Swanson Group Mfg. LLC v. Jewell , 195 F. Supp. 3d 66 ( 2016 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
SWANSON GROUP MFG. LLC, et al.., )
Plaintiffs, §
v. § Civil Case No. 15-1419 (RJL)
)
S.M.R. JEWELL, Secretary of Interior, et al., g D
Defendants. ) .|UN 2 8 2016
MEMORANDUM OPINION c‘;'°'k. U.S. D|strict & Bankruptcy
ms '°' 910 Dlstr|ct of columbia
(Jun ____, 2016) [Dkts. ##l l, l6]
This is the most recent iteration of cases before this Court involving timber sales
in the Pacific Northwest and habitat for the northern spotted oWl. Plaintiffs here seek
declaratory and injunctive relief from injuries resulting from alleged violations of the
Oregon and California Railroad and Coos Way Wagon Road Grant Lands Act of 1937
("O&C Act"), 43 U.S.C § ll8la, and the Administrative Procedure Aet, 5 U.S.C. §§ 551-
706, by the Bureau of Land Management ("BLM"), the U.S. Fish and Wildlife Services
("FWS"), and the U.S. Forest Service concerning resource management and wildlife
conservation. Corrected Compl. ("Corr. Compl.") M l, 97-l 19 [Dkt. #5]. On September
22, 2015, plaintiffs filed a Motion for Preliminary Injunction "to maintain the status quo
that has existed since entry of the judgment in Swanson I, on June 26, 2013." Mot. for
Prelim. Inj. l [Dkt. #l l]. Defendants subsequently filed a Motion to Dismiss, asserting
the case should be dismissed because it is barred by issue preclusion and, in the
alternative, because plaintiffs lack standing. See generally Mot. to Dismiss Corr. Compl.
l
("Mot. to Dismiss") [Dkt. #16]. Upon due consideration of the parties’ pleadings, the
relevant law, and the entire record herein, I find that (l) plaintiffs American Forest
Resource Council, Douglas Timber Operations, Swanson Group Manufacturing, Hull-
Oaks Lumber Company, Seneca Jones Timber Company, Seneca Sawmill Company, and
Freres Lumber Company are precluded from relitigating their standing in the instant case;
(2) plaintiffs C&D Lumber Company, Starfire Lumber Company, Boise Cascade Wood
Products, South Coast Lumber, Robert Ragon, Robert Freres, and Scott Keep fail to
sufficiently allege standing; and (3) Rough & Ready is not barred by issue preclusion and
sufficiently establishes standing for purposes of the motion to dismiss,' but does not meet
the high burden required for a preliminary injunction. Accordingly, defendants’ Motion
to Dismiss is GRANTED in part and DENIED in part, and plaintiffs’ Motion for
Preliminary injunction is DENIED.
BACKGROUND
The slate upon which I write is far from clean. By plaintiffs’ own admission, this
action seeks to restate plaintiffs’ claims from Swanson Group Mfg. LLC v. Jewell, No.
lOcvl 843 (filed on Oct. 29, 2010) ("Swanson 1") and related claims from Swanson Group
Mfg. LLC v. Director, No. 14-21 1 ("Swanson I]") with new evidence regarding standing
"to fill the gaps" identified by our Circuit Court in Swanson 1. Mot. for Prelim. Inj. l.
In Swanson 1, l granted summary judgment in favor of the plaintiffs and found two
l Rough & Ready concedes dismissal of the two surviving claims challenging the formerly used Owl
Estimation Methodology, see infra p. l3 (dismissing the Second and Third Claims for Relief), leaving its
First and Fourth Claims for Relief.
offered any timber sales or announced any upcoming sales for Fiscal Year 2016.7
Compare ia’. ("[T]he Medford District . . . is our only potential source of the additional
timber we require for 2016 (and subsequent years)."), with Swanson Grp. Mfg. v. Jewell,
790 F.3d at 243 (noting the previous Phillippi Declaration "d[id] not indicate the extent
of Rough & Ready’s reliance on timber purchased from Medford"). This sufficiently
cures lack of a causal link at this stage.
