Block et al v. Canepa et al
OPINION AND ORDER GRANTING IN PART AND DENYING IN PART Defendants' 19 Motion to Dismiss for Lack of Jurisdiction. Defendants Motion to Dismiss Plaintiffs claims against Defendants Canepa, Strickrath and Pryce is GRANTED. Defendants Motion to Dismiss for failure to state a claim is DENIED. Plaintiffs shall file their credible threat affidavits within seven days of this Opinion & Order, being due on or before 2/24/2021. Defendants will then have seven days to file any opposition, being due on or before 3/3/2021. Signed by Judge Sarah D. Morrison on 2/17/2021. (tb)
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IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF OHIO
CASE NO.: 20cv-3686
JIM CANEPA, SUPERINTENDENT
OF LIQUOR CONTROL,
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.
The following material information is taken from Plaintiffs’ Complaint, which
the Court accepts as true for purposes of addressing the instant motion.
Plaintiff Derek Block dismissed all of his claims against Defendants on
February 3, 2021. (ECF No. 30.)
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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.
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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.
The Court interprets the Complaint’s reference to “some retailers” in ¶ 30 to
refer to House of Glunz. (ECF No. 1.) This means that House of Glunz is likewise
asserting the transport claim. Plaintiffs shall file a clarification within seven days of
this Opinion & Order if this is incorrect.
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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.
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.
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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 or
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imminent, 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,
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.
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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
Particularized. “[A] plaintiff must show that a defendant’s actions have
harmed the plaintiff in a personal way, not in a generalized way that equally affects
everyone else.” CHKRS, LLC, 2021 U.S. App. LEXIS 102, *8. “To carry on interstate
commerce is not a franchise or a privilege granted by the state; it is a right which
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every citizen of the United States is entitled to exercise under the constitution and
laws of the United States . . . .” Crutcher v. Commonwealth, 141 U.S. 47, 57 (1891).
Hence, the “implied right to interstate commerce” exists on an individual, personal
level. B-21 Wines, Inc. v. Guy, No. 3:20-cv-00099-FDW-DCK, 2020 U.S. Dist. LEXIS
151258, at *7-8 (W.D.N.C. Aug. 18, 2020)(citing Crutcher, 141 U.S. at 57). The
inability of Miller to engage in commerce through purchasing wine he wants outside
of Ohio’s borders that is unavailable in Ohio equates to an injury-in-fact of that
House of Glunz’s injury is likewise particularized. House of Glunz has a
“‘concrete commercial injury’ because it is forbidden from shipping wines to [Ohio]
buyers, thus robbing out-of-state wineries of those potential profits.” Huber Winery
v. Wilcher, No. 3:05-CV-289-S, 2006 U.S. Dist. LEXIS 107831, at *12 (W.D. Ky. Feb.
6, 2006)(quoting Magaw, 132 F.3d at 282). Furthermore, the prohibition is directed
towards out-of-state wineries. In Magaw, the Sixth Circuit Court of Appeals found
that gun manufacturers and dealers satisfied the standing requirements to
challenge a regulation that was “directed at them in particular.” Magaw, 132 F.3d
Actual or imminent. Where, as here, plaintiffs seek injunctive relief, they
must demonstrate that there is both past injury and a real and immediate threat of
future injury to establish that there is an injury in fact. City of Los Angeles v. Lyons,
461 U.S. 95, 111 (1983); see also Mosley, 942 F.3d at 756.
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The harm of Miller and House of Glunz is actual. The harm stems from the
denial of their right to engage in interstate commerce. For this pre-enforcement
challenge, plaintiffs satisfy the threat of future injury requirement if they “allege
‘an intention to engage in a course of conduct arguably affected with a
constitutional interest, but proscribed by statute, and there exists a credible threat
of prosecution thereunder.’” Susan B. Anthony List v. Driehaus, 573 U.S. 149, 158
(2014)(quoting Clapper v. Amnesty Int’l USA, 133 S. Ct. 1138, 1147, 1150 n.5,
(2013)). To date, neither Miller nor House of Glunz have shipped wine directly into
Ohio. That fact is not dispositive. Their “refusal to engage in [unlawful] activities is
the typical substance of a declaratory judgment action and does not, by itself,
preclude a finding that the plaintiff has standing.” ACLU v. NSA, 493 F.3d 644, 656
(6th Cir. 2007). Both Miller and House of Glunz allege an intention to engage in
direct shipping of wine to Ohio if the law is held unconstitutional. (ECF No. 1 at ¶ ¶
5, 6.) That they fail to allege the where, when, why, and how of that intention is of
no consequence. The Court declines to require Plaintiffs to plan illegal activity with
specificity in order to be able to challenge the constitutionality of a law. In the Sixth
Circuit “a citizen should be allowed to prefer ‘official adjudication to public
disobedience.’” Magaw, 132 F.3d at 287 (6th Cir. 1997)(quoting 13A, Charles A.
