Unified Data Services, LLC v. FTC ( 2022 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNIFIED DATA SERVICES, LLC; No. 20-16128
COMPLIANCE CONSULTANTS, LLC;
AMERICAN TECHNOLOGY SERVICES, D.C. No.
LLC; RICHARD ZEITLIN, 2:19-cv-00698-
Plaintiffs-Appellants, JCM-VCF
v.
OPINION
FEDERAL TRADE COMMISSION,
Defendant-Appellee.
Appeal from the United States District Court
for the District of Nevada
James C. Mahan, District Judge, Presiding
Argued and Submitted January 13, 2022
Pasadena, California
Filed July 13, 2022
Before: Richard R. Clifton and Milan D. Smith, Jr., Circuit
Judges, and Stephen Joseph Murphy III, * District Judge.
*
The Honorable Stephen Joseph Murphy III, United States District
Judge for the Eastern District of Michigan, sitting by designation.
2 UNITED DATA SERVICES V. FTC
Opinion by Judge Clifton;
Partial Concurrence and Partial Dissent by
Judge Milan D. Smith, Jr.
SUMMARY **
Appellate Jurisdiction / Standing
The panel affirmed the district court’s dismissal for lack
of subject matter jurisdiction of plaintiffs’ complaint against
the Federal Trade Commission (“FTC”), based on plaintiffs’
failure to adequately plead Article III standing.
Plaintiffs, an individual and his telemarketing
companies, sued the FTC over its alleged prohibition of most
uses in telemarketing of soundboard technology.
The panel rejected the FTC’s contention that the district
court’s order was not final and appealable. The panel held
that there was appellate jurisdiction based on the principles
set forth in WMX Technologies, Inc. v. Miller, 104 F.3d 1133(9th Cir. 1997) (en banc), and subsequent precedents. The
panel concluded that, based on the whole record – including
the failure to grant leave to amend and the clerk’s immediate
entry of final judgment – the district court’s dismissal was
final.
The panel agreed with the district court that plaintiffs
failed to plead facts establishing an injury in fact for
**
This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
UNITED DATA SERVICES V. FTC 3
purposes of standing under Article III of the Constitution.
The panel held that the complaint provided virtually no
information about plaintiffs’ use or concrete plans to use
soundboard technology in a manner that contravened FTC
regulations, nor did it offer any indication that the threat of
FTC enforcement against them was credible or imminent.
Judge M. Smith concurred in part and dissented in part.
He agreed with the majority that, as the complaint stood,
plaintiffs lacked Article III standing to bring this pre-
enforcement challenge because they did not allege that they
have a concrete intention to engage in conduct that was
prohibited by the FTC staff’s interpretation of the
Telemarketing Sales Rule in its 2016 opinion letter. He
disagreed with the majority because he would remand with
instructions for the district court to grant plaintiffs leave to
amend. The district court abused its discretion because it
expressly acknowledged that “the defect in plaintiffs’
complaint may be cured by amendment,” but then
nevertheless denied leave to amend without offering any
justification.
COUNSEL
Thomas Kimble (argued) and Robert Bernhoft, Bernhoft
Law Firm S.C., Austin, Texas; for Plaintiffs-Appellants.
Bradley Dax Grossman (argued), Attorney; Joel Marcus,
Deputy General Counsel; James Reilly Dolan, Acting
General Counsel; Federal Trade Commission, Washington,
D.C.; Christopher Chou, Acting United States Attorney;
Brian W. Irvin, Assistant United States Attorney; United
States Attorney’s Office, Las Vegas, Nevada; for Defendant-
Appellee.
4 UNITED DATA SERVICES V. FTC
OPINION
CLIFTON, Circuit Judge:
This appeal arises from the dismissal of a complaint
against the Federal Trade Commission (“FTC”). Plaintiffs,
an individual and his telemarketing companies, sued the
FTC over its alleged prohibition of most uses in
telemarketing of soundboard technology, a product
described as allowing a live call center agent to simulate a
natural conversation by dispatching prerecorded messages in
response to comments by the person who was called.
This case first requires us to consider our appellate
jurisdiction. The district court dismissed Plaintiffs’
complaint without prejudice for want of subject matter
jurisdiction based on Plaintiffs’ lack of standing. The court
recognized that amending the complaint might not be futile,
but it did not grant leave to amend the complaint. The FTC
contends that the district court’s order was not final and
appealable. We disagree. We have appellate jurisdiction
based on the principles set forth in WMX Technologies, Inc.
v. Miller, 104 F.3d 1133 (9th Cir. 1997) (en banc), and
subsequent precedents, because we conclude, based on the
whole record, that the district court’s dismissal was final.
We next agree with the district court that Plaintiffs have
failed to plead facts establishing an injury in fact for
purposes of standing under Article III of the Constitution.
The complaint provided virtually no information about
Plaintiffs’ use or concrete plans to use soundboard
technology in a manner that contravenes FTC regulations,
nor did it offer any indication that the threat of FTC
enforcement against them was credible or imminent. We
thus affirm the district court’s dismissal for lack of subject
matter jurisdiction.
UNITED DATA SERVICES V. FTC 5
I. Background
The Telemarketing and Consumer Fraud and Abuse
Prevention Act requires the FTC to “prescribe rules
prohibiting deceptive telemarketing acts or practices and
other abusive telemarketing acts or practices.” 15 U.S.C.