'l``he final jurisdictional defect, likely redressability, is also sufficiently cured by
allegations at this stage. Defendants argue (l) this Court "cannot order BLM to offer
timber sales immediately," (2) Rough & Ready "has not demonstrated that it would bid
on those sales, let alone win them at a competitive auction," and (3) "Mr. Phillippi is not
even sure Rough & Ready would reopen its mill." Defs.’ Resp. to R&R Second Decl. 2-
3. Defendants’ first reason appears to relate to the argument that because the BLM has
offered a total timber volume greater than the combined ASQ requirements for all six
districts by selling non-ASQ timber, this Court cannot order additional sales of the ASQ
timber. Defs.’ Reply 22. But the plain text of the G&C Act requires the BLM to meet
the ASQ requirements from the land designated "for permanent forest production."
43 U.S.C. § ll8l(a). There is no exception allowing the BLM to supplement the
7 Defendants argue that Rough & Ready actually gets its timber from Roseburg and Coos Bay Districts,
citing the first Phillippi Declaration f``iled in this case and the denied plaintiffs’ reply to defendants’
response to the Court’s order to show cause in Swanson II. Defs.’ Reply l3. But these sources clearly
show that Phillippi was quoting the Court’s ordered relief for the Medford and Roseburg Districts in
Swcmson I, and that plaintiffs asserted that Rough & Ready’s mill was located to "adjacent to" the Coos
Bay District. See Phillippi Decl. ("R&R First Decl.") ‘H 15 [Dkt. #l l-Z]; Pls.’ Reply to Defs.’ Resp. to
Show Cause Order 7, No. 14-211 [Dkt. #32-1]. To the extent there remains any issue of fact, the Court
accepts the facts as alleged by plaintiff at this stage. See Casey v. Ward, 67 F. Supp. 3d 45, 49-50
(D.D.C. 2014).
ll
shortage with timber from non-ASQ land. Moreover, the history of this case refutes
defendants’ contenti0n, as l ordered the BLM to produce the ASQ from the ASQ lands in
2014, and the BLM complied. See generally Swcmson Grp. Mfg. LLC v. Salazar, 951 F.
Supp. 2d 75 (D.D.C. 2013); see also Bechdolt Decl., Table l. Defendants’ second
argument, that Rough & Ready has not demonstrated it would bid on or win the timber, is
belied by the allegations. Here, plaintiffs have alleged Rough & Ready has an
"excellent" opportunity to purchase timber from BLM, given that a certain percentage of
its timber sales is set aside for certified small businesses, and Rough & Ready is one of
the few remaining such businesses in the lumber manufacturing field. See Corr. Compl.
W 14-19; Phillippi Decl. ("R&R First Decl.") 111 4-5 [Dkt. #l l-Z].
Defendants’ final argument, that Rough & Ready may not reopen the mill, is a
closer call, but as a whole plaintiffs’ allegations suffice to pass muster at this stage.g
Here, Phillippi avers that "[i]f and when in the future the Medford BLM District reliably
offers its full ASQ of timber sales annually, we hope to be able to reopen the mill and
resume operations." R&R Second Decl. il 3. In previous filings in this case, however,
Rough & Ready has maintained that it "occupies a particular niche" because of its unique
products, it "has longstanding relationships with its major customers, and can reliably sell
all the products," and, by virtue of the New Market Tax Credit program, it has even
upgraded its mill to process the smaller diameter logs that are primarily offered by the
8 As explained more fully in the standing section, at the motion to dismiss stage the plaintiff must
demonstrate that the injury is "likely" redressed by a favorable decision on the merits, as opposed to the
more exacting standard of "substantial" likelihood required at the summary judgment or preliminary
injunction stage. See Lujan, 504 U.S. at 561; Food & Water Watch, Inc., 808 F.3d at 9l2-l3.
12
BLM. See R&R First Decl. W 2, 8 ("Lack of demand is not and never was a limitation
. . . ."); see also Corr. Compl. 111 12, 18. Moreover, Rough & Ready has demonstrated its
capacity to reopen its doors after closing once before when such timber became available.
R&R First Decl. 1] 9. Taken as a whole, these allegations establish that Rough & Ready’s
injury is likely redressed by a favorable decision on the merits.
Rough & Ready has sufficiently established standing for purposes of the motion to
dismiss, but concedes dismissal of two of its four claims. The Second and Third Claims
for Relief challenge the Owl Estimation Methodology previously used by defendants.
