Comsys Inc et al v. City of Kenosha Wisconsin et al
Filing
41
ORDER signed by Judge J P Stadtmueller on 11/29/16 granting in part and denying in part 37 Defendants' Motion to Dismiss: GRANTED insofar as it relates to: (1) the official capacity claims asserted against the individually named Defendants; and (2) Count Three; and, DENIED insofar at it relates to all remaining counts. See Order. (cc: all counsel) (nm)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WISCONSIN
COMSYS, INC. and
KATHRYNE L. MCAULIFFE,
Case No. 16-CV-655-JPS
Plaintiffs,
v.
THE CITY OF KENOSHA WISCONSIN,
THE CITY OF KENOSHA WATER UTILITY,
FRANK PACETTI, EDWARD ST. PETER,
MERRIL A. KERKMAN, JR.,
KEITH G. BOSMAN, ERIC J. HAUGAARD,
RHONDA JENKINS, JAN MICHALSKI,
ROCCO L. LaMACCHIA, SR., DAVE PAFF,
KURT WICKLUND, KEITH W. ROSENBERG,
ANTHONY KENNEDY, SCOTT N. GORDON,
CURT WILSON, DANIEL L. PROZANSKI, JR.,
JACK ROSE and ROBERT C. JOHNSON,
ORDER
Defendants.
On June 3, 2016, Comsys, Inc. and Kathryne McAuliffe (collectively,
“the plaintiffs”) filed this lawsuit against The City of Kenosha, The City of
Kenosha Water Utility, and seventeen (17) government officials (collectively,
“the defendants”) under 42 U.S.C. §§ 1983, 1985, 1986 and 1988 seeking
damages to remedy various First, Fourth, and Fifth Amendment violations.
(See generally Docket #1; see also Docket #31 at ¶¶ 1, 122-269 (amended
complaint)). Pursuant to this Court’s supplemental jurisdiction, the plaintiffs
also seek damages for violations of Wisconsin law. (See Docket #31 at ¶¶ 4,
270 -326). The allegations underlying both the federal and state law claims
concern certain information technology (“IT”) service contracts that The City
of Kenosha (“the City”) and The City of Kenosha Water Utility (“the Water
Utility”) entered into with Comsys, Inc. from approximately 1987 until 2015.
(Docket #31 at ¶¶ 32-42). According to the amended complaint, the events
that led up to—and ultimately culminated in—the termination of these IT
service contracts involved a complex conspiracy among the various
government officials that are named in this lawsuit, including the mayor, the
city administrator, the general manger of the Water Utility, the City’s
director of IT, and thirteen (13) Alderpersons. (Docket #31 at ¶¶ 32-121).
Pursuant to Federal Rule of Civil Procedure 12(b)(6), the defendants
filed a motion to dismiss the amended complaint in its entirety. (Docket #37).
That motion is now fully briefed and ripe for adjudication. (Docket #38, #39,
#40). For the reasons stated herein, and as more fully described below, the
Court will grant the defendants’ motion in part, and deny it in part.
1.
BACKGROUND
Before delving into the legal issues underlying the defendants’
motion, the Court will first provide an overview of: (1) the parties to this
litigation; and (2) the factual background of the case.1
1.1
The Parties
Comsys, Inc. (“Comsys”) is a private, for-profit Wisconsin corporation
based in Racine. (Docket #31 at ¶ 6). Comsys is engaged in computer facilities
management throughout the southeastern section of the State. (Docket #31
at ¶ 6). Kathryne McAuliffe (“McAuliffe”)—an adult female citizen who also
resides in Racine—is Comsys’ sole shareholder. (Docket #31 at ¶¶ 6-7).
1
This Court derives its jurisdiction over this action from 18 U.S.C. §§ 1331,
1367. (Docket #31 at ¶¶ 1, 4). For the purposes of ruling on the defendants’ motion
to dismiss, the Court will draw the relevant facts from the plaintiffs’ amended
complaint. (See Docket #31); see also Rosenblum v. Travelbyus.com Ltd., 299 F.3d 657,
661 (7th Cir. 2002) (“As a general rule, on a Rule 12(b)(6) motion, the court may
consider only the plaintiffs’ complaint.”); Duda v. Bd. of Educ. of Franklin Park Pub.
Sch. Dist. No. 84, 133 F.3d 1054, 1057 (7th Cir. 1998) (explaining that an “amended
complaint bec[omes], upon its submission, the operative complaint in the case”).
Page 2 of 35
In this case, the plaintiffs are suing two municipal entities: the City
and the Water Utility. (Docket #31 at ¶¶ 8-9). The City is a municipal,
political subdivision of the State of Wisconsin, duly organized and operating
under the laws of the State. (Docket #31 at ¶ 8). The Water Utility is likewise
a municipal, political subdivision of the State of Wisconsin, duly organized
and operating pursuant to Wis. Stat. § 66.068. (Docket #31 at ¶ 9).
The plaintiffs have also named as defendants:
1.
Keith G. Bosman (“Mayor Bosman”)—an adult citizen and
resident of the City and County of Kenosha—who at all times
relevant, was elected and employed as the mayor of the City;
2.
Frank Pacetti (“Pacetti”)—an adult citizen and resident of the
City and County of Kenosha—who at all times relevant was
employed as the city administrator for the City;
3.
Edward St. Peter (“General Manager St. Peter”)—an adult
citizen and resident of the City and County of Kenosha—who
at all times relevant was employed as the general manager for
the Water Utility;
4.
Merril A. Kerkman, Jr. (“Kerkman”)—an adult citizen and
resident of the County of Kenosha—who, prior to May 1, 2014,
was an employee of Comsys, and, from May 1, 2014, to the
present, has been employed as the City’s director of IT.
(Docket #31 at ¶¶ 10-13).
Also named in this action are thirteen (13) individuals who, at all times
relevant, were elected and employed as Alderpersons for the City: (1) Eric J.
Hauggard; (2) Rhonda Jenkins; (3) Jan Michalski; (4) Scott N. Gordon; (5)
Rocco J. LaMacchia, Sr.; (6) Dave Paff; (7) Kurt Wicklund; (8) Keith W.
Rosenberg; (9) Anthony Kennedy; (10); Curt Wilson; (11) Daniel J. Prozanski,
Page 3 of 35
Jr.; (12) Jack Rose; and (13) Robert C. Johnson. (Docket #31 at ¶¶ 14-26).2 In
addition to their roles as Alderpersons, Eric J. Hauggard, Rhonda Jenkins, Jan
Michalski, and Scott N. Gordon also served, in various capacities, on the
Board of Water Commissioners for the Water Utility. (Docket #31 at ¶¶ 14-16,
22). For the sake of clarity, the thirteen (13) Alderpersons named in this suit
will be collectively referenced hereinafter as the “Alderperson defendants,”
and the four (4) Alderpersons who also served on the Board of Water
Commissioners will be collectively referenced hereinafter as the
“Commissioner defendants.”
1.2
Factual Background
Though the amended complaint spans over eighty (80) pages and
asserts nineteen (19) federal and state law counts against the defendants, the
Court will attempt to overview only those pertinent facts to the defendants’
motion. (Docket #31). Beginning in 1987, Comsys began performing IT
services for the City and the Water Utility as an independent computer
facilities management provider. (Docket #31 at ¶¶ 32-33). In that role,
Comsys
performed
various
functions
such
as
furnishing
professional/technical assistance in connection with IT management,
information system administration, and programming support services.
(Docket #31 at ¶¶ 32-33). During this working relationship, Comsys entered
into various IT service contracts with both the City and the Water Utility.
(Docket #31 at ¶¶ at 37-43).
2
The amended complaint alleges that each of the named defendants in this
case has acted under the “color of state law.” (Docket #31 at ¶¶ 3, 8-26). In addition,
as discussed further below (see infra, Part 3.1), all of the individual defendants are
being sued in their individual and their official capacities. (Docket #31 at ¶ 30).
