Court Opinion

ID: 4672701
Source: CourtListenerOpinion
Date Created: 2021-03-30 15:00:49.772771+00
Date Added: 2024-06-11T08:03:08.941109
License: Public Domain

United States Court of Appeals
         FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued November 9, 2020               Decided March 30, 2021

                        No. 19-5337

                 VOTEVETS A CTION FUND,
                      APPELLANT

                             v.

  UNITED STATES DEPARTMENT OF VETERANS AFFAIRS AND
     DENIS MCDONOUGH, IN HIS OFFICIAL CAPACITY AS
    SECRETARY OF THE UNITED STATES DEPARTMENT OF
                  VETERANS AFFAIRS,
                      APPELLEES

        Appeal from the United States District Court
                for the District of Columbia
                    (No. 1:18-cv-01925)

     Karianne M. Jones argued the cause for appellant. With
her on the briefs were Benjamin M. Seel and Sean A. Lev.

     Daniel Winik, Attorney, U.S. Department of Justice,
argued the cause for appellee. With him on the brief was Mark
B. Stern, Attorney.
                                  2
    Before: GARLAND *, PILLARD and WILKINS, Circuit
Judges.

     Opinion for the Court filed by Circuit Judge PILLARD.

     PILLARD , Circuit Judge:           VoteVets Action Fund
(VoteVets), a nonprofit group that engages in public advocacy on
behalf of veterans, claims the Federal Advisory Committee Act
applies to an entity allegedly established by President Trump and
the Department of Veterans Affairs to advise the Department.
VoteVets dubs the entity the “Mar-a-Lago Council,” after the
Trump resort and club where it first convened. According to
the amended complaint, although the Council operated for
nearly two years and provided advice on various topics, the
Department failed to comply with the Federal Advisory
Committee Act’s requirements.

     The district court held that the Act did not apply to the so-
called Mar-a-Lago Council and dismissed VoteVets’ complaint.
Because we conclude that VoteVets plausibly alleges that the
Council was a governmentally established or utilized advisory
group within the meaning of the Act, we reverse.

                         BACKGROUND

A. The Federal Advisory Committee Act

     Congress enacted the Federal Advisory Committee Act,
Pub. L. No. 92-463, 86 Stat. 770 (1972) (codified as amended
at 5 U.S.C. app. 2 §§ 1-16) (FACA or the Act), with the
objective of “opening many advisory relationships to public
scrutiny except in certain narrowly defined situations,” Pub.
Citizen v. Dep’t of Justice, 491 U.S. 440, 463 (1989). FACA’s

*
  Judge Garland was a member of the panel at the time this case was
submitted but did not participate in the final disposition of the case.
                                3
terms promote transparency, accountability, and open public
participation in executive branch decisions and prevent
informal advisory committees from exerting improper or one-
sided influence. Specifically, the statute seeks to “ensure that
[advisory committees’] creation, operation, and duration be
subject to uniform standards and procedures; that Congress and
the public remain apprised of their existence, activities, and
cost; and that their work be exclusively advisory in nature.” Id.
at 446 (citing 5 U.S.C. app. 2 § 2(b)).

     At the same time, “although its reach is extensive,” FACA
does not “cover every formal and informal consultation
between the President or an Executive agency and a group
rendering advice.” Id. at 453. Executive officials’ solicitation
of views from independently formed and operated entities—
such as nonprofit organizations, associations, or political
parties—with relevant insight and experience does not, without
more, implicate the Act. Id. at 452-53. Nor does FACA apply
to executive consultations on policy issues with ad hoc
collections of private individuals who are not convened “to
render advice or recommendations, as a group.” Ass’n of Am.
Physicians & Surgeons, Inc. v. Clinton, 997 F.2d 898, 913
(D.C. Cir. 1993).

