Opinion ID: 6491398
Heading Depth: 3
Heading Rank: 2

Heading: HMA’s Standing to Sue on Behalf of Itself as an Organization

Text: An organization also has standing to sue for injury to its own interests, separate from any injury to its members, inasmuch as standing may be established in an individual or representative capacity. See Havens Realty Corp. v. Coleman, 455 U.S. 363, 378-79, 102 S.Ct. 1114, 71 L.Ed.2d 214 (1982). It is well settled that the crucial inquiry with regard to standing is whether the plaintiff has alleged such a personal stake in the outcome of the controversy as to warrant his or her invocation of the court’s jurisdiction and to justify exercise of the court’s remedial powers on his or her be-' half. In deciding whether the plaintiff has the reqiiisite interest in the outcome of the litigation, we employ a three-part test: (1) has the plaintiff suffered an actual or threatened injury as a result of the defendant’s wrongful conduct; (2) is the injury fairly traceable to the defendant’s actions; and (3) would a favorable decision likely provide relief for plaintiffs injury. With respect to the first prong of this test, the plaintiff must show a distinct and palpable injury to himself or herself. The injury must be distinct and palpable, as opposed to abstract, conjectural, or merely hypothetical. Akinaka v. Disciplinary Bd. of Hawai‘i Supreme Court, 91 Hawai‘i 51, 55, 979 P.2d 1077, 1081 (1999) (citations, internal quotation marks, and brackets omitted) (emphases added); see also Sierra Club, 100 Hawai'i at 250, 59 P.3d at 885; Fujimoto v. Au, 95 Hawai'i 116, 138-39, 19 P.3d 699, 721-22 (2001); Mottl, 95 Hawai'i at 389, 23 P.3d at 724. Pointing to the allegations in its complaint, quoted below, HMA argues that it has alleged an actual and threatened injury as a result of HMSA’s conduct: 62. HMSA’s unfair and deceptive course of conduct, oppressive business practices and unfair methods of competition have injured HMA in its own right as HMA’s efforts to achieve its purposes have been, and continue to be, frustrated by [HMSA’s] practices, and HMA has been required to devote significant resources to dealing with issues concerning [HMSA’s] improper unfair and deceptive practices];] 63. [HMSA’s] unfair and deceptive course of conduct, oppressive business practices and unfair methods of competition have forced HMA to devote significant resources to handling physician practices inquiries, counseling physicians and otherwise helping to identify and counteract the harm caused by [HMSA] set forth in the [e]omplaint. Specifically, HMA devotes the time of several of its employees to deal with the practices at issue herein. HMA’s efforts to counteract [HMSA’s] unfair and deceptive practices include, inter alia, counseling HMA members on how to counteract the practices at issue, monitoring [HMSA’s] practices, advocating on HMA’s member’s behalf, and lobbying for insurance reform. In support of its position, HMA cites to the United States Supreme Court’s decision in Havens Realty Corp. for the proposition that the allegation that an association has devoted significant resources to counteract the effect of the defendant’s wrongful practices are sufficient to confer standing in its own right. In Havens Realty Corp., the defendants’ discriminatory actions involved steering potential black tenants away from the defendants’ apartment buildings. 455 U.S. at 367, 102 S.Ct. 1114. The plaintiff-organization, which operated a housing counseling service, brought suit against the defendants for engaging in racial steering practices, in violation of section 804 of the Fair Housing Act of 1968, 42 U.S.C. § 3604. Id. at 366-67, 102 S.Ct. 1114. The plaintiff-organization’s complaint alleged that: [Plaintiff] has been frustrated by defendants’ racial steering practices in its efforts to assist ■ equal access to housing through counseling and other referral services. [Plaintiff] has had to devote significant resources to identify and counteract the defendants’] racially discriminatory steering practices. Id. at 379, 102 S.Ct. 1114 (internal quotation marks, citation, and brackets omitted) (emphases added). In an appeal to the United States Court of Appeals for the Fourth Circuit from the federal district court’s grant of the defendants’ motion to dismiss for lack of standing, the Fourth Circuit reversed, holding tliat the plaintiffs allegation of injury was sufficient, at the pleading stage, to satisfy the standing requirements. Id. at 369-70, 102 S.Ct. 1114. The Supreme Court affirmed, holding that the plaintiffs allegations of injury, causation, and redressability was sufficient to establish organizational standing, and stated: If, as broadly alleged, [the defendants’] steering practices have perceptibly impaired [the plaintiffs] ability to provide counseling and referral services for low- and moderate-income homeseekers, there can be no question that the organization has suffered injury in fact. Such concrete and demonstrable injury to the