As they make their way through courts across the metro area, a recent crop of class-action lawsuits against local apartment landlords could change how they bill tenants.
The litigation has been made possible by tenant-friendly legislation from the Colorado General Assembly in the past five years, much of it championed by Rep. Steven Woodrow.
The Denver Democrat is a class-action attorney who files cases under laws he changes.
“I know that some see me as a legislator-litigator,” Woodrow said of his two overlapping careers and the criticisms he has heard. “Well, there are plenty of landlords under the dome who fight for landlords, and there are a couple of us trying to make life better for tenants.”
Meanwhile, an attorney for apartment owners warns of unintended consequences, such as rent increases and supply shortages, if class-action cases continue to pile up here.
“In very short order, we’ve gone from a state that was high on the list for people who invest in housing to low,” said Drew Hamrick, who represents the Colorado Apartment Association and Apartment Association of Metro Denver.
Legislator
“It’s a short bill in length,” Woodrow told his fellow members of the House Judiciary Committee, “with tremendous impact for one of Colorado’s largest constituencies: consumers.”
It was Feb. 8, 2022, and the panel was weighing House Bill 1071. Less than 200 words long, it would allow for greater awards in class-action cases brought under the Colorado Consumer Protection Act, in response to a 2012 court decision that curtailed such damages.
“You’re probably going to hear opponents say that the floodgates will open. This is a nonstarter,” Woodrow testified. “Again, we had class actions under the Consumer Protection Act for 40 years (before 2012) and Colorado was never a hotbed for frivolous lawsuits.”
“You may also hear rumblings that this is all about attorney fees. True!” he said. “Class actions do incentivize lawyers to bring cases. But the fees in a class action have to be approved by courts, based on a number of factors, most importantly the strength of the case.”
As Woodrow foretold, business groups warned a flood of new class-action cases would follow, driving up profits for lawyers, costs of doing business for companies, and prices for consumers. The Colorado Civil Justice League warned investors would fund large lawsuits here.
“When you are a business owner, it doesn’t matter if you are large or small, and an attorney comes in under the color of law saying that he’s going to enforce the Colorado Consumer Protection Act against you, it is done with the purpose of boosting the size of a settlement,” testified Matthew Groves, president of the Colorado Automobile Dealers Association.
The committee approved the bill, 7-4, sending it to the full House and Senate, which also passed it. The committee’s approval followed testimony from Zach Neumann, co-founder of the Eviction Defense Project, who predicted it would be a boon to Colorado renters.
“In a world where so much of Colorado housing is owned by large, out-of-state investors who have enormous sums of money, who own multiple buildings, this is the sort of provision that allows those tenants, those residents, to assert their rights,” he testified.
Woodrow joined the General Assembly in 2020 and has easily won elections since. His district includes much of south Denver, including Cherry Creek, Belcaro and Wash Park, where he lives. Woodrow is now seeking to be appointed as the replacement to Sen. Chris Hansen, who is leaving the Capitol to become CEO of the La Plata Electric Association.
Litigator
Woodrow, who grew up in Michigan and began his law career in Chicago, where he went to college, is one-fourth of the firm Woodrow & Peluso, which has offices on Colorado Boulevard. The firm specializes in consumer litigation, appeals and small business consulting.
In the past 13 months, Woodrow has co-filed at least seven class-action lawsuits on behalf of tenants that accuse property owners and their agents of violating the Consumer Protection Act. Those cases have, so far, survived attempts by landlords to have them dismissed.
“Tenants had been treated as an afterthought,” Woodrow said in an interview with BusinessDen. “These cases now signal a movement towards landlord accountability.”
Tenant class actions are increasingly taking aim at the charges that landlords bill: Late fees at the Turntable Studios near Empower Field, a $25 “valet trash fee” in Glendale, an “insufficient notice penalty” in Thornton, an application fee in Green Valley Ranch, an “administrative fee” in Lakewood, and unjustly pocketed security deposits in south Denver, among others.
Woodrow and his clients say the fees are unfairly high and not well-explained when tenants move in, a way of artificially raising rents. As he co-wrote in one lawsuit, such fees “operate like a hidden tax on tenants who have no choice but to pay” if they want to stay.
Though filed as class actions, all seven cases are awaiting class-action certification by judges, who will also determine the size of each class. Depending on those decisions, damages may be in the millions. Class-action lawyers are usually paid on a contingency basis, earning 25 percent to 40 percent of an award if they reach a settlement or win at trial, but nothing if they lose.
As Woodrow notes, his 2022 legislation was only one legal change in recent years to allow renters to challenge such costs, which critics deride as “junk fees.” The most important, the Rental Application Fairness Act, was passed in 2019, before his time in office.
“There has been a modest uptick in these cases but that’s not because of (House Bill) 1071. It’s because more attorneys are paying attention to this space,” according to Woodrow.
Still, the legislator-litigator’s dual roles cannot be ignored — and aren’t in court. When he sued fellow lawyers from the eviction law firm Tschetter Sulzer for allegedly charging fees to a tenant while evicting her, Tschetter Sulzer responded by noting that his client’s lease was signed before a 2021 law prohibited such a fee. Woodrow introduced that 2021 law.
“Had the legislature intended it to apply retrospectively, it could have done so but did not,” Tschetter Sulzer wrote in October, asking a federal judge to throw out the lawsuit. “Notably, plaintiff’s counsel, Steven Woodrow, is a Colorado state representative.”
How Woodrow’s slate of cases conclude remains to be seen, but he is aiming higher than monetary damages. The lawmaker wants to see local landlords change their ways.
“I think there is going to be a lot of progress that comes out of this,” he said. “More transparency in pricing, less surprise billing, and better situations for tenants.”
Hamrick, the lawyer for apartment associations, said any increase in operational costs for housing providers, including attorney fees, could “lead to a corresponding increase in rent.” And the threat of class actions may scare investors away from Colorado, stagnating apartment supplies.
“It’s a slow burn,” Hamrick told BusinessDen, “but the last thing we want is for Colorado to have the reputation of not being a good place to park housing capital.”
Read more at our partner, BusinessDen.
Get more real estate and business news by signing up for our weekly newsletter, On the Block.
