DAN CARMAN; COIN CENTER; RAYMOND WALSH; QUIET INDUSTRIES CORP. v. JANET YELLEN, in her official capacity as Secretary of the Treasury; UNITED STATES DEPARTMENT OF THE TREASURY; CHARLES PAUL RETTIG, in his official capacity as Commissioner of the Internal Revenue Service; INTERNAL REVENUE SERVICE; MERRICK B. GARLAND, Attorney General; UNITED STATES OF AMERICA
No. 23-5662
UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT
August 9, 2024
RECOMMENDED FOR PUBLICATION Pursuant to Sixth Circuit I.O.P. 32.1(b) File Name: 24a0172p.06
Argued: May 7, 2024
Decided and Filed: August 9, 2024
Before: MOORE, NALBANDIAN, and BLOOMEKATZ, Circuit Judges.
COUNSEL
ARGUED: Jeffrey S. Hetzel, CONSOVOY MCCARTHY, PLLC, Arlington, Virginia, for Appellants. Geoffrey J. Klimas, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., for Appellees. ON BRIEF: Jeffrey S. Hetzel, Cameron T. Norris, CONSOVOY MCCARTHY, PLLC, Arlington, Virginia, for Appellants. Geoffrey J. Klimas, Francesca Ugolini, Ellen Page DelSole, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., for Appellees.
OPINION
KAREN NELSON MOORE, Circuit Judge. Plaintiffs Dan Carman, Coin Center, Raymond Walsh, and Quiet Industries Corp. (“plaintiffs“) regularly transact in cryptocurrency for both personal and business matters. They enjoy the privacy and anonymity that cryptocurrency transactions provide. So when Congress passed amendments to
I. BACKGROUND
A. Amended 26 U.S.C. § 6050I
Title
“Trade or business” has the same meaning in the statute as it does in
Until recently, cash meant “foreign currency” or “any monetary instrument . . . with a face amount of not more than $10,000.”
B. Cryptocurrency
One type of digital asset is cryptocurrency. R. 27 (Am. Compl. ¶ 43) (Page ID #266). Cryptocurrency often uses “open-source code,” which allows the public to view, copy, and use the code without paying. Id. ¶ 44 (Page ID #266). Plaintiffs allege that a given cryptocurrency program relies on “fixed rules of operation designed to facilitate secure and reliable transactions.” Id. ¶ 45 (Page ID #266). To engage in transactions using cryptocurrency, users must have a “private key” and an “address,” both of which are “random but unique” strings of letters and numbers particular to an individual. Id. ¶¶ 46–47 (Page ID #266). To consummate a transaction, a receiver of cryptocurrency provides the sender with their unique address. Id. ¶ 48 (Page ID #266). The sender “digitally signs” with their private key a “transaction message” that specifies the amount of cryptocurrency to be sent. Id. ¶¶ 48–49 (Page ID #266).
According to plaintiffs, once this first part of the cryptocurrency transaction is complete, “miners” work to “review and validate the transaction message.” Id. ¶ 50 (Page ID #267). Through verifying the underlying details of the transaction, such as that the proper private key was entered or that the sender has the requisite amount of cryptocurrency to send, miners’ work also results in the transaction being listed on a public ledger. Id. ¶¶ 50, 52 (Page ID #267). Miners are incentivized to do this verification work because they receive some amount of cryptocurrency as a reward. Id. ¶ 51 (Page ID #267).
