Young America v. Affiliated Computer Services

• Citation: 424 F.3d 840
• Decision Date: 29 September 2005
• Docket Number: No. 04-3674.,04-3674.
• Parties: YOUNG AMERICA CORPORATION, a Minnesota Corporation, Appellant, v. AFFILIATED COMPUTER SERVICES (ACS), INC., a Nevada Corporation, in its capacity as agent for the States of Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Maine, Maryland, Massachusetts, Michigan, Mississippi, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina, Oklahoma, Oregon, Rhode Island, South Carolina, South Dakota, Tennessee, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, and Wyoming (the "States"); David Epstein, in his capacity as agent for the States, Appellees.
• Court: U.S. Court of Appeals — Eighth Circuit

424 F.3d 840

YOUNG AMERICA CORPORATION, a Minnesota Corporation, Appellant, v. AFFILIATED COMPUTER SERVICES (ACS), INC., a Nevada Corporation, in its capacity as agent for the States of Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Maine, Maryland, Massachusetts, Michigan, Mississippi, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina, Oklahoma, Oregon, Rhode Island, South Carolina, South Dakota, Tennessee, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, and Wyoming (the "States"); David Epstein, in his capacity as agent for the States, Appellees.

No. 04-3674.

United States Court of Appeals, Eighth Circuit.

Submitted: June 23, 2005.

Filed: September 29, 2005.

COPYRIGHT MATERIAL OMITTED

Patrick J. McLaughlin, argued, Minneapolis, MN (Todd C. Pearson, on the brief), for appellant.

Aaron D. Van Oort, argued, Minneapolis, MN (Jerry W. Snider, on the brief), for appellee.

Before RILEY, BRIGHT, and JOHN R. GIBSON, Circuit Judges.

RILEY, Circuit Judge.

Young America Corporation (Young America) brought this action against Affiliated Computer Services, Inc. (ACS) and David Epstein (Epstein), an individual affiliated with ACS, seeking declaratory and injunctive relief to prevent ACS from auditing Young America's business records. The district court¹ dismissed the action for lack of subject matter jurisdiction. Young America appeals, and we affirm.

I. BACKGROUND

Young America is engaged in the rebate "fulfillment" business. Young America processes rebates offered by sellers of consumer goods and mails rebate checks to qualifying consumers. When consumers fail to cash the rebate checks, an accumulation of unclaimed property results.

Forty-one states have authorized ACS to audit Young America's records. The purpose of the audit is to determine whether Young America is complying with the states' unclaimed property laws and whether Young America is holding unclaimed property over which the states claim rights.²

Each of the forty-one states sent Young America a letter advising each state had authorized ACS to perform an audit. Six of these states also advised Young America that state law provides for assessments, including interest, penalties, fines, and examination costs, for failing to perform certain duties under the statute, or for failing to report or deliver property within the prescribed time.

Young America refused to submit to an audit and filed this action against ACS and Epstein, seeking declaratory and injunctive relief. In its second amended complaint (complaint), Young America alleges the proposed audit violates the Commerce Clause and the Due Process Clause of the Fourteenth Amendment (Count I); the audit is an unreasonable search and seizure, in violation of the Fourth and Fourteenth Amendments (Count II); and Young America is not a "holder" of unclaimed property, and therefore is not subject to an audit (Count III).

ACS and Epstein moved to dismiss the complaint, arguing the district court lacked (1) subject matter jurisdiction because Young America failed to allege standing sufficiently, and (2) personal jurisdiction over Epstein.³ The district court referred the motion to dismiss to the magistrate judge,⁴ who recommended granting the motion.

Overruling Young America's objections to the magistrate judge's report and recommendation, the district court adopted the magistrate judge's recommendation and granted ACS's motion to dismiss. Because the district court dismissed Young America's complaint for lack of subject matter jurisdiction, it did not address the issue of personal jurisdiction over Epstein. The district court also denied Young America's request for leave to file a third amended complaint, in which Young America would have included allegations the audit demands caused injury to Young America by casting a "pall" on its business. Young America appeals the dismissal of its case, contending it sufficiently alleged standing.

II. DISCUSSION

"[I]f a plaintiff lacks standing, the district court has no subject matter jurisdiction." Faibisch v. Univ. of Minn., 304 F.3d 797, 801 (8th Cir.2002). To show standing under Article III of the U.S. Constitution, a plaintiff must demonstrate (1) injury in fact, (2) a causal connection between that injury and the challenged conduct, and (3) the likelihood that a favorable decision by the court will redress the alleged injury. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992). "The party invoking federal jurisdiction bears the burden of establishing these elements." Id. at 561, 112 S.Ct. 2130. This court reviews de novo a district court's decision to grant a motion to dismiss for lack of subject matter jurisdiction. Metzger v. Village of Cedar Creek, Neb., 370 F.3d 822, 823 (8th Cir.2004).

A. Injury

The district court concluded Young America failed to allege an imminent injury sufficiently, because (1) the state statutes do not authorize penalties if Young America refuses to submit to an audit, (2) ACS has not threatened to penalize Young America for refusing to submit to an audit, and (3) ACS does not have the authority to enforce the state statutes. The district court also noted Young America failed to make minimum factual allegations of injury as to how the audit demand constitutes an actual or imminent injury.

For purposes of standing, a plaintiff's injury must consist of "an invasion of a legally protected interest which is (a) concrete and particularized, and (b) actual or imminent, not conjectural or hypothetical." Lujan, 504 U.S. at 560, 112 S.Ct. 2130 (internal citations and quotations omitted). A complaint need not make a large number of allegations relating to the injury suffered: "general factual allegations of injury resulting from the defendant's conduct may suffice" to establish standing. Id. at 561, 112 S.Ct. 2130. If the plaintiff offers no factual allegations, specific or general, demonstrating an injury in fact, the court should dismiss the claim. See Burton v. Cent. Interstate Low-Level Radioactive Waste Compact Comm'n, 23 F.3d 208, 209 (8th Cir.1994) (holding the plaintiffs failed to allege injury, for purposes of standing, where the plaintiffs did not explain how the challenged tax affected the plaintiffs' rights).

In assessing whether the plaintiff has alleged a sufficiently particularized and concrete injury, the court must accept all factual allegations in the complaint as true and draw all inferences in the plaintiff's favor. Lujan, 504 U.S. at 561, 112 S.Ct. 2130 (stating "[a]t the pleading stage. . . on a motion to dismiss we presume that general allegations embrace those specific facts that are necessary to support the claim") (internal punctuation and quotation omitted); Titus v. Sullivan, 4 F.3d 590, 593 (8th Cir.1993) (holding in a facial challenge to jurisdiction, the court presumes all of the factual allegations concerning jurisdiction to be true and will grant the motion only if the plaintiff fails to allege an element necessary for subject matter jurisdiction).

Young America contends its alleged injury is not hypothetical because the audit demand letters attached to the complaint threaten to enforce ACS's examination demand. The letters simply authorize an audit. They do not threaten enforcement action if Young America refuses to submit to an audit. Even if the letters threatened enforcement action, Young America's complaint contains no allegation ACS itself has attempted or intends to attempt to seek enforcement of its audit demand. ACS has neither issued any subpoenas to compel the production of records nor...