United States 9th Circuit Court of Appeals Reports
FLECK AND ASSOCIATES, INC. v. PHOENIX, 04-35182 (9th Cir.
12-22-2006) FLECK AND ASSOCIATES, INC., an Arizona
corporation, Plaintiff-Appellant, v. PHOENIX, CITY OF, an
Arizona municipal corporation, Defendant-Appellee. No.
05-15293. United States Court Of Appeals, Ninth Circuit.
Submitted December 8, 2006[fn*] San Francisco, California.
Filed December 22, 2006.
[fn*] This panel unanimously finds this case suitable for
decision without oral argument. See Fed.R.App.P. 34(a)(2).
Appeal from the United States District Court for the
District of Arizona David G. Campbell, District Judge,
Presiding.
Paul Gattone, Tucson, Arizona, for the appellant.
James H. Hays, Assistant City Attorney, Phoenix, Arizona,
for the appellee.
Before: DOROTHY W. NELSON, ROBERT E. COWEN,[fn**] and
MARSHA S. BERZON, Circuit Judges.
[fn**] The Honorable Robert E. Cowen, Senior United States
Circuit Judge for the Third Circuit, sitting by
designation.
Opinion by Judge D. W. NELSON.
FOR PUBLICATION
OPINION
This is a challenge, based on the constitutional right of
privacy, to an ordinance prohibiting the operation of “live
sex act” businesses in Phoenix, Arizona (“Phoenix” or “the
city”). Appellant Fleck and Associates, Inc. (“Fleck”) runs
such an establishment and appeals the district court’s
order dismissing its complaint with prejudice.[fn1] The
district court correctly determined Fleck lacked standing to
assert any cognizable privacy rights under the allegations
in its complaint. However, the court improperly proceeded
to reach the merits of the underlying suit, determining
that Fleck’s customers could not state a claim for relief
under any conceivable set of facts. Because Fleck lacked
standing to assert either its own putative privacy rights or
the interests of its customers, the district court lacked
subject matter jurisdiction and should have dismissed the
complaint on that ground alone. We therefore disapprove of
the district court’s undertaking on the merits and hereby
vacate the district court’s order and remand with
instructions to dismiss the complaint without prejudice.
FACTUAL AND PROCEDURAL BACKGROUND[fn2] Fleck is a
for-profit corporation that operates Flex, a gay men’s
social club in Phoenix, Arizona. The club limits access to
adults who have purchased “memberships” on a yearly,
semi-yearly, or daily basis. Many people enter the club by
purchasing daily passes. Customers can rent private
dressing rooms for an additional fee. Sexual activities
take place in the dressing rooms and in other areas of the
club.
In 1998, the city banned “live sex act business[es]”
defined as those “in which one or more persons may view, or
may participate in, a live sex act for a consideration.”
PHOENIX, AZ., CODE § 23-54(B)(3) & (C). In January
2004, police officers entered Flex, searched its office,
questioned two employees and detained them overnight. Fleck
has been threatened with similar actions.
On June 2, 2004, Fleck filed suit in the District of
Arizona seeking injunctive and declaratory relief on the
ground the above-described governmental conduct “violated
the privacy rights of Plaintiff as well as the members and
users of their [sic] facility in violation of the Due
Process Clause as codified in the Fifth and Fourteenth
Amendments.” The complaint did not allege Fleck suffered
any injury other than the invasion of its supposed privacy
interests. Fleck and Associates, Inc. was the only named
plaintiff.
The city filed a motion to dismiss pursuant to Federal Rule
of Civil Procedure 12(b)(1) and (6). On February 15, 2005,
the district court granted the motion, ordered the
complaint dismissed with prejudice, and entered judgment
for the city. The court treated the complaint as raising
two distinct claims, one predicated on an invasion of the
rights of Fleck’s customers (“the customers’ claim”) and
another based on the invasion of Fleck’s rights as a
corporation (“the corporate claim”).
The court correctly found Fleck lacked standing to assert
the rights of its customers. However, the court also opted,
“in the interest of judicial economy,” Fleck & Assocs.
