SOUTHERN DISTRICT OF NEW YORK
Index No. 01 Civ. 8003 (WHP) (AJP)
Class Action Complaint
(Jury Demand)
Carl E. Person, individually, and as a taxpayer, attorney and businessperson in New York City and New York State, Plaintiff,
-against-
NEW YORK CITY ECONOMIC DEVELOPMENT CORP.; EMPIRE STATE DEVELOPMENT CORP.; NEW YORK CITY; and NEW YORK STATE, Defendants.
Plaintiff, attorney Carl E. Person acting pro se, as and for his complaint, respectfully alleges:
Jurisdiction
1. The action arises under 42 U.S.C. Sections 1981 and 1983 (civil rights action), 28 U.S.C. Sections 2201 and 2202 (declaratory judgment action); and various other federal statutes, as set forth in paragraphs 51(a) through 51(p) below.
2. The subject-matter jurisdiction of this Court is invoked under the provisions of Title 28 U.S.C. Section 1331 (federal questions, including issues arising under the U.S. Constitution), 28 U.S.C. Section 1337 (commerce, including RICO, securities), and 28 U.S.C. Section 1343 (civil rights act). Plaintiff also invokes the supplemental jurisdiction of this Court, under 28 U.S.C. Section 1367, to consider claims arising under state law.
3. This court has personal jurisdiction over defendants, as follows: Each of the defendants is a state, or an agency of the State of New York or of a city or other governmental subdivision within the State of New York.
4. Plaintiff, Carl E. Person ("plaintiff"), is a taxpayer, attorney and businessperson conducting his activities since 1962 in New York City and New York State with his residence in New York, New York, and business address at 325 W. 45th Street - Suite 201, New York, New York 10036-3803.
5. Defendant, New York City Economic Development Corporation ("NYCEDC") is an economic development agency for the City of New York, in the State of New York, with its principal place of business at 110 William Street, New York, New York 10038.
6. Defendant, New York City ("NYC"), with its offices at City Hall, New York, New York 10038, exercises control over the activities of NYCEDC, and engages in negotiations and making promises and entering into agreements for New York City as a de facto EDA. Currently, NYC is negotiating with NYS and the owners of the Yankees and Mets to provide part of a $1.5 billion stadium financing to these two NYC major-league baseball teams.
7. Defendant, Empire State Development Corp. ("Empire") is a an economic development agency for the State of New York, with its two principal places of business at 633 Third Avenue, New York, New York 10017-6706 and 30 South Pearl Street, Albany, New York 12245.
8. Defendant, New York State ("NYS"), with its offices (under the name "Office of the Governor of New York State") in Albany, New York and at 633 Third Avenue, New York, New York 10017-6754, exercises control over the activities of Empire, and engages in negotiations and making promises and entering into agreements, as a de facto EDA, for New York State and with New York City . Currently, NYS is negotiating with NYC and the owners of the Yankees and Mets to provide part of a $1.5 billion stadium financing to these two NYC major-league baseball teams.
9. The following definition is used herein:
A. "EDA" or "EDA's" refer to economic development agencies or industrial development agencies which are financed in whole or in part by, and grant benefits to private corporations out of, taxes imposed on residents of the State, City or other area in which the EDA is operating wherein a claimed purpose of payment or award of such benefits is to retain or create jobs for the EDA's area.
10. Plaintiff, a taxpayer, businessperson and attorney in New York City and New York State since the 1960's, is suing the economic development agencies of New York City and New York State to obtain a judgment declaring to be illegal the governmental financing of the New York Yankees, New York Mets and other private corporation, and alleges that this action is a class action against the EDA's in all other states and U.S. territories to enjoin them from the same type of conduct.
11. Job creating is a zero sum game, with increases of jobs in one community resulting in decreases of jobs in the same number in other communities; or, to put it another way, corporations will create jobs in the same number somewhere in the country whether or not a state or community bribes a corporation to create its jobs in the state or community.
