Town of Babylon, NY v. James

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF NEW YORK

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TOWN OF BABYLON, NY, et al.,

MEMORANDUM AND ORDER

Plaintiffs,

22-CV-1681(KAM)(AYS)

-against-

LETITIA JAMES, in her official capacity

as the Attorney General for the State

of New York,

Defendant.

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KIYO A. MATSUMOTO, United States District Judge:

Plaintiffs Town of Babylon, NY; Town of Brookhaven, NY; Town

of Hempstead, NY; Town of Islip, NY; Town of Oyster Bay, NY; Town

of North Hempstead, NY; Town of Huntington, NY; Town of Ramapo,

NY; and the Town of Smithtown, NY (collectively, the “Plaintiffs”)

commenced the instant action against Letitia James in her official

capacity as Attorney General for the State of New York

(“Defendant”), seeking declaratory relief pursuant to the

Declaratory Judgment Act, 28 U.S.C. § 2201 et seq. (ECF No. 1).

Plaintiffs allege that New York Mental Hygiene Law § 25.18(d) (the

“challenged statute”) violates their rights to substantive due

process, equal protection, and access to the courts under the U.S.

and New York Constitutions and violates the home-rule restrictions

under Article IX of the New York Constitution.

Presently before the Court is Defendant’s motion to dismiss

the Fourth Amended Complaint (“FAC”), pursuant to Fed. R. Civ. P.

12(b)(1) and Fed. R. Civ. P. 12(b)(6). (See ECF No. 48,

Defendant’s Notice of Motion to Dismiss.) For the reasons set

forth below, Defendant’s motion is GRANTED.

BACKGROUND

The Court accepts the allegations in the Plaintiffs’ Fourth

Amended Complaint as true for purposes of the Motion to Dismiss.

Carter v. HealthPort Technologies, LLC, 822 F.3d 47, 56-57 (2d

Cir. 2016).

I. Factual Background

Plaintiffs in this case are incorporated towns in New York

that had previously commenced actions against the producers and

distributors of opioid drugs. (ECF No. 45, FAC at ¶¶1-2.)

Plaintiffs brought their claims seeking “money damages for the

financial losses they had suffered as a consequence of the

producers’ and distributors’ wrongdoing.” (Id. at ¶4.)

Specifically, Plaintiffs allege that, as a result of the opioid

crisis in their communities, they were “forced to devote their

scare resources to [respond] to the crisis, which inevitably came

at the expense of other priorities, such as preparations for other

emergencies and replacements for aging fleets of EMS response

vehicles and ambulances.” (Id. at ¶3.)

Plaintiffs provide some background on the opioid epidemic in

their complaint, alleging that opioid producers and distributors

generated “billions of dollars in revenue” while creating a public

health catastrophe that resulted in “nearly two million Americans

[] either abusing opioids or dependent on them” by 2014. (Id. at

¶¶26-27.) This epidemic, the Plaintiffs allege, has had a

“devast[ating] effect on towns and villages throughout New York,

including the towns that are Plaintiffs in this action.” (Id. at

¶29.) Citing the Town of Brookhaven as an example, Plaintiffs

represent that the town’s contracted emergency medical services

provider, Brookhaven Ambulance Company, has had to “delay[]

replacement of first emergency response utility vehicles” and

ambulances as a result of the diversion of money to respond to the

opioid crisis. (Id. at ¶¶31-36.)

Plaintiffs in this case filed their state court complaint in

New York State Supreme Court for Suffolk County on December 10,

2019, naming “multiple defendants involved in the production and

distribution of opiate drugs” and “seeking to hold [those]

defendants responsible for the financial harm Plaintiffs had

suffered as a result of the opioid crisis.” (Id. at ¶37.)

Plaintiffs note that the State of New York, as well as Nassau and

Suffolk Counties, among other entities, also brought similar

claims “against the same producer and distributor defendants.”

(Id. at ¶39.) Subsequently, the State of New York entered into

settlement negotiations with “certain distributor defendants and

producer defendants,” and a bill (“Senate Bill 7194” of the 2021

Regular Session) was introduced in the New York Senate to

“facilitate the settlement discussions that were then underway.”

(Id. at ¶¶42-43.)

According to the Plaintiffs, Senate Bill 7194 “contemplated

the creation of an opioid settlement fund administered by the

State” and “also purported to extinguish some—but not all—of the

claims by State ‘subdivisions’ including ‘each county, city, town,

village, or special district in the state of New York.’” (Id. at

¶43.) Specifically, the bill retroactively “operated to

extinguish” claims that had been filed after June 30, 2019,

including those filed by Plaintiffs. (Id. at ¶¶44-46.) Senate

Bill 7194 was signed into effect on June 29, 2021 (including

Section 25.18(d) of the New York Mental Hygiene Law, in relevant

part). (Id. at ¶47; ECF No. 50, Declaration of Andrew Amer (“Amer

Decl.”), at ¶3.) Section 25.18(d) prohibited any “governmental

entity” from asserting “released claims against entities released

by the [Office of the Attorney General] in a statewide opioid

settlement agreement” on or after June 1, 2021, and extinguished

claims filed after June 30, 2019, and prior to June 1, 2021. (FAC

at ¶44, Amer Decl. at ¶3.)

Plaintiffs allege that the State of New York, along with

Nassau and Suffolk Counties, subsequently “entered into a

settlement with three distributor defendants” which included

“settlements in cash” for Nassau and Suffolk Counties. (FAC at

¶47.) Plaintiffs allege that Nassau and Suffolk Counties, having

filed their claims prior to June 30, 2019, were able to participate

directly in the settlement and “received settlements in cash, with

no restriction on their use of the funds they received.” (Id.)

Because Plaintiffs’ claims were filed after the June 30, 2019,

cutoff set in Section 25.18(d), Plaintiffs allege that they were

left “with no recovery from the producer and distributor defendants

for the financial harm they have suffered as a result of those

defendants’ misconduct.” (Id. at ¶48.) Plaintiffs allege that

the June 30, 2019, cutoff for the extinguishment of claims was

“arbitrary” and “advantaged Suffolk County and Nassau County . . .

at the expense of the towns and villages that stand on the front

line in the opioid crisis.” (Id. at ¶¶6-7.)

