United States District Court, District of Columbia
D. BATES UNITED STATES DISTRICT JUDGE.
Martin Scahill and HRH Services, LLC filed this suit under 42
U.S.C. § 1983, challenging conditions placed on a liquor
license issued to HRH for its restaurant, the Alibi, by the
District of Columbia Alcoholic Beverage Control Board
(“Board”). The conditions essentially prevent
Scahill from entering the premises or playing any role in the
business, which plaintiffs claim violates a number of their
constitutional rights. Currently before the Court is 
defendants' motion to dismiss for lack of standing and
for failure to state a claim. For the following reasons, the
motion will be granted, and plaintiffs' claims will be
following facts are taken from plaintiffs' complaint. In
January 2015, HRH Services, owned by Rachel and Richard
Traverso, applied to the ABC Board for a “New
Retailer's Class CR License” for the Alibi
restaurant. Am. Compl. [ECF No. 9] ¶¶ 11-12. The
Board approved the liquor license on May 18, 2016, subject to
certain conditions that restricted Scahill's involvement
in HRH's business. Id. ¶ 13; see
also Board Order No. 2016-280 (“Board
Order”) [ECF No. 10-1] at 23, 36. Scahill is not an
owner of HRH or the Alibi, but is the guarantor on the
Alibi's lease. Am. Compl. ¶¶ 12, 41. In
addition, Scahill is the former owner of My Brother's
Place, the restaurant that previously occupied the space in
which the Alibi is located, and was the applicant listed on a
prior liquor license application filed by Melles Hospitality
Group. Id. ¶ 13.
the terms of the liquor license, awarded to HRH by the Board,
HRH must execute and maintain a barring notice against
Scahill prohibiting him from entering or accessing the Alibi
for five years, and must notify D.C. police within 24 hours
if any violation of the barring notice occurs. Id.
¶ 13; Board Order at 24, 36. HRH is also prohibited from
transferring ownership of the Alibi to Scahill, and from
permitting Scahill to obtain an interest in the business, in
the Alibi, or in the license. Am. Compl. ¶ 13; Board
Order at 24, 36. Finally, HRH is prohibited from employing
Scahill in any capacity, either in its business or at the
Alibi; from giving Scahill access to or control over the
business's financial accounts; and from allowing Scahill
to “volunteer” for the organization. Am. Compl.
¶ 13; Board Order at 36-37. Any violation of these
conditions could result in revocation of the liquor license.
Am. Compl. ¶ 13; Board Order at 37.
31, 2016, HRH moved the Board for reconsideration of these
conditions, which the Board denied on June 29, 2016. Am.
Compl. ¶¶14-15. Scahill filed a petition for review
of the Board's order with the D.C. Court of Appeals on
July 27, 2016. Id. ¶ 16. On October 6,
2016 the Board issued a Notice of Status and Show Cause
Hearing to HRH, alleging that Scahill had been seen at the
Alibi on June 10, 2016, in violation of the conditions placed
on the liquor license. Id. ¶ 17. The Notice
charged HRH with failing to follow the Board's order, and
threatened to revoke HRH's license. Id.
Plaintiffs allege that the Board's action was in
retaliation for their appeals. Id. HRH and Scahill
then filed this lawsuit on October 18, 2016. Id.
¶ 18. Allegedly in retaliation for filing this suit, the
Board issued a second Notice of Status and Show Cause hearing
to HRH on November 7, 2016, asserting that Scahill had been
seen at the Alibi on July 8, 2016. Id. ¶ 19.
bring claims against the Board, the District of Columbia, and
ten unnamed “John Doe” defendants under 42 U.S.C.
§ 1983, seeking declaratory and injunctive relief as
well as damages. Plaintiffs allege that the conditions placed
on the liquor license violate their First Amendment rights to
freedom of speech and freedom of association, and that the
Board issued the show cause orders to HRH in retaliation for
plaintiffs' exercise of their First Amendment rights. In
addition, plaintiffs claim that the order violates their
Fifth Amendment rights to liberty, due process, and freedom
of movement, and that the Board's order violates the
unconstitutional conditions doctrine. Id.
¶¶ 20-52. Defendants-the District of Columbia and
the Board-filed a motion to dismiss under Federal Rule of
Civil Procedure 12(b)(1) and 12(b)(6), arguing that
plaintiffs lack standing and have failed to state a
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 (2009) (quoting
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
(2007)). A plaintiff's “[f]actual allegations must
be enough to raise a right to relief above the speculative
level.” Twombly, 550 U.S. at 555.
