Long Island Housing Services, Inc. et al v. Village of Great Neck Plaza et al

Filing 83

ORDER Denying 78 Motion to Stay Discovery Pending Decision on Motion to Dismiss Amended Complaint. (PLEASE SEE ORDER FOR FURTHER DETAILS) The Court finds that the Agency has failed to establish that a complete stay of discovery pending the outcome of its Rule 12(c) motion is warranted, and therefore, in its discretion, denies the Agencys motion for a stay. Document discovery should commence according to the schedule established by Judge Tomlinson. Ordered by Judge Arthur D. Spatt on 12/1/2015. (Ortiz, Grisel)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
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LONG ISLAND HOUSING SERVICES, INC.,
FAIR HOUSING JUSTICE CENTER, INC.,
Plaintiffs,
ORDER
14-cv-3307 (ADS)(AKT)
-againstNASSAU COUNTY INDUSTRIAL
DEVELOPMENT AGENCY,
Defendant.
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APPEARANCES:
Emery Celli Brinckerhoff & Abady LLP
Attorneys for the Plaintiffs
600 Fifth Avenue
10th Floor
New York, NY 10020
By: Diane Lee Houk, Esq.
David A. Lebowitz, Esq., Of Counsel
Phillips Lytle LLP
Attorneys for the Defendant
620 Eighth Avenue, 23rd Floor
New York, NY 10018
By: Alan J Bozer, Esq.
Anna Mercado Clark, Esq., Of Counsel
Carroll McNulty & Kull LLC
Attorneys for the Defendant
570 Lexington Avenue, 8th Floor
New York, NY 10022
By: Joseph P. McNulty, Esq.
Robert Seigal, Esq., Of Counsel
SPATT, District Judge.
On May 29, 2014, the Plaintiffs Long Island Housing Services, Inc. and Fair Housing
Justice Center, Inc. (collectively, the “Plaintiffs”) commenced this action against the Defendants
the Village of Great Neck Plaza (the “Village”) and the Nassau County Industrial Development
Agency (the “Agency,” together with the Village, the “Original Defendants”). The complaint
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asserted federal and state housing discrimination claims against the Original Defendants, alleging
that they enacted and applied a local affordable housing ordinance that mandates unlawful
housing discrimination by excluding most middle-aged and non-white people from eligibility.
(See Compl. at ¶¶ 16–19.)
On July 21, 2014, the Agency filed an answer to the original complaint.
On July 21, 2014, the Village filed an answer to the original complaint.
On August 5, 2014, the parties appeared before United States Magistrate Judge A.
Kathleen Tomlinson for a conference during which Judge Tomlinson stayed formal discovery
pending the parties’ settlement discussions.
On July 2, 2015, the parties again appeared before Judge Tomlinson for a settlement
conference. At the conference, the Village and the Plaintiffs represented that after extensive
settlement negotiations, they had reach an agreement to the settle the action solely as to the
Village. However, no such agreement was reached between the Plaintiffs and the Agency.
Thus, the Plaintiffs’ claims against the Agency remained pending.
On September 9, 2015, the Agency and the Plaintiffs appeared before Judge Tomlinson
for a conference for an amended scheduling order so that discovery with respect to the Plaintiffs’
remaining claims against the Agency could proceed. At that conference, the Agency represented
that it intended to make a motion pursuant to Federal Rule of Civil Procedure (“Fed. R. Civ. P.”)
12(c) to dismiss the complaint on the pleadings and requested a complete stay of discovery
pending the outcome of its motion. Judge Tomlinson denied the Agency’s request for a
complete stay of discovery but held depositions in abeyance pending the outcome of the
Agency’s motion to dismiss.

