Cmty. Fin. Servs. Assocation of Am., Ltd. v. Fed. Deposit Ins. Corp.
| Decision Date | 19 December 2016 |
| Docket Number | Case No. 14-CV-953 (GK) |
| Parties | COMMUNITY FINANCIAL SERVICES ASSOCATION OF AMERICA, LTD., et al., Plaintiffs, v. FEDERAL DEPOSIT INSURANCE CORPORATION, et al., Defendants. |
| Court | U.S. District Court — District of Columbia |
Plaintiffs, Community Financial Services Association of America, Ltd. ("CFSA") and Advance America, Cash Advance Centers, Inc. ("Advance America"), allege that the Defendants, the Federal Deposit Insurance Corporation ("the FDIC"), the Board of Governors of the Federal Reserve System, and the Office of the Comptroller of the Currency and Thomas J. Curry, in his official capacity as the Comptroller of the Currency ("the OCC"), have violated the due process rights of CFSA's members. Plaintiffs seek declaratory and injunctive relief to prevent these alleged violations from continuing.
This matter is before the Court on Defendants' Corrected Motion to Dismiss for Lack of Associational or Organizational Standing or, in the Alternative, for Judgment on the Pleadings ("Motion.to Dismiss"), in which Defendants seek dismissal of CFSA as a party to this case. [Dkt. No. 75]. Upon consideration of the Motion, Opposition, Reply, and the entire record herein, the Motion to Dismiss is granted.1
The basic facts of this case were fully discussed in the Court's prior Memorandum Opinion on Defendants' Motions to Dismiss for Lack of Subject Matter Jurisdiction or, in the Alternative, for Failure to State a Claim. CFSA v. FDIC, 132 F. Supp. 3d 98, 105-107 (D.D.C. 2015). Consequently, an abbreviated discussion of the facts follows.
Plaintiffs are CFSA, an association of payday lenders, and Advance America, a payday lender and member of CFSA. Id., 132 F. Supp. 3d at 105. Defendants are agencies of the United States Government that have been delegated regulatory authority over various parts of the United States banking system. Id. at 106.
Plaintiffs allege that Defendants participated and continue to participate in a campaign to force banks to terminate their business relationships with payday lenders, known as. "Operation Choke Point" and initiated by the United States Department of Justice. Id. at 106-107. Defendants allegedly forced banks thatthey supervise to terminate relationships with CFSA's members, "by first promulgating regulatory guidance regarding reputation risk,' and by later relying on the reputation risk guidance 'as the fulcrum for a campaign of backroom regulatory pressure seeking to coerce banks to terminate longstanding, mutually beneficial relationships with all payday lenders.'" Id.
On June 5, 2014, Plaintiffs filed their original Complaint, [Dkt. No. 1], which they amended on July 30, 2014, [Dkt. No. 12], alleging that Defendants had violated the Administrative Procedure Act ("APA") and CFSA's members' right to procedural due process under the Fifth Amendment to the United States Constitution. CFSA, 132 F. Supp. 3d at 107. Defendants then filed Motions to Dismiss for Lack of Subject Matter Jurisdiction or, in the Alternative, for Failure to State a Claim, [Dkt. Nos. 16, 17, & 18]. Id.
On September 25, 2015, the Court issued a Memorandum Opinion ("Memorandum Opinion"), granting in part and denying in part Defendants' Motions. CFSA, 132 F. Supp. 3d 98. The Court held that Plaintiffs had failed to state a claim under the APA, and dismissed all claims brought pursuant to it. However, Plaintiffs could continue litigating their due process claims, see id., under the theory that the stigma caused by Operation Choke Point deprived them of a protected interest in liberty or property. Id. at 123-24 (citing Paul v. Davis, 424 US 693, 708 (1976) & Gen. Elec. Co. v. Jackson, 610 F.3d 110, 121 (D.C. Cir. 2010)).
Plaintiffs then filed a Second Amended Complaint ("SAC"), alleging facts and claims essentially indistinguishable from those contained in their earlier complaints.2 [Dkt. No. 64]. Each Defendant filed an Answer to the Second Amended Complaint. [Dkt. Nos. 65, 66, & 67].
On October 29, 2015, Defendants filed a Motion to Dismiss Plaintiff CFSA for Lack of Associational and Organizational Standing or, in the Alternative, a Motion for Judgment on the Pleadings, [Dkt. No. 73], which they corrected on November 6, 2015. [Dkt. No. 75]. Defendants seek dismissal only of Plaintiff CFSA for lack of standing, and do not challenge the standing or seek dismissal of Plaintiff Advance America. Plaintiffs filed an Opposition on November 12, 2015, [Dkt. No. 76] and Defendants filed their Reply on November 19, 2015. [Dkt. No. 77].
