Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca3-15-03979/USCOURTS-ca3-15-03979-0/pdf.json

Nature of Suit Code: 441
Nature of Suit: Civil Rights Voting
Cause of Action: 

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PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

______

No. 15-3979

______

JACKIE NICHOLS, 

 Appellant 

v.

CITY OF REHOBOTH BEACH; 

SAM COOPER, Mayor of Rehoboth; 

SHARON LYNN, City Manager of Rehoboth

______

On Appeal from the United States District Court 

for the District of Delaware

(D. DE No. 1-15-cv-00602)

District Judge: Honorable Gregory M. Sleet

______

Argued April 7, 2016

Before: FISHER, COWEN, and RENDELL, Circuit Judges.

(Filed: September 7, 2016)

David L. Finger, Esq. [ARGUED]

Finger & Slanina

1201 Orange Street

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2

One Commerce Center, Suite 725

Wilmington, DE 19801

Counsel for Appellant

Max B. Walton, I, Esq. [ARGUED]

Connolly Gallagher

267 East Main Street

Newark, Delaware 19711

Matthew F. Boyer, Esq.

Ryan P. Newell, Esq.

Arthur G. Connolly, III, Esq.

Connolly Gallagher

1000 West Street

The Brandywine Building, Suite 1400

Wilmington, DE 19801

Counsel for Appellees

______

OPINION OF THE COURT

______

FISHER, Circuit Judge.

Jackie Nichols is a resident, property owner, and 

taxpayer in the City of Rehoboth Beach, Delaware. Rehoboth 

Beach held a special election—open to residents of more than 

six months—for approval of a $52.5 million bond issue, and 

the resolution passed. Nichols voted in the election. She then 

filed this civil action challenging the election and the resultant 

issuance of bonds. The District Court found that Nichols 

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lacked standing and dismissed the case. The sole issue on 

appeal is whether Nichols had, as she claims, municipal 

taxpayer standing to make such a challenge. Because Nichols 

has failed to show an illegal use of municipal taxpayer 

funds—and therefore cannot establish standing on municipal 

taxpayer grounds—we will affirm the District Court’s Order.

I.

A.

The facts of this case are simple. On April 27, 2015, 

the Board of Commissioners of Rehoboth Beach adopted a 

resolution proposing the issuance of up to $52.5 million in 

general obligation bonds to finance an ocean outfall project. 

The resolution followed an initial resolution and a public 

hearing, as required by Section 40(d)-(e) of Rehoboth 

Beach’s City Charter. Pursuant to the City Charter, Rehoboth 

Beach held a special election on June 27, 2015, to determine 

whether it was authorized to borrow funds to finance the 

project. Rehoboth Beach expended municipal funds on the 

special election: first, before the election, it used taxpayer 

funds to place a full-page advertisement in a local newspaper 

urging the voters to “Vote Yes” in favor of the proposed 

outfall project; second, the costs of the special election were 

paid from the Rehoboth Beach treasury. 

The Rehoboth Beach City Charter governs the voting 

procedures for special elections. Section 40(h) of the Charter 

states the following:

At the said Special Election, every owner or 

leaseholder, as defined in this Charter, of 

property, whether an individual, partnership or 

corporation, shall have one vote and every 

person who is a bona fide resident of the City of 

Rehoboth Beach, but who is not an owner or 

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leaseholder, as defined in this Charter, of 

property within the corporate limits of the City 

of Rehoboth Beach and who would be entitled 

at the time of holding of the said Special 

Election to register and vote in the Annual 

Municipal Election if such Annual Municipal 

Election were held on the day of the Special 

Election shall have one vote whether or not 

such person be registered to vote in the Annual 

Municipal Election.

Charter of Rehoboth Beach § 40(h) (1963), 

http://charters.delaware.gov/rehobothbeach.pdf. Section 40 

does not define the term “bona fide resident,” but Section 7 of 

the Charter, which deals with the manner of holding annual 

elections, defines the term “resident” as “an individual 

actually residing and domiciled in the City of Rehoboth 

Beach for a period of six months immediately preceding the 

date of the election.” Id. § 7(d).

At the special election, Rehoboth Beach accepted only 

voters who were either property owners or who had been 

residents for a minimum of six months. Corporations and 

other artificial entities that owned property in Rehoboth 

Beach were also permitted to vote. Nichols alleges that 

persons who owned several parcels of property in Rehoboth 

Beach through the ownership of artificial entities were 

granted one vote for each parcel owned. She further alleges 

that those who qualified as residents and who owned property 

were granted two votes. The votes of the special election were

tallied, and the majority of eligible voters approved the 

issuance of the general obligation bonds—637 votes to 606 

votes. Nichols is a property owner in Rehoboth Beach and 

voted in the special election.

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B.

Nichols filed this action 19 days after the special 

election vote took place. About a month later, she filed a fourcount amended complaint against the City of Rehoboth 

Beach, Sam Cooper (mayor of Rehoboth Beach), and Sharon 

Lynn (city manager of Rehoboth Beach). In Counts I and II of 

the amended complaint, Nichols alleged that Rehoboth Beach 

violated the Fourteenth Amendment by requiring voters to 

live in, or hold property in, Rehoboth Beach for six months 

before being entitled to vote as residents. In Count III, she 

alleged that Rehoboth Beach violated the Fourteenth 

Amendment by allowing property owners to vote more than 

once. Count IV was a pendent state law claim for “exceeding 

authority” in which Nichols alleged that Rehoboth Beach had 

violated Delaware law by purchasing the newspaper 

advertisement encouraging voters to support the issuance of 

bonds. 

Rehoboth Beach filed a motion to dismiss Nichols’s 

amended complaint, arguing, among other things, that 

Nichols lacked standing because, as a resident and property

owner, she had voted in the election and had thus suffered no 

injury. The District Court issued a memorandum opinion and 

order granting Rehoboth Beach’s motion and dismissing the 

case for lack of subject matter jurisdiction. The District Court 

explained:

The court agrees with Defendants that Nichols 

lacks standing. Initially, the court agrees with 

Defendants that Nichols is not contesting the 

expenditure of tax funds, but the legality of the 

Special Election. Second, the court notes that 

Nichols suffered no particularized injury as a 

result of the Special Election. Nichols is a 

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property owner in the city and had the right to 

vote in the Special Referenda Election. Thus, 

she lacks the concrete personal injury necessary 

to bring suit. As a result, the court lacks the 

subject matter jurisdiction to hear this action.

