Appeals panel: Background check service OK to report woman's 1996 battery guilty plea to landlord

By Scott Holland | Apr 19, 2019

CHICAGO — The U.S. Seventh Circuit Court of Appeals upheld a ruling against a woman who was suing a background check service she said wrongly reported a past guilty plea to a prospective landlord, leaving her unable to rent an apartment.

Seventh Circuit Judges Frank Easterbrook, Diane Wood and Michael Brennan heard an appeal Sept. 24 from Rafaela Aldaco in her dispute with RentGrow Inc. Easterbrook wrote the panel’s unanimous opinion, issued April 16.

According to court documents, Aldaco pleaded guilty to battery in 1996 and was sentenced to six months of supervision. After completion, the state court dismissed the charge. However, Aldaco did not ask the court to expunge her record. The conviction turned up in 2015 when RentGrow, doing business as Yardi Resident Screening, did a background check at the request of a landlord whom Aldaco had asked for a lease.

After the landlord denied the lease, Easterbrook wrote, Aldaco protested to Yardi, “falsely asserting that the battery record did not pertain to her” and failing to correct its error that her sentence was 60 months, instead of six. Yardi re-examined its check, confirmed its initial finding and closed the case. That prompted Aldaco to sue, alleging violation of the Fair Credit Reporting Act. 

Although agencies are allowed to report convictions regardless of how far in the past they occurred, Aldaco argued her sentence of court supervision should not be considered a conviction under the FCRA.

U.S. District Judge Joan Lefkow had granted summary judgment to RentGrow, “concluding that ‘conviction’ has a federal definition, under which Aldaco’s battery record qualifies,” according to Easterbrook.

The panel held up the 1983 U.S. Supreme Court opinion in Dickerson v. New Banner Institute, in which the court “unanimously held that federal law supplies the meaning of ‘conviction,’ ” Easterbrook wrote. “A majority went on to hold that, as a matter of federal law, a guilty plea without a formal judgment is a ‘conviction.’ ”

The panel further said courts after Dickerson “regularly use federal law to define the term and reject the argument that it requires a final judgment.” It cited examples such as the Controlled Substances Act and several federal judicial and appellate opinions, all of which point to the idea that the federal definition of conviction includes guilty pleas such as Aldaco’s.

“As far as we can tell, the word ‘conviction’ in federal statutes has been defined according to state law only with explicit direction from Congress,” Easterbrook wrote. “And we could not find any case law that limited ‘conviction’ to final judgments when the federal statute leaves the term undefined.”

The panel said Aldaco didn’t give any persuasive reasons to interpret the FCRA differently from established precedent, relying only on a dissenting opinion in Dickerson “and isolated statements in the Congressional record.”

While the federal law allows state law to take precedent if on record before Sept. 30, 1996, the panel said there is no such law in Illinois and so the federal statute prevails. Where Illinois law does offer protections for people with sentences of supervision, Easterbrook wrote, there are limits. For example, employers can use such sentences to inform hiring decisions, and courts can use them to bar reoffenders from again getting that sentence or use as a basis for enhancing a misdemeanor to a felony.

Aldaco also said even if her plea constitutes a conviction, Yardi didn’t follow reasonable procedures for its report. The panel disagreed, saying the only inaccuracy was the length of the sentence reported. Aldaco said Yardi erred by not reporting the court had dismissed the battery charge.

The judges on the panel, however, noted the landlord’s “eligibility criteria disqualified applicants with any criminal record of either battery or assault — regardless of the length of the sentence or any diversionary disposition.”

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U.S. Bankruptcy Court for the Northern District of Illinois U.S. Court of Appeals for the Seventh Circuit

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