| Shelton v New York State Liq. Auth. |
| 2009 NY Slip Op 02703 [61 AD3d 1145] |
| April 9, 2009 |
| Appellate Division, Third Department |
| Daniel Shelton, Doing Business as Shelton Brothers,Appellant, v New York State Liquor Authority et al., Respondents. (Action No. 1.)Daniel Shelton, Doing Business as Shelton Brothers, Appellant, v State of New York,Respondent. (Action No. 2.) |
—[*1] Andrew M. Cuomo, Attorney General, Albany (Rajit S. Dosanjh of counsel), forrespondents.
Stein, J. Appeals (1) from an order of the Supreme Court (Egan Jr., J.), entered November 2,2007 in Albany County, which, among other things, partially granted defendants' motion todismiss the complaint in action No. 1, (2) from an order and an amended order of said court,[*2]entered January 11, 2008 in Albany County, which deniedplaintiff's motion for, among other things, leave to amend the complaint in action No. 1, and (3)from an order of the Court of Claims (McCarthy, J.), entered June 12, 2008, which granteddefendant's motion to dismiss the claim in action No. 2.
Plaintiff/claimant, Daniel Shelton (hereinafter plaintiff), is a Massachusetts resident in thebusiness of marketing and distributing beer throughout the United States. The actions underlyingthis appeal arose out of plaintiff's efforts to register the brand labels of six beers for sale withinNew York with defendant New York State Liquor Authority (hereinafter the Authority) asrequired by the Alcoholic Beverage Control Law (see Alcoholic Beverage Control Law§ 107-a). In plaintiff's words, the subject beer labels make "comic and irreverentreferences to Christmas themes."
Plaintiff's applications to register the six labels were submitted on October 3, 2006.Thirty-one days later, an employee of the Authority allegedly called plaintiff and informed himthat the applications had been denied. Although no written denial had been issued,[FN1]plaintiff commenced action No. 1 in Supreme Court on November 21, 2006 seeking to enjoin theAuthority from prohibiting the sale of the subject beers in New York and alleging various stateand federal constitutional and statutory violations by the Authority and its three Commissioners,the individual defendants named in action No. 1. By letter dated November 28, 2006, theAuthority officially approved the labels of the subject beers. Nevertheless, plaintiff commencedaction No. 2 in the Court of Claims, also seeking damages for alleged constitutional violationsstemming from the denial of his applications.
In action No. 1, the Authority and its Commissioners (hereinafter collectively referred to asdefendants) moved to dismiss plaintiff's amended and second amended complaint.[FN2]Plaintiff opposed the motion and cross-moved for leave to amend the complaint a third time toadd as defendants the Department of Taxation and Finance and its acting Commissioner. In aNovember 2007 order, Supreme Court partially granted defendants' motion by dismissing thefirst eight causes of action as moot and the 11th cause of action for failure to state a cause ofaction and lack of subject matter jurisdiction. The court also partially granted plaintiff's crossmotion, permitting modification of the complaint only with respect to the remaining two causesof action.[FN3]Plaintiff then unsuccessfully moved for reargument on the dismissal of his 11th cause [*3]of action for failure to state a claim under 42 USC § 1983 or,alternatively, leave to again amend the complaint so as to specifically allege sufficientinvolvement of the individual defendants to sustain his 42 USC § 1983 cause of action. Inaction No. 2, the Court of Claims granted defendant State of New York's motion to dismissplaintiff's claim for want of subject matter jurisdiction.
Plaintiff appeals from Supreme Court's November 2007 order dismissing nine of his causesof action, that court's January 2008 order denying his motion to amend his complaint withrespect to his 11th cause of action, and the Court of Claims' order dismissing his claim in actionNo. 2. We consolidated the appeals and now modify the orders in action No. 1.
First addressing action No. 1, we find that plaintiff's first eight causes of action wereproperly dismissed. The Authority's ultimate approval of the labels rendered moot plaintiff'sclaims based upon the denial of his applications and, contrary to plaintiff's argument on appeal,the exception to the mootness doctrine has not been demonstrated. The exception may only befound when all of the following three factors are present: "(1) a likelihood of repetition, eitherbetween the parties or among other members of the public; (2) a phenomenon typically evadingreview; and (3) a showing of significant or important questions not previously passed on, i.e.,substantial and novel issues" (Matter of Hearst Corp. v Clyne, 50 NY2d 707, 714-715[1980]). Here, plaintiff has failed to demonstrate that either the first or second factor is present.
The unique factual underpinnings that render plaintiff's first eight causes of action moot arenot likely to recur. The Authority ultimately approved the applications; thus, plaintiff's claimedinjury stems solely from the alleged verbal communication denying the applications andplaintiff's subsequent reliance on that information. Accordingly, the emphasis that plaintiffplaces on the fact that defendants have denied applications in the past based onsimilar—and, according to plaintiff, illegal—criteria, is misplaced. A future denialof plaintiff's applications could certainly happen but, unlike here, a denial would present anactionable controversy.
