Stagg, P.C. v. U.S. Dept. of StateStagg, P.C. v. U.S. Dept. of State
LEVAL, Circuit Judge:
Plaintiff Stagg, P.C. (“Stagg“) appeals from the judgment of the United States District Court for the Southern District of New York (Katherine Polk Failla, J.) granting summary judgment to Defendants, the United States Department of State (“DOS“), the Secretary of State, and the Directorate of Defense Trade Controls, (“DDTC“).1 The complaint seeks, inter alia,
Under the ITAR and their governing statute, the Arms Export Control Act (“AECA“),
Stagg is a law firm, which specializes in export control matters. The complaint asserts that Stagg intends to speak on the ITAR‘s technical data
The complaint alleges that Stagg has been deterred from engaging in its intended speech by two public statements of DOS: one which expresses the view that technical data does not qualify for the public domain exclusion if it “has been made available to the public without authorization,” 80 Fed. Reg. 31,525, 31,535 (June 3, 2015), and another, which states, “[I]t is seldom the case that a party can aggregate public domain data for purposes of application to a defense article without . . . creating a data set that itself is not in the public domain,” 78 Fed. Reg. 31,444, 31,445 (May 24, 2013). Stagg asserts that the publicly available information it intends to use has never been authorized by the Government for release into the public domain, and also that it fears its aggregation and modification of public domain data will create a data set that
The district court granted summary judgment to Defendants, concluding, inter alia, that the text of the ITAR unambiguously does not require a license for Stagg‘s intended republication of information in the “public domain” that has not been previously authorized for release into the public domain. In a later ruling on Stagg‘s motion for reconsideration, the district court characterized its previous ruling as finding “that the purported prior restraint alleged in [Stagg‘s complaint] did not exist” because the ITAR did not apply to Stagg‘s intended speech, and rejected on standing grounds Stagg‘s request for a declaratory judgment that the licensing scheme is unconstitutional. App‘x at 83. While it was clear that the district court ruled against Stagg and dismissed its complaint, it was not entirely clear whether
This appeal followed. For the reasons below, we agree substantially with the district court‘s reasoning that the licensing regulations did not cover Stagg‘s pleaded intended speech and conclude that the complaint should be dismissed under Article III because Stagg is no longer at risk of injury from the licensing provisions it claims are unconstitutional.
I. BACKGROUND
A. The Statutory and Regulatory Scheme
Section 38 of the AECA authorizes the President to control the export of “defense articles and defense services.”
Under the AECA, any person “who engages in the business of manufacturing, exporting, or importing any” of the items on the USML must register with the DDTC and pay a registration fee prescribed by regulation.
The AECA further provides that no defense articles or defense services included in the USML “may be exported or imported without a license for such export or import,” except as otherwise provided by the ITAR.
The ITAR define “export” to include “releasing or otherwise transferring technical data to a foreign person in the United States,” which is classified as a “deemed export.”
(1) Through sales at newsstands and bookstores;
(2) Through subscriptions which are available without restriction to any individual who desires to obtain or purchase the published information;
(3) Through second class mailing privileges granted by the U.S. Government;
(4) At libraries open to the public or from which the public can obtain documents;
(5) Through patents available at any patent office;
(6) Through unlimited distribution at a conference, meeting, seminar, trade show or exhibition, generally accessible to the public, in the United States;
(7) Through public release (i.e., unlimited distribution) in any form (e.g., not necessarily in published form) after approval by the cognizant U.S. government department or agency (see also
§ 125.4(b)(13) of this subchapter);(8) Through fundamental research in science and engineering at accredited institutions of higher learning in the U.S. where the resulting information is ordinarily published and shared broadly in the scientific community. Fundamental research is defined to mean basic and applied research in science and engineering where the resulting information is ordinarily published and shared broadly within the scientific community, as distinguished from research the results of which are restricted for proprietary reasons or specific U.S. Government access and dissemination controls. University research will not be considered fundamental research if:
(i) The University or its researchers accept other restrictions on publication of scientific and technical information resulting from the project or activity, or (ii) The research is funded by the U.S. Government and specific access and dissemination controls protecting information resulting from the research are applicable.
A willful violation of Section 38 of the AECA or of the ITAR is punishable by a fine of up to $1,000,000 or imprisonment of up to 20 years, or both.
The ITAR establish several circumstances in which a license can be denied or revoked, including whenever “the Department of State deems such action to be in furtherance of world peace, the national security or the foreign policy of the United States, or is otherwise advisable.”
