Court Opinion

ID: 6112309
Source: CourtListenerOpinion
Date Created: 2022-01-25 16:00:35.464428+00
Date Added: 2024-06-11T08:54:23.070981
License: Public Domain

21-677-cv
Aptive Environmental, LLC v. Village of East Rockaway

                               UNITED STATES COURT OF APPEALS
                                   FOR THE SECOND CIRCUIT

                                           SUMMARY ORDER

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A
SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED
BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1.
WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY
MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE
NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY
OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.

        At a stated Term of the United States Court of Appeals for the Second Circuit, held at the
Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York on the
25th day of January, two thousand twenty-two.

Present:         ROSEMARY S. POOLER,
                 DENNY CHIN,
                 SUSAN L. CARNEY,
                            Circuit Judges.

_____________________________________________________

APTIVE ENVIRONMENTAL, LLC,

                                  Plaintiff-Appellee,

                          v.                                               21-677-cv

VILLAGE OF EAST ROCKAWAY, NEW YORK,

                        Defendant-Appellant.
_____________________________________________________

Appearing for Appellant:          John E. Ryan, Ryan, Brennan & Donnelly LLP, Floral Park, N.Y.

Appearing for Appellee:           Clint Cowan, Lynn Pinker Hurst & Schwegmann, LLP (Kent D.
                                  Krabill, on the brief), Dallas, TX.

Appeal from the United States District Court for the Eastern District of New York (Feuerstein,
J.).

     ON CONSIDERATION WHEREOF, IT IS HEREBY ORDERED, ADJUDGED,
AND DECREED that the judgment of said District Court be and it hereby is AFFIRMED.
        The Village of East Rockaway (“Village”) appeals from the March 22, 2021 judgment of
the United States District Court for the Eastern District of New York (Feuerstein, J.), denying the
Village’s motion for summary judgment, granting Aptive Environmental, LLC’s (“Aptive”)
cross-motion for summary judgment, and granting judgment as a matter of law to Aptive on the
grounds that the Village’s solicitation fee is unconstitutional. We assume the parties’ familiarity
with the underlying facts, procedural history, and specification of issues for review.

        We review an order granting summary judgment de novo, drawing all factual inferences
in favor of the non-moving party. Viacom Int’l, Inc. v. YouTube, Inc., 676 F.3d 19, 30 (2d Cir.
2012). Summary judgment is proper if “there is no genuine dispute as to any material fact and
the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a).

        The only issue on appeal is whether the Village’s $200 solicitation fee is constitutional.
Solicitation is a form of expression entitled to First Amendment protection. 1 See Village of
Schaumburg v. Citizens for a Better Env’t, 444 U.S. 620, 632 (1980). “[I]t is equally clear that
while the exercise of [c]onstitutionally protected activities may not be taxed, it may be regulated,
provided the regulation is narrowly tailored to achieve a legitimate governmental interest, is
content-neutral in terms and effect, and does not unduly burden speech.” Nat’l Awareness
Found. v. Abrams, 50 F.3d 1159, 1165 (2d Cir. 1995) (citation omitted). “Thus, fees that serve
not as revenue taxes, but rather as means to meet the expenses incident to the administration of a
regulation and to the maintenance of public order in the matter regulated are constitutionally
permissible.” Id.

        The Constitution permits municipalities to require solicitation licenses, but licensing
regulation is subject to scrutiny under the First Amendment. We have summarized the Supreme
Court’s First Amendment licensing jurisprudence as follows:

