Court Opinion

ID: 9477965
Source: CourtListenerOpinion
Date Created: 2023-08-05 06:35:58.438665+00
Date Added: 2024-06-11T17:46:08.899512
License: Public Domain

RIPPLE, Circuit Judge,
concurring.
I join the judgment of the court and the basic rationale of Chief Judge Bauer’s opinion. It is important to emphasize, at the beginning of the inquiry, that we are dealing with a very early stage of the litigation. The district court dismissed the entire case because, in its view, it was without subject matter jurisdiction. The court held that the parties had not brought before it a case or controversy, the constitutional prerequisite to the exercise of federal judicial jurisdiction. It reached no other question. Accordingly, on this appeal, our sole task is to determine whether the district court was correct when it dismissed the entire case on this threshold question.
As Chief Justice Warren noted in Flast v. Cohen, “[sjtanding has been called one of ‘the most amorphous [concepts] in the entire domain of public law.’ ” 392 U.S. 83, 99, 88 S.Ct. 1942, 1952, 20 L.Ed.2d 947 (1968) (quoting Hearings on S.2097 before *995the Subcommittee on Constitutional Rights of the Senate Judiciary Committee, 89th Cong., 2d Sess. 465, 498 (1966) (statement of Prof. Paul A. Freund)). He suggested, therefore, that courts begin their analysis of a standing problem by recalling that standing is really a conceptual subdivision of a broader jurisdictional requirement— the "case or controversy” requirement of Article III. This constitutional limitation on the power of federal courts embodies, noted Chief Justice Warren, “two complementary but somewhat different limitations.” Id. at 95, 88 S.Ct. at 1949-50.
In part those words limit the business of federal courts to questions presented in an adversary context and in a form historically viewed as capable of resolution through the judicial process. And in part those words define the role assigned to the judiciary in a tripartite allocation of power to assure that the federal courts will not intrude into areas committed to the other branches of government. Jus-ticiability is the term of art employed to give expression to this dual limitation placed upon federal courts by the case- and-controversy doctrine.

Id.

