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. e du/thir dc ir c uit_1998/68Filed April 2, 1998

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 97-5281

TRUMP HOTELS & CASINO RESORTS, INC.,

Appellant

v.

MIRAGE RESORTS INCORPORATED; THE STATE OF NEW JERSEY; THE NEW JERSEY DEPARTMENT OF TRANSPORTATION; THE SOUTH JERSEY TRANSPORTATION AUTHORITY; THE CASINO REINVESTMENT DEVELOPMENT AUTHORITY; THE NEW JERSEY TRANSPORTATION TRUST FUND AUTHORITY; JOHN J. HALEY, JR., in his capacity as Acting Commissioner of the New Jersey Department of Transportation; JAMES A. CRAWFORD, in his capacity as Executive Director of the South Jersey Transportati on Authority; JAMES B. KENNEDY, in his capacity as

Executive Director of the Casino Reinvestment Development Authority; STEVEN HANSEN, in his capaci ty as Executive Director of the New Jersey Transportat ion Trust Fund Authority

On Appeal from the United States District Court for the District of New Jersey

Civil Action No. 97-cv-01371

Argued: February 11, 1998

Before: GREENBERG, NYGAARD and McKEE, Circuit Judges

(Opinion Filed: April 2, 1998)HERBERT J. STERN, ESQ. (Argued)

Stern & Greenberg 75 Livingston Avenue Roseland, New Jersey 07068 Attorneys for Appellant

PETER VERNIERO, ESQ. JEFFREY J. MILLER, ESQ. Office of Attorney General of
New Jersey
Division of Law Richard J. Hughes Justice Complex

CN 112 Trenton, New Jersey 08625 Attorney for Appellees, The State of New Jersey, The New Jersey Department of Transportation, The New Jersey Transportation Trust Fund Authority, John H. Haley, Jr.,

and Steven Hansen

GUY P. RYAN, ESQ. MARC D. HAEFNER, ESQ. (On the Brief)

Gilmore & Monahan

10 Allen Street

Box 1540 Toms River, New Jersey 08754 Attorney for Appellees, The South Jersey Transportation Authority and

James A. Crawford

KEVIN J. COAKLEY, ESQ. (Argued) Connell, Foley & Geiser LLP 85 Livingston Avenue Roseland, New Jersey 07068

and

2MICHAEL R. COLE, ESQ.

Riker, Danzig, Scherer, Hyland &

Perretti LLP Headquarters Plaza One Speedwell Avenue Morristown, New Jersey 07962 Attorneys for Appellees, the Casino Reinvestment Development Authority and James B. Kennedy

OPINION OF THE COURT

McKEE, Circuit Judge:

Trump Hotels & Casino Resorts, Inc., appeals from t he district court's Rule 12(b)(6) dismissal of this ac tion which Trump brought under Section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. S 78j(b), and Secur ities and Exchange Commission Rule 10b-5, 17 C.F.R. S 240.10b-5. Trump also appeals the district court' s subsequent refusal to exercise supplemental jurisdi ction

over state law claims. For the reasons that follow we agree with the district court's conclusion that Trump lac ks standing, and we will therefore affirm.

I.

Mirage Resorts, Inc., and Trump Hotels and Casino Resorts, Inc. own competing casinos in Atlantic Cit y, New Jersey. Although Trump brought this action under th e securities laws, the seeds of this dispute were sow n when a real estate development was planned in Atlantic C ity. Although our inquiry does not need to address the d etails of the planned development, a brief discussion of i t is necessary to place the dispute in context.

The action arises from a dispute involving the redevelopment of a parcel of land known as the Huro n North Redevelopment Area ("H-Tract"). The H-Tract i s located in the Marina District of Atlantic City and is comprised of approximately 178 acres, 150 of which are owned by Atlantic City. The tract consists of wetla nds that

3were used as a municipal landfill until the 1960's. Trump

claims that the H-Tract is highly contaminated with hazardous substances and is vacant except for a few municipally maintained facilities.

