Opinion
40264804.
Decided April 13, 2005.
MEMORANDUM DECISION
In this action for declaratory and injunctive relief, plaintiffs Moussa Ousmane, Antonia Delgado and Mohammed Ali (the "street vendors") move for an order permitting this action against defendants to proceed as a class action pursuant to CPLR § 902. The street vendors seek class action status on behalf of all persons who have received notices of violation ("NOVs") returnable to the Environmental Control Board ("ECB") for violating New York City's laws and rules regulating the sale of food and merchandise in public space, since July 17, 2003, when the new penalty schedules ("Increased Penalty Schedule") were instituted.
Defendant Christopher Ward is the Commissioner of the Department of Environmental Protection ("DEP") and Chairperson of the Environmental Control Board, which is responsible for enforcing all laws and rules relating to the "regulation of street peddling" (NYC Charter § 1404(c)(1)(e)). Defendant Gretchen Dykstra is the Commissioner of the Department of Consumer Affairs ("DCA"), which is responsible for regulating merchandise vendors. Defendant Thomas R. Frieden is the Commissioner of the Department of Health Mental Hygiene ("DHMH"), which is responsible for regulating mobile food vendors. Defendants, including the City of New York, are collectively referred to herein as "the City."
Factual Background
The Increased Penalty Schedule was instituted pursuant to an ECB "MEMO," addressed to all Administrative Law Judges ("ALJs"), and made effective as of July 17, 2003. Pursuant to the Memo, the "Board" approved a number of "significant changes" to the code penalty tables, and advised the ALJs to keep the old tables for the purpose of adjudicating older NOVs.
Prior to the Memo, the ECB's mandatory penalty level for multiple offense violations was set at the minimum values of each legal range, to wit: $25.00 for the first violation within each two-year period; $50.00 for the second; $100.00 for the third; and $250.00 for the fourth and subsequent violation. Pursuant to the Memo, the penalties were increased to their maximum value in each legal range, to wit: $50.00 for the first violation within each two year period; $100.00 for the second; $250.00 for the third; and $1000.00 for the fourth and subsequent violation. Non-multiple offense violations were also increased, from $100.00 to $200.00 for vendors who are found guilty, and from $200.00 to $400.00 for vendors who default.
Plaintiffs are vendors who sell food and merchandise on the streets and sidewalks of New York City. According to the Complaint, plaintiff Moussa Ousmane, a forty-four year old resident of Brooklyn, is a licensed vendor who sells watches in downtown Manhattan. Vending is his sole source of income, from which he supports his wife and five children. Plaintiff Antonia Delgado, a sixty-nine year old resident of Queens, has sold hats and shirts in downtown Manhattan for the last fifteen years. Plaintiff Mohammed Ali, a forty-one year old resident of the Bronx, supports his wife and four children by selling hot dogs and pretzels in downtown Manhattan for the past seven years.
On December 29, 2003 plaintiff Delgado was found guilty, after a hearing at the ECB, of vending on a sidewalk that was less than twelve feet wide pursuant to NYC Admin. Code § 20-465(a), and ordered to pay a fine of $1,000.00. It is claimed that due to the fine, Ms. Delgado closed her vending business because she can no longer afford to pay the rent to store her merchandise in her garage.
On December 30, 2003, plaintiff Ousmane was found in violation, after a hearing at the ECB, of vending less than twenty feet from a building entrance pursuant to NYC Admin. Code § 20-465(d), and ordered to pay a fine of $1000.00. It is alleged that as a result of the fine, Mr. Ousmane risks having the electricity in his apartment turned off and losing his license when it expires.
On March 10, 2004, plaintiff Ali was found guilty after a hearing for failing to conspicuously display his license while vending pursuant to NYC Admin. Code § 17-311(b), and ordered to pay a $1000.00 fine. As he is unable to pay the fine, Mr. Ali is in jeopardy of being evicted from the garage where he stores his pushcart at night and defaulting on his small business loan.
Previously, on August 11, 2003, Sean Basinski, Director of the Urban Justice Center ("UJC") Street Vendor Project, was informed by the ALJ during an ECB hearing that violation penalties for street vendors had increased. In response to his document request pursuant to Freedom of Information Law, also known as FOIL, ECB sent Mr. Basinski the Increased Penalty Schedule, as well as minutes from two 2003 meetings during which ECB approved such fine increases. On May 23 and June 25, 2004, Mr. Basinski requested information from ECB as to whether ECB complied with the due process requirements of the New York City Administrative Procedure Act ("CAPA") to no avail. The street vendors state that they did not know about the rule change at the time it was effected, and that Mr. Ousmane and Mrs. Delgado became aware of the fine increase when they received the ALJ's decisions. According to the Summons in this action, the street vendors completed their own search of the City Record for any notice of the Increased Penalty Schedule or any public hearing relating thereto and found no indication that the CAPA requirements were met.
