Feather v. SSM Health Care et al
Filing
101
OPINION MEMORANDUM AND ORDER IT IS HEREBY ORDERED that Defendants motion to dismiss for lack of standing [Doc. No. 82] is GRANTED.IT IS FURTHER ORDERED that Plaintiffs FAC against Defendants is dismissed for lack of standing. Signed by District Judge Henry Edward Autrey on 7/23/18. (CLA)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION
LISA FEATHER, STANLEY
BEIERMANN, and HOLLY PYATT, on behalf
of herself, individually, and on behalf of all others
similarly situated, and on behalf of the
SSM PENSION PLANS,
Plaintiffs,
v.
SSM HEALTH, a Missouri Non-profit Corporation,
THE PENSION COMMITTEE FOR THE
RETIREMENT PLAN FOR SSM EMPLOYEES,
JOHN and JANE DOES 1-20, MEMBERS OF
THE PENSION COMMITTEE FOR THE
RETIREMENT PLAN FOR SSM EMPLOYEES,
each an individual, and JOHN and JANE DOES 2140, each an individual,
Defendants.
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OPINION, MEMORANDUM AND ORDER
Introduction
This matter is before the Court on Defendants’ Motion to Dismiss Plaintiffs’
First Amended Complaint. [Doc. No. 82]. Plaintiffs filed an Opposition to the
Motion. Defendants filed a Reply. The Court heard oral arguments during a
Special Session of Court at De Smet Jesuit High School on April 3, 2018. For the
reasons set forth below, the Motion is granted.
Facts and Background
The Employee Retirement Income Security Act of 1974 (“ERISA”), 29
U.S.C. §§ 1001 et seq., regulates plans established or maintained by an employer.
ERISA, however, exempts certain plans from its coverage, including church plans,
as defined in ERISA § 3(33), 29 U.S.C. § 1002(33). 29 U.S.C. § 1003(b)(2). This
is one of dozens of similar cases in which plaintiffs challenge whether a plan
sponsored by a religiously affiliated hospital meets the requirements to be a church
plan.
Defendant SSM Health1 is a tax-exempt, non-profit organization organized
under the laws of the State of Missouri. SSM Health dates back to 1874 when the
Sisters of Saint Mary (now the Franciscan Sisters of Mary) established a civil law
organization bearing its name. In 1982, this organization became the corporation
now known as SSM Health. In 2013, SSM Health Ministries, a public juridic
person of the Roman Catholic Church, succeeded the Franciscan Sisters of Mary in
its role overseeing the health system. SSM Health’s Articles of Incorporation
require it to be operated “in accordance with . . . the teachings and mission of the
Roman Catholic Church.”
SSM Health sponsors three defined benefit pension plans: the Retirement
Plan for Employees of SSM Health Care, the Retirement Plan for Employees of St.
Mary’s Hospital, Centralia, Illinois, and the Retirement Plan for Employees of
1
SSM Health is a fictitious name under which SSM Health Care Corporation does business.
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Certain Illinois Entities Related to SSM Health Care (“Plans”). The assets of the
Plans are held in the SSM Health Care System Master Pension Trust (“Trust”).
SSM Health’s 2016 Audited Financial Statements show that the Trust has $1.39
billion in assets and SSM Health’s qualified plans, including the Plans at issue
here, have $2.16 billion in liabilities.
Defendant SSM Health Care Pension Committee (“Pension Committee”) is
the Plan Administrator of the Plans. SSM Health’s board of directors appoints the
members of the Pension Committee. As the Plan Administrator, the Pension
Committee has the full and complete authority, responsibility, and control in its
sole and absolute discretion over the administration of the Plans.
Plaintiffs Lisa Feather, Stanley Beiermann, and Holly Pyatt are former
employees and participants in the Plans.
Plaintiffs initially filed this case in the United States District Court for the
Southern District of Illinois on April 8, 2016. Defendants’ motion to transfer the
case to this Court pursuant to a forum selection clause was granted on October 25,
2016. On December 7, 2016, Defendants moved to stay the case pending the
Supreme Court’s resolution of three consolidated church plan cases, Advocate
Health Care Network v. Stapleton, 137 S. Ct. 1652, 198 L. Ed. 2d 96 (2017). This
Court granted the stay. After the Supreme Court resolved the primary legal issue in
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this case, Plaintiffs filed a First Amended Complaint (“FAC”) on September 6,
2017, adding three state law claims.
