En Banc Sixth Circuit To Hear Michigan City Benefits Case in March

Legal fallout from a Michigan financial crisis will soon be before the en banc Sixth Circuit. Responding to the City of Pontiac’s deficits, Pontiac’s emergency manager modified collective bargaining agreements in 2011 to reduce retirement benefits for Pontiac’s retired employees. A Michigan statute granting him those emergency powers was later rejected by referendum. Retired employees brought suit, raising a series of federal constitutional claims – specifically, impairment of contract, federal preemption, and deprivation of property interest without due process. A district judge determined that the retired employees were unlikely to prevail and denied their request for injunctive relief.

On appeal, a split Sixth Circuit panel sent the case back to the district court. Declining to reach the federal constitutional issues briefed by the parties, the majority sua sponte suggested that the emergency measures may be void under Michigan law. The majority instructed the district court to review whether the manager had the power to do what he did. Examining Michigan constitutional principles, the majority questioned whether the law was properly in effect at the time of his acts, and whether the referendum rejecting the law later voided those acts.

On March 19, the en banc Sixth Circuit will take another look. En banc review occurs when a majority of active circuit judges vote to rehear the case. Often when the Court grants en banc review, a dissent from the panel opinion gets the attention of other judges. In this case, Judge Griffin argued in dissent that the majority “misapplie[d] the constitutional avoidance doctrine, direct[ed] the district court to address issues more appropriately left to the Michigan courts, and unjustifiably depart[ed] from our well-established principles of appellate review[.]” Judge Griffin contended that the state-law grounds were not before the Sixth Circuit and in any event offered no basis for questioning the validity of the Michigan statute. Reaching the federal claims, Judge Griffin concluded that they were unlikely to succeed on the merits and that the public interest in addressing the financial crisis supported denial of preliminary relief.

The outcome stands to be significant in terms of both procedure and substance. The Court may make pronouncements about principles of appellate review in the Sixth Circuit. And if reaching the federal claims, the Court’s conclusions may have far-reaching effects on the rights of public employees.

Sixth Circuit Website Features A Series Of Video Clips On Effective Appellate Advocacy

By Steve Delchin on January 30, 2014 Posted in Interviews

Did you know that the Sixth Circuit’s website features a series of video clips produced by the Federal Public Defender’s Office for the Southern District of Ohio that offer training advice for practice under the Criminal Justice Act (“CJA”), 28 U.S.C. § 3006A? The video clips do not have Hollywood style production values (we are talking pro bono practice, after all), but they do offer very useful information for practice under the CJA, which provides counsel for indigent defendants.

One of the best videos in the series is an interview with Judge Jeffrey Sutton who provides an in-depth discussion on effective appellate advocacy before the Sixth Circuit. Judge Sutton tackles a number of topics in his video interview, including (1) the best way to write a persuasive appellate brief, (2) how to organize arguments in a brief, (3) how the Sixth Circuit views the Summary of the Argument section, (4) how to write a compelling Statement of Facts section, (5) how to prepare effectively for oral argument, (6) how oral argument factors into the Sixth Circuit’s decision making process, and (7) rookie mistakes to avoid in appellate practice.

Judge Sutton, for example, emphasizes how every lawyer who appears before the Sixth Circuit needs to properly frame the appeal for the Court. Yet Judge Sutton observes that “a lot of lawyers in the Sixth Circuit really do not have a theory of the case. They have a lot of potential ideas that they think a court of appeals panel might agree with, but they really don’t have any one way of thinking about the case which they think is the right way to look at the law. And what that leads to is a brief with one alternative theory after another really lacking in conviction . . . .” Judge Sutton notes that the problems associated with an ineffective brief invariably carry over to oral argument: “As soon as the lawyer meets some resistance on a point, they just continue to switch, and you’re left with this sense from the panel as a judge that the lawyer really doesn’t have any real conviction about one theory of the case and how to handle it. So the theory of the case is absolutely critical.”