§ 6102(a)(1). Pursuant to that authority, the FTC
promulgated the Telemarketing Sales Rule (hereinafter, “the
Rule”). In 2008, the FTC amended the Rule to prohibit
unsolicited robocalling in the form of “any outbound
telephone call that delivers a prerecorded message,” by
telemarketers without prior consent from the consumer.
16 C.F.R. § 310.4(b)(1)(v); see Telemarketing Sales Rule,
73 Fed. Reg. 51,164, 51,184–85 (Aug. 29, 2008). The Rule
makes an exception for calls made to “induce a charitable
contribution from a member of, or previous donor to, a non-
profit charitable organization,” which may use prerecorded
messages without prior consent subject to certain
constraints, such as permitting the recipient to opt out in the
future. 16 C.F.R. § 310.4(b)(1)(v)(B).
Plaintiffs, identified in the complaint as “Richard Zeitlin
and his associated companies,” Unified Data Services, LLC,
Compliance Consultants, LLC, and American Technology
Services, LLC, sued the FTC over the application of this
scheme to soundboard technology. According to the
complaint, the allegations in which we take as true for
purposes of this appeal, soundboard technology “works by
allowing highly trained and skilled call center agents to
interact and converse with consumers on a real-time basis
using recorded sound files.” With soundboard, a call center
agent, who remains active on the call and has the ability to
intervene with his or her own voice if necessary, can
“select[] and substitute[] appropriate audio clips . . . in such
a way that the consumer experiences a natural conversation.”
6 UNITED DATA SERVICES V. FTC
In 2009, Michael Bills, the CEO of Call Assistant, a
marketing firm in Utah using soundboard and not a party to
the action before us, sought an opinion from FTC staff
regarding the use of soundboard technology in
telemarketing. See 16 C.F.R. 1.3(a) (permitting the FTC or
its staff to issue advisory opinions). In response, FTC staff
issued an advisory letter that concluded that soundboard, as
the use of the technology was described by Bills in his
request, did not violate the Rule’s robocalling restrictions.
But in 2016, FTC staff changed course. 1 Based on
“evidence of the widespread use of soundboard technology
in a manner that does not represent a normal, continuous,
two-way conversation between the call recipient and a live
person,” FTC staff determined in a subsequent advisory
letter that using soundboard indeed constituted prohibited
robocalling. 2 The 2016 letter concluded that it was
“indisputable” that soundboard technology, which “delivers
a prerecorded message” under 16 C.F.R. § 310.4(b)(1)(v),
fell within the plain language of the Rule. The letter further
stated, “Given the actual language used in the [Rule], the
increasing volume of consumer complaints, and all the
1
Both the 2009 and 2016 letters are available on the FTC’s website.
FTC, Staff Opinion Letter (Sept. 11, 2009), available at
https://bit.ly/3tHTd1S [https://perma.cc/5APL-5GT3]; FTC, Staff
Opinion Letter (Nov. 10, 2016), available at https://bit.ly/34CML3M
[https://perma.cc/FEY7-7UZM].
2
The 2016 letter was also the subject of litigation in the D.C. Circuit
brought by a soundboard industry group. See generally Soundboard
Ass’n v. FTC, 888 F.3d 1261 (D.C. Cir. 2018). That court held that the
2016 letter was not final, reviewable agency action. Id. at 1267–68. Here,
the FTC argues that the lack of finality independently warranted
dismissal of the complaint. But because the district court ruled on
standing grounds and because we agree that Plaintiffs lack standing,
Soundboard Association does not impact our analysis.
UNITED DATA SERVICES V. FTC 7
abuses we have seen since we issued the September 2009
letter, we have decided to revoke the September 2009 letter,”
giving telemarketing industry members six months to “bring
themselves into compliance” with the new guidance. 3
Plaintiffs sued the FTC in response to the 2016 letter.
They brought six counts under the Administrative Procedure
Act (“APA”) and the First Amendment, and Plaintiffs sought
various forms of declaratory and injunctive relief. Among
other things, they asked for a declaration that the 2016 letter
impermissibly restricts protected speech, vacatur of the 2016
letter, a declaration that the 2009 letter “remains in full force
and effect,” and an injunction barring the FTC from
enforcing the Rule against soundboard users.
The complaint contains little information about Plaintiffs
or how Plaintiffs themselves use soundboard technology.
From what is explicit or implicit in the complaint, Zeitlin
owns the corporate plaintiffs, and Plaintiffs together are
members of “the telemarketing sales industry.” Plaintiffs
have “nonprofit clients” who may be subject to the Rule’s
special provisions for charitable calls. Plaintiffs allege that
they are among those “Soundboard users” who face “serious
civil penalties for failure to comply with the new rule” set
forth in the 2016 letter. Plaintiffs allege that they, “together
with many others, have invested millions of dollars and spent
countless hours in training and development to implement
Soundboard technology and its concomitant business
model.” The 2016 letter, they allege, renders the industry
3
Both the 2009 letter and the 2016 letter advised that they expressed
only the views of FTC staff and did not bind the Commission itself. See
16 C.F.R. § 1.3(c) (“Advice rendered by the staff is without prejudice to
the right of the Commission later to rescind the advice and, where
appropriate, to commence an enforcement proceeding.”).
