NOT PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

 

No. 09-4182

 

CULINARY SERVICE OF DELAWARE VALLEY, INC.;

MARTIN CAPLAN,

Appellants

 v.

BOROUGH OF YARDLEY, PENNSYLVANIA;

C. WILLIAM WINSLADE, individually and in his official capacity;

JAMES J. O’NEILL, individually and in his official capacity;

JAMES M. MCNAMARA, individually and in his official capacity;

JOSEPH HUNTER, individually and in his official capacity

 

On Appeal from the United States District Court

for the Eastern District of Pennsylvania

(D.C. No. 2-09-cv-01251)

District Judge: Honorable Petrese B. Tucker

 

Argued on June 22, 2010

Before: AMBRO, CHAGARES, and VAN ANTWERPEN, Circuit Judges.

(File: June 30, 2010)

Steven Pachman, Esq.

Lathrop B. Nelson, III, Esq. [ARGUED]

Sidney S. Liebesman, Esq.

Montgomery, McCracken, Walker & Rhoads, LLP

123 South Broad Street

Avenue of the Arts

Philadelphia, PA 19109
2

Counsel for Appellants

Andrew G. Cassidy, Esq.

Christian P. LaBletta, Esq.

Donnelly and Associates, P.C.

1 West First Avenue, Suite 450

Conshohocken, PA 19428

Counsel for Appellees

Harry G. Mahoney, Esq.

Thomas C. Gallagher, Esq. [ARGUED]

Deasey, Mahoney, Valentini & North, Ltd.

Suite 3400, 1601 Market Street

Philadelphia, PA 19103

Counsel for Appellees Borough of Yardley, C. William Winslade, James M.

McNamara, and Joseph Hunter

Joseph D. Goldberg, Esq.

Wendi D. Barish, Esq. [ARGUED]

Tamara L. Rudow, Esq.

Weber, Gallagher, Simpson, Stapleton, Fires & Newby

2000 Market Street

Suite 1300

Philadelphia, PA 19103

Counsel for Appellee James J. O’Neill

 

OPINION OF THE COURT

 

VAN ANTWERPEN, Circuit Judge.

Culinary Services of Delaware Valley, Inc. (“Culinary Services”) and Martin

Caplan (“Caplan”) (collectively referred to herein as “Plaintiffs”) appeal from an August

21, 2009 order of the United States District Court for the Eastern District of Pennsylvania
 The facts in this section are derived from Plaintiffs’ original complaint, which the 1

District Court dismissed pursuant to Federal Rule of Civil Procedure 12(b)(6) and (7).

3

dismissing their complaint and a September 29, 2009 order denying their motion for leave

to file an amended complaint. We will affirm the dismissal of all of Plaintiffs’ claims,

except for the request for declaratory relief, which we will vacate and remand for further

proceedings. We will also affirm the denial of the motion to amend.

I. Factual and Procedural History

A. Factual History1

Culinary Services distributes amusement, arcade, and redemption games to

establishments licensed by the Pennsylvania Liquor Control Board (“PLCB”). Two of

these games are at issue in this case: Red, White & Blue Game and HoldEm Poker Game

(collectively referred to herein as the “Games”). 

The Red, White & Blue Game is a three-reel game in which the player must stop

each reel to win. The HoldEm Poker Game is a five-reel game in which the first two

reels each assign a card, and the player must stop the remaining reels to win. Plaintiffs

maintain that the Games do not function in the same manner as traditional slot machines

because they do not utilize random number generators, outcomes are not predetermined,

and players must use skill to stop the reels to succeed. Thus, Plaintiffs contend that the

use of skill predominates over chance in the Games.

On March 7, 2008, Plaintiffs entered into an agreement with the Knowles-Doyle
 It is unfortunate that the Pennsylvania state entities, agencies, and officials did not 2

issue an opinion on the legality of the Games. Such an opinion, reaching either

conclusion, would likely have prevented the set of events that transpired in the absence of

any guidance whatsoever. Plaintiffs clearly made significant efforts to obtain such an

opinion, only to be rebuffed. 

4

American Legion in Yardley, Pennsylvania (the “Yardley American Legion”). The

Agreement provided that the Yardley American Legion would lease the Games from

Culinary Services in exchange for fifty-percent of the net revenue from the Games. The

Agreement also provided for automatic termination “immediately upon notice by

authorities that the games are prohibited for any reason.” (App. at 32.) 

