Petition — King v. United States

Supreme Court brief1977

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IN THE

Supreme Court of the United- States a

OCTOBER TERM, 1976

No....40~3T

Louis J. Lerxowrrz, as Attorney General of

the State of New York,

Petitioner,

against

Surecey Herrior Brooks and Gioria Jones, et al.,

Respondents.

PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

Louis J. LerKxow1Tz

Attorney General of the

State of New York

Pro Se Petitioner

Office & P.O. Address

Two World Trade Center

New York, New York 10047

Tel. No. (212) 488-3396

Samvue. A. Hrmsnowrrz

First Assistant Attorney General

A. Sera GREE NWALD

Assistant Attorney General

of Counsel

APPENDIX A

Order of the Court of Appeals.

Filed April 7, 1977

UNITED STATES COURT OF APPEALS

FOR THE Seconp Circuir

At a stated Term of the United States Court of

Appeals for the Second Circuit, held at the

United States Courthouse in the City of

New York, on the seventh day of April, one

thousand nine hundred and seventy-seven.

Present: Hon. Wmuu1am H. Trmsers, Circuit Judge.

Hon. James 8S. Howpen,

Hon. Frepertck v.P. Bryan, District Judges.

75-7437

Surracey Herriorr Brooks, Gioria Jones, individually

and on behalf of all others similarly situated,

Plaintiff s-A ppellants,

Vv.

Fiacc Broruers, Inc., individually and as representative

of a class of all others similarly situated, Henry Face,

individually and as President of Flagg Brothers, Inc.,

THe American WaAREHOUSEMEN’s AssociaATION OF NEW

York anp New Jersey, Inc., Tue Cotp Storace Ware-

HOUSEMEN’s ASSOCIATION OF THE Port or New York,

Defendants- Appellees.

APPEAL FROM THE Unirep States District Court

FOR THE SOUTHERN District or New York

. Appendix A

This cause came on to be heard on the transcript of rec-

ord from the United States District Court for the Southern

District of New York, and was argued by counsel.

ON CONSIDERATION WHEREOF, it is now hereby ordered, ad-

judged and decreed that the judgment of said District

Court be and it hereby is reversed and the action be and

it hereby is remanded to said District Court for further

proceedings in accordance with the opinion of this court

with costs to be taxed against the appellees.

A. DantreL Fvsaro

Clerk

by s/ ArrHur HELLER

Arthur Heller

Deputy Clerk

APPENDIX B

Opinion of the Court of Appeals.

UNITED STATES COURT OF APPEALS

For tHe Seconp Circuit

No. 523—September Term, 1975.

(Argued February 13, 1976 Decided April 7, 1977.)

Docket No. 75-7437

Sumey Herriott Brooks, Groria Jones, individually

and on behalf of all others similarly situated,

Plaintiff s-A ppellants,

Face Broruers, inc., individually and as representative

of a class of all others similarly situated, Henry Face,

individually and as President of Flagg Brothers, Inc.,

THe AMERICAN WAREHOUSEMEN’s Association, THE Ly-

TERNATIONAL ASSOCIATION OF REFRIGERATED WAREHOUSES.

Inc., WaREHOUSEMEN’s AssociaTION or New York aNpD

New Jersey, Inc., Toe Cotp Strorace WarEHOUSEMEN’S

ASSOCIATION OF THE Port or New York, and Lovis J.

Lerxowirz, as Attorney General of the State of New

York,

Defendants-A ppellees.

Timpers, Circuit Judge, and

Howpen*® and Brayan,** District Judges.

Before:

_ * James S. Holden, Chief Judge of the District of Vermont,

sitting by designation.

** Frederick vP. Bryan, Senior District Judge of the Southern

District of New York, sitting by designation.

Appendix B

Appeal from an order of the United States District Court

for the Southern District of New York, Henry F. Werker,

J., dismissing, for lack of state action, plaintiff’s com-

plaint challenging §§ 7-209 and 7-210 of the New York Uni-

form Commercial Code as violative of 42 U.S.C. § 1983

and the due process clause of the fourteenth amendment

io the United States Constitution.

Reversed and remanded.

Martin A. Scuwartz, Esq., White Plains, N.Y.

(The Legal Aid Society of Westchester

County, White Plains, N.Y., on the brief,

Lawrence S. Kahn, Evelyn Isaac, of coun-

sel), for Plaintiff s-Appellants.

Atvixn ALTMAN, Esq., New York, N.Y. (Brodsky,

Linnett & Altman, New York, N.Y., on the

brief, Michael Barnas, of counsel), for De-

fendants-Appellees Flagg Brothers, Inc.,

and Henry Flagg.

Witt H. Towre, Esq., Chicago, Ill. (Burke,

Kerwin & Towle, Chicago, Ill. and Werner

& Weiss, P.C., New York, N.Y., on the brief,

Norman Weiss, of counsel), for Defend-

ants-Appellees American Warehousemen’s

Association and The International Associ-

ation of Refrigerated Warehouses, Inc.

Arwotp H. Suaw, Esq., New York, N.Y. (Jaffe,

Shaw & Rosenberg, New York, N.Y., on

the brief), for Defendants-Appellees Ware-

housemen’s Asssociation of New York and

New Jersey, Inc., and the Cold Storage

Warehousemen’s Association of the Port of

New York.

A. Sern Greenwawp, Asst. Attorney General

(Louis J. Lefkowitz, Attorney General,

_ tO A —

Appendix B

State of New York, and Samuel A. Hirsho-

witz, First Asst. Attorney General, of

counsel), for Defendant-Appellee Louis J.

Lefkowttz, Attorney General of the State

of New York.

Bryan, Senior District Judge:

New York Uniform Commercial Code 47-209 grants a

warehouseman a lien upon goods in his possession for

charges ineurred in connection with storage, and permits

him to retain the goods until such charges are satisfied.

New York Uniform Commercial Code $210 gives the

warehouseman the power to enforce his lien by selling the

stored goods, after complying with specified procedures.’

* The full text of the statutes in question foll :

‘_f1tind tic, _—

(footnote continued on following page)

6a 7a

Appendix B begudiic 8

This statute provides that notice of a prospective sale be ever, contemplate any judici ates

given to the owner of the stored goods. It does not, how- owing or . a. —— paren = or

goods on of the

(footnote continued from preceding page) a cha. ges.

(3) A warehouseman’s fien for charges and expenses under e question presented by this appeal is whether the

subsection (1) or a security interest under subsection (2) is warehouseman’s enforcement of his lien in this manner

also effective against any person who so entrusted the bailor constitutes action “under ec ’ san

with possession of the goods that a pledge of them by him to meaning of 42 U.S.C. §1 a of” state law within the

a good faith purchaser for value would have been valid but is wwe or state action under the

not effective against a person as to whom the document con- (footnote continued from preceding page}

fers no right in the goods covered by it under section 7—503.

(4) A warehouseman loses his lien on any goods which he not less than ten days after receipt of the notifica-

tion, and a conspicuous statement that unless the claim

voluntarily delivers or which he unjustifiably refuses to de- : Se pate foe :

liver. is paid within that time the goods will be advertised

~Y or sale and sold by auction at a specified time and

§ 7—210. Enforcement of Warehouseman’s Lien place. an

(1) Except as provided in subsection (2), a warehouseman’s (d) The sale must confo .

lien may be enforced by public or private sale of the goods in tion. rm to the terms of the notifica-

bloc or in parcels, at any time or place and on any terms (e) The sale ,

which are commercially reasonable, after notifying all persons to that Pra tine | A <~ | peg — place

known to claim an interest in the goods. Such notification a : ,

must include a statement of the amount due, the nature of the (f) aa Pong a vee of the time given in the notifica-

proposed sale and the time and place of any public sale. The : once a week fo wy ent of the sale must be published

fact that a better price could have been obtained by a sale at ; sapere of aan r : wo weeks consecutively in a news-

a different time or in a different method from that selected by . held A er wed eremergese where the sale is to be

the warehouseman is not of itself sufficient to establish that the of the goods, 2. ae a ae include a description

e person on whose ac-

sale was not made in a commercially reasonable manner. If : ‘ :

the warehouseman either sells the goods in the usual manner ; —_——> The pom ny held, and the time and place of

in any recognized market therefor, or if he sells at the price : days pr a jon must take place at least fifteen

current in such market at the time of his sale, or if he has : paper of e an publication. If there is no news-

otherwise sold in conformity with commercially reasonable ; held, the ed circulation where the sale is to be

practices among dealers in the type of goods sold, he has sold : days believe th a must be posted at least ten

in a commercially reasonable manner. A sale of more goods places in th a eborh not less than six conspicuous

than apparently necessary to be » seeel »s aavate satisfaction Be e neighborhood of the proposed sale.

of the obligation is not commercially reasonable except in cases 9) ore any sale pursuan : .

covered by the preceding sentence. claiming a right in the ove _ ae —e a =

(2) A warehouseman’s lien on goods other than goods stored aoe the lien and the reasonable expenses wtdeene oon d a

by a merchant in the course of his business may be enforced is section. In that event the goods must not be sold, b 4

only as follows: must be retained by the warehouseman subject Ben

. a o of the receipt and thi . J ‘to the terms

(a) All persons known to claim an interest in the goods (4) Th P is Article.

must be notified. ont thin jou pas may buy at any public sale pursu-

(b) The notification must be delivered in person or sent 5 ae.

by registered or certified letter to the last known ad- m A purchaser in good faith of goods sold to enforce a

dress of any person to be notified. ouseman’s lien takes the goods free of any rights of

(ec) The notification must include an itemized statement ne b rat whom the lien was valid, despite noncompli-

of the claim, a description of the goods subject to the tion y the warehouseman with the requirements of this sec-

lien, a demand for payment within a specified time : ( :

(footnote continued on following page) footnote continued on following page)

Appendix B

fourteenth amendment.* We hold that it does, and there-

fore reverse the lower court’s dismissal of the complaint

and remand for a determination of whether the statutory

scheme involved comports with due process.

Since the case comes before us on the dismissal of the

complaint, we accept the plaintiffs’ allegations of fact as

true. See Conley v. Gibson, 355 U.S. 41, 45-46 (1957).

The original plaintiff in this case, Shirley Herriott

Brooks, was a resident of Mount Vernon. On June 13,

1973, pursuant to an order of eviction of the City Court

of Mount Vernon, the city marshal removed Brooks and

her possessions from her apartment. Brooks told the

marshal that she wanted to call someone to store her

furniture and other household goods. The marshal in-

formed her that she couid not do so and that the man with

him, defendant Henry Flagg, president of defendant Flagg

Brothers, Ine., would store her furniture. Flagg told

(footnote continued from preceding page)

(6) The warehouseman may satisfy his lien from the pro-

ceeds of any sale pursuant to this section but must hold the

balance, if any, for delivery on demand to any person to whom

he would have been bound to deliver the goods.

(7) The rights provided by this section shall be in addition

to all other rights allowed by law to a creditor against his

debtor.

(8) Where a lien is on goods stored by a merchant in the

course of his business the lien may be enforced in accordance

with either subsection (1) or (2).

(9) The warehouseman is liable for damages caused by

failure to comply with the requirements for sale under this

section and in case of willful violation is liable for conversion.

? The ‘‘under color of’’ state law provision in § 1983 is equivalent

to the state action requirement of the fourteenth amendment.

Shirley v. State National Bank of Connecticut, 493 F.2d 739, 741

(2d Cir.), cert. denied, 419 U.S. 1009 (1974), citing Adickes v.

S. H. Kress & Co., 398 U.S. 144, 152 n.7 (1970) and United States

v. Price, 383 U.S. 787, 794-95 n.7 (1966).

Appendix B

Brooks that she would have to pay $65 per month for the

moving and storage of her furniture. Brooks replied that

this sounded like a high price but, believing that she had

no choice, authorized Flagg to proceed with the moving and

storage of her furniture and household possessions.