See Corr. Compl. 48-51 (Second Claim for Relief), 5 l-53 (Third Claim for Relief).
Based on defendants’ representations that the Owl Estimation Methodology is not
currently in use and will not again be put into use in the future, plaintiffs concede
dismissal of these claims without prejudice. Pls.’ Opp’n 37. Accordingly, Rough &
Ready’s Second and Third Claims for Relief are dismissed as conceded, leaving its First
and Fourth Claims for Relief as its existing claims going forward.
C. All Non-Returning Plaintiffs Lack Standing.
Defendants argue that issue preclusion applies more broadly to bar all plaintiffs
from litigating standing on the grounds that they are "in privity with" the returning
plaintiffs from Swanson 1 and Swanson II, Mot. to Dismiss 20, but l decline to wade into
this thorny thicket. Preclusion of non-parties implicates serious due process concerns and
"runs up against the ‘deep-rooted historic tradition that everyone should have his own
day in court." Taylor, 553 U.S. at 892-93. Accordingly, the Supreme Court has carefully
13
delineated six narrow exceptions to the general rule against non-party preclusion.9 Ia’. at
892-93. Defendants appear to argue that the non-party plaintiffs are precluded under the
Taylor Court’s fifth exception for designated representatives, agents, or proxies.‘° Id. at
895. Though framed as an issue of privity, the theory seems to be that the non-parties are
precluded from litigating their own standing here because they designated the returning
plaintiffs as their representatives in the previous actions, based on their relationships with
returning plaintiffs and varying levels of participation in the prior cases. Mot. to Dismiss
20-21. l need not address these arguments, however, because the non-party plaintiffs fail
to allege standing sufficient to overcome defendants’ motion to dismiss.
"Article IIl of the Constitution confines the jurisdiction of the federal courts to
actual ‘Cases’ and ‘Controversies,’ and . . . ‘the doctrine of standing serves to identify
939
those disputes which are appropriately resolved through the judicial process. Clz``nton v.
Cz'ty ofNew York, 524 U.S. 4l7, 429-30 (1998) (quoting Whz'tmore v. Arkansas, 495 U.S.
149, 155 (l990)). Plaintiffs bear the burden of demonstrating they have standing to
pursue their claims. See Lujczn, 504 U.S. at 56l. "[T]he irreducible constitutional
minimum of standing" requires "[l] an injury in fact . . . which is (a) concrete and
9 The exceptions consist of non-parties who (l) agree to be bound by the previous action, (2) had a pre-
existing substantive legal relationship with a party to the previous action (focusing on relationships
arising out of property law, such as bailee and bailor), (3) were represented in properly conducted class
actions and suits brought by trustees, guardians, and other flduciaries, (4) assumed control over the
previous action, effectively driving the argument and theory of the case, (5) act as designated
representatives, proxies, or agents of a party to the previous action to avoid preclusion, and (6) fall under
special statutory schemes such as bankruptcy and probate proceedings. Id. at 893-95.
‘° Defendants style their argument as one of "privity,” but the Supreme Court specifically declined to use
the term "privity" in this context to prevent confusion, as it is commonly used to encompass a variety of
legal relationships. Taylor, 553 U.S. at n.8
l4
particularized, and (b) actual or imminent, not conjectural or hypothetical, . . . [2] a
causal connection between the injury and the conduct complained of . . . , [and] [3] it
must be likely, as opposed to merely speculative, that the injury will be redressed by a
favorable decision." Id. at 560-61 (footnote, citations, and intemal quotation marks
omitted).
Furthermore, because the plaintiffs here seek injunctive relief, they must show an
imminent future injury. See Dearth v. Holder, 641 F.3d 499, 501 (D.C. Cir. 201 l). This
€CG
requirement creates a significantly more rigorous burden to establish standing"’ than
that on parties seeking redress for past injuries. Chamber of Commerce v. EPA, 642 F.3d
l92, 200 (D.C. Cir. 201 l) (quoting Um``tea’ Trcmsp. Um'on v. ICC, 891 F.2d 908, 913
(D.C. Cir. 1989)). That is, "to ‘shift[ ] injury from conjectural to imminent,’ the
[plaintiffs] must show that there is a ‘substantial . . . probability’ of injury." Ia’. (first
alteration in original) (quoting Sherley v. Sebelius, 610 F.3d 69, 74 (D.C. Cir. 20l0))
(intemal quotation marks omitted).
