UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

East Coast Serv. Indus. Co. Inc., d/b/a Whiskeys 20, Thomas Svoleantopoulos, and Rosalie Sweeney

v. Civil No. 19-cv-1182-JD Opinion No.

N.H. State Liquor Commission, et al.

O R D E R

East Coast Service Industry (“Whiskeys 20”), Thomas

Svoleantopoulos, and Rosalie Sweeney brought this suit alleging

violations of the federal constitution and state law against the

New Hampshire State Liquor Commission (the “Commission”) and its

employees.1 The suit also names the City of Manchester, the

Manchester Police Department, and various officers and employees

of the City of Manchester and the Manchester Police Department.2

The Commission and its employees move to dismiss the claims in

the Amended Complaint. The plaintiffs object.

1 The Commission’s employees named as defendants are Matthew Elliot, Nicolas Cutting, Danielle Ellston, Matthew Culver, Ashley Wright, Joseph S. Plaia, and John Doe 1, and will be referred to collectively as the “employees” except when individually named.

2 The City of Manchester, the Manchester Police Department, and their officers or employees did not respond to the Amended Complaint and there is no proof of service or completed waiver of service filed in the case. Standard of Review

In considering a motion to dismiss, the court asks whether

the plaintiffs have made allegations that are sufficient to

render their entitlement to relief plausible. Manning v. Boston

Med. Ctr. Corp.,

(1st Cir. 2013). The court

accepts all well-pleaded facts as true and draws all reasonable

inferences in the non-moving party’s favor. Hamann v.

Carpenter,

(1st Cir. 2019). The court, however,

disregards conclusory allegations that simply parrot the

applicable legal standard. Manning,

. To

determine whether a complaint survives a motion to dismiss, the

court should use its “judicial experience and common sense,” but

should also avoid disregarding a factual allegation merely

because actual proof of the alleged facts is improbable.

The plaintiffs attached several documents to the Amended

Complaint. When evaluating a motion to dismiss, “[t]he court

may supplement the facts contained in the pleadings by

considering documents fairly incorporated therein and facts

susceptible to judicial notice.” R.G. Fin. Corp. v. Vergara-

Nuñez,

(1st Cir. 2006). The court may also

consider “documents the authenticity of which are not disputed

by the parties,” official public records, documents central to

the plaintiff’s claim, and documents sufficiently referenced in

2 the complaint. Watterson v. Page,

(1st Cir.

1993).

Background

The plaintiffs operate “Whiskeys 20,” a “restaurant and

late-night lounge” in Manchester, New Hampshire. Doc. 13 ¶¶ 1,

23. Broadly, the plaintiffs allege that the Commission and its

employees violated the federal constitution and New Hampshire

state law by abusing their regulatory powers over alcohol sales,

treating them differently than other liquor license holders, and

subjecting them to unreasonable searches.

A. New Hampshire Liquor Commission and Liquor Licenses

New Hampshire prohibits the sale of any liquor or alcoholic

beverage without a liquor license issued by the Commission. RSA

178:1, I; see RSA 178:2, I (“The commission may issue licenses

. . . .”). On October 27, 2015, the Commission granted Whiskeys

20 a restaurant license. A restaurant license allows its holder

to prepare, cook, and serve food in addition to selling

alcoholic beverages.

3 B. September 29, 2016, Surveillance, Inspection and Warnings

On an unknown date after it was issued a liquor license,3

Whiskeys 20 complained to the Commission that defendant Matthew

Elliot, an investigator with the Commission, “had entered

Whiskeys 20, allegedly with a warrant, and threatened to arrest

Mr. Svoleantopoulos.” Doc. 13 ¶ 49. Then, in October 2016,

Whiskeys 20 wrote another complaint to the Commission, asserting

that Elliot and Nicolas Cutting, another investigator with the

Commission, had retaliated against it for making the earlier

complaint.

Specifically, in the October 2016 complaint, Whiskeys 20

wrote that, on September 29, 2016, Elliot had “engaged in

surveillance of Whiskeys 20 for 30 minutes outside the

establishment.” Id. ¶ 50. “After conducting that surveillance,

Mr. Elliot and Mr. Cutting approached Mr. Svoleantopoulos, and

Mr. Elliot criticized him about providing safe transportation

for a customer.” Id. Elliot also told Svoleantopoulos that he

was “lucky” because they had found an intoxicated customer

outside as opposed to inside Whiskeys 20. Id.

3 The Amended Complaint does not indicate when Whiskeys 20 filed the complaint with the Commission. See doc. 13 ¶¶ 48-49.

