Long Island Lighting Co. v. Long Island Power Authority

• Decision Date: 04 February 1988
• Citation: 138 Misc.2d 745,525 N.Y.S.2d 497
• Parties: LONG ISLAND LIGHTING COMPANY and Herbert Jaffe, Plaintiffs, v. The LONG ISLAND POWER AUTHORITY, William L. Mack, Irving Like, Nora Bredes, Leon Campo, Richard Kessel, Stephen Liss, Vincent Tese, John Adam Kanas and Martin Bernstein, in their official capacities as trustees of the Long Island Power Authority, Defendants, and Shoreham-Wading River Central School District, Intervenor-Defendant.
• Court: New York Supreme Court

Page 497

525 N.Y.S.2d 497

138 Misc.2d 745

LONG ISLAND LIGHTING COMPANY and Herbert Jaffe, Plaintiffs, v. The LONG ISLAND POWER AUTHORITY, William L. Mack, Irving Like, Nora Bredes, Leon Campo, Richard Kessel, Stephen Liss Vincent Tese, John Adam Kanas and Martin Bernstein, in their official capacities as trustees of the Long Island Power Authority, Defendants and Shoreham-Wading River Central School District, Intervenor-Defendant.

Supreme Court, Nassau County IAS Part XII.

Feb. 4, 1988.

Shea & Gould, New York City, for plaintiff Long Island lighting co.

Douglas Foster, Mid-Atlantic Legal Foundation, New York City, for plaintiff Herbert Jaffe.

Skadden, Arps, Slate, Meagher & Flom, New York City, for defendants.

Lou Lewis, P.C., Poughkeepsie, Robert Abrams, Atty. Gen. by Samuel A. Cherniak, New York City, for intervenor-defendant.

ELI WAGER, Justice.

The 1986 Legislature with the approval of Governor Mario Cuomo enacted "The Long Island Power Authority Act" (L.1986 c. 517). In a statement of "legislative findings and declarations" (§ 1020-a), the Legislature set forth its concerns relative to the "economic well-being, health and safety of the residents of and the commerce and industry in the service area" (the counties of Suffolk, Nassau and a portion of Queens serviced by LILCO). Constantly rising rates for electricity and declining consumer confidence in LILCO's ability to meet the power needs of the residential, commercial and industrial population are declared to be matters of state concern. Above all, however the specter of the "imprudent" Shoreham nuclear power plant, the imposition of its cost on the ratepayers as well as on the stockholders of the company, the uncertainties of the plant's future "reliability, cost of construction, operation and maintenance" are given as the justification for "replacing such investor owned utility with a publicly owned power authority". The enactment gives rise to this litigation which follows a quite similar action instituted in the Federal Court (see infra).

Thus, to date, Shoreham has generated little else but public controversy and litigation. The havoc feared by the opponents of Shoreham's nuclear power on Long Island may have claimed LILCO as its first, and only, victim.

In this action plaintiffs, Long Island Lighting Company (LILCO), a public service corporation incorporated under the Transportation Law of the State of New York, and Herbert Jaffe (Jaffe), one of its shareholders, challenge the validity of the Long Island Power Authority Act (the LIPA Act--PUBLIC AUTHORITIES LAW, Article 5, Title 1-A ) and seek to enjoin its implementation. Before the Court at this time is their motion for a preliminary injunction, restraining defendants, pendente lite, from taking any actions to implement the Act, including but not limited to any actions to make a tender offer to purchase or exchange LILCO shares of stock for cash or securities for the purpose of enabling the State-created Long Island Power Authority (LIPA) to acquire LILCO's stock or assets. Plaintiffs also sue as taxpayers pursuant to STATE FINANCE LAW § 123-b, subd. 1.

Defendants, in addition to opposing plaintiffs' motion, have moved to dismiss the verified complaint, pursuant to CPLR 3211(a), asserting, inter alia, the defenses of collateral estoppel and what they have designated as "judicial estoppel", otherwise known as estoppel against inconsistent positions in judicial proceedings.

Looking first at the request for preliminary injunctive relief, it is readily apparent that plaintiffs' motion is, at best, premature. Essential to any application for such a drastic provisional remedy are the likelihood of the movant's ultimate success in the action in which the motion is made and the danger that, in the event of its denial, the movant will be irreparably harmed ( Matter of Town of Stony Point v. New York State Office of Mental Retardation and Developmental Disabilities, 78 A.D.2d 858, 432 N.Y.S.2d 633; Matter of Estate of Nelson, 110 A.D.2d 535, 536, 487 N.Y.S.2d 777). At this juncture, defendants have taken no steps which would indicate the imminence of a tender offer so as to create a basis for urgent intervention by this Court. Indeed, as of the date of argument of this motion, the results of the feasibility study required by LIPA Act § 1020-h, subd. 2 as a pre-requisite to LIPA's acquisition of LILCO or any of its securities or assets had not been published and the absence of urgency would appear to have been conceded by plaintiffs when, in connection with the instant application, they did not seek the issuance of a temporary restraining order. Under the circumstances, a present danger of irreparable harm has not been demonstrated and, therefore, the motion for a preliminary injunction is denied.