Indeed, for this scenario to repeat itself, defendants would have to verbally communicate theAuthority's position on pending applications and plaintiff would, once again, have to rely on thatinformation, as opposed to seeking a written decision. Even in this case, because the Authoritydid not issue a written denial within 30 days of plaintiff's application, plaintiff's labels weredeemed approved as early as November 3, 2006, the 31st day after plaintiff's October 3, 2006application was submitted. Armed with this information, we find it dubious that plaintiff wouldallow himself to be misguided by an oral communication in the future.
Further, we cannot agree with plaintiff that, should this situation repeat itself, it wouldcontinue to evade review. Plaintiff argues that defendants have the unfettered ability to delayapproval during a critical marketing period—here the months immediately precedingChristmas—and then approve the labels at the onset of litigation, thereby continuallyevading review. However, given the Alcoholic Beverage Control Law's express statutoryprotection against undue delay by the Authority, discussed above, we find plaintiff's concerns tobe unfounded (see Alcoholic Beverage Control Law § 107-a [4] [c] [2]). Plaintiffmay seek approval from the [*4]Authority well in advance of histargeted marketing season,[FN4]and he will be guaranteed a decision within 30 days. If a written denial is issued, it could beimmediately challenged. If no written decision is forthcoming, plaintiff could proceed with theknowledge that his application has been deemed approved (see Alcoholic BeverageControl Law § 107-a [4] [c] [2]). Accordingly, the exception to the mootness doctrine isnot applicable as at least two of the necessary factors are not present (see Matter of City of New York v NewYork State Pub. Empl. Relations Bd., 54 AD3d 480, 482 [2008], lv denied 12NY3d 701 [2009]; Matter of Clear Channel Communications v Rosen, 263 AD2d 663,664-665 [1999]).
Next, we hold that plaintiff's 11th cause of action seeking damages pursuant to 42 USC§ 1983, as stated in plaintiff's second amended complaint, was properly dismissed(see CPLR 3211 [a] [7]). "[A] section 1983 claim for damages against a state official canonly be asserted against that official in his or her individual capacity"; section 1983 claims willnot lie against state officials in their official capacity or under a respondeat superior theory(Al-Jundi v Estate of Rockefeller, 885 F2d 1060, 1065 [1989]). Instead, it wasincumbent upon plaintiff to "allege particular facts indicating that [each of the individualdefendants] was personally involved in the deprivation of the plaintiff's constitutional rights;mere 'bald assertions and conclusions of law' do not suffice" (Davis v County of Nassau,355 F Supp 2d 668, 677 [ED NY 2005], quoting Leeds v Meltz, 85 F3d 51, 53 [1996]).
Plaintiff's second amended complaint, even when liberally construed (see Skibinsky v State Farm Fire & Cas.Co., 6 AD3d 975, 976 [2004]), fails to include allegations of personal involvement byany of the individual defendants. Indeed, the general allegations that "defendants refused tolicense the beers" and that such refusal was done in bad faith offer nothing specific with regardto any particular action taken by any of the individually named defendants. Because " 'personalinvolvement of defendants in alleged constitutional deprivations is a prerequisite to an award ofdamages under [section] 1983,' " plaintiff's 11th cause of action was properly dismissed(Williams v Smith, 781 F2d 319, 323 [1986], quoting McKinnon v Patterson,568 F2d 930, 934 [1977], cert denied 434 US 1087 [1978]; see Davis v County ofNassau, 355 F Supp 2d at 676-677; see also Mansour v Abrams, 185 AD2d 670, 670[1992]; Colon v Coughlin, 58 F3d 865, 873-874 [1995]; Al-Jundi v Estate ofRockefeller, 885 F2d at 1065-1067).
We reach a different conclusion, however, with respect to Supreme Court's denial ofplaintiff's motion for leave to amend his complaint so as to remedy these deficiencies. "Providedthat there is no prejudice to the nonmoving party and the amendment is not plainly lacking inmerit, leave to amend pleadings under CPLR 3025 (b) should be freely granted" (Smith v Haggerty, 16 AD3d 967,967-968 [2005] [internal quotation marks and citation omitted]). In determining the merit of theproposed amendment, we must accept as true the facts alleged and draw all reasonable inferencesin favor of plaintiff (see Soumayah vMinnelli, 41 AD3d 390, 391 [2007]). Here, Supreme Court found no prejudice todefendants in the proposed amendment, but held that the motion was plainly lacking in merit.However, in dismissing plaintiff's 11th cause of action for failure to state a cause of action,Supreme Court relied on the fact that the complaint included "no allegations that the telephonecall was made at the behest of the Commissioners, that they were aware of the telephone call orthat they were actively involved in the purported determination to deny the applications." Incontrast, plaintiff's "second proposed third amended [*5]verifiedcomplaint" includes the assertion that the individual defendants directed the Authority employeeto call plaintiff and that, "[u]pon information and belief, the individual CommissionerDefendants were aware of, and approved of, the . . . call."
