Moody v. Mich. Gaming Control Bd.

• Decision Date: 02 February 2017
• Docket Number: No. 16-1155,16-1155
• Citation: 847 F.3d 399
• Parties: Daniel MOODY, Plaintiff-Appellant, v. MICHIGAN GAMING CONTROL BOARD; Scott McLeay; Steven J. Ferrari; Al Ernst; Norma Cole ; Eric Pertinnen; Jim Curran ; Richard Kalm; John Lessnau, Defendants-Appellees.
• Court: U.S. Court of Appeals — Sixth Circuit

847 F.3d 399

Daniel MOODY, Plaintiff-Appellant,

v.MICHIGAN GAMING CONTROL BOARD; Scott McLeay; Steven J. Ferrari; Al Ernst; Norma Cole ; Eric Pertinnen; Jim Curran ; Richard Kalm; John Lessnau, Defendants-Appellees.

No. 16-1155

United States Court of Appeals, Sixth Circuit.

Argued: December 8, 2016

Decided and Filed: February 2, 2017

ARGUED: Hugh M. Davis, CONSTITUTIONAL LITIGATION ASSOCIATES, P.C., Detroit, Michigan, for Appellant. Thomas R Nafso, OFFICE OF THE MICHIGAN ATTORNEY GENERAL, Lansing, Michigan, for Appellees. ON BRIEF: Hugh M. Davis, CONSTITUTIONAL LITIGATION ASSOCIATES, P.C., Detroit, Michigan, for Appellant. Thomas R Nafso, OFFICE OF THE MICHIGAN ATTORNEY GENERAL, Lansing, Michigan, for Appellees.

Before: COLE, Chief Judge; BOGGS and SILER, Circuit Judges.

OPINION

SILER, Circuit Judge.

Daniel Moody ("Moody") appeals from the district court's dismissal of his First Amendment retaliation claim for lack of standing. For the following reasons, we affirm the district court's decision.

I. Factual and Procedural History

Moody is a horse trainer engaged in harness racing and is the trainer of record for his family farm. Defendants are the Michigan Gaming Control Board ("MGCB") and various individual employees ("individual defendants") of the MGCB. Moody's father, John Moody ("John"), was suspended and excluded by the MGCB in 2010. John later publicly criticized and sued the MGCB over those actions. In 2011, an anonymous email led to the investigation of Moody by the MGCB. The purpose behind this investigation was to determine whether Moody was only a "paper trainer" for his father, who could no longer participate in activities related to racing.

The MGCB held a hearing in May 2012, during which it looked into such issues as trainer responsibility at the Moody farm, Moody's tax returns and billing records, and the business practices of the farm. Another hearing was held in July 2012 to investigate certain issues further. These issues included whether Moody was giving a disqualified person (his father) access to racing; Moody's failure to remove the name of a groom from the stable list when the groom was no longer employed at the farm; and Moody's failure to cooperate by not returning a call from an investigator for the MGCB. The MGCB also requested that Moody produce his tax returns and a list of horses, owners, and training contracts.

At the hearings, Moody testified that John, Sarah Garver, and Moody's cousin David, all worked on the farm. He said that John worked around the stables but once a horse began racing, John no longer had contact with that horse. Moody also presented his tax returns and was directed to sign a 4506-T authorization to allow the IRS to release his tax filing information to the MGCB. Moody believed his tax preparer, Sandy Hennessy, had e-filed his 2010 and 2011 tax returns with the IRS. However, Hennessy told the investigators that only the 2011 tax return had been e-filed but that Moody had not been notified of this issue. A third hearing was held in November 2012, which essentially dealt with the same issues as in the previous hearings.

In December 2012, when Moody attempted to file his application for 2013 licensing, he was disqualified from racing until June 2013 for the matters discussed at the November hearing. In January 2013, a consent order was prepared that would have allowed Moody to begin participating in racing in March 2013, but it required Moody to agree not to take legal action against the MGCB. However, because Moody did not sign the consent order, he remained disqualified for six months. He appealed that suspension. In September 2013, Moody was told by the MGCB that he could apply for licensure without any of the preconditions that were proposed. The parties settled, and the administrative law judge dismissed the case.

