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Magistrate says eminent domain case belongs in state court

In a setback for plaintiffs in the Atlantic Yards eminent domain case, U.S. Magistrate Judge Robert M. Levy yesterday recommended that the federal case be dismissed without prejudice, leaving those challenging condemnations to do so in state court, where they would have less leverage to argue that the project results from a sweetheart deal.

Levy’s report and recommendations centered on narrow procedural grounds rather than the merits of Goldstein vs. Pataki, which occupied the majority of the lively 2/7/07 oral argument in the case.

Though Levy’s recommendation to federal Judge Nicholas Garaufis is not binding, judges generally follow such recommendations. Still, the parties in the case have ten business days to file objections, and Develop Don’t Destroy Brooklyn, the coalition organizing the 13 plaintiffs—homeowners, business owners, and renters—promised to do so.

Forest City Ratner had no comment, but a spokesman for Mayor Mike Bloomberg praised the decision.

Press coverage

Irresponsibly, the New York Times today offers a brief Associated Press article on page B2, headlined Judge Urges Dismissal of Atlantic Yards Suit, that indicated that a judge "has the final say on whether the suit survives." It fails to acknowledge that the case could be refiled in state court, though longer versions of the AP story make that point. There's no disclosure of the Times Company's business relationship with Forest City Ratner. The Times, which in January promoted the one reporter who gained expertise regarding Atlantic Yards, never covered the hearing in the case. The Times today also offers an op-ed critical of Atlantic Yards, but the effect of that piece is diminished by the report on the lawsuit.

The Daily News, in an article headlined N.Y. home court in arena suit - judge, got the point that the case was being pushed to state court. The New York Post didn't cover it. The New York Sun, which offered significant coverage of the hearing, doesn't publish until Monday.

A procedural issue

Levy at first disagreed with two other procedural arguments made by the defense. Noting, however, that eminent domain is mainly a matter of state and local concern, he relied on a case known as Burford, which requires federal courts to stand clear when they might disrupt “state efforts to establish a coherent policy with respect to a matter of substantial public concern."

The plaintiffs looked on the bright side. "We are pleased that Judge Levy rejected all of the defendants' strained procedural arguments except one," said plaintiffs' lead attorney Matthew Brinckerhoff. He called the Burford abstention "a very rare and narrow exception to the general rule that federal courts are obligated to hear claims seeking to vindicate federal rights."

Jennifer Levy of South Brooklyn Legal Services, who represents tenant-plaintiffs in the case, noted that the plaintiffs were not challenging the intricacies of state eminent domain law but rather eminent domain as evaluated under the constitution. "The area of law under which the case is brought is purely federal, so federal court is the appropriate forum," she said.

Whether that argument will convince Garaufis, who also must weigh whether there might be a flood of similar cases, remains to be seen. If not, when the plaintiffs go to state court, they'll face more restrictions on their capacity to extract government documents that might prove their theory that the project was conceived by developer Bruce Ratner and immediately backed by the city and state.

A respectful nod to the charges

Near the end of his 42-page report, Magistrate Levy gave a respectful nod to the claims expressed in court earlier this month, in which Brinckerhoff argued that the benefits of the project were pretextual, and that the plaintiffs should be given the chance to prove that.

Lawyers for the defendants, including the Empire State Development Corporation (ESDC) and developer Forest City Ratner, contended that, as long as the project demonstrated a “public purpose”—and they said an arena, open space (which they erroneously called “parks”), and affordable housing certainly qualified—the courts have no role in serving as “super-planning boards of last resort.”

Levy seemed quite intrigued, tossing out hypotheticals in which a clear public purpose was balanced by a clear case of corruption, and asking where to draw the line.

Brinckerhoff pointed to the Supreme Court’s 2005 Kelo vs. New London decision, especially the concurrence written by Justice Anthony Kennedy, which looked askance at projects unlike that in New London, where the state had committed public funds “before most of the private beneficiaries were known” and a variety of development plans were examined—both arguably missing in this case. Lawyers for the defense said that Kelo applied only to eminent domain for economic development, not for blight removal, as in Brooklyn.

In a coda to his decision, Levy wrote yesterday, "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."

Yes, the case is ripe

Before recommending dismissal, Levy disagreed with two key arguments made by the defense. The defendants asked that the complaint be dismissed as not ripe for review, because condemnation proceedings have not actually begun.

Levy noted that the pertinent question “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.”

Still, he found “plaintiffs' injuries sufficiently concrete to be considered ripe for judicial review.” Even though the ESDC has not yet gone to court to acquire the properties at issue, the agency has issued a “Determination and Findings” regarding eminent domain.

Levy was dismissive of some defense arguments, noting that, while the ESDC had offered “a few examples of development projects that stalled or were abandoned after the condemning authority issued its Determination and Findings... they do not suggest that there is any danger of the Atlantic Yards Project meeting a similar fate.”

Abstention, version one

Levy, after spending spent more than 15 pages on the ripeness issue, devoted fewer than 13 pages to the issue of abstention, or whether the court should stay out of the case. For more than three pages, he addressed a case known as Younger, which states that federal courts should not interfere with ongoing state proceedings.

In this case, he noted, “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.”

Abstention, version two

Regarding Burford, Levy cited three factors identified by the Second Circuit Court of Appeals, including "[1] the degree of specificity of the state regulatory scheme, [2] the necessity of discretionary interpretation of state statutes, and [3] 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. (Still, as he suggested later, that’s not easy.)

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.” He even noted that the Supreme Court's Kelo opinion emphasized “the 'great respect' that we owe to state legislatures and state courts in discerning local public needs.”

Why the venue matters

Levy then got to the crux of the matter: it’s easier to pry documents from the defendants in federal court. “Plaintiffs have good reasons for preferring federal court over state court, not the least of which is the lack of access to discovery in state court proceedings under the EDPL,” he wrote.

In a footnote, he offered an observation that, from the plaintiffs’ perspective, must be ominous: “As one court has explained, ‘under the EDPL, the [condemning authority] holds nearly all the cards, with any aggrieved party having little right to participate in the initial determination and limited right to judicial review thereafter.”

He agreed with the defense that a ruling in favor of the plaintiffs might send future litigants to federal court. “No prospective condemnee, given the choice, would opt for narrow, on-the-record (yet constitutionally adequate) review in the Appellate Division if all of the benefits of federal review were freely available,” he wrote.

The larger issues

In another footnote, Levy seemed to acknowledge the larger issues. “As a matter of public policy, the availability of discovery could reasonably be expected to promote a full and robust public debate and enhance the likelihood of rational decision-making,” he wrote. “However, the constitutionality of the EDPL is not in question in this litigation, and it is not the place of the federal courts to determine public policy in areas of state and local concern such as eminent domain.”

Arguably, the plaintiffs’ challenge under Kelo is a plea for courts, if not federal ones, to intervene in certain instances where public policy has gone wrong.

Still, while Levy acknowledged “this action presents important public policy concerns,” it is “essentially local in nature.” So, if the plaintiffs can’t convince Judge Garaufis to overrule Levy’s report, they will argue the important public policy concerns in state court, albeit without as much legal ammunition.