Southeastern Public Safety Group Inc. v. Munn

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF NORTH CAROLINA

CHARLOTTE DIVISION

NO. 3:20-CV-00203-FDW-DCK

SOUTHEASTERN PUBLIC SAFETY

GROUP INC.,

Plaintiff,

v. ORDER

RANDY MUNN

NORTH CAROLINA CRIMINAL

JUSTICE EDUCATION AND

TRANING STANDARDS

COMMISSION

ADAM TRANUM

RICHARD SQUIRES

CAPITAL SPECIAL POLICE, LLC

CHRISTY THAXTON,

Defendants.

THIS MATTER is before the Court on Defendants’ Motions to Dismiss. Defendant Christy

Thaxton (“Defendant Thaxton”) filed a Motion to Dismiss pursuant to Fed. R. Civ. P. 12(b)(1) and

(b)(6). (Doc. No. 24). Defendants Adam Tranum (“Defendant Tranum”) and Capitol Special

Police, LLC (“Defendant CSP”) filed a Motion to Dismiss pursuant to Fed. R. Civ. P. 12(b)(6).

(Doc. No. 25). Defendants Randy Munn (“Defendant Munn”), Richard Squires (“Defendant

Squires”), and North Carolina Criminal Justice Education and Training Standards Commission

(“Defendant Commission”) filed three separate Motions to Dismiss pursuant to Fed. R. Civ. P.

12(b)(6); however, the Motions are identical and will be treated as one for purposes of this Order.

(Doc. Nos. 35, 36, 37). All Motions have been fully briefed and are ripe for review. For the reasons

stated herein, each Motion to Dismiss is GRANTED.

I. BACKGROUND1

This lawsuit arises out of Plaintiff’s contractual agreement to provide subcontracted,

private law enforcement services for North Carolina Department of Transportation’s (“NCDOT”)

construction project on Interstate-77 (“I-77”) in the Charlotte, North Carolina area. (Doc. No. 7).

Plaintiff is a North Carolina corporation certified to provide private law enforcement

services in North Carolina, “including on NCDOT construction zones.” Id. at p. 4. According to

the Amended Complaint, Plaintiff is the “only [United States Department of Transportation]

Disadvantaged Business Enterprise (“DBE”) in North Carolina authorized to provide police

protection for federally funded NCDOT projects.” Id. at p. 10.

In mid-2016, Plaintiff subcontracted with Sugar Creek Construction, LLC (“SCC”) to

provide contract law enforcement services for SCC while SCC completed construction work on

the I-77 project.2 Id. at p. 11. Specifically, the subcontract agreement required Plaintiff to provide

North Carolina-certified law enforcement officers for traffic management in active construction

zones. Id. at pp. 11-12. Plaintiff alleges its officers “performed [their] law enforcement services to

the satisfaction of SCC and the NCDOT, without incident, for nine months.” Id. at p. 14.

Plaintiff alleges that, on March 27, 2017, Defendant Adam Tranum (“Defendant Tranum”),

Operations Manager of Capitol Special Police, LLC (“CSP”), “was driving on I-77” looking for

“law enforcement and security contracts upon which to bid for,” when Defendant Tranum noticed

Plaintiff’s patrol vehicle “operating in a construction lane with red and blue lights flashing.” Id. at

pp. 14-15. Defendant Tranum allegedly believed the operation of Plaintiff’s patrol vehicle in a

construction lane was a violation of N.C. GEN. STAT. § 74E, which governs company police

1 The background described herein is derived from the Amended Complaint, (Doc. No. 7), and all allegations are

taken as true for purposes of this Order.

2 Sugar Creek Construction is not a party to this lawsuit.

agencies.3 (Doc. No. 7, p. 15). Plaintiff alleges that, because Defendant Tranum works for a direct

competitor of Plaintiff, CSP, Defendant Tranum emailed Defendant Randy Munn (“Defendant

Munn”), the Company Police Administrator for the North Carolina Department of Justice

(“NCDOJ”), to inform him of Plaintiff’s alleged violation of § 74E. (Doc. No. 7, p. 15).

In his role as Company Police Administrator, Defendant Munn was allegedly responsible

for investigating all possible violations of § 74E. (Doc. No. 7, p. 15). Defendant Munn allegedly

commenced an investigation into Plaintiff on March 29, 2017, two days after receiving the email

from Defendant Tranum. Id. During the course of his investigation, Defendant Munn allegedly

contacted SCC and informed SCC that Plaintiff “could not continue to provide law enforcement

services to SCC.” Id. Plaintiff also alleges Defendant Munn told Plaintiff to “stop operations [at

the I-77 construction zone] immediately or face suspension of its certification or ‘other legal

action.’” Id. at p. 16. Defendant Munn was informed that Plaintiff ceased operations on the I-77

project on March 30, 2017. Id.

Although the exact timeline is unclear from the Amended Complaint, around March 30,

2017, Defendant Munn forwarded a copy of Plaintiff’s subcontracting agreement with SCC to his

boss, Defendant Richard Squires (“Defendant Squires”), the Deputy Director of Recertifications

for the Criminal Justice Standards Division at NCDOJ.4 (Doc. No. 7, pp. 16-17). Plaintiff alleges

the electronic forwarding of its contract with SCC was a violation of N.C. GEN. STAT. § 74E-5 and

3 Elsewhere in the Amended Complaint, Plaintiff cites to 12 N.C. ADMIN. CODE 2I.0304(4)(a), which prohibits

company police officers from “activating or operating a blue light in or on any vehicle in this State except when

operating a motor vehicle used primarily by company . . . police in the performance of his official duties . . . when in

property jurisdiction limitations specifically described under G.S. 74E-6.”

4 Plaintiff states Defendant Squires is an “agent to the Commission.” (Doc. No. 7, p. 17). This characterization

differs from the caption of the Amendment Complaint, which indicates that Defendant Squires is Deputy Director of

Recertifications for North Carolina Criminal Justice Training Division. (Doc. No. 7, p. 1). The Amended Complaint

does not clearly reconcile this inconsistency.

