Paradise Concepts, Inc. v. Wolf

• Decision Date: 31 August 2020
• Docket Number: CIVIL ACTION NO. 20-2161
• Citation: 482 F.Supp.3d 365
• Parties: PARADISE CONCEPTS, INC., et al. and Others Similarly Situated v. Thomas W. WOLF, et al.
• Court: U.S. District Court — Eastern District of Pennsylvania

482 F.Supp.3d 365

PARADISE CONCEPTS, INC., et al. and Others Similarly Situated

v.Thomas W. WOLF, et al.

CIVIL ACTION NO. 20-2161

United States District Court, E.D. Pennsylvania.

Filed August 31, 2020

Walter Stephen Zimolong, Zimolong LLC, Villanova, PA, for Paradise Concepts, Inc., MWS, LLC, MQRE, LLC.

Stephen R. Kovatis, Office of Attorney General, Philadelphia, PA, for Thomas W. Wolf, Rachel Levine, Dennis M. Davin, Kalonji Johnson.

MEMORANDUM

SURRICK, J.

In response to the COVID-19 pandemic, Governor Tom Wolf and other Pennsylvania state officials issued various orders and implemented programs to combat the spread of the virus. Plaintiffs, three Pennsylvania businesses that were forced to close as a result of the orders, contend that these government actions have infringed on their constitutional rights.

Presently before the Court is Defendants’ Motion to Dismiss. For the following reasons, the Motion will be granted in part and denied in part.

I. BACKGROUND

On March 19, 2020, in response to the COVID-19 pandemic, Defendant, Governor Wolf, issued an executive order "regarding the closure of all businesses that are not life sustaining." (SAC ¶ 10 & Ex. A, ECF No. 4.) That same day, Defendant Rachel Levine, Secretary of the Pennsylvania Department of Health, issued a similar order. (Id. ¶ 14 & Ex. B.) These orders effectively closed all non-life sustaining businesses in Pennsylvania. (See id. ¶¶ 10-17 & Exs. A & B.)

The following day, Governor Wolf issued a press release explaining that non-life sustaining business could seek a waiver from the March 19 business closure orders from the Department of Community and Economic Development ("DCED"). (Id. ¶ 18 & Ex. C.) The press release provided that "a team of professionals at DCED [would] review each request and respond based on the guiding principle of balancing public safety while ensuring the continued delivery of critical infrastructure services and functions." (Id. Ex. C.)

Over 42,000 non-life sustaining businesses applied for waivers and nearly 7,000 were granted, including a waiver for Governor Wolf's family business, Wolf Home Products. (Id. ¶¶ 22-23.) On April 3, 2020, before DCED had processed all of the waiver requests that it received, Governor Wolf ended the waiver program. (Id. ¶ 24.) Governor Wolf, Secretary Levine, and DCED Secretary Dennis Davin were responsible for enforcing and implementing the waiver program. (Id. ¶¶ 25-26.)

On April 28, 2020, Defendant Kalonji Johnson, Commissioner of the Pennsylvania Bureau of Professional and Occupational Affairs ("BPOA"), issued "guidance for appraisers, notaries, title companies, and home inspectors," related to real estate transactions during the pandemic. (Id. ¶ 27 & Ex. D.) According to this guidance, appraisers, notaries, title companies, and home inspectors could operate regardless of the business closure orders, but only with respect to homes that were under contract before March 18, 2020. (Id. ¶ 29.) The guidance also permitted appraisers, notaries, title companies, and home inspectors to perform in-person activities, such as showings, appraisals, and inspections, as long as the participants wore masks, gloves, and foot coverings. (Id. ¶ 30.)

Plaintiff Kenwood Pools operates a retail store in Levittown, Pennsylvania. It sells pool and spa chemicals, filtration systems, heat pumps, gas heaters, pool toys, and maintenance equipment. It also offers swimming pool services. (Id. ¶¶ 32-33.) Kenwood Pools complied with the March 19 business closure orders, but eventually learned that two of its nearby competitors, LA Pools and Spa and Leslie's Pool Supplies and Service Repairs, had obtained waivers. (Id. ¶¶ 36-40.) Like Kenwood Pools, LA Pools and Leslie's Pool Supplies operate retail locations and sell pool products. (Id. ¶ 38.) Leslie's Pool Supplies is three miles from Kenwood Pools and LA Pools is 20 miles from Kenwood Pools. (Id. ¶ 40.) Despite the similarities among these businesses, when Kenwood Pools attempted to obtain a waiver, its request was denied without explanation. (Id. ¶¶ 41-42.)

Plaintiff WIN Home Inspection, of Elizabethtown, Pennsylvania, also applied for a waiver. Although WIN's competitor, Trimmer Home Inspections, obtained a waiver, WIN's request for a waiver was denied. WIN and Trimmer are ten miles from one another and serve the same customers. (Id. ¶¶ 43-47.)

Plaintiff MQRE, a Philadelphia realtor, opted not to request a waiver because it thought that doing so would be futile. It eventually learned, however, that another realtor, just blocks away, received a waiver. (Id. ¶¶ 48-51.)