4 Later the same evening, Elliot provided Svoleantopoulos a

“verbal warning” for having a “disorderly premises” because

there was liquor spilled in the hallway near the bathroom. Id.

¶ 51. Svoleantopoulos told Elliot that the spill was water and

was coming from a bathroom toilet. Elliot also provided a

verbal warning based on an observation that a person was

drinking in the bathroom hallway. Whiskeys 20 alleges that

Elliot’s observation was false.

Finally, “Whiskeys 20 learned it was issued another verbal

warning on September 29 for a ‘statement from [a] purchaser as

to age.’” Id. ¶ 52. Whiskeys 20, however, asserts that the

purchaser was over twenty-one and that Elliot never questioned

Svoleantopoulos about the purchaser.

C. September 2018 Violations and Settlement Agreement

In late 2018, the Commission issued three “Administrative

Notices of Agency Action” to Whiskeys 20, alleging violations of

state liquor laws and regulations. In the administrative

notices, the Commission alleged that, 1) on September 22, 2018,

Whiskeys 20 served an alcoholic beverage to a visibly

intoxicated person; 2) on July 6, 2018, Whiskeys 20 served an

alcoholic beverage to an underage person; and 3) on July 6,

2018, Whiskeys 20 accepted photographic identification that was

5 expired or inconsistent with the appearance of the person who

presented it. Id. ¶ 58.

The plaintiffs allege that, on April 18, 2019, the

Commission and, “upon information and belief,” Culver, “forced”

Whiskeys 20 to sign a Settlement Agreement4 instead of having an

adjudicatory hearing on the allegations. Id. ¶ 62. Three

persons signed the Settlement Agreement: Joseph Plaia; John Doe

1,5 on behalf of “Enforcement & Licensing”; and Svoleantopoulos,

on behalf of Whiskeys 20.

Under the Settlement Agreement, Whiskeys 20 had to pay a

fine, its liquor license was suspended for several days, and it

was assessed eight “points” to its liquor license. Among other

terms in the Settlement Agreement, Whiskeys 20 had to offer

“full course meals” to its customers, it was prohibited from

offering shots to anyone on the premises, and it was prohibited

from permitting entry to any customers under twenty-one years of

age after nine p.m. Id. ¶ 63; doc. 13-3. It was also

prohibited from hosting an “under 21 night.” The Commission

conditioned the renewal of Whiskeys 20’s liquor license on these

terms.

4 The Settlement Agreement is attached to the Amended Complaint. Doc. 13-3.

5 Doe’s signature on the document is illegible.

6 D. Police Calls, Police Detail, and Liquor Commission Inspections

The plaintiffs allege that the City of Manchester and the

Manchester Police Department have required Whiskeys 20 to have a

police detail “every weekend.” Doc. 13 at 3. The plaintiffs

allege that, in the first part of 2019, “the number of calls

made to Manchester PD for service at Whiskeys 20 for various

incidents and/or events was lower than the calls made to two

neighboring bars,” Club Manchvegas and McGarvey’s. Id. ¶ 69.

According to the Amended Complaint, in 2017, 295 calls were made

to Manchester PD for service at Whiskeys 20. In 2018, 191 calls

were made. Ten calls were made through March 2019.

The plaintiffs allege that despite Whiskeys 20’s “pristine

record” for calls to the police, defendants Elliot, Cutting,

Danielle Ellston, Culver, and Ashley Wright have conducted “over

40 premises inspections of Whiskeys 20” between 2017 and March

2019 and have “conducted video and audio surveillance of

Whiskeys 20’s employees.” Id. ¶ 72. The plaintiffs allege that

other bars – such as Club Manchvegas and McGarvey’s – have not

received the same volume of inspections from the Commission.

In June 2019, Whiskeys 20 requested that the police detail

be limited or eliminated. On June 26, the Manchester Police

Department informed Whiskeys 20 that the police detail would not

be eliminated. Each police detail costs Whiskeys 20

7 “approximately $258.” Doc. 13 ¶ 84. Whiskeys 20 has an

outstanding balance of $3,000 for unpaid police detail invoices.

E. July 2019 Overservice Allegations

On July 31, 2019, the Commission issued administrative

notices to Whiskeys 20, alleging that on June 23, 2019, it had

sold an alcoholic beverage to a visibly intoxicated individual.

Another violation notice alleged that Whiskeys 20 had allowed

patrons to self-serve alcoholic beverages. On June 24, the

Commission placed a hold on Whiskeys 20’s liquor license

renewal, which was set to expire on July 31. The Commission,

however, extended Whiskeys 20’s license through December 2,

2019, without a renewal.

