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Nnebe v. Daus

United States Court of Appeals, Second Circuit

July 19, 2019

Jonathan Nnebe, Khairul Amin, Eduardo Avenaut, New York Taxi Workers Alliance, individually and on behalf of all others similarly situated, Plaintiffs - Appellants - Cross-Appellees,
v.
Matthew Daus, Joseph Eckstein, Elizabeth Bonina, The New York City Taxi and Limousine Commission, The City of New York, Charles Fraser, Defendants - Appellees - Cross-Appellants, Alexander Karmansky, individually and on behalf of all others similarly situated, Plaintiff, Charles Frazier, Defendant. Anthony Stallworth, Parichay Barman, Noor Tani, The New York Taxi Workers Alliance, individually and on behalf of all others similarly situated, Plaintiffs - Appellants,
v.
Meera Joshi, Chris Wilson, Stas Skarbo, The City of New York, Defendants - Appellees.

          Argued: January 14, 2019

         The Nnebe plaintiffs are taxi drivers who instituted this action under 42 U.S.C. § 1983, complaining that their constitutional rights were violated when their licenses were suspended following their arrests and they were not given meaningful post-suspension hearings to consider whether their licenses should be reinstated. They appeal following a bench trial in the United States District Court for the Southern District of New York (Richard J. Sullivan, Judge), after which the court held that the hearings provided by defendants were sufficient. Because the drivers' property interest in their licenses is substantial, the risk of erroneous deprivation is unacceptably high, and defendants could institute a more meaningful process at minimal financial and administrative cost, we conclude that the hearings did not afford plaintiffs adequate process. We therefore AFFIRM in part and REVERSE in part the judgment of the district court and REMAND for further proceedings.

         The Stallworth plaintiffs are also taxi drivers who instituted a similar action challenging the same regulatory regime. The district court dismissed their complaint for failure to state a claim in reliance on its Nnebe ruling. Because we find that that ruling was incorrect, we AFFIRM in part and REVERSE in part the judgment of the district court and REMAND for further proceedings.

          Daniel L. Ackman, Law Office of Daniel L. Ackman, New York, New York, David T. Goldberg, Donahue & Goldberg, LLP, New York, New York, for Plaintiffs - Appellants - Cross-Appellees in Nnebe, and Daniel L. Ackman, Law Office Of Daniel L. Ackman, New York, New York for Plaintiffs -Appellants in Stallworth.

          Claude S. Platton, Assistant Corporation Counsel (Richard Dearing, Susan Paulson, on the brief), for Zachary W. Carter, Corporation Counsel, New York, New York, for Defendants -Appellees - Cross-Appellants in Nnebe, and Zachary W. Carter, Corporation Counsel, Claude S. Patton, Susan Paulson, and Scott Shorr, New York, New York, for Defendants - Appellees in Stallworth.

          Runa Rajagopal, The Bronx Defenders, Bronx, New York, for amici curiae The Bronx Defenders, Community Service Society of New York, Legal Action Center, Neighborhood Defender Service of Harlem, Youth Represent, Urban Justice Center Mental Health Project, Brooklyn Defender Services, Legal Aid Society, and LatinoJustice PRLDEF.

          Before: Katzmann, Chief Judge, and Hall and Lynch, Circuit Judges.

          Gerard E. Lynch, Circuit Judge.

         The Taxi and Limousine Commission of New York City (the "TLC") has the authority to issue, revoke, and suspend taxi drivers' licenses. These tandem cases require us to examine the TLC's suspension procedures under the Due Process Clause to determine whether the TLC provides meaningful hearings to drivers whose licenses have been suspended pending the outcome of criminal proceedings. We conclude that it does not.

         We first determine that evidence of a driver's ongoing danger to health and public safety is relevant under the statutory and regulatory scheme. We then conclude that, in light of the significant private interest at stake, the unacceptably high risk of erroneous deprivation, and the fact that additional safeguards can be provided with minimal burden on governmental resources, the TLC's refusal to consider such evidence violates due process.

         Accordingly, in Nnebe we AFFIRM in part and REVERSE in part the judgment of the district court, we AFFIRM in part and REVERSE in part the judgment in Stallworth, and we REMAND both cases to the district court for further proceedings.

         BACKGROUND

         This appeal concerns what happens when taxi drivers are arrested on criminal charges and their licenses are summarily suspended. Though arrested drivers are entitled under the relevant regulation to a post-suspension hearing, the plaintiffs contend that the hearings the TLC provides are meaningless, and that no driver has ever had his or her license reinstated following such a hearing. They bring claims that sound in procedural due process, arguing that the post-suspension hearings are not the "meaningful" hearings that due process requires. See Mathews v. Eldridge, 424 U.S. 319, 333 (1976) (citation omitted).

