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Vining v. Executive Board of the District of Columbia Health Benefit Exchange Authority

Court of Appeals of The District of Columbia

December 7, 2017

Kirby Vining, Appellant,
Executive Board of the District of Columbia Health Benefit Exchange Authority, et al., Appellees.

          Argued March 2, 2016

         Appeal from the Superior Court of the District of Columbia (CAB-6496-14) (Hon. Herbert B. Dixon, Jr., Trial Judge)

          Michael Bekesha for appellant.

          Jason Lederstein, Assistant Attorney General, with whom Karl A. Racine, Attorney General for the District of Columbia, Todd S. Kim, Solicitor General at the time the brief was filed, and Loren AliKhan, Deputy Solicitor General, were on the brief, for appellees.

          Before Glickman and Easterly, Associate Judges, and Reid, Senior Judge.

          Glickman, Associate Judge

         Kirby Vining appeals the dismissal of his taxpayer suit against the District of Columbia Health Benefit Exchange Authority and its Executive Director and Executive Board (collectively, the "Exchange Authority"). Mr. Vining seeks declaratory and injunctive relief to stop what he claims is the Exchange Authority's illegal use of municipal funds to allow members of Congress, congressional employees, and their dependents to purchase health insurance on the small business exchange created by the District under the Patient Protection and Affordable Care Act. The Superior Court granted the District's motion to dismiss the complaint pursuant to Civil Rules 12 (b)(1) for lack of standing and 12 (b)(6) for failure to state a claim.[1]

         We affirm the dismissal because Mr. Vining's status as a municipal taxpayer does not provide him with the standing necessary to maintain this action. We therefore do not reach the merits of Mr. Vining's claim of illegality, which turns on whether federal law preempts otherwise applicable District law.


         As enacted by Congress in 2010, the Patient Protection and Affordable Care Act (the "ACA")[2] envisioned that the States and the District of Columbia[3] would establish two marketplaces for the purchase of health insurance: an "American Health Benefit Exchange" for qualifying individual consumers and a "Small Business Health Option Program, " or "SHOP Exchange, " for small employers seeking group coverage for their employees.[4] The ACA defines a "small employer" eligible to use a SHOP Exchange as one with no more than one hundred employees, though it permits States to restrict access to employers with no more than fifty employees.[5]

         In 2012, the Council of the District of Columbia created the Exchange Authority as an independent agency and directed it to establish the individual and small business exchanges necessary to implement the ACA.[6] The Exchange Authority Act defines a "small employer" eligible to participate in a District SHOP Exchange as one employing on average no more than fifty employees.[7] The Council established a "nonlapsing" fund (the "Exchange Fund") exclusively for the Exchange Authority to draw on in order to carry out its responsibilities.[8]

         The ACA also provided that after January 1, 2014, the Federal Government could make health insurance plans available to Members of Congress and congressional staff only through a State exchange.[9] In response to this provision, OPM issued final regulations in October 2013 requiring the Members and staff of Congress to enroll in a plan offered on the District of Columbia SHOP Exchange in order to receive federal contributions to their insurance premiums.[10] The Centers for Medicare and Medicaid Services in the Department of Health and Human Services issued interpretive guidance stating that size requirements for small employers to participate in SHOP Exchanges would not apply to Members of Congress and congressional staff.[11]

         Mr. Vining sued the Exchange Authority in October 2014. His complaint alleged that since November 2013, the Exchange Authority had allowed at least 12, 359 congressional employees and dependents to purchase health insurance on the District of Columbia SHOP Exchange, in contravention of the provision in the District's Exchange Authority Act restricting participation in the small business exchange to employers with fifty or fewer employees.[12] Mr. Vining further alleged that this "illegal" operation of the District's SHOP Exchange caused irreparable injury to his "interests as a taxpayer" because the Exchange Fund used to administer the Exchange included taxpayer money appropriated annually by the Council from the District's General Fund. The complaint requested the court to grant equitable relief, including a declaration that congressional participation in the District's SHOP Exchange was unlawful and an injunction barring the Exchange Authority from allowing such participation "or, at a minimum, from expending further taxpayer funds" thereon.

         In moving to dismiss the complaint pursuant to Civil Rule 12 (b)(1) on standing grounds, the Exchange Authority denied that municipal taxes had been used to fund the District's SHOP Exchange. The Exchange Authority cited public District Government Budget Plans for fiscal years 2013 through 2015 showing that no general taxpayer revenues had been appropriated for its use and that it was funded only by federal grant monies and assessments levied on health insurance carriers.[13] In response, Mr. Vining contended that, as a District of Columbia taxpayer, he has standing to challenge the Exchange Authority's illegal expenditure of municipal funds whatever the source of those funds and regardless of whether municipal taxes are at issue. He also argued that the source of the funds is a factual question that could not be resolved on a Rule 12 (b)(1) motion prior to discovery, and that even if no municipal tax dollars had been used yet, they might have to be drawn upon in the future if the Exchange Authority were confronted with a revenue shortfall.

         The Superior Court rejected Mr. Vining's argument. Citing cases linking municipal taxpayer standing to claims that actually do implicate municipal taxes, the court ruled that Mr. Vining "has not demonstrated a reasonable inference that municipal taxpayer funds have been appropriated to the defendant [E]xchange [A]uthority to establish a cognizable injury to maintain standing to bring his underlying complaint."[14] The court therefore granted the Exchange Authority's Rule 12 (b)(1) motion to dismiss for lack of standing.[15]


         Mr. Vining contends that he has standing as a municipal taxpayer to bring this action to prevent the illegal expenditure of municipal funds by the Exchange Authority. He argues that the Superior Court erred in ruling otherwise, because it should not have made a finding prior to discovery as to whether Exchange Authority operations were funded with taxpayer money, and, in any event, because the source of the municipal funds used by the Exchange Authority is irrelevant to his standing to sue to restrain their illegal expenditure. For the reasons that follow, we disagree.

