SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK Index No. 650932/2017 HIMMELSTEIN, McCONNELL, GRIBBEN, DONOGHUE & JOSEPH, LLP, HOUSING COURT ANSWERS, INC., and MICHAEL McKEE, AMENDED Plaintiffs, VERIFIED CLASS ACTION COMPLAINT against MATTHEW BENDER & COMPANY, INC., A MEMBER OF LEXISNEXIS GROUP, INC. Defendant. The plaintiffs, HIMMELSTEIN, McCONNELL, GRIBBEN, DONOGHUE & JOSEPH, LLP, (hereafter, HMGDJ ) HOUSING COURT ANSWERS, INC. ( HCA ) and MICHAEL McKEE ( McKee ) (collectively, the plaintiffs ) by their attorneys, Fishman Rozen LLP, individually, and on behalf of the class defined herein, as and for their complaint against the defendant, MATTHEW BENDER & COMPANY, INC., a member of LEXISNEXIS GROUP, INC. (hereafter, Bender or the defendant ), allege as follows, upon information and belief: INTRODUCTION AND NATURE OF THE ACTION 1. Plaintiffs bring this action on behalf of themselves and a class comprised of (i) all Persons residing, or doing business, within the State of New York who purchased the New York Landlord-Tenant Law book published by the defendant, 1 1 of 39
also known as the Tanbook (the Tanbook ) from the defendant or any of its predecessors during the six-year period prior to the commencement of this action. 2. The Tanbook is issued on an annual basis and is described by the defendant as designed to provide authoritative information and as a compilation of all the laws and regulations governing landlord/tenant matters in New York, providing the text of state statutes, regulations and local laws. 3. The Tanbook is sold as part of a subscription service whereby purchasers can elect to automatically receive new editions of the book published annually each year as new editions are released. 4. The Tanbook is offered for sale to the general public via the defendant s website (https://store.lexisnexis.com) as well as through the widely used book seller Amazon.com (https://www.amazon.com/new-york-landlord-tenant- Tanbook-2016-ebook/dp/B018J1Z8DA/ref=sr_1_1?ie=UTF8&qid= 1495144452&sr=8-1&keywords=tanbook) 5. Subscription services for the Tanbook are regularly purchased by consumers, including lawyers, judges, real estate professionals, tenant advocacy and other groups, and individuals in New York State, and it has been for many years. 6. Rather than an authoritative source of state statutes, laws, and regulations, the Tanbook, which is represented by the defendant as complete and unedited, is instead, at least as pertains to those involving rent regulated housing in New York, 2 2 of 39
rife with omissions and inaccuracies, rendering it of no value to the attorneys, lay people, judges, and other consumers who use it. 7. The plaintiffs, and the class they seek to represent, allege that by selling the Tanbook with numerous omissions and incomplete laws and regulations the defendant breached its contract with the class members who purchased the book, and/or relied upon the subscription service and compilation services the book purported to provide to purchasers. 8. As a result of such breach of contract the plaintiffs and the purported class are entitled to recover their contract damages consisting of the amount they paid for the book during the six-year period prior to the commencement of this action. 9. The plaintiffs, and the class they seek to represent, further allege, as detailed herein, that the defendant has been unjustly enriched in the amount of all Tanbook sales during the six-year period prior to the commencement of this action. 10. The plaintiffs and the class they seek to represent further allege, as detailed herein, that the defendant engaged in deceptive business practices, in violation of New York General Business Law 349, and, as a result, they are entitled to recover their actual damages consisting of restitution for the amount paid to the defendant for the purchase of the Tanbook by each class member during the requisite statute of limitations period prior to the commencement of this action, together with an injunction barring the defendant from engaging in further deceptive practices and an award of statutory attorney s fees. 3 3 of 39
11. The plaintiffs, and the class they seek to represent, also allege that the defendant committed fraud by making uniform statements to the general public on its website in which it materially misrepresented that the Tanbook contained a complete and accurate compilation of the New York City rent regulation laws, that the defendant knew such representations to be false when made, that it made such representations with the intent of inducing members of the class to purchase the book and, as a result, they suffered damage in the amount of the purchase price they paid for the book. 12. The plaintiffs, and the class they seek to represent, seek an award of actual and punitive damages against the defendant for willfully and knowingly engaging in such fraud. 13. The plaintiffs, and the purported class, following certification, are also entitled to an award of attorney s fees pursuant to CPLR 909. 14. By this action, plaintiffs seeks to remedy the harm caused by defendant s wrongful conduct. As set forth below, plaintiffs and all those similarly situated should be awarded compensatory damages, restitution and/or other relief to redress defendant s unlawful and deceptive conduct constituting breach of contract and/or unjust enrichment and in violation of New York General Business Law 349. 4 4 of 39
JURISDICTION AND VENUE 15. This Court has jurisdiction under CPLR 302, because defendant regularly transacts business within the State of New York. 16. Venue is appropriate in New York County Court pursuant to CPLR 503, because plaintiffs are located in this county. THE PARTIES 17. HMGDJ is a law firm located at 15 Maiden Lane, New York, NY. HMGDJ is a limited liability partnership, duly registered as such with the State of New York. 18. All of the partners and associates of HMGDJ are attorneys admitted to practice before the courts of the State of New York. HMGDJ s website address is http://www.hmgdjlaw.com. 19. HMGDJ, which was first established in 1981, represents individuals, families, tenant associations, cooperative shareholder groups, condominium associations and commercial tenants in disputes over evictions, rent increases, rental-owner conversions and other issues. 20. Since at least 2010, and each year since, HMGDJ has had a subscription service with the defendant which included the purchase of multiple copies of the Tanbook from the defendant for use by its attorneys and non-attorney staff. 5 5 of 39
