Holmes et al v. City of Racine et al

Filing 60

ORDER signed by Judge J P Stadtmueller on 7/30/14: dismissing without prejudice 1 Plaintiffs' complaint; Plaintiffs shall file an amended complaint within 21 days of the entry of this order; and, Defendants shall have 21 days after Plaintiffs have filed an amended complaint to file their respective answers or appropriate motions. See Order. (cc: all counsel)(nm)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WISCONSIN
THOMAS J. HOLMES, OTHA KEITH FAIR,
JOSE MALDONADO,
MARIA E. MALDONADO,
CERAFIN DAVALOS, WILBUR JONES,
PYTHAPHONE KHAMPANE, and
OMJAI NUEAKEAW,

Case No. 14-CV-208-JPS

Plaintiffs,
v.
CITY OF RACINE, GARY BECKER,
JOHN DICKERT,
DOWNTOWN RACINE CORPORATION,
TAVERN LEAGUE OF RACINE CITY,
KURT S. WAHLEN, JEFFREY A. COE,
JAMES KAPLAN, GREGORY T. HELDING,
DAVID L. MAACK, ARON WISNESKI,
ROBERT MOZOL, DEVIN P. SUTHERLAND,
MARK L. LEVINE, JOSEPH G. LEGATH,
DOUGLAS E. NICHOLSON,
MONTE G. OSTERMAN, MARY OSTERMAN,
and GREGORY S. BACH,

ORDER

Defendants.
The plaintiffs—black, Hispanic, and Thai former owners of bars in
downtown Racine, Wisconsin—filed their complaint in this action on
February 25, 2014. (Docket #1 (“Compl.”), ¶¶ 9–15). In it, they allege that the
defendants—the City of Racine, local politicians, a political group, and a nonprofit—engaged in various activities designed to eliminate minority-owned
bars, specifically those owned by the plaintiffs, from operating in downtown
Racine. (E.g., Compl., ¶ 4). This, the plaintiffs assert, violated their civil rights
and the Racketeer Influenced and Corrupt Organizations Act (“RICO”), and
thus they brought suit against the defendants under the Civil Rights Act
(“CRA”), 42 U.S.C. §§ 1983, 1985(3), and RICO, 18 U.S.C. §§ 1962(b)–(d). (E.g.,
Compl., ¶ 5).

The defendants, in four separate groups (which the Court will discuss
in further detail later in this opinion, but essentially deriving from the
identity of the attorneys representing them), moved to dismiss the complaint.
(Docket #25, #28, #31, #36). The plaintiffs responded to the defendants’ four
separate motions, largely opposing them. (Docket #45, #46, #47, #48).
However, the plaintiffs did agree to dismiss certain aspects of their claims
(which, again, the Court will discuss more fully, as follows). (See Docket #45
at 41, 43, 48–50). The plaintiffs also entered a stipulation to dismiss one of the
individual defendants (Docket #49), which the Court adopted (Docket #50).
Thereafter, the separate groups of defendants filed their respective reply
briefs, (Docket # 52, #55, #57, #58), meaning that the motions to dismiss are
now fully briefed and ready for a decision.
Needless to say, this matter is very complex. If the four separate
motions to dismiss were not enough, several of the briefs in support of those
motions exceed the typical page limits. (See Docket #20, #43, #51). But that is
not to say that the motions were unnecessary; indeed, they raise legitimate
shortcomings with the plaintiffs’ complaint. Due to the vast number of
plaintiffs and named defendants, the complaint suffers from its breadth,
creating significant confusion as to who, precisely, is claiming what against
whom.
Thus, given the complexity, the Court believes that it is best to use this
order to try to clear up the confusion. This requires that the Court take pains
to be very specific, starting by describing the general nature of the plaintiffs’
allegations, then specifically detailing the plaintiffs’ claims and which aspects
of those claims the plaintiffs have agreed to dismiss. After providing that
background, the Court will address the remaining substance of the
outstanding motions to dismiss.
Page 2 of 29

In the end, the Court finds that it has no choice but to dismiss the
complaint. As already noted and as will be described in further detail, the
complaint is much too vague to provide any meaningful notice to the
defendants of the respective plaintiffs’ claims. This is not to say that the
plaintiffs’ claims are necessarily without merit—in fact, their general
allegations suggest a case with serious potential that should proceed to
discovery. For that reason, the Court will allow the plaintiffs an opportunity
to amend their complaint in a way that comports with the following
discussion.
1.

PLAINTIFFS’ ALLEGATIONS
The Court begins with a general discussion of the plaintiffs’ factual

allegations. At this stage of the proceedings, the Court must accept all of the
plaintiffs’ well-pleaded factual allegations as true. See, e.g., Ashcroft v. Iqbal,
556 U.S. 662, 663 (2009) (complaint must “contain sufficient factual matter,
accepted as true, to ‘state a claim to relief that is plausible on its face.’”)
(emphasis added; quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570
(2007)). Thus, in describing the plaintiffs’ allegations, the Court does not
mean to imply that they are necessarily true. Rather, the Court recounts them
only for the purpose of providing the relevant record upon which it must
assess the defendants’ motions to dismiss.
1.1

The Parties

There are eight plaintiffs in this case. They are all either black,
Hispanic, or Thai, and owned several bars located in downtown Racine:
(1)

Thomas Holmes is black and owned and operated the Park 6
Bar from 2008 to 2012 (Compl., ¶ 9);

(2)

Otha Keith Fair is black and owned and operated The Place
on 6th, LLC, from 2009 to 2012 (Compl., ¶ 10);

Page 3 of 29

(3-4)

Pythaphone Khampane and Omjai Nueakeaw are ThaiAmerican and Thai, respectively, and together owned and
operated Ginger’s Lounge from 2008 to 2011 (Compl.
¶¶ 11–12);

(5)

Wilbur Jones is black and owned and operated Viper’s
Lounge from 1998 to 2008 (Compl. ¶ 13);

(6)

Cerafin Davalos is Hispanic and owned and operated Cera’s
Tequila Bar from 2006 to 2008 (Compl. ¶ 14);

