Saying it would “defy common sense” to rule otherwise, a state appeals panel has ruled apartment tenants who didn’t pay security deposits can’t sue landlords for alleged violations of a Chicago ordinance governing such transactions.
The decision blocked an attempt to expand a "no injury" standard created by the Illinois Supreme Court for big money class action lawsuits brought under the state's biometric privacy law to now apply to lawsuits brought by tenants against landlords for technical violations of Chicago's ordinance governing landlord-tenant relations.
John Hundley sued WPD Management, alleging the company never provided information about current interest rates applicable to security deposits, information his lawsuit alleged was required under Chicago’s Residential Landlord Tenant Ordinance (RLTO.) He later amended the complaint to add co-plaintiffs Emma O’Neal and Taylor Scoggin. After Cook County Judge Neil Cohen dismissed that complaint, finding the plaintiffs lacked standing, the renters challenged the dismissal before the Illinois First District Appellate Court.
Justice Raymond Mitchell wrote the panel’s opinion, issued Nov. 3; Justices Freddrenna Lyle and David Navarro concurred.
When WPD first moved to dismiss, it argued the leases contained the required general summary of tenants’ rights, including a section titled “Security Deposits and Prepaid Rent.” But the tenants said the ordinance requires landlords to include both the general summary and a specific security deposit summary with all contracts. Judge Cohen dismissed that complaint, finding the renters suffered no legal injury.
The plaintiffs responded with a motion for reconsideration, arguing WPD didn’t challenge their standing, thus depriving them of a chance to address that issue. Cohen denied that motion, prompting the appeal in which they argued the ordinance doesn’t require a plaintiff to allege they were ever actually harmed, but only that the landlord may have violated the ordinance.
WPD responded by agreeing the lease agreements didn’t include a distinct security deposit summary, but said that omission is immaterial when it doesn’t require tenants to pay such a deposit.
“Although the RLTO is to be ‘liberally construed and applied to promote its purposes and policies,’ reading it as broadly as plaintiffs urge strains the text and purpose of the ordinance,” Mitchell wrote, quoting the city’s municipal code. “Holding a defendant liable for statutory damages ($100 per violation) for failing to provide a summary regarding security deposit interest rates with a rental agreement that does not require a security deposit would in essence require a defendant to perform a ‘useless act.’ ”
The panel said the plaintiffs rested their argument on liability principally on Rosenbach v. Six Flags Entertainment Corp., a Biometric Information Privacy Act case that reached the Illinois Supreme Court in 2019. In that case, the amusement park operator allegedly violated BIPA based on a failure to meet disclosure requirements, not because the plaintiffs demonstrated they had suffered identity theft or any other actual legal injury.
However, Mitchell said, that decision doesn't apply in the class action against the landlords because the Rosenbach decision addressed the unique nature of biometric information and consent under the BIPA law.
“A tenant who does not pay a security deposit cannot ever be injured by a landlord’s failure to provide information about the interest rate applicable to a refund of a security deposit,” Mitchell wrote. “By requiring that the interest rate summary be included with rental agreements, the Chicago City Council no doubt intended to protect those tenants who actually paid security deposits. But where, as here, a tenant does not pay a security deposit, and is not required to, there is no risk of injury from the failure to provide the interest rate information.”
The panel also rejected the renters’ arguments regarding their ability to prove their standing before the circuit court. Mitchell explained WPD argued for dismissal based on failure to allege an injury, not a lack of standing, and “In any event, the concept of standing is so basic that a judge may raise the issue” independent of either party’s action. He further said the plaintiffs were allowed to make those arguments on appeal, where they failed to be persuasive.
WPD Management was represented by Tressler LLP, of Chicago.
Representing the renters was attorney Jeffrey Sobek, of JS Law, Chicago.
In a phone interview, Sobek said he will attempt to elevate the case to the Illinois Supreme Court, which he feels should determine the plaintiffs have standing because they alleged WPD failed to meet its statutory obligation to provide notice of its security deposit terms.
Sobek said the point of the RLTO “is to fix a problem with security deposits and tenants getting information” and said his experience is the renters more likely to be in need of information seem to be the least likely to know what the law entitles them to receive.
He noted the RLTO has had a positive effect on security deposit policies from the tenants’ perspective and said the majority of landlords provide all the required summaries, even if they do not charge those deposits.