American Trucking Associations, Inc. v. New York State Thruway Authority
795 F.3d 351
2d Cir.2015Background
- Plaintiffs (three commercial trucking companies, their trade association, and a putative class) sued the New York State Thruway Authority under 42 U.S.C. § 1983, alleging the Thruway charges constitutionally excessive tolls in violation of the Commerce Clause by diverting toll revenue to the upstate New York Canal System.
- The Thruway Authority is a public-benefit corporation statutorily empowered to operate the Thruway, to sue and be sued, and to finance itself almost entirely by tolls; it is not treated as an arm of the State for Eleventh Amendment purposes under this Circuit’s precedent (Mancuso).
- In 1992 the State transferred management of the Canal System to the Thruway Authority via the Canal Corporation; canal costs have since been funded largely through diverted Thruway tolls (about 10–12% of toll revenue, ~$80–100 million annually).
- Plaintiffs did not name the State of New York as a defendant. The Thruway Authority (represented by the New York Attorney General) moved to dismiss under Fed. R. Civ. P. 12(b)(7) for failure to join the State as a necessary party under Rule 19; the district court granted dismissal without prejudice.
- The Second Circuit reviewed the Rule 19 dismissal for abuse of discretion (legal questions de novo) and vacated the district court’s judgment, holding the State of New York is not a ‘‘necessary’’ party under Rule 19(a).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether New York is a necessary party under Rule 19(a) | Plaintiffs implicitly argue State need not be joined; suit targets Thruway Authority’s tolling practice | Thruway/State: New York has cognizable interests (property, financial, and in defending its laws) that would be impaired if absent | New York is not a necessary party under Rule 19(a) because its asserted interests are not practically impaired by litigation in its absence |
| State property interest in the Canal System | Plaintiffs: suit challenges toll diversion, not title or disposition of canals | Thruway/State: constitutional mandate protects canal ownership and funding; a judgment could threaten that interest | Court: real property ‘‘abandon/ dispose’’ protections are not implicated; title/ownership not at issue, so no Rule 19(a) joinder on that basis |
| State financial interest from lost toll diversion | Plaintiffs: funding shifts do not make State a required party | Thruway/State: invalidation would force State to find alternate funding, creating a significant financial stake | Court: financial interest is too remote/indirect; corporate separation and statutes insulate State from direct liability, so Rule 19(a) joinder not warranted |
| Interest in defending validity of state law | Plaintiffs: challenge goes to Authority’s actions; state need not be named to have its law defended | Thruway/State: the suit effectively challenges state law authorizing canal management/funding | Court: mere challenge to statutes does not automatically make the sovereign a necessary party; notice/intervention statutes exist for absent sovereigns |
Key Cases Cited
- Mancuso v. N.Y. State Thruway Auth., 86 F.3d 289 (2d Cir. 1996) (Thruway Authority not an arm of the state for Eleventh Amendment purposes)
- ConnTech Dev. Co. v. Univ. of Conn. Educ. Props., Inc., 102 F.3d 677 (2d Cir. 1996) (state’s indirect financial interest in a separate entity insufficient for Rule 19 joinder)
- Marvel Characters, Inc. v. Kirby, 726 F.3d 119 (2d Cir. 2013) (absent party’s prejudice is diminished when remaining parties share counsel and aligned interests)
- Bridgeport & Port Jefferson Steamboat Co. v. Bridgeport Port Auth., 567 F.3d 79 (2d Cir. 2009) (Commerce Clause limits on tolls/diversions)
- Seneca Nation of Indians v. New York, 383 F.3d 45 (2d Cir. 2004) (an absent sovereign may be necessary when the suit directly implicates sovereign real property interests)
- Conn. v. Cooter & Gell authority applied via precedent principles, see Cooter & Gell, 496 U.S. 384 (U.S. 1990) (abuse of discretion standard where legal error influences discretionary Rule 19 ruling)
- Hess v. Port Auth. Trans-Hudson Corp., 513 U.S. 30 (U.S. 1994) (entity performing public functions does not automatically acquire state sovereign immunity)