(App. 19–20.) Having concluded that it lacked subject matter 

jurisdiction, the District Court did not address any of 

Rehoboth Beach’s remaining arguments. Nichols timely 

appealed.

II.

“We have jurisdiction pursuant to 28 U.S.C. § 1291 

over a dismissal for lack of subject matter jurisdiction, and 

our review for lack of subject matter jurisdiction is plenary.” 

Swiger v. Allegheny Energy, Inc., 540 F.3d 179, 180 (3d Cir. 

2008).

III.

Nichols argues that the District Court misperceived her 

allegations and that she has standing—not as a voter but as a 

municipal taxpayer. She presents two bases upon which we 

could find that she has municipal taxpayer standing to bring 

her case. First, she argues that she has standing to challenge

the $52.5 million in municipal debt incurred by an allegedly 

unlawful special election. Second, she contends that she has 

standing to challenge Rehoboth Beach’s use of municipal 

funds to hold the special election and to purchase a 

newspaper advertisement in support of that election.

Nichols’s first argument fails because she has not challenged 

the expenditure of the $52.5 million, merely the special 

election that approved the issuance of the bonds. Her second 

argument fails because she has not alleged a direct link 

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between the expenditure of municipal funds and the 

challenged aspect of the municipal action and because those 

expenditures were de minimis.

A. Municipal Taxpayer Standing

“Article III of the Constitution limits the judicial 

power of the United States to the resolution of Cases and 

Controversies, and Article III standing enforces the 

Constitution’s case-or-controversy requirement.” Hein v. 

Freedom From Religion Found., Inc., 551 U.S. 587, 597–98 

(2007) (internal quotation marks and alterations omitted). 

“One of the controlling elements in the definition of a case or 

controversy under Article III is standing.” Id. at 598 (internal 

quotation marks and alterations omitted). The elements 

necessary for establishing “the irreducible constitutional 

minimum of standing” under Article III are as follows:

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. Second, there must be a causal 

connection between the injury and the conduct 

complained of—the injury has to be fairly 

traceable to the challenged action of the 

defendant, and not the result of the independent

action of some third party not before the court. 

Third, it must be likely, as opposed to merely 

speculative, that the injury will be redressed by 

a favorable decision.

Lujan v. Defenders of Wildlife, 504 U.S. 555, 560–61 (1992) 

(internal quotation marks, citations, and alterations omitted).

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The Supreme Court has roundly rejected federal 

taxpayer standing noting that a federal taxpayer’s interest “in 

seeing that Treasury funds are spent in accordance with the 

Constitution does not give rise to the kind of redressable 

‘personal injury’ required for Article III standing.” Hein, 551 

U.S. at 599 (explaining that an “interest in ensuring that 

[federal] funds are not used by the Government in a way that 

violates the Constitution” is “too generalized and attenuated 

to support Article III standing”). This follows from the fact 

that a federal taxpayer’s

interest in the moneys of the treasury . . . is 

shared with millions of others, is comparatively 

minute and indeterminable, and the effect upon 

future taxation, of any payment out of the funds, 

so remote, fluctuating and uncertain, that no 

basis is afforded for an appeal to the preventive 

powers of a court of equity.

Frothingham v. Mellon, decided with Massachusetts v. 

Mellon, 262 U.S. 447, 487 (1923); see also Doremus v. Bd. of 

Ed. of Hawthorne, 342 U.S. 429, 433 (1952) (reiterating that 

“the interests of a taxpayer in the moneys of the federal 

treasury are too indeterminable, remote, uncertain and 

indirect to furnish a basis for an appeal to the preventive 

powers of the Court over their manner of expenditure”). 

Likewise, “state taxpayers have no standing under 

Article III to challenge state tax or spending decisions simply 

by virtue of their status as taxpayers.” DaimlerChrysler Corp. 

v. Cuno, 547 U.S. 332, 346 (2006). Federal and state 

taxpayers cannot show Article III standing based on their 

status as taxpayers “because the alleged injury is not concrete 

and particularized, but instead a grievance the taxpayer 

suffers in some indefinite way in common with people 

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generally.” Id. at 344 (internal citations and quotation marks 

omitted). “In addition, the injury is not actual or imminent, 

but instead conjectural or hypothetical.” Id. (internal

quotation marks omitted).

The Supreme Court has, however, allowed one form of 

taxpayer standing to survive: standing based on municipal 

taxpayer status. This difference in the treatment of municipal 

taxpayers is justified, at least in theory, by the closeness 

between the municipal taxpayer and the expenditure of 

municipal taxpayer funds. As explained in Frothingham:

The interest of a taxpayer of a municipality in 

the application of its moneys is direct and 

immediate and the remedy by injunction to 

prevent their misuse is not inappropriate. It is 

upheld by a large number of state cases and is 

the rule of this court. . . . The reasons which 

support the extension of the equitable remedy to 

a single taxpayer in such cases are based upon 

the peculiar relation of the corporate taxpayer to 

the corporation, which is not without some 

resemblance to that subsisting between 

stockholder and private corporation.

262 U.S. at 486–87. Thus, unlike a state or federal taxpayer, a 

municipal taxpayer may challenge certain expenditures of 

municipal funds in federal court. 

Though a municipal taxpayer may, in some cases, 

challenge municipal expenditures, her right to do so is not 

unlimited. We have applied the “good-faith pocketbook” 

requirements, articulated by the Supreme Court in Doremus, 

to municipal taxpayer standing. Doremus, 342 U.S. at 434 

(explaining that “a good-faith pocketbook action” is one in 

which a plaintiff alleges “a direct dollars-and-cents injury”). 

