CULINARY Serv. Of Del. VALLEY INC. v. Bor. Of YARDLEY
| Decision Date | 30 June 2010 |
| Docket Number | No. 09-4182,D.C. No. 2-09-cv-01251,09-4182 |
| Parties | CULINARY SERVICE OF DELAWARE VALLEY, INC.;MARTIN CAPLAN,Appellants v. BOROUGH OF YARDLEY, PENNSYLVANIA;C. WILLIAM WINSLADE, individually and in his official capacity;JAMES J. O'NEILL, individually and in his official capacity; JAMES M. MCNAMARA, individually and in his official capacity;JOSEPH HUNTER, individually and in his official capacity |
| Court | U.S. Court of Appeals — Third Circuit |
Steven Pachman, Esq., Lathrop B. Nelson, III, Esq. [ARGUED], Sidney S. Liebesman, Esq., Montgomery, McCracken, Walker & Rhoads, LLP Counsel for Appellants
Andrew G. Cassidy, Esq., Christian P. LaBletta, Esq., Counsel for Appellees. Harry G. Mahoney, Esq., Thomas C. Gallagher, Esq. [ARGUED], Deasey, Mahoney, Valentini & North, Ltd., Counsel for Appellees Borough of Yardley, C. William Winslade, James M., McNamara, and Joseph Hunter
Joseph D. Goldberg, Esq., Wendi D. Barish, Esq. [ARGUED], Tamara L. Rudow, Esq., Counsel for Appellee James J. O 'Neill
NOT PRECEDENTIAL
Before: AMBRO, CHAGARES, and VAN ANTWERPEN, Circuit Judges.
Culinary Services of Delaware Valley, Inc. ("Culinary Services") and Martin Caplan ("Caplan") (collectively referred to herein as "Plaintiffs") appeal from an August 21, 2009 order of the United States District Court for the Eastern District of Pennsylvaniadismissing their complaint and a September 29, 2009 order denying their motion for leave to file an amended complaint. We will affirm the dismissal of all of Plaintiffs' claims, except for the request for declaratory relief, which we will vacate and remand for further proceedings. We will also affirm the denial of the motion to amend.
Culinary Services distributes amusement, arcade, and redemption games to establishments licensed by the Pennsylvania Liquor Control Board ("PLCB"). Two of these games are at issue in this case: Red, White & Blue Game and HoldEm Poker Game (collectively referred to herein as the "Games").
The Red, White & Blue Game is a three-reel game in which the player must stop each reel to win. The HoldEm Poker Game is a five-reel game in which the first two reels each assign a card, and the player must stop the remaining reels to win. Plaintiffs maintain that the Games do not function in the same manner as traditional slot machines because they do not utilize random number generators, outcomes are not predetermined, and players must use skill to stop the reels to succeed. Thus, Plaintiffs contend that the use of skill predominates over chance in the Games.
On March 7, 2008, Plaintiffs entered into an agreement with the Knowles-Doyle American Legion in Yardley, Pennsylvania (the "Yardley American Legion"). The Agreement provided that the Yardley American Legion would lease the Games from Culinary Services in exchange for fifty-percent of the net revenue from the Games. The Agreement also provided for automatic termination "immediately upon notice by authorities that the games are prohibited for any reason." (App. at 32.)
Before entering into the Agreement, Plaintiffs sought the opinions of the Pennsylvania Gaming Control Board ("PGCB") and PLCB regarding the legality of the Games-the PGCB did not respond, and the PLCB did not offer an opinion on their legality. Plaintiffs then consulted the Pennsylvania State Police's Bureau of Liquor Code Enforcement ("BLCE"), which despite inspecting the Games, offered a "no comment" opinion.2
After entering into the Agreement, but before installing the Games, Caplan informed the local police chief, James J. O'Neill ("Chief O'Neill"), of his intention to install the Games and of the BLCE's "no comment" opinion. After Plaintiffs installed the Games, Borough Manager C. William Winslade ("Manager Winslade") informed the board of directors of the Yardley American Legion that the Games had been "deemed illegal by Yardley Borough, Yardley Borough Police Department, and the Pennsylvania State Police." (Id. at 34.)
Shortly thereafter, Manager Winslade issued an official notification to the Yardley American Legion that "after careful investigation by Police Chief O'Neill it has been deemed that machines you have are in [sic] illegal." (Id. at 35.) The notification stated that "Chief O'Neill's investigation included discussions with Commander Rackovich of the Quakertown Barracks of the PA State Police and Special Investigator Smith of the PA State Police." (Id.) Plaintiffs contend that Manager Winslade, Chief O'Neill, and Commander Rackovich never personally inspected the Games and that each lacks the expertise or training to assess their legality. Further, Investigator Smith allegedly disclaimed any personal knowledge or experience with the Games and confirmed he would thus be unable to issue an opinion regarding their legality.
