R.S.S.W., Inc. v. City of Keego Harbor

• Decision Date: 16 September 1998
• Docket Number: No. 98-70497.,98-70497.
• Citation: 18 F.Supp.2d 738
• Parties: R.S.S.W., INC., d/b/a/ Goose Island Brewery, a Michigan corporation, and Richard Skinner, Plaintiffs, v. CITY OF KEEGO HARBOR, a Michigan municipal corporation, Michael Steklac, its City Manager, Jack Beach, its Chief of Police, its City Council Members Ralph Behler, Robert Burns, Arthur Nance, and David Hofmann, Defendants.
• Court: U.S. District Court — Eastern District of Michigan

18 F.Supp.2d 738

R.S.S.W., INC., d/b/a/ Goose Island Brewery, a Michigan corporation, and Richard Skinner, Plaintiffs, v. CITY OF KEEGO HARBOR, a Michigan municipal corporation, Michael Steklac, its City Manager, Jack Beach, its Chief of Police, its City Council Members Ralph Behler, Robert Burns, Arthur Nance, and David Hofmann, Defendants.

No. 98-70497.

United States District Court, E.D. Michigan, Southern Division.

September 16, 1998.

As Amended September 23, 1998.

COPYRIGHT MATERIAL OMITTED

Hugh M. Davis, Jr., Detroit, MI, Robert D. Horvath, Troy, MI, for Plaintiffs.

James E. Tamm and D. Kevin Davis, Bloomfield Hills, MI, Thomas Ryan, Sylvan Lake, MI, for Defendants.

MEMORANDUM OPINION & ORDER

GILMORE, District Judge.

I.

The present action is brought by R.S.S.W., Inc., a closely held corporation doing business as Goose Island Brewery ("Goose Island"), and its sole shareholder Richard Skinner ("Skinner") (jointly, "Plaintiffs"). The Amended Complaint, filed May 1, 1998, names as Defendants the City of Keego Harbor ("City" or "Keego Harbor") and the purported "authorized decisionmakers" for the City.¹ These decisionmakers include City Manager Michael Steklac ("Steklac"), Chief of Police Jack Beach ("Beach"), and City Council Members Ralph Behler ("Behler"), Robert Burns ("Burns"), Arthur Nance ("Nance"), and David Hofmann ("Hofmann"). These persons are sued in both their individual and official capacities.

II.

The parties are now before the Court on Defendants' Motion to Dismiss or, Alternatively, for Summary Judgment.² As discovery has yet to be completed in this case, Defendants' Motion for Summary Judgment is premature. The Court thus denies Defendants' Motion for Summary Judgment out of hand and addresses only the Motion to Dismiss.

Defendants' Motion to Dismiss arises under Fed.R.Civ.P. 12(b)(6) ("Rule 12(b)(6)"). Rule 12(b)(6) provides that

[e]very defense, in law or fact, to a claim for relief in any pleading ... shall be asserted in the responsive pleading thereto if one is required, except that the following defenses at the option of the pleader may be made by motion: ... (6) failure to state a claim upon which relief may be granted.

The Sixth Circuit has often discussed how a trial court is to review a Rule 12(b)(6) motion. It states that a trial court "must construe the complaint liberally in the plaintiff[s'] favor and accept as true all factual allegations and permissible inferences therein." Gazette v. City of Pontiac, 41 F.3d 1061, 1064 (6th Cir.1994); see also Miller v. Currie, 50 F.3d 373, 377 (6th Cir.1995). Because a Rule 12(b)(6) motion rests upon the pleadings rather than the evidence, "[i]t is not the function of the court [in ruling on such a motion] to weigh evidence or evaluate the credibility of the witnesses." Miller, 50 F.3d at 377. As put by the Supreme Court,

When a federal court reviews the sufficiency of a complaint, before the reception of any evidence[,] its task is necessarily a limited one. The issue is not whether [the] plaintiff[s] will ultimately prevail but whether the plaintiff[s are] entitled to offer evidence to support the[ir] claims. Indeed it may appear on the face of the pleadings that a recovery is very remote and unlikely but that is not the test.

Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974) (quoted in Miller, 50 F.3d at 377). Thus, the court should deny a Rule 12(b)(6) motion "`unless it appears beyond doubt that the plaintiff[s] can prove no set of facts in support of [their] claim which would entitle [them] to relief.'" Gazette, 41 F.3d at 1064 (quoting Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)); see also Miller, 50 F.3d at 377; Vemco, Inc. v. Camardella, 23 F.3d 129, 132 (6th Cir.), cert. denied, 513 U.S. 1017, 115 S.Ct. 579, 130 L.Ed.2d 495 (1994). "While this standard is decidedly liberal, it requires more than the bare assertion of legal conclusions." In re DeLorean Motor Co., 991 F.2d 1236, 1240 (6th Cir.1993). Rather, the complaint "`must contain either direct or inferential allegations respecting all the material elements to sustain a recovery under some viable legal theory.'" Id. at 1240 (quoting Scheid v. Fanny Farmer Candy Shops, Inc., 859 F.2d 434, 436 (6th Cir. 1988)).

