Goldstein v. Pataki

516 F.3d 50

Daniel GOLDSTEIN, Jerry Campbell, as the putative administrator of the estate of Oliver St. Clair Stewart and in his individual capacity, Gelin Group, LLC, Chadderton's Bar and Grill, Inc., d/b/a Freddy's Bar and Backroom, Maria Gonzalez, Jackie Gonzalez, Yesenia Gonzalez, Huda Mufleh-Odeh, Jan Akhtar, David Sheets, Peter Williams Enterprises, Inc., 535 Carlton Ave. Realty Corp., Pacific Carlton Development Corp., Aaron Piller, and Rockwell Property Management, LLC, Plaintiffs-Appellants, v. Governor George E. PATAKI, New York State Urban Development Corporation, d/b/a Empire State Development Corporation, Bruce C. Ratner, James P. Stuckey, Forest City Enterprises, Inc., Forest City Ratner Company Ratner Group, Inc., BR FCRC, LLC, BR Land, LLC, FCR Land, LLC, Brooklyn Arena, LLC, Atlantic Yards Development Company, LLC, Michael Bloomberg, Daniel Doctoroff, Andrew M. Alper, Joshua Sirefman, City of New York, New York City Economic Development Corporation, Empire State Development Corporation, and Charles A. Gargano, Defendants-Appellees.

Docket No. 07-2537-cv.

United States Court of Appeals, Second Circuit.

Argued: October 9, 2007.

Decided: February 1, 2008.

Matthew D. Brinckerhoff (Andrew G. Celli, Jr., Eric Hecker, of counsel), Emery Celli Brinckerhoff & Abady LLP, New York, NY, Jennifer Levy, South Brooklyn Legal Services, Brooklyn, NY, for Plaintiffs-Appellants.

Preeta D. Bansal (Douglas M. Kraus, of counsel) Skadden, Arps, Slate, Meagher & Flom LLP, New York, NY, (on behalf of the Empire State Development Corporation appellees), Laura R. Johnson, Assistant Solicitor General, Barbara D. Underwood, Solicitor General, Benjamin N. Gutman, Deputy Solicitor General for Andrew M. Cuomo, Attorney General of the State of New York, New York, NY, (on behalf of the New York State appellees), Jeffrey R. Braun, Karen L. Mintzer, Kerri B. Folb, Jessica J. Glass, Kramer Levin Naftalis & Frankel LLP, Richard G. Leland, Fried, Frank, Harris, Shriver & Jacobson LLP, New York, NY, (on behalf of the Forest City Ratner appellees), Jane L. Gordon, Edward F.X. Hart for Michael A. Cardozo, Corporation Counsel of the City of New York, New York, NY, (on behalf of the New York City appellees), for Defendants-Appellees.

Before: JACOBS, Chief Judge, KATZMANN and LIVINGSTON, Circuit Judges.^*

KATZMANN, Circuit Judge:

Few powers of government have as immediate and intrusive an impact on the lives of citizens as the power of eminent domain. For affected property owners, monetary compensation may understandably seem an imperfect substitute for the hardships of dislocation and the loss of a home or business. But federal judges may not intervene in such matters simply on the basis of our sympathies. Just as eminent domain has its costs, it has its benefits, and in all but the most extreme cases, Supreme Court precedent requires us to leave questions of how to balance the two to the elected representatives of government, notwithstanding the hardships felt by those whose property is slated for condemnation.

Against this backdrop, we must decide if a complaint has sufficiently alleged that an eminent domain action violates the Public Use Clause of the Fifth Amendment. In our view, the plaintiffs-appellants effectively acknowledge, albeit reluctantly, that the well-publicized, multibillion dollar development project they challenge would result, inter alia, in a new stadium for the New Jersey Nets, a public open space, the creation of affordable housing units and the redevelopment of an area in downtown Brooklyn afflicted for decades with substantial blight. They contend, however, that the project's public benefits are serving as a "pretext" that masks its actual raison d'être: enriching the private individual who proposed it and stands to profit most from its completion. Following Supreme Court precedent, we conclude that the plaintiffs have not mounted a viable Fifth Amendment challenge. The judgment of the district court is affirmed.

I.

