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Robert I. Toussie and Chandler v. County of Suffolk

August 2, 2011

ROBERT I. TOUSSIE AND CHANDLER PROPERTY, INC., PLAINTIFFS,
v.
COUNTY OF SUFFOLK, ROBERT J. GAFFNEY, INDIVIDUALLY, AND IN HIS OFFICIAL CAPACITY AS SUFFOLK COUNTY EXECUTIVE, ALLEN GRECCO, AND PEERLESS ABSTRACT CORP., DEFENDANTS.
ROBERT I. TOUSSIE, LAURA TOUSSIE, ELIZABETH TOUSSIE, MICHAEL I. TOUSSIE, PRAND CORP. F/K/A CHANDLER PROPERTY, INC., ARTHUR A. ARNSTEIN CORP., TOUSSIE LAND ACQUISITION & SALES CORP., AND TOUSSIE DEVELOPMENT CORP. PLAINTIFFS,
v.
COUNTY OF SUFFOLK, PAUL SABATINO, II, PATRICIA B. SIELINSKI AND THOMAS A. ISLES, DEFENDANTS.



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

MEMORANDUM & ORDER

Plaintiffs, Robert I Toussie ("Toussie") and Chandler Property, Inc., began this action (01-CV-6716) in October 2001, asserting that their civil rights had been violated when the Defendants, Suffolk County and Robert J. Gaffney ("Gaffney"), denied them the opportunity to purchase thirty-one parcels of real estate at the 2001 Suffolk County Surplus Auction. (2001 Am. Compl. [Doc. No. 45].) In April 2005, those plaintiffs, joined by Laura Toussie, Elizabeth Toussie, Michael I. Toussie, Prand Corp. f/k/a Chandler Property, Inc., Arthur A. Arnstein Corp., Toussie Land Acquisition and Sales Corp., and Toussie Development Corp. (collectively "Plaintiffs" or "Toussies"), commenced a second action (05-CV-1814) asserting similar claims under 42 U.S.C. § 1983. (2005 Compl. [Doc. No. 1].) The 2005 Complaint alleged that the Defendants, Suffolk County, Paul Sabatino, II ("Sabatino"), Patricia B. Zielsinki ("Zielinski")*fn1 ,and Thomas A. Isles ("Isles"), violated Plaintiffs' civil rights when they blocked the sale of sixteen parcels in 2002 and barred Plaintiffs' attendance from public auctions in 2004. As they had in the 2001 Amended Complaint, Plaintiffs also asserted several state law claims including, among other things, breach of contract, unjust enrichment, and defamation. On May 18, 2007, the Court consolidated the 2001 and 2005 actions in the interest of judicial economy. [Doc. No. 182]. Pending before the Court is Defendants' motion for summary judgment. For the following reasons, Defendants' motion is GRANTED IN PART and DENIED IN PART.

BACKGROUND*fn2

Defendant Suffolk County ("Suffolk County" or "the County") regularly auctions real property that it has acquired as a result of non-payment of real estate taxes. (Pls.' 56.1 Stmt. ¶ 6.) The terms and conditions governing the auctions are

set forth in an auction booklet, which is passed as legislation pursuant to County law and distributed in advance of the auction. (Id. ¶ 32; Pls.' 56.1 Supp. ¶ 36; Defs.' 56.1 Stmt. ¶3.)

The County held an auction on May 23-24, 2001*fn3 ("2001 Auction"), where Plaintiff Toussie was the highest bidder on four parcels, and Plaintiff Chandler Property, Inc. was the highest bidder on twenty-seven parcels. (Pls.' 56.1 Stmt. ¶¶ 5,

12.) Pursuant to the terms and conditions of the 2001 Auction, Plaintiffs entered into memoranda of sale for each parcel and tendered the required 20% down payment and auction fee for each of the thirty-one properties. (Pls.' 56.1 Stmt. ¶ 5.) All auction sales, however, were conditioned upon approval by the Suffolk County Legislature ("Legislature"). (Defs.' 56.1 Stmt.

¶ 4.)*fn4 The Legislature's discretion to approve or disapprove the sales was not limited in the auction booklet, the Suffolk County Administrative Code, or Terms and Conditions of Sale.

