Suit Seeks End to ‘Tenant Blacklist’

On October 31, lawyers working with the Metropolitan Council on Housing filed a case in New York State Supreme Court to block the state court system from selling information that is used to create a “tenant blacklist.”

The lawsuit was filed on behalf of James Whelan, a rent-stabilized tenant in Manhattan whose landlord is threatening to evict him based on the owner-use loophole in the rent-regulation laws. Whelan’s lawyers won a temporary restraining order barring the courts from releasing any information about him to tenant-screening companies if an eviction case is filed against him in Housing Court. They aim to obtain a permanent order preventing the court system from selling the data used to create tenant-screening reports.

For a fee, the state court system will provide daily updates on cases that have been filed in Housing Court. Tenant-screening companies use that data to produce reports about individual tenants, with each company creating its own database. Landlords and brokers routinely purchase these reports when evaluating applicants for new apartments. When tenants show up as having appeared as defendants in Housing Court, they are generally denied the apartment, no matter what the circumstances were.

Whelan’s building, a five-story walkup, was purchased in February. On June 23, a notice was shoved under his door. “We will not renew your lease in order to house an immediate family member of one of the owners,” it read. Owners can legally seek to evict a rent-regulated tenant to use the apartment for themselves or a family member, but they often file bogus claims when they want to replace a rent-regulated tenant with someone who can be charged more.

“My first reaction was, I don’t even know how to think about this,” Whelan says. Losing his rent-stabilized apartment “would mean that I would [have to] leave New York City.”

Whelan works as a driver for a limousine company. He has lived in his small one-bedroom apartment for 17 years, and pays $1,240 per month. “My rent is affordable for someone who makes the kind of money I do,” he says. “I just couldn’t afford to move to another apartment and pay double what I was paying here.”

His lease would expire on Oct. 31. He started calling friends, and was surprised by how many were facing or had faced similar attempts by their landlords to evict them on dubious grounds. One friend who lived three blocks away had received an owner-use eviction threat at the same time as another neighbor in the same building.

Whelan’s goal was always to fight the eviction and keep his home, but he also worried that if he fought back and lost, that could harm his chances of obtaining another apartment. He wasn’t aware of exactly how the blacklist worked—or that tenants would be flagged for simply being defendants—but he knew that to compete for housing, a tenant’s record needed to be near-spotless.

He had worked for nine months as a real-estate agent at one of the city’s largest rental agencies, and says the biggest lesson he learned was, “you’d better make sure that you qualify. You have to have your ducks in a row or you’re not going to get an apartment.”

One of the friends Whelan called had gone to Met Council on Housing for help in fighting an eviction. At Met Council’s walk-in clinic, Whelan was told that many tenants beat owner-use eviction attempts, if they’re willing to fight back and force the landlords to prove their intentions in court. Moreover, the letter he received from his landlord indicated that his case might be quickly dismissed. It stated that “one of the members of AAHM Partners LLC which owns 1431 First Ave. will house his son in [your] apartment”—but the owner-use provision applies only to individual owners, not corporations.

However, even if his case were dismissed, Whelan would still end up on the tenant blacklist. The courts electronically transmit data about Housing Court cases to tenant-screening companies, including the filing of a new case by a landlord against a tenant, as soon as the case is assigned a court date.

Whelan was exactly the type of person whose dilemma demonstrates the injustice of the tenant blacklist. He has never before been sued by any landlord. He has a 17-year history of being a good tenant in his current apartment. Yet he would be branded as a bad tenant and denied the chance to move to a new apartment that he otherwise qualified for, simply by challenging an eviction case that seems on face value to have been brought in bad faith and without merit.

Met Council encouraged Whelan to consider joining the lawsuit against the blacklist. He was connected with lawyers James Fishman and Steve Dobkin, who since December 2010 have been collaborating with Met Council and with the housing committee of the National Lawyers Guild’s New York City chapter on this campaign.

“We’ve been looking for somebody like you,” Dobkin told Whelan when they first met. “You’re a triple-A candidate for being a plaintiff.”

Met Council began the search for potential plaintiffs last December by publicizing the call in this newspaper, on our radio show, on our Web Site, and by training the volunteers who staff our tenants’ rights telephone hotline and walk-in clinic. We spoke with hundreds of tenants who have already been harmed by the blacklist—people who were denied apartments based on false or misleading information on tenant-screening reports.

To obtain an injunction barring the courts from selling the data to tenant-screening companies, however, we needed a tenant who hadn’t yet been sued in court, but who faced the imminent threat of a case. “You need someone who can show that they’re about to suffer immediate and irreparable harm to get a restraining order,” says Fishman. “Someone who’s already in the database is already harmed.”

Whelan not only fit those criteria, but is facing the type of eviction that clearly did not arise from anything that could indicate his undesirability as a tenant— presumably what the blacklist is meant to show.

Fishman is an expert on tenant blacklisting in New York. In 2004, he sued First American Registry, later known as First Advantage SafeRent (and now as CoreLogic SafeRent), for violating the Fair Credit Reporting Act’s requirement that credit reports be complete, accurate, and not misleading. The company had been excluding dispositions (final settlements or judgments) from the records of Housing Court cases it reported on. That meant its tenant blacklist functioned much like a criminal-background check would if it reported everyone who was ever arrested and did not say whether they were ever convicted of a crime. The suit resulted in a change in practice, and $2 million in damages for the class of affected tenants.

Following that case, Fishman initiated multiple suits in State Supreme Court to bar individual landlords from commencing Housing Court cases against specific tenants who planned to fight their landlords’ threats of eviction, but were concerned about ending up on the tenant blacklist by doing so. Fishman was successful in forcing landlords to use the venue of Supreme Court, which does not sell its records to tenant-screening companies—and in doing so, he says, “establishing the principle that blacklisting causes irreparable harm.”

Many advocates have concluded that the best way to ending tenant blacklisting entirely is to get the courts to stop selling the electronic data to the tenant-screening companies in the first place. Landlords are generally not interested in finding out more than the simple fact that a tenant was in court. In a tight rental market like New York, they can bypass anyone who has ever been in Housing Court.

The lawsuit alleges that providing such easy access to information that is used to deny housing to all tenants who are named as defendants has “a constitutionally defective chilling effect” on tenants’ legal rights. It argues that the sale of this data forces tenants “to choose between (a) abandoning their homes and relinquishing their tenancy rights to rent-regulated housing and thereby avoiding the effects of ‘tenant blacklisting’ or (b) using the Housing Court to present all of their defenses and claims to their landlord’s effort to evict them, which causes them to be ‘blacklisted.'”

The lawsuit would not deny access to Housing Court records. Information about any individual case can be obtained for free by visiting the court, searching the computer database, and requesting the case file from the clerk. Fishman says that he believes in an open court system with public access to that information—and the entire case history would provide more of a basis for making a decision about a prospective tenant. It could also curtail errors based on sloppiness, such as when tenants show up on screening reports simply because they have the same name as someone else with a Housing Court history.

Fishman says that the blacklists “effectively eviscerate” the hard-won rights of tenants. “If they’re afraid to stand up to their landlords in court, they might as well not have any of those rights.”

Whelan hopes that as a result of his case, the tenant blacklist will be abolished. “Anybody who goes to Housing Court will be put on this list, regardless of the fact of what they’ve done or not done,” he says. The only problem he and his friends created as tenants, he adds, was to “have a rent-stabilized apartment in a nice building.”