United States District Court, E.D. New York
JAMES V. NAPLES and JAMES C. NAPLES, Plaintiffs,
PHILIP STEFANELLI; JOSEPH PARISI; DAVID PARISI; ENVIRONMENTAL SERVICES, INC.; COUNTY OF SUFFOLK (NEW YORK); and JOHN DOES 1-100, Defendants.
Harry R. Thomasson, Jr., Esq., Law Office of Harry Thomasson, Wantagh, NY, for Plaintiffs.
Sean P. Lenihan, Esq., Davis & Ferber, LLP, Islandia, NY, Arlene S. Zwilling, Esq., Susan A. Flynn, Esq., Suffolk County Attorney's Office, Hauppauge, NY, for Defendants Stefanelli.
Arlene S. Zwilling, Esq., Susan A. Flynn, Esq., Suffolk County Attorney's Office, Hauppauge, NY, for Defendants Suffolk County.
Glen B. Gruder, Esq, Certilman Balin Adler & Hyman LLP, Hauppauge, NY, Paul B. Sweeney, Esq., Sanjay V. Nair, Esq., Certilman Balin Adler & Hyman LLP, East Meadow, NY, ESI Defendants.
MEMORANDUM & ORDER
JOANNA SEYBERT, District Judge.
Currently pending before the Court is Defendants Environmental Services, Inc. ("ESI"), Joseph Parisi, and David Parisi's (collectively, the "ESI Defendants") motion to dismiss the Second Amended Complaint for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6). (Docket Entry 33.) For the following reasons, the ESI Defendants' motion to dismiss is GRANTED IN PART and DENIED IN PART.
Plaintiffs James V. Naples ("James Naples") and James C. Naples ("Jimmy Naples") originally commenced this action on September 6, 2012 against three groups of defendants: (1) Suffolk County (the "County"), the Suffolk County Police Department (the "County Police Department"), and Philip Stefanelli ("Officer Stefanelli") (collectively, the "County Defendants"); (2) the State of New York, the New York State Department of Environmental Conservation Police Department (the "DEC Police Department"), and the New York State Department of Environmental Conservation (the "DEC") (collectively, the "State Defendants"); and (3) the ESI Defendants. Before any of the Defendants answered the original Complaint, Plaintiffs filed an Amended Complaint on October 17, 2012, which asserted a variety of federal and state law claims arising out of an alleged conspiracy among Defendants to drive Plaintiffs' Long Island-based biofuel companies out of business. Specifically, the Amended Complaint asserted claims for: (1) violations of Plaintiffs' constitutional rights pursuant to 42 U.S.C. § 1983; (2) violations of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1961, et seq.; (3) violations of Section 340 of New York's General Business Law (the "Donnelly Act"); (4) violations of Section 349 of New York's Business Law (the "Consumer Protection Act"); (5) intentional/negligent infliction of emotional distress; (6) tortious interference with business relations; (7) conversion and theft (against Officer Stefanelli and the ESI Defendants only); (8) fraud and extortion; (9) negligent hiring, training, and supervision (against the Suffolk County Police Department and the DEC Police Department only); and (10) libel and slander (against all Defendants but the DEC Police Department). (See Am. Compl., Docket Entry 3, ¶¶ 142-233.)
The County Defendants filed a motion to dismiss the Amended Complaint on December 14, 2012, and the State Defendants and ESI Defendants filed separate motions to dismiss on January 31, 2013. (Docket Entries 13, 18, 19.) By Memorandum and Order dated September 18, 2013 (the "First Dismissal Order"), the Court granted the State Defendants' motion to dismiss, dismissing with prejudice all claims against the State Defendants. Naples v. Stefanelli, 972 F.Supp.2d 373, 390-91 (E.D.N.Y. 2013). The Court granted in part and denied in part the County Defendants' and the ESI Defendants' motions to dismiss, dismissing without prejudice, and with leave to replead, Plaintiffs' RICO and Donnelly Act claims against the ESI Defendants, as well as Plaintiffs' claims against the County and Officer Stefanelli alleging municipal liability under Section 1983. Id. at 387-89, 394-97. The Court also dismissed Plaintiff's malicious prosecution claim against the ESI Defendants without prejudice, but did not grant Plaintiffs leave to replead that claim. Id. at 402 n.32. Finally, the Court denied the ESI Defendants' motion to dismiss insofar as it sought dismissal of Jimmy Naples' false arrest claim and both Plaintiffs' illegal search, intentional infliction of emotional distress, tortious interference, libel/slander, and conversion claims. Id. at 393-94, 399-402.
