Suit by Blackwater vs. City of San Diego

Blackwater Worldwide (2008-05-21)

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More Info: Blackwater, Blackwater Otay

• Blackwater-Complaint.pdf: Blackwater Complaint

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MAYER BROWN LLP
BRYAN DALY (SEN 117901)
  bdaly@mayerbrown.com
JOHN NADOLENCO (SBN 181128)
  jnadolenco@mayerbrown.com
350 South Grand Avenue, 25th Floor
Los Angeles. CA 90071-1503
Telephone: (213)229-9500
Facsimile: (213) 625-0248

NEIL DYMOTT FRANK MCFALL & TREXLER APLC
Michael I. Neil
mneil@neildymott.com
1020 2nd Avenue, Suite 2500
San Diego, CA 92101-4959
Telephone: (619) 238-1712
Facsimile: (619) 238-1562

Attorneys for Plaintiff
BLACKWATER LODGE AND TRAINING CENTER, INC., dba
BLACKWATER WORLDWIDE

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF CALIFORNIA

BLACKWATER LODGE AND TRAINING CENTER, INC., a Delaware corporation dba BLACKWATER WORLDWIDE,       Plaintiff, v. KELLY BROUGHTON, in his capacity as Director of the Development Services Department of the City of San Diego; THE DEVELOPMENT SERVICES DEPARTMENT OF THE CITY OF SAN DIEGO, an agency of the City of San Diego; AFSANEH AHMADI, in her capacity as the Chief Building Official for the City of San Diego; THE CITY OF SAN DIEGO, a municipal entity; and DOES 1-20, inclusive,       Defendants.

Case No. ___ COMPLAINT FOR: (1) INJUNCTIVE RELIEF: (2) DECLARATORY JUDGMENT; (3) VIOLATION OF 42 U.S.C. 8 1983 (PROCEDURAL DUE PROCESS); (4) VIOLATION OF 42 U.S.C. § 1^83 (EQUAL PROTECTION); (5) DORMANT COMMERCE CLAUSE; (6) VIOLATION OF CAL. CONST.. ART. IS 7(A) (PROCEDURAL DUE PROCESS) (7) VIOLATION OF CAL. CONST., ART. I § 7(A) (EQUAL PROTECTION) DEMAND FOR JURY TRIAL

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Plaintiff Blackwater Lodge and Training Center, Inc. dba Blackwater Worldwide ("Blackwater") alleges upon knowledge as to itself and its own actions, and upon information and belief as to all other matters, against Defendants Kelly Broughton in his capacity as Director of the Development Services Department of the City of San Diego, the Development Services Department of the City of San Diego (the "Department"), Afsaneh Ahmadi in her capacity as the Chief Building Official for the City of San Diego (the "Building Official"), and the City of San Diego (the "City") as follows:

NATURE OF THE ACTION

1. This is an action to, inter alia, enforce the provisions of the San Diego Municipal Code ("SDMC") and to remedy the City of San Diego's violation of Blackwater's federal and state constitutional rights to procedural due process and equal protection, as well as those under the Commerce Clause of the U.S. Constitution. Blackwater has a multi-million dollar contract from the United States Navy to train sailors. To perform its duties under the contract, Blackwater secured the rights to use a remote facility in Otay Mesa, on the outskirts of the City of San Diego. See Exhibit A for visual depiction of area. Blackwater then applied to the City for the building permits needed under the SDMC to remodel the facility by adding internal walls, air conditioning units and an insulated target range. Initially, the City complied with its responsibilities under the SDMC, granting Blackwater all needed building permits. The City subsequently conducted the inspections prescribed by the SMDC, inspecting and approving the facility's electrical and fire/life safety infrastructure, Finally, on April 30, the City's Building,Official issued final approvals for the facility, including granting approval for its Certificate of Occupancy. As Defendant Broughton reportedly admitted in a recent news story, Blackwater "complied with our municipal code and the California Building Code" and, consequently, the City issued to Blackwater the proper permits and approvals.

2. After the City issued these permits and approvals, but before the City performed its ministerial duty of issuing the Certificate of Occupancy, certain self-proclaimed activists began complaining loudly about the location of "mercenaries" in San Diego. They incorrectly alleged Blackwater was locating in the City not to fulfill its Navy contract, but to conduct covert border operations in close proximity to Mexico. And they openly stated that they wanted to kick Blackwater out of town because it provides support to the United States in the war in Iraq and because it is a North Carolina-based defense contractor.

3. Unfortunately, these activities had their intended effect, leading the City to refuse to issue the Certificate of Occupancy notwithstanding its obligation to do so. No doubt this occurred because this year is an election year. Indeed, Election Day is June 3, and the Mayor and City Attorney are both standing for re-election and are locked in tough struggles. In an apparent effort to curry favor with the activists and after his election opponent raised the Blackwater permits as an election issue, the City Attorney on May 16, 2008 issued a legal memorandum incorrectly concluding, among other things, that the Blackwater project should be subject to further discretionary review.%STARTFOOTNOTE{}% Like most municipalities, San Diego's zoning code denotes three general categories of uses. Although different cities call them by different names, the first such category could be described as "prohibited under all circumstances." In many cities, examples include, a topless bar serving-alcohol or a dump/landfill. The next category, could be called, "discretionary," as those uses must go through the city's discretionary review process. An example would be locating a bar within 1000 feet of a residential neighborhood. The final category could are usually called "ministerial review," meaning that if a city inspector checks the site for certain clearly defined features set forth in the code (for example, fire doors and lighting, and proper number of parking spaces), the city has no discretion is permitting the facility. As detailed below, vocational institutions, instructing in any subject, fall under this third category in San Diego. %ENDFOOTNOTE% Given the California Attorney General's recent report regarding "The Sunroad Building Project," it appears that the City Attorney has a pattern of issuing flawed reports to serve political purposes.

