Kelly v. RealPage Inc.

47 F.4th 202

Kevin Joseph KELLY; Karriem Bey, On behalf of themselves and all others similarly situated, Appellants

v.REALPAGE INC., d/b/a OnSite; RP On Site, LLC.

No. 21-1672

United States Court of Appeals, Third Circuit.

Argued December 15, 2021

Opinion Filed: August 24, 2022

Lauren K.W. Brennan, James A. Francis, John Soumilas [ARGUED], Francis Mailman Soumilas, 1600 Market Street, Suite 2510, Philadelphia, PA 19103, Counsel for Appellants

Ronald I. Raether, Jr., Troutman Pepper, 5 Park Plaza, Suite 1400, Irvine, CA 92614, Misha Tseytlin [ARGUED], Troutman Pepper, 227 West Monroe Street, Suite 3900, Chicago, IL 60606, Counsel for Appellees

Mark W. Mosier, Covington & Burling, 850 10th Street, N.W., One City Center, Washington, DC 20001, Counsel for Amici Curiae Consumer Data Industry Association and Professional Background Screening Association

Nicole A. Saharsky, Mayer Brown, 1999 K Street, N.W., Washington, DC 20006, Counsel for Amicus Curiae Chamber of Commerce of the United States of America

Before: GREENAWAY, JR., KRAUSE, and PHIPPS, Circuit Judges

KRAUSE, Circuit Judge.

In late 2018, Appellants Kevin Kelly and Karriem Bey found themselves in just the sort of frustrating predicament the Fair Credit Reporting Act ("FCRA"), 15 U.S.C. § 1681 et seq. , was designed to avoid, see J.A. 5. Their rental applications were denied based on inaccurate consumer reports generated by a consumer reporting agency, RealPage, Inc. RealPage would not correct the reports unless Appellants obtained proof of the error from its sources; and the identity of RealPage's sources was not included in the disclosures to Appellants, despite their requests for their files. So Appellants availed themselves of the remedy Congress provided and sued RealPage, claiming it had violated its obligation under the FCRA to disclose on request "[a]ll information in the consumer's file at the time of the request" and "[t]he sources of th[at] information." 15 U.S.C. § 1681g(a). Appellants sought damages and attorneys' fees not only for themselves but also on behalf of a purported class and subclass.

The class action did not get far. The District Court denied Appellants' motion for class certification on the grounds that Appellants failed to satisfy Rule 23(b)(3)'s predominance and superiority requirements and that their proposed class and subclass were not, in any event, ascertainable. For the reasons explained below, we disagree, and because the Court based its predominance analysis on a misinterpretation of Section 1681g(a) and erred in applying our ascertainability precedent, we will vacate and remand.

I. FACTUAL AND PROCEDURAL BACKGROUND

To place the parties and their interactions in context, we begin with a brief overview of the FCRA before recounting the history of this case.

A. The Fair Credit Reporting Act

In the FCRA, Congress sought to address the problem of "inaccurate or arbitrary information" in consumer reports by requiring credit reporting agencies ("CRAs")¹ to "utilize accurate, relevant, and current information in a confidential and responsible manner." Cortez v. Trans Union, LLC , 617 F.3d 688, 706 (3d Cir. 2010) (quoting Guimond v. Trans Union Credit Info. Co. , 45 F.3d 1329, 1333 (9th Cir. 1995) ); see also Bibbs v. Trans Union LLC , 43 F.4th 331, 338–39 (3d Cir. 2022) (explaining that, in enacting the FCRA, Congress intended to "protect consumers from the transmission of inaccurate information about them" (quotation omitted)). It defined a "consumer report" to encompass "any ... communication of any [consumer] information by a consumer reporting agency ... which is used or expected to be used" to establish the consumer's eligibility for credit, employment, or another purpose. 15 U.S.C. § 1681a(d). Then, to advance its "consumer oriented objectives," Guimond , 45 F.3d at 1333, Congress specified the groups of third-party "users" to whom CRAs could disclose consumer reports, e.g., id. §§ 1681b, 1681e(a), the different categories of information that must be omitted from or included in consumer reports procured by different users, e.g., id. §§ 1681c, 1681f, and the responsibilities of such users once they procured those reports from CRAs, e.g., id. § 1681e; 12 C.F.R. § 1022.137.

