NJ District Court Denies Newark’s Motion to Dismiss Class Action by Potential SOTA Recipients Represented by Lowenstein and The Legal Aid Society, Casting Doubt on the Constitutionality of Newark’s “Needy Person Ban”

In a long-running dispute over New York City’s Special One-Time Assistance (SOTA) program, which assists individuals and families living in New York City shelters obtain permanent housing in and outside of New York City, the Hon. Madeline Cox Arleo of the U.S. District Court for the District of New Jersey has denied Newark’s motion to dismiss a class action suit by prospective recipients of SOTA seeking to move to Newark. The decision allows the plaintiffs, who are represented by Lowenstein Sandler and The Legal Aid Society, to pursue their claims that a Newark municipal ordinance, which prohibits any person or organization from bringing a “needy person to the City of Newark for the purpose of making him or her a public charge” and restricts the ability of third parties providing rental subsidies to prepay rent on behalf of SOTA recipients, violates the constitutional right to travel and the New Jersey Law Against Discrimination (“NJLAD”), respectively.

The SOTA program is designed to assist individuals and families living in New York City’s shelters by providing one year’s rent for homes within New York City or in another state. After the program’s inception in 2017, many recipients used the assistance to relocate to Newark but subsequently encountered problems with uninspected and uninhabitable units, often without heat or working electricity or with collapsed ceilings, roach and rodent infestations, broken pipes, and floods.

In 2019, Newark attempted to remedy the SOTA program through amendments to its Municipal Code that imposed inspection and reporting requirements on any agency or person providing rental subsidies to tenants seeking housing in Newark. Unfortunately, the ordinance also prohibited any person from “knowingly bring[ing], or caus[ing] to be brought, a needy person to the City of Newark for the purpose of making him or her a public charge” (the “Needy Persons Ban”). It further restricted the ability of third parties providing rental subsidies to prepay rent on behalf of SOTA recipients (the Prepaid Rent Ban).

On November 12, 2020, Lowenstein and The Legal Aid Society filed an Intervenor Complaint and Crossclaims against Newark and New York City on behalf of tenants currently residing in New York City shelters, eligible for SOTA, and wishing to be placed in Newark housing but prevented from doing so because of Newark’s Needy Persons Ban. The complaint argued that the ordinance violates both NJLAD and the U.S. Constitution and sought declaratory and injunctive relief to enjoin Newark from enforcing the ordinance and prohibiting future tenants from traveling to and living in Newark. (The tenants’ claims against New York City were later voluntarily dismissed without prejudice.) 

In this latest stage of the litigation, Newark filed a motion to dismiss the tenants’ claims on the grounds that they failed to state a cause of action for violations of either NJLAD or the constitutional right to travel. The district court rejected both arguments. First, the district court concluded that tenants’ complaint adequately alleged that the Prepaid Rent Ban violated NJLAD because it compels landlords to discriminate against tenants on the basis of lawful income (i.e., receipt of rental subsidies). Second, the court held that tenants stated a claim that the Needy Persons Ban is unconstitutional based on an 80-year-old U.S. Supreme Court precedent, Edwards v. California. In Edwards, the Supreme Court invalidated a California statute that made it a misdemeanor for any “person, firm or corporation or officer or agent thereof” to “bring[] or assist[] in bringing into the State any indigent person who is not a resident of the State, knowing him to be an indigent person.” The Court concluded that the statute was unconstitutional as a barrier to interstate commerce.

Here, Newark’s Needy Persons Ban states that “[n]o person shall knowingly bring, or cause to be brought, a needy person to the City of Newark for the purpose of making him or her a public charge.” In denying Newark’s motion to dismiss the tenants’ complaint, the judge wrote: “Newark’s Ordinance is strikingly similar to the provision struck down in Edwards and the Court fails to recognize why it should be treated any differently.”

The Lowenstein team includes Matthew M. Oliver and Rebecca J. Ryan.

About Lowenstein Sandler LLP
Lowenstein Sandler is a national law firm with more than 350 lawyers based in New York, New Jersey, Palo Alto, Utah, and Washington, D.C. The firm represents leaders in virtually every sector of the global economy, with particular emphasis on investment funds, life sciences, and technology. Recognized for its entrepreneurial spirit and high standard of client service, the firm is committed to the interests of its clients, colleagues, and communities. 

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