Court Opinion

ID: 4579687
Source: CourtListenerOpinion
Date Created: 2020-10-22 17:02:44.657109+00
Date Added: 2024-06-11T13:40:31.756485
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            DISTRICT OF COLUMBIA COURT OF APPEALS

                       Nos. 19-CV-1100 & 19-CV-1221

                       DYLAN CARRAGHER, APPELLANT,

                                       V.

                       DISTRICT OF COLUMBIA, APPELLEE,

                        Appeals from the Superior Court
                          of the District of Columbia
                                (CAB-6109-19)

                     (Hon. John M. Campbell, Trial Judge)

                          (Decided October 22, 2020)

      Before GLICKMAN, BECKWITH, and DEAHL, Associate Judges.

      DEAHL, Associate Judge: Dylan Carragher sued the District of Columbia

challenging the validity of the Sports Wagering Procurement Practices Reform

Exemption Act of 2019 (“Exemption Act”). D.C. Law 23-1, 66 D.C. Reg. 2451.

This Exemption Act permitted the Office of Lottery and Gaming to award a non-

competitive contract for operating the District’s sports gambling system

unencumbered by preexisting procurement laws, which otherwise would have

required a competitive bidding process for awarding the contract. D.C. Code § 2-
                                         2

351.01, et seq. (2016 Repl.). Mr. Carragher argues the Exemption Act effectively

amended Title IV of the Home Rule Act—also known as the District’s Charter—

which is something the D.C. Council is not empowered to do without ratification

via a public referendum process that did not occur here. D.C. Code § 1-203.03(a);

see also Zukerberg v. District of Columbia Bd. of Elections, 97 A.3d 1064, 1066

(D.C. 2014) (describing “two-step process” of D.C. Council passage and public

referendum as one method for amending the District’s Charter). The District

counters that the Exemption Act simply modified procurement laws and involved

no alteration of the Home Rule Act’s requirements that those laws be followed.

The trial court agreed with the District on the merits and granted summary

judgment in its favor.

      The District now argues, as it did below, that Mr. Carragher lacks standing

to bring his suit. The trial court did not address this threshold standing question,

but we cannot bypass it. See Grayson v. AT&T Corp., 15 A.3d 219, 229 (D.C.

2011) (en banc) (“Standing is a threshold jurisdictional question which must be

addressed prior to and independent of the merits of a party’s claim.”) (citation

omitted). We agree with the District that Mr. Carragher lacks standing. We vacate

the trial court’s grant of summary judgment and remand with instructions to

dismiss the suit for lack of standing.
                                         3

                                        I.

      Until recently, federal law prohibited sports gambling in all but a handful of

jurisdictions.   While Nevada and Atlantic City, New Jersey, are the most

recognized exceptions to that longstanding prohibition, a federal statute has also

long carved out (via a grandfathering clause) exemptions for Montana, Delaware,

and Oregon. See 28 U.S.C. § 3704(a)(1)-(2); Nat’l Collegiate Athletic Ass’n v.

Christie, 926 F. Supp. 2d 551, 556 (D.N.J. 2013) (“‘grandfather clause’ resulted in

exceptions for four states: Delaware, Oregon, Montana, and Nevada. Additionally,

New Jersey was the only state qualified to establish sports gambling within the

one-year period” permitted by statute).       The sweeping federal prohibition

applicable to other jurisdictions was upended recently when the Supreme Court

decided Murphy v. Nat’l Collegiate Athletic Ass’n, 138 S. Ct. 1461 (2018).

Murphy held that federal restrictions precluding states from authorizing sports

gambling violated the anticommandeering doctrine. Id. at 1475. That doctrine, in

a phrase, “withhold[s] from Congress the power to issue orders directly to the

States.” Id.

      With Murphy in the books, many jurisdictions—including the District—

raced to launch sports gambling platforms.       See Legislative Tracker: Sports
                                         4

Betting, Legal      Sports        Report (visited      Sept.       10,          2020),

https://www.legalsportsreport.com/sportsbetting-bill-tracker/

https://perma.cc/TU2X-3PDF (“nearly 75% of US states have either legalized

sports wagering or introduced legislation to do so” since Murphy). To establish a

first-to-market advantage over neighboring jurisdictions, the District sought to

surmount various legal hurdles that otherwise might have delayed its efforts.

