After filing three lawsuits against the city of East Palo Alto this month, Page Mill Properties is facing its own legal challenges on two fronts - from the city and a group of tenants.

The residents, Eric Oberle, Shery Scott, Matthew Fremont and Nathan Ben Yonatan, all received rent increases of between 14 and 38 percent from Page Mill and have filed a class action suit against the landlord, alleging that Page Mill's rent hikes are illegal, meant to cause harm and an unfair business practice.

The complaint, filed on July 15, also alleges that Page Mill is using a "sham" ownership scheme to subvert East Palo Alto's rent control law, which exempts buildings with four or less units. Page Mill has transferred all such units into 17 limited liability companies in order to dodge the ordinance, the complaint alleges.

The firm Heller Ehrman LLP has taken on the case pro bono and is seeking punitive and actual damages. Oberle said the suit could represent up to 200 people.

A Page Mill Properties spokesman declined to comment on the lawsuit.

Also, Interim City Attorney Valerie Armento is planning to file an injunction on Page Mill's most recent round of rent increases this week in order to freeze and challenge them in court. The new rents will take effect Friday.

The legal counterattack coincides with the first inklings of an organized grassroots opposition to the rent hikes. With the help of the Stanford Law Clinic, a group of tenants ran a petition drive Saturday to protest the rent increases, which have affected about 1,300 of Page Mill's roughly 1,650 units. Oberle, who helped organize the drive, said about 100 tenants signed on.

"It was a great turnout," Oberle said.

The group will hold a second drive this Saturday at 1974 Euclid Ave.

Jessica Steinberg, an attorney from the clinic, said she plans to present the petitions to the East Palo Alto Rent Stabilization Board as soon as possible and call for a hearing with an outside examiner. A favorable decision could help the tenants and the city later in court, Steinberg said.

Page Mill owns about 1,650 units in East Palo Alto and has passed two rounds of rent hikes since late last year. The private investment firm and the city have been battling ever since over whether the increases are legal under East Palo Alto's Rent Stabilization Program.

Page Mill used the maximum rents from city calculated rent certificates for each unit, which were much higher than the actual rents being paid, probably due to a sag in the rental market a few years ago. The city, on the other hand, claims the landlord should have based the increase on the actual rent being paid and limited it to a consumer pricing index, which is usually about 3.2 percent. Both sides have found supporting language for their cases in the city's ordinance.

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