Wright, Arthur R. Miller & Edward H. Cooper, Federal Practice and Procedure, §
3532.5 at 183-84 (2nd ed. 1984)).
The issue thus becomes whether there is a credible threat that Defendants
will prosecute Miller or House of Glunz under Ohio’s direct-ship law in the future.
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When “determining whether a complaint states a plausible claim for relief, . . . the
court is confined to the complaint itself.” Agema v. City of Allegan, 826 F.3d 326,
332 (6th Cir. 2016). “Plaintiffs need only support their claim of a credible threat of
prosecution with general factual allegations, for on a motion to dismiss we
presum[e] that general allegations embrace those specific facts that are necessary to
support the claim.” White v. United States, 601 F.3d 545, 551 (6th Cir. 2010)
(quotation marks and citation omitted).
In this case, the Complaint is devoid of such allegations. Hence, the Court
ORDERS Plaintiffs to supply, by affidavits, particularized allegations of fact
supportive of Plaintiffs’ standing as to the credible threat of prosecution. See
Plunderbund Media, L.L.C. v. DeWine, 753 F. App’x 362, 366 (6th Cir.
2018)(quoting Warth, 422 U.S. at 501). Plaintiffs must file these affidavits within
seven days of this Opinion & Order; Defendants will then have seven days to file
any opposition on this issue. Plaintiffs’ failure to timely file the affidavits will result
in dismissal of Plaintiffs’ direct ship claim for lack of standing. If Plaintiffs timely
file supporting documentation, the Court will treat the Defendants’ Motion to
Dismiss Plaintiffs’ direct ship claim as a factual challenge under Fed. R. Civ. P.
2. Causation and Redressability
The Court will address causation and redressability if necessary after the
requested additional briefing is complete.
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D. Transport Restriction
Count One asserts Ohio’s limitation on the amount of wine that an individual
may transport into the state in a thirty-day period violates the Commerce Clause
because no similar limitation exists on intra-state purchases. 3 Defendants again
argue that neither Plaintiff can show each of the three requisite standing elements
such that dismissal is warranted.
Defendants argue that Plaintiffs lack sufficient injuries because Miller does
not allege that he attempted to transport more than 4.5 liters of wine into Ohio.
Defendants contend that he also fails to allege the requisite “how, when, or where
[he] would purchase the wine.” (ECF No. 19 at 23.) Defendants argue that House of
Glunz “does not allege any actual or planned attempt to have an individual
transport more than 4.5 liters of wine into Ohio.” (ECF No. 19 at 22.) These
omissions, according to Defendants, are fatal to this count because “‘[s]uch ‘some
day’ intentions -- without any description of concrete plans, or indeed even any
specification of when the some day will be -- do not support a finding of the ‘actual
R.C. 4301.20(L) provides:
Any resident of this state or any member of the armed
forces of the United States, who has attained the age of
twenty-one years, from bringing into this state, for
personal use and not for resale, not more than one liter of
spirituous liquor, four and one-half liters of wine, or two
hundred eighty-eight ounces of beer in any thirty-day
period, and the same is free of any tax consent fee when
the resident or member of the armed forces physically
possesses and accompanies the spirituous liquor, wine, or
beer on returning from a foreign country, another state, or
an insular possession of the United States; . . . .
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or imminent’ injury that our cases require.’” (ECF No. 19 at 22) (quoting Lujan, 504
U.S. at 564). As such, Defendants argue that the Plaintiffs fail to sustain their
Plaintiffs retort by arguing illegality and impossibility prevent the detail
Defendants insist upon. (ECF No. 20 at 6.) They state that they have no concrete
plans to break the law. Miller further argues that he could not complete the
transport anyway due to unspecified COVID-19 travel restrictions.
