Frank Krasner Ltd. v. Montgomery County, Md

• Decision Date: 11 March 2005
• Docket Number: No. 04-1030.,04-1030.
• Citation: 401 F.3d 230
• Parties: FRANK KRASNER ENTERPRISES, LTD., d/b/a Silverado Gun Show, d/b/a Silverado Promotions; RSM, Incorporated, d/b/a Valley Gun & Police Supply; Robert D. Culver, Individually and Member of Montgomery Citizens for a Safer Maryland, Plaintiffs-Appellees, v. MONTGOMERY COUNTY, MARYLAND, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fourth Circuit

401 F.3d 230

FRANK KRASNER ENTERPRISES, LTD., d/b/a Silverado Gun Show, d/b/a Silverado Promotions; RSM, Incorporated, d/b/a Valley Gun & Police Supply; Robert D. Culver, Individually and Member of Montgomery Citizens for a Safer Maryland, Plaintiffs-Appellees, v. MONTGOMERY COUNTY, MARYLAND, Defendant-Appellant.

No. 04-1030.

United States Court of Appeals, Fourth Circuit.

Argued: December 1, 2004.

Decided: March 11, 2005.

ARGUED: Clifford Lee Royalty, county attorney's office for the County of Montgomery, Rockville, Maryland, for Appellant. Jonathan Paul Kagan, Brassel & Baldwin, P.A., Annapolis, Maryland, for Appellees. ON BRIEF: Charles W. Thompson, Jr., County Attorney, Marc P. Hansen, Chief, General Counsel Division, Karen L. Federman Henry, Principal Counsel for Appeals, Rockville, Maryland, for Appellant. Alexander J. May, Brassel & Baldwin, P.A., Annapolis, Maryland, for Appellees.

Before LUTTIG and GREGORY, Circuit Judges, and W. Craig BROADWATER, United States District Judge for the Northern District of West Virginia, sitting by designation.

Reversed by published opinion. Judge GREGORY wrote the opinion, in which Judge LUTTIG and Judge BROADWATER joined.

GREGORY, Circuit Judge:

In this case we examine whether a gun-show promoter and an exhibitor at that promoter's gun shows have standing to challenge in federal court a county law that denies public funding to venues that display and sell guns. We hold that no such standing exists. Accordingly, we reverse the ruling of the district court.

I.

Since 1990, Frank Krasner Enterprises, Ltd. ("Krasner") has been in the business of putting on gun shows in the state of Maryland. For his shows in Montgomery County, Maryland, Krasner has biannually leased between 13,000 to 18,000 square feet of space at a venue in the City of Gaithersburg called the Montgomery County Agricultural Center ("Ag Center").¹ Co-Appellee RSM, Inc. is a regular exhibitor at these gun shows who sells firearms and related equipment and also discusses the use and value of firearms. The Ag Center is privately owned by a non-profit group, but has received occasional, yet substantial, funding from Montgomery County for various projects.

On May 16, 2001, the Montgomery County Council amended Chapter 57 of the Montgomery County Code. Exclusively at issue here is section 57-13 of the Code, entitled "Use of Public Funds."² It states:

(a) The County must not give financial or in-kind support to any organization that allows the display and sale of guns at a facility owned or controlled by the organization. Financial or in-kind support means any thing of value that is not generally available to similar organizations in the County, such as a grant, special tax treatment, bond authority, free or discounted services, or a capital improvement constructed by the County.

(b) An organization referred to in subsection (a) that receives direct financial support from the County must repay the support if the organization allows the display and sale of guns at the organization's facility after receiving the County support. The repayment must include the actual, original value of the support, plus reasonable interest calculated by a method specified by the Director of Finance.

Montgomery Co., Md.Code § 57-13. This section applies to guns sold and support received after December 1, 2003. Less than a month after section 57-13 became law, the Ag Center sent a letter to Krasner stating that, "we have been forced to make financial decisions to stop conducting activities which would invoke the County to impose financial sanctions on the Ag Center." J.A. 54. The letter made clear that this decision was a result of the County's funding restriction, not any problems with Krasner.³

The Ag Center's decision does not appear economically irrational: the County had given the Ag Center a total of more than $500,000 over the past ten years for certain discrete projects, and while the County was under no obligation to give the Ag Center anything, the record reveals no reason — other than holding gun shows — that the Ag Center could not expect to receive more funding from the County in the future.⁴ Importantly, however, the letter also noted that the Ag Center did not wish to take Krasner's position opposing the bill:

As you know, from the very beginning of the gun show discussions back in October 2000, the Board of Directors attempted to steer clear of taking a political position on the matter of gun control, because it is not inherent to the Ag Center's mission in the community to take political positions on matters not directly related to agriculture.

J.A. 54.

