Case: 19-20661      Document: 00515539612       Page: 1      Date Filed: 08/25/2020




          United States Court of Appeals
               for the Fifth Circuit
                                                                     United States Court of Appeals
                                                                              Fifth Circuit

                                                                            FILED
                                                                      August 25, 2020
                                No. 19-20661                           Lyle W. Cayce
                                                                            Clerk

 Spec’s Family Partners, Limited,

                                                          Plaintiff—Appellant,

                                    versus

 The Executive Director of The Texas Alcoholic
 Beverage Commission, Adrian Bentley Nettles, ex officio;
 Dexter K. Jones; Emily E. Helm; Judith L. Kennison;
 Matthew Edward Cherry,

                                                      Defendants—Appellees.



                 Appeal from the United States District Court
                     for the Southern District of Texas
                            USDC 4:18-CV-2670


 Before Davis, Graves, and Duncan, Circuit Judges.
 Stuart Kyle Duncan, Circuit Judge:
        Spec’s Family Partners sued officials in the Texas Alcoholic Beverage
 Commission (“TABC”) after TABC investigated Spec’s and brought a
 largely unsuccessful administrative action against it. We must decide
 whether the district court correctly concluded that various forms of
 immunity required dismissal of Spec’s’ claims. We affirm in part, reverse in
 part, and vacate in part.
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                                   No. 19-20661

                                        I.
        Because the district court dismissed this case under Federal Rule of
 Civil Procedure 12(b)(1), we take the factual allegations in the complaint as
 true. See Wooten v. Roach, 964 F.3d 395, 402 (5th Cir. 2020).
        This case arises out of an investigation and administrative proceedings
 by TABC against Spec’s Family Partners (“Spec’s”). The key individual
 players are Dexter Jones, Chief of Audit and Investigations for TABC; Emily
 Helm, former TABC General Counsel; Judith Kennison, TABC Deputy
 General Counsel; and Matthew Cherry, a TABC attorney.
        Spec’s operates stores across Texas under the name Spec’s Wines,
 Spirits & Finer Foods. In late 2012 or early 2013, TABC received a complaint
 that Spec’s was engaged in various violations of state law and regulations, so
 it began investigating. The investigation lasted approximately three years.
 While the investigation was ongoing, TABC invited Spec’s officials to a
 meeting at which settlement was discussed. TABC demanded over $8
 million from Spec’s to resolve violations allegedly uncovered during the
 investigation. Spec’s declined.
        After its investigation ended in February 2016, TABC issued Spec’s a
 Notice of Violation letter alleging Spec’s had violated various laws and
 regulations. TABC filed the letter with the Texas State Office of
 Administrative    Hearings    (“SOAH”),          which   began   administrative
 proceedings against Spec’s. In the SOAH action, TABC sought cancellation
 or suspension of all 164 permits related to Spec’s stores. In the alternative,
 TABC sought civil penalties of up to $713,050,000.
        While the SOAH case was pending, Spec’s continued to submit
 applications to TABC. It applied for two new store permits and one change-
 of-address permit for an existing store. TABC placed administrative holds on
 all three applications, and then protested them with the SOAH. TABC also
 refused to grant regular renewals of existing Spec’s licenses while the SOAH
 proceedings were pending.



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        The SOAH consolidated TABC’s three protests with the original
 Spec’s case. Ultimately, the SOAH Administrative Law Judges (“ALJs”)
 ruled in Spec’s’ favor on every allegation except one involving a credit law
 violation. For that violation, the ALJs recommended a warning. They also
 recommended that the three protested applications be granted.
        Spec’s then sued several TABC officials (collectively, “Defendants”)
 in federal court, bringing claims under 42 U.S.C. § 1983, the Sherman Act,
 and state law. It also sought declaratory relief under 28 U.S.C. § 2201, and
 injunctive relief under Ex parte Young, 209 U.S. 123 (1908). Finally, it sought
 a declaration that Defendants’ acts were ultra vires.
        The district court granted Defendants’ motion to dismiss, reasoning
 Defendants were entitled to various forms of immunity. First, it held
 Defendants enjoyed absolute immunity from the § 1983 claims. Second, it
 concluded that sovereign immunity barred the injunctive and declaratory
 claims against Defendants in their official capacities. Third, it held the
 Sherman Act claims were barred by state-action immunity. Finally, having
 dismissed all of Spec’s’ federal claims, the court declined to exercise
 supplemental jurisdiction over its remaining state law claim. Spec’s timely
 appealed.
                                       II.
        We review dismissal of Spec’s’ claims de novo. See Williams ex rel. J.E.
 v. Reeves, 954 F.3d 729, 734 (5th Cir. 2020). “In determining immunity, we
 accept the allegations of the plaintiffs’ complaint as true.” Singleton v.
 Cannizzaro, 956 F.3d 773, 779 (5th Cir. 2020) (cleaned up). We review the
 district court’s decision not to exercise supplemental jurisdiction for abuse
 of discretion. Brookshire Bros. Holding, Inc. v. Dayco Products, Inc., 554 F.3d
 595, 601–02 (5th Cir. 2009).
                                      III.
        Spec’s’ arguments regarding absolute immunity fall into two groups.
 First, Spec’s argues that Defendants are not entitled to immunity from
 claims that they took wrongful acts while the SOAH case was proceeding:

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                                     No. 19-20661

 namely, placing holds on Spec’s’ applications, protesting those applications,
 and refusing to issue regular permit renewals. 1 Second, Spec’s contends that
 Defendants are not immune from its claims that, as part of their investigation,
 they intentionally procured false testimony to use against Spec’s in
 settlement negotiations and during the SOAH proceedings.
        The district court ruled that absolute immunity shields Defendants
 from both claims. We agree that Defendants enjoy absolute immunity from
 the claims regarding their allegedly wrongful acts taken while the SOAH case
 was proceeding. But we disagree that Defendants are absolutely immune
 from the claim that they intentionally concealed information from a TABC
 auditor during the investigation. We therefore affirm in part and reverse in
 part the district court’s judgment on this issue.
                                          A.
        “[P]rosecutors are absolutely immune from liability under § 1983 for
 their conduct in ‘initiating a prosecution and in presenting the State’s case’
 insofar as that conduct is ‘intimately associated with the judicial phase of the
 criminal process.’” Burns v. Reed, 500 U.S. 478, 486 (1991) (citations
 omitted) (quoting Imbler v. Pachtman, 424 U.S. 409, 431 (1976)); see also
 Wooten, 964 F.3d at 407. Similarly, “executive branch officials, when
 participating in a federal administrative agency’s adjudicative process, are
 entitled to absolute immunity because they perform functions comparable to
 those of judges and prosecutors.” Beck v. Tex. State Bd. of Dental Examiners,
 204 F.3d 629, 634 (5th Cir. 2000). This principle extends to state agency
 officials. See id.; see also O’Neal v. Miss. Bd. of Nursing, 113 F.3d 62, 65 (5th
 Cir. 1997). In assessing whether those officials qualify for absolute immunity,
 we apply a nonexhaustive list of factors from the Supreme Court’s decision
 in Butz v. Economou, 438 U.S. 478, 512 (1978). See Disraeli v. Rotunda, 489
 F.3d 628, 631 (5th Cir. 2007). Those factors include:




        1
         Spec’s’ complaint and its brief on appeal group these three acts together, so
 we analyze them accordingly.
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                                         No. 19-20661

         (1) the need to assure that the individual can perform his
             functions without harassment or intimidation;
         (2) the presence of safeguards that reduce the need for private
             damages actions as a means of controlling unconstitutional
             conduct;
         (3) insulation from political influence;
         (4) the importance of precedent;
         (5) the adversary nature of the process; and
         (6) the correctability of error on appeal.
 Id. (citing Beck, 204 F.3d at 634). “No one factor is controlling.” Id.
                                              B.
         Spec’s’ complaint alleges that, while TABC’s original SOAH case
 was proceeding, Defendants 2 wrongfully placed holds on three permit
 applications, protested those applications, and refused to renew existing
 permits. Applying the Butz factors, we conclude that, in taking those actions,
 Defendants were acting in a prosecutorial role and are entitled to absolute
 immunity from these claims.
         First, we examine “the need to assure that the [Defendants] can
 perform [their] functions without harassment or intimidation.” Id.
 Defendants are tasked under Texas law with comprehensively regulating the
 alcoholic beverage industry. See TEX. ALCO. BEV. CODE § 5.31. 3 TABC