As soon as her goods were loaded on Flagg’s trucks, one

of the moving men told Brooks that she would have to pay

$178—$75 per month for storage, $75 for barreling and

platforming, and $28 for fumigating. Brooks protested

that the entire job was only to cost $65, but eventually

handed over a check for $178.

On or about June 15, 1973, Brooks called Flagg Brothers

to find out how long it would store her goods for the $178

payment. She was informed that she already owed an

additional $156. On June 19, 1973, Brooks went to the

Flagg Brothers office. She was given a ‘‘Combined Uni-

form Household Goods Bill of Lading and Freight Bill’’

indicating that Flagg Brothers regarded the $178 payment

as a deposit and that there was a ‘‘balance due’’ of $156.°

Brooks told Henry Flagg that the charges were unreason-

able and that she could not pay them. He told her that on

the first of July, 1973 she would owe an additional $75 for

storage for the month of July. Brooks argued that her

storage payment on June 13, 1973 should run to July 13,

5 We reject Flagg Brothers’ assertion that Brooks agreed to sale

upon default in payment by accepting, some six days after the

initial storage, the ‘‘Combined Uniform Household Goods Bill of

Lading and Freight Bill’’ which in minute print referred to sale

by the warehouseman in the event of nonpayment of storage

charges. See Fuentes v. Shevin, 407 U.S. 67, 94-96 (1972). We

thus view the authorization of sale of stored goods by Flagg as

arising solely from § 7-210, specifically subsection (2) which gov-

erns enforcement of a warehouseman’s lien on goods other than

goods stored by a merchant in the course of his business, and not

from any contractual provisions. This is undoubtedly the case with

respect to plaintiff Jones, who alleges that she never authorized

storage of her goods, see infra at 4. The court below adopted this

analysis, at least in part.

10a

Appendia B

1973, but Flagg insisted that, since storage charges are

computed on a ‘‘per month’’ basis, even if her goods had

been stored on June 29, 1973 an additional $75 would still

be due on July 1, 1973.

The dispute over storage charges continued. On August

25, 1973, Brooks received a letter from Flagg Brothers

informing her that unless she paid her outstanding balance

of $306 within 10 days, her furniture would go up for sale.

This letter was accompanied by a ‘‘Final Notice’’ inform-

ing Brooks that, unless payment on her storage account

were made, Flagg Brothers would advertise her goods for

public auction.

On September 21, 1973, Brooks instituted this action on

behalf of herself and a proposed class consisting of

persons whose property is stored in a warehouse

located in the State of New York and whose property

has been encumbered by a lien pursuant to New York

Uniform Commercial Code § 7-209 and subject to sale

pursuant to New York Uniform Commercial Code

§ 7-210 because of warehouse fees allegedly due, with-

out opportunity for a prior hearing.

Relying upon 42 U.S.C. §1983* and its jurisdictional

counterpart, 28 U.S.C. § 1343(3),° she sought injunctive and

*42 U.S.C. § 1983 provides:

Every person who, under color of any statute, ordinance,

regulation, custom, or usage, of any State or Territory, sub-

jects, or causes to be subjected, any citizen of the United

States or other person within the jurisdiction thereof to the

deprivation of any rights, privileges, or immunities secured

by the Constitution and laws shall be liable to the party in-

jured in an action at law, suit in equity, or other proper pro-

ceeding for redress.

*28 U.S.C. § 1343 provides:

The district courts shall have original jurisdiction of any civil

action authorized by law to be commenced by any person:

(footnote continued on following page)

lla

Appendic B

declaratory relief and damages on the ground that the

detention and threatened sale of her goods pursuant to

New York Uniform Commercial Code §§ 7-209 and 7-210

violated the due process clause of the fourteenth amend-

ment. Named as defendants were the Mount Vernon

marshal,’ Henry Flagg, and Flagg Brothers, Ine., indi-

vidually and as representative of a proposed defendant

class consisting of

warehousemen doing business in the State of New

York and who impose liens and subject goods to sale

pursuant to New York Uniform Commercial Code

§§209-210 [sic] without affording the owner of the

goods a prior opportunity to be heard.

In accordance with an agreement between counsel, on

January 24, 1974, subsequent to the filing of the complaint,

Brooks was permitted to remove her possessions from

Flagg Brothers’ warehouse without paying the disputed

storage charges. Then in February, 1974 counsel stipulated

that the action, with the classes described substantially as

above, was a proper plaintiff and defendant class action

under Fed. R. Civ. P. 23 with respect to the claims for

injunctive and declaratory relief. These stipulations, how-

ever, were never approved by then District Judge Gurfein,

to whom the case was assigned.

On June 25, 1974, Judge Gurfein granted the motion of

Gloria Jones to intervene as party plaintiff pursuant to

(footnote continued from preceding page)

(3) To redress the deprivation under color of any State law,

statute, ordinance, tion. custom or usage, of any right,

privilege or immunity secur: © the Constitution of the

United States or by any Act c¢ ~~»gress providing for equal

rights of citizens or of all pers: sin the jurisdiction of the

United States.

The action was subsequently dismissed as to the marshal by

agreement of the parties.

12a

Appendiz B

Fed. R. Civ. P. 24. Jones’ allegations were parallel to

those of Brooks. She, too, had been evicted by the Mount

Vernon marshal, who was accompanied by an employee

of Flagg Brothers. Jones denies, however, that she ever

authorized Flagg Brothers to store her goods ‘‘either by

written or oral contract, or otherwise,’’ and claims that she

was never advised of the rate she would have to pay for the

storage of her household belongings. At the time of her

proposed intervention, Jones’ goods were still being re-

tained by Flagg Brothers, who informed her counsel that

they had no present intention to sell the goods and would

inform him well in advance if they did decide to sell them.’

By the same order that granted Jones’ motion to inter-

vene, Judge Gurfein permitted the Attorney General of the

State of New York, the American Warehousemen’s Associ-

*It appears that after the district court rendered its decision

of July 7, 1975 dismissing the complaint, see infra at 5, Mrs. Jones

informed her counsel that she had paid Flagg $1,600 for the re-

turn of her goods; that she did not receive all of her goods back;

that some of her goods were received in damaged condition; and

that she did not make the $1,600 payment voluntarily but only be-

cause of alleged threats of sale and the twenty-month detention of

the goods.

Thereafter, by letter dated December 15, 1976, while this appeal

was sub judice, Jones’ counsel informed the court pursuant to Fed.

R. App. P. 43 that he had learned of her recent death.

It is well settled that a plaintiff’s cause of action under 42

U.S.C, § 1983 survives for the benefit of the estate if the applicable

state law creates a right of survival. Spence v, Staras, 507 F.2d

954, 557 (7th Cir. 1974); Hall v. Wooten, 506 F.2d 564 (6th Cir.

1974) ; Brazier v. Cherry, 293 F.2d 401 (5th Cir), cert. denied, 368

U.S. 921 (1961). See also Shaw v. Garrison, 545 F.2d 980 (5th

Cir. 1977) (§ 1983 claim survives plaintiff’s death after suit was

brought even though it would abate under applicable state law).

Jones’ claims for relief would survive under New York Estates,

Powers and Trusts Law §§ 11-3.1, 3.2(b), and thus are not abated

by her death for purposes of this suit. Accordingly, counsel for

Jones requests that, in the event of reversal, the case be remanded

to the district court with leave for substitution of her personal

representative pursuant to Fed. R. Civ. P. 25(a).

ec a ie

13a

Appendix B

ation, the International Association of Refrigerated Ware-

houses, Inc., the Warehousemen’s Association of the Port

of New York, Inc.,* and the Cold Storage Warehousemen’s

Association of the Port of New York to intervene as

parties defendant. Brooks v. Flagg Brothers, Inc., 63

F.R.D. 409 (S.D.N.Y. 1974). The Attorney General was

allowed to intervene on consent. Judge Gurfein permitted

the trade associations to intervene over the objection of

plaintiffs’ counsel. The associations claimed that their

imembers were engaged in large scale warehousing on be-

half of merchants and other commercial entities function-

ing in interstate commerce, and argued that their interests

in upholding the constitutionality of §4 7-209 and 7-210

would not be adequately represented by Flagg Brothers,

whose business was the moving and storage of furniture

and other household goods.

On August 26, 1974, plaintiffs moved for class certifica-

tion as to both plaintiffs and defendants, and for summary

judgment on the question of the constitutionality of

§§ 7-209 and 7-210. On September 19, 1974, the Flagg

defendants moved to dismiss the action for failure to state

a claim upon which relief can be granted.

By decision and order dated July 7, 1975, Judge Werker,

to whom the case iad been reassigned, denied plaintiffs’

motion for summary judgment and granted defendants’

motion to dismiss the complaint. Applying the analysis of

Jackson v. Statler Foundation, 496 F.2d 623 (2d Cir. 1974),

cert. denied, 420 U.S. 927 (1975),° Judge Werker concluded

* The Warehousemen’s Association of the Port of New York,

Ine., subsequently amended its certificate of incorporation to

change its name to ‘‘ Warehousemen’s Association of New York and

New Jersey, Inc.’’

*In Jackson, Judge Smith specified five factors that are ‘‘par-

ticularly important’’ to a determination of state action:

(footnote continued on following page)

l4a

Appendix B

that in imposing and enforcing his lien pursuant to 4§ 7-209

and 7-210, the warehouseman does not act ‘‘under color of’’

state law within the meaning of 42 U.S.C. § 1983. He dis-

missed the action for failure to state a claim under 42

U.S.C. § 1983 without passing upon the due process claims

or the class certification questions. This appeal followed.

Appellants do not presently press their challenges to

§ 7-209, which authorizes imposition of the warehouseman’s

lien and retention of stored goods until it is satisfied.”

They do, however, contend that enforcement of the ware-

houseman’s lien by sale pursuant to § 7-210 constitutes

state action because the statute (1) delegates to the ware-

houseman uniquely governmental power and (2) expands

the remedies available to the warehouseman beyond those

which he possessed at common law. On the present record,

this question is properly before us for decision. See

Tedeschi v. Blackwood, 410 F. Supp. 34, 38-41 (D. Conn.

1976) (three-judge court) and cases there cited. See also

Franks v. Bowman Transportation Co., 424 U.S. 747, 752-

757 (1976).

(footnote continued from preceding page)

(1) the degree to which the ‘‘private’’ organization is de-

pendent on governmental aid; (2) the extent and intrusiveness

of the governmental regulatory scheme; (3) whether that

scheme connotes government approval of the activity or

whether the assistance is merely provided to all without such

connotation; (4) the extent to which the organization serves

a public function or acts as a surrogate for the State; (5)

whether the organization has legitimate claims to recognition

as « ‘‘private’’ organization in associational or other constitu-

tional terms.

Each of these factors is material; no one factor is conclusive.

496 F.2d at 629.

However, they state that they wish to preserve this point for

possible review by the Supreme Court.

15a

Appendix B

Il.

The state action inquiry is not an easy one. Moose Lodge

No. 107 v. Irvis, 407 U.S. 163, 172 (1972). ‘‘Only by sifting

facts and weighing circumstances can the #onobvious in-

volvement of the State in private conduct be attributed its

true significance.’’ Burton v. Wilmmgtom Parking Aw

thority, 365 U.S. 715, 722 (1961). The ultimate question

to be resolved is “whether there is a sufficiently close nexus

between the State and the challenged action of the [private]

entity so that the action of the latter may be fairly treated

as that of the State iself.” Jackson v. Metropolitan Edison

Co., 419 U.S. 345, 351 (1974).

The first step in the resolution of this question is to

identify correctly the particular kind of state action allega-

tion with which the court is dealing. This is because

standards for determining state action have been formu-

lated in many different contexts, and the resulting formu-

lations are not often interchangeable. For example, the

criteria for finding state action in equal protection cases

involving charges of racial discrimination are easier to

meet than those formulated in cases such as that at bar.

