United States Court of Appeals, Second Circuit.: No. 698, Docket 96-7840
United States Court of Appeals, Second Circuit.: No. 698, Docket 96-7840
3d 877
Allan M. Pepper, Kaye, Scholer, Fierman, Hays & Handler, LLP, New
York City, for Plaintiff-Appellee.
Lawrence S. Kahn, Corporation Counsel of the City of New York, New
York City, for Defendants-Appellants.
Before: WALKER, McLAUGHLIN, and JACOBS, Circuit Judges.
McLAUGHLIN, Circuit Judge:
Defendants appeal from an order of the United States District Court for
the Southern District of New York (Sotomayor, J.) granting plaintiff's
motion for a preliminary injunction.
BACKGROUND
Procurement Procedures in General
Under the New York City Charter, a bidder for a City contract must clear two
hurdles. First, the bid must be "the most advantageous to the city," taking into
consideration a variety of factors, including price. N.Y. City Charter 319.
Second, a bidder must be found "responsible" by the agency granting the
contract. N.Y. City Charter 313(b)(2),(3). The City Charter then requires
contracts to be awarded to the "lowest responsible bidder," unless it is in the
City's "best interest" to accept another bid. N.Y. City Charter 313(b)(2).
The City Charter states that "[n]o person or firm shall be suspended or debarred
from contracting with the city or any agency of the city ... [without] reasonable
notice and reasonable opportunity ... to respond at a hearing to be held on a
record." N.Y. City Charter 335(a),(b)(1). The Charter lists several grounds
for debarment, including indictment or conviction, violation of contract
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York State Supreme Court dismissed the proceeding holding that the City had
the right to terminate the contracts at will and that the dispute resolution
procedure plaintiff tried to invoke did not apply to terminations. HANAC did
not appeal.
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On May 1, 1996, while its Article 78 proceeding was still pending, HANAC
filed the present 1983 suit against the City of New York and various City
officials ("City") in the United States District Court for the Southern District of
New York (Sotomayor, J.). This suit alleged that the City (a) deprived HANAC
of its property interest in its status as an eligible City contractor by de facto
debarring it from consideration for City contracts and (b) deprived HANAC of
its liberty interest in its good name and reputation by labelling it
"nonresponsible" without due process in violation of the Fourteenth
Amendment. HANAC sought a preliminary injunction requiring the City to
reinstate all its cancelled contracts, and enjoining the City from denying
HANAC any further contracts until the outcome of the 1983 action.
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The City now appeals the injunction arguing that: (1) HANAC has no property
interest in its status as a City contractor; (2) HANAC's liberty interest in its
reputation was not violated by nonresponsibility findings; (3) even if HANAC
suffered deprivations of property and liberty interests, the City afforded
HANAC the procedures required by the Due Process Clause; (4) HANAC
made no showing of irreparable harm, and (5) even if the City violated
HANAC's due process rights, the remedy ordered by the district court exceeded
its authority.
DISCUSSION
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When reviewing alleged procedural due process violations, the Supreme Court
has distinguished between (a) claims based on established state procedures and
(b) claims based on random, unauthorized acts by state employees. See Hudson
v. Palmer, 468 U.S. 517, 532, 104 S.Ct. 3194, 3203, 82 L.Ed.2d 393 (1984);
Parratt v. Taylor, 451 U.S. 527, 541, 101 S.Ct. 1908, 1916, 68 L.Ed.2d 420
(1981), overruled on other grounds by Daniels v. Williams, 474 U.S. 327, 106
S.Ct. 662, 88 L.Ed.2d 662 (1986). In the latter case, the Due Process Clause of
the Fourteenth Amendment is not violated when a state employee intentionally
deprives an individual of property or liberty, so long as the State provides a
meaningful postdeprivation remedy. Hudson v. Palmer, 468 U.S. at 531, 533,
104 S.Ct. at 3202-03, 3203-04. When the deprivation occurs in the more
structured environment of established state procedures, rather than random acts,
the availability of postdeprivation procedures will not, ipso facto, satisfy due
process. Id. at 532, 104 S.Ct. at 3203; Logan v. Zimmerman Brush Co., 455
U.S. 422, 435-36, 102 S.Ct. 1148, 1157-58, 71 L.Ed.2d 265 (1982).
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HANAC cannot resuscitate its due process claim simply because an Article 78
proceeding is now barred by Article 78's four-month statute of limitations.
"Where, as here, Article 78 gave ... a meaningful opportunity to challenge [the
debarment] ..., [HANAC] was not deprived of due process simply because [it]
failed to avail [itself] of the opportunity." Giglio, 732 F.2d at 1135.
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HANAC can find little comfort in the general rule that 1983 allows plaintiffs
with federal or constitutional claims to sue in federal court without first
exhausting state judicial or administrative remedies. Kraebel v. New York City
Dep't of Hous. Preservation and Dev., 959 F.2d 395, 404 (2d Cir.1992); see
also Monroe v. Pape, 365 U.S. 167, 183, 81 S.Ct. 473, 481-82, 5 L.Ed.2d 492
(1961), overruled on other grounds by Monell v. Department of Soc. Servs.,
436 U.S. 658, 98 S.Ct. 2018, 56 L.Ed.2d 611 (1978); Patsy v. Board of
Regents, 457 U.S. 496, 500-01, 102 S.Ct. 2557, 2559-60, 73 L.Ed.2d 172
(1982). Our decisions holding that an Article 78 proceeding constitutes an
adequate postdeprivation procedure under the Due Process Clause are
consistent with this general rule. See Marino v. Ameruso, 837 F.2d 45, 47 (2d
Cir.1988). If there is a constitutional violation, federal courts are available to
hear 1983 suits despite the availability of adequate state procedures. Monroe
v. Pape, 365 U.S. at 183, 81 S.Ct. at 481-82. Parratt, Hudson and their progeny,
however, emphasize that there is no constitutional violation (and no available
1983 action) when there is an adequate state postdeprivation procedure to
remedy a random, arbitrary deprivation of property or liberty. Zinermon v.
Burch, 494 U.S. at 132, 110 S.Ct. at 986-87; Parratt v. Taylor, 451 U.S. at 541,
101 S.Ct. at 1916; Hudson v. Palmer, 468 U.S. at 531, 533, 104 S.Ct. at 320203, 3203-04.
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CONCLUSION
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