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The municipal taxpayer plaintiffs in Doremus challenged a 

state law mandating Bible reading in public schools. 342 U.S. 

at 430–31. The Supreme Court concluded that they lacked 

standing as municipal taxpayers because they failed to show

that the Bible reading resulted in any direct monetary cost. Id.

at 431 (“[I]t is neither conceded nor proved that the brief 

interruption in the day’s schooling caused by compliance with 

the statute adds cost to the school expenses or varies by more 

than an incomputable scintilla the economy of the day’s 

work.”). The plaintiffs made no allegation that the Bible 

reading was “supported by any separate tax or paid for from 

any particular appropriation or that it adds any sum whatever 

to the cost of the school.” Id. at 433. Furthermore, the 

plaintiffs failed to show that the Bible reading had any impact 

on their overall tax burden. Id. (“No information is given as 

to what kind of taxes are paid by appellants and there is no 

averment that the Bible reading increases any tax they do pay 

or that as taxpayers they are, will, or possibly can be out of 

pocket because of it.”). Thus, the Supreme Court made clear 

in Doremus that in order for a municipal taxpayer to have 

standing in federal court, she must demonstrate (1) that a 

particular expenditure accompanied the allegedly illegal 

practice and (2) that it put her “out of pocket.”

Accordingly, in ACLU-NJ v. Township of Wall, we 

recognized that, following Doremus, plaintiffs must 

“establish more than a potential de minimis drain on tax 

revenues due to the [allegedly unconstitutional conduct].” 246 

F.3d 258, 262 (3d Cir. 2001). In ACLU-NJ, residents of Wall 

Township, New Jersey, filed a suit against the Township,

alleging that the Township’s holiday display violated the 

Establishment Clause of the First Amendment. Id. at 260. The 

holiday display consisted of a variety of holiday items, 

including a crèche and a menorah. We observed that, even 

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though the Township “own[ed] the Nativity display, and 

presumably the menorah, and the overall display [was] set up 

with defendant’s support, direction and/or approval,” the 

Township did not “maintain” the display. Id. at 263. As such, 

we held that the plaintiffs lacked standing because they 

“failed to establish an expenditure on the challenged elements 

of the [holiday] display.” Id. at 263–64. The Township did 

not expend funds by displaying the religious elements it 

owned. A plaintiff must therefore establish a municipal 

expenditure on the challenged aspect of the disputed practice 

in order to have municipal taxpayer standing.

We further clarified that, even if the Township had 

used its own paid employees to erect the display, or had used 

Township funds to light it, we would not, without further 

evidence, assume that such expenditures amounted to 

anything more than de minimis expenditures. And, consistent 

with Doremus, de minimis expenditures attributable to the 

challenged practice are insufficient to confer Article III 

standing. Therefore, a municipal taxpayer plaintiff must show 

(1) that he pays taxes to the municipal entity, and (2) that 

more than a de minimis amount of tax revenue has been

expended on the challenged practice itself. ACLU-NJ, 246 

F.3d at 263–64; see also Doe v. Beaumont Indep. Sch. Dist., 

173 F.3d 274, 282 (5th Cir. 1999).

B. The Issuance of Bonds

As an initial observation, we agree with the District 

Court that “Nichols is not contesting the expenditure of tax 

funds, but the legality of the Special Election.” (App. 19–20.)

We are not faced with the question of whether Nichols would

have had standing to challenge these voting requirements

under different circumstances—e.g., in a case where she was

not permitted to vote. Certainly, as the District Court 

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recognized, Nichols was both a property owner in and a 

resident of Rehoboth Beach and therefore has no basis to 

challenge the voting requirements directly. Instead, Nichols

has attempted to remedy her lack of traditional “injury-infact” by asserting municipal taxpayer standing. This she 

cannot do.

1

 

In order for a plaintiff to gain access to federal court 

using municipal taxpayer standing, she must show that the 

municipality has actually expended funds on the allegedly

illegal elements of the disputed practice. Nichols’s argument 

on appeal fails to grasp this inherent requirement, despite her 

recognition that “[m]unicipal taxpayer standing is available 

when there is an expenditure of municipal tax funds on an 

 1 Nichols waives any argument that she has standing as 

a voter, see Appellant’s Br. 15 (“The particular injury was to 

Ms. Nichols as a municipal taxpayer, not as a voter . . . .”), 

but mentions parenthetically that “the dilution of her vote as a 

result of those unlawful rules should provide an independent 

ground for her standing,” id. This position is developed only 

in a footnote with a brief citation to authority. Any argument 

that she has standing as a voter is accordingly waived. See 

John Wyeth & Bro. Ltd. v. CIGNA Int’l Corp., 119 F.3d 1070, 

1076 n.6 (3d Cir. 1997) (“[A]rguments raised in passing (such 

as, in a footnote), but not squarely argued, are considered 

waived.”). The Dissent “question[s] whether anyone else 

would be a more suitable plaintiff to litigate . . . the ‘one 

person, one vote’ claim.” Dissent, lines 284–85. We do not 

pass judgment on whether Nichols would be an appropriate 

plaintiff to make such a challenge since she waived her ability 

to challenge the voting requirements directly. 

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unconstitutional practice.” Appellant’s Br. 8.2 Because the 

$52.5 million was not spent on an illegal practice, Nichols 

cannot assert municipal taxpayer standing to challenge the 

expenditure.

The Dissent mischaracterizes the nature of the injury 

Nichols alleged and asserts that the proposed issuance of 

$52.5 million in general obligation bonds satisfies the injury 

requirement. Dissent, Lines 91–93. Certainly, if $52.5 million 

had been expended on an illegal practice, this would be a 

different case. But Nichols did not allege that there was 

anything illegal about what the $52.5 million was to be 

expended on. The only expenditure that Nichols can 

challenge is the cost of holding the special election—not the 

resultant issuance of bonds—and, as we will explain below, 

those funds would have been expended regardless of whether 

the voting requirements were unconstitutional or not.