See, e.g., Coleman v. Wagner College, 429 F.2d 1120, 1127

(2d Cir. 1970) (Friendly, J. concurring) ; Jackson v. Statler

Foundation, supra, at 628-29; Girard v. 94th St. and Fifth

Ave. Corp., 530 F.2d 66, 69 (2d Cir.), cert. denied, 425 U.S.

974 (1976). Similarly, tests for determining whether the

state has become so entwined with a private entity—by

financially supporting it, regulating it, or otherwise—as to

make the actions of the private entity the state’s own, are

not of much help in resolving other types of state action

problems.

In this case, Judge Werker used the factors enumerated

in Jackson v. Statler Foundation, supra, at 629, see supra

n.9, to determine whether state action was present. The

l6a

Appendia B

Jackson factors, however, developed in a case where the

appellant sought to characterize the allegedly racially dis-

criminatory activities of certain private foundations as

state action by virtue of the foundations’ tax exempt status,

are not particularly enlightening when applied to the fac-

tual situation at hand. The instant case involves a question

of alleged delegation of distinctly governmental power,

which can best be resolved by reference to cases involving

similar facts.

The Supreme Court has not yet squarely addressed the

question of whether a delegation of state authority to

ereditors constitutes state action. Its only comment on the

subject came in Jackson v. Metropolitan Edison Co., supra,

where the Court rejected a claim that state action was

present in a tariff-authorized termination of electric ser-

vice by a privately owned and operated utility corporation

hoiding a certificate of public convenience issued by the

Pennsylvania Utility Commission. The Court there noted:

If we were dealing with the exercise by [the power

company] of some power delegated to it by the State

which is traditionally associated with sovereignty . . .

our case would be quite a different one.

419 U.S. at 352-53.

Several circuit courts, however, have decided the state

action question in cases involving due process challenges

to summary creditors’ remedies similar to that presented

here. These cases have focused on essentially the same

factors (whether the state has delegated one of its unique

powers to a private person; whether the common law rights

of the creditor were expanded or merely codified; whether

the creditor’s power amounts to a roving commission or

exists only over particular chattels that are closely con-

nected with the debt; whether the creditor’s remedy was

l7a

Appendiz B

authorized by contract as well as statute; whether the

ereditor’s resort to the remedy was mandatory or optional;

whether the state extensively sequlates the creditor’s in-

dustry; and even whether title rests in the debtor or

creditor) to varying degrees and with varying results.

See Culbertson v. Leland, 528 F.2d 426 (9th Cir. 1975)

(“innkeeper’s’’ lien; state action) ; Hall v. Garson, 430 F.2d

430 (5th Cir. 1970) (“innkeeper’s” lien; state action) ;

Davis v. Richmond, 512 F.2d 201 (1st Cir. 1975) (“inn-

keepers” lien; no state action) ; Anastasia v. Cosmopolitan

National Bank of Chicago, 527 F.2d 150 (7th Cir. 1975),

cert, denied, 424 U.S. 928 (1976) (“innkeeper’s” lien; no

state action); Philips v. Money, 503 F.2d 990 (7th Cir,

1974), cert. denied, 420 U.S. 934 (1975) (“garageman’s”

lien; no state action); James v. Pinniz, 495 F.2d 206 (5th

Cir. 1974) (repossession; no state action); Adams v.

Southern California First National Bank, 492 F.2d 324

(9th Cir.), cert. denied, 419 U.S. 1006 (1974) (reposses-

sion; no state action); Fletcher v. Rhode Island Hospital

Trust National Bank, 496 F.2d 927 (1st Cir.), cert. denied,

419 U.S. 1001 (1974) (bank’s right of set-off; no state ac-

tion); Melara v. Kennedy, 541 F.2d 802 (9th Cir. 1976)

(enforcement of warehouseman’s lien under California

Commercial Code § 7210; no state action).

Appellants here specify only two factors which point to

state action in the warehouseman’s enforcement of his lien.

We conclude, however, that the combination of New York’s

statutory delegation of distinctly governmental power to

the warehouseman and its corresponding expansion of his

common law remedies suffices to thrust the state’s involve-

ment in the challenged activity over the threshold of state

action.

New York Uniform Commercial Code § 7-210 provides

the warehouseman with a truly extraordinary remedy.

After giving the bailor specified notice, see supra n. 1, the

warehouseman is entitled to sell the stored goods in satis-

18a

Appendiz B

faction of whatever he determines the storage charges to

be. The warehouseman, unquestionably an interested

party, is thus authorized by law to resolve any disputes

over storage charges finally and unilaterally.

The Supreme Court has already shown its grave concern

over even temporary deprivations of property without

prior judiciai determination of the amount owing in a

series of cases challenging various provisional remedies

afforded creditors. See Sniadach v. Family Finance Corp.,

395 U.S. 337 (1969); Fuentes v. Shevin, supra; Mitchell v.

W.T. Grant Co., 416 U.S. 600 (1974); North Georgia Fin-

ishing, Inc. v. Di-Chem, Inc., 419 U.S. 601 (1975). These

cases stand at least for the proposition that while judicial

inquiry may at times be postponed, an adequate judicial

determination of liability must take place before any

deprivation of property if due process requirements are

to be satisfied. The statutory scheme before us, in contrast,

contemplates no judicial—or even impartial—determina-

tion of the amount owing before a final deprivation of

property.

This would be quite beside the point if the state were not

implicated in the warehouseman’s enforcement of his lien.

But by enacting § 7-210, New York not only delegated to

the warehouseman a portion of its sovereign monopoly

power over binding conflict resolution, see Shirley v. State

National Bank of Connecticut, supra, at 747 (Kaufman,

C.J., dissenting); Bond v. Dentzer, 494 F.2d 302, 312 (2d

Cir.), cert. denied, 419 U.S. 837 (1974) (Kaufman, C./.,

dissenting), but also let him, by selling stored goods, ex-

ecute a lien and thus perform a function which has tradi-

tionally been that of the sheriff.”

"* Blye v. Globe-Wernicke Realty Co., 347 N.Y.S.2d 170 (1973).

There, in finding that an innkeeper’s enforcement of his lien pursu-

ant to New York Lien Law § 181 involves state action and violates

(footnote continued on following page)

~ eel

19a

Appendiz B

This delegation expanded the warehouseman’s remedies

far beyond those existing at common law. There the ware-

houseman, in the absence of an express agreement authoriz-

ing sale upon default, could only retain the goods to co-

eree payment; he could not sell the goods and apply the

proceeds to the debt. R. Brown, The Law of Personal

Property § 108, at 519, § 119, at 588-89 (2d ed. 1955)." If

mere detention of the goods failed to bring about payment,

the warehouseman had to resort to the courts to obtain a

judgment for the charges due and then deliver a writ of

execution to the sheriff, who would sell the goods pursuant

to the requirements of state law and deliver the proceeds

to the warehouseman. See 62 N.Y. Jur. Warehouse Receipts

§ 125, at 747, 747 n.2. Only in 1879" did the warehouseman

(footnote continued from preceding page)

due process, the New York Court of Appeals stated:

In this State, the execution of a lien, be it a conventional

security interest (Lien Law, § 207), a writ of attachment

(CPLR art. 62), or a judgment lien (OPLR art. 52) tradi-

tionally has been the function of the Sheriff.

347 N.Y.S.2d at 175. See also Sharrock vy. Dell Buick-Cadilluc,

= —— N.Y.S.2d —— (App. Div. 2d Dept., decided March 238,

1977).

We do not agree with Judge Werker’s attempt to distinguish

Blye on the ground that the liens referred to there all involve ex-

ecution upon goods having no particular relationship to the debt

owing. A ‘“‘conventional security interest’’ would include the

typical purchase money security interest where the debt and se-

curity are fundamentally related.

Morecver, we are reluctant to rely heavily in the state action

ivquiry u)°* whether the property executed upon’ is closely con-

m “ted t> .~ alleged debt or not connected at all. This considera-

‘.. . bea ».ty upen the extent of the intrusion upon the debtor’s

property «sits that the state has authorized, and not upon whether

the state has in fact delegated some of its sovereign power.

8 See also Schmidt v. Blood, 9 Wend. 268, 271 (N.Y. Sup. Ct.

oe) . Knapp, Stout & Co. v. McCaffrey, 177 U.S. 638, 644-45

( ,

8 We note in passing that this was subsequent to the enactment

of the fourteenth amendment.

20a

Appendia B

for the first time become empowered to sell stored goods

in satisfaction of delinquent charges.**

Appellees argue that the alteration of common law rights

which took place is of little significance, citing the follow-

ing passage from Burke and Reber, State Action, Congres-

sional Power and Creditors’ Rights: An Essay on the

Fourteenth Amendment, 47 S. Cal. L. Rev. 1 (1973):

The fact that the law under attack is new and creates,

rather than codifies, common law rights should not

change the inquiry. The focus for state action pur-

poses should always be on the impact of the law upon

private ordering, not the law’s age or historical under-

pinnings. Unless the law in some fashion significantly

interferes with private ordering, the challenged con-

duct should not be attributed to the state. To make

state action turn upon whether the statutory right

being asserted has common law origins would lead to

anomalous results. The identical private conduct pur-

suant to the identical state statutory or judicial law,

would be state action in some states while not in others

depending solely upon the fortuitous and unimportant

circumstances of the age and history of the law.

Id. at 47.

We of course agree that an alteration in the common law

remedy alone is not dispositive of the state action inquiry.

But we reject the authors’ conclusion that statutes such as

) 7-210 have only a minor impact on “private ordering.”

Were it not for this statute, the warehouseman would

stand in the position of any other creditor, i.e., he would

** See Ch. 336 [1879] N.Y. Laws 417. This statute underwent

various amendments and reenactments, not here pertinent, before

assuming its present form with the adoption of the Uniform Com-

mercial Code in 1962. See Ch. 421, [1883] N.Y. Laws 592; Ch.

526, [1885] N.Y. Laws 891; Ch. 418, [1897] N.Y. Laws 514; Ch.

369, [1899] N.Y. Laws 793; Ch. 732, [1907] N.Y. Laws 1706;

Ch, 588, [1949] N.Y. Laws 1339.

21a

Appendix B

have to have the debt he claims he is owed judicially

established, and then have the sheriff execute upon the

goods which he concededly has the common law right to

hold as security. The action of the state in granting the

warehouseman the privileged position he enjoys under

§ 7-210, even though long ago, drastically changes the

balance of power between debtor and creditor. It permits

a complete circumvention of the judicial process, by

installing the warehouseman as the final and interested

judge of any disputes over storage charges, and as the

sheriff who will enforce his own decisions. While we

recognize generally the value of preserving a sphere for

private activity free from the restrictions imposed upon

the state by the fourteenth amendment,” it is plain that

the state’s conscious election to delegate a portion of its

uniquely governmental power to the warehouseman in order

to enhance his common law position as creditor constitutes

state action.

The result we reach today accords with prior decisions

of this circuit which conducted similar state action in-

quiries.

In Shirley v. State National Bank of Connecticut, supra,

the plaintiff’s automobile was peacefully repossessed by

an assignee of the conditional seller, pursuant to a con-

tractual provision. The plaintiff challenged the constitu-

tionality of the Connecticut statute which authorizes such

repossession if the sales contract expressly makes default

a ground for retaking the property. In concluding that

state action was not present, the court, with Chief Judge

Kaufman dissenting, relied heavily on the fact that Con-

necticut creditors -had a common law right to peaceful

repossession without a hearing, and that the statutory

1*This value is nonexistent, however, when a private party

wields power that belongs to the state and is subject to egregious

abuse if not regulated.

22a

Appendix B

enactment only increased protection of installment pur-

chasers. Judge Mulligan reasoned that

since peaceful repossession existed at common law in

Connecticut, the mere codification of that right does

not, in our view, constitute state action. No delegation

of traditional state power has been granted to any

private person.

