Hug v. Am. Traffic Solutions, Inc., 4:14CV00138 ERW

STEPHANIE HUG, on her own behalf and on behalf of all other similarly situated, Plaintiffs, v. AMERICAN TRAFFIC SOLUTIONS, INC., Defendant.

No. 4:14CV00138 ERW

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MISSOURI EASTERN DIVISION

Dated: June 11, 2014

MEMORANDUM AND ORDER

This matter comes before the Court on Defendant American Traffic Solutions, Inc.'s Motion to Dismiss First Amended Petition [ECF No. 21].

I. BACKGROUND

On December 20, 2013, Plaintiff Stephanie Hug, on her own behalf and on behalf of all others similarly situated (collectively, Plaintiffs) filed the First Amended Class Action Petition (Petition) in the Circuit Court for the City of St. Louis, Missouri. The Petition states Defendant American Traffic Solutions, Inc. contracted with the City of St. Louis (City) to aid enforcement of City Ordinance 66868, codified at St. Louis City, Mo., Rev. Code § 17.07.010 et seq. (Ordinance). Enacted in 2005, the Ordinance authorizes installation and use of traffic cameras to detect certain red light traffic violations. The Petition defines a "Class" of Plaintiffs as all persons "accused" of a red light violation based upon a red light camera in the City. ECF No. 1-2 at ¶ 35. It further defines a "Sub-Class" of Plaintiffs as all persons who paid fines as a result of accusations arising out of a red light camera. ECF No. 1-2 at ¶ 36. Collectively, Plaintiffs allege the red light Ordinance impermissibly places the burden on the accused to rebut a presumption ofguilt, which is ultimately based on the registered owner of the vehicle, rather than the driver. Plaintiffs claim, by contracting with the City to help enforce the Ordinance, Defendant violated Article I, Section 10 of the Missouri Constitution and the Missouri Merchandising Practices Act (MMPA). Plaintiffs also assert a claim for unjust enrichment. They seek damages, disgorgement of Defendant's allegedly illicit revenues, a declaration that the Ordinance is unconstitutional and void, and an injunction prohibiting Defendant from providing the contested services in the future.

On January 23, 2014, Defendant removed the Petition to this Court pursuant to 28 U.S.C. §§ 1332, 1441, 1446, and 1453. Defendant now moves to dismiss the Petition for failure to join a necessary party, and for failure to state a claim upon which relief can be granted.

II. STANDARD

Under Federal Rule of Civil Procedure (FRCP) 12(b)(6), a party may move to dismiss a claim for "failure to state a claim upon which relief can be granted." The notice pleading standard of FRCP 8(a)(2) requires a plaintiff to give "a short and plain statement showing that the pleader is entitled to relief." To meet this standard and to survive a FRCP 12(b)(6) 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, 678 (2009) (internal quotations and citation omitted). This requirement of facial plausibility means the factual content of the plaintiff's allegations must "allow[] the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Cole v. Homier Distrib. Co., 599 F.3d 856, 861 (8th Cir. 2010) (quoting Iqbal, 556 U.S. at 678). The Court must grant all reasonable inferences in favor of the nonmoving party. Lustgraaf v. Behrens, 619 F.3d 867, 872-73 (8th Cir. 2010).

III. DISCUSSION

In its Motion, Defendant argues the Petition should be dismissed for two main reasons. First, Defendant argues the entire Petition should be dismissed for failure to join a necessary party pursuant to FRCP 19(a). Second, Defendant contends each of the Petition's four individual Counts should be dismissed for failure to state a claim upon which relief can be granted.

A. Necessary Joinder

First, Defendant argues the Petition should be dismissed pursuant to FRCP 12(b)(7), for failure to join the City and the Director of the Department of Revenue (Director) under FRCP 19. Defendant contends the City must be a party, because the City enacted the Ordinance, and has an interest in protecting its validity. Additionally, Defendant claims, under Missouri law, the Director has exclusive authority to designate which traffic offenses lead to the assessment of points, and Missouri courts then report traffic violations to the Department of Revenue; thus, Defendant maintains "the Director may be affected by a declaration of invalidity of the Ordinance because the Department of Revenue is the party responsible for the promulgation and application of charge codes related to the Ordinance." ECF No. 22 at 6.

