Digital Recognition Network, Inc. v. Hutchinson

Decision Date13 October 2015
Docket NumberNo. 14–3084.,14–3084.
Citation803 F.3d 952
PartiesDIGITAL RECOGNITION NETWORK, INC. ; Vigilant Solutions Inc., Plaintiffs–Appellants, v. Asa HUTCHINSON, in his official capacity as Governor of the State of Arkansas; Leslie Rutledge, in her official capacity as Attorney General of the State of Arkansas,Defendants–Appellees.
CourtU.S. Court of Appeals — Eighth Circuit

Michael A. Carvin, argued, Washington, DC, Jane W. Duke, Little Rock, AR, Ryan J. Watson, Washington, DC, on the brief, for PlaintiffsAppellants.

Patrick E. Hollingsworth, AAG, argued, Little Rock, AR, for DefendantsAppellees.

Before MURPHY, COLLOTON, and KELLY, Circuit Judges.

Opinion

COLLOTON, Circuit Judge.

Digital Recognition Network, Inc., and Vigilant Solutions, Inc., contend that the Arkansas Automatic License Plate Reader System Act, Ark.Code § 12–12–1801 et seq., violates their rights to freedom of speech under the First Amendment. They sued the attorney general and governor of Arkansas under 42 U.S.C. § 1983 and 28 U.S.C. §§ 2201 and 2202, seeking injunctions prohibiting enforcement of the Act and a declaration that the Act is unconstitutional. The district court2 granted the officials' motion to dismiss, ruling that the officials are immune from suit under the Eleventh Amendment. We affirm the court's dismissal on the ground that Digital Recognition Network and Vigilant Solutions lack standing, so there is no Article III case or controversy.

I.

We recite the facts according to the complaint filed by Digital Recognition and Vigilant, as we will call the companies for convenience. Vigilant Solutions developed an automatic license plate reader technique that permits computers to identify license-plate numbers in digital photographs. Digital Recognition uses Vigilant's reader technique to identify license-plate numbers in photographs taken by cameras that Digital Recognition sells to vehicle repossession companies and others. A repossession company mounts the cameras on tow trucks and other vehicles, and the cameras automatically photograph everything the vehicles encounter. Digital Recognition notifies the driver when a photographed vehicle is subject to repossession, and sells the license-plate data it collects to clients, such as automobile finance and insurance companies.

The clients use the license-plate data to identify cars that are subject to repossession and to locate cars that have been stolen or fraudulently reported as stolen. The cameras also date and time-stamp the photographs and record the global positioning system coordinates for the location at which the picture was taken. Digital Recognition uses this information to aid its clients in recovering vehicles. Digital Recognition also partners with Vigilant to make the reader data available to law enforcement agencies. The agencies use Digital Recognition's data to locate missing persons and find stolen vehicles.

Effective August 2013, Arkansas enacted the Automatic License Plate Reader System Act, which makes it “unlawful for an individual, partnership, corporation, association, or the State of Arkansas, its agencies, and political subdivisions to use an automatic license plate reader system.” Ark.Code § 12–12–1803(a). The Reader System Act, as we will call it for short, permits “any ... person claiming that a violation of [the Act] has injured his or her business, person, or reputation,” to bring an action for damages against the violator. Id. § 12–12–1807(a).

Before the Act became law, Digital Recognition sold three camera kits to companies operating in Arkansas, and two of them had begun using the kits. Digital Recognition collected data in Arkansas, and then sold the data to clients and disseminated it to Vigilant. Law enforcement agencies in Arkansas accessed Vigilant's data, sometimes generating investigative leads. Because of the Act, Digital Recognition's camera affiliates in Arkansas have stopped using the camera kits, so Digital Recognition no longer is able to collect license-plate data in Arkansas.

Digital Recognition stopped selling or disseminating license-plate data, and the company does not offer camera kits for sale. Vigilant no longer receives data from Digital Recognition or distributes it to law enforcement agencies. The companies understand the Reader System Act to prohibit these activities. But for the Act, Digital Recognition, Vigilant, and their affiliates would resume collection and dissemination of license-plate data and the sale of camera kits in Arkansas.

Digital Recognition and Vigilant (collectively hereafter, Digital Recognition) sued the governor and attorney general of Arkansas in their official capacities in May 2014. Digital Recognition claimed that “use of [automatic license plate reader] systems to collect and create information” and dissemination of the information constitutes speech. According to Digital Recognition, the Act impermissibly restricts this speech based on its content—license-plate data—and on the identity of the speaker, because the Act contains exceptions for some entities, such as law enforcement agencies. See Ark.Code § 12–12–1803(b)(1). Digital Recognition sought a declaration that the Act violates the Free Speech Clause, and preliminary and permanent injunctive relief prohibiting application or enforcement of the Act. Digital Recognition also moved separately for preliminary injunctive relief.

