### INTHE UNI TED S TATESCOU RT OFAPPEALS FORTHE FIFTH CIRCU IT

N o. 08- 50100

D O U G LA S A LA N L ITT L E , O n B eh al f of T h em selves an d A l lO t h ers S i m i l arl y S i t u ated; L ITT L E , R O B E R T S & C O M P A N Y , P C , O n B eh al f of T h em selves an d A l lO t h ers S i m i l arl y S i t u ated P l ai n t i f fs - A pp el l an t s - C ross - A pp el l ees v. KPM G LL P; F RANKLI N W M ARES H; DAVI D J KI RKPA TR I CK; ROBER T W LAM BERT ; J ERRYW AYNE CLAI BORNE; JAM ES T ERRYS TRANGE, J R; J AC K T URNE R T AY L OR , J R; R I CHA RD E S EX T ON; S ARA L OU BR O W N ; LAR RYEVAN S D efen d a n ts - A p p ell ee s -C ross -A p p ell a n ts

N o. 08- 50104

DE S ER T E AG L E DI S T RI BUT I NG O F E L P AS O I NC P l ai n t i f f - A pp el l an t
- C ross - A pp el l ee N C VEN TUR ES I N C; ST JAM ES CAPI TAL PARTNE RS LP Interven or Pl ai n t i f

fs - A pp el l an t s- C ross - A pp el l ees

v. KPM G LL P; F RANKLI N W M ARES H; DAVI D J KI RKPA TR I CK; ROBER T W LAM BERT ; J ERRYW AYNE CLAI BORNE; JAM ES T ERRYS TRANGE, J R; J AC K T URNE R T AY L OR , J R; R I CHA RD E S EX T ON; S ARA L OU BR OW N; LAR RYE VA NS United States Court of App eals Fifth Circuit 

### F I L E D Jul y 10, 2009 Cha rl es R. F ulb ru g e II I ClerkN o. 08- 50100 c ons ol i dat ed w i t h 08- 50104

2 D efen d a n ts - A p p ell ee s-C ross -A p p ell a n ts

A pp eal s f

rom t h e U n i t ed S t ates D i st ri ctC ou rt f or t h e W est ern D i st ri ctof T exas
B ef ore JO L L Y , D eM O S S , an d P R A D O , C i rcui tJu dg es . E
. G R A D YJO L L Y , C i rcui tJu dg e: J o h n H u d s o n (“H u d s o n ”) w a s ap a r tn e ra t K P M G L L P fr o m 1 9 8 4 u n til 19 99 , pr ac t i c i ng pub l i c a c c o unt anc y i n Te xa s . H e di d no t , ho w e ve r , ha ve t he requ i red T exas l i cense t o practi ce. It i s al l egedt h at K P M G L L P ’ s Tex as l i cense an d regi st rat i on w ere t h eref ore i m proper; i t s part i ci pa t i on i n T exas’ s pu bl i caccoun t an cy m arket, un l aw f u l
. I ti s f

u rt h er al l eged t h at K P M G L L P m an aged t o m a in t a in it s T e x a s lic e n s e a n dr e g is t r a t io n o n l yb yc o n c e a li n gH u d s o n ’s
u n l i censed p ract i ce f rom t h e rel evan tau t h ori t i es. I n 2005, a publ i c ac c ount antand a publ i c - ac c ount ancy f i r m i n T exas brou gh ta pu t ative cl ass a ct i on againstK P M G L L P an d severalof i t s part n ers (colle ctive l y, “ K P M G ”)

. T h e p u tative cl a ss (t h e “com p eti tors”) con ten d s th a t, f r o m 1 9 8 4 u nt i l1999, i t s m e m b e r s l o s tb us i ne s s t o KPM G w he n KPM G par t i c i pat ed i n T exas ’ s publ i c - ac c ount ancy m ar ketunl aw f ul l y. Asec on d p u t ative cl ass act i on w as brou gh t aga i n st K P M G by a grou p of i t s Texas c l i ent s. Thi s p u tati ve c l as s (t he “ c l i ent s” ) c ont ends t hat , f r om 1984
u n t i l199 9, K P M G m i srepresented t h e na t u re of i t s pu bl i c- accoun t an cy servi ces an d overcha rged f

or t h em un l aw f

u l l y. O ver K P M G ’ s opposi t ion , N C V en t u res In c. (“N C V en tu r e s ”) an dS t. Ja m es C a p i tal P a rtn ers L P (“S t. Ja m es”) i n t ervened as pl ai n t i f fs. T h e d is tr ic t c o u r t d is m is s e db o th a c tio n s o n th e p le a d in g s . T h e co u r t h e ld th a t t h e com p eti tors’cl a i m of i nj u ryi s too sp ecu l a tive to con fer A rti cl e III st andi ng ort o g ive r i se t o ac l ai m f orw hi c h re l i ef

c an be gr ant ed. I thel d t hatN o. 08- 50100 c ons ol i dat ed w i t h 08- 50104

3 t he c l i ent s have fai l ed t o pl ead ac t ual , c onc r et e i nj ury suf f i c i ent t o give r i se to
a c l ai m f

o rw hi c h r e l i e f

c an be g r ant ed. The put at ive c l as s e s a ppe alf r o m t he di sm i ssal s. Th e cli en t s al so ap pea l f rom a rul i n g t o st ri ke tw o exh ibi t s t h at t h ey atta ch ed to t h ei r s econd

