The opinion of the court was delivered by: Jerome B. Simandle United States District Judge
I. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . 3
II. BACKGROUND . . . . . . . . . . . . . . . . . . . . . . . . 4
III. DEFENDANTS' MOTION TO DISMISS .. . . . . . . . . . . . . 12
A. Rooker-Feldman Doctrine . . . . . . . . . . . . . . 12
B. Younger Abstention .. . . . . . . . . . . . . . . . 17
1. Nature of the Interference . . . . . . . . . . 19
2. Dismissal of Damages Claims .. . . . . . . . . 22
4. Prospective Injunction . . . . . . . . . . . . 23
C. Sovereign Immunity .. . . . . . . . . . . . . . . . 25
D. Sufficiency of Factual Allegations .. . . . . . . . 29
1. New Jersey Civil Rights Act and Section 1983 Claims with respect to Equal Protection .. . . 31
2. Procedural Due Process . . . . . . . . . . . . 37
3. Substantive Due Process .. . . . . . . . . . . 38
4. Interstate Commerce and Right to Travel .. . . 41
5. Conversion . . . . . . . . . . . . . . . . . . 46
6. Federal and State Conspiracy Claims. . . . . . 46
E. Governmental Immunity . . . . . . . . . . . . . . . 48
F. Statute of Limitations .. . . . . . . . . . . . . . 51
IV. PLAINTIFFS' MOTION TO AMEND .. . . . . . . . . . . . . . 54
A. Procedural Background . . . . . . . . . . . . . . . 54
B. Standard of Decision .. . . . . . . . . . . . . . . 57
C. New Allegations Regarding Supervisory Defendants .. 57
D. Additional Claims and Other New Allegations . . . . 59
E. Clarifying Amendments . . . . . . . . . . . . . . . 62
F. Summary . . . . . . . . . . . . . . . . . . . . . . 64
V. APPEAL OF MAGISTRATE JUDGE ORDER . . . . . . . . . . . . 64
A. Background of the E-mail Discovery Dispute .. . . . 65
B. Standard of Review .. . . . . . . . . . . . . . . . 69
C. Analysis .. . . . . . . . . . . . . . . . . . . . . 70
1. De Novo Review . . . . . . . . . . . . . . . . 70
2. Abuse of Discretion .. . . . . . . . . . . . . 75
VI. CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . 76
This civil rights case involves allegations of racial discrimination in New Jersey's system of commercial bus safety inspections. Plaintiffs bring this action against two groups of defendants, the state agencies and officials who operate the inspection system ("State Defendants") and a repair shop and its owner who Plaintiffs allege are involved in the discrimination ("Garage Defendants"). The matter is before the Court on the State Defendants' motion to dismiss under Rules 12(b)(1) and 12(b)(6), Fed. R. Civ. P. [Docket Item 260] and Plaintiffs' crossmotion to file a Fourth Amended Complaint under Rule 15, Fed. R. Civ. P. [Docket Item 287].*fn1 Both sets of Defendants oppose the motion to amend. Plaintiffs also appeal a decision of Magistrate Judge Schneider regarding preservation of government emails and discovery of email backup tapes [Docket Item 284].
For the reasons explained below in today's Opinion, the Court will grant the State Defendants' motion to dismiss except as to certain claims against Defendants Shulze and Colorel.*fn2 The Court will deny the motion to amend except insofar as it clarifies the current complaint with respect to the remaining claims because the additional claims and allegations are unduly delayed and prejudicial. Magistrate Judge Schneider's discovery ruling will be affirmed.