12. Plaintiff alleges that the financing activities are discriminatory and unfair and that the usual beneficiaries are multi-national corporations, conglomerates and superstore chains which do not need the financing, are not increasing the total number of employees in the U.S. through their activities (but instead are decreasing the number), are using such financing to support their globalizing efforts and injuring the middle class in the United States as a result.
13. The nation's EDA's (such as defendants' recent financing of Pathmark in Harlem, New York) are financing the corporations which are destroying small and independent businesses by violation of the Robinson-Patman Act, 15 U.S.C. Sections 13(a) and 13(f) (inducing and knowingly receiving unlawfully low per-unit prices), which exacerbates the competitive disadvantage for the existing, small law-abiding businesses in the area, causing them to go out of business and discharge their employees.
14. Plaintiff has discussed these issues in his three related websites on (i) the Robinson-Patman Act, http://www.lawmall.com/rpa; (ii) stopping the expansion of Wal-Mart and other superstores into a community, http://www.lawmall.com/wal-mart; and (iii) this lawsuit, to stop job thefts in the United States, http://www.lawmall.com/jobtheft.
15. Also, the grant of huge amounts of taxpayers' money by several government officials to a few favored corporations creates an environment for corruption, the few favored corporations having huge financial incentives to find some ways to compensate the several state and local economic-development officials, or others having control of funds, licensing or approvals, to exercise their discretion as public officials in favor of the corporation through unlawful kickbacks, other hidden benefits, and political contributions.
16. Specifically, the plaintiff seeks to stop the imminent $1.5 billion financing (mostly) by defendants of the new Yankee stadium and new stadium for the New York Mets, and to bind all government agencies in the United States and its territories to a judgment prohibiting government financing of private corporations for the ostensible or actual purpose of purchasing or retaining jobs.
17. Diversion of $1 billion in taxpayers' money to the Yankees and Mets will not create new jobs not otherwise to be created, but will increase the amount of taxes which plaintiff and other taxpayers will have to pay, and/or decrease the services which the defendants could otherwise provide to its citizens and residents, to make New York City and New York State more attractive to all existing and to all future businesses, and not just to a select few.
18. The class action is to facilitate a judgment by adjudication or settlement to simultaneously stop the governmental financing practices throughout the United States and its territories, to end the wasteful, costly, corrupt, unfair, discriminatory and zero-sum competition by ECD's to retain and create jobs in the ECD's respective areas.
19. The proposed financing of the two stadiums in New York city would be the largest gift ever given by defendants, and given to two for-profit monopolist organizations (Yankees major-league baseball in the Bronx, and Mets major-league baseball in Queens), to enable them to extract further monopolistic profits from their existing monopolies, at taxpayer expense.
20. The class alleged by plaintiff is a class of defendants consisting of all state, local and U.S. territorial government agencies known or performing as economic development agencies or industrial development agencies ("EDA's") operating within the United States, the District of Columbia and/or any U.S. territories to provide one or more types of financial inducements to keep specific business entities and their jobs within the area serviced by the EDA or to induce specific businesses to transfer or set up business operations and jobs within the area served by the EDA.
21. There are approximately 1,000 EDA's in the United States and its territories, not including privately-owned economic development organizations, such as those operated by electric utilities. A list of such EDA's may be compiled from the following two websites: (i) URL www.ecodevdirectory.com/index2.htm (Economic Development Directory Website); and (ii) URL www.doc.gov/eda/html/1a12_edd.htm (The Dept. of Commerce, Directory of Economic Development Agencies).
22. The representatives of the class are the defendants in this action, all of which are EDA's as defined above.
23. The class, consisting of about 1,000 ECD's, is so numerous that joinder of all members is impracticable.
24. There are questions of law and fact common to the class, with the common questions of fact relating to the use of taxpayers' funds and credit to purchase or retain jobs, with the benefits being made available to a limited number of corporations, with such benefits not generally being made available to existing businesses in the area; and common questions of law [see paragraphs 51(a) through 51(p) below] as to the legality of such job-purchase and job-retention activities by the ECD's.