       In the First Amendment context, the Supreme Court has held that governmental
       entities may impose licensing fees relating to the exercise of constitutional rights
       when the fees are designed “to meet the expense incident to the administration of
       the [licensing statute] and to the maintenance of public order in the matter
       licensed.” Cox v. New Hampshire, 312 U.S. 569, 577 (1941) (quotation marks
       omitted). Put another way, imposing fees on the exercise of constitutional rights is
       permissible when the fees are designed to defray (and do not exceed) the
       administrative costs of regulating the protected activity. E. Conn. Citizens Action
       Grp. v. Powers, 723 F.2d 1050, 1056 (2d Cir. 1983) (“Licensing fees used to defray
       administrative expenses are permissible, but only to the extent necessary for that
       purpose.”); see Int’l Women’s Day March Planning Comm. v. City of San Antonio,
       619 F.3d 346, 370 (5th Cir. 2010); Nat’l Awareness Found. v. Abrams, 50 F.3d
       1159, 1165 (2d Cir. 1995) (“Thus, fees that serve not as revenue taxes, but rather
       as means to meet the expenses incident to the administration of a regulation and to
       the maintenance of public order in the matter regulated are constitutionally
       permissible.”); see also Selevan v. N.Y. Thruway Auth., 711 F.3d 253, 259-61 (2d
1
 The Village’s argument that its solicitation fee is permissible because Aptive engages in
commercial solicitation was raised for the first time on reply, and is therefore waived. See
Pettaway v. Nat’l Recovery Sols., LLC, 955 F.3d 299, 305 n.2 (2d Cir. 2020).
                                                 2
       Cir. 2013) (upholding a toll bridge fee as “constitutional[ly] permissib[le]” in the
       “right to travel” context); cf. Murdock v. Pennsylvania, 319 U.S. 105, 113-14
       (1943) (striking down a license tax that was “not a nominal fee imposed as a
       regulatory measure to defray the expenses of policing the activities in question”).

Kwong v. Bloomberg, 723 F.3d 160, 165-66 (2d Cir. 2013) (footnotes omitted). Only fees up to
or equaling the proven expenses of the municipality in regulating the expressive activity are
permissible. See Powers, 723 F.2d at 1056. As the proponent of the fee, the Village bears the
burden of substantiating the fee amount by adducing evidence of the administrative costs
purportedly defrayed. See id. (holding that an administrative fee was unconstitutional where the
government entity did not produce evidence that the fee charged was equal to the administrative
costs of the regulation); Deegan v. City of Ithaca, 444 F.3d 135, 142 (2d Cir. 2006) (“The entity
that enacted a challenged regulation has the burden to demonstrate that the interest served
justifies the restriction imposed.”).

         Here, the Village failed to satisfy its burden of substantiating the $200 solicitation fee by
providing evidence of the administrative costs the fee purportedly defrayed. The parties dispute
the nature of the evidence required to justify the solicitation fee. Aptive argues the Village must
justify the fee with actual data and concrete evidence. The Village argues that estimates are
permissible evidence of the fee needed to defray costs of regulation, particularly where, as here,
the Village had not yet issued a commercial solicitation license.

        We need not settle the issue here, as there is insufficient evidence in the record to even
properly estimate the administrative costs associated with the solicitation licensing regulation.
The Village failed to follow Local Rule 56.1(a) and submit a statement of undisputed material
facts in support of its motion for summary judgment. The Village also failed to file the required
counterstatement in response to Aptive’s Rule 56.1 statement per Local Rule 56.1(b). So long as
the moving party’s Rule 56.1(a) statement includes citations to admissible evidence, “[i]f the
opposing party then fails to controvert a fact so set forth in the moving party’s Rule 56.1
statement, that fact will be deemed admitted.” Giannullo v. City of New York, 322 F.3d 139, 140
(2d Cir. 2003). Furthermore, the Village submitted attorney affidavits with its summary
judgment papers that both add and controvert facts to which the Village previously testified.
“[W]hen an attorney makes statements under penalty of perjury in an affidavit or an affirmation,
the statements do constitute part of the evidentiary record and must be considered.” Kulhawik v.
Holder, 571 F.3d 296, 298 (2d Cir. 2009). However, a party may not “create an issue of fact by
submitting an affidavit in opposition to a summary judgment motion that, by omission or
addition, contradicts the affiant’s previous deposition testimony.” Hayes v. N.Y.C. Dep’t of
Corr., 84 F.3d 614, 619 (2d Cir. 1996).

