Opinion
Case No. 3:02CV7620.
May 10, 2004
ORDER
This is a civil rights case in which plaintiffs BPNC, Inc. ("BPNC"), Brian Pearson, and Nicholas Costanzo allege that defendants Rae Ann Estep, Pam Laycock, Rodney Isaacson, Earl Mack, all employees of the State of Ohio ("State defendants"), and Kenneth Wynn, a representative of the National Alcohol Beverage Control Association, Inc. ("NABCA"), violated plaintiffs' constitutional rights. Plaintiffs bring their claims under 42 U.S.C. § 1983.
This court has subject matter jurisdiction pursuant to 28 U.S.C. § 1331. Pending are: 1) defendant Wynn's Fed.R.Civ.P. 12(b)(2) and 12(b)(6) motion to dismiss; 2) the State defendants' motion to strike plaintiffs' response to their motion for judgment on the pleadings; 3) the State defendants' Fed.R.Civ.P. 12(c) motion for judgment on the pleadings; and 4) plaintiffs' motion to shift fees and costs of service. For the following reasons, the motion to dismiss will be granted, the motion to strike will be denied, the motion for judgment on the pleadings will be granted, and the motion to shift fees and costs of service will be granted in part and denied in part.
BACKGROUND
Plaintiffs Brian Pearson and Nicholas Costanzo started BPNC (then known as Fubar, Inc.) in 1998. The company's product, Zippers, a small, "shot"-sized gelatin cup infused with alcohol, was apparently quite successful and, by 2002, was being sold by retailers across the United States.
Three of the defendants are employees of the Ohio Department of Commerce, Division of Liquor Control: Estep is Superintendent, Laycock is Chief of the Beer and Wine Section, and Isaacson is an inspector. Defendant Mack is an investigator for the Ohio Department of Public Safety. Defendant Wynn, the only defendant who is not a State employee, resides in Utah and is affiliated with NABCA, a private corporation. Wynn was NABCA's President in 1998-1999. Plaintiff has filed suit against each of the State defendants in their individual capacities and against Wynn both in his individual capacity and as a representative of NABCA, claiming that Wynn worked in concert with the State defendants.
Plaintiffs allege that the defendants conspired to destroy their business because defendants dislike plaintiffs' product and believe that Zippers appeal disproportionately to children and adults under the age of twenty-one and that plaintiffs marketed Zippers specifically to appeal to underage drinkers.
Plaintiffs allege that "throughout the existence of Fubar and BPNC, Pearson and Costanzo, as company representatives, were in regular contact with various agencies of the State of Ohio in an effort to register and legally market their product within the State, but they were met with resistance, delay, and harassment on a continuing basis from 1998 until the present time." (Doc. 35, at 3 ¶ 5). Specifically, they allege that defendants engaged in a systematic conspiracy in which they interfered with plaintiffs' contracts with BPNC customers, displayed public animosity toward plaintiffs and the Zippers product, filed false criminal charges against plaintiffs, unlawfully searched plaintiffs' office in Toledo, Ohio and seized their property, and intentionally and unjustifiably engaged in acts to delay and frustrate plaintiffs' attempt to get legal permits to manufacture and distribute Zippers in Ohio.
A. Plaintiffs' Claims 1. Claim One: Violation of 42 U.S.C. § 1983
Plaintiffs allege generally that defendants, acting under color of state law, deprived them of their rights in violation of 42 U.S.C. § 1983.
2. Claim Two: Interference with Contractual Arrangements
Plaintiffs allege that defendants engaged in a conspiracy "intentionally to cause economic harm to the plaintiffs by interfering with the contractual arrangements with their customers. . . ." (Doc. 35, at 7 ¶ 22). Their complaint alleges that, while the criminal charges allegedly instigated by defendants were pending, plaintiffs lost business because many of their customers refused to promote or sell Zippers. They also allege that defendants Isaacson and Mack contacted plaintiffs' customers and suppliers and made negative comments about BPNC. ( Id. at 4 ¶ 9).
3. Claim Three: Fourth Amendment Violation
Plaintiffs allege that defendants conspired to deprive them of their Fourth Amendment rights by unreasonably searching and seizing their property. During a search of BPNC's Toledo office on June 25, 2002, plaintiffs allege approximately seventeen State of Ohio agents, including defendants Isaacson and Mack, seized property belonging to BPNC and the individual plaintiffs and held that property for six months without filing any criminal charges against plaintiffs.
4. Claim Four: Fourteenth Amendment Due Process Violation
Plaintiffs allege that defendants' actions constituted a conspiracy to defame and stigmatize plaintiffs, interfering with their liberty and property rights. The complaint alleges specifically that defendants publicly announced that they were investigating "illegal activity of BPNC" ( Id. at 5 ¶ 12) and pursued allegedly meritless criminal charges against plaintiffs, for which plaintiffs allege a Lucas County Grand Jury refused to return an indictment. Plaintiffs allege that defendants' actions hurt the sale of Zippers.5. Claim Five: Fourteenth Amendment Due Process Violation
Plaintiffs allege that defendants again conspired to violate their Fourteenth Amendment procedural due process rights "by having a license revoked and by having approval for their labels rescinded without notice and an opportunity to be heard." ( Id. at 8 ¶ 28).
6. Claim Six: Fourteenth Amendment Due Process Violation
Plaintiffs allege that defendants conspired to deprive plaintiffs of their substantive due process rights by subjecting them to a "malicious criminal prosecution." ( Id. at 9 ¶ 30). They claim that defendants tried to press criminal charges against plaintiffs but were unable to receive an indictment on those charges.
7. Claim Seven: Fourth Amendment Violation
Plaintiffs allege that defendants conspired to violate their Fourth Amendment right "to be free of a warrant application that intentionally misstates material facts." ( Id. at 9 ¶ 32).
8. Claim Eight: First Amendment Violation
Plaintiffs allege that defendants engaged in a conspiracy to deprive them of their First Amendment rights by deliberately "drawing out permit and license application timeframes and delaying final decisions on such matters. . . ." ( Id. at 9 ¶ 34). Plaintiffs claim that this conduct deprived them of their right to petition for redress of grievances, apparently because failure to officially deny their application for a license precluded plaintiffs from seeking appropriate administrative remedies.
