COMMUNITY FINANCIAL SERVICES ASSOCIATION OF AMERICA, LTD. et al v. FEDERAL DEPOSIT INSURANCE CORPORATION et al

Filing 97

MEMORANDUM OPINION to the Order granting Defendants' Motion to Dismiss. Signed by Judge Gladys Kessler on 12/19/16. (CL)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA

}

COMMUNITY FINANCIAL SERVICES
ASSOCATION OF AMERICA, LTD.,
et al.,

}
}
}
}

Plaintiffs,

}
}

v.

}

Case No. 14-CV-953 (GK}

}

FEDERAL DEPOSIT INSURANCE
CORPORATION, et al.,

}
}
}

Defendants.

}
}

~~~~~~~~~~~~~~~~~

MEMORANDUM OPINION

Plaintiffs,
America, Ltd.
Inc.

Community

Financial

Services

Association

of

("CFSA") and Advance America, Cash Advance Centers,

("Advance America"), allege that the Defendants, the Federal

Deposit Insurance Corporation ("the FDIC"), the Board of Governors
of the Federal Reserve System, and the Off ice 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.
injunctive

relief

to

prevent

Plaintiffs seek declaratory and
these

alleged

violations

from

continuing.
This matter
Motion to Dismiss
Standing or,

is before
for

the Court

on Defendants'

Lack of Associational

in the Alternative,

1

Corrected

or Organizational

for Judgment on the Pleadings

..
("Motion.to Dismiss"), in which Defendants seek dismissal of CFSA
as a party to this case.

[Dkt . No.

7 5] .

Upon consideration of

the Motion, Opposition, Reply, and the entire record herein, the
Motion to Dismiss is granted. 1
I.

Background
A. Factual Background

The 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,
for Failure to State a Claim.
105-107 (D.D.C. 2015).

in the Alternative,

CFSA v. FDIC, 132 F. Supp. 3d 98,

Consequently, an abbreviated discussion of

the facts follows.
Plaintiffs are CFSA,

an association of payday lenders,

Advance America, a payday lender and member of CFSA.
Supp.

3d at 105.

Government

that

and

Id., 132 F.

Defendants are agencies of the United States
have

been delegated

regulatory authority over

various parts of the United States banking system.

Id. at 106.

Plaintiffs allege that Defendants participated and continue
to participate in a campaign to force banks to terminate their
business relationships with payday lenders,
Choke Point"
Justice.

known as. "Operation

and initiated by the United States Department of

Id. at 106-107.

Defendants allegedly forced banks that

See Section I.B, Procedural Background, infra, for a detailed
history of the relevant briefs.
1

2

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,

relationships withall payday lenders.'"

mutually

beneficial

Id.

B. Procedural Background

On June 5, 2014,

Plaintiffs filed their original Complaint,

[Dkt. No. l], 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 Cons ti tut ion.

CFSA,

Defendants then filed Motions to Dismiss

132 F. Supp. 3d at 107.

for Lack of Subject Matter Jurisdiction or,
for Failure to State a Claim,

in the Alternative,

[Dkt. Nos. 16, 17, & 18].

Id.

On September 25, 2015, the Court issued a Memorandum Opinion
("Memorandum

Opinion" ) ,

Defendants' Motions.

granting

CFSA,

in part

and

132 F. Supp. 3d 98.

denying

in part

The Court held

that Plaintiffs had failed to state a claim under the APA,
dismissed all claims brought pursuant to it.

and

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

intere~t

in liberty or property.

3

Id. at 123-

24 (citing Paul v. Davis, 424 US 693, 708 (1976) & Gen. Elec. Co.
v. Jackson, 610 F.3d 110, 121 (D.C. Cir. 2010)).
Plaintiffs

then filed a

Second Amended Complaint

("SAC") ,

alleging facts and claims essentially indistinguishable from those
contained in their earlier complaints. 2

[Dkt.

No.

64] .

Defendant filed an Answer to the Second Amended Complaint.
Nos. 65, 66,

CFSA

Standing or,

[Dkt.

67].

&

On October 29,
Plaintiff

Each

for

2015,
Lack

Defendants filed a Motion to Dismiss
of

Associational

in the Alternative,

a

and

Organizational

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

Opposition on November 12, 2015,

America.

Plaintiffs

filed

an

[Dkt. No. 76] and Defendants filed

their Reply on November 19, 2015.

[Dkt. No. 77].

Despite the Court's dismissal of Plaintiffs' APA claims,
Plaintiffs again included them in their Second Amended
Complaint.
See SAC , , 116-197 (Counts I-III, V-VII, IX-XI all
brought pursuant to the APA). As those claims were dismissed,
they are no longer before the Court and are not the subject of
this motion. Only Plaintiffs' due process claims, claims IV,
VIII, and XII, are properly before the Court.
2

4

II.

Standard of Review
A. Motion to Dismiss Under Fed. R. Civ. P. 12(b) (1)

As courts of

limited jurisdiction,

only those powers

federal

courts possess

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,
deciding

whether

to

531 F.3d 930,

grant

a

motion

jurisdiction under Rule 12 (b) (1),

932
to

(D.C. Cir. 2008). In
dismiss

for

lack

of

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)).
Nonetheless,

"[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

outside

the

(D.D.C.

2001).

pleadings,

The Court may also consider matters

and may

rest

its

decision

on

its

own

resolution of disputed facts. See Herbert v. Nat'l Acad. of Sci.,
974 F.2d 192, 197 (D.C. Cir. 1992).

5

B. Motion for Judgment on the Pleadings Under Fed. R. Civ.
P.

12 {c)

"After the pleadings are closed but within such time as not
to

delay

the

pleadings."

trial,

any

party may

Fed. R. Civ. P. 12(c).

move

for

judgment

on

the

"Under Rule 12(c), the court

must accept the nonmovant' s a'llegations as true and should view
the facts in the light most favorable to the nonmovant."
v.

District of Columbia,

562 F.

Supp.

2d 30,

(internal citations and quotation marks omitted).

32

Bowman

(D.D.C.

2008)

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,
evidenced

on
in

the

complaint

the

record,

supplemented

or

the

by

complaint

undisputed

facts

supplemented

by

undisputed facts plus the court's resolution of disputed facts."
Id. at 32-33 (internal citations and quotation marks omitted) .
"The 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.
III. Analysis

Defendants 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
6

claims

that

remain.

Mot.

to

Dismiss at 1-2.

Specifically, Defendants contend that CFSA lacks

associational standing,
standing.3

