New York state's highest court is set to hear arguments Wednesday on whether the tenants of nearly a dozen apartment buildings in New York City may pursue a class action lawsuit against their landlords over alleged violations of the state's rent control laws. 

The New York Court of Appeals scheduled the case as its first to consider since June, when it began its summer break.

The court's seven judges will review whether the Appellate Division, First Department erred when it reinstated many of the tenants' claims after they were initially dismissed by Manhattan Supreme Court Justice Erika Edwards. 

The lawsuit was brought three years ago by a group of tenants who alleged their landlords overcharged them rent during times when their buildings should have received tax incentives tied to the J-51 program, immediately after their units were removed from rent control, and following individual apartment improvements, or IAIs. 

The tenants are being represented before the Court of Appeals by Roger Sachar, an associate with Newman Ferrara in Manhattan.

The litigation included claims from the tenants of 24 apartments, spread between 11 different buildings in New York City. Each of those buildings, according to court filings, are owned, through separate companies, by the defendant, Big City Properties, LLC.

Big City is being represented before the Court of Appeals by Simcha Schonfeld of Koss & Schonfeld in Manhattan. 

Schonfeld is expected to make the company's case for reversing the Appellate Division's decision to reinstate many of the tenants' claims, which could evolve into class action litigation in the future. The lawsuit was thrown out at the trial court, which ruled that each of the tenants' claims were too particular to result in class certification.

"Based on the facts of this case, the court determines that this suit fails as a class action because the questions of law or fact common to the class do not predominate over questions affecting only individual members," Edwards wrote for the trial court.

She also wrote that the claims or defenses may not be typical of the class, and that a class action would not be superior to other available methods of adjudication for each tenant. In other words, the tenants' claims were too disparate to proceed as a class.

Edwards wasn't ruling on a motion to certify the class, which is required for litigation to move forward as a class action lawsuit. She was, instead, determining whether to grant a motion to dismiss from Big City Properties. She did so, in its entirety.

The First Department, in a split decision, modified that order and reinstated most of the claims and class action allegations. The panel wrote in its majority opinion that the decision from Edwards to shoot down the tenants' class action claims was made too early in the litigation, and without considering what information could be gleaned from discovery. 

"The dismissal, at this early stage, before an answer was filed and before any discovery occurred, was premature," the First Department wrote.

That decision was handed down with three judges on the majority opinion, and two in the dissent, which grants civil cases an automatic opportunity to appeal to the Court of Appeals.

The coalition of tenants, in their brief to the Court of Appeals, argued that a decision to throw out class claims at such an early stage in litigation, particularly before a motion for class certification has been considered, would be contrary to what the state's appellate courts have previously held in similar situations.

"Dismissing class claims at such a preliminary stage would be highly unusual, and has never been countenanced by this Court," the tenants' brief said. "The First and Second Departments have uniformly held that a determination of whether the class action prerequisites have been satisfied, prior to class certification, is inappropriate."

They also argued that state law would allow their class to be split into different so-called subclasses, where differences exist among the plaintiffs. One subclass, for example, could be for members who alleged they were overcharged rent based on false claims of IAIs.

Attorneys for Big City wrote in their brief that the claims alleged by the tenants are not common to the proposed class. The actions alleged by each tenant happened at different times, in different units, which were owned by different landlords, they wrote. Each will require its own, separate analysis, which they argued would exempt the tenants from forming a class.

"That is, there is nothing that is true of one putative class member that would necessarily be true for another," Big City's attorneys wrote. 

They pointed to one of the dissenting justices from the First Department, who wrote that allegations of rent overcharges were specific to each unit and could not be collectively analyzed for the group of tenants. 

"To be clear, the point I am making is not that the common questions will not predominate; it is that questions common to the class, predominant or otherwise, simply do not exist," wrote First Department Associate Justice David Friedman.

The Court of Appeals is scheduled to hear arguments on the case Wednesday afternoon. It's the first case scheduled for the court's session, which is set for 2 p.m. in Albany.

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