RSWW Inc v. Keego Harber

RECOMMENDED FOR FULL-TEXT PUBLICATION

Pursuant to Sixth Circuit Rule 206

File Name: 05a0065p.06

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

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Plaintiffs-Appellants, -

R.S.W.W., INC., d/b/a Goose Island Brewery, et al.,

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No. 01-2695

v.

,

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CITY OF KEEGO HARBOR, et al., -

Defendants-Appellees. -

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Appeal from the United States District Court

for the Eastern District of Michigan at Flint.

No. 98-40377—Paul V. Gadola, District Judge.

Argued: July 29, 2003

Decided and Filed: February 10, 2005

Before: DAUGHTREY and MOORE, Circuit Judges; CALDWELL, District Judge.*

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COUNSEL

ARGUED: Robert D. Horvath, Troy, Michigan, for Appellants. Julie McCann O’Connor,

O’CONNOR, DeGRAZIA & TAMM, Bloomfield Hills, Michigan, for Appellees. ON BRIEF:

Robert D. Horvath, Troy, Michigan, for Appellants. Julie McCann O’Connor, O’CONNOR,

DeGRAZIA & TAMM, Bloomfield Hills, Michigan, for Appellees.

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OPINION

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KAREN K. CALDWELL, District Judge. Plaintiffs-Appellants R.S.W.W., Inc., d/b/a Goose

Island Brewery and its sole shareholder Richard Skinner (together “Goose Island”) appeal the

district court’s dismissal of their constitutional claims asserted under 42 U.S.C. § 1983 against

Defendants-Appellants City of Keego Harbor (“Keego Harbor”) and various city officials (together

the “Defendants”) and police officers. Goose Island charges that the Defendants unconstitutionally

attempted to force it to close its microbrewery earlier than required by Michigan law. The district

court dismissed all claims. We AFFIRM in part, REVERSE in part and REMAND to the district

court for proceedings not inconsistent with this Opinion.

*

The Honorable Karen K. Caldwell, United States District Judge for the Eastern District of Kentucky, sitting

by designation.

1

No. 01-2695 R.S.W.W., et al. v. City of Keego Harbor, et al. Page 2

I. FACTS AND PROCEDURE.

A. Goose Island’s Complaint and the Motion to Dismiss.

According to Goose Island’s complaint (the “Complaint”), at the time this action began, it

owned and operated Goose Island Brewery (the “Brewery”), an establishment that sold food and

alcoholic beverages in Keego Harbor, Michigan. The Complaint states that Keego Harbor is a small

community of approximately 3,000 residents situated close to Cass Lake, Sylvan Lake and the

Clinton River. When it opened the Brewery in 1995, Goose Island held various permits from the

Michigan Liquor Control Commission (“MLCC”) including a Class “C” liquor license and a

brewpub license which permitted it to serve alcoholic beverages. The licenses granted to Goose

Island by the MLCC were in effect at the time this action was filed.

Michigan laws and regulations permit liquor licensees to serve food and alcohol until 2:00

a.m. Goose Island asserts that the MLCC has complete control over alcohol sales in the state of

Michigan and that local communities cannot require MLCC-licensed establishments to close earlier

than 2:00 a.m. Goose Island charges, however, that, beginning in 1997, Keego Harbor and certain

city officials set out on an unlawful harassment campaign to force Goose Island to close the Brewery

at 11:00 p.m.

This unlawful harassment campaign allegedly consisted of the city withholding certain

administrative approvals requested by Goose Island and inordinate police surveillance directed at

Goose Island, its patrons and its employees. Specifically, Goose Island charges that the city refused

to grant it a requested zoning variance, approval of a site plan amendment and permission to change

the name on its sign. Goose Island also charges that the city police conducted daily “drive-

throughs” of Goose Island’s parking lot; stopped the vehicles of Goose Island’s customers and

employees and, in some cases, issued them tickets; parked their police cars near Goose Island where

patrons and customers would see them; and lodged a complaint against Goose Island with the

MLCC. According to the Complaint, the police scrutiny caused a significant drop in its monthly

sales.

In the Complaint, Goose Island asserted a claim under 42 U.S.C. § 19831 against the city of

Keego Harbor, its City Manager at the time of the events in question (Michael Steklac), its Chief

of Police at the time of the events in question (Jack Beach), and various members of its city council2

during the events in question (Ralph Behler, Robert Burns, Arthur Nance and David Hofmann).

The individuals were sued in both their individual and official capacities.

