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SOPHER v. ABRAMS

August 30, 1982

Jacob I. SOPHER and J.I. Sopher & Co., Inc., Plaintiffs,
v.
Robert ABRAMS, as Attorney General of the State of New York, Defendant


Miner, District Judge.


The opinion of the court was delivered by: MINER

MEMORANDUM-DECISION and ORDER

MINER, District Judge.

 I

 In this action plaintiffs, Jacob I. Sopher and J.I. Sopher & Co., Inc., seek to permanently enjoin defendant Robert Abrams, Attorney General of the State of New York, from requiring disclosure, in documents distributed to the public in connection with the offering and sale of real estate securities, of the fact that the Attorney General has commenced a civil proceeding against plaintiffs. The complaint is predicated upon 42 U.S.C. § 1983 and jurisdiction is conferred by 28 U.S.C. §§ 1343(a)(3) and (a)(4). Before this Court is plaintiffs' application for a preliminary injunction. Fed.R.Civ.P. 65(a). *fn1"

 II

 Plaintiff J.I. Sopher & Co., Inc. (here-in-after "Sopher") *fn2" has been a licensed real estate brokerage firm since 1965, engaging in brokerage relating primarily to the rental of apartments. Sopher is presently located at 425 East 61st Street, New York, New York, where an "Exhibition Hall of Apartments" is maintained. This exhibition contains a display of models, pictures and other information regarding rental apartments in various buildings throughout New York City. (Affidavit of Jacob I. Sopher, para. 3). Prospective tenants visit the Exhibition Hall, discuss their rental requirements with a licensed real estate broker or salesperson, and, if they so desire, are escorted to various apartments. If and when an apartment is leased through Sopher's efforts, the tenant is charged a broker's fee pursuant to a written agreement. Id. at P 4.

 In addition to its activities as a broker of rental apartments, Sopher frequently has acted as the selling agent or managing agent in connection with the conversion of apartment buildings to cooperative ownership. Such conversions are regulated by the Attorney General pursuant to the Martin Act, New York General Business Law § 352 et seq.

 On March 3, 1982, the Attorney General commenced a proceeding in the Supreme Court, New York County, entitled State v. Jacob I. Sopher and J.I. Sopher & Co., Inc. (Index No. 40812/82). The petition, consisting of twelve causes of action, involves claims that Sopher fraudulently collected improper commissions upon the rental of certain apartments, including those buildings which it managed, in violation of New York Executive Law § 63(12). The petition seeks injunctive relief and restitution of those brokerage fees allegedly improperly collected by Sopher.

 Since the commencement of the state court proceeding against Sopher, the Attorney General has required that the pendency of that proceeding be disclosed in all offering plans for cooperative conversions in which Sopher is designated as the selling or managing agent. *fn3" The Attorney General alleges that, with respect to all offering plans submitted for filing prior to March 31, 1982, such disclosure has been required pursuant to regulations codified in Title 13, New York Code of Rules and Regulations ("NYCRR"), Part 17. The Attorney General further alleges that, with respect to offering plans submitted after March 31, 1982, such disclosure has been required pursuant to newly issued regulations which are codified in 13 NYCRR, Part 18.

 Sopher alleges that the disclosure requirement of 13 NYCRR § 17.2(b)(xx) is unconstitutional on its face under the Equal Protection Clause of the fourteenth amendment in that the regulation requires disclosure of only pending or "existing lawsuits" and does not require the disclosure of lawsuits which have been adjudicated. Therefore, Sopher contends, the regulation lacks a "rational basis" enabling it to withstand a fourteenth amendment challenge. Sopher further alleges that the Attorney General has selectively and discriminatorily enforced the disclosure requirement against Sopher, in violation of the Equal Protection Clause, and that the Attorney General, by requiring disclosure of the state court proceedings, is attempting to force Sopher to settle that lawsuit, in violation of the Due Process Clause of the fourteenth amendment.

 III

 In this Court a party seeking a preliminary injunction must make a clear showing of "(a) irreparable harm and (b) either (1) likelihood of success on the merits or (2) sufficiently serious questions going to the merits to make them a fair ground for litigation and a balance of hardships tipping decidedly toward the party requesting the preliminary relief." Sperry International Trade, Inc. v. Government of Israel, 670 F.2d 8, 11 (2d Cir.1982); Warner Bros., Inc. v. Gay Toys, Inc., 658 F.2d 76, 78-79 (2d Cir.1981). A preliminary injunction is an "extraordinary and drastic remedy which should not be routinely granted" except upon a clear showing that the movant has carried its heavy burden. Buffalo Forge Co. v. Ampco-Pittsburgh Corp., 638 F.2d 568, 569 (2d Cir.1981); Beech-Nut, Inc. v. Warner Lambert Co., 480 F.2d 801, 803 (2d Cir.1973). Moreover, where granting a preliminary injunction would adversely affect the "public interest for whose impairment, even temporarily, an injunction bond cannot compensate, the court may in the public interest withhold relief until a final determination of the rights of the parties, though the postponement may be burdensome to the plaintiff." Yakus v. United States, 321 U.S. 414, 440, 64 S. Ct. 660, 674, 88 L. Ed. 834 (1944); New York Pathological and X-Ray Laboratories, Inc. v. Immigration and Naturalization Service, 523 F.2d 79, 81 (2d Cir.1975). This court believes that plaintiffs' application for a preliminary injunction should be denied, since, regardless of whether irreparable harm has been demonstrated, plaintiffs have failed to meet the burden of demonstrating the last prong of this Circuit's preliminary injunction test. *fn4"

 IV

 The Equal Protection Clause commands that "all persons similarly circumstanced shall be treated alike." F.S. Royster Guano Co. v. Virginia, 253 U.S. 412, 415, 40 S. Ct. 560, 561, 64 L. Ed. 989 (1920). However, "the Constitution does not require things which are different in fact or opinion to be treated in law as though they were the same." Tigner v. Texas, 310 U.S. 141, 147, 60 S. Ct. 879, 882, 84 L. Ed. 1124 (1940). The initial discretion to determine classifications resides with state legislatures and they "must have substantial latitude to establish classifications that roughly approximate the nature of the problem perceived, that accommodate competing concerns both public and private, and that account for limitations on the practical ability of the State to remedy every ill." Plyler v. Doe, 457 U.S. 202 at , 102 S. Ct. 2382 at 2394, 72 L. Ed. 2d 786 ...


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