As is evident, the insight and advice offered by Judge Sutton in his video interview is not limited to CJA practice, but rather has broad application to all appellate practitioners. If you are new to the Sixth Circuit, Judge Sutton’s 18 minute video can be a valuable tool for helping you excel in your appeal. And even if you are a seasoned appellate veteran, Judge Sutton’s advice could make a critical difference in your next appeal before the Sixth Circuit.

View the training videos on the Sixth Circuit’s website.

By the way, in case you are not aware or have not thought about it, representing indigent clients under the CJA can be a highly rewarding experience, as most of the blog writers for the Sixth Circuit Appellate Blog can attest. It is an especially great opportunity for young lawyers to develop appellate experience while fulfilling their community service and pro bono responsibilities. I encourage you to consider becoming a CJA panel member.

Back to the Basics: Effective Advocacy in Complex Commercial Disputes

By Squire Patton Boggs on January 30, 2014 Posted in Recent Cases

The recent unpublished decision of Dice Corporation v. Bold Technologies demonstrates some common pitfalls and offers practical insight to advocates who litigate complex commercial disputes. The case involved an intellectual property dispute between software suppliers that arose when a customer switched suppliers. The petitioner, Dice, alleged that its competitor, Bold Technologies, stole its intellectual property while transitioning the customer onto its own platform. Naturally, this basic dispute involved complex issues concerning software, source code and data extraction. The trial court found for Bold Technologies on summary judgment and Dice appealed, but the Court rejected its appeal.

The opinion, written by Judge Gibbons, is replete with reminders that the Sixth Circuit will not decide issues that are presented for the first time on appeal. “It is well-settled that this court’s function is to review the case presented to the district court, rather than a better case fashioned after an unfavorable order.” Related to the preservation of issues for appeal, the opinion also provides helpful clues to advocates who litigate complex commercial disputes, to wit, that the best advocacy is both simple and straightforward.

“It is the parties, in our adversarial system, who frame the issues before the court.” In complex commercial disputes, it is easy to get lost in technical minutiae. But the advocate’s job is still the same. And emphasizing a simple trail of logic that closes all the loops not only leaves a clean record for appeal, it guards against confusion and helps the decision maker(s) come to your position. For example, the Court comments that, “Other than a generalized explanation of what the receiver drivers do, Dice has failed to explain whether the receiver drivers derive economic value from their secrecy.” Likewise, the Court pointed out that “[Dice] provided hundreds of pages of incomprehensible computer code without explanation other than Clifford Dice’s claim that ‘Bold’s extraction program utilized Dice source code in the conversion process.’” And finally, the Court remarked that “the district court was not required to comb through the uncited record to make sense of Dice’s claim and, at the very least, Dice was obligated to explain the factual basis for its claim to the district court.”

In addition to simple, the best advocacy in complex commercial disputes is also straightforward. Sometimes, an advocate’s presentation may remain obscure for various reasons. It is debatable whether that is ever a good approach. But in complex commercial disputes, ambiguity is more risky because – unlike a slip-and-fall case or a First Amendment free speech case – the decision maker(s) may not have the relevant life experience to make concrete what is left ambiguous. And not only is the decision maker(s) unlikely to figure out their own reason why you should win, they probably will not give you the benefit of the doubt: “Although Dice’s briefing on this claim is opaque, we are skeptical whether Dice raised this claim before the district court.”

Sixth Circuit Issues Significant Bankruptcy Decision

By Colter Paulson on January 27, 2014 Posted in Recent Cases

In December, the Sixth Circuit, in Grant, Konvalinka & Harrison, P.C. v. Still (In re McKenzie), 737 F.3d 1034 (6th Cir. 2013), addressed two matters of first impression when it adopted the majority rules that (i) a creditor who seeks relief from the bankruptcy automatic stay has the burden to prove the validity of its perfected security interest in collateral; and (ii) the expiration of the two-year statute of limitations on bankruptcy avoidance actions does not prevent the trustee from asserting them defensively under section 502(d) of the Bankruptcy Code.