The district court discerned various constitutional claims in the Complaint. Relevant to this

appeal are Goose Island's claims that the Defendants violated its rights to due process by way of

“unconstitutional conditions” and that the city’s ordinance regulating signs (the “Sign Ordinance”)

violates the First Amendment. R.S.S.W., Inc. v. City of Keego Harbor, 18 F.Supp.2d 738, 744 (E.D.

Mich. 1998), recon. denied, 56 F.Supp.2d 798 (E.D. Mich. 1999)3.

1

Section 1983 provides for legal and equitable remedies against any person who, under color of state law,

deprives any person of any "rights, privileges, or immunities secured by the Constitution and laws . . . . " 42 U.S.C.

§ 1983.

2

In its initial complaint, Goose Island also named the MLCC and its chairperson as defendants but later

dismissed them.

3

In all pleadings before this Court, the corporate plaintiff is identified as R.S.W.W., Inc. The plaintiff is

incorrectly designed at R.S.S.W., Inc. in the published opinions of the district court.

No. 01-2695 R.S.W.W., et al. v. City of Keego Harbor, et al. Page 3

On the Defendants’ Motion to Dismiss the Complaint, the district court dismissed the

challenge to the Sign Ordinance. The district court also dismissed the claims against the individual

city council members determining that they were entitled to absolute legislative immunity.4

B. The Amended Complaint and Motion for Summary Judgment.

In May, 2000, the district court granted Goose Island’s motion to amend the Complaint to

add two Keego Harbor police officers as defendants. It denied Goose Island permission to add as

defendants the city planning consultant and his company, Phillip McKenna and McKenna5

Associates, Inc. (together, “McKenna”). Goose Island then filed a Second Amended Complaint

adding the two police officers, Gregory Palmer (“Palmer”) and Daniel Reynolds (“Reynolds”), and

charging that Palmer and Reynolds carried out the inordinate police scrutiny of Goose Island, its

patrons and employees (the “Second Amended Complaint”).

The amended complaint also stated that Goose Island had been forced to close the Brewery

soon after commencing this action because the Defendants’ actions had made it “unfeasible” for it

to continue operations. The amended complaint further charged that Goose Island had been unable

to sell its property because the Defendants’ actions had “significantly, and negatively, impacted the

marketability of [Goose Island’s] property/licenses, and have impaired fair market value.”

The officers then moved for summary judgment of the claims made in the Second Amended

Complaint. The district court determined that, with the amended complaint, Goose Island was

attempting to assert equal protection and due process claims against the officers and dismissed both

claims.6

C. Dismissal of Unconstitutional Conditions Claim for Lack of Jurisdiction.

By October, 2001, the sole remaining claim in the action was Goose Island’s claim that

Keego Harbor and its city manager and police chief had violated the doctrine of “unconstitutional

conditions.” At that time, the Defendants moved to dismiss the claim for lack of subject matter

jurisdiction. By Order dated November 6, 2001, the district court granted the motion to dismiss.

Goose Island then filed a notice of appeal.

D. Issues on Appeal.

On appeal, Goose Island charges that the district court erred 1) in ruling that it did not have

subject matter jurisdiction over Goose Island’s unconstitutional conditions claim; 2) in ruling that

Goose Island did not have standing to assert a challenge to the Sign Ordinance; 3) in ruling that the

city council members were entitled to legislative immunity; 4) in dismissing the police officers; and

4

The ruling on the Motion to Dismiss was entered on September 16, 1998 by District Judge Horace W. Gilmore.

On November 2, 1998, the case was transferred to District Judge Paul V. Gadola.

5

A First Amended Complaint was filed at the request of the district court to clarify the issues remaining after

Goose Island’s dismissal of the MLCC and its chairperson. R.S.S.W., Inc. v. City of Keego Harbor, 18 F.Supp.2d at 740

n.1 (E.D. Mich. 1998).

6

In its Summary Judgment, the district court also dismissed Goose Island’s claim that the Defendants had

violated its rights under the Due Process Clause by depriving it of a property right in its license and a liberty right in

engaging in its chosen profession. On appeal, Goose Island does not challenge the district court’s dismissal of this claim

and this Court will not, therefore, address the propriety of that dismissal.

No. 01-2695 R.S.W.W., et al. v. City of Keego Harbor, et al. Page 4

5) in denying 7Goose Island’s motion to amend the pleadings to add the city planning consultant and

his company.

