Court Opinion

ID: 4106596
Source: CourtListenerOpinion
Date Created: 2016-12-12 22:00:33.783992+00
Date Added: 2024-06-11T11:33:43.529263
License: Public Domain

United States Court of Appeals
                       For the First Circuit

No. 16-1254

                 SCOTT PHILLIPS, individually and on
              behalf of all others similarly situated,

                       Plaintiff, Appellant,

                                 v.

               EQUITY RESIDENTIAL MANAGEMENT, L.L.C.,

                        Defendant, Appellee.

          APPEAL FROM THE UNITED STATES DISTRICT COURT
                FOR THE DISTRICT OF MASSACHUSETTS

              [Hon. Rya W. Zobel, U.S. District Judge]

                               Before

                     Lynch, Stahl, and Barron,
                          Circuit Judges.

     David Pastor, with whom Pastor Law Office LLP, Joshua N.
Garick, Law Office of Joshua N. Garick, Preston W. Leonard, and
Leonard Law Office PC were on brief, for appellant.
     Craig M. White, with whom Baker & Hostetler LLP, Thomas H.
Wintner, and Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
were on brief, for appellee.

                         December 12, 2016
              STAHL, Circuit Judge. This dispute arises out of a class

action brought by Scott Phillips against his former landlord,

Equity Residential Management, L.L.C. ("ERM").          Phillips alleged

that ERM violated several provisions of the Massachusetts Security

Deposit Law ("Security Deposit Law"), Mass. Gen. Laws ch. 186,

§ 15B, relating to unlawful charges or deductions taken against

his security deposit and ERM's failure to return the security

deposit within thirty days after he moved out of his leased

apartment.      The purported class consisted of other former tenants

of ERM-owned or managed apartments who also, since August 6, 2009,

had   these    same   grievances.1   As   recompense,   Phillips   sought

recovery under the Security Deposit Law's penalty provision, Mass.

Gen. Laws ch. 186, § 15B(7), which includes, inter alia, the

availability of treble damages.

              At summary judgment, the district court awarded Phillips

a Pyrrhic victory:      though he was entitled to recover his security

deposit (less a small amount of holdover rent), the district court

refused to apply Section 15B(7), and soon after denied his class

      1The purported class also consisted of two subclasses, a
"Sworn Statement Subclass" and a "Cleaning Charge Subclass." These
subclasses relate to Phillips's contention that ERM violated
several different provisions of the Security Deposit Law and that
his claims are typical of the claims of each subclass. The merits
of Phillips's proposed class, however, are not before this court.

                                     - 2 -
certification motion on mootness grounds.2     Phillips challenges

these rulings on appeal, arguing that the district court should

have ruled on his class certification motion before the parties'

summary judgment motions, that his class certification motion

should not have been dismissed as moot, and that he was entitled

to recovery under Section 15B(7).

          Phillips's last contention is of particular importance,

since the outcome turns on provisions of the Massachusetts Security

Deposit Law that have not been interpreted by the Massachusetts

Supreme Judicial Court ("SJC") in over three decades.   See Mellor

v. Berman, 454 N.E.2d 907, 910-13 (Mass. 1983).      Generally, we

must make an "informed prophecy" as to how the highest state court

would rule on questions of that state's law.   Ambrose v. New Eng.

Ass'n of Schs. & Colls., Inc., 252 F.3d 488, 497-98 (1st Cir. 2001)

("Our task . . . is to discern the rule the state's highest court

would be most likely to follow under these circumstances, even if

our independent judgment might differ.").    The SJC's guidance in

this area, however, is "sufficiently undeveloped . . . so as to

make such prophetic action unwise," see Showtime Entm't, LLC v.

Town of Mendon, 769 F.3d 61, 79 (1st Cir. 2014).   For this reason

and the others that follow, we certify a question regarding the

     2 The district court determined that "Phillips no longer ha[d]
a live individual case because all of his claims have been decided"
and "[a]s a result, proceeding to class certification [would be]
inappropriate."

                                 - 3 -
relevant provisions of the Massachusetts Security Deposit Law to

the SJC, and refrain from deciding the merits of Phillips's other

claims until that question is resolved.   See Mass. S.J.C. R. 1:03;

see also, e.g., Easthampton Sav. Bank v. City of Springfield, 736

F.3d 46, 48, 50-53 (1st Cir. 2013).

                                 I.

            We recite the facts relevant to the certified question.

