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Wallace v. Powell

August 24, 2010


The opinion of the court was delivered by: Judge Caputo


Presently before the Courtare five motions to dismiss: (1) Defendant Barbara Conahan's Motion to Dismiss (Doc. 433); (2) Defendant Cindy Ciavarella's Motion to Dismiss (Doc. 435); (3) Defendants Robert J. Powell's and Vision Holdings, LLC's Motion to Dismiss the Master Complaints Pursuant to Fed R. Civ. P. 12(b)(6) (Doc. 437); (4) Motion to Dismiss by Mid-Atlantic Youth Services Corp, PA Child Care, LLC and Western PA Child Care, LLC (Doc. 439); and (5) Motion of Defendants Robert K. Mericle and Mericle Construction, Inc., Pursuant to Fed. R. Civ. P. 12, to Dismiss the Master Complaint for Class Actions and the Individual Plaintiffs' Master Long Form Complaint (Doc. 442). For the reasons discussed below, the motions of Defendants Cindy Ciavarella and Barbara Conahan will be granted, and the remaining motions will be granted in part and denied in part.

This Court has jurisdiction over the present action pursuant to 28 U.S.C. §§ 1331 ("federal question") and 1367 ("supplemental").


I. Factual Background

The allegations of the Individual Plaintiffs' Master Complaint ("IC") (Doc. 134) and Class Action Plaintiffs' Master Complaint ("CAC") (Doc. 136) that are relevant to the present motions are as follows:

A. Parties

Defendants Michael Conahan ("Conahan") and Mark Ciavarella were at all relevant times Judges of the Court of Common Pleas of the Eleventh Judicial District of the Commonwealth of Pennsylvania. (IC ¶¶ 5, 6; CAC ¶¶ 161, 162.) From approximately January 2002 until January 2007, Conahan served as President Judge. (IC. ¶ 5.) Conahan and Ciavarella were also owners, officers, shareholders, operators, and beneficiaries of Pinnacle Group of Jupiter, LLC ("Pinnacle") and Beverage Marketing of PA, Inc. ("Beverage"). (IC ¶¶ 5, 6; CAC ¶¶ 161, 162.)Pinnacle was owned and operated by Defendants Barbara Conahan ("Mrs. Conahan") and Cynthia Ciavarella ("Mrs. Ciavarella"), the wives of Defendants Conahan and Ciavarella, respectively. (IC ¶¶ 12-14; CAC ¶¶ 166, 167.)

Defendants Robert Powell ("Powell") and Gregory Zappala ("Zappala") were at all relevant times owners, officers, shareholders, and operators of Defendants PA Child Care, LLC ("PACC"), Western PA Child Care, LLC ("WPACC"), Mid Atlantic Youth Services ("MAYS"), Vision Holdings, LLC. (IC ¶¶ 4, 11; CAC ¶¶ 163, 165.) Powell was also an attorney-at-law and owner, officer, shareholder, and operator of Powell Law Group, P.C. (IC ¶ 4.) PACC and WPACC are a limited liability companies which each own and operate a youth detention center. (IC ¶¶ 7, 8.)MAYS was a corporation responsible for the operation of the PACC and WPACC facilities by virtue of contractual agreement. (IC ¶ 18.)Defendant Robert Mericle ("Mericle") was at all relevant times an owner, shareholder, officer, and operator of Mericle Construction, Inc. ("Mericle Construction"). (IC ¶ 9; CAC ¶ 164.) Mericle Construction was at all times a closely held corporation. (IC ¶ 10.)Mericle was a contractor and friend of Ciavarella. (IC ¶ 39.)

Plaintiffs are a number of juveniles who appeared before Ciavarella and their parents. (IC ¶ 3; CAC ¶¶ 10-160, 176-183, 192-648.)

B. Conspiracy

A conspiracy existed "among the judges and [the other Defendants] to conceal $2.6 million in payments to the judges from Defendants and others as yet unknown in exchanged for referring children who appeared before [Ciavarella] to these juvenile correctional facilities." (IC ¶ 29; CAC ¶ 664.) In exchange for this improper income, Conahan and Ciavarella entered into agreements guaranteeing placement of juvenile offenders exclusively with PACC, removed funding from the Luzerne County juvenile detention facility, facilitated the construction and expansion of PACC and WPACC, and directed juvenile be housed at PACC and WPACC. (IC ¶ 34.) "Defendants one and all participated in a scheme to ensure that a disproportionate number of juveniles. . . were incarcerated in juvenile detention facilities owned, operated, and influenced by Defendants." (IC ¶ 36.) "Defendants entered into and through various overt acts described above an agreement between themselves to illegally deprive Plaintiffs of their basic constitutional rights for their own personal enrichment and profit." (IC ¶ 81.) Implicit in the demand for kickbacks was the understanding that the payments were quid pro quo for Conahan and Ciavarella's exercise of their judicial authority to send juveniles to PACC and WPACC "and to take other discretionary acts." (IC ¶ 46; CAC ¶ 656.)

