Hooks v. State of Wisconsin, et al.

Filing 39

ORDER signed by Chief Judge Rudolph T Randa on 05/06/2009 granting 21 Motion to Dismiss; granting 26 Motion to Dismiss. This cause of action is dismissed in its entirety with prejudice. (cc: all counsel; via US Mail to Lapricia Hooks) (Koll, J)

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF WISCONSIN

L A P R I C I A S. HOOKS, P l a i n t i f f, v. D E N N IS RYAN, C IN D A STRICKER, M A R C I A RAMIREZ,1 C A R L A HECK, B U N N Y BOOKER, N O R A GOMEZ, K E V IN COUGHLIN, S H A R O N BERGE, a n d ANDREA LEFFELHOLZ, D e f e n d a n t s. C a s e No. 08-C-0631

DECISION AND ORDER

O n July 23, 2008, Plaintiff Lapricia S. Hooks ("Hooks") filed a complaint pro s e against the State of Wisconsin, Bureau of Regulation and Licensing, and Department of Q u a lity Assurance alleging that the defendants violated her constitutional rights by harassing h e r to the extent that she was forced to close her child care center and surrender her adult f a m ily license. Hooks also alleged that she has a non-profit transportation company that was d e n ie d state funding because as posited by Hooks she was the only female minority business o w n e r seeking the funding.

Hooks named "Marsha Ramirez" as a defendant. However, an e-mail attached as exhibit VII to the amended c o m p l a in t indicates that the name is "Marcia Ramirez." The Court has amended the caption to reflect the correct nam e.

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O n July 31, 2008, this Court issued a Decision and Order directing Hooks to c la rif y the information that she had provided in her petition and affidavit in order to proceed w ith o u t prepayment of fees and costs. Hooks filed an amended petition and affidavit to p ro c e ed without prepayment of fees and costs. In a Decision and Order dated September 24, 2 0 0 8 , the Court considered the information provided by Hooks and concluded that Hooks was u n a b le to pay the filing fee for commencing this action and allowed Hooks to proceed in forma p a u p e ris . The Court liberally construed Hooks's complaint as arising under 42 U.S.C. � 1 9 8 3 .2 The Court further discussed that Hooks's allegations arguably raised an equal

p ro te c tio n claim and a due process claim. Hooks, however, named defendants who were im m u n e from suit due to the Eleventh Amendment of the United States Constitution.3 The C o u rt allowed Hooks leave to amend her complaint to name the individual officials of the S ta te of Wisconsin, Bureau of Regulation and Licensing and Department of Quality Assurance w h o m she claims were involved in the alleged violations. O n October 8, 2008, Hooks filed a two-part amended complaint and named in d iv id u a l state employees and one county official. The first part of Hooks's complaint names a s defendants Dennis Ryan ("Ryan"), an employee of the Milwaukee County Department of A g in g ; Cinda Stricker ("Stricker"), the licensing chief of the Bureau of Regulation and

2 42 U.S.C. � 1983 provides in pertinent part: "Every person who, under color of any statute, ordinance, r e g u la tio n , custom, or usage, of any State or Territory or the District of Columbia, subjects, or causes to be subjected, a n y citizen of the United States or other person within the jurisdiction thereof to the deprivation of any rights, p r iv ile g e s , or immunities secured by the Constitution and laws, shall be liable to the party injured in an action at law, s u it in equity, or other proper proceeding for redress." 3

The Eleventh Amendment provides as follows: "The Judicial power of the United States shall not be c o n s tr u e d to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens o f another State, or by Citizens or Subjects of any Foreign State." U.S. Const. amend. XI.

