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Seneca Nation of Indians v. Paterson

October 14, 2010

SENECA NATION OF INDIANS, PLAINTIFF, CAYUGA INDIAN NATION OF NEW YORK, PLAINTIFF-INTERVENOR,
v.
DAVID PATERSON, GOVERNOR OF THE STATE OF NEW YORK, JAMIE WOODWARD, ACTING COMMISSIONER, NYS DEPARTMENT OF TAXATION AND FINANCE, WILLIAM COMISKEY, DEPUTY COMMISSIONER, OFFICE OF TAX ENFORCEMENT, NEW YORK STATE DEPARTMENT OF TAXATION AND FINANCE, JOHN MELVILLE, ACTING SUPERINTENDENT, NEW YORK STATE POLICE, EACH IN HIS OR HER OFFICIAL CAPACITY, DEFENDANTS.



The opinion of the court was delivered by: Honorable Richard J. Arcara United States District Judge

DECISION AND ORDER

(Stay Pending Appeal)

INTRODUCTION

The Seneca Nation of Indians ("Seneca Nation") commenced this action seeking to enjoin implementation of certain amendments to the New York State tax law relating to the taxation of cigarettes sold by reservation retailers. Along with the complaint, the Seneca Nation filed a motion for a preliminary injunction. The Cayuga Indian Nation of New York ("Cayuga Nation") was granted permission to intervene in the action and joined in the motion for a preliminary injunction.

A preliminary injunction hearing was held on September 14 and 15, 2010. On September 23rd, this Court heard supplemental argument on the motion. In a separate Decision and Order issued today, this Court denied the motion for a preliminary injunction upon finding that the plaintiffs had failed to show a likelihood of success on the merits of their claims.

The Nations have expressed their intent to appeal the denial of their motion to the United States Court of Appeals for the Second Circuit, which they have the right to do. In light of the Court's adverse determination, they ask that this Court grant a stay pending appeal so as to prevent irreparable injury to the Nations pending an opportunity by the Second Circuit to fully consider their arguments. The State of New York opposes any further stay of the new tax laws.

Absent a stay pending appeal, the new tax amendments will take effect immediately. For the reasons stated below, the Court finds it necessary to further stay implementation of the new tax amendments pending appeal by the Nations.

DISCUSSION*fn1

Pursuant to Fed. R. Civ. P. 62(c), this Court has the authority to grant a stay pending appeal. Rule 62(c) provides:

While an appeal is pending from an interlocutory order or final judgment that grants, dissolves, or denies an injunction, the court may suspend, modify, restore, or grant an injunction on terms for bond or other terms that secure the opposing party's rights.

Fed. R. Civ. P. 62(c).*fn2 In determining whether to grant a stay pending appeal, this Court considers the following factors:

(1) whether the movant will suffer irreparable injury absent a stay, (2) whether a party will suffer substantial injury if a stay is issued, (3) whether the movant has demonstrated a substantial possibility, although less than a likelihood, of success on appeal, and (4) the public interests that may be affected.

LaRouche v. Kezer, 20 F.3d 68, 72 (2d Cir.1994) (internal quotations and citation omitted). "[T]he degree to which [one] factor must be present varies with the strength of the other factors, meaning that more of one factor excuses less of the other." In re World Trade Center Disaster Site Litigation, 503 F.3d 167, 170 (2d Cir. 2007)(internal quotations omitted). In other words, the factors are viewed on a "sliding scale," and "[t]he necessary 'level' or 'degree' of possibility of success will vary according to the court's assessment of the other stay factors." See Thapa v. Gonzales, 460 F.3d 323, 334-35 (2d Cir. 2006).

It is important to recognize that the standard for granting a stay pending appeal is different than the standard required to obtain a preliminary injunction. Plaintiffs' failure to demonstrate a likelihood of success on the merits of their claim was fatal to their motion for a preliminary injunction because such a showing is essential to obtaining that relief. See Monserrate v. New York State Senate, 599 F.3d 148, 154 (2d Cir. 2010). In contrast, "[a]s the standard makes clear, a grant of injunctive relief pending appeal does not depend solely or even primarily on a consideration of the merits." LaRouche, 20 F.3d at 72. To obtain a stay pending appeal, "the movant need not always show a 'probability of success' on the merits; instead, the movant need only present a substantial case on the merits when a serious legal question is involved and show that ...


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