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UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
JAMES KELLY LAMBERT, ET AL. CIVIL ACTION
VERSUS NO: 05-5931
BOARD OF COMMISSIONERS OF THE
ORLEANS LEVEE DISTRICT, ETAL.
SECTION: R
ORDER AND REASONS
Before the Court are motions to dismiss filed by the Board
of Commissioners for the Orleans Levee District, Resolve Marine
Group, Marine Recovery and Salvage, LLC, Michael Mayer and George
L. Carmouche. For the following reasons, the Court
DENIES the
motions.
I. INTRODUCTION
Plaintiffs James Kelly Lambert, Donald Scott and Robin
Lovelock brought this case as a purported class action on behalf
of similarly-situated persons who own vessels located in two
Orleans Parish marinas operated by the Board of Commissioners for
the Orleans Levee District. Plaintiffs name as defendants the
Levee District; James P. Huey, the former President of the Levee
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District; George L. Carmouche, a former attorney for the Levee
District; Douglas Scott Carmouche; Michael George Mayer; Marine
Recovery and Salvage, LLC; Resolve Marine Group; and St. Tammany
Pearl River Salvage.
Plaintiffs allege generally that Hurricane Katrina damaged
and/or destroyed many vessels located in the two marinas, but
that many other vessels suffered little or no damage from the
storm itself. After the storm, both the vessels that were
damaged by the storm and the ones that did not suffer significant
damage needed immediate attention to prevent further damage from
sitting incorrectly in the water or sitting out of the water
entirely. Plaintiffs allege that the Levee District imposed
unnecessarily strict requirements on their ability to access
their vessels in order to salvage them. Plaintiffs allege that
defendants imposed these limitations, at least initially, to
prevent vessel owners from salvaging their vessels on their own
or through a marine salvage contractor of their choosing and to
force vessel owners to pay exorbitant prices to certain of the
defendants in order to have their vessels salvaged.
Plaintiffs assert a number of claims against the various
defendants, including breach of contract, violation of Louisiana
antitrust law, violation of the Louisiana Unfair Trade Practices
Act, intentional tort, a civil rights claim under 42 U.S.C. §
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1983, breach of a compensated depositary contract, and negligence
on the part of a negotiorum gestor. The Levee District, Resolve,
Marine Recovery and Salvage, Mayer and George Carmouche have each
moved to dismiss certain of plaintiffs’ claims.1
II. FACTUAL BACKGROUND
The Levee District operates two marinas, the Orleans Marina
and the South Shore Harbor Marina, on the south
Pontchartrain
marinas were damaged, tossed ashore, or sunk as a result of
Hurricane Katrina, which swept through southeast
August 29, 2005.
On or about September 12, 2005, the Levee District allegedly
gave Marine Recovery and Salvage exclusive authority to oversee
all salvage operations in the two marinas.2 Defendants
Douglas
1Marine Recovery and Salvage also moved to dismiss thecomplaint for improper
service of process. At oral argument onthese motions, counsel for
plaintiffs represented that plaintiffshad since properly served Marine Recovery
and Salvage. Counsel
for Marine Recovery and Salvage did not dispute that assertion.
Accordingly, the motion is denied as moot.
2At oral argument on the motions to dismiss, the partiesdisputed whether
certain of defendants’ alleged actions, such asthe exclusivity arrangement with
Marine Recovery and Salvage,
were or were not properly authorized by the Levee District.
Although plaintiffs argued that a number of actions were notproperly authorized
by the Levee District, their complaintnevertheless attributes those actions,
for the most part, to the
3
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Scott Carmouche (the son of defendant George Carmouche, a Levee
Board attorney) and Michael Mayer allegedly formed Marine
Recovery and Salvage on September 8, 2005. Marine Recovery and
Salvage then allegedly entered into exclusive contracts with
Resolve and St. Tammany Pearl River to carry out the salvage
operations. Plaintiffs allege that defendants designed this
arrangement to provide Resolve and St. Tammany Pearl River with
the exclusive right to conduct salvage operations in the two
marinas, thus permitting them to charge inflated rates for their
services. These companies then allegedly passed some portion of
the revenue from these overpriced salvage services on to certain
other defendants and unidentified third parties.
