TJM 64, Inc. v. Harris

• Decision Date: 08 March 2021
• Docket Number: Case No. 2:20-cv-02498-JPM-tmp
• Parties: TJM 64, INC., T.J. Mulligans, Inc., RAB Memphis, LLC, Hadley's PUB, Inc., Tavern 018, Inc., Brewski's Sports Bar and Grille, LLC, Murphy's Public House, Inc., and Canvas of Memphis, LLC, Plaintiffs, v. Shelby County Mayor, Lee HARRIS; Shelby County Health Department Director, Alisa Haushalter; and Shelby County Health Officer, Bruce Randolph, Defendants.
• Court: U.S. District Court — Western District of Tennessee

526 F.Supp.3d 331

TJM 64, INC., T.J. Mulligans, Inc., RAB Memphis, LLC, Hadley's PUB, Inc., Tavern 018, Inc., Brewski's Sports Bar and Grille, LLC, Murphy's Public House, Inc., and Canvas of Memphis, LLC, Plaintiffs,

v.Shelby County Mayor, Lee HARRIS; Shelby County Health Department Director, Alisa Haushalter; and Shelby County Health Officer, Bruce Randolph, Defendants.

Case No. 2:20-cv-02498-JPM-tmp

United States District Court, W.D. Tennessee, Western Division.

Signed March 8, 2021

Randall N. Songstad, The Songstad Law Firm, Memphis, TN, for Plaintiffs.

Emmett Lee Whitwell, Robert Joseph Leibovich, Shelby County Attorney's Office, Memphis, TN, for Defendants.

ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM

JON P. McCALLA, UNITED STATES DISTRICT JUDGE

Before the Court is the Defendants’ Motion to Dismiss, filed on August 3, 2020. (ECF No. 23.) Defendants move the Court pursuant to Fed. R. Civ. P. 12(b)(6) for an order dismissing the Complaint with prejudice. (ECF No. 23-1 at PageID 174.) Defendants argue that (1) Plaintiffs’ substantive due process claim fails because they cannot show that Shelby County Health Department Health Directive 8 is unrelated to any legitimate purposes and (2) Plaintiffs’ Takings claim fails because (a) the Shelby County Government engaged in a valid exercise of its police powers and (b) Defendants’ alleged action was neither a physical nor a regulatory taking. (See generally id. )

Plaintiffs filed a Response on August 30, 2020. (ECF No. 25.) Plaintiffs concede that their Fourteenth Amendment substantive due process claim should be dismissed. (Id. at PageID 188.) Plaintiffs continue to assert their Fifth Amendment Takings Clause claim against the Defendants, arguing that Defendants’ actions constitute (1) a categorical regulatory taking because Plaintiffs have alleged that there is no economically beneficial use left for their property or, in the alternative, (2) a non-categorical regulatory taking because the question of whether Plaintiffs’ property has been taken for public use is a question of fact and cannot be decided at this stage of the proceedings. (See generally id. ) Defendants filed a Reply on September 9, 2020, in which they provide additional authority in support of their arguments. (ECF No. 28 at PageID 198.)

For the reasons set forth below, Defendants’ Motion to Dismiss is GRANTED .

I. BACKGROUND

This action was filed on July 13, 2020. (ECF No. 1.) Plaintiffs are the owners of several establishments licensed as limited service restaurants in Shelby County, Tennessee. (Id. ¶¶ 19–20.) On July 8, 2020, the Shelby County Health Department issued an order requiring all "Bars/Limited Service Restaurants and Clubs" to shut down for forty-five days because of a spike in COVID-19 cases in Shelby County, TN ("the Closure Order"). (Id. ¶¶ 15–16.) The Closure Order allowed all other businesses to remain open, except (1) "Bars/Limited Service Restaurants and Clubs," (2) "Adult Entertainment venues," (3) schools, and (4) "[f]estivals, fairs, parades, large scale sporting events, and large-scale community events." (Id. ¶ 17.) According to local regulation, a "Limited Service Restaurant" is a facility that "must not have total gross receipts of prepared foods in excess of 50% of their overall sales." (Id. ¶ 18.)

Plaintiffs assert two constitutional violations: (1) the Closure Order (also known as Shelby County Health Directive 8) violates the Takings Clause of the Fifth Amendment, as a regulatory taking; and (2) the Closure Order violates substantive due process under the Fourteenth Amendment. (Id. at PageID 5, 10.) Plaintiffs have conceded that their Fourteenth Amendment substantive due process claim should be dismissed, so Plaintiffs’ only assertion still at issue is that the Closure Order violates the Takings Clause. (ECF No. 25 at PageID 188.) Plaintiffs assert that the Closure Order "prohibits all economically beneficial and profitable uses of the Plaintiffs’ Tangible Property and Physical Location[,] [and that] [t]he entirety of the Plaintiffs’ property rights have been extinguished." (Id. ¶ 33.) Plaintiffs assert that the Closure Order qualifies as a categorical taking under Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 1019, 112 S.Ct. 2886, 120 L.Ed.2d 798 (1992), and, alternatively, qualifies as a regulatory taking under the framework established by Penn Cent. Transp. Co. v. New York City, 438 U.S. 104, 98 S.Ct. 2646, 57 L.Ed.2d 631 (1978). (Id. ¶¶ 37–45.)

