Any party entering into a stipulated settlement or consent decree with a state must take care to ensure that it will not be deprived of the benefit of its bargain by subsequent changes in the state’s legislation. In Doe v. Pataki, Nos. 06-2126-cv(L), 06-3709-cv(CON), 2007 U.S. App. LEXIS 5518 (2d Cir. March 8, 2007), the Second Circuit concluded that, although a state had entered into a court-approved stipulation of settlement stating that specific statutory language was applicable to the settling plaintiffs, the state remained free to apply subsequent statutory amendments to those plaintiffs absent an “unmistakable” intent not to do so.
The plaintiffs in Doe v. Pataki had filed a class action challenging New York’s Sex Offender Registration Act (SORA) on various constitutional grounds. Under SORA, state officials place registrants into one of three classifications – “level one,” “level two,” or “level three” – based on the perceived risk that the registrant will commit another offense. That classification determines the period of time during which the registrant must register with law enforcement authorities and the extent of community notification requirements. Among the plaintiffs’ claims was that registrants were assigned to one of SORA’s three classifications without adequate due process protections. The District Court agreed, ruling that due process required that a registrant could only be assigned to one of those classifications if he or she was provided, inter alia, a court hearing, advance notice of the recommended classification, and a right to counsel at the hearing.
Following that ruling, the plaintiffs entered into a settlement agreement with the State of New York, known as the “Stipulation,” which was ordered approved by the District Court. Although the putative class was never certified, the terms of the Stipulation were to be applicable to all putative class members. The Stipulation set forth procedures for conducting redetermination hearings for registrants who had been classified as level two and level three offenders. The Stipulation also set forth the period during which, under SORA as it then existed, offenders of each classification would be required to register with law enforcement authorities. Thus, paragraph fifteen of the Stipulation provides that “[i]f a plaintiff’s risk level is determined to be a level 2, that plaintiff will be considered to be a level 2 offender as of March 11, 2002; therefore, the duration of the registration requirement will be 10 years from the date of his or her original registration. . . . If a plaintiff's risk level is reduced to a level 1, that plaintiff will be considered a level 1 offender as of March 11, 2002; therefore, the duration of the registration requirement will be ten years from the date of his or her original registration.”
Subsequently, the New York legislature amended SORA, increasing the registration requirement for level one offenders from ten to twenty years and requiring level two offenders to register for life. (The amendment permitted certain level two offenders the right to petition for relief after thirty years.)
The plaintiffs moved the District Court for an order enforcing the Stipulation and enjoining the state from requiring level one or level two offenders to register for any period longer than ten years. The District Court granted the plaintiffs’ motion, but stayed its order pending appeal. While the appeal was pending, SORA was again amended to increase community notification requirements, and the plaintiffs requested clarification as to whether that amendment was within the scope of the injunctive relief ordered by the District Court.
The Second Circuit reversed by a vote of two to one. The majority concluded that the plaintiffs had bargained only for the procedures for classification, and that they were not entitled to protection from subsequent legislative changes concerning the effects of those classifications.
The majority opinion cited ordinary principles of contract interpretation, as traditionally applied to stipulated settlements and consent orders. Because one of the parties was a state, however, the majority also noted that its determination of the parties’ intent “should reflect traditional concerns regarding a federal court’s authority to restrict a state’s inherent powers.” Specifically, the majority concluded that, under the “unmistakability doctrine” set forth in United States v. Winstar Corp., 518 U.S. 839, 871, 116 S. Ct. 2432, 135 L. Ed. 2d 964 (1996) (plurality opinion), a state’s “sovereign power . . . will remain intact unless surrendered in unmistakable terms.”
In dissent, Judge Pooler maintained that the majority had in fact disregarded traditional principles of contract interpretation. Specifically, the dissent asserted that the majority had disregarded the plain language of paragraph fifteen of the Stipulation and erroneously determined that there was an ambiguity regarding the intent of the parties. The dissent also challenged the majority’s conclusion that, to the extent that the District Court found that the intent of the parties was that registrants would be required to register only for the periods set forth in paragraph fifteen notwithstanding subsequent amendments to SORA, that finding was clearly erroneous. Finally, the dissent asserted that Winstar was not applicable, arguing that “what [was] at issue [in Doe v. Pataki] . . . [was] not a wholesale surrender of the police power or an implicit disavowal of the right to amend the statutes that exercise it, but rather whether a state may make a binding promise to certain of its citizens not to subject them to those future amendments.”
In light of Doe v. Pataki, any party entering into a stipulated settlement or consent decree with a state should take care to use “unmistakably clear” language to prevent the state from imposing upon that party any subsequent legislation that would deprive it of any of the benefits provided to it under that settlement.