Simon Bronner v. Lisa Duggan ( 2020 )

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued March 9, 2020 Decided June 19, 2020
No. 19-7017
SIMON BRONNER, DERIVATIVELY ON BEHALF OF NOMINAL
DEFENDANT THE AMERICAN STUDIES ASSOCIATION, ET AL.,
APPELLANTS
v.
LISA DUGGAN, ET AL.,
APPELLEES
Appeal from the United States District Court
for the District of Columbia
(No. 1:16-cv-00740)
Jerome M. Marcus argued the cause for appellants. With
him on the briefs was Jennifer Gross. Aviva Vogelstein entered
an appearance.
Thomas C. Mugavero argued the cause for appellees. With
him on the joint brief was Mark Allen Kleiman, Maria C.
LaHood and Shayana D. Kadidal. John J. Hathway entered an
appearance.
Before: HENDERSON, GRIFFITH and WILKINS, Circuit
Judges.
Opinion for the Court filed by Circuit Judge HENDERSON.
2
KAREN LECRAFT HENDERSON, Circuit Judge: Four
professors of American studies—Simon Bronner, Michael
Rockland, Michael Barton and Charles Kupfer (collectively,
Professors)—sued the American Studies Association (ASA)
and individual ASA leaders after the ASA endorsed a boycott
of Israeli academic institutions. They allege that the individual
defendants breached various statutory, contractual and
fiduciary duties in connection with the boycott. After the
district court dismissed their ultra vires claim and all derivative
claims brought on the ASA’s behalf, the Professors filed a
second amended complaint. Although the district court initially
ruled that the amount in controversy supported federal diversity
jurisdiction, it ordered additional briefing to address lingering
concerns and, nearly three years after the suit was filed,
concluded to a legal certainty that the Professors could not in
fact satisfy the amount-in-controversy requirement. The court
therefore dismissed the action for want of subject-matter
jurisdiction. For the reasons that follow, the district court did
not err in revisiting its jurisdictional determination, applying
the legal certainty test or valuing the amount in controversy.
Accordingly, we affirm.
I. Background
The ASA, a nonprofit organization incorporated in the
District of Columbia (D.C.), “is the nation’s largest and oldest
organization dedicated to the promotion of the study of
American culture.” J.A. 115. Primarily comprised of professors
and scholars, the ASA facilitates intellectual discourse by,
among other things, hosting conferences and sponsoring
academic publications. It has also long advocated for its
members and for American studies in general by adopting
public positions on important issues, many of which are
politically charged. For example, the ASA has taken a stance
3
on such topics as the Iraq War, wealth inequality and unionized
hotels, to name a few.
At the ASA’s annual meeting in November 2013, ASA
leadership introduced a resolution to involve the ASA in a
boycott of Israeli academic institutions. 1 According to the
Professors, the boycott movement politicized the ASA and
“subvert[ed] . . . [its] scholarly purpose.” J.A. 109. Despite
their strong opposition, the resolution was deemed approved
following a vote of the ASA membership.
The Professors allege that, starting in 2012, over one year
before the November 2013 meeting, the individual
defendants—all current or former members of the ASA
National Council 2 or key ASA committees—perpetrated a
scheme to push the resolution through the ASA. They contend
the defendants are leaders of, or at least sympathetic to, the
United States Campaign for the Academic and Cultural
Boycott of Israel and engaged in a coordinated effort to place
boycott sympathizers in ASA leadership positions, all the while
concealing their agenda from the general membership. But
when the National Council failed to unanimously adopt the
boycott resolution, the measure was put to a vote of the
membership at large. The defendants then purportedly took
1
The resolution outlined the ASA’s “commit[ment] to the
pursuit of social justice” and, after noting the lack of “effective or
substantive academic freedom for Palestinian students and scholars
under conditions of Israeli occupation,” resolved to “honor the call
of Palestinian civil society for a boycott of Israeli academic
institutions” and “support[] the protected rights of students and
scholars everywhere to engage in research and public speaking about
Israel-Palestine.” J.A. 23.
2
The National Council is the ASA’s governing body. See
Governance, AM. STUDIES ASS’N,
https://www.theasa.net/about/governance (last visited June 3, 2020).
4
steps to manipulate the vote in their favor. They recruited
students to join the ASA—ostensibly to vote in favor of the
boycott—but froze the ASA membership rolls before the vote
was publicly announced, which prevented some members,
including plaintiff Barton, from voting on the resolution. 3
Finally, the resolution was treated as if it passed, despite failing
to garner the requisite two-thirds vote.
According to the Professors, the ASA has suffered myriad
economic and reputational harms as a consequence of the
boycott resolution. Specifically, they contend the ASA
incurred substantial expenses promoting and defending the
boycott while, at the same time, revenue from donations and
membership fees declined following its adoption. Dues were
thereafter raised by, at most, $155 per year, J.A. 173–74, and,
to cover the remaining shortfall, the Professors claim the
individual defendants improperly invaded the ASA’s Trust and
Development Fund to pay for boycott-related public relations
and legal fees,4 see Professors’ Br. 10–11.
The Professors’ attempts to obtain voluntary redress
proved unsuccessful and they filed suit in the United States
District Court for the District of Columbia on April 20, 2016.
Their first amended complaint brought derivative claims, on
behalf of the ASA, against the individual defendants for breach
3
Barton’s membership lapsed in 2012 for nonpayment of
dues. Although Barton paid all outstanding dues and was accepted
back into the ASA, he was not permitted to vote on the resolution
because his membership was reinstated after the annual meeting. Yet
at least one other person who likewise paid dues in December 2013
was permitted to vote.
4
The defendants point out that, at least with respect to the
ASA’s legal expenditures, “these alleged withdrawals would never
have been necessary” but for the Professors’ “continued litigation
efforts.” Appellees’ Br. 32.
5
of fiduciary duties, ultra vires acts and corporate waste, and
direct claims for ultra vires acts, corporate waste, breach of the
District of Columbia Nonprofit Corporations Act of 2010, D.C.
