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Harrington v. Nebraska Liquor Control Commission

United States District Court, D. Nebraska

February 6, 2015

SHANE HARRINGTON, Plaintiff,
v.
THE NEBRASKA LIQUOR CONTROL COMMISSION, THE CITY OF LINCOLN, NEBRASKA, a Municipal Corporation, and TOM CASADY, JIM PESCHONG, JOHN SPATZ, RUSSELL FOSLER and HOBERT RUPE, individually and in their official capacities as employees of the City of Lincoln and the State of Nebraska, Defendants.

MEMORANDUM AND ORDER

LYLE E. STROM, Senior District Judge.

This matter is before the Court on two motions. Defendants Tom Casady, Jim Peschong, John Spatz, Russell Fosler, and the City of Lincoln filed their motion to dismiss (Filing No. 15) pursuant to Federal Rule of Civil Procedure 12(b)(6) on October 20, 2014. As of the date of this memorandum and order, plaintiff Shane Harrington has not filed a responsive brief and the defendants have not, therefore, filed reply briefs.[1] In lieu of a response, Harrington has filed a motion to amend his complaint a second time (Filing No. 17). After review of the motions, briefs, and relevant case law, the Court finds as follows.

I. BACKGROUND

Harrington is a entrepreneurial citizen of Nebraska who has amassed his wealth through an "internet modeling company" called MelTech, Incorporated ("MelTech"). Filing No. 4, at 1-2, ¶¶ 1-4. MelTech started a website designed to monetize prurient interest. Id. at 2, ¶¶ 3-6. According to Harrington, the website is rather tame; he suggests that it deserves a "G" rating from the Motion Picture Academy. Id. at 2, ¶¶ 3-6.

Following his success in the entertainment industry, Harrington wished to begin a night club in downtown Lincoln and applied for a liquor license. Id. at 3, ¶¶ 10-12. Before the hearing, a member of the Lincoln city council and the Lincoln chief of police both contacted Harrington by e-mail and admonished him that he would not receive the license unless he sold or closed MelTech. Id. at 4, ¶¶ 15-16. During the application process, Harrington understood that the Nebraska Liquor Commission would only investigate facts relating to misdemeanors within the last five years and felonies that Harrington might have on his record. Id. at 3, ¶ 14. The hearing did not proceed as Harrington expected.

Harrington lists the following examples of how he was denied his rights of due process. First, he claims that local law enforcement has harassed him ever since he began MelTech, including audio and video surveillance. Id. at 2-3, ¶¶ 8-9. In fact, the Lincoln Police amassed and compiled a comprehensive file on the activities of Harrington, his friends, and his family over the previous decade. Id. at 2-3, ¶ 9. The complaint refers to this file as "The Book, " which was a term used by someone at the licensing hearing. Id. Second, Tom Casady, former chief of police of Lincoln, testified at the hearing that Harrington's website was illegal, which negatively affected the likelihood of his receiving the permit. Id. at 4-5, ¶¶ 18-21. Third, one of the three commissioners slept through part of the hearing. Id. at 5, ¶ 21. Fourth, Harrington alleges that the Commission barred him from the night club that he had leased. Id. at 5, ¶ 23. Fifth, the named defendants showed 50 nude photographs of Harrington's ex-wife during the hearing. Id. at 6, ¶ 24. Finally, the Commission denied his license which resulted in the failure of the business. Following denial of his liquor license, Harrington sold the night club. Id. at 6, ¶ 27. Harrington contends that the City of Lincoln imposed conditions upon the sale of the business that were unreasonable, such as not allowing Harrington to sell it to any of his associates or family. Id. The hearings occurred on and before May 2011.

Harrington did not appeal the Commission's decision but he now seeks compensatory and punitive damages. Harrington estimates he spent $10, 000 out-of-pocket start-up costs on the failed night club, expended $500, 000 worth of "sweat equity, " lost $1, 500, 000 in expectation damages of night club revenue because of the denial of the license, and lost hundreds of thousands more from diminished sales at MelTech due to damage to Harrington's reputation. Id. at 6, ¶ 28. Harrington asks for $25, 000, 000 in punitive damages. Id.