III.

In compliance with the foregoing standard of review, the Court will not consider evidence outside of the pleadings, nor will it entertain Defendants' challenges to Plaintiffs' factual assertions. Rather, at this juncture, the Court will accept as true all factual allegations and permissible inferences in the Amended Complaint. Gazette, 41 F.3d at 1064. Those facts are as follows:

Goose Island is a "brewpub"³ located in Keego Harbor, Michigan. At the time that Goose Island opened for business in 1995, it acquired a Class "C" liquor license from the predecessor establishment.⁴ It then applied, in its own stead and with the City's approval,⁵ for its own licenses. It was granted the following licenses on October 30, 1995:(i) a class "C" liquor license; (ii) a Sunday sales permit; (iii) an "official" (food) permit; (iv) a dance permit; and (v) a "SDM" license. Approximately seventeen months later, on March 25, 1997, Goose Island was also granted its "brewpub" license. Under state law, all such licenses must be renewed each year as of May 1st. Goose Island's licenses have been renewed each year since 1995 and are currently in full force and effect.

Since its opening, Goose Island has served food and alcohol until 2:00 a.m., as allegedly permitted under the rules and regulations of the MLCC (specifically, R436.1403). However, Defendants, in their efforts to promote Keego Harbor as a family-oriented summer recreational destination, have pressured Goose Island to set a closing time of 11:00 p.m.⁶ Cognizant that they have no authority to require an earlier closing time, Defendants have declined to make a formal request that Goose Island set a closing time of 11:00 p.m. Rather, they set out on an unlawful campaign of harassment intended to force Goose Island into submission. That campaign had four main components.

First, Defendants pursued their goal by means of "inordinate police scrutiny." For example, the City police drove through the Goose Island parking lot on a daily basis, parked within the near-vicinity of the building, and stopped and sometimes ticketed employees and customers as they left the brewpub. Defendants also enlisted the police departments of neighboring cities to assist them in this effort. The alleged scrutiny is to blame for a down-turn in business. Goose Island's sales receipts were only $31,000 in January 1998, as compared to $91,000 in January 1997.

Second, Defendants passed a City liquor license ordinance ("Liquor Ordinance") in order to advance their illegal objective. The Liquor Ordinance lists the criteria upon which the City will recommend non-renewal or revocation of a liquor license to the MLCC. It reads in relevant part as follows:

The City Council may recommend non-renewal or revocation of a license or permit to the [MLCC] upon a determination based upon a preponderance of the evidence at [a] hearing that any of the following exist:

Violations of State laws or local ordinances concerning the licensed premises including, but not limited to, any of the following:

...

(b) A pattern of patron conduct in the neighborhood of the licensed premises which is in violation of the law and/or disturbs the peace ... and tranquility of the neighborhood;

...

(d) Entertainment on the premises or activity in connection with the licensed premises which by its nature causes, creates, or contributes to disorder, disobedience to rules, ordinances or laws, or contributes to the disruption of normal activity of those in the neighborhood of the licenses premises;

and

(e) Any advertising, promotion or activity in connection with the licensed premises which by its nature causes, creates, or contributes to the disruption of normal activity of those in the neighborhood of the licensed premises.

Plaintiffs contend that these criteria are overly broad and subjective. Furthermore, they claim that the City Council intended that they be so, as the Ordinance was created as a tool with which seek the revocation of the liquor license of any local establishment that refuses to set the desired 11:00 p.m. closing time.

Third, Defendants have pursued their goal through abuse of the City zoning authority. For example, the City informed Skinner that a zoning variance would not be required for a particular construction project on Goose Island's south property line.⁷ However, after the construction project was completed, City reversed itself and told Skinner that a variance would in fact be required. Steklac then informed Skinner that the required variance would be granted only if Goose Island would begin to "voluntarily" close each day by 11 p.m. When Goose Island refused to comply, the zoning variance was denied.⁸ The City also refused to even consider a subsequent request by Goose Island to change the name of and the sign-face on the brewpub. Specifically, Steklac stated in a November 21, 1997, letter, that "since there are a number of site plan and use issues to be resolved at the Goose Island Brewery, the issue of the sign-face replacement should properly be part of those overall discussions."

Fourth and finally, Defendants harassed Goose Island by lodging an unjustified complaint with the MLCC regarding a customer incident. Specifically, the City lodged a complaint with the MLCC after Goose Island called the City police for assistance with an inebriated customer. Plaintiffs argue that that action was inappropriate given that Goose Island itself brought the customer's condition to the City's attention.

Plaintiffs claim that Defendants, and particularly Steklac, actually threatened to seek the revocation of Goose Island's liquor license. However, Goose Island's license was in fact renewed on May 1,...