City of Arlington, Texas v. Texas Oil & Gas Association and Texas Independent Producers & Royalty Owners Association ( 2014 )

COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH
NO. 02-13-00138-CV
CITY OF ARLINGTON, TEXAS APPELLANT
V.
TEXAS OIL & GAS ASSOCIATION APPELLEES
AND TEXAS INDEPENDENT
PRODUCERS & ROYALTY
OWNERS ASSOCIATION
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FROM THE 153RD DISTRICT COURT OF TARRANT COUNTY
TRIAL COURT NO. 153-259190-12
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MEMORANDUM OPINION1
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I. INTRODUCTION
The sole issue we address in this appeal is whether Appellees Texas Oil &
Gas Association and Texas Independent Producers & Royalty Owners
1
See Tex. R. App. P. 47.4.
Association possess associational standing to assert on behalf of their members
causes of action against Appellant City of Arlington. For the reasons set forth
below, we hold that they do, and we will affirm the trial court’s denial of the City’s
motion for summary judgment asserting a lack of standing.
II. FACTUAL BACKGROUND
Appellees are two trade associations. Appellees’ members include natural
gas well operators. After the City, in 2012, established a new permit fee––
requiring natural gas operators in the City to pay an additional $2,400 per well
per year––and implemented numerous amendments to its fire code that affected
oil and gas production in the City, the trade associations filed suit against the City
seeking a declaratory judgment that the permit fee and the regulations violated
the constitutional and statutory rights of the members of the trade associations.
Specifically, Appellees sought a declaratory judgment that the fee violates the
equal protection clauses of the Texas and United States constitutions, that the
fee constitutes an unconstitutional exaction, that the fee is a deprivation of the
natural gas well operators’ vested property rights in violation of Texas Local
Government Code section 245.002, and that the fee constitutes an
unconstitutional occupation tax under the Texas constitution.2
2
Appellees’ Third Amended Petition for Declaratory Relief also seeks a
declaratory judgment that the retrospective enforcement of the amended fire
code is a deprivation of natural gas well operators’ vested property rights in
violation of Texas Local Government Code section 245.002. Because the City
moved for summary judgment on Appellees’ second amended petition, the City
does not address this claim in its brief.
2
The City filed a traditional motion for summary judgment titled, “Motion for
Summary Judgment on Plaintiffs’ Lack of Standing.” The motion alleged that
facts pleaded in Appellees’ petition seeking declaratory judgment had placed the
circumstances of Appellees’ individual members at issue and that, therefore,
Appellees did not satisfy the third prong of the associational standing test and
consequently lacked standing. At the time the City filed its motion for summary
judgment, Appellees’ live pleading was Appellees’ Second Amended Petition for
Declaratory Judgment. In support of its traditional summary judgment motion,
the City relied upon only Appellees’ Second Amended Petition for Declaratory
Judgment, the City’s first request for production to both Appellees, and
Appellees’ responses to the City’s first request for production. After a hearing,
the trial court denied the City’s motion for summary judgment asserting
Appellees’ lack of standing. The City perfected this appeal, raising a single
issue: “Did the trial court err in denying the City of Arlington’s Motion for
Summary Judgment on Plaintiffs’ Lack of Standing?”
III. STANDARD OF REVIEW
Whether a court has subject-matter jurisdiction is a question of law. Frost
Nat’l Bank v. Fernandez, 315 S.W.3d 494, 502 (Tex. 2010), cert. denied, 131 S.
Ct. 1017 (2011); Tex. Dep’t of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 226
(Tex. 2004). Standing is a component of subject-matter jurisdiction, and a
plaintiff must have standing to maintain a suit. Tex. Ass’n of Bus. v. Tex. Air
Control Bd., 852 S.W.2d 440, 445–46 (Tex. 1993). It has long been the rule that
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a plaintiff’s good-faith allegations are used to determine the trial court’s
jurisdiction. Frost Nat’l Bank, 315 S.W.3d at 503. A court may presume the truth
of allegations supportive of standing to determine standing and dispose of
litigation through summary judgment. See id. (citing Tex. Ass’n of Bus., 852
S.W.2d at 446); Brown v. Todd, 53 S.W.3d 297, 305 n.3 (Tex. 2001) (“Because
standing is a component of subject matter jurisdiction, we consider [it] as we
would a plea to the jurisdiction, construing the pleadings in favor of the plaintiff.”).
