there is not other authority to verify the contract for deed
vendors assertion that Ms. Holly still owed him money after cancellation of the contract for deed
Rental Research should have deleted the information as required by 1681i(a). Pinner v. Schmidt,
805 F. 2d 1258, 1262 (5th Cir. 1987).
Ms. Holly had not one but seven disputes with the record arising out of a cancellation of
contract for deed and an unlawful detainer and the claim of the vendor for additional money after
statutory cancellation and other issues. App. 29-31. She was entitled to submit a dispute
statement for each separate issue. Official Staff Commentary 9 61 l(13). Rental Research limited
Ms. Holly to one 100 word statement even though she disputed different problems.
2 Under Minnesota law once statutory cancellation has been effected all rights under
the contract are terminated including the vendor’s right to obtain judgment for installments
due. Zirinsky v. Sheehan, 413 F. 2d 481 ( 8th Cir. 1969) cert denied 396 U.S. 1059.
Unlike the FCRA, the Minnesota Tenant Screening Act might be read to limit the tenant
to only one 100 word statement irrespective of the existence of multiple disputes, though it can
also be read as allowing a 100 word statement for each dispute. Compare 15 U.S.C. 3 1681i(b)
with MINN. STAT. 5 504.30 Subd. 3. The Minnesota law also does not limit the tenant screening
service’s right to limit statement to 100 words to situations where the agency “provides the
consumer with assistance” 15 U.S.C. 5 1681i(b). To the extent the FCRA provides consumers
with greater protection regarding the right to submit dispute statement, its provisions take
precedent over inconsistent state law. 15 U.S.C. 3 1681t.
Defendant’s motion to dismiss this claim should be denied. Plaintiffs motion for summary
judgment of this claim should be granted. Defendant should be enjoined from limiting dispute
statements where the tenant disputes multiple items. Each item disputed is treated separately.
Defendants should further be enjoined from codifying or otherwise editing any statement and
limiting statements to 100 words unless the tenant has affirmatively requested that Rental
Research provide assistance in writing the statement.
V. Rental Research is required to reinvestigate reports prepared by TRW.
Defendant argues that since it does not prepare the TRW portion of the tenant report, it
is not a consumer reporting agency and therefore is not responsible for dealing with disputes.
Again, the facts are not in dispute. Both Ms. Wilson and Ms. Holly disputed several
items in their tenant screening reports, including items that were in the section of the report that
were ordered by Rental Research from TRW and included in the Instant Inquiry. For example,
Ms. Wilson pointed out accounts that were not hers, that a judgment listed as unpaid had been
satisfied, that an account over seven years old was being reported and that the report improperly
stated that her social security number had been changed. App. 19. These assertions raise
fundamental questions of accuracy. They are precisely the type of problems the FCRA is
designed to remedy. Rental Research informed both Ms. Wilson and Ms. Holly that any dispute
they had had to be with the source of the information, TRW. App. 13 and 14. It refused to
reinvestigate these reports. It is extremely inconvenient and time consuming for prospective
tenants to have to attempt to contact several agencies. This causes significant hardship. App.
Rental Research is obligated under the FCRA to reinvestigate any information it reports,
including third party reports, that it includes in tenant reports to landlords. The FCRA obligates
any credit reporting agency to respond to requests for verification. The FCRA definition of
“consumer reporting agency” includes agencies that “assemble” information, including
information from other credit report companies. 15 U.S.C. § 1681a(f). The Act does not
condition an agency’s response to requests for verification based on the source of the disputed
data. Under the FCRA, when defendant incorporated another agency’s report within their report,
the defendant assumed responsibility for the third party report. When a consumer conveys to
a consumer reporting agency a dispute over the completeness or accuracy of any item of
information in the consumer’s file, the agency must conduct a reinvestigation. 15 U.S.C.
5 1681i(a). The obligation to reinvestigate is not contingent on the source of the information.