N.C. GEN. STAT. § 132-1.2(1) because neither of the statutes authorize the disclosure of “company

police agency contracts with third parties.” (Doc. No. 7, p. 17).

Sometime after forwarding a copy of Plaintiff’s contract with SCC to Defendant Squires,

Defendant Munn allegedly stated in a March 31, 2017 email to Plaintiff’s CEO, Chief Williams,

that Plaintiff’s contract with SCC was a “clear violation of the Company Police Act.” Id.; see also

(Doc. No. 7-6). Plaintiff alleges it informed Defendant Munn that it ceased all work on I-77 as of

“March 30, 2017.” (Doc. No. 7, p. 16). Plaintiff alleges Defendant Munn then contacted SCC,

without any authority to do so, and informed SCC that “Plaintiff was prohibited from impeding

traffic or engaging their blue lights while on I77 [sic].” (Doc. No. 7, p. 17).

Around the same time, Defendant Munn further informed Chief Williams that Plaintiff’s

“law enforcement officers were restricted to working ‘behind the barriers’ and . . . could not work

in any lanes of travel.” Id. at p. 19. Plaintiff alleges Defendant Munn’s “own pecuniary interests

in off-duty employment” drove him to interfere with Plaintiff’s contract with SCC. Id. at p. 18.

Shortly thereafter, SCC allegedly “resume[d] their ‘secondary employment agreements’ with

municipal and county law enforcement agencies” instead of continuing to work with Plaintiff. Id.

Beginning in May 2017, Defendant Munn, Plaintiff, and Assistant Attorney General

Whitney Belich allegedly engaged in email conversations discussing the ownership of the relevant

portions of I-77, as the ownership of I-77 would dictate whether Plaintiff was authorized to operate

its blue lights under N.C. GEN. STAT. § 74-E6(2) and 12 N.C. ADMIN. CODE 2I.0304(4)(a).5 (Doc.

No. 7, pp. 20-24). At some point during the email exchanges, Assistant Attorney General Belich

5 N.C. GEN. STAT. § 74-E6(2) gives company police officers the same powers as municipal and county officers to

make arrests when the arrests are made on “[r]eal property owned by or in the possession and control of a person

who has contracted with the employer to provide on-site company police security personnel services for the

property.” 12 N.C. ADMIN. CODE 2I.0304(4)(a) prohibits company police officers from operating or activating their

blue lights except when operating their vehicle within jurisdictional limits described under § 74-E6.

allegedly expressed the opinion that SCC did not have any possessory interest in I-77 and Plaintiff

would accordingly be prohibited from engaging in traffic control pursuant to the Company Police

Act. Id. at p. 20.

Plaintiff alleges Defendant Munn, in at least one of his emails to Plaintiff, deliberately

deleted disclaimer text informing Plaintiff that the contents of the email were neither legal advice

nor the official position of the NCDOJ. (Doc. No. 7, p. 24). The alleged deletion “gave Plaintiff

the false impression that [Assistant Attorney General Belich] had provided an official opinion of

the NCDOJ.” (Doc. No. 7, p. 24). Plaintiff alleges it believed it could no longer perform work for

SCC as a result of the omitted disclaimer. Id.

However, in July of 2017, Assistant Attorney General Belich allegedly reversed course and

communicated to Defendant Munn that Plaintiff could provide law enforcement services on I-77

as part of its agreement with SCC. Id. Plaintiff alleges Defendant Munn did not communicate this

information to Plaintiff and only communicated it to Defendant Squires. Id. Plaintiff alleges it only

found out about Assistant Attorney General Belich’s opinion when it submitted a public records

request in December 2020. Id. Plaintiff contends Defendant Munn intentionally concealed Belich’s

opinion “to continue to interfere with” Plaintiff and SCC’s contract between July 17, 2017 and

December 23, 2020. Id. Plaintiff maintains that, as a result of Defendant Munn’s concealment, it

contacted Shelby Scales (“Scales”), Director of NCDOT’s Civil Rights Division for assistance and

clarification.6 Id. at p. 25.

Scales allegedly assigned Plaintiff’s case to Defendant Christy Thaxton (“Defendant

Thaxton”), the Business Opportunity and Workforce Development Manager for the NCDOT Civil

Rights Division. Id. at pp. 5, 26. Defendant Thaxton allegedly discussed Plaintiff’s SCC contract

6 Shelby Scales is not a party to this lawsuit.

with Defendants Munn, Squires “and others” on June 11, 2018, and on June 29, 2018, Defendant

Thaxton informed Plaintiff that Plaintiff could not perform contract law enforcement services for

SCC on I-77. Plaintiff alleges it believed Defendant Thaxton’s statement was the official opinion

of the NCDOT and further contends her statement “rendered null Plaintiff’s designation as a DBE,

in that Plaintiff, as a direct result of the statements of Thaxton, Squires, and Munn, believed it was

not legally permitted to bid on contracts to provide police protection in NCDOT Work Zones.” Id.

Ultimately, Plaintiff contends Defendant Munn’s “influence” has extended to other

agencies, all of which have all worked in concert to interfere with “Plaintiff’s ability to compete

in the contract law enforcement services market.” Id. at p. 27. Plaintiff alleges Defendant Munn

has incorrectly advised other third parties about the laws governing company police agencies under

N.C. GEN. STAT. § 74E. Id. at p. 28. According to Plaintiff, all named Defendants have “failed to

correct the harm caused to Plaintiff, despite their knowledge and involvement thereof for more

than three years.” Id. at p. 29.

