United States District Court, District of Columbia
RANDOLPH D. MOSS United States District Judge.
a group of individuals sharing “mutual concerns”
about Israeli settlements in the West Bank and East
Jerusalem, bring this “declaratory judgment”
action against the Department of the Treasury and Secretary
of the Treasury Steven Mnuchin. They allege that the Treasury
Department has granted tax-exempt status under 26 U.S.C.
§ 501(c)(3) to “approximately 200 U.S.
pro-Israeli-settlement” organizations that
“either fund or engag[e] in . . . criminal activities
abroad, ” and that, despite this “criminal
conduct, ” the Department has failed to
“challeng[e] or [to] revok[e] [the organizations']
tax-exempt status.” Dkt. 7 at 4-5 (Am. Compl.).
According to Plaintiffs, this failure by the Treasury
Department has led to-and, absent correction, will continue
to lead to-the infliction of an array of wrongs against the
Palestinian people. Id. As a remedy, Plaintiffs seek
an order requiring the Treasury Department “to . . .
initiate an investigation into any and all tax-exempt
entities based in America which transmit $20, 000 or more on
an annual basis to any country in the world;” to
“revoke the entit[ies'] tax-exempt status”
where “appropriate;” and to “refer all tax
fraud and money laundering findings to the [Internal Revenue
Service] and/or U.S. Department of Justice for criminal
prosecution.” Id. at 74-75.
motions are currently before the Court. First, Defendants
move to dismiss the first amended complaint for lack of
Article III standing and for failure to state a claim. Dkt.
10 at 1- 2. Second, Plaintiffs seek leave to file a second
amended complaint, which would join five additional
plaintiffs and detail the harms that they have allegedly
suffered (or will allegedly suffer) due to Defendants'
failure to monitor the actions of the U.S.-based tax-exempt
entities. Dkt. 18. Finally, Sam Abrams, a U.S. taxpayer and
resident of New York State, moves to intervene, asserting
that, if the Treasury Department is required “to
investigate pro-Israel charities, ” it should
“also investigate . . . charities . . . hostile to
Israel.” Dkt. 13 at 2-3. In opposing the latter two
motions, Defendants extend their jurisdictional defense to
the claims that the five additional putative plaintiffs and
Abrams seek to assert.
explained below, the Court agrees that the existing
Plaintiffs, the five additional putative plaintiffs, and
Abrams all lack Article III standing. The Court, accordingly,
will grant Defendants' motion to dismiss the first
amended complaint for lack of jurisdiction, will deny
Plaintiffs' motion to file a second amended complaint as
futile, and will deny Abrams' motion for leave to
intervene on the ground that neither he nor any other party
has standing to assert his proposed claim.
Defendants “challenge the adequacy of [the first
amended] complaint and [exhibits] to support
[Plaintiffs'] standing, ” the Court
“accept[s] [their] well-pleaded factual allegations as
true and draw[s] all reasonable inferences from those
allegations in [Plaintiffs'] favor.” Arpaio v.
Obama, 797 F.3d 11, 19 (D.C. Cir. 2015); see also
West v. Lynch, 845 F.3d 1228, 1231 (D.C. Cir. 2017). The
same standard applies, moreover, to the Court's
consideration of whether Plaintiffs' proposed second
amended complaint contains allegations sufficient to
establish Article III standing, or whether, instead, the
proposed amendment is futile. See Williams v. Lew,
819 F.3d 466, 471-73 (D.C. Cir. 2016). Because the issues
presented in Defendants' motion to dismiss and in their
opposition to Plaintiffs' motion for leave to amend
overlap, and because the proposed second amended complaint is
identical to the first amended complaint, save for the
addition of one paragraph that details the allegations of the
five plaintiffs seeking to join the suit, compare
Dkt. 7 with Dkt. 18-2, the Court will focus on (and
cite to) the factual allegations set forth in the proposed
second amended complaint.
a group of thirty-seven individuals, “join[ed] in this
litigation” due to their “concerns” over
the “explosive settlement expansion” by Israelis
in the West Bank and East Jerusalem. Dkt. 18-2 at 1-3, 8
(Second Am. Compl. ¶ 6). They allege that organizations
in the United States that were granted tax-exempt status
under 26 U.S.C. § 501(c)(3) based on their
“‘charitable' or ‘educational' . .
