Mainstreet Organization of Realtors v. Calumet City , 505 F.3d 742 ( 2007 )

SYKES, Circuit Judge,

concurring.

I agree with my colleagues that the preliminary injunction must be vacated and the case dismissed for lack of standing. The court’s analysis of prudential standing doctrine is comprehensive, and I join the panel’s conclusion that the plaintiffs alleged injury is too remote to permit it to litigate this constitutional claim. I disagree, however, that the plaintiff has gotten over the first hurdle of establishing constitutional standing; Article Ill’s case- or-controversy requirements are not met here.

The MainStreet Organization of Realtors (“the Association”) brought this action seeking declaratory and injunctive relief to “redress the deprivation ... of rights guaranteed to the Realtor Association, its Members, and the citizens of [Calumet City] by the Fourth, Fifth and Fourteenth Amendments.” These deprivations, according to the complaint, were caused by the City’s point-of-sale code compliance ordinance. The Fourth Amendment claim alleged that the ordinance impermissibly subjects the City’s property owners to warrantless inspections; the Fifth Amendment claim alleged unconstitutional takings of property without just compensation; and the Fourteenth Amendment claims alleged that the ordinance violates equal protection and deprives the owners of their property without due process of law. Only the due process claim remains.

The district court granted the Association’s motion for a preliminary injunction prohibiting the City from enforcing the ordinance. The City responded by amending the ordinance. The district court then dissolved the first injunction as moot but was dissatisfied with the City’s efforts and entered a second injunction prohibiting enforcement of the amended ordinance. The amended ordinance, like its predecessor, requires that real property in the City be inspected for compliance with the City’s building and zoning codes before it is sold. Generally speaking, ownership may not be transferred until the property complies with building and zoning codes or adequate provision is made to bring the property up to code. As the court notes, point-of-sale ordinances like this one are common building and zoning code enforcement measures and are aimed at maintaining the quality of municipal housing stocks.

As to associational standing (see Hunt v. Wash. State Apple Adver. Comm’n, 432 U.S. 333, 343, 97 S.Ct. 2434, 53 L.Ed.2d 383 (1977)), the Association alleged that the City’s point-of-sale ordinance “adversely affect[ed]” its member-brokers’ “ability to consummate real estate transactions.” The bulk of the Association’s complaint, however, is devoted to the effect of the ordinance on the rights of the City’s property owners, not the Association’s members. The same is true of the Association’s motion for a preliminary injunction. The district court gave the question of the Association’s standing short shrift, summarily concluding that “the interest that ... [the Association’s members] are entitled to protect is essentially their business interest. It’s a deprivation of the ability to earn eommission[s] on sales.”

The court appears to reject this holding — rightly, I think — for the rather obvious reason that the Association’s members “have no rights in commissions they may someday earn on sales of property with whose owners they have as yet no brokerage contract.” Majority op. at 746. But the court also concludes that the possibility of reduced future commissions — commissions the brokers have no arguable legal right or expectation to receive — is enough to confer constitutional standing. I cannot see how this can be reconciled.

It is clear, as the court notes, that “Calumet City’s ordinance imposes no duties or sanctions on real estate brokers.” Majority op. at 746. The very nature of the claims initially asserted — warrantless property inspections, unconstitutional takings of property, deprivations of property in violation of equal protection and due process — demonstrates that the rights the ordinance is alleged to infringe belong to the property owners, not the real estate brokers. As such, the court concludes (and I agree) that “[t]he brokers are not suing to enforce their constitutional property rights[,] ... [t]hey are suing to enforce the property rights of the owners of residential property.” Majority op. at 746. But this means the Association has failed to establish Article III standing, not just that prudential standing considerations preclude this suit, as the court concludes. An injury to the City’s real property owners does not confer standing on the City’s real estate brokers simply because they are collaterally affected. Without some cognizable injury to their oum rights, the brokers (and derivatively, the Association) lack constitutional standing to sue, and judicial policy governing third-party standing does not come into play.¹

