Court Opinion

ID: 9407885
Source: CourtListenerOpinion
Date Created: 2023-07-10 18:00:52.122118+00
Date Added: 2024-06-11T17:20:39.849849
License: Public Domain

Case: 22-20047      Document: 00516814454         Page: 1     Date Filed: 07/10/2023

            United States Court of Appeals
                 for the Fifth Circuit
                                                                           United States Court of Appeals
                                                                                    Fifth Circuit

                                 ____________                                     FILED
                                                                              July 10, 2023
                                  No. 22-20047                               Lyle W. Cayce
                                 ____________                                     Clerk

   A & R Engineering and Testing, Incorporated,

                                                              Plaintiff—Appellee,

                                        versus

   John Scott, Attorney General of Texas,

                                            Defendant—Appellant.
                   ______________________________

                   Appeal from the United States District Court
                       for the Southern District of Texas
                            USDC No. 4:21-CV-3577
                   ______________________________

   Before Stewart, Willett, and Oldham, Circuit Judges.
   Andrew S. Oldham, Circuit Judge:
          Under Texas law, parties to municipal contracts must certify that they
   do not and will not boycott Israel for the duration of their contracts. The City
   of Houston offered A&R Engineering and Testing, Inc. a contract with an
   anti-boycott clause. A&R refused to sign and brought a § 1983 suit against the
   City and the Texas Attorney General. The district court entered a
   preliminary injunction against the City and the Attorney General. The
   Attorney General appealed, arguing that A&R lacks standing. We agree. We
   reverse and remand with instructions to vacate the injunction and dismiss the
   suit against the Attorney General.
Case: 22-20047       Document: 00516814454         Page: 2   Date Filed: 07/10/2023

                                    No. 22-20047

                                         I.
          Rasmy Hassouna is the owner of A&R Engineering and Testing, Inc.
   (“A&R”). He also is a Palestinian proponent of the Boycott, Divestment,
   and Sanctions (“BDS”) movement, which encourages the use of economic
   sanctions and other nonviolent pressure against Israel. Hassouna and A&R
   both boycott Israel.
          A&R has provided engineering services for the City of Houston (“the
   City”) for seventeen years. In the year preceding this lawsuit, the City paid
   A&R $300,000 for its work. Hassouna anticipated that A&R would continue
   to contract with the City for the foreseeable future.
          In 2017, Texas enacted an anti-BDS statute that requires state
   governmental entities to include clauses in their contracts certifying that
   contractors do not and will not boycott Israel throughout the duration of the
   contracts. Tex. Gov’t Code § 2271.002(b). The full statute says:
          Provision Required in Contract
          (a) This section applies only to a contract that:
                 (1) is between a governmental entity and a company
                 with 10 or more full-time employees; and
                 (2) has a value of $100,000 or more that is to be paid
                 wholly or partly from public funds of the governmental
                 entity.
          (b) A governmental entity may not enter into a contract with a
          company for goods or services unless the contract contains a
          written verification from the company that it:
                 (1) does not boycott Israel; and
                 (2) will not boycott Israel during the term of the con-
                 tract.
   Id. § 2271.002.
          The statute defines “boycott Israel” to mean:

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          “Boycott Israel” means refusing to deal with, terminating
          business activities with, or otherwise taking any action that is
          intended to penalize, inflict economic harm on, or limit
          commercial relations specifically with Israel, or with a person
          or entity doing business in Israel or in an Israeli-controlled
          territory, but does not include an action made for ordinary
          business purposes.
   Id. § 808.001(1); see id. § 2271.001(1) (adopting by cross-reference
   § 808.001(1)’s definition of the phrase).
          In October 2021, the City sent A&R a renewal contract. Hassouna
   valued the renewal contract at $1.5 million—or 10% to 15% of A&R’s
   business. But this new contract included an anti-boycott provision, which the
   parties had not previously included in their contracts. A&R refused to sign
   the contract until the City removed the provision. The City rejected A&R’s
   request.
          A&R then filed this suit against the City of Houston and the Texas
   Attorney General. A&R brought as-applied and facial constitutional
   challenges under § 1983, seeking damages and injunctive relief. Specifically,
   A&R requested the court declare the Texas law unconstitutional under the
   First and Fourteenth Amendments, strike anti-boycott clauses from
   proposed and current contracts with the City or the State of Texas, order the
   City to offer A&R a new contract without the clause, temporarily restrain the
   City from awarding the contract to another party during the course of the
   litigation, and award A&R economic damages against the City.
          A&R subsequently sought a preliminary injunction. The district court
   granted it:
          The Defendant City of Houston (“Houston”) is hereby
          enjoined from including, in its proposed contract with Plaintiff,
          the clause found in Subsection 2.19.1 of the contract’s current

