Response to Tavern League's 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 RACINE CITY TAVERN LEAGUE’S MOTION FOR JUDGMENT ON THE PLEADINGS

Case 2:14-cv-00208-JPS Filed 06/27/14 Page 1 of 12 Document 46

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 RACINE CITY TAVERN LEAGUE’S MOTION FOR JUDGMENT ON THE PLEADINGS

In opposition to the Racine City Tavern League’s motion for judgment on the pleadings under Rule 12(c), (Doc. Nos. 36 and 37), Plaintiffs submit as follows: I. Introduction The Tavern League’s motion relies on two, unsupported and factually deficient arguments. First, the Tavern League attempts to argue that Plaintiffs do not allege predicate acts and causation. In so doing, the Tavern League completely ignores the numerous predicate acts alleged in Plaintiff’s Complaint. Second, throughout its motion the Tavern League attempts to distance itself from its actions by claiming that it has no responsibility for the actions of its members. If this were true, it would create an untenable rule, fraught with policy concerns, that an organization cannot be held liable for the actions of its members, specifically its board members.

The reality is that the Tavern League is at or near the center of this conspriacy. The bars owned by Tavern League members have been protected to a preposterous extent as compared to the minority-owned bars. That is no coincidence, rather, they bought their protection by illegaly

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funding the Mayor’s office by walking over bags of money.1 At the same, and by virtue of the same bribes, white members of the Tavern League were given the right of first refusal for any liquor licenses improperly seized and extorted from minority business owners on the basis of race. Again, this is no coincidence. Put simply, the suggestion made by the Tavern League that this Court should find as a matter of law that it had no involvemnt is irrational. At a minimum, there are issues of fact abound and Plaintiffs look forward to a jury deciding what role the Tavern League truly played in driving minority-owned taverns out of downtown Racine.

II. Legal Standard Pursuant to Rule 12(c), a party may move for judgment on the pleadings after both the plaintiff’s complaint and the defendant’s answer have been filed. Fed. R. Civ. P. 12(c). Rule 12(c) motions are reviewed under the same standard as a motion to dismiss under Rule 12(b). N. Ind. Gun & Outdoor Shows, Inc. v. City of S. Bend, 163 F.3d 449, 452 (7th Cir. 1998). Courts will grant a Rule 12(c) motion only if “it appears beyond doubt that the plaintiff cannot prove any facts that would support his claim for relief.” Craigs, Inc. v. Gen. Elec. Capital Corp., 12 F.3d 686, 688 (7th Cir. 1993) (quoting Thomason v. Nachtrieb, 888 F.2d 1202, 1204 (7th Cir. 1989)). Therefore, to succeed on a motion for judgment on the pleadings, “the moving party must demonstrate that there are no material issues of fact to be resolved.” N. Ind. Gun & Outdoor Shows, Inc., 163 F.3d at 452.

Courts are required to accept as true all well-pled facts and allegations in the complaint, to draw all reasonable inferences in favor of the plaintiff and construe all allegations of a complaint in the light most favorable to the plaintiff. R.J.R. Serv., Inc. v. Aetna Cas. & Sur. Co.,

1

Plaintiffs have a sworn statement to this effect from a former member of Mayor Dickert’s campaign staff, which will be produced in the ordinary course of discovery.

