Town of Newburgh, New York v. Newburgh EOM LLC

Background

The Town of Newburgh brought the case in New York Supreme Court, Orange County, against Crossroads Hotel and Newburgh EOM LLC, which the opinion says owns and operates the hotel. The Town alleged that using the hotel to house asylum seekers or other people for more than 30 days violated local building and zoning rules requiring compliance with the hotel’s certificate of occupancy and limiting hotel use to transient lodging.

After asylum seekers arrived at the hotel, the state court issued a temporary restraining order. Among other things, the order barred additional migrants or asylum seekers from being transported to Orange County and restricted changes to the hotel’s use unless required permits and approvals were obtained. The order allowed 110 people already staying at the property to remain. The federal court later extended the order until it decided the remand motion.

Removal to Federal Court

The hotel removed the case from state court and later filed an amended notice of removal. It relied on two federal jurisdiction theories:

1. Section 1443(1), which allows certain civil or criminal cases to be removed when a person cannot enforce specified federal equal-rights protections in state court; and 2. Section 1441, based on federal-question jurisdiction under 28 U.S.C. § 1331.

The Town moved to remand, arguing that its complaint pleaded only state-law claims seeking relief under local codes. The court noted that the party seeking removal bears the burden of showing that federal jurisdiction exists. It also noted that the parties were all citizens of New York, so diversity jurisdiction was unavailable.

Section 1443(1)

The court explained that removal under section 1443(1) requires the defendant to satisfy two parts. First, the claimed right must arise under a federal law providing specific civil rights stated in terms of racial equality. Second, the defendant must show that it is denied, or cannot enforce, that right in the state courts.

The court accepted that Title II of the Civil Rights Act of 1964, 42 U.S.C. § 1981, and the Fourteenth Amendment’s Equal Protection Clause could potentially satisfy the first part. The hotel alleged that the Town was trying to prevent it from housing asylum seekers who were largely racial minorities.

The court held, however, that the hotel failed to satisfy the second part. The hotel relied mainly on the Town’s lawsuit and the temporary restraining order. But the court found no federal law barring municipalities from enforcing zoning and building codes and no New York statute or constitutional provision that would prevent the hotel from raising its federal rights in state court. The court also concluded that allegations of selective enforcement of facially neutral rules did not establish that the hotel could not vindicate its federal rights in state court.

The court therefore held that the hotel had not established a basis for removal under section 1443(1). It also denied the hotel’s request for an evidentiary hearing concerning that removal theory because the circumstances did not show a reason to believe that the state court could not protect the hotel’s federal rights.

Federal-Question Jurisdiction Under Section 1441

The hotel alternatively argued that the case qualified for the narrow exception allowing federal jurisdiction over certain state-law claims involving substantial federal issues. The court explained that this exception applies only when a federal issue is necessarily raised, actually disputed, substantial, and capable of resolution in federal court without upsetting the federal-state balance.

The court held that the exception did not apply because the Town’s complaint sought enforcement of local municipal codes and did not raise a federal issue on its face. The hotel, rather than the Town, had raised discrimination and federal immigration-policy issues. Those issues could arise as defenses, but a federal defense generally cannot create federal-question jurisdiction. Because the complaint’s claims could succeed or fail without deciding a federal issue, the court did not consider the remaining requirements of the exception.

Disposition

Judge Cathy Seibel granted the Town’s motion to remand. The Clerk was directed to terminate the motion and remand the case to the Supreme Court of the State of New York, Orange County. The temporary restraining order remains in effect until that state court changes it.