(7–8) Jose Maldonado and Maria Maldonado are Hispanic and
together owned and operated The Cruise Inn from 2001 to
2006 (Compl. ¶ 15).
They brought suit against a number of defendants, including the City of
Racine and various individuals and groups involved in Racine’s local politics.
(See Compl. ¶¶ 16–35). Those defendants have since split into several
separate groups, as follows:
(1)

the Municipal Defendants, which includes:
(a)

the City of Racine (hereinafter “Racine” or “the City”)
(Compl. ¶ 16);

(b)

John Dickert, Racine’s current mayor, who has held
that position since May of 2009 (Compl. ¶ 17);

(c)

Gary Becker, Racine’s former mayor, who served in
that position from May of 2003 until May of 2009
(Compl. ¶ 18);

(d)

Kurt Wahlen, who served as Racine’s police chief from
2007 until April of 2012 (Compl. ¶ 21);

(e)

Jeffrey Coe, an alderman sitting on Racine’s Common
Council from April of 2001 through April of 2005, April
of 2007 through April of 2011, and April of 2013
through present (Compl. ¶ 22);

(f)

James Kaplan, an alderman sitting on Racine’s
Common Council from April of 2006 through present,
during which time he has served on the City’s Board of
Health and Licensing Committee (Compl. ¶ 23);
Page 4 of 29

(g)

Raymond DeHahn, an alderman sitting on Racine’s
Common Council from April of 2005 through April of
2011, during which time he served on the City’s
Licensing Committee (Compl. ¶ 24);

(h)

Gregory Helding, an alderman sitting on Racine’s
Common Council from April of 2005 through present,
during which time he served on the City’s Licensing
Committee (Compl. ¶ 25);

(i)

David Maack, an alderman sitting on Racine’s Common
Council from April of 2000 through April of 2010,
during which time he served on the City’s Licensing
Committee (Compl. ¶ 26);

(j)

Aron Wisneski, an alderman sitting on Racine’s
Common Council from April of 2006 through April of
2012, during which time he served on the City’s
Licensing Committee (Compl. ¶ 27);

(k)

Robert Mozol, an alderman sitting on Racine’s
Common Council from April of 2007 through April of
2013, during which time he served on the City’s
Licensing Committee (Compl. ¶ 28);

(l)

Devin Sutherland, who serves as manager of Racine’s
Downtown Business Improvement District (“BID #1”)
and executive director of the Downtown Racine
Corporation (the Court will discuss both BID #1 and the
Downtown Racine Corporation in further detail, below)
(Compl. ¶ 29);

(m)

Mark Levine, who serves as the chairman of BID #1 and
also owns property within BID #1 (Compl. ¶ 30);

(n)

Joseph LeGath, a member of the BID #1 board, who
also owns several bars in Racine and serves as the
director of the Racine City Tavern League (which the
Court will discuss further, below) (Compl. ¶ 31); and

(o)

Gregory Bach, Mayor Dickert’s assistant (Compl. ¶ 35);

Page 5 of 29

(2)

the Political Staff Defendants, a term the Court has created to
describe the group that include:
(a)

Doug Nicholson, a member of the Racine City Tavern
League, who owns several bars withing BID #1 and also
serves on the City’s Board of Ethics (Compl. ¶ 32);

(b)

Monte Osterman, who assisted Mayor Dickert with his
2009 and 2011 mayoral campaigns (Compl. ¶ 33); and

(c)

Mary Jerger Osterman, who served as Mayor Dickert’s
treasurer for his 2009 and 2011 mayoral campaigns
(Compl. ¶ 34);

(3)

the Downtown Racine Corporation, a private, non-profit
corporation that works to enhance Downtown Racine’s image
and functionality and contracts with the City to manage BID
#1, the Downtown Racine Corporation is managed by an
Executive Director (Devin Sutherland, one of the Municipal
Defendants) and governed by a Board of Directors (some of
whom are named Municipal Defendants) (Compl. ¶ 19); and

(4)

the Racine City Tavern League (the “Tavern League”), a nonprofit corporation that, essentially, serves as a lobbying group
for alcohol retailers in Racine, Wisconsin (Compl. ¶ 20), and
currently has approximately 83 members, the vast majority of
whom are white (Compl. ¶ 20).

1.2

The Plaintiffs’ Factual Allegations

Current-Mayor Dickert was elected in May of 2009.1 (Compl. ¶ 17, 39).
He replaced former-Mayor Becker, who was found to have engaged in
criminal conduct and resigned in January of 2009. (Compl. ¶ 39).
From the start of his campaign, current-Mayor Dickert made clear his
intent to “revitalize” and “clean up” downtown Racine, getting rid of
“undesirable” or “problem” patrons. (Compl. ¶ 40). This was obviously a

1

The plaintiffs claim, however, that the illegal activities engaged in by the
defendants extend back into the term of former-Mayor Becker. (See, e.g., Compl.
¶¶ 140, 153).

Page 6 of 29

view he shared with some members of the Tavern League—including
Municipal Defendant LeGath and Political Staff Defendant Nicholson—who
contributed large amounts of money to current-Mayor Dickert’s campaign.
(Compl. ¶ 41). Those contributions were allegedly in excess of statutory
limits, and the campaign allegedly fraudulently reported them when
depositing them into the campaign account. (Compl. ¶ 41).
There were allegedly some other financial shenanigans going on, both
during and after current-Mayor Dickert’s election. First, he allegedly received
sizeable personal loans from family members and staff members, which he
deposited into his personal account; he then wrote checks to his campaign
from those funds, all to avoid contribution limits. (Compl. ¶ 42). Further,
after becoming mayor, Dickert allegedly continued to accept money from
Tavern League members and other business owners in Racine. (Compl. ¶ 43).
He deposited that money into his campaign accounts for use in his 2011 reelection campaign, and allegedly has continued to receive such contributions.
(Compl. ¶ 43).
So, why did the donors make these allegedly illegal contributions to
current-Mayor Dickert? According to the plaintiffs, it was to both sway
Dickert’s agenda and to, essentially, buy positions in Racine’s municipal
government from which they could control the agenda further. (Compl.
¶¶ 41, 44).
The plaintiffs allege that “Dickert conspired with Alderpersons, Police
Department officials, the Downtown Racine Corporation, BID #1 Board
members, and business and property owners to prevent minority bar owners
from obtaining and/or maintaining their liquor licenses and to ensure white
Tavern League members kept their respective liquor licenses.” (Compl. ¶ 44).
According to this theory, the Police Department (presumably at currentPage 7 of 29

