Scahill v. Dist. of Columbia
Scahill v. Dist. of Columbia
Opinion of the Court
Currently before the Court is [16] plaintiffs' motion for reconsideration and for *16leave to amend their complaint. For the following reasons, the motion will be denied.
I. BACKGROUND
The Court will assume familiarity with the facts of this case, as laid out in the prior Memorandum Opinion granting defendants' motion to dismiss ("Mem. Op.") [ECF No. 14]. See Scahill v. District of Columbia,
Defendants filed a motion to dismiss under Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6), arguing that plaintiffs lacked standing and failed to state a claim. The Court granted the motion, finding that a prior D.C. Court of Appeals decision precluded HRH from claiming it had standing on its claims related to the Board's order and that plaintiffs did not state plausible claims to relief. Mem. Op. at 33; see Order ("September 25 Order") [ECF No. 13]. The Court also issued an order to show cause as to why the claims against the John Doe defendants should not be dismissed for failure to identify and serve them with process under Federal Rule of Civil Procedure 4(m). See Order [ECF No. 15]. Plaintiffs then voluntarily dismissed their claims against the John Doe defendants. See Response to Order to Show Cause [ECF No. 17]. However, HRH also filed a motion to: (1) reconsider the Court's decision regarding HRH's standing, thereby seeking to revive HRH's First and Fifth Amendment and unconstitutional conditions claims; and (2) amend plaintiffs' complaint to provide more detailed facts, in order to revive their retaliation claims. See Pl. HRH's Mot. for Reconsideration and for Leave to Amend the Compl. ("HRH Mot.") [ECF No. 16]. The District opposes the motion. See Defs.' Opp. to Pl. HRH Servs. LLC's Mot. for Reconsideration and to Amend the Compl. ("Opp'n") [ECF No. 21].
II. DISCUSSION
HRH argues that the Court should reconsider its determination that a prior D.C. Court of Appeals decision precluded later courts from finding that HRH has standing. HRH asserts that it was fined by the Board after briefing closed on the motion to dismiss, and that this factual change triggers the curable defect exception to issue preclusion. HRH Mot. at 3-5. HRH also claims that issue preclusion should not have applied in the first place, because standing under the D.C. Administrative Procedure Act (DCAPA) is not the same issue as Article III standing.
A. STANDARD OF REVIEW
Before the Court can reach the merits of HRH's reconsideration motion, it *17must first resolve a dispute over the applicable standard of review. HRH argues that its motion is properly brought under Federal Rule of Civil Procedure 54(b) because the September 25 Order was not a final order. HRH Mot. at 2 n.2; Reply Br. in Supp. of Pl. HRH's Mot. for Reconsideration and for Leave to Amend the Compl. ("Reply") [ECF No. 23] at 1, 5-6. Under this Rule, a court may revise its decisions "at any time before the entry of a judgment adjudicating all the claims and all the parties' rights and liabilities." Fed. R. Civ. P. 54(b). The District, on the other hand, claims that plaintiffs' voluntary dismissal of the John Does eliminated the final claims in the case, thus transforming the September 25 Order into a final order that may be reconsidered only under Rule 59(e). See Opp'n at 4-5. That Rule allows a party to move to "alter or amend a judgment" already entered. Fed. R. Civ. P. 59(e). The Court must therefore determine whether plaintiffs' voluntary dismissal of the John Doe plaintiffs transformed the September 25 Order into a final one.