II. Procedural History

Plaintiffs commenced the instant case on March 25, 2022,

initially asserting claims arising under 42 U.S.C. § 1983 and the

New York State Constitution. (See ECF No. 1, Complaint, at ¶¶34-

43.) Plaintiffs subsequently filed a First Amended Complaint on

March 29, 2022, correcting a misnomer in the Defendant’s name in

the original complaint and adding a fourth cause of action based

on the 14th Amendment. (See generally ECF No. 9.) Plaintiffs

amended their complaint for a second time on April 6, 2022, adding

additional factual detail, among other things. (See generally ECF

No. 16, Second Amended Complaint (“SAC”).) Defendant consented to

the entry of the SAC, (see ECF No. 18), and requested a pre-motion

conference to discuss a planned motion to dismiss on April 7, 2022,

(see ECF No. 17), which the Court granted.

In response, Plaintiffs sought Defendant’s consent to further

amend their complaint, which Defendant granted, (ECF No. 20), and

subsequently filed a Third Amended Complaint (“TAC”) on April 12,

2022, (ECF No. 21, TAC). The TAC was a significant revision,

removing the Section 1983 claim and instead seeking declaratory

relief and a permanent injunction, albeit under similar legal

theories. (See generally TAC.) Defendant subsequently requested

a pre-motion conference regarding a motion to dismiss on April 18,

2022, (ECF No. 22), and Plaintiffs requested a pre-motion

conference to discuss filing an emergency motion for a temporary

restraining order on May 2, 2022, (ECF No. 24). The Court

discussed both planned motions during a May 3, 2022, hearing, and

ordered that briefing would proceed on the motion to dismiss first,

and subsequently the motion for injunctive relief would be

considered after adjudicating the motion to dismiss. (Minute Entry

dated May 3, 2022.)

After the motion to dismiss was fully briefed, on August 5,

2022, Defendant submitted a letter request for oral argument on

the Motion to Dismiss, which Plaintiffs joined. (ECF No. 37; ECF

No. 39.) The Court granted the request, and subsequently held

oral argument in the instant case on February 23, 2023. (Minute

Entry dated February 23, 2023.) Based on the parties’ filings and

the oral argument made, the Court granted the Defendant’s motion

to dismiss without prejudice, due to Plaintiffs’ lack of legal

capacity to bring the action. (Id.) The Court granted Plaintiffs

leave to file a Fourth Amended Complaint addressing the

deficiencies by March 9, 2023. (Id.)

Plaintiffs filed their Fourth Amended Complaint on March 9,

2023, (see generally FAC), and Defendant responded by requesting

to proceed with motion practice to dismiss the action, (ECF No.

46). The Court subsequently set a briefing schedule, and the

motion to dismiss was fully briefed on May 31, 2023. (See ECF No.

48, Defendant’s Notice of Motion; ECF No. 49, Defendant’s

Memorandum of Law in Support of its Motion to Dismiss (“Def’t

Mem.”); ECF No. 50, Amer Decl.; ECF No. 52, Plaintiffs’ Memorandum

of Law in Opposition (“Pl. Opp.”); ECF No. 54, Defendant’s Reply

Memorandum of Law in Further Support of its Motion to Dismiss

(“Def’t Reply”).)

LEGAL STANDARD

I. Motion to Dismiss under Rule 12(b)(1)

Federal courts have inherent power under Rule 12(b)(1) to

dismiss claims for which subject matter jurisdiction is lacking.

Morrison v. Nat'l Austl. Bank Ltd., 547 F.3d 167, 170 (2d Cir.

2008), aff'd, 561 U.S. 247 (2010). In considering a motion to

dismiss under Rule 12(b)(1), the “[C]ourt must take all facts

alleged in the complaint as true and draw all reasonable inferences

in favor of [the] plaintiff.” Id. (internal quotation marks and

citation omitted). The Court may also “consider evidence outside

the pleadings.” Id. (citing Makarova v. United States, 201 F.3d

110, 113 (2d Cir.2000)).

“An objection to standing is properly made on a Rule 12(b)(1)

motion.” Tasini v. N.Y. Times Co., 184 F. Supp. 2d 350, 354-55

(S.D.N.Y. 2002) (citing Steel Co. v. Citizens for a Better Env't,

523 U.S. 83, 88-89 (1998)). “[T]he question of standing is whether

the litigant is entitled to have the court decide the merits of

the dispute or of particular issues.” Warth v. Seldin, 422 U.S.

490, 498 (1975). To survive a Rule 12(b)(1) motion to dismiss,

there must be facts plausibly establishing that the plaintiff has

standing to sue. Carter v. HealthPort Technologies, LLC, 822 F.3d

47, 56-57 (2d Cir. 2016).

II. Motion to Dismiss under Rule 12(b)(6)

To survive a motion to dismiss under Rule 12(b)(6),

“a complaint must contain sufficient factual matter, accepted

as true, to ‘state a claim to relief that is plausible on its

face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell

Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “A claim has

facial plausibility when the plaintiff pleads factual content that

allows the court to draw the reasonable inference that the

defendant is liable for the misconduct alleged.” Id. Although

“detailed factual allegations” are not required, “[a] pleading

that offers labels or conclusions or a formulaic recitation of the

elements of a cause of action will not do.” Id. (internal

quotation marks and citation omitted).

DISCUSSION

“Where, as here, the defendant moves for dismissal under Rule

12(b)(1) . . . as well as on other grounds, the court should

consider the Rule 12(b)(1) challenge first.” U.S. ex rel.

Kreindler & Kreindler v. United Techs. Corp., 985 F.2d 1148, 1155-

56 (2d Cir. 1993) (internal quotation marks and citation omitted).

Accordingly, the Court first addresses Defendants’ Rule 12(b)(1)

arguments, followed by their Rule 12(b)(6) arguments.

I. The Capacity-to-Sue Rule

a. Legal Standard

“Legal capacity is governed by Federal Rule of Civil Procedure

17(b).” Centro De La Comunidad Hispana De Locust Valley v. Town

of Oyster Bay, 954 F. Supp. 2d 127, 136 (E.D.N.Y. 2013), aff'd,

868 F.3d 104 (2d Cir. 2017). As such, “[p]ursuant to Fed. R. Civ.

P. 17(b), the capacity of a governmental entity to sue or be sued

is a question of state law.” Orraca v. City of New York, 897 F.