21. HCA, formerly known as Citywide Task Force on Housing Court, is a notfor-profit-corporation duly registered as such pursuant to Section 402 of the Not For Profit Corporation Law. 22. HCA maintains an office in the County, City and State of New York. It s website address is http://hcanswers.org. 23. HCA is duly registered with the Internal Revenue Service as a tax-exempt Section 501(c)(3) entity. 24. HCA is duly registered with the New York State Department of Law, Charities Bureau, as a non-for-profit charitable institution. 25. HCA s Mission Statement states: The mission of Housing Court Answers is to promote and protect the true administration of justice in the housing courts of New York City. The organization serves over 40,000 people annually, primarily people of low income and members of minority groups, who visit Housing Court Answers tables at the housing courts and who call our rent arrears hotline. Staff provides practical, easy-to-understand information in languages including Spanish, French, Mandarin, and Creole on housing court practices and procedures and on the laws that govern housing in the city. Staff also refers clients to legal service providers, community based organizations and government agencies and authorities that assist New Yorkers with housing issues. Housing Court Answers offers a free annual training series to housing advocates about housing law and housing services and programs and holds an annual conference that focuses on specific issues of interest relevant to housing court. 26. HCA has a paid staff of 18 non-lawyers who provide information and materials to pro se litigants, both landlords and tenants, at the New York City Housing Court in all five boroughs. 6 6 of 39
27. During the class period HCA entered a subscription service with the defendant which included the purchase of multiple copies of the Tanbook. 28. HCA non-lawyer staff members use the Tanbook in connection with its work on behalf of pro se Housing Court litigants. 29. McKee is an individual residing in the City and State of New York. 30. McKee is a long-time New York tenant advocate and tenant organizer who serves as a volunteer at various tenant advocacy organizations, including Tenants Political Action Committee and Metropolitan Council on Housing. 31. For many years during the class period McKee has had a subscription with the defendant which included the purchase of the Tanbook. 32. McKee purchased and uses the Tanbook in his capacity as a New York tenant organizer and tenant advocate as well as for his personal use in his capacity as an individual interested in, and concerned about, landlord-tenant issues in New York State. 33. The defendant is a domestic corporation with a place of business in New York at 230 Park Avenue, New York, NY. The defendant regularly engages in business in the State of New York. 34. The defendant is an operating division of LexisNexis Group, a subsidiary of RELX Group. 35. The defendant publishes various law related publications in New York and elsewhere in the United States. The Tanbook is among the publications that the defendant publishes in New York. 7 7 of 39
CLASS ACTION ALLEGATIONS 36. Plaintiff brings this action as a class action, pursuant to CPLR Article 9, on behalf of the Class consisting of (i) all persons residing or doing business within the State of New York who purchased the Tanbook from the defendant, or any authorized seller for the defendant or any of its predecessors during the six-year period prior to the commencement of this action (the class period ). Excluded from the class is the defendant, any employee, agent or officer of the defendant and any parent or subsidiary of the defendant and their employees, agents, officers, successors or assigns. 37. The Class satisfies the numerosity, commonality, typicality adequacy, predominance, and superiority requirements of CPLR 901. 38. The members of the Class are so numerous that joinder of all members is impracticable. Although the precise number of Class members is unknown to plaintiff at this time, and can be determined only by appropriate discovery, it is reasonably estimated that the Class consists of at least thousands of persons who are geographically dispersed throughout New York State and the United States. 39. Because each of the named plaintiffs purchased the Tanbook from the defendant in at least one of the previous six years they are members of the Class and their claims are typical of the claims of the members of the Class with the only variation pertaining to the number of books purchased by class members. 8 8 of 39
40. The harm suffered by plaintiffs and all other Class members was and is caused by the defendant s uniform conduct, i.e., defendant s sale of the Tanbook with numerous omissions and incomplete laws and regulations that were represented by the defendant to be complete and authoritative, which has resulted, or which could reasonably result, in the misapplication, misunderstanding, and incorrect citation, by lawyers, judges, and lay-people, of laws and regulations that are critical to rent regulated tenants in New York. 41. Plaintiffs will fairly and adequately represent and protect the interests of the Class in that plaintiffs have no interests antagonistic to, nor in conflict with, the Class. To further ensure such protection, plaintiffs have retained competent counsel, experienced in consumer, landlord-tenant, and class action litigation, who intends to prosecute this action vigorously. 42. A class action is superior to other available methods for the fair and efficient adjudication of this controversy. Because the monetary damages suffered by individual Class members are relatively small, the expense and burden of individual litigation make it virtually impossible for individual Class members to seek redress for the wrongful conduct alleged. If Class treatment of these claims were not available, defendant would likely continue its wrongful conduct of selling the Tanbook, and would also unfairly receive many hundreds, thousands, or millions of dollars for a product which has little or no value whatsoever to the persons purchasing it, or would otherwise escape liability for its wrongdoing, as alleged in this Complaint. 9 9 of 39
