City Attorney: $9 Million Nightclub Lawsuit 'Baseless'

Categories: Law & Order
Can you treat San Francisco like the Sopranos? City Attorney's office says no.

Yesterday, a nightclub owner and one of his former bartenders filed a complaint against the city and state alleging a "pattern of racketeering activity, including false arrests, assault and battery, kidnappings, [and] improper use of police authority," and asking for $9 million in damages. The complaint invokes the Racketeer Influenced and Corrupt Organizations Act (RICO)..

But according to deputy City Attorney Robert Bonta, you can't use RICO to sue a city.

The list of defendants in the nightclub complaint includes the city and county of San Francisco, the state of California, Mayor Gavin Newsom, the San Francisco Police Department, California's Department of Alcoholic Beverage Control, police Officer Larry Bertrand, and ABC Investigator Michelle Ott. We reported at length on the allegations that led to the lawsuit in a cover story two weeks ago. 

In a letter to Mark Webb, the attorney who filed the RICO complaint, Bonta called the suit "baseless."

"In a very short amount of time, I have been able to confirm the long-standing rule that a RICO suit does not lie against a public entity," Bonta wrote today. (A PDF of the letter is below.)

Originally designed to help the government prosecute the Mob, RICO has also been used against Microsoft and Best Buy, anti-abortion protesters, and the Los Angeles Police Department. It's used -- and, some law professors say, abused -- in part because it allows plaintiffs to triple their damages.

But Bonta cited two decisions of U.S. 9th Circuit Court of Appeals in which judges dismissed RICO suits -- one against the city of Honolulu -- ruling that municipalities cannot be sued under RICO.
"Please immediately withdraw your RICO claim against defendants," Bonta wrote in his letter to Webb. "Otherwise we will have no choice but to file a motion to dismiss and seek all appropriate costs and fees in order to reimburse the taxpayers of the City and County of San Francisco for defending against a baseless claim."

Bonta cited two precedents in his letter to Webb. In the first, Lancaster Community Hospital v. Antelope Valley Hospital District (1991), judges rejected the RICO claims against a hospital district, a "government entity," because "government entities are incapable of forming a malicious intent," one of the requirements for a RICO case. According to the decision, "public policy is offended if all the citizens of a state are made liable for extraordinary damages as the result of the actions of a few dishonest officials."    

In  Pedrina v. Chun (1996), Hawaiian tenants who were evicted so that a golf course could be built on their land invoked RICO against the city of Honolulu. The plaintiffs alleged that bribery of the mayor and other city officials led to the city's approval of the golf course. Again the U.S. 9th Circuit Court of Appeals upheld a lower court's decision that "a municipality could not be held liable under RICO."

In 2006, however, the Supreme Court did let stand a ruling that allowed a plaintiff to use RICO to sue the Los Angeles Police Department for racketeering in connection with the LAPD Rampart scandal. That plaintiff eventually received part of a $2.85 million settlement.

Asked about the Supreme Court ruling, City Attorney deputy press secretary Jack Song would only comment, "We stand firmly behind our letter."

As for the other defendants, Department of Alcoholic Beverage Control spokesman John Carr wrote in an e-mail today, "While we cannot comment with any specifics in regard to the lawsuit, the public can be assured that we will continue to carry out our mission to administer the provisions of the Alcoholic Beverage Control Act in a manner that fosters and protects the health, safety, and welfare of the people of the state."

Tony Winnicker, Newsom's spokesman, did not respond to a request for comment earlier today.

The complaint filed yesterday alleges that "Mayor Gavin Newsom has participated, directly or indirectly, in the conduct of a racketeering enterprise's affairs since he has been fully apprised of the misdeeds and criminal acts, including predicate acts, described below. ...Newsom himself is an owner of one or more nightclubs in San Francisco (the Matrix), which has never been disturbed by either the San Francisco Police or the ABC, further pointing to Newsom as being directly involved in this pattern of racketeering activity."

Webb, the plaintiff's attorney, said that despite these allegations, he still hopes he and Newsom can talk things out over coffee.

Read our earlier, related post, Nightclub Sues City, Asks for $9 Million in Damages

Read the letter deputy City Attorney Robert Bonta sent to attorney Mark Webb, courtesy of the City Attorney's office:
Bonta Letter.pdf 

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