Remember, Levy recommended that the case be dismissed and more properly filed in state court. However, he did so based on only one argument by the defense; he agreed with two other arguments by the plaintiffs, 13 property owners and tenants organized by Develop Don’t Destroy Brooklyn (DDDB), that the case should remain in federal court.
Thus, while the DDDB plaintiffs are asking Garaufis to overturn Levy’s one argument for dismissal, the defendants—the city, the Empire State Development Corporation, and developer Forest City Ratner—are not only backing Levy’s dismissal argument, but contending that he was incorrect in not dismissing the case on other grounds.
It’s not automatic that a federal judge will hold a hearing on the responses to a magistrate’s recommendations; the judge could simply rely on legal briefs. But the decision to hold a hearing seems to indicate a recognition of the complexity of the legal arguments and even the importance of the case.
Legal memos are linked from DDDB's case web site.
Procedure, not merits
At issue are only procedural questions, not the issues of substance that actually occupied the majority of the argument in court on 2/7/07.
Levy wrote, "Plaintiffs’ Amended Complaint raises serious and difficult questions regarding the exercise of eminent domain under emerging Supreme Court jurisprudence, many of which were explored in some detail at oral argument. However, in light of my recommendation that this court abstain, it would be inappropriate to address plaintiffs’ claims on the merits."
Then again, should the case be moved to state court, it would be much harder for the plaintiffs to prevail. So procedure affects substance.
(I’m out of town and will miss the oral arguments tomorrow.)
Thinking about Burford
The hardest-fought issue regards Burford, or the 1943 case Burford v. Sun Oil Co. Though the parties in the case devoted just four of 220 pages of preliminary memoranda to Burford, Levy rested his decision on that case.
He cited three factors identified by the Second Circuit Court of Appeals, including " the degree of specificity of the state regulatory scheme,  the necessity of discretionary interpretation of state statutes, and  whether the subject matter of the litigation is traditionally one of state concern.”
“Here, the first and third factors weigh in favor of abstention,” he wrote, citing the “highly specific and comprehensive mechanism for condemnees” to challenge condemnation “in a state-created system of administrative and judicial review” under the Eminent Domain Procedure Law, or EDPL.
Also, he wrote that “it is indisputable that eminent domain is traditionally a matter of local concern and that the state has a vital interest in establishing a coherent policy with respect to it.”
The plaintiffs contend that Levy was wrong. They argue that the EDPL is procedural rather than substantive; not unusually specific; and that there’s no adequate alternative forum. Indeed, should the case go to state court, not only would the plaintiffs not have access to discovery, they wouldn’t be able to sue any entity beyond the ESDC, wouldn’t be able to collect damages, nor be able recover attorneys’ fees.
Moreover, they argue that the issue is not whether hearing the case in federal court would interfere with a state regulatory scheme, but whether that interference would be undue. While eminent domain, they acknowledge, is traditionally a state concern, the Supreme Court has held that eminent domain is not particularly susceptible to Burford abstention.
Nor is there a centralized review procedure in New York under the EDPL, unlike in the other two cases in which the Supreme Court had upheld Burford abstention. Also, because the claims in the case are federal claims, it would not entangle the federal court in state law.
The ESDC, however, calls the case “a classic candidate for Burford abstention” and contends the plaintiffs’ argument misunderstands and mischaracterizes the doctrine. The defense memorandum points to a case that states that federal review “would be disruptive of state efforts to establish a coherent policy.”
The ESDC argues that the Supreme Court has in fact affirmed an abstention when federal claims were made. Moreover, the ESDC argues that the plaintiffs’ distinction between “procedural” and “substantive” is incorrect; rather, Burford calls for abstention in regard to “a matter of substantial public concern,” and that a process like the EDPL can be substantial.
The ESDC points out that the challenge to the “public use” clause of the Fifth Amendment aims at an area of law in which federal court mainly defer to state courts. And the ESDC points to a 2005 case, Brody v. Vill. of Port Chester, not cited by the plaintiffs, which upheld the EDPL as adequate, citing “the narrow role that courts play in ensuring that the condemnation is for a public use.”
Last word: plaintiffs
On the Burford issue, the plaintiffs get the last word. They argue that there's a significant difference between the EDPL's exclusive process for arriving at a condemnation decision and the "purportedly exclusive procedure" for judicial review. State policy regarding uniform pre-determination proceeding--the focus of the legislative revamp that led to the EDPL--would not be threatened.
Nor, they say, is the EDPL's state process particularly expeditious. The case in state court likely won't be decided until September.
The Brody case, they argue, isn't applicable because the claims were due process claims, with a much lower threshold regarding the adequacy of an alternative forum. "Here, there is no way Plaintiffs can meaningfully litigate their claims... without discovery and factfinding," the memo states.
AY & affordable housing
The other defendants let the ESDC take the lead in the defense, but in their own memos add some legal and policy arguments.
The city argues, “Allowing plaintiffs to side-step the comprehensive and uniform procedures set forth in the [EDPL] in favor of litigation in federal court would present a serious threat to the City’s ability to move forward with critical projects that depend on public-private partnerships for their success, including the construction of affordable housing and the creation of viable mixed-use developments in blighted urban areas.”
“For example, in a sample of 21 affordable housing projects undertaken by the New York City Housing and Preservation Department (“HPD”) in partnership with private developers between 1995 and 2005, approximately 5832 of 14,369 units required acquisition by eminent domain,” the memo states. “Under plaintiffs’ theory, the owners of those lots acquired by eminent domain and then transferred to private developers to facilitate the construction of the City’s plan for affordable housing would all be able to bring a challenge to the taking in federal court.”
