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Stein v. City of Philadelphia

United States District Court, Third Circuit

December 10, 2013

MARC STEIN, Plaintiff,
CITY OF PHILADELPHIA, et al., Defendants.



Presently before this Court are Defendants Northern Liberties Neighbors Association, Matt Ruben, Larry Freedman, David Witz, Judy Donovan, Richard Donovan, James Brossy, and Debbie Rudman’s Motion to Dismiss (Doc. 4);[1] Plaintiff’s Response in Opposition thereto (Doc. 10); and Defendants’ Reply (Doc. 14). For the reasons set forth below, this Court will grant in part and deny in part Defendants’ Motion to Dismiss. This Court grants Plaintiff leave to amend its Complaint as to its tortious interference with prospective contractual relations claim only; it declines to grant Plaintiff leave to amend any other claims.


Plaintiff Marc Stein d/b/a 626 Front LLC a.k.a Aura Restaurant and Lounge (“Plaintiff”), has brought this action against fifteen (15) defendants, [2] alleging that its rights under the First and Fourteenth Amendments to the Constitution, 42 U.S.C. §§ 1983 and 1981, and the laws and statutes of the Commonwealth of Pennsylvania have been violated. (Compl. ¶ 4). Plaintiff alleges, inter alia, that private defendants conspired with the City of Philadelphia, and the City of Philadelphia Police Department, to maliciously and purposefully deprive Plaintiff of its legal rights. (Compl. ¶ 8). Specifically, Plaintiff claims that Defendants have engaged in a comprehensive and purposeful campaign against it and, as a result, its application for a Special Assembly and Amusement License was denied.

Plaintiff is a restaurant and bar, owned by Marc Stein, operating at 628 North Front Street in the Northern Liberties section of Philadelphia. (Compl. ¶¶ 13-14). Defendants include the Northern Liberties Neighbors Association (“NLNA”), a private civic association, and several of its alleged members. On January 28, 2012, Plaintiff opened with a disc jockey and dancing, primarily catering to an “upscale urban” African-American demographic. (Compl. ¶¶ 28-30). To operate, Plaintiff was required to obtain a Special Assembly and Amusement License issued by the City of Philadelphia. (Compl. ¶ 32). Without this license, Plaintiff could not have a disc jockey, and dancing would have been prohibited in the establishment. (Compl. ¶ 45). Plaintiff contends that although it obtained all the necessary prerequisites for the Special Assembly and Amusement License, its application was denied by the City of Philadelphia Board of Review on May 29, 2012. (Compl. ¶35). This decision was affirmed on appeal. (See Compl. Ex. E).

Plaintiff avers that its license application was denied, in part, because of Defendants’ strong opposition to its operation. (Compl. ¶ 36). According to Plaintiff, the Philadelphia Police Department, 6th District opposed the Special Assembly and Amusement License application because the NLNA informed it that Plaintiff was operating illegally. (Compl. ¶ 37). In addition, Plaintiff argues that the NLNA and other members of the Northern Liberties community have continuously attempted to inhibit Plaintiff’s business operations. (Compl. ¶38). Specifically, Plaintiff states that the NLNA and its members have (i) photographed Plaintiff’s patrons and their activities, (ii) directed negative comments to Plaintiff’s patrons and staff during events, (iii) attacked Plaintiff on social networking sites, blogs, and emails, and (iv) filed a number of unfounded complaints with the City of Philadelphia Police Department. (Compl. ¶ 40). Plaintiff argues that it has been unfairly targeted because it caters to an “upscale urban” African-American demographic. (Compl. ¶42). Plaintiff avers that although a number of nightlife locations generate business in the Northern Liberties area, neighbors and NLNA members try to attribute negative activity in the area solely to Plaintiff. (Compl. ¶ 41). Due to Defendants’ opposition campaign, Plaintiff says that it has been unable to operate in the manner in which it was conceived, and has sustained a substantial loss of business. (Compl. ¶¶ 47-48).


On a motion to dismiss for failure to state a claim pursuant to Fed.R.Civ.P. 12(b)(6), the court is required to accept as true all allegations in the complaint and all reasonable inferences that can be drawn therefrom, and to view them in the light most favorable to the non-moving party. See Oshiver v. Levin, Fishbein, Sedran & Berman, 38 F.3d 1380, 1384 (3d Cir. 1994). A complaint should be dismissed only if the alleged facts, taken as true, fail to state a claim. See In re Warfarin Sodium Antitrust Litig., 214 F.3d 395, 397-98 (3d Cir. 2000). The question is whether the claimant can prove any set of facts consistent with his or her allegations that will entitle him or her to relief, not whether that person will ultimately prevail. Scheuer v. Rhodes, 416 U.S. 232, 236 (1974); Semerenko v. Cendant Corp., 223 F.3d 165, 173 (3d Cir. 2000). While a court will accept well-pled allegations as true for the purposes of the motion, it will not accept bald assertions, unsupported conclusions, unwarranted inferences, or sweeping legal conclusions cast in the form of factual allegations. Morse v. Lower Merion Sch. Dist., 132 F.3d 902, 906 (3d Cir. 1997). On the contrary, “[t]he pleader is required to ‘set forth sufficient information to outline the elements of his claim or to permit inferences to be drawn that these elements exist.’” Kost v. Kozakiewicz, 1 F.3d 176, 183 (3d Cir. 1993) (citation omitted).


Defendants have raised several arguments in support of dismissing this action. This Court will address each of these arguments in turn.