There are four non-retuming company plaintiffs: C&D Lumber Company, Starfire
Lumber Company, Boise Cascade Wood Products, and South Coast Lumber.“ Each fails
to adequately allege standing. These plaintiffs assert economic injuries from lack of
sales, each alleging it relies on BLM timber, and that the current shortage thereof
prevents is preventing the companies from operating at full capacity. See Corr. Compl.
" Though not parties themselves to either Swanson 1 or Swanson II, C&D Lumber Company and Starflre
Lumber Company are members of returning plaintiff organizations American Forest Resource Council,
Douglas Timber Operations.
15
M 45-49 (Starfire Lumber Company), 50-51, 54 (C&D Lumber Company), 55-56 (South
Coast Lumber), 58-60, 63 (Boise Cascade Wood Products). Unfortunately for these
plaintiffs, they have failed to allege a substantial probability of an imminent future injury,
let alone an actual ongoing injury that is fairly traceable to the BLM’s refusal to offer
ASQ timber. Unlike Rough & Ready, these companies have not specified how much
timber they can purchase from the various other sources, or plausible reasons why those
sources will not suffice. lt is unclear that the BLM’s failure to provide ASQ timber is the
cause of their revenue shortages, or that an order compelling the sale of ASQ timber
would likely redress them.
Plaintiff companies also allege that they are injured by imminent risk of wildfire
starting on mismanaged BLM timberlands and spreading to bordering timberland owned
or used by various plaintiffs. See, e.g., Corr. Compl. 111 38, 54, 6l, 68. Unfortunately for
plaintiffs, their allegations do not adequately support this theory of standing either.
Although plaintiffs have generally identified which lands border the BLM timberlands,
see, e.g., Corr. Compl. wl 6l, 64, plaintiffs have not indicated the precise location of
those lands or how much of them, if any, are ASQ-specific land. Relatedly, and perhaps
most importantly, there are no allegations that the relief sought_ordering the BLM to
sell ASQ timber in compliance with the O&C Act-would lower the risk in these specific
areas. Accordingly, these plaintiff companies have not sufficiently alleged standing.
In addition to the non-returning company plaintiffs, and unlike the previous
Swanson cases, this case includes three individual plaintiffs Plaintiff Robert Ragon, the
Executive Director of Douglas Timber Operators, Inc., filed declarations in the previous
l6
cases in his official capacity, but was not a plaintiff. See, e.g., Ragon Decl., No. 10-1843
[Dkt. #41-7]; Ragon Decl., No. 14-211 [Dkt. #17-2]. Plaintiff Robert Freres, Jr.,
Executive Vice President of Freres Lumber Co., also previously filed declarations in his
official capacity but was not a prior plaintiff See, e.g., Freres Decl., No. 14-2ll [Dkt.
#17-4]. The third individual plaintiff, Scott Keep, is an employee of plaintiff Seneca
Sawmill Company and had not previously filed any declarations, nor had he been a
plaintiff in the previous Swanson cases. Corr. Compl. il 28.
Each of the individual plaintiffs fails to sufficiently allege standing All three
individuals allege they enjoy hunting, fishing, and engaging in other recreation on
timberlands that border BLM lands. Corr. Compl. 111 28, 38, 64. They allege injury from
an increased risk of wildfire caused by BLM’s mismanagement of its timberland and
spreading to the bordering non-BLM land, which threatens their recreational activity. See
z'd.; see also Ragon Decl. 11 3 [Dkt. #l l-l()]; Freres Decl. 1 15 [Dkt. #l 1-4]; Keep Decl.
il 2 [Dkt. #l l-9] (alleging recreational interests, but no injury). Thus, although the
individuals allege recreational interests separate and apart from their employers, their
purported injury to those interests is based on the same alleged increased risks of wildfire
addressed above. The individual plaintiffs’ conclusory allegations of risk of wildfire fail
to establish standing for the same reasons as the company plaintiffs.
D. Rough & Ready Fails to Satisfy the High Burden Required for a
Preliminary Injunction.