8 UNITED DATA SERVICES V. FTC
“whipsawed between abandoning its business and laying off
thousands of workers to whom they have paid good salaries
for years and facing potentially ruinous enforcement actions
and penalties.”
The FTC moved to dismiss the complaint on several
grounds, only one of which we need to discuss here. The
FTC argued that the district court lacked subject matter
jurisdiction because the complaint failed to allege a
sufficient injury in fact suffered by Plaintiffs for standing
purposes under Article III.
The district court agreed. It granted the motion to dismiss
under Federal Rule of Civil Procedure 12(b)(1) on standing
grounds because “plaintiffs have failed to show the ‘when,
to whom, where, or under what circumstances’ of the FTC’s
purported enforcement and, consequently, have not
established a credible threat of enforcement.” The order
concluded, “However, the defect in plaintiffs’ complaint
may be cured by amendment, so the court dismisses
plaintiffs’ claims without prejudice.” 4 Despite this
observation, the district court did not grant Plaintiffs leave
to amend their complaint. On the same day the order was
filed, the clerk of the district court entered judgment “in
4
We take that observation by the district court as acknowledging a
possibility, not making a specific determination, that Plaintiffs would
actually satisfy the requirements for standing, as discussed below, by
alleging more details. The district court did not know at that point what
Plaintiffs could allege about their situation, their use of soundboard
technology, and the threat of FTC enforcement action against them. In
case it might matter in the future, we make clear that we have not
concluded that Plaintiffs would actually be able to satisfy the
requirements for standing with an amended complaint. That question
could not be answered until a revised complaint is offered and could be
considered.
UNITED DATA SERVICES V. FTC 9
favor of the Defendant and against the Plaintiffs without
prejudice.” Plaintiffs appealed.
II. Appellate Jurisdiction
We begin with our jurisdiction. See In re Application for
Exemption from Elec. Pub. Access Fees by Jennifer Gollan
& Shane Shifflett, 728 F.3d 1033, 1036 (9th Cir. 2013) (“The
question of appellate jurisdiction must always be resolved
before the merits of an appeal are examined or addressed.”
(quotation marks and citation omitted)). “Pursuant to
28 U.S.C. § 1291, we only have appellate jurisdiction over
‘final decisions’ of district courts.” Van Dusen v. Swift
Transp. Co. Inc., 830 F.3d 893, 896 (9th Cir. 2016).
The district court’s order dismissed the complaint
without prejudice and acknowledged that amendment may
not be futile. The FTC contends that this appeal must be
dismissed for want for appellate jurisdiction because, it says,
such an order is not final under 28 U.S.C. § 1291.
We disagree. We have appellate jurisdiction because,
looking at the record as a whole, “the district court intended
its order to end the case.” Knevelbaard Dairies v. Kraft
Foods, Inc., 232 F.3d 979, 983 (9th Cir. 2000). Despite
acknowledging that amendment of the complaint might not
be futile, the district court did not grant leave to amend. That
omission, combined with the district court clerk’s entry of
judgment on the same day, demonstrates that the dismissal
order was final and appealable.
In WMX Technologies, an en banc panel of this court
considered whether a dismissal without prejudice and with
leave to amend constituted a final, appealable order. We held
that it did not. WMX Techs., 104 F.3d at 1135. In that case,
the district court granted a motion to dismiss under Rule
10 UNITED DATA SERVICES V. FTC
12(b)(6) without prejudice but ordered that “Plaintiffs may
further amend as to [two of their] claims for relief,” giving
them thirty days to do so. Id. at 1134. The district court then
issued a “judgment” that likewise explicitly permitted
amendment by a particular date. Id.When Plaintiffs appealed that judgment without
amending their complaint, we held that we lacked appellate
jurisdiction. Id. at 1135. The district court “did not direct
‘that all relief be denied’ but left the suit pending for further
proceedings.” Id. (quoting Jung v. K. & D. Mining Co.,
356 U.S. 335, 336–37 (1958)). WMX Technologies
reaffirmed that a plaintiff given leave to amend must
affirmatively alert the district court that it intends to rest on
its complaint as pleaded before an appeal may be taken:
Unless a plaintiff files in writing a notice of
intent not to file an amended complaint, such
dismissal order is not an appealable final
decision. In a typical case, filing of such
notice gives the district court an opportunity
to reconsider, if appropriate, but more
importantly, to enter an order dismissing the
action, one that is clearly appealable.
Id. at 1135–36 (quoting Lopez v. City of Needles, 95 F.3d 20,
22 (9th Cir. 1996)).
WMX Technologies also recognized that “construction
difficulties” can arise “when a complaint is simply dismissed
without prejudice”:
Absent further explicit illumination from the
district court, we may have to determine from
the whole record whether it was
contemplated that the dismissal was for lack
UNITED DATA SERVICES V. FTC 11
of jurisdiction, whether further amendment
was anticipated, whether the district court
made it plain that there could be no further
amendment, or whether it was contemplated
that the whole action was dismissed on the
merits.
Id. at 1136. “However, when a district court expressly grants
leave to amend, it is plain that the order is not final.” Id.
at 1136–37.
Here, we are faced with an ambiguous order dismissing
the complaint without prejudice. We therefore must consider
the “whole record,” WMX Techs., 104 F.3d at 1136, to
determine whether the district court “intended the dismissal
order to end the case.” Knevelbaard Dairies, 232 F.3d
at 983.We conclude it did.
