Harrington v. Nebraska Liquor Control Commission et al

Filing 24

MEMORANDUM AND ORDER - The motion of the Nebraska Liquor Control Commission and Hobert Rupe (Filing No. 13 ) is denied as moot pursuant to the Court's order, Filing No. 21 . The plaintiff's motion to amend his complaint (Filing No. [1 7]) is denied. The motion (Filing No. 15 ) of Tom Casady, Jim Peschong, John Spatz, Russell Fosler, and the City of Lincoln is denied in part and granted in part. All claims against the City of Lincoln and Councilman Spatz are dismissed. The motion to dismiss Tom Casady, Jim Peschong, and Russell Fosler is denied at this time. The following Causes of Action are dismissed as to all defendants: Fifth, Sixth, Eighth, Ninth. Ordered by Senior Judge Lyle E. Strom. (GJG)

IN THE UNITED STATES DISTRICT COURT FOR THE
DISTRICT OF NEBRASKA
SHANE HARRINGTON,

)
)
Plaintiff,
)
)
v.
)
)
THE NEBRASKA LIQUOR CONTROL
)
COMMISSION, THE CITY OF
)
LINCOLN, NEBRASKA, a Municipal)
Corporation, and TOM CASADY, )
JIM PESCHONG, JOHN SPATZ,
)
RUSSELL FOSLER and HOBERT
)
RUPE, individually and in
)
their official capacities as )
employees of the City of
)
Lincoln and the State of
)
Nebraska,
)
)
Defendants.
)
______________________________)

4:14CV3171

MEMORANDUM AND ORDER

This matter is before the Court on two motions.
Defendants Tom Casady, Jim Peschong, John Spatz, Russell Fosler,
and the City of Lincoln filed their motion to dismiss (Filing No.
15) pursuant to Federal Rule of Civil Procedure 12(b)(6) on
October 20, 2014.

As of the date of this memorandum and order,

plaintiff Shane Harrington has not filed a responsive brief and
the defendants have not, therefore, filed reply briefs.1

In lieu

of a response, Harrington has filed a motion to amend his

1

Harrington brought claims against the Nebraska Liquor
Control Commission and Hobert Rupe (“the Nebraska Defendants”),
in addition to the other defendants. The Nebraska Defendants
filed a motion to dismiss (Filing No. 13) but Harrington filed an
unopposed motion (Filing No. 19) to dismiss the Nebraska
Defendants, which the Court granted (Filing No. 21). Therefore
the Court will deny Filing No. 13 as moot.

complaint a second time (Filing No. 17).

After review of the

motions, briefs, and relevant case law, the Court finds as
follows.
I.

BACKGROUND
Harrington is a entrepreneurial citizen of Nebraska who

has amassed his wealth through an “internet modeling company”
called MelTech, Incorporated (“MelTech”).
¶¶ 1-4.

Filing No. 4, at 1-2,

interest.

MelTech started a website designed to monetize prurient
Id. at 2, ¶¶ 3-6.

According to Harrington, the

website is rather tame; he suggests that it deserves a “G” rating
from the Motion Picture Academy.

Id. at 2, ¶¶ 3-6.

Following his success in the entertainment industry,
Harrington wished to begin a night club in downtown Lincoln and
applied for a liquor license.

Id. at 3, ¶¶ 10-12.

Before the

hearing, a member of the Lincoln city council and the Lincoln
chief of police both contacted Harrington by e-mail and
admonished him that he would not receive the license unless he
sold or closed MelTech.

Id. at 4, ¶¶ 15-16.

During the

application process, Harrington understood that the Nebraska
Liquor Commission would only investigate facts relating to
misdemeanors within the last five years and felonies that
Harrington might have on his record.

Id. at 3, ¶ 14.

hearing did not proceed as Harrington expected.
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The

Harrington lists the following examples of how he was
denied his rights of due process.

