WCI, Inc. v. Ohio Dep't of Pub. Safety

• Decision Date: 30 July 2020
• Docket Number: Case No.: 3:17-cv-282
• Parties: WCI, INC., Plaintiff, v. OHIO DEPARTMENT OF PUBLIC SAFETY, et al., Defendants.
• Court: U.S. District Court — Southern District of Ohio

475 F.Supp.3d 770

WCI, INC., Plaintiff,

v.OHIO DEPARTMENT OF PUBLIC SAFETY, et al., Defendants.

Case No.: 3:17-cv-282

United States District Court, S.D. Ohio, Western Division, at Dayton.

Signed July 30, 2020

Luke Lirot, Pro Hac Vice, Law Office of Luke Lirot, P.A., Clearwater, FL, Anthony R. Cicero, Dayton, OH, for Plaintiff.

Charles Febus, Joseph Edward Schmansky, Ohio Attorney General's Office, Anthony John Garcia, Office of the Ohio Attorney General Charitable Law Section, Columbus, OH, for Defendants.

ENTRY AND ORDER REJECTING REPORT AND RECOMMENDATIONS OF THE MAGISTRATE JUDGE. (ECF 26); OVERRULING PLAINTIFF'S OBJECTION TO THE REPORT AND RECOMMENDATION (ECF 28); SUSTAINING DEFENDANTS’ OBJECTION TO THE REPORT AND RECOMMENDATION (ECF 27); GRANTING DEFENDANTS’ MOTION TO DISMISS FOR LACK OF JURISDICTION, (ECF 22), AND TERMINATING CASE.

THOMAS M. ROSE, UNITED STATES DISTRICT JUDGE

The instant case is on remand from the United States Court of Appeals for the Sixth Circuit. See WCI, Inc. v. Ohio Department of Public Safety , 774 F. App'x 959 (6th Cir. 2019). The panel noted:

WCI filed this suit in the district court, alleging constitutional violations and seeking declaratory and injunctive relief against the Commission and the Department. In its complaint, WCI claimed to have preserved its right to plenary adjudication of these issues in federal court pursuant to England v. Louisiana State Board of Medical Examiners , 375 U.S. 411, 84 S.Ct. 461, 11 L.Ed.2d 440 (1964). The defendants did not answer the complaint or specifically deny the England reservation claim, but instead moved to dismiss the complaint for failure to state a claim upon which relief could be granted.

For purposes of this appeal, we assume without deciding that WCI properly invoked its England reservation, but we recognize that this question might warrant further analysis on remand. See id. at 418–19, 84 S.Ct. 461 ("But we see no reason why a party, after unreservedly litigating his federal claims in the state courts although not required to do so, should be allowed to ignore the adverse state decision and start all over again in the District Court."); Trafalgar Corp. v. Miami Cty. Bd. of Comm'rs , 519 F.3d 285, 288 (6th Cir. 2008) ("Furthermore, because [the plaintiff] asserted federal issues in its complaint at the state court level, it cannot now claim to have reserved its federal causes of action for subsequent litigation in federal court under ... England [.]"); see also Lumbard v. City of Ann Arbor , 913 F.3d 585, 589–90 (6th Cir. 2019) (recognizing England limitations).

WCI, Inc. v. Ohio Dep't of Pub. Safety , 774 F. App'x 959, 961 (6th Cir. 2019).

An England reservation permits a plaintiff who is in state court because a federal court abstained from ruling on questions of state law to reserve federal claims for subsequent review in a federal forum. A party making an England reservation has a duty to make a Windsor notification to the state court of the claims being reserved, so that the state court can interpret state law with an eye to the coming federal challenges, but the party must not actually litigate the claims in the state court. Anderson v. Charter Twp. of Ypsilanti , 266 F.3d 487, 495–96 (6th Cir. 2001) (citing " Government and Civic Employees Organizing Committee v. Windsor , 353 U.S. 364, 366, 77 S.Ct. 838, 1 L.Ed.2d 894 (1957), England , 375 U.S. at 420, 84 S.Ct. 461, and NAACP v. Button , 371 U.S. 415, 427, 83 S.Ct. 328, 9 L.Ed.2d 405 (1963) ).

For a while, the Sixth Circuit extended England beyond cases of federal abstention, in order to permit a plaintiff to reserve federal claims—and thereby avoid the Rooker - Feldman doctrine¹ —in cases where the plaintiff is procedurally obligated to bring an initial state court action. See DLX, Inc. v. Kentucky , 381 F.3d 511, 523, n.9 (6th Cir. 2004) (given that state court action is a condition precedent for ripeness of a federal takings claim, claim preclusion does not bar subsequent federal takings action where plaintiff reserved federal claims in the state court proceeding) (internal citation omitted). The DLX extension, however, has been abrogated:

