The opinion
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
GLOBAL GROWTH, LLC, GBIG )
CAPITAL, LLC, and GREG )
LINDBERG, )
)
Plaintiffs, )
)
v. ) 1:20-CV-248
)
MIKE CAUSEY, in his official and )
individual capacities, )
)
Defendant. )
MEMORANDUM OPINION AND ORDER
Catherine C. Eagles, District Judge.
The plaintiffs, Greg Lindberg, Global Growth, LLC, and GBIG Capital, LLC,
move to set aside the judgment dismissing their complaint against North Carolina
Commissioner of Insurance Mike Causey. In the alternative, the plaintiffs seek leave to
amend their complaint. Because the plaintiffs have shown neither clear error of law nor
manifest injustice in the Court’s previous judgment, and because it would be futile to
allow the proposed amendment, their motions will be denied.
Federal Rule of Civil Procedure Rule 59(e) authorizes a court, in its discretion, to
alter or amend its own judgment to correct a clear error of law or to prevent manifest
injustice. Zinkand v. Brown, 478 F.3d 634, 637 (4th Cir. 2007). In essence, the rule
“gives the district court a chance to correct its own mistake if it believes one has been
made.” Id. While motions to amend should be freely granted under Federal Rule of Civil
Procedure 15(a)(2), they need not be granted if amending the complaint would be futile.
United States ex rel. Wilson v. Kellogg Brown & Root, Inc., 525 F.3d 370, 376 (4th Cir.
2008).
1. The Court’s decision was not wrong, and the proposed amended
complaint does not cure the defects.
The plaintiffs contend that the Court’s earlier decision was wrong. But they do
not cite any new cases in support of their arguments and largely repeat arguments made
in response to the earlier motion to dismiss. The Court has already rejected those
arguments, and for the several reasons previously stated, dismissal was appropriate. See
Doc. 29.
The plaintiffs contend that the amended complaint cures the deficiencies in the
original complaint as to the various causes of action asserted, Doc. 34 at 5–6, but it
merely rewords many of the original paragraphs and adds more conclusory statements
and new rhetorical flourishes. See, e.g., Doc. 33-1 at ¶¶ 7–13, 63, 85, 89, 92–94, 99–100;
see also Doc. 33-2 (showing the redline changes between the original complaint and the
proposed amended complaint).
The core of the complaint remains unchanged and is equally implausible. As
previously noted, Doc. 29 at 6, the allegations in the complaint taken as a whole must
give rise to “more than a sheer possibility that a defendant has acted unlawfully.”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). When a complaint pleads facts that are
“merely consistent with” a defendant’s liability, it “stops short of the line between
possibility and plausibility.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 557 (2007).
Nothing in the complaint or proposed amended complaint moves the facts from possible
to plausible, and the Court’s original observation remains apt:
Here, the “nub of the complaint,” Twombly, 550 U.S. at 565, is that Mr.
Causey and the Department of Insurance investigated two LLCs and their
owner who had supported Mr. Causey’s unsuccessful opponent in the
previous election and the investigation led to the discovery of financial
information and other concerns sufficient to cause numerous other states to
take adverse action against the plaintiffs and their insurance companies,
lenders to refuse to lend to the plaintiffs, the FBI to investigate the plaintiffs
and their insurance companies for criminal conduct, and the Superior Court,
with the plaintiffs’ consent, to transfer responsibility for the plaintiffs’
insurance companies in North Carolina away from the plaintiffs’ control, not
to mention to result in a criminal conviction for Mr. Lindberg. To find the
plaintiffs’ allegations of false information, corrupt motives, and
constitutional violations plausible, one would have to be willing to believe
that insurance regulators in several other states, a number of sophisticated
national lenders, a well-respected national media outlet, the FBI, a Superior
Court judge, and a federal jury all made important decisions based on
unfounded and false information provided by Mr. Causey without
independent evaluation or verification. And one would have to believe that
an elected official would find the route of choice to dispose of a financial
supporter of a political rival to be the making of false claims to the FBI,
providing perjured testimony to a federal jury, and facing official and public
scrutiny for possible involvement in a bribery scheme.
Perhaps this is theoretically possible. But on the facts alleged, it is more
likely that Mr. Causey and the Department investigated legitimate concerns
about the financial state of the plaintiffs and their North Carolina insurance
companies, concerns shared by private lenders and other state regulatory
authorities, and that Mr. Causey had a reasonable basis to believe Mr.
Lindberg was attempting to bribe him, as investigated by the FBI and as
found by a jury beyond a reasonable doubt. It is more likely that this lawsuit
is a back-handed effort to avoid the results of decisions which led to
unwanted regulatory oversight, to avoid compliance with a state court order
to which the plaintiffs earlier consented and now want to disclaim, and to
undermine a jury verdict rendered in a criminal trial.
