Suit Hinges on Tenant-Screening Service’s Accuracy

Information in a Van Nuys-based tenant-screening firm’s computer that listed someone with the same name as a defendant in an eviction lawsuit prevented Quida F. Johnson of Lake View Terrace from renting an apartment on Hubbard Street in Sylmar.

Despite her unusual first name, there was another Quida Johnson, who lived in Lynwood and had been a defendant in two 1986 eviction actions. And when the prospective landlord asked U.D. Registry--a firm that keeps records on more than 1 million renters--to check Quida F. Johnson’s rental history in September of that year, those eviction cases popped up on the computer screen.

She became, in the firm’s argot, a “bingo,” meaning that she had been positively linked to an eviction lawsuit. But the only connection was her name.

Johnson, who drives a school bus, complained. She told U.D. Registry that she had never been evicted and that she had never lived in Lynwood. But the agency refused to tell her exactly what the inquiring landlord had been told. And she could not clear her record.

Even after Johnson’s attorney sent U.D. Registry a copy of her lease for the Lake View Terrace apartment where she lived when the eviction actions were filed, the company demanded more proof that she was not the same person, according to court records.

July 17 Trial

Soon after, Johnson became one of nine plaintiffs in a lawsuit filed against U.D. Registry and its owner and president, Harvey Saltz of Sherman Oaks, that is scheduled to go to trial July 17 in Los Angeles Superior Court.

The plaintiffs claim that they were denied apartments because of incorrect or prejudicial information sold to landlords by the registry, one of only two large tenant-screening agencies in the nation.

A jury will hear testimony from as many as 80 witnesses and review more than 250 exhibits during a trial that attorneys estimate may last more than five weeks to determine whether the plaintiffs suffered damages from U.D. Registry’s practices.

During two years of litigation over the lawsuit filed by a coalition of public-interest law firms, issues relating to the regulation of the $30-million tenant-screening industry and its standards of accuracy and accessibility were decided by Judge Jerry K. Fields.

Fields has ruled that U.D. Registry, which now keeps its location secret, must maintain an office where renters can review their files. He ruled that the firm should be as tightly regulated as other investigative agencies, meaning that it must verify the accuracy of information that it collects from landlords and must update its files every three months. And he barred U.D. Registry from linking a renter in any way to an eviction lawsuit based solely on a matching name.

“A major concern in this case for us is to clean up the U.D. Registry’s act and to make them comply with the law, and they don’t want to do that,” said lead attorney David S. Pallack of San Fernando Neighborhood Legal Services. “If this case is going to be settled, they’re going to have to change their practices.”

2-Year-Old Lawsuit

But Sumner Cotton, an attorney for U.D. Registry, said most of the issues that have emerged in the 2-year-old lawsuit are unrelated to the plaintiffs’ claims that they have been harmed by his client’s practices. He said the lawsuit is an attempt by the plaintiffs’ attorneys to rewrite through litigation the laws that they have been unable to change through lobbying.

“It’s not a question of whether this is fair or unfair,” Cotton said, referring to how U.D. Registry operates. “The question is, ‘What is the law?’ And you don’t come into a court . . . and try to change the law to fit what you think it should be.”

Saltz said his firm has not broken any laws. “We have been operating within the law and always have been, and I would be shocked if somebody now interpreted the law to mean that we had not been,” he said recently.

Cotton said he plans to appeal several of Fields’ rulings.

Tenant-screening firms such as U.D. Registry began operating about 12 years ago. They gather information on evictions, known legally as unlawful detainer cases, from municipal courts nationwide and sell the information to landlord clients the same way credit reporting agencies sell retailers information about how consumers pay their bills.

With a rent default rate in California of about 15% and annual losses from unpaid rent exceeding $1 billion, Saltz found an eager market for the information he was selling.

A competitor who recently entered the market, William Bower of Contemporary Information Corp. in Santa Clarita, credits Saltz with teaching apartment managers that they needed more information about prospective tenants.

“In Harvey’s defense, he’s done a lot for the industry,” Bower said. Saltz has shown apartment managers that “if they know about tenants beforehand . . . they won’t have to evict them later,” he said.

Misused Information

But Bower and other competitors, as well as critics among tenants’ advocates and the Legislature, say Saltz and U.D. Registry have misused the information that the registry sells and have given too little attention to that information’s accuracy.