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L ic e n sin g ; Marcia Ramirez ("Ramirez"), a supervisor with the Bureau of Regulation and L i c e n s i n g ; Carla Heck ("Heck"), a child care licensor with the Bureau of Regulation and L icen sin g ; Bunny Booker ("Booker"), an assisted living surveyor; Nora Gomez ("Gomez"), a quality assurance program specialist; and Kevin Coughlin ("Coughlin"), the director of the B u re a u of Assisted Living. Liberally construed, Hooks alleges that these defendants engaged in conduct that constituted harassment to the extent that she was forced to close her child care c e n te r and surrender her adult family home license in violation of her Fourteenth Amendment rig h ts to equal protection and due process. In a Decision and Order dated December 2, 2008, th e Court allowed Hooks to proceed against these defendants in their individual capacities. T h e second part of Hooks's amended complaint names Sharon Berge ("Berge") a n d Andrea Loeffelholz ("Loeffelholz") as defendants in conjunction with her claim that her n o n -pro fit transportation company, Kadyn's Transportation, Inc. ("Kadyn's Transportation"), w h ic h sought funding for the 2008 WETAP ("Wisconsin Employment Transportation A s s is ta n c e Program") Grant Cycle was denied funding because, as alleged by Hooks, she was the only female minority business owner seeking the funding. Berge and Loeffelholz are e m p lo ye d as WETAP program managers. The Court allowed Hooks to proceed with a F o u rte e n th Amendment equal protection claim against Berge and Loeffelholz in their in d iv id u a l capacities. On February 2, 2009, the state defendants, Stricker, Ramirez, Heck, Booker, G o m e z , Coughlin, Loeffelholz and Berge filed a motion to dismiss. On February 10, 2009,

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R ya n , the remaining defendant and an employee of Milwaukee County, filed a motion to d is m is s . The motions are fully briefed and will be considered by the Court. FACTUAL BACKGROUND In June 2006, Hooks alleges that she voluntarily closed Jahar's Learning Center, L L C ("Jahar's Learning Center"), a child care facility located in her residence in Milwaukee, W isc o n sin . In August 2006, Hooks alleges that her residence was licensed as an adult family h o m e , Our New Beginning, LLC ("Our New Beginning"). During 2006 and 2007, Hooks f u rth e r alleges that she contacted Ryan, an employee of the Milwaukee County Department o f Aging, as well as other county employees, in order to secure a contract to provide services to adult residents. (Am. Compl. at 2-3.) It appears that Milwaukee County declined to c o n tra c t with Our New Beginning. H o o k s then attempted to reopen Jahar's Learning Center and sent a request to S tric k e r, the licensing specialist with the Bureau of Regulation and Licensing. In a letter dated F e b ru a ry 22, 2007, Hooks requested to have the license for Jahar's Learning Center reinstated. (Id . at 3-4.) Hooks alleges that the state defendants unnecessarily delayed in letting her reopen h e r child care center in 2007. (Id.) Jahar's Learning Center, however, was reopened in June o f 2007 for a period of six months. (Id. at 4.) Hooks alleges that, following the reopening of her child care center in June of 2 0 0 7 , Hooks was harassed because Heck, a child care licensor with the Bureau of Regulation a n d Licensing, made four unannounced visits to Jahar's Learning Center and cited Hooks for

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a violation during one of those visits. (Id. at 4-5.) Hooks's alleges that on December 31, 2 0 0 7 , the six month probationary license for Jahar's Learning Center expired. (Id. at 6.) Hooks alleges that she was harassed because Jahar's Learning Center was issued a second six-month probationary license rather than a two-year license. (Id. at 6-7.) Hooks a ls o alleges that the defendants continually harassed her for having a child care center and an a d u lt family home license. (Id. at 7-13.) As part of the alleged harassment, Hooks was issued a citation for operating the child care center at the same address as the adult family home. C o rre spo n d e n c e attached to Hooks's amended complaint documents that Hooks was informed b y state employees that she needed to decide which license she wanted to continue, as a dual lic e n s e for a child day care and an adult family home was not permitted. (Id. at Ex. VII.) It a p p e ars that when the state defendants realized that Hooks had been mistakenly dual-licensed, th e defendants asked her to choose between the licenses. Hooks alleges that her interactions w ith the defendants on the dual-licensure issue ultimately led her to surrender both her child c a re license and her adult family home license. (Id. at 13.) Hooks contends she was deprived th e equal protection of the law, was deprived of "a way of life, liberty and property" without d u e process of law and was deprived of "the pursuit of happiness." (Id. at 13.) The second part of Hooks's amended complaint alleges that in May, 2007, H o o k s opened Kadyn's Transportation and applied for grant funding from Wisconsin E m p lo ym e n t Transportation Assistance Program ("WETAP"). (Id. at 15.) Kadyn's

