Berry v. Allen

• Decision Date: 20 June 1969
• Docket Number: No. 18930.,18930.
• Parties: James R. BERRY and Lucille Berry, Plaintiffs-Appellees, v. Bert ALLEN, James R. Watts, William P. Lusk and Joe Jones, Defendants-Appellants.
• Court: U.S. Court of Appeals — Sixth Circuit

411 F.2d 1142 (1969)

James R. BERRY and Lucille Berry, Plaintiffs-Appellees, v. Bert ALLEN, James R. Watts, William P. Lusk and Joe Jones, Defendants-Appellants.

No. 18930.

United States Court of Appeals Sixth Circuit.

June 20, 1969.

Edwin O. Davis of Davis & Mahan, Louisville, Ky., for appellants.

William A. Young, Frankfort, Ky., for appellees.

Before O'SULLIVAN, PHILLIPS and CELEBREZZE, Circuit Judges.

CELEBREZZE, Circuit Judge.

Appellees brought an action in the United States District Court for the Western District of Kentucky under the Civil Rights Act, 42 U.S.C. § 1983, claiming that Appellants violated their civil rights by arbitrarily refusing to grant them a local liquor license. The Trial Court, upon findings of fact, entered judgment for Appellees directing Appellants to issue them the local license. Appellants then perfected this appeal. We reverse the judgment of the District Court.

The Kentucky Revised Statutes provide a comprehensive scheme for regulating commerce in alcoholic beverages. KRS Chs. 241-244. These statutes vest state officials, a State Alcoholic Beverages Administrator and State Alcoholic Beverages Control Board in particular, with power to determine the quota of liquor licenses for counties and cities and who shall be entitled to them. An individual wishing to open a retail liquor outlet must therefore procure a state license.

Local officials may also have a say in the matter. A county or city may designate its own alcoholic beverage administrator to whom applicants must apply before making application for state licenses. Although local administrators lack power to determine the quota of liquor licenses for their localities, this being a state function, they may regulate the distribution of liquor outlets to ensure that too many do not become concentrated in one area.

If either administrator expresses his intention to deny his particular license, the applicant is entitled to a hearing before the State Alcoholic Beverages Control Board. If after the hearing the Board declines to issue the state license, because it upholds the local administrator or it refuses on the recommendation of the State Administrator to issue the state license, the applicant may appeal to the Franklin County Circuit Court and from there to the Court of Appeals of Kentucky.

The Kentucky procedure outlined above thus provides for co-operation between the local administrators, where they have qualified for that office, and state administrators in deciding whether local conditions warrant the granting of a license. The State Administrator, however, may refuse to issue a license "for any reason which he, in the exercise of his sound discretion, may deem sufficient." KRS 243.450. The State Board reviews the State Administrator's exercise of discretion to see if it was reasonable. See O'Brien v. Department of Alcoholic Beverages Control, 306 Ky. 238, 206 S.W.2d 941 (1947). And the courts of Kentucky will review the Board's action to see if the Board had jurisdiction and if substantial evidence supports its findings of fact. KRS 243.570(2). This is the normal arrangement between courts and administrators where the State has entrusted the latter with discretion to make informed determinations.

Turning to the case before us, Appellees applied to the Kentucky Department of Alcoholic Beverage Control on May 24, 1963 for a retail package liquor license to open an outlet in Meade County, Kentucky. No one had at that time qualified for the post of County Administrator in Meade County. The quota that the State Board had established for this County was full, however. Appellees then successfully petitioned the State Board to increase the quota of retail package liquor licenses for Meade County. Appellees renewed their application for a state license. Some of the Appellants herein filed protests as interested citizens and the State Administrator denied Appellees' application on the ground that the Fort Knox area of Meade County, Kentucky, where Appellees proposed to locate their store, was being adequately served by the retail liquor outlets already there. The Board affirmed the State Administrator. It specifically found that:

"1. The proposed premises for which the license was sought was on a state highway and is an unincorporated isolated area.

"2. There was inadequate police protection in the area where the licensed premises are proposed to be located.

"3. Other alcoholic beverage outlets in the general area of the proposed premises are adequate to serve this sparsely populated portion of Meade County.

"4. The officials of Meade County, Kentucky, including the County Judge, members of the Fiscal Court, and the County Court Clerk were present and objected to the issuance of said license."

Appellees appealed to the Franklin County Circuit Court which reversed the Board. The Board appealed to the Court of Appeals of Kentucky which reversed the judgment of the Circuit Court and held that the Board was justified in denying Appellees' application. Moberly v. Berry, Ky., 405 S.W.2d 198 (1966). Thus after exhausting state procedures, Appellees found themselves without a liquor license. Meanwhile, Appellant Bert Allen had qualified for the office of County Alcoholic Beverage Administrator for Meade County.

Approximately six months after the decision in Moberly v. Berry, Ky., 405 S.W.2d 198 (1966), Appellees brought an action against members of the State Board in the United States District Court for the Eastern District of Kentucky under 42 U.S.C. § 1983 claiming that the State Board members had violated their civil rights. Appellees alleged that the entry by the Board of the order denying their license

"was the result of a conspiracy by the defendants herein being politically motivated and was the result of a conspiracy by the defendants each with the other to * * * arbitrarily * * * discriminate against plaintiffs by holding them to a standard different from that used in granting the same type of license to other applicants similarly situated. * *."

Appellees requested that the District Court grant the following relief: first, that the Court enjoin the Board from issuing any retail package liquor license for use in Meade County; second, that the Court enter an order directing defendants to rehear Appellees' application for a state license; and third, that upon reconsideration of same defendants be directed to apply to plaintiffs "the same standard of eligibility used in issuing licenses to other applicants similarly situated." This is all that Appellants requested in their complaint.

The Board moved to dismiss the complaint on the ground that it failed to state a claim under Section 1983 of the Civil Rights Act. The Court denied the Board's motion and the Board filed an answer. Before the case could be set for trial, a general election was held and as a result there was a change of State administration. Following the election, for reasons that do not appear in the record, the Board withdrew its answer and elected to stand on its motion to dismiss. The District Court...