Plaintiffs assert that throughout September and October
2005, Levee District personnel prevented vessel owners from
accessing their vessels in order to move and/or salvage them.
Levee District personnel told plaintiffs that only Marine
Recovery and Salvage and its designated agents were permitted to
access the marinas in order to move vessels. Plaintiffs also
assert that they were told that anyone who attempted to enter the
marinas without the Levee District’s permission would be arrested
Levee District itself, rather than to individuals acting ultra
vires. For the purposes of this motion, the Court will take theallegations
contained in the complaint as true.
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by the Levee Board Police.
Plaintiffs allege that, during this period, Resolve and St.
Tammany Pearl River salvaged and/or moved many vessels without
permission from either the vessel owner or the vessel’s insurer,
that Resolve and St. Tammany Pearl River sent the owners of these
vessels inflated bills for their services, and that these
unauthorized salvage attempts often caused additional damage to
the vessels.
On October 3, 2005, several insurance companies filed suit
in civil district court in
exclusivity arrangement among the Levee District, Marine Recovery
and Salvage, Resolve, and St. Tammany Pearl River and the
excessive salvage fees being charged by Resolve and St. Tammany
Pearl River. The state court issued a temporary restraining
order on October 4, 2005. The parties resolved the suit on or
about October 13, 2005, when the Levee District agreed that it
would no longer give Marine Recovery and Salvage, Resolve, and
St. Tammany Pearl River exclusive access to the marinas.
Plaintiffs allege, however, that the Levee District nevertheless
continued to give Marine Recovery and Salvage, Resolve and St.
Tammany Pearl River exclusive access to the marinas until at
least October 25, 2005.
On or about October 26, 2005, the Levee District posted on
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its website a new policy that ostensibly allowed other salvage
companies into the marinas in order to recover vessels. Under
this policy, the Levee District would permit any salvage company
to enter the marina and access vessels after the company complied
with the following conditions: (1) that it provide the Levee
District with proof of insurance showing the Levee District as an
additional insured on the policy; (2) that it provide a list of
vessels that were to be moved, including the name of each
vessel’s owner; and (3) that it provide written authorization
from the insurance company insuring each vessel that it intended
to move. Under the policy, once a company furnished this
information, the Levee District would review the documentation
and provide the contractor with written permission to enter the
marinas. The policy required authorized contractors to schedule
all salvage operations with the
District. A statement accompanying the revised marina access
policy noted that the Levee District had already authorized two
companies, Resolve and St. Tammany Pearl River, to conduct
salvage operations in the marinas.
Plaintiffs allege that Marine Recovery and Salvage, Resolve
and St. Tammany Pearl River continued to have de facto exclusive
access to the marinas, despite the revised policy. Plaintiffs
allege that the Levee District did not require Resolve and St.
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Tammany Pearl River to comply with the new procedures, but it
instead treated them as “favored” contractors because they had
agreed to pay Marine Recovery and Salvage a “commission” of ten
percent of their income from salvage operations in the marinas.
Plaintiffs further allege that the “Byzantine” procedures
mandated by the Levee District’s revised policy on marina access
were overly strict and time-consuming, which hindered other
contractors in complying with them and gaining access to salvage
vessels in the marinas.
On or about December 23, 2005, the Levee District again
revised its policy on marina access. Under the current policy, a
salvage contractor can operate in the marina if it provides proof
of at least $1 million in liability insurance covering salvage
operations, names the Levee District as an additional insured on
the policy, and executes a hold harmless agreement in favor of
the Levee District. In addition, the contractor must obtain the
permission of the owner and/or insurer of each vessel that it
intends to salvage and inform the Levee District of the
identities of the vessels to be salvaged. Authorized contractors
may then conduct salvage operations at the marina without the
need to schedule operations with the marina managers.
