Response to Tavern League's motion to dismiss

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF WISCONSIN

THOMAS J. HOLMES, et al., Plaintiffs, v. Case No: 14-CV-208 JOHN DICKERT, et al., Defendants.

PLAINTIFFS’ BRIEF IN OPPOSITION TO THE RACINE CITY TAVERN LEAGUE’S MOTION FOR JUDGMENT ON THE PLEADINGS

Case 2:14-cv-00208-JPS Filed 06/27/14 of 12 Document 46

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UNITED STATES DISTRICT COURT EASTERN DISTRICT OF WISCONSIN

THOMAS J. HOLMES, et al., Plaintiffs, v. Case No: 14-CV-208 JOHN DICKERT, et al., Defendants.

PLAINTIFFS’ BRIEF IN OPPOSITION TO THE RACINE CITY TAVERN LEAGUE’S MOTION FOR JUDGMENT ON THE PLEADINGS

In opposition to the Racine City Tavern League’s motion for judgment on the pleadings

under Rule 12(c), (Doc. Nos. 36 and 37), Plaintiffs submit as follows:

I. Introduction The Tavern League’s motion relies on two, unsupported and factually deficient

arguments. First, the Tavern League attempts to argue that Plaintiffs do not allege predicate acts

and causation. In so doing, the Tavern League completely ignores the numerous predicate acts

alleged in Plaintiff’s Complaint. Second, throughout its motion the Tavern League attempts to

distance itself from its actions by claiming that it has no responsibility for the actions of its

members. If this were true, it would create an untenable rule, fraught with policy concerns, that

an organization cannot be held liable for the actions of its members, specifically its board

members.

The reality is that the Tavern League is at or near the center of this conspriacy. The bars

owned by Tavern League members have been protected to a preposterous extent as compared to

the minority-owned bars. That is no coincidence, rather, they bought their protection by illegaly


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funding the Mayor’s office by walking over bags of money.1 At the same, and by virtue of the

same bribes, white members of the Tavern League were given the right of first refusal for any

liquor licenses improperly seized and extorted from minority business owners on the basis of

race. Again, this is no coincidence. Put simply, the suggestion made by the Tavern League that

this Court should find as a matter of law that it had no involvemnt is irrational. At a minimum,

there are issues of fact abound and Plaintiffs look forward to a jury deciding what role the

Tavern League truly played in driving minority-owned taverns out of downtown Racine.

II. Legal Standard

Pursuant to Rule 12(c), a party may move for judgment on the pleadings after both the

plaintiff’s complaint and the defendant’s answer have been filed. Fed. R. Civ. P. 12(c). Rule

12(c) motions are reviewed under the same standard as a motion to dismiss under Rule 12(b). N.

Ind. Gun & Outdoor Shows, Inc. v. City of S. Bend, 163 F.3d 449, 452 (7th Cir. 1998). Courts

will grant a Rule 12(c) motion only if “it appears beyond doubt that the plaintiff cannot prove

any facts that would support his claim for relief.” Craigs, Inc. v. Gen. Elec. Capital Corp., 12

F.3d 686, 688 (7th Cir. 1993) (quoting Thomason v. Nachtrieb, 888 F.2d 1202, 1204 (7th Cir.

1989)). Therefore, to succeed on a motion for judgment on the pleadings, “the moving party

must demonstrate that there are no material issues of fact to be resolved.” N. Ind. Gun & Outdoor

Shows, Inc., 163 F.3d at 452.

Courts are required to accept as true all well-pled facts and allegations in the complaint,

to draw all reasonable inferences in favor of the plaintiff and construe all allegations of a

complaint in the light most favorable to the plaintiff. R.J.R. Serv., Inc. v. Aetna Cas. & Sur. Co.,

1 Plaintiffs have a sworn statement to this effect from a former member of Mayor Dickert’s campaign staff, which will be produced in the ordinary course of discovery.


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895 F.2d 279, 281 (7th Cir. 1989); Bontkowski v. First Nat’l Bank of Cicero, 998 F.2d 459, 461

(7th Cir.1993); Perkins v. Silverstein, 939 F.2d 463, 466 (7th Cir. 1991). 2

III. Argument

A. Plaintiffs’ 1962(c) claim against the Tavern League is properly supported by the allegations in the Complaint

The Tavern League joins and adopts the argument of Municipal Defendants. TLR Mem.

at 1. In the interest of efficiency, Plaintiffs, therefore, likewise adopt and incorporate by

reference their arguments concerning this issue as set forth in Plaintiffs’ Brief in Opposition to

Municipal Defendants’ Motion to Dismiss as if fully set forth herein. See Sect. IV.

