Pinnacle’s deal with 20K tenants withstands court appeal

A federal appeals court has upheld a settlement between notorious landlord Pinnacle Group and more than 20,000 rent-regulated tenants, clearing the way for these tenants to seek individual compensation from Pinnacle for rent overcharges and other complaints.

The 2011 settlement of the tenants’ class action lawsuit against Pinnacle was “fair, reasonable and adequate,” the United States Court of Appeals for the Second Circuit said in a ruling Monday.  The settlement was thrown into uncertainty in April, when several tenants asked the appeals court to overturn it as they argued that it didn’t account for certain claims — worth millions more — for which Pinnacle might also be liable.

But the appeals court deemed the exclusions reasonable and said that all class-action settlements involve compromises, the New York Times reported.

Under the terms of the settlement, Pinnacle had agreed to adopt a set of best practices when carrying out rent increases and evictions, and agreed to have a court-appointed administrator hear the tenants’ individual complaints and determine compensation, which could reach up to $10 million, the tenants’ lawyer, Richard Levy of Jenner & Block, told the newspaper.

A lawyer for the dissenting tenants, Kenneth Rosenfeld, director of legal services at the Northern Manhattan Improvement Corporation, told the Times that his clients were “pretty devastated by the decision.”

“It gives no guidelines about how to go about settling class actions when there are disparate interests among the class,” he said. [NYT]  – Hiten Samtani