Plaintiffs response to City of Racine motion to dismiss

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF WISCONSIN

THOMAS J. HOLMES, et al., Plaintiffs, v.

Case No: 14-CV-208

JOHN DICKERT, et al., Defendants.

PLAINTIFFS’ BRIEF IN OPPOSITION TO THE MUNICIPAL DEFENDANTS’ MOTION TO DISMISS

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TABLE OF CONTENTS I. Introduction ............................................................................................................................. 1 II. Legal Standard for a Motion to Dismiss .............................................................................. 3 III. Statement of Facts ................................................................................................................ 5 A. Defining the Conspiracy: “Cleaning up” Downtown Racine ...................................... 5 B. The Discriminatory Process ......................................................................................... 6 C. The Quid Pro Quo ........................................................................................................ 7 IV. RICO Argument ................................................................................................................... 8 A. Plaintiffs sufficiently plead predicate acts against the Municipal Defendants ............ 8 1. Plaintiffs are not required to specify the particular statutes violated by Defendants ........................................................................................................ 8 2. Predicate acts under the Federal RICO Act .....................................................10 a. Extortion as a predicate act under the Hobbs Act ................................10 i. The Cruise Inn ..........................................................................12 ii. Viper’s Lounge ........................................................................13 iii. Ginger’s Lounge .....................................................................13 iv. The Place on 6th .....................................................................14 v. Park 6 .......................................................................................15 vi. Summary of extortion under the Hobbs Act ...........................16 b. Extortion as a predicate act under Wisconsin law ...............................16 c. Debunking the Municipal Defendants’ extortion arguments ...............17 d. Bribery and Receipt of an Unlawful Gratuity as predicate acts...........18 e. Money Laundering as a predicate act...................................................22 3. Predicate acts under the Wisconsin Organized Crime Control Act .................23 a. Official Misconduct as a predicate act .................................................23 i. Campaign finance law offenses ...............................................24 ii. Official duty violations ............................................................25 iii. Wisconsin’s Official Misconduct statute ................................27 4. Plaintiffs’ alternative request for leave to amend ............................................31 B. Plaintiffs sufficiently plead a pattern of racketeering activity under RICO ................31 1. Plaintiffs have sufficiently pleaded closed-ended continuity ..........................32 2. Plaintiffs have sufficiently pleaded open-ended continuity .............................35 i Case 2:14-cv-00208-JPS Filed 06/27/14 Page 2 of 53 Document 45

3. Plaintiffs’ alternative request for leave to amend ............................................ 36 C. Plaintiffs have standing and sufficiently plead causes of action under §1962. ............ 36 1. Plaintiffs plead multiple predicate acts against each Defendant ....................... 36 2. Plaintiffs plead proximate cause between predicate acts and their injuries ...... 39 3. Plaintiffs state a claim under § 1962(d) ............................................................ 40 4. Plaintiffs dismiss individually named defendants in their “official capacity” . 41 5. Plaintiffs’ alternative request for leave to amend ............................................. 42 V. Civil Rights Argument ........................................................................................................... 42 A. Plaintiffs have “standing” ............................................................................................ 42 B. Plaintiffs dismiss the “official capacity” claims against certain defendants ................ 43 C. The Maldonados’ claims are not barred by the statute of limitations .......................... 43 D. Plaintiffs have alleged “personal involvement” by all defendants .............................. 45 E. Quasi-judicial immunity applies only to the Licensing Committee’s revocation and non-renewal decisions .................................................................................................. 48 F. Defendants Maack and Wisneski are not entitled to dismissal of all plaintiffs ........... 49 VI. Conclusion ............................................................................................................................. 50

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UNITED STATES DISTRICT COURT EASTERN DISTRICT OF WISCONSIN

THOMAS J. HOLMES, et al., Plaintiffs, v.

Case No: 14-CV-208

JOHN DICKERT, et al., Defendants.

PLAINTIFFS’ BRIEF IN OPPOSITION TO THE MUNICIPAL DEFENDANTS’ MOTION TO DISMISS

In opposition to the Rule 12(b)(6) motion brought by the Municipal Defendants (hereinafter “Defendants”) (Doc. Nos. 25 and 26), Plaintiffs submit as follows: I. Introduction: Defendants’ pleading motion raises a number of issues, none of which defeat the sum and substance of Plaintiffs’ claims. Defendants do not, and cannot, take issue with the sufficiency of the allegations supporting Plaintiffs’ Sections 1983 and 1985 claims—namely that there was a pattern and practice of racial discrimination against minority bar owners in the City of Racine in violation of Plaintiffs’ civil rights. Instead, Defendants focus on Plaintiffs’ Civil RICO allegations, contending that Plaintiffs’ Complaint does not sufficiently plead a pattern of racketeering conduct and amounts to nothing more than “an incredible tale of far-reaching conspiracy and political intrigue…” Def. Mem. at 1. If a near decade-long pattern of extorting “side agreements” and liquor licenses from minority business owners and then handing them over to white members of the Tavern League who have bribed the Mayor through illegal cash donations cannot support a pattern of racketeering activity under the Civil RICO statute, then

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nothing can. The fact that Defendants’ racketeering activity was motivated by racial animus, in addition to greed, does not take it out of the realm of Civil RICO—it simply makes it worse.

The details of the civil rights violations suffered by Plaintiffs, along with the pattern of racketeering activity engaged in by Defendants, are set forth in the Complaint and need not be entirely repeated here. However, it bears mentioning that Defendants grossly mischaracterize Plaintiffs’ Complaint by paraphrasing the allegations in such a way to “water down” the facts.

For instance, Defendants try to box Plaintiffs into what Defendants describe as “Liquor License Acts” and “Campaign Acts.” What they choose to ignore, however, is that the conduct is interrelated. Plaintiffs’ theory is both linear and logical: 

Defendants desired to “clean up” downtown Racine by eliminating minorityowned bars frequented by minority clientele.



In order to accomplish their objective, Defendants pressured minority bar owners by coercing them to enter into expensive “side agreements” and, ultimately, forcing them to either relinquish or lose their liquor licenses.



Defendants’ conduct violated Plaintiffs’ civil rights because similarly situated white bar owners were not subject to the same treatment.



In addition, Defendants’ coercive tactics amounted to extortion, which is a predicate act under the Civil RICO statute.



Consistent with their goal of ridding downtown Racine of minority bars, once Defendants successfully seized the liquor licenses from minority bar owners they re-distributed them to white bar owners.



To make sure whites—and not minorities—were given the newly available liquor licenses, white members of the Racine City Tavern League bribed Mayor Dickert through illegal donations.



Mayor Dickert and his staff laundered the money and then obliged on the bribe by not only protecting white-owned bars from licensing scrutiny, but by making the licenses seized from minorities available to white members of the Tavern League.

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Defendants’ plan was successful as today there are no minority-owned bars in downtown Racine. By its very nature, the conspiracy continues to date. In order to accomplish Defendants’ objective of keeping minority-owned bars out of downtown Racine, white-owned bars continue to be protected from scrutiny and minority owners continue to be locked out from Racine’s liquor licenses.

II. Legal Standard for a Motion to Dismiss: When reviewing a motion to dismiss brought under Rule 12(b)(6), the court must “construe the…[c]omplaint in the light most favorable to Plaintiff, accepting as true all wellpleaded facts and drawing all possible inferences in his favor.” Cole v. Milwaukee Area Tech.

Coll.. 634 F.3d 901, 903 (7th Cir. 2011). Analysis under a Rule 12(b)(6) motion does not involve assessment of the merits of the suit, but rather the sufficiency of the complaint. Gibson v. City of Chicago, 910 F.2d 1510, 1520 (7th Cir. 1990) (citations omitted).

Notwithstanding Defendants’ effort to inflate the pleading requirements, the federal “system operates on a notice pleading standard; Twombly and its progeny do not change this fact.” See Bissessur v. Ind. Univ. Bd. of Trustees, 581 F.3d 599, 603 (7th Cir. 2009); see also generally Smith v. Duffey, 576 F.3d 336, 339–40 (7th Cir. 2009) (noting courts’ over reliance on Twombly). In other words, the “big difference between notice and code pleading” is that complaints brought in federal court “need not spell out every element of a legal theory.”

Hemenway v. Peabody Coal Co., 159 F.3d 255, 261 (7th Cir. 1998). In fact, plaintiffs need only provide “fair notice of what the…claim is and the grounds upon which it rests.” Bell Atl. Corp. v.

Twombly, 550 U.S. 544, 555 (2007). “[D]etailed factual allegations” are not required. Twombly, 550 U.S. at 555. Rather, Rule 8(a)(2) requires only a “short and plain statement of the claim showing that the pleader is entitled to relief.” Ashcroft v. Iqbal, 556 U.S. 662, 663 (2009).

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Moreover, this Court should be mindful that conspiracies—such as the one Plaintiffs allege here—are “secret by their very nature.” United States v. Scarbrough, 990 F.2d 296, 299 (7th Cir. 1993); see also Schiffels v. Kemper Fin. Servs., Inc., No. 91 C 1735, 1993 WL 153850, at *14, n.14 (N.D. Ill. 1993) (“It goes without saying that conspiracies are secret operations”). In the case of a conspiracy, “the proof is largely in the hands of the alleged conspirators.” Poller v.

Columbia Broad Sys., Inc., 368 U.S. 464, 473 (1962). In such circumstances, “direct allegations of conspiracy are not always possible given the secret nature of conspiracies. Nor are direct allegations necessary.” In re Graphics Processing Units Antitrust Litig., 540 F.Supp.2d 1085, 1096 (N.D. Cal. 2007). As noted by legal scholars Wright and Miller: The federal courts have recognized that the nature of conspiracies often makes it impossible for the plaintiff to provide details at the pleading stage and that the pleader should be allowed to resort to the discovery process and not be subjected to a dismissal of his complaint.

Charles Alan Wright & Arthur Miller, Federal Practice and Procedure, Rule 8: General Rules of Pleading, 5 Fed. Prac. & Proc. Civ. § 1233 (3d ed.) (Updated 2014).

Even when Rule 9(b)’s heightened pleading requirement is implicated, factual details beyond a plaintiff’s knowledge without the opportunity for discovery are not required. Rule 9(b) “does not require absolute particularity or a recital of the evidence, especially when some matters are beyond the knowledge of the pleader and can only be developed through discovery.” Id. at § 1298 (emphasis added); see also U.S. ex rel. Themmes v. Hamilton Enters., Inc., No. 04-C-700, 2005 WL 1268784 at *6 (E.D. Wis. May 26, 2005) (the “particularity requirement of Rule 9(b) must be relaxed where the plaintiff lacks access to all facts necessary to detail his claim”).

Indeed, “Rule 9(b) is satisfied by a showing that further particulars of the alleged fraud could not have been obtained without discovery.” Emery v. Am. Gen. Fin., Inc., 134 F.3d 1321, 1323 (7th Cir. 1998).

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In the present matter, Defendants both exaggerate the pleading standard and grossly mischaracterize the level of detail set forth in Plaintiffs’ Complaint. Plaintiffs have alleged over 130 paragraphs of facts graphically detailing the discriminatory practices and pattern of racketeering activity engaged in by Defendants. Consistent with federal pleading requirements, Plaintiffs do not have to set forth all evidence that will be presented at trial—especially when the finer details of the conspiracy at issue are uniquely known by Defendants. It is simply unfair (and unseemly) for these Defendants—who intentionally kept their conduct and motivations a secret—to complain that Plaintiffs have not adequately pled the details of their clandestine operation. Courts addressing this very issue have consistently held that defendants cannot hide behind walls they intentionally created. In such circumstances, plaintiffs are entitled to discovery and a complaint should not be dismissed at the pleading stage. This is especially true here, where Plaintiffs’ Complaint is replete with detail and undoubtedly places Defendants on “fair notice of the claim.” Twombly, 550 U.S. at 555.

III. Statement of Facts: A. Defining the Conspiracy: “Cleaning up” Downtown Racine The conspiracy at issue centers on Defendants’ common desire to get rid of minorityowned bars from downtown Racine. Defendants’ conspiracy is motivated by animus and racism—specifically, their collective belief that “cleaning up” and “rehabilitating” downtown Racine requires the elimination of minority-owned bars. ¶ 3.1 In order to effectuate their scheme, Defendants have engaged in a long-standing and continuing practice of discrimination against minority bar owners. In particular, Defendants have continually driven minority bars out of business by coercing them to enter into expensive side agreements and, ultimately, forcing them to give up or lose their liquor licenses.