Focusing largely on the unlimited discretion afforded by the standard “or is otherwise advisable,” as well as the lack of procedural safeguards (such as judicial review) to reduce the danger of abuse of that discretion, Stagg seeks a declaratory judgment that the ITAR license scheme operates as an unconstitutional prior restraint on speech.4
B. Defendants’ Public Statements Interpreting the ITAR
Stagg asserts that its fears of prosecution result largely from two public statements of DOS interpreting the ITAR. First, on May 24, 2013, DOS posted a notice in the Federal Register (the “2013 Notice“) responding to requests for clarification whether the aggregation of public domain data could be considered a “defense service” or render the data “other than public domain.” The 2013 Notice stated:
The Department confirms that a defense service involves technical data and therefore the use of publicly available information would not constitute a defense service. . . . The Department notes, however, that it
is seldom the case that a party can aggregate public domain data for purposes of application to a defense article without using proprietary information or creating a data set that itself is not in the public domain.
78 Fed. Reg. at 31,445.
Second, on June 3, 2015, DOS issued a notice of proposed rulemaking (the “2015 Notice“) that would have amended the definition of “public domain” to state that “technical data . . . is not in the public domain if it has been made available to the public without authorization.” 80 Fed. Reg. at 31,535. The 2015 Notice contained the following explanatory preamble:
Paragraph (b) of the revised definition explicitly sets forth the Department‘s requirement of authorization to release information into the ‘public domain.’ Prior to making available ‘technical data’ or software subject to the ITAR, the U.S. government must approve the release . . . .
The requirements of paragraph (b) are not new. Rather, they are a more explicit statement of the ITAR‘s requirement that one must seek and receive a license or other authorization from the Department . . . to release ITAR controlled ‘technical data,’ as defined in
§ 120.10 . . . . This proposed provision will enhance compliance with the ITAR by clarifying that ‘technical data’ may not be made available to the public without authorization. Persons who intend to discuss ‘technical data’ at a conference or trade show, or to publish it, must ensure that they obtain the appropriate authorization.
80 Fed. Reg. at 31,528. This proposed amendment was never adopted.
C. Procedural History
1. Stagg‘s Complaint
Stagg‘s operative complaint alleges that it “seeks to immediately speak publicly and to immediately publish free educational materials on the ITAR‘s technical data provisions, including at upcoming public conferences,” and that it “intends to speak and publish such materials on a continual basis.” App‘x at 114–15. The purpose of these materials is to “provide educational awareness to the public on how to comply with the ITAR‘s technical data controls.” Id. at 115. “This speech would also contain some comments critical of the government and . . . propose future regulatory revisions in this area.” Id. The complaint also alleges Stagg‘s intention to publish these presentation materials to its website. Id. at 116.
As examples in these materials, Stagg seeks to use “published and generally accessible public information that is available from bookstores and libraries . . . [that] would have otherwise constituted technical data but is excluded from the technical data provisions because it is in the public domain.” Id. at 115. Stagg alleges that the information it intends to use was “not authorized by the Defendants into the public domain.” Id. at 116.
2. Stagg‘s Motion for Preliminary Injunction
Stagg filed a motion for preliminary injunction,5 seeking to enjoin “any licensing or other approval requirements for putting privately generated
Against the background described above of government statements asserting that materials appearing to fall within the public domain exclusion might not be excluded from ITAR‘s license requirement, either because they came into the public domain without authorization or because the materials in the public domain had been aggregated, the district court held that Stagg had standing to challenge the ITAR based on its allegations that it possessed technical data “available in — but unauthorized for release into — the public domain, that it wants to aggregate into a set of materials for presentation to an audience.” Id. at 209.
The district court6 then concluded that the balance of the equities and the public interest required denial of Stagg‘s motion for a preliminary injunction. Id. at 210. Noting that Stagg‘s requested injunction would extend not just to situations involving the republication of publicly available technical data but to “all situations where individuals wished to disclose technical data generate[d] privately but covered by the ITAR,” the court
The court also rejected the possibility of entering an injunction limited to republication of previously published technical data. Because Stagg declined to provide any detail as to the nature of the information it intended to use in its presentations, the district court had “no choice but to assume the worst case scenario — e.g. technical data regarding highly sensitive defense systems published by an unauthorized source, repackaged by Stagg P.C. for purposes of its speeches.” Id. at 210 n.47.