Prior to filing for bankruptcy, the Debtor in In re McKenzie pledged his interests in certain assets, including his equity in various entities, to his law firm, Grant, Konvalinka & Harrison (“GKH”) to secure legal fees owed to the firm. As the purported first lien creditor, GKH moved for relief from the automatic stay as it related to those assets—alleging that it had a valid lien and that the debtor had no remaining equity. The trustee objected on several grounds, and the bankruptcy court and district court sided with the trustee.

On appeal, GKH made several arguments, the most notable of which were (i) that GKH should not have to bear the burden of establishing the validity of it security interest in the pledged equity interests; and (ii) that the trustee cannot use his hypothetical lien creditor status and avoidance powers defensively under section 502(d) of the bankruptcy code, once the two year statute of limitations for filing an affirmative avoidance action has passed.

Though the parties cited no appellate or district court cases on point, the Sixth Circuit aligned with the majority of bankruptcy courts and held that GKH should bear the burden of establishing the validity of its security interests in the pledged collateral. GKH’s argument that the plain language of section 362(g) of the Bankruptcy Code does not permit a court to alter burdens with regard to the automatic stay did not persuade the Sixth Circuit. The Court held that “the validity of a creditor’s security interest is often determinative of the debtor’s lack of equity in the property, and consequently affects the ultimate issue—whether the bankruptcy court should terminate the automatic stay.” The Sixth Circuit was also persuaded by the fact that the creditor would likely be in the best position to demonstrate the validity of its own security interest.

The Sixth Circuit also affirmed the bankruptcy court’s decision to allow the trustee to use his avoidance powers defensively to defeat GKH’s motion for relief from the automatic stay. The trustee argued that the Debtor’s conveyance of his equity interests to GKH were avoidable transactions pursuant to section 547 of the Bankruptcy Code and therefore section 502(d) of the Bankruptcy Code permitted the Trustee to defensively avoid GKH’s security interest. The Sixth Circuit agreed, adopting the position of the Ninth Circuit in El Paso City of Texas v. Am W. Airlines, Inc. (In re Am. W. Airlines, Inc.), 217 F.3d 1161 (9th Cir. 2000) as well as the majority of bankruptcy courts. The Court concentrated on the difference between seeking affirmative relief in the form of an avoidance action and the defensive use of avoidance powers, which seeks no affirmative relief. The Sixth Circuit relied on the fact that the text of section 502(d) and its predecessor statute do not refer to the statute of limitations in section 546(a)(1)(A). Finally, the Court held that the Trustee’s defensive use of avoidance powers outside of the statute of limitations is consistent with the central purpose of the Bankruptcy Code—to ensure equality of distribution among creditors.

The Sixth Circuit Warns: If You Act “Ostrich-Like” On Appeal, You May Be Sanctioned Under Rule 38

By Steve Delchin on January 27, 2014 Posted in News and Analysis

Frivolous and unwarranted appeals. They continue to be a problem in the Sixth Circuit, as long-time followers of our blog know. We’ve gone back and reviewed over two years’ worth of opinions in the Sixth Circuit, and the picture that emerges is one of too many parties and too many attorneys pursuing frivolous and unwarranted appeals leading to appellate sanctions.

It shouldn’t be this way. Rule 3.1 of the ABA Model Rules of Professional Conduct prohibits unwarranted appeals while Rule 38 of the Federal Rules of Appellate Procedure makes clear that frivolous appeals are sanctionable. Rule 38 states that “[i]f a court of appeals determines that an appeal is frivolous, it may, after a separately filed motion or notice from the court and reasonable opportunity to respond, award just damages and single or double costs to the appellee.” The Sixth Circuit has emphasized that “Rule 38 should doubtless be more often enforced than ignored in the face of a frivolous appeal.” Shaya v. Countrywise Home Loans, Inc., 489 Fed. Appx. 815, 819 (6th Cir. 2012). And without a doubt, the Sixth Circuit has put its words into practice.

