United States District Court, District of Columbia
COMMUNITY FINANCIAL SERVICES ASSOCATION OF AMERICA, LTD., et al., Plaintiffs,
FEDERAL DEPOSIT INSURANCE CORPORATION, et al., Defendants.
Kessler, United States District Judge.
Community Financial Services Association of America, Ltd.
("CFSA") and Advance America, Cash Advance Centers,
Inc. ("Advance America"), allege that the
Defendants, the Federal Deposit Insurance Corporation
("the FDIC"), the Board of Governors of the Federal
Reserve System, and the Office of the Comptroller of the
Currency and Thomas J. Curry, in his official capacity as the
Comptroller of the Currency ("the OCC"), have
violated the due process rights of CFSA's members.
Plaintiffs seek declaratory and injunctive relief to prevent
these alleged violations from continuing.
matter is before the Court on Defendants' Corrected
Motion to Dismiss for Lack of Associational or Organizational
Standing or, in the Alternative, for Judgment on the
Pleadings ("Motion to Dismiss"), in which
Defendants seek dismissal of CFSA as a party to this case.
[Dkt. No. 75]. Upon consideration of the Motion, Opposition,
Reply, and the entire record herein, the Motion to Dismiss is
basic facts of this case were fully discussed in the
Court's prior Memorandum Opinion on Defendants'
Motions to Dismiss for Lack of Subject Matter Jurisdiction
or, in the Alternative, for Failure to State a Claim.
CFSA v. FDIC, 132 F.Supp.3d 98, 105-107 (D.D.C.
2015). Consequently, an abbreviated discussion of the facts
are CFSA, an association of payday lenders, and Advance
America, a payday lender and member of CFSA. Id.,
132 F.Supp.3d at 105. Defendants are agencies of the United
States Government that have been delegated regulatory
authority over various parts of the United States banking
system. Id. at 106.
allege that Defendants participated and continue to
participate in a campaign to force banks to terminate their
business relationships with payday lenders, known as.
"Operation Choke Point" and initiated by the United
States Department of Justice. Id. at 106-107.
Defendants allegedly forced banks that they supervise to
terminate relationships with CFSA's members,
"by-first promulgating regulatory guidance regarding
reputation risk, ' and by later relying on the reputation
risk guidance 'as the fulcrum for a campaign of backroom
regulatory pressure seeking to coerce banks to terminate
longstanding, mutually beneficial relationships with all
payday lenders.'" Id.
5, 2014, Plaintiffs filed their original Complaint, [Dkt. No.
1], which they amended on July 30, 2014, [Dkt. No. 12],
alleging that Defendants had violated the Administrative
Procedure Act ("APA") and CFSA's members'
right to procedural due process under the Fifth Amendment to
the United States Constitution. CFSA, 132 F.Supp.3d
at 107. Defendants then filed Motions to Dismiss for Lack of
Subject Matter Jurisdiction or, in the Alternative, for
Failure to State a Claim, [Dkt. Nos. 16, 17, & 18].
September 25, 2015, the Court issued a Memorandum Opinion
("Memorandum Opinion"), granting in part and
denying in part Defendants' Motions. CFSA, 132
F.Supp.3d 98. The Court held that Plaintiffs had failed to
state a claim under the APA, and dismissed all claims brought
pursuant to it. However, Plaintiffs could continue litigating
their due process claims, see id., under the theory
that the stigma caused by Operation Choke Point deprived them
of a protected interest in liberty or property. Id.
at 123- 24 (citing Paul v. Davis, 424 U.S. 693, 708
(1976) & Gen. Elec. Co. v. Jackson, 610 F.3d
110, 121 (D.C. Cir. 2010)).
then filed a Second Amended Complaint ("SAC"),
alleging facts and claims essentially indistinguishable from
those contained in their earlier complaints. [Dkt. No. 64].
Each Defendant filed an Answer to the Second Amended
Complaint. [Dkt. Nos. 65, 66, & 67].
