Ludwig's Drug Store, Inc. v. Forest City Enterprises, Inc. et al
Filing
47
ORDER granting in part 30 Motion to Dismiss; granting 34 Motion to Dismiss for Failure to State a Claim. The Court grants Brooklyn Events Center, LLC's (BEC) motion to dismiss the Second Amended Complaint ("SAC") in part and grants Levy Premium Foodservice Limited Partnership's motion to dismiss in its entirety. The Court dismisses Plaintiffs' section 1981, NYSHRL and NYCHRL claims against BEC and declines to exercise supplemental jurisdiction over Plaintiffs' breach of contract claims against BEC. Ordered by Judge Margo K. Brodie on March 4, 2016. (Reyneri, Rafael)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
--------------------------------------------------------------LUDWIG’S DRUG STORE, INC., JERMAINE
PRATT, SEAN SCARBOROUGH and GLEN
DEFREITAS,
MEMORANDUM & ORDER
13-CV-6045 (MKB)
Plaintiffs,
v.
FOREST CITY ENTERPRISES, INC.,
BROOKLYN EVENTS CENTER, LLC d/b/a
BARCLAYS CENTER, COMPASS GROUP USA,
INC. and LEVY PREMIUM FOODSERVICE
LIMITED PARTNERSHIP,
Defendants.
--------------------------------------------------------------MARGO K. BRODIE, United States District Judge:
On March 12, 2014, Plaintiffs Ludwig’s Drug Store, Inc. (“Ludwig’s”), Jermaine Pratt,
Sean Scarborough and Glen Defreitas filed a Second Amended Complaint1 in the
above-captioned action asserting claims against Defendants Forest City Enterprises, Inc.
(“Forest”), Brooklyn Events Center, LLC, doing business as Barclays Center (“BEC”), Compass
Group USA, Inc. (“Compass”) and Levy Premium Foodservice Limited Partnership (“Levy”).
The Second Amended Complaint (“SAC”) alleges that Defendants discriminated against
Plaintiffs on the basis of race in connection with a license agreement between BEC and
Ludwig’s and asserts claims pursuant to (1) the New York State Human Rights Law, N.Y. Exec.
Law § 296(2)(a) (“NYSHRL”); (2) the New York City Human Rights Law, N.Y.C. Admin.
1
Ludwig’s commenced this action on October 31, 2013 against Forest, BEC and
Compass One, LLC (“Compass One”). (Compl., Docket Entry No. 1.) On December 5, 2013,
Ludwig’s, Pratt, Scarborough and Defreitas filed an Amended Complaint asserting claims
against Forest, BEC and Compass One. (Am. Compl., Docket Entry No. 10.)
Code § 8-107 (“NYCHRL”); (3) 42 U.S.C. § 1981; and (4) 42 U.S.C. § 1983; and (5) for breach
of contract claim under New York State law. (SAC ¶¶ 14, 27, 53–76, Docket Entry No. 22.)
Plaintiffs seek compensatory and punitive damages, attorney’s fees, costs and injunctive relief.
(Id. ¶¶ 57, 61, 67, 72, 76.)
On June 10, 2014, BEC and Forest moved to dismiss all claims asserted against them in
the SAC for failure to state a claim, except for the breach of contract claim by Ludwig’s against
BEC. (Not. of Mot. to Dismiss on behalf of Defs. Forest & BEC (“Forest & BEC Mot.”),
Docket Entry No. 30; Mem. in Supp. of Forest & BEC Mot. (“Forest & BEC Mem.”), Docket
Entry No. 31.) By separate motion filed on June 10, 2014, Compass and Levy moved to dismiss
all claims asserted against them in the SAC for failure to state a claim. (Not. of Mot. to Dismiss
on behalf of Defs. Compass & Levy (“Compass & Levy Mot.”), Docket Entry No. 34; Mem. in
Supp. of Compass & Levy Mot. (“Compass & Levy Mem.”), Docket Entry No. 36.)
On March 30, 2015, the Court heard oral arguments on Defendants’ motions (the “March
30, 2015 Hearing”) and, for the reasons stated on the record and explained below, the Court
partially granted the motions to dismiss from the bench and reserved decision as to certain
claims. (Mar. 31, 2015 Min. Entry.) During the March 30, 2015 Hearing, the Court dismissed:
(1) the section 1983 claim against all Defendants; (2) all remaining claims — under section
1981, the NYSHRL and the NYCHRL, and for breach of contract — against Forest and
Compass; and (3) the breach of contract claim against Levy. (Id.) The Court reserved decision
as to the remaining claims against BEC and Levy — under section 1981, the NYSHRL and the
NYCHRL — and Pratt’s, Scarborough’s and Defreitas’ (collectively the “Individual Plaintiffs”)
breach of contract claims against BEC. (Id.)
For the reasons set forth below, the Court grants BEC’s motion to dismiss the SAC in
2
part and grants Levy’s motion to dismiss in its entirety. The Court dismisses Plaintiffs’ section
1981, NYSHRL and NYCHRL claims against BEC and declines to exercise supplemental
jurisdiction over Plaintiffs’ state law breach of contract claims against BEC.
I.
Background
On October 10, 2013, BEC, as licensor, and Ludwig’s, as licensee, entered into the
Barclays Center Suite License Agreement (the “Agreement”). (Agreement 1, annexed to SAC as
Ex. A, Docket Entry No. 22-1; SAC ¶ 14.) Pursuant to the Agreement, Ludwig’s obtained a
license to use a suite at the Barclays Center arena located in Brooklyn, New York (the “Arena”)
in accordance with the Agreement’s terms and conditions. Plaintiffs allege that the Individual
Plaintiffs use the suite during events held at the Arena and that Defendants have subjected the
Individual Plaintiffs and their African-American guests to racial discrimination.
a.
Parties
Ludwig’s, a New York corporation, is a “neighborhood pharmacy” located in Brooklyn,
New York.2 (SAC ¶¶ 5, 20.) Defreitas is Ludwig’s “designated agent,” (id. ¶ 6), and Pratt and
Scarborough are both employees of Ludwig’s, (id. ¶¶ 7–8). Defreitas, Pratt and Scarborough are
all African-American. (Id. ¶¶ 23−24.) Forest, an Ohio corporation licensed to do business in
New York, is the owner of the Arena. (Id. ¶ 9.) BEC, a Delaware corporation licensed to do
business in New York, “manages” the Arena. (Id. ¶ 10.) Compass is a North Carolina limited
liability company licensed to do business in New York. (Id. ¶ 11.) Levy is the wholly-owned
subsidiary of Compass. (Id. ¶ 12.) Plaintiffs allege “on information and belief” that Levy
provides catering services for the Arena. (Id.)
2
The facts alleged in the SAC are assumed to be true for the purposes of the motions to
dismiss.
3
b.
The Arena
Plaintiffs allege that, prior to the construction of the Arena, the State of New York (the
“State”) expropriated the land on which the Arena now stands through eminent domain. (Id.
¶ 21.) Plaintiffs also allege that the Metropolitan Transit Authority leases the land on which the
Arena is now located from the State. (Id.) Plaintiffs further allege that Forest receives “tax
benefits and public subsidies” from the State, and the State “has also provided significant
encouragement to Forest, and by association, to Levy and BEC.” (Id. ¶ 22.)
The Arena is the home of the National Basketball Association team known as the
Brooklyn Nets and is a venue for a variety of concerts and performances. (See Agreement 3; see
also SAC ¶ 49.) There are 104 spectator suites with box-seating located within the Arena. (SAC
¶¶ 15, 26.)
c.
The Agreement
The Agreement states, “this Barclays Center Suite License Agreement (this ‘License
Agreement’) is entered into by and between Brooklyn Events Center, LLC d/b/a Barclays Center
(‘Licensor’) . . . and Ludwig[’]s Drug Store Inc. (‘Licensee’) . . . this 10th day of October 2013
(the ‘Commencement Date’).” (Agreement 1 (capitalization omitted).) Richard Mastrota, who
is the President of Ludwig’s and is Caucasian, signed the Agreement on behalf of Ludwig’s.
(Agreement 2; SAC ¶ 23.) Under the Agreement, BEC agreed to provide Ludwig’s with a
license to use the suite number B-5 (the “Suite”) for a three-year term from October of 2013 to
September of 2016. (Agreement 1; SAC ¶¶ 14, 16.) In exchange, Ludwig’s agreed to pay
license fees in accordance with a payment schedule. (Agreement 1, Schedule B; SAC ¶ 17.)
Pursuant to the Agreement, Ludwig’s is entitled to a set number of tickets to certain
events held at the Arena, and the tickets may be used by Ludwig’s employees and their guests to
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access the Suite during such events. (Agreement 1, 3–4; SAC ¶¶ 14–15.) The Agreement
includes a provision regarding “Suite Services” that states, in relevant part:
During the Term, Licensor shall furnish to the Suite at its expense
the following: (a) Maintenance of the Suite and the appliances,
fixtures, equipment and furniture included therein in good order and
repair, subject to ordinary wear and tear; provided, however, that
Licensee shall be responsible for any repairs or replacements
beyond ordinary wear and tear, such repairs to be made at the
direction of Licensor and at Licensee’s cost (as described below).
(b) Cleaning service, including vacuuming, removal of debris and
general cleaning of space within a reasonable time after each Event
during which Licensee uses the Suite.
(Agreement 5, ¶ 17.) The Agreement also provides for suite amenities including food and
beverage service during events. (Agreement Schedule A; SAC ¶ 15.) The Agreement includes a
provision regarding transfers and assignments, (Agreement 4, ¶ 8), and an integration clause, (id.
at 6, ¶ 23). Plaintiffs allege that Levy provides food and beverage services for the Suite. (SAC
¶ 18.) Plaintiffs further allege, upon information and belief, that staff provided by Forest, BEC
and Levy are responsible for “clean[ing], maintain[ing], and servic[ing]” the Suite.3 (Id. ¶ 19.)
d.
Alleged discrimination
According to Plaintiffs, each of the Individual Plaintiffs is “directly involved” with the
Suite. (Id. ¶¶ 23–24.) Upon entering and signing the Agreement on Ludwig’s behalf, Mastrota
made Defreitas the “manager” of the Suite and tasked him with handling all “dealings” and
communications with BEC and all ticket distributions in connection with the Agreement. (Id.
3
The terms of the Agreement only confirm that BEC agreed to “furnish to the Suite at its
expense” maintenance and cleaning services. (Agreement 5, ¶ 17.) The Agreement does not
mention Levy, and Forest is only mentioned in provisions that have no bearing on this allegation.
