Case 3:14-cv-00774-JGH Document 16-1 Filed 12/18/14 Page 1 of 13 PageID #: 100 IN THE UNITED STATES DISTRICT COURT WESTERN DISTRICT OF KENTUCKY, AT LOUISVILLE CASE NO. 3:14-cv-00774-JGH Electronically filed EDWARD MUSSELMAN PLAINTIFF v. ROBERT KING, et al. DEFENDANTS MEMORANDUM IN SUPPORT OF MOTION TO DISMISS ***** Comes the Defendant, John T. Ward, Jr. ( Ward ), by counsel, and hereby submits this memorandum in support of his Motion to Dismiss the Complaint filed against him as an individual and in his official capacity as Executive Director of the Kentucky Horse Racing Commission ( Commission ). In support of his Motion, Ward states the following: INTRODUCTION The Kentucky Horse Racing Commission is a state agency within the Public Protection Cabinet. Ky. Rev. Stat. Ann. 230.225(1) (2010). The Commission was created by the Kentucky legislature to regulate the conduct of horse racing and pari-mutuel wagering on horse racing, and related activities within the Commonwealth of Kentucky. Id. Pursuant to statute, Ward is employed as the Executive Director of the Commission. Ky. Rev. Stat. Ann. 230.230 (2010). Any person who wishes to conduct a horse race meeting must be licensed by the Commission. Ky. Rev. Stat. Ann. 230.280 (2010) and 230.300 (2010). Similarly, every person who desires to participate in horse racing on racing association grounds must also be licensed by the Commission. Ky. Rev. Stat. Ann. 230.310(1) (2010). Page 1 of 13
Case 3:14-cv-00774-JGH Document 16-1 Filed 12/18/14 Page 2 of 13 PageID #: 101 The Plaintiff, Edward Musselman, is a Commission licensee with a valid 2014 Commission license. Defendant Robert King ( King ) is Director of Security at Churchill Downs Racetrack. Churchill Downs, Inc. is the parent corporation of Churchill Downs Racetrack, LLC ( Churchill Downs ). Churchill Downs is an association licensed by the Commission to conduct live thoroughbred race meetings pursuant to KRS 230.300. Thoroughbred racing associations 1 are regulated under KRS Chapter 230 and 810 KAR Chapter 1. On July 2, 2014, the Plaintiff s Commission license was suspended for a total of thirty (30) days - from July 13, 2014 through August 11, 2014 - for a physical altercation that occurred at Churchill Downs. See Stewards Ruling attached to Complaint as Exhibit D. Reinstatement of Plaintiff s license was contingent on enrollment and participation in an accredited program that addresses anger management. See Complaint Exhibit D. The Plaintiff served his suspension and successfully completed an anger management program. As a result, the Plaintiff s 2014 license has been valid and in good standing since August 11, 2014. Separate and independent from the Plaintiff s license suspension, Churchill Downs exercised its common law property rights to exclude the Plaintiff from its grounds. See Ejection Notice attached to Complaint as Exhibit E. Notably, the Ejection Notice was issued on June 29, 2014, three days before the Stewards issued their ruling. Churchill Downs also decided to keep the ejection in effect, irrespective of the Plaintiff s completion of his license suspension. See October 15, 2014 letter attached to Complaint as Exhibit H ( the ejection will stay in effect for the remainder of calendar year 2014. ) 1 An association is any person licensed by the Kentucky Horse Racing Commission under KRS 230.300 and engaged in the conduct of a recognized horse race meeting. Ky. Rev. Stat. Ann. 230.210 (5) (2012). Page 2 of 13
Case 3:14-cv-00774-JGH Document 16-1 Filed 12/18/14 Page 3 of 13 PageID #: 102 At no time did Ward consult with Churchill Downs regarding its decision to eject the Plaintiff. Similarly, at no time did Ward instruct any other racing association to eject the Plaintiff. The Commission does not have jurisdiction or authority over this decision. The only matter over which the Commission does have jurisdiction is the Plaintiff s 2014 license, which is active and in good standing. From Ward s perspective as Executive Director of the Commission, there are no restrictions on the Plaintiff s 2014 license. The Plaintiff s Complaint contains four counts. He seeks a preliminary and permanent injunction, enjoining each of the Defendants from preventing [his] free exercise of his otherwise valid 2014 license Complaint, p. 10, 1. He also seeks a declaratory judgment that all Defendants herein are prohibited from preventing Edward L. Musselman from using his valid 2014 license to gain access to the premises of Churchill Downs unless and until he is granted a hearing before the Kentucky Horse Racing Commission... Complaint, p. 13, 1. In addition to these requests, the Plaintiff alleges claims of tortious interference and a violation of 42 U.S.C. 1983. For the reasons that follow, the Complaint against Ward should be