The Equal Rights Center v. Equity Residential, et al. (Maryland U.S.D.C) (Approved for Publication)

Signed April 13, 2007--Memorandum Opinion by Judge Andre M. Davis.

The Equal Rights Center ("ERC") is a Washington, D.C.-based non-profit organization having approximately 150 individual members, many with disabilities. ERC's mission, inter alia, is to protect the rights of persons with disabilities through education, counseling, advocacy, enforcement, and referral services. ERC instituted this action for injunctive and declaratory relief, and damages, against Equity Residential, a real estate investment trust organized under the laws of Maryland (which describes itself as one of the largest owners [of apartment buildings] in the U.S.) and ERC Operating Limited Partnership, an Illinois limited partnership owned and controlled by Equity Residential (collectively, "Equity").

The first claim by ERC falls under the Fair Housing Act ("FHA"). The gravamen of this claim is that Equity engaged in a pattern and practice of violating the FHA in that they repeatedly and continually failed to design and construct properties subject to prescriptions of the FHA, i.e., multi-family properties containing the minimum number of units and relevant features so as to render the properties accessible to persons with disabilities. The second claim sues under the Americans with Disabilities Act ("ADA"), contending that the properties at issue do not contain, in areas comprising "public accommodations," e.g., leasing offices, parking lots, sidewalks, and restrooms, certain features of minimum accessibility and adaptable design as required by law.

Equity responded with a Rule 12(b)(6) motion to dismiss for lack of subject matter jurisdiction and for improper venue. Equity sought, in the alternative, a severance of what they asserted were multiple claims and a transfer of venue of such severed claims to the numerous districts where the challegened properties are located. Reasoning that the purpose of Rule 12(b)(6) is to test a sufficiency of a complaint and not to resolve contests regarding facts, the merits of a claim, or the applicability of defenses, the Court denied Equity's motion.

A Rule 12(b)(6) motion should not be granted unless it appears beyond doubt that the plaintiff can prove no set of facts in support of the claim which would entitled plaintiff to relief, viewed in the light most favorable to the plaintiff. The Court's first consideration was standing. To establish Article III standing, a plaintiff must allege facts which demonstrate: (1) the existence of a "concrete and particularized" injury-in-fact; (2) a causal connection between the injury suffered and the conduct complained of; and (3) that a favorable adjudication would redress the alleged injury. Fundamentally, it is a pleading burden, although the court must be satisfied at all times that the requirement is met. Organizational standing under the FHA exists to the limits of constitutional "case or controversy" limits; prudential considerations play no role. Thus, to allege a redressable injury-in-fact caused by Equity under the FHA, ERC need only allege facts that demonstrate that the Equity's actions either have caused the organization to divert resources to identify and counteract the defendants' unlawful practices or that the challenged actions have frustrated ERC's mission, which allegation ERC made.

Nonetheless, Equity challenged standing, relying on the contentions that (1) ERC's mission is too generalized for ERC to suffer a cognizable injury; (2) as a matter of law, ERC does not and cannot suffer a cognizable injury outside of the greater Washington area; and (3) ERC will not be entitled to relief on a nationwide basis. The Court found all three contentions unpursuasive.

Finally, Equity sought to have the court slice and dice ERC's two legal claims into 300 separate claims (one for each property) and, thereafter, transfer each claim to the federal district in which that property is located. The Court found to do so would not only be inappropriate but would unnecessarily create a litigation nightmare. Courts have recognized a presumption in favor of the nonmoving party that all claims in a case will be resolved in a single trial and not be severed, placing the burden on the party moving for severance to show that: (1) it will be severely prejudiced without a separate trial; and (2) the issue to be severed is so distinct and separable from the others that a trial of that issue alone may proceed without injustice. In determining whether severance is proper, courts consider: (1) whether the issues sought to be tried separately are significantly different from one another; (2) whether the separable issues require different witnesses and different documentary proof; (3) whether the party opposing severance will be prejudiced if it is granted; and (4) whether the party requesting severance will be prejudiced if the claims are not severed.

As the circumstances in the instant case weighed heavily against severance and transfer, Equity's motion was denied.

The full opinion is available in PDF.

Baron Financial Corp. v. Natanzon (Maryland U.S.D.C.)(Approved for Publication)

Issued July 7, 2006 -- Opinion of Judge Susan K. Gauvey. (Approved for publication.)

This opinion addresses a Counterclaim and Third-Party Complaint ("Natanzon's Claim") filed by Defendant Roni Natanzon ("Natanzon") against Baron Financial Corporation ("Baron") and Samuel Buchbinder ("Buchbinder"), in the above-captioned case, in which a Co-Defendant ERN, LLC ("ERN"), an LLC in which Natanzon held a membership interest, had already declared bankruptcy. A synopsis of another ruling in this case involving different procedural and substantive issues in dispute is available here.