organization’s activities—witli the consequent drain on the organization’s resources— constitutes far move than simply a setback to the organization’s abstract social interests. We therefore conclude, as did the Coui't of Appeals, that in view of [the plaintiffs] allegations of injury it was improper for the District Court to dismiss for lack of standing the claims of the organization in its own right. Id. at 379, 102 S.Ct. 1114 (citation and footnotes omitted) (emphasis added). Relying on Hawaii’s Thousand Friends v. Anderson, 70 Haw. 276, 768 P.2d 1293 (1989), HMSA maintains that HMA’s allegation is not legally sufficient to confer standing because it is merely “investigative expenditures.” Id. at 284, 768 P.2d at 1299. In Hawaii’s Thousand Friends, then-Mayor Frank Fasi directed his administration to embark on a study of available locations in central 0‘ahu for a city-developed housing project, pursuant to authority granted by the legislature in HRS §§ 359G-4.1 and 46-15.1. 70 Haw. at 278, 768 P.2d at 1296. The Waiola Estate lands was identified as ideal for the proposed housing development. Id. Hawai‘i Thousand Friends (the plaintiff), a non-profit corporation, learned of the proposed development through a series of public advertisements that touted the then-City and County of Honolulu Managing Director’s efforts in the project. Id. at 279, 768 P.2d at 1296. Thereafter, the plaintiff began an investigation into the Waiola project, concerned that the proposed project was to be situated on land that was designated as agricultural in the State Development Plan. Id. at 279, 768 P.2d at 1297. The plaintiff filed suit, and the State defendants unsuccessfully moved for partial summary judgment based on the plaintiffs lack of standing. Id. at 280, 768 P.2d at 1297. Eventually, the case went to trial on the plaintiffs third amended complaint, wherein it alleged, inter alia, that the State defendants had: (1) conspired to place public ads for the Waiola project solely to promote then-City Managing Director’s political goals, thereby committing a fraudulent use of public funds; and (2) made numerous misrepresentations in the advertisements. According to the complaint, the injury sustained by [the plaintiff] was the “unlawful depletion of the City and County of Honolulu cash assets held in public trust.” It prayed for relief in the form of ... (2) an injunction barring [the State] defendants from taking any further action on the Wai-ola project; and (3) general damages to be paid directly to the City treasury in the amount of the public funds used to finance the Waiola pi'oject. Id. The jury returned a verdict in favor of the plaintiff in the amount of $482,921. The plaintiff, thereafter, requested that the judgment reflect that the award be paid to the City’s treasury rather than to the plaintiff. The trial court declined, stating that it had no authority to amend the jury’s verdict. Id. at 281, 768 P.2d at 1297. On appeal to this court, the State defendants raised, inter alia, the issue of the plaintiffs standing. This court held that the plaintiff did not have standing to bring suit, explaining that: [The plaintiff] allege[d] that it suffered three types of injury as a result of defendants’ actions. First, because of the illegal use of public moneys, those moneys are not available for environmental studies and/or other low-and moderate-income housing developments. This asserted injury can be viewed in two ways, neither of which would give [the plaintiff] standing: (a) it could be interpreted to mean that in order to conduct environmental studies and other housing developments, additional funds would have to be found to pay for them; and (b) that [the plaintiffs] political priorities—environmental studies and other housing developments funded through governmental expenditures—would not be addressed. By such an assertion, [the plaintiff] is seeking to do no more than vindicate its own value preferences^ the proper forum for which is in the legislature, executive, or administrative agencies,] through the judicial process [i.e., the plaintiff failed to show some concrete injury]- Id. at 283, 768 P.2d at 1299 (brackets, citation, and internal quotation marks omitted). This court further noted that the plaintiffs claim that “it was compelled to investigate defendants’ illegal conduct, and in doing so expended its own funds, is also a use of the judicial process to vindicate [the plaintiffs] value preferences.” Id. at 284, 768 P.2d at 1299. Were we to recognize [the plaintiffs] investigation expenditures as injury in fact sufficient to confer standing, any interest group or individual could initiate special interest litigation merely by incurring expenses connected therewith. We abhor the use of courtrooms as political forums to vindicate individual value preferences. Id. (emphasis added). The allegations of the case before this court, however, are distinguishable from those advanced in Hawaii’s Thousand Friends inasmuch as HMA is not alleging that the