"A copy of relevant documentation may be made available at the Court's request,” the memo says in a footnote, and it would be interesting to see how those projects compare to Atlantic Yards. The Atlantic Yards project would generate 90 units of low-income housing and 135 units of moderate- and middle-income housing a year over ten years, under a best-case scenario, though even landscape architect Laurie Olin suggests the project would take 20 years. That would mean 45 low-income units a year. Meanwhile, the project would include 1930 (or 1730, assuming 200 are subsidized) market-rate condominiums, with a market value of $1.6 to $2 billion.
The city’s memorandum includes a copy of the legislative history of the EDPL, explaining how its 1977 passage reflected a nearly seven-year effort to standardize an inconsistent and complex scheme around the state. “Discovery and trial, such as is sought by plaintiffs here would only increase the uncertainty of vital public projects moving forward,” the city argues.
Forest City argument
The Forest City Ratner memo also cites Brody, noting that this appellate case was decided after the Supreme Court’s 2005 decision in Kelo v. New London, which the plaintiffs have cited as barring sweetheart deals leading to eminent domain. The Brody decision stated that the “wisdom or advisability of a public project is not reasonably subject to the adversarial adjudicative process.”
The Forest City memo notes that, after the passage of the EDPL, “the decision to condemn private property no longer is made by a would-be condemnor in private, but must be considered at a public hearing that is designed to foster meaningful public participation and transparent decision making, and creates the record that forms the basis for subsequent judicial review.” (Did the 8/23/06 public hearing “foster meaningful public participation and transparent decision making”?)
Moreover, Forest City argues, the EDPL offers accelerated judicial review in state court “to offset the delay resulting from the requirement of extensive public participation in a condemnor’s decision.” In this case, “plaintiffs fully participated in the public process that was conducted by ESDC, and personally and by counsel made extensive oral and written contributions to the record. But having participated in the part of the process established by EDPL 207 that they found useful, they have elected not to participate in the second part.”
The Forest City memo cites Levy’s point that allowing this case to continue in federal court “would provide incentive for forum shopping” and send future cases to federal court. Argues Forest City, “Neither the present plaintiffs nor those in similar positions in other cases should be permitted to game the system in this way. Indeed, given the enormous sums of money that a major project puts at risk, opponents can view the mere complexity and prolonged pendency of a litigation as a tactic that may strangle a project prior to any final adjudication of the merits.”
Is the case ripe?
Levy had disagreed with the defense contention that the case should be dismissed because the plaintiffs’ injuries weren’t sufficiently concrete to be considered ripe for judicial review. The pertinent question, he wrote, “is whether the challenged condemnation is final, imminent, or inevitable,” but acknowledged that those concepts remain “amorphous, open to interpretation, and at any rate highly fact-specific.”
The ESDC, however, continues to maintain that the claims aren’t ripe “at least until ESDC commences a proceeding for transfer of title.” The question, according to the ESDC memo, “is whether the alleged future deprivation is imminent and ‘certainly impending.’” Levy's recommended ruling, argues the defense, “threatens… to open the floodgates to the federal courts” because plaintiffs should be in state court.
The ripeness argument drew a scathing response from the plaintiffs’ lawyers: “The upshot of Defendants’ argument is that this case is rendered unripe simply because an imaginative person could post an alternate universe in which Defendants will suddenly have an epiphany—recognizing that the Public Use Clause and fundamental notions of representative government are incompatible with their abuse of the power of eminent domain to consummate a private business deal—and decide to scotch the Project. Anything is possible, after all.”
As for whether the courts would be flooded, the plaintiffs respond, “It is plan that courts must give substantial deference to public use findings when made by true legislative bodies, motivated to achieve a public purpose by condemning land identified by the government (not the pre-selected developer) before any private beneficiaries are known.”
While the ESDC points out that the agency has “up to three years” to commence taking title, the plaintiffs respond, “Defendants are playing fast and loose with reality. The reality is that demolition for the Project began last month.”
The Younger abstention
The ESDC also argues that dismissal is appropriate because of a case known as Younger, which states that federal courts should not interfere with ongoing state proceedings. Levy had written that “there is no pending state court proceeding in which plaintiffs will have the opportunity to present the federal claims raised in the instant complaint.”
While other plaintiffs have filed a case in state court challenging the ESDC’s plans regarding two specific properties, “that proceeding will not necessarily address or resolve the claims plaintiffs assert in this matter.”
The defendants take issue with Levy’s description of the plaintiffs in the other case as non-condemnees, arguing that, as rental tenants, they are in fact condemnees—a disputed issue in that state case. The ESDC also suggests that the state case “in all likelihood will have to decide whether the Atlantic Yards project serves a public purpose” and thus would address the question at issue in federal court.
The plaintiffs respond that “nobody knows” whether the state court case “will or will not address public use issues.” Moreover, there’s no reason why that case, with different plaintiffs, would be binding on the federal court case.
Last word: defense
The defendants reiterate that the case is not ripe until the condemnation actually proceeds--a deadline established in other cases. Forest City Ratner "has every right to prepare itself for the Project by beginning demolition work on property it owns or has rights to, while bearing the risk that the Project will not proceed." (Emphasis in original)
As for the Younger argument about why the federal court should abstain, the defense contends that if the state court rejects the ESDC's eminent domain determination and findings, the state agency "cannot proceed with any condemnations pursuant to that decision." (Emphasis in the original)