The hallmarks of cryptocurrency are decentralization and anonymity. Plaintiffs claim that miners do not have any personal stake in a given transaction or even know
C. The Interaction Between the Amended Reporting Requirements and Cryptocurrency
Under plaintiffs’ view, the amended reporting requirements will require both senders and receivers of cryptocurrency to disclose certain information. A sender of more than $10,000 in cryptocurrency will need to disclose to the receiver their Social Security Number, name, and address. Id. ¶ 94 (Page ID #278). The receiver will need to include this information in the report sent to the government. Id. A receiver of cryptocurrency will need to include their own Social Security Number, name, and address in the report as well. Id. ¶ 95 (Page ID #278). Along with this information, the receiver will need to report the amount of cryptocurrency received, when the transaction occurred, and its “nature.” Id. ¶ 96 (Page ID #279) (citation omitted). Finally, the receiver will need to include “any other information required by Form 8300,” which is the form used to complete the reports. Id. ¶ 97 (Page ID #279); see also
Plaintiffs harbor serious concerns about being “forced to comply with this entire, intrusive process.” R. 27 (Am. Compl. ¶ 105) (Page ID #282). Plaintiffs allege that armed with information from reports, the government will be capable of “identify[ing] [transactions] in the public ledger.” Id. ¶ 106 (Page ID #283). Once the government
Plaintiffs allege more. If the government takes these steps, it will receive “a detailed and intimate transaction history” for an individual all without having to obtain a warrant or to act on probable cause. Id. ¶¶ 114–15 (Page ID #285). The information may be shared with all levels of law enforcement. Id. ¶ 120 (Page ID #286); see also
According to the amended complaint, because of the “related” transactions requirements, receivers of cryptocurrency will likely need to demand personal identifying information from any sender of any amount of cryptocurrency because “there is no natural, common-sense way” for a receiver to know that one transaction is unrelated to another. Id. ¶¶ 116–17 (Page ID #285). It will be difficult to comply with the law‘s verification requirements, because “cryptocurrency transactions . . . occur across vast distances and can involve an indeterminate number of persons.” Id. ¶ 119 (Page ID #286). The law‘s terms also present a compliance problem. For example, a receiver who is a miner may not be able to identify the “person” from whom they received cryptocurrency, because a miner “is automatically rewarded with new cryptocurrency when [they] perform[] mathematically verifiable work to secure the public ledger.” Id. ¶ 126 (Page ID #287–88). Likewise, individuals will be unable to discern if they are exempt from the reporting requirements in the case that a transaction takes place entirely outside the United States, because “cryptocurrency transactions are validated and stored on computers all around the world.” Id. ¶ 127 (Page ID #288).
Finally, per the amended complaint, the amended
D. The Plaintiffs
Dan Carman is a lawyer and businessman who lives in Fayette County, Kentucky. Id. ¶ 134 (Page ID #291). He uses Bitcoin and regularly transacts in it. Id. Carman intends to receive cryptocurrency as payment in connection with his work as a Bitcoin consultant. Id. ¶ 136 (Page ID #291). He alleges that he will receive cryptocurrency payments exceeding $10,000 in both single and related transactions involved with this work. Id. Similarly, Carman plans personally to mine cryptocurrency and to do so through a company. Id. ¶ 137 (Page ID #291–92). Beyond receipt of cryptocurrency, Carman also intends to send cryptocurrency to others when engaging in certain transactions. Id. ¶ 138 (Page ID #292). He will additionally send cryptocurrency to advocacy and religious organizations as part of “advanc[ing] his expressive associations.” Id. ¶ 139 (Page ID #292–93).
Carman claims that because he will engage in the types of transactions covered by
Coin Center is a non-profit organization that “advances the civil liberty interests of cryptocurrency users.” Id. ¶¶ 148, 152 (Page ID #294–95). Like Carman, Coin Center alleges that it will likely be subject to the reporting requirements because it receives contributions and sells sponsorships in connection with its advocacy activities. Id. ¶¶ 149–52 (Page ID #295). As a result of the reporting requirements, Coin Center believes that donors will be less likely to contribute to its activities and that Coin Center, like Carman, will incur substantial compliance costs. Id. ¶¶ 153–54 (Page ID #296).
Raymond Walsh is a software engineer and small businessman who owns plaintiff Quiet Industries, a Bitcoin mining company based out of Kentucky. Id. ¶¶ 157, 159 (Page ID #297). Walsh often receives Bitcoin payments exceeding $10,000 in connection with his work with Quiet Industries. Id. ¶ 160 (Page ID #297–98). In connection with his mining activities, Walsh is “rewarded [with cryptocurrency] out of a common pool of assets,” some of which comes from other cryptocurrency users and some of which comes from cryptocurrency software. Id. Further, Walsh spends more than $10,000 in cryptocurrency in certain transactions in connection with his business. Id. ¶¶ 161–62 (Page ID #298). Like the other plaintiffs, Walsh alleges
The government has not foresworn enforcement of the new reporting requirements as to any of the plaintiffs. Id. ¶ 179 (Page ID #301). Because related transactions under the new requirements can reach back up to one year, some of plaintiffs’ activities may already be subject to the law. Id. ¶ 180 (Page ID #302).
