Appeals from the Superior Court of the District of Columbia (CAB1425-02) and (CAB532-08) (Hon. Melvin R. Wright, Trial Judge)
(Hon. Lynn Leibovitz, Trial Judge)
Argued en banc June 22, 2010
Before WASHINGTON, Chief Judge, RUIZ, REID, GLICKMAN, KRAMER, FISHER, BLACKBURNE-RIGSBY, THOMPSON, and OBERLY, Associate Judges.
Opinion for the court by Associate Judge Reid.
Opinion concurring in part and dissenting in part by Judge Ruiz at p. 68.
REID, Associate Judge: In these consolidated cases*fn1 appellant Alan Grayson appeals the trial court's judgment granting appellees'*fn2 Super. Ct. Civ. R. 12 (b) motion to dismiss his District of Columbia Consumer Protection Procedures Act ("CPPA") claims for unlawful trade practices.*fn3 These claims involve the unused balance on telephone calling cards (escheated telephone calling card prepayments), and Mr. Grayson describes his lawsuit as "a 'whistleblower' action" to recover funds belonging to the District. The trial court dismissed Mr. Grayson's CPPA claim on the ground that he lacked standing (Rule 12 (b)(1)), and even if he suffered injury, his complaint failed to state a claim for which relief may be granted (Rule 12 (b)(6)).
Appellant Paul M. Breakman appeals the trial court's judgment granting the Super. Ct. Civ. R. 12 (b)(1) motion of appellee, AOL LLC ("AOL"), to dismiss his CPPA claim for unlawful trade practice on the ground that he does not have standing. He alleged, in essence, that AOL failed to disclose to its current and existing members the cheaper option for monthly Dial-Up ISP Service charged to new members.
Confronting us in both cases is a fundamental threshold issue of standing, which is not to be confounded with the question of whether appellants can prevail on the merits of their respective claims. Rather, we must determine whether the trial court properly dismissed these claims, in response to appellees' motions to dismiss, because appellants do not have standing to assert their CPPA claims. To answer that question, we focus first on the standing requirement in the District of Columbia. Second, we examine whether the Council of the District of Columbia intended to disturb or override this court's constitutional standing requirement. Third, we determine whether the factual allegations in Mr. Grayson's and Mr. Breakman's respective complaints are sufficient to enable them to survive a standing challenge on a motion to dismiss. Finally, because the trial court also dismissed Mr. Grayson's complaint under Super. Ct. Civ. R. 12 (b)(6), we consider whether his complaint states a cause of action within the meaning of that rule.
We conclude that even though Congress created the District of Columbia court system under Article I of the Constitution, rather than Article III, this court has followed consistently the constitutional standing requirement embodied in Article III. Thus, appellants must allege "some threatened or actual injury resulting from . . . putatively illegal action"*fn4 in order for this court to assume jurisdiction. "The actual or threatened injury required by Art. III may exist solely by virtue of 'statutes creating legal rights, the invasion of which creates standing.'"*fn5
We hold that the Council of the District of Columbia did not disturb or override our constitutional standing requirement in amending the CPPA in 2000; the words of the 2000 amendments, viewed in the context of the legislative and drafting history of these amendments, do not reveal an explicit intent of the Council to erase the constitutional standing requirement*fn6 to which this court has adhered during the past several decades.*fn7
Furthermore, we hold that the trial court properly dismissed Mr. Breakman's complaint under Rule 12 (b)(1) because he failed to plead sufficient facts showing that he meets the constitutional standing requirement, that is that he suffered an injury in fact or that he is entitled to lodge a representative action. And, we hold that Mr. Grayson has individual standing to seek injunctive or other relief under the principle that the "actual or threatened injury required by Art. III [of the Constitution] may exist solely by virtue of 'statutes creating legal rights, the invasion of which creates standing.'" Warth.*fn8 However, we conclude that Mr. Grayson failed to allege legally viable claims under D.C. Code § 28-3904 (a), (e), (f), (h), and (r).