Whiskeys 20 disputed the administrative notices. On

November 5, 2019, after a witness to the alleged overservice

recanted prior statements to the Commission, the Commission

informed Whiskeys 20 that it had elected not to pursue the

administrative notices further. The Commission, however, stated

that it would perform an “audit” of Whiskeys 20 prior to

granting a full renewal of its license. Whiskeys 20 alleges

that it was difficult to schedule events and order alcoholic

beverages while its license was pending expiration.

8 F. Claims The plaintiffs’ Amended Complaint contains seven counts:

• Count I: declaratory judgment; • Count II: violation of equal protection rights under the Fourteenth Amendment; • Count III: violation of procedural due process rights under the Fourteenth Amendment; • Count IV: violation of Fourth Amendment; • Count V: tortious interference with advantageous economic advantages with New Hampshire consumers; • Count VI: intentional infliction of emotional distress; and • Count VII: Negligent infliction of emotional distress.

Count I is brought against the Commission, Plaia, and Doe, and

Counts II through VII are brought against all defendants. The

claims are brought against the defendants in both their official

and individual capacities.

The plaintiffs “seek damages of $20 million, exclusive of

any punitive damages to which they are entitled, and recovery of

their attorney’s fees and costs.” Doc. 13 at 3. Whiskeys 20

also seeks injunctive relief prohibiting the defendants from

engaging in unlawful conduct as alleged in Counts II through IV.

Discussion

The Commission and employees move to dismiss all claims

against them in both their official and individual capacities.

The plaintiffs oppose dismissal of the claims. The Commission

9 and employees filed a reply, and the plaintiffs filed a

surreply.

I. Eleventh Amendment of the United States Constitution

The Commission and employees argue that they are immune

from suit in their official capacities under the Eleventh

Amendment.6 The plaintiffs do not articulate an objection to

dismissal of the Commission as to Counts I through VII or to

dismissal of the employees in their official capacities as to

Counts V through VII, on the basis of Eleventh Amendment

immunity. The Commission is dismissed as a party defendant in

Counts I through VII. The employees in their official

capacities are dismissed as parties in Counts V through VII.

Whiskeys 20 objects to dismissal of the employees in their

official capacities as to Counts I through IV. It contends

that, in Counts I through IV, it seeks prospective injunctive

relief against the employees. Whiskeys 20 argues that the

Eleventh Amendment does not bar suits that seek prospective

injunctive relief against individuals in their official

capacities. The employees replied only as to Count I, which is

6 “The Judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State.” U.S. Const. amend. XI.

10 a declaratory judgment claim against employees Plaia and Doe

that challenges the validity of the Settlement Agreement based

on a New Hampshire regulation.

A. Immunity for Plaia and Doe as to Count I

Employees Plaia and Doe in their official capacities are

entitled to Eleventh Amendment immunity as to Count I. “Absent

an explicit waiver from the state, the Eleventh Amendment bars

official capacity suits against state actors in federal court

unless the suit seeks prospective injunctive relief.” Caisse v.

DuBois,

(1st Cir. 2003) (citing Rosie D. v.

Swift,

(1st Cir. 2002)). The exception to

Eleventh Amendment immunity discussed in Caisse applies only

where prospective injunctive relief corrects ongoing violations

of federal law. Swift,

; see also Ex parte

Young,

(1908). In Count I, Whiskeys 20

does not allege any violation of federal law, and it seeks

declaratory relief rather than prospective injunctive relief.

Therefore, the Eleventh Amendment applies to Plaia and Doe in

their official capacities as to Count I. See Swift,

.

11 B. Waiver In its surreply, Whiskeys 20 asserts that employees Plaia

and Doe failed to raise Eleventh Amendment immunity as to Count

I in their motion to dismiss. Whiskeys 20 contends that Plaia

and Doe raised the argument for the first time in their reply

brief. Therefore, Whiskeys 20 contends, Plaia and Doe have

waived their Eleventh Amendment immunity for this litigation.7

In certain circumstances, a state’s “affirmative conduct in

litigation” can result in its waiver of Eleventh Amendment

immunity for the litigation. See New Hampshire v. Ramsey,

, 15-18 (1st Cir. 2004). The motion to dismiss could have

more clearly asserted that Plaia and Doe, like the Commission,

raised Eleventh Amendment immunity as to Count I. Nevertheless,

the employees clarified their position in their reply and made

no affirmative statement of waiver. Moreover, it would be

unusual and inconsistent for the defendants to assert immunity

as to the Commission while waiving immunity for its employees.