The official notification effectively terminated the Agreement. Caplan subsequently requested the Borough to rescind the notification, to no avail. Instead, at a public meeting, Borough Council President Joseph Hunter ("President Hunter") expressed the Council's support for the decisions and actions of Manager Winslade and Chief O'Neill. The Borough published the minutes from this meeting on its website. At the same meeting, Borough Solicitor James M. McNamara ("Solicitor McNamara") agreed to look into the matter. A few days later, he informed Plaintiffs, "The Borough of Yardley is in no position to make a determination as to the legality of the[ Games] and the effect of possible use of the [Games] in the [Yardley] American Legion hall." (Id. at 40.)
Notwithstanding this disclaimer of authority, the Borough and its officers continued to refuse to rescind the official notification. Instead, Solicitor McNamara suggested the parties wait until the Bucks County District Attorney's Office issued an opinion on the matter. The Bucks County District Attorney, however, declined to offer an opinion after inspecting the Games.
As a consequence of the Borough's actions, Plaintiffs lost their only contract in Pennsylvania and have since been unable to enter into additional contracts. Although several other potential customers have indicated their willingness to enter into agreements with Plaintiffs, they have declined to do so because of the Borough's assessment of the Games. As a result, Plaintiffs have been unable to distribute its inventory of fifty-four Games and have been deterred from manufacturing "hundreds more."
Plaintiffs filed a complaint in the District Court against the Borough of Yardley, Manager Winslade, Chief O'Neill, Solicitor McNamara, and President Hunter3 asserting four counts: (I) a § 1983 claim for violation of procedural due process against all Defendants; (II) tortious interference with contract against Manager Winslade and Chief O'Neill; (III) commercial disparagement against Manager Winslade, Chief O'Neill, and President Hunter; and (IV) a request for declaratory relief against all Defendants that the Games are "games of skill that are legal under the laws of the Commonwealth of Pennsylvania." (App. at 46.)
On August 21, 2009, the District Court dismissed Plaintiffs' complaint in its entirety. The Court concluded that Plaintiffs failed to identify a protected property or liberty interest to support Count I and, regardless, Defendants are entitled to qualified immunity. The Court also determined that the individual Defendants are entitled to statutory immunity from Counts II and III, and that Plaintiffs failed to join indispensable parties for Count IV. Plaintiffs then sought leave to file an amended complaint, which the District Court denied in its September 29, 2009 footnote-order. The Court stated: "Not only is the Proposed Amended Complaint substantially similar to the original complaint, but the proposal also fails to address the issue of prejudice to the absent parties that would unquestionably be affected by the outcome of this matter." (Id. at 18 n.1.) Plaintiffs filed this timely appeal.4
The District Court exercised subject matter jurisdiction over Plaintiffs' § 1983 claim pursuant to 28 U.S.C. § 1331, and exercised supplemental jurisdiction over the tort and declaratory judgment actions pursuant to § 1367. The Court had authority to issue declaratory relief under § 2201. We have jurisdiction under § 1291 to review an order granting a motion to dismiss. See, e.g., Phillips v. County of Allegheny, 515 F.3d 224, 230 (3d Cir. 2008).
We exercise plenary review over a district court's order granting a motion to dismiss under Rule 12(b)(6). Fowler v. UPMC Shadyside, 578 F.3d 203, 206 (3d Cir. 2009). First, we must distinguish between factual allegations and legal conclusions in the complaint; second, if the complaint sets forth well-pleaded factual allegations, we may assume their veracity and draw inferences favorable to the non-moving party, but then must determine whether the factual allegations show an entitlement to relief. Phillips, 515 F.3d at 233-34; see Ashcroft v. Iqbal, 129 S. Ct. 1937, 1950, 1953 (2009).
Of course, whether a claim is plausible depends on the nature of the claim asserted. See Phillips, 515 F.3d at 233. This does not impose a probability requirement at the pleading stage, but instead simply calls for enough facts to raise a reasonable expectation that discovery will reveal evidence of the necessary elements of the claims. Iqbal, 129 S. Ct. at 1949; Phillips, 515 F.3d at 234. At this stage of the litigation, we focus on whetherthe non-moving party sufficiently pled its claims, not whether it can prove its claims. Fowler, 578 F.3d at 213.
We also perform plenary review of a grant of qualified immunity and apply the same standards applicable to review of Rule 12(b)(6) motions. Leveto v. Lapina, 258 F.3d 156, 161 (3d Cir. 2001). The grant of immunity will be upheld only when immunity is established on the face of the...
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