Cho Ex Rel. Situated v. City of N.Y.
Opinion
This case requires us to consider the application of the
Rooker
-
Feldman
doctrine where plaintiffs complain of injuries flowing from settlement agreements that were "so-ordered" by state-court judges. Plaintiffs-Appellants Sung Cho, Nagle Washrite LLC (Cho's business entity), David Diaz, and Jameelah El-Shabazz appeal from a judgment in the United States District Court for the Southern District of New York (Andrew L. Carter,
Judge
) dismissing their complaint. Plaintiffs-Appellants are all individuals or businesses that were subject to eviction based on New York City's Nuisance Abatement Law, N.Y.C. Admin. Code §§ 7-701
et seq
., and had agreed to settle eviction proceedings brought by the City, rather than to litigate the nuisance charges. Defendants-Appellees are the City of New York, New York City Mayor Bill de Blasio in his official capacity, the New York City Police Department, New York City Police Commissioner James P. O'Neill in his official capacity, the New York City Law Department, and Zachary W. Carter, Corporation Counsel for the City of New York, in his official capacity (collectively, the "City"). The district court dismissed plaintiffs' claims for lack of subject matter jurisdiction, concluding that they were barred by the
Rooker
-
Feldman
doctrine.
Cho v. City of N.Y.
,
The single question on appeal is whether the district court's Rooker - Feldman ruling was erroneous. Plaintiffs argue that only one of Rooker - Feldman 's four requirements is met and that therefore the case should proceed. Essentially, they maintain that Rooker - Feldman should not bar jurisdiction where, as here, plaintiffs' alleged injuries were merely ratified by the state-court judgments rather than caused by them.
As explained below, we agree that plaintiffs complain of injuries that were merely ratified by the state-court judgments, and not, as required by Rooker - Feldman , caused by them. Since Rooker - Feldman bars district court jurisdiction only when all four of its requirements are met, it was *642 therefore error for the district court to dismiss for lack of jurisdiction.
Accordingly, we VACATE the judgment of the district court and REMAND this case to the district court for further proceedings.
BACKGROUND
This appeal arises out of events that occurred when plaintiffs were charged with violating New York City's Nuisance Abatement Law, N.Y.C. Admin. Code §§ 7-701
et seq.
(the "Ordinance").
1
The plaintiffs entered into settlement agreements with the City rather than defend themselves in court; each one of their agreements was subsequently "so-ordered" in state court. They now bring claims in federal court under
Enacted in 1977 to address concerns that various illegal activities were "detrimental to the health, safety, and welfare of the people of the city and of the businesses thereof and visitors thereto," the Ordinance allows the City to close a residence or business for up to one year when it can show, by a preponderance of the evidence, that certain enumerated offenses - such as drug crimes, stolen property offenses, prostitution, or obscenity - occurred on the premises.
At the time of the relevant events, the Ordinance allowed for the issuance of a temporary closing order regardless of the culpability of the defendant residents and business owners.
See, e.g.
,
City of New York v. Castro
,
More specifically, the named plaintiffs allege the following: Sung Cho, a laundromat owner, claims that the NYPD conducted sting operations on his premises in which it used his laundromat to sell purportedly stolen electronics on two separate occasions. Cho claims that several months after these sting operations, he received a notice evicting him from his business and imposing $1,000 per day in civil fines. A hearing was scheduled, but Cho settled with the City the day before, understanding that even if he was able to prove that neither he nor his employees had any involvement with the alleged criminal conduct, his innocence would not provide a defense against the injunction.
The second named plaintiff, David Diaz, tells the following story: He and his family members were arrested after cocaine was found in his apartment. No charges were brought, however, against either Diaz or any member of his family. Four months later, he returned home to a notice of eviction. Like Cho, Diaz settled with the City rather than try to defend the litigation; the complaint alleges that the City's lawyer (whom he mistakenly thought was acting on his behalf) told him that it would be "risky" to fight the eviction action, and that he therefore decided not to take that risk, given the fact that he had an infant daughter. J.A. 30-31.
The third named plaintiff, Jameelah El-Shabazz, alleges as follows: She and her son, Akin, were mistakenly arrested for drug possession when authorities found paper cups of what was later determined to be crushed eggshells in her apartment. El-Shabazz and her son sued the City for wrongful arrest, and the City settled the suit by paying them $37,500. Four months after the arrest (and one month after the settlement), El-Shabazz received an eviction notice based on an affidavit from an NYPD officer who claimed (as had been since disproved) that drugs had been found in her apartment. Like the other two plaintiffs, she settled rather than defending the case.
