Flynt et al v. Harris et al
Filing
31
ORDER signed by District Judge John A. Mendez on 05/26/17 ORDERING that defendants' 19 Motion to Dismiss is GRANTED WITH LEAVE TO AMEND. Plaintiffs shall file a First Amended Complaint within 20 days or this action will be dismissed. Defendants' responsive pleadings are due 20 days thereafter. (Benson, A)
1
2
3
4
5
6
7
8
UNITED STATES DISTRICT COURT
9
EASTERN DISTRICT OF CALIFORNIA
10
11
12
LARRY C. FLYNT; HAIG KELEGIAN
SR.; and HAIG T. KELEGIAN
JR.,
13
Plaintiffs,
14
15
16
No.
2:16-cv-02831-JAM-EFB
ORDER GRANTING DEFENDANTS’
MOTION TO DISMISS
v.
XAVIER BECERRA, et al.,
Defendants.
Three card club owners want more than a one-percent interest
17
18
in out-of-state casinos, which California’s gambling laws
19
prohibit.
20
Bureau of Gambling Control and California officials, alleging
21
these laws violate the U.S. Constitution’s dormant commerce and
22
substantive due process clauses.
23
move to dismiss this action.
24
oppose.
25
Court grants Defendants’ motion. 1
26
1
27
28
Because of this prohibition, Plaintiffs sue both the
Opp’n, ECF No. 24.
Compl., ECF No. 1.
Mot., ECF No. 19.
Defendants
Plaintiffs
For the reasons explained below, the
This motion was determined to be suitable for decision without
oral argument. E.D. Cal. L.R. 230(g). The hearing was
scheduled for May 2, 2017. In deciding this motion, the Court
takes as true all well-pleaded facts in the complaint.
1
1
2
I.
BACKGROUND
Card clubs pervade California.
Patrons frequent these
3
establishments to play card games.
4
license, California residents may own card clubs.
5
Plaintiffs Larry C. Flynt, Haig Kelegian Sr., and Haig T.
6
Kelegian Jr. each own gaming licenses.
7
Compl. ¶ 17.
With a gaming
Id.
Id. ¶¶ 8-10.
But Plaintiffs want more than ownership: They also want to
8
substantially invest in out-of-state casinos.
9
California forbids this.
Id. ¶ 4.
California’s gambling laws empower the
10
state to revoke card club owners’ gaming licenses if they have
11
more than one-percent interest in an out-of-state, casino-style
12
gambling entity.
13
Flynt and Kelegian Sr. allege these laws made them forego
14
lucrative business opportunities; Kelegian Jr. owned more than
15
one-percent interest in an out-of-state casino, and the state
16
made him divest it.
17
Cal. Bus. & Prof. Code §§ 19858, 19858.5.
See Compl. ¶¶ 47-57.
Believing these laws to be unconstitutional, Plaintiffs sue
18
the Bureau of Gambling Control and state officials.
19
Automatic Substitution of Parties, ECF No. 18.
20
and as-applied challenges, Plaintiffs argue §§ 19858 and 19858.5
21
violate the U.S. Constitution’s dormant commerce and substantive
22
due process clauses.
23
this case as untimely.
Compl. ¶¶ 1-7.
Through facial
Defendants move to dismiss
Mem., ECF No. 19-1, at 4-5.
II.
24
Notice of
OPINION
25
A.
Statute of Limitations
26
Section 1983 claims brought in California federal court
27
have a two-year statute of limitations.
28
Cmty. Renaissance of Cal., 766 F.3d 1191, 1198 (9th Cir. 2014)
2
See Butler v. Nat’l
1
(citing Cal. Civ. Proc. Code § 335.1).
2
defines the limitations period, federal law determines the claim
3
accrues “when a plaintiff knows or has reason to know of the
4
actual injury.”
5
Cir. 2016); Knox v. Davis, 260 F.3d 1009, 1013 (9th Cir. 2001).
Although state law
See Scheer v. Kelly, 817 F.3d 1183, 1188 (9th
6
B.
Discussion
7
Plaintiffs filed their complaint on November 30, 2016.
8
generally Compl.
9
See
The parties dispute whether this was timely.
Defendants contend it is not because Plaintiffs’ injuries
10
occurred more than two years earlier.
11
Plaintiffs argue the case is timely because their injuries are
12
ongoing.
13
See Mem. at 5.
But
See Opp’n at 6-8.
To bolster their statute-of-limitations defense, Defendants
14
cite two operative dates.
