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Sabri Properties, LLC. v. City of Minneapolis

United States District Court, D. Minnesota

March 6, 2019

Sabri Properties, LLC, Plaintiff,
v.
City of Minneapolis, Defendant.

          REPORT AND RECOMMENDATION

          HILDY BOWBEER UNITED STATES MAGISTRATE JUDGE

         Robert M. Speeter, Speeter & Johnson, 120 South Sixth Street, Suite 1515, Minneapolis, MN 55402, for Sabri Properties, LLC

         Sarah C. S. McLaren, Office of the Minneapolis City Attorney, 350 South Fifth Street, City Hall-Room 210, Minneapolis, MN 55415, for the City of Minneapolis HILDY BOWBEER, United States Magistrate Judge

         This matter is before the Court on the Motion to Dismiss filed by the City of Minneapolis [Doc. No. 16]. The Honorable Michael J. Davis referred this motion to the undersigned for the issuance of a report and recommendation. (Order of Referral, Dec. 19, 2018 [Doc. No. 21].) For the reasons set forth below, the Court recommends that the Motion to Dismiss be granted.

         I. Background

         Plaintiff Sabri Properties, LLC (“Sabri”) is a limited liability company organized under the laws of Minnesota. (Compl. ¶ 3 [Doc. No. 1].) Sabri is suing Defendant City of Minneapolis (“the City”) for violating its right to due process under the Fourteenth Amendment to the U.S Constitution, violating its right to due process under the Minnesota Constitution and Minnesota state law, and depriving it of the right to a jury trial as guaranteed by the Minnesota Constitution. (Compl. ¶¶ 10-19.)

         A. Factual Background

         On October 10, 2018, the City received a complaint that Sabri had blocked a sidewalk or lane with construction materials and equipment at 2900 Pleasant Avenue South without a valid permit. (Compl. Ex. A [Doc. No. 1-1].) On October 12, 2018, citing this as Sabri's fifth violation of Minneapolis Code of Ordinances (“MCO”) § 430.30(2)[1] within a 24-month period, the City issued an administrative citation to Sabri in the amount of $3, 200. (Compl. Ex. A.)

         The Minneapolis City Council enacted an administrative enforcement and hearing process for the resolution of violations of the MCO in order to “facilitate compliance with certain provisions of [the MCO] and avoid unnecessary delay in the enforcement of the Minneapolis Code of Ordinances.” MCO § 2.10. Sabri was required to either pay the fine or request a hearing within 25 days of service of the administrative citation. MCO § 2.80. Hearings are conducted before a hearing officer selected and appointed by the Minneapolis City Attorney. MCO § 2.100(b). Sabri alleges that hearing officers are compensated directly from the City Attorney's budget. (Compl. ¶ 8.) According to an exhibit Sabri attached to his Complaint, the City of Minneapolis entered into an agreement with a law firm on March 8, 2010, for the provision of administrative hearing officer services for a three-year term during which compensation would not exceed $175, 000. (Compl. ¶ 8, Ex. C). Hearing officers have authority to, inter alia, mediate a settlement between the alleged MCO violator and the City, dismiss the administrative citation, and determine if a violation has occurred. MCO § 2.100(g). The burden of proof rests on the City to demonstrate by “a preponderance of the evidence that a violation occurred and that the required corrective action, if applicable, is reasonable.” MCO § 2.100(f).