CODE §§ 29-401.01 et seq., and breach of contract. The
Professors sought damages as well as declaratory and
injunctive relief.
After finding that the Professors’ “claims plainly me[t] the
low standard for establishing a sufficient amount in
controversy,” Bronner v. Duggan (Bronner I), 249 F. Supp. 3d
27, 38 (D.D.C. 2017), 5 thus satisfying the requirements for
federal diversity jurisdiction,6 the district court granted in part
the defendants’ motion to dismiss. First, the court dismissed all
derivative claims. Id. at 37. Under D.C. Code § 29-411.03, a
derivative proceeding may be commenced only after a demand
to take suitable action has been made on the nonprofit
corporation and ninety days have expired from the demand’s
effective date. The Professors, however, filed suit only two
days after delivering a formal demand letter and did not
demonstrate that a pre-suit demand would have been futile.
Bronner I, 249 F. Supp. 3d at 45. Next, the district court
dismissed the direct ultra vires claim under Federal Rule of
Civil Procedure 12(b)(6) because the Professors had not
pleaded facts showing that the boycott resolution was contrary
5
The Professors did not quantify their damages but “assert[ed]
that over $75,000 is in controversy in the case, albeit in a cursory
fashion.” Bronner I, 249 F. Supp. 3d at 38.
6
“The district courts shall have original jurisdiction of all civil
actions where the matter in controversy exceeds the sum or value of
$75,000, exclusive of interests and costs” and is between citizens of
different states. 28 U.S.C. § 1332(a). Here, the parties do not dispute
diversity of citizenship so the district court focused solely on the
$75,000 jurisdictional threshold. Bronner I, 249 F. Supp. 3d at 37.
6
to the ASA’s express purposes or otherwise violated any D.C.
statute or ASA bylaw. Id. at 47–50.
The Professors moved for leave to file a second amended
complaint, asserting several new claims and adding four
defendants who held senior ASA leadership roles. In total, they
alleged nine counts based on breach of fiduciary duties, ultra
vires acts, breach of contract, corporate waste and breach of the
D.C. Nonprofit Corporations Act. The district court granted
leave to file on March 6, 2018, and simultaneously invoked the
“continuing duty to examine its subject matter jurisdiction.”
Bronner v. Duggan (Bronner II), 324 F.R.D. 285, 294 (D.D.C.
2018) (citing Henderson ex rel. Henderson v. Shinseki, 562
U.S. 428, 434 (2011)). The court noted that, notwithstanding
the parties did “not explicitly readdress[] subject matter
jurisdiction in their latest round of motions,” the filings
nevertheless “raised certain issues” implicating the amount in
controversy, namely, whether the individual defendants could
be held liable for damages. Id. The D.C. Nonprofit
Corporations Act provides that directors 7 of a charitable
corporation are not liable to the corporation or its members for
money damages when acting in an official capacity, except in
four specific instances. 8 See D.C. CODE § 29-406.31(d). Thus,
if the individual defendants are immune from damages
7
The district court construed the ASA National Council as
“equivalent to a Board for Directors.” Bronner II, 324 F.R.D. at 294
(citing D.C. CODE § 29-401.02(1) (“‘Board’ or ‘board of directors’
means the group of individuals responsible for the management of
the activities and affairs of the nonprofit corporation, regardless of
the name used to refer to the group.”)).
8
Directors may be held liable for: “(1) [t]he amount of a
financial benefit received by the director to which the director is not
entitled; (2) [a]n intentional infliction of harm; (3) [a] violation of
§ 29-406.33; or (4) [a]n intentional violation of criminal law.” D.C.
CODE § 29-406.31(d).
7
liability, “it would in fact be legally impossible for [the
Professors] to recover $75,000.” Bronner II, 324 F.R.D. at 294.
The district court reaffirmed its jurisdiction following
supplemental briefing. See Bronner v. Duggan (Bronner III),
317 F. Supp. 3d 284, 289 (D.D.C. 2018). Because the
Professors sufficiently alleged that the challenged conduct
constituted “[a]n intentional infliction of harm,” id. at 291
(quoting D.C. CODE § 29-406.31(d)(2)), the individual
defendants were “not shielded from damages by D.C. Code
§ 29-406-31(d),” id. at 294. But the court itself acknowledged
that the ruling was not necessarily final, concluding that
“jurisdiction remain[ed] intact, for now.” Id. at 289 (emphasis
added). On the contrary, the district court teed up future
jurisdictional challenges, declaring that if it is “true as a matter
of law that [the Professors] . . . cannot seek damages on behalf
of the ASA,” id. at 290 n.5, their failure “to explain how they
have individually suffered more than $75,000 in damages, or
why complying with an injunction would cost the ASA more
than that amount,” was all the more problematic, id. at 289 n.2.
Given these concerns, the court committed to “again reexamine
its subject matter jurisdiction” if properly “raised in a well-
fashioned motion to dismiss or motion for summary
judgment.” Id. at 290 n.5.
Heeding this invitation, the defendants filed a motion to
dismiss, which was granted on February 4, 2019. See Bronner
v. Duggan (Bronner IV), 364 F. Supp. 3d 9, 23 (D.D.C. 2019).
The Professors’ inability to “bring a derivative action on
ASA’s behalf under District of Columbia law,” id. at 20, did
not foreclose the recovery of “damages arising from injuries
they suffered directly,” id. at 17. But because the Professors
had “failed to demonstrate that the value of the injunctive and
declaratory relief they seek, combined with those damages,
exceeds $75,000,” it “appear[ed] to a legal certainty” that they
8
could not satisfy the amount-in-controversy requirement. Id.
The action was therefore dismissed for lack of subject-matter
jurisdiction and the Professors timely appealed.
Although they also challenge the dismissal of the ultra
vires claim in the first amended complaint, the crux of the
Professors’ appeal is that the ultimate jurisdictional
determination was in error, inasmuch as the district court had
originally found the amount-in-controversy requirement
satisfied. “We review de novo a dismissal for lack of subject-
matter jurisdiction.” Am. Hosp. Ass’n v. Azar, 895 F.3d 822,
825 (D.C. Cir. 2018).