As recourse for its alleged inability to compete in the marketplace, Plaintiff has asserted

the following causes of action: (1) 42 U.S.C. § 1983 violation of Plaintiff’s right to equal protection

against all Defendants; (2) 42 U.S.C. § 1983 violation of Plaintiff’s right to procedural due process

against all Defendants; (3) civil conspiracy under state law and 42 U.S.C. § 1985 against all

Defendants; (4) abuse of process against Defendants Tranum and CSP; (5) tortious interference

with contract against Defendants Munn, Squires, Thaxton, and Commission; (6) fraud against

Defendant Munn; (7) unfair and deceptive trade practices against all Defendants; (8) alternative

claims under the North Carolina Constitution against all Defendants. (Doc. No. 7).

Defendants have all filed Motions to Dismiss pursuant to Fed. R. Civ. P. 12(b)(1) and/or

(b)(6), (Doc. Nos. 24, 25, 35, 36, 37), and all are ripe for review. The Court will address each

Motion separately, below.

II. STANDARD OF REVIEW

a. Fed. R. Civ. P. 12(b)(1)

Lack of subject matter jurisdiction may be raised at any time either by a litigant or the

court. Mansfield, C. & L.M. Ry. Co. v. Swan, 111 U.S. 379, 382 (1884). The ability of the court

to independently address subject matter jurisdiction is important to finality inasmuch as a litigant,

even one who remains silent on the issue of jurisdiction, may wait until they receive an adverse

judgment from a district court and raise the issue of subject matter jurisdiction for the first time on

appeal, thereby voiding the judgment. Capron v. Van Noorden, 2 Cranch 126, 127, 2 L.Ed. 229

(1804). The Federal Rules of Civil Procedure anticipate this issue and provide that “[i]f the court

determines at any time that it lacks subject-matter jurisdiction, the court must dismiss the action.”

Fed. R. Civ. P. 12(h)(3) (emphasis added).

When a court considers its subject matter jurisdiction, the burden of proof is on the plaintiff.

Adams v. Bain, 697 F.2d 1213, 1219 (4th Cir. 1982). In Richmond, Fredericksburg & Potomac

R.R. Co. v. United States, 945 F.2d 765 (4th Cir. 1991), the Court of Appeals for the Fourth Circuit

held as follows:

In determining whether jurisdiction exists, the district court is to regard the

pleadings' allegations as mere evidence on the issue, and may consider evidence

outside the pleadings without converting the proceeding to one for summary

judgment. The district court should apply the standard applicable to a motion for

summary judgment, under which the nonmoving party must set forth specific facts

beyond the pleadings to show that a genuine issue of material fact exists. The

moving party should prevail only if the material jurisdictional facts are not in

dispute and the moving party is entitled to prevail as a matter of law. A district

court order dismissing a case on the grounds that the undisputed facts establish a

lack of subject matter jurisdiction is a legal determination subject to de novo

appellate review.

Id. at 768-69 (citations omitted).

b. Fed. R. Civ. P. 12(b)(6)

Federal Rule of Civil Procedure 12(b)(6) provides for dismissal when the pleading party

fails to “state a claim upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6). A motion to

dismiss pursuant to Fed. R. Civ. P. 12(b)(6) tests the legal “sufficiency of a complaint” but “does

not resolve contests surrounding the facts, the merits of a claim, or the applicability of

defenses.” Republican Party of N.C. v. Martin, 980 F.2d 943, 952 (4th Cir. 1992); accord E. Shore

Mkts, Inc. v. J.D. Assocs. Ltd. P’ship, 213 F.3d 175, 180 (4th Cir. 2000). A complaint attacked by

a Rule 12(b)(6) motion to dismiss will survive if it contains “enough facts to state a claim to relief

that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 697 (2009) (quoting Bell Atlantic

Corp. v. Twombly, 550 U.S. 544, 570 (2007)); see also Robinson v. American Honda Motor Co.,

Inc., 551 F.3d 218, 222 (4th Cir. 2009). “A claim has facial plausibility when the plaintiff pleads

factual content that allows the court to draw the reasonable inference that the defendant is liable

for the misconduct alleged.” Iqbal, 556 U.S. at 678. “Threadbare recitals of the elements of a cause

of action, supported by mere conclusory statements, do not suffice.” Id. The Supreme Court has

said:

Federal Rule of Civil Procedure 8(a)(2) requires only “a short and plain

statement of the claim showing that the pleader is entitled to relief.” Specific

facts are not necessary; the statement need only “give the defendant fair

notice of what the . . . claim is and the grounds upon which it rests.” In

addition, when ruling on a defendant’s motion to dismiss, a judge must

accept as true all of the factual allegations contained in the complaint.

Erickson v. Pardus, 551 U.S. 89, 93-94 (2007) (alteration in original) (internal citations omitted)

(quoting Twombly, 550 U.S. at 555-56).

III. DEFENDANT THAXTON’S MOTION TO DISMISS

In its Amended Complaint, Plaintiff asserts three causes of action specifically against

Defendant Thaxton and three causes of action generally against “Defendants.” (Doc. No. 1, pp.

29-35). For purposes of ruling on Defendant Thaxton’s Motion to Dismiss, the Court takes the

allegations contained in Plaintiff’s Amended Complaint as true and assumes the following causes

of action are asserted against Defendant Thaxton: (1) deprivation of equal protection and

procedural due process rights under 42 U.S.C. § 1983; (2) civil conspiracy under state law and 42

U.S.C. § 1985; (3) tortious interference with contract; (4) unfair and deceptive trade practices; and

(5) state constitutional violations. (Doc. No. 1, pp. 29-35). Defendant Thaxton moves to dismiss

all claims against her pursuant to Fed. R. Civ. P. 12(b)(1), arguing they are barred by some form

of governmental immunity, and/or pursuant to Fed. R. Civ. P. 12(b)(6) because all claims fail to

plausibly allege Plaintiff is entitled to relief. (Doc. No. 24).

a. Individual Capacity Claims

At the outset, the Court first determines whether Defendant Thaxton is sued in her

individual and/or in her official capacity. Plaintiff sues Defendant Thaxton in both her individual

capacity as well in her official capacity, (Doc. No. 7), but Defendant Thaxton maintains she is only

sued in her official capacity because the allegations against her “all concern acts and omissions

that occurred only within the scope of her position as manager of NCDOT’s Business Opportunity

and Workplace Development unit.” (Doc. No. 24-2, p. 8).

