Terance Frazier v. City of Fresno

— 1 — — 2 — — 3 — — 4 — — 5 — — 6 — — 7 — 8 UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA — 10 — 11 TERRANCE FRAZIER, et al., No. 1:20-cv-01069-DAD-SAB 12 Plaintiffs, 13 v. ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS’ 14 CITY OF FRESNO, et al., MOTION TO DISMISS 15 Defendants. (Doc. No. 6) — 16 — — 17 — 18 This matter is before the court on defendants’ motion to dismiss plaintiffs’ complaint 19 pursuant to Federal Civil Procedure Rules 12(b)(1) and 12(b)(6) for lack of subject matter 20 jurisdiction and failure to state a claim upon which relief may be granted. (Doc. No. 6.) Pursuant 21 to General Order No. 617 addressing the public health emergency posed by the COVID-19 22 pandemic, defendants’ motion was taken under submission on the papers. (Doc. No. 7.) For the 23 reasons set forth below, the court will grant in part and deny in part defendants’ motion to 24 dismiss.1 25 1 The undersigned apologizes for the excessive delay in the issuance of this order. This court’s overwhelming caseload has been well publicized and the long-standing lack of judicial resources — 26 — in this district long-ago reached crisis proportion. That situation has now been partially addressed 27 by the U.S. Senate’s confirmation of a new district judge for this court on December 17, 2021. Nonetheless, for over twenty-two months the undersigned was left presiding over approximately 28 1,300 civil cases and criminal matters involving 735 defendants. Unfortunately, that situation 1 BACKGROUND 2 On July 31, 2020, plaintiffs Terrance Frazier and Central Valley Community Sports 3 Foundation (“CVCSF”), (collectively, “plaintiffs”), filed this action against the City of Fresno, 4 Mayor Lee Brand, City Manager Wilma Quan, Assistant City Manager James Schaad, Chief of 5 Staff Tim Orman, and Does 1–20, inclusive (collectively, “defendants”) in this court. (Doc. No. 6 1.) In their complaint, plaintiffs allege as follows. 7 Plaintiff CVCSF is a nonprofit public benefit corporation founded in 2015 whose goals 8 are to “provide sports and entertainment facilities and programs for the citizens of the Central 9 Valley.” (Id. at ¶ 5.) Plaintiff Frazier describes himself as a “real estate investor, entrepreneur, 10 philanthropist, and community activist in the Central Valley.” (Id. at ¶ 4.) Plaintiff CVCSF 11 represents that it is a “minority-founded entity,” and plaintiff Frazier describes himself as an 12 African-American man. (Id. at ¶¶ 4–5.) 13 On December 7, 2015, CVCSF entered into a twenty-five-year Ground Lease (the 14 “Lease”) with the City of Fresno for CVCSF’s tenancy in Granite Park, a “large, unused public 15 property” that “was costing the City of Fresno hundreds of thousands of dollars annually just to 16 maintain” and had accrued “significant deferred maintenance.” (Id. at ¶ 13.) Among other terms 17 under the Lease, CVCSF agreed to make up to $2.7 million in capital improvements to Granite 18 Park in exchange for a $62,500 lease credit to be incurred annually by the City of Fresno. (Id.) 19 As part of the Lease, the City of Fresno agreed to make “reasonable efforts” to provide recycled 20 water for the irrigation of Granite Park, which “otherwise would have to be irrigated by CVCSF 21 at significant expense.” (Id. at ¶ 14.) According to plaintiffs, these cost-saving recycled water 22 provisions were “essential” to CVCSF’s decision to enter into the agreement. (Id.) 23 In addition to the Lease, the parties also entered into a Service Agreement relating to 24 recreational services and programming at Granite Park. (Id. at ¶ 16.) Under the Service 25 Agreement, the City of Fresno would pay an annual fee of $150,000.00 to CVCSF, and CVCSF — 26 — 27 sometimes results in the court not being able to issue orders in submitted civil matters within an acceptable period of time. This has been frustrating to the court, which fully realizes how 28 incredibly frustrating it is to the parties and their counsel. 1 would bear the cost of required maintenance, recreational activities, or programs at Granite Park. 2 (Id. at ¶ 17.) Plaintiff alleges that the $150,000.00 annual fee was “significantly less than the City 3 of Fresno had been spending to maintain Granite Park in a minimal way for the prior several 4 years” and that the parties recognized that the annual fee “would not come close to covering” the 5 actual expenses CVCSF would incur in connection with maintaining the park and its 6 programming. (Id.) 7 The general terms of the Service Agreement specify that 8 [r]ecords of [CVCSF’s] expenses pertaining to this Agreement shall be kept on a generally recognized accounting basis and shall be 9 available to CITY or its authorized representatives upon request during regular business hours throughout the life of this Agreement 10 and for a period of three years after final payment . . . . In addition, all books, documents, papers, and records of [CVCSF] pertaining to 11 this Agreement shall be available for the purpose of making audits, examinations, excerpts, and transcriptions for the same period of 12 time. 13 (Id. at 53.) 14 According to plaintiffs, CVCSF raised over $2 million for capital improvements for the 15 park, including “substantial personal funds” from plaintiff Frazier, and CVCSF complied with its 16 recreational programming, maintenance, and security obligations under the Lease and Service 17 Agreement. (Id. at ¶ 18.) The City of Fresno, on the other hand, exhibited a “lack of 18 cooperation” with CVCSF’s programming, maintenance, and security obligations; failed to make 19 “any efforts” to provide recycled water for the park; and failed to grant permits for proposed 20 billboards and signage at the park, which decreased CVCSF’s anticipated revenue. (Id.) These 21 actions and inactions by the City of Fresno led to CVCSF incurring larger losses in connection 22 with Granite Park than it had anticipated, including $200,000 per year on water for Granite Park 23 and costs from building connections to the City of Fresno’s recycled water. (Id. at ¶¶ 19, 36.) As 24 a result, in 2018, Mr. Frazier, on behalf of CVCSF, requested that the City of Fresno increase its 25 annual fee under the Service Agreement to $300,000.00. (Id. at ¶ 19.) 26 In response—and at the urging of defendants Mayor Brand, City Manager Quan, Assistant 27 City Manager Schaad, and Chief of Staff Orman, (collectively, the “individual defendants”)—the 28 City of Fresno requested an audit of CVCSF’s operational records relating to Granite Park. (Id. at 1 ¶ 20.) Although the purported purpose of the audit was to justify the fee increase requested by 2 plaintiffs, the individual defendants “insisted that the audit have the objective of uncovering proof 3 of unlawful or unethical conduct by Mr. Frazier, rather than assessing the Granite Park project.” 4 (Id.) Moreover, the individual defendants instructed the City Auditor to utilize an unreliable and 5 subjective sampling method for the audit, rather than a randomized sampling method. (Id.) 6 Seeking to expedite the renegotiation of the Service Agreement, CVCSF “promptly” 7 provided the City of Fresno’s auditors with several years of records, despite the records having 8 not been fully reviewed by its accountant or attorneys. (Id. at ¶ 21.) Although the records were 9 imperfect, they demonstrated that CVCSF’s Granite Park project was running at a “genuine and 10 substantial deficit.” (Id. at ¶ 22.) In November 2018, the City of Fresno prepared a draft audit 11 using the imperfect records and invited CVCSF to comment on various findings. (Id.) Upon 12 review of the draft audit, CVCSF “conceded that its expedited information needed to be refined 13 and finalized and therefore withdrew its request to renegotiate the Service Agreement” in late 14 November 2018. (Id. at ¶ 23.) At that time, the City of Fresno informed plaintiffs that the audit 15 would be “placed on hold” for six months. (Id. at ¶ 24.) 