Munguia-Brown v. Equity Residential

Background

The court resolved outstanding motions in a class action involving Plaintiffs’ claims about the validity of late rental fees charged under residential leases. The opinion states that the court had original jurisdiction under the Class Action Fairness Act. It also states that Plaintiffs sought restitution of potentially excessive late fees collected from California tenants, along with injunctive and declaratory relief if the fees were unlawful.

Set-off claims

Plaintiffs moved under Federal Rule of Civil Procedure 12(b)(1), which concerns subject-matter jurisdiction, to dismiss Defendants’ set-off claims in their seventh affirmative defense. The court declined to exercise supplemental jurisdiction over Defendants’ individualized claims seeking to offset alleged debts such as cleaning charges, early-termination fees, attorneys’ fees, court costs, unpaid rent, and other monthly fees. The court found those debts sufficiently unrelated to Plaintiffs’ challenge to the late rental fees and concluded that including them would make the class action unmanageable.

The court stated that, under its prior rulings and California law, the disputed late fees could be set off only by damages from lost use of funds and additional costs incurred in collecting and accounting for late rent. It therefore granted Plaintiffs’ motion to dismiss Defendants’ other debt-collection set-off claims.

Summary judgment concerning David Bonfanti

Defendants sought summary judgment, or partial summary judgment, on Plaintiff David Bonfanti’s claims. They argued that he knowingly and voluntarily paid late fees on fifteen occasions and therefore could not recover if the late-fee provision were found unlawful. Defendants relied on the voluntary-payment doctrine, a defense concerning payments made with full knowledge of the relevant facts and their legal significance.

The court declined to decide what the California Supreme Court might hold about applying that doctrine in the consumer-protection context. Instead, based on the evidence, it found a factual dispute about whether Bonfanti knew that the late fees were excessive or illegal when he paid them. The court therefore denied Defendants’ motion for partial summary judgment as to Plaintiff David Bonfanti’s claims.

Third amended complaint

Plaintiffs sought leave under Rule 15(a) to file a third amended complaint. They proposed adding Shannah Smith, a current Equity Residential tenant with standing to seek injunctive relief; changing the class definitions to include tenants who were charged and/or paid one or more late fees; and extending the Standard Late Fee Class Period to 75 days before trial instead of ending it on October 23, 2017.

The court allowed amendment to add a current tenant as a class representative and to extend the period for potential recovery to 75 days before trial. It rejected the proposed amendment that would include roommates or others who paid late fees but were not contractually obligated to pay them. The court therefore granted in part and denied in part Plaintiffs’ motion for leave to file their third amended complaint.

Class certification

Based on the permitted complaint amendments, Plaintiffs also sought to modify the class-certification order. The court granted the requested changes concerning adding Shannah Smith and extending the Standard Late Fee Class Period. It denied the request to include people, such as roommates, who may have paid late fees but were not contractually obligated to pay them, finding that those potential plaintiffs lacked commonality and typicality with the class. The court therefore granted in part and denied in part Plaintiffs’ motion to modify the class-certification order.

Managerial employees

Defendants sought to exclude from the class approximately 40 management-level employees who lived at an Equity property during the class period and were charged a late fee. The court found no serious or irreconcilable conflict requiring their exclusion. It concluded that their employment and alleged involvement in implementing the challenged policy did not create a sufficiently serious conflict of interest. The court therefore denied Defendants’ motion to modify the prior orders to exclude managerial employees.

Administrative motion and case management

The court reviewed Plaintiffs’ administrative motion to strike, or alternatively to obtain leave to file a response to Defendants’ objections, and found it extraneous. The court denied that administrative motion.

The opinion lists Plaintiffs’ administrative motion to file documents under seal among the outstanding motions, but the provided text does not state a disposition for that motion. The court set a further case-management conference for November 12, 2021, at 11:00 a.m., and ordered the parties to submit a joint case-management statement by November 5, 2021.