Munguia-Brown v. Equity Residential

Background

The plaintiffs are current and former tenants in Equity Residential’s California properties who were charged late fees after failing to pay rent on time. The plaintiffs contend that the late-fee provision was an unlawful liquidated-damages provision; Equity disputes that contention.

The court previously certified two classes: the Standard Late Fee class and the Woodland Park Pre-Existing Lease class. It later recertified the Standard Late Fee class to extend the class period until 75 days before trial, added Shannah Smith as a class representative, and certified a class seeking injunctive relief under Federal Rule of Civil Procedure 23(b)(2).

The opinion addresses a motion by defendants to decertify the classes, a motion by plaintiffs to exclude the opinion testimony of Mark J. Hosfield, a motion by plaintiffs for sanctions, and several motions to seal documents. The conclusion separately states dispositions for the three substantive motions but does not state a separate disposition for the sealing motions.

Motion to Decertify the Classes

The court held that defendants had to show changed facts or law justifying decertification. Equity argued that the classes no longer satisfied requirements such as numerosity, typicality, adequate representation, common questions, or the applicable class categories under Rule 23.

The court found that Equity’s uniform late fee continued to create common questions about liability. It also held that potential offsets for certain costs were a separate damages issue that did not defeat the predominance of common issues. The court found that damages could be determined using common evidence, including records of late payments, assessed fees, and actual costs related to late payments.

The court also rejected Equity’s argument that the voluntary-payment defense required individualized inquiries. It stated that the defense depended largely on whether class members were fully informed about facts bearing on the validity of the late fee. The court found that defendants had not presented new facts or law warranting decertification and DENIED defendants’ motion for decertification of the classes.

Motion to Exclude Expert Testimony

Plaintiffs sought to exclude Hosfield’s testimony under Federal Rule of Evidence 702 and the standards governing expert evidence. Hosfield calculated Equity’s costs of collecting late rent by asking a small representative group of property-level employees to estimate the time they spent on collections and then using those percentages to estimate compensation costs for employees across the company.

The court concluded that most of plaintiffs’ challenges concerned the weight of Hosfield’s conclusions rather than whether the testimony was admissible. Because the case would be tried to the court, the judge could consider the methodology during cross-examination and assign the testimony the appropriate weight. The court did not find the methodology and calculations unacceptably imprecise and stated that it could make further reliability and admissibility determinations during trial. The court DENIED plaintiffs’ motion to exclude Hosfield’s testimony.

Motion for Sanctions

Plaintiffs sought $114,441.40 in monetary sanctions under Federal Rule of Civil Procedure 16(f), alleging that Equity violated the court’s scheduling orders. Plaintiffs argued that Equity had represented that it stopped charging late fees during the pandemic and that its costs from March 2020 onward were not relevant.

The opinion states that Equity briefly resumed imposing late fees in California in August 2020 and resumed them more permanently in February 2021. Equity argued that pandemic-period costs became relevant only after plaintiffs successfully extended the class period and that it provided information about pandemic-era late fees and policies once that information became relevant. Equity had also advised that an expanded class and time period would require new cost data and revised expert analysis.

The court found no fault with Equity’s addition of discoverable materials concerning the expanded class and DENIED plaintiffs’ motion for sanctions.

Disposition

The court DENIED defendants’ motion for decertification, DENIED plaintiffs’ motion to exclude Mark J. Hosfield’s expert opinion, and DENIED plaintiffs’ motion for sanctions against defendants.