Plaintiffs filed their Second Amended Complaint on October 25, 2013, which alleges the same factual background as the Amended Complaint, but attempts to correct the pleading deficiencies of Plaintiffs' malicious prosecution, RICO, and Donnelly Act claims against the ESI Defendants. The Second Amended Complaint is nearly identical to the Amended Complaint, the facts of which are set forth extensively in the First Dismissal Order. Accordingly, the Court presumes familiarity with the underlying allegations of this action, and the new allegations of the Second Amended Complaint are set forth throughout the discussion section of this Memorandum and Order.
Briefly, however,  Plaintiffs James Naples and Jimmy Naples, who are father and son respectively, were the owners and operators of Island Biofuel, LLC and JNS Industries, LLC (collectively, the "Naples Corporations"), two Long Island biofuel companies that were engaged in, inter alia, the business of collecting and reselling waste kitchen oil. (SAC ¶¶ 3-4.) Plaintiffs, through the Naples Corporations, would enter into contracts with restaurants on Long Island to collect and resell their used kitchen oil. (See SAC ¶¶ 18-31.) If they secured a contract, Plaintiffs would provide the restaurant with locked containers to store its used oil pending Plaintiffs' scheduled pick-up. (SAC ¶ 29.)
Defendants Joseph Parisi and David Parisi own and operate Defendant ESI, a biofuel company that was in competition with the Naples Corporations. (SAC ¶¶ 6-8, 17.) Plaintiffs claim that beginning in 2010, ESI began targeting Plaintiffs' customers and inducing them to breach their contracts with the Naples Corporations and hire ESI instead. (SAC ¶¶ 18-19.) If ESI was successful in convincing one of Plaintiffs' customers to sign a contract with ESI, ESI would remove Plaintiffs' containers and locks from the premises and replace them with ESI's containers and locks. (SAC ¶ 19.) Plaintiffs estimate that between 2010 and May 2012, the ESI Defendants stole in excess of twenty thousand gallons of oil worth approximately $50, 000, containers valued at $15, 000, and $100, 000 in lost profits from Plaintiffs' customers. (SAC ¶¶ 26-27.)
Plaintiffs also claim that the ESI Defendants employed Officer Stefanelli, a Suffolk County police officer, and paid him in cash to use his influence in the County Police Department to threaten, harass, and intimidate Plaintiffs because they were competitors of ESI. (SAC ¶¶ 80, 98-100, 102, Ex. C.) They allege that in September 2011, Officer Stefanelli and other County police officers pulled over and falsely arrested Jimmy Naples while he was driving a truck to collect waste cooking oil from Plaintiffs' customers. (SAC ¶¶ 32-34.) The County officers and officers from the Suffolk County Motor Carrier Division allegedly conducted warrantless searches of the truck and wrongfully charged Island Biofuel with violating Section 140.00 of New York Vehicle and Traffic Law for operating a commercial vehicle in violation of the state's safety requirements-specifically, for having a broken windshield wiper blade and an expired "insurance health card." (SAC ¶ 55.) Officer Stefanelli also "arranged for the [DEC] to inspect and close" the Naples Corporations' garage in Center Moriches. (SAC ¶¶ 55-56, 74). The DEC ordered that the garage be closed, ticketed Jimmy Naples and Island Biofuel for operating a waste facility without a permit in violation of N.Y. Comp. Codes R & Regs. tit., § 360-1.7(a)(1)(i), and ticketed Island Biofuel for violating the New York Department of Transportation's regulations governing the safe operation of commercial motor vehicles, N.Y. Comp. Codes R & Regs. tit., § 820.0 et seq. (SAC ¶¶ 61, 76; Parisi Decl. Ex. 7.) Also, in October 2011, the County Police Department's Seventh Precinct (Defendant Stefanelli's precinct) rearrested Jimmy Naples and charged him with Criminal Mischief in the Fourth Degree in violation of N.Y. Penal Law § 145.00 for allegedly cutting a ten dollar lock on one of ESI's oil containers with bolt cutters (SAC ¶ 66; Parisi Decl. Ex. 7), apparently based on a false witness statements signed by David Parisi (SAC ¶ 67).
Plaintiffs claim that they discovered the alleged conspiracy between the ESI Defendants and Officer Stefanelli after Jimmy Naples' arrest, when Plaintiffs went to ESI's headquarters to retrieve some of their containers. (SAC ¶ 79.) Plaintiffs claim that upon arriving, they "were stunned to see Defendant Stefanelli working at the facility dressed fully in clothing indicating that he was employed by and working for Defendant ESI." (SAC ¶ 80.) They were "furious with the discovery of Defendant Stefanelli's presence, " refused to sign the release forms for their containers, and insisted that the County Police Department be called. (SAC ¶ 83.) Officer Stefanelli made a call, and an officer arrived shortly thereafter. (SAC ¶ 84.) He spoke to Officer Stefanelli first and then told Plaintiffs that he would not get involved; if Plaintiffs wanted their container, they would have to sign the release as requested. (SAC ¶ 84.)
