MARGO K. BRODIE, District Judge.
Plaintiffs Gem Financial Service, Inc., doing business as Gem Pawnbrokers, and Mitchell Kaminsky brought the above-captioned action against Defendants the City of New York ("City"), the New York City Police Department ("NYPD") and Police Officers John Doe #1-10, alleging unlawful search and seizure, malicious prosecution, arbitrary treatment as a class of one in violation of the Fourth and Fourteenth Amendments, and municipal liability. Plaintiffs also allege claims under the New York State Constitution, the New York Civil Rights Law ("NYCRL") and New York State common law for malicious prosecution and tortious interference. Plaintiffs seek damages, a declaratory judgment, injunctive relief and attorneys' fees. Defendants moved to dismiss the Complaint for failure to state a claim. At oral argument on March 6, 2014, the Court dismissed Plaintiff Mitchel Kaminsky from this action and dismissed all claims against the NYPD. For the reasons discussed below, Defendants' motion to dismiss is granted in part and denied in part. The Court grants Defendants' motion to dismiss Gem Financial Services, Inc.'s ("Gem" or "Plaintiff") class of one Equal Protection claim, federal malicious prosecution claim, NYCRL claim, and tortious interference claim. The Court denies Defendants' motion to dismiss Plaintiff's Fourth Amendment claim, state law malicious prosecution claim, municipal liability claim, and request for equitable relief. Plaintiff is granted leave to file an amended complaint.
Plaintiff Gem is a collateral loan broker and secondhand dealer, duly licensed by the New York City Department of Consumer Affairs.
On March 11, 2011, NYPD officers entered a Gem store located at 1724 Pitkin Avenue, Brooklyn, New York ("Pitkin Store") without a warrant and issued four summonses to Pitkin Store Manager Keith Watts citing violations of state and local law, all of which were eventually dismissed after numerous court appearances and argument on the merits.
On or about March 14, 2012, NYPD officers entered a Gem regional store located at 216-15 Jamaica Avenue, Queens Village, New York ("Queens Village Store"), and questioned why the Queens Village Store was not using Leads Online. (Id. ¶ 25.) The NYPD urged Gem to consider using Leads Online or endure constant visits resulting in business disruption and possibly the issuance of criminal violations and arrest. (Id. ¶ 27.) The NYPD made it clear that if Gem registered with Leads Online, these disruptive visits would end. (Id. ¶ 28.)
On or about April 4, 2012, the NYPD entered the Pitkin Store and again stated that because Gem had not registered with Leads Online, Gem would be subjected to constant visits. (Id. ¶¶ 29, 31.)
On or about May 2, 2012, an NYPD officer told Gem's Vice-President Harold Dambrot that police visits would continue unless Gem signed up with Leads Online. (Id. ¶ 40.) The officer informed Dambrot that Leads Online would allow the NYPD to identify all of Gem's customers and transactions. (Id. ¶ 42.) During this conversation, the NYPD reiterated that if Gem did not sign up with Leads Online, more visits, arrests and possibly the closure of stores would follow. (Id. ¶ 43.)
On May 21, 2012, NYPD officers entered the Queens Village Store and asked questions about various transactions. (Id. ¶ 46.) Although the officers told Gem's management that they were performing an administrative inspection, they did not perform a "regulatory review of Gem's books and records to seek to confirm transactional regularities." (Id. ¶¶ 48-49.) Gem was again threatened with continued business disruption if it refused to use Leads Online. (Id. ¶ 50.) During this incident, Dambrot told the officers via telephone that Leads Online violates the privacy rights of Gem customers and several federal laws. (Id. ¶¶ 53-54, 56.) After speaking with Dambrot, the officers threatened the Queens Village Store manager John Somer with arrest and store closure if Gem did not comply. (Id. ¶ 56.) Although no arrests were made, the NYPD did issue a misdemeanor summons to Gem for a violation of New York City Administrative Code 20-273. (Id. ¶¶ 58-59; Summons No. 433775608-5 annexed to Compl. as Ex. B.) This charge was eventually dismissed after the presentation of evidence and argument on the merits. (Compl. ¶ 61.)
On June 13, 2012, NYPD officers again entered the Queens Village Store and threatened further business disruption and arrests if Gem did not use Leads Online. (Id. ¶¶ 62, 64.) The officers issued another criminal misdemeanor summons to Gem for a violation of New York City Administrative Code 20-273 that was dismissed after the presentation of evidence and argument on the merits. (Id. ¶¶ 65-67; Summons No. 433775619-0, annexed to Compl. as Ex. D.)
On September 19, 2012, the NYPD issued another misdemeanor summons to Gem for a violation of Section 2-101(a) of the Rules of the City of New York. The summons was dismissed after presentation of evidence and argument on the merits. (Id. ¶¶ 68, 70-71, 73; Summons No. 433769774-3, annexed to Compl. as Ex. F.)
On a number of other occasions between the fall of 2011 through 2012, the NYPD maintained a constant presence at Gem's various stores and investigated random transactions. (Compl. ¶ 32.) On many of these occasions, the NYPD demanded collateral jewelry without a warrant or any other legal right. (Id. ¶ 33.) In addition, the NYPD would demand that Gem place "criminal holds" on certain collateral jewelry, without any legal basis, thereby preventing Gem from utilizing said jewelry during the ordinary course of business. (Id. ¶¶ 34-35.) On many of these visits the NYPD would remind Gem that if it were to register with Leads Online, these activities would "cool." (Id. ¶ 36.)