         2
           Spec’s’ allegations are not entirely clear about which individual Defendants
 were involved with each of the actions. Our holdings apply to each of the Defendants
 to the extent Spec’s alleges their involvement in the actions discussed.
         3
             This section provides in relevant part:
         (a) The commission may exercise all powers, duties, and functions conferred
 by this code, and all powers incidental, necessary, or convenient to the administration
 of this code. It shall inspect, supervise, and regulate every phase of the business of
 manufacturing, importing, exporting, transporting, storing, selling, advertising,
 labeling, and distributing alcoholic beverages, and the possession of alcoholic beverages
 for the purpose of sale or otherwise. It may prescribe and publish rules necessary to
 carry out the provisions of this code.
         (b) The commission shall:
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                                      No. 19-20661

 officials must be allowed to “make these decisions free from the threat of
 incurring personal liability for every decision they” make. Beck, 204 F.3d at
 636 (quoting O’Neal, 113 F.3d at 66). As evidenced by this case, the duties
 TABC performs, especially when bringing enforcement against potentially
 noncompliant businesses, are “likely to arouse the ire of targeted
 individuals.” Disraeli, 489 F.3d at 632.
        Second, we look for “the presence of safeguards that reduce the need
 for private damages actions as a means of controlling unconstitutional
 conduct.” Id. at 631. Spec’s alleges that the combined SOAH proceedings
 included discovery, hearings, and written decisions—all characteristics of
 judicial proceedings. See id. at 633 (finding sufficient safeguards in, inter alia,
 requirements of a hearing, evidence, and written decision); Beck, 204 F.3d at
 635 (looking to similar safeguards); O’Neal, 113 F.3d at 66 (same). Taking
 these allegations as true, we conclude that procedural safeguards were both
 available and applied in this case.
        Third, we examine TABC’s insulation from political influence.
 Disraeli, 489 F.3d at 631. Under Texas law, TABC is “composed of five
 members, who are appointed by the governor with the advice and consent of
 the senate.” TEX. ALCO. BEV. CODE § 5.02. The members are appointed to
 staggered six-year terms, with terms expiring every two years. Id. § 5.03.
 Moreover, Texas law prohibits anyone “appointed to or serv[ing] on the
 commission, or hold[ing] an office under the commission, or . . . employed



          (1) protect the public safety by deterring and detecting violations of this code;
          (2) promote legal and responsible alcohol consumption;
          (3) ensure fair competition within the alcoholic beverage industry;
          (4) ensure consistent, predictable, and timely enforcement of this code;
          (5) ensure a consistent, predictable, and timely licensing and permitting
              process;
          (6) promote and foster voluntary compliance with this code; and
          (7) communicate the requirements of this code clearly and consistently.


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                                        No. 19-20661

 by the commission” from having “a financial interest in an alcoholic
 beverage business.” TEX. ALCO. BEV. CODE § 5.05(a). Texas law also
 prohibits other entanglements with the alcoholic beverage industry. See id.
 § 5.05(c)–(d). 4 TABC officials and employees are thus generally free to
 resolve disputes without political pressure or industry influence. See Beck,
 204 F.3d at 636; O’Neal, 113 F.3d at 66.
        Fourth, we examine the importance of precedent. Disraeli, 489 F.3d
 at 631. Spec’s makes no allegations or argument about whether TABC was
 bound by internal precedent. We therefore find “no reason . . . to conclude
 that [TABC] would be unlikely to follow its own precedent.” Id. at 633; see
 also Beck, 204 F.3d at 636 (concluding “the absence of this factor is not
 dispositive” where “the record does not reveal whether the Board abided by
 internal precedent”).
        Fifth, we inquire into the adversarial nature of the process. Disraeli,
 489 F.3d at 631. Spec’s’ complaint says nothing about the presence or
 absence of adversarial process respecting the holds, protests, or refusals to
 renew permits. As already noted, however, all these actions were combined
 with the existing SOAH proceedings “for purposes of discovery, hearing on
 the merits, and final decisions.” Such proceedings are adversarial. See TEX.


        4
            These sections provide, in full:
        (c) A person may not be a member of the commission or act as the general
 counsel to the commission if the person is required to register as a lobbyist under
 Chapter 305, Government Code, because of the person’s activities for compensation
 on behalf of a profession related to the operation of the commission.
         (d) A person may not be a member of the commission and may not be a
 commission employee employed in a “bona fide executive, administrative, or
 professional capacity,” as that phrase is used for purposes of establishing an exemption
 to the overtime provisions of the federal Fair Labor Standards Act of 1938 (29 U.S.C.
 Section 201 et seq.), if:
            (1) the person is an officer, employee, or paid consultant of a Texas trade
      association in the field of alcoholic beverages; or
            (2) the person’s spouse is an officer, manager, or paid consultant of a Texas
    trade association in the field of alcoholic beverages.