     Where it applies, FACA requires, among other things, that
each covered advisory committee publicly file its charter, 5
U.S.C. app. 2 § 9(c), that “[e]ach advisory committee
meeting . . . be open to the public” following public notice, that
“[d]etailed minutes” of all such meetings be maintained, id.
§ 10(a)(1)-(2), (c), and that “the records, reports, transcripts,
minutes, appendixes, working papers, drafts, studies, agenda, or
other documents which were made available to or prepared for
or by” the committee be made available to the public, id. § 10(b).
                               4
B. VoteVets’ Allegations

      VoteVets filed this suit in August 2018, claiming that the
Mar-a-Lago Council was an advisory committee created to
advise the Department of Veterans Affairs (VA or Department),
that President Trump selected its members, that the President
utilized the Council to inform and guide decisions on important
aspects of veterans’ care, and that over the course of the
Council’s work the Department and the Council did not comply
with applicable requirements of FACA. Because we review the
adequacy of the complaint as a matter of pleading, and not the
truth of its allegations, the facts recited here are as plaintiff
alleges them, with reasonable inferences drawn in the
plaintiff’s favor. We take no position on what might ultimately
be proved.

     On December 28, 2016, President-elect Donald Trump
attended a meeting with healthcare executives at the Mar-a-
Lago resort in Palm Beach, Florida. Three men, all of whom
are members of the Mar-a-Lago Club, organized the meeting:
Isaac “Ike” Perlmutter, CEO of Marvel Entertainment; Bruce
Moskowitz, a medical doctor and founder of the Biomedical
Research and Education Foundation; and Marc Sherman,
managing director of the consulting firm Alvarez & Marsal. Am.
Compl. ¶¶ 2, 30-31. None of those men had experience in the
U.S. military or government. Id. ¶ 2. According to the
President-elect’s spokesman, Sean Spicer, the meeting involved
“lots of brainstorming on how to improve and reform” the
Department. Id. ¶ 36(a).

    A few weeks later, in January 2017, the President-elect
announced at a press conference that his incoming administration
would be setting up a group “to help David [Shulkin],” the
nominee for Secretary of Veterans Affairs, “straighten out the
[Department].” Id. ¶ 28; Defs.’ Mot. Dismiss, Ex. B at 3-4,
                                5
VoteVets Action Fund v. Dep’t of Veterans Affairs, 414 F. Supp.
3d 61 (D.D.C. 2019) (No. 18-cv-01925), ECF No. 8-3 (news
conference transcript). He added that Ike Perlmutter was “very,
very involved” in that effort. Am. Compl. ¶ 36(b). After the
press conference, a source said that “Perlmutter would ‘take on
an informal, though “significant,” advisory role in Trump’s
administration with respect to veterans’ affairs.’” Id. VoteVets
alleges that President Trump named Perlmutter “to lead the
Council” and Moskowitz and Sherman to serve as members.
Id. ¶ 29. No effort was made to ensure a balanced membership,
nor to protect against inappropriate conflicts of interest.

     The Mar-a-Lago Council reconvened on or around February
7, 2017, when Perlmutter, Moskowitz, and Sherman met with
Shulkin. Id. ¶ 36(c); Appellant’s Br. 7-8. After the meeting,
Moskowitz sent an email to Shulkin with the subject line “Group
meeting,” explaining that the group did “not need to meet in
person monthly” but could have in-person meetings “when
necessary” and collaborate by phone calls at other times. Am.
Compl. ¶ 36(d). Over the ensuing year and a half, Perlmutter,
Moskowitz, and Sherman conducted more than twenty-five
meetings, id. ¶ 3, and advised the Department on a range of
projects including an initiative to curb veteran suicide, id. ¶ 45,
development of a mobile application for VA patients to locate
services and records, id. ¶¶ 46-60, development of a national
medical device registry, id. ¶¶ 61-63, a $10 billion contract to
modernize the VA’s digital records system, id. ¶¶ 9, 64-67,
evaluation of VA surgery programs, id. ¶ 70, a potential
partnership to develop a tracking system for human tissue
devices, id. ¶ 71, privatization of essential VA healthcare
services, id. ¶¶ 68-69, and development of a new VA mental
health initiative, id. ¶ 72. None of the Council’s meetings was
publicly announced in advance or open to the public, and no
minutes were kept or documents made public. Id. ¶¶ 76-77,
79, 83-85.
                                6
C. Prior Proceedings

     Defendants moved to dismiss for lack of standing and
failure to state a claim. The district court held that VoteVets had
standing, VoteVets Action Fund v. Dep’t of Veterans Affairs, 414
F. Supp. 3d 61, 67-68 (D.D.C. 2019), but that it failed plausibly
to allege (1) that the Council had “the structure required to be an
advisory committee under FACA,” id. at 70, and (2) that the
Council was “established” or “utilized” by the federal
government, id. at 68-73.