“The ‘core component’ of the requirement that a htigant have standing to invoke the authority of a federal court ‘is an essential and unchanging part of the case- or-controversy requirement of Article III.’ ” DaimlerChrysler Corp. v. Cuno, 547 U.S. 332, 126 S.Ct. 1854, 1861, 164 L.Ed.2d 589 (2006) (quoting Lujan v. Defenders of Wildlife, Inc., 504 U.S. 555, 560, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992)). The “threshold question in every federal case” is “whether the plaintiff has ‘alleged such a personal stake in the outcome of the controversy’ as to warrant his invocation of federal-court jurisdiction and to justify exercise of the court’s remedial powers on his behalf.” Warth v. Seldin, 422 U.S. 490, 498-99, 95 S.Ct. 2197, 45 L.Ed.2d 343 (1975) (emphasis added) (quoting Baker v. Carr, 369 U.S. 186, 204, 82 S.Ct. 691, 7 L.Ed.2d 663 (1962)). This is because “[t]he Art. Ill judicial power exists only to redress or otherwise to protect against injury to the complaining party, even though the court’s judgment may benefit others collaterally.” Id. at 499, 95 S.Ct. 2197.

The familiar requirements of Article III standing are: “First, the plaintiff must have suffered an injury in fact — an invasion of a legally protected interest which is (a) concrete and particularized ... and (b) actual or imminent, not conjectural or hypothetical.” Lujan, 504 U.S. at 560, 112 S.Ct. 2130 (citations and internal quotations omitted). “Second, there must be a causal connection between the injury and the conduct complained of — the injury has to be fairly ... trace[able] to the challenged action of the defendant, and not ... th[e] result [of] the independent action of some third party not before the court.” Id. (internal quotations omitted). And “[t]hird, it must be likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision.” Id. at 561, 112 S.Ct. 2130 (internal quotations omitted). Thus, a federal court’s jurisdiction “can be invoked only when the plaintiff himself has suffered ‘some threatened or actual injury resulting from the putatively illegal action.’ ” Warth, 422 U.S. at 499, 95 S.Ct. 2197 (emphasis added) (quoting Linda R.S. v. Richard D., 410 U.S. 614, 617, 93 S.Ct. 1146, 35 L.Ed.2d 536 (1973)).

The Supreme Court has made it clear that “when the plaintiff is not himself the object of the government action or inaction he challenges, standing is not precluded, but it is ordinarily ‘substantially more difficult’ to establish.” Lujan, 504 U.S. at 562, 112 S.Ct. 2130 (quoting Allen v. Wright, 468 U.S. 737, 758, 104 S.Ct. 3315, 82 L.Ed.2d 556 (1984)). Where the “plaintiffs asserted injury arises from the government’s allegedly unlawful regulation (or lack of regulation) of someone else[,1 ... causation and redressability ordinarily hinge on the response of the regulated (or regulable) third party to the government action or inaction — and perhaps the response of others as well.” Id,.; see also DH2, Inc. v. U.S. S.E.C., 422 F.3d 591, 596 (7th Cir.2005). “In this situation, ‘much more is needed’ to establish standing....” DH2, Inc., 422 F.3d at 596 (quoting Lujan, 504 U.S. at 562, 112 S.Ct. 2130).

Finally, “[t]he party invoking federal jurisdiction bears the burden of establishing the[] elements” of standing. Lujan, 504 U.S. at 561, 112 S.Ct. 2130; see also DaimlerChrysler, 126 S.Ct. at 1861 n. 3. These are “not mere pleading requirements but rather an indispensable part of the plaintiffs case,” and “each element must be supported in the same way as any other matter on which the plaintiff bears the burden of proof, i.e., with the manner and degree of evidence required at the successive stages of the litigation.” Lujan, 504 U.S. at 561, 112 S.Ct. 2130. At the pleading stage, the plaintiff must allege facts that, assuming their truth, would establish the injury-in-fact elements necessary to support standing. At summary judgment, those facts must be supported in the usual way (by affidavit or other evidence), and at trial they must be proven. Id.