E. The Claims
Plaintiffs launch five distinct constitutional attacks on the amended
Plaintiffs’ first claim is that the amended
Plaintiffs’ First Amendment claim turns on freedom of association. Plaintiffs aver that the reporting requirements will “chill protected associational activities” by requiring those who wish to remain anonymous to be subject to disclosures and by potentially exposing to retaliatory actions by the government those who donate to expressive associations. Id. ¶¶ 221–22 (Page ID #312–13). Because the reporting mandate “will require parties to reveal expressive associations to the government,” it will “chill and is already chilling protected associational activities in at least three ways.” Id. ¶ 229 (Page ID #316). These include allowing the “government to ascertain the unrelated expressive associations of parties to all covered transactions” through “public-ledger analysis,” id. ¶ 230 (Page ID #316); increasing the likelihood that malicious actors like hackers will obtain information and be capable of linking transactions to individuals, id. ¶ 231 (Page ID #316–17); and “directly mandat[ing]
Plaintiffs’ first Fifth Amendment challenge to the amended
Plaintiffs also claim that Congress has exceeded its enumerated powers by promulgating the amended
Finally, plaintiffs claim that the amended
F. Procedural Background
Plaintiffs filed a complaint in this case on June 10, 2022, R. 1 (Compl.) (Page ID #1–71) and subsequently filed an amended complaint on November 28, 2022, R. 27 (Am. Compl.) (Page ID #256–333). On December 12, 2022, defendants moved to dismiss the amended complaint for both lack of jurisdiction and for failure to state a claim. R. 29 (Mot. to Dismiss at 1) (Page ID #339). Defendants argued that each of the four plaintiffs in this case lacked standing to press each of their claims, arguing in effect that all of the plaintiffs’ injuries were either too speculative or not cognizable. R. 29-1 (Defs.’ Mem. at 7–19) (Page ID #349–61). Defendants additionally contended that several of plaintiffs’ claims, including their Fourth Amendment search claim, First Amendment free-association claim, and Fifth Amendment vagueness claim, were not ripe. Id. at 19–21 (Page ID #361–63). Finally, defendants argued that all of plaintiffs’ claims failed on the merits regardless of any jurisdictional issues. Id. at 21–40 (Page ID #363–82).
Plaintiffs opposed all of defendants’ arguments. R. 32 (Pls.’ Opp.) (Page ID #392–441). Plaintiffs claimed that a variety of injuries supported standing for their pre-enforcement challenge, including that they are directly subject to the reporting mandate, that they will incur compliance
The district court agreed with defendants on justiciability grounds. R. 34 (Op.) (Page ID #466–87); Carman v. Yellen, No. CV 5:22-149-KKC, 2023 WL 4636883 (E.D. Ky. July 19, 2023). The district court first found that plaintiffs’ Fourth Amendment claim was not ripe, because the amended
Since plaintiffs filed their appeal, defendants have filed a
II. DISCUSSION
A. Standard of Review
“We review de novo a district court‘s grant of a motion to dismiss for lack of subject matter jurisdiction.” Kiser v. Reitz, 765 F.3d 601, 606 (6th Cir. 2014). At this juncture, we accept the facts as
B. Standing Generally
The general requirements of standing are familiar. Under
Standing is assessed on a claim-by-claim basis and “is not dispensed in gross.” Davis v. Fed. Election Comm‘n, 554 U.S. 724, 734 (2008) (quoting Lewis v. Casey, 518 U.S. 343, 358 n.6 (1996)); see also DaimlerChrysler Corp. v. Cuno, 547 U.S. 332, 352 (2006) (discussing cases). Even if a plaintiff has standing to press a particular claim or to challenge a particular provision of a law deemed to be unlawful, they may lack standing to challenge other provisions of the law that have not caused their injury. See, e.g., California v. Texas, 593 U.S. 659, 679 (2021). Likewise, if a plaintiff‘s injury does not derive from the purportedly unlawful conduct or provision, but instead from some other source, a plaintiff will lack standing because the injury will not be “fairly traceable to enforcement of the allegedly unlawful provision.” Id. (internal quotation marks and citation omitted).