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895 F.2d 279, 281 (7th Cir. 1989); Bontkowski v. First Nat’l Bank of Cicero, 998 F.2d 459, 461 (7th Cir.1993); Perkins v. Silverstein, 939 F.2d 463, 466 (7th Cir. 1991). 2 III. Argument A. Plaintiffs’ 1962(c) claim against the Tavern League is properly supported by the allegations in the Complaint The Tavern League joins and adopts the argument of Municipal Defendants. TLR Mem. at 1. In the interest of efficiency, Plaintiffs, therefore, likewise adopt and incorporate by reference their arguments concerning this issue as set forth in Plaintiffs’ Brief in Opposition to Municipal Defendants’ Motion to Dismiss as if fully set forth herein. See Sect. IV. Before moving to the Tavern League’s argument, however, Plaintiffs must correct numerous inaccuracies contained in its portrayal of the Complaint. Like the Municipal Defendants, the Tavern League attempts to “water down” the Complaint and, in so doing, disregards important facts and ignores the significance of others. For example, the Tavern League grossly mischaracterizes the benefits received by Mayor Dickert and other Municipal Defendants via the quid pro quo. The Tavern League claims that, at best, the monetary bribes “somehow gave the Tavern League control over every facet of city government.” TLR Mem. at 8. However, as discussed below, the benefits given to the Municipal Defendants are not so limited, and the advantages obtained by the Tavern League cannot be summarized in a single sentence.

2

Plaintiffs would like to provide the Court with the necessary context to understand the Tavern League’s decision to move for judgment on the pleadings under Rule 12(c), rather than for dismissal under Rule 12(b)(6) like the remaining Defendants. In exchange for an 11-day extension of time to respond to Plaintiffs’ Complaint, through and including May 16, counsel for Tavern League agreed verbally and in writing to file an answer on behalf of his client.

(Ex. 1, Bosack letter). On May 15, counsel for the Tavern League called Plaintiffs’ counsel and advised that he would be filing a short Rule 12(b)(6) motion to dismiss adopting Municipal Defendants’ motion. When Plaintiffs’ counsel objected based on their prior agreement, counsel for the Tavern League changed course and filed the present Rule 12(c) Motion for Judgment on the Pleadings, as well as an Answer to the Complaint. Plaintiffs therefore request that any attempt by the Tavern League to adopt and/or incorporate by reference the arguments made by Municipal Defendants in their motion to dismiss be disregarded in its entirety.

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The Tavern League injects a number of other inaccuracies in its characterization of Plaintiffs’ Complaint and, in doing so, ignores numerous important, well-pled facts, prohibiting it from seeing the forest for the trees: 

The Tavern League and its members shared a common goal with Defendants—eradicating minority-owned bars from downtown Racine— which was motivated by racial animus. ¶¶ 140-43, 148(h).



At the same time, the Tavern League and its members seized an opportunity to improve their economic status and increase their political influence in Racine.

In exchange for the Tavern League’s campaign contributions and public support, both of which satisfy the “benefit” prong of bribery under federal and state law, Dickert appointed numerous Tavern League contributors to highranking positions within the City government, awarded contributors with Cityfunded business, and shielded Tavern League members from Police Department and Licensing Committee scrutiny.3 Consistent with their goal of eradicating minority-owned bars from downtown Racine, liquor licenses extorted from minority bar owners were re-distributed to white members of the Tavern League. ¶¶ 41, 44.4



It can reasonably be inferred that the quid pro quo with Dickert and other Municipal Defendants had the effect of increasing the appeal of membership within the Tavern League, thus providing it with increased revenue from membership dues that are central to the Tavern League’s continued operation and success. ¶¶ 41, 44. Plaintiffs are entitled to all such reasonable inferences.

Bontkowski, F.2d at 461.



This quid pro quo, which was part of a larger conspiracy, created a perpetual cycle of bribes being given to public officials in exchange for official acts, which had the effect of benefitting not only the Tavern League and its members, but also the Municipal Defendants. 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” and “revitalizing” downtown Racine. ¶¶ 40, 105. The BID #1 and the Downtown Racine Corporation, whose respective boards of directors included

3

The Tavern League claims the Complaint lacks any allegations that the Tavern League itself gave any bribes or unlawful gratuities. TLR Mem. at 5. However, the Complaint does, in fact, allege that the Tavern League made legal and illegal financial contributions to Dickert’s campaign. ¶ 44. Moreover, it can reasonably be inferred from the facts alleged in the Complaint that the Tavern League members named therein acted with the intent to benefit the Tavern League’s membership, and therefore advance the interests of the Tavern League itself.