II. ANALYSIS.

A. Standards of Review.

This court reviews de novo a district court’s grant of a motion to dismiss. Montgomery v.

Huntington Bank, 346 F.3d 693, 697-98 (citation omitted). In reviewing a motion to dismiss, we

must construe the complaint in the light most favorable to the plaintiff and find dismissal proper

only if it appears beyond doubt that the plaintiff cannot prove any set of facts in support of his

claims that would entitle him to any relief. Id. (citation omitted).

This court also reviews de novo the district court’s grant of summary judgment using the

same Rule 56(c) standard as the district court. Williams v. Mehra, 186 F.3d 685, 689 (6th Cir.

1999). In accordance with Federal Rule of Civil Procedure 56(c), summary judgment is proper “if

the pleadings, depositions, answers to interrogatories, and admissions on file, together with the

affidavits, if any, show that there is no genuine issue as to any material fact and that the moving

party is entitled to a judgment as a matter of law.” Fed. R. Civ. P. 56(c). “In deciding a motion for

summary judgment, we view the factual evidence and draw all reasonable inferences in favor of the

non-moving party.” Williams, 186 F.3d at 689 (citation omitted). The moving party has the burden

of proving that no genuine issue as to any material fact exists and that it is entitled to a judgment as

a matter of law. Street v. J.C. Bradford & Co., 886 F.2d 1472, 1477-78 (6th Cir. 1989). A dispute

over a material fact cannot be “genuine” unless a reasonable jury could return a verdict for the

nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

A district court’s denial of a motion to amend a complaint is reviewed for an abuse of

discretion. Begala v. PNC Bank, Ohio, Nat’l Ass’n, 214 F.3d 776, 783 (6th Cir. 2000). “Abuse of

discretion is defined as a definite and firm conviction that the trial court committed a clear error of

judgment.” Bowling v. Pfizer, Inc., 102 F.3d 777, 780 (6th Cir. 1996) (quoting Logan v. Dayton

Hudson Corp., 865 F.2d 789, 790 (6th Cir. 1989).

B. Dismissal of Unconstitutional Conditions Claim for Lack of Subject Matter

Jurisdiction.

Pursuant to 28 U.S.C. § 1331, district courts have jurisdiction over all civil actions arising

under federal laws or the Constitution. The party attempting to show that federal jurisdiction exists

bears the burden of demonstrating jurisdiction “by competent proof.” Thomson v. Gaskill, 315 U.S.

442, 446 (1942).

7

Goose Island also asserts that the district court erred in ruling that Goose Island did not have standing to assert

an equal protection claim against the City and the city officials based on unequal enforcement of traffic laws. The district

court actually dismissed this claim on two grounds. As recognized by Goose Island, the district court held that Goose

Island had no standing to assert the claim because the alleged unequal enforcement actions were directed at Goose

Island’s customers and employees and not at Goose Island itself. R.S.S.W., Inc. v. City of Keego Harbor, 18 F.Supp.2d

at 747. The district court also held, however, that Goose Island’s allegations of inordinate police scrutiny could not form

the basis for an equal protection claim because Goose Island had only alleged increased traffic stops and police presence

but not actual enforcement of laws. Id. On appeal, Goose Island does not challenge this second grounds for dismissal

of its equal protection claim against the City and city officials. Goose Island’s failure to do so moots any need for this

Court to address the alternative grounds for dismissal of the claim. Thus, the Court declines to address whether the

district court properly determined that Goose Island lacked standing to assert an equal protection claim against the City

and city officials based on unequal enforcement of traffic laws.

No. 01-2695 R.S.W.W., et al. v. City of Keego Harbor, et al. Page 5

With its unconstitutional conditions claim, Goose Island asserts that the Defendants withheld

certain administrative approvals from it unless it agreed to close at 11:00 p.m. In dismissing the

claim, the district court determined that, “[f]or the reasons set forth in Defendant’s briefs,” Goose

Island had not adequately identified the federal right which it alleged that the Defendants had

deprived it of in violation of 42 U.S.C. § 1983. Examining the Defendants’ brief in support of their

Motion to Dismiss, it appears that the district court dismissed the unconstitutional conditions claim

because it was premised only upon a state law governing alcohol sales but did not involve any

federal right as required for the court’s jurisdiction.

Under the unconstitutional conditions doctrine, “a state actor cannot constitutionally

condition the receipt of a benefit, such as a liquor license or an entertainment permit, on an

agreement to refrain from exercising one’s constitutional rights . . . . ” G & V Lounge, Inc. v. Mich.

