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ANHEUSER-BUSCH, INC. v. GOODMAN

November 6, 1989

ANHEUSER-BUSCH, INC., Plaintiff
v.
JAMES A. GOODMAN, ROBERT P. FOHL, OLIVER L. SLINKER, PA LIQUOR CONTROL BOARD, COL. RONALD M. SHARPE, PENNSYLVANIA STATE POLICE, Defendants


William W. Caldwell, United States District Judge.


The opinion of the court was delivered by: CALDWELL

WILLIAM W. CALDWELL, UNITED STATES DISTRICT JUDGE

 Currently before the court is defendants' motion to dismiss. Plaintiff, Anheuser-Busch, Inc., commenced this action in the United States District Court for the Eastern District of Pennsylvania on February 10, 1989. Upon defendants' motion, the action was transferred to this court. The defendants are James A. Goodman, Robert P. Fohl and Oliver L. Slinker, members of the Pennsylvania Liquor Control Board ("Board"), the Board itself, Col. Ronald M. Sharpe, the Commissioner of the Pennsylvania State Police, and the Pennsylvania State Police.

 Plaintiff's complaint challenges certain Board regulations set forth in 40 Pa. Code §§ 11.201 and 11.202. Count I of the complaint alleges that the regulations violate the Sherman Act, 15 U.S.C. § 1 et seq. Count II alleges that they violate the commerce clause of the United States Constitution. U.S. Const. art. I, § 8, cl. 3. Count III contends that the Board exceeded the powers granted to it in the Pennsylvania Liquor Code, 47 P.S. § 1-101 et seq. (Purdon Supp. 1989-90), by enacting the regulations. Plaintiff requests an injunction against their further enforcement and a declaration that they are invalid.

 Defendants' motion argues that: (1) we should abstain from deciding the questions presented; and (2) the complaint fails to state a claim upon which relief can be granted. We will grant the motion in part. Specifically, we will abstain from adjudicating Count II and we will dismiss Count III because we lack jurisdiction over it under the eleventh amendment. We will, however, permit plaintiff to proceed on the merits of the antitrust claim in Count I.

 We will begin our analysis with the eleventh amendment issue. While the defendants have not raised eleventh amendment immunity, we may do so sua sponte. See Kuchka v. Kile, 634 F. Supp. 502, 510 (M.D. Pa. 1985); Yakelis v. Commonwealth of Pennsylvania, Pennsylvania State Police, 1989 U.S. Dist. LEXIS 4554 (W.D. Pa. 1989); Shipley v. First Federal Savings & Loan Ass'n, 619 F. Supp. 421, 434 (D. Del. 1985); Gerrard v. United States Office of Education, 656 F. Supp. 570 (N.D. Cal. 1987). See also Allegheny County Sanitary Authority v. EPA, 732 F.2d 1167, 1173 (3d Cir. 1984) ("A federal court . . . must examine each claim in a case to determine whether jurisdiction over that claim is barred by the Eleventh Amendment").

 The eleventh amendment bars a suit against a state in federal court by either one of its own citizens or, as here, a citizen of another state. Pennhurst State School & Hospital v. Halderman, 465 U.S. 89, 104 S. Ct. 900, 79 L. Ed. 2d 67 (1984). *fn1" This prohibition extends to claims under both state and federal law. As stated by the Supreme Court in Pennhurst : "The Amendment . . . is a specific constitutional bar against hearing even federal claims that otherwise would be within the jurisdiction of the federal courts, Id. at 120, 104 S. Ct. at 918, 79 L. Ed. 2d at 91 (emphasis in original). Further, the "bar applies to pendent [state] claims as well." Id., 104 S. Ct. at 918, 79 L. Ed. 2d at 91. (brackets added). Moreover, the amendment cannot be avoided by suing state officials or seeking only prospective relief since the theories of Ex parte Young, 209 U.S. 123, 28 S. Ct. 441, 52 L. Ed. 714 (1908), and Edelman v. Jordan, 415 U.S. 651, 94 S. Ct. 1347, 39 L. Ed. 2d 662 (1974), are not applicable "in a suit against State officials on the basis of state law." Pennhurst, 465 U.S. at 106, 104 S. Ct. at 911, 79 L. Ed. 2d at 82; Allegheny County Sanitary Authority v. EPA, supra. Accordingly, a federal court is without power to order a state agency or state officials to conform their conduct to the requirements of state law. See Spidle v. Commonwealth of Pennsylvania, Office of the Budget, 660 F. Supp. 941 (M.D. Pa. 1987). In fact, the Supreme Court has noted that "it is difficult to think of a greater intrusion on state sovereignty . . . . Such a result conflicts directly with the principles of federalism that underlie the Eleventh Amendment." Pennhurst, 465 U.S. at 106, 104 S. Ct. at 911, 79 L. Ed. 2d at 82. *fn2"