First, he claims that local

law enforcement has harassed him ever since he began MelTech,
including audio and video surveillance.

Id. at 2-3, ¶¶ 8-9.

In

fact, the Lincoln Police amassed and compiled a comprehensive
file on the activities of Harrington, his friends, and his family
over the previous decade.

Id. at 2-3, ¶ 9.

The complaint refers

to this file as “The Book,” which was a term used by someone at
the licensing hearing.

Id.

Second, Tom Casady, former chief of

police of Lincoln, testified at the hearing that Harrington’s
website was illegal, which negatively affected the likelihood of
his receiving the permit.

Id. at 4-5, ¶¶ 18-21.

Third, one of

the three commissioners slept through part of the hearing.
at 5, ¶ 21.

Fourth, Harrington alleges that the Commission

barred him from the night club that he had leased.
¶ 23.

Id.

Id. at 5,

Fifth, the named defendants showed 50 nude photographs of

Harrington’s ex-wife during the hearing.

Id. at 6, ¶ 24.

Finally, the Commission denied his license which resulted in the
failure of the business.

Following denial of his liquor license,

Harrington sold the night club.

Id. at 6, ¶ 27.

Harrington

contends that the City of Lincoln imposed conditions upon the
sale of the business that were unreasonable, such as not allowing

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Harrington to sell it to any of his associates or family.

Id.

The hearings occurred on and before May 2011.
Harrington did not appeal the Commission’s decision but
he now seeks compensatory and punitive damages.

Harrington

estimates he spent $10,000 out-of-pocket start-up costs on the
failed night club, expended $500,000 worth of “sweat equity,”
lost $1,500,000 in expectation damages of night club revenue
because of the denial of the license, and lost hundreds of
thousands more from diminished sales at MelTech due to damage to
Harrington’s reputation.

Id. at 6, ¶ 28.

$25,000,000 in punitive damages.

Harrington asks for

Id.

Harrington brings claims pursuant to 42 U.S.C. §§ 1983
and 1985 for violation of his First, Fourth, Fifth, Ninth, and
Fourteenth Amendment rights.

Id. at 13, ¶ 65.

First, Harrington

alleges that he was denied the liquor license for exercising his
First Amendment right to operate his website.
72.

Id. at 15, ¶ 68-

Second, Harrington alleges that the liquor license hearing

was so outrageous that it denied him his right to Due Process
pursuant to the Fifth and Fourteenth Amendments.
¶ 73-81.

Id. at 15-16,

Third, Harrington alleges that the denial of his liquor

license on the basis of his ownership of an adult entertainment
website is a violation of Fourteenth Amendment protection of
Equal Protection, particularly in relation to others who have
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received liquor licenses.

Id. at 17, ¶ 82-87.

Fourth,

Harrington alleges that the Book, the events which surround the
Book’s construction by the Lincoln Police Department, and the
unlicensed airing of his ex-wife’s nude photos constitute a
violation of his right to privacy pursuant to the Fourth, Ninth,
and Fourteenth Amendments.

Id. at 17-18, ¶ 88-92.

Fifth,

Harrington asserts Nebraska Revised Statute § 28-926, a criminal
violation of “oppression under color of office,” against the
defendants.

Id. at 18-19, ¶ 93-96.

Sixth, Harrington alleges

that the liquor license hearing was so outrageous that it
constituted “abuse of power” under Nebraska state law.

Id. at

19, ¶ 97-102 (citing Gordon v. Community First State Bank, 255
Neb. 637, 587 N.W.2d 343, 351 (1998); Stagemeyer v. County of
Dawson, 192 F. Supp. 2d 998, 1010 (D. Neb. 2002)).2

Seventh,

Harrington alleges tortious interference with a business
relationship.

Filing No. 4, at 20-21, at ¶¶ 103-110.

Eighth,

Harrington alleges defamation of character under Nebraska law.
Id. at 21-22, at ¶¶ 111-117.
of privacy.”