In November of 1994, the City Council of Atlantic C ity authorized the City Planning Board to prepare a Redevelopment Plan for the H-Tract. On April 12, 19 95, the City Council of Atlantic City adopted the Redevelop ment Plan proposed by the Planning Board and began seeki ng a developer for the H-Tract pursuant to that Redevelo pment Plan. Mirage emerged as a potential developer and p roposed to build a casino complex on the H-Tract. Thereafte r, Mirage entered into a series of agreements with the City (including a Redevelopment Agreement, and a Memorandum of Understanding) regarding the proposed development of the H-Tract as a multi-casino resort . The Redevelopment Agreement gave Mirage an option to ac quire and develop the H-Tract as a multi-casino resort in exchange for Mirage's undertaking to remediate environmental contamination and to pay for the relo cation of the City's existing facilities on the site.

Shortly before the execution of the Memorandum of Understanding between Mirage and the City, the Atla ntic City delegation to the New Jersey State Legislature introduced legislation known as the Municipal Landf ill Site Remediation & Redevelopment Act, N.J.S.A. 13:1E-116 .1 - 116.7 (the "Remediation Act"). The Remediation Act was subsequently enacted into law. According to Mirage, the Remediation Act allows Mirage to be reimbursed for the majority of the closure and remediation costs assoc iated with its clean-up of the H-Tract.1

The Redevelopment Agreement conditioned Mirage's obligations to develop the H-Tract upon a number of

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1. The Remediation Act "permits a developer who clo ses and remediates an eligible site the opportunity to apply for reimb ursement of up to 75 percent of the costs after commencement of a busine ss operation on the

remediated site. The State makes the reimbursement from a fund comprised of one-half of all state sales taxes coll ected from the business on that site." State of New Jersey and The Casino R einvestment Development Authority v. Trump Hotels & Casino Reso rts, No. ATL-L1373-97, slip opn. at 8-9 (N.J. Law Div., May 14, 1 997).

4contingencies. The most significant contingency for

purposes of this dispute was the approval and fundi ng by the State of New Jersey of a roadway called the"Wes tside Connector." The plans for the Westside Connector in clude the construction of a 2.2 mile long highway connect ing the Atlantic City Expressway to Brigantine Boulevard, a nd a 2,000 foot long tunnel. Trump claims that construct ion of the tunnel portion of the Westside Connector requir es the acquisition and destruction of nine private homes a nd more than 200 units of federally-assisted low income hou sing, 47 of which are currently occupied. Trump also claims that the Westside Connector will provide direct access to th e HTract, that its primary purpose is to facilitate th e development of the H-Tract by Mirage, and that Mira ge will not proceed with the development of the H-Tract in the
absence of the Westside Connector.

On September 17, 1996, the New Jersey Department of Transportation ("DOT") and Mirage entered into a Memorandum of Understanding regarding the design an d
construction of the Westside Connector. The Memoran dum of Understanding was followed by the execution of a Road Development Agreement between Mirage, the State of New Jersey, acting through the DOT, and the South Jerse y Transportation Authority ("SJTA").

The Road Development Agreement reflects a commitmen t by the parties to move forward with the proposed We stside Connector, and it defines the respective obligation s of the parties regarding the proposed construction and det ails various conditions to the closing of the Road Agree ment. It also sets forth the funding sources for the project , which include $65 million in proceeds from bonds issued t hrough the South Jersey Transportation Authority ("SJTA") repayable from, and collateralized by, parking and investment funds collected for use by the Casino Reinvestment Development Authority ("CRDA") and $55 million in the proceeds of bonds issued through the SJTA repayable from, and collateralized by, alternative investment tax obligations of all casinos that will be located

on the H-Tract.

Trump currently owns three of the thirteen casinos in Atlantic City. One of Trump's casinos, "Trump's Cas tle," is

5located in the Marina District near the H-Tract. Tr ump

claims that it will be adversely affected by the co nstruction of the Westside Connector and the development of th e HTract in a number of ways. The Westside Connector w ill significantly reduce access to Trump's Castle. Duri ng construction it will effectively block access to Tr ump's Castle for a year or more, and make it difficult fo r persons from within and without the City to get to Trump Ho tels' Atlantic City casinos. Trump claims that its busine ss will thus be seriously injured. In addition, Trump claim s that
the new road will increase traffic flow into the ci ty and therefore worsen local air quality conditions and t raffic congestion which already adversely affect Trump's p atrons and employees. Trump also alleges that the developm ent will endanger the community because the H-Tract is highly contaminated. Trump alleges that since the Westside Connector will bisect the city, the H-Tract develop ment will cause permanent injury to the City's entire Boardwa lk area, including Trump's Taj Mahal and Palace casinos, int o which Trump has invested enormous amounts of money.