25. The defenses of the representatives of the class are typical of the defenses of the class.
26. The representative parties will fairly and adequately protect the interests of the class.
27. The practices alleged in this complaint amount to a waste of hundreds of billions of dollars, which can only be stopped on an equitable basis to all states, local areas and territories in the United States if the practice is ended by all ECD's at the same time, which is possibly only by a class action such as this.
28. The prosecution of separate actions against individual members of the class would create a risk of
A. inconsistent and/or varying adjudications with respect to individual members of the class which would establish incompatible standards of conduct for the party opposing the class, or
B. adjudications with respect to individual members of the class which would as a practical matter be dispositive of the interests of the other members not parties to the adjudications or substantially impair or impede their ability to protect their interests, or
C. questions of law or fact common to the members of the class predominate over any questions affecting only individual members, and a class action is superior to other available methods for the fair and efficient adjudication of the controversy.
29. From the middle of the depression in the mid-1930's (staring with Missouri) and continuing up to the present, virtually every state and many cities and other political subdivisions in most states set up economic development agencies - often called industrial development agencies - (hereinafter, "EDA's") to attract corporations to set up business activities in their own area, and to work at deterring existing businesses from leaving these same areas.
30. The avowed purpose of the EDA's has been to obtain additional jobs for the area, and to keep existing jobs from leaving the area. Also, a purpose is to help the area grow economically, a natural result from increased employment and business in the area.
31. Stiff competition among the 1,000 or so EDA's in the United States has resulted to try to encourage major corporations to move their business or plant and jobs to a specific state, city or other community, with the result that cities and towns are bidding enormous prices in their quest to purchase jobs for their own area. Missouri was unable to change its status during this period of being the state with the lowest per-capita income.
32. By reason of this bidding war, large corporations find it profitable to merely threaten to move to another location, because this encourages the local EDA to enter into the bidding contest with distant EDA's to see which EDA can offer the highest package of economic benefits to the major corporation to have it say or leave, whichever the case may be.
33. These inducements are not made to any of the existing small businesses in the area, and in fact the inducements are of such a large amount per job involved (reaching as high as $300,000 per job in some notable cases), it would be impossible for any EDA to pay every business $300,000 per job because jobs do not cost that much in private capital to create.
34. Also the EDA and locale would never be paid back their original purchase price for the purchased jobs at such high acquisition costs.
35. The bidding process is not among 1,000 EDA's, but generally is among only a limited number of EDA's (such as 3 to 7), which means that the corporation is already interested in these communities for other reasons (such as location, educational standing, lack of unions, price of land, availability of transportation to major markets) without payment of any inducements to the corporation. 36. The major corporation receives a benefit in this bidding process from the winning EDA and community which is a windfall for the corporation and an amount which cannot be paid to the existing businesses in the town to get them to promise to remain in the town.
37. If nobody were offering inducements, the corporations would operate somewhere, presumably within one of the states of the United States.
38. If a major corporation were not able to sell its jobs in this fashion, by threatening to leave a community, or by promising to move to a different community, the corporation would have to decide whether to move or stay based on the merits of the location options, and the related costs and benefits, but without the factor of what amounts to a governmental bribe, payable to a select few, but paid by the taxpayer and competitors who will be injured by the entry of a competitor into the community with formidable subsidies provided by the taxpayers.
39. Government has no right to be in the business of financing selected businesses, which turn out to be the businesses which need no such financing, unlike most of the other businesses in the area which probably could use similar subsidies.
40. What is worse, the companies selected for the subsidies are generally superstore chains such as Wal-Mart or other multi-national corporations which through a variety of practices have been injuring small and independent businesses, local governments, taxpayers and others in these same communities.
41. The superstores are violating the Robinson-Patman Act which prohibits price discrimination and requires the superstores not to induce manufacturers to sell to the superstores at lower per-unit prices than being given to their competitors; and the multi-national corporations are generally shifting their operations and employment to other, lower-wage countries and causing a decline in the standard of living for the middle class in the United States.
