Vapor Tech. Ass'n v. Cuomo

203 A.D.3d 1516

166 N.Y.S.3d 296

In the Matter of VAPOR TECHNOLOGY ASSOCIATION et al., Respondents,

v.Andrew M. CUOMO, as Governor of the State of New York, et al., Appellants.

532438

Supreme Court, Appellate Division, Third Department, New York.

Calendar Date: February 8, 2022

Decided and Entered: March 31, 2022

Letitia James, Attorney General, Albany (Dustin J. Brockner of counsel), for appellants.

Thompson Hine LLP, New York City (Eric N. Heyer of Thompson Hine LLP, Washington, DC, of counsel, admitted pro hac vice), for respondents.

Before: Garry, P.J., Egan Jr., Pritzker, Colangelo and Ceresia, JJ.

MEMORANDUM AND ORDER

Egan Jr., J. Appeal from an order of the Supreme Court (Cholakis, J.), entered October 22, 2020 in Albany County, which, in a combined proceeding pursuant to CPLR article 78 and action for declaratory judgment, granted petitioners’ motion for an award of counsel fees and litigation expenses.

Respondent Public Health and Health Planning Council (hereinafter the Council) is an administrative body within respondent Department of Health (hereinafter DOH) empowered to establish "sanitary regulations, to be known as the sanitary code of the state of New York, subject to approval by" respondent Commissioner of Health ( Public Health Law § 225[4] ). In response to concerns about the increasing prevalence of youth vaping and the availability of flavored vape liquids that were contributing to that trend, the Council and the Commissioner adopted emergency regulations in September 2019 that prohibited the possession, manufacture, distribution or sale of "any e-liquid with a distinguishable taste or aroma, other than the taste or aroma of tobacco or menthol" and the electronic cigarettes and similar devices containing it (10 NYCRR former 9–3.1 [b]; see 10 NYCRR former 9–3.2). Several days later, and before enforcement of the emergency regulations was to begin in October 2019, petitioners commenced this combined CPLR article 78 proceeding and declaratory judgment action seeking, among other things, to challenge the emergency regulations as adopted in excess of respondents’ regulatory authority. Petitioners simultaneously moved for, as is relevant here, a preliminary injunction preventing enforcement of the emergency regulations. Petitioners unsuccessfully sought a temporary restraining order pending the outcome of that motion but, upon review pursuant to CPLR 5704(a), this Court granted the temporary restraining order in October 2019. Supreme Court then granted the motion in January 2020, and respondents appealed.

The appeal was rendered moot after a statutory prohibition on the sale of non-tobacco flavored electronic cigarette products was enacted in April 2020 (see Public Health Law § 1399–mm –1, as added by L 2020, ch 56, part EE, § 1), prompting DOH to let the emergency regulations expire later that month (see State Administrative Procedure Act § 202[6] ). Upon the parties’ stipulation, respondents discontinued the appeal and petitioners reserved the right to move for counsel fees and expenses pursuant to the State Equal Access to Justice Act (see CPLR art 86). In July 2020, petitioners did so. Supreme Court granted petitioners’ motion to the extent of finding that they were entitled to an award of counsel fees and expenses and directed a hearing to determine the reasonable amount thereof. Respondents appeal.

We reverse. CPLR 8601(a) "mandates an award of fees and other expenses to a prevailing party in any civil action brought against the state, unless the position of the state was determined to be substantially justified or that special circumstances render an award unjust" ( Matter of Scott v. Coleman, 20 A.D.3d 631, 631, 798 N.Y.S.2d 547 [2005], lv dismissed 5 N.Y.3d 880, 808 N.Y.S.2d 143, 842 N.E.2d 29 [2005] ; see Kimmel v. State of New York, 29 N.Y.3d 386, 392, 57 N.Y.S.3d 678, 80 N.E.3d 370 [2017] ; Matter of Clarke v. Annucci, 190 A.D.3d 1245, 1246, 140 N.Y.S.3d 627 [2021], lv dismissed 37 N.Y.3d 935, 147 N.Y.S.3d 574, 170 N.E.3d 449 [2021] ). Respondents contest Supreme Court's conclusion that their position was not substantially justified, meaning that it lacked "a reasonable basis both in law and fact" ( Matter of New York State Clinical Lab. Assn., Inc. v. Kaladjian, 85 N.Y.2d 346, 356, 625 N.Y.S.2d 463, 649 N.E.2d 811 [1995] [internal quotation marks and citation omitted]; accord Matter of Walker v. Novello, 36 A.D.3d 1100, 1102, 828 N.Y.S.2d 656 [2007] ). Notably, even where the "respondents did not prevail in the underlying proceeding, their position can be deemed substantially justified" if it had such a reasonable basis ( Matter of Rivers v. Corron, 222 A.D.2d 863, 864, 635 N.Y.S.2d 722 [1995] ; see Matter of New York State Clinical Lab. Assn., Inc. v. Kaladjian, 85 N.Y.2d at 357, 625 N.Y.S.2d 463, 649 N.E.2d 811 ; Matter of Smith v. Fischer, 50 A.D.3d 1279, 1280, 855 N.Y.S.2d 921 [2008] ). "Whether [the respondents’] position in a particular matter indeed was substantially justified is a determination committed to the sound discretion of the court of first instance and is reviewable as an exercise of judicial discretion" ( Matter of Perez v. New York State Dept. of Labor, 259 A.D.2d 161, 163, 697 N.Y.S.2d 718 [1999] [internal quotation marks and citations omitted]; see Matter of New York State Clinical Lab. Assn., Inc. v. Kaladjian, 85 N.Y.2d at 356, 625 N.Y.S.2d 463, 649 N.E.2d 811 ; Matter of Scott v. Coleman, 20 A.D.3d at 632, 798 N.Y.S.2d 547 ).