On March 14, 1997, Trump filed a complaint against Mirage, the State of New Jersey, the New Jersey DOT , the SJTA, the CRDA and the New Jersey Transportation Tr ust
Fund in the United States District Court for the Di strict of New Jersey. Trump sought declaratory and injunctive relief which would effectively bar the construction of the Westside Connector and the development of the H-Tract by hal ting the sale of the bonds that are a necessary componen t of the funding scheme. Trump alleged that the funding sche me for the planned construction of the Westside Connector and the development of the H-Tract would violate numero us statutes,2 state law3 and the New Jersey Constitut ion.

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2. In addition to an allegation of impending securi ties fraud, Trump's complaint also alleged violations of the following federal statutes:
Section 404 of the Clear Water Act, 33 U.S.C. S 1344; the R ivers and Harbors Appropriation Act of 1899, 33 U.S.C. S 403; the Fed eral-Aid Highway Act, 23 U.S.C. S 109 and the Clean Air Act, 42 U.S.C. S 7506. The district court granted defendants' 12(b)(6) motion as to tho se claims and Trump has not appealed from the dismissal of those claims . The district court dismissed the Clean Water Act because Trump failed to comply with the act's notice requirement; dismissed the Rivers and Harbors Act claim

6However, we are only concerned with Trump's allegat ions

that the funding mechanism violates the Securities and Exchange Act of 1934, 15 U.S.C. S 78j(b), Securitie s and Exchange Commission Rule 10b-5, 17 C.F.R. S 240.10b -5, and Article IV, S 7, P 2 of the New Jersey Constitu tion.

The defendants initially moved to dismiss Trump's complaint under Fed. R. Civ. P. 12(b)(6) alleging t hat the complaint failed to state a claim. Simultaneously, they filed a complaint in the Law Division of the Superior Cou rt of New Jersey naming Trump as a defendant and seeking a declaration that the statutory provisions which all owed for CRDA funding of various projects were constitutiona l.4 State of New Jersey and the Casino Reinvestment Development Authority v. Trump Hotels and Casino Re sorts, Inc., No. ATL-L-1373-97 ("State litigation").

On May 1, 1997, the district court dismissed all of the federal claims under Fed. R. Civ. P. 12(b)(6) and d eclined to exercise supplemental jurisdiction over the state l aw claims. Trump Hotels & Casino Resorts, Inc. v. Mira ge Resorts, Inc., 963 F.Supp. 395 (D.N.J. 1997). This appeal followed. However, Trump only appeals from the dist rict

court's dismissal of its 10b-5 claim and the refusa l to exercise supplemental jurisdiction over the New Jer sey constitutional claim. The district court held that Trump had no standing to seek injunctive relief under Rule 10 b-5 because the claimed injury was too indirect and rem ote

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because the Act provides no private cause of action ; dismissed the Federal-Aid Highway Act claim because Trump's compl aint admitted that no federal funds would be used to fund the project; and dismissed the Clean Air Act claim because Trump failed to allege federal funding and failed to plead compliance with the statute's notic e requirement.

3. The complaint also alleged a violation of the Ne w Jersey Coastal Area Facility Review Act, N.J.S.A. SS 13:19-1, et seq. T he district court declined to exercise supplemental jurisdiction over that state law claim and Trump has not appealed from that decision.

4. The defendants believed that Trump's federal lit igation created a cloud

that had to be removed before the CRDA could issue the bonds. Appellees' Br. at 6. They also believed that the fe deral court did not

have subject matter jurisdiction over the state constitu tional question raised by Trump in the federal litigation. Id.