The sole plaintiff that overcomes the dismissal hurdle, Rough & Ready, is unable
to satisfy the higher burden required to obtain a preliminary injunction When ruling on a
l7
motion for preliminary injunction, a court must consider "whether (l) the plaintiff has a
substantial likelihood of success on the merits; (2) the plaintiff would suffer irreparable
injury were an injunction not granted; (3) an injunction would substantially injure other
interested parties; and (4) the grant of an injunction would further the public interest."
Sollera, Inc. v. Food & DrugAdmz'n., 627 F.3d 89l, 893 (D.C. Cir. 2010) (internal
quotation marks omitted). I begin, and end, with consideration of whether Rough &
Ready has established substantial likelihood of success on the merits, l find it has not.
The "affirinative burden of showing a [substantial] likelihood of success on the
merits . . . necessarily includes a likelihood of the court’s reaching the merits, which in
turn depends on a [substantial] likelihood that plaintiff has standing." Nat ’l Wz'la'lzfe
Fea"n v. Burforcl, 835 F.2d 305, 328 (D.C. Cir. l987) (Williams, J., concurring and
dissenting). "Accordingly, a party who seeks a preliminary injunction must show a
substantial likelihood of standing." Fooa’ & Water Walch, Inc., 808 F.3d at 913 (internal
quotation marks omitted). A party who fails to show a "substantial likelihood" of
standing is not entitled to a preliminary injunction. Id. (quoting Obama v. Klayman, 800
F.3d 559, 568 (D.C. Cir. 2015) (Williams, J.)).
While the allegations supporting Rough & Ready’s standing suffice to satisfy the
lower "likely" standard required at motion-to-dismiss phase, they fail to rise to the level
of the "substantial likelihood" required at the preliminary injunction phase. See Fooa’ &
Water Watch, lnc., 808 F.3d at 9l2-l3. ln particular, although Rough & Ready plausibly
claims that its injuries are likely redressable as described above, its "hope to be able to
reopen the mill and resume operations" if and when the BLM offers its full ASQ of
l8
timber sales is insufficient to establish substantial likelihood of redressability. R&R
Second Decl. 11 3. That is, while the various allegations taken as a whole establish Rough
& Ready’s injuries are likely redressable, they simply fail to provide the basis necessary
to establish the requisite substantial likelihood. Accordingly, Rough & Ready survives
the motion to dismiss, but fails to satisfy the high burden required to obtain a preliminary
injunction at this time.
CONCLUSION
Thus, for all the reasons stated herein, defendants’ motion to dismiss is
GRANTED as to all plaintiffs other than Rough & Ready, GRANTED in part and
DENIED in part as to Rough & Ready, and plaintiffs’ Motion for Preliminary injunction
is DENIED. A separate Order consistent with this decision accompanies this
Memorandum Opinion.
19
federal agency actions to be unlawful: (l) the failure to offer for sale a declared amount
of timber from two western Oregon districts, and (2) the development and use of an Owl
Estimation Methodology. See Order and Mem. Op., No. 10-1843 [Dkts. ##58, 59]. That
decision was appealed to our Circuit Court, which vacated the grant of summary
judgment on the grounds that the plaintiffs in that case lacked Article IlI standing. See
Swanson Group Mfg. LLC, el al. v. Jewell, et al., No. 13-5268, 790 F.3d 235, 20l5 WL
3634645, at *3 (D.C. Cir. June 12, 20l5). Plaintiffs in Swanson 11, No. 14-211, brought
suit against the BLM making essentially the same allegations at issue in Swcmson 1, z``.e.
that defendant had failed to offer for sale the timber that it was required to offer for sale
under the O&C Act. The Swanson 11 plaintiffs requested that this Court extend the
reasoning of the vacated Swanson 1 summary judgment opinion to other Oregon districts
that were not at issue in Swanson 1. See Compl. 1 2l, No. l4-2ll [Dkt. #l].z On
September 28, 2015, l dismissed Swanson II-along with two other related actions
involving many of the same plaintiffsL-for lack of standing, in accord at 1lance with our
Circuit Court’s opinion in Swanson 1.
Currently before the Court are plaintiffs’ Motion for Preliminary Injunction, and
defendants’ Motion to Dismiss, in which defendants argue that issue preclusion bars
plaintiffs from relitigating standing and, regardless, plaintiffs lack standing. Given the
overlapping and potentially dispositive issues, l address both motions herein.