The plaintiffs cite no case holding that an elected official with regulatory
enforcement responsibilities is constitutionally precluded from investigating
and regulating companies within his jurisdiction merely because those
companies or their owners made financial donations to the campaign of a
rival. And the facts alleged in the complaint make it clear that there were
legitimate and rational reasons for regulatory activity. The well-pleaded
facts do not permit the court to infer more than “the mere possibility of
misconduct.” Dismissal is therefore appropriate. Iqbal, 556 U.S. at 679.
Doc. 29 at 6–8
2. The Court’s explanation was adequate.
The plaintiffs also complain that the Court did not “squarely address” every
factual allegation asserted in their complaint and every legal argument raised in their
briefs, especially as to the First Amendment claim. Doc. 32 at 7, 9; Doc. 37 at 2, 5. The
fact that a court does not address in detail every argument made in a brief or discuss
every contention and alleged fact in a complaint does not mean that the court did not
fairly consider a party’s positions. Indeed, the Rules of Civil Procedure are clear that
courts are not required to state any findings or conclusions at all when ruling on a Rule
12 motion to dismiss. Fed. R. Civ. P. 52(a)(3).
When a matter is complicated or raises multiple issues, it no doubt facilitates
appellate review to be clear about the basis for a decision. See Danley v. Allen, 480 F.3d
1090, 1091 (11th Cir. 2007). And in some cases, when time permits, a detailed
explanation for a ruling provides information from which the parties and the public can
evaluate the decision, which increases public trust in both the competence and the
impartiality of the courts.
But lengthy expositions are not needed in every case. For example, appellate
courts do not need the help of district courts to evaluate whether a complaint states a
plausible claim for relief; such evaluation is a legal question reviewed de novo. In many
other cases, a review of the briefing together with a short explanation usually makes it
clear why a particular decision was reached, and not every case is of significant public or
legal interest. Here, the Court’s earlier order granting the motion to dismiss went well
beyond the minimum and addressed in substance the dispositive points raised by the
briefs.
3. The First Amendment retaliation claim fails to state a claim.
To the extent the plaintiffs found the basis of the Court’s decision on the First
Amendment retaliation claim to be unclear, the following makes it explicit: It is
appropriate to dismiss a complaint based on qualified immunity and failure to state a
claim at the Rule 12(b)(6) stage when the facts alleged do not plausibly assert
constitutional misconduct. See Iqbal, 556 U.S. at 666.
To plead a First Amendment § 1983 retaliation claim, the plaintiffs must allege
facts that show or give rise to plausible inferences that (1) they engaged in
constitutionally protected speech; (2) the plaintiffs’ speech caused the defendant to take
retaliatory action against the plaintiffs, and; (3) the alleged retaliatory conduct adversely
affected the plaintiffs’ constitutionally protected speech. See Suarez Corp. Indus. v.
McGraw, 202 F.3d 676, 686 (4th Cir. 2000); see also Blankenship v. Manchin, 471 F.3d
523, 528 (4th Cir. 2006). The plaintiffs allege that they supported Mr. Causey’s political
opponent in an election and accurately state that they have a First Amendment right to
contribute to candidates for elected office, McCutcheon v. Fed. Election Comm’n, 572
U.S. 185, 191 (2014), so as to this element, the complaint is plausible. As to the other
two elements, which overlap to a fair degree, the original complaint and the proposed
amended complaint contain only conclusory assertions without facts showing or tending
to show retaliatory conduct adversely affecting the plaintiffs’ exercise of their First
Amendment rights.
For example, the plaintiffs in their brief point to Mr. Causey’s “decision to alter
the conclusions in a [third-party consultant’s] report that served as the predicate for
adverse action later.” Doc. 32 at 8. But the paragraph in the complaint cited by the
plaintiffs to support this proposition states only, in conclusory terms, that a “member of
Causey’s team” directed a third-party to include findings that “lacked any legal or factual
support.” Doc. 1 at ¶ 85. The proposed amended complaint is just as conclusory,
changing the analogous paragraph to refer to “Causey’s administration” instead of
“Causey’s team,” with no other meaningful changes. Doc. 33-1 at ¶ 85. Neither version
of the complaint alleges anywhere else that Mr. Causey altered a third-party report, much
less other facts to support a plausible inference that he did so as a predicate to adverse
action or with the intention of chilling or restricting the plaintiffs’ speech rights. Neither
complaint alleges facts to support the assertion of a causal connection between the
plaintiffs’ support of Mr. Causey’s political rival and this alleged alteration.
