Heidel v. Cuomo

Background

Three businesses and their owners sued New York State, Governor Kathy Hochul in her official capacity, New York City, and Mayor Bill de Blasio in his official capacity. The businesses were R. Andrew Heidel, Inc., doing business as The Way Station; PO Italianissimo Inc.; and NYMS Productions, Inc., doing business as Murdered by the Mob. The complaint sought money damages, but no injunction or other forward-looking relief, and purported to represent a class that could include businesses such as bars, restaurants, movie theaters, shopping malls, and gyms.

The lawsuit challenged executive orders issued by New York State and New York City during the Covid-19 emergency. Among other restrictions, the orders limited or prohibited indoor dining while allowing businesses to use options including takeout, delivery, and outdoor dining. The plaintiffs alleged that the restrictions destroyed or largely wiped out their businesses and deprived them of all economically viable use of their property.

The claims against the City and de Blasio were brought under Section 1983, a federal law allowing claims for certain constitutional violations by state or local officials. Those claims alleged regulatory takings under the Fifth Amendment and New York Constitution, substantive due process violations, and equal protection violations. The claim against New York State and Hochul was a Fifth Amendment takings claim that the plaintiffs said could be brought directly under the Takings Clause without Section 1983.

The complaint originally named then-Governor Andrew Cuomo. The court took notice of Cuomo’s resignation and Hochul’s swearing-in as governor on August 24, 2021, and substituted Hochul for Cuomo in the official-capacity claim.

Legal standard

The defendants moved to dismiss under Rule 12(b)(6), which tests whether a complaint contains enough factual allegations to plausibly support legal relief. The court was required to accept well-pleaded factual allegations as true but not legal conclusions presented as facts.

Claims against New York State and Hochul

The court dismissed the takings claim against New York State based on sovereign immunity under the Eleventh Amendment. Sovereign immunity generally prevents private individuals from suing a nonconsenting state in federal court. The court assumed, without deciding, that the Fifth Amendment’s Takings Clause might in some circumstances permit a claim without relying on Section 1983. It nevertheless concluded that the Eleventh Amendment barred this money-damages claim against the State.

The same reasoning applied to Hochul. Because she was sued for damages in her official capacity, the court treated the suit as one against the State itself. The court also rejected the plaintiffs’ argument that the lack of a comparable class-action procedure in the New York Court of Claims should remove the State’s immunity. The court noted that the plaintiffs did not claim they were personally unable to seek relief in that court.

Takings claims against the City and de Blasio

The court granted the motion to dismiss Counts One and Two, which alleged violations of the federal and New York takings provisions. A categorical regulatory taking occurs when a government regulation eliminates all economically beneficial or productive use of property. The court held that the complaint did not plausibly allege such a total deprivation.

The complaint did not describe how the orders affected each business’s revenue or operations, or explain the extent of the alleged property deprivation. The Way Station and Murdered by the Mob had allegedly closed before some of the challenged orders took effect. The complaint also did not clearly state whether the closures were temporary or permanent. Because the orders allowed takeout, delivery, and outdoor dining, the court concluded that the allegations did not show that the plaintiffs were denied all productive or economically beneficial use of their property.

The court also rejected the plaintiffs’ attempt to recast the claims in their opposition papers as claims for temporary, non-categorical takings. The complaint had characterized the alleged takings as categorical and did not provide facts about the nature or extent of any temporary interference. Counts One and Two were therefore dismissed against the City and de Blasio.

Substantive due process claim

The court granted the motion to dismiss Count Three, the substantive due process claim. The plaintiffs argued that the restrictions interfered with fundamental rights to work, contract, pursue a lawful occupation, and engage in commerce, and that the government’s conduct shocked the conscience.

The court held that the complaint did not plausibly allege interference with a fundamental right. Although the Constitution provides some protection for choosing a private occupation, that right remains subject to reasonable regulation, and business losses alone do not establish a due process violation. The plaintiffs could continue some business activities through takeout, delivery, and outdoor dining, and the complaint did not describe how the orders prevented any individual plaintiff from pursuing a lawful occupation.

Because no fundamental right was plausibly alleged, the restrictions needed only to have a reasonable relationship to a legitimate public-health objective. The court concluded that limiting indoor dining and similar activities had a real and substantial relationship to containing the spread of Covid-19. It also held that the allegations described policies the plaintiffs considered misguided, not conduct sufficiently extreme to shock the conscience.

Equal protection claims

The court dismissed Counts Four and Five, which alleged federal and New York equal protection violations based on distinctions between essential and non-essential businesses. As an initial matter, the court questioned whether the plaintiffs had shown an injury caused by that distinction. State Order 202.6 classified bars and restaurants as “essential retail,” and the complaint did not allege that the limits on indoor food service resulted from the essential/non-essential classification. The court also noted that two businesses allegedly closed before that order was issued.

The court then held that, even assuming an injury, the complaint did not plausibly allege an equal protection violation. The plaintiffs did not plausibly allege that the restrictions burdened a fundamental right, so the classifications were subject to rational-basis review. Under that standard, a classification is valid if it is reasonably related to a legitimate government purpose. The court concluded that officials had a reasonable basis for treating indoor dining differently because customers could not wear masks while eating and drinking, and indoor dining brought people from different households together indoors.

Disposition

Judge Castel’s conclusion states that the defendants’ motions to dismiss were granted. The complaint was dismissed in its entirety, the clerk was directed to enter judgment for the defendants, and the case was closed. The opinion does not add a “with prejudice” or “without prejudice” qualification.