New York Urban League, Inc. v. State of N.Y.

• Decision Date: 07 December 1995
• Docket Number: No. 1112,1112
• Citation: 71 F.3d 1031
• Parties: NEW YORK URBAN LEAGUE, INC., Straphangers Campaign, Andrea Mapp, Deborah Carrington, and Juan B. Gonzalez, Plaintiffs-Appellees, v. The STATE OF NEW YORK, George E. Pataki, as Governor of the State of New York, Joseph L. Bruno, as Temporary President of the New York State Senate, and Sheldon Silver, as Speaker of the New York State Assembly, Defendants, Metropolitan Transportation Authority, E. Virgil Conway, as Chairman and President of the MTA, Defendants-Appellants. Docket 95-9108.
• Court: U.S. Court of Appeals — Second Circuit

Page 1031

71 F.3d 1031

64 USLW 2400

NEW YORK URBAN LEAGUE, INC., Straphangers Campaign, Andrea Mapp, Deborah Carrington, and Juan B. Gonzalez Plaintiffs-Appellees, v. The STATE OF NEW YORK, George E. Pataki, as Governor of the State of New York, Joseph L. Bruno, as Temporary President of the New York State Senate, and Sheldon Silver, as Speaker of the New York State Assembly, Defendants Metropolitan Transportation Authority, E. Virgil Conway, as Chairman and President of the MTA, Defendants-Appellants.

No. 1112.

Docket 95-9108.

United States Court of Appeals, Second Circuit.

Argued Nov. 14, 1995.

Decided Dec. 7, 1995.

Eric T. Schneiderman, Kirkpatrick & Lockhart, New York City (Gerald A. Novack, John Sullivan, Peter Vaughan, Alan S. Brodherson, on the brief), for plaintiff-appellee N.Y. Urban League, Inc.

G. Oliver Koppell, Zwerling, Schachter, Zwerling & Koppell, New York City (Dan Drachler, Hillary Sobel, on the brief), for plaintiffs-appellees Straphangers Campaign, Andrea Mapp, Deborah Carrington, and Juan B. Gonzalez.

Jeffrey Glekel, Skadden, Arps, Slate, Meagher & Flom, New York City (Thomas J. Schwarz, Jeremy A. Berman, on the brief), for defendants-appellants Metropolitan Transp. Authority and E. Virgil Conway, as Chairman and President of the MTA.

Harvey J. Golubock, Assistant Attorney General In Charge, Litigation Bureau, New York City (Dennis C. Vacco, Attorney General of the State of New York, Victoria A. Graffeo, Solicitor General, Jeffrey I. Slonim, Gary E. Lesch, Assistant Attorneys General, of counsel), for defendant State of N.Y.

Barbara J. Olshansky, Michael E. Deutsch, The Center for Constitutional Rights, New York City, for amicus curiae The New York City Environmental Justice Alliance.

Before WALKER, LEVAL, and CABRANES, Circuit Judges.

PER CURIAM:

Plaintiffs filed this action on October 20, 1995, challenging the allocation by the State of New York and the Metropolitan Transportation Authority ("MTA") of funds for mass transit in New York City and surrounding suburban communities. Plaintiffs claim that riders of the New York City Transit Authority ("NYCTA") subway and bus system, the majority of whom are members of protected minority groups, pay a higher share of the cost of operating that system than commuter line passengers, who are predominantly white, pay to support the commuter rail system, and that U.S. Department of Transportation ("U.S.DOT") regulations promulgated under Title VI of the Civil Rights Act of 1964 proscribe such a result. Upon filing their complaint, plaintiffs moved for preliminary injunctive relief barring the implementation of a proposed 20% fare increase for subway and bus riders. The United States District Court for the Southern District of New York (Robert P. Patterson, Jr., Judge ) granted a preliminary injunction against the MTA on November 8, 1995. This court entered a stay the following day.

This appeal presents the narrow question of whether plaintiffs have made the requisite showing for preliminary injunctive relief barring the MTA from imposing the fare increase on the NYCTA lines. To justify such an injunction, plaintiffs must show irreparable harm in the absence of injunctive relief and a likelihood of success on the merits of their underlying claim. We conclude that they have not. Plaintiffs' underlying claim challenges the total allocation of funds to the subway and bus system on the one hand and to the commuter lines on the other. In considering whether plaintiffs had shown a likelihood of success on the merits of this claim, the district court focused on the proposed NYCTA fare increase without examining the broader financial and administrative context in which this fare increase was adopted. As a result, the district court's conclusion that the plaintiffs are likely to succeed on the merits is based upon insufficient evidence. We therefore vacate the injunction and remand for further proceedings consistent with this opinion.

I. BACKGROUND

A. Facts

At the heart of this case are the complex systems of public transportation serving New York City and surrounding suburban communities. The following facts are not in dispute. The New York City Transit Authority ("NYCTA") administers the subway and bus system within four boroughs of New York City, ¹ transporting some 1.5 billion passengers per year on twenty-five subway lines and 231 bus routes. The Long Island Railroad ("LIRR") and the Metro-North Commuter Railroad ("Metro-North") (collectively, the "commuter lines") carry 135 million passengers per year to some 250 stations located along nineteen lines. The NYCTA has annual operating expenses of $3.1 billion, while the commuter lines have annual operating expenses of $1.4 billion.

