Meegan et al v. Brown et al

Filing 25

DECISION AND ORDER GRANTING Bryon Brown and the City of Buffalo's 13 Motion to Dismiss; GRANTING Nils Olsen and the Buffalo Fiscal Stability Authority's 17 Motion to Dismiss; DISMISSING sua sponte the claims against Andrew Cuomo and New York State; DIRECTING the Clerk of the Court to close this case. Signed by William M. Skretny, Chief Judge U.S.D.C. on 5/20/2012. (MEAL)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NEW YORK
ROBERT P. MEEGAN, JR., individually and as
President of the Buffalo Police Benevolent
Association, and the BUFFALO POLICE
BENEVOLENT ASSOCIATION,
Plaintiffs,
v.

DECISION AND ORDER
11-CV-621S

BRYON W. BROWN, as Mayor of the City of
Buffalo, CITY OF BUFFALO, BUFFALO FISCAL
STABILITY AUTHORITY, NILS OLSEN, as
Chairman of the Buffalo Fiscal Stability Authority,
ANDREW M. CUOMO, as Governor of the State of
New York, STATE OF NEW YORK,
Defendants.
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.1 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

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The Act itself, as opposed to the post-repeal interpretation of the Act, has also been challenged
in this Court as a violation of these clauses. The Act was upheld. Buffalo Teachers Fed’n v. Tobe, 446 F.
Supp. 2d 134 (W .D.N.Y. 2005) aff’d Buffalo Teachers Fed’n v. Tobe, 464 F.3d 362 (2d Cir. 2006) cert.
denied, 550 U.S. 918,127 S. Ct. 2133, 167 L. Ed. 2d 864 (2007).

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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);
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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 (4) involved claims raised in this action
that were, or could have been, raised in those actions.
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9.

In Meegan I, the Police Benevolence Association (“PBA”) commenced

proceedings in state court on May 27, 2004 against the BFSA challenging the Wage
Freeze as, inter alia, unconstitutional. (Pl.’s Pet. ¶ 60-67, attached as “Ex. B” to Buzzard
Decl.; Docket No. 17-3.) After receiving a favorable outcome in the trial court, the Appellate
Division, 4th Department, reversed and dismissed the PBA’s petition on the merits.
Motions for leave to appeal were denied.
10.

In Meegan II, after the BFSA lifted the Wage Freeze in July 2007 and

determined that affected employees' wages or salaries would not include increases that
would have accrued during the Wage Freeze period, the PBA commenced an article 78
proceeding challenging this interpretation of the Act. The PBA received favorable outcomes
at the trial court and intermediate appellate court, but the Court of Appeals reversed the
Fourth Department and held that the Act “plainly permits the BFSA to suspend all salary
and wage increases, including any ‘step up’ and ‘increments’.” Meegan II, 16 N.Y.3d at
402.
11.

It is equally plain that Meegan and the PBA seek relief from the “same

transaction or series of transactions” as in their state-court proceedings. In each
proceeding, here and in the state courts, the PBA’s complaint arises out of the same set
of facts (the BFSA adopting a Wage Freeze, subsequently repealing it, and interpreting it
to mean that affected employees could not recover lost step-increases) and they concern
causes of action (constitutional violations) that could have been, and were, raised in either
proceeding. See Schulz v. Williams, 44 F.3d 48, 54 (2d Cir. 1994) (constitutional claims
can be adjudicated in the courts of New York). Such a situation presents a textbook
example for the application of res judicata. See Ferris v. Cuevas, 118 F.3d 122, 126 (2d.
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Cir. 1997) (“Once a claim is brought to a final conclusion, all other claims arising out of the
same transaction or series of transactions are barred, even if based upon different theories
or if seeking a different remedy”) (internal citations, quotation marks and modifications
omitted).
12.

Indeed, the PBA offers scant, if any, response to this argument – neither the

phrase “res judicata” nor its equivalent even appears in their responding affidavit. Although
there are very limited exceptions to this doctrine, Plaintiffs do not argue that those
exceptions should apply here. Nor do they argue that they were prevented from raising
these issues in the state court proceedings, likely because, in fact, they did. In its brief
submitted to the Court of Appeals, the PBA asserted that the BFSA’s interpretation of the
Act was a violation of the Contracts Clause. (PBA’s Ct. of App. Br. at 33-35, attached as
“Ex. H” to Buzzard Decl.; Docket No. 17-5.) Further, Plaintiffs’ claim here would be barred
even if they did not raise this point in their Court of Appeals brief because the focus is on
the “transactions or series of transactions” at issue, not the remedy or theories of liability.
See Ferris, 118 F.3d at 126.
13.