In light of these well-established principles, it is hard to understand the court’s categorical statement that a “case is not dismissed for failure to invoke federal jurisdiction just because the plaintiff fails to prove injury.” Majority op. at 745. To the contrary, it is the plaintiffs burden to prove injury-in-fact, Lujan, 504 U.S. at 561-62, 112 S.Ct. 2130, and cases are often dismissed for failure of the plaintiff to carry that burden. See, e.g., DaimlerChrysler, 126 S.Ct. at 1868; Lujan, 504 U.S. at 562, 112 S.Ct. 2130; Winkler v. Gates, 481 F.3d 977, 988 (7th Cir.2007); DH2, Inc., 422 F.3d at 596-97. Also, I cannot agree with the court’s view that “[ojrdinarily and here the allegation [of injury] is enough,” as long as “there is some nonnegligable, nontheoretical, probability of harm.” Majority op. at 744. This treats the constitutional mínimums as trifling requirements easily satisfied by almost any allegation of injury, leaving only prudential standing considerations to be consulted. But the Supreme Court has long emphasized that the case-or-controversy requirement is critical to the legitimacy of the court’s role: “That requirement states a limitation on judicial power, not merely a factor to be balanced in the weighing of so-called ‘prudential’ considerations.” Valley Forge Christian Coll. v. Ams. United for Separation of Church & State, Inc., 454 U.S. 464, 475, 102 S.Ct. 752, 70 L.Ed.2d 700 (1982) (“[Neither the counsels of prudence nor the policies implicit in the ‘case or controversy’ requirement should be mistaken for the rigorous Art. Ill requirements themselves.”).

I do not mean to suggest that “to establish standing a plaintiff must establish that a right of his has been infringed; that would conflate the issue of standing with the merits of the suit.” Aurora Loan Servs., Inc. v. Craddieth, 442 F.3d 1018, 1024 (7th Cir.2006). Rather, the plaintiff “must have a colorable claim to such a right.” Id. Thus, “[ajlthough standing in no way depends on the merits of the plaintiffs contention that particular conduct is illegal, ... it often turns on the nature and source of the claim asserted.” Warth, 422 U.S. at 500, 95 S.Ct. 2197. Accordingly, “[i]t is not enough that he claims to have been injured by the defendant’s conduct. ‘The alleged injury must be legally and judicially cognizable.’ ” Craddieth, 442 F.3d at 1024 (quoting Raines v. Byrd, 521 U.S. 811, 819, 117 S.Ct. 2312, 138 L.Ed.2d 849 (1997)). That is, “the injury must be to the sort of interest that the law protects when it is wrongfully invaded.” Id.

This case advanced beyond the pleading stage to the entry of a preliminary injunction, which of course requires the plaintiff to shoulder the burden of establishing a likelihood of success on the merits. Christian Legal Soc’y v. Walker, 453 F.3d 853, 859 (7th Cir.2006). This includes the elements of standing and usually requires the plaintiff to move beyond mere allegations. But the Association’s motion for a preliminary injunction did no more than rely on the complaint, almost all of which, as I have noted, pertains to the rights of the City’s property owners. As to its members’ interests, the Association alleged only that the point-of-sale ordinance adversely affected its members’ ability to consummate real estate transactions. This is not a legally protected interest; the brokers do not have a generalized right to consummate real estate transactions or earn commissions.

It is certainly true as a practical economic matter that real estate brokers have an interest in consummating as many transactions as they can at the highest prices possible so as to maximize the amount of commissions they earn. But this is nothing more than an aspiration, not an expectation or right; no law, state or federal, protects this interest. That the point-of-sale ordinance has the potential to reduce commissions does not alone establish injury for purposes of constitutional standing; the Association must establish that the brokers’ interest in future commissions is “the sort of interest that the law protects when it is wrongfully invaded.” Craddieth, 442 F.3d at 1024. It has not done so. The brokers do not have a colorable due process claim to future commissions; the Association does not argue otherwise. Indeed, the Association has invoked no principle of law — constitutional, statutory, or common law — as an arguable source of legal protection for its members’ interests. The injury asserted here, while perhaps a plausible practical one, is not “legally and judicially cognizable.” Raines, 521 U.S. at 819, 117 S.Ct. 2312. Without a claim of injury to a legally protected interest, the brokers cannot establish Article III standing.

