Cierco v. Lew , 190 F. Supp. 3d 16 ( 2016 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
RAMON CICERO, et al.,
Plaintiffs,
v. Civil Action No. 15-1641 (JEB)
JACOB J. LEW, et al.,
Defendants.
MEMORANDUM OPINION
Plaintiffs Ramon and Higini Cicero, along with two associated corporations, are the
majority shareholders of a privately held Andorran Bank, Banca Privada d’Andorra S.A. (BPA),
which has recently found itself in a bit of a pickle. An arm of the U.S. Treasury Department, the
Financial Crimes Enforcement Network (FinCEN), developed concerns that BPA was
facilitating – or was willfully blind to – various money-laundering transactions happening under
its roof. Relying on authority provided by the 2001 USA PATRIOT Act, FinCEN in early 2015
started a process that, had it been completed, would have effectively required all U.S. banks to
stop transacting with BPA. In pursuit of this goal, FinCEN published both a Notice of Finding
and a Notice of Proposed Rulemaking in the Federal Register, stating its reasons for suspecting
that BPA was of “primary money laundering concern” and proposing regulations that would
limit U.S. banks’ involvement with the accused.
Before FinCEN promulgated a final rule, however, Plaintiffs sued in this Court in
October 2015, seeking to vacate those Notices and enjoin Treasury from proceeding any further.
Plaintiffs believe that FinCEN’s actions set into motion a chain of events that will (soon and
irrevocably) lead to BPA’s demise. In particular, after the Notices issued, U.S. banks voluntarily
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ceased U.S. dollar transactions with BPA. Even worse, the Andorran government took control of
BPA and has recently developed plans for its liquidation. Given this turn of events, FinCEN
recently changed course, withdrawing its Notice of Finding and NPRM in early 2016 because it
believes that BPA, on account of its Andorran receivership, is no longer of “primary money
laundering concern.” Pointing to those withdrawals, the government has now moved to dismiss,
arguing that any controversy that once existed between the parties has been rendered moot. The
Court agrees and will grant Defendants’ Motion.
I. Background
A. Statutory Background
Beginning at least with the enactment of the Bank Secrecy Act in 1970, Pub. L. 91-508,
Tit. II, 84 Stat. 1118, Congress has given the Secretary of the Treasury authority to impose
various regulations on domestic banks to reduce the “use of banks and other institutions as
financial intermediaries by persons engaged in criminal activity.” Ratzlaf v. United States, 510
U.S. 135, 138 (1994). Following the terrorist attacks on September 11, 2011, Congress amended
the Act in Title III of the 2001 USA PATRIOT Act, Pub. L. 107-56, 115 Stat. 272, in an effort to
“prevent, detect, and prosecute international money laundering and the financing of terrorism.”
Id. § 302(b)(1). Relevant here, § 311 of the PATRIOT Act, codified at 31 U.S.C. § 5318A, gave
the government authority to impose any of five “special measures” on domestic financial
institutions, provided the Secretary “finds that reasonable grounds exist for concluding” that a
foreign bank – i.e., one “operating outside the United States” – is “of primary money laundering
concern.” 31 U.S.C. § 5318A(a)(1).
The first four of the “special measure[s]” allow the Secretary, by way of FinCEN, to
require domestic banks to keep records and report on specific types of transactions. Id.
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§ 5318A(b); see also § 310 (establishing FinCEN as a “a bureau in the Department of the
Treasury” and enumerating its authorities). Those measures, which are not at issue here, may be
imposed by Treasury “by regulation, order, or otherwise as permitted by law.”
§ 5318A(a)(2)(B).
The fifth special measure, in contrast – which is the one FinCEN believed was warranted
for BPA – represents a more severe imposition on domestic banks. If the Secretary finds a
foreign banking institution to be “of primary money laundering concern,” he may, “in
consultation with the Secretary of State, the Attorney General, and the Chairman of the Board of
Governors of the Federal Reserve System, . . . prohibit, or impose conditions upon, the opening
or maintaining in the United States of a correspondent account or payable-through account by
any domestic financial institution or domestic financial agency for or on behalf of a foreign
banking institution.” Id. § 5318A(b)(5). Unlike the other four measures, which may be imposed
“as permitted by law,” this measure “may be imposed only by regulation.” § 5318A(a)(2)(B),
(C); see 5 U.S.C. § 553 (describing procedures for agency rulemaking).