organizational standing,

or third party

Id.

CFSA 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 Claim.
A. CFSA Lacks Standing
i. CFSA Must Establish
Standing

that

It

Has

Article

III

Article III of the Constitution limits the jurisdiction of
federal courts to certain "Cases" and "Controversies." See U.S.
Const. art. III,
judiciary' s

§

2. "[N]o principle is more fundamental to the

proper role

in our

system of

government

than

the

constitutional limitation of federal-court jurisdiction to actual
cases or controversies." Clapper v. Amnesty Int'l USA, 133 S.Ct.
1138, 1146,
the

(2013)

(internal citations omitted).

case-or-controversy

requirement

is

that

"One element of
plaintiffs

must

3 In ruling on Defendants' first Motion to Dismiss, this Court
held that the Plaintiffs collectively had standing to raise
these due process claims. CFSA, 132 F. Supp. 3d at 108-115.
However, in doing so, the Court did not expressly distinguish
between CFSA's and Advance America's respective standing to
raise these claims, nor did the parties themselves raise the
issue. See id. and [Dkt. Nos. 16, 17, 18, 23, 41, 44 & 46].
7

establish that they have standing to sue." Id.

(internal quotation

marks and citation omitted) .
"[T] he

irreducible

constitutional

minimum

standing

of

contains three elements. First, the plaintiff must have suffered
an injury in fact .
and

(b)

actual

or

. which is (a) concrete and particularized,
imminent,

not

conjectural

or

hypothetical.

Second, there must be a causal connection between the injury and
Third,

the conduct complained of
I

it must be likely,

as

opposed to merely speculative, that the injury will be redressed

I

by a favorable decision." Lujan v. Defenders of Wildlife, 504 U.S.
555,

560-61,

( 1992)

(internal

quotation marks,

citations,

and

footnotes omitted) .
ii.

CFSA Lacks Associational Standing

Under the theory of associational standing, an organization
may

sue

as

a

representative

of

standing to sue in its own right.
Apple Advertising Commission,

its

members

even

if

it

lacks

See Hunt v. Washington State

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)
its

the interests the organization seeks to protect in

lawsuit are

germane

to the organization's purpose;

and 3)

"neither the claim asserted nor the relief requested requires the

8

participation of individual members in the lawsuit."
Air Transp. Ass'n v. Reno, 80 F.3d 477, 483

Id., at 343;

(D.C. Cir. 1996).

The Court has already ruled that CFSA's members have standing
to pursue the due process claims remaining in this lawsuit.
132 F. Supp. 3d at 108-15.

Furthermore,

CFSA,

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.
a. CFSA' s claims that its members' due process
rights have been violated cannot be litigated
without the participation of its members

To

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."
343.

Accordingly,

432 U.S. at

Plaintiffs' claims are the starting point for

determining whether member participation is required.
Plaintiffs allege that Operation Choke Point violates the due
process rights of CFSA's members.
204 (Claims IV, VIII, XII).
under the

so-called

See

SAC~~

141-47, 173-79, 198-

These due process claims are brought

"stigma-plus

rule."

General Elec.

Co.

v.

Jackson, 610 F.3d at 121 (citing Paul v. Davis, 424 U.S. at 708).
9

Under 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.

at708).
In its 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,
U.S.

204

433,

(D.C.

437

Cir.

(1971)).

2001); Wisconsin v.
Alternatively,

Constantineau,

the

Court

held

400
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."

Id.

It is quite evident that significant participation by CFSA's
members is required under either theory.
theories

of

the

case

is

that

its

Central to both of CFSA's

members

have

relationships as a result of Operation Choke Point.
its claims CFSA must provide evidence that:

10

1)

lost

banking

Thus, to prove
Operation Choke

Point

stigmatized CFSA' s

banking

relationships;

members;

and

3)

2)

that

that
the

CFSA' s

loss

of

members
those

lost

banking

relationships was caused by the stigma generated by Operation Choke
Point.
Even
Operation

if

it

Choke

is

possible

Point

had

that

Plaintiffs

stigmatiz.ed

could

CFSA' s

show

members

that

without

significant member participation, 4 that alone would be insufficient
to prove their claims.
("stigma

alone

is

See General Electric,
insufficient

to

610 F. 3d at 121

invoke

due

process

actually

lost

banking

protections").
Instead,

to

show

that

they

had

relationships and those losses were caused by Operation Choke Point
would require significant and extensive participation by CFSA's
members.

First,

that CFSA' s
For

example,

member-specific evidence is necessary to show

members have,
members

in fact,

would

have

lost banking relationships.
to

present

individualized

"documentation regarding the allegedly lost accounts,
the deposit agreements."

including

Mot. to Dismiss at 16.

Second, in order to establish that it was the stigma generated
by Operation Choke Point that caused those losses,

rather than

For example, Plaintiffs could attempt to show· that Operation
Choke Point had stigmatized the entire payday lending industry
relying primarily on evidence of the words and actions of
Defendants.
4

11

some

other

required

cause,

to

individual

provide

banks

evidence

would almost

regarding

certainly be

their

reasons

terminating banking relationships with CFSA's members.

for

This might

include communications between the banks and CFSA's members, see
id., along with the evidence of the banks' own reasoning, such as
internal memoranda or emails.
introduce

individualized

Both require CFSA' s

evidence

of

their

members to

lost

banking

relationships.
Furthermore, establishing that CFSA's members can no longer
pursue their chosen line of business will also almost certainly
require

individualized

activity

before

evidence as

to

and

evidence

after

of

their

Operation

the myriad factors

failure of their business. 5

respective

Choke

relevant

business

Point,

along

to

success or

the

with

Mot. to Dismiss at 7.

It is impossible to see how any of this could be accomplished
without

significant

member

participation.

