Holmes v. City of Racine, Case No. 14-CV-208-JPS

• Decision Date: 31 October 2014
• Docket Number: Case No. 14-CV-208-JPS
• Court: U.S. District Court — Eastern District of Wisconsin
• Parties: THOMAS J. HOLMES d/b/a Park 6 Bar LLC, OTHA KEITH FAIR d/b/a The Place on 6th LLC, JOSE MALDONADO d/b/a The Cruise Inn, MARIA E. MALDONADO d/b/a The Cruise Inn, WILBUR JONES d/b/a Viper's Lounge, PYTHAPHONE KHAMPANE d/b/a Ginger's Lounge, and OMJAI NUEAKEAW d/b/a Ginger's Lounge Plaintiffs, v. CITY OF RACINE, GARY BECKER, JOHN DICKERT, TAVERN LEAGUE OF RACINE CITY, KURT S. WAHLEN, JAMES KAPLAN, GREGORY T. HELDING, DAVID L. MAACK, ARON WISNESKI, ROBERT E. MOZOL, DEVIN P. SUTHERLAND, MARK L. LEVINE, JOSEPH G. LEGATH, DOUGLAS E. NICHOLSON, MONTE G. OSTERMAN, MARY OSTERMAN, and GREGORY S. BACH, Defendants.

THOMAS J. HOLMES d/b/a Park 6 Bar LLC, OTHA KEITH FAIR d/b/a The Place on 6th LLC,
JOSE MALDONADO d/b/a The Cruise Inn, MARIA E. MALDONADO d/b/a The Cruise Inn,
WILBUR JONES d/b/a Viper's Lounge, PYTHAPHONE KHAMPANE d/b/a Ginger's Lounge,
and OMJAI NUEAKEAW d/b/a Ginger's Lounge Plaintiffs,
v.
CITY OF RACINE, GARY BECKER, JOHN DICKERT,
TAVERN LEAGUE OF RACINE CITY, KURT S. WAHLEN, JAMES KAPLAN,
GREGORY T. HELDING, DAVID L. MAACK, ARON WISNESKI,
ROBERT E. MOZOL, DEVIN P. SUTHERLAND, MARK L. LEVINE, JOSEPH G. LEGATH,
DOUGLAS E. NICHOLSON, MONTE G. OSTERMAN, MARY OSTERMAN,
and GREGORY S. BACH, Defendants.

Case No. 14-CV-208-JPS

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF WISCONSIN

October 31, 2014

ORDER

The plaintiffs filed their initial Complaint (the "Complaint," or the "original Complaint") in this action on February 25, 2014. (Docket #1 ("Compl.")). They alleged that the defendants engaged in illegal activities to eliminate minority-owned bars from downtown Racine, Wisconsin, and sued the defendants under the Civil Rights Act ("CRA"), 42 U.S.C. §§ 1983, 1985(3), and the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. §§ 1962(b)-(d). (Compl., ¶¶ 4-5).

The defendants then filed four separate motions to dismiss. (Docket #25, #28, #31, #36). The Court reviewed those motions and determined that the plaintiffs' complaint was, indeed, deficient. (Docket #60). The Court was

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particularly concerned with the fact that the complaint was extremely vague. (E.g., Docket #60 at 27-28). In the original Complaint, the plaintiffs had not adequately distinguished which claims it had intended to assert against particular defendants. (E.g., Docket #60 at 27-28). Nonetheless, the Court found that the claims generally had some merit, in spite of the confusing pleadings, and so allowed the plaintiffs to amend their complaint. (E.g., Docket #60 at 3, 27-29).

The plaintiffs amended their complaint, generally clarifying their allegations. (Docket #62 ("Am. Compl.")).¹ Thereafter the defendants again filed four separate motions to dismiss. (Docket #67, #70, #73, #75). Those motions are fully briefed (Docket #82, #84, #86, #88, #89), and the Court now turns to decide them.

1. BACKGROUND

The Court begins by addressing the background of this case. In doing so, it expects the reader to be familiar with its recitation of the factual background, as appeared in its order dismissing the plaintiffs' original Complaint, and so does not provide as detailed an overview as appeared in that order. (Docket #60 at 3-9). Nonetheless, for ease of reading, the Court will again provide a short discussion of the parties and their general allegations. Thereafter, the Court discusses the plaintiffs' Amended Complaint, the changes made therein, and the specific claims that now remain in this case. The Court then discusses, generally, the defendants' outstanding motions to dismiss and the arguments that form the basis for those motions. Finally, the Court will discuss, with greater specificity, the

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plaintiffs' conspiracy- and RICO-related allegations, as the defendants' motions to dismiss are focused primarily on the dismissal of the plaintiffs' RICO claims. After providing that background, the Court will turn to its substantive analysis of the motions to dismiss, in Section 2 of this order.

1.1 Parties and Allegations²

There are seven plaintiffs remaining in this case.³ They are all either black, Hispanic, or Thai, and owned several bars located in downtown Racine:

(1) Thomas Holmes is black and owned and operated the Park 6 Bar from 2008 to 2011 (Am. Compl., ¶ 9);

(2) Otha Keith Fair is black and owned and operated The Place on 6th, LLC, from 2009 to 2012 (Am. Compl., ¶ 10);

(3-4) Pythaphone Khampane and Omjai Nueakeaw are Thai-American and Thai, respectively, and together owned and operated Ginger's Lounge from 2008 to 2011 (Am. Compl. ¶¶ 11-12);

(5) Wilbur Jones is black and owned and operated Viper's Lounge from 1998 to 2008 (Am. Compl. ¶ 13);

(7-8) Jose Maldonado and Maria Maldonado are Hispanic and together owned and operated The Cruise Inn from 2001 to 2006 (Am. Compl. ¶ 14).