October 29, 2015, Defendants filed a Motion to Dismiss
Plaintiff CFSA for Lack of Associational and Organizational
Standing or, in the Alternative, a Motion for Judgment
on the Pleadings, [Dkt. No. 73], which they
corrected on November 6, 2015. [Dkt. No. 75]. Defendants seek
dismissal only of Plaintiff CFSA for lack of standing, and do
not challenge the standing or seek dismissal of Plaintiff
Advance America. Plaintiffs filed an Opposition on November
12, 2015, [Dkt. No. 76] and Defendants filed their Reply on
November 19, 2015. [Dkt. No. 77].
Standard of Review A. Motion to Dismiss
Under Fed.R.Civ.P. 12(b)(1)
courts of limited jurisdiction, federal courts possess only
those powers specifically granted to them by Congress or
directly by the United States Constitution. Kokkonen v.
Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994).
The plaintiff bears the burden of establishing by a
preponderance of the evidence that the Court has subject
matter jurisdiction to hear the case. See Shuler v.
United States, 531 F.3d 930, 932 (D.C. Cir. 2008) . In
deciding whether to grant a motion to dismiss for lack of
jurisdiction under Rule 12(b) (1), the court must
"accept all of the factual allegations in [the]
complaint as true." Jerome Stevens Pharmaceuticals,
Inc. v. Food & Drug Admin., 402 F.3d 1249, 1253 54
(D.C. Cir. 2005) (quoting United States v. Gaubert,
499 U.S. 315, 327 (1991)).
"[t]he plaintiff's factual allegations in the
complaint will bear closer scrutiny in resolving a 12(b)(1)
motion than in resolving a 12(b)(6) motion for failure to
state a claim." Grand Lodge of Fraternal Order of
Police v. Ashcroft, 185 F.Supp.2d 9, 13-14 (D.D.C. 2001)
. The Court may also consider matters outside the pleadings,
and may rest its decision on its own resolution of disputed
facts. See Herbert v. Nat'1 Acad, of Sci., 974
F.2d 192, 197 (D.C. Cir. 1992).
Motion for Judgment on the Pleadings Under Fed.R.Civ.P.
the pleadings are closed but within such time as not to delay
the trial, any party may move for judgment on the
pleadings." Fed.R.Civ.P. 12(c). "Under Rule 12(c),
the court must accept the nonmovant's allegations as true
and should view the facts in the light most favorable to the
nonmovant." Bowman v. District of Columbia, 562
F.Supp.2d 30, 32 (D.D.C. 2008) (internal citations and
quotation marks omitted). As with a motion to dismiss for
lack of subject-matter jurisdiction, "the court may
consider the motion based on the complaint standing alone or,
where necessary, on the complaint supplemented by undisputed
facts evidenced in the record, or the complaint supplemented
by undisputed facts plus the court's resolution of
disputed facts." Id. at 32-33 (internal
citations and quotation marks omitted).
court should grant a motion for judgment on the pleadings if
the movant is entitled to judgment as a matter of law."
Id. at 32.
challenge the standing of Plaintiff CFSA, arguing that it no
longer has Article III standing following this Court's
dismissal of the Plaintiffs' APA claims. Mot. to Dismiss
at 1. Defendants argue that CFSA cannot establish that it has
standing to pursue any of the due process claims that remain.
Mot. to Dismiss at 1-2. Specifically, Defendants contend that
CFSA lacks associational standing, organizational standing,
or third party standing. Id.
counters that it satisfies the requirements for all three
types of standing. Furthermore, CFSA argues that Defendants
waived these arguments by failing to raise them in their
original Motions to Dismiss for Lack of Subject Matter
Jurisdiction or, in the Alternative, for Failure to State a
CFSA Lacks Standing
CFSA Must Establish that It Has Article III Standing
III of the Constitution limits the jurisdiction of federal
courts to certain "Cases" and
"Controversies." See U.S. Const, art. Ill.
§ 2. "[N]o principle is more fundamental to the
judiciary's proper role in our system of government than
the constitutional limitation of federal-court jurisdiction
to actual cases or controversies." Clapper v.
Amnesty Int'1 USA, 133 S.Ct. 1138, 1146, (2013)
(internal citations omitted). "One element of the
case-or-controversy requirement is that plaintiffs must
establish that they have standing to sue." Id.
