                         RECOMMENDED FOR FULL-TEXT PUBLICATION
                              Pursuant to Sixth Circuit Rule 206
                                    File Name: 06a0179p.06

                   UNITED STATES COURT OF APPEALS
                                FOR THE SIXTH CIRCUIT
                                  _________________


                                                     X
                                                      -
                Nos. 05-3698/3854

                Plaintiff-Appellee/Cross-Appellant, -
 THE SUPERIOR BEVERAGE CO., INC.,
                                                      -
                                                      -
                                                             Nos. 05-3698/3787/3854

                                                      ,
           v.                                          >
                                                      -
                                                      -
                              Defendant-Appellant/ -
 SCHIEFFELIN & CO.,

                                    Cross-Appellee. -
                                                      -
                                                      -
                                                      -
                    No. 05-3787
 GOODMAN BEVERAGE CO., INC., et al.,                  -
                               Plaintiffs-Appellees, -
                                                      -
                                                      -
                                                      -
           v.
                                                      -
 SCHIEFFELIN & CO.,
                                                      -
                              Defendant-Appellant. N

                         Appeal from the United States District Court
                        for the Northern District of Ohio at Cleveland.
                Nos. 05-00834; 05-00868—Peter C. Economus, District Judge.
                                  Argued: April 26, 2006
                             Decided and Filed: May 24, 2006
              Before: MERRITT, MARTIN, and McKEAGUE, Circuit Judges.
                                    _________________
                                        COUNSEL
ARGUED: James B. Niehaus, FRANTZ WARD, Cleveland, Ohio, for Appellant. James L.
Messenger, HENDERSON, COVINGTON, MESSENGER, NEWMAN & THOMAS, Youngstown,
Ohio, Kevin R. McMillan, KABAT, MIELZINER & SOBEL, Beachwood, Ohio, for Appellees.
ON BRIEF: James B. Niehaus, Jay R. Carson, FRANTZ WARD, Cleveland, Ohio, for Appellant.
James L. Messenger, Jerry M. Bryan, Richard J. Thomas, HENDERSON, COVINGTON,
MESSENGER, NEWMAN & THOMAS, Youngstown, Ohio, Kevin R. McMillan, Jonathan F.
Sobel, KABAT, MIELZINER & SOBEL, Beachwood, Ohio, for Appellees.




                                              1
Nos. 05-3698/3787/3854                 Superior Beverage Co. et all. v. Schieffelin & Co.                           Page 2


                                                 _________________
                                                     OPINION
                                                 _________________
        BOYCE F. MARTIN, JR., Circuit Judge. Schieffelin & Co., an alcohol distributor, appeals
two orders from the district court, in which that court abstained from exercising jurisdiction based
on the Supreme Court’s decision in Louisiana Power & Light Co. v. Thibodaux, 360 U.S. 25 (1959).
Superior Beverage has cross-appealed on the same issue. The district court based its decision on
the fact that the litigation is alcohol-related; it determined that Ohio has a complex regulatory
scheme dealing with the distribution of alcohol, and that the Twenty-first Amendment grants to the
states authority to regulate all alcohol-related matters. For the following reasons, we REVERSE the
order of the district court, and REMAND for further proceedings.
                                                           I.
        On March 1, 2005, Schieffelin & Co. issued letters to Superior, Goodman, and Mid-Ohio
Wines, informing them that it would be terminating their distributorship agreements. This action
by Schieffelin was pursuant to the Alcohol Beverage Franchise Act (ABFA), specifically, Ohio
Revised Code Section 1333.85(D), which allows a “successor manufacturer” who              acquires the
distributorship rights of another manufacturer to terminate a franchise agreement.1 On March 28,
2005, Goodman and Mid-Ohio Wines filed an action against Schieffelin & Co., alleging violations
of the ABFA in the Court of Common Pleas in Lorain County. The complaint sought declarative
and injunctive relief, as well as monetary damages. The main allegation of the complaint was that
Schieffelin & Co. is not a “successor manufacturer” under R.C. 1333.87, and thus cannot terminate
the franchise without just cause. Superior filed an action against Schieffelin & Co. in federal district
court on March 30, 2005. Superior, Goodwin, and Mid-Ohio Wines obtained temporary restraining
orders against Schieffelin & Co. Schieffelin & Co. subsequently filed a Notice of Removal in the
Goodman/Mid-Ohio Wines action to consolidate the proceedings in federal court, and the parties
agreed to extend the temporary restraining order until the June 2, 2005 preliminary injunction
hearing.
       On April 29, 2005, Schieffelin & Co. sent Superior, Goodman, and Mid-Ohio Wines letters
explaining its decision to terminate the franchise relationships pursuant to R.C. 1333.85(D).
Schieffelin & Co. further explained that it had “just cause” to end the franchise relationship, as is
required by Ohio statute for all terminations except those instituted under R.C. 1333.85(D). In
response to this letter, Mid-Ohio Wines and Goodman filed a motion for contempt and to extend
discovery relating to Schieffelin & Co.’s “just cause” argument. The district court denied the motion
for contempt but agreed to extend filing.
         Additionally, the district court requested briefing on whether abstention might be appropriate
in this case. The parties submitted briefs on the issue. On May 31, 2005, the district court ruled that