See

Friends

for

American Free Enterprise Ass'n v. Wal-Mart Stores, Inc., 284 F.3d
575,

577

defendants'

(5th

Cir.

2002)

interference

in

(association's
bilateral

claims

relationships

regarding
between

Defendants also point out that testing Plaintiffs' claims may
require "documentation of each member's finances over the past
several years .
. interrogatories about any other lost
relationships or business opportunities that could have affected
[members'] financial prospects, and notice depositions to adduce
each member's present ability to do business." Mot. to Dismiss
at 15-16.
5

12

association members and third parties not involved in the lawsuit
are too fact-specific to be resolved without individual member
participation)

.6

b. CFSA's request for injunctive,
rather than
monetary, relief is insufficient to establish
that member participation is not required

In spite of this,
injunctive

relief,

participation

is

not

Plaintiffs argue that because they seek

rather

than

required.

monetary
Opp'n

at

damages,
11-12.

member
For

this

proposition Plaintiffs cite United Food and Commercial Works Union
Local 751 v. Brown Group, Inc., in which the Court noted that in

6

Indeed, the facts of Friends for American Free Enterprise seem
directly on point. In that case an association of "manufacturers'
representatives" sued Sam's Club for tortious interference.
The
manufacturers' representatives were quintessential middlemen,
selling the goods produced by the manufacturers to third parties,
such as Sam's Club.
The representatives' contracts with the
manufacturers
had
exclusivity
clauses
that
prevented
the
manufacturers from selling their products directly to others.
Sam's Club decided it would no longer purchase goods from the
representatives, but would instead purchase them directly from the
manufacturers.
An association of manufacturers' representatives
then sued on their behalf, in part to keep the members' identities
secret. 284 F.3d at 576.
The court held that the association lacked associational
standing because member participation was required to prove the
underlying claims.
Just as here, the associational plaintiff
claimed that the defendant, Sam's Club, was exerting pressure on
a third party not before the court, the manufacturers, in order to
get the third party to terminate a bilateral relationship with the
association's members, the manufacturers' representatives.
The
court held that resolution of the tortious interference claims
required member participation because the defendant would need to
be able to obtain information regarding the business relationship
between
the
association's
members
and
the
third-party
manufacturers. Id. at 576-77.
13

all

prior cases

standing existed,

where

the

evident

logical
on

its

had

found

that

associational

plaintiffs had only sought injunctive relief.

517 U.S. 544, 554 (1996)
The

Court

("Brown Group").

fallacy

inherent

face.

The

in

fact

Plaintiffs'

that

all

argument

cases

in

is

which

associational standing has been found to exist involved a request
for injunctive relief, does not mean that associational standing
exists in all cases where an association seeks injunctive relief.
Indeed,

such a

rule

is

plainly precluded by

the

Court's

holding in Hunt, which requires the Court to look not only at the
type of relief requested but also at the nature of

"the claim

asserted" to determine whether member participation is required,
a requirement repeatedly confirmed since Hunt was decided.

Hunt,

433 U.S. at 343; see also Rent Stabilization Ass'n v. Dinkins, 5
F.3d 591, 596

(2d Cir. 1993)

("the relief sought is only half of

the story . . . we must also examine the claims asserted to determine
whether
American

they
Free

require

indi victual

Enterprise,

284

participation.") ;
F.3d

at

577

(no

Friends

for

associational

standing even though plaintiffs only sought injunctive relief);
Kansas Heal th Care Ass' n v.

Kansas Dep' t

Servs.,

(10th Cir.

958 F. 2d 1018,

1022

of Social and Rehab.

1992)

(no associational

standing even though plaintiffs only sought injunctive relief) .

14

Thus,

the mere fact that Plaintiffs seek injunctive rather

than monetary relief does not mean that member participation is
not required in this lawsuit.
c. This defect cannot be cured through sampling

Plaintiffs argue that this defect can be overcome by sampling
--i.e. by taking evidence from a representative sample of CFSA's
members

without violating Hunt's

(arguing

that

"courts

have

standing where, as here,
case

with a

Association

sampling of
of

American

Opp' n at 17

third prong.

repeatedly

upheld

associational

'an association plaintiff can prove its
evidence

from

Physicians

&

its members'"

Surgeons,

(quoting

Inc.

v.

Texas

Medical Bd., 627 F.3d 547, 551-552 (5th Cir. 2010))).
Plaintiffs are correct that numerous courts have held that
the third prong of Hunt may be satisfied even though some minimal
degree of member participation is necessary.
Council v.

Pittsburg,

949 F;2d 83,

Chicago Police Ass'n v.
19 93) ;
Inc.,

89

See e.g. Hospital

(3d Cir.

City of Chicago,

1991);

7 F.3d 584

see also Association of American Physicians
627

Circuits'

F.3d

at

551-52

(providing

an

approaches to allowing sampling) .

overview

Retired

(7th Cir.

&

Surgeons,

of

various

Those courts have

held that a representative sample of members could provide evidence
without violating Hunt's third prong.

See Association of American

Physicians & Surgeons, Inc., 627 F.3d at 551-52.

15

There does not appear to be any bright-line rule regarding at
what point sampling violates Hunt's third prong.

See id. at 552

(differences in various Circuits' approaches "are more of degree
than kind").

Instead, it is a discretionary inquiry as to whether

it would be more efficient to allow sampling, rather than require
each member to bring a claim individually.
Society

v.

International

U.S.

See

Agency

Alliance for Open
International

for

Development, 651 F.3d 218, 229 (2d Cir. 2011).

A number of factors

are relevant to this inquiry.
Typically,

sampling

is

appropriate

participation from individual members"
claim.

Id.

where

only

"minimal

is required to prove the

(internal· quotation marks

and citations

omitted).

Thus, sampling is appropriate in a case where a "discrete pattern