43. Common questions of law and fact exist as to all members of the Class, which predominate over any questions that may affect individual Class members. Among the questions of law and fact common to the Class are the following: a) whether the Tanbook is replete with omissions and incomplete laws and regulations pertaining to the New York rent regulations rendering it an unreliable resource for the attorneys, judges, tenant advocates, individuals and other consumers who use it; b) whether the defendant breached its contract with the class members by selling them a book that was represented to be a complete compilation of the laws and regulations set forth in it when in fact it was not; c) whether the defendant engaged in deceptive business practices by representing that the Tanbook to be a complete compilation of the laws and regulations set forth in it when in fact it was not; d) whether the defendant has been unjustly enriched with the proceeds of the sale of the Tanbook which has little or no value to its purchasers; e) whether the defendant has been unjustly enriched by charging its full price for the 2017 Tanbook because it was not published and issued until almost one-half of the year had elapsed; f) whether defendant should be enjoined from continuing to sell or offer to sell the Tanbook to members of the public without insuring that contains a complete and accurate compilation of the laws and regulations it purports to include; 10 10 of 39
g) whether the class members purchased the Tanbook from the defendant during the class period; and h) Whether the class members should be awarded punitive damages based upon the plaintiffs claim that the defendant committed a knowing and willful fraud on them by representing the Tanbook to contain a complete and accurate compilation of New York s rent regulations and laws when it knew that such representations were false. 44. The Class is readily definable, and prosecution of this action as a Class action will reduce the possibility of repetitious litigation. Upon information and belief, information concerning the names and addresses of class members who purchased the Tanbook during the class period is available from defendant s books and records. 45. Plaintiffs know of no difficulty which will be encountered in the management of this litigation that would preclude its maintenance as a Class action. FACTUAL ALLEGATIONS 46. The Tanbook is a book that is published by the defendant and marketed to individuals, law firms, courts and other consumers who are involved in Landlord/Tenant legal issues in New York State. 47. The Tanbook is part of a package of the defendant s Color Books including the Redbook, the Whitebook, the Bluebook, the Yellowbook the 11 11 of 39
Greenbook, the Graybook, and the Goldbook, each of which is aimed at lawyers, the judiciary, and other consumers involved in the subject matter of each volume. 48. It is estimated that the defendant sold at least 100,000 Tanbooks to class members during the class period. 49. An investigation conducted by the plaintiffs attorneys (the investigation ) confirmed that the 2016 Tanbook is rife with significant omissions and inaccurate provisions of state and local statutes and regulations concerning rent regulation in New York. 50. The same or more omissions also affect editions of the Tanbook from at least 2010. 51. That investigation consisted of a review of New York State and New York City rent regulation laws, including the Emergency Tenant Protection Regulations (9 NYCRR Parts 2500-2511), the Emergency Tenant Protection Act of 1974, the City Rent and Rehabilitation Law (NYC Admin. Code Sections 26-401 to 26-415) (the New York City Rent Control Law ), the New York City Rent and Eviction Regulations (9 NYCRR Parts 2200-2211) (the New York City Rent Control Regulations ), the Rent Stabilization Code (9 NYCRR Parts 2520-2531) and the Rent Stabilization Law (NYC Admin. Code Sections 26-501 to 26-507, 26-509-26-520). a) The investigation revealed that the following omissions and inaccuracies in the statutes and regulations reviewed: Emergency Tenant Protection Regulations: 6 omissions, 2 inaccuracies; 12 12 of 39
b) City Rent and Rehabilitation Law: 7 omissions, 2 inaccuracies; c) New York City Rent and Eviction Regulations: 8 omissions; d) Rent Stabilization Code: 9 omissions, 2 inaccuracies; e) Rent Stabilization Law: 7 omissions, 2 inaccuracies. The full list of omissions and inaccuracies is attached hereto as Exhibit A. 52. The sections of the laws and regulations omitted from the Tanbook or for which there are substantial inaccuracies concern significant aspects of New York Landlord/Tenant law, and include provisions providing protections to tenants under the various rent regulatory schemes. 53. For a substantial period of time the defendant knew that the Tanbook s compilation of these laws and regulations was incomplete and inaccurate. Despite such knowledge, the defendant has not taken any steps to notify or warn prior purchasers of the Tanbook of these deficiencies. 54. On or about May 22, 2017 the defendant issued a 2017 edition of the Tanbook. Upon information and belief, the 2017 edition includes the provisions of the various rent regulation statutes and regulations identified in the original complaint as missing from the 2016 edition of the book, thereby confirming that such provisions were previously absent and should have been in the book all along. 13 13 of 39
Examples of Omissions from the Rent Stabilization Law 55. By way of example, the 2016 Tanbook, and, upon information and belief, all prior editions of the Tanbook published during the class period, omit the entire sentence providing for the requirements under the NYC Rent Stabilization Law for disabled Rent Stabilized tenants to qualify for a Disability Rent Increase Exemption ( DRIE ) as described in 26-509b.(2)(i). That sentence, missing from the Tanbook, reads: To qualify as a person with a disability for the purposes of this section, an individual shall submit to such agency as the mayor shall designate proof (as specified by regulation of such agency as the mayor shall designate) showing that such individual is currently receiving social security disability insurance (SSDI) or supplemental security income (SSI) benefits under the federal social security act or disability pension or disability compensation benefits provided by the United States department of veterans affairs, or was previously eligible by virtue of receiving disability benefits under the supplemental security income program or the social security disability program and is currently receiving medical assistance benefits based on determination of disability as provided in section three hundred sixty-six of the social services law. 56. The 2016 edition of the Tanbook and, upon information and belief, all prior editions of the Tanbook published during the class period, omit the entire subsection providing for the mandated formula for calculating rents when a Rent Stabilized Tenant who is recipient of either a Senior Citizen Rent Increase Exemption ( SCRIE ) or a DRIE also receives a rent reduction order from the NYS Department of Housing and Community Renewal. That subsection [ 26-509b.(3)(i)(d)(iii)], missing from the Tanbook, reads: 14 14 of 39