First, the district court clerk here entered judgment on
the same day that the court granted the motion to dismiss.
We recognize, as the FTC argues, that the clerk’s
“commitment of the judgment to writing, . . . as well as the
filing, entry, and recordation of the judgment, are ministerial
acts.” Lockwood v. Wolf Corp., 629 F.2d 603, 608 n.2 (9th
Cir. 1980). But ministerial does not necessarily mean
inconsequential. See Fed. R. Civ. P. 58(a) (“Every judgment
and amended judgment must be set out in a separate
document . . . .”); Fed. R. Civ. P. 58(b)(1)(C) (“[U]nless the
court orders otherwise, the clerk must, without awaiting the
court’s direction, promptly prepare, sign, and enter the
judgment when . . . the court denies all relief.”); Fed. R. App.
P. 4(a) (entry of judgment triggers time to file notice of
appeal). We have long considered the clerk’s understanding
that the court disposed of a case to be “probative” of finality.
Knevelbaard Dairies, 232 F.3d at 983; Cooper, 704 F.3d
12 UNITED DATA SERVICES V. FTC
at 777 (explaining that “the clerk’s definitive termination of
the case” is “instructive” as to whether “the court considered
the case closed”). The entry of judgment on the same day as
the order of dismissal demonstrates that the district court
intended its order to be final. 5
Second, the district court did not expressly grant leave to
amend, and “[f]ailure to allow leave to amend supports an
inference that the district court intended to make the order
final.” Gerritsen v. de la Madrid Hurtado, 819 F.2d 1511,
1514 (9th Cir. 1987). “It is not uncommon for courts to
frame a jurisdictional dismissal as being ‘without prejudice’
because the merits have not been considered.” Cooper,
704 F.3d at 777. Thus, the district court’s acknowledgment
of the possibility of amendment “do[es] not overcome the
inference that the district court . . . intended to finally
dispose of the action.” Id. at 776.
Plaintiffs contend that the district court’s order in this
case is analogous to the order considered in Cooper v.
Ramos, 704 F.3d 772 (9th Cir. 2012). In Cooper, the district
court dismissed a § 1983 complaint “without prejudice, to
the extent that Plaintiff is able to plead viable claims that are
not barred by Rooker-Feldman.” 6 Id. at 776. We observed
that “the [district] court neither granted nor denied [the
5
As dismissal was without prejudice, Plaintiffs could have initiated
a new action with a revised complaint. At oral argument, they told us that
they had not yet done so, though more than 21 months had passed.
6
“The Rooker-Feldman doctrine prevents the lower federal courts
from exercising jurisdiction over cases brought by ‘state-court losers’
challenging ‘state-court judgments rendered before the district court
proceedings commenced.’” Lance v. Dennis, 546 U.S. 459, 460 (2006)
(per curiam) (quoting Exxon Mobil Corp. v. Saudi Basic Indus. Corp.,
544 U.S. 280, 284 (2005)).
UNITED DATA SERVICES V. FTC 13
plaintiff’s] request for leave to amend.” Id. We concluded,
however, that the district court had effectively denied leave
to amend because its rationale on the merits “strongly
suggest[ed]” the district court had rejected the viability of
amendment. Id. at 777. Here, by contrast, when the district
court dismissed the complaint without prejudice, it explicitly
recognized that “the defect in plaintiffs’ complaint may be
cured by amendment.” In other words, the district court
recognized in no uncertain terms that amendment might not
be futile. We therefore disagree with Plaintiffs that the
district court in substance concluded that amendment could
not cure any defects. That argument is belied by the plain
text of the order.
At the same time, we disagree with the FTC’s argument
that the district court’s acknowledgment of the possibility of
amendment means that leave to amend was granted and that
we should simply apply the rule from WMX Technologies.
The district court’s order was silent on leave to amend. And
unlike in Cooper, in which we gleaned that a request for
leave was denied from the substance of the order even in the
face of the district court’s silence, Plaintiffs never sought
leave to amend at the district court. At most, Plaintiffs
referenced amendment obliquely in their responsive brief,
but did so only in reference to dismissal with prejudice:
“Finally, any defect in this regard, whether real or imagined,
could easily be corrected by filing an amended complaint
and could hardly justify a dismissal with prejudice”
(emphasis added). By the terms of its order, the district court
here seemed to do as Plaintiffs asked. As amendment might
be viable, the court dismissed the complaint without
prejudice, but no leave to amend was granted in this action.
This case, therefore, is not squarely controlled by the result
in WMX Technologies, and we conclude the district court
intended its order to finally dispose of the case.
14 UNITED DATA SERVICES V. FTC
We acknowledge, of course, that we have repeatedly
instructed that leave to amend should be given, even sua
sponte, if amendment could cure a pleading defect. See, e.g.,
Watison v. Carter, 668 F.3d 1108, 1117 (9th Cir. 2012) (“A
district court should grant leave to amend even if no request
to amend the pleading was made, unless it determines that
the pleading could not possibly be cured by the allegation of
other facts.” (brackets and citation omitted)). Nevertheless,
the district court’s recognition that amendment might not be
futile does not equate to an actual grant of leave to amend.