1. Injury in Fact
Legally protected interest. If the Court agrees with Plaintiffs’ position that the
transport law violates the dormant Commerce Clause, Plaintiffs have a right to
relief under the Declaratory Judgment Act. They have adequately alleged a
violation of a legally protected interest.
Concreteness. Plaintiffs argue that the transport law is unconstitutional. This
is an argument that Courts routinely consider and redress where appropriate.
Plaintiffs’ alleged injuries are concrete.
Particularized. Plaintiffs have alleged a particularized injury for the same
reasons set forth supra in the discussion of the direct ship count.
Actual or imminent. The harm of Miller and House of Glunz is actual and
stems from the denial of their right to engage in interstate commerce. That neither
Miller nor House of Glunz: (1) attempted to transport more than the law allows into
Ohio and (2) specified the details of their intention to bring or arrange more than
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4.5 liters of wine into Ohio if the transport law is held unconstitutional is not
dispositive for the same reasons stated supra in the direct-ship analysis.
R.C. § 4301.99(C) provides that whoever violates the transport statutes, R.C.
§ 4301.60 and 4301.20(L), is guilty of a misdemeanor of the first degree. Again, the
question becomes whether there is a credible threat that Defendants will prosecute
Miller and/or House of Glunz under Ohio’s transport laws in the future. The
Complaint is silent on this issue. Thus, the Court ORDERS Plaintiffs to supply, by
affidavits, particularized allegations of fact supportive of Plaintiffs’ standing as to
the credible threat of prosecution for the transport count. See Plunderbund Media,
L.L.C., 753 F. App’x at 366 (quoting Warth, 422 U.S. at 501). Plaintiffs must file
these affidavits within seven days of this Opinion & Order; Defendants will then
have seven days to file any opposition on the credible threat issue. Plaintiffs’ failure
to timely file the affidavits will result in dismissal of Plaintiffs’ transport claim for
lack of standing. If Plaintiffs timely file supporting documentation, the Court will
treat the Defendants’ Motion to Dismiss Plaintiffs’ transport claim as a factual
challenge under Fed. R. Civ. P. 12(b)(1).
Causation and Redressability
The Court will address causation and redressability if necessary after the
requested additional briefing.
Defendants next challenge Plaintiffs’ Complaint on Eleventh Amendment
immunity grounds. Defendants concede that Yost is not immune. They argue that
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Canepa, Strickrath and Pryce are. Plaintiffs assert that no immunity applies to
those three defendants under Ex Parte Young, 209 U.S. 123 (1908). Defendants’
arguments prove persuasive.
A. Standard of Review
Eleventh Amendment immunity acts as a jurisdictional bar. Pennhurst State
Sch. & Hosp. v. Halderman, 465 U.S. 89, 98 (1984). Hence, this portion of the
motion shall be examined under Rule 12(b)(6). A motion to dismiss under that rule
operates to test the sufficiency of the claims. In deciding a motion to dismiss
pursuant to Rule 12(b)(6), the Court must accept all factual allegations as true and
make reasonable inferences in favor of the non-moving party. Keys v. Humana, Inc.,
684 F.3d 605, 608 (6th Cir. 2012)(citing Harbin-Bey v. Rutter, 420 F.3d 571, 575
(6th Cir. 2005)). Only “a short and plain statement of the claim showing that the
pleader is entitled to relief” is required under Fed. R. Civ. P. 8(a)(2). “[T]he
statement need only give the defendant fair notice of what the . . . claim is and the
grounds upon which it rests.” Erickson v. Pardus, 551 U.S. 89, 93 (2007) (internal
quotation marks and citation omitted). Although the plaintiff need not plead specific
facts, the “[f]actual allegations must be enough to raise a right to relief above the
speculative level” and to “state a claim to relief that is plausible on its face.” Bell
Atl. Corp. v. Twombly, 550 U.S. 544, 555, 570 (2007)). A plaintiff must “plead
factual content that allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678
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The Eleventh Amendment provides that “[t]he judicial power of the United
States shall not be construed to extend to any suit in law or equity, commenced or
prosecuted against one of the United States by Citizens of another State.” U.S.