B. Factual and Procedural Background
1. The Two Notices
In March 2015, FinCEN publicly announced that it had “found that reasonable grounds
exist for concluding that [BPA] is a financial institution operating outside of the United States of
primary money laundering concern.” Notice of Finding That Banca Privada d’Andorra Is a
Financial Institution of Primary Money Laundering Concern (“Notice of Finding”), 80 Fed. Reg.
13464, 13464 (March 13, 2015). Basing this assessment on various factors, it concluded that: (a)
“[s]everal of BPA’s high-level management have facilitated financial transactions on behalf of
TPMLs [third-party money launderers]”; and (b) BPA has weak anti-money-laundering (AML)
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controls and “allow[s] its customers to conduct transactions through the U.S. financial system
that disguise the origin and ownership of the funds.” Id. at 13465-66. FinCEN acknowledged
that while BPA may offer services for some “legitimate business purposes,” distinguishing
between legitimate and illegitimate services was “difficult to assess on the information
available . . . .” Id. at 13466. On the basis of these findings, FinCEN concluded that imposition
of the fifth special measure under § 311 was appropriate, suggesting that doing so
would guard against [] international money laundering and other
financial crimes described above directly by restricting the ability of
BPA to access the U.S. financial system to process transactions, and
indirectly by public notification to the international financial
community of the risks posed by dealing with BPA and TPMLs.
Id. at 13466.
On the same day it published its Notice of Finding, FinCEN also published in the Federal
Register a Notice of Proposed Rulemaking “to propose the imposition of [the fifth] special
measure against BPA.” Imposition of Special Measure against Banca Privada d’Andorra as a
Financial Institution of Primary Money Laundering Concern (NPRM), 80 Fed. Reg. 13304,
13304 (March 13, 2015). In addition to setting forth what the rule would require from U.S.
financial institutions and justifying Treasury’s use of the fifth special measure, the government
also observed that “[o]ther countries or multilateral groups have not yet taken action similar to
the action proposed in this rulemaking,” – i.e., blocking the domestic use of correspondent bank
accounts maintained for BPA and screening out BPA-related transactions. Id. at 13305. It
therefore “encourage[d] other countries to take similar action based on the information contained
in this NPRM and the Notice of Finding.” Id. It also informed the public that the deadline for
submitting any comments regarding the NPRM was May 12, 2015. Id. at 13304-05.
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Plaintiffs took advantage of the public-comment period, filing on May 6, 2015, a
comment that “described (1) numerous steps the Bank had taken for years prior to FinCEN’s
Notice to evaluate its AML and compliance program, (2) the results of those evaluations, and (3)
evidence showing the Andorran government’s certification of BPA’s AML program.”
Complaint, ¶ 66. The comment did not specifically respond to FinCEN’s allegations contained
in the Notice of Finding because, according to Plaintiffs, “[t]he characteristic lack of specificity
in the NOF made it impossible” to do so. Id. ¶ 70. Plaintiffs also wrote letters to FinCEN before
the comment period closed, asking for it to “provide additional specificity or a complete file of
unclassified underlying documents that served as the evidentiary basis for the charges, in order to
afford Plaintiffs the opportunity to provide a comprehensive response before the closure of the
Notice and Comment period on May 6, 2015.” Id., ¶ 71. FinCEN, however, never responded.
Id.
Notwithstanding their ongoing attempts to change Treasury’s mind, Plaintiffs allege that
the Notice of Finding and NPRM had an “immediate impact” on BPA’s business. See id., ¶ 43.
Specifically, they believe the Notices “directly caused the Andorran government to seize BPA.”
Id. In addition, “BPA’s U.S. correspondent banks immediately froze BPA’s accounts and
refused further banking services, thus cutting BPA off from the U.S. dollar market. BPA’s non-
U.S. dollar banking relationships worldwide also were immediately terminated.” Id.