New Jersey's Bus Safety Compliance Act ("BSCA") creates a system of inspections to promote vehicle safety. N.J. Stat. Ann. § 48:4-2.1. Federal law makes states eligible to receive federal grants if they adopt and enforce certain safety regulations. 49 C.F.R. §§ 350.107, 350.201(a). Regulations promulgated pursuant to the BSCA expressly adopt and incorporate by reference certain federal rules pertaining to safety of vehicle equipment in order to receive grants under the federal program. N.J. Admin Code § 16:53-1.1 (adopting 49 C.F.R. § 393). The BSCA regulations, modeled on these federal rules, provide that authorized officers can direct any bus operated in New Jersey to immediately drive to a designated facility for inspection. N.J. Admin Code § 16:53A-6.1. Buses discovered to have a mechanical condition that would likely cause an accident or a breakdown, a so-called "outof-service violation," may be required to unload passengers and be prevented from operating until the conditions have been repaired on-site or until towed and fixed at a repair facility. N.J. Stat. Ann. § 48:4-2.1(h). Additionally, the bus company is subject to civil penalties for each violation. N.J. Stat. Ann. § 48:4-2.1(f).
Plaintiffs are six African American owned and operated bus companies and their individual owners.*fn3 They offer bus tours between Pennsylvania and casinos that market to African Americans in Atlantic City, New Jersey. Both the passengers and drivers of the buses are largely African American. Beginning in 2000, according to Plaintiffs, they allegedly began to experience a pattern of racial discrimination in the bus inspection program that is ongoing.
Specifically, Plaintiffs allege that bus inspectors gather near casinos that have primarily African American clientele, targeting casino buses, instead of randomly selecting buses for inspection. They claim that this initially discriminatory targeting leads to further increased scrutiny, because buses may be stopped based on data collected during prior inspections and kept in a database, leading to further stops and inspections.
Plaintiffs allege that when they are stopped, they are often subjected to the highest level of inspection, unlike white-owned bus operators with inferior safety and compliance records. They allege that even the highest level of inspection should only take about an hour, but that inspections of Plaintiffs' buses typically take three to four hours.
Plaintiffs allege that the inspectors fabricate violations of the BSCA, finding out-of-service violations even on new or nearly-new buses. When a violation is found or invented, Defendants discriminate against them by exercising their discretion to require towing to a repair shop instead of allowing on-site repair. The inspectors require the buses to be towed to Jimmy's Lake Side Repair Shop, owned by Defendant James Restuccio, who charges them above the prevailing market rates, subjects them to verbal abuse, and "typically cannot perform the allegedly necessary repairs," requiring Plaintiffs to tow the buses elsewhere for repairs. (Compl. ¶ 35.) The inspectors allow white-owned bus operators to select the repair centers when those buses require repair.
Plaintiffs allege that when a bus does pass an inspection, it is supposed to receive a sticker that would prevent the bus from being inspected again during the quarter during which the sticker was issued. Their buses do not receive these stickers when they pass inspection.
According to the Complaint, at least some of the allegedly discriminatory incidents resulted in summonses being issued to Plaintiffs, leading to municipal court adjudication of the outof-service violations. What proportion of allegedly discriminatory inspections turned up out-of-service violations, and what proportion of those resulted in summonses is unclear. The only allegations or evidence presented to the Court with respect to these municipal court adjudications is the vague mentions in the Complaint of fines assessed to Plaintiffs, Defendant's exhibit purporting to be a "representative sample" of municipal court adjudication docket transcripts, and Defendants' representation in their brief that no municipal court adjudication was ever appealed, and that all of them resulted either in a finding of violation, or a plea agreement. (Defs.' Br. Supp. Motion to Dismiss, at 4-5, Ex-A "Representative Sample of Adjudications.".)
The Defendants are the state agencies, the New Jersey Department of Transportation (NJDOT) and New Jersey Department Motor Vehicle Commission (NJMVC), and various state officials involved in the bus inspections as well as Jimmy's Lakeside Garage and its owner. There are no allegations in the Complaint regarding the conduct of any individual state officer. Instead, the Complaint contains only blanket accusations, such as that "[d]efendants and their agents have taken all of these discriminatory and harassing actions both directly and through ratification of others' acts." (Compl. ¶ 38.) The complaint also does not refer to any particular incidents of the alleged pattern of conduct, nor does it provide any dates other than the approximate starting date of the general pattern of conduct in 2000.