- am en ded com pl ai n t
. K P M G cr oss- ap pea l s f rom a n c illa r yru lin g s in b o th a c tio n s . W e ha ve consol i da t ed the act i on s f or ap pea l
. W e h ol d t h at, as t h e di st ri ct court deci ded , t h e com peti t ors’cl ai m of i nj u ry i s t oo s p e cu la tive t o confer Art i c l e I I I s t and i ng. The c l i e nt s hav e fail e d t o pl e ad ac t ual , c o nc r e t e i nj u ry su ffi cie n t to su rv ive d ism iss a l u n d e r F e d e ra l R u le o f C ivil P ro ce d u re 1 2 (b )(6). We a f f i r m. I. T h e pu t ative cl ass act i on s ari se f rom th e sam e fact u alal l egati on s. B e cau se t h ese app eal s are f rom di sm i ssal s on t h e act i on s’pl ead i n gs, w e m u st
a ssu m e th e a l l eg a ti on s ar e tru e a n dde scribe th em as if the y w ere fa ct. T h e T e x a s P u b lic A c c o u n ta n c yA c t (“ T P AA”), a s i n fo r c e fr o m 1 9 8 4 u n til 19 99 , r e quir e d f

i r m s o f c e r t i f

i e d pub l i c ac c o unt ant s t o r e gi s t e ra nnua l l y w i t h t he T exas S t ate B o a rd of P u bl i c A ccoun t an cy (t h e “ S t ate B oard”)

. Af i rm di d n ot q u a lifyto re g is te ru n le s s e a c h o f its p a r tn e r s p r a c tic i n gp u b lic a c c o u n ta n c yin T ex a s h eld a T ex a s p u b l i c-acco u n tan cyl i cen se a n dcerti fi ca ti on . T h e S tate Boar d e nf

o r c e d t hi s r e quir e m e ntb y hav i ng f i r m s a nnua l l y s ubm i t , und e ro at h, th e n a m e a n dT e x a s lice n s e n u m b e ro f e a c h p a r tn e rw h o p r a c tic e dp u b lic
a c c o u n ta n c yin T e x a s . R egi st rat i on , i n t u rn, w as a st atutor y prerequ i si t e t o obtai n a f i rm l i cense. T h e T P AAm an da t ed that t h e State B oard revok e t h e regi st rat i on an d l i cense o f a ny f i r m no tm e e t i ng e ac h q uali f i c at i o n f

o rr e gi s t r at i o n. J o h n H u d s o n p r a c t ic e dp u b li c a c c o u n t a n c ya s ap a r t n e rin K P M G ’s H ou st on of

f i ce f rom Jan u ary 1, 198 4, un t i lJan u ary 1, 199 9. H u dson hel d a N ew Y ork pu bl i c- accoun t an cy l i cense, b u th e n ever h el d a T exas pu bl i c- accoun t an cyN o. 08- 50100 c ons ol i dat ed w i t h 08- 50104

4 l i cense. D espi t e H u dson ’ s un l i cen se d p ract i ce, K P M G regi st ered an d received
a lic en se to p ra cti ce p u b l i c acc ou n tan cyi n T ex a s ev eryye a r f rom 19 8 4 u n til 19 99
. KP M G d i d so b y c o nc e al i ng H uds o n’ s l ac k o f aTe xa s l i c e ns e f

r o m t he S t ate B oard: In 198 4 an d 1985 , K P M G om i t t ed H u dson ’ s nam e f rom t h e l i stof Texas par t ner s t hati ts ubm i t t ed t o t he St at e Boar d as pa rt o f t he annual
r e g is tr a tio n p r o c e s s . In 1 9 8 6 , K P M G in c lu d e dH u d s o n ’ s n a m e b u t p r o v id e dh is N ew Y ork l i cense nu m ber i n st ead of a T exas l i cense n u m ber. T h e State B oard
c aughtt hi s anom al y and br oughti tt o K PM G ’ s at t ent i on, w hi c h re spo nded t hat H u d s o n w a s “in th e p r o c e s s o f a p p ly in gfo rh is T e x a s lice n s e .” K P M G a g a in
om i t t ed H udson’ s nam e f r om i t s l i stof Texas par t ner s eac h yearbe t w ee n 1987 and 1999. H udson r et i r ed e f fec t ive January 1, 1999. D espi t e K P M G ’ s r epresentati on i n198 6 that H u dson w as in t h e process o f a p p ly in gfo raT e x a s p u b lic -a c c o u n ta n c ylice n s e , H u d s o n d idn o t a c tu a lly
a p p lyfo raT e x a s li c e n s e u n til 1 9 9 2
. H e a p p lie da t t h e d ir e c tio n o f F r a n k lin M aresh ( “M aresh”) , t h e m an aging pa rt n er of K P M G ’ s H ou st on off i ce. Th ree of H uds o n’ s c o w o r ke r s i n thato f f i c e— de f e ndants R i cha rd S exton, L arry E vans , a nd S ara L ou B row n— si gn ed H u dson ’ s app l i cat i on as c h aract er w i t n esses . A n ot h er o f H ud s o n’ s c o wor ke r s , de fe nd a ntJe r r yCl a ib o r ne , c e r t i f i e do n b e ha l f

o f KPM G t h at H u dson ’ s s t atem en t s i n hi s app l i cat i on w ere t rue an d cor rect
. E ach
c o w o r k e rk n e w th a t H u d s o n h a de n g a g e din th e u n l i c e n s e dp r a c tic e o f p u b lic
accoun t an cy si n ce 1 984
. E ach cow orker al so kn ew t h at H u dson ’ s app l i cat i on c o nt ai ne d fal s e st at e m e nt s . The St at e B o ar d de ni e d H uds o n’ s a ppli c at i o n, a nd H uds o n ne ve rr e ap pl i e d. F r o m 1 9 9 3 u n t i l1 9 9 9 , M a r e s h f u r t h e r e dK P M G ’s c o n c e a lm e n to f H u d s o n ’s unl i c en sed prac t i c e e ven t hough M ar es h had re t i r ed f r om K PM G

. I n 1993, M a resh j oin ed the S tate B oa rd ’ s M aj or C a ses C om m i ttee, w h i ch w a s th e S tate B o a r d c o m m it t e e t h a t w o u ld h a v e b e e n c h a r g e d w it h in v e s t i g a t i n gK P M G ’s l i c e ns e a nd r e gi s t r at i o n. M ar e s h c o nt i nue d t o w o r k f o rt he St at e Boa r d, a nd h eN o. 08- 50100 c ons ol i dat ed w i t h 08- 50104