The Arkansas officials moved to dismiss the case, arguing that there is no case or controversy under Article III, and that they are immune from suit under the Eleventh Amendment. The district court ruled that Digital Recognition lacked standing to seek an injunction, but had standing to pursue declaratory relief, because the court thought a declaratory judgment would redress the company's injury. The district court then concluded, however, that sovereign immunity reflected in the Eleventh Amendment barred the suit against the governor and the attorney general in their official capacities. The court considered the exception to sovereign immunity for relief against state officials with authority to enforce state law, see Ex Parte Young, 209 U.S. 123, 28 S.Ct. 441, 52 L.Ed. 714 (1908), but ruled that the exception did not apply, because the Arkansas officials “are not connected to enforcement of the [Reader System] Act, nor have they threatened to enforce it.” The district court denied Digital Recognition's motion for preliminary injunctive relief as moot. Digital Recognition appeals, and we review the district court's ruling de novo. Anderson–Tully Co. v. McDaniel, 571 F.3d 760, 762 (8th Cir.2009).

II.

Digital Recognition argues that the district court erred by dismissing its complaint based on the Eleventh Amendment and state sovereign immunity. The state officials make a two-fold response: The Eleventh Amendment bars the suit, because the officials do not have sufficient connection to enforcement of the Reader System Act, and there is no Article III case or controversy, because Digital Recognition lacks standing to sue.

Article III of the U.S. Constitution limits the jurisdiction of the federal courts to Cases and “Controversies.” Already, LLC v. Nike, Inc., ––– U.S. ––––, 133 S.Ct. 721, 726, 184 L.Ed.2d 553 (2013). [S]tanding is an essential and unchanging part of the case-or-controversy requirement.” Lujan v. Defenders of Wildlife, 504 U.S. 555, 560, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992). To establish standing, a plaintiff must show that he has suffered an injury in fact that is fairly traceable to the challenged conduct of the defendant and will likely be redressed by a favorable decision. Id. at 560–61, 112 S.Ct. 2130. Digital Recognition must establish standing for each type of remedy sought, including declaratory and injunctive relief. Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S. 167, 185, 120 S.Ct. 693, 145 L.Ed.2d 610 (2000) ; see Mosby v. Ligon, 418 F.3d 927, 932–33 (8th Cir.2005).

“The Eleventh Amendment confirms the sovereign status of the States by shielding them from suits by individuals absent their consent.”Frew ex rel. Frew v. Hawkins, 540 U.S. 431, 437, 124 S.Ct. 899, 157 L.Ed.2d 855 (2004). The Eleventh Amendment also bars suits brought against state officials if the state is the real, substantial party in interest.” Pennhurst State Sch. & Hosp. v. Halderman, 465 U.S. 89, 101, 104 S.Ct. 900, 79 L.Ed.2d 67 (1984) (internal quotation marks omitted). In Ex Parte Young, the Supreme Court established a significant exception to this immunity. The Court held that a suit to enjoin a state official's enforcement of state legislation on the ground that the official's action would violate the Constitution is not a suit against the State, and is thus not barred by the Eleventh Amendment, so long as the official has “some connection with the enforcement the act.” 209 U.S. at 155–60, 28 S.Ct. 441 ; see Va. Office for Prot. & Advocacy v. Stewart, 563 U.S. 247, 131 S.Ct. 1632, 1638, 179 L.Ed.2d 675 (2011). The Court reasoned that unconstitutional state legislation is “void,” and that a state official's enforcement of that legislation therefore “is a proceeding without the authority of, and one which does not affect, the state in its sovereign or governmental capacity.” Ex Parte Young, 209 U.S. at 159, 28 S.Ct. 441. Enforcement of unconstitutional legislation “is simply an illegal act upon the part of [the] state official,” and the State may not immunize officials from suit for such violations of the Constitution. Id. at 159–60, 28 S.Ct. 441.

In a case like this one, the questions of Article III jurisdiction and Eleventh Amendment immunity are related. Article III requires the plaintiff to show a causal connection between the state officials and the alleged injury. The Eleventh Amendment does not preclude jurisdiction over the state officials if there is “some connection” between the officials and enforcement of the challenged state law. This court concluded in one case that...

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