Town of Southold v. Go Green Sanitation, Inc.

• Citation: 949 F.Supp.2d 365
• Decision Date: 12 June 2013
• Docket Number: No. 12–cv–3837 (ADS)(AKT).,12–cv–3837 (ADS)(AKT).
• Parties: TOWN OF SOUTHOLD, Plaintiff, v. GO GREEN SANITATION, INC. and Frank Fisher, Individually, Defendants.
• Court: United States District Courts. 2nd Circuit. United States District Court (Eastern District of New York)

949 F.Supp.2d 365

TOWN OF SOUTHOLD, Plaintiff,

v.GO GREEN SANITATION, INC. and Frank Fisher, Individually, Defendants.

No. 12–cv–3837 (ADS)(AKT).

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

June 12, 2013.

Smith, Finkelstein, Lundberg, Isler & Yakaboski, LLP by Frank Isler, Esq., of Counsel, Riverhead, NY, Attorneys for the Plaintiff.

Meyer, Suozzi, English & Klein, P.C. by Robert Angelillo, Esq., of Counsel, Garden City, NY, Attorneys for the Defendants.

MEMORANDUM OF DECISION AND ORDER

SPATT, District Judge.

On or about July 5, 2012, the Plaintiff Town of Southold (the “Plaintiff” or the “Town”) commenced an action in the Supreme Court of the State of New York, County of Suffolk against the Defendants Go Green Sanitation, Inc. (“Go Green”) and Frank Fisher (“Fisher” and collectively the “Defendants”), seeking an injunction shutting down Go Green's recycling and refuse collection business in the Town. Subsequently, on August 2, 2012, the Defendants removed the action, uncontested, to this Court pursuant to 28 U.S.C. §§ 1441 and 1446.

Presently before the court is the Defendants' motion to amend their counterclaims and to join a new party. However, in reviewing that motion it has come to the Court's attention that it lacks subject matter jurisdiction over this action. As such and for the reasons that follow, the Court dismisses this action for lack of subject matter jurisdiction and remands this case back to the Supreme Court of the State of New York, County of Suffolk.

I. BACKGROUND

Unless otherwise noted, the following facts are derived from the Notice of Removal and the exhibits attached thereto.

The Plaintiff is a municipal corporation organized and existing under New York State law, situated in and with its principal place of business in the county of Suffolk, New York. The Defendant Go Green is a New York Corporation with its principal place of business in the Town of Southampton, New York. The individual Defendant Fisher is the President of Go Green and a citizen of the State of New York residing in Riverhead, New York. At the time of the Complaint, Go Green operated a commercial carting operation, collecting and transporting refuse and recyclables in the Town of Southold.

The Town's Code requires any vehicle engaged in the commercial disposal of any material to obtain a permit from the Town. A permit may be revoked by the Town Board after notice and a hearing. The Code further prohibits collection of refuse from a residence if it is mixed with recyclables or for a carter to mix recyclables with refuse. In addition, all residential garbage placed curbside for collection must be in a Town garbage bag (“yellow bags”). Collection of refuse not in a Town garbage bag is made unlawful by the Town Code.

As previously stated, on or about July 5, 2012 the Plaintiff commenced this action in the Supreme Court of the State of New York, County of Suffolk, seeking injunctive relief to shut down the Defendants' carting operations in the Town.

The Plaintiff alleged that Go Green operated its carting business in the Town without a permit. The Plaintiff further alleged that Go Green violated the Town's code provisions that required separate handling of refuse and recyclables and also those provisions which mandated the use of yellow garbage bags. The Town further alleged that Go Green's “illegal business operations” caused harm to Go Green's competitors in the Town, who were “in compliance with the code and h[eld] commercial carter permits.” (Notice of Removal Ex. A, ¶ 16, ECF No. 1–1). Moreover, the Town complained of diminished recycling volume entering the Town's Solid Waste Facility and dramatically reduced revenue from yellow bag sales from the time Go Green began operating in the Town.

In their Answer dated August 2, 2012, the Defendants claimed that Go Green was in fact issued a carter permit by the Town of Southold but that the permit was never delivered to them and was later revoked by the Town without notice or a hearing. They further substantially denied all of the Plaintiff's allegations.

With their Answer, the Defendants also filed five counterclaims. First, they asserted that the revocation of the carter permit without notice and a hearing was in violation of the Town Code as well as the due process clause and the civil rights guaranteed by the United States Constitution and Federal Law. Second, they claimed that the revocation without notice and a hearing violated the Defendants' property rights under the Constitution and Federal Law. As a Third and Fourth Counterclaim, they alleged that the revocation and attempts to shut down Go Green's business in the Town were done in order to benefit Go Green's competitors. They therefore allege that the Town engaged in an unreasonable restraint of trade under the Sherman Act, 15 U.S.C. § 1 et seq., and under New York State law. Finally, they contended that the Town's requirement that residents purchase yellow bags from the Town for all their garbage constituted a “user fee” for the Town Transfer Station but was imposed even on those who did not use the Town Transfer Station. They therefore urged that this law constituted a tax beyond the Town's authority under the Town Law and was thus a violation of the Constitution and Federal Law.

