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Alemu v. Department of For-Hire Vehicles

United States District Court, District of Columbia

August 21, 2018

MISGANAW ALEMU, et al., Plaintiffs,



         Granting Defendants' Motions to Dismiss


         This case involves a group of individuals who believe that they have been defrauded by a government institution established, in part, to protect their interests; an institution that they claim has been corrupted by private interests opposed to their own. Plaintiffs are a group of taxicab drivers who have brought several common law, District of Columbia law, and federal law claims against a District of Columbia regulatory agency, the Department of For-Hire Vehicles (“DFHV”), and Jeffrey Schaeffer, an owner of various taxi-related companies (together, “Defendants”). Plaintiffs allege that DFHV misrepresented important taxicab licensing information and then worked alongside Mr. Schaeffer to draft and implement new licensing regulations which effectively preclude them from obtaining licenses to operate their own taxicabs. Now before the Court are DFHV's motions to dismiss for insufficient service of process and lack of subject-matter jurisdiction, and both Defendants' motions to dismiss for failure to state a claim for relief. For the reasons stated below, the Court grants both motions to dismiss for failure to state a claim.


         A. The DFHV

         Plaintiffs' claims arise from their inability to obtain “H-Tag” permits and, consequently, their inability to own and operate taxicabs. An “H-Tag” is a license necessary to operate a public for-hire vehicle in the District of Columbia. See D.C. Code § 47-2829 (2018); Mem. P. & A. Supp. Def. Dep't For-Hire Vehicles Mot. Dismiss (“DFHV Mem.”) Ex. 1 (“H-Tag Report”) at 1, ECF No. 18-3.[1] DFHV determines the criteria for H-Tag eligibility. Id.[2]

         DFHV is “a subordinate agency within the executive branch of the District government with exclusive authority for intrastate regulation of the public-vehicle-for-hire industry.” D.C. Code § 50-301.04 (2018). It is led by a Director who is appointed by the Mayor with the advice and consent of the District of Columbia Council. D.C. Code § 50-301.05. “The DFHV is charged with the continuance, further development, and improvement of the vehicle-for-hire industry within the District, and for the overall regulation of limousines, sedans, taxicabs, taxicab companies, taxicab fleets, and taxicab associations.” D.C. Code § 50-301.07(a). Among other powers, it has the authority to establish “criteria, standards, and requirements for the licensing of public vehicle-for-hire owners, operators, companies, associations, and fleets.” D.C. Code § 50-301.07(c)(2).

         B. Jeffrey Schaeffer's Involvement in the Taxicab Market

         Mr. Schaeffer allegedly owns several taxicab companies, insurance companies, and a car repair shop in the District of Columbia, has a personal office in the same building as DFHV, [3]and has held a large share of the District's taxicab market for more than 20 years. Compl. ¶¶ 5, 25, ECF No. 1. Plaintiffs assert that Mr. Schaeffer's market share and proximity to DFHV allow him to influence DFHV's actions; specifically, its implementation of H-Tag regulations. Id. ¶¶ 5-6, 25. Mr. Schaeffer allegedly has a history of lobbying for favorable taxicab regulations to maintain his grip on the taxicab market. See Id. ¶¶ 7, 13, 36.

         C. H-Tag Regulation

         Before 2009, the District of Columbia operated on an open-taxicab-licensing system, with no limit on the number of H-Tags that could be issued. See H-Tag Report at 3. In 2009, the District of Columbia Taxicab Commission (“DCTC” or the “Commission”), DFHV's predecessor, placed a moratorium on H-Tags, effectively halting any new issuances to individual taxicab drivers and taxicab companies.[4] See Compl. ¶ 26, ECF No. 1; H-Tag Report at 4. While the moratorium was in effect, Plaintiffs-taxicab drivers in the District of Columbia who leased their cabs from H-Tag holders-inquired about the steps that would be necessary to obtain their own H-Tags once DFHV decided to lift the moratorium. Compl. ¶ 26. During a series of meetings from 2011 to 2015, DFHV officials allegedly informed Plaintiffs that they would be eligible for H-Tags so long as they registered with DFHV, successfully completed a “Taxicab Operator's Course, ” and earned the requisite certificate of completion. Id. Accordingly, Plaintiffs each registered with DFHV as for-hire candidates and paid $800 to attend and complete the course.[5] Id. ¶¶ 26-27; see Certificate of Completion, ECF No. 1-2.

         In September 2016, DFHV lifted the moratorium, but contrary to its alleged representations to Plaintiffs it adopted a regulation that gave priority licensing only to previous H-Tag holders, effectively barring Plaintiffs from obtaining H-Tags. See Compl. ¶¶ 28, 30, 66; D.C. Mun. Regs. tit. 31, § 1010.20 (2017). The current H-Tag regulation requires Plaintiffs to have previously surrendered H-Tags to DFHV-which Plaintiffs have not done because they never owned H-Tags-or to register a wheelchair-accessible or electric vehicle-vehicle types which Plaintiffs allegedly do not own, or claim are impractical. See Compl. ¶ 15; D.C. Mun. Regs. tit. 31, § 1010.20 (2017).