2 "The interpretation of the 0 & C Act set forth in the Memorandum Opinion and Order of June 26, 2013
in [Swanson 1] applies to the BLM’s management of its Coos Bay, Eugene, Lakeview and Salem districts
in exactly the same manner as to the BLM’s Medford and Roseburg districts."
3 See Mem. Op., Carpenters Indus. Council v. Jewell, No. 13-361 [Dkt. #91]; Mem. Op., Am. Forest Res.
Councz'l v. Jewell, No. 14-368 [Dkt. #35].
STANDARD OF REVIEW
The Court may dismiss a complaint for failure to state a claim upon which relief
may be granted. See Fed. R. Civ. P. l2(b)(6). ln considering a motion to dismiss under
Rule l2(b)(6), the court must "liberally" construe the complaint "in favor of the plaintiff,
who must be granted the benefit of all inferences that can be derived from the facts
alleged." Schuler v. Unz'tea' States, 617 F.Zd 6()5, 608 (D.C. Cir. 1979) (intemal citation
and quotation marks omitted). However, in considering the pleadings, the Court is not
required to "accept legal conclusions cast in the form of factual allegations," or to rely on
inferences "unsupported by the facts set out in the complaint." Kowal v. MCI Commc ’ns
Corp., 16 F.3d 1271, 1276 (D.C. Cir. 1994). Thus, to withstand dismissal, the
allegations, when read in a light most favorable to the plaintiff, must "raise a right to
relief above the speculative level." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007).
ANALYSIS
Four plaintiffs who were parties in both Swanson 1 and Swanson II," along with
seven other forest product manufacturers, a forest landowner, and three individuals, filed
this case to restate their prior claims, this time with new allegations and declarations in an
attempt to overcome the standing hurdle. Before reaching standing, however, I must
address defendants’ threshold argument that litigation of standing is barred by issue
preclusion.
4 Swanson Group Mfg. LLC, Rough & Ready LLC, American Forest Resource Council, and Douglas
Timber Operators, Inc. were parties in Swcznson 1 and Swanson 11. There are four additional plaintiffs in
the instant case who were parties in one of those two actions.
4
A. Issue Preclusion Bars Seven of the Eight Plaintiffs from Swanson 1 and
Swanson II from Relitigating Standing.
Issue preclusion, or collateral estoppel, bars "successive litigation of an issue of
fact or law [l] actually litigated and [2] resolved in a valid court determination [3]
essential to the priorjudgrnent." New Hampshire v. Maz``ne, 532 U.S. 742, 748-49 (2()01);
see also Taylor v. Sturgell, 553 U.S. 880, 892 & n.5 (20()8). The doctrine of issue
preclusion serves to "protect against the expense and vexation attending multiple
lawsuits, conserv[e] judicial resources, and foste[r] reliance on judicial action by
minimizing the possibility of inconsistent decisions." Taylor, 553 U.S. at 892 (alterations
in original and internal quotation marks omitted). Our Circuit Court has found that issue
preclusion applies to jurisdictional issues such as Article Ill standing See, e.g., Nat’l
Ass ’n ofHome Buz``la’ers v. EPA, 786 F.3d 34, 41 (D.C. Cir. 2015). "Because a
jurisdictional dismissal does not involve an adjudication on the merits, it will not bar
relitigation of the cause of action originally asserted, but it may preclude relitigation of
the precise issues of jurisdiction adjudicated." Ia’. (internal quotation marks and
alterations omitted).
A litigant can overcome issue preclusion under the curable defect exception. This
narrow exception "allows relitigation of jurisdictional dismissals when ‘a precondition
requisite to the court’s proceeding with the original suit was not alleged or proven, and is
supplied in the second suit."’ Ia’. (quoting Dozier v. Ford Motor Co., 702 F.Zd ll89,
1192 (D.C. Cir. 1983)). ln other words, jurisdiction can be relitigated "``only if a material
change following dismissal cured the original jurisdictional deficiency." Nat’l Ass ’n of
Home Buz``la’ers, 786 F.3d at 4l.