2. Plaintiffs’ Lawsuit & Subsequent Developments
Seven months after issuance of the Notice of Finding and NPRM, six months after the
Andorran government seized BPA, and five months after the public-comment period closed,
Plaintiffs – who are the Bank’s shareholders and not BPA itself – filed a six-count suit in this
Court. See Compl. (filed Oct. 7, 2015). Counts I and II levied substantive and procedural
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challenges to the Notices under the Administrative Procedure Act, insisting, inter alia, that
FinCEN’s fact finding was flawed, that such flaws yielded an erroneous finding that BPA was
“of primary money laundering concern,” and that the information set forth in the Notices were
too vague to allow BPA to adequately respond in its comments. See id., ¶¶ 97-112. Count III
alleged a violation of the Due Process Clause; by causing U.S. banks to close BPA’s
correspondent bank accounts, Plaintiffs allege that Treasury “effectively deprived BPA of the
right to its property, including its U.S. property – the correspondent accounts,” which, in turn,
unconstitutionally “deprived the Plaintiffs of [their] property interests as directors and
shareholders of BPA” and “caused BPA and Plaintiffs substantial and irreparable reputational
harm.” Id., ¶¶ 116-17 (emphases added). Counts IV and V largely overlap with Counts I and II,
contending that FinCEN exceeded its statutory authority under § 311 – first, by failing to
thoroughly examine “the extent of BPA’s legitimate business operations,” id., ¶ 123, and second,
by failing to “provide adequate notice and a meaningful opportunity for the Plaintiffs to
comment before BPA was labeled an institution of ‘primary money laundering concern.’” Id.,
¶ 130. Finally, Count VI sought a writ of mandamus that would order Treasury “to issue a Final
Order within thirty days of service of this Complaint so that its conduct can then be subject to
full judicial review.” Id., ¶ 133.
Moving to their prayer for relief, Plaintiffs asked the Court to “hold[] unlawful and
rescind[] the NOF and set[] aside the NPRM” and “enjoin[] FinCEN from promulgating a Final
Rule.” Id. at 43. In the alternative, they asked for “an order requiring FinCEN to provide
Plaintiffs with the documents underlying its decision to issue the NOF and NPRM” or, in the
event the Court concluded that the NOF and NPRM “d[id] not constitute final agency action, an
order requiring FinCEN to either withdraw the NOF and NPRM or issue a final rule within thirty
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days of service of the complaint.” Id. As a final, catch-all request, they sought “[a] grant of such
additional or different relief as the Court deems just and proper.” Id. at 44.
In November 2015, Plaintiffs moved for partial summary judgment. See ECF No. 15. In
response, the government moved to stay briefing, arguing that they had failed to effect proper
service, which, if it had been accomplished, would have precipitated a motion to dismiss. See
ECF No. 17. After convening a hearing in January 2016, the Court agreed to stay briefing on the
summary-judgment motion, but ordered the government to quickly file a motion to dismiss by
the end of that month. See Minute Order of Jan. 15, 2016.
One day after docketing their reply brief on the dismissal motion, see ECF No. 32,
Defendants filed a notice informing the Court that FinCEN had just submitted withdrawals of
both the Notice of Finding and NPRM. See ECF No. 33 at 1-2. Given those recent
developments, the government contended that, in addition to the arguments it had made in its
motion to dismiss, “the complaint . . . should also be dismissed as moot.” Id. at 2. (The
withdrawals were published on March 4, 2016, at 81 Fed. Reg. 11648 and 81 Fed. Reg. 11496,
respectively.)
To justify its about-face, FinCEN pointed to the steps taken by the Andorran government
that had rendered BPA effectively moribund, which meant that FinCEN no longer considered the
Bank “of primary money laundering concern.” 81 Fed. Reg. at 11648. In particular, FinCEN
noted that the Andorran regulator of financial institutions, Institut Nacional Andorrà de Finances
(INAF), had seized BPA in March 2015 and ousted its leadership. See 81 Fed. Reg. at 11648.
The following month, the Andorran parliament also created a new government agency and gave
it the authority to restructure and supervise resolution of banks – the Agència Estatal de
Resolució d’Entitats Bancàries (AREB) – which then took control of BPA. Id. AREB
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subsequently “instituted a process by which BPA’s ‘good assets’ would be stripped from it and
transferred to a new financial institution – Vall Banc – which would be owned by the Andorran
government. Vall Banc would then be sold for the financial benefit of the Andorran
government.” Opp. at 1. Although Plaintiffs agree that these steps have transpired and that Vall
Banc has already “been established,” they insist that all hope is not lost, as “the asset transfer has
not yet taken place.” Id. Even so, FinCEN for its part is satisfied that “the steps taken by the
authorities in Andorra sufficiently protect the U.S. financial system from the money laundering
risks previously associated with BPA,” 81 Fed. Reg. at 11649, and that the imposition of § 311
special measures is no longer justifiable. Id.
After being notified of those new developments in February 2016, the Court convened
yet another status conference and ordered supplemental briefing on the issue of mootness. See
Minute Order of Feb. 26, 2016. That briefing now complete, the Court considers the parties’
arguments below.