When a rent reduction order is issued by the state division of housing and community renewal, the amount of the reduction shall be subtracted from the rent payable by the tenant specified in a currently valid rent exemption order issued pursuant to this subdivision. The landlord may not collect from the tenant a sum of rent exceeding the adjusted amount while the rent reduction order is in effect. Examples of Omissions or Substantial Inaccuracies from the Rent Stabilization Code 57. The 2016 edition of the Tanbook and, upon information and belief, all prior editions of the Tanbook published during the class period, omit two entire subsections of the Rent Stabilization Code regarding the applicability of Rent Stabilization for certain otherwise eligible housing accommodations. Rent Stabilization Code Part 2520.11(r) (5) and Part 2520.11(r)(6) are not found in the Tanbook. They read as follows (omissions in bold): Part 2520.11 Applicability This Code shall apply to all or any class or classes of housing accommodations made subject to regulation pursuant to the RSL or any other provision of law, except the following housing accommodations for so long as they maintain the status indicated below: (r) housing accommodations which (5) became or become vacant on or after June 24, 2011, with a legal regulated rent of $ 2,500 or more per month; (6) exemption pursuant to this subdivision shall apply regardless of whether the next tenant in occupancy or any subsequent tenant in occupancy is charged or pays less than the applicable amount qualifying for deregulation as provided in this subdivision; 15 15 of 39
58. The 2016 edition of the Tanbook and, upon information and belief, all prior editions of the Tanbook published during the class period, omit the subsection of the Rent Stabilization Code regarding the level of high rent high income vacancy deregulation in effect since July 1, 2011. Rent Stabilization Code Part 2520.11(s)(2) is not found in the Tanbook. That section exempts housing accommodations which: (2) have a legal regulated rent of $ 2,500 or more per month as of July 1,2011 or after, and which are occupied by persons who had a total annual income in excess of $ 200,000 per annum for each of the two preceding calendar years, where the first of such two preceding calendar years is 2010 or later, with total annual income being defined in and subject to the limitations and process set forth in Part 2531 of this Title; 59. The 2016 edition of the Tanbook and, upon information and belief, all prior editions of the Tanbook published during the class period, omit the entire subsection of the Rent Stabilization Code regarding applications for adjustment of initial legal regulated rent for housing accommodations under RSC 2522.3(f). This subsection, among its other requirements, generally limits the use of allegations of unique or peculiar circumstances by landlords to seek initial rent levels beyond levels prevailing in the same area for substantially similar housing [ 2522.3(f)(2)], and eliminates consideration of previous rent regulation under the New York Private Housing Finance Law ( PHFL ) or other State or Federal laws, in and of itself, as a unique or peculiar circumstance. [ 2522.3(f)(4)]. The full text of subsection 2522.3(f), omitted entirely in the Tanbook, reads as follows: 16 16 of 39
(1) Except as provided in section 2521.1(a)(2) of this code, the landlord or tenant of a housing accommodation made subject to this code by the ETPA may, within 60 days of the date the housing accommodation became subject to the ETPA or the commencement of the first tenancy thereafter, file an application on forms prescribed by the DHCR to adjust the initial legal regulated rent on the grounds that the presence of unique or peculiar circumstances materially affecting the legal regulated rent has resulted in a rent which is substantially different from the rents generally prevailing in the same area for substantially similar housing accommodations. (2) The DHCR may grant an appropriate adjustment of the initial legal regulated rent upon finding that such grounds do exist, provided that the adjustment shall not result in a legal regulated rent substantially different from the legal regulated rents generally prevailing in the same area for substantially similar housing accommodations. (3) Any such adjustment shall consider, in addition to the factors contained in section 2522.3(f)(2), the equities involved and the general limitations required by section 2522.7 of this Part. (4) Previous regulation of the rent for the housing accommodation under the PHFL or any other State or Federal law shall not, in and of itself, constitute a unique and peculiar circumstance within the meaning of this subdivision. Any change in economic circumstances arising as a consequence of the termination of such prior regulation of rent may only be addressed in a proceeding for adjustment of the legal regulated rent under paragraphs (b) and (c) of section 2522.4 of this Part. 60. The 2016 edition of the Tanbook, and, upon information and belief, all prior editions of the Tanbook published during the class period, completely omit RSC 2522.8(a)(3). That subsection limits a landlord from taking a vacancy rent increase to no more than one time in any one calendar year. The full text of subsection 2522.8(a)(3), omitted entirely in the Tanbook, reads as follows: 17 17 of 39
(3) Effective June 24, 2011, the increase authorized in this paragraph may not be implemented more than one time in any calendar year, notwithstanding the number of vacancy leases entered into in such year. 61. The 2016 edition of the Tanbook, and, upon information and belief, all prior editions of the Tanbook from approximately 2013 through 2016 to the present, failed to provide an accurate version of the penalties a landlord may face if it is found to have violated an order of the DHCR. Since approximately October 2012, RSC 2526.2(c)(1) has allowed DHCR to impose a penalty of $1,000 for the first such offense and $2,000 for each subsequent offense. Since approximately October 2012, if an owner has been found by DHCR to have harassed a tenant RSC 2526.2(c)(2) provides that DHCR may impose a penalty of $2,000 for the first such offense and $10,000 for each subsequent offense. 62. The Tanbook s version of these sections has not been accurate for over four years and instead states that the penalties for such violations are significantly lower than the penalties that have been in effect for some time. The full text of these two sections 2526.2(c)(1) and 2526.2(c)(2) reads as follows: (c) If the owner is found by the DHCR: (1) to have violated an order of the DHCR, the DHCR may impose, by administrative order after holding a hearing, a penalty in the amount of $ 1,000 for the first such offense and $ 2,000 for each subsequent offense; or (2) to have harassed a tenant to obtain a vacancy of a housing accommodation, the DHCR may impose, by administrative order after holding a hearing, a penalty in the amount of $ 2,000 for the first such 18 18 of 39