493 F.2d at 743.

In Bond v. Dentzer, supra, the same panel which decided

Shirley faced a similar question: whether the unilateral

filing of wage assignments by creditors with their debtors’

employers, as authorized by the New York wage assign-

ment statute and pursuant to specific loan agreements,

constitutes state action. Once again the court, with Chief

Judge Kaufman dissenting, found no state action, reject-

ing the plaintiffs’ ‘‘partnership,’’ ‘‘encouragement,’’ and

‘traditional state functions’’ theories. The partnership

argument fell because of the lack of state ‘‘entwinement’’

with the defendant finance companies. The other arguments

failed because the state had ‘‘not deprived the plaintiffs of

anything,’’ 494 F.2d at 307:

|T jhe legislation does not vest the assignee with any

function traditionally performed by the State. The

function of the wage assignment has always been that

of a private levy without a prior court order. There

was never any requirement or practice which has been

called to our attention which mandated the creditor

to first establish the debt before attaching the wages

and whicly the State has now abrogated. In fact, as

our prior discussion indicates, the State has created a

right on the part of the debtor to question the debt by

initiating an action which was not known at common

law. In sum, the statute has not given the assignee

anything new; it has in fact circumscribed substantially

23a

Appendia B

the rights of the creditor which were untrammeled at

common law.

404 F.2d at 311.

The distinctions between the facts of Shirley and Bond

and those of the case at bar are manifest. In neither of

those cases was there any expansion of common law

creditors’ remedies or delegation of power traditionally

exercised by the state—the precise factors which we deem

determinative in the present state action inquiry.” See

also Tedeschi v. Blackwood, supra, at 42 n.10.

In the most recent case on the subject in this circuit,

Tedeschi v. Blackwood, supra, Judge Smith, writing for a

three-judge district court in Connecticut, concluded that

statutory provisions permitting the foreclosure by sale

of a garageman’s lien for towing and storage—analogous

to § 7-210—involved state action and violated due process.

The statutory scheme at issue in Tedeschi empowered a

police officer or motor vehicle inspector who determined

that a motor vehicle had been abandoned, unregistered, or

dangerously parked to have the vehicle towed to a garage

for storage. All towing and storage charges incurred be-

came a lien on the vehicle which in time could be foreclosed

by the garage through its sale of the vehicle. The statute

did not, however, afford a right to a hearing to a person

wishing to contest the application of either its towing or

its lien provisons to his vehicle. -

Judge Smith found state action present in the implemen-

tation of the towing provisions by virtue of a state agent’s

“meaningful participation” by initiating all such towings.

He then ruled that state action was present in the creation

of the garageman’s lien because, rather than merely

** A further distinguishing feature of both Shirley and Bond

is that the courts there concluded that the creditors’ remedies in

question were specifically authorized by contracts underlying the

debts. Contrast n.3, supra.

24a

Appendix B

“acknowledging’’ the legality of private conduct, this

statute “authorized” conduct which would otherwise be

impermissible.” Finally, he concluded that

taken by itself, the foreclosure of a garagekeeper’s

lien pursuant to § 14-150 to cover towing and storage

charges also constitutes “state action.’

410 F. Supp. at 42 (emphasis added), and noted that in

Hernandez v. European Auto Collision, 487 F.2d 378 (2d

Cir. 1973), this court gave a strong indication that it would

find such foreclosure or sale provisions unconstitutional.

The plaintiff in Hernandez, whose car was auctioned off

by a garageman after he refused to pay for allegedly un-

authorized repairs, challenged the pertinent sale provision

of the New York Lien Law. Without expressly addressing

the issue of state action, the court, in an opinion by Judge

Wyzanski, ruled that, if the facts were as plaintiff claimed,

he had a tenable contention that the lien law as applied

violated the due process clause. It directed the district

court to try the case on its merits. Judge Timbers, in a

concurring opinion joined by Judge Lumbard, would have

* Judge Smith observed:

While Connecticut common law may recognize the legality of a

garage lien for services on a vehicle voluntarily surrendered for

the performance of these services, it does not recognize such a

lien where the garage has gained possession of the vehicle

without the owner’s consent. See Paton v. Robinson, 81 Conn.

547, 554, 71 A. 730 (1909).

410 F. Supp. at 42.

** Judge Smith may have qualified this conclusion somewhat

when he observed later in his opinion:

Thus, even if, when considered by itself, the implementation of

the lien provisions did not result in ‘‘state action’’, it would

still be infected by the ‘‘state action’’ resulting from the im-

plementation of § 14-150’s towing provision.

410 F. Supp. at 43.

25a

Appendic B

taken the further step of directing the district court to

declare the sale provisions unconstitutional as applied if

Hernandez were able to prove his allegations. 487 F.2d at

383.

Appellants here argue that state action was found sub

silentio by the Hernandez court, and point out that the

plaintiff in that case briefed the point on appeal. While

such a sub silentio jurisdictional ruling is not binding

precedent in this court, United States v. L.A. Tucker Truck

Lines, Inc., 344 U.S. 33, 38 (1952), we note Chief Judge

Kaufman’s dissent in Shirley v. State National Bank of

Connecticut, swpra, at 745-47, particularly his statement

that the garageman’s right of sale at issue in Hernandez

did not exist at common law. See also Sharrock v. Dell

Buick-Cadillac, Inc., supra.

We recognize that our holding that the enforcement of

the warehouseman’s lien pursuant to §7-210 constitutes

action under color of state law is directly contrary to that

of the Ninth Circuit in Melara v. Kennedy, supra. We have

given that case due consideration, but we disagree with

its conclusion and are unpersuaded by its analysis.

The case is reversed and remanded to the district court.

On remand, the first question to be resolved is that of class

determination,” because that may have an important bear-

ing on the resolution of due process claims. Since the

named plaintiffis in this case were consumers who stored

personal belongings with Flagg Brothers and not mer-

chants, the only constitutional challenge they can make

individually is to § 7-210(2), which authorizes enforcement

of the warehouseman’s lien upon goods ‘‘other than goods

stored by a merchant in the course of his business.’’

§ 7-210(1) is an entirely distinct provision which authorizes

* Leave is hereby granted for substitution of Jones’ personal

representative as plaintiff pursuant to Fed. R. Civ. P. 25(a). See

n.7, supra.

26a

Appendiz B

enforcement of the warehouseman’s lien in the typical com-

mercial warehousing situation, and defendant trade associa-

tions have raised a serious argument that a summary sale

provision in this context may be constitutionally unobjec-

tionable. See D. H. Overmeyer Co. v. Frick Co., 405 U.S.

174 (1972). The constitutionality of § 7-210(1) will not be

before the court, however, unless commercial warehouses

are determined to be within a defendant class against which

suit is brought by an appropriate class of plaintiffs.

Reversed and remanded.

Hoxpen, District Judge, dissenting:

I respectfully dissent. I am persuaded, as Judge Werker

was, that his court was without jurisdiction and would af-

firm the dismissal of the action.

The unfortunate plight which confronted the plaintiff

Brooks, following her eviction in June 1973, inspires con-

cern. And Mrs. Jones was similarly situated when she was

evicted in November cf the same year. According to the

complaints they were victimized by the overbearing of the

defendant warehousemarz. But on the facts alleged the

State of New York was not a participant in the action

taken by the defendant Flagg.

The defendant retained the bailed property under an

ancient possessory lien conferred by the common law.’ See

Schmidt v. Blood, 9 Wend. 268, 271 (N.Y.Sup. Ct. 1832) ;

cf. Knapp, Stout é Co. v. McCaffrey, 177 U.S. 638, 644-645

(1900). See also R. Whitaker, A Treatise of the Law Rela-

tive to the Rights of Lien and Stoppage in Transitu 13-14

(1816). While the complaints speak of threats of sale, that

* The common law remedy in New York gave the warehouseman

a ee lien on the stored goods until the storage charges were

paid.

27a

Appendix B

drastic remedy was not applied; the property has been

returned to both plaintiffs.’

The power of sale asserted by the defendant was first

conferred on warehousemen by an enactment of the New

York Legislature in 1879. Ch. 336 [1879] N.Y. Laws 417.

Thus, for nearly a century warehousemen in New York

have had the authority to sell goods stored with them to

satisfy delinquent charges. The majority of the court con-

cludes that the ‘‘statutory delegation of government power

and its corresponding expansion of his common law reme-

dies suffices to thrust the state’s involvement in the chal-

lenged activity over the threshold of state action.’’ Accord-

ing to the majority, that thrust is sufficient to generate the

judicial power to uproot a statutory provision that has

governed the rights and remedies between warehousemen

and their bailors for many years without interdiction by

the courts of New York.

I agree that the question to be searched is whether the

State of New York has become so involved in the retention

and threatened sale of the plaintiff’s goods that defendant’s

action ‘‘may be fairly treated as that of the State itself.’’

Jackson v. Metropolitan Edison Co., swpra at 351. With-

out such participation the Fourteenth Amendment affords

no protection. Jd.

Of course a state can act only by way of its legislative,

executive and judicial branches. Ex parte Virginia, 100

U.S. 339, 347 (1880). Here there is no suggestion of state

participation by judicial action. To the contrary, it is the

want of judicial action that is the predicate of the com-

plaint. And the State’s executive officers were not partici-

pants in either the creation of the lien or the threat to

2 After the action was brought, by agreement of counsel, the

plaintiff Brooks removed her goods without paying the storage

charges. The plaintiff Jones’ storage charges were paid with pro-

test against the amount of the charges and the goods were removed.

28a

Appendia B

enforce it. The State quit the arena when the evictions

were accomplished, before the present controversy began.

The only state involvement is through the action of the

legislature in adopting the challenged provisions of the

Uniform Commercial Code § 7-210.

The question, as I perceive it, is whether the remedies

provided by §§ 7-209 and 7-210 of the New York Uniform

Commercial Code are ‘‘commanded’’ by the State, or ‘‘so

entwined with governmental policies or so impregnated

with a governmental character as to become subject to the

constitutional limitations placed upon state action.’’ Evans

v. Newton, 382 U.S. 296, 299 (1966).

The roots of the present controversy are embedded in

private dealings between the warehouseman and the bailors

of the prope ty that was stored in the warehouse facility.

No state agency or official has intervened to sell or threaten

to sell the property entrustec by the plaintiffs to the de-

fendant warehouseman. As to non-commercial storage,

such as here involved, the Uniform Commercial Code

merely retained the detailed provisions for notice, pub-

lication and public sale found in Section 33 of the Uniform

Warehouse Receipts Act. Uniform Commercial Code

) 7-210, Official Comment 1.

In Shirley v. State National Bank, 493 F.2d 729 (2d

Cir.), cert. denied, 419 U.S. 1009 (1974), the court was con-

cerned with state action in the context of the Connecticut

Retail Installment Sales Financing Act. Writing for the

majority, Judge Mulligan pointed out:

Here the right to private repossession always existed.

Codification did not encourage the practice one whit.

As we have pointed out, the legislation made it less

attractive by providing greater safeguards to the con-

sumer in the conditional sales contract.

Td. at 744.

29a

Appendix B

By the law of New York the enforcement of a Ware-

houseman’s lien, for nearly a hundred years, has not ‘been

the function of the sheriff. As will be seen from what is

written in the margin, the historical background of the

challenged statute tells us that the State of New York has

not been significantly involved in the enforcement of the

warehouseman’s lien since 1879 unless, of course, either

the bailor or bailee elected to resort to judicial action. And

the statute makes no “command” that §§ 7-209 and 7-210

shall be pursued as the warehouseman’s exclusive remedy.

Compare Peterson v. City of Greenville, 373 U.S. 244, 248

(1963). The statutory history of the contested provisions

of the New York Uniform Commercial Code indicates that

there has been an accretion of safeguards to the mutual

benefit of the parties to the bailment. Cf. Bond v. Dentzer,

494 F.2d 302, 307-09 (2d Cir.), cert. denied, 419 U.S. 837

(1974); Shirley v. State National Bank, supra, 493 F.2d

at 742.