Procedural History
On August 24, 2004, the street vendors commenced this action seeking declaratory and injunctive relief, alleging that the City's actions in increasing the monetary penalties for violations of the NYC Administrative and Health Codes violated CAPA, were arbitrary and capricious, and were an illegal extension of the ECB's authority to merely enforce the provisions of the NYC Charter and Administrative Code. Particularly, the street vendors assert that CAPA requires that the policy change be subject to certain public notification requirements. The street vendors allege that the City illegally promulgated, and continue to illegally enforce, the Increased Penalty Schedule against them in violation of CAPA. They further allege that the City failed to publish a notice of the proposed rule thirty days prior in the City Record, announce the purpose of the proposed rule, solicit written comments, hold a public hearing, provide notice to the City Council, news media, and Community Boards, and publish notice in the City Record thirty days prior to the rule becoming effective. Therefore, the street vendors claim, the Increased Penalty Schedule is null and void as a matter of law.
By order to show cause, the street vendors moved for a preliminary injunction against the City enjoining them from implementing and enforcing such fines, or preventing any vendor from renewing their vendor license or permit due to the failure to pay such fines and for a declaration that the penalty increase and regulations thereunder relating to food and merchandise vendors are null and void. A temporary stay was ordered and hearing scheduled.
On September 28, 2004, a hearing was held in which testimony and extensive oral argument was heard. After finding that the street vendors satisfied their burden of establishing (1) their likelihood of success on the merits, (2) irreparable harm, and (3) balancing of the equities in favor of the relief sought, by order dated September 28, 2004, as amended on October 4, 2004, the Court issued preliminary injunctive relief. The Court Order restrained the City from implementing and enforcing the Increased Penalty Schedule and from preventing any vendor from renewing his or her license or permit due to the failure to pay the excess fines issued under the Increased Penalty Schedule. The Order was subsequently clarified, by stating that the July 17, 2003 Increased Penalty Schedule constituted an improper rule change.
The Court also directed the parties to appear for a Preliminary Conference on October 26, 2004.
Said order, dated October 26, 2004, also set forth a further motion schedule.
In this regard, CAPA requires that if the agency's statement fits the definition of a "rule" under New York City Charter § 1041 (5), then for that statement to be valid and binding, it must have been subjected to CAPA's procedures for notice, comment, public hearing, and publication (NY City Charter § 1043; 1700 York Assoc. v. Kaskel, 182 Misc2d 586 [Sup Ct NY County 1999]). In other words, for the City's agency's pronouncement to be a rule with the force and effect of law, it must be adopted in accordance with the rule-making requirements under CAPA (NY City Charter § 1041-1046; 1700 York Assoc. v. Kaskel, supra).
Pursuant to NYC Charter § 1043, each agency shall, inter alia, (1) publish the full text of the proposed rule in the City Record at least 30 days prior to the date set for a public hearing, (footnote 4, cont'd) (2) provide the public an opportunity to comment on the proposed rule (i) through submission of written data, views, or arguments and (ii) at a public hearing, unless the agency determines, in writing, that such hearing would serve no public purpose.
CAPA defines "rule" as:
"the whole or part of any statement or communication of general applicability that (i) implements or applies law or policy . . . including an amendment . . . of any such statement or communication.
a. 'Rule' shall include . . . any statement or communication which prescribes (i) standards which, if violated, may result in a sanction or penalty.'"
The Court notes that the "decision and order" form on which the ALJs ordered payment refers to such fines as a "civil penalty."
Compliance with CAPA gives the public an opportunity to comment on a proposal before it becomes effective, which is consistent with the legislative desire to give the citizenry a voice in the operation of government (Association of Messenger Servs., Inc. v. City of New York, 136 Misc2d 869 [Sup Ct NY County 1987]). The right to communicate views to governmental decision makers harmonizes with the democratic process as opposed to permitting the Commissioner to change governing rules without notice to the community or segment affected ( id.). The Court also considered the notion that exceptions should not be read into statutes so as to permit bureau officials to avoid the necessity of procedural compliance by attaching the label "memo" or "revised fee tables" to what is essentially a rule change ( id.). An agency may not circumvent CAPA's rulemaking requirements by giving a different label to what is in purpose or effect a rule or amendment to a rule ( 1700 York Assoc. v. Kaskel, supra).