offense and up to $ 10,000 for each subsequent offense or for a violation consisting of conduct directed at the tenants of more than one housing accommodation. Such order shall be deemed a final determination for the purposes of judicial review pursuant to Part 2530 of this Title. Such penalty may, upon the expiration of the period for seeking review pursuant to article 78 of the Civil Practice Law and Rules, be docketed and enforced in the manner of a judgment of the Supreme Court; or Examples of Omissions from the City Rent and Rehabilitation Law (NYC Rent Control Law) 63. The 2016 edition of the Tanbook and, upon information and belief, all prior editions of the Tanbook published during the class period, omit the entire sentence providing for the requirements under the City Rent and Rehabilitation Law (also known as the NYC Rent Control Law), N.Y.C. Administrative Code Sections 26-401 26-415, for disabled Rent Control tenants to qualify for a DRIE as described in NYC Administrative Code 26-405m.(2)(i). That sentence reads: To qualify as a person with a disability for the purposes of this section, an individual shall submit to such agency as the mayor shall designate proof (as specified by regulation of such agency as the mayor shall designate) showing that such individual is currently receiving social security disability insurance (SSDI) or supplemental security income (SSI) benefits under the federal social security act or disability pension or disability compensation benefits provided by the United States department of veterans affairs, or was previously eligible by virtue of receiving disability benefits under the supplemental security income program or the social security disability program and is currently receiving medical assistance benefits based on determination of disability as provided in section three hundred sixty-six of the social services law. Nothing herein contained shall render ineligible for benefits persons receiving supplemental security income or additional state payments, or both, under a program administered by the United States department of health and human services or by such department and the New York State department of social services. 19 19 of 39
64. The 2016 edition of the Tanbook, and, upon information and belief, all prior editions of the Tanbook published during the class period, omit the entire subsection in the City Rent and Rehabilitation Law providing the mandated formula for calculating rents when a Rent Controlled Tenant who is recipient of either a SCRIE or a DRIE also receives a rent reduction order. That subsection [ 26-405m.(3)(a)(iii)] reads as follows: (c) When a rent reduction order is issued by the city rent agency, the amount of the reduction shall be subtracted from the rent payable by the tenant specified in a currently valid rent exemption order issued pursuant to this subdivision. The landlord may not collect from the tenant a sum of rent exceeding the adjusted amount while the rent reduction order is in effect. Examples of Omissions from the New York City Rent and Eviction Regulations (NYC Rent Control Regulations) 9 NYCRR Parts 2200-2211 65. The 2016 edition of the Tanbook, and, upon information and belief, all prior editions of the Tanbook published during the class period, omit two entire subsections of the New York City Rent and Eviction Regulations regarding the applicability of Rent Control for certain otherwise eligible housing accommodations. NYC Rent and Eviction Regulations 2200.2(f)(19)(v) and 2200.2(f)(19)(v) are not found in the Tanbook. They read as follows (omissions in bold): 2200.2 Statutory definition (f) Housing accommodations not subject to control. Notwithstanding the foregoing definition of housing accommodations, these regulations shall not apply to the following: 20 20 of 39
(19) Housing accommodations which: (v) became or become vacant on or after June 24, 2011, with a maximum rent of $2,500 or more per month; (vi) exemption pursuant to this paragraph shall apply regardless of whether the next tenant in occupancy or any subsequent tenant in occupancy is charged or pays less than the applicable amount qualifying for deregulation as provided in this paragraph; 66. The 2016 edition of the Tanbook and, upon information and belief, all prior editions of the Tanbook published during the class period, omit the subsection of the NYC Rent and Eviction Regulations regarding the level of high rent high income vacancy deregulation in effect since July 1, 2011. NYC Rent and Eviction Regulations Part 2200.2(f)(20(ii) is not found in the Tanbook. It exempts housing accommodations which: (ii) have a maximum rent of $ 2,500 or more per month as of July 1, 2011 and which are occupied by persons who had a total annual income in excess of $ 200,000 per annum for each of the two preceding calendar years, where the first of such two preceding calendar years is 2010 or later, with total annual income being defined in and subject to the limitations and process set forth in Part 2211 of this Title; Examples of Omissions or Substantial Inaccuracies from the Emergency Tenant Protection Regulations 67. The 2016 edition of the Tanbook and, upon information and belief, all prior editions of the Tanbook published during the class period, omit two entire subsections of the Emergency Tenant Protection Regulations regarding the 21 21 of 39
