Novak et al v. United States of America et al
Filing
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ORDER GRANTING THE UNITED STATES OF AMERICA'S MOTION TO DISMISS re: 7 . ~ The Complaint is DISMISSED WITH PREJUDICE ~ Signed by JUDGE LESLIE E. KOBAYASHI on 4/26/2013. (afc)CERTIFICATE OF SERVICEParticipants registered to receive electronic notifications received this document electronically at the e-mail address listed on the Notice of Electronic Filing (NEF). All participants are registered to receive electronic notifications.
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII
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Plaintiffs,
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vs.
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UNITED STATES OF AMERICA, and )
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DOES 1-100 inclusive,
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Defendants.
_____________________________ )
PATRICK NOVAK; DANIEL ROCHA;
LARRY KENNER, dba KENNER,
INC., a Hawai`i corporation;
KEN SCHOOLLAND; BJORN
ARNTZEN; PHILIP R. WILKERSON;
and WILLIAM AKINA, Ph.D.,
Individually and as
representatives of a class of
similarly situated persons,
CIVIL 12-00638 LEK-RLP
ORDER GRANTING THE UNITED STATES OF AMERICA’S MOTION TO DISMISS
Before the Court is the United States of America’s
(“the Government”) Motion to Dismiss Complaint with Prejudice
(“Motion”), filed on January 28, 2013.
Plaintiffs Patrick Novak,
Daniel Rocha, Larry Kenner, Ken Schoolland, Bjorn Arntzen,
Philip R. Wilkerson, and William Akina, Ph.D, (collectively,
“Plaintiffs”) filed their memorandum in opposition on April 1,
2013, and the Government filed its reply on April 8, 2013.
The
Court finds this matter suitable for disposition without a
hearing pursuant to Rule LR7.2(d) of the Local Rules of Practice
of the United States District Court for the District of Hawai`i
(“Local Rules”).
After careful consideration of the Motion,
supporting and opposing memoranda, and the relevant legal
authority, the Government’s Motion is HEREBY GRANTED for lack of
standing and for the reasons set forth below.
BACKGROUND
On November 29, 2012, Plaintiffs filed a Complaint
against the Government seeking, among other things, “a
declaration that the Jones Act is invalid as it applies to
interstate commerce involving the State of Hawaii’s commercial
activities with the other United States of America, Nations, and
Indian Tribes of the United States of America, and to recover
costs of suit and reasonable attorneys’ fees.”
[Dkt. no. 1
(Complaint) at ¶ 4.]
The Complaint appears to seek declaratory and
injunctive relief, as well as monetary damages, in connection
with the Government’s enforcement of the cabotage provisions of
the Merchant Marine Act of 1920, which is commonly known as the
Jones Act.
See 46 U.S.C. § 55102 (formerly codified at 46 U.S.C.
App. § 883).
The thrust of the Complaint is that the enforcement
of the Jones Act, as applied in the State of Hawai`i, is an
unlawful restraint of interstate trade in violation of the
Commerce Clause of the United States Constitution, Article I, §
8, cl. 3, and 42 U.S.C. § 1983.
[Compl. at ¶¶ 3-4.]
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The cabotage1 provision of the Jones Act governs
domestic transportation of merchandise over water.
§ 55102.
See 46 U.S.C.
Under that provision, all goods shipped between ports
in the United States must be shipped on vessels built in the
United States that are wholly owned and crewed by United States
citizens.
See id. § 55102(b).
Any merchandise that is
transported in violation of the Jones Act is subject to seizure
and forfeiture to the Government, or an amount equal to the value
of the merchandise or cost of transportation is recoverable from
the person transporting the merchandise.
Id. § 55102(c).
The
purpose of this provision of the Jones Act is to protect the
United States Merchant Marine, seamen, and shipping industry.
See Am. Haw. Cruises v. Skinner, 713 F. Supp. 452, 457 (D. D.C.
1989); Wirth Ltd. v. S/S Acadia Forest. 537 F.2d 1272 (5th Cir.
1976); Marine Carriers Corp. v. Fowler, 429 F.2d 702 (2nd Cir.
1970).
I.
The Motion
In the instant Motion, the Government argues that this
Court must dismiss the Complaint with prejudice pursuant to Fed.
R. Civ. P. 12(b)(1) because (1) Plaintiffs have failed to
establish their Article III and/or prudential standing, and (2)
1
“Cabotage” is defined as the “carrying on of trade along a
country’s coast; the transport of goods or passengers from one
port or place to another in the same country.” Black’s Law
Dictionary 230 (9th ed. 2009).
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under the Tucker Act, this Court lacks jurisdiction over
Plaintiffs’ claims for monetary damages.
