United States District Court, C.D. California
GUSTAVO ESCAMILLA; and GREENWAY NUTRIENTS, INC. Plaintiff,
UNITED STATES OF AMERICA; DEPARTMENT OF HOMELAND SECURITY; and DOES 1-50, inclusive Defendants.
ORDER GRANTING DEFENDANTS' MOTION TO DISMISS WITH
D. WRIGHT, II UNITED STATES DISTRICT JUDGE
Gustavo Escamilla (“Escamilla”) and Greenway
Nutrients, Inc., (“Greenway”) filed this action
against the Department of Homeland Security
(“DHS”) and the United States of America
(collectively, “Defendants”). Based upon
Defendants' actions in conjunction with a trademark
infringement investigation, Plaintiffs assert various federal
and state law claims for violations of civil rights, due
process, and equal protection, in addition to claims for
intentional and negligent infliction of emotional distress.
(See Compl. ¶¶ 76-109, ECF No. 1.)
Plaintiffs also request declaratory and injunctive relief.
(Id. ¶¶ 110-112.) Defendants moved to
dismiss the complaint for lack of subject matter
jurisdiction, pursuant to Rule 12(b)(1) of the Federal Rules
of Civil Procedure, and failure to state a claim, pursuant to
Rule 12(b)(6). (Mot., ECF No. 9.) For the reasons discussed
below, the Court GRANTS Defendants'
Motion to Dismiss with prejudice.
April 13, 2013, Greenway filed a civil action (the
“Colorado action”), alleging trademark
infringement and other claims against multiple defendants,
including a subset of Greenway's own investors. (See
Greenway Nutrients, Inc. v. Blackburn, Case No.
1:13-cv-13-1088-MSK-KMT (D. Colo.), Compl., ECF No. 1.) DHS
officials subsequently contacted Plaintiffs in or about March
2015. (Compl. ¶ 13.) On March 3, 2015, Plaintiffs met
with Shawn Gibson (“Gibson”), Operations Manager
for the United States Immigration and Customs Enforcement
(“ICE”), a DHS agency, and several other special
agents. (Compl. ¶ 14; Mot. 3.) Gibson explained to
Plaintiffs that the Greenway investor defendants in
Plaintiffs' civil suit had already been subject to
extensive investigation for criminal trademark infringement.
(Compl. ¶¶ 17-18; Mot. 3.) He told them that, as of
the meeting date, ICE and the United States Attorney's
Office had recovered over $26 million in the investigation.
(Compl. ¶ 18; Mot. 3.) He also informed Plaintiffs that
they may be able to recover from an established victims'
fund. (Id.) Plaintiffs allege that Gibson also
promised them that the Kansas City U.S. Attorney's Office
for the Western District of Missouri (“USAO-MO”)
agreed that Greenway would be added as a victim in the
government's case and that they “would no longer
ever need to worry about having to hire another private
attorney . . . to pursue the accused suspects['] ongoing
theft” of Greenway's products. (Compl. ¶¶
19, 21.) In May 2015, Greenway's counsel in the Colorado
action withdrew, and Greenway never retained new counsel.
(See Greenway Nutrients, Case No.
1:13-cv-13-1088-MSK-KMT, ECF Nos. 137, 143.)
again communicated with Gibson in June 2015, and Gibson
responded that his team was continuing their investigation in
relation to Plaintiffs' claims. (Compl., Ex. 5.)
Escamilla reached out to DHS again on August 3, 2015,
expressing anger and frustration about the length of the
investigation. (See id., Ex. 6.) Gibson responded,
explaining his team was continuing their work and informing
Escamilla that these accusatory emails were not helpful.
(Id.) On August 17, 2015, the District Court of
Colorado dismissed Greenway's suit without prejudice due
to Greenway's failure to prosecute. (Greenway
Nutrients, Case No. 1:13-cv-13-1088-MSK-KMT, Judg., ECF
contacted Gibson again in October 2016 to complain about the
Greenway defendant investors' continued
infringement. (See Compl., Exs. 7-8.) On
October 28, 2016, Gibson notified Plaintiffs that-due to
Plaintiffs' failure to prevail against the Greenway
investors in the Colorado action-ICE and USAO-MO would no
longer investigate the Greenway investors' product
infringement. (Id. ¶ 27; Mot. 3.) Plaintiffs
immediately protested this decision. (Compl. ¶ 28.) They
contacted Gibson again on November 21, 2016, to inquire about
the investigation against the Greenway investors and advise
Gibson that Escamilla felt discriminated against for his
status as “a Mexican-American small businessman . . .
