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Leer Electric, Inc. and Stephen C. Leer v. Stephen Schmerin

December 2, 2011

LEER ELECTRIC, INC. AND STEPHEN C. LEER, PLAINTIFFS,
v.
STEPHEN SCHMERIN, ROBERT O'BRIEN, SANDY VITO, A. ROBERT RISALITI, JOSEPH HICKEY, RICHARD SLAGLE, LOUIS BEEMER, PETER VON GETZIE, AND JAMES HOLZMAN, DEFENDANTS.



The opinion of the court was delivered by: (judge Caputo)

MEMORANDUM

Defendants Hickey, Slagle, Beemer, Getzie, and Holzman (collectively, "Hickey") move for dismissal of plaintiffs' complaint. Stephen Leer, an electrical contractor and President of Leer Electric, alleges that the Pennsylvania Department of Labor and Industry ("DLI") unfairly targeted his company because he runs a non-union shop. He further alleges the "debarment" proceeding initiated by the DLI against him for allegedly violating the Prevailing Wage Act ("PWA") was pretextual. Leer alleges its real purpose was to force him out of business. Leer's amended complaint brings substantive and procedural due process claims, as well as an equal protection claim, all under 42 U.S.C. § 1983.

In the motion to dismiss, Hickey makes four arguments: (1) the complaint should be dismissed under the Younger doctrine; (2) defendants Holzman and Getzie have absolute prosecutorial immunity; (3) Leer's suit is really a malicious prosecution action, the elements of which he has failed to establish; and (4) the substantive due process claim fails because the allegations are not "conscience shocking." The Court disagrees with all but the fourth argument, and will therefore grant the motion to dismiss in part and deny it in part.

Additionally, Leer moves to strike Hickey's reply brief as untimely and the Court will grant this motion.

BACKGROUND

Leer Electric, Inc. is a non-union electrical contractor with over one hundred employees located in Dillsburg, Pennsylvania. Because of Leer's success in obtaining work on public projects, it alleges the pro-union DLI attempted to drive the company out of business. After a series of audits over four years, the DLI issued an Order to Show Cause ("OSC") in July 2008 and sought debarment. The OSC accused Leer of miscategorizing labor tasks so it could pay its employees less in violation of the PWA. If debarred, Leer would be prohibited from bidding on public contracts for three years. Before the administrative hearing, Leer filed this suit against the DLI and individual defendants. Defendants, citing Younger, moved to stay the action pending resolution of the administrative hearing. The Court denied the motion on the grounds that Younger's three requirements were not met (Doc. 22).

After all claims against the DLI and the state law claims against the individual defendants were dismissed, Leer filed an amended complaint, adding new defendants. The amended complaint brought a claim for a permanent injunction, as well as for multiple constitutional violations. In March 2011, the Hearing Examiner in the state proceeding issued his Recommendation. While he found Leer underpaid some employees on several state projects, he concluded it was unintentional. Both sides are currently appealing the Recommendation.

Defendants Schmerin, O'Brien, Vito, and Risaliti then moved to have the case dismissed (Doc. 38) in May 2011, again under Younger abstention. This Court denied the motion but did dismiss all claims against Sandy Vito. Hickey then filed a motion to dismiss in July 2011. The motion has been briefed and is ripe for review.

LEGAL STANDARD

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. 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).

When considering a Rule 12(b)(6) motion, the Court's role is limited to determining if 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).

DISCUSSION

I. Hickey's Motion to Dismiss (Doc. 42)

The Court will address each of Hickey's four arguments in turn.

A. Younger Abstention

This Court ruled in its previous order (Doc. 43) that it would not abstain from adjudicating this suit. In so ruling, the Court held that important state interests were not implicated and Younger's "bad faith" exception applied. The Court sees no reason to reverse its previous decision.

In Younger v. Harris, the United States Supreme Court established an abstention doctrine by holding that federal courts may not enjoin pending state criminal proceedings. 437 U.S. 37 (1971). In the line of cases that followed Younger, the Supreme Court made it clear that this abstention doctrine is not specific to criminal matters, but also applies to state civil court and administrative proceedings. See Pennzoil Co. v. Texaco, Inc.,481 U.S. 1 (1987) (holding that federal courts may not enjoin state civil proceedings between private parties); Ohio Civil Rights Commn. v. Dayton Christian Schools, Inc., 477 U.S. 619 (1986) (holding that federal courts may not enjoin state administrative proceedings when important state interests are involved); Middlesex County Ethics Committee v. Garden State Bar Ass'n, 457 U.S. 423 (1982) (first applying Younger to state administrative proceedings). "The Younger doctrine ... reflects a strong policy against federal intervention in state judicial processes in the absence of great and immediate irreparable injury to the federal plaintiff." Moore v. Sims, 442 U.S. 415 (1979) (citing Samuels v. Mackell, 401 U.S. 66, 69 (1971)).

Younger abstention is appropriate when three requirements are satisfied: (1) the federal plaintiff is a party in an ongoing state judicial proceeding subject to interference by continued federal court action; (2) the state proceeding implicates important state interests; and (3) the federal plaintiff has an adequate opportunity to raise constitutional challenges in the state court proceedings. ...


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