Comstock v. New York State

MEMORANDUM DECISION AND ORDER I. INTRODUCTION On July 26, 2023, Plaintiffs, consisting of constituents of New York State and current or aspiring New York State legislators, brought this action against the following individuals and entities: New York State; the New York State Senate; the New York State Assembly; Letitia James, in her official capacity as New York State Attorney General; and the following individuals in their official capacities as state legislators: Andrea Stewart-Cousins, Robert Ortt, Carl Heastie, Crystal Peoples-Stokes, and William Barclay. (Dkt. No. 1; see also Dkt. No. 18). Plaintiffs allege that the addition of Section 5-b to the New York Legislative Law, establishing restrictions on legislators’ outside income, violates provisions of the United States and New York State Constitutions and seek a declaratory judgment invalidating the law. (Dkt. No. 18). Specifically, Plaintiffs allege that Section 5-b: (1) discriminates against legislators on the basis of their outside income in violation of the Equal Protection Clauses of the United States and New York State Constitutions; (2) unconstitutionally adds an additional qualification to be a member of the New York State Legislature in violation of Article III, Section 7 of the New York State Constitution; (3) is unconstitutionally vague and deprives legislators of their property without due process of law in violation of the Due Process Clauses of the United States and New York State Constitutions; (4) disenfranchises voters in violation of Article I, Section 1 of the New York State Constitution; (5) deprives legislators of their salaries in violation of Article III, Section 6 of the New York State Constitution; (6) deprives legislators of their rights to vote on legislation and to participate in the legislative process in violation of the First and Fourteenth Amendments to the United States Constitution; (7) deprives legislators’ constituents of their right to vote in violation of the First and Fourteenth Amendments to the United States Constitution; (8) effectively expels legislators from the New York State Legislature without due process in violation of the Due Process Clauses of the United States and New York State Constitutions. (Id.). Defendants, excepting Ortt and Barclay, have filed a motion to dismiss. (Dkt. No. 23).¹ This motion is fully briefed. (Dkt. Nos. 23-4, 25, 26). After briefing was submitted on the motion to dismiss, Plaintiffs filed a motion to amend their complaint, accompanied by a proposed second amended complaint (the “PSAC”)² and supporting memorandum of law. (Dkt. Nos. 27, 27-2, 27-3). Defendants have filed a response opposing the motion to amend, or alternatively, requesting that it be decided along with the motion to dismiss. (Dkt. No. 28). For the following reasons, the Court grants Defendants’ motion to dismiss and denies Plaintiffs’ motion to amend. II. MOTION TO AMEND THE COMPLAINT Plaintiffs have filed a motion to amend their complaint pursuant to Rule 15(a)(2) of the Federal Rules of Civil Procedure. (Dkt. No. 27). The PSAC adds as defendants the New York State Commission on Ethics and Lobbying in Government (“COELIG”) and eleven members of COELIG. (Dkt. No. 27-2, at 1-2).³ Plaintiffs also seek to eliminate their current eighth cause of action and replace it with a claim for damages pursuant to 42 U.S. §1983, among other changes. (Id. at 22-23). Defendants argue that the motion to amend should be denied based on undue delay or futility. (Dkt. No. 28, at 4, 6-8). In the alternative, they request that the Court decide the motion to amend along with the motion to dismiss. (Id. at 9). In general, leave to amend should be freely given “when justice so requires.” Fed. R. Civ. P. 15(a)(2). “District courts in this Circuit have repeatedly explained that, when faced with an amended complaint, they may either deny a pending motion to dismiss as moot or consider the merits of the motion, analyzing the facts as alleged in the amended pleading.” Pettaway v. Nat’l Recovery Sols., LLC, 955 F.3d 299, 303 (2d Cir. 2020) (citing Conforti v. Sunbelt Rentals, Inc., 201 F. Supp. 3d 278, 291 (E.D.N.Y. 2016)). Because the moving Defendants have had an opportunity to respond to the PSAC, the Court will consider their motion to dismiss with respect to the PSAC. If the claims in the PSAC cannot survive Defendants’ motion to dismiss, then Plaintiffs’ cross-motion to amend will be denied as futile. See Keitt v. New York City, 882 F. Supp. 2d 412, 460-61 (S.D.N.Y. 2011) (“An amendment is considered futile when the proposed new claim