"A decision is final only if it 'ends the litigation on the merits and leaves nothing for the court to do but execute the judgment.' " Cincinnati Ins. Co. v. All Plumbing, Inc.,
Moreover, the Court granted defendants' motion to dismiss plaintiffs' amended complaint as against the Board and the District. See September 25 Order. The September 25 Order did not dismiss the action in its entirety. Nor did the Court dismiss the complaint with prejudice. "In evaluating the finality of district court rulings on motions to dismiss, [the D.C. Circuit has] distinguished between orders dismissing the action, which are final, ... and orders dismissing the complaint, which, if rendered 'without prejudice,' are 'typically' not final ...." Attias v. Carefirst, Inc.,
Thus, HRH is correct that its reconsideration motion must be treated as a Rule 54(b) motion, not a Rule 59(e) motion. Unlike Rule 59(e), which "sets a high threshold for parties to raise a new argument for the first time after judgment," Cobell v. Jewell,
B. RECONSIDERATION OF ISSUE PRECLUSION
HRH has moved for reconsideration on only one issue: the preclusive effect of the D.C. Court of Appeals' prior decision on HRH's standing to challenge the Board's order. Particularly because the parties did not have the opportunity to brief this issue prior to the September 25 Order, the Court takes seriously its obligation to reexamine the preclusion holding. Ultimately, however, HRH's two attacks on that holding are unconvincing.
1. The Curable Defect Exception
HRH first argues that the Board's decision on July 20, 2017 to fine HRH $4,000 for violating the terms of its liquor license, and HRH's payment of that fine, cured any jurisdictional defect identified by the D.C. Court of Appeals. HRH Mot. at 4-5. HRH thereby invokes the curable defect exception to issue preclusion, which "allows relitigation of jurisdictional dismissals when a precondition requisite to the court's proceeding with the original suit was not alleged or proven, and is supplied in the second suit." Nat'l Ass'n of Home Builders v. EPA,
Here, the factual change-the Board's decision to fine HRH-"follow[ed] dismissal": it occurred in July 2017, about nine months after the D.C. Court of Appeals dismissed HRH's original appeal. The Board's decision was also a material change, although the District seeks to claim otherwise. See Opp'n at 8-10. To work a material change, "[t]he new fact or occurrence must be separate and distinct from the past transaction that formed the basis for the original cause of action." Newdow v. Bush,
However, the fine does not ultimately trigger the curable defect exception, because it was imposed too late to make a difference. The standing inquiry is "focused on whether the party invoking jurisdiction had the requisite stake in the outcome when the suit was filed." Davis v. FEC,
2. The "Same Issue" Requirement
For its second gambit, HRH claims that DCAPA standing and Article III standing do not constitute the "same issue," and that therefore the D.C. Court of Appeals' decision on the former does not preclude HRH from arguing the latter. HRH Mot. at 5-6. Because HRH's claim, in the main, relies on "arguments that [the Court] has already rejected on the merits," Moore,
HRH responds that the D.C. Court of Appeals' order did not state the grounds on which it determined that HRH lacked DCAPA standing. HRH Mot. at 6; Reply at 4. But the D.C. Court of Appeals' order cannot be interpreted as resting on anything other than the injury-in-fact requirement. As this Court has previously noted, the D.C. Court of Appeals described the Board's order as making HRH "enforce the barring notice it had issued against Martin Scahill," who was "not affiliated with the business." Mem. Op. at 7-8 (quoting HRH Servs., No. 16-AA-758). The *20court also cited a prior D.C. Court of Appeals decision as authority for dismissing the case, with a parenthetical quoting that decision's holding that "[a] party has not been ... aggrieved by agency action unless [there is] some actual or threatened 'injury in fact' from the challenged agency action." HRH Servs., No. 16-AA-758 (quoting Dist. Intown Props., Ltd. v. D.C. Dep't of Consumer & Regulatory Affairs,
C. AMENDING THE COMPLAINT
In addition to its request for reconsideration, HRH moves to amend plaintiffs' complaint to add more details in support of plaintiffs' First Amendment retaliation claims. Because plaintiffs have already used up their one automatic amendment, and because more than 21 days have elapsed since defendants filed their motion to dismiss, such an amendment requires leave of the Court. Fed. R. Civ. P. 15(a)(2). "The court should freely give leave when justice so requires."