Eight plaintiffs-American Forest Resource Council, Douglas Timber Operations,
Swanson Group Manufacturing, Hull-Oaks Lumber Company, Seneca J ones Timber
Company, Seneca Sawmill Company, Freres Lumber Company, and Rough & Ready_
were parties to either or both of the previously dismissed Swanson 1 and Swanson 11
cases, and cannot relitigate their standing here. In National Association of Home
Buz``lcz’ers, our Circuit Court set forth a two-step framework to determine whether a prior
dismissal for lack of standing precludes relitigation of the same jurisdictional issue in a
subsequent case. 786 F.3d at 41. First, the defendant has the burden to establish the
elements of issue preclusion. 1d. Second, the burden shifts to plaintiff to satisfy the
curable defect exception. Id. If the defendant carries its burden and the plaintiff does
not, the plaintiff is precluded from establishing standing and the plaintiffs case must be
dismissed. 1a’. at 43.
The defendants have clearly established the elements of issue preclusion as to
these eight plaintiffs. To begin, this case involves the same standing issue these
companies previously litigated: whether plaintiffs have demonstrated an actual or
imminent concrete economic injury as a result of the BLl\/I’s level of timber sales. See
Swanson 11, 2015 WL 5693429, at *4 (dis1nissing the case because, "just as in Swanson
1, plaintiffs cannot show that any of their economic losses are traceable to the failure to
offer for sale timber under the O&C Act instead of to an independent source, such as the
recession, or that their prediction of future injury is more certain than those [the D.C.
Circuit] has concluded are insufficient") (internal quotation marks omitted). This issue
6
was actually litigated and essential to the standing-based dismissals of the previous
Swanson cases.5 Plaintiffs miss the mark in arguing the standing issue here differs
materially from that already litigated given the later time period. See Pls.’ l\/[em. in
Opp’n to Mot. to Dismiss Corr. Compl. ("Pls.’ Opp’n") l4-l7 [Dkt. #21]. lssue
preclusion bars relitigation "even if the issue recurs in the context of a different claim."
Taylor, 553 U.S. at 892. Here, plaintiffs’ claims that they will suffer imminent future
injury rest on the same allegations of past economic injury that failed to establish Article
lIl standing previously. Defs.’ Reply in Supp. of Mot. to Dismiss Corrected Complaint
("Defs.’ Reply") at 5 [Dkt. #22].
Unfortunately for seven of the eight returning plaintiffs, they do not evade
dismissal under the curable defect exception. This narrow exception allows relitigation
of jurisdiction "only if a material change following dismissal cured the original
jurisdictional deflciency." Nat’l Ass ’n ofHome Buz``lders, 786 F.3d at 4l. With the
exception of Rough & Ready, the returning plaintiffs fail to allege any material change
that would establish standing. Plaintiffs argue that an injury that continues to occur after
the entry of judgment constitutes a new injury post-dating such judgment, citing the
current operating capacities and supply of timber as the new injuries here. Pls.’ Opp’n
l 1-13. As defendants note, however, these "current" situations are not new injuries post-
dating the Swanson dismissal, but rather are ongoing, pre-existing injuries See Defs.’
Reply lO, Because these injuries are the continuing result of the alleged timber shortage,
5 F or purposes of issue preclusion, it makes no difference that the prior cases were dismissed without
prejudice. See Dozz``er, 702 F.Zd at l 194.
American Forest Res0urce Council, Douglas Timber Operations, Swanson Group
Manufacturing, Hull-Oaks Lumber Company, Seneca J ones Timber Company, Seneca
Sawmill Company, and Freres Lumber Company do not satisfy the requirements for the
curable defect exception.
B. Rough & Ready Is the Only Returning Plaintiff That Overcomes Issue
Preclusion Under the Curable Defect Excepti0n.
Rough & Ready is the sole returning plaintiff that satisfies the curable defect
exception Issue preclusion can be overcome only if there is a material change that cures
the jurisdictional defect. See Nat’l Ass ’n ofHome Buz``lders, 786 F.3d at 4l. To establish
standing at the motion to dismiss stage, plaintiffs "must state a plausible claim that [they
have] suffered an injury in fact fairly traceable to the actions of the defendant that is
likely to be redressed by a favorable decision on the merits." Food & Waler Watch, Inc.
v. Vz``lsack, 808 F.3d 905, 913 (D.C. Cir. 20l5). "At the pleading stage, general factual
allegations of injury resulting from the defendant’s conduct may suffice, for on a motion
to dismiss we presume that general allegations embrace those specific facts that are
necessary to support the claim." Lujcm v. Dey%. of Wz``ldlzfe, 504 U.S. 555, 561 (1992)
(internal quotation marks and alterations omitted). In determining standing, the Court
may consider materials outside of the complaint. See Coal. for Underground Expansz``on
v. Mz``nez‘a, 333 F.3d 193, 198 (D.C. Cir. 2003) ("[W]here necessary, the court may
consider the complaint supplemented by undisputed facts evidenced in the record . . . .").