Inc., 356 F. Supp. 2d at 1039 n. 4, to discuss the merits,
deciding that “the privacy rights of Fleck’s members . . .
do not exist in Fleck’s public social club.” Id. at 1041.
The district court therefore dismissed the customers’ claim
on the alternative grounds that Fleck lacked standing to
bring it or that it failed as a matter of law given the
nature of the right to privacy. Because Fleck lacked
standing to assert its customers’ rights, the district
court lacked subject matter jurisdiction over the claim and
should have dismissed on that basis without discussing the
merits.
As to the second claim, the court held Fleck enjoyed
standing to assert its own rights as a corporation. Id. at
1038. The court did not, however, identify what those
corporate rights might have been. Instead, it immediately
proceeded to hold that Fleck lacked any cognizable privacy
rights and dismissed for failure to state a claim. Id. at
1039, 1041. Because Fleck failed to allege the invasion of
any cognizable corporate right, it similarly lacked
standing to raise the corporate claim. Therefore, this
claim should also have been dismissed for lack of subject
matter jurisdiction.
DISCUSSION
I. Standard of Review
Whether a party lacks standing is a legal issue subject to
de novo review. Hong Kong Supermarket v. Kizer, 830 F.2d
1078, 1080 (9th Cir. 1987).
II. Standing
A. “Traditional” (Non-Associational) Standing
Standing doctrine involves “`both constitutional
limitations on federal-court jurisdiction and prudential
limitations on its exercise.'” Kowalski v. Tesmer, 543 U.S.
125, 128-29 (2004) (quoting Warth v. Seldin, 422 U.S. 490,
498 (1975)). The constitutional aspect inquires “whether
the plaintiff has made out a `case or controversy’ between
himself and the defendant within the meaning of Art[icle]
III” by demonstrat-ing a sufficient personal stake in the
outcome. Warth, 422 U.S. at 498. The prudential
limitations, in contrast, restrict the grounds a plaintiff
may put forward in seeking to vindicate his personal stake.
Id. at 499. Most important for our purposes is that “a
litigant must normally assert his own legal interests rather
than those of third parties.” Phillips Petroleum Co. v.
Shutts, 472 U.S. 797, 804 (1985) (citations omitted).
[1] The constitutional limitations require a litigant to
allege “(1) a threatened or actual distinct and palpable
injury to [himself]; (2) a fairly traceable causal
connection between the alleged injury and the . . .
challenged conduct; and (3) a substantial likelihood that
the requested relief will redress or prevent the injury.”
Hong Kong Supermarket, 830 F.2d at 1081 (citations
omitted).
[2] The first of these elements, sometimes described as
“injury in fact,” necessitates a showing of “an invasion of
a legally protected interest” that “affect[s] the plaintiff
in a personal and individual way.” Lujan v. Defenders of
Wildlife, 504 U.S. 555, 560 & n. 1 (1992). A plaintiff
seeking to invoke federal court jurisdiction must plead
that he has suffered some cognizable injury to make the
threshold showing of a case or controversy. Vt. Agency of
Natural Res. v. United States ex rel. Stevens, 529 U.S.
765, 771 (2000) (“[T]he Art[icle] III judicial power exists
only to redress or otherwise to protect against injury to
the complaining party.” (quoting Warth, 422 U.S. at 499)).
Fleck has failed to plead an injury in fact. According to
the complaint, the only harm that has allegedly befallen
Fleck & Associates Inc. is that its “privacy rights” were
violated when the city “criminalized private, consensual
homosexual sexual acts” by enacting and enforcing §
23-54. However, as the district court correctly held,
corporations have no such privacy rights. Since Fleck has
not alleged the invasion of any cognizable right, it has
failed to establish the “irreducible constitutional minimum
of standing.” Lujan, 504 U.S. at 560.
[3] “[C]orporations can claim no equality with individuals
in the enjoyment of a right to privacy.” United States v.
Morton Salt Co., 338 U.S. 632, 652 (1950); see also
Browning-Ferris Indus. v. Kelco Disposal, Inc., 492 U.S.
