Butcher v. Wendt
| Decision Date | 22 September 2020 |
| Docket Number | August Term, 2019,Docket No. 19-224-cv |
| Parties | George H. BUTCHER III, Plaintiff-Appellant, v. Bradley W. WENDT, Rick Fitzgerald, Michael D. Cassell, Joseph Farneti, Defendants-Appellees. |
| Court | U.S. Court of Appeals — Second Circuit |
George H. Butcher III, pro se, New Rochelle, NY.
Daniel L. Millman, Daniel L. Millman, P.C., Jericho, NY, for Defendant-Appellee Bradley W. Wendt.
Rick Fitzgerald, pro se, Orlando, FL.
Michael D. Cassell, pro se, Hogan & Cassell, LLP, Jericho, NY.
David Lawrence III, Assistant Solicitor General (Barbara D. Underwood, Solicitor General, Anisha S. Dasgupta, Deputy Solicitor General, on the brief), for Letitia James, Attorney General of the State of New York, New York, NY, for Defendant-Appellee Joseph Farneti.
Before: RAGGI, LOHIER, and MENASHI, Circuit Judges.
George Butcher III, pro se, appeals from a judgment of the United States District Court for the Southern District of New York (Schofield, J. ) dismissing his complaint in part under the Rooker- Feldman 1 doctrine and in part under Rule 12(b)(6) of the Federal Rules of Civil Procedure for failure to state a claim under the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. §§ 1962(c), (d), as well as 42 U.S.C. § 1983. Butcher alleged that the individual defendants—former employees of Butcher's company, a lawyer for one of the employees, and a New York Supreme Court justice—conspired against him in arbitration and judicial proceedings arising out of an employee compensation dispute.
We affirm the dismissal of all the claims under Rule 12(b)(6), without addressing the dismissal in part under the Rooker- Feldman doctrine.
At all times relevant to this litigation, Butcher was the Chairman and Chief Executive Officer of the BondFactor Company. In April 2010 BondFactor hired Bradley Wendt to be its president. After some negotiation, Wendt's employment contract provided for a base compensation of $1.2 million, which would accrue each year and vest when the company received a $10 million capital infusion. Until that time, Wendt was entitled to a minimum salary of $28,000. By May 2013 the initial capital infusion of $10 million had occurred, and Wendt's accrued base compensation was fully vested. In July 2013, however, Butcher and BondFactor amended employee contracts to delay payment of unpaid vested compensation until the company had raised $500 million. Although Wendt objected to adding the new $500 million infusion target to his contract, he eventually signed the amended contract.
Rick Fitzgerald was hired as BondFactor's managing director in 2011 with a base compensation of $250,000, which accrued annually and was set to vest upon a capital infusion of $20 million. Fitzgerald elected to forgo a minimum salary in exchange for reimbursements for weekly travel between New York and Fitzgerald's home in Florida.
Wendt and Fitzgerald soon began to complain about their compensation, and both were fired in November 2013. They started an arbitration proceeding against BondFactor and Butcher, raising several claims relating to their employment and compensation. In a partial final award entered in February 2015, the arbitrator dismissed all of Wendt's claims and several of Fitzgerald's claims. As for Fitzgerald's claim under the Fair Labor Standards Act (FLSA) and his contractual claim that BondFactor improperly refused to reimburse his travel expenses, however, the arbitrator awarded Fitzgerald $156,459.76 plus attorneys’ fees, for which Butcher and BondFactor were jointly and severally liable. In May 2015 the arbitrator issued a final award that determined the amount of Fitzgerald's attorneys’ fees.
Having lost, Wendt challenged the arbitrator's decision in State Supreme Court under Article 75 of New York's Civil Practice Law and Rules.2 Justice Joseph Farneti, a defendant in this litigation, presided over the action. Attorney Michael Cassell, another defendant in this litigation, represented Wendt in the Article 75 proceeding. Butcher and BondFactor principally moved to dismiss the petition as untimely, but Justice Farneti denied the motion, concluding that the time for filing the petition began to run upon entry of the final award in May 2015 rather than the partial award in February. Turning to the merits, Justice Farneti vacated the arbitration award. He explained that the 2013 amendment to Wendt's contract violated New York public policy because it increased the capital infusion target upon which Wendt's base compensation would vest after the original infusion target had already been reached. Butcher and BondFactor appealed Justice Farneti's decision. The New York State Appellate Division reversed Justice Farneti's judgment, concluding that Wendt's petition should have been dismissed as untimely. Wendt v. BondFactor Co., 94 N.Y.S.3d 134, 169 A.D.3d 808 (2d Dep't 2019).