We decline to remand with instructions to allow leave
for amend. Plaintiffs have waived the argument on appeal
that they are entitled to such relief from this court. Their
opening brief does not “argue[] specifically and distinctly”
that we should remand this case with instructions to grant
leave to amend, even as relief in the alternative. Christian
Legal Soc. Chapter of Univ. of California v. Wu, 626 F.3d
483, 485 (9th Cir. 2010) (citation omitted). Instead, Plaintiffs
have repeatedly insisted that their complaint was sufficient
as pleaded and only asked us to reverse the district court. 7
7
The opening brief contains, at most, the following language:
“Appellants contend that their original complaint meets the
constitutional standing requirements in its present form. To the extent
that this Court disagrees, Appellants respectfully request that the Court
find there are no fatal pleading defects and allow Appellants to correct
any technical pleading defects upon remand.” This oblique reference to
remanding for leave to amend (to cure what Plaintiffs mischaracterize as
“technical pleading defects”), however, comes amidst a section focused
entirely on remand for the addition of an entirely new claim. And the
reply brief—after the FTC squarely addressed the question of
jurisdiction and amendment—again insisted that its complaint sufficed
as-is, asking only for us to reverse. This court has “refused to address
claims that were only argued in passing or that were bare assertions with
no supporting argument.” Christian Legal Soc., 626 F.3d at 487
UNITED DATA SERVICES V. FTC 15
We are unpersuaded by the dissent’s arguments about
judicial economy. It is true that sometimes, requiring the
parties to file a new action “could undermine the goal of
judicial economy.” Lopez v. Smith, 203 F.3d 1122, 1130 (9th
Cir. 2000) (en banc) (emphasis added). Here, given that
dismissal was without prejudice, but Plaintiffs have yet to
file a new action with a revised complaint, see supra note 5,
and given that Plaintiffs have made no attempt in this court
or below to explain what their added allegations would be,
we harbor serious doubts that they can adequately plead
standing. We suspect that remand would only undermine
judicial economy by further prolonging a doomed cause. But
even if Plaintiffs do file a new complaint, the District of
Nevada, like many district courts, anticipates that related
cases ought to be heard by the same judge and provides for
that possibility. See D. Nev. LR 42-1(a) (requiring parties to
file notice of related actions “whether active or terminated”
and providing that “the assigned judges will determine
whether the actions will be assigned to a single district
judge”). The district court would not, then, be writing on a
blank slate, as the dissent suggests.
Accordingly, based on the record as a whole—including
the failure to grant leave to amend and the clerk’s immediate
entry of final judgment—we conclude that the district court
intended its order granting the FTC’s motion to dismiss for
lack of subject matter jurisdiction to be final. Of course, “[i]t
would always be helpful if district courts made their
(alterations, quotation marks, and citations omitted). The plaintiffs’
request to correct any technical pleading defects upon remand is, at most,
a “gesture[]” in favor of remand for leave to amend. Kaiser v. Cascade
Cap., LLC, 989 F.3d 1127, 1135 n.12 (9th Cir. 2021). We do not consider
it sufficient to preserve the argument that remand for leave to amend
would be appropriate relief from this court.
16 UNITED DATA SERVICES V. FTC
intentions . . . both plain and explicit.” WMX Techs.,
104 F.3d at 1136. Nonetheless, we are satisfied that we have
appellate jurisdiction here and, accordingly, turn next to the
question of standing.
III. Standing
We review a district court’s dismissal under Rule
12(b)(1) for lack of standing de novo. Banks v. N. Tr. Corp.,
929 F.3d 1046, 1049 (9th Cir. 2019); Vasquez v. Los Angeles
Cnty., 487 F.3d 1246, 1249 (9th Cir. 2007). “Each element
of standing ‘must be supported with the manner and degree
of evidence required at the successive stages of the
litigation.’” Maya v. Centex Corp., 658 F.3d 1060, 1068 (9th
Cir. 2011) (ellipsis omitted) (quoting Lujan v. Defs. of
Wildlife, 504 U.S. 555, 561 (1992)). “At the pleading stage,
general factual allegations of injury . . . may suffice, for on
a motion to dismiss we ‘presume that general allegations
embrace those specific facts that are necessary to support the
claim.’” Id. (brackets omitted) (quoting Lujan, 504 U.S. at
561). In the context of a motion to dismiss, “[a]ll of the facts
alleged in the complaint are presumed true, and the pleadings
are construed in the light most favorable to the nonmoving
party.” Bates v. Mortg. Elec. Registration Sys., Inc., 694 F.3d
1076, 1080 (9th Cir. 2012).
“Three elements form the ‘“irreducible constitutional
minimum” of standing’ to file suit in federal court.” Ctr. for
Biological Diversity v. Mattis, 868 F.3d 803, 816 (9th Cir.
2017) (quoting Spokeo, Inc. v. Robins, 578 U.S. 330, 338
(2016)). “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. (quoting Spokeo, 578 U.S.
at 338). “The injury in fact must constitute ‘an invasion of a
legally protected interest which is (a) concrete and
UNITED DATA SERVICES V. FTC 17
particularized, and (b) actual or imminent, not conjectural or
hypothetical.’” Lopez v. Candaele, 630 F.3d 775, 785 (9th
Cir. 2010) (quoting Lujan, 504 U.S. at 560).