The plaintiffs also contend that Mr. Causey retaliated against their protected
speech by making numerous allegedly false statements to other regulators, law
enforcement, and federal authorities. See, e.g., Doc. 1 at ¶¶ 11, 76. In particular, the
plaintiffs allege that Mr. Causey said (1) the plaintiffs were not “honest operators” in the
insurance industry; (2) the plaintiffs’ companies were “undercapitalized;” (3) their assets
were “worthless;” (4) the plaintiffs siphoned money from the insurance holdings to fund
acquisitions and affiliates to the detriment of policyholders; (5) the plaintiffs overstated
the value of their assets, and; (6) “falsely told federal authorities that he was offered and
had received a campaign contribution of $110,000” from some of the plaintiffs. Id. The
plaintiffs assert that these statements caused the other regulators and authorities to take
actions that adversely affected the plaintiffs. Doc. 32 at 9.
Because these alleged retaliatory acts each involve Mr. Causey’s speech, they
implicate Mr. Causey’s own First Amendment rights, as well as his duty to keep the
public and other law enforcement officials informed about potential fraud and ongoing
investigations and prosecutions. See McGraw, 202 F.3d at 688–89. In this situation,
“where a public official’s alleged retaliation is in the nature of speech, in the absence of a
threat, coercion, or intimidation intimating that punishment, sanction, or adverse
regulatory action will imminently follow, such speech does not adversely affect a
person’s First Amendment rights, even if defamatory.” McGraw, 202 F.3d at 687.
The plaintiffs make no allegation that Mr. Causey explicitly threatened to take
adverse regulatory action against the plaintiffs on account of their political speech, as was
the case in Blankenship v. Manchin, 471 F.3d 523, 530 (4th Cir. 2006), nor do they point
to any facts from which such threats could be inferred. Rather, Mr. Causey’s alleged
statements are more like the statements at issue in McGraw. There, two public officials
made statements to the media that, among other things, the plaintiffs “prey[ed] on the
elderly, infirmed and incapacitated,” had representatives with “a documented proclivity
to violence,” and “link[s] to organized crime.” McGraw, 202 F.3d at 682–83. The
Fourth Circuit held that these statements did not constitute actionable retaliation because
the plaintiffs failed to show that the statements could “reasonably be interpreted as
intimating that [the defendants] would punish, sanction, or take an adverse action against
[the plaintiffs].” Id. at 689. Moreover, the Fourth Circuit noted that none of the
statements “even implied that [the defendants] would utilize their governmental power to
silence [the plaintiffs],” or “encourage any action that caused adversity” to the plaintiffs.
Id. The same is true here.
None of Mr. Causey’s alleged defamatory statements imply he will punish,
sanction, or take adverse action against the plaintiffs because of their support for Mr.
Causey’s political rival. Like the statements in McGraw, Mr. Causey’s alleged
statements show only concern about the plaintiffs’ illegal or dishonest business practices.
These are valid concerns for an insurance regulator to have, and the plaintiffs have not
shown how such statements could be interpreted as a threat intended to silence their
protected speech.1 The proposed amended complaint does not include any additional
statements from Mr. Causey, nor additional facts to make the plaintiffs’ allegations more
plausible. See, e.g., Doc. 33-2 at ¶¶ 11, 76.
The plaintiffs assert that it is appropriate to infer from these allegedly false and
defamatory remarks that Mr. Causey had a general retaliatory intent in taking regulatory
action against the plaintiffs. McGraw does not support this argument, as noted supra.
But even if one could infer that Mr. Causey wanted to put the plaintiffs out of business,
nothing in those remarks, as alleged, provides even an inkling that his motive was
1 The plaintiffs acknowledge that Mr. Causey’s “communications with other regulators may
not, by themselves, create a plausible claim for relief.” Doc. 32 at 9.
retribution for their earlier support of Mr. Causey’s campaign opponent or that he spoke
with an intent to injure the plaintiffs’ exercise of their constitutional speech rights—both
of which are required for this cause of action.
The complaint includes many other repeated conclusory allegations that Mr.
Causey retaliated against the plaintiffs for their past support of his political opponent.
See, e.g., Doc. 1 at Jf] 1, 7-13, 63, 65-67, 71-72, 74, 84-85, 89, 92-94, 99-100, 104,
106, 109, 111, 116. But as with the alleged retaliatory acts already discussed, these
assertions are unaccompanied by specific facts indicating that Mr. Causey had a
retaliatory motive to chill or restrict the plaintiffs’ First Amendment speech. The fact
that the plaintiffs supported Mr. Causey’s political opponent in an election does not, by
itself, create a plausible inference of retaliatory intent nor intimate a threat of regulatory
action should that protected speech continue.
Conclusion
There is no clear error of law nor manifest injustice in the Court’s earlier order,
and the Rule 59(e) motion will be denied. Because the proposed amended complaint
does not make the plaintiffs’ claims any more plausible, allowing the amendment would
be futile. The motion to amend the complaint will be denied.
It is ORDERED that the plaintiffs’ motion for relief, Doc. 31, is DENIED and the
plaintiffs’ motion to amend the complaint, Doc. 33, is DENIED.
This the 12th day of January, 2021.
UNITED STATES DIS a JUDGE