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On September 11, 2015, Judge Tomlinson issued an amended scheduling order, which,
among other things, set a November 30, 2015 deadline for the parties to respond to requests for
the production of documents and interrogatories.
On October 1, 2015, Judge Tomlinson so-ordered the parties’ stipulated protocol for the
discovery of electronic stored information (“ESI”), pursuant to which the Agency agreed to run
nine search terms across the documents of four of its employees.
On October 14, 2015, the Court so-ordered a stipulation of dismissal with prejudice as to
the Village.
On October 15, 2015, the Agency filed a motion pursuant to Fed. R. Civ. P. 12(c) for a
judgment on the pleading dismissing the complaint. The Agency also filed a separate motion
pursuant to Fed. R. Civ. P. 26(c) to stay discovery pending the outcome its Rule 12(c) motion.
On October 23, 2015, the Court so-ordered a stipulation by the parties extending the
November 30, 2015 deadline to respond to the requests for the production of documents and
interrogatories until December 15, 2015.
On November 12, 2015, the Court so-ordered a stipulation by the parties pursuant to
which the Agency consented: (i) to the filing of an amended complaint pursuant to Fed. R. Civ.
P. 15(a)(2); and (ii) to withdraw its Rule 12(c) motion and its Rule 26(c) motion to stay
discovery without prejudice to renewing both motions after the filing of the amended complaint.
On November 6, 2015, the Plaintiffs filed an amended complaint against the Agency
principally alleging that the Agency “knowingly provided financial assistance for the Maestro, a
94-unit rental building with 19 affordable apartments located in the predominantly white
Village [] that applied discriminatory eligibility requirements enacted originally by the Village.”
(Am. Compl. at ¶ 2.) As a result, the Plaintiffs asserted that the Agency (i) committed
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intentional discrimination in violation of the Fair Housing Act, 42 U.S.C. § 3601, et seq. (the
“FHA”); (ii) aided and abetted housing discrimination in violation of the New York State Human
Rights Law, N.Y. Exec. Law § 290 (“NYSHRL”); and (iii) aided and abetted housing
discrimination in violation of the Nassau County Open Housing Law, Local Law No. 9-2006,
Title C-1, § 21-9.7 et seq. (“NCOHL”). (See id. at ¶¶ 76–91.)
The Plaintiffs seek damages in the form of declaratory and injunctive relief enjoining the
Agency from “providing financial assistance to housing projects in Nassau County that utilize
residency preferences and/or age requirements,” as well as monetary and punitive damages. (See
id. at ¶ 91.)
On November 20, 2015, the Agency filed a motion pursuant to Fed. R. Civ. P. 12(c) for a
judgment on the pleadings dismissing the amended complaint. On the same day, the Agency
filed a motion pursuant to Fed. R. P. 26(c) seeking a stay of discovery pending the outcome of
the Rule 12(c) motion.
The latter motion to stay discovery is now fully briefed. For the reasons set forth below,
the Court denies the Agency’s motion to stay discovery.
I. DISCUSSION
Pursuant to Fed. R. Civ. P. 26(c), a court, in its discretion, may stay discovery or issue a
protective order upon a showing of “good cause.” In this regard, district courts in this Circuit
have often found that a defendant’s motion to dismiss does not, by itself, provide “good cause”
for staying discovery. See Kanowitz v. Broadridge Fin. Sols., Inc., No. CV 13-649 (DRH)
(AKT), 2014 WL 1338370, at *5 (E.D.N.Y. Mar. 31, 2014) (“It is well-settled in this District
that litigants are not entitled to an automatic stay of discovery pending the determination of a
motion to dismiss.”); Bachayeva v. Americare Certified Special Servs., Inc., No. 12-CV-1466
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(RRM) (SMG), 2013 WL 4495672, at *4 (E.D.N.Y. Aug. 20, 2013) (‘“[I]t is well-settled that the
issuance of a stay of discovery pending the outcome of a motion to dismiss is ‘by no means
automatic.’”) (quoting Integrated Sys. & Power, Inc. v. Honeywell Int’l, Inc., 09–cv–5874, 2009
WL 2777076, at *1 (S.D.N.Y. Sept.1, 2009)); Thomas v. New York City Dep't of Educ., No. 09CV-5167 (SLT), 2010 WL 3709923, at *3 (E.D.N.Y. Sept. 14, 2010) (“The pendency of a
dispositive motion is not, without more, grounds for an automatic stay.”).
Instead, district courts have considered the following factors in determining whether a
stay of discovery is appropriate pending the outcome of a dispositive motion: “(1) whether the
defendant has made a strong showing that the plaintiff’s claim is unmeritorious; (2) the breadth
of discovery and the burden of responding to it; and (3) the risk of unfair prejudice to the party
opposing the stay.” Thomas v. New York City Dep't of Educ., No. 09-CV-5167 (SLT), 2010
WL 3709923, at *3 (E.D.N.Y. Sept. 14, 2010) (quoting Rivera v. Inc. Vill. of Farmingdale, No.
CV 06–2613(DRH) (ARL), 2007 WL 3047089, at *1 (E.D.N.Y. Oct. 17, 2007)); see also Alford
v. City of New York, No. CV 2011-0622 (ERK) (MDG), 2012 WL 947498, at *1 (E.D.N.Y.
Mar. 20, 2012) (same). However, these factors are not dispositive, and the court must ultimately
“look to the particular circumstances and posture of each case.” Alford, 2012 WL 947498, at *1
(citing Hachette Distribution, Inc. v. Hudson County News Co. Inc., 136 F.R.D. 356, 358
(E.D.N.Y. 1991)).
As to the first factor, the Agency claims it has made a strong showing that the Plaintiffs’
housing discrimination claims are “unmeritorious” because the Plaintiffs have failed to allege a
discriminatory motive on the part of the Agency, nor alleged that the Agency was aware of the
disparate impact that the Village’s housing ordinance would have on non-white applicants for
affordable housing. (The Agency’s Mem. of Law at 5–6.)
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In Texas Dep't of Hous. & Cmty. Affairs v. Inclusive Communities Project, Inc., 135 S.
Ct. 2507, 2513, 192 L. Ed. 2d 514 (2015), the United States Supreme Court recently held that