Consider the recent opinions below in which the Sixth Circuit, more often than not, has imposed sanctions. The opinions below provide insight into the types of improper behavior that may lead to sanctions, including, among other things: (1) ignoring clearly established facts barring a claim, (2) discounting prior warnings by the district court that sanctions are possible, (3) failing to include record citations in a brief, (4) failing to file a reply brief when necessary to respond to the other side, (5) relying on imaginary citations, (6) ignoring adverse authority, (7) failing to deal candidly with the Court, and (8) otherwise pursuing an appeal “ostrich-like” without regard to the relevant law or the facts.

Bridgeport Music, Inc. v. Southfield Music, Inc., 714 F.3d 932 (6th Cir. 2013): awarding sanctions under Rule 38 after concluding that the conduct of a party and her appellate counsel was “objectively and patently meritless and a waste of judicial resources” because the appeal was untimely and because the claim was barred by a signed release.
Seifert v. Graphic Packaging Int’l, Inc., 486 Fed. Appx. 594 (6th Cir. 2012): awarding sanctions under Rule 38 against plaintiff’s counsel (though not against plaintiff) because the plaintiff’s attorney filed a brief with no record citations (violating Federal Appellate Rule 28(a)(9)(A)) that “had no reasonable expectation” of vacating the district court’s summary judgment in favor of the defendant.
In re Reese, 485 Fed. Appx. 32 (6th Cir. 2012): recognizing that the Court should be “cognizant of the need to weigh the impositions of sanctions carefully in order to avoid chilling parties’ exercise of the rights to appeal,” but nonetheless affirming an award of sanctions imposed by the Bankruptcy Appellate Panel for the filing of a frivolous appeal (though declining to award additional attorney’s fees with respect to the appeal to the Sixth Circuit).
Shaya v. Countrywide Home Loans, Inc., 489 Fed. Appx. 815 (6th Cir. 2012): after concluding that “Plaintiffs’ arguments are wholly without merit and had no reasonable expectation of altering the district court’s judgment,” awarding sanctions against plaintiffs’ counsel “because the blame sits on Plaintiffs’ counsel’s shoulders.” (And if you needed additional proof that proper citations (and proper cite checking) is critical, consider the panel’s criticism of plaintiff’s counsel for relying on an imaginary citation: “Plaintiffs’ counsel’s citation to ‘12 CFR 108 & 130’—a citation that was made in two separate district court cases and now on appeal, and which does not exist—is frivolous, unreasonable, and without foundation.”)
Waeschle v. Dragovic, 687 F.3d 292 (6th Cir. 2012): declining to impose Rule 38 sanctions but including a stern warning that counsel, as officers of the court, are obligated “to deal candidly with the obvious [circuit] authority that is contrary to [their client’s] position.”

Finally, consider the Sixth Circuit’s recent decision in Kempter v. Michigan Bell Telephone Co., 2130 FED App. 0786N (6th Cir. 2013). The panel here acknowledged that the case did not involve “any serious misrepresentations, vexatious tactics, or other overt signs of bad faith,” but it did suffer from “such serious factual and legal issues that sanctions are warranted.” Among other things, the appellant relied on an “often misleadingly selective, reading of the record” and “a marked lack of fam iliarity with the relevant law.” The panel also highlighted that the appellant had “failed to file a reply brief altogether, a problematic factor given the strength of [the opposing party’s] response,” and that the appellant previously had been warned by the district court that sanctions might be justified. The panel concluded its opinion by making clear that Rule 38 does “not permit a lawyer, ostrich-like, to continue prosecuting a case while refusing to recognize the relevant legal standard or counter the opposing party’s factual arguments.”

The Sixth Circuit’s bottom line is clear: Don’t act ostrich-like on appeal or you will risk sanctions.