The plaintiffs assert that the settlement agreements that they entered into with the City required them to waive various constitutional rights. Cho's agreement required him to waive his right to a hearing if accused of further violations, consent to future warrantless inspections, and install a camera surveillance system to which the NYPD could have ready access. Diaz's agreement required him to bar all of his family members - except for his infant daughter - from ever entering his apartment. El-Shabazz's agreement required her to permanently exclude her son Akin from the apartment. Each plaintiff further alleges that his or her waiver of constitutional rights was not knowing and voluntary and that he or she was pressured into settling by the City's attorneys.
Importantly for purposes of this appeal, after the plaintiffs signed their settlement agreements, each of the agreements was "so-ordered" by justices of the Bronx and New York County Supreme Courts, and the nuisance actions were dismissed. There were no further state-court proceedings.
On October 12, 2016, plaintiffs filed a federal lawsuit in the Southern District of New York, seeking declaratory and injunctive relief on behalf of themselves and a putative class. Specifically, they alleged that "City attorneys use the[ ] eviction actions to compel property owners and leaseholders to enter into settlement agreements waiving constitutional rights," and that the "coercive settlement agreements violate the Fourteenth Amendment." J.A. 16. They asked the court to permanently enjoin defendants from enforcing the *644 agreements, to declare the "agreements exacted" to be "unconstitutional, invalid, and unenforceable," and to award nominal damages. J.A. 66-67.
In response, defendants moved to dismiss for a number of reasons including, inter alia , statute of limitations and failure to state a claim. At oral argument on the motion to dismiss, the district court sua sponte raised concerns about its jurisdiction, citing the Rooker - Feldman doctrine, and asked the parties for supplemental briefing on that issue. Upon review, the district court held that the Rooker - Feldman doctrine barred jurisdiction and thus dismissed the case. This appeal followed.
DISCUSSION
When a federal suit follows a state suit, the former may, under certain circumstances, be prohibited by what has become known as the
Rooker
-
Feldman
doctrine.
See
18B Charles Alan Wright, Arthur R. Miller & Edward H. Cooper, Federal Practice & Procedure: Jurisdiction 2d § 4469.1 (2018). Our review of a district court's application of
Rooker-Feldman
is de novo.
See, e.g.
,
Green v. Mattingly
,
I. The Rooker-Feldman Doctrine
The
Rooker
-
Feldman
doctrine is named for two Supreme Court cases,
Rooker v. Fidelity Trust Co.
,
However, beyond establishing this basic principle,
Rooker
and
Feldman
"provided little guidance on how to apply [it]."
Hoblock
,
Much of our previous case law was thus abrogated, and we subsequently articulated
*645
that in order for a court to be deprived of jurisdiction under the
Rooker
-
Feldman
doctrine, four requirements must be met: (1) the federal-court plaintiff must have lost in state court; (2) the plaintiff must complain of injuries caused by a state-court judgment; (3) the plaintiff must invite district court review and rejection of that judgment; and (4) the state-court judgment must have been rendered before the district court proceedings commenced.
Hoblock
,
Since
Exxon Mobil
, we have applied the
Rooker
-
Feldman
doctrine with some frequency to cases involving suits directly against state-court judges,
5
or in which error by state-court judges in state-court proceedings is asserted, frequently in the foreclosure process.
6
As relevant to this case, when considering challenges to stipulated settlements, we have ruled that
Rooker
-
Feldman
acted as a procedural bar in
Fraccola v. Grow
,
In contrast, we have concluded that
Rooker
-
Feldman
did
not
apply where a plaintiff filed a federal suit alleging that defendants' conduct during the course of a state foreclosure action violated,
inter alia
, the Fair Debt Collection Practices Act ("FDCPA").
See
Gabriele v. Am. Home Mortg. Servicing, Inc.
,
In an analogous context, in
Sykes v. Mel S. Harris and Associates, LLC
,
II. Rooker-Feldman 's Second Requirement
While all four requirements must be met in order for
Rooker
-
Feldman
to act as a jurisdictional bar, we have held that the second requirement - that the plaintiff complains of an injury
caused
by a state-court judgment - is the "core requirement from which the other[ ] [
Rooker
-
Feldman
requirements] derive."