Mayor Dickert’s direction) would target minority-owned bars and report
crimes and other disturbances that occurred there at a higher rate. Citizens
(presumably at the control of either the Dickert campaign, the Tavern
League, or conspiring business owners) would do the same. Those reports
resulted in the minority-owned bars being called before the Common
Council for a hearing. There, the Common Council often required that the
minority-owned bars take expensive steps to combat the problems, such as
installing cameras or hiring off-duty police officers to provide security. If the
owners could afford to take such steps—and not all could, instead choosing
to voluntarily relinquish their licenses—they then had to walk a very tight
rope, because the slightest slip-up would result in additional hearings and,
eventually, the loss of their liquor licenses.2 Those lost liquor licenses were,
in turn, acquired by white individuals. (Compl. ¶¶ 44, 46–67, 90–138). Whiteowned bars, meanwhile, were reported far less often—occasionally even
receiving the benefit of having police officers list the location of a disturbance
as having occurred in a general area or separate address, so as to disguise the
fact that the disturbance had occurred in their bar. Then, even when the
white owners were called before the Common Council, they escaped with

2

This is a simplification of the hearing process, which was largely conducted
before the Licensing Committee (a sub-committee of the Common Council), but is
sufficient for the purposes deciding the motions to dismiss.

Page 8 of 29

less or no additional safety requirements and did not face the same licenseloss prospects that the minority owners did. (Compl. ¶ 68–89).3
And, if this course of conduct was intended to rid downtown Racine
of all minority-owned bars, it succeeded: there currently are not any
minority-owned bars in downtown Racine. (Compl. ¶ 65). The plaintiffs all
lost or relinquished their licenses, some after spending large amounts of
money on complying with Common Council safety requirements.
2.

PLAINTIFFS’ CLAIMS AND AGREEMENTS TO DISMISS
On the basis of those alleged facts, the plaintiffs filed suit against the

defendants. Their complaint alleges five separate claims.
(1)

The CRA conspiracy claim, pursuant to 42 U.S.C. § 1985(3). In
this claim, the plaintiffs claim that the defendants conspired to
deprive the plaintiffs of their civil rights, specifically the equal
protection of the law and equal privileges and immunities
under the law, on the basis of their race (Compl. ¶¶ 139–45).

(2)

The general CRA claim, pursuant to 42 U.S.C. § 1983. In this
claim, the plaintiffs allege that each of the defendants, acting
under color of state law, deprived the plaintiffs of their civil
rights, specifically the equal protection of the law and equal
privileges and immunities under the law, on the basis of their
race (Compl. ¶¶ 146–50).

3

In an effort to keep this order as short as possible, the Court has not
included all of the facts described by the plaintiffs. But those facts are enlightening.
The plaintiffs have provided a long recitation of the municipal actions taken against
them, which—when compared to those taken against white-owned bars with very
similar problems—are (on their face) clearly harsher than those directed at their
white counterparts. Of course, we are at an early stage of the proceedings and
discovery may ultimately reveal reasons for that treatment. Nonetheless, on its face,
the course of conduct is concerning.

Page 9 of 29

(3)

The RICO acquisition claim, pursuant to 18 U.S.C. § 1962(b). In
this claim, the plaintiffs allege that the defendants targeted the
plaintiffs and obtained power or control over their businesses
through a scheme of corrupt and illegal activities (Compl.
¶¶ 151–66).4

(4)

The RICO conduct claim, pursuant to 18 U.S.C. § 1962(c). In
this claim, the plaintiffs allege that the defendants conducted
corrupt and illegal activities through their businesses or the
Racine municipal government (Compl. ¶¶ 167–74).

(5)

The RICO conspiracy claim. In this claim, the plaintiffs allege
that the defendants conspired in carrying out the corrupt and
illegal activities. (Compl. ¶¶ 175–84).

One of the first giveaways that the plaintiffs’ complaint may have
problems is the fact that it totally fails to clarify who is making which of these
claims against whom and in what capacity. Rather than work with a rifle, the
plaintiffs unholstered their bazooka: without any clarifying language in the
complaint, it seems clear that each plaintiff intends to allege each claim against
each defendant (and in the case of the individual defendants, those claims are
against them in each of their capacities—official and individual).
They have attempted to walk that back a bit by agreeing to narrow
their claims slightly in the following ways:
(1)

dismissing all claims against Raymond DeHahn (Docket #49,
#50);

(2)

dismissing their RICO claims against Racine (Docket #45 at 41);

4

Or, at least, that is what they must be claiming, because 18 U.S.C. § 1962(b)
is directed at preventing unlawful acquisition of power or control of a business.
However, as the Court will discuss in further detail, the plaintiffs do not seem to
flesh out the power/control aspect of their claim.

Page 10 of 29

(3)

dismissing their RICO claims against individual Municipal
Defendants (Dickert, Becker, Wahlen, Coe, Kaplan, DeHahn,
Helding, Maack, Wisneski, Mozol, Sutherland, Levine, LeGath
and Bach), to the extent that such claims were made against
them in their “official capacity” (Docket #45 at 41);

(4)

dismissing their CRA claims against the individual Municipal
Defendants (Dickert, Becker, Wahlen, Coe, Kaplan, DeHahn,
Helding, Maack, Wisneski, Mozol, Sutherland, Levine, LeGath
and Bach) in their “official capacity” (Docket #45 at 43);

(5)

dismissing their RICO acquisition claim, pursuant to 18 U.S.C.
§ 1962(b), against Downtown Racine Corporation (Docket #57
at 9); and

(6)

dismissing their RICO acquisition claim, pursuant to 18 U.S.C.
§ 1962(b), against the Political Staff Defendants (Osterman,
Jerger, and Nicholson) (Docket #52 at 7).