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                                    No. 22-20047

          draft. With this exception, Houston and Plaintiff are free to
          negotiate (or not) the terms of Plaintiff’s further employment.
          The State of Texas is hereby enjoined from attempting to
          enforce Chapter 2271 of the Texas Government Code as to
          either Plaintiff or Houston in the negotiation or performance of
          the contract for Professional Materials Engineering Labor and
          Services . . . , if and when it is executed.
   ROA.521–22. The Attorney General appealed.
          Shortly thereafter, A&R and the City entered a contract without the
   anti-boycott provision. A&R then filed a “Suggestion of Mootness,” which
   the Attorney General opposed.
                                         II.
          “Article III jurisdiction is always first. Here, it’s also last.” E.T. v.
   Paxton, 41 F.4th 709, 714 (5th Cir. 2022) (quotation omitted). We (A) begin
   with our own jurisdiction and then (B) turn to the district court’s. We
   (C) conclude by addressing A&R’s remaining counterarguments.
                                         A.
          A&R contends that we lack jurisdiction over the appeal because the
   case is now moot. Mootness, of course, is a jurisdictional defect. See DeFunis
   v. Odegaard, 416 U.S. 312, 316 (1974) (per curiam). Our inability “to review
   moot cases derives from the requirement of Article III of the Constitution
   under which the exercise of judicial power depends upon the existence of a
   case or controversy.” Liner v. Jafco, Inc., 375 U.S. 301, 306 n.3 (1964). As the
   Supreme Court has explained:
          The underlying concern is that, when the challenged conduct
          ceases such that there is no reasonable expectation that the
          wrong will be repeated, then it becomes impossible for the
          court to grant any effectual relief whatever to the prevailing

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          party. In that case, any opinion as to the legality of the
          challenged action would be advisory.
   City of Erie v. Pap’s A.M., 529 U.S. 277, 287 (2000) (quotation omitted). A
   case is not moot when the party invoking appellate jurisdiction is laboring
   under the pain of an injunction. See id. at 288; accord R. Fallon, J.
   Manning, D. Meltzer & D. Shapiro, Hart & Wechsler’s
   Federal Courts and the Federal System 202 (7th ed. 2015)
   [hereinafter Hart & Wechsler].
          This appeal is not moot. The district court entered an injunction
   against the State of Texas, and that injunction remains in effect. It explicitly
   bars the Attorney General from initiating enforcement actions while the
   parties’ contract is live. And the injunction applies to any “attempt[] to
   enforce” Chapter 2271 in the “performance of the contract . . . if and when
   it is executed.” Texas’s efforts to win vacatur of that injunction plainly
   render the appeal not moot.
                                         B.
          Next we turn to the district court’s jurisdiction. It had none.
          To satisfy the Article III case-or-controversy requirement, plaintiffs
   must have standing to sue “at the time the action commence[d].” Friends of
   the Earth, Inc. v. Laidlaw Env’t Servs. (TOC), Inc., 528 U.S. 167, 170 (2000).
   A&R must satisfy the familiar tripartite test. It must show it suffered (1) an
   “injury in fact” (2) that’s “fairly traceable” to the Attorney General’s
   conduct and (3) that’s likely “redressed by a favorable decision.” Lujan v.
   Defs. of Wildlife, 504 U.S. 555, 560–61 (1992) (quotation omitted).
          First, injury in fact. A&R must show it “suffered ‘an invasion of a
   legally protected interest’ that is ‘concrete and particularized’ and ‘actual or
   imminent, not conjectural or hypothetical.’” Spokeo, Inc. v. Robins, 578 U.S.

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   330, 339 (2016) (quoting Lujan, 504 U.S. at 560). Any intangible harm must
   have “a close relationship to a harm that has traditionally been regarded as
   providing a basis for a lawsuit in English or American courts.” Id. at 341.
   Monetary harms “readily qualify.” TransUnion LLC v. Ramirez, 141 S. Ct.
   2190, 2204 (2021). Finally, the injury must exist when plaintiffs filed the
   complaint. See Uzuegbunam v. Preczewski, 141 S. Ct. 792, 796 (2021)
   (requiring “a personal interest in the dispute . . . at the outset” of the case
   for standing).
          Here, as the district court noted, A&R “suffered, or may soon suffer,
   an injury by losing the opportunity to renew its contract with Houston.”
   ROA.502. The lost opportunity is connected to a financial loss. See
   TransUnion, 141 S. Ct. at 2204; cf. In re Taxable Mun. Bond Secs. Litig., 51
   F.3d 518, 523 (5th Cir. 1995) (injury based on a “lost opportunity” must show
   actual financial loss). And the loss isn’t speculative. A&R retained records of
   how much it made in previous contracts, and A&R owner Hassouna testified
   about A&R’s expected profits from its contract with the City.
          Second, traceability. The economic harm and lost opportunity are
   traceable to the City. The City after all is the party responsible for contracting
   with A&R.
          But it’s unclear how A&R can trace its economic injury to the
   Attorney General. See Allen v. Wright, 468 U.S. 737, 756–59 (1984) (holding
   that, even when plaintiffs allege “one of the most serious injuries recognized
   in our legal system,” it’s not justiciable where “the chain of causation
   between the challenged Government conduct and the asserted injury are far
   too weak for the chain as a whole to sustain respondents’ standing”).
   Traceability is particularly difficult to show where the proffered chain of
   causation turns on the government’s speculative future decisions regarding