Petitioners challenged the emergency regulations upon the ground that they intruded upon the Legislature's policy-making authority and violated the separation of powers doctrine. In that regard, "[a] legislature may enact a general statutory provision and delegate power to an agency to fill in the details, as long as reasonable safeguards and guidelines are provided to the agency" ( Greater N.Y. Taxi Assn. v. New York City Taxi & Limousine Commn., 25 N.Y.3d 600, 608, 15 N.Y.S.3d 725, 36 N.E.3d 632 [2015] ; accord Matter of Sugarman v. New York State Bd. of Elections, 190 A.D.3d 1228, 1229, 140 N.Y.S.3d 328 [2021] ; see Boreali v. Axelrod, 71 N.Y.2d 1, 10, 523 N.Y.S.2d 464, 517 N.E.2d 1350 [1987] ). In assessing whether the Council and the Commissioner went beyond the guidelines set by the Legislature in issuing the emergency regulations, the pertinent factors are whether they "(1) operated outside of [their] proper sphere of authority by balancing competing social concerns in reliance solely on [their] own ideas of sound public policy; (2) engaged in typical, interstitial rulemaking or wrote on a clean slate, creating [their] own comprehensive set of rules without benefit of legislative guidance; (3) acted in an area in which the Legislature has repeatedly tried — and failed — to reach agreement in the face of substantial public debate and vigorous lobbying by a variety of interested factions; and (4) applied [their] special expertise or technical competence to develop the challenged regulations" ( Matter of Acevedo v. New York State Dept. of Motor Vehs., 132 A.D.3d 112, 119, 14 N.Y.S.3d 790 [2015] [internal quotation marks, brackets and citations omitted], affd 29 N.Y.3d 202, 54 N.Y.S.3d 614, 77 N.E.3d 331 [2017] ; accord Matter of Sugarman v. New York State Bd. of Elections, 190 A.D.3d at 1229, 140 N.Y.S.3d 328 ; see Boreali v. Axelrod, 71 N.Y.2d at 12–14, 523 N.Y.S.2d 464, 517 N.E.2d 1350 ).

With regard to the first factor, the Council is empowered to create regulations "deal[ing] with any matters affecting the security of life or health or the preservation and improvement of public health in the state of New York" with the Commissioner's approval ( Public Health Law § 225[5][a] ), and that broad grant of authority has been upheld given the impracticability of "prescrib[ing] detailed rules" for the "infinitely variable conditions" that present threats to public health ( Chiropractic Assn. of N.Y., Inc. v. Hilleboe, 12 N.Y.2d 109, 120–121, 237 N.Y.S.2d 289, 187 N.E.2d 756 [1962] ; see Matter of New York State Socy. of Surgeons v. Axelrod, 77 N.Y.2d 677, 683, 569 N.Y.S.2d 922, 572 N.E.2d 605 [1991] ). Emergency regulations banning the manufacture and sale of the flavored vape liquids preferred by children and contributing to the sharp increase of vaping among them, with its accompanying health impacts, were accordingly within that grant of authority – and reflected concerns for which the record contains factual support – and the regulations did not obviously attempt to address other policy goals beyond the related public health dilemma of discouraging youth vaping while leaving options open for adults who believed that vaping could help them quit cigarette smoking (compare Garcia v. New York City Dept. of Health & Mental Hygiene, 31 N.Y.3d 601, 611–613, 81 N.Y.S.3d 827, ...