II. Subject-Matter Jurisdiction
Article III of the Constitution prescribes that “[f]ederal
courts are courts of limited subject-matter jurisdiction” and
“ha[ve] the power to decide only those cases over which
Congress grants jurisdiction.” Al-Zahrani v. Rodriguez, 669
F.3d 315, 317 (D.C. Cir. 2012) (citing Micei Int’l v. Dep’t of
Commerce, 613 F.3d 1147, 1151 (D.C. Cir. 2010)); see
Kontrick v. Ryan, 540 U.S. 443, 452 (2004) (“Only Congress
may determine a lower federal court’s subject-matter
jurisdiction.” (citing U.S. CONST. art. III, § 1)). Exercise of the
judicial power therefore begets a corresponding “obligation to
ensure that [federal courts] do not exceed the scope of their
jurisdiction.” Henderson, 562 U.S. at 434. To fulfill this
obligation, courts must consider the barriers to federal
adjudication the Congress has erected.
In cases based on diversity of citizenship, the “Congress
has further narrowed our jurisdiction by periodically increasing
the amount-in-controversy minimum.” Spielman v. Genzyme
Corp., 251 F.3d 1, 4 (1st Cir. 2001). “Subject-matter
limitations” such as this “must be policed by the courts on their
own initiative,” Ruhrgas AG v. Marathon Oil Co., 526 U.S.
9
574, 583 (1999), and, once jurisdiction is in question, “the
party claiming subject matter jurisdiction”—here, the
Professors—“has the burden to demonstrate that it exists.”
Khadr v. United States, 529 F.3d 1112, 1115 (D.C. Cir. 2008)
(citing Moms Against Mercury v. FDA, 483 F.3d 824, 828
(D.C. Cir. 2007)).
The Professors’ jurisdictional arguments can be
summarized as follows. First, it was improper for the district
court to revisit the amount in controversy and conclude instead,
nearly three years after the suit was filed and contrary to its
initial findings, that the Professors failed to satisfy this
necessary element of federal diversity jurisdiction. And, in so
doing, the court incorrectly applied the “legal certainty”
standard. Second, the district court erred in valuing the amount
in controversy. We address their arguments in turn.
A. Revisiting Jurisdiction
The general rule to assess whether the amount in
controversy exceeds the threshold for federal diversity
jurisdiction is that “the sum claimed by the plaintiff controls if
the claim is apparently made in good faith.” St. Paul Mercury
Indem. Co. v. Red Cab Co., 303 U.S. 283, 288 (1938) (footnote
omitted). To warrant dismissal, then, “[i]t must appear to a
legal certainty that the claim is really for less than the
jurisdictional amount,” although “[e]vents occurring
subsequent to the institution of suit which reduce the amount
recoverable below the statutory limit do not oust jurisdiction.”
Id. at 289–90. Put differently, federal courts are not divested of
jurisdiction simply because a valid defense exists, the district
court’s rulings have reduced the amount recoverable or the
plaintiff is otherwise unable to recover an amount sufficient to
support jurisdiction. Id. at 289, 292. But see Stevenson v.
Severs, 158 F.3d 1332, 1334 (D.C. Cir. 1998) (per curiam)
10
(noting that when the claim on which original jurisdiction has
vested is dismissed, the district court may exercise discretion
in deciding whether to keep the remaining claims based on its
authority under 28 U.S.C. § 1367(c)(3)).
From this, the Professors argue that their place in federal
court was cemented in 2017 when the district court concluded
it was “far from legally certain that [they] could not recover
over $75,000.” Bronner I, 249 F. Supp. 3d at 38. As they see
it, the district court erred when, nearly two years later, it found
“to a legal certainty” that the Professors could not in fact satisfy
the amount-in-controversy requirement. Bronner IV, 364
F. Supp. 3d at 17. And because dismissal was predicated on
their “lack [of] standing to seek damages arising from ASA’s
alleged injuries,” id., the Professors contend this “ruling[] of
the district court” that “reduce[d] the amount recoverable
below the jurisdictional requirement,” St. Paul Mercury, 303
U.S. at 292, is a subsequent event incapable of divesting
jurisdiction, see id. at 289–90. They also identify numerous
purported errors in the district court’s application of St. Paul
Mercury’s “legal certainty” standard.
As an initial matter, we address the Professors’ argument
that the district court improperly reassessed jurisdiction in light
of the allegations contained in the second amended complaint.
They invoke the principle that “[t]he amount in controversy for
federal diversity jurisdiction purposes is determined as of the
time the action is commenced,” Worthams v. Atlanta Life Ins.
Co., 533 F.2d 994, 997 (6th Cir. 1976), which reflects St. Paul
Mercury’s concern that jurisdiction, once properly acquired,
should not depend on whether the plaintiff is ultimately entitled
to the jurisdictional amount, cf. Newman-Green, Inc. v.
Alfonzo-Larrain, 490 U.S. 826, 830 (1989) (“The existence of
federal jurisdiction ordinarily depends on the facts as they exist
when the complaint is filed.”). It makes sense to focus on the
11
claims set out in the complaint, instead of the plaintiff’s actual
recovery; “[o]therwise every diversity case that a plaintiff lost
on the merits would be dismissed for lack of federal
jurisdiction, allowing the plaintiff to start over in state court.”
Herremans v. Carrera Designs, Inc., 157 F.3d 1118, 1121 (7th
Cir. 1998).
But there are different concerns implicated by the filing of
an amended complaint and the Professors’ position runs
headlong into the Supreme Court’s more recent direction that
“when a plaintiff files a complaint in federal court and then
voluntarily amends the complaint, courts look to the amended
complaint to determine jurisdiction.” Rockwell Int’l Corp. v.
United States, 549 U.S. 457, 473–74 (2007). It is true, as the
Professors point out, that Rockwell did not involve an amount-
in-controversy dispute. But they cite no authority to support
their claim that this distinction necessarily cabins Rockwell’s
reach and, in fact, they appear to have conceded Rockwell’s
applicability here. See Oral Arg. at 1:58 (“Our amended
complaint is the complaint we’re talking about.”).
