Am. Charities for Reasonable Fundraising Regulation, Inc. v. O'Bannon , 909 F.3d 329 ( 2018 )


Menu:
  •                                                                     FILED
    United States Court of
    PUBLISH                         Appeals
    Tenth Circuit
    UNITED STATES COURT OF APPEALS
    November 21, 2018
    FOR THE TENTH CIRCUIT                  Elisabeth A. Shumaker
    _________________________________            Clerk of Court
    AMERICAN CHARITIES FOR
    REASONABLE FUNDRAISING
    REGULATION, INC.; RAINBOW
    DIRECT MARKETING, LLC,
    Plaintiffs - Appellants,
    v.                                                No. 17–4177
    DANIEL O’BANNON, Director of
    the Utah Division of Consumer
    Protection, Department of
    Commerce for the State of Utah,
    Defendant - Appellee.
    _________________________________
    Appeal from the United States District Court
    for the District of Utah
    (D.C. No. 2:08-CV-00875-RJS)
    _________________________________
    Charles Nave, Charles H. Nave, P.C., Roanoke, Virginia, for Plaintiffs-
    Appellants.
    Stanford E. Purser, Deputy Solicitor General, Office of the Utah Attorney
    General (Tyler R. Green, Solicitor General, and David N. Wolf, Assistant
    Attorney General, with him on the brief), Salt Lake City, Utah, for
    Defendant-Appellee.
    _________________________________
    Before BACHARACH, EBEL, and MORITZ, Circuit Judges.
    _________________________________
    BACHARACH, Circuit Judge.
    _________________________________
    This appeal turns on mootness. The issue arose when Utah changed
    its law governing professional fundraising consultants. Utah officials had
    interpreted its old law to require the plaintiff, Rainbow Direct Marketing,
    to register and obtain a permit in the State of Utah. Rainbow viewed these
    requirements as unconstitutional and unsuccessfully sued in district court.
    But during the appeal, Utah substantially revised its law, prompting
    officials to concede that the new restrictions do not apply to Rainbow. This
    change in the law renders the appeal moot.
    I.    Applying the old law, officials required Rainbow to comply with
    Utah’s registration and permitting requirements.
    Rainbow is a New York company that advises certain charities on
    fundraising through direct mail. In 2007, Rainbow agreed to consult with a
    nonprofit group, Straight Women in Support of Homos (SWiSH), on a
    national campaign to raise funds through direct mail. Before the campaign
    could begin, however, Utah officials informed Rainbow that they
    interpreted state law to require Rainbow to register and obtain a Utah
    permit.
    But Rainbow did not want to register or obtain a Utah permit; the
    permit fee is $250, and Rainbow believed that Utah overenforces its
    registration laws in a way that inflates the cost of charitable fundraising.
    Rainbow therefore declined to consult with SWiSH. Losing this
    opportunity prompted Rainbow to sue, challenging the constitutionality of
    2
    Utah’s registration and permitting requirements. The district court granted
    summary judgment to the defendant, and Rainbow appealed.
    II.    Utah changes the law, and officials interpret the new law to
    relieve Rainbow of the need to register or obtain a permit.
    After Rainbow appealed, Utah changed its law. The new law states
    that a permit is required for a professional fundraising consultant only if it
        maintains a business in Utah or employs someone there or
        advises a charitable organization that is subject to general
    jurisdiction in Utah.
    Utah Code Ann. § 13-22-5(4)(a) (eff. Mar. 19, 2018). Utah officials
    concede that (1) Rainbow does not maintain a business or employee in
    Utah and (2) SWiSH is not subject to general jurisdiction in Utah. Thus,
    Utah officials contend that Rainbow need not register or obtain a permit
    under the new law. 1
    III.   This change in the law renders the appeal moot.
    Regardless of whether Utah officials are right, however, the change
    in the law renders the appeal moot.
    Our jurisdiction is limited to “cases” or “controversies.” U.S. Const.
    art. III § 2, cl. 1. When a case or controversy no longer exists, the appeal
    becomes moot and we lose jurisdiction. WildEarth Guardians v. Pub. Serv.
    Co. of Colo., 
    690 F.3d 1174
    , 1182 (10th Cir. 2012); McClendon v. City of
    1
    No one pleaded that Rainbow maintains a business in Utah, employs
    someone in Utah, or currently advises a charitable organization subject to
    general jurisdiction in Utah.
    3
    Albuquerque, 
    100 F.3d 863
    , 867 (10th Cir. 1996). The defendant bears the
    burden of showing a lack of jurisdiction due to mootness. Citizen Ctr. v.
    Gessler, 
    770 F.3d 900
    , 907 (10th Cir. 2014).
    The defendant has satisfied this burden by showing Utah’s change in
    the law. Rainbow denies that the appeal is moot, invokes exceptions to the
    mootness doctrine, and contends that refusing to consider the appeal on the
    merits would be unjust.