As defendants note, the Commentary recognizes that one credit reporting company will
frequently ask another credit reporting company for information. FTC Official Staff Commentary
§ 604 Amended through Feb 11, 1992. Such a request creates an agency relationship between
the companies. Id. This agency relationship does not in anyway limit the requesting credit
reporting agency’s responsibility; it merely puts a legal label on the responsibility created by the
request for information.
Defendant’s arguments on this issue are without merit. Defendant has a contractual
relationship with TRW. It has the ability to transmit and receive data. It can easily forward the
customer dispute to TRW and ask for a response to the conflict. In this respect, Rental Research
is merely treating TRW as it would any other source of disputed information. Defendant can
not simply ignore its responsibility in the face of a consumer request for reinvestigation. It can
not pass off its responsibility merely because the source of the information Rental Research used
to assemble its report is another credit reporting agency.
VI. Defendants are not entitled to dismissal or summary judgment on the claim of
inaccurately reporting information under the FCRA or Minnesota law.
Plaintiff has both the threshold burden of showing an inaccuracy in the report and the
ultimate burden of proving the lack of reasonable care in the agency’s reporting procedures. See
Houston v. TRW Information Services, Inc., 707 F.Supp. 689, 693 (S.D.N.Y. 1989). Stated
another way, a consumer cannot successfully base a case upon an inaccuracy alone but “must
minimally present evidence from which a trier of fact can infer that the consumer reporting
agency failed to follow reasonable procedures . . .” Stewart v. Credit Bureau, Inc., 734 F.2d 47,
51 (D.C. Cir. 1984).
A. Rental Research’s Unlawful Detainer Reports are Not Accurate as to the
Subject of the Report.
Defendant asserts that it has fully and accurately disclosed the unlawful detainer
information as provided to it in Minnesota District court records based solely on the similarity
between the name of applicant and the name in the court record. Defendant argues that Plaintiffs
do not allege that the reported facts are inaccurate. Defendant’s Memorandum at 10. Defendant’s
characterization of Plaintiffs’ position is incorrect. Defendant’s reports are inaccurate.
It is apparent from Rental Research’s marketing information and its memorandum of law
that it is the practice of Rental Research to routinely include unlawful detainer actions that may
“possibly” relate to the individual. There can be no question that this practice frequently
produces inaccurate reports; that unlawful detainers are reported that do not apply to the subject
of the report. Rental Research’s own marketing materials implicitly acknowledge this fact, as
does the disclaimer language attached to the report. App. 6. Ms. Wilson’s report, listing 12
eviction cases when only two apply, is a prime example. App. 23-26. This inaccuracy is hardly
limited to Ms. Wilson, however, as both workers in the Hennepin’ County Court System and
social service agencies have attested to the widespread nature of inaccurate reports.
The only question is whether Rental Research can defend its practice by arguing that it
is sufficient if information is accurately recorded, even if the source of information as it was used
is inherently inaccurate.
Defendant suggests that the test for accuracy is whether the information can be found and
was copied verbatim from a source. Congress enacted the FCRA because it perceived a “need
to insure that consumer reporting agencies exercise their grave responsibilities with fairness,
impartiality, and a respect for the consumer’s right to privacy.” 15 U.S.C. § 1681 (a)(4)
(emphasis added). The fairness of any report to the consumer was a paramount concern and must
be considered in any question of the accuracy of the reported material. The FCRA does not
answer the question of whether accurate reporting of inaccurate, unverified public records is
sufficient. Neither the words “accuracy” nor “reasonable procedures” are defined in the FCRA
Where the statute is ambiguous it is appropriate to review legislative history. Blum v. Stenson,
465 U.S. 886, 896, 104 S.Ct. 1541, 1547, 79 L.Ed. 2d 891 (1984). There are two additional
sources of interpretation of the statute; the courts and FTC Official Staff Commentary as
amended though Feb 11, 1992. App. 55-77.
The legislative history of the FCRA demonstrates the that accuracy of information is
judged by its relationship to the consumer, not merely by a comparison to the source of the data.
Sen. Proxmire described the problems caused by confusion of people names as the number one
error when he described the FCRA. S. Rep. 139 91 Cong. 2nd Sess, (1970).