This court affirmed by summary order. Regarding the question whether Stagg had standing, we reasoned that “[i]n stating that (1) it presently seeks to disseminate information already in its possession subject to ITAR‘s challenged licensing requirement and (2) it has already refrained from doing so for fear of being sanctioned, Stagg has alleged the real or immediate threat of future injury necessary for standing.” Stagg P.C. v. U.S. Dep‘t of State, 673 F. App‘x 93, 94–95 (2d Cir. 2016) (summary order) (internal quotation marks omitted). We further noted:
[M]any of Stagg‘s arguments on appeal could be read as attacking not the existing regulatory scheme, but either a proposed regulation that
was never adopted [i.e., the June 3, 2015 proposed rule], or a prior regulation that Stagg claims was once in force but has since been repealed. Constitutional questions about regulations that no longer exist or that have been under consideration do not present cases or controversies within a court‘s Article III jurisdiction. Here, however, the government unambiguously confirmed at oral argument that Stagg correctly characterizes the government‘s interpretation of the existing regulatory scheme . . . . Thus, we agree that Stagg has standing to challenge that scheme as the government construes it.
Id. at 95 n.1 (internal citation omitted). As to the merits, we found no abuse of discretion in the district court‘s decision to deny preliminary injunctive relief. Id. at 96.
3. The Parties’ Cross-Motions for Summary Judgment
The parties cross-moved for summary judgment. In support of Stagg‘s motion for summary judgment, Christopher Stagg, Stagg‘s principal and lead attorney, submitted two declarations in which he reiterated that Stagg wished to use “examples of published and generally accessible information that would otherwise constitute technical data but for the public domain exclusion” in its presentations and published materials, App‘x at 136–37, and that it wished to “aggregate and modify that information with application to defense articles to show different and new ways that technical data relating to defense articles can take form,” id. at 138. The declarations also added that
The district court denied Stagg‘s motion for summary judgment and granted Defendants’ motion for summary judgment, concluding that “after evaluating the unambiguous text of the ITAR . . . it [could not] discern the constitutional infirmities identified by [Stagg].” App‘x at 21. The court reaffirmed that Stagg had standing because, “under the Government‘s own stated interpretation of the regulatory scheme, Plaintiff may be subject to prosecution for republishing technical data that was obtained from otherwise public domain sources, but that was not authorized by Defendants to be placed into the public domain.” Id. at 36.7 On the other hand, analyzing the text of the ITAR, the court found that “[n]othing in the current [ITAR] can reasonably be interpreted to suggest that data that would otherwise qualify as public domain does not [so qualify] solely because it became publicly available without government authorization.” Id. at 42–43. Similarly, it concluded that the text could not reasonably be interpreted to mean that
Stagg moved for reconsideration of the district court‘s opinion, which the court denied. Of particular relevance here, the court rejected several of Stagg‘s arguments for reconsideration on standing grounds. First, Stagg argued that the district court‘s summary judgment ruling failed to properly apply the unbridled discretion doctrine of City of Lakewood v. Plain Dealer Pub. Co., 486 U.S. 750 (1988), and the requirement of certain procedural safeguards for prior restraints on speech under Freedman v. Maryland, 380 U.S. 51 (1965). The district court rejected this argument, explaining that its earlier decision concluded that the “purported prior restraints that were the subject of [Stagg‘s complaint] do not exist.” App‘x at 81. Thus, the court concluded, the
Plaintiff has not established standing to mount a facial challenge to portions of the ITAR regulating speech that does trigger the licensing requirement, because the characteristics that Plaintiff has disclosed about the speech it seeks to engage in — disseminating, aggregating, and modifying information already in the public domain, including republication of that information to the Internet — do not [trigger the licensing requirement].
Id. at 83.