To some further unspecified extent, the plaintiffs have also acknowledged or
not disputed that portions of their claims cannot lie in the following manner:
(1)

that plaintiffs Davalos, Jones, and Fair cannot sustain their
claims against the Municipal Defendants on the Common
Council to the extent those claims are based upon the Common
Council’s decision to revoke or to not renew their liquor
licenses (though they assert that they can maintain their claims
relating to “side agreements”) (Docket #45 at 48);

(2)

that plaintiffs Khampane, Nueakeaw, and Holmes cannot
sustain their claims against Municipal Defendant Maack to the
extent those claims are based upon the Common Council’s
decision to revoke or to not renew their liquor licenses (though
they assert that they can maintain their claims relating to “side
agreements”) (Docket #45 at 49–50); and

(3)

that plaintiffs Fair and Holmes cannot sustain their claims
against Municipal Defendant Wisneski to the extent those
claims are based upon the Common Council’s decision to
revoke or to not renew their liquor licenses (though they assert
that they can maintain their claims relating to “side
agreements”) (Docket #45 at 49–50).

Page 11 of 29

On this basis alone, the Court would find it appropriate to dismiss the
plaintiffs’ complaint in order to have them file an amended version. Frankly,
given the breadth of the complaint and the plaintiffs’ vague and haphazard
attempts to pare it back, the Court is seriously confused about what claims
are viable and against whom. Without a doubt, the parties, including the
plaintiffs, must be too. Therefore, it would be appropriate to require an
amended complaint if only so that the plaintiffs could clarify what claims
they are actually continuing to assert in this case.
3.

DISCUSSION
There are, however, other problems with the complaint. Rather than

dismiss it on that basis alone to allow a clarifying amendment, only to have
the same disputes bubble up to the surface again, the Court will address the
merits of the defendants’ motions to dismiss.
In doing so, the Court must accept all of the plaintiffs’ well-pleaded
factual allegations as true to determine whether the complaint states “‘a
claim to relief that is plausible on its face.’” Iqbal, 556 U.S. at 663 (quoting Bell
Atlantic Corp. v. Twombly, 550 U.S. at 570). “A claim has facial plausibility
when the plaintiff pleads factual content that allows the court to draw the
reasonable inference that the defendant is liable for the misconduct alleged.”
Iqbal, 556 U.S. at 678. This plausibility requirement helps “to protect
defendants from having to undergo costly discovery unless a substantial case
is brought against them.” United States v. Vaughn, 722 F.3d 918, 926 (7th Cir.
2013).
With that standard in mind, the Court turns to addressing the
substance of the defendants’ motions to dismiss. Because of the vast number
of allegations and the fact that those allegations affect different groups of

Page 12 of 29

defendants in different ways, the Court will address each group’s motion to
dismiss separately.
3.1

Municipal Defendants

The Municipal Defendants’ motion to dismiss is the most substantial.
In it, they point out serious problems with the plaintiffs’ CRA and RICO
claims against them.
3.1.1

CRA Claims

The Municipal Defendants have several valid concerns with the
plaintiffs’ CRA claims.
3.1.1.1 No Third Party Standing
First, the Municipal Defendants are right to clarify that the plaintiffs
cannot bring claims on one another’s behalf. It may not have been the
plaintiffs’ intent, but because their complaint does not specify individual
claims, it seems that each individual plaintiff may be trying to allege claims
on behalf of other plaintiffs or unnamed parties. To the extent they are
attempting to do so, that is impermissible. See, e.g., Elk Grove Unified Sch. Dist.
v. Newdow, 542 U.S. 1, 17–18 (2004) (litigant cannot sue in federal court to
enforce the rights of third parties); Rawoof v. Texor Petroleum Co., Inc., 521 F.3d
750, 757 (7th Cir. 2008). There is no doubt that each plaintiff has standing to
bring his or her own CRA claims, and allegations with respect to other
plaintiffs may be pertinent to each individual plaintiff’s claims. (Docket #45
at 42). The confusion creeps in because the plaintiffs lumped every single one
of their individual claims into single claim sections for 42 U.S.C. § 1983 and
42 U.S.C. § 1985(3), respectively. (Compl. ¶¶ 139–50). That joining of the
multiple individual claims only serves to confuse matters. Therefore, in filing
an amended complaint, the plaintiffs should be sure to specify the extent of
their individual claims.
Page 13 of 29

3.1.1.2 Statute of Limitations on Maldonado Claims
Second,5 there appear to be statute of limitations issues with the
Maldonado plaintiffs’ CRA claims. Under the applicable statute of limitations
supplied by Wisconsin law, the Maldonados had to bring their CRA claims
within six years of the date when they knew or should have known that their
constitutional rights were violated. See, e.g., Reget v. City of La Crosse, 595 F.3d
691, 694 (7th Cir. 2010) (six year limitations period on 42 U.S.C. § 1983 actions
brought in Wisconsin, pursuant to Wis. Stat. § 895.53); Gray v. Lacke, 885 F.2d
399, 409 (7th Cir. 1989) (same); Draper v. Martin, 664 F.3d 1110, 1113 (7th Cir.
2011) (limitations period accrues when plaintiff knew or should have known
of violation); Hileman v. Maze, 367 F.3d 694, 696 (7th Cir. 2004) (same); Kelly
v. City of Chicago, 4 F.3d 509, 511 (7th Cir. 1993) (same). The Seventh Circuit
uses a two-step test to determine the accrual date: first, identifying the injury,
and, second, determining when the plaintiff could have sued for that injury.
Draper, 664 F.3d at 1113 (citing Hileman, 367 F.3d at 696).
So, what was the Maldonados’ injury? Presumably when they were
the victims of harmful actions—being subject to a due process hearing and
“fines, threats, calls, and visits”—that forced them to sell their property, all
of which allegedly occurred on the basis of their race.
Next, when could the Maldonados have sued for that injury? This
question is up for debate. The Municipal Defendants argue that it accrued no
later than January 9, 2007, the date on which the Maldonados sold their
establishment. This would be the case if the Court were to adopt the

5

The Municipal Defendants have made other arguments against the
plaintiffs’ complaint, some of which the plaintiffs agreed with. (See Docket #45, at
43). The Court has already addressed the plaintiffs’ concessions in that regard in
Section 2, supra. Therefore, the Court does not repeat them in this section.

