Source: https://en.wikisource.org/wiki/Holiday_Magic,_Inc._v._Warren_497_F.2d_687
Timestamp: 2018-06-18 14:01:46
Document Index: 679906930

Matched Legal Cases: ['§ 100', '§ 12', '§ 2281', '§ 2281', '§ 2281', '§ 2281', '§ 2283']

(Redirected from Holiday Magic, Inc. v. Warren 497 F.2d 687)
The Court there went on to say that if those criteria are met it is 'impermissible for a single judge to decide the merits of the case, either by granting or by withholding relief'. Since our jurisdiction is no greater than that of the district judge, we too must look to the allegations of the complaint and at the regulation challenged. The state regulation in question here was issued by the Wisconsin Department of Agriculture pursuant to authority vested in the Department of Agriculture by § 100.20 of the Wisconsin statutes. [FN1]
(2) 'Investment' is any acquisition, for a consideration other than personal services of personal property, tangible or intangible, for profit or business purposes, and includes, without limitation, franchises, business opportunities and services. It does not include real estate, securities registered under chapter 551, Wis.Stats., or sales demonstration equipment and materials furnished at cost for use in making sales and not for resale. (3) 'Person' includes partnerships, corporations and associations.
FN2. The complaint alleges in Claim One that:
9. Upon information and belief that defendants, individually and in concert, have in the past, to presently, and threaten in the future, to deprive plaintiffs herein, their distributors, contractors, vendees, agents, and employees, of rights of plaintiffs herein arising under the laws and Constitution of the United States.
10. That the means used and threatened to be used by defendants are civil and criminal enforcement of general order Ag. 122, Wisconsin Administrative Code, purportedly enacted pursuant to Sec. 100.20, Wis. Stats.; that individuals have, owing to actions of defendants, been prosecuted and convicted in the past of alleged criminal violations of the said order and various other individuals, corporations, and associations including the plaintiffs herein, are presently engaged in defense of alleged violations of said order seeking civil and quasi-criminal penalties and relief, including fines, civil forfeitures, injunctions, restraining orders, temporary injunctions or restraining orders, declaratory relief, etc.; that more actions and enforcement of remedies procured in earlier actions are presently threatened by defendants against plaintiffs, their distributors, contractors, vendees, agents, and employees.
11. That a copy of said Ag. 122 is appended hereto and incorporated herein by reference.
12. Upon information and belief that the plaintiffs herein are by such enforcement and threatened enforcement being denied rights and privileges arising under the laws and Constitution of the United States in the following respects:
(g) That said enforcement and threatened enforcement constitutes a violation of the privileges and immunities of the citizens of the United States guaranteed by Amendment Fourteen to the Constitution [sic] (of) the United States, and, further, constitutes a violation of the due process requirements of Amendments Five and Fourteen to the Constitution of the United States, in the following respects:
13. That the aforesaid prosecutions are undertaken as vexatious and malicious proceedings designed to put plaintiffs herein out of business in the State of Wisconsin.
14. That no adequate remedy for the foregoing obtains at law.
15. That the plaintiffs herein will all and individually be done irreparable harm by the enforcement of Act. 122 in the following respects:
1. Plaintiffs herein expressly reallege all of the allegations contained in Claim One herein, except those allegations contained in Paragraphs 13, 14 and 15.
2. That, as the foregoing has indicated, an actual controversy of justiciable nature exists between plaintiffs and defendants, involving the rights of plaintiffs arising under the Constitution and laws of the United States hereinbefore alleged.
3. That no court of federal jurisdiction has as of yet addressed the federal questions arising herein.
1. Enforcing, or instituting proceedings under Chapter Ag. 122, Wisconsin Administrative Code, a general order purportedly promulgated pursuant to Sec. 100.20 Wis. Stats., against plaintiffs and their distributors, contractors, vendees, agents, and employees.
2. And, further, enforcing or instituting proceedings of either a criminal or civil nature pursuant to said Ag. 122, and seeking or attempting to procure against said plaintiffs, their distributors, contractors, vendees, agents and employees the imposition or enforcement of fines, civil forfeitures, criminal sentences, injunctions, restraining orders, temporary injunctions or restraining orders, damages, declaratory relief, or any other form of civil or criminal remedy, relief, or judgment.
3. And, further, enforcing or attempting to enforce any of the aforementioned remedies or judgments or further prosecuting or attempting to further prosecute or enforce any and all of the aforementioned remedies or judgments which may be available to defendants in actions commenced prior to the date hereof and/or pursuant to judgments taken or to be taken or orders of court procured or to be procured prior to the date hereof.
1. That the court enter a declaratory judgment determining the rights of plaintiffs and defendants under the Constitution of the United States, Article One, Sections 8 and 10; the First, Fifth, and Fourteenth Amendments to the Constitution of the United States; and the U.S.C.ode, Title 42, Section 1983.
2. That the court enter a declaratory judgment directing defendants to cease and desist from all further prosecution under Ag. 122.