4. A few days later, the Mayor, relying on the City Attorney's incorrect legal analysis, announced to the press that he was issuing a "Stop Work" order on the Blackwater facility—despite his administration approving and defending the permits just two weeks earlier. The Mayor also took this position after being pressured by political groups and after his opponent criticized him on the Blackwater issue.

5. Subsequently, on May 19, 2008, the City took formal action, with the City's Director of Development Services, Defendant Broughton, announcing in a letter to Blackwater that Development Services would not send to Blackwater its Certificate of Occupancy. Again, the City took this action even though the City earlier had determined that all requirements for the facility had been met, and even though the City's Building Official had earlier approved issuance of the Certificate of Occupancy. The Director's letter also ordered Blackwater to refrain from using the facility upon penalty of fines or other city action. The City provided no notice or hearing before effectively shutting down the facility. Defendant Broughton's May 19, 2008 letter also relied on the City Attorney's flawed opinion and, indeed, attached a copy of it.

6. The City took its action notwithstanding the fact that other vocational institutions, such as the Southwestern College police academy, operate in close proximity to the Otay Mesa facility and throughout the City. Blackwater is informed and believes that Southwestern—and likely other vocational institutions, including privately-run institutions—were not required to go through the further discretionary process being imposed on Blackwater. Instead, on information and belief, other vocational institutions were issued permits and Certificates of Occupancy as a matter of right and after only ministerial review, just as Blackwater was, before politics came into play. Similarly, on information and belief, other facilities within the City featuring target ranges were not required to follow the City's proposed discretionary process being imposed on Blackwater.

7. If Blackwater is unable to start training the Navy's sailors on June 2, it will be irreparably harmed in that its constitutional rights will have been violated, its reputation severely damaged, its contractual relationship with the Navy jeopardized, and its ability to train the country's armed forces severely compromised, which can have tragic consequences as described below. 8. Accordingly, Blackwater seeks declaratory and injunctive relief for the City's violation of its own Municipal Code and Blackwater's constitutional rights. Moreover, Blackwater seeks to recover all money damages caused by Defendants' conduct.

JURISDICTION AND VENUE

9. Blackwater seeks, inter alia, to remedy the City of San Diego's violation of Blackwater's federal constitutional rights, pursuant to 42 U.S.C. § 1983, and under the dormant Commerce Clause. Accordingly, this Court has subject matter jurisdiction over this action under 28 U.S.C. §§ 1331 and 1343.

10. This Court also has diversity jurisdiction over this action under 28 U.S.C. § 1332 because complete diversity exists between Plaintiffs and Defendants. Blackwater is incorporated in Delaware with its principal place of business in North Carolina. Defendants all are citizens of California. The amount in controversy in this case easily exceeds $75,000, exclusive of interest and costs, as the contract with the Navy is worth about $400 million.

11. This Court has supplemental jurisdiction over the state law claims sought herein, pursuant to 28 U.S.C. § 1367, because these state law claims are so related to the federal law claims over which this Court has original jurisdiction, that they form part of the sarhe case and controversy under Article III of the United States Constitution.

12. Venue is proper in this District under 28 U.S.C. § 1391 because all the Defendants reside in this District, the property that is the subject of this action is located in this District and a substantial part of the events or omissions giving rise to Plaintiffs' claims occurred in this District.

THE PARTIES

13. Plaintiff Blackwater Lodge and Training Center, Inc. dba Blackwater Worldwide is a Delaware corporation and has its principal place of business in North Carolina.

14. Defendant Kelly Broughton is a citizen of the State of California and is sued in his capacity as Director of the Department of Development Services of the City of San Diego.

15. Defendant Department of Development Services is an agency of the City of San Diego.

16. Defendant Afsaneh Ahmadi is a citizen of the State of California and is sued in her capacity as the Chief Building Official for the City of San Diego.

17. Defendant City of San Diego is a municipal entity in the State of California.

18. Plaintiff is ignorant of the true names and capacities of defendants sued as DOES 1-20, inclusive, and therefore sues these defendant by such fictitious names. Plaintiff will amend this Complaint to allege their true names and capacities when ascertained. Plaintiff is informed and believes and based thereon alleges that each of the defendants designated as a DOE is responsible in some manner for the wrongful acts and omissions referred to herein and thereby proximately caused injuries and damages to Plaintiffs as herein alleged.

FACTUAL BACKGROUND

Blackwater's Contract with the United States Navy

19. Blackwater Worldwide professionals are U.S. military and law-enforcement veterans dedicated to training military law-enforcement personnel at home and protecting U.S. dignitaries abroad. One of Blackwater's primary functions is to protect the lives of U.S. diplomats in Iraq. Though it is not the biggest government contractor, it is among the most high-profile. Lately, certain individuals and interest groups have stigmatized Blackwater for its support of the United States' efforts in Iraq, and in particular for Iraqi casualties suffered during firefights that have occurred during Blackwater's protection of civilians in Iraq. Attacking Blackwater has become a cause celebre for certain individuals wishing to express their displeasure with the war in Iraq or how the administration has handled it.

20. A lesser known function of Blackwater is providing training for the men and women of the United States Navy. In 2000, terrorists attacked the U.S.S. Cole by sailing up to it in a slow-moving craft laced with explosives, killing 17 Navy sailors and injuring 39 others. After concluding that its sailors could have defended themselves from the assailants had they been better trained in basic firearm usage and tactics, the Navy contracted with Blackwater to train its sailors on the safe, effective use of small personal weaponry and other apprehension techniques.

21. Blackwater located the facility that is the subject of this suit in San Diego because the Navy contract required close proximity to Naval Base San Diego, the largest naval base on the West Coast, and also within San Diego's city limits.

