New York City Housing Authority Secures Denial of Motion to Enforce Class Action Settlement Agreement

Paul, Weiss achieved a significant victory for the New York City Housing Authority (NYCHA), securing the denial of a motion to enforce a seven-year-old class action settlement over mold abatement. NYCHA and Paul, Weiss successfully argued that the settlement, which requires NYCHA to remediate mold problems, does not apply to thousands of NYCHA apartments now under private management under a public-private partnership.

NYCHA and a class of residents who suffer from asthma reached a settlement agreement in 2013, in which NYCHA agreed to remediate mold and excessive moisture in housing developments it owned and operated according to an extensive standard procedure. Soon thereafter, NYCHA transitioned some of its housing to the Permanent Affordability Commitment Together (PACT) program, a public-private partnership in which former NYCHA-operated developments are leased to private developers, who in turn invest hundreds of millions of dollars to renovate the developments and operate them more efficiently. Without PACT, NYCHA’s aging housing stock would be in crisis; well over half of NYCHA’s developments are 50 or more years old and continue to deteriorate under its $40 billion of current capital needs.

Amidst the implementation of PACT, the parties reached a revised consent decree that explicitly excluded PACT housing from NYCHA’s obligation under a revised standard procedure. Two years later, and as more developments were transitioned to PACT, plaintiffs brought a motion to enforce the settlement, arguing that the revised consent decree applied to PACT housing. The plaintiffs’ motion, if granted, stood to jeopardize the PACT program by potentially binding private developers to a mold procedure that only NYCHA can implement, thus likely threatening the most significant chance that residents have of remediating mold at its source through capital improvements.

In denying the plaintiffs’ motion, Judge William H. Pauley III of the Southern District of New York adopted NYCHA’s interpretation of the revised consent decree in full. The court held that the terms of the revised consent decree were unambiguous, and that the plaintiffs’ competing interpretations suffered fatal flaws, namely that the standard procedure plainly excluded PACT from its application even after the plaintiffs had knowledge that PACT was in operation. Ultimately, because this ruling leaves PACT potentially without relief, the court ordered the parties to either revise the consent decree an additional time or propose a pre-trial schedule to further litigate the action. With this victory, NYCHA will be in the best position possible to chart a future course that hopefully ensures PACT can continue.

The Paul, Weiss team included litigation partner Gregory Laufer, who argued the motion, and counsel Robert Kravitz.