Liquor Control Comm’n, 23 F.3d 1071, 1077 (6th Cir. 1994).

For at least a quarter-century, this Court has made clear that even though a person

has no “right” to a valuable governmental benefit and even though the government

may deny him the benefit for any number of reasons, there are some reasons upon

which the government may not rely. It may not deny a benefit to a person on a basis

that infringes his constitutionally protected interests . . . .

Perry v. Sindermann, 408 U.S. 593, 597 (1972); See also Amelkin v. McClure, 330 F.3d 822, 827-28

(6th Cir.)(stating that “unconstitutional conditions” doctrine holds that government may not grant a

benefit on condition that the beneficiary surrender a constitutional right, even if the government may

withhold the benefit altogether), cert. denied, 124 S.Ct. 827 (2003).

Clearly, a federal court has jurisdiction over a properly asserted unconstitutional conditions

claim because it involves the infringement of a constitutional right. In determining whether the

district court had subject matter jurisdiction over Goose Island’s unconstitutional conditions claim,

the Court must first examine the validity of the constitutional right asserted. Goose Island appears

to assert that its right to due process was infringed because the city attempted to force it to relinquish

that right by withholding certain government benefits.

As this Court has previously recognized, while the unconstitutional conditions doctrine has

been most consistently applied to protect First Amendment rights, it has also been applied by the

Supreme Court to other constitutional provisions, including the Takings Clause. Woodard v. Ohio

Adult Parole Authority, 107 F.3d 1178, 1190 (6th Cir. 1997)(citations omitted), rev’d on other

grounds, 523 U.S. 272 (1998). The doctrine should equally apply to prohibit the government from

conditioning benefits on a citizen’s agreement to surrender due process rights. See, e.g., Vance v.

Barrett, 345 F.3d 1083, 1089 (9th Cir. 2003)(applying the unconstitutional conditions doctrine to

protect rights to due process).

In order to assert a valid due process claim, however, a plaintiff must establish that the

interest asserted is a liberty or property interest protected under the Fourteenth Amendment. Wojcik

v. City of Romulus, 257 F.3d 600, 609 (6th Cir. 2001). Goose Island argues that it had a protected

property right in its liquor license which included the right to certain hours of operation. In Wojcik,

this Court recognized that “Michigan courts have held that the holder of a liquor license has a

constitutionally protected interest and is therefore entitled to proper proceedings prior to making

decisions regarding renewal or revocation.” Id. at 609-10 (citing Bisco’s, Inc. v. Michigan Liquor

Control of Comm’n, 238 N.W.2d 166, 167 (Mich. 1976)). The issue before this Court, however,

is whether Goose Island had a property interest in certain hours of operation.

In Board of Regents v. Roth, 408 U.S. 564 (1972), the Supreme Court explained that “[t]o

have a property interest in a benefit, a person clearly must have more than an abstract need or desire

No. 01-2695 R.S.W.W., et al. v. City of Keego Harbor, et al. Page 6

for it. He must have more than a unilateral expectation of it. He must, instead, have a legitimate

claim of entitlement to it.” Id. at 577. Constitutionally protected property interests are not created

by the Constitution itself but rather by “existing rules or understandings that stem from an

independent source such as state law – rules or understandings that secure certain benefits and that

support claims of entitlement to those benefits.” Id.

“[A] party cannot possess a property interest in the receipt of a benefit when the state’s

decision to award or withhold the benefit is wholly discretionary.” Med Corp., Inc. v. City of Lima,

296 F.3d 404, 409 (6th Cir. 2002). Thus, in order to establish a constitutionally protected property

interest in remaining open until 2:00 a.m., Goose Island “must point to some policy, law, or mutually

explicit understanding that both confers the benefits and limits the discretion of the City to rescind

the benefit.” Id. at 410.

In Med Corp., MedCorp., an ambulance company licensed to provide ambulance services

in Lima, Ohio, sued the city when the city suspended the dispatch of 911 calls to the company for

one week. As is the case with Goose Island’s liquor license, there was no question that MedCorp.

had a property interest in its license. Id. at 411. MedCorp. charged, however, that it also had a

property interest in receiving 911 dispatches. Id. at 409. The district court determined that Med

Corp. did not have a property interest in receiving 911 dispatches from the city because there was

no enforceable policy or procedure restraining the city’s discretion to suspend the dispatches. Id.

at 408. This Court agreed finding that it was undisputed that there was no written policy or

legislative enactment that established a procedure for maintaining the 911 dispatch list or that

limited the city’s discretion to remove ambulance companies from the list. Id. at 410.

