In Maddicks v Big City Props., LLC, 2018 NY Slip Op 05523 (July 26, 2018), the Appellate Division First Department allowed a class action involving tenants to move forward. In the action, the tenants alleged that the landlords involved were receiving J-51 tax benefits from New York City, but failed to issue proper rent stabilized leases to tenants as required in exchange for those benefits. The tenants are also seeking to recover overcharge amounts collected by those landlords.
Counsel for the landlords made an early motion to dismiss, which was granted by the lower court. The First Department reinstated the tenants' claims finding that they satisfied the class action requirements of numerosity, predominance of common issues of law or fact, typicality of the named plaintiffs' claims, adequate representation, and superiority of class action versus other methods. Despite that the action involved 11 different buildings and 8 different owners, the court found that all of the buildings were managed by Big City Realty Management, and all the owners are allegedly part of one holding company, Big City Acquisitions.
As with many J-51 group or class actions, the tenants in this case alleged that the setting of the improper rents in these apartments was part of a systematic effort by Big City Acquisitions to avoid compliance with the rent stabilization laws. The landlord argued that each tenant's claim was different in that their rent, rent histories and set of facts differed from their neighbors. The First Department wasn't persuaded and found that, "[A]lthough there may be some differences in the documents to be examined for each apartment, whether individual issues will predominate over class concerns can be fleshed out once plaintiffs make a motion for class certification and defendants oppose it."
Overall this is a good decision for large groups of tenants who want to proceed via class actions against their landlord and the landlord's main holding companies. The one downside to filing a class action all tenants should be aware of is that you are not entitled to collect any treble damages on your overcharge claim if proceeding as a class.
Read the full decision here.