(See id. at 4, ¶ 7(a) (indemnity provision stating that BEC’s corporate affiliates including Forest
shall not be liable for injuries to persons or property caused by Ludwig’s or its invitees); id. at 6,
¶ 21 (insurance provision stating that Ludwig’s shall maintain commercial general liability
insurance and providing that BEC and affiliates including Forest are to be named as additional
insureds under the policy).)
5
¶ 23.) The Individual Plaintiffs frequent the Suite during events at the Arena and they use the
Suite to entertain guests. (See id. ¶¶ 24, 40–41.)
Plaintiffs allege, upon information and belief, that, as distinct from the Suite, none of the
other suites in the Arena are “licensed, managed, or typically utilized by African[-]Americans.”
(Id. ¶ 25.) Plaintiffs further allege that Defendants discriminated against the Individual Plaintiffs
and their African-American guests on account of their race. (Id. ¶ 27.)
i.
BEC’s refusal to interface with Defreitas as Suite manager
According to Plaintiffs, at the time when BEC and Ludwig’s entered the Agreement,
Mastrota advised BEC that Defreitas would be managing the Suite. (Id. ¶ 23.) Although
Mastrota directed BEC to interface solely with Defreitas and asked that BEC send all
correspondence and tickets directly to Defreitas, BEC ignored these requests and instead sent all
correspondence and tickets to Mastrota. (Id.) BEC also invited Mastrota, and not Defreitas, to a
dinner organized for suite holders. (Id. ¶ 28.) When Mastrota reiterated his instructions to BEC
regarding Defreitas, BEC “refused to work through Defreitas.” (Id. ¶ 23.) Plaintiffs also allege
that Defendants did not provide them with tickets to certain “special events,” including the
“Legends Classic 2013,” even though Plaintiffs were entitled to such tickets under the
Agreement. (Id. ¶ 29.)
ii.
Harassment of the Individual Plaintiffs by Arena staff and security
Plaintiffs allege that the Individual Plaintiffs are “continually harassed, followed, and
questioned” when they attend events at the Arena. (Id. ¶ 39.) Plaintiffs specifically allege three
instances of such harassment. (See id. ¶¶ 30–31.) Plaintiffs allege, upon information and belief,
that non-African-American patrons are not subjected to the same treatment by Arena staff. (Id.
¶ 39.)
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On or about October 19, 2013, while using the Suite, the Individual Plaintiffs overheard a
radio communication indicating that “the people in their Suite were considered a security threat.”
(Id. ¶ 31.) Shortly thereafter, Arena security raided suite number B-16, which is located on the
same level of the Arena as the Suite. (Id.; Diagram of Approx. Location of the Suite, annexed to
Agreement as Ex. A.) During the raid, the people present in suite B-16 were forced to remain on
the ground while security checked their identification. (SAC ¶ 31.) Plaintiffs allege, upon
information and belief, that the raid of suite B-16 was a mistake because security actually
intended to raid the Suite. (Id.)
Plaintiffs also allege that Lawrence Saurs, who was employed by BEC as its “Manager of
Premium Partnerships,” “treated Defreitas as if he did not belong” in the Arena. (Id. ¶ 30.)
Plaintiffs further allege, upon information and belief, that BEC “directed Saurs to treat Defreitas
suspiciously based on his race.” (Id.) On or about October 19, 2013, when Saurs encountered
Defreitas at a “VIP entrance” to the Arena, Saurs asked Defreitas why he was frequently at the
Arena. (Id.) Approximately one week later, during another encounter between Saurs and
Defreitas at the same VIP entrance, Saurs again asked Defreitas why he was frequently at the
Arena, and Defreitas told Saurs that he had licensed a suite. (Id.) In response, Saurs stated
“sometimes I have to be the bad guy” and told Defreitas that he had a background in law
enforcement. (Id.)
iii. Substandard food, beverage, cleaning and maintenance services
Plaintiffs allege that when the Individual Plaintiffs and their African-American guests use
the Suite, they are subjected to “deplorable” food, beverage, cleaning and maintenance services.
(Id. ¶ 32.) Plaintiffs also allege, “[u]pon information and belief, [that] Levy executives have
directed their staff to provide subpar” services to the Suite, (id. ¶ 35), and Jordan Beckerman, a
7
“supervisor” at Levy, “has [] warned Levy employees to avoid [the Suite],” (id. ¶¶ 48, 50).
Plaintiffs further allege that “proper” services are provided to the Arena’s other suites, which are
licensed by and used to host non-African-American patrons. (Id. ¶ 34.) Plaintiffs also allege that
“when [the Suite] hosts numerous Caucasian guests, food and housekeeping service is proper.”
(Id. ¶ 33.)
1.
Cleaning services
Plaintiffs allege that “housekeeping does not clean [the Suite] without a specific request”
and the Suite is “routinely” left “dirty and disorganized.” (Id. ¶ 32.) Plaintiffs allege that on
November 19, 2013, because housekeeping had “left [the Suite] as a mess,” Pratt was cleaning
the Suite himself and a patron from a neighboring suite licensed by CBS Radio observed Pratt
doing so. (Id. ¶ 36.) Plaintiffs allege that the CBS Radio suite is “regularly and immaculately
cleaned,” and that the CBS Radio patron was “shocked” at the state of the Suite and asked Pratt
why housekeeping was not cleaning the Suite. (Id. ¶¶ 36–37.)
2.
Food and beverage services
Plaintiffs allege that food and drink orders are “routinely” delivered to the Suite “very
late, if at all,” and, “upon inquiries, African[-]Americans are frequently told that the kitchen is
closed.” (Id. ¶ 32.) Plaintiffs allege that on or about October 26, 2013, the Individual Plaintiffs
attended an event at the Arena with a guest and they ordered pizza from the Suite. (Id. ¶ 40.)
Plaintiffs also allege that they were falsely accused of not paying for the pizza and, after Pratt
provided a credit card to resolve the issue, he was charged $1,000 for the pizza and this amount
was never refunded or adjusted. (Id.)
According to Plaintiffs, on October 28, 2013, Defreitas used the Suite with a
“dark-skinned” guest and they ordered food, drinks and ice. (Id. ¶ 41.) When the order had not
8
arrived after forty-five minutes, Defreitas inquired as to when the order would be delivered and
was told that the order required approval from a supervisor. (Id.) When the ice arrived, it was
delivered in a “dirty” bucket and Defreitas’ guest was ultimately charged for multiple items that
he neither ordered nor received. (Id.)
Plaintiffs also allege that on March 10, 2014, Defreitas hosted seven African-American
guests in the Suite who ordered French fries. (Id. ¶ 44.) The French fries were not delivered
until after an hour had passed and Defreitas had “intervened.” (Id.) Plaintiffs allege that when
the Suite hosts Caucasian guests, such delays do not occur. (Id. ¶ 45.) Finally, Plaintiffs allege
that the Individual Plaintiffs are “routinely” denied access to refrigerators located in the Suite
despite the fact that they are entitled to access the food in these refrigerators. (Id. ¶ 38.) When
the Individual Plaintiffs attempt to access these refrigerators, they are told that verification from
a supervisor is required, and access is often denied even after the Individual Plaintiffs obtain
such verification. (Id.)
3.
Maintenance services
Plaintiffs allege that on December 25, 2013, Defreitas was using the Suite and he “called
maintenance to secure a TV that was falling from the wall.” (Id. ¶ 43.) In response to Defreitas’
request, a “supervisor” stated, “did you or one of the kids pull the TV off of the wall? TV’s
don’t just fall off walls!” (Id.) Defreitas responded to the supervisor’s comment by explaining
“that no one had touched the TV.” (Id.) The supervisor then stated “it was just a question, it’s
weird that a TV would just fall off the wall.” (Id.)
e.
Additional allegations
Plaintiffs allege that “on numerous occasions” Defreitas’ personal items were stolen from
the Suite when Plaintiffs and their guests were not present in the Suite. (Id. ¶ 42.)
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II. Discussion
a.
Standard of review
In reviewing a motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil
Procedure, a court must “accept all factual allegations in the complaint as true and draw
inferences from those allegations in the light most favorable to the plaintiff.” Tsirelman v.
Daines, 794 F.3d 310, 313 (2d Cir. 2015) (quoting Jaghory v. N.Y. State Dep’t of Educ., 131
F.3d 326, 329 (2d Cir. 1997)); see also 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 Atl. 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 Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009)); see also Pension Ben. Guar. Corp. ex rel. St. Vincent Catholic Med. Ctrs. Ret. Plan v.
Morgan Stanley Inv. Mgmt. Inc., 712 F.3d 705, 717–18 (2d Cir. 2013). Although all allegations
contained in the complaint are assumed true, this principle is “inapplicable to legal conclusions”
or “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory
statements.”4 Iqbal, 556 U.S. at 678.
4
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) documents deemed integral to the
complaint, and (4) public records. See L-7 Designs, Inc. v. Old Navy, LLC, 647 F.3d 419, 422
(2d Cir. 2011) (documents attached to the complaint, those incorporated by reference, and those
integral to the complaint); 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).
10
b.
Section 1983 claim
Ruling from the bench, the Court granted Defendants’ motion to dismiss Plaintiffs’ claim
pursuant to section 1983 for failure to state a claim. In order to sustain a claim for relief under
section 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 rights,
privileges, or immunities 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)). The first element reflects the fact that section 1983 “constrains only state conduct, not
the ‘acts of private persons or entities.’” Hooda v. Brookhaven Nat’l Lab., 659 F. Supp. 2d 382,
393 (E.D.N.Y. 2009) (quoting Rendell-Baker v. Kohn, 457 U.S. 830, 837 (1982)). As such, “the
under-color-of-state-law element of § 1983 excludes from its reach merely private conduct, no
matter how discriminatory or wrongful.” Am. Mfrs. Mut. Ins. Co. v. Sullivan, 526 U.S. 40, 50
(1999) (citation and internal quotation marks omitted).
i.
State action by private entities
The conduct of a nominally private entity may be attributed to the state, satisfying the
state action requirement, if:
(1) the entity acts pursuant to the “coercive power” of the state or is
“controlled” by the state (“the compulsion test”); (2) when the state
provides “significant encouragement” to the entity, the entity is a
“willful participant in joint activity with the state,” or the entity’s
functions are “entwined” with state policies (“the joint action test”
or “close nexus test”); or (3) when the entity “has been delegated a
public function by the state,” (“the public function test”).
Sybalski v. Indep. Grp. Home Living Program, Inc., 546 F.3d 255, 257 (2d Cir. 2008) (citing
Brentwood Acad. v. Tenn. Secondary Sch. Athletic Ass’n, 531 U.S. 288, 296 (2001)); see Sykes v.