For its part, Plaintiff does not dispute Defendant Thaxton’s contention, but rather argues

Defendant Thaxton is a public employee who is not protected by any form of governmental

immunity. See (Doc. No. 27, p. 13). However, because Plaintiff provides no argument and instead

offers only legal conclusions, the Court assumes Defendant Thaxton is a public official, not a mere

public employee, who exercises discretion in her statutorily-delegated responsibility to provide

supportive services to DBEs in North Carolina.7 See N.C GEN. STAT. § 136-28.4.

Turning now to Defendant Thaxton’s unopposed argument that she is sued in only her

official capacity, the Court agrees. Courts are cautioned against allowing actions “to proceed

simply because the complaint names a state official in his or her individual capacity [because to

do so] ‘would be to adhere to an empty formalism and to undermine the principle . . . that Eleventh

Amendment immunity represents.’” Martin v. Wood, 772 F.3d 192, 195 (4th Cir. 2014) (quoting

Idaho v. Coeur d’Alene Tribe of Idaho, 521 U.S. 261, 270 (1997)). When evaluating whether a

suit against a State official in her individual capacity is effectively a claim against the State itself,

courts must “examine the substance of the claims stated in the complaint.” Martin, 772 F.3d at 196

(emphasis in original). The substance of the allegations in a complaint can be evaluated by

questions such as:

(1) were the allegedly unlawful actions of the state officials tied inextricably to their

official duties; (2) if the state officials had authorized the desired relief at the outset,

would the burden have been borne by the State; (3) would a judgment against the

state officials . . . operate against the State; (4) were the actions of the state officials

taken to further personal interests distinct from the State’s interest; and (5) were the

state officials’ actions ultra vires.

Id. at 195 (internal citations and quotations omitted).

7 Plaintiff cites to Farrell, ex rel. Farrell v. Transylvania Cnty. Bd. of Educ., 682 S.E.2d 224 (N.C. Ct. App. 2009) to

support its argument Defendant Thaxton is a public employee. Farrell describes three characteristics that distinguish

a public official from a public employee: “(1) a public office is a position created by the constitution or statutes; (2)

a public official exercises a portion of the sovereign power; and (3) a public official exercises discretion, while

public employees perform ministerial duties.” 682 S.E.2d at 228. Here, North Carolina imposes a statutory duty on

the NCDOT to “encourage and promote participation by” DBEs in NCDOT projects. N.C. GEN. STAT. § 136-28.4.

As manager of the Business Opportunity and Workplace Development unit, Defendant Thaxton has managerial

responsibility for providing supportive services to DBEs, which include services to encourage and promote the

participation of DBEs. See NCDOT, Business Opportunity and Workforce Development,

https://www.ncdot.gov/about-us/board-offices/offices/civil-rights/Pages/business-opportunity-workforce-

development.aspx (last visited Aug. 4, 2021).

Here, the substance of the allegations contained in the Amended Complaint against

Defendant Thaxton clearly indicate the action is effectively an action against the State itself.

Defendant Thaxton’s involvement in the matter occurred only because Defendant Thaxton was

assigned to provide support services to Plaintiff as a DBE as part of Defendant Thaxton’s official

job responsibilities. (Doc. No. 7, p. 26). All of Defendant Thaxton’s alleged communications with

Plaintiff and/or other Defendants occurred as a result of Defendant Thaxton’s responsibility to help

Plaintiff navigate the marketplace as a DBE. Id. Moreover, Defendant Thaxton’s allegedly

wrongful acts—misstating the law to Plaintiff and removing Plaintiff from an NCDOT database—

were prompted by Defendant Thaxton’s understanding of the law as dictated by the NCDOJ. Id. It

is clear from the face of the Amended Complaint that Defendant Thaxton’s actions were taken to

further the State’s interest, not Defendant Thaxton’s interests. To be sure, the Amended Complaint

states Defendant Thaxton acted “outside the scope of [her] official duties,” (Doc. No. 7, p. 29);

however, a cursory legal conclusion is not sufficient to overcome the true substance of the claims

against Defendant Thaxton—that Defendant Thaxton violated the law while carrying out her

official duties. The Court accordingly finds Defendant Thaxton has been sued only in her official

capacity and turns now to Defendant Thaxton’s Eleventh Amendment argument.

b. Eleventh Amendment and Sovereign Immunity

The Eleventh Amendment generally prevents unconsenting States from being sued in

federal or state court. Alden v. Maine, 527 U.S. 706, 729 (1999). Although the language of the

Eleventh Amendment appears to apply to a narrow range of circumstances, “the Constitution bars

suits against nonconsenting States in a wide range of cases.” Franchise Tax Bd. of Ca. v. Hyatt,

139 S. Ct. 1485, 1496 (2019). Such cases include those brought pursuant to 42 U.S.C. § 1983 and

§ 1985. Quern v. Jordan, 440 U.S. 332, 343-45 (1979); see also Cribb v. Pelham, 552 F. Supp.

1217, 1220 (D.S.C. 1982) (“[T]he State . . . is [not] subject to suit under 42 U.S.C. § 1983 or

1985.”). Notably, “a suit against a state official in his or her official capacity is not a suit against

the official but rather is a suit against the official’s office,” which is “no different from a suit

against the State itself.” Will v. Mich. Dept. of State Police, 41 U.S. 58, 71 (1989).

Here, all claims asserted against Defendant Thaxton in her official capacity as an official

within the North Carolina Department of Transportation (“NCDOT”) are claims against the State

of North Carolina. Thus, all claims are barred by the Eleventh Amendment against Defendant

Thaxton in her official capacity unless (1) North Carolina has waived its sovereign immunity for

the relevant causes of action; (2) Congress has abrogated North Carolina’s immunity for the

relevant causes of action; or (3), Plaintiff is seeking prospective relief against Defendant Thaxton,

and Defendant Thaxton has a “special relation” to the challenged action. None of the exceptions

to Eleventh Amendment immunity are present here.