 2 The cases that Nichols cites illustrate that municipal 

taxpayer standing exists only in cases where plaintiffs seek to 

challenge unlawful expenditures. See, e.g., Smith v. Jefferson 

Cty. Bd. of Sch. Comm’rs, 641 F.3d 197, 210 (6th Cir. 2011) 

(“[M]unicipal taxpayers may fulfill the injury requirement by 

pleading an alleged misuse of municipal funds.”); Bd. of Ed. 

v. N.Y. Teachers Ret. Sys., 60 F.3d 106, 110 (2d Cir. 1995) 

(“[A] municipal taxpayer has standing to challenge allegedly 

unlawful municipal expenditures.”); Cammack v. Waihee, 932 

F.2d 765, 770 (9th Cir. 1991) (“[M]unicipal taxpayer standing 

simply requires the ‘injury’ of an allegedly improper 

expenditure of municipal funds. . . .”); see also Freedom 

From Religion Found., Inc. v. Zielke, 845 F.2d 1463, 1470 

(7th Cir. 1988) (“A plaintiff’s status as a municipal taxpayer 

is irrelevant for standing purposes if no tax money is spent on 

the allegedly unconstitutional activity.”).

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C. Municipal Expenditures

Nichols also contends that she has municipal taxpayer 

standing to bring this action on the basis of two expenditures 

by Rehoboth Beach: (1) the funds required to hold the special 

election and (2) the funds used to purchase an advertisement

in a local newspaper. Neither of these expenditures is 

sufficient to grant Nichols standing. As such, she does not 

have municipal taxpayer standing to challenge the special 

election, and the District Court properly dismissed her

complaint.

1.

We conclude that the expenditure of municipal funds 

to hold a special election is not sufficient to establish 

municipal taxpayer standing. Nichols alleged that the voting 

procedures at the special election—the six-month residency 

requirement and the ability of property owners to vote more 

than once—violated the Fourteenth Amendment. She did not 

assert that Rehoboth Beach expended funds on the allegedly 

unconstitutional aspects of the special election, i.e., the voting 

requirements. The special election itself would have been 

held regardless of the procedures Rehoboth Beach employed. 

In other words, Rehoboth Beach would have expended the 

funds necessary to hold the special election even if the voting 

requirements had been different. 

As noted above, in ACLU-NJ, the plaintiffs could not

show that the Township expended funds on the challenged 

element—the public display of religious symbols. Because 

the plaintiffs failed to establish an expenditure on the 

challenged elements of the holiday display, they could not 

show municipal taxpayer standing. ACLU-NJ, 246 F.3d at 

263–64. Here, Nichols’s concern is not that Rehoboth Beach 

held a special election to approve bonds but rather that some 

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of the requirements of the special election were 

unconstitutional. But the complaint fails to allege any direct 

link between the expenditure of municipal funds and the 

allegedly unconstitutional elements of the special election—

and this failure is fatal to Nichols’s claim.

3

2.

Rehoboth Beach’s purchase of an advertisement in a 

local newspaper similarly does not support municipal 

taxpayer standing in this instance. There is no dispute that 

Rehoboth Beach expended municipal funds when it 

purchased an advertisement alerting the public to the special 

election. Again, the purported illegality of the election 

procedures has nothing to do with the expenditure of funds 

for the advertisement—an appropriate expenditure. The 

 3 Even if there were a direct connection between the 

funds expended on the special election and the challenged 

voting practice, we would reach the same result. That de 

minimis costs were associated with the special election itself 

does not give rise to Article III standing. ACLU-NJ, 246 F.3d 

at 264 (requiring more than de minimis municipal 

expenditures to make a “good-faith pocketbook action”). The 

Dissent asserts that “the issuance of $52.5 million in 

municipal bonds cannot really be compared to the trivial 

amount of taxpayer money a municipality could have 

possibly spent to erect and light two discrete components of a 

seasonal holiday display.” Dissent, Lines 116–19. Obviously 

not. But that comparison misses the mark since the $52.5 

million at issue in this case was not expended on a challenged 

practice. By contrast, the challenged expenditure in ACLU-NJ 

was the cost of erecting and lighting the religious elements in 

the holiday display, which is comparable to the expense of 

holding the election here. 

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advertisement simply urged eligible voters to participate. 

Moreover, the cost is analogous to the types of expenses 

dismissed in ACLU-NJ as de minimis—such as the cost of 

electricity required to light the religious elements of a display.

Accordingly, the advertisement does not qualify as the kind 

of “direct dollars-and-cents injury” required under Doremus 

for “a good-faith pocketbook action.” Doremus, 342 U.S. at 

434; see also Fuller v. Volk, 351 F.2d 323, 327 (3d Cir. 1965)

(“[I]n order for the taxpayer to have standing, he must show 

that his position as a taxpayer is in some way affected . . . .”). 

This expenditure cannot, therefore, serve as a basis for 

municipal taxpayer standing. 

IV.

Because Nichols does not have standing as a municipal 

taxpayer, we will affirm the District Court’s dismissal of her 

case for lack of subject matter jurisdiction. 

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1

Nichols v. City of Rehoboth Beach, et al., No. 15-3979, 

dissenting.

COWEN, Circuit Judge.

I must respectfully dissent. The City of Rehoboth 

Beach held a special election to authorize a $52.5 million 

bond issuance, which was approved—637 votes to 606 votes. 

In Counts I and II of her amended complaint, Jackie Nichols 

alleged that Rehoboth Beach, Mayor Sam Cooper, and City 

Manager Sharon Lynn violated the Fourteenth Amendment 

by requiring individuals to reside in the municipality for at 

least six months in order to cast votes as Rehoboth Beach 

residents. In Count III, she claimed that Defendants violated 

“the ‘one person, one vote’ principle of the 14th Amendment” 

by allowing “individuals one vote for each parcel of property 

they owned in Rehoboth (directly or indirectly through an 

entity), in addition to one vote if they also resided in 

Rehoboth.” (A12.) “Count IV was a pendent state law claim 

for ‘exceeding authority’ in which Nichols alleged that 

Rehoboth Beach had violated Delaware law by purchasing 

the newspaper advertisement encouraging voters to support 

the issuance of bonds.” (Maj. Op. at 5.) Unlike the majority, 

I conclude that Nichols—as a municipal taxpayer—has 

Article III standing to bring her federal constitutional claims 

as well as her state law cause of action. In addition, I believe 

that, while she fails to satisfy the requirements for prudential 

standing with respect to Counts I and II, she has prudential 

standing to litigate Counts III and IV.