Bank of Am., 723 F.3d 399, 406 (2d Cir. 2013). Each of the three tests requires a fact-specific
inquiry into the challenged conduct and, in order to find state action, a court must determine that
11
the specific actions of which the plaintiff complains may fairly be attributed to the state. See
Grogan v. Blooming Grove Volunteer Ambulance Corps, 768 F.3d 259, 265 (2d Cir. 2014)
(examining public function test); Cooper v. U.S. Postal Serv., 577 F.3d 479, 491–92 (2d Cir.
2009) (examining joint action test); Lynch v. Southampton Animal Shelter Found. Inc., 971 F.
Supp. 2d 340, 349–50 (E.D.N.Y. 2013) (examining compulsion test).
In moving to dismiss Plaintiffs’ section 1983 claim, Defendants asserted that Plaintiffs
failed to adequately allege state action. (Forest & BEC Mem. 7–10; Compass & Levy Mem.
18 & n.17.) In opposition, Plaintiffs argued that they had sufficiency alleged that Defendants
engaged in state action based on the joint action or close nexus test and the public function test.
(Pls. Mem. in Opp’n to Forest & BEC Mot. (“Opp’n to Forest & BEC Mot.”) 6–8, Docket
Entry No. 38; Pls. Mem. in Opp’n to Compass & Levy Mot. (“Opp’n to Compass & Levy Mot.”)
19–20, Docket Entry No. 37.) In response, Defendants argued that the allegations in support of
state action did not satisfy either of the tests relied on by Plaintiffs. (Reply Mem. in Supp. of
Forest & BEC Mot. (“Forest & BEC Reply”) 3–4, Docket Entry No. 33; Reply Mem. in Supp. of
Compass & Levy Mot. (“Compass & Levy Reply”) 10–11, Docket Entry No. 39.) Defendants
also argued that Plaintiffs failed to allege state action because Plaintiffs did not allege that there
was any state involvement in the specific conduct complained of. (Forest & BEC Reply 2–3;
Compass & Levy Reply 11.) Defendants further argued that Plaintiffs instead relied on
allegations about state involvement in activity that was unrelated to the specific activity claimed
to have caused the injury giving rise to this action. (Forest & BEC Reply 2–3; Compass & Levy
Reply 11.) The sufficiency of the allegations as to each test are discussed below.
1.
Joint action or close nexus test
Plaintiffs allege that Forest receives tax benefits and public subsidies such that the State
12
has “provided significant encouragement to [Forest], and by association, to Levy and BEC,”
(SAC ¶ 22); the Arena was built on land that New York State obtained by exercising its eminent
domain power, (id. ¶ 21); and the Arena is located on land leased from the State, (id. ¶ 22).
During oral argument, Plaintiffs’ counsel also asserted that the Arena “was built using public
funds,” (Tr. of Mar. 30, 2015 Hr’g (“Tr.”) 4:14), that police officers “assist the [A]rena . . . [by
directing] the flow of people [coming] in and out of the [A]rena,” (Tr. 7:9–12), and that Levy is
required to comply with State public health laws that regulate the sale of food and beverages to
the public, (Tr. 8:16–21).
Under the close nexus or joint action test, the requisite nexus between the State and the
challenged conduct exists “where a private actor has operated as a willful participant in joint
activity with the State or its agents, or acts together with state officials or with significant state
aid.” Abdullahi, 562 F.3d at 188 (internal citations and quotation marks omitted); Barrett v.
Harwood, 189 F.3d 297, 304 (2d Cir. 1999) (“A private person — not a government
official — acts under color of state law for purposes of § 1983 when ‘he has acted together with
or has obtained significant aid from state officials’ . . . .” (quoting Lugar v. Edmondson Oil Co.,
457 U.S. 922, 937 (1982))). “[A] private entity does not become a state actor for purposes of
§ 1983 merely on the basis of ‘the private entity’s creation, funding, licensing, or regulation by
the government.’” Fabrikant v. French, 691 F.3d 193, 207 (2d Cir. 2012) (quoting Cranley v.
Nat’l Life Ins. Co. of Vt., 318 F.3d 105, 112 (2d Cir. 2003)). It is also not sufficient “to plead
state involvement in some activity of the institution alleged to have inflicted injury upon a
plaintiff; rather, the plaintiff must allege that the state was involved with the activity that caused
the injury giving rise to the action.” Sybalski, 546 F.3d at 258 (emphasis, internal quotation
marks and citations omitted).
13
That Forest receives tax benefits and public funding does not suffice to allege that Forest,
or any other Defendant, engaged in state action. See Young v. Halle Hous. Assocs., L.P., 152
F. Supp. 2d 355, 364 (S.D.N.Y. 2001) (granting summary judgment dismissing § 1983 claim
brought by residents of privately-owned, low-income housing facility who challenged the
facility’s policy regarding overnight guests because mere fact that housing facility “benefitted
from significant amounts of government funding” and public subsidies was not sufficient to
satisfy state action requirement); Elmasri v. England, 111 F. Supp. 2d 212, 221 (E.D.N.Y. 2000)
(granting summary judgment dismissing § 1983 claim challenging outcome of divorce and
custody proceedings and holding that court appointed guardian and psychologist were not state
actors even though they were paid with state funds).5
The fact that Levy is subject to state regulation is also insufficient to allege state action.
5
But see Ludtke v. Kuhn, 461 F. Supp. 86, 92–96 (S.D.N.Y. 1978) (concluding that
City’s involvement with Yankee Stadium was sufficient to satisfy state action requirement for
purposes of § 1983 gender discrimination claim challenging Stadium policy that barred female
reporters from entering Clubhouse locker room). In Ludtke, the court held that the Stadium’s
enforcement of the policy at issue constituted state action because the City acquired Yankee
Stadium by exercising its eminent domain power, the Yankees leased the Stadium from the City,
and public funds were used to pay for the Stadium’s renovation and maintenance. Id. The
Ludtke court based this holding on the “symbiotic relationship” test established by the Supreme
Court in Burton v. Wilmington Parking Authority, 365 U.S. 715 (1961). Ludtke, 461 F. Supp. at
93–94 (discussing Burton and noting that “[t]he facts of the case at hand so nearly resemble
those of Burton that there can be little doubt that state action exists here”). Since the Ludtke
opinion, however, the Second Circuit has indicated that “federal courts must assess the continued
vitality of earlier state-action precedents in light of more recent decisional law.” Khulumani v.
Barclay Nat’l Bank Ltd., 504 F.3d 254, 314 (2d Cir. 2007) (discussing state action requirement
and noting that while the “Warren Court took an expansive view of state action in its effort to
combat racial discrimination[,] . . . the subsequent Burger and Rehnquist Courts reversed this
trend in order to shield private behavior from the reach of the Constitution”), aff’d sub nom. Am.
Isuzu Motors, Inc. v. Ntsebeza, 553 U.S. 1028 (2008). The Second Circuit has further stated that
Burton was “one of the Warren Court cases that took an expansive view of state action” and that,
“[a]lthough neither Burton nor the symbiotic relationship doctrine has been overruled, they have
been severely narrowed in scope and diminished as precedent.” Id. at 314 n.8 (quoting 1 Martin
A. Schwartz, Section 1983 Litigation: Claims and Defenses § 5.13[A], at 5–90–5–91 (4th ed.
2003)).
14
See Hollander v. Copacabana Nightclub, 624 F.3d 30, 33–34 (2d Cir. 2010) (affirming dismissal
of § 1983 gender discrimination claim challenging nightclubs’ admissions policy and concluding
that plaintiff failed to allege state action notwithstanding state regulations governing sale of
alcohol by nightclubs and that nightclubs’ liquor licenses were issued by state); Cranley, 318
F.3d at 112–13 (affirming dismissal of § 1983 claim and concluding that insurance company did
not engage in state action during its reorganization into a holding company notwithstanding that
reorganization was carried out in accordance with state law governing reorganization of
insurance companies).
The allegations are also insufficient because Plaintiffs fail to allege any state involvement
in the precise conduct on which Plaintiffs’ claims are based, namely, the harassment and
substandard service the Individual Plaintiffs have allegedly been subjected to when they attend
events at the Arena and use the Suite. See Hollander, 624 F.3d at 34 (holding that allegedly
discriminatory nightclub admissions policy was too attenuated from state regulation of alcohol
sales and issuance of liquor licenses to satisfy state action requirement); Young, 152 F. Supp. 2d
at 364 (“[T]he crucial relationship for a finding of state action is between the governmental
entity and the action taken by the private entity, not between the governmental entity and the
private actor.”). Plaintiffs therefore failed to allege state action pursuant to the joint action or
close nexus test.
2.
Public function test
Plaintiffs allege that “[b]ecause [Forest] receives tax benefits and public subsidies, it is a
public function of the state.” (SAC ¶ 22.) Plaintiffs further allege that the Arena is “a place of
public accommodation.” (Id. ¶ 74.)
“Under the public function test, ‘[s]tate action may be found in situations where an
15
activity that traditionally has been the exclusive, or near exclusive, function of the State has been
contracted out to a private entity.’” Grogan, 768 F.3d at 264–65 (quoting Horvath v. Westport
Library Ass’n, 362 F.3d 147, 151 (2d Cir. 2004)). The test is not satisfied where a private entity
engages in activity that has merely “been regularly performed by governments.” Grogan, 768
F.3d at 265. Rather, the private entity must engage in activity that has historically been the
“exclusive prerogative” of the state. Id. This test is stringent because, “[w]hile many functions
have been traditionally performed by governments, very few have been exclusively reserved to
the State.” Flagg Bros. v. Brooks, 436 U.S. 149, 158 (1978) (internal quotation marks omitted).
Courts have concluded that activities such as holding local primary elections, Terry v. Adams,
345 U.S. 461, 469–70 (1953), providing medical care for prison inmates, West v. Atkins, 487
U.S. 42, 54–57 (1988), and creating and operating post offices, Cooper, 577 F.3d at 492–93,
have historically been the exclusive prerogative of the state. By contrast, the public function test
is not satisfied by conduct such as supplying utility services, Jackson v. Metro. Edison Co., 419
U.S. 345, 352–53 (1974), and providing nursing home services to Medicaid recipients, Blum v.
Yaretsky, 457 U.S. 991, 1011–12 (1982).