applicability of Rent Stabilization for certain otherwise eligible housing accommodations. Emergency Tenant Protection Regulations Sections 2500.9(m)3 and 2500.9(m)(4). They read as follows (omissions in bold): 2500.9 Housing accommodations subject to regulation This Chapter shall apply to all or any class or classes of housing accommodations in a city, town or village for which a declaration of emergency has been made except the following: (m) housing accommodations which: (3) became or become vacant on or after June 24, 2011, with a legal regulated rent of $ 2,500 or more per month; (4) exemption pursuant to this subdivision shall apply regardless of whether the next tenant in occupancy or any subsequent tenant in occupancy is charged or pays less than the applicable amount qualifying for deregulation as provided in this subdivision; 68. The 2016 edition of the Tanbook and, upon information and belief, all prior editions of the Tanbook published during the class period, omit the entire subsection of the Emergency Tenant Protection Regulations regarding the limitation of a vacancy rent increase to one time in any calendar year. [Emergency Tenant Protection Regulations 2502.7(a)(3)]. This subsection prohibits a landlord from taking a vacancy rent increase more than one time in any one calendar year. The full text of subsection 2502.7(a)(3), omitted in the Tanbook, reads as follows: (3) Effective June 24, 2011, the increase authorized in this paragraph may not be implemented more than one time in any calendar year, notwithstanding the number of vacancy leases entered into in such year. 22 22 of 39
69. The 2016 edition of the Tanbook, and, upon information and belief, all prior editions of the Tanbook from approximately 2013 to the present, fail to provide an accurate version of the penalties a landlord may face if found to have violated an order of the DHCR. Since approximately October 2012 the Emergency Tenant Protection Regulations under 2506.2(c)(1) has allowed DHCR to impose a penalty of $1,000 for the first such offense and $2,000 for each subsequent offense. Since approximately October 2012, if a landlord has been found by DHCR to have harassed a tenant, the Emergency Tenant Protection Regulations under 2506.2(c)(2) provide that DHCR may impose a penalty of $2,000 for the first such offense and $10,000 for each subsequent offense. The Tanbook s version of these penalties has not been accurate for at least four years and provides for significantly less fines then have been in effect for some time. The full text of these two sections 2506.2(c)(1) and 2506.2(c)(2) read as follows: (c) If a landlord is found by the division: (1) to have violated an order of the division, the division may impose by administrative order after hearing, a civil penalty in the amount of $ 1,000 for the first such offense and $ 2,000 for each subsequent offense; or (2) to have harassed a tenant to obtain vacancy of a housing accommodation, the division may impose by administrative order after hearing, a civil penalty in the amount of $ 2,000 for the first such offense and up to $ 10,000 for each subsequent offense or for a violation consisting of conduct directed at the tenant of more than one housing accommodation. 23 23 of 39
70. There is no indication in the Tanbook s text or promotional materials that would suggest to any purchaser that the Tanbook does not contain the complete sections of the rent regulation laws and regulations identified above, or that it is not a complete and definitive compilation of those laws and regulations. 71. To the contrary, the defendant s uniform representations, made on its website as well as in the book itself, confirm that it claims, and has claimed, that the book is a complete and definitive compilation of the New York rent regulation laws and regulations. 72. The defendant s failure to include all of the sections of the New York rent regulation laws and regulations has resulted in at least one instance of a litigant being harmed because both his attorney and a New York State Supreme Court Justice mistakenly relied upon the Tanbook s compilation of the New York Rent Stabilization Law. 73. On or about December 5, 2016, Matthew Chachère, an attorney at Northern Manhattan Improvement Corporation Legal Services ( NMIC Legal Services ), sent a letter to the defendant advising that he had discovered certain inaccuracies in the 2016 edition of the Tanbook s compilation of the RSL in the course of representing a client in a matter before this Court. (Attached as Exhibit B) 24 24 of 39
74. Mr. Chachere attached with the letter he sent to the defendant a motion he had recently filed seeking reargument of a decision based upon error of law caused by reliance on the Tanbook. (See Exhibit B) 75. In his letter, Mr. Chachère urged the defendant to take prompt corrective action so that others do not unknowingly rely on obsolete law to their detriment (or to the detriment of third parties). 76. On or about December 13, 2016 Mr. Chachère received a written response to his letter from Jacqueline M. Morris Legal Content Editor LexisNexis Matthew Bender, stating: We sincerely apologize for these issues which occurred long ago and have only recently been brought to our attention. We are currently discussing next steps with the Product Manager. We plan to replace all of the content of the Tanbook for the 2017 edition which will ship in early 2017. (Attached as Exhibit C) 77. Despite Ms. Morris letter, made over five months ago, the defendant did not, until on or about May 22, 2017, issue a 2017 edition of the Tanbook. More significantly, it is apparent that the defendant was long aware of the deficiencies described in this action yet it took no steps to warn its customers of them. 78. Upon information and belief, prior to 2017, the defendant issued new editions of the Tanbook in early January of each year. 79. The 2017 edition of the Tanbook was not issued until on or about May 22, 2017, almost six months into the current year. 25 25 of 39
80. The 2017 edition of the Tanbook will only be current for approximately six months, and the defendant s subscribers were thereby deprived of a current version of the book for almost half of the current year. Nevertheless, the defendant charged its subscribers the full price for the book and did not pro rate that price to take into account the diminished amount of time it would remain current. FIRST CAUSE OF ACTION: BREACH OF CONTRACT 81. Plaintiff repeats each and every allegation set forth above as if fully stated herein. 82. The listing for the Tanbook on the defendant s online store website states that it includes all the laws and regulations governing landlord/tenant matters in New York, providing the text of state statutes, regulations, and local laws. (https://store.lexisnexis.com). 83. The defendant s website further states that while the Tanbook includes only provisions of the RPL, RPAPL, MDL, Lien Law, RPTL, CPLR and GBL (emphasis added), and select Local Laws from New York City, Albany, and Rochester (emphasis added), that the book also includes the Rent stabilization and rent control laws and regulations (https://store.lexisnexis.com) at a minimum implying, if not actually confirming, that such laws and regulations are reproduced in their entirety. 26 26 of 39
