Judge OKs Tenants, Boots Advocacy Group in N.Y. High-Rent Suit

http://news.lp.findlaw.com/andrews/pl/mas/20081020/20081020_buyers&renters.html
By TRICIA GORMAN, Andrews Publications Staff Writer

A renters-rights advocacy group lacks standing to participate in a class-action lawsuit because it suffered no injury as a result of raised rents in New York apartment buildings, a federal judge has ruled.

U.S. District Judge Colleen McMahon said the class of individual renters could proceed because they supported their claims under state law and the federal racketeering statute.

Nine tenants of buildings owned by Pinnacle Group filed the suit in the U.S. District Court for the Southern District of New York in July 2007 on behalf of all tenants who leased apartments from the company since July 2004.

Nonprofit community group Buyers & Renters United to Save Harlem joined the tenants in the suit.

Named defendants Pinnacle Group and founder Joel Wiener own 400 buildings and more than 21,000 apartments in New York City.

The plaintiffs say the defendants are trying to force them out of their rent-controlled apartments so they can develop higher-rent apartments and condominiums.

Pinnacle and Wiener misrepresented the amount of legally allowed rent, lied about making repairs and improvements to the apartments, and filed baseless eviction notices to drive lower- and middle-income tenants out, the suit says.

The suit alleges the defendants violated New York's Consumer Protection Act by engaging in deceptive acts such as demanding illegally high rents and filing the baseless eviction actions.

They also violated the Racketeer Influenced and Corrupt Organizations Act by conducting business through intimidation and extortion, the plaintiffs say.

The defendants moved to dismiss the suit, arguing that the advocacy group lacked standing to bring a RICO claim and that the tenants failed to support their RICO and state law claims.

Judge McMahon dismissed the group from the suit.

Buyers & Renters had alleged that the inflated rents caused it injury because the scheme hurt its efforts to organize and advocate on behalf of tenants.

That argument is not sufficient to confer standing for a RICO claim, the judge said, as the law requires an injury to "business or property," not simply difficulty in performing one's work.

She denied the defendants' other dismissal motions, finding that the tenants sufficiently support their claims.

Judge McMahon said the plaintiffs provided sufficient examples of the defendants' alleged mail fraud and extortion in support of the RICO claim.

The complaint lists more than 30 instances in which the defendants allegedly used the mail to send communications aimed at defrauding the plaintiffs, such as termination and eviction notices and lease renewal forms, the judge said.

Though Pinnacle and Wiener may not have mailed the material personally, landlords who worked for them did, which sufficiently links the defendants to the alleged mail fraud, Judge McMahon added.

The defendants further argued that the plaintiffs could not sufficiently state a violation of the state's consumer-protection law because the relationship between a landlord and a tenant is contractual and not consumer-oriented.

The judge disagreed, saying New York courts have given tenants private rights of action against landlords.