In these circumstances, the employees stand in the place of the

Commission, which is the real party in interest in Count I,

7 Alternatively, Whiskeys 20 asks the court to decline to consider the immunity defense for Plaia and Doe on the ground that it was raised for the first time in a reply brief. If the court were to take that route, Plaia and Doe could raise the defense later. See Acevedo Lopez v. Police Dep’t of Com. of Puerto Rico,

(1st Cir. 2001) (“Eleventh Amendment immunity can be raised at any time because of its jurisdictional implications.”). Therefore, the defense will be addressed here.

12 because any decree that the Settlement Agreement is invalid

would operate against the Commission. See Pennhurst State Sch.

& Hosp. v. Halderman,

(1984) (“[R]elief

sought nominally against an officer is in fact against the

sovereign if the decree would operate against the latter.”).

For those reasons, Plaia and Doe did not by their conduct waive

Eleventh Amendment immunity for the purpose of this litigation.

See Ramsey,

, 15-18. Count I is dismissed as to

employees Plaia and Doe in their official capacities.

II. Remaining Claims Against Employees

The employees move to dismiss the remaining claims against

them after application of the Eleventh Amendment. The remaining

claims against the employees are Count I (declaratory judgment)

as brought against Plaia and Doe in their individual capacities,

Counts II through IV (constitutional claims) against all the

employees in both their individual and official capacities, and

Counts V through VII (state tort claims) against all the

employees in their individual capacities. The plaintiffs object

to dismissal of these claims.

A. Declaratory Judgment (Count I)

The employees argue that Plaia and Doe are incorrectly

named as defendants in Count I, which is Whiskeys 20’s

13 declaratory judgment claim challenging the validity of the

Settlement Agreement. They argue that there is no actual

controversy between Plaia, Doe, and Whiskeys 20 because the

Settlement Agreement sets forth legal relations only between the

Commission and Whiskeys 20. Whiskeys 20 responds, arguing that

“this Agreement was never binding on, and could not have been

legally approved by, NHSLC. Thus, the only interested parties,

for purposes of the Agreement and Count I, are Whiskeys 20 and

Defendants Plaia and John Doe 1.” Doc. 25 at 5-6.

The Settlement Agreement purports to be an agreement

between the Commission and Whiskeys 20. Doc. 13-3 (“The New

Hampshire Liquor Commission accepts the above settlement subject

to the terms and conditions set forth in this agreement.”).

Nowhere does the Settlement Agreement suggest that it is an

agreement between Whiskeys 20, Plaia, and Doe. Rather, Plaia

and Doe signed as agents of the Commission and “Enforcement &

Licensing,” respectively. Doc. 13-3.

Whiskeys 20 has not alleged facts to show that Plaia and

Doe have any legal interest in the validity or invalidity of the

Settlement Agreement in their individual capacities.8 Instead,

8 Whiskeys 20 also argues that, because the Settlement Agreement is invalid, the signatories are interested parties. Whiskeys 20 does not show, however, that allegations of invalidity transform the agreement to one between Whiskeys 20 and the individuals who signed on behalf of the Commission.

14 they signed as agents of a government entity, that is, the

Commission. Therefore, Count I does not state a claim against

Plaia and Doe in their individual capacities. Kentucky v.

Graham,

(1985) (“Personal-capacity suits

seek to impose personal liability upon a government official for

actions he takes under color of state law. . . . Official-

capacity suits, in contrast, generally represent only another

way of pleading an action against an entity for which an officer

is an agent.”) (citations and quotation marks omitted).

For those reasons, Count I is dismissed as brought against

Plaia and Doe in their individual capacities. Because all of

the defendants named in Count I have been dismissed, Count I is

dismissed in its entirety.

B. Constitutional Claims (Counts II through IV)

The employees raise qualified immunity as to Whiskeys 20’s

claims that they violated the Equal Protection Clause (Count

II), the Fourteenth Amendment’s Due Process Clause (Count III),

and the Fourth Amendment (Count IV). In the alternative, the

employees argue that Whiskeys 20 fails to state claims for

relief under Federal Rule of Civil Procedure 12(b)(6).

Application of the defense of qualified immunity is a two-step

analysis in which it is first determined whether the facts,

taken in the light most favorable to the plaintiff, show that

15 the defendant violated a constitutional right. Hunt v. Massi,

(1st Cir. 2014). Therefore, for both Rule

12(b)(6) and the defense of qualified immunity, the court

determines whether Whiskeys 20 has stated a constitutional

violation.