16 Around the time that the City of Fresno circulated the draft audit, Mr. Frazier sued a 17 former Fresno restauranteur, Sammy Franco, for the balance of an unpaid loan of approximately 18 $300,000.00. (Id. at ¶ 25.) Mr. Franco then allegedly “took on Mr. Frazier through social media” 19 in retaliation for Mr. Frazier’s lawsuit. (Id.) In January 2019, with knowledge of the pending 20 Granite Park audit, Mr. Franco submitted a Public Records Act request with the City of Fresno 21 seeking a copy of the audit report. (Id.) At this time, only the draft audit report had been created. 22 (Id.) Under California Government Code § 36525(b)(2), papers and memoranda pertaining to 23 incomplete audits are not public records. (Id. at ¶ 26.) At least one member of the City Auditor’s 24 Office expressed concern to the individual defendants regarding releasing the draft audit report 25 due to its incomplete status. (Id. at ¶ 27.) Nevertheless—and despite knowing that the 26 provisional findings in the draft audit were based on a “substandard sampling methodology” and 27 that the release of the report would be “extremely damaging” to plaintiffs—the individual 28 ///// 1 defendants “insisted” that the draft audit would be deemed final so that it could be disclosed to 2 Mr. Franco. (Id. at ¶¶ 27–29.) 3 According to plaintiffs, the draft audit report was thus released by the City of Fresno to 4 Mr. Franco, who “immediately” posted the report on social media along with an attack on 5 plaintiffs. (Id. at ¶ 30.) “Soon thereafter, the draft audit was prominently reported in the Fresno 6 Bee.” (Id.) Although defendants could have provided plaintiffs with advance notice of the audit 7 report’s impending release so that plaintiffs could have filed a reverse Public Records Act action 8 to enjoin its release, defendants chose not to do so. (Id. at ¶ 31.) 9 Following the release of the audit report, plaintiff Frazier repeatedly requested that 10 defendants release a public statement advising that CVCSF is in good standing, but defendants 11 refused his requests in that regard. (Id. at ¶ 33.) Defendant City of Fresno has also since 12 disclosed that it has no system for delivering recycled water from its wastewater treatment plant 13 to other sites, and it would cost millions of dollars to develop such a system. (Id. at ¶ 36.) As a 14 result, at all relevant periods of time, the terms in the Lease providing that the City of Fresno 15 would make reasonable efforts to provide Granite Park with recycled water have been infeasible. 16 (Id.) 17 During a meeting on March 5, 2019, defendant Schaad utilized the draft audit as “proof” 18 of CVCSF’s noncompliance with the Lease and Service Agreement. (Id. at ¶ 35.) In follow-up 19 meetings between the individual defendants and plaintiffs, the individual defendants asserted that 20 CVCSF was in default of the Lease and Service Agreement by relying on “unrealistic and 21 unnecessary projections of the Granite Park project’s future development.” (Id.) These efforts 22 have been allegedly motivated by defendants’ “collective agenda” to reclaim Granite Park in 23 order to lease it to the Fresno Football Club (“FFC”), a minor league affiliate of Major League 24 Soccer. (Id. at ¶ 37.) To that end, the individual defendants and other City of Fresno staff met 25 with FFC representatives “numerous times” regarding the Granite Park site and “had been 26 observed driving around the Granite Park area surveying the complex.” (Id.) 27 Plaintiffs allege that the January 2019 release of the audit report to the public has had 28 “very negative economic” impacts on plaintiffs. (Id. at ¶ 32.) Plaintiff Frazier has been denied 1 loans for other projects based on the negative press surrounding the release of the report, and 2 plaintiff CVCSF has lost tournament revenue due to a reduction in bookings for sports 3 tournaments. (Id.) Plaintiffs estimate that their total financial losses are $4,350,000 for Mr. 4 Frazier and $6,750,000 for CVCSF. (Id.) In addition, plaintiffs allege that defendants’ conduct 5 has devalued their property interests in the Lease (including its mandatory and conditional 6 purchase rights), damaged their abilities to pursue and profit from their businesses, and impaired 7 their abilities to profit from business opportunities unrelated to Granite Park. (Id. at ¶ 39.) 8 Based on the foregoing allegations, plaintiffs assert the following claims: (1) 9 unconstitutional defamation, brought under 42 U.S.C. § 1983 on behalf of plaintiffs against all 10 defendants; (2) First Amendment retaliation, brought under 42 U.S.C. § 1983 on behalf of 11 plaintiffs against all defendants; (3) discriminatory denial of contract rights, brought under 42 12 U.S.C. §§ 1981 , 1983 on behalf of plaintiff CVCSF against all defendants; (4) breach of contract 13 under California law, brought on behalf of plaintiff CVCSF against defendant City of Fresno; and 14 (5) breach of the covenant of good faith and fair dealing under California law, brought on behalf 15 of plaintiff CVCSF against defendant City of Fresno. (Id.) 16 Plaintiffs filed their complaint in this court on July 31, 2020. (Doc. No. 1.) On August 17 25, 2020, defendants filed the pending motion to dismiss plaintiffs’ complaint. (Doc. No. 6.) On 18 November 5, 2020, plaintiffs filed an ex parte application for an extension of time to file an 19 opposition to defendants’ motion to dismiss, which this court granted on November 6, 2020. 20 (Doc. Nos. 11, 12.) On November 9, 2020, plaintiffs filed their opposition to the pending motion 21 to dismiss. (Doc. No. 13.) On November 24, 2020, defendants filed their reply thereto. (Doc. 22 No. 15.) 23 LEGAL STANDARD 24 A. Motion to Dismiss for Failure to State a Claim Pursuant to Rule 12(b)(6) 25 The purpose of a motion to dismiss pursuant to Rule 12(b)(6) is to test the legal 26 sufficiency of the complaint. N. Star Int’l v. Ariz. Corp. Comm’n, 720 F.2d 578, 581 (9th Cir. 27 1983). “Dismissal can be based on the lack of a cognizable legal theory or the absence of 28 sufficient facts alleged under a cognizable legal theory.” Balistreri v. Pacifica Police Dep’t, 901 1 F.2d 696, 699 (9th Cir. 1990). A plaintiff is required to allege “enough facts to state a claim to 2 relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). “A 3 claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw 4 the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. 5 Iqbal, 556 U.S. 662, 678 (2009). 6 In determining whether a complaint states a claim on which relief may be granted, the 7 court accepts as true the allegations in the complaint and construes the allegations in the light 8 most favorable to the plaintiff. Hishon v. King & Spalding, 467 U.S. 69, 73 (1984); Love v. 9 United States, 915 F.2d 1242, 1245 (9th Cir. 1989). However, the court need not assume the truth 10 of legal conclusions cast in the form of factual allegations. U.S. ex rel. Chunie v. Ringrose, 788 11 F.2d 638 , 643 n.2 (9th Cir. 1986). While Rule 8(a) does not require detailed factual allegations, 12 “it demands more than an unadorned, the defendant-unlawfully-harmed-me accusation.” Iqbal, — 13 — 556 U.S. at 678 . A pleading is insufficient if it offers mere “labels and conclusions” or “a 14 formulaic recitation of the elements of a cause of action.” Twombly, 550 U.S. at 555 ; see also 15 Iqbal, 556 U.S. at 676 (“Threadbare recitals of the elements of a cause of action, supported by 16 mere conclusory statements, do not suffice.”). Moreover, it is inappropriate to assume that the 17 plaintiff “can prove facts which it has not alleged or that the defendants have violated the . . . laws 18 in ways that have not been alleged.” Associated Gen. Contractors of Cal., Inc. v. Cal. State 19 Council of Carpenters, 459 U.S. 519, 526 (1983). 20 In ruling on a motion to dismiss brought pursuant to Rule 12(b)(6), the court is permitted 21 to consider material which is properly submitted as part of the complaint, documents that are not 22 physically attached to the complaint if their authenticity is not contested and the plaintiffs’ 23 complaint necessarily relies on them, and matters of public record. Lee v. City of Los Angeles, — 24 — 250 F.3d 668 , 688–89 (9th Cir. 2001). 