Tenant Can Bring Class Action for Overcharge

Tenant sued landlord for rent overcharge and sought certification from the court for a class action. Landlord claimed that tenant sought to waive certain overcharge penalties and therefore couldn't adequately represent a class of tenants under laws governing class actions. The court ruled for tenant.

Landlord appealed and lost. Tenant's rent overcharge claim didn't seek a "penalty" within the meaning of Civil Practice Laws and Rules (CPLR) Section 901(b), governing class actions, because she waived her right to triple damages under the Rent Stabilization Law (RSL). Tenant could waive the triple damages since they weren't a mandatory penalty under the law. And tenant didn't waive her right to reimbursement for claimed overcharges and interest, since these claims didn't render her action an action for a penalty for purposes of CPLR Section 901(b). Even though such recovery is labeled a penalty by the RSL, they lack a punitive and deterrent purpose. Tenant's request for attorney's fees also didn't constitute seeking a penalty, since the general right to attorney's fees in landlord-tenant proceedings doesn't apply to administrative proceedings.

Two of the appeals court judges disagreed with the overall decision, finding that triple damages were a penalty. The RSL provision for triple damages was enacted after CPLR Section 901(b), and, therefore, the legislature must have been aware that calling triple damages a penalty under the RSL prevented a class action lawsuit. The clear intent of CPLR Section 901(b) is to preclude the maintenance of a class action seeking a penalty.

Gudz v. Jemrock Realty Company, LLC: 2013 NY Slip Op 02814, 2013 WL 1760601 (App. Div. 1 Dept.; 4/25/13; Tom, JP, Sweeny, Moskowitz [dissenting], Manzanet-Daniels [dissenting], Gische, JJ)