     On the question of establishment, the court held that
President-elect Trump’s “off-the-cuff comments” at a press
conference “hardly reflect the kind of formal, affirmative steps
required to establish an advisory committee.” Id. at 70. It also
held that the facts “suggest[ed] that the three men—not
President Trump or the Department—were the ones who took
the initiative to organize themselves,” which the district court
held undercut any reasonable inference that the President
selected the members. Id.

     As for the “utilized” inquiry, the court acknowledged that
VoteVets had plausibly alleged “that the alleged advisory
committee exercised influence . . . over the agency.” Id. at 72.
But it held that “for FACA purposes, it is the amount of
influence that the agency exercises over the advisory
committee that matters.” Id. The court reasoned that if the
Department of Veterans Affairs was itself under the Council’s
control, then the Department could not have exerted enough
influence on the Council to “utilize” the latter under FACA.
Id.

    VoteVets timely appeals, arguing that its allegations
plausibly demonstrate that the Council had the form of an
                               7
advisory committee and was established or utilized by the
federal government, so subject to the Act.

                         ANALYSIS

     As an initial matter, we agree with the district court that
VoteVets has standing to sue.           VoteVets claims an
informational injury under FACA by pleading that the Council
and VA failed to comply with the statute’s disclosure and
transparency requirements. Id. at 67-68; see also Byrd v. EPA.,
174 F.3d 239, 243 (D.C. Cir. 1999). And “[w]e assume, as we
must at the pleading stage, that for purposes of standing the
Council and its assorted subgroups are, as alleged, ‘advisory
committees’ within the meaning of FACA § 3(2).” Judicial
Watch, Inc. v. U.S. Dep’t of Commerce, 583 F.3d 871, 873
(D.C. Cir. 2009). Even though the Council is no longer
meeting, see Oral Arg. Tr. 8, this case presents a live
controversy because VoteVets seeks documents from the
Council pursuant to 5 U.S.C. app. 2 § 10(b). See Ass’n of Am.
Physicians & Surgeons, 997 F.2d at 901 n.1; Cummock v.
Gore, 180 F.3d 282, 292 (D.C. Cir. 1999).

     We must decide whether the complaint plausibly alleges
that the Council had the group structure of an advisory
committee, and whether it was either established or utilized by
the federal government. As already noted, FACA and its array
of statutory requirements do not reach “every formal and
informal consultation between the President or an Executive
agency and a group rendering advice.” Pub. Citizen, 491 U.S.
at 453. To count as an advisory committee, a group must have
“in large measure, an organized structure, a fixed membership,
and a specific purpose.” Ass’n of Am. Physicians & Surgeons,
997 F.2d at 914. To be covered, such a committee must also
be “established or utilized” by the federal government to provide
“advice or recommendations for the President or one or more
                                  8
agencies or officers of the Federal Government.” 5 U.S.C. app.
2 § 3(2). To be “established” within the meaning of FACA, a
committee must be created by the federal government. Byrd,
174 F.3d at 245. To be “utilized,” it must be subject to the
federal government’s “actual management or control,” even if it
is not created by the government. Wash. Legal Found. v. U.S.
Sentencing Comm’n, 17 F.3d 1446, 1450 (D.C. Cir. 1994).

