Lead Opinion
The plaintiff in this civil rights lawsuit is an association of real estate brokers in a portion of the Chicago metropolitan area that includes Calumet City. The City enacted an ordinance that forbids the sale of a house without an inspection to determine whether it is in compliance with the City’s
We do not reach the merits of the suit or express an opinion on them. Real estate brokers, in our judgment, do not have standing to challenge a law that impedes the sale of property they would like to broker; and their association’s standing is derivative from theirs and falls with it. National Solid Waste Management Ass’n v. Pine Belt Regional Solid Waste Management,
A complication is that there are two concepts of standing. There is Article III standing, which requires just an injury in fact, and “prudential” standing, a more complex, judge-made concept of standing. We think there is standing in the first sense but not the second. There is standing in the first sense because the brokers may well be harmed by the ordinance. By adding to the cost of selling residential property, the ordinance (if allowed to go into effect) is likely to reduce the brokers’ commissions in two ways. The higher the cost of selling property, the less property will be sold, and so the fewer commissions the brokers will be paid. And anything that reduces the salability of property reduces its market value, and the lower the price at which a house is sold the smaller the commission the broker will receive. Of course a seller might try to charge a higher price in order to cover some of the cost of complying with the ordinance, and a broker’s commission is normally a percentage of the sale price. But the seller’s attempt would fail if indeed the ordinance reduces the value of the property to prospective purchasers.
Against this it can be argued that the ordinance will boost property values in Calumet City and by doing so perhaps make the brokers better off rather than worse off. That is possible, but standing in the Article III sense does not require a certainty or even a very high probability that the plaintiff is complaining about a real injury, suffered or threatened. A suit to redress an injury to the plaintiff is a “case” or “controversy” within the meaning that the courts have imprinted on these words of Article III of the Constitution, Allen v. Wright,
It is true that if the federal courts could decide cases brought by persons on whom a defendant’s alleged misconduct could not possibly inflict tangible harm, so that a person living in California who read about Calumet City’s point of sale ordinance could have brought the present suit, the power of the federal courts relative to the other branches of government would be magnified alarmingly. In Aurora Loan Services, Inc. v. Craddieth,
But there is also a nonconstitutional doctrine, entirely judge-made, of standing, to which the unilluminating term “prudential standing” has been affixed. Valley Forge Christian College v. Americans United for Separation of Church & State, Inc.,
The doctrine is various. The strand relevant to this case governs the situation in which the injury on which the plaintiff founds his suit is derivative from the injury suffered by the defendant’s immediate victim. Often the harm from a harmful act will ramify far beyond that victim, as the present case illustrates. The initial victims of an ordinance impeding the sale of homes are homeowners who would like to sell — or perhaps all homeowners subject to the ordinance; for as we said, any impairment of the salability of a property reduces its value because salability (“alien-ability” in an older legal vocabulary) is one of the rights that, along with such other rights as the right to the exclusive enjoyment of the property, make a fee-simple interest more valuable than other interests in property, such as that of a licensee. But anything that impedes the sale of property, and by impeding it reduces the number of sales and the average sale price, harms other people besides the owners. It harms real estate brokers, sure, but it also harms title insurance companies, mortgage lenders, termite inspectors, moving companies, interior decorators, renovators, prospective home buyers, sell
The brokers’ suit thus is barred by the principle that, subject to certain exceptions, one cannot sue in a federal court to enforce someone else’s legal rights. Id.; Elk Grove Unified School District v. Newdow,
We mentioned exceptions. Craig v. Boren,
We need not worry that unless the doctrine limiting third-party standing is bent in this case there will be nobody to obtain a ruling on the constitutionality of the Calumet City ordinance. Compare Lepelletier v. FDIC,
It would be more perspicuous to describe the doctrine that bars the brokers at the threshold as that of remoteness, and illustrate it with reference to the rule of antitrust law that denies the right of a purchaser from a cartel’s customers to sue the cartel for damages even if the customer passed on the cartel overcharge to their purchasers. Illinois Brick Co. v. Illinois,
Notice that while the practical objections to allowing the second-tier purchaser to sue are identical to the objections to allowing someone harmed by the infringement of another’s rights to sue, the antitrust case doesn’t fit squarely into the “no-third-party-standing” pigeonhole. The second-tier purchaser is not complaining about the cartel’s violation of the first-tier purchasers’ rights; he is claiming that he too has a right under antitrust law not to be victimized (even if indirectly) by a cartel. If we don’t want him to be allowed to sue we can say he has no right under antitrust law and thus turn it into a third-party case. But it is cleaner to say that the injury is too remote; that the first-tier purchaser has better information about the presence of cartel pricing and should therefore have the right to sue, as there will be better enforcement that way. Similarly, the brokers’ injury in this case is too remote to sustain standing even if they might be thought to have a property right, perhaps in contracts that they have signed with homeowners who want to sell but because of the ordinance are less likely to be able to do so at .an attractive price. The cases differ because the brokers are not seeking damages, and therefore the issue of apportionment presented by the antitrust case does not arise. But the problem of allowing a derivative victim to preempt the claims of the immediate victim is the same in both cases.