Before entering into the Agreement, Plaintiffs sought the opinions of the

Pennsylvania Gaming Control Board (“PGCB”) and PLCB regarding the legality of the

Games – the PGCB did not respond, and the PLCB did not offer an opinion on their

legality. Plaintiffs then consulted the Pennsylvania State Police’s Bureau of Liquor Code

Enforcement (“BLCE”), which despite inspecting the Games, offered a “no comment”

opinion.2

After entering into the Agreement, but before installing the Games, Caplan

informed the local police chief, James J. O’Neill (“Chief O’Neill”), of his intention to

install the Games and of the BLCE’s “no comment” opinion. After Plaintiffs installed the

Games, Borough Manager C. William Winslade (“Manager Winslade”) informed the

board of directors of the Yardley American Legion that the Games had been “deemed

illegal by Yardley Borough, Yardley Borough Police Department, and the Pennsylvania
5

State Police.” (Id. at 34.) 

Shortly thereafter, Manager Winslade issued an official notification to the Yardley

American Legion that “after careful investigation by Police Chief O’Neill it has been

deemed that machines you have are in [sic] illegal.” (Id. at 35.) The notification stated

that “Chief O’Neill’s investigation included discussions with Commander Rackovich of

the Quakertown Barracks of the PA State Police and Special Investigator Smith of the PA

State Police.” (Id.) Plaintiffs contend that Manager Winslade, Chief O’Neill, and

Commander Rackovich never personally inspected the Games and that each lacks the

expertise or training to assess their legality. Further, Investigator Smith allegedly

disclaimed any personal knowledge or experience with the Games and confirmed he

would thus be unable to issue an opinion regarding their legality.

The official notification effectively terminated the Agreement. Caplan

subsequently requested the Borough to rescind the notification, to no avail. Instead, at a

public meeting, Borough Council President Joseph Hunter (“President Hunter”) expressed

the Council’s support for the decisions and actions of Manager Winslade and Chief

O’Neill. The Borough published the minutes from this meeting on its website. At the

same meeting, Borough Solicitor James M. McNamara (“Solicitor McNamara”) agreed to

look into the matter. A few days later, he informed Plaintiffs, “The Borough of Yardley

is in no position to make a determination as to the legality of the[ Games] and the effect

of possible use of the [Games] in the [Yardley] American Legion hall.” (Id. at 40.)
 Chief O’Neill retained separate counsel and, when appropriate, is referred to 3

separately. All other defendants are collectively referred to as “Borough Defendants.” 

Otherwise, general references to “Defendants” include both the Borough Defendants and

Chief O’Neill.

6

Notwithstanding this disclaimer of authority, the Borough and its officers

continued to refuse to rescind the official notification. Instead, Solicitor McNamara

suggested the parties wait until the Bucks County District Attorney’s Office issued an

opinion on the matter. The Bucks County District Attorney, however, declined to offer an

opinion after inspecting the Games. 

As a consequence of the Borough’s actions, Plaintiffs lost their only contract in

Pennsylvania and have since been unable to enter into additional contracts. Although

several other potential customers have indicated their willingness to enter into agreements

with Plaintiffs, they have declined to do so because of the Borough’s assessment of the

Games. As a result, Plaintiffs have been unable to distribute its inventory of fifty-four

Games and have been deterred from manufacturing “hundreds more.”

B. Procedural History

Plaintiffs filed a complaint in the District Court against the Borough of Yardley,

Manager Winslade, Chief O’Neill, Solicitor McNamara, and President Hunter asserting 3

four counts: (I) a § 1983 claim for violation of procedural due process against all

Defendants; (II) tortious interference with contract against Manager Winslade and Chief

O’Neill; (III) commercial disparagement against Manager Winslade, Chief O’Neill, and

President Hunter; and (IV) a request for declaratory relief against all Defendants that the
 The notice of appeal in a civil action must be filed within thirty days after the entry

4

of the judgment appealed. Fed. R. App. P. 4(a)(1)(A). If, however, the party files a

motion to alter or amend the judgment within the time permitted under the Federal Rules

of Civil Procedure, the time for filing the notice of appeal runs from the entry of the order

disposing of such motion. Id. R. 4(a)(4)(A)(iv). Some courts have treated a motion for

leave to file an amended complaint as a motion to alter or amend, so long as it is filed

within ten days after entry of the judgment. See, e.g., Trotter v. Regents of Univ. of N.M.,

219 F.3d 1179, 1183 (10th Cir. 2000); see also Rankin v. Heckler, 761 F.2d 936, 942 (3d

Cir. 1985) (“Regardless of how it is styled, a motion filed within ten days of entry of

judgment questioning the correctness of a judgment may be treated as a motion to alter or

amend the judgment under Rule 59(e).”). Plaintiffs filed their motion to amend within ten

days of the August 21, 2009 order. See also Fed. R. Civ. P. 6(a) (establishing manner of

computing time). The District Court disposed of the motion on September 29, 2009, and

7

Games are “games of skill that are legal under the laws of the Commonwealth of

Pennsylvania.” (App. at 46.)