25 ANALYSIS 26 Defendants argue that several claims set forth in plaintiffs’ complaint must be dismissed 27 pursuant to Federal Civil Procedure Rules 12(b)(1) and 12(b)(6). (Doc. No. 6-1 at 11.) 28 Specifically, defendants argue that: (i) plaintiff Frazier does not have standing to pursue his 1 claims under 42 U.S.C. § 1983 , (ii) plaintiffs have not sufficiently stated a claim for 2 unconstitutional defamation in violation of their due process rights; (iii) plaintiff CVCSF has not 3 sufficiently stated a claim for violation of 42 U.S.C. § 1981 ; (iv) plaintiffs’ state law claims are 4 time-barred due to plaintiffs’ failure to comply with the California Government Tort Claims Act; 5 and (v) plaintiffs’ cause of action for breach of the implied covenant of good faith and fair dealing 6 is duplicative of their cause of action for breach of contract. (Id.) In opposition to defendants’ 7 motion to dismiss, plaintiffs reject each of defendants’ arguments and assert that the pending 8 motion to dismiss should be denied in its entirety. (Doc. No. 13 at 24.) In reply, defendants 9 assert that plaintiffs’ opposition ignores operative facts and that the law supports a partial 10 dismissal of plaintiffs’ complaint. (Doc. No. 15 at 2.) 11 The court will address the parties’ arguments in turn. 12 A. Claims Brought by Plaintiffs Frazier and CVCSF 13 Plaintiff Frazier joins plaintiff CVCSF in two claims brought against defendants: (1) 14 unconstitutional defamation under 42 U.S.C. § 1983 , brought against all defendants, and (2) First 15 Amendment retaliation under 42 U.S.C. § 1983 , brought against all defendants. (Doc. No. 1 at 16 13, 16.) Regarding plaintiffs’ claim for unconstitutional defamation, plaintiffs allege that 17 defendants made a false representation by designating the draft audit as final and that plaintiffs 18 have suffered injury as a result. (Doc. No. 1 at 13–14.) Regarding their claim for First 19 Amendment retaliation, plaintiffs assert that defendants retaliated against them for exercising 20 their First Amendment rights to “petition the government for redress, to protest government 21 impropriety, and to criticize government officials.” (Doc. No. 1 at 17.) 22 Defendants contend that plaintiff Frazier lacks standing to pursue both of his claims 23 brought under 42 U.S.C. § 1983 . (Doc. No. 6-1 at 11.) In addition, defendants argue that 24 plaintiffs have failed to state a claim for unconstitutional defamation under 42 U.S.C. § 1983 . (Id. 25 18.) Apart from their arguments that plaintiff Frazier lacks standing, defendants do not seek the 26 dismissal of plaintiffs’ claim for First Amendment retaliation under 42 U.S.C. § 1983 . (Id. at 11.) 27 ///// 28 ///// 1 1. Whether Plaintiff Frazier has Standing to Bring Claims Under 42 U.S.C. § 1983 2 for Both Unconstitutional Defamation and First Amendment Retaliation 3 “In essence the question of standing is whether the litigant is entitled to have the court 4 decide the merits of the dispute or of particular issues.” Warth v. Seldin, 422 U.S. 490 , 498 5 (1975.) Each form of relief sought requires a separate showing of standing. Friends of the Earth, 6 Inc. v. Laidlaw Environmental Services (TOC), Inc., 528 U.S. 167, 185 (2000); Bates v. United 7 Parcel Service, Inc., 511 F.3d 974, 985 (9th Cir. 2007) (en banc); see also Haro v. Sebelius, 747 8 F.3d 1099, 1108 (9th Cir. 2013). Two types of standing are relevant to this inquiry: (1) Article 9 III standing, “which enforces the Constitution’s case-or-controversy requirement,” and (2) 10 prudential standing, which has traditionally encompassed “at least three broad principles,” 11 including “the general prohibition on a litigant raising another person’s legal rights.”2 Lexmark — 12 — 13 2 In Lexmark, the Supreme Court clarified that the label of “prudential standing” is a “misnomer as applied to the zone-of-interests analysis,” under which courts must use traditional tools of — 14 — statutory interpretation to determine whether Congress has authorized a particular class of persons 15 to sue under a statute. Lexmark Intern., Inc. v. Static Control Components, Inc., 572 U.S. 118, 127 (2014). However, the Supreme Court in Lexmark left the prudential doctrine of third-party 16 standing unaffected, noting that “[t]he limitations on third-party standing are harder to classify . . . . This case does not present any issue of third-party standing, and consideration of that doctrine’s 17 proper place in the standing firmament can await another day.” Id. at 127 n.3. Third-party standing is squarely at issue in this case, where defendants argue that, in essence, plaintiff — 18 — Frazier’s § 1983 claims are an improper attempt to assert the rights of plaintiff CVCSF. (Doc. 19 No. 6 at 15–17); see Barrows v. Jackson, 346 U.S. 249, 255 (1953) (describing the general rule that “one may not claim standing . . . to vindicate the constitutional rights of some third party”); 20 Warth, 422 U.S. at 499 (“[E]ven when the plaintiff has alleged injury sufficient to meet the ‘case or controversy’ requirement, . . . the plaintiff generally must assert his own legal rights and 21 interests, and cannot rest his claim to relief on the legal rights or interests of third parties.”). Accordingly, and consistent with the approach followed by other district and circuit courts after — 22 — Lexmark, the court will continue to analyze defendants’ arguments related to this issue within the 23 context of prudential standing. See, e.g. Calista Enterprises Ltd. v. Tenza Trading Ltd., No. 3:13-cv-01045-SI, 2014 WL 3695487 , at *6, *6 n.7 (D. Or. July 24, 2014) (noting that that court 24 will continue to analyze third-party standing under the framework of prudential standing due to the Supreme Court in Lexmark not reaching the issue); HomeAway Inc. v. City and County of San — 25 — Francisco, No. 3:14-cv-04859-JCS, 2015 WL 367121 , at *7 (N.D. Cal. Jan. 27, 2015) (declining “to extend Lexmark to invalidate a prudential standing doctrine that it explicitly did not reach” — 26 — and finding that its holding “is consistent with a number of other courts that have interpreted 27 Lexmark as leaving the prudential doctrine of third-party standing unaffected”); Moncier v. Haslam, 570 Fed. App’x. 553, 556 (6th Cir. 2014) (describing Lexmark’s holding as “not relevant 28 to” certain issues of prudential standing, including third-party standing). 1 Intern., Inc. v. Static Control Components, Inc., 572 U.S. 118, 126 (2014) (internal quotation 2 omitted). Article III standing requires that “(1) the plaintiff suffered an injury in fact, i.e., one 3 that is sufficiently ‘concrete and particularized’ and ‘actual or imminent, not conjectural or 4 hypothetical,’ (2) the injury is ‘fairly traceable’ to the challenged conduct, and (3) the injury is 5 ‘likely’ to be ‘redressed by a favorable decision.’” Bates, 511 F.3d at 985 (quoting Lujan v. 6 Defenders of Wildlife, 504 U.S. 555 , 560–61 (1992)); see also Buono v. Norton, 371 F.3d 543 , 7 546 (9th Cir. 2004). Prudential standing requires that “a party ‘generally must assert his own 8 legal rights and interests, and cannot rest his claim to relief on the legal rights or interests of third 9 parties.’” HomeAway Inc. v. City and County of San Francisco, No. 3:14-cv-04859-JCS, 2015 10 WL 367121 , at *6 (N.D. Cal. Jan. 27, 2015) (quoting Kowalski v. Tesmer, 543 U.S. 125 , 129 11 (2004)); see also Bracamonte v. Probation Dept. of the Cnty. of Sacramento, No. 2:06-cv-0186812 MCE-GGH, 2008 WL 691850 , at *2 (E.D. Cal. Mar. 12, 2008). In light of defendants’ 13 arguments, as described below, prudential standing, rather than Article III standing, is placed at 14 issue by the motion pending before the court.3 15 “In general, shareholders of a corporation or members of an LLC lack prudential standing 16 to assert individual claims based on harm to the corporation or LLC in which they own shares.” 