Supp. 148, 152 (S.D.N.Y. 1995). “Capacity to sue is a threshold

matter allied with, but conceptually distinct from, the question

of standing.” LBBW Luxemburg S.A. v. Wells Fargo Sec., LLC, 744

F. App'x 710, 714 n.3 (2d Cir. 2018) (summary order) (quoting 59

Am. Jur. 2d Parties § 26). Although “[c]apacity, unlike standing,

is ordinarily not a jurisdictional issue . . . a party must

maintain its capacity to sue throughout litigation, and lack of

capacity is grounds for dismissal.” Sonterra Cap. Master Fund,

Ltd. v. Barclays Bank PLC, 403 F. Supp. 3d 257, 267 (S.D.N.Y. 2019)

(internal quotation marks and citations omitted).

New York follows the traditional capacity-to-sue rule, which

states that “municipalities and other local governmental corporate

entities and their officers lack capacity to mount constitutional

challenges to acts of the State and State legislation.” City of

New York v. State of New York, 655 N.E.2d 649, 651 (N.Y. 1995)

(hereafter “City of New York”). Such entities are “purely

creatures or agents of the State,” and so “cannot have the right

to contest the actions of their principal or creator affecting

them in their governmental capacity or as representatives of their

inhabitants.” Id. In other words, “political power conferred by

the Legislature confers no vested right as against the government

itself.” Id. (quoting Black River Regulating Dist. v. Adirondack

League Club, 121 N.E.2d 428, 433 (N.Y. 1954)). The New York

capacity-to-sue rule is also a “necessary outgrowth of separation

of powers doctrine: it expresses the extreme reluctance of courts

to intrude in the political relationships between the Legislature,

the State and its governmental subdivisions.” City of New York,

655 N.E.2d at 654.

“The New York Court of Appeals has recognized four exceptions

to this general rule: (1) where a public corporation has express

statutory authorization to bring suit; (2) where the legislation

adversely affects a public corporation's proprietary interest in

a specific fund of moneys; (3) where the statute impinges upon

‘Home Rule’ powers of a public corporation constitutionally

guaranteed under article IX of the New York State Constitution;

and (4) where the public corporation asserts that, if it is obliged

to comply with the statute, that very compliance will force the

corporation to violate a constitutional proscription.” In re World

Trade Ctr. Lower Manhattan Disaster Site Litig., 846 F.3d 58, 63–

64 (2d Cir. 2017) (citing City of New York, 655 N.E.2d at 652).

The New York Court of Appeals has emphasized “that the exceptions

we have recognized to date are narrow.” In re World Trade Ctr.

Lower Manhattan Disaster Site Litig., 89 N.E.3d 1227, 1234 (N.Y.

2017) (hereafter “Matter of WTC”). Specifically, the New York

Court of Appeals has explained that under the general rule, it had

“barred public entities from challenging a wide variety of state

actions, such as, e.g., the allocation of state funds amongst

various localities.” Id. (citing City of New York).

b. Analysis

Both Plaintiffs and Defendant agree that only two of the four

exceptions to the general rule barring constitutional challenges

by political subdivisions could potentially apply in the present

case. (Def’t Mem. at 13; Pl. Opp at 11.) The second exception,

the proprietary interest exception, may apply where a public entity

is “‘vested with an entitlement to a specific fund by a statute’

and the challenged statute adversely affects its interest in the

fund.” Matter of WTC, 89 N.E.3d at 1233 (quoting Town of Moreau

v. Saratoga County, 531 N.Y.S.2d 61, 62 (3d Dep’t 1988)). The

third exception, the home rule exception, may apply where a state

statute impinges on a municipality's home rule powers under the

State Constitution. Matter of WTC, 89 N.E.3d at 1233 (citing Town

of Black Brook v. State, 362 N.E.2d 579 (N.Y. 1977)). The Court

will consider the applicability of each exception in turn.

i. Proprietary Interest Exception

Defendants argue, and the Court agrees, that the proprietary

interest exception does not apply to the instant case. As noted

by the Second Circuit, “[t]wo cases serve as helpful guideposts in

assessing the applicability of the [proprietary interest]

exception.” In re World Trade Ctr. Lower Manhattan Disaster Site

Litig., 892 F.3d 108, 111 (2d Cir. 2018). The Second Circuit

summarized those two cases as follows:

In the first, Gulotta v. State, three New York counties

and their county executives brought an action

challenging “the system of State mandates,” which

consisted of “various laws which require[d] the

[c]ounties to make expenditures.” 645 N.Y.S.2d 41, 42

(2d Dep’t 1996). The New York Supreme Court ruled that

the plaintiffs had the capacity to sue, but the Appellate

Division disagreed. Id. The Appellate Division

recognized that “municipalities and other local

governmental corporate entities and their officers lack

the capacity to mount constitutional challenges” to

state legislation, and expressly held—despite the fact

that the laws at issue required county expenditures—that

the proprietary-interest exception did not apply. Id. at

42–43. In “stress[ing]” the narrowness of the exceptions

to the capacity-to-sue rule in Matter of World Trade

Center, the New York Court of Appeals cited that holding

as authoritative. 89 N.E.3d 1227, 1234.

The second case . . . is County of Rensselaer v. Regan,

607 N.E.2d 793 (N.Y. 1992). In 1981, the New York State

Legislature enacted the “‘special traffic options

program for driving while intoxicated’ (STOP–DWI)

whereby a participating county could receive fines and

forfeitures collected by courts within that county for

alcohol-related driving offenses.” Id. at 794. A decade

later, the Legislature passed another law that diverted

to the state a percentage of the drunk driving funds to

which participating counties were entitled. Id. The

plaintiff counties brought a constitutional challenge to

the new law, and the New York Court of Appeals held that

their challenge could be heard because, “STOP–DWI

legislation having been neither amended nor repealed,

the participating counties ha[d] a proprietary claim to

the fines and forfeitures” to which the later

legislation was directed. Id. at 795.

Id. at 111–12 (state reporter citations omitted).

