September 30, 2013

Jenner & Block won a resounding appellate victory on behalf of more than 20,000 current and former New York City tenants in a class-action lawsuit against their landlord, the Pinnacle Group, over allegations of harassment, overcharges and unfair evictions.  On September 30, 2013, the United States Court of Appeals for the Second Circuit affirmed a federal district court’s June 2012 opinion approving a settlement for the rent-regulated tenants that it said “achieved significant benefits for the class, particularly in its injunctive aspects, against significant odds.”

Pinnacle owned scores of rent-controlled apartments in New York, which has a complicated set of laws and rent-control regulations.  Low-income tenants in Pinnacle’s properties accused the company of orchestrating a harassment campaign against them to force them to move out so that new tenants – not under rent control – could move in, thereby making Pinnacle’s buildings more valuable.

The New York City Public Advocate asked Jenner & Block to help on a pro bono basis.  Serving as class counsel, a firm team in 2007 filed a RICO lawsuit in federal court on behalf of the low-income tenants.  After several intense legal battles over an unsuccessful motion to dismiss and the firm’s successful motion to certify the classes, the parties began settlement negotiations. 

The landmark settlement included an independent and streamlined claims administration process; a $2.5 million legal assistance fund established by Pinnacle to assist the tenants in asserting their rights; an injunction wherein Pinnacle agreed to honor best practices enforced by a court-appointed claims administrator; and an audit of new rents, among other things.  In the claims administration process, tenants could bring informal damage claims for harassment, blacklisting, and certain rent overcharges.

Following an extended notice period and what the Second Circuit called “substantial outreach to class members” by class counsel, fewer than 1% of the class members opted out or objected to the settlement.  Unfortunately, all five named class representatives objected to the settlement and voiced their objections to the district court.  The district court conducted a fairness hearing, carefully considered all of the objections, and in June 2012, issued what the Second Circuit described as a “thorough” and “well-reasoned” 54-page opinion granting final approval to the settlement.

The five named class representatives and three objecting class members then appealed to the Second Circuit Court of Appeals.  In rejecting their arguments, the Second Circuit  noted that the named class representatives were the “more militant members of the class” and pointed out that “the district court thoroughly and carefully reviewed the settlement and concluded that it was a fair and sensible way to resolve these claims.”

Led by Partner Richard F. Levy, the team included Partner Ross B. Bricker and Associates Katherine A. Neville, Marisa K. Perry and Joshua H. RubinPartners Michael T. Brody, Matthew S. Hellman and Paul M. Smith and Associate Elizabeth A. Edmonson provided invaluable assistance as the case proceeded on appeal. 

The Second Circuit’s decision was reported in several media outlets, including the New York Times.