National Lifeline Association v. Marybel Batjer ( 2023 )

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS JAN 31 2023
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
NATIONAL LIFELINE ASSOCIATION, No. 21-15969
Plaintiff-Appellee, D.C. No. 3:20-cv-08312-MMC
v.
MEMORANDUM*
MARYBEL BATJER, in her official
capacity as a commissioner of the California
Public Utilities Commission; et al.,
Defendants-Appellants.
Appeal from the United States District Court
for the Northern District of California
Maxine M. Chesney, District Judge, Presiding
Argued and Submitted May 13, 2022
San Francisco, California
Before: MURGUIA, Chief Judge, BUMATAY, Circuit Judge, and BAKER,**
International Trade Judge.
Concurrence by Judge BAKER.
The California Public Utilities Commission (“CPUC”) administers the
California LifeLine Program—a state universal service program intended to ensure
*
This disposition is not appropriate for publication and is not precedent except as
provided by Ninth Circuit Rule 36-3.
**
The Honorable M. Miller Baker, International Trade Judge for the United States
Court of International Trade, sitting by designation.
access to affordable communication services (like cell-phone services) for low-
income Californians. California LifeLine subsidizes costs for participating
wireless carriers, which include members of the National LifeLine Association
(“NLA”), an industry trade association and the Plaintiff in this case. In 2020, the
CPUC implemented a new rule that California LifeLine members were precluded
from charging low-income customers a co-pay for two affordable wireless plans.
NLA sued certain CPUC Commissioners (the Defendants), arguing that the
inability to charge a co-pay meant that the rule was preempted by federal law.
After NLA moved for judgment on the pleadings, the district court agreed and
issued a permanent injunction enjoining the CPUC from enforcing certain changes
to California LifeLine. The Defendants appealed.
We have jurisdiction under 28 U.S.C. § 1291 and reverse the district court’s
order granting NLA’s motion for judgment on the pleadings.
Congress charged the Federal Communications Commission (“FCC”) with
advancing “universal service”: making high-quality communication services
available nationwide “at just, reasonable, and affordable rates,” and offering these
services to “low-income consumers.” 47 U.S.C. § 254(b)(1), (b)(3); see 47 U.S.C.
§ 151. Under this system, the FCC runs a federal universal service fund that
provides subsidies to service providers offering affordable plans to low-income
consumers. See 47 C.F.R. §§ 54.401, 54.403(a). Likewise, states can establish
2
their own universal service funds, so long as these state programs do not conflict
with FCC rules or the FCC’s universal service program, see 47 U.S.C. § 254(f),
and are not preempted by the Communications Act of 1934, see 47 U.S.C.
§ 332(c)(3)(A).
California LifeLine is one such state universal service program that
subsidizes service providers to deliver high-quality communication services at
affordable rates to low-income citizens. See Cal. Pub. Util. Code § 871.7(a). The
California legislature has authorized the CPUC to oversee California LifeLine,
including setting subsidy amounts and establishing eligibility requirements for
participating members. Id. § 873. In 2020, after Governor Gavin Newsom
proclaimed a State of Emergency in response to the COVID-19 pandemic, the
CPUC commenced a rulemaking process to determine whether to adjust California
LifeLine’s subsidy amounts and eligibility criteria to “meet [California LifeLine
participants] distance learning, telehealth and other essential needs.”
In October 2020, after soliciting feedback from service providers, including
NLA, the CPUC increased mobile service plan requirements without a
corresponding increase in the subsidy amount. The CPUC thereby created four
tiered wireless plans that participating service providers could offer, including the
two affordable plans at issue here: (Tier 1) a “Basic Plan” of unlimited voice/text
and 4 GB of broadband with a $12.85 subsidy; and (Tier 2) a “Standard Plan” of
3
unlimited voice/texts and 6 GB of broadband with a $14.85 subsidy. Under the
CPUC’s rule, to be eligible for a subsidy, a wireless service provider would need to
provide either the Basic Plan or the Standard Plan without a co-pay (the “2020
Rule”).1 Providers, however, could charge a co-pay for the other two plans (Tiers
3 & 4) conditioned on the CPUC’s approval that the co-pays were affordable. The
CPUC adopted this rule for one year, running from December 1, 2020, through
November 30, 2021. During the rulemaking process, NLA protested that the
subsidies would not cover the cost of the plans if they could not charge co-pays.
