Anvar et al v. Dwyer et al

OCR transcription for search; preserved printed pages are authoritative

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UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND

KAMBIS ANVAR and MICHELLE
DRUM,
Plaintiffs,

Vv.

ELIZABETH TANNER, in her official BL Is LSP ese I al

capacity as Director of R.I. Department

of Business Regulation, and PETER

NERONHA, in his official capacity as

Attorney General of Rhode Island,
Defendants.

MEMORANDUM AND ORDER

JOHN J. MCCONNELL, JR., United States District Chief Judge.

This is a civil rights action brought pursuant to 42 U.S.C. § 1983 challenging
the constitutionality of R.I, Gen, Laws § 3-4-8(a) and 230 R.I. Admin. Code 30-10-
1.4.19(B)(1), which prohibit out-of-state alcohol retailers from selling, shipping, and
delivering alcohol directly to Rhode Island residents, and R.I. Gen. Laws §§ 3-5-10, 3-
5-11, 3-5-15, 3-5-17, and 3-7-18, and 230 R.I. Admin. Code 30-10-1.4.10(B) and 30-10-
1.4.27, which Plaintiffs allege have the practical effect of preventing out-of-state
retailers from lawfully selling and delivering alcohol to Rhode Island consumers.
Plaintiffs assert that these — unlawfully benefit in-state sellers to the
detriment of out-of-state business interests, in violation of the Commerce Clause of
the United States Constitution. Defendants move to dismiss under Rule 12(b)(1) for

lack of subject-matter jurisdiction.

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I. BACKGROUND

Plaintiffs Kambis Anvar and Michelle Drum are Rhode Island residents and
wine consumers over the age of twenty-one who wish to purchase wine from out-of-
state sources and have it delivered to their homes. Plaintiffs have contacted out-of-
state sellers by telephone and the Internet seeking Rhode Island wine delivery. ECF
No. 1, { 18. The retailers have, in turn, declined invitations to place such orders.!
Id, Plaintiffs allege that because Rhode Island law does not mandate that in-state
alcohol purchases be made in person and permits direct-to-consumer orders from out-
of-state wineries, the only justification for barring out-of-state retail shipments is
thus impermissible protectionism. /d., §[{ 22°23.

Plaintiffs filed suit seeking a declaratory judgment that this regulatory scheme
violates the Commerce Clause of the United States Constitution. Jd. at 6. Plaintiffs
further ask this Court to enjoin Defendants from enforcing the relevant statutory and
regulatory provisions and direct Defendants to permit direct-to-consumer wine sales,
shipments, and deliveries. /d.

Defendants filed an Answer (ECF No. 15) and requested a stay as to expert
discovery to allow for briefing on the issue of subject-matter jurisdiction (ECF No.

35).

1 Additionally, Plaintiff Anvar described attempting to have wine celivered to
Rhode Island from wine discount website “Wines “Til Sold Out.” ECF No. 40-1 at
15:18-16:01. He also recounted attempting to participate in a wine of the month club.
ECF No. 40-1 at 16:02-16:08. See also ECF No. 40-1 at 17:19-25:09; ECF No. 40-3 at
26°28; 30°31.

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Defendants subsequently filed a Motion to Dismiss for lack of standing. ECF
No. 40. Along with their motion, Defendants included excerpts of Plaintiffs’
depositions and answers to interrogatories from discovery that pre-dated the Court's
stay of the scheduling order. ECF No. 40-1 — 40-4, Defendants attack standing by
virtue of a challenge controverting the Complaint’s factual underpinnings. ECF No.
A0 at 8-9.

In responding to the Motion to Dismiss, Plaintiffs submitted personal
declarations expanding on their depositions and responses to interrogatories, among
other materials. ECF No. 41-2, 41-3. Additionally, Plaintiffs filed declarations
containing the results of counsel’s research as to out-of-state retailers’ desire to
deliver wine to Rhode Island residents if the law so permitted, as well as to the
purported unavailability of certain wines in the Rhode Island marketplace. ECF No.
A1-4, 41-7,

Defendants Move to Strike the declarations as inadmissible hearsay and on
other grounds. ECF No. 438,

II. STANDARD OF REVIEW

Defendants have Moved to Dismiss the claims against them under Rule
12(b)(1).. Generally, “[t]he proper vehicle for challenging a court’s subject-matter
jurisdiction is Federal Rule of Civil Procedure 12(b)(1).” Valentin v. Hosp. Bella
Vista, 254 F.3d 358, 362 (ist Cir. 2001). If a plaintiff “lacks Article II] standing to

bring a matter before the court, the court lacks subject matter jurisdiction to decide

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the merits of the underlying case.” Dubois v. U.S. Dep’t of Agric., 102 F.3d 1278, 1281
(1st Cir. 1996) (citing FW/PBS, Ine. v. City of Dail, 493 U.S. 215, 231 (1990)).

