Second Circuit Lets Eviction-Settlement Challenges Move Forward

The Second Circuit ruled that a case challenging New York officials' eviction-settlement practices can move forward in federal court, despite the fact that a state-court judge ratified the settlements. The ruling is a victory for victims of the practices, and says that a civil-rights defendant can't side-step federal jurisdiction by having a state-court judge merely ratify the defendant's actions.

The case, Cho v. City of New York, arose when New York officials coerced individuals and businesses into signing settlement agreements waiving various constitutional rights in order to avoid eviction. The settlement agreements were subsequently "so-ordered" by state-court judges.

Plaintiffs sued in federal court under Section 1983, but the defendants won a district court ruling dismissing the case based on the Rooker-Feldman doctrine. (That doctrine says that a federal district court can't hear an appeal of a state-court judgment.) The Second Circuit reversed.

The court ruled that the state-court judges' acts of "so-order[ing]" the settlement agreements didn't turn the plaintiffs' federal-court case into a de facto appeal (that would have been barred by Rooker-Feldman). Instead, the state-court judges merely ratified the settlements. Moreover, the plaintiffs' harm was caused by the coerced settlement agreements themselves, not by the state-court ratification. The court explained:

The instant case thus does not entail the evil Rooker-Feldman was designed to prevent. Plaintiffs are attempting to remedy an alleged injury caused when, prior to any judicial action, they were coerced to settle, not an injury that flows from a state-court judgment. By allowing an action such as this to go forward, we do not risk turning our federal district courts into quasi-appellate courts sitting in review of state-court decisions.

The ruling only allows the case to move forward in federal court; it says nothing about the merits.