Ignoring the requirements that the public entity be “vested

with an entitlement to a specific fund by statute,” Matter of WTC,

89 N.E.3d at 1233, Plaintiffs argue that their potential recovery

of damages from their opioid lawsuits is akin to the “potential

revenue generated by the STOP-DWI program” in County of Rensselaer,

(Pl. Opp. at 13). Continuing, Plaintiffs argue that “[b]oth here

and in County of Rensselaer, the State’s legislation sought to

capture prospective revenue to be garnered through litigation that

otherwise would have been kept by the political subdivisions.”

(Id.)

Defendant appropriately distinguishes the instant case from

County of Rensselaer, noting that “unlike in Rensselaer, there is

no statute granting Plaintiffs the right to receive any specific

funds; rather, Plaintiffs had only unadjudicated legal claims

asserted against opioid defendants that may or may not have

resulted in a monetary recovery.” (Def’t Reply at 3.) Continuing,

Defendant notes that “[a]lthough the specific amount of the funds

to be received by each county in any year in [County of] Rensselaer

was uncertain until such time as the fines and forfeitures were

collected, each participating county had a proprietary interest in

these ‘discrete funds’ specifically designated for its use by

statute.” (Id.)

The Court finds Defendant’s arguments persuasive. As noted

by the Appellate Division in a case cited by the Court of Appeals

approvingly in Matter of WTC, “[m]erely asserting a claim to a

particular sum of money does not, however, create the proprietary

interest needed for standing.” Town of Moreau v. Saratoga County,

531 N.Y.S.2d 61, 62 (3d Dep’t 1988). Rather, in previous cases

where the exception was utilized, the “public entity [was] vested

with an entitlement to a specific fund by a statute and the

challenged statute adversely affect[ed] its interest in the fund.”

Matter of WTC, 89 N.E.3d at 1233 (emphasis added) (internal

quotation marks and citation omitted). In particular, County of

Rensselaer involved an “allegedly unconstitutional law [that] was

aimed at specific funds to which the counties were otherwise

entitled.” In re World Trade Ctr. Lower Manhattan Disaster Site

Litig., 892 F.3d 108, 112 (2d Cir. 2018).

Plaintiffs do not cite any persuasive authority that suggests

they have a “vested” entitlement to a “specific fund” by statute,

based on their pre-existing lawsuits against opioid producers and

distributors, as required to satisfy the proprietary interest

exception. While there may be similarities between the instant

case and County of Rensselaer, there are also important

differences. Both cases involve the proceeds of litigation,

however, in the case of County of Rensselaer, the proceeds in

Rensselaer were to be placed into a specific fund, created by

statute, which would be available “for law enforcement and

education purposes in accordance with plans submitted to and

approved by the Commissioner of Motor Vehicles, who ha[ve] a

continuing duty to monitor each county's program.” County of

Rensselaer v. Regan, 607 N.E.2d 793, 794 (N.Y. 1992).

Specifically, the Special Traffic Options Program for Driving

While Intoxicated (“STOP-DWI”) legislation established the fund

and provided that “where a county establishes a [STOP-DWI program],

pursuant to this section, it shall receive fines and forfeitures

collected by any court, judge, magistrate, or other officers within

that county from violations of [Vehicle and Traffic Law statutes,

including operating a motor vehicle while under the influence of

alcohol or drugs] . . . the county shall deposit them in a separate

account entitled [STOP-DWI] and they shall be under the exclusive

care, custody, and control of the chief fiscal officer of each

county participating in this program.” Alcohol and Drug-Related

Provisions of Vehicle and Traffic Law-Recodification, 1988 N.Y.

Sess. Law Serv. 47.1

The STOP-DWI legislation which created the fund at issue in

County of Rensselaer did not create a cause of action which

political subdivisions could bring “in their proprietary

capacities to protect the same kinds of pecuniary interests that

a plaintiff has,” as Plaintiffs argue was the case with their

extinguished claims against opioid distributors and producers.

(Pl. Opp. at 14.) Rather, the STOP-DWI legislation designated

fines and forfeitures received from the prosecution of traffic

infractions into a specific fund exclusively for the use of each

participating county. County of Rensselaer, 607 N.E.2d at 794.

1 The Court cites to the 1988 version of the law which was in force at the time

of County of Rensselaer. 607 N.E.2d at 794.

The Court of Appeals found that the STOP-DWI legislation was

sufficient to grant the participating counties a “proprietary

claim to the fines and forfeitures at issue.” Id. at 795.

In the instant case, Plaintiffs’ extinguished claims in state

court were “based on the fact that the producer and distributor

defendants, through conduct that was negligent and that also

violated various statutory provisions, had caused Plaintiffs

tremendous financial harm.” (FAC at ¶38.) As such, there is a

clear difference between the challenged legislation in County of

Rensselaer, which affected the plaintiff political subdivision’s

proprietary rights to a statutorily created fund, and the law in

the instant case, which affected Plaintiffs’ rights to continue

lawsuits involving certain claims “against a manufacturer,

distributor, or dispenser of opioid products.” N.Y. Mental Hyg.

Law § 25.18(d). Though the challenged statute in the instant case

may affect the Plaintiffs’ “vested rights,” Plaintiffs do not show

that they are “vested with an entitlement to a specific fund by a

statute.” Matter of WTC, 89 N.E.3d at 1233. As such, Plaintiffs’

claims against the state are not subject to the proprietary

interest exception.2

2 Though there is a general presumption against statutory retroactivity in

situations involving vested rights, the Court also notes that the Supreme Court

has stated that “the potential unfairness of retroactive civil legislation is

not a sufficient reason for a court to fail to give a statute its intended

scope. Retroactivity provisions often serve entirely benign and legitimate

purposes, whether to respond to emergencies, to correct mistakes, to prevent

circumvention of a new statute in the interval immediately preceding its

ii. Home Rule Exception

Under the home rule exception, when “a local government's

claim is based on one of the protections of article IX [of the New

York State Constitution], the principle underlying the otherwise

general rule prohibiting it from questioning legislative action

affecting its powers is no longer applicable.” Town of Black Brook

v. State, 362 N.E.2d 579, 580–81 (N.Y. 1977). Specifically, the

exception applies in a situation “where a state statute impinges

on a municipality's home rule powers under the State Constitution.”

