Citations
- 13 F. Supp. 3d 893
Full opinion text
ENTRY ON DEFENDANTS’ MOTION FOR JUDGMENT ON THE PLEADINGS
RICHARD L. YOUNG, Chief Judge.
Plaintiffs, Little Arm Inc. d/b/a B & B Distributions (“Little Arm”), Bohemian Groove LLC (“Bohemian”), MELX2 Enterprises Inc. (“MELX2”), and IDK Anything LLC (“IDK”), bring this action against all Prosecuting Attorneys in Indiana (“Defendants”) seeking injunctive and declaratory relief as to Indiana Code 35-48-4-10.5, which makes it illegal to possess, distribute, or manufacture any “synthetic drug lookalike substance,” as defined in Indiana Code § 35-31.5-2-321.5. Plaintiffs allege that the Statute violates due process and the equal protection clause under the U.S. Constitution and the Indiana Constitution and is thus unconstitutional. Defendants have moved to dismiss Plaintiffs’ state claims for lack of subject matter jurisdiction pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure. Defendants also move for judgment on the pleadings on Plaintiffs’ federal claims pursuant to Rule 12(c) of the Federal Rule of Civil Procedure. For the reasons set forth below, the court GRANTS the motion to dismiss and GRANTS IN PART and DENIES IN PART the motion for judgment on the pleadings.
I. Background
A. Parties
Plaintiffs are for-profit companies in Indiana that sell, among other things, aromatherapy products throughout Indiana. (Compl. ¶¶ 16-23). Little Arm is located in Fort Wayne; Bohemian is located in Huntington; MELX2 is located in Bloom-ington; and IDK is located in Carmel. (Id.). Defendants are prosecutors who are elected officials whose responsibilities include investigating and prosecuting criminal offenses (including those created by the Statute) within the various counties in the State of Indiana. (Id. at ¶ 24)
B. Statute
Plaintiffs challenge the constitutionality of Indiana Code 35-48-4-10.5 (“Statute”), effective May 7, 2013, which criminalizes the possession, distribution, and manufacture of synthetic drugs and synthetic drug lookalike substances (“Lookalike Substances”). (Compl. ¶¶ 1, 28). Plaintiffs allege that Defendants have targeted their legal business with the Statute. (Id. at ¶ 25).
1. Penalties
The Statute provides various civil and criminal penalties for involvement with a synthetic drug or Lookalike Substance. For example, penalties for possession of a synthetic drug or Lookalike Substance may range from a Class B infraction to a Class D felony. Ind.Code 35-48-4-11.5. And the penalties for dealing these substances range from a Class A infraction to a Class C felony. Ind.Code 35-48-4-10.5. Additionally, if a retail merchant has (1) violated this statute by selling or offering to sell these substances in the normal course of business, and (2) the violation resulted in a criminal conviction, then the court “shall recommend the suspension of the registered retail merchant certificate for the place of business for one (1) year.” Ind.Code 35-48-4-10.5(d). If the violation resulted instead in an infraction, the court may suspend the retail merchant’s certificate for six months. Id.
2. Definitions
The Indiana Code defines “synthetic drug” as a substance containing one or more of a multitude of specific chemical compounds, including an analog of the compound. Ind.Code § 35-31.5-2-321 (amended May 7, 2013). An “analog” is defined as a “new or novel chemical entity, independent of synthetic route or natural origin, having substantially the same: (1) carbon backbone structure; and (2) pharmacological mechanism of action; as a compound specifically defined as a synthetic drug .... ” Ind.Code § 35-31.5-2-16.5. Moreover, a compound may be determined to be a synthetic drug under an emergency provision. Ind.Code § 35-31.5-2-321(13). This entails the Indiana Board of Pharmacy adopting an emergency rule to declare that a substance is a synthetic drug. Ind. Code § 25-26-13-4.1.
The Indiana Code defines a Lookalike Substance as one (1) or more of the following:
(1) A substance, other than a synthetic drug, which any of the factors listed in subsection (c) would lead a reasonable person to believe to be a synthetic drug.
(2)A substance, other than a synthetic drug:
(A) that a person knows or should have known was intended to be consumed; and
(B) the consumption of which the person knows or should have known to be intended to cause intoxication.