         B. Sabri's Claims

         Sabri organizes its allegations into three counts. In Count I, Sabri alleges that the City violated its Fourteenth Amendment right to due process under the United States Constitution because the City appoints and pays the hearing officers before whom violations are heard. (Compl. ¶¶ 7-8, 11.) In Count II, Sabri alleges that the City violated its right to due process under the United States and Minnesota Constitutions and state statutory law because (1) a civil fine of $3, 200 exceeds the maximum fine of $300 for a petty misdemeanor, as set by Minn. Stat. § 609.02, subd. 4a; and (2) the standard of proof at administrative hearings is “by a preponderance of the evidence” rather than “proof beyond a reasonable doubt, ” in contravention of Minn. Stat. § 484.87, subd. 4; Minn. Stat. § 611.02; and Minnesota Rule of Criminal Procedure 23.05, subd. 3. (Compl. ¶¶ 9, 15, 17.) Finally in Count III, Sabri alleges that the City's imposition of a monetary civil fine violates its right to a trial by jury under the Minnesota Constitution. (Compl. ¶¶ 18-19.) As relief, Sabri seeks a declaratory judgment that MCO §§ 2.80 and 2.100 are facially unconstitutional and as applied under both the United States and Minnesota Constitutions, and that those sections violate various Minnesota statutes and the Minnesota Rules of Criminal Procedure; an injunction; and an award of costs, disbursements, and attorney's fees.

         C. The City's Motion to Dismiss

         On December 17, 2018, the City moved to dismiss Sabri's Complaint for failure to state a claim upon which relief may be granted pursuant to Federal Rule of Civil Procedure 12(b)(6). The City argues that the administrative hearing system does not violate due process under either the United States or Minnesota Constitution, contests the criminal nature of the civil fine and imposition of a criminal evidentiary standard, and submits that the Minnesota Constitution does not extend the right to jury trial to administrative citations. (Def.'s Mem. Supp. Mot. Dismiss [Doc. No. 18].) Sabri filed a memorandum in opposition [Doc. No. 23] on January 4, 2019, and the City filed a reply memorandum [Doc. No. 25] on January 22, 2019. The Court held a motion hearing on February 4, 2019, and took the motion under advisement.[2]

         II. Legal Standard

         On a motion to dismiss filed pursuant to Federal Rule of Civil Procedure 12(b)(6), the Court “must take the well-pleaded allegations of the complaint as true, and construe the complaint, and all reasonable inferences arising therefrom, most favorably to the pleader.” Morton v. Becker, 793 F.2d 185, 187 (8th Cir. 1986). “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, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is facially plausible “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id.

         Generally, a court may not consider matters outside the pleadings in assessing the sufficiency of a complaint under the Rule 12(b)(6) standard. Porous Media Corp. v. Pall Corp., 186 F.3d 1077, 1079 (8th Cir. 1999) (citations omitted). A court may make exceptions to this rule for matters of public record, materials “necessarily embraced by” the complaint, and exhibits submitted with the complaint. Id. (citations omitted).

         III. Discussion

         A. Count I: City's Appointment and Compensation of Hearing Officers

         Sabri alleges in the Complaint that, because it has no choice but to pay the administrative fine or contest the fine before a hearing officer selected and compensated by the City, it is deprived of due process of law as guaranteed by the Fourteenth Amendment of the United States Constitution. (Compl. ¶ 11.) The City moved to dismiss this claim, asserting that it has taken substantial steps to provide due process in the administrative enforcement and hearing process, including the right of an alleged violator to strike one hearing officer without cause and subsequent officers for cause, the right to request subpoenas and to present testimony from witnesses, and the right to a recorded hearing, written decision, and judicial review by the Minnesota Court of Appeals. (Def.'s Mem. Supp. Mot. Dismiss at 7-8 (citing Compl. Ex. B (MCO § 2.100(b))).) The City cites two Minnesota Court of Appeals' decisions that rejected Sabri's contention and held that the City's process of selection and compensation of administrative hearing officers does not offend due process. (Def.'s Mem. Supp. Mot. Dismiss at 8 (citing In re Khan, 804 N.W.2d 132 (Minn.Ct.App. 2011); Buchanan v. City of Minneapolis, No. A10-1695, 2011 WL 2982621 (Minn.Ct.App. July 25, 2011), review denied Sept. 20, 2011).)

         Sabri counters that the hearing officer system deprives it of a “neutral and unbiased adjudicator, a factor recognized as an essential element of due process by both state and federal courts.” (Pl.'s Mem. Opp'n Mot. Dismiss at 2 [Doc. No. 23].) As support for this position, Sabri relies on Tumey v. Ohio, 273 U.S. 510 (1927), where the Court reversed a criminal conviction because the ...


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