“‘Threadbare recitals of the elements of a cause
of action, supported by mere conclusory statements, ' are
therefore insufficient to withstand a motion to
dismiss.” BEG Invs., LLC v. Alberti, 144
F.Supp.3d 16, 21 (D.D.C. 2015) (quoting Iqbal, 556
U.S. at 678). “A court need not accept a
plaintiff's legal conclusions as true nor must a court
presume the veracity of any legal conclusions that are
couched as factual allegations.” Id. (citing
Twombly, 550 U.S. at 555). Nor must a court accept
as true a plaintiff's factual allegations “insofar
as they contradict exhibits to the complaint or matters
subject to judicial notice.” Kaempe v. Myers,
367 F.3d 958, 963 (D.C. Cir. 2004).
argue that plaintiffs lack standing to challenge the
conditions imposed on the liquor license because HRH
voluntarily stipulated to these conditions, as reflected in
the Board's order and findings of fact. Defendants also
claim that the Board is non sui juris (meaning it cannot be
sued independently), and that plaintiffs have failed to
allege an unconstitutional custom or policy that would enable
them to bring suit against the District. See Mot. to
Dismiss at 2-3. On the merits, defendants argue that
plaintiffs have failed to allege enough facts to support any
of their claims. Id. at 2. The Court will consider
each argument in turn.
outset, the Court must briefly discuss which documents it may
consider in evaluating the motion to dismiss. Defendants'
arguments regarding standing depend heavily on findings in
the Board's order imposing the license conditions, which
defendants have attached to their motion to dismiss.
See Board Order. Defendants have also provided the
Board's order denying the motion for reconsideration, a
D.C. Court of Appeals order denying HRH's petition for
review of the Board's order, and Scahill's petition
for review of the Board's order. See Exs. B-D,
Mot. to Dismiss [ECF Nos. 10-2 to 10-4]. Plaintiffs argue
that defendants “improperly” attached these
documents to their motion to dismiss, and that the Court may
not consider in particular the Board's principal order,
as it is outside the pleadings and not “integral”
to the complaint. The Court disagrees, for several reasons.
argument that the Board's principal order imposing the
license conditions is not “integral” to
plaintiffs' complaint is entirely unsupportable-the
complaint quotes this order at length, and it is the basis
for most of plaintiffs' claims. See, e.g., Am.
Compl. ¶¶ 13, 22-25, 31- 32, 34-36, 40-45, 48-52.
As the Board's order is appended to the motion to
dismiss, referred to in the complaint, integral to
plaintiffs' claims, and undisputed as to its
authenticity, the order may be considered here. See
Kaempe, 367 F.3d at 965.
addition, the Board's order, the order denying the motion
for reconsideration, and the documents from the D.C. Court of
Appeals are public records relevant to plaintiffs'
complaint and subject to judicial notice on a motion to
dismiss. See EEOC v. St. Francis Xavier Parochial
Sch., 117 F.3d 621, 624 (D.C. Cir. 1997); Grant v.
Dep't of Treasury, 194 F.Supp.3d 25, 28 n. 2 (D.D.C.
2016) (noting that “the Administrative Judge's
Initial Decision, Treasury's Final Agency Decision, and
[the Merit System Protection Board]'s Final Order are
official, public documents subject to judicial
notice”); BEG Invs., 144 F.Supp.3d at 19 n.3
(taking judicial notice of ABC Board orders which were
official public documents, pertinent to plaintiff's
claims, and attached to defendant's motion to dismiss);
Hinton v. Corr. Corp. of Am., 624 F.Supp.2d 45, 46
(D.D.C. 2009) (noting that on a motion to dismiss, courts may
consider “documents upon which the plaintiff's
complaint necessarily relies even if the document is produced
not by the plaintiff in the complaint but by the defendant in
a motion to dismiss” (internal quotations omitted)).
the Court may consider matters outside the pleadings in
resolving challenges to its subject matter jurisdiction under
Rule 12(b)(1). See Advance Am. v. FDIC,
___F.Supp.3d___, 2017 WL 2869918, at *2 (D.D.C. 2017). A lack
of standing constitutes “a defect in [the Court's]
subject matter jurisdiction, ” Haase v.
Sessions, 835 F.2d 902, 906 (D.C. Cir. 1987), and in
considering jurisdiction, the court “may rest its
decision on its own resolution of disputed facts.”