Matter of WTC, 89 N.E.3d at 1233. The New York Court of Appeals

summarized the protections of Article IX of the New York State

constitution as follows:

Article IX, § 2 of the State Constitution grants the

Legislature authority to enact a “general law” relating

to the property, affairs or government of local

governments (N.Y. Const, art. IX, § 2[b][2]). A general

law is defined as a “law which in terms and in effect

applies alike to all counties, all counties other than

those wholly included within a city, all cities, all

towns or all villages” (N.Y. Const., art IX, § 3[d][1]).

In contrast, a “special law” is defined as a “law which

in terms and in effect applies to one or more, but not

all, counties, counties other than those wholly included

within a city, cities, towns or villages” (N.Y. Const.,

art. IX, § 3[d][4]). Article IX further provides that a

special law relating to the property, affairs or

government of any local government may not be enacted

without a “home rule message” from the locality or the

localities affected by the law (N.Y. Const., art. IX, §

2[b][2]). A home rule message is a “request of two-

thirds of the total membership of [the local]

passage, or simply to give comprehensive effect to a new law Congress considers

salutary.” Landgraf v. USI Film Prod., 511 U.S. 244, 267–68 (1994). Further,

the Court notes that such a question may only be reached if a party has the

capacity and standing to challenge the retroactive statute in question.

legislative body or . . . [a] request of its chief

executive officer concurred in by a majority of such

membership” (id.).

Patrolmen's Benevolent Ass'n of City of New York Inc. v. City of

New York, 767 N.E.2d 116, 120 (N.Y. 2001) (hereafter “PBA II”).

The parties both interpret Section 25.18(d) of the Mental

Hygiene Law as a “special law” under Article IX of the New York

State Constitution. (Def’t Mem. at 14; Pl. Opp. at 14.) This

follows from the logic of PBA II, where a law with statewide

applicability had the “actual effect” of being a “restriction

targeted at [only] four localities,” and thus was classified as a

“special law.” PBA II, 767 N.E.2d at 121. Defendant argues,

however, that legislation which “‘was enacted in furtherance of

and bears a reasonable relationship to a substantial State-wide

concern’ is not subject to home-rule restrictions, even if the

legislation simultaneously relates to the property, affairs or

government of a local government.” (Def’t Mem. at 14 (citing

PBA II, 767 N.E.2d at 121).) Plaintiffs disagree that the

challenged statute was enacted in furtherance of a substantial

state-wide concern, arguing that because Nassau and Suffolk

Counties were allowed “to participate directly in the settlement

. . . the statute, as a matter of law, cannot be deemed to be

solely for the State’s benefit.” (Pl. Opp. at 14-15 (citing City

of New York v. Patrolmen's Benevolent Ass'n of City of New York,

Inc., 676 N.E.2d 847, 848 (N.Y. 1996) (hereafter “PBA I”)).)

The case cited by Plaintiffs, PBA I, concerned a law which

sought to achieve “State-wide uniformity with respect to impasse

procedures available to police department members under Civil

Service Law § 209 . . . [but] isolated New York [City] for different

treatment and thus failed in its goal to achieve uniformity in the

[Civil Service law’s] treatment of police.” PBA II, 767 N.E.2d at

122 (describing the law at issue in PBA I). Although that version

of the law was found not to be “enacted in compliance with the

home rule requirements of the State Constitution,” a subsequent

amended version of the law “correct[ed] the infirmities of its

predecessor statute by not targeting one locality and uniformly

applying to all local governments, by expressly stating the

substantial State concern sought to be addressed and by ensuring

that the legislation is rationally related to that concern.” Id.

Defendant argues, and the Court agrees, that the challenged

bipartisan statute in the instant case bears “a reasonable

relationship to a substantial State-wide concern,” to address the

devastating impact of the opioid crisis in New York by establishing

an opioid settlement fund. (Def’t Mem. at 15 (citing PBA II, 767

N.E.2d at 121).) In determining whether a substantial State

concern is present, courts “rel[y] upon the stated purpose and

legislative history of the act in question.” PBA I, 676 N.E.2d at

852. The Court of Appeals has further noted that the “wisdom of

that determination is not for court review,” although the

“fulfillment of th[e] legislative purpose” should be “rationally

served” by the legislation in question. PBA II, 767 N.E.2d at 122

(internal quotation marks and citation omitted).

As noted by Defendant, the Sponsors Memorandum for Senate

Bill 71943 (the bill which included Section 25.18(d), as noted

supra) stated plainly that the purpose for the bill was to

“establish an opioid settlement fund and advisory board to insure

that any settlement monies are dedicated towards substance use

disorder prevention, treatment and recovery.” New York Sponsors

Memorandum, 2021 S.B. 7194. The Sponsors Memorandum also included

further justification for the creation of a dedicated opioid

settlement fund, noting the fact that much of the money from the

tobacco settlements of the 1990s was ultimately used “to pay for

an array of programs and services unrelated to the harms of tobacco

use.” Id. As such, the sponsor of the bill argued that “[a]ny

money obtained from these lawsuits [against manufacturers and

distributors of opioids] must be used to address the harms caused

by drug use and by the ways in which drug laws have been enforced.”

Id. In furtherance of that purpose, the law “creates a secure

3 The Court takes judicial notice of the legislative materials in question. The

Second Circuit has held that “as a fundamental matter, courts may take judicial

notice of legislative history.” Goe v. Zucker, 43 F.4th 19, 29 (2d Cir. 2022),

cert. denied sub nom. Goe v. McDonald, 143 S. Ct. 1020 (2023).

fund for any opioid settlement funds the state receives and [a]

board to oversee the fund allocations” and further “ensures that

dollars received in any settlement are used for the intended and

right purposes.” Id. The purpose and justification of the bill

is echoed in the text of the statutes, as well, which expressly

defines the “Opioid settlement fund” as having a purpose of

“preventing addiction and reducing the harms caused by the overdose

and substance use disorder epidemic consistent with the terms of

any statewide opioid settlement agreement.” N.Y. Mental Hyg. Law

§ 25.18.