      The D.C. Council’s first step was to pass the Sports Wagering Lottery

Amendment Act of 2018, D.C. Law 22-312, 66 D.C. Reg. 1402 (codified

principally at D.C. Code § 36-621.01 et seq. (2020 Supp.)). That Act authorized

the District to establish its own online sports gambling platform “through contract

with a limited number of partners” who would operate the underlying systems on

behalf of the Office of Lottery and Gaming. D.C. Code § 36-621.11(a)(1-2). But

impediments remained. Most notably, the Procurement Practices Reform Act of

2010 (“Procurement Act”), D.C. Code § 2-351.01 et seq., required any contract for

operating the District’s gambling platform to be opened to competitive bidding,

and a competitive bid process promised to delay the online platform’s rapid launch.

According to one estimate, a competitive bid process would have postponed any

gambling platform’s launch by about three years, which the Office of Lottery and

Gaming figured would cost the District about $60 million in lost revenue. D.C.
                                         5

Council Comm. on Fin. and Revenue, Report on Bill 23–25 at 2 (Jan. 30, 2019); id.

attachment C at 6 (Jan. 28, 2019, testimony of Beth Bresnahan).

      To prevent such delay, the D.C. Council’s next step was to exempt the initial

launch of a sports gambling platform from the Procurement Act’s competitive bid

requirements. In early 2019, the Council passed the Exemption Act, supra, which

rendered the Procurement Act’s competitive bid requirements inapplicable to

“[t]he initial procurement contract” for sports gaming. 66 D.C. Reg. 2451. Shortly

after the Exemption Act took effect, the District signed a sole-source contract with

Intralot without ever opening that contract up to competitive bidding. Under the

contract’s terms, Intralot would run the District’s sports gambling platform in

exchange for a sizable percentage of the gambling proceeds.

      Mr. Carragher brought suit in D.C. Superior Court claiming the D.C.

Council, through the Exemption Act, impermissibly amended Section 424b of the

Home Rule Act; that is something the D.C. Council is not empowered to do

without ratification via a public referendum process. D.C. Code § 1-203.03(a).

The Home Rule Act provision in question requires the District’s Chief Financial

Officer—who oversees the Office of Lottery and Gaming’s procurement of goods

and services—to follow statutory procurement requirements.         D.C. Code § 1-
                                          6

204.26 (2016 Repl.). The District did not dispute that it was obliged by the Home

Rule Act to follow statutory procurement requirements, but maintained that the

Exemption Act merely amended the District’s procurement laws rather than the

Home Rule Act’s mandate that those laws be followed.

      The trial court agreed with the District that the Exemption Act did not

amend the Home Rule Act so that it did not require ratification via public

referendum. The court further noted the Procurement Act itself expressly allows

the District to deviate from competitive bidding requirements when “otherwise

authorized by law,” D.C. Code § 2-354.01, and held the Exemption Act was one

such authorized deviation. The court thus concluded the Exemption Act lawfully

altered the Procurement Act’s requirements for the initial launch of a sports

gambling platform, granted the District’s motion for summary judgment, and

dismissed Mr. Carragher’s complaint with prejudice. The trial court’s summary

judgment order did not address whether Mr. Carragher had standing to bring his

suit, though the District had repeatedly argued he did not.

                                         II.

      On appeal the District renews its argument that Mr. Carragher lacks standing

to maintain his suit. Although the District’s courts were established under Article I
                                         7

of the Constitution, D.C. Code §§ 1-204.31(a), 11-101, “this court has followed

consistently the constitutional standing requirement embodied in Article III” of the

Constitution. Grayson, 15 A.3d at 224. That means Mr. Carragher had the burden

to demonstrate, among other things, that the conduct complained of caused him to

suffer an “injury in fact” that is “concrete and particularized,” “actual or

imminent,” and “fairly traceable to the challenged action.” Id. at 246 (quoting

Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992)).

      Mr. Carragher advanced two distinct theories of standing in the trial court,

though he now relies almost exclusively on the second theory. First, he argued that

he has “competitor standing” because of his interest in operating his own gambling

platform in the District, an interest that he contends was thwarted by the District’s

award of a non-competitive contract to Intralot. See generally District of Columbia

v. Group Ins. Admin., 633 A.2d 2, 19 (D.C. 1993) (discussing competitor standing

for the award of government contracts). Second, he argued that he has “municipal

taxpayer standing” because, as a District resident and taxpayer, he has a cognizable

interest in seeing that his tax dollars are not used unlawfully. See generally

District of Columbia Common Cause v. District of Columbia, 858 F.2d 1, 8-9

(D.C. Cir. 1988). We disagree on both points and conclude that Mr. Carragher

does not have standing because, even if he were correct that the Exemption Act
                                          8

illegally amends the Home Rule Act, he has suffered no injury as a result of that

alleged illegality.