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All factual citations within this brief are to Plaintiffs’ Complaint, Docket No. 1.

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But extorting side agreements and liquor licenses from minorities is just the first step in the process. In order to truly solidify Defendants’ collective goal of “cleaning up” downtown Racine, the liquor licenses once held by minorities must be re-distributed to white bar owners and kept out of the hands of minorities. This exchange, or quid pro quo, is essential to accomplishing Defendants’ goal of keeping minority-owned bars out of downtown Racine.

B. The Discriminatory Process As mentioned above, the scheme implemented by Defendants to eliminate minorityowned bars from downtown Racine involves the extortion of side agreements and liquor licenses.

It is a multi-faceted scheme with a common objective.

As an initial obstacle, the Licensing Committee—the municipal body charged with hearing all alcohol licensing matters—has systematically imposed heightened burdens on minority-owned bars to obtain a liquor license in the first instance. ¶¶ 16(c), 46. Then, in the event minority-owned bars manage to obtain a liquor license, they are routinely targeted based on race and called in to defend themselves before the Licensing Committee.2 ¶¶ 47, 59-60. At that point, under the threat of license revocation, minority bar owners are coerced into entering “side agreements.” ¶ 48. Such extortionate side agreements disrupt the business of minority bars and force minority owners hoping to keep their liquor licenses to spend significant money to, for example, hire off-duty security, install video security, purchase ID scanners, institute dress codes, implement music restrictions, install metal detectors and additional lighting, and even donate to local charitable groups chosen by the City. ¶ 49. Although similar or worse incidents

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The statistics support Plaintiffs’ allegations. Although police calls to minority-owned bars were markedly lower than calls to white-owned bars, minority bar owners were called before the Licensing Committee almost twice as many times as white bar owners between 2006 and June 2013. ¶ 58.

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routinely occur at white-owned bars, white owners are rarely called before the Licensing Committee, and even more rarely forced to enter into side agreements. ¶ 48.

In the event a minority bar owner capitulates to a side agreement (as opposed to simply giving up their license), the next step in Defendants’ scheme to divest minorities of their liquor licenses is to send them to a “due process hearing,” generally under the pretext of continuing incidents or a purported failure to comply with the side agreement. Nearly all minority-owned bars faced with a due process hearing leave with their license recommended for suspension or revocation. ¶ 54. At that point, the minority bar owners either give up and surrender their license or wait for the Licensing Committee to inevitably revoke or not renew their license. ¶ 56. Even though similar or worse incidents occur at white-owned bars, none have surrendered their licenses or had their licenses suspended, revoked or not renewed by the City. ¶ 57.

C. The Quid Pro Quo In order to fully and forever eliminate minority bars from downtown Racine, the liquor licenses previously held by minorities have been given to white bar owners. The Tavern League is an organization almost exclusively comprised of white bar owners. ¶ 20. Certain members of the Tavern League, most notably Joey LeGath and Doug Nicholson, illegally funded Mayor Dickert’s office with cash, or bribe money, in excess of campaign contribution limits. ¶ 41.

Dickert’s office, in turn, fraudulently reported these unlawful cash receipts in campaign finance reports, thereby disguising the nature and source of the bribe money. ¶ 41. In exchange for the bribe money, Dickert, acting with other members of the municipality including the Alderpersons, Police Department, Downtown Racine Corporation and BID #1 Board Members, have not only protected white-owned bars from licensing scrutiny, but have given the liquor licenses extorted from minorities to white members of the Tavern League. ¶ 44. In addition, Dickert also rewarded

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many Tavern League contributors with influential governmental positions or City-funded business. ¶ 41.

This quid-pro-quo relationship wherein Dickert accepted bribes from Tavern League members persisted after Dickert’s election in 2009, into his re-election in 2011, and likely continues today. ¶ 43. Indeed, Dickert keeps up his end of the bargain by continuing to prevent minority bar owners from obtaining and/or maintaining liquor licenses, and thereby ensuring that Tavern League members keep their respective liquor licenses. ¶¶ 43-44. Dickert effectuates this scheme in conjunction with the Municipal Defendants—all of whom also benefit from this conspiracy to drive minority bars out of Racine. ¶ 44.

IV. RICO Argument: A. Plaintiffs sufficiently plead predicate acts against the Municipal Defendants Defendants attempt to diminish the predicate acts supporting Plaintiffs’ Civil RICO counts by separately referring to them as either “Liquor License Acts” or “Campaign Acts.” This characterization, however, is far too limiting because, as discussed above, Defendants’ conduct is interrelated and cannot be casually compartmentalized. By the same token, Defendants improperly attempt to limit the predicate acts at issue to extortion under the federal extortion statute, 18 U.S.C. § 1951, and bribery under the Wisconsin bribery statute, Wis. Stat. § 946.10.

The facts set forth in Plaintiffs’ Complaint, however, not only adequately plead predicate acts under those two statutes, but they also support predicate acts under a number of additional laws.

1. Plaintiffs are not required to specify the particular statutes violated by Defendants As an initial matter, Plaintiffs are not required to list in the Complaint each and every statute and subsection that, if violated, constitutes a predicate act. See Def. Mem. at 11. Under the notice pleading standard, a plaintiff is not required to plead legal theories or cite to specific 8

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statutes. Nat’l Accident Ins. Underwriters, Inc. v. Citibank, F.S.B., 243 F. Supp. 2d 763, 765 (N.D. Ill. 2002) (citing Slaney v. The Int’l Amateur Athletic Fed’n, 244 F.3d 580, 600 (7th Cir. 2001)). “Instead of asking whether the complaint points to the appropriate statute, a court should ask whether relief is possible under any set of facts that could be established consistent with the allegations.” Bartholet v. Reishauer A.G. (Zurich), 953 F.2d 1073, 1078 (7th Cir. 1992); see Wisc. Bell, Inc. v. MCIMETRO Access Transmission Servs., Inc., 218 F.R.D. 616, 618 (E.D. Wis. 2002) (citing Goren v. New Vision Int’l, Inc., 156 F.3d 721, 730, n.8 (7th Cir. 1998)) (a complaint’s citation of one statutory subsection does not preclude reliance upon another subsection not cited).3 Beyond this threshhold matter, Plaintiffs have specifically alleged sufficient facts to plead a multitude of predicate acts as defined by 18 U.S.C. § 1961(1) and Wis. Stat. § 946.82, Wisconsin’s state RICO act (“WOCCA”), including, but not limited to, violations of the following federal and state crimes:          

Extortion in violation of the federal extortion statute, 18 U.S.C. § 1951(b); Extortion in violation of the Wisconsin extortion statute, Wis. Stat. 943.30; Bribery in violation of the federal bribery statute, 18 U.S.C. § 201(b); Bribery in violation of the Wisconsin bribery statute, Wis. Stat. 946.10; Receiving an unlawful gratuity in violation of federal law, 18 U.S.C. § 201(c); Receiving an unlawful gratuity in violation of Wisconsin law, Wis. Stat. 11.25(1); Official misconduct in violation of Wisconsin law, Wis. Stat. 946.12; False swearing in violation of Wisconsin law, Wis. Stat. 946.32(1)(a); Honest services fraud in violation of federal law, 18 U.S.C. § 1346; and Money laundering in violation of federal law, 18 U.S.C. § 1956(a)(1)(B)(i)

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Should this Court decide otherwise and require Plaintiffs to identify each and every statute violated by Defendants’ conduct, Plaintiffs can easily amend to do so.

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2. Predicate Acts Under the Federal RICO Act All RICO claims, with the exception of a claim under 18 U.S.C. § 1962(d), require a plaintiff to plead a “pattern of racketeering activity.” 18 U.S.C. § 1962. A “pattern of racketeering activity” requires at least two acts occurring within 10 years of each other. 18 U.S.C. § 1961(5). An act of racketeering activity, also known as a “predicate act,” is any action indictable under specific federal statutes, as well as “any act or threat involving murder, kidnaping, gambling, arson, robbery, bribery, extortion, dealing in obscene matter, or dealing in a controlled substance or listed chemical…which is chargeable under State law and punishable by imprisonment for more than one year.” 18 U.S.C. § 1961(1). Here, Plaintiffs have adequately alleged numerous separate predicate acts including, but not limited to, extortion, bribery, money laundering, and violations of Wisconsin’s official misconduct statute. a. Extortion as a predicate act under the Hobbs Act The crime of extortion under federal law, which is codified by the Hobbs Act, occurs when anyone “in any way or degree obstructs, delays, or affects commerce…by extortion or attempts or conspires to do so.” 18 U.S.C. § 1951(a). There are three elements of the crime of extortion under the Hobbs Act: (1) the defendant induces another to part consensually with property; (2) through the wrongful use of actual or threatened force, violence, or fear, or under color of official right; (3) which affects interstate commerce in any way or degree. 18 U.S.C. § 1951(a).

With respect to the first element, the term “property” is defined broadly under the Hobbs Act and includes both tangle and intangible forms of property (such as property rights). Nat’l Org. for Women, Inc. v. Scheidler, 897 F.Supp. 1047, 1072 (N.D. Ill. 1995) (“NOW II”) (citing Town of West Hartford v. Operation Rescue, 915 F.2d 92, 101 (2d Cir. 1990)). “The concept of

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property under the Hobbs Act…includes, in a broad sense, any valuable right considered as a source or element of wealth and does not depend on a direct benefit being conferred upon the person who obtains the property.” United States v. Tropiano, 418 F.2d 1069, 1075–76 (2d Cir. 1969) (citations omitted). For example, the right to conduct a lawful business, including the right to solicit business, constitutes “property” for purposes of the Hobbs Act. NOW II, 897 F.Supp. at 1073 (citing Tropiano, 418 F.2d at 1076); see also Sekhar v. United States, 133 S.Ct. 2720, 2725, n.2 (2013) (“Obtaining ‘goodwill and customer revenues’ by threatening a market competitor [may also] be considered “obtaining property from another.”).

With respect to the second element, the requirement that the wrongful conduct be “under color of official right” requires a plaintiff to plead a quid pro quo, i.e., that the public official received a benefit or thing of value in return for his agreement to perform specific official acts.

Evans v. United States, 504 U.S. 255, 268 (1992). Importantly, there is no requirement that extortion under “color of official right” begin with the public official. Id. at 265. Rather, “wrongful acceptance of a bribe by a public official establishes all the inducement that the statute requires [because] the coercive element is provided by the public office itself.” Id. at 266. When the official receives a benefit in exchange for his or her agreement to perform an official act, the offense is completed. Id. at 268.

Additionally, the second element of extortion under the Hobbs Act can be satisfied by pleading fear of economic harm. United States v. Crockett, 979 F.2d 1204, 1212 (7th Cir. 1992) (citing United States v. Lisinski, 728 F.2d 887, 890 (7th Cir. 1984)) (“This circuit and others have long recognized that the term ‘fear’ in the Hobbs Act includes fear of economic harm or loss.”). This concept is established by showing that the defendant preyed upon or exploited the victim’s fear of economic harm. See United States v. Nedza, 880 F.2d 896, 902 (7th Cir. 1989);

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Lisinski, 728 F.2d at 890 (fear that loss of liquor license would put the victim’s restaurant out of business was sufficient even though the defendant did not create the vulnerable position in which victim found himself); see also United States v. Crowley, 504 F.2d 992, 996 (7th Cir. 1974).

Here, Plaintiffs have alleged sufficient facts in the Complaint to adequately plead the first two elements of extortion under 18 U.S.C § 1951 (and Defendants do not question the third element—that their extortionate acts affected interstate commerce). Regarding the first element, Plaintiffs allege numerous instances where Defendants—either through fear of economic loss resulting from the suspension and/or revocation of their liquor licenses or under color of official right—induced Plaintiffs to part consensually with the property in the form of land, liquor licenses and money. Importantly, all of those acts were done in furtherance of Defendants’ conspiracy to eliminate minority-owned bars from downtown Racine. i. The Cruise Inn: the Maldonados, gave up their business and land under the color of official right and threat of economic loss The Maldonados were minority bar owners who owned The Cruise Inn and an adjoining piece of property since 2001. From 2001 to 2006, no one from the Police Department, the Licensing Committee, the Common Council, or the Mayor’s office paid any attention to the Maldonados or The Cruise Inn. However, in 2006—as the area became developed and, consequently, more valuable—the City suddenly grew interested in obtaining their piece of land.

