LA tenants sue Equity Residential over background checks

A lawsuit alleges that Equity Residential insisted on investigative consumer reports for all of its prospective tenants — a charge that adds to earlier legal challenges related to leasing practices of Sam Zell’s Chicago-based REIT.

The suit, filed in L.A. County Superior Court on Aug. 10, centers on invasion of privacy allegations. Under California law, landlords who want to run “investigative consumer reports” — a kind of character assessment often based on interviews with someone’s associates — on prospective tenants must follow certain disclosure practices that include informing the tenants of the searches and providing them access to copies of the results.

But Equity Residential, which manages tens of thousands of units in Southern California and the Bay Area, routinely commissioned such checks and intentionally kept prospective tenants in the dark about them, the suit alleges.

The company “did not want the tenants or prospective tenants to know about or have access to any confidential consumer reports about them,” the suit states, “but wanted to manage and run the property free of any restrictions, questions or inquiries by tenants.”

A representative for Equity Residential did not respond to a request for comment. The suit also listed 10 unnamed defendants, a group that includes at least some employees.

The plaintiffs in the case are renters who applied to live at two Equity Residential-owned and managed buildings in Marina del Rey and Hollywood. The suit, which calls Equity Residential’s conduct “willful and grossly negligent,” is seeking $10,000 or more for each report that was illegally ordered, as well as punitive and other damages. It also demands that the management company change its screening practices.

Of the six plaintiffs, four were seeking to rent at the Breakwater Apartments, in the upscale coastal market of Marina del Rey, and two were seeking to rent at the Vantage Hollywood Apartments.

In the complaint, the plaintiffs argue they were subject to what amounted to a corporate-ordered invasion of privacy. All of the plaintiffs applied for units within the past two years, according to the suit, and as part of that process paid for and completed housing applications. The applications said that Equity Residential could screen for background checks and evictions, and also included a release that gave the firm permission “to get private and personal information from third parties.”

But rather than running a typical credit report, Equity Residential — without notifying the tenants or following other disclosures laws — obtained the investigative reports, according to the suit. The more detailed reports were ordered by Equity Residential on all tenants, the suit says. The investigative reports “often contain errors or misinformation that is highly destructive of an individual’s reputation,” credit score or even employability, according to the lawsuit.

“Without disclosure … [the prospective tenants] would not be able to read the reports and demand that errors be corrected, and [the prospective tenants] would not even know if such reports were being used against him or her,” the suit states.

The lawsuit is the latest West Coast legal challenge against Equity Residential’s leasing practices. In 2017, in a case that’s still pending, tenants hit the company with a class action suit related to its late fees. And early this year another suit claimed Equity Residential was charging tenants five times the appropriate cost for background checks. That suit also brought up the investigative consumer reports, alleging Equity Residential failed to provide receipts and copies.

Earlier this summer, a Washington, D.C. court ordered the company to pay nearly $2 million to tenants over another case, which involved deceptive and illegal rent hikes.

Equity Residential is a publicly traded real estate investment trust that owns or has investments in 310 properties with 80,200 apartment units, according to its website. Chairman Sam Zell is a billionaire who at one time owned Tribune, the parent company of the Los Angeles Times newspaper.

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