of conduct .

[is]

alleged to have applied equally against a

large number of association members," such that "once proved as to
some, the violations would be proved as to all."

Id.

A related factor is whether the claims present "pure questions
of law" or, instead, are "fact-specific."
Free

Enterprise

Ass'n,

284

F.3d

at

See Friends for American

577.

Thus,

Courts

have

repeatedly held that the third prong of Hunt is not violated where
the claim involves a question of law. 7

7

Id.; Playboy Enterprises,

Another parallel is the difference between facial and as-applied
challenges.
Facial
challenges do not ordinarily require
individual
member
participation
but
as-applied
challenges
16

Inc. v. Public Service Com'n of Puerto Rico, 906 F.2d 25, 35 (1st
Cir.

1990)

(member participation is not required where the case

involves a "question of law which is not particular to each member
of the Association"); Bano v. Union Carbide Corp., 361 F.3d 696,
714

(2d Cir.

"organization

2004)
seeks

(member participation is not required where
a

purely

legal

ruling") ;

but

see

Retired

Chicago Police Ass'n v. Chicago, 7 F.3d 584, 601 (third prong of
Hunt

satisfied even

questions of law") .

though claims

"were

not

premised on pure

In contrast, Courts have concluded that member

participation is required - and thus the third prong of Hunt is
violated - where a fact-specific inquiry is necessary to establish
a violation.

Friends for American Free Enterprise Ass' n,

284

F.3d at 577.
Finally, courts have concluded that sampling does not violate
Hunt's

prohibition

on

member

participation

where

the

sample

evidence focuses on the conduct of the defendant to establish a

ordinarily do.
See Kansas Health Care Ass' n, 958 F. 2d at 1022
(individual participation not required where violation can be
adduced solely by looking at terms of agency policy or practice
(discussing AMISUB (PSL), Inc. v. Colorado Dep't of Social Servs.,
879 F.2d 789 (10th Cir. 1989)) but individual participation is
required where violation cannot be determined from reviewing
policies "on their face"); Bano v. Union Carbide Corp, 361 F. 3d
696, 714 (2d Cir. 2004) (member participation required in "asapplied" challenge (discussing Rent Stabilization Ass'n, 5 F.3d at
596)); Free Speech Coalition, Inc. v. Attorney General, 787 F.3d
142, 153-54 (3d Cir.) (as-applied challenge under First Amendment
requires member participation to establish violation), rev'd on
other grounds by 825 F.3d 149 (3d Cir. 2016).
17

violation

of

law,

rather

than

injuries.

Pennsylvania Psychiatric Soc.

Services,

Inc.,

280 F.3d 278,

286

on

the

extent
v.

of

plaintiff's

Green Spring Health

(3d Cir 2002)

(limited member

participation does not defeat standing where sample evidence 'is
about "methods" employed by Defendants and used to prove "systemic"
conduct by Defendants); Alliance for Open Society, 651 F.3d at 229
(finding

associational

Defendants .

standing

where

"it

is

the

conduct

. that will be the primary subject of inquiry") ;

Retired Chicago Policy Ass'n v. Chicago, 7 F.3d 584, 602-03
Cir.)

of

(7th

(limited member participation does not defeat associational

standing

where

sample

evidence

focuses

on

whether

defendants

engaged in alleged conduct) .
Even Hospital Council of Western Pennsylvania v. Pittsburgh,
949 F.2d 83

(3d Cir. 1991), the case on which Plaintiffs rely so

heavily, is understood to allow for limited member participation
where the sample evidence was used to prove the conduct of the
defendant.

See Retired Chicago Policy Ass'n,

7 F.3d at 603

("In

that case, at issue was whether the defendant governmental entities
had pursued the policy of which the plaintiffs complained;

the

court believed that issue could be answered through the evidence
submitted by, among others, some of the parties.").
The Court concludes that sampling is inappropriate in this
case, as all of the relevant factors suggest that no efficiencies

18

will be gained by allowing CFSA to litigate this matter,

rather

than having individual members litigate their own claims.
Fir$t,

Plaintiffs'

stigma-plus claims do not

involve pure

questions of law, but instead, are highly fact-sensitive.

Whether

any individual member has suffered a loss of banking relationships
and whether that loss was caused by Operation Choke Point turns on
unique facts that are specific to that member, such as what reasons
the individual bank gives for terminating the relationship.
Second,

this

is

not

a

case where

limited to the conduct of the Defendants.

sample

evidence

can be

As the Court has already

explained, the Defendants' conduct is only one of the elements in
establishing a due process violation under the stigma-plus test.
Indeed,

CFSA's

own

pleadings

confirm

participation is required in this case.

that

See SAC

~

individual

14 ("numerous

CFSA members have lost their business relationships with banks"
(emphasis added)).
lost

banking

By stating that not all of its members have

relationship

CFSA

has

clearly

demonstrated

that

Operation Choke Point did not have a uniform ef feet on CFSA' s
members. Therefore, this is not a case where sample evidence can
establish violations that "once proved as to some [members]
would be proved as to all."

See Association of American Physicians

& Surgeons, Inc., 627 F.3d at 552.

19

Finally,

the Court believes that sampling is likely to be

inappropriate where an organization's membership is as small as
CFSA's.

Where an organization contains only 41 members, as CFSA

does, a statistically significant sample size includes virtually
all members.
risk

of

Indeed, any smaller sub-sample of members raises the

choosing

an

unrepresentative

sample,

either

through

Thus, a sample

inadvertence or cherry-picking by the plaintiff.

of sufficient size to be representative will not be significantly
more efficient than bringing the case individually, and any smaller
sample is likely to be unrepresentative and misleading.
Consequently,

all of the relevant factors

suggest that it

will be no more efficient to have CFSA litigate this case than to
Association of

have members pursue their claims individually.
American Physicians & Surgeons,

Inc.,

627 F.3d at 552-53

(third

prong of Hunt is concerned with "whether an association or its