Page 14 of 29

Municipal Defendants’ arguments and find that the Maldonados should have
been aware that they were treated disparately from white owners, because
those white owners’ liquor license renewals were a matter of public record.
(See, e.g., Docket #58 at 25–26). That argument gives every appearance of a
stretch: it assumes that the Maldonados should have been aware of the issues
at other establishments and aware that the owners were white, then utilized
that information in conjunction with the public knowledge that the white
owners’ liquor licenses had been renewed. Thus, while the Municipal
Defendants cite persuasive authority for the proposition that the Court
should not extend the CRA accrual date when the Maldonados could have
discovered their injury on the basis of public records (Docket #58 at 26)
(citing Wise v. Hubbard, 769 F.2d 1, 2–3 (1st Cir. 1985); Perry H. Bacon Trust v.
Transition Partners, Ltd., 298 F. Supp. 2d 1182, 1191–92 (D. Kan. 2004); Vieyra
v. Harris County, No. 10-CV-1412, 2010 WL 4791518, at *5 (S.D. Tex. Nov. 17,
2010); Hanson v. Johnson, No. Civ. 02-3709, 2003 WL 21639194, at * 3, *5 n.2 (D.
Minn. June 30, 2003); Soliman v. Philip Morris Inc., 311 F.3d 966, 975 (9th Cir.
2002)), the Maldonados would have needed much more detailed knowledge
to have known they could sue for their injury.
Thus, in the end, the Court determines that the Maldonados may
maintain their claims in the amended complaint. In other words, in
dismissing the complaint, the Court does not do so with prejudice against the
Maldonados.
However, the Maldonados should be aware that their claims remain
on thin ice. The Court has not definitively determined that their claims
escape the statute of limitations. Rather, it has found only that—on the basis
of the record before it—the claims escape dismissal at this early stage. If there
is reason to believe that the Maldonados should have known that their claims
Page 15 of 29

had accrued (or if the defendants can provide controlling or better-applicable
law), then their claims may still be subject to dismissal.
3.1.1.3 Failure to Allege Personal Involvement
Third, one of the symptoms of the plaintiffs’ overly-broad complaint
is the fact that they fail to adequately allege that certain of the Municipal
Defendants had any personal involvement in the alleged deprivations of the
plaintiffs’ civil rights. Of course, to be held liable under 42 U.S.C. § 1983, an
individual defendant “must be ‘personally responsible for the deprivation of
a constitutional right.’” Sanville v. McCaughtry, 266 F.3d 724, 740 (7th Cir.
2001) (quoting Chavez v. Ill. State Police, 251 F.3d 612, 651 (7th Cir. 2001)).
Unfortunately, in painting with a broad brush, the plaintiffs fail to explain
how a number of the Municipal Defendants—specifically Becker, Wahlen,
Sutherland, Levine, LeGath, and Bach—had any personal responsibility for
depriving the plaintiffs of their civil rights. By and large, the allegations are
too bare-bones to find even the spectre of personal responsibility; meanwhile,
the plaintiffs do not explain how some defendants—Bach, for example, who
did not begin working for Dickert until 2009—should be liable to each of the
plaintiffs, even those who suffered alleged deprivations when those
defendants could not have participated in a deprivation.6
Again, this is a problem that stems from the plaintiffs’ overly-broad
complaint. In failing to connect the dots between each individual plaintiff’s
claims against each individual defendant, the plaintiffs have failed to plead
42 U.S.C. § 1983 claims against many of the named Municipal Defendants.

6

The same discussion applies to the plaintiffs’ claims against Maack and
Wisneski, which it seems that the plaintiffs have conceded they cannot maintain,
though that is not absolutely clear. (See Section 2, supra). If the plaintiffs elect to
amend their complaint, they should keep these facts in mind.

Page 16 of 29

This is not a basis to dismiss those claims with prejudice, though. The
plaintiffs may amend their complaint to clearly specify the defendants’
personal involvement.
3.1.2

RICO Claims

Each plaintiff apparently alleges three separate RICO claims against
each defendant, pursuant to 18 U.S.C. §§ 1962(b), 1962(c), and 1962(d),
respectively. There are multiple problems with each claim.
3.1.2.1

Failure to Adequately Allege Predicate Acts
Dooms All Three RICO Claims

While 18 U.S.C. §§ 1962(b), 1962(c), and 1962(d) each have distinct
elements, they all require the existence of a “pattern of racketeering activity.”
See 18 U.S.C. §§ 1962(b–d) (the terms of subsection (d) may not specifically
mention a pattern requirement, but in requiring a violation of subsection (a),
(b), or (c), it effectively imports those sections’ pattern requirement). A
pattern of racketeering activity requires at least two “predicate acts” of
racketeering activity. 18 U.S.C. § 1961(5). This means that the plaintiffs have
to have pleaded at least two “act[s] or threat[s] involving…bribery [or]
extortion…,” in order to state a claim under 18 U.S.C. §§ 1962(b), 1962(c), and
1962(d). See, e.g., 18 U.S.C. §§ 1961(1, 5), 1962(b–d).
The Court begins by again highlighting the lack of clarity in the
plaintiffs’ complaint. Despite providing a fairly detailed factual recitation at
the beginning of their complaint, the plaintiffs never circle back to those facts
in their RICO claims section to provide a specific detail of what they believe
the predicate acts to be.
However, reading the complaint as broadly as possible, the Court
agrees with the Municipal Defendants that there may be two groups of acts
that may constitute predicate acts: (1) the alleged interference with the
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plaintiffs’ liquor licenses (“the Liquor License Acts”); and (2) the alleged
bribes and improper contributions to current-Mayor Dickert during his
campaign, which are now allegedly ongoing (“the Campaign Acts”). (Docket
#26 at 12).
3.1.2.1.1

