The Georgia Republican Party v. Securities and Exchange Commission , 888 F.3d 1198 ( 2018 )

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[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 16-16623
________________________
Agency No. 34-78683
THE GEORGIA REPUBLICAN PARTY,
NEW YORK REPUBLICAN STATE COMMITTEE,
TENNESSEE REPUBLICAN PARTY,
Petitioners,
versus
SECURITIES AND EXCHANGE COMMISSION,
FINANCIAL INDUSTRY REGULATORY AUTHORITY, INC.,
Respondents.
________________________
Petition for Review of a Decision of the
Securities and Exchange Commission
________________________
(Date)
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Before WILLIAM PRYOR and JULIE CARNES, Circuit Judges, and
CORRIGAN, * District Judge.
JULIE CARNES, Circuit Judge:
In 2015, the Financial Industry Regulatory Authority (“FINRA”), a self-
regulatory organization operating under the auspices of the Securities and
Exchange Commission, proposed adopting Rule 2030—a regulation governing the
political contributions of FINRA members who solicit government officials for
investment advisory services contracts. A year later, after notice and comment, the
Commission issued an order approving the Rule.
The Georgia Republican Party, the New York Republican State Committee,
and the Tennessee Republican Party filed a petition challenging the Commission’s
order. They contend that the Commission lacked the authority to approve Rule
2030 and that the Rule violates the First Amendment. We, however, are unable to
consider the petition’s merits because the Georgia Party does not have standing to
challenge the Rule and this Court is not the proper venue for either the New York
Committee or the Tennessee Party. As a result, we dismiss the Georgia Party for
lack of jurisdiction, and transfer the appeal of the remaining two parties to the
United States Court of Appeals for the District of Columbia Circuit.
*
Honorable Timothy J. Corrigan, United States District Judge for the Middle District of Florida,
sitting by designation.
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I. BACKGROUND
In 2010, the Commission enacted rules generally prohibiting investment
advisors from “provid[ing] investment advisory services for compensation to a
government entity within two years after a contribution to an official of the
government entity.” 17 C.F.R. § 275.206(4)–5(a)(1); see 75 Fed. Reg. 41018,
41068–69 (2010). The Commission’s rules also prohibit investment advisors from
using placement agents—persons who solicit government officials for investment
advisory services contracts on behalf of investment advisers—unless such agents
are “regulated person[s]” within FINRA. 17 C.F.R. § 275.206(4)–5(a)(2)(i)(A).
The Commission’s rules further prohibit investment advisers from working with
placement agents unless FINRA enacts rules that prohibit these placement agents
from “engaging in distribution or solicitation activities if certain political
contributions have been made” and such rules are “substantially equivalent” to, or
“more stringent” than, the Commission’s comparable rules for investment advisers.
Id. § 275.206(4)–5(f)(9)(ii).
So, in 2015, FINRA proposed Rule 2030 to the Commission for adoption.
80 Fed. Reg. 81650, 81650–56 (2015); see 15 U.S.C. § 78s(b)(1) (requiring that
self-regulatory organizations receive approval from the Commission before any
rule change may take effect). Subject to some exceptions, Rule 2030 prohibits
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placement agents from “engag[ing] in distribution or solicitation activities for
compensation with a government entity on behalf of an investment adviser that
provides or is seeking to provide investment advisory services to such government
entity within two years after a contribution to an official of the government entity.”
FINRA Rule 2030(a). Thus, if a placement agent makes a contribution to a
government official, the placement agent must wait two years before it can solicit
the employing governmental entity for an investment advisory services contract
and be paid for doing so.
Rule 2030 also includes provisions that attempt to prevent placement agents
from circumventing the Rule by making indirect contributions to government
officials. One such provision states that placement agents may not “solicit or
coordinate any person or political action committee to make” payments “to a
political party of a state or locality of a government entity with which the covered
member is engaging in, or seeking to engage in, distribution or solicitation
activities on behalf of an investment adviser.” FINRA Rule 2030(b).
In August 2016, after notice and comment, the Commission issued a final
order approving the Rule. 81 Fed. Reg. 60051, 60051–52 (2016). In response, the
Georgia Party, the New York Committee, and the Tennessee Party filed a joint
petition in this Court under 15 U.S.C. § 78y(a), asserting that the Commission
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lacked the authority to approve Rule 2030 and that the Rule violates the First
Amendment.
II. DISCUSSION
A. The Georgia Party Lacks Standing to Challenge Rule 2030.
“Article III of the Constitution restricts [the judicial power] to the traditional
role of Anglo–American courts, which is to redress or prevent actual or imminently
threatened injury to persons caused by private or official violation of law.”