Soon after U.D. Registry and similar companies went into business, state legislators began hearing that the firms routinely disseminated inaccurate, old information that unfairly denied housing to renters. Allegations also surfaced that U.D. Registry, then known as the Unlawful Detainer Register, was gathering “life-style reports” about renters’ political affiliations, sexual habits and other activities.

In court depositions, Cotton and Saltz have denied that the firm ever gathered such information. But several industry sources said it was widely known that, at least in the past, the registry asked landlords for such information on tenants.

“For years Harvey used to report life-style information about tenants’ political affiliations, who comes and goes, stuff that has nothing to do with their performance as tenants and payment of rent,” said Grady Robertson, president of U.D. Registry’s main competitor, the Robertson Co., based in San Diego.

After several unsuccessful attempts to regulate tenant-screening agencies, the Legislature in 1983 passed legislation amending the California Consumer Credit Reporting Act and Investigative Consumer Reporting Act to include such agencies.

‘Illusory Protection’

But that bill, which was supported by the California Apartment Assn. and the tenant-screening agencies, provided only “illusory protection” for tenants, according to a staff analysis written for the state Senate Housing and Community Development Committee.

Robertson said the lawsuit may succeed in strengthening the protections.

“This business has tremendous social obligations attached to it, and Harvey doesn’t uphold those social obligations,” Robertson said. “We think tenants are customers . . . and that means they have to be taken care of. The legitimacy and accuracy of our information is tremendously important.”

A key point on which Saltz and Robertson differ, and the issue that brought Quida Johnson into the lawsuit, is how much matching information is necessary to link a landlord’s prospective tenant to a computer record of an eviction action.

Robertson said his firm requires that the prospective tenant must list the apartment involved in the eviction lawsuit as a previous address before reporting that the person was evicted from it.

Because tenants are aware that past evictions can make it difficult for them to rent an apartment, they are wary about listing those addresses on rental applications. As a result, Robertson said, only about 2% of landlord inquiries result in a positive link between a tenant and a past eviction case.

The lawsuit’s plaintiffs contend that Saltz’s firm tells landlords about eviction cases that may or may not be linked to the person about whom the landlord is seeking information. According to court records, Cotton and Saltz have denied that they report these “possible” cases.

May Have Made Mistake

Cotton acknowledged that U.D. Registry may have made a mistake in Johnson’s case. But he said the law requires that the firm only strive for accuracy. He said it doesn’t require perfection.

But they acknowledge that a U.D. Registry credit operator “would indicate that there is a case that might apply to the prospective tenant” and urge the landlord to investigate further.

In other testimony, Saltz acknowledged that he was aware that some landlords refused to rent to prospective tenants based on such vague reports. Fields has ruled that practice illegal, and Cotton has said U.D. Registry is complying with that ruling.

Another dispute based on the 1983 legislation relates to what cases could be reported to landlords.

The legislation prevents tenant-screening agencies from telling landlords about eviction lawsuits that tenants win.

Saltz and others in the tenant-screening industry interpret that ruling to mean that information about any case ending short of a trial can be reported. For example, if a tenant and a landlord settle a rent dispute and the landlord decides to withdraw the lawsuit, the lawsuit would still be reported to future landlords.

The plaintiffs’ attorneys have argued that such an approach is prejudicial to tenants and that such lawsuits sometimes are filed to harass a tenant. Assemblyman Richard Katz (D-Sylmar), who authored unsuccessful legislation in 1982 that would have strengthened controls on tenant-screening agencies, said it is unfair to allow such lawsuits to remain on a renter’s record.

“In this kind of an arrangement, a tenant is presumed to be guilty of something merely because the report is filed,” Katz said. He said existing law is analogous to keeping files on people who are merely arrested--but not convicted--of crimes.

Clouds Picture

Robertson sides with Saltz on that issue. He said filing an eviction lawsuit is sometimes the only way to force a renter to pay. If screening agencies are barred from reporting such actions, he said, it means that such firms cannot provide to their landlord clients an accurate picture of tenants.

Fields ruled in favor of the plaintiffs on that issue, but reversed himself June 22, saying he had misinterpreted the law.

A third issue relates to the ease with which a renter can find out what is in his file. Presently, the plaintiffs argue, it takes a tenant several weeks to arrange to see the files.

In addition, Pallack said, renters are told only what is in their personal file and not whether information from the files of renters with the same or similar names has been reported to landlords. Fields also ruled that practice to be illegal.

But Fields did rule that U.D. Registry was not required to reveal the contents of tenants’ files to their attorneys.