                                          A.

       We start with Mr. Carragher’s argument that he has competitor standing

because, had the District followed preexisting procurement laws, he might have

submitted his own potentially successful bid. That is a recognized theory of

standing, but it is one that required Mr. Carragher to show that he was in a position

to submit a viable bid to operate the District’s gaming platform had the contract

been opened to competitive bidding. See generally Group Ins. Admin., 633 A.2d at

19 (“[A] disappointed bidder need demonstrate only that if its bid had been fairly

and honestly considered, there was substantial chance that it would receive an

award.”) (citations, alterations, and internal quotations omitted). Mr. Carragher

never made such an allegation below—much less one supported “through ‘specific

facts’ set forth ‘by affidavit or other evidence’” as required to establish standing at

the summary judgment stage. Grayson, 15 A.3d at 246. That failure is fatal to his

argument.

       Mr. Carragher did not allege below that he wanted to operate the District’s

sports gambling platform, nor did he suggest that he would have submitted a viable
                                        9

bid had the contract been opened to competitive bidding. Instead, the harm he

alleged was his frustrated desire to launch his own “online sports betting platform

designed to compete in D.C.’s sports wagering marketplace.” But that marketplace

does not exist. Nor would one have emerged in the event the District accepted

competitive bids for awarding a contract to operate its own platform.          Mr.

Carragher’s grievance is thus entirely divorced from any complaint he has about

the Exemption Act’s allowance of a non-competitive bid process. In other words,

he has not suffered any injury traceable to the illegality he alleges. Lexmark

Intern., Inc. v. Static Control Components, 572 U.S. 118, 125 (2014) (injury must

be “fairly traceable to the challenged action”). The contract awarded to Intralot,

which Mr. Carragher challenges, was to provide infrastructure and related services

to assist the Office of Lottery and Gaming in launching its own sports gambling

platform. Had that contract been opened to competitive bidding, Mr. Carragher

would remain frustrated in his desire to enter the sports gambling market as an

independent operator.

      On appeal, Mr. Carragher aims closer to the mark, arguing that but for the

Exemption Act, he “along with many others, could have competed for any

available online sports betting contracts and licenses.” But even interpreting that

vague allegation to mean Mr. Carragher would have submitted a bid to operate the
                                        10

District’s gaming platform had it been opened to competitive bidding, it offers no

help to Mr. Carragher here for two reasons: (1) “the time and place for factual

development” on standing is “in the Superior Court,” not here, UMC Dev., LLC v.

District of Columbia, 120 A.3d 37, 44 n.23 (D.C. 2015); and (2) “[w]hen a lawsuit

reaches the summary judgment stage,” as this one has, “standing must be shown

through ‘specific facts’ set forth ‘by affidavit or other evidence,’” Grayson, 15
A.3d at 246.    Thus, even if we entertain and (very) liberally construe Mr.

Carragher’s belated and vague allegation that he “could have competed” in an open

bidding process for operating the District’s sports gambling platform, there is no

evidence in the record that he actually would have submitted a bid or, had he done

so, that his bid would have been viable. Group Ins. Admin., 633 A.2d at 19

(prospective bidder must show “substantial chance” it would have been successful

to satisfy standing requirements) (internal citations omitted). Because there was no

evidence to support those points, Mr. Carragher lacks competitor standing.
                                        11

                                        B.

      The stickier wicket 1 is Mr. Carragher’s contention that he has municipal

taxpayer standing. See generally District of Columbia Common Cause v. District

of Columbia, 858 F.2d 1, 4 (D.C. Cir. 1988). Unlike federal and state taxpayers—

who typically do not, by their taxpayer status alone, have standing to challenge

federal and state tax expenditures 2—municipal taxpayers may have standing to

challenge local expenditures provided their cause of action “‘is a good-faith

pocketbook action’ complaining of ‘a direct dollars-and-cents injury.’” Vining v.

