Merco Properties, Inc. v. Guggenheimer

• Decision Date: 03 June 1975
• Docket Number: No. 73 Civ. 4658.,73 Civ. 4658.
• Citation: 395 F. Supp. 1322
• Parties: MERCO PROPERTIES, INC., and Joseph Merolla, Plaintiffs, v. Elinor GUGGENHEIMER, Commissioner of the Department of Consumer Affairs, City of New York, et al., Defendants.
• Court: U.S. District Court — Southern District of New York

395 F. Supp. 1322

MERCO PROPERTIES, INC., and Joseph Merolla, Plaintiffs, v. Elinor GUGGENHEIMER, Commissioner of the Department of Consumer Affairs, City of New York, et al., Defendants.

No. 73 Civ. 4658.

United States District Court, S. D. New York.

June 3, 1975.

COPYRIGHT MATERIAL OMITTED

Charles Sutton, New York City, for plaintiffs.

Corporation Counsel's Office, N.Y.C., by Joseph I. Lauer, Joseph Halpern and K. Jane Fankhanel, New York City, for defendants.

MEMORANDUM

STEWART, District Judge:

Plaintiffs bring this action pursuant to 42 U.S.C. § 1983 and 28 U.S.C. § 2201, seeking declaratory and injunctive relief, to restrain defendants from enforcing a New York City ordinance requiring the licensing of cabarets and catering establishments on the ground that such ordinance is unconstitutional on its face and as applied.¹

Plaintiff Merco Properties, Inc. ("Merco") is the lessee under a written 50-year lease dating from October, 1966 of the Hotel Granada, located at 268 Ashland Place in downtown Brooklyn. Plaintiff Joseph Merolla is the principal shareholder, president and director of Merco. Defendants are the City of New York, Betty Furness, former Commissioner of Consumer Affairs, Deputy Commissioner Bernard Sack, Consumer Affairs' hearing examiner Leo Pollack, and former Mayor John V. Lindsay.² Plaintiffs allege that Furness, Sack and Lindsay were responsible for the administration and enforcement of the challenged ordinances during 1973.

Following successive denials by defendants of Merco's applications for catering and cabaret licenses between 1969 and 1973, plaintiffs brought the instant action challenging the 1973 license denial on constitutional grounds.³ Specifically, plaintiffs allege that the denial of Merco's license application denied them their "constitutional right to engage in their lawful and legitimate business and vocation of providing a place . . . for the peaceable assembly of members of the public . . . and of providing . . . them food and beverages with music for listening, dancing and entertainment. . . ." Complaint, ¶ 43. Plaintiffs also contend that the denial of a license to Merco has deprived members of the public of the "place of their choice to peaceably assemble." Complaint, ¶ 44. Additionally, plaintiffs maintain that the challenged ordinance is unconstitutionally vague and overbroad on its face and as applied in that it grants the Commissioner of Consumer Affairs unfettered and unguided discretion to refuse to issue catering and cabaret licenses when she is not "satisfied" that the applicant is "a fit and proper person." Complaint, ¶ 46. Plaintiffs do not allege any violations of procedural due process; in fact, Merco was accorded an adversary hearing in the presence of counsel before its license was denied.

This court issued a temporary restraining order in November, 1973, enjoining the enforcement of the applicable licensing ordinances against plaintiffs, thus allowing them to use the premises of the Hotel Granada as a cabaret and catering establishment. The temporary restraining order has remained in effect as a de facto preliminary injunction pending determination of plaintiffs' motion for injunctive relief and defendants' cross-motion for dismissal pursuant to Rule 12(b)(1) and (6) of the Federal Rules of Civil Procedure.

Standing

Defendants allege that both plaintiffs Merco and Merolla lack standing to bring this action. Since a corporation cannot be deprived of freedom of speech and of assembly, Hague v. C. I.O., 307 U.S. 496, 527, 59 S.Ct. 954, 83 L.Ed. 1423 (opinion of Stone, J.; see also opinion of Roberts, J., id., at 514, 59 S.Ct. 954) (1939), defendants argue that Merco does not have standing. We disagree. Merco does not maintain that it is being deprived of freedom of speech and assembly, but rather, that the public is being deprived of those rights by operation of the allegedly unconstitutional licensing ordinance. Merco does have standing, we believe, to assert the interest of the public in freedom of assembly. Such standing was granted to a corporate plaintiff in City News Center, Inc. v. Carson, 310 F.Supp. 1018, 1023 (M.D.Fla.1970), in which relief was also sought under 42 U.S.C. § 1983 and 28 U.S.C. § 2201 and jurisdiction founded upon 28 U.S.C. § 1343. But see 101 Studio Inc. v. Bardal, 384 F.Supp. 852 (S.D.N.Y.1974). In a related context, the Fifth Circuit has noted:

Numerous Supreme Court opinions attest to the fact that First Amendment rights are not private rights of the appellants so much as they are rights of the general public. "Those guarantees of speech and press are not for the benefit of the press so much as for the benefit of all of us."

