In Stafford v A&E Real Estate Holdings, LLC, the Appellate Division, First Department reversed a motion court’s denial of class certification and allowed a group of tenants to proceed collectively against one of New York’s major landlords.
At the heart of the dispute is a claim that A&E and its affiliated entities orchestrated a deliberate and widespread scheme to improperly deregulate hundreds of rent-stabilized apartments across 22 buildings acquired between 2012 and 2015. The plaintiffs alleged that the company relied on inflated or undocumented Individual Apartment Improvements (IAIs) and the strategic misuse of preferential rents to push units above legal thresholds, circumventing rent stabilization laws.
The motion court originally denied class certification, largely on grounds related to manageability and individual variations among the units. However, the AD1 disagreed with that approach, noting that the lower court failed to apply the statutory factors -- under CPLR 901 and 902 -- nor gave the dispute the liberal construction that class action mechanisms demand. By referencing Maddicks v Big City Props., a seminal Court of Appeals case from 2019, the panel emphasized that a unified scheme of illegal conduct can give rise to issue certification—even if the scheme manifests differently across cases. As long as the overarching methodology is common, the presence of some factual nuances does not defeat the case for certification.
The ruling reaffirms the judiciary’s openness to approve class actions in the housing context—where tenants may suffer real, albeit individually modest, harms that would be economically irrational to pursue alone. The court acknowledged that these cases are precisely where the class mechanism offers the most value: making legal recourse accessible, efficient, and equitable. In this instance, the tenants had identified over 550 apartments potentially affected by the same deregulation scheme. Many of these claims, the court noted, would otherwise be procedurally or financially barred were it not for the ability to aggregate them.
The decision also rebuffed A&E’s attempt to deflect liability by pointing to renovations conducted by prior owners. That argument, the panel reasoned, was irrelevant to the legal obligations of the current landlord. Under rent stabilization rules, the onus remains on the current landlord to maintain and present proper documentation for any improvements justifying rent hikes or deregulation. Additionally, the inclusion of potentially uninjured tenants in the class was not a fatal flaw—an issue that, the court advised, could be sorted out during subsequent proceedings.
Now that's class action power.
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DECISION