Moreover, St. Paul Mercury was a removal case, which
“raise[s] forum-manipulation concerns that simply do not exist
when it is the plaintiff who chooses a federal forum.” Rockwell,
549 U.S. at 474 n.6. The worry that a plaintiff will attempt to
“prevent removal[] by forswearing any effort to collect more
than the jurisdictional threshold” does not obtain in that
circumstance. Back Doctors Ltd. v. Metro. Prop. & Cas. Ins.
Co., 637 F.3d 827, 830 (7th Cir. 2011) (citing, inter alia, St.
Paul Mercury, 303 U.S. at 291). At the same time, when a suit
is instituted in state court, “[t]here is a strong presumption that
the plaintiff has not claimed a large amount in order to confer
jurisdiction on a federal court.” St. Paul Mercury, 303 U.S. at
290. Taken together, these considerations counsel that in a
removal case we look to the plaintiff’s original complaint, not
12
post-removal amendments. But for a case like this one, “filed
originally in federal court,” normal jurisdictional “principles
generally function as expected.” In Touch Concepts, Inc. v.
Cellco P’ship, 788 F.3d 98, 101 (2d Cir. 2015); see also
Boelens v. Redman Homes, Inc., 759 F.2d 504, 507–08 (5th
Cir. 1985) (forum-manipulation concerns “are not present”
when “the plaintiff, rather than the defendant, is invoking the
jurisdiction of the federal court[,] . . . because the burden is on
the plaintiff to establish jurisdiction in the first instance . . . .”).
We therefore affirm that, under Rockwell, it was not error for
the district court to revisit the amount in controversy based on
the second amended complaint.
The Professors nevertheless assert that the good-faith sum
claimed in the second amended complaint established federal
jurisdiction. Indeed, the district court initially said as much.
After the second amended complaint was filed, the court
concluded, “at th[at] stage, it [wa]s legally possible that [the
Professors] could recover more than $75,000 if they prevail.”
Bronner III, 317 F. Supp. 3d at 289. At the same time, however,
the court acknowledged that if the Professors could not in fact
recover damages from the individual defendants—an
unanswered question at that point—“it would be legally
impossible for [them] to recover $75,000.” Id. The court’s
approach—temporarily affirming jurisdiction while
simultaneously identifying potential defects for future
resolution—caused it and the parties to “dance[] around the key
issue . . . for multiple rounds of briefing and opinions.”
Bronner IV, 364 F. Supp. 3d at 17. Although we may disagree
that the extended inquiry evinced the smooth coordination of a
“waltz . . . reach[ing] its crescendo,” id., we find no error in the
decision to prolong adjudication of this threshold question. As
we stated over forty years ago, “the district court may question
at any time whether the jurisdictional amount has been shown.”
King v. Morton, 520 F.2d 1140, 1145 (D.C. Cir. 1975) (citing
13
McNutt v. Gen. Motors Acceptance Corp., 298 U.S. 178, 189
(1936)); see also Arbaugh v. Y & H Corp., 546 U.S. 500, 506
(2006) (“The objection that a federal court lacks subject-matter
jurisdiction may be raised by a party, or by a court on its own
initiative, at any stage in the litigation, even after trial and the
entry of judgment.” (citation omitted)).
Even so, the Professors argue that the district court’s volte
face in its tentative jurisdictional assessment reflects an
erroneous application of St. Paul Mercury’s legal certainty
standard. They assert that once the amount-in-controversy
requirement has been deemed fulfilled, the district court must
“find that the legal certainty test is satisfied and that the
plaintiffs’ allegations in the complaint were made in bad faith”
before dismissing the action for failure to exceed the $75,000
jurisdictional threshold. Professors’ Reply Br. 8. And, because
their allegations were not made in bad faith, they contend the
district court was foreclosed from overruling its earlier amount-
in-controversy determination. The Professors’ position
stretches St. Paul Mercury too far.
Although St. Paul Mercury’s “primary concern” may be
“the plaintiff’s ‘good faith’ in alleging the amount in
controversy,” Coventry Sewage Assocs. v. Dworkin Realty Co.,
71 F.3d 1, 6 (1st Cir. 1995), the opinion also makes clear that
if, from the face of the pleadings, it is apparent,
to a legal certainty, that the plaintiff cannot
recover the amount claimed or if, from the
proofs, the court is satisfied to a like certainty
that the plaintiff never was entitled to recover
that amount, . . . the suit will be dismissed,
St. Paul Mercury, 303 U.S. at 289. This “latter passage appears
to render irrelevant whether the plaintiff exercised good faith
in pleading entitlement to recover the jurisdictional amount
14
when it is clear ‘to a legal certainty’ that he cannot recover a
sufficient amount.” Esquilin-Mendoza v. Don King Prods.,
Inc., 638 F.3d 1, 4 (1st Cir. 2011). That is, “legal certainty . . .
trumps the plaintiff’s good faith.” Id. (citation and internal
quotation marks omitted). So even if the legal certainty test is
intended to assess the plaintiff’s “good faith in choosing the
federal forum,” St. Paul Mercury, 303 U.S. at 290; cf. Jones v.
Landry, 387 F.2d 102, 104 (5th Cir. 1967) (“[G]ood faith and
legal certainty are equivalents rather than two separate tests.”),
it adds an objective element to this inquiry, see Tongkook Am.,
Inc. v. Shipton Sportswear Co., 14 F.3d 781, 785 (2d Cir.
1994). Put differently, “jurisdiction is defeated
notwithstanding the plaintiff’s good faith . . . if one familiar
with the applicable law could not reasonably have concluded
that the claim was worth the jurisdictional amount.” Esquilin-
Mendoza, 638 F.3d at 4. Relying solely on subjective good
faith, as the Professors urge, would undercut the Supreme
Court’s instruction that good faith “is open to challenge . . . by
the facts disclosed at trial” so that, if “it is clear . . . [the] claim
never could have amounted to the sum necessary to give
jurisdiction[,] there is no injustice in dismissing the suit.”9 St.