In 2015, Moody filed a complaint under 42 U.S.C. § 1983 in the Eastern District of Michigan. He raised three different counts in this complaint, against both the MGCB and individual employees in their official and individual capacities. In Count I, he argued that he suffered First Amendment retaliation in the form of his disqualification from racing due to his father's actions in filing suit against the MGCB. In Count II, he argued that he had a liberty interest in his right to engage in the harness-racing industry, and that Defendants had deprived him of that right. In Count III, he claimed that he had a property interest in his licenses to train and race, and that he was deprived of that interest without due process.

Later, pursuant to Federal Rule of Civil Procedure 12(b)(6), the court held that the MGCB was protected against suit due to Eleventh Amendment immunity and that neither the MGCB nor the individual defendants in their official capacities were "persons" subject to suit under 42 U.S.C § 1983. The court then dismissed all claims against the MGCB and the official-capacity claims against the individual defendants. As to the First Amendment claim, the court stated that for third-party standing, there must be a hindrance to the third party's ability to protect his own interest. Noting that Moody alleged an injury and a close relationship between himself and his father, the court nevertheless found that Moody failed to show a hindrance to his father's ability to protect his own rights. As John had filed his own lawsuit against the MGCB and related defendants alleging constitutional violations arising out of the MGCB's investigation of him, the court ruled that Moody failed to show a hindrance preventing John from asserting his own rights, leaving Moody unable to claim third-party standing. The court also found that Moody did not have a liberty interest in his license, and that he had not been deprived of procedural due process, as several hearings were held both before and after his license was suspended. As such, the court dismissed all counts of the complaint.

Moody later filed a motion to reconsider, pointing to the fact that the trial court did not permit John to amend his complaint and add a First Amendment claim for the alleged retaliation against his son.¹ The court denied the motion. Moody then appealed, arguing that the court erred in finding that John was not hindered from protecting his interests and that Moody has third-party standing to raise the First Amendment retaliation claim.²

II. Analysis

A. Standard of Review

We review a district court's dismissal of claims pursuant to Federal Rule of Civil Procedure 12(b)(6) de novo. Winget v. JP Morgan Chase Bank, N.A. , 537 F.3d 565, 572 (6th Cir. 2008). As with the consideration by a district court, an appellate court accepts the plaintiff's factual allegations as true and views the complaint in the light most favorable to the plaintiff, but is not required to accept legal conclusions or unwarranted factual inferences as true. Id. at 575.

B. Moody Lacks Third-Party Standing

Standing is a threshold issue for bringing a claim in federal court and must be present at the time the complaint is filed. See Lynch v. Leis , 382 F.3d 642, 647 (6th Cir. 2004). A plaintiff may assert his "own legal rights and interests," but generally, a litigant may not sue to protect the constitutional rights of a third party. Kowalski v. Tesmer , 543 U.S. 125, 129, 125 S.Ct. 564, 160 L.Ed.2d 519 (2004). This bar, however, is not absolute. Id. A plaintiff may raise a constitutional claim on behalf of a third party if he can prove (1) injury-in-fact to the plaintiff, (2) a close relationship between the plaintiff and the third party whose rights he asserts, and (3) a hindrance preventing the third party from raising his own claim. See Kowalski , 543 U.S. at 129–30, 125 S.Ct. 564 ; Smith v. Jefferson Cty. Bd. of Sch. Comm'rs , 641 F.3d 197, 208 (6th Cir. 2011) ; Fieger v. Ferry , 471 F.3d 637, 649 (6th Cir. 2006). A close relationship between the litigant and third party ensures that the plaintiff will effectively advocate for the third party's rights. Kowalski , 543 U.S. at 129, 125 S.Ct. 564.

In this case, the district court agreed that Moody met the first two requirements for third-party standing in that he had alleged an injury (temporary disqualification from horse racing) and a close relationship between himself and the third party (father and son). Moody's case was dismissed because the court found that there was no hindrance preventing John from protecting his own rights. John had filed his own suit against the MGCB and individual defendants, and thus John was able to pursue his own interests in court. Accordingly, the issue now before us is whether the district court erred when determining that no hindrance existed.

Determining the existence of a hindrance requires examining "the likelihood and ability of the third parties ... to assert their own rights." Powers v. Ohio , 499 U.S. 400, 414, 111 S.Ct. 1364, 113 L.Ed.2d 411 (1991). Courts have found the following to constitute a hindrance that keeps a third party from protecting his or her own rights: deterrence from filing suit due to privacy concerns, imminent mootness of a case, or systemic practical challenges to pursuing one's own rights. See Powers v. Ohio , 499 U.S. 400, 414...