Both the NYCTA and the commuter lines operate under the umbrella of the Metropolitan Transit Authority ("MTA"), a public benefit corporation created under New York law. See N.Y. PUB.AUTH.LAW Secs. 1263(1)(a), 1264 (McKinney 1982 & Supp.1995). The NYCTA is a legally separate public benefit corporation affiliated with the MTA, id. Sec. 1201(1), while the LIRR and Metro-North are wholly owned subsidiaries of the MTA. ² The MTA's Under New York law and applicable bond covenants, the MTA must be self-sustaining with respect to the combined operating expenses of the MTA and its subsidiary corporations, including the commuter lines. Id. Sec. 1266(3). Similarly, the NYCTA must be self-sustaining with respect to its operating costs. Id. Sec. 1202(1). Because the revenues derived from fares do not meet the operating costs of the NYCTA or the commuter lines, each depends upon funding from federal, state, and city sources to pay a percentage of its costs. The U.S. Department of Transportation ("U.S.DOT") provides operating assistance to the NYCTA and the commuter lines through the MTA. In addition, the NYCTA and the commuter lines receive several categories of state assistance, including: (1) appropriations from the State's General Fund, according to a statutory formula or through specific local assistance appropriations bills, see N.Y. TRANSP.LAW Sec. 18-b(1) (McKinney 1994); (2) state and regional taxes deposited in the Metropolitan Mass Transportation Operating Assistance ("MMTOA") account, a certain portion of which is designated annually by the state legislature for payment of the operating costs of the NYCTA and the MTA, including the operating costs of the commuter lines, see N.Y. STATE FIN.LAW Sec. 88-a(7)(a) to -a(7)(b) (McKinney 1989 & Supp.1995); (3) shares of mortgage recording taxes collected in New York City and the counties that the MTA serves, apportioned (to the extent relevant for our purposes) according to a statutory formula between the transit and commuter railroad accounts of the MTA's special assistance fund, see N.Y. TAX LAW Sec. 261(1)(a) (McKinney Supp.1995); N.Y. PUB.AUTH.LAW Sec. 1270(1)(a) (McKinney Supp.1995); and (4) statutory shares of an account funded by petroleum business taxes.

board of seventeen directors also serves as the board of the NYCTA. Id. Sec. 1201(1).

The NYCTA and the commuter lines also receive certain local subsidies. The NYCTA receives funds from the City of New York ("City") matching the State's payment from its General Fund, see N.Y. TRANSP.LAW Sec. 18-b(5)(a); the MTA receives matching funds from the City and the counties served by the commuter railroads, see id. The City and the counties served by the commuter lines are required to reimburse the MTA for the cost of maintaining commuter railroad terminals within their respective borders. See N.Y. PUB.AUTH.LAW Sec. 1277 (McKinney 1982). The NYCTA receives some revenue from certain mortgage recording and real estate taxes imposed by the City. The NYCTA has historically been reimbursed by the City for costs of its reduced-fare program for school children, as well as for its provision of services to elderly and disabled persons.

Finally, the NYCTA and the commuter lines receive some level of subsidization from the redistribution of surplus funds of one of the MTA's affiliated units, the Triborough Bridge and Tunnel Authority ("TBTA"). See N.Y. PUB.AUTH.LAW Sec. 1219-a(2)(b) (McKinney 1982). By statute, the NYCTA receives $24 million of any surplus outright, plus 50% of the balance, for payment of its operating expenses; the remaining 50% is applied to the operating expenses of the MTA and the commuter lines. Id.

In 1994, the NYCTA received total operating assistance of $1.22 billion, while the commuter railroads received total operating assistance of $635 million. ³ It is undisputed, however, that recent actions of the State of New York have reduced the level of state funds appropriated to the NYCTA, as well as the pool of state funds from which appropriations to the NYCTA and the MTA are made. Specifically, plaintiffs contend, and the district court found, that the state budget passed in June 1995 (1) reduced by $86.55 million the NYCTA's share of MMTOA funds, while increasing the commuter lines' share by $12 million; and (2) shifted $220 million from the MMTOA account, from which appropriations to the NYCTA and the commuter lines are made, to the State's General Fund. ⁴ The net impact of these changes In August 1995, the MTA projected that the NYCTA's operating costs would exceed its operating revenues (including income from fares and federal, state, and local subsidies) by $167 million in 1995 and $316 million in 1996. For the commuter lines, the MTA projected a slight surplus for 1995 and a deficit of $72 million for 1996. In response to these projections, the MTA board considered and adopted a funding package involving cost-cutting measures and fare increases for the NYCTA and the commuter lines. The MTA calculated that a 20% fare increase for the NYCTA would generate $45 million in additional revenue in 1995 and $274 million in additional revenue for 1996; and that a fare increase of 8.5% for the commuter lines would generate $5.6 million in 1995 and $33.5...