Hoblock
,
On appeal here, plaintiffs allege, inter alia , that the state courts merely ratified rather than produced their injuries, and that therefore, the district court erred when it dismissed their suit for lack of jurisdiction. We thus begin by analyzing Rooker - Feldman 's "core" substantive requirement: are the injuries of which plaintiffs complain produced by the state-court judgments at question or merely ratified by such judgments? We conclude that they are merely ratified, for reasons explained below.
III. Plaintiffs' Alleged Injuries
First, we look to the complaint to determine the nature of the injury of which plaintiffs complain. Plaintiffs target what they describe as a "lumbering and indiscriminate law enforcement program that forces ordinary, innocent people to waive their constitutional rights without being accused, much less convicted, of a crime." J.A. 15. According to plaintiffs, the injuries of which they complain flow from the City's conduct in enforcing the Ordinance, specifically the allegedly predatory conduct of the City's attorneys. Plaintiffs complain that the "City attorneys use [no-fault] eviction actions to compel property owners and leaseholders to enter into settlement agreements waiving constitutional rights" and that the "coercive settlement agreements violate the Fourteenth Amendment." J.A. 16. They argue repeatedly that at heart, their complaint is about the agreements themselves and the conduct that led to them - not the judgments so-ordered by the state court.
Defendants dispute plaintiffs' argument that the injury of which they complain is caused by conduct leading to the agreements, but do concur that the agreements themselves are the injury. They argue, however, that the agreements are indistinguishable from the state judgments that were filed when the state-court judges so-ordered the agreements.
The relevant case law persuades us that plaintiffs have the stronger argument. In
Sykes
, for example, we held that
Rooker
-
Feldman
did not bar the district court's jurisdiction where similar misconduct was alleged; specifically, the plaintiffs alleged
*647
that defendants were engaged in a "default judgment mill" to obtain state-court judgments by unlawful means.
Several courts in our Circuit have similarly held that state-court action was a mere "ratification" of the injury in similar circumstances, and thus that
Rooker
-
Feldman
's second requirement was not met. For example, in
Green v. City of New York
,
These cases are persuasive that where, as here, plaintiffs bring claims alleging harm flowing from wrongful conduct leading to settlement terms and do not argue that the state courts committed any error in so-ordering the parties' agreements, the complaint attacks the conduct itself, and the claim does not function as a
de facto
appeal. Defendants point us towards
Fraccola
,
Plaintiffs further argue that the harm of which they complain exists separate and apart from the state-court judgments, for two reasons. First, they argue that their constitutional rights were violated when they were forced to sign the settlement agreements, whether such agreements were enforceable or not. Second, they argue that, as two of the three agreements contained in the record became enforceable as of signing, they were legally binding *648 contracts to which plaintiffs were bound even before the state court so-ordered them. For its part, the City considers the state-court judgments and the settlement agreements to be one and the same, arguing that it was "only in the state courts' so-ordering of those agreements that the City obtained the power to take the actions that plaintiffs claim caused them injury." Appellee Br. 28. We will consider each argument in turn.
First, plaintiffs argue that harm befell them "as soon as" the City engaged in conduct with the aim of coercing them to waive their constitutional rights; more specifically, they claim that even "[i]f the City had not
succeeded
in depriving Plaintiffs of their constitutional rights, the City's negotiating tactics
still
would have violated the Constitution and given rise - at a minimum - to a claim for nominal damages." Appellant Reply Br. 13 (first emphasis added) (citing
Amato v. City of Saratoga Springs, N.Y.
,
Second, plaintiffs maintain that tangible harm befell them as soon as the contracts were signed. Cho signed his agreement on December 23, 2013, but it was not filed with the court until March 18, 2014. J.A. 250-56. Likewise, El-Shabazz signed her agreement on September 29, 2011, and it was not filed with the court until October 17, 2011. 10 J.A. 140-43. Since the agreements state that the "Stipulation of Settlement shall be effective immediately upon execution of the parties," and the agreements were signed significantly before they were filed with the state court, plaintiffs appear to be correct that they were bound by their terms immediately, regardless of the action of the state courts. 11 J.A. 142, 255. Especially as the agreements included provisions, for example, banning particular people from the premises (in El-Shabazz's case, her son), plaintiffs' arguments that harm befell them as soon as they signed are persuasive. 12
*649 Moreover, even were that not the case, and the stipulations were effective only after being so-ordered by the state court, plaintiffs are still attacking the agreements themselves and the course of conduct that led to them, rather than the state courts' rulings.
