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X-MEN SEC., INC. v. PATAKI

July 10, 1997

X-MEN SECURITY, INC., et al., Plaintiffs, against GOVERNOR GEORGE PATAKI, et al., Defendants.


The opinion of the court was delivered by: GLASSER

MEMORANDUM AND ORDER

 GLASSER, United States District Judge:

 SUMMARY

 All defendants now move to dismiss the complaint pursuant to Fed. R. Civ. P. 12(b)(6); the State Defendants also move under Fed. R. Civ. P. 12(b)(1). For the reasons set forth below, the Private Defendants' motion should be granted, and the motions of the State Defendants and King should be granted in part and denied in part. *fn1"

 BACKGROUND

 The Plaintiffs

 X-Men is a private corporation that provides security and protective services. The majority of its employees, and its owner Richards, are black and Muslim and attend mosques that follow the teachings of the Nation of Islam, one of whose ministers is Louis Farrakhan. According to the complaint, X-Men is not affiliated with the religious corporation of the Nation of Islam.

 Plaintiff Boyd is the president of the Ocean Towers Tenants Association, an advocacy group for the tenants of Ocean Towers.

 The Defendants

 The Private Defendants are DU Third Realty, Co. L.P. ("DU"), the owner of Ocean Towers; Bernard Jereski, a partner of DU; BSR Management Corp. ("BSR"), the managing agent of Ocean Towers; and Aaron Silberman, an officer of BSR. They are alleged to have acted in concert with the State Defendants who are George Pataki, Governor of the State of New York; Jules Polonetsky, a New York State Assemblyman; and Joseph H. Holland, the former New York State Commissioner of the Division of Housing and Community Renewal ("DHCR"), and with King, United States Representative for the Third Congressional District of New York. The State Defendants and King are sued in their individual capacities.

 Regulation of Ocean Towers

 Although Ocean Towers is privately owned and operated, it receives public financing from both the federal and state governments. The development is regulated by the federal government through the Housing and Urban Development Agency ("HUD") and by the State of New York through the DHCR. As part of its oversight, DHCR regulations require that contracts over $ 500 at Ocean Towers be awarded through a competitive bidding process. See 9 N.Y.C.R.R. § 1728-4.1(b). Prior DHCR approval is needed to enter into contracts in excess of $ 5,000, and on such contracts, the presumption is that the building owner will recommend to DHCR that the contract be awarded to the lowest responsible bidder. See 9 N.Y.C.R.R. § 1728-4.1(d)(1) and (g).

 FACTS

 The following facts are accepted as true for purposes of this motion.

 Until June 28, 1993, Ocean Towers was plagued by violent crime, gangs and drugs. Compl. PP 20-23. On that date, N.O.I. Security, Inc. ("N.O.I.") contracted with DU, the development's owner, and BSR, the manager, to provide security services to Ocean Towers. Id. at P 24. The contract was executed by Dion Muhammad, an officer of N.O.I., and Bernard Schreiber, the late president of BSR, and was to extend for one year. Id.; Pl.'s Br. in Opp. to State Defs. Motion to Dismiss, p.14. Pursuant to an amendment to the contract, N.O.I.'s parent company, X-Men, became the "named holders" of the contract. Compl. P 24.

 The complaint alleges that shortly after X-Men began its work at Ocean Towers, defendants Polonetsky and King, motivated by racial and religious prejudice, formed a conspiracy with three objectives: (1) terminating X-Men's contract with DU and BSR; (2) preventing X-Men and Richards from procuring future contracts; and (3) preventing Boyd and the other tenants of Ocean Towers from enjoying the benefits of X-Men's security services. Id. at PP 36, 39, 41. Using their official positions to create a public frenzy, the conspirators made false allegations that: X-Men was controlled by Farrakhan; the Nation of Islam profited from the Ocean Towers contract; X-Men was a racist hate group; and X-Men and Richards were guilty of fraud, mismanagement and unpaid debts. Id. at PP 40-44.

 Notwithstanding the alleged conspiracy, X-Men worked under their one-year contract for the remainder of 1993 and into 1994. When the contract expired, they continued to provide security on a month-to-month basis. Id. at PP 25, 57. Despite BSR's pleasure with X-Men's performance during this time, the complaint alleges that it came under pressure from DHCR to solicit open bids for the security contract as required by DHCR regulations. In August 1994, BSR reluctantly went ahead and sought bids on the Ocean Towers security guard contract.