22. The services Blackwater has been providing to the Navy over the past five years include a vocational training program for sailors. Blackwater's training programs for sailors will teach a variety of skills, including marksmanship, assembly and disassembly of firearms, basic arrest and apprehension techniques, and proper Safety for the latest state-of-the-art personal weaponry. This type of" training is expected to improve our sailors' ability to protect our country, our Navy ships and themselves.

23. Pursuant to this contractual relationship with the Navy, Blackwater is required to begin training its next class on June 2, 2008.

24. If Blackwater is unable to meet the June 2, 2008 deadline for commencing its training facility, it risks being unable to satisfy its contractual undertaking and being unable to train the nation's sailors as contemplated. Additionally, if Blackwater is unable to meet this deadline, its reputation will be severely damaged and its contractual relationship with the United States Navy jeopardized. This damage to its reputation could well result in the loss of other contracts and likely would damage Blackwater in an amount that is difficult, if not impossible, to quantify.

Blackwater Identifies the Training Site and Obtains All Necessary Permits

25. To provide the services required by the Navy, a site must have space for vocational/classroom instruction and a target range. As a leading site for the training, Blackwater identified and leased a warehouse located at 7685 Siempre Viva Road in the Otay Mesa Development District in the City of San Diego (the "Otay Mesa facility"). Blackwater was not required to obtain an Otay Mesa Development Permit for the Otay Mesa facility because it is a vocational school, which is exempt from such permits under SDMC §§ 1517.0202(a)(2), 1517.0301, 131.0622 and Table 131-06B to 131.0622.

26. Initially, Blackwater hoped to work with Southwest Law Enforcement Training Enterprises, an independent and respected San Diego based law-enforcement training partnership, in creating and running the Otay Mesa facility. Blackwater and Southwest Law Enforcement conducted arms-length negotiations over a contract related to the Otay Mesa training facility.

27. In September 2007, Southwest Law Enforcement applied for a Building Permit to construct 44 feet of new partitions in the Otay Mesa facility. SDMC § 129.0212 provides in pertinent part: "A decision on an application for a Building Permit shall be made by the Building Official in accordance with Process One. The Building Permit shall be approved if the Building Official finds that the work described in the permit application, plans, specifications, and other data comply with the requirements of the Building Regulations, other applicable laws and ordinances, and any applicable development permit." (Emphasis added.) See also SDMC § 112.0501, Diagram 112-05A (depicting "Process One" to include only staff level ("ministerial") review).

28. The Building Permit for construction of the partitions was granted and Blackwater began developing the Otay Mesa facility.

29. By late spring, Blackwater and Southwest Law Enforcement were not able to come to mutually agreeable contract terms; thus, their relationship ended with regard to the facility. Nonetheless, Blackwater continued to create the training facility and prepare for the training classes. There is no requirement that Blackwater change the name of the entity to which the permit was issued because the rights provided by the permit relate to the facility.

30. Blackwater's affiliate, Raven Development Group, which specializes in the creation of training facilities, assisted Blackwater with its construction of and preparations for the Otay Mesa facility. For example, in February 2008, Raven filed two applications for Building Permits for the Otay Mesa facility. These permits were for (1) installing two new air conditioning units and six exhaust fans, and (2) adding an indoor target range. These permits were granted, and Blackwater, assisted by Raven, began installing the additional air conditioning units and exhaust fans and constructing the indoor target range.

31. At the site, an indoor target range will be used for training related to marksmanship and the use of firearms. Under the SDMC, Blackwater was required to obtain a building permit for the target range, but was not required to obtain any other approvals. Indeed, SDMC § 53.10(d) explicitly exempts target ranges from all San Diego firearm restrictions, including council approval. In fact, after a reasonable investigation, Blackwater has been unable to identify any instance in which the City Council has been asked to approve a gun permit for a target range at a training facility or vocational or trade school, or when a target range was required to comply with the discretionary process now being imposed on Blackwater.

32. The same disparate treatment applies to vocational facilities instructing in similar subjects. For example, Southwestern College operates a Peace Officers Standards and Training (P.O.S.T)-certified police academy at 8100 Gigantic Street, less than a quarter mile from Blackwater's Otay Mesa facility. On information and belief, Southwestern College was not required to obtain from the City Council any special approval to operate as a vocational institution. On further information and belief—and despite initial claims to the contrary—other vocational institutions, including privately-run institutions, exist in the Otay Mesa area and were not required to obtain the approvals that Blackwater was told it must obtain, or follow the process being imposed on Blackwater.

33. After informing the Navy that Blackwater would be able to satisfy the Navy's West Coast training needs, Blackwater prepared for the training classes that will be offered at the Otay Mesa facility by, inter alia, sending offer letters to potential instructors and by arranging with vendors to purchase supplies and training materials. Blackwater also leased the facility at a cost of $35,000 per month, and spent hundreds of thousands of dollars renovating the facility.

34. In short, Blackwater complied the SDMC permit and approval requirements, as recently admitted by Defendant Broughton:

Earlier this month, the Mayor Jerry Sanders launched an inquiry into how Blackwater obtained its permits. One issue under review is why the development services department classified the company's navy training center as a trade school. David Potter is a former planner with the city. He says no city rules exist that would exclude the project from operating as a trade school.

Potter: The zone clearly allows that but doesn't define what it is....so I would say this qualifies as vocational training.

And that's why development services director Broughton says even if Blackwater had been listed on the permit applications, his staff wouldn't have done anything differently.