The majority appropriately points out that “[t]he 

Supreme Court has, however, allowed one form of taxpayer 

standing to survive: standing based on municipal taxpayer 

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2

status.” (Id. at 9.) Under the doctrine of municipal taxpayer 

standing, “[t]he interest of a taxpayer of a municipality in the 

application of its money is direct and immediate and the 

remedy by injunction to prevent their misuse is not 

inappropriate.” Frothingham v. Mellon, 262 U.S. 447, 486 

(1923). “In other words, under Frothingham we presume a 

municipal taxpayer’s relationship to the municipality is 

‘direct and immediate’ such that the taxpayer suffers concrete 

injury whenever the ‘challenged activity involves a 

measurable appropriation or loss of revenue.’” United States 

v. City of N.Y., 972 F.2d 464, 470 (2d Cir. 1992) (quoting 

D.C. Common Cause v. Dist. of Columbia, 858 F.2d 1, 5 

(D.C. Cir. 1988)). In fact, a number of judges have 

questioned whether this well-established approach—which 

dates back to the 1800s—is at odds with both modern 

standing principles as well as the contemporary realities of 

municipal financing and spending practices. See, e.g., Smith 

v. Jefferson Cty. Bd. of Sch. Comm’rs, 641 F.3d 197, 221 

(6th Cir. 2011) (en banc) (Sutton, J., concurring) (addressing 

“tension between the municipal-taxpayer-standing doctrine 

and modern standing principles”); City of N.Y., 972 F.2d at 

471 (questioning Frothingham presumption given existence 

of municipalities with multi-billion dollar budgets). 

According to the Sixth Circuit, “municipal taxpayers are able 

to rely on what would otherwise be labeled a generalized 

grievance,” and they are thereby allowed “to sidestep the 

‘zone of interest’ test that courts apply in other instances.” 

Smith v. Jefferson Cty. Bd. of Sch. Comm’rs, 788 F.3d 580, 

591 n.4 (6th Cir. 2015) (citing Smith, 641 F.3d at 222 

(Sutton, J., concurring)), cert. denied sub nom. Kucera v. 

Jefferson Cty. Bd. of Sch. Comm’rs, 136 S. Ct. 1246 (2016). 

Yet “[t]he Supreme Court created the distinction and has 

stood by it for some time, requiring lower courts like ours to 

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3

apply it as is.” Smith, 641 F.3d at 222 (Sutton, J., concurring) 

(citing Rodriguez de Quijas v. Shearson/Am. Express Inc., 

490 U.S. 477, 484 (1984)).

I find that the District Court did not approach this 

generous notion of municipal taxpayer standing with the 

seriousness and care it deserves. “If standing is ‘one of the 

most amorphous [concepts] in the entire domain of the public 

law,’ Flast v. Cohen, [392 U.S. 83, 99 (1968)], nowhere is 

this better demonstrated than in the area of municipal 

taxpayer standing.” Warnock v. NFL, 356 F. Supp. 2d 535, 

540 (W.D. Pa.), aff’d, 154 F. App’x 291 (3d Cir. 2005). 

Nevertheless, the District Court merely cited general legal 

principles governing the standing inquiry and, without a 

detailed explanation, stated that it “agrees with Defendants 

that Nichols is not contesting the expenditure of tax funds, but 

the legality of the Special Election.” Nichols v. City of 

Rehoboth Beach, C.A. No. 15-602 GMS, 2015 WL 8751180, 

at *3 (D. Del. Dec. 14, 2015). Unlike the majority, the 

District Court did not discuss any municipal taxpayer cases or 

address the governing principles of this doctrine. The 

majority, in any event, recognizes that we exercise de novo 

review over the District Court’s dismissal on standing 

grounds. See, e.g., Edmonson v. Lincoln Nat. Life Ins. Co., 

725 F.3d 406, 414 (3d Cir. 2013), cert. denied, 134 S. Ct. 

2291 (2014). “In examining a challenge to a party’s standing, 

the Court must accept as true all material allegations set forth 

in the complaint and construe those facts in favor of the 

nonmoving party.” Nichols, 2015 WL 8751180, at *2 (citing 

Warth v. Seldin, 422 U.S. 490, 501 (1975); Storino v. 

Borough of Point Pleasant Beach, 322 F.3d 293, 296 (3d Cir. 

2003)). General factual allegations of injury resulting from 

the defendant’s actions may be sufficient at the motion to 

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4

dismiss stage. See, e.g., Lujan v. Defenders of Wildlife, 504

U.S. 555, 561 (1992).

To satisfy the standing requirements of Article III, a 

plaintiff must show that: (1) he or she has suffered an injury 

in fact “that is (a) concrete and particularized and (b) actual or 

imminent, not conjectural or hypothetical;” (2) the injury is 

fairly traceable to the defendant’s challenged action; and (3) it 

is likely that the injury will be redressed by a favorable 

decision. Friends of the Earth, Inc. v. Laidlaw Envt’l Servs. 

(TOC), Inc., 528 U.S. 167, 180-81 (2000) (citing Lujan, 504 

U.S. at 560-61). In order to meet the injury requirement, a 

municipal taxpayer must establish a so-called “good-faith 

pocketbook” injury. See, e.g., ACLU-NJ v. Twp. of Wall, 

246 F.3d 258, 262 (3d Cir. 2001) (“[A] municipal taxpayer 

may possess standing to litigate ‘a good faith pocketbook 

action.’” (citing Doremus v. Bd. of Educ., 342 U.S. 429 

(1952))); see also, e.g., Fuller v. Volk, 351 F.2d 323, 327 (3d 

Cir. 1965) (stating that, in order to have standing, plaintiff 

must show position as taxpayer is in some way affected and, 

in short, that action constitutes good-faith pocketbook action). 

A municipal taxpayer establishes a good-faith pocketbook 

injury by showing “a measurable appropriation or 

disbursement” of public funds “occasioned solely by the 

activities complained of.” Doremus v. Bd. of Educ., 342 U.S. 