While neither the Second Circuit nor any district courts within the Second Circuit have
addressed the public function test with respect to the operation of stadiums like the Arena, two
district courts outside the Second Circuit have held that the public function test is not satisfied in
this context. See Bessey v. Spectrum Arena, L.P., No. 11-CV-7099, 2011 WL 6779306, at *1–2,
*4 (E.D. Pa. Dec. 23, 2011) (denying plaintiffs’ motion to enjoin private entity that owned and
operated sports arena from enforcing policy prohibiting protests at arena and holding that there
was no state action under public function test because “[w]hile professional sports, concerts and
other entertainment events enhance the cultural and civic life of a community, providing these
16
services is not the exclusive province of the State and, in fact, is not a governmental function”);
Stark v. Seattle Seahawks, No. 06-CV-1719, 2007 WL 1821017, at *1–2, *7 (W.D. Wash. June
22, 2007) (granting summary judgment motion and dismissing § 1983 claim against private
entity vested with exclusive power and authority to operate a publically-owned sports stadium
because “the court is not persuaded that operating an event center is a function that has
traditionally and exclusively been reserved to the state”). The Court agrees that because the
operation of a sports arena is not a function that is traditionally and exclusively reserved to the
state, Plaintiffs failed to allege state action pursuant to the public function test.
Because the allegations are insufficient to satisfy the threshold state action requirement
under either the joint action or close nexus test or the public function test, Plaintiffs failed to state
a claim pursuant to section 1983 and, accordingly, the Court dismissed Plaintiffs’ section 1983
claim as to all Defendants at the March 30, 2015 Hearing.
c.
Remaining claims against Forest and Compass
In addition to the section 1983 claim, the SAC also asserts four additional claims against
Forest and Compass, under (1) section 1981, (2) the NYSHRL and (3) the NYCHRL, and (4) for
breach of contract under New York State law. (See SAC ¶¶ 54–56, 60, 65, 69–71 (asserting
foregoing claims against “Defendants” without limitation).) As further explained below, the
Court dismissed these remaining claims against Forest and Compass during the March 30, 2015
Hearing for failure to state a claim. (Tr. 50:19–21, 56:24–57:2; Mar. 31, 2015 Min. Entry.)
In support of the remaining claims against Forest, the SAC alleges that Forest owns the
Arena. (SAC ¶ 9.) The SAC also alleges “[u]pon information and belief, [the Suite] was to be
cleaned, maintained, and serviced by staff provided by [Forest], BEC, and Levy (the ‘Staff’).”
(Id. ¶ 19.) While the SAC alleges that various actions were undertaken by “the Staff,” as this
17
term is defined in the SAC, and by “housekeeping” and “maintenance,” which terms are not
defined, the SAC fails to allege any specific conduct or action by Forest.6 In addition, there are
no facts alleged from which the Court may plausibly infer that Forest was involved in food and
beverage, cleaning or maintenance services.7 With respect to Compass, the SAC alleges only
that Compass is the parent company of Levy. (SAC ¶ 12.)
Rule 8(a) of the Federal Rules of Civil Procedure “does not demand that a complaint be a
model of clarity or exhaustively present the facts alleged.” Atuahene v. City of Hartford,
10 F. App’x 33, 34 (2d Cir. 2001). However, at a minimum the complaint must, “give each
defendant ‘fair notice of what the plaintiff’s claim is and the ground upon which it rests.’” Id.
(quoting Ferro v. Ry. Express Agency, Inc., 296 F.2d 847, 851 (2d Cir. 1961)). This standard is
not satisfied “[b]y lumping all the defendants together in each claim and providing no factual
basis to distinguish their conduct.” Id. at 34. Rather, a complaint should provide “specification
6
(See SAC ¶ 32 (alleging that “[t]he Staff provides deplorable service” to the Individual
Plaintiffs because food and drink deliveries are routinely late and “housekeeping does not clean”
the Suite and routinely leaves it dirty and disorganized); id. ¶ 36 (alleging a specific instance in
which “housekeeping left [the Suite] as a mess”); id. ¶ 38 (alleging that “the Staff tells” the
Individual Plaintiffs that “supervisor verification” is needed to access refrigerators in the Suite);
id. ¶ 39 (alleging that the Individual Plaintiffs are “continually harassed, followed, and
questioned by Staff”); id. ¶ 40 (alleging a specific instance in which “the Staff accused” the
Individual Plaintiffs and a guest of not paying for pizza); id. ¶ 43 (alleging a specific instance in
which Defreitas “called maintenance” and stating comments of unidentified “supervisor” in
response); id. ¶ 46 (alleging that when non-party Andrew Mapp attended events in the Suite “his
treatment by the Staff was atrocious”).)
7
For example, Plaintiffs make no allegations about specific Forest executives or
employees and the Agreement provides only that BEC “shall furnish to the Suite at its expense”
maintenance and cleaning services. (Agreement 5.) In fact, Forest is only mentioned in two
provisions of the Agreement, neither of which suggests Forest was involved in the conduct of
which Plaintiffs complain. (Id. at 4 (indemnity provision stating that BEC’s corporate affiliates
including Forest shall not be liable for injuries to persons or property caused by Ludwig’s or its
invitees); id. at 6 (insurance provision stating that Ludwig’s shall maintain commercial general
liability insurance and providing that BEC and affiliates including Forest must be named as
additional insureds).)
18
of any particular activities by any particular defendant.” In re Elevator Antitrust Litig., 502 F.3d
47, 50 (2d Cir. 2007); see In re Digital Music Antitrust Litig., 812 F. Supp. 2d 390, 417
(S.D.N.Y. 2011) (“Although Plaintiffs argue that they alleged that the [p]arent [c]ompanies were
directly involved in the alleged conspiracy, a reading of the complaint indicates otherwise. The
complaint alleges direct involvement of the [p]arent [c]ompanies by way of generic references to
‘defendants.’ This approach is insufficient.” (internal citations omitted)).
During the March 30, 2015 Hearing, counsel for both Forest and Compass argued that the
SAC failed to allege any conduct by Forest or Compass. (Tr. 55:14–18 (Forest); Tr. 49:9–20
(Compass).) In response, Plaintiffs’ counsel stated, “I don’t think [Plaintiffs] were ever aware as
to the extent of [Forest’s] . . . connection . . . with [the Arena], and until I am able to do a
deposition, I do not believe I can satisfy [the] requirement [of alleging conduct by Forest].”
(Tr. 56:19–23.) Given the dearth of any allegations of conduct by Forest or Compass, the Court
dismissed all remaining claims against Forest and Compass as insufficiently pled. See Sherman
v. Town of Chester, 752 F.3d 554, 557–58, 567 (2d Cir. 2014) (affirming dismissal of § 1981
action brought by Jewish developer who claimed town discriminated against him by perpetually
refusing to approve his subdivision proposal because, although town residents allegedly
expressed fear that proposed subdivision “might become a ‘Hassidic Village’” and plaintiff’s
model-home was allegedly vandalized with a swastika, no facts were alleged to link this conduct
to the town).
d.
Breach of contract claim against Levy
As further explained below, the Court dismissed the breach of contract claim against
Levy during the March 30, 2015 Hearing for failure to state a claim. (Tr. 68:12–21.)
Plaintiffs’ breach of contract claim is based on the Agreement entered into by Ludwig’s
19
and BEC. (SAC ¶ 63.) The SAC asserts that “Defendants have failed to perform by failing [to]
properly . . . maintain and clean [the Suite] in violation of paragraph 17b of the Agreement.” (Id.
¶ 65.) Paragraph 17 of the Agreement provides, in pertinent part: “Suite Services. During the
Term, [BEC] shall furnish to the Suite at its expense the following: . . . (b) Cleaning service,
including vacuuming, removal of debris and general cleaning of space within a reasonable time
after each Event during which [Ludwig’s] uses the Suite.” (Agreement 5, ¶ 17.) The Agreement
does not mention Levy. However, the SAC alleges that Levy provides food and beverage
services for the Suite. (SAC ¶ 18.)
In support of its motion to dismiss Plaintiffs’ breach of contract claim, Levy argued that
Plaintiffs could not state a claim against Levy pursuant to the Agreement because Levy is not a
party to the Agreement. (Compass & Levy Mem. 14–15.) In response, Plaintiffs conceded that
Levy is not a party to the Agreement but asserted that the breach claim should nonetheless be
permitted to proceed against Levy. (Opp’n to Compass & Levy Mot. 17.) Plaintiffs argued that,
although Levy is not a party to the Agreement, their breach of contract claim against Levy
should not be dismissed because “Plaintiffs would not be able to recover in unjust enrichment,”
(id.) given that “claims for unjust enrichment may be precluded by the existence of a contract
governing the subject matter of the dispute even if one of the parties to the lawsuit is not a party
to the contract,” (id. (quoting LaRoss Partners, LLC v. Contact 911 Inc., 874 F. Supp. 2d 147,
165 (E.D.N.Y. 2012))). Levy argued that Plaintiffs’ position was meritless and that the case
relied on by Plaintiffs is inapposite. (Compass & Levy Reply 7.)
“To state a claim for breach of contract under New York law, ‘the complaint must allege:
(i) the formation of a contract between the parties; (ii) performance by the plaintiff; (iii) failure
of defendant to perform; and (iv) damages.’” Orlander v. Staples, Inc., --- F.3d ---, ---, 2015 WL
20
5438783, at *3 (2d Cir. Sept. 16, 2015) (quoting Johnson v. Nextel Commc’ns, Inc., 660 F.3d
131, 142 (2d Cir. 2011)); see also Noise In the Attic Prods., Inc. v. London Records, 782
N.Y.S.2d 1, 3 (App. Div. 2004). Contracts are generally unenforceable against non-parties given
“the fundamental principle of contract law prohibiting the parties to a contract from binding
nonparties.” Davis v. Blige, 505 F.3d 90, 103 (2d Cir. 2007); see Sheldon v. Khanal, 396
F. App’x 737, 740 (2d Cir. 2010) (“We easily conclude that plaintiffs failed to state a claim for
breach of contract against the . . . defendants, as it is not alleged that they were party to any
contract with plaintiffs.”); see also Kamdem-Ouaffo v. Pepsico, Inc., No. 14-CV-227, 2015 WL
1011816, at *7 (S.D.N.Y. Mar. 9, 2015) (“It is hornbook law that an entity must be a party to a
contract for a claim of breach of that contract to lie, unless the entity has assumed or been
assigned the contract.”); Malmsteen v. Universal Music Grp., Inc., 940 F. Supp. 2d 123, 135
(S.D.N.Y. 2013) (“A contract cannot bind a non-party unless the contract was signed by the
party’s agent, the contract was assigned to the party, or the signatory is in fact the ‘alter ego’ of
the party.” (citation omitted)).