Because this appeal follows the grant of a motion to dismiss, we must derive our version of the facts of record, including our description of the Atlantic Yards Project, from the allegations set forth in the plaintiffs' Amended Complaint, "taking [them] as true . . . and drawing all reasonable inferences in favor of the plaintiffs]." Stuto v. Fleishman, 164 F.3d 820, 824 (2d Cir.1999).¹

The Atlantic Yards Arena and Redevelopment Project (the "Atlantic Yards Project" or the "Project") is a publicly subsidized development project set to cover twenty-two acres in and around the Metropolitan Transit Authority's Vanderbilt Yards, an area in the heart of downtown Brooklyn, New York. The plan for the Project, which will be designed in part by the architect Frank Gehry, includes the construction of a sports arena that will play home to the National Basketball Association franchise currently known as the New Jersey Nets, no fewer than sixteen high-rise apartment towers, and several office towers. The Project site is bounded generally by Dean Street, Atlantic Avenue, Fourth Avenue, and Vanderbilt Avenue.

Announced to the public in December 2003, the. Project is being carried out, in part, through the assistance of the New York State Urban Development Corporation, which also operates as the Empire State Development Corporation ("ESDC"), a public-benefit corporation and political subdivision of New York State. The involvement of the ESDC is critical. Although approximately half the proposed footprint for the Project lies within the Atlantic Terminal Urban Renewal Area ("Renewal Area"), a heavily blighted area owned in part by the Metropolitan Transit Authority ("MTA"), the Project site also includes an adjacent parcel of land with less blight (referred to in the complaint as the "Takings Area") that is currently held by private parties. Under the plan for the Project, the ESDC, if necessary, will acquire the rest of the privately held land in the Takings Area through the use of eminent domain.

Consistent with the strictures of New York's Eminent Domain Procedure Law, the ESDC held a public hearing, which it publicized in advance, on August 23, 2006, at which it discussed the proposal for the Project in detail. See N.Y. Em. Dom. Proc. Law § 202. Thereafter, in September 2006, members of the public were invited to attend a community forum on the Project where they could voice their concerns.

II.

Plaintiffs-appellants are fifteen property owners whose homes and businesses in the Takings Area are slated for condemnation to make way for the Project. In October 2006, they filed this action in the Eastern District of New York, naming as defendants Appellee Bruce Ratner, the private developer carrying out the Project, several entities affiliated with him (collectively, the "Forest City Ratner Appellees" or "Ratner Group") and various officials, agencies, and subdivisions of New York State and New York City (respectively, the "State Appellees" and "City Appellees").² The action was assigned to the Hon. Nicholas G. Garaufis.

Apparently, after being consolidated, this action represented the first challenge in federal court to the Atlantic Yards Project. The original complaint raised three federal-law claims, asserting that the use of eminent domain in furtherance of the Project would violate the "Public Use" Clause of the Fifth Amendment, and the Equal Protection and Due Process Clauses of the Fourteenth Amendment. Thereafter, the plaintiffs amended the complaint, asserting the same three federal-law causes of action against all defendants, and adding a cause of action under New York state law against defendant ESDC.

Each of the claims relies on slightly different allegations.³ The heart of the complaint, however, and the centerpiece of the instant appeal, is its far-reaching allegation that the Project, from its very inception, has not been driven by legitimate concern for the public benefit on the part of the relevant government officials. Appellants contend that a "substantial" motivation of the various state and local government officials who approved or acquiesced in the approval of the. Project has been to benefit Bruce Ratner, the man whose company first proposed it and who serves as the Project's primary developer. Ratner is also the principal owner of the New Jersey Nets. In short, the plaintiffs argue that all of the "public uses" the defendants have advanced for the Project are pretexts for a private taking that violates the Fifth Amendment.

The defendants timely moved to dismiss all the claims on various grounds, among them that the complaint failed to state a claim upon which relief could be granted. See Fed.R.Civ.P. 12(b)(6). Magistrate Judge Robert Levy, to whom the Rule 12 motion practice was referred, issued a Report and Recommendation ("R & R") recommending that the district court abstain from deciding the issue under Burford v. Sun Oil Co., 319 U.S. 315, 63 S.Ct. 1098, 87 L.E d. 1424 (1943). See Goldstein v. Pataki, 2007 WL 1695573 (E.D.N.Y. Feb.23, 2007). After objections were filed, Judge Garaufis rejected this aspect of the R & R, and, instead, dismissed the federal claims in the amended complaint with prejudice. See Goldstein v. Pataki, 488 F.Supp.2d 254 (E.D.N.Y.2007). In a ruling that is not challenged on appeal, the district court declined to retain supplemental jurisdiction over the state claim, dismissing it without prejudice.

With respect to the claim made under the Public. Use Clause, the district court concluded, after a thorough and careful analysis, that no such claim was available. By the plaintiffs' own admission, the court noted, the Project here would serve several well-established public uses such as the redress of blight, the construction of a sporting arena, and the creation of new housing, including 2,250 new units of affordable housing. Id. at 286-87. The district court additionally held that a "pretext" oargument provided a valid basis for a public-use...