        1
            That section states in pertinent part:
                  If a successor manufacturer acquires all or substantially all of the stock or assets of another
        manufacturer through merger or acquisition or acquires or is the assignee of a particular product or
        brand of alcoholic beverage from another manufacturer, the successor manufacturer, within ninety
        days of the date of the merger, acquisition, purchase, or assignment, may give written notice of
        termination, nonrenewal, or renewal of the franchise to a distributor of the acquired product or
        brand. . . . If the successor manufacturer complies with the provisions of this division, just cause or
        consent of the distributor shall not be required for the termination or nonrenewal.
R.C. 1333.85(D).
Nos. 05-3698/3787/3854              Superior Beverage Co. et all. v. Schieffelin & Co.                         Page 3


it must abstain from the litigation. The court concluded that R.C. 1333.87 probably vested exclusive
jurisdiction in the Ohio courts, but ultimately based its decision on Thibodaux, 360 U.S. 25. The
court remanded the action filed by Mid-Ohio Wines and Goodman to the Court of Common Pleas
in Loraine County, where the Mid-Ohio/Goodman suit originated, and dismissed without prejudice
the action filed by Superior because Superior only filed in federal court. This appeal follows.
                                                          II.
        We have jurisdiction over the district court’s remand order pursuant to 28 U.S.C. § 1291.
Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 715 (1996). There is complete diversity between
the parties, and the amount in controversy exceeds $75,000. 28 U.S.C. § 1332. The district court
did not reach the merits of this action in part because it determined that federal courts most likely
do not have jurisdiction over actions under Ohio’s Alcoholic Beverages Franchise Act.
                                                          III.
A. Standard of Review
        When we review a decision to abstain under Thibodaux or Burford v. Sun Oil Co., 319 U.S.
315 (1943)2, we review that decision de novo. See Habich v. City of Dearborn, 331 F.3d 524, 530
n.2 (6th Cir. 2003) (recognizing tension within the Circuit regarding the proper level of review, and
declaring de novo review the rule of the Circuit); MacDonald v. Village of Northport, Michigan, 164
F.3d 964, 967 (6th Cir. 1999) (“We review the district court's abstention de novo.”).
B. Abstention
        The district court declined to exercise jurisdiction, and rather abstained based on Thibodaux,
360 U.S. 25. In that eminent domain case, the Supreme Court held that it was appropriate for a
federal district court to stay proceedings pending a state court’s decision as to whether the city could
exercise the power of eminent domain under state law. Id. at 29. The Court held that it was proper
to stay the action based on abstention because eminent domain “is intimately involved with
sovereign prerogative.” Id. at 28. Relying upon Thibodaux, the district court abstained from
exercising jurisdiction based on its conclusion that this alcohol-related litigation involved matters
exclusively controlled by the state, a determination that it based in large part on the Twenty-first
Amendment. “An examination of precedent addressing the import of the Twenty-first Amendment
suggests that the federal courts will intervene in this area of state prerogative only where the state’s
conduct potentially infringes on other constitutional rights.” Dist. Ct. Opn. at 20. The district court
concluded that because it was being asked to employ its powers as a court of equity, it had the
authority to decline to exercise its jurisdiction.
         1. Abstention in a Damages Action
        First, despite any discussion regarding the propriety of relying on the Twenty-first
Amendment to abstain from exercising federal jurisdiction, the district court’s order to abstain
contradicts Quackenbush. 517 U.S. 706. In that case, the Supreme Court held that a federal court’s
power to abstain “derives from the discretion historically enjoyed by courts of equity.” Id. at 727-
28. Therefore, a federal court’s discretion to abstain from exercising jurisdiction does not extend
so far as to permit a court to dismiss or remand, as opposed to stay, an action at law. Id. at 731.