The CPUC nonetheless adopted the 2020 Rule.
NLA sued the Defendants, seeking: (i) a declaratory judgment that the 2020
Rule is preempted by § 332(c)(3)(A) of the Communications Act; and (ii) a
permanent injunction enjoining the Defendants from enforcing the 2020 Rule.
After NLA moved for judgment on the pleadings, the district court granted NLA’s
motion, concluding that the rule was preempted, and enjoined the Defendants from
enforcing the 2020 Rule.
1. Rule 12(c) of the Federal Rules of Civil Procedure allows a party to
move for judgment on the pleadings “[a]fter the pleadings are closed—but early
enough not to delay trial.” Fed. R. Civ. P. 12(c). “A judgment on the pleadings is
properly granted when, taking all the allegations in the non-moving party’s
1
The parties also refer to the 2020 Rule as the “Free Rate Rule” or the “Subsidy Rule.”
4
pleadings as true, the moving party is entitled to judgment as a matter of law.”
Fajardo v. Cnty. of Los Angeles, 179 F.3d 698, 699 (9th Cir. 1999). Because NLA
moved for judgment on the pleadings, this court looks to the allegations in the
Defendants’ pleadings, here their answer. See id. An order granting a motion
for judgment on the pleadings is reviewed de novo. Fleming v. Pickard, 581 F.3d
922, 925 (9th Cir. 2009). Questions of law, including preemption, are also
reviewed de novo. Toumajian v. Frailey, 135 F.3d 648, 652 (9th Cir. 1998).
2. The Defendants argue that NLA does not have standing. An
association has standing to bring suit on behalf of its members when: (1) “its
members would otherwise have standing to sue in their own right,” (2) “the
interests it seeks to protect are germane to the organization’s purposes,” and (3)
“neither the claim asserted, nor the relief requested, requires the participation of
individual members in the lawsuit.” Nat’l Fam. Farm Coal. v. EPA, 966 F.3d 893,
908 (9th Cir. 2020). The parties only dispute whether NLA has satisfied the first
prong. A NLA member has standing if it can show an “injury in fact,” causation,
and redressability. Lujan v. Defs. of Wildlife, 504 U.S. 555, 560–61 (1992).
As a preliminary matter, “a plaintiff is presumed to have constitutional
standing to seek injunctive relief when it is the direct object of regulatory action
challenged as unlawful . . . .” Los Angeles Haven Hospice, Inc. v. Sebelius, 638
F.3d 644, 655 (9th Cir. 2011) (citing Lujan, 504 U.S. at 561–62). Here, NLA
5
alleges, and the Defendants do not meaningfully dispute, that some of its members
participate in California LifeLine and therefore are the object of the 2020 Rule.2
Even if being the object of the 2020 Rule is insufficient to establish standing, NLA
alleged in its complaint and substantiated with exhibits, that two of its members
submitted advice letters to the CPUC seeking to charge their California LifeLine
customers copays despite the 2020 Rule. However, the CPUC rejected these
proposals. Therefore, at least some of NLA members’ pricing plans were impacted
by the 2020 Rule. Similarly, NLA alleges, and the Defendants do not deny, that
before the 2020 Rule, some NLA members were offering 3 GB plans at no cost to
subscribers in exchange for California LifeLine’s $14.85 subsidy. Under the 2020
Rule, however, providers are required to offer 6 GB of data in exchange for the
same $14.85 subsidy. Having to provide additional data without an increased
subsidy imposes a concrete injury sufficient to confer standing. See Lujan, 504
U.S. at 561–62.3
2
Although the Defendants deny the allegation that NLA members “‘will be’ subject to the [2020
Rule] because there is no requirement that wireless providers participate in the California
LifeLine program,” the Defendants do not deny that some NLA members currently participate in
California Lifeline. Continued participation in California LifeLine requires compliance with the