Thus, the Court looked to the substantive effect of the July 14th Memo to determine whether compliance with CAPA's publication and notice requirements was mandated ( see Association of Messenger Services, Inc. v. City of New York, supra, citing Edenwald Contr. Co. v. City of New York, 86 Misc2d 711 [Sup Ct NY County 1974]). The Court determined that the former penalty schedule provided for a "floor" and a "ceiling" so as to permit the ALJ to assess fees between a certain range. However, by eliminating the "floor" from the ALJ's options of what may be assessed after an adjudication, the City ostensibly modified the rule and created a new one. The Court noted that CAPA's notice, publication, and hearing procedures were followed when the Department of Health and Mental Hygiene amended Health Code § 3.12(b) in 2002 to raise the minimum fine for violations of the Health Code, some of which applied to vendors ( see Order to Show Cause dated August 24, 2004, page 10; see also New York City Committee for Taxi Safety v. New York City Taxi and Limousine Comm'n, 177 Misc2d 855 [Sup Ct NY County 1998] [respondent complied with CAPA where it provided adequate notice and opportunity to comment on the proposed regulations]). The Court found no distinction between raising the minimum fine in the 2002 Health Code § 3.12(b) matter, and the instant matter in which the range was eliminated. Also, by its own language, the change as referred to in the body of the Memo was referred to as a "new" schedule. Therefore, the Increased Penalty Schedule, which materially affected the rights of street vendors similarly situated, effectively constituted a "rule" change or amendment, and therefore, was subject to CAPA's publication and notice requirements ( see 1700 York Assoc. v. Kaskel, supra; Ravinder Pal Singh v. Taxi and Limousine Commission of the City of New York, 282 AD2d 368 [1st Dept 2001] [defendant's policy, which shortened the grace period for renewal of an operator's license from six months to 30 days after the license expired, was void for failure to comply with CAPA]).
The Court further held that clearly, CAPA was not complied with. Since the City failed to comply with CAPA, the street vendors sufficiently established a strong likelihood of success on the merits of their claim that the City's actions in instituting the Increased Penalty Schedule were arbitrary and capricious ( see Ravinder Pal Singh v. Taxi and Limousine Commission of the City of New York, supra [concluding that denial of renewal application based on an amendment to policy which did not comply with CAPA was arbitrary and capricious]). The Court also acknowledged the ECB's right to monitor, control and insure the health, safety and welfare of the population. However, the record failed to indicate that ECB's basis for raising the fines — that the increased fines for certain violations represent critical violations and that the fines have not been raised in ten years — were in any way related to its right to monitor, control and insure the health, safety and welfare of the population.
When analyzing the irreparable harm, the Court noted that a finding of irreparable harm may also support a finding that the balance of the equities tips in favor of the movants. Here, the street vendors are residents who are working and paying taxes, two things more than a lot of people who are citizens born here have yet to do, and trying to get by in a society that is allegedly open and free, and encouraging democracy and living the American Dream. When the Court compared their earnings with the United States Department of Health and Human Services 2004 Poverty Guidelines, the Court concluded that the witnesses clearly fit within the guidelines of those living below the poverty level even though they are working. The testimony of the witnesses indicated that they are, as defined by Judge Beverly Cohen in Conway Farmer v. D'Agostino Supermarkets, Inc. ( 144 Misc2d 631 [Supreme Court NY County 1989]), people "in a precarious economic position not comparable to that of an employee of any company" and that their "borderline existence level" makes the injury irreparable. The Court further articulated that homelessness is not the sole measuring scale, and that barely surviving below the poverty level demonstrated irreparable harm because at the time that they could be made whole by money damages, the recovery may be to no avail and of no use when their life has spiraled so far out of control that they cannot get it back in line.
2004 Federal Poverty Guidelines, http://aspe.hhs.gov/poverty/04poverty.shtml, which is taken from Federal Register, Vol. 69, No. 30, February 13, 2004, pp. 7336-7338.
Based on the submissions and the testimony at the hearing, the Court found that the street vendors established their entitlement to injunctive relief.
The City has since changed the penalty schedule in accordance with CAPA, including publication of the proposed changes in the City Record. Instant Application
In support of class action status, the street vendors assert that they represent a class of possibly 20,000 licensed and unlicensed street vendors who have received NOVs for violating New York City's laws and rules regulating the sale of food and merchandise in public space, since July 17, 2003. According to the street vendors, members of the class have all been adversely affected by the City's decision to raise vending fines that day. The street vendors allege that they are representatives of a class which includes all street vendors in New York City, similarly situated, who are subject to certain regulations under Chapters 17 and 20 of the NYC Administrative Code and Articles 81, 89 and 113 of the New York City Health Code.