Liquor License Acts

The Liquor License Acts, at least on the state of the pleadings, cannot
be treated as predicate acts. To begin, to the extent that the plaintiffs may be
arguing that the Liquor License Acts constituted civil rights violations,
which, in turn, constitute predicate acts, they are incorrect as a matter of law.
See, e.g., Jennings v. Emry, 910 F.2d 1434, 1438 (7th Cir. 1990) (violations of
civil rights are not RICO predicate acts); Giuliano v. Fulton, 399 F.3d 381, 388
(1st Cir. 2005) (same). The plaintiffs do not seem to push that argument,
though.
Instead, they try to convince the Court that the Liquor License Acts
constitute extortion, under both federal law (18 U.S.C. § 1951) and state law
(Wis. Stat. § 943.30). (Docket #45 at 11–17). Extortion would, of course,
qualify as a predicate act. 18 U.S.C. § 1961(5). The problem is that the factual
allegations are not sufficient to escape Rule 12(b)(6) dismissal.
Under federal law, there is no extortion where the sole beneficiary is
a governmental entity. Wilkie v. Robbins, 551 U.S. 537, 564–66 (2007). On the
state of the pleadings, it seems as if Racine was the sole beneficiary of the
Liquor License Acts.
Of course, the plaintiffs disagree. They argue that their allegations
“clearly support the reasonable inference that Defendants stood to gain
financially, and otherwise, from their extortionate acts.” (Docket #45 at 18).
But the plaintiffs do not explain how their allegations support those
assertions. Perhaps they mean that, in taking action against the plaintiffs, the
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defendants received financial rewards or secured liquor licenses for
themselves or others. But there are no specific allegations in the complaint
stating so.
The plaintiffs also argue that the Municipal Defendants benefitted
politically from their acts. It is a regular occurrence that an elected
official—such as an elected sheriff—takes a tough-on-crime stance, which
results in (typically lawful) deprivations of others’ liberties, and for which the
official is eventually rewarded politically by the electorate. The Court
hesitates to classify such activity as extortion, as it would seem to open up a
world of lawsuits against elected officials who are zealous in carrying out
their otherwise lawful functions.7
As to the whether the Liquor License Acts satisfy Wisconsin’s
extortion statute, an argument first raised in the plaintiffs’ response briefs,
the Court finds similar problems. To begin, there is a similar government-asbeneficiary problem. There is no Wisconsin case law on the topic, but the
Court struggles to see how the outcome should differ under Wisconsin law
as compared to federal law (although, if this issue comes up again, the Court
will welcome argument from the plaintiffs on the topic). Additionally, the
allegations simply do not raise the specter of an extortionate scheme: it is
unclear what the plaintiffs were threatened with to coerce them to act.
Finally, as with just about every other aspect of the plaintiffs’
complaint, the plaintiffs simply never specify who actually did what that
would satisfy the elements of either 18 U.S.C. § 1951 and state law Wis. Stat.
§ 943.30.

7

The Court is not entirely foreclosing this issue. If it comes up again later in
the case, the plaintiffs are free to brief it further, but the Court will not side with
them absent citation to solid authority.

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3.1.2.1.2

Campaign Acts

Likewise, the Campaign Acts cannot be treated as predicate acts on
the state of the pleadings. Any potential violations of Wisconsin’s campaign
finance laws, as found in Wisconsin Statutes Chapter 11, would not
necessarily constitute predicate acts. The terms of 18 U.S.C. § 1961(5) do not
clearly include campaign finance violations. Furthermore, as the Municipal
Defendants correctly point out, there is some question as to whether
Wisconsin’s campaign finance laws are even valid in light of recent Supreme
Court and Seventh Circuit decisions. (Docket #26 at 20 n. 9 (citing
McCutcheon v. Federal Election Comm’n, --- U.S. ----, 134 S.Ct. 1434 (2014); Wis.
Right to Life, Inc. v. Barland, No. 12-2915, --- F.3d ---- (7th Cir. May 14, 2014))).
Finally, even if Chapter 11 violations were predicate acts, the plaintiffs have
done nothing more than provide conclusory allegations that such violations
occurred. The Court is not applying a heightened pleading standard when
it finds so: simply put, the plaintiffs have not alleged any factual matter to
support a finding of a Chapter 11 violation, instead providing only
conclusions that such violations occurred. (See, e.g., Compl. ¶¶ 41–43 (stating
that excess contributions were made and falsely reported, but providing no
factual detail in support)).
The plaintiffs’ argument that the Campaign Acts constituted bribery
also fails for lack of specificity. The plaintiffs have not alleged any
communication between the multiple defendants to indicate an agreed quid
pro quo transaction, as would be necessary to establish bribery. See Kaye v.
D’Amato, 357 Fed. App’x 706, 714 (7th Cir. 2009). There are no allegations
regarding who paid what to whom and in exchange for what; thus, all of the
hallmarks of a bribery claim—be it under federal law (18 U.S.C. §§ 201(b),
201(c)) or state law (Wis. Stat. § 11.25(1))—are entirely missing, except for the
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bald conclusory statements that excess donations or improper loans were
made for the purpose of a quid pro quo transaction.
Likewise, the plaintiffs’ argument that money laundering occurred is
not adequately supported. Again, there are no factual allegations to support
a finding of money laundering—only a bald conclusion that there was money
laundering. This is not enough.
Finally, to the extent that the plaintiffs argue that the Campaign Acts
(or for that matter, the Liquor License Acts) fall under the definition of
“predicate acts” as defined by Wisconsin’s state RICO act, that fact would be
irrelevant. The Court cannot find a federal RICO violation without a federal
RICO predicate act. There may be some substantial overlap between the two
statutes, but Wisconsin RICO predicate acts do not per se constitute federal
RICO predicate acts.
In the end, given the myriad other issues with the complaint, the
Court was going to dismiss this complaint anyway and this predicate acts
analysis is of little impact. Perhaps, if that were not the case, the Court would
have given the plaintiffs’ claims a more charitable reading. But, given that the
plaintiffs must amend their complaint anyway, the Court raises these
concerns with the hope that the plaintiffs will consider them and draft their
complaint taking them into account.8

8

The plaintiffs’ failure to plead any RICO predicate acts effectively prevents
the Court from determining whether they sufficiently alleged a “pattern of
racketeering activity.” See DeGuelle c. Camilli, 664 F.3d 192, 199 (7th Cir. 2011) (citing
H.J. Inc. v. Northwestern Bell Telephone Co., 492 U.S. 229 (1989)). The Municipal
Defendants argue that the plaintiffs have failed to make allegations in that regard
but, without any predicate acts to analyze for a pattern, the Court finds that it is
wiser not to reach that question.