[not] represented by private legal counsel.”
(Id. ¶¶ 29-30.) Escamilla complained that
he was being taken advantage of by DHS. (Id. ¶
30.) Gibson responded that same day, clarifying that DHS
could not “move forward with any investigation
involving [Plaintiffs'] trademark until [Plaintiffs]
resolve[d] this issue with the District Court in Colorado,
” because that decision in favor of the alleged
infringers precluded them from filing charges. (Id.,
April 11, 2017,  Plaintiffs notified Gibson that they
“just discovered new and compelling evidence”
regarding Michael J. Ryan, the former attorney for Greenway,
and his “unlawful divulging, sharing, [and] . . .
disclosing [of] Greenway'[s] confidential business
information [and] trade secrets.” (Id. ¶
32; Mot. 3.) After receiving no response, Plaintiffs
contacted DHS. (See Compl. ¶ 33.) Plaintiffs
allege they filed a formal complaint with the DHS Office for
Civil Rights and Civil Liberties on May 1, 2017. (See
id.) ICE has no record, however, indicating Plaintiffs
formally filed a complaint. (Declaration of Robert A. Ramey
(“Ramey Decl.”) ¶¶ 2-3, ECF No. 9-1.)
On May 2, 2017, DHS emailed Escamilla explaining that they
lacked jurisdiction over his allegations. (See
Compl., Ex. 11.)
then contacted the DHS Office of Professional Responsibility
(“OPR”) on July 27, 2017. (Id. ¶
36.) They expressed their concerns to Russell Simons
(“Simons”), OPR Resident Agent in Charge.
(Id. ¶¶ 37-38; Mot. 3.) Simons initiated
an investigation. (Compl. ¶ 39.) Between August 3 and
August 4, 2017, there were multiple follow-up exchanges
between Simons and Plaintiffs. (Id. ¶¶ 39-
46; Mot. 4.) Simons explained Gibson's inability to
proceed with their claims in light of the adverse civil
judgment. (Compl. ¶¶ 41-42.) Plaintiffs explained
the circumstances of the civil case's dismissal, and
Simons agreed to speak to Gibson about this issue again.
(Id. ¶ 45.) After further discussion with
Gibson, on August 4, 2017, Simons called and reiterated to
Plaintiffs that they would be required to return to federal
civil court to receive a favorable decision in the Colorado
action before DHS could continue pursuing their claims, as
the standing decision left the validity of Plaintiffs'
trademark ownership at issue. (Id. ¶ 46; Mot.
October 24, 2017, Plaintiffs filed a complaint against
Defendants for federal and state civil rights violations,
federal due process violations, federal equal protection
violations, intentional infliction of emotional distress, and
negligent infliction of emotional distress, seeking damages
as well as injunctive and declaratory relief. (See
generally Compl.) On January 29, 2018, Defendants moved
to dismiss the case pursuant to Federal Rules of Civil
Procedure 12(b)(1) and 12(b)(6). (See generally
Mot.) Defendants' Motion is now before the
Subject Matter Jurisdiction
Rule 12(b)(1) of the Federal Rules of Civil Procedure, a
defendant may move to dismiss a complaint for lack of subject
matter jurisdiction. See Fed. R. Civ. P. 12(b)(1).
“Jurisdictional dismissals in cases premised on
federal-question jurisdiction are exceptional . . . .”
Sun Valley Gasoline, Inc. v. Ernst Enters., 711 F.2d
138, 140 (9th Cir. 1983). “Rule 12(b)(1) jurisdictional
challenge may be facial or factual.” Safe Air for
Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004)
(citing White v. Lee, 227 F.3d 1214, 1242 (9th Cir.
2000)). A facial attack is based on the challenger's
assertion that allegations in the complaint are
“insufficient on their face to invoke federal
jurisdiction.” Safe Air, 373 F.3d at 1039. A
factual attack disputes the validity of allegations that, if
true, would invoke federal jurisdiction. Id. In
resolving a factual attack, the Court “need not presume
the truthfulness of the plaintiffs' allegations.”
White, 227 F.3d at 1242. “[T]he district court
may review evidence beyond the complaint without converting
the motion to dismiss into a motion for summary
judgment.” Safe Air, 373 F.3d at 1039. This
evidence includes “affidavits furnished by both
parties.” Savage v. Glendale Union High Sch. Dist.