Plaintiffs’ FAC alleges the following: Defendants have violated ERISA by
treating the Plans as exempt church plans (Count I); the Pension Committee has
violated ERISA’s reporting and disclosure provisions (Count II); SSM Health has
failed to provide minimum funding (Count III); SSM Health and the Pension
Committee violated ERISA when offering improperly calculated lump sum
benefits (Count IV); SSM Health failed to establish the Plans under written
instruments compliant with ERISA (Count V); SSM Health failed to establish a
trust compliant with ERISA (Count VI); Plaintiffs’ benefits under ERISA should
be clarified (Count VII); Defendants breached their ERISA fiduciary duties (Count
VIII); the church plan exemption as applied to SSM Health is unconstitutional
(Count IX); breach of contract against SSM Health (Count X); unjust enrichment
against SSM Health (Count XI); and breach of common law fiduciary duty against
the Pension Committee (Count XII).
Defendants move to dismiss pursuant to Federal Rule of Civil Procedure
12(b)(1) for lack of standing and, alternatively, pursuant to Rule 12(b)(6) for
failure to state a claim upon which relief may be granted.
Standard
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A motion to dismiss for lack of subject matter jurisdiction pursuant to Rule
12(b)(1) may be either a “facial” challenge based on the face of the pleadings, or a
“factual” challenge, in which the court considers matters outside the pleadings. See
Titus v. Sullivan, 4 F.3d 590, 593 (8th Cir.1993); Osborn v. United States, 918 F.2d
724, 729 n. 6 (8th Cir.1990). When a party makes a facial challenge, as Defendants
do here, “the court restricts itself to the face of the pleadings and the non-moving
party receives the same protections as it would defending against a motion brought
under Rule 12(b)(6).” Branson Label, Inc. v. City of Branson, Mo., 793 F.3d 910,
914 (8th Cir. 2015) (quoting Osborn, 918 F.2d at 729, n.6).
The purpose of a Rule 12(b)(6) motion to dismiss is to test the legal
sufficiency of a complaint so as to eliminate those actions “which are fatally
flawed in their legal premises and designed to fail, thereby sparing litigants the
burden of unnecessary pretrial and trial activity.” Young v. City of St. Charles, 244
F.3d 623, 627 (8th Cir. 2001) (citing Neitzke v. Williams, 490 U.S. 319, 326-27
(1989)). To survive a motion to dismiss, the complaint must include “enough facts
to state a claim to relief that is plausible on its face.” Bell Atlantic Corp. v.
Twombly, 550 U.S. 544, 570 (2007). A complaint that contains “labels and
conclusions,” and “a formulaic recitation of the elements of a cause of action” is
not sufficient. Twombly, 550 U.S. at 555; accord Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009). In evaluating a motion to dismiss, the court can “choose to begin by
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identifying pleadings that, because they are no more than conclusions, are not
entitled to the assumption of truth.” Iqbal, 556 U.S. at 679. Turning to any “wellpleaded factual allegations,” the court should “assume their veracity and then
determine whether they plausibly give rise to an entitlement to relief.” Id.
On a “motion to dismiss, a court may consider ‘matters incorporated by
reference or integral to the claim, items subject to judicial notice, [and] matters of
public record.’” U.S. ex rel. Kraxberger v. Kansas City Power & Light Co., 756
F.3d 1075, 1083 (8th Cir. 2014) (quoting Miller v. Redwood Toxicology Lab., Inc.,
688 F.3d 928, 931 n. 3 (8th Cir. 2012)). The FAC specifically references the plan
documents, the Trust, the summary plan description, and SSM Health’s Audited
Financial Statements. See Gorog v. Best Buy Co., 760 F.3d 787, 791 (8th Cir.