Broughton: I don't see that I would have had any other choice but to approve it because it complied with our municipal code and the California Building Code.{{KPBS, San Diego City Hall Probes Permit for Blackwater Facility, by Amita Sharma, May 20, 2008, available at http://www.kpbs.Org/news/local:id=11738}}

Blackwater Should Not Be Required To Undergo The City's Proposed Discretionary Process

35. The Otay Mesa Development District requires a development permit or an exemption from the permit requirement. Blackwater is exempt from the permit requirement because its facility—a trade/vocational school—is in compliance with this Ordinance. SDMC §1517.0202(a)(2).

36. Vocational/trade schools, such as Blackwater's training facility, are permitted uses as of right in the Otay Mesa Development, pursuant to two distinct provisions of the Municipal Code. SDMC § 1517.030 l(a)(l) specifically authorizes "[a]ll uses permitted in the IH-2-1 zone." It further exempts facilities permitted in the IH-2-1 zone from obtaining any special permits, including an Otay Mesa Development Permit. Vocational schools are permitted in the IH-2-1 zone, under SDMC § 131.0622, Table 131-06B. Thus, because Blackwater's facility, a vocational school, would be permitted in the IH-2-1 zone as a matter of right, it is similarly permissible, as a matter of right, in Otay Mesa.

37. A vocational school also is permissible in Otay Mesa under SDMC § 1517.0301(a)(8)(A). That section allows a trade school to operate that instructs in subjects related to a use permitted in the Industrial Subdistrict. The Industrial Subdistrict allows for a wide variety of uses, including: (1) scientific research and development activities; (2) manufacturing plants requiring advance technology and skills; (3) facilities engaged in the production of experimental products; (4) general industrial uses (defined as "Establishments engaged in the ... manufacturing ... testing [or] servicing ... of a wide range of products"); (4) storage warehouses; and (5) facilities involved in the wholesale distribution of various goods (including machinery, equipment, and supplies), pursuant to SDMC §§ 1517.0301(a)(2)(A), (2)(B), (2)(D), (3), (6)(A), (6)(B), et seq. Thus, if the subjects taught at Blackwater's vocational facility relate to any of these permissible uses, it is also permissible.

38. Blackwater's facility will instruct in a variety of subjects, all of which are related to permitted uses in the Otay Mesa Industrial Subdistrict. For example, Blackwater's facility will instruct on proper safety techniques for using the latest state-of-the-art personal weaponry. Because facilities engaged in researching and developing this weaponry are permitted in the subdistrict, a vocational school instructing end users on how to properly employ these devices would also be permissible. Blackwater's facility will also instruct students on how to assemble and disassemble firearms. Because facilities engaged in the manufacturing of firearms and firearm components are permitted in the subdistrict, a vocational school instructing individuals on how to assemble these items would also be permissible. Although it is by no means required that such weapons actually be manufactured in the subdistrict for weapons training to be permitted, it is certainly notable that a facility constructing Navy training drones employing live rocket motors is located next door to the Otay Mesa Facility.

39. Blackwater does not require approval by the City Council to train sailors on the proper use of firearms at the facility. SDMC § 53.10(d) clearly permits the discharge of firearms, without discretionary council approval or CEQA review, if the firearms are discharged at a facility instructing on the proper use of firearms and allowing individuals to engage in target practice. Such facilities are called target ranges. By exempting from special approval processes the places where San Diegans (and in this case, the men and women serving in the U.S. Navy) may practice gun safety and gun accuracy, the Municipal Code is consistent with the public policy of the State of California, which similarly exempts target ranges from even the strictest of gun laws.{{See, e.g., Cal. Pen. Code § 12026.2(a)(9) (exempting people traveling to target ranges from California's concealed weapon ban); Cal. Pen. Code § 12027(f) (exempting members of target ranges, whether public or private, from other concealed weapons . restrictions); Cal, Pen..Code §J2031 (b)(5) (exempting individuals at target ranges from being charged with felony for carrying a loaded weapon); Cal. Pen. Code § 12070(b)(9) (exempting target ranges that loan guns to individuals from California gun-transfer laws); Cal. Pen. Code § 12073(b)(7) (exempting target ranges from certain recordkeeping requirements); Cal. Pen. Code § 12280(k)0)(C)(i) (exempting target ranges from California assault weapons ban); Cal. Pen. Code § 12285(c)(3) (exempting individuals at target ranges from certain assault weapon registration requirements ); and Cal. Civ. Code § 3482.1 (exempting compliant shooting ranges from nuisance liability).}}

40. In sum, the Blackwater facility is clearly a vocational school. Vocational schools are permitted in Otay Mesa—as a matter of right with no need for discretionary or CEQA review—under two separate provisions of the Municipal Code.

San Diego City Officials Inspect Blackwater's Facilities and Give Blackwater the Right to Occupy the Facility

41. During and after the development process, inspectors from the City visited the Otay Mesa facility to inspect the work done pursuant to the three building Permits. Each inspector met with representatives of Blackwater, who specifically identified themselves as Blackwater employees. On March 21, 2008, the City's electrical inspector visited the facility. Meeting with him was Blackwater West Vice President Brian Bonfiglio, who identified himself as a Blackwater employee and provided the inspector with a Blackwater business card. Mr. Bonfiglio also was wearing a Blackwater shirt. The City's electrical inspector approved Blackwater's electrical permits. On March 25, 2008, the San Diego Fire Inspector visited the facility and met with Mr. Bonfiglio, who again identified himself as working for Blackwater, provided the inspector with a Blackwater business card and again was wearing a Blackwater shirt. The Fire inspector approved Blackwater's fire and safety permits. Similarly, Blackwater representatives had met with City planners and other officials, and identified themselves as Blackwater employees. No effort was made to conceal Blackwater's management or control over the Otay Mesa facility. Every City staff member must have known they were dealing with Blackwater employees.

