Fleck and Associates v. Phoenix, City

• Decision Date: 22 December 2006
• Docket Number: No. 05-15293.,05-15293.
• Citation: 471 F.3d 1100
• Parties: FLECK AND ASSOCIATES, INC., an Arizona corporation, Plaintiff-Appellant, v. PHOENIX, CITY OF, AN ARIZONA MUNICIPAL CORPORATION, Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

471 F.3d 1100

FLECK AND ASSOCIATES, INC., an Arizona corporation, Plaintiff-Appellant, v. PHOENIX, CITY OF, AN ARIZONA MUNICIPAL CORPORATION, Defendant-Appellee.

No. 05-15293.

United States Court of Appeals, Ninth Circuit.

Submitted December 8, 2006.^*

Filed December 22, 2006.

COPYRIGHT MATERIAL OMITTED

Paul Gattone, Tucson, AZ, for the appellant.

James H. Hays, Assistant City Attorney, Phoenix, AZ, for the appellee.

Appeal from the United States District Court for the District of Arizona; David G. Campbell, District Judge, Presiding. D.C. No. CV-04-01118-PHX-DGC.

Before: D.W. NELSON, COWEN,^** and BERZON, Circuit Judges.

D.W. NELSON, Senior Circuit Judge:

This is a challenge, based on the constitutional right of privacy, to an ordinance prohibiting the operation of "live sex act" businesses in Phoenix, Arizona ("Phoenix" or "the city"). Appellant Fleck and Associates, Inc. ("Fleck") runs such an establishment and appeals the district court's order dismissing its complaint with prejudice.¹ The district court correctly determined Fleck lacked standing to assert any cognizable privacy rights under the allegations in its complaint. However, the court improperly proceeded to reach the merits of the underlying suit, determining that Fleck's customers could not state a claim for relief under any conceivable set of facts. Because Fleck lacked standing to assert either its own putative privacy rights or the interests of its customers, the district court lacked subject matter jurisdiction and should have dismissed the complaint on that ground alone. We therefore disapprove of the district court's undertaking on the merits and hereby vacate the district court's order and remand with instructions to dismiss the complaint without prejudice.

FACTUAL AND PROCEDURAL BACKGROUND²

Fleck is a for-profit corporation that operates Flex, a gay men's social club in Phoenix, Arizona. The club limits access to adults who have purchased "memberships" on a yearly, semi-yearly, or daily basis. Many people enter the club by purchasing daily passes. Customers can rent private dressing rooms for an additional fee. Sexual activities take place in the dressing rooms and in other areas of the club.

In 1998, the city banned "live sex act business[es]" defined as those "in which one or more persons may view, or may participate in, a live sex act for a consideration." PHOENIX, AZ., CODE § 23-54(B)(3) & (C). In January 2004, police officers entered Flex, searched its office, questioned two employees and detained them overnight. Fleck has been threatened with similar actions.

On June 2, 2004, Fleck filed suit in the District of Arizona seeking injunctive and declaratory relief on the ground the above-described governmental conduct "violated the privacy rights of Plaintiff as well as the members and users of their [sic] facility in violation of the Due Process Clause as codified in the Fifth and Fourteenth Amendments." The complaint did not allege Fleck suffered any injury other than the invasion of its supposed privacy interests. Fleck and Associates, Inc. was the only named plaintiff.

The city filed a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(1) and (6). On February 15, 2005, the district court granted the motion, ordered the complaint dismissed with prejudice, and entered judgment for the city. The court treated the complaint as raising two distinct claims, one predicated on an invasion of the rights of Fleck's customers ("the customers' claim") and another based on the invasion of Fleck's rights as a corporation ("the corporate claim").

The court correctly found Fleck lacked standing to assert the rights of its customers. However, the court also opted, "in the interest of judicial economy," Fleck & Assocs. Inc., 356 F.Supp.2d at 1039 n. 4, to discuss the merits, deciding that "the privacy rights of Fleck's members . . . do not exist in Fleck's public social club." Id. at 1041. The district court therefore dismissed the customers' claim on the alternative grounds that Fleck lacked standing to bring it or that it failed as a matter of law given the nature of the right to privacy. Because Fleck lacked standing to assert its customers' rights, the district court lacked subject matter jurisdiction over the claim and should have dismissed on that basis without discussing the merits.

As to the second claim, the court held Fleck enjoyed standing to assert its own rights as a corporation. Id. at 1038. The court did not, however, identify what those corporate rights might have been. Instead, it immediately proceeded to hold that Fleck lacked any cognizable privacy rights and dismissed for failure to state a claim. Id. at 1039, 1041. Because Fleck failed to allege the invasion of any cognizable corporate right, it similarly lacked standing to raise the corporate claim. Therefore, this claim should also have been dismissed for lack of subject matter jurisdiction.

DISCUSSION

I. Standard of Review

Whether a party lacks standing is a legal issue subject to de novo review. Hong Kong Supermarket v. Kizer, 830 F.2d 1078, 1080 (9th Cir.1987).