Summers v. Earth Island Inst., 555 U.S. 488, 492 (2009). Standing doctrine
“reflect[s] this fundamental limitation” and “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.” Id. at 493
(emphasis omitted) (internal quotation marks omitted). So, if a plaintiff lacks
standing, then “federal courts do not have jurisdiction over his or her complaint.”
Stalley ex rel. U.S. v. Orlando Reg’l Healthcare Sys., Inc., 524 F.3d 1229, 1232
(11th Cir. 2008).
“The party invoking federal jurisdiction bears the burden of establishing”
standing. Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992). “Since
[standing elements] are not mere pleading requirements but rather an indispensable
part of the plaintiff’s case, each element must be supported in the same way as any
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other matter on which the plaintiff bears the burden of proof, i.e., with the manner
and degree of evidence required at the successive stages of the litigation.” Id. At
the pleading stage “general factual allegations of injury . . . may suffice.” Id. But
in response to a summary judgment motion, “the plaintiff can no longer rest on
such ‘mere allegations,’ but must ‘set forth’ by affidavit or other evidence ‘specific
facts.’” Id. (quoting Fed. R. Civ. P. 56(e)). In this context, a petition for appellate
review of a final agency order is more analogous to a motion for summary
judgment, “in that both request a final judgment on the merits.” Iowa League of
Cities v. EPA, 711 F.3d 844, 869 (8th Cir. 2013). “Accordingly, parties seeking
direct appellate review of an agency action must prove each element of standing as
if they were moving for summary judgment in a district court.” Id. Thus,
petitioners “bear the responsibility of meeting the same burden of production,
namely ‘specific facts’ supported by ‘affidavit or other evidence.’” Id. at 870
(quoting Lujan, 504 U.S. at 561); see also Sierra Club v. EPA, 793 F.3d 656, 662
(6th Cir. 2015); N. Laramie Range Alliance v. FERC, 733 F.3d 1030, 1034 (10th
Cir. 2013); Citizens Against Ruining the Environment v. EPA, 535 F.3d 670, 675
(7th Cir. 2008); Sierra Club v. EPA, 292 F.3d 895, 899–900 (D.C. Cir. 2002).
To establish standing then, a petitioner must put forth specific facts
supported by evidence showing that: “(1) it has suffered an ‘injury in fact’ . . . (2)
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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). Our focus here is on the first element: injury
in fact. An injury in fact must be “concrete and particularized and . . . actual or
imminent, not conjectural or hypothetical.” Id. at 180. “[T]he injury required for
standing need not be actualized,” but it must be “real, immediate, and direct.”
Davis v. FEC, 554 U.S. 724, 734 (2008). “Although imminence is concededly a
somewhat elastic concept, it cannot be stretched beyond its purpose, which is to
ensure that the alleged injury is not too speculative for Article III purposes—that
the injury is certainly impending.” Clapper v. Amnesty Int’l USA, 568 U.S. 398,
409 (2013) (emphasis in original) (quoting Lujan, 504 U.S. at 565 n.2). Indeed,
the Supreme Court has “repeatedly reiterated that ‘threatened injury must be
certainly impending to constitute injury in fact,’ and that ‘[a]llegations of possible
future injury’ are not sufficient.” Id. (alteration and emphases in original) (quoting
Whitmore v. Arkansas, 495 U.S. 149, 158 (1990)). And it has “been reluctant to
endorse standing theories that require guesswork as to how independent
decisionmakers will exercise their judgment.” Id. at 1150. A prospective injury
that is contingent on the choices of a third party is less likely to establish standing.
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See id.; see also Summers, 555 U.S. at 494 (“[Petitioners] can demonstrate
standing only if application of the regulations by the Government will affect them
. . . .” (emphasis in original)).
Here, the Georgia Party is not directly regulated by Rule 2030 because it is
not a placement agent. Nevertheless, the Party argues that it suffers an injury in
fact from Rule 2030 because the Rule: (1) inhibits the Party’s ability to fundraise;
(2) forces the Party to divert resources; and (3) harms its members. Although each
of these types of harm can potentially establish injury in fact, the Georgia Party has
not put forward adequate facts to support any of these theories.
1. Injury based on the impairment of the Georgia Party’s ability to
fundraise
The Georgia Party, relying on the D.C. Circuit’s opinion in Taxation without
Representation of Wash. v. Regan, 676 F.2d 715 (D.C. Cir. 1982), rev’d on other
grounds, 461 U.S. 540 (1983), contends that it suffers a direct injury from Rule
2030 because the Rule will hinder the Party’s ability to fundraise. The Party
asserts that, because Rule 2030 prohibits placement agents from “solicit[ing] or
coordinat[ing]” to make any “[p]ayment to a political party of a state . . . with
which the covered member is engaging in, or seeking to engage in, distribution or
solicitation activities on behalf of an investment adviser,” the Rule will necessarily
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harm the Party’s fundraising because some placement agents will not be able to
contribute to the Party.