The Court does not agree this case should be dismissed for failure to join the City and the Director. FRCP 19 determines whether joinder of a particular party is compulsory. Specifically, FRCP 19(a)(1) states,

A person who is subject to service of process and whose joinder will not deprive the court of subject-matter jurisdiction must be joined as a party if:

(A) in that person's absence, the court cannot accord complete relief among existing parties; or

(B) that person claims an interest relating to the subject of the action and is so situated that disposing of the action in the person's absence may:

(i) as a practical matter impair or impede the person's ability to protect the interest; or

(ii) leave an existing party subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations because of the interest.

"Subsection '(a)(1) requires joinder only when the absence of the unjoined party prevents complete relief among the current parties. . . . The focus is on relief between the parties and not on the speculative possibility of further litigation between a party and an absent person.'" Gwartz v. Jefferson Memorial Hosp. Ass'n, 23 F.3d 1426, 1428 (8th Cir. 1994) (quoting LLC Corp. v. Pension Benefit Guar. Corp., 703 F.2d 301, 305 (8th Cir. 1983)). The party moving for dismissal under FRCP 12(b)(7) has the burden to show joinder of the absent party is necessary under FRCP 19. EEOC v. Apria Healthcare Grp., Inc., 222 F.R.D. 608, 610 (E.D. Mo. 2004).

In arguing the City and the Director must be joined, Defendant conflates "necessary" parties with "proper" parties. That is, while Defendant has stated many cogent reasons the City and the Director could be allowed to join this suit, Defendant has failed to state reasons the City and the Director must be joined. Defendant has not shown either the City or the Director have claimed an interest in the subject of this suit. Fed. R. Civ. P. 19(a)(1)(B). Nor has Defendant shown the Court would be unable to accord complete relief among the parties without them. Fed. R. Civ. P. 19(a)(1)(A). Aside from a declaration the Ordinance is invalid, Plaintiffs seek injunctive relief and damages solely from Defendant. Simply because the City and Director "may be affected" by this litigation does not make them necessary parties under FRCP 19. ECF No. 38 at 5. Defendant may be correct when it contends the classification of traffic offenses is a task exclusively assigned to the Director; however, this allegation bears more relevance on Defendant's defense than it does on the purported necessary joinder of the City and Director, which have not come forward to claim an interest in the subject of this litigation.

Finally, Defendant relies on inapposite case law. For example, Defendant cites Mackey v. Montrym for the proposition the City has a "paramount" interest in "preserving the safety of its public highways[.]" 443 U.S. 1, 17 (1979). Mackey, however, had nothing to do with the meaning of necessary joinder. Rather, Mackey discussed the government's interest in highway safety solely to determine whether a particular statute met the due process requirements delineated by Mathews v. Eldridge, 424 U.S. 319 (1976). See also Mackey, 443 U.S. at 11-19 (applying three-part Eldridge test: (1) "identification of the nature and weight of the private interest affected by the official action challenged," (2) "consideration of the likelihood of an erroneous deprivation of the private interest involved as a consequence of the procedures used," and (3) balancing "the state interests served by summary procedures used, as well as the administrative and fiscal burdens . . . that would result from the substitute procedures sought."). Defendant's first argument for dismissal is denied.

B. Failure to State a Claim upon which Relief Can Be Granted

In its remaining grounds for dismissal, Defendant argues each of Plaintiffs' Counts individually fails to state a claim upon which relief can be granted, and should therefore be dismissed pursuant to FRCP 12(b)(6). The Court addresses each Count in turn.

1. Count I

Count I seeks damages on behalf of the Sub-Class for Defendant's alleged violation of Article I, Section 10 of the Missouri Constitution. Specifically, Plaintiffs allege the Ordinance "conflicts with Article I, Section 10 of the Missouri Constitution¹ because it impermissibly places the burden upon the owner of the vehicle to rebut a presumption of guilt, in violation of the due process rights of [Plaintiffs]." ECF No. 1-2 at ¶ 46. Plaintiffs further allege Defendanthas made explicit promises to not assess points for Ordinance violations; Plaintiffs contend this violates Missouri Revised Statute § 302.225, which, according to Plaintiffs, "expressly requires such reporting." ECF No. 1-2 at ¶ 47. Defendant contends Count I fails to state a claim for two reasons.

a. Criminal Nature of Ordinance

First, Defendant argues Count I fails to state a claim upon which relief can be granted, because the Ordinance is civil, not criminal, in nature, and, therefore, the government need not prove Ordinance violations beyond a reasonable doubt. "Under Missouri law, municipal ordinance violations are considered civil actions, while prosecutions of municipal ordinances are 'quasi-criminal in nature' because the rules of criminal procedure apply." Brunner v. City of...