II. DISCUSSION
A. Article III‘s Requirement of a “Case” or “Controversy”
We must first determine whether Stagg asserts a “case” or “controversy” within the jurisdiction of the federal courts. If not, then federal courts lack the power to adjudicate his claim for declaratory relief. See Genesis Healthcare Corp. v. Symczyk, 569 U.S. 66, 71 (2013) (noting that the authority of
The requirement of standing is an “essential and unchanging part of the case-or-controversy requirement of
“In determining whether a litigant has standing to challenge governmental action as a violation of the First Amendment, . . . the litigant [must] demonstrate a claim of specific present objective harm or a threat of specific future harm.” Meese v. Keene, 481 U.S. 465, 472 (1987) (internal quotation marks omitted). A plaintiff who seeks to bring a pre-enforcement challenge to a law asserts an
1. Stagg‘s “Personal Stake” in the Litigation
Stagg‘s complaint alleges that it intends to disseminate, through its published materials and public presentations, “published and generally accessible public information that is available from bookstores and libraries . . . [that] would have otherwise constituted technical data but is excluded from the technical data provisions because it is in the public domain.” App‘x at 115. This includes information, Stagg alleges, that was “not authorized by the Defendants into the public domain.” Id. at 116. Additionally, the complaint asserts Stagg‘s intention to “aggregate and modify public domain information to provide more interactive examples.” Id. The complaint does not allege an intention to disseminate anything that is not “published,” “generally accessible,” and “available from bookstores and libraries.” Stagg asserts a fear of prosecution for two reasons: (1) because DOS‘s 2015 Notice interprets the ITAR to require a license for republication of materials that are publicly available through one of the means enumerated in the public domain provision, if these materials were never authorized for
Notwithstanding these allegations, the district court concluded that Stagg “never truly faced a prior restraint.” App‘x at 65. We agree, and we therefore conclude that Stagg can no longer establish the requisite “personal stake” to sustain federal court jurisdiction, because its intended republication of these materials does not subject it to a credible threat of enforcement of the license requirement. See Susan B. Anthony List, 573 U.S. at 159.
First, under the ITAR licensing requirement, “technical data” that is subject to licensing does not include “information in the public domain.”
As for the first category of innocuous changes that do not alter the significance of the data, the above discussion of Stagg‘s intent to aggregate demonstrates why such changes would not create new technical data. The
On the other hand, as for “modifications” at the other extreme, which change the content — as opposed to the form — of technical data pertaining to defense articles from what was set forth in the public domain version, data that had been so modified would no longer be public domain materials. They clearly would be subject to the licensing requirement of ITAR.
Stagg‘s complaint does not specify how it intends to “modify public domain information” to create its “interactive examples.” App‘x at 116. Nor do Christopher Stagg‘s declarations provide any additional clarity. In his June 2018 declaration, for instance, Christopher Stagg states that Stagg wishes to “modify [public domain information] with application to defense articles to show different and new ways that technical data relating to defense articles
Stagg further contends that it remains subject to a prior restraint, notwithstanding the district court‘s construction of the ITAR, because it remains unclear which Internet sources qualify for the public domain exception. The issue of Stagg‘s publication of Internet materials was introduced into this litigation by the declarations of Christopher Stagg,
We conclude that Stagg has failed to allege an intention to engage in any activity that is subject to the ITAR‘s licensing requirement. The ITAR leave Stagg free to do all of the things it pleaded an intention to do, without being subject to the requirements of registration and licensing. Although
2. Stagg‘s Further Arguments for Article III Jurisdiction
Stagg further argues that, notwithstanding the district court‘s (and our) ultimate conclusion that the ITAR licensing requirement does not apply to the intended conduct it pleaded, it nonetheless may challenge the constitutionality of that licensing requirement. It advances three reasons: (1) standing must be determined, as established in Klein v. Qlik Techs., Inc., “as of the outset of litigation,” 906 F.3d 215, 221 (2d Cir. 2018); (2) the district court‘s ultimate finding of lack of standing impermissibly contravened this court‘s earlier conclusion that “Stagg has standing to challenge [the ITAR] as the government construes it,” Stagg, 673 F. App‘x at 95 n.1; and (3) a facial challenge persists regardless of “whether . . . constructions of the ITAR would
First, Stagg contends that the district court‘s ultimate finding of lack of standing to seek declaratory relief as to the constitutionality of the ITAR, after having first concluding that Stagg had standing, violated the principle established in Qlik that standing is determined “as of the outset of the litigation.” Appellant‘s Br. 22 (quoting Qlik, 906 F.3d at 221). Whatever merit Stagg‘s argument may have with respect to refinements of terminology for describing different forms of absence of adversity necessary to establish a “case” or “controversy” subject to federal court jurisdiction under
In Qlik, a shareholder brought a derivative suit in the name of a corporation alleging that the corporation‘s fiduciaries committed violations of the Securities Exchange Act, causing loss to the corporation. Qlik, 906 F.3d at 218. During the pendency of the litigation, the corporation‘s shares were “bought out in an all-cash merger, causing [the shareholder-plaintiff] to lose any financial interest in the litigation.” Id. The district court then dismissed
Whatever the merits of Stagg‘s observations on the Qlik precedent, they do not show that Stagg‘s suit satisfies
In ruling on the motion for a preliminary injunction, the district court concluded that Stagg had standing because the Government‘s assertions that Stagg‘s intended actions were subject to licensing gave rise to a credible fear of prosecution. That was the basis on which we affirmed the district court‘s conclusion that Stagg had standing. See Stagg, 673 F. App‘x at 94–95. Our subsequent conclusion that Stagg has no personal stake depends on an altogether different basis. The district court ruled (and we agree) that the Government could not lawfully enforce the license requirement against Stagg for its intended speech alleged in the complaint because the unambiguous terms of the licensing scheme do not cover such speech. We conclude that Stagg no longer faces a credible threat of prosecution by virtue of the preclusive effect of our ruling.
