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Ltd. v. The Executive Director of Texas Alcoholic Beverage Commission

United States District Court, S.D. Texas, Houston Division

August 28, 2019



          The Honorable Alfred H. Bennett United States District Judge.

         Before the Court are Texas Alcoholic and Beverage Commission officials-the Defendants-Adrian Bentley Nettles (Executive Director of TABC), Dexter K. Jones (Chief of Audit and Investigations), Emily E. Helm (former General Counsel for TABC), Judith L. Kennison (TABC attorney), and Matthew Edward Cherry's (TABC attorney) Motion to Dismiss (Doc. #15), Plaintiff Spec's Family Partners, Ltd.'s ("Plaintiff) Response (Doc. #28), and Defendant's Reply (Doc. #32). After considering the parties' arguments, submissions and applicable legal authority, the Court grants Defendants' Motion to Dismiss.

         I. Background

         This case arises out of an administrative enforcement action prosecuted by the Texas Alcoholic Beverage Commission ("TABC") against Plaintiff. Plaintiff alleges that the fifty-three charges brought against it were "wrongfully and maliciously pursued," that the administrative enforcement action brought by TABC against Plaintiff "should have never been filed," and that it caused "tremendous expense and economic loss" to Plaintiff. Doc. #3 at 1; Doc. #28 at 1.

         In late 2012, early 2013, industry participants complained of misconduct by Plaintiff As a result, TABC investigated aspects of Plaintiff s business and concluded that Plaintiff violated numerous applicable Texas regulations. TABC initiated a formal case at the State Office of Administrative Hearings ("SOAH") in February 2013. In the SOAH case, TABC sought to cancel or suspend 164 of Plaintiffs retail package store permits. Doc. #3 at 6. Plaintiff alleges that Defendants "wrongfully withheld permits" for new stores across Texas and refused to renew Plaintiffs permits for existing stores during the administrative enforcement action. Id. at 2. Plaintiff believes that Defendants did this in order to "coerce an unjustified multi-million dollar settlement" from Plaintiff. Id.; Doc. #28 at 1.

         The two-week SOAH hearing was conducted in front of a panel of three administrative law judges. Doc. #3 at 10-30. After the evidentiary hearing, the panel of judges concluded that TABC had not met its burden with respect to any of the charges against Plaintiff except "one credit law violation." Id. at 9. Plaintiff now claims that the charges against it were "groundless" and Defendants were the cause of Plaintiffs economic losses. Doc. #28 at 2. Plaintiff asserts numerous complaints concerning the actions of TABC officials during the initiation of the enforcement action and the enforcement hearing. Doc. #3 at 10-30. Specifically, Plaintiff alleges that the conduct of the TABC officials involved in the administrative enforcement proceedings violated its Fourth, Fifth, and Fourteenth Amendment rights under 42 U.S.C. § 1983. Id. at 1, 30-33.

         Plaintiff further argues that "TABC's allegations were based on false testimony from a TABC witness" and that it was deprived of both procedural and substantive due process. Id. at 9, 30. Furthermore, Plaintiff brings state law claims for malicious prosecution. Id. at 35-38. Plaintiff requests that this Court issue a declaratory judgment and provide injunctive relief to prevent TABC from "ever again engaging in the same or similar abusive tactics in the future." Id. at 2. Plaintiff is also seeking just compensation for the losses and damages it suffered as a result of the enforcement action. Id. Lastly, Plaintiff alleges that TABC violated the Sherman Antitrust Act (The Sherman Act, 26 Stat. 209, as amended, 15 U.S.C. § 1 et seq.) and seeks a declaratory judgment that Texas Alcoholic Beverage Code § 102.01(a)(7) is a per se violation of the Sherman Antitrust Act. Doc. #3 at 2; 38-40.

         Defendants move to dismiss this case for failure to state a claim and for failure to overcome TABC and its' officials' immunity from suit under Fed.R.Civ.P. 12(b)(6) and Fed.R.Civ.P. 12(b)(1). Defendants argue that Plaintiffs claims should be dismissed pursuant to Eleventh Amendment sovereign immunity, and that the individual Defendants are entitled to both absolute immunity and qualified immunity. The issue before the Court is whether Plaintiffs allegations concerning the administrative enforcement proceedings are appropriate in light of Defendants' assertion of various immunities from suit.

         II. Legal Standards

         A. Motion to Dismiss 12(b)(1) and 12(b)(6)

         A district court must dismiss a case when the plaintiff fails to establish subject-matter jurisdiction. Fed.R.Civ.P. 12(b)(1). "When a Rule 12(b)(1) motion is filed in conjunction with other Rule 12 motions, the court should consider the Rule 12(b)(1) jurisdictional attack before addressing any attack on the merits." Ramming v. United States, 281 F.3d 158, 161 (5th Cir. 2001). However, dismissal based on lack of subject-matter jurisdiction does not constitute a determination of the claim on its merits, and does not prevent a plaintiff from pursuing the claim in a court that has proper jurisdiction. Id.

         A motion to dismiss is the proper vehicle to assert a claim of absolute immunity. See Imbler v. Pachtman, 424 U.S. 409, 416 (1976) (prosecutorial immunity); Mowbray v. Cameron County, 274 F.3d 269, 276, 279 (5th Cir. 2001) (prosecutorial immunity and witness immunity). The Supreme Court has stated that a defendant properly invoking immunity is entitled to dismissal even before discovery. Behrens v. Pelletier, 516 U.S. 299, 306 (1996).

         Rule 12(b)(6) allows dismissal if a plaintiff fails "to state a claim upon which relief may be granted." Fed.R.Civ.P. 12(b)(6). "Under the 12(b)(6) standard, all well-pleaded facts are viewed in the light most favorable to the plaintiff, but plaintiffs must allege facts that support the elements of the cause of action in order to make out a valid claim." City of Clinton v. Pilgrim's Pride Corp., 632 F.3d 148, 152-53 (5th Cir. 2010). "To survive a Rule 12(b)(6) motion to dismiss, a complaint 'does not need detailed factual allegations,' but must provide the plaintiffs grounds for entitlement to relief-including factual allegations that when assumed to be true 'raise a right to relief above the speculative level.'" Cuvillier v. Taylor, 503 F.3d 397, 401 (5th Cir. 2007) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). That is, "a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief:hat is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 674 (2009) (quoting Twombly, 550 U.S. at 570).

         B. Eleventh Amendment ...

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