Page 4 of 35
On or about March 8, 1988, Comsys hired Kerkman as an employee,
and from January 1, 2013, until March 31, 2014, Kerkman served as the
company’s Chief Information Officer. (Docket #31 at ¶ 34). As an employee
of Comsys, Kerkman signed a contract which governed various areas,
including, but not limited to, confidentiality, trade secrets, non-disclosure,
non-competition, and “corporate opportunities.” (Docket #31 at ¶¶ 45-51).
At the core of this law suit, the amended complaint alleges that
Kerkman and Pacetti conspired to misappropriate Comsys’ goodwill,
confidential information, trade secrets, and employees. (Docket #31 at ¶ 60).
More specifically, the plaintiffs allege that sometime in or around July of
2013, Kerkman began soliciting Pacetti to: (1) create a director of IT position
for the City; and (2) hire Kerkman to fill that role. (Docket #31 at ¶¶ 58, 60).
To that end, Kerkman allegedly obtained unlawful access to Comsys’ and
McAuliffe’s confidential and proprietary business data, personal information,
and trade secrets either by unlawfully access Comsys’ and McAuliffe’s email
accounts/archives or by modifying certain server settings to covertly route
Comsys’ emails to Pacetti and/or Kerkman. (See Docket #31 at ¶¶ 61-62).
Though the City did not formally create the director of IT position
until late November or early December 2013, on September 24, 2013, Pacetti
allegedly informed McAuliffe that he planned to create and offer the position
to Kerkman, and that Kerkman would accept the City’s offer. (Docket #31 at
¶¶ at 66, 69). Unbeknownst to the plaintiffs, during the process of creating
this new, in-house IT department, Pacetti allegedly relied on information that
Kerkman unlawfully obtained from the plaintiffs’ confidential business and
personal data and emails. (Docket #31 at ¶ 69).
In light of the City’s purported creation of an in-house IT department,
Pacetti informed McAuliffe that the City wanted to reduce Comsys’ service
Page 5 of 35
fees. (Docket #31 at ¶ 66). Ultimately, however, the parties could not agree
on a modified contract price. (Docket #31 at ¶¶ 66-67).
In the spring of 2014, while the City’s Deputy Police Chief, Daniel
Miskinis (“Miskinis”), conducted “an administrative spot check for purposes
of ensuring compliance” with Police Department e-mail “archiving”
protocols, “it was discovered that archives containing e-mails of both Deputy
Chief Miskinis and Chief Morrissey were being maintained on [the City’s
email server], contrary to protocol.” (Docket #31 at ¶¶ 77, 79). As part of this
investigation, the police interviewed McAuliffe on numerous occasions.
(Docket #31 at ¶¶ 79, 82). Ultimately, the investigation led Miskinis to
conclude that, on various occasions in 2013-2014, Kerkman had wrongfully
accessed Comsys’ employee emails, tax documents, and salary information.
(Docket #31 at ¶¶ 80-82, 89).
When Pacetti learned of the Miskinis investigation, Pacetti asked to
meet with McAuliffe, wherein he expressed disappointment with her having
“initiated” the investigation. (Docket #31 at ¶ 85). Pacetti then allegedly
threatened McAuliffe by telling her “it would not be good” for the plaintiffs
if the Kenosha Police Department pursued the allegations of criminal
conduct against Kerkman. (Docket #31 at ¶ 85). At a second meeting, the
plaintiffs allege that Pacetti threatened he would terminate Comsys’ IT
service contracts if McAuliffe continued engaging with law enforcement on
the basis of Kerkman’s allegedly criminal activities. (Docket #31 at ¶ 90).
It was not until March 31, 2014, following the Miskinis investigation,
that Comsys formally terminated Kerkman due to his allegedly unlawful
access to McAuliffe’s and other employees’ email archives. (Docket #31 at
¶ 91). A few weeks later, the City formally hired Kerkman as the director of
IT. (Docket #31 at ¶ 92).
Page 6 of 35
On May 1, 2014, the plaintiffs filed a criminal complaint against
Kerkman. (Docket #31 at ¶ 93).3 In connection with that complaint, the Racine
County Sheriff’s Department executed a search warrant on the City’s
computer servers on May 27, 2014; this search, according to the plaintiffs, set
off a chain of retaliatory acts directed towards McAuliffe and Comsys.
(Docket #31 at ¶ 97). First, McAuliffe allegedly received an email from Pacetti
and General Manager St. Peter stating that “[e]ffective immediately…
all…Comsys system access privileges to all City of Kenosha and Kenosha
Water Utility computer systems [were] temporarily disabled.” (Docket #31
at ¶ 98). In addition, both Mayor Bosman and General Manager St. Peter
called special meetings of the Common Council and the Board of Water
Commissioners “[t]o consider the service and lease agreements between the
City and COMSYS, Inc.” (Docket #31 at ¶¶ 99-100). The plaintiffs further
claim that Mayor Bosman and Pacetti personally contacted some of the
Alderperson defendants to advocate for the termination of Comsys’
contracts. (Docket #31 at ¶ 101).
On June 2, 2014—the day that the City Council and the Board of Water
Commissioners were set to conduct special meetings to discuss Comsys’
situation—Comsys’ legal counsel emailed a letter and supporting documents
to the City Attorney outlining Kerkman’s and Pacetti’s allegedly unlawful
conspiracy to misappropriate Comsys’ goodwill, confidential information,
trade secrets, and employees. (Docket #31 at ¶ 104). Nonetheless, after
deliberating in closed sessions, both the City and the Water Utility voted to
terminate Comsys’ IT service contracts. (Docket #31 at ¶¶ 104-108).
3
The Kenosha Police Department has allegedly referred the complaint to the
Racine County Sheriff’s Department, which is actively investigating the case with
the Federal Bureau of Investigation. (Docket #31 at ¶¶ 93-94).
Page 7 of 35
Prior to the contracts’ termination, the plaintiffs allege that Comsys
had never been notified of any compliance issues; in fact, the plaintiffs allege
that Comsys had even received a letter from the City Attorney praising its
excellent working relationship with the City. (Docket #31 at ¶ 102). Further,
the amended complaint alleges that at no time in the three years prior to the
contracts’ termination did the Common Council discuss, budget for,
commission studies for, or otherwise formally contemplate the creation of an
in-house IT Department. (Docket #31 at ¶ 103). David Bogdala—an
Alderman who participated in the City’s June 2, 2014, special
meeting—allegedly informed the press that the call to terminate Comsys’
contracts “had everything to do with [the plaintiffs’ criminal] investigation.”
(Docket #31 at ¶ 109).
Thereafter, the plaintiffs allege that the Water Utility: (1) began to
“unilaterally and improperly” shift Comsys’ billed hours between itself and
the City; and (2) hired two Comsys employees, in violation of their employee
contracts. (Docket #31 at ¶¶ 110-117). None of the defendants have allegedly
investigated Comsys’ claims or, at any time, attempted to stop the
termination of Comsys’ contracts or disciplined Kerkman or Pacetti. (Docket
#31 at ¶¶ 110-117).
As a result of the aforementioned conduct, Comsys claims to have
sustained injury and damages including, but not limited to: (1) a loss of
substantial business revenue and profit; (2) a loss of valuable confidential and
proprietary business information and trade secrets; and (3) a material loss of
business reputation and goodwill value. (Docket #31 at ¶ 119). In addition,
McAuliffe claims to have been harmed by: (1) a loss of stock value in
Comsys; (2) a material loss of professional reputation; and (3) severe
emotional distress. (Docket #31 at ¶ 120). Further, the plaintiffs claim that the
Page 8 of 35
City and the Water Utility have terminated their relationships with a womanowned business enterprise in favor creating an all-male in-house IT
department. (Docket #31 at ¶ 121). Collectively, these harms form the basis
of the plaintiffs’ nineteen (19) count complaint. (See generally Docket #31).
2.