The Legislature's approval of the sales was sought on an expedited basis,*fn5 meaning that the resolution would be submitted to the full Legislature, rather than to the Ways & Means Committee ("Committee") for initial approval. (Id. ¶ 12.) On recommendation of Defendant Sabatino, counsel to the Legislature, the resolution approving the 2001 Auction sales was split into two bills: Introductory Resolution 1676-01 ("IR 1676-01"), which proposed authorization of the sale of parcels to Plaintiffs, and Introductory Resolution 1675-01 ("IR 1675-01"), which proposed authorization for the sale of parcels to all other buyers. (Defs.' 56.1 Stmt. ¶ 13.) The County had never before split auction sales into two separate resolutions.

July 30, 2001 and was tabled.*fn6 On August 7, 2001, the full Legislature considered a motion to discharge IR 1676-01 from Committee. Present were members of the community who objected to the properties ever being sold to Toussie or any company affiliated with him. The motion was defeated. (Pls.' 56.1 Stmt. ¶ 17; Defs.' 56.1 Stmt. ¶ 17.) The Committee again considered IR 1676-01 on August 20, 2001 and this time unanimously defeated it. Counsel for Toussie as well as members of the community again appeared to testify regarding the sale. (Defs.' 56.1 Stmt. ¶¶ 18-20.) In response to complaints from community-members, Toussie's attorney stated that Toussie would agree that neither he nor his son would develop the property. (Pls.' 56.1 Supp. ¶ 16; Pls.' 56.1 Stmt. ¶ 19.) Despite these assurances, on August 28, 2001, after again hearing testimony from community members in opposition to the sales, the Legislature affirmed the Committee's action. (Pls.' 56.1 Stmt.

¶ 21; Defs.' 56.1 Stmt. ¶ 21.) Plaintiffs allege that the Legislature had no legitimate reason for defeating IR 1676-01, but did so to pander to their constituents for political gain. (Pls.' 56.1 Stmt. ¶ 25.) Defendants assert that the County'sdecision was based on their legitimate concerns regarding Toussie's business practices.*fn7 On October 11, 2001, Toussie and Chandler Property, Inc. commenced one of the two actions consolidated herein challenging the Legislature's failure to approve these sales.

On March 18, 2002, Toussie wrote a letter to the County asking "that the County advise [him] as soon as possible if it intend[ed] to prohibit [him] from purchasing property at the May 2002 Auction." (Pls.' 56.1 Supp. ¶ 21.) The County responded stating that "the failure of the Suffolk County Legislature to approve the conditional sales for the May 2001 auction, did not include a directive barring him from future actions," but also cautioning that "participation does not carry with it a guarantee of success" because "sales are conditioned upon the discretionary approval of the Suffolk County Legislature." (Pls.' 56.1 Stmt. Ex. 47.)

The County held another auction on May 15-16, 2002 ("2002 Auction"). The auction booklet and Terms and Conditions of Sale were identical to those in the 2001 Auction. Toussie, his company, Prand Corp., his wife, Laura Toussie, her company, Arthur A. Arnstein Corp., his daughter, Elizabeth Toussie, his brother, Michael Toussie, and companies bearing the Toussie name but not owned or operated by the family, Toussie Land Acquisition & Sales Corp. and Toussie Development Corp. were the winning bidders on sixteen properties. (Pls.' 56.1 Stmt. ¶ 33.) They again signed memoranda of sale and tendered the required 20% down payment and auction fee for each of the sixteen properties. (Id.)

On June 11, 2002, IR 1730-2002, which proposed the approval of the sale of parcels to the high bidders at the 2002 Auction, was presented to the Legislature. The resolution was assigned to the Committee, which voted unanimously on June 17, 2002 to table IR 1730-2002 so that separate resolutions segregating the Toussie-related parcels could be drafted and introduced. (Defs.' 56.1 Stmt. ¶ 35 & Ex. X.)*fn8