The Complaint's federal claims include three counts. Count I is a 42 U.S.C. § 1983 claim based on several provisions of the United States Constitution. It claims Defendants' discriminatory practices violate the Equal Protection Clause of the United States Constitution, the Interstate Commerce Clause, and the Privileges and Immunities clause of Article IV protecting the right to travel freely between states.*fn4 Plaintiffs also argue as part of Count I that Defendants have violated Plaintiffs' rights of procedural due process in some unspecified way, and attempted to cover up the illegal acts set forth in the Complaint, which is a violation of Plaintiffs' substantive due process rights. Count II is a 42 U.S.C. § 1981 claim, arguing that Defendants interfered with Plaintiffs' contractual relationship with their customers by preventing Plaintiffs from making and performing contracts with their customers, and preventing Plaintiffs from contracting with towing companies of Plaintiffs' choice, instead forcing them to use Jimmy's Towing. The current complaint is unclear about which defendants the § 1981 claim is brought against, but Plaintiffs' proposed Fourth Amended Complaint would clarify that this claim is only against the Garage Defendants. Count III is a 42 U.S.C. § 1985(3) claim that alleges a conspiracy to carry out the pattern of conduct alleged in the Complaint.
Plaintiffs' state law claims also include three counts. Count IV is a New Jersey Civil Rights Act claim that mirrors the § 1983 claim. See N.J. Stat. Ann. 10:6-2(c) & (e); Compl. ¶¶ 66--77. Plaintiffs claim that Defendants' alleged conduct violates provisions of the New Jersey Constitution analogous to the provisions of the United States Constitution they claim were violated, and Plaintiffs also identify a number of provisions of Chapter 30 of the New Jersey Code of Criminal Justice that they claim Defendants violated. Count V is a conversion claim against the Garage Defendants and two inspection officers, Shulze and Colorel, based on their refusal to return one or more buses to Plaintiffs. The factual allegations supporting Count V refer to "Defendant Jimmy's," as well as "Defendants" generally. But Plaintiffs clarify in their opposition to the motion to dismiss that they intended the claim to apply only to the Garage Defendants and the two state officials acting in their individual capacities, which is reflected in the proposed Fourth Amended Complaint. Count VI is a state law civil conspiracy claim against all defendants based on the same conduct underlying the § 1985(3) conspiracy claim.
Plaintiffs seek compensatory and punitive damages, as well as the disgorgement of "any illegally-collected fees, charges, or other sums that Plaintiffs have paid as a proximate result of Defendants' discriminatory and illegal acts." (Compl. ¶ 92(c).) They clarify in their opposition to the motion to dismiss that their reference to disgorgement refers to only fees and charges paid to the Garage Defendants for towing and storage (Pls.' Br. Opp. Motion to Dismiss, at 22), and they seek to amend the Complaint to clarify this point. Plaintiffs also ask for equitable relief including a declaration that Defendants violated the laws upon which Plaintiffs rely, and an injunction against future such unlawful action.
The initial complaint was filed by the original Plaintiffs (Charles Major and Major Tours, Inc., as well as Victoria Daniels and M & M Tours) on June 15, 2005. After the first complaint was filed, the parties conducted nearly four contentious years of discovery. During this period, the initial Plaintiffs amended the Complaint several times adding additional Plaintiffs, among other changes. Magistrate Judge Schneider ordered Defendants not to file dispositive motions with respect to the current complaint until this time. [Docket Item 124.]