II. Standing

A. "Traditional" (Non-Associational) Standing

Standing doctrine involves "`both constitutional limitations on federal-court jurisdiction and prudential limitations on its exercise.'" Kowalski v. Tesmer, 543 U.S. 125, 128-29, 125 S.Ct. 564, 160 L.Ed.2d 519 (2004) (quoting Warth v. Seldin, 422 U.S. 490, 498, 95 S.Ct. 2197, 45 L.Ed.2d 343 (1975)). The constitutional aspect inquires "whether the plaintiff has made out a `case or controversy'" between himself and the defendant within the meaning of Art[icle] III "by demonstrating a sufficient personal stake in the outcome." Warth, 422 U.S. at 498, 95 S.Ct. 2197. The prudential limitations, in contrast, restrict the grounds a plaintiff may put forward in seeking to vindicate his personal stake. Id. at 499, 95 S.Ct. 2197. Most important for our purposes is that "a litigant must normally assert his own legal interests rather than those of third parties." Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 804, 105 S.Ct. 2965, 86 L.Ed.2d 628 (1985) (citations omitted).

The constitutional limitations require a litigant to allege "(1) a threatened or actual distinct and palpable injury to [himself]; (2) a fairly traceable causal connection between the alleged injury and the . . . challenged conduct; and (3) a substantial likelihood that the requested relief will redress or prevent the injury." Hong Kong Supermarket, 830 F.2d at 1081 (citations omitted).

The first of these elements, sometimes described as "injury in fact," necessitates a showing of "an invasion of a legally protected interest" that "affect[s] the plaintiff in a personal and individual way." Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 & n. 1, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992). A plaintiff seeking to invoke federal court jurisdiction must plead that he has suffered some cognizable injury to make the threshold showing of a case or controversy. Vt. Agency of Natural Res. v. United States ex rel. Stevens, 529 U.S. 765, 771, 120 S.Ct. 1858, 146 L.Ed.2d 836 (2000) ("[T]he Art[icle] III judicial power exists only to redress or otherwise to protect against injury to the complaining party.") (quoting Warth, 422 U.S. at 499, 95 S.Ct. 2197).

Fleck has failed to plead an injury in fact. According to the complaint, the only harm that has allegedly befallen Fleck & Associates Inc. is that its "privacy rights" were violated when the city "criminalized private, consensual homosexual sexual acts" by enacting and enforcing § 23-54. However, as the district court correctly held, corporations have no such privacy rights. Since Fleck has not alleged the invasion of any cognizable right, it has failed to establish the "irreducible constitutional minimum of standing." Lujan, 504 U.S. at 560, 112 S.Ct. 2130.

"[C]orporations can claim no equality with individuals in the enjoyment of a right to privacy." United States v. Morton Salt Co., 338 U.S. 632, 652, 70 S.Ct. 357, 94 L.Ed. 401 (1950); see also Browning-Ferris Indus. v. Kelco Disposal, Inc., 492 U.S. 257, 284, 109 S.Ct. 2909, 106 L.Ed.2d 219 (1989) (O'Connor, J., concurring in part, dissenting in part) ("[A] corporation has no . . . right to privacy."). More generally, a corporation is not entitled to "`purely personal' guarantees" — those rights that have historically been granted to protect individuals. First Nat'l Bank of Boston v. Bellotti, 435 U.S. 765, 778 n. 14, 98 S.Ct. 1407, 55 L.Ed.2d 707 (1978). An analysis of the "nature, history, and purpose," id., of the constitutional guarantee at issue demonstrates that it is "purely personal" and therefore incapable of being claimed by a corporation.

Fleck squarely identifies the source of its supposed right as the liberty guarantee described in Lawrence v. Texas, 539 U.S. 558, 123 S.Ct. 2472, 156 L.Ed.2d 508 (2003). The Lawrence Court, however, was concerned with "the autonomy of the person" to make choices about intimate relationships free from governmental stigmatization or sanction. Id. at 574, 123 S.Ct. 2472. "At the heart of liberty is the right to define one's own concept of existence, of meaning, of the universe, and of the mystery of human life." Id. (quoting Planned Parenthood of Se. Pa. v. Casey, 505 U.S. 833, 851, 112 S.Ct. 2791, 120 L.Ed.2d 674 (1992)). The Lawrence Court held that due process requires "respect for [the petitioners'] private lives [such that t]he State cannot demean their existence or control their destiny by making their private sexual conduct a crime." Id. at 578, 123 S.Ct. 2472.

It is hard to imagine a constitutional guarantee that could be more inherently personal and therefore unavailable to a corporate entity, "an artificial being, invisible, intangible, and existing only in contemplation of law." Dartmouth College v. Woodward, 17 U.S. (4 Wheat.) 518, 636, 4 L.Ed. 629 (1819). Corporations are not self-defining autonomous creatures...