         In late-2017, Plaintiffs filed the complaint initiating this action. Plaintiffs allege that, under the semblance of the H-Tag regulation, DFHV and Mr. Schaeffer conspired and attempted to monopolize the District of Columbia's taxicab market. See generally Compl. Plaintiffs argue that this alleged anticompetitive conduct was made possible by Mr. Schaeffer's significant market share in the District's taxicab industry and his lobbyist's efforts to advocate for favorable taxicab regulations. See Id. ¶¶ 5, 48, 81. Plaintiffs also argue that DFHV officials misrepresented the H-Tag eligibility requirements to Plaintiffs, knowing that Plaintiffs would be unable to obtain H-Tags once the new regulations were issued. Id. ¶ 58. They assert six claims against DFHV: (1) promissory estoppel, (2) fraudulent misrepresentation, (3) negligent supervision, (4) equal protection, (5) attempted monopolization, and (6) conspiracy to monopolize. See generally id. Plaintiffs assert the equal protection and monopolization claims against Mr. Schaeffer as well. See generally id.

         Before the Court are DFHV's ripe motions to dismiss pursuant to Federal Rules of Civil Procedure 12(b)(1), 12(b)(5), and 12(b)(6), and Mr. Schaeffer's ripe motion to dismiss pursuant to Rule 12(b)(6). DFHV argues that (1) the Court lacks standing because Plaintiffs fail to allege injury in fact; and (2) Plaintiffs' claims are unripe because they have neither applied for nor been denied H-Tags. See DFHV Mem. at 5-7, ECF No. 18-1. Alternatively, DFHV argues that Plaintiffs' complaint is factually and legally insufficient, and therefore that it fails to state a claim upon which the Court may grant relief. See generally DFHV Mem. Mr. Schaeffer also argues that Plaintiffs' allegations are factually and legally insufficient. See generally Schaeffer Mem. As discussed below, the Court denies DFHV's motion to dismiss for lack of subject-matter jurisdiction but grants both Defendants' motions to dismiss for failure to state a claim for relief.


         A. Rule 12(b)(1)

         A motion to dismiss for lack of standing and ripeness constitutes a motion under Rule 12(b)(1) of the Federal Rules of Civil Procedure, because both defects are “defects in subject-matter jurisdiction.” Haase v. Sessions, 835 F.2d 902, 906 (D.C. Cir. 1987). “Because subject-matter jurisdiction focuses on the court's power to hear the plaintiff's claim, a Rule 12(b)(1) motion imposes on the court an affirmative obligation to ensure that it is acting within the scope of its jurisdictional authority.” Grand Lodge of Fraternal Order of Police v. Ashcroft, 185 F.Supp.2d 9, 13 (D.D.C. 2001) (citing 5A Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure § 1350). Federal courts are courts of limited jurisdiction, and the law presumes that “a cause lies outside this limited jurisdiction . . . .” Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). Accordingly, “[a]s a court of limited jurisdiction, ” this Court “begin[s], and end[s], with an examination of [its] jurisdiction.” Gen. Motors Corp. v. EPA, 363 F.3d 442, 448 (D.C. Cir. 2004).

         It is the plaintiff's burden to establish that the court has subject-matter jurisdiction. Lujan v. Defs. of Wildlife, 504 U.S. 555, 561 (1992). In determining whether the plaintiff has met this burden, a court must accept “the allegations of the complaint as true, ” Banneker Ventures, LLC v. Graham, 798 F.3d 1119, 1129 (D.C. Cir. 2015), and “construe the complaint liberally, granting the plaintiff the benefit of all inferences that can be derived from the facts alleged.” Barr v. Clinton, 370 F.3d 1196, 1199 (D.C. Cir. 2004) (internal quotation marks omitted). However, “the plaintiff's factual allegations in the complaint . . . will bear closer scrutiny in resolving a 12(b)(1) motion than in resolving a 12(b)(6) motion for failure to state a claim.” Grand Lodge of Fraternal Order of Police, 185 F.Supp.2d at 13-14 (citing 5A Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure § 1350) (internal quotation marks omitted).

         B. Rule 12(b)(6)[6]

         The Federal Rules of Civil Procedure require that a complaint contain “a short and plain statement of the claim” 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 (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 (1974), abrogated on other grounds by Harlow v. Fitzgerald, 457 U.S. 800 (1982); Brewer v. District of Columbia, 891 F.Supp.2d 126, 130 (D.D.C. 2012). 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).

         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 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (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).” Twombly, 550 U.S. at 555-56 (citations and footnote omitted). “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, ” are therefore 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 legal conclusions that are couched as factual allegations, see Twombly, 550 U.S. at 555.