2020 Rule.
3
The Concurrence also argues that the case is moot because the 2020 Rule has expired. See
Concurrence at 8–9. The capable of repetition yet evading review mootness exception applies to
this case. This “exception is limited to extraordinary cases where ‘(1) the duration of the
challenged action is too short to allow full litigation before it ceases, and (2) there is a reasonable
expectation that the plaintiffs will be subjected to it again.’” Alaska Ctr. For Env’t v. U.S. Forest
Serv., 189 F.3d 851, 854–55 (9th Cir. 1999) (quoting Greenpeace Action v. Franklin, 14 F.3d
1324, 1329 (9th Cir. 1992)). Because the 2020 Rule was set to be enforced for only a year, the
6
3. Turning to the merits, the district court concluded that the 2020 Rule
was preempted by 47 U.S.C. § 332(c)(3)(A). A state law is preempted, and “must
yield to the law of Congress,” when the “state law, in its application to a particular
case, comes into collision with an act of Congress.” MetroPCS California, LLC v.
Picker, 970 F.3d 1106, 1117 (9th Cir. 2020) (cleaned up). See U.S. Const. art. VI,
cl. 2. “[A] ‘clear and manifest purpose’ of pre-emption is always required.”
Puerto Rico Dep’t of Consumer Affs. v. Isla Petroleum Corp., 485 U.S. 495, 503
(1988). Federal schemes that permit state participation “rais[e] the strong
inference that Congress did not intend” to preempt state action. In re Volkswagen
“Clean Diesel” Mktg., Sales Practices, & Prods. Liab. Litig., 959 F.3d 1201, 1225
(9th Cir. 2020).
Here, Congress has created a coordinate system by permitting states to
“adopt regulations not inconsistent with the [FCC’s] rules to preserve and advance
universal service,” including through programs that subsidize service for low-
income consumers. 47 U.S.C. § 254(f). See also MetroPCS California, LLC, 970
F.3d at 1119 (setting “a higher [preemption] threshold” where Congress
first prong is satisfied. Second, given that the CPUC can review and renew its regulations on an
annual basis, there is a reasonable expectation NLA will be subjected to the 2020 Rule, or a
similar rule, in the future. Cf. MetroPCS California, LLC v. Picker, 970 F.3d 1106, 1116 (9th
Cir. 2020) (concluding that legislation that expired was not moot as “a case challenging expired
legislation remains justiciable when the litigant still needs the judicial protection that it sought”)
(cleaned up). The Concurrence argues that the CPUC effectively denied this allegation is its
Answer, but there, the CPUC only denied that NLA members “will be” subject to the 2020 Rule,
not that there was no reasonable expectation of a future rule.
7
“recognizes state authority”). As part of this system, however, Congress has also
explicitly preempted certain state laws. The first sentence of the “State
preemption” subsection in the Communications Act provides that “no State . . .
shall have any authority to regulate . . . the rates charged by any commercial
mobile service or any private mobile service, except that this paragraph shall not
prohibit a State from regulating the other terms and conditions of commercial
mobile services.” 47 U.S.C. § 332(c)(3)(A).4 However, § 332(c)(3)(A) “leaves its
key terms undefined. It never states what constitutes rate and entry regulation or
what comprises other terms and conditions of wireless service.” Peck v. Cingular
Wireless, LLC, 535 F.3d 1053, 1056 (9th Cir. 2008) (citation omitted). This case
therefore asks whether the 2020 Rule’s requirement that California LifeLine
members offer certain affordable plans with $0 co-pay is permissible under § 254
to advance universal service or if it impermissibly “regulate[s] . . . the rates
charged” for wireless services under § 332(c)(3)(A).
California is not engaged in rate regulation within the meaning of
§ 332(c)(3)(A) because service providers may leave and set their own rates if they
4
The second and third sentences of § 332(c)(3)(A) provide additional exceptions not applicable
here. The FCC filed an amicus brief explaining that § 332(c)(3)(A)’s second sentence “exempts
from preemption certain state requirements—including rate regulations—once wireless service
‘has become vital to universal service.’” The FCC refers to this as the Pittencrieff interpretation
or the “universal service exception,” named after an FCC case articulating this statutory
construction. See 13 F.C.C. Rcd. 1735, 1748 ¶ 25 (1997). Arguably this exception could apply
to the 2020 Rule, but the parties did not litigate the exception before the district court, and the
FCC and the parties ask that this court not rule on its applicability on appeal.