The Georgia Party, however, does not provide sufficient evidence to support
its assertions. The Party’s only evidence is the affidavit of J. Adam Pipkin, the
Georgia Party’s Executive Director. Mr. Pipkin’s affidavit states broadly that
those regulated by Rule 2030 “will be . . . limited in their ability to contribute to
the Georgia Republican Party” and that the Rule “will significantly hinder the state
party.” Mr. Pipkin does not assert that he himself would like to contribute to the
Georgia Party but has decided not to do so because of Rule 2030. He does not
identify another person who wishes to contribute but will not because of the Rule.
And he does not offer any factual support for his general assertion that the Georgia
Party will be “significantly hinder[ed]” in some way. In other words, the affidavit
offers no facts to show that the Georgia Party’s fundraising will actually be
harmed. The affidavit’s generalized “[a]llegations of possible future injury,”
without factual support, “are not sufficient” to establish “certainly impending”
injury. Clapper, 568 U.S. at 409 (alteration and emphases in original) (quoting
Whitmore v. Arkansas, 495 U.S. 149, 158 (1990)).
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2. Injury based on the diversion of the Georgia Party’s resources
The Georgia Party also argues that it is harmed because it must divert
resources from its core mission to advise state and local officeholders about the
impact of Rule 2030 on their ability to fundraise. We have recognized that an
“organization has standing to sue on its own behalf if the defendant’s illegal acts
impair its ability to engage in its projects by forcing the organization to divert
resources to counteract those illegal acts.” Ga. Latino Alliance for Human Rights
v. Governor of Ga., 691 F.3d 1250, 1259–60 (11th Cir. 2012) (quotation marks
omitted).
Mr. Pipkin, however, does not state in his affidavit that the Georgia Party
has been, or will be, forced to divert any resources at all—let alone that such
diversion impairs the Party. Because the Georgia Party offers no facts whatsoever
to support this theory, it necessarily fails.
3. Injury to the Georgia Party’s members
Finally, the Georgia Party contends that it has standing because its members
have standing. “An association has standing to bring suit on behalf of its members
when its members would otherwise have standing to sue in their own right, the
interests at stake are germane to the organization’s purpose, and neither the claim
asserted nor the relief requested requires the participation of individual members in
the lawsuit.” Friends of the Earth, 528 U.S. at 181. To establish standing under
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this theory, an organization must “make specific allegations establishing that at
least one identified member ha[s] suffered or [will] suffer harm.” Summers, 555
U.S. at 498. We cannot accept an organization’s “self-descriptions of [its]
membership . . . . regardless of whether it is challenged.” Id. at 499.
The Georgia Party alleges that Rule 2030 harms its members in two ways.
First, members who are placement agents directly regulated by Rule 2030 face
consequences for making contributions to certain candidates. Second, members
who are state and local officials are inhibited by Rule 2030 from receiving such
contributions.
Yet, once again, the Georgia Party has failed to allege that a specific
member will be injured by the rule, and it certainly offers no evidence to support
such an allegation. Mr. Pipkin’s affidavit identifies that he is a member of the
Party, but his affidavit does not establish that he is regulated by Rule 2030 or that
he plans to make (or receive) a specific contribution that would trigger the Rule.
And Mr. Pipkin’s affidavit identifies no other members of the Georgia Party who
are covered or affected by Rule 2030. Thus, the Party has failed to identify at least
one member who has or will suffer harm from Rule 2030 as required to show
injury in fact.
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The Georgia Party invokes this Court’s previous decision in Florida State
Conference of the NAACP v. Browning to argue that it need not “name names” to
establish standing based on prospective harm. 522 F.3d 1153, 1160 (11th Cir.
2008). In Browning, we held that organizations need not identify particular
members who would be harmed because future “probabilistic injuries” to
unidentified members were sufficient if at least one member was “certain to get
injured in the end.” Id. at 1162–64.
Here, however, Mr. Pipkin’s affidavit does not aver that at least one of the
Georgia Party’s members is certain to be injured by Rule 2030. Moreover, since
Browning, the Supreme Court has rejected probabilistic analysis as a basis for
conferring standing. In Summers, the majority rejected the dissent’s theory that an
organization could establish standing if “there is a statistical probability that some
of [its] members are threatened with concrete injury.” 555 U.S. at 497. The
Supreme Court reasoned that probabilistic standing ignores the requirement that
organizations must “make specific allegations establishing that at least one
identified member had suffered or would suffer harm.” Id. at 498; see also id. at
498–99 (“This requirement of naming the affected members has never been
dispensed with in light of statistical probabilities, but only where all the members
of the organization are affected by the challenged activity.”). So “[w]hile it is
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certainly possible—perhaps even likely—that one individual will” suffer an injury
from Rule 2030, “that speculation does not suffice.” Id. at 499.