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                                  No. 19-20661

 ALCO. BEV. CODE § 5.43 (designating SOAH to conduct hearings); TEX.
 GOV’T CODE §§ 2001.081–.103 (providing rules for evidence, witnesses, and
 discovery in contested administrative cases); see also Beck, 204 F.3d at 636
 (discussing adversarial aspects including representation by counsel, ability to
 present evidence, oaths, and evidentiary rulings). We are therefore satisfied
 that “the overall agency action” here was adversarial in nature. Disraeli, 489
 F.3d at 633.
        Lastly, we ask whether any errors were correctable on appeal. Id. at
 631. Spec’s’ complaint says nothing about its appeal rights from the
 contested aspects of the administrative hearings. But we again emphasize
 that TABC’s actions were combined with the underlying SOAH case and
 were reviewed on the merits. Thus, Spec’s was free to—and did—challenge
 the grounds for the holds and protests before the ALJs. With the exception
 of a single credit law violation, Spec’s prevailed in their challenge, and the
 ALJs also recommended that the protested permits be granted. Further,
 Spec’s could appeal any denial of its applications to renew existing permits.
 See TEX. ALCO. BEV. CODE §§ 11.67(1), 61.34(a). Finally, under Texas law,
 “[a] person who has exhausted all administrative remedies available within a
 state agency and who is aggrieved by a final decision in a contested case is
 entitled to judicial review.” TEX. GOV’T CODE § 2001.171. We are therefore
 persuaded that any errors in the process were remediable on appeal.
        The Butz factors thus strongly suggest that Defendants’ challenged
 conduct was akin to prosecutors intimately involved in judicial proceedings
 and therefore “entitled to absolute immunity from suit.” Disraeli, 489 F.3d
 at 632. Defendants were discharging their statutory mandate to regulate the
 alcoholic beverage industry. The challenged acts—administrative holds,
 protests, and decisions regarding renewal permits—were related to, and
 arose out of the same alleged conduct as, the underlying SOAH case. This
 point is underscored by Spec’s’ allegations that the SOAH combined all the
 issues into a single consolidated case and that the bases for the underlying
 SOAH case and the protests were the same.



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                                      No. 19-20661

         Spec’s counters, in conclusory fashion, that the challenged acts were
 merely administrative and regulatory and thus disentitled to absolute
 immunity. It accuses the district court of failing to analyze the functions
 Defendants were performing. But Spec’s’ argument suffers from precisely
 that flaw: it offers virtually no functional analysis of Defendants’ acts, beyond
 labeling them “administrative” and “regulatory.” 5 That is insufficient.
         For these reasons, we conclude that Defendants were functioning in
 quasi-prosecutorial roles as the State’s advocate in a way “intimately
 associated with” judicial proceedings. See Imbler, 424 U.S. at 431; Burns, 500
 U.S. at 486. Defendants are thus entitled to absolute immunity from the
 § 1983 claims concerning the acts challenged here. 6
                                           C.
         We disagree, however, with the district court’s conclusion that
 Defendants are entitled to absolute immunity from Spec’s’ claim that they
 intentionally concealed information from a TABC auditor. Spec’s alleges
 that Kennison “and other representatives of the TABC” concealed
 documents from Kathy Anderson, a TABC auditor, to obtain testimony from
 her that Spec’s had violated the Texas Alcoholic Beverage Code. Kennison
 did this even though she knew the documents did not establish any violation
 by Spec’s. TABC then used Anderson’s testimony (1) as leverage to try and



         5
           Spec’s is mistaken that State v. Bush, 253 S.W. 2d 269 (Tex. 1952), supports
 its position. In that case, the Texas Supreme Court observed that liquor permitting is
 “merely the exercise of an administrative function” confided to certain officials, in the
 course of deciding that a county court at law had no jurisdiction to issue a new permit.
 Id. at 272. The decision says nothing about whether officials involved in permitting are
 entitled to absolute immunity.
         6
           Our decision should not be read to conclusively settle the question of absolute
 immunity for any and all challenges to TABC actions during enforcement proceedings.
 Because we assume the truth of Spec’s’ pleadings, those pleadings, together with
 Spec’s’ arguments on appeal, compel the conclusions we reach today. As our
 discussion of the Butz factors suggests, absolute immunity in cases such as this turns
 on the specific facts of individual cases. See Burns, 500 U.S. at 487 (when determining
 whether absolute immunity applies, “it is important to determine the precise claim” a
 plaintiff makes about a defendant’s role (emphasis added)).
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                                     No. 19-20661