Const. Amend. XI. “This immunity is far reaching. It bars all suits, whether for
injunctive, declaratory or monetary relief, against the state and its departments, by
citizens of another state, foreigners or its own citizens.” Thiokol Corp. v. Dep’t of
Treas., 987 F.2d 376, 381 (6th Cir. 1993)(internal citations omitted). The prohibition
extends to suits against state officials sued in their official capacities because “a suit
against a state official in his or her official capacity is not a suit against the official
but rather is a suit against the official’s office.” Grinter v. Knight, 532 F.3d 567, 572
(6th Cir. 2008) (quoting Will v. Mich. Dep’t of State Police, 491 U.S. 58, 71 (1989)).
Defendants, as the parties arguing that they are immune, have the burden of proof
to show that they are entitled to immunity. Guertin v. State, 912 F.3d 907, 936 (6th
Because Canepa, Strickrath, and Pryce are state officials, they are protected
by Eleventh Amendment immunity unless an exception applies. Doe v. Dewine, 99
F. Supp. 3d 809, 816 (S.D. Ohio April 15, 2015)(Dlott, J.). Plaintiffs argue Ex Parte
Young is the applicable exception here. Ex Parte Young held:
that individuals who, as officers of the state, are clothed
with some duty in regard to the enforcement of the laws of
the state, and who threaten and are about to commence
proceedings, either of a civil or criminal nature, to enforce
against parties affected an unconstitutional act, violating
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the Federal Constitution, may be enjoined by a Federal
court of equity from such action.
Ex Parte Young, 209 U.S. at 155-56. “The theory of Young [i]s that an
unconstitutional statute is void . . . and therefore does not ‘impart to [the official]
any immunity from responsibility to the supreme authority of the United States.’”
Green v. Mansour, 474 U.S. 64, 68 (1985) (quoting Ex Parte Young, 209 U.S. at
160)). “Under the doctrine of Ex Parte Young, suits against state officials seeking
equitable relief for ongoing violations of federal law are not barred by the Eleventh
Amendment.” Telespectrum, Inc. v. Public Serv. Com’n of Ky., 227 F.3d 414, 419 (6th
Here, Plaintiffs sue Canepa, Strickrath, and Pryce in their official capacities
for prospective injunctive relief to prevent enforcement of Ohio’s allegedly
unconstitutional direct-ship and transport laws. Application of the Ex Parte Young
exception is not automatic, however. The Ex Parte Young doctrine allows Plaintiffs’
suit to proceed against these Defendants if they (1) have “some connection with the
enforcement of the act,” Ex Parte Young, 209 U.S. at 157; and (2) have enforced or
threatened to enforce the allegedly unconstitutional law. Russell v. LunderganGrimes, 784 F.3d 1037, 1047 (6th Cir. 2015). Regarding the connection element,
“[g]eneral authority to enforce the laws of the state is not sufficient to make
government officials the proper parties to litigation challenging the law.” Children’s
Healthcare is a Legal Duty v. Deters, 92 F.3d 1412, 1416 (6th Cir. 1996)(citation
omitted). The threat of enforcement aspect is satisfied “when there is a realistic
possibility the official will take legal or administrative actions against the plaintiff’s
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interests.” Russell, 784 F.3d at 1048. Ex Parte Young is premised upon action.
Deters, 92 F.3d at 1415.
Superintendent Canepa acknowledges that the Division of Liquor Control is
“responsible for granting or refusing permits for the manufacture, distribution, and
sale of intoxicating liquor and enforcing the provisions of Ohio’s liquor control laws.”
(ECF No. 22 at 7.) But he contends, without opposition from Plaintiffs, that the
Division “lacks authority to pursue legal or administrative actions against nonpermitholders.” (ECF No. 22 at 7 citing Ohio Rev. Code Chapters 4301 and 4303.)
Plaintiffs are non-permitholders. Because Canepa lacks legal authority to take legal
or administrative action adverse to Plaintiffs’ interests, there is no realistic
possibility that he will do so. Ex Parte Young does not apply and Canepa is immune
under the Eleventh Amendment.