Whether a pleader has alleged facts that affirmatively demonstrate a trial court’s
subject-matter jurisdiction is a question of law reviewed de novo. Frost Nat’l
Bank, 315 S.W.3d at 502. Thus, we review de novo the issue of whether
Appellees’ pleadings establish their standing to invoke the remedial powers of
the trial court on behalf of Appellees’ members under the doctrine of
associational standing.
IV. THE ASSOCIATIONAL STANDING TEST3
Article III of the United States Constitution limits the judicial power of the
United States to the resolution of “cases” and “controversies.” U.S. Const. art. III,
§ 2, cl. 1. One element of the case-and-controversy requirement under Article III
3
While we are obligated to follow the dictates of only the United States
Supreme Court and the Texas Supreme Court, we nonetheless draw on and
discuss the associational standing precedent of other courts that also apply the
Hunt associational standing test adopted by the United States Supreme Court.
See Penrod Drilling Corp. v. Williams, 868 S.W.2d 294, 296 (Tex. 1993).
4
is that the plaintiff, including an association, must have standing to invoke a
court’s remedial powers on behalf of its members. Big Rock Investors Ass’n v.
Big Rock Petroleum, Inc., 409 S.W.3d 845, 848 (Tex. App.—Fort Worth 2013,
pet. denied) (citing Comm. for Reasonable Reg. of Lake Tahoe v. Tahoe Reg’l
Planning Agency, 365 F. Supp. 2d 1146, 1161 (D. Nev. 2005)). An association
has standing to bring suit on behalf of its members when (1) its members would
otherwise have standing to sue in their own right, (2) the interests it seeks to
protect are germane to the organization’s purpose, and (3) neither the claim
asserted nor the relief requested requires the participation in the lawsuit of each
of the individual members. Id. (citing Hunt v. Wash. State Apple Adver. Comm’n,
432 U.S. 333, 343, 97 S. Ct. 2434, 2441 (1977); Tex. Ass’n of Bus., 852 S.W.2d
at 447). The third prong of the associational standing test is best seen as
focusing on the matters of administrative convenience and efficiency, not on
elements of a case or controversy within the meaning of the Constitution. Id.
(citing United Food & Comm’l Workers Union Local 751 v. Brown Grp., Inc., 517
U.S. 544, 557, 116 S. Ct. 1529, 1536 (1996)).
V. APPLICATION OF THE LAW TO THE PRESENT FACTS
The City agrees that Appellees satisfied the first two prongs of this three-
pronged associational standing test but claims on appeal that Appellees cannot
meet the third prong for several reasons, which we discuss below.
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A. The City’s Challenge to Appellees’ Pleading of Relevant Facts
As noted above, the City filed a traditional motion for summary judgment
on the standing issue, attacking Appellees’ ability to satisfy the third prong of the
associational standing test and attaching as summary-judgment evidence
Appellees’ second amended petition and requests for production the City had
served on Appellees, as well as Appellees’ responses. The City’s motion for
summary judgment alleged that Appellees had put the individualized
circumstances of their members into issue by pleading the individual
circumstances of their members. The City’s motion for summary judgment
alleged that “through Plaintiffs’ allegations they have placed their members’ prior
actions, past and current safety record, financial condition, potential training, and
revenue payments to the City squarely into issue, which all require [Appellees’]
members’ participation.” Likewise, the City’s brief on appeal also claims that
“[b]y making these allegations of ‘Relevant Facts’ (and by incorporating these
‘Relevant Facts’ into every cause of action pleaded), [Appellees] have put
various matters into issue. For instance, [Appellees’] allegations have put their
individual members’ safety record and safety procedures into issue in this
lawsuit.” A review of both Appellees’ second and third amended petitions for
declaratory judgment shows, however, that Appellees merely pleaded factual
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circumstances generally applicable to all Appellees’ members, not facts unique to
any particular member of Appellees.4
The City nonetheless argues on appeal that Appellees’ “own pleadings
negate associational standing under prong three.” Throughout its brief, the City
points to the “relevant facts” section of Appellees’ pleading and claims that the
facts pleaded by Appellees require a fact-intensive individual inquiry of
Appellees’ members, defeating the third prong of the associational standing test.