17 Solarmore Management Services, Inc. v. Bankruptcy Estate of DC Solar Solutions, 2:19-cv18 02544-JAM-DB, 2021WL 3077470, at *3 (E.D. Cal. July 21, 2021) (citing Erlich v. Glasner, 418 19 F.2d 226 , 227 (9th Cir. 1969)). “However, a shareholder does have standing where he or she has 20 been injured directly and independently of the corporation.” Bracamonte, 2008 WL 691850 , at 21 *3 (quoting Shell Petroleum, N.V. v. Graves, 709 F.2d 593, 595 (9th Cir. 1983)). “The same 22 conduct may result in injury to both the corporation and the individual shareholders.” RK 23 Ventures, Inc. v. City of Seattle, 307 F.3d 1045, 1057 (9th Cir. 2002). 24 ///// — 25 — 3 Defendants challenge plaintiff Frazier’s standing under Federal Rule of Civil Procedure — 26 — 12(b)(1). (Doc. No. 6-1 at 14.) While challenges to a party’s Article III standing are appropriate 27 for resolution under Rule 12(b)(1), issues of prudential standing are appropriately resolved under Rule 12(b)(6). See Solarmore Management Services, Inc. v. Bankruptcy Estate of DC Solar 28 Solutions, 2:19-cv-02544-JAM-DB, 2021WL 3077470, at *2 (E.D. Cal. July 21, 2021). 1 In their pending motion to dismiss, defendants argue that plaintiff Frazier lacks standing 2 to pursue both of his claims brought under § 1983 because the allegations of his complaint 3 establish that “the operative contracts were between the City and CVCSF, . . . the audit pertained 4 to CVCSF’s records; and Frazier was acting on behalf of CVCSF in seeking to renegotiate the 5 contract and responding to the audit request.” (Doc. No. 6-1 at 16.) Defendants assert that Mr. 6 Frazier’s role as an employee and officer of CVCSF does not confer standing upon him to sue for 7 injuries suffered by CVCSF. (Id.) Moreover, insofar as Mr. Frazier is a shareholder of CVCSF 8 and thus has an ownership interest in the Granite Park development, defendants argue that “the 9 right of a corporation to bring suit under Section 1983 eliminates the need for recognition of a 10 right in shareholders to bring suit on the corporation’s behalf.” (Id.) Finally, defendants argue 11 that no exceptions to the shareholder standing rule apply here because Mr. Frazier is unable to 12 establish that he has suffered an injury distinct from that allegedly suffered by CVCSF. (Id.) 13 In opposition to the motion to dismiss, plaintiffs argue that defendants disregard various 14 aspects of plaintiffs’ complaint that allege injuries applicable to Mr. Frazier specifically and, as 15 such, are distinct from the injuries suffered by CVCSF. (Doc. No. 13 at 12.) For example, 16 plaintiffs assert that in moving for dismissal defendants disregard plaintiffs’ contention that the 17 individual defendants insisted that the Granite Park audit have the objective of uncovering proof 18 of unlawful or unethical conduct by Mr. Frazier. (Id.) As to plaintiffs’ claim for defamation in 19 violation of the constitution, plaintiffs argue that because the draft audit was falsely designated as 20 a final investigation finding and made “harmful findings regarding Mr. Frazier directly that were 21 damaging as to him specifically,” Mr. Frazier was an individual target of defamatory statements 22 and consequently has standing to sue as an individual. (Id. at 13.) As to their claim for retaliation 23 in violation of the First Amendment, plaintiffs argue that Mr. Frazier asserted his First 24 Amendment rights as an individual citizen by criticizing defendants, in response was individually 25 targeted by the defendants, and suffered “distinct personal harms” as a result. (Id. at 14–15.) 26 In reply, defendants contend that although plaintiffs state that Mr. Frazier suffered harm 27 individually, plaintiffs “detail no harmful information about Frazier individually” and do not 28 ///// 1 allege any special duty owed to Mr. Frazier that would confer standing upon him to bring his 2 claims under § 1983. (Doc. No. 15 at 2–4.) 3 The court concludes that plaintiff Frazier has sufficiently alleged injuries that are direct 4 and also independent from the injuries allegedly suffered by plaintiff CVCSF and therefore 5 survive the pending motion to dismiss. The facts in this case are comparable to those in cases in 6 which the Ninth Circuit has found that individual shareholder plaintiffs sufficiently alleged 7 injuries that were direct and independent of the injuries to the corporation. For example, in 8 Soranno’s Gasco, Inc. v. Morgan, individual plaintiffs brought suit on behalf of both themselves 9 and the corporation of which they were owners and shareholders, alleging First Amendment 10 retaliation and due process violations. 874 F.2d 1310 , 1313–14, 1316 (9th Cir. 1989). In 11 Soranno’s Gasco, Inc., the Ninth Circuit held that the alleged violation of an individual plaintiff’s 12 free speech rights, as well as the individual plaintiffs’ alleged mental and emotional distress, 13 constituted direct and independent personal injuries sufficient to state a cognizable claim. Id. at 14 1318. Similarly, in another case the Ninth Circuit has held that the plaintiffs-shareholders’ 15 allegations that the defendant violated their First and Fourteenth Amendment rights as 16 individuals, as well as their allegations of emotional distress, conferred standing to bring their 17 civil rights action as individuals. RK Ventures, Inc. v. City of Seattle, 307 F.3d 1045, 1057 (9th 18 Cir. 2002). 19 Here, plaintiffs allege that due to defendants’ conduct, “both Mr. Frazier and CVCSF 20 sustained harm and injury, both to their protected property interests in the Granite Park project, 21 but also their liberty interest in practicing their professions and business.” (Doc. No. 1 at 15, 17.) 22 In addition, plaintiffs allege that Mr. Frazier in particular “sustained general damages, including 23 humiliation, embarrassment, anger, and related emotional distress.” (Id.) These allegations on 24 behalf of plaintiff Frazier are sufficient to adequately plead injuries distinct from those suffered 25 by plaintiff CVCSF. See Gomez v. Alexian Bros. Hosp. of San Jose, 698 F.2d 1019 , 1021 (9th 26 Cir. 1983) (finding that “humiliation and embarrassment” caused to an individual plaintiff were 27 “personal to plaintiff and distinct from any injuries suffered by [the corporation]”); see also 28 Riley’s American Heritage Farms v. Claremont Unified Sch. Dist., No. 5:18-cv-02185-JGB-SHK, — 1 — 2019 WL 3240105 , at *4 (C.D. Cal. Mar. 6, 2019) (holding that an individual plaintiff sufficiently 2 alleged direct and independent injuries where the individual plaintiff alleged retaliation for 3 exercising his First Amendment rights and that defendants’ conduct damaged his individual 4 reputation). 5 2. Whether Plaintiffs have Stated a Claim for Unconstitutional Defamation under 42 6 U.S.C. § 1983 7 Title 42 U.S.C. § 1983 provides that “[e]very person who, under color of [state law] . . . 8 subjects, or causes to be subjected, any citizen of the United States . . . to the deprivation of any 9 rights, privileges, or immunities secured by the Constitution . . . shall be liable to the party injured 10 in an action at law, suit in equity, or other proper proceeding for redress.” “The Due Process 11 Clause of the Fourteenth Amendment encompasses two types of protections: substantive rights 12 (substantive due process) and procedural fairness (procedural due process).” Sanchez v. City of 13 Fresno, 914 F. Supp. 2d 1079, 1099 (E.D. Cal. 2012). Substantive due process “forbids the 14 government from depriving a person of life, liberty, or property in such a way that ‘shocks the 15 conscience’ or ‘interferes with rights implicit in the concept of ordered liberty.’” Nunez v. City of 16 Los Angeles, 147 F.3d 867, 871 (9th Cir. 1998) (quoting United States v. Salerno, 481 U.S. 739 , 17 746 (1987)). “The right to procedural due process prohibits the government from depriving an 18 individual of a liberty or property interest without first following the proper procedures.” 19 Williams v. Price, No. 1:18-cv-00102-LJO-SAB, 2018 WL 3491681 , at *5 (E.D. Cal. July 19, 20 2018). 