On August 21, 2009, the District Court dismissed Plaintiffs’ complaint in its

entirety. The Court concluded that Plaintiffs failed to identify a protected property or

liberty interest to support Count I and, regardless, Defendants are entitled to qualified

immunity. The Court also determined that the individual Defendants are entitled to

statutory immunity from Counts II and III, and that Plaintiffs failed to join indispensable

parties for Count IV. Plaintiffs then sought leave to file an amended complaint, which the

District Court denied in its September 29, 2009 footnote-order. The Court stated: “Not

only is the Proposed Amended Complaint substantially similar to the original complaint,

but the proposal also fails to address the issue of prejudice to the absent parties that would

unquestionably be affected by the outcome of this matter.” (Id. at 18 n.1.) Plaintiffs filed

this timely appeal.4
Plaintiffs filed their notice of appeal within thirty days of that order.

8

II. Jurisdiction and Standards of Review

The District Court exercised subject matter jurisdiction over Plaintiffs’ § 1983

claim pursuant to 28 U.S.C. § 1331, and exercised supplemental jurisdiction over the tort

and declaratory judgment actions pursuant to § 1367. The Court had authority to issue

declaratory relief under § 2201. We have jurisdiction under § 1291 to review an order

granting a motion to dismiss. See, e.g., Phillips v. County of Allegheny, 515 F.3d 224,

230 (3d Cir. 2008).

We exercise plenary review over a district court’s order granting a motion to

dismiss under Rule 12(b)(6). Fowler v. UPMC Shadyside, 578 F.3d 203, 206 (3d Cir.

2009). First, we must distinguish between factual allegations and legal conclusions in the

complaint; second, if the complaint sets forth well-pleaded factual allegations, we may

assume their veracity and draw inferences favorable to the non-moving party, but then

must determine whether the factual allegations show an entitlement to relief. Phillips,

515 F.3d at 233-34; see Ashcroft v. Iqbal, 129 S. Ct. 1937, 1950, 1953 (2009). 

Of course, whether a claim is plausible depends on the nature of the claim asserted. 

See Phillips, 515 F.3d at 233. This does not impose a probability requirement at the

pleading stage, but instead simply calls for enough facts to raise a reasonable expectation

that discovery will reveal evidence of the necessary elements of the claims. Iqbal, 129 S.

Ct. at 1949; Phillips, 515 F.3d at 234. At this stage of the litigation, we focus on whether
9

the non-moving party sufficiently pled its claims, not whether it can prove its claims. 

Fowler, 578 F.3d at 213.

We also perform plenary review of a grant of qualified immunity and apply the

same standards applicable to review of Rule 12(b)(6) motions. Leveto v. Lapina, 258

F.3d 156, 161 (3d Cir. 2001). The grant of immunity will be upheld only when immunity

is established on the face of the complaint. Thomas v. Independence Twp., 463 F.3d 285,

295 (3d Cir. 2006).

We perform a bifurcated review for dismissals under Rule 12(b)(7): Rule 19(a)

conclusions of law are subject to plenary review and factual findings are reviewed for

clear error, and a Rule 19(b) determination that a party is indispensable is reviewed for

abuse of discretion. See Huber v. Taylor, 532 F.3d 237, 247 (3d Cir. 2008). We also

review a district court’s denial of a motion for leave to file an amended complaint for

abuse of discretion. Toll Bros., Inc. v. Twp. of Readington, 555 F.3d 131, 137 (3d Cir.

2009). “An abuse of discretion arises when the district court’s decision rests upon a

clearly erroneous finding of fact, an errant conclusion of law or an improper application

of law to fact.” NLRB v. Frazier, 966 F.2d 812, 815 (3d Cir. 1992) (quotations omitted).

III. Discussion

A. Count I: § 1983 Procedural Due Process

The District Court dismissed Plaintiffs’ § 1983 claim for two reasons: (1) they

failed to assert a property or liberty interest protected by the Fourteenth Amendment, and
10

(2) Defendants are entitled to qualified immunity. We will affirm the District Court’s

dismissal because Plaintiffs have not alleged deprivation of a protected interest.