T ra n sp o rta tio n is described as a "new start up company without any dedicated funding." (Id.) K ad yn ' s Transportation was listed in a December 6, 2007, WETAP Memorandum, however,

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K a yd n 's Transportation was later denied the grant request. The December 21, 2007, letter e x p lain in g the grant denial stated that the grant was denied because "the WETAP program is cu rren t ly funding a Day Care Transportation Provider in the Milwaukee Urbanized Area where yo u are currently contracted to be a transportation vendor and that is a conflict of interest." (Id. a t Ex. V.) The denial also noted that Kadyn's Transportation failed to show "local match s u p p o rt." (Id.) Hooks alleges that she was the "only minority business women sitting at the ro u n d table with a non-profit organization and got denied funding." (Id. at 16.) APPLICABLE LAW A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) challenges th e sufficiency of the complaint for failure to state a claim upon which relief may be granted. F e d . R. Civ. P. 12(b)(6). Dismissal of an action under this motion is warranted if the plaintiff c a n prove no set of facts in support of her claims that would entitle her to relief. Travel All O v e r the World, Inc. v. Kingdom of Saudi Arabia, 73 F.3d 1423, 1429-30 (7th Cir. 1996). F u r th e rm o re , "a pro se complaint, however inartfully pleaded, must be held to less stringent sta n d a rd s than formal pleadings drafted by lawyers and can only be dismissed for failure to state a claim if it appears beyond doubt that the plaintiff can prove no set of facts in support o f [her] claim which would entitle [her] to relief." Estelle v. Gamble, 429 U.S. 97, 106 (1976) (c itin g Haines v. Kerner, 404 U.S. 519, 520-21 (1972)) (internal quotations omitted). This C o u rt "may take into consideration documents incorporated by reference to the pleadings" and " m a y also take judicial notice of matters of public record" without converting a motion to d is m is s into a motion for summary judgment. United States v. Wood, 925 F.2d 1580, 1582

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(7 th Cir. 1991). The Court, however, must look to the factual allegations contained within the f o u r corners of the complaint. See Palda v. Gen. Dynamics Corp., 47 F.3d 872, 875 (7th Cir. 1 9 9 5 ) .4 A N A L Y SIS In the Court's Decision and Order, dated December 2, 2008, the Court observed th a t Hooks's amended complaint only lists Hooks as a plaintiff, even though the complaint in v o lv e s Hooks's three business entities, Jahar's Learning Center, Our New Beginnings and K a d yn 's Transportation.5 The real parties in interest are free-standing business entities rather th a n Hooks as an individual. For example, the complaint alleges that Kadyn's Transportation w a s the organization to apply for the grant, Kadyn's Transportation was listed in the December 4 , 2007 WETAP Memorandum and Kadyn's Transportation was the organization that failed to receive the grant. The general principle is that a corporate shareholder does not have an individual rig h t of action against third parties for damages to the shareholder resulting indirectly from in ju ry to the corporation. Twohy v. First Nat'l Bank of Chicago, 758 F.2d 1185, 1194 (7th Cir. 1 9 8 5 ). Wisconsin law is clear that causes of action belonging to the corporation cannot be