     We review de novo the district court’s grant of a motion to
dismiss under Federal Rule of Civil Procedure 12(b)(6). Lewis
v. Pension Benefit Guaranty Corp., 912 F.3d 605, 609 (D.C.
Cir. 2018). Because the district court dismissed VoteVets’ case
on the complaint alone, we must for purposes of this appeal
assume the truth of the factual allegations. A plaintiff need not
make “detailed factual allegations,” but “[t]o survive a motion to
dismiss, a complaint must contain sufficient factual matter,
accepted as true, to ‘state a claim to relief that is plausible on its
face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 570 (2007)).
“A claim has facial plausibility when the plaintiff pleads factual
content that allows the court to draw the reasonable inference
that the defendant is liable for the misconduct alleged.” Id. at
678. The standard requires “more than a sheer possibility that a
defendant has acted unlawfully” but “is not akin to a ‘probability
requirement.’” Id. (quoting Twombly, 550 U.S. at 556). Finally,
“[a] complaint survives a motion to dismiss even ‘[i]f there are
two alternative explanations, one advanced by [the] defendant
and the other advanced by [the] plaintiff, both of which are
plausible.’” Banneker Ventures, LLC v. Graham, 798 F.3d
1119, 1129 (D.C. Cir. 2015) (quoting Starr v. Baca, 652 F.3d
1202, 1216 (9th Cir. 2011)).

     We analyze requisite aspects of the standard in turn to explain
our holding that VoteVets plausibly alleged that the Council had
                               9
the required structure and was, at a minimum, established by the
federal government to advise the Department.

A. The Group’s Structure, Membership, and Purpose

     “In order to implicate FACA, the President, or his
subordinates, must create an advisory group that has, in large
measure, an organized structure, a fixed membership, and a
specific purpose.” Ass’n of Am. Physicians & Surgeons, 997
F.2d at 914. To be an advisory committee, the group must also
“render advice or recommendations, as a group, and not as a
collection of individuals.” Id. at 913. As described in VoteVets’
complaint, the Council met those requirements.

     The three men identified as comprising the Council jointly
organized the health care executives’ meeting with President-
elect Trump at Mar-a-Lago in December 2016, Am. Compl. ¶¶ 2,
36(a). Trump announced the next month that a group led by Ike
Perlmutter would help VA Secretary Shulkin “straighten out” the
VA. Id. ¶¶ 28-29. The Council was to influence key VA
personnel decisions and steer certain policy choices, including
major decisions in areas of apparent personal or business
interest to its members, such as private contracting for
electronic medical records, electronic registries, or mobile
apps. Id. ¶¶ 46-69.

     After President Trump’s inauguration, the Council met
regularly and its members repeatedly described themselves as a
“group” or “team” working together. Id. ¶ 74(b), (d); see also
id. ¶ 74(o) (“we saw an opportunity to assist the Department of
Veterans Affairs’ leadership,” “[w]e offered our counsel,” and
“[w]e provided our advice and suggestions”). According to
VoteVets, Perlmutter, Sherman, and Moskowitz worked
intensively as a group, including through in-person meetings,
emails, and phone calls, see Am. Compl. ¶ 74(a)-(n). During
meetings, conference calls, planning periods, and in spoken and
                               10
written communication, the trio operated and referred to
themselves as a unit. Members of the Department, too,
considered them a “team.” See id. ¶¶ 69, 74(d) (then-Secretary
Shulkin writing “I agree with Ike and the team”). The Council
members consulted one another in advising the Department,
jointly offering their recommendations. See id. ¶ 74(j)
(Sherman edited Department’s non-disclosure agreement to
permit the Council members to consult with one another).
Although, as the Department points out, the complaint
acknowledges that the three members were not all invariably
present at every Council meeting, e.g., id. ¶ 36(m), (r), (u); see
also Appellees’ Br. 17-18, the members present often took care
to specify that they would fill in the others, e.g., Am. Compl.
¶ 74(a), (j).

     As described in the complaint, the Mar-a-Lago Council
also had the “formality and structure” that we have held is “an
important factor in determining the presence of an advisory
committee” under FACA. Ass’n of Am. Physicians &
Surgeons, 997 F.2d at 914. The Council had a “fixed
membership” of Perlmutter, Moskowitz, and Sherman, Am.
Compl. ¶¶ 2, 29, and “a specific purpose” of advising the
Department of Veterans Affairs on “the essential decisions”
relating to veterans’ affairs, id. ¶ 74(o). Perlmutter led the
Council. Id. ¶ 29. Those allegations suffice to identify the trio
as forming an advisory group for purposes of FACA.
Additional detail is not required at the pleading stage.