The Fourteenth Amendment prohibits state action which “deprive[s] any person of

life, liberty, or property, without due process of law.” U.S. Const. amend. XIV, § 1. To

enable individuals to enforce these rights, Congress enacted § 1983 as a federal cause of

action against deprivation of any rights, privileges, or immunities secured by the

Constitution or laws of the United States. See Town of Castle Rock v. Gonzales, 545 U.S.

748, 755 (2005). To state a § 1983 claim, Plaintiffs must demonstrate that Defendants,

acting under the color of state law, deprived Plaintiffs of a right secured by the

Constitution or the laws of the United States. See Chainey v. Street, 523 F.3d 200, 219

(3d Cir. 2008). Plaintiffs allege a violation of procedural due process.

To establish a procedural due process claim under § 1983, Plaintiffs must prove (1)

a deprivation of an individual interest encompassed by the Fourteenth Amendment’s

protection of life, liberty, or property, and (2) that the procedures available did not

provide due process of law. See Hill v. Borough of Kutztown, 455 F.3d 225, 233-34 (3d

Cir. 2006). The first step in evaluating a § 1983 claim is to identify the exact contours of

the underlying right Plaintiffs claim was violated and to determine whether they have

alleged deprivation of a constitutional right at all. See Chainey, 523 F.3d at 219. 

Plaintiffs argue Defendants deprived them of their property and liberty interests in the

right to engage in a legitimate business free from arbitrary state deprivation. We will
11

address the property and liberty characterizations in turn.

1. Property Interest 

Procedural due process does not protect every benefit; rather, to have a property

interest in a benefit, a person must clearly have more than an abstract need or desire and

more than a unilateral expectation of receiving the benefit. Gonzales, 545 U.S. at 756. In

constitutional parlance, the claimant must have a legitimate claim of an “entitlement.” Id.

Entitlements, however, are not established by the Constitution; rather, they are created

and defined by existing rules or understandings that stem from an independent source,

such as state law. Id. A claimant must show an entitlement to a property interest created

by a state statute or regulation or arising from government policy or a mutually explicit

understanding. Carter v. City of Philadelphia, 989 F.2d 117, 120 (3d Cir. 1993); see

Baraka v. McGreevey, 481 F.3d 187, 206 (3d Cir. 2007); Rogers v. Bucks County

Domestic Relations Section, 959 F.2d 1268, 1274 (3d Cir. 1992). 

Plaintiffs cite no statute, regulation, government policy, or mutually explicit

understanding in their complaint that would demonstrate an entitlement to pursue their

business interests. Nor have Plaintiffs cited any source for their entitlement to this Court. 

Thus, Plaintiffs pled only a unilateral expectation of an interest in operating their

business, which is not sufficient to plead an entitlement to a property interest under the

Fourteenth Amendment.

2. Liberty Interest
12

We have, however, recognized a relevant liberty interest – the right to hold specific

private employment and to follow a chosen profession free from unreasonable

government interference. See Piecknick v. Pennsylvania, 36 F.3d 1250, 1259 (3d Cir.

1994). But the Constitution only protects this liberty from state actions that threaten to

deprive persons of the right to pursue their chosen occupation; state actions that exclude a

person from one particular job are not actionable in due process claims. See id. Thus, it

is the liberty interest to pursue a calling or occupation, not the right to a specific job, that

is secured by the Fourteenth Amendment. Id. at 1259, 1262; see Thomas, 463 F.3d at

297; Latessa v. N.J. Racing Comm’n, 113 F.3d 1313, 1317-18 (3d Cir. 1997). Therefore,

Plaintiffs must allege an inability to obtain employment within the field, not just a

particular job or at a specific location or facility. See, e.g., Latessa, 113 F.3d at 1317-18. 

Assuming Plaintiffs’ allegations are true, they have been unable to lease additional

Games in Pennsylvania because of Defendants’ official notification letter. In fact, several

businesses have acknowledged their willingness to enter into commercial relationships

with Plaintiffs but for Defendants’ declaration that the machines are illegal. Regardless,

at best, Plaintiffs have been precluded from distributing only two Games, and counsel

conceded at argument that Plaintiffs can sell other Games in other locations. As such,

Plaintiffs have only been deprived of the specific job of distributing the Games in

Pennsylvania, but they can still engage in the general distribution business, to say nothing

of their ability to lease Games in other states. See Bernard v. United Twp. High Sch. Dist.
 The District Court also granted Defendants qualified immunity from Plaintiffs’ § 5

1983 claim. Our conclusion that Plaintiffs were not deprived of a protected interest

justifies the grant of immunity. The first inquiry under qualified immunity requires the

Court to decide whether the facts Plaintiffs have alleged constitute a violation of a

constitutional right. See Pearson v. Callahan, 129 S. Ct. 808, 815-16 (2009). Because

we conclude that Plaintiffs did not identify a protected property or liberty interest, they

have not alleged a violation of a constitutional right. Therefore, we could alternatively

dismiss Count I on the basis of qualified immunity. See id.