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3.1.2.2

Plaintiffs’ RICO Standing

The Municipal Defendants also argue that the plaintiffs lack standing
to pursue their RICO claim because they failed to allege that each Municipal
Defendant engaged in at least two predicate acts and that such predicate acts
harmed the plaintiffs. This is an important point for the plaintiffs to consider
in drafting their amended complaint.
Though the Seventh Circuit has never specifically stated so, the
Second Circuit has made clear that, to succeed on a RICO claim against any
given defendant, the plaintiff must prove the elements of the claim against
that defendant. DeFalco v. Bernas, 244 F.3d 286, 315 n.19 (2d Cir. 2000). In
other words, if a plaintiff sues twenty defendants, she must prove every
element of her claim against each defendant if she wishes to recover from
each of them. This is a wise rule: why should defendants who did not
engage, for example, in at least two predicate acts be held liable on a RICO
claim simply because they were named with other defendants who did
commit the two predicate acts?
The Municipal Defendants also point out that the plaintiffs’ RICO
claims do not make clear which defendants’ actions harmed which plaintiffs.
As a simple matter of standing, the individual plaintiffs cannot maintain
claims against defendants who did not harm them. E.g. Lujan v. Defenders of
Wildlife, 504 U.S. 555, 560–61 (1992) (requiring a causal connection between
plaintiff’s alleged injury and challenged action of defendant). Thus, where
the plaintiffs do not make clear how they were harmed by specific
defendants’ actions, it is not clear that they have standing to sue those
specific defendants.
These rules are important and should be considered but do not
necessarily mean that each plaintiff must absolutely plead two specific
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predicate acts separately against every defendant he or she is suing. That
may be the wiser course of action, but given that the Court is looking for
“plausibility,” that does not seem that it is an absolute requirement.
This is not an invitation to engage in the same sort of vague drafting
that the Court has seen so far, though. Here is what is clear: each plaintiff
must allege facts that, taken as true, would show a claim to relief that is
plausible on its face. Iqbal, 556 U.S. at 663. In other words, the Court will not
allow them to escape dismissal simply by pleading a host of facts which they
then incorporate into claims against all or groups of the defendants. Rather,
the Court expects to see each plaintiff who wishes to assert a RICO claim to
plead factual allegations, as specifically as possible, against the specific
defendant(s) they allege that claim against so as to show a claim to relief that
is plausible on its face. The Court cannot tell the plaintiffs how to do
this—that is a matter of judgment. Suffice it to say that, absent factual
allegations that would establish facial plausibility of RICO claims against
specific defendants by specific plaintiffs, the Court will be obliged to dismiss
the RICO portions of the plaintiffs’ amended complaint.
3.1.2.3

§ 1962(d) Claims

Finally, the Court points out that it agrees with the Municipal
Defendants that, to the extent that the plaintiffs fail to plead an agreement
that would violate either 28 U.S.C. §§ 1962(b) or 1962(c), they also fail to state
a claim under 28 U.S.C. § 1962(d). For the reasons described above, the
plaintiffs have not adequately stated facts that would show either a scheme
that would violate 28 U.S.C. §§ 1962(b) or 1962(c) or an agreement to engage
in such a scheme. In drafting their amended complaint, the plaintiffs should
keep this in mind, so as to ensure that they adequately plead those elements.

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3.2

Political Staff Defendants

Next, the Court turns to the motion to dismiss filed by the Political
Staff Defendants—Osterman, Jerger, and Nicholson. They raise some of the
same arguments as the Municipal Defendants and some additional
arguments specific to their own circumstances. The Court addresses all of
those arguments, as follows.
3.2.1

CRA Claims

The Court finds that the plaintiffs’ CRA claims against the Political
Staff Defendants are troubled for the same reasons described in Sections
3.1.1.1, 3.1.1.2, and 3.1.1.3, supra, in addition to the fact that the plaintiffs have
not pleaded factual allegations in sufficient detail as against the Political Staff
Defendants. Thus, as the Court has repeated several times, the plaintiffs
should ensure that their amended complaint adequately addresses these
issues.
The Court also points out that it is unclear whether the Political Staff
defendants engaged in state action so as to allow them to be liable under 42
U.S.C. § 1983. In any event, to the extent that the plaintiffs wish to proceed
against the Political Staff Defendants under 42 U.S.C. § 1985(3), they must
bear in mind the need to allege concerted action between the Political Staff
Defendants and the government actors.
3.2.2

RICO Claims

The Political Staff Defendants also object to the RICO claims against
them on several grounds.
3.2.2.1

Lack of Mayoral Power over Liquor Licenses

The Political Staff Defendants argue that they cannot possibly be liable
for RICO claims because, to the extent that they engaged in any bribery or
extortion, they did so in relation to the mayor, who lacks power to issue or
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revoke liquor licenses. (See, e.g., Docket #52 at 2–4). The plaintiffs certainly
should have made their points on these allegations more clearly in their
complaint. But, the Court has already decided to allow the plaintiffs to
amend their complaint. It seems as though the plaintiffs are alleging that the
mayor engaged in other, non-legislative activities as part of the alleged
scheme (for instance, directing the police officers to focus more heavily on
minority-owned businesses). This may play into a RICO scheme. Though
tenuous, the Court will not foreclose the plaintiffs from trying to connect
these dots in their amended complaint.
3.2.2.2

Bribery and 18 U.S.C. §§ 201(b), 201(c)
Violations Not Sufficiently Pleaded

The Political Staff Defendants also argue that—to the extent that the
plaintiffs allege bribery or a violation of 18 U.S.C. §§ 201(b) or 201(c) as a
predicate act—such allegations are not sufficiently pleaded. The Court
agrees. If the plaintiffs wish to sustain those claims in their amended
complaint, they should be sure to pay close attention to the elements of those
claims and be sure to include facts that would establish the facial plausibility
of the claims.
3.2.2.3

Lack of Enterprise Allegations

The plaintiffs’ complaint is also devoid of any allegations that would
show that the Political Staff Defendants played a significant role in the
operation or management of an enterprise. See, e.g., United States v.
Cummings, 395 F.3d 392, 397–400 (7th Cir. 2005). This does not necessarily
mean that the Court is finding that the plaintiffs cannot adequately plead
such allegations—only that, in amending their complaint, the plaintiffs must
allege sufficient facts that would do so.