The only wrinkle in this case is that the City did not argue remoteness until we raised the issue at oral argument. And because the remoteness doctrine is not jurisdictional in the sense that Article III standing is — if there is no Article III standing, the court is obliged to dismiss the suit even if the standing issue has not been raised — it may seem that it can be waived or forfeited just like any other nonjurisdictional defense to a suit.
But nonconstitutional lack of standing belongs to an intermediate class of cases in which a court can notice an error and reverse on the basis of it even though no party has noticed it and the error is not jurisdictional, at least in the conventional sense. Another example is the failure of a petitioner for federal habe-as corpus to have exhausted his state remedies. Even when exhaustion is not a jurisdictional prerequisite to judicial review, the court can in its discretion dismiss for failure to exhaust. Granberry v. Greer,
Those are not cases about remoteness; what connects them to our case is the presence of interests that are not represented by the parties, whether the interests of missing parties (such as homeowners, in this case) or the independent interests of the court. When judicial or administrative remedies have not been exhausted, the court is at risk of making an ill-informed ruling because it lacks the benefit of another tribunal’s expertise; or an unnecessary ruling because the agency might have resolved the case and the loser not have sought judicial review; or a ruling that gratuitously affronts another judicial system. As we said in Waldron v. McAtee,
In a typical case of remoteness, such as the cartel case that we mentioned, the cartel’s members may not care which tier of purchasers sues them. Neither may Calumet City care whether it is sued by real estate brokers or homeowners. Indeed, in both cases the defendants might prefer the derivative victim to sue, because his stake may be smaller than the immediate victim’s stake, or, being at a further remove from the alleged misconduct than the immediate victim, he may be a less informed and therefore less effective plaintiff. The immediate victim is harmed the most and knows the most, but is not before the court to assert his interest in controlling litigation against the wrongdoer.
Because what we are calling the doctrine of remoteness is a method of judicial protection of absent parties or other unrepresented interests, a court can invoke it on its own initiative, as many cases make clear. See, e.g., Delorme v. United States,
A sentence in Lindley v. Sullivan,
Lindley has twice been cited by this court for the proposition that a court is barred from raising a prudential-standing issue on its own initiative. MacLauchlan v. Prudential Ins. Co. of America,
Because the real estate brokers and their association do not have standing to challenge the Calumet City point of sale ordinance, the preliminary injunction issued by the district court is vacated and the suit is dismissed without prejudice.
Concurrence Opinion
concurring.
I agree with my colleagues that the preliminary injunction must be vacated and the case dismissed for lack of standing. The court’s analysis of prudential standing doctrine is comprehensive, and I join the panel’s conclusion that the plaintiffs alleged injury is too remote to permit it to litigate this constitutional claim. I disagree, however, that the plaintiff has gotten over the first hurdle of establishing constitutional standing; Article Ill’s case- or-controversy requirements are not met here.