13

No. 30, 5 F.3d 1090, 1092-93 (7th Cir. 1993) (finding no liberty interest in distributing

one particular print because plaintiff was not prevented from distributing other prints);

see also Thomas, 463 F.3d at 297 (reviewing official conduct that affected plaintiff’s

entire business and left plaintiff with no other options). Indeed, counsel for Chief O’Neill

acknowledged at argument that Plaintiffs would be permitted to distribute other

unquestionably legal games in the Borough of Yardley.

Consequently, Plaintiffs have failed to assert a protected property or liberty

interest, an essential element to their procedural due process claim. We will affirm the

District Court’s dismissal of Count I.

5

B. Counts II and III: Tort Claims

The District Court dismissed Plaintiffs’ tort claims against President Hunter,

Manager Winslade, and Chief O’Neill because each is entitled to statutory immunity

under Pennsylvania law. The Court also concluded that Plaintiffs did not sufficiently

plead that Defendants’ conduct fell within a statutory exception to the grant of immunity.

In Pennsylvania, “no local agency shall be liable for any damages on account of
14

any injury to a person or property caused by any act of the local agency or any employee

thereof or any other person.” 42 Pa. Cons. Stat. § 8541. The local agency, however, may

be liable if (1) the damages would be recoverable if caused by a person not having

immunity under § 8541, (2) the injury was caused by the negligent act of the local agency

or an employee acting within the scope of his or her office or duties, and (3) the injury

falls within an enumerated exception. Id. § 8542. The parties agree that none of these

exceptions apply.

More pertinent to this matter, an employee of a local agency enjoys the same scope

of immunity as the agency. See id. § 8545. Section 8550, however, abrogates the

employee’s immunity if “it is judicially determined that the act of the employee caused

the injury and that such act constituted a crime, actual fraud, actual malice or willful

misconduct.” Id. § 8550. 

“Willful misconduct” is synonymous with “intentional tort.” Delate v. Kolle, 667

A.2d 1218, 1221 (Pa. Commw. Ct. 1995). Accordingly, the actor must have desired to

bring about the result, or must at least have known or should have known that the result

was substantially certain to follow. See Kuzel v. Krause, 658 A.2d 856, 859 (Pa.

Commw. Ct. 1995). Thus, our inquiry focuses on whether Plaintiffs pled sufficient facts

to show these Defendants desired the termination of the Agreement or to cause Plaintiffs

to suffer pecuniary loss, or that Defendants knew or should have known those results

were substantially certain to follow. See also Stoeckinger v. Presidential Fin. Corp. of
15

Del. Valley, 948 A.2d 828, 834 (Pa. Super. Ct. 2008) (stating elements of tortious

interference claim); Pro Golf Mfg., Inc. v. Tribune Review Newspaper Co., 809 A.2d 243,

246 (Pa. 2002) (listing elements of commercial disparagement claim).

With regard to the tortious interference claim, Plaintiffs make bare assertions that

Manager Winslade and Chief O’Neill acted willfully to bring about the termination of the

Agreement, which is not sufficient under Iqbal, 129 S. Ct. at 1950, 1953. They merely

allege that the Agreement automatically terminated after Defendants notified the Yardley

American Legion that the Games are illegal. This does not reveal that Manager Winslade

or Chief O’Neill desired or was substantially certain the Agreement would terminate as a

result of his conduct. Therefore, the allegations fail to show an entitlement to relief.

As for the commercial disparagement claim, Plaintiffs allege that President Hunter

adopted Manager Winslade’s and Chief O’Neill’s actions, and that the adoption was

published on the Borough’s website. They further allege that Defendants refused to

rescind the official notification notwithstanding Solicitor McNamara’s disclaimer of

authority. Plaintiffs then make a bare assertion that Defendants engaged in this conduct

to cause, or should have known their conduct would cause, Plaintiffs to suffer pecuniary

loss. Plaintiffs assert no facts to support this alleged intent and, therefore, they failed to

show an entitlement to relief. See id. Accordingly, we will affirm the dismissal of

Counts II and III.