B. Defendants' Arguments
Defendant Wynn argues: 1) this court lacks personal jurisdiction over him; 2) he is a private individual and therefore not amenable to suit under § 1983; 3) even if plaintiffs had claimed that Wynn acted under color of state law, their complaint fails to state any claim under § 1983 that Wynn deprived them of any federal statutory or constitutional rights; and 4) plaintiffs Pearson and Costanzo lack standing to prosecute claims on behalf of BPNC.
The State defendants argue: 1) Pearson and Costanzo lack standing to prosecute claims on behalf of BPNC; 2) they are immune from suit due to qualified immunity; 3) plaintiffs have failed to plead their conspiracy claims with sufficient specificity; 4) the State defendants are collectively "the State" and therefore cannot conspire among themselves; 5) plaintiffs' complaint fails to state facts in support of their claims for a conspiracy between the State and defendant Wynn; and 6) plaintiffs have no constitutional right to sell liquor.
I. DEFENDANT WYNN'S MOTION TO DISMISS STANDARDS OF REVIEW A. Fed.R.Civ.P. 12(b)(6) Motion
When ruling on a Rule 12(b)(6) motion to dismiss for failure to state a claim upon which relief can be granted, the court reads the complaint in the light most favorable to the complaining party, and all of the complaining party's factual allegations are accepted as true. Dugan v. Brooks, 818 F.2d 513, 516 (6th Cir. 1987). The court's task is to determine not whether the complaining party will prevail on its claims but whether it is entitled to offer evidence to support those claims. Scheuer v. Rhodes, 416 U.S. 232, 236 (1974). Dismissal is appropriate only if it appears beyond doubt that the complaining party can prove no set of facts in support of the claims that would entitle him or her to relief. Pfennig v. Household Credit Servs., 295 F.3d 522, 525-26 (6th Cir. 2002) (citing Bibbo v. Dean Witter Reynolds, Inc., 151 F.3d 559, 561 (6th Cir. 1998)).
B. Fed.R.Civ.P. 12(b)(2) Motion
"The procedural scheme which guides the district court in disposing of Rule 12(b)(2) motions is well-settled." Theunissen v. Matthews, 935 F.2d 1454, 1458 (6th Cir. 1991). Plaintiff bears the burden of establishing personal jurisdiction over defendants. Id.; CompuServe, Inc. v. Patterson, 89 F.3d 1257, 1262 (6th Cir. 1996). Moreover, plaintiff may not stand on its pleadings to meet its burden; plaintiff must "set forth specific facts showing that the court has jurisdiction." Theunissen, 935 F.2d at 1458. Because this court has elected to decide this motion based on affidavits alone, plaintiff's pleadings and affidavits will be considered in a light most favorable to plaintiff. Id. A court in this situation "does not weigh the controverting assertions of the party seeking dismissal." Id. at 1459.
DISCUSSION
Defendant's Wynn's primary arguments are that this court may not exercise personal jurisdiction over him and that, even if all of plaintiffs' factual allegations against him are true, they have failed to state any claim for conspiracy upon which relief can be granted. Because I conclude that plaintiffs have failed to state a claim for conspiracy against Wynn, this court cannot exercise personal jurisdiction over him, and his motion must be granted on both bases. Thus, it will be unnecessary for me to consider Wynn's argument regarding plaintiffs Pearson and Costanzo's standing to pursue their claims against him.
A. 12(b)(6) Motion to Dismiss for Failure to State a Claim
To state a cause of action under § 1983, a plaintiff must allege the deprivation of a right secured by the United States Constitution or federal statute by a person acting under color of state law . Spadafore v. Gardner, 330 F.3d 849, 852 (6th Cir. 2003) (citing Flagg Bros., Inc. v. Brooks, 436 U.S. 149, 155-7 (1978)). A plaintiff may not proceed under § 1983 against a private party. Tahfs v. Proctor, 316 F.3d 584, 590 (6th Cir. 2003) (citing Am. Mfrs. Mut. Ins. Co. v. Sullivan, 526 U.S. 40, 50 (1999)). As an initial matter, defendant Wynn argues that his status as a private individual and representative of a private corporation exclude him from any potential liability under § 1983 in the instant action.
If, however, private persons act jointly with state officials to carry out a prohibited action, such persons act under the color of law for purposes of § 1983. Tahfs, 316 F.3d at 590. A private party may be a considered a state actor under § 1983 if: 1) "the deprivation complained of was 'caused by the exercise of some right or privilege created by the State;'" and 2) "the offending party 'acted together with or has obtained significant aid from state officials, or because his conduct is otherwise chargeable to the State.'" Id. at 590-91 (quoting Lugar v. Edmondson Oil Co., 457 U.S. 922, 937 (1982). Plaintiffs' § 1983 claim against Wynn meets this requirement because they allege that he acted with the State defendants to deprive plaintiffs of their rights through abuse of the state's authority, inter alia, to review and provide liquor licenses, obtain search warrants, and initiate criminal proceedings.
Plaintiffs' complaint against Wynn in his individual capacity and as a representative of NABCA, however, does not allege facts supporting a claim against Wynn for conspiracy under § 1983. A civil conspiracy is "an agreement between two or more persons to injure another by unlawful action." Spadafore, 330 F.3d. at 854 (quoting Hooks v. Hooks, 771 F.2d 935, 943-44 (6th Cir. 1985)). "Express agreement among all the conspirators is not necessary to find the existence of a civil conspiracy." Id. To prove a § 1983 conspiracy, a plaintiff need only show: 1) "that there was a single plan"; 2) "that the alleged coconspirator shared in the general conspiratorial objective"; and 3) that an overt act causing injury to the complainant was committed in furtherance of the conspiracy. Id.
Conspiracy claims must be pled with some degree of specificity. Id. (citing Gutierrez v. Lynch, 826 F.2d 1534, 1538 (6th Cir. 1987)). Vague and conclusory allegations unsupported by material facts are not sufficient to state a conspiracy claim under § 1983. Id. at 854. Because direct evidence of an express agreement among all conspirators will rarely be available, however, a plaintiff may rely on circumstantial evidence to prove the existence of the conspiracy. Id. (citing Weberg v. Franks, 229 F.3d 514, 528 (6th Cir. 2000)).