21 “When assessing procedural due process claims under § 1983, [courts] ask whether the 22 State deprived the plaintiff of a constitutional liberty interest, and if so, whether the deprivation’s 23 attendant procedures were constitutionally insufficient.” Endy v. County of Los Angeles, 975 F.3d 24 757, 764 (9th Cir. 2020). “A liberty interest may be implicated ‘where a person’s good name, 25 reputation, honor, or integrity is at stake because of what the government is doing to him.’” Id. 26 (quoting Wisconsin v. Constantineau, 400 U.S. 433, 437 (1971)). However, “[d]amage to 27 reputation alone is not actionable under § 1983.” Hart v. Parks, 450 F.3d 1059, 1069 (9th Cir. 28 2006) (citation omitted); see also Paul v. Davis, 424 U.S. 693, 694 (1976) (holding that 1 defamation by a government official, standing alone, is not actionable under § 1983). Rather, 2 “procedural due process protections apply to reputational harm only when a plaintiff suffers 3 stigma from governmental action plus alteration or extinguishment of ‘a right or status previously 4 recognized by state law.’” Humphries v. County of Los Angeles, 554 F.3d 1170, 1185 (9th Cir. 5 2009) (quoting Paul v. Davis, 424 U.S. 693, 711 (1976)). This standard, known as the “stigma6 plus” test, requires that a plaintiff demonstrate that (1) “the injury to the plaintiff’s reputation was 7 inflicted in connection with the deprivation of a federally protected right,” and (2) “the injury to 8 reputation caused the denial of a federally protected right.” Hart, 450 F.3d at 1070 . 9 In moving to dismiss this claim, defendants argue that plaintiffs have not properly alleged 10 a stigma-plus violation, asserting that defendants’ alleged release of a draft audit does not rise to 11 the level of stigmatizing conduct that courts have found to be necessary for plaintiffs to state a 12 cognizable procedural due process claim.4 (Doc. Nos. 6-1 at 22–23; 15 at 6–7.) Plaintiffs 13 acknowledge that there is no constitutional protection for damage to one’s reputation, but counter 14 that they were “both damaged beyond their reputations” due to defendants’ alleged defamation; 15 specifically, “the value of their interest in the Granite Park development was diminished, and 16 their mandatory and contingent purchase rights were devalued” and “defendants’ false 17 representations impaired Mr. Frazier’s and CVCSF’s abilities to continue in their chosen 18 professions or businesses, which require financial capability for purposes of obtaining loans and 19 contracts and making financial presentations and projections.” (Doc. No. 13 at 15–16.) In reply, 20 defendants contend that plaintiffs have not alleged sufficiently stigmatizing events perpetrated by — 21 — 4 Defendants also argue that plaintiffs have not sufficiently alleged a substantive due process — 22 — violation. (Doc. No. 6-1 at 20–21.) In their complaint, plaintiffs assert that defendants’ alleged 23 actions meet the requirements of the stigma-plus test in part because defendants’ allegedly false representations impaired plaintiffs’ “liberty and property interest[s] protected by the Substantive 24 Due [P]rocess Clause of the Fourteenth Amendment.” (Doc. No. 1 at 15 (emphasis added).) However, as described above, the “stigma-plus” test applies only to alleged violations of — 25 — procedural due process. Endy, 975 F.3d at 764. In their opposition to defendants’ pending motion to dismiss, plaintiffs clarify that “this claim is based in the Procedural Due Process — 26 — Clause” without further reference to substantive due process. (Doc. No. 13 at 16.) Therefore, the 27 court will assume that plaintiffs’ reference to substantive due process rights in their complaint was in error and thus concludes that it need not address defendants’ argument that plaintiffs have 28 failed to allege a substantive due process violation. 1 defendants, and to the extent that plaintiffs have allegedly been damaged by their inability to 2 obtain loans and contract with third parties, any such injury was caused by third parties rather 3 than by the government. (Doc. No. 15 at 8.) 4 The court finds plaintiffs’ arguments in this regard to be unpersuasive. Plaintiff is correct 5 that stigmatizing statements which cause an injury to a plaintiff’s employment opportunities may, 6 in some circumstances, rise to the level of a constitutional violation. See, e.g., Tibbetts v. 7 Kulongoski, 567 F.3d 529 , 535–36 (9th Cir. 2009). However, “[s]tigmatizing statements that 8 merely cause reduced economic returns and diminished prestige, but not permanent exclusion 9 from . . . gainful employment within the trade or profession do not constitute a deprivation of 10 liberty.” Blantz v. California Dept. of Corrections and Rehabilitation, Div. of Correctional 11 Health Care Servs., 727 F.3d 917, 925 (9th Cir. 2013) (internal quotation and citation omitted). 12 That is, “the liberty interests protected by the Fourteenth Amendment are implicated only when 13 the government’s stigmatizing statements effectively . . . bar [the plaintiff] from all employment 14 in her field.” Id. Thus, it is immaterial that plaintiff Frazier has allegedly been “denied loans for 15 other projects based upon the bad press associated with the draft audit report” or that plaintiff 16 CVCSF has “lost tournament revenue due to a reduction in bookings,” because plaintiffs have 17 pled no facts suggesting that they are barred from all employment in their fields. (Doc. No. 1 at 18 ¶ 32); see also WMX Technologies, Inc. v. Miller, 197 F.3d 367 (9th Cir. 1999) (finding that an 19 allegedly defamatory report that “arguably . . . damaged [plaintiff’s] reputation and could affect 20 its business relations with others and thus the goodwill of the business . . . . would present a 21 classic case for a state court defamation action, but not an action under § 1983”). Similarly, to the 22 extent that plaintiffs argue that the value of their Granite Park purchase rights were diminished, 23 they cite no authority for the proposition that a—potentially temporary—diminution in plaintiffs’ 24 purchase rights some two-decades in the future is a constitutional violation subject to vindication 25 under 42 U.S.C. § 1983 . 26 Moreover, the court notes that “the ‘stigma-plus’ test requires that the defamation be 27 accompanied by an injury directly caused by the Government, rather than an injury caused by the 28 act of some third party.” WMX Technologies, Inc. v. Miller, 80 F.3d 1315, 1320 (9th Cir. 1996), 1 appeal dismissed on other grounds, 103 F.3d 1133 (9th Cir. 1997) (en banc); Chaudhry v. Angell, 2 No. 1:16-cv-01243-SAB, 2021 WL 4461667 , at *48 (E.D. Cal. Sept. 29, 2021) (“[T]he 3 defamation must be accompanied by an injury directly caused by the government, not injury 4 caused by a third party that is reacting to the government’s defamatory statement) (emphasis 5 added).5 In this case, plaintiffs allege that it was Mr. Franco who “immediately” posted the audit 6 on social media “attacking Mr. Frazier and CVCSF’s Granite Park Project,” and subsequently, the 7 audit was “prominently reported in the Fresno Bee.” (Doc. No. 1 at ¶ 30.) Plaintiffs have failed 8 to allege facts which, if proven, would demonstrate that the injuries they claim—namely, 9 “negative economic impacts” on plaintiffs’ business dealings with third parties—were directly 10 caused by the government action alleged in this case, rather than being caused by the actions of 11 third parties such as Mr. Franco, local journalists, or parties who declined to engage in business 12 with plaintiffs. (Doc. No. 1 at ¶ 32); see also Lemad Corp. v. Calfee, No. 2:08-cv-0923-PHX13 ECV, 2010 WL 11519238 , at *4 (D. Ariz. Feb. 23, 2010) (finding insufficient state action on 14 which to base a due process claim where a plaintiff “seek[s] recovery based not on direct 15 governmental action . . . but rather based on the decisions of third parties . . . in reactions to 16 statements made by [the defendant local government official]”); Milstead v. Begich, No. 3:08-cv17 0100-RRB, 2009 WL 10676007 , at *3 (D. Ala. Jan. 6, 2009) (“[Plaintiff’s] injuries, though 18 arguably related to the statements of [defendant government officials], were the result of the 19 actions of third parties: her [private employer] and [industry members]”); Hardaway v. 20 California Dept. of Corrections, No. 97-cv-0311-FMS-PR, 1997 WL 61366 , at *1 (N.D. Cal. 21 ///// — 22 — 5 As described above, a plaintiff may be able to allege a constitutional violation where a public 23 entity’s defamation causes a total bar on employment in that plaintiff’s chosen field, which may involve employment decisions made by third parties. See, e.g. Stretten v. Wadsworth Veterans 24 Hosp., 537 F.2d 361 , 366 n.13 (9th Cir. 1976) (“[A] label which would prevent an individual from practicing his chosen profession at all may have consequences so severe that liberty would — 25 — be infringed”); Bollow v. Federal Reserve Bank of San Francisco, 650 F.2d 1093, 1101 (9th Cir. 1981) (“To implicate constitutional liberty interests, however, the reasons for dismissal must be — 26 — sufficiently serious to ‘stigmatize’ or otherwise burden the individual so that he is not able to take 27 advantage of other employment opportunities”). However, plaintiffs have not alleged facts supporting such a narrowly confined claim here and it appears clear to the court that given the 28 allegations of the complaint before it that plaintiffs could in good faith allege no such facts. 