At that point, Mayor Gary Becker, the Common Council, the Licensing Committee, members of the Police Department and other City officials conspired to shut down the Cruise Inn and force the Maldonados to sell their property. Mayor Becker instructed Jose Maldonado to sell his property and threatened that the Licensing Committee, under color of official right, would revoke his liquor license if he failed to comply. Thereafter, other City officials threatened Maria Maldonado, warning that she was in “deep trouble.” It was at that time the City began arbitrarily 12

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fining the Maldonados for so-called “offenses” such as weeds and chipped paint. And, despite the fact that there were almost no altercations or police activity at the Cruise Inn since it opened for business, the Common Council suddenly summoned the Maldonados to a due process hearing. In the face of threats from City officials and the inevitable revocation of their liquor license, the Maldonados reluctantly succumbed to the City’s demands, closed The Cruise Inn and agreed to sell their parcels of land. ¶¶ 91-96. ii. Viper’s Lounge: Wilber Jones was forced to enter into an expensive side agreement under the color of official right and threat of economic loss Wilber Jones, a minority bar owner, owned Viper’s Lounge since 1998. The bar was predominantly frequented by minority patrons. In all of its years of operation, Viper’s Lounge never had any shootings or violent crimes associated with its business and the vast majority of instances reported there involved nuisances such as noise complaints and crowd control.

Nonetheless, under the threat of license revocation and as part of a “side agreement,” the City forced Jones to incur significant costs hiring off-duty Police Department officers, even though Jones hired his own private security. Despite the complete absence of violence at the bar, Viper’s was repeatedly harassed by the Licensing Committee and continuously called to appear before it for either minor incidents or occurrences off-site, thereby disrupting its business. Alderman Kaplan campaigned on a promise to put Viper’s out of business and, ultimately, the Licensing Committee, along with Kaplan, voted for non-renewal of Viper’s liquor license in 2008. ¶¶ 101105. iii. Ginger’s Lounge: Pythanphone Khampane and Omjai Neuakeaw gave up their business and were forced to enter into expensive side agreements under the color of official right and threat of economic loss Plaintiffs Pythanphone Khampane and Omjai Neuakeaw, minority bar owners, owned and operated Ginger’s Lounge, which was frequented by minority patrons. In 2009, under the 13

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threat of license suspension and/or revocation, Ginger’s Lounge entered into a side agreement with the Licensing Committee. The side agreement, which required Ginger’s to employ additional security guards, limit capacity, purchase surveillance cameras, purchase ID card scanners and limit the business’ hours of operation, cost Ginger’s in excess of $10,000 and interfered with business operations. Notwithstanding, Ginger’s was called before the Licensing Committee and subsequently referred to a due process hearing. Immediately before the hearing, the owners and their attorney were informed by Alderman Wisneski and the City’s attorneys that Ginger’s could maintain its liquor license if it ceased playing “hip-hop” music and changed its patrons. Despite the many attempts to assuage the Licensing Committee, including Ginger’s zero tolerance policy for disruptive behavior and the more than $10,000 in security-related expenses it incurred, the Licensing Committee recommended that the Common Council revoke Ginger’s liquor license. Rather than incur additional expenses to challenge the Licensing Committee’s decision, Ginger’s surrendered its liquor license following the due process hearing. ¶¶ 106-11. iv. The Place on 6th: Keith Fair was forced to enter into an expensive side agreement under the color of official right and threat of economic loss The Place on 6th, a minority-owned bar largely frequented by minority patrons, was called before the Licensing Committee on 19 separate occasions for minor and non-violent incidents. Notably, many of those incidents were falsely reported to the Police Department by neighbors who were bribed by Defendants.4 Under threat of a due process hearing in 2011, Fair entered into a side agreement with the Licensing Committee requiring him to double the number of security cameras, increase the minimum age of entry to 25, and suspend the bar’s operation

4

For example, Mark Levine, Chairman of BID #1, posted a rental listing for an apartment at 507 6th Street, which is located next door to The Place On 6th and across the street from Park 6. The ad stated “special discount available – discuss after showing.” In August 2011, two potential tenants met with Levine to discuss renting this apartment and were told by Levine that the discount was contingent on their agreement to complain about The Place On 6th and Park 6. ¶ 113.

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for 15 days—an agreement which both cost money and disrupted his right to conduct business.

Despite Fair’s cooperation and decision to enter into a side agreement, he was called before the Licensing Committee after a fight occurred at the bar. The Common Council revoked Fair’s liquor license upon the recommendation of the Licensing Committee. ¶¶ 112-117. v. Park 6: Thomas Holmes gave up his business and was forced to enter into expensive side agreements under the color of official right and threat of economic loss Thomas Holmes, a minority bar owner, owned and operated Park 6, which was predominantly frequented by minority patrons. Holmes was repeatedly harassed by the Licensing Committee. Although the incidents that occurred at Park 6 were no different in nature or frequency than those at any other bar in downtown Racine, Holmes and Park 6 were summoned before the Licensing Committee on numerous occasions, were forced to enter into numerous costly side agreements, and were subjected to three due process hearings in three and a half years of operation. The side agreements forced upon Park 6 contained unprecedented and disruptive conditions such as requiring constant video surveillance, early closures, monitoring of decibel levels and use of identification scanners. In addition, the Police Department and the Downtown Racine Corporation purchased two cameras (totaling $10,000) and aimed them exclusively at Park 6 so the City could constantly monitor their activity.

On December 8, 2010, Police Chief Wahlen—as a resident, not as a police chief—filed a complaint with the Licensing Committee requesting Park 6 be brought in for a due process hearing. At the hearing, Wahlen admitted he did not properly swear to the complaint, but nevertheless, the Common Council voted to revoke Park 6’s liquor license. Holmes appealed the decision and the Racine County Circuit Court enjoined the City from enforcing the revocation.

Determined to put Park 6 out of business, the Licensing Committee then convened a “special

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meeting” at which it voted against renewal of Park 6’s liquor license. To appease the Licensing Committee and avoid having his liquor license revoked, Holmes entered into yet another costly side agreement with the City, while the City, behind Holmes’ back, appealed the circuit court’s injunction. In the face of mounting costs due to side agreements with the Licensing Committee and fighting the City’s appeal, not to mention the prospect of future side agreements and due process hearings, Holmes threw in the towel and closed Park 6. ¶¶ 118-130. vi. Summary of extortion under the Hobbs Act As described above, Plaintiffs allege they were forced by Defendants to voluntarily part with their property in the form of money, the goodwill and patronage of their customers, the right to conduct a business, and their actual liquor licenses. In each instance, Plaintiffs parted with their property as a result of actions of the Mayors, the Licensing Committee, the Common Council, the Aldermen, the Police Department and other Municipal Defendants, both through fear of economic loss and under the color of official right.5 The predicate acts for extortion under the Hobbs Act are therefore well-pled in the Complaint. b. Extortion as a predicate act under Wisconsin law Likewise, Plaintiffs have also sufficiently pled extortion under Wisconsin law. Wis. Stat. § 943.30 defines extortion as: Whoever, either verbally or by any written or printed communication, maliciously threatens to accuse or accuses another of any crime or offense, or threatens or commits any injury to the person, property, business, profession, calling or trade, or the profits and income of any business, profession, calling or trade of another, with intent thereby to extort money or any pecuniary advantage whatever, or with intent to compel the person so threatened to do any act against the person’s will or omit to do any lawful act, is guilty of a Class H felony.

5

Conspiring to extortion is a crime and predicate act. See 18 U.S.C. § 1951(a).

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Wisconsin’s extortion statute eliminates the “consent” requirement of the Hobbs Act; it is therefore easier to establish extortion under Wisconsin law than under its federal counterpart.

Further, Wisconsin law does not require the receipt of property by a defendant to be proven in order to establish an extortion offense. NOW II, 897 F.Supp. at 1080; see also State v. Dauer, 174 Wis. 2d 418, 432-33, 497 N.W.2d 766 (Wis. Ct. App. 1993) (“[E]xtortion may [] be committed if no property or money is transferred, but the victim is coerced to do something against his or her will.”).

The above described acts against Plaintiffs all meet the pleading requirement for extortion under Wis. Stat. § 943.30 (see Sect. III(A)(3)(a)(i-vi), supra). In addition, to the extent that Plaintiff Cerafin Davalos, as owner of Cera’s Tequila Bar, may not have been forced into a side agreement and did not voluntarily relinquish his liquor license, he was wrongfully and maliciously accused of an offense with the improper intent of seizing his liquor license. In particular, the Police Department, the Common Council, the Licensing Committee and other City officials blamed Cera’s Tequila Bar for a homicide that did not occur on its premises. Because of this, Cera’s was called before the Licensing Committee for a due process hearing and ultimately, lost its liquor license. ¶¶ 97-100. c. Debunking the Municipal Defendants’ extortion arguments Defendants have “cherry-picked” allegations and simply ignored others to argue that Plaintiffs have failed to sufficiently plead extortion. For example, Defendants mistakenly contend that certain Plaintiffs—the owners Cera’s Tequila Bar, Viper’s Lounge and The Place on 6th—cannot plead extortion under federal law because they did not consent to surrendering their liquor licenses. Def. Mem. at 17-18. Defendants are wrong, primarily because they take a myopic view of the facts and, more specifically, the definition of “property.”

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As noted above, the definition of “property” under the Hobbs Act is expansive—it encompasses money and it encompasses the right to do business. The Complaint here alleges numerous instances when Plaintiffs consented, through fear of economic loss and under color of official right, to consensually enter into side agreements. These extortionate side agreements not only required Plaintiffs to part with property in the form of money, but they interfered with Plaintiffs’ right to do business. Thus, contrary to Defendants’ argument, the Complaint alleges facts sufficient to satisfy the “consent” prong of Hobbs Act extortion as to each individual Plaintiff. Equally important is the fact that Wisconsin’s extortion statute, Wis. Stat. 943.30, does not require consent as an element. Defendants’ argument, therefore, fails for this reason alone.

Next, Defendants argue that the sole beneficiary of the extortionate acts was the government and not the individual defendants. The allegations in Plaintiffs’ Complaint, however, clearly support the reasonable inference that Defendants stood to gain financially, and otherwise, from their extortionate acts. Importantly, the Seventh Circuit has noted that “[t]he Hobbs Act…does not require that the Defendant profit economically from the extortion.” Nat’l Org. for Women, Inc. v. Scheidler, 968 F.2d 612, 630, n.17 (7th Cir. 1992) (“NOW I”) (citations omitted).

Nor does the Hobbs Act require that the perpetrator of an extortionate act receive the benefit of his or her act. Town of W. Hartford v. Operation Rescue, 915 F.2d 92, 101 (2d Cir. 1990) (citing United States v. Clemente, 640 F.2d 1069, 1079–80 (2d Cir. 1981)) (“[W]hether a Hobbs Act defendant personally receives any benefit from his alleged extortion is largely irrelevant for the purpose of determining guilt under that Act.”), cert. denied, 454 U.S. 820, 102 S.Ct. 102 (1981). Extortion under the Hobbs Act focuses, instead, on the loss to the victim. NOW II, 897 F.Supp. at 1073.

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Accepting as true all well-pleaded facts and reasonable inferences therefrom, Plaintiffs have alleged individual, personal benefits to all Defendants involved: In return for the Tavern League’s legal and illegal financial contributions, Dickert conspired with Alderpersons, Police Department officials, the Downtown Racine Corporation, BID #1 Board members, and business and property owners to prevent minority bar owners from obtaining and/or maintaining their liquor licenses and to ensure white Tavern League members kept their respective liquor licenses. Once these licenses were revoked or surrendered by the minority bar owners, the licenses became available to the white members of the Tavern League. This quid pro quo relationship between Dickert and the Tavern League benefited Dickert in that it furthered his campaign promise of “revitalizing” and “cleaning up” the downtown area and secured him financial support. Meanwhile, the white Tavern League members were not only protected from Police Department and Licensing Committee scrutiny, but also gained access to the limited number of liquor licenses available in Racine. The Defendant Aldermen, in turn, claimed a “tough on crime” stance with their respective constituents, and the white-owned business and property owners represented by the Downtown Racine Corporation financially benefited by maintaining control of what businesses could or could not operate in downtown Racine. ¶ 44. d. Bribery and Receipt of an Unlawful Gratuity as predicate acts Plaintiffs also adequately plead facts supporting the commission of bribery as a predicate act under both federal and state law. Bribery under 18 U.S.C. § 201(b) consists of the following five elements: (1) a public official; (2) a corrupt intent; (3) a benefit (or anything of value) accruing to the public official; (4) a relationship between the benefit and an official act; and (5) an intent to influence the public official (or to be influenced if the defendant is the official) in the carrying out of the official act. 18 U.S.C. § 201(b).6 Wisconsin’s bribery statute has similar elements except it does not require corrupt intent. Wis. Stat. § 946.10.