7from the alleged securities fraud. Id. at 402. In r efusing to

exercise supplemental jurisdiction over Trump's sta te constitutional challenge, the district court reason ed that "state courts should be given the opportunity to in terpret their state constitutions," and since "[o]nly the N ew Jersey Supreme Court can give an authoritative constructio n of the New Jersey Constitution." Id. at 408, the court exercised its discretion and refused to hear Trump' s state
law claims.5

II.

Our standard of review of a dismissal under Rule 12 (b)(6) is plenary. When reviewing a motion to dismiss for want of standing, we must accept as true all material alleg ations of the complaint and must construe the complaint in fa vor of the plaintiff. Warth v. Seldin, 422 U.S. 490, 501 ( 1975). A complaint should be dismissed only if, after accept ing as true all of the facts alleged in the complaint, and drawing all reasonable inferences in the plaintiff 's favor , no relief could be granted under any set of facts consistent with the allegations of the complaint. ALA, Inc. v. CCAIR, I nc., 29 F.3d 855, 859 (3d Cir. 1994).

III.

Trump argues that the use of bonds issued by the SJ TA as a part of the funding mechanism violates Article IV, S 7, P 2 of the New Jersey Constitution, which Trump arg ues strictly limits the use of casino derived revenues to projects and programs that benefit senior and disabled citiz ens of the State of New Jersey. Trump further argues that neither the CRDA nor the SJTA plan to disclose this purport ed constitutional infirmity to potential purchasers of the bonds. Thus, argues Trump, the issuance of the bond s would constitute securities fraud in violation of t he Securities and Exchange Act of 1934, and the Securi ties

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5. On May 14, 1977, the New Jersey state court held that the statutes challenged by Trump in the federal action were vali d under the New Jersey constitution. Trump has appealed that decisi on and briefs on the appeal have been filed with the appellate division of the state court.

8and Exchange Commission Rule 10b-5. Consequently,

Trump seeks to enjoin the sale of the bonds.6

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6. Although we need not dwell upon the intricacies of New Jersey's casino financing laws as part of our resolution of this appeal, this dispute is best understood in context with applicab le state statutes, and relevant provisions of the New Jersey Constitution. Accordingly, we briefly describe them here in the margin:

On November 2, 1976, New Jersey voters approved an amendment to the New Jersey Constitution which permitted the Leg islature to authorize the establishment and operation of gambling casinos in Atlantic City. However, the amendment required that any such legis lation

shall provide for the State revenues derived therefrom to be applied solely for the purpose of providing funding for reductions in
property taxes, rental, telephone, gas, electric, and municipal utilities charges of, eligible senior citizens and disabled re sidents of the State,

and for additional or expanded health services o r benefits or transportation services or benefits to eligi ble senior citizens and disabled residents, in accordance with such formulae as the Legislature shall by law provide.

N.J. Const. art. IV, S 7, P 2, subparagraph D. The 1977 Casino Control Act was enacted pursuant to this amendment. The Cas ino Control Act established a tax on a casino's "gross revenues." N .J.S.A. 5:12-24. All funds derived from this tax were to be placed in a special fund referred to as the "Casino Revenue Fund." N.J.S.A. 5:12-145( a), which would be used exclusively for programs to assist the elderly and disabled. N.J.S.A. 5:12-145(c). The Act also required casino licensees whose gross revenues exceeded the capital cost of constructing their cas inos to make additional investments in Atlantic City. Any licens ee that failed to make the required investments would be subject to an alt ernative investment tax on gross revenues dedicated to the Casino Reven ue Fund. N.J.S.A. 5:12-144(b)(3); see State of New Jersey and the Cas ino Reinvestment Development Authority v. Trump Hotels & Casino Reso rts, Inc., No. ATL-L1373-97, slip opn. at 6 (N.J. Super. Ct. Law Div., May 14, 1997).