8
do not wish to comply with the California LifeLine’s subsidy requirements. The
2020 Rule sets requirements for voluntary participation in California LifeLine to
advance universal service.5 Under the CPUC’s rules, “[w]ireless service providers
are encouraged, but not required to, offer LifeLine,” and providers interested in
becoming a California LifeLine member must file an advice letter demonstrating
that their services comply with the California LifeLine eligibility requirements.
Decision Adopting Revisions to Modernize and Expand the Cal. LifeLine Program,
CPUC, D.14-01-036 at 3, 31–32 (Jan. 16, 2014). The 2020 Rule’s co-pay
requirements are part of those eligibility conditions. Service providers can
withdraw from California LifeLine at any time so long as they give a thirty-day
notice to customers and fulfill existing contractual obligations. See D.14-01-036 at
163; see also 47 C.F.R. § 54.205.6 Outside of California LifeLine, service
5
NLA alleged in its Complaint that California LifeLine is voluntary, and the parties stipulated
that the dispute was “strictly legal in nature” and did not require discovery. However, in
response to the FCC’s amicus brief, NLA argues for the first time that “[t]wo of the largest
wireless carriers in the country are legally obligated to keep participating in California LifeLine
. . . .” Any fact not pled in a complaint but raised for the first time on appeal is inappropriate to
consider when assessing a motion for judgment on the pleadings. See Fed. R. Civ. P. 12(c). At
most, NLA demonstrates a genuine dispute as to a material fact, which does not help NLA at this
posture.
Even considering the assertions from NLA and amicus CTIA that T-Mobile is required to
participate indefinitely and that Verizon is required to participate for at least twenty years, these
allegations still do not amount to impermissible state rate regulation. T-Mobile voluntarily
agreed to this commitment as a condition to regulatory approval of a merger, and Verizon’s
obligation also arose from regulatory approval of a merger. In any event, the record does not
reflect that Verizon or T-Mobile are members of NLA; and thus are not party to this suit.
6
NLA and amicus CTIA argue that California LifeLine’s thirty-day notice requirement is
9
providers can set their own wireless service rates as long as they comply with
applicable federal law. See 47 U.S.C. §§ 201 et seq.
Accordingly, the 2020 Rule does not require all California service providers
to offer certain services to consumers at specific rates; the rule applies only to
those that desire a state subsidy. That some NLA members might lose money
providing affordable plans to low-income consumers because they cannot charge a
co-pay for certain plans is of no moment under § 332(c)(3)(A): service providers
may forgo the state subsidy and set their own rates if they do not wish to comply
with the 2020 Rule’s eligibility conditions. The rule therefore does not directly
control—and thus does not impermissibly regulate—the rates that providers may
set. See Peck, 535 F.3d at 1057 (noting no rate regulation where a state statute
allowed a carrier to “remain[] free to charge its customers as much, or as little, as
the market will bear”); Engine Mfrs. Ass’n v. S. Coast Air Quality Mgmt. Dist., 498
F.3d 1031, 1040–47 (9th Cir. 2007) (citing N. Illinois Chapter of Associated
preempted rate regulation, relying on Cellco Partnership v. Hatch, for the proposition that
“‘freez[ing] rates for some period’ of time . . . is the very definition of rate regulation.” 431 F.3d
1077, 1082 (8th Cir. 2005). Cellco Partnership’s reasoning does not hold here, because that case
did not deal with a voluntary state subsidy program, but rather a wireless consumer protection
law that required all service providers to implement certain changes. Id. at 1079, 1082. Unlike
the statewide law in Cellco Partnership, the 2020 Rule does not regulate the conduct of all
California service providers, but only those voluntarily participating in California LifeLine.
Moreover, the 2020 Rule does not freeze rates, because participating service providers, including
NLA members, had the opportunity to opt out before the 2020 Rule’s thirty-day notice
requirement took effect as the rule directed “a wireless provider” to file an advice letter for any
plan “it seeks to offer.”
10
Builders & Contractors, Inc. v. Lavin, 431 F.3d 1004, 1006 (7th Cir. 2005) (“The
question ‘is a condition on the receipt of a grant a form of regulation?’ comes up
frequently, and the answer almost always is negative.”)).
Furthermore, given the presumption that “express preemption statutory
provisions should be given a narrow interpretation,” NLA’s argument that
§ 332(c)(3)(A) contains no explicit voluntary participation exception fails, because
the statute need not carve out every exception. Air Conditioning & Refrigeration
Inst. v. Energy Res. Conservation & Dev. Comm’n, 410 F.3d 492, 496 (9th Cir.