Plaintiffs’ bribery allegations, which are summarized above and throughout this brief, detail the quid pro quo whereby bribe money was given to Mayor Dickert by members of the

6

The federal statute has been interpreted to encompass three separate and distinct means of committing the offense, “since the giving, offering or promising of something of value are stated disjunctively in the statute.” United States v. Lubomski, 277 F. Supp. 713, 716 (N.D. Ill. 1967) (emphasis added). “[C]onsequently it has been held that each of the three modes may give rise to a separate and distinct offense even when part of a single transaction, since each involves an element which the others do not.” Id. at 716-17 (citations omitted).

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Tavern League in exchange for official acts carried out by Mayor Dickert and other Municipal Defendants. See ¶¶ 41-45, 157, 169. After glossing over and unfairly paraphrasing Plaintiffs’ bribery allegations, Defendants argue that Plaintiffs do not sufficiently plead bribery because, they claim, the Complaint contains no facts as to who allegedly contributed “excess” contributions, to whom the contributions were given, in what amounts, or at what time. Def. Mem. at 22. Without these facts, they argue, it is impossible to determine who initiated the bribe.

Notably, Defendants do not cite any law supporting their argument, likely because there is none. Bribery offenses are simply not subject to Rule 9(b)’s heightened pleading standard, but rather, consistent with Rule 8(a)(2), a complaint “attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations.” Twombly, 550 U.S. at 555. Additionally, the bribes were secretive by their very nature and, as discussed above, Plaintiffs cannot be expected to plead the details of facts uniquely within Defendants’ possession without an opportunity for discovery.7 The Municipal Defendants also argue “there are no facts from which to infer that there was some sort of illicit agreement constituting bribery,” nor, as they claim, “are there any factual allegations in support of an alleged quid pro quo such as any communications between any of the alleged Tavern League members and any of the Municipal Defendants.” Def. Mem. at 22. To the contrary, the elements of bribery and the quid pro quo could not have been pled more clearly.8

7

Plaintiffs note that they are in possession of a recorded statement from a former employee of Mayor Dickert’s campaign staff detailing the bribes accepted and concealed by Dickert’s office. The statement will be produced in the course of discovery but, if required to amend by the Court, Plaintiffs can certainly plead more particulars concerning the illegal campaign acts, bribes and receipt of unlawful gratuities.

8 There is no requirement that a specific “communication”, or any communication for that matter, be alleged to support a bribery offense. Nor would Plaintiffs be knowledgeable of the communications at the pleading stage.

Nevertheless, the reasonable inference to be drawn from Plaintiffs’ allegations that Mayor Dickert was paid bribe money by members of the Tavern League in exchange for official acts is that a communication indeed occurred.

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In rushing to conclude that the bribery claims are improperly pled, Defendants make two critical mistakes. First, they limit their discussion of the “benefit” to money. But neither federal nor state law defines “benefit” so restrictively. Under the federal statute, a benefit can be “anything of value”, 18 U.S.C. § 201(b), and under the state statute it can be “any property or any personal advantage.” Wis. Stat. § 946.10. Under the appropriate definitions, therefore, benefits among the Defendants were abound.

Plaintiffs allege that members of the Tavern League illegally handed over cash, or bribe money, to Mayor Dickert’s office in excess of the campaign contribution limits and, in exchange, received the benefit of protection from liquor licensing scrutiny and the right of first refusal for any “open” liquor license. ¶¶ 41, 44. Mayor Dickert of course benefited financially and, at the same time, both he and the Alderpersons benefited by earning public support from the Tavern League and the goodwill of their constituents in upholding their campaign promises of “cleaning up” downtown Racine. ¶¶ 40, 105. The Police Department benefited when minority bar owners were required to staff off-duty Police Department officers at their bars under the various side agreements imposed on them by the City. ¶¶ 49, 102. And BID #1 and the Downtown Racine Corporation, which worked with various individuals to flood the Police Department with calls concerning the minority-owned bars and their minority patrons, benefitted by upholding their respective promises to enhance the image and improve the socioeconomic conditions of downtown Racine, therefore justifying their continued existence. ¶¶ 16(d), 19, 59.

Next, Defendants completely ignore 18 U.S.C. § 201(c), and its Wisconsin counterpart, Wis. Stat. § 11.25(1), which codify the offense of receiving an unlawful gratuity. According to the Seventh Circuit, receipt of an unlawful gratuity is a predicate act under RICO because, like bribery, it represents “an attack on the integrity of public officials” and therefore “falls

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comfortably within the generic classification of bribery.” United States v. Garner, 837 F.2d 1404 (7th Cir. 1987). Receiving an unlawful gratuity under 18 U.S.C. § 201(c) requires the following four elements: (1) a public official; (2) a benefit (or anything of value) accruing to the public official; (3) a relationship between the benefit and some official act; and (4) an intent that the benefit pass to the public official “for or because of” the official act. 18 U.S.C. § 201(c). Unlike bribery, the offense of receiving unlawful gratuities does not require an actual exchange or quid pro quo. See United States v. Sun-Diamond Growers of Calif., 526 U.S. 398, 404-05 (1999).

Moreover, there is no requirement of intent that the official act be influenced by the benefit. See Daniel Hays Lowenstein, Political Bribery and the Intermediate Theory of Politics, 32 UCLA L. Rev. 784, 796-97 (1985). Another distinguishing factor between federal bribery and unlawful gratuities is that bribery requires a corrupt intent, whereas an unlawful gratuity does not. Because Plaintiffs’ allegations support a bribery offense under federal and state law, they necessarily support multiple predicate acts of receiving an unlawful gratuity under 18 U.S.C. § 201(c) and Wis. Stat. § 11.25(1). e. Money Laundering as a predicate act The federal money laundering statute provides that: Whoever, knowing that the property involved in a financial transaction represents the proceeds of some form of unlawful activity, conducts or attempts to conduct such a financial transaction which in fact involves the proceeds of specified unlawful activity…knowing that the transaction is designed in whole or in part to conceal or disguise the nature, the location, the source, the ownership, or the control of the proceeds of specified unlawful activity …shall be sentenced to a fine…or imprisonment for not more than twenty years or both.” 18 U.S.C. § 1956(a)(1)(B)(i).

Here, Plaintiffs’ Complaint adequately alleges the predicate act of money laundering as it contains sufficient facts to demonstrate numerous distinct transactions and the deliberate concealment of proceeds. Specifically, Plaintiffs allege that Dickert’s campaign staff collected 22

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numerous monetary contributions from several members of the Tavern League that routinely exceeded the cash limits for individuals, as well as the total contribution limits for individuals. ¶ 41. Those “campaign contributions” were then fraudulently reported in campaign finance reports

by Dickert’s campaign staff. ¶ 41. It can reasonably be inferred from the facts that the illegal campaign contributions received by Dickert were part of an unlawful activity and, knowing so, Dickert and his staff concealed and disguised the same. See United States v. Warner, 292 F.Supp.2d 1051, 1066 (N.D. Ill. 2003) (“On a motion to dismiss, the indictment sufficiently charges a distinct transaction and deliberate concealment of net profits for purposes of the money laundering statute.”).9 3. Predicate acts under the Wisconsin Organized Crime Control Act In addition to various predicate acts under the federal RICO statute, Plaintiffs’ Complaint supports the commission of multiple predicate acts under Wisconsin’s state RICO act. a. Official Misconduct as a predicate act In a footnote, Defendants state, “for the sake of caution,” that “should Plaintiffs intend to rely on alleged violations of unspecified Sections of Wis. Stat. § 946, not every violation of an official misconduct statute entails bribery or extortion.” Def. Mem. at 14, n. 6. They go on to point out that LaFlamboy—an Illinois case interpreting Illinois law—states that “official misconduct, i.e. performing acts in excess of an official’s lawful authority, cannot constitute racketeering for purposes of RICO.” Id. Defendants are wrong for the simple reason that WOCCA, a Wisconsin statute, specifically identifies § 946.12 as a predicate offense and enumerates five different forms of official misconduct. See § 946(1-5). Moreover, it also

9

Defendants’ contention that certain of Plaintiffs’ allegations are defective because they are made “on information and belief” is baseless. The law holds the opposite. See Brown v. Budz, 398 F.3d 904, 914 (7th Cir. 2005) (allegations in a complaint “cannot be faulted for their reliance on ‘information and belief,’” particularly when “pleadings concern matters peculiarly within the knowledge of the defendants.”).

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qualifies as a predicate act because it proscribes bribery in a general sense. Garner, 837 F.2d at 1418 (holding that the Illinois official misconduct statute proscribes bribery in the generic sense, even if the statute does not require corrupt intent or an agreement to perform a quid pro quo).

The relevant portions of Wisconsin’s official misconduct statute make it a felony offense for any public officer or employee to: (1) intentionally fail or refuse to perform a known mandatory, nondiscretionary, ministerial duty in the manner required by law; (3) exercise a discretionary power in a manner inconsistent with the duties of the office or the rights of others and with intent to obtain a dishonest advantage; or (5) intentionally solicits or accepts anything of value which the officer or employee knows is greater or less than is fixed by law for the performance of any service or duty. Wis. Stat. 946.12(1)(3)(5). In the present case, Defendants violated Wisconsin’s official misconduct statute on several occasions and in different ways. i. Campaign finance law offenses Plaintiffs’ well-pled allegations plainly support violation of campaign finance laws.

Because they cannot complain about the sufficiency of the allegations, Defendants instead argue that violations of Wis. Stat. § 11, Wisconsin’s campaign financing laws, do not constitute predicate acts because they are not “state law crimes which involve ‘murder, kidnaping, gambling, arson, robbery, bribery, extortion, dealing in obscene matter, or dealing in a controlled substance or listed chemical.’” Def. Mem. at 20. Defendants cite New York and Illinois case law to support their argument—which is a rather revealing decision given that Wisconsin law holds that violations of campaign finance and election law statutes are in dereliction of the duties owed by a public official under § 946.12, and are thus predicate acts. State v. Jensen, et. al., 2004 WI App 89 ¶ 231; 272 Wis. 2d 707 ; 681 N.W.2d 230.

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In Jensen, the defendants claimed the scope of § 946.12(3) does not include Wisconsin’s campaign finance laws as espoused in Wis. Stat. § 11. The court held otherwise: We agree that § 946.12(3) is not a campaign finance law or election law. The defendants fail to understand, however, that they are not being prosecuted for violating any campaign finance or election laws. Rather, they are facing prosecution for violating a criminal statute, namely § 946.12(3), which prohibits officials, such as the defendants, from violating their duty as public officials. In this case, those duties are found, in part, within the campaign finance and election law statutes.” Id. Here, Plaintiffs alleged that Defendants, including members of the Tavern League and Mayor Dickert, violated Wis. Stat. 11 by making campaign contributions in excess of the statutory limits and by intentionally concealing the nature and source of the funds. ¶¶ 41-45, 153158. Defendants Nicholson, LeGath, Bach and Monte Osterman participated in delivering the illegal campaign contributions to Mayor Dickert’s campaign. ¶ 41. At a minimum, Mayor Dickert and Mary Osterman knew of the violations of campaign financing laws and took overt efforts to conceal the illegal contributions. Id. Each time Mayor Dickert accepted a campaign contribution in excess of set campaign contribution laws, and each time he fraudulently reported those contributions, he violated his duties as set forth by Wis. Stat. § 11 and committed official misconduct in violation of § 946.12, a predicate act.10 ii. Official duty violations Defendants also violated Wisconsin’s Official Misconduct statute by exercising discretionary power in a manner inconsistent with the duties of office and the rights of others and with intent to obtain a dishonest advantage. Wis. Stat. § 946.12(3). Plaintiffs’ Complaint contains nearly one hundred paragraphs detailing how each Plaintiff was subjected to numerous, repeated

10

Mayor Dickert further violated Wis. Stat. § 11—and thus committed an official act in violation of Section 946— by accepting “loans” from a nonresident and a member of his campaign staff, depositing them into his personal bank account, and then writing checks to his campaign under the guise that the money was coming from his own pocket.