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3.2.2.4

Actions Prior to Dickert’s Election

The Political Staff Defendants have been brought into this case
primarily because of their association with current-Mayor Dickert’s
campaign. To the extent that the plaintiffs argue that the Political Staff
Defendants should be liable to any of the plaintiffs for activities that occurred
before that campaign, they need to reexamine their contentions. Perhaps the
plaintiffs have some basis to believe that the Political Staff defendants were
involved in some of the pre-campaign activities, but that is not at all clear
from the complaint. If the plaintiffs maintain their complaint against the
Political Staff defendants on this basis, they had better provide clear
allegations to establish how the political staff defendants could possibly be
liable for pre-campaign activities.
3.3

Downtown Racine Corporation9

Downtown Racine Corporation (and its executive director, Devin
Sutherland) by and large reiterate the Municipal Defendants’ arguments as
to the CRA and RICO claims. Accordingly, for the same reasons described in
Sections 3.1.1 and 3.1.2, supra, the Court finds that the plaintiffs cannot
sustain their claims against Downtown Racine Corporation and Sutherland.
(The Court’s analysis of the Political Staff Defendants in Sections 3.2.1 and
3.2.2, supra, is also relevant to the plaintiffs’ claims against Downtown Racine
Corporation and Sutherland.) Again, the plaintiffs will be permitted to

9

Downtown Racine Corporation’s brief also addresses the plaintiffs’ claims
against Devin Sutherland, who seems to be separately represented as one of the
Municipal Defendants. (See Docket #58, purporting to have been made on behalf of
Sutherland). It is not entirely clear which group Sutherland falls into—a
determination that is made all the more difficult by the fact that Sutherland is
mentioned only once in the plaintiffs’ complaint and his role in the alleged activities
is otherwise left entirely unclear. (Compl. ¶ 29).

Page 26 of 29

amend their complaint as more fully described in those sections to ensure
that they adequately state claims against Downtown Racine Corporation and
Sutherland.
3.4

Tavern League

The Tavern League reiterates many of the arguments raised by the
Municipal Defendants and the Political Staff Defendants. Accordingly, for the
same reasons described in Sections 3.1.1, 3.1.2, 3.2.1, and 3.2.2, supra, the
court finds that the plaintiffs cannot sustain their claims against the Tavern
League. The plaintiffs will also be permitted to amend their complaint as
more fully described in those sections to ensure that they adequately state
claims against the Tavern League.
Finally, to address the Tavern League’s one argument that is not
addressed elsewhere, the Court advises the plaintiffs that, if they wish to
sustain their action against the Tavern League, they should make clear how
the Tavern League—itself, as opposed to its individual members—is liable
for any claim they levy against it.
4.

CONCLUSION
In sum, the Court will grant the defendants’ motions and dismiss the

plaintiffs’ complaint in its entirety. The complaint is so broad and vague as
to be virtually functionless. The Court will, however, allow the plaintiffs to
amend their complaint. In doing so, the plaintiffs should give careful
consideration to the Court’s discussion, above. Perhaps most importantly, the
plaintiffs need to ensure that each of their separate claims is clearly
delineated and supported by factual allegations.
By filing such a broad and vague complaint, the plaintiffs imposed
significant burdens on a broad swath of defendants. Many of those
defendants seem to have had little involvement in the activities that the
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plaintiffs complain of. Thus, the Court admonishes the plaintiffs to carefully
consider what claims they are bringing and against whom and avoid
bringing meritless claims against blameless defendants. The plaintiffs’
shotgun approach in their initial complaint is likely one of the reasons that
the plaintiffs felt the need to make their individual claims so vague. Working
with a scalpel rather than a butcher knife requires more time, but leads to a
more precise result. And that precision will pay dividends in the long run,
allowing the Court and parties to avoid worthless discovery (and attendant
disputes), motions, jury instructions, and the other trappings of litigation that
only grow more complex with additional superfluous parties.
The Court requests that the parties be sure to engage in meaningful
discussions with each other at every stage of the litigation. For instance, to
the extent that, in future briefing, the multiple groups of defendants find that
their arguments overlap, they may wish to file a joint motion. This would
reduce the number of duplicative arguments being made before the Court.
Likewise, it would be wise for the parties to discuss the plaintiffs’ amended
complaint as it is being drafted. In doing so, the parties may realize that they
can reach some common ground as to what claims and defendants should
remain in the case.
Finally, the Court addresses the Municipal Defendants’ request that
the Court require a RICO case statement in the plaintiffs’ amended
complaint, as is standard practice in the Eastern District of Louisiana. (Docket
#58 at 30). To be sure, a RICO case statement may be a very useful item to
include in a RICO complaint. The plaintiffs should certainly consider
including it. The Court will not, however, require such a statement. The
pleading standards are those described in Iqbal, Twombly, and Rule 8 of the
Federal Rules of Civil Procedure. If the plaintiffs satisfy those standards in
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their amended complaint—with or without a RICO case statement—only
then the Court will allow the case to proceed.
Accordingly,
IT IS ORDERED that the plaintiffs’ complaint be and the same is
hereby DISMISSED without prejudice; the plaintiffs shall file an amended
complaint within 21 days of the entry of this order; the defendants shall have
21 days after the plaintiffs have filed an amended complaint to file their
respective answers or appropriate motions.
Dated at Milwaukee, Wisconsin, this 30th day of July, 2014.
BY THE COURT:

J.P. Stadtmueller
U.S. District Judge

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