. nature[s]” actually serve as “financial
‘pass-throughs'” from “wealthy U.S.
donors” to Israeli entities committed to “the
forcible expulsion of indigenous non-Jewish Palestinians,
” the “theft of private property, ” the
malicious destruction of private property, and the
“murder” of Palestinians. Id. at 4-5.
Plaintiffs allege that the actions of these U.S. nonprofit
organizations “violate numerous . . . [§]
501(c)(3) regulations” and “at least eight
federal criminal statutes.” Id. at 5-6.
Plaintiffs also allege that, [d]espite the[se] rampant”
violations of law, the Treasury Department has “not
challenged or revoked the tax-exempt status” of the
“approximately 200 U.S. pro-Israeli-settlement [§]
501(c)(3) [organizations].” Id. mat 4-5. And
Plaintiffs further allege that, because the Treasury
Department has failed to “investigate the criminal
activities that these tax-exempt entities have been funding
or engaging in for at least the last [forty] years, ”
the entities continue “to openly solicit
tax-deductible contributions” in order to fund
“the various settlements they have chosen to
adopt.” Id. at 6.
thirty-seven plaintiffs, the proposed second amended
complaint contains specific allegations about only eight of
them. As they also alleged in the first amended complaint,
Plaintiffs allege that “John Doe” “has been
concerned about [the Treasury Department's] failure to
monitor” the § 501(c)(3) organizations described
above “for a number of years” and has
“heard from various Palestinian friends and
neighbors” about “the atrocities that are being
committed” which, he asserts, are being “largely
subsidized by the American taxpayer.” Id. at 9
(Second Am. Compl. ¶ 7). Plaintiffs allege that Susan
Abulhawa is also “concerned about [the Treasury
Department's] ongoing failure to . . . prevent the
criminal activities engaged in by th[e] pro-settlement
tax-exempt entities, ” and, more significantly, that
Israel “[has] dislocat[ed]” her from the
“patch of earth” in Jerusalem “where [her]
family ha[d] dwelt for centuries.” Id. at 10
(Second Am. Compl. ¶ 9). They further allege that
Michael Several “has visited Israel on many occasions
and [has] seen first-hand what settlement expansion has meant
to the ordinary Palestinian citizen.” Id.
(Second Am. Compl. ¶ 10). And, they allege that Several,
who has performed “significant research on U.S. donors
and pro-settlement tax-exempt entities, ” “firmly
believes that financial support rendered by” those
entities has “promoted widespread violence against
Palestinians” and has “perpetuated the
environment and conditions that give rise to violent
resistance to the Israeli occupation.” Id. at
10-11 (Second Am. Compl. ¶¶ 10-11).
proposed second amended complaint would add allegations about
five more plaintiffs who seek to join the litigation. Most
notably, Plaintiffs allege (or, more precisely, seek leave to
allege) that putative plaintiff Linda Kateeb “owns six
plots of land in the West Bank;” that an “Israeli
settler organization . . . supported by funds provided by
U.S. tax-exempt entities” recently “purported to
purchase two” of her plots from “violent Israeli
settlers who had set up outposts on [her] land;” and
that she “is worried that if [the Treasury Department]
continues to allow so-called tax-exempt funds to flow to the
organization, she will lose her remaining four plots of
land.” Dkt. 18-2 at 11 (Second Am. Compl. ¶
13(a)). Plaintiffs also seek leave to allege that Abbas
Hamideh “similarly has lost, and fears that he will
continue to lose, . . . family land in the West Bank”
if U.S.-based nonprofits “are permitted to provide
funds to violent settlers.” Id. They seek
leave to allege that Doa'a Abu Amer “lost fourteen
family members when the Israeli army bombed the daycare
center [in Gaza] in which they sought refuge, ”
id. at 12 (Second Am. Compl. ¶ 13(b)), and that
Ahmed Al-Zeer was “beaten by violent settlers while on
his own property outside [of a] segregated settlement”
in the West Bank, id. (Second Am. Compl. ¶
13(c)). Finally, Plaintiffs seek leave to allege that Danny
Awad “lost the Christian center” he managed in
the West Bank due to an “illegal transaction”
involving “a settler organization and its U.S.
backers.” Id. at 12-13 (Second Am. Compl.
from these paragraphs detailing plaintiff-specific factual
allegations, see Id. at 9-13 (Second Am. Compl.