84. The defendant describes, and has described, the Tanbook as a compilation of the statutory and regulatory provisions governing landlord-tenant matters in New York State. (2016 Tanbook, Overview, contained in both the book and on the defendant s website.) 85. Part III of the Tanbook is entitled Rent Regulation and is described in the book s Overview, appearing in both the book and on the defendant s website, as being comprised of the laws and regulations covering rent stabilization and rent control in New York City and in applicable areas elsewhere in the state. 86. As in its online store, the Tanbook s overview states that the other sections of the book are intended to be selected provisions, selected local laws, and various provisions, in contrast to Part III, which indicates that it is a complete reproduction of the rent stabilization and rent control laws and regulations. 87. In reality, editions of the Tanbook published before the commencement of this action are not an authoritative source of rent regulation laws and regulations in New York. Nor are such editions a complete compilation of such laws and regulations. Instead, such editions of the Tanbook are an unreliable and incomplete resource missing a significant number of statutory and regulatory rent regulation provisions. 88. Upon information and belief, the missing or inaccurate provisions of the 2016 Tanbook were also missing or inaccurate in each of the annually published editions of the Tanbook during the entire class period. 27 27 of 39
89. By offering a complete and authoritative compilation of such laws and regulations and then failing to provide such a product and service to the plaintiff and members of the class, the defendant breached its contract with such persons and entities. 90. Upon information and belief, the defendant currently sells the Tanbook for prices ranging from $108.00 to $120.00. 91. Upon information and belief, the defendant previously sold the Tanbook during the class period for prices ranging from $60-$120.00. 92. The plaintiffs and the class suffered contract damages in the amount they paid for the Tanbook during the class period. 93. The plaintiffs and the class are entitled to a money judgment against the defendant in an amount equal to the total Tanbook sales to class members during the class period. 94. In addition, the defendant impliedly contracted with its subscribers that it would produce and provide a new edition of the book at the beginning of each year. 95. The defendant breached that service contract with its subscribers in 2017 by failing to produce and provide the 2017 edition of the book until on or about May 22, 2017. 96. Despite not producing and providing the book to its subscribers until on or about May 22, 2017, the defendant charged them the full price of the 2017 edition 28 28 of 39
of the Tanbook even though it was not issued until almost half the current year had elapsed. 97. The defendant failed to pro rate the cost of the book to its subscribers even though it will only be usable by them for little more than half the year, instead of the full year that each subscriber contracted for when they entered their subscription service agreement with the defendant. 98. In addition, the plaintiffs are entitled to recover the pro rata amount of the 2017 Tanbook price they were billed and paid, from the beginning of the year through the date of its release in May 2017 because the defendant breached its contract to provide the book at the beginning of the year. SECOND CAUSE OF ACTION: DECEPTIVE BUSINESS PRACTICES IN VIOLATION OF GENERAL BUSINESS LAW ART. 22-A 99. Plaintiffs repeat each and every allegation set forth above as if fully stated herein. 100. GBL 349(a) states: Deceptive acts or practices in the conduct of any business, trade or commerce or in the furnishing of any service in this state are hereby declared unlawful. 101. GBL 349(h) states, in pertinent part, any person who has been injured by reason of any violation of this section may bring an action in his own name to enjoin such unlawful act or practice, an action to recover his actual damages or fifty dollars, whichever is greater, or both such actions. The court 29 29 of 39
may, in its discretion, increase the award of damages to an amount not to exceed three times the actual damages up to one thousand dollars, if the court finds the defendant willfully or knowingly violated this section. The court may award reasonable attorney s fees to a prevailing plaintiff. 102. The Tanbook subscription service is offered for sale to the general public via the defendant s website (https://store.lexisnexis.com) as well as through the widely used online book seller Amazon.com (https://www.amazon.com/new- York-Landlord-Tenant-Tanbook-2016-ebook/dp/B018J1Z8DA/ref=sr_1_1? s=digital-text&ie=utf8&qid=1495208548&sr=1-1). 103. Neither the defendant nor Amazon places any restrictions on who can purchase the Tanbook. As such, the Tanbook is offered for sale to consumers generally. 104. Upon information and belief, the Tanbook subscription service is purchased by lawyers, law firms, individuals, tenant advocacy and other groups and entities such as law libraries where it is used by law students, as well courts, where it is used by judges and court staff. As such, all of these purchasers are consumers of the defendant s product. 105. Upon information and belief, the Tanbook is also purchased, and has been purchased for personal use, by individual tenants and landlords, who are not lawyers, seeking a publication which contains the relevant landlord-tenant laws and regulations applicable in New York, and which pertain to their own tenancies or leases. 30 30 of 39
106. Based upon the generalized, non-restricted sale of the Tanbook through internet websites owned or approved by the defendant, where it is offered to sale to the general public, and based upon the actual sale of the book to individuals who use it to obtain an understanding of their personal tenancy and lease rights, the sale of the Tanbook is consumer-oriented as that term has been applied by the Courts of this state. 107. The named plaintiffs are all consumers of the defendant s Tanbook subscription service in that they purchased it for their own personal use and not for resale to anyone else. 108. The defendant represents, and has long represented, to Tanbook purchasers, and prospective purchasers, as authoritative, and representative of the complete text of the rent stabilization and rent control laws and regulations. 109. The defendant advises purchasers and prospective purchasers of the Tanbook the method by which they should cite it to courts. The 2016 book states, Cite this publication as: New York Landlord-Tenant Law, Tanbook, Ch. Title., no. (2015 ed. LexisNexis/Matthew Bender, 2015). Upon information and belief, prior editions and the 2017 edition have a similar advisory. 110. These representations similarly appear on the defendant s website where it promotes the purchase of the Tanbook to prospective purchasers. 111. The defendant s representations that the Tanbook is a complete and authoritative source of rent regulation laws and regulations is false, deceptive and misleading because it, at least through 2016, undeniably omits, or inaccurately 31 31 of 39