Baron and Buchbinder moved to dismiss the two remaining counts in Natanzon's Claim: Intentional Interference with Economic Advantage ("Count I") and Unfair Competition ("Count IV.")

Regarding Count I, the Court noted that Natanzon claimed damages under three subtheories:

1. Baron and Buchbinder allegedly damaged ERN’s and Natanzon’s economic relationships with independent sales organizations (ISOs) and merchants by making statements to ISOs about their lawsuits against ERN and Natanzon and about Natanzon personally.

The Court held that since Natanzon personally lacked either a contract with the ISOs or an existing business relationship with them, he lacked standing to bring suit for any claim of tortious interference on the basis of his mere membership in ERN, and failed to allege facts sufficient to allow a defamation claim to proceed under a more liberal reading of the claim.

2. Baron interfered with Natanzon’s business interests by "frustrating ERN's and Natanzon's ability to devote" their full time to the operation of their business.

The Court held that Natanzon had failed to allege sufficient facts to establish either a contract with ISOs or a likelihood of a prospective business relationship with any identified ISOs, and dismissed the claim for failure to state a claim on which relief might be granted.

3. Baron and Buchbinder allegedly filed lawsuits and otherwise interfered in Natanzon’s attempt to rehabilitate ERN and meet his obligations under the Memorandum of Understanding between the parties.

The Court held that since Baron and Buchbinder were themselves parties to the Memorandum of Understanding, they could not commit tortious interference with their own contract against Natanzon as a matter of law. Accordingly, the Court dismissed Count I with prejudice.

Count IV of Natanson's Claim alleged the following as acts constituting "unfair competition":

(1) Buchbinder's and Baron's institution and prosecution of numerous lawsuits against Natanzon, ERN, and ERN Israel; (2) their failure to make residual payments to ISOs with respect to their Assigned Portfolios, pursuant to the terms of the MOU and the Rider; (3) their improper demands for documentation; (4) their claim that ERN failed to process the patent application even though Buchbinder is aggressively his own 'all-in-one' POS machine (which has diminishes the value of any patent ERN might obtain); and (5) [other additional matters]

The Court held that all of Natanzon's alleged damages arose out of his ownership interest in ERN, and that since Natanzon had not pled any distinct injury to himself specifically as an owner, as opposed to financial damages to ERN itself, he lacked standing to sue for Baron and Buchbinder for unfair competition under Maryland law. Accordingly, the Court dismissed Count IV.

Natanzon had previous conceded his lack of standing to bring Counts II and III of his Claim, and the Court summarily dismissed those two conceded counts. All counts having been dismissed, the Court dismissed Natanzon's Claim in its entirety.

The full memorandum opinion is available in PDF.

Andrew v. Clark (Maryland U.S.D.C.)(Approved for Publication)

Issued February 5, 2007 -- Opinion of Judge Andre M. Davis. Approved for publication.

Plaintiff served as a Major in the Baltimore City Police Department (BCPD) and was the Commanding Officer of the Eastern District of the BCPD at times relevant. After a barricade incident, Plaintiff prepared and distributed to his chain of command an "internal memorandum" criticizing the BCPD's handling of that incident. Receiving no response from his chain of command, Plaintiff released a copy of the internal memorandum to a Baltimore Sun reporter. Internal Affairs investigated the release and Plaintiff was subsequently fired.

Plaintiff filed and subsequently moved to amend a complaint in U.S. District Court alleging multiple state and federal counts against then Police Commissioner Kevin Clark and other parties. The complaint as amended alleged inter alia that Defendants' firing of Plaintiff:

1. violated the procedural due process requirements under the 14th Amendment of the Constitution and 14 U.S. Sec. 1983 of the United States Code, as amended, due to the defendants' failure to provide either:

a. an adjudicatory hearing; or

b. a demotion to a civil service position at which a hearing would ostensibly apply under the Maryland Law Enforcement Officer's Bill of Rights ("LEOBR"); and further

2. violated Plaintiff's right to freedom of speech with respect to the preparation and release of the internal memorandum.

Defendants moved under Rule 12(b)(6) to dismiss all federal counts from the complaint.

The U.S. District Court held that Plaintiff acted in his capacity as a agent of the BCPD in preparing and distributing the internal memorandum, and accordingly had no such protected freedom of speech rights in that professional capacity under the First Amendment as would trump the BCPD's power to discipline or fire an employee. It held further that Defendant had not violated any of Plaintiff's procedural due process rights, as Plaintiff had no "property' right in his as an at-will employee under Maryland law, and thus no federal constitutional provision protected him from the deprivation of that "property". The Court also held that while state law may entertain a right of Plaintiff to be demoted to a protected, civil service rank as an intermediate discipline in lieu of termination, no constitutional principles commanded such a right.

Accordingly, the U.S District Court dismissed under Rule 12(b)(6) all federal claims in the complaint with prejudice and all non-diversity of citizenship state law claims without prejudice.

The Memorandum Opinion may be read here in PDF.