In October 2016 Wendt and Fitzgerald, represented by Cassell, filed a lawsuit in the Southern District of New York claiming that Butcher had retaliated against them in violation of the federal Dodd-Frank Act. The district court dismissed the complaint as barred under the doctrine of res judicata because Wendt and Fitzgerald could have raised their retaliation claims in the earlier arbitration. See Wendt v. BondFactor Co., No. 16 Civ. 7751 (DLC), 2017 WL 3309733, at *7 (S.D.N.Y. Aug. 2, 2017).
In October 2017, while Butcher's appeal to the Appellate Division was still pending, Butcher filed this action in federal court alleging that Wendt, Fitzgerald, Cassell, and Justice Farneti conspired to defraud him and to deprive him of his due process rights in the Article 75 proceeding, in violation of RICO, 18 U.S.C. § 1962(c), (d), and 42 U.S.C. § 1983. In his second amended federal complaint, Butcher alleged that Wendt and Fitzgerald made a number of false statements that were designed to manufacture a future lawsuit against BondFactor, that Wendt and Fitzgerald conspired to testify falsely during the arbitration proceedings, and that attorney Cassell knowingly filed false statements in the Article 75 proceeding and the Dodd-Frank lawsuit. Butcher also alleged that, as early as December 2014, well prior to entry of the final arbitration award, Wendt, Fitzgerald, Cassell, and Justice Farneti were already conspiring to vacate the award. Wendt and Cassell delayed filing the Article 75 proceeding, Butcher claimed, "to facilitate the selection of Farneti as the presiding officer." App'x at 308. Finally, Butcher asserted that Wendt and Cassell must have bribed Justice Farneti to rule in Wendt's favor.
The District Court held that the Rooker- Feldman doctrine deprived it of subject matter jurisdiction over Butcher's RICO claims related to Wendt's compensation and certain claims arising from the Article 75 proceeding. It dismissed Butcher's remaining claims on the merits for failure to state a claim. It was after the District Court dismissed Butcher's complaint that the New York Appellate Division reversed Justice Farneti's judgment. See supra at 6.
This appeal followed.
Butcher first argues that the District Court improperly relied on the Rooker- Feldman doctrine to dismiss his claims related to Wendt's compensation for lack of jurisdiction while an appeal of Justice Farneti's judgment in the Article 75 proceeding was pending. We conclude that these claims, like the others in Butcher's complaint, were properly dismissed for failure to state a claim and, therefore, we affirm on a different basis from that relied on by the District Court. See Wells Fargo Advisors, LLC v. Sappington, 884 F.3d 392, 396 n.2 (2d Cir. 2018).
We review de novo the dismissal of Butcher's claims under Federal Rule of Civil Procedure 12(b)(6). See Fink v. Time Warner Cable, 714 F.3d 739, 740 (2d Cir. 2013). "[A] complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face," Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quotation marks omitted), and that "raise[s] a right to relief above the speculative level," Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007).
All of Butcher's claims against Justice Farneti are for money damages and arise out of acts or omissions taken in his judicial capacity related to the Article 75 proceeding over which he presided. "It is well settled that judges generally have absolute immunity from suits for money damages for their judicial actions." Bliven v. Hunt, 579 F.3d 204, 209 (2d Cir. 2009). Because Butcher's claims against Justice Farneti are barred by absolute judicial immunity, they were correctly dismissed under Rule 12(b)(6).
The District Court also correctly dismissed Butcher's RICO and § 1983 claims against Wendt, Fitzgerald, and Cassell. To state a claim of a substantive RICO violation under § 1962(c), a plaintiff must allege, among other things, two or more predicate acts "constituting a pattern" of "racketeering activity." Williams v. Affinion Grp., LLC, 889 F.3d 116, 124 (2d Cir. 2018) (quotation marks omitted). Those predicate acts must be the "proximate cause" of the alleged injury. Empire Merchs., LLC v. Reliable Churchill LLLP, 902 F.3d 132, 140 (2d Cir. 2018) (quotation marks omitted). To state a claim for RICO conspiracy under § 1962(d), the plaintiff must also "allege the existence of an agreement to violate RICO's substantive provisions." Williams, 889 F.3d at 124 (quotation marks omitted). And "[t]o state a claim against a private entity on a section 1983 conspiracy theory, the complaint must allege facts demonstrating that the private entity acted in concert with the state actor to commit an unconstitutional act." Ciambriello v. County of Nassau, 292 F.3d 307, 324 (2d Cir. 2002) (quotation marks omitted).
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