The opinion of the court was delivered by: LASKER
The defendants move that this court abstain from entertaining jurisdiction and for a stay of proceedings as to plaintiff's requests for documents and interrogatories in this case challenging the City's practice of issuing Maximum Base Rent (MBR) increases to landlords without affording tenants prior notice or hearing.
Defendants suggest three bases for abstention. First, they argue that "recent decisions of the U.S. Supreme Court display a clear pattern of preference for local judicial regulation of essentially local matters, of which the New York City Rent Control Law is typical." Second, they contend that on the merits plaintiff's complaints as to the operation of the MBR System do not rise to the level of federal constitutional violations, since the "worst consequence" of the procedure complained of is a yearly 7 1/2% increase in the legal maximum rent. Finally, they claim that Washington v. Davis, 426 U.S. 229, 96 S. Ct. 2040, 48 L. Ed. 2d 597 (1976) should be read to reject plaintiff's theory that they are entitled to special procedural protection as representatives of a class of the poor upon whom even small rent increases may have special impact.
Defendants' second and third contentions merit little discussion on this motion. Washington v. Davis is completely inapposite. That case held that use of a facially neutral employment test which had a discriminatory impact on minority applicants did not violate constitutional standards unless in addition a showing of discriminatory intent was made. It did not involve or consider the procedural due process issue herein raised. In their moving affidavit,
defendants do not discuss the merits of their second contention, but discuss only those cases relating to the abstention doctrine. To the extent that defendants intend to suggest that any injury to plaintiffs is de minimis or is not a "grievous loss" of a statutory entitlement, the argument must be rejected on the authority of such cases as Burr v. New Rochelle Municipal Housing Authority, 479 F.2d 1165 (2d Cir. 1973); Escalera v. New York City Housing Authority, 425 F.2d 853 (2d Cir. 1970). We cannot agree that for the occupants of rent-controlled housing, 60% of whom are claimed to have incomes below $8,000. (para. 28, Rule 9(g) Statement Accompanying Plaintiffs' Motion for Summary Judgment), a yearly rent increase of 7 and 1/2% is constitutionally insignificant. Believing this court to have jurisdiction over the issues raised in the complaint, we turn to defendants' remaining contention, that as a matter of discretion this court should abstain from deciding these issues and "remand" [sic] the parties to the state courts or dismiss the complaint.
Defendants have taken us on a veritable excursion through various aspects of what is loosely referred to as the federal abstention doctrine. They seem to suggest that each and every aspect of this doctrine has a bearing on this case and requires us to abstain. The defendants' argument fails to specify those aspects of this case which correspond to characteristics of other decisions which concluded that abstention was appropriate. Nonetheless, we consider each of the claimed bases for abstention.
In such cases as Railroad Commission of Texas v. Pullman Co., 312 U.S. 496, 61 S. Ct. 643, 85 L. Ed. 971 (1941); Dillard v. Virginia Industrial Comm'n., 416 U.S. 783, 94 S. Ct. 2028, 40 L. Ed. 2d 540 (1974); Boehning v. Indiana Employees Ass'n., 423 U.S. 6, 96 S. Ct. 168, 46 L. Ed. 2d 148 (1975); Harris Co. Commissioner's Court v. Moore, 420 U.S. 77, 95 S. Ct. 870, 43 L. Ed. 2d 32 (1975); Bellotti v. Baird, 428 U.S. 132, 96 S. Ct. 2857, 49 L. Ed. 2d 844 (1976) and Carey v. Sugar, 425 U.S. 73, 96 S. Ct. 1208, 47 L. Ed. 2d 587 (1976), (discussed in paras. 8, 9 of Defendants' Affidavit), abstention was found to be required because of the possibility that resolution of a question of state law might avoid in whole or in part "the necessity for federal constitutional adjudication." Bellotti v. Baird, supra, 428 U.S. at 147, 96 S. Ct. at 2866. The City, however, has suggested no question of state law whose resolution could affect the plain and simple due process claim asserted by plaintiffs: that it is a denial of due process not to afford tenants notice of and opportunity to protest MBR increases before they take effect.
Nor have the defendants referred us to any cases now pending in the state courts in which this issue might be resolved. Cf. Carey v. Sugar, supra; Tonwal Realties, Inc. v. Beame, 406 F. Supp. 363 (S.D.N.Y.1976).
It appears that state law on this question is perfectly clear and that no case for abstention under the above cited cases is presented. This conclusion is based on the recent decision of the New York Court of Appeals in Bedford Building Co. Inc. v. Beame, 38 N.Y.2d 729, 381 N.Y.S.2d 38, 343 N.E.2d 756 (1975) in which tenants intervened in a suit brought by the landlord's association to require the City to issue MBR increases in accordance with local law. The Appellate Division in that case had directed the City either to issue final MBR increases to all eligible buildings or, if the processing could not be completed within the thirty days allowed, to issue interim MBR orders to the landlords. 45 A.D.2d 950, 359 N.Y.S.2d 299 (1st Dept. 1974). The intervenors filed an appeal from that decision insofar as it found the MBR law to be constitutional and insofar as it directed the grant of interim MBR orders, and argued that it was a denial of due process to allow such increases -- whether they be interim or final MBR orders -- to go into effect without affording tenants notice and an opportunity to be heard prior to the rent adjustment. See Brief and Supplementary Appendix of Intervenors-Appellants filed in New York Court of Appeals. The Court of Appeals in a four sentence per curiam opinion affirming the Appellate Division stated: "We would only add that we find no merit to intervenors' claim that the tenants are constitutionally entitled to notice and an opportunity to be heard before rents are adjusted (cf. Wasservogel v. Meyerowitz, 300 N.Y. 125, 89 N.E.2d 712)."