Here, Plaintiffs do not allege that Levy is a party to the Agreement. Nor do Plaintiffs
allege that the Agreement was signed by Levy’s agent or alter-ego, or that the Agreement was
assigned to Levy. Accordingly, Plaintiffs fail to state a breach claim against Levy. See Sheldon,
396 F. App’x at 740; Malmsteen, 940 F. Supp. 2d at 135. In arguing that their breach claim
should not be dismissed because the Agreement may preclude an unjust enrichment claim
against Levy, Plaintiffs rely on LaRoss Partners, LLC v. Contact 911 Inc., 874 F. Supp. 2d 147
(E.D.N.Y. 2012). (Opp’n to Compass & Levy Mot. 17.) LaRoss Partners, however, does not
support the proposition that a breach of contract claim may be stated against a non-party where
the non-party is alleged to have been unjustly enriched in connection with the contract. LaRoss
21
Partners, 874 F. Supp. 2d at 152, 165–66. In LaRoss Partners, the court determined that an
unjust enrichment claim was precluded by the existence of a contract governing the subject
matter of the dispute, notwithstanding that the claim was asserted against a non-signatory to the
contract. Id. at 165–66. Although the plaintiff in LaRoss Partners also asserted a breach of
contract claim against the non-signatory, the non-signatory did not move to dismiss the breach
claim. See id. at 169. As such, the court did not address the merits of the breach claim or the
issue of whether an otherwise deficient breach claim is viable in such circumstances due to the
unavailability of an unjust enrichment claim. The breach of contract claim against Levy was
therefore dismissed during the March 30, 2015 Hearing.
e.
Section 1981 claim against BEC and Levy
The Individual Plaintiffs allege that Defendants violated section 1981 by subjecting the
Individual Plaintiffs and their African-American guests to racial discrimination and “interfer[ing]
with Plaintiffs’ rights to make and enforce contracts.”8 (SAC ¶ 60.) Having already determined
during the March 30, 2015 Hearing that the SAC fails to state any claims against Forest and
Compass, only the section 1981 claims against BEC and Levy remain.
The SAC states the following allegations in support of the Individual Plaintiffs’ claims
under section 1981: (1) the Individual Plaintiffs are harassed by Arena staff and security
8
The SAC asserts discrimination claims under section 1981, the NYSHRL and the
NYCHRL on behalf of all Plaintiffs. (SAC ¶ 60.) In their motion to dismiss, BEC and Forest
argued that the discrimination claims on behalf of Ludwig’s should be dismissed because
the SAC fails to allege that Ludwig’s, the corporate entity, was subjected to discrimination.
(Forest & BEC Mem. 16–17.) In response, Plaintiffs argued that “Ludwig’s has been
discriminated against due to its association with the Individual Plaintiffs.” (Opp’n to Forest &
BEC Mot. 15–16.) However, at the March 30, 2015 Hearing, Plaintiffs’ counsel stated that the
discrimination claims are only asserted on behalf of the Individual Plaintiffs. (Tr. 60:9–20.) As
such, the Court only addresses the discrimination claims brought by the Individual Plaintiffs and
dismisses any discrimination claims by Ludwig’s.
22
personnel when they attend events at the Arena, (id. ¶¶ 30–31, 39); (2) the cleaning services
provided to the Suite are substandard, (id. ¶¶ 32–34, 36–37); (3) the maintenance services
provided to the Suite are substandard, (id. ¶ 43); (4) BEC has refused to interface with Defreitas
as the manager of the Suite and has not provided Defreitas with tickets to certain suite-holder
events, (id. ¶¶ 23, 28–29); (5) Defreitas’ personal items have been stolen from the Suite, (id.
¶ 42); (6) the Individual Plaintiffs and their African-American guests are subjected to
substandard food and beverage services when they use the Suite, (id. ¶¶ 32–35, 40–41, 44–45);
and (7) the Individual Plaintiffs are denied access to the refrigerators located in the Suite, (id.
¶ 38). The allegations regarding harassment by Arena staff and security, the cleaning services
provided to the Suite, the maintenance services provided to the Suite, BEC’s refusal to interface
with Defreitas and to provide him with certain tickets, and the theft of Defreitas’ personal items
appear to be based solely on conduct allegedly undertaken by employees or agents of BEC.
(Opp’n to Forest & BEC Mot. 2–3.) The food and beverage services allegations, by contrast,
appear to be based solely on conduct allegedly undertaken by employees or agents of Levy.
(Opp’n to Compass & Levy Mot. 2–3.) The Individual Plaintiffs also appear to allege that
employees or agents of both BEC and Levy have prevented them from accessing the Suite’s
refrigerators. (Opp’n to Forest & BEC Mot. 2–3; Opp’n to Compass & Levy Mot. 2–3.) BEC
and Levy argue that the allegations are insufficient to state a claim under section 1981.
Section 1981 states that:
[a]ll persons within the jurisdiction of the United States shall have
the same right in every State and Territory to make and enforce
contracts, to sue, be parties, give evidence, and to the full and equal
benefit of all laws and proceedings for the security of persons and
property as is enjoyed by white citizens, and shall be subject to like
punishment, pains, penalties, taxes, licenses, and exactions of every
kind, and to no other.
42 U.S.C. § 1981(a). For purposes of claims premised on the impairment of a plaintiff’s right to
23
make and enforce contracts, section 1981 defines the phrase “make and enforce contracts” to
include “the making, performance, modification, and termination of contracts, and the enjoyment
of all benefits, privileges, terms, and conditions of the contractual relationship.” 42 U.S.C.
§ 1981(b). To state a claim under section 1981, a plaintiff must allege that “(1) [he] is a member
of a racial minority; (2) an intent to discriminate on the basis of race by the defendant; and (3)
the discrimination concerned one or more of the activities enumerated in the statute.” Bentley,
Jr. v. Mobil Gas Station, 599 F. App’x 395, 396 (2d Cir. 2015) (quoting Mian v. Donaldson,
Lufkin & Jenrette Sec. Corp., 7 F.3d 1085, 1087 (2d Cir. 1993)). BEC and Levy argue that the
Individual Plaintiffs fail to sufficiently allege the second and third elements. (Forest & BEC
Mem. 10–15; Compass & Levy Mem. 9–14.) Because, for the reasons explained below, the
Court concludes that the Individual Plaintiffs fail to allege “circumstances giving rise to a
plausible inference of racially discriminatory intent,” Yusuf v. Vassar Coll., 35 F.3d 709, 713
(2d Cir. 1994), the second element is dispositive and the Court therefore declines to address the
sufficiency of the allegations as to the third element.
Direct evidence of discriminatory intent is not required to satisfy the second element of a
section 1981 claim, as a plaintiff may instead rely on circumstantial evidence that supports an
inference of discrimination. Lizardo v. Denny’s, Inc., 270 F.3d 94, 104 (2d Cir. 2001) (stating,
in context of reviewing grant of summary judgment dismissing § 1981 claims brought by
restaurant patrons, that “direct evidence of discrimination is not necessary” because
discrimination claims may be based on “sufficient circumstantial evidence”). An inference of
discrimination may be drawn where “similarly situated” patrons, who are not members of the
relevant protected class, are treated differently than the plaintiffs who allege discrimination
under section 1981. See id. at 101. “When plaintiffs seek to draw inferences of discrimination
24
by showing that they were ‘similarly situated in all material respects’ to the individuals to whom
they compare themselves, their circumstances need not be identical, but there should be a
reasonably close resemblance of facts and circumstances.” Id. (internal citation omitted).
At the motion to dismiss stage, a plaintiff must “specifically allege the ‘circumstances
giving rise to a plausible inference of racially discriminatory intent.’” Bentley, Jr., 599 F. App’x
at 396 (quoting Yusuf, 35 F.3d at 713). “A plaintiff’s naked allegation that the defendant acted
based on the plaintiff’s race and color is too conclusory to survive a motion to dismiss.” Id.
(citing Albert v. Carovano, 851 F.2d 561, 572 (2d Cir. 1988) (en banc)).
BEC and Levy argue that the SAC fails to sufficiently allege that the Individual Plaintiffs
were subjected to intentional discrimination due to their race. (Forest & BEC Mem. 10–15;
Compass & Levy Mem. 10–12.) Essentially, BEC and Levy contend that Plaintiffs rely on
conclusory allegations without alleging sufficient facts, (Forest & BEC Mem. 13;
Compass & Levy Mem. 10–11), and that Plaintiffs improperly state a number of allegations
“upon information and belief,” (Forest & BEC Mem. 2–3, 11–12; Compass & Levy Mem. 11).
The parties’ specific arguments as to each of the categories of allegations of discriminatory
treatment are addressed below.
i.
Harassment by Arena staff and security
In support of their claim against BEC,9 the Individual Plaintiffs allege that they are
9
The Court understands the discrimination claims based on harassment by Arena staff
and security to be asserted against BEC only because, as discussed above, the allegations
regarding harassment by Arena staff and security appear to be based solely on conduct allegedly
undertaken by the employees or agents of BEC. (Compare Opp’n to Forest & BEC Mot. 3
(reciting allegations regarding harassment by Arena staff and security in statement of facts
included in opposition to BEC’s motion), with Opp’n to Compass & Levy Mot. 2–3 (including
no allegations regarding harassment by Arena staff and security in statement of facts set forth in
opposition to Levy’s motion).)
25
“continually harassed, followed, and questioned” when they attend events at the Arena, and that,
“upon information and belief, non-African-American patrons are not treated this way by the
Staff.” (Id. ¶ 39.) Plaintiffs also allege, upon information and belief, that BEC “directed Saurs
to treat Defreitas suspiciously based on his race.” (Id. ¶ 30.) Specifically, Plaintiffs allege that
on two occasions Saurs asked Defreitas why he was frequently at the Arena and, during the
second encounter, Saurs told Defreitas that he had a background in law enforcement and stated
“sometimes I have to be the bad guy.” (Id. ¶ 30.) The Individual Plaintiffs also allege that on
one occasion they overheard a radio communication indicating that “the people in [the] Suite
were considered a security threat” and, shortly thereafter, security raided another suite located in
the Arena. (Id. ¶ 31.) The Individual Plaintiffs further allege, upon information and belief, that
security’s actual intent had been to conduct the raid in the Suite but, due to a mistake, the raid
was carried out in another suite. (Id.) Plaintiffs argue that asserting their allegations on
information and belief is appropriate as to the treatment of non-African-American patrons by
Arena staff and security, BEC’s instruction to Saurs regarding Defreitas, and the raid of a
neighboring suite because these allegations pertain to facts within the exclusive possession and
control of BEC. (Opp’n to Forest & BEC Mot. 5, 14–15.) With respect to the alleged instruction
to Saurs, Plaintiffs assert that the Individual Plaintiffs “were not present when BEC directed its
employees to treat Plaintiff Defreitas suspiciously because of his race, such information is
company policy and is therefore within the sole control of Defendants.” (Id. at 5 (internal
citation omitted).) Similarly, Plaintiffs argue that they “cannot allege definitively that [the raid]
was intended for [the Suite] because this information is also within the sole control of the
Defendants.” (Id. (internal citation omitted).)