¶¶ 7-13), the remaining 113 numbered paragraphs of
the proposed second amended complaint include a litany of
allegations of wrongdoing by the U.S.-based § 501(c)(3)
entities that, Plaintiffs claim, the Treasury Department has
failed to regulate. Among other allegations, the proposed
second amended complaint addresses the “history of
settlement expansion funded by U.S. donors and tax-exempt
entities, ” id. at 15-25 (Second Am. Compl.
¶¶ 18-34); the “United States public policy
regarding settlement expansion activity;” id.
at 26- 30 (Second Am. Compl. ¶¶ 35-37), and the
“statutory violations” that Plaintiffs contend
that “U.S. tax-exempt entities and their donors have
all conspired to” commit, including money laundering,
wire fraud, racketeering, and “war crimes, ”
id. at 42-50 (Second Am. Compl. ¶¶ 59-
73). Plaintiffs claim that scores of § 501(c)(3)
organizations have engaged in these purported violations of
law “with the express knowledge of” the Treasury
Department and despite the Department's duty “to
ensure that the perpetrators of [such] activities . . . [are]
sanctioned to the fullest extent of the law.”
Id. at 72-73 (Second Am. Compl. ¶¶ 111,
brought suit on December 16, 2015, Dkt. 1, and filed their
first amended complaint on February 5, 2016, Dkt. 7. Then, on
April 4, 2016-four days before Defendants moved to dismiss
the first amended complaint-Plaintiffs purported to file a
second amended complaint adding five plaintiffs. Dkt. 9.
Plaintiffs did not seek leave of the Court or consent from
Defendants before doing so. In their reply brief in support
of their motion to dismiss, Defendants argued that the Court
“should disregard the second amended complaint”
for failure to comply with Federal Rule of Civil Procedure
15(a)(2), but, “[o]ut of an abundance of caution,
” they nevertheless addressed the merits, arguing that
the additional plaintiffs and allegations would not cure the
jurisdictional defects they had identified. Dkt. 16 at 3.
Recognizing their procedural misstep, Plaintiffs then moved
for leave to file their second amended complaint, arguing
that granting them leave to file the proposed second amended
complaint would not prejudice Defendants, would best serve
judicial economy, and would be in the interest of justice.
the parties were briefing Defendants' motion to dismiss,
Abrams moved to intervene. Dkt. 13. He argues that, in the
event that the Court “open[s] the floodgates” to
complaints like the one filed by Plaintiffs, he should be
permitted to seek an order compelling Defendants to
“investigate the tax status” of “charities
that are hostile to Israel.” Id. at 2-3. The
Court ordered Defendants to respond to Abrams's motion
and, in particular, to address whether Abrams has standing to
intervene. See Minute Order, May 21, 2016. In
response, Defendants filed a memorandum arguing that Abrams
lacks standing and that, accordingly, he should not be
permitted to intervene. Dkt. 17 at 2.
Motion to Dismiss Under 12(b)(1)
“[f]ederal courts are courts of limited jurisdiction,
possessing only that power authorized by Constitution and
statute, ” Gunn v. Minton, 133 S.Ct. 1059,
1064 (2013) (quotation marks omitted), they have “an
affirmative obligation to consider whether the constitutional
and statutory authority exist for [them] to hear each
dispute” brought before them, James Madison Ltd. ex
rel. Hecht v. Ludwig, 82 F.3d 1085, 1092 (D.C. Cir.
1996) (quotation marks omitted). If the ...