Hooks's response to the defendants' motions to dismiss is to submit new factual allegations and new exhibits t h a t are not contained in her complaint. Hooks's new factual allegations and new exhibits will be disregarded by this C o u rt. The Court's Decision and Order stated, "Hooks's complaint involves three business entities, Jahar's L e a r n in g Center LLC, O u r New Beginning LLC and Kaydn's [sic] Transportation, Inc. At this early stage of the p r o c e e d in g s , it is not clear whether the claims Hooks asserts are her claims or whether they are the claims of a business e n t ity or entities. This issue raises the potential question of Hooks's standing to pursue any Fourteenth Amendment c la im s . Also as a pro se plaintiff, Hooks would not be able to represent an LLC or a corporation. Such entities must a p p e a r by counsel. See United States v. Hagerman, 545 F.3d 579, 581 (7th Cir. 2008)." Docket # 9, Decision and O r d e r , December 2, 2008.
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m a in ta in e d by the individual shareholder, unless the shareholder has suffered direct injury. R o se v. Schantz, 56 Wis. 2d 222, 229, 201 N.W.2d 593, 597 (1972). Consequently, Hooks s u f f e re d no injury and lacks standing. See Flynn v. Merrick, 881 F.2d 446, 450 (7th Cir. 1989) ( " T h e district court correctly determined that a plaintiff-shareholder cannot maintain a civil rig h ts action for damages suffered by the corporation. . . . Filing suit under 42 U.S.C. � 1983 d o es not diminish the requirement that the shareholder suffer some individual, direct injury."). In this cause of action, Kadyn's Transportation is not a party and Hooks lacks standing to bring a claim on behalf of Kadyn's Transportation. Moreover, as discussed later in this Decision, th e allegations relevant to the grant issue fail to state a claim for relief. With regard to a limited liability company, such as Jahar's Learning Center and O u r New Beginning, under Wis. Stat. � 183.1101, an action on behalf of an LLC is to be b ro u g h t "in the name of the limited liability company" and pursuant to authorization which m u st be described in the complaint. Wis. Stat. � 183.1101(3) ("In an action brought on behalf o f a limited liability company, the complaint shall describe with particularity the authorization o f the member to bring the action and the determination of the authorization."). The amended c o m p la in t does not satisfy these pleading requirements. Moreover, commercial entities do not h a v e a liberty interest or fundamental rights. Mid-American Waste Sys., Inc. v. City of Gary, 4 9 F.3d 286, 291 (7th Cir. 1995) ("Corporations do not have fundamental rights; they do not h a v e liberty interests, period."). The Court found that the only possible claim related to the denial of a grant for K a d yn 's Transportation was an equal protection claim. Hooks's alleged in her amended

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c o m p la in t that she was the only minority business woman "sitting at the round table" who was d e n ie d funding. (Am. Compl. at 16.) Hooks, however, later clarifies that her "claim does not re st on gender and race" but instead, rests on being denied the pursuit of happiness. Docket # 23 at 7. In order to maintain an equal protection claim, Hooks must show that the d e f en d a n ts intentionally discriminated against her because of her membership in a particular c la s s . Gray v. Lacke, 885 F.2d 399, 414 (7th Cir. 1989), cert. denied, 494 U.S. 1029 (1990). H o o k s must show both discriminatory treatment and discriminatory intent on the part of the d e f e n d a n ts . David K. v. Lane, 839 F.2d 1265 (7th Cir. 1988) ("The Equal Protection Clause h a s long been limited to instances of purposeful or invidious discrimination rather than e rro n e o u s or even arbitrary administration of state powers."). Hooks is unable to satisfy this b u rd e n . As the record demonstrates, one of the reasons Kadyn's Transportation was d e n ied a grant was that the grant application was incomplete. Moreover, the complaint admits th a t Kadyn's Transportation did not provide documentation of a local match. See Wis. Stat. � 85.24(3)(d) ("As a condition of obtaining a grant under this paragraph, a public or private o rg a n iz a tio n may be required to provide matching funds at any percentage."). The WETAP g ra n t application was only complete if a local match was shown. See Wis. Stat. � 85.24(3)(d), W is Stat. � 106.26(3)(c)1. Hooks does not dispute that Kadyn's Transportation failed to show th e existence of matching funds. Hooks's allegations related to Kadyn's Transportation and th e grant denial are dismissed for failure to state a claim.