  force Spec’s to pay a large sum to settle the investigation, and (2) as a basis
  for supplementing its allegations against Spec’s in the SOAH proceedings.
  Spec’s further alleges that “the TABC and their counsel” withheld
  information regarding applicable grace periods from Anderson to prompt her
  to incorrectly testify that the grace periods did not exist. TABC then
  attempted to use this incorrect testimony to leverage a settlement from
  Spec’s.
         These acts fall outside the scope of absolute immunity. “[A]cts
  undertaken by a prosecutor in preparing for the initiation of judicial
  proceedings or for trial, and which occur in the course of his role as an
  advocate for the State, are entitled to the protections of absolute immunity.”
  Buckley, 509 U.S. at 273. But “non-testimonial pretrial actions, such as the
  fabrication of evidence, are not within the scope of absolute immunity
  because they are not part of the trial.” Castellano v. Fragozo, 352 F.3d 939,
  958 (5th Cir. 2003) (en banc).
         Here, Spec’s alleges that “Ms. Kennison (and other representatives
  of the TABC) concealed” relevant evidence from the TABC auditor,
  prompting her to give false testimony. The testimony was obtained during
  the investigation and was used as settlement leverage and as a basis for filing
  additional charges against Spec’s in the SOAH proceeding. Defendants’
  alleged actions aimed to manipulate the ongoing investigation by creating
  evidence that could be used to obtain a favorable outcome—either a “win”
  in the SOAH proceedings or a significant settlement payment by Spec’s. In
  essence, Defendants allegedly fabricated evidence, and we stated in Fragozo
  that such a claim does not fall within the scope of absolute immunity. See id.
  The district court erred by concluding otherwise. 7



         7
            To the extent Spec’s claims Defendants elicited false testimony during the
  administrative proceedings, however, they are entitled to immunity. Those actions
  were part of the “trial,” and Cherry was acting as “an advocate for the State.” See
  Buckley, 509 U.S. at 273. But Spec’s focuses on Defendants’ manipulation of evidence
  before the SOAH proceedings were initiated, and those alleged acts fall outside the
  scope of absolute immunity.
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                                         No. 19-20661

          In sum, the district court correctly concluded Defendants are entitled
  to absolute immunity from Spec’s’ claims that they wrongfully placed
  administrative holds and protested Spec’s’ applications and wrongfully
  refused to renew existing permits during the SOAH proceedings. However,
  contrary to the district court’s conclusion, Defendants are not entitled to
  absolute immunity from Spec’s’ claims that, during the investigation, they
  concealed evidence from a TABC auditor in order to get false testimony to
  be used as settlement leverage and as an evidentiary basis for filing additional
  charges against Spec’s in the SOAH proceeding. 8
                                             IV.
          The district court also held that sovereign immunity bars the § 1983
  claims against Defendants in their official capacities. It further concluded
  that sovereign immunity barred Spec’s’ claims for injunctive and declaratory
  relief against Defendants because Spec’s did not allege an ongoing injury, but
  instead sought rulings on “past alleged deficiencies.” We agree and affirm.
                                              A.
          Sovereign      immunity       generally       “bars   private     suits    against
  nonconsenting states in federal court.” City of Austin v. Paxton, 943 F.3d 993,
  997 (5th Cir. 2019). This immunity extends both to the state and to “agencies
  acting under its control.” Puerto Rico Aqueduct & Sewer Auth. v. Metcalf &
  Eddy, Inc., 506 U.S. 139, 144 (1993). The Supreme Court’s decision in Ex
  parte Young, 209 U.S. 123 (1908), established a narrow exception to that
  immunity for “suits for injunctive or declaratory relief against individual
  state officials acting in violation of federal law.” City of Austin, 943 F.3d at