Turning, now, to defendants' dismissal motion, the essence of plaintiffs' contention is that the LIPA Act runs afoul of the due process ( Article 1, § 6 ) and equal protection ( Article 1, § 11 ) clauses of the Constitution of the State of New York in that its provisions are allegedly intended to and, unless enjoined, will prevent LILCO and its shareholders from realizing the fair value of the company in a State (LIPA) takeover.

A similar challenge to the LIPA Act as purportedly violative of the comparable provisions of the United States Constitution (Amendment XIV) formed a significant portion of the substance of an action instituted by plaintiff, LILCO, in the United States District Court for the Northern District of New York ( LILCO v. Cuomo, 666 F.Supp. 370) against the defendants herein and others. By a memorandum-decision and order, dated August 4, 1987, that Court (Munson, C.J.) sustained the validity of the LIPA Act while, at the same time, finding that its companion law, the Used and Useful Act (PUBLIC SERVICE LAW § 66, subd. 24), was violative of the Federal equal protection clause.

It is evident from the scholarly opinion of Chief Judge Munson (pp. 407-409) that the contentions set forth in paragraph "28" of the verified complaint in the instant action had similarly been asserted in the Federal litigation and had been considered and addressed by him in a manner unfavorable to LILCO. If this Court were to determine that the conclusions reached by the U.S. District Court with respect to those contentions had the effect of precluding the re-litigation of the issues thus decided, it might swiftly dismiss the relevant portions of plaintiffs' pleading herein under the theory of collateral estoppel. However, such a determination is not viewed as appropriate in this instance.

The following language, expressed by the Honorable James E. Niehoff, the recent distinguished Justice of this Court and of the Appellate Division, Second Department, in Becker v. Levitt, 81 Misc.2d 664, 668, 366 N.Y.S.2d 940, is most significant:

"It is well settled that State courts are not bound by Federal decisions in cases in which a statute is tested against the provisions of the Federal Constitution, notwithstanding that those provisions are essentially, if not completely, identical to State constitutional provisions. At the same time, it is well established that Federal decisions in cases of this kind are of highly persuasive effect as authorities in State courts, and only rarely will a statute held by the Federal courts not to be in conflict with the Federal Constitution fail to survive a State court test against a similar constitutional provision (see 8 NY Jur, Constitutional Law, § 45)."

Although it is currently LILCO's position that the LIPA Act is wholly invalid as violative of the aforementioned New York State Constitutional provisions, the effectiveness of the statute (which, a fortiori, presumes its validity) once formed the basis of a successful challenge by LILCO to a resolution of the Suffolk County Legislature (No. 850 of 1986), which had provided for the acquisition of LILCO's stock and/or assets by a local development corporation. The substance of that challenge was LILCO's contention, sustained by the Courts ( Long Island Lighting v. Suffolk, 119 A.D.2d 128, 505 N.Y.S.2d 956), that the State, in enacting Article 5, Title 1-A of the PUBLIC AUTHORITIES LAW, had pre-empted the subject area of legislation.

If LILCO were the only plaintiff in the instant action, this Court might well dismiss the verified complaint under the doctrine of judicial estoppel since, having once invoked the LIPA Act for its own benefit, LILCO may not now attack its constitutionality. (See Matter of City of Syracuse, 224 N.Y. 201, 205, 120 N.E. 203; Shepherd v. Mount Vernon Trust Co., 269 N.Y. 234, 247, 199 N.E. 201; Trask v. Trask, 85 Misc.2d 980, 381 N.Y.S.2d 584.) Plaintiff, Jaffe, however, was not a party to the Suffolk County proceeding and, therefore, rather than invoke the estoppel doctrine against LILCO, alone, the Court will determine the matter upon its merits.

Although defendants' motion is one for dismissal of the action under CPLR 3211(a), the nature of the action is such that a determination that plaintiffs are not entitled to the declaration which they seek would not warrant a dismissal of the complaint but, rather, the Court would be required to render a declaration as to the constitutionality of the statute under its scrutiny. (See Hirsch v. Lindor Realty Corp., 63 N.Y.2d 878, 483 N.Y.S.2d 196, 472 N.E.2d 1024; Powers v. General Accident Insurance Company of America, 109 A.D.2d 830, 486 N.Y.S.2d 764; Daly v. Becker, 109 A.D.2d 651, 486 N.Y.S.2d 239.)

The Court, therefore, will now address plaintiffs' contentions that the LIPA Act deprives them of rights guaranteed to them under the due process and equal protection clauses of the New York State Constitution.

At the outset, let it be noted that plaintiffs' burden in successfully challenging the validity of the statute is a substantial one. In the words of Judge Gabrielli, writing for the majority of the Court of Appeals in Dorset v. Cultural...