Paul Mercury, 303 U.S. at 290; see Tongkook, 14 F.3d at 785
(“[W]hile [the plaintiff]’s subjective ‘good faith’ is one of the
factors to assess in determining subject-matter jurisdiction,
‘good faith’ alone does not control where it is apparent that, ‘to
a legal certainty,’ [the plaintiff] could not recover the requisite
9
This language further supports our conclusion that the district
court properly revisited its initial jurisdictional determination. In St.
Paul Mercury, the Supreme Court held that dismissal is warranted if
“it is apparent, to a legal certainty, that the plaintiff cannot recover
the amount claimed,” not only “from the face of the pleadings” but
also “from the proofs.” 303 U.S. at 289. If, as the Professors contend,
the district court was precluded from reassessing subject-matter
jurisdiction in light of concerns identified during the course of
litigation, this instruction would be rendered toothless.
15
jurisdictional amount . . . .”). We therefore decline to adopt
their more restrictive articulation.
Setting aside, then, the Professors’ subjective good faith,
it is well accepted that the legal certainty test is satisfied “when
a specific rule of substantive law or measure of damages limits
the amount of money recoverable by the plaintiff to less than
the necessary number of dollars to satisfy the requirement.”
14AA CHARLES ALAN WRIGHT ET AL., FEDERAL PRACTICE AND
PROCEDURE § 3713 (4th ed. 2011). Although the Professors
contend “there must be a statute that explicitly limits the
amount available,” Professors’ Reply Br. 7, and that “the legal
certainty test is almost never (if ever) satisfied where there are
one or more tort claims,” id. at 8, the case law does not
corroborate their unsupported assertions. In Esquilin-Mendoza,
for example, the First Circuit dismissed the plaintiff’s tort
action for lack of subject-matter jurisdiction because, despite
her good faith in claiming approximately one million dollars in
damages, “she ha[d] no legal entitlement to recover damages
for any emotional or other injury caused by” the defendant. 638
F.3d at 2, 5. And her one plausible claim, relating to the
defendant’s delay in returning her vehicle, could not support a
damages award even close to approaching the $75,000
threshold. Id. at 6.
To be clear, the issue is not whether the plaintiff is
victorious once the dust settles. Success (or lack thereof) on the
merits is not the linchpin of federal diversity jurisdiction. Cf.
Nightingale Home Healthcare, Inc. v. Anodyne Therapy, LLC,
589 F.3d 881, 886 (7th Cir. 2009) (“The failure [to prove
damages] is a failure on the merits rather than a failure of
jurisdiction.”). Instead, the concern is that the exercise of
jurisdiction was erroneous in the first instance inasmuch as “the
plaintiff never was entitled to recover” the requisite amount in
controversy. St. Paul Mercury, 303 U.S. at 289 (emphasis
16
added); see also, e.g., Charvat v. GVN Mich., Inc., 561 F.3d
623, 628 (6th Cir. 2009) (“It appears to a legal certainty that
‘[a] claim is less than the jurisdictional amount where the
applicable [] law bar[s] the type of damages sought by
plaintiff.’” (alterations in original) (quoting Rosen v. Chrysler
Corp., 205 F.3d 918, 921 (6th Cir. 2000) (quotation marks
omitted))); McQueen v. Woodstream Corp., 672 F. Supp. 2d
84, 88 (D.D.C. 2009) (“If it becomes apparent during the
course of litigation that from the outset the maximum
conceivable amount in controversy was less than the
jurisdictional minimum, the court must dismiss the case for
lack of subject matter jurisdiction.”).
Here, the district court held that the relevant substantive
law precluded the Professors from obtaining relief on the
ASA’s behalf, see Bronner IV, 364 F. Supp. 3d at 20
(Professors “do not, and cannot, bring a derivative action . . .
under District of Columbia law” and “failed to identify any
other District of Columbia cause of action by which they can
assert ASA’s claims”), and, thus, it was “a legal certainty that
[they] cannot collect the damages they claim ASA is owed,” id.
at 21. The Professors point once again to the district court’s
initial determination of jurisdictional sufficiency and construe
this later ruling as a subsequent event incapable of divesting
jurisdiction. Their argument relies on a distinction some courts
have made “between subsequent events that change the amount
in controversy”—which do not oust jurisdiction—“and
subsequent revelations that, in fact, the required amount was or
was not in controversy at the commencement of the action”—
which do. Jones v. Knox Expl. Corp., 2 F.3d 181, 183 (6th Cir.
1993) We need not travel far down that road, however.
The district court’s ruling was just as correct when the suit
commenced, notwithstanding it was rendered three years later.
The lack of subject-matter jurisdiction, then, is not attributable
17
to the dismissal of claims during the course of litigation nor is
it the product of changed circumstances “disclosed by an
amended complaint, by application of a legal defense following
discovery, or by evidence adduced at a trial.” Id. Rather, it
stems from the conclusion that the Professors never were
entitled to collect certain damages. Cf. id. (“Since no
subsequent event occurred to reduce the amount in
controversy, this can only mean that the plaintiffs’ claims never
satisfied the jurisdictional requirement.”). By answering a
question that existed at the outset, the court’s “ruling thus
confirmed what had been apparent earlier: [the Professors’]
attempt to meet the jurisdictional minimum was in vain from
the beginning.” Spielman, 251 F.3d at 6; see Jones, 2 F.3d at
183 (“[L]ack of the jurisdictional amount from the outset—
although not recognized until later—is not a subsequent change
that can be ignored.” (quoting 1 JAMES WM. MOORE ET AL.,
MOORE’S FEDERAL PRACTICE ¶ 0.92[1] (2d ed. 1993))).
