Simon v Pohnpei [1994] FMSC 49; 6 FSM Intrm. 314 (Pon. 1994) (21 January 1994)

THE SUPREME COURT OF THE
FEDERATED STATES OF MICRONESIA
Cite as Simon v. Pohnpei, [1994] FMSC 49; 6 FSM Intrm. 314 (Pohnpei 1994)

[1994] FMSC 49; [6 FSM Intrm. 314]

SNYDER H. SIMON,
Plaintiff,

vs.

STATE OF POHNPEI,
Defendant.

CIVIL ACTION NO. 1994-008

MEMORANDUM OF DECISION

Andon L. Amaraich
Associate Justice

Decided: January 14, 1994
Opinion Entered: January 21, 1994

APPEARANCES:

For the Plaintiff:
R. Barrie Michelsen, Esq.
Law Offices of R. Barrie Michelsen
P.O. Box 1450
Kolonia, Pohnpei FM 96941

For the Defendant:
Andrea Hillyer
Acting Attorney General
Office of the Pohnpei Attorney General
Kolonia, Pohnpei FM 96941

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[6 FSM Intrm. 315]

HEADNOTES

Constitutional Law - Due Process
Something more than a state merely misinterpreting its own law, such as that the state's interpretation was arbitrary, grossly incorrect, or motivated by improper purposes, is needed to raise a legitimate due process issue. Simon v. Pohnpei, [1994] FMSC 49; 6 FSM Intrm. 314, 316 (Pon. 1994).

Civil Procedure - Injunctions
Where there is little likelihood that of success on the merits, where economic loss does not represent irreparable harm, where the balance of interests weighs against the plaintiff, and where the public interest favors regulation of alcohol sales, no preliminary injunctive relief will be granted the plaintiff ordering the defendant state grant it an alcoholic beverage license which would not preserve the status quo pending the litigation. Simon v. Pohnpei, [1994] FMSC 49; 6 FSM Intrm. 314, 316-18 (Pon. 1994).

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COURT'S OPINION

ANDON L. AMARAICH, Associate Justice:

On Friday, January 14, 1994, the plaintiff filed a motion under FSM Civil Rule 65 asking for a temporary restraining order and a preliminary injunction to "enjoin Defendant . . . from denying the Plaintiff an alcoholic business license based on non-statutory grounds." The plaintiff, Snyder Simon, recently became the manager of Oceanview Bar. Counsel for the plaintiff sought an emergency hearing on the motion in hopes that the bar would be able to serve alcohol over the weekend. After reviewing the matter the Court determined that it should deny the motion without a hearing. Counsel for the plaintiff was informed of the decision the same day by the clerk's office. The Court now explains the basis for its decision.

The Court has looked to four factors to guide its exercise of discretion under Rule 65. Those factors are: (1) the likelihood of success on the merits of the party seeking injunctive relief, (2) the possibility of irreparable injury to the moving party, (3) the balance of possible injuries or inconvenience to the parties which would flow from granting or denying the relief, and (4) any impact on the public interest. Ponape Transfer & Storage v. Pohnpei State Pub. Lands Auth., [1986] FMSC 21; 2 FSM Intrm. 272, 275-77 (Pon. 1986). The object of a preliminary injunction is to preserve the status quo pending the litigation on the merits. Ponape Enterprises Co. v. Bergen, [1993] FMSC 52; 6 FSM Intrm. 286, 288 (Pon. 1993). After reviewing the plaintiff's submission, the Court has determined that the factors identified in Ponape Transfer & Storage do not support granting the preliminary relief requested.

Likelihood Of Success On The Merits:

The crux of the plaintiff's argument for reversal of the State of Pohnpei's decision to deny him an alcoholic business license is that the action was based on an erroneous interpretation of section 3 of the Alcohol Beverage Control Act, D.L. No. 4L-99-77 ("Alcohol Act"), a state law. See Pohnpei v. Mack, [1987] FMPSC 3; 3 FSM Intrm. 45, 55 (Pon. S. Ct. Tr. 1987) (statutes of former Trust Territory applicable to the states became part of the state's laws). It remains a question whether this Court would exercise jurisdiction over this issue involving interpretation of Pohnpei State law pertaining to licensing. The plaintiff argues that by misinterpreting the Alcohol Act the State deprived the

[6 FSM Intrm. 316]

plaintiff of due process in violation of article IV, section 3 of the FSM Constitution and 11 F.S.M.C. 701, thus creating "national law" jurisdiction under article XI, section 6(b) of the FSM Constitution. However, even if the plaintiff were able to convince this Court that his interpretation of the Alcohol Act was superior to the State's interpretation, that would probably not be enough to make the State's adherence to its own interpretation a violation of due process rights guaranteed by the national constitution. Otherwise any case involving the interpretation of a state law by the State government would be an issue of "national law" and give the national court jurisdiction. Something more would almost certainly have to be shown to raise a legitimate due process issue - such as that the State's interpretation was arbitrary, grossly incorrect, or motivated by improper purposes. As this Court stated in Hadley v. Kolonia Town, [1987] FMSC 7; 3 FSM Intrm. 101, 103 (Pon. 1987), a case involving a Kolonia ordinance regarding drinking permits:

While national law requires this Court to protect persons against violations of civil rights, strong considerations of federalism and local self-government suggest that local institutions should be given an opportunity to address local issues, even civil rights issues, especially when this can be done without placing the rights of the parties in serious jeopardy and when the local decision may obviate the need for a constitutional ruling by the national court.