The street vendors contend that this action satisfies all of the requirements for class action status in that (1) as there are approximately 12,000 licensed street vendors in New York City, the class is so numerous that joinder of all members is impracticable; (2) there are questions of law or fact common to the class, i.e., the legality of the City's actions in promulgating the Increased Penalty Schedule affecting violation penalties for all members of the class, which predominate over any questions affecting individuals; (3) the claims of the representative parties are typical of the claims of the class; (4) as the street vendors are represented by the UJC, which has extensive experience representing marginalized communities, they will fairly and adequately protect the interests of the class; and (5) a class action is superior to other available methods for the fair and efficient adjudication of the controversy because the size of each individual claim is relatively small, and the street vendors lack the financial resources to bring suit individually.
With respect to this last requirement, the street vendors acknowledge that class certification in lawsuits involving government action has been denied because of the presumption in those cases that any relief awarded to the named plaintiffs will be afforded to all persons similarly situated. However, they argue, class action status is proper in cases against the government because the principles of stare decisis do not always protect the rights of potential plaintiffs. The street vendors note that (1) class status is frequently granted in actions where the class is comprised of economically disenfranchised individuals who will not be able to file suit on their own behalf; (2) class status is appropriate in actions against the government where the commencement of individual actions would be "oppressively burdensome" due to the relatively small amount of the claim; and (3) class certification is warranted where the government has demonstrated reluctance to extend temporary injunctive relief to all members of the purported class. The City, who has refused to refund any penalties paid pursuant to the Increased Penalty Schedule, has demonstrated their reluctance to extend relief to all members of the proposed class. For these reasons, it is argued, the principle of stare decisis will not protect all class members in this matter.
The street vendors also allege that they satisfy the additional requirements of CPLR § 902, in that they know of no interest of the class in controlling or prosecuting of individual actions, the nature of the case makes in inefficient to prosecute separate actions, they know of no other litigation concerning this matter previously commenced by any member of the proposed class, and it is desirable to concentrate the litigation of the claim in this forum to avoid the problems of multiple litigation.
Class certification, they argue, is therefore necessary to assure that all those affected by the City's decision will receive justice to which they are entitled, without the necessity of resorting to needless duplicative litigation. Plaintiffs also claim that class action status provides a means of redress for the many people who would not otherwise come forward to challenge the City's actions because of the expense and difficulty of individual litigation. Further, class action status will reduce the administrative burden on the Court that would result from a flood of substantially identical claims.
In opposition to class certification, the City argues that the street vendors have failed to satisfy the fifth requirement, that a "class action is superior to other methods for the fair and efficient adjudication of the controversy" (CPLR 901(a)(5)).
The City contends that class certification is inappropriate where governmental operations are involved because in the event the street vendors are successful, persons similarly situated to the street vendors will be adequately protected by the doctrine of stare decisis. Any determination favorable to the street vendors would be binding on the City and automatically benefit persons claimed to be represented regardless of whether those persons were made plaintiffs through a grant of class certification.
Additionally, the City posits that class certification is superfluous where there is no evidence of a government official's unwillingness to apply the Court's holdings to similarly situated individuals. In response to the street vendors' allegation that the City's failure to refund penalties paid pursuant to the Increased Penalty Schedule demonstrates bad faith or an unwillingness to comply with the Court's order, the City notes that the Court's injunctive relief order did not direct the ECB to refund fines already paid. Rather, the City claims, it has complied with the Court's order by recalculating all penalties issued for vendor-related offenses since the date of the Memo and extending the expiration on vendors with licenses scheduled to expire on September 30, 2004 to permit each vendor additional time to pay off those violations. And, the City agrees to (1) refund monies paid pursuant to the Increased Penalty Schedule as to those claims not otherwise time-barred and (2) give the relief ordered by the Court to all similarly situated individuals without the need for class certification.
The City argues that the case law cited by the plaintiffs, wherein courts declined to apply the so-called "government operations rule," is distinguishable because, inter alia, the plaintiffs in those cases were presented with emergency situations militating immediate relief from the court on behalf of the class. The City contends that the instant case does not involve an emergency situation wherein harm is imminent since preliminary injunctive relief has been issued, and no vendor is prevented from renewing its license for failure to pay the increased fines under the penalty schedule.
The City further argues that in the event class certification is deemed warranted, the Court should ensure that the class is described with specificity and that the proposed class be limited in two ways.
In the latter regard, the City asserts that since the street vendors are challenging ECB's authority to increase the penalty schedule without going through the CAPA process, and claim that the Increased Penalty Schedule is arbitrary and capricious, the only appropriate vehicle to challenge the ECB's determination is by an Article 78 proceeding. Consequently, the four-month Statute of Limitations applies, and the street vendors cannot avoid its application by denominating the instant proceeding as one for declaratory judgment, or as a class action seeking declaratory relief.
