WCI, Inc. v. Ohio Department Of Public Safety

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF OHIO

WESTERN DIVISION AT DAYTON

WCI, Inc.,

Plaintiff,

v. Case No.: 3:17-cv-282

Judge Thomas M. Rose

Ohio Department of Public Safety, et al.,

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.

___________________________________________________________________________

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 (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 (“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 (1957), England, 375 U.S. at 420, and NAACP v.

Button, 371 U.S. 415, 427 (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

1 The Rooker-Feldman, named for Rooker v. Fidelity Trust Co., 263 U.S. 413 (1923) and District of Columbia Court

of Appeals v. Feldman, 460 U.S. 462 (1983), bars a federal district court from exercising subject matter jurisdiction

over cases “brought by state-court losers complaining of injuries caused by the state-court judgments rendered before

the district court proceedings commenced and inviting district court review and rejection of those judgments.” Exxon

Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 284 (2005). The doctrine emanates in part from the

2

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 (2005), clearly overruled this circuit, along with others,

with respect to our DLX claim-preclusion exemption. San Remo,

545 U.S. at 345 (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. “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 (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 (citing Allen v. McCurry,

449 U.S. 90, 94–96 (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

(1984).

provisions of 28 U.S.C. § 1257(a) to hold that federal appellate jurisdiction over a state court decision lies exclusively

with the Supreme Court, and not lower federal courts. Abbott v. Michigan, 474 F.3d 324, 330 (6th Cir. 2007) (noting

that “the proper course of action” when a plaintiff complains of an injury directly caused by a state-court judgment “is

to appeal the judgment through the state-court system and then to seek review by writ of certiorari from the U.S.

Supreme Court.”).

2 “The … judicial proceedings of any court of any such State…shall have the same full faith and credit in every court

within the United States and its Territories and Possessions as they have by law or usage in the courts of such State,

Territory or Possession from which they are taken.” 28 U.S.C. § 1738 (West)

3

Lumbard v. City of Ann Arbor, 913 F.3d 585, 589–90 (6th Cir.), cert. denied, 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 (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 (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 (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; 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, 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. at 382.

* * * * * * * * *

4

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 (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

3 Plaintiff’s claims would be barred even without the holding of San Remo Hotel, as a review of the record reveals

that Plaintiff did not make a valid England reservation. While Plaintiff formally invoked England, Plaintiff

proceeded to actively litigate the claims it brings to this forum. Windsor requires informing the state court of the

federal claims that will be subsequently brought, so that questions of state law can be made with an eye to those

5

While Plaintiff asserts their claims survive Rooker-Feldman, they would still face

jurisdictional hurdles. Under the Eleventh Amendment to the U.S. Constitution, a state and

its agencies may not be sued in federal court, regardless of the relief sought, unless the state

has waived its immunity or Congress has overridden it. See Puerto Rico Aqueduct & Sewer

Auth. v. Metcalf & Eddy, Inc., 506 U.S. 139, 144 (1993) (“This [Eleventh Amendment]

withdrawal of jurisdiction effectively confers an immunity from suit. Thus, ‘this Court has

consistently held that an unconsenting State is immune from suits brought in federal courts

by her own citizens as well as by citizens of another State.’”) (quoting Edelman v. Jordan,

415 U.S. 651, 662–663 (1974)); Pennhurst State Sch. & Hosp. v. Halderman, 465 U.S. 89,

120 (1984) (“[I]f a lawsuit against state officials under 42 U.S.C. § 1983 alleges a

constitutional claim, the federal court is barred from awarding damages against the state

treasury even though the claim arises under the Constitution. Similarly, if a § 1983 action

alleging a constitutional claim is brought directly against a State, the Eleventh Amendment

bars a federal court from granting any relief on that claim.”) (citation omitted); Alabama v.

challenges. A party my not, however, claim to be merely fulfilling Windsor, and proceed to list the “reserved”

federal claims in the assignments of error. Trafalgar Corp. v. Miami Cty. Bd. of Comm'rs, 519 F.3d 285, 287–88 (6th

Cir. 2008) (“because Trafalgar 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 DLX or England.”). See

also, Appellate Brief, filed Dec. 10, 2015, and Notice of Appeal, field September 10, 2015, WCI, Inc. v. Ohio State

Liquor Control Comm., 15-cv-7970, 16AP-72, 2016-Ohio-4778, 68 N.E.3d 250 (10th Dist. Ct. App. 2016) available

at https://fcdcfcjs.co.franklin.oh.us/CaseInformationOnline/. A court may sua sponte take notice of another court's

order for the limited purpose of recognizing the subject matter of the litigation. Auto-Owners Ins. Co. v. Morris, 191

F. Supp. 3d 1302, 1304–05 (N.D. Ala. 2016) (citing United States v. Jones, 29 F.3d 1549, 1553 (11th Cir. 1994) and

Liberty Mut. Ins. Co. v. Rotches Pork Packers, Inc., 969 F.2d 1384, 1388 (2d Cir. 1992)).