The District argues that the Court should deny the motion to amend as moot, or else deny it as futile. Opp'n at 12-15. The first of these arguments is inapposite here, because the September 25 Order was not final. Unlike cases in which a final judgment has been entered, a Rule 15(a) motion does not become moot simply because reconsideration of the initial interlocutory opinion is unwarranted. See Ciralsky v. CIA,
HRH runs into greater trouble, however, when confronted with the District's futility argument. "Courts may deny a motion to amend a complaint as futile ... if the proposed claim would not survive a motion to dismiss."
*21Williams v. Lew,
"To establish a claim for retaliation under the First Amendment, an individual must prove (1) that he engaged in protected conduct; (2) that the government took some retaliatory action sufficient to deter a person of ordinary firmness in plaintiff's position from speaking again; and (3) that there exists a causal link between the exercise of a constitutional right and the adverse action." Doe v. District of Columbia,
HRH provides the greatest amount of new detail for a claim that received only a sentence-worth of space in the First Amended Complaint: that the Board retaliated against HRH by sending inspectors to harass the staff at the Alibi. See SAC ¶¶ 53-56, 61, 63-64. This alleged harassment began less than two weeks after HRH filed its motion with the Board to reconsider the conditions placed on HRH's liquor license-it filed the motion on May 31, 2016 and investigators began visiting the Alibi on June 10. Id. ¶ 61. This temporal proximity could be enough on its own to plausibly allege causation. See BEG Invs., LLC v. Alberti,
However, other information in the record renders HRH's retaliation claim too dubious to survive a motion to dismiss. Within the complaint itself, HRH alleges that the Board's main investigator, Mark Brashears, indicated a causal connection between HRH's First Amendment activity and his investigations when he "stated that Mr. Scahill 'did this to himself.' " Id. ¶ 64; see id. ¶ 56 ("On June 10, 2016, Investigator Brashears rationalized the heightened scrutiny and harassment by stating that Mr. Scahill 'did this to himself.' "). But this allegation actually undermines HRH's claim, because it shows that Brashears was, if anything, preoccupied by Scahill's past actions rather than by HRH's activity. Scahill was not the party who engaged in the protected conduct, nor is he alleged to be the one against whom the Board retaliated. Within the complaint itself, then, there is evidence that something other than HRH's motion for reconsideration was the but-for cause of the Board's inspections.
HRH's position becomes far more tenuous once one takes into account the evidence later presented at the Board's show cause hearing. The Court need not *22"accept as true the [amended] complaint's factual allegations insofar as they contradict exhibits to the complaint or matters subject to judicial notice." Kaempe v. Myers,
The July 19 Board Order contradicts or tempers many of the factual allegations made in the SAC. For instance, the order states that Cullings testified that she was "not familiar with Mr. Scahill and could not definitively identify Mr. Scahill ... even with the photograph she was given." July 19 Board Order ¶ 14. But Cullings also testified that "she has no 'reasonable basis to doubt' [Brashears'] identification of Mr. Scahill."
Most importantly, the Board order shows that Brashears began investigating the Alibi on June 10, 2016 not because HRH had filed its reconsideration motion, but rather because he "became aware that [the Alcoholic Beverage Regulation Administration] had received a complaint that Martin Scahill was at [the] Alibi." July 19 Board Order ¶ 12. Similarly, Brashears testified that his July inspections were *23spurred by another complaint to the agency that Scahill was at the Alibi. Id. ¶ 19. Rachel Traverso was present at the show cause hearing and able to testify, and HRH's attorneys were free to put forward an alternative rationale. Id. ¶ 48. Yet there is no indication that any party gave any other explanation for Brashears' activities. This direct explanation for the Board's inspections is far more persuasive than any inference of retaliatory intent that might be drawn from their temporal proximity to HRH's reconsideration motion. "This is thus not a case in which the plaintiff and defendant each present plausible explanations for the facts alleged." Arpaio v. Obama,
The SAC also provides more detailed allegations regarding two show cause orders the Board issued to HRH on October 6 and November 7, 2016, charging HRH with violating its liquor license. SAC ¶¶ 55, 57-59, 61-62. The Court had previously determined that the allegations regarding these orders did not adequately plead a First Amendment retaliation claim, Mem. Op. at 25-28, and the SAC does not remedy the prior complaint's defects. As noted in the Court's opinion on the motion to dismiss, the Board's October show cause order was too distant in time from the protected activity for which the order could have been in retaliation-HRH's May reconsideration motion and July appeal-to raise a plausible retaliation claim. See
As far as the November order goes, HRH's retaliation claim fails for the same two reasons it did previously. First, the party whose activity allegedly caused the retaliation (Scahill) is not the party against whom the Board allegedly retaliated (HRH).
