## Facts

- Lola Hornsby applied to the City of Atlanta for a retail liquor store license.
- She alleged she met all prescribed qualifications for the license, including requirements tied to applicant character and store location.
- The Mayor and Board of Aldermen denied the application without giving any reason.
- Hornsby alleged the denial was arbitrary, capricious, and discriminatory, violating the Fourteenth Amendment’s Due Process and Equal Protection Clauses.
- She alleged Atlanta used a “ward courtesy” practice under which licenses were effectively granted only if one or both aldermen from the ward approved the application.
- Hornsby sued in federal court under civil-rights jurisdiction and sought declaratory relief, asserting city officials acted under color of state law to deprive her of constitutional rights.

## Issues

1. Whether denial of an individual liquor license application is a legislative/political act insulated from judicial review, or an adjudicative/administrative decision subject to due process constraints.
2. Whether allegations that officials denied a license without stated reasons and under a no-standards “ward courtesy” practice state a federal claim for denial of due process and equal protection actionable in federal court.
3. Whether the Twenty-First Amendment’s grant of broad regulatory authority over alcohol bars federal constitutional review of allegedly arbitrary or discriminatory liquor-licensing decisions.

## Decision

- The Fifth Circuit reversed the district court’s dismissal and remanded for further proceedings.
- The court held that denying a liquor license application is not legislation; licensing decisions are adjudicative.
- The court held the complaint sufficiently alleged arbitrary and discriminatory action under color of state law to state a claim under the Fourteenth Amendment cognizable in federal court.
- The court rejected the view that liquor regulation under the Twenty-First Amendment is exempt from due process and equal protection limits.
- On remand, the district court was directed to develop an evidentiary record and determine whether Atlanta’s licensing practices and the specific denial violated Hornsby’s constitutional rights and what relief was appropriate.

## Legal Principles

- License issuance and denial are adjudicative actions applying preexisting standards to a specific applicant and therefore must comply with due process and equal protection.
- Government discretion in licensing must be guided by ascertainable, non-arbitrary standards; unfettered discretion that allows decisions without reasons or criteria may violate the Fourteenth Amendment.
- Even if a state or city has broad authority to regulate or prohibit alcohol, that authority must still be exercised consistently with the Fourteenth Amendment.
- A plaintiff states a federal civil-rights claim when she alleges that local officials, acting under color of state law, arbitrarily and discriminatorily denied a license through procedures lacking constitutionally adequate standards.

## Conclusion

The Fifth Circuit held that municipal liquor licensing is an adjudicative function subject to Fourteenth Amendment constraints, and that allegations of standardless, politically conditioned denials (including “ward courtesy”) can state a federal civil-rights claim requiring factual development rather than dismissal.


Hornsby v. Allen, 326 F.2d 605 (5th Cir. 1964)