Thana v. Board of License Commissioners, 104 F. Supp. 3d 711

Background

Thai Palace & Lounge (Plaintiffs) held a Charles County liquor license subject to a 2009 consent order restricting entertainment and a 2012 Second Consent Order that permitted expanded entertainment but prohibited "go-go" entertainment and outside promoters controlling events.
Plaintiffs later ran events advertised as promoted by outside promoters and with "go-go" entertainment, prompting the Board of License Commissioners to issue a show-cause order and, after a hearing, to revoke the Second Consent Order and the liquor license.
Plaintiffs sought judicial review in state circuit court; the circuit court affirmed the Board, holding Plaintiffs waived constitutional challenges by knowingly consenting to the Second Consent Order and finding the restrictions reasonable.
Plaintiffs then filed a § 1983 complaint in federal court alleging the go-go restriction violated the First Amendment and seeking declaratory, injunctive relief, and $500,000 in damages; they also moved for injunctive relief.
The district court questioned jurisdiction and, on defendants’ motion, considered whether the Rooker–Feldman doctrine barred the federal suit because Plaintiffs were state-court losers seeking relief that would require reversing the state-court judgment.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether federal court has jurisdiction under Rooker–Feldman over Plaintiffs’ challenge to the Board’s revocation and the circuit court affirmation	Thana seeks federal review of the constitutionality of the restriction and relief (declaratory, injunctive, damages); argues some relief (damages) was unavailable in state court	Defendants say Plaintiffs are state-court losers asking the federal court to review/reject the state-court judgment; Rooker–Feldman bars jurisdiction	Court held Rooker–Feldman bars jurisdiction because adjudication would require overturning the state-court ruling and Board order
Whether a declaratory judgment that the Second Consent Order’s go-go restriction was unconstitutional is independently cognizable in federal court	Plaintiffs contend the restriction is an unconstitutional condition on speech and ask for declaration of invalidity	Defendants note the Second Consent Order is revoked and the state court already rejected the constitutional challenge; declaratory relief would require finding the state court erred	Held that the declaratory claim is inextricably intertwined with the state judgment and barred by Rooker–Feldman
Whether Plaintiffs can avoid Rooker–Feldman by seeking monetary damages for the imposition of the Second Consent Order	Plaintiffs argue damages were not available in state-court review and thus permit federal jurisdiction	Defendants argue damages would still require addressing the validity of the order and are claims arising from the Board’s decision; adding damages cannot evade Rooker–Feldman	Court held damages claim is barred because the alleged harms flow from the state-court-affirmed administrative decision
Whether the case should be dismissed on abstention grounds instead of Rooker–Feldman	Plaintiffs implicitly contend federal forum appropriate for constitutional claims	Defendants alternatively argued abstention doctrines could apply	Court did not reach abstention after finding lack of jurisdiction under Rooker–Feldman

Key Cases Cited

Rooker v. Fidelity Trust Co., 263 U.S. 413 (establishing federal district courts lack appellate jurisdiction to review final state-court judgments)
D.C. Court of Appeals v. Feldman, 460 U.S. 462 (clarifying Rooker doctrine’s bar on lower federal court review of state-court decisions)
Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280 (narrowing Rooker–Feldman to cases where federal plaintiff is a state-court loser seeking review of a state judgment)
Davani v. Virginia Dept. of Transportation, 434 F.3d 712 (4th Cir.) (explaining Rooker–Feldman applies only where injury is caused by the state-court judgment itself)
Skinner v. Switzer, 562 U.S. 521 (holding a federal suit may challenge a statute or rule underlying a state-court decision without invoking Rooker–Feldman if not seeking review of the judgment)
Elyazidi v. SunTrust Bank, 780 F.3d 227 (4th Cir.) (distinguishing claims that do not require overturning state-court determinations from those that are inextricably intertwined)
Adkins v. Rumsfeld, 464 F.3d 456 (4th Cir.) (permitting federal challenge to statute underlying state decrees where relief does not reverse state-court decree)
VonRosenberg v. Lawrence, 781 F.3d 731 (4th Cir.) (discussing abstention distinct from Rooker–Feldman)