Scahill v. Dist. of Columbia

• Decision Date: 11 December 2017
• Docket Number: Civil Action No. 16–2076 (JDB)
• Parties: Martin SCAHILL, et al., Plaintiffs, v. DISTRICT OF COLUMBIA, et al., Defendants.
• Court: U.S. District Court — District of Columbia

286 F.Supp.3d 12

Martin SCAHILL, et al., Plaintiffs,

v.DISTRICT OF COLUMBIA, et al., Defendants.

Civil Action No. 16–2076 (JDB)

United States District Court, District of Columbia.

Signed December 11, 2017

Brendan James Klaproth, Klaproth Law PLLC, Washington, DC, for Plaintiffs.

MEMORANDUM OPINION

JOHN D. BATES, United States District Judge

Currently before the Court is [16] plaintiffs' motion for reconsideration and for leave to amend their complaint. For the following reasons, the motion will be denied.

I. BACKGROUND

The Court will assume familiarity with the facts of this case, as laid out in the prior Memorandum Opinion granting defendants' motion to dismiss ("Mem. Op.") [ECF No. 14]. See Scahill v. District of Columbia, 271 F.Supp.3d 216, 2017 WL 4280946 (D.D.C. Sept. 25, 2017). Plaintiffs Martin Scahill ("Scahill") and HRH Services, Inc. ("HRH") brought claims under 42 U.S.C. § 1983 against the District of Columbia Alcoholic Beverage Control Board ("the Board"), the District of Columbia itself, and ten unnamed "John Doe" defendants. Plaintiffs alleged that conditions placed on HRH's liquor license—which barred Scahill from entering HRH's pub, the Alibi—violated their First Amendment rights to freedom of speech and freedom of association, and that the Board brought enforcement actions against HRH in retaliation for plaintiffs' lawsuits against the Board. Plaintiffs also claimed that the order violated their Fifth Amendment rights to liberty, due process, and freedom of movement and violated the unconstitutional conditions doctrine. Plaintiffs sought a declaratory judgment, injunctive relief, and damages.

Defendants filed a motion to dismiss under Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6), arguing that plaintiffs lacked standing and failed to state a claim. The Court granted the motion, finding that a prior D.C. Court of Appeals decision precluded HRH from claiming it had standing on its claims related to the Board's order and that plaintiffs did not state plausible claims to relief. Mem. Op. at 33; see Order ("September 25 Order") [ECF No. 13]. The Court also issued an order to show cause as to why the claims against the John Doe defendants should not be dismissed for failure to identify and serve them with process under Federal Rule of Civil Procedure 4(m). See Order [ECF No. 15]. Plaintiffs then voluntarily dismissed their claims against the John Doe defendants. See Response to Order to Show Cause [ECF No. 17]. However, HRH also filed a motion to: (1) reconsider the Court's decision regarding HRH's standing, thereby seeking to revive HRH's First and Fifth Amendment and unconstitutional conditions claims; and (2) amend plaintiffs' complaint to provide more detailed facts, in order to revive their retaliation claims. See Pl. HRH's Mot. for Reconsideration and for Leave to Amend the Compl. ("HRH Mot.") [ECF No. 16]. The District opposes the motion. See Defs.' Opp. to Pl. HRH Servs. LLC's Mot. for Reconsideration and to Amend the Compl. ("Opp'n") [ECF No. 21].

II. DISCUSSION

HRH argues that the Court should reconsider its determination that a prior D.C. Court of Appeals decision precluded later courts from finding that HRH has standing. HRH asserts that it was fined by the Board after briefing closed on the motion to dismiss, and that this factual change triggers the curable defect exception to issue preclusion. HRH Mot. at 3–5. HRH also claims that issue preclusion should not have applied in the first place, because standing under the D.C. Administrative Procedure Act (DCAPA) is not the same issue as Article III standing. Id. at 5–6. Additionally, HRH seeks leave to amend its complaint, so it can add more details about the Board's alleged retaliatory acts. Id. at 6–7. The Court will consider each argument in turn.

A. STANDARD OF REVIEW

Before the Court can reach the merits of HRH's reconsideration motion, it must first resolve a dispute over the applicable standard of review. HRH argues that its motion is properly brought under Federal Rule of Civil Procedure 54(b) because the September 25 Order was not a final order. HRH Mot. at 2 n.2; Reply Br. in Supp. of Pl. HRH's Mot. for Reconsideration and for Leave to Amend the Compl. ("Reply") [ECF No. 23] at 1, 5–6. Under this Rule, a court may revise its decisions "at any time before the entry of a judgment adjudicating all the claims and all the parties' rights and liabilities." Fed. R. Civ. P. 54(b). The District, on the other hand, claims that plaintiffs' voluntary dismissal of the John Does eliminated the final claims in the case, thus transforming the September 25 Order into a final order that may be reconsidered only under Rule 59(e). See Opp'n at 4–5. That Rule allows a party to move to "alter or amend a judgment" already entered. Fed. R. Civ. P. 59(e). The Court must therefore determine whether plaintiffs' voluntary dismissal of the John Doe plaintiffs transformed the September 25 Order into a final one.