Ninth, Harrington alleges “invasion

Id. at 22-23, at ¶¶ 118-122.

Tenth and finally,

Harrington alleges that defendants’ actions constitute infliction
of emotional distress.

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claim.

Id. at 23, at ¶¶ 123-128.

Harrington seeks punitive damages under a state law
Filing No. 1, at 19, at ¶ 101.
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Harrington filed his complaint (Filing No. 1) on August
20, 2014.

Harrington filed an amended complaint (Filing No. 4)

on August 21, 2014.
complaints.

There is little difference between these

Compare Filing No. 1 (Pagination and paragraph 64),

with Filing No. 4 (Pagination, paragraph 64, and three
attachments).

Some three months later, during the pendency of

the motion to dismiss and after Harrington failed to respond to
the defendants’ briefs, Harrington filed a motion to file another
amended complaint.
II.

LEGAL STANDARDS
When determining whether to grant leave to amend a

complaint pursuant to Federal Rule of Civil Procedure 15(a)(2),
the Court considers undue delay, bad faith, or dilatory motive by
plaintiff that results in prejudice to the defendant.

Foman v.

Davis, 371 U.S. 178 (1962); Jenson v. Cont’l Fin. Corp., 404 F.
Supp. 792, 794 (1975).

Leave to amend "shall be freely given

when justice so requires."

Fed. R. Civ. P. 15(a)(2).

However,

the granting of such a motion is left to the discretion of the
Court.

Russ v. Ratliff, 578 F.2d 221, 224 (8th Cir. 1958).
The Court has an obligation to consider sua sponte

whether it has subject matter jurisdiction over a case.

Thomas

v. United Steelworkers Local 1938, 743 F.3d 1134, 1139 (8th Cir.
2014).

The Court "must raise jurisdictional issues 'when there
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is an indication that jurisdiction is lacking, even if the
parties concede the issue.'”

Id. (quoting Thomas v. Basham, 931

F.2d 521, 523 (8th Cir. 1991)).

Suits are subject to dismissal

when the Court lacks subject matter jurisdiction to hear the
matter.

Fed. R. Civ. P. 12(b)(1).

The party asserting

jurisdiction bears the burden of proving that jurisdiction is
proper.

Great Rivers Habitat Alliance v. FEMA, 615 F.3d 985, 988

(8th Cir. 2010).
Determining whether a complaint states a plausible
claim for relief is “a context-specific task” that requires the
court “to draw on its judicial experience and common sense.”
at 679.

Id.

Under Twombly, a court considering a motion to dismiss

may begin by identifying pleadings that, because they are no more
than conclusions, are not entitled to the assumption of truth.
Id.

Although legal conclusions “can provide the framework of a

complaint, they must be supported by factual allegations.”

Id.

Accordingly, the Supreme Court has prescribed a “two-pronged
approach” for evaluating Rule 12(b)(6) challenges.
Iqbal, 556 U.S. 662, 679 (2009).

Ashcroft v.

First, a court should divide

the allegations between factual and legal allegations; factual
allegations should be accepted as true, but legal allegations
should be disregarded.

Id.

Second, the factual allegations must

be examined for facial plausibility.
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Id.

“A claim has facial plausibility when the plaintiff
pleads factual content that allows the court to draw the
reasonable inference that the defendant is liable for the
misconduct alleged.”

Bell Atlantic Corp. v. Twombly, 550 U.S.

544, 677 (2007) (stating that the plausibility standard does not
require a probability, but asks for more than a sheer possibility
that a defendant has acted unlawfully).

A court must find

“enough factual matter (taken as true) to suggest” that
“discovery will reveal evidence” of the elements of the claim.
Id. at 558, 556.

When the allegations in a complaint, however

true, could not raise a claim of entitlement to relief, the
complaint should be dismissed for failure to state a claim under
Fed. R. Civ. P. 12(b)(6).

