19-161-cv Weisshaus v. Port Authority

UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT

SUMMARY ORDER

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT'S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION "SUMMARY ORDER"). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.

At a stated term of the United States Court of Appeals for the Second Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York, on the 28th day of May, two thousand twenty.

PRESENT: BARRINGTON D. PARKER, DENNY CHIN, SUSAN L. CARNEY, Circuit Judges. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

YOEL WEISSHAUS, Plaintiff-Appellant,

-v- 19-161-cv

PORT AUTHORITY OF NEW YORK & NEW JERSEY, Defendant-Appellee,

NEW YORK STATE, NEW YORK STATE ASSEMBLY, NEW YORK STATE SENATE, STATE OF NEW JERSEY, NEW JERSEY STATE LEGISLATOR, NEW JERSEY STATE GENERAL ASSEMBLY, NEW JERSEY STATE SENATE, JOHN DOES 1 THROUGH 20, JANE DOES 1 THROUGH 20, Defendants.

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FOR PLAINTIFF-APPELLANT: YOEL WEISSHAUS, pro se, New Milford, New Jersey.

FOR DEFENDANT-APPELLEE: KATHLEEN G. MILLER, The Port Authority of New York and New Jersey, New York, New York.

Appeal from the United States District Court for the Southern District of

New York (Eaton, J.). 1

UPON DUE CONSIDERATION, IT IS HEREBY ORDERED,

ADJUDGED, AND DECREED that the judgment of the district court is AFFIRMED in

part and VACATED in part, and the action is REMANDED for further proceedings

consistent with this order.

Plaintiff-appellant Yoel Weisshaus, proceeding pro se, sued defendant-

appellee Port Authority of New York and New Jersey (the "Port Authority"), claiming,

inter alia, that toll increases for the Port Authority's river crossings violated his right to

travel. His complaint was sua sponte dismissed in 2011. On appeal, we affirmed the

dismissal of all claims, except we remanded for the district court to consider whether

Weisshaus had adequately pleaded a dormant Commerce Clause claim. See Weisshaus

1 Judge Richard K. Eaton, of the United States Court of International Trade, sitting by designation. -2- v. Port Auth. of N.Y. & N.J.,

(2d Cir. 2012). We noted that the

district court could, in its discretion, stay the case pending resolution of a similar case

brought against the Port Authority by AAA Northeast and other AAA entities

(collectively, "AAA").

.

On remand, in an amended complaint, Weisshaus asserted three claims

under the dormant Commerce Clause based on: (1) the setting of tolls to fund projects

unconnected to the Port Authority's "interdependent transportation system" ("ITN");

(2) the discount given to E-ZPass users as compared to those who pay tolls in cash; and

(3) the setting of tolls to fund future projects. He also asserted other claims not based

on the dormant Commerce Clause. The Port Authority moved to dismiss the new

complaint for failure to state a claim, or to stay the case pending decision in the AAA

case. The Port Authority provided exhibits from the AAA case in support. The district

court stayed Weisshaus's case until summary judgment was granted for the Port

Authority in the AAA case. D. Ct. Dkt. No. 56; see also AAA Ne. v. Port Auth. of N.Y. &

N.J. ("AAA"),

(S.D.N.Y. 2016). After the stay was lifted,

Weisshaus moved to file a second amended complaint. The district court denied that

motion. It considered converting the Port Authority's motion to dismiss to a motion for

summary judgment, but did not do so; in the end, it granted the Port Authority's

motion to dismiss, relying in part on factual findings the court had made in AAA.

-3- This appeal followed. We assume the parties' familiarity with the

underlying facts, the procedural history, and the issues on appeal.

I. Standards of Review

We review de novo a district court's dismissal for failure to state a claim.

Smith v. Hogan,

(2d Cir. 2015). While we ordinarily "review denial of

leave to amend under an abuse of discretion standard, when the denial of leave to

amend is based on a legal interpretation, such as a determination that amendment

would be futile, a reviewing court conducts a de novo review."

(internal quotation

marks and alterations omitted) (italics added).

II. Non-ITN Projects Claim

In deciding a motion to dismiss for failure to state a claim, this Court (and

the district court) should not consider matters outside the pleadings. See Nakahata v.

N.Y.-Presbyterian Healthcare Sys., Inc.,

(2d Cir. 2013). Courts must limit

their consideration to: (1) "the factual allegations in the . . . complaint, which are

accepted as true"; (2) "documents attached to the complaint as an exhibit or

incorporated in it by reference"; (3) "matters of which judicial notice may be taken"; or

(4) "documents either in plaintiff['s] possession or of which plaintiff[] had knowledge

and relied on in bringing suit." Roth v. CitiMortgage Inc.,

(2d Cir. 2014)

(internal quotation and alterations marks omitted).

