This case raises for potential review several questions concerning the standards for class certification under CPLR article 9, particularly how those standards apply in the context of a pre-answer motion to dismiss.
In this case, a group of 28 tenants assert claims against defendant Big City Acquisitions LLC and associated entities for an alleged scheme to charge illegally inflated rents in violation of state rent regulation laws. Plaintiffs allege that defendants’ scheme consisted of four illegal practices: (1) inflating rent increases based on individual apartment improvements (IAIs); (2) failing to register accurate and complete rental information; (3) misrepresenting negotiated initial fair market rents for units moving from rent control to rent stabilization; and (4) failing to offer stabilized leases for units in buildings for which the owner received certain tax benefits.
The named plaintiffs seek to assert their claims as a class action on behalf of all current and former tenants of the properties owned or operated by defendants. Defendants filed a pre-answer motion to dismiss asserting a variety of grounds for dismissal, including that the class allegations failed as a matter of law. Supreme Court, New York County (Edwards, J.) granted the motion, concluding in essence that while class certification might be appropriate for a group of tenants asserting similar violations by a single building or owner, this action improperly sought class certification of multiple groups of tenants asserting different types of violations across various buildings and owners. The court found that, under those circumstances, plaintiffs could not establish the class prerequisites of predominance, typicality and superiority as a matter of law.
A divided panel of the First Department reversed. On the class certification questions, the majority noted that “generally a detailed analysis of class certification status is inappropriate at the pleading stage” and that it was premature in the context of the pre-answer motion to dismiss in this case, “before discovery and before a class certification motion has been made, to rule out the class claims in their entirety.” Two dissenting judges disagreed and would have affirmed the pre-answer dismissal of plaintiffs’ class claims because, in their view, the complaint made clear that “questions common to the class, predominant or otherwise, simply do not exist.”
The First Department granted leave to appeal.
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