Id. at 558; Ashcroft v. Iqbal, 556

U.S. 662, 679 (2009).
III. DISCUSSION
A.

LEAVE TO AMEND
As outlined above, plaintiff has procrastinated in

amending his complaint until well after the deadline to amend
without leave of the Court and the deadline to respond to the
defendants’ motion to dismiss.
justifications.

The plaintiff offers two

First, the plaintiff’s local counsel may have

had a potential conflict of interest which took time to
investigate.

Second, plaintiff’s counsel was delayed by
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discovery.

The Court liberally grants extensions and amendments

if parties but timely notify the Court of the need.

This is not

a request for an extension, however, but a justification of
plaintiff’s discretion not to communicate with the Court or abide
by deadlines.

The plaintiff’s excuses were known well before he

shared them with the Court.

Now the Court is on the eve of

disposition of pending motions and the plaintiff offers thin
explanation for its unauthorized, unilateral, and undue delays.
No more undue delay will be permitted.

See Beeck v. Aquaslide

“N” Drive Corp., 562 F.2d 537, 540 (8th Cir. 1977).

The Court

finds that the plaintiff has acted with undue delay and that it
has failed to cure its deficiencies through previous amendment.
In weighing the time lapse and the various motions pending in
this action, the Court will deny plaintiff’s motion to amend his
complaint and will proceed to analyze the motion to dismiss.
Furthermore, the plaintiff’s request for an alternative ten-day
extension to respond to the defendants’ motion to dismiss will be
denied.
B.

CAUSES OF ACTION AS TO ALL DEFENDANTS
The Court first addresses four Causes of Action which

apply to all defendants.

In his Fifth Cause of Action,

Harrington asserts that all defendants violated Nebraska Revised
Statute § 28-926, a criminal statute, “oppression under color of
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office.”

Filing No. 1, at 18-19, ¶ 93-96.

Though the

proposition of suing another under a criminal law statute for a
civil remedy may seem like a novel idea, it is not untested.

The

United States District Court for the District of Nebraska and the
Nebraska Supreme Court has seen this argument previously:
Plaintiffs' Fifth Cause of Action
attempts to allege a violation of
Neb. Rev. Stat. Ann. § 28–926 [].
This is a criminal statute which
provides for treble damages if a
public servant or peace officer
commits the misdemeanor offense of
“oppression under color of office.”
It is highly questionable whether
section 28–926 authorizes a civil
cause of action seeking treble
damages to be brought under its
provisions. C.f. LaBenz Trucking,
Inc. v. Snyder, 246 Neb. 468, 519
N.W.2d 259, 261–62 (1994) (in case
where plaintiffs waived recovery of
treble damages and requested only
actual damages under section
28–926, court held statute to be
“penal in nature” and stated, “[a]
statute which imposes liability for
actual damages and additional
liability for the same act exacts a
penalty. Plaintiffs cite no
authority, nor has our research
discovered any, to support the
proposition that a party may
convert a purely penal statute into
a remedial one simply as the
election of the party.”). I find
that in this case, where Plaintiffs
have specifically requested treble
damages [], section 28–926 does not
support a civil cause of action.

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Stagemeyer v. County of Dawson, 192 F. Supp. 2d 998, 1011 (D.
Neb. 2002).

The United States District Court went on to dismiss

the claim in its entirety.

Id.

For the foregoing reasons, the

Court will grant the defendants’ motion to dismiss Harrington’s
Fifth Cause of Action.
In his Sixth Cause of Action, Harrington claims that
all defendants committed an abuse of process.

Abuse of process

requires involvement of a judicial process and Harrington’s
complaint involves no judicial process.

In Gordon v. Cmty. First

State Bank, the Nebraska Supreme Court held that an action for
“abuse of process” must be predicated upon judicial, not
administrative, process.

Gordon v. Cmty. First State Bank, 255

Neb. 637, 651, 587 N.W.2d 343, 353 (1998).

