BRIEF IN SUPPORT OF DEFENDANTS' MOTION FOR SUMMARY JUDGMENT AGAINST PLAINTIFF DOMAINE ALFRED, INC.

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1 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION ELEANOR HEALD, RAY HEALD, JOHN ARUNDEL, KAREN BROWN, RICHARD BROWN, BONNIE MCMINN, GREGORY STEIN, MICHELLE MORLAN, WILLIAM HORWATH, MARGARET CHRISTINA, ROBERT CHRISTINA, TRISHA HOPKINS, JIM HOPKINS, MALVADINO VINEYARDS, INC., and DOMAINE ALFRED, INC., Case No. 00-CV DT v Plaintiffs, JOHN ENGLER, Governor of Michigan, JENNIFER M. GRANHOLM, Attorney General of Michigan; and JACQUELYN STEWART, Chairperson, Michigan Liquor Control Commission, in their official capacities, BERNARD A. FRIEDMAN United States District Judge MARC L. GOLDMAN Magistrate Judge Defendants, and MICHIGAN BEER & WINE WHOLESALERS ASSOCIATION, Intervenor-Defendant. / BRIEF IN SUPPORT OF DEFENDANTS' MOTION FOR SUMMARY JUDGMENT AGAINST PLAINTIFF DOMAINE ALFRED, INC. 1

2 TABLE OF CONTENTS Page INDEX OF AUTHORITIES...ii, iii STATEMENT OF FACTS... 1 ARGUMENTS I. THE LACK OF ADEQUATE FACTUAL ALLEGATIONS IN SUPPORT OF PLAINTIFF DOMAINE ALFRED, INC.'S COMPLAINT WARRANTS ITS DISMISSAL... 2 A. Plaintiff Domaine Alfred, Inc.'s Complaint presents no real... case or controversy for this Court to decide B. Plaintiff Domaine Alfred, Inc. lacks standing to bring this lawsuit C. Plaintiff Domaine Alfred, Inc. cannot maintain a 42 U.S.C action supported only by conclusory allegations II. THE DEFENDANTS' ARGUMENTS FOR DISMISSAL OF THE COMPLAINT, SUBMITTED PRIOR TO THIS COURT GRANTING PLAINTIFFS' MOTION TO ADD THIS PLAINTIFF, APPLY TO PLAINTIFF DOMAINE ALFRED, INC., AS WELL... 8 CONCLUSION... 8 RELIEF REQUESTED 9 2

3 INDEX OF AUTHORITIES CASES PAGES Baker v. McCollan, 443 U.S. 137; 99 S.Ct. 2689; 61 L.Ed.2d 433 (1989)...5 Chapman v. City of Detroit, 808 F.2d 459 (6th Cir. 1986)...5 Conley v. Gibson, 355 U.S. 41; 2 L.Ed.2d 80; 78 S.Ct. 99 (1957)...6 Jackson v. Dukakis, 526 F.2d 64 (1st Cir. 1975)...5 Lincoln Cercpac v. Health and Hosp. Corp., 977 F. Supp. 274 (S.D.N.Y. 1997), aff'd, 147 F.3d 165 (2d Cir. 1998)...8 New York and Philadelphia, S.S. Co. v. Comm'rs of Emigration, 113 U.S. 33; 5 S.Ct. 352; 28 L.Ed. 899 (1885)...3 Parratt v. Taylor, 451 U.S. 527; 101 S.Ct. 1908; 68 L.Ed.2d 420 (1981), overruled on other grds...5 Scheid v. Fannie Farmer Candy Shops, 859 F.2d 434 (6th Cir. 1988)...6, 7 United States v. Raines, 362 U.S. 17; 80 S.Ct. 519; 4 L.Ed.2d 524 (1960)...3 Warth v. Seldin, 422 U.S. 490; 95 S.Ct. 2197; 45 L.Ed. 343 (1975)...4, 5 Yusuf v. Vassar College, 35 F.3d 709 (2d Cir. 1994)...8 3

4 FEDERAL STATUTES 42 U.S.C. 1981, U.S.C , 4, 5 STATE STATUTES MCL RULES FED.ÊR.ÊCIV.ÊP.Ê8(a)...6, 7 FED. R. CIV. P. 12(b)(1)...7 FED. R. CIV. P. 12(b)(6)...1, 7, 8 FED. R. CIV. P. 12(c)...1 FED. R. CIV. P

