Judge OKs $6.6M deal to end class action vs CHA over tenant utility fees; lawyers get $1.3M

By Scott Holland | Sep 6, 2018

Klio0701 at English Wikipedia [GFDL (http://www.gnu.org/copyleft/fdl.html) or CC BY-SA 3.0 (https://creativecommons.org/licenses/by-sa/3.0)], from Wikimedia Commons

A federal judge has signed off on a $6 million deal to end a class action accusing the Chicago Housing Authority of improperly estimating utility fees.

In documents filed Aug. 29 in Chicago,  U.S. District Judge Gary Feinerman approved ending the complaint six women filed against the CHA in late 2015 in which they said the agency violated tenants’ U.S. Housing Act Brooke Amendment rights by not updating utility allowances for more than eight years despite significant rate increases.

According to case filings, public housing agencies charging rent based on income must set monthly rates between $50 and an amount equal to 30 percent of a family’s gross adjusted income. Once that figure is set, the housing agency pays the tenant a calculated utility allowance via rent credit or direct payment. The Department of Housing and Urban Development requires annual review of those allowances with interim adjustments possible if utility rates change by at least 10 percent.

In the initial filing, the plaintiffs said the CHA’s failure to update utility allowances forced them to pay more than 30 percent of their income toward rent. Although the CHA won partial dismissal of the complaint, a judge determined the plaintiffs were allowed to bring a claim against CHA for breach of the residential lease.

The parties opened 18 months of settlement talks in October 2016 with Magistrate Judge Jeffrey Gilbert mediating. During that process, each side retained outside experts to formulate utility cost estimates, then exchanged those findings and allowed mutual questioning of the experts. There were at least two exchanges of demands and counteroffers before a daylong mediation session on June 22, 2017. On Sept. 1 that year, CHA established new utility allowances for all public housing units, and the parties first reached an agreement in principal on Dec. 6, then negotiated terms over the ensuing four months.

The class had not been certified during negotiations. Under the terms of the agreement, anyone who collected a CHA utility allowance from Aug. 7, 2005, and Sept. 1, 2017, will be compensated out of a $6.675 million fund. Terms call for carving out $5,000 incentive awards for each named plaintiff as well as more than $1.3 million for the class counsel, including lawyers from the firm of Hughes, Socol, Piers, Resnick & Dym Ltd., and the Sargent Shriver National Center on Poverty Law, both of Chicago.

The money will be paid to class members via mailed checks; any checks not cashed within 90 days will be voided and that money used to reimburse CHA for payments to settlement administrators with any leftover funds given to Springboard to Success, a nonprofit entity affiliated with CHA. If unused checks don’t cover the CHA’s settlement administration costs, the money will come from the attorneys’ fee award.

Payments to current and former CHA residents will be calculated based on the utility allowance code assigned to each housing address during the time they lived at a CHA facility, along with factors such as number of bedrooms and length of residency. In the event of a class member found to have lived at more than one CHA address during the period in question, determinations will be made separately for each unit.

Class members will be responsible for managing income tax implications of any payouts. If settlement checks are issued to former CHA residents who are no longer alive, an heir or legally authorized representative may request a re-issued check within 90 days. If multiple beneficiaries file claims, the amount will be split evenly among them, according to settlement documents filed with the court.

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Organizations in this Story

Chicago Housing Authority Hughes, Socol Piers Resnick Sargent Shriver Center On Poverty Law U.S. District Court for the Northern District of Illinois

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