C. Construction of PACC and WPACC Facilities

In approximately June 2000, Ciavarella had discussions with Powell who was interested in constructing a juvenile facility in Luzerne County. (IC ¶ 39; CAC ¶ 649.) Powell was then introduced to Mericle for the purpose of locating land and constructing the facility. (IC ¶ 39; CAC ¶ 649.) Powell and Zappala, doing business as PACC, acquired land in Luzerne County and entered into an agreement with Mericle to construct a juvenile detention center to be operated by PACC and MAYS. (IC ¶ 40; CAC ¶¶ 649-50.) In or before January 2003, Conahan and Ciavarella arranged to receive a payment of $997,600 for their actions accomplishing the construction of PACC's facility. (IC ¶ 43; CAC ¶ 656, 701.) In order to conceal this payment, Conahan, Ciavarella, Powell, and Mericle signed an agreement prepared by Mericle purporting to pay a broker's fee to Powell, when a large portion of the money was intended for Conahan and Ciavarella. (IC ¶ 44; CAC ¶ 702.) Conahan and Ciavarella also took steps to close the existing Luzerne County juvenile facility. Conahan removed funding for the existing Luzerne County juvenile detention facility. (IC ¶ 42; CAC ¶ 655.) Conahan and Ciavarella publicly maintained that conditions at the existing facility were deplorable. (CAC ¶ 654.) They also demanded kickbacks from Powell in exchange for closing the existing Luzerne County juvenile facility. (IC ¶ 46.) On or about January 29, 2002, Conahan executed a "Placement Guarantee Agreement" between PACC and the Court of Common Pleas for Luzerne County to house juvenile offenders at the PACC facility. (IC ¶ 41; CAC ¶ 652.)

Due to the success of PACC, Powell and Zappala, doing business as WPACC, constructed a juvenile facility in western Pennsylvania. (IC ¶ 51; CAC ¶ 659.) This facility was also constructed by Mericle. (IC ¶ 51; CAC ¶ 659.) Upon completion of the WPACC facility in July 2005, a $1,000,000 payment was made to Conahan and Ciavarella by Powell. (IC ¶ 51; CAC ¶ 659, 709.) To conceal this payment, Conahan, Ciavarella, Powell, and Mericle signed a "Registration and Commission Agreement" purporting to be an agreement for Mericle to pay Powell a fee of $1,000,000, while the money was instead transferred to Pinnacle, an entity owned by Conahan and Ciavarella. (IC ¶ 52; CAC ¶ 659.) Mericle Construction was also hired to construct an addition onto the PACC facility. (IC ¶ 53; CAC ¶ 661.) Upon completion of that project in February 2006, a $150,000 payment was made to Conahan and Ciavarella via Pinnacle. (IC ¶ 53.) Again Conahan, Ciavarella, Powell, and Mericle signed a written agreement to hide this transaction. (IC ¶ 54.) In addition to these payments, "Powell made hundreds of thousands of dollars in concealed payments to Ciavarella and Conahan for their past and future acts relating to [PACC] and [WPACC]" through Pinnacle and Vision. (CAC ¶ 662.) Conahan and Ciavarella also engaged in a number of other transactions to hide any sums they received. (IC ¶¶ 48-50, 55-58, 60-65; CAC ¶¶ 703-21.)

D. Juvenile Adjudications

"For defendants' scheme to succeed, Ciavarella and Conahan had to ensure that youth were placed at the facilities and that youth were not aware of Ciavarella's or Conahan's financial stake in their placement." (CAC ¶ 665.) The consistent placement of youth facilitated the construction of WPACC's facility, the expansion of PACC's facility, and the continuing contract between Luzerne County and these private operators. (CAC ¶¶ 669- 670.) Powell believed that if he stopped paying Conahan and Ciavarella they would have retaliated against him by sending no more juveniles to PACC and WPACC. (IC ¶ 59.) In approximately February 2003, Ciavarella began directing that youthful offenders be sent to PACC's facility. (IC ¶ 55.) In these juvenile adjudications, Ciavarella routinely deprived the juveniles of their constitutional rights. (CAC ¶¶ 2, 672-73, 681-87.) Conahan and Ciavarella also implemented "zero tolerance" policies for the purpose of making it virtually impossible for juveniles to avoid placement. (CAC ¶¶ 676-77.)