Collateral loan brokers and secondhand dealers in New York City operate under a regulatory framework that includes several provisions of the New York State General Business Law, the New York City Charter, the New York City Code and the Rules and Regulations of the City of New York. At the State level, Chapter 20, Article 5 of the General Business Law regulates collateral loan brokers. See N.Y. Gen. Bus. Law Ch. 20, Art. 5. Section 43 of the General Business Law requires collateral loan brokers to keep a book with specific information concerning loans and collateral. N.Y. Gen. Bus. Law Ch. 20, Art. 5 § 43. Section 45 of the same law discusses inspection and states in pertinent part:
N.Y. Gen. Bus. Law Ch. 20, Art. 5 § 45.
New York City law also affords the NYPD Police Commissioner ("Commissioner") the power to conduct administrative searches of certain trades including pawnbrokers and secondhand dealers. Section 436 of the New York City Charter discusses the Commissioner's search power and states in pertinent part:
N.Y. City Charter § 436. Several sections of the New York City code expressly govern the operations of secondhand dealers and pawnbrokers. Section 20-277 discusses the reporting requirements of pawnbrokers and states in pertinent part:
N.Y. City Code § 20-277. Section 20-267 is an analogous provision directed at secondhand dealers. See N.Y. City Code § 20-267. Section 20-272(b) addresses lost or stolen goods and states in pertinent part:
N.Y. City Code § 20-272. Section 20-273 discusses the information secondhand dealers and pawnbrokers must keep in a "book in which shall be legibly written in English. . . ." See N.Y. City Code § 20-273(a)-(b). Subsection (d) discusses police inspection of said books and states in pertinent part:
N.Y. City Code § 20-273(d). A violation of "any of the provisions of this subchapter or any rule or regulation issued thereunder" is a class A misdemeanor. See N.Y. City Code § 20-275. In addition, several provisions of the Rules and Regulations of the City of New York specifically address secondhand dealers and collateral loan brokers although none speak to administrative searches. See R.C.N.Y. Tit. 6, §§ 2-101-04, 5-221-37.
All parties rely on a memorandum entitled "Guidelines for the Inspection of Pawnbroker and Second-hand Dealers Businesses," issued in 1998 by then NYPD Deputy Commissioner for Legal Matters George A. Grasso ("Grasso Memo"). (Annexed to the Declaration of Diane M. Murray ("Murray Decl.") as Ex. H.) Although the Grasso Memo is not referenced in or attached to the Complaint, the Court recognizes the Grasso Memo as integral to the Complaint.
In reviewing a motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure, the court "must take all of the factual allegations in the complaint as true." Pension Ben. Guar. Corp. ex rel. St. Vincent Catholic Med. Centers Ret. Plan v. Morgan Stanley Inv. Mgmt. Inc., 712 F.3d 705, 717 (2d Cir. 2013) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)); see also Lundy v. Catholic Health Sys. of Long Island Inc., 711 F.3d 106, 113 (2d Cir. 2013) (quoting Holmes v. Grubman, 568 F.3d 329, 335 (2d Cir.2009)); Matson v. Bd. of Educ., 631 F.3d 57, 63 (2d Cir. 2011) (quoting Connecticut v. Am. Elec. Power Co., 582 F.3d 309, 320 (2d Cir. 2009)). A complaint must plead "enough facts to state a claim to relief that is plausible on its face." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim is plausible "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Matson, 631 F.3d at 63 (quoting Iqbal, 556 U.S. at 678); see also Pension Ben. Guar. Corp., 712 F.3d at 717-18. "[W]here the wellpleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged — but it has not `show[n]' — `that the pleader is entitled to relief.'" Pension Ben. Guar. Corp., 712 F.3d at 718 (alteration in original) (quoting Iqbal, 556 U.S. at 679). Although all allegations contained in the complaint are assumed true, this principle is "inapplicable to legal conclusions." Iqbal, 556 U.S. at 678.
When deciding a motion to dismiss, a court's review is limited to the four corners of the complaint but a court may also review (1) documents attached to the complaint, (2) any documents incorporated in the complaint by reference, (3) any documents deemed integral to the complaint, and (4) public records. See Nielsen v. Rabin, ___ F.3d ___, ___, 2014 WL 552805, at *4 (2d Cir. Feb. 13, 2014) (documents attached to the complaint and those incorporated by reference); Global Network Commc'ns, Inc. v. City of New York, 458 F.3d 150, 156 (2d Cir. 2006) (documents integral to the complaint); Blue Tree Hotels Inv. (Canada), Ltd. v. Starwood Hotels & Resorts Worldwide, Inc., 369 F.3d 212, 217 (2d Cir. 2004) (public records).
In order to sustain a claim for relief under § 1983, a plaintiff must allege (1) that the challenged conduct was committed by a person "acting under color of state law," and (2) that such conduct "deprived [the plaintiff] of a right secured by the Constitution or laws of the United States." Cornejo v. Bell, 592 F.3d 121, 127 (2d Cir. 2010) (quoting Pitchell v. Callan, 13 F.3d 545, 547 (2d Cir. 1994)); see also Am. Mfrs. Mut. Ins. Co. v. Sullivan, 526 U.S. 40, 49 (1999) (same). Plaintiff has alleged sufficient facts to show that Defendants, acting under color of state law, plausibly violated its Fourth Amendment rights.
Plaintiff alleges that Defendants' intrusions were not legitimate administrative inspections and thus violated the Fourth Amendment.