Other hallmarks of the standing analysis are familiar, too. For one, standing should not be assessed against the merit (or lack thereof) of a claim. See, e.g., Hicks v. State Farm Fire & Cas. Co., 965 F.3d 452, 463 (6th Cir. 2020) (“[O]ne must not confuse weakness on the merits with absence of Article III standing.” (quoting Ariz. State Legislature v. Ariz. Indep. Redistricting Comm‘n, 576 U.S. 787, 800 (2015))). “Although standing in no way depends on the merits of the plaintiff‘s contention that particular conduct is illegal,” standing “often turns on the nature and source of the claim asserted.” Warth v. Seldin, 422 U.S. 490, 500 (1975). Second, “establish[ing] standing depends considerably upon whether the plaintiff is himself an object of the action (or forgone action) at issue.” Lujan, 504 U.S. at 561. If so, a plaintiff may more easily establish an injury in fact and show that the challenged action both
Finally, in the preenforcement context, we impose additional requirements to ensure that an injury is imminent. We consider whether the party seeking to invoke federal jurisdiction has demonstrated (1) “an intention to engage in a course of conduct arguably affected with a constitutional interest,” Susan B. Anthony List v. Driehaus, 573 U.S. 149, 161 (2014) (quoting Babbitt v. Farm Workers, 442 U.S. 289, 298 (1979)); (2) that their “intended future conduct is ‘arguably . . . proscribed by [the] statute‘” at issue, id. at 162 (quoting Babbitt, 442 U.S. at 298) (alterations in original); and (3) that “the threat of future enforcement . . . is substantial,” id. at 164.
C. Ripeness
“[T]he ripeness doctrine traditionally incorporates both constitutional and prudential elements.” Kiser, 765 F.3d at 606. The constitutional elements of ripeness encompass traditional parts of the standing inquiry: namely, whether a plaintiff “is threatened with ‘imminent’ injury in fact.” MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 128 n.8 (2007) (quoting Lujan, 504 U.S. at 560); accord Susan B. Anthony List, 573 U.S. at 158–59. If a case is “dependent on ‘contingent future events that may not occur as anticipated, or indeed may not occur at all,‘” it is not constitutionally ripe. Trump v. New York, 592 U.S. 125, 131 (2020) (per curiam) (quoting Texas v. United States, 523 U.S. 296, 300 (1998)).
On the other hand, prudential ripeness, although closely related, has been called into question in recent years. See, e.g., Susan B. Anthony List, 573 U.S. at 167 (commenting on the questions surrounding “the continuing vitality of the prudential ripeness doctrine“); Lexmark, 572 U.S. at 126 (recognizing that prudential standing doctrines are “in some tension with our recent reaffirmation of the principle that a federal court‘s obligation to hear and decide cases within its jurisdiction is virtually unflagging” (internal quotation marks and citations omitted)). Nonetheless, this court as well as other circuits have continued applying the doctrine particularly when important future intervening events, such as impending regulatory action, will clarify the dispute or obviate the need for weighing in on contingencies. See Nat‘l Rifle Ass‘n of Am. v. Magaw, 132 F.3d 272, 291–92 (6th Cir. 1997) (“We believe a federal court should not intervene and determine whether a statute enacted by Congress is unconstitutionally vague on its face before the agency with rulemaking authority has had an opportunity to interpret the statute.“); see also, e.g., Bellion Spirits, LLC v. United States, 7 F.4th 1201, 1209 (D.C. Cir. 2021) (considering whether claim was prudentially ripe post-Lexmark, and concluding claim was “fit for judicial decision because ‘judicial intervention’ would not ‘inappropriately interfere with further administrative
D. Certain of Plaintiffs’ Claims are Not Ripe2
The related doctrines of Article III standing and ripeness are both limits on a federal court‘s ability to hear a case. Warshak v. United States, 532 F.3d 521, 525 (6th Cir. 2008) (en banc) (citing Arizonans for Official English v. Arizona, 520 U.S. 43, 66–67 (1997)). We begin our analysis with ripeness. And on this basis, we hold that plaintiffs’ vagueness and self-incrimination claims are not ripe, but that the remainder of their claims are.
The district court resolved many of the issues in this case on ripeness grounds, finding that plaintiffs’ Fourth Amendment, R. 34 (Op. at 9–12) (Page ID #474–77), First Amendment, id. at 16–17 (Page ID #481–82), Fifth Amendment vagueness, id. at 17–18 (Page ID #482–83), enumerated powers, id. at 18–20 (Page ID #483–85), and Fifth Amendment self-incrimination, id. at 20 (Page ID #485), claims were all not ripe. The district court appeared to rely principally on prudential ripeness factors when deeming these claims not ripe. See, e.g., id. at 12 (Page ID #477) (finding that the hardship to plaintiffs is minimal as it relates to the Fourth Amendment claim because plaintiffs do not yet need to report their transactions). And the district court appeared to suggest that as a general matter no claim can be ripe when a law has yet to go into effect. See, e.g., id. at 19 (Page ID #484). Plaintiffs rightly note that most of the district court‘s findings and defendants’ arguments on ripeness concern prudential, not constitutional, matters. Appellants’ Reply at 15. Further, the district court‘s view that plaintiffs brought claims too early merely because the law is not yet in effect is unsound. See, e.g., Appellants’ Br. at 35 (collecting cases). Still, with respect to plaintiffs’ vagueness and self-incrimination challenges, ripeness problems abound.