would not withstand a motion to dismiss, either for failure to state a cause of action, or on another ground.” (citing Milanese v. Rust-Oleum Corp., 244 F.3d 104, 110 (2d Cir. 2001))). III. BACKGROUND A. Challenged Law Senate Bill (“S.B.”) 9617, signed into law on December 31, 2022, raised New York State legislators’ salaries and imposed outside income limits on legislators. Act of Dec. 31, 2022, 2022 N.Y. Sess. Laws, ch. 841, §§1-2 (McKinney) (codified at N.Y. Legis. L. §5-b). The outside income limits on legislators become effective January 1, 2025, and are as follows: [A] member of the legislature receiving a salary for legislative work from the state of New York shall be permitted to earn outside income each year for performing fee for service activities and compensated outside activities approved under the permanent joint rules of the Senate and Assembly in an amount totaling no greater than the earning limitations for retired persons in positions of public service allowed for the same year under subdivision two of section two hundred twelve of the retirement and social security law. N.Y. Legis. L. §5-b. This amount is currently equal to $35,000. See N.Y. Retire. & Soc. Sec. L. §212(2). Section 5-b(2)(a) defines “outside earned income” to “mean wages, salaries, fees, and other forms of compensation for services actually rendered.” The following are specifically excluded from the definition of “outside earned income”: (1) salary, benefits and allowances paid by the state; (2) income and allowances attributable to service in the reserves of the armed forces of the United States, national guard or other active military service; (3) copyright royalties, fees, and their functional equivalent, from the use of copyrights, patents and similar forms of intellectual property rights, when received from established users or purchasers of such rights; (4) income from retirement plans of the state of New York or the city of New York, private pension plans or deferred compensation plans (e.g., 401, 403(b), 457, etc.) established in accordance with the internal revenue code; (5) income from investments and capital gains, where the member’s services are not a material factor in the production of income; (6) income from a trade or business in which a member of their family holds a controlling interest, where the member’s services are not a material factor in the production of income; and (7) compensation from services actually rendered prior to January [1, 2025], or prior to being sworn in as a member of the legislature. Id. §5-b(2)(b). A legislator who does not comply with the outside income restrictions is prohibited from receiving a salary for his or her legislative position and from voting as a member of the New York legislature. Id. §5-b(1). Additionally, “[a] member of the legislature who knowingly and intentionally violates” these provisions “shall be subject to a civil penalty in an amount not to exceed [$40,000] and the value of any gift, compensation or benefit received in connection with such violation.” Id. §5-b(3). The civil penalty assessment “shall be made by the legislative ethics commission.” Id. S.B. 9617 also amended N.Y. Legis. L. §80(7)(i), granting the legislative ethics commission the power to render formal advisory opinions on what Section 5-b requires upon written request from an individual subject to its jurisdiction. Act of Dec. 31, 2022, 2022 N.Y. Sess. Laws, ch. 841, §4 (McKinney). Such advisory opinions “until and unless amended or revoked[] shall be binding on the legislative ethics commission in any subsequent proceeding concerning the person who requested the opinion and who acted in good faith, unless material facts were omitted or misstated by the person in the request for an opinion.” N.Y. Legis. L. §80(7)(i). B. Facts⁴ The following persons are Plaintiffs in this action: Richard Comstock and Joseph White, taxpayers and voters in New York State; Kevin McCaffrey, a current legislator in Suffolk County who “aspires to be a member of the New York State Assembly”; George Borello, Thomas O’Mara, Mario Mattera, and Bill Weber, members of the New York State Senate; and Jodi Giglio, Andrew W. Goodell, Steve Hawley, Brian Manktelow, Matt Slater, and Robert Smullen, members of the New York State Assembly. (Dkt. No. 27-2,

7-19). Plaintiffs who are current or aspiring legislators, (collectively, the “Legislator Plaintiffs”), all, except for Plaintiff Slater,⁵ allege earning income from sources outside their legislative jobs that is (or could be⁶) “greater than the earning limitations [under the challenged law].” (Id.