II. Legal Standard
In evaluating Defendants’ supplemental Motion to Dismiss, the Court must “treat the
complaint’s factual allegations as true . . . and must grant plaintiff ‘the benefit of all inferences
that can be derived from the facts alleged.’” Sparrow v. United Air Lines, Inc., 216 F.3d 1111,
1113 (D.C. Cir. 2000) (quoting Schuler v. United States, 617 F.2d 605, 608 (D.C. Cir. 1979))
(internal citation omitted); see also Jerome Stevens Pharms., Inc. v. FDA, 402 F.3d 1249, 1253
(D.C. Cir. 2005); Scheuer v. Rhodes, 416 U.S. 232, 236 (1974) (“[I]n passing on a motion to
dismiss, whether on the ground of lack of jurisdiction over the subject matter or for failure to
state a cause of action, the allegations of the complaint should be construed favorably to the
pleader.”); Walker v. Jones, 733 F.2d 923, 925–26 (D.C. Cir. 1984) (same). The Court need not
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accept as true, however, “a legal conclusion couched as a factual allegation,” nor an inference
unsupported by the facts set forth in the Complaint. Trudeau v. Fed. Trade Comm’n, 456 F.3d
178, 193 (D.C. Cir. 2006).
To survive a motion to dismiss under Rule 12(b)(1), a plaintiff bears the burden of
proving that the Court has subject-matter jurisdiction to hear its claims. See DaimlerChrysler
Corp. v. Cuno, 547 U.S. 332, 342 & n.3 (2006); Arpaio v. Obama, 797 F.3d 11, 19 (D.C. Cir.
2015). A court has an “affirmative obligation to ensure that it is acting within the scope of its
jurisdictional authority,” Grand Lodge of Fraternal Order of Police v. Ashcroft, 185 F. Supp. 2d
9, 13 (D.D.C. 2001), which includes the obligation to consider issues of mootness. See Mine
Reclamation Corp. v. FERC, 30 F.3d 1519, 1522 (D.C. Cir. 1994). For this reason, “‘the
[p]laintiff’s factual allegations in the complaint . . . will bear closer scrutiny in resolving a
12(b)(1) motion’ than in resolving a 12(b)(6) motion for failure to state a claim.” Grand Lodge,
185 F. Supp. 2d at 13-14 (quoting 5A Charles A. Wright & Arthur R. Miller, Fed. Prac. & Proc.
§ 1350 (2d ed. 1987)). Additionally, unlike with a motion to dismiss under Rule 12(b)(6), the
Court “may consider materials outside the pleadings in deciding whether to grant a motion to
dismiss for lack of jurisdiction. . . .” Jerome Stevens Pharm., 402 F.3d at 1253.
Although the Court must “address the issue [of mootness] sua sponte because [it] goes to
the jurisdiction of this court,” Mine Reclamation Corp., 30 F.3d at 1522, the party asserting
mootness – here, the government – generally bears the burden of establishing that a case is moot
in the first instance. See Honeywell Int’l, Inc. v. NRC, 628 F.3d 568, 576 (D.C. Cir. 2010). The
party opposing a mootness challenge, in turn, “bears the burden of showing an exception [to the
mootness doctrine] applies.” Id. (internal quotation marks omitted).
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III. Analysis
Article III of the Constitution limits federal courts’ jurisdiction to “actual, ongoing
controversies.” Honig v. Doe, 484 U.S. 305, 317 (1988). If “events have so transpired that [a
judicial] decision will neither presently affect the parties’ rights nor have a more-than-
speculative chance of affecting them in the future,” the case is moot, and this Court lacks
jurisdiction to entertain the suit. Abdelfattah v. U.S. Dep’t of Homeland Sec., 787 F.3d 524, 534
(D.C. Cir. 2015) (internal citation and quotation marks omitted); see Nat’l Black Police Assoc. v.
Dist. of Columbia, 108 F.3d 346, 349 (D.C. Cir. 1997) (“[A] federal court has no power to render
advisory opinions or decide questions that cannot affect the rights of litigants in the case before
[it].”) (internal citations, alterations, and quotation marks omitted). The Court separately
discusses two facets of the mootness doctrine: the issue of voluntary cessation and the capable-
of-repetition-yet-evading-review question.
A. Voluntary Cessation
In making its case that “events have so transpired” as to render this controversy moot, the
government relies on its decision to withdraw the two Notices that Plaintiffs, in their Complaint,
sought to have “rescind[ed]” or “set[] aside.” Compl. at 43. In these circumstances, where the
“intervening event arguably ending any live controversy between [the parties]” is the
government’s own decision to end the challenged conduct, “voluntary cessation analysis governs
[the] mootness inquiry.” Nat’l Black Police Assoc., 108 F.3d at 349.