 The relevance of these principles to Count III of the complaint is obvious. Count III can only be construed as a claim against the Board and its members for action taken in furtherance of official state duties. The Board has promulgated regulations dealing with the pricing of malt and brewed beverages. Plaintiff contends that these regulations are beyond the statutory authority conferred by the Pennsylvania General Assembly. On that basis plaintiff's complaint requests "an injunction against further enforcement of the Regulations and a declaration of their invalidity." We are without jurisdiction to entertain this state law claim or grant this relief. Accordingly, Count III must be dismissed. *fn3"

 In reaching this conclusion we recognize that the eleventh amendment does not apply when state officials act ultra vires their authority. Pennhurst, 465 U.S. at 101 n. 11, 104 S. Ct. at 908 n. 11, 79 L. Ed. 2d at 79 n. 11. (citations omitted). An official acts ultra vires, however, only when he acts "without any authority whatever." Id., 104 S. Ct. at 908 n. 11, 79 L. Ed. 2d at 79 n. 11. (quoted case omitted). "[A] claim of error in the exercise of that power is . . . not sufficient." Id., 104 S. Ct. at 908, n. 11, 79 L. Ed. 2d at 79 n. 11 (quoted case omitted).

 We have examined the statutory bases upon which plaintiff rests its contention that the Board acted without authority in promulgating the regulations. Those are 47 P.S. §§ 2-207(b), 4-431, 4-492 (Purdon Supp. 1989-90). We have also reviewed other provisions of the Liquor Code. See 47 P.S. §§ 1-104(a),(c), 2-207(b),(h),(i). Without going into detail, we conclude that the Board was not acting ultra vires, as the Supreme Court interprets that term for eleventh amendment purposes, and thus the plaintiff's claim does not fall within the exception for ultra vires acts.

 Defendants also urge us to abstain from deciding Counts I and II under the abstention doctrine set forth in Railroad Commission v. Pullman Co., 312 U.S. 496, 61 S. Ct. 643, 85 L. Ed. 971 (1941). Under Pullman, a federal court may abstain from deciding a federal constitutional claim to allow a state court to decide an uncertain issue of state law that would moot the constitutional issue or cast it in a materially different light. Thus, Pullman abstention will apply when the question of state law is (1) potentially dispositive of the constitutional issue and (2) unsettled or uncertain. Heritage Farms, Inc. v. Solebury Twp., 671 F.2d 743, 747 (3d Cir. 1982). See also Schall v. Joyce, 885 F.2d 101 (3d Cir. 1989).

 Clearly, the state law question is potentially dispositive of the constitutional issue. If the Liquor Control Board's promulgation of these regulations is inconsistent with state law, the regulations would be invalid and the commerce clause claim would be moot. As stated by the Court in Pullman : "If there was no warrant in state law for the Commission's assumption of authority, there is an end of the litigation; the constitutional issue does not arise." Pullman, 312 U.S. at 501, 61 S. Ct. at 645, 85 L. Ed. at 975.

 Regarding the second factor, our research indicates that the question of the regulations' validity under state law is unsettled. We found no cases interpreting the regulations in question. Nor did we find cases specifically limiting the Board's power to adopt regulations of the kind involved in this case. Based upon our analysis of the eleventh amendment ultra vires issue above, the situation is also not one where the interpretation of the state statute is plain. Compare Kennecott Corp. v. Smith, 637 F.2d 181 (3d Cir. 1980). Thus, we are being "asked to decide an issue by making a tentative answer which may be displaced tomorrow by a state adjudication." Pullman, 312 U.S. at 500, 61 S. Ct. at 645, 85 L. Ed. at 974. Abstention is therefore appropriate in connection with the commerce clause claim. See also Pennsylvania Medical Society v. Marconis, 679 F. Supp. 452 (M.D. Pa. 1987).

 As noted, defendants have also argued that we should abstain under Pullman from deciding plaintiff's Sherman Act claim as well. The obvious difficulty with doing so is that Pullman dealt with avoiding the unnecessary adjudication of a constitutional issue. That is in line with the well established rule that a federal court will avoid deciding a constitutional issue if it can do so. See Mach-Tronics, Inc. v. Zirpoli, 316 F.2d 820, 825 n.5 (9th Cir. 1963). Here, we would only be avoiding ...


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