Resolution of the question of government action “hinges

on the weighing of a number of variables, principally the

degree of government involvement, the offensiveness of the

conduct, and the value of preserving a private sector free

from the constitutional requirements applicable to govern-

ment institutions.” Wahba v. New York University, 492

F.2d 96, 102 (2d Cir.), cert. denied, 419 U.S. 874 (1974);

Friendly, The Dartmouth College Case and the Public-

Private Penumbra (1969).

Here we are not confronted with offensive discriminatory

conduct by a private entity. There is nothing mandatory

about the challenged statute; the State is neutral. The

facts of the present controversy fail to establish involve-

ment by the State of New York sufficient to constitute state

action. Bond v. Dentzer, supra. See Shirley v. State

National Bank, supra, 493 F.2d at 744.

30a

Appendix B

Unlike the majority, I am persuaded that the adoption

of § 7-210 of the New York Commercial Code does not

constitute state action. The reasoning pursued in Melara v.

Kennedy, 541 F.2d 802 (9th Cir. 1976) on the very question

presented here, appears to me to be sound. See also Smith

v. Bekins Moving & Storage Co., 384 F.Supp. 1261 (E.D.

Pa. 1974).

As we have seen, New York Uniform Commercial] Code

§§ 7-209 and 7-210 afford a choice of remedies to both bailor

and bailee. The defeadant warehouseman’s exercise, or

threatened exercise, of the power of sale allowed by the

Code, “where the initiative comes from it and not from the

State, does not ma its action in doing so ‘state action’

for purposes of the Fourteenth Amendment.” Jackson v.

Metropolitan Edison Co., supra, 419 U.S. at 357.

Absent the jurisdictional requisite of state action, I

would affirm the order of the District Court without reach-

ing the due process claim.

3la

APPENDIX C

Opinion of the District Court.

Shirley Herriott Brooxs and Gloria Jones, Individually

and on behalf of all others similarly situated, Plaintiffs,

Vv.

F.iacc Broruers, Inc., Individually and as representative

of a class of all others similarly situated, et al., Defend-

ants.

No. 73 Civ. 4050 (HFW).

United States District Court,

S. D. New York.

July 7, 1975.

Plaintiffs filed federal civil rights suit on claim of depri-

vation of due process arising out of potential sales by

warehousemen pursuant New York Uniform Cc mercial

Code without affording owner of goods a prior opportunity

to be heard. The District Céudt, Werker, J., held that state

action, within Fourteenth Amendment, is not present when

warehouseman seeks to enfonee his own lien pursuant to

Uniform Commercial Code self-help provision, whether or

not contracts contain a sale- se-of-default provision;

thus, allegations of deprivati due process by such

sales without affording owner of goyds a prior opportunity

to be heard failed to state a claim under federal civil rights

statute proscribing the deprivation of rights.

Action dismissed.

The Legal Aid Society of Westchester County, by Mar-

tin A. Schwartz, White Plains, N. Y., for plaintiffs.

Louis J. Lefkowitz, Atty. Gen., pro se by A. Seth Green-

wald, Asst. Atty. Gen., of counsel.

32a

Appendiz C

Brodsky, Linett & Altman, New York City by Alvin Alt-

man, New York City, of counsel, for Flagg Brothers.

Werner & Weiss, New York City by Norman Weiss, New

York City, of counsel, for intervenor American Warehouse.

Jaffe, Shaw & Rosenberg, New York City, by Arnold

Shaw, New York City, of counsel, for Warehouseman Ass’n

and Cold Storage Ass’n.

OPINION

Wenrker, District Judge.

Plaintiffs Brooks and Jones are residents of Westchester

County whose property was stored by defendant Flagg

Brothers, Ine. following their evictions by the Mount Ver-

non Marshal in 1973.1. On their own behalf and that of a

proposed class of “persons whose property is stored in a

warehouse located in the State of New York and whose

property has been encumbered by a lien pursuant to New

York Uniform Commercial Code § 209 and subject to sale

pursuant to New York Uniform Commercial Code § 210 be-

cause of warehouse fees allegedly due,’ they challenge the

constitutionality of those two statutes pursuant to 42

U.S.C. $1983. They allege deprivation of due process

* For the allegations of these named plaintiffs see the decision

on Jones’ motion to intervene by the Honorable Murray Gurfein,

then U.S.D.J., at 63 F.R.D. 409, 411-12 (S.D.N.Y. 1974).

* Verified Complaint at 2.

* Section 1983 reads:

Every person who, under color of any statute, ordinance, reg-

ulation, custom, or usage of any State or Territory, subjects,

or causes to be subjected, any citizen of the United States or

other person within the jurisdiction thereof to the depriva-

(footnote continued on following page)

33a

Appendix C

guaranteed by the Fourteenth Amendment of the United

States Constitution, and seek declaratory and injunctive

relief as well as money damages. Their proposed class of

defendants includes “all . . . warehousemen doing business

in the State of New York and who impose liens and subject

goods to sale pursuant to New York Uniform Commercial

Code $§ 209, 210 without affording the owner of the goods

a prior opportunity to be heard.”

Section 7-209 grants a warehouseman a lien on goods

stored, and/or transported, for fees allegedly owed by the

customer.’ Section 7-210 gives a warehouseman the au-

thority to enforce such a lien by public or private sale upon

proper notification to the customer and adherence to com-

mercially reasonable sale procedures.°

Plaintiffs have moved for class action certification of

both a plaintiff and a defendant class, and for summary

judgment on the question of the statutes’ constitutionality.

Defendants have cross-moved to dismiss for failure to state

a cause of action and for lack of subject matter jurisdiction

on the ground that the challenged conduct does not con-

stitute state action within the meaning of the Fourteenth

(footnote continued from preceding page)

tion of any rights, privileges or immunities secured by the

Constitution and laws, shall be liable to the party injured in

an action at law, suit in equity, or other proper proceeding

for redress.

Federal district courts have jurisdiction to hear actions under

§ 1983 by virtue of 28 U.S.C. § 1343(3).

* Verified Complaint at 3.

’ Prior to codification by the U.C.C. and its predecessors, such

a lien existed at common law. R. Brown, The Law of Personal

Property § 119 (2d ed. 1955).

*Such a right of enforcement did not exist in New York at

common law, although it has existed in statutory form since 1879.

See note 17, infra.

34a

Appendix C

Amendment, and was not performed ‘‘under color of’’ state

law within the meaning of § 1983.’ Upon careful consider-

ation of the facts in this case and the following analysis of

relevant Second Circuit and Supreme Court decisions, the

court finds that defendants are indeed correct. Plaintiffs’

action is consequently dismissed for lack of jurisdiction.

Plaintiffs have advanced four arguments in support of

their assertion that state action is present in the challenged

activity. Their first argument is that the Second Cirecuit’s

decision in Hernandez v. European Auto Collision, Inc.,

487 F.2d 378 (2d Cir. 1973) compels a finding of state

action in this case. State action, however, was never dis-

cussed in that opinion. In Hernandez plaintiff challenged

the garageman’s lien provisions of the New York Lien Law

which allow a garageman to detain an automobile until

alleged storage and repair charges are paid, and to fore-

close his lien by selling the auto upon proper notification

to the bailor.* The district court judge dismissed the com-

plaint, noting: |

‘*{EJ]ven assuming that the defendants are acting un-

der color of state law, the court cannot find that the

plaintiffs’ constitutional right to due process of law

has been deprived by the operation of the challenged

provisions of the lien law. Consequently, ..., the court

need not go further and formally pass upon the sec-

ond requirement—the presence of state action.”

"The “state action” and “action under color of state law”

concepts have been found to be functionally equivalent. Adickes

vu. S. H. Kress & Co., 398 U.S. 144, 90 S.Ct. 1598, 26 L.Ed.2d

142 (1970). Hereinafter they shall be jointly referred to as

“state action.”

*The statutes challenged in Hernandez are substantially sim-

ilar to those in question here. Compare, New York Lien Law

§§ 184, 201, 202 and 204 with New York U.C.C. §§ 7-209, and 210.

35a

Appendix C

346 F.Supp. 313, 317 (E.D.N.Y.1972).°

On appeal the Second Cireuit upheld the dismissal as to

the detention provisions of the New York Lien Law because

it found that having voluntarily delivered his car to the

defendant garageman, and having never requested its re-

turn or tendered reasonable storage charges, the plaintiff

had no standing to challenge the lien. 487 F.2d at 380.

As to the sale provisions of the statute, however, the court

noted that if, upon remand, the district judge were to find

plaintiff’s version of the facts as alleged,

‘‘then we would conclude that plaintiff has, under the

doctrines enunciated in Fuentes v. Shevin, 407 U.S. 67

[92 S. Ct. 1983, 32 L.Ed. 556] (1972), Bell v. Burson,

402 U.S. 535 [91 S.Ct. 1586, 29 L.Ed.2d 90] (1971), and

Sniadach v. Family Finance Corp., 395 U.S. 337, [89

S.Ct. 1820, 23 L.Ed.2d 349], a tenable contention that

Section 204 of the New York Lien Law as applied here

was repugnant to the due process clause of the Four-

teenth Amendment... .’’

Id. at 382-83. Neither the court’s opinion nor the concur-

ring opinion’ in Hernandez mentioned or discussed the

issue of state action.

[1] Plaintiffs argue that a “finding” of state action is

implicit in both Hernandez opinions. However, because

*In a footnote, however, Judge Costantino noted that the

presence of state action “would seem to be quite manifest.

“Though he is a private individual, the lienor through the public

auctioneer it has retained, is performing a traditionally public

function pursuant to a right accorded it by a state statute.

346 F.Supp. 313 at 317.

went further than Judge Wyzanski in the court’s opinion, stating

that they would direct the district court to declare the sale pro-

visions unconstitutional as applied if plaintiff were to prove his

allegations.

36a

Appendiz C

District Judge Costantino had merely assumed the pres-

ence of state action in order to consider and dismiss the

Hernandez constitutional claim on its merits, the state ac-

tion issue was not properly before the Court of Appeals;

the sole issue on appeal was whether, assuming state ac-

tion, plaintiff had stated a claim. Furthermore, even if a

finding of state action were implicit in the Second Circuit’s

decision, this court would not be bound by such a sub silen-

tio ruling. United States v. L. A. Tucker Truck Lines, 344

U.S. 33, 38, 73 S.Ct. 67, 97 L.Ed. 54 (1952). This court

therefore concludes that the Second Circuit’s decision in

Hernandez is not dispositive of the state action issue in

this case.

[2] Plaintiffs, in their remaining argument, would have

the court find state action because:

—the warehouseman who enforces his own lien pursuant

to § 7-210 is performing what has traditionally been

a public function;

—the state imposes extensive regulation on the ware-

housing industry, ineluding regulation of the chal-

lenged activity; and

—section 7-210 confers on warehousemen rights in ex-

cess of those at common law.

The question of whether state action exists usually

arises with respect to private conduct upon an allegation

that the conduct is “so entwined with governmental poli-

cies or so impregnated with a governmental character as

to become subject to the . . . limitations placed upon state

action.” Evans v. Newton, 382 U.S. 296, 299, 86 S.Ct. 486,

488, 15 L.Ed.2d 373 (1966). However, as the Supreme

Court noted in Moose Lodge No. 107 v. Irvis, 407 U.S. 163,

172, 92 S.Ct. 1965, 1971, 32 L.Ed.2d 627 (1972), “while

the principle is easily stated, the question of whether par-

37a

Appendiz C

ticular discriminatory conduct is private, on the vne hand,

or amounts to ‘state action,’ on the other hand, frequently

admits of no easy answer.” The answers, particularly in

recent months, have varied from circuit to cireuit, and

even within the Second Circuit have produced division and

disagreement among panels.”

In Jackson v. Statler Foundation, 496 F.2d 623 (2d Cir.