Before moving to the Tavern League’s argument, however, Plaintiffs must correct

numerous inaccuracies contained in its portrayal of the Complaint. Like the Municipal

Defendants, the Tavern League attempts to “water down” the Complaint and, in so doing,

disregards important facts and ignores the significance of others. For example, the Tavern

League grossly mischaracterizes the benefits received by Mayor Dickert and other Municipal

Defendants via the quid pro quo. The Tavern League claims that, at best, the monetary bribes

“somehow gave the Tavern League control over every facet of city government.” TLR Mem. at

8. However, as discussed below, the benefits given to the Municipal Defendants are not so

limited, and the advantages obtained by the Tavern League cannot be summarized in a single

sentence.

2 Plaintiffs would like to provide the Court with the necessary context to understand the Tavern League’s decision to move for judgment on the pleadings under Rule 12(c), rather than for dismissal under Rule 12(b)(6) like the remaining Defendants. In exchange for an 11-day extension of time to respond to Plaintiffs’ Complaint, through and including May 16, counsel for Tavern League agreed verbally and in writing to file an answer on behalf of his client. (Ex. 1, Bosack letter). On May 15, counsel for the Tavern League called Plaintiffs’ counsel and advised that he would be filing a short Rule 12(b)(6) motion to dismiss adopting Municipal Defendants’ motion. When Plaintiffs’ counsel objected based on their prior agreement, counsel for the Tavern League changed course and filed the present Rule 12(c) Motion for Judgment on the Pleadings, as well as an Answer to the Complaint. Plaintiffs therefore request that any attempt by the Tavern League to adopt and/or incorporate by reference the arguments made by Municipal Defendants in their motion to dismiss be disregarded in its entirety.


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The Tavern League injects a number of other inaccuracies in its characterization of

Plaintiffs’ Complaint and, in doing so, ignores numerous important, well-pled facts, prohibiting

it from seeing the forest for the trees:

The Tavern League and its members shared a common goal with Defendants—eradicating minority-owned bars from downtown Racine—which was motivated by racial animus. ¶¶ 140-43, 148(h).

At the same time, the Tavern League and its members seized an opportunity to improve their economic status and increase their political influence in Racine. In exchange for the Tavern League’s campaign contributions and public support, both of which satisfy the “benefit” prong of bribery under federal and state law, Dickert appointed numerous Tavern League contributors to high-ranking positions within the City government, awarded contributors with City-funded business, and shielded Tavern League members from Police Department and Licensing Committee scrutiny.3 Consistent with their goal of eradicating minority-owned bars from downtown Racine, liquor licenses extorted from minority bar owners were re-distributed to white members of the Tavern League. ¶¶ 41, 44.4

It can reasonably be inferred that the quid pro quo with Dickert and other

Municipal Defendants had the effect of increasing the appeal of membership within the Tavern League, thus providing it with increased revenue from membership dues that are central to the Tavern League’s continued operation and success. ¶¶ 41, 44. Plaintiffs are entitled to all such reasonable inferences. Bontkowski, F.2d at 461.

This quid pro quo, which was part of a larger conspiracy, created a perpetual cycle of bribes being given to public officials in exchange for official acts, which had the effect of benefitting not only the Tavern League and its members, but also the Municipal Defendants. Mayor Dickert of course benefited financially and, at the same time, both he and the Alderpersons benefited by earning public support from the Tavern League and the goodwill of their constituents in upholding their campaign promises of “cleaning up” and “revitalizing” downtown Racine. ¶¶ 40, 105. The BID #1 and the Downtown Racine Corporation, whose respective boards of directors included

3 The Tavern League claims the Complaint lacks any allegations that the Tavern League itself gave any bribes or unlawful gratuities. TLR Mem. at 5. However, the Complaint does, in fact, allege that the Tavern League made legal and illegal financial contributions to Dickert’s campaign. ¶ 44. Moreover, it can reasonably be inferred from the facts alleged in the Complaint that the Tavern League members named therein acted with the intent to benefit the Tavern League’s membership, and therefore advance the interests of the Tavern League itself. 4 As stated above, Plaintiffs are in possession of a recorded statement from a former member of Mayor Dickert’s campaign staff detailing the bribes accepted and concealed by Dickert’s office. Plaintiffs can therefore plead more particulars by way of amendment if requested by the Court.