5 b e c a m e th e S t a t e B o a r d ’s C h a ir m a n in 1 9 9 6
. H e p e r s o n a ll yk n e w o f H u d s o n ’s
u n li c e n s e dp u b li c -a c c o u n t a n c yp r a c t ic e (a n d , c o n s e q u e n t ly , o f K P M G ’s i n eli gibil i ty to reg i ster i n T ex a s), bu t he n ev er d i sclosed the se facts to th e S tate B oard. Th e State B oard n ever i n vest i gated H u dson ’ s un l i censed p u bl i caccoun t an cy pract i ce, an d i tnev er i n vest i gated K P M G ’ s el i gibi l i t y t o regi st er. Ata l lt i m e s f

r o m 1 98 4 unt i l 19 99 , K PM G r e pr e s e nt e d t o pr o s pe c t ive a nd
a c tu a l clie n ts th a t itw a s ap a r tn e r s h ip re g is te r e da n dlice n s e dto p r a c tic e p u b lic
a ccou n tan cyi n T ex a s. T h i s r e p r e s e n ta ti on w a s tru e: at allti m es m a terialto t h e s e a p p e a l s , KP M G w asregi st ered an d l i censed to pract i ce pub l i c acc ou n t an cy i n T exas. K P M G di d not di scl ose, h ow ever, t h at itha d obtai n ed the regi st rat i on andl i c e ns e f

r aud ul e nt l y, o r tha ti tw as unq uali f i e d un de rt he TPAA t o ho l d a fir m re g is tr a tio n o rlic e n s e . H u d s o n ’ s u n lic e n s e dp r a c tic e c a m e t o lig h t o n lyin 2 0 0 5 , w el laf

t erK PM G ’ s annu all i c ens es and r egi st r at i ons f ort he ye ar s 1984 t hr o ugh1 99 9 hade xp i r e d. Agai n, t he s e a l l e ga t i o ns a r e t ak e n f r o m t he puta t ive c l as s e s ’r e l e va nt pl eadi ngs. W e m ustac c eptt hem as t r ue f orourpurpo se s t oday. II. T h e t wo p u t a t iv e c l a s s e s r a i s e d i s t i n c tl e g a la r g u me n t s , a n dt h e t wo ac t i ons ’ pro c edur al hi st or i es di f fer . W e f

i r st des c r ibe t he c om pet i t ors’ l eg al argu m en t s an d t h ei r act i on ’ s procedu ral h i st ory. W e n ext describe the cl i en t s’ l egalar gum ent s and t hei rac t i on’ s pro c edur alhi st or y. A. I n t he c o m pe t i t o r s ’a c t i o n, t he l ive pl e ad i ng i s t he o r i gi nalc o m pl ai nt
. The
c o m p e t i t o r s ’l e g a la r g um e nti s a s f o l l ow s . Fr o m 1 9 8 4 u nt i l1 9 9 9 , KPM G pa r t i c i pa t e d i n Te xa s ’ s pub l i c - ac c o unt anc y m ar ke t

— and o bt ai ne d c l i e nt s w ho ot h erw i sew o ul d havehir e d the com peti t ors— u n l aw f u l l y. K P M G ’ s part i ci pa t i on i nT exas’ s pu bl i c- accoun t an cym a rk e t w a s u n l aw f u lbecau se H u dson ’ s un li censed pu bl i c- accoun t an cy pract i ce cau sed K P M G t o be i n el i gibl e t o regi st er i n T exas.N o. 08- 50100 c ons ol i dat ed w i t h 08- 50104

6 H ad t he St at e Boar d l ear ned of K PM G ’ s i nel i gibi l i t y t o r egi st er , i tw oul d have
r e v o k e dK P M G ’ s re g is tr a tio n a n dlice n s e to p r a c tic e p u b lic a c c o u n ta n c yin T e x a s . S eeT EX . O CC
. C ODE § 9 01
. 50 4( 2) ( 19 99 ) (“ [ T] he b o ar d .
. . s hallr e vo ke t he regi st rat i on an d l i cense of a . . . partnershi p . . . t h at do e s n o t m eeteach qu al i f i c at i o n f

o rr e gi s t r at i o n pr e s c r ibe d b y t hi s c hap t e r . ” )

. Fur t he r , t he
c o m pe t i t o r s a l l e ge , K PM G m ana ge d t o o bt ai n 1 98 4- 19 99 r egi st ra t i o ns a nd l i c ens es onl y t hro ugh act s of c onc eal m entand c ons pi r ac y. Th ey c ont end t hat t hi s c onductcons t i t ut ed co nst r uct ive f r aud, cons pi r ac y t o co m m i tc ons t r uct ive frau d , torti ou s i n terferen ce w i th p rosp ective con tractu a l relati on s, con sp i ra cyto
com m itt orti ou s in t erfe re n ce w ith p ro sp e ctiv e co n tra ctu a l rela tion s, L an h am A ct violati on s, R a ck etee r In fl u en ced an dC orru p t O rg a n i za ti on s A ct (“R IC O ”) vi o l at i o ns , a nd Sh e r m an Actv i o l at i o ns . The c o m pe t i t o r s s e e k t he di s go r ge m e nt
o f a l lr e ve nue s o rpr o f i t s t hatK PM G g e ne r at e d t h roug h i t s Te xa s o pe r at i o ns f r o m 1 98 4 unt i l1 99 9, a s w e l la s pun i t ive da m ag e s , s t at ut o r y da m ag e s (i nc l udi ng a tt o r n e y ’ s fe e s ), a n dco s ts
. K P M G (on beh al f

of al ldefen da n t s exceptM ar esh) m ovedt o di sm i ss u n der Fe d e r a lRu l e s o f Civ i l Pr o c e d u r e 1 2 (b ) ( 1 ) a n d1 2 (b ) ( 6 )