In this case, however, Rule 436.1403 of the Michigan Administrative Code provides that “an

on-premises licensee shall not sell, give away, or furnish alcoholic liquor between the hours of 2

a.m. and 7 a.m. on any day . . . . ” Mich. Admin. Code r. 436.1403(1). On its face, the rule does not

grant licensees a right to remain open until 2:00 a.m. but merely provides that licensees cannot sell

liquor after 2:00 a.m. Nevertheless, in Noey v. City of Saginaw, 261 N.W. 88 (Mich. 1935), the

Supreme Court of Michigan determined that a Michigan city ordinance cannot fix closing hours to

a period shorter than that specified in the state rule.8 Thus, in this matter, in contrast to Med. Corp.,

there is a written regulation that both confers the benefit at issue (serving alcohol until 2:00 a.m.)

and prohibits city officials from rescinding the benefit.

“The legal definition of ‘property’ most often refers not to a particular physical object, but

rather to the legal bundle of rights recognized in that object.” Brotherton v. Cleveland, 923 F.2d

477, 481 (6th Cir. 1991). See also U.S. v. Frost, 125 F.3d 346, 367 (6th Cir. 1997). Included in this

bundle of rights are the rights to “possess, use and dispose” of a particular article. Brotherton, 923

F.2d at 481. Under Michigan law, a liquor license is property which includes the right to serve

alcohol until 2:00 a.m. Accordingly, just as a licensee’s license could not be revoked without due

process, neither can a licensee’s right to serve alcohol until 2:00 a.m. be revoked without due

process. Cf. Sea Girt Restaurant & Tavern Owners Ass’n v. Borough of Sea Girt, 625 F.Supp. 1482,

1487-89 (D. N.J.) (holding that a New Jersey liquor license is a property interest for purposes of due

process analysis and that the statutory process by which municipalities set the hours during which

alcoholic beverages may be sold must afford procedural due process to licensees), aff’d, 802 F.3d

448 (3rd Cir. 1986).

If Keego Harbor had forced Goose Island to close at 11:00 p.m. without any prior procedure,

that action clearly would have violated Goose Island’s constitutionally protected property rights.

8

The state regulation in effect at the time of the Noey decision was substantially similar to Rule 436.1403,

providing that, “no licensee. . . shall sell or permit the sale of any alcoholic liquor for consumption on the premises

between the hours of 2:00 o’clock and 7:00 o’clock A.M. Eastern Standard Time. . . . ” Noey, 261 N.W. at 89.

No. 01-2695 R.S.W.W., et al. v. City of Keego Harbor, et al. Page 7

Pursuant to the “unconstitutional conditions” doctrine, Keego Harbor cannot indirectly force Goose

Island to close at 11:00 p.m. by withholding government benefits. The fact that Goose Island

apparently never closed at 11:00 p.m. is irrelevant. The due process violation at issue is the city’s

alleged requirement that Goose Island choose between its due process rights in certain hours of

operation and the desired city approvals. See Vance, 345 F.3d at 1088 n.5.

Goose Island’s allegation that the city withheld approval of its request for a site plan

amendment and a zoning variance and its request to change the name on its sign until Goose Island

would agree to shorten its operating hours at least raises a constitutional question over which the

district court had jurisdiction. Accordingly, the district court erred in dismissing Goose Island’s

unconstitutional conditions claim on grounds that it lacked subject matter jurisdiction. Whether

Goose Island can produce any evidence to support the claim or should ultimately prevail are separate

issues that are not before this Court since the district court did not address the merits of this claim.

C. Dismissal of Challenge to Sign Ordinance.

Goose Island argues on appeal that the district court incorrectly dismissed its facial challenge

to the Sign Ordinance which makes it unlawful “for any person to erect, re-erect, alter or relocate

any sign un less [sic] a permit shall have been first obtained from the Building Inspector. . . .” With

its Complaint, Goose Island charged that the city had refused to consider its request to change the

name on its business sign and alleged that the Sign Ordinance violates the First Amendment “since

it is not confined by narrow, definite and objective guidelines.” The district court dismissed Goose

Island’s facial challenge to the ordinance finding that Goose Island had no standing to assert the

claim because the city had not denied Goose Island’s request to change its sign but only postponed

consideration of it pending the resolution of the zoning disputes. R.S.S.W., Inc., 18 F.Supp.2d at

748.