As our Circuit Court noted in its review of Swanson I, Rough & Ready came
"closest to showing Article III standing." Swanson Grp. Mfg. v. Jewell, 790 F.3d 235,
242 (D.C. Cir. 20l5). Our Circuit Court identified three jurisdictional defects: an
"uncertain and unspecified" risk of closure, a lack of causal link to the BLM timber
shortage, and likely redressability. See z'd. at 242-43. Rough & Ready has cured all three
defects at this motion-to-dismiss stage.
The first defect, insufficient allegations of risk of closure, is cured by an
undisputed new injury, the second closure. After the original judgment in Swanson I, the
company was forced to close its doors. See Pls.’ Opp’n ll. By July 2014, before our
Circuit Court published its opinion, the company reopened. See ia’. At the inception of
this case, Rough & Ready was "operating at 90 percent of [its] capacity" but "need[ed]
additional new BLM ASQ timber sales this year and each year thereafter to be able to
survive." Ia’. On February 25, 2016, plaintiffs moved for leave to file a supplemental
declaration informing this Court that the company would close again "due to lack of
adequate timber." Pls.’ Mot. to File. Suppl. Decl., Ex. A jj 2 ("R&R Second Decl.")
[Dkt. #26-1].6 Defendants did not object to the filing of the declaration itself, but
responded to the substance therein. Defs.’ Resp. to Pls.’ Mot. to File Suppl. Decl. [Dkt.
#27]. I granted leave to file the supplemental declaration. See Minute Order, l\/lar. 9,
20l6.
In the supplemental declaration, Rough & Ready President Link Phillippi averred
that on February 12, 2016, he announced the company would again be closing due to lack
6 "On February l2, 2016 I announced that Rough & Ready will again be closing due to lack of adequate
timber supply. I was forced to terminate 20 of our 70 employees immediately, and to halt production at
the sawmill. Our only activity currently is to complete the processing of lumber we have already cut and
not yet prepared for sale, and to complete sales on our existing inventory of lumber. We expect to cease
all operations and lay off an additional 42 employees in the next sixty days." R&R Second Decl. 11 2.
9
of adequate timber supply. R&R Second Decl. jj 2. He explained that in order to remain
competitive, i.e. operate, the company must run two shifts each day and process 50-60
mmbf each year. Ia’. jj 3. The non-BLM timber only supplied 12.5 mmbf, and "the
[BLM] is [Rough & Ready’s] only potential source of the additional lumber [it]
require[s] for 2016 (and subsequent years)." Id. The most recent closure and the
corresponding timber supply analysis clearly post-date the original judgment in Swanson
1 and the dismissals in Swanson II, and thus constitute a "material change following
dismissal." Nat’l Ass ’n of Home Buz'lders, 786 F.3d at 4l. Moreover, the injury is no
longer a risk of injury but now constitutes an actual, concrete, and particularized injury in
fact that is not hypothetical or conjectural. See Lujan, 504 U.S. at 560; see also Swanson
Grp. Mfg. v. Jewell, 790 F.3d at 243 (that Rough & Ready "may not" be able to continue
operating and keep its work force employed was "the kind of uncertain and unspecific
prediction of future harm that is inadequate to establish Article III standing[,]" noting
"Phillippi never state[d] that Rough & Ready suffered any harm, much less had to lay off
employees or close its mill").
The second defect, lack of causal link to the BLM shortage, is also cured by
allegations of material change. The supplemental Rough & Ready declaration sets forth
in great detail how much timber the company needs to operate, how much timber is
provided by the non-BLM lands, how much more is needed, and where that timber could
come from. R&R Second Decl. jj 3. in particular, Phillippi alleges Rough & Ready buys
its timber from the Medford District alone and, to date, the Medford District has not
lO