In the first of the tandem cases, Nnebe v. Daus, plaintiffs-appellants-cross-appellees are drivers whose licenses were suspended before 2007. They first brought this action under 42 U.S.C. § 1983 in 2006; it has since wound its way through a complex procedural web which culminated in a bench trial, from the results of which plaintiffs now appeal (No. 18-866-cv). The defendants in that case - the TLC, the City of New York, and various employees of those entities - cross-appeal the single issue on which the district court found in plaintiffs' favor: that the notice given to suspended drivers prior to December 2006 was constitutionally infirm (No. 18-1254-cv).

         In the second case, Stallworth v. Joshi, the plaintiffs-appellants are drivers suspended in 2017 after being arrested for leaving the scene of an accident. Defendants - the City of New York, and various City and TLC employees - moved to dismiss the case for failure to state a claim in light of the district court's rulings in Nnebe. The district court granted the motion; plaintiffs appeal (No. 18-490-cv).

         I. The TLC Regulatory Regime

         The New York City Charter grants broad authority to the TLC to promulgate and implement a regulatory program for the taxi industry. See N.Y.C. Charter § 2303(b)(5) (granting the TLC, inter alia, the power to issue, revoke, and suspend licenses). New York City Administrative Code § 19-512.1(a) (the "Ordinance") governs the revocation of taxicab licenses and reads as follows: "The commission . . . may, for good cause shown relating to a direct and substantial threat to the public health or safety and prior to giving notice and an opportunity for a hearing, suspend a taxicab . . . license . . . ." The Ordinance further requires notice to be given within five calendar days of any such suspension, and "an opportunity to request a hearing . . . within ten calendar days" of such notification. Id. In passing the Ordinance, the City Council noted "the strong need for aggressive regulation of the taxicab . . . industry and those directly responsible for the safety of the riding public" but found that certain TLC rules modifying disciplinary measures against drivers were overly "onerous." Id. n.1. The Council determined that the new ordinance, with its requirements of good cause related to a direct and substantial threat to public safety and of a prompt hearing process, "establishes a superior balancing of the concern for safe and high quality service with the need for fair treatment of an industry important to New York City." Id.

         Under this authority, the TLC has promulgated a number of regulations over the years dealing with arrest-related license suspensions and revocations. In 1999, the first version of the Rule, 35 R.C.N.Y. § 8-16(a) (1999), allowed the TLC Chairperson to order a summary suspension of a license, pending revocation proceedings, if he or she "finds that emergency action is required to insure public health, safety or welfare." The 1999 Rule further required notification of the summary suspension within five days, and an opportunity to request a prompt post-deprivation hearing before an administrative law judge ("ALJ") "who shall consider relevant evidence and testimony" under oath. Id. §8-16(c), (d). The ALJ was then required to issue a written recommendation to the TLC Chair, who could "accept, reject or modify the recommendation." Id. §8-16(e).

         In 2006, the Rule was amended; notably, the amended Rule specified that the TLC Chair could summarily suspend a license "based upon an arrest on criminal charges that the Chairperson determines is relevant to the licensee's qualifications for continued licensure." R.C.N.Y. § 8-16 (c) (2006). It then laid out the issue to be determined at the hearing: "whether the charges underlying the licensee's arrest, if true, demonstrate that the licensee's continued licensure during the pendency of the criminal charges would pose a threat to the health or safety of the public." Id. The TLC Chair retained the authority to accept, reject, or modify the finding of the ALJ. Id. §8-16(f).

         The most recent version of the Rule, as amended in 2014, provides as follows: "The Chairperson can summarily suspend a License based upon an arrest or citation if the Chairperson believes that the charges, if true, would demonstrate that continued licensure would constitute a direct and substantial threat to public health or safety." R.C.N.Y. § 68-15(d)(1). The Rule then proceeds to state that all felonies and certain enumerated misdemeanors will trigger a summary suspension. Id. This latest version of the Rule provides for a hearing at which the issue to be determined is "whether the charges underlying the Licensee's arrest, if true, demonstrate that the continuation of the License while awaiting a decision on the criminal charges would pose a direct and substantial threat to public health or safety." Id. § 68-15(d)(3).[1]

         II. Summary Suspension Process[2]

         While the text of the Rule has gone through several iterations, in practice the summary suspension process has been essentially the same since its adoption. As the district court pointed out, "[e]ven the most significant change to the Rule - the addition of the substantive standard in 2006 - merely reflected and restated pre-existing practice." J. App'x 65.[3]

         A. The Initial Suspension Process

         When a licensed taxi driver is arrested, the New York Division of Criminal Justice Services ("DCJS") sends the TLC an arrest notification. A TLC employee then confirms that the arrested person is in fact a licensed TLC driver and checks the charged offense against a list of offenses that the TLC considers sufficiently serious to warrant suspension.[4] The listed offenses include all felonies, and misdemeanors involving violence, driving, or sexual misconduct.[5]

         The TLC then notifies the driver in a letter that it has learned of his or her arrest, that the driver's license has been suspended, and that the driver can schedule a hearing to contest the suspension. The driver is not informed of any standard that will be applied at the hearing, but the letter does direct the driver to the version of the Rule in force at time of the letter's issuance. The letter also makes clear that the TLC may lift the suspension if the charges are resolved in the driver's favor, and that the driver should inform the TLC of any developments in the criminal case.