2014) (finding agreements “embraced by” the complaint were appropriately
considered on a motion to dismiss). The Articles of Incorporation of SSM Health
and the Articles of Agreement of its predecessor, the Sisters of Saint Mary, are
public records. The Court will consider these materials in deciding the Motion.
SSM Health attached to its Motion a decree issued by the Congregation for
Institutes of Consecrated Life and Societies of Apostolic Life, a branch of the Holy
See (the central governing body of the Roman Catholic Church). The decree grants
public juridic personality to SSM Health Ministries and approves its canonical
statutes. A public juridic person is the canon-law equivalent of a corporation. See
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Medina v. Catholic Health Initiatives, 877 F.3d 1213, 1222 (10th Cir. 2017).
Plaintiffs argue that the decree is not subject to judicial notice because it was
issued by a non-party (an institute of the Vatican) to another non-party (the
Franciscan Sisters of Mary) and because they dispute its significance (although
they do not explain how they dispute it). Plaintiffs also argue that SSM Health
Ministries is not a church and is distinct from the Catholic Church.
In McCarthy v. Fuller, the Seventh Circuit ordered the district court to take
judicial notice of a statement from the Congregation for Institutes of Consecrated
Life and Societies of Apostolic Life regarding a person’s status in the Roman
Catholic Church on the ground that a secular court has no authority to take sides on
issues of religious doctrine. 714 F.3d 971, 975-76 (7th Cir. 2013) (citing HosannaTabor Evangelical Lutheran Church & Sch. v. E.E.O.C., 565 U.S. 171, 181-91
(2012); Serbian Eastern Orthodox Diocese v. Milivojevich, 426 U.S. 696, 708-20
(1976); Kedroff v. St. Nicholas Cathedral, 344 U.S. 94, 115-16 (1952); Askew v.
Trustees of General Assembly of Church of the Lord Jesus Christ of the Apostolic
Faith Inc., 684 F.3d 413, 415 (3d Cir. 2012)). Plaintiffs attempt to distinguish
McCarthy by arguing that they are not questioning church doctrine or any entity’s
status within the Roman Catholic Church. But in McCarthy, the district court
wanted to let the jury—instead of the Holy See—decide whether a woman could
call herself a Catholic sister. Here, Plaintiffs want a civil court to decide whether
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SSM Health Ministries is a Catholic organization and part of the Church. For the
same constitutional reasons articulated in McCarthy, this Court will take judicial
notice of the decree regarding SSM Health Ministries.
Discussion
Standing under 12(b)(1)
Under Article III, § 2 of the United States Constitution, federal jurisdiction
is limited to “Cases” and “Controversies.” U.S. Const. Art. III, § 2. “‘One element
of the case-or-controversy requirement’ is that plaintiffs ‘must establish that they
have standing to sue.’” Clapper v. Amnesty Int’l USA, 568 U.S. 398, 408 (2013)
(quoting Raines v. Byrd, 521 U.S. 811, 818 (1997)). The “irreducible constitutional
minimum” of standing consists of three elements. Spokeo, Inc. v. Robins, 136 S.Ct.
1540, 1547 (2016) (citing Lujan v. Defenders of Wildlife, 504 U.S. 555, 560
(1992)). “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.” Id. (citing Lujan, 504 U.S. at 560-61).
“The plaintiff, as the party invoking federal jurisdiction, bears the burden of
establishing these elements.” Id. (citing FW/PBS, Inc. v. Dallas, 493 U.S. 215, 231
(1990)). Where a case is at the pleading stage, the plaintiff must “clearly . . . allege
facts demonstrating each element.” Id. (quoting Warth v. Seldin, 422 U.S. 490, 518
(1975)).