The instant case thus does not entail the evil Rooker - Feldman was designed to prevent. Plaintiffs are attempting to remedy an alleged injury caused when, prior to any judicial action, they were coerced to settle, not an injury that flows from a state-court judgment. By allowing an action such as this to go forward, we do not risk turning our federal district courts into quasi-appellate courts sitting in review of state-court decisions. 13
CONCLUSION
For the foregoing reasons, we VACATE the judgment of the district court and remand for further proceedings.
Because a court that rules on a defendant's motion to dismiss a complaint "must accept as true all of the factual allegations contained in the complaint,"
Bell Atl. Corp. v. Twombly
,
The Ordinance has since been amended and no longer allows ex parte temporary closing orders to issue where the nuisance is created by the sale of drugs or stolen goods. N.Y.C. Admin. Code § 7-710.
The Ordinance has also since been amended to allow a defense where a defendant "was not aware of, should not have been aware of, and had no reason or duty to be aware of the public nuisance addressed by such disposition or order." N.Y.C. Admin. Code §§ 7-725, 7-726.
Parties who contend that adverse state judgments are flawed for reasons raising federal questions may, of course, seek review in the Supreme Court, which has appellate jurisdiction in such matters. U.S. Const . art. III.
See, e.g.,
Richter v. Conn. Judicial Branch
,
See, e.g.
,
Vossbrinck v. Accredited Home Lenders, Inc.
,
In surveying our applications of Rooker - Feldman , we have cited a number of unpublished summary orders. We do so not to rely on any proposition of law they might be taken to establish - by definition such orders merely apply established law to particular sets of facts. But precisely because such orders illustrate routine applications of established law, the pattern of results that they reach can provide an informative survey of the kinds of cases in which a doctrine has been found unproblematically to apply or not to apply.
Districts courts outside our Circuit have also found a mere "ratification" in similar circumstances.
See, e.g.
,
Arnett v. Arnett
,
Plaintiffs have, in fact, sought nominal damages of $10.00 each. J.A. 67.
The record does not disclose when the state judges actually "so-ordered" the agreements, and defendants argue that "[n]one of the injuries alleged in plaintiffs' complaint had occurred when the state courts so-ordered their settlement stipulations on the same day plaintiffs agreed to them." Appellee Br. 29 (emphasis added). However, the evidence in the record reveals only the dates on which the stipulations were filed with the courts.
Defendants also argue that this argument is unpreserved, but the dates are part of the settlement agreements, of which the district court took judicial notice. As plaintiffs have consistently argued that the harm flowed from the agreements themselves, and not the state-court actions, we can properly consider the additional fact that the agreements were filed only some time after their signing, and that they were effective immediately upon signing.
See, e.g.
,
United States v. Erie Cty., N.Y.
,
We note that even if the agreements were enforceable only
after
they were judicially approved (as was the case with Diaz), the precedents we discuss above include many instances in which we found that state-court action was a mere "ratification," and not the cause of the injuries.
See, e.g.
,
Sykes
,
Plaintiffs also argue both that they are not state-court losers and that they do not seek review and reversal of any state-court judgments. Because Rooker - Feldman will bar jurisdiction only when all four of its requirements are met, and we have already held that the injury of which plaintiffs complain was merely ratified by the state court, we need not address those arguments.
Reference
- Full Case Name
- SUNG CHO, Individually and on Behalf of All Others Similarly Situated, Nagle Washrite LLC, Individually and on Behalf of All Others Similarly Situated, David Diaz, Individually and on Behalf of All Others Similarly Situated, Jameelah El-Shabazz, Individually and on Behalf of All Others Similarly Situated, Plaintiffs-Appellants, v. CITY OF NEW YORK, Mayor Bill De Blasio, in His Official Capacity as Mayor of the City of New York, New York City Police Department, Police Commissioner James P. O'Neill, in His Official Capacity as New York City Police Commissioner, New York City Law Department, Zachary W. Carter, in His Official Capacity as Corporation Counsel of the City of New York, Defendants-Appellees.
- Cited By
- 141 cases
- Status
- Published