3. That the court award costs and disbursements of this action to plaintiffs herein.
[5][6] A complaint should be liberally construed. When a motion to dismiss is made, well pleaded allegations must be taken as admitted. A complaint may be dismissed if clearly without merit but it should not be dismissed for insufficiency unless it appears to a certainty that plaintiff is entitled to no relief under any state of facts which could be proved in support of the claim. See generally, 2A J. Moore's Federal Practice § 12.08. For Section 2281 to apply, 'a state statute or administrative order must be challenged, a state officer must be a party defendant, injunctive relief must be sought, and it must be claimed that the statute or order is contrary to the Constitution of the United States'. Wright, Law of Federal Courts, 189 (1970). All of these pleading requirements are alleged in the complaint. It is the fourth of these which is in contention here-- the existence of a substantial constitutional issue. [7] The complaint here need only formally allege a basis for equitable relief, Idlewild, supra; and jurisdiction, upon the ground of a federal question, is determined by the allegations of the complaint and not by the way the facts turn out or by a decision on the merits. *695 Mosher v. Phoenix, 287 U.S. 29, 30, 53 S.Ct. 67, 77 L.Ed. 148 (1932).
Whether or not plaintiffs can prove such allegations as 'irreparable harm' and 'chilling affect,' they are alleged on the face of the complaint. It is undisputed that plaintiff corporations are being sued for violations of Ag 122 in the state courts and they allege they are 'threatened' with further actions. The regulation has been construed by the state's Supreme Court and plaintiffs allege 'no adequate remedy . . . obtains at law' and that 'no court of federal jurisdiction has as yet addressed the federal question arising herein'. [8][9] A state has the power to regulate business to protect the public interest and defendants argue to this court that the validity and need for Chapter Ag 122 has been 'unreservedly upheld' by both the trial court and Wisconsin Supreme Court in the H. M. Distributors case, supra. In that case the court found the Agriculture Department's rules are not void for vagueness; that neither the right of a person to make investment nor constitutional freedom of speech was invaded by the Department's rules prohibiting chain distributor schemes as unfair trade practices; and that the right of free speech does not extend to promoting products. Regardless of any personal reactions we may have to the merits of defendants' position here, such a decision alone does not foreclose plaintiffs from challenging the regulation in a federal forum on constitutional grounds and seeking adjudication of their federal claims if they are substantial. First Amendment claims are involved in this case and it has been held that the abstention doctrine is inappropriate where statutes have been justifiably attacked on their face as abridging free expression. Dombrowski v. Pfister, 380 U.S. 479, 489-490, 85 S.Ct. 1116, 14 L.Ed.2d 22 (1965); Zwickler v. Koota, 389 U.S. 241, 248, 88 S.Ct. 391, 19 L.Ed.2d 444 (1967). As the Supreme Court said in Zwickler, a federal court has a duty 'to give due respect to a suitorhs choice of a federal forum for the hearing and decision of his federal constitutional claims,' and federal courts do not have the right to decline the exercise of jurisdiction 'simply because the rights asserted may be adjudicated in some other forum'. Here as in Zwickler, the question of overbreadth is raised. In Zwickler it was held a statutory construction by the state courts would not avoid or modify the constitutional question. Zwickler, 389 U.S. 241, 248, 249.
[10] It appears to this court that the jurisdictional issues in this case are inextricably intertwined with the merits and that there are questions to be aired upon a hearing before a three-judge court. When there are issues fairly open to debate they should be left for development *696 in a three-judge hearing and the merits assessed by three judges, not one. Whether or not plaintiffs' activity is illegal and whether the regulation does or does not invade the area of their protected freedoms is not for this court to decide. We cannot decide if plaintiffs' claims are good or bad. Nor are they questions for a single judge. The single judge's opinion indicates an extensive consideration of the arguments, the merits and a weighing of interests. We acknowledge it is difficult not to go to the merits in determining the jurisdictional issue. We would agree with the statement made by Chief Judge John R. Brown in a Fifth Circuit case that 'in this day and time of dynamic expansion of constitutional principles and their application to new and sometimes unheard of situations it takes prescience of a Delphic order to say with certainty' that an attack is insubstantial. Jackson v. Choate, 404 F.2d 910, 913 (5 Cir., 1968). There it was suggested 'it is the better course-- certainly from an administrative standpoint-- to forego the doubts, constitute a 3-Judge Court, and allow that court to determine initially this and the other issues'. By referring to the Jackson case we are neither approving of nor rejecting the Fifth Circuit's approach of request-unless-no-doubt-at-all. The determination as to whether an issue is substantial does require a legal judgment and often the issue is clear either because the precise issue has been decided or because recent decisions of the Supreme Court strongly suggest the issue is foreclosed. But if a question is a difficult or close one, wasted effort can be avoided by prompt request by the single judge for the assistance of two additional judges.