42. These anti-American activities of the recipients of these job purchase benefits are able to expand their market share in the United States, at the expense of the competing businesses which obtain no such subsidy (and in fact have to pay a portion of it in taxes), and use their domination of the United States market to expand through globalization into the markets of other countries and ruin their small and independent business as well.
43. It has been unlawful for banks to invest in businesses, and it should be unlawful for states, cities, towns, villages and other community agencies to invest the taxpayers' money by paying large companies hundreds of millions of dollars to do what they are going to do anyway.
44. This amounts to a form of commercial bribery, in which a corporation is paid to favor one city with jobs which it would have given to another city, but for the unlawful payment.
45. It also amounts to a denial of due process, a denial of equal protection, and exclusion from special legislation - for the competing and other businesses in the area which do not have the opportunity to receive matching funds (on a per job basis) for keeping their businesses in the area.
46. An evil of the practice is that it permits a corporation which has amassed the most jobs to coerce and then conspire with communities (in a form of greenmail, ransom or extortion) not to injure the community by moving away if the community pays the corporation the blackmail/greenmail/extortionate sum of $10 million to $1 billion or so.
47. Normally, we would prosecute persons demanding money in exchange for not hurting the community, but the stakes are very high. A small town with 5,000 persons believes it would never have unemployment again in the town if a corporation brought 500 to 1,000 jobs to the area, instead of to a town 50 miles away.
48. Governments should not be permitted to get involved in corporate decisions by paying them to influence their decisions in favor of the government. The adverse effect on other governments and the people they represent is obvious, but until the practice is prohibited at one time as to all EDA's throughout the country, governments which do not join in the bidding run the risk of losing jobs which other would have gone to the community.
49. It takes a decision in a class action such as this to bind all parties to a policy of no government bidding for jobs.
50. Plaintiff is a taxpayer in areas in which the defendant EDA's operate, and as taxpayer, sole practitioner attorney and businessperson has been adversely affected by the benefits paid by such EDA's to major corporations to keep them in the area (by inducing them through payments not to leave), and by paying corporations to set up jobs in the area, which resulted in the financing and subsidy of a major competitor of taxpaying businesses in the locale served by the EDA's, and made such competitors less profitable, less viable, less able to pay their employees on the scale to which they were accustomed, and with a reduction in taxes being paid by such injured competitors to the governments involved, and with a reduction in client and customer base for the plaintiff.
51. The activities of each of the defendants and members of the class of defendants are unlawful and in violation of, or infringe the rights of the plaintiff, under the following constitutional provisions, statutes, or other rules of law:
a. 28 U.S.C. Sections 2201 and 2202, action for declaratory judgment;
b. 42 U.S.C. Section 1981, which requires equal rights under the law for all persons in the United States, as follows: "(a) Statement of equal rights. All persons within the jurisdiction of the United States shall have the same right in every State and Territory to make and enforce contracts, to sue, be parties, give evidence, and to the full and equal benefit of all laws and proceedings for the security of persons and property as is enjoyed by white citizens, and shall be subject to like punishment, pains, penalties, taxes, licenses, and exactions of every kind, and to no other."
c. 42 U.S.C. Section 1983, as state action depriving plaintiff of rights secured under the United States and State Constitutions, and federal and state statutes, and other rules and doctrines of law;
d. Impermissible burden on interstate commerce, prohibited by U.S. Constitution, Sec. 8, Cl 3, "Power of Congress to regulate commerce.", which states: "To regulate commerce with foreign nations, and among the several States, and with the Indian tribes.";
e. Denial of Due Process, prohibited by the 5th and 14th Amendments to the United States Constitution; and equivalent provisions in various State Constitutions;
f. Denial of Equal Protection, prohibited by the 5th and 14th Amendments to the United States Constitution; and equivalent provisions in various State Constitutions; for example: NY CLS Const Art I, Section 11 (2001) ("No person shall be denied the equal protection of the laws of this state or any subdivision thereof.")