257, 284 (1989) (O’Connor, J., concurring in part,
dissenting in part) (“[A] corporation has no . . . right to
privacy.”). More generally, a corporation is not entitled
to “`purely personal’ guarantees” — those rights
that have historically been granted to protect individuals.
First Nat’l Bank of Boston v. Bellotti, 435 U.S. 765, 778
n. 14 (1978). An analysis of the “nature, history, and
purpose,” id., of the constitutional guarantee at issue
demonstrates that it is “purely personal” and therefore
incapable of being claimed by a corporation.
Fleck squarely identifies the source of its supposed right
as the liberty guarantee described in Lawrence v. Texas,
539 U.S. 558 (2003). The Lawrence Court, however, was
concerned with “the autonomy of the person” to make choices
about intimate relationships free from governmental
stigmati-zation or sanction. Id. at 574. “At the heart of
liberty is the right to define one’s own concept of
existence, of meaning, of the universe, and of the mystery
of human life.” Id. (quoting Planned Parenthood of Se. Pa.
v. Casey, 505 U.S. 833, 851 (1992)). The Lawrence Court
held that due process requires “respect for [the
petitioners’] private lives [such that t]he State cannot
demean their existence or control their destiny by making
their private sexual conduct a crime.” Id. at 578.
[4] It is hard to imagine a constitutional guarantee that
could be more inherently personal and therefore unavailable
to a corporate entity, “an artificial being, invisible,
intangible, and existing only in contemplation of law.”
Dartmouth College v. Woodward, 17 U.S. (4 Wheat.) 518, 636
(1819). Corporations are not self-defining autonomous
creatures worthy of respect and dignity in the relevant
sense. Neither do they have private lives, let alone
“private lives in matters pertaining to sex” as Fleck would
have it. Because the right to privacy described in Lawrence
is purely personal and unavailable to a corporation, Fleck
failed to allege an injury in fact sufficient to make out a
case or controversy under Article III.
Nevertheless, Fleck claims that the “inherently personal
right of homosexual sexual activity is central to the
function and operation of [its] facility,” and that this
somehow means Fleck has a liberty interest protected by the
due process clause to run a “facility devoted to providing
a safe location for homosexuals to express their
sexuality.” Essentially, Fleck argues that it has a right
to facilitate the exercise of the admittedly personal
“right of homosexual sexual activity.”
[5] This argument is really just a claim that Fleck should
be allowed to champion the liberty interests of its
customers. Under traditional standing doctrine, a party
meeting the constitutional requirements of injury,
causation, and redressi-bility, may, on rare occasions,
“act[ ] as [an] advocate[ for] the rights of third
parties,” Craig v. Boren, 429 U.S. 190, 195 (1976), if he
can overcome the prudential rule limiting the grounds for
relief. However, exceptions to the prudential rule
presuppose a litigant who has already met the
constitutional requirements. See Kowalski, 543 U.S. at
128-29 (reiterating that constitutional standing limits are
separate and distinct from prudential rule against
asserting third-party rights). Since Fleck has failed to
allege a cognizable personal injury, the prudential limits
on “third-party standing” are beside the point.[fn3]
B. Associational Standing
[6] Under the doctrine of “associational” or
“representational” standing an organization may bring suit
on behalf of its members whether or not the organization
itself has suffered an injury from the challenged action.
Hunt v. Wash. State Apple Adver. Comm’n, 432 U.S. 333,
342-44 (1977). The district court directed most of its
standing analysis to this doctrine and correctly held that
Fleck has no associational standing to assert the rights of
its customers. Fleck & Assocs. Inc, 356 F. Supp. 2d at
1036-38.
To obtain associational standing, the entity must show that
(1) at least one of its members would have standing to sue
in his own right, (2) the interests the suit seeks to
vindicate are germane to the organization’s purpose, and
(3) neither the claim asserted nor the relief requested
requires the participation of individual members in the
lawsuit. United Food & Commercial Workers Union Local 751 v.