Doc. No. 1, ¶¶ 42, 177.

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acts of official misconduct by City officials who routinely acted inconsistently with the duties of their office and the rights of others, and with the clear intent of obtaining a dishonest advantage.

Wis. Stat. 946.12(3). Wisconsin law supports Plaintiffs’ allegations.

In State v. Tronca, a Milwaukee Alderman, Mark Ryan, and two individuals, Tronca and Wolfe, were cited, respectively, for official misconduct under Section 946.12 and for being a parties to a crime under Section 939.05. State v. Tronca, 84 Wis. 2d 68, 77; 267 N.W.2d 216, 220 (1978). Ryan allegedly told two business owners that he would approve their liquor license requests in exchange for monies that were picked up on three occasions by Tronca and Wolfe. Id. The Wisconsin Supreme Court went on to provide a thorough analysis of § 946.12(3).

It is apparent from these cases that the powers of a public official, which are subject to control by various types of misconduct statutes, are not limited to expressly conferred powers but apply to de facto powers which arise by custom and usage and which are exercised under the color of office and which, by virtue of the office, tend to have a corrupt influence on public affairs.” Id at 78; 221.

Section 946.12(3) is construed under Wisconsin law to capture a broad scope of official misconduct. Id at 81; 222. Stated simply, this statute prohibits “the corrupt exercise of discretionary power ‘whether by act of commission or omission,’” and further requires that an officer or employee “act honestly in performing duties or exercising powers which involve discretion.’” Id. Section 946.12(5) also proscribes official misconduct. In Ryan v. State, the Wisconsin Supreme Court analyzed Section 946.12(5)’s prohibition against soliciting or accepting “anything of value which the officer or employee knows is greater or less than is fixed by law.”

Wis. Stat. § 946.12(5); See also Ryan v. State, 79 Wis. 2d 83, 86 255 N.W.2d 910 (1977). In Ryan, Alderman Ryan was prosecuted under Wisconsin’s official misconduct law for accepting gift certificates after approving the transfer of a liquor license for a restaurant owner and the

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petition for a dog grooming business. Ryan, 79, Wis. 2d at 86. The gift certificates totaled $600.

Id. The Wisconsin Supreme Court pointed out that, in violation of § 946.12(5), a “jury could infer that [Alderman Ryan] accepted the $600 worth of certificates as a greater compensation than was fixed by law for his services as an alderman.” Id. at 93. Ryan’s acceptance of gift certificates, as opposed to money, was of no moment because the Court said that “anything of value” could support the charge, even a sausage. Id. at 92. iii. Wisconsin’s Official Misconduct statute Plaintiffs’ Complaint is replete with examples of public officials exercising discretionary power in a manner inconsistent with the duties of office, all of which were done with the intent of obtaining a dishonest advantage by eliminating minority-owned bars from downtown Racine in violation of § 946.12(3).11 Between 2006 and 2013, the Police Department, under the direction of and in conspiracy with Mayor Becker, Mayor Dickert and Chief Wahlen, unduly focused on minority bars despite the fact that “calls for service to minority-owned bars compared to whiteowned bars were markedly lower for fights, assaults, ordinance complaints, civil trouble, weapons, and narcotics.” ¶ 58. Unjustified and unequal attention was drawn to minority-owned bars through the following schemes, executed by and between the Municipal Defendants: 

The Downtown Racine Corporation, BID #1 members, Alderman and City officials encouraged “anonymous” callers to call in bogus complaints against minority-owned bars so that the Police Department was dispatched and there was a paper trail for the Licensing Committee and Common Council to use in proceedings against minority-owned bars. ¶ 59.



The Downtown Racine Corporation hired a private security group and purchased cameras that were linked directly to City Hall in order to focus attention on minority-owned bars and create a paper trail for the Licensing Committee and Common Council to use in proceedings against minority-owned bars. ¶¶ 60-61.

11

The “advantages,” or benefits, obtained by the Municipal Defendants are identified throughout this brief, most notably in Sections III(C) (pp. 7-8), IV(A)(2)(c) (p. 19) and IV(A)(2)(d) (p. 21).

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

The Police Department routinely waited outside minority-owned bars to videotape patrons coming and going from the bars and used the videos to disingenuously claim that excessive police resources were needed to maintain peace in the areas around the minority-owned bars. “[R]arely did the Police Department provide such attention to white-owned bars and their predominately white patrons.” ¶ 62.



Off-duty police officers who worked security at white-owned bars regularly deflected incidents at white-owned bars from the Police Department, while routinely exaggerating incidents at minority-owned bars and calling the Police Department for assistance. Compl., ¶¶ 63, 148.

Essentially, Defendants created numerous artificial mechanisms to support their fiction

that minority-owned bars were excessively violent, dangerous and disturbing when, in reality, the incidents at minority-owned bars were generally less threatening than those at white-owned bars. The following are examples illustrating not only the disparate treatment on the basis of race, but a repeated and continuous pattern where public officers and employees exercise discretionary power in a manner inconsistent with the duties of office and the rights of others.

Date 08/12/05

10/05/06

02/18/07

08/31/07

Conduct A fight broke out at Rickey’s Place, a bar owned by a white member of the Tavern League. A suspect shot the owner and bartender. The bar was never called before the Common Council for the incident. ¶ 68.

At Hall Lounge, a white-owned bar, 21 people were arrested for underage drinking, three guns were confiscated and seven criminal arrests were made. When called before the Licensing Committee, the owner blamed his security guard. The matter was “received and filed” with no further action. ¶ 69. Months prior, City officials threatened the Maldonados, minority bar owners, with revocation of the Cruise Inn’s liquor license for a non-life threatening altercation. ¶¶ 92-94.

Another fight broke out at Ricky’s Place and required six police squads to respond.

This matter was never brought before the Licensing Committee and Ricky’s license was renewed even though this was the second incident of violence at the bar. ¶ 70. By comparison, months earlier, in an effort to acquire the liquor license and property of the Maldonados, the City fined them for weeds and chipped paint. ¶ 94.

A fight broke out at Kenny’s, a bar owned by a white member of the Tavern League and frequented by white patrons. A patron came into the bar and shot two people inside the bar and one person outside of the bar. When called before the Licensing Committee, the owner said that he fired three bartenders and promised to be more observant. The matter was “received and filed” with no further action. ¶ 71. In contrast, Viper’s Lounge, a minority-owned bar, was forced into a side agreement and did not have its license renewed even though it never had any shootings or violent crimes associated with its business. ¶¶ 101-104.

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08/31/07

02/05/09

01/09/10

07/10/10

02/25/11

05/05/11

08/06/11

04/19/12

08/11/12

A person was shot multiple times in the parking lot of George’s Tavern, a bar owned by a white member of the Tavern League. When called before the Licensing Committee, the owner made some promises and, without having to enter into a side agreement, the matter was “received and filed” with no further action. ¶ 72.

A person was shot four times while walking to TBG’s Bar & Grill, a bar owned by a white member of the Tavern League. The police department found the victim inside the bar and the door of the bar was shattered due to gunfire. The bar was never called before the Licensing Committee. ¶ 73. In stark contrast, by this time, The Cruise Inn, Cera’s Tequila Bar and Viper’s Lounge were all shut down for comparatively far more benign, and indeed non-violent, incidents. ¶¶ 91-105.

After a fight broke out at Joey’s On Lathrop—owned by defendant and white member of the Tavern League, Joey LaGath—multiple gun shots were fired and three local establishments were hit with bullets. The bar was never called before the Licensing Committing. ¶ 74. During the same time, the Licensing Committee required Ginger’s to enter into side agreements and eventually revoked its license for minor and non-violent incidents. Id at ¶¶ 101-104.

A patron was hit by gunshots in the arm and stomach as he walked out of Pepi’s, a bar owned by a white member of the Tavern League. Pepi’s was never called before the Licensing Committee. ¶ 75.

A crowd incident and assault occurred at Ivanhoe’s Pub & Eatery, a bar owned by defendant and white member of the Tavern League, Doug Nicholson. Ivanhoe’s was never called before the Licensing Committee. ¶ 76.

A fight began in Peg & Lou’s Bar, the owners of which are white members of the Tavern League. The victim involved was killed and his body was found at closing time. When called before the Licensing Committee, the owners promised to be more diligent watching customers. The matter was “received and filed” with no further action. ¶ 77. Months earlier, Ginger’s, a minority-owned bar, was forced to spend more than $10,000 as part of a side agreement and ultimately had its license revoked for minor, non-violent incidents. ¶¶ 106-110. Likewise, Park 6 was forced to enter into multiple side agreements and its liquor license was revoked, in part, because its security guard was hit with a stray bullet shot from down the block. ¶ 118-125.

Another fight broke out at Kenny’s, a bar owned by a white member of the Tavern League. Four people were arrested and eight officers were required to manage the incident; the Police Department was tied up for over three hours. As before, the matter was simply “received and filed” with no further action required. ¶ 78.

A melee broke out at Envi, another bar owned by Doug Nicholson, a defendant and white member of the Tavern League. Five police squads were required. The Police Department advised dispatch to report the scene as the “300 block of Main Street” to avoid having it linked to Envi. The matter was never brought before the Licensing Committee. ¶ 79.

Yet another incident occurred at Kenny’s, a bar owned by a white member of the Tavern League. Gun shots were fired hitting multiple cars and one person in the arm.

The shooting was not reported by the Police Department and is not in the bar’s history report. Nor was it referred to the Licensing Committee. ¶ 80. A few months later, following an innocuous bar fight where no arrests were made, the Licensing Committee revoked the Place on 6th’s liquor license. ¶¶ 116-117.

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05/11/13

06/09/13

06/23/13

07/13/13

07/15/13

Nine months later another shooting occurred at Kenny’s where two people fired numerous shots as the bar was emptying. No action was taken by the Licensing Committee. ¶ 81.

Another fight occurred at Ricky’s Place, a bar owned by a white member of the Tavern League, which left a patron with a head injury. The matter was never brought before the Licensing Committee. ¶ 82.

Yet another shooting occurred at Kenny’s where several rounds were fired in the rear patio area. A patron was struck in the leg by a bullet. Seven days later, despite five violent incidents since 2007, four of which involved shootings, Kenny’s liquor license was renewed. ¶ 83.

Another fight broke out at Pepi’s, a bar owned by a white member of the Tavern League, where a crowd was gathered in the street impeding traffic and causing a disturbance. The police either were not called or were deflected from the scene. ¶ 84.

Another violent incident broke out at Kenny’s, where police responded to find a visibly injured person and a large amount of beer bottles outside the bar. The matter was never referred to the Licensing Committee. ¶ 85.

The above details numerous incidents where public officers and employees, including the Aldermen sitting on the Licensing Committee and officers in the Police Department, all of whom were acting under the direction of and in conspiracy with Mayor Becker, Mayor Dickert and Chief Wahlen, exercised their discretion in a manner inconsistent with the duties of their office and the rights of others. White-owned bars, specifically those owned by Tavern League members, were protected without even the slightest repercussion notwithstanding repeated incidents of violence. In contrast, minority-owned bars with comparatively far fewer and far more benign incidents were given the “death penalty.” As detailed in Plaintiffs’ Complaint and as discussed throughout this brief, the entire conspiracy was done in order to eliminate minority bars from downtown Racine and, thus, gain a dishonest advantage for all those Defendants who benefited from the quid pro quo.

The pattern outlined above involves multiple instances of official misconduct in violation of Wis. Stat. § 946.12(3). Additionally, Mayor Dickert’s acceptance of bribe money in exchange for his official acts violates Wis. Stat. § 946.12(5).