LEGAL STANDARD
“A motion to dismiss pursuant to [Rule] 12(b)(6) challenges the
viability of a complaint by arguing that it fails to state a claim upon which
relief may be granted.” Camasta v. Jos. A. Bank Clothiers, Inc., 761 F.3d 732, 736
(7th Cir. 2014). “To survive a motion to dismiss under Rule 12(b)(6), a
plaintiff must state enough facts that, when accepted as true, ‘state a claim for
relief that is plausible on its face.’” Spierer v. Rossman, 798 F.3d 502, 510 (7th
Cir. 2015) (citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “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.” McCauley v. City of Chicago, 671 F.3d 611, 615
(7th Cir. 2011) (citing Ashcroft v. Iqbal, 556 U.S. 662 (2009)). The Court must
“tak[e] all factual allegations as true and draw[] all reasonable inferences in
favor of the plaintiffs.” Pugh v. Tribune Co., 521 F.3d 686, 692 (7th Cir. 2008).
3.
ANALYSIS
The defendants argue that dismissal of the amended complaint is
proper under Rule 12(b)(6) for six reasons. They argue that:
1.
The official capacity claims against individually named
defendants are redundant;
2.
The doctrine of absolute legislative immunity bars all claims
against the Alderperson and Water Commissioner defendants;
Page 9 of 35
3.
A lack of personal involvement bars the claims asserted against
Mayor Bosman, General Manager St. Peter, and the
Alderperson defendants;
4.
The claims against the City and the Water Utility are
insufficiently pled under the “final policymaker” doctrine;
5.
The amended complaint fails to state First, Fourth and Fifth
Amendment claims; and
6.
All of the state law claims are barred because:
a.
The plaintiffs failed to comply with Wisconsin’s notice
of claim statute, Wis. Stat. § 893.80; and,
b.
Municipal entities may not be held liable for the
intentionally tortious conduct of their employees under
Wis. Stat. § 893.80(4).
(Docket #37). The Court will address each argument in turn.
3.1
Official Capacity Claims
The defendants argue that the Court should dismiss all of the official
capacity claims asserted against the individually named defendants because
they are duplicative of the same claims that are alleged against the
municipalities in this action. (Docket #38 at 7). This is because “a lawsuit
against a municipal official in his official capacity is equivalent to one against
the municipality.” (Docket #38 at 7) (citing Kentucky v. Graham, 473 U.S. 159,
165–66 (1985)). The plaintiffs “do not dispute” the defendants’ position and
expressly acknowledge that an official capacity suit is construed as a suit
against the municipal defendants.4 (Docket #39 at 7; Docket #31 at ¶ 30).
4
The plaintiffs’ opposition brief explains that their goal in drafting the
complaint in such a manner was to put the individually named defendants on
notice that they are being sued both in their individual and official capacities.
(Docket #37 at 7; Docket #31 at ¶ 30).
Page 10 of 35
“Official-capacity suits…generally represent only another way of
pleading an action against an entity of which an officer is an agent. As long
as the government entity receives notice and an opportunity to respond, an
official-capacity suit is, in all respects other than name, to be treated as a suit
against the entity.” Kentucky, 473 U.S. at 165–66; see also Sow v. Fortville Police
Dep't, 636 F.3d 293, 300 (7th Cir. 2011) (“[A]n official capacity suit is another
way of pleading an action against an entity of which the officer is an agent.”).
Based on this rule, district courts routinely dismiss official capacity claims
against individuals as “redundant” where the appropriate municipality is
also named. See, e.g., Black Earth Meat Mkt., LLC v. Vill. of Black Earth, No.
14-CV-674, 2015 WL 7301244, at *4 (W.D. Wis. Nov. 18, 2015), aff'd, No.
15-3818, 2016 WL 4468085 (7th Cir. Aug. 24, 2016) (“Therefore, I will dismiss
plaintiffs’ § 1983 claims against the seven trustees as redundant of plaintiffs’
§ 1983 claim against the Village.”); Kerry M. v. Manhattan Sch. Dist. #114, No.
03-CV-9349, 2004 WL 2538303, at *5 (N.D. Ill. Sept. 28, 2004) (“Following
these cases, the Court agrees that plaintiff’s claims against Dr. Fries in her
official capacity are redundant and unnecessary.”).
Accordingly, because the City and Water Utility are defendants in this
action, the Court will dismiss all of the official capacity claims against the
individually named defendants as they are both unnecessary and redundant.
3.2
Legislative Immunity
Next, the defendants argue that the Alderperson and Commissioner
defendants should be dismissed from this case because they are absolutely
immune from suit under the doctrine of legislative immunity. (Docket #38 at
7-9). In response, the plaintiffs argue that because these defendants were not
acting in their “legislative capacity” when they voted to terminate Comsys’
Page 11 of 35
contracts with the City and the Water Utility the doctrine of legislative
immunity is inapplicable. (Docket #39 at 8-12).
“The principle that legislators are absolutely immune from liability
for their legislative activities has long been recognized in Anglo-American
law.” Bogan v. Scott-Harris, 523 U.S. 44, 48 (1998). This rule of “absolute
immunity” exists to advance the “public good” by ensuring that “the exercise
of legislative discretion [is] not inhibited by judicial interference or distorted
by the fear of personal injury.” Id. at 54. In light of this purpose, the Supreme
Court has clarified that the “venerable tradition” of legislative immunity not
only applies to federal legislators, but also protects state, local, and regional
officials who are sued under Section 1983. Id. at 49 (explaining “that Congress
did not intend the general language of § 1983 to ‘impinge on a tradition so
well grounded in history and reason’”) (internal citations omitted).
Due to the “absolute” nature of legislative immunity, however, the
doctrine only protects officials insofar as they are acting “in the sphere of
legitimate legislative activity.” Tenney v. Brandhove, 341 U.S. 367, 376 (1951).
In other words, “[a]bsolute immunity…only applies to those legislators
acting in their legislative capacity.” Rateree v. Rockett, 852 F.2d 946, 950 (7th
Cir. 1988). Government officials seeking immunity bear the burden of
showing that the doctrine protects the specific conduct at issue. Id.
To determine whether the doctrine of legislative immunity applies,
courts rely on a functional test. See Clarke v. Abele, No. 16-CV-208, 2016 WL
1611475, at * 3 (E.D. Wis. 2016). In other words, this Court must “first look[]
at whether the acts were ‘in form, quintessentially legislative.’” Bagley v.
Blagojevich, 646 F.3d 378, 385 (7th Cir. 2011) (internal citations omitted).
Under this inquiry, whether an action is formally legislative “turns on the
nature of the act” and whether the act is an “integral step[] in the legislative
Page 12 of 35
process,” rather than on “the motive or intent of the official performing it.”
Id. at 392; accord Rateree, 852 F.2d at 950. Further, “courts look at whether the
defendants acted pursuant to constitutional or statutory procedures.” Bagley,
646 F.3d at 392-93 (“Without a doubt, the act of vetoing a line item in a bill
constitutes an ‘integral’ step in Illinois’s ‘legislative process.’ Illinois’s
Constitution gives the state’s governor authority to exercise a line-item veto
over appropriation bills.”) (internal citations omitted); see also State Emps.
Bargaining Agent Coal. v. Rowland, 494 F.3d 71, 90–91 (2d Cir. 2007)
(concluding that it was unclear whether the alleged actions were “integral
steps in the statutory budget process”) (internal citations omitted).
Second, “though Bogan does not explicitly require an inquiry into the
action’s substance,” courts may also “examine the action’s substance because
it [may] help illuminate what actions are included ‘in the sphere of legitimate
legislative activity.’” Bagley, 646 F.3d at 392 (internal citations omitted). For
this portion of the inquiry, the Court should look “at the action’s character
to determine whether the action substantively ‘bore all the hallmarks of
traditional legislation.’” Id. (citing Bogan, 523 U.S. at 55). In other words, an
action will “qualif[y] as legislative in substance if it reflects ‘a discretionary,
policymaking decision implicating the budgetary priorities of the
[government] and the services the [government] provides to its
constituents.’” Id. (citing Bogan, 523 U.S. at 55); see also Yakus v. United States,
321 U.S. 414, 424 (1944) (“The essentials of the legislative function are the
determination of the legislative policy and its formulation and promulgation
as a defined and binding rule of conduct.”). If, however, a legislator is
performing an “administrative act” as opposed to a “legislative act,” the
legislator is not protected by absolute immunity. Bagley, 646 F.3d at 393-94.
