The case is Royal Crown Day Care, LLC v. Department of Health and Mental Hygiene of the City of New York, decided on March 19. Some private scammer told the plaintiffs that if they did not give him money, his connections with the city government shut down the business. (The city official eventually plead guilty to fraud in accepting money from the scammer to benefit the latter's day care centers). Plaintiffs complained in writing to a state senator about the shakedown, and shortly afterwards the individual government defendants shut down their business for alleged health code violations.
This is a First Amendment violation. But do the defendants get qualified immunity. This immunity is available when government defendants do not violate violate clearly-established law. In other words, if the state of the case law is murky, they get the benefit of the doubt. Defendants say the health code required them to shut down the facility. But the Second Circuit (Pooler, Lynch and Droney) says that if defendants' improper motive contributed to the shutdown, they can lose the case if they had some discretion in making this decision, i.e., if they did not have to shut it down and could have imposed another penalty. This is a nuanced interpretation of the First Amendment, but it's not a new one.
Royal Crown “can prove First Amendment retaliation even if the measures taken by [defendants] were otherwise justified.” Beechwood Restorative Care Ctr. v. Leeds, 436 F.3d 147, 152 (2d Cir. 2006). That is to say, the fact that defendants in this case may have been justified in closing down Royal Crown based on their regulatory responsibilities to enforce the Health Code does not insulate them from being “subject to a claim of improper motive,” if defendants retained some discretion in how they performed their regulatory enforcement functions. Id. at 153.The reason why the government can lose a First Amendment case even if it had a valid reason to punish the plaintiff is that the plaintiff can prove retaliation if the protected speech was a "substantial or motivating factor in" the defendant's decision. As defendants shut down plaintiff's day care center only a few days after plaintiff engaged in free speech in sending the complaint letter to a state senator, and the law has long recognized that the government cannot retaliate against people and entities in this manner, plaintiff has a legitimate First Amendment claim.