The Department of Public Safety, under Director Strickrath’s direction, “does
conduct investigations and related law enforcement actions against suspected
violators of Ohio liquor laws” (ECF No. 19 at 18) and is “actively involved in
enforcing Ohio’s liquor control laws.” (ECF No. 22 at 8.) As Plaintiffs point out, the
Department enforced those laws in Toledo v. Eischen, 6th Dist. Lucas No. L-081062, 2008-Ohio-6531, and Hobnob, Inc. v. Ohio Liquor Control Comm’n, 10th Dist.
Franklin No. 17AP-907, 2018-Ohio-3499. Each is distinguishable. First, while
Eischen also involved R.C. 4301.60 and appellants without liquor permits, it took
place more than twelve years ago. This substantial time gap does not support a
finding that there is a realistic possibility the Department will take similar action
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against the Plaintiffs here. Second, Hobnob did not involve the statutes now in focus
but did address a permitholder. Hobnob is thus irrelevant. Hence, Ex Parte Young
does not apply to Strickrath in this instance and he has Eleventh Amendment
Lastly, the Liquor Control Commission, under Chairwoman Pryce, “is
responsible only for hearing appeals of decisions by the Division,” but no Plaintiff
has a permit. (ECF No. 22 at 7.) Consequently, Pryce argues that there is no
realistic possibility that the Liquor Control Commission will take legal or
administrative action against the Plaintiffs. Id. Plaintiffs raise no substantive
opposition to this argument. Chairwoman Pryce is therefore entitled to Eleventh
In sum, the Court GRANTS the Defendants’ Motion to Dismiss as to
Defendants Canepa, Strickrath, and Pryce. (ECF No. 22.)
FAILURE TO STATE A CLAIM
The State’s final argument in support of dismissal is that the laws are issued
pursuant to the Twenty-First Amendment and are non-protectionist such that they
do not violate the dormant Commerce Clause. (ECF No. 19 at 31.) Plaintiffs counter
by arguing that whether the laws serve the public health or safety cannot be
determined on a motion to dismiss. (ECF No. 20.)
Resolving this issue involves meshing the Commerce Clause with the
Twenty-First Amendment. The Commerce Clause gives Congress the power
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“[t]o regulate Commerce . . . among the several States.” U.S. Const. art. I, § 8, cl. 3.
It “grants Congress power to preempt or permit state laws that interfere with
interstate commerce, and it impliedly ‘prohibits state laws,’ as determined by the
federal courts, ‘that unduly restrict interstate commerce.’” Lebamoff Enters. v.
Whitmer, 956 F.3d 863, 869 (6th Cir. 2020)(en banc denied May 26, 2020)(certiorari
denied by Lebamoff Enters. v. Whitmer, 2021 U.S. LEXIS 414 (U.S., Jan. 11, 2021))
(quoting Tenn. Wine & Spirits v. Thomas, 139 S. Ct. 2449, 2459 (2019)). “Under the
implied prohibition, if a state law discriminates against out-of-state goods or
nonresident economic actors, it may survive only if tailored to advance a legitimate
state purpose.” Whitmer, 956 F.3d at 869 (quotation and citation omitted).
“While the Commerce Clause grants Congress power to eliminate state laws
that discriminate against interstate commerce, the Twenty-first Amendment grants
the States the power to regulate commerce with respect to alcohol.” Id. Section Two
of the Amendment prohibits “[t]he transportation or importation into any State,
Territory, or possession of the United States for delivery or use therein of
intoxicating liquors, in violation of the laws thereof.” U.S. Const. amend. XXI, § 2.
Thus, “the section gives the States broad latitude to regulate the distribution of
alcohol within their borders.” Whitmer, 956 F.3d at 869.
Dormant Commerce Clause review is typically reserved for “laws that protect
in-state economic interests at the expense of out-of-state competitors.” Garber v.
Menendez, 888 F.3d 839, 843 (6th Cir. 2018). Plaintiffs allege, and Defendants
concede for purposes of this motion only, that Ohio’s direct-ship and transport laws
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have a discriminatory effect on interstate commerce. (ECF No. 19 at 34.) Therefore,
to determine whether the laws violate the dormant Commerce Clause, the Court
asks whether the laws “can be justified as a public health or safety measure or on
some other legitimate non-protectionist ground.” Tenn. Wine & Spirits, 139 S. Ct. at
2474. If the “‘predominant effect of the law is protectionism,’ rather than the
promotion of legitimate state interests, the Twenty-first Amendment does not
‘shield’ it.” Whitmer, 956 F.3d at 869 (quoting Tenn. Wine & Spirits, 139 S. Ct. at
2474.) Hence, the question is whether the laws’ predominant effect is legitimate,
non-protectionist measures or public health and safety interests.