Harrington’s

complaint regards administrative process, not judicial process.
For the forgoing reason, the Court will grant the defendants’
motion to dismiss the Sixth Cause of Action.
In his Eighth Cause of Action, Harrington alleges
defamation by all defendants on the basis of statements made in
his administrative hearings and the contents of the Book.

The

statute of limitations for libel and slander is one year after
the alleged conduct.

Neb. Rev. Stat. § 25-208.

Harrington’s complaint occurred in 2011.
was filed in 2014.

The events in

Harrington’s complaint

The statute of limitations has run.
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Therefore, the Court will grant the defendants’ motion to dismiss
Harrington’s Eighth Cause of Action.
In his Ninth Cause of Action, Harrington alleges
invasion of privacy against all defendants based on the
compilation of the Book and events at the licensing hearings.
The statute of limitations for invasion of privacy is one year
after the alleged conduct.

Neb. Rev. Stat. § 20-211.

in Harrington’s complaint occurred in 2011.
complaint was filed in 2014.

The events

Harrington’s

The statute of limitations has run.

Therefore, the Court will grant the defendants’ motion to dismiss
Harrington’s Ninth Cause of Action.
C.

THE CITY OF LINCOLN
In Harrington’s complaint, he failed to allege that the

City of Lincoln has an official custom or policy which caused a
violation of Harrington’s constitutional rights.
Filing No. 4.

See generally

Therefore, the Court will grant the defendants’

motion to dismiss Causes of Action One, Two, Three, and Four
against the City of Lincoln.

See Lee v. Andersen, 616 F.3d 803,

807 (8th Cir. 2010); Monell v. Dep’t of Soc. Servs., 436 U.S.
658, 690-91 (1978); Doe By & Through Doe v. Washington County,
150 F.3d 920, 922 (8th Cir. 1998)).
The remaining Cause of Actions, Seven and Ten, are both
tort claims.

Under the Nebraska Political Subdivisions Tort
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Claims Act, “no political subdivision of the State of Nebraska
shall be liable for the torts of its officers, agents, or
employees, and . . . except to the extent . . . provided by the
Political Subdivisions Tort Claims Act.”
§ 13-902.

Neb. Rev. Stat.

The Political Subdivision Tort Claims Act does not

allow for suit against municipal entities for the denial of a
liquor license.

In fact, the Act expressly grants immunity for

the denial of a liquor license.

Neb. Rev. Stat. § 13-910(4).

Because Harrington’s claims against the City of Lincoln are based
upon the denial of his liquor license, the Court will grant the
defendants’ motion to dismiss the final two remaining claims
against the City of Lincoln.
D.

CITY COUNCILMAN SPATZ
The Court will grant the defendants’ motion to dismiss

all claims against City Councilman Spatz in his individual
capacity on the basis of Qualified Immunity.

Qualified Immunity

is immunity from suit rather than a mere defense to liability,
and therefore, immunity issues should be resolved at the earliest
possible stage of the litigation.
201 (2001).

Saucier v. Katz, 533 U.S. 194,

The Court determines whether qualified immunity

exists by applying a two-step inquiry:

“(1) whether the facts

shown by the plaintiff make out a violation of a constitutional
or statutory right; and (2) whether the right was clearly
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established at the time of the defendant’s alleged misconduct.”
Santiago v. Blair, 707 F.3d 984, 989 (8th Cir. 2013).

A key

element of this analysis depends upon the objective
reasonableness of his or her conduct as measured by reference to
clearly established law.

