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BEG Invstments, LLC v. Alberti

United States District Court, D. Columbia.

March 31, 2014

BEG INVESTMENTS, LLC, Plaintiff,
v.
NICHOLAS ALBERTI, et al., Defendants

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Re Document No.: 4.

For BEG INVESTMENTS, LLC, Plaintiff: Matthew August LeFande, LAW OFFICES OF MATTHEW AUGUST LEFANDE, Arlington, VA.

For NICHOLAS SALVATORE ALBERTI, DONALD CORTES BROOKS, HERMAN ODELL JONES, CARVIN THOMAS NOPHLIN, MIKE SILVERSTEIN, RUTHANNE MILLER, Defendants: Gary Daniel Feldon, LEAD ATTORNEY, OFFICE OF THE ATTORNEY GENERAL FOR THE DISTRICT OF COLUMBIA, Public Interest Division, Washington, DC.

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MEMORANDUM OPINION

RUDOLPH CONTRERAS, United States District Judge.

Granting Defendants' Motion to Dismiss

I. INTRODUCTION

Plaintiff, BEG Investments, LLC, is a company that operates a restaurant located at 1123 H Street, NE, known as Twelve Restaurant and Lounge. The Defendants are members of the Alcohol Beverage Control Board, established by D.C. Code § 25-201. Pursuant to the Alcoholic Beverage Statute, the ABC Board has the authority to " issue licenses to persons who meet the requirements set forth" in the statute, and to impose " certain conditions" on those licenses if the Board " determines that the inclusion of the conditions will be in the best interest of the locality . . . where the licensed establishment is to be located." D.C. Code § 25-104(a), (e). Pursuant to this authority, Defendants issued a license to the Plaintiff upon the condition that Plaintiff hire the Metropolitan Police Department (" MPD" ) to patrol the area surrounding Twelve Restaurant and Lounge. Plaintiff asserts that the Defendants acted beyond their statutory authority in imposing this condition upon Plaintiff's license.

Plaintiff now brings suit against the Defendants in their individual capacity alleging: 1) racketeering in violation of 18 U.S.C. § 1962(c); 2) conspiracy to commit racketeering in violation of 18 U.S.C. § 1962(d); 3) deprivation of equal protection of the law; 4) deprivation of property interests pursuant to the Takings Clause of the Fifth Amendment; 5) deprivation of freedom of speech under the First Amendment; and 6) conspiracy to deprive Plaintiff of the equal protection of the laws in violation of 42 U.S.C. § 1985. Defendants move to dismiss under Rule 12(b)(6) for a failure to exhaust judicial remedies, and failure to state a claim. For the reasons set forth below, Defendants' motion to dismiss is granted, but Plaintiff is granted leave to amend his claims brought pursuant to the Equal Protection Clause and the First Amendment.

II. FACTUAL ALLEGATIONS

Plaintiff, BEG Investments, LLC, is a company that operates a restaurant located at 1123 H Street, NE, known as Twelve Restaurant and Lounge. Plaintiff has sued Defendants, Nicholas Alberti, Donald Brooks, Herman Jones, Calvin Nophlin, Mike Silverstein, and Ruthanne Miller in their individual capacities for a violation of its rights under several statutory and constitutional provisions, detailed below. The Defendants are members of the Alcohol Beverage Control Board (" ABC Board" ), established by D.C. Code § 25-201.

The ABC Board has oversight authority over the Alcoholic Beverage Regulation Administration (" ABRA" ), which advises the ABC Board and provides " professional, technical, and administrative staff assistance to the Board in the performance of its functions." D.C. Code § 25-202. Pursuant to the Alcoholic Beverage Statute, the ABC Board has the authority to " issue licenses to persons who meet the requirements set forth" in the statute, and to impose " certain conditions" on those licenses if the Board " determines that the inclusion of the conditions will be in the best interest of the locality...where the licensed establishment is to be located." D.C. Code § 25-104(a), (e).

In 2005, the District of Columbia City Council amended a bill relating to emergency

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suspension of liquor licenses to include a provision permitting licensees to enter into " Reimbursable Detail" agreements for " MPD officers to patrol the surrounding area of an establishment for the purpose of maintaining public safety, including the remediation of traffic congestion and the safety of public patrons, during their approach and departure from the establishment." D.C. Code § 25-798 (a)(3); Emergency Suspension of Liquor Licenses Act of 2005, D.C. Act 16-20. This new code section provided for " compensation of the MPD by the licensee when reimbursable details are requested by the licensee." D.C. Code § 25-798 (a)(1).

Plaintiff alleges that on June 22, 2011, Defendants issued an Order pursuant to their authority as the Alcoholic Beverage Control Board, ordering Plaintiff to " hire the MPD Reimbursable Detail whenever the establishment provides any entertainment permitted by the establishment's entertainment endorsement." ABRA Order 2011-289 at 5, June 22, 2011; Compl. ¶ 26, Feb. 11, 2013, ECF No. 1. Plaintiff moved for reconsideration of the Order. Compl. ¶ 29. After conducting a hearing, Defendants ordered Plaintiff to " hire the MPD Reimbursable Detail whenever the establishment provides any DJs or live music as entertainment at the establishment. The MPD Reimbursable Detail shall be hired for a minimum of four hours and shall end no sooner than one hour after closing." ABRA Order 2011-368 at 2, Aug. 10, 2011. According to Plaintiff, this Order required it to retain MPD officers at a rate of over $55 per hour per officer -- more than double the basic daily wage rate of policemen. Compl. ¶ 32. On October 9, 2011, Plaintiff did not employ a Reimbursable Detail, and was subsequently fined $1,500 by the Defendants. Compl. ¶ 33. Plaintiff asserts that it has paid thousands of dollars to the MPD as a result of the Reimbursable Detail Order. Compl. ¶ 34.