As courts of limited jurisdiction, federal courts possess only those powers specifically granted to them by Congress or directly by the United States Constitution. Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). The plaintiff bears the burden of establishing by a preponderance of the evidence that the Court has subject matter jurisdiction to hear the case. See Shuler v. United States, 531 F.3d 930, 932 (D.C. Cir. 2008). In deciding whether to grant a motion to dismiss for lack of jurisdiction under Rule 12(b)(1), the court must "accept all of the factual allegations in [the] complaint as true." Jerome Stevens Pharmaceuticals, Inc. v. Food & Drug Admin., 402 F.3d 1249, 1253 54 (D.C. Cir. 2005) (quoting United States v. Gaubert, 499 U.S. 315, 327 (1991)).
Nonetheless, "[t]he plaintiff's factual allegations in the complaint will bear closer scrutiny in resolving a 12(b)(1) motion than in resolving a 12(b)(6) motion for failure to state a claim." Grand Lodge of Fraternal Order of Police v. Ashcroft, 185 F. Supp. 2d 9, 13-14 (D.D.C. 2001). The Court may also consider matters outside the pleadings, and may rest its decision on its own resolution of disputed facts. See Herbert v. Nat'l Acad. of Sci., 974 F.2d 192, 197 (D.C. Cir. 1992).
"After the pleadings are closed but within such time as not to delay the trial, any party may move for judgment on the pleadings." Fed. R. Civ. P. 12(c). "Under Rule 12(c), the court must accept the nonmovant's allegations as true and should view the facts in the light most favorable to the nonmovant." Bowman v. District of Columbia, 562 F. Supp. 2d 30, 32 (D.D.C. 2008) (internal citations and quotation marks omitted). As with a motion to dismiss for lack of subject-matter jurisdiction, "the court may consider the motion based on the complaint standing alone or, where necessary, on the complaint supplemented by undisputed facts evidenced in the record, or the complaint supplemented by undisputed facts plus the court's resolution of disputed facts." Id. at 32-33 (internal citations and quotation marks omitted).
"The court should grant a motion for judgment on the pleadings if the movant is entitled to judgment as a matter of law." Id. at 32.
Defendants challenge the standing of Plaintiff CFSA, arguing that it no longer has Article III standing following this Court's dismissal of the Plaintiffs' APA claims. Mot. to Dismiss at 1. Defendants argue that CFSA cannot establish that it has standing to pursue any of the due process claims that remain. Mot. toDismiss at 1-2. Specifically, Defendants contend that CFSA lacks associational standing, organizational standing, or third party standing.3 Id.
CFSA counters that it satisfies the requirements for all three types of standing. Furthermore, CFSA argues that Defendants waived these arguments by failing to raise them in their original Motions to Dismiss for Lack of Subject Matter Jurisdiction or, in the Alternative, for Failure to State a Claim.
Article III of the Constitution limits the jurisdiction of federal courts to certain "Cases" and "Controversies." See U.S. Const. art. III, § 2. "[N]o principle is more fundamental to the judiciary's proper role in our system of government than the constitutional limitation of federal-court jurisdiction to actual cases or controversies." Clapper v. Amnesty Int'l USA, 133 S.Ct. 1138, 1146, (2013) (internal citations omitted). "One element of the case-or-controversy requirement is that plaintiffs mustestablish that they have standing to sue." Id. (internal quotation marks and citation omitted).
Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61, (1992) (internal quotation marks, citations, and footnotes omitted).
Under the theory of associational standing, an organization may sue as a representative of its members even if it lacks standing to sue in its own right. See Hunt v. Washington State Apple Advertising Commission, 432 U.S. 333, 343 (1977). Three elements are required to establish associational standing: 1) at least one of the organization's members has standing to sue in her own right; 2) the interests the organization seeks to protect in its lawsuit are germane to the organization's purpose; and 3) "neither the claim asserted nor the relief requested requires theparticipation of individual members in the lawsuit." Id., at 343; Air Transp. Ass'n v. Reno, 80 F.3d 477, 483 (D.C. Cir. 1996).
The Court has already ruled that CFSA's members have standing to pursue the due process claims remaining in this lawsuit. CFSA, 132 F. Supp. 3d at 108-15. Furthermore, it is self-evident that the interest CFSA seeks to protect--the continued...
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