According to the State, Whitmer establishes that the laws are nonprotectionist and therefore not in violation of the dormant Commerce Clause. The
Whitmer plaintiffs included individual wine consumers, an individual wine
merchant, and an Indiana alcoholic retailer. They asserted that Michigan’s liquor
laws prohibiting “non-Michigan wine retailers from 1) selling and distributing wine
directly to Michigan consumers, and 2) obtaining licenses and engaging in their
occupations in Michigan” violated the dormant Commerce Clause. Lebamoff Enters.
v. Snyder, 347 F. Supp. 3d 301, 304 (E.D. Mich. 2018). The trial court agreed and
granted summary judgment in plaintiffs’ favor.
The Sixth Circuit reversed. Reasoning that Section Two of the Twenty-First
Amendment granted the states authority over the importation of alcohol into their
borders, the appeals court determined that Michigan’s laws promoted legitimate
state interests and did not flow from state protectionism such that the laws did not
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violate the dormant Commerce Clause. Whitmer, 956 F.3d at 867. With the benefit
of a full evidentiary record, the Sixth Circuit found Michigan’s legitimate state
interests to include “promoting temperance and controlling the distribution of
[alcohol]” and collecting tax revenue. Id. at 871-72.
From this, Defendants argue that Ohio’s three-tier distribution scheme is
similar to Michigan’s so it follows that Ohio’s laws do not violate the dormant
Commerce Clause under Whitmer. But there are two key differences between
Whitmer and this case precluding that result. First, Whitmer was decided on a full
evidentiary record. That record enabled the appeals court to consider the legislative
history of Michigan’s liquor laws, Michigan’s enforcement of the laws, and local
issues Michigan officials were addressing via their liquor laws. Id. at 877 (agreeing
that Michigan “presented enough evidence, which the plaintiffs have not sufficiently
refuted, to show its in-state retailer requirement serves the public health.”)
(McKeague, J., concurring)(citing Tennessee Wine, 139 S. Ct. at 2474). Such
evidence is not present in this case, as it is only at the motion to dismiss stage.
Second, due to that full record, the Sixth Circuit was able to compare Michigan and
Indiana liquor law to determine that Indiana’s laws would permit it to undercut
Michigan’s prices were Michigan’s liquor laws deemed unconstitutional. Whitmer,
956 F.3d at 872. That undercutting would then serve to increase consumption via
cheaper prices, in contravention of Michigan’s non-protectionist interest in limiting
consumption. Id. It would also cause Michigan to lose significant tax revenue. In
this case, no information about Illinois’s law is before the Court to enable such a
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comparison and determination relative to Ohio’s direct ship and transport laws.
Whitmer thus fails to automatically establish that Ohio’s laws are not in violation of
the dormant Commerce Clause as a matter of law.
The State argues that its laws are non-protectionist because its three-tier
system allows it “to impose various health and safety measures” and to impose
mandatory minimum pricing on wine to decrease demand via higher prices. (ECF
No. 22 at 9-10.) The three-tier system may well serve legitimate state interests. But
the question is whether the predominant effect of the laws is protectionism or
promotion of those legitimate interests. See Whitmer, 956 F.3d at 869. On the
present record, such a determination is both impossible and improper. This
argument fails to support dismissal.
Plaintiffs shall file their credible threat affidavits within seven days of this
Opinion & Order. Defendants will then have seven days to file any opposition. The
Court’s decision on Defendants’ Motion to Dismiss for lack of standing will be held
in abeyance pending passage of those deadlines.
Defendants’ Motion to Dismiss Plaintiffs’ claims against Defendants Canepa,
Strickrath and Pryce is GRANTED. (ECF No. 19.)
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Defendants’ Motion to Dismiss for failure to state a claim is DENIED. (ECF
IT IS SO ORDERED.
s/ Sarah D. Morrison
SARAH D. MORRISON
UNITED STATES DISTRICT JUDGE
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