-4- As for judicial notice, Federal Rule of Evidence 201(b) provides that courts

may take judicial notice only of facts outside the trial record that are "not subject to

reasonable dispute." Fed. R. Evid. 201(b). "Such facts must either be (1) generally

known within the territorial jurisdiction of the trial court or (2) capable of accurate and

ready determination by resort to sources whose accuracy cannot reasonably be

questioned." Int'l Star Class Yacht Racing Ass'n v. Tommy Hilfiger U.S.A., Inc.,

(2d Cir. 1998) (internal quotation marks omitted). "A court may take judicial

notice of a document filed in another court not for the truth of the matters asserted in

the other litigation, but rather to establish the fact of such litigation and related filings."

(internal quotation marks omitted). "Facts adjudicated in a prior case do not meet

either test of indisputability contained in Rule 201(b): they are not usually common

knowledge, nor are they derived from an unimpeachable source." Id.; see also Liberty

Mut. Ins. Co. v. Rotches Pork Packers, Inc.,

(2d Cir. 1992) (noting

that the district court overstepped the bounds of judicial note when it relied on

a finding of fact from a bankruptcy court order).

"[W]here matter outside the pleadings is offered and not excluded by the

trial court, the motion to dismiss should be converted to a motion for summary

judgment." Nakahata,

; see also Fed. R. Civ. P. 12(d) ("If, on a motion

under Rule 12(b)(6) or 12(c), matters outside the pleadings are presented to and not

excluded by the court, the motion must be treated as one for summary judgment under

-5- Rule 56. All parties must be given a reasonable opportunity to present all the material

that is pertinent to the motion."). However, "reversal for lack of conversion is not

required unless there is reason to believe that the extrinsic evidence actually affected the

district court's decision and thus was not at least implicitly excluded." Amaker v. Weiner,

(2d Cir. 1999).

We conclude that the district court erred in dismissing the non-ITN

projects claim. The Port Authority submitted with its motion evidence produced in

AAA. The Port Authority relied on this evidence for the proposition that its ITN system

was unprofitable. The district court did not convert the motion to one for summary

judgment, but nonetheless cited to factual findings in the AAA decision. In doing so,

the district court apparently believed it could take judicial notice of the factfinding in

AAA. For instance, in examining whether revenues were diverted to non-ITN projects,

the court described the findings in AAA and then concluded:

Faced by the full weight of these facts, Weisshaus has not shown that his allegations of fact could lead the court to reasonably find the Port Authority liable on facts that have already been determined to foreclose liability. Thus, plaintiff’s claim that portions of the 2011 Toll Increase are being diverted to projects not functionally related to the ITN fails to state a claim under the dormant Commerce Clause. Because the court previously decided that there were no toll revenues that could have been diverted to projects outside of the ITN, plaintiff’s claim that the 2011 Toll Increase is being used to fund non-ITN projects . . . necessarily fails to allege facts sufficient to satisfy the pleading standard.

S. App'x at 29. -6- The findings in AAA, however, were not subject to judicial notice, and

Weisshaus disputed or attempted to distinguish a number of facts drawn from those

cases that were material to the decision to dismiss the non-ITN projects claim in this

case. Because that use of facts from AAA was error, the matter is remanded for the

district court to convert the motion to one for summary judgment, in whole or in part,

and to permit Weisshaus an opportunity to submit evidence in opposition to the

motion. Of course, the district court is free, upon such conversion, to consider the

evidentiary materials submitted by the Port Authority. We express no opinion as to the

merits of Weisshaus's claim.

III. Points That Are Affirmed

Despite the error discussed above, there are aspects of the district court's

decision that we affirm.

A. Other Dormant Commerce Clause Claims

Weisshaus argues that the Port Authority's cash toll surcharge violates the

dormant Commerce Clause because it "penalize[es] drivers for not having E-ZPass."

Appellant's Br. at 49. He contends that the district court erred when it considered the

benefits that E-ZPass confers on all drivers -- that is, better traffic flow -- because the

court "stepped outside the four corners of the complaint[]" to make such a finding.

