Wall & Ochs, Inc. v. Hicks

• Decision Date: 09 April 1979
• Docket Number: No. 78-115-Civ-5.,78-115-Civ-5.
• Court: U.S. District Court — Eastern District of North Carolina
• Parties: WALL & OCHS, INC., Plaintiff, v. Greg L. HICKS, Herbert L. Ridgeway, Jr., Herbert L. Ridgeway, III, Henry C. Severs and Edward L. Thigpen, Individually and as Members of the North Carolina State Board of Opticians, and North Carolina Opticians Association, Intervenor, Defendants.

469 F. Supp. 873

WALL & OCHS, INC., Plaintiff, v. Greg L. HICKS, Herbert L. Ridgeway, Jr., Herbert L. Ridgeway, III, Henry C. Severs and Edward L. Thigpen, Individually and as Members of the North Carolina State Board of Opticians, and North Carolina Opticians Association, Intervenor, Defendants.

No. 78-115-Civ-5.

United States District Court, E. D. North Carolina, Raleigh Division.

April 9, 1979.

COPYRIGHT MATERIAL OMITTED

James R. Trotter, Spruill, Trotter & Lane, Rocky Mount, N. C., for plaintiff.

Millard R. Rich, Jr., Deputy Atty. Gen., Raleigh, N. C., for defendants.

John N. Fountain, Bailey, Dixon, Wooten, McDonald & Fountain, Raleigh, N. C., for defendant intervenor.

MEMORANDUM OF DECISION

DUPREE, District Judge.

Wall & Ochs, Inc., a foreign corporation engaged in retail eyeglass vending in the Eastern District of North Carolina, brings this action under 42 U.S.C. § 1983 alleging the violation of its First and Fourteenth Amendment rights. Specifically, plaintiff contends that defendants, acting individually and through the North Carolina State Board of Opticians ("State Board"), unlawfully penalized and prohibited it from advertising its products, and illegally restricted it from operating its inter-company vending and processing procedures in an economically feasible manner. Declaratory and injunctive relief is sought.

After the State Board answered, the North Carolina Opticians Association ("Association") was allowed to intervene. Thereafter, plaintiff filed a partial summary judgment motion, with affidavits, as to Counts 1, 2, 3, 4 and 7 of its complaint (Count 5 having been voluntarily dismissed as moot). Defendants followed suit by filing a dismissal motion based upon the abstention doctrine, and, in the alternative, cross-motions for summary judgment as to all counts. Wall & Ochs contends abstention is inappropriate, and summary judgment improper as to Count 6 because of remaining questions of fact. These motions are now ripe for resolution.

The facts are substantially undisputed as follows. Wall & Ochs, Inc., is a Pennsylvania corporation with authorization to do business in eastern North Carolina and other states as a retail vendor of prescription eyeglasses. Its outlet at 167 Winstead Avenue, Rocky Mount, North Carolina, is operated and supervised by Mildred H. Carr (Ms. Carr), a licensed dispensing optician who serves customers and completes prescriptions in the manner and with the skill required by Article 17, Chapter 90, of the North Carolina General Statutes.

The State Board of Opticians is organized under and required to implement the purposes and provisions of N.C.G.S. §§ 90-234 to 255.1, and various administrative regulations promulgated thereunder, which regulate the manufacture and sale of prescription eyeglasses in North Carolina. As well as being State Board members, the individual defendants are registered dispensing opticians engaged as retail or wholesale vendors of prescription eyeglasses in North Carolina. They are also members of the intervenor State Opticians Association.

During the twelve months preceding this action, plaintiff published advertisements in the Rocky Mount Evening Telegram offering prescription eyeglasses for sale at discount prices with gifts and premiums. These ads resulted in increased sales and profits. On or about October 13, 1977, the State Board acted to impose fines totaling $300 upon Wall & Ochs due to its advertising, and on October 4 notified Ms. Carr that it was "moving" against her because plaintiff was "operating in North Carolina under her professional authority." She was also fined $300 for the above advertising. These actions were taken by the Board in a telephone poll without affording plaintiff or Ms. Carr notice of a hearing, an opportunity to appear at such a hearing, and the opportunity to be heard in person or through counsel, and present evidence and cross-examine witnesses.¹

Plaintiff's proposed method of future operation is the subject of Count 6 which requests N.C.G.S. §§ 90-250 and 255, also 21 N.C.A.C. § 40.0203, be declared unconstitutional as restraining interstate commerce and violating due process. Since Wall & Ochs is vertically integrated, in that it owns and operates the optical laboratories which make the eyeglasses it sells at retail, it proposes to vend its glasses by: (1) receiving prescriptions for eyeglasses from customers in its retail outlets; (2) sending the prescriptions and frame selections made by customers to its optical laboratory in New Jersey where the eyeglasses will be made; and then (3) returning the finished eyeglasses to its outlets for customer delivery. Although these orders will be filled by and under the supervision of persons trained as dispensing opticians, they will not be sold and fitted under the supervision of such dispensing opticians. The above statutory provisions, on their face, prohibit such a method of operation.²