But the relevant facts pleaded by Appellees and challenged by the City were
required to be pleaded to establish the first prong of the associational standing
test—that Appellees’ members would otherwise have standing to sue in their own
right. See, e.g., S. Tex. Water Auth. v. Lomas, 223 S.W.3d 304, 308 (Tex. 2007)
(explaining that to meet the first prong of the associational standing test, the
association “must show that its members have standing to sue in their own
right”). The facts pleaded by Appellees do establish, as required by the first
prong of the associational standing test, that the individual members of Appellees
have a personal stake in the alleged dispute and that the injury each has suffered
is concrete and particularized. A pleading cannot fail the third prong simply
4
Additionally, the record before us contains the City’s special exceptions to
and moved to strike as not relevant Appellees’ second amended petition. The
City specially excepted to some of the same factual allegations it now contends
defeat Appellees’ ability to satisfy the third prong of the associational standing
test. For example the City’s special exceptions alleged that the factual
allegations “regarding the safety record of Plaintiffs fail to state a cause of
action[, and] do not relate to any factual or legal bases for any cause of action
actually pled” and should be stricken.
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because it satisfies the first prong. We cannot agree with the City’s contention
that the relevant facts pleaded by Appellees conclusively negate the third prong
of the associational standing test.
The City also contends that the requests for production it sent to Appellees
and Appellees’ responses show that numerous matters directly concerning the
circumstances of the individual members of Appellees are at issue. The City’s
requests for production seek numerous documents related to member operators’
safety preparedness, response capacity, compliance thresholds, and other
similar matters. Appellees responded to these requests for production stating
that “[t]o the extent that this Request seeks documentation from ‘Member
Operators,’ this Request seeks information or documentation from third parties
that are not a party to this action and whose documents are not under the care,
custody, or control of [Appellees].” The City argues that because Appellees
cannot produce the requested documents, this conclusively negates Appellees’
satisfaction of the third prong of the associational standing test. But the need for
discovery from some of Appellees’ members does not automatically defeat
associational standing. See N.H. Motor Transp. Ass’n v. Rowe, 324 F. Supp. 2d
231, 235–37 (D. Me. 2004) (holding that “concerns regarding access to
information not in the possession of the associations, but instead in the sole
control of nonparty UPS” did not defeat third prong of associational standing);
see also, e.g., Warth v. Seldin, 422 U.S. 490, 511, 95 S. Ct. 2197, 2212 (1975)
(stating that associational standing may be proper “so long as the nature of the
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claim and of the relief sought does not make the individual participation of each
injured party indispensable to proper resolution of the cause”); Winnebago Cnty.
Citizens for Controlled Growth v. Cnty. of Winnebago, 891 N.E.2d 448, 456 (Ill.
App. Ct. 2008);5 Playboy Enters., Inc. v. Pub. Serv. Comm’n of P.R., 906 F.2d
25, 35–36 (1st Cir.) (“[J]ust because a claim may require proof specific to
individual members of an association does not mean the members are required
to participate as parties in the lawsuit.”), cert. denied, 498 U.S. 959 (1990). The
issue under the third prong of the associational standing test is not whether some
discovery might be required from some of Appellees’ individual members; the
issue is whether either the nature of the claims or the relief sought requires an
intensive, fact-based inquiry of each individual member so that the presence of
each individual member is required as a party to the lawsuit, thereby thwarting
5
The court in Winnebago quoted:
We can discern no indication in Warth, Hunt, or [International
Union, United Automobile, Aerospace, & Agriculture Implement
Workers of America v. Brock, 477 U.S. 274, 106 S. Ct. 2523 (1986)]
that the Supreme Court intended to limit representational standing to
cases in which it would not be necessary to take any evidence from
individual members of an association. Such a stringent limitation on
representational standing cannot be squared with the Court’s
assessment in Brock of the efficiencies for both the litigant and the
judicial system from the use of representational standing. Rather,
the third prong of Hunt is more plausibly read as dealing with
situations in which it is necessary to establish “individualized proof,”
for litigants not before the court in order to support the cause of
action.