First, confusion with other persons: Each year, millions of Americans get married, get
divorced, change their name, their job or their residence. Millions of people have the
same or similar name. Therefore, it is no wonder that credit bureaus frequently confuse
one individual with another, sometimes with tragic results. Recently, a New York
assemblyman was denied credit for no apparent reason. Only after repeated calls to the
credit bureau did he learn that- the credit bureau had confused him with someone else.
A person less persistent might still have a falsely blemished record, particularly if he did
not happen to be an assemblyman.
It was recognized that one of the most common sources of inaccuracies in credit reports
are from public record information. Hearings on H.R 16340 before the Subcomm. on Consumer
Affairs of the House Cornm. on Banking and Currency, 9lst Cong., 2d Sess. 130 (1970). App.
107-l 13. Public record information is difficult to keep current because official records often do
not record the final disposition of legal matters, or the final dispositions may be unavailable for
inspection because of the particular nuances of judicial record keeping. Id. Agencies frequently
made reporting errors by confusing records of persons with the same name. Id.
Courts which have considered situations where the records of a third person have been
improperly included in the file of an unrelated individual have consistently held that the resulting
reports are “inaccurate.” Lowry v. Credit Bureau, Inc. of Georgia, 444 F. Supp. 541 (N.D. Ga.
1978); Thompson v. San Antonio Retail Merchants, 682 F. 2d 509 (5th Cir. 1982); Stevenson v.
TRW, Inc., 987 F. 2d 288, 291 (5th Cir. 1993); Morris v. Credit Bureau of Cincinnati, Inc., 563
F. Supp. 962, 965 (S. D. Ohio 1983); Jones v. Credit Bureau of Greater Garden City, Inc. 1989
W.L. 107747 (D.Kan.) See also Consumer Problems With Credit Reporting Bureaus: Hearings
before the Senate Subcomm. on Consumers of the Comm. on Trademark, Science & Technology
102 2d Cong. 2d Sess 2 (1992) at 26.
The trial court in Cisrzeros v. UDR, App. 93-96, held that the practice of reporting
possibles produces inaccurate reports and was unreasonable as a matter of law. App. 95.
Because UDR stopped reporting possibles it was not an issue on appeal. Cisneros, 39 Cal. App.
4th at 573, 46 Cal. Rptr. 2d at 250. Other courts have concluded that while the report was
inaccurate the reasonableness of the procedure was a question of fact. Cotto, 721 FSupp. at 7.
Both of these cases denied the tenant screening agency motion for summary judgment. Even if
this court declines at this time to follow the decision in Cisneros in finding that the practice of
linking by similar name only is per se unreasonable, defendant is not entitled to be granted a
motion to dismiss.
Like the tenant screening company in Cotto, Rental Research attempts to avoid the data
problem by warning landlords that its reports may not be accurate, providing in a disclaimer that.
. . App. 6. This disclaimer has no legal effect.
The defendant’s argument that the disclaimer contained in its report to the landlord -- to
the effect that the accuracy of the information was not guaranteed -- insulates it from
liability is unavailing. In enacting the FCRA, “Congress evinced its desire that agencies
assembling conventional credit reports be more than conduits of information.” Bryant v.
TRW, Inc., 689 F.2d 72, 78 (6th Cir. 1982). The very purpose of the Act -- to protect
individuals from the dissemination of incomplete or inaccurate information -- would be
thwarted if a reporting agency could slip off the hook with a boilerplate disclaimer.
Cotto, 721 F.Supp. at 7.
A credit reporting agency like Rental Research that uses a problematic database can not
ignore those problems or pass them off to the subscriber. The FCRA recognizes that there may
be problems inherent with particular data. If the reporting agency knows that the data base has
problems, it has to do more to verify the information, not less.