Sixth Circuit Narrows Scope Of Drug Manufacturers’ Immunity In Michigan

By Squire Patton Boggs on January 22, 2014 Posted in News and Analysis, Recent Cases

Fentanyl, a powerful prescription painkiller, is often delivered transdermally via time-release patches. In Miller v. Mylan, the estate of a Michigan woman sued fentanyl patch manufacturer Mylan, alleging that her death was caused by a defective patch delivering too much of the narcotic too fast. Mylan moved to dismiss, claiming statutory immunity under Mich. Comp. Laws § 600.2946(5), which immunizes manufacturers of FDA-approved “drugs”—with “drug” defined by the Federal Food, Drug, and Cosmetic Act—from suit. The district court dismissed the suit, finding that the time-release mechanism of the patch was merely a “component” of the fentanyl, akin to the time-release capsules often used to administer drugs orally.

On appeal, a divided Sixth Circuit panel narrowed the scope of the Michigan statute, holding that it does not protect manufacturers of “combination products,” which the Act defines as combining both a “drug” and “device.” The majority cited the general principle that “statutes in derogation of the common law should be narrowly construed,” but did not elaborate on whether this was a discrete principle or whether the narrowness of construction should correlate with the degree to which a statute derogates the common law. The similar, but more modest, rebuttable-presumption statutes in other states derogate the common law of torts considerably less than the Michigan statute’s categorical immunity. See, e.g. N.J. Stat. § 2A:58C-4 (providing a rebuttable presumption in favor of the adequacy of an FDA-approved warning for “a drug or device or food or food additive” as defined by the Federal Food, Drug, and Cosmetic Act). The unique breadth of the Michigan immunity statute might have led the court to interpret it especially narrowly. See Kyle D. Logue, Coordinating Sanctions In Tort, 31 Cardozo L. Rev. 2313, 2344 (2010) (explaining that “a number of states have . . . creat[ed] a sort of rebuttable regulatory compliance defense,” but “[n]o other state has gone [as] far” as Michigan, where the presumption is non-rebuttable).

The majority, Judges Merritt and Gibbons, acknowledged that the patch was regulated as a “drug,” but did not find this to be dispositive of whether the patch “is” a drug because the amendment creating the “combination product” definition did not create a corresponding new mode of regulation, but permitted combination products to be regulated as either drugs or devices. The majority speculated that the patch’s “effect on the human body” might be “mechanical (rather than chemical),” and remanded to the district court to resolve the factual question of the proper definition of the patch: is it a “combination product” or simply a “drug”? Judge Gibbons also wrote separately to chide the district court for straying beyond the complaint to consider documents submitted by Mylan in support of its defense.

Judge McKeague dissented on both procedural and substantive grounds. First, he pointed out that Plaintiffs had not alleged the patch to be a “combination product” in their complaint or in their pleadings before the district court, and therefore it was inappropriate for the Sixth Circuit to consider the argument in the first instance. Second, relying heavily on the documents submitted by Mylan (“the only evidence in the record shows that the FDA designated the fentanyl patch as a ‘drug’”), he concluded that the fentanyl patch was a drug, not a combination product, and therefore it was not necessary to reach the question of whether combination products were covered by the Michigan statute.

Judge Stranch Offers Suggestions on Drafting Arbitration Agreements

By Squire Patton Boggs on January 22, 2014 Posted in Recent Cases

We recently reported on the Sixth Circuit’s pro-arbitration trend in several recent decisions, and an unpublished decision yesterday, Pureworks, Inc. v. Unique Software Solutions, Inc., is no exception. The Sixth Circuit enforced the arbitrability of earn-out covenants in an asset purchase agreement, concluding that because the disputed issues “arguably fall within the scope of the parties arbitration agreement,” arbitration was proper. It also enforced the arbitration award, concluding: “so long as arbitrators arguably construe the contract and not giving them authority, courts may not overturn their decisions, even if the courts are convinced the arbitrators have committed serious error.”

