Glazer's Wholesale Drug Co., Inc. v. Kansas

• Decision Date: 07 April 2000
• Docket Number: No. 99-2363-DJW.,99-2363-DJW.
• Citation: 92 F.Supp.2d 1228
• Parties: GLAZER'S WHOLESALE DRUG CO., INC., et al., Plaintiffs, v. State of KANSAS, et al., Defendants.
• Court: U.S. District Court — District of Kansas

92 F.Supp.2d 1228

GLAZER'S WHOLESALE DRUG CO., INC., et al., Plaintiffs, v. State of KANSAS, et al., Defendants.

No. 99-2363-DJW.

United States District Court, D. Kansas.

April 7, 2000.

Roger M. Theis, John T. Moore, Coy M. Martin, Hinkle Elkouri Law Firm, L.L.C., Wichita, KS, for Plaintiffs.

Richard L. Cram, Kansas Department of Revenue, Bureau of Legal Services, Topeka, KS, Laura M. Graham, Alcohol Beverage Control, Topeka, KS, Christopher J. Tymeson, Kansas Dept. of Revenue — Legal Services, Topeka, KS, David J. Dunlap, State of Kansas, Topeka, KS, for Defendants.

MEMORANDUM AND ORDER

WAXSE, United States Magistrate Judge.

This matter is before the Court on Defendants' Joint Motion To Dismiss (doc. # 11). More specifically, Defendants seek to dismiss Plaintiffs' 42 U.S.C. § 1983 civil rights claims pursuant to Fed.R.Civ.P. 12(b)(1) and 12(b)(6). For the following reasons, the Court finds Defendants' motion should be granted in part and denied in part.

FACTUAL BACKGROUND

Plaintiff Glazer's Wholesale Drug Company, Inc. ("Glazer's") is a Texas corporation engaged in business as a wholesale distributor of wine, beer and distilled spirits. Plaintiffs A.B. Sales, Inc. ("A.B.Sales") and Premier Beverage, Inc. ("Premier") are Kansas corporations engaged in business as wholesale distributors of wine, beer and distilled spirits. Both A.B. Sales and Premier currently are licensed to do business in Kansas as wholesale distributors of beer, wine and distilled spirits.

On or around July 15, 1999, plaintiff corporations executed an Asset Purchase Agreement ("Agreement") in which plaintiff Glazer's agreed to purchase from plaintiffs A.B. Sales and Premier assets relating to the wholesale distribution of alcoholic liquor. Plaintiffs assert they are unable to consummate this Agreement, however, because the Kansas Liquor Control Act ("KLCA") prohibits a nonresident person or entity such as Glazer's from obtaining a license to do business in Kansas as a wholesale distributor of beer, wine or distilled spirits. As a result, Plaintiffs bring the instant cause of action seeking (a) a declaratory judgment finding the KLCA licensing residency requirements invalid under the United States Constitution; and (b) injunctive relief which permanently will enjoin Defendants from enforcing the KLCA licensing residency requirements. The named defendants ("Defendants") in this cause of action are (1) the State of Kansas; (2) the Kansas Department of Revenue; (3) Karla J. Pierce (in her official capacity as Secretary of the Kansas Department of Revenue); and (4) Robert G. Longino (in his official capacity as Director of the Kansas Department of Revenue, Division of Alcoholic Beverage Control ("ABC")).¹

In lieu of answering the Complaint, Defendants filed a motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(1) and 12(b)(6) on the grounds that (1) the Court lacks subject matter jurisdiction based on the immunity provision within the Eleventh Amendment to the United States Constitution; (2) Plaintiffs fail to state a claim upon which relief may be granted based on Eleventh Amendment immunity and on the fact that defendants the State of Kansas and the Kansas Department of Revenue are not "persons" under 42 U.S.C. § 1983; and (3) Plaintiffs fail to state a claim upon which relief may be granted because the Kansas Department of Revenue lacks capacity to be sued as a separate entity.

DISCUSSION

I. Fed.R.Civ.P. 12(b)(1): Lack of Subject Matter Jurisdiction

Defendants maintain this Court lacks subject matter jurisdiction over Plaintiff's cause of action because the Eleventh Amendment to the United States Constitution, as interpreted by the United States Supreme Court and the United States Court of Appeals for the Tenth Circuit, prohibits a plaintiff from bringing suit in federal court against the State of Kansas, Kansas state agencies or Kansas state officials. Plaintiffs, on the other hand, argue the Court does have jurisdiction over their cause of action pursuant to an exception to Eleventh Amendment immunity, which specifically authorizes suits for prospective relief against state officers to prohibit conduct that violates federal law. Defendants contend the exception referenced by Plaintiffs is inapplicable. The issue presented, therefore, is whether the Eleventh Amendment divests this Court of subject matter jurisdiction over Plaintiffs' cause of action.

