Some Rooker-Feldman for you

The Supreme Court has devised a set of rules that prevent unhappy state court parties to relitigate their cases in federal court. One of those rules is called Rooker-Feldman, named after two Supreme Court cases. Rooker-Feldman says you cannot file a case in federal court that, in essence, represents an appeal from a state court judgment. This allows the federal courts to respect state court judgments, no matter how silly they are. Rooker-Feldman is a complex area, however, as shown in this case.

The case is Cho v. City of New York, issued on December 11. This case has three plaintiffs, each of whom settled eviction proceedings that the City brought against them for allegedly misusing their property for criminal activity. The plaintiffs agreed to settle those eviction proceedings while maintaining their innocence; they claimed the settlements were coerced. After the settlements were "so ordered" by state judges, plaintiffs brought suit in federal court, alleging the City's lawyers used these eviction actions to compel property owners and leaseholders to enter into settlement agreements that require them to waive their constitutional rights.

Since there is a strong state court connection to this federal lawsuit, we've got a Rooker-Feldman problem here, do we not? The City argues that this case is really an end-run around the settlements that the state judges have already so-ordered. We solve Rooker-Feldman problems by applying a four-part test: (1) the federal-court plaintiff must have lost in state court; (2) the plaintiff must complain of injuries caused by a state-court judgment; (3) the plaintiff must invite district court review and rejection of that judgment; and (4) the state-court judgment must have been rendered before the district court proceedings commenced." The second requirement seems to be the most important, says the Second Circuit (Lynch, Hall and Carney). Plaintiffs say the state courts that so-ordered the settlements merely ratified rather than produced their injuries, and that they can proceed with their lawsuit against the City of New York over its coercive settlement practices. This is the first time the Second Circuit tackles this issue.

The Court of Appeals agrees with plaintiffs, holding that, "where, as here, plaintiffs bring claims alleging harm flowing from wrongful conduct leading to settlement terms and do not argue that the state courts committed any error in so-ordering the parties’ agreements, the complaint attacks the conduct itself, and the claim does not function as a de facto appeal." As the Court concludes, "The instant case thus does not entail the evil Rooker-Feldman was designed to prevent. Plaintiffs are attempting to remedy an alleged injury caused when, prior to any judicial action, they were coerced to settle, not an injury that flows from a state-court judgment. By allowing an action such as this to go forward, we do not risk turning our federal district courts into quasi-appellate courts sitting in
review of state-court decisions."