Block v. Canepa

DEREK BLOCK, et al., Plaintiffs, v. JIM CANEPA, SUPERINTENDENT OF LIQUOR CONTROL, et al., Defendants.

CASE NO.: 20cv-3686

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF OHIO EASTERN DIVISION

February 17, 2021

JUDGE MORRISON

MAGISTRATE VASCURA

OPINION AND ORDER

Remaining Plaintiffs, an individual wine enthusiast and an Illinois wine store, challenge the constitutionality of Ohio's prohibition against out-of-state wine shipments to Ohio's residents and of Ohio's limitation on the amount of wine Ohio residents can transport into the state from a foreign jurisdiction.¹ Defendants move to dismiss and the motion is ripe. (ECF Nos. 19, 20, 22.) Pursuant to the reasoning that follows, the Court DENIES the motion.

I. BACKGROUND

The following material information is taken from Plaintiffs' Complaint, which the Court accepts as true for purposes of addressing the instant motion.

Plaintiff Kenneth Miller is an Ohio resident and wine collector. Plaintiff House of Glunz, Inc. is an Illinois corporation that markets, sells and ships wine at retail to consumers.

Defendant Jim Canepa is the Superintendent of the Ohio Division of Liquor Control. Defendant Dave Yost is the Attorney General of Ohio. Defendant Thomas Strickrath is the Director of the Ohio Department of Public Safety. Defendant Deborah Pryce is Chairperson of the Ohio Liquor Control Commission. Each is sued in their official capacity and is alleged to have acted at all relevant times under color of law.

Ohio's liquor laws create a three-tier distribution system. Under this system, the wine manufacturer or importer (first tier) sells wine to a wholesale distributor (second tier) who then resells to a retailer (third tier). (ECF No. 19 at 14-15.) A retailer then sells wine to consumers. Id. The manufacturer, distributor, and retailer must each obtain proper permits from the State.

Miller wants to buy wine directly from retailers outside of Ohio that offer wine not available to him in Ohio for shipment to his home but Ohio prohibits such shipments. R.C. § § 4301.58(B), 4301.60, and 4303.25. He has not attempted to complete such a purchase. Miller wants the opportunity to make such purchases. Miller also travels to other states to buy wine. He wants to be able to transport more than the maximum 4.5 liters Ohio law allows into Ohio from other states but he has not attempted to do so. R.C. § 4301.20.

House of Glunz has no physical location in Ohio and no intention of opening one here. House of Glunz does not have a permit from the Department of Liquor Control that would allow it to ship wine directly to Ohio residents. It has not applied for any permit that might allow it to do so. House of Glunz has customers who want it to ship wine to Ohio. House of Glunz has not attempted to complete such sales because Ohio law prevents House of Glunz from doing so without a permit or physical Ohio presence. It has therefore lost business. House of Glunz does not allege "any actual or planned attempt to have an Ohio resident transport more than" the limit into Ohio. (ECF Nos. 1 and 19 at 22.)

Plaintiffs use 42 U.S.C. § 1983 to challenge Ohio's direct-ship prohibition and transport limitation.² They highlight the ability of Ohio retailers to ship wine to non-residents and the lack of quantity restriction on consumers transporting wine within the state to argue that those laws violate the dormant Commerce Clause. They seek a declaratory judgment that the laws are unconstitutional and an injunction "barring the [D]efendants from enforcing them and requiring the defendants to permit the shipping and transportation of wine from out-of-state retailers to Ohio consumers." (ECF No. 20 at 2.) They further request costs and expenses, including attorney's fees.

Defendants move to dismiss arguing that Plaintiffs lack standing. Alternatively, they argue that three of the four Defendants are immune from suit under the Eleventh Amendment and that the Plaintiffs fail to state a claim upon which relief may be granted. Plaintiffs oppose. Intervenor Defendant Wholesale Beer & Wine Association of Ohio ("Wholesale") also responded (ECF No. 21), urging the Court to refrain from addressing a proper remedy while not opposing the motion to dismiss. Being fully advised, the Court addresses the arguments in order.

II. STANDING

Defendants first argue that each Plaintiff lacks standing to pursue their claims in this Court such that full dismissal is proper. "The threshold question in every federal case is whether the court has the judicial power to entertain the suit." National Rifle Assoc. of Am. v. Magaw, 132 F.3d 272, 279 (6th Cir. 1997) (citation omitted). Hence, the Court begins with summarizing the standard of review for addressing motions to dismiss for lack of standing before turning to the substance of Defendants' standing arguments.