1. Class-of-One Equal Protection (Count II)

Whiskeys 20 alleges that the employees treated it

differently from similarly-situated Manchester bars by

subjecting it to excessive investigations and penalties not

imposed on those other bars. The employees argue that Whiskeys

20’s class-of-one claim is barred by Engquist v. Oregon Dep’t of

Agric.,

(2008).9

“The Equal Protection Clause contemplates that similarly

situated persons are to receive substantially similar treatment

from their government.” Davis v. Coakley,

(1st Cir. 2015). The Supreme Court has recognized a “class-of-

one” equal protection claim where “the plaintiff alleges that

she has been intentionally treated differently from others

similarly situated and that there is no rational basis for the

9 Whiskeys 20 argues that the employees failed to sufficiently develop their argument that its class-of-one equal protection claim fails, thereby waiving the argument. The court disagrees and will address the argument.

16 difference in treatment.” Village of Willowbrook v. Olech,

(2000).

In Engquist, the Supreme Court held that class-of-one equal

protection claims cannot be sustained when they challenge “forms

of state action . . . which by their nature involve

discretionary decisionmaking based on a vast array of

subjective, individualized assessments . . . [in which] treating

like individuals differently is an accepted consequence of the

discretion granted.” Caesars Mass. Mgmt. Co. v. Crosby,

(1st Cir. 2015). While Engquist was decided in

the context of public employment decisions, the Supreme Court

hypothesized that a class-of-one equal protection claim could

not be used to challenge speeding tickets issued by law

enforcement officers to some speeders but not others:

[A]llowing an equal protection claim on the ground that a [speeding] ticket was given to one person and not others, even if for no discernible or articulable reason, would be incompatible with the discretion inherent in the challenged action. It is no proper challenge to what in its nature is a subjective, individualized decision that it was subjective and individualized.

Engquist,

. Similarly, in Crosby, the First

Circuit held that a class-of-one equal protection claim

challenging a report about a casino operator’s suitability was

inappropriate under Engquist where the casino licensing board

was provided “broad discretionary judgment.” Crosby,

(“The possibility of mandating or deriving a baseline

against which to assess a claim of treating seemingly similarly

situated individuals differently, . . . is in fact even further

from possibility in casino licensing than in public

hiring. . . . [T]he virtually plenary discretion that defines

the state activity places this case squarely within the Engquist

rule limiting class-of-one redress.”) (citation and quotation

marks omitted). In other words, regulatory decisions to issue

licenses are, generally, highly subjective, discretionary

decisions. In these cases, class-of-one equal protection claims

cannot be sustained. See

Like the casino licensing board discussed in Crosby and the

hypothetical law enforcement officer described in Engquist, the

decisions made by the Commission as to licensing and enforcement

are discretionary and highly subjective. Within certain bounds,

the Commission may investigate license applicants and holders,

enforce and punish violations of New Hampshire’s liquor

regulations, and determine whether any license may be renewed.

See RSA 179:57, I; RSA 178:3, XI. For example, RSA 179:57, I

and RSA 178:3, XI, dictate that Commission investigators and

officials conduct “frequent” inspections and permit the exercise

of subjective judgment about licensing renewals. It is

otherwise left to the Commission’s and its investigators’

subjective judgment to determine the timing, frequency, and

18 scope of authorized inspections. Similarly, RSA 179:57, I, and

N.H. Code Admin. R., Liq. (“Liq.”) 603.02 provide the Commission

with discretion to determine what penalty to impose if

violations are found after an investigation.

Given this regulatory structure, investigations by the

Commission, as well as the penalties that may arise from any

violations found, are the types of state action that, by their

nature, involve “discretionary decisionmaking based on a vast

array of subjective, individualized assessments.” See Crosby,

. Therefore, Whiskeys 20’s class-of-one equal

protection claim on the ground of disparate treatment as to

investigations and penalties imposed by the Commission cannot be

sustained. See

For those reasons, the court dismisses

Count II of the Amended Complaint as against the employees.

2. Procedural Due Process (Count III)

Whiskeys 20 contends that the employees violated its right

to procedural due process under the Fourteenth Amendment. A

procedural due process claim requires the plaintiff to show that

it has a protected property interest and that the defendants

deprived it of that interest without due process. Miller v.

Town of Wenham, Ma.,

(1st Cir. 2016). The

employees argue that Whiskeys 20 does not have a protected

19 property interest and that, even if it did, it was not deprived

of the property interest.

a. Existence of Property Interest

Whiskeys 20 asserts that it has a protected property

interest in the renewal of its liquor license. “Property

interests are created and defined by state law.” Frank v. City

of Manchester, No. 9-CV-389-PB,

, at *3 (D.N.H.

Aug. 10, 2011) (citing Leis v. Flynt,

(1979)).

