CHRISTINE SMITH, on behalf of herself and all others similarly situated v. NEW YORK STATE SECRETARY OF STATE, Rossana Rosado, in her official capacity, JOHN DOES #1 and #2
20-CV-4958 (PKC) (PK)
UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK
March 31, 2022
PAMELA K. CHEN, United States District Judge
Case 1:20-cv-04958-PKC-PK Document 26 Filed 03/31/22 Page 1 of 19 PageID #: 212
PAMELA K. CHEN, United States District Judge:
Plaintiff Christine Smith brings this action, on behalf of herself and all others similarly situated, against defendants New York State Secretary of State Rossana Rosado (“Defendant Rosado“) and John Does #1 and #2 (the “John Doe Defendants“) (collectively, “Defendants“), in their official capacities, to challenge the policies, practices, and customs of the New York State Department of State regarding the formation and dissolution of New York limited liability companies. Plaintiff alleges that these policies, practices, and customs violate her right to due process and freedom of association under the United States and New York State Constitutions. Pending before the Court is Defendant Rosado‘s motion to dismiss Plaintiff‘s first amended class action complaint (“FAC“) for lack of subject matter jurisdiction and failure to state a claim.
For the reasons stated herein, Defendant Rosado‘s motion to dismiss is granted, Plaintiff‘s request for leave to amend is denied, and this case is dismissed in its entirety.
I. Procedural Background
Plaintiff commenced this action on October 15, 2020, against Defendant Rosado only. (See Complaint (“Compl.“), Dkt. 1.) On December 31, 2020, Defendant Rosado requested a pre-motion conference in anticipation of filing a motion to dismiss pursuant to Federal Rules of Civil Procedure (“Rules“) 12(b)(1) and 12(b)(6). (See Defendant Rosado‘s Letter Motion for Pre-Motion Conference (“Def. PMC Letter“), Dkt. 10.) Defendant Rosado‘s letter raised Eleventh Amendment immunity and
On January 28, 2021, Plaintiff filed the FAC, which, among other things, added the John Doe Defendants in their official capacities. (See FAC, Dkt. 13.) On February 11, 2021, Defendant Rosado filed another pre-motion conference request, once again seeking permission to file a motion to dismiss pursuant to
A. Plaintiff‘s Discovery of Her Identity Theft
On November 5, 2019, Plaintiff noticed an unauthorized charge on her credit card dated October 21, 2019. (FAC, Dkt. 13, ¶ 14.) “After investigating the purchase, Plaintiff learned that the unauthorized charge was made on incfile.com . . . as payment for the formation of a limited liability company.” (Id. ¶ 15.) Plaintiff neither formed, nor authorized another person to form on her behalf, a limited liability company. Similarly, Plaintiff did not use or authorize anyone else to use her credit card to pay for the formation fees on incfile.com. (Id. ¶ 23.)
Plaintiff subsequently learned that the limited liability company was named 27 Linden Smith LLC (the “LLC“) and that its address was registered as 27 Linden Place Apt. 2, Hempstead, New York (the “Hempstead Address“). (Id. ¶ 16.) Plaintiff‘s name is listed in the LLC‘s articles of organization as the “[registered] agent of the limited liability company upon whom process against it may be served” at the Hempstead Address.3 (Id. ¶ 20.) As a result, Plaintiff‘s name is also listed in the database of the New York Department of State‘s (“Department of State“) Division of Corporations, State Records and Uniform Commercial Code (“Division of Corporations“) as the only registered agent and contact person for service of process for the LLC, at the Hempstead Address. (Id. ¶ 19.)