The procedural posture here is unique. Defendants fashion their Rule 12(b)(1)
Motion to Dismiss as a factual challenge to standing, rather than a facial one. Ina
facial challenge, “the court must credit the plaintiff's well-pleaded factual
allegations,” draw all reasonable inferences in the plaintiffs favor, and adjudicate the
challenge accordingly. Valentin, 254 F.3d at 368, By contrast, in a factual challenge,
the plaintiff disputes “the accuracy (rather than the sufficiency) of the jurisdictional
facts asserted by the plaintiff and proffer[s] materials of evidentiary quality in
support of that position.” Jd. In the context of such a challenge, a plaintiffs facts are
entitled to “no presumptive weight,” and the court may delve into auxiliary
submissions beyond the pleadings. Jd. “The attachment of exhibits to a 12(b)(1)
motion does not convert it” to a motion for summary judgment. Gonzalez v. United
States, 284 F.3d 281, 288 (1st Cir. 2002).

III. DISCUSSION
A, Properly Characterizing Defendants’ Dispositive Motion

A Rule 12(b)(1) motion to dismiss for lack of subject-matter jurisdiction “must
be made before pleading if a responsive pleading is allowed.” Fed. R. Civ. P. 12. Here,
Defendants so moved after filing an Answer. Plaintiffs argue that this poor timing
converted Defendants’ motion under Rule 12(b)() to a motion for summary judgment.
But, where a lack of subject-matter jurisdiction is alleged in a post-answer Rule

12(b)(1) motion, a court may decide the jurisdictional issue under Rule 12(h)(8). That

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rule provides: “if the court determines at any time that it lacks subject-matter
jurisdiction, the court must dismiss the action.” Fed. R. Civ. P. 12(h)(3); see
also Avbaugh v. Y&H Corp., 546 U.S. 500, 506 (2006); Greystone Bank v. Tavarez,
No. 09-CV-5192 (SLT), 2010 WL 3325208, at *1 (E.D.N.Y. Aug. 19, 2010) (collecting
cases). Thus, the Court will consider Defendants’ motion under Rule 12(h)(3).
B. Standing

Defendants contend that Plaintiffs lack standing to advance their claims. “[A]
federal court may resolve only ‘a real controversy with real impact on real persons.”
TransUnion LLC v. Ramirez, No. 20-297, 2021 WL 2599472, at *7 (U.S. June 25,
2021) (quoting Am. Legion v. Am, Humanist Assn., 189 S. Ct. 2067, 2103 (2019)). A
plaintiff carries the jurisdictional burden, Mangual vy. Rotger-Sabat, 317 F.8d 45, 56
(1st Cir. 2008).

To establish standing, a plaintiff must have “(1) suffered an injury in fact, (2)
that is fairly traceable to the challenged conduct of the defendant, and (8) likely to be
redressed by a favorable judicial decision.” Spokeo, Inc. v. Robins, 13865, Ct. 1540,
1547 (2016), “Injury in fact” means an “invasion of a legally protected interest” that
is both “concrete and particularized” as well as “actual or imminent,” rather than
“conjectural or hypothetical.” Jd. at 1548 (quoting Lujan v. Defenders of Wildlife,
504 U.S. 555, 560 (1992)). “For an injury to be ‘particularized,’ it ‘must affect the
plaintiff in a personal and individual way,” Spokeo, 136 S. Ct. at 1548 (quoting Lujan,
504 U.S. at 560 n.1), with a plaintiff possessing “‘a personal stake’ in the case.”

TransUnion, No. 20-297, 2021 WL 2599472, at *6 (quoting Raines v. Byrd, 521 U.S.