2005). Reading the preemption provision narrowly so as not to implicate many
forms of state action is particularly appropriate in an area where Congress created a
coordinate system of regulation, and where there is a “history of state regulation
[that] requires [this court] to apply the presumption against preemption.”
MetroPCS California, LLC, 970 F.3d at 1119 (“States traditionally ‘exercised
broad power to regulate telecommunications markets within their borders in ways
that were designed to promote . . . universal service.’”) (quoting In re Public
Utility Commission of Texas, 13 F.C.C. Rcd. 3460, 3463 (1997)). And as the FCC
explains in its amicus brief, the 2020 Rule is not an end-run around
§ 332(c)(3)(A)’s prohibition on rate regulation, because under “California’s
LifeLine rules, the $0 copayment requirement does not control anything except
California’s own expenditures.” California has the discretion to subsidize only
11
plans that advance its statutory interest in offering “high-quality basic telephone
service at affordable rates to the greatest number of California residents . . . by
making residential service affordable to low-income citizens.” Cal. Pub. Util.
Code § 871.7(a). Cf. S. Dakota v. Dole, 483 U.S. 203, 212 (1987).
Accordingly, on NLA’s motion for judgment on the pleadings, the 2020
Rule’s $0 co-pay requirement for certain affordable plans is not rate regulation
preempted by § 332(c)(3)(A), because participation in California LifeLine is
voluntary and service providers remain free to opt out and charge whatever rates
they deem appropriate.
REVERSED and REMANDED.
12
Nat’l Lifeline Ass’n v. Batjer, No. 21-15969
FILED
JAN 31 2023
BAKER, Judge, concurring in the judgment: MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
I concur in reversing the district court but reach that conclusion for different
reasons than my colleagues. In my view, we should reverse because the National
Lifeline Association failed to demonstrate constitutional standing. In any event, be-
cause the challenged policy has lapsed and there is no basis on this most peculiar
record for inferring any continuing controversy, this case is moot.
I
For decades, California has subsidized telephone service to low-income resi-
dents through its LifeLine program administered by the California Public Utilities
Commission. Beginning in 2014, the Commission permitted—but did not require—
wireless service providers to participate in the program. Under this program, partic-
ipating wireless providers agreeing to the Commission’s terms and conditions re-
ceived state subsidies. Those terms and conditions allowed participating providers
to charge copayments to subscribers in all tiers of service.
In October 2020, the Commission modified the LifeLine program for a one-
year period (effective December 1, 2020, through November 30, 2021) to prohibit
participating providers from charging copays to subscribers in the two lowest tiers
of service.1 Like the majority, I refer to this as the “2020 Rule.”
1
The Commission’s order further provided that “[b]efore December 1, 2021, we
must revisit these issues to establish tiers for the following year.”
On November 24, 2020, the National Lifeline Association, a trade association
that represents wireless LifeLine providers, brought this suit in the district court
against the Commission. The Association’s unverified complaint sought a declara-
tory judgment that Section 332(c)(3)(A) of the Communications Act, 47 U.S.C.
§ 332(c)(3)(A), preempts the 2020 Rule and further sought an injunction against
enforcement of that Rule.
After the Commission answered, the Association moved under Federal Rule
of Civil Procedure 12(c) for judgment on the pleadings. Full briefing ensued, in
which the Commission challenged the Association’s standing as well as defended
on the merits. On May 5, 2021, the district court granted the motion by simply en-
tering, with minor modifications, the Association’s proposed order granting declar-
atory and injunctive relief.
After the Commission took this timely appeal, the 2020 Rule lapsed on its
own terms on November 30, 2021. At argument, counsel informed us that the Com-
mission did not renew the 2020 Rule for the period of December 1, 2021, to Novem-
ber 30, 2022. The Commission also took no position on whether it would reinstate
the Rule in the future.
II
On appeal, the Commission again challenges the associational and direct
standing of the Association. I begin with associational standing.
2
A
“To have associational standing, [an] organization must show that (a) its
members would otherwise have standing to sue in their own right; (b) the interests
it seeks to protect are germane to the organization’s purposes; and (c) neither the
claim asserted nor the relief requested requires the participation of individual mem-
bers in the lawsuit.” Nat’l Family Farm Coal. v. U.S. EPA, 966 F.3d 893, 908 (9th
Cir. 2020) (cleaned up).