The State Defendants now move to dismiss the Complaint on a number of grounds. These include the Rooker-Feldman doctrine and Younger abstention because of municipal court rulings on out-of-service violation penalties levied against Plaintiffs; sovereign immunity; failure to file within the statute of limitations; and various insufficiencies in the allegations as to particular claims. Plaintiffs move to file a Fourth Amended Complaint in response to Defendants' motion to dismiss, seeking to add some allegations regarding the supervisory defendants' failure to train and investigate, to clarify parts of the Complaint, as discussed above, and to add two new causes of action related to the same conduct: a claim under Title VI of the Civil Rights Act of 1964, 42 U.S.C. § 2000d, against the State Defendants and a claim under the New Jersey Law Against Discrimination (NJLAD), N.J. Stat. Ann. § 10:5-1, against all defendants.
III. DEFENDANTS' MOTION TO DISMISS
A. Rooker-Feldman Doctrine
According to the Rooker-Feldman doctrine, a federal district court cannot entertain what is functionally an appeal from a state court decision because Congress has only granted the power to hear such appeals to the United States Supreme Court. See 28 U.S.C. § 1257 (2006) (allowing appeal from state court decisions to the United States Supreme Court); Rooker v. Fidelity Trust Co., 263 U.S. 413, 415-16 (1923); District of Columbia Court of Appeals v. Feldman, 460 U.S. 462, 483-84 (1983); Gary v. Braddock Cemetery, 517 F.3d 195 (3d Cir. 2008). Defendants argue that this Court therefore lacks subject matter jurisdiction over Plaintiffs' Complaint, which they characterize as seeking relief from the municipal court adjudications of Plaintiffs' out-of-service violations.
The Supreme Court explained the scope of the doctrine in Exxon Mobil Corp. v. Saudi Basic Industries Corp., 544 U.S. 280 (2005). In Exxon, the Supreme Court was concerned with what it saw as the improper application of the Rooker-Feldman doctrine in the Third Circuit and elsewhere when ordinary principles of preclusion and abstention should govern the situation. Exxon, 544 U.S. at 1521-22. The Supreme Court emphasized that the only cases that constitute functional appeals are "cases brought by state-court losers complaining of injuries caused by state-court judgments rendered before the federal district court proceedings commenced and inviting district court review and rejection of those judgments." Id. Thus, "If a federal plaintiff presents some independent claim, albeit one that denies a legal conclusion that a state court has reached in a case to which he was a party, then there is jurisdiction and state law determines whether the defendant prevails under principles of preclusion." Exxon, 544 U.S. at 293 (internal quotations and citations omitted); see also Turner v. Crawford Square Apartments III, L.P., 449 F.3d 542, 547-48 (3d Cir. 2006); Bolden v. City of Topeka, 441 F.3d 1129, 1143 (10th Cir. 2006).
Although the Complaint argues that some of the out-of-service violations were improper, Plaintiffs seek redress not from the civil penalties themselves but the private costs and interference with their business caused by the inspections, towing, and repair. Moreover, except for claims of outright fabrication of violations, Plaintiffs' claims do not even conflict with any state court decisions as that conflict is understood for the purposes of Rooker-Feldman, because the claims do not ask the Court to deny the legal conclusions actually reached by any municipal court in this matter.
The Third Circuit Court of Appeals decision in Desi's Pizza, Inc. v. City of Wilkes-Barre, 321 F.3d 411 (3d Cir. 2003), controls this case with respect to the claims other than the fabrication claims. In that case, the district court had found that the state court's determination that the plaintiff was a nuisance had necessarily determined that the defendants' "conduct was unrelated to retaliation or [to Desi's'] minority clientele." Id. at 418. But the Third Circuit Court of Appeals disagreed and reversed, finding that "the state court's finding that Desi's was a 'common nuisance' means only that Desi's operated in violation of the Liquor Code or the Crimes Code." Id. at 423. As in Desi's, in this case, the municipal court's adjudications related to the out-of-service violations did not determine whether the summonses for those violations were issued selectively, or otherwise as a result of selective stops, selectively increased scrutiny, or any other kind of discriminatory investigation or enforcement.*fn5 Therefore, because there is no conflict with the state court adjudications, this Court ...