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Calvo v. City of New York

United States District Court, S.D. New York

April 2, 2018

SUSAN CALVO, JOHN PETERS PROFESSIONAL LIMOUSINES, INC., JACKLYN RESTREPO, PEDRO CAMACHO, EAMON YUEL and YONG ZHANG individually and on behalf of all others similarly situated, Plaintiffs,

          OPINION & ORDER

          VALERIE CAPRONI United States District Judge.

         This case involves the former policy and practice of Defendant City of New York (“City”) to seize vehicles that were suspected of being used illegally as vehicles for hire without a warrant and prior to a hearing. After this Court decided that the City's practice was unconstitutional as applied to so-called first time violators, Plaintiffs sought class certification, which was denied without prejudice because Plaintiffs failed to propose a class defined in such a way that everyone within it had standing. Plaintiffs now seek class certification for a second time, but fail again, albeit for a different reason. For the following reasons, Plaintiffs' motion for class certification is DENIED with prejudice.

         I. BACKGROUND

         The Court assumes the parties' familiarity with the facts of this case and directs readers to its prior opinions. See Harrell v. City of N.Y. (“Harrell I”), 138 F.Supp.3d 479 (S.D.N.Y. 2015); Calvo v. City of New York (“Calvo I”), No. 14-CV-7246 (VEC), 2017 WL 4231431 (S.D.N.Y. Sept. 21, 2017). For the purposes of this opinion, the following facts merit repetition.

         Prior to this Court's summary judgment decision, when a police officer or Taxi and Limousine Commission (“TLC”) inspector had probable cause to believe that a vehicle was being operated as an unlicensed vehicle for hire in violation of N.Y. City Administrative Code (“Code”) § 19-506(b)(1), the officer or inspector seized the vehicle prior to an administrative hearing on the alleged violation. Harrell I, 138 F.Supp.3d at 484-85 (citing Code § 19-506(h)(1); 35 R.C.N.Y. §§ 68-23(b)(2), (c)(2)). The TLC would issue a summons for the alleged violation, and the seized vehicle would not be released until the administrative hearing, unless the owner or operator either (1) pleaded guilty to the Section 19-506(b)(1) violation and paid a fine or (2) posted a bond. Calvo I, 2017 WL 4231431, at *1 (citations omitted). In addition, the TLC required payment of the seized vehicle's towing and storage fees before it would release the vehicle; if the Section 19-506(b)(1) violation was ultimately dismissed, those fees would be returned. Id. (citations omitted).

         The Court concluded that this practice was unconstitutional under the Fourth and Fourteenth Amendments as applied to vehicle owners with no prior violations in the preceding 36 months (“first-time violators”), and granted Plaintiffs' cross-motion for summary judgment as to liability relative to first-time violators. Harrell I, 138 F.Supp.3d at 496. The Court reaffirmed its grant of summary judgment as to liability on reconsideration relative to Plaintiffs Michael Harrell, Jaclyn Restrepo, and Peter Camacho, but denied Plaintiffs' cross-motion for summary judgment as to liability relative to Plaintiffs Susan Calvo and John Peters Professional Limousines (“JPPL”). Harrell v. City of N.Y. (“Harrell II”), No. 14-CV-7246 (VEC), 2015 WL 9275683 (S.D.N.Y. Dec. 18, 2015). In so holding, the Court found that there were questions of fact whether Plaintiffs Calvo and JPPL were actually first-time violators at the time of their complained-of seizures. Id. at *4.

