Curtis v. Nessel

          Hon. Paul L. Maloney, Judge

          REPORT AND RECOMMENDATION

          PHILLIP J. GREEN, UNITED STATES MAGISTRATE JUDGE

         Plaintiff brought this action against the Michigan Attorney General, pursuant to 42 U.S.C. § 1983, claiming that Michigan's statutory prohibition on private gambling violates his rights under the First, Tenth and Fourteenth Amendments.^[1] He seeks declaratory judgment that the potential enforcement of those laws is unconstitutional. Plaintiff also seeks injunctive relief, as well as nominal damages.^[2]

         This matter is before the Court on defendant's motion to dismiss. (ECF No. 14, 15). Plaintiff filed a response (ECF No. 17) and defendant replied (ECF No. 21).^[3] For the reasons stated herein, I recommend that the motion to dismiss be granted.

         BACKGROUND

         Plaintiff's complaint consists largely of bare legal conclusions. Nevertheless, the following allegations can be gleaned from it.

         Plaintiff is a citizen of the state of Michigan who currently resides in South Bend, Indiana. He primarily challenges three of Michigan's statutory provisions. (See Compl. ¶¶ 44-46, ECF No. 1, PageID.7). The first prohibits private games of chance, making such conduct a misdemeanor punishable by up to one year incarceration and a maximum fine of $1, 000. Mich. Comp. Laws § 750.301. The second prohibits the advertisement and public dissemination of information relating to betting, also a misdemeanor punishable by up to one year incarceration and a maximum fine of $1, 000. Mich. Comp. Laws § 750.305. The third prohibits the promotion of a lottery and the dispossession of property by means of a lottery, making such conduct a two-year misdemeanor. Mich. Comp. Laws § 750.372.

         Plaintiff claims an interest in developing and offering “ ‘equitable' games of chance, ” which would compete with Michigan's lottery. (Compl. ¶¶ 1, 22, ECF No. 1, PageID.1, 4). He defines equitable gambling as “risking money or other property for gain, contingent in whole or in part upon probabilities from which the operator derives no fees or income.” (Id. at ¶ 24, PageID.4). Plaintiff contends that his gambling system would save Michigan resident's approximately two billion dollars annually as compared to Michigan's “loss-based” system, which directs a portion of funds collected to the game's operators. (Id. at ¶¶ 2, 5, PageID.1-2).

         Plaintiff claims that Michigan's lottery scheme violates the state's sovereignty; that the state's prohibition on equitable games of chance violates his due process and equal protection rights; and that the state's gambling statutes violate his First Amendment rights to speech and association. Defendant moves to dismiss plaintiff's claims under Federal Rule of Civil Procedure 12(b)(1) on the grounds that plaintiff lacks standing due to his failure to allege an injury-in-fact. In the alternative, defendant seeks dismissal under Rule 12(b)(6) on the basis that plaintiff's allegations fail to state a claim on which relief can be granted.

         LEGAL STANDARDS

         Standing in its constitutional dimension is a threshold issue necessary to establish a case or controversy under Article III. Warth v. Seldin, 422 U.S. 490, 498 (1975). As the party invoking federal jurisdiction, plaintiff must demonstrate that he has standing to prosecute his claims. See, e.g., Loren v. Blue Cross & Blue Shield of Michigan, 505 F.3d 598, 607 (6th Cir. 2007). To establish standing, plaintiff must demonstrate that he has suffered a concrete, particularized, and legally cognizable injury-in-fact. See Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992).

         A Rule 12(b)(6) motion to dismiss tests the legal sufficiency of a complaint by evaluating the assertions therein in a light most favorable to plaintiff to determine whether the complaint states a valid claim for relief. See, e.g., In re NM Holdings Co., LLC, 622 F.3d 613, 618 (6th Cir. 2000). Pursuant to Rule 12(b)(6), a claim must be dismissed for failure to state a claim on which relief may be granted unless the “[f]actual allegations [are] enough to raise a right for relief above the speculative level on the assumption that all of the complaint's allegations are true.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 545 (2007). As the Supreme Court more recently held, to survive a motion to dismiss, a complaint must contain “sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.' ” Ashcroft v. Iqbal, 556 U.S. 662, 677-78 (2009). This plausibility standard “is not akin to a ‘probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully.” If the complaint pleads facts that are “merely consistent with” a defendant's liability, it “stops short of the line between possibility and plausibility of ‘entitlement to relief.' ” Id. As the Court further observed:

Two working principles underlie our decision in Twombly. First, the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions. Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice . . . Rule 8 marks a notable and generous departure from the hyper-technical, code-pleading regime of a prior era, but it does not unlock the doors of discovery for a plaintiff armed with nothing more than conclusions. Second, only a complaint that states a plausible claim for relief survives a motion to dismiss . . . Determining whether a complaint states a plausible claim for relief will, as the Court of Appeals observed, be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense. But where the well pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged - but it has not “show[n]” - “that the pleader is entitled to relief.”

Id. at 678-79 (internal citations omitted).

         When resolving a Rule 12(b)(6) motion to dismiss, the Court may consider the complaint and any exhibits attached thereto, public records, items appearing in the record of the case, and exhibits attached to the defendant's motion to dismiss provided such are referenced in the complaint and central to the claims therein. See Bassett v. National Collegiate Athletic Assoc.,528 F.3d 426, 430 (6th Cir. 2008); see also Stringfield v. Graham, 212 Fed.Appx. 530, 535 (6th Cir. 2007) (documents ...