429, 434 (1952) (citing Everson v. Bd. of Educ., 330 U.S. 1 

(1947)); see also, e.g., D.C. Common Cause v. Dist. of 

Columbia, 858 F.2d 1, 4 (D.C. Cir. 1988) (“One commentator 

has interpreted Doremus as requiring a taxpayer to challenge 

an activity involving an expenditure of public funds that 

would not otherwise be made.” (citing Note, Taxpayers’ 

Suits: A Survey and Summary, 69 Yale L.J. 895, 922 

(1960))).

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5

According to Nichols, she has an interest as a 

municipal taxpayer in challenging “the unlawful incurring of 

municipal debt by issuing bonds to be repaid from tax funds.” 

(Appellant’s Brief at 11 (footnote omitted).) She also points 

to the Defendants’ use of taxpayer funds to purchase a 

newspaper advertisement and to conduct the special election. 

I believe that the proposed issuance of $52.5 million in 

general obligation bonds—based on an election conducted 

pursuant to allegedly unconstitutional voting rules and 

decided by a mere thirty-one votes—satisfies the injury 

requirement. Likewise, this bond issuance meets the 

causation and redressability prongs. Because Nichols thereby 

has Article III standing to pursue her federal constitutional 

claims, I need not—and do not—consider whether the 

election expenditures likewise meet these standing 

requirements. In addition, I conclude that the use of taxpayer 

money to purchase an advertisement in a local newspaper 

satisfies the requirements for Article III standing with respect 

to Nichols’s state law cause of action.

The proposed bond issuance constitutes a “good-faith 

pocketbook” injury. In ACLU-NJ v. Township of Wall, 246 

F.3d 258 (3d Cir. 2001), two taxpayers challenged on 

Establishment Clause grounds the inclusion of a crèche and a 

menorah in a holiday display erected near the entrance to the 

township’s municipal building, id. at 260. We determined 

that the plaintiffs failed to carry “their burden of proving an 

expenditure of revenues to which they contribute that would 

make their suit ‘a good-faith pocketbook action.’” Id. at 264 

(quoting Doremus, 342 U.S. at 434). The Court explained 

that, even if we were to assume that the display was erected 

by paid municipal employees, “there is no indication that the 

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6

portion of such expenditure attributable to the challenged 

elements of the display would have been more than the de 

minimis expenditure that was involved in the Bible reading in 

Doremus [in which the teacher or school principal was 

responsible for the readings].” Id. at 264 (citing Doremus v. 

Bd. of Educ., 71 A.2d 732, 733 (N.J. Super. Ct. 1950); Doe v. 

Madison Sch. Dist. No. 321, 177 F.3d 789, 794 (9th Cir.

1999) (en banc)). Similarly, the ACLU-NJ Court refused to 

assume that the township expended more than a de minimis 

amount of money to light the display’s religious elements. Id. 

After all, the display also featured an evergreen tree, 

decorated urns, and candy can banners. Id. at 260. However, 

the issuance of $52.5 million in municipal bonds cannot 

really be compared to the trivial amount of taxpayer money a 

municipality could have possibly spent in order to erect and 

light two discrete components of a seasonal holiday display. 

This appeal instead implicates millions of dollars in debt 

“backed by the full faith and credit of the issuing 

municipality” and payable “by tax revenue.” In re SmurfitStone Container Corp., 425 B.R. 735, 737 n.2 (Bankr. D. Del. 

2010) (citing Greenberg, Municipal Sources: Some Basic 

Principles and Practices, 9 Urb. Law. 340-41 (1977)). Such 

indebtedness clearly represents a measurable liability or 

encumbrance of the municipality. Given the nature of the 

relationship between a municipality and municipal 

taxpayers—“which is not without some resemblance to that 

subsisting between stockholder and private corporation,” 

Frothingham, 262 U.S. at 487 (citing 4 Dillon, Municipal 

Corporations § 1580 et seq (5th ed.))—this liability in turn 

constitutes a burden on the taxpayers themselves, see, e.g., 

Crampton v. Zabriskie, 101 U.S. 601, 609 (1879) (“[I]t would 

seem eminently proper for courts of equity to interfere upon 

the application of the taxpayers of a county to prevent the 

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7

consummation of a wrong, when the officers of those 

corporations, assume, in excess of their powers, to create 

burdens upon property-holders.”).

According to the majority, Nichols “has not challenged 

the expenditure of the $52.5 million, merely the special 

election that approved the issuance of the bonds.” (Maj. Op. 

at 6.) Purportedly, “[b]ecause the $52.5 million was not spent 

on an illegal practice, Nichols cannot assert municipal 

taxpayer standing to challenge the expenditure.” (Id. at 13.) I 

nevertheless believe that an expenditure of taxpayer money 

specifically “approved” by a special election conducted under 

unconstitutional voting rules constitutes “an illegal practice.” 

These two components—i.e., the expenditure and the election 

approving the expenditure—should not be severed in the 

manner suggested by the majority. After all, the legality of 

the bond issuance itself depends on the special election and 

its outcome—which, in this case, was decided by thirty-one 

votes. Could an expenditure really be considered anything 

other than “an illegal practice” where the requisite election 

approving the expenditure itself violated “the ‘one person, 

one vote’ principle of the 14th Amendment” as well as basic 

constitutional principles governing voter residency 

requirements? (A12.)

 Federal “municipal taxpayer” cases also indicate that 

Nichols satisfies the injury requirement with respect to the 

proposed bond issuance and the underlying special election. 

ACLU-NJ had already been fully litigated on the merits, and 

the plaintiffs accordingly had the burden of proving their 

standing “‘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 successive stages of the 

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8

litigation.’” ACLU-NJ, 246 F.3d at 261 (quoting Lujan, 504 

U.S. at 561). This matter comes to us on a motion to dismiss. 