Plaintiffs initiated this class action suit on May 5, 2020. (ECF No. 1.) On May 8, 2020, they filed a Second Amended Complaint, alleging: (Count I) a violation of their substantive due process rights, as guaranteed by the Fifth and Fourteenth Amendments; and (Count II) a violation of their rights to equal protection, as guaranteed by the Fourteenth Amendment. (SAC ¶¶ 59-87.) On August 3, 2020, Defendants filed this Motion to Dismiss for lack of subject matter jurisdiction and for failure to state a claim. (ECF No. 11.)

II. DISCUSSION

A. Standard of Review

In order to adjudicate a case, a federal court must have subject matter jurisdiction. Bender v. Williamsport Area Sch. Dist. , 475 U.S. 534, 541-42, 106 S.Ct. 1326, 89 L.Ed.2d 501 (1986). Defendants challenge this Court's subject matter jurisdiction, pursuant to Federal Rule of Civil Procedure 12(b)(1). "In evaluating a Rule 12(b)(1) motion, a court must first determine whether the movant presents a facial or factual attack." In re Schering Plough Corp. , 678 F.3d 235, 243 (3d Cir. 2012). "In reviewing a facial challenge, which contests the sufficiency of the pleadings, ‘the court must only consider the allegations of the complaint and documents referenced therein and attached thereto, in the light most favorable to the plaintiff.’ " Id. (quoting Gould Elec. Inc. v. United States , 220 F.3d 169, 176 (3d Cir. 2000) ). "A factual attack, on the other hand, is an argument that there is no subject matter jurisdiction because the facts of the case ... do not support the asserted jurisdiction." Constitution Party of Pennsylvania v. Aichele , 757 F.3d 347, 358 (3d Cir. 2014). On a factual attack, the "court may weigh and ‘consider evidence outside the pleadings.’ " Id. (quoting Gould Elecs. Inc. , 220 F.3d at 176 ).

Although Defendants do not dispute any of the facts alleged by Plaintiffs, they point to several articles and press releases regarding the course of the pandemic, including the gradual reopening of Pennsylvania and Pennsylvania businesses since the March 19 business closure orders. Indeed, as we indicate below, infra n.1, the essence of Defendants’ jurisdictional argument is that because Plaintiffs are now free to operate their businesses, this matter is now moot. We treat this argument as a factual attack. See Molina v. Pennsylvania Soc. Serv. Union , 392 F. Supp. 3d 469, 477-78 (M.D. Pa. 2019).

With regard to Defendants’ assertion that Plaintiffs have failed to state a claim, "a plaintiff must allege ‘enough facts to state a claim to relief that is plausible on its face’ " to survive a motion to dismiss pursuant to Rule 12(b)(6). New Jersey Carpenters & the Trustees Thereof v. Tishman Const. Corp. of New Jersey , 760 F.3d 297, 302 (3d Cir. 2014) (quoting Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). "A complaint has facial plausibility when there is enough factual content ‘that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.’ " Id. (quoting Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) ). When considering the sufficiency of a complaint on a 12(b)(6) motion, a court "must accept all factual allegations in the complaint as true and draw all reasonable inferences in favor of the plaintiff." Id. (citing Phillips v. Cnty. of Allegheny , 515 F.3d 224, 231 (3d Cir. 2008) ). The court should also consider the exhibits attached to the complaint and matters of public record. See Schmidt v. Skolas , 770 F.3d 241, 249 (3d Cir. 2014).

B. Substantive Due Process Does Not Protect Plaintiffs’ Business Interests¹

Plaintiffs allege that they "have a protectable property interest in their right to earn a living, right to operate their businesses free from arbitrary government interference and a right to use their retail locations in a lawful manner." (SAC ¶ 60.)

The Fifth Amendment provides that "[n]o person shall ... be deprived of life, liberty, or property, without due process of law...." U.S. Const. amend. V. The Fourteenth Amendment similarly provides that no state shall "deprive any person of life, liberty, or property, without due process of law...." U.S. Const. amend. XIV. "Substantive due process is a ‘component of the [Fourteenth Amendment] that protects individual liberty against certain government actions regardless of the fairness of the procedures used to implement them.’ "

Wrench Transp. Sys., Inc. v. Bradley , 340 F. App'x 812, 815 (3d Cir. 2009) (internal quotations omitted) (quoting Collins v. City of Harker Heights , 503 U.S. 115, 125, 112 S.Ct. 1061, 117 L.Ed.2d 261 (1992) ).

In a non-precedential decision, the Third Circuit in Bradley held that the "right to engage in business" is "more similar to the type of intangible employment rights that [the court] has rejected as not protected by substantive due process than the real property interests which can be protected by substantive due process." Id. (internal quotations omitted) (collecting cases). More recent decisions by and within the Third Circuit have cited to this holding approvingly. See , e.g. , Joey's Auto Repair & Body Shop v. Fayette Cnty. , 785 F. App'x 46, 50 (3d Cir. 2019) (noting that "a substantive due process right to conduct business without zoning interference extends beyond our precedent"); Saucon Valley Manor, Inc. v. Miller , 392 F. Supp. 3d 554,...