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

• Decision Date: 05 March 2015
• Docket Number: No. 12-1984,12-1984
• Parties: FLYING DOG BREWERY, LLLP, Plaintiff - Appellant, v. MICHIGAN LIQUOR CONTROL COMMISSION; NIDA SAMONA; DONALD WEATHERSPOON; PATRICK GAGLIARDI; COLLEEN POBUR; EDWARD GAFFNEY, Defendants - Appellees.
• Court: U.S. Court of Appeals — Sixth Circuit

FLYING DOG BREWERY, LLLP, Plaintiff - Appellant, v. MICHIGAN LIQUOR CONTROL COMMISSION; NIDA SAMONA;

DONALD WEATHERSPOON; PATRICK GAGLIARDI; COLLEEN POBUR;

EDWARD GAFFNEY, Defendants - Appellees.

No. 12-1984

UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT

March 5, 2015

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION

File Name: 15a0173n.06

ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF MICHIGAN

OPINION

Before: DAUGHTREY, MOORE, and STRANCH, Circuit Judges.

JANE B. STRANCH, Circuit Judge. This appeal arises from Flying Dog Brewery's allegation that its First Amendment rights were violated when the members of the Michigan Liquor Control Commission initially denied Flying Dog's application to register a beer label in Michigan. Flying Dog sued under 42 U.S.C. § 1983, alleging a violation of its First Amendment rights, and the case ultimately proceeded on a claim for damages. The district court granted summary judgment in favor of the Commissioners, extending to them both quasi-judicial and qualified immunity. Flying Dog Brewery, LLLP v. Mich. Liquor Control Comm'n, 870 F. Supp. 2d 477 (W.D. Mich. 2012). Flying Dog now appeals. For the reasons explained below, we REVERSE the judgment of the district court and remand for further proceedings.

I. BACKGROUND

Craft beer maker Flying Dog Brewery created a Belgian-style India Pale Ale, "Raging Bitch," in celebration of its twentieth anniversary. (R. 1 at Page ID 5, ¶ 16.) In manufacturing this and other craft beers, Flying Dog's co-founder, George Stranahan, was influenced by his friend, "the iconoclastic journalist and literary figure Hunter S. Thompson." Flying Dog claims that its products are "inextricably imbued with and promote[] the irreverent 'gonzo' spirit and outlook for which Thompson is noted." (R. 1 at Page ID 3, ¶¶ 10-11.) Ralph Steadman, an artist with whom Thompson frequently collaborated, also worked with Flying Dog in the production of brewery-related products, including beer labels. (R. 1 at Page ID 4, ¶ 13.) The label for "Raging Bitch" beer depicts a wild dog presenting human female genitalia as well as possessing semblances of human female breasts. The label is inscribed:

Two inflammatory words . . . one wild drink. Nectar imprisoned in a bottle. Let it out. It is cruel to keep a wild animal locked up. Uncap it. Release it . . . stand back!! Wallow in its golden glow in a glass beneath a white foaming head. Remember, enjoying a RAGING BITCH, unleashed, untamed, unbridled—and in heat—is pure GONZO!! It has taken 20 years to get from there to here. Enjoy! - Ralph Steadman

(R. 1 at Page ID 5, ¶ 16.)

Before Flying Dog could sell "Raging Bitch" beer in Michigan, the company was required to seek a registration number and approval from the Michigan Liquor Control Commission. Mich. Admin. Code R. 436.1611. The issue before the Commission was approval of the beer label—its written inscription and the pictorial representation that provided context and meaning for the label's language. The Commission derives its authority from the Michigan Constitution, which provides that the "legislature may by law establish a liquor control commission which,subject to statutory limitations, shall exercise complete control of the alcoholic beverage traffic within this state, including the retail sales thereof." Mich. Const. art. 4, § 40 (1963). Pursuant to this constitutional authority, the Michigan Legislature created a five-member administrative body appointed by the governor with the advice and consent of the senate to regulate alcohol sales in Michigan. Mich. Comp. Laws § 436.1209. No more than three of the five members of the Commission may be members of the same political party. Id. Two members, one from each political party, serve as Hearing Commissioners to handle "violation cases." Id. The other three members serve as Administrative Commissioners who are responsible for administering the laws applicable "to licensing, purchasing, enforcement, merchandising, and distribution." Id. At least two of the Administrative Commissioners sit as an appeal board to review initial decisions. Id.

At the time of relevant events, the Administrative Commissioners were Nida Samona, Donald Weatherspoon, and Patrick Gagliardi. Samona served as the Commission Chairperson. The Hearing Commissioners were Colleen Pobur and Edward Gaffney. Although Flying Dog initially named all five as defendants in this suit, only the Administrative Commissioners remain in the litigation. (R. 1 at Page ID 2-3, ¶¶ 6-7.)