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Tavern League members, financially benefited by maintaining control of what businesses could or could not operate in downtown Racine and also by upholding their respective promises to enhance the image of downtown Racine and to improve the social and economic conditions within the district, thereby justifying their continued existence. ¶¶ 16(d), 19, 44.

The Tavern League further supported the Municipal Defendants’ disparate treatment of minority bar owners by causing its members to appear before the Licensing Committee to testify against them, while offering only favorable testimony when white-owned bars were called before the Licensing Committee. ¶¶ 87, 89, 138, 148(h).5

Bearing in mind these well-pleaded facts, it is abundantly clear that Plaintiffs adequately

allege their injuries were proximately caused by the Tavern League members’ predicate acts.

1. Plaintiffs sufficiently allege that the Tavern League members’ actions proximately caused their injuries

The sole argument advanced by the Tavern League is that Plaintiffs’ RICO claims fail

because there is no causal connection between its members’ predicate acts and Plaintiffs’ alleged

injuries. TLR Mem. at 5. Germaine to the discussion are, of course, the predicate acts

themselves; but the Tavern League omits any meaningful discussion of them. As Plaintiffs have

addressed the Tavern League’s predicate acts above and in further detail in their Brief in

Opposition to Municipal Defendants’ Motion to Dismiss, they need not repeat them in entirety

here. In summary, many long-standing Tavern League members committed multiple predicate

acts of extortion under Wis. Stat. § 943.30, bribery under 18 U.S.C. § 201(b) and Wis. Stat. §

946.10, and giving unlawful gratuities under 18 U.S.C. § 201(c).

In an attempt to lend credibility to its argument, the Tavern League relies on Empress

Casino Joliet Corp. v. Blagojevich, a case that, on its surface, involves facts seemingly

analogous to those alleged here. The plaintiff in Blagojevich, an owner and operator of riverboat

5 Plaintiffs have additional information regarding Tavern League members not named in the Complaint but who were recruited to speak out against minority-owned bars at hearings before the Licensing Committee. Plaintiffs are therefore willing to amend the Complaint to include this information if required to do so by the Court.


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casinos, alleged that former Illinois governor Rod Blagojevich, his campaign committee Friends

of Blagojevich (FOB), five entities that operate horse racing tracks in Illinois and the owner of

two of those tracks, violated the RICO Act by conspiring to exchange campaign contributions for

state action. Empress Casino Joliet Corp. v. Blagojevich, 09-C-3585, 2013 WL 4478741, at *1

(N.D. Ill. Aug. 19, 2013). The alleged state action was the passing of two legislative acts that

harmed the plaintiff’s business. Id.

Blagojevich is readily distinguishable from this case. The defendants in Blagojevich

moved for summary judgment, not for judgment on the pleadings. Id. Extensive discovery had

been undertaken in that case, through which numerous facts were developed and explored

beyond those alleged in the Complaint. Id. at *1-2, 5-6. It was only then that the court

determined no reasonable jury could make a finding of proximate cause between the predicate

acts and the two legislative acts. The standard of review applicable to a motion for judgment on

the pleadings under Rule 12(c) and one for summary judgment under Rule 56(a) are not one and

the same, and Plaintiffs are not required to prove their case at the pleading stage. Rather, the only

question is whether, taking all well-pleaded allegations in the Complaint as true and drawing all

reasonable inferences in favor of Plaintiffs, the Complaint states a claim upon which relief can be

granted. Plaintiffs’ Complaint does. The Tavern League’s reliance on Blagojevich is therefore

misplaced.

The Tavern League further states that “the Plaintiffs allege no injury to themselves other

than the revocation or denial of liquor licenses by the Common Council and Licensing

Committee, or improper pressure by the Common Council or Licensing Committee that led

Plaintiffs to voluntarily give up their licenses.” TLR Mem. at 7. Notwithstanding the fact that

other injuries in addition to the loss of their liquor licenses are specifically pled or reasonably


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inferred from the facts—such as being forced to spend substantial sums of money to comply with

side agreements, losing the goodwill and patronage of their customers, and losing their right to

conduct a lawful business, including the right to solicit business—the injuries acknowledged

Tavern League mentions are by themselves sufficient under the RICO Act. ¶¶ 44, 59-62, 91-117.