          8
            Defendants also contend that to the extent they are not entitled to absolute
  immunity, they are shielded by qualified immunity. The district court did not reach the
  issue because it concluded Defendants were entitled to absolute immunity. Presumably
  for that reason, Spec’s does not address the question in its opening brief, and because
  it did not file a reply brief, we lack Spec’s’ arguments on the issue. We decline to
  address the question in the first instance. See Humphries v. Elliott Co., 760 F.3d 414, 418
  (5th Cir. 2014) (“It is the general rule, of course, that a federal appellate court does not
  consider an issue not passed upon below.” (quoting Singleton v. Wulff, 428 U.S. 106,
  120 (1976))). Defendants are free to raise the issue on remand.
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  997 (quoting Raj v. La. State Univ., 714 F.3d 322, 328 (5th Cir. 2013)).
  Determining if the exception applies involves “a straightforward inquiry into
  whether the complaint alleges an ongoing violation of federal law and seeks
  relief properly characterized as prospective.” Va. Off. for Protection &
  Advocacy v. Stewart, 563 U.S. 247, 255 (2011) (cleaned up) (quoting Verizon
  Md. Inc. v. Pub. Serv. Comm’n of Md., 535 U.S. 635, 645 (2002)).
                                         B.
         We agree with the district court that Spec’s’ § 1983 claim for damages
  against Adrian Nettles in his official capacity as Executive Director of TABC
  is barred by sovereign immunity. “Congress has not abrogated state
  sovereign immunity under . . . § 1983.” Raj, 714 F.3d at 328. Spec’s sued
  Nettles “Ex Officio,” under “42 U.S.C. § 1983.” Because state sovereign
  immunity has not been abrogated by § 1983, Spec’s cannot bring a damages
  claim against Nettles in his official capacity. That claim was correctly
  dismissed.
         We also agree with the district court that Spec’s’ claims for injunctive
  and declaratory relief are barred by sovereign immunity. Spec’s seeks a
  declaration that Defendants violated its rights and that TABC’s
  interpretations of various statutes and rules are incorrect. It also seeks an
  injunction prohibiting TABC and its officials from repeating the various acts
  Spec’s alleges violated its rights. But Spec’s does not allege that TABC or its
  officials are currently engaged in any of those behaviors or that any such
  actions are imminent. It is undisputed that the investigation and SOAH
  proceedings forming the basis of the allegations in this case are completed.
  The injunctive relief sought focuses on past behavior but does not allege an
  “ongoing violation of federal law.” See Stewart, 563 U.S. at 255. Spec’s has
  therefore failed to allege a claim that falls within the Ex parte Young exception,
  and its claims for injunctive and declaratory relief are barred by sovereign
  immunity. See Williams, 954 F.3d at 737 (Young exception “focuse[s] on
  cases in which a violation of federal law by a state official is ongoing as
  opposed to cases in which federal law has been violated at one time or over a
  period of time in the past”). We therefore affirm on this issue.

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                                      No. 19-20661

                                           V.
         Spec’s also sought a declaration that Texas Alcoholic Beverage Code
  § 102.07(a)(7) is a per se violation of the Sherman Act. It further alleged that
  Defendants violated the Sherman Act by placing holds on Spec’s’
  applications, denying renewals during the SOAH proceedings, and seeking
  to cancel or suspend Spec’s’ existing permits. The district court concluded
  these antitrust claims were barred by the state-action doctrine. We agree.
                                           A.
         The Sherman Act forbids unreasonable restraints of trade. Ohio v. Am.
  Express Co., 138 S. Ct. 2274, 2283 (2018); see 15 U.S.C. § 1. However, in
  Parker v. Brown, 317 U.S. 341 (1943), the Supreme Court recognized that the
  Sherman Act was not intended “to restrain a state or its officers or agents
  from activities directed by its legislature.” Id. at 350–51. Thus, “exercise[s]
  of the State’s sovereign power” are immune from antitrust scrutiny, and
  “[s]tate legislation and decisions of a state supreme court, acting legislatively
  rather than judicially . . . ipso facto are exempt from the operation of the
  antitrust laws.” N. Carolina State Bd. of Dental Examiners v. F.T.C., 574 U.S.
  494, 504 (2015) [hereinafter Dental Examiners] (cleaned up).
         For acts that are not clearly exercises of state sovereign power, the
  Court has established two requirements relevant to state-action immunity.
  California Retail Liquor Dealers Ass’n v. Midcal Aluminum, Inc., 445 U.S. 97,
  105 (1980). “First, the challenged restraint must be one clearly articulated
  and affirmatively expressed as state policy; second, the policy must be
  actively supervised by the State itself.” Id. (internal quotation marks
  omitted). These dual requirements are known as the “Midcal test.”
         However, “[s]ome defendants are not subject to both prongs of Midcal
  review.” Earles v. State Bd. of Certified Pub. Accountants of La., 139 F.3d 1033,
  1040 (5th Cir. 1998). For example, in Town of Hallie v. City of Eau Claire, 471
  U.S. 34 (1985), the Supreme Court held that municipalities are not subject to
  the “active supervision” requirement. Id. at 46–47. The Court also observed
  that “[i]n cases in which the actor is a state agency, it is likely that active state
  supervision would also not be required.” Id. at 46 n.10. We subsequently held
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                                    No. 19-20661

