In 2007, 10 Pinnacle tenants sued the landlord in federal court, alleging that the company had raised rents improperly and filed eviction notices frivolously as part of a scheme to drive rent-regulated tenants out of their apartments so the landlord could raise rents or sell the units as condos or co-ops. The suit claimed that Pinnacle had violated not just state law but also the federal Racketeer Influenced and Corrupt Organizations act, or RICO.
In April 2010, a judge certified the group as a class. Pinnacle asked for permission to appeal, questioning the plaintiffs' standing to raise a RICO claim and faulting the allegations themselves as too vague to be rebutted. Pinnacle did not receive approval to appeal.
Several of the original plaintiffs had already settled.
Under the agreement announced yesterday, which requires approval by the judge, Pinnacle would provide up to $2.5 million to assist tenants in making claims for financial relief to an independent claims administrator that the court will appoint. Only tenants who lived in Pinnacle housing from July 11, 2004 and April 27, 2010 would be covered.
The $2.5 million just covers assistance to tenants in making their claims. It would not be a limit on how much Pinnacle might pay out to tenants whom the administrator decides are owed money.
After all claims are processed, any money left over from the $2.5 million fund would go to legal services organizations that assist tenants.
A joint statement from lawyers for both sides says that Pinnacle agreed to "follow specific protocols to document rent increases for all rent stabilized or rent controlled apartments and the basis for potential legal proceedings" and maintain a Helpline for questions and complaints about repairs, leases and evictions.
CORRECTION: The original version of this post incorrectly reported that a settlement had ended the lawsuit. In fact, the settlement requires a judge's approval.