Plaintiff cannot avoid res judicata by means of a talismanic invocation of England.

Anderson v. Charter Twp. of Ypsilanti, 266 F.3d 487, 497 (6th Cir. 2001) (“His argument on appeal to the Michigan

Court of Appeals thus went far beyond the limited-notice requirement of Windsor. Anderson therefore waived his

right to pursue these claims in federal court, despite the district court's retention of the federal claims.”).

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Pugh, 438 U.S. 781, 782 (1978) (“There can be no doubt, however, that suit against the State

and [one of its departments] is barred by the Eleventh Amendment, unless [the State] has

consented to the filing of such a suit.”). Not only does this independently wipe out

Plaintiff’s claims for monetary damages, it would do away with declaratory and prospective

injunctive relief.

Plaintiff points out an exception to the Eleventh Amendment bar, “a federal court

may, without violating the Eleventh Amendment, issue a prospective injunction against a

state officer to end a continuing violation of federal law.” Ex Parte Young at 203 U.S. at 159;

Wolfel v. Morris, 972 F.2d 712, 719 (6th Cir. 1992) (“[T]he eleventh amendment is not a bar

to injunctive relief against the defendants in their official capacities.”); Verizon Md., Inc.

PSC, 535 U.S. 635, 645 (2002) (“In determining whether the doctrine of Ex Parte Young

avoids an Eleventh Amendment bar to suit, a court need only conduct a ‘straightforward

inquiry into whether [the] complaint alleges an ongoing violation of federal law and seeks

relief properly characterized as prospective.’”) citing Idaho v. Coeur d’Alene Tribe of Idaho,

521 U.S. 261, 296 (1997).

However, declaratory and injunctive relief against State officials sued in their official

capacities should not be granted where the future injury is speculative or may never occur. See

Kallstrom v. City of Columbus, 136 F.3d 1055, 1072 (6th Cir. 1998); see also Ford v.

Department of Justice, 6th Cir. Case No. 98-5495, 1999 U.S. App. LEXIS 13302 *4 (June 11,

1999). A plaintiff must “show that future harm to him is certainly impending.” Buckley v.

Ray, 848 F.3d 855, 867 n.10 (8th Cir. 2017) (Emphasis in original). A likelihood of

repetition must be shown. Id.

7

WCI’s threat of facing unfair sanctions remains speculative and unlikely to occur,

because sanctions do not arise until a violation is found. WCI’s complaint details several

measures it has taken to avoid future liquor violations, suggesting that it will not violate again.

Comp., ¶¶23-28, ECF 1, PageID 5-6. “A claim is not ripe for adjudication if it rests upon

contingent future events that may not occur as anticipated, or indeed may not occur at all.”

Texas v. United States, 523 U.S. 296, 300 (1998). Read in its entirety, the Complaint alleges

that WCI will not violate Rule 52 in the future. WCI’s request for a prospective injunction is

not ripe for adjudication because it rests upon contingent future events that may not occur as

anticipated or, as is more likely the case, may not occur at all. Compare Berry v. Schmitt, 688

F.3d 290, 297 (6th Cir. 2012) (“warning letter implied a threat of future enforcement that

elevated the injury from subjective chill to actual injury.”). Thus, declaratory and

prospective injunctive relief is not available due to the absence of an imminent threat.

Finally, the Court will consider Plaintiff’s custom and practice claims.4 Under

Article III, “this court only possesses jurisdiction over actual cases and controversies that will

affect the rights of the litigants.” Marquart v. McGinnis, 22 F. App’x 383, 384 (6th Cir. 2001),

citing, Rosales-Garcia v. Holland, 238 F.3d 704, 713 (6th Cir. 2001). The Complaint does

not allege that WCI itself will be affected in the future by the claimed “custom[s] and

practice[s]” on the part of the Commission. Indeed, the state court has ruled that Plaintiff’s

rights were not violated in the instant case.