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III. DISCUSSION
A. Legal Standard
Motions to dismiss under Federal Rule of Civil Procedure
12(b)(6) are traditionally viewed with disfavor and
are
infrequently granted. Test Masters Educ. Servs., Inc. v. Singh,
428 F.3d 559, 570 (5th Cir. 2005) (citing Shipp v. McMahon, 199
F.3d 256, 260 (5th Cir. 2000)). On a motion to dismiss, the
Court must accept all well-pleaded facts in the complaint as true
and view those facts in the light most favorable to the
plaintiff. See Baker v. Putnal, 75 F.3d 190, 196 (5th Cir.
1996); Am. Waste & Pollution Control Co. v. Browning-Ferris,
Inc., 949 F.2d 1384, 1386 (5th Cir. 1991). The Court must
resolve all doubts as to the sufficiency of the claim in the
plaintiff’s favor. Vulcan Materials Co. v. City of
238 F.3d 382, 387 (5th Cir. 2001). The claim should be dismissed
only if it clearly appears that the plaintiff cannot prove any
set of facts in support of his claim that would entitle him to
relief.
(5th Cir. 1995).
B. Contractual Exculpation - The Lease Provisions
Resolve moves to dismiss plaintiffs’ antitrust, LUTPA and
section 1983 claims against it on the ground that the claims are
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barred by the terms of plaintiffs’ lease agreements with the
Levee District. The Levee District, Marine Recovery and Salvage,
Mayer and George Carmouche join in Resolve’s arguments.3 The
defendants assert that section XXX of plaintiffs’ leases
unambiguously forecloses plaintiffs’ claims. Section XXX
provides:
XXX. ACTS BY LESSOR DURING EMERGENCIES OR
THREATS TO PUBLIC SAFETY
In case of a perceived emergency or threat topublic safety, LESSOR, its agents
andassigns, are authorized to do whatever isreasonable [sic] necessary and as
LESSORdeems appropriate. These acts include but
are not limited to the following: boardingthe boat/vessel; moving the
boat/vessel ortaking any other action without liability fordamages or loss of
any kind. Under these
circumstances, LESSOR accepts responsibilityonly for the consequences for
grossnegligence. LESSEE agrees to pay all costsassociated with any activity
performed by theLESSOR during a perceived emergency. . . .
(Rec. Doc. 25 Ex. A).
Before it considers the merits of defendants’ motions, the
Court must first determine whether it can consider the provisions
of the plaintiffs’4 lease agreements with the Levee District on
3At oral argument, counsel for the Levee District stated
that the Levee District does not seek to dismiss plaintiffs’
section 1983 claim against it.
4Resolve attaches only the lease agreement between plaintiffLambert and the
Levee District. Plaintiffs allege, however, that
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these motions to dismiss. A district court that considers a
motion to dismiss ordinarily can consider only the plaintiff’s
complaint and any documents attached to the complaint. See,
e.g., Scanlan v. Texas A&M Univ., 343 F.3d 533, 536 (5th Cir.
2003). The Fifth Circuit recognizes an exception to this general
rule and permits district courts to consider documents attached
to a defendant’s motion to dismiss if the documents are referred
to in the plaintiff’s complaint and are central to the
plaintiff’s claims. See Collins v. Morgan Stanley Dean Witter,
224 F.3d 496, 498-99 (5th Cir. 2000) (“In so doing, the defendant
merely assists the plaintiff in establishing the basis of the
suit, and the court in making the elementary determination of
whether a claim has been stated.”).
In this case, plaintiffs’ lease agreements with the Levee
District are mentioned at several points in the complaint, and
the agreements are certainly central to at least some of
plaintiffs’ claims (e.g., plaintiffs’ claims against the Levee
District and James Huey for breach of contract). Moreover, and
significantly, plaintiffs have not objected to defendants’
invocation of the lease provisions. See Scanlan, 343 F.3d at 536
(stating that “[t]he fact that the plaintiffs did not object” to
other vessel owners had the same standard-form lease agreementwith the Levee
District. (See Rec. Doc. 1 Ex. A, ¶ 4).