. KP M G a r g u e dt h a t : (A) t he St at e Boa r d p o s s e s s e s e xc l us ive j ur i s di c t i o n o ve rt hi s di s put e ; ( B) t he
c o m p e t i t o r s ’c l a i m o f i nj u r yi s t o o s p e c u l a t iv e t o c o n fe rAr t i c l e I I I s t a n d i n g ; ( C) t h e com peti t ors’cl ai m of inj u ry i s too specu l ative t o give ri se t o a cl ai m f or w h i ch
r e l i e f c an be g r ant e d; a nd (D ) i nj ur y as i de , t he c o m pe t i t o r s failf o rv ar i o us reasons t o st ate a cl ai m f or w h i ch r el i ef can be gran t ed u n der t h e l egal t h eori es t h at t h ey assert
. Th e com peti t ors re sp o n ded t o K P M G ’ s m ot i on t o di sm i ss, K P M G re p lie d , a n dth e co m p e tit o r s s u r -r e p lie d
. M ar es h sep a ra tel y f i l ed a m ot i on t o di sm i ss , i n w hi c h he adopt ed by
r e fe rence t he o t he rde fe nda nt s ’a r gum e nt s f o rdi s m i s s al
. M ar e s h a l s o f i l e d a
m ot i on f

or part i alsum m ary j u dg m en ton the bases of absol u t e an d qu a li f i ed i m m u n i t y. Th e com peti t ors opp osed t h ese m ot i on s.N o. 08- 50100 c ons ol i dat ed w i t h 08- 50104

KPMG gave notice of challenging the denial of Maresh’s motion for partial su mmary 1 ju dgment, but it did not pursue the argument in its appellate briefs. “Becau se arguments not assertedinanoriginalbrief are generally deemed to be abandoned, we will not address this argument.” LaBarge Pipe &Steel C o. v. FirstBank , 5 5 0F .3 d 4 4 2 , 4 4 9n .5( 5 thC ir
. 2 0 0 8). 7 T h e di st ri ctcourthel d that t h e co m peti t ors’cl ai m of i nj u ry i s t oo speculat ive t o confer A rt i cl e I IIst an di n g or t o give ri se t o a cl ai m f or w h i ch rel i ef
can be gran t ed. I tdi sm i ssed t h e act i on un der F ederalR u l e of C ivi lP rocedure 12(b) ( 1) or, al t erna t ivel y, un der F ederalR u l e of C ivi lP rocedure 1 2 (b )(6 ). H aving dis m i ssed t h e act i on on these groun ds, t h e d i st ri ctcou rtres olved
on l y pa rt of K P M G ’ s al t erna t ive argu m en t s. I tconcl u ded t h at t h e State B oard does n ot possess excl u sive j u ri sdi ct i on over t h e act i on an d t h at t h e com peti t ors p le a d e dfr a u dw i t h e n o u g h p a r tic u la r ityto s a tis fyF e d e r a l R u le o f C iv il P rocedure 9(b)

. T h e di st ri ct court di d not consi der ot h er of th e p art i es’ argu m en t s, such a s w h et h er th e c o m peti t ors suff i ci en t l y pl ead ed a con spi racy ora RICO ent er pri se . The di st r i c tc our tdi sm i ss ed M ar es h’ s m ot i on f orpar t i al
s um m ar y j udg m e nta s m o o t
. The c o m pe t i t o rs t i m el y ap pe al e d f r o m t he act i on ’ s di sm i ssal
. K P M G t i m e ly cross

- ap pea l ed ( on beh al f of al ldefen da n t s, i ncl udi ng M ar es h)

. K PM G c hal l enges t he gr ounds o f t he di sm i ss al , urg i ng t hat t h e State B oard p osses ses excl u sive j u ri sdi ct i on over t h i s di spu t e. 1 B. In the cl i en ts’ a cti on , th e live plea d i n g is t h e se con d -am en d ed com p l a i n t. In t h e ori gi n alcom pl ai n t , t h e pu t ative cl ass’ s n am ed pl ai n t i f fs w ere N A B A sset Vent ur e I L. P. ( “ N AB I ” ) , N AB Ass e t Vent ur e I I L. P. ( “ N AB I I ” ) , N A B A sset V en t u re I IIL
. P
. ( “ N A B I II ” ) , N A B A ssetV en t u re IVL
. P
. (“ N A B IV” ) , an d A sset C ol l ect ors L
. P
. (“A ssetC ol l ect ors” )

. I n t h e f i rst
- am en ded com pl ai n t , D esert E a gle D is tr ib u ti n g o f E lP a so, In c. (“D ese rt E a gle”) rep l a ced N A B II, N A B III , an d N A B IVas nam ed p l ai n t i f f

. Th e sec on d-am en ded com pl ai n tref l ect edN o. 08- 50100 c ons ol i dat ed w i t h 08- 50104

8 c hanges t o t he c l i ent s’c ause s of ac t i on and r el i ef

s ought
. I tc ont i nued t o nam e a s p la in tiffs N A B I, A s s e t C o lle c to r s , a n dD e s e r t E a g le
. W h en N A B I , A ssetC ol l ect ors, an d D esertE agle f i l ed the second-am en ded
c o m p l a i nt , NC Ve nt ur e s a ndSt

. Ja m e s m o v e dt o i nt e r v e ne as p l a i nt i f fs . KPM G opp osed t h e m ot i on , an d i tal so al l egedt h at N A B I an d A ssetC ol l ect ors l ack st an di n g. Th e di st ri ctcourtgran t ed the m o tion to i n t ervene. Th e parti es s t i pul at e d t o t he di s m i s s al o f N AB I andAss e tCol l e c t o r s . The a c t i o n’ s c ur r e nt pl ai n t i f fs are D esertE agle, N C V en t u res, an d S t
. Jam es. Th e c l i ent s’s ubst ant ive l egalar gu m en t p r oc ee ds as f ol l ow s. Fro m 1984
u n ti l19 9 9 , K P M G rep rese n te d t h a t it w a s p rop erly reg i stere dan dl i cen sed to p r a c tice p u b l i c acc ou n tan cyi n T ex a s. A s K P M G ’ s p a rtn ers k n ew , th is representat i on w as fal se. K P M G did n o t q u al i f y t o regi st er i n T exas becau se H uds o n pr ac t i c e d p ubli c ac c o unt anc y t he r e w i t ho ut a l i c e ns e andc e r t i f i c at i o n. As a c o n s e q u e n c e o f KPM G m i s r e p r e s e n t a t i o n s , t h e c l i e n t s b a r g a i n e dfo ra nd pai d f ort he s ervi c es of

