YOUNG AMERICA CORPORATION, a Minnesota Corporation, Appellant,
v.
AFFILIATED COMPUTER SERVICES (ACS), INC., a Nevada Corporation, in its capacity as agent for the States of Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Maine, Maryland, Massachusetts, Michigan, Mississippi, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina, Oklahoma, Oregon, Rhode Island, South Carolina, South Dakota, Tennessee, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, and Wyoming (the "States"); David Epstein, in his capacity as agent for the States, Appellees.
No. 04-3674.
United States Court of Appeals, Eighth Circuit.
Submitted: June 23, 2005.
Filed: September 29, 2005.
COPYRIGHT MATERIAL OMITTED Patrick J. McLaughlin, argued, Minneapolis, MN (Todd C. Pеarson, on the brief), for appellant.
Aaron D. Van Oort, argued, Minneapolis, MN (Jerry W. Snider, on the brief), for appellee.
Before RILEY, BRIGHT, and JOHN R. GIBSON, Circuit Judges.
RILEY, Circuit Judge.
Young America Corporation (Young America) brought this action against Affiliated Computer Services, Inc. (ACS) and David Epstein (Epstein), an individual affiliated with ACS, seeking declaratory and injunctive relief to prevent ACS from auditing Young America's business records. The district court1 dismissed the action for lack of subject matter jurisdiction. Young America appeals, and we affirm.
I. BACKGROUND
Young America is engaged in the rebate "fulfillment" business. Young America processes rebates offered by sellers of consumer goods and mails rebate checks to qualifying consumers. When consumers fail to cash the rebate checks, an accumulation of unclaimed property results.
Forty-one states have authorized ACS to audit Young America's records. The purpose of the audit is tо determine whether Young America is complying with the states' unclaimed property laws and whether Young America is holding unclaimed property over which the states claim rights.2
Each of the forty-one states sent Young Ameriсa a letter advising each state had authorized ACS to perform an audit. Six of these states also advised Young America that state law provides for assessments, including interest, penalties, fines, and examination costs, for failing to perform certain duties under the statute, or for failing to report or deliver property within the prescribed time.
Young America refused to submit to an audit and filed this action against ACS and Epstein, seeking declaratory and injunctive relief. In its second amended complaint (complaint), Young America alleges the proposed audit violates the Commerce Clause and the Due Process Clause of the Fourteenth Amendment (Count I); the audit is an unreasonable search and seizure, in violation of the Fourth and Fourteenth Amendments (Count II); and Young America is not a "holder" of unclaimed property, and therefore is not subject to an audit (Count III).
ACS аnd Epstein moved to dismiss the complaint, arguing the district court lacked (1) subject matter jurisdiction because Young America failed to allege standing sufficiently, and (2) personal jurisdiction over Epstein.3 The district court referred the motion to dismiss to the magistrate judge,4 who recommended granting the motion.
Overruling Young America's objections to the magistrate judge's report and recommendation, the district court adopted the magistrate judge's recommendation and granted ACS's motion to dismiss. Because the district court dismissed Young America's complaint for lack of subject matter jurisdiction, it did not address the issue of personal jurisdiction over Epstein. The district court also denied Young America's request fоr leave to file a third amended complaint, in which Young America would have included allegations the audit demands caused injury to Young America by casting a "pall" on its business. Young America appeals the dismissal of its case, contending it sufficiently alleged standing.
II. DISCUSSION
"[I]f a plaintiff lacks standing, the district court has no subject matter jurisdiction." Faibisch v. Univ. of Minn.,
A. Injury
The district court concluded Young America failed to allege an imminent injury sufficiently, because (1) the state statutes do not authorize penalties if Young America refuses to submit to an audit, (2) ACS has not threatened to penalize Young America for refusing to submit to an audit, and (3) ACS does not have the authority to enforce the state statutes. The distriсt court also noted Young America failed to make minimum factual allegations of injury as to how the audit demand constitutes an actual or imminent injury.
For purposes of standing, a plaintiff's injury must consist of "an invasion of a legаlly protected interest which is (a) concrete and particularized, and (b) actual or imminent, not conjectural or hypothetical." Lujan,
In assessing whether the plaintiff has alleged a sufficiently particularized and concrete injury, the court must accept all factual allegations in the complaint as true and draw all inferences in the plaintiff's favor. Lujan,
Young America contends its alleged injury is not hypothetical because the audit demand letters attached to the complaint threaten to enforce ACS's examination demand. The letters simply authorize an audit. They do not threaten enforcement action if Young America refuses to submit to an audit. Even if the lettеrs threatened enforcement action, Young America's complaint contains no allegation ACS itself has attempted or intends to attempt to seek enforcement of its audit demand. ACS has neither issued any subpоenas to compel the production of records nor sought judicial enforcement of its audit demand.5
Young America also has failed to demonstrate ACS has the authority to bring an enforcement suit on behalf of the states. Young America contends "[i]t is only fair for Young America to assume. . . enforcement powers were . . . delegated [to ACS]." The letters authorizing ACS to act on behalf of the states clearly limit ACS's authority merely to conducting an audit. The letters do not authorize ACS to litigate on the states' behalf. Without any indication ACS has the authority to force Young America to submit to an audit, Young America's alleged threat of enforcement is insufficient tо establish an injury in fact.
On appeal, Young America alleges the audit demands have "cast a pall on Young America's relationships with its customers." Young America concedes its complaint did not set forth this alleged injury. Apparently recognizing this deficiency in the complaint, Young America sought to file a third amended complaint, which would have included the allegation the audit demands themselves caused injury to Young America by casting a "pall" on its business. Young America's second amended complaint failed to state this claim, or even make general factual allegations of imminent injury. Therefore, the district court correctly dismissed this action for lack of subject matter jurisdiction.
In sum, we conclude Young America failed sufficiently to allege the first element of standing, i.e., an injury in fact. Therefore, this court may affirm the district court on that basis, and we need not reаch the other two standing requirements. See Delorme v. United States,
B. Causation
The district court correctly held Young America failed to establish causation. As explained above, the audit demand letters do not threaten suit if Young America refuses tо submit to an audit, and even if the states can penalize Young America for failing to submit to an audit, Young America failed to allege ACS has the authority to litigate on the states' behalf.
C. Redressability
Finally, the district court held Young America failed to establish redressability, because it is "at best speculative" whether a judgment against ACS would control the states' ability to enforce their unclaimed property statutes. Without citing any authority, Young America contends the states would be bound by the determination of the issues litigated in this action, because ACS is their authorized agent.
To establish redressability, "it must be more than merely speculative that the relief requested would have any effect to redress the harm to the plaintiff." Hall v. LHACO, Inc.,
III. CONCLUSION
We affirm the district court's dismissal of this action for lack of subject matter jurisdiction.
Notes:
Notes
The Honorable David S. Doty, United States District Judge for the District of Minnesota
The majority of states have adopted variatiоns of the Uniform Disposition of Unclaimed Property Act, which provides unclaimed property is subject to escheat by the stateSee Uniform Disposition of Unclaimed Property Act § 4 (1995).
Alternatively, ACS and Epstein argued Young America failed to state a claim. The district court did not address whether Young America failed to state a claim, concluding such argument was moot. Given our affirmance of the district court's dismissal for lack of subject matter jurisdiction, we express no opinion regarding whether Young America failed to state a claim
The Honorable Susan Richard Nelson, United States Magistrate Judge for the District of Minnesota
Nothing in our holding forecloses Young America's ability to challenge the audits, if and when the states initiate action to enforce their audit demand