Rittenhouse Entertainment, Inc v. City of Wilkes-Barre ( 2019 )

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_____________
No. 18-2991
_____________
RITTENHOUSE ENTERTAINMENT, INC.; THE MINES, INC.; G NET COMM. CO.;
PHOENIX ESTATES; THOMAS J. GRECO,
Appellants
v.
CITY OF WILKES-BARRE; THOMAS LEIGHTON, individually and as the Mayor of
Wilkes-Barre; GERALD DESSOYE, individually and as Chief of Police of Wilkes-
Barre; J.J. MURPHY, individually and as City Administrator of Wilkes-Barre; TONY
THOMAS, JR., individually and as members of the Wilkes-Barre City Council; KATHY
KANE, individually and as members of the Wilkes-Barre City Council; WILLAM
BARRETT, individually and as members of the Wilkes-Barre City Council; RICK
CRONAUER, individually and as members of the Wilkes-Barre City Council;
MICHAEL MERRITT, individually and as members of the Wilkes-Barre City Council;
BUTCH FRATI, individually and as Director of Operations of Wilkes-Barre; LUZERNE
COUNTY; MICHAEL SAVOKINAS, individually and as Luzerne County Sheriff;
KING'S COLLEGE; FATHER THOMAS J. O'HARA, individually and as Officers and
Employees of Kings College; ROBERT MCGONIGLE, individually and as Officers and
Employees of Kings College; PAUL LIDENMUTH, individually and as Officers and
Employees of Kings College; JOHN MCANDREW, individually and as Officers and
Employees of Kings College
______________
On Appeal from the United States District Court for the
Middle District of Pennsylvania
(No. 3-11-cv-00617)
District Judge A. Richard Caputo
Submitted Pursuant to Third Circuit L.A.R. 34.1(a)
June 27, 2019
Before: CHAGARES, GREENAWAY, JR., and GREENBERG, Circuit Judges.
(Filed: August 26, 2019)
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OPINION *
____________
CHAGARES, Circuit Judge.
Thomas Greco and his associated corporations 1 (collectively, “plaintiffs”) filed
suit alleging equal protection and due process violations for actions taken against his
nightclub, The Mines. The plaintiffs appeal the District Court’s grant of summary
judgment in favor of the City, College, and County Defendants 2 on all claims. The parties
do not dispute that The Mines served a higher percentage of minorities than did
neighboring bars. Nor do they dispute that the neighborhood suffered from a high crime
rate. But the parties dispute whether the concentrated police presence around The Mines
was due to a higher incidence of crimes in that area or the fact that The Mines served
*
This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does
not constitute binding precedent.
1
The plaintiffs include G Net Comm. Co., Phoenix Estates, Thomas J. Greco,
Rittenhouse Entertainment, Inc., and The Mines, Inc.
2
The City Defendants include the City of Wilkes-Barre; Thomas Leighton,
individually and as Mayor; Gerard Dessoye, individually and as Chief of Police; J.J.
Murphy, individually and as City Administrator; Tony Thomas, Jr., Kathy Kane, William
Barret, Rick Cronauer, and Michael Merritt, individually and as members of City
Council; and Butch Frati, individually and as Director of Operations. The College
Defendants include King’s College; Father Thomas J. O’Hara, individually and as an
Officer and Employee of King’s College; and Robert McGonigle, individually and as an
Officer and Employee of King’s College. The County Defendants include the County of
Luzerne; Michael Savokinas, individually and as Luzerne County Sheriff.
2
more minorities. Because there is enough evidence for a reasonable jury to infer
discriminatory intent, we will vacate and remand in part and affirm in part.
I.
The following background comes from the evidentiary record before the District
Court, and on appeal from a grant of summary judgment, the facts are construed in the
light most favorable to the non-moving party. 3 Greco is the owner and operator of The
Mines, a bar and nightclub in Wilkes-Barre, Pennsylvania. King’s College, a private and
Catholic college, is located across the street from The Mines. The Mines opened in
September of 2008 and operated on Thursday, Friday, and Saturday nights, averaging
between 400 and 800 customers each night. About 30–40% of The Mines’ clientele were
members of a racial minority, primarily black and Hispanic, and The Mines served more
minorities than neighboring bars. Chief of Police Gerald Dessoye testified that he did not
know the racial composition of The Mines’ patrons but that the bars in Wilkes-Barre “are
diverse,” Appendix (“App.”) 1597, and he told Greco, “you’ve got the wrong kind of
crowd” at The Mines. App. 3006. Chad Williams, who lived above The Mines and
sometimes worked there, encountered Father O’Hara, the president of the College, while
3
The parties dispute whether the District Court abused its discretion in handling
the plaintiffs’ failure to comply with Local Rule 56.1. The plaintiffs submitted their own
Statement of Undisputed Material Facts instead of responding to the moving parties’
statements. The District Court applied the proper standard, “conduct[ing] a full analysis
[of the record] to determine whether granting summary judgment was appropriate.”