Accordingly, we reject as a basis for abstention the suggestion that state law is unclear and should be further resolved by state courts before federal courts approach constitutional issues.
Defendants also seem to argue that cases such as Younger v. Harris, 401 U.S. 37, 91 S. Ct. 746, 27 L. Ed. 2d 669 (1971), Hicks v. Miranda, 422 U.S. 332, 95 S. Ct. 2281, 45 L. Ed. 2d 223 (1975) and Huffman v. Pursue Ltd., 420 U.S. 592, 95 S. Ct. 1200, 43 L. Ed. 2d 482 (1975) require abstention here. (para. 10, Moving Affidavit). These cases, however, involved efforts by persons who were defendants in ongoing criminal or quasi-criminal state proceedings to obtain federal injunctive relief. They have virtually no bearing to the instant case. Nor does the recently decided case of Juidice v. Vail, 430 U.S. 327, 97 S. Ct. 1211, 51 L. Ed. 2d 376 (1977), which similarly involved suit by federal plaintiffs to decide issues which could be presented in pending state court contempt proceedings against the federal plaintiffs.
As the defendants seem to recognize, the only substantial basis for abstention in the instant case arises from a line of decisions which can be said to date from Burford Co. v. The Sun Oil Co., 319 U.S. 315, 63 S. Ct. 1098, 87 L. Ed. 1424 (1943) (paras. 11, 12 Defendants' Moving Affidavit). The defendants characterize this line of decision as "[expanding] the abstention doctrine to include its use in cases wherein a federal issue under the civil rights law goes to the heart of important state governmental issues." Burford itself involved a challenge to an order of the State Railroad Commission of Texas permitting the drilling of certain oil wells separated by distances less than the minimum generally prescribed. The court, emphasizing Texas' substantial interest in the substantive aspects of this comprehensive scheme of regulation, and noting that plaintiffs had a remedy by way of appeal from the Commission Order to the state courts, held that in the exercise of its equitable jurisdiction the federal court should have dismissed the suit. Other cases which defendants group with Burford also involve challenges to substantive aspects of state regulatory or law enforcement activity. See, e.g., Rizzo v. Goode, 423 U.S. 362, 96 S. Ct. 598, 46 L. Ed. 2d 561 (1976); Reetz v. Bozanich, 397 U.S. 82, 90 S. Ct. 788, 25 L. Ed. 2d 68 (1970).
The defendants argue that the City's rent control law is similar to the regulatory schemes and/or sovereign law enforcement activities involved in the above cited cases, in that it is a matter in which local interests are so predominant that federal courts simply should not engage in review of its administration. In support of their contention, they point to Tonwal Realties, Inc. v. Beame, supra, 406 F. Supp. 363. There, landlords sought a judgment declaring the rent control statute to be unconstitutional in various respects. The court quite properly abstained from decision, noting that (a) a case was presently pending in the appellate state court presenting identical issues, and (b) the state courts had been far from reluctant to render decisions in rent control cases. It wrote:
"'If we were to distort §§ 1343 and 1983 to vest federal courts with jurisdiction over the uniquely local substantive matters which this case presents, we would not only impair our ability to consider the vast array of cases that properly belong in federal forums but, as surely as sunrise, we create yet another and an unnecessary interference with orderly State processes.' McDowell v. Texas, 465 F.2d 1342, 1346 (5th Cir. 1972) . . ." 406 F. Supp. at 366 (emphasis added)
In contrast to Tonwal, plaintiffs here do not challenge substantive aspects of the Rent Control Law, such as the criteria which the law directs the City agency to consider in reaching its determinations respecting MBR orders. Rather, plaintiffs contend that by virtue of that law they, as tenants, hold a statutory entitlement to pay no more than the lawful maximum rent, and that the federal constitution requires appropriate procedural protections to be afforded before that statutory entitlement is adversely affected to any substantial degree. The Burford line of cases, we believe, was not meant to require a federal court to abstain from deciding a pure issue of procedural due process raised under state or local statute. Indeed, the federal courts have decided many such claims in recent years. See, e.g., Goldberg v. Kelly, 397 U.S. 254, 90 S. Ct. 1011, 25 L. Ed. 2d 287 (1970); Fuentes v. Shevin, 407 U.S. 67, 92 S. Ct. 1983, 32 L. Ed. 2d 556 (1972); Yee-litt v. Richardson, 353 F. Supp. 996 (N.D.Cal.), aff'd. 412 U.S. 924, 93 S. Ct. 2753, 37 L. Ed. 2d 152 (1973).
Although it is always necessary in a case raising this kind of issue to balance the governmental interests involved against those of the individual claimants, the federal court is no less qualified to strike that balance than are the state courts. Moreover, it is our judgment that the state courts have finally expressed themselves with respect to the constitutional issue raised and that it would be futile to stay this ...