individual members are better positioned to present a case" and
judicial efficiency) .
"require[]

the

Therefore,

participation

of

lawsuit,"

the

standing.

concludes

CFSA' s

claims

individual

that

CFSA

so clearly

members

lacks

in

the

See Hunt, 432 U.S. at 343.
iii.

Court

as

associational

CFSA Lacks Organizational Standing

Additionally, rather than suing on behalf of its members, an
organization may sue on its own behalf to protect against alleged

20

violations of its own interests.

Nat'l Treasury Employees Union

v. United States, 101 F.3d 1423, 1427-28.

(D.C. Cir. 1996)

Havens Realty Corp. v. Coleman, 455 U.S. 363, 378,
so,

To do

the organization must satisfy each of the traditional three

prongs of the standing inquiry redressability.

Id. at 1427.

injury in fact,

"concrete and demonstrable injury to

activities."

causation, and

However, the alleged injury cannot

simply be an injury to its members' interests.
be a

(1982)).

(citing

Instead, it must

[the organization's]

Id.

CFSA alleges two distinct injuries which it argues satisfy
the first prong of injury in fact.

First, CFSA alleges that it is

receiving fewer dues payments from members as a result of Operation
Choke Point.

Second, CFSA alleges that, as a

Opp'n at 28, n.8.

result of Operation Choke Point, it has had to divert significant
resources from its traditional activities to assist members who
have been adversely affected.

Opp'n at 27.

a. CFSA's allegations that it has lost membership
dues are too speculative to establish causation
or redressability

The parties dispute whether Plaintiffs'

loss of membership

dues, caused by the Defendants' actions, constitutes a cognizable
injury in fact.

See Opp'n at 28; Mot. to Dismiss at 19-20.

21

Each

party musters a number of cases seeking to show that it is correct. 8
Yet, neither cites to a decision of this Circuit's Court of Appeals
that conclusively resolves the issue.
Even if the Court were to assume that a loss of membership
dues was a cognizable injury in fact, it is evident that Plaintiffs
cannot show that this injury was caused by Operation Choke Point
or that an order from this Court would redress it.
"When

a

plaintiff's

asserted

injury

arises

from

the

Government's regulation of a third party that is not before the
court,

it

standing.

becomes
Because

substantially
the

more

necessary

difficult

elements

of

to

establish

causation

and

redressability in such a case hinge on the independent choices of
the regulated third party, it becomes the burden of the plaintiff
to adduce facts showing that those choices have been or will be
made

in

such

manner

as

to

produce

8

causation

and

permit

Opp'n at 28 n.8
(citing Taxation with Representation of
Washington v.Regan, 676 F.2d 715, 722-23 (D.C. Cir. 1982), rev'd
on other grounds, 461 U.S. 540 (1983); Construction Indus. Ass'n
of Sonoma Cnty. v. City of Petaluma, 522 F.2d 897, 903 (9th Cir.
1975); National Treasury Emps. Union v. IRS, 2006 WL 416161, at *2
(D.D.C. Feb. 22,_2006); NAACP v. Acusport Corp., 210 F.R.D. 446,
457 (E.D.N.Y. 2002); Tiano v. County of Santa Clara, 1994 WL
618467, at *6 (N.D. Cal. Oct. 19, 1994) Richards v. New York State
Dep't of Corr. Servs., 572 F. Supp. 1168, 1179 (S.D.N.Y. 1983));
Mot.
to Dismiss at 19 (asserting that loss of dues is a
"derivative" harm and therefore non-cognizable as an Article III
injury (citing Petro-Chem Processing, Inc. v. EPA, 866 F.2d 433,
435 n.2 (D.C. Cir. 1989); Bensman v. United States Forest Serv.,
408 F.3d 945, 948 n.2 (7th Cir. 2005); Delta Air Lines, Inc. v.
Export-Import Bank, 85 F. Supp. 3d 250, 262 (D.D.C. 2015)).
22

redressability

of

injury.

speculation as

to the existence of a

In

other

words,

mere

unadorned

relationship between the

challenged government action and the third-party conduct will not
suffice to invoke the federal judicial power."

National Wrestling

Coaches Assn' v. Dept. of Education, 366 F.3d 930, 938 (D.C. Cir.
2004); see also Clapper v. Amnesty Intern. USA, 133 S. Ct. 1138,
1150

(2013)

theories

(expressing

that

require

a

"reluctan[ce]

guesswork

as

to
to

endorse
how

standing

independent

decisionmakers will exercise their judgment.").
Previously,
Plaintiffs'

this Court held in its Memorandum Opinion that

allegations were

sufficient

CFSA, 132 F. Supp. 3d at 111-15.

to establish standing.

The Court held that Plaintiffs'

allegations established causation,

by alleging that Defendants'

actions had caused third-party banks, who are not parties to this
litigation, to terminate their business relationships with CFSA's
members.

Id.

The Court also found that a decision in Plaintiffs'

favor could redress this injury by enabling Plaintiffs to once
again access the banking system, even if their original banks did
not restore the terminated banking relationships.

Id.

Plaintiffs now ask that the Court go even further and find
that the increased costs CFSA's members suffered because of the
alleged loss of banking relationships in turn caused those members
to either withdraw from CFSA or to reduce their membership level

23

•.

within the association, resulting in lower dues.
29,

n. 8.

Plaintiffs'

argument

fails

See Opp'n at 28-

because they cannot

show

either causation or redressability.
First, CFSA has failed to allege any facts tending to show a
causal

relationship

between

decreased membership revenue.

Operation

Choke

Point

and

its

CFSA names multiple members who

allegedly have lost banking relationships as a result of Operation
Choke Point, but fails to name a single member who has reduced its
dues payments as a result of such losses.

See SAC.

Similarly,

CFSA has submitted numerous declarations from members who allege
that they have lost banking relationships as a result of Operation
Choke Point, but not one alleges that Operation Choke Point caused
it to reduce its dues payments to CFSA.

See various declarations

[Dkt. Nos. 23-1, 23-2, 23-3, 23-4, 23-5, 23-6, 23-8].
Indeed,

it appears

just as plausible that CFSA' s members,

faced with the allegedly existential threat of Operation Choke
Point,
because

would maintain or increase
CFSA's

very

regulatory actions.

mission

is

their contributions
to

defend

them

Absent any tangible evidence,

from

to

CFSA

harmful

it is

"mere