Advance Am., 2017 WL 2869918, at *2 (citing
Herbert v. Nat'l Acad. of Sci., 974 F.2d 192,
197 (D.C. Cir. 1992)). Because defendants challenge
plaintiffs' standing here, the Court may look to matters
outside the pleadings, including the Board's orders, to
determine whether plaintiffs have standing to allege their
claims. Accordingly, the Court will take judicial notice of
the Board's order and of the other orders attached to
defendants' motion to dismiss.
plaintiff “bears the burden of showing that he has
standing, ” Summers v. Earth Island Inst., 555
U.S. 488, 493 (2009), and “must demonstrate standing
for each claim he seeks to press and for each form of relief
that is sought, ” Town of Chester v. Laroe Estates,
Inc., 137 S.Ct. 1645, 1650 (2017) (citation omitted).
“The ‘irreducible constitutional minimum of
standing contains three elements': (1) injury-in-fact,
(2) causation, and (3) redressability.” Commuter
Rail Div. of Reg'l Transp. Auth. v. Surface Transp.
Bd., 608 F.3d 24, 30 (D.C. Cir. 2010) (quoting Lujan
v. Defs. of Wildlife, 504 U.S. 555, 560 (1992)).
Plaintiffs must plead or prove each element of standing
“with the requisite ‘degree of evidence required
at the successive stages of the litigation.'”
In re Science Applications Int'l Corp. Backup Tape
Data Theft Litig. (“SAIC”), 45 F.Supp.3d 14,
23 (D.D.C. 2014) (quoting Lujan, 504 U.S. at 561).
Thus, at the motion to dismiss stage, “[p]laintiffs
must plead facts that, taken as true, make the existence of
standing plausible.” Id. (emphasis in
original). When considering standing, the Court “must
be ‘careful not to decide the questions on the merits
for or against the plaintiff, and must therefore assume that
on the merits the plaintiffs would be successful in their
claims.'” In re Navy Chaplaincy, 534 F.3d
756, 760 (D.C. Cir. 2008) (quoting City of Waukesha v.
EPA, 320 F.3d 228, 235 (D.C. Cir. 2003)).
assert briefly that plaintiffs have not suffered an injury in
fact because they have not shown that the conditions imposed
on the license actually harmed them. Mot. to Dismiss at 11.
Defendants also argue, based on the evidence from the
Board's order that HRH voluntarily executed a barring
notice against Scahill, that the conditions in the liquor
license are a “self-inflicted injury” caused by
HRH and not fairly traceable to the Board. Id. at
11-12. Scahill's injuries, in turn, are therefore
traceable to HRH rather than to the Board. Id. at
12. In other words, defendants argue that plaintiffs have a
causation problem. See, e.g., Ellis v.
Comm'r of IRS, 67 F.Supp.3d 325, 336 (D.D.C. 2014)
(“[I]t is well-settled in this jurisdiction that
self-inflicted injuries-injuries that are substantially
caused by plaintiff's own conduct-sever the causal nexus
needed to establish standing.”).
turns out, there is no need to decide this issue as it
relates to HRH, because another court has already done so.
After the Board denied HRH's motion for reconsideration,
HRH appealed the Board's order to the D.C. Court of
Appeals under the District of Columbia Administrative
Procedure Act's (“DCAPA”) judicial review
provision. See D.C. Code § 2-510(a). The court
issued a show cause order “directing [HRH] to show
cause why the petition for review should not be dismissed for
lack of standing.” HRH Servs., Inc. v. D.C.
Alcoholic Beverage Control Bd., No. 16-AA-758 (D.C. Oct.
13, 2016) (Ex. C, Mot. to Dismiss [ECF 10-3]). HRH filed a
response, but the court ultimately dismissed the petition for
lack of standing. Id. While the court did not lay
out every step of its reasoning, it noted that the Board had
required HRH to “enforce the barring notice it had
issued against Martin Scahill, a person not affiliated
with the business according to [HRH's] own
statements below.” Id. (emphasis
DCAPA only allows review of agency actions when a party has
suffered “a legal wrong, or [is] adversely affected or
aggrieved.” D.C. Code § 2-510(a). The D.C. Court
of Appeals has interpreted this language to require the same
elements of standing that federal courts apply under Article
III of the U.S. Constitution. See Mallof v. D.C. Bd. of
Elections and Ethics, 1 A.3d 383, 394-95, 394 n.51 (D.C.
2010); see also Friends of Tilden Park, Inc. v. District
of Columbia, 806 A.2d 1201, 1206 (D.C. 2002)
(“Congress did not establish this court under Article
III of the Constitution, but we nonetheless apply in every
case the constitutional requirement of a case or controversy
and the prudential prerequisites of standing.” (quoting
Speyer v. Barry, 588 A.2d 1147, 1160 (D.C. 1991))
(internal quotation marks omitted)). In particular, the party
seeking review must show that it suffered an injury in fact,
Mallof, 1 A.3d at 394, which is determined by
“look[ing] to federal standing jurisprudence, ”
Friends of Tilden Park, 806 A.2d at 1206 (citation
and internal quotation marks omitted). The D.C. Court of
Appeals relied on the injury-in-fact requirement in its order
dismissing HRH's petition. HRH Servs., No.