BEC argues that Plaintiffs’ allegations are conclusory and otherwise insufficient to
26
support a plausible inference of discriminatory intent. BEC asserts that Plaintiffs fail to allege
any facts to suggest a plausible basis for the “information and belief” that, in contrast to the
Individual Plaintiffs, non-African-American patrons are not “continually harassed, followed, and
questioned.” (Forest & BEC Mem. 11–12; Forest & BEC Reply 6.) In addition, BEC argues
that Plaintiffs misstate the circumstances in which it is appropriate to assert allegations upon
information and belief and fail to appreciate that such allegations must be accompanied by facts
on which the belief is founded. (Forest & BEC Reply 5.) BEC also contends that “Plaintiffs fail
to articulate any basis whatsoever for their supposed belief that BEC instructed Saurs to [treat
Defreitas suspiciously based on his race].” (Forest & BEC Reply 6; see Forest & BEC Mem. 11,
16.) BEC argues that Saurs’ alleged conduct during the specific instances cited by Plaintiffs
does not support a plausible inference of discriminatory intent. (Forest & BEC Reply 6 n.7.)
BEC further argues that Plaintiffs fail to plead any facts as to the basis for their belief regarding
the intended target of the raid conducted by security, (Forest & BEC Mem. 11–12), and that
Plaintiffs fail to allege a connection between the raid and the Individual Plaintiffs’ race in any
event because “Plaintiffs have actually alleged that Arena security’s actions
were . . . [undertaken] because ‘people in [the Suite] were considered a security threat,’” (Forest
& BEC Reply 7).
“When a plaintiff sets out allegations on information and belief, he is representing that he
has a good-faith reason for believing what he is saying, but acknowledging that his allegations
are based on secondhand information that [he] believes to be true.” Pirelli Armstrong Tire Corp.
Retiree Med. Benefits Trust v. Walgreen Co., 631 F.3d 436, 442 (7th Cir. 2011) (internal
quotation marks and citation omitted) (alteration in original). The Second Circuit has explained
that the “Twombly plausibility standard . . . does not prevent a plaintiff from pleading facts
27
alleged ‘upon information and belief’ where the facts are peculiarly within the possession and
control of the defendant.” Arista Records, LLC v. Doe 3, 604 F.3d 110, 120 (2d Cir. 2010).
Some district courts in this Circuit have required that allegations upon information and belief be
accompanied by a statement of the facts upon which the belief is founded. See JBCHoldings NY,
LLC v. Pakter, 931 F. Supp. 2d 514, 527 (S.D.N.Y. 2013) (“[A]lthough a plaintiff may [plead
facts upon information and belief] where the facts are peculiarly within the possession and
control of the defendant or where the belief is based on factual information that makes the
inference of culpability plausible, such allegations must be accompanied by a statement of the
facts upon which the belief is founded.” (citations omitted)); Prince v. Madison Square Garden,
427 F. Supp. 2d 372, 385 (S.D.N.Y. 2006) (“[A]llegations pled on ‘information and belief’ are
proper if ‘accompanied by a statement of the facts upon which the belief is founded.’”); see also
Sanders v. Grenadier Realty, Inc., 367 F. App’x 173, 175 (2d Cir. 2010) (affirming dismissal of
discrimination claim under Fair Housing Act for failure to state a claim where plaintiffs alleged
racial animus based on facts pled on information and belief and “plaintiffs allege[d] no basis for
the ‘information and belief’ on which their assertion” was based).
Here, the Court has no basis from which to infer that Plaintiffs’ belief regarding BEC’s
alleged instruction to Saurs is other than pure speculation and that facts in BEC’s exclusive
possession may plausibly support this contention. Nor do the allegations regarding Defreitas’
encounters with Saurs support a plausible inference of any connection between Defreitas’ race
and Saurs’ questions about why Defreitas was frequently at the Arena or between Defreitas’ race
and Saurs’ comments about his law enforcement background and being “the bad guy.” In
addition, the Court has no basis from which to infer that Plaintiffs’ belief that Arena security
intended to raid the Suite is more than speculation. However, even if Arena security did intend
28
to raid the Suite, the allegations suggest that Arena security’s interest in raiding the Suite was
connected to the determination that “people in [the] Suite were considered a security threat.”
(SAC ¶ 31.) There are no allegations in the SAC to support an inference that this security threat
determination was connected to the race of the Individual Plaintiffs and their guests. See Yusuf,
35 F.3d at 714 (affirming dismissal of § 1981 claim for failure to state a claim and concluding
that plaintiff failed to sufficiently allege discriminatory intent because “the abundance of other
possible reasons for the [challenged conduct] combined with the lack of any specific factual
support for [the plaintiff’s] claim of a racial motivation illustrate[d]” that the claim was based on
a “naked allegation” of racial discrimination). Therefore, the Individual Plaintiffs fail to
plausibly allege discriminatory intent based on the allegations regarding harassment by Arena
staff and security.
ii.
Cleaning services
In support of their claim against BEC based on substandard cleaning services,10 Plaintiffs
allege that “housekeeping does not clean [the Suite] without a specific request, routinely leaving
it dirty and disorganized.” (SAC ¶ 32.) Plaintiffs also allege that “housekeeping service is
proper” when the Suite hosts “numerous” Caucasian guests, (id. ¶ 33), and that “housekeeping
service is proper at other suites, which are licensed by non-African Americans, and which host
non-African Americans,” (id. ¶ 34). Plaintiffs allege a specific instance in which Pratt was
cleaning the Suite himself because “housekeeping [had] left it as a mess” when a patron from the
10
The Court understands the discrimination claims based on the cleaning services
provided to the Suite to be asserted against BEC only because, as discussed above, the cleaning
service allegations appear to be based solely on conduct allegedly undertaken by the employees
or agents of BEC. (Compare Opp’n to Forest & BEC Mot. 2–3 (reciting allegations regarding
cleaning services provided to the Suite in statement of facts included in opposition to BEC’s
motion), with Opp’n to Compass & Levy Mot. 2–3 (including no allegations regarding cleaning
services provided to the Suite in statement of facts set forth in opposition to Levy’s motion).)
29
neighboring CBS Radio suite observed Pratt cleaning and was “shocked” and asked Pratt why
housekeeping was not cleaning the Suite. (Id. ¶ 36.) Plaintiffs further allege that the CBS suite
is “regularly and immaculately cleaned.” (Id. ¶ 37.) In addition, during the March 30, 2015
Hearing, Plaintiffs’ counsel asserted that the CBS Radio suite is “run by various white people.”
(Tr. 26:14–19.)
Plaintiffs contend that the SAC provides sufficient allegations “based on the personal
knowledge of the Plaintiffs” that “specifically demonstrate the disparate treatment afforded to
Plaintiffs, and their non-Caucasian guests, as compared to the treatment afforded the Caucasian
licensees and guests.” (Opp’n to Forest & BEC Mot. 10.) BEC contends that Plaintiffs fail to
plead any specific facts to support a plausible inference of discriminatory intent based on the
allegations regarding cleaning services. (Forest & BEC Mem. 13.) BEC also argues that
Plaintiffs’ contention that “housekeeping service is proper at other suites, which are licensed by
non-African Americans, and which host non-African Americans,” (SAC ¶ 34), is not sufficient to
allege that the other suites are similarly situated comparators because “Plaintiffs have not even
endeavored to allege or explain how or at what events the suites were treated differently,” (Forest
& BEC Reply 8). During the March 30, 2015 Hearing, counsel for BEC also argued that the
allegations regarding the CBS Radio suite and the encounter between Pratt and the CBS Radio
patron are insufficient because the SAC does not allege sufficient facts to suggest the two suites
are similarly situated. (See Tr. 13:16–14:2, 34:20–39:8.)
Plaintiffs have not alleged sufficient facts to support a plausible inference that BEC’s
alleged failure to provide adequate cleaning services to the Suite was racially motivated.
Plaintiffs allege that, although the Suite is generally left “dirty and disorganized,” (SAC ¶ 32),
“housekeeping service is proper” when the Suite hosts Caucasian guests, (id. ¶ 33). However,
30
the Agreement states that BEC is required to provide cleaning services “within a reasonable time
after each Event during which Licensee uses the Suite.” (Agreement 5, ¶ 17(b) (emphasis
added).) In contrast to food and beverage services, which are necessarily provided
contemporaneously with the Suite’s use during events, (see id. 4–5, ¶ 15), the individual BEC
employees tasked with cleaning the Suite are not obligated to do so until after the Individual
Plaintiffs and their guests have used it during an event and Plaintiffs have not alleged otherwise.
Thus, the circumstances under which food and beverage services are provided to the Suite are
such that the Court can infer the individual employees responsible for such services were aware
of the race of the Individual Plaintiffs and their guests upon serving the Suite. However, the
circumstances under which cleaning services are provided — after events and, presumably, in
the absence of the Individual Plaintiffs and their African-American guests — do not give rise to a
similar inference with respect to the individual employees responsible for cleaning the Suite.
Nor have Plaintiffs alleged any facts about the particular people who cleaned the Suite, or the
particular circumstances under which the Suite was cleaned, to support an inference that the
individuals who cleaned the Suite had a way of knowing whether it had been used to host
African-American or Caucasian guests such that they were in a position to modify the quality of
the cleaning services accordingly. See Pourghoraishi v. Flying J, Inc., 449 F.3d 751, 758–59
(7th Cir. 2006) (upholding grant of summary judgment as to section 1981 claim because
defendant had no way of knowing plaintiff’s race at time of allegedly discriminatory conduct), as
amended on denial of reh’g (May 25, 2006).
Plaintiffs’ cleaning-services claim is premised on the alleged discrepancies between
(1) the cleaning services provided to the Suite depending on whether it is used to host
African-American or Caucasian guests and (2) the cleaning services provided to the Suite and the
31
Arena’s other suites. However, Plaintiffs fail to allege specific facts and instead rely solely on a
series of adjectives which Plaintiffs use to characterize the nature of the cleaning services
provided in each case and the condition in which the Suite is generally left. Specifically,
Plaintiffs allege that the cleaning services provided to the Suite are “deplorable,” (SAC ¶ 32),
that the Suite is “routinely le[ft] [] dirty and disorganized,” (id.), that “proper” cleaning services
are provided to the other suites in the Arena and to the Suite when it hosts Caucasian guests, (id.
¶¶ 33–34), and that the CBS Radio suite is “immaculately cleaned,” (id. ¶ 37). Given their
failure to allege facts to support these descriptive and conclusory allegations, the Individual
Plaintiffs fail to state a claim based on the cleaning services provided to the Suite. See Green v.