unadorned speculation" to inf er a causal link between Operation
Choke Point and the alleged reduction in members' dues payments.
See National Wrestling Coaches Ass'n,

366 F.3d at 838;

Water Watch v. Vilsack, 808 F.3d 905, 913 (D.C .. Cir. 2015)

24

Food and
(a court

need not "accept inferences that are unsupported by facts set out
in

the

complaint"

(internal

citations

and

quotation

marks

omitted))
Unable

to

show

that

Operation

reduction in membership dues,

Point

has

caused

a

it is essentially impossible for

CFSA to establish redressability.
establish causation,

Choke

Furthermore, even if CFSA could

it is entirely unclear that a court order,

ending Operation Choke Point, would cause CFSA's members to return
to paying their previous level of dues.

Indeed,

just as with

Plaintiff's arguments regarding causation, the Court can imagine
an

equally

plausible

scenario

in

which

the

Court

orders

a

termination of Operation Choke Point and CFSA's members decline to
resume their prior dues payments because the danger has passed.

9

9

This absence of causation and redressability distinguishes the
present case from many of those that Plaintiffs cite for the
proposition that a loss of membership dues constitutes an Article
III injury.
See Opp'n at 28, n.8 (citing National Treasury
Employees Union v. IRS, 2006 WL 416161, *2 (D.D.C. Feb. 22, 2006)
("NTEU"); Construction Industry Ass'n of Sonoma v. Petaluma, 522
F.3d 897, 903-04 (9th Cir. 1975)).
For example, in NTEU the Plaintiff union challenged the
firing of union members and the court found standing on the
basis of a loss of union dues.
2006 WL 416161 at *2.
The
court held that the loss was necessarily caused by the firing of
union members and was redressable because if the members were
reinstated they would be required to begin paying dues once
again.
Id.
Similarly, in Petaluma the Plaintiff Construction association
challenged a regulation capping the number of dwellings that could
be built annually and the court found standing on the basis of a
25

The Court is mindful of the Supreme Court's and the Circuit
Court of Appeals' repeated admonitions not to speculate as to how
third

parties

might

manufacture standing.

respond

to

a

court

order

in

order

to

See Food and Water Watch, 808 F.3d at 931

("when considering any chain of allegations for standing purposes,
we

may

reject

as

overly

speculative

those

links

which

are

predictions of future events (especially future actions to be taken
by third

pa~ties)");

838; Clapper,

National Wrestling Coaches Ass'n, 366 F.3d at

133 S. Ct. at 1150.

In this case, it is entirely

speculative as to whether the alleged reduced membership dues were
caused by Operation Choke Point or could be redressed by an order
Therefore,

of this Court.

CFSA cannot establish organizational

standing on the basis of that alleged injury.
b. CFSA' s alleged reprogramming of organizational
resources in response to Operation Choke Point
is not a cognizable Article III injury

CFSA also alleges that it has standing because Operation Choke
Point

frustrates

CFSA's

mission

resources to combat that harm.

and

CFSA

has

Opp'n at 25-27

had

to

expend

(citing National

loss of membership dues.
Petaluma, 522 F.3d at 903-04.
Because
membership dues were a fixed percentage of revenues, the cap on
building activity necessarily caused a reduction in dues and
lifting the cap would necessarily redress that harm.
Id.
26

Treasury Emps. Union v. United States, 101 F.3d 1423, 1430 (D.C.
Cir. 1996)).
In assessing an organization's standing it is insufficient to
show that the organization's "mission has been compromised" by the
challenged
Instead,

action.

it must

Food
show the

and

Water

Watch,

808

challenged action has

organization's own activities.

Id.

F.3d

at

"impeded"

919.
the

In other words, a showing of

injury requires "more than simply a setback to the organization's
abstract social interests." Nat'l Ass'n of Home Builders v. EPA,
667 F.3d 6, 11 (D.C. Cir. 2011).
This requires a "two-part inquiry-'we ask, first, whether the
agency's

action or omission to act

injured the

organization's

interest and, second, whether the organization used its resources
to counteract that harm.'" Food and Water Watch, 808 F.3d at 919
(quoting PETA v. USDA, 797 F.3d 1087, 1093 (D.C. Cir. 2015)).

"To

allege an injury to its interest, an organization must allege that
the defendant's conduct perceptibly impaired the organization's
ability to provide services in order to establish injury in fact.
An organization's ability to provide services has been perceptibly
impaired when the defendant's conduct causes an inhibition of the
organization's daily operations."
citations omitted) .

27

Id.

(internal quotations and

. advocacy is

"[A]n organization's use of resources for .

See Food

not sufficient to give rise to an Article III injury."
i
'

I

&

Water Watch,

"Furthermore,

808 F. 3d at 920.

an organization

does not suffer an injury in fact where it expends resources to
educate

its

members

and

others

unless

doing

so

subjects

the

organization to operational costs beyond those normally expended."
Id. at 920 (internal citations and quotations omitted) .
The harms asserted by CFSA are not cognizable Article III
injuries.

First,

CFSA notes that its mission is to advocate on

behalf of payday lenders in the legislative and regulatory arena,
while Operation Choke Point is allegedly designed to put an end to
payday lending,
Opp'n at 27.

the very activity CFSA advocates on behalf of.

CFSA contends that if that is not a direct conflict

with its mission,

then nothing ever would be.

Id.

While CFSA

tries to characterize this as a unique organizational harm, it is
nothing more than a "generalized grievance about the conduct of
the Government."
to its essence,
necessarily,

Food and Water Watch, 808 F.3d at 926.

CFSA believes that payday lending is good and,

that

lending is bad.

Reduced

this

effort

to

allegedly

eliminate

That is not an Article III injury.

payday

Id.

Additionally, CFSA alleges that it has been forced to divert
resources

from

its

traditional

lobbying activities and instead

spend its resources advising its members on how to respond to

28

Operation Choke Point and negotiating with the banks on behalf of
members.

Id.

Essentially, CFSA argues that it has been forced to