Federal courts are courts of limited jurisdiction; they may exercise jurisdiction only when specifically authorized to do so. Castaneda v. I.N.S., 23 F.3d 1576, 1580 (10th Cir.1994). Given this limited authority, there is a presumption against federal jurisdiction. Scheideman v. Shawnee County Bd. of Cty. Comm'rs, 895 F.Supp. 279, 281 (D.Kan.1995) (citing Basso v. Utah Power & Light Co., 495 F.2d 906, 909 (10th Cir.1974)). Because the party invoking the jurisdiction of the court has the duty to establish that federal jurisdiction does exist, it is the plaintiff who bears the burden of showing why the case should not be dismissed when federal jurisdiction is challenged. Id.; Jensen v. Johnson County Youth Baseball League, 838 F.Supp. 1437, 1439-40 (D.Kan.1993). A court lacking jurisdiction must dismiss the case at any stage of the proceeding in which it becomes apparent that jurisdiction is lacking. Laughlin v. Kmart Corp., 50 F.3d 871, 873 (10th Cir.), cert. denied, 516 U.S. 863, 116 S.Ct. 174, 133 L.Ed.2d 114 (1995); Fed.R.Civ.P. 12(h)(3). Challenges to jurisdiction under Fed.R.Civ.P. 12(b)(1) generally take two forms: facial attacks on the sufficiency of jurisdictional allegations and factual attacks on the accuracy of those allegations. Holt v. United States, 46 F.3d 1000, 1002-3 (10th Cir.1995). Defendants' motion falls within the first category.

A. Eleventh Amendment Immunity in General

"The Eleventh Amendment generally bars suits against a state in federal court commenced by citizens of that state or citizens of another state." Elephant Butte Irr. Dist. v. Department of Interior, 160 F.3d 602, 607 (10th Cir.1998), cert. denied, 526 U.S. 1019, 119 S.Ct. 1255, 143 L.Ed.2d 352 (1999). There are three primary methods, however, in which a plaintiff can circumvent the Eleventh Amendment. J.B. v. Valdez, 186 F.3d 1280, 1285-86 (10th Cir.1999) (citing Elephant Butte, 160 F.3d at 607; ANR Pipeline Co. v. Lafaver, 150 F.3d 1178, 1187-88 (10th Cir.) cert. denied, 525 U.S. 1122, 119 S.Ct. 904, 142 L.Ed.2d 902 (1999)). First, a state may consent to the action. Id. at 1286 (citations omitted). "Second, `Congress may clearly and expressly abrogate the states' immunity.'" Id. (citations omitted). Third, "a party may sue a state official pursuant to Ex parte Young, 209 U.S. 123, 28 S.Ct. 441, 52 L.Ed. 714 (1908)." Id. (citing Elephant Butte, 160 F.3d at 607). It is the Ex parte Young exception to Eleventh Amendment immunity upon which Plaintiffs rely to establish federal jurisdiction.

B. The Ex Parte Young "Exception" To Eleventh Amendment Immunity

"Under the Ex parte Young doctrine, `the Eleventh Amendment generally does not bar a suit against a state official in federal court which seeks only prospective equitable relief for violations of federal law, even if the state is immune.'" Id. (quoting Elephant Butte, 160 F.3d at 607); see also Green v. Mansour, 474 U.S. 64, 68, 106 S.Ct. 423, 88 L.Ed.2d 371 (1985) ("[A] suit challenging the constitutionality of a state official's action in enforcing state law is not one against the State. The theory of Young [is] that an unconstitutional statute is void, and therefore does not impart to [the state official] any immunity from responsibility to the supreme authority of the United States.") (citations and internal quotation marks omitted).

Plaintiffs argue the instant cause of action falls squarely within the permissible ambit of Ex parte Young because they seek only the following prospective equitable relief in their suit: (1) a declaratory judgment finding Kansas state officials have violated the U.S. Constitution by discriminating against nonresidents seeking wholesale beer and liquor licenses; and (2) an injunction prohibiting Kansas state officials from enforcing the unconstitutional nonresidency bar against Plaintiffs in the future.² Defendants do not dispute Plaintiffs' contention that Ex parte Young is still a valid exception to Eleventh Amendment immunity, but instead argue that limitations to the doctrine recently imposed by the United States Supreme Court render the doctrine inapplicable under the facts at bar. See Idaho v. Coeur d'Alene Tribe of Idaho, 521 U.S. 261, 117 S.Ct. 2028, 138 L.Ed.2d 438 (1997); Seminole Tribe of Florida v. Florida, 517 U.S. 44, 116 S.Ct. 1114, 134 L.Ed.2d 252 (1996).³ Although there is no dispute that the two Supreme Court cases to which Defendants refer have limited the scope of the Ex parte Young doctrine, the Court rejects Defendants' argument that they render the doctrine inapplicable under the facts at bar.

1. Seminole Tribe v. Florida — The "Remedial Scheme" Limitation

In Seminole Tribe v. Florida, 517 U.S. 44, 116 S.Ct. 1114, 134 L.Ed.2d 252 (1996), an Indian Tribe brought suit in federal court seeking to force the state of Florida to comply with provisions of the Indian Gaming Regulatory Act ("IGRA"). Because they had named Florida's governor Lawton Chiles as a defendant in the action, plaintiffs sought to invoke the Ex parte Young rule permitting federal jurisdiction over claims for prospective injunctive relief against state officials. Id. The Court, however, limited the scope of the Ex parte Young doctrine to hold that the doctrine should not be invoked in those cases where Congress "has prescribed a detailed remedial scheme for the enforcement against a State of a statutorily created right." Id.

Defendants argue that the Seminole Tribe v. Florida limitations to the Ex parte Young doctrine render the doctrine inapplicable here. The Court finds, however, that Seminole Tribe has no application...