Phillips and a friend, Sean Ostriker,3 entered into a written lease

with ERM for an apartment located at Longview Place in Waltham,

Massachusetts.    The lease term lasted from July 20, 2012 to May

19, 2013.     In accordance with the lease, Phillips paid ERM a

$750.00 security deposit prior to move-in, and he requested its

return shortly after vacating the apartment on May 20, 2013. After

receiving his request, ERM sent Phillips a signed Statement of

Deposit Account ("SODA") listing charges against his security

deposit totaling $968.08.4   The SODA credited $750.06 against this

amount, reflecting Phillips's $750.00 security deposit and $0.06

in accumulated interest, and claimed a balance due of $218.02.

     3 Ostriker moved out of the apartment in December 2012 and
arranged for one of Phillips's fraternity brothers, Gil Jacobs, to
take his place. Jacobs moved into the apartment in February 2016.
Jacobs, however, moved out in April 2013, leaving Phillips as the
sole tenant.
     4 The charges included unpaid rent, a late payment fee,
apartment and carpet cleaning charges, a carpet replacement
charge, and an "Other Phys Damages" charge.

                                  - 4 -
            On   August   6,   2013,   Phillips   filed    a    class    action

complaint against ERM in Massachusetts Superior Court.            He alleged

that ERM had violated the Security Deposit Law by:                      (1) not

providing him, within thirty days of his vacating the apartment,

sufficiently detailed written evidence of damages for which funds

were deducted from his security deposit, (2) not providing him

with an itemized list of damages sworn to under the pains and

penalties of perjury, and (3) impermissibly deducting certain

cleaning charges from his security deposit.         ERM removed the case

to   the    United   States    District   Court   for     the   District     of

Massachusetts based on diversity of citizenship, see 28 U.S.C. §

1332(d), and counterclaimed for the $218.02 balance outlined in

the SODA.

            Soon after, both Phillips and ERM moved for summary

judgment.    The district court found that ERM did not comply with

Mass. Gen. Laws ch. 186, § 15B(4)(iii), which required ERM to

provide Phillips with "an itemized list of damages" sworn to "under

pains and penalties of perjury."          Phillips v. Equity Residential

Mgmt., No. 13-12092, 2015 WL 12733438, at *3 (D. Mass. Dec. 14,

2015).     This failure, the court concluded, also resulted in a

second violation under a separate provision of the Security Deposit

Law since Phillips did not receive the required "itemized list of

damages . . . in compliance with the provisions of [Section 15B]"

                                       - 5 -
within thirty days after the termination of his tenancy.5                     Id.

(quoting Mass. Gen. Laws ch. 186, § 15B(6)(b)).               Based on this

second violation, the district court held that ERM forfeited its

right to retain any part of Phillips's security deposit.               Id.; see

also Mass. Gen. Laws ch. 186, § 15B(6) (stating that a lessor

"shall forfeit [the] right to retain any portion of [a tenant's]

security deposit for any reason" if the lessor violates any

provision of Section 15B(6)).

               Phillips   nonetheless      insisted    that   ERM's       Section

15B(6)(b) violation resulted in a third Security Deposit Law

violation under Mass. Gen. Laws ch. 186, § 15B(6)(e).                        That

provision provides that a lessor must "return to the tenant the

security deposit or balance thereof to which the tenant is entitled

after       deducting   therefrom   any    sums   in   accordance     with    the

provisions of this section, together with any interest thereon,

within thirty days after termination of the tenancy."               Id.

               The   alleged   Section     15B(6)(e)   violation,      Phillips

continued, activated yet another Security Deposit Law provision,

Mass. Gen. Laws ch. 186, § 15B(7).           Section 15B(7) awards tenants

        5
       Phillips emailed ERM to request the return of his security
deposit on May 28, 2013. He claims that ERM sent him his SODA
detailing the charged damages to the apartment in "late May or
Early June," though the record suggests that it was mailed that
same day. Phillips's father, a guarantor of his son's lease, later
sent an email to ERM on June 23, 2013 (thirty-four days after
Phillips had vacated the apartment) asserting that the SODA did
not comply with Section 15B's requirements.

                                          - 6 -
"three times the amount of [their] security deposit or balance

thereof to which the tenant is entitled plus interest at the rate

of five per cent from the date when such payment became due,

together with court costs and reasonable attorney's fees" if the

lessor or his agent fails to comply with clauses (a), (d), or (e)

of Section 15B(6).       Id.

             The     district   court,    however,    refused   to    entertain

Phillips's    argument,     finding      that   ERM   only   violated   Section

15B(6)(e) because of its violation of Section 15B(6)(b). Phillips,

2015 WL 12733438, at *4.        Under Phillips's reading of the statute,

the court reasoned, any violation of Section 15B(6)(b) would result

in a violation of Section 15B(6)(e), making Section 15B(6)(b)

redundant.     Id.    Since Section 15B(6)(b) is not listed in Section

15B(7), the district court also inferred that Section 15B(6)(b)

was excluded from its list "by deliberate choice."                   Id. at *3.