Accordingly, we affirm the trial court's dismissal of Mr. Breakman's complaint; we disagree with its ruling as to Mr. Grayson's standing, but affirm its dismissal of Mr. Grayson's complaint under Super. Ct. Civ. R. 12 (b)(6). We also amend and reissue Grayson I as an opinion covering only Mr. Grayson's claim under the District of Columbia False Claims Act ("FCA").
Mr. Grayson's Amended Complaint and Mr. Breakman's Complaint
On March 26, 2004, Mr. Grayson filed an amended complaint in which he set forth a cause of action under the CPPA. He alleged the following, in part. He brought "this cause of action for the interests of himself and the general public." Paragraph 157. He described himself essentially as a businessman who had served in 1990 and 1991 as the President of a Fortune 500 international communications company, with over $1 billion in assets, which "operates in a variety of different markets, including prepaid calling cards."*fn9 "He has obtained and used prepaid calling cards in [the] District, the unused value of which the Defendants have failed to report and pay to the Mayor." Paragraph 6. Mr. Grayson alleges further that the unused portion of a prepaid calling card is "breakage," and "[t]he defendants have been retaining breakage since 1992," in the amount of millions of dollars, instead of reporting and turning over the breakage to the Mayor of the District, as unclaimed property. Paragraphs 27-35. As of some time in 2003, "each of the Defendants held around $200,000 in communications prepayments received in 1999 from owners whose last known address was in the District"; these sums "had remained dormant during the statutory dormancy period," but "[t]he defendants failed to report and pay or deliver these deposits and advance payments to the Mayor by November 1, 2003." Paragraph 64. When "the amount of communications prepayments that the Defendants received from persons with District addresses in other years since 1997," are taken into consideration, "the total amount of communications prepayments that each of the [D]efendants had received from owners whose last known address was in the District that had remained dormant during the statutory dormancy period, as of June 30, 2003, exceeded $500,000 for Verizon, AT&T, MCI and Sprint." These sums were not reported or paid to the District, and "[a]s noted above, the . . . Plaintiff has obtained and used prepaid calling cards in the District, the unused value of which the Defendants have failed to report and pay to the Mayor." Paragraph 32.
The complaint alleged that by their actions, the Defendants engaged in
unlawful trade practices under D.C. Code § 28-3904 (2003).*fn10
Paragraph 165. "The Defendants have
engaged in the trade practice of soliciting and accepting
communications prepayments, and then failing to pay or deliver to the
Mayor the unused balances of prepaid calling cards . . ., in violation
of [the District of Columbia Unclaimed Property Act, in particular,
D.C. Code § 41-119 (2003)]." Paragraph 164. Paragraphs 166 through 168
and 173 of Mr. Grayson's "Second Claim for Relief" specified that
"[t]his practice is unlawful under D.C. Code § 28-3904 . . . for
166. § 28-3904 (a) & (e). It is unlawful because the Defendants have represented to the owner that his or her prepayment equals the purchase price of the card. The Defendants have provided services whose price is less than the amount of prepayment. Thus the Defendants have represented that their services have characteristics, uses, benefits and quantities that they do not have. This violates D.C. Code § 28-3904 (a) (2003). This also constitutes a representation of a material fact which has a tendency to mislead, which violates id. § 28-3904 (e).