dismissed in its entirety. I. Plaintiff s claims against Ward in his official capacity are barred by the Eleventh Amendment and should be dismissed pursuant to Fed. R. Civ. Pro. 12(b)(1) The Plaintiff states that the Court has jurisdiction over this matter pursuant to 42 U.S.C. 1983, in that Plaintiff Musselman alleges violations of his 14 th Amendment rights by the Defendants, and each of them, acting under color of law. Complaint, 4. However, [t]he law is well-settled that, unlike a local government, a state cannot be sued for damages under 1983 in either state or federal court. Bailey v. Montgomery, 433 F.Supp.2d 806, 809 (E.D. Ky. 2006). Additionally, unless a state consents to suit, the Eleventh Amendment prohibits lawsuits against a state and its entities. Pennhurst State School & Hospital v. Halderman, 465 U.S. 89, 100 Page 3 of 13
Case 3:14-cv-00774-JGH Document 16-1 Filed 12/18/14 Page 4 of 13 PageID #: 103 (1984). [A] suit against a state official in his or her official capacity is not a suit against the official but rather is a suit against the official s office. As such, it is no different from a suit against the state itself. Will v. Michigan Department of State Police, 491 U.S. 58, 71 (1989). This jurisdictional bar applies regardless of the nature of the relief sought. Pennhurst, at 100; The Commission is a state agency in the Public Protection Cabinet and, in the absence of a waiver, is therefore protected from suit by the Eleventh Amendment. Ky. Rev. Stat. Ann. 230.225(1) (2010). Kentucky has not waived its sovereign immunity as to the claims that Plaintiff has asserted. Ward, as an employee of the Commission pursuant to KRS 230.230, is also protected from suit by the Eleventh Amendment. Because he has been named in his official capacity, the Eleventh Amendment is a jurisdictional bar to the Plaintiff s claims against him. Pennhurst, at 98 ( In short, the principle of sovereign immunity is a constitutional limitation on the federal judicial power established in Art. III. ). This Court does not have subject matter jurisdiction over the claims asserted against Ward in his official capacity. Therefore, the Complaint should be dismissed against John T. Ward, Jr. in his official capacity pursuant to Fed. R. Civ. P. 12(b)(1) for lack of subject matter jurisdiction. II. Plaintiff s claims against Ward in his individual capacity should be dismissed as the Complaint fails to state a claim upon which relief can be granted pursuant to Fed. R. Civ. P. 12(b)(6) On a Fed. R. Civ. P. 12(b)(6) motion, all of the allegations contained in the Plaintiff s complaint are accepted as true, and the complaint is construed liberally in favor of the party opposing the motion. Miller v. Currie, 50 F.3d 373, 377 (6th Cir. 1995) (citing Mertick v. Blalock, 983 F.2d 1353, 1356 (6 th Cir. 1993)). Conversely, the Court is not bound to accept as Page 4 of 13
Case 3:14-cv-00774-JGH Document 16-1 Filed 12/18/14 Page 5 of 13 PageID #: 104 true a legal conclusion couched as a factual allegation. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal citations omitted). a. Count 1 Preliminary and Permanent Injunction The Plaintiff seeks the following injunctive relief: A preliminary injunction followed by a permanent injunction, enjoining each of the Defendants from preventing Mr. Musselman s free exercise of his otherwise valid 2014 license to enter the grounds of any of Kentucky s licensed racetracks in order to pursue his livelihood and his right to earn a living without due process. Complaint, Count 1, p. 10, 1. Per the Plaintiff s Motion for a Preliminary Injunction, an evidentiary hearing involving all the parties, including Ward, was scheduled for December 17, 2014. On December 15, 2014, Plaintiff s counsel notified the Court and the parties that (Musselman, King, and Churchill Downs) have reached a settlement wherein Mr. Musselman s ejection will be lifted effective January 1, 2015 and that consequently Mr. King and Churchill Downs will be dismissed, by agreement, from this lawsuit. See Email dated 12/15/2014 from Robert Heleringer, attached as Exhibit A. As a result, there was no need for injunctive relief and consequently no need for a hearing on Wednesday [December 17, 2014]. Id. Plaintiff s counsel reiterated this position on December 16, 2014 when he stated to the Court, The balance of our suit against Mr. Ward continues. But there is now NO need for any injunctive relief and thus no need for any hearing tomorrow. 2 See Email dated 12/16/2014 from Robert Heleringer, attached as Exhibit B. If there is no need for any injunctive relief, then there is no need for this Count of the Complaint against Ward and it should be dismissed. 2 Ward reserves the right to move the Court for sanctions to be compensated for the substantial time spent preparing for a hearing that apparently was never necessary in relation to Ward. Page 5 of 13
