Muhmoud v. City Of San Jose

Background

Mustafa Muhmoud alleged that he owned Shisha Hookah Lounge in downtown San Jose from February 2017 until September 2020, when the business ceased operations. The business bordered an open-air public parking lot owned and operated by the Santa Clara Valley Transit Authority (VTA). Muhmoud alleged that City representatives, San Jose police officers, and others took actions concerning occupancy limits, nuisance behavior, and the parking lot that caused significant revenue loss and rendered his business inoperable. He further alleged that these actions were motivated by a desire to shut down the lounge and transform the area into a VTA Silicon Valley Bay Area Rapid Transit station.

After an earlier order dismissed some claims, Muhmoud filed a second amended complaint asserting three causes of action: (1) a federal equal-protection claim under 42 U.S.C. § 1983 based on a “class of one” theory against the City defendants; (2) an equal-protection claim under Article I, section 7 of the California Constitution against the City, seeking injunctive relief; and (3) a § 1983 conspiracy claim against all defendants. The City defendants were the City of San Jose, Leo Prescott, Rick Galea, and Ray Simpson. VTA separately moved to dismiss the conspiracy claim against it.

City Defendants’ Motion

The City defendants moved to dismiss the conspiracy claim and the request for injunctive relief under Federal Rule of Civil Procedure 12(b)(6), which tests whether a complaint states a legally sufficient claim.

The court denied the motion as to the conspiracy claim. To plead a § 1983 conspiracy, Muhmoud had to allege an agreement among the defendants to deprive him of constitutional rights and an actual deprivation resulting from that agreement. The court found that the second amended complaint identified when the alleged agreement was reached, who was involved, and what the alleged agreement was: targeting Muhmoud and removing him from operating the business. The court also found that Muhmoud alleged an actual deprivation because the business was rendered inoperable after the alleged differential treatment.

The court dismissed the California constitutional equal-protection claim and the request for injunctive relief. It concluded that Muhmoud’s allegations concerned past conduct and that he had not alleged that he intended to open another business or facts showing a likelihood of future harm. Without continuing present adverse effects, the court found that he lacked standing to seek an injunction. The court stated that amendment was not futile and granted leave to amend if Muhmoud could plausibly allege facts establishing standing.

VTA’s Motion

The court granted VTA’s motion to dismiss the conspiracy claim against VTA. Because VTA is a governmental entity, Muhmoud had to plead municipal liability under Monell, meaning that a VTA policy, practice, or custom caused the alleged constitutional violation.

The court found that Muhmoud had not identified a VTA policy, practice, or custom or described the content of one. The allegations that VTA agents communicated with City representatives, participated in meetings, arranged one meeting, and denied a request for access did not support a plausible inference that a VTA policy, practice, or custom caused the alleged injury. The court characterized the allegations as multiple acts directed at a single incident rather than a widespread and persistent policy or practice.

The court dismissed the conspiracy claim against VTA without prejudice because it could not definitively conclude that amendment would be futile. It allowed Muhmoud to amend to allege specific facts showing that a VTA policy, custom, or practice was the moving force behind the alleged constitutional violation.

Disposition

Judge Davila held that the City defendants’ motion was granted in part and denied in part. The second cause of action and the request for injunctive relief were dismissed without prejudice, while the City defendants’ motion was otherwise denied. VTA’s motion was granted, and the third cause of action against VTA was dismissed without prejudice. Any amended complaint had to be filed within 21 days of the order.