Machesky v. Bizzell, 414 F.2d 283, 289 (5th Cir. 1969) (citations omitted). This language should apply equally to guarantees of freedom of assembly.

We also find that Merco has standing to assert due process claims to the extent that it alleges that its denial of a license was an unconstitutional deprivation of liberty or property. City News Center, Inc. v. Carson, supra, at 1022.

Defendants argue that Merolla is without standing to bring this action, since he cannot sue for damages to the corporation or to himself derivatively. We agree. The gravamen of Merolla's complaint is that he was injured because Merco was denied a catering and cabaret license. He does not allege a separate injury to himself as an individual.⁴ In a similar situation, the Ninth Circuit held that a stockholder owner, with his wife, of all the capital stock of a corporation of which he was president and general manager could not bring an action under 42 U.S.C. § 1983 for damages suffered by the corporation. Erlich v. Glasner, 418 F.2d 226 (9th Cir. 1969). See also Gentry v. Howard, 365 F.Supp. 567 (W. D.La.1973) (corporation given standing under 42 U.S.C. § 1983; action by corporate president dismissed). The Erlich decision was bottomed on the rule that "even though a stockholder owns all, or practically all, of the stock in a corporation, such a fact of itself does not authorize him to sue as an individual." Erlich v. Glasner, supra at 228 (citation omitted). In light of the Erlich case, we dismiss Merolla as a party plaintiff.

Defendants' Immunity

We next turn to defendants' claim that they are immune and privileged from actions brought under 42 U.S. C. § 1983. Defendant New York City was improperly named as a defendant, since a city is not a person within the meaning of 42 U.S.C. § 1983. City of Kenosha v. Bruno, 412 U.S. 507, 93 S.Ct. 2222, 37 L.Ed.2d 109 (1973). See also Moor v. County of Alameda, 411 U.S. 693, 93 S.Ct. 1785, 36 L.Ed.2d 596 (1973). Consequently, there is no jurisdiction under 28 U.S.C. § 1343(3). See Fisher v. City of New York, 312 F.2d 890 (2d Cir. 1963). Since the Declaratory Judgment Act does not afford an independent basis for relief, 6A Moore's Federal Practice ¶ 57.05 (2d Ed. 1974), plaintiff Merco has no claim against the City of New York. Accordingly, plaintiffs' complaint against the City of New York must be dismissed.

Plaintiffs seek compensatory and punitive damages in their complaint. Defendants contend that they are immune from claims for damages in actions brought under 42 U.S.C. § 1983. In Pierson v. Ray, 386 U.S. 547, 87 S.Ct. 1213, 18 L.Ed.2d 288 (1967), the Supreme Court held that police officers were immune from damage awards for false arrests in actions under 42 U.S.C. § 1983, provided that they acted in good faith and within the scope of their duties. The Court intimated that the same result would obtain if a police officer acted under a statute he believed to be valid but which was later held to be unconstitutional, on its face or as applied. 386 U.S. at 555, 87 S.Ct. 1213.

Similarly, it has been held that while a state official sued in his official capacity, as opposed to individual capacity, cannot interject his official capacity as a bar to injunctive and declaratory relief, the fact that he is sued in his official capacity does operate as a bar to liability for monetary damages. Williams v. Eaton, 443 F.2d 422 (10th Cir. 1971); Poindexter v. Woodson, 357 F.Supp. 443 (D.Kan.1973).

In this action, defendants have been sued in their official capacities "and there is no question that they were acting in their respective official capacities during the period when the unconstitutional acts charged were committed." Poindexter v. Woodson, supra, at 460. Although defendants Furness and Sack were also sued in their individual capacities, there has been no allegation that they were acting in an individual capacity in any matter connected with the instant lawsuit. Accordingly, we must dismiss any claims for monetary damages sought by plaintiffs, since we find that this case is controlled by the above-cited cases. See also Johnson v. Alldredge, 488 F.2d 820, 826-27 (3d Cir. 1973), cert. denied 419 U.S. 882, 95 S.Ct. 148.

Abstention

Defendants contend that principles of federalism, comity and equity require that we abstain from further consideration of this action, so that the state courts may first construe the challenged ordinances. The Supreme Court has held that "the paradigm case for abstention arises when the challenged state statute is susceptible of `a construction by the state courts that would avoid or modify the federal constitutional question.'" Lake Carriers' Ass'n v. MacMullan, 406 U.S. 498, 510, 92 S.Ct. 1749, 1757, 32 L.Ed.2d 257 (1972) (citations omitted).<sup>5</sup> In these circumstances, abstention serves to minimize federal-state friction and avoids premature and perhaps unnecessary constitutional adjudication. Kusper v. Pontikes, 414 U.S. 51, 55, 94 S.Ct. 303, 38 L.Ed.2d 260 (1973). Where, however, it cannot be fairly concluded that the challenged state statute or ordinance is susceptible of a constitutional interpretation, "abstention would amount to shirking the solemn responsibility of the federal courts to `guard, enforce, and protect every right granted or...