B. The Government “Established” the Group

    FACA defines the term “advisory committee” as “any
committee, board, commission, council, conference, panel, task
force, or other similar group” that is “established or utilized by
the President,” “by one or more agencies,” or by a statute or
                                11
reorganization plan. 5 U.S.C. app. 2 § 3(2)(A)-(C). 1 To be so
“established,” the committee must be “actually formed by the
agency” or the President. Byrd, 174 F.3d at 245; see Food
Chem. News v. Young, 900 F.2d 328, 332 (D.C. Cir. 1990)
(“‘[E]stablished’ indicates ‘a Government-formed advisory
committee[.]’” (quoting Pub. Citizen, 491 U.S. at 460 & n.11)).
In particular, the federal government must select the committee’s
members. If someone outside the federal government selects the
members of an advisory committee, the committee is not
“established” within the terms of FACA—although it might still
be covered by the Act if it is “utilized” by the federal government.
See Byrd, 174 F.3d at 246-47 (panel was not “a Government-
formed advisory committee” because a private firm selected the
committee’s members from a list provided by the agency and
included members not on the agency’s list).

     Here, VoteVets’ allegations suffice to raise the inference
that the federal government—either the Department of Veterans
Affairs or President Trump himself—established the Council. As
President-elect, Trump attended a meeting convened by
Perlmutter, Moskowitz, and Sherman that was focused on
improving and reforming the Department. Am. Compl. ¶ 36(a).
A couple of weeks later, the President-elect publicly announced
plans to set up a group to help the Secretary for Veterans Affairs
and stated that Perlmutter was “very, very involved” with plans

1
  Committees “composed wholly of full-time, or permanent part-
time, officers or employees of the Federal Government” or “created
by the National Academy of Sciences or the National Academy of
Public Administration” are not advisory committees under FACA. 5
U.S.C. app. 2 § 3(2). Likewise, government contractors are not
advisory committees. Food Chem. News v. Young, 900 F.2d 328,
331 (D.C. Cir. 1990). Certain advisory committees are exempt from
FACA’s requirements, including those that are “established or
utilized by” the CIA, Federal Reserve System, or Office of the
Director of National Intelligence. 5 U.S.C. app. 2 § 4(b)(1)-(3).
                               12
to improve the Department. Id. ¶ 36(b). Perlmutter,
Moskowitz, and Sherman then met with Shulkin the next month
for a “[g]roup meeting.” See id. ¶ 36(c)-(d). For at least a year
and a half thereafter, the three men worked together to advise
the Department on a variety of topics. Among other things, they
recommended that the Department run a public awareness
campaign about veteran suicide, id. ¶ 45, develop a mobile
application based on one built by Moskowitz, id. ¶¶ 46-60,
create a medical device registry, id. ¶¶ 61-63, contract with a
private firm to overhaul its electronic health records system, id.
¶¶ 64-67, and privatize some VA health services, id. ¶¶ 68-69.
Those allegations are sufficient “factual content” for “the court
to draw the reasonable inference that,” in response to the
President’s own request or by the Department in line with the
President-elect’s expressed intention, an advisory committee
including the three men was established to advise the
Department of Veterans Affairs. Iqbal, 556 U.S. at 678.