Case 3:14-cv-00774-JGH Document 16-1 Filed 12/18/14 Page 6 of 13 PageID #: 105 Additionally, Ward has not engaged in any conduct from which he could be enjoined, nor is there any allegation of actionable conduct. The Plaintiff claims that Security personnel stated to Mr. Musselman that the reason for his ejection was that the track was following the instructions and directions of the Kentucky Horse Racing Commission to honor and to follow the June 29, 2014 ejection of Mr. Musselman by Churchill Downs at any/all of Kentucky s licensed racetracks. Complaint, 24. Even by viewing the facts in the light most favorable to the Plaintiff, there is still no allegation that Ward himself was involved in these instructions and directions. Ward has done nothing to prevent the Plaintiff s free exercise of his valid 2014 license, and therefore there is no conduct to enjoin. 3 Count 1 of the Complaint should be dismissed for failure to state a claim upon which relief can be granted. b. Count 2 Violation of 42 U.S.C. 1983 The Plaintiff alleges that he has been deprived of the protections of the Due Process clause because of Ward s refusal to grant an administrative hearing to adjudicate Churchill Downs ejection of the Plaintiff. Specifically, he contends that the Kentucky Horse Racing Commission has effectively and directly upheld and enforced [Churchill Downs ] ejection without permitting Mr. Musselman any stay relief or a hearing to challenge the effective suspension/revocation of his license. Complaint, 43. Section 1983 claims against an official acting in his individual capacity seek to impose personal liability upon a government official for actions he takes under color of state law. Kentucky v. Graham, 473 U.S. 159, 165 (1985). Personal liability exists where the official, acting under color of state law, caused the deprivation of a federal right. Id. at 166. Ward has not deprived the Plaintiff of his federal right 3 The Plaintiff s 2014 license will expire at the end of calendar year 2014, at which time this request for injunctive relief will be rendered moot. Page 6 of 13
Case 3:14-cv-00774-JGH Document 16-1 Filed 12/18/14 Page 7 of 13 PageID #: 106 to Due Process, because Ward does not have the authority to grant an administrative hearing to adjudicate a racing association s decision to eject the Plaintiff. KRS 230.320 provides licensees with the right to an administrative hearing when a license is denied, suspended, or revoked after a hearing by the stewards Ky. Rev. Stat. Ann. 230.320(3) (2010). The Plaintiff s license was suspended by the Commission on July 2, 2014 for a period of thirty (30) days, with his reinstatement being contingent on enrollment and participation in anger management classes. See Complaint Exhibit D. The Plaintiff elected not to appeal this Stewards Ruling, served his suspension, and completed an anger management program. Accordingly, his license was restored to good standing on August 11, 2014. The Plaintiff was afforded all the Due Process rights to which he was entitled when he was suspended by the Stewards. Because his license is not currently denied, suspended, or revoked, the right to an administrative hearing as provided in KRS 230.320 does not apply to the Plaintiff. There is no provision in Kentucky law that would permit Ward to grant an administrative hearing regarding Churchill Downs ejection of the Plaintiff pursuant to its private property rights. See Ky. Rev. Stat. Ann. 230.230 (2010) for duties of the Executive Director. Churchill Downs ejection of the Plaintiff is an entirely separate matter from Stewards Ruling 14-0047. In its ejection letter, Churchill Downs cited 810 KAR 1:025 Section 22 which provides: The validity of a license does not preclude or infringe on the common law rights of associations to eject or exclude persons, licensed or unlicensed, from association grounds. This regulatory provision codifies the holding in James v. Churchill Downs, Inc., 620 S.W.2d 323 (Ky. App. 1981) that nothing in KRS Chapter 230 abrogates the racing associations common law rights of exclusion. Id. Churchill Downs exercised this right when they issued their ejection on June 29, 2014 and when they declined to lift the ejection on October 15, 2014, regardless of the Plaintiff s Page 7 of 13