 While BSR was considering the bids it received, Polonetsky and King forwarded a letter under Polonetsky's signature dated September 24, 1994 to then-DHCR Commissioner Donald Halperin. The letter stated, in relevant part:

 
Since the Nation of Islam promotes hatred against whites, Jews, women, Catholics and others, it is difficult to understand how the X-Men are eligible for a state-supported contract -- which requires compliance with equal employment and nondiscrimination guidelines. It seems clear that state support for this contract subsidizes the activities of a hate group and helps fund the racist and anti-Semitic goals of Louis Farrakhan and the Nation of Islam.

 Id. at P 45. Later in the letter, Polonetsky urged the Commissioner to terminate the contract with X-Men. Id. at P 46. According to the complaint, the efforts of Polonetsky and King were at least partially successful because on or about November 14, 1994, Jereski and Silberman (on behalf of DU and BSR) notified X-Men that their contract would not be renewed for a definite term. Id. at P 47.

 At the conclusion of the 1994 bidding process, BSR recommended that DHCR reject all the submitted bids and retain X-Men on account of the "dramatic improvements" in security that were made on their watch. Id. at P 49, Ex. A. DHCR followed this advice and rejected the bids, enabling X-Men to continue providing security at Ocean Towers during 1994 and 1995 on a monthly basis.

 Over that time, the complaint alleges that Polonetsky succeeded in bringing Pataki, Holland, DU, BSR, Jereski and Silberman into the conspiracy. Compl. P 55. The conspirators' goal was allegedly achieved on September 9, 1996 when BSR notified X-Men that the contract would be terminated once and for all effective October 10, 1996. Id. at P 62. On that date, Task Force Security Ltd., the low bidder in the 1995 bidding process, was scheduled to take over security at Ocean Towers. However, that date came and went without Task Force taking over because, allegedly, they were not competent to perform the required services. A security company that had not participated in the 1995 bidding process was eventually brought in on a monthly basis. Id. at P 64.

 X-Men, Richards and Boyd filed the complaint in this action in October 1996 charging all defendants with violating 42 U.S.C. §§ 1981, 1983 and 1985(3). The State Defendants and King are also charged with tortious interference with contract in violation of New York state law. Plaintiffs seek $ 200 million in compensatory and punitive damages as relief.

 I. Standing of Plaintiff Boyd

 As a threshold matter, it is argued by the State Defendants that plaintiff Boyd lacks standing to prosecute this action because she has not suffered any cognizable injury as a result of the unlawful acts charged.

 In order for a federal court to assert jurisdiction over an action, the court must find that a justiciable "case or controversy" exists. See U.S. Const., Art. III, § 2. Standing is the principle doctrine to determine whether a case or controversy exists and the doctrine which delineates a plaintiff's entitlement to invoke the power of a federal court. Comer v. Cisneros, 37 F.3d 775, 787 (2d Cir. 1994). The Supreme Court has determined that a plaintiff must satisfy three criteria to have standing: (1) personal injury or threat of injury; (2) that the injury fairly can be traced to the action; and (3) that the injury is likely to be redressed by the requested relief. Garelick v. Sullivan, 987 F.2d 913, 918-19 (2d Cir.), cert. denied 510 U.S. 821, 114 S. Ct. 78, 126 L. Ed. 2d 47 (1993). The alleged injury cannot be "abstract" in character. City of Los Angeles v. Lyons, 461 U.S. 95, 101, 75 L. Ed. 2d 675, 103 S. Ct. 1660 (1983). It must be "distinct and palpable." Gladstone, Realtors v. Village of Bellwood, 441 U.S. 91, 100, 60 L. Ed. 2d 66, 99 S. Ct. 1601 (1979) (internal quotations omitted). In other words, a plaintiff must demonstrate that she "has sustained or is immediately in danger of sustaining some direct injury as the result of the challenged official conduct and the injury or threat of injury must be both real and immediate, not conjectural or hypothetical." Lyons, 461 U.S. at 102 (internal quotations omitted).