         A. Municipal Taxpayer Standing

         "Standing to sue is a doctrine rooted in the traditional understanding of a case or controversy[, ]"[16] the words used in Article III of the Constitution to define the proper scope of "[t]he judicial Power of the United States."[17] "No principle, " the Supreme Court has declared, "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."[18] In the District of Columbia, Congress has vested "[t]he judicial power" over local cases and controversies in the Superior Court and this court.[19] Although Congress established the two tribunals pursuant to Article I of the Constitution, [20] we conform our exercise of "judicial power" to the law of Article III standing.[21]

         Constitutional standing requirements determine whether a plaintiff is "a proper party to request an adjudication of a particular issue" by virtue of having a genuine "personal stake" in the outcome.[22] "[A] plaintiff raising only a generally available grievance about government - claiming only harm to his and every citizen's interest in proper application of the Constitution and laws, and seeking relief that no more directly and tangibly benefits him than it does the public at large - does not state an Article III case or controversy."[23] Rather, "the 'irreducible constitutional minimum' of standing consists of three elements. . . . The plaintiff must have (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision."[24] The burden is on the plaintiff to establish each of these three elements.[25] To establish an "[i]njury in fact, " the plaintiff must show that he has "suffered 'an invasion of a legally protected interest' that is 'concrete and particularized' and 'actual or imminent, not conjectural or hypothetical.'"[26]

         To establish his standing to bring this case, Mr. Vining relies on his status as a municipal taxpayer suing to prevent the putatively unlawful expenditure of municipal funds. Generally speaking, taxpayers lack standing (as taxpayers) to challenge the lawfulness of governmental expenditures "because the alleged injury is not 'concrete and particularized, ' but instead a grievance the taxpayer 'suffers in some indefinite way in common with people generally, '" and also because "the injury is not 'actual or imminent, ' but instead 'conjectural or hypothetical.'"[27] But municipal taxpayer suits historically have been viewed differently, as the Supreme Court acknowledged in Frothingham v. Mellon[28] Distinguishing such actions from suits by federal taxpayers, the Frothingham Court accepted the proposition that "resident taxpayers may sue to enjoin an illegal use of the moneys of a municipal corporation" on the premise that "[t]he interest of a taxpayer of a municipality in the application of its moneys is direct and immediate."[29] Although it has been cogently argued that Frothingham's endorsement of municipal taxpayer standing is "on its face inconsistent with current principles of constitutional standing, "[30] the doctrine has not been repudiated. For present purposes, we assume the continued viability in the District of Columbia of the proposition that municipal taxpayers have the right, "in the proper case, to initiate suit against the city government to prevent illegal use of municipal funds."[31]

         Even so, the Supreme Court has clarified that a municipal taxpayer's suit can satisfy the "case or controversy" requirement of Article III "only when it is a good-faith pocketbook action" complaining of "a direct dollars-and-cents injury."[32] This court accordingly has understood the municipal taxpayer standing doctrine to mean that "a taxpayer may sue a municipal corporation to enjoin the misuse or misappropriation of funds [that] such corporation derives from taxes paid by such local taxpayers."[33] It is at least plausible to say that a municipal taxpayer suffers what the Frothingham Court called a "direct and immediate" (if typically small) pecuniary injury from the unlawful expenditure of his tax dollars because such an expenditure might be said to increase his tax burden. But if the municipality's unlawful expenditure is not funded by his taxes, he cannot be said to suffer such direct harm from the expenditure - let alone what the Supreme Court's more recent decisions describe as an "injury in fact" that is "concrete and particularized" and "actual or imminent, not conjectural or hypothetical." Without a link between his municipal taxes and the challenged municipal expenditure, he is in the position of raising only a commonly available grievance and "seeking relief that no more directly and tangibly benefits him than it does the public at large."[34] Thus, "municipal taxpayers do not have standing [to sue to enjoin municipal expenditures] when no tax moneys are spent."[35]

         Mr. Vining takes issue with this conclusion, at least insofar as the local courts of the District of Columbia are concerned. He argues that binding precedent in this jurisdiction from the nineteenth and early twentieth centuries requires us to hold that a District of Columbia taxpayer has the right to sue in Superior Court to prevent the illegal expenditure of municipal funds regardless of the source of those funds or whether taxpayer monies are in any way at stake. The cases involving the expenditure of municipal funds that Mr. Vining cites - Roberts v. Bradfield[36] and B. F. Cummins Co. v. Burleson[37] - did not go nearly so far, however. They say (in what we take to be dicta) that a municipal taxpayer may sue to prevent the misuse of municipal funds, but they do not address at all whether such a taxpayer may do so when no tax dollars are involved in the misuse.[38] We therefore cannot view the cases on which Mr. Vining relies as having decided the question or as foreclosing us from doing so now. "The rule of stare decisis is never properly invoked unless in the decision put forward as precedent the judicial mind has been applied to and passed upon the precise question."[39] Particularly where the question is one of subject-matter jurisdiction, as the question of standing is here, prior decisions that overlooked the issue cannot bind us when it finally is presented to us for decision.[40] But even if these older cases actually had held that a municipal taxpayer can sue to prevent spending that does not implicate his tax dollars, the "jurisprudential basis" of that hypothetical ruling has been so "substantially undermined" by subsequent standing decisions of the Supreme Court that stare decisis "does not oblige us to follow" it.[41]

         We therefore hold that a municipal taxpayer does not have standing to sue to prevent expenditures if his tax dollars do not contribute to them.

         B. The Source of the Exchange ...

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