Furthermore, the fact that the challenged statute does not

apply equally across all localities (specifically Nassau and

Suffolk counties), as noted by Plaintiffs, does not prevent it

from addressing a “substantial State-wide concern.” As stated by

the New York Court of Appeals, “[a] great deal of legislation

relates both to the property, affairs or government of a local

government and to matters other than the property, affairs or

government of a local government—i.e., to matters of substantial

state concern.” Empire State Chapter of Associated Builders &

Contractors, Inc. v. Smith, 992 N.E.2d 1067, 1071 (N.Y. 2013)

(internal quotation marks omitted). As such, the home rule

provisions, which “were intended to prevent unjustifiable state

interference in matters of purely local concern,” are not triggered

by legislation that “do[es] not treat all counties alike, [as long

as it] unquestionably affect[s] the state as a whole.” Id. at

1071-73.

Accordingly, the Court agrees with the parties that Senate

Bill 7194 is a special law, and finds that the statute did not

trigger the home rule procedural requirements because it “was

enacted in furtherance of and bears a reasonable relationship to

a substantial State-wide concern.” PBA II, 767 N.E.2d at 121. In

light of this finding, the home rule exception to the general rule

barring constitutional challenges by political subdivisions does

not apply. Because this Court has found that neither exception to

the rule barring public entities from suits challenging state

actions as unconstitutional applies to Plaintiffs in the instant

case, Plaintiffs lack capacity under New York state law to bring

this action, and this court thus lacks jurisdiction to hear any

dispute.

II. Standing

a. Legal Standard

Even if Plaintiffs did not lack the capacity to bring this

action challenging state action, “Courts have an independent

obligation to determine whether subject-matter jurisdiction

exists, even when no party challenges it.” Hertz Corp. v. Friend,

559 U.S. 77, 94 (2010) (citation omitted). “The irreducible

constitutional minimum of standing derives from Article III,

Section 2 of the U.S. Constitution, which limits federal judicial

power to cases and controversies.” Nat. Res. Def. Council, Inc.

v. U.S. Food & Drug Admin., 710 F.3d 71, 79 (2d Cir. 2013) (internal

quotation marks and citations omitted). To establish Article III

standing, a plaintiff must show “(i) that [s]he suffered an injury

in fact that is concrete, particularized, and actual or imminent;

(ii) that the injury was likely caused by the defendant; and (iii)

that the injury would likely be redressed by judicial relief.”

TransUnion LLC v. Ramirez, 594 U.S. 413, 423 (2021) (citing Lujan

v. Defenders of Wildlife, 504 U.S. 555, 560-561 (1992). At the

pleading stage, a plaintiff “bears the burden of alleging facts

that affirmatively and plausibly suggest that [he or she] has

standing to sue.” Calcano v. Swarovski N. Am. Ltd., 36 F.4th 68,

75 (2d Cir. 2022) (internal quotation marks and citation omitted).

b. Analysis

The Second Circuit has clearly held that “[p]olitical

subdivisions of a state may not challenge the validity of a state

statute under the Fourteenth Amendment.” City of New York v.

Richardson, 473 F.2d 923, 929 (2d Cir. 1973); see also Aguayo v.

Richardson, 473 F.2d 1090, 1101 (2d Cir. 1973) (“[t]he City lacks

standing to assert constitutional claims against the State”). This

rule is premised on the Supreme Court’s decision in Williams v.

Mayor and City Council of Baltimore, 289 U.S. 36, 40 (1933), which

held that “[a] municipal corporation, created by a state for the

better ordering of government, has no privileges or immunities

under the Federal Constitution which it may invoke in opposition

to the will of its creator.” The Second Circuit has since

clarified that “a subdivision may sue its state under the Supremacy

Clause,” joining the 5th and 10th Circuits in its holding. Tweed-

New Haven Airport Auth. v. Tong, 930 F.3d 65, 73 (2d Cir. 2019).

The Second Circuit did not abrogate their previous decisions in

reaching their decision in Tweed, however, noting that City of New

York v. Richardson and Aguayo “present[] considerations different

from those we consider here.” Id. at 73 n.7. Rather, the Second

Circuit noted that the Supremacy Clause “raises unique federalism

concerns” not addressed by Williams or other Supreme Court cases

relied upon by the Second Circuit in City of New York v.

Richardson. Id. at 73.

Plaintiffs’ complaint does not state a cause of action arising

under the Supremacy Clause. (See generally FAC). Furthermore,

Plaintiffs do not cite any controlling authority that directly

contradicts City of New York v. Richardson or otherwise holds that

a political subdivision has standing to bring suit against its

parent state under the Fourteenth Amendment.4 Where the Second

4 Plaintiffs cite to Romer v. Evans, 517 U.S. 620, 625 (1996) and Washington v.

Seattle Sch. Dist. No. 1, 458 U.S. 457, 464 (1982), noting that the two cases

were cited in Tweed for the proposition that “the Supreme Court has repeatedly

entertained suits against a state by a subdivision of the state, including cases

under the Supremacy Clause.” Tweed-New Haven Airport Auth., 930 F.3d at 73.

However, as noted by Defendants, in both cases “the plaintiffs included entities

that were not political subdivisions, so the question of legal [standing] to

maintain the suit was not dispositive and, therefore, apparently was not raised

or addressed.” (Def’t Reply at 7.) Plaintiffs in the instant case consist

Circuit has “spoken directly to the issue presented,” this Court

must follow its decision unless it is “overruled in a precedential

opinion by the Second Circuit itself,” or later Supreme Court

precedent “so undermines it that it will almost inevitably be

overruled by the Second Circuit.” United States v. Smith, 489 F.

Supp. 3d 167, 172–73 (E.D.N.Y. 2020). Here, in light of the Second

Circuit’s decision in City of New York v. Richardson, and a lack

of later Second Circuit or Supreme Court jurisprudence undermining

that decision, this Court must conclude that Plaintiffs lack

standing to pursue their claims under the Fourteenth Amendment.

Plaintiffs’ argument that they are able to evade the Second

Circuit’s holding in City of New York v. Richardson by bringing

this suit in their “proprietary capacity” against the state is

likewise without merit. Plaintiffs do not cite to any authority

that differentiates between a political subdivision suing its

parent state in its “proprietary capacity” as opposed to its

“governmental capacity.” The primary authority cited by

Plaintiffs for this proposition is Owen v. City of Independence,

Mo., 445 U.S. 622, 644-46 (1980), which dealt primarily with the

extent to which a municipal corporation enjoyed protection from

tort liability. Plaintiffs attempt to connect this line of case

law to the instant case by citing a decision from the Southern

solely of political subdivisions of New York state, so this court does not find

the cited cases supportive of their standing argument.

