United States District Court, N.D. California
PAUL S. DANIELS, et al., Plaintiffs,
ALAMEDA COUNTY, et al., Defendants.
ORDER GRANTING MOTION TO DISMISS WITH LEAVE TO AMEND
RE: DKT. NO. 15
JACQUELINE SCOTT CORLEY UNITED STATES MAGISTRATE JUDGE
Daniels and Nanette Dillard allege that they were prosecuted
by the Alameda County District Attorneys' Office in
retaliation for exercising their First Amendment rights.
Defendants move to dismiss all of Plaintiffs' claims
under Federal Rule of Civil Procedure 12(b)(6) and to strike
the state law claims under California Code of Civil Procedure
§ 425.16, the anti-Strategic Lawsuits Against Public
Participation (anti-SLAPP) statute. (Dkt. No. 15.) After
carefully considering the parties' submissions, including
their post-hearing submissions, and having had the benefit of
oral argument on June 13, 2019, Defendants' motion to
dismiss Plaintiffs' Section 1983 claim is GRANTED with
leave to amend and the motion to dismiss Plaintiffs'
state law claims is denied without prejudice. The Section
1983 claim must be dismissed because Plaintiffs have not
plausibly alleged that each defendant caused Plaintiffs'
prosecution; nor have they plausibly alleged an absence of
probable cause. The Court declines to address the state law
claims until it determines if the federal claim will proceed
past the pleading stage.
Dillard was the Executive Director of Alameda County's
Associated Community Action Program (“ACAP”).
(Complaint at ¶ 7.) ACAP was a “quasi-governmental
Joint Powers Agency in Alameda County.” (Id.
at ¶ 5.) During the summer of 2005, Ms. Dillard and Paul
Daniels, who worked for ACAP as the Community Services Block
Grant Manager, fell in love. (Id. at ¶ 7.) The
couple married two years later in 2007. (Id.)
2010, Ms. Dillard discovered that $159, 000 which should have
been held in the Alameda County Treasury for ACAP was
missing. (Id. at ¶ 8.) Ms. Dillard raised this
issue at a January 19, 2011 meeting with Alameda County Board
of Supervisors President Nate Smiley, who was also a member
of the ACAP Governing Board. (Id.) Although Ms.
Dillard requested Mr. Smiley's assistance in tracing the
missing funds, they were never accounted for and Ms. Dillard
now believes that Supervisor Miley and Scott Haggerty, who
was on the Alameda County Board of Supervisors, caused them
to be transferred. (Id.)
January 19, 2011 meeting Ms. Dillard also raised concerns
regarding the financial services Alameda County provided to
ACAP under the joint powers agreement. (Id. at
¶ 9.) Ms. Dillard requested that ACAP be allowed to go
forward as an independent 501(c)(3) non-profit organization
and allowed to “operate outside of political
motivation.” (Id.) This change did not happen,
and instead, Plaintiff was placed on administrative leave
following a February 2, 2011 emergency closed door session of
the ACAP Board of Governors. (Id. at ¶ 11.) Ms.
Dillard and Mr. Daniels were both subsequently removed from
their positions with ACAP. (Id. at ¶ 12.)
County thereafter shut down ACAP and “cannibalized its
grants to benefit the pet pork barrel projects of certain
supervisors including Supervisor Miley.” (Id.
at ¶ 12.) The County then attempted to interfere with
Ms. Dillard and Mr. Daniels' unemployment benefits by
suggesting that they had been terminated for cause.
(Id.) Ms. Dillard sued the ACAP Governing Board
including Mr. Miley, Mr. Haggerty, Mr. Lieber, and Ms. Souza
for violation of her rights under California's Brown Act
based on their actions at the February 2, 2011 meeting and
her termination. (Id. at ¶ 13.) The County
ultimately agreed to settle the suit for more than $300, 000.
as the settlement was reached, “County officials
immediately demanded that Dillard return the settlement money
paid, based on a bogus theory that Dillard was liable for
certain ACAP indebtedness to the federal government.”
(Id. at ¶ 14.) However, this
“indebtedness was a consequence of the County Political
Defendants' own actions.” (Id.) When Ms.
Dillard refused to return the settlement money, “the
county Political Defendants trumped up a raft of specious
accusations, and caused a criminal prosecution to be
commenced against both Dillard and Daniels.”
(Id.) Defendants “peddled” “false
allegations” to the District Attorney's Office and
Ms. Dillard and Mr. Daniels were charged with having violated
federal regulations by “drawing down and distributing
federal Department of Health and Human Services
(“DHHS”) funds.” (Id. at ¶
16.) The criminal complaint also charged Ms. Dillard with
“enrich[ing] herself by utilizing ACAP resources, and
 creat[ing] two backdated documents immediately following
her dismissal as executive director of ACAP.”