Brown Group, Inc., 517 U.S. 544, 553 (1996) (citing Hunt,
432 U.S. at 343).
[7] Fleck’s complaint fails to demonstrate associational
standing. First, Fleck does not have any “members” in the
sense required by the doctrine. Associational standing is
reserved for organizations that “express the[ ] collective
views and protect the[ ] collective interests” of their
members. Hunt, 432 U.S. at 345. Here, the allegations in
the complaint make clear that “members” of Flex are merely
customers. Fleck does not allege that its customers in any
way have come together to form an organization for their
mutual aid and benefit. Cf. Int’l Union, United Auto.,
Aerospace, & Ag. Implement Workers of Am. v. Brock, 477
U.S. 274, 290 (1986) (“[T]he doctrine of associational
standing recognizes that the primary reason people join an
organization is often to create an effective vehicle for
vindicating interests that they share with others.”).
Second, the purpose of the “association” here (Fleck &
Associates, Inc.) is to turn a profit. Fleck’s suit seeks
to vindicate the putative privacy interests of its
customers.
This is clearly not germane to the purpose of the
organization. Cf. Id. at 286 (where union’s constitution
announced goal of establishing social and unemployment
insurance funded by government and private employers, suit
seeking to vindicate union members rights’ under Trade Act
of 1974 was germane to organizational purpose); Hunt, 432
U.S. at 344 (association created for purpose of protecting
and promoting Washington state apple industry may seek to
vindicate its members’ commercial interests).
III. Conclusion
[8] As presently constituted, the complaint fails to
demonstrate that Fleck suffered a distinct and palpable
injury to any cognizable corporate right. In addition,
Fleck does not have associational standing to assert the
rights of its customers. Therefore, under the allegations
in the complaint, the district court lacked subject matter
jurisdiction over the entirety of Fleck’s complaint and
erred by reaching the merits.[fn4] We therefore vacate the
district court’s order and remand with instructions to
dismiss without prejudice. See Steel Co. 523 U.S. at 94 (if
court lacks jurisdiction it is powerless to reach the
merits); FW/PBS, Inc. v. City of Dallas, 493 U.S. 215, 235
(1990); Brereton v. Bountiful City Corp., 434 F.3d 1213,
1216-20 (10th Cir. 2006) (dismissal for want of standing
must be “without prejudice”).
VACATED AND REMANDED with instructions.
[fn1] Fleck & Assocs., Inc. v. City of Phoenix, 356 F. Supp.
2d 1034 (D. Ariz. 2005).
[fn2] For the purpose of reviewing the motion to dismiss for
want of standing, all factual representations are drawn
from Fleck’s complaint and assumed to be true. See Warth v.
Seldin, 422 U.S. 490, 501 (1975).
[fn3] Even if Fleck had alleged an “injury in fact” and the
other constitutionally required elements of standing, it
could not rely on the interests of its customers under the
allegations in the complaint. Exceptions to the prudential
rule are disfavored and a party seeking to champion the
rights of third persons must demonstrate that, “[f]irst,
[it] has a `close’ relationship with the person who
possesses the right . . . [and s]econd . . . there is a
`hindrance’ to the possessor’s ability to protect his own
interests.” Kowal-ski, 543 U.S. at 130 (citations omitted).
Fleck has alleged neither condition.
[fn4] Fleck contends alternatively that even if it lacks
“formal” standing to sue, this court should reach the
merits on the theory that the constitutional issue
presented is gravely important. Aside from the fact that
Fleck cites no authority for this position, it neglects
that standing is an aspect of subject matter jurisdiction
and that, no matter how important the issue, a court
lacking jurisdiction is powerless to reach the merits under
Article III of the Constitution. See Adarand Constructors,
Inc. v. Mineta, 534 U.S. 103, 110 (2001). Fleck also
complains that because the city’s motion to dismiss
challenged standing on the ground that Fleck was allegedly
not licensed to transact business in Arizona, the district
court impermissibly went “beyond the scope of the limited
Motion to Dismiss in order to craft a basis upon which to
contrive a basis [sic] for granting the Motion.” Of course,
since standing is an aspect of subject matter jurisdiction,
the district court was free to reach the issue sua sponte
and was free to find that Fleck lacked standing for reasons
other than those put forward by the city. See Fed.R.Civ.P.
12(h)(3); Steel Co. v. Citizens for Better Env’t, 523 U.S.
83, 95 (1998).