Sullivan v. RCI Dining Services (Round Rock), Inc.
Filing
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REPORT AND RECOMMENDATIONS re #41 Motion for Leave to File Document, filed by Rosemary Claus Sullivan, Aaron Brothers. Signed by Judge Mark Lane. (jk)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS
AUSTIN DIVISION
ROSEMARY CLAUS SULLIVAN, AND
AARON BROTHERS AS INDEPENDENT
EXECUTOR OF THE ESTATE OF
WILLIAM
SLADE
SULLIVAN,
DECEASED,
Plaintiffs,
V.
THE CITY OF ROUND ROCK, TEXAS;
OFFICERS N.J. ZOSS, K.A. MAYO, AND
A.P. BALLEW; AND RICK’S CABARET
INTERNATIONAL, INC. A/K/A RCI
DINING SERVICES (ROUND ROCK)
INC.
A/K/A
RCI
HOSPITALITY
HOLDINGS, INC.,
Defendants.
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A-14-CV-349-LY-ML
REPORT AND RECOMMENDATION
OF THE UNITED STATES MAGISTRATE JUDGE
TO THE HONORABLE LEE YEAKEL
UNITED STATES DISTRICT JUDGE
Before the Court are Plaintiffs’ Motion for Leave to File Plaintiffs’ Third Amended
Complaint [Dkt. #41], RCI Hospitality Holdings, Inc. F/K/A Rick's Cabaret International, Inc.'s
Memorandum in Opposition to Plaintiffs’ Motion for Leave to File Plaintiffs’ Third Amended
Complaint [Dkt. #44], and Plaintiffs’ Reply to Response to Motion for Leave to File Plaintiffs’
Third Amended Complaint [Dkt. #48]. The Motions were referred by United States District
Judge Lee Yeakel to the undersigned on June 22, 2015 for a Report and Recommendation as to
the merits pursuant to 28 U.S.C. § 636(b), Rule 72 of the Federal Rules of Civil Procedure, and
Rule 1(d) of Appendix C of the Local Rules of the United States District Court for the Western
District of Texas. After reviewing the pleadings, the relevant case law, as well as the entire case
file, the undersigned issues the following Report and Recommendation to the District Court.
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I. BACKGROUND
The factual allegations underlying this case are set forth in detail in the prior Report and
Recommendation dated December 29, 2014 [Dkt. #29] and adopted in all respects on March 18,
2015 [Dkt. #37]. In brief, Plaintiff Rosemary Claus Sullivan, the mother of William Slade
Sullivan, and Aaron Brothers, independent executor of Sullivan’s estate, (collectively,
“Plaintiffs”) bring claims against the City of Round Rock Texas and officers N.J. Zoss, K.A.
Mayo, and A.P. Ballew (collectively, the “City Defendants”) for excessive force resulting in
Sullivan’s wrongful death. Plaintiffs also bring pendent state law claims against Rick’s Cabaret
International, Inc., a/k/a RCI Hospitality holdings, Inc. (“RCI Hospitality”) for negligent
undertaking and violations of the Texas Dram Shop Act. All of Plaintiffs’ claims arise out of the
factual allegations summarized below, which are set out in greater detail (including record
citations) in the prior Report and Recommendation dated December 29, 2014 [Dkt. #29]
A. Factual Allegations
According to Plaintiffs, decedent Sullivan was a regular at Rick’s Cabaret, and the
employees of Rick’s often served him to the point of intoxication past the legal limit to drive an
automobile. Plaintiffs allege Rick’s employees routinely gave Sullivan a ride home, called him a
cab, or otherwise arranged for his safe transportation on these occasions. On the night in
question, employees of Rick’s allegedly texted Sullivan and encouraged him to come drink at
Ricks, promising to get him and his vehicle safely home afterward. Rick’s employees allegedly
provided bottle service to Sullivan and continued to serve him until after 3 in the morning. At
that point, a disagreement about the bill cropped up, and a manager of Rick’s told Sullivan they
would not be driving him home or paying for a taxi. Sullivan then obtained his car keys and
went to his truck, allegedly to charge his phone in order to call a friend for a ride. Rick’s
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employees allegedly called 911 and reported that Sullivan had taken his keys and was driving
off. Round Rock police officers quickly arrived, blocked in Sullivan’s car, and dragged him out
of the vehicle (despite a handicapped tag visible in the windshield). During the officers’ attempts
to remove Sullivan from his vehicle, Sullivan fell heavily on the pavement and curb and suffered
injuries that rendered him a quadriplegic. He died during the course of this lawsuit, which is
now maintained by his mother and his estate (“Plaintiffs”).
B. Prior Complaint and Amendments
Plaintiffs sue the City of Round Rock Texas and officers N.J. Zoss, K.A. Mayo, and A.P.