diversion of its resources was devoted to the lawsuit at issue. Indeed, as this court stated in Hawaii’s Thousand Friends, an organization’s allegation that it expected to expend or had expended resources by filing a lawsuit to challenge the defendant’s practice or policy are insufficient to establish standing. Id. at 284, 768 P.2d at 1299. We note that the United States Courts of Appeals for the District of Columbia, the Third Circuit, and the Fifth Circuit have also held that, for an organization to show the requisite injury, it must demonstrate an expenditure of resources independent of those con-neeted with its lawsuit. See Fair Housing Council of Suburban Philadelphia v. Montgomery Newspapers, 141 F.3d 71, 79 (3d Cir.1998) (holding that “litigation expenses alone do not constitute damage sufficient to support standing”); Fair Employment Council of Greater Washington, Inc. v. BMC Mktg. Corp., 28 F.3d 1268, 1276 (D.C.Cir.1994) (finding that expense of testing was a “self-inflicted” harm resulting from organization’s budgetary choices rather than defendant’s actions); Ass’n for Retarded Citizens v. Dallas County Mental Health & Mental Retardation Ctr. Bd. of Trs., 19 F.3d 241, 244 (5th Cir.1994) (“The mere fact that an organization redirects some of its resources to litigation and legal counseling in response to actions or inactions of another party is insufficient to impart standing upon the organization.”); Spann v. Colonial Village, Inc., 899 F.2d 24, 27 (D.C.Cir.), certs. denied, 498 U.S. 980, 111 S.Ct. 508, 509, 112 L.Ed.2d 521 (1990) (“An organization cannot, of course, manufacture the injury necessaiy to maintain a suit from its expenditure of resources on that very suit. Were the rule otherwise, any litigant could create injury in fact by bringing a case, and Article III would present no real limitation.”); but cf. Ragin v. Harry Macklowe Real Estate Co., 6 F.3d 898, 905 (2d Cir.1993) (organization had standing to sue based on diversion of resources to pursue litigation and other legal efforts to counteract the discrimination); Hooker v. Weathers, 990 F.2d 913, 915 (6th Cir.1993) (organization had standing based on investigation using testers and confirmation of facts and circumstances alleged in complaint); Village of Bellwood v. Dwivedi, 895 F.2d 1521, 1525 (7th Cir.1990) (to have standing the organization need only show deflection of time and money from counseling to legal efforts). As previously stated, HMA alleges that HMSA’s conduct has frustrated HMA’s pursuit of its underlying purpose, 20 because HMSA’s alleged wrongful practices have threatened its members’ ability, inter alia, to provide medically necessary healthcare services and fulfill other aspects of their patients’ care. Thus, HMA alleges that it has been required to devote significant resources to dealing with issues concerning HMSA’s wrongful practices. In our view, HMA’s allegations are more akin to those alleged in Havens Realty Corp., 455 U.S. at 379, 102 S.Ct. 1114, as discussed supra (association had standing when the defendants’ conduct caused more than a setback to its abstract social interests, such as injury to its counseling activities and a drain in its resources). Further, as the court in In re Managed Care Litigation, 298 F.Supp.2d at 1306, stated, “allegations that the [insurers] have interfered in medical treatment decisions and developed systemic practices regarding payments directly affect medical associations who must deal with the fallout of such behavior.” In that case, the federal district court, rejecting the insurers’ contention that the complaint lacked an objectively quantifiable, concrete set of costs, other than the cost of litigation, concluded that the medical associations had sufficiently alleged the elements of individual standing by asserting, inter alia, in their complaint that, “the systemic practices being challenged in this lawsuit have caused them to lose membership and to expend their own time and resources fighting [the insurers’] tactics.” Id. at 1305. Accordingly, we hold that, at this stage in the litigation, HMA has sufficiently alleged direct injury to itself and, thereby, possesses standing to bring suit on its own behalf as an organization to address that injury. See also Moseke v. Miller & Smith, Inc., 202 F.Supp.2d 492, 499-500 (E.D.Va.2002) (finding that an association has alleged facts that demonstrate a palpable injury to itself by alleging that it “devoted significant resources to identify and counteract the [defendants’ practices” and did so to the detriment of its organizational purpose (citation and internal quotation marks omitted)). Having concluded that the plaintiffs are entitled to bring their claims in court, we next turn our discussion to the circuit court’s orders granting HMSA’s motion for judgment on the pleadings, essentially dismissing the plaintiffs’ claims of unfair ■ methods of competition and tortious interference with prospective economic advantage based upon a failure to state a claim.