To succeed in demonstrating the case is moot under such circumstances, the government
must show “that (1) ‘there is no reasonable expectation that the alleged violation will recur,’ and
(2) ‘interim relief or events have completely or irrevocably eradicated the effects of the alleged
violation.’” Id. (quoting Cty. of Los Angeles v. Davis, 440 U.S. 625, 631 (1979)). The Court
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will take each prong in turn, concluding that Defendants have established that the case is moot.
1. No Reasonable Expectation of Recurrence
As a general matter, “executive action rescinding . . . a regulation can moot a challenge to
its validity.” Gulf Oil Corp. v. Brock, 778 F.2d 834, 840 (D.C. Cir. 1985); see Center for
Science in the Public Interest v. Regan, 727 F.2d 1161, 1164-65 (D.C. Cir. 1984) (case moot
when agency rescinded challenged regulation and promulgated new one). In this case, the
withdrawal notices themselves convincingly establish that the “alleged violation” – i.e.,
FinCEN’s issuance of Notices as a prerequisite to imposing § 311 special measures against BPA
– is not likely to recur. As a reminder, FinCEN is without power to impose the fifth special
measure unless the Secretary finds that “reasonable grounds exist for concluding” that the target
foreign bank is “of primary money laundering concern.” 31 U.S.C. § 5318A(a)(1). In contrast
to the position Treasury took when it issued the challenged Notices, it has now formally
published its conclusion that “BPA no longer operates in a manner that poses a money
laundering threat to the U.S. financial system” – given its seizure by INAF and proposed
liquidation by AREB. See 81 Fed. Reg. at 11497; 81 Fed. Reg. at 11649. Treasury therefore
presently lacks any basis for proposing and then promulgating a rule that would impose special
measures against U.S. banks that do business with BPA.
Reinforcing this conclusion is Plaintiffs’ own failure to argue that the government will
impose the fifth special measure on BPA in the future. See Larsen v. U.S. Navy, 525 F.3d 1, 4
(D.C. Cir. 2008) (“[B]ecause plaintiffs never allege that the Navy is likely to or even considering
reinstituting the [challenged policy], there is no reasonable expectation that the alleged violation
will recur.”) (internal citation and quotation marks omitted). On the contrary, they candidly
admit that “BPA [itself] may not be a future victim” of Treasury’s actions, but weakly suggest
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that Plaintiffs must be allowed to proceed in order to save other banks from suffering the same
fate. See Opp. at 15. They would, of course, have no standing to protest such action.
Defendants have thus established that there is “no reasonable expectation” that the alleged
violations as to Plaintiffs will recur.
2. Effects of Violation Eradicated by Intervening Events
While their first argument may be cursory, it is on the second condition – that “interim
relief or events have completely and irrevocably eradicated the effects of the alleged violation,”
Davis, 440 U.S. at 631 – that Plaintiffs believe that Defendants have fallen short. They insist that
Andorra’s seizure and forthcoming dissolution of BPA was caused by FinCEN’s Notices, and
that the “Court’s intervention” will ameliorate those continuing injuries. Here, too, however, the
government has the better argument.
“The determination whether sufficient effects [of the alleged violation] remain to justify
decision often will turn on the availability of meaningful relief.” 13C Charles Alan Wright,
Arthur R. Miller & Edward H. Cooper, Fed. Prac. & Proc., § 3533.3.1, at 104-05 (3d ed. 2008).
On one hand, “a case is not moot if a court can provide an effective remedy.” Larsen, 525 F.3d
at 4 (D.C. Cir. 2008). At the same time, courts may not decide a controversy where post-filing
events “make[] it impossible for the court to grant ‘any effectual relief whatever’ . . . .” Church
of Scientology of Cal. v. United States, 506 U.S. 9, 12 (1992) (emphasis added); see also
Conservation Force, Inc. v. Jewell, 733 F.3d 1200, 1204 (D.C. Cir. 2013) (case rendered moot
“when, among other things, the court can provide no effective remedy because a party has
already ‘obtained all the relief that [it has] sought’”) (quoting Monzillo v. Biller, 735 F.2d 1456,
1459 (D.C. Cir. 1984)); Kennecott Utah Copper Corp. v. U.S. Dep’t of Interior, 88 F.3d 1191,
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1207 (D.C. Cir. 1996) (a party “no longer suffer[s] a legally cognizable injury traceable to the
alleged violations” where “the court can no longer provide . . . any meaningful relief”).