167. § 28-3904 (h). This trade practice is unlawful because the Defendants have advertised and offered communications services whose price is equal to the amount of the prepayment, when the Defendants did not intend to provide services whose price is equal to the amount of the prepayment. In fact, the Defendants have provided services whose price is less than the amount of prepayment. Thus the Defendants have advertised or offered services without the intent to sell them (in cases where the calling card is never used) or without the intent to sell them as advertised or offered. This violates D.C. Code § 28-3904 (h) (2003). . . . . 168. § 28-3904 (r). This trade practice is unlawful because pursuant to it, the Defendants retain property that, by law [D.C. Code § 41-119 (2003) and D.C. Code § 2-308.14 (2003)], must be paid or delivered to the District. The Defendants knew at the time of the sale that breakage is common, and their customers would be unable to receive substantial benefits from such breakage, unless the Defendants paid or delivered it to the District. Breakage leads to a gross disparity between the price of the prepaid calling card sold and the value of the services received. The Defendants have knowingly taken advantage of the inability of the customer reasonably to protect his interests because of age, physical or mental infirmities, ignorance, illiteracy, and inability to understand the language of the agreement, all of which lead to high breakage levels. This violates D.C. Code § 28-3904 (r) (2003). . . . . 173. § 28-3904 (f). The failure to pay or deliver breakage to the District also is unlawful because the Defendants have failed to inform their customers that the Defendants will not pay or deliver breakage to the District. This is failure to state a material fact, and such failure tends to mislead the customers, in violation of D.C. Code § 28-3904 (f) (2003).
Paragraphs 169 to 172 alleged the impact of defendants' unlawful trade practices on senior citizens and disabled persons. For example, Paragraph 172 declared that "senior citizens and disabled persons are substantially more vulnerable than other members of the public to the Defendants' conduct set forth above because of age, poor health or infirmity, impaired understanding, mobility or disability. They have actually suffered substantial economic damage from the Defendants' conduct." Paragraph 177 asserted that: "Verizon, AT&T, MCI and Sprint each have issued approximately 100,000 prepaid calling cards to persons whose last known address is in the District, which have remained dormant during the statutory period, but for which breakage has not been paid or delivered to the Mayor."
Mr. Breakman filed a complaint against AOL on January 23, 2008. He sought "to remedy AOL's unlawful trade practice of charging its current and past members more than double the price offered to new members for essentially the same services and failing to disclose to . . . current and past members that essentially the same services are available at less than half the price they are being charged." Paragraph 1. He described himself only as "a resident of the District of Columbia," Paragraph 14, who was bringing his lawsuit "in a representative capacity on behalf of the interests of the general public . . . for unlawful trade practices under the [CPPA]." Paragraph 5. He did not allege that he is an AOL member, or that he has any relationship to AOL. Rather, Mr. Breakman's complaint states that he 'is suing Defendant AOL for its trade practices in violation of the laws of the District of Columbia which have injured District of Columbia consumers who have paid and/or continue to pay AOL $23.90 to $25.90 a month for essentially the same Dial-up ISP Service new members get for $9.95 a month because AOL has failed to disclose to said consumers the material fact that essentially the same service is available for $9.95 per month.' Paragraph 12. He demanded "actual damages," "treble damages," "punitive damages," "[a]n injunction," and "[r]easonable attorneys' fees" against AOL "for each individual consumer."
Appellees' Motions to Dismiss and the Rulings of the Trial Court
On March 20, 2007, appellees moved jointly to dismiss Mr. Grayson's claims, contending that his "complaint fails to state a claim under the [CPPA] because plaintiff cannot show that he or any other customer was injured." In an oral ruling, the trial court determined that Mr. Grayson lacked standing, noting that "to maintain a claim under the [CPPA], the plaintiff has to produce some evidence showing that there's some damage that he has suffered as a result of the unlawful trade practice." The court declared that Mr. Grayson "is a resident of the State of Florida and not the District of Columbia." Furthermore, the court reasoned that Mr. Grayson "has held the unclaimed property [his calling card] and still has possession of it according to his own complaint." "He has the property and he can use it at any time." Hence, "it is not abandoned property" and "there is no violation because he has the means and the opportunity to use the property at any time he chooses." The fact that Mr. Grayson's complaint alleges injuries to others and the District of Columbia under the CPPA is irrelevant; Mr. Grayson cannot bring a claim under the CPPA if "he himself has not suffered any injury." In addition, the trial court concluded that even if Mr. Grayson suffered an injury, the complaint alleges an injury that "belongs to the District of Columbia, and not to him" (that is, the failure of defendants "to notify the District of Columbia that they have been holding unclaimed property"). Consequently, Mr. Grayson "failed to ple[a]d the elements necessary to permit survival under a 12(b)(6) motion."