McLaughlin, 480 F. App’x 44, 49 (2d Cir. 2012) (affirming dismissal of prisoner’s Eighth
Amendment excessive force claim based on encounter with correctional officers because,
“[a]lthough [the plaintiff] characterize[d] his encounter with the officers as an ‘attack,’” the
plaintiff failed to allege facts about the encounter and, as such, the court had no basis to infer that
the officers’ conduct constituted cruel and unusual punishment); see also DM Research, Inc. v.
Coll. of Am. Pathologists, 170 F.3d 53, 55 (1st Cir. 1999) (“While the plaintiff’s ‘facts’ must be
accepted as alleged, this does not automatically extend to . . . subjective characterizations . . . .”
(citation omitted)); Fisher Bros. Sales v. United States, 46 F.3d 279, 286 (3d Cir. 1995)
(affirming dismissal of claims brought under Federal Tort Claims Act and stating “the fact that
we must accept the plaintiffs’ version of the facts as true does not mean that we must accept
plaintiffs’ characterization of those facts”).
In addition, the Court is not persuaded that a single specific reference to the alleged
discrepancy between the cleaning services provided to the Suite and the CBS Radio suite on a
single occasion, (see SAC ¶ 36), is sufficient to infer that racial animus is a plausible
32
explanation. Therefore, the Individual Plaintiffs fail to plausibly allege discriminatory intent
based on the cleaning-services allegations.
iii. Maintenance services
In support of their claim against BEC based on substandard maintenance services,
Plaintiffs allege that, on one occasion when Defreitas was using the Suite, he “called
maintenance to secure a TV that was falling from the wall,” and the supervisor who responded
stated, “did you or one of the kids pull the TV off of the wall? TV’s don’t just fall off walls!”
(SAC ¶ 43.) Plaintiffs further allege that, when Defreitas explained “that no one had touched the
TV,” the supervisor stated, “it was just a question, it’s weird that a TV would just fall off the
wall.” (Id.) Plaintiffs fail to plead any facts to suggest a connection between the alleged
condition of the television located in the Suite or Defreitas’ encounter with the supervisor, and
the race of the Individual Plaintiffs or their guests. Therefore, the Individual Plaintiffs fail to
plausibly allege discriminatory intent based on the maintenance services allegations.
iv. BEC’s refusal to interface with Defreitas
Plaintiffs allege that BEC has refused to send correspondence, tickets and invitations to
Defreitas in his capacity as “manager” of the Suite. (SAC ¶ 23.) Plaintiffs allege that, at the
time when BEC and Ludwig’s entered the Agreement, Mastrota advised BEC that Defreitas
would be managing the Suite and directed BEC to send all correspondence and tickets directly to
Defreitas. (Id.) Plaintiffs also allege that BEC ignored these requests and instead sent all
correspondence and tickets to Mastrota, (id.), including an invitation to a dinner organized for
suite holders, (id. ¶ 28). Plaintiffs further allege that Defendants did not provide them with
tickets to certain “special events,” including the “Legends Classic 2013,” even though Plaintiffs
were entitled to such tickets under the Agreement. (Id. ¶ 29.) When Mastrota reiterated his
33
instructions to BEC regarding Defreitas, BEC “refused to work through Defreitas.” (Id. ¶ 23.)
Plaintiffs have not stated any allegations that suggest BEC’s failure to re-direct
correspondence and tickets from Mastrota to Defreitas was related to Defreitas’ race. Although
Plaintiffs allege Mastrota advised BEC of Defreitas’ appointment at the time the parties entered
the Agreement, the Agreement does not reflect Defreitas’ appointment as Suite manager. The
integration clause included in the Agreement provides, in pertinent part:
This License Agreement is an integrated contract which contains all
agreements of the parties with respect to the License, the Suite, the
Arena and any other subject hereof.
No other prior or
contemporaneous agreement or understanding pertaining to the
Suite shall be effective. This License Agreement may be modified
in writing only, signed by the parties in interest at the time of the
modification.
There are no oral or written statements,
representation, agreements or understandings that modify, amend or
vary any of the terms of this License Agreement.
(Agreement 6, ¶ 23; see also id. at 4, ¶ 8 (provision precluding transfers or assignments).) Thus,
the terms of the Agreement requiring written modifications undermine Plaintiffs’ allegation, as it
is possible that BEC failed to re-direct correspondence, tickets and invitations to Defreitas, not
because of Defreitas’ race, but because BEC did not view Defreitas’ appointment as Suite
“manager” as a valid modification of the Agreement, which is a valid and non-discriminatory
explanation. See Yusuf, 35 F.3d at 714 (affirming dismissal of § 1981 claim and noting that
“[the] complaint itself identifies a number of other, race-neutral factors that may have led to” the
challenged conduct); Rodriguez v. City of New York, No. 13-CV-6552, 2014 WL 1399415, at
*3–4 (E.D.N.Y. Apr. 10, 2014) (granting motion to dismiss employment discrimination claims
because, although plaintiff alleged that she was subjected to discrimination on the basis of race
and gender, “[plaintiff’s] own complaint seem[ed] to offer an alternative, nondiscriminatory
reason for the” challenged conduct); Hussey v. N.Y.S. Dep’t of Law/Office of Atty. Gen., 933 F.
Supp. 2d 399, 407–08 (E.D.N.Y. 2013) (granting motion to dismiss employment discrimination
34
claims because allegations failed to support a plausible inference of racially discriminatory intent
where “plaintiff’s own [c]omplaint provide[d] at least two additional nondiscriminatory reasons
for” the challenged conduct). Plaintiffs have therefore failed to allege facts supporting a
plausible inference that BEC’s alleged refusal to “work through” Defreitas was motivated by
discriminatory intent.
v.
Theft of Defreitas’ personal items
In support of their claim against BEC,11 Plaintiffs allege that “on numerous occasions”
Defreitas’ personal items have been stolen from the Suite when the Individual Plaintiffs and their
guests were not present. (SAC ¶ 42.) Plaintiffs fail to allege any facts to suggest a connection
between Defreitas’ race and the theft of his belongings. Plaintiffs therefore fail to plausibly
allege that the theft of Defreitas’ belongings was motivated by discriminatory intent.
vi. Food and beverage services
In support of their claim against Levy,12 Plaintiffs allege that the Individual Plaintiffs and
their African-American guests are subjected to “deplorable” food and beverage service when
11
The Court understands the discrimination claim based on the theft of Defreitas’
personal items to be asserted against BEC only because, as discussed above, the allegations
regarding the theft of Defreitas’ personal items appear to be based solely on conduct allegedly
undertaken by the employees or agents of BEC. (Compare Opp’n to Forest & BEC Mot. 3
(reciting allegation regarding the theft of personal items from the Suite in statement of facts
included in opposition to BEC’s motion), with Opp’n to Compass & Levy Mot. 2–3 (including
no allegation regarding theft of personal items in statement of facts set forth in opposition to
Levy’s motion).)
12
The Court understands the discrimination claims based on the food and beverage
services provided to the Suite to be asserted against Levy only because, as discussed above, the
allegations regarding food and beverage services appear to be based solely on conduct allegedly
undertaken by the employees or agents of Levy. (Compare Opp’n to Compass & Levy Mot. 2–3
(reciting allegations regarding food and beverage services provided to the Suite in statement of
facts included in opposition to Levy’s motion), with Opp’n to Forest & BEC Mot. 2–3 (including
no allegations regarding food and beverage services in statement of facts set forth in opposition
to BEC’s motion).)
35
they use the Suite based on three specific instances. (Id. ¶ 32.) During the first instance, the
Individual Plaintiffs were accused of not paying for a pizza and Pratt was then charged $1,000
for the pizza, (id. ¶ 40); during the second instance, Defreitas and a “dark-skinned” guest were
made to wait in excess of forty-five minutes for food and drinks they had ordered, ice was
delivered to them in a “dirty” bucket, and Defreitas’ guest was overcharged, (id. ¶ 41); and
during the third instance, Defreitas and his African-American guests were made to wait an hour
for the French fries they ordered to be delivered, (id. ¶ 44). Plaintiffs further allege that, when
the Suite hosts Caucasian guests, such delays do not occur, (id. ¶ 45), and food service is
“proper,” (id. ¶ 33). Plaintiffs allege that “proper” food and beverage service is provided to the
Arena’s other suites, which are licensed and frequented by non-African-American patrons. (Id.
¶ 34.) Finally, Plaintiffs allege “upon information and belief, [that] Levy executives have
directed their staff to provide subpar” services to the Suite, (id. ¶ 35.), and Levy “supervisor”
Beckerman “has [] warned Levy employees to avoid [the Suite],” (id. ¶¶ 48, 50).
Levy argues that Plaintiffs fail to allege facts that support a plausible inference of
discriminatory intent based on the food and beverage services provided to the Individual
Plaintiffs and their African-American guests. (Compass & Levy Mem. 11.) Levy also argues
that Plaintiffs fail to allege any facts as to the basis for their belief that Levy executives issued
the directive to their staff. (Id.) Levy further argues that, even assuming Beckerman warned
Levy staff to avoid the Suite, Plaintiffs fail to allege facts to suggest a connection between
Beckerman’s warning and the Individual Plaintiffs’ race. (Compass & Levy Reply 4.) Plaintiffs
argue that the directive from Levy executives is properly alleged on information and belief
because “Plaintiffs were not at the meeting when [Levy executives] directed [their] employees to
provide subpar service to [the Suite], [and] such information is company policy and is therefore
36
within the sole control and knowledge of Defendants.” (Opp’n to Compass & Levy Mot. 6.)
Plaintiffs also contend that the SAC pleads sufficient facts to allege discriminatory intent
because Plaintiffs allege that Beckerman “warned Levy employees to avoid [the Suite], [and]
thereby provide[] subpar service to the Individual Plaintiffs and their guests.” (Id. at 11–12.)
The food and beverage service allegations are not sufficient to allege discriminatory
intent. First, the conduct alleged during the three instances specified — in which Levy
employees were allegedly responsible for delayed food deliveries, erroneous charges and a
“dirty” ice bucket — does not, by itself, give rise to a plausible inference of discriminatory
intent. See Bentley v. Mobil Gas Station, No. 12-CV-6586, 2014 WL 1478697, at *1–2
(W.D.N.Y. Apr. 15, 2014) (dismissing § 1981 claim because plaintiff failed to allege any facts to
suggest a racial motivation for conduct of gas station employees who served other customers
prior to plaintiff and then banned plaintiff from store), aff’d sub nom., Bentley, Jr., 599 F. App’x
at 396. Second, while Plaintiffs allege that “proper” and prompt food and beverage service is
provided to the other suites in the Arena and to the Suite when it hosts Caucasian guests, these
allegations are descriptive and conclusory and are not supported by any specific factual
allegations. Finally, even assuming Levy executives directed employees to provide subpar
service to the Suite and Beckerman warned employees to avoid the Suite, the Court has no basis
to infer a connection between these instructions and the race of the Individual Plaintiffs and their
guests. See Watson v. N.Y. Pressman’s Union No. 2, 444 F. App’x 500, 502 (2d Cir. 2011);
Yusuf, 35 F.3d at 714. Plaintiffs therefore fail to sufficiently allege discriminatory intent based
on the allegations regarding food and beverage services.
vii. Access to Suite refrigerators
In support of their claims against both BEC and Levy, the Individual Plaintiffs allege that
37
they are “routinely” denied access to refrigerators located in the Suite despite their entitlement to
access the refrigerators as reflected by the inclusion of their names on an “access list.” (SAC
¶ 38.) The Individual Plaintiffs further allege that they are directed to obtain verification from a
supervisor, and access is often still denied even after they obtain such verification. (Id.)