a pr ope rl y-reg i st er ed ac c ount i ng f i r m . They i nst ead receivedt h e servi ces of an accoun t i n g f i rm w h ose regi st rat i on an d l i cense w ere s u bje c t t o m a n d a to r yre v o c a tio n . The m ar ke tpr i c e f

o rapr o pe r l y- r e gi s t e r e da c c o u n t a n c y f i r m ’ s s e r vi c e s , t he cl i en t s al l ege, exceeds t h e m arket p ri ce f or the i den t i calservi ces of a f i rm w h ose regi st rat i on an d l i cense are subj ectt o m an da t ory revoc ati on . Th i s i s s o becau se t he l at t e rf

i r m ’ s s e r vi c e s c ar r y an e l e m e nt o f r i s k: if t he St at e Boa r d r e vo ke s t he firm ’ s reg i stration a n d l i cen se, th e cli en t: (A) m u st i n cu r a d d i ti on a lex p en ses to h ave the accoun t i n g w ork checked by a l i censed acc ou n t an t or accoun t an cy f i rm an d ( B ) m ay i n cur civi ll i abili t y f or s h ari n g t h e f

i rm ’ s w ork w i t h t h i rd pa rt i es w hi l e rep rese nt i ng t he w or k as havi ng bee n per f or m ed bya f

i r m t hatw as
r e gi s t e r e d a nd li c e ns e d. T h e cli en t s t h u s assert t h at, becau se of K P M G ’ s m i srepresentat i on s, t h ey barga i n ed an d p ai d f or r i sk- f

ree acc ou n t i n g servi ces bu ti n st ead rec eivedl ess-N o. 08- 50100 c ons ol i dat ed w i t h 08- 50104

9 valuab l e, ri sk- beari n g accoun t i n g servi ces. T h ey contend t h at K P M G ’ s c on du ct t ow ar d t hem c ons t i t ut ed ac t ualand c ons t r uct ive f r aud, brea c h of

f i duci ar y dut y, sim p l e or g ross n eg l i ge n ce, n eg l i ge n t m i s r ep rese n tati on , bre a ch of con tract, b r e a c h o f

wa r r a n t y , T e x a s De c e p t iv e T r a d e Pr a c t i c e s Ac t v i o l a t i o n s , a n dRI CO
v iola tion s. T h e yse e k to r ecover th e servi ces’ov e rc h a rg e (m e a su re da s b e n e fit- o fth e -b a r g a in d a m a g e s , o u t-o f-p o c k e t d a m a g e s , lo s t p r o fits , e q u ita b le d is g o r g e m e n t , o r p e c u n ia r yd a m a g e s ), s t a t u t o r yd a m a g e s (i n c lu d in ga t t o r n e y ’s fees ) , a nd p uni t ive da m ag e s . To s upp o r tt he i ra s s e r t i o ns , t he c l i e nt s a t t ach ed to the i r seco n d -am en d ed com p l a i n t a n a ff i d a vit of W a n d a L ore n z (a f orm er S tate B o a rd m e m b e r) a n dad e cla ra tion of H e rb e rt W a rn e r (afor m e r K P M G p a rtn e r). O n be half o f al l de fe nda nt s e xc e pt M ar e s h, K PM G m o ve d t o di s m i s s t he clien ts’ a ctio n u n d e r F e d e ra l R u les of C ivil P ro ce d u re 1 2 (b )(1), 1 2 (b )(6), a n d9 (b ). K PM G ar gued i n favorof di sm i ss alt hat : (A) t he St at e Boar d pos se ss es ex c l usive ju r is d ic tio n o v e rth is d is p u te ; (B ) th e clie n ts ’a c tio n is a n im p e r m is s ib le
c o l l at e r ala t t ac k o f

t he St at e Boa rd’ s 1 98 4- 19 99 r e gi s t r at i o n de c i s i o ns ; ( C) t he cl i en t s l ack stand i n g t o enfor ce t h e T P AAth ro u g h a private r i gh tof act i on f

or da m ages; (D ) t h e cli en ts fa il e d t o pl ead act u al , concret e i nj u ry; an d ( E ) i nj u ry asi de, t h e cli en t s oth erw i se fai lt o st ate a c l ai m f or w h i ch rel i ef

can be gran t ed
u n d er th e p a rti cu l a r l eg a lthe ories th a t t h eyass ert. The c l i e nt s r e s po nde d t o t he m o t i on to d i s m i s s , K PM G r e pl i e d, a nd t he
c l i e nt s s ur - r e pl i e d. M ar e s h s e pa r at e l y f i l e d am o t i o n t o di s m i s s , i n whi c h he
a d o p te d b y r e fe r e n c e th e o th e r d e fe n d a n ts ’ a r g u m e n ts in fa v o r o f d i s m i s s a l. M aresh als o f

i l ed a m ot i on f

or part i alsum m ar yju d g m e n ton the bases of absol u t e an d qu al i f

i ed i m m u n i t y. Th e cli en t s opposedt h ese m ot i on s. T h e di st ri ct court rej ect ed K P M G ’ s argu m en t s t h at t h e S ta te B oard pos se ss es ex c l usive j uri sdi c t i on ove r t hi s di sput e, t hatt he ac t i on i s a c ol l at er al at t ac k o f

t he St at e Boa r d’ s r e gi s t r at i on a n d l i ce ns i ng de c i s i o ns , a nd t hatt he cl i en t s l ack stand i n g becau se t h e T P AAdoes not c reat e a p rivate r i gh tof act i onN o. 08- 50100 c ons ol i dat ed w i t h 08- 50104

10 for da m a ge s. Ith eld, h ow ev er , t h a t th e cli en ts fa i l ed to plea dactu a l , con crete i nj u rysu ff

i ci en t t o g ive ri se to a cla im for w h i ch reli ef can be gra n ted
. It di sm i ssed t h e act i on un der F ederalR u l e of C ivi lP rocedure 12 (b) ( 6)