Third, Stagg argues that, under the Supreme Court‘s and our court‘s prior restraint case law, a facial challenge to the “deemed export” provision as a whole persists regardless of how we construe the ITAR. Stagg‘s cited precedents do not support its argument.
Stagg relies heavily on the Supreme Court‘s statement in Freedman v. State of Maryland that “it is well established that one has standing to challenge a statute on the ground that it delegates overly broad licensing discretion to an administrative office, whether or not his conduct could be proscribed by a properly drawn statute, and whether or not he applied for a license.” 380 U.S. at 56.
City of Lakewood v. Plain Dealer Publishing Co., on which Stagg also relies, similarly does not establish that Stagg has standing to raise a broad facial challenge to provisions that do not apply to it. There, the City of Lakewood, Ohio adopted an ordinance giving the mayor broad authority to grant or deny applications for permits to place news racks on public property, and to place terms and conditions on any such permit. City of Lakewood v. Plain Dealer Pub. Co., 486 U.S. 750, 753 (1988). The plaintiff newspaper elected not to seek a permit, instead raising a facial challenge to the ordinance. Id. at 754. The majority held that the newspaper could bring its facial challenge. The dissent disagreed, arguing that it should have been required to apply for a permit first. See id. at 775–76 (White, J., dissenting) (describing the “usual rule” that, in cases involving administrative discretion over granting permits, the Court need not assume that the discretion will be illegally exercised, and that the plaintiff should “apply and see what happens” (internal quotation marks
Thus, the key issue in City of Lakewood, as in Freedman, was whether a plaintiff could challenge a licensing scheme without applying for, and being denied, a license. There was no question whether the plaintiff‘s intended activities would subject it to the licensing requirement it sought to challenge.11 See id. at 755–56 (“[W]hen a licensing statute allegedly vests unbridled discretion in a government official over whether to permit or deny expressive activity, one who is subject to the law may challenge it facially without the necessity of first applying for, and being denied, a license.” (emphasis added)). City of Lakewood therefore does not stand for the proposition that a facial challenge lies as to licensing requirements not applicable to the plaintiff‘s intended activities. To read City of Lakewood otherwise would mean allowing any number of plaintiffs to raise a facial challenge to a licensing
Finally, Stagg cites Lusk v. Village of Cold Spring, 475 F.3d 480 (2d Cir. 2007), for the proposition that a prior restraint challenge does not consider “the application of the statute to a particular set of facts.” Id. at 493 n.15. Lusk does not support Stagg‘s argument that we must adjudicate its facial challenge to aspects the ITAR‘s licensing scheme even if we hold that that scheme unambiguously does not apply to its intended speech. In Lusk, the plaintiff challenged a local law, which prohibited making alterations to certain buildings without prior permission from a review board. 475 F.3d at 482. The plaintiff challenged the law after having received a “Violation Notice” from the defendant, charging him with violation of the law. Id. at 481. The court did not hold that Lusk was not subject to the law. Thus, Lusk says
* * *
In sum, we conclude that Stagg‘s constitutional challenges to the ITAR do not assert a case or controversy within the jurisdiction of the federal courts because the unambiguous provisions of the ITAR do not subject Stagg (to the extent of its intended activities as alleged in its complaint) to any licensing requirement or credible threat of enforcement.
We agree with the district court that the ITAR licensing scheme does not apply to Stagg‘s intended conduct alleged in the complaint, and so rule. We disagree with the district court, however, as to the consequences of that ruling. As a result of the district court‘s (and our) rulings on the unambiguous inapplicability of the ITAR license requirement to Stagg‘s intended actions, Stagg has no personal stake in its suit for a declaration that the ITAR licensing scheme is unconstitutional. Stagg‘s suit therefore fails the test of
CONCLUSION
For the foregoing reasons, the plaintiff is not at risk of prosecution under the ITAR licensing scheme. The district court‘s judgment is VACATED, and Stagg‘s suit to declare that scheme unconstitutional is DISMISSED for lack of