Plaintiffs do not allege any facts to support a connection between the limitations imposed on
their access to the Suite refrigerators and their race. See Bentley, Jr., 599 F. App’x at 396.
Plaintiffs have therefore failed to allege facts that support a plausible inference of discriminatory
intent based on the extent of their access to the Suite refrigerators.
For the reasons set forth above, the Individual Plaintiffs fail to sufficiently allege
discriminatory intent in support of their section 1981 claims against BEC based on the alleged
harassment by Arena staff and security, the cleaning services allegations, the maintenance
services allegations, BEC’s refusal to interface with Defreitas, and the theft of Defreitas’
personal items. The Individual Plaintiffs also fail to sufficiently allege discriminatory intent in
support of their section 1981 claim against Levy based on the food and beverage services
allegations, and their claims against BEC and Levy based on allegations regarding the Suite
refrigerators. Because the Individual Plaintiffs’ failure to sufficiently allege discriminatory
intent is dispositive, the Court concludes that the Individual Plaintiffs fail to state a claim under
section 1981 and grants the motions by BEC and Levy as to the Individual Plaintiffs’ section
1981 claims.13
f.
NYSHRL claims against BEC and Levy
Plaintiffs allege that BEC and Levy violated the Individual Plaintiffs’ rights under the
13
Because of the Court’s ruling on Plaintiffs’ failure to allege discriminatory intent, the
Court does not address BEC and Levy’s additional arguments in support of their motions to
dismiss the section 1981 claims.
38
NYSHRL by discriminating against the Individual Plaintiffs and their African-American guests
on the basis of race. (SAC ¶¶ 54–55.)
The NYSHRL states, in relevant part:
It shall be an unlawful discriminatory practice for any person, being
the owner, lessee, proprietor, manager, superintendent, agent or
employee of any place of public accommodation, resort or
amusement, because of the race, . . . of any person, directly or
indirectly, to refuse, withhold from or deny to such person any of
the accommodations, advantages, facilities or privileges
thereof . . . .
N.Y. Exec. Law § 296(2)(a). A plaintiff must sufficiently allege that the defendant intended to
discriminate on the basis of race to state a claim under both section 1981 and the NYSHRL. See
Self v. Dep’t of Educ. of the City of N.Y., 844 F. Supp. 2d 428, 434, 436–38, 439 (S.D.N.Y. 2012)
(granting defendants’ motion for summary judgment as to discrimination claims under § 1981
and NYSHRL because plaintiff failed to establish racial animus); Perez Rivera v. Hertz Corp.,
990 F. Supp. 234, 236–37 (S.D.N.Y. 1997) (“To establish a claim under section 1981 or the
NY[S]HRL, plaintiffs must prove that . . . [the] defendant’s actions were purposefully
discriminatory and racially motivated.”). Therefore, the Court need not conduct a separate
analysis. For the reasons set forth above with respect to the section 1981 claims, the Individual
Plaintiffs fail to sufficiently allege discriminatory intent in support of their NYSHRL claims.
The Individual Plaintiffs therefore fail to state a claim under the NYSHRL against BEC or Levy
and the motions are granted as to the NYSHRL claims.
g.
NYCHRL claims against BEC and Levy
Plaintiffs allege that BEC and Levy violated the Individual Plaintiffs’ rights under the
NYCHRL by discriminating against the Individual Plaintiffs and their African-American guests
on the basis of race. (SAC ¶¶ 69–71.)
The NYCHRL states, in relevant part:
39
It shall be an unlawful discriminatory practice for any person, being
the owner, lessee, proprietor, manager, superintendent, agent or
employee of any place or provider of public accommodation,
because of the actual or perceived race . . . of any person, directly or
indirectly, to refuse, withhold from or deny to such person any of
the accommodations, advantages, facilities or privileges
thereof . . . .
N.Y.C. Admin. Code § 8-107(4)(a). “[C]ourts must analyze NYCHRL claims separately and
independently from any federal and state law claims, construing the NYCHRL’s provisions
‘broadly in favor of discrimination plaintiffs, to the extent that such a construction is reasonably
possible.’” Mihalik v. Credit Agricole Cheuvreux N. Am., Inc., 715 F.3d 102, 109 (2d Cir. 2013)
(citations omitted). “To state a claim for discrimination under the NYCHRL, a plaintiff must
only show differential treatment of any degree based on a discriminatory motive . . . .”
Gorokhovsky v. N.Y.C. Hous. Auth., 552 F. App’x 100, 102 (2d Cir. 2014) (citing Mihalik, 715
F.3d at 114). However, even under this more liberal pleading standard, a plaintiff must still
plausibly allege that he was subjected to unequal treatment because of his protected
characteristic. See Mihalik, 715 F.3d at 110 (“[D]istrict courts must be mindful that the
NYCHRL is not a ‘general civility code.’ The plaintiff still bears the burden of showing that the
conduct is caused by a discriminatory motive.”); LaSalle v. City of New York, No. 13-CV-5109,
2015 WL 1442376, at *6 (S.D.N.Y. Mar. 30, 2015) (granting motion to dismiss race
discrimination claim under NYCHRL because, notwithstanding “the more lenient standard of the
NYCHRL,” plaintiff failed to allege facts supporting an inference that “she was treated ‘less
well’ than other employees because of her race”); see also Sosa v. Local Staff, LLC, 618
F. App’x 19, 20 (2d Cir. 2015) (“Although we construe the NYCHRL more broadly than its
federal and state counterparts, we recognize that it still does not operate as a general civility
code.” (internal quotation marks and citations omitted)).
As discussed above with respect to the section 1981 claims, the Individual Plaintiffs fail
40
to allege facts that support a plausible inference of discriminatory intent and, therefore, they
cannot state a claim under the NYCHRL. Accordingly, the Court grants the motions and
dismisses the NYCHRL claims against BEC and Levy.
h.
Supplemental jurisdiction over breach of contract claims against BEC
Having dismissed all of Plaintiffs’ federal claims — under sections 1983 and
1981 — over which the Court had original jurisdiction, the Court declines to exercise
supplemental jurisdiction over Plaintiffs’ remaining breach of contract claims against BEC.14
District courts have supplemental jurisdiction over state law claims “in any civil action of
which the district court[] ha[s] original jurisdiction,” provided the claims “are so related to
claims in the action . . . that they form part of the same case or controversy under Article III of
the United States Constitution.” 28 U.S.C. § 1367(a); Montefiore Med. Ctr. v. Teamsters Local
272, 642 F.3d 321, 332 (2d Cir. 2011) (noting that federal courts may exercise supplemental
jurisdiction when federal claims and state claims “stem from the same ‘common nucleus of
operative fact’” (quoting United Mine Workers of Am. v. Gibbs, 383 U.S. 715, 725 (1966))). A
district court “may decline to exercise supplemental jurisdiction over a claim . . . if . . . the
district court has dismissed all claims over which it has original jurisdiction.”15 28 U.S.C.
14
The SAC asserts a breach of contract claim pursuant to paragraph 17(b) of the
Agreement on behalf of all Plaintiffs. (SAC ¶¶ 62–67.) As the Court dismissed the breach
claims against Forest, Compass and Levy during the March 30, 2015 Hearing for the reasons set
forth above, only the breach claims against BEC remain. While BEC moved to dismiss the
Individual Plaintiffs’ breach of contract claim, it did not challenge the breach claim asserted by
Ludwig’s. (Forest & BEC Mem. 17.) Because the Court declines to exercise supplemental
jurisdiction over the breach of contract claims, the Court does not address the sufficiency of the
Individual Plaintiffs’ breach claim against BEC pursuant to the Agreement.
15
The Court may decline to exercise supplemental jurisdiction over Plaintiffs’ breach of
contract claims notwithstanding the Court’s decision to exercise supplemental jurisdiction over
the merits of the Individual Plaintiffs’ NYSHRL and NYCHRL claims. See McCaul v. Ardsley
41
§ 1367(c)(3); Alliance of Auto. Mfrs., Inc. v. Currey, --- F. App’x ---, ---, 2015 WL 1529018, at
*3 (2d Cir. Apr. 7, 2015) (holding it was “not improper for the court to decline to exercise its
supplemental jurisdiction” after it properly dismissed the plaintiff’s constitutional claims);
Purgess v. Sharrock, 33 F.3d 134, 138 (2d Cir. 1994) (“[I]f the federal claims are dismissed
before trial, even though not insubstantial in a jurisdictional sense, the state claims should be
dismissed as well.” (alteration in original) (quoting Castellano v. Bd. of Trustees, 937 F.3d 752,
758 (2d Cir. 1991))). Accordingly, Plaintiffs’ breach of contract claims against BEC are
dismissed without prejudice.
III. Conclusion
For the foregoing reasons, the Court grants BEC’s motion to dismiss the SAC in part and
grants Levy’s motion to dismiss in its entirety. The Court dismisses Plaintiffs’ section 1981,
NYSHRL and NYCHRL claims against BEC and declines to exercise supplemental jurisdiction
over Plaintiffs’ breach of contract claims against BEC.
SO ORDERED:
s/ MKB
MARGO K. BRODIE
United States District Judge
Dated: March 4, 2016
Brooklyn, New York
Union Free Sch. Dist., 514 F. App’x 1, 4–6 (2d Cir. 2013) (holding that district court did not
abuse its discretion in exercising supplemental jurisdiction to decide motion to dismiss one state
law claim while declining to exercise supplemental jurisdiction over another state law claim and
noting that the elements of the state law claim dismissed pursuant to Rule 12(b)(6) were
“substantially the same” as those of the federal claim); see also 32A Am. Jur. 2d Federal Courts
§ 615 (“A court may decline supplemental jurisdiction at any stage of litigation, and the fact that
it may have previously exercised such jurisdiction is not a bar to later relinquishing it.”).
42
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