C. Count IV: Declaratory Judgment
 Section 2201 grants district courts authority to “declare the rights and other legal 6

relations of any interested party seeking such declaration.” 28 U.S.C. § 2201(a). But §

2201 merely enlarges the range of remedies available; it does not create subject matter

jurisdiction. Mack Trucks, Inc. v. Int’l Union, United Auto., Aerospace & Agric.

Implement Workers of Am., 856 F.2d 579, 583 n.4 (3d Cir. 1988). Therefore, the court

must find an independent basis for jurisdiction before it can consider a declaratory

judgment action. Id. Plaintiffs’ counsel confirmed at argument that jurisdiction for the

declaratory judgment action is based on supplemental jurisdiction. We have affirmed the

dismissal of Plaintiffs’ § 1983 claim, the only claim that arises under federal law. See 28

U.S.C. § 1331. Thus, the District Court may find it appropriate to consider whether it will

exercise supplemental jurisdiction over Plaintiffs’ request for a declaration that the

Games are “legal under the laws of the Commonwealth of Pennsylvania.” (See App. at 46

(emphasis added).)

In addition, a declaratory judgment is discretionary and courts are under no

compulsion to exercise that discretion. State Auto Ins. Cos. v. Summy, 234 F.3d 131, 133

(3d Cir. 2000). The central question is whether the controversy may better be settled in

state court. See United States v. Pennsylvania, Dep’t of Envtl. Res., 923 F.2d 1071, 1075

(3d Cir. 1991). None of the limitations on the court’s discretion appears to exist in this

case. See Summy, 234 F.3d at 134 (citing Dep’t of Envtl. Res., 923 F.2d at 1076-79).

16

The District Court dismissed Plaintiffs’ request for declaratory relief because they

failed to join indispensable parties. On appeal, Plaintiffs argue that the purportedly

indispensable parties are not necessary to this action. The Borough Defendants contend

that we should abstain under Burford v. Sun Oil Co., 319 U.S. 315 (1943). We decline

the invitation to abstain and will vacate the District Court’s dismissal because the

allegedly indispensable parties are not necessary. On remand, the District Court should

consider whether it wishes to continue to exercise jurisdiction over this claim and, if so,

whether it should exercise its discretion and decline to grant declaratory relief.6

1. Burford Abstention

We take a two-step approach to Burford abstention analysis. Matusow v. Trans-
17

County Title Agency, LLC, 545 F.3d 241, 247-48 (3d Cir. 2008); Chiropractic Am. v.

Lavecchia, 180 F.3d 99, 104-05 (3d Cir. 1999). First, we consider whether timely and

adequate state court review is available. Chiropractic Am., 180 F.3d at 104. If there is

not, abstention is not appropriate; however, if there is, we then examine three issues: (1)

whether the particular regulatory scheme involves matters of substantial public concern,

(2) whether it is the sort of complex, technical regulatory scheme to which Burford is

usually applied, and (3) whether federal review of Plaintiffs’ claims would interfere with

Pennsylvania’s efforts to establish and maintain a coherent regulatory policy. Id. at 105;

see New Orleans Pub. Serv., Inc. v. Council of City of New Orleans, 491 U.S. 350, 361

(1989); see also Riley v. Simmons, 45 F.3d 764, 771 (3d Cir. 1995) (stating that courts

proceed to second step only if there is adequate and timely state review available). Each

of these factors need not be present to warrant abstention. Lac D’Amiante du Quebec,

Ltee v. Am. Home Assurance Co., 864 F.2d 1033, 1043 (3d Cir. 1988).

Pennsylvania courts routinely decide what conduct constitutes “gambling” and

whether such conduct is “unlawful.” Moreover, Pennsylvania allows parties to seek

declaratory relief. See 42 Pa. Cons. Stat. § 7532. As such, there is adequate and timely

review available in state court. Therefore, we turn our focus to the issues identified in

Chiropractic America. 180 F.3d at 105. 

To implicate a matter of substantial public concern, the suit must be filed against a

party protected by or subject to the regulatory scheme. See, e.g., Univ. of Md. at Balt. v.
18

Peat Marwick Main & Co., 923 F.2d 265, 273-74 (3d Cir. 1991). In this case, Plaintiffs,

the parties purportedly subject to the gambling regulations, initiated suit against parties

who are neither subject to nor protected by, and do not even control, the regulations at

issue. Therefore, this factor is not implicated. 