Exec. Bd. of District of Columbia Health Benefit Exch. Auth., 174 A.3d 272, 279-

      1
         A “sticky wicket” is a term derived from cricket, a sport that by some
estimates has a betting market worth more than $100 billion per year. Punters
Spend a Trillion on Sport, Bay of Plenty Times, Apr. 18, 2015, at B7 (cricket
accounts for 12% of a global sports betting market worth more than $1 trillion). It
refers to a damp or soft pitch that makes the ball bounce erratically, making it
harder for the batsman, or batswoman, to hit.
      2
          Such a grievance “is not ‘concrete and particularized,’ but instead a
grievance the taxpayer ‘suffers in some indefinite way in common with people
generally.’” DaimlerChrysler Corp. v. Cuno, 547 U.S. 332, 344 (2006) (first
quoting Lujan, 504 U.S. at 560; then quoting Frothingham v. Mellon, decided with
Massachusetts v. Mellon, 262 U.S. 447 (1923)); see also DaimlerChrysler Corp.,
547 U.S. at 345 (“rationale for rejecting federal taxpayer standing applies with
undiminished force to state taxpayers”).
                                         12

80 (D.C. 2017) (quoting Doremus v. Bd. of Educ. of the Borough of Hawthorne,

342 U.S. 429, 434 (1952)). 3

      Mr. Carragher and the District disagree about what it means for a taxpayer to

suffer a “dollars-and-cents injury” under this test, and more specifically, they

disagree about whether an anticipated loss of tax revenue—as opposed to an illegal

tax expenditure—confers standing upon a municipal taxpayer. The difference

matters because Mr. Carragher contends the District would have realized more

      3
         One reason offered for why municipal taxpayers have a stronger claim to
standing than state or federal taxpayers is that there is a presumptively small
number of taxpayers in a municipality so that a misuse of municipal taxes more
directly impacts the taxpayer than would the misuse of state or federal taxes.
Frothingham, 262 U.S. at 487 (federal taxpayer’s interest in how federal taxes are
spent “is shared with millions of others, is comparatively minute and
indeterminable, and the effect upon future taxation, of any payment out of the
funds, so remote, fluctuating and uncertain, that no basis is afforded for an appeal
to the preventive powers of a court of equity”). The force of that rationale is
suspect in municipalities like the District, which is more populous than some states
(Wyoming and Vermont). See American Atheists, Inc. v. City of Detroit
Downtown Dev. Auth., 567 F.3d 278, 286 (6th Cir. 2009) (“Why residents of New
York City necessarily have a greater stake in the way city officials spend their
share of the city budget than North Dakotans have in the way state officials spend
their share of the state budget may indeed be a head-scratcher.”). And the entire
doctrine of municipal taxpayer standing has been called into question as antiquated
and inconsistent with modern standing doctrine. See Common Cause, 858 F.2d at
11-12 (Williams, J., concurring). Yet we have always adhered to it and have no
cause to doubt its vitality now. Mr. Carragher simply does not satisfy its strictures
for the reasons that follow.
                                          13

revenue had the contract to operate its gaming platform been opened to

competitive bidding.

      In Mr. Carragher’s view, a municipal taxpayer has suffered an injury,

sufficient for standing purposes, whenever he can demonstrate that the

complained-of act caused a “loss of revenue,” citing to federal circuit court cases

articulating that view. Common Cause, 858 F.2d at 5; Smith v. Jefferson Cty. Bd.

of Sch. Comm’rs, 641 F.3d 197, 210 (6th Cir. 2011) (en banc). That is, Mr.

Carragher argues if the District could have generated more revenue by opening the

Intralot contract up to competitive bidding, that is enough to substantiate his injury

for standing purposes. In the District’s contrary view, a mere loss of potential

revenue is not a cognizable injury to the generic municipal taxpayer. Instead, the

District cites binding precedent for the proposition that “if the municipality’s

[allegedly] unlawful expenditure is not funded by . . . taxes,” then there is no injury

for municipal taxpayer standing purposes. Vining, 174 A.3d at 280; see also

Debevoise v. Back, 359 A.2d 279, 280 (D.C. 1976). In other words, if there is no

direct “link between [the taxpayer’s] municipal taxes and the challenged municipal

expenditure,” then “municipal taxpayers do not have standing to sue to enjoin

municipal expenditures when no tax moneys are spent.” Vining, 174 A.3d at 280

(citation and internal quotations omitted).
                                         14

