Tenants Can Bring Class Action Based on Unlawful Deregulation and Rent Overcharge

Rent-stabilized tenants in three separate cases sued landlords for reimbursement of rent overcharges and asked that the cases be declared class actions. The court and appeals court ruled for tenants in two cases. In the third case, the court ruled against tenants, but the appeals court reversed. Landlords then appealed to New York's highest court, which ruled for tenants. Although the amount of rent overcharge damages varied from tenant to tenant, the legal question of whether tenants' apartments were unlawfully deregulated applied to an entire class of tenants, and therefore a class action was appropriate. In each case tenants claimed that their apartments were deregulated in violation of Rent Stabilization Law Section 26-516(a) because landlords accepted J-51 tax benefits. Tenants also waived any statutory right to triple damages. They were permitted to do so since triple damages weren't a mandatory penalty for rent overcharge. To maintain a class action, tenants couldn't seek the triple damages, since this penalty would be greater than any actual overcharge damages.

Borden v. 400 East 55th Street Associates, LP: 2014 NY Slip Op 08211, 2014 WL 6607407 (Ct. App. NY; 11/24/14; Lippman, CJ)