While our work here at Greenfield Advisors is often varied, we tend to work on many class action real estate cases. That’s partially because we do a lot of complicated statistical modeling (known as regression analysis, a type of mass appraisal) that many firms won’t tackle, but it’s also because when a big environmental issue affects real estate, those cases are usually and best tried en masse. As real estate experts, our firm is often asked to submit an affidavit as part of the class certification process. This requires us to consider the factors that are legally necessary for a class action to proceed (or “be certified”): numerosity, commonality, and typicality. There are a few others, but they typically are handled by the attorneys, not the real estate experts.
To satisfy numerosity, class members must be so numerous that joinder of all of them would be impractical. It seems pretty straightforward—essentially, there just needs to be a fair number of people so that, were they to file individually, combining all their suits would be impossible. While it is not really up to the real estate expert to prove numerosity, we are often involved in finding out what the number of class members actually is. Using our geographical information systems (GIS), we are able to identify parcels, approximate parcel count, and determine other real estate information to assist our clients in satisfying this condition for the court.
We are often asked to opine on real estate characteristics that aid our clients in determining whether the potential class members meet the commonality argument, such as property types, market and submarket stratification, and even the modelability of the class area as a whole. At Greenfield, we know first-hand that the first argument against a real estate class action is that there are varied property types, and thus they are not “in common.” We also know that with good data and the development of a mass appraisal method, we can determine values for markets and their submarkets. In fact, we feel that looking at a market or submarket as the sum of its parts in addition to as a whole tells the real story of what’s going on. We could of course do it “one property at a time,” and we are not opposed to doing that, but when you are dealing with hundreds or even thousands of properties that have been similarly affected, a mass appraisal usually saves time and money. If the technology and data are there, why not use it?
We have seen affidavits in opposition of class action that argue that a class that consists of both one- and two-story homes and multi-family properties is “too varied” and thus the class representatives are “not typical” of the class as a whole. What’s important in establishing typicality is that the class representatives have had similar issues related to the cause of the suit, and that they are in markets that are similar or are easy to subcategorize. For instance, a recent class action we worked on included single-family, multi-family, and even commercial properties. The properties were affected by the same contamination, the effects were fairly evenly disbursed throughout the class, the data were easy to stratify, and the case is proceeding through the various phases of litigation as a class action.
Class actions are data intensive and require a lot of organization and management, but the class has to meet the numerosity, commonality, and typicality arguments to even exist. Greenfield Advisors has a history of working on these types of cases and providing our clients help all along the way.
– Sarah J. Kilpatrick