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Alfarah v. City of Soledad

United States District Court, N.D. California, San Jose Division

June 24, 2016



          EDWARD J. DAVILA United States District Judge.

         In this civil rights action, Plaintiff Wared Alfarah ("Plaintiff") alleges that Defendant City of Soledad ("the City") violated several of Plaintiff's constitutional rights by effectively shutting down his business. The City contends that its actions were justified because the business hosted games that fell into a category of slot machines prohibited by state criminal law. Plaintiff seeks damages as well as a declaratory judgment from this Court delineating the boundaries of that law.

         Presently before the court are the City's motion to dismiss Plaintiff's complaint and Plaintiff's motion for a preliminary injunction. See Dkt. Nos. 17, 30. Having carefully considered the parties' arguments, the Court finds that Plaintiff's complaint fails to state a claim and that it is inappropriate for this federal Court to issue a declaratory judgment interpreting state law. For the reasons set forth in further detail below, the motion to dismiss is GRANTED, and the motion for a preliminary injunction is DENIED.


         Plaintiff ran a retail business called VAPE N CONNECT ("VNC"). Dkt. No. 1 ("Compl."), ¶ 2. In addition to selling vaping products, VNC offered pay-to-play games. Id., ¶ 9. Players began by funding a game account card and entering the information from that card at a PC terminal, which then revealed the amount of the potential prize the player could win. Id., ¶ 9-1. The actual game involved a cursor that moved along the screen across a series of bars and stopped when the player pressed a button. Id., ¶ 9-2. Based on the bar on which the player stopped the cursor, the player won a corresponding amount of money. Id. Although the potential win amounts were random, the player's skill allegedly determined the actual amount the player won. Id., ¶ 10.

         On or about September 9, 2015, several officers of the City's police department entered the store without a warrant and began insisting that these games constituted illegal gambling. Id., ¶¶s 12-15. Plaintiff explained how the games worked and told the officers that a City official had assured Plaintiff that he could continue operating the games as long as they were not slot machines. Id., ¶ 12. Nevertheless, the officers told Plaintiff that he needed to obtain a license to operate a casino, threatened to arrest him, seized all of the game account cards as evidence, and forced Plaintiff to sign a property receipt. Id., ¶ 14. Plaintiff was forced to close his business. Id., ¶ 16. Defendant has yet to file any criminal charges against Plaintiff. Id.

         The relevant criminal statute applies to slot machines, defined as machines that accept money and award the player money or anything else of value "by reason of any element of hazard or chance or of other outcome unpredictable by" the player. Cal. Penal Code § 330b(d). "Pinball and other amusement machines or devices, which are predominantly games of skill, " do not count as slot machines. Id. § 330b(f). The California Supreme Court has said that a slot machine under this statute must "award[] cash or other prizes of value to users . . . by arranging or prearranging winning sweepstakes entries in a manner that is unpredictable to the user." People ex rel. Green v. Grewal, 61 Cal.4th 544, 562-63 (2015).

         Plaintiff believes that the games at VNC were games of skill and not slot machines. He brings five causes of action: (1) a claim under the Declaratory Judgment Act ("DJA") for a declaratory judgment that the games at issue are legal; (2) a 42 U.S.C. § 1983 claim for violations of the First Amendment because providing the game was protected commercial speech; (3) a § 1983 claim for violations of the Fourth Amendment for an unreasonable search or seizure without a warrant; (4) a § 1983 claim for violations of the Fifth Amendment for an unlawful taking of property without due process; and (5) a § 1983 claim for violations of the Equal Protection Clause of the Fourteenth Amendment because Defendant allows other businesses offering similar games to continue to operate. Compl., ¶¶s 24-52. Plaintiff brings all of these claims against the City itself "because its policies, customs and improper training of its officers caused Plaintiff's injuries." Id., ¶ 3.

         Plaintiff seeks to enjoin the City from destroying any seized property, interfering with Plaintiff's business, or threatening or initiating criminal prosecution or other action arising from Plaintiff's offering these games. Id. at 13-14. Plaintiff also seeks the aforementioned declaratory judgment that the games in question are legal under § 330b. Id. at 14. Finally, Plaintiff seeks compensatory and general damages for the alleged constitutional violations. Id. at 14-15.

         On January 7, 2016, the City moved to dismiss all of these claims. See Dkt No. 17. Plaintiff filed a written opposition to the motion. See Dkt. No. 24. On March 4, 2016, after the parties had fully briefed the motion to dismiss, but before the Court had held a hearing on the motion, Plaintiff moved for a preliminary injunction. See Dkt. No. 30. The City opposed the motion in writing. See Dkt. No. 35. The Court heard arguments on both motions on June 23, 2016. See Dkt. No. 43.


         A. Federal Rule of Civil Procedure 12(b)(6)

         Federal Rule of Civil Procedure 8(a) requires a plaintiff to plead each claim with sufficient specificity to "give the defendant fair notice of what the . . . claim is and the grounds upon which it rests." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal quotation marks omitted). Although particular detail is not generally necessary, the factual allegations "must be enough to raise a right to relief above the speculative level" such that the claim "is plausible on its face." Id. at 556-57. A complaint which falls short of the Rule 8(a) standard may be dismissed if it fails to state a claim upon which relief can be granted. Fed.R.Civ.P. 12(b)(6). Dismissal of a claim under Rule 12(b)(6) may be based on a "lack of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory." Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990); see Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097, 1104 (9th Cir. 2008).