1974), cert. denied, 420 U.S. 927, 95 S.Ct. 1124, 43 L.Ed.2d

397 (1975), Judge Smith enumerated five factors culled

from a review of state action case law which the court

found to be “particularly important to a determination of

‘state action’ ”:*

(1) the degree to which the ‘private’ organization is

dependent on governmental aid; (2) the extent and in-

In Tucker v. Maher, 497 F.2d 1309 (2d Cir. 1974) Judge

Mulligan noted:

Constitutional law, particularly in this difficult and confus-

ing area of state action and due process, is hardly predict-

able with any degree of certainty. The very recent history

of such constitutional litigation in this cireuit should con-

vineingly indicate that the role of the prophet is precarious

at best.

In a footnote he then added:

In Shirley v. State Nat’l Bank, 493 F.2d 739 (2d Cir. 1974),

and Bond v. Dentzer, 494 F.2d 302 (2d Cir. 1974), after

both panels had split 2-1 over state action issues, rehearings

en bane were denied . . . by votes of 5-3. In Jackson v.

Statler Foundation, 496 F.2d 623 (2d Cir. 1974), again a

state action case, a rehearing en bane was also denied by a

failure of a majority of the active judges to vote in favor of

such reconsideration; the vote was 4-4, 496 F.2d at 636.

Id. at 1315.

s Although the Jackson v. Statler Foundation factors were

enumerated in the context of an action against charitable founda-

tions for alleged racial discrimination, and the courts have tradi-

tionally used a lesser state action standard where race is con-

(footnote continued on following page)

38a

Appendix C

trusiveness of the governmental regulatory scheme;

(3) whether that scheme connotes government ap-

proval of the activity or whether the assistance is

merely provided to all without such connotation; (4)

the extent to which the organization serves a public

function or acts as a surrogate for the state; (5)

whether the organization has legitimate claims to rec-

ognition as a ‘private’ organization in associational

or other constitutional terms.

Each of these factors is material; no one factor is

conclusive.

* o . ia s e

Moreover, even if one of these factors is absent, a

finding of ‘state action’ may still be appropriate.

Id. at 629-34 (emphasis added). Plaintiffs’ second argu-

ment for state action, that in enforcing his own lien a

warehouseman is performing a public function, finds sup-

port in Judge Smith’s list above. Their rationale is that

at common law a warehouseman could enforce his lien only

by obtaining a court judgment and having the sheriff exe-

cute on it; thus, by allowing a warehouseman to enforce

his lien without resort to the courts and the sheriff, § 7-210

enables him to perform an ‘‘inherently’’ public function.

Plaintiffs rely for this theory upon Blye v. Globe-Wer-

nicke Realty Co., 33 N.Y.2d 15, 20, 347 N.Y.S.2d 170, 175,

300 N.E.2d 710, 715 (1973) in which the New York Court

(footnote continued from preceding page)

cerned (see pages 1064, 1065, infra), they are helpful in delimit-

ing the outer boundaries of state action prerequisites. The court

in Statler Foundation found that if the defendant institutions

were substantially dependent upon their tax-exempt status, if the

government’s regulatory scheme was both detailed and intrusive,

if the scheme carried connotations of government approval, if the

institutions did not have a substantial constitutional claim to be

left alone, and if they served some public function, then the dis-

trict court on remand could find state action.

39a

Appendix C

of Appeals found that an innkeeper’s execution of his own

lien amounts to the exercise of a public function: ‘‘ [T]he

execution of a lien, be it a conventional security interest,

(cite), a writ of attachment (cite), or a judgment lien

(cite), traditionally has been the function of the Sheriff.’’

The liens referred to by the Blye court, however, all in-

volve satisfaction of a debt having no particular relation

to the goods executed upon. While such liens historically

belong to the sheriff for execution, execution on goods law-

fully in a warehouseman’s possession, to satisfy charges

arising out of such possession, is not traditionally a func-

tion of the sheriff; traditionally the sheriff was called

upon for execution on goods only after the warehouseman

had obtained a judgment lien.* Melara v. Kennedy, 74

Civ. 1535, N.D.Cal., August 21, 1974. Accord, Collier, Pro-

cedural Due Process—Post Fuentes Constitutionality of

Garageman’s Liens, 54 B.U.L.Rev. 542, 554 (1974). This

distinction mandates rejection of the public function

theory.“ Cf. James v. Pinniz, 495 F.2d 206, 208 (5th Cir.

1974); Melara v. Kennedy, supra. In Melara, a case sub-

stantially identical to the one at hand, the court held that

enforcement of a lien pursuant to § 7210 of the California

Uniform Commercial Code was not performance of a state

or publie function, and did not constitute state action. See

also Parks v. Mr. Ford, 386 F.Supp. 1251, E.D.Pa., 1974.

(Pennsylvania’s repairman’s lien statutes do not so infuse

8 Ever since its statutory creation in 1879 (L.1879 ¢. 336), the

warehouseman’s lien has traditionally been enforced by ware-

housemen themselves.

4 Even if this court were to conclude, however, that enforce-

ment of a lien pursuant to § 7-210 constitutes execution of a

public function, this conclusion would not lead inexorably to a

finding of state action. See Jackson v. Metropolitan Edison Co.,

419 U.S. 345, 353, 95 S.Ct. 449, 42 L.Ed.2d 477 (1974); Powe v.

Miles, 407 F.2d 73, 80 (2d Cir. 1968).

40a

Appendix C

private acts of detention and sale with state involvement

as to render them state action).

[3] Plaintiffs’ third argument in support of state action

relies upon the public function theory and must be re-

jected with it. They suggest that because “warehouses and

warehousemen are affected with a public interest,” state

regulation of the industry permeates its nominally private

acts with state action. This line of reasoning was effec-

tively foreclosed by the Supreme Court in Jackson v.

Metropolitan Edison Co., 419 U.S. 345, 95 S.Ct. 449, 42

L.Ed. 2d 477 (1974). In that case petitioner challenged the

constitutionality of the defendant’s authority, under a

tariff filed with the State Public Utilities Commission, to

cut off her electric power without meeting the due process

standards enumerated in Fuentes v. Shevin, 407 U.S. 67,

92 S.Ct. 1983, 32 L. Ed.2d 556 (1972). Justice Rehnquist,

writing for the Court, stated:

Perhaps in recognition of the fact that the supply-

ing of utility service is not traditionally the exclusive

prerogative of the State, petitioner invites the expan-

sion of the doctrine of this limited line of cases into

a broad principle that all businesses ‘affected with the

public interest’ are state actions in all their actions.

We decline the invitation for reasons stated long

ago in Nebbia v. New York, 291 U.S. 502 [54 8.Ct..505,

78 L.Ed. 940] (1934), ...:

“It is clear that there is no closed case or category

of businesses affected with a public interest... . The

phrase ‘affected with a public interest’ can, in the

nature of things, mean no more than that an indus-

try, for adequate reason, is subject to control for the

publie good. . . . In several of the decisions of this

Court wherein the expressions ‘affected with a pub-

lic interest’ and ‘clothed with a public use’ have been

4la

Appendix C

put forward as the criteria ... it has been admitted

that they are not susceptible of definition and form

an unsatisfactory test.” Jd., at 536 [54 S.Ct. 505).

Id. at 353, 95 S.Ct. at 455.

[4] Plaintiffs seem to have anticipated such fore-

closure, for they suggest in the alternative that even if

the challenged activity is essentially private, state regula-

tion of the industry is so directly and significantly involved

therein that the state must be viewed as a joint partici-

pant. Under this rubric which tracks factor (2) in Judge

Smith’s list above, the state’s “involvement” is its regula-

tion of the warehouseman’s lien sale and its failure to

include in that pervasive regulation a requirement of

Fuentes due process standards. This in essence is the

theory first used by the Supreme Court in Burton v. Wil-

mington Parking Authority, 365 U.S. 715, 81 S. Ct. 856,

6 L.Ed.2d 45 (1961). Burton, however, is distinguishable

in two important ways. First, in the instant case the sym-

biotic relationship between the state and the private de-

fendant present in Burton is missing. Secondly, Burton

was @ case involving racial discrimination, and “racial dis-

crimination is so peculiarly offensive and . . . so much the

*°In Jackson v. Metropolitan Edison Co., supra, the Supr

Court described the Burton case as follows: 4 pepe

. . . Where a private lessee who practiced racial discrimination

leased space for a restaurant from a state parking authority in

a publicly owned building, the Court held that the State had

so far insinuated itself into a position of interdependence with

the restaurant that it was a joint participant in the enterprise.

Id. at 725 [81 S.Ct. 856]. We cautioned, however, that ‘while

a multitude of relationships might appear to some to fall

within the Amendment's embrace,’ differences in cireumetances

beget differences in law, limiting the actual holding to lessees

of public property.

419 U.S, at 357-58, 95 S.Ct. at 457.

42a

Appendiz C

prime target of the Fourteenth Amendment that a lesser

degree of involvement may constitute ‘state action’ with

respect to it than would be required in other contexts.”

Coleman v. Wagner College, 429 F.2d 1120, 1127 (2d Cir.

1970).% See also Greco v. Orange Memorial Hospital

Corp., 513 F.2d 873 (5th Cir. 1975); Adams v. So. Cal.

First National Bank, 492 F.2d 324, 333 (9th Cir. 1973),

cert. denied, 419 U.S. 1006, 95 S.Ct. 325, 42 L.Ed.2d 282

(1974). Thus resolution of the state action issue in this, a

non-racial case, is not controlled by the standards evolved

in eases of racial discrimination.

[5] Plaintiff’s last argument, and by all appearances the

sturdiest, is that by statutorily conferrine on warehouse-

men a power not possessed at common law, the state has

created an impetus for warehouseman lien sales, has en-

couraged such sales, and has thereby so involved itself in

the challenged conduct as to transform it into state action.”

‘6 Our cireuit has long recognized a double “state action” stand-

ard, a less onerous test for cases involving racial discrimination,

and a more rigorous standard for other claims. See United States

v. Wiseman, 445 F.2d 792, 795 at n. 3 (2d Cir. 1971).

1? The statutory right to enforce the warehouseman’s lien, first

enacted in 1879, was reenacted as § 118 of the New York General

Business Law in 1907. L.1907, e. 732 § 33, as amended L.1949,

c. 588. In 1962 the state legislature again reenacted it, this time

as part of the U.C.C., effective since 1964. The state courts have

traditionally considered these statutory provisions to be in dero-

gation of common law. See, e. g.: Maritime World Corp. v. Grefe

Steel Warehouse Corp., 154 N.Y.S.2d 684 (S.Ct.N.Y.Cnty.1956) ;

Hackett v. Nelson Express & Storage Co., 162 Mise. 444, 294

N.Y.S. 905 (1937). To the extent, however, that contractual pro-

visions between warehousemen and customers allowing for sale in

ease of default have been enforced by the courts, sale provisions

of contractual origin can be said to be part of the state’s common

law. Cf. note 18, infra. A majority of warehouseman contracts

in New York apparently contain such provisions.

43a

Appendix C

(See factor (3) of Judge Smith’s Jackson v. Statler

Foundation list, supra.) The key to this argument is the

alteration of common law, for the Second Circuit in recent

decisions has held more statutory codification of common

law rights insufficient state involvement to constitute state

action. Bond v. Dentzer, 494 F.2d 302 (2d Cir. 1974):

Shirley v. State National Bank, 493 F.2d 739 (2d Cir. 1974).

In Shirley, where plaintiff challenged repossession of

goods purchased under an installment sales contract, the

court stated:

. since peaceful repossession existed at common

law in Connecticut, the mere codification of that right

does not, in our view, constitute state action.

Id. at 743. Likewise in Bond, the court found that state ac-

tion was not present in an assignment of wages made pursu-

ant to New York’s wage assignment statute because ‘‘the

statute has not given the assignee anything new’’. Id. at

311. See also Phillips v. Money, 503 F. 2d 990 (7th Cir.

1974) ; Fletcher v. Rhode Island Hospital Trust National

Bank, 496 F.2d 927 (1st Cir. 1974); Parks v. Mr. Ford,

supra at 1268; Boland v. Essex County Bank and Trust

Co.,"* 361 F.Supp. 917 (D.Mass.1973).

