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Decided: June 28, 2016

The Fourth Circuit reversed the district court’s Rooker-Feldman ruling and remanded for further proceedings.

In 2009, Plaintiffs, owner of Thai Palace, a restaurant and lounge, sought an alcoholic beverage license from the Board of License Commissioners of Charles County, Maryland (the Board).  Thai Palace previously had an alcoholic beverage license but it was revoked in 2007 for hosting “entertainment that featured nudity.”  Thai Palace and the Board entered into a consent order stating Thai Palace could “‘be operated as a family restaurant’” for certain hours of the day and have no entertainment other than “‘dinner music from either a radio and/or t.v. . . . without prior written approval of the Board.’”  In November 2009, Thai Palace requested to be allowed to provide live entertainment and for the Board to rescind the earlier consent order.  The Board refused to rescind the earlier consent order but modified it, allowing Thai Palace to extend its hours and to provide “‘instrumental and acoustical music; Karaoke; [and] DJ music and dancing.’”  The 2012 consent order stated Thai Palace “‘shall not allow an outside promoter to maintain control of any entertainment and shall not offer any “teenager only” events or “go-go” entertainment.’”  Thai Palace did not follow the terms of the consent order and contracted with “‘go-go’ bands to perform at Thai Palace.”  The Board, after receiving information about the concerts, required Thai Palace to show cause as to why the 2012 consent order should not be revoked.  The Board revoked the 2009 consent order, the 2012 consent order and the alcoholic beverage license after it held an evidentiary hearing.  Thai Palace filed a petition for review of the Board’s revocations and the circuit court affirmed the revocation of the 2012 consent order.  Thai Palace appealed and the court of special appeals affirmed.  The Maryland Court of Appeals denied Thai Palace’s writ of certiorari.  Thai Palace commenced this federal action under 42 U.S.C. § 1983.  Thai Palace alleged the Board had violated its First Amendment rights by not allowing it to host “‘go-go’ entertainment” and sought $500,000 in compensatory damages.  The district court granted the Board’s motion to dismiss for lack of subject matter jurisdiction per the Rooker-Feldman doctrine.

On appeal, Thai Palace asserts the Rooker-Feldman doctrine does not apply to its § 1983 claim but rather the principles of claim preclusion apply.  The Board contends the Rooker-Feldman doctrine does apply because the federal court could not resolve Thai Palace’s claim without a “‘corresponding determination that the State court’s judgment, and the Board’s decision affirmed by that State court’s judgment, were decided in error.’”  The Court relied on Exxon v. Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 284 (2005), which stated “‘[t]he Rooker-Feldman doctrine . . . is confined to cases of the kind from which the doctrine acquired its name: cases brought by state-court losers complaining of injuries caused by state-court judgments rendered before the district court proceedings commenced and inviting district court review and rejection of those judgments.’”  The Court stated preclusion principles apply to “concurrent, independent suits that results when the two suits address the same subject matter, claims, and legal principles,” whereas the Rooker-Feldman doctrine applies when a party is “appealing a state court judgment to the Supreme Court.”  The Rooker-Feldman doctrine does not apply when a party “‘presents an independent claim.’”

The Court determined the Rooker-Feldman doctrine did not apply because the action was a concurrent, independent action; therefore, the district court had jurisdiction on the claim.  The Court supported its conclusion for five reasons: (1) “the doctrine does not apply here because the district court here was not called upon to exercise appellate jurisdiction over a final judgment from ‘the highest court of a State in which a decision could be had’”; (2) “Thai Palace’s action was, and is, challenging the action of a state administrative agency, rather than alleging injury caused by a state court judgment”; (3) “because Thai Palace challenges state administrative actions, the Rooker-Feldman doctrine does not apply as a categorical matter”; (4) “the differences between the two proceedings demonstrate that this federal action must be seen as an independent, concurrent action that does not undermine the Supreme Court’s jurisdiction over any state court judgment”; and (5) “while pursuing this independent, concurrent action, Thai Palace in fact never sought to bypass the Supreme Court’s appellate jurisdiction under 28 U.S.C. § 1257(a) over any relevant state court judgment.”  Therefore, the Court held Thai Palace had asserted an independent, concurrent action and the Rooker-Feldman doctrine did not apply.

Accordingly, the Court reversed the district court’s Rooker-Feldman ruling and remanded for further proceedings.

Full Opinion

Alicia E. Morris