Pursuant to the language of CPLR § 217, an Article 78 proceeding must be commenced within four months after the ECB Appeals Board's determination becomes "final and binding," and such determination is "final and binding" when it "has impact" upon petitioner who is thereby aggrieved. According to the City, the challenged administrative decision became "final and binding" on the vendor when each potential plaintiff was impacted by the imposition of higher fines in accordance with the Increased Penalty Schedule, and was thereby aggrieved. Furthermore, the City contends that where the effect of an administrative determination is unambiguous and certain, the statutory period in which to challenge is triggered when the aggrieved party is notified of the decision. Once the potential plaintiff received a determination from ECB in which the higher penalty was imposed, that individual was on notice of the increased penalty, and their failure to commence an Article 78 proceeding within four months of such notice precludes their claim from inclusion in the proposed class. For the foregoing reasons, the City contends that as the instant action was commenced on August 24, 2004, vendors who had final ECB adjudications prior to April 24, 2004 are barred from inclusion in the proposed class.
That the four-month Statute of Limitations applies to the case at bar is not at issue in this motion for class certification. In a footnote within their Reply Memorandum, the street vendors note that the point has not necessarily been conceded, but opine that this issue is not necessary for reply.
Second, the City seeks to eliminate from the proposed class those who failed to file an administrative appeal within 30 days of the mailing of the ECB hearing officers' recommendation with respect to a notice of violation. The City contends that claims by such individuals are forever barred from judicial review based on a failure to first exhaust administrative remedies.
Relying on Title 15 of the Rules and Regulations of the City of New York ("RCNY") Sections 31-71(a)and 31-75 as well as CPLR § 7801, the City contends that in order for a plaintiff to commence an Article 78 proceeding, there must have been a final administrative determination, followed by exhaustion of administrative remedies. Thus, the City argues, those individuals who received a decision from the ECB in which penalties were imposed pursuant to the Increased Penalty Schedule, and who failed to file an appeal within 30 days thereof are precluded not only from Article 78 relief, but from inclusion in the proposed class.
15 RCNY § 31-71: "Filing. Any party aggrieved by the hearing officer's recommended decision and order may, within 30 days of mailing of the same, file written exceptions with the tribunal. A copy of the exceptions shall be served upon all parties, and proof of such service filed with the tribunal. Written exceptions must contain a concise statement of the issues presented, specific objections to the findings of fact and conclusions of law set forth in the hearing officer's recommended decision and order, and arguments presenting clearly the points of law and fact relied on in support of the position taken on each issue." 15 RCNY § 75 states in relevant part: "After exhaustion of the procedures set forth above, judicial review of the final decision and order of the board may be sought pursuant to Article 78 of the New York Civil Practice Law and Rules."
Defendants cite Greater New York Health Care Facilities Ass'n v. DeBuono ( 91 NY2d 716 [1998]) for the proposition that the exhaustion requirement with regard to administrative appeals extends to the class action and declaratory judgement context.
In addition to the general limitation of potential class members sought by the City, the City specifically opposes the inclusion, either as a class member or representative, of plaintiff Ousmane on the aforementioned grounds. The ECB's decision imposing a penalty according to the Increased Penalty Schedule was mailed to Mr. Ousmane on January 16, 2004, and Mr. Ousmane did not timely submit an appeal of such violation to the ECB Appeals Board in accordance with 15 RCNY §§ 31-71(a).
The City also notes that plaintiff Ousmane filed a request for access to the audiotapes from the ECB hearing on or about June 6, 2004, six months after the mailing of such decision. As Title 15 RCNY § 31-72(a) provides that applications for the transcript be made within the time allotted for the filing of exceptions, his request was denied as untimely. Since plaintiff Ousmane did not timely file exceptions (or request access to the hearing transcript), the determination against him became final and binding on February 21, 2004. Furthermore, the City argues that because Mr. Ousmane has not and now cannot exhaust his administrative remedies, his claim should be barred as forever premature, and he should not be included in any certified class.
In reply, the street vendors first contend that despite the existence of the government operations rule, class certification remains the superior method for resolving this case.
The street vendors argue that the cases cited by the City wherein class certification was denied against the government are misapplied, since the reasons for the denials, where they can be ascertained, were unrelated to stare decisis. Furthermore, the street vendors argue that although individuals faced with an emergency situation are often granted class certification despite the government operations rule, none of the cases to which the City cites relied upon the existence of such an emergency in granting class certification. The street vendors instead emphasize that where, as in the instant case, a large number of identifiable individuals with nearly identical claims are seeking relatively modest monetary damages, courts have invariably granted class certification.
Despite the City's assurances that potential class members will be protected by stare decisis, the street vendors opine that class certification is warranted nonetheless because in the instant case, the government operations rule is inadequate to provide relief to potential class members. The City has failed to demonstrate how potential class members will overcome socioeconomic factors that keep many of them from access to court so that stare decisis can be applied, and relatedly, how the litigation of thousands of individual claims would be a superior method of recovery in this case or bring about a prompt and efficient resolution of the issues. Therefore, the Court should exercise its discretion to grant class certification because only class certification will assure that the vendors' claims are judicially determined and that judicial resources are efficiently spent.