Accordingly, the district court did not err in applying St. Paul
Mercury’s legal certainty test after initially finding the amount-
in-controversy requirement satisfied. Because the district court
properly revisited its jurisdiction, we proceed to address its
finding that the Professors’ “remaining claims do not raise an
amount-in-controversy exceeding $75,000.” Bronner IV, 364
F. Supp. 3d at 22.
B. Determining the Amount in Controversy
The district court held that it was legally certain the
Professors could not recover more than $75,000, accounting for
their individual damages and the value of the requested
injunctive and declaratory relief. See id. at 21. The Professors
reject this assessment and maintain they adequately alleged an
amount in controversy that exceeds the jurisdictional
minimum. Specifically, they assert that the district court (1)
erred in holding that the Professors could not seek damages on
18
behalf of the ASA, (2) incorrectly valued the claimed equitable
relief and (3) failed to account for punitive damages. Their
arguments are unavailing.
1. Monetary Damages
The second amended complaint seeks “[a]ctual damages
on behalf of” the ASA, J.A. 190, and the Professors concede
that “[t]hese damages are intended to make the ASA whole,”
Professors’ Br. 38. Their attempt to recover monetary damages,
not for injuries they have suffered personally, but for harms
allegedly inflicted on the ASA by the individual defendants,
would typically end our inquiry. Corporate shareholders are
“generally prohibit[ed] . . . from initiating actions to enforce
the rights of the corporation unless the corporation’s
management has refused to pursue the same action for reasons
other than good-faith business judgment.” Franchise Tax Bd.
of Cal. v. Alcan Aluminum Ltd., 493 U.S. 331, 336 (1990).
Instead, “[c]laims of corporate mismanagement must be
brought on a derivative basis because no shareholder suffers a
harm independent of that visited upon the corporation and the
other shareholders.” Cowin v. Bresler, 741 F.2d 410, 414 (D.C.
Cir. 1984). This “so-called shareholder standing rule . . . is a
longstanding equitable restriction,” Franchise Tax Bd., 493
U.S. at 336, reflecting the established tenet that “plaintiffs must
demonstrate Article III standing by asserting their ‘own legal
rights and interests’ rather than resting ‘claim[s] to relief on the
legal rights or interests of third parties,’” Helmerich & Payne
Int’l Drilling Co. v. Bolivarian Republic of Venezuela, 784
F.3d 804, 814 (D.C. Cir. 2015) (alteration in original) (quoting
Warth v. Seldin, 422 U.S. 490, 499 (1975)), vacated on other
grounds, 137 S. Ct. 1312 (2017).
District of Columbia law applies the derivative-suit
requirement to nonprofit corporations like the ASA. See D.C.
19
CODE §§ 29-411.01 et seq. It would appear, then, that the
Professors are in a bind. They request damages for injuries
incurred by the ASA yet, at the same time, maintain that the
second amended complaint contains no derivative claims. In a
“clever attempt to avoid this straightforward conclusion,”
Bronner IV, 364 F. Supp. 3d at 20, the Professors argue that
they have nevertheless alleged cognizable direct claims. They
principally rely on two District of Columbia cases—Daley v.
Alpha Kappa Alpha Sorority, Inc., 26 A.3d 723 (D.C. 2011),
and Jackson v. George, 146 A.3d 405 (D.C. 2016)—that
recognize “non-profit members may directly suffer certain
injuries from organizational mismanagement that for-profit
shareholders do not.” Bronner IV, 364 F. Supp. 3d. at 21. But
by framing Daley and Jackson as “hold[ing] that third-party
and shareholder standing rules do not apply,” Professors’ Br.
42, the Professors stretch those decisions too far.
In Daley, members of the Alpha Kappa Alpha sorority
sued the sorority, its affiliate foundation and certain officials,
alleging that the officials had violated the organization’s
constitution and bylaws by making several large expenditures
without first obtaining approval from the sorority’s legislative
body. 26 A.3d at 726. The plaintiffs sought to “restore those
funds, enjoin the [officials] from taking any further action that
would harm [the sorority], and restore their membership
privileges.” Id. at 727. The D.C. Court of Appeals declined to
sanction an expansive application of the derivative-suit
requirement in that context, noting the “uneasy fit” between
nonprofit members, who fund the organization and are united
by a shared social or charitable purpose, and traditional
shareholders in for-profit corporations. Id. at 729. Indeed,
certain of the court’s language can be read to suggest that the
payment of membership fees confers a personal stake sufficient
to overcome third-party standing limitations:
20
On its face, it would seem almost self-evident
that members of a nonprofit organization whose
revenue depends in large part upon the regular
recurring annual payment of dues by its
members have standing to complain when
allegedly the organization and its management
do not expend those funds in accordance with
the requirements of the constitution and by-laws
of that organization.
Id. At the same time, however, the court continued to
emphasize that the plaintiffs must suffer individualized injuries
entitling them to personalized relief. The plaintiffs could
therefore directly bring breach of fiduciary duties, ultra vires
and breach of contract claims because their “individual rights
. . . were affected by the alleged failure to follow the dictates of
the constitution and by-laws and they thus had a ‘direct,
personal interest’ in the cause of action, even if ‘the
corporation’s rights [were] also implicated.’” Id. (quoting
Franchise Tax Bd., 493 U.S. at 336).
The D.C. Court of Appeals revisited the issue in Jackson.
There, the plaintiffs alleged that they were singled out for
unfair treatment after a power struggle divided the trustees of
Jericho Baptist Church Ministries, Inc. Specifically, they were
barred from church property and from attending services and
their tithes and offerings were purportedly used without
authorization. 146 A.3d at 415. In affirming the trial court’s
holding that the plaintiffs had standing “to proceed on the
claims they brought on their own behalves,” the appellate court
again highlighted the personalized nature of the plaintiffs’
injuries, emphasizing the lower court’s conclusion that the
plaintiffs had “alleged an injury particularized to them and
[had] a personal financial stake.” Id. (quotation marks omitted).
