GPTA has received many questions from tenants regarding the recent tenants class action settlement. GPTA was not involved in that lawsuit, but we have followed developments in the lawsuit since it was filed. The best general source of information regarding the lawsuit can be found at: https://www.gatewayplazasettlement.com, or by contacting the lawyers representing the tenants in the lawsuit, Jeffrey Norton (Newman Ferrara LLP) and Peter Safirstein (Safirstein Metcalf LLP).
GPTA has taken some of the questions that we received from tenants and submitted them to Messrs. Norton and Safirstein. Here are the questions and the attorneys’ answers:
- Will the rent abatements be credited all at once for a particular claimant, or will they be credited in increments over multiple rental periods?
a. If someone’s rent abatement amount exceeds that person’s monthly rent, how will the abatement be handled?
It is our understanding that the rent abatements will be credited within the least amount of rent cycles possible (likely one or two in most cases) as it will depend upon the amount of the abatement due. If the amount is such that it would be greater than the rent due in the first month, the remaining abatement would be credited against the following month’s rent, etc. - Does a current tenant Class Member have the option of taking a cash payment from the settlement fund, or is the current tenant’s settlement fund benefit limited to a rent abatement?
Current tenants are limited to rent abatements and cannot opt for cash payments. - Will the settlement administrator provide a summary of how a Class Member’s
abatement or payment was calculated? If that is not currently contemplated, could that be added to the administrator’s to-do list?
No. That is not a common practice for a couple of reasons. First, adding that task (i.e., notifying Class Members of the proposed calculation before payments are made) would dramatically increase the amount presently allocated for notice and administration costs, reduce the overall amount payable to class members, and delay payment significantly (perhaps by years). Second, including that information with the payment (or abatement) to Class Members would also add cost without serving any meaningful purpose since there would be no mechanism to address perceived discrepancies once all the settlement funds are distributed. - Will any rent abatements or cash payments be issued or distributed before the April 16 deadline for submitting claim forms? How long after claim submission or how long after the claim deadline will it be before rent abatements or cash payments are issued?
Because the ultimate rent abatements/cash payments will be calculated on a pro-rata basis, no credits/payments will be issued until all claims have been submitted and allocation amounts have been calculated and verified. Even after all claims are submitted, there may be individual issues to sort out (e.g., claim forms conflict with rent records in some respect). Only after the claims process concludes will one be able to calculate how much each class member will be entitled to. - Will cash payments or rent abatements from the settlement be subject to income taxation? If so, would they be taxed as regular income? Is the treatment different for rent abatements than for cash payments? Will 1099s be issued?
For this question, I suggest class members speak with their tax professionals. We are not tax attorneys and cannot give tax advice or tax opinions. Often class action settlements are taxable but not always. - Does a class member need to submit a claim form in order to have benefit of the 5% annual limitation on rent increases provided in the settlement?
Yes. Although it may apply automatically, I wouldn’t suggest class members take that chance. - If a tenant is covered under the 2009 QRS agreement, will protections under that
agreement or any extension of that agreement be adversely affected by the tenant’s submission of a settlement claim form?
No. - If a tenant is not covered under the 2009 QRS agreement, will such tenant’s submission of a settlement claim form adversely affect the tenant’s prospects for being included in a new QRS agreement if such an agreement is reached between BPCA and the landlord?
No. - Will the rent abatement (or cash payment) be calculated based on rent paid only up to August 1, 2017 (by which time the capital improvements were largely completed), or will the abatements/payments be based on rent paid throughout the Class Period, which the settlement agreement defines as extending up to the Final Settlement Date? (Compare Settlement Notice para. 46 with para. 52.)
a. If it’s the former, does that mean that Class Members who moved into Gateway on or after August 1, 2017 will receive no benefit from the $10 million settlement fund?
No. Abatements/cash payments will be calculated through the end of the class period – regardless of when someone moved in to Gateway. - Where there is more than one tenant named on a lease, and each tenant is a Class Member, will each co-tenant Class Member be entitled to a separate rent abatement or cash payment? If so, how is each co-tenant’s entitlement amount calculated?
If the claims administrator receives more than one claim for the same unit over same time period (i.e., indicating more than one person on lease), the information will be checked against the rent data to confirm. Assuming it is determined that more than one Class Member was responsible for the rent on a unit (for a specified time), an assumption of joint responsibility will be applied such that each will be entitled to a separate cash payment. If there are two tenants, each gets half the allotment. If there are three, each gets one-third, etc. These scenarios have been flagged for the claims administrator so special attention is given. - Can you clarify certification number 8 on the Claim Form (“I have not submitted any other Claim covering the same apartment during the Class Period and know of no other Person having done so on my behalf.”) This certification does not seem to reach an “other Claim” submitted on behalf of a co-tenant Class Member, since such an “other Claim” would not have been submitted on behalf of the Class Member signing the certification; it would instead have been submitted on behalf of a different Class Member.
a. Another way of asking this question is whether or not certification number 8 should be read to mean: “I have not submitted any other Claim covering the same apartment during the Class Period and know of no other Person having done so on my behalf or on behalf of any co-tenant Class Member.”
No, it should not be read to mean anything other than what it says. Each Class Member should submit their own claim. See Response to Question 10. - Can you clarify whether the abatement/cash payment calculation examples given in the settlement notice include the effects of allocating approximately $3.6 million to legal fees and costs? It looks like the examples in the notice assumed that the full $10 million settlement fund would be distributed to the class. Is that correct? If so, would it be more accurate to estimate the rebate or cash payment amounts as being roughly 64% of the numbers given in the notice? (I.e., to assume that only $6.4 million of settlement funds would be distributed to Class members.)
The numbers in the notice are for illustration purposes only and not based on any particular tenant or rent paid. The ultimate calculation, using the formula provided in the notice, will be based on the amount available for distribution after payment of attorneys’ fees and expenses which have not yet been set. - Assuming a Class Member tenant has not opted out of the Class, is the scope of the Release applicable to such Class Member affected in any way by whether the Class Member submits a Claim or accepts a rent abatement or cash payment from the settlement fund?
No, if a class member fails to opt out or submit a claim, they will be subject to the same release as those who did submit a claim as outlined in the notice and settlement agreement.