Weitzner v. Sanofi Pasteur Inc., 909 F.3d 604, 614 (3d Cir. 2018). The court did not
abuse its discretion.
3
walking his dog. Williams invited Father O’Hara to come inside The Mines, but Father
O’Hara refused because the “crowd was too dark for [his] students.” App. 5912.
The Hardware Bar is located a few blocks from The Mines and served fewer
minorities than The Mines. Chief Dessoye described it as “a problem bar.” App. 1586.
Officer Donald Crane testified that the police allocated more resources toward the
Hardware Bar than The Mines; “[w]e were definitely down at the Hardware Bar more
often” responding to issues. App. 1356. In March 2009, Officer Erika Oswald was
assaulted outside the Hardware Bar, leaving her unconscious from a traumatic head
injury. But Chief Dessoye did not increase police presence in front of the Hardware Bar
thereafter. While the Hardware Bar addressed its issues by privately hiring Wilkes-Barre
police officers to work security, Greco’s request to do the same was denied.
The neighborhood around The Mines and the College suffered from a crime
problem. The police reported that on March 27, 2009, a fight broke out in front of The
Mines involving about 200 people and overwhelming the police. But Greco witnessed
the fight and testified that only 50 people were involved. When he told this to Chief
Dessoye, the Chief responded, “sometimes they embellish the report” and maybe the
report was “exaggerated.” App. 3010, 3006.
Crimes specifically against the College students included a stabbing, a fight
resulting in a broken jaw, and an incident involving a gun and a knife. Students and
parents complained about campus safety and considered transferring due to safety
concerns. The College hosted a public forum to discuss campus safety issues. Robert
McGonigle, the Dean of Students, coordinated the event with the Wilkes-Barre police
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department. McGonigle sent an email to the students informing them of the campus
safety forum; The Mines was mentioned twice in the email, while no other bar was
mentioned. The College prepared a document with anticipated questions, one of which
was why the College had not closed down The Mines. J.J. Murphy, the Wilkes-Barre
city administrator, Father O’Hara, and Chief Dessoye were present at the forum. Father
O’Hara denied Greco’s request to attend. On April 8, 2009, Father O’Hara, Mayor
Leighton, and Chief Dessoye met to discuss how the issues in the area would be
addressed. Thereafter, Father O’Hara told Greco, “either we’re going to petition to close
The Mines or the parents [of the College students] are going to petition to close The
Mines. And I’m going to talk to Mayor Tom and Chief Dessoye about how we’re going
to continue to go about closing down The Mines.” App. 3010. A police officer in front
of The Mines also told the manager “we are closing your boss down.” App. 1156.
On April 30, 2009, the Wilkes-Barre police department carried out a “saturation
patrol” spanning a few blocks surrounding The Mines. This type of police action
“saturates” a specific neighborhood with law enforcement to address crime. Multiple law
enforcement entities participated in the saturation patrol at the request of the Wilkes-
Barre police department, including the Luzerne County Sherriff’s Office, Luzerne County
Probation and Parole, State Parole and Probation, the Pennsylvania Liquor Control
Board, and the Pennsylvania State Police Gang Unit. Luzerne County Sheriff Savokinas
had agreed to help other law enforcement entities when asked for assistance in the past,
so when Chief Dessoye asked for County manpower for one night, the Sheriff agreed.
Jennifer Roberts, a Deputy Sheriff in the Luzerne County Sheriff’s Office, participated in
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the saturation patrol. She testified that “[a]lmost all of” the Wilkes-Barre police officers
told her that the purpose of the saturation patrol was to deal with The Mines. App. 5287.
Specifically, Deputy Sheriff Roberts testified that Officer Rennick, her personal friend,
told her that The Mines is a “problem bar, and we don’t want these kind of people in our
town.” App. 5287. She further testified that Officer Rennick was referring to “black
people, Hispanic people.” App. 5287.