The Plaintiffs appear to suggest that res judicata is inapplicable because the

injury from which they now seek relief arose as a direct result of the New York Court of
Appeals’ decision. Plaintiffs state in their affidavit, “[T]he constitutionality of the [Act] did not
come into issue, as to the lifting of the wage freeze, until the New York State Court of
Appeals interpreted the statute contrary to the lower courts[] . . . .” (Schwan Aff., ¶ 36;
Docket No. 20.) This Court also notes that the Court of Appeals did not specifically address
any constitutional issues.
Although Plaintiffs only hint that they take umbrage with this aspect of the decision,
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to the extent that they seek to argue that their injury was caused by the state court or their
constitutional rights were not given due consideration, this Court lacks jurisdiction to hear
such a claim and Plaintiffs must appeal to the United States Supreme Court. See Howlett
v. Rose, 496 U.S. 356, 366 110 S. Ct. 2430, 110 L. Ed. 2d 332 (1990); Martin v. Hunter's
Lessee, 1 Wheat. 304, 4 L. Ed. 97 (1816); see also Exxon Mobil Corp. v. Saudi Basic
Indus. Corp., 544 U.S. 280, 284, 291, 125 S. Ct. 1517, 161 L. Ed. 2d 454 (2005)
(Rooker-Feldman doctrine bars all federal courts, except the Supreme Court, from hearing
"cases brought by state-court losers complaining of injuries caused by state-court
judgments rendered before the district court proceedings commenced and inviting district
court review and rejection of those judgments”). Further, any suggestion that the Court of
Appeals’ interpretation of the Act rendered it unconstitutional misunderstands basic
premises of law dating to Marbury v. Madison, 5 U.S. (1 Cranch) 137 (1803). When a court
rules that a statute is unconstitutional, the court’s ruling does not render it so, but simply
recognizes that the statute was unconstitutional when it was adopted by the legislative and
executive branches. These suggestions, therefore, do not save Plaintiffs’ claims.
14.

What is more, Plaintiffs’ claims fail for at least two additional reasons. First,

they are time-barred. A 42 U.S.C. § 1983 action accrues when the plaintiff knew or had
reason to know of the injury that forms the basis of his action. See Patterson v. City of
Oneida, 375 F.3d 206, 225 (2004). Assuming, without deciding, that this action should be
constrained by § 1983's three-year statute of limitations (and not a four-month limitation
period as would be applicable to a New York State Article 78 proceeding), Plaintiffs claims
fall outside this window. See Romer v. Leary, 425 F.2d 186, 188, (2d Cir. 1970); see also
Shomo v. City of New York, 579 F.3d 176, 181 (2d Cir. 2009) (“The applicable statute of
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limitations for a § 1983 action arising in New York State is three years.”). The Act was
initially adopted in 2003 and the Wage Freeze was implemented in 2004. Thus, if the
limitations period were to run from either of those dates, Plaintiffs’ action would surely be
time-barred. But, even assuming a later start date, Plaintiffs’ claims would still fail. Plaintiffs
must have known about the BFSA’s unfavorable interpretation of the Act – the
interpretation about which they know complain – at the latest, on October 31, 2007
because they raised this concern in oral argument with Justice Michalek of the New York
State Supreme Court. (See Oral Arg. Tr., 8:5-21, attached to Van Vessum Aff. as “Ex. D”;
Docket No. 13-2.) Having filed their claim in July of 2011, their action would be time-barred
even if the clock began to tick on October 31, 2007.2
15.

Second, this Court has already determined that the BFSA’s interpretation of

the Act did not violate the Contracts Clause as applied to the Buffalo Teachers Federation.
See Buffalo Teachers Fed’n v. Tobe, --- F. Supp. 2d ----, No. 04–CV–457S, 2012 WL
444043, at *6-*7 (W.D.N.Y. Feb. 10, 2012) (Tobe III); see also Buffalo Teachers Fed’n v.
Tobe, 446 F. Supp. 2d 134 (W.D.N.Y. 2005) (Tobe I) aff’d Buffalo Teachers Fed’n v. Tobe,
464 F.3d 362 (2d Cir. 2006) (Tobe II) cert. denied, 550 U.S. 918,127 S. Ct. 2133, 167 L.
Ed. 2d 864 (2007). Although the Buffalo Teachers Federation, the Plaintiffs in Tobe III,
were operating under the strict Fed. R. Civ. P. 60(b) standard, the reasoning employed in
that case, which concerned nearly the same set of circumstances and allegations, applies
equally here. In short, this Court found, inter alia, that all the facts on which this Court and
the Second Circuit initially relied in deciding Tobe I and Tobe II remained unchanged by

2

Plaintiffs offer no response to this argum ent in their opposing affidavits.

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the BFSA’s post-repeal interpretation of the Act, and, “consequently, . . . this Court's
ultimate conclusion” also remained unchanged: the Act did not violate the Contracts
Clause. See Tobe III at *6.
16.

A Takings Clause violation was not before this Court in Tobe III. But the

Second Circuit upheld the Act as non-violative of the Takings Clause in Tobe II and this
Court finds that discussion, like the Contracts Clause analysis, equally applicable here.
See 464 F.3d at 375-76.
17.

For the foregoing reasons, Defendants’ motions are granted.

18.

Finally, because Plaintiffs’ claims are barred, this Court will, sua sponte,

dismiss them as against the non-moving defendants. See, e.g., Salahuddin v. Jones, 992
F.2d 447, 449 (2d Cir. 1993) (per curiam) (sua sponte dismissal not only appropriate on
res judicata grounds, but “virtually mandatory”).

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***
IT HEREBY IS ORDERED, that Bryon Brown and the City of Buffalo’s Motion to
Dismiss (Docket No. 13) is GRANTED.
FURTHER, that Nils Olsen and the Buffalo Fiscal Stability Authority’s Motion to
Dismiss (Docket No. 17) is GRANTED.
FURTHER, that claims against Andrew Cuomo and New York State are
DISMISSED, sua sponte.
FURTHER, the Clerk of the Court is directed to close this case.
SO ORDERED.

Dated: May 20, 2012
Buffalo, New York
/s/William M. Skretny
WILLIAM M. SKRETNY
Chief Judge
United States District Court

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