891 N.E.2d at 456.
9
the administrative convenience, efficiency, and judicial economy served by the
doctrine of associational standing. See N.H. Motor Transp. Ass’n, 324 F. Supp.
2d at 236 (“In determining whether individual participation is necessary, however,
the focus is on the nature of the relief requested (injunctive relief versus
damages), not on discovery”); see also Warth, 422 U.S. at 511, 95 S. Ct. at
2211. Thus, satisfaction of the third prong of the associational standing test
depends primarily on the nature of the claims asserted and the relief sought and
whether those require joinder of the members of the association as parties. See,
e.g., Hunt, 432 U.S. at 343, 97 S. Ct. at 2441 (setting forth third prong as
requiring that “neither the claim asserted nor the relief requested requires the
participation of individual members in the lawsuit”); Tex. Ass’n of Bus., 852
S.W.2d at 447 (same).
We overrule the portion of the City’s sole issue claiming that Appellees’
pleadings and Appellees’ answers to the City’s requests for production
conclusively negate the third prong of the associational standing test. We turn
now to the balance of the City’s issue contending that the claims asserted and
the relief sought by Appellees preclude associational standing.
B. The City’s Challenge on Appeal to the Claims
Asserted and to the Relief Sought by Appellees
Under the third prong of the associational standing test, determining what
type of claims brought by an association and what type of relief sought by an
association would or would not require the participation in the litigation of the
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association’s individual members and therefore would or would not advance
prudential concerns of administrative convenience, efficiency, and judicial
economy is somewhat tricky. Big Rock, 409 S.W.3d at 849. Usually, an
association’s claim for damages on behalf of its members is barred by want of
the association’s standing to sue because such suits typically require each
individual member to participate as a party in the litigation to establish his own
damages. See, e.g., Warth, 422 U.S. at 516, 95 S. Ct. at 2214 (“Thus, to obtain
relief in damages, each member of Home Builders who claims injury . . . m[u]st
be a party to the suit.”); Telecomms. Research & Action Ctr. on Behalf of
Checknoff v. Allnet Commc’n Servs., Inc., 806 F.2d 1093, 1095 (D.C. Cir. 1986)
(holding that “the money damages claims TRAC seeks to advance are the kind
that ordinarily require individual participation” and that associational standing did
not exist). For example, in Warth, the United States Supreme Court held that an
association of construction firms could not seek damages for the profits and
business lost by its members because “whatever injury may have been suffered
is peculiar to the individual member concerned, and both the fact and extent of
injury would require individualized proof.” 422 U.S. at 515–16, 95 S. Ct. at 2214.
Although generally an association lacks standing to seek money damages
unique to each of its individual members, an association generally does possess
standing to assert claims for a declaratory judgment, an injunction, or some other
type of prospective equitable relief on behalf of its members. Big Rock, 409
S.W.3d at 850. When an association seeks a declaration, injunction, or some
11
other form of prospective equitable relief, it can reasonably be supposed that the
remedy, if granted, will inure to the benefit of those members of the association
actually injured and that, consequently, prudential concerns are advanced and
the association may possess standing to invoke the court’s remedial powers on
behalf of its members. Tex. Ass’n of Bus., 852 S.W.2d at 448 (holding that “TAB
seeks only prospective relief, raises only issues of law, and need not prove the
individual circumstances of its members to obtain that relief, thus meeting the
third prong” of the associational standing test); see also Hunt, 432 U.S. at 344,
97 S. Ct. at 2442 (recognizing that neither the commission’s “interstate
commerce claim nor [its] request for declaratory and injunctive relief requires
individualized proof and both are thus properly resolved in a group context”).
Appellees’ pleadings seek a declaratory judgment that the City’s permit fee
and fire code regulations are facially unconstitutional in multiple respects.