1. Vagueness
We begin with vagueness. Plaintiffs do not suggest that the amended
Plaintiffs broadly argue that “[f]acial challenges to [laws] are generally ripe the moment the challenged [law] is passed.” Appellants’ Br. at 38 (quoting Suitum v. Tahoe Reg‘l Plan. Agency, 520 U.S. 725, 736 n.10 (1997)). But that discussion in Suitum concerned one specific type of claim: Fifth Amendment takings claims premised on the theory that mere passage of a statute or regulation constitutes a taking. Suitum, 520 U.S. at 736 (“We held that the only issue justiciable at that point was whether mere enactment of the statute amounted to a taking.“). The quoted footnote clarifies that “[s]uch” challenges are generally ripe the moment a law is passed. Id. at 736 n.10 (emphasis added). And plaintiffs’ reliance on Hill v. Snyder, 878 F.3d 193 (6th Cir. 2017), is similarly misplaced. Appellants’ Br. 38. Hill concerned facial challenges to a sentencing law‘s review processes and an alleged denial of rehabilitative programming. 878 F.3d at 214. The case has nothing to do with vagueness. Instead, Hill reiterates the black-letter proposition that “claims are fit for review if they present ‘purely legal’ issues that ‘will not be clarified by further factual development.‘” Id. at 213–14 (quoting Thomas v. Union Carbide Agric. Prods. Co., 473 U.S. 568, 581 (1985)).
No doubt, facial vagueness challenges are permissible. But Johnson v. United States, 576 U.S. 591 (2015), does not help plaintiffs. Appellants’ Reply at 19. For one, Johnson did not raise any standing or ripeness issues: the petitioner was sentenced under the at-issue provision. 576 U.S. at 595. Here, however, there is considerable uncertainty over whether any of plaintiffs’ alleged vagueness issues will come to pass. More basically, the petitioner in Johnson did not argue that the law as a whole was void for vagueness but instead contended that the particular provision under which he was sentenced was. Id. at 597–98 (speaking only to the residual clause). Plaintiffs suggest that their challenge is no different, yet in fact they are merely creating hypothetical situations under which myriad separate provisions of
We cannot invalidate
Another fact cuts against plaintiffs on this point: pending regulatory action and the agency‘s moratorium on enforcement until regulations go into effect. Below, both the district court and defendants were of the view that mere regulatory uncertainty meant that the case as a whole was not ripe. As a general matter, there is no hard rule that such uncertainty or a lapse in time between when a lawsuit is brought and when a law might take effect render a challenge not ripe. See, e.g., Thomas More L. Ctr. v. Obama, 651 F.3d 529, 538 (6th Cir. 2011) (facial challenge was ripe despite being brought several years before law was to take effect when there was “no reason to think that plaintiffs’ situation will change” and “no reason to think the law will change“), abrogated on other grounds by Nat‘l Fed‘n of Indep. Bus. v. Sebelius, 567 U.S. 519 (2012); Retail Indus. Leaders Ass‘n v. Fielder, 475 F.3d 180, 188 (4th Cir. 2007) (fact that regulations had not been promulgated did not render claim unripe because “[r]egulations could not alter the [a]ct‘s provisions, which clearly establish the healthcare spending and reporting requirements that [the plaintiff] claims are invalid” and thus question was “purely legal“). But plaintiffs’ cited authority generally adds little to their argument that their vagueness challenge is ripe despite pending notice-and-comment rulemaking that may limit
Try as they might, plaintiffs cannot avoid binding precedent on this point, either. In National Rifle Association of America, we considered challenges to the Crime Control Act, a federal statute which regulated certain firearms. 132 F.3d at 277–78. The plaintiffs brought several claims, including a due-process vagueness claim, an enumerated-powers claim, an equal-protection claim, and certain APA claims. Id. at 278. In an opinion that sounds in both constitutional and prudential ripeness concerns, see, e.g., id. at 291, we held that all of the plaintiffs’ preenforcement claims were ripe other than their vagueness challenges, id. at 291–93. With respect to claims other than the vagueness challenge, we held that the challenges to the law‘s very passage were ripe because “[t]he statute [could not] be interpreted more narrowly on an ‘as applied’ basis in order to avoid these constitutional issues” and “[e]nforcement of the [a]ct would not serve to further sharpen or focus their Commerce Clause or Equal Protection challenges.” Id. at 291. But the same was not true of the plaintiffs’ vagueness challenge. Id. at 292–93. Although we did note the since-rejected idea that a vagueness challenge must be as- applied
The same concerns that National Rifle Association discussed with respect to a preenforcement-facial-vagueness challenge apply with equal force here. Forthcoming regulations may meaningfully narrow
2. Self-incrimination