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4. Plaintiffs’ alternative request for leave to amend Any defects asserted in Plaintiffs’ pleading of predicate acts asserted by Defendants can be cured by way of amendment to include additional detail. Courts should freely allow amendments under Rule 15(b) as justice requires, so that cases are decided on the merits rather than on bare pleadings. Fuhrer v. Fuhrer, 292 F.2d 140 (7th Cir. 1961); Select Creations, Inc. v.

Paliafito American, Inc., 830 F.Supp. 1213, 1215 (E.D. Wis. 1993). The federal rules favor granting leave to amend and leave should only be denied when it is certain that a plaintiff would not be entitled to relief under any set of facts. Id. Accordingly, in the event this Court finds that any aspect of Plaintiffs’ pleading of predicate acts is deficient, Plaintiffs would request that leave to amend be granted.

B. Plaintiffs sufficiently plead a pattern of racketeering activity under RICO Defendants argue that “Plaintiffs, at best, have alleged predicate acts relating to bribery, extortion, money laundering and/or campaign finance violations in connection with Dickert’s 2009 mayoral campaign.” Def. Mem. at 27. Defendants’ effort to limit the predicate acts to Mayor Dickert’s 2009 campaign is baseless and, consequently, discredits their entire “continuity” argument. To the extent a further response is required, however, Plaintiffs have sufficiently pled both “closed-ended” and “open-ended” continuity.

At the outset, it is important to note that the Seventh Circuit has modified the traditional multifactorial, fact-intensive analysis found in Morgan v. Bank of Waukegan, 804 F.2d 970, 975 (7th Cir. 1986).12 Now, there is no single formula required for a RICO pattern: “the may be one scheme or many schemes; there may be only a few acts of racketeering or there may be many.”

12

The Morgan factors include: (1) the number and variety of predicate acts; (2) the length of time over which the predicate acts were committed; (3) the number of victims; (4) the presence of separate schemes; and (5) the occurrence of distinct injuries. 804 F.2d at 975.

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J.D. Marshall v. Redstart, Inc., 935 F.2d 815, 821 (7th Cir. 1991). Further, as the Supreme Court has recognized: The limits of the relationship and continuity concepts that combine to define a RICO pattern, and the precise methods by which relatedness and continuity or its threat may be proved, cannot be fixed in advance with such clarity that it will always be apparent whether in a particular case a “pattern of racketeering activity” exists. H.J. Inc. v. Northwestern Bell Telephone Co., 109 S.Ct. 2893, 2902 (1989).

Under the “continuity plus” relationship test, “the predicate acts must be related to one another (the relationship prong) and pose a threat of continued criminal activity (the continuity prong).” Jennings v. Auto Meter Products, Inc., 495 F.3d 466, 473 (7th Cir. 2007). The relationship prong is satisfied when the predicate acts “have the same or similar purposes, results, participants, victims, or methods of commission, or otherwise are interrelated by distinguishing characteristics and are not isolated events.” Hartz v. Friedman, 919 F.2d 469, 472 (7th Cir. 1990). Further, a plaintiff “may show continuity by showing that the predicates are a regular way...of conducting or participating in an ongoing and legitimate RICO enterprise.” H.J. Inc. at 2893.

1. Plaintiffs have sufficiently pleaded closed-ended continuity The predicate acts set forth in Plaintiffs’ Complaint and detailed within this brief are entirely interrelated—all designed to “clean up” downtown Racine by eliminating minorityowned bars, and all benefiting the Defendants involved both financially and politically. Multiple schemes were involved to accomplish their objective: from initiating bogus complaints against minority bars, to exercising official discretion in a manner inconsistent with the duties of office and the rights of others, to extorting side agreements from minorities and seizing their liquor licenses, to protecting the white-owned taverns from licensing scrutiny, to re-distributing liquor licenses to members of the Tavern League and, finally, to lining the pockets of Mayor Dickert 32

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and securing political appointments of the Alderman and members of BID #1 and the Downtown Racine Corporation. These acts were not isolated; they were very clearly part of a pattern.

Consistent with the Supreme Court’s interpretation of the continuity requirement, this was, and has been for six or seven years, the regular way of conducting business for these Defendants. DeGuelle v. Camilli, 664 F.3d 192, 203 (7th Cir. 2011) (finding that predicate acts of tax fraud satisfied the closed-ended continuity test because these acts occurred over period of five years and involved several actors and methods of commission). The Seventh Circuit has held that, at the summary judgment stage, evidence a defendant resorts to extortion every time it encounters resistance to the goals of the enterprise satisfies the “regular way of conducting business” standard. Shields Enterprises, Inc. v. First Chicago Corp., 975 F.2d 1290, 1296 (7th Cir. 1992). Here, at the pleading stage, Plaintiffs’ allegations very clearly support the reasonable inference that Defendants resorted to extortion whenever any minority came into possession of a liquor license.

Defendants rely on Midwest Grinding Co. v. Spitz, throughout their motion to argue against closed-ended continuity. 976 F.2d 1016, 1018 (7th Cir. 1992). Midwest Grinding involved a lone plaintiff who filed suit against a competitor and two individuals alleging that, over a year’s time, they engaged in a fraudulent scheme to divert customers and employees away from the plaintiff. Id. at 1018. In rejecting the plaintiff’s RICO claims on summary judgment, the court aptly described the case as follows: “At its most basic level, this is a purely private business dispute between Spitz and Midwest. Congress did not have such a dispute in mind in fashioning the civil treble damage remedy to the federal RICO statute.” Id. at 1025. The present matter—involving eight plaintiffs and twenty defendants—is not remotely comparable to a business dispute involving a single plaintiff over a short period of time.

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The Municipal Defendants’ reliance on Roger Whitmore’s Auto. Servs., Inc. v. Lake Cnty. is similarly misplaced. 424 F.3d 659 (7th Cir. 2005). The plaintiff in Roger Whitmore, a tow truck driver, filed a civil RICO action against the local sheriff and his election campaign organization. Id. The plaintiff alleged that, through extortion and bribery, he was forced to support the defendants in their campaign. Id. When the plaintiff later withdrew his support in favor of a different candidate, he claimed the sheriff retaliated by intentionally implementing a policy that reduced his amount of towing business. Id. In analyzing the plaintiff’s RICO claims, the court held that the alleged predicate acts of extortion did not satisfy the definition under the Hobbs Act. Id. at 671. In fact, the Court found there was no evidence the defendants were extorting campaign funds from the plaintiff or any other towing operators. Id. Additionally, the Court was unconvinced that the alleged intimidation against the plaintiff (i.e., the fear of injury or harm element) was reasonable under the circumstances. Id. “If a plaintiff's subjective discomfort with uniformed and armed law enforcement officers dropping by for contributions is enough to qualify as Hobbs Act extortion, it won't be long before all police fund raisers (for political or other purposes) come to an end.” Id. In analyzing the pattern of racketeering activity” prong, the court found that the plaintiff did not satisfy the continuity prong of “pattern of racketeering activity” under either closed- or open-ended continuity. Id. at 672. First, the plaintiff asserted a time frame of only two years. Id. at 673. Second, the number of predicate acts was not large. Id. at 673. Third, the victims of the defendants’ alleged activities was confined to a small group—tow truck drivers. Id. Finally, there was no threat of a continued RICO violation as there was a natural ending point when the sheriff was elected. Id. at 674. In sum, the plaintiff’s RICO action was merely based upon his claim that

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he felt pressured to donate to the campaign and that the new policy implemented by the sheriff adversely affected his business.

The present matter is far different in that Defendants’ conduct involves the commission of dozens of predicate acts and injury to many plaintiffs. The Complaint sufficiently alleges illegal conduct in violation of multiple statutes that spans the length of two Mayoral campaigns, over seven years, and threatens to continue. The alleged predicate acts are not simply grounded in illegal campaign finance violations, but rather multiple, continuous predicate acts to ensure that minority-owned bars are extinguished from downtown Racine. ¶¶ 131-138.

2. Plaintiffs have sufficiently pleaded open-ended continuity Applying the same myopic view as they did with their closed-ended continuity analysis, Defendants proudly contend that because they have successfully eliminated minority-owned bars from downtown Racine, there is no threat of continuity or continued criminal activity. In support, Defendants cite to only Vicom, Inc. v. Harbridge Merchant Servs., which involved a single plaintiff business that sued certain parties over a business dispute and alleged predicate acts of mail and wire fraud occurring over a nine month period of time. 20 F.3d 771, 775 (7th Cir. 1994). The court held that open-ended continuity was not satisfied because the plaintiff could not establish that a specific threat of continuity existed, nor could the plaintiff establish that the predicate acts were a regular way of conducting the legitimate business. Id at 782-783. The same failures do not exist here.

First, there is a continued threat of harm. Defendants have and will continue to keep minorities from obtaining liquor licenses—which itself presents a continuing threat, especially to future minority business owners who desire to open a bar in downtown Racine. In addition, to effectuate their objective, Defendants will continue to protect white-owned bars from licensing

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scrutiny, members of the Tavern League will continue to bribe Mayor Dickert to secure access to liquor licenses, and Mayor Dickert will continue protect the Alderman and members of the Downtown Racine Corporation and BID #1 so long as they continue to “toe the party line.” Said differently, because the conspiracy will fail if it does not continue, the threat of continuing harm is very real.

Second, as discussed above, a plaintiff can show open-ended continuity by alleging that the predicate acts were the defendants’ regular way of conducting business. Plaintiffs’ Complaint raises at least the reasonable inference that extortion, bribery and official misconduct in furtherance of Defendants’ objective to “clean up” downtown Racine has become and continues to be their regular way of doing business. At a minimum, Plaintiffs should be entitled to discovery to determine whether commission of the predicate acts continues or, as Defendants suggest, stopped once they accomplished their objective.

3. Plaintiffs’ alternative request for leave to amend As set forth above, amendments are to be freely allowed as justice requires. In the event this Court finds that Plaintiffs have not alleged sufficient facts to support a relationship among the predicate acts or the threat of continued harm, Plaintiffs can readily do so and would request leave to amend be granted accordingly.

C. Plaintiffs have standing and sufficiently plead causes of action under § 1962 Defendants make “standing” arguments in an effort to evade responsibility for their pattern of racketeering activity under Section 1962(b) and (c).

1. Plaintiffs plead multiple predicate acts against each Defendant First, Defendants contend that Plaintiffs fail to plead “that each Municipal Defendant” individually engaged in a “pattern of racketeering.” Def. Mem. at 32. In support, Defendants cite

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two Second Circuit cases and two district court opinions from the Northern District of Illinois.

The Second Circuit cases, DeFalco v. Bernas, 244 F.3d 286 (2d. Cir. 2001) and United States v.

Perisco, 832 F.2d 705 (2d Cir. 1987), both involve appeals after verdicts and, therefore, offer no meaningful guidance for ruling on a pleading motion. Both Northern District of Illinois opinions are readily distinguishable on their facts.

Guaranteed Rate, Inc. v. Barr, 912 F. Supp. 2d 671 (N.D. Ill. 2012) is a mortgage fraud case filed after the 2008 financial crisis. The plaintiff, a lender, claimed to be the victim of a price inflation scheme and was left holding 87 unsold condominiums. Id at 677-78. Because this case was centered on fraud, and only fraud, the court required that “[s]trict adherence to the particularity requirement is especially important in a case such as this where the predicate fraud allegations provide the only link to federal jurisdiction.” Id at 684. Guaranteed Rate is distinguishable on its face because, like many failed RICO cases, it involved a mere business dispute.13 Additionally, Plaintiffs’ case is not exclusively or even primarily based upon fraud, which was the only basis in Guaranteed Rate and the reason the Court demanded “strict adherence.” Importantly, the court in Guaranteed Rate also noted that “where facts are inaccessible to the plaintiff, the plaintiff must, at a minimum, state the grounds for its suspicions.” Id. at 686. Consistent with the very case relied upon by Defendants, Plaintiffs here have articulated throughout their Complaint a well-grounded factual basis for their suspicions.

Next, the Municipal Defendants cite to the trial court opinion in Roger’s Whitmore, a case which, as discussed above, is factually distinguishable. Most notably, the court in Roger’s Whitmore dismissed three defendants because “their participation was limited to a single money 13

Courts have consistently rejected RICO claims arising out of ordinary business disputes. “Civil RICO plaintiffs persist in trying to fit a square peg in a round hole by squeezing garden-variety business disputes into civil RICO actions.” Midwest Grinding, 976 F.2d at 1025.