On June 25, 2002, two resolutions, IR 1800-2002, which proposed approval of the sales to Plaintiffs, and IR 1801-2002, which proposed approval of the remaining sales, were introduced and assigned to the Committee. (Defs.' 56.1 Stmt. ¶ 36.) On July 29, 2002, IR 1801-2002 was discharged from Committee, and on August 6, 2002, it was approved by the Legislature. (Id. ¶¶ 37-38.) IR 1800-2002, on the other hand, was tabled then re-tabled three times by the Committee. (Defs.' 56.1 Stmt. ¶¶ 39-48.) At the November 15, 2002 Committee meeting, Plaintiffs' counsel, Richard Hamburger, again stated that Plaintiffs were willing to enter into a binding agreement that would preclude any residential development of the parcels and Isaac's involvement with the land in any manner. (Pls.' 56.1 Stmt. ¶ 42.) Nevertheless, at the December 9, 2002 Committee meeting, IR 1800-2002 was defeated. (Id. ¶ 48; Defs.' 56.1 Stmt. ¶ 48.) IR 1800-2002 was never voted on by the full Legislature, and it died in Committee. On or about April 25, 2003, Plaintiffs filed an Article 78 proceeding in the Supreme Court of Suffolk County challenging the Legislature's disapproval of their sales in the 2002 Auction. See Toussie v.Countyof Suffolk, No. 03-9048 (N.Y. Sup. Ct. Suffolk Cnty. Sept. 23, 2003) (Defs.' 56.1 Stmt. Ex. OO.). The Supreme Court found in favor of Defendants, holding that (1) no valid contract existed, (2) in disapprovingthe sale, the Legislature was acting "within the clear letter of th[e] contract language," and (3) the Legislature's decision was not arbitrary or capricious. Id. The Appellate Division affirmed, see Toussie v. Cnty. of Suffolk, 26 A.D.3d 506, 809 N.Y.S.2d 573 (2d Dep't 2006), and the Court of Appeals denied leave to appeal, see Toussie v. County of Suffolk, 7 N.Y.3d 11, 823 N.Y.S.2d 770 (2006).

The County held another auction on November 30 and December 1, 2004 ("2004 Auction"). (Defs.' 56.1 Stmt. ¶ 64.) Toussie was the winning bidder on one parcel, but the County refused to allow him to sign a memorandum of sale. (Pls.' 56.1 Supp. ¶ 32.) Assistant County Attorney George Nolan then instructed the auctioneer not to accept any more bids from Toussie or anyone with a close relationship to him and directed the police to escort Toussie, his wife and his attorney from the auction room. (Id. ¶¶ 32-33.) After Mr. and Mrs. Toussie were escorted from the premises, Toussie's attorney, Richard Hamburger, returned to bid on properties as agent for Toussie. (Id. ¶ 34.) Although he was the highest bidder, the County refused to accept any down payment or auction fee and refused to allow him to sign the memoranda of sale on Toussie's behalf. (Id.) Plaintiffs assert that Defendants Sabatino, Isles and Zielinski made the decision to reject Toussie's bids and remove Mr. and Mrs. Toussie from the auction. (Id. ¶¶ 33, 35.)

On April 13, 2005, Plaintiffs commenced the second of the two actions consolidated herein challenging the Legislature's failure to approve the 2002 Auction sales and the County's refusal to allow Mr. and Mrs. Toussie to participate in the 2004 Auction. On May 18, 2007, the two actions were consolidated, and on February 22, 2011, Defendants filed for summary judgment.*fn9

DISCUSSION

I. Standard of Review "Summary judgment is appropriate where there are nogenuine disputes concerning any material facts, and where the moving party is entitled to judgment as a matter of law." Harvis Trien & Beck, P.C. v. Fed. Home Loan Mortg. Corp. (In re Blackwood Assocs., L.P.), 153 F.3d 61, 67 (2d Cir. 1998) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986)); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986).

"The burden of showing the absence of any genuine dispute as to a material fact rests on the party seeking summary judgment." McLee v. Chrysler Corp., 109 F.3d 130, 134 (2d Cir.1997); see also Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S. Ct. 1598, 26 L. Ed. 2d 142 (1970). "In assessing the record to determine whether there is a genuine issue to be tried as to any material fact, the court is required to resolve all ambiguities and draw all permissible factual inferences in favor of the party against whom summary judgment is sought." McLee, 109 F.3d at 134.