Plaintiffs allege defendant Wynn conspired with the State defendants to deprive plaintiffs of constitutional rights. Their descriptions of the acts they allege violated their rights, however, never mention Wynn. Plaintiffs' only allegation regarding Wynn is an allegation that he sent a letter to defendant Rae Ann Estep, Superintendent of the Division of Liquor Control, stating, in relevant part:
While [Zippers] apparently meet all [Bureau of Alcohol, Tobacco, and Firearms] requirements and are therefore legal, I personally see no reason why they shouldn't be banned from sale in any market.
. . .
I don't know if you have the authority to ban the sale of Zipper's, but I would certainly back you if you did ban them. I don't know what I can do to help you get rid of them but I would do anything you asked if you thought it would help.
(Doc. 35 exh. A).
Plaintiffs' complaint makes no allegation that Wynn acted on the intentions expressed in this letter, nor does it allege that Estep responded to this letter or otherwise accepted Wynn's offer to "do anything you asked" to help in an effort to "ban" Zippers. Even if the court assumes that, by including Wynn in their complaint and asserting conspiracy claims against all of the defendants, plaintiffs meant to imply that Wynn was complicit in arranging the events they describe — including the issuance of an allegedly false search warrant, denial of BPNC's application for a permit, and speaking out against the product — there is simply no tenable assertion in the complaint that suggests that Wynn communicated with any other defendants (other than the one letter to Estep), participated in the development of any single plan, or performed any act in furtherance of the alleged conspiracy.
Although it is true that "[e]ach conspirator need not have known all of the details of the illegal plan or all of the participants involved" and "express agreement among all the conspirators is not necessary," plaintiffs' allegations are simply not enough. Spadafore, 330 F.3d at 854 (quoting Hooks, 771 F.2d at 943-44). The most plaintiffs have alleged is that Wynn shared the State defendants' alleged animus for plaintiffs' product and voiced support for the alleged conspiratorial objective. Thus, even if plaintiffs prove each of the allegations in their complaint, they will lack proof that Wynn had any involvement in developing a single plan or that he performed any acts that could be considered to have furthered the alleged conspiracy.
Plaintiffs' conclusory allegations that defendant conspired with the State of Ohio to harm plaintiffs are unsupported by factual allegations that would establish a conspiracy between Wynn and the State defendants. Accordingly, Wynn's 12(b)(6) motion to dismiss must be granted.
B. Rule 12(b)(2) Motion to Dismiss for Lack of Jurisdiction Over the Person
There is no general personal jurisdiction over defendant Wynn in his individual or representative capacity; therefore, plaintiffs must make a prima facie showing that this court has specific personal jurisdiction over Wynn. Glasstech, Inc. v. TGL Tempering Sys., Inc., 50 F. Supp.2d 722, 725 (N.D. Ohio 1999). "To determine whether personal jurisdiction exists over a defendant, federal courts apply the law of the forum state, subject to the limits of the Due Process Clause of the Fourteenth Amendment." CompuServe, Inc. v. Patterson, 89 F.3d 1257, 1262 (6th Cir. 1996). This requires a two-step analysis: 1) the defendant must be amendable to suit under the Ohio long-arm statute; and 2) the exercise of personal jurisdiction must not violate due process. Ramada Franchise Sys., Inc. v. Hanna Hotel Enters., LLC, 147 F. Supp.2d 840, 844 (N.D. Ohio 2001) (citing Cole v. Mileti, 133 F.3d 433, 436 (6th Cir. 1998)).
The Ohio Supreme Court has determined that Ohio's long-arm statute does not extend personal jurisdiction to the limits of due process. Goldstein v. Christiansen, 70 Ohio St.3d 232, 238 n. 1 (1994). Therefore, both prongs of the constitutional analysis must be analyzed separately. Hunter v. Armando, 197 F. Supp.2d 964, 968 (N.D. Ohio 2002).
1. The Ohio Long-Arm Statute
The Ohio long-arm statute, O.R.C. § 2307.382(A), states that personal jurisdiction arises from:
(1) Transacting any business in this state;
(2) Contracting to supply services or goods in this state;
(3) Causing tortious injury by an act or omission in this state;
(4) Causing tortious injury in this state by and act or omission outside this state if he regularly does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered in this state . . .;
(5) Causing injury in this state to any person by breach of warranty . . .;
(6) Causing tortious injury in this state to any person by an act outside this state committed with the purpose of injuring persons . . .;
(7) Causing tortious injury to any person by a criminal act . . .;
(8) Having an interest in, using, or possessing real property in this state;
(9) Contracting to insure any person, property, or risk located within this state. . . .
Plaintiffs assert that Wynn's alleged participation in a conspiracy to deprive plaintiffs of their rights satisfies subsection (6) of the long-arm statute. Were Wynn a co-conspirator, he would be causing tortious injury to plaintiffs in Ohio, even if he never left Utah. Because plaintiffs do not state a claim for conspiracy, however, there is no basis for exercising personal jurisdiction over Wynn.
2. Constitutional Due Process
In the instant situation, the exercise of personal jurisdiction over Wynn does not comport with the due process clause of the Fourteenth Amendment. For jurisdiction to be constitutional under the due process clause, Wynn must have certain minimum contacts with the State of Ohio such that maintenance of the suit in Ohio does not offend traditional notions of fair play and substantial justice. International Shoe Co. v. State of Washington, 326 U.S. 310, 319 (1945).
The Sixth Circuit has established a three-part test to determine the constitutionality of exercising specific personal jurisdiction over a non-resident defendant: 1) Wynn must purposefully avail himself of the privilege of conducting activities in Ohio or causing consequence in Ohio; 2) the cause of action must arise from Wynn's activities in Ohio; and 3) the acts must have a substantial enough connection with Ohio that exercising jurisdiction over Wynn is reasonable. Southern Machine Co. v. Mohasco Indus. Inc., 401 F.2d 374, 381 (6th Cir. 1968); see also Bridgeport Music, Inc. v. Still N the Water Publ'g., 327 F.3d 472, 477-78 (6th Cir. 2003).
The "purposeful availment" requirement is satisfied when the defendant's contacts with the forum state "proximately result from actions by the defendant himself that create a 'substantial connection' with the forum State," and when the defendant's conduct and connection with the forum are such that it should "reasonably anticipate being haled into court there." CompuServe, Inc. v. Patterson, 89 F.3d 1257, 1263 (6th Cir. 1996) (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474-75 (1985)).
