Flying Dog Brewery, LLLP v. Mich. Liquor Control Comm'n

• Citation: 870 F.Supp.2d 477
• Decision Date: 28 June 2012
• Docket Number: Case No. 1:11–CV–307.
• Parties: FLYING DOG BREWERY, LLLP, Plaintiff, v. MICHIGAN LIQUOR CONTROL COMMISSION, et al., Defendants.
• Court: U.S. District Court — Western District of Michigan

870 F.Supp.2d 477

FLYING DOG BREWERY, LLLP, Plaintiff,

v.MICHIGAN LIQUOR CONTROL COMMISSION, et al., Defendants.

Case No. 1:11–CV–307.

United States District Court,

W.D. Michigan,

Southern Division.

June 28, 2012.

Alan Gura, Gura & Possessky PLLC, Alexandria, VA, for Plaintiff.

Donald S. McGehee, Gerald A. Whalen, MI Dept. Attorney General, Lansing, MI, Melinda A. Leonard, Rosendo Asevedo, Jr., MI Dept. Attorney General, Southfield, MI, for Defendants.

OPINION AND ORDER

ROBERT J. JONKER, District Judge.

This case arises out of Defendant Michigan Liquor Control Commission's (the “Commission”) initial denial of Plaintiff's application for a license to sell its “Raging Bitch” beer in Michigan. The Commission initially determined that Plaintiff's label was “detrimental to the health, safety, or welfare of the general public,” in violation of Mich. Admin. Code R. 436.1611(1)(c). Plaintiff sued under 42 U.S.C. § 1983 for both injunctive relief against the Commission, and for damages against the five commissioners (the “Commissioners”) in office when Plaintiff's licensing application was denied. The Commission later issued an administrative order reversing its previous orders, rescinding the beer-labeling rule underpinning their earlier decision, and granting Plaintiff's request for a license to sell Raging Bitch beer in Michigan. (docket # 33–2.) The Commission's action mooted Plaintiff's request for injunctive relief. (docket # 43.) All that remains are Plaintiff's claims for damages against the Commissioners in their individual capacities. Before the Court is Defendants' Motion to Dismiss the claims against the Commissioners based on absolute quasi-judicial immunity, or in the alternative, qualified immunity (docket # 53), and Plaintiff's Motion for Partial Summary Judgment Regarding Liability (docket # 56). After reviewing all matters of record, the Court GRANTS Defendants' Motion, and DENIES Plaintiff's Motion.

BACKGROUND

Under Michigan law, the Commission has the “sole right, power, and duty to control the alcoholic beverage traffic” within the State, including regulating the sale of alcoholic beverages such as beer, wine, and liquor. Mich. Comp. L. § 436.1201(2). The Commission is comprised of five members. Three of the members—the Administrative Commissioners—have the responsibility for decisions “relating to licensing ... merchandising, and distribution.” Id. § 436.1209(2). The other two members—the Hearing Commissioners—have no role in the licensing process, but rather hear and decide violation cases relating to existing rules and regulations promulgated by the State legislature and the Commissioners. ( Id.) At all times relevant to this litigation, Defendants Nida Simona, Patrick Gagliardi, and Donald Weatherspoon served as Administrative Commissioners, and Defendants Colleen Pobur and Edward Gaffney served as Hearing Commissioners. (Compl., docket # 1, at ¶ 18.)

Before beer can be sold in Michigan, it must receive Commission approval. Mich. Admin. Code R. 436.1611(1)(c). On September 17, 2009, Plaintiff applied for a license to sell “Raging Bitch” beer, a Belgian-style India Pale Ale. On November 18, 2009, the three Administrative Commissioners denied Plaintiff's application, reasoning that the label contained material that was “detrimental to the health, safety, or welfare of the general public.” (docket # 11–2.) The denial was made under the beer-labeling rule in effect at the time, which granted the Commission the authority to “disapprove any beer label submitted for registration that is deemed to promote violence, racism, sexism, intemperance, or intoxication or to be detrimental to the health, safety, or welfare of the general public.” Mich. Admin. Code R. 436.1611(1)(c)(before the amendment effective October 19, 2011). Plaintiff requested an appeal hearing, which a two-member majority of the Administrative Commissioners conducted. (docket # 11–3.) After the hearing, the Administrative Commissioner's original decision was affirmed for substantially the same reasons. (docket # 11–4.) At no time were the two Hearing Commissioners involved in the decision to deny Plaintiff its license to sell.