As to the City's proffered limitations of the proposed class, the street vendors argue that (1) the City is equitably estopped from pleading the Statute of Limitations; (2) the street vendors never received notice of the penalty schedule; and (3) the street vendors are not required to exhaust administrative remedies.
The street vendors contend that the City is estopped from asserting the Statute of Limitations because by failing to promptly answer plaintiff's FOIL request, the City has prevented plaintiff's counsel and the street vendors from discovering the cause of action and caused the street vendors to delay suit until after the Statute of Limitations has run.
In any event, the street vendors' claims are not time barred, because the ECB decisions, which merely gave them notice that they were in violation, were insufficient to give them notice of the Increased Penalty Schedule. Opining that individuals have no reason to challenge an administrative decision unless they know they have been aggrieved by it, the street vendors argue that the Statute of Limitations begins to run only when the aggrieved party receives notice that he or she has been impacted by an administrative decision. The street vendors claim that said notice was at best ambiguous, which is inadequate to trigger the Statute of Limitations. Additionally, it is argued that the plaintiff class has still never been properly notified of the promulgation of the Increased Penalty Schedule.
Finally, the street vendors contend that they, and members of the proposed class, were not required to exhaust administrative remedies given that the instant case falls within the ambit of each of the three exceptions to the exhaustion requirement: (1) futility, (2) where pursuit of administrative remedy would cause irreparable harm, and (3) where there are no issues of fact to be resolved on administrative appeal. The street vendors opine that the pursuit of administrative relief would be futile because appeal would be made to the same body that promulgated the challenged penalty increase. The street vendors contend that they were not required to exhaust their administrative remedies because they were faced with irreparable harm which could not await the completion of the two or more year ECB appeals process. Additionally, the street vendors asset that the exhaustion requirement is inapplicable when the challenge is a facial one to the general policy and not to the individual determinations that were made.
Analysis
The issues before the Court are the mode and scope of relief available, specifically: (1) is class certification appropriate, and if so (2) how should the class be defined?
I. Class Certification Stare Decisis
It is uncontested that the street vendors have satisfied the first four prerequisites to class action relief as set forth in CPLR § 901, to wit: the numerosity of the proposed class, the predominance of common questions of law and fact among the claims of the proposed class members which derive from the same conduct of the City, the typicality of their claim to the claims of the proposed class members, and the adequacy of representation (CPLR § 901(a)).
With respect to the fifth requirement as to whether class action relief is "superior to other methods for the fair and efficient adjudication of the controversy," the Court is cognizant that where government operations are involved, and where subsequent petitioners will be adequately protected under the principles of stare decisis, the "government operations rule" applies so as to preclude class action certification. The government operations rule "cautions against class certification where governmental operations are involved, since any relief granted to the named plaintiffs would adequately flow to and protect others similarly situated under principles of stare decisis" ( Legal Aid Soc. v. New York City Police Dept., 274 AD2d 207 [1st Dept 2000]). Notwithstanding, the "general rule against class certification in actions involving government operations is not absolute" (82 NY Jur. Parties § 275). Class certification does not cease to be a matter within the court's discretion simply because governmental operations are at issue, though it should be used cautiously in such cases ( Cunningham v. Frucher, 110 Misc2d 458 [Sup Ct NY County 1981]; Knapp v. Michaux, 55 AD2d 1025 [4th Dept 1977]). Indeed, class certification has been granted when governmental entities are involved ( Seittelman v. Sabol, 158 Misc2d 498 [Sup Ct NY County 1993] citing Tindell v. Koch, 164 AD2d 689; Lamboy v. Gross, 126 AD2d 265; Kuppersmith v. Perales, Index No. 40242/86 Sup Ct NY County May 11, 1987, Schackman, J.] [finding that even though it was claimed that decision favorable to plaintiff would have stare decisis effect available to other tenants bringing individual suits, elderly tenants would incur expense and effort in bringing suits for such small monthly benefits which would be "oppressively burdensome" in view of their economic situations], aff'd 145 AD2d 1005, 535 NYS2d 510).
In this Court's opinion, it is impracticable and inefficient for each individual in the proposed class who has been adversely affected by the imposition of the Increased Penalty Schedule, to institute litigation in order to obtain reimbursement. Further, unless this Court grants class certification, its directives concerning entitlement to reimbursement will only apply to the individual named street vendors ( Seittelman v. Sabol, supra).