The government’s argument that the Court can grant no meaningful remedy is a simple
one: Plaintiffs have principally asked for equitable relief in the form of vacatur of the two
Notices. Since the government’s own withdrawal of those Notices yields the same outcome as a
vacatur ordered by this Court, Plaintiffs have obtained what they asked for, and no live
controversy remains. See Monzillo, 735 F.2d at 1459 (dismissing as moot claim for equitable
and declaratory relief where “appellees obtained all the relief that they sought”); Midcoast
Fisherman’s Ass’n v. Blank, 948 F. Supp. 2d 4, 8 (D.D.C. 2013) (dismissing case as moot where
“the [defendant] agency’s subsequent actions have given plaintiffs the most they would be
entitled to if they won this case”).
A close examination of Plaintiffs’ carefully drafted and circumscribed prayer for relief
confirms the soundness of the government’s argument. In the Complaint, Plaintiffs request in
full:
A. An order holding unlawful and rescinding the NOF and setting
aside the NPRM.
B. An order enjoining FinCEN from promulgating a Final Rule.
C. Should the Court decline to rescind the NOF and set aside the
NPRM, an order requiring FinCEN to provide Plaintiffs with the
documents underlying its decision to issue the NOF and NPRM.
D. Should the Court decline to rescind the NOF and set aside the
NPRM on the grounds that they do not constitute final agency
action, an order requiring FinCEN to either withdraw the NOF and
NPRM or issue a final rule within thirty days of service of the
complaint.
E. An award of costs and attorneys’ fees under any applicable statute
or authority.
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F. A grant of such additional or different relief as the Court deems
just and proper.
Compl. at 43-44.
With the Notice of Finding and NPRM now withdrawn, Plaintiffs have obtained precisely
the relief they sought under paragraphs A and B, which, as drafted, represent their first-order
priorities. See Cueto v. Dir., Bureau of Immigration & Customs Enf’t, 584 F. Supp. 2d 147,
149-50 (D.D.C. 2008) (case moot when plaintiff “obtain[s] all the relief he or she sought in the
complaint”). The Court cannot “hold unlawful and rescind” already-withdrawn notices, and, as
explained above, FinCEN cannot promulgate a Final Rule where the government concedes that it
no longer has cause to do so. See supra Section III.A.1.
As to paragraphs C and D, they offer in-the-alternative requests that come into play only
if the relief sought in paragraph A is not obtained. But, as just pointed out, that relief has been
obtained. Such a conclusion is reinforced by Plaintiffs’ decision to ignore remedial requests C
and D in their Opposition. Finally, Paragraph E seeks only costs and fees and has no bearing on
mootness, and Paragraph F provides a general, catch-all request for any other relief deemed “just
and proper.” Taking all of these requests together and evaluating them against Defendants’
recent actions, it is manifest that Plaintiffs have “obtained all the relief that [they] sought.”
Conservation Force, Inc., 733 F.3d at 1204 (internal citation and quotation marks omitted).
Loath to throw in the towel, Plaintiffs rejoin that the consequences of Defendants’
allegedly unlawful Notices continue to haunt them, and that the Court can help eliminate the
specter of that past illegality. Specifically, Plaintiffs’ equity in BPA is frozen in limbo, given the
Bank’s receivership and impending liquidation. They attribute this state of affairs to FinCEN’s
Notices, see Opp. at 16 (“[T]he Andorran government has stated publicly that its actions to seize
and dissolve BPA were prompted by FinCEN’s notices and not by any independent concern
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about BPA.”), and thus argue that a declaratory judgment that FinCEN acted improperly in the
past will help them recover their assets from the Andorran government going forward. See Opp.
at 13.
As a preliminary matter, Plaintiffs seem to be moving the goalpost in an effort to avoid
mootness. In opposing the government’s initial motion to dismiss – which was briefed before
the Notices were withdrawn – Plaintiffs asserted that the rescinding of FinCEN’s Notices would
redress their injuries. See ECF No. 31 (Opp. to Gov. Mot. to Dismiss) at 25 (“[T]here is a
substantial likelihood that [judicial] relief would redress plaintiffs’ injuries here – which is all
plaintiffs need show – if FinCEN were to rescind its NOF and NPRM that BPA is ‘of primary
money laundering concern.’”); id. at 3 (“The withdrawal of the NOF and NPRM meet the
standard for redress[ing]” their “harm,” consisting of the Andorran government’s “depriv[ation]
of personal property – that is[, Plaintiffs’] ownership of shares in BPA and their positions as
Chairmen of its Board.”).