. H av i ng di sm i ssed t h e act i on on t h ese groun ds, t h e di st ri ctcourtden i ed K P M G ’ s m ot i on to d is m is s in s o fa ra s K P M G s o u g h t d is m is s a lu n d e rF e d e r a l R u le o f C iv il Procedu re 9(b) ; t he c l i ent s’al l egat i ons w er e par t i c ul areno ugh t o s at i sf y t hat rul e. K P M G sep a ra tel y m ov ed to strik e th e L ore n z a n dW a rn er ex h ib i ts. It
c ont ended t hatt he e xhibi t s con st i t ut ed e xper t
- opi ni on t es t i m ony and t hat
e xp e r t
- o pi ni o n t e s t i m o ny i s i nap pr o pr i at e a ta n a c t i o n’ s pl e ad i ng s t ag e . The
c lie n ts o p p o s e dth e m o tio n , ch a r a c te r iz in gL o r e n z a n d W a r n e ra s “u n iq u e ly qu al i f i ed” exp ert s bu t al so contend i n g t h at t h e exh ibi t s contai n ed n o n - exp ert fac t ualt e s t i m o ny. Tha tt e s t i m o ny, t he cli e nt s as s e r t e d, w as notaddit ive of t he
c o m pl ai nt ’ s fac t ual al l e ga t i o ns (i n t he s e ns e o f pr o vi di ng f

r e s h a l l e ga t i o ns ) b ut in s te a dm e r e lyg a v e co n te x t t o th e co m p la in t’s a lle g a tio n s . The di st r i c tc o ur tg r ant e d KPM G ’ s m o t i o n t o s t r i ke t he Lo r e nz a nd W ar ne rex hibit s . I tco nc l ude d t hatt he ex hibit s co nt ai ne d ex pe r tt e s t i m o ny and t h at any n on - opi n i on t est i m on y t hatthe y c o nt aine d was i ne xtr i c ab ly i nt e r t w i n ed
w i t h t he e xp e r tt e s t i m o ny. U nde rt hi s co ur t ’ s pr e c e de nt s , t he di s t r i c tc o ur the l d,
e xp e r tt e s t i m o ny i s i nap pr o pr i at e a tt he pl e ad i ng s t ag e . I to r de r e d t he Lo r e nz a n dW a rn er ex h ib i ts stri ck en f rom the seco n d -am en d ed com p l a i n t. The c l i e nt s have t i m e l y ap pe al e d f r o m t he ac t i o n’ s di s m i s s aland f r o m t he pa rt i algran tof

K P M G ’ s m ot i on t o st ri k e the L orenz an d W arn er exhibi t s. K P M G (o n beh al f

of al ldefen da n t s, i n cl u di n g M aresh) t i m el y cros s- ap pea l ed f r o m t he g r a nto f

NC Ve nt ur e s ’ s a ndSt

. J a m e s ’ s m ot i on t o i nt e r v e ne . KPM G
a lso c ross - ap pea l ed f rom t h e groun ds of

di sm i ssalan d, on cross - ap pea l , rai ses a n ew argu m en topp osi n g federal

- court j u ri sdi ct i on : t h e cli en t s’cl ai m of i nj u ry i s t oo s pec ul at ive t o c onferA r t i c l e I I I s t andi ng.N o. 08- 50100 c ons ol i dat ed w i t h 08- 50104

The co mpeti t or sc on t end that the j uri sdictionalquestionis factu al: “KPMG b ased 2 its motio n t o dismiss ona challenge toa fact—whetherLittlesuffered a concrete, non sp eculative in

j uryinth at KPMG tookb u sin es s from him while unlawfully co mp etinga gain st him in ElP aso—tha ti s centralto the merits of Little’s sub stantivecauses of action .” This cont enti on is witho ut me rit;whetherLittle suffe redinjury that isconcr eteand non-s pec ulative pres ents a le gal qu es tion . See, e.g. , Si mo n v . E. Ky. Welf are Rights Org. , 42 6 U .S. 26 , 37 , 46 (197 6) (vacating

d en ialof motionto dismiss forlack of standing , an d re mandingwith instruction s to dismiss, b ecau se the alle ge d in jury was in sufficiently concrete an d nonsp eculative)

. 11 III. W e ha ve ap pel l ate j u ri sdi ct i on un der 28 U
. S

. C

. § 129 1. W e f i rstconsi der t h e cr oss- ap pea l s f

rom t h e com peti t ors’a ctio n . W e nex tconsi der t h e cr ossa p p e a ls fr o m th e clie n ts ’a c tio n . A. W e r evi ew a di sm i ss alf orl ac k of

s t andi ng de no vo . E
. g. , R oark & Hard ee L Pv. C ity of A u stin , 5 22 F. 3d5 33 , 5 42 (5t h C i r . 2 00 8)

. “ O ve rt he y e ar s , o ur 2
c as e s hav e e s t ab l i s he d t hat t he i r r e duc ibl e c o ns t i t ut i o nalm i ni m um o f s t and i ng con tain s th ree elem en ts. ” L u ja n v. D efe n d er s of Wild lif e , 504 U
. S. 555, 560 ( 19 92 )

. The s e e l e m e nt s a r e “ ( 1) a n ‘i nj ur y i n fac t ’t hati s ( a) c o ncr e t e a nd pa r t i c ul ar i z e d a nd (b) a c t ualo ri m m i ne nt ; ( 2) ac aus al c o nne c t i o n be t w e e n t he inj u ryan dthe con d u ct com p l a i n ed of; an d( 3 ) th e lik elih oo dtha t a fa v o r a b le d ecisi on w i l lred ress the i nj u ry . ” Crof t v . G o v e r no rof

Texas , 562 F. 3d 735, 745 ( 5t h C i r . 2009) (c i t i ng Luj an , 504 U
. S. at 560- 61)

. “ Th e par t y i nvoki ng fede r al j u ri sd i cti on be a rs th e b u rd en of esta b l i sh i n g t h ese elem en ts. ” Luj an , 5 04 U
. S.
a t 5 6 1
. A t t h e p le a d in gs ta g e , a lle g a tio n s o f inju r y a r e lib e r a llyco n s tr u e d
. S ee id