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An injury-in-fact is “an invasion of a legally protected interest which is (a)
concrete and particularized, and (b) actual or imminent, not conjectural or
hypothetical.” Arizona Christian Sch. Tuition Org. v. Winn, 563 U.S. 125, 134
(2011) (quoting Lujan, 504 U.S. at 560-61). An injury-in-fact must be
“particularized,” meaning it “affect[s] the plaintiff in a personal and individual
way.” Spokeo, 136 S.Ct. at 1548 (quoting Lujan, 504 U.S. at 560 n.1). A
“concrete” injury must be “de facto,” “must actually exist” and must not be
“abstract.” Id. “Article III standing requires a concrete injury even in the context of
a statutory violation.” Id. at 1549. Alleging “a bare procedural violation, divorced
from any concrete harm” fails to “satisfy the injury-in-fact requirement of Article
III.” Id.; see also Braitberg v. Charter Commc’ns, Inc., 836 F.3d 925, 930 (8th Cir.
2016). If a plaintiff alleges an imminent, rather than actual, injury, the plaintiff
must demonstrate that “the threatened injury is ‘certainly impending,’ or there is a
‘“substantial risk” that the harm will occur.’” In re SuperValu, Inc., 870 F.3d 763,
769 (8th Cir. 2017) (quoting Susan B. Anthony List v. Driehaus, ––– U.S. ––––,
134 S.Ct. 2334, 2341 (2014)). Allegations of possible future injury or speculative
or hypothetical risks are insufficient. Id. at 771 (citing Clapper, 568 U.S. at 409;
Braitberg, 836 F.3d at 930).
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Plaintiffs bring various claims under ERISA §§ 502(a)(2) and (a)(3), 29
U.S.C. §§ 1132(a)(2) and (a)(3).2 Plaintiffs allege that SSM Health and the
Pension Committee breached their ERISA fiduciary duties, resulting in the Plans
being underfunded (Counts I, III, and VIII). They also allege SSM Health has
violated procedural provisions of ERISA (Counts II, IV, V, VI, and VII). In the
alternative, Plaintiffs bring constitutional (Count IX) and state law claims (Counts
X-XII).
Counts I, III, and VIII
The Plans are defined benefit pension plans. Defined benefit plans consist of
a general pool of assets, and participants have an interest only in their individual
benefits and not the corpus of the trust. See Hughes Aircraft Co. v. Jacobson, 525
U.S. 432, 439 (1999). The employer bears the risk of any funding shortfall. Id. The
Eighth Circuit has found that a participant in an overfunded defined benefit plan
does not have an injury because their benefits are not affected. Thole v. U.S. Bank,
Nat’l Ass’n, 873 F.3d 617, 630 (8th Cir. 2017); McCullough v. AEGON USA Inc.,
585 F.3d 1082, 1084-85 (8th Cir. 2009); Harley v. Minn. Mining & Mfg. Co., 284
F.3d 901, 906 (8th Cir. 2002).3 However, this does not mean that participants have
2
For four of their claims, Counts II, III, V, and VI, Plaintiffs do not plead a section of ERISA
that would allow them to sue for the alleged violations. On the face of the FAC, Plaintiffs have
not pled that they are part of a class of plaintiffs entitled to sue under the statute and thus have
statutory standing.
3
The Eighth Circuit held that 29 U.S.C. §§ 1132(a)(2) and (a)(3) do not permit a participant in a
defined benefit plan to bring suit claiming liability for alleged breaches of fiduciary duties when
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an injury if a plan is less than 100% funded. See, e.g., Lee v. Verizon Commc’ns,
Inc., 837 F.3d 523, 546-47 (5th Cir. 2016), cert. denied sub nom. Pundt v. Verizon
Commc’ns, Inc., 137 S. Ct. 1374, 197 L. Ed. 2d 568 (2017) (finding participants
did not have standing when a plan was 66% actuarially funded).
Here, Plaintiffs allege in Counts I, III, and VIII, that SSM Health has failed
to make sufficient contributions to the Trust, leaving the Plans underfunded.