Under these circumstances, we cannot agree that the proposed allegation of personalinvolvement—albeit of a kind that may ultimately fall within the scope of the qualifiedimmunity that the individual defendants enjoy as state officials (see Cavanaugh vDoherty, 243 AD2d 92, 97 [1998]; see also Bad Frog Brewery, Inc. v New York StateLiq. Auth., 134 F3d 87, 101 [1998]) is "plainly lacking in merit" at this early pleading stage.Contrary to defendants' arguments, plaintiff's assertions appear to be based on more than merespeculation inasmuch as it can be reasonably inferred that the conduct complainedof—authorizing communication of a decision by the Authority—would haverequired the direct knowledge and/or participation of at least one of the Commissioners(see Alcoholic Beverage Control Law §§ 10, 17 [1]). Where, as here, "thecomplaint does not merely assume . . . personal involvement based on [defendants']position of authority" but instead alleges some direct action by the individual defendants thatcontributed to the alleged deprivation of constitutional rights, a claim under 42 USC §1983 is stated (Hayes v Sweeney, 961 F Supp 467, 475 [1997]; see Williams vSmith, 781 F2d at 324). Accordingly, we conclude that Supreme Court abused its discretionin denying the motion to amend (see Cary v Fisher, 161 AD2d 1063, 1064 [1990];see also Linen v County of Rensselaer, 274 AD2d 911, 913 [2000]).
Turning to action No. 2 in the Court of Claims, we conclude that the court's dismissal ofplaintiff's state constitutional tort claims was proper. Although, in limited situations, a privatecause of action to recover monetary damages for state constitutional violations can arise (seeBrown v State of New York, 89 NY2d 172, 177-178 [1996]), no such claim will lie wherethe claimant has an adequate remedy in an alternate forum (see Martinez v City ofSchenectady, 97 NY2d 78, 83-84 [2001]; Bullard v State of New York, 307 AD2d676, 678 [2003]). Here, plaintiff's action in Supreme Court—where he had the opportunityto seek redress for the same wrongs asserted in his action in the Court ofClaims—demonstrates that he had an alternative remedy, rendering his constitutional tortclaims against the State unnecessary and inappropriate. In addition, allegedly unlawful actionstaken by the Authority could have been challenged in the context of a CPLR article 78proceeding. Under these circumstances, the Court of Claims properly dismissed plaintiff's claimssounding in state constitutional tort (seeMatter of Ken Mar Dev., Inc. v Department of Pub. Works of City of Saratoga Springs, 53AD3d 1020, 1025 [2008]; Lyles vState of New York, 2 AD3d 694, 695 [2003], affd on other grounds 3 NY3d396 [2004]; Bullard v State of New York, 307 AD2d at 678-679).
In addition, the Court of Claims correctly dismissed plaintiff's challenges to theconstitutionality of the Alcoholic Beverage Control Law and the Authority's regulations becausethe Court of Claims is not the appropriate forum in which to seek declaratory relief (see Cassv State of New York, 58 NY2d 460, 463 [1983]; State of New York v Fehlhaber Corp. &Horn Constr. Co., 69 AD2d 362, 374 [1979]; CPLR 3001). Likewise, claims for damagesagainst the State based on alleged deprivations of rights under the US Constitution are beyondthe jurisdiction of the Court of Claims (see Lyles v State of New York, 2 AD3d at 696;Torres v State of New York, 13Misc 3d 574, 575 [2006]; see also Will v Michigan Dept. of State Police, 491 US58, 71 [1989]). Accordingly, plaintiff's claim in action No. 2 was properly dismissed in itsentirety.
Cardona, P.J., Peters and Malone Jr., JJ., concur. Ordered that the orders and amended orderentered November 2, 2007 and January 11, 2008 are modified, on the law, without costs, byreversing so much thereof as granted defendants' motion dismissing the 11th cause of action andas denied plaintiff's motion for leave to amend the complaint with respect to the 11th cause ofaction; defendants' motion denied to said extent and plaintiff's motion granted to said extent; and,as so modified, affirmed.
Ordered that the order entered June 12, 2008 is affirmed, without costs.
Footnote 1: Pursuant to the AlcoholicBeverage Control Law, applications for registration of labels which have previously beenapproved by the Federal Bureau of Alcohol, Tobacco and Firearms—such as those at issuehere—are deemed approved by the Authority if the Authority does not deny theapplications, in writing, within 30 days of receipt (see Alcoholic Beverage Control Law§ 107-a [4] [c] [2]).
Footnote 2: The second amended complaintadded a cause of action challenging the imposition of certain fees and taxes on beer by theDepartment of Taxation and Finance.
Footnote 3: The remaining causes of actionallege violations of the Commerce and Equal Protection Clauses and are not at issue in thisappeal.
Footnote 4: Plaintiff did not seek approvaluntil October for labels he wished to market prior to Christmas.