Page 13 of 35
The difference between “legislative” activity and “administrative”
activity often involves fine distinctions that are difficult to decipher. See
Rateree, 852 F.2d at 951 (“Although this line drawing is often difficult, it
preserves the balance between inhibiting public officials from exercising their
essential duties and protecting victims of wrongs committed by public
officials.”). For example, though “[i]ntroducing, voting, and signing into law
a budget [are] ‘formally legislative’ actions.…” Bagley, 646 F.3d at 392 (citing
Bogan, 523 U.S. at 55), voting on an issue, in and of itself, does not
conclusively determine whether an act is legislative in nature. See, e.g.,
Chicago Miracle Temple Church, Inc. v. Fox, 901 F. Supp. 1333, 1343-44 (N.D. Ill.
1995) (concluding that a village board vote to authorize a purchase offer for
property was not “legislative action” because it was not an enactment or
promulgation of public policy). Recognizing this fact, the Seventh Circuit has
acknowledged a “distinction between actions that involve the elimination of
positions for policy reasons (legislative actions) and actions that result in an
individual’s termination for reasons that relate to that individual
(administrative actions).” Bagley, 646 F.3d at 394 (emphasis added).
In this case, both parties acknowledge that the Alderperson and
Commissioner defendants are named in this lawsuit as a result of their votes
to terminate Comsys’ IT service contracts. (Docket #31 at ¶¶ 91-201 , 222-232,
255-261). These votes were cast on June 2, 2014, by the City Council and the
Board of Water Commissioners. (Docket #31 at ¶¶ 91-201 , 222-232, 255-261).
Based on the limited facts before it, however, the Court cannot conclude that
the defendants have satisfied their burden to show that the Alderperson and
Commissioner defendants should be cloaked by legislative immunity.
In terms of whether the defendants’ votes were legislative in form, it
appears that the votes cast during the special meetings were made pursuant
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to prescribed, statutory procedures. See Wis. Stat. § 62.11(2) (“More frequent
regular meetings may be established by the council, and the mayor may call
a special meeting….”); Wis. Stat. § 62.11(5) (during special meetings, “the
council shall have the management and control of the city property, finances,
highways, navigable waters, and the public service, and shall have power to
act for the government and good order of the city….”). And, to be sure,
“signing and vetoing bills…are ‘integral steps in the legislative process.’”
Bagley, 646 F.3d at 391 (internal citations omitted).
Nonetheless,
determining
whether
the
Alderperson
and
Commissioner defendants’ actions were substantively legislative—i.e.,
whether the defendants were acting in a legislative or administrative capacity
at the time they cast their votes—depends on facts that have not (yet) been
fully developed in this litigation. The defendants’ position turns on their
assertion that “the Alderperson [d]efendants voted to eliminate an
outsourced IT department, i.e., Comsys, in favor of creating [an] in-house IT
department.” (Docket #40 at 3). And, since “[t]hose votes constituted a classic
discretionary, policy-making, decision that implicated the budgetary priorities
of the City as a whole, and that affected the services the City provides to its
residents,” the defendants urge the Court to conclude that the doctrine of
legislative immunity should apply. (Docket #40 at 3) (emphasis added).
The problem with this argument, however, is that it exclusively relies
upon activities that took place after the Alderperson and Commissioner
defendants voted to terminate the contracts. (Docket #40 at 2-3). In other
words, the defendants argue that the City’s creation of the director of IT
position conclusively demonstrates that the Alderperson and Commissioner
defendants had the enactment or promulgation of budgetary policy—rather
than the potential for litigation—in mind when voting to terminate Comsys’
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contracts. (Docket #40 at 2-3). This position stands in tension with the
allegations in the amended complaint, which state that: (1) the purpose of the
City Council’s and Board of Water Commissioners’ meetings was not
legislative in nature, but rather administrative (i.e., to discuss legal strategies
with Kenosha’s legal counsel); and (2) prior to the votes in question, the City
and the Water Utility had never contemplated the creation of an in-house IT
department.5 (Docket #39 at 10-11) (citing Docket #31 at ¶¶ 99-100, 109); see
also Fox, 901 F.Supp at 1342 (analyzing Supreme Court and Seventh Circuit
precedent and concluding that “at its core the legislative function involves
determining, formulating, and making policy”) (emphasis added).
The exhibits submitted with the amended complaint also suggest that
the defendants’ votes to terminate Comsys’ contracts may have been made
in response to the City’s and the Water Utility’s fear of potential litigation
with Comsys, rather than enactment an in-house IT policy. See Fowler–Nash
v. Democratic Caucus of the Pennsylvania House of Representatives, 469 F.3d 328,
340 (3d Cir. 2006) (holding that because an employment decision “did not
rely on any broad consideration of policy,” was not “directed to creating a
new policy,” “did not reach beyond a single employee,” and did not
eliminate a position “thereby affecting future employees,” the defendants
were not acting legislatively when they terminated the plaintiff). First, the
meeting notices prepared by the City and the Water Utility specifically
referenced both the City’s and the Water Utility’s intent “to discuss litigation
strategies with the City’s Legal Counsel regarding issues surrounding this
5
As previously noted on Page 6 of this Order, the plaintiffs allege that: (1)
Comsys had never previously been notified of compliance issues; and (2) Comsys
had received a letter from the City Attorney praising its excellent working
relationship with the City. (Docket #31 at ¶¶ at 102-103).
Page 16 of 35
action.” (Docket #31, Exs. 9-10). Likewise, the recorded minutes from both
special meetings confirm that as soon as the City Council and Board of Water
Commissioners convened, they went into closed discussions pursuant to Wis.
Stat. § 19.85(1)(g) (providing that “[a] closed session may be held [to]…
confer[] with legal counsel for the governmental body who is rendering oral
or written advice concerning strategy to be adopted by the body with respect
to litigation in which it is or is likely to become involved”). Immediately
following these closed sessions, without any discussion as to the policy or
budgetary considerations, both bodies voted to terminate Comsys’ contracts.
(Docket #31, Exs. 12-13).
In sum, the amended complaint contains allegations that, if true, cast
significant doubt on whether the Alderperson and Commissioner defendants
were truly acting in a “legislative capacity” at the time they voted to
terminate Comsys’ IT service contracts. Due to the limited factual record
before it at this juncture, the Court will deny the defendants’ motion to
dismiss the Alderperson and Commissioner defendants on the grounds of
absolute legislative immunity.
3.3
Personal Involvement
Next, the defendants argue that the amended complaint fails to
sufficiently plead personal involvement with respect to: (1) the Alderperson
and Commissioner defendants; (2) Mayor Bosman; and (3) General Manager
St. Peter. (Docket #38 at 9-12). As such, the defendants argue these particular
persons cannot be held liable under Section 1983 and should be dismissed
from the action. (Docket #38 at 9-12). The Court disagrees.
Page 17 of 35
“Section 1983 creates a cause of action based on personal liability and
predicated upon fault; thus, liability does not attach unless the individual
defendant caused or participated in a constitutional deprivation.” Vance v.
Peters, 97 F.3d 987, 991 (7th Cir. 1996) (internal citations omitted); see also
Eades v. Thompson, 823 F.2d 1055, 1063 (7th Cir. 1987) (“Each individual
defendant can be liable only for what he or she did personally, not for any
recklessness on the part of any other defendants, singly or as a group.”).