4 As stated above, Plaintiffs are in possession of a recorded statement from a former member of Mayor Dickert’s campaign staff detailing the bribes accepted and concealed by Dickert’s office. Plaintiffs can therefore plead more particulars by way of amendment if requested by the Court.

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Tavern League members, financially benefited by maintaining control of what businesses could or could not operate in downtown Racine and also by upholding their respective promises to enhance the image of downtown Racine and to improve the social and economic conditions within the district, thereby justifying their continued existence. ¶¶ 16(d), 19, 44. 

The Tavern League further supported the Municipal Defendants’ disparate treatment of minority bar owners by causing its members to appear before the Licensing Committee to testify against them, while offering only favorable testimony when white-owned bars were called before the Licensing Committee. ¶¶ 87, 89, 138, 148(h).5

Bearing in mind these well-pleaded facts, it is abundantly clear that Plaintiffs adequately allege their injuries were proximately caused by the Tavern League members’ predicate acts.

1. Plaintiffs sufficiently allege that the Tavern League members’ actions proximately caused their injuries The sole argument advanced by the Tavern League is that Plaintiffs’ RICO claims fail because there is no causal connection between its members’ predicate acts and Plaintiffs’ alleged injuries. TLR Mem. at 5. Germaine to the discussion are, of course, the predicate acts themselves; but the Tavern League omits any meaningful discussion of them. As Plaintiffs have addressed the Tavern League’s predicate acts above and in further detail in their Brief in Opposition to Municipal Defendants’ Motion to Dismiss, they need not repeat them in entirety here. In summary, many long-standing Tavern League members committed multiple predicate acts of extortion under Wis. Stat. § 943.30, bribery under 18 U.S.C. § 201(b) and Wis. Stat. § 946.10, and giving unlawful gratuities under 18 U.S.C. § 201(c).

In an attempt to lend credibility to its argument, the Tavern League relies on Empress Casino Joliet Corp. v. Blagojevich, a case that, on its surface, involves facts seemingly analogous to those alleged here. The plaintiff in Blagojevich, an owner and operator of riverboat

5

Plaintiffs have additional information regarding Tavern League members not named in the Complaint but who were recruited to speak out against minority-owned bars at hearings before the Licensing Committee. Plaintiffs are therefore willing to amend the Complaint to include this information if required to do so by the Court.

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casinos, alleged that former Illinois governor Rod Blagojevich, his campaign committee Friends of Blagojevich (FOB), five entities that operate horse racing tracks in Illinois and the owner of two of those tracks, violated the RICO Act by conspiring to exchange campaign contributions for state action. Empress Casino Joliet Corp. v. Blagojevich, 09-C-3585, 2013 WL 4478741, at *1 (N.D. Ill. Aug. 19, 2013). The alleged state action was the passing of two legislative acts that harmed the plaintiff’s business. Id. Blagojevich is readily distinguishable from this case. The defendants in Blagojevich moved for summary judgment, not for judgment on the pleadings. Id. Extensive discovery had been undertaken in that case, through which numerous facts were developed and explored beyond those alleged in the Complaint. Id. at *1-2, 5-6. It was only then that the court determined no reasonable jury could make a finding of proximate cause between the predicate acts and the two legislative acts. The standard of review applicable to a motion for judgment on the pleadings under Rule 12(c) and one for summary judgment under Rule 56(a) are not one and the same, and Plaintiffs are not required to prove their case at the pleading stage. Rather, the only question is whether, taking all well-pleaded allegations in the Complaint as true and drawing all reasonable inferences in favor of Plaintiffs, the Complaint states a claim upon which relief can be granted. Plaintiffs’ Complaint does. The Tavern League’s reliance on Blagojevich is therefore misplaced.