It is well-accepted that although the owner or operator of a business has a reasonable expectation of privacy in commercial property, this expectation is different from, and less than, a similar expectation in an individual's home. New York v. Burger, 482 U.S. 691, 699-700 (1987). "This expectation is particularly attenuated in commercial property employed in `closely regulated' industries." Id. at 700. Given the diminished expectation of privacy of closelyregulated businesses, "a warrantless inspection of commercial premises may well be reasonable within the meaning of the Fourth Amendment." Id. at 702; see also In re Terrorist Bombings of U.S. Embassies in E. Africa, 552 F.3d 157, 168 (2d Cir. 2008) ("Administrative searches, particularly those involving heavily regulated industries, may also be exempt from the warrant requirement under certain circumstances."). In Burger, a case involving the constitutionality of a New York Vehicle and Traffic Law permitting warrantless searches of junkyards, the Supreme Court established a three-part test to determine whether a warrantless search of a closelyregulated industry is reasonable: (1) "there must be a `substantial' government interest that informs the regulatory scheme pursuant to which the inspection is made"; (2) "warrantless inspections must be necessary to further the regulatory scheme"; and (3) the administrative scheme at issue "must provide a constitutionally adequate substitute for a warrant." Burger, 482 U.S. at 702-03; Anobile v. Pelligrino, 303 F.3d 107, 117 (2d Cir. 2002) (identifying the three criteria established by the Burger court); see also LeSueur-Richmond Slate Corp. v. Fehrer, 666 F.3d 261, 264 (4th Cir. 2012) ("A statute permitting government agents to conduct warrantless searches in the context of a heavily regulated industry is constitutional so long as it satisfies the three-pronged test laid out by the U.S. Supreme Court. . . ." (citing Burger, 482 U.S. at 702)). The third factor is satisfied if the regulatory statute advises "the owner of the commercial premises that the search is being made pursuant to the law and has a properly defined scope, and it . . . limit[s] the discretion of the inspecting officers." Burger, 482 U.S. at 703.
Defendants argue that the visits at issue did not violate the Fourth Amendment because they were permitted under § 436 of the New York City Charter which addresses the NYPD's search authority with respect to pawnbrokers and secondhand dealers such as Plaintiff. (Defs. Mem. 10.) This assumes that § 436 is a constitutionally adequate regulatory scheme. But, the Burger Court expressly declined to address the constitutionality of § 436, Burger, 482 U.S. at 703 n.13 ("we have no reason to reach the question of the constitutionality of § 436"), and the constitutionality of § 436 has not been addressed directly by any court post-Burger.
According to Plaintiff, "the NYPD consistently sought to bully Gem in part by maintaining a constant presence at Gem's various stores and `investigating' random transactions — despite not performing any regimented inspection of the books and records," (Compl. ¶¶ 32, 49), and instead "on many of these occasions . . . demanded to confiscate collateral jewelry despite having no warrant or legal right otherwise," (id. ¶ 33). Plaintiff further alleges that on many occasions the NYPD "demanded that Gem place criminal holds on certain collateral jewelry" thereby preventing Gem from using such collateral jewelry for ordinary business. (Id. ¶ 34.) Most of Plaintiff's allegations fall within the expansive scope of the NYPD's authority under § 436. See N.Y. City Charter § 436 ("[I]n connection with the performance of any police duties" the Commissioner "shall have power to examine . . . clerks and employees and their books, business premises, and any articles of merchandise in their possession." (emphasis added)). However, § 436 does not authorize the NYPD to search, seize or place holds on any collateral jewelry absent a warrant and/or probable cause.
Plaintiff also alleges that Defendants operated with an improper motive, specifically, that Defendants sought to coerce Plaintiff by continuing their disruptive actions as long as Gem failed to use Leads Online. (Compl. ¶ 78.) However, an officer's subjective motive is irrelevant if any actual search that took place otherwise comports with the Fourth Amendment. See Spinelli, 579 F.3d at 167 ("The relevant inquiry is "whether the officers' actions are `objectively reasonable' in light of the facts and circumstances confronting them, without regard to their underlying intent or motivation."); Simms v. Vill. of Albion, N.Y., 115 F.3d 1098, 1110 (2d Cir. 1997) ("Because the Second Circuit utilizes a wholly objective test in determining whether a Fourth Amendment violation occurred, the subjective intent of the officers effecting the entries was irrelevant."); Blue v. Koren, 72 F.3d 1075, 1081 (2d Cir. 1995) ("An improper motive does not create an expectation of privacy where none exists. The claim is better framed as one for government harassment in retaliation for the exercise of a constitutional right and thus sounds in due process."). Furthermore, to the extent that Plaintiff seeks to bring a § 1983 claim based on these threats, (Compl. ¶ 75), such an action fails as only actual constitutional violations may form the basis of a § 1983 claim. See Justice v. McGovern, No. 11-CV-5076, 2012 WL 2155275, at *3 (E.D.N.Y. Jun. 12, 2012) (dismissing an excessive force claim and noting that "[c]ourts in the Second Circuit have consistently held that [m]ere threats, verbal harassment or profanity, without any injury or damage, are not actionable under Section 1983" (second alteration in original) (internal quotation marks omitted) (citing Mateo v. O'Connor, No. 10-CV-8426, 2012 WL 1075830, at *4 (S.D.N.Y. Mar. 29, 2012))); 5 Borough Pawn, LLC v. City of New York, 640 F.Supp.2d 287 (S.D.N.Y. 2009) ("threatening to violate a person's constitutional rights cannot be the basis for a claim under § 1983" (citing Cotz v. Mastroeni, 476 F.Supp.2d 332, 362 (S.D.N.Y. 2007))). Therefore, to the extent Plaintiff alleges Fourth Amendment violations based on the subjective intent or threats of NYPD officers, such claims are dismissed.