"A decision is final only if it ‘ends the litigation on the merits and leaves nothing for the court to do but execute the judgment.’ " Cincinnati Ins. Co. v. All Plumbing, Inc., 812 F.3d 153, 156 (D.C. Cir. 2016) (citation omitted). Therefore, a court must resolve all claims against all defendants before an order may be deemed final. This is a procedure that the parties themselves can only rarely control. "The judge, not the parties, is meant to be the dispatcher who controls the circumstances and timing of the entry of final judgment." Blue v. D.C. Pub. Sch., 764 F.3d 11, 18 (D.C. Cir. 2014). Thus, a court can render a prior order final by involuntarily dismissing remaining claims or parties, even without prejudice. Id. However, the D.C. Circuit "treats voluntary but non-prejudicial dismissals of remaining claims [by plaintiffs themselves] as generally insufficient to render final and appealable a prior order disposing of only part of the case." Id. at 17. Here, plaintiffs dismissed their claims against the John Doe defendants on their own initiative, and did not indicate that they were doing so with prejudice. Response to Order to Show Cause at 1; see Fed. R. Civ. P. 41(a)(1)(B) ("Unless the notice or stipulation [of dismissal] states otherwise, the dismissal is without prejudice."). Hence, the September 25 Order cannot be retroactively declared final based on their voluntary dismissal.

Moreover, the Court granted defendants' motion to dismiss plaintiffs' amended complaint as against the Board and the District. See September 25 Order. The September 25 Order did not dismiss the action in its entirety. Nor did the Court dismiss the complaint with prejudice. "In evaluating the finality of district court rulings on motions to dismiss, [the D.C. Circuit has] distinguished between orders dismissing the action, which are final, ... and orders dismissing the complaint, which, if rendered ‘without prejudice,’ are ‘typically’ not final ...." Attias v. Carefirst, Inc., 865 F.3d 620, 623 (D.C. Cir. 2017) (citations omitted). As this Court neither dismissed the action nor was involved in dismissing the claims against the John Doe defendants, the Court's prior order was not final.

Thus, HRH is correct that its reconsideration motion must be treated as a Rule 54(b) motion, not a Rule 59(e) motion. Unlike Rule 59(e), which "sets a high threshold for parties to raise a new argument for the first time after judgment," Cobell v. Jewell, 802 F.3d 12, 25 (D.C. Cir. 2015), " Rule 54(b)'s approach ... can be more flexible, reflecting the ‘inherent power of the rendering district court to afford such relief from interlocutory judgments as justice requires,’ " id. Justice may require reconsideration "where a court has ‘patently misunderstood a party[,] ... has made an error not of reasoning but of apprehension, or where a controlling or significant change in the law or facts [has occurred] since the submission of the issue to the Court.’ " Moore v. Carson, No. CV 14-2109 (JDB), 2017 WL 1750248, at *3 (D.D.C. May 3, 2017) (citation omitted) (second alteration in original). The decision whether to reconsider a prior order is left to the Court's discretion, and the Court need not consider arguments that have already been rejected on the merits. Id. (citing Capitol Sprinkler Inspection, Inc. v. Guest Servs., Inc., 630 F.3d 217, 225, 227 (D.C. Cir. 2011) ).

B. RECONSIDERATION OF ISSUE PRECLUSION

HRH has moved for reconsideration on only one issue: the preclusive effect of the D.C. Court of Appeals' prior decision on HRH's standing to challenge the Board's order. Particularly because the parties did not have the opportunity to brief this issue prior to the September 25 Order, the Court takes seriously its obligation to reexamine the preclusion holding. Ultimately, however, HRH's two attacks on that holding are unconvincing.

1. The Curable Defect Exception

HRH first argues that the Board's decision on July 20, 2017 to fine HRH $4,000 for violating the terms of its liquor license, and HRH's payment of that fine, cured any jurisdictional defect identified by the D.C. Court of Appeals. HRH Mot. at 4–5. HRH thereby invokes the curable defect exception to issue preclusion, which "allows relitigation of jurisdictional dismissals when a precondition requisite to the court's proceeding with the original suit was not alleged or proven, and is supplied in the second suit." Nat'l Ass'n of Home Builders v. EPA, 786 F.3d 34, 41 (D.C. Cir. 2015) (citation and internal quotation marks omitted). To break the shield of issue preclusion under this exception, a plaintiff must show that "a material change following dismissal cured the original jurisdictional deficiency." Id.

Here, the factual change—the Board's decision to fine HRH—"follow[ed] dismissal": it occurred in July 2017, about nine months after the D.C. Court of Appeals dismissed HRH's original appeal. The Board's decision was also a material change, although the District seeks to claim otherwise. See Opp'n at 8–10. To work a...