     The Department urges us to draw different inferences from
the above facts. It asserts that President-elect Trump’s
announcement evinced only a broad intention to seek input on
veterans’ affairs from various parties, including healthcare
executives and hospitals, not an intention to establish the
particular three-member Council. Appellees’ Br. 13-14. As the
Department reads it, the complaint does not identify an advisory
committee convened by the President (or the Department), but
describes only how Perlmutter, Moskowitz, and Sherman took it
upon themselves to offer advice. Id. at 14-15. However
plausible it might be that the President-elect’s remarks at his
January 2017 press conference referred to a different group of
professionals, or that the members themselves formed the
Council and were not selected by anyone in the federal
government, the allegations plausibly support VoteVets’ claim
that the President or other government officials formed the
Council.
                                13
     Nor is it dispositive that the President-elect mentioned only
Perlmutter, not Sherman or Moskowitz, by name in his January
2017 press conference; VoteVets has alleged other facts, such as
Sherman and Moskowitz’s Mar-a-Lago connections to President
Trump, and the President-elect’s earlier meeting with all three
men, that suggest that the President-elect selected each of them.
See Am. Compl. ¶¶ 31, 36(a). The existence of a plausible
alternative—even one that may “prove to be . . . true”—“does
not relieve defendants of their obligation to respond to a
complaint that states a plausible claim for relief, and to
participate in discovery.” Banneker Ventures, LLC, 798 F.3d
at 1129. Discovery may show that one of the government’s
alternate explanations is in fact correct. But it may also vindicate
VoteVets’ theory, and “our role is not to speculate about which
factual allegations are likely to be proved after discovery.”
Harris v. D.C. Water & Sewer Auth., 791 F.3d 65, 70 (D.C.
Cir. 2015).

     Finally, the government need not take any formal steps to
“establish” a FACA advisory committee. Appellees do not
dispute that the role of the government in creating an advisory
committee and selecting its members may be shown by
circumstantial evidence. Where direct evidence such as a
formal letter or express public announcement on the
government’s part establishing an advisory committee is
available, it typically suffices. Cf. Food & Water Watch v.
Trump, 357 F. Supp. 3d 1, 5 (D.D.C. 2018) (Executive Order
establishing a council); Ctr. for Biological Diversity v. Tidwell,
239 F. Supp. 3d 213, 218 (D.D.C. 2017) (team of advisors
announced by initiation letter). But there is no requirement that
government officials act with any particular formality to
“establish” an advisory committee as a source of advice. See
Pub. Citizen, 491 U.S. at 461 (“[W]hen an officer brings
together a group by formal or informal means, . . . such group
                              14
is covered by the provisions of [FACA].” (quoting S. Rep. No.
92-1098, at 8 (1972))).

     No contrary implication should be drawn from our
observation that “form is a factor” in assessing whether a group
operates with the “organized structure, . . . fixed membership,
and . . . specific purpose” required to qualify as an advisory
committee at all. Ass’n of Am. Physicians & Surgeons, 997
F.2d at 914 (“the formality and structure of the group” is “an
important factor in determining the presence of an advisory
committee”). Whether the working groups at issue in
Association of American Physicians and Surgeons, Inc. had
been “established” by the government was unquestioned. Id.
at 903. The distinct, disputed issue that called for record
development on remand in that case was whether those
groups—admittedly established by the government “with a
good deal of formality”—might nonetheless lack the structure
required of a FACA advisory committee, operating instead
more like a “crowd,” “horde,” or other “collection of
individuals who do not significantly interact with each other.”
Id. at 914-15. Formality was required on that issue, not on the
separate question whether the government had “established”
the group.

    At the current stage, we accept that, shortly after the
President-elect announced in January 2017 his intent to set up a
group of healthcare business leaders to advise the Department
of Veterans Affairs, such a group was established at
governmental behest. See Appellant’s Br. 36-37.

                          *    *   *

     Because we hold that the complaint states a FACA claim
based on the alleged advisory committee having been
“established” by the President, possibly together with the
agency, we need not also reach VoteVets’ alternative theory
                              15
that the group was “utilized” by the government. We neither
embrace nor reject the district court’s holding that the
government did not “utilize” the Council, and that ruling is now
vacated in any event. We do not decide whether a committee
that goes beyond working under the federal government’s
management or control, and instead controls the agency it
advises, is “utilized” by the government within the meaning of
FACA, and it appears that no other court has addressed the
issue. Our holding that VoteVets has pleaded sufficient facts
to survive a motion to dismiss allows the issues—whether the
group was structured as an advisory committee within the
meaning of FACA, and whether it was “established or utilized”
by the government—to play themselves out in the district court
through discovery and summary judgment or trial.

    For the foregoing reasons, we reverse the district court’s
dismissal of VoteVets’ claims and remand for further
proceedings consistent with this opinion.

                                                   So ordered.