First, as to waiver, Plaintiff argues it has “alleged that Thaxton and the NCDOT waived all

types of immunity.” (Doc. No. 27, p. 5). Plaintiff has indeed alleged waiver in its Amended

Complaint:

the NCDOJ and NCDOT have waived any governmental immunity they could have

raised to the allegations in the Complaint through the purchase of liability insurance

that was in effect at all relevant times or, in the alternative, the NCDOJ and NCDOT

have reserved insurance funds to cover the relevant and alleged tortious acts

committed by their agents and/or employees.8

(Doc. No. 7, pp. 5-6). Notwithstanding that this allegation is a legal conclusion, which this Court

is free to disregard when evaluating the sufficiency of a complaint, none of Plaintiff’s factual

8 Plaintiff appears to be confusing municipal immunity with State immunity. The State of North Carolina provides

that municipalities within the State may waive immunity in certain circumstances by purchasing liability insurance.

N.C. GEN. STAT. § 160A-485. Municipalities are meaningfully different from States; notably and relevant to this

Order, States are protected by the Eleventh Amendment and municipalities are not. The Court also notes that

NCDOJ is not a named party to this lawsuit notwithstanding Plaintiff’s allegations concerning NCDOJ.

allegations or argument as to waiver are sufficient to overcome the sovereign immunity afforded

to Defendant Thaxton, and North Carolina, under the Eleventh Amendment.

States may waive their Eleventh Amendment immunity “if the State voluntarily invokes

[federal] jurisdiction, or else if the State makes a clear declaration that it intends to submit itself to

[federal] jurisdiction.” Coll. Sav. Bank v. Fla. Prepaid Postsecondary Educ. Expense Bd., 527 U.S.

666, 675-76 (1999) (quotations and citations omitted). The Fourth Circuit has explained:

[W]e have recognized two ways in which a State may waive its Eleventh

Amendment immunity: (1) expressly in a state statute or constitutional provision,

“as long as the provision explicitly specifies the state’s intention to subject itself to

suit in federal court,” or (2) implicitly “by voluntarily participating in federal

spending programs when Congress expresses a clear intent to condition

participation in the programs . . . on a State’s consent to waive its constitutional

immunity.”

Constantine v. Rectors and Visitors of George Mason Univ., 411 F.3d 474, 491 (4th Cir. 2005)

(alteration in original) (quoting Litman v. George Mason Univ., 186 F.3d 544, 550 (4th Cir. 1999)).

As to express waiver, North Carolina has neither waived its immunity to suit under § 1983, Mary’s

House, Inc. v. N.C., 976 F. Supp. 2d 691, 697 (M.D.N.C. 2013), nor waived its immunity to suits

brought for intentional torts. See Guthrie v. N.C. State Ports Auth., 299 S.E.2d 618, 625 (N.C.

1983) (explaining that North Carolina has waived its immunity for negligent torts only); see also

Jolly v. Univ. of N.C. at Wilmington, No. 7:09-CV-136-BO, 2010 WL 2024094, at *2 (E.D.N.C.

May 19, 2010).

Here, Plaintiff’s claims are brought pursuant to § 1983, § 1985, or North Carolina state

law. Plaintiff has not pointed to any state law or state constitutional provision indicating North

Carolina’s express intention to subject itself to suit in federal court under any of the causes of

action asserted. And, to the extent Plaintiff argues North Carolina’s acceptance of federal funds

from the Federal Highway Administration’s (“FHA”) DBE program constitutes waiver, Plaintiff’s

argument fails. Plaintiff has failed to point to any “express and unequivocal” language stated in

any text of any statute indicating Congress’ intent to condition the receipt of FHA funds on waiving

sovereign immunity. Accordingly, Plaintiff has not sufficiently alleged any facts that would allow

this Court to conclude North Carolina has waived its immunity to suit for any of the causes of

action Plaintiff asserts.

Second, Plaintiff argues Congress has abrogated immunity for “States receiving federal

funds who violate the provisions of any anti-discrimination statute.” (Doc. No. 27, p. 6) (emphasis

added). Setting aside Plaintiff’s failure to cite to any federal anti-discrimination statute as a

possible source of abrogation in its Complaint or Response other than 49 C.F.R. § 26.5, Plaintiff’s

argument is incorrect.9

Congress may abrogate immunity when legislating pursuant to Section 5 of the Fourteenth

Amendment in part because § 5 “expressly granted [Congress the] authority to enforce . . . the

substantive provisions of the Fourteenth Amendment, which themselves embody significant

limitations on state authority.” Fitzpatrick v. Bitzer, 427 U.S. 445, 454-55 (1976). However, there

is no similar express grant of authority found in 42 U.S.C. §§ 1983 and 1985. Quern, 440 U.S. at

345 (“[Section] 1983 does not explicitly and by clear language indicate on its face an intent to

sweep away the immunity of the states; nor does it have a history . . . which shows that Congress

considered and firmly decided to abrogate the Eleventh Amendment immunity of the States.”); see

also Cribb v. Pelham, 552 F. Supp. 1217, 1220 (D.S.C. 1982) (“[T]he State . . . is [not] subject to

suit under 42 U.S.C. § 1983 or 1985.”).

9 The Court is not convinced that 49 C.F.R. Part 26 is properly classified as an anti-discrimination statute as it

governs the participation of Disadvantaged Business Enterprises in U.S. DOT financial assistance programs. See 49

C.F.R. Part 26.

Here, Plaintiff asserts only two causes of action pursuant to federal law: 42 U.S.C. § 1983

and § 1985, see (Doc. No. 7), and neither federal statute abrogates North Carolina’s Eleventh

Amendment immunity as a matter of law. The remaining causes of action are state law causes of

action, and as discussed above, North Carolina has not waived its immunity for the state law causes

of action asserted. Plaintiff’s abrogation argument fails.