"Although the moving party bears the initial burden of establishing that there are no genuine issues of material fact, once such a showing is made, the non-movant must 'set forth specific facts showing that there is a genuine issue for trial.'" Weinstock v. Columbia Univ., 224 F.3d 33, 41 (2d Cir. 2000) (quoting Anderson, 477 U.S. at 256). "Mere conclusory allegations or denials will not suffice." Williams v. Smith, 781 F.2d 319, 323 (2d Cir. 1986). Similarly, "unsupported allegations do not create a material issue of fact." Weinstock, 224 F.3d at 41 (citing Goenaga v. March of Dimes Birth Defects Found., 51 F.3d 14, 18 (2d Cir. 1995)).

II. Collateral Estoppel

Defendants argue that collateral estoppel bars "[t]he bulk" or "most, if not all" of Plaintiffs' claims. (Defs.' Mem. 2.) Under New York law,*fn10 collateral estoppel or issue protection claims (2001 Am. Compl. Count II; 2005 Compl. Counts III, XX, XXVI), bill of attainder claims (2001 Am. Compl. Count I; 2005 Compl. Counts XIII, XIX, XXIX), and substantive and procedural due process claims (2001 Am. Compl. Count III; 2005 Compl. Counts I, V, XXII, XXVII, XXVIII) are barred by the Suffolk County Supreme Court's decision in Toussie v. County of Suffolk, No. 03-9048 (Sup. Ct. Suffolk Cnty. Sept. 23, 2003), aff'd, 26 A.D.3d 506, 809 N.Y.S.2d 573 (2d Dep't 2006) because "all issues regarding the Legislature's authority, discretion and legal basis for refusing to execute or approve sales of auction properties . . . have been fully litigated and resolved against [P]laintiffs" (Defs.' Mem. 5).*fn11

A. All Claims Based on 2001 and 2004 Auctions Defendants assert that the state court's decision with respect to the 2002 Auction bars all contract, bill of attainder, equal protection, and substantive and procedural due process claims arising out of the 2001 and 2004 Auctions.

Defendants' argument is based primarily on the fact that the language requiring approval of the Legislature, as set forth in the auction booklet, Memorandum of Sale, and applicable Administrative Code provision, is identical for the 2001, 2002 and 2004 Auctions, and the fact that Plaintiffs' past and present business practices, which factored into the Legislature's refusal to deliver deeds in 2002, remained a constant fact whenever the Legislature was faced with the prospect of selling auction properties to the Plaintiffs.

Similar facts or circumstances surrounding the actions, however, do not establish identity of the issues between the Article 78 proceeding and the 2001 and 2004 Auctions. Collateral estoppel depends on the specific facts of each case and will only prohibit the re-litigation of issues that were "actually and necessarily" decided. The Article 78 proceeding dealt exclusively with the 2002 Auction, and the court there held that the Legislature's disapproval of that particular sale to Plaintiffs was not arbitrary or capricious. The Supreme Court's opinion, the appellate record, and the Second Department's opinion are void of any facts regarding the 2001 Auction or the 2004 Auction. Since Plaintiffs have not had any opportunity to argue the unique facts of either of the other two auctions, collateral estoppel will not preclude those claims. See, e.g., Davis v. Halpern, 813 F.2d 37, 40 (2d Cir.1987) (no identity of issues between Article 78 proceeding and current civil rights litigation when "state proceeding dealt only with Davis' second [allegation of discrimination], not with his first (which was barred by the four-month statute of limitations in Article 78 proceedings) or the third . . . (which has not yet occurred)"); Ponterio v. Kaye, No. 06-CV-6289, 2007 WL 141053, at *10 (S.D.N.Y. Jan. 22, 2007) (collateral estoppel did not bar plaintiff from bringing claim arising out of conduct that occurred after state court issued its decision).

