The opinion of the court was delivered by: William M. Skretny Chief Judge United States District Court
1. This action once again concerns the much-litigated Wage Freeze Resolution ("Wage Freeze" or "Freeze") enacted by the Buffalo Fiscal Stability Authority ("BFSA"). The background of the Freeze has been well-documented by this Court, the Second Circuit, and the courts of New York State. To summarize, on July 3, 2003, the New York State Legislature, through the Buffalo Fiscal Stability Authority Act ("Act"), created the Control Board to stabilize and improve the City of Buffalo's failing financial health. One of the powers the legislature vested in the Control Board was the discretion to freeze wages. On April 21, 2004, the Control Board exercised that discretion and enacted the Wage Freeze, which, for purposes of this case, had the effect of eliminating contractual salary increases that Plaintiffs had negotiated with the City of Buffalo.
On July 1, 2007, the BFSA lifted the Wage Freeze and took the position that the Act should be read to mean that affected employees' wages or salaries would not include increases that would have accrued during the Wage Freeze period. This was apparently contrary to the parties' working understanding while the Freeze was in effect.
2. It is this post-repeal interpretation of the Act that Plaintiffs, Robert Meegan and the Buffalo Police Benevolent Association, argue violates the Contract and Takings Clauses of the United States Constitution.*fn1 See U.S. Const. art. I, § 10, cl. 1; U.S. Const. amend. V. Defendants, the City of Buffalo and the BFSA, have each filed motions to dismiss. For the following reasons, those motions are granted.
3. Rule 12(b)(6) allows dismissal of a complaint for "failure to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). Federal pleading standards are generally not stringent: Rule 8 requires only a short and plain statement of a claim. Fed. R. Civ. P. 8(a)(2). But the plain statement must "possess enough heft to show that the pleader is entitled to relief." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 127 S. Ct. 1955, 1966, 167 L. Ed. 2d 929 (2007).
When determining whether a complaint states a claim, the court must construe it liberally, accept all factual allegations as true, and draw all reasonable inferences in the plaintiff's favor. ATSI Commc'ns, Inc. v. Shaar Fund, Ltd., 493 F.3d 87, 98 (2d Cir. 2007). Legal conclusions, however, are not afforded the same presumption of truthfulness. See Ashcroft v. Iqbal, 556 U.S. 662, 129 S. Ct. 1937, 1949, 173 L. Ed. 2d 868 (2009) ("The tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions.").
4. "To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Iqbal, 129 S. Ct. at 1945 (quoting Twombly, 550 U.S. at 570). Labels, conclusions, or a "formulaic recitation of the elements of a cause of action will not do." Twombly, 550 U.S. at 555. Facial plausibility exists when the facts alleged allow for a reasonable inference that the defendant is liable for the misconduct charged. Iqbal, 129 S. Ct. at 1949. The plausibility standard is not, however, a probability requirement: the pleading must show, not merely allege, that the pleader is entitled to relief. Id. at 1950. Well-pleaded allegations must nudge the claim "across the line from conceivable to plausible." Twombly, 550 U.S. at 570.
5. Both Defendants seek dismissal of Plaintiffs' claims on res judicata grounds. Dismissal on this ground, if warranted, is permissible on a Rule 12(b)(6) motion. See Day v. Moscow, 955 F.2d 807, 811 (2d Cir. 1992). In adjudicating such a motion, this Court is entitled to consider:
(1) facts alleged in the complaint and documents attached to it or incorporated in it by reference, (2) documents 'integral' to the complaint and relied upon in it, even if not attached or incorporated by reference, (3) documents or information contained in defendant's motion papers if plaintiff has knowledge or possession of the material and relied on it in framing the complaint, (4) public disclosure documents required by law to be, and that have been, filed with the Securities and Exchange Commission, and (5) facts of which judicial notice may properly be taken under Rule 201 of the Federal Rules of Evidence.
In re Merrill Lynch & Co., 273 F. Supp. 2d 351, 356--57 (S.D.N.Y. 2003) (internal citations omitted), aff'd in part and rev'd in part on other grounds sub nom., Lentell v. Merrill Lynch & Co., 396 F.3d 161 (2d Cir. 2005), cert. denied, 546 U.S. 935, 126 S. Ct. 421, 163 L. Ed. 2d 321 (2005). Significantly, in consideration of the fifth element, this Court can take judicial notice of state-court judgments. See, e.g., Scherer v. Equitable Life Assurance Soc'y, 347 F.3d 394, 402 (2d Cir. 2003) (taking judicial notice of state-court records);
Washington v. U.S. Tennis Ass'n, 290 F. Supp. 2d 323, 326 (E.D.N.Y. 2003) (courts are "permitted to take judicial notice of court documents from previous actions").
6. "Under the doctrine of res judicata, or claim preclusion, 'a final judgment on the merits of an action precludes the parties . . . from relitigating issues that were or could have been raised in that action.'" Flaherty v. Lang, 199 F.3d 607, 612 (2d Cir. 1999) (quoting Rivet v. Regions Bank of La., 522 U.S. 470, 118 S. Ct. 921, 925, 139 L. Ed. 2d 912 (1998)).
7. Specifically, looking to New York law as this Court must, see Migra v. Warren City Sch. Dist. Bd. of Educ., 465 U.S. 75, 81, 104 S. Ct. 892, 79 L. Ed. 2d 56 (1984), four requirements must be met: (1) a previous action involving the same plaintiffs or those in privity with them (2) was resolved on the merits (3) by a court of competent jurisdiction, and, most importantly, (4) the subsequent action involves claims that were, or could have been, raised in the previous action. See EDP Med. Computer Sys., Inc. v. United States, 480 F.3d 621, 624 (2d Cir. 2007); Monahan v. N.Y.C. Dep't of Corrs., 214 F.3d 275, 285 (2d Cir. 2000). As alluded to above, this Court must give New York state court decisions the same preclusive effect that a New York state court would. Migra, 465 U.S. at 81; O'Connor v. Pierson, 568 F.3d 64, 69 (2d Cir. 2009).
8. Here, Defendants seek dismissal of this action based on New York proceedings Meegan v. Masiello, 21 A.D.3d 1266, 802 N.Y.S.2d 576 (4th Dep't 2005) (Meegan I) and Meegan v. Brown, 16 N.Y.3d 395, 948 N.E.2d 425, 924 N.Y.S.2d 1 (2011) (Meegan II), both of which were (1) brought by the same plaintiffs, (2) resolved on the merits (3) by a court of competent jurisdiction and ...