However, “‘[a]n official satisfies the personal responsibility requirement…if
the conduct causing the constitutional deprivation occurs at [his or her]
direction or with [his or her] knowledge and consent.’” Smith v. Rowe, 761
F.2d 360, 369 (7th Cir. 1985) (quoting Crowder v. Lash, 687 F.2d 996, 1005 (7th
Cir. 1982)). That is, the defendants “must know about the conduct and
facilitate it, approve it, condone it, or turn a blind eye for fear of what they
might see.” Jones v. City of Chicago, 856 F.2d 985, 992-93 (7th Cir. 1988)
(internal citations omitted). “They must in other words act either knowingly
or with deliberate, reckless indifference.” Id.
First, with respect to the Alderperson and Commissioner defendants,
the defendants argue that the mere act of voting to terminate Comsys’
contracts with the City and the Water Utility is insufficient “personal
involvement” in the underlying First Amendment violations to sustain
liability under Section 1983. (Docket #38 at 10-11). Beyond the fact that the
defendants cite to no case law in support this proposition, the problem with
their broad assertion is that they ignore the context in which the Alderperson
and Commissioner defendants purportedly made their decisions to terminate
Comsys’ contracts.
The amended complaint alleges that, prior to casting their votes, the
defendants were made aware of: (1) Pacetti’s and Kerkman’s conspiracy; and
Page 18 of 35
(2) the plaintiffs’ criminal complaint/investigation in connection with that
conspiracy. (Docket #31 at ¶¶ 105-106, 191-201, 222-232). The plaintiffs
further allege that the votes were made for the sole purpose of retaliating
against the plaintiffs’ initiation of the criminal investigation into Pacetti and
Kerkman. (Docket #31 at ¶¶ 105-106, 191-201, 222-232). As evidence that the
Alderman and Commissioner defendants “participated” in retaliating against
the plaintiffs, the plaintiffs claim that one of the City’s Alderman, Alderman
Bogdala, publicly abstained from voting on the Comsys contracts because the
vote “had everything to do” with the plaintiffs’ criminal complaint and
investigation into Pacetti’s and Kerkman’s conspiracy. (Docket #31 at ¶ 109).
Thus, the Court cannot conclude, at this juncture, that the Alderman and
Commission defendants should be dismissed for a lack of personal
involvement.
Second, the Court concludes that the amended complaint alleges
sufficient personal involvement with respect to Mayor Bosman and General
Manager St. Peter. For his part, Mayor Bosman allegedly telephoned certain
Alderperson defendants in advance of the City’s special meeting to discuss
Comsys’ contracts. (Docket #31 at ¶ 101). In these conversations, the plaintiffs
allege that Bosman “push[ed]” the Alderpersons to terminate the City’s
Comsys’ contracts. (Docket #31 at ¶¶ 99, 101, 171-178). With respect to
General Manager St. Peter, the amended complaint alleges that after learning
of the plaintiffs’ criminal complaint and investigation into Pacetti and
Kerkman, St. Peter terminated Comsys’ access privileges to the City’s and the
Page 19 of 35
Water Utility’s computers.6 (Docket #31 at ¶ 98). And, both defendants are
alleged to have: (1) called the special meetings that led to the votes on
Comsys’ contracts; and (2) drafted, signed, and mailed Comsys’ termination
letters. (Docket #31 at ¶¶ 99-100, 107-108). Given their knowledge of the
plaintiffs’ criminal complaint and the investigation into Pacetti and
Kerkman’s conspiracy, the plaintiffs have sufficiently alleged that Mayor
Bosman and General Manger St. Peter participated in the violation of the
plaintiffs’ First Amendment rights.7 (Docket #31 at ¶¶ 98-101, 107-108, 171190, 202-221).
6
The defendants argue that this communication was not, in fact, “sent” from
General Manager St. Peter because he is merely “cc’d” on the access email. (Docket
#40 at 6). However, the exhibit filed by the plaintiffs shows that both General
Manager St. Peter’s and Pacetti’s names appear in the signature line of the email.
(Docket #31, Ex. 8). Thus, there appears to be a factual issue regarding who actually
terminated Comsys’ access to the City’s and the Water Utility’s computers.
However, as the amended complaint appears to have a good faith basis to support
the assertion that General Manager St. Peter was (at least partially) responsible for
this allegedly retaliatory act, the Court cannot fairly determine, at this stage,
whether he should be dismissed.
7
Again, while the defendants argue that the acts of “calling” a special
session and “mailing” a contract termination letter are not sufficient personal
involvement to sustain Section 1983 liability, they cite to no case to support their
broad propositions. (Docket ##38 at 11; Docket #40 at 6). Absent any showing from
the defendant as to why these actions—which were allegedly taken by Mayor
Bosman and General Manager St. Peter—in direct response to, and in order to
retaliate against, the plaintiffs’ alleged exercise of free speech, the Court cannot
fairly conclude that a Rule 12(b)(6) dismissal is proper. See Cole v. Milwaukee Area
Tech. Coll., 634 F.3d 901, 903 (7th Cir. 2011) (reiterating that when reviewing a Rule
12(b)(6) motion to dismiss, the court must “construe the…[c]omplaint in the light
most favorable to Plaintiff, accepting as true all well pleaded facts and drawing all
possible inferences in his favor”).
Page 20 of 35
3.4
Monell Claims
The plaintiffs allege two claims—Counts Three and Eight—against the
City and the Water Utility under Monell v. New York City Dept. of Social
Services, 436 U.S. 658, 694 (1978). (Docket #31 at ¶¶ 146-150, 233-241). The
defendants argue, however, that Count Three against the municipal entities
must be dismissed because the plaintiffs have failed to allege that the
constitutional violation at issue was “caused by a person with ‘final decision
policymaking authority.’”8 (Docket #38 at 12-14; Docket #40 at 6-7) (quoting
McTigue v. City of Chicago, 60 F.3d 381, 382 (7th Cir. 1995)). The Court agrees
with the defendants and will, therefore, dismiss Count Three.
Under Monell, municipal liability exists only “when [the] execution of
a government’s policy or custom, whether made by its law-makers or by
those whose edicts or acts may fairly be said to represent official policy,
inflicts the injury.” Monell, 436 U.S. at 694. In this sense, “a municipality
cannot be held liable under § 1983 on a respondeat superior theory.” Id. at 691.
“Case law recognizes three ways in which a municipality’s policy can violate
an individuals civil rights: (1) an express policy that, when enforced, causes
a constitutional deprivation; (2) a widespread practice that, although not
authorized by written law or express municipal policy, is so permanent and
8
In their opening brief, the defendants argued that both Counts Three and
Eight should be dismissed. (Docket #38 at 12-14). However, as the parties agree that
the plaintiffs properly allege that the City Council is the final policymaker with
respect to the City, and that the allegedly wrongful conduct at issue in Count Eight
was indeed committed by the City Council, the defendants do not pursue this
theory of dismissal in their reply brief. (Docket #40 at 7). Rather, the defendants rely
on a later argument—namely, that Count Eight should be dismissed because it fails
to state an underlying First Amendment claim. See infra, Part 3.5.1. As such, the
Court will not address the defendants’ initial, and now abandoned, position with
respect to Count Eight.
Page 21 of 35
well settled as to constitute a custom or usage with the force of law; or (3) an
allegation that the constitutional injury was caused by a person with final
policymaking authority.” McTigue v. City of Chicago, 60 F.3d 381, 382 (7th Cir.
1995) (internal citations omitted) (internal quotation marks omitted).
Here, the parties agree that Count Three relies on the third theory of
municipal liability described above. (Docket #38 at 12-14; Docket #39 at 1517). In that claim, the plaintiffs allege that Pacetti, as City Administrator, was
the final policymaker as it related to the monitoring, oversite, and
interactions with third party vendors, including Comsys. (Docket #31 at
¶¶ 146-150). Further, the amended complaint alleges that Pacetti directed
and/or authorized Kerkman to engage in unauthorized surveillance of the
plaintiffs’ email accounts, in violation of the Fourth Amendment. (Docket #31
at ¶¶ 146-150). In response, the defendants claim that, under Wisconsin state
law and the City’s ordinances, the Common Council, rather than the City
Administrator, has final policymaking authority with respect to outside
vendors. (Docket #38 at 13-14; Docket #40 at 6-7).
