984 F.3d 633
8th Cir.2021Background
- Aspen retained the predecessor to B. Riley FBR (FBR) under an Engagement Letter to pay FBR 1.25% of the aggregate consideration in the event of a sale, including contingent future compensation (CVRs).
- Markel acquired Aspen in 2010, paying cash plus contingent-value-rights (CVRs) to Aspen shareholders; FBR received 1.25% of the cash portion and later claimed 1.25% of any additional CVR payments.
- CVR Holders (represented by former CEO Yeransian) sued Markel in Delaware over CVR valuation; no additional compensation has been determined or paid.
- In 2018 the CVR Holders sued FBR in Nebraska for a declaratory judgment that FBR is not entitled to further payment; FBR removed and moved to dismiss for lack of Article III standing under Rule 12(b)(1).
- The district court treated the motion as a factual Rule 12(b)(1) challenge, dismissed without prejudice for lack of standing, denied Rule 59(e) relief and leave to amend; the CVR Holders appealed arguing manifest legal error.
- The Eighth Circuit affirmed: the CVR Holders lack standing because any injury is speculative/not ripe, not fairly traceable to FBR, and not presently redressable; the Declaratory Judgment Act does not expand jurisdiction.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Article III injury-in-fact | CVR Holders have a concrete contractual right to a share of future payments; FBR's claim injures that right now | No concrete injury: amount unresolved and no payments made; claim is speculative | No injury-in-fact; claims unripe and speculative |
| Traceability and redressability | FBR’s assertion of a competing claim causes the injury and a declaratory judgment against FBR would protect CVR Holders | Additional compensation will be paid by Markel (a nonparty); FBR lacks authority to pay, so any injury is attributable to Markel | Injury not fairly traceable to FBR and not redressable now |
| Declaratory Judgment Act effect | DJA permits declaratory relief so federal court may decide competing claims now | DJA is procedural only and cannot create Article III jurisdiction | DJA does not confer standing; action must be definite, concrete, and ripe |
| Procedural challenges: Rule 12(b)(1) factual attack and denial of Rule 59(e)/leave to amend | District court erred in treating the motion as factual and in denying amendment under liberal standards | Factual treatment was proper; lack of standing is incurable so amendment would not help | No manifest error; dismissal affirmed; amendment would not cure jurisdictional defect |
Key Cases Cited
- Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016) (defines concrete and particularized injury-in-fact requirement)
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992) (three-part standing test: injury, traceability, redressability)
- Branson Label, Inc. v. City of Branson, Mo., 793 F.3d 910 (8th Cir. 2015) (standard of review for factual Rule 12(b)(1) attacks)
- Balogh v. Lombardi, 816 F.3d 536 (8th Cir. 2016) (injury not traceable where defendant lacks authority to effect relief)
- McLeod v. General Mills, Inc., 856 F.3d 1160 (8th Cir. 2017) (declaratory judgment must be definite and concrete)
- Calderon v. Ashmus, 523 U.S. 740 (1998) (court should avoid premature declaratory judgments that resolve issues collateral to pending litigation)
- MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118 (2007) (ripeness and standing concerns in declaratory judgment context)
- Aetna Life Ins. Co. v. Haworth, 300 U.S. 227 (1937) (DJA is procedural and does not expand federal jurisdiction)
- Ryan v. Ryan, 889 F.3d 499 (8th Cir. 2018) (Rule 59(e) limited to correcting manifest errors)
- Henley v. Brown, 686 F.3d 634 (8th Cir. 2012) (appeal from Rule 59(e) permits challenge to underlying judgment for manifest legal error)