In 1984, the Casino Reinvestment Act of 1984 was en acted to spur investment. State of New Jersey and the Casino Rein vestment Development Authority, at 6. The Act created the Ca sino Reinvestment Development Authority ("CRDA") to accelerate develo pment and to provide a focus for reinvestment by the casinos. N. J.S.A. 5:12-153. The CRDA "was charged to maintain public confidence in the casino gambling industry as a unique tool of urban develop ment for Atlantic City; to directly facilitate the redevelopment of e xisting blighted areas; and to address pressing social and economic needs b y providing eligibleprojects in which casino licensees could invest." S tate of New Jersey, at

6.

9Section 10(b) of the Securities Exchange Act of 193 4

provides:

It shall be unlawful for any person, directl y or indirectly, by the use of any means or instr umentality of interstate commerce or of the mails, or o f any facility of any national securities exchange . . .

(b) To use or employ, in connection with th e purchase or sale of any security, . . . any manipulat ive or deceptive device or contrivance in contraven tion of such rules and regulations as the Commission may prescribe . . . in the public interest or fo r the protection

of investors.

15 U.S.C. S 78j(b)(emphasis added). Securities and Exchange Commission Rule 10b-5 was promulgated pursuant to Section 10(b) of the Act. That Rule pro vides:

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In 1993, the New Jersey Legislature amended the Cas ino Control Act by enacting the Parking Fee Act "to accelerate the CRDA's efforts to develop the Atlantic City `corridor region' (the in frastructure connecting the Atlantic City Expressway to the Boardwalk)." St ate of New Jersey, at 7. The Legislature imposed a $2.00 fee on consumers who parked at casino-controlled parking facilities and required t hat $1.50 of this

amount to be remitted to the CRDA whether or not th e consumer used or entered the casino facility. N.J.S.A. 5:12-173.3 . Id. Proceeds are deposited in a special account in the State Treasur y to be used for, among other things, any project that the CRDA deter mines is "related to improving highways, roads, infrastructures, traffic regulation and public safety" in the corridor region. N.J.S.A. 5:12-173.4 . The Legislature also authorized the CRDA to sell bonds to finance such p rojects and to pledge parking fee proceeds to repay the indebtedness. N.J .S.A. 5:12-173.6,

173.7.

Mirage, the State of New Jersey and its various age ncies entered into the Road Agreement under certain of these New Jerse y statutes, viz., N.J.S.A. 5:12-173.1 - 173.7 (requiring the CRDA to collect parking fees to fund "eligible projects") and N.J.S.A. 5:12-144. 1 and N.J.S.A. 5:12-173 (requiring casino licensees both to purchase bonds issued by the CRDA and to make investments in eligible projects approv ed by the CRDA). In one of its state law causees of action, Trump asked the district court to declare these enabling statutes unconstitutional un der the New Jersey Constitution. However, the district court refused t o exercise supplemental jurisdiction over the constitutional c hallenge and dismissed it without prejudice.

10It shall be unlawful for any person, directl y or

indirectly, by the use of any means or instr umentality of interstate commerce, or of the mails or o f any facility of any national securities exchange,

(a) To employ any device, scheme, or artific e to defraud,

(b) To make any untrue statement of a materi al fact or to omit to state a material fact necessary i n order to make the statements made, in the light of th e circumstances under which they were made, no t misleading, or

(c) To engage in any act, practice, or cours e of business which operates or would operate as a fraud o r deceit upon any person, in connection with the purc hase or sale of any security.

17 C.F.R. S 240.10b-5 (emphasis added). For our pur poses, the operative phrase in both the statute and the re gulation is "in connection with the purchase and sale." Trum p does not allege that it intends to purchase the bonds wh en, and if, they are issued. Thus, the threshold issue is w hether Trump has standing to bring this action.

A.

"In essence the question of standing is whether the litigant is entitled to have the court decide the m erits of the dispute or of particular issues." Warth v. Seldin, 422 U.S. 490, 498 (1975). Standing "subsumes a blend of constitutional requirements and prudential consider ations." Valley Forge Christian College v. Americans United for Separation of Church and State, Inc., 454 U.S. 464, 471 (1982). Obviously, satisfying the Article III "case or controversy" requirement is the "irreducible consti tutional minimum" of standing.7 Lujan v. Defenders of Wildli fe, 504 U.S. 555, 560 (1992). Article III constitutional st anding contains three elements: (1) the plaintiff must hav e suffered

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7. The constitutional dimensions of the standing qu estion bear a close relationship to the questions of ripeness and mootn ess. See Warth v. Seldin, 422 U.S. at 499 n.10.