Plaintiff has satisfactorily pleaded factual allegations to state a claim that Gem stores were searched outside the "specific inspections . . . for specific purposes" of § 436. See Burger, 482 U.S. at 703. Defendants' motion to dismiss Plaintiff's § 1983 action as to the warrantless search and seizure of collateral jewelry is denied.
Liberally construing the Complaint, Plaintiff alleges that the summonses issued to Gem and Watts, the manager at the Pitkin Store, resulted in unlawful seizures under the Fourth Amendment. Plaintiff argues that the issuance of "merit-less criminal summonses" resulted in a violation of their constitutional rights. (Compl. ¶¶ 77, 81-82.) Defendants argue that the summonses were not seizures within the scope of the Fourth Amendment.
"Section 1983 claims of deprivations of liberty related to criminal prosecutions implicate the Fourth Amendment right to be free of unreasonable seizure of the person." Burg v. Gosselin, 591 F.3d 95, 97 (2d Cir. 2010). The Second Circuit has made clear that "the issuance of a prearraignment, non-felony summons requiring a later court appearance, without further restrictions, does not constitute a Fourth Amendment seizure." Burg, 591 F.3d at 98. But in Burg, the Second Circuit acknowledged that the number of appearances may bear upon whether a summons could be considered a seizure. Id. However, the Court added, in dictum, that "it is hard to see how multiple appearances required by a court, or for the convenience of the person answering the summons, can be attributed to the conduct of the officer who issues it." Id. More recently, the Second Circuit stated that "Burg's dictum is questionable unless the multiple appearances were for the arrestee's convenience." Swartz v. Insogna, 704 F.3d 105, 112 (2d Cir. 2013).
Plaintiff alleges that the NYPD issued a total of four criminal summonses to Watts, and three summonses to Gem, all meritless. (Compl. ¶¶ 39, 58, 65, 70.) The charges against Watts were dismissed "after numerous court appearances and argument on the merits." (Id. ¶ 40.) With respect to the other summonses, Plaintiff only alleges that they appeared in court and after the presentation of evidence and argument, the charges were dismissed. (Id. ¶¶ 61, 67, 73.) All of these summonses were, indisputably, pre-arraignment, non-felony summonses requiring a later court appearance and without further restrictions. The important distinction between Plaintiff's allegations concerning the summonses issued to Watts and those issued to Gem is multiple court appearances. Burgh and Swartz, read together, suggest that a pre-arraignment, non-felony summons that results in multiple court appearances — for reasons other than the arrestee's convenience — may constitute a Fourth Amendment seizure. Accepting the factual allegations in the Complaint as true, Plaintiff has plausibly alleged that Watts may have suffered a deprivation of his Fourth Amendment rights. However, Plaintiff cannot bring an action based on Watts' possible Fourth Amendment deprivation.
Plaintiff asserts a malicious prosecution claim based on the issuance of seven misdemeanor summonses. (Compl. ¶¶ 103-10.) Under New York law, the elements of a malicious prosecution are "(1) commencement of a criminal proceeding, (2) favorable termination of the proceeding, (3) lack of probable cause, and (4) institution of the proceedings with actual malice." Swartz, 704 F.3d at 111-12 (citing Jocks v. Tavernier, 316 F.3d 128, 136 (2d Cir. 2003)); see also Cameron v. City of New York, 598 F.3d 50, 63 (2d Cir. 2010) (stating the elements of a malicious prosecution claim under New York law); Murphy v. Lynn, 118 F.3d 938, 947 (2d Cir. 1997) (same); Adams v. City of New York, ___ F. Supp. 2d. ___, ___ WL 309640, at *14 (E.D.N.Y. Jan. 29, 2014) (same). In addition, a plaintiff must show a "sufficient post-arraignment liberty restraint to implicate the plaintiff's Fourth Amendment rights." Rutigliano v. City of New York, 326 F. App'x 5, 8-9 (2d Cir. 2009) (quoting Rohman v. New York City Transit Auth., 215 F.3d 208, 215 (2d Cir. 2000)). The Court dismisses Plaintiff's § 1983 claim based on malicious prosecution for failure to allege a plausible liberty deprivation.
As discussed above, supra Part II.b.i.2, Plaintiff does not allege that it appeared in court more than once for any given summons. As such, Plaintiff's claim falls "squarely into the line of cases . . . holding that a single court appearance, as an alleged deprivation of liberty, is insufficient to support a Section 1983 malicious prosecution claim." Porat v. Lincoln Towers Cmty. Ass'n, No. 04-CV-3199, 2005 WL 646093, at *3 (S.D.N.Y. Mar. 21, 2005), aff'd, 464 F.3d 274 (2d Cir. 2006). Plaintiff's citations to Murphy v. Lynn and Swartz v. Insogna, suggesting the contrary are distinguishable. (Pl. Opp'n Mem. 13.) In Murphy, the court prohibited Plaintiff from leaving the State of New York until the resolution of the charges against him. Murphy, 118 F.3d at 946. Plaintiff has alleged no similar restriction on a constitutionally protected right such as the freedom to travel. Plaintiff also cites to Swartz, 704 F.3d at 112, where the Second Circuit reversed a dismissal of a malicious prosecution claim. In Swartz, the Plaintiff was subject to a criminal complaint for disorderly conduct which remained pending for several years and required three court appearances. Id. at 108. Here, in contrast, Gem's summonses were dismissed within months of being issued and required, according to the Complaint, only single court appearances. See Sherwyn Toppin Mktg. Consultants, Inc. v. City of New York, No. 08-CV-1340, 2013 WL 685382, at *10 (E.D.N.Y. Feb. 25, 2013) (dismissing plaintiff's malicious prosecution claim for failing to "allege that more than one appearance or any other restrictions resulted from the summons issued"); Gilliard v. City of New York, No. 10-CV-5187, 2013 WL 521529, at *14 (E.D.N.Y. Feb. 11, 2013) ("Plaintiff cannot show that he suffered a `seizure' as contemplated by the Fourth Amendment because it is undisputed that Plaintiff was issued a non-felony summons that was dismissed for legal insufficiency less than two months after it was issued."). In addition, as already discussed, see supra Part II.b.i.2, Plaintiff cannot adopt any potentially plausible constitutional violation suffered by Watts. Accepting the factual allegations pleaded in the Complaint as true, and drawing all reasonable inference in Plaintiff's favor, the Court finds that Plaintiff fails to plead a plausible liberty deprivation. The Court therefore dismisses Plaintiff's § 1983 claim based on malicious prosecution but grants Plaintiff leave to amend the Complaint if it can allege and support a plausible liberty deprivation.