Here, Plaintiffs have alleged that the Tavern League members’ predicate acts of

extortion, bribery and giving unlawful gratuities are directly related to their injuries. There is no

requirement of a “‘racketeering injury’ separate from the harm from the predicate acts.” Sedima,

S.P.R.L. v. Imrex Co., Inc., 473 U.S. 479, 495 (1985). Rather, any recoverable damages

occurring by reason of a violation of § 1962(c) will flow from the commission of the predicate

acts.” Id. at 497. Accordingly, Plaintiffs have alleged sufficient facts to support the “but for” and

proximate cause elements of their RICO claim against the Tavern League. The Tavern League’s

argument should be summarily rejected.

B. Plaintiffs sufficiently allege claims against the Tavern League under 42 U.S.C. §§ 1983 and 1985(3)

1. The Tavern League conspired with Mayor Dickert and other City Officials to eliminate minority-owned businesses from downtown Racine

The Tavern League makes two arguments: First, that Plaintiffs’ allegations are

insufficient because the conduct of all defendants is “lumped together” in the Complaint; and,

second, that Plaintiffs have failed to allege “state action” by the Tavern League, a private actor.

Def. Mem. at 8–9. Both arguments fail to acknowledge, let alone apply, the applicable law and

the facts in the Complaint.

First, the Tavern League cites two Seventh Circuit cases to argue that Plaintiffs’ “lumped

together” allegations are insufficient under § 1983. See Def. Mem. at 9. Both cases, however,

address heightened pleading under Federal Rule of Civil Procedure 9(b) and thus have absolutely


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no application to Plaintiffs’ § 1983 claim. See Vicom, Inc. v. Harbridge Merch. Servs., Inc., 20

F.3d 771, 777–78 (7th Cir. 1994) (addressing Rule 9(b) in relation to RICO claims); Sears v.

Likens, 912 F.2d 889, 893 (7th Cir. 1990) (finding that the plaintiffs failed to satisfy Rule 9(b) in

relation to claims under the federal Securities Act of 1933). Accordingly, the Tavern League has

applied the wrong pleading standard to Plaintiffs’ § 1983 claim. Notwithstanding, Plaintiffs have

alleged numerous actions by the Tavern League in support of § 1983 liability, including but not

limited to illegally contributing to Mayor Dickert to have its members appointed to City

positions and, in turn, rid downtown Racine of minority-owned businesses. See ¶¶ 41, 43, 147,

148(h). Indeed, those very allegations also defeat the Tavern League’s next argument: That

Plaintiffs have failed to allege “state action.”

As the Tavern League concedes, Plaintiffs can allege “state action” by asserting that the

Tavern League was “a willful participant in joint action with the [City] or its agents.” Def. Mem.

at 9. The Tavern League nonetheless asserts that Plaintiffs have failed to do so because they have

merely set forth “[v]ague and conclusory allegations . . . of a conspiracy[.]” Def. Mem. at 9. To

the contrary, even a cursory review of the Complaint reveals that Plaintiffs have alleged

extensive cooperation between the Tavern League and City officials to rid downtown Racine of

minority-owned bars.

Again, Plaintiffs have alleged that the Tavern League illegally contributed to Mayor

Dickert’s campaign to secure “powerful positions within the municipal government[.]” See ¶ 41.

That conspiracy was created to, and did, eliminate minority-owned bars in downtown Racine

through a series of injurious actions, including the imposition of trumped-up fines and “side

agreements” and the revocation or non-renewal of Plaintiffs’ liquor licenses. See, e.g., ¶¶ 90–130


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(specifying that “a plan was implemented to rid downtown Racine of minority bars” and

enumerating injuries to Plaintiffs as a result of said conspiracy). Plaintiffs have further alleged:

After becoming Mayor in 2009, Dickert, and other Defendants on his behalf, continued to accept bribes from Tavern League members and other businesses in Racine. Dickert and other Defendants continued to fraudulently report the monies in campaign finance reports and then deposit the monies into the campaign’s bank account. These practices continued up to and after the 2011 re-election campaign for Dickert, and likely continue to date. at ¶ 43

Plaintiffs have thereby alleged that the Tavern League reached an understanding with

Mayor Dickert to pay him (and did, in fact, pay him) for influence – influence which included

the ability to rid downtown Racine of minority-owned businesses, including Plaintiffs’ taverns.