To implicate the sort of technical, complex regulatory scheme to which Burford

abstention is usually applied, the action must challenge the scheme itself, rather than just

actions taken under color of the scheme. See Addiction Specialists, Inc. v. Twp. of

Hampton, 411 F.3d 399, 409-10 (3d Cir. 2005); Gwynedd Props., Inc. v. Lower Gwynedd

Twp., 970 F.2d 1195, 1202-03 (3d Cir. 1992); Izzo v. Borough of River Edge, 843 F.2d

765, 769 (3d Cir. 1988). This case falls within the latter category – Plaintiffs are not

challenging the validity of the gambling regulations but rather the application of the rules

to the Games. Further, the regulatory scheme does not appear to be all-encompassing or

extremely intertwined because Pennsylvania courts have developed common law

principles to identify what constitutes “gambling” and whether it is unlawful under the

criminal statute. See, e.g., Commonwealth v. Dent, 992 A.2d 190, 192-93, 197 (Pa.

Super. Ct. 2010). As such, this factor also is not implicated.

Finally, we consider whether federal review of Plaintiffs’ claims would interfere

with Pennsylvania’s efforts to establish and maintain a coherent regulatory policy. 

Chiropractic Am., 180 F.3d at 105. The state’s interest, however, must be very important

– a federal court cannot just abstain to avoid disrupting the scheme. Peat Marwick, 923
 The District Court identified these parties based on Plaintiffs’ complaint. These 7

parties include: the Commonwealth of Pennsylvania; the PGCB; the BCLE; the

Pennsylvania Attorney General; and the District Attorney of Bucks County, Pennsylvania.

19

F.2d at 272. Regardless of the importance of Pennsylvania’s regulation of gambling, the

other factors weigh against abstention. Therefore, we will not abstain.

2. Indispensable Parties

The District Court dismissed Count IV because it identified Commonwealth

entities it concluded were indispensable in resolving Plaintiffs’ claim for declaratory

relief. The Court, however, erred in its analysis of whether the entities were necessary 7

under Rule 19(a); therefore, we will vacate the dismissal on this basis.

Rule 19 analysis is a two-step process. Gen. Refractories Co. v. First State Ins.

Co., 500 F.3d 306, 312 (3d Cir. 2007). The court must first determine whether the absent

parties are “necessary” under Rule 19(a). Id. If the parties are necessary, and joinder is

not feasible, then the court must determine whether the parties are “indispensable” under

Rule 19(b). Id. A holding that joinder is compulsory under Rule 19(a) is a necessary

predicate to the district court’s discretionary determination under Rule 19(b). Id. at 313. 

Rule 19 provides:

“A person who is subject to service of process and whose joinder will not

deprive the court of subject-matter jurisdiction must be joined as a party if: (A)

in that person’s absence, the court cannot accord complete relief among

existing parties; or (B) that person claims an interest relating to the subject of

the action and is so situated that disposing of the action in the person’s absence

may: (i) as a practical matter impair or impede the person’s ability to protect

the interest; or (ii) leave an existing party subject to a substantial risk of
20

incurring double, multiple, or otherwise inconsistent obligations because of the

interest.”

Fed. R. Civ. P. 19(a)(1). Subsection (a)(1)(A) is limited to considerations of whether the

court can grant complete relief to persons already named; the effect on unnamed parties is

immaterial. See Gen. Refractories Co., 500 F.3d at 313. 

Subsection (a)(1)(B), however, requires the court to take into consideration the

effect the resolution of the dispute may have on absent parties. Id. at 316. Under the first

prong of subsection (a)(1)(B), a party must show that some outcome of the federal case

would preclude the absent parties with respect to an issue material to the absent parties’

rights or duties. See id. An assertion that a disposition would amount to persuasive

precedent, however, is not sufficient. See Huber, 532 F.3d at 250. In addition, concerns

regarding privity and the possibility of preclusion are too speculative to require joinder. 

See id. at 251. 

The second prong of (a)(1)(B) focuses on the obligations of named parties, not

absent parties. See, e.g., Keweenaw Bay Indian Cmty. v. Michigan, 11 F.3d 1341, 1347

(6th Cir. 1993); Northrop Corp. v. McDonnell Douglas Corp., 705 F.2d 1030, 1043 n.15

(9th Cir. 1983). Further, an unsubstantiated or speculative risk will not satisfy Rule 19(a)

criteria – the possibility of exposure to multiple or inconsistent obligations must be real. 

See 7 Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice &

Procedure § 1604, at 64 (3d ed. 2001).