plaintiffs may assert housing discrimination claims under the FHA based on a disparate impact
theory. Under that theory, a plaintiff may prove an inference of discrimination by showing that a
challenged practice has had a ‘“disproportionately adverse effect on minorities’ and [is]
otherwise unjustified by a legitimate rationale.” Id. (quoting Ricci v. DeStefano, 557 U.S. 557,
577, 129 S.Ct. 2658, 174 L.Ed.2d 490 (2009)). However, the Court noted in dicta that “[a]
plaintiff who fails to allege facts at the pleading stage or produce statistical evidence
demonstrating a causal connection cannot make out a prima facie case of disparate impact.” Id.
at 2523–24. A causal connection can be established by, for example, pointing to a “defendant’s
policy or policies causing that disparity.” Id. at 2523.
Although the Agency did not have control over the alleged discriminatory ordinance
enacted by the Village, the amended complaint alleges that it provided tax incentives to the
Maestro to develop the Plaza Landmark and as a condition for those incentives, the Agency
insisted that the Maestro apply the alleged discriminatory ordinance to renting affordable
housing units at the Plaza Landmark. (See Am. Compl. at ¶ 49. To that end, the amended
complaint contains specific allegations that the alleged conditions causing a disparate impact on
minorities were made clear to the Agency by the Mayor of the Village and others at a June 13,
2011 hearing held by the Agency regarding the application for financial assistance by the Plaza
Landmark. (See id. at ¶¶ 44–47.) Despite allegedly being aware of the potential for disparate
impact, the Agency apparently insisted during negotiations that Maestro apply the age
requirements and residency preference system established by the alleged discriminatory
ordinance. (See id. at ¶ 56.)
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These allegations, if true, may show the requisite causation to survive the Agency’s Rule
12(c) motion to dismiss the amended complaint. Therefore, the Court finds, without deciding the
Agency’s Rule 12(c) motion, that the Agency has not made a strong showing that the Plaintiffs’
claims are without merit. Accordingly, the first factor weighs against granting a stay of
discovery.
As to the second factor —the breadth of discovery and the burden of the Agency in
responding to it —, Judge Tomlinson has already limited discovery pending the outcome of the
Agency’s motion to documents and interrogatories. Despite the fact that discovery has already
been limited, the Agency claims that it will be overly burdened by responding to the Plaintiffs’
discovery requests because it will have to expend $40,000 to produce the ESI documents
requested by the Plaintiffs. (The Agency Mem. of Law at 4.)
However, as the Plaintiffs correctly point out, the Agency stipulated to the scope of the
ESI discovery in the September 30, 2015 ESI protocol. If the Agency objected to the burden or
costs associated with the scope of ESI discovery, it could have negotiated for a narrower set of
search terms and custodians. However, the Agency did not do so, and the issuance of a stay of
discovery is not the appropriate mechanism to deal with the Agency’s belatedly expressed
concerns about the burden of ESI discovery.
Moreover, the Court notes that running nine search terms over the documents of four
custodians does not on its face seem overly broad, and the Agency provides no rationale for why
it should cost more than $40,000 to do so. Indeed, if the proposed search terms yield an
unwieldy number of results, there is no reason why the parties cannot confer to limit the scope of
those terms, or if they cannot agree, ask Judge Tomlinson to do so. Thus, the Court does not find
that the second factor weighs in favor of a stay.
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Finally, as to the third factor — the prejudice to the Plaintiffs in granting a stay —, the
Court notes that this case has been pending since May 29, 2014 and discovery has already been
stayed once for the purpose of settlement negotiations with the Village. Therefore, any further
delay of discovery in this matter may prejudice the Plaintiffs. Further, if the allegations in the
amended complaint are true, any further delay will also be against the public interest in
preventing the Agency from engaging in the encouragement and enforcement of discriminatory
housing practices. Therefore, the Court finds the third factor to weigh against granting a stay in
this case.
The Agency contends that the Plaintiffs have already obtained a consent decree from the
Village providing for the repeal of the challenged housing ordinance and promotion of additional
affordable housing units in the Village. (The Agency Mem. of Law at 4.) Thus, the Agency
contends that the Plaintiffs have already obtained the primary relief they sought in bringing this
action and therefore, would not be prejudiced by additional delays. (See id.)
The Court disagrees. The consent decree with the Village did not address the alleged
policies of the Agency, which the Plaintiffs seek to change. Nor did the Consent Decree with the
Village address the Plaintiffs’ claims against the Agency for monetary and punitive damages.
Thus, the Plaintiffs still have a substantial interest in seeing their case against the Agency move
forward. Accordingly, the Court finds that the Agency’s assertion that the Plaintiffs would not
be prejudiced by a further delay of discovery to be without merit.
In sum, the Court finds that the Agency has failed to establish that a complete stay of
discovery pending the outcome of its Rule 12(c) motion is warranted, and therefore, in its
discretion, denies the Agency’s motion for a stay. Document discovery should commence
according to the schedule established by Judge Tomlinson.
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SO ORDERED.
Dated: Central Islip, New York
December 1, 2015

_/s/ Arthur D. Spatt__
ARTHUR D. SPATT
United States District Judge

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