Moreover, because the point-of-sale ordinance regulates real property owners, not brokers, the claim asserted here arises from the City’s allegedly unconstitutional regulation of someone other than the Association’s members, and “much more is needed” to establish standing. Lujan, 504 U.S. at 562, 112 S.Ct. 2130. The attenuated injury asserted by the Association is insufficient to satisfy this standard. The brokers’ alleged injury (even assuming it is legally cognizable and judicially redressa-ble) depends upon the independent action of third parties not before the court— namely, the property owners upon whom the ordinance operates, building inspectors and zoning authorities, and prospective buyers of real property in the City who are just as likely to pay more, not less, for property that complies with the City’s codes. This is too conjectural to satisfy the “much more” that is needed to establish standing where the challenged regulation burdens someone other than the plaintiff.

In short, the brokers’ alleged injury is “a diffuse and speculative harm,” and more fundamentally, the “interest asserted is not a legally protected one.” DH2, Inc., 422 F.3d at 596-97. The suit therefore must be dismissed for lack of Article III standing. Of course, my disagreement with my colleagues on this point means only that the case is doubly dismissible; I join the court’s conclusion that prudential third-party standing doctrine bars the Association from bringing this claim. But if the Supreme Court’s recent standing jurisprudence means anything, it is that constitutional standing prerequisites are to be closely monitored and scrupulously enforced. See Hein v. Freedom, Religion Found., — U.S. —, 127 S.Ct. 2553, 2562, 168 L.Ed.2d 424 (2007) (“No principle is more fundamental to the judiciary’s proper role in our system of government than the constitutional limitation of federal-court jurisdiction to actual cases or controversies.”) (quotation omitted); DaimlerChrysler, 126 S.Ct. at 1861 (“The case-or-controversy limitation is crucial in maintaining the tripartite allocation of power set forth in the Constitution.”) (internal quotations omitted). This is (or should be) true even when there is a prudential doctrine handy to guard against unwarranted extensions of judicial authority. I see little reason to think the Court would be inclined to relax the constitutional minimums in third-party standing cases.

The “federal courts sit ‘solely! ] to decide on the rights of individuals,’ ” Hein, 127 S.Ct. at 2562 (quoting Marbury v. Madison, 5 U.S. (1 Cranch) 137, 170, 2 L.Ed. 60 (1803)), “and must ‘refrai[n] from passing upon the constitutionality of an act ... unless obliged to do so in the proper performance of our judicial function, when the question is raised by a party whose interests entitle him to raise it.’ ” Id. (quoting Valley Forge, 454 U.S. at 474, 102 S.Ct. 752). The brokers’ rights are not at issue here; their Association therefore is not entitled to litigate the question of the constitutionality of the City’s point-of-sale ordinance. I join the court in vacating the preliminary injunction and dismissing the suit, but for lack of constitutional, as well as prudential, standing.

1 . Prudential standing considerations generally prohibit “a litigant’s raising another person's legal rights,” Elk Grove Unified Sch. Dist. v. Newdow, 542 U.S. 1, 11-12, 124 S.Ct. 2301, 159 L.Ed.2d 98 (2004), but this doctrine kicks in to bar suit (or not) only after the litigant has established his own Article III standing to sue. In Newdow, for example, the plaintiff established constitutional standing to challenge the practice of daily recitation of the Pledge of Allegiance in his daughter's school as an unconstitutional interference with his right as a parent to direct the religious education of his daughter. Id. at 9-10, 124 S.Ct. 2301. The Supreme Court concluded that although Article III requirements were met, prudential considerations required dismissal of the father’s suit because a state court had awarded legal custody to the child's mother, depriving the father of his right under state law to sue to vindicate his daughter's rights as her "next friend.” Id. at 17-18, 124 S.Ct. 2301. The Court held: "In our view, it is improper for the federal courts to entertain a claim by a plaintiff whose standing to sue is founded on family law rights that are in dispute when prosecution of the lawsuit may have an adverse effect on the person who is the source of the plaintiff's claimed standing.” Id. at 17, 124 S.Ct. 2301.