The concentrated police presence around The Mines did not begin and end with
the saturation patrol on April 30. Every Thursday, Friday, and Saturday night beginning
in April 2009, the Wilkes-Barre police would park on the sidewalk in front of and across
from The Mines; park in and block the entrance to The Mines’ parking lot; and stand at
the entrance to The Mines with a drug-sniffing dog. These actions deterred customers
from entering The Mines. Greco drove to the neighboring bars every Thursday, Friday,
and Saturday to see if the police did the same elsewhere. They did not. Within months,
The Mines went out of business.
Meanwhile, some of Greco’s properties that had Keystone Opportunity Zone
(“KOZ”) designation were then denied that designation on his application to extend.
KOZ is a Pennsylvania state tax benefit program designed to encourage property owners
to bring business to certain under-developed areas. This is accomplished through local
and state tax waivers, abatements, or exemptions. Some of Greco’s properties in Wilkes-
Barre already had KOZ designation. But around the same time The Mines was subject to
significantly greater police presence, Greco’s application to extend the KOZ designation
6
of his properties was denied. The parties disagree as to whether his application to extend
was timely and contained the necessary information.
In 2010, Greco pleaded guilty in federal court to the felony of misprision for
failing to report corruption in violation of 18 U.S.C. § 4. Greco bought televisions for a
county commissioner and failed to disclose the manner in which he was paid back.
The plaintiffs filed a lawsuit against the City, College, and County Defendants in
2011 for violations of due process, equal protection, and various other statutory and state
causes of action. The plaintiffs alleged that the defendants conspired to shut down The
Mines through concentrated police presence due to the fact that The Mines served more
minorities than any neighboring bar. The plaintiffs also alleged that the denial of KOZ
renewal was a result of the discrimination, and that Greco’s charge and conviction for
misprision was retaliation for threatening to sue. The following counts survived the
defendants’ motions to dismiss: (1) plaintiffs’ §§ 1983 and 1985 claims against the City,
County, and College Defendants, for the alleged violations of plaintiffs’ Fourteenth
Amendment Equal Protection rights (Count One); (2) plaintiffs’ §§ 1981 and 1982 claims
against Mayor Leighton, Chief Dessoye, the City of Wilkes-Barre, plaintiffs’ § 1985
claims against all City Defendants, 4 and plaintiffs’ §§ 1981, 1982, and 1985 claims
against the College Defendants, for the alleged retaliation against plaintiffs for serving
minorities (Count Two); (3) plaintiffs’ Fourteenth Amendment Due Process claims
4
While the Plaintiffs did not specify the subsection under which they are
proceeding, the District Court assumed it was § 1985(3), as that is the only relevant
subsection. We will do the same.
7
against all defendants for alleged abuse of police powers (Count Three); (4) plaintiffs’
substantive due process claims against the City of Wilkes-Barre, Mayor Leighton, and
City Council Members for the alleged improper denial of Greco’s KOZ applications
(Count Four); (5) plaintiffs’ tortious interference with business relationships claim
against the City and College Defendants (Count Five); and (6) plaintiffs’ claims against
Mayor Leighton and Chief Dessoye for allegedly manipulating Greco into committing
misprision (Count Six). Rittenhouse Entm’t, Inc. v. City of Wilkes-Barre, No. 3:11-617,
2012 WL 3562030, at *18 (M.D. Pa. Aug. 16, 2012).
The District Court granted summary judgment for the defendants on Counts One,
Two, Three, Four and Six and dismissed Count Five. The plaintiffs timely appealed.
II.
The District Court exercised jurisdiction under 28 U.S.C. §§ 1331, 1343, and
declined to exercise supplemental jurisdiction under § 1367(c)(3). We have appellate
jurisdiction under 28 U.S.C. § 1291. We review the District Court’s grant of summary
judgment de novo. Renchenski v. Williams, 622 F.3d 315, 324 (3d Cir. 2010).
“Summary judgment is appropriate only if there is no genuine dispute as to any material
fact and the movant is entitled to judgment as a matter of law. We view the facts in the
light most favorable to the non-moving party.” Buhdun v. Reading Hosp. & Med. Ctr.,
765 F.3d 245, 251 (3d Cir. 2014) (citations omitted).
III.