 The complaint in this case fails to allege any facts from which it can be inferred that Boyd (or any other tenant of Ocean Towers) has been or will be injured as a result of defendants' conduct. The complaint does not allege that as a result of the contract termination Boyd has been, or is likely to be, a crime victim, nor does it allege that Ocean Towers lacks adequate security or has suffered an increase in crime. It is not alleged that Boyd or the tenants of Ocean Towers are in danger of having present or future security contracts terminated by BSR, DU or DHCR. Any suggestion that these events are likely to happen in the future is purely speculative. Boyd's mere interest in, or concern over, the termination of X-Men's contract "-- no matter how deeply felt -- is insufficient to demonstrate injury in fact." Evans v. Lynn, 537 F.2d 571, 591 (2d Cir. 1975)(en banc), cert. denied, 429 U.S. 1066, 97 S. Ct. 797, 50 L. Ed. 2d 784 (1977). Accordingly, this court has no jurisdiction over Boyd's constitutional claims and they should be dismissed pursuant to Fed. R. Civ. P. 12(b)(1).

 II. Legal Standard on a Motion to Dismiss

 In analyzing a motion to dismiss for failure to state a claim, the court must view the complaint in the light most favorable to plaintiff and accept all allegations contained therein as true. Scheuer v. Rhodes, 416 U.S. 232, 236, 40 L. Ed. 2d 90, 94 S. Ct. 1683 (1974). Dismissal of a complaint under Fed. R. Civ. P. 12(b)(6) is inappropriate "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Yusuf v. Vassar College, 35 F.3d 709, 713 (2d Cir. 1994)(quoting Conley v. Gibson, 355 U.S. 41, 45-46, 2 L. Ed. 2d 80, 78 S. Ct. 99 (1957)). Complaints based on civil rights statutes must include specific allegations of facts showing a violation of rights "instead of a litany of general conclusions that shock but have no meaning." Barr v. Abrams, 810 F.2d 358, 363 (2d Cir. 1987).

 III. § 1981

 Plaintiffs' first cause of action claims that all defendants violated 42 U.S.C. § 1981 by terminating X-Men's contract out of racial animus.

 Section 1981 bars certain racially motivated and purposefully discriminatory acts. It provides:

 42 U.S.C. § 1981 (West 1983).

 To state a claim under § 1981, a plaintiff must allege facts in support of the following elements: (1) the plaintiff is a member of a racial minority; (2) an intent to discriminate on the basis of race by the defendant; and (3) the discrimination concerned one or more of the activities enumerated in the statute (i.e. the right to make and enforce contracts). Mian v. Donaldson, Lufkin, & Jenrette Secs., 7 F.3d 1085, 1087 (2d Cir. 1993). In order to survive a motion to dismiss, plaintiffs must allege with specificity "the events claimed to constitute intentional discrimination as well as circumstances giving rise to a plausible inference of racially discriminatory intent." Yusuf, 35 F.3d at 713. Under Yusuf, it is not enough to simply assert that the defendant took adverse action against the plaintiff and the action was the product of racial animus. The complaint must allege specific facts supporting both the existence of the racial animus and the inference of a link between the adverse treatment and the racial animus. Indication of racial bias may be found in the form of statements attributable to the decision-makers responsible for the adverse action, or patterns of conduct that suggest the influence of race in decision-making. Id. at 715. Mere conclusory allegations are insufficient. See Mian, 7 F.3d at 1088.

 Defendants argue first that plaintiffs cannot maintain a claim as "blacks" of racial discrimination because they have not alleged that all the employees of X-Men are black. They cite two Second Circuit cases in support of this assertion, Jews For Jesus, Inc. v. Jewish Community Relations Council, Inc. of New York, 968 F.2d 286 (2d Cir. 1992), and Albert v. Carovano, 851 F.2d 561, 572 (2d Cir. 1988). In Jews for Jesus ("JFJ"), the Second Circuit held that the religious organization of the same name could not maintain a claim for racial discrimination where the record indicated that the organization was comprised of both Jew and non-Jews. *fn2" "Because JFJ is a racially diverse society, it cannot . . . maintain a claim as 'Jews' of racial discrimination." 968 F.2d at 292. Carovano involved a claim that Hamilton College selectively enforced its disciplinary rules against the plaintiffs because they were "black or Latin." The Circuit Court observed in that case that no allegation had been made in the complaint that all the plaintiffs were black or Latin and this omission undercut plaintiffs' argument that the discrimination complained of was based on race. 851 F.2d at 572.

 On the complaint alone, the court cannot conclude that X-Men are barred from bringing a claim as "blacks" of racial discrimination. The complaint alleges that "a majority of [X-Men] employees are of Black African-American descent." Compl. P 32. This language leaves open the possibility that all the employees of X-Men are black but not of African-American descent or that an overwhelming percentage are black. In any event, plaintiff Richards is black ...


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