Krasner, RSM, Inc., and a member of MCSM responded to the Ag Center's decision by suing Montgomery County in the United States District Court for the District of Maryland. Importantly, the Ag Center is not a party to this lawsuit, and the Appellees assert only their rights, not Ag Center's. Appellees' Br. at 17-20. The lawsuit claims that the County's spending provision violates Maryland's "Tillie Frank" law,⁵ which empowers municipalities to ignore some overlapping county regulations, as well as the First and Fourteenth Amendments of the Constitution. The state-law argument is that section 57-13 is really a regulatory provision in the guise of a funding restriction, and thus inapplicable to the Ag Center because it is within the municipality of Gaithersburg, which has exempted itself from County regulations on which the City also has legislative authority. Appellees' Br. at 27-33. Appellees also argue that, even if section 57-13 is a spending restriction, it is invalid because there is no nexus between the purpose of the County's expenditure and prohibiting gun shows. See Id. at 34-42. The First Amendment claim is that section 57-13 singles out Appellees and burdens their "commercial free speech" while the Fourteenth Amendment argument is that section 57-13 violates the Equal Protection Clause because it treats gun shows differently without a rational basis. See Id. at 43-61.

The district court found against the County on the state-law claim and declined to reach the constitutional issues. Frank Krasner Enter., Ltd., v. Montgomery Co., Md., 166 F.Supp.2d 1058 (D.Md.2001). The County appealed, and this court vacated the district court's ruling and remanded for a determination of whether the plaintiffs had standing to sue. See Frank Krasner Enter., Ltd. v. Montgomery Co., Md., 60 Fed.Appx. 471, 472 (4th Cir.2003). On remand, the district court determined that Krasner and RSM alone (collectively, "Appellees") had standing. The County again appeals.

II.

The standing doctrine is an indispensable expression of the Constitution's limitation on Article III courts' power to adjudicate "cases and controversies." Allen v. Wright, 468 U.S. 737, 750-51, 104 S.Ct. 3315, 82 L.Ed.2d 556 (1984). The burden of establishing standing to sue lies squarely on the party claiming subject-matter jurisdiction. Lujan v. Defenders of Wildlife, 504 U.S. 555, 561, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992); Bender v. Williamsport Area Sch. Dist., 475 U.S. 534, 546, 106 S.Ct. 1326, 89 L.Ed.2d 501 (1986). We review the question of whether a party possesses standing, like other questions of law, de novo. Marshall v. Meadows, 105 F.3d 904, 905-06 (1997).

The Supreme Court has held that two strands of standing exist: Article III standing, which enforces the Constitution's case or controversy requirement, and "prudential" standing, which embodies "judicially self-imposed limits on the exercise of federal jurisdiction." Elk Grove Unified Sch. Dist. v. Newdow, 542 U.S. 1, 124 S.Ct. 2301, 2308-09, 159 L.Ed.2d 98 (2004). The requirements of Article III standing are numbingly familiar.⁶ To have a claim heard in federal court, a plaintiff must establish: (1) an "injury in fact" to a "legally protected interest" that is both "(a) concrete and particularized, and (b) actual or imminent, not conjectural or hypothetical"; (2) a causal connection between the injury and the conduct complained of that is "fairly traceable," and not "the result of the independent action of some third party not before the court"; and (3) a non-speculative likelihood that the injury would be redressed by a favorable judicial decision. See Lujan 504 U.S. at 560-61, 112 S.Ct. 2130 (emphasis added) (internal quotations, brackets, and citations omitted).

In Allen v. Wright, 468 U.S. 737, 104 S.Ct. 3315, 82 L.Ed.2d 556 (1984), the Supreme Court acknowledged that the plaintiffs, parents of black schoolchildren, stated an injury in fact (a diminished chance for their children to receive a racially integrated education) but found that the injury was not "fairly traceable" to the government's challenged actions (granting tax-exempt status to racially discriminatory public schools). Id. at 753, 756-58, 104 S.Ct. 3315. Rather, the Court held that the link was "highly indirect" and "attenuated at best" because the injury "`results from the independent action of some third party not before the court.'" Id. at 757, 104 S.Ct. 3315 (quoting Simon v. Eastern Ky. Welfare Rights Org., 426 U.S. 26, 42, 96 S.Ct. 1917, 48 L.Ed.2d 450 (1976)) (emphasis added). That is, the Court could not be sure — but rather found it "speculative" — that, had the schools not been given tax-exempt status, the white children would have attended public rather than private schools. Id. at 758, 104 S.Ct. 3315.

Cases after Allen have held that when a plaintiff is not the direct subject of government action, but rather when the "asserted injury arises from the government's allegedly unlawful regulation (or lack of regulation) of someone else," Lujan, 504 U.S. at 562, 112 S.Ct. 2130 (emphasis in original), satisfying standing requirements will be "`substantially more difficult.'" Id. (quoting Allen, 468 U.S. at 758, 104 S.Ct. 3315). This is so because, "[t]he existence of one or more of the essential elements of standing `depends on the unfettered choices made...