Ind.Code Ann. § 35-31.5-2-321.5. The factors listed in the Statute which may be considered in determining whether a substance is a Lookalike Substance include:
(1) the overall appearance of a dosage unit of the substance;
(2) how the substance is packaged for sale or distribution, including its shape, color, size, markings or lack of markings, taste, consistency, and any other identifying physical characteristics;
(3) any statement made by the owner or person in control of the substance concerning the substance’s nature, use, or effect;
(4) any statement made to the buyer or recipient of the substance suggesting or implying that the substance is a synthetic drug;
(5) any statement made to the buyer or recipient of the substance suggesting or implying that the substance may be resold for profit;
(6) the overall circumstances under which the substance is distributed, including whether:
(A) the distribution included an exchange of, or demand for, money or other property as consideration; and
(B) the amount of the consideration was substantially greater than the reasonable retail market value of the substance the seller claims the substance to be.
Id. The definition excludes, however, the following: (1) food and food ingredients, (2) alcohol, (3) a legend drug (as defined in Indiana Code 16-18-2-199), (4) tobacco, or (5) a dietary supplement (as defined in Indiana Code 6-2.5-1-16). Id.
3. State Enforcement
Plaintiffs allege that prior to the Statute’s enactment, law enforcement targeted Plaintiffs’ customers and vendors in an attempt to dissuade them from conducting business with Plaintiffs. (Compl. ¶ 39). Also, law enforcement searched and seized products from Little Arm on December 20, 2012; Bohemian on May 29, 2012, and September 18, 2012; and MELX2 on January 17, 2013. (Id. at ¶ 40). These searches and seizures were all related to the aromatherapy products sold by the respective stores. (Id.).
After the Statute’s enactment, Indiana State Excise Police (“Excise”) seized from a non-party a product manufactured by Little Arm, claiming it to be a Lookalike Substance. (Id. at ¶ 41). Excise also threatened adverse action against another business if it chose to sell aromatherapy or air freshener products sold by the Plaintiffs. (Id. at ¶ 42).
In addition, the Indiana Department of Revenue website contains a flyer entitled “Legal Notice: Illegal Drugs, Marketed as ‘Spice,’ ‘Incense,’ ‘Potpourri,’ ‘Plant Food,’ and ‘Bath Salts’ ” (“Flyer”). (Id. at ¶ 51, Ex. F). The Flyer could be accessed on the website page for “New and Small Business Education Center”; specifically, under the link which states, “If you are operating a convenience store or plan to sell bath salts, spice or synthetic drugs, click here.” (Id., Ex. G). The Flyer is endorsed by the Indiana State Police, Indiana Attorney General, Indiana State Department of Health, Indiana Board of Pharmacy, and the Indiana Sheriffs’ Association. (Id., Ex. F). The Flyer summarizes the various penalties and remedies for manufacturing, distributing, or possessing synthetic drugs. (Id.). The bottom of the Flyer states in bold, capital letters, “RELIANCE ON PACKAGING REPRESENTATIONS, SUPPLIER REPRESENTATIONS, AND LAB REPORTS SHALL BE DONE AT YOUR OWN RISK.” (Id.). The Flyer does not, however, mention Lookalike Substances.
Due to the above State actions, Plaintiffs allege that they have suffered a significant loss of revenue and goodwill in their respective communities and will continue to suffer such losses if Defendants continue to target Plaintiffs’ lawful business activities. (Id. at ¶ 43).
4. Efforts to Comply with Statute
Indiana law enforcement maintains that Plaintiffs’ products contain Lookalike Substances, but Plaintiffs have made several efforts to comply with federal and Indiana law. (Id. at ¶ 44). For example, Plaintiffs’ aromatherapy products are in packaging which conspicuously warns that the products are not intended for human consumption and also provides instructions for proper usage. (Id. at ¶ 45). In addition, Plaintiffs had reputable laboratories test their proposed aromatherapy products to ensure they complied with federal and Indiana law. (Id. at ¶ 47). Such testing, however, is no longer sufficient to determine if the contents of the products fall into the definition for a Lookalike Substance. (Id. at ¶ 48). In fact, the laboratory that previously tested Plaintiffs’ products now refuses to provide an opinion as to whether Plaintiffs’ aromatherapy products fall within this definition. (Id. at ¶ 49).