         Plaintiffs were granted leave to amend and added Eamon Yuel and Yong Zhang as plaintiffs. Calvo I, 2017 WL 4231431, at *2 (citation omitted). The parties proceeded through discovery before Plaintiffs moved for class certification. Id. The Court denied Plaintiffs' motion, concluding that they had “failed to propose a class that [was] defined in such a way that everyone within it [had] standing. . . . Under all of their proposed definitions, Plaintiffs [sought] to include all registered owners of vehicles that were seized by the City; Plaintiffs [ ] failed to rebut the City's compelling evidence that a subset of that class consists of ‘straw' owners who did not suffer any injury in fact from the City's unconstitutional practice of seizing vehicles suspected of being used in violation of Section 19-506(b)(1) from first time violators.” Id. at 7 (citations omitted). The Court granted Plaintiffs an opportunity to seek certification of a narrower class, hypothesizing that “[a] class consisting of registered owners who were either operating the vehicles at the time that they were seized or who retrieved the vehicles from the TLC might be sufficient to narrow the class to those who have Article III standing.” Id. But the Court explicitly made “no finding relative to whether a class can be defined that would satisfy Article III and Rule 23, whether any of the named Plaintiffs would be a suitable class representative, nor whether Plaintiffs' counsel is qualified to be named as class counsel.” Id.

         Accepting the Court's invitation to try again, Plaintiffs moved for class certification, modifying somewhat the class definition that the Court had hypothesized might work from a standing perspective. See Plaintiffs' Memorandum of Law in Support of Plaintiffs' Second Motion for Class Certification (“Pls.' Mem.”) [Dkt. 225]. Defendants oppose Plaintiffs' motion on a number of grounds, in particular with regard to Article III standing and satisfaction of the certification requirements under Federal Rule of Civil Procedure 23. See Defendants' Memorandum of Law in Opposition to Plaintiffs' Second Motion for Class Certification (“Opp.”) [Dkt. 232]. For the reasons discussed below, the Court denies Plaintiffs' motion with prejudice.


         A. The Court Will Assume Satisfaction of the Standing Requirement Although There Remain Questions Whether All Members of Plaintiffs' Proposed Class Would Have Article III Standing

         Article III standing is “the threshold question in every federal case, determining the power of the court to entertain the suit.” Denney v. Deutsche Bank AG, 443 F.3d 253, 263 (2d Cir. 2006) (quoting Warth v. Seldin, 422 U.S. 490, 498 (1975)) (internal quotation marks omitted). “The filing of suit as a class action does not relax this jurisdictional requirement.” Id. (citation omitted). To establish Article III standing, the “plaintiff must have (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision.” Spokeo, Inc. v. Robins, 136 S.Ct. 1540, 1547 (2016) (citing Lujan v. Defs. of Wildlife, 504 U.S. 555, 560-61 (1992)).

         Because these Article III requirements are “an indispensable part of the plaintiff's case, each element [of standing] must be supported in the same way as any other matter on which the plaintiff bears the burden of proof, i.e., with the manner and degree of evidence required at the successive stages of the litigation.” Lewis v. Casey, 518 U.S. 343, 358 (1996) (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992)) (internal quotation marks omitted); see also In re Elec. Books Antitrust Litig., Nos. 11 MD 2293 (DLC), 12 Civ. 3394 (DLC), 2014 WL 1641699, at *8 (S.D.N.Y. Apr. 24, 2014) (citing Lewis, 518 U.S. at 358). Accordingly, a plaintiff's burden to show Article III standing becomes higher as the case proceeds. See Lewis, 518 U.S. at 358 (quoting Lujan, 504 U.S. at 561). Here, at class certification, Plaintiffs must prove standing by a preponderance of the evidence. See Teamsters Local 445 Freight Div. Pension Fund v. Bombardier Inc., 546 F.3d 196, 202 (2d Cir. 2008) (“[T]he preponderance of the evidence standard applies to evidence proffered to establish Rule 23's requirements . . . .”).

         In connection with class certification, “[t]he class must [] be defined in such a way that anyone within it would have standing.” Denney, 443 F.3d at 264. Although it is not necessary that each member of the putative class submit evidence of personal standing, “no class may be certified that contains members lacking Article III standing.” Id. at 263-64. Put differently, “Article III's jurisdictional requirements [apply] to each member of a class.” In re Literary Works in Elec. Databases Copyright Litig., 509 F.3d 116, 126 (2d Cir. 2007) (citing Denney, 443 F.3d at 264), rev'd on other grounds, Reed Elsevier, Inc. v. Muchnick, 559 U.S. 154 (2010). Ultimately, the Article III standing inquiry must be examined through the prism of the class definition; in this Circuit, a class cannot be certified if any person captured within the class definition lacks Article III standing. See Denney, 443 F.3d at 263-64.[1]