On August 2, 2012, the Defendants filed a timely Notice of Removal, thereby removing the action to this Court pursuant to the provisions of 28 U.S.C. §§ 1441 and 1446. They argued that this Court could exercise jurisdiction pursuant to 28 U.S.C. § 1441 on the basis of the federal questions of due process, civil rights, and restraint of trade that arose from the Town's actions in revoking Go Green's permit. The Plaintiff did not seek remand or otherwise challenge the removal and the thirty days afforded to them to do so have since expired. However, remand based on lack of subject matter jurisdiction may be brought to the Court's attention and pursued at any time. 28 U.S.C. § 1447(c).

Previously, on July 23, 2012, the parties stipulated to a 120–day moratorium with regard to enforcement of the yellow bag law. The stipulation also allowed Go Green to continue operating in the Town through November 23, 2012. The Defendants moved for a Temporary Restraining Order to extend that moratorium and the court held a hearing to consider that motion on November 15, 2012. The Court denied Defendants' motion and declined to issue the requested injunction.

At the same hearing on November 15, 2012, the Court expressed doubt about the Defendants' standing to challenge the Town's yellow bag law as an illegal user fee or tax in its fifth counterclaim. Therefore, the Defendants now seek leave of the Court to join Jose Perez (“Perez”), a resident of the Town of Southold and to add as a sixth counterclaim the same challenge to the yellow bag law but with Perez as the named counterclaim plaintiff.

The Plaintiff opposes these amendments as futile, claiming that the yellow bag program is neither a user fee nor a tax. Rather, they insist that the law is a valid exercise of the Town's State–Approved Local Solid Waste Management Program in furtherance of the Town's mandate from the State to reduce waste going into landfills or incinerators by requiring as much recycling and reuse as possible. In reply, the Defendants cite authority purportedly supporting their contention that a fee, even when part of a town sanitation program, can be characterized as an illegal tax.

II. DISCUSSION

Even where the parties do not adequately raise the issue, the district court can inquire sua sponte as to whether subject matter jurisdiction exists. See Durant, Nichols, Houston, Hodgson, & Cortese–Costa P.C. v. Dupont, 565 F.3d 56, 62 (2d Cir.2009) (“If subject matter jurisdiction is lacking and no party has called the matter to the court's attention, the court has the duty to dismiss the action sua sponte.”); Joseph v. Leavitt, 465 F.3d 87, 89 (2d Cir.2006) (“[W]e have an independent obligation to consider the presence or absence of subject matter jurisdiction sua sponte.”); Poindexter v. Nash, 333 F.3d 372, 383 (2d Cir.2003) (“[I]f the parties do not call a [subject matter] jurisdictional defect to the attention of the court, the court has the duty to raise it sua sponte.”); Stewart v. Atwood, 834 F.Supp.2d 171, 177 (W.D.N.Y.2012) (“Regardless of whether the issue is raised by the parties, a district court is required to inquire into and determine whether federal subject matter jurisdiction in a removed action exists.”); Fed.R.Civ.P. 12(h)(3) (“If the court determines at any time that it lacks subject-matter jurisdiction, the court must dismiss the action.”). “[L]ack of subject matter jurisdiction cannot be waived.” In re Stock Exchanges Options Trading Antitrust Litig., 317 F.3d 134, 151 (2d Cir.2003). See also New York v. Shinnecock Indian Nation, 686 F.3d 133, 138 (2d Cir.2012) (“[Subject matter] [j]urisdiction cannot be created by the consent of the parties.”). This Court will now proceed to review whether the requisite subject matter exists for it to exercise jurisdiction over this removed action.

A. Legal Standard for Removal

A cause of action that was initially filed in state court may be removed by a defendant where “the district courts of the United States have original jurisdiction.” 28 U.S.C. § 1441(a). Accordingly, a prerequisite for removal jurisdiction is that the court has the power to exercise original jurisdiction. See, e.g., Caterpillar Inc. v. Williams, 482 U.S. 386, 392, 107 S.Ct. 2425, 96 L.Ed.2d 318 (1987) (“Only state-court actions that could have been filed in federal court may be removed to federal court by the defendant.”)

Pursuant to 28 U.S.C. § 1331, the district courts have original jurisdiction over all civil actions arising under the United States Constitution and the laws and treaties of the United States. The Section 1331 federal question determination requires a limited inquiry, looking only at the Plaintiff's original cause of...