Plaintiffs maintain, however, that their products do not contain synthetic drugs. Nonetheless, because of the confusion over the definition of a Lookalike Substance, Plaintiffs claim they are in immediate danger of direct injury stemming from prosecution, searches, and seizure. (Id. at ¶ 60). And conducting sample polls to determine what a reasonable person thinks is a Lookalike Substance would come at a substantial cost to Plaintiffs. (Id. at ¶ 58). As a result, if law enforcement determines that Plaintiffs’ aromatherapy products contain Lookalike Substances, then they will have to shut down their respective businesses because such products constitute a large percentage of their gross revenue. (Id. at ¶ 50). Ultimately, this would deny all economically beneficial or productive use of the inventory. (Id. at ¶ 57).
5. Constitutional Claims
Plaintiffs now claim the Statute is unconstitutional under the U.S. Constitution and the Indiana Constitution. Plaintiffs allege that the Statute violates due process because it is impermissibly vague on its face and as applied to them; in particular, they claim the Statute fails to provide definite notice as to what behavior is criminalized and invites arbitrary and discriminatory enforcement. Plaintiffs also bring equal protection claims arguing, among other things, the products exempted from the Statute and the factors used in defining a Lookalike Substance are arbitrary and irrational. Lastly, Plaintiffs claim the Statute constitutes a regulatory taking of property because their products may be seized by law enforcement without either warning or just compensation and thus leaves no reasonable economically viable use for their aromatherapy products.
Plaintiffs seek a declaratory judgment that the Statute is unconstitutional in its entirely both on its face and as applied to them. In the alternative, Plaintiffs seek a preliminary injunction enjoining the enforcement of the Statute. Defendants now move to dismiss Plaintiffs’ state law claims on jurisdictional grounds while also moving for judgment on the pleadings as to their federal due process and equal protection claims.
II. Standard
A. Rule 12(c) Motion
Rule 12(c) allows a party to move for judgment on the pleadings after the pleadings are closed but early enough not to delay trial. Fed.R.Civ.P. 12(c). Motions for judgment on the pleadings are reviewed under the same standard as a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6). R.J. Corman Derailment Services, LLC v. Int’l Union of Operating Engineers, Local Union 150, AFL-CIO, 335 F.3d 643, 647 (7th Cir.2003). In deciding such a motion, the court will consider only the pleadings— that is, the complaint, answer, and any written instruments attached as exhibits. Hous. Auth. Risk Retention Grp., Inc. v. Chicago Hous. Auth., 378 F.3d 596, 600 (7th Cir.2004).
Factual allegations in the complaint must be sufficient to raise the possibility of relief above a speculative level. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). Although detailed allegations are not required, the plaintiff must allege facts that state a claim to relief that is plausible on its face. Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (citing Twombly, 550 U.S. at 570, 127 S.Ct. 1955). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is hable for the misconduct alleged.” Id. (citing Twombly, 550 U.S. at 556, 127 S.Ct. 1955). That said, “threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id. At bottom, the motion tests the legal sufficiency of a complaint, not the merits of the case. United States v. Clark Cnty., Ind., 113 F.Supp.2d 1286, 1290 (S.D.Ind.2000).
B. Rule 12(b)(1) Motion
Rule 12(b)(1) requires dismissal if the court lacks subject matter jurisdiction. The plaintiff has the burden of proving that jurisdiction requirements are met. Kontos v. United States Dep’t of Labor, 826 F.2d 573, 576 (7th Cir.1987). The court accepts all well-pleaded allegations from the complaint as true and makes any reasonable inferences in the plaintiffs favor. Hughes v. Chattem, Inc., 818 F.Supp.2d 1112, 1116 (S.D.Ind.2011). That said, in contrast to a Rule 12(b)(6) motion, the court “may properly look beyond the jurisdictional allegations of the complaint and view whatever evidence has been submitted on the issue to determine whether in fact subject matter jurisdiction exists.” Capitol Leasing Co. v. F.D.I.C, 999 F.2d 188, 191 (7th Cir.1993). The court will first turn to the jurisdictional issues before reaching the merits of Defendants’ Rule 12(c) motion. See Kimble v. Postmaster Gen., No. 1:11-cv-0826, 2012 WL 1833682, at *1 (S.D.Ind. May 18, 2012) aff'd sub nom. Kimble v. Donahoe, 511 Fed.Appx. 573 (7th Cir.2013).
III. Discussion
A. Motion to Strike
Plaintiffs move to strike portions of Defendants’ brief that impermissibly inject matters outside the pleadings. This includes the following statements:
• Here, the listing of synthetic drugs is necessary to keep up with the industry, which slightly modifies the chemical formula and claims it’s a new drug not listed and thus not illegal. (Defs.’ Mem. 1