         Approximately nine out of ten suspended drivers initially request a hearing. Seventy-five percent of suspended drivers eventually have their suspensions lifted by virtue of a favorable disposition of their cases - such as the charges against them being dismissed, reduced to an offense that is not on the list, or otherwise resolved in their favor. A driver can notify the TLC of a change in the status of his or her criminal case at any time, including after the hearing and review process has taken place. If the criminal case is resolved without a conviction, the TLC does not inquire into the reasons for the favorable disposition, but automatically lifts the suspension.

         B. The Summary Suspension Review Process

         After a driver requests a hearing, the TLC notifies the driver by letter of the time, date, and location of the hearing, and informs the driver that he or she can present evidence and call witnesses. The letter informs the driver that "the purpose of th[e] hearing will be to determine whether your TLC license should remain suspended pending the final disposition of your criminal case." J. App'x 67.

         The review process itself consists of two parts: the first is a hearing before an ALJ at which the driver and a TLC attorney appear and present evidence; the second is a review of the ALJ's recommendation by the TLC Chair. Two different administrative bodies have presided over the summary suspension hearings. While there were some differences in procedure, under neither regime has the TLC Chair ever recommended reinstating a driver's license. We consider each in turn.

         1. Hearings before TLC ALJs

         Prior to November 2007, the ALJs presiding at summary suspension hearings were TLC employees. The TLC ALJs were instructed not to consider any specific facts and circumstances about either the drivers or the individual crimes with which they were charged. Rather, they were directed to address only three issues: (1) whether the suspended driver had in fact been charged with a crime; (2) whether the charge was still pending; and (3) whether the crime with which the driver was charged had a "nexus" to public health or safety. J. App'x 67. The first two were factual questions, [6] but the nexus question "was a 'philosophical' question and was decided based on argument, not facts." Id. However, the ALJs did not direct drivers to the "philosophical" nexus standard, and "most, if not all, suspended drivers did not understand what the standard was." J. App'x 68. Instead, the ALJs "encouraged drivers to argue anything they wanted - including that they were not a threat to health or public safety or that they were innocent - so that those arguments could be included in the record." Id. Although the drivers were allowed to present evidence and call witnesses on these subjects, the TLC ALJs did not consider drivers' particularized arguments that their licensure did not pose a threat to the public safety.

         The hearings under the TLC ALJs "resulted in a nearly unbroken record of recommendations that the suspension be continued." J. App'x 68. In only three cases out of hundreds of hearings was a contrary recommendation made. A single ALJ, Eric Gottlieb, was responsible for all three. He was promptly reprimanded by his supervisor, and subsequently took care not to make another such recommendation for fear that he would be transferred to a less desirable work location. See Nnebe v. Daus, 644 F.3d 147, 152S53 (2d Cir. 2011) ("Nnebe II"). Gottlieb testified that, after being admonished, he recommended continued suspension in all cases. As Gottlieb stated, "[s]o long as the person before me was, in fact, arrested, he would remain on suspension, absolutely." J. App'x 306.

         2. Hearings before OATH ALJs

         Starting in November 2007, the hearings were presided over by ALJs employed by the City's Office of Administrative Trials and Hearings ("OATH"). The process under the OATH ALJs was largely the same as before the TLC ALJs, but the standard applied was different. At an OATH hearing, the ALJs were directed to consider "whether the particular suspended driver is, in fact, a direct and substantial threat to public health or safety." J. App'x 68 (emphases added). Under this regime, an ALJ was more likely to recommend lifting a driver's suspension, though the absolute number of such recommendations was still low.[7]

         3. TLC Chairperson Review

         Under both regimes, the TLC Chairperson makes the ultimate decision about whether to lift a summary suspension. After the hearing, the TLC sends a copy of the ALJ's recommendation to the driver, and notifies the driver that he or she may submit a written response to the recommendation. The written response, however, may not incorporate any evidence outside of the hearing record, and the notice does not inform the driver of the standard the Chair will apply.