The Tavern League further states that “the Plaintiffs allege no injury to themselves other than the revocation or denial of liquor licenses by the Common Council and Licensing Committee, or improper pressure by the Common Council or Licensing Committee that led Plaintiffs to voluntarily give up their licenses.” TLR Mem. at 7. Notwithstanding the fact that other injuries in addition to the loss of their liquor licenses are specifically pled or reasonably

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inferred from the facts—such as being forced to spend substantial sums of money to comply with side agreements, losing the goodwill and patronage of their customers, and losing their right to conduct a lawful business, including the right to solicit business—the injuries acknowledged Tavern League mentions are by themselves sufficient under the RICO Act. ¶¶ 44, 59-62, 91-117.

Here, Plaintiffs have alleged that the Tavern League members’ predicate acts of extortion, bribery and giving unlawful gratuities are directly related to their injuries. 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). Rather, any recoverable damages occurring by reason of a violation of § 1962(c) will flow from the commission of the predicate acts.” Id. at 497. Accordingly, Plaintiffs have alleged sufficient facts to support the “but for” and proximate cause elements of their RICO claim against the Tavern League. The Tavern League’s argument should be summarily rejected.

B. Plaintiffs sufficiently allege claims against the Tavern League under 42 U.S.C. §§ 1983 and 1985(3) 1. The Tavern League conspired with Mayor Dickert and other City Officials to eliminate minority-owned businesses from downtown Racine The Tavern League makes two arguments: First, that Plaintiffs’ allegations are insufficient because the conduct of all defendants is “lumped together” in the Complaint; and, second, that Plaintiffs have failed to allege “state action” by the Tavern League, a private actor.

Def. Mem. at 8–9. Both arguments fail to acknowledge, let alone apply, the applicable law and the facts in the Complaint.

First, the Tavern League cites two Seventh Circuit cases to argue that Plaintiffs’ “lumped together” allegations are insufficient under § 1983. See Def. Mem. at 9. Both cases, however, address heightened pleading under Federal Rule of Civil Procedure 9(b) and thus have absolutely

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no application to Plaintiffs’ § 1983 claim. See Vicom, Inc. v. Harbridge Merch. Servs., Inc., 20 F.3d 771, 777–78 (7th Cir. 1994) (addressing Rule 9(b) in relation to RICO claims); Sears v.

Likens, 912 F.2d 889, 893 (7th Cir. 1990) (finding that the plaintiffs failed to satisfy Rule 9(b) in relation to claims under the federal Securities Act of 1933). Accordingly, the Tavern League has applied the wrong pleading standard to Plaintiffs’ § 1983 claim. Notwithstanding, Plaintiffs have alleged numerous actions by the Tavern League in support of § 1983 liability, including but not limited to illegally contributing to Mayor Dickert to have its members appointed to City positions and, in turn, rid downtown Racine of minority-owned businesses. See ¶¶ 41, 43, 147, 148(h). Indeed, those very allegations also defeat the Tavern League’s next argument: That Plaintiffs have failed to allege “state action.”

As the Tavern League concedes, Plaintiffs can allege “state action” by asserting that the Tavern League was “a willful participant in joint action with the [City] or its agents.” Def. Mem. at 9. The Tavern League nonetheless asserts that Plaintiffs have failed to do so because they have merely set forth “[v]ague and conclusory allegations . . . of a conspiracy[.]” Def. Mem. at 9. To the contrary, even a cursory review of the Complaint reveals that Plaintiffs have alleged extensive cooperation between the Tavern League and City officials to rid downtown Racine of minority-owned bars.

Again, Plaintiffs have alleged that the Tavern League illegally contributed to Mayor Dickert’s campaign to secure “powerful positions within the municipal government[.]” See ¶ 41.

That conspiracy was created to, and did, eliminate minority-owned bars in downtown Racine through a series of injurious actions, including the imposition of trumped-up fines and “side agreements” and the revocation or non-renewal of Plaintiffs’ liquor licenses. See, e.g., ¶¶ 90–130

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(specifying that “a plan was implemented to rid downtown Racine of minority bars” and enumerating injuries to Plaintiffs as a result of said conspiracy). Plaintiffs have further alleged: After becoming Mayor in 2009, Dickert, and other Defendants on his behalf, continued to accept bribes from Tavern League members and other businesses in Racine. Dickert and other Defendants continued to fraudulently report the monies in campaign finance reports and then deposit the monies into the campaign’s bank account. These practices continued up to and after the 2011 re-election campaign for Dickert, and likely continue to date. at ¶ 43 Plaintiffs have thereby alleged that the Tavern League reached an understanding with Mayor Dickert to pay him (and did, in fact, pay him) for influence – influence which included the ability to rid downtown Racine of minority-owned businesses, including Plaintiffs’ taverns.