11an injury in fact -- an invasion of a legally prote cted

interest which is (a) concrete and particularized a nd (b) actual or imminent, not conjectural or hypothetical ; (2) there must be a causal connection between the injur y and the conduct complained of -- the injury has to be f airly traceable to the challenged action of the defendant and not the result of the independent action of some third party not before the court; and (3) it must be likely, as opp osed to merely speculative, that the injury will be redress ed by a favorable decision. Id. at 560-61 (citations, inter nal quotations, brackets and ellipses omitted).

In addition to the " `immutable requirements of Art icle III,' the federal judiciary has also adhered to a set of prudential principles that bear on the question of standing." Bennett v. Spear, ___ U.S. ___, 117 S. Ct. 1154, 1161 (1997) ( citation omitted). They are: (1) "the plaintiff generally mu st assert his own legal rights and interests, and cannot rest his claim to relief on the legal rights or interests of third parties," Valley Forge Christian College, 454 U.S. at 474 (citation omitted); (2) "even when the plaintiff ha s alleged redressable injury sufficient to meet the requireme nts of Article III, the federal courts will not adjudicate abstract questions of wide public significance which amount to generalized grievances pervasively shared and most appropriately addressed in the representative branc hes," Id. at 474-75 (citation omitted); and (3) "the plaintif f 's complaint must fall within the zone of interests to be protected or regulated by the statute or constituti onal guarantee in question." Id. (citation and internal quotations omitted).

It is this latter "zone of interests" consideration which is of paramount concern here. Although the "zone of in terests" consideration had its origin in the context of judi cial review proceedings under the Administrative Procedures Act ("APA"), see Association of Data Processing Service Organizations, Inc. v. Camp, 397 U.S. 150 (1970), i t is now clear that it applies "in suits not involving revie w of federal administrative action," and it is one "among other prudential standing requirements of general applica tion." Bennett v. Spear, 117 S. Ct. at 1161.

12B.

It is by no means certain that Trump has alleged sufficient injury to achieve Article III standing h ere. However, even if the allegations of fraud in the is suance of securities that Trump does not intend to purchase a re sufficient for purposes of Article III, they clearl y fall outside the zone of interests protected by the SJTA, sectio n 10(b) of the Securities Act, and Rule 10b-5.

The Supreme Court has held that only a purchaser or seller of a security has standing to bring a privat e 10b-5 securities fraud action for money damages. Blue Chi p Stamps v. Manor Drug Stores, 421 U.S. 723 (1975). However, Trump is not bringing a private damages ac tion under 10b-5. Rather, Trump seeks injunctive relief against what it claims is an impending 10b-5 violation, and it claims standing based on a pre-Blue Chip Stamps dec ision of this court, Kahan v. Rosenstiel, 424 F.2d 161 (3 d Cir. 1970). In Kahan, we carved out a narrow exception t o the "Birnbaum rule" and held that the non-purchasing or nonselling plaintiff of a security has standing to req uest injunctive relief for a 10b-5 violation.

The Birnbaum rule takes its name from Birnbaum v. Newport Steel Corp., 193 F.2d 461 (2d Cir. 1952), w hich was decided twenty-three years before the Supreme C ourt's Blue Chip Stamps decision. In Birnbaum the court examined the legislative history of securities legi slation and concluded that Rule 10b-5 "extended protection only to the defrauded purchaser or seller" of the security at i ssue. Id. at 464. Thus was born the Birnbaum purchaser/seller rule. In Blue Chip Stamps, the Supreme Court expressly de clared that "Birnbaum was rightly decided." 421 U.S. at 73 1.