“[W]hen a licensing statute allegedly vests unbridled discretion in a government official over

whether to permit or deny expressive activity, one who is subject to the law may challenge it facially

without the necessity of first applying for, and being denied, a license.” City of Lakewood v. Plain

Dealer Publishing Co., 486 U.S. 750, 755-56 (1988). The “root of this long line of precedent is the

time-tested knowledge that in the area of free expression a licensing statute placing unbridled

discretion in the hands of a government official or agency constitutes a prior restraint and may result

in censorship.” Id. at 757.

Plaintiffs cannot assert third party standing in every First Amendment facial challenge to an

ordinance– only in vagueness and overbreadth challenges. Brandywine, Inv. v. City of Richmond,

359 F.3d 830, 835 (6th Cir. 2004). It is well established that a plaintiff has standing to challenge a

statute on the ground that it delegates overly broad licensing discretion to an administrative office,

whether or not he has applied for a license. Nightclubs, Inc. v. City of Paducah, 202 F.3d 884, 889

(6th Cir. 2002)(quoting Freedman v. Maryland, 380 U.S. 51, 56 (1986)).

Goose Island challenges the Sign Ordinance on the basis that its grants overly broad

licensing discretion that permitted the city to withhold approval of its request to change its name on

its business sign. For purposes of determining Goose Island’s standing on this claim, it is irrelevant

that the city did not actually deny Goose Island’s request to change its sign but only delayed

consideration of the request. In fact, a form of overly broad licensing discretion subjecting an

ordinance to a third-party facial challenge is the failure to place brief, specific time limits on the

decision-making process. Id. The district court erred in ruling that Goose Island has no standing to

challenge the Sign Ordinance on First Amendment grounds and this matter will be remanded to the

district court for a ruling on the merits of that claim.

No. 01-2695 R.S.W.W., et al. v. City of Keego Harbor, et al. Page 8

D. Dismissal of City Council Members.

In its ruling on the Motion to Dismiss, the district court dismissed the individual city council

members – Behler, Burns, Nance, and Hofmann – from the action finding that they were entitled to

absolute legislative immunity because their alleged wrongful actions were legislative acts. Id. at 749.

Local legislators are entitled to absolute immunity “when they act in their legislative capacities.”

Shoultes v. Laidlaw, 886 F.2d 114, 117 (6th Cir. 1989). “Absolute legislative immunity attaches to

all actions taken in the sphere of legitimate legislative activity.” Bogan v. Scott-Harris, 523 U.S. 44,

54 (1998)(quotations and citation omitted).

The district court determined that Goose Island had only alleged that the city council

members participated in the passage of various ordinances9 and that Goose Island had failed to make

any specific allegations regarding non-legislative acts by any single council member. R.S.S.W., Inc.,

18 F.Supp. 2d at 749. On appeal, Goose Island argues that the district court improperly granted the

individual city council members legislative immunity because its Complaint against them was based,

not on legislative activity, but on the city’s “policy” of harassing Goose Island into closing three

hours earlier than required under state law. Goose Island alleges generally that the city council

created the “close at 11 p.m.” demand and then pressured the City Manager and Police Chief to force

Goose Island to comply.

The only claims that remain in this action are the unconstitutional conditions claim and the

Sign Ordinance claims. The passage of the Sign Ordinance is a purely legislative act for which all

council members are immune from suit. Shoultes, 886 F.2d at 117-18 (mayor and council were

clearly acting in their legislative capacities in passing zoning ordinance and, thus, absolutely

immune from suit where ordinance was subsequently held invalid). The actions that are relevant to

the unconstitutional conditions claim are the city’s alleged refusals to grant Goose Island the site

plan amendment unless it agreed to close at 11:00 p.m.; the city’s alleged refusal to grant Goose

Island the zoning variance unless it agreed to close at 11:00 p.m.; and the city’s alleged refusal to

grant Goose Island permission to change its business sign unless it agreed to close at 11:00 p.m.

On appeal, Goose Island argues that it made specific allegations in the district court

regarding non-legislative actions undertaken by Defendant Hofmann. Goose Island points to

minutes of the city council and Planning Commission’s meetings and the deposition transcripts of

Hofmann’s neighbor and of police chief Jack Beach. These documents certainly make clear that

Hofmann objected to Goose Island’s operations. Nevertheless, these documents do not evidence any

activity relevant to Goose Island’s unconstitutional conditions claim, i.e., that Hofmann caused the

relevant government officials to fail to approve Goose Island’s administrative requests unless it

agreed to close at 11:00 p.m.