15
day California enacted its gambling law.
16
§ 19858). The Ninth Circuit makes clear, however, that when a
17
plaintiff facially challenges a law, that law’s enactment date
18
does not commence the limitations period.
19
at 1188 (finding plaintiff’s claim timely because limitations
20
period began when the California Supreme Court denied her review
21
petition, not when the challenged rules were enacted).
22
First, they cite January 1, 2008—the
Mem. at 5 (referencing
See Scheer, 817 F.3d
Second, Defendants cite June 12, 2014—the day the California
23
Gambling Control Commission (“Commission”) ordered Kelegian Jr.
24
to divest his illegal interest 2 and fined him $200,000 for
25
2
26
27
28
Kelegian Jr. opened Kelco Gaming, LLC, a casino-style gambling
entity in Seattle, Washington. Compl. ¶¶ 54-55. He owned 1%
interest and his wife owned 99% interest. Id. ¶ 55. He reported
his interest, but California’s marital property law deemed it
“vastly in excess of one percent.” Id. ¶ 56.
3
1
violating §§ 19858 and 19858.5.
2
Commission Decision (attached to Compl. as Ex. F).
3
Commission’s decision applies only to Kelegian Jr., but it also
4
admittedly put Flynt and Kelegian Sr. on notice about the injury
5
underlying this suit (Compl. ¶¶ 47-57) and therefore is the
6
operative date for all Plaintiffs’ alleged injuries.
7
finds, therefore that all of the Plaintiffs’ claims accrued on
8
June 12, 2014—more than two years before Plaintiffs filed suit
9
and are time barred unless Plaintiffs pled a continuing harm.
10
11
See Mem. at 5.
See also
The
The Court
See Knox, 260 F.3d at 1013.
They did not. A continuing harm is one that first occurs
12
beyond the statute of limitations but continues to occur within
13
the statutory period.
14
continuing harm may be timely even though they technically
15
accrued outside the statute of limitations.
16
continuing harm, the alleged wrongdoing and resultant injury must
17
truly be ongoing or reoccurring; a “mere continuing impact from
18
past violations” does not suffice.
19
(internal citations and quotation marks omitted).
20
See id.
Claims based on alleged
See id.
But to be a
See id. (original emphasis)
Plaintiffs argue they allege ongoing, continuous harm.
21
Opp’n at 6-7.
22
business opportunities: California’s gambling laws made Flynt and
23
Kelegian Sr. forfeit lucrative opportunities to invest in out-of-
24
state casinos.
25
Kelegian Sr. identify a date these alleged injuries occurred.
26
The Court lacks information critical to assess them and thus
27
declines to consider them.
28
First they cite Flynt’s and Kelegian Sr.’s lost
See Compl. ¶¶ 47-52.
Yet neither Flynt nor
Second, Plaintiffs cite the Commission’s decision as an
4
1
ongoing, continuous injury.
2
Commission fined Kelegian Jr. for violating California’s gambling
3
prohibition, see Ex. F at 5, which he paid, Compl. ¶ 57.
4
a single harm.
5
continuous harm theory by characterizing the Commission decision
6
as a “pending enforcement action” whose impact remains in effect
7
until June 13, 2019.
8
Commission stayed (for five years) $125,000 of Kelegian Jr.’s
9
fine, see Ex. F at 5, the stay was conditioned on his §§ 19858
See Opp’n at 8.
It is not.
The
This is
In opposition, Plaintiffs manufacture an ongoing,
See Opp’n at 8.
Not so.
Although the
10
and 19858.5 compliance, see id. at 6.
In other words, the
11
Commission made a one-time decision with a lasting impact.
12
continuing impact (precluding Plaintiffs from substantially
13
investing in out-of-state casinos) is not actionable.
14
260 F.3d at 1013.
15
so their complaint is time barred. The Court finds that
16
Plaintiffs still might be able to plead sufficient facts to avoid
17
dismissal on statute of limitations grounds and therefore grants
18
the motion to dismiss without prejudice.
That
See Knox,
Plaintiffs have not alleged a continuous harm,
19
20
21
III.
ORDER
The Court GRANTS Defendants’ motion to dismiss with leave
22
to amend.
23
twenty days of this Order or this action will be dismissed.
24
Defendants’ responsive pleadings are due twenty days thereafter.
25
26
Plaintiffs shall file a First Amended Complaint within
IT IS SO ORDERED.
Dated: May 26, 2017
27
28
5
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?