Gregory v. Fresno Cnty.
| Decision Date | 07 June 2019 |
| Docket Number | Case No. 1:18-cv-00524-LJO-SAB |
| Parties | MATTHEW G. GREGORY, et al., Plaintiffs, v. FRESNO COUNTY, et al., Defendants. |
| Court | U.S. District Court — Eastern District of California |
FINDINGS AND RECOMMENDATIONS RECOMMENDING GRANTING DEFENDANTS' MOTION TO DISMISS PLAINTIFFS' FIRST AMENDED COMPLAINT
Currently before the Court is California Department of Justice ("DOJ"), Registry of Charitable Trusts ("RCT"), Xavier Becerra, David Eller, Walter Garcia, Kamala Harris, Tanya M. Ibanez, Elizabeth S. Kim, and Julianne Mossler's (collectively "State Defendants") motion to dismiss Matthew G. Gregory, Danella J. Gregory, Gina D. Gregory, Matthew J. Gregory, Wounded Warriors Support Group ("WWSG"), and Central Coast Equine Rescue & Retirement ("CCERR") (collectively "Plaintiffs") first amended complaint.
The Court heard oral argument on May 29, 2019. Counsel Gina Gregory appeared for Plaintiffs. Counsel Diana Esquivel appeared for Defendants. Having considered the moving, opposition, and reply papers, the declarations and exhibits attached thereto, arguments presented at the May 29, 2019 hearing, as well as the Court's file, the Court issues the following findings and recommendations.
On April 16, 2018, Plaintiffs filed this civil rights action pursuant to 42 U.S.C. § 1983 against Fresno County, Lisa Smittcamp, and Jeffrey Dupras (collectively "County Defendants"), and State Defendants.
On June 27, 2018, State Defendants filed a motion to dismiss and request for judicial notice. (ECF Nos. 21 and 22.) On July 3, 2018, County Defendants filed a motion to dismiss. (ECF No. 25.) The motions to dismiss were referred to the undersigned for the preparation of findings and recommendations. (ECF Nos. 23, 26.) On September 6, 2018, findings and recommendations were filed recommending granting the County Defendants motion to dismiss and granting in part the State Defendants motion to dismiss. (ECF No. 62.) After receiving an extension of time, Plaintiffs filed objections to the findings and recommendations on October 4, 2018. (ECF No. 66.)
On November 9, 2018, the district judge issued an order to show cause regarding the res judicata effect of a state jury verdict that had been entered against Plaintiffs. (ECF No. 70.) The parties filed responses to the order to show cause. (ECF Nos. 71, 72, 73.) On December 13, 2018, an order adopting in part the findings and recommendations was filed. (ECF No. 74.) The County Defendants' motion to dismiss was granted, the State Defendants' motion to dismiss was granted in part, and the matter was stayed pending the finality of the State Court action. (Id.) On February 11, 2019, the stay of this action was lifted, judgment was entered on behalf of the County Defendants, and Plaintiffs were granted leave to file a first amended complaint. (ECF No. 76.)
On March 26, 2019, Plaintiffs filed a first amended complaint against Julianne Mossler and David Eller (hereafter "Defendants"). (ECF No. 77.) On April 23, 2019, Defendants filed a motion to dismiss and request for judicial notice. (ECF Nos. 80, 81.) Plaintiffs filed an opposition and objections to the motion to dismiss on May 7, 2019. (ECF Nos. 82, 83.) On May 8, 2019, the matter was referred to the undersigned. (ECF No. 84.) On May 22, 2019, Defendants filed a reply to Plaintiffs' opposition and objections. (ECF No. 86.)
A hearing was held on the motion to dismiss on May 29, 2019, and the matter was submitted. (ECF No. 91.) On May 29, 2019 and May 31, 2019, Plaintiffs filed supplemental briefing and supplemental authority addressing the motion to dismiss. (ECF Nos. 92, 93, 94, 95.) On June 3, 2019, Plaintiffs' supplemental briefs were stricken from the record. (ECF No. 97.)
Under Federal Rule of Civil Procedure 12(b)(6), a party may file a motion to dismiss on the grounds that a complaint "fail[s] to state a claim upon which relief can be granted." A motion to dismiss pursuant to Rule 12(b)(6) tests the legal sufficiency of the complaint. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). In deciding a motion to dismiss, "[a]ll allegations of material fact are taken as true and construed in the light most favorable to the nonmoving party." Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337-38 (9th Cir. 1996). The pleading standard under Rule 8 of the Federal Rules of Civil Procedure does not require " 'detailed factual allegations,' but it demands more than an unadorned, the-defendant-unlawfully harmed-me accusation." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007)). In assessing the sufficiency of a complaint, all well-pleaded factual allegations must be accepted as true. Iqbal, 556 U.S. at 678-79. However, "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Id. at 678. To avoid a dismissal under Rule 12(b)(6), a complaint must plead "enough facts to state a claim to relief that is plausible on its face." Twombly, 550 U.S. at 570.