The only basis for specific jurisdiction asserted by plaintiffs in the instant case is the letter from Wynn to the Superintendent of Ohio's Division of Liquor Control. As discussed above, there is no evidence that Wynn helped plan or participated in a conspiracy to violate plaintiffs' rights. See Calphalon Corp. v. Rowlette, 228 F.3d 718, 722-23 (6th Cir. 2000) (holding that the focus of the purposeful availment analysis is on the quality, not the quantity of the defendant's contacts with the forum state, so one contact with the forum state could be enough, but explaining that purely "fortuitous" and "attenuated" contacts do not provide a basis for personal jurisdiction) (citing Burger King, 471 U.S. at 478; LAK, Inc. v. Deer Creek Enter., 885 F.2d 1293, 1301 (6th Cir. 1989)); Consumer Direct, Inc. v. McLaughlin, 138 F.R.D. 519, 523 (N.D. Ohio 1991) (holding that a defendant's "single written communication to Ohio asserting the validity of his patent and expressing a willingness to negotiate for a license is not the sort of purposeful activity that would make it reasonable for the defendant to expect to be haled into court here").
If the letter at issue in the instant case actually established what plaintiffs believe it establishes — that Wynn offered to participate in the alleged conspiracy — it would be enough to show that Wynn made a contact with the State of Ohio for the purpose of violating the law in Ohio. It would show a contact with the State of Ohio substantial enough to provide a reasonable basis for him to expect that he could be haled into Ohio courts. The letter on which plaintiffs' rely, however, does not establish what they believe it establishes, and they do not allege any other facts linking Wynn to Ohio.
Thus, plaintiffs have not shown that Wynn meets the first of the three Mohasco factors — purposeful availment. Nor have they provided any facts upon which to base a claim that the alleged conspiracy arose from any action Wynn took in Ohio. Based on the allegations plaintiffs have made, exercising jurisdiction over Wynn is not reasonable, and his motion to dismiss must be granted based both on his 12(b)(2) and 12(b)(6) arguments.
II. STATE DEFENDANTS' MOTION TO STRIKE
The State defendants' motion to strike plaintiffs' response to the motion for judgment on the pleadings shall be denied. Although the Sixth Circuit no longer requires plaintiffs seeking to overcome a defendant's assertion of qualified immunity to meet a heightened pleading standard, district courts have discretion to determine how much information plaintiffs can provide in support of their claims when rebutting a qualified immunity claim. Goad v. Mitchell, 297 F.3d 497, 503-04 (6th Cir. 2002). Because plaintiffs' second amended complaint is so vague with regard to the facts supporting their claims, I will review the declaration and exhibits offered in support of their claims. On the basis of that review, I conclude that, even with the additional information, plaintiffs have failed to allege violations of their statutory or constitutional rights and defendants are entitled to dismissal of all claims.
III. STATE DEFENDANTS' MOTION FOR JUDGMENT ON THE PLEADINGS STANDARD OF REVIEW
Fed.R.Civ.P. 12(c) provides that a party may move for judgment on the pleadings after the pleadings are closed but within such time as not to delay trial. The motion "must be sustained 'by the undisputed facts appearing in all the pleadings, supplemented by any facts of which the court will take judicial notice.'" Pension Benefit Guaranty Corp. v. Bank One, N.A., 34 F. Supp.2d 608, 609 (S.D. Ohio 1998) (quoting 2A James W. Moore, et al., Moore's Federal Practice ¶ 12.15 (2d ed. 1991)). "[A]ll well-pleaded material allegations of the non-moving party's pleadings are taken as true, and all allegations of the moving party which have been denied are taken as false." Pension Benefit Guaranty Corp., 34 F. Supp.2d at 609. "Judgment on the pleadings may be granted only if, on the facts as to admitted allegations, the moving party is clearly entitled to judgment." Id.
Functionally, rule 12(c) provides the same standard of review as Fed.R.Civ.P. 12(b)(6). The court considers whether, based on the allegations in the second amended complaint, plaintiffs can prove any set of facts that would entitle them to relief. United States ex rel. Bledsoe v. Cmty. Health Sys., Inc., 342 F.3d 634, 643 (6th Cir. 2003). In doing so, the court construes the complaint in the light most favorable to the plaintiffs and accepts all of their factual allegations as true. Id. (citing Ziegler v. IBP Hog Market, Inc., 249 F.3d 509, 511-12 (6th Cir. 2001)).
DISCUSSION
I note at the outset that the State defendants' assertion that plaintiffs failed to make clear whether they are suing the State defendants in their official or individual capacities is erroneous: plaintiffs' second amended complaint specifies that the State defendants are sued in their individual capacities. Thus, defendants' Eleventh Amendment arguments are moot. That leaves for determination their contentions that they are entitled to qualified immunity and that plaintiffs have not stated a claim for conspiracy upon which relief can be granted.
A. Qualified Immunity
When a defendant state official seeks qualified immunity, "a ruling on that issue should be made early in the proceedings so that the costs and expenses of trial are avoided where the defense is dispositive." Saucier v. Katz, 533 U.S. 194, 200 (2001); see also Greene v. Barber, 310 F.3d 889 (6th Cir. 2002). This is because qualified immunity is an immunity from suit, not just a defense to liability. Saucier, 533 U.S. at 201.
The Supreme Court has set forth a two-step analysis for determining whether an official is entitled to qualified immunity: 1) whether the facts alleged, taken in the light most favorable to the party asserting the injury, establish that the official's conduct violated a constitutional right; and, if so, 2) whether that right was clearly established at the time the injury occurred such that the "law . . . put the [official] on notice that his conduct would be clearly unlawful." Id. at 201-02. As the Court noted in Saucier, qualified immunity protects "'all but the plainly incompetent or those who knowingly violate the law.'" Id. at 202 (quoting Malley v. Briggs, 475 U.S. 335, 341 (1986)).
1. Whether the State Defendants' Alleged Conduct Violated Plaintiffs' Rights
Plaintiffs allege that the State defendants violated their rights by:
1) interfering with their contractual arrangements (Claim Two);
2) unreasonably searching and seizing their property based on a search warrant that intentionally misstated material facts in violation of the Fourth Amendment (Claims Three and Seven);
3) defaming and stigmatizing plaintiffs, revoking plaintiffs' license and permit applications, and maliciously bringing criminal prosecution against plaintiffs, all in violation of their Fourteenth Amendment rights (Claims Four, Five, and Six); and
4) delaying a final decision on plaintiffs' permit and license applications in violation of their First Amendment right to petition for redress of grievances (Claim Eight).