Now that Treasury has withdrawn those Notices, however, Plaintiffs have changed their
tune, arguing instead that “[t]he relief plaintiffs actually seek in this action is a judicial
determination that the NOF and NPRM are unlawful and were issued in violation of the
requirements of Section 311,” which they argue “would significantly increase the likelihood that
Andorra would suspend and ultimately reverse course on the dismemberment of BPA.” Opp. at
13 (emphasis in original). But Plaintiffs’ own allegations in their Complaint contradict this
unsupported assertion. That pleading specifically identifies two preconditions that Plaintiffs
assert must be satisfied for Andorra to reverse course on dismantling BPA. First is the removal
of the two Notices. See Compl., ¶ 46 (“If these baseless and facially defective Notices were
rescinded or found to have been improperly issued, BPA could be returned to its shareholders
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who could resurrect the portions of its business that are still viable.”) (emphases added). That
step, of course, has been completed. According to Plaintiffs, however, that alone is insufficient.
In addition, the “Andorran regulators have told [Plaintiffs] that” returning BPA to its
shareholders would also “require the approval of FinCEN.” Id. (emphasis added). To remedy
Plaintiffs’ continuing harm, then, it is not enough for the Court declare those Notices unlawful;
FinCEN itself would have to proactively register its approval – to the Andorran government –
that BPA be resurrected.
Plaintiffs have never asked for such extensive relief, however, and the Court is not
obliged to keep the case afloat both by ignoring their own prayer and by envisaging what relief
they might have sought – but did not – in their Complaint. See Finca Santa Elena, Inc. v. U.S.
Army Corps of Eng’rs, 62 F. Supp. 3d 1, 5 (D.D.C. 2014) (“‘[T]heoretically’ available relief
sufficient to defeat mootness does not include ‘imagined possibilities beyond those requested in
the complaint, but rather’ involves ‘giv[ing] the plaintiff the benefit of the doubt as to whether
certain requested relief would in fact ease or correct the alleged wrong.’”) (quoting Bayou
Liberty Ass’n, Inc. v. U.S. Army Corps of Eng’rs, 217 F.3d 393, 397 (5th Cir. 2000) (emphasis
in Fincal Santa Elena). More important, even if Plaintiffs had asked the Court to order FinCEN
to approve the return of BPA to Plaintiffs, they offer no argument as to why they would be
lawfully or equitably entitled to such a remedy. Cf. Am. Bioscience, Inc. v. Thompson, 269 F.3d
1077, 1084 (D.C. Cir. 2001) (where plaintiff “prevails on its APA claim, it is entitled to relief
under that statute, which normally will be a vacatur of the agency’s order”).
In addition, the D.C. Circuit has indicated that where a plaintiff seeks both declaratory
and injunctive relief pertaining to unlawful agency action, and where the latter has been mooted,
an outstanding request for the former will not operate to bar mootness: “If a plaintiff has made
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no challenge to some ongoing underlying policy, but merely attacks an isolated agency action,
then the mooting of the specific claim moots any claim for a declaratory judgment that the
specific action was unlawful, unless the specific claim fits the” two exceptions to mootness – i.e.,
voluntary cessation or capable of repetition yet evading review. City of Houston, Tex. v. Dep’t
of Hous. & Urban Dev., 24 F.3d 1421, 1429 (D.C. Cir. 1994). This is so because any such order
“declaring [the agency’s past conduct] illegal would accomplish nothing—amounting to exactly
the type of advisory opinion Article III prohibits.” Larsen, 525 F.3d at 4; accord Transwestern
Pipeline Co. v. FERC, 897 F.2d 570, 575 (D.C. Cir. 1990) (“A case is moot if events have so
transpired that the decision will neither presently affect the parties’ rights nor have a more-than-
speculative chance of affecting them in the future.”) (emphasis added). Plaintiffs have not
argued that a declaration of invalidity would itself alter the relationship between the parties to
this suit – as opposed to Plaintiffs’ speculation that it might have an impact on a third-party
sovereign government – meaning any such declaration would amount to an impermissible
advisory opinion. See Spivey v. Barry, 665 F.2d 1222, 1235 (D.C. Cir. 1981) (dismissing case
as moot where “a grant of declaratory relief would not achieve any useful objective”).