         2
           At least one court has recognized that Thibodaux abstention is really a variant of Burford abstention. See
Grode v. Mutual Fire, Marine and Inland Ins. Co., 8 F.3d 953, 957 (3d Cir. 1993). Given the similarity of the two
doctrines, we consider the standard of review we have employed in reviewing a district court’s decision to abstain under
Burford to be the appropriate standard for a Thibodaux review.
Nos. 05-3698/3787/3854             Superior Beverage Co. et all. v. Schieffelin & Co.                       Page 4


Several courts have expressed doubt that, given Quackenbush, a federal court can dismiss an action
that includes a claim for damages under abstention principles. See Yamaha Motor Corp., U.S.A.
v. Stroud, 179 F.3d 598, 603-04 (8th Cir. 1999) (holding that a stay rather than a dismissal is
appropriate when “monetary damages are sought in addition to injunctive relief and the federal court
is not asked to declare a state statute unconstitutional in order to award damages”); Pompey v.
Broward County, 95 F.3d 1543, 1552 n.12 (11th Cir. 1996) (“It is doubtful that federal district courts
may dismiss claims for damages under abstention principles.”).
        MacDonald v. Village of Northport, Mich., 164 F.3d 964 (6th Cir. 1999), in which we
affirmed a district court’s abstention from an action for damages, is not to the contrary. There,
homeowners sued a Michigan village and the Michigan State Treasurer regarding the ownership and
land use of a platted street, and sought both equitable relief and damages. Id. at 966-67. This Court
affirmed the district court’s order dismissing the case because “the Burford abstention doctrine and
the Eleventh Amendment created ‘grounds together’ to dismiss [the] case.” Id. at 973. The
MacDonald court explicitly recognized that Quackenbush held that “a dismissal based on abstention
is appropriate only where the relief sought is equitable or otherwise discretionary.” Id. at 969 n.4.
See Johnson v. City of Chesapeake, Virginia, 205 F.3d 1333 (4th Cir. 2000) (unpublished table
decision) (reading MacDonald as consistent with Quackenbush’s prohibition against dismissing
damage actions on abstention grounds). Given this reasoning, a claim seeking both equitable
damages and money damages would not be an appropriate claim for abstention.
        In this case, the claim was for both equitable and money damages and, therefore, the district
court’s order dismissing and remanding the instant action constituted an “abnegation of judicial
duty.” Thibodaux, 360 U.S. at 29. Although the district court concluded that “the relief sought by
the plaintiffs is effectively equitable in nature,” it is not exclusively equitable; the plaintiffs explicitly
seek declaratory relief, injunctive relief, and damages. In determining whether it had diversity
jurisdiction, the district court held that “the declaratory and injunctive relief sought by all plaintiffs
is valued at an amount in excess of $75,000.00.” The district court’s determination that the
jurisdictional requirement was met by way of the value of the declaratory and injunctive relief does
not detract from the fact that Goodman and Mid-Ohio Wines explicitly requested in their complaint
in the Ohio state court action “judgment awarding to Plaintiffs any and all reasonable damages
suffered by them and proximately caused by the conduct of the Defendant in violating the Ohio
Alcoholic Beverages Franchise Act, O.R.C. Section 1333.82, et seq. and the contract between
Plaintiff Mid-Ohio and Defendant.” Superior also requested legal and equitable relief in its
complaint to the district court. Superior, Goodman, and Mid-Ohio all seek equitable relief and
monetary damages. Therefore, remanding the case based on abstention was inappropriate.
        2. Thibodaux/Burford Abstention and the Twenty-first Amendment
         In the Supreme Court decision of Burford, an oil company sued in federal court to attack the
validity  of an order of the Texas Railroad Commission granting the defendant a permit to drill oil
wells.3 319 U.S. at 317. The order was part of Texas’s regulatory system created to conserve oil
and gas. Id. at 318. Given Texas’s interest in conserving gas and oil and that industry’s impact on
its entire economy, and because a decision by a federal court would interfere with the complex
administrative and judicial system created by that state to address the precise issue, the Supreme
Court held that abstention was appropriate. Id. at 332. The Court held that in appropriate
circumstances, federal courts, “‘exercising a wise discretion,’ restrain their authority because of
‘scrupulous regard for the rightful independence of the state governments.’” Id. (quoting Railroad
Comm. v. Pullman Co., 312 U.S. 500, 501 (1941)). Similarly, in Thibodaux, the Supreme Court held