To have a protectable property interest, “a person clearly must

have more than an abstract need or desire for [the benefit]. He

must have more than a unilateral expectation of it. He must,

instead, have a legitimate claim of entitlement to it.” Bd. of

Regents v. Roth,

(1972).

“Permissive” wording in a statute that authorizes the grant

or denial of a license suggests that an applicant for the

license has a limited or no protectable property interest in it.

See Chongris v. Bd. of Appeals,

(1st Cir. 1987)

(holding that applicant for “common victualler’s license” had no

protectable interest where statute stated licensing authorities

“may” grant licenses and that authorities had discretion to

determine whether license was warranted by “the public good”);

see also Scott v. Village of Kewaskum,

(7th

Cir. 1986) (“To the extent a request [for a license] appeals to

20 discretion rather than to rules, there is no property.”).

Accordingly, it is “a rare case in which an application for a

license that the government has discretion to grant or deny will

give rise to a property right protected by the due process

clause.” Frank,

, at *3.

RSA chapter 178 provides the Commission with discretion in

deciding whether a liquor license may be renewed and in

determining what facts are relevant to its decision. Under RSA

178:3, XI, “[t]he commission may consider the licensee’s record

of violations, the manner in which the licensee has operated

during the term of the license, the effect of the license on the

neighborhood or community, and any other facts presented at the

renewal hearing in determining whether to renew the license.”

Considering the permissive wording of RSA 178:3, Whiskeys 20

does not have a protectable property interest in the renewal of

its liquor license sufficient to sustain its procedural due

process claim in this case.

Whiskeys 20 argues that, in Vars v. Citrin,

(1st Cir. 2006), the First Circuit found that holders of liquor

licenses in Rhode Island have some protectable property

interests in them. In Rhode Island, however, the renewal of a

liquor license is presumed: “[A] holder of a [liquor license]

who applies prior to November 15 of the year in which his

license expires is prima facie entitled to a renewal thereof.”

21 Beacon Restaurant, Inc. v. Adamo,

(1968)

(holding that Rhode Island liquor licenses have “some of the

aspects of a property right”). Conversely, New Hampshire law

provides that “[t]here shall be no presumption that any liquor

license shall be renewed.” RSA 178:3, XI.

Whiskeys 20 contends, however, that under RSA 178:3, XI,

the Commission “must” renew a license if the applicant “meets

all of the current requirements for the issuance of a license.”

Doc. 25 at 16. Whiskeys 20 misreads the statute. RSA 178:3,

XI, states that a license “shall not” be renewed “unless the

licensee meets all of the current requirements for the issuance

of a license.” As such, the Commission must deny a liquor

license renewal if the applicant fails to meet the current

requirements for issuance, but it need not grant renewal if the

requirements are met. In other words, meeting the current

requirements for issuance of a liquor license is a necessary

condition for renewal, but meeting those requirements does not

guarantee renewal.

In any event, the Commission has significant discretion in

determining whether the current requirements for issuance are

met and, therefore, in determining whether any license may be

renewed. For example, one condition for the issuance (and

therefore renewal) of a license is that the Commission is

“satisfied” that “[t]he proposed location of the business is an

22 appropriate one, considering the nature of the business, the

nature of the surrounding neighborhood, and the number of

similar businesses in that neighborhood.” RSA 178:3, VII. The

Commission must also be “satisfied” that “the applicant is of

sufficiently good character to leave no substantial doubt that

the proposed business shall be operated in strict accordance

with all applicable state and federal alcoholic beverage control

laws and rules.”

For those reasons, the applicable statutes do not create a

“legitimate claim” to the renewal of Whiskeys 20’s liquor

license. Rather, the Commission is provided broad discretion in

determining whether any license warrants renewal. Because

Whiskeys 20 does not have a protectable property interest in the

renewal of its liquor license, its procedural due process claim

based on delayed renewal or non-renewal must be dismissed. See

Roth,

.

b. Deprivation of Property Interest

The employees also argue, in the alternative, that Whiskeys

20’s procedural due process claim is insufficient because, even

assuming that it has a protected property interest in its liquor

license, it has not alleged a deprivation of its rights without

due process. Because Whiskeys 20 does not have a protected

property interest, there is no need to address the alternative

23 position of the employees. Whiskeys 20’s procedural due process

claim (Count III) is dismissed as to the employees.

3. Fourth Amendment (Count IV)

Whiskeys 20 alleges that the employees violated the Fourth

Amendment by conducting warrantless searches. The employees

assert that Whiskeys 20 has failed to allege any specific

searches or seizures that occurred. They also argue that no

warrant is required to conduct an administrative search.