         The Second Circuit has made clear that in assessing Article III standing, “while ownership and possession generally may provide evidence of standing, it is the injury to the party seeking standing that remains the ultimate focus.” United States v. Cambio Exacto, S.A., 166 F.3d 522, 527 (2d Cir. 1999) (emphasis added). Because of “the lack of proven injury, ” the Second Circuit has “denied standing to ‘straw' owners who do indeed ‘own' the property, but hold title to it for somebody else. Such owners do not themselves suffer an injury when the property is taken.” Id. (citing United States v. 500 Delaware Street, 113 F.3d 310, 312 (2d Cir. 1997)). Thus, to demonstrate injury in fact sufficient for Article III standing, “one must be more than a mere ‘straw owner[]' who holds title for some unknown person.” United States v. $829, 422.42, Currency, 561 Fed.Appx. 100, 100 (2d Cir. 2014) (citation omitted). Rather, “[t]here must be some indicia of reliability or substance to claims of ownership in order to reduce the likelihood of a false or frivolous claim.” Id. (citation and internal quotation marks omitted).

         The Plaintiffs' new proposed class includes “all registered owners of straight plate vehicles[2] seized for alleged first-time violations of New York City Administrative Code Section 19-506 from September 8, 2011 to the present who were operating the vehicle at the time of the seizure, or who retrieved the vehicle personally or through an agent by paying towing and storage fees.” Pls.' Mem. at 3-4. In other words, Plaintiffs propose that there be three requirements to be a class member: (1) the person[3] was the registered owner of the straight-plate vehicle; (2) the vehicle was seized for a first-time violation of the relevant provision on or after September 8, 2011; and (3) the person (a) was operating the vehicle at the time of the seizure, or (b) paid the required towing and storage fees and retrieved the vehicle either (i) personally or (ii) through an authorized agent.[4]

         According to Plaintiffs, a registered owner's use of a vehicle at the time of its seizure proves that he or she was not a straw owner. Pls.' Mem. at 4. They also argue that paying towing and storage fees directly or through an agent shows a financial interest in the vehicle that demonstrates true ownership. Id. at 5. Plaintiffs believe that, by adopting the definition of the class that the Court suggested might work, their definition resolves the concerns the Court had with their first proposed class definition by effectively “exclud[ing] any owner who elected not to recover their [sic] vehicle, as well as ‘straw' owners who arguably suffered no cognizable injury, ” id. at 4, thus leaving in the class only individuals who have standing.

         Plaintiffs' class definition raises problems of its own. Plaintiffs do not appear to account for registered owners who were operating the vehicle when seized (the “3(a)” group) but who abandoned the vehicle after the seizure-such individuals appear to fall within the class definition but nonetheless would appear to be “straw owners, ” as evidenced by their abandonment of the vehicle. Although not obvious by the bolded print definition of the class that appears in their brief, Plaintiffs assert that they intend to exclude from the class persons who might otherwise be included (i.e., registered owner, first-time seizure, operator at the time of seizure) if the vehicle is abandoned. Pls.' Mem. at 4; Reply at 2. And while that clarification helps to narrow the class, Plaintiffs nevertheless clearly intend to include in the class persons whose vehicles were recovered after a first violation but then abandoned after a subsequent seizure. Although Plaintiffs give Defendants' argument related to such putative class members short shrift, see Declaration of Andrew St. Laurent (“St. L. Decl.”) [Dkt. 243] ¶ 29, the Court agrees with Defendants that an owner who retrieves a vehicle once but then abandons it a month or two later appears likely to be a straw owner. See Declaration of Edward Murray[5] (“Murray Decl.”) [Dkt. 261] ¶¶ 43-45.