Plaintiffs would suffer an actual injury if the Plans fail to pay benefits, but
Plaintiffs do not allege that the Plans have not paid benefits. See Duncan v. Muzyn,
885 F.3d 422, 427 (6th Cir. 2018) (“So what is Plaintiffs’ injury here? Start with
what it is not: any actual loss or decrease in their benefits.”) The Eighth Circuit has
not addressed whether and to what degree underfunding of a defined benefit plan is
sufficient to show an imminent injury. Based on the standard from In re
SuperValu, there must be a substantial risk that benefits will be affected, or plan
default must be certainly impending. See also Duncan, 885 F.3d at 428 (A
“beneficiary under a defined-benefit plan suffers an injury only where the
challenged action puts his defined benefits in jeopardy.”) (citing LaRue v. DeWolff,
Boberg & Assocs., Inc., 552 U.S. 248, 255 (2008)).
the plan is overfunded. Thole, 873 F.3d at 630; McCullough, 585 F.3d at 1084; Harley, 284 F.3d
at 906. In the most recent case, the Eighth Circuit clarified that these cases concern whether a
participant has statutory standing to sue, not constitutional standing at issue here. Thole, 873 F.3d
at 630.
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The Court finds that Plaintiffs do not allege an imminent injury. SSM
Health’s financial statements show that SSM Health has made annual contributions
averaging more than $100 million over the past three years and that the Plans have
sufficient assets to pay benefits for a decade even if these contributions ceased.
SSM Health 2016 Audited Financial Statement at 41 (showing estimated future
benefit payments from 2017-2026 are less than assets). During oral argument,
Plaintiffs’ counsel argued that the Plans could default and that if SSM Health
terminated the Plans, then participants would not receive benefits. [Hearing
Transcript at 16-17]. But Plaintiffs have failed to allege that the Plans are
terminating or that SSM Health would be unable to cover the alleged underfunding
if the Plans terminate. Circuit courts have rejected similar hypothetical risks. See
Duncan, 885 F.3d at 428-29 (“Plaintiffs will only be harmed if the Plan runs out of
money and if the TVA refuses to make up the shortfall while Plaintiffs are still
receiving benefits from the Plan.”) (emphasis original); Lee, 837 F.3d at 529-31
(concluding that “constitutional standing for defined-benefit plan participants
requires imminent risk of default by the plan, such that the participant’s benefits
are adversely affected,” and collecting appellate decisions that have reached the
same conclusion); Perelman v. Perelman, 793 F.3d 368, 375 (3d Cir. 2015)
(finding a risk of future adverse effects on benefits is not an injury in fact); David
v. Alphin, 704 F.3d 327, 338 (4th Cir. 2013) (“We find these risk-based theories of
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standing unpersuasive, not least because they rest on a highly speculative
foundation lacking any discernible limiting principle.”) Plaintiffs’ allegations of
future harm are speculative and insufficient to confer standing.
Plaintiffs also argue that they are harmed because the Plans are not insured
by the Pension Benefit Guarantee Corporation. PBGC insurance only provides a
benefit if a plan terminates underfunded, which has not occurred here. Therefore,
lack of insurance also is a risk of a future harm and one that the Court finds to be
speculative rather than imminent. See Krauter v. Siemens Corp., No. 17-1662,
2018 WL 921542, at *3 (3d Cir. Feb. 16, 2018) (finding claim regarding lack of
insurance for retirement benefit was speculative because the plaintiff “would only
be harmed by [its] absence if there were to be a default”).
Another district court examining whether participants in a church plan had
standing to bring ERISA funding claims recently held the opposite. See Boden v.
St. Elizabeth Med. Ctr., Inc., No. CV 16-49-DLB-CJS, 2018 WL 1629866, at *3-7
(E.D. Ky. Apr. 4, 2018). In doing so, the court rejected the Fifth Circuit’s analysis
in Lee, and found that a participant bringing a claim under § 1132(a)(2) need not
show an individual injury but must show an injury to the plan. Id. at *5. This Court
does not find the reasoning persuasive and is bound by different precedent. The
Eighth Circuit has rejected the notion that an uninjured participant has standing to
sue under § 1132(a)(2) on behalf of the plan. McCullough, 585 F.3d at 1086. The
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Boden decision is also difficult to reconcile with the Sixth Circuit’s decision in
Duncan issued shortly before Boden. The Sixth Circuit found a depletion of assets
did not put the plan at risk of default and that plaintiffs’ injury was hypothetical,
citing approvingly to Lee. Duncan, 885 F.3d at 429.