District of New York, which mused that “whether the rule barring

municipalities from bringing Fourteenth Amendment claims against

one another would apply to a municipal corporation bringing a

challenge in its proprietary—not its governmental—capacity” would

be an “interesting question.” City of New Rochelle v. Town of

Mamaroneck, 111 F. Supp. 2d 353, 364-65 (S.D.N.Y. 2000). The

court’s statement was referring to a decision from the Sixth

Circuit which had concluded that “a municipality may not assert a

substantive claim for protection of its rights [under the

Fourteenth Amendment] against any other municipality or state

political subdivision.” Id. (citing South Macomb Disposal

Authority v. Township of Washington, 790 F.2d 500, 505 (6th Cir.

1986)).

Though the question discussed by the court in City of New

Rochelle might be an “interesting” one, it is of no moment here.

The instant case involves political subdivisions challenging

legislation passed by their parent state under the Fourteenth

Amendment, as opposed to a municipality bringing a Fourteenth

Amendment action against another political subdivision,

potentially in a “proprietary” capacity. Furthermore, although

Plaintiffs argue that “[t]here is nothing distinctly

‘governmental’ about the claims the [Plaintiffs] brought against

the opioid producer and distributor defendants,” (Pl. Opp at 22),

their claimed harm in the underlying cases arose out of

expenditures for “emergency medical services (‘EMS’), fire

departments, and police departments operated by towns and

villages,” (FAC at ¶30.), which are traditional governmental

functions, see Janusaitis v. Middlebury Volunteer Fire Dep't, 607

F.2d 17, 25 (2d Cir. 1979). As such, this Court finds it

unnecessary to conduct any further analysis of the question posed

by the non-controlling decision in City of New Rochelle, finding

its analysis inapplicable to the instant case. Plaintiffs lack

standing to bring a Fourteenth Amendment action5 against New York

and its Attorney General under binding Second Circuit precedent,

and thus this Court lacks jurisdiction to hear their claims. City

of New York v. Richardson, 473 F.2d at 929.

III. State Constitutional Claims

a. Legal Standard

When a district court has original jurisdiction over claims

in a case, it “shall have supplemental jurisdiction over all other

claims that are so related to claims in the action . . . that they

form part of the same case or controversy under Article III.” F5

Capital v. Pappas, 856 F.3d 61, 77 (2d Cir. 2017) (citing 28 U.S.C.

5 The Court notes that while Plaintiffs also make claims regarding violations

of their First Amendment rights by New York, those claims arise under the

Fourteenth Amendment, given they allege action by the state and not the federal

government. See New York Times Co. v. Sullivan, 376 U.S. 254, 276-77 (1964);

see also Slattery v. Hochul, 61 F.4th 278, 287 n.1 (2d Cir. 2023) (“the Supreme

Court has held that the Fourteenth Amendment incorporates the protections of

the First Amendment against state governments”).

§ 1367(a)); see United Mine Workers of Am. v. Gibbs, 383 U.S. 715,

725 (1966) (“Pendent jurisdiction . . . exists whenever there is

a claim ‘arising under [the] Constitution, the Laws of the United

States, and Treaties made, or which shall be made, under their

Authority,’ and the relationship between that claim and the state

claim permits the conclusion that the entire action before the

court comprises but one constitutional ‘case.’” (quoting U.S.

Const. art. III, § 2)). Claims are considered “‘part of the same

case or controversy’ if they ‘derive from a common nucleus of

operative fact.’” Shahriar v. Smith & Wollensky Rest. Grp., Inc.,

659 F.3d 234, 245 (2d Cir. 2011) (quoting Briarpatch Ltd., L.P. v.

Phoenix Pictures, Inc., 373 F.3d 296, 308 (2d Cir. 2004)).

“[A] district court ‘may decline to exercise supplemental

jurisdiction’ if it ‘has dismissed all claims over which it has

original jurisdiction.’” Kolari v. New York-Presbyterian Hosp.,

455 F.3d 118, 122 (2d Cir. 2006) (quoting 28 U.S.C. § 1367(c)(3)).

“Once a district court's discretion is triggered under §

1367(c)(3), it balances the traditional ‘values of judicial

economy, convenience, fairness, and comity’ in deciding whether to

exercise jurisdiction.” Id. at 122 (citing Carnegie-Mellon Univ.

v. Cohill, 484 U.S. 343, 350 (1988)). Although it is not mandatory

to decline supplemental jurisdiction, “the Supreme Court has

stated that ‘in the usual case in which all federal-law claims are

eliminated before trial, the balance of factors to be considered

under the pendant jurisdiction doctrine—judicial economy,

convenience, fairness and comity—will point toward declining

jurisdiction over the remaining state-law claims.’” In re Merrill

Lynch Ltd. Partnerships Litig., 154 F.3d 56, 61 (2d Cir. 1998)

(quoting Cohill, 484 U.S. at 350 n.7).

b. Analysis

Notwithstanding the Court’s finding regarding Plaintiffs’

lack of capacity to bring this case, this Court has also found

that Plaintiffs lack standing to pursue their claims based on the

Fourteenth Amendment to the U.S. Constitution, and as such, this

Court does not have subject matter jurisdiction to hear those

claims. Plaintiffs’ remaining claims arise under the Constitution

of the State of New York, and therefore this Court must examine

whether there is any other basis for this Court to exercise

jurisdiction over the remaining claims.

The Court concludes that it cannot exercise diversity

jurisdiction over this action, as there is a lack of diversity

between the parties. Plaintiffs are political subdivisions of New

York, and the Defendant is the Attorney General of New York, sued

in her official capacity. (FAC at ¶¶10-20.) The Court concludes

that, although supplemental jurisdiction could be exercised, as

the state and federal claims “derive from a common nucleus of

operative fact,” such an exercise of jurisdiction “would not

promote the values articulated in United Mine Workers of America

v. Gibbs” and thus, the exercise of supplemental jurisdiction

should be declined. See Shahriar, 659 F.3d at 245.