The question remains whether satisfaction of this ‘‘com-

mon law codification or alteration” test alone constitutes

In Boland, the court examined the constitutional validity of

the Massachusetts self-help repossession statute. It found that at

common law repossession was allowed only A poser for by econ-

tract, whereas the statute in question allowed repossession unless

it was ibited by contract. In dicta the court asserted that the

same differences had existed in Shirley v. State National Bank,

supra, between the common and statutory law of Connecticut,

adding: “. . . there is no indication in the [Second Circuit]

court’s ruling in Shirley v. State National Bank that the parties

undertook to demonstrate to the court the changes in the law of

Connecticut brought about by its enactment of the U.C.C.” Id at

921. The Boland court found that state action existed.

44a

Appendiz C

state involvement significant enough to be called state ac-

tion. Judge Smith in Jackson v. Statler Foundation, supra,

warned that “no one factor is conclusive.” By definition,

if the facts here do not meet the state action standards

for cases of racial discrimination such as Statler Founda-

tion, they do not meet the more exigent prerequisites to

state action in non-racial cases. The Fifth and Ninth

circuits, in the context of challenges to self-help reposses-

sion statutes, have both found the common law test, alone,

to be insufficient. In Adams v. So. Cal. First National

Bank, supra, the Ninth Circuit stated:

[We do not consider it conclusive that section 9503

of the California Commercial Code confirmed what

the law of California had theretofore been, i. e., that

a secured party upon default had a right to take

possession of the collateral. This is not the final an-

swer to the touchstone of state action. Were such a

test the only one, the California statutes adopting the

common law of England would cast the shadow of

state action over all activity and pose an argument

that could blanket all individual wrongs under section

1983.

492 F.2d at 330. The Fifth Cireuit in James v. Pinniz,

supra, noted:

. . the fact is that Mississippi cases did not sanction

self-help repossession except when provided for in the

parties’ contract, whereas § 9-503 allows it except when

the contract is silent on the point. Thus the ereditor’s

arguments that §9-503 merely carried forward the

former Mississippi practice and that the contract is

the sole source of summary repossession power, lose

some force.

495 F.2d at 209. The court then went on to conclude,

however, “No bright lines can be drawn in this area, and

45a

Appendix C

we draw none. Some state involvement . . . may be

present here, but it is simply not enough, given the non-

racial nature of the case, to constitute state action.”

[6] Given the Second Circuit’s discussions in Shirley

and Bond, as well as relevant decisions from other courts,

it seems clear to this court that with respect to those mem-

bers of plaintiffs’ “class” whose contracts contained a

sale-in-case-of-default provision, there is no state action.

See note 17 supra. As the Ninth Circuit noted in Adams,

“the State cannot be held responsible for creating condi-

tions that result in standardized contracts in the credit

industry which typically provide for self-help repossession

without notice or an opportunity for a hearing prior to

the seizure of property.” 492 F.2d at 333. See Note—State

Action: Theories for Applying Constitutional Restrictions

to Private Activity, 74 Col. L. Rev. 656 at 665 (1974).

Indeed one case which has dealt specifically with § 7-210

and a contractual provision for sale has so ruled. Smith v.

Bekins Moving and Storage Co., 384 F.Supp. 1261 (E.D.Pa.

1974). Furthermore, here as in Shirley and Bond, the

codification and alteration of common law also impose

certain procedural restraints on it, to the benefit of ware-

house customers, i.e., requirements as to fair notice, reason-

able sale, etc., and thus, as in those cases, represent amelia-

tory rather than regressive action. “Private action does

not become state action simply because government regu-

lation has not gone so far as a plaintiff would like.”

Jackson v. Statler Foundation, supra at 639.

Likewise, with respect to those in plaintiffs’ “class” who

are subject to no contractual provision of sale, the court

also fails to find sufficient state involvement to constitute

state action. It is true that for this group of warehouse

customers the defendants’ power of sale comes only from

§ 7-210. However, in its decision in Jackson v. Metropoli-

tan Edison Co., supra, the Supreme Court stated: “Ap-

46a

Appendix C

proval by a state utility commission . . ., where the Com-

mission has not put its own weight on the side of the

proposed practice by ordering it, does not transmute a

practice initiated by the utility and approved by the

Commission into ‘state action.’” Id. at 357, 95 S.Ct. at 456

(emphasis added). In this case no less than in Jackson, the

state’s involvement in the challenged activity is merely

permissive. For this reason, and for the reasons detailed

above, the court must conclude that plaintiffs have failed

to show sufficient state involvement in the enforcement

of warehousemen’s liens to confer jurisdiction upon a fed-

eral district court under 28 U.S.C. § 1343(3), or to state

a claim under 42 U.S.C. § 1983." The action is therefore

dismissed.

So ordered.

1 The court notes that a challenge to §§ 7-209 and 7-210 has

already been mounted in the state courts. In Jones v. Banner

Moving and Storage Inc., 78 Mise.2d 762, 358 N.Y.S.2d 885

(Kings Cnty 1974), the New York Supreme Court found those

statutes to be unconstitutional for essentially the same reasons

plaintiffs would present here. That decision has been argued on

appeal to the Appellate Division, 2d Dept., and is now sub judice.

47a

APPENDIX D

District Court Opinion on Motion to Intervene.

Shirley Herriott Brooks, Individually and on behalf

of all others similarly situated, Plaintiffs,

Vv.

Face Broruers, Inc., and Henry Flagg, Individually

and as President of Flagg Brothers, Inc., Defendants.

No. 73 Civ. 4050 MIG.

United States District Court,

S. D. New York

June 25, 1974.

A purported class action was initiated by the owner of

personal property stored in a public warehouse, seeking an

adjudication that New York’s warehousemen’s lien laws,

which grant warehousemen a lien and the right to sell

stored goods for warehousemen’s fees allegedly due with-

out granting the owner of the stored goods an opportunity

for a hearing prior to the imposition of the lien and sale,

were unconstitutional.

The Legal Aid Society of Westchester County, by Martin

A. Schwartz, Lawrence S. Kahn and Gene F. Reibman,

White Plains, N. Y., of counsel, Louis B. York, Manhattan

Legal Services Corp., New York City, for plaintiffs.

Brodsky, Linett & Altman, New York City, for defend-

ants, by Alvin Altman and Michael J. Barnas, New York

City, of counsel.

Louis J. Lefkowitz, Atty. Gen., of N. Y., pro se, proposed

intervenor, by A. Seth Greenwal?, Asst. Atty. Gen., of

counsel.

48a

Appendia D

Werner & Weiss, New York City, for proposed inter-

venors, American Warehousemen’s Ass’n and Interna-

tional Ass’n of Refrigerated Warehouses, Inc., by Martin

Weiss, New York City, of counsel.

Jaffe, Shaw & Rosenberg, New York City for proposed

intervenors, Warehousemen’s Ass’n of Port of N. Y. and

the Cold Storage Warehousemen’s Ass’n of Port of N. Y.,

by Arnold H. Shaw, New York City, of counsel.

Gurrern, District Judge:

This is an action challenging the constitutionality of New

York’s warehousemen’s lien laws, N.Y.U.C.C. $§ 7-209,

210, which grant a warehouseman a lien and the right to

sell stored goods for warehouseman’s fees allegedly due

without granting the owner of the stored goods an oppor-

tunity for a hearing prior to the imposition of the lien

and sale. The plaintiff Brooks individually and on behalf

of all others similarly situated seeks declaratory and in-

junctive relief and money damages. Jurisdiction is al-

leged under 42 U.S.C. §§ 1983, 1985, 28 U.S.C. § 1343(3),

(4) and 28 U.S.C. §§ 2201, 2202.

There are currently four pending motions to intervene

pursuant to Fed.R.Civ.P. 24. (1) Gloria Jones has moved

to intervene as a plaintiff individually and on behalf of all

others similarly situated pursuant to Fed.R.Civ.P. 24(b)

(2); (2) the American Warehousemen’s Association and

the International Association of Refrigerated Warehouses,

Ine. have moved to intervene as party defendants; (3)

the Warehousemen’s Association of the Port of New York,

Ine. and the Cold Storage Warehousemen’s Association of

the Port of New York have moved to intervene as party

defendants; and (4) the Attorney General of the State of

New York has moved to intervene as a party defendant.

Only the Attorney General’s motion is unopposed. Flagg

opposes the intervention of the proposed plaintiff.

49a

Appendiz D

Tue ‘‘Brooxs CompiaintT’’

Shirley Brooks (“Brooks”) alleges that she represents —

‘fa class of persons whose property is stored in a ware-

house located in the State of New York and whose prop-

erty has been encumbered by a lien pursuant to New York

Uniform Commercial Code § 7-209 and subject to sale

pursuant to New York Uniform Commercial Code § 7-210

because of warehouse fees allegedly due, without oppor-

tunity for a prior hearing.’" She further alleges that the

action is properly a class action under Fed.R.Civ.P. 23.

Brooks also claims that defendant Flagg Brothers, Inc.

_(‘‘Flagg Brothers’’) is a representative of a class of de-

fendants, ‘‘all of whom are warehousemen doing business

in the State of New York and who impose liens and subject

goods to sale pursuant to New York Uniform Commercial

Code §§ 209-210 without affording the owner of the goods

a prior opportunity to be heard.’”

Brooks is a New York citizen, residing in White Plains

with her three minor children. Her husband is deceased.

Her weekly ‘‘take home’’ salary is approximately $100, her

sole source of income.

Flagg Brothers is a New York corporation engaged in

the business of moving and storage. Flagg Brothers main-

tains an office at 247 South Fifth Avenue, Mount Vernon,

New York. Defendant Henry Flagg (‘‘Flagg’’) is Presi-

dent of Flagg Brothers; he is sued individually and in his

official capacity. Defendant James A. Leviston (‘‘Mar-

shal’’) is the City Marshal of Mount Vernon and is also

sued individually and in his official capacity.

+4 5.

*q 7.

50a

Appendiz D

In her complaint, Brooks alleges the following facts. In

the spring of 1973, an order of eviction was entered by the

City Court of Mount Vernon against the plaintiff who was

then residing at 33 North 3rd Avenue, Mount Vernon, N. Y.

The defendant Marshal appeared on June 13, 1973 to re-

move the plaintiff and her possessions from her apart-

ment. Brooks told the Marshal that she wanted to call

someone to store her furniture. The Marshal responded

that she could not get anyone to store her furniture and

that the man with him, defendant Flagg, wou'd store her

furn.ture. Flagg informed Brooks that she would have

to pay $65 per month for moving and storage. Believing

she had no choice, Brooks agreed. After the goods were

loaded onto one of Flagg Brothers’ trucks, one of the mov-

ing men told Brooks that she would have to pay $178 ($75

per month for storage, $75 for barreliing and platforming

and $28 for fumigating).

After her eviction, Brooks and her children moved into

her cousin’s apartment at 120 North Kensco Avenue, White

Plains, New York. On June 15, 1973 the plaintiff called

Flagg Brothers and was informed that she owed an ad-

ditional $156. When she went to Flagg Brothers’ office,

she was told that the $178 was considered only a deposit.

She was also advised that the storage charges were on a

“ner month” basis so that an additional $75 would be due

on July 1, rather than on July 13 as she had thought.

Subsequent communications between Brooks and Flagg

Brothers include: Flagg’s secretary advising Brooks that

the plaintiff could only obtain her possessions if she paid

$484 in cash; a letter from Flagg Brothers in the form of

a “Final Notice” that unless payment was made Flagg

Brothers would advertise her goods for public auction.

Prior to August, 1973, Brooks had been unable to remove

her goods because of insufficient space in her cousin’s apart-

ment.

dla

Appendiz D

It appears that the goods have now been returned to

plaintiff Brooks in their entirety. She has no claim for in-

junctive relief but only a claim for damages and declara-

tory relief.