Goose Island has alleged generally that the city council pressured other city officials to force

Goose Island to close at 11:00 p.m. Nevertheless, in its pleadings before the district court, Goose

Island alleged no specific activity by any individual council member with regard to its

unconstitutional conditions claim. The district court correctly concluded that the only actions that

Goose Island alleged that the individual city council members undertook relevant to its complaint

were legislative actions. Accordingly, the district court correctly concluded that the individual city

council members were entitled to legislative immunity. Therefore, we affirm the district court’s

dismissal of the individual city council members as parties to this action.

9

In addition to its challenge to the Sign Ordinance, before the district court, Goose Island challenged Keego

Harbor ordinances governing zoning and the revocation of liquor licenses. After its ruling on the Motion to Dismiss,

the district court denied Goose Island’s motion that the liquor and zoning ordinances be declared unconstitutional. That

ruling is not challenged on appeal.

No. 01-2695 R.S.W.W., et al. v. City of Keego Harbor, et al. Page 9

E. Dismissal of Police Officers.

Goose Island added police officers Palmer and Reynolds as defendants to this action in its

Second Amended Complaint. The amended complaint asserts generally that Palmer and Reynolds

“carried out their police patrol activities in this improper fashion, deciding to focus law enforcement

activities against plaintiffs because Keego Harbor’s city council wanted plaintiffs to close at 11

p.m.” The amended complaint asserts that the officers stopped and, in some cases, ticketed patrons

and employees; lodged a complaint with the MLCC against Goose Island; and entered the business

after closing and demanded that employees depart.

In ruling on the officers’ Motion for Summary Judgment, the district court determined that,

with the Second Amended Complaint, Goose Island was asserting equal protection and due process

claims against the officers and dismissed both claims. On appeal, Goose Island argues that the

district court should have analyzed its claim against the officers as a retaliation claim and not as a

vindictive enforcement claim.

With the various motions made by the Defendants below, the district court was asked to

analyze the claims made in the Complaint and the Second Amended Complaint. From the pleadings,

it is not clear which claims Goose Island asserts against any particular defendant, much less the

individual defendants. Where the pleadings do mention actual causes of action, they are mentioned

only in connection with Keego Harbor or, more generally, Defendants.

As to Reynolds and Palmer, the Second Amended Complaint does not assert any causes of

action against them specifically.10 The complaint asserts that the “police actions” generally violated

“equal protection of the laws” and Goose Island’s rights to “procedural due process.” The complaint

mentions a retaliation claim but appears to assert it only against the city,11 not against Reynolds and

Palmer in their individual capacities. The complaint states:

And, to the degree Keego Harbor’s police and administrative actions are in

retaliation for Plaintiff’s refusal to close at 11:00 p.m. and for Plaintiff’s concomitant

recourse to their administrative and/or judicial remedies, Keego Harbor’s actions

violate the Fourteenth and First Amendments since they have taken place because

Plaintiffs have chosen to defend their legal rights by pursuing their available

remedies.

Second Amended Complaint, ¶ 12 (emphasis added).

In its response to the officers’ Motion for Summary Judgment filed in the district court,

Goose Island does not mention a retaliation claim but discusses only an equal protection claim

against the officers in their individual capacities.

Before this Court, Goose Island appears to recognize that it asserted only an equal protection

claim against the officers but argues that the district court should have analyzed that claim as a

retaliation claim. Goose Island’s retaliation claim, however, does not implicate the Equal Protection

Clause. A retaliation claim is a claim that “government officials retaliated against the plaintiffs for

10

Nor does the complaint state that Goose Island is asserting any claims against the officers in their individual

capacities. Nevertheless, because the officers asserted qualified immunity as a defense to the equal protection and due

process claims, it appears that the officers understood that Goose Island was asserting those claims against the officers

in their individual capacities.

11

The district court dismissed Goose Island’s retaliation claim against the city in its Summary Judgment and

Goose Island does not challenge that dismissal on appeal.

No. 01-2695 R.S.W.W., et al. v. City of Keego Harbor, et al. Page 10

exercising their constitutional rights.” Thaddeus-X v. Blatter, 175 F.3d 378, 386 (6th Cir. 1999).