21
Distilling Daley and Jackson, we believe members of D.C.
nonprofit corporations may be able to assert certain direct
claims that shareholders in for-profit corporations must pursue
derivatively. That said, traditional third-party standing rules are
not entirely displaced. Otherwise, D.C. Code §§ 29-411.01 et
seq., which outline the derivative-suit requirement for
nonprofit corporations, would be rendered almost entirely
meaningless. Rather, as the district court noted, the focus on
individualized harms counsels that “Daley and Jackson
concern a non-profit member’s standing to seek relief based on
the member’s injuries, but not a non-profit member’s standing
to seek relief based on the non-profit’s injuries.” Bronner IV,
364 F. Supp. 3d at 21. Indeed, the district court held only that
the Professors could not “collect the damages they claim ASA
is owed,” saying nothing about their ability to recover damages
to themselves. Bronner IV, 364 F. Supp. 3d at 21 (emphasis
added). On the contrary, it explicitly recognized that, under
Daley and Jackson, they “may assert their claims directly and
seek damages and injunctive relief for their individual
injuries.” Id.
The issue, then, is that the Professors appear to believe
that, once they have standing to litigate a direct claim, they may
thereafter rely on injuries to the ASA to satisfy the amount-in-
controversy requirement. Not so. Despite the Professors’
contention that their inability to recover on the ASA’s behalf
implicates the calculation of damages, not standing, the fact
remains that they are attempting to rely on an exception to the
more general rule that individuals lack standing to seek relief
owed to a third party. And if a claim falls outside that
exception, it is subject to the longstanding rule that
shareholders may not enforce a corporation’s rights absent “a
direct, personal interest in [the] cause of action.” Franchise Tax
Bd., 493 U.S. at 336. That nonprofit members have standing to
press a suit to protect their own interests does not, in turn,
22
entitle them to vindicate interests held solely by the non-profit.
See Town of Chester v. Laroe Estates, Inc., 137 S. Ct. 1645,
1650 (2017) (“[P]laintiff must demonstrate standing . . . for
each form of relief that is sought.” (quoting Davis v. Fed.
Election Comm’n, 554 U.S. 724, 734 (2008)). It is clear, then,
that the Professors may assert direct claims for personalized
injuries allegedly inflicted by the individual defendants. They
may not, however, utilize a direct claim as a Trojan horse to
sneak derivative claims past the bulwarks of the federal courts.
We briefly note that the Professors cite the D.C. Superior
Court’s determination, in parallel litigation, that their claims
are direct, not derivative. See Amended Order Granting in Part
Motions to Dismiss at 25–28, Bronner v. Duggan, No. 2019
CA 1712 B (D.C. Super. Ct. Dec. 12, 2019). This ruling is not
incompatible with the district court’s decision, which found
that the second amended complaint contains direct claims.
Quite the opposite, it undercuts the Professors’ argument by
acknowledging that they “inappropriately seek derivative
damages” and “may only proceed on the damages that they
have personally suffered.” Id. at 34. In sum, we find no error in
the district court’s conclusion that it is “a legal certainty that
[the Professors] cannot collect the damages they claim ASA is
owed.” Bronner IV, 364 F. Supp. 3d at 21.
As for the Professors’ individual injuries, it is evident that
their resulting damages do not exceed the $75,000
jurisdictional threshold. They vaguely assert several
personalized injuries: economic and reputational damage;
manipulation of voting rights, both generally and against
Barton; and, reading between the lines, mismanagement of
membership fees and increased dues. This latter contention
does not get them very far. Bronner and Rockland, as honorary
lifetime members, do not owe dues and Kupfer has not paid
dues since 2014. Moreover, as the district court pointed out,
23
even “[i]f Defendants misappropriated every dollar that [the
Professors] contributed to ASA in annual dues, it would take
each [Professor] 625 years to reach $75,000 in damages.”
Bronner IV, 364 F. Supp. 3d at 22. Their other claims fare no
better. The Professors nowhere explain how they have suffered
economic or reputational damage. They assert no loss of
standing within their universities. They do not purport to have
been denied tenure, promotions or other prestigious honors.
Nor do they claim to have had their writings rejected by
academic journals.
It is true that a plaintiff need not provide an exact valuation
or detailed breakdown of damages at the outset of litigation, as
the claimed sum controls if “apparently made in good faith.”
St. Paul Mercury, 303 U.S. at 288. But it does not follow that
any unsupported claim will suffice. “While the ‘legal certainty’
test is an exacting one,” Martin v. Gibson, 723 F.2d 989, 991
(D.C. Cir. 1983) (per curiam) (citing King, 520 F.2d at 1145),
“we have emphasized that . . . the party asserting jurisdiction
always bears the burden of establishing the amount in
controversy once it has been put in question,” Rosenboro v.
Kim, 994 F.2d 13, 17 (D.C. Cir. 1993) (citing Martin, 723 F.2d
at 991, 993); see also Dep’t of Recreation & Sports of P.R. v.
World Boxing Ass’n, 942 F.2d 84, 88 (1st Cir. 1991) (“Once
challenged, . . . the party seeking to invoke jurisdiction has the
burden of alleging with sufficient particularity facts indicating
that it is not a legal certainty that the claim involves less than
the jurisdictional amount.”). Although “the Supreme Court’s
yardstick demands that courts be very confident that a party
cannot recover the jurisdictional amount before dismissing the
case for want of jurisdiction,” dismissal is warranted if, for
example, the plaintiffs “submit[] no . . . evidence” supporting
their alleged injury. Rosenboro, 994 F.2d at 17. The Professors
have provided nothing beyond a bare-bones assertion of
jurisdictional sufficiency to suggest that the monetary damages
24
arising from their direct claims even remotely approach
$75,000. This is not enough to carry their burden and therefore
the district court did not err in finding the Professors’ claimed
damages inadequate to satisfy the amount-in-controversy
requirement.
2. Equitable Relief
The Professors requested an order declaring that the
defendants breached their fiduciary duties and that the boycott
vote was improper. They also asked the court to enjoin ASA
leadership from (1) acting contrary to the ASA constitution; (2)
taking any action to enforce the boycott; and (3) making any
unauthorized payments, including in support of the boycott. As
with monetary damages, a complaint seeking declaratory or
injunctive relief should not be dismissed unless it appears “to a
legal certainty” that the claims will not exceed the minimum
amount in controversy. Hunt v. Wash. State Apple Advert.