Only a word is in order with respect to the ripeness of plaintiffs’ Fifth Amendment self-incrimination claim. As a general matter, a Fifth Amendment self-incrimination claim is not ripe until a claim of the privilege is actually made. California Bankers Ass‘n v. Shultz, 416 U.S. 21, 72–75 (1974) (holding that self-incrimination claim based on forced reporting not ripe because “[w]e cannot, on the basis of supposition that privilege will be claimed and not honored, proceed now to adjudicate the constitutionality under the Fifth Amendment” (citation omitted)). No claim of privilege has been made, and so plaintiffs’ challenge on this ground is not ripe. Plaintiffs’ alternative basis for claiming a violation of this privilege—that any production of reports or documents to the government implicates the privilege—is squarely foreclosed by binding Supreme Court precedent, and so to the extent plaintiffs press this theory, we dismiss it on the merits. United States v. Hubbell, 530 U.S. 27, 34 (2000) (“The word ‘witness’ in the constitutional text limits the relevant category of compelled incriminating communications to those that are ‘testimonial’ in character.“).
3. Enumerated Powers, Fourth Amendment, and First Amendment
The district court largely repeated its above analyses with respect to plaintiffs’ enumerated powers, Fourth Amendment, and First Amendment claims. And on certain points, we agree with the district court that plaintiffs appear to rely on contingencies that may never come to pass in order either to advance certain legal theories or to bolster their claims. But scrutinizing plaintiffs’ claims demonstrates that plaintiffs have ripe claims for purposes of their enumerated powers, Fourth Amendment, and First Amendment claims.
Plaintiffs’ enumerated-powers claim is clearly ripe. Neither the district court nor defendants realistically suggest that none of the plaintiffs will be subject to
Plaintiffs’ First and Fourth Amendment claims are not so simple. But for reasons discussed in our standing discussion, see infra, the claims are constitutionally ripe. We pause, however, to discuss certain issues surrounding these claims with respect to their fitness for review. On one read of plaintiffs’ complaint and plaintiffs’ arguments, their Fourth Amendment claim would seem not fit for our review. Plaintiffs suggest that the government will undertake substantial investigative efforts to connect the transactions they must report to the public ledger, then to discern what the plaintiffs’ addresses are, and then to discover a litany of undisclosed transactions that may offer insight into the intimate details of plaintiffs’ lives. By undertaking this series of actions, the government allegedly will invade the plaintiffs’ Fourth Amendment rights. But to explain this Fourth Amendment theory is to demonstrate its issues. See, e.g., Hill, 878 F.3d at 214 (suggesting that “claims [that] create the risk of entanglement in abstract disputes” are not ripe); Doe v. Oberlin Coll., 60 F.4th 345, 356 (6th Cir. 2023) (ripeness issue related to selective-enforcement claim cured because “since the filing of the amended complaint, we have learned that [college] closed its investigation into the incidents“).5
But plaintiffs have also put forth a Fourth Amendment claim premised on the text of
The same is true of the First Amendment claim. One ostensible version of this claim is based on a causal chain that may never come to pass: principally, as with the Fourth Amendment claim, that the government will undertake efforts to discover substantial information about plaintiffs’ expressive activities and associations that is not otherwise self-evident from the initial reports. By way of an example, plaintiffs allege that the reporting mandate “will chill expressive activity because it will allow the government to ascertain the unrelated expressive associations of parties to all covered transactions . . . [through the use of] public-ledger analysis” and “will all but guarantee that hackers will be able to access and publicize the information contained in
As with the Fourth Amendment claim, however, a narrower version of the claim appears ripe now: that the “reporting mandate will directly mandate the reporting of expressive associations.” Id. ¶ 232 (Page ID #317). In essence, under this theory, plaintiffs allege that the mere disclosure of transactions to the government impedes their First Amendment associational rights, regardless of the government‘s decision (or not) to undertake further investigation. Because there is no question that at least some of the plaintiffs will need to make
In line with the above, the district court erred by finding that plaintiffs’ enumerated-powers, Fourth Amendment, and First Amendment claims are not ripe. Although plaintiffs may not proceed on the theories that the government may abuse the information it obtains via disclosures, which are akin to as-applied challenges based on speculative scenarios, plaintiffs also put forth theories that require no further factual development and that appear to raise only legal issues stemming from the face of the statute.