Section 1983 is not itself a source of substantive rights; it is a vehicle for enforcing federal statutory and constitutional rights. See Spadafore, 330 F.3d at 852. Thus, I will not consider plaintiffs' first claim, which simply alleges a violation of § 1983, as other than an invocation of § 1983 as a basis for each of plaintiffs' substantive claims.
a. Interference with Contractual Arrangements
It is not clear what federal statute or constitutional provision plaintiffs mean to invoke to support their claim that defendants' conduct sought "intentionally to cause economic harm to the plaintiffs by interfering with the contractual arrangements with their customers . . ." and thereby violated plaintiffs' rights. (Doc. 35, at 7 ¶ 22).
Article I, § 10 of the United States Constitution provides: "No State shall . . . pass any . . . Law impairing the Obligation of Contracts." When a plaintiff alleges a violation of this provision, the proper inquiry is "whether the change in state law has operated as a substantial impairment of a contractual relationship." General Motors Corp. v. Romein, 503 U.S. 181, 186 (1992) (internal quotation omitted).
In the instant case, however, plaintiffs do not allege that the State of Ohio enacted a law or regulation that affected their contractual obligations. They merely allege that State officials engaged in a course of conduct that adversely affected their contractual relations, causing plaintiffs to suffer economic damages. This sounds much more like a state law claim for tortious interference with contract. See Fred Siegel Co., L.P.A. v. Arter Hadden, 85 Ohio St.3d 171, 176 (1999) (explaining that, in Ohio, the elements of a claim for tortious interference with contract are: 1) the existence of a contract; 2) the wrongdoer's knowledge of the contract; 3) the wrongdoer's intentional procurement of the breach; 4) a lack of justification; and 5) resulting damages).
It is more likely that plaintiffs intended their claim to allege a violation of plaintiffs' Fourteenth Amendment procedural due process rights. The first step in analyzing a procedural due process claim is to determine whether plaintiffs have "been deprived of a protected interest in 'property' or 'liberty.'" American Mfrs. Mut. Ins. Co. v. Sullivan, 526 U.S. 40, 59 (1999) (citing Mathews v. Eldridge, 424 U.S. 319, 332 (1976)). The court then looks to the relevant state procedures to ensure that they comport with due process. Id.
In the instant case, the property interest of which plaintiffs claim to have been deprived is, apparently, an interest in maintaining private contractual arrangements free from interference by State officials. I need not, however, address the issue of whether this is a protected property interest. Even if I assume that plaintiffs have alleged deprivation of a protected property interest, plaintiffs' claim cannot proceed because there is absolutely no allegation that plaintiffs have been deprived of due process. When State law provides a means to enforce a contract claim, any property interest in that contract is fully protected by State law; thus, there is no due process violation. Lujan v. G G Fire Sprinklers, Inc., 532 U.S. 189, 197 (2001) ("If [the State] makes ordinary judicial process available to [plaintiff] for resolving its contractual dispute, that process is due process."). Thus, because plaintiffs may pursue their interference with contractual arrangements claim as a State law claim for tortious interference with contract, they may not pursue it under § 1983 as a Fourteenth Amendment due process claim.
Defendants are entitled to dismissal of Claim Two because it fails to state a violation of a federal constitutional or statutory right.
b. Unreasonable Search and Seizure and Filing a False Affidavit to Obtain a Search Warrant
Plaintiffs allege in Claim Three that defendants' conduct deprived them of their Fourth Amendment right to be free from unreasonable search and seizure of property. Plaintiffs also allege in Claim Seven that defendants' conduct violated their Fourth Amendment right "to be free of a warrant application that intentionally misstates material facts." (Doc. 35, at 9 ¶ 32). Their assertion is that defendants caused the officer who applied for the search warrant for plaintiffs' property to do so on the basis of false information. Plaintiffs have not specified what statements they allege to be false.
It is not clear why plaintiffs separated their Fourth Amendments contentions into two claims. Both Claims Three and Seven appear to be based on the same events — the search of BPNC's Toledo office and seizure of plaintiffs' property. Plaintiffs' allegation that defendants somehow caused an allegedly false statement to be included in the affidavit in support of the search warrant that authorized that search is an allegation that merely supports their argument that the search at issue was unreasonable and unconstitutional. I will, therefore, combine the two claims and analyze them as one.
Plaintiffs claim that defendants "arranged for a false affidavit to be filed in support of a search warrant so as to add some official legitimacy to their unlawful conduct" and that "[b]y authority of the warrant issue [sic] upon the false affidavit, on June 25, 2002, approximately seventeen (17) agents, including Mack and Isaacson, . . . raided the offices of BPNC, Inc. and seized virtually everything the company needed to conduct business." (Doc. 35, at 5 ¶¶ 13, 14).
The basis of plaintiffs' claim that the June 25, 2002 search and seizure were unconstitutional appears to be the alleged fact that the basis for the search warrant was false; thus, the warrant was not supported by probable cause. The Fourth Amendment requires that warrants be issued only upon a showing of probable cause. Vakilian v. Shaw, 335 F.3d 509, 517 (6th Cir. 2003) (citing Greene v. Reeves, 80 F.3d 1101, 1105 (6th Cir. 1996)). Generally, investigators and police officers are entitled "to rely on a judicially secured warrant for immunity from a § 1983 action for illegal search and seizure unless the warrant is so lacking in indicia of probable cause that official belief in the existence of probable cause is unreasonable." Yancey v. Carroll County, 876 F.2d 1238, 1243 (6th Cir. 1989) (citing Malley v. Briggs, 475 U.S. 335 (1986)). An officer or investigator "may be held liable under § 1983 for making material false statements either knowingly or in reckless disregard for the truth to establish probable cause. . . ." Vakilian, 335 F.3d at 517 (citing Ahlers v. Schebil, 188 F.3d 365, 373 (6th Cir. 1999)).
Plaintiffs, however, have not named as a defendant the officer who filed the affidavit containing the allegedly false statement. Nor have they named all of the "approximately seventeen agents" who participated in the allegedly unconstitutional search and seizure. They allege vaguely that the State officials they named as defendants — two of whom apparently had no personal involvement at all in the search and seizure — "arranged for a false affidavit to be filed." (Doc. 35, at 5 ¶ 13).