The licensing issue at the center of this litigation appears at this time to be essentially a local issue.

Moreover, the plaintiff has not persuaded this Court that there is any likelihood that the State's interpretation is incorrect, much less arbitrary or grossly incorrect. The reason given by the State for denying plaintiff, the new manager of Oceanview Bar, the license is that "only the operator of an establishment can be granted the license to sell alcoholic beverages in that establishment." The plaintiff claims that there is nothing in the Alcohol Act creating such a limitation. However, the plaintiff's interpretation defines no limits at all on who may obtain the license. This argument proves too much because it would mean that if the persons responsible for operation of a bar were disqualified from obtaining a license due to unsatisfactory moral character or other reasons, see Alcohol Act §§ 3-7, they could simply have someone else apply for the license, even if that person had no control over how the business was operated.

Moreover, the plaintiff argues that the State cannot take into account the poor record of the prior management of Oceanview Bar, even though the same party still owns the business. According to an exhibit accompanying the plaintiff's motion, that record includes violating the State Beverage Act 20 times within one year and having more than 40 cases filed against it by the State over a two-year period. Facially, such a record is reasonably of concern to the State, as long as the same owner continues to have a hand in the operation of the business. Otherwise an owner could repeatedly violate applicable laws and avoid the risk that the business would be denied a license by having a succession of new managers file the applications.

Moreover, the textual basis for the plaintiff's interpretation does not appear to be persuasive. The plaintiff argues that the Alcohol Act does not list the record of the prior management as a factor for granting a license. The plaintiff concludes that the prior management's record is therefore an "impermissible factor." However, the simple fact that this factor was not identified in the Alcohol Act does not mean it is an impermissible factor. The list of qualifications in the Alcohol Act does not purport to be exhaustive, and the plaintiff does not provide any reason for believing that it was meant to be.

[6 FSM Intrm. 317]

Possibility of Irreparable Harm:

The plaintiff claims that if he is not allowed to serve alcohol he will suffer irreparable harm in the form of lost profits that are not ascertainable except by conjecture. However, economic loss does not constitute irreparable harm. Ohio ex rel. Calebrezze v. Nuclear Regulatory Comm'n, [1987] USCA6 358; 812 F.2d 288, 290 (6th Cir. 1987); Lucas v. Bechtel Corp., 800 F.2d 839, 847 (9th Cir. 1986); Wisconsin Gas Co. v. Federal Energy Regulatory Comm'n, [1985] USCADC 98; 758 F.2d 669, 674 (D.C. Cir. 1985). The plaintiff contends that because this was the first weekend that the bar would be open under his management, and because a live band was appearing, the amount of lost profits was uncertain and thus irreparable.^[1] Even if the Court believed that uncertainty of calculation could take a case outside the general rule stated above, the plaintiff has failed to show that the economic loss here cannot be estimated with reasonable accuracy. There is no evidence that people in the community are generally aware of the change in managers, or that live music has not been provided at the bar in the past. Thus it should be possible to use past receipts to estimate how much the bar would have made had it been licensed to sell alcohol. Moreover, the plaintiff's claim that the financial loss cannot be ascertained is belied by his own prayer for relief, which seeks "damages to be determined at trial for lost profits due to the denial of Plaintiff's application for an alcoholic business license." All of this indicates that the amount of damages is susceptible to estimation.

Balance of Interests:

The record shows that the plaintiff first applied for an alcohol business license on December 30, 1993 - only two weeks before he filed his motion with this Court. Thus the plaintiff must have been aware that there was uncertainty regarding whether he would obtain his license in time to serve alcohol starting January 14th, and the ill effects from his inability to do so must be attributed in part to his own decision to proceed in light of that uncertainty. Thus, the State's interest in ending the poor record of compliance at Oceanview Bar outweighs the plaintiff's interest.

Public Interest:

The public certainly has an interest in seeing that persons are not arbitrarily deprived of the due process rights guaranteed by the FSM Constitution. However, as stated above, it is not at all certain that those rights are implicated when the State, acting reasonably and without improper motive, misinterprets state law. Moreover, alcoholic beverages are susceptible to serious abuse and the public has attempted to limit that abuse by placing restrictions on the sale of alcohol. The public has an important interest in seeing that those restrictions are not flouted. On balance the Court does not believe that the public interest will be furthered by granting the temporary restraining order or preliminary injunction requested.

Finally, as noted above, the object of a preliminary injunction is to preserve the status quo pending the litigation on the merits. In this case, however, the plaintiff has asked the Court to "enjoin Defendant . . . from denying the Plaintiff an alcoholic beverage business license." Thus it

[1994] FMSC 48; [6 FSM Intrm. 318]

appears that if the Court granted the "preliminary" relief requested the State would have to issue a license to the plaintiff. The issuance of a license to the plaintiff would change the status quo, not maintain it. Thus this final factor also militates against granting the motion.

Therefore, it is hereby ordered, that the plaintiff's motion is denied.

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^[1] The plaintiff cites Johnson v. Mansfield Hardwood Lumber Co., 143 F. Supp. 826 (W.D. La. 1956), aff'd[1957] USCA5 119; , 242 F.2d 45 (5th Cir. 1957), for the proposition that "[a]n injury is irreparable where the damages are estimable only by conjecture." However, the Court's reading of that decision indicated that the finding of irreparable harm was based primarily on the fact that "[i]f the plaintiffs were to be relegated to an action in damages, they would find themselves, should they prevail, with a judgment against an empty shell." 143 F. Supp. at 834.