MOTIONS TO INTERVENE

(1) Jones’ Motion to Intervene as Plaintiff

[1] Because Brooks’ case for injunctive relief has been

dissipated, the same lawyers now seek intervention on be-

half of Gloria Jones. In her proposed intervenor’s com-

plaint, Jones virtually tracks the jurisdictional® and class

action allegations that appear in Brooks’ complaint.

Jones is a New York citizen, residing alone at 670 Lincoln

Avenue, Mount Vernon, New York. She has a weekly in-

come of $87.00 after taxes. The defendants are Flagg and

Flagg Brothers. She does not name the Marshal.

Jones alleges that on December 26, 1973 the Marshal

came to remove her and her possessions pursuant to an

order of eviction entered against Jones by the City Court

of Mount Vernon. The Marshal repeated what he had told

Brooks that Jones could not get anyone to store her furni-

ture and other possessions and that the man with him, an

employee of Flagg Brothers, was the man who would store

her goods.

Unlike Brooks, Jones did not agree to Flagg Brothers

storing her goods. Nor was she advised of the storing

rate. Nonetheless, Flagg Brothers took the goods to its

storage warehouse.

After her eviction, Jones moved to her current address.

She spoke to Flagg Brothers in March, 1974 and was told

* Jones limits herself to 42 U.S.C. § 1983, 28 U.S.C. § 1343(3)

and 28 U.S.C. §§ 2201, 2202. She omits as a basis for jurisdiction

42 U.S.C. § 1985, 28 U.S.C. § 1343(1), (4).

52a

Appendiz D

she would have to pay $600 to obtain her goods. She was

also told that had she not contacted Flagg Brothers at

that time the goods would have been sold immediately.

Thereafter, Jones complained of the high price, nothing

that she had not contracted to pay for the storage. The

defendants told her that the bill was only $500 and that if

she did not pay the entire sum by April 12, 1974 the goods

would be sold. Jones cannot afford to pay.‘

Jones urges that the imposition of a warehousemen’s lien

and the threatened sale (U.C.C. §§ 7-209, 7-210) without a

prior hearing are actions under color of state law which

violate plaintiff’s due process rights under the Fourteenth

Amendment.

Like the Brooks’ complaint, the Jones’ complaint seeks

declaratory and injunctive relief and damages.

In an answering affidavit, Flagg’s attorney avers that

defendants have advised plaintiff’s counsel that the de-

fendants have no intention of selling the goods and if they

do decide to sell them, plaintiff’s counsel will be notified

“well in advance of any sale.’ Plaintiff’s counsel has

sworn in a reply affidavit that because of these assurances

he has not sought a temporary restraining order on behalf

of Jones.

Jones’ motion is for permissive intervention (Fed.R.

Civ.P. 24(b)(2)) and as part of her representation of a

class (Rule 23).

No class determination under Rule 23 has yet been con-

sidered by the Court.

Rule 24(b)(2) provides in part: “Upon timely applica-

tion anyone may be permitted to intervene in an action:

. . . (2) when an applicant’s claim or defense and the

*97 17.

5 Altman Affd. { 5.

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Appendiz D

main action have a question of law or fact in common.

. . In exercising its discretion the court shall consider

whether the intervention will unduly delay or prejudice

the adjudication of the rights of the original parties.”

Having eliminated Brooks as a plaintiff for injunctive

relief, the defendants now seek to eliminate the proposed

intervenor Jones by telling her that they have no intention

of selling her goods, and that she would, in any event, be

notified well in advance of the sale. If the defendants made

the same promise each time a plaintiff challenged them, or

even gave the goods back each time, they would have a

continuing argument that there is no justiciable contro-

versy and that the particular plaintiff had no standing.

The situation is analogous to the problem presented in

Southern Pacific Terminal Co. v. Interstate Commerce

Comm’n, 219 U.S. 498, 31 S.Ct. 279, 55 L.Ed. 310 (1911),

where the Court held that it had jurisdiction to determine

whether an order of the LC.C. should be enjoined, even

though the order had by then expired. “The questions in-

volved in the orders of the Interstate Commerce Commis-

sion are usually continuing (as are manifestly those in the

case at bar) and their consideration ought not be, as they

might be, defeated, by short term orders, capable of repeti-

tion, yet evading review.’’ (219 U.S. at 515, 31 S.Ct. at

283.)

In the case at bar, the practices of ihe defendants under

a continuing statute cannot be kept from judicial scrutiny

by quick settlements or apologies. The threat alleged by

Mrs. Jones that her furniture would be sold if she did not

pay makes this a case or controversy, certainly for pur-

poses of a declaratory judgment. Her property is con-

cededly in the defendants’ possession and the threat has

been alleged. The defendants’ position remains that stor-

age fees are due and that Jones is responsible for them.

Even though the threat of sale did not succeed in “co-

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Appendiz D

ercing’’ a ‘‘voluntary’’ payment by Jones, defendants still

maintain that they do have recourse to § 7-210 procedures.

The fact that they agreed not to invoke § 7-210 during this

suit does not affect Jones’ action in terms of its ripeness

any more than had Jones sought and won a restraining

order. Since the threat of sale would have been sufficient

for ripeness for purposes of a restraining order, it is also

sufficient here. See Hart & Wechsler, The Federal Courts

and The Federal System 139 n. 5 (1953).

Similarly, the status quo accord does not diminish Jones’

interest for purposes of standing. She has alleged “ ‘such

a personal stake in the outcome of the controversy as to

assure that the concrete adverseness which sharpens the

presentation of issues upon which the court so largely

depends for illumination of difficult constitutional ques-

tions. . . .’ Baker v. Carr, 369 U.S. 186, 204, 82 S.Ct. 691,

703, 7 L.Ed.2d 663 (1962).” Jenkins v. McKeithen, 395

U.S. 411, 423, 89 S.Ct. 1843, 1849, 23 L.Ed.2d 404 (1969).

While it is true that the factual patterns in Jones’ com-

plaint differ from Brooks’, the legal issue remains the

same, whether the decision of Margo v. Lentini Bros. Mov-

ing & Storage Co., 338 F.Supp. 464 (E.D.N.Y.1971), aff’d

per curiam on opinion below, 460 F.2d 1064 (2 Cir.), cert.

denied, 406 U.S. 961, 92 S.Ct. 2074, 32 L.Ed.2d 349 (1972),

upholding the constitutionality of § 7-210 has continuing

vitality in light of Fuentes v. Shevin, 407 U.S. 67, 92 S.Ct.

1983, 32 L.Ed.2d 556 (1972) and Hernandez v. European

Auto Collision, Inc., 487 F.2d 378 (2 Cir. 1973). Accord-

ingly, permissive intervention is appropriate. Boone v.

Wyman, 295 F.Supp. 1143 (S.D.N.Y.1969) (Mansfield, J.).

(2) Mottons to Intervene as Defendants

[2] (a) The American Warehousemen’s Association

(“AWA”) is a non-profit organization incorporated in IIli-

nois, with its principal place of business in Illinois. It is

55a

Appendiz D

the national trade association for the public merchandise

warehousing industry, having 478 members who operate in

every state (including New York) except four. Its mem-

bers’ warehouses account for approximately 1,801,218,000

eubie feet of warehouse space—about 75% of all public

merchandise warehouse space in the United States.

(b) The International Association of Refrigerated Ware-

houses (“IARW’’) is a non-profit Delaware corporation

with its principal offices in Washington, D.C. It is the na-

tional trade association for the public refrigerated ware-

housing industry, having 218 member companies in the

United States who operate 432 public refrigerated ware-

houses in every state (including New York) except four.

The membership accounts for 567,000,000 cubic feet of

public refrigerated warehouse space which represents over

75% of the total public refrigerated warehouse space in the

United States.

Both the AWA and IARW argue that since the U.C.C.

(including the provisions of §§ 7-209 and 7-210) has been

adopted in 49 states, a holding that §§ 7-209 and 7-210 are

unconstitutional would adversely affect their membership.

While they claim there are common issues of law, they

assert intervention is appropriate because their interests

may differ from Flagg Brothers’. They note that Flagg

Brothers deals with the public—storing furniture—while

they deal with commodities in commerce. They contend

that if the statute is held to be unconstitutional it would

affect them as well, without the Court having been ac-

quainted with the problems of their industry. Both seek

intervention pursuant to Fed.R.Civ.P. 24(a) and 24(b).

New York (“WAPNY”) is a trade association incorporated _

in New York consisting of many public warehousemen do-

ing business in the City of New York and metropolitan

56a

Appendia D

New Jersey area. The members store, handle and dis-

tribute merchandise, commodities and materials of every

character and description.

(d) The Cold Storage Warehousemen’s Association of

the Port of New York (“CSWAPNY’’) is an unincorpor-

ated trade association, with a membership in the same

geographical vicinity as WAPNY. Their activities consist

primarily of the storage, handling and distribution of

pershable foods and other commodities that require

refrigerated facilities for their storage.

In response to the motions of all four proposed interven-

ing defendants, the plaintiff urges that their proper role

should be that of amicus curiae, not party defendants.

I disagree. As was not the case in Sierra Club v. Morton,

405 U.S. 727, 92 S.Ct. 1361, 31 L.Ed.2d 636 (1972), the

proposed intervenors have alleged that its members them-

selves would be affected by a declaration that §§ 7-209 and

7-210 are unconstitutional (cf. 405 U.S. at 735). It is plain

that at least the New York members of the intervenors have

substantial interest in upholding the constitutionality of the

provisions here attacked, with non-New York members in

states which have adopted the U.C.C. also interested.

Under Rule 24(b) one may be permitted to intervene in

an action “(2) when an applicant’s claim or defense and

the main action have a question of law or fact in common.”

It might have been thought, as is indeed suggested by the

objecting plaintiff, that where merely a question of law is

involved the intervenor should be remitted to the status of

an amicus curiae. That makes some sense because the

judgment here would not be res judicata on any claim or

defense of the proposed intervening defendants.

[3] The test of permissive intervention is broader how-

ever. First, the rule reads in the disjunctive—question of

law or fact—so that intervention may be permitted where

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Appendiz D

the question of law, though 1o¢ of fact, is common. Second,

the words “claim or defense” have not been read in a tech-

nical sense, but permissive intervention has been upheld

even where in Professor Moore’s phrase “the existence of

any nominate ‘claim’ or ‘defense’ is difficult to find.” Moore,

Federal Practice, {| 24.10[2], 24-354.

A ground for intervention is “economic interest.’’ Cas-

cade Natural Gas Corp. v. El Paso, Natural Gas Co., 386

U.S. 129, 135, 87 S.Ct. 932, 17 L.Ed.2d 814 (1967) (inter-

vention by California allowed because its interests in a

competitive system of natural gas distribution) ;* Nuesse v.

Camp, 128 U.S.App.D.C. 172, 385 F.2d 694 (1967); Textile

Workers Union of America v. Allendale Co., 96 U.S.App.

D.C. 401, 226 F.2d 765, 769 (1955) (“a real economic stake

in the outcome of this litigation”); Champ v. Atkins, 76

U.S.App.D.C. 15, 128, F.2d 601 (1942).

It is, of course, true that in some situations a general

economic interest would not be enough. But in this situa-

tion where specific segments of an industry would be vi-

tally affected by a declaration that the statute which

governs their business conduct is unconstitutional, there is

little reason to exclude them from participation. As Judge

Leventhal said in Nuesse v. Camp, swpra at 700:“. . . the

‘interest’ test is primarily a practical guide to disposing of

law suits by involving as many apparently concerned per-

sons as is compatible with efficiency and due process.” The

tendered answers of the proposed intervenors do not raise

complicated questions of fact. On being permitted to inter-

vene, their activity will be controlled by appropriate or-

ders of the Court.

The four motions to intervene as party defendants are

granted pursuant to Fed.R.Civ.P. 24(b) (2).

* Though Cascade was a Rule 24(a) intervention, the principle

should apply to 24(b) intervention as well.

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Appendiz D

(3) The State Attorney General of the State of New

York is permitted to intervene on consent.

Further captions in the action shall include the names of

the intervening parties.

It is so ordered.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.