Kahan was decided eighteen years after Birnbaum, bu t five years before Blue Chip Stamps. In Kahan we rev iewed then existing precedent in the Second Circuit and concluded that, despite the Birnbaum rule, Second C ircuit jurisprudence allowed a non-purchasing or non-selli ng plaintiff to bring an action for injunctive relief under 10b-5. We stated "[t]he purchase-sale requirement must be interpreted so that the broad design of the Exchang e Act, to prevent inequitable and unfair practices on securit ies

13exchanges and over-the-counter markets, is not frus trated

by the use of novel or atypical transactions." 424 F.2d at 171. Accordingly, we held that

[n]either the language of S 10(b) and Rule 1 0 b-5 nor the policy they were designed to effectuate mandate adherence to a strict purchaser-seller requi rement so as to preclude suits for [injunctive] relief if a plaintiff

can establish a causal connection between th e violations alleged and the plaintiff's loss.

Id., at 173.

Trump argues that this "relaxed standing" rule of K ahan survived Blue Chip Stamps. Mirage argues to the con trary citing Cowin v. Bresler, 741 F.2d 410 (D.C. Cir. 19 84) to support its position that Blue Chip Stamps sounded the death knell for the "relaxed standing" rule. In Cow in, the court held that the Blue Chip Stamps purchaser-sell er limitation applies with equal force to equitable ac tions.

We have not, heretofore, squarely addressed this is sue. In Tully v. Mott Supermarkets, Inc., 540 F.2d 187, 194 (3d Cir. 1976), a panel of this court assumed that the "rela xed standing" rule of Kahan survived Blue Chip Stamps, but
held that the case before it did not fit into that rule. 540 F.2d at 194. In Sharp v. Coopers & Lybrand, 649 F.2 d 175, 186 n.15 (3d Cir. 1981), overruled in part on other grounds, In re Data Access Systems Securities Litigation, 84 3 F.2d 1537 (3d Cir. 1988)(en banc), we wrote that Blue Ch ip Stamps precludes a non-purchaser or non-seller from seeking injunctive relief for an impending 10b-5 vi olation. However, that reference is clearly dicta, and not p art of the holding. 649 F.2d at 187 n.15.

Thus, we have yet to decide whether a non-purchasin g or non-selling plaintiff continues to have standing to seek injunctive relief for an alleged 10b-5 violation af ter Blue Chip Stamps. However, resolution of that question m ust await yet another day as we need not now decide it to

resolve the case at bar. Whether or not the relaxed standing rule survives Blue Chip Stamps, the injuries that T rump alleges here are not within the zone of protection established by S 10(b) and Rule 10b-5 regardless of the relief sought. Furthermore, Trump has not establish ed the

14prerequisite nexus between the injuries it claims, and the

securities violations that it alleges. Even under K ahan's rule of relaxed standing, one seeking injunctive re lief had to

establish a "causal connection between the violatio ns alleged" and the loss claimed. See Kahan, 424 F.2d at 173. As noted above, there we stated that we would not s trictly adhere to the "purchase-seller requirement . . . if a plaintiff

could establish a causal connection between the vio lations alleged and plaintiff's loss." (emphasis added). He re, Trump has not established any such causal link. According ly, we hold that the injuries that Trump alleges are insuf ficient to confer standing to seek relief under either Blue Ch ip Stamps, or our holding in Kahan.

Trump has no intention of purchasing the bonds, and
, therefore, is not a member of the universe of poten tial investors.8 Consequently, it cannot demonstrate tha t it would suffer an injury sufficiently connected to th e securities fraud it alleges.9 Trump argues, in part , that it must be allowed to bring this action because of the unique circumstances surrounding an offering of government bonds. At oral argument Trump suggested that its ro le in enjoining this sale of securities without proper di sclosure is tantamount to acting as a private attorney general on behalf of the investing public, and the public in g eneral, and this is sufficient to confer standing. However, Trump is obviously aware of the purported infirmity that it alleges in this offering. The claimed constitutional infirmity was the

___________________________________________________ ______________

8. In view of Trump's allegations, it would not fur ther Trump's position to allege an intention to purchase as Trump could n ot, in good faith, assert that it had relied upon the alleged fraudule nt conduct. In order to state a securities fraud claim under S 10(b) and Ru le 10b-5, a private plaintiff must plead that he or she "reasonably rel ied on the misrepresentation or omission and . . . consequentl y suffered damage." In re Westinghouse Securities Litigation, 90 F.3d 6 96, 710 (3d Cir. 1996).