In response, Whiskeys 20 argues that employees Elliot and

Cutting entered Whiskeys 20 on September 29, 2016, “for no

purpose other than to threaten” Svoleantopoulos. Doc. 25 at 19-

20 (citing Doc. 13 ¶ 49). Whiskeys 20 contends that Elliot

conducted “illegal surveillance” that evening and that he

entered again to provide Whiskeys 20 two verbal warnings. Doc.

25 at 20.

“The right of the people to be secure in their persons,

houses, papers, and effects, against unreasonable searches and

seizures, shall not be violated . . . .” U.S. Const. amend. IV.

“A search within the meaning of the Fourth Amendment occurs

whenever the government intrudes upon any place and in relation

to any item in which a person has a reasonable expectation of

privacy.” United States v. Moss,

(1st Cir.

2019).

24 a. External Surveillance and Public Spaces

Not every surveillance or entrance into a building is a

search within the meaning of the Fourth Amendment. See Katz v.

United States,

(1967). The Fourth

Amendment does not preclude the type of external surveillance

that is alleged in the Amended Complaint. See California v.

Ciraolo,

(1986) (concluding that visual

surveillance of a property from a public space is not a “search”

under the meaning of the Fourth Amendment). As to Elliot’s

entries into the business premises to observe or to provide

Whiskeys 20 or Svoleantopoulos “verbal warnings,” the claim is

also insufficient. The observations that led to the “verbal

warnings” occurred near a “hallway floor by the bathroom,” which

would be a public area of Whiskeys 20 for which Whiskeys 20 has

no reasonable expectation of privacy. See Katz,

(“[T]he Fourth Amendment protects people, not places. What a

person knowingly exposes to the public, even in his own home or

office, is not a subject of Fourth Amendment protection.”).

b. Administrative Search Exception

Even if Elliot or Cutting entered a space in which Whiskeys

20 held a reasonable expectation of privacy to observe or to

25 provide Svoleantopoulos with “verbal warnings,”10 the

administrative search exception to the warrant requirement

applies. Administrative searches or seizures pursuant to a

regulatory scheme that meets the Fourth Amendment’s standards

are exempt from the warrant requirement. See United States v.

Maldonado,

(1st Cir. 2004). Such a

regulatory scheme must meet a three-prong test to be reasonable

under the Fourth Amendment: “First, there must be a substantial

government interest that informs the regulatory scheme pursuant

to which the inspection is made. Second, the warrantless

inspections must be necessary to further the regulatory scheme.

Finally, the implementation of the statutory inspection program

must provide a constitutionally adequate substitute for a

warrant.” See State v. Gness,

(2014);

Maldonado,

(noting the same criteria).

Whiskeys 20 does not contest that New Hampshire has a

substantial government interest in regulating establishments

that serve liquor, and the New Hampshire Supreme Court has

already provided persuasive reasoning in support of the

necessity of warrantless administrative inspections under New

Hampshire’s liquor regulation scheme. “Requiring investigators

10While the observations leading to the issuance of the verbal warnings occurred in a public area, the Amended Complaint does not allege where Elliot was when he provided the verbal warnings themselves to Svoleantopoulos.

26 to obtain a warrant before inspecting a licensee’s commercial

premises or records would impede the inspectors’ abilities to

detect violations of state liquor laws and to quickly and

efficiently investigate wrongdoing that may pose a threat to

public safety.” Gness,

(quoting In re Morgan,

(1999)). Therefore, warrantless searches in the

liquor industry “allow investigators to quickly investigate

potential wrongdoing, and deter statutory violations.” Gness,

.

Finally, the New Hampshire Supreme Court has also

persuasively explained that Commission investigators do not have

unlimited discretion in their searches and are subject to

limitations sufficient to be a substitute for a warrant. See

(“RSA title XIII provides articulable guidelines that

limit investigators' discretion during inspections. . . . By

detailing the conditions that constitute license violations, the

statute guides investigators during both annual inspections and

premises checks.”). In this case, the alleged illegal search

and seizure involved an entry during which Elliot provided a

verbal warning to Svoleantopoulos about a potential violation of

New Hampshire’s liquor code and regulations. The alleged

intrusion was for a minimal duration and a limited purpose that

conformed to RSA title XIII and the liquor code. See Liq.