Intertwined with the injury-in-fact inquiry is the
requirement that the case be ripe for review, which is
“peculiarly a question of timing.” Thomas v. Anchorage
Equal Rts. Comm’n, 220 F.3d 1134, 1138 (9th Cir. 2000) (en
banc) (citation omitted). “[I]n measuring whether the litigant
has asserted an injury that is real and concrete rather than
speculative and hypothetical, the ripeness inquiry merges
almost completely with standing.” Id. at 1139 (quotation
marks and citation omitted).
Where, as here, Plaintiffs seek judicial intervention
before the government has enforced the challenged policy
against them, they bear the burden of showing “a credible
threat of enforcement.” Susan B. Anthony List v. Driehaus,
573 U.S. 149, 161 (2014). “[G]eneralized threats of
prosecution do not confer constitutional ripeness.” Clark v.
City of Seattle, 899 F.3d 802, 813 (9th Cir. 2018) (quoting
Bishop Paiute Tribe v. Inyo Cnty., 863 F.3d 1144, 1154 (9th
Cir. 2017)). “Rather, there must be ‘a genuine threat of
imminent prosecution.’” Id. (quoting Bishop Paiute Tribe,
863 F.3d at 1154). We look to three factors 8 to determine
whether plaintiffs have shown such a credible threat:
“[1] whether the plaintiffs have articulated a concrete plan to
violate the law in question, [2] whether the prosecuting
authorities have communicated a specific warning or threat
to initiate proceedings, and [3] the history of past
8
Other cases have additionally looked to “whether the challenged
law is inapplicable to the plaintiffs.” Lopez, 630 F.3d at 786. Because the
FTC does not contend that the 2016 letter or the Rule is inapplicable to
Plaintiffs, this factor is irrelevant here.
18 UNITED DATA SERVICES V. FTC
prosecution or enforcement under the challenged statute.” 9
Id. (quoting Bishop Paiute Tribe, 863 F.3d at 1154).
Plaintiffs have not sufficiently alleged a constitutional
injury in fact. Applying the first factor, the complaint utterly
lacks, let alone states “with some degree of concrete detail,”
an allegation that Plaintiffs “intend to violate” the Rule as
interpreted by the 2016 letter. Lopez, 630 F.3d at 786. The
complaint fails to state to what extent Plaintiffs currently use
soundboard technology, to what extent they use it in
connection with charitable activity, and whether they plan to
use it in the future. They have not, in short, provided any
information about the “when, to whom, where, or under what
circumstances” they would use soundboard technology but
for the challenged policies. Id. at 787 (quoting Thomas,
220 F.3d at 1139). “Without these kinds of details, a court is
left with mere ‘“some day” intentions,’ which ‘do not
support a finding of the “actual or imminent” injury that our
9
Plaintiffs suggest that the Supreme Court’s decision in Susan B.
Anthony List v. Driehaus abrogated the Ninth Circuit’s three-part test.
Not so. We have continued to apply this test after Susan B. Anthony List
as a means of determining whether a purported injury meets the Supreme
Court’s “credible threat” requirement. See, e.g., Clark, 899 F.3d at 813
(concluding that “these three factors are absent in the present case” and
that accordingly, “[t]he [plaintiffs’] claims bear no resemblance to the
prototypical pre-enforcement challenge case, in which ‘the threatened
enforcement of a law’ against a plaintiff is imminent.” (quoting Susan B.
Anthony List, 573 U.S. at 158)). The cases to which Plaintiffs point as
other means of establishing standing pertain instead to the question of
whether an agency action is “final” for purposes of APA review—an
additional, not alternative, requirement for justiciability of the APA
claims. See U.S. Army Corps of Eng’rs v. Hawkes Co., 578 U.S. 590, 599
(2016); Sackett v. EPA, 566 U.S. 120, 126 (2012); Frozen Food Express
v. United States, 351 U.S. 40, 44 (1956).
UNITED DATA SERVICES V. FTC 19
cases require.’” Id. at 787–88 (quoting Thomas, 220 F.3d
at 1140).
At most, the complaint alleges that Plaintiffs are part of
an industry that has collectively “invested millions of dollars
and spent countless hours in training and development” and
that the industry is now “whipsawed between abandoning its
business and laying off thousands of workers to whom they
have paid good salaries for years and facing potentially
ruinous enforcement actions and penalties.” These
allegations are “not sufficiently concrete to meet even the
minimum injury in fact threshold.” Lopez, 630 F.3d at 790.
For one, it is not clear on which side of the whipsaw
Plaintiffs fell since the letter’s issuance, for they have
disclaimed using soundboard technology in a manner
inconsistent with the 2016 letter but failed to allege that they
would use soundboard technology but for the 2016 letter. For
another, these allegations do not show that these Plaintiffs
have “outlined a concrete plan to engage in proscribed
conduct.” Clark, 899 F.3d at 813. Even a “Hobson’s choice”
must be “particularized” and “imminent.” Id. at 812 (quoting
Am. Trucking Ass’ns, Inc. v. City of Los Angeles, 559 F.3d
1046, 1057 (9th Cir. 2009)).
The other pre-enforcement challenge factors weigh
against standing, too. Plaintiffs have not pleaded any facts
showing past FTC enforcement against them or any future
warning of prosecution. Their complaint merely says that
they face “serious civil penalties” from violation of the
challenged policies, without any indication that such
penalties are imminent or realistic. 10 This conclusory
10
Plaintiffs argue that since their complaint was filed, the FTC
subsequently brought an action against fourteen defendants for violating
the Rule by using soundboard, which makes the threat of enforcement
20 UNITED DATA SERVICES V. FTC
assertion “fail[s] to show a reasonable likelihood that the
government will enforce the challenged law against them.”