        3
           Although the district court did not purport to follow Burford, it emphasized that Ohio “has established an
intricate regulatory regime to govern the sale and importation of alcoholic beverages within its borders.”
Nos. 05-3698/3787/3854         Superior Beverage Co. et all. v. Schieffelin & Co.               Page 5


that it was appropriate for a district court to stay proceedings pending the interpretation by the state
court of a disputed, and never-before addressed, statute involving eminent domain. 360 U.S. at 29.
The Supreme Court noted that:
       The special nature of eminent domain justifies a district judge, when his familiarity
       with the problems of local law so counsels him, to ascertain the meaning of a
       disputed state statute from the only tribunal empowered to speak definitively – the
       courts of the State under whose statute eminent domain is sought to be exercised –
       rather than himself make a dubious and tentative forecast.
Id. The Court in Thibodaux observed that abstention was particularly appropriate in the context of
eminent domain because that area of law “is intimately involved with sovereign prerogative.” Id.
at 28.
         Purportedly following Thibodaux, the district court held that abstention was appropriate in
this instance because the Twenty-first Amendment gave the states the sole authority to regulate
matters involving alcohol. The district court noted that under the Twenty-first Amendment and the
states’ inherent police power, the states possess broad authority to regulate, restrict or ban the sale
of alcohol. Granholm v. Heald, 544 U.S. 460, 125 S.Ct. 1885, 1902 (2005) (“The aim of the
Twenty-first Amendment was to allow States to maintain an effective and uniform system for
controlling liquor by regulating its transportation, importation, and use.”); 44 Liquormart, Inc. v.
Rhode Island, 517 U.S. 484, 514 (1996) (“Section . . . 2 [of the Twenty-first Amendment] delegated
to the several States the power to prohibit commerce in, or the use of, alcoholic beverages.”). The
district court further noted that the Twenty-first Amendment vests states with the authority to control
issues intertwined with the sale and use of alcohol. New York Liquor Auth. v. Bellanca, 452 U.S.
714, 718 (1981) (holding that states have the authority to prohibit or regulate adult entertainment
in liquor-licensed establishments). Based on Ohio’s authority over alcohol use and distribution
within its borders, the fact that Ohio has an “intricate regulatory regime to govern the sale and
importation of alcoholic beverages,” and the fact that no court had addressed the substantive issues
before the district court, it declined to exercise jurisdiction. The court determined that “Ohio’s
interests in resolving the present cases substantially outweighs the defendant’s right to have these
matters heard in a federal court.”
        Schieffelin & Co. and Superior argue that the district court erred in declining to exercise
jurisdiction. First, they argue that the thrust of the litigation, whether Schieffelin & Co. is a
successor manufacturer under R.C. 1333.87, is not an issue of “substantial public import whose
importance transcends the results of the case then at bar,” but rather is really nothing more than an
ordinary commercial dispute. Schieffelin & Co.’s argument is compelling. This dispute does not
involve the licensing of liquor distributors, or the means by which liquor is sold. Rather, the only
issue before the district court is whether, under Ohio law, Schieffelin & Co. was justified in
terminating the franchise without just cause. The district court’s conclusion that abstention is
appropriate whenever litigation involving any aspect of alcohol is involved because of the Twenty-
first Amendment is misguided.
       The district court acknowledged that, despite the Twenty-first Amendment, federal courts
have frequently heard cases involving alcohol-related litigation. The district court maintained,
however, that federal courts only intervene in alcohol-related litigation when the state’s conduct
possibly infringes on other constitutional rights. Granholm, 544 U.S. 460; Bellanca, 452 U.S. 714;
Larkin v. Grendel’s Den, Inc., 459 U.S. 116, 122 n.5 (1982); Craig v. Boren, 429 U.S. 190, 209
(1976). However, the district court overlooked the numerous instances in which federal courts have