Case 3:14-cv-00774-JGH Document 16-1 Filed 12/18/14 Page 8 of 13 PageID #: 107 status as a Commission licensee. In the absence of the authority to grant a hearing for this type of dispute, Ward cannot have violated the Plaintiff s Due Process rights. The Plaintiff alleges that the Kentucky Racing Commission has effectively and directly upheld and enforced [Churchill Downs ] ejection. Complaint, 43. He goes on to contend that Churchill Downs unlawful ejection of Mr. Musselman, without cause, has been supported and enforced by the racing commission, particularly in the action it took in advising Kentucky Downs security personnel and senior management on September 24, 2014, that Mr. Musselman should be (and indeed was) ejected from its grounds solely because he (Musselman) had been the subject of an indefinite ejection/exclusion by Churchill Downs. Complaint, 44. Assuming, arguendo, that the actions alleged in Paragraph 44 of the Complaint would constitute a violation of Plaintiff s constitutional rights, the allegations do not include any decision or action by Ward. In fact, Ward himself is not alleged to have been involved in any way in the events at Kentucky Downs. Where a Plaintiff seeks to hold someone individually liable for constitutional injury directly caused by someone else, the court must apply standards regarding supervisory liability. Clark v. Kentucky, 229 F.Supp.2d 718, 723 (E.D. Ky. 2002) (citing Doe, ex rel. Doe. v. City of Roseville, 296 F.3d 431, 439 (6th Cir. 2002)). Allegations of respondeat superior do not sustain a 1983 claim against state employees in their individual capacities, meaning that officials are personally liable for damages under that statute only for their own unconstitutional behavior. Colvin v. Caruso, MDOC, 605 F.3d 282, 292 (6th Cir. 2010) (quoting Leach v. Shelby County Sheriff, 891 F.2d 1241, 1246 (6th Cir. 1989)). No actionable conduct is alleged against Ward. Regarding the events at Kentucky Downs, the Complaint is completely void of any behavior by Ward. In regard to Ward s denial of the request for a stay and an administrative Page 8 of 13
Case 3:14-cv-00774-JGH Document 16-1 Filed 12/18/14 Page 9 of 13 PageID #: 108 hearing, the Plaintiff cannot be deprived of a right where none exists. Therefore, the 28 U.S.C. 1983 claim against Ward individually should be dismissed for failure to state a claim upon which relief can be granted. c. Count 3 - Request for a declaratory judgment The Declaratory Judgment Act found in 28 U.S.C. 2201 provides the mechanism for seeking pre-enforcement review of a statute. National Rifle Ass'n of America v. Magaw, 132 F.3d 272, 279 (6th Cir. 1997). [W]hen ruling under the Declaratory Judgment Act, usually only purely legal issues are fit for judicial resolution before prosecution is initiated. Id. at 290 (6th Cir. 1997) (citing Abbott Laboratories v. Gardner, 387 U.S. 136, 148 (1967), partially superseded by statute, Clean Air Amendments of 1970, Pub.L. No. 91-604, 84 Stat. 1676). In the case at bar, the Plaintiff seeks a declaratory judgment from this Court stating: That all Defendants herein are prohibited from preventing Edward L. Musselman from using his valid 2014 license to gain access to the premises of Churchill Downs unless and until he is granted a hearing before the Kentucky Horse Racing Commission to challenge Churchill Downs October 15, 2014, indefinite extension, without cause, of its June 29[,] 2014 ejection of the aforesaid Mr. Musselman. Complaint, Count Three, 1. The Plaintiff s request does not specifically ask the Court to resolve a legal issue, but instead reiterates the request for an injunction. Therefore, he has not presented a request that is fit for review under the Declaratory Judgment Act. Additionally, the Plaintiff s request for a declaratory judgment has been rendered moot by the agreement reached between the Plaintiff and Defendants Churchill Downs and King. Pursuant to that agreement, the Plaintiff s ejection from Churchill Downs will be lifted as of January 1, 2015. Additionally, the aforementioned parties have filed an Agreed Order of Partial Dismissal of Claims ( Agreed Order ) which states that, the Complaint and any and all claims Page 9 of 13
Case 3:14-cv-00774-JGH Document 16-1 Filed 12/18/14 Page 10 of 13 PageID #: 109 of Plaintiff Edward L. Musselman as against Defendants Churchill Downs, Inc. and Robert King are voluntarily dismissed with prejudice. There is no allegation in the Complaint that Ward in any way prevented the Plaintiff from using his 2014 license to gain access to Churchill Downs. Of course, if the only Defendants that prevented the Plaintiff s access to Churchill Downs have been dismissed from the lawsuit, then this count of the Complaint fails to state a claim upon which relief can be granted and should therefore be dismissed. d. Count 4 - Tortious interference In order to recover under a claim of tortious interference with a prospective business advantage 4, the Plaintiff must prove: (1) the existence of a valid business relationship or its expectancy; (2) defendant's knowledge thereof, (3) an intentional act of interference; (4) an improper motive; (5) causation; and (6) special damages. Monumental Life