Antitrust Law Daily Wrap Up, RICO—E.D. Wis.: Minority bar owners lose liquor licenses, file deficient RICO claims, (Aug 1, 2014)

By Greg Hammond, J.D.

A group of black, Hispanic, and Thai former bar owners brought insufficient Racketeer Influenced and Corrupt Organizations Act (RICO) claims against the City of Racine, Wisconsin after they lost their liquor licenses. In granting the City’s motion to dismiss, the federal district court in Milwaukee determined that the complaint was too vague and provided no meaningful notice to the defendants of the respective plaintiffs’ claims (Holmes v. City of Racine, July 30, 2014, Stadtmueller, J.).

Background. Eight minority bar owners in downtown Racine filed suit against four groups of defendants: (1) municipal defendants, consisting of the City of Racine, the mayor, and other politicians; (2) political staff defendants, comprised of city workers and individuals involved in the mayor’s campaign; (3) Downtown Racine Corporation, a non-profit engaged in enhancing downtown Racine’s image and functionality; and (4) Racine City Tavern League, a non-profit that serves as a lobbying group for alcohol retailers in Racine.

The bar owners alleged that Racine’s mayor accepted money from Tavern League members during his mayoral campaign and that he continues to receive such contributions. The donations were supposedly made to sway his agenda and to buy positions on the City’s municipal government. In addition, the bar owners claimed that the mayor conspired with Alderpersons, police department officials, the Downtown Racine Corporation, and others to “prevent minority bar owners from obtaining and/or maintaining their liquor licenses and to ensure white Tavern League members kept their respective liquor licenses.” Currently, according to the former bar owners, there are no longer any minority-owned bars in downtown Racine.

In their complaint, the bar owners alleged—in part—RICO violations for: (1) targeting minority bar owners and obtaining power or control over their businesses through a scheme of corrupt and illegal activities; (2) conducting corrupt and illegal activities through their businesses or the Racine municipal government; and (3) conspiring to carry out the corrupt and illegal activities. The City and other defendants moved to dismiss.

Insufficient pleadings. The court first determined that the complaint was overly broad and failed to clarify which plaintiff was making what claim, against whom, and in what capacity. “Rather than work with a rifle, the plaintiffs unholstered their bazooka: without any clarifying language in the complaint, it seems clear that each plaintiff intends to allege each claim against each defendant,” the court stated. Consequently, the complaint was dismissed for the plaintiffs to amend and narrow their claims.

In addition, it was specifically found that the plaintiffs failed to allege sufficient facts to demonstrate: (1) a pattern of racketeering activity, whether through the predicate acts of extortion, violations of Wisconsin’s campaign finance laws, bribery, or money laundering; (2) RICO standing, as it was unclear which plaintiffs were harmed by which defendants, and how; and (3) a scheme or an agreement to engage in a scheme that would violate 28 USC section 1962(b) or 1962(c). The RICO claims against the political staff, Downtown Racine Corporation, and the Tavern League were similarly dismissed for insufficient allegations.

The minority bar owners have 21 days from the entry of the dismissal order to file an amended complaint.

The case number is 14-CV-208-JPS.

Attorneys: Brian H. Eldridge (Segal McCambridge Singer & Mahoney Ltd.) for Thomas J. Holmes. Jennifer AB Kreil (Meissner Tierney Fisher & Nichols SC) for City of Racine. Christina A. Katt (Wilson Elser Moskowitz Edelman & Dicker LLP) for Downtown Racine Corp. Daniel C.W. Narvey (Godfrey & Kahn SC) for Tavern League of Racine City.

Companies: Downtown Racine Corp.

Cases: RICO WisconsinNews