No. 205, Maricopa Cnty., 343 F.3d 1036, 1039 n.2 (9th
Cir. 2003). “Once the moving party has converted the
motion to dismiss into a factual motion by presenting
affidavits or other evidence properly brought before the
court, the party opposing the motion must furnish affidavits
or other evidence necessary to satisfy its burden of
establishing subject matter jurisdiction.” Id.
Failure to State a Claim
12(b)(6) motion to dismiss tests the legal sufficiency of the
complaint. Navarro v. Block, 250 F.3d 729, 732 (9th
Cir. 2001). In considering a motion to dismiss for failure to
state a claim, “the court must accept as true all
factual allegations in the complaint, as well as all
reasonable inferences that may be drawn from such
allegations.” LSO, Ltd. v. Stroh, 205 F.3d
1146, 1150 n.2 (9th Cir. 2000). To be entitled to this
presumption of truth, “allegations in a complaint . . .
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.” Levitt v. Yelp! Inc., 765
F.3d 1123, 1135 (9th Cir. 2014). All such allegations are to
be construed in the light most favorable to the nonmoving
party. Schwarz v. United States, 234 F.3d 428, 435
(9th Cir. 2000). The “factual allegations that are
taken as true must [also] plausibly suggest an entitlement to
relief.” Levitt, 765 F.3d at 1135. To
determine this, the Court relies upon its judicial experience
and common sense. Ashcroft v. Iqbal, 556 U.S. 662,
679 (2009). “The plausibility standard is not akin to a
‘probability requirement, ' but it asks for more
than a sheer possibility that a defendant has acted
unlawfully.” United States v. Corinthian
Colls., 655 F.3d 985, 991 (9th Cir. 2011).
Leave to Amend
Rule 15 of the Federal Rules of Civil Procedure, a party may
amend its pleading once as a matter of course within
twenty-one days of serving or, if the pleading requires a
responsive pleading, within twenty-one days of service of a
responsive pleading or service of a Rule 12 motion.
See Fed. R. Civ. P. 15(a). “In all other
cases, a party may amend its pleading only with the opposing
party's written consent or the court's leave.
Fed.R.Civ.P. 15(a)(2). The Court should freely grant leave to
amend when justice requires. Id. “This policy
is to be applied with extreme liberality.” Eminence
Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1051 (9th
Cir. 2003). In assessing the appropriateness of leave to
amend, the Court considers “undue delay, bad faith
dilatory motive on the part of the movant, repeated failure
to cure deficiencies by amendments previously allowed, undue
prejudice to the opposing party of allowance of the
amendment, and futility of the amendment . . . .”
Foman v. Davis, 371 U.S. 178, 182 (1962). The
opposing party bears the burden of showing why leave to amend
should not be granted. DCD Programs, Ltd. v.
Leighton, 833 F.3d 183, 187 (9th Cir. 1987).
Rule 12, a party may bring a motion to dismiss based on seven
different grounds. See Fed. R. Civ. P. 12(b).
Accordingly, Defendants request that Plaintiffs'
complaint be dismissed for lack of subject matter
jurisdiction and failure to state a claim. (See
Subject Matter Jurisdiction
courts . . . have original jurisdiction of all civil actions
arising under the Constitution, laws, or treaties of the
United States.” 28 U.S.C. § 1331. Generally,
“[w]hether the complaint states a cause of action on
which relief could be granted is a question of law[, ] and
just as issues of fact[, ] it must be decided after and not
before the court has assumed jurisdiction over the
controversy.” Bell v. Hood, 327 U.S. 678, 682
(1946). The only exceptions to this are “where the
alleged claim under the [C]onstitution or federal statutes
clearly appears to be immaterial and made solely for the
purpose of obtaining jurisdiction or where such claim is
wholly insubstantial and frivolous.” Safe Air,
373 F.3d at 1039 (quoting Bell, 327 U.S. at 682.);
cf. Sun Valley Gasoline, 711 F.2d at 140 (“[A]
jurisdictional finding of genuinely disputed facts is
inappropriate when the jurisdictional issue and substantive
issues are so intertwined that the question of jurisdiction
is dependent on the resolution of factual issues going to the
merits' of an action.”).
case, Plaintiffs' assertion of federal question
jurisdiction appears to be predicated upon claims brought
under 42 U.S.C. § 1983 for violations of civil rights,
due process, and equal protection, and the Federal Tort
Claims Act (“FTCA”), 28 U.S.C. § 1346, for
civil right violations and tortious conduct. (Compl.