Ins. Co. v. Nationwide Retirement Solutions, Inc., 242 F.Supp.2d 438, 450 (W.D.Ky. 2003) (citing CMI, Inc. v. Intoximeters, Inc. 918 F. Supp. 1068, 1080 (W.D. Ky. 1995)). As the Plaintiff himself states, he derives revenue, as his only source of income, from advertisements he sells in the spaces reserved for same in his publication. Complaint, 12. It is clear that his business relationships are with his advertisers, and there is no allegation in the Complaint that Ward has had contact with any of the Plaintiff s advertisers. Even if the Plaintiff could demonstrate that in fact he has a valid business relationship with Churchill Downs, Ward has done nothing to interfere, intentionally or otherwise, with that relationship. A successful claim of tortious interference would also require that Ward s actions be improperly motivated. Ward has acted in compliance with the law governing his authority and 4 Under Kentucky law, there are claims for tortious interference with contract and tortious interference with prospective business advantage. See Snow Pallet, Inc. v. Monticello Banking Co., 367 S.W. 3d 1, 5 (Ky. App. 2012). The Plaintiff has not indicated which claim he alleges, but due to the absence of an existing contract between the Plaintiff and Churchill Downs, it is assumed he alleges tortious interference with a prospective business advantage. Page 10 of 13
Case 3:14-cv-00774-JGH Document 16-1 Filed 12/18/14 Page 11 of 13 PageID #: 110 the authority of the Commission to grant administrative hearings; this compliance does not evince improper motivation. It follows that in the absence of any support for the first four elements of a claim for tortious interference, there can be no causation or special damages as required by the fifth and sixth elements. Additionally, [t]he doctrine of qualified immunity affords protection against individual liability for civil damages to officials insofar as their conduct does not violate clearly established statutory or constitutional rights of which a reasonable person would have known. Henry v. Metropolitan Sewer District, 922 F.2d 332, 339 (6th Cir. 1990) (quoting Harlow v. Fitzgerald, 457 U.S. 800, 818 (1982)). [T]he relevant inquiry focuses on whether a reasonable official in the defendant s position could have believed his conduct to be lawful, considering the state of the law as it existed when the defendant took the challenged action. Id. (quoting Poe v. Haydon, 853 F.2d 418, 423-24 (6th Cir. 1988) cert.denied, 488 U.S. 1007 (1989)). As previously explained, Ward complied with the law in all respects. The Plaintiff was afforded all Due Process rights to which he was entitled when his license was suspended. Now that the Plaintiff s license is not suspended, there is no provision in KRS Chapter 230 or 810 KAR Chapter 1 that would permit Ward to grant an administrative hearing of Churchill Downs ejection of the Plaintiff. Additionally, there is no allegation that Ward engaged in any conduct related to the events at Kentucky Downs. The claim against him for tortious interference should be dismissed for failure to state a claim upon which relief can be granted under Fed. R. Civ. Pro. 12(b)(6). Page 11 of 13
Case 3:14-cv-00774-JGH Document 16-1 Filed 12/18/14 Page 12 of 13 PageID #: 111 CONCLUSION Ward in his official capacity as Executive Director of the Commission is protected from suit by the Eleventh Amendment and the claims against him should be dismissed for lack of subject matter jurisdiction under Fed. R. Civ. P. 12(b)(1). Each of the claims alleged against Ward in his individual capacity fails to state a claim upon which relief can be granted and should be dismissed in accordance with Fed. R. Civ. P. 12(b)(6). Wherefore, John T. Ward, Jr. respectfully requests that this Court dismiss the Complaint against him in its entirety. Respectfully submitted, /s/ Katherine M. Paisley Katherine M. Paisley Kentucky Horse Racing Commission 4063 Iron Works Parkway, Building B Lexington, KY 40511 Peter F. Ervin Public Protection Cabinet 500 Mero Street Capitol Plaza Tower, 5 th floor Frankfort, KY 40601 CERTIFICATE OF SERVICE I hereby certify that a true copy of the foregoing was served by first class mail, postage prepaid, or through the Court s CM/ECF System, to the following on this 18th day of December 2014: Robert L. Heleringer 7982 New LaGrange Road Suite One Louisville, Kentucky 40222 Alan Pincus (pro hac vice) 4330 Evergreen Place Las Vegas, Nevada 89107 Counsel for Plaintiff Page 12 of 13
Case 3:14-cv-00774-JGH Document 16-1 Filed 12/18/14 Page 13 of 13 PageID #: 112 Patricia C. LeMeur Phillips Parker Orberson & Arnett, PLC 716 W. Main Street Louisville, KY 40202 Counsel for Defendants Robert King and Churchill Downs, Inc. /s/katherine M. Paisley Katherine M. Paisley Page 13 of 13