g. Special legislation prohibited by the Constitutions of various states, including New York, as follows: NY CLS Const Art III, Section 17 (2001): "The legislature shall not pass a private or local bill in any of the following cases: * * * Granting to any private corporation, association or individual any exclusive privilege, immunity or franchise whatever. [or] Granting to any person, association, firm or corporation, an exemption from taxation on real or personal property.";
h. Lending to Private corporation prohibited by the Constitutions of various states, including New York, as follows: NY CLS Const Art VIII, Section 1 (2001) ("No county, city, town, village or school district shall give or loan any money or property to or in aid of any individual, or private corporation or association, or private undertaking, or become directly or indirectly the owner of stock in, or bonds of, any private corporation or association; nor shall any county, city, town, village or school district give or loan its credit to or in aid of any individual, or public or private corporation or association, or private undertaking, except .... [omitted]");
i. Commercial bribery, prohibited under federal and state Constitutions, statutes and other law;
j. Unlawful economic coercion and extortion prohibited under federal and state Constitutions, statutes and other law, including 18 U.S.C. Section 1951 (defining "extortion" as "the obtaining of property from another, with his consent, induced by wrongful use of actual or threatened force, violence, or fear, or under color of official right."; and under New York law, New York Penal Law Section 155.40 (obtained by extortion: "or by failing or refusing to perform an official duty, in such manner as to affect some person adversely");
k. Unlawful misappropriation use and theft of tax revenues and public funds for private corporate use;
l. Violation of Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. Sections 1961, et seq. and comparable "little RICO statutes" in more than half of the states, including New York: New York Penal Law Section 460.20 (enterprise corruption);
m. Violation of federal mail fraud statutes, 18 U.S.C. Sections 1341 (mail fraud) and 1343 (fraud by wire, radio or television), and various statutes in all states prohibiting fraud and schemes to defraud, including New York: New York Penal Law Section 190.65 (prohibiting schemes to defraud); one instance of the alleged fraud is the failure of the favored corporations to advise the ECD's that the corporation is buying virtually all of its goods in violation of the Robinson-Patman Act (paying perhaps half as much per unit) and that the existing businesses in the ECD's area will be unable to remain in business as a result (and that the existing employees of such businesses will lose their jobs);
n. Violation of various statutes in all states prohibiting grand larceny (by false promise), including New York: New York Penal Law Section 155.35;
o. Violation of federal and state securities laws and rules, including the Securities Act of 1933, 15 U.S.C. Section 12(2) (to the extent that publicity efforts to obtain taxpayer and government approval may be deemed a prospectus); Rule 10b-5 under the Securities Exchange Act of 1934, 17 C.F.R. 240.10b-5; Section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. Section 78j(b); and the New York Martin Act, New York General Business Law Section 352-c prohibiting fraud, deception, unrealistic promises with respect to the sale of securities;
p. Unlawful looting of the public treasury through corrupt dealings between state officials and private corporations, with resulting failure of the states, cities and towns to obtain or enforce the benefit of their bargain and failure to obtain recovery of the moneys and other benefits transferred to the favored corporations;
52. Defendants have already paid hundreds of millions of dollars or more to a limited number of major corporations (such as Kidder Peabody, Time Warner, Bertelsmann AG, ABC, Conde Nast, McGraw-Hill, NBC, the New York Times Co., the New York Post, News Corp, Reuters and Viacom, General Motors - but virtually no corporation which is not itself or affiliated with a multi-national corporation, multi-billion dollar conglomerate or media powerhouse) as purported inducements for such corporations to remain where they were already located in New York, or to move facilities to New York, or set up new facilities in New York, and are currently negotiating with the respective owners of the New York Yankees and New York Mets baseball teams to provide about 67% (or approximately $1 billion) of $1.5 billion in financing to build two new stadiums in New York City for these two existing New York businesses.
53. Each of the defendants has acted intentionally, with malice and knowing that their activities were in violation of law.
54. The plaintiff has been injured irreparably and continues to be injured irreparably in his status as a taxpayer, attorney and businessperson by reason of defendants' activities, as alleged above.