Reliability of sources. Whether a consumer reporting agency may rely on the accuracy
of information from a source depends on the circumstances. This section does not hold
a consumer reporting agency responsible where an item of information that it receives
from a source that it reasonably believes to be reputable appears credible on its face, and
is transcribed, stored and communicated as provided by that source. Requirements are
more stringent where the information furnished appears implausible or inconsistent, or
where procedures for furnishing it seem likely to result in inaccuracies, or where the
consumer reporting agency has had numerous problems regarding information from a
particular source. FTC Official Staff Commentary Section 607 (2)(D). App. 70.
The problems inherent in the unlawful detainer court records create a high probability that a
name search alone will result in inaccuracies. Faced with this problem defendant must do more
not less to insure accuracy. It is apparent that defendant already has the means to produce
accurate reports, because it does precisely that with its VCRs. Rental Research knows that
unverified information it obtains from court records inherently unreliable. Its disclaimer tells
landlords that it wants them to call Rental Research after the landlord verifies the information
themselves. App. 6. The procedure used to produce verified reports appears to be a more
reasonable process that produces more accurate information. App. 7. Further discovery is
required on this issue.
Unlike the FCRA, the Minnesota Tenant Screening Act does not require an agency to use
reasonable procedures to assure maximum possible accuracy. 15 U.S.C. Sec. 1681e(b). The
Minnesota law requires the report to be accurate. MINN. STAT. § 504.30 subd. 4. The
“reasonable procedures” defense does not appear to be available under Minnesota law. See
Carroll v. Exxon Co. U.S.A., 434 F. Supp. 557 (E. D. La. 1977).
The main provision of the Minnesota Tenant Screening Act requires tenant screening
services to publish all relevant information concerning an individual in an unlawful detainer
action. MINN. STAT. § 504.30 Subd. 4. The last sentence of MINN. STAT. § 504.30 Subd. 4
provides tenant screening companies with additional immunity from claims “if the tenant
screening service reports complete and accurate information as provided by the court.” Read
out of context this sentence might be interpreted to mean that a tenant screening agency can
report anything so long as the information is accurately copied from the court record. This
analysis ignores the preceding sentences which require tenant screening companies to convey
information that accurately relates to the individual who is the subject of the report, not all
individuals with similar names. The liability limitation in Subdivision 4 relieves tenant screening
agencies from any responsibility only for errors that may exist in court records. It does not
relieve the agency of the responsibility to insure that the court records reported actually relate
to the individual.
B. Even if Rental Research’s Unlawful Detainer Reports Are Technically
Accurate, they are still Misleading, In Violation of FCRA.
Defendant argues that its reports are technically accurate and, because of its disclaimer,
technical accuracy is all that is required. Defendant cites a number of cases dealing with reports
that were technically accurate but misleading. The cases cited by Defendant such as Todd v.
Associated Credit Bureau Services, Inc., 451 F. Supp 447 (E.D.Pa. 1997), afsd mem. 578 F. 2d
1376 (3rd Cir. 1978), cert. den’d, 439 U.S. 1068 (1979) Grant v. TRW, 789 F. Supp. 690 (D.
Md. 1992) and Boothe v. TRW Credit Data, 768 F. Supp. 434 (S.D. N.Y. 1991) are not on point
because in each of those cases the court found that the information in the report was in fact
accurate. Bryant v. TRW, Inc., 487 F. Supp. 1234,124O aff. 689 F. 2d. 72,77 (6th Cir. 1982).
In contrast, the reports here are inaccurate.
Other courts have held that a report which is technically accurate but still misleading
violates FCR4. Congress did not limit the Act’s mandate to reasonable procedures to assure only
technical accuracy; to the contrary, the Act requires reasonable procedures to assure “maximum
accuracy.” The Act’s self-stated purpose is “to require that consumer reporting agencies adopt
reasonable procedures for meeting the needs of commerce for consumer credit . . . in a manner
which is fair and equitable to the consumer, with regard to the confidentiality, accuracy,
relevancy, and proper utilization of such information,” 15 U.S.C. 3 1681e(b). Certainly reports
containing factually correct information that nonetheless mislead their readers are neither
maximally accurate nor fair to the consumer who is the subject of the reports. Koropoulos v.