presents, numerous sections of the key rent regulatory laws and regulations, constitutes a materially deceptive act and practice in the conduct of business, trade, or commerce or in the furnishing of services in this State which affect the public interest under GBL 349. 112. The plaintiff and the Class have been injured by defendant s conduct in the amount they paid for the Tanbook during the class period. 113. The defendant is liable to the plaintiff and the class for the actual damage they sustained as allowable under GBL 349 in an amount to be determined at trial. 114. Additionally, the defendant should be enjoined from continuing to engage in illegal deceptive business practices by continuing to sell the Tanbook, or offering it for sale, to consumers by falsely claiming that it fully and accurately contains all of the provisions of the RSL, the RSC, the Rent Control Law and the Rent Control regulations if it does not. THIRD CAUSE OF ACTION: UNJUST ENRICHMENT 115. Plaintiff repeats each and every allegation set forth above as if fully stated herein. 116. Defendant has been unjustly enriched at the expense of and to the detriment of plaintiff and the Class by wrongfully charging and receiving payment for the Tanbook under the facts and circumstances alleged. Defendant s retention 32 32 of 39
of the monies wrongfully collected from plaintiff and the Class violates fundamental principles of justice, equity, and good conscience. 117. Plaintiff and the Class are entitled to recover from defendant all amounts as unjust enrichment that have been wrongfully and improperly collected and retained by defendant, and defendant should be required to disgorge the monies which it has unjustly obtained. 118. In addition, for many years prior to 2017 the defendant published a new edition of the Tanbook at the beginning of each calendar year. 119. As a result of a long standing pattern and practice of doing so, the defendant impliedly contracted with its subscribers that the new edition of the Tanbook would be published and made available to them for a full year. 120. The defendant did not publish and issue the 2017 Tanbook to its subscribers until on or about May 22, 2017. 121. The defendant breached its implied contract with its subscribers that it would publish and issue the 2017 edition of the book at the beginning of 2017. 122. Despite not producing and providing the book to its subscribers until on or about May 22, 2017, the defendant charged them the full price of the 2017 edition of the Tanbook, even though it was not issued until almost half the current year had elapsed. 123. The defendant failed to pro rate the cost of the book to its subscribers even though, if accurate and complete, it will only be usable by them for little more than half the year, instead of the full year that each subscriber 33 33 of 39
contracted for when they entered their subscription service agreement with the defendant. 124. The plaintiffs and the class they represent, are entitled to recover the pro rata amount of the 2017 Tanbook price they were billed and paid, from the beginning of the year through the date of its release in May 2017. FOURTH CAUSE OF ACTION: FRAUD 125. Plaintiffs repeat each and every allegation set forth above as if fully stated herein. 126. The defendants made uniform statements to the general public on its website that the Tanbook contained a complete and accurate compilation of the New York City rent regulation laws. 127. Such representations were materially false; in fact, at least through the 2016 edition, the Tanbook failed to include significant portions of such laws. 128. The defendant knew such representations to be false because it was aware that the Tanbook had not been updated to include additions and amendments to New York regulations and laws. 129. In December 2016 an attorney who regularly used the Tanbook discovered the omission of significant portions of the New York City rent regulation laws and conveyed his discovery directly to the defendant. (See Exhibit B) 130. In response, in December 2016, the defendant, through an authorized agent, advised the attorney, these issues which occurred long ago 34 34 of 39
and have only recently been brought to our attention. We are currently discussing next steps with the Product Manager. We plan to replace all of the content of the Tanbook for the 2017 edition which will ship in early 2017. (See Exhibit C) 131. The defendant thereby conceded that it knew the Tanbook had significant omissions and that those omissions existed for many years. 132. During the class period the defendant falsely represented to the general public that the Tanbook contained a complete compilation of the New York City Rent regulations and laws as part of an inducement to prospective purchasers of the book. 133. The plaintiffs and the class they seek to represent suffered uniform damages as a result of the defendant s fraud, in the amount they paid for the Tanbook during the class period. 134. The defendant s fraudulent conduct, as detailed here, was directed to the general public. 135. The defendant s conduct, in continuing to make such representations for years, when it knew them to false, is outrageous, gross, and involves high moral culpability. 136. In order to punish the defendant and deter it, and others, from engaging in such conduct in the future, the trier of fact should award punitive damages in a sufficient amount to achieve such punishment and deterrence. WHEREFORE, plaintiffs, on behalf of itself and the Class, demand 35 35 of 39
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STATE OF NEW YORK ) ) ss: COUNTY OF NEW YORK ) VERIFICATION JENNIFER LAURIE, being duly sworn, deposes and says: I am the Executive Director of Housing Court Answers, Inc., a plaintiff in this action. I have read the amended complaint in this action and verify that the allegations set forth therein are true and accurate to the best of my knowledge except for those matters which are alleged upon information and belief and as to those matters I believe them to be true. Sworn to me this 25 th day of May, 2017 IE -:. 38 38 of 39