Ballew (collectively,
the “City Defendants”) for excessive force in
42 U.S.C. §§ 1983 and 1988.
violation
of
Federal subject matter jurisdiction exists over these claims
pursuant to 28 U.S.C §§ 1331 and 1343(a)(3). Plaintiffs sue Rick’s Cabaret International, Inc.,
a/k/a RCI Hospitality holdings, Inc. for state law negligence, gross negligence, and Dram Shop
Act claims (TEX. ALCOHOLIC BEV. CODE § 2.02) arising out of the same underlying facts and
therefore pendent to their federal lawsuit. 28 U.S.C. § 1367.
Two amended complaints have been filed to date. [Dkt. #6, 15] The First Amended
Complaint abandoned claims against certain individual officers “after further information
indicates that they were not involved in [Sullivan]’s extraction and arrest.” [Dkt. #6] at 1. The
Second Amended Complaint notified the Court of Sullivan’s death and the need to substitute his
mother and executor as parties. [Dkt. #15] at 1-2. Plaintiffs now seek leave to file a Third
Amended Complaint.
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C. The Third Amended Complaint Adds a Defendant, Seeks Exemplary Damages
The proposed Third Amended Complaint seeks to add RCI Dining Services (Round
Rock), Inc., (“RCI Dining”) as a Defendant on the basis that this company is owned by the
Defendant RCI Hospitality Holdings, Inc., f/k/a Rick’s Cabaret International, Inc. (“RCI
Hospitality”) and has operated under the Assumed Name “Rick’s Cabaret” since May 13, 2010.
Mot. Leave to Amend [Dkt. #41] at 1-2, Exs. A-D. Therefore, Plaintiffs allege RCI Dining,
d/b/a Rick’s Cabaret, is responsible, along with its parent company RCI Hospitality, Inc.,
(collectively, the “Rick’s Cabaret Defendants”) for the negligence, gross negligence, and
violations of Tex. Alcoholic Bev. Code § 2.02 alleged to have occurred on March 21, 2014.
Mot. Leave to Amend at 2. The Proposed Third Amended Complaint additionally seeks to add
claims for punitive damages against all defendants on the basis of recently filed expert reports
opining that both the City Defendants and the Rick’s Cabaret Defendants were grossly negligent.
Id.
II. STANDARD OF REVIEW
Federal Rule of Civil Procedure 15(a)(2) states, “the court should freely give leave [to
amend the pleadings] when justice so requires.” The U.S. Supreme Court stated that the rule was
designed to “facilitate the amendment of pleadings except where prejudice to the opposing party
would result.” U.S. v. Hougham, 364 U.S. 310, 316-317 (1960) (emphasis added). Leave to
amend is not automatic, Wimm v. Jack Eckerd Corp., 3 F.3d 137, 139 (5th Cir. 1993) (citations
omitted). The court “may consider a variety of factors in exercising its discretion, including
undue delay, bad faith or dilatory motive on the part of the movant, repeated failures to cure
deficiencies by amendments previously allowed, undue prejudice to the opposing party . . ., and
futility of the amendment.” Jones v. Robinson Property Group, L.P., 427 F.3d 987, 994 (5th Cir.
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2005). Nevertheless, the Fifth Circuit recognizes a strong presumption in favor of granting leave
to amend. Fin. Acquisition Partners LP v. Blackwell, 440 F.3d 278, 291 (5th Cir. 2006). “If the
district court lacks a ‘substantial reason’ to deny leave, its discretion ‘is not broad enough to
permit denial.’” Jamieson v. Shaw, 772 F.2d 1205, 1208 (5th Cir. 1985) (quoting Dussouy v.
Gulf Coast Investment Corp., 660 F.2d 594, 597 (5th Cir. 1981)).
III. ANALYSIS
The City Defendants do not object to the proposed Third Amended Complaint.
Therefore, the undersigned RECOMMENDS leave to amend be GRANTED with respect to the
proposed claim for punitive damages against the City Defendants.
A. RCI Hospitality Has Not Established Undue Prejudice From Joining RCI Dining
Defendant RCI Hospitality, the parent company of RCI Dining (d/b/a/ “Rick’s Cabaret”),
objects that the proposed joinder of RCI Dining is untimely under the Scheduling Order, which
closed amendments to the pleadings and joinder of additional parties on December 8, 2014, [Dkt.
#38], and Plaintiffs’ failure to add RCI Dining as a defendant before the pleading deadline
demonstrates a failure to exercise due diligence. Resp. [Dkt. #44] at 1—2.
Plaintiffs reply that RCI Hospitality’s arguments concerning timeliness and diligence do
nothing to establish that the amendment requested would unfairly surprise or prejudice the
Defendants. Reply [Dkt. #48] at 1—2. The Fifth Circuit has long recognized the “mere passage
of time need not result in refusal of leave to amend; on the contrary, it is only undue delay that
forecloses amendment.” Dussouy, 660 F.2d at 598. The trial of this matter is set for January of
2016, over six months from the date of Plaintiffs’ request to amend the complaint. Reply [Dkt.