We conclude that summary judgment was improper on Counts One, Two, and
Three (“the discrimination claims”) against the City and College Defendants but that it
8
was proper on all claims against the County Defendants. We also affirm on Counts Four
and Six. On remand, in addition to considering the discrimination claims, the District
Court should also consider Count Five –– the state law tortious interference claim –– as
well as the issue of qualified immunity for the City Defendants in the first instance.
A.
The discrimination claims raise distinct constitutional and statutory causes of
action, but common among them is the element of intentional discrimination on the basis
of race. These claims include violations of the Equal Protection Clause and the Due
Process Clause under 42 U.S.C. § 1983, violations of §§ 1981, 1982, and conspiracy to
commit them under § 1985. To allege a racial discrimination claim under the Fourteenth
Amendment’s Equal Protection Clause, a plaintiff must allege “racially discriminatory
intent or purpose.” City of Cuyahoga Falls, Ohio v. Buckeye Cmty. Hope Found., 538
U.S. 188, 195 (2003) (citation omitted). Similarly, a claim for abuse of police power
that violates substantive due process requires “conduct intended to injure” that “rise[s] to
the conscience-shocking level.” Cty. of Sacramento v. Lewis, 523 U.S. 833, 847 (1998).
And “bias against an ethnic group” is “conscience-shocking behavior.” Chainey v.
Street, 523 F.3d 200, 220 (3d Cir. 2008). So, use of the police power to discriminate
intentionally on the basis of race violates substantive due process. Likewise, an element
of both §§ 1981 and 1982 is intentional racial discrimination. Brown v. Phillip Morris
Inc., 250 F.3d 789, 797 (3d Cir. 2001). Section 1981 gives all persons the right to make
and enforce contracts and § 1982 provides various real and personal property rights. 42
U.S.C. §§ 1981, 1982. Discriminatory intent requires that the decision-maker took “a
9
particular course of action at least in part ‘because of,’ not merely ‘in spite of,’ its adverse
effects upon an identifiable group.” Antonelli v. New Jersey, 419 F.3d 267, 274 (3d Cir.
2005) (quoting Personnel Adm’r of Mass. v. Feeney, 442 U.S. 256, 279 (1979)).
The District Court granted summary judgment on these claims because it found no
evidence of racially discriminatory intent. We disagree. There is evidence that the City
Defendants concentrated the police presence around The Mines “at least in part ‘because
of,’” Antonelli, 419 F.3d at 274, the race of The Mines’ clientele. Specifically, the City
Defendants’ statements –– “you’ve got the wrong kind of crowd” and “we don’t want
these kind of people in our town,” referring to “black people, Hispanic people” –– give
rise to an inference of discriminatory intent. App. 3006, 5287. Moreover, there is
evidence that only The Mines was singled out, while other bars, such as the Hardware
Bar, that served fewer minorities but had plenty of incidents requiring police response,
were not subject to similar treatment by police. And while the City Defendants argue that
such disparate treatment was warranted because of the March 27 event, the size of that
fight is disputed. The same is true of the College Defendants. While they are not state
actors, they are not immunized from liability because “a private party who willfully
participates in a joint conspiracy with state officials to deprive a person of a constitutional
right acts ‘under color of state law’ for purposes of [section] 1983.” Abbot v. Latshaw,
164 F.3d 141, 147–48 (3d Cir. 1998). And there is evidence that the College Defendants
conspired with the City Defendants to shut down The Mines because of the race of its
patrons. Father O’Hara’s statement that the crowd at The Mines was “too dark for [his]
students” suggests discriminatory intent. App. 5912. Dean McGonigle’s email about the
10
student forum mentioned only one bar, The Mines, suggesting that he singled out The
Mines from the neighboring, white-clientele bars. And Father O’Hara’s statement that he
was working with the mayor and the chief of police “about how we’re going to continue
to go about closing down The Mines” suggests an agreement among the defendants.
App. 3010.
Accordingly, the plaintiffs’ § 1983 and § 1985 claims alleging violations of equal
protection against the City and College Defendants should have survived summary
judgment because a reasonable jury could infer that they agreed to deprive The Mines of
equal protection of the law due to the race of The Mines’ patrons. This evidence of
intentional racial discrimination concerned contract and property rights enumerated in §
1981 and § 1982 –– such as the financial transaction of selling a drink at the plaintiffs’
bar –– so summary judgment on these claims for the City and College Defendants was
improper. Likewise, the substantive due process claims brought under § 1983 and § 1985
for abuse of police power and conspiracy to abuse police power also survive summary
judgment because a jury could reasonably infer that the City and College Defendants
agreed to discriminate intentionally on the basis of race by deliberately concentrating
police power on the bar that serves minorities, and in so doing, forcing the bar out of
business and depriving the plaintiffs of their property.
