MATTHEW A. GOLDSTEIN, PLLC, Appellant v. UNITED STATES DEPARTMENT OF STATE, et al., Appellees
No. 16-5034
United States Court of Appeals, District of Columbia Circuit.
Argued November 21, 2016 Decided March 14, 2017
Katherine Twomey Allen, Attorney, U.S. Department of Justice, argued the cause
Before: GRIFFITH, SRINIVASAN, and MILLETT, Circuit Judges.
GRIFFITH, Circuit Judge:
The plaintiff is a law firm that advises clients on U.S. law that regulates the international arms trade. Concerned that the State Department might enforce arms-control regulations against it in a way that would force disclosure of confidential client information, the law firm seeks declaratory and injunctive relief. The district court dismissed the action for lack of standing and ripeness. We affirm on the ground that the plaintiff lacks standing to bring a pre-enforcement challenge because it faces no credible threat of enforcement.
I
A
The Department of State regulates international arms brokering under the Arms Export Control Act and the International Traffic in Arms Regulations (ITAR). In the interest of national security, the Act authorizes the President to designate various weapons and technologies as “defense articles” and to regulate their import and export.
The Act requires those who manufacture, import, or export these defense articles to register with the U.S. government, see
Part 129 of the ITAR governs these brokers. Before a person may be approved to engage in brokering activities, he must disclose to the State Department certain information, including the specific activity he intends to undertake; the name, nationality, address, and place of business of those involved; a description of the defense article at issue; the defense article‘s destination; and what the defense article will be used for. See
As relevant here, in 2013 the State Department promulgated a rule to clarify that “brokering activities” include “[s]oliciting, promoting, negotiating, contracting for, arranging, or otherwise assisting in the purchase, sale, transfer, loan, or lease of a defense article or defense service,”
[a]dvising on the legality of a transaction, such as advising whether a transaction is ITAR compliant, tax rates or other laws may be preferential, drafting
of contract terms where parties to the transaction have already been identified by the client, representing [a] client to a client-identified foreign party, conducting ITAR audits, and/or providing training or assistance with ITAR compliance procedures.
J.A. 103-04. Not all actions taken by attorneys are exempt from the regulations, however. If attorneys
engage in activities that go beyond providing consulting or legal advice, including being a third party to the transaction, or ... [if they] engage[] in soliciting, locating a buyer or seller, introducing or recommending specific parties, structuring the transaction, marketing, promoting, and/or negotiating ITAR-controlled defense articles and services on behalf of their clients beyond contract terms of already identified foreign parties by [their] client, then such activities may constitute brokering activities under ITAR.
The State Department has established an optional process under the ITAR for requesting an official determination on whether a particular activity constitutes brokering. See
B
Matthew A. Goldstein is the principal attorney in a law firm that bears his name and specializes in providing legal advice to clients involved in transactions subject to the ITAR. Goldstein attests that his firm “regularly represents clients in the preparation of the terms and conditions of sale, user agreements, vendor certifications, and other legal documents” for ITAR-related transactions. J.A. 51-52. According to Goldstein, his firm‘s clients often have not identified the foreign parties that will be involved in prospective transactions at the time the firm provides its legal advice.
Soon after the State Department promulgated its 2013 regulation explicitly excluding legal services from the ITAR‘s definition of brokering activities, Goldstein sought an advisory opinion from the Department pursuant to
Goldstein asserts that, nearly a year after he requested an advisory opinion, the head of compliance at the State Department called him to say that the services described in his request would not be subject to Part 129 so long as his clients did not pay his firm a contingency fee or a commission. Relying on this advice, Goldstein withdrew his request. The State Department responded with a letter, advising Goldstein that his initial request and the phone conversation “lacked sufficient detail for the Department to make an official determination as to whether the activities
Shortly thereafter, Goldstein‘s firm filed suit in district court alleging that the State Department lacked constitutional and statutory authority to apply Part 129 to bona fide legal advice and seeking declaratory and injunctive relief to prevent the Department from requiring the firm to register as a broker. After the firm filed suit, the State Department sent Goldstein another letter. This letter, responding to the particulars of Goldstein‘s initial request for an advisory opinion, informed him that providing traditional legal advice would not qualify as a brokering activity—at least in situations where the foreign party had already been identified. The reason for this disclaimer, the Department subsequently explained, is that lawyers qualify as brokers when they work to find foreign counterparties to transactions for their clients; when the foreign party is already known, the risk that the lawyer is acting as a finder is eliminated.