Defendants also argue that Plaintiff's malicious prosecutions claim must be dismissed because the actions did not terminate in Plaintiff's favor. (Defs. Mem. 16.) Plaintiff only alleges that all actions were dismissed, providing no information as to the nature of the dismissals. (Compl. ¶¶ 61, 67, 73.) The disposition certificates attached to the Complaint are similarly unilluminating. (See Disposition Certificates annexed to Compl. as Exs. C, E, and G.)
"An acquittal is the most obvious example of a favorable termination." Russell v. Smith, 68 F.3d 33, 36 (2d Cir. 1995). Absent an acquittal, a plaintiff must "demonstrate a final termination of the criminal proceeding in her favor, or at least `not inconsistent with [her] innocence.'" Okoi v. El Al Israel Airlines, 378 F. App'x 9, 11 (2d Cir. 2010) (alteration in original) (quoting Smith-Hunter v. Harvey, 95 N.Y.2d 191, 196 (2000)).
Transcripts from the Queens County Criminal Court show that the court dismissed one summons for legal insufficiency while the court dismissed the other two, ostensibly, on the merits.
Defendants do not dispute that Plaintiff has plausibly alleged the remaining elements of a malicious prosecution claim. However, the Court notes that Plaintiff failed to allege that it filed a timely notice of claim with respect to its May 21, 2012 summons.
Plaintiff alleges that Defendants violated Gem's right to Equal Protection by singling out "pawnbrokers and second hand dealers from other similarly situated businesses such as jewelry stores, consignment shops[,] banks and other retail businesses." (Compl. ¶ 90.) Plaintiff further alleges "[t]hat by Defendants actions, Gem was singled out . . . as a `class of one.'" (Id. ¶ 91.) Defendants argue that Plaintiff fails to state a claim by failing to show that Gem is similarly situated to any identified comparator. (Defs. Mem. 12.) The Court agrees and dismisses Plaintiff's Equal Protection claim.
"To state a `class-of-one' equal protection claim `the plaintiff [must] allege[ ] that [he] has been intentionally treated differently from others similarly situated and that there is no rational basis for the difference in treatment.'" Martine's Serv. Ctr., Inc. v. Town of Wallkill, ___ F. App'x ___, ___, 2014; WL 321943, at *2 (2d Cir. Jan. 30, 2014) (alterations in original) (quoting Harlen Assocs. v. Inc. Vill. of Mineola, 273 F.3d 494, 499 (2d Cir. 2001)); see also Fortress Bible Church v. Feiner, 694 F.3d 208, 222 (2d Cir. 2012) ("The Supreme Court recognized an Equal Protection claim `where the plaintiff alleges that she has been intentionally treated differently from others similarly situated and that there is no rational basis for the difference in treatment.'" (quoting Village of Willowbrook v. Olech, 528 U.S. 562, 564 (2000))). "[A] classof-one claim requires a plaintiff to show an extremely high degree of similarity between itself and its comparators." Fortress Bible Church, 694 F.3d at 222 (quoting Ruston v. Town Bd. for Skaneateles, 610 F.3d 55, 59-60 (2d Cir. 2010)); see also JWJ Indus., Inc. v. Oswego Cnty., 538 F. App'x 11, 14 (2d Cir. 2013) (same) (quoting Clubside, Inc. v. Valentin, 468 F.3d 144, 159 (2d Cir. 2006)). A plaintiff must show that "(i) no rational person could regard the circumstances of the plaintiff to differ from those of a comparator to a degree that would justify the differential treatment on the basis of a legitimate government policy; and (ii) the similarity in circumstances and difference in treatment are sufficient to exclude the possibility that the defendants acted on the basis of a mistake." Id. at 222 (quoting Ruston, 610 F.3d at 60).
Plaintiff alleges that it was treated differently than jewelry stores, consignment shops, banks and other retail businesses. None of the businesses cited by Plaintiff are similar to it, "let alone so similar that no rational person could see them as different." Ruston, 610 F.3d at 60 (finding that a 14-home development could not be compared to a country club, a luxury spa, homes and other properties lacking the required similarity); see also Quick Cash of Westchester Ave. LLC v. Vill. of Port Chester, No. 11-CV-5608, 2013 WL 135216, at *10 (S.D.N.Y. Jan. 10, 2013) ("Plaintiff's selection of single attributes of its shops for comparison purposes, while ignoring the unique combination of attributes they possess, does not render it plausible that a jury could determine that pawn shops were so similar to banks, retail stores, second hand gold dealers, and consignment stores that any alleged selective treatment of pawn shops was unjustified.").