In many respects the case is a fairly routine one, but Judge Stranch took the opportunity in concurrence to “address my concerns regarding the need for clear language in agreements governing the arbitration of business disputes.” While acknowledging that no lawyer can foresee all potential disputes that may arise in the aftermath of a business deal, Judge Stranch suggests that some additional thought should be given at the drafting stage in order to avoid a lot of problems down the road. Such care is particularly necessary in the arbitration context, Judge Stranch concludes, given that “there has been a decided move to mandate the use of arbitration for resolution of business against business disputes.” She continues: “but in this rush to flee the courthouse, it appears that the parties have not always thought through or written their agreements with the clarity necessary to delineate what disputes will be entrusted to what type of arbitrator.” As a result of such imprecission, countless dollars are spent litigating – the exact result that the parties were seeking to avoid.

A further refinement could be offered on Judge Stranch’s observation, and that is that parties who are contemplating litigating such issues should be fully cognizant of the trends in the law of the jurisdiction where they plan to sue. For instance, some of the recent decisions from the Sixth Circuit in the arbitration area seem to be fairly obvious in light of the Court’s existing precedent, but parties are intent on litigating them nonetheless. So perhaps a dose of pragmatism should be added to some additional care in drafting agreements.

Important Year for Supreme Court Scrutiny of the Sixth Circuit

By Squire Patton Boggs on January 21, 2014 Posted in News and Analysis, Supreme Court

This is an important year for Supreme Court scrutiny of the Sixth Circuit. Susan B. Anthony List v. Driehaus is the eleventh Sixth Circuit case that the Supreme Court has taken this Term, which is the most since 2004. That number is higher than for any other circuit except the Ninth (also eleven).

We have noted here recent commentary that the Sixth Circuit is surpassing the Ninth Circuit as the most frequently reversed of all the Federal circuits. But, in fact, the truth may be more nuanced than that commentary suggests. After all, the Supreme Court decides very few cases and it is common knowledge that habeas has served as a flash point between the courts. Last year, for example, the Supreme Court only took two cases from the Sixth Circuit, both criminal cases. In short, there is not enough data to draw sweeping conclusions.

This year, the Sixth Circuit cases before the Supreme Court encompass a wide range of issues that extend well beyond criminal law and habeas. So far, two of the eleven decisions have been reversed. But one of the cases was reversed outside of the merits (Ford Motor Co. v. United States) and the other was a habeas case (Burt v. Titlow). Given the breadth of types of issues under review, perhaps a more meaningful assessment of Supreme Court review of the Sixth Circuit will emerge after the dust settles on this Term.

In sum, given the high number and diversity of Sixth Circuit decisions up for review, this is an important year for understanding Supreme Court scrutiny of the Sixth Circuit. The additional decisions will certainly inform the debate on how the Sixth Circuit is viewed by the Supreme Court. We will study the decisions as they are issued along with historical data to gain the fullest picture of the Sixth Circuit possible.

When Are Motions For Certification Favored?

By Squire Patton Boggs on January 17, 2014 Posted in News and Analysis

*This is the second in a series of posts about the certification of questions of state law.

Although the certification procedure serves structural goals such as federalism and “preserv[ing] state sovereignty,” Schering-Plough Healthcare Prods. v. NBD Bank, N.A., 98 F.3d 904, 913 (6th Cir. 1996), the Sixth Circuit’s perception of whether a movant “deserves” certification factors into the court’s decision regarding whether to certify.