. ( “ [ O ] n a m ot i on t o di sm i ss w e ‘ presum [ e] th at generalal l egati on s em brace th o s e s p e c ific fa c ts th a t a r e n e c e s s a r yto s u p p o r t t h e cla im ’[o f s ta n d in g].” ( quot i ng Luj an v . Nat ’lWi l dl if eFe d. , 491 U
. S

. 871 , 889 ( 199 0) ) )

. H ow ever, a l l eg a ti on s of i nj u rytha t i s m ere l y co nj ectu ra lor h yp oth eti ca ldo n ot s u ff i ce to
c o n fe rs ta n d in g . Se eD ai m le r Chry s le rCor p. v . Cuno , 547 U
. S. 332, 344- 46, 350 ( 2006)

. Acl ai m of

i nj u ry generally i s t oo conj ect u ralor h y p o th e ti calt o conferN o. 08- 50100 c ons ol i dat ed w i t h 08- 50104

12 sta n d i n g w h en t h e i nj u ry’ s exi st en ce depen ds on t h e deci si on s of t h i rd pa rt i es
n ot be fore th e cou rt. See, e . g. , Si m on v. E
. K y. W e lf areR ight s O rg. , 426 U
. S. 26, 41 (1976) (“ [ I] nj u ry att h e ha n ds of a h ospi t ali s i n suff i ci en tby i t sel f

t o est abli sh
a ca se or co n tro v e rs y in th e co n te x t of th is su it, forn o h o sp ita l i s a d e fen d a n t.”)

. H ere, t h e com peti t ors’cl ai m of i nj u ry i s lo st b u si n ess: K P M G provi ded p u b lic -a c c o u n ta n c ys e r v ic e s to T e x a s clie n ts w h o , th e co m p e tit o r s a s s e r t, w o u ld h a v e h ir e dap u ta tiv e c la s s m e m b e rin K P M G ’ s a b s e n c e fr o m th e m a r k e t. T h is
c la im o f inju r y r e q u ir e s t h e fo ll o w in g c h a in o f c a u s a t io n . F ir s t , h a d K P M G ’s T ex a s reg i stration be en rev ok ed , K P M G ’ s T ex a s cl i en ts w ou l dh a v e sou gh t t o repl ace K P M G

. S econd , t h e cl i en t s w ou l d hav e repl aced K P M G w i t h one or m ore of t h e pl ai n t i f

fs. Th i rd, t h e cli en t s w ou l d h ave p ai d f or t h e pl ai n t if

fs’servi ces. T h at K P M G ’ s Tex as cl i en t s w ou l d h ave s ou gh t t o repl ace K P M G requi res sp ecu l a ti on . T h e T P AA p erm i ts a firm w h ose reg i stration h a s b ee n rev ok ed to
a p p lyfo rre in s ta te m e n t. S ee T EX . O CC
. C ODE§ 9 0 1 .50 7 (19 9 9 ) (“O n re ce ip t of a
w r i t t en appl i c at i on, and af t ernot i c e a nd h ea r i ng, t he bo ar d m ay . . . ( 2) reregi st er a person w h o se regi st rat i on w as revoked
. . . . ” )

. Th e com peti t ors al l ege t h at t h e S t ate B oard w ou l d hav e revoked K P M G ’ s l i cense an d regi st rat i on becau se of

a si n gl e partner’ s u n li ce n se d p ract i ce (ou tof as m an y as seven h u n d r e dT e x a s p a r tn e r s ). T h e co m p e tit o r s a ls o a lle g e th a t, fr o m 1 9 8 4 u n til 199 9, K P M G garn ered hu n dreds of m i l l i on s o f d o l l ars i n bu si n ess f rom p a rti ci p a ti n g inT ex a s’ s p u b l i c-acco u n tan cym a rk et. K P M G ’ s m otiva ti on to
c or r ec t t he c ause of

r evo c at i on and t o s ee k r ei nst at em ent

— qui c kl y— w oul d have been obvi ou s. I ti s no l ess l i kely that K P M G ’ s T exas cl i en t s w ou l d h ave w ai t ed f o rKPM G’ s r e i ns t a t e m e nta s thattheywo ul dh a v e s o ug htt o r e p l a c e KPM G
w i t h an ot h er s ervi ce provi der. Tha t t h e c l i e n t s wo u l d h a v e r e p l a c e d KPM G wi t h o n e o r m o r e o f t he pl ai nt i f fs r e quir e s s pe c ul at i o n. H adK PM G ’ s Te xa s r e gi s t r at i o n b e e n r e vo ke d,
a s m a n ya s a b o u t s e v e n h u n d r e dlic e n s e da n dce r tifie dp u b lic a c c o u n ta n ts w o u ldN o. 08- 50100 c ons ol i dat ed w i t h 08- 50104

B ecau se the pl aintiffs l ack standing, we la c k jurisdictionto determine whether: 3 (A) the plaintiffs’ claim of injury is too specul ative to give ri se toa claim for whichrelief can be granted; or (B) inj uryaside, the competitors otherwise failto state a claim for whichrelief canbegranted under the legal theories that theyassert. Al so, we do not reachthe merits of KPMG’s cross-ap pealin sofar as it re que sts analtern ative holdingth at the StateBoard possesses exclu sivej uri sdiction over the competitors’ action.
13 h a v e fo u n dth e m s e lv e s a t a fir m w ith p o te n tia llyd im in is h e dca p a c ityto o b ta in bu si n ess. U n der such ci rcum st an ces, som e of t h e accoun t an t s m ay hav e chosen t o l eave K P M G

. C l i en t s of t h e dep a rtin ga ccoun t an t s, deci di n g t o repl ace K P M G , coul d h ave t ak en theirbu si n ess t o K P M G ’ s f orm er part n ers i n st ead of t h e pl ai n t i f

fs. T h a t c lie n ts w h o ch o s e to t a k e t h e irb u s in e s s t o th e p la in tiffs u ltim a te ly
w o ul d ha ve pa i d t he pl ai nt i f fs a s t he y hadK PM G a l s o r e quir e s s pe c ul at i o n, b ut
w e w i l l no t f

ur t he r be l ab o r t he po i nt
. The c o m pe t i t o r s ’c l ai m o f i nj ur y de pe nds
on s eve r all ayer s of

dec i si ons by t hi r d par t i es — atm i ni m um , K PM G ’ s Texas
c l i e nt s — andi s t o o s pe c ul at ive t o c o nfe rAr t i c l e I I I s t and i ng. W e af f i r m t he di sm issalof

t h e com peti t ors’act i on un der F ederalR u l e of C ivi lP rocedure 1 2 (b )(1). 3 B. W e af f i rm t h e di sm i ssal of t h e cl i en t s’act i on , di sm i ss as m oott h e cli en t s’ ap pea lf rom t h e ord er st ri king the L orenz an d W arn er exhibi t s, an d d o not r each t he m e r i t s o f