curtail its traditional issue advocacy and engage in a new type of
advocacy to respond to the threat posed by Operation Choke Point.
Yet, the Court of Appeals has repeatedly rejected the argument
that impairment of an organization's ability to engage in issueadvocacy is a cognizable injury.

See Center for Law and Educ. V.

Dep't of Educ., 396 F.3d 1152, 1161-62 (D.C. Cir. 2005)

(impairment

of organization's ability to engage in "pure issue-advocacy" is
not cognizable injury for standing purposes)
Union,
94.

i

National Taxpayers

Inc. v. U.S., 68 F.3d 1428, 1433i PETA, 797 F.3d at 1093-

The courts have reasoned that an organization's interest in

lobbying on behalf of its members is ordinarily indistinguishable
from and identical to its abstract interest in having "a social
goal furthered."
1428,

1433.

National Taxpayers Union, Inc. v. U.S., 68 F.3d
Harms

to

insufficiently concrete
Article III injury. 10

Id.

to
i

such

a

rise

to

generalized
the

level

of

interest
a

are

cognizable

PETA, 797 F.3d at 1094.

Indeed,· in some instances, government actions that hinder the
policy objectives of an organization may help, rather than harm,
the organization as an institution, by energizing its members or
by giving it new opportunities to carry out its mission. See Elec.
Privacy Info. Ctr. v. Dep't of Educ., 48 F. Supp. 3d 1, 23 (D.D.C.
2014) ("Here, the Final Rule has not impeded EPIC's programmatic
concerns and activities, but fueled them. And the expenditures
that EPIC has made in response to the Final Rule have not kept it
from pursuing its true purpose as an organization but have
10

29

Consequently,

CFSA

has

failed

to

establish

that

it

has

organizational standing.
iv.

CFSA lacks Third Party (Jus Tetrii} Standing

Defendants
organizational

argue

that

standing

even

if

Plaintiffs

still

they

requirements of third party standing,
standing.

fail

to

can

establish

satisfy

the

also known as jus tetrii

CFSA asserts that it has satisfied the requirements for

third party standing.
The

doctrine

of

third

party

standing

is

a

prudential

limitation on the ability of third parties to challenge actions
that injure others who are not before the court.
FDIC, 164 F.3d 37, 43 (D.C. Cir. 1999).
that,

ordinarily,

Lepelletier v.

It reflects the principle

"a litigant must assert his or her own legal

rights and interests,

and cannot rest a claim to relief on the

legal rights or interests of third parties."

Powers v. Ohio, 499

U.S. 400, 410 (1991).
A party seeking to clear the prudential hurdle of third party
standing must first establish that it has Article III standing.
See Sands v. NLRB, 825 F.3d 778, 784 (D.C. Cir. 2016)

("[plaintiff]

contributed to its pursuit of its purpose.") ; Nat' 1 Consumers
League v. Gen. Mills, Inc., 680 F. Supp. 2d 132, 136 (D.D.C.2010)
("Challenging conduct like General Mills' alleged mislabeling is
the very purpose of consumer advocacy organizations. As such,
General Mills' alleged conduct does not hamper NCL' s advocacy
effort; if anything it gives NCL an opportunity to carry out its
mission.") .
30

•.

must show that he has standing under Article III,
or jus tertii,

satisfies third party,

Assuming she has done so,

and that he

standing requirements.

11

)

•

there are three factors that must be

considered in "determining whether an individual may assert the
rights of others:
in fact,

(1)

'the litigant must have suffered an injury

thus giving him or her a sufficiently concrete interest

in the outcome of the issue in dispute, '

( 2)

have a close relation to the third party,'

'the litigant must
and

(3)

'there must

exist some hindrance to the third party's ability to protect his
or her own interests. '

11

Powers, 499 U.S. at 411)

Lepelletier,

164

F. 3d at 43

(quoting

(emphasis added).

As the foregoing analysis makes clear, CFSA lacks Article III
standing, and therefore, it does CFSA no good to establish third
party standing.

Furthermore, even if CFSA could establish Article

III

CFSA's

standing,

alleged

hindrance

to

its

members

is

insufficient to find that it has third party standing.
As the Court has already concluded, many if not all of CFSA's
members would be required to participate in this lawsuit and to
disclose information regarding their banking relationships.

Thus,

CFSA's members will be forced to disclose their identities and
business practices in order to prove the claims in this lawsuit
and the claimed hindrance will exist regardless of whether. CFSA
litigates these claims on behalf of its members or whether the

31

Indeed,

members are forced to bring them individually.
CFSA' s

members,

lawsuit,

Advance

America,

is

already

a

party

one of
to

this

suggesting that this fear is not a hindrance to member

participation at all.

See Hodak v. Peters, 535 F.3d 899, 905 (8th

Cir. 2008).
Additionally, CFSA fails to cite a single case holding that
fear of future regulatory activity alone constitutes a cognizable
hindrance. 11

As third-party standing is an exception to the rule

that litigants must bring their own claims, it is looked on with
disfavor,

Kowalski v. Tesmer,

543 U.S. 125, 130

(2004),

and the

Court will not extend this exception.
Thus, the Court concludes that CFSA cannot meet the test for
third party standing.
v.

In

sum,

Therefore CFSA cannot establish standing under any
theory

the

Court

concludes

that

CFSA

associational standing or organizational standing.

lacks

either

Furthermore,

the Court concludes that even if CFSA had organizational standing,

Plaintiffs rely on Members of the City Council of L.A. v.
Taxpayers for Vincent, 466 U.S. 789, 798 (1984). That case makes
clear that fear is a hindrance unique to the context of a facial
challenge under the First Amendment to a criminal statute.
Id.
11

The other case on which Plaintiffs rely did not hold that
fear alone constitutes a hindrance. See Pennsylvania Psychiatric
Soc., Inc., 280 F.3d at 290 (concluding that fear "coupled with
[the third parties']
potential incapacity to pursue legal
remedies" constituted a hindrance) .
32

it

cannot

satisfy

the

prudential

requirements

of

third party

standing, and therefore should not be allowed to litigate the due
process claims of
standard of

review

its members.
for

a

These conclusions rest on the