A. 42 U.S.C. § 1981

First, Defendants contend that Counts V, VI, VII, IX, XIII, and XIV should be dismissed because Defendants are not state actors, and therefore are not liable under 42 U.S.C. §§ 1981 and 1983.[3] As support for this claim, Defendants cite Vurimindi v. City of Philadelphia, No. 10-0088, 2010 U.S. Dist. LEXIS 82762 (E.D. Pa. 2010), in which this District held that a civic association is not a state actor for § 1983 purposes. This Court agrees with Plaintiff that Defendants have misapplied a §1983 standard to Plaintiff’s § 1981 claims. Plaintiff does not make any reference to § 1983 within the counts at issue, which are all entitled “Discrimination by Interfering with a Contractual Interest, 42 U.S.C. § 1981.” Puzzlingly, Defendants apply a §1983 standard in the instant motion, contending that Defendants do not qualify as state actors under this statute. This § 1983 analysis is clearly inapposite to claims arising under § 1981 because § 1981 is not limited to activity by state actors. 42 U.S.C. § 1981(a) states:

All persons within the jurisdiction of the United States shall have the same right in every State and Territory to make and enforce contracts, to sue, be parties, give evidence, and to the full and equal benefit of all laws and proceedings for the security of persons and property as is enjoyed by white citizens.

The rights protected by this section are protected against impairment by both state actors and private citizens. 42 U.S.C. § 1981(c); see also Brown v. Philip Morris, Inc., 250 F.3d 789, 797 (3d Cir. 2001) (“In neither [§§1981 nor 1982] . . . need a plaintiff allege state action on the part of the defendant.”).

Looking at the motion to dismiss in isolation, Defendants have therefore not appropriately addressed Plaintiff’s claims. Defendants have, however, referenced Plaintiff’s § 1981 claims in their Reply. Although this brief should be stricken from the record, [4] this Court, acting within its discretion, will consider it. Therefore this Court reviews Defendants’ Reply, which argues that Plaintiff’s § 1981 claims are meritless because (i) Plaintiff Marc Stein is not a racial minority, and (ii) Plaintiff has failed to allege that Defendants’ conduct has interfered with its contractual interests.

To state a valid claim under § 1981, a plaintiff must show (1) that he or she is a member of a racial minority, (2) intent to discriminate on the basis of race by the defendant, and (3) discrimination concerning one or more of the activities enumerated in the statute, which includes the right to make and enforce contracts. Brown, 250 F.3d at 797 (quoting Yelverton v. Lehman, No. Civ. A. 94-6114, 1996 U.S. Dist. LEXIS 7651 (E.D. Pa. June 3, 1996)). To satisfy the first element, a plaintiff who is not a member of a minority group may bring suit under the statute if he or she has suffered injury as a result of discriminatory conduct directed against such group. See Riccobono v. Whitpain Tp., 497 F.Supp. 1364, 1373 (E.D. Pa. 1980) (holding that a white plaintiff had standing to bring suit under § 1981for the injury he suffered because the defendants believed he was willing to contract and do business with members of minority groups); Des Vergnes v. Seekonk Water District, 601 F.2d 9, 14 (1st Cir. 1979) (“[A] person has an implied Right of action against any other person who, with a racially discriminatory intent, injures him because he made contracts with non-whites.”).

1. Count V

In Count V of the Complaint, Plaintiff brings a § 1981 claim against David Witz, an alleged member of the NLNA. In determining whether the first element of a § 1981 claim is satisfied, this Court chooses to defer to this District’s holding in Riccobono. In that case, a white plaintiff, who wanted to build an indoor roller skating rink on property he owned in Whitpain Township, brought suit under § 1981 against a number of defendants, including two private civic associations and their members. The plaintiff alleged that although the County’s planning commission had recommended approval of his building permit application, and the Township Engineer found his application met all necessary requirements, the Township Planning Commission recommended that his application be denied. Riccobono, 497 F.Supp. at 1368. The Riccobono plaintiff averred that members of the Planning Commission and other community actors worked together to thwart his efforts to acquire a building permit because they believed that his roller rink would attract black people into the area. Id. The Riccobono Court, finding that the plaintiff potentially could have suffered injuries because defendants believed he was willing to contract and do business with African Americans, held that the plaintiff had standing to bring his § 1981 claim. Id. at 1373. Riccobono is comparable to the instant case. Plaintiff Marc Stein, a white restaurant and bar owner, has brought suit under § 1981 claiming that the actions of the Defendant and others have prevented him from serving his primarily African-American clientele. Therefore, this Court finds that the first § 1981 element is satisfied as to Defendant David Witz, as well as to all other Defendants noted in this challenge.

Plaintiff’s Count V must be dismissed, however, because it has failed to satisfy the second element of the § 1981 test: intent to discriminate on the basis of race by the defendant. In Paragraph 96 of the Complaint, Plaintiff states “Plaintiff target demographic is ‘upscale urban.’ Although the Plaintiff is not a minority his club is patronized by a crowd comprised of minorities, mainly persons of African American or Hispanic heritage.” This paragraph does allude to the fact that there are potential racial implications in this case. However, in the remainder of the count, Plaintiff fails to allege any intent to discriminate on the basis of race by Defendant David Witz. Plaintiff does plead facts that Defendant engaged in hostile activity in order to remove Plaintiff from the community, (Compl. ΒΆΒΆ 97-104), but simply does not plead any facts establishing a racially discriminatory intent ...

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