42. Blackwater completed the projects for which it obtained permits: constructing 44 feet of partitions, installing air conditioning units and exhaust fans, and installing an indoor target range. On April 29, Blackwater staff and its contractors met with Afsaneh Ahmadi, Chief Building Official for the City of San Diego, at her request. She scrutinized Blackwater's plans, and requested one more walk-through of the facility. The very next day, the City's Structural Engineer conducted a final inspection and, finding that Blackwater was in compliance with all relevant provisions of the SDMC, approved issuance of a Certificate of Occupancy, pursuant to SDMC §§ 129.0113(a) & 129.0114. The Building Official evidenced this approval of the Certificate of Occupancy by stamping the plans for the Otay Mesa facility. He was overheard saying, "everything looked good. I can't not sign these plans."

43. All that is left is the ministerial act of sending Blackwater its Certificate of Occupancy, SDMC § 129.0114 ("Issuance of a Certificate of Occupancy." "The Building Official shall inspect the structure and if the Building Official finds no violations of the Land Development Code or other regulations that are enforced by the City's designated Code Enforcement Official, the Building Official shall issue a certificate of occupancy") (emphasis added); see also SDMC § 131.0622. Blackwater is informed and believes that it is the City's custom and practice to mail the actual paper Certificate of Occupancy several weeks after the approval. No further permits or approvals are necessary from the City of San Diego before Blackwater commences its training program at the Otay Mesa facility.

Election Year Politics Trigger an Investigation of the Otay Mesa Facility

44. San Diego's Mayor and City Attorney will stand for re-election on June 3, 2008. The Otay Mesa facility that Blackwater intends to open on June 2, 2008 has become an issue in both the Mayor's and the City Attorney's campaigns for re-election.

45. Several self-proclaimed activists have tried to make Blackwater's Otay Mesa facility an election issue. According to The Courage Campaign, "Now it's up to the Mayor and the San Diego City Council to-stand up against these mercenaries setting up shop on in California." The Mayor's election opponent, Steve Francis, also sought to make Blackwater a campaign issue by claiming the "Blackwater permit issue raises more questions than it answers," including "[w]hy was this matter not handled in an open and transparent way with public hearings and public comment period?" Indeed, a headline read, "Blackwater Explodes into San Diego Mayoral Race."

46. On April 26, 208, San Diego Councilman Scott Peters, at a rally organized by political activists, began questioning the propriety of the City approving Blackwater's facility. Peters is running for City Attorney against Mike A.guirre. The press covered the issue through late April and early May.

47. On May 5, 2008, the Mayor of San Diego requested that the City's Chief Operating Officer, Jay Goldstone, "conduct an investigation into the permits granted so far and permits yet to be granted" for Blackwater's Otay Mesa facility.

48. Despite not being requested by the Mayor to conduct an investigation, the City Attorney then, on May 16, 2008, issued a Memorandum recommending the issuance of a "Stop Work Order," or, in the alternative, the revocation of trie Certificate of Occupancy for the Otay Mesa facility. This Memorandum contains incorrect factual assumptions and reaches faulty legal conclusions and specifically states the City Attorney is "open to considering additional information or facts as they become known." The Memorandum was issued in a transparent attempt for the City Attorney to garner political support from activists who have been opposing Blackwater's efforts. A copy of the City Attorney's May 16, 2008 Memorandum is attached as Exhibit B.

49. On May 19, 2008, counsel for Blackwater wrote to the Mayor of San Diego—and copied the City Attorney—describing the numerous errors and flaws in the City Attorney's analysis. For example, counsel for Blackwater explained how the City Attorney's claim that "because Blackwater will train members of the U.S. Navy on the proper use of firearms at the facility, the [SDMC] requires a special approval by the city council" was incorrect. SDMC § 53.10 "generally prohibits the use of firearms and allows the city council to issue permits for the same under 'conditions as it deems proper.' However, SDMC section 53.10(d) clearly permits the discharge of firearms, without discretionary council approval or CEQA review, if the firearms are discharged at a facility instructing on the proper use of firearms and allowing individuals to engage in target practice. Such facilities are called 'target ranges."'

50. Additionally, counsel for Blackwater explained that the City Attorney's contention "that a law enforcement or security training operation does not 'clearly qualify' as a permitted use in Otay Mesa" is incorrect. Vocational schools, such as Blackwater's Otay Mesa facilities "are permitted in Otay Mesa, as a matter of right" under SDMC §§ 1517.0301(a)(l), 131.0622, and 1517.0301(a)(8). A copy of the May 19, 22008 letter from counsel for Blackwater to the Mayor of the City of San Diego is attached as Exhibit C.

The City of San Diego Nullifies Blackwater's Building Permits and Revokes its Approval for the Certificate of Occupancy

51. On the same day, May 19, 2008—not even an hour after Blackwater sent its letter (and certainly before City officials had time to digest Blackwater's factual and legal analysis), and before the audit report requested by the Mayor had been issued—Defendant Broughton, in his capacity as Director of the City of San Diego's Development Services Department, wrote to Mr. Brian Bonfiglio, Vice President of Blackwater, to inform him that the City of San Diego "will not issue a certificate of occupancy" for the Otay Mesa facility. The letter directed Blackwater not to use the "portions of the building identified for use as a shooting range and vocational/trade school.. .until a certificate of occupancy has been issued for this change of use."

52. Mr. Broughton further asserted that "no certificate of occupancy will be issued until the appropriate discretionary processes associated with the use of firearms in city limits and determination of use for the vocational/trade school by the Planning Commission has been completed. Since [the] Planning Commission and City[] Council's actions will be considered discretionary, these actions are subject to review under the California Environmental Quality Act (CEQA)."