  in two cases that the state or public agency at issue was not subject to the
  “active supervision” requirement. See Green v. State Bar, 27 F.3d 1083, 1087
  (5th Cir. 1994); Benton, Benton & Benton v. La. Pub. Facilities Auth., 897 F.2d
  198, 203 (5th Cir. 1990).
         The Supreme Court’s most recent statement of the state-action
  immunity test is Dental Examiners, which applied both Midcal prongs to a
  state board of dental examiners, the majority of which were required to be
  practicing dentists. 574 U.S. at 500, 504–06. In applying both prongs, the
  Court emphasized that the state had “delegate[d] control over a market to a
  nonsovereign actor.” Id. at 505. “State agencies,” the Court explained, “are
  not simply by their governmental character sovereign actors for purposes of
  state-action immunity.” Id. To qualify, the agency must have “more than a
  mere facade of state involvement” because the rationale underlying state
  action immunity requires “the states [to] accept political accountability for
  anticompetitive conduct they permit and control.” Id.
         Thus, as summarized by one of our sister circuits, there are basically
  “three approaches to analyzing a state-action defense.” Edinboro College Park
  Apartments v. Edinboro Univ. Found., 850 F.3d 567, 572 (3d Cir. 2017). First,
  true state action is ipso facto exempt from antitrust scrutiny. Dental
  Examiners, 574 U.S. at 504; Hoover v. Ronwin, 466 U.S. 558, 568 (1984)
  (“Where the conduct at issue is in fact that of the state legislature or supreme
  court, we need not address the issues of ‘clear articulation’ and ‘active
  supervision.’”). Second, acts by a typical state agency or municipality are
  entitled to state-action immunity if “the conduct is pursuant to a ‘clearly
  articulated and affirmatively expressed state policy’ to replace competition
  with regulation.” Hoover, 466 U.S. at 568–69 (quoting Cmty. Commc’ns Co.
  v. City of Boulder, 455 U.S. 40, 54 (1982)); see also Town of Hallie, 471 U.S. at
  46–47. Third, for acts by private parties, or by state “agencies” composed of
  individuals who participate in the market they regulate, we apply both Midcal
  requirements—we ask both whether the acts were taken pursuant to a clearly
  articulated state policy and whether the acts were supervised by the state. See
  Dental Examiners, 574 U.S. at 506; see also Veritext Corp. v. Bonin, 901 F.3d

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                                         No. 19-20661

  287, 292–93 (5th Cir. 2018) (applying both Midcal prongs where regulatory
  board consisted of market participants).
          We apply this state-action framework to Spec’s’ Sherman Act claims.
                                               B.
          Spec’s     first   argues     that    Texas     Alcoholic      Beverage      Code
  § 102.07(a)(7) is a per se violation of the Sherman Act. Section 102.07(a)(7)
  provides that “no person who owns or has an interest in the business of a
  distiller, brewer, rectifier, wholesaler, class B wholesaler, winery, or wine
  bottler, nor the agent, servant, or employee of such a person, may . . . allow
  an excessive discount to a retailer . . . .” Id. Spec’s contends that “any ban
  on liquor or wine discounts is a ‘hybrid restraint’ of trade, which is a per se
  violation of [S]ection 1 of the Sherman Antitrust Act.” We disagree. Section
  102.07(a)(7) was duly enacted by the Texas Legislature. As “[s]tate
  legislation,” it “ipso facto [is] exempt from the operation of the antitrust laws
  because [it is] an undoubted exercise of state sovereign authority.” Dental
  Examiners, 574 U.S. at 504 (cleaned up). The district court thus correctly
  dismissed this claim. 9
                                               C.
          Spec’s next contends that Defendants violated the Sherman Act by
  placing holds on Spec’s’ applications, denying renewals during the SOAH
  proceedings, and seeking to cancel or suspend Spec’s’ existing permits. We
  disagree. Each of these acts qualifies for state-action immunity.
          First, the challenged acts are subject to only Midcal’s “clear
  articulation” prong. There are no allegations that Defendants are
  nonsovereign actors regulating markets in which they participate. As we have
  already observed, Texas law prohibits TABC officials and employees from