Credit Bureau, Inc. 734 F. 2d 37 (1984). See also Annotation, Requirement ofSec.607(b) of Fair
Credit Reporting Act (15 U.S.C. § 1681e(b)) That Credit Bureaus Follow “Reasonable
Procedures to Assure MLzximuw Possible Accuracy, 81 A.L.R. Fed. 207 (1987). It does not
relieve the agency of the responsibility for ensuring that it has first appropriately identified court
records are in fact related to the individual who is the subject of the report.
C. Defendant Has Failed to Use Reasonable Procedures in Assembling its
The FCRA requires agencies to follow reasonable procedures to assure maximum possible
accuracy. 15 U.S.C. § 1681e(b). This Court should take into account the competing interests
of consumers, report users, and credit reporting agencies in determining which procedures are
reasonable. Three criteria must be balanced:
1. The probability that the procedure would improve the accuracy of the credit
2. The magnitude of the injury borne by the consumer if the procedure is not
adopted and inaccuracies result; and
3. The effect that the procedure would have on credit reporting agencies and their
Alexander v. Morre & Associates, Inc., 533 F.Supp. 948, 952 (D. Hawaii 1982).
A brief review of these criteria, even prior to full development of the record, demonstrates
that defendant cannot establish, as a matter of law, that it uses reasonable procedures to assure
maximum possible accuracy. As to the first factor, we know there is an additional verification
procedure available to Rental Research customers which would greatly improve accuracy: the
verified credit report (VCR) which Rental Research already offers to their customers. There may
be other such procedures as well which will become apparent through discovery. The second
factor involves the magnitude of the injury if additional verification is not employed. The
widespread and severe nature of the harm has already been amply demonstrated, through Rental
Research’s own materials, plaintiff Wilson’s experience, and the experiences of staff in both the
Hem-repin County Court system and social service agencies.
The final factor concerns the effects of additional procedures imposed on credit reporting
agencies if additional verification is required. The problem of combining data using similar
names is not unique to the tenant screening companies. Unlike defendant, mainstream credit
reporting agencies avoid the problems of inaccuracy by name only by using “very elaborate
matching algorithms” that enable credit reporting companies to match names that are similar or
social security numbers that are close but not identical. 1992 hearing at 37 (testimony of Walter
Kurth, representative of Associated Credit Bureaus, Inc.) Matching algorithms avoid creating
several different files for the same person or placing information in the wrong person’s file. Id.
“For example, if Richard M. Nixon and Richard Milhous Nixon are not mutched and merged,
then a new file will be created for every possible permutation of that name.” Rameden “When
the Database Is Wrong. Do Consumers Have Any Effective Remedies Against Credit Reporting
Agencies or Information Providers?” 100 Commercial Law Journal 390, 398 (1995).
While the Act does not require
aware of steps it can take to improve the accuracy of its reports at a reasonable cost it must take
such steps. FTC Official Staff Commentary 9 607 item 3B. App. 281. Rental Research charges
only $14.00 to produce a verified report. App. 11. Defendant has amply reason to suspect the
accuracy of reports containing “possibles.” It is unreasonable for Rental Research to continue
to knowingly report inaccurate material. Inaccurate reports cause tremendous harm; accurate
reports are needed. The reasonableness of Rental Research procedures clearly is not an issue
appropriate for dismissal or summary judgment. See Cotto, supra at 7.
Defendant’s motion to dismiss should be converted to a motion for summary judgment.
Defendant’s motion should be denied. Plaintiffs’ cross motion for partial summary judgment on
the issues of the use of the release of liability, the improper limitation of dispute statements and
Rental Research responsibility for reinvestigating third party reports they incorporate, should be
Dated: LAW OFFICES OF THE LEGAL AID
Attorney Registration No. 89357
2507 Fremont Avenue North
Minneapolis, MN 554 11
Telephone: (612) 588-2099
Timothy L. Thompson
Attorney Registration No. 109447
430 First Avenue North, Suite 300
Minneapolis Minnesota 55401
Telephone: (612) 332-1441
ATTORNEYS FOR PLAINTIFFS