B. State Common Law Breach of Contract Claims Based on 2002 Auction

While Defendants have failed to meet their burden with respect to the claims arising out of the 2001 and 2004 Auctions, they have sufficiently established that there is identity of the issues as between the Article 78 proceeding and the state law contract claim related to the 2002 Auction (2005 Compl. Count XXIV). In their 2005 Complaint, Plaintiffs allege that "[t]he disapproval of the sales by the Suffolk County Legislature was arbitrary, capricious, in bad faith, and in violation of the law, and contrary to the terms of the contracts formed when the memoranda of sale were signed. Thus, the County breached the contracts." (2005 Compl. ¶ 287.) Plaintiffs raised the identical question before the Supreme Court of Suffolk County. See Toussie v. Cnty. of Suffolk, No. 03-9048 (N.Y. Sup. Ct.Suffolk Cnty. Sept. 23, 2003) ("Toussie plaintiffs argue that the disapproval was made in violation of lawful procedure, was arbitrary and capricious and constituted an abuse of any discretion."). The court held (1) that no valid contract existed, (2) that in disapproving the sale, the Legislature was acting "within the clear letter of th[e] contract language," and(3) that the Legislature's decision was not arbitrary or capricious. Id. The Appellate Division affirmed. See Toussie v. Cnty. of Suffolk, 26 A.D.3d 506, 809 N.Y.S.2d 573 (2d Dep't 2006). Those issues are identical to issues in the present case.

Plaintiffs respond by arguing that they did not have a full and fair opportunity to litigate their contract claims in the Article 78 proceeding. (Pls.' Opp'n 12-15.) Factors to be considered when determining whether there was a full and fair opportunity to litigate the issue in the prior action include "the size of the claim, the forum of the prior litigation, the use of initiative, the extent of the litigation, the competence and experience of counsel, the availability of new evidence, indications of a compromise verdict, differences in the applicable law and foreseeability of future litigation." Gilberg v. Barbieri, 53 N.Y.2d 285, 292, 423 N.E.2d 807, 441 N.Y.S.2d 49, 51, (1981) (emphasis added) (citation omitted); see also King v. Fox, 418 F.3d 121, 130 (2d Cir. 2005).

Plaintiffs argue that they did not have a full and fair opportunity to litigate their claims in state court because of the discovery of new evidence in the form of (1) the Legislative record revealing that IR 1800-2002 was never "disapproved" but was instead repeatedly tabled until it expired; (2) "subsequent discovery" revealing that prior to Defendants' refusal to approve the sale of surplus property to Plaintiffs there had never before been a refusal of such sales; and (3) former Legislator Fred Towle's*fn12 guilty plea to bribery and fraud. (Pls.' Opp'n 12-15.)

The Legislative record and the "subsequent discovery" are not "new" evidence that would bar the application of collateral estoppel. Courts have held that evidence is not new if it was available during the pendency of the prior action. See Ryan v. N.Y. Tel. Co., 62 N.Y.2d 494, 504, 467 N.E.2d 487, 492-93, 478 N.Y.S.2d 823, 828-29 (1984); Feldstein v. N.Y. State Office of Mental Health, Bronx Psychiatric Ctr., 846 F. Supp. 1089, 1101 (E.D.N.Y. 1994). Evidence is available if it was in the party's possession or the party could have obtained it during the prior proceeding. See Ryan, 62 N.Y.2d at 504, 467 N.E.2d at 492-93, 478 N.Y.S.2d at 828-29) (finding that evidence in party's possession but not introduced in prior proceeding is not "new evidence" that would defeat the application of collateral estoppel in a later proceeding); Feldstein, 846 F. Supp. at 1101 (holding that a party cannot rely on his failure to engage in discovery during an Article 78 proceeding to defeat collateral estoppel). Plaintiffs were in possession of the Legislative record when they brought their Article 78 proceeding, and they could have engaged in discovery during that proceeding to obtain the statistics regarding how often the Legislature disapproved sales. A party has a full and fair opportunity to litigate so long as "the procedures in the initial forum meet the minimum demands of procedural due process." Rameau v. N.Y. State Dep't of Health, 741 F. Supp. 68, 71 n.3 (S.D.N.Y. 1990) (citing Kremer, 456 U.S. at 483-84). The Article 78 proceeding provided Plaintiffs with a forum to request and present the previously-described "new" evidence; therefore, Plaintiffs cannot argue that their failure to utilize that forum deprived them of their ability to fully litigate this issue.

