Court rejects challenge to State and City COVID-19 shutdown rules

Here is another challenge to COVID-19 rules. In this case, the plaintiff argues that former Governor Cuomo's Executive Orders dealing with the virus violated the Takings Clause of the U.S. Constitution. They also challenge the rules set down by the City of New York. For various reasons, there is no case here, the Court of Appeals says.

The case is Heidel v. Governor of New York State, a summary order issued on January 31. Plaintiffs claim the COVID-19 rules interfered with their ability to maintain their businesses. One plaintiff is a restaurant. Another plaintiff is a theater group. They want to bring a class action. But on the federal claim, we have ourselves a sovereign immunity problem. Under the Constitution, you cannot sue the State in federal court for certain constitutional violations. You have to do so in the state Court of Claims. Since this case was filed in federal court, plaintiffs try to get around this principle by arguing that "state procedures fail to provide 'reasonable, certain and adequate provision for obtaining compensation,' they may pursue their claim in federal court." In particular, they argue that

(1) the rules effectively “require pre-suit joinder of all class members,” (2) “there is no way for Plaintiffs’ counsel to ascertain and contact the Class members,” (3) “the best possible ethically-permitted mailed notice would lack the key opt-out nature of class actions under both Rule 23 and CPLR Article 9,” and (4) “the Court of Claims requires claimants with business claims such as Class members to identify and verify the ‘total sum claimed’ in damages with specificity.”

The Second Circuit (Leval, Nardini and Cabranes) recognizes that the Court of Claims process makes class-action relief more challenging than in federal court under Fed. R. Civ. P. 23, the procedural steps in the Court of Claims do not prevent plaintiffs from getting individual relief in that Court. 

That analysis covers the claims against the State of New York. As for the claims against New York City, the Court finds that plaintiffs cannot show that any of their injuries were caused by the City policies. That means plaintiffs lack standing to pursue these claims against the City. 

As noted by the District Court, “[w]hile the Complaint makes detailed allegations about public health orders issued by . . . the City, it includes no factual allegations about how those orders affected plaintiffs individually, including any effect on revenue or business operations, or any attempt to stay in business under modified pandemic conditions.” Thus, Plaintiffs never connect the dots between any City policy and their alleged injuries necessary to show causation. Notably, Plaintiffs fail to address City Defendants’ causation argument in their reply beyond mere recitation that the City’s actions caused Plaintiffs’ business closures.