On March 25, 2011, Plaintiff filed this action against Defendants, alleging the Commission's decision violated Plaintiff's First Amendment rights. (docket # 1.) The Complaint sought injunctive relief preventing the enforcement of Rule 436.1611(1)(c) against Plaintiff and compensatory damages against the Commissioners in their individual capacities. ( Id.) While this case was pending, the Administrative Commissioners revised their prior decision in light of Sorrell v. IMS, ––– U.S. ––––, 131 S.Ct. 2653, 180 L.Ed.2d 544 (2011). (docket # 54, at 11.) Following this review, the Administrative Commissioners decided to approve the “Raging Bitch” label for use in connection with Michigan beer sales and to rescind Rule 436.1611(1)(c), as well as the analogous rules that applied to labeling wine and spirits. (docket 39–1, 39–2.) As a result of Defendants' actions, Plaintiff withdrew its then-pending Motion for a Preliminary Injunction. The parties agree that Plaintiff's claims for damages against the Commissioners in their individual capacities are the only claims that remain in dispute, and are the subject of the Motions currently before the Court.

ANALYSIS

Defendants argue that they are immune from Plaintiff's claims for damages. The Administrative Commissioners argue that they were acting in a quasi-judicial role when they denied the application based on Rule 436.1611(1)(c), and are therefore entitled to absolute immunity from Plaintiff's claims against them. Alternatively, the Administrative Commissioners assert that qualified immunity requires dismissal of Plaintiff's claims, because their actions were not prohibited by any clearly established law. The Hearing Commissioners argue that they too are entitled to quasi-judicial or qualified immunity, but that the claims against them also fail on the merits because they were not in any way involved in the licensing decision at issue. Plaintiff counters that neither immunity doctrine applies to shield the Commissioners from liability, and that because all of the Commissioners are involved in what Plaintiff views as an unconstitutional licensing procedure, they must all be held personally liable for their actions. The Court addresses each Motion below.

A. Standard of Review

Defendants argue dismissal of Plaintiff's claims is appropriate under Fed.R.Civ.P. 12(b), 12(c), and 56. With respect to the applicable standard of review, Plaintiff argues that the Court must confine its analysis to the Rule 56 standard of review because Defendant's Motion relies in part on affidavits from both Hearing Commissioners in arguing for dismissal, which incorporate facts into the record that would be outside the proper scope of Rule 12(b)(6) and 12(c). As a practical matter, the standard of review will not materially impact the analysis, given that the parties agree on the facts germane to the Court's Opinion. In an abundance of caution, however, the Court will treat Defendant's Motion as a motion for summary judgment under Rule 56, so as to consider all evidence of record. Of course, Plaintiff's Motion for Summary Judgment implicates the same standard.

Summary judgment is appropriate when there are genuine issues of material fact and the moving party is entitled to judgment as a matter of law. Jones v. Potter, 488 F.3d 397, 402 (6th Cir.2007); Fed.R.Civ.P. 56. A genuine issue of material fact exists “if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). In considering a motion for summary judgment, the Court must draw all reasonable inferences in favor of the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). The ultimate question is “whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law.” Anderson, 477 U.S. at 251–52, 106 S.Ct. 2505.

B. The Hearing Commissioners are entitled to summary judgment because they did not personally participate in the licensing decision.

Before discussing the applicability of Defendants' asserted immunity defenses, the Court first addresses the claims against the Hearing Commissioners, Defendants Pobur and Gaffney. The Hearing Commissioners were not in any way involved in the decision to deny Plaintiff's licensing application, as their primary responsibility is “to hear violation cases arising from the obligations imposed on licensees under the Code and the Commission's administrative rules.” (Pobur Aff., docket # 54–2, at ¶ 3; Gaffney Aff., docket # 54–3, at ¶ 3.) Consequently, the Hearing Commissioners argue the claims against them must necessarily fail, because they took no action that could have even arguably violated Plaintiff's First Amendment rights.

Plaintiff admits that the Hearing Commissioner's were not involved in the application denial, but argues that claims against them individually remain appropriate because “they hear violation cases and stood ready to punish any importer, distributor, or seller of unlicensed RAGING BITCH.” (docket # 63, at 12.) In essence, Plaintiff argues that the mere threat of possible action on the part of the Hearing Commissioners in the event Plaintiff for some reason decided to sell its product without a license states a cognizable basis for its First Amendment claim.

Plaintiff's argument is unpersuasive. To hold the Hearing Commissioners liable, Plaintiff must demonstrate that “each defendant, through the official's own individual actions, has violated the Constitution.” Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1948, 173 L.Ed.2d 868 (2009). A claimed violation must be based upon active...