exercised jurisdiction in alcohol-related litigation, even in the absence of tension between the
Twenty-first Amendment and other constitutional rights. See Wirtz Corp. v. United Distillers &
Vintners North America, Inc., 224 F.3d 708, 713 (7th Cir. 2000) (holding that suit was improperly
Nos. 05-3698/3787/3854              Superior Beverage Co. et all. v. Schieffelin & Co.                         Page 6


removed from state tribunal, although approving district court’s refusal to abstain from exercising
jurisdiction); Decatur Liquors, Inc. v. District of Columbia, 384 F. Supp. 2d 58 (D.D.C. 2005)
(holding that abstention is unnecessary in a suit brought by liquor licensees claiming that
amendment to liquor code was not passed in accordance with procedural requirements of Home Rule
Act); Dayton Heidelberg Distrib. Co., Inc. v. Vineyard Brands, Inc., 108 F. Supp. 2d 859 (S.D. Ohio
2000) (litigation involving Ohio’s Alcoholic Beverages Franchise Act). As the district court   noted,
federal courts, including this Court, have actually considered the specific act in question.4 Dayton
Heidelberg Distrib. Co., Inc. v. Vineyard Brands, Inc., No. 01-4061, 74 F. App’x 509 (6th Cir. Aug.
25, 2003); Dayton Heidelberg., 108 F. Supp. 2d 859 (S.D. Ohio 2000); Jameson Crosse, Inc. v.
Kendall-Jackson Winery, Ltd., 917 F. Supp. 520 (N.D. Ohio 1996).
         The Supreme Court’s decision in Hostetter v. Idlewild Bon Voyage Liquor Corp., 377 U.S.
324 (1964), is especially instructive. In that case, a corporation sued to enjoin the New York State
Liquor Authority from interfering with its business of selling tax-free bottled wines and liquors to
departing international airline travelers. The New York State Liquor Authority had determined that
the plaintiff was unlicensed and unlicensable under state law and, as in this case, the resolution of
the litigation depended on the interpretation of a state statute. Id. at 326-27. The Supreme Court
affirmed the district court’s decision declining to abstain. “Unlike many cases in which abstention
has been held appropriate, there was here no danger that a federal decision would work a disruption
of an entire legislative scheme of regulation.” Id. at 329. The Supreme Court further noted that
there, as here, neither party requested that the federal court decline to exercise jurisdiction. Id.
        The district court determined that abstention was appropriate because many of the issues
before the district court have not been addressed by any other court. Specifically, the district court
noted that it is unclear whether “damages or other such relief” are available under R.C. 1333.87.
Further, the district court noted that no court has addressed the relationship between R.C.
1333.85(D), which allows a successor manufacturer to terminate a distribution franchise absent just
cause, and R.C. 1333.85(B)(4), which excludes “a manufacturer’s sale, assignment or other transfer
of the manufacturer’s product or brand to another manufacturer over which it exercises control.”
Determining whether the transfer of rights to Schieffelin & Co. is governed by R.C. 1333.85(B)(4)
or (D) is the heart of this litigation.
        That a state statute has not been previously considered by a state court, however, is not a
basis for abstention. First, although it is not immediately clear at first blush whether Schieffelin &
Co. is a successor manufacturer, R.C. 1333.85 is unambiguous. Furthermore, the scope of the term
“successor manufacturer,” while certainly important to the parties, is not a particularly important
issue of state law. For these reasons, the district court erred in abstaining from exercising its
jurisdiction in this case.
C. Jurisdiction-Granting Statute
        Although it ultimately was not the basis for abstention, the district court did note that “it is
inclined to interpret section 1333.87 as vesting exclusive jurisdiction in the Ohio courts of common
pleas over claims arising from unlawful violations of the Act, particularly where the plaintiffs seek
monetary relief.” The jurisdictional component of Ohio’s Alcoholic Beverages Franchise Act did
not, however, provide the basis for the district court’s decision, and thus, it is not necessary for this
Court to address whether it would have been improper for the district court to dismiss and remand
the instant actions based on R.C. 1333.87.