In an effort to salvage its claim, Plaintiff argues that other similarly situated pawn brokers are not mistreated so long as they use Leads Online. (Pl. Opp'n Mem. 5.) Plaintiff submits an Affidavit by EZ Pawn Corp. President David Kaminsky in support of that argument. (Affidavit of David Kaminsky, annexed to Paul J. Solda Declaration as Ex. A.) This affidavit falls outside the four corners of the Complaint and the Court declines to recognize it, as it must, at the motion to dismiss stage. See McCarthy v. Dun & Bradstreet Corp., 482 F.3d 184, 191 (2d Cir. 2007). In addition, Plaintiff argues that the comparison to other pawnbrokers was alleged sufficiently in the Complaint. (Pls. Opp'n Mem. 7.) Plaintiff points to paragraphs 23 and 24 of the Complaint. (Id.) Paragraph 23 states that the City and the NYPD "have adopted a practice in which [pawnbrokers] not utilizing Leads Online — are singled out and treated as suspect and with prejudice." (Compl. ¶ 23.) Paragraph 24 states that "such businesses including the Plaintiff — not utilizing Leads Online have been effectively prejudiced and discriminated by the NYPD and have been, as a consequence, subjected to constant threats, intimidation and disruptive actions. . . ." (Id. at 24.) These allegations fail to identify a comparatorwith the requisite extremely high degree of similarity and, consequently, Plaintiff fails to state a class of one claim.
In opposition to the motion to dismiss, Plaintiff cites to a variety of inapposite case law. First, Plaintiff cites to DeMuria v. Hawkes, 328 F.3d 704 (2d Cir. 2003), to support the argument that "general allegations of disparate treatment are sufficient to survive a motion to dismiss." (Pl. Opp'n Mem. 9.) The Second Circuit has since overruled DeMuria. See Ruston, 610 F.3d at 59 ("We hold that the pleading standard set out in Iqbal supersedes the `general allegation' deemed sufficient in DeMuria, 328 F.3d at 707."). Second, Plaintiff claims that a jury is best suited to decide "whether or not comparators were treated differently" and cites to Mosdos Chofetz Chaim, Inc. v. Vill. of Wesley Hills, 815 F.Supp.2d 679, 693 (S.D.N.Y. 2011) for support. (Pl. Opp'n Mem. 9.) The court in Mosdos noted that "class of one" claims require "that the comparators's circumstances must be `prima facie identical'" whereas "selective enforcement" or "selective treatment" claims involve "a slightly less stringent similarly situated standard." Id. at 693-66. Plaintiff's citation to Kirschner v. Zoning Bd. of Appeals of Inc. Vill. of Valley Stream, 924 F.Supp. 385, 391 (E.D.N.Y. 1996), is unhelpful as that case also involved a selective treatment claim.
Finally, in its opposition brief Plaintiff argues that the goal of Defendants' actions was to inhibit the exercise of Gem's "right to free establishment and commerce." (Pls. Opp'n Mem. 6-7.) Plaintiff does not reference any such constitutional rights anywhere in the Complaint. Accusations of malice and bad faith also appear for the first time in Plaintiff's opposition brief. (Id. at 7.) These new allegations suggest that Plaintiff wishes to pursue a claim of selective enforcement. See Martine's Serv. Ctr., ___ F. App'x at ___, 2014 WL 321943, at *2 ("An equal protection claim premised on selective enforcement requires a showing that `(1) . . . compared with others similarly situated, [he] was selectively treated, and (2) the selective treatment was motivated by an intention to discriminate on the basis of impermissible considerations, such as race or religion, to punish or inhibit the exercise of constitutional rights, or by a malicious or bad faith intent to injure [him].'" (quoting Zahra v. Town of Southold, 48 F.3d 674, 683 (2d Cir. 1995)). The Court grants Plaintiff leave to amend the Complaint in order to properly assert such a claim.
Plaintiff argues that Defendants have adopted "a secret, unexpressed policy" that targets businesses not using Leads Online and treats those businesses as "suspect and with prejudice." (Compl. ¶ 23.) Presumably, it is this secret, unexpressed policy that forms the basis of Gem's municipal liability allegations.
In order to sustain a claim for relief under § 1983 against a municipal defendant, such as the City, a plaintiff must show the existence of an official policy or custom that caused injury and a direct causal connection between that policy or custom and the deprivation of a constitutional right. Monell v. Dep't of Soc. Servs., 436 U.S. 658, 694-95 (1978); see also Torraco v. Port Auth. of N.Y. & N.J., 615 F.3d 129, 140 (2d Cir. 2010) ("[T]o hold a city liable under § 1983 for the unconstitutional actions of its employees, a plaintiff is required to plead and prove three elements: (1) an official policy or custom that (2) causes the plaintiff to be subjected to (3) a denial of a constitutional right." (alteration in original)); Pierre v. City of New York, No. 12-CV-9462, 2014 WL 56923, at *10 (S.D.N.Y. Jan. 7, 2014) ("[A] plaintiff must establish both a violation of his or her constitutional rights and that the violation was caused by a municipal policy or custom; that is, that the policy or custom was the actual `moving force' behind the alleged wrongs."). Such policies need not be formal or even recognized by official decision making channels. See Sorlucco v. New York City Police Dep't, 971 F.2d 864, 870-71 (2d Cir. 1992) ("discriminatory practices of city officials are persistent and widespread" may "be so permanent and well settled as to constitute a `custom or usage' with the force of law" (quoting Monell, 436 U.S. at 691)).