Appellees do not seek money damages on behalf of their members. Appellees
do not seek relief that will differ among their members. Instead, Appellees seek
only declaratory relief that raises primarily issues of law; the relief requested by
Appellees, if granted, will apply equally to all of their members, regardless of the
particular individual circumstances of each individual member.6 Thus, Appellees
possess associational standing to raise these claims and to request this relief on
behalf of their members. See Tex. Ass’n of Bus., 852 S.W.2d at 443
6
The conclusion and prayer in Appellees’ second and third amended
petitions seek only various declarations.
12
(recognizing association’s standing to assert facial challenge to constitutionality
of administrative enforcement scheme); see also Hunt, 432 U.S. at 343–44, 97 S.
Ct. at 2441–42 (recognizing state commission’s associational standing to assert
facial challenge to statute for unconstitutionally discriminating against interstate
commerce); Concerned Owners of Thistle Hill Estates Phase I, LLC v. Ryan Rd.
Mgmt., LLC, No. 02-12-00483-CV, 2014 WL 1389541, at *3 (Tex. App.––Fort
Worth Apr. 10, 2014, no pet.) (mem. op.) (holding association possessed
associational standing to assert claims and relief that were common to all of
association’s members).
Although we believe the above analysis is dispositive of the remainder of
the City’s issue on appeal, we nonetheless, in the interest of thoroughness,
briefly address each of Appellees’ pleaded claims.
1. Equal Protection Declaratory Judgment
Appellees seek a declaratory judgment that the City’s permit fee violates
the equal protection clauses of the United States and Texas constitutions
because the permit fee required of Appellees is greater than the permit fee
required of other businesses involved in the production, storage, or transportation
of flammable, combustible, or hazardous materials or substances. The City
contends that this request requires a fact-intensive inquiry of the individual
members and their circumstances. During oral argument, however, the City
conceded that the permit fee charged to each of Appellees’ members was an
across-the-board $2,400 per wellhead. Thus, Appellees’ equal protection
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challenge requires a comparison between the fees the City requires to be paid by
other businesses in Arlington that are engaged in the production, storage, or
transportation of flammable, combustible, or hazardous materials or substances
and the $2,400-per-wellhead fee imposed on Appellees’ members.7 A
comparison between natural gas operators as a group and other businesses
dealing with combustible or hazardous materials does not require the
participation of Appellees’ individual natural gas operator members as parties.
See, e.g., Sanders v. Palunsky, 36 S.W.3d 222, 224–25 (Tex. App.—Houston
[14th Dist.] 2001, no pet.) (setting forth elements of equal protection claim).
2. Unconstitutional Exaction Declaratory Judgment
Concerning Appellees’ request for a declaratory judgment that the City’s
permit fee constitutes an unconstitutional exaction, the City contends that the
past and future revenues earned by Appellees’ individual members (and
ultimately shared with the City) must be shown in order for Appellees to establish
disproportionality. But Appellees assert that this information is already in the
7
Indeed, Appellees’ petition states under its equal protection declaratory
judgment claim:
[The City] in passing the ordinance providing for Gas Well
Operational Permit Fee has created a special class of business in
Arlington––natural gas well operators––and has imposed this
additional assessment only on that business. . . . [T]he City purports
to classify natural gas well operators as distinct from every other
business in the City that produces, uses, transports, dispenses,
disposes, stores, or handles flammable, combustible, or hazardous
materials or substances.
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City’s possession and is contained in the City’s own records; Appellees pleaded
that since January 2008, “[w]hen added to the amount of lease bonuses paid to
the City, the City of Arlington has received over $120 million from natural gas
companies before accounting for permit and inspection fees.” The standard of
review that we are required to apply mandates that in determining standing, we
view the pleadings in the light most favorable to Appellees. See Frost Nat’l Bank,
315 S.W.3d at 503. And the City did not come forward with jurisdictional facts
controverting Appellees’ pleaded facts that the City possesses records of the
amount of lease bonuses and monies it has received from Appellees’ members.
Thus, we take Appellees’ pleadings as true for purposes of determining standing.
