Hu v. City of New York

Decision Date13 June 2019
Docket NumberDocket No. 18-737-cv,August Term 2018
Parties Eric HU, NY Drilling, Inc., and 888 Consulting Corp., Plaintiffs-Appellants, v. The CITY OF NEW YORK, Dennis Burkart, Jose L. Espaillat, Michael Camera, Rafael Collis, Salvatore Concialdi, Robert Turner, Cesar Romero, Rick D. Chandler, Muhammad Imran, D. Eric Hoyt, Defendants-Appellees, John/Jane Does, Nos. 1-10, Defendants.
CourtU.S. Court of Appeals — Second Circuit

Daniel J. Schneider, Farber Schneider Ferrari LLP, New York, NY, for Plaintiffs-Appellants.

Antonella Karlin, Assistant Corporation Counsel (Richard Dearing and Kathy Chang Park, on the brief), for Zachary W. Carter, Corporation Counsel of the City of New York, New York, NY, for Defendants-Appellees.

Before: Jacobs and Lynch, Circuit Judges, and J. Hall, District Judge.**

J. Hall, District Judge:

Plaintiffs Eric Hu ("Hu"), 888 Consulting Corporation ("888 Consulting"), and NY Drilling ("NY Drilling") are an Asian construction worker and Asian-owned companies.1 They brought this lawsuit against the City of New York ("the City"), Assistant Chief Inspector Dennis Burkart ("Burkart"), and several of Burkart's colleagues at the Department of Buildings ("DOB"), alleging that the defendants selectively enforced the City's building codes on the basis of racial animus against Asians and personal animus against Hu. The plaintiffs raised claims under the Equal Protection Clause, the Due Process Clause, section 1981 of title 42 of the United States Code, the Monell doctrine, and New York tax law.

The United States District Court for the Eastern District of New York (Ross, J. ) dismissed the plaintiffs' federal causes of action under Federal Rule of Civil Procedure 12(b)(6) and declined to exercise supplemental jurisdiction over the remaining state claim. The plaintiffs now appeal, arguing that the District Court improperly applied a heightened pleading standard to their Amended Complaint. For the reasons that follow, we AFFIRM in part and VACATE in part the judgment below.

I. BACKGROUND

The Amended Complaint alleges the following facts, which we take as true for the purposes of evaluating a motion to dismiss.

This action centers primarily on Burkart's "personal vendetta" against Asians in general and Hu in particular. Burkart's racial animus stems from his belief that Asians were responsible for the downfall of a construction company that he owned prior to his employment at DOB. In particular, Burkart blames Asians for undercutting his rates to the point where he could no longer compete.

Burkart's alleged animus against Hu, a Taiwanese-American construction worker, has several sources. In 2011, Hu filed a complaint with DOB alleging that Burkart's enforcement of the building code was racially discriminatory. Later that year, Hu sued one of Burkart's colleagues at DOB for hitting Hu with a car. Although Burkart was only a passenger in the vehicle and was not named as a defendant in the lawsuit, the plaintiffs believe that DOB may have disciplined Burkart for his involvement in the car accident. In 2014, Hu filed an FBI report alleging extortion by another of Burkart's colleagues, Massimo Dabusco ("Dabusco"). As a result of the ensuing FBI investigation, Dabusco left DOB, pled guilty to criminal charges, and was sentenced to 18 months' imprisonment. See Judgment (Doc. No. 47), United States v. Massimo Dabusco , EDNY Docket No. 16-CR-559-DLI.

Burkart has not been shy in voicing his feelings about Asians and Hu. While inspecting construction worksites, Burkhart has been observed harassing, belittling, and threatening Asian workers. He has been overheard calling Hu "a rat" for reporting Dabusco to the FBI, as well as bragging about his plans to "shut down every one of Hu's jobsites around the city." Hu Appellants' Appendix ("Hu Appx.") (Doc. No. 40), Case No. 18-737-cv, at A24 ¶ 75, A27 ¶ 96. According to other DOB inspectors, Burkart even has a picture of Hu on his wall. It is an open secret within the City's construction community that a jobsite that involves Hu will be shut down by DOB inspectors.

NY Drilling and 888 Consulting have also become targets of Burkart's animosity, due both to their racial composition and to their close ties to Hu. NY Drilling is a construction company that employed Hu until 2015, when Hu formed his own construction company, 888 Consulting. Both NY Drilling and 888 Consulting are owned and controlled by Asians, and they frequently work with each other on construction jobs.