AOL lodged an amended June 27, 2008 motion to dismiss Mr. Breakman's CPPA claim under Super. Ct. Civ. R. 12 (b)(1) and (6). AOL asserted that Mr. Breakman lacked standing to bring his claim, and stated, in part:
The Complaint . . . is devoid of any allegations that [Mr.] Breakman is - or ever has been - a subscriber of AOL's dialup services . . . . [Mr.] Breakman does not allege that he is part of the class that he represents . . . . He does not allege that AOL breached any duty to him, that he was mislead by AOL, or that he sustained any actual, consequential, or exemplary damages as a result of AOL's alleged conduct.
After reviewing the applicable CPPA statutory provisions, and case law governing standing, the trial court determined, in accordance with cited precedent, that "notwithstanding the [CPPA's] broad remedial provisions, . . . a plaintiff must allege a personal injury in fact to have standing," but that "no reasonable juror could find plaintiff has sustained injury in fact."
"Whether the trial court has subject matter jurisdiction is a question
of law which this court reviews de novo."*fn11 We also
review "a dismissal for failure to state a claim de novo."*fn12
"[W]e accept the allegations of the complaint as true, and
construe all facts and inferences in favor of the
plaintiff."*fn13 "Because '[o]ur rules reject the
approach that pleading is a game of skill in which one misstep . . .
may be decisive to the outcome' and 'manifest a preference for
resolution of disputes on the merits, not on technicalities of
pleading,' we construe pleadings 'as to do substantial
justice.'"*fn14 "The only issue on review of a
dismissal made pursuant to Rule 12 (b)(6) is the legal sufficiency of
the complaint"; and "a complaint should
not be dismissed because a court does not believe that a plaintiff
will prevail on [his] claim."*fn15 "Indeed it may
appear on the face of the pleadings that a recovery is very remote and
unlikely but that is not the test."*fn16
THE STANDING DOCTRINE IN THE DISTRICT OF COLUMBIA
A. Introduction to the Standing Question
"Standing is a threshold jurisdictional question which must be addressed prior to and independent of the merits of a party's claims." Bochese v. Town of Ponce Inlet.*fn17 This is a longstanding principle emphasized in federal case law since Warth, supra, where the Court unequivocally stated that Article III "standing in no way depends on the merits of the plaintiff's contention that particular conduct is illegal."*fn18 Thus, the basic function of the standing inquiry is to serve as a threshold a plaintiff must surmount before a court will decide the merits question about the existence of a claimed legal right. If a plaintiff's factual allegations are sufficient to require a court to consider whether the plaintiff has a statutory (or otherwise legally protected right), then the Article III standing requirement has served its purpose; and the correctness of the plaintiff's legal theory -- his understanding of the statute on which he relies -- is a question that goes to the merits of the plaintiff's claim, not the plaintiff's standing to present it. Thus, during this threshold inquiry, "the question is whether the person whose standing is challenged is a proper party to request an adjudication of a particular issue." United States v. Bearden.*fn19 Federal Circuits routinely have approached standing as a question to be resolved prior to consideration of the merits of the case.*fn20
Yet, a court may be tempted to avoid the fundamental standing principle because of a conviction that a plaintiff cannot prevail on the merits of his complaint. The Ninth Circuit does not always follow the principle that standing must be considered independent of the merits, but it nevertheless has acknowledged this general principle:
Quite frequently, and perhaps usually, the determination of the truth of the allegation of an injury in fact does not require an examination of the merits of the claim asserted. Under circumstances frequently existing, the issue of standing can be regarded as independent of the merits.