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811, 819 (1997)), “A ‘concrete’ injury must be ‘de factd; that is, it must actually exist.”
Spokeo, 136 S. Ct. at 1548 (citing Black’s Law Dictionary 479 (9th ed. 2009)).
“Concrete’ is not, however, necessarily synonymous with ‘tangible.” Spokeo, 136 S.
Ct. at 1549 (citing Pleasant Grove City v. Summum, 555 U.S. 460 (2009) (free
speech); Church of Lukumi Babalu Aye, Inc. v. Hialeah, 508 U.S. 520 (1998) (free
exercise)),

Here, the traceability and redressability elements needed to establish standing
are not in dispute. Rather, Defendants assail injury in fact.2 In bringing their factual
challenge, Defendants assert that since Plaintiffs did not intend to complete a
purchase and did not desire particular wine brands or vintages when contacting the
out-of-state suppliers, that Plaintiffs were not injured in a manner that confers
standing. This argument inappropriately links intent and injury in fact and

marginalizes long-held Commerce Clause jurisprudence.

2 It is worth noting that no court confronted with comparable allegations has
declined to find standing where consumer'plaintiffs pleaded injury by virtue of a state
regulatory scheme that legally barred them from purchasing alcohol direct-to-
consumer from out-of-state merchants, See, e.g., Sarasota Wine Mkt. v. Schmitt, 987
F.3d 1171, 1178 (8th Cir. 2021); B-21 Wines v. Guy, No. 3:20-cv-00099-FDW-DCK,
2020 WL 4819540, at *3-4 (W.D.N.C. 2021); Block v. Canepa, No. 20-cv-3686, 2021
WL 615197, at *3-4 (S.D, Ohio 2021); Freeman v. Corzine, 629 F.3d 146, 154-57 (8d
Cir. 2010); Baude vy. Heath, No. 1:05-cv-0735-JDT-TAB, 2007 WL 2479587, at *8 (S.D.
Ind. 2007); Huber Winery v. Wilcher, No. 3:05-CV-289-S, 2006 WL 8449122, at *4-6
(W.D, Ky. 2006); Cherry Hill Vineyards, LEC v. Hudgins, 488 F. Supp. 2d 601, 606-
08 (W.D. Ky. 2006); Bridenbaugh vy. Freeman-Wilson, 227 F.3d 848, 849-50 (7th Cir.
2000).

8 Defendants characterized Plaintiffs’ depositions thusly: “[Plaintiffs] testified
that they contacted out-of-state retailers for the purpose of this lawsuit at the
suggestion of their counsel, but not with any intention of purchasing wine.”
(emphasis added), ECF No. 40 at 3.

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The Supreme Court has consistently characterized the Commerce Clause as
“conferring a ‘right’ to engage in interstate trade free from restrictive state
regulation.” Dennis v. Higgins, 498 U.S, 489, 448 (1991) (citing Crutcher v.
Kentucky, 141 U.S. 47, 57 (1891). “To carry on interstate commerce is not a franchise
or privilege granted by the State; it is a right which every citizen of the United States
is entitled to exercise under the Constitution and laws of the United States.”
Crutcher, 141 U.S. at 57. See also Granholm vy. Heald, 544 U.S. 460, 473 (2005)
(recognizing citizens have the “right to have access to the markets of other States on
equal terms”); Wo Union Tel. Co. v. Kansas ex rel. Coleman, 216 U.S. 1, 26 (1910)
(referring to “the substantial rights of those engaged in interstate commerce”);
Garrity v. New Jersey, 385 U.S. 493, 500 (1967) (engaging in interstate commerce is
a “righIt] of constitutional stature”). This constitutional legacy undergirds a clear
legally protected interest in interstate commerce free of state regulation. See Spokeo,
136 S. Ct. at 1548 (citing Lujan, 504 U.S. at 560).

Based on the facts alleged, the Court finds that Plaintiffs’ harm is both concrete
and particularized. Put simply, Plaintiffs contacted out-of-state merchants and were
prevented from purchasing and receiving a lawful product in an interstate
marketplace in which they wish to participate. Moreover, Plaintiff Anvar sought to
have wine delivered to Rhode Island from wine discount website “Wines “Til Sold
Out,” ECF No. 40-1 at 15:18-16:01, and to purchase a wine of the month club delivery
membership. Jd. at 16:02-16:08. Plaintiff Drum, like Anvar, contacted out-of-state

retailers who conveyed that they would not deliver product to Rhode Island resident