This is not enough to state a claim against any of the defendants. Plaintiffs have not pointed to an allegedly false material statement in the affidavit. They have not alleged that the two defendants who allegedly took part in the search — Mack and Isaacson — made any knowingly false statements or omissions to the judge who issued the warrant such that they would be liable under § 1983. See Vakilian, 335 F.3d at 517. Finally, plaintiffs have not claimed that the allegedly false statement in the affidavit was "material to the finding of probable cause." Id. at 517 ("To overcome an officer's entitlement to qualified immunity . . . a plaintiff must establish: (1) a substantial showing that the defendant stated a deliberate falsehood or showed reckless disregard for the truth and (2) that the allegedly false or omitted information was material to the finding of probable cause.") (citing Hill v. McIntyre, 884 F.2d 271, 275 (6th Cir. 1989)).
Plaintiffs allege that defendants were aware of some facts that were not included in the search warrant affidavit. (Doc. 66, at 5). They have not, however, alleged that the officer who executed the affidavit or any of the defendants intentionally misled the judge to obtain the warrant. Nor have plaintiffs explained how omission of those facts would be material to a finding that no probable cause existed for the warrant.
Plaintiffs have provided evidence that a statement in the affidavit regarding BPNC's contact with Jane Aguilar, who works for Citifest, Inc. in Toledo, Ohio, was inaccurate. (Doc. 69 exh. H). They have not, however, claimed that this particular statement was material to the finding of probable cause. Given the scope of the allegations in the affidavit, I conclude that this statement was not crucial to the judge's finding of probable cause.
At the very least, a plaintiff claiming to have been subjected to a search on the basis of a false affidavit must be required to allege that one or more specified factual assertions in the affidavit supporting the search warrant was false. See Franks v. Delaware, 438 U.S. 154, 155-56 (1978) (requiring a criminal defendant to make a "substantial preliminary showing" of falsity before being entitled to a hearing on a motion to suppress on the basis of falsehoods in an affidavit). As the Ninth Circuit explained:
[A] plaintiff's [§ 1983] complaint must contain nonconclusory allegations that the defendant knowingly included false statements in the affidavit or did so with reckless disregard. That is, he must 'point out specifically the portion of the warrant affidavit that is claimed to be false,' . . . and allege some facts tending to show that the defendant was aware or should have been aware of the falsity of those statements. He must also allege that the false statements were 'necessary to the finding of probable cause,'. . . .Branch v. Tunnell, 937 F.2d 1382, 1387 (9th Cir. 1991), overruled on other grounds by Galbraith v. County of Santa Clara, 307 F.3d 1119 (9th Cir. 2002) (quoting Franks, 438 U.S. at 171 and 156); see also Liston v. County of Riverside, 120 F.3d 965, 973 (9th Cir. 1997) ("the showing necessary to get to a jury in a 1983 action is the same as the showing necessary to get an evidentiary hearing under Franks") (internal quotation omitted) (citing Snell v. Tunnell, 920 F.2d 673, 698 (10th Cir. 1990)).
Plaintiffs' complaint does not specify the false statement or statements plaintiffs allege led to the grant of the search warrant. Nor have they shown that any such false statement was deliberate, or made with a reckless disregard for the truth. Thus, plaintiffs have not stated a claim for a violation of their Fourth Amendment rights. Defendants are entitled to dismissal of Claims Three and Seven.
c. Defamation
Plaintiffs allege in Claim Four that defendants conspired to defame and stigmatize plaintiffs, interfering with their liberty and property rights and denying them due process. Plaintiffs allege that defendants publicly stated that the State was investigating "illegal activity of BPNC" and contacted plaintiffs' customers and suppliers to make negative comments about plaintiffs. Plaintiffs claim that these statements hurt BPNC's reputation and business.
Reputation, however, is not a protected liberty or property interest. Paul v. Davis, 424 U.S. 693, 711-12 (1976); Ferencz v. Hairston, 119 F.3d 1244, 1249 (6th Cir. 1997). It is "simply one of a number [of interests] which the State may protect against injury by virtue of its tort law, providing a forum for vindication of those interests by means of damages actions." Paul, 424 U.S. at 712. To recover under the Fourteenth Amendment, plaintiffs must allege that the defamatory acts caused another deprivation of a constitutionally protected right or interest along with the damage to reputation. See Jackson v. Heh, No. 98-4420, 2000 WL 761807, at **3 (6th Cir. 2000) (citing Paul, 424 U.S. at 711).
Nonetheless, plaintiffs assert that "a person's reputation, good name, honor, and integrity are among the liberty interests protected by the due process clause." (Doc. 66, at 8). The case plaintiffs cite in support of this proposition, however, clearly explains that, to be entitled to a "name-clearing hearing" (due process) when he or she is defamed, a plaintiff must first show that "the stigmatizing statements [were] made in conjunction with the plaintiff's termination from employment." Quinn v. Shirey, 293 F.3d 315, 320 (6th Cir. 2002).
Plaintiffs claim that defendants' alleged conduct adversely affected sales of Zippers. The due process clause, however, "does not apply to the indirect adverse effects of governmental action." O'Bannon v. Town Court Nursing Ctr., 447 U.S. 773, 789 (1980). Plaintiffs' lost sales are "no more than an indirect injury resulting from government action." Nuclear Transp. Storage, Inc. v. United States, 890 F.2d 1348, 1354 (6th Cir. 1989); see also Air Brake Sys., Inc. v. Mineta, 202 F. Supp.2d 705, 714-15 (E.D. Mich. 2002) (holding that lost sales are an indirect injury and not protected by the due process clause).
This case does not involve the loss of a job or any other protected interest. Thus, any defamation by the defendants of plaintiffs or their product is not actionable under § 1983. Paul, 424 U.S. at 706 ("the Court has never held that the mere defamation of an individual . . . was sufficient to invoke the guarantees of procedural due process absent an accompanying loss of government employment").
Plaintiffs have not alleged deprivation of a protected right or interest, and have not stated a claim for a violation of the due process clause. Defendants are therefore entitled to dismissal of Claim Four.
d. Revoking Plaintiffs' License and Rescinding Plaintiffs' Labels
Plaintiffs claim that defendants acted to revoke plaintiffs' license and rescind approval for labels without an opportunity to be heard, violating their Fourteenth Amendment due process rights.