The Court also observes that the narrow exception to the government operations rule permits class certification only when the government has revealed a "demonstrated reluctance" to extend mandated relief to parties other than the individual plaintiffs before the court ( Legal Aid Soc. v. New York City Police Dept., supra, citing Mitchell v. Barrios-Paoli, 253 AD2d 281 and Varshavsky v. Perales, 202 AD2d 155, 155-156).
The City contends that the instant case does not fall within the exception to the government operations rule because there is no showing of its alleged unwillingness to comply with the Court's orders; nor does an emergency situation exist that would require class certification. While these points are well taken, they do not represent the full range of situations where adherence to the government operations rule is inappropriate. One of several circumstances under which courts have held that class certification is the preferred method of adjudication in spite of the governmental operations rule is when "the class action . . . seeks money damages, there is a large, readily defendable class, and there are questions of law and fact virtually identical as to each member of that class" (82 NY Jur Parties § 275). This is the law in the First Department, as announced in Beekman v. City of New York ( 411 NYS2d 620, 621 [1st Dept 1979] ["this case differs from Rivera and its progeny, which dealt with classes with indefinite numbers and with claims against government agencies that would repeatedly arise and would best be resolved by the doctrine of stare decisis"]; see also Watts v. Wing, 308 AD2d 391, 392 [1st Dept 2003] ["Although where government operations are concerned stare decisis is generally considered adequate to protect those threatened by governmental overreaching, here the government operations doctrine has no application to limit plaintiffs' access to class-wide relief since the putative class is composed of those for whom the complained-of harm is not merely prospective but, as alleged, already a fait accompli"]). The instant case fits well within this exception to the government operations rule, in that the vendors seek reimbursement of excess fines paid pursuant to the Increased Penalty Schedule; any party potentially aggrieved by the administrative decision has in fact already been aggrieved; and it is undisputed that the class is a large one where common questions of law and fact predominate over questions affecting only individual members.
Aside from the basic presumption that the government can be trusted to afford relief to aggrieved individuals absent class certification, the policy underlying the government operations rule is an avoidance of undue administrative burden on government operations and a related avoidance of an undefinable and perhaps endless line of plaintiffs that may some time in the future seek to take advantage of the decision ( see, e.g., Martin v. Lavine, 39 NY2d 72 ["Although this proceeding has been styled as a class action, we think that there is no compelling need to grant class action relief in this case in light of the enormity of the administrative problem which would be posed in implementing this decision . . ."]). However, where the class, as here, is limited and well-defined, this justification ceases to exist. The City may easily ascertain who was fined under the penalty schedule, and may provide relief to those individuals efficiently. The administrative task is therefore finite; once relief is afforded these individuals, the City need not revisit this matter in the future.
That the City pledges to apply the Court's ruling to persons similarly situated to the street vendors is of no moment; the government operations rule is based on an assumption that the government can be expected to comply with the Court; a promise to do so is thus rendered mere surplusage. It follows then, that if the facts of a given case bring it within an exception to the government operations rule, a pledge by the government body to comply does not eviscerate this exception. Furthermore, even assuming that the City would comply without being haled into court by thousands of individuals, to deny class certification here would be to ignore the economic and social realties of the aggrieved vendors. And, even if the City were to automatically comply with the Court order, thereby rendering the vendors' lack of access to the courts a non-issue, the vendors would still be required to seek their entitlement from the administrative body. In addition to the inherent difficulties that an indigent recent-immigrant might face in so doing, each vendor would also be subject to the City's determination of whether he or she is similarly situated to the street vendors in this action. Having already been aggrieved by the City's illegal promulgation of increased penalties, these vendors should not be required to jump through additional hoops to be made whole. Through class certification, the Court may best protect the interests of these otherwise vulnerable individuals.
The Court opines that "a class action is superior to other available methods for the fair and efficient adjudication of the controversy" (CPLR § 901(a)(5)) and that class certification is the most efficient and just means for adjudicating the instant action. Class certification will provide the most prompt resolution for all parties involved. Aggrieved vendors will not need to risk being discouraged by or otherwise caught up in bureaucracy, nor subjected to an individual determination of whether they are similarly situated. On the other hand, there is no injustice to the City by this determination; the City may provide the relief necessary with minimal administrative burden, and close the book on this matter.
The class action is a tool which, among other benefits, allows individuals who would otherwise be without the resources to do so to seek justice. The government operations rule exists in New York State as a justifiable limitation on this resource. It insulates the government from the undue burden placed upon its administrative duties by the specter of an undefined class and a potentially endless line of new class members coming forth to obtain the benefits of a prior decision. In the present case, however, this threat to governmental efficiency does not exist. The Court will therefore not burden this largely disadvantaged and disenfranchised sector of society with the obligation to wade, as individuals, through a city bureaucracy daunting enough to individuals with advanced degrees and a command of the English language, no less a recent immigrant with few resources. These vendors, aggrieved by the City's failure to notify them of a penalty increase that would inflict great hardship upon them and their ability to pursue a life in this country, are entitled to relief in one swift stroke. The street vendors' motion for class certification is therefore granted. II. Limitation of the Class
Contrary to the City's contention, limitation of the class based on a calculation of the four-month Statute of Limitations period from the date on which the proposed class members received a final determination of their NOVs is without merit.