         The Court's facial concerns aside, Defendants also raise a number of issues with Plaintiffs' definition and its effectiveness in defining a class that contains only persons with standing. See Opp. at 2-9. Through the declaration of Edward Murray, TLC's Assistant General Counsel, Defendants argue that the class as redefined would still contain individuals who lack standing.[6] Id. at 3-7; Murray Decl. In particular, the Murray Declaration analyzes the seizure records that would be used to identify prospective members of the class, finding a variety of fact patterns that raise very real concerns: individuals who “serially retrieved”[7] multiple vehicles that were registered to different individuals, who (sometimes) lived at the same address[8] (¶¶ 6-8; 14- 21); registered owners who had multiple cars registered at different addresses at virtually the same time[9] (¶ 10); registered owners who were operating the vehicle at the time of seizure but had the vehicle retrieved by a “serial retriever”[10] (¶ 20); vehicles that were seized multiple times but registered to different owners, raising questions about the validity of the registrations[11] and transfers[12] (¶¶ 23-27; ¶¶ 34-36); registered owners reclaimed vehicles after one seizure but then abandoned the vehicle after a subsequent seizure[13] (¶¶ 43-45); third-party authorizations to retrieve vehicles were used to allow a “serial retriever” to recover multiple vehicles, calling into question whether the registered owner was harmed by the seizure of the vehicle[14] (¶ 30); and corporate entities appear to have been used as alter-egos for individuals, making it difficult to ascertain the true owner of a vehicle and whether a violation was truly first-time[15] (¶¶ 46-51). Defendants also raised doubts as to the validity of registrations and third-party authorizations, noting through a proffered handwriting expert that signatures purportedly from the same registered owner did not match across the owner's documents. Opp. at 6 n.5; Declaration of Ruth Brayer (“Brayer Decl.”) [Dkt. 235] ¶ 7.[16]

         Plaintiffs largely answer Defendants' arguments through a declaration from their lawyer, Andrew St. Laurent. See St. L. Decl. While the Declaration properly notes that some of the issues that Murray identifies speak to membership in the class rather than to standing, the Declaration also dismisses some of the concerns as irrelevant without any argument. See id. For example, St. Laurent declares that “Murray notes that some registered owners abandoned vehicles after certain seizures but not after others. . . . However, there is no logical basis to find a registered owner forfeited his or her right to press claims arising from the seizure of a vehicle he or she spent time and money to recover based on a prior or subsequent abandonment of a vehicle. This argument is accordingly irrelevant.” Id. ¶ 29. This argument misses-or purposefully avoids-the point entirely: the fact that a vehicle is abandoned by a registered owner who previously retrieved it (or had it retrieved) raises a significant question of fact as to whether he was a straw owner all along and therefore never had a cognizable injury associated with the seizure of the vehicle.

         In all, although the Plaintiffs' class definition could have been more thoughtfully drafted (particularly as to the exclusion for abandonment), most of the issues Defendants raise speak only to whether a person would be able to opt-in to the class-such as whether the offense was truly first-time and whether a third-party authorization was valid-rather than to standing. Nonetheless, two issues suggest that some of the persons embraced by the proposed class definition may not have standing. First, the evidence of widespread registration fraud raises broad concerns about tying class membership, even partially, to being a registered owner. As Defendants suggest, other indicia of ownership, such as titles and leases, may be preferable and provide more certainty in proving vehicle ownership. Second, as discussed above, registered owners whose vehicles were retrieved once but abandoned when they were subsequently seized may be straw owners who suffered no injury. As discussed in Calvo I,

[A] ‘straw' owner-one who does not have a true ownership interest in the vehicle but merely has the vehicle registered in his or her name-is not injured by signing an authorization for someone else to retrieve the vehicle from the TLC. Signing an authorization has no impact on such an owner because he or she has no true ownership interest in the vehicle that was seized; there is no evidence that such an owner cared at all or experienced any harm (emotional or financial) in connection with the vehicle being seized.

2017 WL 4231431, at *6. It is not inconceivable that a straw owner might assist with the recovery of a vehicle the first time it is seized but would not expend such effort for a subsequent seizure (not to mention the role that forged registrations and authorizations might play in such a recovery-then-abandonment scenario). Of course, a true owner could abandon a vehicle for an ...

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