5 STATEMENT OF FACTS The original Plaintiffs included thirteen individual residents of two Michigan counties. These Plaintiffs contended in the original complaint that they would like to purchase (unidentified) wines from out-of-state sources (also unidentified), which wines they contend are not currently available in Michigan, and have these wines shipped directly to their homes without compliance with Michigan's laws. Following the Defendants' filing of a motion to dismiss for various reasons pursuant to FED. R. CIV. P. 12(b)(6) and 12(c), including an argument based on lack of standing, Plaintiffs filed, and this Court granted, Plaintiffs' motion to add two outstate wineries as Plaintiffs. These wineries are Malvadino Vineyards, Inc. and Domaine Alfred, Inc. This Court extended the schedule for briefing and argument on Defendants' original Motion, as well as motions filed by Intervenor-Defendant and by Plaintiffs, to provide Defendants with a short opportunity to conduct discovery. Defendants submitted Interrogatories and Requests for Production of Documents to each of the winery Plaintiffs on October 27, Domaine Alfred, Inc., responded to those interrogatories, but Malvadino Vineyards did not. Counsel for Plaintiffs has requested the dismissal of Malvadino Vineyards from this action, so Domaine Alfred, Inc. remains the only winery Plaintiff. In Domaine Alfred, Inc.'s responses to Interrogatories, it indicates that it has never sought licensure to sell its wines in Michigan, has never contacted a Michigan licensed entity to market and sell its wines, has never shipped wine to Michigan, and has no knowledge of ever having sold wine to a Michigan resident. The remainder of the facts have been set out previously. 5

6 ARGUMENT THE LACK OF ADEQUATE FACTUAL ALLEGATIONS IN SUPPORT OF PLAINTIFF DOMAINE ALFRED, INC.'S COMPLAINT WARRANTS ITS DISMISSAL. I. A. Plaintiff Domaine Alfred, Inc.'s Complaint presents no real case or controversy for this Court to decide. Plaintiff Domaine Alfred, Inc. has failed to allege facts that could establish an actual case or controversy before this Court. The statute that Plaintiff seeks to invalidate, MCL provides in pertinent part: Except as provided in this section and section 301, a sale, delivery, or importation of alcoholic liquor, including alcoholic liquor for personal use, shall not be made in this state unless the sale, delivery, or importation is made by the commission, the commission's authorized agent or distributor, an authorized distribution agent approved by order of the commission, a person licensed by the commission, or by prior written order of the commission. All spirits for sale, use, storage, or distribution in this state, shall originally be purchased by and imported into the state by the commission, or by prior written authority of the commission.... This provision relates to one of the most essential functions of the Michigan Liquor Control Commission and the state's authority over trafficking in alcohol pursuant to the Twenty-First Amendment; it provides for the approval and/or licensing by the Commission of anyone who seeks to sell, deliver or import alcoholic liquor in Michigan for any purpose, including personal use. Plaintiff alleges it unconstitutionally infringes on rights guaranteed by the Commerce Clause of the Constitution and enforceable by an action under 42 U.S.C Plaintiff Domaine Alfred, Inc. is a California winery located in San Luis Obispo, California. In responses to Interrogatories, Plaintiff stated that it had never applied for a Michigan license as a wine wholesaler, wine retailer, Outstate Seller of Wine or 6

7 Michigan winery. Ex. 1, Int. #1. Plaintiff further denied having ever inquired of the Michigan Liquor Control Commission, the Governor, the Attorney General, or any other person or agency, how its wines could be sold in Michigan. Ex. 1, Int. #3. Plaintiff has only existed and been licensed as a winery since 1997, Ex. 1, Int. #6, and has only bottled and released one vintage, comprised of a total of 2300 cases, 1000 of which have been sold. Ex. 1, Int. #6. None of the wine produced has been shipped to Michigan, Ex. 1, Int. #6 c., #10. There is no factual allegation that Domaine Alfred, Inc., has requested approval for a product and been denied, or requested licensure and been denied, based on its out-of-state status. In fact, it is clear that this Plaintiff has never applied to be licensed to sell its wines legally in Michigan and been denied. Nor, from the facts contained in the Complaint and as set forth in answers to Interrogatories, does it appear that this Plaintiff has suffered any type of enforcement action of the laws that restrict sales and deliveries of alcoholic beverages in Michigan to only those entities licensed and approved by the State. It appears that Plaintiff has made a marketing decision to not sell its very limited number of bottles of wines in Michigan. The United States Supreme Court has long recognized that a federal court does not have jurisdiction:... to pronounce any statute, either of a state or of the United States, void, because irreconcilable with the Constitution, except as it is called upon to adjudge the legal rights of litigants in actual controversies... [I]n the exercise of that jurisdiction, it is bound by two rules, to which [the Supreme Court] has rigidly adhered, never to anticipate a question of constitutional law in advance of the necessity of deciding it; never to formulate a rule of constitutional law broader than is required by the precise facts to which it is to be applied. United States v. Raines, 362 U.S. 17, 21; 80 S.Ct. 519; 4 L.Ed.2d 524 (1960), quoting from the Court's decision in New York and Philadelphia, S.S. Co. v. Comm'rs of Emigration, 113 U.S. 33, 39; 5 S.Ct. 352; 28 L.Ed. 899 (1885). 7