Burkart has acted on his prejudices by targeting the plaintiffs' worksites for inspections and unwarranted building code violations. Although DOB inspectors are assigned predetermined routes, Burkart regularly deviates from his routes to visit, inspect, and issue violations to construction sites that are managed and operated by Asian workers and Asian-owned companies. He often does so on his own time and while off duty. Further, he conducts these site visits on his own initiative and not in response to public complaints, even though DOB is a complaint-driven agency that takes enforcement actions primarily in response to grievances received from the general public. During these visits, Burkart issues violations and stop work orders, often for aspects of construction that fall outside the purview of his division within DOB, the Concrete Enforcement Unit. Burkart also appears to issue violations to Asian-run construction sites at a higher rate than his colleagues. According to the plaintiffs' review of building code violations, Burkart issues 63 percent of his violations to Asian-run construction companies, workers, or sites, as compared to between 8 and 28 percent for other DOB inspectors.

While Burkart is the only defendant alleged to harbor animus against Hu or Asians, Burkart has enlisted the help of other DOB officers in harassing the plaintiffs. Burkart or members of his team actively search DOB databases to identify construction worksites that employ Hu. When Burkart becomes aware of a job involving Hu, 888 Consulting, or NY Drilling, Burkart makes sure that he or a member of his team visits that jobsite. Burkart also sends other DOB inspectors outside of their assigned routes to issue violations to Asian developers and contractors. Sometimes, Burkart visits a construction site, takes pictures, and then leaves without taking any enforcement action. Shortly thereafter, however, another DOB inspector will return to that site and issue a violation for the conditions observed by Burkart. The plaintiffs believe that Burkart directs other DOB inspectors to issue violations in order to "avoid the optic of having an enormous number of violations and SWO[s] [stop work orders] signed in Burkart's name which are for alleged violations beyond the scope of his own duties [and] outside his route and region[.]" Hu Appx. at A34 ¶ 166.

The Amended Complaint details four enforcement actions. Although the specifics vary, they generally involve Burkart, by himself or in coordination with other DOB officers, sanctioning the plaintiffs based on fabricated or frivolous building code violations; orchestrating time-consuming audits of the plaintiffs' jobsites; forcing the plaintiffs to install unnecessary onsite protections, such as additional fencing; or halting the plaintiffs' projects with stop work orders.

These and other enforcement actions are taking a financial toll on the plaintiffs. Burkart's violations have burdened the plaintiffs with fines, compliance costs, and legal fees. Clients are firing the plaintiffs due to jobsite delays resulting from DOB audits and stop work orders, and some are suing the plaintiffs for breaches of contract. The plaintiffs are also losing prospective business, because of Hu's reputation as a lightning rod for DOB inspections and sanctions.

II. PROCEDURAL HISTORY

The plaintiffs brought this lawsuit in April 2017. See generally Complaint (Doc. No. 1), EDNY Docket No. 17-cv-2348. At a pre-motion conference, the District Court permitted the plaintiffs to amend their pleadings to address deficiencies the Court had identified. See generally Transcript for Telephonic Conference ("Pre-Motion Conf. Tr.") (Doc. No. 43-8), EDNY Docket No. 17-cv-2348. The plaintiffs filed an Amended Complaint, and the defendants moved to dismiss shortly thereafter. In March 2018, the District Court granted the Motion to Dismiss with prejudice, and this appeal followed.

III. STANDARD OF REVIEW

We review de novo a district court's dismissal of a complaint under Rule 12(b)(6). Carpenters Pension Tr. Fund of St. Louis v. Barclays PLC , 750 F.3d 227, 232 (2d Cir. 2014). For the purposes of such a review, "this Court must accept as true all allegations in the complaint and draw all reasonable inferences in favor of the non-moving party." Matson v. Bd. of Educ. of City Sch. Dist. of New York , 631 F.3d 57, 63 (2d Cir. 2011) (internal quotation marks omitted). Nevertheless, the plaintiff's complaint must "contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Id. "A claim is facially plausible when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Progressive Credit Union v. City of New York , 889 F.3d 40, 48 (2d Cir. 2018) (internal quotation marks omitted). In deciding a Rule 12(b)(6) motion, the court may consider "only the facts alleged in the pleadings, documents attached as exhibits or incorporated by reference in the pleadings[,] and matters of which judicial notice may be taken." Samuels v. Air Transp. Local 504 , 992 F.2d 12, 15 (2d Cir. 1993).

IV. DISCUSSION

In the Amended Complaint, the plaintiffs assert (1) Equal Protection claims for discriminatory enforcement of the building code; (2) a section 1981 claim for interfering on the basis of race with the right to make and enforce contracts; (3) Due Process claims for depriving them of...

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