Alternatively, the
Government argues, the Court should dismiss the Complaint with
prejudice pursuant to Fed. R. Civ. P. 12(b)(6) for failure to
state a claim upon which relief can be granted.
First, the Government argues that Plaintiffs lack
Article III standing because they have failed to demonstrate that
they have suffered any concrete or particularized injury that is
actual or imminent, rather than merely conjectural or
hypothetical.
[Mem. in Supp. of Motion at 9.]
The Government
notes that the Complaint does not state any facts explaining how
each Plaintiff was injured by enforcement of the Jones Act, and
fails to provide any details regarding Plaintiffs’ businesses,
their interstate shipping activities, or how they were affected
by the Jones Act.2
[Id. at 9-10 (citing Compl. at ¶¶ 9-15).]
The Government further argues that Plaintiffs have failed to show
how their alleged injuries are fairly traceable to any challenged
action by the Government: Plaintiffs merely assert a generalized
disagreement with the Jones Act and unsubstantiated claims of
economic harm allegedly caused by it.
2
[Id. at 10 (citing Compl.
Paragraphs 9-15 of the Complaint describe each of the
Plaintiffs and each paragraph contains the same generalized
allegation that each Plaintiff “purchased domestic ocean cargo
shipping services on west coast Hawaii routes, paid fuel
surcharges thereon, and suffered directly pecuniary injury and
damages as a result of the Jones Act, and has suffered the
damages contained herein.” [Compl. at ¶¶ 9-15.]
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at ¶¶ 3-4, 9-15, 17, 25, 58, 61-64).]
The Government also
asserts that Plaintiffs have failed to show that it is likely,
and not merely speculative, that their alleged injuries would be
redressed by a favorable ruling: even if the Jones Act were
invalidated, it is unclear if or how the cost of shipping would
decrease for any of the Plaintiffs.
[Id.]
Thus, the Government
argues, Plaintiffs have failed to establish Article III standing.
Next, the Government argues that Plaintiffs have also
not satisfied the prudential standing requirements.
The
Government argues that Plaintiffs assert only broad, general
claims.
[Id. at 12.]
The Government argues further that no
Plaintiff in the proposed class is within the “zone of interest”
intended by Congress to be protected or regulated by the Jones
Act.
[Id. at 12-13 (citing American Maritime Ass’n v.
Blumenthal, 458 F. Supp. 849, 856 (D. D.C. 1977), aff’d, 590 F.2d
1156 (D.C. Cir. 1978), cert. denied, 441 U.S. 943 (1979) (holding
that Congress intended the Jones Act to protect and regulate
American ship owners, operators, shipbuilders, and seamen);
Alaska Excursion Cruises, Inc. v. United States, 603 F. Supp.
541, 546 (D. D.C. 1984) (holding that the Jones Act was intended
“to benefit American shipowners competing economically in the
coastwise trade”); Kauai Kunana Dairy Inc. v. United States of
America, Civ. No. 09-00473 DAE-LEK, 2009 WL 4668744, at *4 (D.
Hawai`i Dec. 8, 2009)).]
Thus, under principles of prudential
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standards, the Government argues, the Court should refrain from
adjudicating Plaintiffs’ “abstract questions of wide public
significance, which amount to no more than generalized grievances
against the Jones Act.”
[Id. at 13.]3
The Government further argues that the Court lacks
jurisdiction over Plaintiffs’ claims for monetary damages for
financial and economic injuries allegedly suffered by Plaintiffs
during the period “from at least September 1, 1959 to the
present.”
[Id. at 14 (quoting Compl. at ¶¶ 1, 22, 61-61).]
Specifically, the Government notes that, together, the Tucker
Act, 28 U.S.C. § 1491(a)(1), and the Little Tucker Act, 28 U.S.C.
§ 1346(a)(2), provide for exclusive jurisdiction solely in the
Court of Federal Claims for claims seeking more than $10,000 in
damages.
[Id. at 15.]
The Government argues that Plaintiffs’
claim for monetary damages is well in excess of the $10,000
jurisdictional amount, given the size of the plaintiff class and
the duration of the class period.
[Id. at 16 (citing Compl.
¶¶ 1, 22-23).]
Finally, the Government argues that the Court should
dismiss the Complaint for failure to state a claim under Fed. R.
Civ. P. 12(b)(6).
The Government notes that Plaintiffs do not
3
The Government also argues that Plaintiffs’ claims may be
dismissed as non-justiciable under the political question
doctrine. [Id. at 13 n.11 (citing Baker v. Carr, 369 U.S. 186,
217 (1962); Gonzales-Vera v. Kissinger, 449 F.3d 1260, 1263 (D.C.
Cir. 2006)).]