9. Trump is not at all in the same position as was Kahan in Kahan v. Rosenstiel. Kahan was a minority shareholder and, a ssuming the truth of the allegations in his complaint, was being offe red less money for his shares than was the majority shareholder. Thus, Kah an stood to suffer
a loss in the value of his investment because of th e alleged securities fraud. Trump cannot demonstrate a loss from an inve stment it will never

make.

15basis of state court litigation and it must now be disclosed

to prospective purchasers. That disclosure adequate ly protects the investing public without a tortured st anding analysis under federal securities laws. Section 10( b) and Rule 10b-5 reflect a "strong federal interest .. . in ensuring a proper flow of information between the parties to a securities transaction." Lewis v. Chrysler Corp., 9 49 F.2d 644, 649 (3d Cir. 1991)(quoting Healey v. Catalyst Recovery of Pennsylvania, Inc., 616 F.2d 641, 646 (3d Cir. 1 980)). As

we wrote in Kahan:

The Act was designed to eliminate deceptive and unfair practices in security trading and to protect the public from inaccurate, incomplete and misleading

information. The thrust of the Act and the d ecisions interpreting it is to give the investing pub lic the opportunity to make knowing and intelligent decisions regarding the purchase and sale of securitie s.

Kahan, at 173 (emphasis added).

Aside from nebulous allegations of environmental ha rm and harm to the Atlantic City community, Trump's essential complaint is that the proceeds from the s ale of the bonds will be used to build a highway and tunnel wh ich will funnel traffic from the Atlantic City Expressw ay to the multi-casino complex Trump's competitor will build on the H-Tract. The highway and tunnel, once completed, wi ll be a boon for Mirage and Trump fears economic loss. Admittedly, there is a highly attenuated connection between the funding scheme and Trump's claimed "injury". Ho wever, that "injury" is much too tenuous to be regarded as arising from the alleged securities fraud. The injury resul ts from the highway that will bring traffic to Trump's comp etitor. Trump's assertion that the injuries are within the zone of interests protected by S 10(b) and Rule 10b-5 requi res us to stretch reality as well as precedent past the break ing point. We refuse to do so. Accordingly, we hold that Trump has no standing to seek injunctive relief against the issu ance of the

bonds.

IV.

Two small matters remain. First, Trump claims that the district court abused its discretion by "failing to provide

16Trump with an opportunity to supply further particu larized

allegations of fact to support its standing." Appel lant's Br. at 47. However, Trump never requested leave of the district court to amend or supplement its complaint. Therefo re, it cannot raise that issue on appeal. Mann v. Conlin, 22 F.3d 100, 103 (6th Cir. 1994)(where plaintiff never requ ested leave to amend in the district court, that argument is not properly before appellate court).

Second, as noted above, Trump has appealed from the
district court's decision to refrain from exercisin g supplemental jurisdiction over its state law claim that the proposed funding scheme violates the New Jersey Constitution. However, supplemental jurisdiction is exercised as a matter of discretion. See Borough of West Mifflin v. Lancaster, 45 F.3d 780, 788 (3d Cir. 199 5). A court may decline to exercise supplemental jurisdic tion over

a state law claim where "the claim raises a novel o r complex issue of state law." 28 U.S.C. S 1367(c)(1) . Clearly, the question of whether the proposed funding scheme for the Westside Connector violates the New Jersey Constitution is a complex issue of state law which is better left to the New Jersey courts to determine. See Doe v. Sundquist, 106 F.3d 702, 708 (6th Cir. 1997)(declin ing to exercise supplemental jurisdiction, in part, "out o f respect for the right of a state court system to construe t hat state's own constitution."). Thus, we believe that the dist rict court did not abuse its discretion by refusing to exercis e supplemental jurisdiction over the state law consti tutional

claim.

V.

For the above reasons, the judgment of the district court
will be affirmed.

A True Copy:

Teste:

Clerk of the United States Court of Appeals

for the Third Circuit

17