As a threshold issue, defendants invoke the doctrine of equitable abstention, Huffman v. Pursue, Ltd., 420 U.S. 592, 95 S.Ct. 1200, 43 L.Ed.2d 482 (1975), and contend this court should not decide the instant issues because state administrative proceedings had already been begun, thus a federal court action would undermine paramount state interests. To support their position, defendants note that, after notifying Wall & Ochs that fines had been levied against it for publishing advertisements offering eyeglasses for sale at discounts, the State Board also informed it a hearing would be held on March 17, 1978 to consider further disciplinary action. The present lawsuit was filed approximately one month later, on March 14. Defendants contend the issuance of this notification "commenced" state administrative proceedings before the occurrence of any federal proceedings on the merits. See Hicks v. Miranda, 422 U.S. 332, 95 S.Ct. 2281, 45 L.Ed.2d 223 (1975). They further contend that, once state administrative proceedings had been concluded, plaintiff could have sought judicial review of the Board's actions in the state courts under the North Carolina Administrative Procedure Act ("APA"), N.C.G.S. § 150A-1, et seq. Thus, all of the constitutional claims Wall & Ochs presently raises can be aired and, if necessary, vindicated in state administrative and judicial tribunals.

This area of the law is multi-faceted and a brief background discussion would be helpful in placing the instant question in proper perspective.

The doctrine of abstention was first enunciated in Railroad Commission of Texas v. Pullman Company, 312 U.S. 496, 61 S.Ct. 643, 85 L.Ed. 971 (1941), and required a federal court to abstain from deciding issues involving matters of state law when that law was unsettled and would soon be the subject of a state court decision. Rather than dismiss the action, Pullman held jurisdiction was to be retained pending clarification of the state questions which, it was hoped, would obviate the constitutional claims. Although many considerations went into the court's opinion, the most important were avoidance of unnecessary constitutional decisions, particularly those subject to displacement by future state adjudications, and maintenance of the federal system through preservation of state administrative and judicial autonomy. A good example of this latter aspect is Burford v. Sun Oil Company, 319 U.S. 315, 63 S.Ct. 1098, 87 L.Ed. 1424 (1943), which compelled abstention and then dismissal in a case needlessly in conflict with the state's administration of its regulatory affairs.³ The more dubious branches of abstention concern unsettled state law areas and federal docket congestion. See Wohl v. Keene, 476 F.2d 171 (4th Cir. 1973), and generally Wright, Law of Federal Courts § 52 at 224-29 (3rd Ed. 1976).

Equitable abstention, albeit a derivative of Pullman, had its genesis in three cases — Douglas v. City of Jeannette, 319 U.S. 157, 63 S.Ct. 877, 87 L.Ed. 1324 (1943); Dombrowski v. Pfister, 380 U.S. 479, 85 S.Ct. 1116, 14 L.Ed.2d 22 (1956); and Younger v. Harris, 401 U.S. 37, 91 S.Ct. 746, 27 L.Ed.2d 669 (1971). These, in essence, required abstention in, and dismissal of, actions seeking to enjoin already initiated state court prosecutions on federal constitutional grounds except when the threat of "irreparable injury" was both great and immediate. See also Samuels v. Mackell, 401 U.S. 66, 91 S.Ct. 764, 27 L.Ed.2d 688 (1971). The court felt any sound constitutional defense could be raised prior to or during trial; and if unsuccessful, raised through the state appellate courts and ultimately on certiorari to the United States Supreme Court. In 1974, Hicks v. Miranda, 422 U.S. 332, 95 S.Ct. 2281, 45 L.Ed.2d 223 (1975), extended equitable abstention ". . . where state criminal proceedings are begun against the federal plaintiffs after the federal complaint is filed but before any proceedings of substance on the merits have taken place in the federal court . . .." 422 U.S. at 349, 95 S.Ct. at 2292. Compare Doran v. Salem Inn, Inc., 422 U.S. 922, 95 S.Ct. 2561, 45 L.Ed.2d 648 (1975).

These somewhat murky concepts were applied to civil litigation in Huffman v. Pursue, Ltd., 420 U.S. 592, 95 S.Ct. 1200, 43 L.Ed.2d 482 (1975). There, a state court defendant failed to appeal a civil court order declaring his property a nuisance. He instead sued the state authorities for injunctive and declaratory relief in federal court charging First and Fourteenth Amendment violations. On appeal to the Supreme Court, the Younger principles were held applicable to civil proceedings and plaintiffs were required henceforth to exhaust state appellate remedies unless "bad faith" on the part of state officials or immediate and irreparable harm was shown. The nuisance proceeding attacked in Huffman related to criminal obscenity statutes and thus was more akin to a criminal proceeding than most civil actions.

Rather than limiting equitable abstention to quasi-criminal civil proceedings, Juidice v....