In contrast, the record is devoid of evidence that the County Defendants were
involved at all beyond the assistance they offered the city on one night. Sheriff
Savokinas routinely agreed to help in multi-jurisdictional operations, and there is no
11
evidence he or his office acted with discriminatory intent. Summary judgment in favor of
the County Defendants on all claims was appropriate.
B.
In Count Four, the plaintiffs also allege a violation of substantive due process as a
result of the City Defendants’ denial of KOZ extension benefits. “To establish a
substantive due process claim, a plaintiff must prove the particular interest at issue is
protected by the substantive due process clause and the government’s deprivation of that
protected interest shocks the conscience.” Chainey, 523 F.3d at 219. But not all property
interests are “worthy” of substantive due process protection. Reich v. Beharry, 883 F.2d
239, 244 (3d Cir. 1989). And whether the property interest contains this “particular
quality depends on whether that interest is fundamental under the United States
Constitution.” Newark Cab. Ass. v. City of Newark, 901 F.3d 146, 155 (3d Cir. 2018)
(citation omitted).
For example, we have held that state-law entitlement to water and sewer services
is not protected by substantive due process. Ransom v. Marrazzo, 848 F.2d 398 (3d Cir.
1988). There, we explained,
[T]he legal fact that, once a municipality . . . establishes a
utility for its citizens, a citizen’s expectation of receiving that
service rises to the level of a property interest cognizable under
the Due Process Clause, merely brings that expectation within
the compass of the Fourteenth Amendment’s procedural
protections . . . . It does not transform that expectation into a
substantive guarantee against the state in any circumstance.
Id. at 412 (emphasis added) (citations omitted). We also held there is no property
interest protected by substantive due process (or procedural due process) in
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“Pennsylvania’s competitive bidding statutes [that] require that public contracts be
awarded to the lowest responsible bidder.” Indep. Enter. Inc. v. Pittsburgh Water &
Sewer Auth., 103 F.3d 1165, 1178-80 (3d Cir. 1997). Likewise, “tenured public
employment is a wholly state-created contract right” so it is not a “fundamental property
interest entitled to substantive due process protection.” Nicholas v. Pa. State Univ., 227
F.3d 133, 142-43 (3d Cir. 2000). The KOZ program provides tax benefits to certain
businesses through an application –– and re-application –– process. The KOZ benefits
are merely that –– a benefit –– and therefore are not fundamental rights protected by
substantive due process under the Constitution. Therefore the “threshold requirement”
for a substantive due process challenge is not met, Gikas v. Washington School Dist., 328
F.3d 731, 737 (3d Cir. 2003), and summary judgment for the City Defendants was
appropriate.
C.
Greco individually raises a claim of selective prosecution. He claims that Mayor
Leighton and Chief Dessoye “influenced” an FBI agent to “manipulate” Greco “into
becoming vulnerable to the charge of misprision.” Pl. Br. 40. But the City of Wilkes-
Barre did not charge him with misprision; the federal government did. Nor is there any
evidence that Mayor Leighton and Chief Dessoye agreed to influence the FBI in any way.
The District Court properly granted summary judgment to the City Defendants on this
claim.
IV.
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For the foregoing reasons, we will vacate the District Court’s summary judgment
order on Counts One, Two, and Three as to the City and College Defendants and
remand. 5 Summary judgment as to the County Defendants will be affirmed on all counts.
Summary judgment on Counts Four and Six will be affirmed. 6
5
The City Defendants argue that summary judgment was proper on these counts
for an alternative reason: that they are entitled to qualified immunity on the disputed
facts. But the District Court did not reach this issue, so on remand the court should
consider the qualified immunity of each City Defendant in the first instance. See Grant v.
City of Pittsburgh, 98 F.3d 116, 123 (3d Cir. 1996).
6
Pursuant to 28 U.S.C. § 1367(c)(3), the District Court declined to exercise
supplemental jurisdiction over Count Five, a tortious interference claim under state law.
Because we are vacating and remanding claims over which the District Court has original
jurisdiction, we will also vacate the court’s order as to supplemental jurisdiction and
remand.
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