Plaintiff alleges that the City and the NYPD "have encouraged and permitted such unconstitutional policies and customs to be carried out and have thereby demonstrated a deliberate indifference to those constitutional values belonging to Gem." (Compl. ¶ 89.) Plaintiff has alleged enough factual allegations to state a plausible claim that Defendants' actions of maintaining a near-constant presence at Gem stores were so persistent and widespread as to constitute the force of law. See Connick v. Thompson, 563 U.S. ___, ___, 131 S.Ct. 1350, 1354 (2011) ("action pursuant to official municipal policy . . . includes . . . practices so persistent and widespread as to practically have the force of law." (citation and internal quotation marks omitted)). Plaintiff identifies, and discusses in detail, seven visits by the NYPD. (Compl. ¶¶ 40, 42-43, 46, 48-50, 53-54, 56, 58-59, 62, 64, 68, 70-71, 73.) Plaintiff also alleges, which the Court must accept as true, that these are only examples of Defendants' "constant threats, intimidation and disruptive actions" "between the fall of 2011 through 2012." (Id. ¶ 24.) Such allegations are sufficient to survive a motion to dismiss challenge. See Ferrari v. Cnty. of Suffolk, 790 F.Supp.2d 34, 46 (E.D.N.Y. 2011) ("Three instances (including Plaintiff's own claim) might not suffice to overcome summary judgment[,] [b]ut at this stage, they do permit a plausible inference of a widespread practice or informal custom within Suffolk County."); Michael v. Cnty. of Nassau, No. 09-CV-5200, 2010 WL 3237143, at *4 (E.D.N.Y. Aug. 11, 2010) (finding a Monell claim adequately pleaded based on "multiple incidents" over a period of "several hours" including actions by various police officers); cf. Layou v. Crews, No. 11-CV-0114, 2013 WL 5494062, at *16 (N.D.N.Y. Sept. 30, 2013) (dismissing a Monell claim based on plaintiff's failure "to [identify] any other example from which it could plausibly be concluded that such incidences are either widespread or persistent throughout the County of Oswego"); Dellutri v. Village of Elmsford, 895 F.Supp.2d 555, 565 (S.D.N.Y. 2012) ("Normally, `a custom or policy cannot be shown by pointing to a single instance of unconstitutional conduct. . . .'" (quoting Newton v. City of New York, 566 F.Supp.2d 256, 271 (S.D.N.Y. 2008))). As discussed above, see supra Part II.b.i.1, Plaintiff has alleged a plausible Fourth Amendment violation with respect to the warrantless search and seizure of collateral jewelry. Plaintiff has also successfully pleaded factual allegations sufficient to establish a plausible municipal custom which caused its constitutional violation.
Plaintiff seeks a declaratory judgment finding that: (1) the use of Leads Online violates the Fourth Amendment rights of "all citizens who have an expectation to privacy," (2) administrative inspections must be limited to "records review in premises and carried out on a systemic and regulated basis in which all pawnbrokers and secondhand dealers are reviewed orderly by law enforcement," and (3) § 436 is unconstitutional. (Compl. ¶ 133.) Plaintiff also requests injunctive relief prohibiting Defendants from coercing Plaintiff or similarly situated tradesmen into using Leads Online. (Id.) Defendants, assuming that Plaintiff's substantive claims would be dismissed, argue that Plaintiff's declaratory and injunctive requests cannot be recognized as independent causes of action and therefore must be dismissed. (Defs. Mem. 19.) As discussed above, Plaintiff has pleaded a plausible § 1983 claim, as such, there exists a viable substantive claim from which the Court may issue equitable relief. See In re Joint E. & S. Dist. Asbestos Litig., 14 F.3d 726, 731 (2d Cir. 1993) ("[A] court may only enter a declaratory judgment in favor of a party who has a substantive claim of right to such relief."); Springfield Hosp. v. Hofmann, No. 09-CV-254, 2011 WL 3421528, at *4 (D. Vt. Aug. 4, 2011) (finding that "[t]he same rationale applies to injunctions"), aff'd, 488 F. App'x 534 (2d Cir. 2012). Defendants' motion to dismiss Plaintiff's demand for equitable relief is denied.
Plaintiff also brings state law actions under the NYCRL and New York common law for tortious interference. Defendants urge the Court to decline to exercise supplemental jurisdiction over all state law claims, assuming the dismissal of all federal claims. (Defs. Mem. 21-22.) Because the Court has not dismissed all of Plaintiff's federal actions, that argument fails. However, Defendants also argue that Plaintiff's state law claims fail as a matter of law.
Plaintiff alleges that Defendants violated Gem's right to privacy and equal protection under the New York Constitution and "Article 1 and Article 3 of the Civil Rights Law of N.Y.S." (Compl. ¶ 95.) Article 1 of the NYCRL is the short title for the law and confers no rights. N.Y. Civ. Rights Law § 1. Article 3 concerns the privilege from arrest. See N.Y. Civ. Rights Law. § 1. None of these are applicable to Plaintiff's allegations. At oral argument on March 6, 2013, counsel for Plaintiff conceded that the NYCRL claim was not well pleaded and may not even fit within the facts of this case. Because there is no stated NYCRL claim, the claim is dismissed without prejudice.
Plaintiff alleges that Defendants tortuously interfered with its business. "To state a claim for tortious interference with business relations, a plaintiff must adequately allege that: `(1) the plaintiff had business relations with a third party; (2) the defendant interfered with those business relations; (3) the defendant acted for a wrongful purpose or used dishonest, unfair, or improper means; and (4) the defendant's acts injured the relationship.'" Valley Lane Indus. Co. v. Victoria's Secret Direct Brand Mgmt., L.L.C., 455 F. App'x 102, 105 (2d Cir. 2012) (citing Catskill Dev., L.L.C. v. Park Place Entm't Corp., 547 F.3d 115, 132 (2d Cir. 2008)). Defendants argue that Plaintiff has failed to satisfy the first and third elements of a tortious interference claim. (Defs. Mem. 22.) The Court agrees that Plaintiff does not satisfy the first element and therefore dismisses Plaintiff's tortious interference claim.