The essence of the claim is that the plaintiff engaged in conduct protected by the Constitution or by

statute, that the defendant took adverse action against the plaintiff, and that the adverse action was

taken because of the protected conduct. Id. at 386-87.

To the extent that Goose Island alleges that government officials retaliated against it for

accessing the courts, that claim arises under the First Amendment. Thaddeus-X, 175 F.3d at 391;

Hoeber on Behalf of NLRB v. Local 30, 939 F.2d 118, 126 (3rd Cir. 1991) (“The filing of a lawsuit

carries significant constitutional protections, implicating the First Amendment right to petition the

government for redress of grievances, and the right of access to courts.”) Goose Island’s claim that

government officials retaliated against it for exercising an alleged liberty or property right to stay

open until 2:00 a.m. implicates, as Goose Island itself argues, the Due Process Clause. Goose

Island’s retaliation claim does not, however, arise under the Equal Protection Clause. See, e.g.,

Watkins v. Bowden, 105 F.3d 1344, 1354 (11th Cir. 1997) (“A pure or generic retaliation claim,

however, simply does not implicate the Equal Protection Clause.”); Grossbaum v. Indianapolis-

Marion County Bldg. Auth., 100 F.3d 1287, 1296 n.8 (7th Cir. 1996)(Equal Protection Clause “does

not establish a general right to be free from retaliation”). Thus, the district court did not err by

failing to analyze Goose Island’s equal protection claim against the officers as a retaliation claim.

Goose Island never properly asserted a retaliation claim against the officers in their

individual capacities before the district court and, therefore, that claim will not be addressed on

appeal. “This Court will not decide issues or claims not litigated before the district court.” White

v. Anchor Motor Freight, Inc., 899 F.2d 555, 559 (6th Cir. 1990). Goose Island also argues that the

district court incorrectly determined that the police officers were entitled to qualified immunity. The

district court, however, determined that the officers were entitled to qualified immunity only as an

“alternate ground” for dismissing the equal protection claim and only after determining that Goose

Island had not created an issue of fact regarding the claim. Because the Court upholds the district

court’s dismissal of the equal protection claim on its merits, it need not address whether the officers

were entitled to qualified immunity.

F. District Court’s Denial of Motion to Amend Pleadings.

Federal Rule of Civil Procedure 15(a) states that leave to amend a pleading “shall be freely

given when justice so requires.” Fed. R. Civ. P. 15(a). A district court abuses its discretion when

it denies a motion to amend and “fails to state the basis for its denial or fails to consider the

competing interests of the parties and the likelihood of prejudice to the opponent.” Moore v. City

of Paducah, 790 F.2d 557, 559 (6th Cir. 1986).

Goose Island filed this action in February, 1998. It moved to add McKenna as a defendant

in January, 2000. In its order denying Goose Island’s motion to add McKenna as a defendant, the

district court adopted the findings of the magistrate judge. In rendering a decision, the magistrate

judge specifically considered the following :

Based on the pleadings and the representations of counsel, I’m going to find that

there has been undue delay in filing the motion with respect to McKenna and

McKenna and Associates. I believe that the addition of McKenna and McKenna and

Associates at this period in time would be unduly prejudicial, both to the existing

defendants, the City of Keego Harbor, and the individuals, as well as to McKenna.

What the addition of McKenna and McKenna and Associates in this lawsuit would

require is reopening the whole case. This case has been going on for several years.

It went on previous to that, I believe, in the state court’s litigation between these

parties. I am not about, at this stage of the proceeding when discovery is closed, to

No. 01-2695 R.S.W.W., et al. v. City of Keego Harbor, et al. Page 11

– to add a new party, following which discovery is going to reopen completely on

all the issues in the case.

Tr. Mot. Hr’g, pp. 28-29.

Thus, the magistrate judge found that there had been undue delay in the filing of the motion

and that the addition of McKenna would be unduly prejudicial to the existing Defendants given that

discovery was already complete. The magistrate judge further considered that Goose Island retained

the right to sue McKenna in a separate action. As the district court did not abuse its discretion, we

affirm its denial of Goose Island’s motion to amend its complaint to add McKenna.

III. CONCLUSION.

For the foregoing reasons, we REVERSE the district court’s Order dismissing Goose

Island’s unconstitutional conditions claim and the district court’s Order dismissing Goose Island’s

challenge to the Keego Harbor sign ordinance; we otherwise AFFIRM the district court and; we

REMAND to the district court for further proceedings not inconsistent with this Opinion.