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Leo v. Appfolio, Inc.

United States District Court, W.D. Washington, Tacoma

January 30, 2018

ANTHONY JAMES LEO, on behalf of himself and all others similarly situated, Plaintiff,
v.
APPFOLIO, INC., Defendant.

          ORDER ON DEFENDANT'S MOTION TO STRIKE AND/OR DISMISS

          ROBERT J. BRYAN United States District Judge

         This matter comes before the Court on Defendant's Motion to: (1) Dismiss or Strike Count I Class Claim and Class Allegations, and (2) Dismiss Counts II, III, and IV of the Complaint. Dkt. 13. The Court has considered the pleadings filed in support of and in opposition to the motion and the file herein.

         Filed on September 27, 2017, this putative class action alleges that Defendant AppFolio, Inc. (“AppFolio”), a consumer reporting agency, fails to: accurately report consumer information, disclose the true source of its public records information, and disclose the identity of each person (including end-users) that have procured a consumer's report, all contrary to the Fair Credit Reporting Act, 15 U.S.C. §§ 1681-1681x (“FCRA”). Dkt. 1. Defendant's motion to strike or dismiss the Count I class allegations and claims and dismiss the remaining counts in the Complaint (Dkt. 13) should be denied.

         I. BACKGROUND FACTS AND PROCEDURAL HISTORY

          A. BACKGROUND ON APPFOLIO

         According to the Complaint, AppFolio sells consumer reports (sometimes called credit reports) for residential screening purposes. Dkt. 1, at 2. It asserts that AppFolio's “standard practice is to use only partial matching and not full identifying information in preparing consumer reports, ” leading to mixed files - reports which include information about people who are not the subjects of the report. Dkt. 1, at 3. This failure to require a match to full identifying information is allegedly employed by AppFolio to maximize the number of reports it generates and sells. Id. The Complaint asserts that AppFolio intentionally uses these procedures to “maximize the likelihood of a match between any inquiry and some data in its database about one or more consumers, purposefully prioritizing quantity of matches over accuracy.” Id., at 4.

         The Complaint alleges that AppFolio obtains its public records information from private vendors and does not retrieve public records itself. Dkt. 1, at 4. “Nevertheless, . . . AppFolio falsely lists the names and addresses of courthouses or other government offices as the true ‘source' of its public record information” in the reports. Id. The Complaint asserts that AppFolio only receives a distilled version of the public records from its vendors, which frequently have “numerical and other factual errors, do not contain the most updated status of the public records, invert the debtor and creditor, and are placed in the wrong consumer's file.” Id. It alleges that AppFolio does not disclose the true sources of the public records information to consumers despite the fact that “[d]isclosure of the true source of a [consumer reporting agency's (“CRA”)] information is vital so that certain credit reporting errors that originate at the source can be corrected and so that consumers always know who is furnishing important credit information about them.” Id.

         The Complaint also asserts that AppFolio keeps records of each person, including end-users, who have requested reports. Dkt. 1, at 5. It maintains that AppFolio does not disclose this information to consumers. Id., at 6.

         B. BACKGROUND FACTS REGARDING PLAINTIFF ANTHONY JAMES LEO

         According to the Complaint, around October 16, 2016, Plaintiff Anthony James Leo applied to rent an apartment with Aspen Real Estate & Property Management Group NW, Inc. (“Aspen”). Dkt. 1, at 6. As a part of his application, Mr. Leo provided his full name, address, social security number, and date of birth. Id. The next day, Aspen ordered an AppFolio consumer tenant screening report on Mr. Leo and sent AppFolio all the identifying information that Mr. Leo provided. Id. Mr. Leo asserts that “[d]espite having been provided with [Mr. Leo's] name, address, social security number, and date of birth, [AppFolio] did not use all of those personal identifiers in determining whether [Mr. Leo] had a public record history.” Id.

         The report AppFolio sold Aspen stated that Mr. Leo “had an eviction record from 2015, even though the eviction defendant was ‘Tanya Lee' and occurred in West Greenville, South Carolina.” Id. The Complaint asserts that “the eviction record belongs to an unrelated person and [Mr. Leo] does not have a civil judgment for an eviction from 2015 in West Greenville, South Carolina.” Id., at 7. The Complaint alleges that this mixing of files was a result of AppFolio's “use of an imprecise name matching procedure to match eviction records [Tanya Lee's] to apartment rental applicants such as Plaintiff [Anthony James Leo].” Id.

         On October 17, 2016, Aspen denied Mr. Leo's application “in substantial part because the AppFolio report included a record of a recent eviction.” Dkt. 1, at 7. Concerned, Mr. Leo alleges in his Complaint that he “contacted the West Greenville Summary Court on several occasions over the next two-week period, and it was confirmed to him that the eviction did not belong to him, but to an unrelated individual named ‘Tanya Lee.'” Id.

         In April 2017, Mr. Leo wrote AppFolio, and requested a copy of his file. Id. The Complaint alleges that in May 2017, AppFolio sent Mr. Leo a copy of his file, and reported that the source for the 2015 eviction was “Court West Greenville, Greenville.” Id., at 7. The Complaint asserts that AppFolio “did not obtain any public record information about Plaintiff or about any consumer from a court in West Greenville, South Carolina, ” but, instead, from a private vendor. Id. Mr. Leo maintains that “pursuant to its systematic practice, Defendant failed to disclose to Plaintiff any information about its vendor, Defendant's true source of the public record at issue.” Id., at 9. Mr. Leo asserts that AppFolio also failed to disclose the identity of each person, including end-users, that procured a report about him. Id. Mr. Leo maintains that AppFolio “deprived [him] of this valuable information according to its standard practice and procedure.” Id., at 8.

         Mr. Leo asserts that, as a result of AppFolio's conduct, he has suffered (a) a lost rental opportunity, (b) harm to his reputation, and (c) emotional distress. Id.

         Mr. Leo proposes the following classes:

(1) All persons residing in the United States (including all Territories and other political subdivisions of the United States), beginning five years prior to the filing of this Complaint and continuing through the resolution of this action, about whom AppFolio furnished a consumer report which included one or more record(s) which did not pertain to the person who was the subject of the report, as a result of AppFolio's matching procedures;
(2) All persons residing in the United States (including all Territories and other political subdivisions of the United States), beginning five years prior to the filing of this Complaint and continuing through the resolution of this action, about whom AppFolio furnished a consumer report which included one or more record(s) for which the first or last name on the ...

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