# 48] at 2. Here, there is no suggestion in the record that Plaintiffs’ amendment would prejudice
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the ability of the Rick’s Cabaret Defendants to develop and present a full defense of Plaintiffs’
claims against them. Dussouy, 660 F.2d at 598.
On this record, there is no support for the notion that Plaintiffs have repeatedly failed to
cure deficiencies in their theory of the claim, or that Plaintiffs have acted in bad faith in seeking
repeated amendments. See Jones, 427 F.3d at 994. In fact, Plaintiffs’ history of amendment to
drop claims against unnecessary parties suggests a good faith effort to shape the lawsuit
efficiently and appropriately. Dussouy, 660 F.2d at 599. RCI Hospitality has not even suggested
that amendment to add RCI Dining would be futile; on the contrary, RCI Hospitality has asserted
all along that it is not a proper defendant, and merely claims Plaintiffs were not diligent in timely
identifying RCI Dining as a defendant. Resp. [Dkt. #44] at 2.
On these facts, RCI Hospitality has not identified any “substantial reason” to deny leave
to amend to join RCI Dining as a defendant. Dussouy, 660 F.2d at 597.
Therefore, the
undersigned RECOMMENDS leave to amend be GRANTED with respect to the proposed
joinder of RCI Dining as a defendant.
B. RCI Hospitality Has Not Established Futility
RCI Hospitality contends an amendment allowing Plaintiffs to assert claims for punitive
damages against any of the proposed Rick’s Cabaret Defendants would be futile because the
Dram Shop Act does not recognize punitive damages. Resp. [Dkt. #44] at 4—5. Plaintiffs,
however, contend their proposed punitive damages claim is not based on Dram Shop liability,
but on their independent common law claim for gross negligence. Reply at 2. Further, because
the punitive damages claim is based on the same underlying factual allegations as Plaintiffs’
original damages claims, Plaintiffs contend their amendment does not cause Defendants undue
surprise or prejudice. Id.
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The District Court has already adopted this court’s finding that Plaintiffs’ Second
Amended Complaint “sufficiently states a separate negligent undertaking claim against RCI that
is not preempted by the Texas Dram Shop Act.” Order of March 18, 2015 [Dkt. #37] at 2.
Plaintiffs now claim their expert report suggests the Rick’s Cabaret Defendants were not merely
negligent, but grossly negligent in their conduct towards Sullivan, independent of the duties and
safe harbors imposed by the Dram Shop Act. Mot. Leave to Amend. [Dkt. # 41] at 2.
RCI Hospitality contends the expert on whom Plaintiffs rely for their punitive damages
claim has opined only on liability under the Dram Shop Act. Resp. [Dkt. # 44] at 5. This is an
argument concerning the weight or admissibility of the expert’s testimony and does not establish
the futility of a claim for gross negligence and exemplary damages arising out of Plaintiffs’
separate negligent undertaking claim.
See Jamieson, 772 F.2d at 1208 (“When futility is
advanced as the reason for denying an amendment to a complaint, the court is usually denying
leave because the theory presented in the amendment lacks legal foundation or because the
theory has been adequately presented in a prior version of the complaint.”).
RCI Hospitality has not established the futility of an amendment seeking punitive
damages for gross negligence with regard to the negligent undertaking claim. Id. Therefore, the
undersigned RECOMMENDS leave to amend be GRANTED with respect to the proposed claim
for punitive damages against RCI Hospitality and RCI Dining.
IV. RECOMMENDATIONS
For the reasons stated with particularity above, the undersigned RECOMMENDS
Plaintiffs’ Motion for Leave to File Plaintiff’s Third Amended Complaint filed June 4, 2015
[Dkt. #41] be GRANTED in its entirety.
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V. OBJECTIONS
The parties may file objections to this Report and Recommendation. A party filing
objections must specifically identify those findings or recommendations to which objections are
being made. The District Court need not consider frivolous, conclusive, or general objections.
See Battles v. United States Parole Comm’n, 834 F.2d 419, 421 (5th Cir. 1987).
A party’s failure to file written objections to the proposed findings and recommendations
contained in this Report within fourteen (14) days after the party is served with a copy of the
Report shall bar that party from de novo review by the District Court of the proposed findings
and recommendations in the Report and, except upon grounds of plain error, shall bar the party
from appellate review of unobjected-to proposed factual findings and legal conclusions accepted
by the District Court. See 28 U.S.C. § 636(b)(1)(C); Thomas v. Arn, 474 U.S. 140, 150-53, 106
S. Ct. 466, 472-74 (1985); Douglass v. United Services Automobile Ass’n, 79 F.3d 1415 (5th Cir.
1996)(en banc).
To the extent that a party has not been served by the Clerk with this Report &
Recommendation electronically, pursuant to the CM/ECF procedures of this District, the Clerk is
ORDERED to mail such party a copy of this Report and Recommendation by certified mail,
return receipt requested.
SIGNED June 29, 2015
_______________________________
MARK LANE
UNITED STATES MAGISTRATE JUDGE
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