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for-territory transaction.” 2002 WL 959587 at *2, *6. Here, however, Plaintiffs have identified numerous predicate acts committed by each named defendant participating in the RICO conspiracy. Specifically: 

Multiple acts of extortion under the Hobbs Act and Wis. Stat. 943.30 were committed by Mayor Dickert, Mayor Becker, Alderman members of the Common Council and Licensing Committee, and their co-conspirators, including Mark Levine, Devin Sutherland and Kurt Wahlen.



Campaign financing violations, money laundering, bribery and the receiving of unlawful gratuities were committed by Mayor Dickert, the Tavern League and their co-conspirators, including Doug Nicholson, Joey LeGath, Gregory Bach, Monte Osterman and Mary Osterman.



Offenses falling under Wisconsin’s official misconduct statute were committed by Mayor Dickert, Mayor Becker, Alderman members of the Common Council and Licensing Committee, and Kurt Wahlen.

Each offense as described in Plaintiffs’ Complaint, and as further detailed in this opposition brief, represents a single predicate act. Conservatively, the extortion offenses total over 15 predicate acts for each involved defendant. In terms of the campaign finance violations, accepting the contributions and then fraudulently reporting them are separate predicate acts. The same applies to bribery, money laundering and receipt of an unlawful gratuity, where each “transaction” constitutes a predicate act for both the “giver” and “receiver.” While an exact amount of violations is unknown at this point, assuming the bare minimum, there would be four predicate acts for each involved defendant. Last, Plaintiffs have set forth in exhaustive detail the numerous violations of Wisconsin’s Official Misconduct statute, Section 946.12. Conservatively, based upon their investigation thus far, Plaintiffs estimate 22 separate “official misconduct” predicate offenses across the involved defendants. Thus, even assuming the most conservative

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breakdown, as we do here, Defendants’ contention that Plaintiffs do not plead two or more predicate acts per defendant is wildly off base.14 2. Plaintiffs plead proximate cause between predicate acts and their injuries Defendants next argue that Plaintiffs do not adequately allege “that they were injured in their ‘business or property by reason of’ a RICO violation.” Def. Mem. at 34-35. Stated a little differently, Defendants claim Plaintiffs have not adequately plead causation. Defendants’ argument, however, is readily defeated because it relies entirely upon the unfounded assumption that the only predicate acts at issue are what Defendants define as the “Campaign Acts.” See Def. Memo at 35-36 (“even generally assuming that Plaintiffs have properly pleaded the Campaign Acts as predicate acts, which is not the case, the Campaign Acts are too attenuated from Plaintiffs’ injuries”). Yet again, Defendants have unfairly mischaracterized the facts in an effort to limit the Court’s analysis.

As exhaustively detailed throughout this brief, Plaintiffs have pled the commission of dozens of predicate act offenses, only some of which involve the illegal campaign contributions accepted by Mayor Dickert. Without considering the actual scope of the predicate acts at issue, Defendants’ argument that Plaintiffs have not pled causation is hollow. Plaintiffs’ allegations support a clear, direct causal link between the predicate acts of extortion and official misconduct and Plaintiffs’ resulting damages. Likewise, Mayor Dickert’s acceptance of illegal campaign contributions from the Tavern League—amounting to bribery, violation of campaign finance laws and receipt of unlawful gratuities—is the lynch pin that keeps the liquor licenses out of the hands of minorities and puts them into the pockets of white-owned members of the Tavern

14

In the event the Court finds the individual Municipal Defendants are not on sufficient notice of the claims, Plaintiffs can assert more particularized details as to each named defendant by way of amendment and would request leave accordingly.

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League. At a minimum, these facts support the reasonable inference that this conduct was injurious to Plaintiffs’ businesses.

3. Plaintiffs state a claim under 18 U.S.C. § 1962(d) In the alternative, Plaintiffs allege sufficient facts to state a claim under 18 U.S.C. § 1962(d) against all of the Municipal Defendants who did not violate the substantive RICO statute. To state a claim for conspiracy under 18 U.S.C. § 1962(d), “a plaintiff must allege that (1) the defendant agreed to maintain an interest in or control of an enterprise through a pattern of racketeering activity, and (2) the defendant further agreed that someone would commit at least two predicate acts to accomplish those goals.” DeGuelle v. Camilli, 664 F.3d 192, 204 (7th Cir. 2011) (citation omitted). A RICO conspiracy defendant does not need to personally commit a predicate act. Instead, a plaintiff need only allege that “the defendant agreed that someone would commit at least two predicate acts in furtherance of the conspiracy.” DeGuelle, 664 F.3d at 204 (emphasis in original) (citation omitted). “[T]he touchstone of liability under § 1962(d) is an agreement to participate in an endeavor which, if completed, would constitute a violation of the substantive statute.” Goren v.

New Vision Int'l, Inc., 156 F.3d 721, 732 (7th Cir. 1998). A review of Plaintiffs’ allegations shows that the Complaint demonstrates such an agreement. Here, as discussed in detail above, the Complaint sufficiently alleges that all of the Municipal Defendants had knowledge of various predicate acts, discussed those acts and promoted the commission of those acts to effectuate the many facets of the conspiracy, including the bribery of public officials in exchange for official acts and the extortion of liquor licenses from minority bar owners. Based on the cumulative effect of these acts, the manner in which they were carried out and their intended and actual effect, it can reasonably be inferred there was an agreement between the Municipal Defendants

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to participate in an endeavor which, if completed, would constitute a violation of the substantive provisions of the RICO Act. ¶¶ 39-44, 58-63, 90-130, 139-184.

Plaintiffs can also demonstrate they were injured as a result of the Municipal Defendants’ violation of § 1962(d). Like a claim under 18 U.S.C. § 1962(c), a plaintiff alleging a violation of § 1962(d) must allege that he or she was injured “by reason of” a violation of § 1962. See 18 U.S.C. § 1964(c). Additionally, the injury must arise “from an act that is…independently wrongful under RICO.” Beck v. Prupis, 529 U.S. 494, 505-06 (2000). Importantly, there is no requirement of a “’racketeering injury’ separate from the harm from the predicate acts.” Sedima, S.P.R.L. v. Imrex Co., Inc., 473 U.S. 479, 495 (1985).

Here, Plaintiffs allege that they suffered injuries to their businesses or property “by reason of” Defendants’ actions in that they were forced to enter into costly side agreements, lost the goodwill and patronage of their customers, lost their right to conduct a lawful business, including the right to solicit business, and were either forced to forfeit their liquor licenses or had their licenses revoked. ¶¶ 90-130. Therefore, if this Court determines that Plaintiffs do not state a claim against certain of the Municipal Defendants under § 1962(c), it is clear that, accepting as true all well-pled facts in the Complaint and drawing all reasonable inferences therefrom, Plaintiffs allege sufficient facts to state a claim against those Defendants under § 1962(d).

4. Plaintiffs dismiss individually named defendants in their “official capacity” Plaintiffs agree that municipalities and municipal employees designated in their “official capacity” are not liable under RICO. Plaintiffs therefore agree to dismiss the RICO counts as asserted against the City of Racine as well as against the individual Municipal Defendants “in their official capacity.” The RICO actions against the Municipal Defendants in their individual capacities should be sustained.

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5. Plaintiffs’ alternative request for leave to amend As set forth above, amendments are to be freely allowed as justice requires. In the event this Court finds that Plaintiffs have not alleged sufficient facts to support standing or causation for their RICO counts, Plaintiffs can readily do so and would request leave to amend be granted accordingly.

V. Civil Rights Argument: A. Plaintiffs have “standing” The Municipal Defendants assert that Plaintiffs “appear” to base their § 1983 and § 1985(3) claims on “the violations of the civil rights of” other plaintiffs and non-parties, and request that their claims be dismissed “to [that] extent.” Def. Mem. at 41–42. Defendants’ argument is baseless. First, each Plaintiff has alleged an actual, concrete and particularized injury caused by Defendants and which can be remedied by this Court. See ¶¶ 91–96 (Maldonados); ¶¶ 97–100 (Davalos); ¶¶ 101–105 (Jones); ¶¶ 106–11 (Khampane and Nueakeaw); ¶¶ 112–17 (Fair); ¶¶ 118–30 (Holmes). Accordingly, each Plaintiff has standing to sue. See City of Glendale v. Vill. of River Hills, No. 10-C-57, 2011 WL 2262491, at *3 (E.D. Wis. Jun. 6, 2011) (explaining “standing” requirement).

Second, Plaintiffs may use Defendants’ actions as to other plaintiffs and non-parties in support of their claims. Such actions evidence the City’s “custom” and, therefore, support Plaintiffs’ Monell claim.15 Such actions further evidence the discriminatory intent in Defendants’ treatment of Plaintiffs.

15

See Monell v. Dep’t of Soc. Servs. Of City of New York, 463 U.S. 658, 690–91 (1978) (“[L]ocal governments… may be sued for constitutional deprivations visited pursuant to governmental ‘custom’ even though such a custom has not received formal approval through the body’s official decision-making channels.”)

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B. Plaintiffs dismiss the “official capacity” claims against certain defendants Plaintiffs agree that claims against certain defendants in their “official capacity” under § 1983 and § 1985(3) are redundant because Plaintiffs have also sued the City of Racine under those statutes. Therefore, Plaintiffs withdraw the “official capacity” claims against Defendants Dickert, Becker, Wahlen, Coe, Kaplan, DeHahn, Helding, Maack, Wisneski, Mozol, Sutherland, Levine, LeGath and Bach. The civil rights claims against the Municipal Defendants in their individual capacities should be sustained.

C. The Maldonados’ claims are not barred by the statute of limitations Defendants argue that the Maldonados’ civil rights claims are barred by the six-year statute of limitations because the “violations of their constitutional rights—the forced sale of their property and the alleged discriminatory acts that predated the sale—occurred, at the latest, in January 2007.” Def. Mem. at 43–44. Defendants then assert—without reference to any allegation in the Complaint—that “[a]t that point, the Maldonados knew of the alleged violations.” See id. at 44. The Court should reject Defendants’ attempt to ignore well-settled law on both pleading and the accrual of claims under § 1983 and § 1985(3).

First, “the basic rule [is] that the statute of limitations is an affirmative defense…and need not be addressed in the complaint.” Barry Aviation Inc. v. Land O'Lakes Mun. Airport Comm'n, 377 F.3d 682, 688 (7th Cir. 2004). Indeed, “[c]omplaints need not anticipate defenses; the resolution of the statute of limitations comes after the complaint stage.” Id. Only “when the plaintiff…admits definitively that the applicable limitations period has expired” may the statute of limitations issue be resolved on the face of the complaint. See id.

The Municipal Defendants contend that the Maldonados’ claims would have accrued on “the date [they] knew or should have known that [their] constitutional rights had been violated.”

For the Maldonados, therefore, their civil rights claims would have accrued when they “knew or 43

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should have known of the discriminatory nature of” Defendants’ actions. See Kuemmerlein v. Bd. of Educ. of Madison Metro. Sch. Dist., 894 F.2d 257, 261 (7th Cir. 1990); see also Woods v. City of Rockford, No. 08-2638, 2010 WL 697352, at *3 (7th Cir. 2010) (cited in Def. Mem. at 44) (finding that claim accrued when the plaintiffs “knew that the City had failed to renew their license in violation of their right to due process”) (emphasis added).

Here, Defendants have not referenced a single allegation in the Complaint that would enable the Court to “definitively” determine that the Maldonados “knew or should have known” of the discriminatory nature of Defendants’ actions in January 2007. The Maldonados allege that they were taken to a due process hearing as a result of an altercation at their bar in July 2006, see ¶ 93; that City officials, including Mayor Becker, subsequently visited their property, threatened revocation of their liquor license and fined them for minor offenses such as weeds and chipped paint, see ¶ 94; and that they were forced to sell their property as a result, see ¶ 95–96. None of those allegations definitively establish that the Maldonados knew or should have known that they had been discriminated against because of their race by January 2007. Indeed, given that the Maldonados were the first of Plaintiffs to be injured by the discriminatory actions of Defendants, the reasonable inference is that the Maldonados did not have notice of the discriminatory nature of the claims until much later. Accordingly, Defendants’ argument must be rejected. See, e.g., Avery v. Pagel, 12-CV-00192, 2013 WL 593438, at *4 (E.D. Wis. Feb. 15, 2013) (where plaintiff-prisoner sued under §1983 for strip searches—occurring both outside of and within the statute of limitations—the court refused to dismiss the claim, noting that the “accrual date of plaintiff's strip search claim is not entirely clear”).

