Richard Levy
Richard Levy ()

Jenner & Block took 
a law designed to combat the mob—the Racketeer Influenced and Corrupt Organizations Act—and turned it against a New York landlord.

As a result, starting in June, as many as 22,000 tenants of Pinnacle Group gained access to a streamlined claims process that will let them seek reimbursement from Pinnacle for alleged rent overcharges, harassment and interference in tenancy rights.

The housing group has also agreed to a two-year injunction, during which it must refrain from harassing behavior and its records will be subject to court review to guard against potential abuses, including rent overcharges and refusals to repair apartments. Pinnacle will pay $2.5 million to the Legal Aid Society and Legal Services NYC, which are advising tenants in the claims process.

Jenner & Block said Monday that over 500 tenants had filed claims to date, and the firm expects the number to grow considerably over the coming weeks. Tenants have until Oct. 27 to submit their claims to a court-appointed administrator.

With as many as 50 lawyers working on the case, Jenner & Block provided more than 11,000 hours of pro bono work, including defending the settlement before the U.S. Court of Appeals for the Second Circuit. (The firm ranked first in The American Lawyer’s 2014 Pro Bono survey.)

Jenner & Block litigation partner Richard Levy took the case in 2006 at the request of New York’s then-Public Advocate Betsy Gotbaum, after a state investigation into allegations of tenant harassment by Pinnacle. Levy held a meeting in New York’s Riverside Park to hear from tenants.

Two other meetings were held in Harlem after the class was certified, in addition to a hotline that was set up to field questions. Over 1,000 phone calls, letters and emails were received from tenants, according to the firm.

“We came away with scores and scores of individuals who were willing to tell us what their problems were,” Levy says.

Instead of taking the matter to state court, Levy filed civil RICO claims against Pinnacle in federal district court. RICO was a “strong weapon” to obtain an optimal settlement, he says, since it opened up the possibility of damages and an injunction. It required proving that actions against individual tenants were part of an orchestrated campaign by Pinnacle to drive out rent-regulated tenants; Pinnacle said the allegations had no merit.

The case survived a motion to dismiss, and the Second Circuit rejected Pinnacle’s attempt to appeal class certification. In 2011, Pinnacle agreed to settle without admitting wrongdoing.

Not everyone was happy with the settlement. Five class representatives and three other class members objected, claiming the settlement did not meet the needs of certain tenant subclasses and did not provide for sufficient damages. A small number of tenants—less than 1 percent, according to the firm—either expressed their opposition to or opted out of the settlement.

After the district judge approved the settlement in 2012, the class members took their challenge to the Second Circuit, which last year upheld the settlement, calling the RICO suit “a daring and unconventional effort.” The U.S. Supreme Court denied certiorari in April, clearing the way for the claims process to begin.

Tenants who lived in a rent-controlled or rent-stabilized Pinnacle apartment between July 11, 2004, and April 27, 2010, are eligible to submit claims if they were victims of the wrongful conduct stated in the settlement.

Levy said the entire process and settlement had implications beyond Pinnacle Group, and had likely put other landlords on notice.

“We have heard anecdotally from people involved in real estate and low-income real estate that this shook up a lot of landlords,” he says. “We don’t have admissible evidence to that conclusion, but we think it served as a warning to rapacious landlords.”