In Bochner v. City of New York, No. 23-683 (2d Cir. Oct. 7, 2024), while adopting the city defendants’ argument that the plaintiffs lacked jurisdictional standing, the Second Circuit twits the city’s corporation counsel for waiting two years to raise the issue and—for “failure to exercise reasonable diligence in identifying and raising jurisdictional questions early in a case”—denies the city costs on appeal.
This case originated with the pandemic lockdown in 2020, when New York City adopted rules against landlords that (among other things) “rendered permanently unenforceable certain personal liability guaranties on commercial lease obligations arising between March 7, 2020, and June 30, 2021” (“Guaranty Law”). Among the challengers were plaintiffs 287 7th Avenue Realty LLC and its owner Elias Bochner (“Bochner Plaintiffs”). The district court originally granted a Fed. R. Civ. P. 12(b)(6) motion dismissing the entire action on the merits.
On a first trip to the Second Circuit, Melendez v. City of New York, 16 F.4th 992 (2d Cir. 2021), the court remanded the case for further development of the plaintiffs’ constitutional Contracts Clause challenge. Up to that point, “the City never disavowed enforcement of the Guaranty Law or challenged plaintiffs’ standing or federal jurisdiction on that ground.”
“Only on remand,” two years after the case was first filed (2022) and “when the parties cross-moved for summary judgment, did the City assert its non-enforcement of the Guaranty Law to challenge the Bochner Plaintiffs’ standing and federal jurisdiction.” The City the argued for the first time that the City did not enforce the challenged law and that the plaintiffs thus could not establish a redressable injury. At the summary judgment stage, “the Bochner Plaintiffs bore a heightened burden to demonstrate standing by adducing factual evidence showing that they faced a credible threat of imminent and redressable injury from the City’s enforcement of the Guaranty Law.”
The Bochner Plaintiffs conceded that the challenged law was not enforced by the city.
The district court nevertheless held that “Plaintiffs demonstrated that their injury was redressable because a favorable court decision on their constitutional challenge would remove the ‘absolute barrier to recovering unpaid rent’ imposed by the Guaranty Law.” It granted summary judgment on the merits of the Contract Clause claim to the Bochner Plaintiffs.
The Second Circuit orders that the case be dismissed without prejudice for lack of standing. Plaintiffs “failed to come forward with a single instance in which the City sued or threatened to sue any commercial landlord for violating the Guaranty Law. Moreover, the City has now unequivocally disavowed any intent to enforce the Guaranty Law against the Bochner Plaintiffs.” Owing to its concession, “the Bochner Plaintiffs necessarily fell short of meeting their heightened burden on summary judgment to adduce ‘factual evidence’ proving a credible threat of imminent and redressable enforcement injury by the City.”
At the close of the opinion, though, the panel expresses possible “concern that the City had engaged in sanctionable strategic delay in not raising an enforcement challenge to standing until this court partially reversed the Rule 12(b)(6) dismissal judgment in its favor.”
It holds that the “delay was not strategic” and thus did not warrant sanctions.
“At the same time, however, the City’s delay in raising an enforcement challenge to standing appears to have been negligent. The City was represented in this action by the City’s Corporation Counsel, who ‘controls litigation on the City’s behalf and enjoys the general enforcement powers’ conferred by law . . . . Thus, during the lengthy dismissal stage of this case, the City had every reason to explore the scope of its authority to enforce the Guaranty Law. Similarly, it had every reason to decide at that stage of the litigation whether to disavow enforcement of the Guaranty Law against the Bochner Plaintiffs, as it now unequivocally has done. The City’s failure to conduct such due diligence, coupled with its concession of standing on two occasions, failed timely to alert the district court and this court to an enforcement issue determinative of standing that, if raised earlier, might have shortened or streamlined this years-long litigation. Similarly, the need for multiple submissions to learn the scope of the City’s authority to enforce the Guaranty Law, and the history of its appearances to defend that law, unnecessarily prolonged resolution of this appeal.”
“In these circumstances, although the City prevails in part on this appeal, we deny it costs because its actions unreasonably and unnecessarily delayed consideration of plaintiffs’ standing and federal jurisdiction. See Fed. R. App. P. 39(a)(4) . . . . Although federal courts must address jurisdictional questions at any time in a case, they need not condone a party’s failure to exercise reasonable diligence in identifying and raising jurisdictional questions early in a case to avoid putting courts and adversaries to unnecessary time and expense . . . . Accordingly, we deny the City costs on this appeal.”
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