E. Plaintiffs Have Suffered an Injury in Fact for Purposes of Their Ripe Claims
Separate and distinct from any ripeness issues, defendants also claim that plaintiffs have failed to plead adequately an injury in fact for all of their claims. Accordingly, we consider if plaintiffs’ ripe claims—the enumerated-powers claim, First Amendment claim, and Fourth Amendment claim—nonetheless have an injury-in-fact problem. Because plaintiffs have pleaded facts showing that they will indeed be subject to the reporting requirements in some form or another and pay compliance costs, the district court should have proceeded to the merits on these claims.
As with ripeness, plaintiffs’ First and Fourth Amendment claims have much in common with respect to injury in fact. Plaintiffs have pleaded that they will engage in at least some transactions that require
First, there is no question that, per the amended complaint‘s allegations, at least some of the plaintiffs will have to report at least some of their transactions. Although the government disputes this, see infra, we know that “[w]hen the suit is one challenging the legality of government action or inaction, the nature and extent of facts that must be averred . . . in order to establish standing depends considerably upon whether the plaintiff is himself an object of the action (or forgone action) at issue.” Lujan, 504 U.S. at 561. When there is no doubt that the plaintiff is the direct object of the law, regulation, or government action, “there is ordinarily little question that the action or inaction has caused him injury, and that a judgment preventing or requiring the action will redress it.” Id. at 561–62.
Plaintiffs’ alleged harm flows from being subject to
Plaintiffs have little difficulty demonstrating an injury in fact for purposes of their enumerated-powers claim. Although plaintiffs must demonstrate their standing on a claim-by-claim basis, there is no reason why the same injury that provides the plaintiffs with standing to bring their First and Fourth Amendment claims—being directly subject to the disclosure requirements—would not suffice to create standing for their enumerated-powers claim. See State Nat‘l Bank, 795 F.3d at 54 (direct regulation theory of injury sufficed when “[t]he Bank is not challenging an agency rule that regulates its conduct . . . but rather is challenging the legality of the regulating agency itself“). In any event, because this claim is that the statute is void ab initio, we see no reason why any of the injuries that plaintiffs identify would not suffice. See, e.g., Kentucky v. Yellen, 54 F.4th 325, 342–43 (6th Cir. 2022) (compliance costs met injury-in-fact requirement for spending-clause violation); Rice v. Village of Johnstown, 30 F.4th 584, 591 (6th Cir. 2022) (holding that “palpable economic injuries” in the form of “family‘s economic interest in developing its property” met injury-in-fact requirement for procedural-due-process claim (quoting Sierra Club v. Morton, 405 U.S. 727, 733 (1972))).
The district court appears to have recognized this with respect to the enumerated-powers claim but still found that plaintiffs lacked standing. The district court‘s reasoning is not persuasive. First, the district court took plaintiffs’ claim out of context. Rather than looking at the claim as pleaded and the injuries tied to the claim, the district court found that “the alleged harm arising from this claim is seemingly the Government‘s ‘surveillance’ of those whose cryptocurrency transactions are disclosed under the amended
Neither the district court‘s nor defendants’ other views on the injury-in-fact requirement rest on solid ground. The district court found that the plaintiffs could not rely on the plethora of injuries that they allege that they will suffer—including being objects of regulation, suffering from economic harms, and incurring compliance costs—to create standing for their claims. Id. at 20–21 (Page ID #485–86). The district court based this overarching finding on Judge Batchelder‘s lead opinion in American Civil Liberties Union v. National Security Agency, 493 F.3d 644, 648 (6th Cir. 2007) (Lead Op.) (showing that Judge Gibbons concurred in only the judgment and that Judge Gilman dissented); id. at 688 (Gibbons, J., concurring) (concurring in the judgment because the plaintiffs “failed to provide evidence that they are personally subject to” the challenged action, and refusing to “reach the myriad other standing and merits issues” discussed by the lead and dissenting opinions). The lead opinion in ACLU scrutinized the plaintiffs’ claims and stated that the plaintiffs lacked standing through a sort of mixed standing and merits analysis. Id. at 653 (Lead Op.). This was so because, according to the lead opinion, “a cause of action is intertwined with an injury.” Id. Yet the lead opinion did not cite any cases to support this proposition. And the analysis appears to merge the merits and standing inquiry, which the Supreme Court has explicitly held is inappropriate. See Davis v. United States, 564 U.S. 229, 249 n.10 (2011); see also, e.g., CHKRS, LLC v. City of Dublin, 984 F.3d 483, 489 (6th Cir. 2021) (“[J]ust because a plaintiff‘s claim might fail on the merits does not deprive the plaintiff of standing to assert it.“) (collecting cases).