A. Standard of Review

Federal R. Civ. P. 12(b)(1) applies to Defendants' motion as to standing. See Crawford v. United States Dep't of the Treasury, No. 3:15-CV-00250, 2016 U.S. Dist. LEXIS 55395, at *18, 117 A.F.T.R.2d (RIA) 2016-1400 (S.D. Ohio Apr. 25, 2016) (Rose, J.). That rule allows a defendant to file a motion to dismiss based on a "lack of jurisdiction over the subject matter." Fed. R. Civ. P. 12(b)(1). The plaintiff has the burden of proving jurisdiction when subject matter jurisdiction is challenged.Mitchell v. BMI Fed. Credit Union, 374 F. Supp. 3d 664, 666-67 (S.D. Ohio 2019)(Marbley, J.)(citation omitted).

The standard of review of a 12(b)(1) motion to dismiss for lack of subject matter jurisdiction depends on whether the defendant makes a facial or factual challenge to subject matter jurisdiction. Wayside Church v. Van Buren County, 847 F.3d 812, 816-17 (6th Cir. 2017). Only the former is present here. Mosley v. Kohl's Dep't Stores, Inc., 942 F.3d 752, 756 (6th Cir. 2019). A facial attack "questions merely the sufficiency of the pleading" and requires the district court to "take[] the allegations in the complaint as true." Gentek Bldg Prods., Inc. v. Sherwin-Williams Co., 491 F.3d 320, 330 (6th Cir. 2007) (citation omitted.)

B. Elements of Standing

"Not all disputes have a home in federal court." Buchholz v. Tanick, 946 F.3d 855, 860 (6th Cir. 2020). "Article III of the Constitution limits federal courts' jurisdiction to certain 'Cases' and 'Controversies.'" Clapper v. Amnesty Int'l USA, 568 U.S. 398, 408 (2013). "One element of the case-or-controversy requirement is that plaintiffs must establish that they have standing to sue." Id. (internal quotations and citation omitted). "The party seeking to invoke federal jurisdiction bears the burden to demonstrate standing and he 'must plead its components with specificity.'" Daubenmire v. City of Columbus, 507 F.3d 383, 388 (6th Cir. 2007) (quoting Coyne v. American Tobacco Co., 183 F.3d 488, 494 (6th Cir. 1999)).

"To satisfy Article III standing, the plaintiff must demonstrate that (1) he or she suffered an injury in fact that is concrete and particularized and actual orimminent, not conjectural or hypothetical; (2) the injury is fairly traceable to the challenged action of the defendant; and (3) it is likely that the injury will be redressed by a favorable decision." Mosley, 942 F.3d at 756 (quotation marks and citation omitted). Each of the standing elements "must be supported . . . with the manner and degree of evidence required at the successive stages of the litigation." Lujan v. Defs. of Wildlife, 504 U.S. 555, 561 (1992). At the pleading stage, plaintiffs must "'clearly . . . allege facts demonstrating' each element" of standing. Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1547 (2016) (quoting Warth v. Seldin, 422 U.S. 490, 518 (1975)).

A plaintiff "must demonstrate standing separately for each form of relief sought." Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S. 167, 185 (2000)). "However, only one plaintiff needs to have standing in order for [a claim] to move forward." Parsons v. United States DOJ, 801 F.3d 701, 710 (6th Cir. 2015) (citation omitted).

C. Direct Ship

In Count Two, Plaintiffs assert that Ohio's law barring foreign businesses without a proper permit from shipping wine to Ohio residents, "which Ohio will not issue to retailers who are not located in Ohio and/or do not obtain their wine from a wholesaler located in Ohio," violates the dormant Commerce Clause by favoring Ohio businesses at the expense of out-of-state wine retailers. (ECF No. 20 at 2.) Defendants counter that neither Plaintiff satisfies all three standing requirements so dismissal is proper.

1. Injury in Fact

"To establish injury in fact, a plaintiff must show that he or she suffered 'an invasion of a legally protected interest' that is 'concrete and particularized' and 'actual or imminent, not conjectural or hypothetical.'" Spokeo, 136 S. Ct. at 1548 (quoting Lujan, 504 U. S. at 560).

Legally protected interest. For this aspect, plaintiffs "must show that the[y] . . . ha[ve] a right to relief if the court accepts the plaintiff's interpretation of the constitutional or statutory laws on which the complaint relies." CHKRS, LLC v. City of Dublin, 2021 U.S. App. LEXIS 102, *9 (6th Cir. Ohio January 4, 2021)(citation omitted). Plaintiffs have done so here. If the Court agrees with Plaintiffs' position that the direct ship laws violate the dormant Commerce Clause, Plaintiffs have a right to relief under the Declaratory Judgment Act.

Concreteness. "To allege a concrete injury, a plaintiff must establish that the injury is 'real and not abstract,' an element that considers whether the plaintiff has asserted a type of injury traditionally redressed by the courts." Id. at *8-9 (quoting Buchholz, 946 F.3d at 861). Plaintiffs argue that the direct ship law is unconstitutional. This is an argument that Courts routinely consider and redress where appropriate.

Particularized. "[A] plaintiff must show that a defendant's actions have harmed the plaintiff in a personal way, not in a generalized way that...