B. Plaintiff‘s Actions to Address the Identity Theft
Upon discovering that someone had stolen her name and formed the LLC, Plaintiff contacted the Department of State by email and phone on November 6 and 7, 2019. (Id. ¶¶ 26, 31.) In the email, Plaintiff “informed the [Department of State] that her identity was stolen and an llc [sic] made in [her] name” and “requested that the [LLC] be dissolved so further damage is not done to [her] credit.” (Id. (internal quotation marks omitted).) Plaintiff also requested that the LLC be “placed inactive as it is fraudulent and started with [a] stolen credit and stolen identity.” (Id. ¶ 27.) On November 14, 2019, the Department of State sent two emails to Plaintiff. In the first email, the Department of State advised Plaintiff that it “has no authority to administratively dissolve the [LLC] or to place the [LLC] as inactive.” (Id. ¶ 28.) The second email, sent one minute later, stated: “If you believe that the articles of organization were fraudulently filed, please contact your District Attorney‘s office.” (Id. ¶ 29.) “On November 21, 2019, Plaintiff received a letter from John J. Whalen, the Director of the [Division of Corporations], which stated that the [Department of State] has no statutory authority to administratively inactivate or dissolve a limited liability company and suggested that Plaintiff discuss the matter with the office of the District Attorney.” (Id. ¶ 30.)
Subsequently, “Plaintiff called the Manhattan District Attorney‘s Cybercrime Unit” and was told that “the unit [does] not handle such cases and that Plaintiff should file a police report.” (Id. ¶¶ 35-36.) Plaintiff filed a police report for identity theft on November 9, 2019. (Id. ¶ 44.) Plaintiff then contacted the Internal Revenue Service, which “found that Plaintiff did not have a relationship with the EIN4 related to the [LLC] and accordingly removed all references to Plaintiff‘s name and social security number in association with this EIN.” (Id. ¶¶ 42-43.) Finally, Plaintiff closed all of her Bank of America bank accounts between November 5-10, 2019.5 (Id. ¶¶ 37-38.)
III. Causes of Action and Requested Relief
Plaintiff asserts four causes of action. The first and third causes of action allege violations of the United States Constitution‘s Fourteenth Amendment due process and First Amendment freedom of association rights, respectively. (Id. ¶¶ 66-71; 78-83.) The second and fourth causes of action allege corresponding New York State Constitution due process and freedom of association violations. (Id. ¶¶ 72-77; 84-89.)
Defendant Rosado is being sued in her official capacity as the head of the Department of State. With respect to the unnamed defendants, Plaintiff alleges that: (1) “Defendant John Doe #1 is a New York State officer responsible for and vested with authority to review incorporation applications for legal sufficiency, including for whether such filings contain fraudulent information” and (2) “Defendant John Doe #2 is a New York State officer responsible for and vested with authority to dissolve fraudulently founded New York State corporations.”6 (Id. ¶¶ 12-13.)
Plaintiff seeks damages against Defendants in their official capacities and “[a] declaratory judgment that Defendants’ policies, practices, and customs violate the First and Fourteenth Amendments of the United States Constitution and
STANDARD OF REVIEW7
A
DISCUSSION
I. New York Limited Liability Company Law
Section 203 of New York Limited Liability Company Law (“NYLLCL“) “provides three specific requirements to form an LLC: (1) preparation of the articles of organization; (2) execution of the articles of organization; and (3) the filing of the articles of organization with the State.” In re Hausman, 921 N.E.2d 191, 193 (N.Y. 2009);
Under NYLLCL section 701(a), a limited liability company can be dissolved in various ways, none of which include any action taken by the Department of State. See
II. The Eleventh Amendment Bars Plaintiff‘s Claims
A. Legal Standard
The Eleventh Amendment provides immunity to states in suits brought against them in federal courts, absent the states’ explicit consent or unequivocal Congressional abrogation of immunity. Pennhurst State School & Hospital v. Halderman, 465 U.S. 89, 99 (1984); CSX Transp., Inc. v. N.Y. State Off. of Real Prop. Servs., 306 F.3d 87, 94-95 (2d Cir. 2002). “State immunity extends to state agencies and to state officers who act on behalf of the state. Thus, when the state is the real party in interest, the Eleventh Amendment generally bars federal court