        Considering the undisputed assertions from Aptive’s statement of material facts that are
supported by evidence, we agree with the district court that there is insufficient evidence to show
that the solicitation licensing fee is designed to defray, and does not exceed, the administrative
costs of regulating solicitor licensing. The Village’s Rule 30(b)(6) witness was Patricia Renner,
the Village clerk. As the district court found, Renner’s deposition testimony attributes the fee to
guesses and estimates that are not based on empirical evidence. In response to how the Village
could know that processing an intake of each application will cost the village fifty to

                                                   3
seventy­five dollars, Renner replied: “Someone has to receive the application, stamp it in, pass it
onto me. It has to go on the agenda. It has to be reviewed by the board, it has to be reviewed --
our attorney is at the board meetings, so he will also be inputting. Then we have to then review
all of the background check, the application itself, what type of business, make sure there’s no
additional information that we're missing. So that’s all time, and time is money.” App’x at 232-
33.

        Nowhere in that answer—or elsewhere in the record—is even a rough approximation of
the time it would take each party to conduct their review, salary cost for each individual
reviewer, overhead costs for the entire process, the “frequency with which inspection or
enforcement occurs,” or “the average time required for an inspection or for enforcement.” Turley
v. N.Y.C. Police Dep’t, 988 F. Supp. 667, 675 (S.D.N.Y. 1997). In fact, Renner admitted that
although she would be administering the licensing scheme, the Village did not seek her input
before deciding on the amount of the fee. Likewise, she testified that the Village did not obtain
estimates from background check companies to determine the likely cost of a background check.
As the magistrate judge found, in a finding with which the district court concurred, the issue is
not that the Village is unable to precisely determine the administrative costs; it is that the Village
“has not done the requisite research and analysis, nor shown . . . through evidence appropriately
cited to at summary judgment” that the $200 fee is constitutionally valid. App’x at 410; Sp.
App’x at 3-4.

        Even if we decided to scour the record for undisputed facts—which we have no
obligation to do given the Village’s failure to abide by Rule 56.1—we would find that Aptive is
entitled to judgment as a matter of law. Renner admitted she does not “issue” the licenses herself
before stating that she would, in fact, do most of the processing of the application for a solicitor
license. For the one solicitation license application the Village received, the deputy clerk spent
one hour finding addresses for the application. The deputy clerk’s yearly compensation is
between $85,000-$110,000, but this employee’s hourly rate is not mentioned in the Village’s
summary judgment affidavit for purposes of calculating the processing costs. This further
demonstrates that the Village did not engage in a careful analysis of what the likely processing
costs for a licensing application would be. See, e.g., Turley, 988 F. Supp. at 674 (concluding that
the “City has significantly overestimated the hourly salary and benefits of the permit processors”
by using the salary of a senior patrolman instead of the much lower salary of senior police
administrative assistants who actually processed permits).

        Lastly, the Village argues that it was reasonable for them to base their $200 fee on the
Village of Floral Park’s $200 fee. But comparison to another jurisdiction “is simply not the test
for assessing the validity of a licensing fee.” Kwong, 723 F.3d at 160 (rejecting plaintiff’s
argument that New York City’s handgun licensing fee was significantly higher than the fee
charged in other jurisdictions); see also Abrams, 50 F.3d at 1166 (“[T]he propriety of inclusion
of particular enforcement costs should be determined case-by-case.”). The key question is
whether the Village’s fee is designed to defray the administrative costs associated with the
licensing scheme in East Rockaway. Here, the undisputed evidence in the record demonstrates

                                                  4
that the Village’s fee was not designed to defray the administrative costs and therefore, it is
unconstitutional. 2

       We have considered the remainder of the Village’s arguments and find them to be
without merit. Accordingly, the order of the district court hereby is AFFIRMED.

                                                      FOR THE COURT:
                                                      Catherine O’Hagan Wolfe, Clerk

2
 We interpret the district court’s order entering a permanent injunction as applying to the
Village’s present Solicitation Fee found at §§ 171-3 and 171-5(A) of the Village Code, and we
do not read the order as forever barring the Village from adopting a licensing fee if it were to
actually undertake a process of estimating the administrative costs associated with its licensing
scheme, relying on evidence rather than speculation or post-hoc justifications.
                                                  5