53. Mr. Broughton's letter asserted that Blackwater may continue to use the Otay Mesa facility as a warehouse. A copy of Mr. Broughton's May 19, 2008 letter to Mr. Bonfiglio is attached as Exhibit D.

54. As detailed above, target ranges are not subject to discretionary council approvals. As detailed above, vocational facilities are not subject to discretionary planning commission review (or the concomitant CEQA analysis).

55. Fearing Blackwater's May 19, 2008 letter may have crossed with Mr. Broughton's May 19, 2008 and not been reviewed, Blackwater sent another letter to Defendant Broughton on May 20, 2008. A copy of the May 20, 2008 letter is attached as Exhibit E. Despite Blackwater's request, the City still refuses to send Blackwater its Certificate of Occupancy.

FIRST CLAIM FOR RELIEF

Injunctive Relief Mandate Against All Defendants

56. Blackwater realleges and incorporates by reference paragraphs 1 through 55 hereof as if set forth herein in full.

57. As Defendant Broughton has admitted, Blackwater has complied with the Municipal Code and the California Building Code. As a result, all permits were properly issued and Blackwater was correctly given the right to occupy the site, and Blackwater has vested rights in the Otay Mesa Facility. Defendants have a clear and present ministerial duty to send to Blackwater its Certificate of Occupancy for the Otay Mesa training facility, which has already been approved by the Building Official.

58. Blackwater has a clear and present right to occupy the Otay Mesa facility and therefore a right to the performance of Defendants' ministerial duty of sending the Certificate of Occupancy. See SDMC § 129.0114.

59. Blackwater does not have a plain, speedy, and adequate remedy in the ordinary course of law because Blackwater must have the training facility operational by June 2, 2008.

60. To remedy Defendants' improper acts and avoid irreparable harm, Blackwater seeks injunctive relief ordering Defendants to send to Blackwater its Certificate of Occupancy. Alternatively, Blackwater seeks an order staying the effectiveness of the Defendant Broughton's May 19, 2008 letter to Brian Bonfiglio and allowing Blackwater to immediately occupy the Otay Mesa Facility. Moreover, Blackwater seeks an order enjoining Defendants from (1) enforcing the May 19, 2008 letter from Kelly Broughton purportedly refusing to issue its Certificate of Occupancy for the Otay Mesa Facility and/or refusing to allow Blackwater to immediately occupy the Otay Mesa Facility, and (2) refusing to perform the ministerial task of sending Blackwater a Certificate of Occupancy for the Otay Mesa Facility.

SECOND CLAIM FOR RELIEF

Declaratory Judgment against All Defendants

61. Blackwater realleges and incorporates by reference paragraphs 1 through 60 hereof as if set forth herein in full.

62. An actual controversy has arisen and now exists between Blackwater and Defendants relating to their respective rights and duties in that Blackwater contends that Defendants' withholding of Blackwater's Certificate of Occupancy is invalid and unenforceable. Instead, the City is legally required to perform the ministerial act of sending Blackwater the Certificate of Occupancy. See SDMC § 129.0114. Defendants dispute these contentions and contend that their withholding of Blackwater's Certificate of Occupancy is valid.

63. Pursuant to 28 U.S.C. § 2201, Blackwater desires a declaration that (1) the Defendants' purported withholding of Blackwater's Certificate of Occupancy is improper, unlawful and invalid and (2) Blackwater has the right to occupy the building.

64. Such a declaration is necessary and appropriate at this time under the circumstances in order that Blackwater and Defendants may ascertain their respective rights and duties, and for Blackwater to avoid irreparable harm.

THIRD CLAIM FOR RELIEF

Violation of Section 1983 (Procedural Due Process) against All Defendants

65. Blackwater realleges and incorporates by reference paragraphs 1 through 64 hereof as if set forth herein in full.

66. At all times relevant herein, all Defendants' conduct was subject to 42 U.S.C. § 1983.

67. Blackwater obtained all necessary Building Permits and approvals to occupy the building so it could operate its training program at the Otay Mesa facility. The Building Official indicated that Blackwater was approved for a Certificate of Occupancy by stamping Blackwater's building plans with a Certificate of Occupancy stamp. Accordingly, Blackwater possesses a protected property right in its building permits and the approval to occupy the building.

68. On May 19, 2008, Defendants, acting under color of state law and pursuant to the City Attorney's flawed analysis, purported to deprive Blackwater of its protected property rights by sending a letter to Brian Bonfiglio, Blackwater's Vice President, stating that "[t]he City will not issue a certificate of occupancy for the [Otay Mesa facility] pursuant to Section 129.0114 of the San Diego Municipal Code..." This letter prohibits Blackwater from using the Otay Mesa facility for any purpose other than "warehouse uses." Accordingly, Blackwater cannot operate its training program or begin classes on June 2, 2008, as it must do to satisfy the United States Navy's requirements.

69. Defendants provided Blackwater no notice and opportunity to be heard before depriving Blackwater of its property rights. Moreover, any post-deprivation hearing that Blackwater might be entitled to would be completely ineffective because nothing would be resolved prior to June 2, 2008. Accordingly, Defendants have violated Blackwater's constitutional right to procedural due process.

70. Because Defendants are improperly withholding Blackwater's Certificate of Occupancy, Blackwater stands to suffer reputational harm and could lose all or a portion of its contract with the United States Navy for the training of sailors. Blackwater may also incur expenses related to the Otay Mesa facility, such as rent, and utility bills, even though the company cannot use it for its training program. Blackwater also may be contractually obligated to pay its instructors, vendors, and landlord for services and goods that it will not be able to use because of this revocation.

71. To remedy this constitutional violation and avoid irreparable harm, Blackwater seeks to recover from Defendants, pursuant to 42 U.S.C. § 1983, appropriate declaratory and injunctive relief as well as its damages, together with interest, and its costs and attorneys' fees in bringing this lawsuit.