Because this Court has “dismissed all claims over which it

has original jurisdiction,” it may properly “decline to exercise

supplemental jurisdiction” pursuant to 28 U.S.C. § 1367(c). The

Court has evaluated whether to exercise supplemental jurisdiction

under the factors established in United Mine Workers of America v.

Gibbs: economy, convenience, fairness, and comity. 383 U.S. at

726. All factors weigh in favor of the Court declining to exercise

supplemental jurisdiction. Neither party has engaged in discovery

in the instant case, which has not proceeded past the briefing of

a motion to dismiss, favoring economy. Comity strongly favors

declining to exercise supplemental jurisdiction in the instant

case, given it involves a novel question of the constitutionality

of a New York statute under the state constitution. This Court

further finds that a state law forum would not be either

inconvenient or unfair to either party. A New York state court

would be well-equipped to examine unique questions of the

constitutionality under state law6, and Plaintiffs could bring a

6 Though many of Plaintiffs’ state law constitutional claims mirror provisions

of the federal constitution, they would nonetheless be reviewed independently

under state law. “Although State courts may not circumscribe rights guaranteed

by the Federal Constitution, they may interpret their own law to supplement or

expand them.” People v. P.J. Video, Inc., 501 N.E.2d 556, 560 (N.Y. 1986).

When “there is no material textual difference between the relevant

constitutional provisions,” the reviewing state court will “conduct a

‘noninterpretive’ review of the constitutional provisions.” In re Nassau Cnty.

Grand Jury Subpoena Duces Tecum Dated June 24, 2003, 830 N.E.2d 1118, 1123 (N.Y.

2005).

similar action challenging the constitutionality of the state’s

actions under the state constitution, to the extent a New York

court found they had capacity to sue. See, e.g., Town of

Brookhaven v. State, 535 N.Y.S.2d 773, 774-75 (3d Dep’t 1988)

(holding that, in a case where plaintiffs, including towns,

challenged the constitutionality of laws regarding apportionment

of state aid to localities, “a declaratory judgment action is the

proper procedural vehicle to accomplish that challenge”).

Accordingly, the Court declines to exercise supplemental

jurisdiction over Plaintiffs’ state law claims.

IV. The Declaratory Judgment Act

a. Legal Standard

The Declaratory Judgment Act (“DJA”), 28 U.S.C. § 2201

provides in relevant part that “any court of the United States,

upon the filing of an appropriate pleading, may declare the rights

and other legal relations of any interested party seeking such

declaration, whether or not further relief is or could be sought.”

§ 2201(a).

b. Analysis

Plaintiffs request this Court enter judgment pursuant to the

DJA, declaring that Senate Bill 7194 is unconstitutional under

various provisions of the New York and Federal constitutions. (See

generally FAC.) Defendant, however, argues that Plaintiffs do not

have a private right of action for their claims arising under the

Fourteenth Amendment to the Federal constitution, and therefore

may not bring an action for a Declaratory Judgment premised on

claims lacking a valid private right of action. (Def’t Mem. at

18.)

The Second Circuit has held that, “[similar to] a

preliminary injunction, a declaratory judgment relies on a valid

legal predicate.” Chevron Corp. v. Naranjo, 667 F.3d 232, 244 (2d

Cir. 2012). Accordingly, the DJA is “procedural only, and does

not create an independent cause of action.” Id. (internal

quotation marks and citations omitted). Consequently, where an

underlying statute “does not provide that legal predicate, the DJA

cannot expand the statute's authority by doing so.” Id. at 245.

Following this precedent, courts in this district have concluded

that “[e]ven though the DJA provides that a court may grant a

declaratory judgment even if no further relief could be sought,

the precedent is clear; the DJA cannot create an individual right

of action under [a statute] if one does not exist.” Magnoni v.

Plainedge Union Free Sch. Dist., No. 17-cv-4043 (DRH), 2018 WL

4017585, at *7 (E.D.N.Y. Aug. 22, 2018).

Defendant argues that political subdivisions may not assert

a private right of action pursuant to 42 U.S.C § 1983 based on

Supreme Court precedent in Inyo County, Cal. v. Paiute-Shoshone

Indians of the Bishop Community of the Bishop Colony, 538 U.S.

701, 712 (2003). This Court, however, need not reach the question

of whether the logic of Inyo County applies to the Plaintiffs in

the instant case, given that they do not rely on Section 1983 to

bring their claim. (See generally FAC). As such, and because

this Court has already found that Plaintiffs lack standing to bring

claims under the Fourteenth Amendment against their parent state,

and this Court has declined to exercise supplemental jurisdiction

over the state law claims, the Court further finds that Plaintiffs

lack the necessary “legal predicate” to seek a declaratory judgment

in the instant case.

V. Failure to State a Claim

Having determined that the Plaintiffs’ FAC must be dismissed

for lack of subject matter jurisdiction, “the accompanying

defenses and objections [by Defendant] become moot and do not need

to be determined.” Rhulen Agency, Inc. v. Alabama Insurance

Guaranty Association, 896 F.2d 674, 678 (2d Cir. 1990). As a

result, this Court declines to address Defendant’s various

arguments regarding the merits of Plaintiffs’ constitutional and

state law claims.

CONCLUSION

For the forgoing reasons, Defendant’s motion to dismiss the

FAC is granted in its entirety. This Court lacks subject matter

jurisdiction to hear Plaintiffs’ claims, which are dismissed. In

light of this Court’s previous dismissal of Plaintiffs’ claims

with leave to amend on February 23, 2023, and Plaintiffs’

opportunity to amend their complaint four times, the Court finds

that further amendment would be futile, and declines to grant

Plaintiffs further leave to amend the complaint. See, e€.g.,

Jacobson v. Kings County Democratic County Committee, 788 F. App'x

770, 774 (2d Cir. 2019) (summary order) (finding district court

did not err in denying leave to amend when Plaintiff has had “the

advantages of multiple pre-motion conferences and a prior

opportunity to amend [the] complaint”).

The Clerk of Court is respectfully directed to enter judgment

in favor of Defendant and close this case.

SO ORDERED

Dated: December 19, 2023

Brooklyn, New York

sige “wes ewe

HON. KIYO A. MATSUMOTO

United States District Judge

Eastern District of New York

35