Plaintiffs allege that they complained to the County Police Department prior to and after Jimmy Naples' arrest, but the County never investigated the complaints or took any action to stop the ESI Defendants' alleged unlawful conduct. (SAC ¶¶ 85-86, 91-93.) Additionally, on April 4, 2012, Plaintiffs, through counsel, submitted a formal complaint to the County Police Department's Internal Affairs Division ("IAD") describing ESI's actions and Officer Stefanelli's alleged involvement and demanding that the charges against Jimmy Naples and Island Biofuel be dropped. (SAC Ex. C.) IAD initially contacted Plaintiffs' counsel to schedule an interview of Plaintiffs; however, no interview was ever conducted. (SAC ¶¶ 92-93.)
Apparently, Officer Stefanelli found out about Plaintiffs' IAD complaint. (SAC ¶ 94.) In response, he circulated a letter to County police officers, which stated that the County Police Department was to protect ESI and that, if anyone saw the Naples Corporations collecting oil, they were to call Officer Stefanelli immediately. The letter stated that he had firsthand knowledge that they were cutting locks and stealing oil and would provide a sworn affidavit for petit larceny. (SAC ¶ 96; Ex. B to Pls.' Opp. to First Mot. to Dismiss, Docket Entry 24-5.) Plaintiffs deny stealing any oil from the ESI Defendants, and they interpreted Officer Stefanelli's letter as a threat and retaliation for their IAD complaint. (SAC ¶¶ 103-04.)
Plaintiffs ultimately sold their assets and exited the industry in or around May 2012. (SAC ¶ 106.) However, before this was known publicly, Officer Stefanelli approached Plaintiffs while they were having breakfast one morning at a local diner. (SAC ¶ 108.) He stated, in sum and substance, that he was and had been employed by ESI to conduct surveillance of ESI's competitors, that there were other police officers involved, and that "a lot of things went on" (which Plaintiffs interpret to mean illegal activity). (SAC ¶ 110.) He was in full uniform and on duty at the time. (SAC ¶ 109.)
The ESI Defendants move to dismiss all of the claims asserted against them in the Second Amended Complaint. (Docket Entry 33.) The Court will first set forth the applicable legal standard before turning to the ESI Defendants' motion more specifically.
I. Legal Standard
In deciding a Rule 12(b)(6) motion to dismiss, the Court applies a "plausibility standard, " which is guided by "[t]wo working principles." Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007); accord Harris v. Mills, 572 F.3d 66, 71-72 (2d Cir. 2009). First, although the Court must accept all allegations as true, this "tenet" is "inapplicable to legal conclusions;" thus, "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Iqbal, 556 U.S. at 678; accord Harris, 572 F.3d at 72. Second, only complaints that state a "plausible claim for relief" can survive a Rule 12(b)(6) motion to dismiss. Iqbal, 556 U.S. at 679. Determining whether a complaint does so is "a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id.; accord Harris, 572 F.3d at 72.
The Court is confined to "the allegations contained within the four corners of [the] complaint." Pani v. Empire Blue Cross Blue Shield, 152 F.3d 67, 71 (2d Cir. 1998). However, this has been interpreted broadly to include any document attached to the complaint, any statements or documents incorporated in the complaint by reference, any document on which the complaint heavily relies, and anything of which judicial notice may be taken. See Chambers v. Time Warner, Inc., 282 F.3d 147, 152-53 (2d Cir. 2002) (citations omitted); Kramer v. Time Warner Inc., 937 F.2d 767, 773 (2d Cir. 1991).
II. Section 1983 Claims
Section 1983 states:
[e]very person who, under color of any statute, ordinance, regulation, custom, or usage, of any State... subjects, or causes to be subjected, any citizen of the United States... to the deprivation of any rights, privileges, or immunities secured by the Constitution and laws, shall be liable to the party injured....
42 U.S.C. § 1983. To state a claim under Section 1983, a plaintiff must "allege that (1) the challenged conduct was attributable at least in part to a person who was acting under color of state law and (2) the conduct deprived the plaintiff of a right guaranteed under the Constitution of the United States.'" Rae v. Cnty. of Suffolk, 693 ...