FOURTH CLAIM FOR RELIEF

Violation of Section 1983 (Equal Protection) against All Defendants

72. Blackwater realleges and incorporates by reference paragraphs 1 through 71 hereof as if set forth herein in full.

73. At all times relevant herein, all Defendants' conduct was subject to 42 U.S.C. § 1983.

74. Blackwater intends to use the Otay Mesa facility to operate a training program for sailors. This training program would include training on marksmanship using the target range that Blackwater has built inside the warehouse. By withholding Blackwater's Certificate of Occupancy, Defendants, based on the City Attorney's flawed analysis, have prevented Blackwater from using the Otay Mesa facility to operate its Navy training program.

75. However, the City permits Southwestern College to operate a P.O.S.T-certified police academy in the Otay Mesa area, at 8100 Gigantic Street, less than a quarter mile from Blackwater's Otay Mesa facility. On information and belief, the City did not require Southwestern College or other vocational institutions, including privately-run institutions, to obtain any special approval from the City Council to operate as a vocational institution, such as the process being imposed on Blackwater. Moreover, on information and belief, other target ranges in the area were not required to pursue the City's proposed "discretionary process"—and were not subjected to CEQA's requirements—as is being required of Blackwater. See Exhibit C.

76. Defendants have not articulated any rational basis for its disparate treatment of Blackwater, on the one hand, and Southwestern College "arid other target ranges or vocational institutions, on the other hand. Indeed, Defendants' withholding of Blackwater's Certificate of Occupancy violates the City's own Municipal Code.

77. Instead of being motivated by any rational basis, Defendants' actions are motivated by political pressure. The existence of Blackwater's facility in Otay Mesa has become an issue in the campaign for re-election of both the San Diego City Attorney and the Mayor of San Diego. Thus, Defendants' actions are motivated not by a legitimate state interest, but by the City Attorney's and the Mayor's desire to win their re-election campaigns.

78. Accordingly, Defendants have violated Blackwater's constitutional right to equal protection.

79. To remedy this constitutional violation and avoid irreparable harm, Blackwater seeks to recover from Defendants, pursuant to 42 U.S.C. § 1983, appropriate declaratory and injunctive relief, as well as its damages, together with interest, and its costs and attorneys' fees in bringing this lawsuit.

FIFTH CLAIM FOR RELIEF

Violation of Dormant Commerce Clause against All Defendants

80. Blackwater realleges and incorporates by reference paragraphs 1 through 79 hereof as if set forth herein in full.

81. At all times relevant herein, all Defendants' conduct was subject to Article I, § 8, cl. 3 of the United State Constitution.

82. "The Commerce Clause empowers Congress '[t]o regulate Commerce .., among the several States,' Art. I, §8, cl. 3, and although its terms do not expressly restrain 'the several States' in any way, we have sensed a negative implication in the provision since the early days, see, e.g., Cooley v. Board of Wardens of Port of Philadelphia ex rel. Soc. for Relief of Distressed Pilots, 12 How. 299, 318-319 (1852); cf. Gibbons v. Ogden, 9 Wheat. I, 209 (1824) (Marshall, C. J.) (dictum). "The modern law of what has come to be called the dormant Commerce Clause is driven by concern about economic protectionism— that is, regulatory measures designed to benefit in-state economic interests by burdening out-of-state competitors." Kentucky v. Davis, — S.Ct. —, 2008 WL 2078187 (U.S., May 19, 2008) (citation and internal quotes omitted).

83. The dormant Commerce Clause requires any justifications for favoring in-state business over out-of-state competitors to satisfy "strict scrutiny."

84. Blackwater intends to use the Otay Mesa facility to operate a training program for sailors. This training program would include training on marksmanship using the target range that Blackwater has built inside the warehouse. By withholding Blackwater's Certificate of Occupancy, Defendants have prevented Blackwater from using the Otay Mesa facility to operate its training program.

85. However, the City permits Southwestern College to operate a P.O.S.T-certified police academy in the Otay Mesa area, at 8100 Gigantic Street, less than a quarter mile from Blackwater's Otay Mesa facility. On information and belief, the City did not require Southwestern College or other vocational institutions, including privately-run institutions, to obtain any special approval from the City Council to operate as a vocational institution, such as the process being imposed on Blackwater. Moreover, on information and belief, other target ranges in the area were not required to pursue the City's proposed "discretionary process"—and were not subjected to CEQA's requirements—as is being required of Blackwater. See Exhibit C.

86. Defendants have not articulated any proper basis for their disparate treatment of Blackwater. The City's withholding of Blackwater's Certificate of Occupancy for political motives is a discriminatory act absent a showing that there is no other means to advance a legitimate local purpose.

87. Defendants have imposed on Blackwater regulatory measures in a manner designed to benefit in-state economic interests by burdening out-of-state competitors.

88. Withholding issuance of Blackwater's Certificate of Occupancy when similar certificates have been routinely issued for in-state companies does not pass strict scrutiny because it unduly burdens the interstate market and impermissibly causes a shift of business from out-of-state firms to in-state firms.

89. To remedy this constitutional violation and avoid irreparable harm, Blackwater seeks to recover from Defendants, pursuant to U.S. Const., art I, § 8, cl. 3, appropriate declaratory and injunctive relief.

SIXTH CLAIM FOR RELIEF

Violation of Cal. Const., art I, § 7 (a) (Procedural Due Process) against All Defendants

90. Blackwater realleges and incorporates by reference paragraphs 1 through 89 hereof as if set forth herein in full.

91. At all times relevant herein, all Defendants' conduct was subject to Cal. Const., art I, § 7(a).

92. Blackwater obtained all necessary building permits and approval to occupy the building so it could operate its training program at the Otay Mesa facility. The Building Official indicated that Blackwater was approved for a Certificate of Occupancy by stamping Blackwater's building plans with a Certificate of Occupancy stamp. Accordingly, Blackwater possesses a protected property right in its building permits and the approval to occupy the building.