16-AA-758 (“A party has not been . . . aggrieved by
agency action unless [there is] some actual or threatened
‘injury in fact' from the challenged agency
action.” (citation omitted)).
another court has already determined that HRH lacks Article
III standing to challenge the Board's order, this Court
must determine whether issue preclusion (collateral estoppel)
prevents HRH from asserting standing on claims related to the
order. See Nat'l Ass'n of Home Builders v.
EPA, 786 F.3d 34, 41 (D.C. Cir. 2015) (“Issue
preclusion applies to threshold jurisdictional issues like
standing . . . .”). Defendants did not raise this
question in their motion to dismiss. But because issue
preclusion “belongs to courts as well as to litigants,
even a party's forfeiture of the right to assert
it-which has not happened here because the defendant[s]
remain free to file an answer-does not destroy a
court's ability to consider the issue sua
sponte.” Stanton v. D.C. Court of Appeals, 127
F.3d 72, 77 (D.C. Cir. 1997) (emphasis in original); see
U.S. Bank Nat'l Ass'n v. Poblete,
___F.Supp.3d___, 2016 WL 1089217, at *11 (D.D.C. Mar. 18,
2016) (applying same rule to collateral estoppel); Amore
ex rel. Estates of Amore v. Accor, S.A., 484 F.Supp.2d
124, 129 (D.D.C. 2007) (same); Burlington Res. Oil & Gas
Co. v. U.S. Dep't of the Interior, 21 F.Supp.2d 1, 4
n. 4 (D.D.C. 1998) (same).
things must be true for issue preclusion to apply:
“‘, the same issue now being raised must have
been contested by the parties and submitted for judicial
determination in the prior case[; 2], the issue must have
been actually and necessarily determined by a court of
competent jurisdiction in that prior case[; and] ,
preclusion in the second case must not work a basic
unfairness to the party bound by the first
determination.'” Martin v. Dep't of
Justice, 488 F.3d 446, 454 (D.C. Cir. 2007) (alterations
in original) (quoting Yamaha Corp., 961 F.2d at
these requirements was satisfied here. The D.C. Court of
Appeals issued a show cause order on the precise issue in
question, and HRH filed a brief in its own defense. See
HRH Servs., No. 16-AA-758. The standing question was
therefore “contested” and “submitted for
judicial determination.” Martin, 488 F.3d at
454. It is also clear that the standing issue was
“actually and necessarily determined”: the court
dismissed the petition for review because-and only
because-it concluded that HRH lacked standing. HRH
Servs., No. 16-AA-758. And there is no doubt that the
D.C. Court of Appeals is a court of competent jurisdiction to
review D.C. agency orders. See D.C. Code §
2-510(a) (authorizing D.C. Court of Appeals to hear petitions
for review of agency orders); Lightfoot v. Cendant Mortg.
Corp., 137 S.Ct. 553, 560 (2017) (“A court of
competent jurisdiction is a court with the power to
adjudicate the case before it.”). Finally, a finding of
preclusion here does not “work a basic
unfairness” to HRH. Martin, 488 F.3d at 454.
Because the D.C. Court of Appeals specifically asked HRH to
address the standing issue if it wished to avoid dismissal,
HRH's “incentives to litigate the point now
disputed were no less present in the prior case.”
Id. at 455. “[N]or are the stakes of the
present case of ‘vastly greater magnitude, '”
since both cases challenge the same Board order, with the
same potential set of consequences for HRH should it lose.
Id. Therefore, collateral estoppel applies. HRH
lacks standing to bring any claims that directly challenge
the Board's order.