Comm’n, 432 U.S. 333, 346 (1977) (citing St. Paul Mercury,
303 U.S. at 288–89). “In assessing whether a complaint
satisfies that standard, a court may look either to the value of
the right that [the] plaintiff seeks to seeks to enforce or to
protect or to the cost to the defendants to remedy the alleged
denial.” Smith v. Washington, 593 F.2d 1097, 1099 (D.C. Cir.
1978) (quotation marks and footnote omitted).
The district court held that, using either measuring stick,
the Professors failed to satisfy the amount-in-controversy
requirement. Bronner IV, 364 F. Supp. 3d at 22. There was “no
indication” that “requir[ing] ASA to comply with its governing
documents and halt improper payments . . . would cost ASA
any money to implement.” Id. Moreover, the Professors “failed
to explain how the right they seek to enforce—the right to be
voluntary members of an apolitical, academic organization—is
25
worth $75,000.” Id. The Professors contend that the district
court erred in valuing the requested relief.
On appeal, their primary argument is that the amount in
controversy includes “withdrawals from the ASA Trust Fund
by the individual defendants and payments for improper
purposes,” purportedly “exceeding $100,000 per year.”
Professors’ Br. 31. They maintain, therefore, that “the value of
the object of the litigation,” Hunt, 432 U.S. at 347, easily
satisfies the jurisdictional minimum. But the Professors
provide no record citation supporting this valuation, nor do
they respond to the defendants’ assertion that this argument
was not made in district court. The Professors needed to
“anchor[] th[eir] claim in the record,” Angelex, Ltd. v. United
States, 907 F.3d 612, 620 (D.C. Cir. 2018) (citing FED. R. APP.
P. 28(a)(8)(A)), since we are neither “expected to be
mindreaders,” Schneider v. Kissinger, 412 F.3d 190, 200 n.1
(D.C. Cir. 2005), nor required to “scour the . . . record
ourselves,” Sierra Club v. EPA, 925 F.3d 490, 496 (D.C. Cir.
2019). They did not and have thus forfeited their insufficiently
developed argument. See, e.g., Schneider, 412 F.3d at 200 n.1
(“[A] litigant has an obligation to spell out its arguments
squarely and distinctly, or else forever hold its peace.”).
Because the Professors otherwise fail to explain how the
equitable relief they seek exceeds the $75,000 threshold, we
find no error in the district court’s assessment.
3. Punitive Damages
Although “[i]t is clear that punitive damages should be
considered in determining the jurisdictional amount in
controversy,” Hartigh v. Latin, 485 F.2d 1068, 1071–72 (D.C.
Cir. 1973) (per curiam), the Professors did not ask the district
court to consider such damages, in the second amended
26
complaint or otherwise. Despite this inconvenient fact, they
assert that the district court erred by failing to do so.
Considering the Professors’ limited entitlement to
compensatory damages, see supra at 22–24, they would have
to rely almost entirely on punitive damages to satisfy the
amount in controversy. “Liberal pleading rules are not a license
for plaintiffs to shoehorn essentially local actions into federal
court through extravagant . . . punitive damage claims.” 10
Kahal v. J.W. Wilson & Assocs., Inc., 673 F.2d 547, 549 (D.C.
Cir. 1982) (per curiam). Thus, “[c]lose scrutiny” is necessary
“where the availability of punitive damages is the sine qua non
of federal jurisdiction.” Id. Additionally, the Professors could
have sought such damages at any time during the lengthy
litigation below and their attempt to do so for the first time on
appeal is too little, too late. “The burden of establishing the
amount in controversy is on the person claiming jurisdiction,”
King, 520 F.2d at 1145, and “arguments in favor of subject
matter jurisdiction can be waived by inattention or deliberate
choice,” NetworkIP, LLC v. FCC, 548 F.3d 116, 120 (D.C. Cir.
2008). Faced with the Professors’ silence, the district court did
not err in failing to assess sua sponte their potential to recover
punitive damages.
III. Ultra Vires Claim
The Professors also contend that the district court erred
when it dismissed the ultra vires claim in the first amended
complaint. But, even if the dismissed claim had survived, it
would not alter the valuation of the amount in controversy. The
10
We express no opinion on the merits of the Professors’ suit.
As the district court recognized, they very well “may have
meritorious claims arising from their individual injuries as ASA
members.” Bronner IV, 364 F. Supp. 3d at 12. But that
acknowledgment does not open the door to federal court.
27
Professors did not plead any damages unique to the first ultra
vires claim. Indeed, the ultra vires claims in the second
amended complaint alleged substantially the same injuries,
including the ASA’s loss of revenue, its improper expenditure
of funds and its reputational harm. Thus, we do not reach this
argument because there is absolutely no indication that
consideration of the dismissed ultra vires claim could cure the
jurisdictional deficiencies that plagued the second amended
complaint. 11
IV. Conclusion
The Professors cannot seek relief on the ASA’s behalf
other than through a derivative suit. And although District of
Columbia law permits them to seek damages directly for
individualized injuries, the Professors have not demonstrated
that those damages come close to exceeding the amount in
controversy required for federal diversity jurisdiction. They
also failed to seek punitive damages and forfeited their
argument regarding the value of the requested injunctive and
declaratory relief. Thus, because it “appear[s] to a legal
certainty that the claim is really for less than the jurisdictional
11
“[W]hen a district court grants a Rule 12(b)(6) motion to
dismiss for failure to state a claim, that dismissal ‘operates as an
adjudication on the merits’ under Rule 41(b) ‘[u]nless the dismissal
order states otherwise.’” Rollins v. Wackenhut Servs., Inc., 703 F.3d
122, 132 (D.C. Cir. 2012) (Kavanaugh, J., concurring) (alteration in
original). And it is “not proper for federal courts to proceed . . . to a
merits question despite jurisdictional objections.” In re Madison
Guar. Sav. & Loan Ass’n, 173 F.3d 866, 870 (D.C. Cir. 1999) (per
curiam) (citing Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83,
94 (1998)).
28
amount,” St. Paul Mercury, 303 U.S. at 289, we affirm the
district court’s dismissal for lack of subject-matter jurisdiction.
So ordered.