         Furthermore, when a plaintiff alleges fraudulent misrepresentation, as Plaintiffs do here, the complaint must “state with particularity the circumstances constituting fraud or mistake.” Fed.R.Civ.P. 9(b); see, e.g., Jefferson v. Collins, 905 F.Supp.2d 269, 282 (D.D.C. 2012); 3D Global Sols., Inc. v. MVM, Inc., 552 F.Supp.2d 1, 7-9 (D.D.C. 2008); Anderson v. USAA Cas. Ins. Co., 221 F.R.D. 250, 254 (D.D.C. 2004). This heightened pleading standard requires a complaint to “state the time, place and content of the false misrepresentations, the fact misrepresented and what was retained or given up as a consequence of the fraud.” United States ex rel. Williams v. Martin-Baker Aircraft Co., 389 F.3d 1251, 1256 (D.C. Cir. 2004) (internal quotation marks omitted) (quoting Kowal v. MCI Commc'ns Corp., 16 F.3d 1271, 1278 (D.C. Cir. 1994)). The plaintiff must also “identify individuals allegedly involved in the fraud.” United States ex rel. Williams, 389 F.3d at 1256.

         IV. ANALYSIS

         As noted above, Defendants move to dismiss the complaint on several grounds. DFHV contends that the Court lacks subject-matter jurisdiction because Plaintiffs fail to plead any injury in fact, and because the issues raised are unripe for judicial review, given that Plaintiffs have neither applied for nor been denied H-Tags. See DFHV Mem. at 5-7. Alternatively, DFHV argues that Plaintiffs fail to state a claim because their allegations are conclusory in nature. See Id. at 8-13. DFHV further argues that Plaintiffs' antitrust claims fail because they do not establish antitrust standing and because DFHV is immune to antitrust liability. See Id. at 15-20. Mr. Schaeffer contends that Plaintiffs fail to properly allege several elements of their antitrust claims, that those claims fall outside the statute of limitations, and that he is also immune to antitrust liability. See generally Schaeffer Mem. Addressing each argument in turn, beginning with DFHV's jurisdictional arguments, the Court concludes that, although it has jurisdiction over this action, Plaintiffs' allegations fail to state a claim upon which relief can be granted. Accordingly, Defendants' motions to dismiss are granted.[7]

         A. Standing & Ripeness

         The Court first disposes of DFHV's motion to dismiss for lack of subject-matter jurisdiction. “Article III of the Constitution limits the jurisdiction of federal courts to ‘actual cases or controversies between proper litigants.'” Mendoza v. Perez, 754 F.3d 1002, 1010 (D.C. Cir. 2014) (quoting Fla. Audubon Soc'y v. Bentsen, 94 F.3d 658, 661 (D.C. Cir. 1996)). To demonstrate the existence of a case or controversy at the pleading stage, a plaintiff must establish the “irreducible minimum” of constitutional standing. Lujan v. Defs. of Wildlife, 504 U.S. 555, 560 (1992). First, the plaintiff must allege a concrete and particularized injury in fact. Id. Next, the plaintiff must trace the challenged action to the defendant, and not to any independent action of a third party. Id. Last, the plaintiff must show that the injury is redressable by a favorable decision. Id. at 561.

         Injury in fact is an invasion of a legally cognizable interest that is “actual and imminent, not conjectural or hypothetical.” Chlorine Inst., Inc. v. Fed. R.R. Admin., 718 F.3d 922, 927 (D.C. Cir. 2013); Abulhawa v. U.S. Dep't of Treasury, 239 F.Supp.3d 24, 32 (D.D.C. 2017); see also Parker v. District of Columbia, 478 F.3d 370, 377 (D.C. Cir. 2007) (“[W]hen the Supreme Court used the phrase ‘legally protected interest' as an element of injury-in-fact, it made clear it was referring only to a ‘cognizable interest'”). Economic injuries, however slight, suffice to establish injury in fact, even when government action causes those injuries. Neighborhood Assistance Corp. of Am. v. CFPB, 907 F.Supp.2d 112, 121 (D.D.C. 2012) (citing Clinton v. City of N.Y., 524 U.S. 417, 432-33 (1998); Cal. Forestry Ass'n v. Thomas, 936 F.Supp. 13, 17 (D.D.C. 1996)); see also Conservation Law Found. v. Pritzker, 37 F.Supp.3d 234, 243 (D.D.C. 2014) (holding that the economic harm that the plaintiff claimed would arise from a Department of Commerce decision was “undeniably a cognizable interest for purposes of standing”) (quoting Lujan, 504 U.S. at 562-63).

         Moreover, when pleading injury in fact, “[g]eneral factual allegations of injury resulting from the defendant's conduct may suffice, for on a motion to dismiss we presum[e] that general allegations embrace those specific facts that are necessary to support the claim.” Osborn v. Visa Inc., 797 F.3d 1057, 1063-64 (2015). Thus, when determining whether the plaintiff suffered an injury in fact, the Court focuses “not on the availability of alternative remedies, ” but on the plaintiff's general allegations of injury. Cmty. Nutrition Inst. v. Block, 698 F.2d 1239, 1247 (D.C. Cir. 1983); cf. Chamber of Commerce v. SEC, 412 F.3d 133, 138 (D.C. Cir. 2005) (holding ...

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