The Supreme Court recently reviewed concepts of constitutional insubstantiality where they arise in the context of convening a three-judge court under § 2281 in the case of Goosby v. Osser, 409 U.S. 512, 518, 93 S.Ct. 854, 858-859, 35 L.Ed.2d 36 (1973): [FN3]
Title 28 U.S.C. § 2281 does not require the convening of a three-judge court when the constitutional attack upon the state statutes is insubstantial. 'Constitutional insubstantiality' for this purpose has been equated with such concepts as 'essentially fictitious,' Bailey v. Patterson, 369 U.S. (31), at 33 (82 S.Ct. 549, 551, L.Ed.2d 512 (1962)); 'wholly insubstantial,' ibid; 'obviously frivolous,' Hannis Distilling Co. v. Baltimore, 216 U.S. 285, 288, (30 S.Ct. 326, 327, 54 L.Ed. 482) (1910); and *697 'obviously without merit,' Ex parte Poresky, 290 U.S. 30, 32, (54 S.Ct. 3, 4-5, 78 L.Ed. 152) (1933). The limiting words 'wholly' and 'obviously' have cogent legal significance. In the context of the effect of prior decisions upon the substantiality of constitutional claims, those words import that claims are constitutionally insubstantial only if the prior decisions inescapably render the claims frivolous; previous decisions that merely render claims of doubtful or questionable merit do not render them insubstantial for the purposes of them insubstantial for the purposes of 28 U.S.C. § 2281. A claim is insubstantial only if "its unsoundness so clearly results from the previous decisions of this court as to foreclose the subject and leave no room for the inference that the questions sought to be raised can be the subject of controversy." Ex parte Poresky, supra, (290 U.S.,) at 32, 54 S.Ct., at 4; quoting from Hannis Distilling Co. v. Baltimore, supra, at 288, (30 S.Ct., at 327); see also Levering & Garrigues Co. v. Morrin, 289 U.S. 103, 105-106 (53 S.Ct. 549, 550, 77 L.Ed. 1062) (1933); McGilvra v. Ross, 215 U.S. 70, 80, (30 S.Ct. 27, 31, 54 L.Ed. 95) (1909).
In Goosby the Supreme Court again reminded Courts of Appeals that they are without jurisdiction to adjudicate the merits of constitutional contentions. The Stratton rule is still good law. It was reaffirmed in Idlewild and referred to in Goosby. Thus, we are left here, figuratively, in a statutory strait jacket with little room to maneuver within the confines of the three-judge acts and the cases limiting our power. Our action is void if we review and incorporate equitable considerations in our decision. The single judge went beyond the complaint and became involved in the merits in determining the threshold question. Although he found the claims insubstantial, his exhaustive and scholarly opinion indicates there were not only many issues but some very complex ones raised in the complaint. Much of the argument made by counsel for the parties before this court would be more suitable in a hearing before a three-judge panel. [11][12] We have reviewed the allegations of the complaint and do not believe the constitutional attack therein made is so 'obviously without merit' as to be insubstantial. We have looked at the case law in the area and believe there should be applied here the concept of insubstantiality as recently set forth in Goosby, supra. There the court said that claims are constitutionally insubstantial 'only if the prior decisions inescapably render the claims frivolous; previous decisions that merely render claims of doubtful or questionable merit do not render them insubstantial for purposes of 28 U.S.C. § 2281'. If the single judge had to make such an extensive examination of the facts and claims in this case as he did in order to determine constitutional insubstantiality, we believe the case does not come within the rationale of those cases which hold three judges are not required.
It is not our intent to be overly technical about the single judge's opinion and determination. We recognize and share in, the concern expressed by federal courts, the Administrative Office of the U.S.C.ourts, and legal scholars over the multiplication of three-judge court proceedings and the burden upon the Supreme Courths docket. [FN4] The procedure is cumbersome and a drain on judicial manpower. There have been innumerable criticisms of the three-judge court statutes and suggestions for their modification. See Ammerman, Three Judge Courts: See How They Run., 52 F.R.D. 293; Currie, The Three Judge Court in Constitutional Litigation, 32 U.Chi.L.Rev. 146 (1964); The Three-Judge District Court: Scope and Procedure Under *698 Section 2281, 77 Harv.L.Rev. 299; Report of the Study Group on the Case Load of the Supreme Court, prepared for the Federal Judicial Center, 57 F.R.D. 573, 596-599 (1972).
The district court here gave careful consideration to each constitutional claim and properly, in my opinion, disposed of the case at the courthouse door where it should have been. Holiday Magic, Inc. v. Warren, 357 F.Supp. 20 (E.D.Wis.1973). I would adopt the opinion of the district court as the opinion of this court. Further, it appears to me, although the parties did not address them, that there might be problems presented here by 28 U.S.C. § 2283, the anti-injunction statute, and the decisions of the Supreme Court typified by Younger v. Harris, 401 U.S. 37, 91 S.Ct. 746, 27 L.Ed.2d 669 (1971), and Samuels v. Mackell, 401 U.S. 66, 91 S.Ct. 764, 27 L.Ed.2d 688 (1971). Cf. Steffel v. Thompson, 42 U.S.L.W. 4357, 415 U.S. 452, 94 S.Ct. 1209, 39 L.Ed.2d 505 (1974). However, because of the adequate disposition of the case by the district court I do not deem it necessary to explore these potential issues, which were not briefed or discussed by the parties, when the existence of these issues, *699 if in fact they are present, would only fortify the correctness of the result reached by the district court. Accordingly, I respectfully dissent.
C.A.Wis. 1974.
Holiday Magic, Inc. v. Warren,
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