         4
          The district court abstained despite these cases because “[n]o federal case has addressed the import of [R.C.
1333.87's] apparent grant of exclusive jurisdiction to the state courts.” As discussed infra, the fact that R.C. 1333.87
grants exclusive jurisdiction to the state court does not undermine the federal courts’ diversity jurisdiction.
Nos. 05-3698/3787/3854          Superior Beverage Co. et all. v. Schieffelin & Co.               Page 7


        A state statute cannot divest a federal court of diversity jurisdiction. Railway Co. v. Whitton,
80 U.S. (13 Wall.) 270, 286, 20 L.Ed. 571 (1872) (“In all cases, where a general right is thus
conferred, it can be enforced in any Federal court within the State having jurisdiction of the
parties.”). “In determining its own jurisdiction, a District Court of the United States must look to
the sources of its power and not to acts of states which have no power to enlarge or to contract the
federal jurisdiction.” Grand Bahama Petroleum Co., Ltd. v. Asiatic Petroleum Corp., 550 F.2d
1320, 1325 (2d Cir. 1977) (quoting Markham v. Newport News, 292 F.2d 711, 713 (4th Cir. 1961)).
The district court had jurisdiction over the parties pursuant to Article III, Section 2 of the
Constitution and 28 U.S.C. § 1332. “The state cannot preclude a District Court from exercising the
judicial power conferred upon the United States in the Constitution and in turn properly delegated
to the District Court.” Elgard Corp. v. Brennan Const. Co., 157 F.R.D. 1, 2 (D. Conn. 1994) (citing
Railway Co., 80 U.S. at 286).
                                                  IV.
         In sum, a state may not deprive a federal court of jurisdiction merely by declaring in a statute
that it holds exclusive jurisdiction. See Grand Bahama Petroleum, 550 F.2d at 1325. Thibodaux
abstention is inappropriate in this case as that type of abstention has only been used in cases
involving uniquely state specific subject matter, such as water rights and eminent domain cases.
Additionally, this case is not a Burford abstention case. For the foregoing reasons, we REVERSE
the district court’s order which remanded the action filed by Goodman/Mid-Ohio Wines and
dismissed the action filed by Superior, and REMAND the case back to the district court for further
proceedings.