         At the motion to dismiss stage, the court must read and construe the complaint in the light most favorable to the non-moving party. Autotel v. Nev. Bell Tel. Co., 697 F.3d 846, 850 (9th Cir. 2012) (citation omitted). When deciding whether to grant a motion to dismiss, the court generally "may not consider any material beyond the pleadings." Hal Roach Studios, Inc. v. Richard Feiner & Co., 896 F.2d 1542, 1555 n.19 (9th Cir. 1990). However, the court may consider material submitted as part of the complaint or relied upon in the complaint, and may also consider material subject to judicial notice. See Lee v. City of Los Angeles, 250 F.3d 668, 688-89 (9th Cir. 2001).

         The court must accept as true all "well-pleaded factual allegations" in the complaint. Ashcroft v. Iqbal, 556 U.S. 662, 664 (2009). However, "courts are not bound to accept as true a legal conclusion couched as a factual allegation." Twombly, 550 U.S. at 555. Nor is a complaint sufficient if it merely "tenders naked assertions devoid of further factual enhancement." Iqbal, 556 U.S. at 678 (internal quotation marks omitted). In other words, "to be entitled to the presumption of truth, allegations in a complaint or counterclaim may not simply recite the elements of a cause of action, but must contain sufficient allegations of underlying facts to give fair notice and to enable the opposing party to defend itself effectively." Eclectic Props. E., LLC v. Marcus & Millichap Co., 751 F.3d 990, 996 (9th Cir. 2014) (quoting Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011)). "In all cases, evaluating a complaint's plausibility is a ‘context-specific' endeavor that requires courts to ‘draw on . . . judicial experience and common sense.'" Levitt v. Yelp! Inc., 765 F.3d 1123, 1135 (9th Cir. 2014) (alteration in original) (quoting Eclectic Props. E., 751 F.3d at 996).

         In the event that a motion to dismiss is granted, "leave to amend should be granted ‘unless the court determines that the allegation of other facts consistent with the challenged pleading could not possibly cure the deficiency.'" DeSoto v. Yellow Freight Sys., Inc., 957 F.2d 655, 658 (9th Cir. 1992) (quoting Schreiber Distrib. Co. v. Serv-Well Furniture Co., 806 F.2d 1393, 1401 (9th Cir. 1986)). A district court may dismiss without leave to amend "where the amendment would be futile." Gardner v. Martino, 563 F.3d 981, 990 (9th Cir. 2009) (citing Thinket Ink Info. Res., Inc. v. Sun Microsystems, Inc., 368 F.3d 1053, 1061 (9th Cir. 2004)). "When a proposed amendment would be futile, there is no need to prolong the litigation by permitting further amendment." Id. (quoting Chaset v. Fleer/Skybox Int'l, LP, 300 F.3d 1083, 1088 (9th Cir. 2002)).

         B. Section 1983 Claims

         "Section 1983 is a ‘vehicle by which plaintiffs can bring federal constitutional and statutory challenges to actions by state and local officials.'" Naffe v. Frey, 789 F.3d 1030, 1035 (9th Cir. 2015) (quoting Anderson v. Warner, 451 F.3d 1063, 1067 (9th Cir. 2006)). In other words, "Section 1983 ‘is not itself a source of substantive rights, ' but merely provides ‘a method for vindicating federal rights elsewhere conferred.'" Albright v. Oliver, 510 U.S. 266, 271 (1994) (quoting Baker v. McCollan, 443 U.S. 137, 144 n.3 (1979)). To state a § 1983 claim, a plaintiff (1) "must allege the violation of a right secured by the Constitution and laws of the United States, " and (2) "must show that the alleged deprivation was committed by a person acting under color of state law." Naffe, 789 F.3d at 1035-36 (quoting West v. Atkins, 487 U.S. 42, 48 (1988)). "Dismissal of a § 1983 claim following a Rule 12(b)(6) motion is proper if the complaint is devoid of factual allegations that give rise to a plausible inference of either element." Id. at 1036 (citations omitted).

         Under longstanding Supreme Court precedent, "[p]laintiffs who seek to impose liability on local governments under § 1983 must prove that ‘action pursuant to official municipal policy' caused their injury." Connick v. Thompson, 563 U.S. 51, 60-61 (2011) (quoting Monell v. Dep'tof Soc. Servs. of City of N.Y., 436 U.S. 658, 691 (1978)). Municipalities are not vicariously liable for the actions of their employees. Monell, 436 U.S. at 691. Instead, courts may impose ยง 1983 liability on municipalities in only three circumstances: (1) when implementation of the municipality's official policies or established customs inflicts the constitutional injury; (2) when omissions leading to constitutional injuries amount to official policy or deliberate indifference on the part of the municipality; or (3) when the individual committing ...

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