Towle's guilty plea to third degree receipt of bribery and first degree scheme to defraud, on the other hand, is new evidence that was not considered by the Supreme Court or Appellate Division in the Article 78 proceeding. The guilty plea, coupled with the fact that during a deposition in this case, Towle invoked his Fifth Amendment privilege against self- incrimination*fn13 when asked whether he received bribes or acted as a conduit for bribes to other legislators during his tenure in exchange for voting against approval of the "Toussie resolutions" (Pls.' 56.1 Stmt. ¶ 17; Towle Dep. 89-90), could have factored into the state courts' analyses of whether the Legislature's action was arbitrary and capricious. Both courts concluded that the Legislature based its decision on Toussie's past and present business practices and held that the Legislature had a rational basis to do so. Since new, previously-unavailable evidence suggests that some of the legislators may have been motivated by bribes, as opposed to Toussie's business practices, Plaintiffs will not be barred from re-litigating the issue of whether the decision was arbitrary and capricious. The other issues, however--whether there was a valid contract and whether the Legislature was acting within the boundaries of that contract--are barred by collateral estoppel.

C. Constitutional Claims Based on 2002 Auction

Defendants assert that Plaintiffs' equal protection,

bill of attainder, and substantive and procedural due process claims related to the 2002 Auction are all barred by collateral estoppel because of the Supreme Court and Appellate Division's finding that the decision to disapprove Plaintiffs' bid was not arbitrary and capricious and was "rationally based on legitimate concerns about the petitioners' past and present business practices." Toussie, 26 A.D.3d at 507, 809 N.Y.S.2d at 574-75. However, since the Court has decided that Plaintiffs are not barred from re-litigating that issue based on new evidence, none of Plaintiffs' constitutional claims are barred by collateral estoppel.

III. Claims Under 42 U.S.C. § 1983 Plaintiffs bring all of their federal claims under 42 U.S.C. § 1983. Section 1983 provides in relevant part that: Every person who, under color of any statute, ordinance, regulation, custom, or usage, of any State . . . causes to be subjected, any citizen of the United States . . . to the deprivation of any rights, privileges, or immunities secured by the Constitution and laws, shall be liable to the party injured in an action at law.

For claims under § 1983, a plaintiff must prove that "(1) the challenged conduct was attributable at least in part to a person who was acting under color of state law and (2) the conduct deprived the plaintiff of a right guaranteed under the Constitution of the United States." Snider v. Dylag, 188 F.3d 51, 53 (2d Cir. 1999) (citing Dwares v. City of N.Y., 985 F.2d 94, 98 (2d Cir. 1993)). Here, the Defendants do not disputethat Defendants were acting under color of state law. The issue, therefore, is whether Defendants' conduct deprived Plaintiffs of a constitutionally protected right.

A. Bill of Attainder

Plaintiffs allege that the "Legislature's decision to disapprove the sale[s]" in 2001 and 2002 and "to approve the[] sales [in 2004] over the objections of Mr. and Mrs. Toussie" constitute unlawful bills of attainder in violation of the Constitution. (2001 Am. Compl. Count I, 2005 Compl. Counts XIII, XIX, XXIX.) The United States Constitution prohibits any state from passing a bill of attainder. U.S. CONST. art. I, § 10, cl. 1. A bill of attainder is "a law that legislatively determines guilt and inflicts punishment upon an identifiable individual without provision of the protections of a judicial trial." Nixon v. Adm'r of Gen. Servs., 433 U.S. 425, 468, 97 S. Ct. 2777, 53 L. Ed. 2d 867 (1977); see also United States v. Lovett, 328 U.S. 303, 315, 66 S. Ct. 1073, 90 L. Ed. 1252 (1946) ("[L]egislative acts, no matter what their form, that apply either to named individuals or to easily ascertainable members of a group in such a way as to inflict punishment on them without a judicial trial are bills of attainder prohibited by the Constitution.").

To determine whether a legislative act*fn14 is a bill of attainder, "the Supreme Court has adopted a three-pronged conjunctive test that considers whether the act: (1) imposed punishment, (2) specified the affected persons, and (3) lacked the protection of judicial process." In re Extradition of McMullen, 989 F.2d 603, 611 (2d Cir. 1993) (citing Selective Serv. Sys. v. Minn. Pub. Interest Research Grp., 468 U.S. 841, 847, 104 S. Ct. 3348, 82 L. Ed. 2d 632 (1984)). Here, the lack of a judicial trial is ...


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