(Id.) Mr. Daniels was only charged “to place
pressure on Dillard to enter a plea bargain” and she
was promised that if she entered a plea, the charges against
Mr. Daniels would be reduced to a misdemeanor. (Id.
at ¶ 17.) A deputy district attorney also advised Mr.
Daniels and Ms. Dillard's defense counsel that although
“the prosecutors were disinclined to bring the action
of highly dubious merit, ” they did so because of
“intense political pressure from the County Board of
Supervisors.” (Id.) Plaintiffs also
subsequently discovered that the County was pursuing an
insurance claim that the carrier would only pay if Mr.
Daniels or Ms. Dillard was convicted of a crime.
Daniels and Ms. Dillard “refused to buckle under
pressure” and the case against them proceeded to trial.
(Id. at ¶ 18.) The trial lasted over four
months during which time “Defendants drummed up
publicity, and Dillard and Daniels were portrayed in the
press and media as crooks.” (Id.) The cost of
attorney's fees “was crushing” and led to Ms.
Dillard and Mr. Daniels losing their home in foreclosure.
(Id. at ¶ 19.) Mr. Daniels and Ms. Dillard were
eventually convicted of some of the charges and acquitted of
others. (Id. at ¶ 20.) In particular, they were
both convicted of improper “draw-down” of federal
funds and Ms. Dillard was also convicted of creating two
post-dated documents that she intended to use in unspecified
legal proceedings. (Id.) Neither Mr. Daniels nor Ms.
Dillard received any custody time; instead, the judge ordered
them to pay over $300, 000 in restitution. (Id. at
¶ 21.) “The restitution order was based upon the
mistaken belief that Dillard and Daniels owed this sum to the
federal Department of Health and Human Services.”
Daniels and Ms. Dillard appealed their convictions; however,
this process took over four years and during this time they
paid appellate counsel $100, 000 which left them
“destitute” and “virtually
unemployable.” (Id. at ¶ 22.) On March
29, 2018, the First District Court of Appeal issued an
opinion finding that “Alameda County had violated the
Supremacy Clause of the United States Constitution by
fashioning state law crimes out of violations of non-penal
federal regulations, when the federal agency charged with
administering the regulations did not deem Daniels' and
Dillards' conduct culpable.” (Id. at
¶ 24.) As a result, Mr. Daniels “was fully
exonerated on the merits” and Ms. Dillard was
“left with only a single count of conviction, for
creating two back-dated documents.” (Id.)
Alameda County Superior Court subsequently granted Mr.
Daniels' and Ms. Dillard's request to dismiss all
charges, terminate their probation, and expunge their
criminal records. (Id. at ¶ 25.) Both Mr.
Daniels and Ms. Dillard nonetheless continue to struggle for
employment. (Id. at ¶ 26.) Ms. Dillard now
works for a tour company making $47, 000 a year.
ten months after the Court of Appeal's decision, Mr.
Daniels and Ms. Dillard filed this action against Alameda
County; the Alameda County Board of Supervisors; Nate Miley,
Keith Carson, Scott Haggerty, Wilma Chan, all members of the
Alameda County Board of Supervisors; Susan Muranishi, the
Alameda County Administrator; Robert Lieber, the former mayor
of Albany and a former member of the ACAP Governing Board;
Diana Souza, a former San Leandro City Council member and
former member of the ACAP Governing Board, the Alameda County
Auditor-Controller Agency, and Patrick O'Connell, the
former Alameda County Auditor-Controller. (Dkt. No. 1.)
Plaintiffs plead four claims for relief: (1)
malicious/retaliatory prosecution in violation of 42 U.S.C.
§ 1983; (2) malicious prosecution under California
common law; (3) violation of the Bane Act, Cal. Civ. Code
§ 52.1; and (4) California common law intentional
infliction of emotional distress.
Alameda County, Alameda County Board of Supervisors, Keith
Carson, Wilma Chan, Scott Haggerty, Nate Miley, Susan
Muranishi, Patrick J O'Connell, and Richard Valle
(hereafter “Defendants”) subsequently filed the
now pending motion to dismiss and to strike the state law
claims under California Code of Civil Procedure §
425.16, the anti-Strategic Lawsuits Against Public
Participation (anti-SLAPP) statute. (Dkt. No. 15.) Defendants
Diana Souza and Robert Lieber separately moved to ...