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W ith regard to Hooks's allegations related to surrendering her license to operate a n adult family home, Our New Beginning, Hooks does not allege that the mistreatment was d u e to Hooks's membership in a protected group. Therefore, construing Hooks's claim l ib e ra lly, Hooks's claim can only survive as a "class of one" equal protection claim. See V illa g e of Willowbrook v. Olech, 528 U.S. 562, 564 (2000) (Successful equal protection claims b ro u g h t by a "class of one," have been recognized "where the plaintiff alleges that she has b e e n intentionally treated differently from others similarly situated and that there is no rational b a sis for the difference in treatment."). The Equal Protection Clause "is to secure every person w ith in the State's jurisdiction against intentional and arbitrary discrimination, whether o c c as io n e d by express terms of a statute or by its improper execution through duly constituted a g e n ts ." Id. "The paradigmatic `class of one' case . . . is one in which a public official, with n o conceivable basis for his action other than spite or some other improper motive (improper b e c au s e unrelated to his public duties), comes down hard on a hapless private citizen." Lauth v . McCollum, 424 F.3d 631, 633 (7th Cir. 2005). The potential for "endless vistas of federal lia b ility" loom large, and consequently, it is difficult to succeed on a "class of one" theory. Id . In order to prove a "class of one" equal protection claim, Hooks must d e m o n stra te that the government is treating unequally those individuals who are prima facie id e n tic a l in all relevant aspects and that there is no rational basis for the difference in treatment o r the cause of the differential treatment is a "totally illegitimate animus" toward the plaintiff b y the defendants. See Woodruff v. Mason, 542 F.3d 545, 554 (7th Cir. 2008). The class of

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o n e plaintiff bears the burden of proving that she has "suffered intentional, irrational, and a rb itra ry discrimination." Bell v. Duperrault, 367 F.3d 703, 707 (7th Cir. 2004). The plaintiff m u s t "eliminate any reasonably conceivable set of facts that could provide rational basis for th e classification." Id. at 708. In this case, Hooks fails to allege that she was treated differently than any other p e rso n solely because of animus toward her by the defendants. Consequently, she fails to state a claim for an equal protection violation. Moreover, Hooks was asking for a dual licensure th a t is not permitted by the Wisconsin Administrative Code. When the state defendants r e a liz e d that Hooks had been mistakenly dual-licensed, the defendants asked her to choose b e tw e e n the licenses. Hooks's request for a dual-licensure runs afoul of the Wisconsin A d m in is tra tiv e Code. Wis. Admin. Code � HFS 45.05(3)(a) 6 ("A provider may not be e n g a g ed in any other activity or occupation during the hours of operation of the center, except f o r daily maintenance of the home"); Wis. Admin. Code � HFS 88.05(3)(o) ("The [adult f a m ily] home shall not be used for any business purpose that regularly brings customers to the h o m e so that residents' use of the home as their residence or the residents' privacy is adversely a f f e c te d ." ). Asking a corporate entity to abide by the administrative code in order to receive a license does not constitute a cause of action under the United States Constitution or any other

During the time Hooks was licensed and/or seeking licensure, the operative code was W is . Admin. Code � HFS 45.05(3)(a). The rules relating to child care centers were renumbered following the creation of the Department o f Children and Families (DCF). The renumbering became effective November 1, 2008. As of that date, W is . Admin. C o d e � HFS 45.05(3)(a) became W i s . Admin. Code � DCF 250.05(3)(a).

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s ta tu te . Consequently, the equal protection claim related to Hooks surrendering the license for O u r New Beginning fails.7 Hooks's has also alleged a violation of her due process rights. The Fourteenth A m e n d m e n t to the United States Constitution provides that no State may "deprive any person o f life, liberty, or property, without due process of law . . . ." U.S. Const. amend. XIV, � 1. T o succeed on a procedural due process claim, a plaintiff must demonstrate a cognizable p rop erty interest, a deprivation of that interest, and a denial of due process. Hudson v. City o f Chicago, 374 F.3d 554, 559 (7th Cir. 2004). The fundamental requirement of due process is "the opportunity to be heard at a meaningful time and in a meaningful manner." Matthews v . Eldridge, 424 U.S. 319, 333 (1976). The due process clause is the source of three separate c o n stitu tio n a l protections that may serve as a basis of a Section 1983 claim against a state and its agents and employees: First, the Clause incorporates many of the specific protections d ef in ed in the Bill of Rights. A plaintiff may bring suit under � 1 9 8 3 for state officials' violation of his rights to, e.g., freedom of s p e e c h or freedom from unreasonable searches and seizures. S e c o n d , the Due Process Clause contains a substantive c o m p o n e n t that bars certain arbitrary, wrongful government a c tio n s "regardless of the fairness of the procedures used to im p le m e n t them." Daniels v. Williams, 474 U.S. 327, 331 (1986). A s to these two types of claims, the constitutional violation a c tio n a b le under � 1983 is complete when the wrongful action is ta k e n . . . . The Due Process Clause also encompasses a third type o f protection, a guarantee of fair procedure. A � 1983 action may b e brought for a violation of procedural due process, but . . . [i]n p ro c e d u ra l due process claims, the deprivation by state action of

Hooks responds that the W is c o n s i n Administrative Code permits dual-licensing, however, Hooks cites a p r o v is io n of the Code that allows the dual-licensing of an adult family home and a foster care home. This provision o f the Code does not apply to the dual license of an adult family home and a child care center.