In September 2009, Flying Dog requested approval to register "Raging Bitch" for distribution and sale in Michigan. Chairperson Samona and Commissioner Weatherspoon reviewed Flying Dog's request and denied it in a written order dated November 18, 2009, finding that the label violated Michigan Administrative Code Rule 436.1611(1)(d), a regulation which is no longer in effect. (R. 11-2 Page ID 28.) That rule authorized rejection of any beer label submitted for registration that was "deemed to promote violence, racism, sexism, intemperance orintoxication or to be detrimental to the health, safety or welfare of the general public." (R. 11-4 Page ID 50.) The Commissioners denied Flying Dog's application because "the proposed label which includes the brand name 'Raging Bitch' contains such language deemed detrimental to the health, safety, or welfare of the general public." (R. 11-2 Page ID 28.) Flying Dog appealed.

Commissioners Gagliardi and Weatherspoon held an appeal hearing in April 2010. Flying Dog's CEO, James Caruso, and his attorney appeared. Caruso stated that the company chose the "edgy" name and label because it reflected the nature of the Belgian yeast used to make the beer, and it promoted the Flying Dog brand. (R. 11-3 Page ID 33-34, 37.) Caruso also represented that his employees—"many ladies working with Flying Dog"—and female customers in bars where Flying Dog conducted market research loved the label and thought it was humorous. Caruso reported that the beer was selling well in other states, and "I apologize if anything about it was offensive to the State of Michigan. I understand the role we play and how necessary it is to certainly be the traffic control as to what comes into the state, especially as beer." Id. at 37.

The Commission's attorney reminded the Commissioners that they had previously declined to approve labels using the words "Bitch, Bubbly Bitch, Royal Bitch and Mad Bitch," and drew the Commissioners' attention to the back of the beer label containing the sentence, "Remember, enjoying a RAGING BITCH, unleashed, untamed, unbridled—and in heat—is pure GONZO!!" The attorney reported visiting Flying Dog's website where he found the remark, "Raging Bitch, if you're lucky, your bitch will look this sexy after 20 years." (R. 11-3 at Page ID 38-39.) Noting that not "many dogs . . . live[] twenty years," the attorney observed "[t]here is a tenor, if you will, to the promotion that I think you have quite correctly caught and need to address." Id. at Page ID 39.

Commissioner Weatherspoon observed that a "dog's not going to drink this beer. . . . it says and in heat, which specifically refers to a female dog . . . [s]o you got to get me from the dog in terms of the reference here, to humans." Id. at 39, 41. Caruso explained that "it's a play on words . . . . So Raging Bitch is a, well you can call it a brood bitch for Raging Bitch when a dog is in heat," to which Commissioner Weatherspoon replied, "That's not the words you used." Id. at 41. Caruso argued that the Commission had previously approved Flying Dog's beer label for "In-Heat Wheat" and at one time had approved the name "Blond Bitch" submitted by Horny Bitch Beer Company. Id. at 42-43. It was Flying Dog that proposed the review standard of the Commission with Caruso's statements and conclusion that "there's a difference between edgy and offensive, and it's certainly a gray area and you gentlemen will determine where that edge is." Id. at 44. Commissioner Gagliardi replied, "That's what we're here to do, Mr. Caruso, . . . when we're in a gray area, [we] attempt to err on the side of the least offensive. . . . [W]e have not been willing to put this particular five-letter word on the front of the box." Observing that the Commission had previously "licensed Flying Dog in the State of Michigan" and recognizing that "there's a place for [Gonzo journalism]," Commissioner Gagliardi stated, "we don't believe in censorship . . . but we also are placing a product in front of ten million people in the State of Michigan. That product goes in front of all ages from children on up, they go to the supermarkets, they go to the party stores with their parents and yes, although beers are in a certain area, they still walk by them." He concluded that, "we do have a responsibility here to place product in a public place with the names that are on it, and that's what we take very seriously." Id. at 44-45.

On July 7, 2010, the Commissioners denied Flying Dog's appeal and affirmed the Commission's November 2009 order, referring to that earlier order as finding that the proposedlabel "includes language deemed detrimental to the health, safety, or welfare of the general public due to the promiscuous nature of the product label." R. 11-4 Page ID 50. The Commissioners denied registration on appeal because the beer label "contains such language deemed detrimental to the health, safety, or welfare of the general public." (R. 11-4 Page ID 51.)

Flying Dog subsequently filed this § 1983 suit against the Commissioners in their individual capacities, alleging that rejection of its beer label violated its First Amendment rights. (R. 1 at Page ID 9, ¶ 32.) Flying Dog claimed that Rule 436.1611(1)(d) was constitutionally invalid, both facially and as applied. (R. 1 at Page ID 9, ¶¶ 31-35.) The brewery sought declaratory and injunctive relief, and demanded a jury trial on the issue of compensatory damages. (R. 1 at Page ID 9-10, Prayer...