         Throughout the period at issue, regardless of the affiliation of the ALJ, the Chair, like the TLC ALJs, considered only: (1) whether a suspended driver has in fact been charged with a crime; (2) whether that charge is still pending; and (3) whether there is a nexus between the charged crime, considered in the abstract, and public health and safety. The Chair can consider evidence relating to the first two inquiries, including the criminal complaint or other charging documents, but the Chair's determination as to whether there is a "nexus" is a "'common sense' determination 'based on the nature of the pending charges.'" J. App'x 70 (citation omitted). The Chair does not consider the specific factual allegations in the complaint, nor does he or she consider any evidence that the driver is not guilty of the charges, or any other evidence that a particular driver does not pose a direct and substantial threat to public safety based on his or her individual characteristics or history.[8] Under neither hearing regime has the TLC Chair ever lifted a suspension.

         III. Procedural History

         A. Nnebe

         The Nnebe plaintiffs - Jonathan Nnebe, Eduardo Avenaut, and Khairul Amin, and the New York Taxi Workers Alliance[9] - filed suit against officials of the TLC and employees of the City of New York in June 2006, challenging the TLC's summary suspension procedures under the Due Process Clause of the Fourteenth Amendment. They sought certification of a class action, declaratory and injunctive relief, compensatory and punitive damages, and attorney's fees. Each of the named plaintiffs was a driver whose license had been suspended after an arrest for assault in the third degree and was restored several months later after the charges against him were either dismissed or adjourned in contemplation of dismissal.[10]

         1. Summary Judgment Motion

         In 2009, the district court granted summary judgment to the defendants. Nnebe v. Daus, 665 F.Supp.2d 311 (S.D.N.Y. 2009) ("Nnebe I"). The district court considered both the lack of a pre-deprivation hearing and the meaningfulness of the post-deprivation hearing under the familiar Mathews framework, first finding no constitutional deprivation in the lack of a pre-deprivation hearing despite the "undoubtedly significant" private interest at stake, noting that "the deprivation of a protected interest is mitigated by the availability of prompt post-deprivation review." Nnebe I, 665 F.Supp.2d at 324.

         The court also found that the post-deprivation hearings did not deprive the plaintiffs of procedural due process, basing its conclusion primarily on its concern that a "full adversarial hearing" as to plaintiffs' guilt or innocence "would be unworkable," and "would present the significant possibility of interference with the criminal investigation and proceedings." Id. at 328. The court also concluded that "additional safeguards . . . would present a significant financial and administrative burden on the TLC." Id.

         The court then held that the plaintiffs' substantive due process claims lacked merit, concluding "that [d]efendants' actions were not so outrageously arbitrary as to rise to the level of a substantive due process violation."[11] Id. at 331 (internal quotation marks omitted). Finally, the court held that there was no merit to plaintiffs' claims that the summary suspensions were "unconstitutional because drivers lack notice that they will be suspended after they are arrested for specified crimes."[12] Id. at 332.

         2. 2011 Appeal

         The Nnebe plaintiffs appealed to this court. We affirmed in part, agreeing that procedural due process did not require a pre-deprivation hearing, and vacated and remanded in part, holding that we could not "determine whether the post-deprivation hearing affords due process because we find that the record on summary judgment does not support the district court's finding (and the City's claim) that the hearing enables a driver to make a showing that 'the charges, even if true, do not demonstrate that the licensee's continued licensure would pose a threat to public health or safety.'" Nnebe II, 644 F.3d at 150 (quoting Nnebe I, 665 F.Supp.2d at 318) (internal quotation marks omitted).

         At oral argument, the City took the position that arrest for one of the enumerated offenses was not per se conclusive that "the licensee's continued licensure would pose a threat to public health or safety," but rather that drivers were given a "real opportunity to show that they do not pose a risk to public safety, arrests notwithstanding," by presenting evidence relevant to that determination. Nnebe II, 664 F.3d at 161. We were troubled, however, by the record's failure to clarify "what it is a driver may in fact attempt to show" to prove that "the regulatory standard was not met - [that] the charges, even if true, did not demonstrate that continued licensure would pose a threat to public safety." Id. at 160. While we noted that the regulatory standard that the City purported to apply might fall "within the range of adequate due process protections," we were nevertheless concerned that the asserted standard was "an oft-quoted nullity that in no way resembles a part of the standard ALJs must apply" as there was "little evidence that an ALJ is allowed actually to apply this standard, . . . [but] considerable evidence supporting the appellants' view that they may not." Id. at 160S61.

         Furthermore, we noted that the district court had "assumed that the only alternative to a hearing on identity and charge would be a hearing at which the TLC would be required to prove that each driver engaged in the charged conduct." Id. at 163. While we agreed with the district court that a host of problems could ensue if the City held "a hearing that functions as a preview of the criminal case" and thus that such a hearing was not required by due process, id. at 160, we noted that there might be other inquiries that could be less burdensome to the City and that might be required, given the significant interests of the plaintiffs, id. at 162S63. We posited, for example, that "even a hearing at which the ALJ is permitted to examine the factual allegations underlying the arrest, without making a determination of likely guilt or innocence, would provide to drivers considerably more opportunity to be heard than the current ...


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