Because the Court cannot grant Plaintiffs any meaningful relief, Defendants have met
their “heavy” burden of showing that the case is moot. See Honeywell, 628 F.3d at 576. For
these reasons, the Court will not address Plaintiffs’ extended digression on why a causal
connection between FinCEN’s Notices and Andorra’s actions might suffice to give Plaintiffs
standing to sue. See Opp. at 16-19 & n.11. Such arguments simply do not address the related
(but distinct) question of whether this Court, given what has transpired in the interim, now has
the power to order any meaningful remedy. See, e.g., Judicial Watch, INC v. Kerry, No. 15-785,
2016 WL 126349, at *3 (D.D.C. Jan. 11, 2016) (“[A] standing inquiry is concerned with the
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presence of injury, causation, and redressability at the time a complaint is filed, while a mootness
inquiry scrutinizes the presence of these elements after filing – i.e., at the time of a court’s
decision.”).
B. Capable of Repetition Yet Evading Review
“[E]ven though the specific action that the plaintiff challenges has ceased, a claim for
declaratory relief will not be moot” if “the specific claim fits the exception for cases that are
capable of repetition, yet evading review . . . .” Del Monte Fresh Produce Co. v. United States,
570 F.3d 316, 321 (D.C. Cir. 2009) (internal quotation marks omitted). This exception “applies
where (1) the challenged action is in its duration too short to be fully litigated prior to cessation
or expiration; and (2) there is a reasonable expectation that the same complaining party will be
subject to the same action again.” FEC v. Wis. Right to Life, Inc., 551 U.S. 449, 462 (2007)
(citation and internal quotation marks omitted). The burden lies with the party invoking the
exception – here, Plaintiffs – “to show that these requirements are met.” S. Co. Servs. v. FERC,
416 F.3d 39, 43 (D.C. Cir. 2005).
The Court need not dwell long on this exception, however, as Plaintiffs make no attempt
to argue the second prong of this test. “For there to be a ‘reasonable expectation’ that [Plaintiffs]
will be subjected to the same action again, that event must be a ‘demonstrated probability.’”
Honig, 484 U.S. at 333 (quoting Murphy v. Hunt, 455 U.S. 478, 482-83 (1982)). Plaintiffs do
not even suggest “that the same controversy will recur” and will “involv[e] the same
complaining party.” Murphy, 455 U.S. at 482. On the contrary, as the Court noted above, they
concede that “BPA may not be a future victim” of FinCEN’s allegedly unlawful behavior, see
Opp. at 15, and furnish neither argument nor evidence suggesting that FinCEN would attempt to
invoke the fifth special measure as to it at any time in the future. Once again, they instead resort
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to arguing that FinCEN’s practices have allowed the government to “repeatedly to evade judicial
review of its actions and to continue the same practices against other banks.” Id. Even if that is
so, Plaintiffs’ recognition that the same controversy is unlikely to ensnare BPA renders
unavailing their appeal to the capable-of-repetition exception.
* * *
A brief coda. In their Opposition, Plaintiffs spend considerable time arguing that
Treasury’s conduct here evinces “a textbook example of a defendant seeking to evade judicial
oversight by appearing to voluntarily cease the complained of action before it has to answer for
its conduct.” Opp. at 2. According to them, Treasury knows that by issuing § 311 notices – such
as those issued here – foreign governments will take action to dismantle a bank before FinCEN
ever has to promulgate a final rule. See id. at 9. Once that government acts, FinCEN may then
withdraw the notices to moot any subsequent challenge. Id. In this way, Treasury insulates its
action both on the front end (lack of ripeness and no final agency action) and on the back end
(mootness). Id. at 9-10.
Troubling as these accusations may be in the abstract, the Court does not believe this
characterization is correct, as Treasury does not always shield itself from judicial scrutiny.
Indeed, another judge in this district recently granted a bank’s preliminary-injunction challenge
to FinCEN’s final rule requiring imposition of the fifth special measure against a Tanzanian-
chartered commercial bank operating in Cyprus. See FBME Bank Ltd. v. Lew, 125 F. Supp. 3d
109, 129 (D.D.C. 2015). In that case, the Court agreed that FinCEN had procedurally erred by
promulgating its rule without disclosing “large portions of the unclassified record on which it
relied” during notice and comment. Id. at 122. Unlike here, however, Treasury issued its final
rule before the plaintiffs brought suit, and it did not withdraw that rule either before or after it
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was challenged – a course of action that undermines Plaintiffs’ belief that the government
consistently acts to insulate its decisions from review. In sum, although Plaintiffs may not act as
foreign banks’ standard bearer in this case, others may serve the same role in the future.
IV. Conclusion
For these reasons, the court will grant Defendants’ Supplemental Motion to Dismiss. A
separate Order so stating will issue this day.
/s/ James E. Boasberg
JAMES E. BOASBERG
United States District Judge
Date: May 18, 2016
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