8 Plaintiff Domaine Alfred, Inc. has alleged no enforcement action against it, nor has it alleged that it has made any effort whatsoever to become licensed or approved to sell its wines in the State. At the May 30, 2000, hearing on the Michigan Beer and Wine Wholesalers Association's Motion to Intervene before Magistrate Marc Goldman, counsel for Plaintiffs suggested that the particular wines sought by the individual Plaintiffs are produced by small, elite wineries with no need to develop a market in Michigan, and no desire to request licensure or approval for the legal sale and delivery of their wines in Michigan. This appears to be precisely the case with this winery Plaintiff. Therefore, in reality, the situation is not that the Plaintiff could not legally sell its products in Michigan, but rather, that it does not choose to apply for a license or seek to have its products handled by a wine wholesaler or Outstate Seller of Wine, so that it can sell its wines in Michigan legally. Accordingly, because there is no actual case or controversy currently before this Court, Plaintiff's action should be dismissed in its entirety. B. Plaintiff Domaine Alfred, Inc. lacks standing to bring this lawsuit. The U.S. Supreme Court has consistently held that a plaintiff lacks standing if he has not acted as necessary to create an actual case or controversy. In Warth v. Seldin, 422 U.S. 490; 95 S.Ct. 2197; 45 L.Ed. 343 (1975) plaintiffs challenged the zoning ordinances of a Rochester, New York, suburb on the basis that they effectively excluded persons of low or moderate income from living in the town in violation of plaintiffs' constitutional rights and 42 U.S.C. 1981, 1982 and The Supreme Court held that the plaintiffs lacked standing because there was no allegation that any of them had demonstrated "specific, concrete facts" that they were harmed by the ordinances. To have standing to bring an action, a plaintiff must demonstrate a personal stake in the outcome of a controversy by showing that he or she has suffered an actual or a threatened injury. Warth, supra. In addition to actual injury, a causal link between 8

9 that injury and the defendant's conduct must be established. Here, Plaintiff has alleged no facts relating to conduct on the part of any of the Defendants that caused an injury to it. Although standing requirements are often construed liberally in civil rights claims based on constitutional rights, the requirement to establish at least an "identifiable trifle" of injury requires that however trifling, the injury must be both real and immediate, rather than merely conjectural or hypothetical. Jackson v. Dukakis, 526 F.2d 64 (1st Cir. 1975). Accordingly, because Plaintiff lacks standing, this case should be dismissed for lack of subject matter jurisdiction. C. Plaintiff Domaine Alfred, Inc. cannot maintain a 42 U.S.C action supported only by conclusory allegations. 42 U.S.C was designed to provide a remedy to persons who have been deprived of rights, privileges, or immunity secured by the Constitution or the laws of the United States. Parratt v. Taylor, 451 U.S. 527; 101 S.Ct. 1908; 68 L.Ed.2d 420 (1981), overruled on other grds. In order to find a violation of 1983, one must find another federally protected right that has been violated by official action. In order to demonstrate liability under 42 U.S.C. 1983, Plaintiff Domaine Alfred, Inc. must first establish that each named Defendant acted under color of state law and that his or her actions offended rights secured by the Constitution and/or laws of the United States. Baker v. McCollan, 443 U.S. 137; 99 S.Ct. 2689; 61 L.Ed.2d 433 (1989). Conclusory, unsupported allegations of constitutional deprivations do not state a claim. Chapman v. City of Detroit, 808 F.2d 459, 465 (6th Cir. 1986): It is not enough for a complaint under 1983 to contain mere conclusory allegations of unconstitutional conduct by persons acting under color of state law. Some factual basis for such claims must be set forth in the pleadings. Place v. Shepherd, 446 F.2d 1239 (6th Cir. 1971). Dismissing a civil rights complaint in Blackburn v. Fisk University, 443 F.2d 121 (6th Cir. 1971), this court found conclusory allegations of unconstitutional acts insufficient, stating: 9