The Court acknowledges that an Article 78 proceeding must be commenced within four months after the administrative determination to be reviewed becomes "final and binding upon the petitioner" ( Yarbough v. Franco, 95 NY2d 342, 717 NYS2d 79; CPLR 217; New York State Assn. of Counties v. Axelrod, 78 NY2d 158, 165, 573 NYS2d 25, 577 NE2d 16). An administrative determination becomes "final and binding" when the petitioner seeking review has been aggrieved by it. An administrative action is not final and binding within the contemplation of CPLR 217 until it "has its impact" upon the petitioner ( Bludson v. Popolizio, 166 AD2d 346, 347 [1st Dept 1990], citing Matter of Edmead v. McGuire, 67 NY2d 714, 716, 499 NYS2d 934, 490 NE2d 853). Further, the Statute of Limitations does not begin to run until the petitioner receives notice of the determination (Matter of Biondo v. New York State Bd. of Parole, 60 NY2d 832, 834, 470 NYS2d 130, 458 NE2d 371). The requirement of "notice" in addition to "impact" exists as "[i]t would be unreasonable to conclude that the determinations of the [administrative body] were binding and final as to the [petitioner] before the administrative procedures have been completed, the impact thereof could be accurately assessed, and petitioners could know whether they were aggrieved" ( Jewish Memorial Hospital v. Whalen, 47 NY2d 331, 343 [emphasis added]). Fundamental fairness requires that "a petitioner should not be held to have been dilatory in challenging a determination of which he was not aware" ( Biondo, 470 NYS2d at 834). Further, the rule requiring meaningful notice in order to trigger the Statute of Limitations is also sound from a public policy standpoint: to hold that promulgation of an administrative regulation alone starts the clock running would encourage backroom governance and thereby subvert the fundamental democratic ideal of the public dialogue.
To determine when the Statute of Limitations is triggered, the Court must first ascertain what administrative action petitioners seek to review ( see Young v. Board of Trustees, 89 NY2d 846, 848; Villella v. Department of Transportation, 142 AD2d 46 [3d Dept 1988]). It is undisputed that the street vendors in this action challenge the City's promulgation of the Increased Penalty Schedule, effective July 17, 2003. However, the City did not give notice of the Increased Penalty Schedule, and the final determinations received by the street vendors herein fail to include any indication that the penalties assessed therein were pursuant to the new Increased Penalty Schedule. Therefore, the date on which the street vendors received their ECB determinations is of no moment. Notably, it is the same lack of public notification that gives rise to the substantive CAPA violation claim that also prevented the Statute of Limitations from running. At best, such "notice" of a schedule change is ambiguous; it is well-settled that such an ambiguity as to the determination made should be resolved against the public body, and in the interest of allowing an aggrieved party its day in court ( Castaways Motel v. C.V.R. Schuyler, 24 NY2d 120, 126-27).
For these reasons, there is also no merit to the City's position that the class be limited so as exclude those proposed members who failed to exhaust administrative remedies within 30 days of the mailing of the ECB's determinations.
The Court is loathe to find, as the City suggests, that the roundabout notice given to the vendors of a heightened penalty serves to bar them from challenging it. It would be abjectly perverse for the Court to on one hand find, as it has, that the City failed to comply with the CAPA requirement of notice and publication, yet at the same time find that the street vendors had knowledge of the Increased Penalty Schedule and failed to take action within the statutory period. The Court will not put a stamp of approval on backroom governance; the City's proffered limitations on the class are therefore rejected.
Given that the City ceased to enforce the July 17, 2003 Increased Penalty Schedule on October 4, 2004, as ordered by this Court, the proposed class is limited to vendors receiving NOVs mailed between the aforementioned dates.
Accordingly, it is hereby
ORDERED that plaintiffs' motion for an order permitting this action against defendants to proceed as a class action pursuant to CPLR § 902 is granted so as to include all persons who have received notices of violation returnable to the Environmental Control Board for violating New York City's laws and rules regulating the sale of food and merchandise in public space, from July 17, 2003 through October 4, 2004; and it is further
ORDERED that Moussa Ousmane, Antonia Delgado and Mohammed Ali are appointed as class representatives, and the Urban Justice Center Street Vendor Project is appointed as counsel for the class.
Although not expressly sought, it is inferred that plaintiffs herein seek to represent the class.
This constitutes the decision and order of the Court.