“[W]hether a particular official has ‘final policymaking authority’ is
a question of state law.” City of St. Louis v. Praprotnik, 485 U.S. 112, 123 (1988)
(emphasis in original). In Wisconsin, the entity responsible for the
“management and control” of the City’s affairs is the City Council. See Wis.
Stat. § 62.11(5). More specifically, pursuant to Wis. Stat. § 62.11(5)
(“Powers”),
except as elsewhere in the statutes specifically provided, the
council shall have the management and control of the city
property, finances, highways, navigable waters, and the public
service, and shall have power to act for the government and
good order of the city, for its commercial benefit, and for
the health, safety, and welfare of the public, and may carry
out its powers by license, regulation, suppression, borrowing
Page 22 of 35
of money, tax levy, appropriation, fine, imprisonment,
confiscation, and other necessary or convenient means.
Wis. Stat. § 62.11(5). Moreover, under the Kenosha Code of General
Ordinances, § 1.046(B), the City Administrator operates under “the direction
of the Mayor and Common Council” to “administ[er] and control…the
operation of the City and the coordination of its Departments and
subunits.…”9
Thus, because Pacetti, as City Administrator, operated under the
“direction and control of the Mayor and Common Council,” the Court
concludes that he did not have final policymaking authority with respect to
the conduct at issue in Count Three. The defendants’ motion to dismiss
Count Three will be granted.
3.5
First, Fourth, and Fifth Amendment Claims
Next, the defendants argue that the amended complaint fails to state
First, Fourth, and Fifth Amendment claims, and, therefore, each Count
corresponding to these claims should be dismissed under Rule 12(b)(6).
(Docket #38 at 14-26). The defendants’ theories with respect to each
constitutional violation will be discussed in turn.
9
In support of their argument that Pacetti retained final policymaking
authority, the plaintiffs cite to Kenosha Code of General Ordinances, § 1.046(D).
(Docket #31 at ¶ 55, Docket #39 at 16). However, subsection “D” of § 1.046 does not
exist, and the plaintiffs have not provided the specific language upon which they
rely. (See Docket #31 at ¶ 55; Docket #39 at 16). Accordingly, the Court cannot
accept the plaintiffs’ unsupported argument that Wisconsin law leaves final
policymaking authority in the hands of the City Administrator.
Page 23 of 35
3.5.1
First Amendment Claims
The plaintiffs assert five First Amendment claims.10 (Docket #31 at
¶¶ 151-241). Each Count alleges that McAuliffe engaged in protected
expression by: (1) participating in the Miskinis investigation; (2) filing a
criminal complaint against Kerkman; and (3) objecting to Pacetti’s and
Kerkman’s unlawful conduct in a letter to the City.11 (Docket #31 at ¶¶ 153,
173, 183, 193, 204, 214, 224).
More specifically, Counts Four and Five against Pacetti claim he
retaliated against the plaintiffs by harassing, threatening, and intimidating
McAuliffe in several ways. The amended complaint claims that: (1) on March
13, 2014, Pacetti stated to McAuliffe his belief she initiated the Miskinis
investigation and that it would “not be good” for her or Comsys if the police
took criminal action against Kerkman; (2) the following day, Pacetti told
another City official that Comsys’ contract “needed to be re-examined”; (3)
on March 20, 2014, Pacetti threatened McAuliffe that he would terminate
Comsys’ contracts if any criminal action were taken against Kerkman; (4) on
May 23, 2014, Pacetti questioned McAuliffe about the whereabouts of the
City’s server and told her he had things to “consider” over the weekend; and
(5) Pacetti and General Manager St. Peter notified McAuliffe on May 30, 2014,
that “effective immediately” Comsys’ system access privileges to all City
10
The claims include: (1) Count Four (which McAuliffe asserts against
Pacetti); (2) Count Five (which Comsys asserts against Pacetti); (3) Count Six (which
McAuliffe asserts against Mayor Bosman, General Manager St. Peter, and the
Alderman defendants); (4) Count Seven (which Comsys asserts against Mayor
Bosman, General Manager St. Peter, and the Alderman defendants); and (5) Count
Eight (the plaintiffs’ Monell claim).
11
The defendants do not contest that these activities constitute protected
speech. (Docket #39).
Page 24 of 35
computer systems was temporarily disabled. (Docket #31 at ¶¶ 85, 86, 90, 96,
98, 154, 164).
With respect to Counts Six and Seven, the plaintiffs claim that Mayor
Bosman retaliated against the plaintiffs by: (1) calling a special City Council
meeting with the intent to terminate Comsys’ contract with the City; (2)
contacting certain Alderpersons in advance of the special meeting to “push”
for the contract’s termination; and (3) actually terminating the City’s contract
with Comsys. (Docket #31 at ¶¶ 174, 205). Similarly, as against General
Manager St. Peter, the plaintiffs claim that he allegedly retaliated by calling
a special meeting for the Water Utility with the intent to terminate Comsys’
contract and by actually terminating the contract. (Docket #31 at ¶¶ 184, 215).
General Manager St. Peter’s signature also appeared on the email in which
Comsys’ access to the City’s computer systems was disabled. (Docket #31 at
¶ 98). Finally, with respect to the Alderman defendants, the plaintiffs claim
that they allegedly retaliated against the plaintiffs by authorizing the City’s
termination of Comsys’ IT contract. (Docket #31 at ¶¶ 194-195, 225-226).
“As a general rule, to prevail on [a First Amendment] retaliation
claim, [a plaintiff] must demonstrate that ‘(1) he engaged in activity protected
by the First Amendment; (2) he suffered a deprivation that would likely deter
First Amendment activity in the future; and (3) the First Amendment activity
was at least a motivating factor in the Defendants’ decision to take the
retaliatory action.’” Novoselsky v. Brown, 822 F.3d 342, 354 (7th Cir. 2016)
(internal citations omitted). Though “merely alleging the ultimate fact of
retaliation is insufficient,” Bridges v. Parke, 191 F.3d 455 (7th Cir. 1999) (citing
Cain v. Lane, 857 F.2d 1139, 1143 n.6 (7th Cir. 1988)), courts must bear in mind
that “an act in retaliation for the exercise of a constitutionally protected right
is actionable under Section 1983 even if the act, when taken for different
Page 25 of 35
reasons, would have been proper,” Gomez v. Randle, 680 F.3d 859, 866 (7th
Cir. 2012).
Further, “even though a person has no ‘right’ to a valuable
governmental benefit and even though the government may deny him the
benefit for any number of reasons, there are some reasons upon which the
government may not rely. It may not deny a benefit to a person on a basis
that infringes his constitutionally protected interests.…” Planned Parenthood
of Ind., Inc. v. Comm'r of Ind. State Dep't Health, 699 F.3d 962, 986 (7th Cir.
2012) (quoting Perry v. Sindermann, 408 U.S. 593, 597 (1972)). In this sense, “a
government may not condition the availability of a public benefit on the
relinquishment of rights guaranteed by the first amendment.” Libertarian
Party of Indiana v. Packard, 741 F.2d 981, 988 (7th Cir. 1984).
Here, the Court finds that Counts Four, Five, Six, Seven, and Eight
allege sufficient facts to withstand the defendants’ motion to dismiss. The
facts and circumstances outlined above demonstrate that Pacetti, Mayor
Bosman, General Manager St. Peter, and the Alderman defendants allegedly
engaged in a pattern of conduct—beginning in July of 2013 and continuing
Page 26 of 35
(at least) through June 2, 201412—that targeted Comsys’ contracts, at least in
part, on the basis of McAuliffe’s: (1) cooperation with the Miskinis
investigation; and/or (2) filing of a criminal complaint against Kerkman.