See id.; Tex. Logos, L.P. v. Brinkmeyer, 254 S.W.3d 644, 647 (Tex. App.––
Austin 2008, no pet.). The “rough proportionality” prong of the Dolan exaction
test does not in this case require a fact-intensive, individual inquiry of each of
Appellees’ members necessitating that each of them be joined as a party to this
litigation. See generally Dolan v. City of Tigard, 512 U.S. 374, 388–96, 114 S.
Ct. 2309, 2318–22 (1994); City of Carrollton v. RIHR Inc., 308 S.W.3d 444, 448–
52 (Tex. App.—Dallas 2010, pet. denied); accord Concerned Owners of Thistle
Hill Estates Phase I, LLC, 2014 WL 1389541, at *6 (recognizing required proof of
total monies collected by homeowners’ association and expenditures by it did not
require individualized participation of all association’s members as parties to
lawsuit).
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3. Violation of Vested Rights Declaratory Judgment
Appellees seek a declaratory judgment that the City’s amended fire code
regulations unconstitutionally deprive Appellees’ members of their vested rights
in violation of section 245 of the Texas Local Government Code. See Tex. Loc.
Gov’t Code Ann. § 245.002 (West 2005) (requiring approval of permit based
solely on ordinance, regulations, and rules in effect at the time the original
application for the permit is filed). The City concedes that section 245.002
prohibits it from “enforcing subsequent regulatory changes to further restrict
property use after a permit application is filed.” The City argues, however, that
section 245.002’s prohibition does not exist when the exemption set forth in
section 245.004(11) applies and contends that Appellees will be required to
disprove application of this exemption by production of the safety records and
procedures concerning each individual well located within the City.
Section 245.004(11) provides that chapter 245 does not apply to
(11) regulations to prevent the imminent destruction of
property or injury to persons if the regulations do not:
(A) affect landscaping or tree preservation, open space
or park dedication, lot size, lot dimensions, lot coverage,
building size, residential or commercial density, or the timing
of a project; or
(B) change development permitted by a restrictive
covenant required by a municipality.
Id. § 245.004(11) (West 2005). The plain language of section 245.004(11)
addresses “regulations” and their purposes; it provides that chapter 245 does not
16
apply to certain regulations if the regulations prevent the imminent destruction of
property or injury to persons. Id. The safety records and procedures concerning
each individual natural gas well located in the City have no bearing on whether
chapter 245.004(11)’s exemption applies to specific regulations promulgated by
the City.8 The City’s claimed application of section 245.004(11)’s exemption to
Appellees’ members’ vested rights does not require a fact-intensive, individual
inquiry of each of Appellees’ members necessitating that each of them be joined
as a party to this litigation.
4. Unconstitutional Occupational Tax Declaratory Judgment
The City argues that Appellees’ claim for an unconstitutional occupational
tax declaratory judgment requires the individual participation of Appellees’
members only because Appellees’ pleading “specifically repeated and
incorporated the ‘Relevant Facts’ allegations in their petition.” We addressed
above why Appellees’ factual pleadings did not conclusively negate the third
prong of the associational standing test, and we need not repeat that analysis
here. Appellees’ pleading of relevant facts does not generate the need for a fact-
8
The City, not Appellees, bears the burden of establishing that section
245.004(11)’s exemption applies to its amended fire code regulations. Accord
Kopplow Dev., Inc. v. City of San Antonio, 399 S.W.3d 532, 535 (Tex. 2013)
(recognizing that before trial, the trial court granted the city’s motion that
Kopplow’s vested rights permit was not effective against subsequent floodplain
ordinance per local government code section 245.004(9)); Hartsell v. Town of
Talty, 130 S.W.3d 325, 328–29 (Tex. App.—Dallas 2004, pet. denied) (noting
that the town did not contend that section 245.004’s exemptions applied).
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intensive, individual inquiry of each of Appellees’ members necessitating that
each of them be joined as a party to this litigation.
VI. CONCLUSION
Having reviewed Appellees’ pleadings, the claims asserted by Appellees,
the relief sought by Appellees, and all of the arguments made and contentions
asserted by the City in its brief, we overrule the City’s sole issue and affirm the
trial court’s judgment.
/s/ Sue Walker
SUE WALKER
JUSTICE
PANEL: GARDNER, WALKER, and MEIER, JJ.
DELIVERED: September 18, 2014
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