1 Feb. 5, 1997) (“Plaintiff’s allegations that the alleged defamation somehow has precluded him 2 from getting a job, i.e., being hired by third persons, does not meet the [stigma-plus] test.”). 3 Here, plaintiffs do not appear to allege injury caused directly by defendants as opposed to 4 injury caused to them by third parties. Indeed, as to plaintiffs’ interactions with defendants 5 following the alleged defamation, plaintiffs assert that although they have been unsuccessful in 6 renegotiating the fees under the Service Agreement, the parties’ Lease and Service Agreement 7 remain in effect, under which plaintiff CVCSF continues to occupy Granite Park and receives a 8 $150,000.00 annual fee from defendant City of Fresno. (Doc. No. 1 at ¶¶ 35, 39.) Accordingly, 9 even assuming plaintiffs were able to allege an injury to their federally protected rights, their 10 claim nonetheless fails because the alleged injury they suffered was not caused directly by the 11 government, but by the reaction of third parties to the alleged defamation.6 12 Accordingly, the court will dismiss plaintiffs’ defamation claims brought pursuant to 13 § 1983 against all defendants due to their failure to state a claim and will do so with prejudice. 14 B. Whether Plaintiff CVCSF has Failed to State a Claim under 42 U.S.C. § 1981 for 15 Discriminatory Denial of Contract Rights 16 Title 42 U.S.C. § 1981 provides that “[a]ll persons within the jurisdiction of the United 17 States shall have the same right . . . to make and enforce contracts . . . as is enjoyed by white 18 citizens.” The Supreme Court has held that 42 U.S.C. § 1983 “is the exclusive federal damages 19 remedy for the violations of the rights guaranteed by § 1981 when the claim is pressed against a 20 state actor.” Jett v. Dallas Independent Sch. Dist., 491 U.S. 701, 735 (1989). “A plaintiff 21 asserting a § 1981 claim must initially identify an impaired contractual relationship under which 22 the plaintiff has rights.” Astre v. McQuaid, 804 Fed. App’x. 665, 666 (9th Cir. 2020).7 In — 23 — 24 6 Because the court concludes that plaintiff has not adequately alleged a stigma-plus violation under the Due Process Clause of the Fourteenth Amendment, the court need not reach the parties’ — 25 — arguments regarding whether defendants’ alleged designation of a draft audit as “final” constitutes a “statement” for purposes of stating a cause of action for defamation. (See Doc. Nos. — 26 — 6-1 at 23; 13 at 16–18; 15 at 7–8.) — 27 — 7 Citation to this unpublished Ninth Circuit opinion is appropriate pursuant to Ninth Circuit Rule 28 36-3(b). 1 addition, a plaintiff must “plausibly allege that the defendant impaired that relationship on 2 account of intentional discrimination.” Id. Thus, to prevail on a § 1981 discrimination claim, “a 3 plaintiff must initially plead and ultimately prove that, but for race, it would not have suffered the 4 loss of a legally protected right.” Comcast Corp. v. Natl. Ass. Of African American-Owned 5 Media, --- U.S. ----, 140 S. Ct. 1009, 1019 (2020). 6 Plaintiff CVCSF alleges that racial animus was the but-for cause of defendants’ conduct 7 because: 8 Specifically, there has not been a similarly situated Caucasian or majority owned business subject to audit for requesting renegotiation 9 of an agreement that was clearly nowhere near as profitable as anticipated. There also has not been an audit of a project managed 10 by a similarly situated Caucasian or majority owned business that in reality was an effort to document law or ethics violations. Nor has 11 any similarly situated Caucasian or majority owned business had an incomplete, substandard draft audit published that was likely 12 damaging in nature. There also has not been a similarly situated Caucasian or majority owned business that has had an investigation 13 suspended by the City of Fresno nonetheless referred to the Fresno County District Attorney’s Office for possible criminal investigation. 14 There also has not been a Caucasian or majority owned business with a similar 25-year contract that was attempted to be broken in favor 15 of a business owned by persons of another race. Finally, there has not been a Caucasian or majority owned business similarly 16 disparaged in the media on the basis of an incomplete investigation and other untruths that were known to be similarly harmful to the 17 subject’s reputation and business prospects. 18 (Doc. No. 1 at ¶ 62.) 19 In their motion to dismiss, defendants argue that “the facts alleged by Plaintiffs and the 20 matters subject to judicial notice negate any implication of racial discrimination,” because, inter 21 alia: there are no allegations of defendants making bigoted statements toward plaintiffs or having 22 discussions about race; the City of Fresno entered into the Lease and Service Agreement in 23 December 2015 with knowledge of plaintiff Frazier’s identity as an African-American man; the 24 Service Agreement gave the City of Fresno the right to audit plaintiff CVCSF; the Fresno City 25 Attorney publicly stated that CVCSF was in substantial compliance with the Lease and Service 26 Agreement; and the City of Fresno has engaged in various business dealings between January 27 ///// 28 ///// 1 2015 and April 2020 that benefit entities with which plaintiff Frazier has been associated. (Doc. 2 No. 6-1 at 27–28.) 8 3 Plaintiff CVCSF counters that the above-excerpted allegations are sufficiently detailed to 4 survive a motion to dismiss and cites a vacated Ninth Circuit decision for the incorrect 5 proposition that plaintiff CVCSF need not plead that discriminatory intent was the but-for cause 6 of its injury. (Doc. No. 13 at 20.) In reply, defendants argue that plaintiff CVCSF’s comparison — 7 — 8 Defendants also filed a request for judicial notice of twenty-three exhibits. (Doc. No. 6-2.) 8 These requests can be summarized as falling under the following categories: (1) documents concerning litigation in the Fresno County Superior Court in which plaintiff Frazier and Mr. 9 Franco were parties (Exhs. A–C); (2) defendant City of Fresno’s response to Mr. Franco’s Public Records Act requests (Exhs. D–F); (3) plaintiff CVCSF’s notice of government claims and — 10 — defendant City of Fresno’s response letter thereto (Exhs. G–I); (4) a biography of plaintiff Frazier 11 found online (Exh. J); (5) City Council Action and Staff Reports spanning October 2014 through April 2020 for the City of Fresno and a Fresno City Planning Commission report (Exhs. K, M, O, 12 Q–T, V–W); and (6) California Secretary of State records for business entities with which defendants allege that plaintiff Frazier is or was affiliated (Exhs. L, N, P, U). An online 13 biography of plaintiff Frazier on a private company’s webpage is not a matter of public record and cannot be “accurately and readily determined from sources whose accuracy cannot be — 14 — reasonably questioned.” Fed. R. Evid. 201(b). Similarly, the online biography is not 15 incorporated by reference into plaintiffs’ complaint. See United States v. Ritchie, 342 F.3d 903, 908 (9th Cir. 2003). Accordingly, defendants’ request for judicial notice of the online biography 16 of plaintiff Frazier is denied. Documents that constitute “matters of public record” may be judicially noticed. Fed. R. Evid. 201(b); Intri-Plex Techs., Inc. v. Crest Grp., Inc., 499 F.3d 1048 , 17 1052 (9th Cir. 2007) (citing Fed. R. Evid. 201(b)); see also Mission Linen Supply v. City of Visalia, No. 1:15-cv-0672-AWI-EPG, 2019 WL 446358 , at *5 (E.D. Cal. Feb. 5, 2019), aff’d on — 18 — other grounds, 817 Fed. App’x. 336 (9th Cir. 2020) (finding that responses to Public Records Act 19 requests “are the type of government document that may be judicially noticed”); Rogers v. Cal. Highway Patrol Officer Macias, 5:19-cv-0479-JGB-KK, 2019 WL 4540119 , at *1 n.2 (C.D. Cal. 20 Apr. 25, 2019) (taking judicial notice of plaintiff’s government claim and the state government’s attendant denial letter); Joana Corp. v. City of Sunnyvale, CA, No. 5:17-cv-00956, 2017 WL 21 5194513, at *4 (N.D. Cal. Nov. 9, 2017) (taking judicial notice of a staff report to the city mayor and council); Rhodes v. Sutter Health, No. 2:12-cv-0013-WBS-DAD, 2012 WL 662462 , at *3 — 22 — (E.D. Cal. Feb. 28, 2012) (taking judicial notice of corporate records filed with the Secretary of 23 the State of California). While plaintiffs oppose defendants’ request for judicial notice, they do not allege that any of defendants’ exhibits contain falsehoods or are otherwise fraudulent, they 24 make no specific arguments for why defendants’ request is a “clearly inappropriate application of judicial notice,” and the case they cite in support of their contention is inapplicable. Hsu v. Puma — 25 — Biotechnology, Inc., 213 F. Supp. 3d 1275 , 1280–85 (C.D. Cal. 2016) (describing common misconceptions regarding the concept of judicial notice and declining to take judicial notice of — 26 — various exhibits that were not public records and were not derived from sources whose accuracy 27 could not reasonably be questioned). Accordingly, the court denies defendants’ request for judicial notice of the online biography of Mr. Frazier and grants defendants’ request for judicial 28 notice of the remaining exhibits. (Doc. No. 6-2, Exhs. A–I, K–W.) 1 to the treatment of “unidentified ‘Caucasian’ businesses”—without mention of “any specific 2 comparators” and without alleging any facts indicating that the defendants “knew of the 3 comparator entity’s racial identity” or that “the comparator entity was similar in all material 4 aspects”—fails to adequately allege that that race was the but-for cause of plaintiff CVCSF’s 5 alleged injuries. (Doc. No. 15 at 9–11.) 6 The court acknowledges that the scourge of racial discrimination does not only rear its 7 insidious head through “statements involving bigotry . . . or discussions involving race.” (Doc. 8 No. 6-1 at 27); see Body by Cook, Inc. v. State Farm Mut. Auto. Ins., 869 F.3d 381, 386 (5th Cir. 9 2017) (“Although ‘naked allegations’ of discriminatory intent are too conclusory to survive a 10 motion to dismiss, discriminatory motive may be—and commonly is—demonstrated by 11 circumstantial evidence. An allegation that similarly situated non-minorities received better 12 treatment could . . . set the predicate for establishing the section 1981 claim.”) (internal quotation 13 and citations omitted). However, the allegations of plaintiffs’ complaint do not adequately assert 14 that race was the but-for cause of defendants’ conduct. The claimed lack of a “similarly-situated 15 Caucasian or majority owned business” subject to the same exact conduct by defendants under 16 this very specific set of circumstances is not a sufficient basis upon which to bring such a claim, 17 where under the allegations of the complaint it is unclear whether there even exists a “similarly18 situated Caucasian or majority owned business” to which plaintiff CVCSF could meaningfully 19 draw a comparison. (Doc. No. 1 at ¶ 62); compare Body by Cook, Inc., 869 F.3d at 387 20 (“Plaintiffs make only generalized allegations regarding Defendants’ alleged disparate treatment 21 of [plaintiff] versus non-minority-owned shops. These allegations are not specific enough to 22 plead discriminatory intent. They fail to identify specific instances when [plaintiff] was refused a 23 contract but a similarly situated non-minority owned body shop was given a contract.”), with 24 Bivett Brackett v. American Airlines Group, Inc., No. 4:21-cv-02681-HSG, 2022 WL 282529 , at 25 *4 (N.D. Cal. Jan. 31, 2022) (finding that the plaintiff had “thinly but plausibly” stated a claim for 26 a violation of 42 U.S.C. § 1981 where she alleged that agents of the defendant airline prevented 27 her from boarding a flight despite allowing Caucasian and Hispanic passengers to board the same 28 flight with luggage the same size as plaintiff’s). 1 According to plaintiffs, “Mr. Frazier and CVCSF also learned that [defendants] had a 2 collective agenda to try to reclaim Granite Park in order to lease it to the Fresno Football Club 3 (“FFC”), a minor league affiliate of Major League Soccer.” (Doc. No. 1 at ¶ 37.) Plaintiff 4 CVCSF alleges that defendants “actively sought to break [the contracts between the parties] in 5 favor of entering into a competing arrangement with FFC.” (Id. at ¶ 70.) Plaintiff CVCSF 6 implies (without explicitly naming FFC) that FFC was at the time “owned by persons of another 7 race,” but does not allege the racial identity of FFC’s ownership or present any specific 8 allegations that FFC’s ownership’s different racial identity motivated defendants’ actions. (Id. at 9 ¶ 62.) 10 As pled, plaintiff CVCSF’s allegations that defendants did not adequately perform their 11 contractual duties because they instead wished to contract with another entity—even when 12 construed in the light most favorable to plaintiff—do not suggest that but-for defendants’ racial 13 animus, defendants would have conducted themselves differently in their dealings with plaintiff 14 CVCSF. Rather, without more, these allegations suggest only a plausible inference that race 15 could have played “some role” in defendants’ decision-making process, which is insufficient to 16 meet the requisite but-for causation standard. See Comcast, 140 S. Ct. at 1013 ; see also Newman 17 v. Google LLC, No. 3:20-cv-04011-LHK, 2021 WL 2633423 , at *6 (N.D. Cal. June 25, 2021) 18 (“Plaintiffs’ personal belief of discrimination, without any factual support, is insufficient to 19 satisfy federal pleading standards.”) (internal quotation omitted). Thus, plaintiff CVCSF has not 20 sufficiently pled a cause of action for discriminatory denial of contract rights against defendants 21 under 42 U.S.C. §§ 1981 , 1983 and, accordingly, the court will dismiss this claim. 22 C. Whether Plaintiff CVCSF’s State Law Claims Against Defendant City of Fresno are 23 Barred by the Statute of Limitations 24 Under the California Tort Claims Act, “no suit for money or damages may be brought 25 against a public entity . . . until a written claim therefor has been presented to the public entity[.]” — 26 — Cal. Gov. Code § 945.4 . “A suit for ‘money or damages’ includes all actions where the plaintiff 27 is seeking monetary relief, regardless whether the action is founded in ‘tort, contract or some 28 other theory.’” Hart v. Alameda County, 76 Cal. App. 4th 766, 778 (1999) (citation omitted); see 1 also City of Stockton v. Superior Court, 42 Cal. 4th 730, 738 (2007). A plaintiff must file an 2 action in court “no later than six months after the date [a notice of rejection] is personally 3 delivered or deposited in the mail.” Cal. Gov. Code § 945.6 ; see also State of California v. 4 Superior Court, 32 Cal. 4th 1234, 1239 (2004) (“[F]ailure to timely present a claim for money or 5 damages” or “to allege facts demonstrating or excusing compliance with the claim presentation 6 requirement subjects a claim against a public entity to a demurrer for failure to state a cause of 7 action.”); Clarke v. Upton, 703 F. Supp. 2d 1037, 1044 (E.D. Cal. 2010) (“The six month period 8 set forth in Section 945.6(a)(1) is mandatory and strict compliance is required.”). 