93. On May 19, 2008, Defendants, acting under color of state law and based on the City Attorney's flawed analysis, purported to deprive Blackwater of its protected property rights by sending a letter to Brian Bonfiglio, Blackwater's Vice President, stating that "[t]he City will not issue a certificate of occupancy for the [Otay Mesa facility] pursuant to Section 129.0114 of the San Diego Municipal Code..." This letter prohibits Blackwater from using the Otay Mesa facility for any purpose other than "warehouse uses." Accordingly, Blackwater cannot operate its training program or begin classes on June 2, 2008, as it must do to satisfy the United States Navy's requirements.

94. Defendants provided Blackwater no notice and opportunity to be heard before depriving Blackwater of its property rights. Any post-deprivation hearing that Blackwater might be entitled to would be completely ineffective because nothing would be resolved prior to June 2, 2008. Accordingly, Defendant has violated Blackwater's constitutional right to procedural due process.

95. Because Defendants are improperly withholding Blackwater's Certificate of Occupancy, Blackwater stands to suffer reputational harm and could lose all or a portion of its contract with the United States Navy for the training of sailors. Blackwater may also incur expenses related to the Otay Mesa facility, such as rent, and utility bills, even though the company cannot use it for its training program. Blackwater also may be contractually obligated to pay its instructors, vendors, and landlord for services and goods that it will not be able to use because of this revocation.

96. To remedy this constitutional violation and avoid irreparably harm, Blackwater seeks to recover from Defendants, pursuant to Cal. Const., art I, § 7(a), appropriate declaratory and injunctive relief.

SEVENTH CLAIM FOR RELIEF

Violation of Cal. Const., art I, § 7(a) (Equal Protection) against All Defendants

97. Blackwater realleges and incorporates by reference paragraphs 1 through 96 hereof as if set forth herein in full.

98. At all times relevant herein, all Defendant's conduct was subject to Cal. Const., art I, § 7(a). -

99. Blackwater intends to use the Otay Mesa facility to operate a training program for sailors. This training program would include training on marksmanship using the target range that Blackwater has built inside the warehouse. By withholding Blackwater's Certificate of Occupancy, Defendants have prevented Blackwater from using the Otay Mesa facility to operate its training program.

100. However, the City permits Southwestern College to operate a P.O.S.T-certified police academy in the Otay Mesa area, at 8100 Gigantic Street, less than a quarter mile from Blackwater's Otay Mesa facility. On information and belief, the City did not require Southwestern College or other vocational institutions, including privately-run institutions, to obtain any special approval from the City Council to operate as a vocational institution, such as the process being imposed on Blackwater. Moreover, on information and belief, other target ranges in the area were not required to pursue the City's proposed "discretionary process"—and were not subjected to CEQA's requirements—as is being required of Blackwater. See Exhibit C.

101. Defendants have not articulated any rational basis for its disparate treatment of Blackwater, on the one hand, and Southwestern College and other target ranges or vocational institutions, on the other hand. Indeed, Defendants' withholding of Blackwater's Certificate of Occupancy violates the City's own Municipal Code.

102. Instead of being motivated by any rational basis, Defendants' actions are motivated by political pressure. The existence of Blackwater's facility in Otay Mesa has become an issue in the campaign for re-election of both the San Diego City Attorney and the Mayor of San Diego. Thus, Defendants' actions are motivated not by a legitimate state interest, but by the City Attorney's and the Mayor's desire to win their re-election campaigns.

103. Accordingly, Defendants have violated Blackwater's constitutional right to equal protection.

104. To remedy this constitutional violation, Blackwater seeks to recover from Defendants, pursuant to Cal. Const., art I, § 7(a), appropriate declaratory and injunctive relief.

PRAYER FOR RELIEF

WHEREFORE, Blackwater prays for:

1. A preliminary and permanent injunction requiring Defendants to complete the ministerial function of sending Blackwater the Certificate of Occupancy or, alternatively, order staying the effectiveness of the City's May 19, 2008 letter to Brian Bonfiglio and allowing Blackwater to immediately occupy the Otay Mesa Facility;
2. A preliminary and permanent injunction enjoining Defendants from (1) enforcing the May 19, 2008 letter from Kelly Broughton purportedly refusing to issue its Certificate of Occupancy for the Otay Mesa Facility and/or refusing to allow Blackwater to immediately occupy the Otay Mesa Facility, and (2) refusing to perform the ministerial task of sending Blackwater a Certificate of Occupancy for the Otay Mesa Facility;
3. A judgment declaring that (1) Defendants Broughton's, the Department's and the City' purported withholding of Blackwater's Certificate of Occupancy is improper, unlawful and invalid and (2) Blackwater has the right to occupy the building;
4. A judgment awarding Blackwater all damages it incurred, together with interest;-
5. A judgment awarding Blackwater its costs and attorneys' fees; and
6. Such other and further relief as this Court deems just and proper.

Dated: May 21, 2008 MAYER BROWN LLP

By: (Signed) John Nadolenco
Attorneys for Plaintiff
BLACKWATER LODGE AND TRAINING CENTER, INC., dba BLACKWATER WORLDWIDE

JURY DEMAND

Plaintiff hereby demand trial by jury of all issues so triable.

Dated: May 21, 2008 MAYER BROWN LLP

By: (Signed) John Nadolenco
Attorneys for Plaintiff
BLACKWATER LODGE AND TRAINING CENTER, INC., dba BLACKWATER WORLDWIDE