The Georgia Party also erroneously relies on Arcia v. Florida Secretary of
State, where we held that three organizational plaintiffs had standing to challenge
“Florida’s efforts to remove the names of ineligible voters from the State’s voter
rolls.” 772 F.3d 1335, 1339, 1342 (11th Cir. 2014). To be sure, we explained that
an “organizational plaintiff[] need not establish that all of [its] members are in
danger” and approvingly cited our holding in Browning that “large organizations
. . . ha[v]e standing [when] there [is] a high probability that at least one of the[ir]
members w[ill] be [harmed].” Id. at 1342. But in Arcia, we were not asked
whether Summers and its requirement that an organization proffer “at least one
identified member [who] had suffered or would suffer harm,” 555 U.S. at 498
(emphasis added), had abrogated our precedent about probabilistic injury to
unnamed plaintiffs. Nor did we need to answer this question because we
acknowledged that the organizations in Arcia “represent a large number of people,
like Ms. Arcia and Ms. Antoine, who face a realistic danger of being identified in
the [voter] removal program[].” Id. (emphasis added). In the light of this
identification of two members, the only question before this Court was whether
there was a realistic danger of injury to the named members, and not whether there
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was a sufficient possibility that any member would suffer an injury. We did not
relax the requirement that an organization name at least one member who can
establish an actual or imminent injury.
In short, the Georgia Party has failed to put forward sufficient factual
support to show that it has, or will, suffer an injury in fact from Rule 2030 to
establish standing under any theory. For reasons unknown to this Court, the
Georgia party has not submitted an affidavit from a member who is a placement
agent regulated by Rule 2030 and who has decided not to make a particular
contribution because of the Rule. See Tenn. Republican Party v. SEC, 863 F.3d
507, 517 (6th Cir. 2017) (“[T]here is no reason why Petitioners could not have put
forth an affidavit from a particular municipal advisor professional who would have
contributed more than $250 were it not for the 2016 Amendments.”). Because we
lack jurisdiction over a party that does not have standing, we dismiss the Georgia
Party for lack of jurisdiction.
B. This Circuit is not the Proper Venue for the New York Committee
and the Tennessee Party.
Having dismissed the Georgia Party, we now address whether this is the
appropriate venue for the New York Committee and the Tennessee Party. 1 The
1
We need not—and do not—address whether the New York Committee and the Tennessee
Party have standing, because “[j]urisdiction is vital only if the court proposes to issue a judgment
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New York Committee and the Tennessee Party filed their petition in this Court
under 15 U.S.C. § 78y(a), which provides that: “A person aggrieved by a final
order of the Commission entered pursuant to this chapter may obtain review of the
order in the United States Court of Appeals for the circuit in which he resides or
has his principal place of business, or for the District of Columbia Circuit.”
Without the Georgia Party, this Circuit is clearly not the appropriate venue
for the New York Committee and the Tennessee Party because neither party
resides or has its principal place of business within this Circuit.
The only question then is the proper remedy. We could dismiss the New
York Committee and the Tennessee Party for improper venue, Fed. Power
Comm’n v. Texaco, Inc., 377 U.S. 33, 39 (1964) (holding that a circuit court “erred
in failing to dismiss [a] petition for lack of venue”), but we have been hesitant to
do so where dismissal would deprive a party of its right to appellate review, see
Becker v. Comm’r of Internal Revenue, 852 F.2d 524, 526 (11th Cir. 1988). We
also have “inherent authority to transfer an appeal when [this] is not the court of
proper venue” and doing so “would be in the interest of justice.” Id.
on the merits.” Sinochem Int’l Co. Ltd. v. Malaysia Int’l Shipping Corp., 549 U.S. 422, 431
(2007) (quoting Intec USA, LLC v. Engle, 467 F.3d 1038, 1041 (7th Cir. 2006)).
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Because the New York Committee and the Tennessee Party could not refile
their petition in a proper venue due to the fact that it is now well outside the 60-day
filing period, 15 U.S.C. § 78y(a)(1), we conclude that it is in the interest of justice
to transfer the appeal. The parties dispute whether venue would be proper for both
the New York Committee and the Tennessee Party in the Second or Sixth Circuits,
where each respectively resides. But, at oral argument, all agreed that the D.C.
Circuit would be a proper venue. Accordingly, we transfer the appeal there.
CONCLUSION
We DISMISS the Georgia Party for lack of jurisdiction and TRANSFER
the New York Committee and Tennessee Party’s petition to the D.C. Circuit.
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