K PM G ’ s cross - appe alf r o m t he g r anto f

N C V e nt ur e s ’ s a nd S t. J a m e s ’ s m o tio n s to in te r v e n e . 1. W e re v iew ad ism iss a l u n d e r F e d e ra l R u le o f C ivil P ro ce d u re 1 2 (b )(6) de
novo . “ To surv i ve a R ul e 1 2(b) ( 6) m ot i on t o di sm i ss , t he pl ai nt i f f m ustpl ead

‘ en ou gh fa cts to state a claim to re l i ef th a t is plau sibl e on i ts fa ce.’” Seve r ancev. Patt ers on , 566 F. 3d 490, 501 ( 5t h C i r . 2009) ( quot i ng B ell A tl. Co rp . v . Tw o m b ly , 1 2 7 S . C t. 1 9 5 5 , 1 9 7 4 (2 0 0 7 )).N o. 08- 50100 c ons ol i dat ed w i t h 08- 50104

14 T h e cli en t s al l ege t h at t h ey barga i n ed f or, an d p a id fo r, t h e ri sk- f ree s e r vi c e s o f a pr o pe r l y- r e gi s t e r e d ac c o unt i ng f i r m but t hat t he y r e c e ive d t he r i s kb ea ri n g se rv i ces o f a n i m p rop erly-reg i stere dacco u n ti n g fi rm . A s th e cli en ts alleg e , h o w e v e r, n o b o d you tsid e of K P M G di scovered H u dson ’ s un li censed p u bl i caccoun t anc y pr ac t i c e unt i l 20 05
. The c l i e nt s do no t c o nt e s t t hat 20 05 w as t oo l at e f o rt he St at e Boa r d t o r e vo ke K PM G ’ s 198 4- 199 9 Tex as r e gi s t r at i o ns a nd l i c e ns e s . W i t ho utt he p ossibi l i t y t hatK PM G ’ s r e gi s t r at i o n a nd li c e ns e m i ght hav e b een revoked , t he c l i e nt s ’c l ai m f o rr e l i e f c o l l ap s e s : t he c l i e nt s fac e d no prospect of

n eedi n g t o i n cur add i t i on alexpen ses t o ha ve K P M G ’ s w ork checked by a l i censed a ccoun t an tor accoun t an cy f i rm , an d an y representat i on s t h at t h ey
m ad e t o t h i r d p a r t i e s t h a t KPM G’ s wo r k wa s t h e wo r k o f a r e g i s t e r e d a nd l i c e ns e d f

i r m w e r e t r ue . Fur t he r m o r e , be c aus e t he pot e nt i albas i s fo rr e vo ki ng K PM G ’ s l i c e ns e a nd r e gi s t r at i o n c am e t o l i ghtt o o l at e f o r t he St at e Boa r d t o do
an ythi n ga bou ti t , an y ot h er c l ai m ed d i f ference i n m arket val u e betw een K P M G ’ s “p r o p e r ly -lic e n s e d ” a n d“i m p r o p e r ly -lic e n s e d ” s e r v ic e s — e v e n if th e o r e tic a llyco n c e iv a b le

— is s im p lyim p la u s ib le
. W h a te v e rth e s ta tu s o f K P M G ’ s r e g is tr a tio n s a n d lic e n s e s fr o m 1 9 8 4 u n til 199 9 m ay h ave been

— “ proper” or“i m proper”— i s now onl y of academ i c i n t erest
a n dis im m a t e r ia l a s fa ra s e s t a b li s h in ga n yr e li e f. W e a ff ir m th e a c t io n ’s d ism iss a l u n d e r F e d e ra l R u le o f C ivil P ro ce d u re 1 2 (b )(6). 2. T h e c l i e nt s al s o ap pe al f r o m t he r ul i ng t o s t r i ke t he Lor e nz and W arn er exh ibi t s. W e di sm i ss t h e app ealas m oot
. T h e cl i en t s r epresented to t h e di st ri ct
c o u r tt h a tth e L o r e n z a n dW a r n e re x h ib it s a r e n o ta d d it iv e o f t h e c o m p la in t ’s fact u alal l egati on s but i n st ead m erely provi de contextto t h ose al l egati on s. For th e r e a son s s t ated abov e, t h e com pl ai n t ’ s al l egati on s fai lt o st ate a c l ai m f or w h i ch rel i ef

can be g ra n te d
. E xh ibi t s t h at m erely give contextt o t h ose al l egat i ons c annotc ure t hi s def i c i enc y.N o. 08- 50100 c ons ol i dat ed w i t h 08- 50104

15 3. K P M G c r o s s -a p p e a ls fr o m th e g r a n to f N C V e n t u r e s ’s a n dS t . J a m e s ’s
m o t io n s to in t e r v e n e a s p la in t if fs in th e c li e n t s ’ a c t i o n . W e in t e r p r e tK P M G ’s
cros s-ap p ea lto be i n the n a tu re o f a n a rg u m en t i n the altern a tive , see k i n g to d iv i d e t he p l a i nt i f

fs i f KPM G c a nn o tac hi e v e a bl a nk e tvi c t o r y . Be c a us e KPM G preva i l s agai n stal lof t h e cli en t s un der R u l e 12(b) ( 6) , reac h in gthis cr ossappeal ’ s m er i t s i s unn ec es sa r y. I V. F or t h e f

oregoi n g reasons, t h e di st ri ctcourt ’ s j u dg m en t s are AF F I RMED.