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consideration of documents attached to motion to dismiss “was
central to” the Collins court’s holding that documents were
properly considered). The Court therefore finds that it can
consider the terms of the lease agreements on these motions.
Even assuming that those defendants who are not parties to
the lease agreements are entitled to rely on section XXX (a
proposition that the Court is not entirely convinced of), the
Court finds that section XXX of the lease agreements does not
foreclose plaintiffs’ claims as a matter of law for a number of
reasons. First, the exculpatory provision of the lease
agreements does not on its face extend to the type of conduct
alleged by plaintiffs here. By its terms, section XXX protects
only actions that are both reasonably necessary and deemed
appropriate by the Levee District. Thus, that the Levee District
approved the actions alleged in the complaint would not alone
establish that section XXX bars plaintiffs’ claims based on those
actions. In addition, section XXX does not exclude liability for
gross negligence, and under
exclude liability for intentional misconduct. See
Ann. art. 2004 (“Any clause is null that, in advance, excludes or
limits the liability of one party for intentional or gross fault
that causes damage to the other party.”). Plaintiffs’ LUTPA,
antitrust and section 1983 claims all involve allegations of
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intentional, not merely negligent, misconduct by the defendants.
Plaintiffs assert that the defendants deliberately prevented
plaintiffs and their chosen contractors from salvaging
plaintiffs’ vessels not because of emergency circumstances, but
rather for defendants’ own financial gain. If proven, section
XXX would not operate to bar claims based on those allegations.
Second, section XXX does not appear to bar the type of
damages that plaintiffs seek to recover with their LUTPA and
antitrust claims. Although section XXX disclaims liability for
“damages or loss of any kind,” that statement is immediately
preceded by a description of the types of actions the Levee
District is permitted to take under section XXX, such as boarding
or moving vessels. This suggests that section XXX might apply
only to claims for damages directly caused by the Levee
District’s emergency actions, e.g., physical damage to a lessee’s
vessel. Plaintiffs’ LUTPA and antitrust claims, on the other
hand, would permit plaintiffs to recover only for injuries
suffered as a result of defendants’ anticompetitive practices,
not for any injuries caused by the physical act of moving or
salvaging their vessels. See La. Rev. Stat. Ann. § 51:137
(providing for recovery of damages for injury to business or
property caused “by reason of any act or thing forbidden by”
state antitrust law); id. § 51:1409 (plaintiff may recover for
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loss of money or property caused by “the use or employment . . .
. of an unfair or deceptive method, act or practice” rendered
unlawful by LUTPA); see also Reingold v. Swiftships, Inc., 126
F.3d 645, 652 (5th Cir. 1997) (“‘The real thrust of the LUTPA,
modeled after the Federal Trade Commission Act . . . is to deter
injury to competition.’”) (quoting Omnitech Int’l, Inc.
v. Clorox
Co., 11 F.3d 1316, 1331 (5th Cir. 1994)); Plaquemine Marine, Inc.
v. Mercury Marine, 859 So. 2d 110, 118 (La. Ct. App. 2003) (“A
claim under [the
allegation of damage to competition.”). It is far from clear
that section XXX was intended to reach claims such as these.
Accordingly, the Court finds that plaintiffs’ antitrust,
LUTPA and section 1983 claims are not subject to dismissal on the
basis of section XXX of plaintiffs’ lease agreements with the
Levee District.
C. Plaintiffs’ LUTPA Claims
The moving defendants also move to dismiss plaintiffs’
claims under the Louisiana Unfair Trade Practices Act. See La.
Rev. Stat. Ann. §§ 51:1401-51:1424. They argue that plaintiffs
cannot bring LUTPA claims on behalf of a class and that
plaintiffs’ individual LUTPA claims fail because plaintiffs are
not “consumers,” as that term is used in the statute.
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As plaintiffs concede in their opposition brief, defendants
are correct that LUTPA claims cannot be brought in a
representative capacity. See, e.g., id. § 51:1409
(person harmed
by unfair trade practices “may bring an action individually but
not in a representative capacity to recover actual damages”).
Accordingly, plaintiffs cannot assert class action claims under
LUTPA.