As Chief Judge Bauer points out, this ease does not implicate directly separation of powers concerns. It does, however, directly implicate the constitutional policy concern, embodied in the case or controversy requirement, of preserving the adversary process. In short, does the plaintiff allege “ ‘such a personal stake in the outcome of the controversy as to assure that concrete adverseness which sharpens the presentation of issues upon which the court so largely depends ...?’” Id. at 99, 88 S.Ct. at 1952 (quoting Baker v. Carr, 369 U.S. 186, 204, 82 S.Ct. 691, 703, 7 L.Ed.2d 663 (1962)).
As the Chief Judge points out, Chief Justice Warren’s formulation has been refined by subsequent decisions of the Supreme Court. Justice Powell’s formulation in Gladstone, Realtors v. Village of Bellwood is perhaps the most concise formulation: “In order to satisfy Art. Ill, the plaintiff must show that he personally has suffered some actual or threatened injury as a result of the putatively illegal conduct of the defendant.” 441 U.S. 91, 99, 99 S.Ct. 1601, 1607-08, 60 L.Ed.2d 66 (1979); accord Duke Power Co. v. Carolina Envtl. Study Group, Inc., 438 U.S. 59, 72, 98 S.Ct. 2620, 2630, 57 L.Ed.2d 595 (1978); Village of Arlington Heights v. Metropolitan Housing Dev. Corp., 429 U.S. 252, 260, 97 S.Ct. 555, 560, 50 L.Ed.2d 450 (1977); Simon v. Eastern Kentucky Welfare Rights Org., 426 U.S. 26, 38, 96 S.Ct. 1917, 1924, 48 L.Ed.2d 450 (1976); Warth v. Seldin, 422 U.S. 490, 499, 95 S.Ct. 2197, 2205, 45 L.Ed.2d 343 (1975); Linda R.S. v. Richard D., 410 U.S. 614, 617, 93 S.Ct. 1146, 1148, 35 L.Ed.2d 536 (1973). “In determining whether there is standing, ‘the court assumes arguendo that [the appellant] [has] pleaded and could prove a violation of substantive law, and asks only whether [it] [has] alleged a concrete injury and a sufficient casual relationship between the injury and the violation.’ ” United States v. Nichols, 841 F.2d 1485, 1498 (10th Cir.1988) (quoting Industrial Inv. Dev. Corp. v. Mitsui & Co., 671 F.2d 876, 888-89 (5th Cir.1982)).
The application of these basic principles to this case is somewhat difficult only because of the very early stage of the litigation. However, in my view, the essential elements of constitutional standing are present. The plaintiff has alleged that it has suffered a “distinct and palpable injury.” Warth, 422 U.S. at 501, 95 S.Ct. at 2206. The plaintiff also has alleged “a ‘fairly traceable’ causal connection between the claimed injury and the challenged conduct.” Duke Power, 438 U.S. at 72, 98 S.Ct. 2630. The complaint alleges that, because of the theft and misuse of private corporate information, the corporation paid out an additional $220 million in connection with its recapitalization scheme than it originally had intended. It also incurred additional fees and expenses in implementing the plan. These additional costs caused FMC to change its corporate structure by taking on additional debt and skewing the equity position of the shareholders in favor of management and the Thrift Plan. The complaint alleges that this injury resulted *996from breach of a fiduciary duty owed to FMC by the appellees and the subsequent insider trading in FMC stock stemming from that breach. The appellees obfuscate the issue of injury by concentrating only on whether the FMC shareholders lost money. The alleged (and that is all that is necessary at this stage) injury to FMC for purposes of Article III standing, however, is that the structure of the corporation was changed as a result of illegal conduct on the part of the appellees. It is the corporation itself that is vitally affected by the change in its structure and, therefore, it is the proper plaintiff to bring this action because it has alleged “a ‘personal stake in the outcome’ in order to ‘assure that concrete adverseness which sharpens the presentation of issues’ necessary for the proper resolution of constitutional questions.” City of Los Angeles v. Lyons, 461 U.S. 95, 101, 103 S.Ct. 1660, 1664, 75 L.Ed.2d 675 (1983) (quoting Baker v. Carr, 369 U.S. 186, 204, 82 S.Ct. 691, 703, 7 L.Ed.2d 663 (1962)).
Fulfillment of these basic requirements of standing is not, of course, the only hurdle that the plaintiff must overcome in order to proceed. It is also necessary that it establish that the injury it alleges be one against which the law affords protection. “Congress may enact statutes creating legal rights, the invasion of which creates standing, even though no injury would exist without the statute.” Linda R.S., 410 U.S. at 617 n. 3, 93 S.Ct. at 1148 n. 3, see also Trafficante v. Metropolitan Life Ins. Co., 409 U.S. 205, 212, 93 S.Ct. 364, 368, 34 L.Ed.2d 415 (1972) (White, J., concurring); Sierra Club v. Morton, 405 U.S. 727, 732, 92 S.Ct. 1361, 1364, 31 L.Ed.2d 636 (1972); Hardin v. Kentucky Utilities Co., 390 U.S. 1, 6, 88 S.Ct. 651, 654, 19 L.Ed.2d 787 (1968). However, it is also necessary that the “statutory provision on which the claim rests properly ... be understood as granting persons in the plaintiff’s position a right to judicial relief.” Warth, 422 U.S. at 500, 95 S.Ct. at 2206 (footnote omitted). As Chief Judge Bauer suggests, this question can be approached as an aspect of the prudential rules of standing. See id.; see also Herpich v. Wallace, 430 F.2d 792, 805-06 (5th Cir.1970) (holding that only purchasers and sellers of securities have standing to bring a private cause of action under section 10(b) and Rule 10b-5 because only they can incur the injury proscribed by those provisions). It also can be addressed quite separately from the standing question in terms of whether the plaintiff has stated a cause of action. See Eason v. General Motors Acceptance Corp., 490 F.2d 654, 658 (7th Cir.1973) (“Instead of stating the issue in terms of standing, we think it is more useful to ask whether the plaintiffs were members of the class for whose special benefit Rule 10b-5 was adopted.”), cert. denied, 416 U.S. 960, 94 S.Ct. 1979, 40 L.Ed.2d 312 (1974).
Regardless of which of these formulations is employed, the essential question remains the same: Do the federal or state statutory provisions upon which each cause of action is predicated afford protection for the plaintiff from the sort of harm alleged in the complaint? To determine whether there is injury that gives rise to a cause of action, a court must analyze the particular provisions of the relevant statutes. With the exception of the Rule 10b-5 allegation, the district court did not undertake a comprehensive analysis of the complaint. Specifically, the district court made no factual findings or legal conclusions with respect to any of the other sections of the securities laws alleged in the complaint. In addition, the district court never addressed the RICO issue. Such a detailed scrutiny of the complaint is necessary before it can be determined whether the plaintiff may proceed. It is inappropriate that such an inquiry be undertaken for the first time on appeal. Accordingly, the judgment of the district court must be reversed and the case remanded for further proceedings. On remand, the district court must address whether the plaintiffs fall within the protection of any of the provisions serving as a predicate for its complaint. While the district court did address the Rule 10b-5 claim, it would be premature to decide the correctness of its analysis at this point and perhaps unfair to preclude further consideration on remand.