motion to

dismiss,

pursuant

to Rule

12(b) (1), or a motion for judgment on the pleadings, pursuant to
Rule 12 (c).
B. Defendants Did not Waive their Standing Arguments

Finally,

Plaintiffs argue that even if CFSA cannot satisfy

either the third prong of the Hunt test for associational standing
or the third prong of the test for third party standing, Defendants
waived these arguments by failing to raise them in their original
Motions to Dismiss.
these

prongs

therefore,

are

Opp'n at 9-11,
merely

prudential

Plaintiffs argue that

29.

limits

on

standing,

and

that they do not survive the Supreme Court's decision

in Lexmark International, Inc. v Static Control Components, Inc.,
134 S. Ct. 1377 (2014).

Opp'n at 9-11, 29.

In Lexmark the Court held that the "zone of interests" test
is

not

a

standing

requirement

therefore non-jurisdictional.
so,

imposed
134 S.

by Article

III

Ct. at 1386-88.

and

is

In doing

the Court suggested that the entire doctrine of prudential

standing may be illegitimate, noting that it "is in some tension
with . .

the principle that a federal court's obligation to hear

and decide cases within its jurisdiction is virtually unflagging."

33

Id.

at 1386

S.Ct.

584,

(quoting Sprint Communications,
591

Jacobs,

134

(internal quotation marks omitted));

(2013)

see

also 15 Moore's Federal Practice 3d

§

Inc. v.

101.50

(describing Lexmark

as "herald[ing] the demise of the prudential strand of standing").
Plaintiffs are correct that the tests for both associational
and third party standing contain prudential elements.
Group,

517 U.S. at 555

prong

is

a

See Brown

("the associational standing test's third

prudential

one");

Kowalski,

543

U.S.

at

129-30

(describing third party standing doctrine as prudential and not
derived from limits of constitutional standing) .

Plaintiffs argue

that in light of Lexmark, such prudential limits on standing are
no longer jurisdictional.

Opp'n at 9-11, 29.

Plaintiffs contend

that such non-jurisdictional arguments can be waived,

and that

Defendants did in fact waive them in this case, by failing to raise
their associational standing and organizational standing arguments
in their first set of Motions to Dismiss.

Id.

Plaintiffs are also correct that Lexmark casts doubt on the
vitality of prudential standing doctrines.
Practice 3d

§

See 15 Moore's Federal

101.50; Sheet Metal, Air, Rail, and Transportation

Workers Local Union 20 v. Van's Industrial Inc.,
(N.D.

In.

December 7,

2015)

2015 WL 8180287

(reviewing decisions in the Sixth,

Seventh, Eleventh Circuits, all stating that Lexmark has cast doubt
on the vitality of prudential standing) .

34

However,

just because a doctrine was labelled as a form of

prudential standing prior to Lexmark,

does not mean that it is
For example,

necessarily non-jurisdictional after Lexmark.

in

Lexmark the Court held that while the prohibition on suits raising
"generalized grievances" had previously been treated as a form of
prudential
standing.

standing,

it

Lexmark, 134

is

s.

actually a

form

of

constitutional

Ct. at 1387, n.3.

Most importantly, the Court in Lexmark expressly reserved the
question of whether third-party standing is a form of prudential
standing or is instead a form of constitutional standing.
see also United States v. TDC Management Corporation,
F.3d 1127,
after

1133

Lexmark,

prudential) .

(D.C.
the

And

Cir.

2016)

limitations

the

Court

of

Inc.,

827

(declining to decide whether,
on

third-party

Appeals

for

the

standing
D. C.

are

Circuit

continues to treat associational standing as jurisdictional after
Lexmark. 12
2016) .

See Sierra Club v.

Thus,

· standing have

FERC,

827 F.3d 69,

65

(D.C.

Cir.

the fact that both associational and third party
been

labelled prudential

in

the

past,

does

not

establish what will happen in the future, post-Lexmark.

This alone would seem to foreclose Plaintiffs' argument with
regard to associational standing. However, in Sierra Club, it was
"unchallenged and clear" that plaintiffs had satisfied the third
prong of the Hunt associational standing test. Therefore, the
question of whether the third prong of Hunt is prudential was not
before the Court of Appeals.
827 F.3d at 65.
12

35

Fortunately, the Court need not enter this thicket.
in

Plaintiffs'

jurisdictional

contention
and

therefore

that

waivable,

are

def ens es

these
is

the

Implicit
non-

assumption

that

Defendants could have and should have raised them in their Motions
to Dismiss for Lack of Subject Matter Jurisdiction or,

in the

Alternative, for Failure to State a Claim (emphasis added) .
However,

Rule

12(h) (2)

unambiguously

provides

that

an

argument that is not raised in an initial Rule 12(b) (6) motion is
not waived prior to the conclusion of the case.
P. 12(h) (2)

See Fed. R. Civ.

(explaining that Rule 12(b) (6) arguments may be raised

as late as trial).

Indeed, Rule 12(h) (2) expressly provides that

any defense that could be brought under Rule 12(b) (6) can later be
raised in a

Rule

12 (c)

motion for

judgment on the pleadings.

Defendants' present motion is just that - a Motion to Dismiss for
Lack

of

Associational

Alternative,

A Motion

or

Organizational

for Judgment

on

the

Standing,

or

Pleadings.

in

the

[Dkt.

No.

75] (emphasis added) .
Thus,
making.

Plaintiffs find themselves in a Catch-22 of their own
Either

the

absence

of

associational

and

third party

standing is jurisdictional, and therefore not waivable, or it is
non-jurisdictional
12 (h) (2).

and

therefore

preserved

according

to

Rule

Either way, Plaintiffs' argument that Defendants have

waived their arguments regarding CFSA's lack of associational and

36

third party standing are without merit.

See Washington Alliance

of Technology Works v. Dep't of Homeland Sec.,
123, n.1
raise

(D.D.C.

in a

2015)

motion

to

(holding that,
dismiss

what

156 F.

after Lexmark,
was

formerly

Supp.

3d

failure to

considered a

prudential standing argument does not waive the issue,

may be

decided on the merits at summary judgment), vacated as moot 650
Fed. Appx. 13 (D.C. Cir. 2016).
IV.

Conclusion

For the foregoing reasons,

Defendants Motion to Dismiss is

granted and Plaintiff CFSA is dismissed.

December 19, 2016
Gladys Kessler
United States District Judge

37