602.01(b) (“Upon detecting conditions which could cause or

27 otherwise lead to violations, the investigator shall discuss the

problem and corrective action with the person in charge at the

licensed business, and issue a notice and record of agency

instruction.”).

c. Motive

Whiskeys 20 contends that Elliot and Cutting did not enter

on September 29 to provide Svoleantopoulos warnings or to

conduct a legitimate investigation. Rather, it asserts that

Elliot and Cutting wanted to retaliate against Whiskeys 20 or

Svoleantopoulos for filing complaints about Elliot. An

officer’s subjective motivations, however, are irrelevant to

whether a warrantless search or seizure is objectively

reasonable under the Fourth Amendment. See, e.g., Brigham City,

Utah v. Stuart,

(2006) (“The officer’s

subjective motivation is irrelevant.”); United States v.

Favreau,

(1st Cir. 2018) (“[The officers’]

ulterior motive is of no consequence under the Fourth

Amendment.”).

d. Other Grounds

As to any other Fourth Amendment violation that Whiskeys 20

sought to allege, the Amended Complaint is too vague to state a

claim. The Amended Complaint states that unspecified defendants

28 conducted “numerous searches and inspections” of Whiskeys 20 and

that these defendants “upon information and belief” “acted

without good faith and without reasonable belief that probable

cause existed for the searches and inspections.” Doc. 13

¶¶ 160, 162. These general statements fail to provide adequate

notice to the court and the defendants about the factual basis

for Whiskeys 20’s legal claims.

For the foregoing reasons, Count IV of the Amended

Complaint is dismissed.

C. State Law Tort Claims (Counts V through VII)

The employees contend that the court should decline to

exercise supplemental jurisdiction over the state law tort

claims (Counts V through VII) if the court dismisses the federal

claims in this case. They also contend, in the alternative,

that they are entitled to official immunity under RSA 99-D:1 as

to the state law counts and that the state law counts fail to

state claims upon which relief can be granted.

1. Supplemental Jurisdiction

Although the court has dismissed all the federal claims

brought against the employees, it has not dismissed the federal

claims as against the City of Manchester, the Manchester Police

Department, or their officers and employees. Because at this

29 point federal claims remain pending, it is not appropriate to

decline supplemental jurisdiction. See

(c)

(“The district courts may decline to exercise supplemental

jurisdiction over a claim . . . if . . . the district court has

dismissed all claims over which is has original jurisdiction.”).

2. Official Immunity Under New Hampshire law, state officials are immune from

liability “for decisions, acts or omissions that are: (1) made

within the scope of their official duties while in the course of

their employment; (2) discretionary, rather than ministerial;

and (3) not made in a wanton or reckless manner.” Farrelly v.

City of Concord,

(2015); see also RSA 99-D:1

(adopting a statutory official immunity for all state officers

and employees). The employees assert that any acts or omissions

by them were “within the scope of their official duties while in

the course of their employment,” were discretionary, and were

“not made in a wanton or reckless manner.” See Farrelly,

. The plaintiffs11 object, arguing that “Counts V-VII

all allege facts that demonstrate [these] Defendants acted in a

‘wanton or reckless manner’ when, among other things, they

11 Whiskeys 20 is the plaintiff as to Count V, while Svoleantopoulos and Sweeney are the plaintiffs as to Counts VI and VII.

30 conducted warrantless, open-ended inspections and improper

compliance checks of Whiskeys 20’s premises.” Doc. 25 at 21.

The facts of the Amended Complaint, taken as true,

establish that the employees’ acts or omissions were “made

within the scope of their official duties while in the course of

their employment” and were “discretionary, rather than

ministerial.” See Farrelly,

. As to

wantonness or recklessness, the inspections of Whiskeys 20 that

are sufficiently identified in the Amended Complaint were not

improper.

The plaintiffs also allege that the employees caused them

substantial damages by delaying renewal of Whiskeys 20’s liquor

license while the violations that had been noticed were being

reviewed. Those violations were ultimately dismissed. The

Amended Complaint contradicts the plaintiffs’ argument as the

Commission extended Whiskeys 20’s license so that it did not

lapse during the investigation. Furthermore, once the

Commission learned that its principal witness had recanted his

statements, it rescinded its allegations.

The other allegations of misconduct in the Amended

Complaint similarly fall outside the scope of “wanton” or

“reckless”. For those reasons, the employees are entitled to

official immunity as to the state law tort claims: Count V

(tortious interference), Count VI (intentional infliction of

31 emotional distress), and Count VII (negligent infliction of

emotional distress). Those claims are dismissed as against the

employees.

Conclusion

For the foregoing reasons, the motion to dismiss (doc. no.

22) by the Commission and employees is granted.

SO ORDERED.

__________________________ Joseph A. DiClerico, Jr. United States District Judge

September 17, 2020

cc: Counsel of Record.

32