The district court dismissed the firm‘s lawsuit for lack of standing. The court held that the complaint failed to allege with specificity that the law firm was engaged in “brokering activities” and what type of information the firm would need to disclose that would run afoul of its duties of confidentiality. The court also observed that the firm‘s allegations of the State Department‘s threat of enforcement were speculative at best. In addition, the court held, for similar reasons, that the plaintiff‘s claims were not ripe. The plaintiff timely filed its notice of appeal, and we have jurisdiction pursuant to
II
“We review a dismissal for lack of standing de novo.” Renal Physicians Ass‘n v. U.S. Dep‘t of Health & Human Servs., 489 F.3d 1267, 1273 (D.C. Cir. 2007). In reviewing a district court‘s grant of “a motion to dismiss for want of standing,” we “must accept as true all material allegations of the complaint, and must construe the complaint in favor of the complaining party.” Warth v. Seldin, 422 U.S. 490, 501 (1975).
The question before us is whether the law firm has standing to seek to enjoin the State Department from enforcing its regulations governing arms brokering. The firm has failed, however, to demonstrate its standing to seek pre-enforcement relief: it has not “suffered an ‘injury in fact[]’ that is (a) concrete and particularized and (b) actual or imminent....” Sabre, Inc. v. U.S. Dep‘t of Transp., 429 F.3d 1113, 1117 (D.C. Cir. 2005) (quoting Friends of the Earth, Inc. v. Laidlaw Envtl. Servs., Inc., 528 U.S. 167, 180-81 (2000)). It is true that a plaintiff is not required “to expose himself to liability before bringing suit to challenge the basis” for an enforcement action by the government. MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 128-29 (2007). After all, a plaintiff can seek pre-enforcement review when the threat of enforcement is “sufficiently imminent.” Susan B. Anthony List v. Driehaus, 573 U.S. 149, 158-59 (2014). But there is something fundamental to a pre-enforcement challenge that is missing here. There must be some desired conduct by the plaintiff that might trigger an enforcement action in the first place. Cf. Abbott Labs. v. Gardner, 387 U.S. 136, 154 (1967)
The 2013 regulation is straightforward: “[A]ctivities by an attorney that do not extend beyond the provision of legal advice to clients” are not brokering activities.
True, an attorney like Goldstein could provide legal advice in a manner that constituted brokering, but the State Department has explained that the only such situation it has identified is when an attorney acts as a “finder” by, for example, helping clients to identify or locate foreign counterparties for proposed transactions. See Oral Arg. Tr. 38:10-14 (government counsel explaining that “the only example ... that the Agency has been able to identify” of an attorney providing legal advice in a manner that implicates the brokering regulation involves the use of that “legal advice to steer a client towards a particular buyer or a particular seller“).2 The law firm simply has alleged no facts suggesting that it intends to act as a finder in any capacity. Moreover, Goldstein has expressly denied that his firm has any plan or desire to do so. See Appellant‘s Br. 24;
The law firm‘s fear that it may be the target of Department enforcement seems to be based on a misunderstanding of the letter that Goldstein received from the State Department after his firm filed suit, in which the Department advised that Goldstein‘s proposed activities would be exempt “as long as” the foreign parties had already been identified. J.A. 40. Focusing on the “as long as” language, the firm argues that it must be subject to the requirements of Part 129 because it “often” provides these services before its clients have identified the foreign parties to proposed transactions. Appellant‘s Reply Br. 5 (“Defendants argue ‘Plaintiff has not adequately alleged that he has engaged in or will engage in any conduct regulated as brokering activity[] under part 129.’ ... But Plaintiff has repeatedly stated that it regularly provides legal advice to clients on transactions where the clients have not identified all parties to the transactions.“).
The letter, however, did not state that all legal advice on international arms transactions in which foreign parties are unidentified necessarily constitutes brokering. On the contrary, the “as long as” language in the State Department‘s letter simply creates a limited safe harbor: when an attorney provides ordinary legal services to a client in a situation where the foreign party has been identified, it is especially clear that the attorney is not helping to “find” the foreign party to the transaction—and thus not engaging in brokering activities. If the foreign party has not been identified, that merely leaves open the possibility that the attorney may be acting as a finder. But the State Department does not take the position that attorneys engage in brokering every time they provide legal advice relating to transactions with foreign parties not yet identified. See Appellees’ Br. 27 (“[P]laintiff mistakenly assumes that all advice on transactions in which the foreign parties are not identified constitutes brokering.“). Rather, its view is that attorneys must go outside the bounds of providing proper legal counsel, and instead must actually undertake brokering measures. Contrary to Goldstein‘s argument, then, the plaintiff‘s stated intention to provide legal advice to clients on transactions where foreign parties are unidentified does not imply that it would face an enforcement action for failing to register under Part 129.
Goldstein may not have provided the State Department with enough information to make an official and binding determination that any particular transaction of his would fall outside the definition of brokering. See
III
So ordered.