10 There are no facts alleged in support of the conclusions, and we are required to accept only well pleaded facts as true, L'Orange v. Medical Protective Co., 394 F.2d 57 (6th Cir. [1968]), not the legal conclusions that may be alleged or that may be drawn from the pleaded facts. Id. at 124 (citations omitted). Accord, Smith v. Rose, 760 F.2d 102, 106 (6th Cir. 1985). There is a sound reason for requiring that a civil rights action against a government official or employee state a claim in terms of facts rather than conclusions. When a government employee is sued, if no factual allegations are made, discovery and perhaps even trial may be required to demonstrate that the claim has no merit. Such activities require the government defendant and others such as government attorneys involved in defense of the claim to divert their attention from their usual activities and to become involved in the litigation to the neglect of their assigned duties. In this Complaint, Plaintiff has alleged that the Governor, Attorney General and Chairperson of the Michigan Liquor Control Commission have responsibility for enforcement of certain liquor laws. However, Plaintiff has failed to allege or provide any facts that could possibly establish that an act of any of the Defendants gave rise to an injury. FED.ÊR.ÊCIV.ÊP.Ê8(a) provides, in pertinent part:... A pleading which sets forth a claim for relief, whether an original claim, counterclaim, cross-claim, or third-party claim, shall contain (1) a short and plain statement of the grounds upon which the court's jurisdiction depends, unless the court already has jurisdiction and the claim needs no new grounds of jurisdiction to support it, (2) a short and plain statement of the claim showing that the pleader is entitled to relief, and (3) a demand for judgment for the relief the pleader seeks. The purpose of Rule 8(a) is to provide the Defendants with "fair notice of what Plaintiffs' claim is and the grounds upon which it rests." Conley v. Gibson, 355 U.S. 41, 47; 2 L.Ed.2d 80; 78 S.Ct. 99 (1957). The Sixth Circuit articulated the standard for reviewing a motion under Rule 8(a) in Scheid v. Fannie Farmer Candy Shops, 859 F.2d 434, 437 (6th Cir. 1988): 10

11 We are not holding the pleader to an impossibly high standard; we recognize the policies behind Rule 8 and the concept of notice pleading. The plaintiff will not be thrown out of court for failing to plead facts in support of every arcane element of his claim. But when a complaint omits facts that, if they existed, would clearly dominate the case, it seems fair to assume that those facts do not exist. This Complaint contains no specific factual allegations as to any harm suffered by Plaintiff Domaine Alfred, Inc., or as to any act by any Defendant causing any harm or potential harm. There has not been supplied a single fact to establish that the Defendants are enforcing a law that on its face, or as applied, violates any civil right of the Plaintiff or the Commerce Clause of the United States Constitution. Accordingly, the suggestion in Scheid, supra, that "when a complaint omits facts that, if they existed, would clearly dominate the case, it seems fair to assume that those facts do not exist", appears apt here. Because of the complete lack of factual support for the allegations, these Defendants request that Plaintiff Domaine Alfred, Inc.'s Complaint (as well as the complaint of the other Plaintiffs) be dismissed for lack of jurisdiction under FED. R. CIV. P. 12(b)(1), for failure to state a claim upon which relief can be granted under FED. R. CIV. P. 12(b)(6) and for failure to comply with FED. R. CIV. P. 8(a), as well as FED. R. CIV. P

12 THE DEFENDANTS' ARGUMENTS FOR DISMISSAL OF THE COMPLAINT, SUBMITTED PRIOR TO THIS COURT GRANTING PLAINTIFFS' MOTION TO ADD THIS PLAINTIFF, APPLY TO PLAINTIFF DOMAINE ALFRED, INC., AS WELL. II. Defendants will not reiterate their prior arguments, but submit that they apply equally here as well, and entitle Defendants to a judgment dismissing all Plaintiffs' actions. CONCLUSION Dismissal of a complaint is appropriate when, as here, "it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Lincoln Cercpac v. Health and Hosp. Corp., 977 F. Supp. 274, 278 (S.D.N.Y. 1997), aff'd, 147 F.3d 165 (2d Cir. 1998). Indeed, "a complaint that consists of nothing more than bald assertions and claims with no facts upon which a court could find a violation fails to state a claim under Rule 12(b)(6)." Id. (citing Yusuf v. Vassar College, 35 F.3d 709 (2d Cir. 1994)). Accordingly, inasmuch as Plaintiff Domaine Alfred, Inc.'s Complaint seeks to dismantle Michigan's regulatory system governing the sale and distribution of all alcohol within this State, but lacks factual or legal basis to support any legitimate cause of action, Defendants respectfully request that this Court dismiss Plaintiff's Complaint. 12

13 RELIEF REQUESTED For all of the reasons set forth above, Defendants respectfully request that this Court dismiss Plaintiff Domaine Alfred, Inc.'s case in its entirety. Respectfully submitted, JENNIFER M. GRANHOLM Attorney General Dated: December 15, 2000 Irene M. Mead (P31283) Assistant Attorney General Attorney for Defendants Michigan Dept. of Attorney General 7150 Harris Dr., P.O. Box Lansing, MI (517) Brief/Domaine/Heald.cwk 13