This case involves a challenge by New York City landlords against the city's Guaranty Law, enacted during the COVID-19 pandemic. The law permanently rendered personal guaranties for commercial leases unenforceable and defined attempts to collect on such guaranties as commercial tenant harassment. While the district court previously ruled that the law violated the Contracts Clause, the City appealed, arguing that the federal courts lacked jurisdiction because the City does not enforce the Guaranty Law. The City conceded standing at the initial dismissal stage but later argued that without a threat of enforcement by the City, the landlords could not demonstrate the concrete injury required for Article III standing.
The Second Circuit distinguished between the standing requirements at the pleadings stage versus the summary judgment stage. At the pleadings stage, the court held that the plaintiffs' allegations were sufficient because the City had not disavowed its enforcement authority, triggering a presumption that the government would enforce proscriptive laws. However, the burden of proof increases as litigation progresses. On summary judgment, the plaintiffs bore a heightened burden to provide factual evidence of a credible threat of imminent enforcement. The City had now unequivocally disavowed any intent to enforce the Guaranty Law against the plaintiffs. The court explained that a declaratory judgment alone cannot supply jurisdiction if there is no one to enjoin and no redressable injury. Because the City does not enforce the law and the plaintiffs seek only forward-looking relief, there is no concrete threat of injury traceable to the City. The court also rejected the argument that a federal ruling would persuade state courts, noting that federal opinions do not bind state courts. Consequently, the plaintiffs failed to meet the injury-in-fact, causation, and redressability requirements for standing at this stage.
The district court's summary judgment ruling is vacated, and the case is remanded with instructions to dismiss the action entirely for lack of subject matter jurisdiction. The prior appellate judgment reversing the dismissal of the plaintiffs' claim remains in effect, meaning the constitutional question is not yet decided on the merits. The City is denied costs on this appeal due to its negligent delay in raising the standing issue, though no sanctions are imposed. Landlords may still challenge the law's constitutionality in state court proceedings or in private disputes with guarantors.
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