Thus, the district court limited Phillips recovery to $647.58.6

This appeal followed.

                                         II.

             A federal court is permitted to certify questions to the

SJC "if there are involved in any proceeding before it questions

     6 The amount reflects the district court's holding that
Phillips was entitled to recover his $750.00 security deposit, but
nonetheless owed ERM $102.42 in holdover rent since Phillips
conceded that he stayed in the apartment one day past the date on
which he had agreed to vacate. Id. at *5.

                                          - 7 -
of law of [Massachusetts] which may be determinative of the cause

then pending in the certifying court and as to which it appears to

the certifying court there is no controlling precedent in the

decisions of this court."   Mass. S.J.C. R. 1:03; see also In re

Engage, Inc., 544 F.3d 50, 52-53 (1st Cir. 2008); Bos. Gas Co. v.

Century Indem. Co., 529 F.3d 8, 13-15 (1st Cir. 2008).7 We conclude

that this case meets those requirements.

          To start, issues of state law are determinative.   If the

SJC concludes that a violation of Section 15B(6)(b) does not also

constitute a violation of Section 15B(6)(e) for Section 15B(7)

purposes, then that answer shall be determinative as to Phillips's

personal claim.   In other words, Phillips will only receive "the

full measure of relief [he] seek[s]" if the SJC agrees with his

position that Section 15B(7) is invoked in such circumstances.

See Easthampton Sav. Bank, 736 F.3d at 50; see also Bos. Gas Co.,

     7 Although neither party requested certification, "we have
the discretion to certify questions to the SJC sua sponte."
Easthampton Sav. Bank, 736 F.3d at 50 n.4. At oral argument, we
asked the parties whether certification on this issue was
appropriate. Neither party objected to certification, though both
questioned the judicial economy of sending Phillips's $750 claim
to the SJC. Still, both parties conceded that certification might
be "appropriate" and a "viable option." Regardless, the SJC "has
previously answered questions certified even over the objections
of both parties." Id. (citing Knapp Shoes, Inc. v. Sylvania Shoe
Mfg. Corp., 649 N.E.2d 1101, 1101-02 (Mass. 1994) (answering
certified question); and Knapp Shoes, Inc. v. Sylvania Shoe Mfg.
Corp., 15 F.3d 1222, 1224 (1st Cir. 1994) (noting objections to
certification)).

                                 - 8 -
529   F.3d    at    15    (certifying      questions    to   the    SJC   that   were

"determinative of the scope" of the plaintiff's claim).

              Meanwhile,      we    have     interpreted      the    SJC's    second

requirement that there be no controlling precedent as preventing

certification "in cases when 'the course [the] state court[] would

take is reasonably clear.'"           Easthampton Sav. Bank, 736 F.3d at 51

(alterations in original) (quoting In re Engage, 544 F.3d at 53).

The course that a state court would take is not reasonably clear

when a case "presents a close and difficult legal issue."                    Id.   As

we will explain, such is our current predicament.

              The district court's interpretive methodology admittedly

has a certain intuitive appeal: the Massachusetts Legislature

deliberately excluded Sections 15B(6)(b) and (c) from Section

15B(7)'s list, suggesting that violations of these provisions are

excused      from   the    Security     Deposit      Law's   enhanced     penalties.

Similarly, if violations of Section 15(6)(b) also necessarily

constituted violations of Section 15B(6)(e), both sections may

lose their independent meaning.              See Blum v. Holder, 744 F.3d 790,

803 (1st Cir. 2014) ("Avoidance of redundancy is a basic principle

of statutory interpretation.").

              The   Security       Deposit    Act's    recognized     purpose      and

legislative history, however, complicate matters.                       The SJC has

noted that the Security Deposit Law "manifest[s] a concern for the

welfare of tenants . . . who, as a practical matter, are generally

                                             - 9 -
in inferior bargaining positions and find traditional avenues of

redress relatively useless."           Mellor, 454 N.E.2d at 912 (internal

citation     and     quotation    marks      omitted).     Nonetheless,      some

Massachusetts courts emphasize that "the purpose of § 15B is seen

not to be arbitrarily penal; rather, the 'underlying goal [is to

establish]    an     "equitable    relationship"'        between   tenants    and

landlords."    Castenholz v. Caira, 490 N.E.2d 494, 497 (Mass. App.