They brought suit against a number of defendants, including the City of Racine and various individuals and groups involved in Racine's local politics. (See Compl. ¶¶ 16-35). Those defendants have appeared in several separate groups, as follows:

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(1) the Municipal Defendants, which includes:

(a) the City of Racine (hereinafter "Racine" or "the City") (Am. Compl. ¶ 15);

(b) Gary Becker, Racine's former mayor, who served in that position from April of 2003 until January 20, 2009 (Am. Compl. ¶ 16);

(c) John Dickert, Racine's current mayor, who has held that position since May of 2009 (Am. Compl. ¶ 18);

(d) Kurt Wahlen, who served as Racine's police chief from September of 2006 until April of 2011 (with a short additional stint as interim chief between July of 2011 and July of 2012) (Am. Compl. ¶ 19);

(f) James Kaplan, an alderman sitting on Racine's Common Council from April of 2006 through present, during which time he has served on the City's Board of Health and Licensing Committee (Am. Compl. ¶ 20);

(h) Gregory Helding, an alderman sitting on Racine's Common Council from April of 2005 through present, during which time he served on the City's Licensing Committee (Am. Compl. ¶ 21);

(i) David Maack, an alderman sitting on Racine's Common Council from April of 2000 through April of 2010, during which time he served on the City's Licensing Committee (Am. Compl. ¶ 22);

(j) Aron Wisneski, an alderman sitting on Racine's Common Council from April of 2006 through July of 2012, during which time he served on the City's Licensing Committee (Am. Compl. ¶ 23);

(k) Robert Mozol, an alderman sitting on Racine's Common Council from April of 2007 through April of 2013, during which time he served on the City's Licensing Committee (Am. Compl. ¶ 24);

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(l) Devin Sutherland, who serves as manager of Racine's Downtown Business Improvement District ("BID #1") and executive director of the Downtown Racine Corporation (the Court will discuss both BID #1 and the Downtown Racine Corporation in further detail, below) (Am. Compl. ¶ 25);

(m) Mark Levine, who serves as the chairman of BID #1 and also owns property within BID #1 (Am. Compl. ¶ 26);

(n) Joseph (or "Joey") LeGath, a member of the BID #1 board, who also owns several bars in Racine and serves as the director of the Racine City Tavern League (which the Court will discuss further, below) (Am. Compl. ¶ 27);

(2) the Political Staff Defendants, a term the Court has used to describe the group that includes:

(a) Doug Nicholson, a member of the Racine City Tavern League and former campaign worker for current-Mayor Dickert, who owns several bars within BID #1 and also serves on the City's Board of Ethics (Am. Compl. ¶ 28);

(b) Monte Osterman ("Osterman"), who assisted Mayor Dickert with his 2009 and 2011 mayoral campaigns, operates Osterman Granite and Marble (a business within the BID #1), and is currently the District #3 Racine County Supervisor (Am. Compl. ¶ 29); and

(c) Mary Jerger Osterman ("Jerger"), who served as Mayor Dickert's treasurer for his 2009 and 2011 mayoral campaigns, owns Copacetic (a business within the BID #1), and was appointed to the City's Board of Ethics by Dickert (Am. Compl. ¶ 30);

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(3) the Downtown Racine Corporation, through Devin Sutherland,⁴ a private, non-profit corporation that works to enhance Downtown Racine's image and functionality and contracts with the City to manage BID #1, the Downtown Racine Corporation is managed by an Executive Director (Sutherland, who is also one of the Municipal Defendants) and governed by a Board of Directors (some of whom are named Municipal Defendants) (See Am. Compl. ¶ 25); and

(4) the Racine City Tavern League (the "Tavern League"), a nonprofit corporation that, essentially, serves as a lobbying group for alcohol retailers in Racine, Wisconsin, and currently has "dozens of members, nearly all of whom are white" (Am. Compl. ¶ 17).

Stated as generally as possible, the plaintiffs allege that current-Mayor Dickert conspired with donors (including white business owners), Alderpersons, the Police Department, the BID #1 board members, and the Tavern League. Together, that group discriminated against the plaintiffs by ensuring that the plaintiffs would be subject to a significant number of complaints and reports to police, which in turn required them to appear before the Common Council—which, the theory goes, Dickert essentially controlled—for civil proceedings in which the plaintiffs had to agree to take expensive remediation steps or face loss of their liquor licenses. Meanwhile, through this alleged conspiracy, the white-owned bars in the area had similar or higher number of incidents, but were reported less often or mis-reported

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by police so that the white owners would not face the same level of scrutiny including civil proceedings and potential license-loss. As a result of these proceedings, the plaintiffs spent large amounts of money on remediation efforts and/or lost or relinquished their liquor licenses. The plaintiffs allege that this activity was a racially-motivated plan to rid downtown Racine of non-white-owned businesses. (See, e.g., Am. Compl. ¶¶ 31-113).

1.2 Amended Complaint

Those general allegations formed the...