Appellants argue that our opinion in DLX means that, in the Sixth Circuit, claims properly reserved under England are not subject to claim preclusion when litigants are involuntarily forced into state court under Williamson. On this point, the Appellants correctly characterize our ruling in DLX . However, the Supreme Court in San Remo Hotel, L.P. v. City and County of San Francisco , 545 U.S. 323, 125 S.Ct. 2491, 162 L.Ed.2d 315 (2005), clearly overruled this circuit, along with others, with respect to our DLX claim-preclusion exemption. San Remo , 545 U.S. at 345, 125 S.Ct. 2491 (overruling Santini v. Conn. Haz. Waste Mgmt. Serv. , 342 F.3d 118 (2d Cir. 2003) ). The San Remo court held that there are no judicial exceptions to the Full Faith and Credit Statute, 28 U.S.C. § 1738,² "simply to guarantee that all takings plaintiffs can have their day in federal court." Id. at 339, 125 S.Ct. 2491. "Even when the plaintiff's resort to state court is involuntary ... we have held that Congress must clearly manifest its intent to depart from § 1738." Id. at 345, 125 S.Ct. 2491 (internal quotation marks omitted). When § 1738 applies to a state court decision, both issue preclusion and claim preclusion apply. "This statute has long been understood to encompass the doctrines of res judicata , or ‘claim preclusion,’ and collateral estoppel, or ‘issue preclusion.’ " Id. at 336, 125 S.Ct. 2491 (citing Allen v. McCurry , 449 U.S. 90, 94–96, 101 S.Ct. 411, 66 L.Ed.2d 308 (1980) ). The preclusion doctrines under § 1738 apply to subsequent litigation in federal court to the same extent that they would in the state courts in which the judgment was rendered. See Migra v. Warren City Sch. Dist. Bd. of Educ. , 465 U.S. 75, 81, 104 S.Ct. 892, 79 L.Ed.2d 56 (1984).

Lumbard v. City of Ann Arbor , 913 F.3d 585, 589–90 (6th Cir.), cert. denied, ––– U.S. ––––, 140 S. Ct. 267, 205 L. Ed. 2d 133 (2019). The Rooker - Feldman doctrine is jurisdictional. Exxon Mobil Corp. v. Saudi Basic Indus. Corp. , 544 U.S. 280, 284, 125 S.Ct. 1517, 161 L.Ed.2d 454 (2005).

Thus,

under the Full Faith and Credit Act, 28 U.S.C. § 1738, federal courts must give a prior adjudication by a state court the same preclusive effect that it would have under the law of the state whose court issued the judgment. See Migra v. Warren City Sch. Dist. Bd. of Educ. , 465 U.S. 75, 80–81, 104 S.Ct. 892, 79 L.Ed.2d 56 (1984) ; Lumbard v. City of Ann Arbor , 913 F.3d 585, 590 (6th Cir. 2019). "When [ 28 U.S.C.] § 1738 applies to a state court decision, both issue preclusion [collateral estoppel] and claim preclusion [res judicata ] apply." Lumbard , 913 F.3d at 590 (citing San Remo Hotel, L.P. v. City & Cty. of San Francisco , 545 U.S. 323, 336, 125 S.Ct. 2491, 162 L.Ed.2d 315 (2005) ). Accordingly, a judgment in [a] state court[ ] has the same claim preclusive effect in federal court that the judgment would have in [that state's] courts. Migra , 465 U.S. at 85, 104 S.Ct. 892 ; Hutcherson v. Lauderdale Cty., Tenn. , 326 F.3d 747, 758 (6th Cir. 2003).

West v. Parker , 783 F. App'x 506, 511-12 (6th Cir.), cert. denied, ––– U.S. ––––, 140 S. Ct. 25, 204 L. Ed. 2d 1181 (2019) (Boggs, J.).

In Ohio, res judicata involves both claim preclusion and issue preclusion. Grava v. Parkman Township , 73 Ohio St.3d 379, 381, 653 N.E.2d 226 (1995). Under claim preclusion, a valid, final judgment on the merits bars all subsequent actions based on any claim arising out of the transaction or occurrence that was the subject matter of the previous action. Kirkhart v. Keiper , 101 Ohio St. 3d 377, 378, 2004-Ohio-1496, 805 N.E.2d 1089. Claim preclusion not only bars claims and defenses that were actually brought in the prior action, but also those that were part of the same transaction or occurrence that could have been brought. Grava , 73 Ohio St. 3d at 382, 653 N.E.2d 226 ; Kocinski v. Reynolds , 6th Dist. Lucas No. L-99-1318, 2000 WL 1132778, at *2, 2000 Ohio App. LEXIS 3595, *4 (Aug. 11, 2000). "Transaction" is defined as a "common nucleus of operative facts." Grava , 73 Ohio St. [3d] at 382.

* * * * * * * * *

Along with claim preclusion, collateral estoppel operates to uphold the past determinations of issues and claims by courts, preserving resources, promoting judicial economy and reducing the possibility of inconsistent decisions. Montana v. United States , 440 U.S. 147, 153-54, 99 S.Ct. 970, 59 L.Ed.2d 210 (1979).

Hake v. Simpson , No. 3:17-CV-420, 2018 WL 3973098, at *5 (S.D. Ohio Aug. 20, 2018), aff'd, 770 F. App'x 733 (6th Cir. 2019) (Rose, J.).

Here, the Ohio appellate court summarized the constitutional claims raised in the assignments of error in state court:

III. The Ohio State Liquor control commission's decision is unconstitutional because it is overbroad and cannot be reconciled with other penalties for more serious violations.

IV. The Ohio State Liquor Control Commission's penalty violates the appellant's 8th Amendment rights by being overwhelmingly excessive.

ECF 1-5, PageID 32.

Plaintiff received a valid, final judgment on the merits of these claims, when the court rejected them. This bars all subsequent actions based on any claim arising out of the transaction or occurrence that was the subject matter of the previous action. Kirkhart v. Keiper , 101 Ohio St.3d 377, 378, 2004-Ohio-1496, 805 N.E.2d 1089. The claims and defenses that were actually brought in Plaintiff's state-court action are barred, as well as those that were part of the same transaction or occurrence that could have been brought. Grava , 73 Ohio St. 3d at 382, 653 N.E.2d 226. This includes WCI's due-process, takings and Eighth-Amendment claims. In short, WCI's III, IV, V, VII and VIII claims are barred.³

While Plaintiff asserts their claims survive Rooker - Feldman , they would still face jurisdictional hurdles. Under the Eleventh Amendment to...