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Thames v. City of Portland

United States District Court, D. Oregon

October 3, 2017

DONNA THAMES, COLUMBIA BAR & GRILL, INC., an Oregon corporation, dba EXOTICA, Plaintiff,
v.
CITY OF PORTLAND, a municipal corporation; CHARLES HALES; OREGON LIQUOR CONTROL COMMISSION; STEVEN MARKS; JOHN ECKHART; DAVID LUSTER; JEFFREY BELL; SHANNON HOFFEDITZ; DAN MCNEAL; MIKE BOYER; MERLE LINDSEY; MARK KRUGER; AMY ARCHER; JASON TALLMADGE; Defendants.

          ORDER

          MARCO A. HERNÁNDEZ United States District Judge.

         Magistrate Judge Papak issued a Findings & Recommendation [53] on July 7, 2017, in which he recommends that this Court grant in part and deny in part the motions to dismiss or strike brought by City Defendants[1] and OLCC Defendants.[2] Defendants David Luster and Jeffrey Bell are not included in either group of defendants and have not joined the motions presently before the Court. The matter is now before the Court pursuant to 28 U.S.C. § 636(b)(1)(B) and Federal Rule of Civil Procedure 72(b).

         When any party objects to any portion of the Magistrate Judge's Findings & Recommendation (“F&R”), the district court must make a de novo determination of that portion of the Magistrate Judge's report. 28 U.S.C. § 636(b)(1); Dawson v. Marshall, 561 F.3d 930, 932 (9th Cir. 2009); United States v. Reyna-Tapia, 328 F.3d 1114, 1121 (9th Cir. 2003) (en banc).

         City Defendants raise several objections to the F&R. City Defendants argue that: (1) Plaintiffs failed to adequately allege causation for their claims, (2) Plaintiffs failed to adequately allege race-based animus with respect to Defendants Mr. Kruger and Ms. Archer, (3) Defendants Ms. Archer and Mr. Hales are entitled to qualified immunity, and (4) the Court should strike the historical allegations contained in paragraphs 27-30 of the complaint. The Court rejects City Defendants' objections, except that it agrees Defendants Ms. Archer and Mr. Hales are entitled to qualified immunity.

         OLCC Defendants object to the F&R's denial of their motion to dismiss Plaintiffs' Claim 12, alleging intentional interference with economic relations; and Claim 13, alleging intentional infliction of emotional distress. The Court agrees with OLCC Defendants' objections and declines to adopt the F&R as to Claims 12 and 13.

         The Court has also reviewed the pertinent portions of the record de novo and finds no other errors in the Magistrate Judge's F&R.

         I. Causation

         City Defendants object to the F&R's conclusion that Plaintiffs sufficiently alleged that Defendants' behavior caused the damages Plaintiffs suffered due to the Club's closure. Their objections mirror the arguments already put forth and rejected by Magistrate Judge Papak.

         In their motion to dismiss, City Defendants brought a broad challenge to all of Plaintiffs' claims against them, arguing that Plaintiffs failed to allege adequate causation. According to City Defendants, Plaintiffs' injuries and damages arise solely out of the closure of the Club. City Defendants argue that Plaintiffs fail to allege facts plausibly suggesting that the City's investigation, negotiation, or request for a nuisance abatement plan caused Plaintiff Ms. Thames to close her business.

         Magistrate Judge Papak correctly rejected City Defendants' arguments, finding that Plaintiffs' alleged damages include more than just damages caused by the Club's closure. F&R 25, ECF 53. More importantly, Plaintiffs have adequately alleged that Defendants' conduct caused Plaintiff to close the Club. Id. Magistrate Judge Papak provides a detailed recitation of facts alleged in the complaint that, when taken as true, support this conclusion. Id. at 25-28.

         In their objections, City Defendants repeat the assertion that all of Plaintiffs' alleged damages, both non-economic and economic, arise solely out of the closure of the Club. However, City Defendants ignore paragraph 179 of Plaintiffs' Complaint, which is incorporated by reference into all of Plaintiffs' claims for relief:

As a direct and proximate result of Defendants' actions as alleged herein, Plaintiffs have suffered non-economic damages in the form of loss of reputation, bodily harm, emotional and mental distress, degradation, embarrassment, and humiliation for which Plaintiff seeks compensation in an amount to be proved at trial, but no less than $5, 000, 000.

Compl. ¶ 179. Such actions, “as alleged herein, ” include acts preceding the closure of the Club. Plaintiffs make similar allegations regarding economic damages. See Compl. ¶ 178. Thus, City Defendants' objection is unavailing.

         II. Allegations of Race-Based Animus as to Defendants Kruger and Archer

         City Defendants object to Magistrate Judge Papak's conclusion that race-based claims against Defendants Mr. Kruger and Ms. Archer could withstand a motion to dismiss, despite the absence of express allegations that Mr. Kruger or Ms. Archer knew that Plaintiff Ms. Thames is African-American. City Defendants did not seek this relief in their motion to dismiss. Instead, City Defendants sought dismissal of entire claims, not dismissal as to individual defendants. While City Defendants' Reply does state, in the context of seeking dismissal of Plaintiffs' conspiracy claim, that there are no facts alleging that Mr. Kruger or Ms. Archer knew Plaintiff was African-American, their motion to dismiss did not make any argument as to Mr. Kruger's or Ms. Archer's knowledge of Ms. Thames' race. See Delgadillo v. Woodford, 527 F.3d 919, 930 n. 4 (9th Cir. 2008) (holding that reply is not proper place to raise new arguments). The issue of whether all race-based claims against Mr. Kruger and Ms. Archer could proceed was never squarely presented to Magistrate Judge Papak. The Court declines to exercise its discretion to consider such argument at this point. See Brown v. Roe, 279 F.3d 742, 745-46 (9th Cir. 2002) (rejecting the Fourth Circuit's holding that a district court must consider new arguments raised for the first time in an objection to a magistrate judge's F&R); (United States v. Howell, 231 F.3d 615 (9th Cir. 2000) (“[I]t would be fundamentally unfair to permit a litigant to set its case in motion before the magistrate, wait to see which way the wind was blowing, and-having received an unfavorable recommendation-shift gears before the district judge.” (citation omitted)); Olmos v. Ryan, No. CV-11-00344-PHX-GMS, 2013 WL 3199831, at *8 (D. Ariz. June 24, 2013) (“Generally, a district court need not consider new arguments raised for the first time in objections to an R & R.”).[3]

         III. Qualified Immunity for Defendants Archer and Hales

         The Court agrees with City Defendants' objection to Magistrate Judge Papak's conclusion that Defendants Ms. Archer and Mr. Hales are not entitled to qualified immunity.

         In their motion to dismiss, City Defendants argued that Ms. Archer and Mr. Hales were entitled to qualified immunity. As to these two defendants, Plaintiffs bring eight claims:

1. 42 U.S.C. § 1981-Race Discrimination
2. 42 U.S.C. § 1983-14th Amendment Procedural Due Process
3. 42 U.S.C. § 1983-14th Amendment Equal Protection
4. 42 U.S.C. § 1983-First Amendment
5. 42 U.S.C. ยง 1985(3)-Conspiracy to Interfere with ...

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