The private right of action provided by LUTPA is available
only to consumers and business competitors. See, e.g., Tubos de
Acero de Mexico, S.A. v. Am. Int'l Inv. Corp., 292 F.3d 471, 480
(5th Cir. 2002); Cent. Healthcare Servs., Inc. v.
Eterna
Petersburg Inc., No. Civ.A. 04-580, 2004 WL 1823036, at *2 (E.D.
Shipyard, Inc., No. Civ.A. 01-2411, 2002 WL 1433876, at *1-2
(E.D. La. June 28, 2002) (noting that, although the Louisiana
First Circuit Court of Appeal has applied LUTPA’s private right
of action beyond consumers and competitors, this Court is bound
by the Fifth Circuit’s determination in Tubos de Acero). Under
LUTPA, the term consumer is defined broadly to include “any
person who uses, purchases, or leases goods or services.” La.
Rev. Stat. Ann. § 51:1402(1). The Fifth Circuit has held that
the group of “consumers” who may bring a private action under
section 51:1409 is, however, limited by LUTPA’s definition of a
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“consumer transaction” as one “involving trade or commerce to a
natural person, the subject of which transaction is primarily
intended for personal, family or household use.” Id. §
51:1402(3); see Orthopedic & Sports Injury Clinic v. Wang Labs.,
Inc., 922 F.2d 220, 225-26 (5th Cir. 1991); Traina v. Nationsbank
of Texas, N.A., No. 00-1160, 2001 WL 1041773, at *6 (E.D. La.
Sept. 7, 2001) (“[T]he Fifth Circuit has held that the act only
applies to consumer transactions, ‘the subject of which
transaction is primarily intended for personal, family, or
household use.’”) (quoting Wang Labs., 922 F.2d at
226).
The Levee District asserts that the allegations of
plaintiffs’ complaint establish that the named plaintiffs are not
“consumers” under LUTPA. When the Court views the allegations of
the complaint in the light most favorable to the plaintiffs, as
it is obliged to do on these motions to dismiss, the Court cannot
conclude that plaintiffs are not consumers entitled to bring suit
under LUTPA. Plaintiffs allege that the defendants agreed to
restrict access to the marinas such that Resolve and St. Tammany
Pearl River were, at various times, either the de jure or de
facto exclusive salvage operators permitted to conduct operations
in the marinas. Plaintiffs assert that, as a result of these
agreements, Resolve and St. Tammany Pearl River were able to
charge exorbitant prices for salvage operations, some portion of
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which was then paid to other defendants in the form of
“commissions.” Plaintiffs can clearly be considered “consumers”
of the allegedly overpriced salvage services that were offered as
a result of defendants’ practices. Moreover, while an agreement
to salvage a vessel is not the paradigmatic “consumer
transaction,” there is nothing before the Court to suggest that
the plaintiffs’ vessels were used for anything other than
personal purposes. Accordingly, the defendants have not shown
that there is no set of facts upon which plaintiffs could state a
claim under LUTPA, and the Court denies their motions to dismiss
plaintiffs’ LUTPA claims.
D. Plaintiffs’ Section 1983 Claim
In its March 22, 2006 order on plaintiffs’ motion for a
preliminary injunction, the Court denied plaintiffs’ request for
injunctive relief on their section 1983 claims. Specifically,
the Court denied plaintiffs’ request for injunctive relief
against the Levee District because plaintiffs failed to show a
likelihood of success on the merits of their forward-looking
challenge to the Levee District’s marina access requirements.
The Court also denied plaintiffs’ request for injunctive relief
against Resolve and Marine Recovery and Salvage because
plaintiffs had not shown that they were acting under color of
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state law for purposes of prospective relief. The Court
specifically declined to decide in its March 22, 2006 order
whether plaintiffs’ allegations would be sufficient to state a
section 1983 claim against any or all of the defendants
concerning their past actions.
George Carmouche, Marine Recovery and Salvage and Mayer now
move to dismiss plaintiffs’ section 1983 claim against them on
the ground that plaintiffs have not sufficiently alleged that
they acted under color of state law or that any of their actions
deprived plaintiffs of a federally protected right.