(Docket #31 at ¶¶ 85, 86, 90, 96, 98, 154, 164, 174, 194-195, 205, 225-226).
Though the defendants are correct that Pacetti, as City Administrator, had
the “right…to debate the merits of” Comsys’ contracts (Docket #38 at 22-23),
nonetheless, Pacetti’s purported threats to terminate Comsys’ contracts in
retaliation for McAuliffe interactions with law enforcement may indeed be
actionable under the First Amendment. See Novoselsky, 822 F.3d at 356
(reiterating that “[r]etaliatory speech” may be “actionable…in situations of
‘threat, coercion, or intimidation that punishment, sanction, or adverse
regulatory action w[ill] immediately follow’”) (internal citations omitted); see
also Kole v. Vill. of Norridge, 941 F. Supp. 2d 933, 946 (N.D. Ill. 2013)
12
The defendants argue that any “retaliatory” conduct that took place prior
to McAuliffe’s protected speech is not actionable under the First Amendment.
(Docket #38 at 23-24). Indeed, the Court agrees that any activity that taking place
before the alleged impetus for retaliation occurred could not have “motivated” the
retaliation. See Novoselsky, 822 F.3d at 354. Nonetheless, the Court cannot agree that
the defendants’ argument warrants the dismissal of any claim in the amended
complaint. Here, the plaintiffs allege that Pacetti threatened Comsys’ contracts after
the Miskinis investigation began in February of 2014. (Docket #31 at ¶¶ 62, 85-86,
90, 96, 98). Likewise, the amended complaint alleges that after McAuliffe filed a
criminal complaint against Kerkman on May 1, 2014: (1) Pacetti and General
Manager St. Peter disabled Comsys’ access to the City’s computer systems; (2)
General Manager St. Peter and Mayor Bosman called special meetings with the City
Counsel and the Board of Water Commissioners, respectively, with the intent to
terminate Comsys’ contracts; (3) Mayor Bosman contacted Alderpersons to
encourage them to cut off dealings with Comsys; and (4) the Alderperson and
Commissioner defendants authorized the termination of Comsys’ contracts.
(Docket #31 at ¶¶ 85, 86, 90, 96, 98, 154, 164, 174, 194-195, 205, 225-226). Because
these actions were purportedly taken in response to, and retaliation for, McAuliffe’s
engagement with law enforcement, the Court cannot conclude that the plaintiffs fail
to state First Amendment claims against the defendants.
Page 27 of 35
(concluding that where the complaint states a plausible First Amendment
claim under the unconstitutional conditions doctrine, the better course is to
proceed to discovery, after which point “the parties remain free to dispute
the applicability of the…doctrine”).
Likewise, though Pacetti, Mayor Bosman, and General Manager St.
Peter did not have the authority to terminate Comsys’ contracts, the
amended complaint does not tie their liability to “voting” for the contracts’
termination. Rather, as outlined above, each of these defendants purportedly
engaged in retaliatory conduct—either by threatening, damaging, or
otherwise undermining Comsys’ relationships with the City and the Water
Utility—in response to McAuliffe’s engagement with law enforcement
(whether through the Miskinis investigation, filing a criminal complaint, or
writing a letter complaining of Kerkman’s conduct).13 (See supra, Part 3.5.1
n.12).
In sum, based on the face of the amended complaint, the Court
concludes that the plaintiffs’ Counts Four, Five, Six, Seven, and Eight state
plausible claims for retaliation under the First Amendment, and, therefore,
the defendants’ motion to dismiss these counts will be denied.
13
The defendants also argue that the amended complaint fails to sufficiently
allege that their actions would“likely deter the exercise of First Amendment
rights.” (Docket #38 at 24). In support of this theory, the defendants point to the fact
that McAuliffe was still able to file a criminal complaint in May of 2014 without
restriction. (Docket #38 at 24-25). This argument obfuscates the potential that
retaliatory government conduct might not necessarily inhibit, but indeed may
“chill,” protected speech. See Massey v. Johnson, 457 F.3d 711, 716 (7th Cir. 2006)
(acknowledging that “[g]overnment retaliation tends to chill an individual's
exercise of his First Amendment rights”). Thus, while further factual development
as to this element of the plaintiffs’ retaliation claims may be necessary, it is
sufficiently pled. (Docket #31 at ¶¶ 156, 166, 176, 186, 197, 207, 217).
Page 28 of 35
3.5.2
Fourth Amendment Claims
In Counts One and Two of the amended complaint, the plaintiffs claim
that Pacetti and Kerkman conspired to unlawfully search the plaintiffs’ email
archives in violation of the Fourth Amendment.14 (Docket #31 at ¶¶ 122-145).
With respect to these Fourth Amendment claims, the defendants argue that:
(1) Counts One and Two fail because the conduct underlying the claims
relates to private action, rather than governmental action, as required by the
Fourth amendment; and (2) even if the searches at issue are considered
government action, any purported searches conducted by Pacetti and/or
Kerkman were “reasonable” under the Fourth Amendment. (Docket #38 at
14-21). Because both of the defendants’ fact-intensive arguments cannot be
resolved at this juncture of litigation, the Court will deny the defendants’
motion to dismiss Counts One and Two.
With respect to the defendants’ first argument, it is indeed true that
“[l]ong-established precedent holds that the Fourth Amendment does not
apply to private searches.” Rann v. Atchison, 689 F.3d 832, 836 (7th Cir. 2012).
Thus, the Fourth Amendment “is wholly inapplicable ‘to a search or seizure,
even an unreasonable one, effected by a private individual not acting as an
agent of the Government or with the participation or knowledge of a
government official.’” United States v. Jacobsen, 466 U.S. 109, 113 (1984)
(internal citations omitted). “When determining whether a private citizen has
acted as a government agent, the question is whether in light of all the
circumstances of the case [the person] must be regarded as having acted as
an instrument or agent of the state….” United States v. Hall, 142 F.3d 988, 993
14
As the Court has concluded that Count Three should be dismissed, it will
exclude that claim from the analysis herein.
Page 29 of 35
(7th Cir. 1998) (internal citations omitted). This inquiry focuses on whether:
(1) “the government knew of and acquiesced in the intrusive conduct”; (2)
“the private party’s purpose in conducting the search was to assist law
enforcement”; and (3) “the government requested the action or offered the
private actor a reward.” United States v. Crowley, 285 F.3d 553, 558 (7th Cir.
2002).
The Court finds that the amended complaint sufficiently alleges
government action. While the defendants’ brief focuses almost exclusively on
the second prong of the “agent or instrument” test (namely, “whether the
private party’s purpose in conducting the search was to assist law
enforcement,” Crowley, 285 F.3d at 558), the amended complaint sufficiently
details facts that Pacetti either: (1) “knew of and acquiesced” in Kerkman’s
conduct; or (2) “requested” or “offered” Kerkman a reward for the wrongful
searches. (Docket #31 at ¶¶ 61-63, 75-89). As outlined above, see supra Part
1.2, the plaintiffs allege that sometime in or around July of 2013, Kerkman
began soliciting Pacetti to: (1) create a Director of IT position for the City; and
(2) hire Kerkman to fill that position. (Docket #31 at ¶¶ 58, 60). And, to that
end, Kerkman and Pacetti allegedly conspired to have Kerkman obtain
unlawful access to Comsys’ and McAuliffe’s confidential and proprietary
business and personal information and trade secrets either by unlawfully
access Comsys’ and McAuliffe’s email accounts and archives or by modifying
server settings to covertly route Comsys’ emails to Pacetti and/or Kerkman.