As to the first of these elements—the only one in dispute here—an association
must allege that “a member suffers an injury-in-fact that is traceable to the defendant
and likely to be redressed by a favorable decision.” Associated Gen. Contractors of
Am., San Diego Chapter, Inc. v. Cal. Dep’t of Transp., 713 F.3d 1187, 1194 (9th
Cir. 2013) (AGC) (citing Braunstein v. Ariz. Dep’t of Transp., 683 F.3d 1177, 1184
(9th Cir. 2012)).
For purposes of assessing the standing of the Association’s members, all we
have are the allegations of its unverified complaint. Before examining those allega-
tions, I pause to emphasize the unusual procedural posture here. The district court
granted a Federal Rule of Civil Procedure 12(c) motion for judgment on the plead-
ings filed by the plaintiff—i.e., by the Association. That the Association was the
moving party makes all the difference for purposes of our standard of review.
3
In most cases involving motions for judgment on the pleadings, the defendant
is the moving party, and for that reason some cases equate the Rule 12(c) standard
with the Rule 12(b)(6) standard in terms of the court construing the complaint’s al-
legations as true. See, e.g., Chavez v. United States, 683 F.3d 1102, 1108 (9th Cir.
2012) (stating that “[a]nalysis under Rule 12(c) is substantially identical to analysis
under Rule 12(b)(6) because, under both rules, a court must determine whether the
facts alleged in the complaint, taken as true, entitle the plaintiff to a legal remedy”)
(cleaned up).
But in the Rule 12(c) context, whether the complaint’s allegations are taken
as true turns on which side is the moving party. “When considering a Rule 12(c)
dismissal, we must accept the facts as pled by the nonmovant”—here, the Commis-
sion. United States ex rel. Cafasso v. Gen. Dynamics C4 Sys., Inc., 637 F.3d 1047,
1053 (9th Cir. 2011) (emphasis added). “For purposes of a motion for judgment on
the pleadings, all allegations of fact of the opposing party are accepted as true. The
allegations of the moving party which have been denied are taken as false.” Austad
v. United States, 386 F.2d 147, 149 (9th Cir. 1967) (emphasis added). Therefore,
where—as here—the plaintiff moves for judgment on the pleadings, the denials in
the answer must be construed as being true. City of Forsyth v. Mtn. States Power
Co., 127 F.2d 583, 584 (9th Cir. 1942).
4
Moreover, again as in the more familiar Rule 12(b)(6) context, the court must
draw all reasonable inferences in favor of the non-moving party. Carillo v. Cnty. of
Los Angeles, 798 F.3d 1210, 1218 (9th Cir. 2015). “Thus, in effect, the party oppos-
ing the motion has the benefit of all possible favorable assumptions.” 5C Wright &
Miller, Federal Practice & Procedure: Civil § 1368 (3d ed. 2022 update). In this
case, that means that any reasonable inferences must be drawn in favor of the Com-
mission (the party opposing the motion) and against the Association (the party seek-
ing judgment on the pleadings).
With these background principles in mind, I turn to the handful of allegations
of the Association’s complaint that arguably allege injury. Paragraphs 8 and 14 aver
that the Commission denied requests by two of the Association’s members, StandUp
Wireless and SafetyNet Wireless, to charge copays to LifeLine subscribers in the
two relevant tiers during the 12-month period covered by the 2020 Rule. The Com-
mission admits it denied these requests. Read in isolation, the Commission’s admis-
sion that it denied relief supports standing.
But Paragraph 8 also alleges that absent the 2020 Rule, the Association’s
members, including StandUp and SafetyNet, “would likely have to charge [copays
to] LifeLine subscribers” in these tiers. Paragraph 68 substantially repeats this alle-
gation and further avers, along the same lines, that the Commission’s “decision to
increase the [minimum service standards, i.e., the level of voice and data service]
5
without increasing the [subsidy] means that service providers would not be able to
offer those plans for free, but the Free Rate Rule prevents [the Association’s] mem-
bers from charging for the services.”