Counts II, V, and VI
Deprivation of a procedural right created by statute must be accompanied by
“some concrete interest that is affected by the deprivation.” Spokeo, 136 S.Ct. at
1549 (quoting Summers v. Earth Island Inst., 555 U.S. 488, 496 (2009)). A
“concrete” intangible injury based on a statutory violation must constitute a “risk
of real harm” to the plaintiff. Id. Plaintiffs allege that the various documents under
which the Plans and Trust are established, the summary plan description, and
benefit statements are not compliant with ERISA’s procedural requirements
(Counts II, V, and VI). But the FAC does not connect these procedural violations
to any concrete injury suffered by the Plaintiffs. See Soehnlen v. Fleet Owners Ins.
Fund, 844 F.3d 576, 585 (6th Cir. 2016) (“[I]t is not sufficient merely to state, as
Plaintiffs do, that the plan is deficient without showing which specific fiduciary
duty or specific right owed to them was infringed.”)
Plaintiffs also allege that SSM entirely failed to provide them with summary
annual reports and funding notices. Plaintiffs argue that depriving them of their
right to actuarial and financial information is an injury-in-fact. Plaintiffs ignore
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that intangible injuries must still be connected to a risk of real harm. Spokeo, 136
S.Ct. at 1549. Plaintiffs have shown no risk of real harm.
Count IV
Plaintiffs have pled no particularized injury for Count IV because they fail to
allege that any of them took lump sum benefits that were allegedly improperly
calculated. At least one of the named plaintiffs must have standing to proceed. See
Horne v. Flores, 557 U.S. 433, 446 (2009); Vill. of Arlington Heights v. Metro.
Hous. Dev. Corp., 429 U.S. 252, 264 n.9 (1977).
Count VII
In Count VII Plaintiffs seek to clarify their future benefits under ERISA §§
502(a)(1)(B) and (a)(3), 29 U.S.C. §§ 1132(a)(1)(B) and (a)(3). This claim is based
on the same alleged ERISA violation in Count II: failure to provide ERISAcompliant benefit statements. To bring a claim under §§ 1132(a)(1)(B) and (a)(3),
Plaintiffs still must show a constitutional injury. Soehnlen, 844 F.3d at 584. Like
Count II, Count VII is devoid of any concrete injury.
Count IX
For all of the same reasons that Plaintiffs have failed to allege an injury-infact related to their ERISA claims, Plaintiffs also lack standing for their allegation
that the church plan exemption, as applied to SSM Health’s Plans, violates the
Establishment Clause. See Overall v. Ascension, 23 F. Supp. 3d 816, 833 (E.D.
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Mich. 2014) (dismissing similar constitutional challenge to the church plan
exemption because the allegations “are simply generic recitations of perceived
harms”).
Counts X-XII
Plaintiffs’ lack of concrete injury regarding the Plans’ funding leaves them
without standing to bring their state law claims as well. Principles of trust law also
compel a finding that they do not have standing. “As a general rule, a beneficiary
may not bring an action at law on behalf of a trust against a third party.” Int’l Ass’n
of Fire Fighters, Local 2665 v. City of Clayton, 320 F.3d 849, 851 (8th Cir. 2003)
(citing Restatement (Second) of Trusts § 281(1) (1957)). “The right to bring such
an action belongs to the trustee.” Id. (citing Restatement (Second) of Trusts § 280).
Participants are beneficiaries of the Trust. In Counts X-XII, under three different
theories, Plaintiffs seek to have SSM Health make contributions to the Trust. They
do not have standing for these claims.
Conclusion
Based upon the foregoing analysis, the Court concludes that Plaintiffs lack
fundamental standing to bring this action. There currently exists no actual case or
controversy such that the Court may exercise jurisdiction over the asserted claims.
Accordingly,
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IT IS HEREBY ORDERED that Defendants’ motion to dismiss for lack of
standing [Doc. No. 82] is GRANTED.
IT IS FURTHER ORDERED that Plaintiffs’ FAC against Defendants is
dismissed for lack of standing.
Dated this 23rd day of July, 2018.
________________________________
HENRY EDWARD AUTREY
UNITED STATES DISTRICT JUDGE
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