(internal quotation marks and citation omitted).
[T]he irreducible constitutional minimum of standing contains
three elements. First, the plaintiff must have suffered an
injury in fact . . . which is (a) concrete and
particularized, and (b) actual or imminent, not conjectural
or hypothetical. Second, there must be a causal connection
between the injury and the conduct complained of . Third, it
must be likely, as opposed to merely speculative, that the
injury will be redressed by a favorable decision."
Lujan v. Defenders of Wildlife, 504 U.S. 555,
560-61, (1992) (internal quotation marks, citations, and
CFSA Lacks Associational Standing
the theory of associational standing, an organization may sue
as a representative of its members even if it lacks standing
to sue in its own right. See Hunt v. Washington State
Apple Advertising Commission, 432 U.S. 333, 343 (1977).
Three elements are required to establish associational
standing: 1) at least one of the organization's members
has standing to sue in her own right; 2) the interests the
organization seeks to protect in its lawsuit are germane to
the organization's purpose; and 3) "neither the
claim asserted nor the relief requested requires the
participation of individual members in the lawsuit."
Id., at 343; Air Transp. Ass'n v. Reno,
80 F.3d 477, 483 (D.C. Cir. 1996).
Court has already ruled that CFSA's members have standing
to pursue the due process claims remaining in this lawsuit.
CFSA, 132 F.Supp.3d at 108-15. Furthermore, it is
self-evident that the interest CFSA seeks to protect--the
continued viability of payday lending--is germane to its
organizational purpose, advocacy on behalf of payday lenders.
Thus, to establish associational standing under
Hunt, CFSA need only show that participation of its
members in this lawsuit is not required. As discussed below,
it fails to do so.
CFSA's claims that its members7 due
process rights have been violated cannot be litigated without
the participation of its members
satisfy the third prong of Hunt CFSA must show that
"neither the claim asserted nor the relief requested
requires the participation of individual members in the
lawsuit." 432 U.S. at 343. Accordingly, Plaintiffs'
claims are the starting point for determining whether member
participation is required.
allege that Operation Choke Point violates the due process
rights of CFSA's members. See SAC ¶¶ 141-47,
173-79, 198-204 (Claims IV, VIII, XII) . These due process
claims are brought under the so-called "stigma-plus
rule." General Elec. Co. v. Jackson, 610 F.3d
at 121 (citing Paul v. Davis, 424 U.S. at 708).
the stigma-plus rule a due process violation exists where the
plaintiff can show, "in addition to reputational harm,
that (1) the government has deprived them of some benefit to
which they have a legal right . . . or (2) the
government-imposed stigma is so severe that it 'broadly
precludes' plaintiffs from pursuing 'a chosen trade
or business.'" Id. (quoting Paul v.
Davis, 424 U.S. at 708).
Memorandum Opinion the Court held that Plaintiffs could
succeed under the first prong of the stigma-plus test by
showing that Operation Choke Point deprived CFSA's
members of a right to hold a bank account. CFSA, 132
F.Supp.3d at 123-24 (citing National Council of
Resistance of Iran v. Department of State, 251 F.3d 192,
204 (D.C. Cir. 2001); Wisconsin v. Constantineau,
400 U.S. 433, 437 (1971)). Alternatively, the Court held that
Plaintiffs could succeed under the second-prong by showing
that "the continued loss of banking relationships,
" caused by Operation Choke Point, "may preclude
them from pursuing their chosen line of business."
quite evident that significant participation by CFSA's
members is required under either theory. Central to both of
CFSA's theories of the case is that its members have lost
banking relationships as a result of Operation Choke Point.
Thus, to prove its claims CFSA must provide evidence that: 1)
Operation Choke Point stigmatized CFSA's members; 2) that
CFSA's members lost banking relationships; and 3) that
the loss of those banking relationships was caused by the
stigma generated by Operation Choke Point.
it is possible that Plaintiffs could show that Operation
Choke Point had stigmatized CFSA's members without
significant member participation,  that alone would be
insufficient to prove their claims. See General
Electric, 610 F.3d at 121 ...