In deciding whether a complaint states a claim, the Ninth Circuit has found that two principles apply. First, to be entitled to the presumption of truth the allegations in the complaint "may not simply recite the elements of a cause of action, but must contain sufficient allegations of underlying facts to give fair notice and to enable the opposing party to defend itself effectively." Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011). Second, so that it is not unfair to require the defendant to be subjected to the expenses associated with discovery and continuedlitigation, the factual allegations of the complaint, which are taken as true, must plausibly suggest an entitlement to relief. Starr, 652 F.3d at 1216. "Dismissal is proper only where there is no cognizable legal theory or an absence of sufficient facts alleged to support a cognizable legal theory." Navarro, 250 F.3d at 732 (citing Balistreri v. Pacifica Police Dept., 901 F.2d 696, 699 (9th Cir.1988)).
Plaintiff Matthew G. Gregory, Danella J. Gregory, and Matthew J. Gregory are all officers of the CCERR and WWSG which were registered 501(c)(3) non-profit organizations until December 2018. (First Am. Compl. ("FAC") ¶¶ 3-5.) CCERR was established to rescue horses and educate the public about animal abuse and neglect and WWSG was established to educate the public about post traumatic stress disorder and veteran's issues. (FAC ¶ 3.) Gina D. Gregory is the daughter of Matthew G. Gregory and Danella Gregory and was admitted to the State Bar of California on June 5, 2014. (FAC ¶ 6.) Gina Gregory became a certified instructor with Professional Association of Therapeutic Horsemanship in 2015, teaching therapeutic riding lessons to U.S. veterans in the Bay Area. (Id.)
WWSG ran a contest that had thousands of free ticket entries and the contest clearly stated that "no purchase was necessary" and it was "void where prohibited." (FAC ¶ 16.) Defendants made the determination that WWSG ran a non-exempt raffle rather than an exempt raffle, lottery, or sweepstakes. (Id.) On April 17, 2017, Defendant Mossler filed an lawsuit in Alameda County Superior Court, People v. WWSG et al., No. RG 17856929, without conducting a reasonable investigation. (FAC ¶ 21.)
Defendant Eller issued a cease and desist letter on August 16, 2016. (FAC ¶ 25.) The letter stated that it would take place immediately and that a request for a hearing would not stay the order. (FAC ¶ 25.) WWSG sent two timely responses to the cease and desist order dated August 16, 2016 and objected to all sanction letters, dated September 6, 2016 and December 8, 2016. (FAC ¶ 17.) The letters stated the basis for WWSG's objections, but no hearings were scheduled. (Id.)
Plaintiffs bring two causes of action: 1) against Defendant Eller for violations of due process for the failure to provide a hearing; and 2) against Defendant Mossler for due process violations for imposing penalties without adequate notice and an opportunity to be heard.
Defendant Eller issued the August 16, 2016 cease and desist letter and other August 16, 2016 correspondence addressed to WWSG referencing "Raffle Registration Denial & Revocation Due to Violation Due to Violations of Law - Check and Application Return." (FAC ¶ 36.) Defendant Eller determined that the drawing that WWSG was conducting was an illegal raffle in violation of California Penal Code § 320.5 without providing Plaintiffs with an opportunity to be heard. (Id.) The letter also stated that WWSG was in violation of section 320.5 for selling tickets online. (Id.) Defendant Eller ordered WWSG to "cease and desist from all raffle activities and solicitations by any means." (FAC ¶ 37.) The order applied to WWSG and all persons or entities working on their behalf. (Id.) Defendant Eller labeled the raffle illegal and demanded a financial report for the raffle under threat to impose a penalty of up to $1,000. (FAC ¶ 38.) In the August 16, 2016 cease and desist letter, Defendant Eller stated that the "Appeal and Request for a Hearing" form must be filed out and returned to request a hearing. (FAC ¶ 40.)
Matthew G. Gregory sent a letter with the required information to request a hearing within the thirty-day time frame required by California Government Code section 999.6(c)(1). (FAC ¶ 41.) The administrative law judge held that the letter was not a request for an appeal. (Id.) Matthew G. Gregory's September 12, 2016 letter addressed both the cease and desist letter and the September 6, 2016 imposition of penalties letter. (Id.) The letter contained the name, address, and registration number of WWSG and stated, (Id.) No hearing was scheduled....
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