Plaintiffs' pleadings do not specify what license was revoked or how that act occurred. Plaintiffs do claim that defendants caused their application for a Department of Alcohol, Tobacco, and Firearms ("ATF") license to be denied, not revoked. It is not clear to the court if this is the act to which Claim Five refers. Plaintiffs have likewise failed to specify either the particular labels to which their claim refers or what label "approval" was rescinded.
Defendants argue that, without these facts, plaintiffs have failed to state a claim that defendants violated their due process rights, only that plaintiffs have been denied due process as a general matter. (Doc. 62, at 14). Defendants also argue that plaintiffs failed to exhaust their administrative remedies as to the license issue because they could have, and did not, appeal the denial of a liquor license to the proper administrative agency in Ohio, pursuant to Ohio law.
I agree with defendants' first argument. At the very least, plaintiffs' allegations should set forth the specific license they are claiming was revoked and defendants' alleged involvement in that revocation (or denial, if that is what plaintiffs meant to allege). Moreover, plaintiffs' allegations should have provided a minimal factual basis for their claim that defendants were involved in the rescission of any label approval.
If plaintiffs were to clarify their claim, and if this claim is meant to allege that defendants' played a role in ATF's denial of plaintiffs' federal license, I would be inclined to disagree with defendants that plaintiffs failed to exhaust their administrative remedies. As the letters written by Representative Marcy Kaptur on plaintiffs' behalf establish, ATF inexplicably delayed in sending plaintiffs their notice of denial, thus preventing them from appealing the decision. (Doc. 69 exh. F).
I note, however, that plaintiffs' pleadings do not provide any facts alleging that defendants had any involvement in ATF's delay in issuing a decision on the federal license. I note also that it is not clear that this is even the license to which Claim Five refers. Thus, it is not necessary to address defendants' claim that plaintiffs have failed to exhaust any administrative remedies. The court has no information as to what those remedies might be.
In Goad, 297 F.3d 497, the Sixth Circuit explained that, although plaintiffs need not meet a heightened pleading requirement when a defendant asserts qualified immunity, "'firm application of the Federal Rules of Civil Procedure is fully warranted' and may lead to the prompt disposition of insubstantial claims." Id. at 503 (quoting Crawford-El v. Britton, 523 U.S. 574, 597 (1998)). This is so "officials are not subjected to unnecessary and burdensome discovery or trial proceedings." Id. at 504.
Thus, I hold that Claim Five fails to state a claim for violation of any statutory or constitutional right; accordingly, defendants are entitled to dismissal of this claim.
e. Malicious Prosecution
Plaintiffs allege that defendants violated their substantive due process rights under the Fourteenth Amendment by bringing a malicious criminal prosecution against them. As defendants point out, however, "the substantive component of the Fourteenth Amendment's Due Process Clause 'with its scarce and openended guideposts' may not give rise to a federal constitutional malicious prosecution claim." Thacker v. City of Columbus, 328 F.3d 244, 258 (6th Cir. 2003) (quoting Albright v. Oliver, 510 U.S. 266, 275 (1994)). Plaintiffs' claim, therefore, cannot proceed as a Fourteenth Amendment claim.
Sixth Circuit panels have disagreed about whether plaintiffs may bring claims for malicious prosecution under the Fourth Amendment, as the Supreme Court suggested, but did not definitively authorize, in Albright, 510 U.S. at 273-74. See Thacker, 328 F.3d at 258-59; Darrah v. City of Oak Park, 255 F.3d 301, 308-11 (6th Cir. 2001); Frantz v. Village of Bradford, 245 F.3d 869, 875-77 (6th Cir. 2001); Spurlock v. Satterfield, 167 F.3d 995, 1005-07 (6th Cir. 1999). The prevailing view, however, seems to be that there is a constitutionally cognizable claim for malicious prosecution under the Fourth Amendment. Thacker, 328 F.3d at 259.
The elements of a federal claim for malicious prosecution are not clear. Id. At a minimum, however, "a plaintiff must show 'that there was no probable cause to justify his arrest and prosecution.'" Id. (quoting Darrah, 255 F.3d at 312). In the instant case, plaintiffs have alleged that defendants sought to have criminal charges brought against them despite knowing that plaintiffs had not violated the law.
Because plaintiffs have not premised their claim for malicious prosecution as a cognizable constitutional claim, however, the court need not decide whether plaintiffs' allegations would be enough to state a claim under the Fourth Amendment, a claim they have not alleged. Because there is no claim for malicious prosecution under the Fourteenth Amendment due process clause, plaintiffs have not stated a claim for violation of a constitutional right, and defendants are entitled to dismissal of Claim Six.
Even if plaintiffs' claim were brought under the Fourth Amendment, it is a right not clearly established in the Sixth Circuit; thus, defendants would be entitled to qualified immunity under the second required inquiry of the qualified immunity analysis. Saucier, 533 U.S. at 202.
f. Delaying Decisions on Permit and License Applications
Plaintiffs allege that defendants, "in drawing out permit and license application timeframes and delaying final decisions on such matters, among other actions, prevented Plaintiffs from exercising their First Amendment right to petition for redress of grievances. . . ." (Doc. 35, at 9 ¶ 34).
The purpose of the First Amendment's petition clause is to ensure that "people 'may communicate their will' through direct petitions to the legislature and government officials." McDonald v. Smith, 472 U.S. 479, 482 (1985) (quoting James Madison,1 Annals of Cong. 738 (1789)); see also Biddulph v. Mortham, 89 F.3d 1491, 1496-97 (11th Cir. 1996) (explaining that the petition clause protects the people's right to make their wishes known to government representatives).
Plaintiffs, however, have not alleged that defendants prevented them from communicating their will to any government official. They allege merely that the defendants delayed decisions on permit and license applications. Plaintiffs, in fact, have provided evidence that they were not denied their right to communicate their wishes to their government representatives: they attached to their response copies of letters Congresswoman Marcy Kaptur and a Legislative Aide to Ohio State Senator Linda Furney sent to administrative agency representatives on plaintiffs' behalf. (Doc. 69 exh. E F). Clearly, plaintiffs were able to make their views known to a variety of government officials. The fact that their letters did not elicit the response they wished does not make their claim viable under the First Amendment petition clause. Apple v. Glenn, 183 F.3d 477, 479 (6th Cir. 1999) ("A citizen's right to petition the government does not guarantee a response to the petition or the right to compel government officials to act on or adopt a citizen's views.").