Plaintiffs allege further facts evidencing the quid pro quo arrangement between the Tavern League and the City, including, but not limited to, the preferential treatment received by white members of the Tavern League. See, e.g., ¶¶ 71–73. Still, further allegations indicate that the Tavern League intentionally cooperated with the City and acted in furtherance of its and the City’s shared purpose. See, e.g., ¶ 89 (alleging that Tavern League Vice President, John McCauliffe, told the Licensing Committee he had spoken with a tavern about how to resolve issues concerning “overcrowding” there and that thereafter the bar owner told the Committee that he had changed his music and, in turn, the bar’s racial makeup).

In short, Plaintiffs have alleged numerous detailed facts regarding the cooperation between the Tavern League and City officials, including Mayor Dickert and the Licensing Committee, for the purpose of ridding downtown Racine of minority-owned bars. The Tavern League’s argument that such allegations are “vague and conclusory” is disingenuous and should be rejected. See Brokaw v. Mercer Cnty., 235 F.3d 1000, 1016 (7th Cir. 2000) (wherein the Seventh Circuit overturned a Rule 12(b)(6) dismissal and rejected argument that the private-state conspiracy allegations at issue were “too vague,” noting that the plaintiff had alleged that the 9 Case 2:14-cv-00208-JPS Filed 06/27/14 Page 10 of 12 Document 46

private actors conspired with a deputy sheriff to file false allegations of child neglect in order to cause child services to remove the child and thereby cause the child’s parents to divorce).

2. The Tavern League misconstrues the alleged conspiracy as one that was comprised of “private actors” only As discussed above, Plaintiffs have pled a conspiracy between the Tavern League and City officials, including Mayor Dickert and members of the Licensing Committee, to rid downtown Racine of minority-owned businesses. Consequently, the Tavern League’s characterization of the conspiracy at issue as a “private conspiracy” is plainly incorrect. See Def. Mem. at 10. Indeed, the cases cited by the Tavern League confirm its misunderstanding as they, unlike this case, address conspiracies involving only private actors. See Brown v. Philip Morris Inc., 250 F.3d 789, 793–94 (3d Cir. 2001) (cited at 10) (identifying defendants as private tobacco companies, non-profits supported by the tobacco industry, and a public relations firm); see also O'Neal v. Atwal, 05-C-739-C, 2006 WL 6040781, at *1–*2 (W.D. Wis. Mar. 8, 2006) (addressing conspiracy of only private actors; namely, three public defenders). Accordingly, the Tavern League’s discussion of rights protected from private conspiracies – interstate travel and freedom from involuntary servitude – have absolutely no application to the § 1985(3) conspiracy alleged by Plaintiffs here. See, e.g., Moore v. Marketplace Rest., Inc., 754 F.2d 1336, 1352 (7th Cir. 1985) (quoting Adickes v. S.H. Kress & Co., 398 U.S. 144, 152 (1970)) (“The involvement of a state official . . . plainly provides the state action essential to show a direct violation of the petitioner's Fourteenth Amendment equal protection rights. . . . Moreover, a private party involved in such a conspiracy even though not an official of the State, can be liable under § 1983.”).

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In short, the Tavern League’s argument, based on the assumption that the conspiracy alleged against it is exclusively a “private” one, is inapposite to the Complaint at issue and must be rejected.

IV. Conclusion For the foregoing reasons, Plaintiffs respectfully request that this Court deny the Racine City Tavern League’s Rule 12(c) motion and grant it such other futher relief as this Court deems just and proper.

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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