Ct. 1986) (alteration in original) (quoting McGrath v. Mishara,

434 N.E.2d 1215, 1222 (Mass. 1982)).

             Mellor similarly traces the gradual evolution of the

Security Deposit Law:

             In 1969, § 15B merely stated that a lessor might
             not require a security deposit in an amount in
             excess of two months' rent.    One year later the
             Legislature added a penalty of double damages for
             the wilful withholding of a tenant's security
             deposit. The requirement in the multiple damages
             provision of a wilful violation was deleted by the
             Legislature in 1972 and has remained omitted
             despite substantial changes in the form of the
             legislative controls on security deposits.     The
             deletion of the requirement of a finding of bad
             faith was not accidental.

454 N.E.2d at 912-13 (citations omitted).

             Later    changes     to   the     statutory   framework    further

subjected landlords to larger potential monetary penalties (i.e.,

Section 15B(7)).        Massachusetts Security Deposit Law, ch. 979,

sec. 1, § 15B(7), 1977 Mass. Acts 1418, 1418-25 (1978).                       The

Legislature, however, also identified a landlord's obligations

                                          - 10 -
under the Security Deposit Act with more specificity and limited

Section 15B(7)'s application to only certain of those violations.

Id.

           One    potential   reading   of     Section     15B's     evolution

suggests that the legislature wished to empower tenants, but in a

limited and balanced way.         Nonetheless, certain Massachusetts

courts    view   the   history   differently       and   suggest     that   the

Legislature's significant interest in compliance with Section

15B's requirements warrants a broad application of its penalty

provision.    See Taylor v. Beaudry, 971 N.E.2d 313, 318 (Mass. App.

Ct. 2012) (Taylor II) ("[T]he Legislature thought the deterrent

effect of [these] suits . . . was necessary to ensure all landlords

return security deposits on time and in full compliance with the

statute.").

           As    previously   mentioned,     the   SJC   has   not    provided

guidance on these provisions of the Security Deposit Law in 33

years.    See Mellor, 454 N.E.2d at 907.             And in the guidance

provided, the SJC has not opined on how or whether a lessor's

noncompliance with Section 15B(4)(iii) might lead to violations of

Sections 15B(6)(b) and (e) and subsequent penalties under Section

15B(7).   See id. at 909 n.4, 913 (declining to consider the issue

and limiting its inquiry to whether a lessor's good faith mitigated

against awarding damages under Section 15B(7)).

                                    - 11 -
               Despite this lack of clarity, the district court made

its ruling notwithstanding two Massachusetts state court decisions

construing the interplay between Sections 15B(6)(b), (6)(e), and

(7).    See Taylor v. Beaudry, 914 N.E.2d 931, 933-36 (Mass. App.

Ct. 2009) (Taylor I), review denied 920 N.E.2d 44 (Table) (Mass.

2009); Carter v. Seto, 2005 Mass. App. Div. 62, 2005 WL 1383337,

at *4-5 (Mass. App. Div. 2005), aff'd, 849 N.E.2d 925 (Table)

(Mass. App. Ct. June 29, 2006), review denied, 853 N.E.2d 1059

(Table) (Mass. 2006).

               In Taylor I, a tenant vacated his apartment on August

31, 2007.      914 N.E.2d at 932.       By mail postmarked October 1, 2007,

the landlord sent the tenant a check covering his security deposit

and accrued interest, minus charges for cleaning and repairs to

the tenant's apartment. Id. Accompanying the check was an undated

letter detailing the charges, but the letter was not signed under

the    pains    and    penalties   of    perjury   as   required   by   Section

15B(4)(iii).          Id.   In response, the tenant filed a complaint

claiming that the landlord had violated Section 15B(6)(b) by not

providing him with an itemized list of damages in compliance with

the provisions of Section 15B, and therefore had forfeited any

right to the entire security deposit. Id. The tenant also claimed

that the landlord had violated Section 15B(6)(e) because the

landlord did not return any portion of the security deposit within

                                         - 12 -
thirty days after the end of his tenancy.8   Accordingly, the tenant

sought a judgment for three times the total amount of his deposit,

plus interest, costs, and reasonable attorney's fees, pursuant to

Section 15B(7).   Id.

          The court concluded that the landlord's conduct had

triggered Section 15B(7), and stated that Section 15B(6)(e)'s

"statutory obligation to return the deposit is clear, as is the

time within which the deposit must be returned."    Id. at 416.   It

went on, however, to declare that "failure to return the security

deposit, less any amounts that § 15B(4)(iii) permits the landlord

to retain, within [thirty days] subjects the landlord to" Section

15B(7) damages.   Id. at 417.