    A.    We reject Rainbow’s arguments denying that the appeal is
    moot.
    Rainbow denies that the appeal is moot, arguing that (1) the law has
    not materially changed and (2) disputes remain over damages, interest, and
    attorneys’ fees. We reject these arguments.
    1.    The change in the law is material.
    Given the change in the law, Utah officials concede that Rainbow
    need not register or obtain a Utah permit. This concession would seemingly
    remove the alleged injury to Rainbow, rendering the appeal moot. See N.
    Nat. Gas Co. v. Grounds, 
    931 F.2d 678
    , 684 (10th Cir. 1991) (“When the
    law that controls a given situation is changed, litigation under the old law
    generally becomes moot.”).
    Rainbow considers the changes immaterial, insisting that the
    constitutional violations remain under the new law. For this contention,
    Rainbow points to opinions holding that a case or controversy continues
    4
    when a statutory change fails to substantially ease the burdens falling on
    the plaintiff. 2 But this contention overlooks the fundamental changes in the
    Utah law.
    Rainbow’s challenge to the new law turns on whether SWiSH is
    subject to general jurisdiction in Utah. Utah insists that SWiSH is not
    subject to general jurisdiction in the state, which would eliminate
    Rainbow’s obligation to register or obtain a Utah permit. But Rainbow
    suggests that SWiSH may be subject to general jurisdiction, so the
    registration and permit obligations might remain.
    This disagreement arises on appeal for the first time because the
    change in the law fundamentally altered the nature of the registration and
    permit requirements. These fundamental changes in the law moot the
    appeal even though Rainbow views the new version as unconstitutional.
    2
    See Ne. Fla. Chapter of Associated Gen. Contractors of Am. v. City
    of Jacksonville, Fla., 
    508 U.S. 656
    , 662 (1993) (“The new ordinance may
    disadvantage them to a lesser degree than the old one, but . . . it
    disadvantages them in the same fundamental way.”); Brockington v.
    Rhodes, 
    396 U.S. 41
    , 43 (1969) (“We do not think the recent statutory
    amendment has rendered this case moot. For the appellant has consistently
    urged the unconstitutionality of any percentage requirement in excess of
    the 1% that Ohio imposed prior to 1952, and he obtained the signatures of
    only about 1% of the voters in his district. He thus could not have won a
    place on the ballot even under the statute as currently written.”); Petrella
    v. Brownback, 
    787 F.3d 1242
    , 1256 (10th Cir. 2015) (“Despite the changes
    to Kansas’ system of school financing, the core elements challenged by
    plaintiffs remain.”); Hill v. Kemp, 
    478 F.3d 1236
    , 1243 (10th Cir. 2007)
    (“Simply put, there remains a difference between how Oklahoma treats
    those who wish to obtain a Choose Life or Adoption Creates Families
    plate, on the one hand, and those who wish to obtain a license plate
    expressing support for abortion rights, on the other.”).
    5
    See Camfield v. City of Okla. City, 
    248 F.3d 1214
    , 1223–24 (10th Cir.
    2001) (concluding that amendments to a law rendered the appeal moot,
    despite the appellant’s constitutional challenge to the new version, because
    the amendments eliminated the statutory basis for the challenge that had
    been brought in district court).
    * * *
    The law materially changed, fundamentally altering the issues that
    had been presented in district court. This change in the law renders the
    appeal moot.
    2.    The remaining disputes do not perpetuate a case or
    controversy.
    Rainbow also argues that a case or controversy continues because
    disputes remain over the availability of damages, interest, and attorneys’
    fees. We disagree.
    As Rainbow argues, the statutory change would not eliminate a pre-
    existing dispute over damages. Brown v. Buhman, 
    822 F.3d 1151
    , 1169
    (10th Cir. 2016). But Rainbow did not ask for damages in the most recent
    version of the complaint. Instead, Rainbow requested (1) a declaratory
    judgment that the old law, as applied to professional fundraising
    consultants, was unconstitutional, (2) an injunction against enforcement of
    the old law, and (3) an award of costs, interest, and attorneys’ fees.
    Because Rainbow did not request damages, their theoretical availability
    6
    would not affect the issue of mootness here. See 
    id. at 1169–70
    (determining that a claim for damages could not affect mootness because
    damages had not been requested in the complaint).
    Rainbow did request interest and attorneys’ fees. But Rainbow never
    moved for an award of interest or attorneys’ fees. Had Rainbow moved for
    interest or attorneys’ fees, a case or controversy might have remained. See
    Dahlem by Dahlem v. Bd. of Educ. of Denver Pub. Schs., 
    901 F.2d 1508
    ,
    1511 (10th Cir. 1990) (“While a claim of entitlement to attorney’s fees
    does not preserve a moot cause of action, . . . the expiration of the
    underlying cause of action does not moot a controversy over attorney’s
    fees already incurred.” (citations omitted)). But without a motion for
    interest or attorneys’ fees, the appeal loses any practical effect. See Lewis
    v. Cont’l Bank Corp., 
    494 U.S. 478
    , 480 (1990) (stating that an interest in
    attorneys’ fees, upon prevailing, does not “create an Article III case or
    controversy where none exists on the merits of the underlying claim”
    (citation omitted)). Thus, the appeal is moot unless a recognized exception
    applies.