II. Procedural Background

The present memorandum concerns four cases consolidated for purposes of discovery by this Court's May 14, 2009, Case Management Order. (Doc. 82.) Subsequent to consolidation, Plaintiffs filed one master amended complaint for individual plaintiffs (Doc. 134) and one master amended complaint for class-action plaintiffs (Doc. 136). Defendants filed the present motions on March 22, 2010, requesting that all claims against them in both complaints be dismissed. (Docs. 433, 435, 437, 439, 442.) Each of these motions has been fully briefed and they are now ripe for disposition.


Federal Rule of Civil Procedure 12(b)(6) provides for the dismissal of a complaint, in whole or in part, for failure to state a claim upon which relief can be granted. FED. R. CIV. P. 12(b)(6). Dismissal is appropriate only if, accepting as true all the facts alleged in the complaint, a plaintiff has not pleaded "enough facts to state a claim to relief that is plausible on its face," Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007), meaning enough factual allegations "'to raise a reasonable expectation that discovery will reveal evidence of'" each necessary element, Phillips v. County of Allegheny, 515 F.3d 224, 234 (3d Cir. 2008) (quoting Twombly, 550 U.S. at 556); see also Kost v. Kozakiewicz, 1 F.3d 176, 183 (3d Cir. 1993) (requiring a complaint to set forth information from which each element of a claim may be inferred). In light of Federal Rule of Civil Procedure 8(a)(2), the statement need only "'give the defendant fair notice of what the . . . claim is and the grounds upon which it rests.'" Erickson v. Pardus, 551 U.S. 89, 93 (2007) (per curiam) (quoting Twombly, 550 U.S. at 555). "[T]he factual detail in a complaint [must not be] so undeveloped that it does not provide a defendant [with] the type of notice of claim which is contemplated by Rule 8." Phillips, 515 F.3d at 232; see also Airborne Beepers & Video, Inc. v. AT&T Mobility LLC, 499 F.3d 663, 667 (7th Cir. 2007).

In deciding a motion to dismiss, the Court should consider the allegations in the complaint, exhibits attached to the complaint, and matters of public record. See Pension Benefit Guar. Corp. v. White Consol. Indus., Inc., 998 F.2d 1192, 1196 (3d Cir. 1993). The Court may also consider "undisputedly authentic" documents when the plaintiff's claims are based on the documents and the defendant has attached copies of the documents to the motion to dismiss. Id. The Court need not assume the plaintiff can prove facts that were not alleged in the complaint, see City of Pittsburgh v. W. Penn Power Co., 147 F.3d 256, 263 & n.13 (3d Cir. 1998), or credit a complaint's "'bald assertions'" or "'legal conclusions,'" Morse v. Lower Merion Sch. Dist., 132 F.3d 902, 906 (3d Cir. 1997) (quoting In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1429-30 (3d Cir. 1997)). "While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations."

Ashcroft v. Iqbal, 129 S.Ct. 1937, 1950 (2009).

When considering a Rule 12(b)(6) motion, the Court's role is limited to determining whether a plaintiff is entitled to offer evidence in support of her claims. See Scheuer v. Rhodes, 416 U.S. 232, 236 (1974). The Court does not consider whether a plaintiff will ultimately prevail. See id. A defendant bears the burden of establishing that a plaintiff's complaint fails to state a claim. See Gould Elecs. v. United States, 220 F.3d 169, 178 (3d Cir. 2000).


Plaintiffs' Complaints bring a number of causes of action against Defendants:*fn1

(1) claims pursuant to § 1983 for violations of the Plaintiffs' federal constitutional rights (IC Counts III, IV, V); (2) claims pursuant to § 1983 for conspiracy to violate the Plaintiffs' rights (IC Count VIII; CAC Counts II, IV); (3) claims pursuant to civil RICO (IC Count I; CAC Counts V, VI); (4) claims of RICO conspiracy (IC Count II; CAC Count VII); (5) state law civil conspiracy (IC Count VIII); and (6) state law false imprisonment (IC Count IX; CAC Count IX). The sufficiency of Plaintiffs' allegations as to each claim will be discussed seriatim.

I. Federal Law ...

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