Zigas and multiple other tenants (tenants) (plaintiffs) lived in an apartment building in San Francisco, California. The landlords (defendants) financed the building with a federally insured mortgage. The mortgage was secured through an agreement between the landlords and the federal Department of Housing and Urban Development (HUD). Pursuant to the agreement, the landlords were prohibited from charging rent in excess of the maximums set out in the rental schedule set by HUD. The tenants brought suit against the landlords in California state court, alleging the landlords charged excessive rents amounting to $2 million. The tenants argued they had standing to sue because they were third party beneficiaries of the agreement between the landlords and HUD. The trial court held the tenants did not have standing to sue under either federal or California state law, and the tenants appealed. On appeal, the appellate court agreed that the tenants did not have standing to sue under federal law. The appellate court then considered the tenants’ claims under state law.