Third, Plaintiff argues Defendant Thaxton fits into the Ex parte Young exception to

Eleventh Amendment immunity because Plaintiff is seeking an injunction enjoining Defendant

Thaxton and the NCDOT from engaging in continuing constitutional violations.10 (Doc. No. 27,

p. 5).

“[T]he Eleventh Amendment permits suits for prospective injunctive relief against state

officials acting in violation of federal law.” Frew ex rel. Frew v. Hawkins, 540 U.S. 431, 437

(2004) (internal citations omitted). “For purposes of Eleventh Amendment analysis, it is sufficient

to determine that [the plaintiff] alleges facts that, if proven, would violate federal law and that the

requested relief is prospective.” S.C. Wildfire Fed’n v. Limehouse, 549 F.3d 324, 332 (4th Cir.

2008). Notably, to ensure that a federal injunction against a state official would be effective, there

must be “‘some connection with the enforcement’ of an unconstitutional act” and the official being

sued. Id. at 333; see also Wright v. N.C., 787 F.3d 256, 262 (4th Cir. 2015) (quoting Ex parte

Young, 209 U.S. 123, 157 (1908)). Thus, for an official “[t]o be amenable to suit under the

Eleventh Amendment, there must be a ‘special relation’ between the state official being sued and

the challenged action,” which “requires ‘proximity to and responsibility for the challenged state

action.’” Wright, 787 F.3d at 262 (emphasis in original) (quoting S.C. Wildfire Fed’n v.

Limehouse, 549 F.3d 324, 333 (4th Cir. 2008)). A “special relationship” between the official sued

10 The NCDOT is not named as a Defendant in this suit. However, as with Defendant Thaxton, a suit against the

NCDOT is a suit against the State of North Carolina itself.

and the challenged action exists when the official has a “specific duty” to enforce the challenged

provision. See S.C. Wildlife Fed’n, 549 F.3d at 333 (explaining that courts may look to both state

and federal law to determine if there is a duty to enforce imposed on the relevant official).

Here, Plaintiff is ultimately alleging Defendant Thaxton violated federal anti-

discrimination and procedural due process law by incorrectly communicating a statement of law

to Plaintiff, thereby rendering “null” Plaintiff’s status as a DBE, and by “removing Plaintiff’s

NCDOT designation to provide police protection on NCDOT Work Zones.”11 (Doc. No. 7, pp.

26, 28). The Court first notes it is not persuaded, even at this early stage in the litigation, that

Defendant Thaxton’s actions amount to a violation of federal law as alleged.

However, even if the Court were to accept as true the legal conclusion that Defendant

Thaxton violated federal law by incorrectly interpreting and applying N.C. GEN. STAT. § 74E,

Defendant Thaxton does not have the special relationship with § 74E necessary for this Court to

entertain a suit seeking prospective relief.12 First, Plaintiff has failed to provide any argument or

legal authority sufficient to establish the existence of a special relationship between Defendant

Thaxton and § 74E. See (Doc. No. 27). Second, after careful review of § 74E, it is the State

Attorney General, not Defendant Thaxton—or anyone else in the NCDOT—who has the duty and

power to enforce the Company Police Act. N.C. GEN. STAT. § 74E-4. Indeed, Plaintiff’s own

Amended Complaint makes clear Defendant Thaxton believed she was interpreting and applying

the law as mandated by the NCDOJ, which is run by the Attorney General. (Doc. No. 7, p. 26).

Accordingly, any injunction issued as to Defendant Thaxton would have no effect on the NCDOJ’s

11 It is unclear from the Amended Complaint whether the designation allegedly removed by Defendant Thaxton was

Plaintiff’s designation as a DBE or Plaintiff’s designation as an authorized company police agency under N.C. GEN.

STAT. § 74E. If the former, it is unclear that Defendant Thaxton would be able to remove a DBE designation as it is

a federally-conferred, not state-conferred, designation.

12 Plaintiff suggests Defendant Thaxton’s allegedly unlawful actions stemmed from her incorrect interpretation and

application of § 74E.

interpretation and application of § 74E and, the prospective relief sought against Defendant

Thaxton, without more, does not invalidate Defendant Thaxton’s Eleventh Amendment immunity.

In sum, the Eleventh Amendment insulates Defendant Thaxton from suit to the extent she

is sued in her official capacity. None of the exceptions to the Eleventh Amendment—waiver;

abrogation; and prospective, injunctive relief—are present here. Accordingly, all of Plaintiff’s

claims against Defendant, except the state constitutional claims, are barred by the Eleventh

Amendment.13

c. State Constitutional Claims

Defendant Thaxton moves to dismiss Plaintiff’s alternative claims under the North

Carolina Constitution because claims under the State constitution are only available when a

plaintiff has no other adequate remedy under state law. (Doc. No. 24-2, p. 9). In response, Plaintiff

argues its state constitutional claims are viable because there are no adequate remedies otherwise

available under state law. (Doc. No. 27, p. 13).

Assuming arguendo Plaintiff is correct, and there are no adequate remedies under state law

such that Plaintiff can assert claims under the State Constitution, Plaintiff has nonetheless failed

to state any plausible constitutional claim. Plaintiff contends Defendants collectively deprived

Plaintiff of the fruits of Plaintiff’s labor, deprived Plaintiff of equal protection under the law, and

created a monopoly in violation of the North Carolina Constitution’s Declaration of Rights. (Doc.

No. 7, pp. 35-36).

