plaintiffs from warehousing their product in Maryland would violate the Commerce Clause.
Furthermore, the unwritten "come to rest" policy is also likely to be found unconstitutional as applied to plaintiff. Any attempt or threat by defendants to enforce the "come to rest" policy to prevent plaintiff from warehousing its liquor at the Jessup, Maryland facility would have the same constitutional infirmity as the local warehousing requirement embodied in the Wholesale Liquor Industry Storage Act.
In any case, even if the rule were not unconstitutional, defendants have not refuted plaintiff's suggestion that the rule is ultra vires, and plaintiff has reserved the right to contest the Board's authority to impose or enforce the rule.
Although defendant did not raise the issue, I have considered sua sponte whether plaintiff should have sought an exemption from the Board as a predicate to filing this suit. I conclude that it would have been futile; the Board could not have afforded adequate relief in the window of opportunity available to plaintiffs to acquire the Jessup property.
Plaintiff has demonstrated that it must close on the opportunity to buy the Jessup property more or less immediately or it will go to a competing purchaser. Since it took the board nearly seven months from the preliminary hearing (and presumably even longer from the original application) to grant the most recent request for an exemption, an application from plaintiff would have been futile. In any case, defendants' position is that the statute does not permit out-of-District warehousing at all, and hence, that the Board does not have the authority to grant exemptions. Thus, even in defendants' view, an application to the Board would have been futile.
Furthermore, plaintiff brought this action under 42 U.S.C. § 1983. Section 1983 does not ordinarily require "exhaustion of state judicial or administrative remedies [because of] the paramount role Congress has assigned to the federal courts to protect constitutional rights." Steffel v. Thompson, 415 U.S. 452, 472-73, 39 L. Ed. 2d 505, 94 S. Ct. 1209 (1974).
Accordingly, plaintiff has demonstrated a substantial likelihood of success on the merits.
The balance of equities heavily favors plaintiff. Plaintiff asserts, without refutation from defendants, that "if the transaction does not go forward immediately, the property will likely be sold to a competitor of Kronheim's who operates businesses in both D.C. and Maryland." Margolies Aff dated January 31, 1995, at P 24. Plaintiff has further asserted that due to the nature of the alcoholic beverage wholesale industry, it may go out of business unless it restores itself to profitability, and that purchase of the Jessup facility is the only way to restore itself to profitability. It has also asserted that if it goes out of business, it will be "invariably unable to reopen [its] business." Id. PP 8-13, 15-18.
The ultimate resolution of this case, particularly given the complex constitutional questions involved, could take weeks or longer, at which point plaintiff would have lost its opportunity to purchase the Jessup warehouse. Thus, plaintiff has shown that absent preliminary injunctive relief, it would suffer immediate injury. Furthermore, "from the earliest times, courts in equity have considered an injury to real property to be irremediable at law. The uniqueness of land typically makes damages an inadequate remedy." Ramirez de Arellano v. Weinberger, 240 U.S. App. D.C. 363, 745 F.2d 1500, 1527 (D.C. Cir. 1984) (footnote omitted), vacated on other grounds, 471 U.S. 1113, 105 S. Ct. 2353, 86 L. Ed. 2d 255 (1985). Thus, if plaintiff were unable to purchase the Jessup property, the injury to plaintiff would be irremediable.
The harm to defendants or any third parties of temporarily enjoining the enforcement of an unconstitutional statute and policy is minimal. Defendants argue that granting the injunction and allowing plaintiff to move its warehouse to Maryland will hamper the District's enforcement of its laws. However, plaintiff must "allow any member of the Board, any investigator of the Board, or any member of the Metropolitan Police Department full opportunity to examine, at any time during business hours, the premises where any beverage is manufactured, kept, sold, or consumed for which . . . a license has been granted." 35 D.C. Reg. D.C. 4947, 5002 (1988), amending D.C. Mun. Regs. tit. 23, § 707.1. If plaintiff fails to do so, the District can suspend or revoke its license. D.C. Code § 25-118(a).
Furthermore, the likelihood that the District would lose taxes is low, and the amount it would lose, if any, is unsubstantial. Issuance of the injunction may also help preserve a competitor in the District alcoholic beverage wholesale market, helping to maintain competitive pricing and diversity of products available to consumers. Accordingly, the threatened harm to plaintiff substantially outweighs any harm that an injunction might pose to defendants and third parties, and issuance of the injunction serves the public interest.
Date: February 23, 1995
Louis F. Oberdorfer
UNITED STATES DISTRICT JUDGE
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