The MainStreet Organization of Realtors (“the Association”) brought this
The district court granted the Association’s motion for a preliminary injunction prohibiting the City from enforcing the ordinance. The City responded by amending the ordinance. The district court then dissolved the first injunction as moot but was dissatisfied with the City’s efforts and entered a second injunction prohibiting enforcement of the amended ordinance. The amended ordinance, like its predecessor, requires that real property in the City be inspected for compliance with the City’s building and zoning codes before it is sold. Generally speaking, ownership may not be transferred until the property complies with building and zoning codes or adequate provision is made to bring the property up to code. As the court notes, point-of-sale ordinances like this one are common building and zoning code enforcement measures and are aimed at maintaining the quality of municipal housing stocks.
As to associational standing (see Hunt v. Wash. State Apple Adver. Comm’n,
The court appears to reject this holding — rightly, I think — for the rather obvious reason that the Association’s members “have no rights in commissions they may someday earn on sales of property with whose owners they have as yet no brokerage contract.” Majority op. at 746. But the court also concludes that the possibility of reduced future commissions — commissions the brokers have no arguable legal right or expectation to receive — is enough to confer constitutional standing. I cannot see how this can be reconciled.
It is clear, as the court notes, that “Calumet City’s ordinance imposes no duties or sanctions on real estate brokers.” Majority op. at 746. The very nature of the claims initially asserted — warrantless property inspections, unconstitutional takings of property, deprivations of property in violation of equal protection and due process — demonstrates that the rights the ordinance is alleged to infringe belong to the property owners, not the real estate brokers. As such, the court concludes (and I agree) that “[t]he brokers are not suing to enforce their constitutional property rights[,] ... [t]hey are suing to enforce the property rights of the owners of residential property.” Majority op. at 746. But this means the Association has failed
“The ‘core component’ of the requirement that a htigant have standing to invoke the authority of a federal court ‘is an essential and unchanging part of the case- or-controversy requirement of Article III.’ ” DaimlerChrysler Corp. v. Cuno,
The familiar requirements of Article III standing are: “First, the plaintiff must have suffered an injury in fact — an invasion of a legally protected interest which is (a) concrete and particularized ... and (b) actual or imminent, not conjectural or hypothetical.” Lujan,
The Supreme Court has made it clear that “when the plaintiff is not himself the object of the government action or inaction he challenges, standing is not precluded, but it is ordinarily ‘substantially more difficult’ to establish.” Lujan,
Finally, “[t]he party invoking federal jurisdiction bears the burden of establishing the[] elements” of standing. Lujan,
In light of these well-established principles, it is hard to understand the court’s categorical statement that a “case is not dismissed for failure to invoke federal jurisdiction just because the plaintiff fails to prove injury.” Majority op. at 745. To the contrary, it is the plaintiffs burden to prove injury-in-fact, Lujan,
I do not mean to suggest that “to establish standing a plaintiff must establish that a right of his has been infringed; that would conflate the issue of standing with the merits of the suit.” Aurora Loan Servs., Inc. v. Craddieth,
This case advanced beyond the pleading stage to the entry of a preliminary injunction, which of course requires the plaintiff to shoulder the burden of establishing a likelihood of success on the merits. Christian Legal Soc’y v. Walker,
It is certainly true as a practical economic matter that real estate brokers have an interest in consummating as many transactions as they can at the highest prices possible so as to maximize the amount of commissions they earn. But this is nothing more than an aspiration, not an expectation or right; no law, state or federal, protects this interest. That the point-of-sale ordinance has the potential to reduce commissions does not alone establish injury for purposes of constitutional standing; the Association must establish that the brokers’ interest in future commissions is “the sort of interest that the law protects when it is wrongfully invaded.” Craddieth,
Moreover, because the point-of-sale ordinance regulates real property owners, not brokers, the claim asserted here arises from the City’s allegedly unconstitutional regulation of someone other than the Association’s members, and “much more is needed” to establish standing. Lujan,
In short, the brokers’ alleged injury is “a diffuse and speculative harm,” and more fundamentally, the “interest asserted is not a legally protected one.” DH2, Inc.,
The “federal courts sit ‘solely! ] to decide on the rights of individuals,’ ” Hein,
Notes
. Prudential standing considerations generally prohibit “a litigant’s raising another person's legal rights,” Elk Grove Unified Sch. Dist. v. Newdow,