4 The Sixth Circuit has affirmed dismissal of the only claim to mention “customs and practices.” WCI, Inc. v. Ohio

Dep't of Pub. Safety, 774 F. App'x 959, 967 (6th Cir. 2019) (“We AFFIRM the district court’s decision as to Counts I,

II, and VI of WCI’s complaint.”). They are also barred by Rooker-Feldman , but the Court will address Plaintiff’s

argument that they survive, underlying other claims.

8

Nevertheless, the Sixth Circuit, after instructing the Court to consider the England

reservation, stated “On remand, the district court is instructed that WCI has a property interest

in its Ohio liquor license. This district court must consider, under the framework of

Mathews, [v. Eldridge, 424 U.S. 319, 335 (1976)] whether Ohio provided sufficient

procedural protection to satisfy the requirements of due process.” WCI, 774 F. App’x at 965.

The Sixth Circuit has repeatedly ruled that Ohio Rev. Code Chapter 119 satisfies procedural

due process: Comsia v. Mangnone, No. 85-4060, 1987 WL 35877 *1 (6th Cir. 1987) (“The

State of Ohio provides an adequate post-deprivation proceeding for the plaintiff to pursue

which satisfies the requirements of procedural due process.”); Haddix v. Simon, 84-3951,

1986 WL 16826 *1 (6th Cir. 1986) (“the State of Ohio has provided meaningful pre-

deprivation and post-deprivation remedies for one adversely affected by decisions of the State

of Ohio Liquor Control Commission.”).5 Nothing has changed with regard to this question.6

5 “Federal courts, in adopting rules, are not free to extend the judicial power of the United States described in Article

III of the Constitution. Willy v. Coastal Corp., 503 U.S. 131, 135 (1992). The judicial power of the United States is

limited by the doctrine of precedent.” Anastasoff v. United States, 223 F.3d 898, 905 (8th Cir.), opinion vacated as

moot on reh'g en banc, 235 F.3d 1054 (8th Cir. 2000). “Following from the limitation of rule making about matters

of substance, even nonprecedential status rules made by federal courts pursuant to their inherent Article III power

would arguably be ultra vires.” Penelope Pether, Constitutional Solipsism: Toward A Thick Doctrine of Article III

Duty; or Why the Federal Circuits' Nonprecedential Status Rules Are (Profoundly) Unconstitutional, 17 Wm. & Mary

Bill Rts. J. 955, 996 (2009).

6 Additionally, Defendant Thomas Stickrath, the Director of the Ohio Department of Public Safety (substituted

automatically for previous Director John Born), is DISMISSED. See Complaint (“Comp.”), ¶ 2. There are no

allegations against the Director of Public Safety. The Report and Recommendation made no recommendation

as regards the motion to dismiss him, possibly overlooking this because Plaintiff did not oppose it. Ohio law

defines Stickrath’s authority, see, e.g., Ohio Revised Code §§ 5502.01 & 5502.011, and no provision authorizes

Stickrath or any of his agents in the Department of Public Safety to impose penalties on liquor permit holders

for violations of Ohio liquor control law. The Department investigates and present charges to the Commission,

which adjudicates and imposes penalties. The Complaint thus states no viable claim against him.

9

A Report and Recommendation, (ECF 25), would have the Court grant in part

Defendants’ Motion to Dismiss for Lack of Jurisdiction (ECF 22) under Rule 12(b)(1),

dismiss WCI’s claims for monetary damages as barred under Fed. R. Civ. P. 12(b)(1) by the

Eleventh Amendment; and otherwise deny Defendants’ Motion to Dismiss for Lack of

Subject Matter Jurisdiction (ECF 22) under Rule 12(b)(1). For the reasons stated above,

the Report and Recommendations of the Magistrate Judge, (ECF 25) is REJECTED.

Plaintiff’s Objection to the Report and Recommendation (ECF 28) is OVERRULED.

Defendants’ Objection to the Report and Recommendation (ECF 27) is SUSTAINED.

Defendants’ Motion to Dismiss for Lack of Jurisdiction (ECF 22) is GRANTED.

The instant case is TERMINATED on the dockets of the United States District

Court for the Southern District of Ohio, Western Division at Dayton.

DONE and ORDERED this 30th day of July, 2020.

s/THOMAS M. ROSE

__________________________________

THOMAS M. ROSE

UNITED STATES DISTRICT JUDGE

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