“Even so, sovereign immunity is not absolute.” In re Dairy Mart Convenience Stores, Inc., 411 F.3d 367, 371 (2d Cir. 2005). In Ex Parte Young, the Supreme Court recognized an exception to state sovereign immunity: a party may bring claims based on federal law violations for prospective injunctive or declaratory relief against state officials. 209 U.S. 123, 155-56 (1908); see also Cecos Intern., Inc. v. Jorling, 706 F. Supp. 1006, 1024 (N.D.N.Y. 1989) (“[I]t has long been established that the eleventh amendment does not forbid federal courts from granting injunctive relief against a state official acting contrary to the United States Constitution.“); Western Mohegan Tribe and Nation v. Orange County, 395 F.3d 18, 21 (2d Cir. 2004) (per curiam) (”Ex parte Young is a limited exception to the general principle of sovereign immunity. It allows a suit for injunctive or declaratory relief challenging the constitutionality of a state official‘s actions in enforcing state law.” (brackets and internal quotation marks omitted)); see also Chinn v. Univ. of New York Sch. Of Law at Queens College, 963 F. Supp. 218, 225 (E.D.N.Y. 1997) (“To avoid a partial ‘end-run’ around Eleventh Amendment immunity, any remedy for past violations of federal
B. Plaintiff‘s Claims
Plaintiff seeks, on behalf of herself and others similarly situated, damages, injunctive relief, and a declaratory judgment for alleged state and federal law violations by Defendants. Defendant Rosado argues that the Court lacks subject matter jurisdiction because Plaintiff‘s claims are barred by the Eleventh Amendment. The Court agrees, and discusses each of Plaintiff‘s claims for relief and damages separately below.10
1. Injunctive and Declaratory Relief
As an initial matter, the Court dismisses Plaintiff‘s state law claims for injunctive and declaratory relief as barred under the Eleventh Amendment. Shibeshi, 531 Fed. Appx. 135, 135-36 (citation omitted); Pennhurst, 465 U.S. at 106 (holding that the Ex Parte Young exception to Eleventh Amendment immunity is “inapplicable in a suit against state officials on the basis of state law“). Plaintiff‘s argument to the contrary, relying on Henrietta D. v. Giuliani, 81 F. Supp. 2d 425, 431 (E.D.N.Y. 2000), is unavailing. Plaintiff argues that the “inclusion of state law claims
The FAC also seeks injunctive and declaratory relief against Defendants for alleged ongoing violations of the federal constitutional Fourteenth Amendment right to due process and the First Amendment right to freedom of association. (FAC, Dkt. 13, ¶¶ 66-71, 78-83; see also id. at 15.) The parties dispute whether Plaintiff‘s claims for injunctive relief are barred by the Eleventh Amendment. “In determining whether the doctrine of Ex Parte Young avoids an Eleventh Amendment bar to suit, a court need only conduct a straightforward inquiry into whether the complaint alleges an ongoing violation of federal law and seeks relief properly characterized as prospective.” Verizon Md., Inc. v. Pub. Serv. Comm‘n of Md., 535 U.S. 635, 645 (2002) (brackets
Indeed, the narrow exception carved out by the Supreme Court in Ex Parte Young requires that individual state actors have “both the power and the duty” under state law to enforce the state statute that is being challenged as unconstitutional. CSX Transp., 306 F.3d at 99 (“Accordingly, Ex Parte Young allows for jurisdiction over the Individual Defendants inasmuch as it is in the performance of their duties that there may be an ongoing violation of federal law. In so holding, we note that such a finding ‘reflects a proper understanding of Ex Parte Young‘s role in our federal system and respect for state courts instead of a reflexive reliance on an obvious fiction.‘” (quoting Idaho v. Coeur d‘Alene Tribe, 521 U.S. 261, 269 (1997) (brackets and internal quotation marks omitted))); see also Marshall v. Switzer, 900 F. Supp. 604, 615 (N.D.N.Y. 1995) (“Actions involving claims for prospective declaratory or injunctive relief are permissible provided the official against whom the action is brought has a direct connection to, or responsibility for, the alleged illegal action.“). Anything less would disrupt the balance between “the doctrine of sovereign immunity” and “the need to prevent violations of federal law.” Dairy Mart, 411 F.3d at 371-72 (quoting Coeur d‘Alene Tribe, 521 U.S. at 269). Thus, a state actor must have, by the law