In construing the Amended Complaint in the light most favorable to Plaintiff and in

accepting the factual allegations as true, the Amended Complaint is devoid of any allegations that

would allow this Court to plausibly infer Plaintiff’s rights have been violated. For example,

13 As will be discussed below, the state constitutional claims are barred under Fed. R. Civ. P. 12(b)(6).

although Plaintiff states it is a Disadvantaged Business Enterprise, Plaintiff does not indicate what

protected class it belongs to and fails to identify any comparators. Without knowing whether any

comparators exist or the protected class Plaintiff belongs to, the Court cannot attempt to evaluate

the merits of Plaintiff’s equal protection claim. As to Plaintiff’s “fruit of its labor” claim, Plaintiff

fails to meet the minimal burden of even identifying the elements to state such claim.14 As to

Plaintiff’s monopoly claim, Plaintiff’s generalized and vague allegations of unfair, deceptive, and

fraudulent acts committed by Defendant Thaxton are insufficient to establish any constitutional

violation in North Carolina. See Sartori v. N.C. Dep’t of Pub. Safety, 778 S.E.2d 476, 476 (table)

(N.C. Ct. App. 2015). Ultimately, even if a claim under the North Carolina constitution were

procedurally available to Plaintiff, Plaintiff has failed to allege facts sufficient to plausibly state

any such claim. Defendant Thaxton is entitled to dismissal of the alternative constitutional claims

against her.

In sum, all claims against Defendant Thaxton must be dismissed because of Eleventh

Amendment immunity or because Plaintiff has failed to plausibly allege Defendant Thaxton

violated any of Plaintiff’s rights. Accordingly, Defendant Thaxton’s Motion to Dismiss, (Doc. No.

24), is GRANTED.

IV. DEFENDANTS TRANUM AND CSP’S MOTION TO DISMISS

In its Amended Complaint, Plaintiff alleges Defendants Tranum and his employer, CSP,

are liable for conspiracy under state law and 42 U.S.C. § 1985; abuse of process; and for violations

of North Carolina’s Unfair and Deceptive Trade Practices Act (“NCUDTPA”). (Doc. No. 7).

14 To state a “fruits of labor” claim under the North Carolina Constitution, a plaintiff must allege the following: “(1)

a clear, established rule or policy existed regarding the employment promotional process that furthered a legitimate

governmental interest; (2) the employer violated that policy; and (3) the plaintiff was injured as a result of that

violation.” Tully v. City of Wilmington, 810 S.E2d 208, 216 (N.C. 2018). Plaintiff is not employed by Defendant

Thaxton, so cannot plausibly allege the first element.

Defendants Tranum and CSP move to dismiss all claims against them pursuant to Fed. R. Civ. P.

12(b)(6). (Doc. No. 26). Plaintiff opposes dismissal of all claims except for the abuse of process

claim, which Plaintiff concedes is not recognized under North Carolina law for the facts alleged

here. (Doc. No. 28, p. 9). The Court accordingly dismisses Plaintiff’s abuse of process claim,

(Count Four), and evaluates Defendants Tranum and CSP’s Motion to Dismiss the conspiracy and

UDTPA claim, below.

a. State Law and § 1985 Conspiracy

Defendants Tranum and CSP move to dismiss Plaintiff’s state law and § 1985 conspiracy

claims because Plaintiff has failed to allege any essential elements of a conspiracy claim, most

notably the existence of an agreement, under both state and federal law. (Doc. No. 26, pp. 4-5). In

response, Plaintiff argues it has sufficiently alleged a conspiracy, wrongful acts committed by

Defendants in furtherance of the conspiracy, and injury to Plaintiff. (Doc. No. 28, pp. 6-7).

Whether alleged under state or federal law, civil conspiracy claims must include sufficient

factual allegations of an “agreement between two or more individuals.” Doe v. Lees-McRae Coll,

No. 1:20-cv-105-MR, 2021 WL 2673050, at *3 (W.D.N.C. June 29, 2021) (explaining the

requirements to state a claim for civil conspiracy under North Carolina state law); Simmons v.

Poe, 47 F.3d 1370, 1377 (4th Cir. 1995) (“[T]o prove a section 1985 ‘conspiracy,’ a claimant must

show an agreement or a ‘meeting of the minds’ by defendants.” (citations omitted)). Plaintiff here

has completely failed to allege this most basic requirement of civil conspiracy. Indeed, the only

use of the word “agreement,” or any variation thereof, in the Amended Complaint is in reference

to Plaintiff’s contractual agreement with SCC or “employment agreements” in general. See (Doc.

No. 7, pp. 2-3, 8-13, 20-21, 29). Contrary to Plaintiff’s arguments, conclusory allegations of

“conspiracy” are not enough to establish a claim for conspiracy—claims of conspiracy require

“concrete supporting facts,” Simmons, 47 F.3d at 1377, and here, there are none. The allegations

pertaining to conspiracy are so deficient and conclusory that the Court is concerned about the

frivolity of asserting such claims. Defendants Tranum and CSP are accordingly entitled to

dismissal of Plaintiff’s state and federal conspiracy claims.

b. UDTPA

Defendants Tranum and CSP argue Plaintiff has failed to state a UDTPA claim because

Defendants Tranum and CSP’s action were neither “in or affecting commerce” nor unfair and

deceptive. (Doc. No. 26, pp. 8-9). In response, Plaintiff argues Defendants conduct affected

commerce “in that they excluded Plaintiff from the market,” and Defendant Tranum’s conduct was

unfair and deceptive because he emailed a “knowingly false complaint [which] had a massive

trickle-down effect.” (Doc. No. 28, pp. 9-10).

In North Carolina, “unfair methods of competition in or affecting commerce, and unfair

and deceptive acts or practices in or affecting commerce, are . . . unlawful.” N.C. GEN. STAT. § 75-

1.1(a). Although the UDTPA’s primary purpose is to protect consumers, it applies to certain

business practices “in appropriate situations.” Dalton v. Camp, 548 S.E.2d 704, 710 (N.C. 2001).