Section 1983 provides a private right of action to any
person who is deprived of a federal constitutional or statutory
right by a person acting under color of state law. See 42 U.S.C.
§ 1983. To state a claim under section 1983, a plaintiff must
allege: (1) that the defendant deprived him of a right secured
by the Constitution or federal law; and (2) that the deprivation
occurred under color of state law. See Cornish v. Corr. Serv.
Corp., 402 F.3d 545, 549 (5th Cir. 2005); Brown v. Miller, 631
F.2d 408, 410 (5th Cir. 1980). For a defendant’s conduct to be
considered state action, the defendant “must be a person who may
fairly be said to be a state actor,” which may be because the
defendant “has acted together with or has obtained significant
aid from state officials, or because his conduct is otherwise
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chargeable to the State.” Lugar v. Edmonson Oil Co., 457
922, 937 (1982).
1. George Carmouche
Plaintiffs’ complaint contains only two allegations in which
George Carmouche is mentioned by name. Paragraph 34 of the
complaint states that defendants James Huey and George Carmouche
“abused their positions of authority” with the Levee District
“and under color of law entered into a conspiracy” to allow the
other defendants to have exclusive access to the marinas for
purposes of conducting salvage operations. Paragraph 42 of the
complaint similarly asserts that George Carmouche abused his
position as a state official.
Taking these allegations as true and reading them as a part
of plaintiffs’ broader claim that all of the defendants’
collective actions deprived plaintiffs of due process of law, the
Court finds that plaintiffs have sufficiently alleged, for
purposes of a motion to dismiss, a section 1983 claim against
George Carmouche. Plaintiffs’ complaint alleges both that George
Carmouche acted under color of state law by abusing his position
as a Levee District official and that his actions, as part of a
larger agreement among the defendants, deprived plaintiffs of
their due process rights by unduly restricting plaintiffs’ access
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to their vessels and by permitting certain defendants to move
plaintiffs’ vessels without permission. Accordingly, the Court
denies George Carmouche’s motion to dismiss plaintiffs’ section
1983 claim against him.
2. Mayer and Marine Recovery and Salvage
Likewise, plaintiffs’ allegations are sufficient at this
stage of the litigation to state a section 1983 claim against
Mayer and Marine Recovery and Salvage. As with George Carmouche,
plaintiffs allege that Mayer and Marine Recovery and Salvage were
participants in a scheme that deprived them of their due process
rights. Morever, although Mayer and Marine Recovery and Salvage
are ostensibly private parties, plaintiffs have sufficiently
alleged that they acted under color of law. A private party can
be found to act under color of law if it “is involved in a
conspiracy with or participates in joint activity with state
actors.” Ballard v. Wall, 413 F.3d 510, 518 (5th Cir. 2005).
In
this case, plaintiffs have alleged that Mayer and Douglas
Carmouche formed Marine Recovery and Salvage shortly after
Hurricane Katrina; that the Levee District granted Marine
Recovery and Salvage and its agents, Resolve and St. Tammany
Pearl River, exclusive access to conduct salvage operations in
the Levee District’s two marinas; that this exclusivity
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arrangement was intended to, and did, permit Resolve and St.
Tammany Pearl River to charge exorbitant prices for salvage work,
a portion of which was passed on to Marine Recovery and Salvage
and other parties; and that this exclusivity arrangement was
enforced by the coercive power of the Levee Board police. These
allegations, if proven, would be sufficient to establish that
Marine Recovery and Salvage and Mayer acted under color of state
law. See id. at 519 (plaintiffs sufficiently alleged
action
under color of law when plaintiffs alleged that private parties
conspired with public official, or that official “provided
‘significant aid’” to private parties). The Court therefore
denies their motion to dismiss plaintiffs’ section 1983 claims.
IV. CONCLUSION
For the reasons stated above, the Court DENIES defendants’
motions to dismiss.
________________________________
SARAH S. VANCE
UNITED STATES DISTRICT JUDGE
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