The United States Supreme Court offers

the following guidance:
Qualified immunity balances two
important interests -- the need to
hold public officials accountable
when they exercise power
irresponsibly and the need to
shield officials from harassment,
distraction, and liability when
they perform their duties
reasonably. The protection of
qualified immunity applies
regardless of whether the
government official's error is “a
mistake of law, a mistake of fact,
or a mistake based on mixed
questions of law and fact.” Groh
v. Ramirez, 540 U.S. 551, 567, 124
S. Ct. 1284, 157 L. Ed. 2d 1068
(2004) (Kennedy, J., dissenting)
(citing Butz v. Economou, 438 U.S.
478, 507 [](1978) (noting that
qualified immunity covers "mere
mistakes in judgment, whether the
mistake is one of fact or one of
law")).
Pearson v. Callahan, 555 U.S. 223, 231 (2009).
address either prong first.

Id. at 236.

The Court may

If no reasonable fact

finder could answer both questions affirmatively, the defendant
is entitled to qualified immunity.

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Nance v. Sammis, 586 F.3d

604, 609 (8th Cir. 2009).

If either element is not satisfied,

there is no necessity for further inquiries concerning qualified
immunity.

In this case, Councilman Spatz is entitled to

Qualified Immunity.

The sole allegation against Spatz, other

than that Spatz voted to recommend the denial of Harrington’s
liquor license, is in paragraph 15:

“Spatz wrote Plaintiff an

email claiming his liquor license application would stand a
better chance if he sold his web sites first, followed by an
announcement to the media about the sale.”
¶ 15.

Filing No. 4, at 4,

The Court finds that Councilman Spatz’s communication to

Harrington and his voting to recommend denial were objectively
reasonable and did not violate plaintiff’s constitutional rights,
and Spatz is entitled to Qualified Immunity.

Therefore, the

Court will grant the City Defendants’ motion to dismiss
Harrington’s claims in his individual capacity.
Also, the Court finds Councilman Spatz is entitled to
Sovereign Immunity for two reasons.

First, the Nebraska

Political Subdivisions Tort Claims Act preserves Sovereign
Immunity for its employees who deny any license.
§ 81-8,219(8).

Neb. Rev. Stat.

Second, Spatz did not actually deny the license.

As a city councilman, Spatz did not have the authority to grant
or deny Harrington’s application, and so Harrington’s allegations

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lack foundation.

Therefore, the Court will grant the defendants’

motion to dismiss Harrington’s claims in his official capacity.
E.

THE OFFICERS
The defendants seek to dismiss the remaining claims

against officer Fosler and Chief Peschong in their individual
capacities because Harrington failed to allege sufficiently
detailed allegations of those defendants’ conduct.
16, at 7-8.

Filing No.

Although “[o]fficers are allowed to make reasonable

errors and this immunity provides ‘ample room for mistaken
judgments,’” the Court finds that the allegations contained
within Harrington’s amended complaint satisfy the procedural
requirements to overcome a motion to dismiss and that the parties
should proceed to discovery.

Therefore, the defendants’ motion

to dismiss officer Fosler and Chief Peschong will be denied at
this time.
Similarly, Tom Casady was the chief of police through
2011, and he was the head of the police department during
relevant periods in Harrington’s complaint.

For the same reasons

noted above, the Court will deny the defendants’ motion to
dismiss former Chief Casady at this time.

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IT IS ORDERED:
1) The motion of the Nebraska Liquor Control Commission
and Hobert Rupe (Filing No. 13) is denied as moot pursuant to the
Court’s order, Filing No. 21.
2) The plaintiff’s motion to amend his complaint
(Filing No. 17) is denied.
3) The motion (Filing No. 15) of Tom Casady, Jim
Peschong, John Spatz, Russell Fosler, and the City of Lincoln is
denied in part and granted in part.
4) All claims against the City of Lincoln and
Councilman Spatz are dismissed.
5) The motion to dismiss Tom Casady, Jim Peschong, and
Russell Fosler is denied at this time.
6)

The following Causes of Action are dismissed as to

all defendants:

Fifth, Sixth, Eighth, Ninth.

DATED this 6th day of February, 2015.
BY THE COURT:
/s/ Lyle E. Strom
____________________________
LYLE E. STROM, Senior Judge
United States District Court

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