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Plaintiffs. ECF No. 40-3 at 26:15-28:06; ECF No. 40-4 at 5,7. The harm is concrete
and actual, and it triggers live constitutional and economic issues. Spokeo, 136 5. Ct.
at 1548. The injury is also particularized, and Piaintiffs have a personal stake in the
disposition of this matter: Plaintiffs are themselves wine purchasers and drinkers
who attempted to engage in a type of cross-border transaction their state of
citizenship proscribes. See id. Defendants question Plaintiffs’ motivations in
contacting out-of-state wine retailers, Plaintiffs’ counsel’s level of involvement in
recommending retailers, and Plaintiffs’ personal knowledge as to wine brand
availability in Rhode Island.4 See ECF No. 40 at 10-11. Notwithstanding that “an
actual arrest, prosecution, or other enforcement action is not a prerequisite to
challenging” the constitutionality of a statute where a plaintiff is subject to a
threatened punitive result, Susan B. Anthony List v. Driehaus, 573 U.S. 149, 158

(2014),5 a plaintiffs motivation is simply not germane to an injury in fact analysis.

4 Defendants also question which wine brands are out of Plaintiffs’ reach by
virtue of their unavailability in the Rhode Island marketplace. Defendants argue
this in the context of standing, citing support from other courts that specified wine
availability in determining that plaintiffs had sustained sufficient injury. See ECF
No. 42 at 7 n. 8. Upon review of these cases, this Court finds that courts elsewhere
did not indicate brand availability was essential to finding standing. But even if it
were, Plaintiff Drum alleged that she turned to a New York wine seller having been
unable to find the Barolo wine she desired. ECF No. 40-3 at 15, 31-32. The Court
foresees that the issue of availability may carry more relevance in assessing
Commerce Clause implications amid an analysis of the merits.

5 In answers to interrogatories, Defendants noted they have brought
“enforcement activities directed at online ordering and deliveries at least ten (10)
times in the past two (2) years.” ECF No. 41-10 at 4. At oral argument, Defendants
said none of the “enforcement activities” to date has been directed at Rhode Island
consumers. Of course, this in no way alters Plaintiffs’ or consumers’ exposure to
enforcement, and this Court would not require a Rhode Island consumer to
consummate a transaction in order to vindicate a constitutional right.

8

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See Pagan v. Calderon, 448 F.3d 16, 30 (st Cir. 2006) (standing inquiry turns on
injury, not motive); see also Wilson v. Moulison N. Corp., 639 ¥.3d 1, 10 (1st Cir. 2011)
(subjective beliefs insufficient to create standing). Indeed, the First Circuit Court of
Appeals recently issued an opinion, agreeing with other Courts of Appeals, that
standing clearly exists where plaintiffs are “testers” (plaintiffs who seek to challenge
the legality of a statute or expose an actor’s noncompliance with governing law).
Suarez-Torres v. Panaderia Y Reposteria Espana, Inc., 988 F.3d 542, 550 (ist Cir.
2021) (standing found where plaintiff entered bakery not as customer but motivated
to detect violations of Americans with Disabilities Act).6 In so concluding, these
courts viewed a plaintiffs driving motivation as not relevant in an injury in fact
analysis. This Court agrees and declines to probe intent in determining the existence
of standing.
IV. CONCLUSION

Plaintiffs have pleaded sufficient injury in fact to constitute Article Il

standing and to clear this early jurisdictional hurdle. Naturally, the question of

whether Rhode Island’s three-tier alcohol distribution system and bar on out-of-state

6 See Suarez-Torres, 988 F.3d at 550 n. 8 (acknowledging the civil rights
movement's long history of using testers to illustrate state-sanctioned
discrimination); Havens Realty Corp. v. Coleman, 455 U.S. 368, 373-75 (1982) (tester
with no intention of buying home sued realtor for providing inaccurate or incomplete
housing information); Pierson v. Ray, 386 U.S. 547, 552-54 (1967) (Black clergymen
“tested” segregated bus terminal knowing legal woes would ensue); Hvers v. Dwyer,
358 U.S. 202, 203-04 (1958) (Black passenger tester sat in White section of segregated
bus with intention of initiating litigation).

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retailer direct-to-consumer alcohol sale, delivery, and shipment can withstand
Plaintiffs’ attack is for another day. Accordingly, the Court DENIES Defendants’
Motion to Dismiss. ECF No. 40.

Because the declarations Defendants seek to have stricken were not material
for the Court’s resolution of the narrow jurisdictional issue at hand ~ and the Court
did not rely on them in its analysis — the Court DENIES AS MOOT Defendants’

Motion to Strike. ECF No. 48.

IT I8 SO/ORD Mf
U

John J. McConnell, Jr.
Chief Judge
United States District Court

July 16, 2021

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