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allege any violation or improper enforcement of the Jones Act
but, rather, seem to argue that the Jones Act, as applied to
interstate shipping to and from Hawai`i, is an unconstitutional
restraint of interstate commerce.
[Id. at 17-18.]
Plaintiffs do
not, however, articulate any legal theory or factual basis to
support this claim.
Further, the Government argues, to the
extent Plaintiffs argue that the Jones Act does not have a
uniform effect among the states, this argument must fail, as
there is ample precedent upholding federal statutes that are not
uniformly applied to all states.
[Id. at 18-19 (citing Currin v.
Wallace, 306 U.S. 1, 13-14 (1939)).]
Thus, the Government urges the Court to grant the
Motion and dismiss the Complaint with prejudice.
II.
Memorandum in Opposition
In their memorandum in opposition, Plaintiffs assert
that they have pled sufficient injury: Plaintiffs have “incurred
an artificially inflated cost of living” because of the Jones
Act.
[Mem. in Opp. at 6-7.]
Specifically, Plaintiffs argue that
the impact of the Jones Act on commodity prices has cost
Dr. William Akina approximately $364,615 over 33 years.
(citing Decl. of William Akina).]
[Id.
Plaintiffs argue that
Ken Schoolland has been unable to ship his vehicle directly from
China to Hawai`i because of the Jones Act.
Decl. of Ken Schoolland).]
[Id. at 7 (citing
Plaintiffs emphasize that, at the
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pleading stage, they need not prove such injuries; it is
sufficient that they merely allege them.
[Id. at 7-8.]
Further,
Plaintiffs argue that a favorable decision by the Court to
“repeal the Jones Act” would benefit the class by allowing
competition in the market and deflating prices.
[Id. at 8.]
Plaintiffs further argue that they have prudential
standing.
Plaintiffs argue that their injury is more than a
generalized grievance.
[Id. at 10-11.]
Plaintiffs also argue
that their claims fall within the “zone of interests” the Jones
Act was meant to protect: the Jones Act was created for the
purpose of “fostering ‘national defense and proper growth of
[U.S.] foreign and domestic commerce’” and to encourage and
protect the merchant marines.
[Id. at 11.]
Citing a report
authored by PricewaterhouseCoopers, Plaintiffs argue, however,
that the merchant marine fleet is declining and that the Jones
Act should be revised to address this “shrinkage or failure of
United States commerce and shipping industries.”
[Id. at 11-12.]
Plaintiffs also argue that this Court has jurisdiction
over their claims, notwithstanding the Tucker Act, because they
do not ask for monetary damages, and only seek “the repeal of the
Jones Act.”
[Id. at 13.]
Thus, Plaintiffs urge the Court to deny the Motion.
III. Reply
In its reply, the Government emphasizes that nothing in
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Plaintiffs’ memorandum in opposition rebuts or cures any of the
multiple grounds presented by the Government in support of the
Motion.
[Reply at 2.]
The Government notes that Judge Ezra
found that the plaintiffs lacked standing in a similar case
challenging the Jones Act.
See Kauai Kunana, 2009 WL 4668744.
The Government goes on to reiterate the arguments it makes in its
memorandum in support of the Motion, and urges the Court to grant
the Motion and dismiss the Complaint with prejudice.
DISCUSSION
Whether Plaintiffs have standing to bring the instant
suit in federal court is a threshold issue for this Court.
If
Plaintiffs do not meet the standing requirements of Article III
of the United States Constitution, then this Court has no
jurisdiction to hear their claim and the Complaint must be
dismissed.
Article III, section 2 of the United States
Constitution provides that a federal court’s judicial power
extends to all cases arising under the Constitution or laws of
the United States, to all cases of admiralty and maritime
jurisdiction, and to controversies to which the United States is
a party or to controversies between two or more states or
citizens of different states.
U.S. Const. art. III, § 2.
The party invoking federal jurisdiction bears the
Carroll v. Nakatani, 342 F.3d
burden of establishing standing.
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934, 940 (9th Cir. 2003).
Plaintiffs seeking to establish
standing must demonstrate that they meet the constitutional “case
or controversy” requirements of Article III, as well as the
court-formulated “prudential” considerations.
See Warth v.
Seldin, 422 U.S. 490, 498 (1975).
First, Plaintiffs may meet the case or controversy
requirement by showing that:
(1) [they have] suffered ‘an injury in fact’ that
is (a) concrete and particularized and (b) actual
or imminent, not conjectural or hypothetical; (2)
the injury is fairly traceable to the challenged
action of the defendant; and (3) it is likely, as
opposed to merely speculative, that the injury
will be redressed by a favorable decision.