Picking up where the district court left off, defendants’ appellate briefing on the standing issue is entirely devoted either to problematizing the merits of plaintiffs’ claims or to questioning whether the plaintiffs are even subject to the reporting mandate. With respect to the former, defendants suggest that in every case that a plaintiff alleges a violation of an individual constitutional right, they must initially make a showing that the violation is at a minimum “colorable” or “arguable.” Appellees’ Br. at 18; see also CHKRS, 984 F.3d at 489 (“[O]nce the plaintiff has alleged a ‘colorable’ or ‘arguable’ claim that the defendant has invaded a legally protected interest, the plaintiff has met this element of an Article III injury.“). According to defendants, this language in CHKRS imposes some additional initial examination of the merits of plaintiffs’ claims as a threshold standing matter. CHKRS, however, is more circumscribed than defendants suggest. CHKRS drew this language principally from Steel Company v. Citizens for a Better Environment, 523 U.S. 83, 92–94 (1998), a case in which the Court addressed an issue of statutory standing in the first instance and rejected addressing statutory merits issues prior to examining Article III standing. 523 U.S. 83, 89 (1998). Steel Company held that a failure of a claim on the merits implicates constitutional standing only when a claim “clearly appears to be immaterial and made solely for the purpose of obtaining jurisdiction or where such a claim is wholly insubstantial and frivolous.” Id. at 89 (quoting Bell v. Hood, 327 U.S. 678, 682–83 (1946)). Steel Company
Similarly, defendants rely on Parsons v. United States Department of Justice to create some new rule that constitutional claims require specific types of injury. 801 F.3d 701, 711–13 (6th Cir. 2015); Appellees’ Br. at 18. But Parsons says no such thing. Instead, Parsons examined standing to bring First Amendment, procedural-due-process, and APA claims premised on the “chilling effects on [the plaintiffs‘] freedoms of speech and association; stigmatic reputational injury; and various harms inflicted by third-party law enforcement agencies, such as improper stops, detentions, interrogations, searches, denial of employment, and interference with contractual relations.” Id. at 711. We then analyzed the plaintiffs’ standing on a claim-by-claim basis, and held that the plaintiffs’ reputational and stigmatic injuries coupled with allegations of chill met the injury-in-fact requirement for the First Amendment and procedural-due-process claims, and that the plaintiffs’ claimed “freedom from placement” on the challenged report sufficiently alleged a procedural injury for the plaintiffs’ APA claims. Id. at 711–13. Nowhere in Parsons did we suggest that only a particular kind of injury could suffice to create standing for a particular kind of constitutional claim. Our caselaw shows the opposite is true. See, e.g., Rice, 30 F.4th at 591; Yellen, 54 F.4th at 342–43.
The defendants’ next line of attack boils down merely to contesting allegations in the amended complaint, which is impermissible at the motion-to-dismiss stage. For instance, defendants reach outside the amended complaint to question whether plaintiffs have any privacy interests in shielding their transactions, because such transactions are likely already reported on income-tax returns. Appellees’ Br. at 22–23. Similarly, the defendants question whether certain plaintiffs are subject to the amended
At this juncture, the district court‘s and defendants’ approach of disregarding plaintiffs’ claimed injuries does not appear appropriate. Nothing in our caselaw suggests that we may discount plaintiffs’ claimed injuries at the motion-to-dismiss stage; instead, we must accept what plaintiffs have pleaded with respect to their injuries and ask only whether such injuries are sufficient to meet the injury-in-fact requirement and accord with the rest of the standing analysis. See 13A CHARLES ALAN WRIGHT, ARTHUR R. MILLER, EDWARD H. COOPER, FED. PRAC. & PROC. JURIS. § 3531.4 (3d ed. 2023) (explaining that “standing can be supported by a very slender reed of injury“). So, for example, we accept that, based on plaintiffs’ allegations,
III. CONCLUSION
For the foregoing reasons, we AFFIRM IN PART and REVERSE IN PART the district court‘s judgment and REMAND for proceedings consistent with this opinion.