Applying these principles here, the Court finds that Plaintiff‘s claims for injunctive relief and declaratory judgment against Defendant Rosado must be dismissed. Although Plaintiff names Defendant Rosado in the FAC, Plaintiff appears to concede that her claims against Rosado are barred by the Eleventh Amendment. Plaintiff‘s opposition to Defendants’ motion to dismiss is devoid of any argument that Defendant Rosado has the authority and duty to enforce the statutory scheme of limited liability company formations and dissolutions under New York law. (Pl. Opp., Dkt. 23, at 8 (discussing the John Doe Defendants’ authority only).) Similarly, the FAC does not identify any general state laws that connect Defendant Rosado to the alleged violations here and nothing in NYLLCL itself charges Defendant Rosado with overseeing the formation and/or dissolution of limited liability companies. See Ex Parte Young, 209 U.S. at 157 (holding that whether a state officer has “some connection with the enforcement of the act” “is the important and material fact,” and that such connection can arise “out of the general law, or [can be] specially created by the act itself“). Accordingly, Plaintiff‘s claims against Defendant Rosado are dismissed as barred by the Eleventh Amendment. See Chrysafis, 534 F. Supp. 3d at 290 (“Nothing in Part A of [the New York COVID-19 Emergency Eviction and Foreclosure Prevention Act of 2020] or the general laws of New York charges the Attorney General with a particular duty to enforce the parts of the statute challenged herein.“); see also HealthNow, 739 F. Supp. 2d at 297 (“If a federal case
Plaintiff‘s claims against Defendants John Doe #1 and John Doe #2 fare no better. Plaintiff argues that “the John Doe Defendants are, by definition, state officers vested with authority to either with [sic] review incorporation applications for legal sufficiency or to dissolve fraudulently founded New York State corporations.” (Pl. Opp., Dkt. 23, at 8.) Plaintiff neither explains where the John Doe Defendants’ purported authority stems from, nor cites any statute to support this conclusion. Plaintiff‘s description of Defendant John Doe #1 in the FAC as “a New York State officer responsible for and vested with authority to review incorporation applications for legal sufficiency” (FAC, Dkt. 13, ¶ 12) simply has no legal or factual basis in the FAC or NYLLCL. Indeed, as discussed, NYLLCL expressly prohibits the Department of State from reviewing limited liability company filings “for legal sufficiency.”
Ultimately, Plaintiff‘s claims against the John Doe Defendants must be dismissed because, notwithstanding Plaintiff‘s conclusory descriptions of them, they lack the power and duty to grant
2. Damages
Plaintiff‘s claim for damages, brought against Defendants in their official capacities (see FAC, Dkt. 13, ¶¶ 11-13), is also barred under the Eleventh Amendment. See Kentucky v. Graham, 473 U.S. 159, 169 (1985) (“[A]bsent waiver by the State or valid congressional override, the Eleventh Amendment bars a damages action against a State in federal court. This bar remains in effect when state officials are sued for damages in their official capacity.” (citations and footnote omitted)). Plaintiff neither asserts that New York has waived its sovereign immunity, nor that
Accordingly, Plaintiff‘s damages claim is dismissed. Furthermore, as discussed below, the Court denies Plaintiff‘s request to amend to name Defendants in their individual capacities.
III. Plaintiff‘s Request to Amend the Complaint Is Denied as Futile
Plaintiff seeks to amend her complaint once more to name Defendants in their individual capacities, arguing that this will “transform the viability of the claim for damages.” (Id.) Plaintiff‘s request for leave to amend is denied as futile.
Under
Here, Plaintiff already filed an amended complaint while fully on notice of the Eleventh Amendment issues that Defendant Rosado intended to raise in her motion to dismiss. (See Def. PMC Letter, Dkt. 10; Pl. PMC Response, Dkt. 12, at 1-2.) Plaintiff‘s failure to include, in the
Accordingly, the Court denies Plaintiff‘s request for leave to amend because the amendment, requested without any discussion of Defendants’ personal involvement in the alleged denial of Plaintiff‘s constitutional rights, is facially insufficient and therefore futile.12 See Jackson
CONCLUSION
For the reasons stated in this Memorandum and Order, Defendant Rosado‘s motion to dismiss is granted and Plaintiff‘s request for leave to file a second amended complaint is denied. Plaintiff‘s first amended complaint is thus dismissed, with prejudice and without leave to replead, pursuant to
SO ORDERED.
Pamela K. Chen
United States District Judge
Dated: March 31, 2022
Brooklyn, New York