    B.    The exceptions to mootness do not apply here.
    Rainbow contends that the appeal falls into one of two exceptions to
    the mootness doctrine: (1) capability of repetition and (2) voluntary
    cessation. These exceptions do not apply here.
    7
    Rainbow contends that the alleged wrong falls within the exception
    for wrongs “capable of repetition which will evade review.” Ind v. Colo.
    Dep’t of Corr., 
    801 F.3d 1209
    , 1215 (10th Cir. 2015). This exception is
    narrow and applies only in exceptional situations. See 
    id. To trigger
    the
    exception, Rainbow must show that “‘(1) the challenged action was in its
    duration too short to be fully litigated prior to its cessation or expiration,
    and (2) there [is] a reasonable expectation that the same complaining party
    [will] be subjected to the same action again.’” Jordan v. Sosa, 
    654 F.3d 1012
    , 1035 (10th Cir. 2011) (quoting Weinstein v. Bradford, 
    423 U.S. 147
    ,
    149 (1975) (alteration in original)). These elements do not apply here.
    The first element requires Rainbow to show that the “allegedly
    unconstitutional behavior is necessarily of short duration.” 
    Jordan, 654 F.3d at 1036
    (emphasis in original). Rainbow suggests that the
    unconstitutional behavior was too short because the litigation could not be
    completed. This suggestion is illogical. The issue of mootness arises only
    when something has changed, eliminating the impact on the plaintiff. If the
    exception applied whenever someone could not finish the litigation, no
    dispute would ever be considered moot.
    Here the allegedly unconstitutional behavior is the adoption of a
    statute requiring professional fundraising consultants like Rainbow to
    register and obtain a permit in Utah. This behavior is not necessarily too
    8
    quick for resolution through litigation. As a result, the “capability of
    repetition” exception does not apply.
    Rainbow also invokes the exception for voluntary cessation. Under
    this exception, a defendant’s voluntary cessation of the challenged practice
    would not ordinarily render the appeal moot. Citizen Ctr. v. Gessler, 
    770 F.3d 900
    , 908 (10th Cir. 2014). It is true that Utah voluntarily enacted the
    new law. But when a defendant voluntarily ceases its conduct by changing
    the pertinent law, the exception applies only if the record shows “that the
    legislature intends to reenact the prior version of the disputed statute.”
    Camfield v. City of Okla. City, 
    248 F.3d 1214
    , 1223–24 (10th Cir. 2001).
    Rainbow argues that Utah’s history reflects unconstitutional
    enforcement. The point is unclear, but presumably Rainbow is arguing that
    Utah could reinstate the old law or improperly enforce the new law. But
    Rainbow has not suggested a reason to believe that Utah would rescind or
    improperly enforce the statutory changes, and the Utah legislature has
    expressed no intent to reenact the old law. So the exception for voluntary
    cessation does not apply.
    C.    Mootness cannot be disregarded based on notions of
    “manifest injustice.”
    Rainbow also argues that dismissal for mootness would create
    “manifest injustice.” This argument overlooks the jurisdictional nature of
    mootness. See pp. 3–4, above. Because mootness is jurisdictional, we
    9
    cannot ignore the issue based on our notions of manifest injustice. See
    Bowles v. Russell, 
    551 U.S. 205
    , 213 (2007) (stating that courts have “no
    authority to create equitable exceptions to jurisdictional requirements”);
    see also Utah ex rel. Utah Dep't of Envtl. Quality, Div. of Air Quality v.
    EPA, 
    750 F.3d 1182
    , 1186 (10th Cir. 2014) (“[W]e cannot expand our
    jurisdiction to avoid hardships even when they are inequitable.”). We
    therefore cannot avoid mootness even if we considered the outcome
    manifestly unjust.
    IV.       Because the appeal is moot, we must remand with instructions for
    the district court to vacate its judgment.
    When the appeal becomes moot based on the prevailing party’s
    unilateral action, we must vacate the district court’s judgment. Schell v.
    OXY USA Inc., 
    814 F.3d 1107
    , 1117 n.5 (10th Cir. 2016). Here the
    mootness resulted from the unilateral action of Utah, which had prevailed
    in district court. We therefore dismiss the appeal as moot and remand with
    instructions to the district court to vacate its judgment and dismiss the
    case. 3
    3
    The defendant “acknowledges that dismissing the appeal as moot may
    require vacating the district court’s decision.” Appellee’s Resp. Br. at 28–
    29 n.10.
    10