          Carter presented a similar factual scenario but was more

explicit in its reasoning.      In that case, tenants sued under

Section 15B after receiving a letter from their previous landlord

stating that they could recover only $270.22 of their $2,150.00

security deposit.   Carter, 2005 WL 1383337, at *2.     The letter,

which itemized the damages charged against the security deposit,

was not signed under the pains and penalties of perjury and did

not include any repair bills or estimates to substantiate these

     8  The court noted that "[a]t some point shortly after
receiving the [tenant's] complaint, the landlord returned to the
tenant the balance of the security deposit." Id. However, "the
record [was] clear that [the landlord] did not return the balance
within thirty days following termination of the tenancy." Id. at
412-13.

                                 - 13 -
charges.     Id.     Unlike in Taylor I, the letter was dated only

nineteen days after the tenants relinquished possession of the

apartment.     Id. at *1-2.

             The court ultimately determined that the letter was

noncompliant with Section 15B(4)(iii) and that the landlord's

"failure to submit a properly sworn itemized list of security

deposit deductions within the time mandated by the statute resulted

in a forfeiture of [the landlord's] right to retain any portion of

the security deposit."         Id. at *4.         The landlord was therefore

required to return the full amount of the security deposit within

thirty days of the termination of the tenancy and did not do so,

resulting in a violation of Section 15B(6)(e).               Id.   The court

then awarded the tenants damages pursuant to Section 15B(7).               Id.

             Given Taylor I and Carter's factual similarities to the

current case, these two decisions raise a measure of doubt that

the SJC would agree with the district court's interpretation.

Thus, although the statutory provisions to be applied in this case

are readily apparent, "the application of those [statutes] is

difficult, and the outcome far from certain."                See Easthampton

Sav. Bank, 736 F.3d at 51.

             Nonetheless, "[t]hat a legal issue is close or difficult

is not normally enough to warrant certification, or else diversity

cases   would      regularly   require    appellate     proceedings   in   two

courts."     Bos. Gas Co., 529 F.3d at 15.               Additional factors,

                                         - 14 -
including "the dollar amounts involved, the likely effects of a

decision on future cases, and federalism interests," guide our

decision    of    whether   to   certify    questions       to   the   SJC.    See

Easthampton Sav. Bank, 736 F.3d at 52.

             Though Phillips's individual claim may revolve around a

relatively small $750.00 security deposit, the outcome of the case

has the potential to impact a large swath of current and future

tenancies throughout Massachusetts.             See id. (certifying questions

to SJC partly because the outcome of the case "ha[d] the potential

to impact thousands of outstanding and future mortgages" across

Massachusetts).       The many residential landlords operating in the

Commonwealth,       meanwhile,    rely     on     interpretations       of    these

important provisions of the Security Deposit Law when structuring

their business activities.        The case also involves interpretation

of   a   state    statute   governing      an   area   of    traditional      state

authority.       See Conille v. Sec'y of Hous. & Urban Dev., 840 F.2d

105, 111 (1st Cir. 1988) (stating that "the area of landlord-

tenant law . . . typically has been the province of state courts

and legislatures.").        Certifying questions about these issues thus

"promotes 'strong federalism interests.'"              Easthampton Sav. Bank,

736 F.3d at 53 (quoting Real Estate Bar Ass'n for Mass., Inc. v.

Nat'l Real Estate Info. Servs., 608 F.3d 110, 119 (1st Cir. 2010)).

                                         - 15 -
                              III.

          For the above reasons, we certify the following question

of Massachusetts law to the SJC:

          1.     With respect to the Massachusetts Security
                 Deposit Law, Mass. Gen. Laws ch. 186, § 15B,
                 when a lessor violates the terms of Section
                 15B(4)(iii),      does      the     lessor's
                 corresponding     violation     of   Section
                 15B(6)(b), which "forfeit[s] his right to
                 retain any portion of the security deposit
                 for any reason," id. § 15B(6), also
                 constitute a violation of Section 15B(6)(e)
                 -- ""fail[ing] to return to the tenant the
                 security deposit or balance thereof to
                 which the tenant is entitled . . . within
                 thirty days after termination of the
                 tenancy"   --    thereby    triggering   the
                 statute's treble damages provision, Section
                 15B(7)?

          We would also welcome any other comments that the SJC

may wish to offer on any relevant aspects of Massachusetts law.

The Clerk of this court is directed to forward to the SJC, under

the official seal of this court, a copy of the certified question

and our opinion in this case, along with copies of the parties'

briefs and appendices.   We retain jurisdiction over this appeal

pending resolution of the certified question.

          So ordered.

                                   - 16 -