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GANCI v. NEW YORK CITY TRANSIT AUTHORITY

April 12, 2005.

LILLIAN GANCI, et al. Plaintiffs,
v.
NEW YORK CITY TRANSIT AUTHORITY, Defendant.



The opinion of the court was delivered by: RICHARD HOLWELL, District Judge

MEMORANDUM OPINION

Plaintiffs bring this action pursuant to 42 U.S.C. § 1983 against the New York City Transit Authority "NYCTA"), both individually and on behalf of those similarly situated, alleging that the manner in which the NYCTA provides refunds for discontinued transit tokens violates the Fifth Amendment.*fn1 Defendant NYCTA is a public benefit corporation created by the New York State Legislature to operate New York City's transit system, including but not limited to its subways and buses, pursuant to the New York Public Authorities Law § 1200, et seq. In order to remedy the alleged constitutional violation, plaintiffs ask the Court for declaratory and injunctive relief, as well as costs and attorneys' fees.

By notice of motion dated May 24, 2004, defendant moved for judgment on the pleadings pursuant to Rule 12(c) of the Federal Rules of Civil Procedure. The NYCTA has identified a number of reasons it believes plaintiffs' Fifth Amendment claim fails as a matter of law, including because (i) plaintiffs have not alleged an economic injury and therefore lack standing; (ii) the decision to phase out tokens is a non-justiciable administrative decision; (iii) tokens are not protected property under the Fifth Amendment; and (iv) the NYCTA's refund procedure does not constitute a taking and is otherwise constitutional. Plaintiffs opposed the motion, and also moved to amend their complaint to assert a Fourteenth Amendment claim. Oral argument on all motions was heard on March 22, 2005; on March 31, 2005, the Court issued an order granting the motion for judgment on the pleadings and denying the motion for leave to amend. The basis for the Court's ruling is set forth below.

  I. Background

  When considering a motion for judgment on the pleadings, district courts should not stray beyond "facts stated in the complaint or in documents attached to the complaint as exhibits or incorporated in the complaint by reference." Kramer v. Time Warner Inc., 937 F.2d 767, 773 (2d Cir. 1991). However, where factual background is provided as "illustrative reference," and not thereafter relied upon as a "ground for decision," reviewing courts are free to look outside the complaint. Id. This Court will do so in order to provide some context.

  The first of New York's subway lines opened on October 27, 1904, and for the next 44 years commuters paid a nickel for the privilege of riding. Perez-Pena, Richard, Subway Token, Currency of the City, Dies at 50, N.Y. Times, March 15, 2003, at B1; see also http://www.nycsubway.org/ (last visited February 2, 2005). In 1948 the fare increased to $.10, forcing the transit authority to replace or modify entrance turnstiles to accept only dimes (technological limitations prevented turnstiles from accepting both nickels and dimes). Subway Token, Currency of the City, Dies at 50, at B1. Five years later, in 1953, the fare was set to rise again, this time to $.15. Rather than modify the turnstiles to accept nickels, dimes and perhaps also quarters, the transit authority introduced the token.

  The original token was a small disc with the letters "NYC" in the middle and the "Y" cut out. This token lasted 17 years, through multiple fare increases, before being replaced by a larger "Y" cutout token in 1970, which itself was retired in 1980 in favor of a solid brass token. Id. Next in line was the "bulls-eye" token, introduced in 1986, and known for its distinctive lighter-colored center. In 1995 the token took its final form, a simple design with a pentagonal cutout in the center. Id. Of course, subway fares were increased more than five times from 1953 to 1995, which means that tokens were not replaced after every fare increase. The New York Times describes a sort of cat-and-mouse game leading up to increases:
Each fare increase over the last five decades has been accompanied by a bluffing game by the transit system as it sought to prevent hoarding of tokens at the pre-increase price. Each time, officials said they would either introduce a new token or bring back a former one, but just as often, they announced at the last moment that the token would not change.
Id. In this way, the NYCTA was frequently able to avoid the cost of designing and producing millions of new tokens when fares increased.

  But that is not to say that a token-based infrastructure was inexpensive to maintain. Tokens had to be transported, recovered, and counted, and were also prone to counterfeit. For these reasons, "transit officials . . . long looked forward to the day when most of their business with riders would involve exchanges of electrons, not metal and paper." Id. That day came in 1994 with the introduction of the "MetroCard" electronic fare system. MetroCards have several advantages over tokens. For one, they do not have to be counted, sorted or collected. Another advantage is that the cards can be sold in "unlimited use" daily, weekly and monthly blocks of time, which allows customers to reduce the average price per ride.