Plaintiff fails to identify any third party relationship damaged by Defendants' conduct. Plaintiff only alleges that "there was damage suffered by the Plaintiff as a result of the actions of Defendants and their interference with said business." (Compl. ¶ 123.) This is a conclusory and insufficient allegation. See DiFolco v. MSNBC Cable L.L.C., 622 F.3d 104, 115 (2d Cir. 2010) (dismissing a tortious interference with prospective business claim due to the omission of "any third party with whom DiFolco had prospective business relations to be interfered with"); Britestarr Homes, Inc. v. Piper Rudnick LLP, 256 F. App'x 413, 415 (2d Cir. 2007) ("Britestarr's claim for tortious interference with business relations fails to identify any business relationship that was damaged by Piper's alleged errors."); see also Combina Inc. v. Iconic Wireless Inc., 936 N.Y.S.2d 58 (Sup. Ct. 2011) (dismissing a tortious interference claim based on a failure "to identify any of plaintiff's current or prospective business relations that were damaged"). Because of Plaintiff's failure to identify "a continuing business or other customary relationship," Scutti Enterprises, LLC. v. Park Place Entm't Corp., 322 F.3d 211, 215 (2d Cir. 2003), Plaintiff's tortious interference claim is dismissed.
The Court grants in part and denies in part Defendants' motion to dismiss. At oral argument on March 6, 2013, the Court dismissed all claims brought by Plaintiff Kaminsky on his own behalf and all claims against the NYPD. The Court grants Defendants' motion to dismiss Plaintiff's class of one Equal Protection claim, federal malicious prosecution claim, NYCRL claim, and tortious interference claim. The Court denies Defendants' motion to dismiss Plaintiff's Fourth Amendment claim, state law malicious prosecution claim, municipal liability claim, and request for equitable relief. Plaintiff is granted thirty days to file an amended complaint to correct any of the identified deficiencies discussed above.
SO ORDERED.
Tangentially, the Second Circuit did not determine that NYTWA had presented its own constitutional violation. Nnebe recognized NYTWA's standing to bring a § 1983 claim based on the underlying procedural due process claims of named plaintiffs and others similarly situated. Here, Gem brings its § 1983 claims on behalf of Gem only. As such, in addition to — or, as part of — the standing inquiry, Gem must plausibly allege that it has been deprived of rights, privileges or immunities secured by the U.S. Constitution. See Aguayo v. Richardson, 473 F.2d 1090, 1099 (2d Cir. 1973) ("Section 1983 confers a cause of action on any citizen of the United States or other person within the jurisdiction thereof who has been deprived under color of state law of any rights, privileges, or immunities secured by the Constitution and laws." (citation and internal quotation marks omitted)); Johnakin v. NYC Dep't of Corr., No. 11-CV-4807, 2013 WL 5519998, at *9 (E.D.N.Y. Sept. 30, 2013) ("Thus, to have standing to bring a claim under 42 U.S.C. § 1983, plaintiffs must demonstrate that they personally suffer from a violation of their civil rights." (citation and internal quotation marks omitted)); Kshel Realty Corp. v. City of New York, No. 01-CV-9039, 2003 WL 21146650, at *8 (S.D.N.Y. May 16, 2003) ("An agent of a principal does not have standing to assert a claim pursuant to Section 1983 on behalf of the principal."). Although "[t]he same conduct may result in injury to both the corporation and the individual," Robinson v. Davis, No. 07-CV-00265, 2010 WL 4062863, at *2 (D. Vt. Oct. 15, 2010), it does not follow that Plaintiff can bring a § 1983 action on its own behalf based on Watts' potentially unconstitutional seizure-via-summons.
"Because there are no federal rules of decision for adjudicating § 1983 actions that are based upon claims of malicious prosecution, [courts] are required by 42 U.S.C. § 1988 to turn to state law-in this case, New York state law — for such rules." Negron v. Wesolowski, 536 F. App'x 151 (2d Cir. 2013) (quoting Conway v. Village of Mount Kisco, 750 F.2d 205, 214 (2d Cir. 1984)). Pursuant to this Second Circuit edict to follow state law, it appears that the New York Court of Appeals has adopted the "inconsistent with innocence" standard and, therefore, this Court does the same. See Cantalino, 96 N.Y.2d at 410 ("[W]e reject defendant's argument that the "inconsistent with innocence" standard is limited to speedy trial dismissals, like the one at issue in Smith-Hunter. The rule announced in Smith-Hunter is one of general application, and we see no reason to deviate from it here."); see also Smith-Hunter v. Harvey, 95 N.Y.2d 191, 200 (2000) (Rosenblatt, J., concurring) (stating that the Court of Appeals "resolv[ed] a conundrum that has beset the law of malicious prosecution: the appropriate test for determining what is a `favorable termination.'"). Furthermore, in Smith-Hunter the New York Court of Appeals expressly limited three of its decisions using the "indicative of innocence" standard in stating, "Our holdings in Ward [v. Silverberg, 652 N.E.2d 914 (1995)], Hollender [v. Trump Village Coop., Inc., 448 N.E.2d 432 (1983)] and MacFawn [v. Kresler, 666 N.E.2d 1359 (1996)] stand only for the proposition that dispositions inconsistent with innocence, like the ones in those cases, cannot be viewed as favorable to the accused." Id. at 755.