Tellingly, the only case Defendants cite in support of their argument is one reviewed on summary judgment, not on the pleadings. See Def. Mem. at 44, citing Woods v. City of Rockford,

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No. 08-2638, 2010 WL 697352, 367 Fed. App’x. 674, 678 (7th Cir. 2010). In addition, the facts giving rise to the equal protection claim in that case were more overtly discriminatory than those alleged by the Maldonados here, such as the imposition of “dress-code limitations” on the plaintiff-establishment’s customers. Id. at *4. Indeed, Wood’s discussion of the facts—again, facts revealed through discovery, not on the pleadings—indicates that the plaintiff definitively knew of the defendant’s discriminatory motive for longer than the statutory period. The same conclusion cannot be drawn from the Maldonados’ allegations here. See Barry Aviation, 377 F.3d at 688 (“The statute of limitations issue may be resolved definitively on the face of the complaint [only] when the plaintiff…admits definitively that the applicable limitations period has expired.”) (internal citation omitted).16 D. Plaintiffs have alleged “personal involvement” by all defendants The Municipal Defendants next argue that Plaintiffs have failed to allege that certain individuals were “personally involved” in Plaintiffs’ civil rights violations. In doing so, they again fail to discuss the law, in this instance, the requirement of “personal involvement.” They also fail to show how particular allegations against particular Defendants are insufficient under the law.17 The following explanation of the “personal involvement” requirement provided by a Wisconsin federal court is instructive: A causal connection, or an affirmative link, between the misconduct complained of and the official sued is necessary. However, it is not necessary that a defendant participate directly in the deprivation…The requisite causal connection is satisfied

16

In the event the Court rules that “discovery rule” allegations are required for the purpose of pleading, Plaintiffs can readily plead such allegations and would request leave to amend accordingly.

17

Presumably, they hope that the Court will do it for them. That is not the Court’s job, however. See generally Salazar v. City of Chicago, 940 F.2d 233, 242 (7th Cir. 1991) (“[P]erfunctory and underdeveloped arguments…are waived (even where those arguments raise constitutional issues.”) (citations omitted).

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if the defendant set in motion a series of events that the defendant knew or should reasonably have known would cause others to deprive the plaintiff of his constitutional rights.

Hoffman v. Kelz, 443 F. Supp. 2d 1007, 1012–13 (W.D. Wis. 2006) (internal citations and quotations omitted).

Consistent with this requirement, Plaintiffs here have alleged the “personal involvement” of all Municipal Defendants identified on Page 45 of Defendants’ brief. 

Mayor Becker: alleging he frequently visited the Maldonados’ property, threatened them, and advised them to sell their property or the City would revoke their liquor license, all of which resulted in the forced sale of the Maldonados’ property. ¶¶ 94– 96.



Police Chief Kurt Wahlen: alleging he declined to investigate a shooting involving Park 6, yet his department subsequently purchased security cameras aimed exclusively at minority-owned bars, including Park 6, after which he personally filed a complaint as a private citizen requesting that Park 6 be subjected to a due process hearing. ¶¶ 121–22, 124.



Devin Sutherland: alleging he is the Executive Director of the Downtown Racine Corporation, an organization which Plaintiffs further allege (1) entered into a quid pro quo relationship with Dickert to rid Racine of minority-owned businesses; (2) encouraged anonymous callers to flood the police department with calls regarding minority-owned bars; (3) purchased security cameras to be aimed exclusively at minority-owned businesses; and (4) selectively sent surveillance of minority-owned bars to the Licensing Committee. ¶¶ 29, 44, 59–61.



Mark Levine: alleging he expressly conditioned an apartment rental discount on the potential renters complaining about Park 6 and the Place on 6th. ¶ 113.



Joey LeGath: alleging that, as the Director of the Tavern League, a member of the BID #1 board, and a member of the board of the City’s Parks, Recreation and Cultural Services, he knowingly assisted in illegal campaign financing in order to gain the cooperation of Dickert in a plan to rid Racine of minority-owned bars. ¶¶ 31, 41.



Gregory Bach: alleging he was a campaign worker for Dickert in both 2009 and 2011 and knowingly assisted in illegal campaign financing in order to gain the cooperation of the Tavern League in a plan to rid Racine of minority-owned bars. ¶¶ 35, 41.



Mayor Dickert: alleging he developed an illegal campaign financing scheme to secure a quid pro quo relationship with the Tavern League and other individuals to rid Racine of minority-owned businesses. ¶¶ 18, 40–45.

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In summary, Plaintiffs have set forth a cohesive narrative, stretching from the administration of Mayor Becker to Mayor Dickert, and involving the Tavern League, Downtown Racine Corporation, Licensing Committee, BID #1 board, and private citizens in a scheme to rid downtown Racine of minority-owned businesses. From Plaintiffs’ allegations it is reasonable to infer that Mayor Dickert instructed his campaign workers, including Osterman, Jerger, and Nicholson, to gain the cooperation of Tavern League members, ¶ 41. Dickert appointed his contributors, including Tavern League members, to important posts in the City such as the Licensing Committee, ¶ 41. It is further reasonable to infer that, in keeping his promise to “revitalize” and “clean up” downtown Racine, ¶ 40, Dickert worked with the Police Department, the Downtown Racine Corporation, and BID #1 to scrutinize, surveil, report on, and trump-up allegations against Plaintiff tavern-owners. Indeed, the surveillance cameras purchased by the Downtown Racine Corporation and the City police were aimed directly at the minority-owned taverns and linked directly to City Hall. ¶ 61. By the time Plaintiffs were thrust into a due process hearing to argue their case against the very men lining Dickert’s campaign coffers, Defendants had manufactured a paper trail of “problems”—often through extortionate “side agreements”—to assure seizure of Plaintiffs’ licenses. See ¶ 59.

Thus, to argue that the Municipal Defendants—who illegally campaigned for, elected and appointed officials for the very purpose of eliminating Plaintiffs from the community, who scrutinized and surveilled Plaintiffs’ businesses, and who trumped-up evidence to revoke Plaintiffs’ licenses—were not “personally involved” in the economic and constitutional injuries suffered by Plaintiffs here would eviscerate § 1983. Plaintiffs have set forth in far more detail than is required at the pleading stage that, at the very least, each defendant “set in motion a series

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of events that the defendant knew or should reasonably have known would cause others to deprive the plaintiff of his constitutional rights.” See Hoffman, 443 F. Supp. 2d at 1012–13. 18 E. Quasi-judicial immunity applies only to the Licensing Committee’s revocation and non-renewal decisions.

Defendants argue that the “Aldermen Municipal Defendants” are entitled to dismissal for the loss of liquor licenses by Plaintiffs Davalos, Jones, and Fair. See Def. Mem. at 45–46. Their argument is overbroad. Although given the law in the Seventh Circuit, these Defendants would be immune from liability vis-à-vis their votes to revoke or not renew Davalos’, Jones’ and Fair’s liquor licenses, see Reed v. Village of Shorewood, 704 F.2d 943, 951 (7th Cir. 1983),19 they are not immune for their other actions causing the loss of Plaintiffs’ liquor licenses, including but not limited to the extortion of side agreements. Indeed, Reed rejected the defendants’ attempt to dismiss the complaint in its entirety as to the liquor control commissioner at issue because he had performed functions other than passing on revocation or non-renewal decisions: Although the defendants appear to believe that answering the immunity questions in favor of [the liquor control commissioner]…would support the district court’s dismissal of the complaint in its entirety, it would not. Not only are there other defendants, who do not and could not claim absolute immunity as judicial… officers, but the complaint about [the liquor control commissioner] extends beyond his conduct as local liquor control commissioner…to his nonjudicial …conduct. Id. at 951.

Plaintiffs Jones and Fair were in fact summoned before the Alderman sitting on the Licensing Committee and required to enter into “side agreements” as a condition of maintaining their licenses. See ¶¶ 102, 115. This is non-judicial conduct which is not reviewable by a court of

18

If this Court concludes that details of “personal involvement” are wanting as to any named defendant, Plaintiffs can readily provide the same by way of amendment and would ask for leave to do so.

19 Plaintiffs respectfully submit that the Seventh Circuit misapplied the United States Supreme Court’s rulings in Butz v. Economou, 438 U.S. 478 (1978) and Cleavinger v. Saxner, 474 U.S. 193 (1985) by disregarding the importance of both the procedural safeguards (or lack thereof) of the “quasi-judicial” hearing under review and the independence of the “quasi-judicial” actor(s) presiding over said hearing in determining the applicability of quasijudicial absolute immunity. See, e.g., Reed, 704 F.2d at 952. Plaintiffs therefore reserve their rights to advocate for a modification of existing law in the Seventh Circuit.

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review. Plaintiffs further note that extorting “side agreements” was not the only non-judicial function performed by the Aldermen, who further subjected Plaintiffs to Licensing Committee “meetings” having nothing to do with any judicial function purportedly present in a due process hearing and, of course, not subject to review by any court. See, e.g., ¶ 109 (alleging that, in 2010, Ginger’s (Khampane and Nueakeaw) was summoned to a Licensing Committee meeting regarding an extension of a side agreement). Accordingly, the “Aldermen Municipal Defendants” are not entitled to dismissal as to Jones and Fair. Plaintiffs respectfully request leave to replead against the Alderman Defendants on behalf of Plaintiff Davalos.20 F. Defendants Maack and Wisneski are not entitled to dismissal as to all plaintiffs.21 Defendants argue that Defendants Maack and Wisneski were not members of the Licensing Committee or Common Council when certain Plaintiffs’ licenses were revoked and, therefore, those Defendants cannot be held responsible for those revocations. See Def. Mem. at 46–47. But, as discussed above, the Alderman may be held liable for their extortion of side agreements from Plaintiffs and other non-judicial conduct. Indeed, Defendants Maack and Wisneski were members of the Licensing Committee when certain Plaintiffs were forced into “side agreements” in order to keep their licenses.

With respect to Alderman Maack, he was a member of the Licensing Committee in September 2009, when Plaintiffs Khampane and Nueakeaw (Ginger’s) were forced to enter into a side agreement. See ¶ 108. He was also a member of the Licensing Committee in August 2009, when Holmes (Park 6) was forced to enter into a side agreement. See ¶ 120.

20

In addition, in the event this Court rules that Plaintiffs’ allegations against the individual Alderman outside the context of their “quasi-judicial” conduct are not sufficiently detailed to put them on notice of the claims against them, Plaintiffs would request leave to amend accordingly.

21 Subject to the Court’s agreement, Plaintiffs will voluntarily dismiss Alderman Raymond DeHahn without prejudice.

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Defendants next argue that Alderman Wisneski should be dismissed as to Plaintiffs Fair and Holmes. However, Wisneski was a member of the Licensing Committee when, in July 2011, Fair (Place on 6th) was forced to enter into a side agreement. See ¶ 115. And, like Maack, Wisneski was a member of the Licensing Committee when, in August 2009, Holmes (Park 6) was forced to enter into a side agreement. See ¶ 120.

VI. Conclusion: The Municipal Defendants’ motion should be denied in its entirety. To the extent this Court finds that any allegations are insufficiently pled, Plaintiffs can readily cure any such defects with additional factual allegations and would ask this Court for leave to do so.

Dated: June 27, 2014

Respectfully submitted, KOHLER & HART, S.C. By: /s/ Martin E. Kohler Martin E. Kohler, Esq. State Bar No. 1016725 735 N. Water Street, Suite 1212 Milwaukee, Wisconsin 53202 (414) 271-9595 Attorney for the Plaintiffs SEGAL MCCAMBRIDGE SINGER & MAHONEY, LTD.

By: /s/ Brian H. Eldridge Steven A Hart, Esq. (ARDC No. 6211008) shart@smsm.com Brian H. Eldridge, Esq. (ARDC No. 6281336) beldridge@smsm.com 233 S. Wacker Drive, Ste. 5500 Chicago, IL 60606 (312) 645-7800 (312) 645-7711 Attorney for the Plaintiffs

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