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Escamilla v. United States

United States District Court, C.D. California

April 4, 2018





         Plaintiffs 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.


         On 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.)

         Escamilla 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 No. 148.)

         Escamilla contacted Gibson again in October 2016 to complain about the Greenway defendant investors' continued infringement.[1] (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., Ex. 10.)

         On April 11, 2017, [2] 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.)

         Plaintiffs 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. 4.)

         On 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 Court.[3]


         A. Subject Matter Jurisdiction

         Under 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.

         B. Failure to State a Claim

         A Rule 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).

         C. Leave to Amend

          Under 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).


         Under 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 generally Mot.)

         A. Subject Matter Jurisdiction

         “[D]istrict 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.”).

         In this 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. ...

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