9 In their complaint, plaintiffs allege that they submitted timely claims for damages in 10 compliance with California Government Code §§ 900, et seq., that their claims were never 11 rejected, and consequently, the present suit is timely brought within the two-year statute of 12 limitations proscribed by California Government Code § 946(a)(2) for actions where written 13 notice is not given by the public entity. (Doc. No. 1 at ¶ 3.) In its motion to dismiss, defendant 14 City of Fresno asserts that it denied both of plaintiff CVCSF’s claims on August 15, 2019, served 15 by mail to the address listed on the claims. (Doc. No. 6-1 at 31.) In support of this contention, 16 defendant City of Fresno attaches three exhibits of which the court took judicial notice as 17 described above: (1) plaintiff CVCSF’s original claim for damages, dated July 3, 2019; (2) 18 plaintiff CVCSF’s amended claim for damages, dated July 17, 2019; and (3) a notice letter from 19 defendant City of Fresno to plaintiffs dated August 15, 2019, rejecting CVCSF’s claim for 20 damages, along with a proof of service document signed by a Senior HR Technician stating that 21 the signatory served the aforementioned notice of rejection of claim document by placing it in a 22 sealed envelope and mailing it to Mr. Frazier at CVCSF. (Doc. No. 6-2, Exhs. G–I.) 23 Accordingly, defendant City of Fresno argues that plaintiff CVCSF’s state law claims are subject 24 to dismissal because plaintiff CVCSF did not file the instant lawsuit within six months of the City 25 of Fresno serving its notice of rejection. (Doc. No. 6-1 at 31.) Plaintiff CVCSF counters that it 26 never received the notice of denial, and thus, its complaint was timely filed. (Doc. No. 13 at 21.) 27 In reply, defendant City of Fresno asserts that the six-month statute of limitations period is 28 ///// 1 triggered by the public entity mailing the notice of rejection, rather than a prospective plaintiff 2 receiving the notice of rejection. (Doc. No. 15 at 14.) 3 Defendant City of Fresno is correct in its assertion that “it is the mailing of the rejection 4 notice that triggers the running of the six-month limitation period.” Green v. Chakotos, No. 1:115 cv-01611-LJO-DLB, 2014 WL 3563314 , at *5 (E.D. Cal. July 18, 2014), report and 6 recommendation adopted, No. 1:11-cv-01611-LJO-DLB, 2014 WL 3927229 (E.D. Cal. Aug. 11, 7 2014). It is immaterial that plaintiff CVCSF alleges that it never received the notice of claim 8 rejection. See, e.g., Him v. City and County of San Francisco, 133 Cal. App. 4th 437, 445 (2005) 9 (noting that “the Legislature has placed upon the claimant the risk that a properly mailed notice of 10 claim rejection is not delivered due to an error,” but that claimants have the opportunity to protect 11 against this risk because claimants may “inquire about the denial and determine, thereby, the 12 limitations period” if they have not received a claim rejection after the 45-day period under which 13 public entities are required to act on a claim); Valderrama v. California, No. 2:19-cv-0138914 MCE-EFB, 2020 WL 2556948 , at *4 (E.D. Cal. May 20, 2020) (“Even proof of non-receipt 15 would not carry the day since because it would still be ‘legally insufficient’ to ‘negat[e] the six16 month statute of limitations defense’”) (citation omitted). 17 The exhibits submitted by defendant City of Fresno reflect that the City of Fresno’s 18 rejection letter was placed in the mail on August 15, 2019. (Doc. No. 6-2, Exh. I, at 41.) 19 Therefore, the six-month time period was triggered on that date and plaintiff CVCSF’s state law 20 claims submitted as part of the complaint filed in this court on July 31, 2020 are untimely. (See 21 Doc. No. 1.) 22 The court will therefore dismiss plaintiff CVCSF’s fourth and fifth causes of action.9 The 23 court will, however, grant plaintiffs leave to amend in this regard if they can, in good faith, allege 24 facts demonstrating that waiver, estoppel, or a tolling period applies to the six-month filing 25 deadline here. Julian v. City of San Diego, 183 Cal. App. 3d, 176 (1986) (“Failure to commence — 26 — 9 Because the court finds that these causes of action are time-barred, the court need not reach 27 defendant City of Fresno’s argument that plaintiff CVCSF’s claim for breach of the implied covenant of good faith and fair dealing is duplicative of plaintiff CVCSF’s claim for breach of 28 contract. (Doc. No. 6-1 at 31–33.) 1 an action within the prescribed period constitutes a valid ground for dismissal, absent waiver, 2 estoppel, or a tolling period.”). 3 D. Leave to Amend 4 Plaintiffs have generally requested leave to file a first amended complaint. (Doc. No. 13 5 at 23.) “Courts are free to grant a party leave to amend whenever ‘justice so requires,’ and 6 requests for leave should be granted with ‘extreme liberality.’” Moss v. U.S. Secret Serv., 572 7 F.3d 962, 972 (9th Cir. 2009) (quoting Fed. R. Civ. P 15(a)(2) and Owens v. Kaiser Found. 8 Health Plan, Inc., 244 F.3d 708, 712 (9th Cir. 2001)). There are several factors a district court 9 considers in determining whether to grant leave to amend, including undue delay, the movant’s 10 bad faith or dilatory motive, repeated failure to cure deficiencies by amendments previously 11 allowed, undue prejudice to the opposing party, and futility. Brown v. Stored Value Cards, Inc., — 12 — 953 F.3d 567, 574 (9th Cir. 2020) (citing Foman v. Davis, 371 U.S. 178, 182 (1962)). Of the 13 factors from Foman, the court should particularly consider prejudice to the opposing party. Id.; 14 Eminence Cap., LLC v. Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003). 15 There is no indication that allowing amendment in this case would be prejudicial to 16 defendants, and defendants make no argument to that effect. There is also nothing to suggest that 17 plaintiffs have acted in bad faith, and there have been no other attempts to cure deficiencies by 18 previously allowed amendments. With the exception of plaintiffs’ first cause of action for 19 unconstitutional defamation under 42 U.S.C. § 1983 , as to which the court deems that granting 20 leave to amend would be futile for the reasons explained above, plaintiffs will therefore be 21 granted leave to amend. 22 CONCLUSION 23 For the reasons stated above, defendants’ motion to dismiss (Doc. No. 6) is granted in part 24 and denied in part as follows: 25 1. Defendants’ motion to dismiss plaintiff Frazier’s causes of action brought under 42 26 U.S.C. § 1983 for lack of standing is denied; 27 ///// 28 ///// 1 2. Plaintiffs’ first cause of action for unconstitutional defamation under 42 U.S.C. § 2 1983 against all defendants is dismissed, with prejudice and without leave to 3 amend, due to plaintiff's failure to state a cognizable claim; 4 3. Plaintiff CVCSF’s third cause of action for discriminatory denial of contract rights 5 brought under 42 U.S.C. $$ 1981, 1983 against all defendants is dismissed, with 6 leave to amend, for failure to state a claim; 7 4. Plaintiff CVCSF’s fourth and fifth causes of action for violations of California 8 state law against defendant City of Fresno are dismissed, with leave to amend, for 9 failure to state a claim; and 10 5. In the event plaintiffs wish to attempt to cure the deficiencies noted herein, they 11 are granted twenty-one days from the issuance of this order to file an amended 12 complaint.!° 13 | IT IS SO ORDERED. Dated: _ April 15, 2022 ee | or 15 UNITED STATES DISTRICT JUDGE — 16 — — 17 — — 18 — — 19 — — 20 — — 21 — — 22 — — 23 — — 24 — 25 | 10 TF plaintiffs elect to file an amended complaint, they are reminded that Local Rule 220 requires 26 | that an amended complaint be complete in itself without reference to any prior pleading. This is because, as a general rule, an amended complaint supersedes the original complaint. See Loux v. 27 | Rhay, 375 F.2d 55, 57 (9th Cir. 1967). Once plaintiffs file an amended complaint, the original pleading no longer serves any function in the case. Therefore, in any amended complaint, as in 28 | an original complaint, each claim must be sufficiently alleged. — 25 —