But the FCRA also sought to address another problem: the consumer's "lack of access to the information in [her] file [and] the difficulty in correcting inaccurate information." Cortez , 617 F.3d at 706 (internal quotation marks omitted) (quoting S. Rep. No. 91–517, at 3 (1969)). To that end, it broadly defined "file" to mean "all of the information on th[e] consumer recorded and retained by a consumer reporting agency regardless of how the information is stored," 15 U.S.C. § 1681a(g), and it required CRAs, upon request, to "clearly and accurately disclose to the consumer" six enumerated categories of information, including "[a]ll information in the consumer's file at the time of the request" and "[t]he sources of [that] information."² 15 U.S.C. § 1681g(a)(1), (a)(2). In addition to specifying the "[c]onditions and form of disclosure to consumers," id. § 1681h, and the procedures for consumers to dispute "the completeness or accuracy of any item of information ... in a consumer's file" with a CRA, id. § 1681i, Congress also gave consumers a powerful remedy to enforce their rights by creating private causes of action, for both willful and negligent violations of the FCRA, including statutory damages and attorney's fees. 15 U.S.C. §§ 1681n, 1681o ; see Long v. Se. Pa. Transp. Auth. , 903 F.3d 312, 323 (3d Cir. 2018) ("Congress granted the consumer a right to receive a copy of his report before adverse action is taken, and provided for statutory damages plus attorney's fees for willful noncompliance[.]").

B. RealPage's Rental Reports

RealPage is a CRA that specializes in providing property managers with consumer reports, which it terms "Rental Reports," to help them evaluate their prospective tenants. See 15 U.S.C. § 1681a(f) ; J.A. 3–4. To generate Rental Reports for those clients over the Class Period,³ RealPage collected public-record information, including criminal records and eviction filings, from third-party vendors like LexisNexis and HygenicsData, stored that information in its own databases, and compiled it to respond to client requests. J.A. 3. A client procuring a Rental Report could also instruct RealPage to make a courtesy copy of that report available to the prospective tenant, who would then be notified of the option to download the Rental Report from RealPage's website. J.A. 179.

Consistent with its obligations under the FCRA, RealPage also disclosed information in response to consumers' direct requests for their files, which could be submitted in two ways. For one, a consumer could use a form on RealPage's website to request a "report and any of the disclosures required by the federal Fair Credit Reporting Act." Appellants' Br. 23 (emphasis omitted); Appellees' Br. 47. In that case, the form would automatically generate an email sent to a dedicated email inbox maintained by RealPage, and RealPage would manually process the request. J.A. 80, 134, 180. Alternatively, a consumer could personally contact a RealPage representative by phone, letter, or email to request their information. J.A. 179–80.

As it turned out, however, regardless of whether a consumer downloaded her courtesy copy of a Rental Report requested by a property manager or initiated her own independent request for her information on file, RealPage provided the consumer with the exact same report, the Rental Report—which did not disclose the third-party-vendor "sources of the information."⁴ 15 U.S.C. § 1681g(a)(2). J.A. 4, 117–18, 124.

C. The Parties

Appellants Kevin Kelly and Karriem Bey are two prospective tenants whose Rental Reports contained inaccuracies and who therefore sought information from RealPage to try to correct those errors. J.A. 5. After Kelly and Bey submitted lease applications for apartments at different properties, the respective property managers requested Appellants' consumer reports from RealPage. In response, RealPage generated and sent their clients Appellants' Rental Reports, each of which contained inaccurate public record information. Kelly's report mistakenly included two DUI convictions and a record of an outdated vehicle inspection tag, the latter of which the report described as a misdemeanor conviction rather than a non-criminal summary offense. J.A. 5, 34–43. Bey's report incorrectly stated that a civil action for possession was filed against him and included an erroneous eviction filing. J.A. 5, 51–54. Not surprisingly, the property managers turned down both Appellants, although in Kelly's case, the manager eventually relented. See J.A. 5, 199–200, 243 (testifying that the only apartment Bey could move into was public housing in a different apartment building).

Upon learning of the inaccuracies in their reports, Kelly and Bey contacted RealPage, hoping to determine the sources of the errors and to correct them. Kelly made requests both using the form on RealPage's website that requested a "report and any of the disclosures required by the federal Fair Credit Reporting Act," Appellants' Br. 23 (emphasis omitted), and by mailing a written request to RealPage for "a copy of all of the information that [was] in [his] file." J.A. 204, 144–45. Bey called RealPage to "let [him] get [his] file" so that he could "correct" the errors. J.A. 233–35. What both Appellants received was simply the Rental Report that RealPage provided to the property manager, J.A. 231–33, and neither Rental Report identified the third-party vendors that sourced the inaccurate records to RealPage. J.A. 33-43, 50-54. Yet without proof from accurate records, RealPage refused to alter the information on the Rental Reports, and without the identity of the third-party vendors, neither Kelly nor Bey could obtain that proof. See, e.g. , J.A. 235–38.

Both Appellants attempted unsuccessfully to obtain...