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   whether and to what extent it will bring enforcement actions in hypothetical
   cases. See Clapper v. Amnesty Int’l USA, 568 U.S. 398, 412–14 (2013).
          These principles plainly bar A&R’s attempt to trace its injuries to the
   Attorney General. That’s for two independent reasons. First, A&R has not
   shown that the Attorney General could interfere with the City’s contracts.
   Chapter § 2271 merely provides a list of definitions, see Tex. Gov’t Code
   § 2271.001, and then a list of requirements, see id. § 2271.002. It doesn’t
   expressly provide a way for the Attorney General to enforce those
   requirements. The statute’s “textually unenforceable language” poses a
   traceability problem. California v. Texas, 141 S. Ct. 2104, 2115 (2021).
          Second, the Attorney General hasn’t taken any action to suggest he
   might enforce the provision even if he has such power. Plaintiffs must assert
   “an injury that is the result of a statute’s actual or threatened enforcement.”
   Id. at 2114. And where the plaintiff fails to allege such actual or threatened
   enforcement, the Supreme Court has instructed us to reject the mere
   potential for enforcement as a “highly attenuated,” “speculative chain of
   possibilities” that cannot trace an injury to the government. Clapper, 568
   U.S. at 410.
          Finally, the City’s conduct severs any link between A&R’s economic
   injury and the Attorney General. See Lujan, 504 U.S. at 560 (“[T]he injury
   has to be fairly traceable to the challenged action of the defendant, and not
   the result of the independent action of some third party not before the court.”
   (quotation omitted)); see also Allen, 468 U.S. at 757–58 (noting how a third
   party disrupted the “line of causation”). The City told the district court it
   would follow state law and include the provision. But the City never
   attributed its actions to any enforcement or threatened enforcement by the
   Attorney General. A&R’s injury depended on the “unfettered,”
   “independent” choices of the City, “whose exercise of broad and legitimate

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   discretion [we] cannot presume either to control or to predict,” so the injury
   isn’t traceable to the Attorney General. Lujan, 504 U.S. at 562 (quotation
   omitted). And A&R does not have standing to sue him.
                                                  C.
           A&R nonetheless contends that the Attorney General should not be
   able to disclaim enforcement of the statute to avoid plaintiffs’ standing while
   also complaining that the injunction interferes with his power to enforce the
   statute to avoid mootness. True, those positions are in tension. But the age-
   old jurisdictional rule is that plaintiffs must establish a case or controversy in
   their complaint before they can obtain an injunction. See United Pub. Workers
   v. Mitchell, 330 U.S. 75 (1947). They cannot get an injunction first and ask
   questions later. And of course, because we’re dismissing plaintiffs’ action
   without prejudice,* they’re free to refile if and when the Attorney General
   takes the jurisdictionally requisite enforcement actions.
           We’re also unpersuaded by plaintiffs’ suggestion that they can get an
   injunction without establishing standing and then insulate their victory
   through mootness. If mootness were just “the doctrine of standing set in a
   time frame,” Henry P. Monaghan, Constitutional Adjudication: The Who and
   When, 82 Yale L.J. 1363, 1384 (1973), then a lack of standing at the
   beginning of a case would perhaps compel holding there’s no jurisdiction at
   the end of the case. But the Supreme Court has held that Professor
   Monaghan’s time-frame aphorism “is not comprehensive.” Laidlaw, 528

           _____________________
           *
              “Our precedents also make clear that a jurisdictional dismissal must be without
   prejudice to refiling in a forum of competent jurisdiction.” Carver v. Atwood, 18 F.4th 494,
   498 (5th Cir. 2021); see also Green Valley Special Util. Dist. v. City of Schertz, Texas, 969 F.3d
   460, 468 (5th Cir. 2020) (en banc) (“Ordinarily, when a complaint is dismissed for lack of
   jurisdiction, including lack of standing, it should be without prejudice.” (quotation
   omitted)).

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   U.S. at 190. And even when there’s no jurisdiction at the beginning of the
   case, the imposition of a judicial remedy can injure the defendant and give
   the defendant the right to invoke federal jurisdiction by way of appeal. See
   ASARCO Inc. v. Kadish, 490 U.S. 605 (1989); Hart & Wechsler, supra,
   at 158–59. That’s what happened here.
                                 *        *         *
         For the foregoing reasons, we conclude that the district court lacked
   jurisdiction to enter its injunction against the Attorney General. We DENY
   the motion to dismiss the appeal for lack of jurisdiction. We REVERSE the
   district court and REMAND with instructions to VACATE the injunction
   and DISMISS the suit against the Attorney General.

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