First, the court looks askance at litigants who first seek certification on appeal, viewing them as indifferent to judicial economy or—arguably worse—as seeking to game the system by obtaining a “do-over.” See BKB Props., LLC v. Suntrust Bank, 453 F. App’x 582, 588 (6th Cir. 2011) (“It is first noteworthy that [the movant] failed to request certification in the district court, thus resulting in the considerable expenditure of judicial resources by the federal courts on the issue.”); City of Columbus v. Hotels.Com, L.P., 693 F.3d 642, 654 (6th Cir. 2012) (“The appropriate time to seek certification of a state-law issue is before a District Court resolves the issue, not after receiving an unfavorable ruling.”). Litigants who move for certification after filing appellate briefs are even worse off, viewed as having wasted both the district and appellate court’s time. See Pennington v. State Farm Mut. Auto. Ins. Co., 553 F.3d 447 (6th Cir. 2009) (denying motion for certification filed “well after the parties had completed briefing”); Carolina Cas. Ins. Co. v. Panther II Transp., Inc., 402 F. App’x 62 (6th Cir. 2010) (explaining that “[u]ntimeliness is itself a reason to deny the motion,” which was filed after the appellate briefs).

Second, the court disfavors motions for certification where the movant has “chosen” to litigate in federal court. Local 219 Plumbing & Pipefitting Indus. Pension Fund v. Buck Consultants, LLC, 311 F. App’x 827, 831 (6th Cir. 2009) (denying plaintiff’s motion “based on our review of the applicable Ohio law and plaintiffs’ choice of a federal forum”); City of Columbus, 693 F.3d at 654 (denying certification in part because plaintiff filed suit in federal court); Shaheen v. Yonts, 394 F. App’x 224, 233 (6th Cir. 2010) (“One who . . . chooses the federal courts in diversity actions is in a peculiarly poor position to seek certification.” (internal quotation marks and alterations omitted)); Union Planters Bank, N.A. v. Cont’l Cas. Co., 478 F.3d 759, 767 (6th Cir. 2007) (denying certification in part because the plaintiff “chose to bring this case in a federal rather than a state forum in the first instance”). In these cases, each movant was a plaintiff that filed suit in federal court. Though there are no Sixth Circuit cases on point, the same logic ought to apply to a defendant that chose to remove a case to federal court and then moved to certify a question to the state court. On the flip side, perhaps a plaintiff who “sought to obtain a ruling in state court” and was “thwarted” by removal ought to be viewed more favorably when requesting certification. See Real Estate Bar Ass’n for Mass., Inc. v. Nat’l Real Estate Info. Servs., 608 F.3d 110, 119 n. 2 (1st Cir. 2010).

Parties should consider these issues when moving for (or opposing) certification of a question of state law. If a case is likely to turn on an unresolved issue of state law, litigants should keep the certification option in mind from the very beginning of a case to put themselves in the most favorable position to have a motion for certification granted.

Closing Time: Sixth Circuit Rejects Kentucky Groceries’ Attempt To Sell Wine and Liquor

By Squire Patton Boggs on January 16, 2014 Posted in Recent Cases

Over the last several years the Sixth Circuit has handled an unusually large number of significant alcohol-related cases (we wonder whether this is a coincidence or a commentary on the interests of the citizenry of the Circuit). Yesterday, the Sixth Circuit enforced a Kentucky statute prohibiting grocery stores and gas stations from selling wine and liquor in the face of an equal protection challenge. Maxwell’s Pic-Pac, Inc. v. Dahner. The district court had held the statute violative of equal protection, but the Sixth Circuit reversed this judgment.

The Court began by chronicling the history of alcohol regulation both nationally and within the Commonwealth. Kentucky ultimately made the decision to prohibit grocery stores and gas stations from selling high alcohol content beverages. As the Sixth Circuit explained, there are a variety of policy rationales for such a prohibition, chief of which is limiting access to high alcohol content drinks because of the potential problems associated with it. Certainly one can debate the public policy rationalization, but those interests sufficed to overcome a rational basis review under the Equal Protection Clause. The Sixth Circuit appreciated that the groceries faced “a high burden” to strike a law down on rational basis review and that “reasonably conceivable facts” justify Kentucky’s dissention.

Kentuckians will therefore have to continue to go to liquor stores in order to access wine and high alcohol liquor (somewhat surprising in the land of bourbon!). And we will have to stay tuned to see if further cases in the Sixth Circuit explore other contours of alcoholic beverage sales within the Circuit.