Claim Eight, therefore, does not state a violation of any constitutional or federal statutory right; accordingly, defendants are entitled to dismissal of this claim.
2. Whether the Constitutional Rights Plaintiffs Alleges Were Clearly Established
Because plaintiffs have failed to provide any basis for their substantive constitutional claims, the State defendants are all entitled to qualified immunity on that basis without consideration of whether any of the pertinent constitutional rights was established when the alleged violation occurred. Saucier, 533 U.S. at 201 ("If no constitutional right would have been violated were the allegations established, there is no necessity for further inquiries concerning qualified immunity.").
B. Whether Plaintiffs Have Stated a Claim for Conspiracy
Because the State defendants are entitled to dismissal of all of plaintiffs' claims, it is not necessary to address their other substantive arguments, including whether plaintiffs have stated a claim for conspiracy. The State defendants' motion for judgment on the pleadings shall be granted.IV. PLAINTIFFS' MOTION TO SHIFT FEES AND COSTS OF SERVICE DISCUSSION
The court will analyze plaintiffs' request in two parts: against Wynn in his individual capacity and against Wynn in his representative capacity.
A. Costs Against Defendant in his Individual Capacity
Plaintiffs request, pursuant to Fed.R.Civ.P. 4(d), that this court award them the costs they incurred in effecting service on defendant Wynn, a resident of Utah, after he failed to comply with plaintiffs' request to waive service of summons.
On August 4, 2003, plaintiffs' counsel sent Wynn a letter containing a waiver of service form and other ancillary materials in compliance with Fed.R.Civ.P. 4(d)(2) (A-G). Plaintiffs' counsel also sent the materials to Wynn on August 12, 2002, at a different address, because he had not replied to the August 4 request. When Wynn failed to return the waiver form sent to him on August 12th within the time required under Rule 4(d), plaintiffs, on October 2, 2003, effected service on Wynn through the Salt Lake County Sheriff in Salt Lake City, Utah.
Fed.R.Civ.P. 4(d)(2) provides:
If a defendant located within the United States fails to comply with a request for waiver made by a plaintiff located in the United States, the court shall impose the costs subsequently incurred in effecting service on the defendant unless good cause for the failure be shown.
Fed.R.Civ.P. 4(d)(5) provides:
The costs to be imposed on a defendant under paragraph (2) for failure to comply with a request to waive service of summons shall include the costs subsequently incurred in effecting service under subdivision (e), (f), or (h), together with the costs, including a reasonable attorney's fee, of any motion required to collect the costs of service.
Wynn does not contend that good cause justified his failure to comply with the request for waiver. Nor does he deny that he received the forms that were sent to him by plaintiffs' counsel.
Thus, inasmuch as Wynn, in his individual capacity, failed to return plaintiffs' waiver of service form, or otherwise respond to plaintiffs' request for a waiver of service, I find, pursuant to Fed.R.Civ.P. 4(d)(2) and (5), that plaintiffs are entitled to an award of the costs they incurred in effecting service as well as the costs, including reasonable attorneys' fees, of the instant motion. See Bozell Group, Inc. v. Carpet Co-op of America Ass'n, Inc., No. 00 Civ. 1248, 2000 WL 1523282, at *4 (S.D.N.Y. Oct. 11, 2000) (awarding costs of service and a reasonable attorney's fee for preparation of the motion for costs).
Plaintiffs, however, contend that they are also entitled to recoup costs incurred prior to the issuance of a summons. Rule 4(d)(2) expressly provides that only "costs subsequently incurred in effecting service" are recoverable. Fed.R.Civ.P. 4(d)(2) (emphasis added). Accordingly, Wynn is not required to reimburse plaintiffs for the costs of sending the waiver of service forms to him in August 2003.
Based on the plaintiffs' calculations, therefore, plaintiffs are entitled to $52 for effecting service on Wynn via the Salt Lake County Sheriff and an award of the reasonable attorneys' fees incurred to effect service and prepare the instant motion on this issue. Though plaintiffs do not itemize their attorneys' fees for those activities, I conclude on the basis of the pleadings that a reasonable fee for the work would be $1,000. In this manner I seek to compensate plaintiffs for their expenses without further prolonging this dispute and increasing the cost to all concerned.
B. Costs Against Defendant in his Representative Capacity
Plaintiffs also request that this court award them the costs they incurred in sending waiver of service request forms to NABCA and in effecting service on NABCA's counsel in Washington, D.C. Plaintiffs contend that Wynn must pay these costs because he is a defendant in the instant case in his capacity as a representative of NABCA. Wynn, however, contends there is no defendant on which the costs can be shifted because the NABCA is not a party to the instant action.
It is undisputed that plaintiffs have not named NABCA as a defendant. Defendant, therefore, shall not have to bear the costs of plaintiffs' efforts to send waiver of service request forms to NABCA and to effect service on defendant through NABCA, or the costs, including reasonable attorneys' fees, for this portion of plaintiffs' instant motion. See Fed.R.Civ.P. 4(d)(2) ("If a defendant . . . fails to comply with a request for waiver . . . the court shall impose the costs subsequently incurred in effecting service on the defendant . . .") (emphasis added); Fed.R.Civ.P. 4(d)(5) ("The costs to be imposed on a defendant . . . for failure to comply with a request to waive service of summons shall include the costs subsequently incurred in effecting service . . . together with the costs, including a reasonable attorney's fee, of any motion required to collect the costs of service.") (emphasis added).
Thus, plaintiffs are not entitled to recoup fees and costs incurred by plaintiffs' efforts to either send waiver of service request forms or effect service on NABCA.
CONCLUSION
In light of the foregoing, it is herebyORDERED THAT
1) Defendant Kenneth Wynn's motion to dismiss be, and hereby is, granted;
2) Defendants Rae Ann Estep, Pam Laycock, Rodney Isaacson, and Earl Mack's motion to strike be, and hereby is, denied;
3) Defendants Rae Ann Estep, Pam Laycock, Rodney Isaacson, and Earl Mack's motion for judgment on the pleadings be, and hereby is, granted; and
4) Plaintiffs' motion to shift fees and costs of service be, and hereby is, granted in part and denied in part; defendant Kenneth Wynn to pay to plaintiffs $52 for costs, plus attorneys' fees in the amount of $1,000.
The Clerk shall enter judgment accordingly.
So ordered.