Lopez, 630 F.3d at 786. To the extent that Plaintiffs have
already chilled their speech even in the absence of FTC
involvement, “self-censorship alone is insufficient to show
injury.” Id. at 792.
Accordingly, Plaintiffs have not alleged a “credible
threat of enforcement” required to establish constitutional
standing, Susan B. Anthony List, 573 U.S. at 161, and the
district court did not err by dismissing the complaint.
IV. Conclusion
We have jurisdiction over this appeal. We affirm the
district court’s dismissal for lack of subject matter
jurisdiction based on Plaintiffs’ failure to adequately plead
Article III standing.
AFFIRMED.
“indisputable.” They have suggested (at least implicitly) that we take
judicial notice of this litigation, but we decline to do so. The FTC’s
enforcement action against other, unrelated parties does not necessarily
make the threat against these Plaintiffs credible. On this record, it is
impossible to tell whether Plaintiffs are “similarly situated” to the parties
against whom the enforcement action was brought such that the action
“cuts in favor of a conclusion that a threat is specific and credible.”
Lopez, 630 F.3d at 786–87. If Plaintiffs file a new action with a revised
complaint, we leave it to the district court to determine in the first
instance to what extent other enforcement actions support Plaintiffs’
standing.
UNITED DATA SERVICES V. FTC 21
M. SMITH, Circuit Judge, concurring in part and dissenting
in part:
I agree with the majority that, as the complaint stands
now, Plaintiffs lack Article III standing to bring this pre-
enforcement challenge because they did not allege that they
have a concrete intention to engage in conduct that is
prohibited by the FTC staff’s interpretation of the
Telemarketing Sales Rule in its 2016 opinion letter. See
Thomas v. Anchorage Equal Rights Comm’n, 220 F.3d 1134,
1139 (9th Cir. 2000) (en banc). Plaintiffs’ briefing arguably
implies that they wish to use soundboard technology to
communicate with first-time donors to charitable
organizations, but they do not identify any concrete plans to
do so, and this intention, if it exists, is not evident from the
complaint. Therefore, Plaintiffs did not adequately allege
standing.
But, as the district court recognized, “the defect in
plaintiffs’ complaint may be cured by amendment.” Even so,
rather than expressly granting or denying leave to amend, the
court stated only that “the court dismisses plaintiffs’ claim
without prejudice.” Although it is possible the district court
intended the dismissal without prejudice to grant leave to
amend, I agree with the majority that the best interpretation
of the district court’s order is that it implicitly denied leave
to amend. 1
Having reached that conclusion, I part ways with the
majority because I believe we should remand with
instructions for the district court to grant Plaintiffs leave to
amend. For at least the past sixty years, we have held that
1
I agree with the majority that we therefore have jurisdiction over
Plaintiffs’ appeal.
22 UNITED DATA SERVICES V. FTC
district courts must grant leave to amend if the defects in the
complaint may be cured, even if the plaintiff does not request
it. See Bonanno v. Thomas, 309 F.2d 320, 322 (9th Cir.
1962); see also Nat’l Council of La Raza v. Cegavske,
800 F.3d 1032, 1041 (9th Cir. 2015) (“It is black-letter law
that a district court must give plaintiffs at least one chance to
amend a deficient complaint, absent a clear showing that
amendment would be futile.”). This rule applies equally
when the district court dismisses a complaint for lack of
subject matter jurisdiction. See Carolina Cas. Ins. Co. v.
Team Equip., Inc., 741 F.3d 1082, 1084 (9th Cir. 2014)
(“Because the district court did not conclude that any
amendment would be futile, it should have dismissed the
initial complaint with leave for Carolina to amend it to
correct, as far as possible, the defective jurisdictional
allegations.”). Further, an “outright refusal to grant the leave
without any justifying reason appearing for the denial” is an
abuse of discretion. Foman v. Davis, 371 U.S. 178, 182
(1962). Here, the district court abused its discretion because
it expressly acknowledged that “the defect in plaintiffs’
complaint may be cured by amendment,” but then
nevertheless denied leave to amend without offering any
justification.
The majority appears to agree that the district court
abused its discretion, but it nevertheless declines to instruct
the district court to grant leave to amend because it contends
that Plaintiffs did not argue on appeal that they are entitled
to leave to amend. See Maj. Op. at 14. I respectfully
disagree. In their opening brief, Plaintiffs argue as follows:
Appellants contend that their original
complaint meets the constitutional standing
requirements in its present form. To the
extent that this Court disagrees, Appellants
UNITED DATA SERVICES V. FTC 23
respectfully request that the Court find there
are no fatal pleading defects and allow
Appellants to correct any technical pleading
defects upon remand.
In addition, Appellants should be permitted
to amend their complaint to add a new
arbitrary and capricious claim under 5 U.S.C.
§ 706(2)(A) . . . .
(emphasis added). As this language illustrates, Plaintiffs
made three distinct arguments: (1) their initial complaint
adequately alleges standing, (2) if we disagree, we should
instruct the district court to grant leave to amend to address
any deficiencies in the standing allegations, and (3) we
should grant leave to amend to add a new claim. 2
Plaintiffs could hardly have been clearer. This is not a
circumstance, like those in the cases the majority cites,
where an appellant attempts to slip in an entirely separate
and undeveloped substantive claim, leaving us to
“manufacture arguments for [the] appellant,” Greenwood v.