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a constitutionally protected interest in "life, liberty, or property" is not in itself unconstitutional; what is unconstitutional is the d e p r i v a t i o n of such an interest without due process of law. . . . T h e constitutional violation actionable under � 1983 is not c o m p l e te when the deprivation occurs; it is not complete unless a n d until the State fails to provide due process. Zinermon v. Burch, 494 U.S. 113, 125-26 (1990). The United States Supreme Court has em p loyed a two-step analysis when analyzing claims that a state has violated an individual's r ig h t to procedural due process. The first area of inquiry deals with whether there exists a " lif e , liberty, or property" interest protectable under the Fourteenth Amendment with which th e state has interfered. The second step of the inquiry is whether the entity responsible for th e alleged deprivation instituted constitutionally sufficient procedural protections. Kentucky D e p 't of Corrections v. Thompson, 490 U.S. 454, 460 (1989). The Court, in permitting Hooks to proceed in forma pauperis liberally construed H o o k 's claim as a procedural due process claim. In the motion to dismiss filed by the state e m p lo ye e s, it is clear that if Hooks had not chosen to surrender her adult family home license, s h e had adequate post-deprivation administrative remedies at her disposal. If Hooks had w a ite d to receive a revocation of license notice based on her unlawful dual-licensure, Hooks w o u ld have had appeal rights under Wis. Admin. Cod � DHS 88.03(7) 8 and Wis. Stat. � �

W is . Admin. Code � DHS 88.03(7) provides that "[a]ny person whose application for a license is denied u n d e r sub. (3) or revoked under sub. (6)(d) or suspended under sub. (6)(e) may request a hearing on that decision u n d e r s. 227.42, Stats."

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2 2 7 .4 2 9 and 227.52.1 0 The state employees cannot be accused of failing to provide due process w h e n Hooks did not pursue the existing due process procedures to obtain a remedy. As for a n y procedural due process claim against defendant Ryan, licensing of Hooks's adult family h o m e is strictly a State of Wisconsin function. Milwaukee County and Ryan have nothing to d o with the licenses that Hooks needed to operate an adult family home or a child care center. H o o k s has no procedural due process claim against Ryan. NOW, THEREFORE, BASED ON THE FOREGOING, IT IS HEREBY O R D E R E D THAT: 1. T h e Motion to Dismiss filed by Cinda Striker, Marcia Ramirez, Carla

H e c k , Bunny Booker, Nora Gomez, Kevin Coughlin, Andrea Loeffelholz and Sharon Berge ( D o c k e t #21) is GRANTED to the extent that Hooks's Amended Complaint fails to state a c a u s e of action against these defendants. 2. T h e Motion to Dismiss filed by Dennis Ryan (Docket #26) is GRANTED

to the extent that Hooks's Amended Complaint fails to state a cause of action against this d e f e n d a n t. 3. 4. T h i s cause of action is DISMISSED in its entirety with PREJUDICE. T h e Clerk of Court is DIRECTED to enter judgment accordingly.

W is . Stat. � 227.42 provides, in part, that "[i]n addition to any other right provided by law, any person filing a written request with an agency for hearing shall have the right to a hearing which shall be treated as a contested case i f : (a) A substantial interest of the person is injured in fact or threatened with injury by agency action or inaction; . . ." W is . Stat. � 227.52 provides, in part, that "[a]dministrative decisions which adversely affect the substantial i n t e r e s t s of any person, whether by action or inaction, whether affirmative or negative in form, are subject to [judicial] r e v i e w as provided in this chapter . . ."
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D a te d at Milwaukee, Wisconsin this 6th day of May, 2009. BY THE COURT s / Rudolph T. Randa Hon. Rudolph T. Randa C h ie f Judge

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