American Civil Liberties Union v. Federal Commc'ns Comm'n, 523 F.2d 1344, 1348 (9th Cir. 1975). In American Civil Liberties Union, a case involving rules promulgated by the Federal Communications Commission,the court concluded that it was "confronted with circumstances in which the truth of the allegations of injury in fact can only be determined by examining the merits of the asserted claim." Id. Both the Tenth and the District of Columbia Circuits have grappled with this principle which recognizes overlap between the standing and merits inquiries. Both of these circuits have noted the inconsistency of its application, see State of Utah v. Babbitt, 137 F.3d 1193, 1207 n.20 (10th Cir. 1988) ("in cases when the standing inquiry overlaps with the merits of the plaintiff's claim, courts have been inconsistent in their willingness to resolve legal questions in determining standing") (citations omitted); Taylor v. Federal Deposit Ins. Corp., 328 U.S. App. D.C. 52, 66, 132 F.3d 753, 767 (1997) ("The appropriate treatment of cases in which the standing inquiry overlaps with the merits so precisely is not entirely clear."). And, both of these circuits have endeavored to identify the type of case in which it is appropriate to apply this principle.
In State of Utah v. Babbitt, supra, plaintiffs in essence sought to participate in an inventory of public lands by the Department of the Interior. The court concluded that it had to determine whether the Federal Land Policy and Management Act (FLPMA) granted them a right to participate in the inventory before it could determine whether plaintiffs had standing to sue. It determined that the FLPMA did not grant them a right to participate in the inventory; therefore they had no standing. Id.at 1210. However, the court in Skull Valley Band of Goshute Indians v. Nielson, 376 F.3d 1223, 1236 (10th Cir. 2004), limited application of the overlap principle to situations in which plaintiffs lacked a legally protected interest and in which plaintiffs' claims had no foundation in law, and proceeded to determine that "plaintiffs have asserted protected legal interests necessary to establish standing." Id. at 1237.
The District of Columbia Circuit stated and apparently applied the overlap principle ("[I]f the plaintiff's claim has no foundation in law, he has no legally protected interest and thus no standing to sue")*fn21 ina 1997 case; the court concluded that plaintiff had no standing to bring her action under the Federal Advisory Committee Act. Claybrook v. Slater, 324 U.S. App. D.C.145, 148, 111 F.3d 904, 907 (1997). But, significantly, in a later case, the D.C. Circuit did not "read Claybrook to stand for the proposition, contra Warth, that we must evaluate the existence vel non of appellants' Second Amendment claim as a standing question." Parker v. District of Columbia, 375 U.S. App. D.C. 140, 148, 478 F.3d 370, 378 (2007). Furthermore, the court labeled the Ninth Circuit's reliance on the overlap principle as "doctrinally quite unsound."*fn22
We believe that the D.C. Circuit's Parker opinion states the better view because it is faithful to the standing principle enunciated in Warth. It also is consistent with another Supreme Court case, Public Citizen v. United States Dep't of Justice.*fn23 There, plaintiffs sued to require the disclosure of information relating to an ABA committee's evaluations of prospective judicial nominees for the Department of Justice. They claimed that the disclosures were mandated by the Federal Advisory Committee Act (FACA), a law that requires governmental "advisory committees" (as defined) to make certain information public. The Court ultimately concluded that FACA was inapplicable to the ABA committee and therefore upheld the dismissal of the lawsuit on the merits because the plaintiffs had no statutory right to the information they sought. Nevertheless, as a threshold matter, the Court held that plaintiffs had standing to bring their lawsuit. Thus, at the point of the standing inquiry, the court did not look to whether the statutory right actually existed, but only whether plaintiffs alleged that they were denied information potentially covered by FACA.*fn24
We mention one other general principle applicable to the standing inquiry. Standing analysis is different "at the successive stages of litigation."*fn25 Thus, the examination of standing in a case that comes to us on a motion to dismiss is not the same as in a case involving a summary judgment motion; the burden of proof is less demanding when the standing question is raised in a motion to dismiss.*fn26 Some federal circuits have determined that "a district court cannot decide disputed factual questions or make findings of credibility essential to the question of standing on the paper record alone but must hold an evidentiary hearing" (emphasis in original).*fn27 This practice is consistent with the Supreme Court's pronouncement in Warth:
For purposes of ruling on a motion to dismiss for want of standing, both the trial and reviewing courts must accept as true all material allegations of the complaint, and must construe the complaint in favor of the complaining party. E.g., Jenkins v. McKeithen, 395 U.S. 411, 421-422 (1969). At the same time, it is within the trial court's power to allow or to require the plaintiff to supply, by amendment to the complaint or by affidavits, further particularized allegations of fact deemed supportive of plaintiff's standing. If, after this opportunity, the plaintiff's standing does not adequately appear from all materials of record, the complaint must be dismissed.*fn28
B. Arguments of the Parties and Amici Regarding the District's Standing Doctrine
The parties and amici present diverse arguments regarding the standing doctrine in the District of Columbia. Mr. Grayson and Mr. Breakman contend that "the constitutional and prudential standing principles imposed by Article III are not mandatory with respect to the District's courts." But appellees argue that before this court decides the merits of a case "the constitutional requirement of a case or controversy and the prudential prerequisites of standing must be satisfied." The Legal Aid Society notes the different ways in which this court has articulated its "justiciability principles (such as standing, mootness, and ripeness)" and urges the court "to recognize explicitly that the D.C. courts are not subject to the same justiciability principles that constrain the judicial power of Article III courts." The District asserts that the conclusion, articulated in some of our cases, that we are "not governed by Article III limitations[,] is well-supported by Supreme Court holdings that Congress has vested the District's courts" with the same type of jurisdiction that state courts exercise, and that we should not read D.C. Code § 11-705, which refers to cases and controversies, "to incorporate all of the jurisprudence relating to those words in Article III of the Constitution."*fn29
To address these contentions, we first provide historical insight into the evolution of the standing doctrine in the District of Columbia. We then discuss the incorporation into our jurisprudence of standing concepts from federal case law.
Historically, we began to articulate our standing principles as the District government transitioned from the Federal Administrative Procedure Act ("FAPA") to the District of Columbia Administrative Procedure Act ("DCAPA"). Relying on the legislative history of the DCAPA, we adopted the identical three-part test for standing followed in the federal courts under the FAPA.*fn30 As we confronted the standing issue in non-APA cases, after Congress enacted the District of Columbia Court Reform and Criminal Procedure Act of 1970 ("Court Reform Act"),*fn31 we took into consideration the fact that we are an Article I court under the Constitution, rather than an Article III court; and in one of our early cases following the adoption of the Court Reform Act, we said:
The requirement that a party have "standing" to invoke the judicial power of the United States is designed to enforce the mandate of Article III of the Constitution that federal courts have jurisdiction only in "cases" and "controversies", . . . although Article III is not the exclusive source of the requirement . . . . In Palmore v. United States, the Supreme Court recently affirmed the view that the courts of local jurisdiction of the District of Columbia, established by Congress pursuant to Article I, are not bound by the requirements of Article III.
Our jurisdiction thus extends as far as Congress has granted it.
Without, however, examining the limits of this grant, this court has followed the principles of standing, justiciability and mootness to promote sound judicial economy and has recognized that an adversary system can best adjudicate real, not abstract, conflicts. Basiliko[, supra], 283 A.2d [at] 818; Atkins
v. United States, 283 A.2d 204, 205 (D.C. 1971).
District of Columbia v. Walters.*fn32
D. Incorporation of Standing Principles from Federal Court Cases
Even though we are an Article I court, we have followed Supreme Court developments in constitutional standing jurisprudence with respect to "whether the plaintiff has made out a case or controversy between him[/her] and the defendant within the meaning of Article III," and we generally have applied prudential limitations on the exercise of our jurisdiction.*fn33 We also have recognized that "when Congress intends to extend standing to the full limit of Article III, the sole requirement for standing . . . [is a] minima of injury in fact, [and under this circumstance,] courts lack the authority to create prudential barriers to standing."*fn34 We often cite Warth, supra. Warth articulated the "minimum constitutional mandate"*fn35 as follows:
In its constitutional dimension, standing imports justiciability: whether the plaintiff has made out a "case or controversy" between himself and ...