Because the District Court did not indicate which subsection of Rule 19(a) it relied
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on, we will consider each. Subsection (a)(1)(A) does not apply to absent parties. 

Subsection (a)(1)(B)(i), however, does apply to absent parties, and the Borough

Defendants claim that a decision in federal court would impair or impede the unnamed

entities’ interest in consistent regulation of gambling in Pennsylvania. Notwithstanding

the merit of this interest, a declaratory judgment in Plaintiffs’ favor would amount to

nothing more than persuasive precedent in any subsequent matter and likely would not

preclude the entities from initiating proceedings in state court for a contrary

determination. These concerns, however, are not sufficient to render the entities

necessary under Rule 19(a), and the prospect of any future action is purely speculative. 

See Huber, 532 F.3d at 250-51; Gen. Refractories Co., 500 F.3d at 315 n.13, 317. As

such, these absent parties are not necessary under Rule 19(a)(1)(B)(i). 

In addition, the Commonwealth entities are not necessary under subsection

(a)(1)(B)(ii). This subsection focuses on the effect on obligations of named parties, and

there is no real risk of multiple or inconsistent obligations to any of the named parties. 

Any anticipated reaction by the Commonwealth entities is purely speculative and,

therefore, not sufficient to satisfy Rule 19(a) criteria. 

Accordingly, the Commonwealth entities are not necessary under Rule 19, and the

District Court’s conclusion that they were indispensable cannot stand. See Huber, 532

F.3d at 251. Therefore, we will vacate the dismissal of Count IV, with instructions to the

District Court to consider its continuing jurisdiction and its exercise of discretion.
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D. Motion for Leave to File an Amended Complaint

A party may amend a filing as a matter of course (1) before being served with a

responsive pleading or (2) within twenty days after service if a responsive pleading is not

allowed and the action has not yet been placed on the trial calendar. Fed. R. Civ. P.

15(a)(1). “In all other cases, a party may amend its pleading only with . . . the court’s

leave. The court should freely give leave when justice so requires.” Id. R. 15(a)(2). 

If a complaint is subject to a Rule 12(b)(6) dismissal, a district court must permit a

curative amendment, even if the party does not request leave, unless such an amendment

would be inequitable or futile. See Phillips, 515 F.3d at 245; Alston v. Parker, 363 F.3d

229, 235, 236 (3d Cir. 2004) (permitting denial of amendment only on grounds of bad

faith, undue delay, prejudice, or futility). “Futility” means that the complaint, as

amended, would still fail to state a claim upon which relief could be granted. In re

Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1434 (3d Cir. 1997). In assessing

futility, we apply the same legal-sufficiency standard as applies under Rule 12(b)(6). Id.

In this case, the District Court denied Plaintiffs’ motion for leave to amend, in part,

because the amended complaint did not address the deficiencies in the original complaint. 

Although the court did not explicitly say so, it apparently denied leave based on futility. 

We agree that Plaintiffs’ proposed amendment would be futile. The amended

complaint still does not identify a protected liberty or property interest essential to

Plaintiffs’ procedural due process claim. Further, the amended complaint still only makes
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bare assertions that the conduct of President Hunter, Manager Winslade, and Chief

O’Neill constituted willful misconduct – Plaintiffs allege that their new allegations

establish that the conduct was “unlawful” and “unreasonable,” but nothing they allege

shows that these Defendants desired the termination of the Agreement or desired to cause

pecuniary loss, or that they were substantially certain such results would occur. See

Kuzel, 658 A.2d at 859; see also Iqbal, 129 S. Ct. at 1950, 1953 (explaining pleading

burden). Therefore, Defendants remain entitled to immunity under Pennsylvania law. 

Finally, Plaintiffs’ claim for declaratory relief is not part of their amended complaint.

Plaintiffs’ proposed amendment still fails to state a claim upon which relief could

be granted and, therefore, is futile. See In re Burlington Coat Factory, 114 F.3d at 1434. 

As such, the District Court did not abuse its discretion, and we will affirm the denial.

IV. Conclusion

For the foregoing reasons, we will affirm the August 21, 2009 order dismissing

Counts I, II, and III, but vacate that portion of the order dismissing Count IV. We will

affirm the September 29, 2009 order denying leave to amend Plaintiffs’ complaint. On

remand, the District Court should consider whether it wishes to continue to exercise

subject matter jurisdiction over Plaintiffs’ request for a declaratory judgment. If the court

retains jurisdiction, it should consider whether it should exercise its discretion and decline

to grant the requested relief.