(Docket #31 at ¶¶ 61-62). The amended complaint details numerous factual
circumstances that purportedly evidence this alleged conspiracy. (Docket #31
at ¶ 62) (claiming that: (1) Pacetti discovered private information that would
not be known without a search of the plaintiffs’ property; (2) both McAuliffe
and Miskinis found direct evidence of Kerkman’s unlawful searches; (3)
Page 30 of 35
Pacetti attempted to shield Kerkman from liability for unlawfully searching
the plaintiffs’ computers; and (4) Pacetti played a substantial role in placing
Kerkman in the position of the City’s director of IT as payback for his
“espionage”). Because a conspiracy need only be alleged generally, Loubser
v. Thacker, 440 F.3d 439, 443 (7th Cir. 2006), the Court finds that the amended
complaint plausibly alleges that Kerkman acted as Pacetti’s “agent” in
conducting the wrongful searches of the plaintiffs’ property during the time
period in question.
Second, the defendants argue that, even if Kerkman could be
considered the government’s agent/instrument, the alleged searches were
“reasonable” because the plaintiffs did not have an “expectation of privacy”
in the archived emails/servers at issue. (Docket #38 at 19-20). However, the
Court cannot fairly conclude from the face of the amended complaint that the
alleged searches conducted by Kerkman and/or Pacetti were “reasonable”
under the Fourth Amendment. See Green v. Butler, 420 F.3d 689, 694 (7th Cir.
2005) (“The touchstone of Fourth Amendment inquiry is reasonableness, a
standard measured in light of the totality of the circumstances and
determined by balancing the degree to which a challenged action intrudes on
an individual’s privacy and the degree to which the action promotes a
legitimate government interest.”). Moreover, “[a] search within the meaning
of the Fourth Amendment occurs only when ‘a reasonable expectation of
privacy’ exists, and a defendant who objects to a search bears the burden of
demonstrating that a reasonable expectation of privacy was violated by the
search.” See also United States v. Williams, 15 F. Supp. 3d 821, 826 (N.D. Ill.
2014) (internal citations omitted). As the defendants acknowledge, the
“inquiry into whether a[n] [individual’s] expectation of privacy was
reasonable is necessarily fact dependent, see United States v. Smith, 978 F.2d
Page 31 of 35
171, 180 (5th Cir. 1992), and ‘whether a legitimate expectation of privacy
exists in a particular place or thing’ must be determined on a case-by-case
basis, United States v. Waller, 426 F.3d 838, 844 (6th Cir. 2005).” United States
v. Villegas, 495 F.3d 761, 767 (7th Cir. 2007).
Though the defendants argue that the plaintiffs could not have an
objectively reasonable expectation of privacy in the City’s email server and/or
email archives (because that hardware/system was owned by the City, as
opposed to Comsys), the defendants’ argument misconstrues the allegations
in the amended complaint. In this action, the plaintiffs’ claim that Pacetti and
Kerkman conspired to search and surveille the plaintiffs’ proprietary and
confidential
communications
and
archives
for
the
purpose
of
misappropriating Comsys’ business assets. (Docket #31 at ¶¶ 61-62). The
defendants do not argue that the plaintiffs did not maintain a reasonable
expectation of privacy in their own personal and business communication
archives, and, as such, the Court will deny the defendants’ motion to dismiss
the plaintiffs’ Fourth Amendment claims.
3.5.3
Fifth Amendment Claim
In Count Eleven, the plaintiffs claim that the City and the Water
Utility violated Comsys’ Fifth Amendment rights by, among other things: (1)
misappropriating
Comsys’
confidential
and
proprietary
business
communications, information, and trade secrets; (2) threatening to terminate
Comsys’ contracts if criminal action were initiated against Kerkman; and (3)
interfering with Comsys’ business and employment contracts. (Docket #31
at ¶¶ 262-269). With respect to the plaintiffs’ Fifth Amendment claim, the
defendants argue that dismissal is proper because the plaintiffs’ claim is
unripe under the doctrine announced in Williamson County Regional Planning
Commission v. Hamilton Bank, 473 U.S. 172, 173 (1985) (holding that “[i]f a state
Page 32 of 35
provides an adequate procedure for seeking just compensation, the property
owner cannot claim a violation of the Just Compensation clause until it has
used the procedure and has been denied compensation”).
Nonetheless, as the plaintiffs outline in their opposition brief, in
Wisconsin, intentional tort claims cannot be asserted against municipal
entities such as the City and the Water Utility. (Docket #39 at 28-29) (citing
Wis. Stat. § 893.80(4)). Thus, because the Williamson County doctrine only
applies where state law remedies would be “available” to provide “just
compensation” for the alleged takings, SGB Fin. Servs., Inc. v. Consol. City of
Indianapolis-Marion Cty., Ind., 235 F.3d 1036, 1038 (7th Cir. 2000), the Court
must deny the defendants’ motion to dismiss Count Eleven.
3.6
State Law Claims
Finally, the defendants argue that the plaintiffs’ state law claims
(Counts Twelve through Nineteen) must be dismissed because: (1) the
plaintiffs failed to file timely notices of claim with the City and the Water
Utility as required under Wis. Stat. § 893.80(1d)(a); and (2) any intentional
tort claims asserted against the City and the Water Utility should be
dismissed because municipalities cannot be sued for intentionally tortious
conduct pursuant to Wis. Stat. § 893.80(4).15 (Docket #38 at 27-29).
With regard to the plaintiffs’ compliance with Wisconsin’s notice of
claim statute, Wis. Stat. § 893.80(1d)(a), Federal Rule of Civil Procedure 9(c)
15
The defendants also argue that the Court should exercise its discretion to
decline supplemental jurisdiction over the remaining state law claims because all
of the plaintiffs’ federal claims should be dismissed for the reasons outlined above.
(Docket #38 at 27). However, because the Court concludes that dismissal of the
plaintiffs’ First, Fourth, and Fifth Amendment claims is improper at this juncture,
the Court will continue to exercise its jurisdiction over the state law claims under
28 U.S.C. § 1367.
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provides that “[i]n pleading conditions precedent, it suffices to allege
generally that all conditions precedent have occurred or been performed.”
Consistent with this rule, the plaintiffs allege that all conditions precedent
have been performed or otherwise occurred, including the plaintiffs’
provisions of notices of claim pursuant to Wis. Stat. §893.80. (Docket #31 at
¶ 5). Given this allegation, the Court concludes that the notice requirements
of Wis. Stat. § 893.80 have been sufficiently pled.
Next, while the Court agrees that the City and the Water Utility may
not be sued for intentionally tortious conduct under Wis. Stat. § 893.80(4), the
defendants fail to direct the Court to which claims in the amended complaint
their argument refers. (Docket #38 at 29). Based on the face of the amended
complaint, it appears that all of the intentional tort claims alleged by the
plaintiffs are against Pacetti and/or Kerkman as individuals. (Docket #31 at
¶¶ 270-326). Thus, the defendants’ argument is inapplicable.
Therefore, as: (1) the plaintiffs have complied with federal pleading
requirements insofar as they relate to Wisconsin’s notice of claim statute; and
(2) there are no intentional tort claims against the City and the Water Utility
to dismiss, the Court will deny the defendants’ motion to dismiss the
plaintiffs’ remaining state law claims.
4.
CONCLUSION
For the reasons stated above, the Court concludes that the defendants’
motion to dismiss the amended complaint should be granted in part and
denied in part. (Docket #37). More precisely, the Court will grant the
defendants’ motion with respect to: (1) the official capacity claims that are
alleged against the individually named defendants; and (2) the plaintiffs’
Monell claim alleged in Count Three. However, the Court concludes that the
amended complaint pleads plausible First, Fourth, and Fifth Amendment
Page 34 of 35
claims. Likewise, the plaintiffs’ have sufficiently pled compliance with
Wisconsin’s notice of claim statute, and, as such, the Court will continue
exercise its supplemental jurisdiction over the plaintiffs’ state law claims.
Accordingly,
IT IS ORDERED that the defendants’ motion to dismiss (Docket #37)
be and the same is hereby GRANTED insofar as it relates to: (1) the official
capacity claims asserted against the individually named defendants; and (2)
Count Three; and DENIED insofar at it relates to all remaining counts.
Dated at Milwaukee, Wisconsin, this 29th day of November, 2016.
BY THE COURT:
J.P. Stadtmueller
U.S. District Judge
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