As the District Court acknowledged, we must accept as true 

all material allegations set forth in the complaint, and general 

factual allegations of injury may be sufficient at this early 

stage of the litigation. See, e.g., Lujan, 504 U.S. at 561; 

Warth, 422 U.S. at 501. In addition, I have already 

highlighted the generous nature of the municipal taxpayer 

standing doctrine. In fact, a municipal taxpayer need not 

show there is a likelihood of any resulting savings that will 

inure to his or her benefit, see, e.g., City of N.Y., 972 F.2d at 

466, or “a net loss to the municipal fisc,” Smith, 641 F.3d at 

212 (citing, inter alia, ACLU-NJ, 246 F.3d at 262). In

Crampton v. Zabriskie, 101 U.S. 601 (1879), the Supreme 

Court concluded that county taxpayers had standing to 

challenge a bond issuance on the grounds that the issuance 

violated a state statute limiting the county’s total expenditures 

to the amount of money it raised by taxes, id. at 607-09. We 

similarly should permit a taxpayer to challenge a bond 

issuance on the grounds that it is based on an election 

conducted in an unconstitutional manner.

As Nichols points out, a number of state supreme 

courts have held that municipal taxpayers possessed the 

requisite standing to challenge the issuance of bonds on the 

grounds of underlying electoral illegalities. Relying on the 

United States Supreme Court’s ruling in Crampton, the 

Virginia Supreme Court of Appeals stated that, “[w]henever a 

citizen and taxpayer is confronted with the proposition that an 

illegal election for the issuance of bonds has been held and 

the issuance of the bonds will result in the imposition of an 

illegal tax burden upon him, he has the right to proceed either 

in equity to enjoin the issuance of the bonds . . . or to proceed 

Case: 15-3979 Document: 003112400209 Page: 24 Date Filed: 09/07/2016
9

by filing a petition in the pending matter.” Appalachian Elec. 

Power Co. v. Town of Galax, 4 S.E.2d 390, 392 (Va. 1939). 

The Idaho Supreme Court concluded that a municipal 

taxpayer could contest the result of a special bond election—

and the official declaration of the election result—on the 

grounds that several identified persons were permitted to vote 

even though they were not qualified to do so (and that, 

without these votes, the proposition would not have passed). 

Henley v. Elmore Cty., 242 P.2d 855, 856-57 (Idaho 1952). 

More recently, Maine’s highest court allowed a taxpayer to 

challenge a municipality’s attempt to incur debt based on 

what the taxpayer believed was an unlawful recounting of 

previously rejected absentee ballots. McCorkle v. Town of 

Falmouth, 529 A.2d 337, 337-39 (Me. 1987). Even 

Defendants acknowledge that the McCorkle and Henley

courts allowed the respective taxpayers to “challenge 

municipality’s vote count.” (Appellees’ Brief at 16 n.9 

(citing Henley, 242 P.2d at 857; McCorkle, 529 A.2d at 

338).) If a municipal taxpayer has standing to challenge the 

vote count, why wouldn’t he or she have the right to 

challenge the constitutionality of the basic rules the 

municipality used to decide who may vote—and how many 

votes they may cast?1

 1 While we should approach state court case law 

applying standing principles with some caution, see, e.g., 

Rocks v. City of Phila., 868 F.2d 644, 647 (3d Cir. 1989) 

(rejecting plaintiffs’ argument that “we should apply 

Pennsylvania case law respecting the broad rights of 

municipal taxpayers to sue local government agencies”), I 

find that these bond election opinions have special 

significance given the fact that neither the majority nor 

Defendants themselves cite to any contrary federal (or even 

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10

Likewise, Nichols’s pendent state law claim 

constitutes a good-faith pocketbook action. The majority 

compares the expense of buying a single newspaper 

advertisement with the potential de minimis costs of erecting 

and lighting the religious elements of the seasonal holiday 

display at issue in ACLU-NJ. However, the taxpayers’ 

Establishment Clause claim implicated the purported costs of 

erecting and lighting the crèche and menorah—as opposed to 

what the township may have spent to erect and light the 

display in its entirety. In contrast, Nichols does not merely 

challenge some minor component of a municipal expenditure. 

She instead alleged that it was the purchase of the newspaper 

advertisement itself that violated Delaware state law. 

According to her amended complaint, “Rehoboth, utilizing 

taxpayer funds (on information and belief), caused to be 

published in a local newspaper a full-page advertisement 

exhorting people to ‘Vote Yes,’ i.e., in favor of the proposed 

outfall project, and presenting a one-sided view of the project, 

without affording opponents the opportunity by means of that 

financed medium to present their side.” (A12-A13.) “The 

expenditure is not within Rehoboth’s express or implied 

power and so is unlawful.” (A13.) While it may not have 

cost the municipality and its taxpayers that much money to 

purchase a single advertisement, “‘[m]unicipal taxpayer 

standing simply requires the “injury” of an allegedly 

 

state) case law that specifically consider whether a taxpayer 

has standing to challenge a bond issuance based on purported 

irregularities in the bond election. This case law also appears 

to be consistent with the generous doctrine of taxpayer 

standing recognized by the United States Supreme Court. See

Appalachian Elec. Power Co., 4 S.E.2d at 392 (quoting 

Crampton, 101 U.S. at 609). 

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11

improper expenditure of municipal funds’” (Maj. Op. at 13 

n.2 (quoting Cammack v. Waihee, 932 F.2d 765, 770 (9th 

Cir. 1991))). See, e.g., D.C. Common Cause, 858 F.2d at 9 

(“Although the factual record on this allegation is sparse, we 

think appellees have made a sufficient showing to avoid 

dismissal for lack of standing. The District spent $7,000 in 

the 1984 campaign [to influence the outcome of an initiative], 

which is evidence that it may do so again.” (citation 

omitted)).

“Injury is only the first part of the standing analysis; 

the plaintiff must also establish that the challenged action 

caused the injury and that the injury would be redressed by a 

favorable decision.” Id. at 5 (citing Allen v. Wright, 468 U.S. 

737, 751 (1984)). Defendants insist that, “[b]ecause the 

Delaware General Assembly adopted the voting requirements 

contained in the City’s Charter, the ‘causation’ prong is not 

satisfied because the challenged conduct is not caused by the 

City, rather it is ‘th[e] result [of] the independent action of 

some third party not before the court’—the State.” 

(Appellees’ Brief at 21 (quoting Lujan, 504 U.S. at 560-61).) 