          9
            Contrary to Spec’s’ contentions, section 102.07(a)(7) does not present a
  situation where the government delegated regulatory power to a private party, and thus
  the provision does not qualify as a “hybrid restraint.” See Xcaliber Int’l Ltd. v. Caldwell,
  612 F.3d 368, 376–77 (5th Cir. 2010). For that reason, its reliance on the Fourth
  Circuit’s decision in TFWS, Inc. v. Schaefer, 242 F.3d 198 (4th Cir. 2001), is inapposite.
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                                    No. 19-20661

  having financial interests in the industry they regulate. See TEX. ALCO. BEV.
  CODE §§ 5.05(a); (c)–(d). TABC is not a state entity run by private actors
  who participate in the regulated market. Thus, we need not apply both Midcal
  prongs. Cf. Dental Examiners, 574 U.S. at 506; Veritext, 901 F.3d at 292–93.
         The dispositive question is whether the challenged acts were
  “affirmatively expressed as state policy.” Midcal, 445 U.S. at 105 (quoting
  City of Lafayette v. La. Power & Light Co., 435 U.S. 389, 410 (1978)).
  “Midcal’s clear articulation requirement is satisfied where the displacement
  of competition is the inherent, logical, or ordinary result of the exercise of
  authority delegated by the state legislature.” Dental Examiners, 574 U.S. at
  506–07 (cleaned up) (quoting F.T.C. v. Phoebe Putney Health Sys., Inc., 568
  U.S. 216, 229 (2013)).
         That standard is met here. The Texas Alcoholic Beverage Code vests
  TABC with comprehensive regulatory authority. See TEX. ALCO. BEV. CODE
  § 5.31(a). Importantly, “[t]he commission shall . . . ensure fair competition
  within the alcoholic beverage industry.” Id. (b)(3) (emphasis added). The
  challenged actions are an “inherent, logical, or ordinary result” of TABC’s
  mandate to comprehensively regulate the alcoholic beverage industry, and of
  its specific mission to regulate competition in that industry. “[T]he statutes
  clearly contemplate that [TABC might] engage in anticompetitive conduct.”
  See Town of Hallie, 471 U.S. at 42. Consequently, the acts Spec’s complains
  of were taken pursuant to a “clearly articulated and affirmatively expressed
  . . . state policy.” Midcal, 445 U.S. at 105. State-action immunity attaches.
                                         VI.
         Finally, Spec’s challenges the district court’s decision to decline
  supplemental jurisdiction over its remaining state-law malicious prosecution
  claim. The district court did so after dismissing all of Spec’s’ federal claims.
  “[D]istrict courts may decline to exercise supplemental jurisdiction over a
  claim . . . if . . . the district court has dismissed all claims over which it has
  original jurisdiction.” 28 U.S.C. § 1367(c). Because Defendants are not
  absolutely immune from all of Spec’s’ federal law claims, supra Part III(C),
  the grounds on which the district court declined to exercise supplemental
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                                    No. 19-20661

  jurisdiction over the state-law claim are no longer present. We therefore
  vacate the portion of the district court’s decision declining to exercise
  supplemental jurisdiction.
                                      * * *
         The district court correctly determined that Defendants are entitled
  to absolute immunity from Spec’s’ § 1983 claims regarding administrative
  holds, protests of applications, and denials of renewals. It erred by concluding
  Defendants are absolutely immune from Spec’s’ § 1983 individual-capacity
  claim regarding the concealment of evidence. The district court correctly
  determined that sovereign immunity bars Spec’s’ official-capacity claims for
  damages and for injunctive and declaratory relief. It correctly held that
  Defendants are entitled to state-action immunity from Spec’s’ antitrust
  claims, and that Texas Alcoholic Beverage Code § 102.07(a)(7) is not a per
  se violation of the Sherman Act. Finally, the district court’s decision to
  decline supplemental jurisdiction over Spec’s’ state-law malicious
  prosecution claim must be vacated because the grounds for that decision are
  no longer applicable.
         AFFIRMED in part; REVERSED in part; VACATED in part;
  REMANDED for further proceedings consistent with this opinion.




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