In addition to the Plaintiff, several other companies' licenses have been conditioned upon a Reimbursable Detail. On July 27, 2011, the Defendants conducted a fact-finding hearing after Police Commander Daniel Hickson requested that Night and Day Management, LLC pay for a Reimbursable Detail at Fur Nightclub. Compl. ¶ 41. On August 17, 2011, Defendants ordered as follows:

[Night and Day Management, LLC] must secure MPD Reimbursable Detail, commencing September 1, 2011, for each night that the Licensee is open to the public for business. For those nights that Reimbursable Detail is required; there must be a minimum of four officers, it must be present for a minimum of four hours and it must remain at the establishment for an additional 30 minutes after closing.

ABRA Board Order 2011-356 at 14, Aug. 17, 2011. A similar order was issued against Inner Circle 1420, LLC for a Reimbursable Detail at Lotus Lounge:

[Inner Circle 1420, LLC] must continue to secure MPD Reimbursable Detail for each night that the Licensee is open to the public for business. For those nights that Reimbursable Detail is required; there must be a minimum of four officers, it must be present for a minimum of four hours and it must remain at the establishment for an additional 30 minutes after closing.

ABRA Board Order 2011-407 at 14, Oct. 5, 2011. On March 31, 2012, John M. Hedgecock wrote a memorandum recommending that the number of MPD officers assigned to Lotus Lounge's Reimbursable Detail be increased. Compl. ¶ 61. When Inner Circle failed to pay for the Reimbursable Detail, enforcement action was brought against it, Inner Circle was fined, and

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Lotus Lounge's operations were suspended for six days. Compl. ¶ 69.

Plaintiff lists two other similar instances. Bar 9, LLC, a limited liability company operating a nightclub known as DC9, was the subject of a " Summary Suspension Status Hearing" conducted by the ABC Board on December 1, 2010. Compl. ¶ 72. Following the hearing, the Board ordered Bar 9 to " contract with MPD to secure a Reimbursable Detail for no fewer than two officers and no less than the hours of operation on any given night the club is open through January 19, 2011." ABRA Board Order 2010-609 at 7, Dec. 1, 2010. The ABC Board imposed a Reimbursable Detail on Non-party Guards, Inc., operating a restaurant known as The Guards, in August 2008, requiring MPD officers to be present " Friday and Saturday evenings between 11:00 p.m. and 3:00 a.m." Compl. ¶ 78. This Order was appealed to the ABC Board, and the appeal was denied. Compl. ¶ 79.

Plaintiff alleges that the Board's imposition of a mandatory Reimbursable Detail is outside the scope of its authority, and violates several provisions of the D.C. Code. Specifically, Plaintiff brings suit against the Defendants in their individual capacity alleging: 1) racketeering in violation of 18 U.S.C. § 1962(c); 2) conspiracy to commit racketeering in violation of 18 U.S.C. § 1962(d); 3) deprivation of equal protection of the law; 4) deprivation of property interests pursuant to the Takings Clause of the Fifth Amendment; 5) deprivation of freedom of speech under the First Amendment; and 6) conspiracy to deprive Plaintiff of the equal protection of the laws in violation of 42 U.S.C. § 1985. Defendants move to dismiss under Rule 12(b)(6) for a failure to exhaust administrative remedies, and failure to state a claim.

III. LEGAL STANDARD

The Federal Rules of Civil Procedure require that a complaint contain " a short and plain statement of the claim" in order to give the defendant fair notice of the claim and the grounds upon which it rests. Fed.R.Civ.P. 8(a)(2); accord Erickson v. Pardus, 551 U.S. 89, 93, 127 S.Ct. 2197, 167 L.Ed.2d 1081 (2007) (per curiam). A motion to dismiss under Rule 12(b)(6) does not test a plaintiff's ultimate likelihood of success on the merits; rather, it tests whether a plaintiff has properly stated a claim. See Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974). A court considering such a motion presumes that the complaint's factual allegations are true and construes them liberally in the plaintiff's favor. See, e.g., United States v. Philip Morris, Inc., 116 F.Supp.2d 131, 135 (D.D.C. 2000). It is not necessary for the plaintiff to plead all elements of her prima facie case in the complaint. See Swierkiewicz v. Sorema N.A., 534 U.S. 506, 511-14, 122 S.Ct. 992, 152 L.Ed.2d 1 (2002); Bryant v. Pepco, 730 F.Supp.2d 25, 28-29 (D.D.C. 2010).

Nevertheless, " [t]o survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell A. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). This means that a plaintiff's factual allegations " must be enough to raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true (even if doubtful in fact)." Bell A. Corp. v. Twombly, 550 U.S. 544, 555-56, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (citations omitted). " Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements," are therefore

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insufficient to withstand a motion to dismiss. Iqbal, 556 U.S. at 678. A court need not accept a plaintiff's legal conclusions as true, see id., nor must a court presume the veracity of the legal conclusions that are couched as factual allegations. See Twombly, 550 U.S. at 555.

IV. ANALYSIS

A. Exhaustion and Abstention

As a threshold matter, Defendants argue that Plaintiff's claims for declaratory and injunctive relief should be dismissed because: 1) the Plaintiff failed to exhaust available state judicial remedies; 2) the claims should properly be heard in state court pursuant to the Burford abstention doctrine; and, 3) the claims should properly be heard in state court pursuant to the Pullman abstention doctrine. If the Court dismissed the Plaintiff's complaint for any of these reasons, Plaintiff would be required to seek relief in state court --the local D.C. Court system. The Court considers each argument in ...


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