Given these factors, and making all reasonable inferences in favor of HRH, the SAC does not give rise to a plausible First Amendment retaliation claim as to either show cause order or the Board's investigations. See Iqbal,
CONCLUSION
For the foregoing reasons, HRH's motion for reconsideration and to amend its complaint is denied. Plaintiffs have chosen not to amend their complaint with regard to anything other than their First Amendment retaliation claims and, based on what is already in the record, it difficult to see what set of facts plaintiffs could plead to allege a plausible retaliation claim. See Animal Legal Def. Fund, Inc. v. Perdue,
The District also argues that the evidence of the fine was not "new" evidence that could justify reconsideration, because HRH knew about the fine two months before issuance of the September 25 Order. Opp'n at 7-8. Plaintiffs did have notice from the briefing on the motion to dismiss that standing was at issue, and defendants attached to their dismissal motion the D.C. Court of Appeals decision that created the possibility of preclusion. However, given the flexibility of the Rule 54(b) analysis, and the fact that the Court brought up the question of issue preclusion sua sponte, plaintiffs' failure to alert the Court to the fine earlier will not be held against them.
It should also be noted that the Court already considered most of plaintiffs' claims on the merits because it found that Scahill had standing. Mem. Op. at 17. HRH's alleged rights and injuries are nearly identical to Scahill's, and are thus very similar to those the Court already found wanting with respect to Scahill's speech, association, freedom of movement, and liberty claims. See id. at 20-23, 28-30; Second Am. Compl. ("SAC") [ECF. No. 16-6] ¶¶ 21, 23, 31. And, without reaching the merits of the unconstitutional conditions claim, the Court notes that the constitutional rights HRH alleges were given up as conditions for receiving a liquor license appear to be the same rights the Court has already adjudicated as to the other claims. Compare Mem. Op. at 20-23, 28-30, with SAC ¶ 47 ("The ABC Board has required HRH Services LLC to curtail its ... rights to liberty, property, freedom of association, and freedom of speech to receive the government benefit of the Liquor License ....").
HRH alleges that "the case report falsely states that ... Cullings identified Mr. Scahill as being present." SAC ¶ 63. Assuming the allegation to be true, it is a troubling reflection on police tactics. However, it is not immediately probative of retaliatory intent. Additionally, the July 19 Board Order provides a more nuanced picture of Cullings' statements, making the case report appear less like an outright lie than an unfortunate embellishment.
HRH also alleges causation based on the fact that the Board did not issue either show cause order "within [thirty] days after it received evidence supporting its belief that violations ... allegedly occurred," SAC ¶ 62, which plaintiffs allege the Board must do to have statutory authority to bring enforcement actions, id. ¶¶ 25, 58-59. HRH made this same objection before the Board, which acknowledged that it had issued the orders more than thirty days but less than sixty days after it actually received and reviewed Brashears' reports. July 19 Board Order ¶ 41-42, 46. As the Board noted, however, id. ¶¶ 43-45 & n.8, the time period within which the Board must issue a show cause order is not mandatory. Under D.C. law, "when a statute says that an agency 'shall' make a decision within a set period of time, that limit is generally considered 'directory rather than mandatory,' " Brown v. D.C. Pub. Emp. Relations Bd.,
Reference
- Full Case Name
- Martin SCAHILL v. DISTRICT OF COLUMBIA
- Cited By
- 9 cases
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- Published