not the end of the matter, however. Since the Court finds
that Scahill has standing, see infra at p. 17, most
of plaintiffs' claims can go forward. See Carpenters
Indus. Council v. Zinke, 854 F.3d 1, 9 (D.C. Cir. 2017)
(“If constitutional standing ‘can be shown for at
least one plaintiff, we need not consider the standing of the
other plaintiffs to raise that claim.'” (quoting
Mountain States Legal Found. v. Glickman, 92 F.3d
1228, 1232 (D.C. Cir. 1996))). But HRH's standing bar
does signal last call for its unconstitutional conditions
claim. At first, it is unclear whether plaintiffs bring this
claim only with respect to HRH, or with respect to both HRH
and Scahill. The complaint alleges that the Board's
unconstitutional conditions injured Scahill as the guarantor
on the lease for the Alibi. Am. Compl. ¶ 52. Yet the
heading for this count in the complaint indicates that only
HRH is asserting an unconstitutional conditions claim, not
Scahill. Id. at 14. And whereas Counts I and II
state that both “[p]laintiffs reallege and
incorporate by reference” the prior allegations in the
complaint, id. ¶¶ 20, 29, Count IV states
that only “Plaintiff HRH Services LLC”
does so, id. ¶ 47 (emphasis
added). Moreover, in order to assert a claim under
the unconstitutional conditions doctrine, a plaintiff must
allege that the government has conditioned receipt of a
benefit on the curtailment of the plaintiff's
constitutional rights. See Autor v. Pritzker, 740
F.3d 176, 183 (D.C. Cir. 2014). Plaintiffs do not allege that
Scahill has received or been denied any government benefit.
Id. ¶¶ 47-52. Because of this, and because
the complaint states on its face that the unconstitutional
conditions claim only applies to HRH, the Court determines
that this claim has been brought with respect to HRH alone.
Since HRH does not have standing, Count IV of the complaint
will be dismissed.
D.C. Court of Appeals' decision dismissed only
HRH's case for lack of standing, and therefore
the decision does not preclude Scahill's
standing to challenge the license conditions. However, his
standing may be difficult to establish, because the
Board's order does not directly regulate Scahill. The
parties do not address this specific issue with respect to
standing, but as standing is necessary to the Court's
jurisdiction, the Court has an obligation to consider it.
See, e.g., Lee's Summit v. Surface Transp.
Bd., 231 F.3d 39, 41 (D.C. Cir. 2000) (“When there
is doubt about a party's constitutional standing, the
court must resolve the doubt, sua sponte if need
be.”). Standing is “substantially more difficult
to establish” when the plaintiff is not “the
object of the government action or inaction”
challenged. Pub. Citizen, Inc. v. Nat'l Highway
Traffic Safety Admin., 489 F.3d 1279, 1289 (D.C. Cir.
2007) (quoting Lujan, 504 U.S at 562). Where not
directly regulated by a challenged government regulation, a
plaintiff must show that there is a “substantial
probability” that he will be harmed as a result of the
rule. See Stillwell v. Office of Thrift Supervision,
569 F.3d 514, 518 (D.C. Cir. 2009) (quoting St.
John's United Church of Christ v. FAA, 520 F.3d 460,
462 (D.C. Cir. 2008)).
Board's order requires the license holder-HRH-to
maintain the barring notice against Scahill and to enforce it
through the measures the Board sets out. See Am.
Compl. ¶ 13; Board Order at 36-37. On the face of the
order, then, there are no consequences for Scahill if HRH
does not comply with these conditions. Moreover, the Board
has not ordered HRH to do anything to Scahill that it could
not otherwise do legally-absent the order, HRH would be free
to maintain a barring notice against Scahill, decline to
employ him, and otherwise decline to associate with him.
being said, while Scahill may not be the primary object of
the Board's order, he is certainly a secondary object.
The basic purpose of the license conditions is to keep
Scahill and HRH apart, when they apparently wish to work
together. The effect of the Board's order is that Scahill
cannot set foot in the Alibi (without risking arrest), cannot
work there, and cannot obtain an interest in the business.
Scahill also alleges that he is the guarantor on the
Alibi's lease, and that the order barring him from the
premises prevents him from playing a role in the business and
managing the liability to which he is exposed as the
guarantor. Am. Compl. ¶ 41. This could constitute harm,
and while this harm is contingent on HRH complying with the
terms of the Board's order, the consequence of HRH's
non-compliance-revocation of its license-suggests that HRH is
likely to enforce the terms of the Board's order, making
this harm a “substantial
probability.” At this stage, plausibility is all that is
required. See SAIC, 45 F.Supp.3d at
second question is whether Scahill's alleged injuries are
“fairly traceable” to the Board. A defendant need
not be the “but-for cause” of a plaintiff's
injuries; an action may be fairly traceable to the defendant
even if defendant's action indirectly caused
plaintiff's harm, although this makes the burden of
establishing standing heavier. See, e.g.,
Massachusetts v. EPA, 549 U.S. 497, 524 (2007)
(causation may be established where defendant caused an
“incremental” part of the alleged injury);
Cmty. for Creative Non-Violence v. Pierce, 814 F.2d
663, 669 (D.C. Cir. 1987) (causation may be established where
a defendant's actions are “a substantial factor
motivating the third parties' actions”). When a
third party bears some responsibility for the plaintiff's
harm, standing may be established where, for example,
“the record present[s] substantial evidence of a ...