OSI LLC v. City of New York

Background

OSI LLC sued the City of New York and the New York City Department of Buildings (DOB), alleging violations of procedural due process under the Fourteenth Amendment and the New York Constitution. OSI also sought declaratory relief. The defendants moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which tests whether a complaint plausibly states a legal claim.

The case concerned DOB summonses issued between 2019 and 2021 that began with the number 390. OSI alleged that these summonses did not adequately tell recipients that they had to certify correction of the cited building-code condition. OSI received two such violations in March 2021. DOB later imposed two penalties totaling $6,000 for failure to certify correction. OSI did not pursue an administrative or judicial appeal of those decisions.

Court’s Analysis

The court treated the $6,000 penalty as implicating a property interest. It therefore focused on whether OSI had received constitutionally sufficient notice and an opportunity to be heard.

First, the court rejected OSI’s argument that failure-to-certify penalties received no process at all. It explained that the administrative code allowed the Office of Administrative Trials and Hearings (OATH) to consider the failure-to-certify issue along with the underlying building-code violation. The court also identified review under New York Civil Practice Law and Rules Article 78, which permits review of agency decisions concerning the measure or manner of a penalty or discipline.

Second, the court held that the 390 summonses provided sufficient notice when their contents were considered as a whole. Although the summonses allegedly lacked the wording used in standard notices, the court found that they identified the underlying violation, directed correction, described the availability of an OATH hearing, and warned that additional penalties could result if the condition was not corrected or correction was not certified.

Third, the court applied the balancing test from Mathews v. Eldridge. The court found that OSI’s property interest was substantial, but concluded that the risk of an erroneous deprivation weighed strongly for the defendants because OATH proceedings and Article 78 review were available. The court assumed for purposes of part of its analysis that OATH might not provide the process OSI described, but found that any additional process would impose only a factor slightly favoring OSI. On balance, the court concluded that OSI had not plausibly pleaded a procedural due process violation.

Disposition

Judge Carter granted the defendants’ motion to dismiss. The court dismissed OSI’s complaint without prejudice and granted OSI leave to file a first amended complaint by April 19, 2024. The court also denied OSI’s February 16, 2024 letter, which it construed as a pre-motion conference letter for an anticipated discovery motion.