Friends of the Earth. Inc. v. Laidlaw Envtl. Servs. (TOC), Inc.,
528 U.S. 167, 180–81 (2000) (citing Lujan v. Defenders of
Wildlife, 504 U.S. 555, 560–61 (1992)); see also Skaff v.
Meridien N. Am. Beverly Hills, LLC, 506 F.3d 832, 837 (9th Cir.
2007).
If a plaintiff fails to establish a case or controversy,
then the federal court lacks subject matter jurisdiction over the
action.
See Steel Co. v. Citizens for a Better Env’t, 523 U.S.
83, 109-110 (1998); Cetacean Community v. Bush, 386 F.3d 1169,
1174 (9th Cir. 2004).
“The doctrine of standing . . . requires federal courts
to satisfy themselves that the plaintiff has alleged such a
personal stake in the outcome of the controversy as to warrant
his invocation of federal-court jurisdiction.”
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Summers v. Earth
Island Inst., 555 U.S. 488, 493 (2009) (internal quotation marks
and citation omitted).
Plaintiffs must show that they suffered a
“concrete and particularized” injury that is “actual or imminent”
and not “conjectural” or “hypothetical.”
Lujan, 504 U.S. at 560;
Council of Ins. Agents & Brokers v. Molasky–Arman, 522 F.3d 925,
932 (9th Cir. 2008).
The Court need not reach the issue of whether
Plaintiffs have established Article III standing, however,
because, even assuming they had, they have failed to meet the
prudential standing requirements.
See City of Sausalito v.
O’Neill, 386 F.3d 1186, 1199 (9th Cir. 2004) (“[I]t is not
enough, however, for a plaintiff to satisfy the constitutional
standing requirements of Article III.
A plaintiff must also
satisfy the non-constitutional standing requirements of the
statute under which he or she seeks to bring suit.”).
Prudential
standing requires that the Court consider “whether the alleged
injury is more than a mere generalized grievance, whether the
plaintiff is asserting her own rights or the rights of third
parties, and whether the claim falls within the zone of interests
to be protected or regulated by the constitutional guarantee or
question.”
Alaska Right to Life Political Action Comm. v.
Feldman, 504 F.3d 840, 848–49 (9th Cir. 2007).
Here, Plaintiffs’ general grievances are, as a matter
of law, not sufficient to establish standing.
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See Arizonans for
Official English v. Arizona, 520 U.S. 43, 64 (1997) (“An interest
shared generally with the public at large in the proper
application of the Constitution and laws will not do.”); United
States v. Hays, 515 U.S. 737, 743 (1995) (“[W]e have repeatedly
refused to recognize a generalized grievance against allegedly
illegal government conduct as sufficient for standing to invoke
the federal judicial power.”).
Plaintiffs assert only generalized claims on behalf of
an extremely broad class of persons or entities that pay for
interstate shipping or are consumers of goods that have been
shipped in interstate commerce.
[See Compl. at ¶ 22 (describing
the proposed class as “[a]ll persons and entities in the United
States . . . who purchased services between the continental
United States and Hawaii in compliance with the Jones Act from at
least September 1, 1959 to the present.”).]
Plaintiffs argue
that they have adequately demonstrated prudential standing
because the enumerated class “experiences a specific injury of
economic decay that can be reversed by repealing the Jones Act.”
[Mem. in Opp. at 11.]
The Court notes, however, that Plaintiffs
themselves state that the alleged harms arising out of the
enforcement of the Jones Act apply to all of the residents and
businesses of the State of Hawai`i.
[Compl. at ¶ 3.]
Their
claim is essentially that the people of the State of Hawai`i
suffer irreparable harm as a result of artificial high prices and
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restrictions on Hawaiian commerce.
This type of broad,
generalized allegation is simply insufficient to meet standing
requirements.
See, e.g., Arizonans for Official English, 520
U.S. at 64.
As such, the Court FINDS that Plaintiffs lack standing
and therefore GRANTS the Motion and DISMISSES the Complaint with
prejudice pursuant to Fed. R. Civ. P. 12(b)(1).
CONCLUSION
On the basis of the foregoing, the Government’s Motion
to Dismiss Complaint with Prejudice, filed January 28, 2013, is
HEREBY GRANTED.
The Complaint is DISMISSED WITH PREJUDICE.
The
Clerk of the Court is instructed to close the case.
IT IS SO ORDERED.
DATED AT HONOLULU, HAWAII, April 26, 2013.
/S/ Leslie E. Kobayashi
Leslie E. Kobayashi
United States District Judge
PATRICK NOVAK, ET AL. V. USA; CIVIL NO. 12-00638 LEK-RLP; ORDER
GRANTING THE UNITED STATES OF AMERICA’S MOTION TO DISMISS
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