In fact, Defendants repeatedly attempt to shift the focus—and 

blame—from themselves to the State of Delaware. 

Nevertheless, it was Defendants’ choice to undertake a 

special election, to enforce the allegedly unconstitutional 

voting rules set forth in the City Charter, and to incur millions 

of dollars in municipal debt on the basis of what turned out to 

be a closely contested election. “[G]overnment officials are 

not bound to follow state law when that law is itself 

unconstitutional. Quite the contrary: in such a case, they are 

bound not to follow state law.” Carhart v. Steinberg, 192 

F.3d 1142, 1152 (8th Cir. 1999), aff’d, 120 S. Ct. 2597 

(2000). Nichols likewise seeks only prospective relief, and 

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12

the doctrine of qualified immunity does not apply to such 

claims. See, e.g., Hill v. Borough of Kutztown, 455 F.3d 225, 

244 (3d Cir. 2006).

More generally, I find that Plaintiffs satisfy both the 

causation and redressability elements. As the majority notes, 

“municipal taxpayer standing simply requires the ‘injury’ of 

an allegedly improper expenditure of municipal funds.” 

Cammack v. Waihee, 932 F.2d 765, 770 (9th Cir. 1991). In 

this case, the “injury” consists of a proposed multi-million 

dollar bond issuance—which was based on a special election 

decided by a mere thirty-one votes pursuant to voting rules 

that allegedly violated the Fourteenth Amendment. In turn, 

the federal judiciary could provide redress by, inter alia, 

enjoining Defendants from issuing any bonds if they fail to 

conduct an election that complies with the United States 

Constitution.2

 With respect to the state law claim, Nichols 

specifically alleged an improper expenditure of funds—the 

purchase of a newspaper advertisement presenting a onesided view of the proposed project—which could be remedied 

by declaratory or injunctive relief. See, e.g., D.C. Common 

Cause, 858 F.2d at 9 (“Appellees’ injury—the District’s 

 2 While Defendants take issue with Nichols’s failure to 

raise her objections until after the special election took place, 

they do not cite to any case specifically holding that the 

respective plaintiffs lacked standing because they failed to 

object before the election or took too long to file their lawsuit 

(and, in two of the decisions they cite, the courts actually 

determined that the plaintiffs possessed standing, see Fulani 

v. Hogsett, 917 F.2d 1028, 1030 (7th Cir. 1990); Soules v. 

Kauaians for Nukoli Campaign Comm., 849 F.2d 1176, 1179 

(9th Cir. 1988)). 

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future misuse of public funds [to influence the outcome of 

initiatives]—will be redressed by an injunction prohibiting 

such expenditures.”).

Having determined (unlike the majority) that Nichols 

possesses standing under Article III to pursue her 

constitutional and state law claims, I must also consider 

whether she satisfies the requirements for prudential standing. 

In Rocks v. City of Philadelphia, 868 F.2d 644 (3d Cir. 1989), 

several city taxpayers and residents “asserted an equal 

protection violation resulting from the application of minority 

business enterprise participation requirements (‘MBE’) to a 

city construction project,” id. at 645. We agreed with the 

district court that these plaintiffs—as municipal taxpayers—

had Article III standing. Id. at 648. However, “[t]he question 

is whether these appellants have sustained a proximate, 

individual, and addressable injury, based solely upon their 

status as municipal residents and taxpayers.” Id. Relying on 

our earlier ruling in Frissell v. Rizzo, 597 F.2d 840 (3d Cir. 

1979), abrogation on other grounds recognized by Amato v. 

Wilentz, 952 F.2d 742 (3d Cir. 1991), the Rocks Court

concluded that the plaintiffs had not satisfied these prudential 

requirements. Rocks, 868 F.2d at 648. Frissell, a 

Philadelphia taxpayer, sought to enjoin the mayor from 

denying customary public advertising to a newspaper in 

retaliation for unfavorable news articles, although the 

newspaper had not joined in the lawsuit or filed its own action 

against the city. Id. “Similarly, in this case no business 

enterprise or construction worker, those most likely to have 

suffered injury under the challenged bid specifications, has 

joined the complaint or brought suit to enjoin the city. The 

appellants here are solely taxpayers, resting their claim on the 

legal rights and interests of third parties, to-wit, those 

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14

business entities and workers not qualifying under the MBE 

requirements.” Id.; see also Warnock, 356 F. Supp. 2d at 546 

(“Rocks suggests that plaintiff is required to establish more 

than an injury received ‘solely’ on his status as a municipal 

taxpayer in order to overcome prudential standing 

limitations.”).

In light of Rocks (and Frissell), I conclude that Nichols 

lacks prudential standing to bring Counts I and II challenging 

the imposition of a sixth-month residency requirement. But I 

reach the opposite conclusion with respect to her state law 

cause of action (Count IV) as well as her claim (Count III) 

alleging that Defendants violated the Fourteenth Amendment 

by allowing property owners to vote more than once in the 

special election. On the one hand, Nichols satisfied the sixthmonth residency requirement and accordingly was allowed to 

vote in the special election—which she did. No disqualified 

voter, “those most likely to have suffered injury under [this 

residency requirement],” has joined this litigation or filed 

their own actions against Defendants. Rocks, 868 F.2d at 

648. On the other hand, a rule granting multiple votes to 

property owners—as well as a bond issuance based on the 

outcome of a closely contested election conducted under such 

a voting rule—directly affected Nichols herself. The 

purchase of an allegedly illegal newspaper advertisement 

similarly injured her. She accordingly need not rest her claim 

on “the legal rights and interests of third parties.” Id. While 

new residents disqualified from voting in the election would 

appear to be the most appropriate parties to challenge the 

residency requirement, I question whether anyone else would 

be a more suitable plaintiff to litigate either the “one person, 

one vote” claim or the pendent state law cause of action. 

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In conclusion, I would affirm the District Court’s order 

in part and vacate it in part. The order would be affirmed 

insofar as it dismissed Counts I and II of the amended 

complaint. Otherwise, I would vacate the order insofar as it 

dismissed Counts III and IV.

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