On July 29, 2020, this Court entered an Order Denying Plaintiffs’ Application for Temporary Restraining Order ("TRO Order"). (ECF No. 22.) In the TRO Order, the Court held that Plaintiffs "are unlikely to succeed on the merits of their constitutional claims and given the potential public health consequences of allowing Plaintiffs to continue to operate their business unfettered by [ ] public safety and health regulations, the issuance of a TRO preventing the enforcement of the Closure Order is not appropriate in this case." (Id. at PageID 153.)

II. LEGAL STANDARD

Federal Rule of Civil Procedure 12(b)(6) allows dismissal of a complaint that "fail[s] to state a claim upon which relief can be granted." A Rule 12(b)(6) motion permits the "defendant to test whether, as a matter of law, the plaintiff is entitled to legal relief even if everything alleged in the complaint is true." Mayer v. Mylod, 988 F.2d 635, 638 (6th Cir. 1993) (citing Nishiyama v. Dickson Cnty., 814 F.2d 277, 279 (6th Cir. 1987) ). A motion to dismiss only tests whether the plaintiff has pled a cognizable claim and allows the court to dismiss meritless cases which would waste judicial resources and result in unnecessary discovery. Brown v. City of Memphis, 440 F. Supp. 2d 868, 872 (W.D. Tenn. 2006).

When evaluating a motion to dismiss for failure to state a claim, the Court must determine whether the complaint alleges "sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ " Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). If a court decides that the claim is not plausible, the case may be dismissed at the pleading stage. Iqbal, 556 U.S. at 679, 129 S.Ct. 1937. "[A] formulaic recitation of the elements of a cause of action will not do." Twombly, 550 U.S. at 555, 127 S.Ct. 1955. The "[f]actual allegations must be enough to raise a right to relief above [a] speculative level." Ass'n of Cleveland Fire Fighters v. City of Cleveland, 502 F.3d 545, 548 (6th Cir. 2007) (quoting Twombly, 550 U.S. at 555, 127 S.Ct. 1955 ). A claim is plausible on its face if "the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 678, 129 S.Ct. 1937 (citing Twombly, 550 U.S. at 556, 127 S.Ct. 1955 ).

A complaint need not contain detailed factual allegations. Twombly, 550 U.S. at 570, 127 S.Ct. 1955. A plaintiff without facts who is "armed with nothing more than conclusions," however, cannot "unlock the doors of discovery." Iqbal, 556 U.S. at 678-79, 129 S.Ct. 1937 ; Green v. Mut. of Omaha Ins. Co., No. 10-2487, 2011 WL 112735, at *3 (W.D. Tenn. Jan. 13, 2011), aff'd, 481 F. App'x 252 (6th Cir. 2012). A court "need not accept as true legal conclusions or unwarranted factual inferences." Morgan v. Church's Fried Chicken, 829 F.2d 10, 12 (6th Cir. 1987). "While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations." Iqbal, 556 U.S. at 679, 129 S.Ct. 1937. A court is "not bound to accept as true a legal conclusion couched as a factual allegation." Twombly, 550 U.S. at 555, 127 S.Ct. 1955.

Assessing the facial sufficiency of a complaint ordinarily must be undertaken without resort to matters outside the pleadings. Wysocki v. Int'l Bus. Mach. Corp., 607 F.3d 1102, 1104 (6th Cir. 2010). "[D]ocuments attached to the pleadings become part of the pleadings and may be considered on a motion to dismiss." Commercial Money Ctr., Inc. v. Illinois Union Ins. Co., 508 F.3d 327, 335 (6th Cir. 2007) (citing Fed. R. Civ. P. 10(c) ); see also Koubriti v. Convertino, 593 F.3d 459, 463 n.1 (6th Cir. 2010). Even if a document is not attached to a complaint or answer, "when a document is referred to in the pleadings and is integral to the claims, it may be considered without converting a motion to dismiss into one for summary judgment." Commercial Money Ctr., 508 F.3d at 335–36. When evaluating a motion to dismiss, the Court may also take judicial notice of pertinent matters of public record, including bankruptcy filings. Signature Combs, Inc. v. United States, 253 F. Supp. 2d 1028, 1040 n.5 (W.D. Tenn. 2003).

III. ANALYSIS

The Fifth Amendment Takings Clause provides that private property shall not "be taken for public use, without just compensation." U.S. Const. amend. V. "The purpose of forbidding uncompensated takings of private property for public use is ‘to bar the Government from forcing some people alone to bear public burdens, which, in all fairness and justice, should be borne by the public as a whole.’ " Connolly v. Pension Benefit Guar. Corp., 475 U.S. 211, 277, 106 S.Ct. 1018, 89 L.Ed.2d 166 (1986) (quoting Armstrong v. United States, 364 U.S. 40, 49, 80 S.Ct. 1563, 4 L.Ed.2d 1554 (1960) ).

There are two recognized categories of takings: (1) physical takings and (2) regulatory takings. Waste Mgmt. v. Metro. Gov't, 130 F.3d 731, 737 (6th Cir. 1997). Plaintiffs allege in their Complaint that the Closure Order was an unconstitutional regulatory taking of their property. (ECF No. 1 at PageID 5.) Defendants raise three arguments that Plaintiffs have failed to state a claim for relief for regulatory taking under the Takings Clause. (See generally ECF No. 23-1.) Defendants argue that the enactment of the Closure Order (1) was a valid...