Plaintiffs allege further facts evidencing the quid pro quo arrangement between the Tavern

League and the City, including, but not limited to, the preferential treatment received by white

members of the Tavern League. See, e.g., ¶¶ 71–73. Still, further allegations indicate that the

Tavern League intentionally cooperated with the City and acted in furtherance of its and the

City’s shared purpose. See, e.g., ¶ 89 (alleging that Tavern League Vice President, John

McCauliffe, told the Licensing Committee he had spoken with a tavern about how to resolve

issues concerning “overcrowding” there and that thereafter the bar owner told the Committee

that he had changed his music and, in turn, the bar’s racial makeup).

In short, Plaintiffs have alleged numerous detailed facts regarding the cooperation

between the Tavern League and City officials, including Mayor Dickert and the Licensing

Committee, for the purpose of ridding downtown Racine of minority-owned bars. The Tavern

League’s argument that such allegations are “vague and conclusory” is disingenuous and should

be rejected. See Brokaw v. Mercer Cnty., 235 F.3d 1000, 1016 (7th Cir. 2000) (wherein the

Seventh Circuit overturned a Rule 12(b)(6) dismissal and rejected argument that the private-state

conspiracy allegations at issue were “too vague,” noting that the plaintiff had alleged that the


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private actors conspired with a deputy sheriff to file false allegations of child neglect in order to

cause child services to remove the child and thereby cause the child’s parents to divorce).

2. The Tavern League misconstrues the alleged conspiracy as one that was comprised of “private actors” only

As discussed above, Plaintiffs have pled a conspiracy between the Tavern League and

City officials, including Mayor Dickert and members of the Licensing Committee, to rid

downtown Racine of minority-owned businesses. Consequently, the Tavern League’s

characterization of the conspiracy at issue as a “private conspiracy” is plainly incorrect. See Def.

Mem. at 10. Indeed, the cases cited by the Tavern League confirm its misunderstanding as they,

unlike this case, address conspiracies involving only private actors. See Brown v. Philip Morris

Inc., 250 F.3d 789, 793–94 (3d Cir. 2001) (cited at 10) (identifying defendants as private tobacco

companies, non-profits supported by the tobacco industry, and a public relations firm); see also

O'Neal v. Atwal, 05-C-739-C, 2006 WL 6040781, at *1–*2 (W.D. Wis. Mar. 8, 2006)

(addressing conspiracy of only private actors; namely, three public defenders). Accordingly, the

Tavern League’s discussion of rights protected from private conspiracies – interstate travel and

freedom from involuntary servitude – have absolutely no application to the § 1985(3) conspiracy

alleged by Plaintiffs here. See, e.g., Moore v. Marketplace Rest., Inc., 754 F.2d 1336, 1352 (7th

Cir. 1985) (quoting Adickes v. S.H. Kress & Co., 398 U.S. 144, 152 (1970)) (“The involvement

of a state official . . . plainly provides the state action essential to show a direct violation of the

petitioner's Fourteenth Amendment equal protection rights. . . . Moreover, a private party

involved in such a conspiracy even though not an official of the State, can be liable under §

1983.”).


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In short, the Tavern League’s argument, based on the assumption that the conspiracy

alleged against it is exclusively a “private” one, is inapposite to the Complaint at issue and must

be rejected.

IV. Conclusion

For the foregoing reasons, Plaintiffs respectfully request that this Court deny the Racine

City Tavern League’s Rule 12(c) motion and grant it such other futher relief as this Court deems

just and proper.

Dated: June 27, 2014 Respectfully submitted,

KOHLER & HART, S.C.

By: /s/ Martin E. Kohler Martin E. Kohler, Esq. State Bar No. 1016725 735 N. Water Street, Suite 1212 Milwaukee, Wisconsin 53202 (414) 271-9595 Attorney for the Plaintiffs

SEGAL MCCAMBRIDGE SINGER & MAHONEY, LTD.

By: /s/ Brian H. Eldridge Steven A Hart, Esq. (ARDC No. 6211008) [email protected] Brian H. Eldridge, Esq. (ARDC No. 6281336) [email protected] 233 S. Wacker Drive, Ste. 5500 Chicago, IL 60606 (312) 645-7800 (312) 645-7711 Attorney for the Plaintiffs


Response to Tavern League's motion to dismiss

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