55. The plaintiff is entitled to a preliminary and permanent injunction preventing and restraining the defendants from financing or participating or promising to finance or participate in the financing of any baseball, football or other sports stadiums in New York State, New York City or any other political subdivision thereof, for the benefit of for-profit sports teams or other for-profit organizations.
56. Plaintiff is entitled to the following relief against defendants, and each of the members of the class of defendants alleged in this complaint:
A. Injunction prohibiting any further job-theft activities;
B. Declaratory judgment to the effect that job-theft activities as described are illegal for a variety of reasons;
C. Declaratory judgment and injunction prohibiting any further transfers of benefits under any outstanding job-theft agreements;
D. Declaratory judgment declaring all job-theft agreements illegal and void or voidable;
E. Requirement that each member of the class give notice to various types of persons (including legislators, official publications, local press, government agencies, government officials, corporations in contract with an agency, and others) as to the judgment of the court;
F. Requirement that each agency sue the corporations receiving benefits for recovery of the benefits if the corporation in any respect is in breach of contract;
G. Order permitting any taxpayer in a state to bring suit on behalf of the state, city, town or agency against a corporation receiving benefits but in breach of its contract, if no action has been commenced by the state, city, town or agency within 6 months from the date of the judgment (or 6 months from the date of the most recent breach of contract); and
H. Order setting up trustee to receive periodic reports from each of the defendants as to compliance with the court's judgment, to be paid for by the defendants; and for the trustee to submit periodic compliance reports to the parties and the Court;
WHEREFORE, plaintiff demands judgment against each of the defendants and members of the class of defendants, as follows:
1. A judgment determining that this action shall be maintained as a class action, as the class of defendants is alleged above.
2. A judgment that each of the defendants and members of the class of defendants is liable to the plaintiff as to each of the legal theories set forth in paragraphs 51(a) through 51(p) above, each of which paragraphs is incorporated by reference hereby.
3. A judgment containing the following substantive provisions:
A. Injunction prohibiting any further job-theft activities;
B. Declaratory judgment to the effect that job-theft activities as described are illegal for the reasons alleged by plaintiff;
C. Declaratory judgment and injunction prohibiting any further transfers of benefits under any outstanding job-theft agreements;
D. Declaratory judgment declaring all job-theft agreements illegal and void or voidable;
E. Order that each member of the class give notice to various types of persons (including legislators, official publications, local press, government agencies, government officials, corporations in contract with an agency, and others) as to the judgment of the court;
F. Order that each agency sue the corporations receiving benefits for recovery of the benefits if the corporation in any respect is in breach of contract;
G. Order permitting any taxpayer in a state to bring suit on behalf of the state, city, town or agency against a corporation receiving benefits but in breach of its contract, if no action has been commenced by the state, city, town or agency within 6 months from the date of the judgment (or 6 months from the date of the most recent breach of contract);
H. Order setting up trustee to receive periodic reports from each of the defendants as to compliance with the court's judgment, to be paid for by the defendants; and for the trustee to submit periodic compliance reports to the parties and the Court;
4. A judgment that each of the defendants and the members of the class of defendants is liable to plaintiff for reasonable attorney's fees, to the extent that plaintiff has hired any attorneys to represent him in this action;
5. A judgment that each of the defendants and the members of the class of defendants is liable to plaintiff for costs and disbursements; and
6. Such other and further relief to the plaintiff as this Court may deem just and proper.
The plaintiff hereby demands, under Rule 38(b) of the Federal Rules of Civil Procedure, a trial by jury of all issues triable of right by a jury.
Dated: New York, New York
...... August 27, 2001
__________________________________
Carl E. Person (CP 7637)
Plaintiff, Pro Se
325 W. 45th Street - Suite 201
New York, New York 10036-3803
(212) 307-4444
Attorney Carl E. Person, LawMall Editor/Publisher, carlpers@ix.netcom.com
For Carl Person's c.v. or resume, click on Carl Person C.V.