FAA, 28 F.3d 971, 977 (9th Cir. 1994). Because Plaintiffs
requested leave to amend to address the standing issues,
there was nothing else left to say. I suppose that, in an
abundance of caution, Plaintiffs could have cited to one of
2
The majority observes in a footnote that Plaintiffs’ request for
leave to amend “comes amidst a section focused entirely on remand for
the addition of an entirely new claim.” Maj. Op. at 14 n.7. To the extent
the majority suggests that Plaintiffs requested leave to amend only to add
the new claim and did not request leave to amend to address the standing
deficiencies, the majority’s interpretation is inconsistent with the plain
text of Plaintiffs’ brief. Plaintiffs stated expressly that their request for
leave to add the new claim is “[i]n addition” to their request for leave to
cure the standing deficiencies. (emphasis added).
24 UNITED DATA SERVICES V. FTC
our numerous opinions holding that they are entitled to leave
to amend, but it makes little sense to refuse to correct the
district court’s error on that basis here, where the law is clear,
and where the majority has already identified authority
showing Plaintiffs are entitled to relief. See Maj. Op. at 14.
Further, even if Plaintiffs did not adequately raise the
district court’s failure to grant leave to amend in their
opening brief, our waiver rule is simply a “rule of practice,”
not a jurisdictional rule, Krause v. Sacramento Inn, 479 F.2d
988, 989 (9th Cir. 1973), so we can exercise our discretion
to overlook it when a “detailed discussion” of an argument
“is unnecessary” and the appellee is not prejudiced, Williams
v. Gerber Prods. Co., 552 F.3d 934, 940 n.5 (9th Cir. 2008).
I would do so here.
The likely consequence of the majority’s refusal to
remand with instructions to grant leave to amend will be to
burden our colleagues in the District of Nevada. Everyone
agrees that Plaintiffs may amend their complaint, the only
dispute is about whether they may do so in this case or
whether they must file an entirely separate action to do so. If
Plaintiffs were to file a separate action, and if it were to be
assigned randomly, as most are, it would likely to be
assigned to a different judge. 3 That judge would then need
to review the complaint, review all of the proceedings in this
case, and then address any motion to dismiss. It is far more
efficient for Judge Mahan, who is already familiar with this
case, to assess the propriety of any amendment. As we have
3
There are seven active district judges in the district of Nevada,
meaning there is at least an 86% (6/7) chance any new action would be
assigned to a different judge. Several senior judges continue to serve in
the District of Nevada, so the chances of the case being assigned to a
different judge are likely even higher.
UNITED DATA SERVICES V. FTC 25
recognized in the past, “forcing [plaintiffs] with deficient but
curable complaints to file new actions, rather than simply
amending their initial complaints” only serves to
“undermine the goal of judicial economy.” Lopez v. Smith,
203 F.3d 1122, 1130 (9th Cir. 2000) (en banc).
The majority suggests that the parties could have any
new case transferred to Judge Mahan pursuant to District of
Nevada Local Rule 42-1. See Maj. Op. at 15. Even assuming
that is correct, that process is far less efficient than following
our ordinary practice of remanding with instructions to grant
leave to amend. Under our traditional approach, any
amended complaint would be in front of Judge Mahan
automatically. Under the majority’s approach, Plaintiffs
must open an entirely separate action, and then a party must
file a notice of related cases in both actions explaining why
assignment to Judge Mahan would be desirable. See D. Nev.
LR 42-1. The “assigned judges” must then determine
whether to transfer the new case. Id. These are exactly the
kinds of inefficiencies we had in mind in Lopez. Thus, even
if the majority is correct that any amended complaint would
ultimately end up before Judge Mahan, the majority’s
approach still imposes unnecessary burdens on the litigants
and the district court.
Next, the majority “suspect[s]” that although Plaintiffs
requested leave to amend, they would not attempt to amend
their complaint if we were to remand with instructions to
grant leave to amend, so doing so would only “further
prolong[] a doomed cause.” Maj. Op. at 15. This is a curious
argument. As an initial matter, it would be odd for Plaintiffs
to request leave to amend if they did not intend to amend the
complaint. But even if the majority were correct—if,
perhaps, Plaintiffs were to change their minds after reading
our opinion—remanding with instructions to grant leave to
26 UNITED DATA SERVICES V. FTC
amend would not materially prolong the litigation. If on
remand Plaintiffs were to decide not to amend the complaint,
they could promptly notify the district court, and the case
would be over. See Lopez v. City of Needles, 95 F.3d 20, 22
(9th Cir. 1996) (referring to “a notice of intent not to file an
amended complaint”). And presumably the district court
would impose a deadline for filing an amended complaint,
so even if Plaintiffs were not inclined to respond, the district
court could close the case after providing a reasonable
opportunity to do so. In light of our longstanding instruction
to grant leave to amend even if a plaintiff does not request it,
district courts have extensive experience managing litigants
who choose not to amend their complaints, and I am
confident that the district court is well-equipped to prevent
the litigation from stretching on interminably.
For the foregoing reasons, I would remand with
instructions for the district court to grant leave to amend.