      The District has the better of the argument for the simple reason that Vining

and Debevoise are binding precedents, whereas the cases Mr. Carragher relies upon

are not. Putting non-binding precedents aside, 4 Vining states unequivocally that “a

municipal taxpayer does not have standing to sue to prevent expenditures if his tax

dollars do not contribute to them.” 174 A.3d at 281. Mr. Carragher does not argue

that the repeated statements to that effect in Vining are non-binding dicta; in fact,

he does not mention Vining at all in response to the District’s argument that it is

fatal to his claim of standing. Yet even if Vining is not dispositive—for instance,

because our discussion on this point did not consider whether lost tax revenues

might constitute an injury for municipal taxpayer standing purposes 5—it would do

Mr. Carragher no good. Our earlier opinion in Debevoise squarely confronted this

      4
         Notably, while Mr. Carragher highlights language from Common Cause
suggesting a mere loss of revenue may constitute an injury to the municipal
taxpayer, that case elsewhere states that “municipal taxpayers do not have standing
when no tax moneys are spent.” 858 F.2d at 4; see also Vining, 174 A.3d at 280
n.35 (collecting cases stating that municipal tax dollars must be spent on the
challenged expenditure to give rise to municipal taxpayer standing). We do not
need or attempt to resolve any potential internal contradiction in Common Cause
because it is not binding on us.
      5
         Vining concerned an allegation that municipal funds were illegally spent,
yet those funds were not municipal tax dollars at all, but instead “federal grant
monies and assessments.” 174 A.3d at 277. Thus, Vining did not squarely
confront the question whether illegally diminishing prospective tax revenues—
rather than illegally spending tax dollars—might constitute an injury under the
municipal taxpayer standing doctrine.
                                          15

issue, where the plaintiff claimed the District’s agents were illegally declining “to

collect taxes from suburban banks” and, had those taxes been collected, “her tax

bills might be reduced or her municipal services improved.” 359 A.2d at 280. We

held that failure to generate tax revenue did not give rise to municipal taxpayer

standing because it involved no “misuse or misappropriation of” municipal taxes,

so that the plaintiff’s suit intruded “into the political issues of revenue collection.”
Id. at 280. So too here.

      The distinction between illegally spending tax dollars versus illegally

diminishing revenues that would otherwise flow into the municipal fisc is a

slippery one, 6 but we have previously drawn that line and, policing it here, find it

to be dispositive. The record demonstrates that the Intralot contract that Mr.

Carragher now seeks to invalidate is not funded by municipal tax dollars, but is

instead funded by gaming revenues. While Mr. Carragher says he “disagree[s]”

      6
         Some courts and jurists have suggested there is little conceptual difference
between the harm that befalls a taxpayer in the two scenarios. See Johnson v.
Economic Dev. Corp. of Cty. of Oakland, 241 F.3d 501, 507-09 (6th Cir. 2001)
(refusing to distinguish an unlawful expenditure from an unlawful loss of public
revenue for purposes of state taxpayer standing because both injure or threaten the
taxpayer’s financial interest); cf. Arizona Christian Sch. Tuition Org. v. Winn, 563
U.S. 125, 148 (2011) (Kagan, J., dissenting) (“Precisely because appropriations
and tax breaks can achieve identical objectives, the government can easily
substitute one for the other.”). But Debevoise and Vining have enshrined this
distinction in our precedents and we are not free to second-guess it.
                                          16

with that as a factual matter, he points us to no record evidence that would make it

a “genuine issue of material fact” sufficient to survive summary judgment. See

Tillery v. District of Columbia, 227 A.3d 147, 150-51 (D.C. 2020) (summary

judgment appropriate when “there is no genuine issue of material fact”) (citation

and internal quotations omitted).        So even if we assume Mr. Carragher

substantiated his claim that the Intralot contract is “more costly than a contract that

is competitively bid,” that would show only a diminishment of expected revenues

from the challenged gaming contract. It does not show the allegedly unlawful

contract is “funded by . . . taxes,” which is the burden he had to carry under Vining

and Debevoise to establish municipal taxpayer standing. Vining, 174 A.3d at 280.

                                         III.

      We vacate the trial court’s judgment and remand with instructions that it

dismiss the suit for lack of standing.

                                                            So ordered.