Appellant's Br. at 51. We disagree. Weisshaus attached a Port Authority press release

to his amended complaint, which explained the Port Authority's reason for discounting

-7- the toll price for E-ZPass users: to decrease traffic congestion. In nearly a decade of

litigation, Weisshaus has never contended that this benefit was inauthentic, nor does he

do so on appeal. Accordingly, the district court appropriately relied on the documents

incorporated into Weisshaus's amended complaint, and it did not err when it dismissed

his cash toll surcharge claim.

Similarly, we affirm the district court's dismissal of Weisshaus's future

projects claim, also raised under the dormant Commerce Clause. There, he argues that

the Port Authority cannot raise toll prices "to fundraise revenues for future facilities,

years in advance" because it may never deliver a benefit to those paying the increased

rate. Appellant's Br. at 54. When determining whether a fee charged by a government

entity violates the Commerce Clause, we consider whether the fee "confer[s] an actual

or potential benefit" on those who pay. See Bridgeport & Port Jefferson Steamboat Co. v.

Bridgeport Port Auth.,

(2d Cir. 2009) (emphasis added). A fee is

permissible if it supports a project with "at least a functional relationship to facilities

used by the fee payers."

(internal quotation marks omitted). Here, the Port

Authority plans to use the funds to "maintain and modernize the bridges and tunnels of

the ITN," Appellee's Br. at 23, which satisfies the "functional relationship" requirement,

see Bridgeport,

. Accordingly, the district court did not err in dismissing

Weisshaus's future projects claim.

-8- B. Scope of Our Prior Mandate

"The scope of a mandate may extend beyond express holdings, and

precludes relitigation both of matters expressly decided [and] . . . impliedly resolved by

the appellate court." In re Coudert Bros. LLP,

(2d Cir. 2015) (internal

quotation marks and alterations omitted). "A mandate, therefore, may expressly

dispose of certain issues raised on appeal, or if the disposition of an issue is necessarily

implied by our decision, a mandate may also foreclose such an issue from being

considered by the lower court."

(internal quotation marks omitted). "The district

court must follow both the specific dictates of the remand order as well as the broader

spirit of the mandate."

(internal quotation marks omitted).

Here, our remand order directed the district court to "analyze the

adequacy of Weisshaus's pleadings with respect to a dormant Commerce Clause claim

by applying the standard the Supreme Court set out . . . for analyzing the

reasonableness of fees charged for use of state-provided facilities." Weisshaus,

. We instructed the district court "to determine in the first instance whether

Weisshaus has adequately pleaded such a claim or should be granted leave to amend

the claim."

. We then affirmed the dismissal of Weisshaus's claims in all

other respects.

. To the extent that Weisshaus attempted on remand to raise

claims other than the dormant Commerce Clause, the district court was correct to

dismiss them as beyond the scope of this Court's mandate.

-9- C. Minimum Wage Claim

In his original complaint, Weisshaus asserted that the post-2011 toll rate

"exceeds the minimum wage guideline of what a person under such income conditions

can afford . . . . Thus, these tolls are targeted to restrict minimum wage earners the right

to travel." Our prior panel affirmed the dismissal of Weisshaus's right-to-travel claim,

stating that "travelers do not have a constitutional right to the most convenient form of

travel, and minor restrictions on travel simply do not amount to the denial of a

fundamental right." Weisshaus,

(internal quotation marks omitted).

In his amended complaint, Weisshaus made essentially the same

allegation that the toll was prohibitively expensive for a minimum wage earner, but

instead presented it as the foundation of a dormant Commerce Clause claim. He

asserted that the toll rate's chilling effect on travel for prospective minimum wage

earners discriminated against interstate commerce. An independent review of the

record and relevant case law reveals that the district court properly held that this claim

fares no better when pursued under the Commerce Clause.

IV. Leave to Amend

The district court's denial of Weisshaus's motion to amend the complaint

was based, at least in part, on the factfinding it drew from AAA, which Weisshaus

disputed. See S. App'x at 34 ("To the extent that plaintiff's Proposed Second Amended

Complaint claims that the ITN was operating at a profit, and therefore, the need for the

-10- 2011 Toll Increase was motivated by an 'ulterior motive of setting the tolls at its highest

level,' the court notes that it has previously addressed the issue in AAA . . . ."). The

district court should reconsider its denial of that motion for the reasons discussed

above.

We have considered all of Weisshaus's remaining arguments and find

them to be without merit. Accordingly, we AFFIRM the judgment of the district court

in part, VACATE in part, and REMAND the action for further proceedings consistent

with this order.

FOR THE COURT: Catherine O=Hagan Wolfe, Clerk of Court

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