Critically for standing purposes, the Commission denies the allegations that
the Association’s members “would likely” charge copays absent the 2020 Rule. The
Commission similarly denies the allegation that the Association’s members “would
not be able to offer those plans” absent the requested copays. We must therefore
assume, consistent with these denials, that the Association’s members—including
StandUp and SafetyNet, the two identified members that sought relief from the 2020
Rule—would provide service and likely not charge copays absent that Rule. That
necessarily means that StandUp, SafetyNet, and the Association’s other members
were not injured by the Commission’s denial of relief, and therefore lack standing.
To support its standing determination, the majority also relies upon the Asso-
ciation’s allegation—which the majority characterizes as “undenied”—that before
the 2020 Rule, some members offered 3 GB plans at no cost to subscribers in ex-
change for California LifeLine’s $14.85 subsidy, whereas the Rule requires that
those members offer 6 GB of service for the same subsidiary amount. Mem. at 6.
But in response to the Association’s allegation that some members offered 3 GB
plans at no cost in exchange for the $14.85 subsidy, the Commission stated that it
“lack[ed] sufficient knowledge as to specific service offerings by [the Association’s]
6
members described in Paragraph 3.” That statement operates as a denial of the As-
sociation’s allegation. See Fed. R. Civ. P. 8(b)(5) (“A party that lacks knowledge or
information sufficient to form a belief about the truth of an allegation must so state,
and the statement has the effect of a denial.”) (emphasis added). Thus, on this record
we have no basis to conclude, as the majority does, that the 2020 Rule requires the
Association’s members “to provide additional data without an increased subsidy.”
Mem. at 7 (emphasis added).
Finally, the Association argues in its brief that enforcement of the Rule would
prompt its members to cease providing LifeLine service, thereby resulting in the loss
of subscribers and associated revenue (a different injury that would easily support
standing). The problem, however, is that the Association failed to allege any such
injury in its complaint, much less submit a declaration to that effect. An argument in
an appellate brief can’t patch holes in the district court record.
* * *
On this record, the Commission’s answer denies in all material respects the
Association’s allegation of injury to its members. Given this procedural posture, we
must accept those denials as true, and therefore the members lack standing. The ab-
sence of standing of any of its members necessarily means that the Association lacks
associational standing.
7
B
The Association also argues that the 2020 Rule inflicts direct injury on it as
an organization. It asks us to infer that it “expended significant resources and effort”
opposing the 2020 Rule, and that such advocacy “divert[ed]” its “resources.” The
Association’s complaint, however, made no such allegations of direct injury, and we
draw all reasonable inferences in favor of the nonmoving party—the Commission.
The Association’s contention that it has direct standing therefore fails.
III
In response to our order that the parties address the lapse of the 2020 Rule2 at
oral argument, the Commission asserts that this case is moot. For its part, the Asso-
ciation contends that because the Commission is free to reenact the 2020 Rule in the
future, this case falls within the capable-of-repetition exception to mootness.
“[T]he capable-of-repetition doctrine applies only in exceptional situations,
and generally only where the named plaintiff can make a reasonable showing that he
will again be subjected to the alleged illegality.” City of Los Angeles v. Lyons, 461
U.S. 95, 109 (1983).
2
The majority contends that “[c]ontinued participation in California LifeLine re-
quires compliance with the 2020 Rule.” Mem. at 6 n.2 (emphasis added). If the ma-
jority means participation in the LifeLine program in 2020 required compliance with
the 2020 Rule, I agree. If the majority means that participation in the program after
2020 requires such compliance, then the majority is mistaken, because the Rule has
lapsed.
8
Here, even assuming the Commission is likely to reenact the 2020 Rule, the
record shows no reason to assume the Association’s members will offer LifeLine
service indefinitely into the future. The complaint lacks any undenied allegation that
the Association’s members have any interest in participating in the LifeLine program
after 2020. The majority appears to infer such a continuing interest, but in this case’s
unusual posture, we must give all reasonable inferences to the Commission—not the
Association. For all we know on this record, the Association’s members have no
such interest. Therefore, the Association has not made “a reasonable showing that
[it] will again be subjected to the alleged illegality,” Lyons, 461 U.S. at 109, and the
capable-of-repetition doctrine does not save this case from mootness.3
3
I note that the Association could have easily avoided these justiciability problems
by submitting declarations and moving for summary judgment, but we take the rec-
ord as we find it.
9