The opinion of the court was delivered by: LASKER
Plaintiff, a tenant of a rent controlled apartment in New York City, sues on behalf of herself and others whose rentals for 1974 and thereafter will be increased as a result of "Maximum Base Rent" ("MBR") orders issued by city rent agency officials pursuant to New York City Administrative Code § Y51-5.0(a) (4) and (5) and New York City Rent Regulations §§ 25 and 26. Approximately one million tenants make up the proposed plaintiff class. Defendants are the New York Housing and Development Administration and the New York City Department of Rent and Housing Maintenance in charge of the Office of Rent Control ("the City"), and R.O.R. Realty Corp. (plaintiff's landlord), individually and on behalf of all other landlords similarly situated, that is, all the landlords of plaintiff class ("the landlord defendants"). Jurisdiction is alleged under 42 U.S.C. § 1983.
Plaintiff claims that the practice of the city defendants of issuing MBR orders to landlords (permitting rent increases of up to 7 1/2 %) without affording tenants prior notice and hearing constitutes state action violative of due proces. She moves for a preliminary injunction restraining the landlord defendants from instituting summary eviction proceedings against members of the proposed plaintiff class for failure to pay the 1974 MBR increases pending determination of this case on the merits, and mandatorily enjoining the City defendants to give notice to the plaintiff class that their landlords have been so restrained. Plaintiff claims such relief is required because (1) the City rent agency is currently preparing 1974-75 MBR orders which will be immediately collectible by landlords; (2) there exists no administrative opportunity for tenants to contest the facts on which the increases are based prior to collectibility; (3) consequently, if preliminary injunctive relief is denied, tenants may be faced with the hard choice either of paying possibly unjustified increases which will work a hardship on many families, or losing their homes through an eviction proceeding for non-payment of the amount of the MBR rent increase.
The Court of Appeals for this Circuit has recently reiterated the rules which guide a district court in deciding a motion for a preliminary injunction:
"We repeatedly have emphasized the heavy burden on a party seeking the extraordinary remedy of preliminary injunctive relief. The standard that has evolved is that the moving party '[assumes] the burden of demonstrating either a combination of probable success and the possibility of irreparable injury or that [it has] raised serious questions going to the merits and that the balance of hardships [tips] sharply in [its] favor. ' Stark v. New York Stock Exchange, 466 F.2d 743, 744 (2d Cir. 1972) (emphasis added); Checker Motors Corp. v. Chrysler Corp., 405 F.2d 319, 323 (2d Cir.), cert. denied, 394 U.S. 999, 89 S. Ct. 1595, 22 L. Ed. 2d 777 (1969)." Pride v. Community School Board, 482 F.2d 257, 264 (2d Cir. 1973); accord, Pride v. Community School Board, 488 F.2d 321 at 324 (2d Cir. 1973).
Recent authority in this Circuit dealing with the rights of tenants in publicly assisted or publicly administered housing supports plaintiff's claim that due process requires some opportunity to be heard prior to a rent increase. Escalera v. N.Y. City Housing Authority, 425 F.2d 853 (2d Cir. 1970), Burr v. New Rochelle Municipal Housing Authority, 479 F.2d 1165 (2d Cir. 1973). In Burr, the case most closely in point, the Court of Appeals held that the Municipal Housing Authority was required to accord notice and the opportunity for written submissions by tenants before promulgation of an across-the-board service charge or rent increase. However, in so holding, it modified the decision of the District Court, which had held that a full adversary hearing was required. Since Burr suggests that plaintiff -- who also claims that a full adversary hearing is required -- is unlikely to be granted the far-reaching relief that she seeks, the question on this motion for preliminary relief is whether, following the trial on the merits, she is likely to gain substantially "more" due process than present procedures now provide.
As the MBR regulatory scheme presently operates, a landlord applies to the City for MBR rent increases (which are computed by statutory formula) after certifying that he is maintaining all essential services, that there are no rent-impairing violations and that he has actually expended 90% of the amount allowed for operating and maintenance expenses. The landlord's certification is checked by the City against the record of violations, if any, for each building. Where there are violations, MBR orders are withheld on notice to the parties.
Tenants may, of course, complain at any time to the proper city agency regarding violations in their buildings, and the posting of such a violation with the City consequently affects the determination of a landlord's eligibility for an MBR increase.Furthermore, the City Administrative Code (§ D26-51.01(f) (i) and the Civil Court Act and Rules (§ 2900.35) provide for an application by a tenant to the Housing Part of the Civil Court to obtain an order directing the City to place a violation on a building if the City has not done so after notice by the tenant.
Additionally, the New York City Rent Law, § Y51-8.0 of the Administrative Code, provides for the filing of written protests by a tenant after the issuance of an MBR order. The city rent agency is required to respond to the protest within a reasonable time, and may notice a hearing or permit the tenant to submit further evidence in connection with his filing. The denial of a protest must set forth the grounds for the decision, and is appealable in New York Supreme Court.
Since plaintiff makes no claim regarding the constitutionality of the standards by which landlords' qualifications for MBR increases are measured, the prior hearing she presses for in this lawsuit would be only a fact-finding inquiry into the level of services provided by a landlord. Plaintiff and defendants agree that tenants are, of course, best situated to know of any building violations. Yet the existence in the present scheme of both formal and informal mechanisms for tenants to lodge complaints with the City regarding claimed violations may well meet the requirements of Burr, undercutting the plaintiff's assertions of probability of success on the merits.
Moreover, the fact that this case involves administration of an MBR program affecting over one million tenants of varying income levels, while Escalera and Burr involved only low-income housing administered by municipal housing authorities, may be a legally significant difference, in view of the settled rule that due process requirements vary according to the severity of the private interest and the government burden involved. Langevin v. Chenango Court, 447 F.2d 296 (2d Cir. 1971), cited with approval in Burr, supra. In view of this rule and the possibility that ...