Harrington brings claims pursuant to 42 U.S.C. §§ 1983 and 1985 for violation of his First, Fourth, Fifth, Ninth, and Fourteenth Amendment rights. Id. at 13, ¶ 65. First, Harrington alleges that he was denied the liquor license for exercising his First Amendment right to operate his website. Id. at 15, ¶ 68-72. Second, Harrington alleges that the liquor license hearing was so outrageous that it denied him his right to Due Process pursuant to the Fifth and Fourteenth Amendments. Id. at 15-16, ¶ 73-81. Third, Harrington alleges that the denial of his liquor license on the basis of his ownership of an adult entertainment website is a violation of Fourteenth Amendment protection of Equal Protection, particularly in relation to others who have received liquor licenses. Id. at 17, ¶ 82-87. Fourth, Harrington alleges that the Book, the events which surround the Book's construction by the Lincoln Police Department, and the unlicensed airing of his ex-wife's nude photos constitute a violation of his right to privacy pursuant to the Fourth, Ninth, and Fourteenth Amendments. Id. at 17-18, ¶ 88-92. Fifth, Harrington asserts Nebraska Revised Statute § 28-926, a criminal violation of "oppression under color of office, " against the defendants. Id. at 18-19, ¶ 93-96. Sixth, Harrington alleges that the liquor license hearing was so outrageous that it constituted "abuse of power" under Nebraska state law. Id. at 19, ¶ 97-102 (citing Gordon v. Community First State Bank, 255 Neb. 637, 587 N.W.2d 343, 351 (1998); Stagemeyer v. County of Dawson, 192 F.Supp.2d 998, 1010 (D. Neb. 2002)).[2] Seventh, Harrington alleges tortious interference with a business relationship. Filing No. 4, at 20-21, at ¶¶ 103-110. Eighth, Harrington alleges defamation of character under Nebraska law. Id. at 21-22, at ¶¶ 111-117. Ninth, Harrington alleges "invasion of privacy." Id. at 22-23, at ¶¶ 118-122. Tenth and finally, Harrington alleges that defendants' actions constitute infliction of emotional distress. Id. at 23, at ¶¶ 123-128.

Harrington filed his complaint (Filing No. 1) on August 20, 2014. Harrington filed an amended complaint (Filing No. 4) on August 21, 2014. There is little difference between these complaints. Compare Filing No. 1 (Pagination and paragraph 64), with Filing No. 4 (Pagination, paragraph 64, and three attachments). Some three months later, during the pendency of the motion to dismiss and after Harrington failed to respond to the defendants' briefs, Harrington filed a motion to file another amended complaint.

II. LEGAL STANDARDS

When determining whether to grant leave to amend a complaint pursuant to Federal Rule of Civil Procedure 15(a)(2), the Court considers undue delay, bad faith, or dilatory motive by plaintiff that results in prejudice to the defendant. Foman v. Davis, 371 U.S. 178 (1962); Jenson v. Cont'l Fin. Corp., 404 F.Supp. 792, 794 (1975). Leave to amend "shall be freely given when justice so requires." Fed.R.Civ.P. 15(a)(2). However, the granting of such a motion is left to the discretion of the Court. Russ v. Ratliff, 578 F.2d 221, 224 (8th Cir. 1958).

The Court has an obligation to consider sua sponte whether it has subject matter jurisdiction over a case. Thomas v. United Steelworkers Local 1938, 743 F.3d 1134, 1139 (8th Cir. 2014). The Court "must raise jurisdictional issues when there is an indication that jurisdiction is lacking, even if the parties concede the issue.'" Id. (quoting Thomas v. Basham, 931 F.2d 521, 523 (8th Cir. 1991)). Suits are subject to dismissal when the Court lacks subject matter jurisdiction to hear the matter. Fed.R.Civ.P. 12(b)(1). The party asserting jurisdiction bears the burden of proving that jurisdiction is proper. Great Rivers Habitat Alliance v. FEMA, 615 F.3d 985, 988 (8th Cir. 2010).

Determining whether a complaint states a plausible claim for relief is "a context-specific task" that requires the court "to draw on its judicial experience and common sense." Id. at 679. Under Twombly, a court considering a motion to dismiss may begin by identifying pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth. Id. Although legal conclusions "can provide the framework of a complaint, they must be supported by factual allegations." Id. Accordingly, the Supreme Court has prescribed a "two-pronged approach" for evaluating Rule 12(b)(6) challenges. Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009). First, a court should divide the allegations between factual and legal allegations; factual allegations should be accepted as true, but legal allegations should be disregarded. Id. Second, the factual allegations must be examined for facial plausibility. Id.

"A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 677 (2007) (stating that the plausibility standard does not require a probability, but asks for more than a sheer possibility that a defendant has acted unlawfully). A court must find "enough factual matter (taken as true) to suggest" that "discovery will reveal evidence" of the elements of the claim. Id. at 558, 556. When the allegations in a complaint, however true, could not raise a claim of ...


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