To state a UDTPA claim, a plaintiff must show: “(1) [the] defendant committed an unfair or

deceptive act or practice, (2) the action in question was in or affecting commerce, and (3) the act

proximately caused injury to the plaintiff.” Id. at 711 (quotation omitted). Because a plaintiff must

first “establish that [the] defendant[’s] conduct was in or affecting commerce before the question

of unfairness or deception arises,” HAJMM Co. v. House of Raeford Farms, Inc., 403 S.E.2d 483,

492 (N.C. 1991) (citation and quotation omitted), the Court focuses its analysis on the second

element of a UDTPA claim—whether Defendants Tranum and CSP’s actions were in or affecting

commerce.

Plaintiff alleges Defendant Tranum violated the UDTPA when he sent one email to

Defendant Munn alerting Defendant Munn that Plaintiff’s patrol vehicles were operating blue

lights potentially in violation of The Company Police Act.15 (Doc. No. 7, p. 35). Plaintiff

essentially argues this single action by Defendant Tranum has had a “massive trickle-down effect”

in or affecting commerce, an argument which strains credulity, particularly when Plaintiff has

provided no legal support for its assertion.

“To ‘affect commerce,’ a defendant’s allegedly deceptive acts must have a tangible effect

on the marketplace.” In re Brokers, Inc., 396 B.R. 162 (Bankr. M.D.N.C. 2008) (quoting Esposito

v. Talbert & Bright, Inc., 641 S.E.2d 695, 698 (N.C. 2007)). Plaintiff argues Defendant Tranum’s

email had a tangible effect on the marketplace because the email had the ultimate effect of

“exclud[ing] Plaintiff from the market and forc[ing] developers and contractors to contract with

off-duty municipal and county law enforcement officers to provide the services Plaintiff had been

providing.” (Doc. No. 28, p. 10). The number of assumptions the Court is required to make to

logically connect Plaintiff’s largely conclusory allegations to a valid UDTPA claim renders

Plaintiff’s claim implausible. For example, assuming Plaintiff was tangibly excluded from the

marketplace, any such exclusion was the result of a temporary determination—made by the chief

law enforcement agency in North Carolina—that Plaintiff had violated the very law allowing

Plaintiff to participate in the marketplace in the first place. To conclude that a law enforcement

action, resulting from an arguably erroneous interpretation of the law, can violate the UDTPA

would lead to absurd results. Moreover, the connection between Defendant Tranum’s single email

and the NCDOJ’s conclusion that Plaintiff violated the Company Police Act is too attenuated to

15 The Court assumes Plaintiff attempts to hold Defendant CSP liable for Defendant Tranum’s actions based on

Defendant CSP and Defendant Tranum’s employer/employee relationship.

plausibly allege Defendant Tranum is responsible for any potential UDTPA violation. Defendants

Tranum and CSP are accordingly entitled to dismissal of Plaintiff’s UDTPA claim.

For the foregoing reasons, Plaintiff has failed to state plausible claims against Defendants

Tranum and CSP. Their Motion to Dismiss, (Doc. No. 25), is GRANTED.

V. DEFENDANTS MUNN, SQUIRES AND COMMISSION’S MOTION TO DISMISS

Defendants Munn, Squires, and Commission have filed three separate Motions to Dismiss;

however, each motion is identical in substance and seek to dismiss Plaintiff’s Amended Complaint

in its entirety. (Doc. Nos. 35, 36, 37). The Court will accordingly treat the three motions as one

for purposes of this Order.

The claims against Defendants Munn, Squires and Commission are barred by the Eleventh

Amendment for the same reasons described above with respect to Defendant Thaxton.16 The Court

acknowledges Plaintiff has asserted claims against Defendants Munn, Squires, and Commission

not asserted against Defendant Thaxton: tortious interference with contract and fraud. (Doc. No.

7, pp. 33-34). However, both are intentional torts and North Carolina has not waived immunity for

such claims. See Guthrie, 299 S.E.2d at 625. To the extent any claim against Defendants Munn,

Squires and Commission is not barred by the Eleventh Amendment, namely the alternative state

constitutional claims, Plaintiff fails to state a claim, again for the same reasons as described above

with respect to Defendant Thaxton. Because all claims against Defendants Munn, Squires, and

Commission either fail because of sovereign immunity or because Plaintiff has failed to meet its

pleading standard, Defendants Munn, Squires, and Commission are entitled to dismissal.17

16 As with Defendant Thaxton, Plaintiff alleges Defendants Munn and Squires are sued in their individual capacities;

however, as with Defendant Thaxton, every allegation as to Defendants Munn and Squires encompass actions taken

only within their official capacity as officials within the NCDOJ. See (Doc. No. 7). Defendant Commission is a

Commission established by the North Carolina General Assembly and is an occupational licensing agency under

N.C. GEN. STAT. § 150B-2(4b). See also N.C. GEN. STAT. Chapter 17C.

17 Although not addressed herein, Defendants Munn, Squires, and Commission move for dismissal on a number of

bases, including issue and claim preclusion. (Doc. No. 37-1, p. 11). Defendants point out, and Plaintiff does not

VI. CONCLUSION

IT IS THEREFORE ORDERED that each Defendant’s Motion to Dismiss, (Doc. Nos. 24,

25, 35, 36, 37), is GRANTED. Plaintiff's Amended Complaint is DIMISSED WITH PREJUDICE

as to all Defendants. The Clerk of Court is respectfully directed to CLOSE this case.

IT IS SO ORDERED.

August 10, 2021

Frank D. Whitney é □

United States District Judge ages

dispute, this matter in this Court represents at least the third time Plaintiff has attempted to litigate the ultimate issue

in this case: whether Plaintiff was unlawfully prevented from providing contract law enforcement services on the I-

77 project. Id. at p. 12. Without evaluating the merits of preclusion, the Court notes it is concerned with the

appearance of impropriety in filing this matter, which is premised on the exact same nexus of operative facts as at

least one other case in which the North Carolina Court of Appeals affirmed dismissal of Keith Williams’, Plaintiff's

CEO, case against NCDOJ. Williams v. N.C. Dep’t of Just., Crim. Standards Div., 848 S.E.2d 231 (N.C. Ct. App.

2020).

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