  Although MetroCards were slow to catch on, by early 2003 they had captured a significant share of gross fare purchases, prompting the NYCTA to announce that tokens would be completely discontinued by the end of the year. Id.*fn2 This decision was communicated to customers through various media, including through postings on NYCTA property, in newspapers announcements, and by both radio and television news broadcasts. (Id.; see, e.g. Ex. 3 to Answer). Luddite commuters were thus faced with a choice: tokens could be used before May 4, 2003 on subways, or before December 31, 2003 on buses. After May 4, 2003, tokens could be redeemed for their purchase price pursuant to a token refund procedure.

  That refund procedure is the subject of this suit. In order to clarify the mechanics of the procedure, the Court invited the parties to submit additional evidence on the topic. Defendant responded with two affidavits. The first is sworn to by Carol Noymer, the NYCTA's attorney of record in this case, and generally outlines the refund procedure as it stood in 1995. The second is sworn to by Carolyn Lewis, the Administrative Manager in the NYCTA's Comptroller's Treasury Business Office, who is responsible for the oversight and administration of the refund procedure. Plaintiff did not submit evidence in response to the Court's request, but stipulated at argument that the current refund procedure is as set forth in defendant's affidavits.

  In 1995, when the NYCTA last changed tokens, customers were allowed to exchange an old token worth $1.25, along with a quarter, for a new one worth $1.50. (March 18, 2005 Aff. of Carol Noymer, ¶ 4). For the first six weeks after the introduction of the new token, customers wishing to make an exchange could do so at any token booth. (Id.) Thereafter, customers wishing to obtain refunds for fewer than 20 tokens were required to travel to NYTCA's Brooklyn headquarters or its Lost Property Office at the 34th and 8th Avenue station in Manhattan. (Id., ¶ 5). Customers wishing to refund more than 20 tokens could only go to the Brooklyn headquarters. (Id.).

  Following the events of September 11, 2001, the NYCTA instituted tighter security precautions at all its facilities. At its Brooklyn headquarters, for example, non-employees had to be escorted at all times. (March 17, 2005 Aff. of Carolyn Lewis, ¶ 4). As a result, because the token refund desk was located on the second floor of the Brooklyn building, refund-seekers needed an escort, which meant that they needed to call ahead and make an appointment. (Id.). This is the procedure that was in effect at the time that tokens were discontinued in 2003, and is also the procedure described in plaintiff's complaint, which was filed in February 2004.

  In September 2004 the procedure changed yet again, this time because the NYCTA moved its Comptroller's Office from Brooklyn to an address in lower Manhattan. (Id., ¶ 5). After the move, the NYCTA was able to drop the requirement that token holders call ahead because the refund desk was situated in a manner that did not allow access to the rest of the building. (Id.). This is the procedure as it stands today — anyone seeking to redeem tokens can do so by traveling to 2 Broadway in lower Manhattan from Monday to Friday between the hours of 9:00 a.m. and 4:00 p.m. (Id., ¶ 6). No advance notice is required, and cash redemptions are offered if the value of the refunded tokens is less than $30. Higher amounts are paid by check. (Id.). Thus, the allegation in plaintiff's complaint that customers seeking a refund must "make an appointment by telephone and appear in person at NYCTA headquarters at 370 Jay Street, Brooklyn, New York", is no longer correct. (Compl., ¶ 15). In any case, plaintiffs still maintain that the refund procedure is "inadequate . . . in that it is extremely impractical . . . to avail [oneself] of [the] procedure in [light] of the time and cost involved." (Compl., ¶ 16). According to plaintiffs, the cost of the refund procedure is especially burdensome when compared with "the value of the refunds to which [customers] are entitled." (Id.). The crux of their claim appears to be that their tokens have been "taken" by the state because the "value" of the discontinued tokens is reduced by the relatively high cost of recovery.*fn3

  Defendant, of course, disagrees with this characterization, noting that while the procedure may involve a "slight inconvenience", it does not violate the Fifth Amendment. (See, e.g., Mot. to Dismiss, pp. 12-21). The Court now turns to that question.

  II. Discussion

  "In deciding a Rule 12(c) motion, [courts] apply the same standard as [is] applicable to a motion under Rule 12(b)(6), accepting the allegations contained in the complaint as true and drawing all reasonable inferences in favor of the nonmoving party." Ziemba v. Wezner, 366 F.3d 161, 163 (2d Cir. 2004) (citation and quotation marks omitted). Accordingly, a complaint should not be dismissed under Rule 12(c) unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim that would entitle him to relief. Conley v. Gibson, 355 U.S. 41, 45-46 (1957). In other words, "[t]he issue is ...


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