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- Case 0:16-cv-61511-WJZ Document 62 Entered on FLSD Docket 08/25/2017 Page 1 of 28
- UNITED STATES DISTRICT COURT
- SOUTHERN DISTRICT OF FLORIDA
- CASE NO. 16-61511-CIV-ZLOCH
- CAROL WILDING, et al.,
- Plaintiffs,
- vs. FINAL ORDER OF DISMISSAL
- DNC SERVICES CORP., d/b/a/
- Democratic National Committee
- and DEBORAH WASSERMAN SCHULTZ,
- Defendants.
- /
- THIS MATTER is before the Court upon Defendants’ Motion To
- Dismiss Plaintiffs’ First Amended Complaint (DE 44). The Court has
- carefully reviewed said Motion, the entire court file, and, with
- the benefit of oral argument, is otherwise fully advised in the
- premises.
- In the 2016 presidential election’s Democratic primaries,
- Bernie Sanders and others vied against Hillary Clinton for the
- Party’s nomination. This case, in short, involves allegations that
- the Democratic National Committee1 was in cahoots with the Clinton
- campaign and sought to tip the scales in her favor in the
- Democratic primaries, all at the direction of, and under the
- leadership and watchful eye of, its then-chair, Deborah Wasserman
- Schultz, despite the DNC’s and Wasserman Schultz’s promise to
- 1
- The Court will refer to Defendant DNC Services Corp. as
- the “DNC.”
- Case 0:16-cv-61511-WJZ Document 62 Entered on FLSD Docket 08/25/2017 Page 2 of 28
- remain impartial. Plaintiffs discovered what they believe is
- evidence of that bias after the DNC’s computer servers were
- penetrated by hackers. Shortly thereafter, they brought this
- putative class action against the DNC and its former chair.
- In evaluating Plaintiffs’ claims at this stage, the Court
- assumes their allegations are true——that the DNC and Wasserman
- Schultz held a palpable bias in favor Clinton and sought to propel
- her ahead of her Democratic opponents. Plaintiffs assert several
- fraud-type claims. But they do not allege they ever heard or acted
- upon the DNC’s claims of neutrality. Plaintiffs also assert a tort
- claim on behalf of all registered Democrats, even though the harm
- they allege impacted all Democratic-primary-eligible voters——and
- under their theory, the entire body politic——the same way. And
- finally, Plaintiffs claim that donors to the DNC are at an
- increased risk of identity theft as a result of the computer hack.
- But they do not allege that the DNC regularly keeps the type of
- information necessary to facilitate identity theft or that the
- hackers targeted, much less obtained, that information. The Court
- must now decide whether Plaintiffs have suffered a concrete injury
- particularized to them, or one certainly impending, that is
- traceable to the DNC and its former chair’s conduct——the keys to
- entering federal court. The Court holds that they have not, which
- 2
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- means the truth of their claims cannot be tested in this Court.
- I.
- According to the First Amended Complaint (DE 8), the DNC is
- the formal governing body for the Democratic Party in the United
- States. Its role is to coordinate strategy in support of
- Democratic Party candidates in local, state, and national
- elections. With respect to the presidential election, the DNC
- organizes the Democratic National Convention in order to nominate
- and confirm a Democratic candidate for the presidency. At the time
- Plaintiffs filed the First Amended Complaint (DE 8), Deborah
- Wasserman Schultz served as the DNC’s Chairperson and presently
- serves as a member of the United States House of Representatives.
- Through its Charter and Bylaws, the DNC has obliged itself to
- a policy of neutrality among Democratic presidential candidates.
- To that end, as it pertains to the “Presidential nominating
- process, the Chairperson shall exercise impartiality and
- evenhandedness as between Presidential candidates and campaigns.
- The Chairperson shall be responsible for ensuring that the national
- officers and staff of the Democratic National Committee maintain
- impartiality and evenhandedness during the Democratic Party
- Presidential nominating process.” DE 8, ¶ 159 (emphasis supplied
- in Complaint). Wasserman Schultz and other DNC officials touted
- 3
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- this policy in public statements during presidential primaries.
- Plaintiffs attribute the following quotes to Wasserman Schultz or
- other DNC staff:
- • “I count Secretary Clinton and Vice President
- Biden as dear friends, but no matter who
- comprises the field of candidates it’s my job to
- run a neutral primary process and that’s what I
- am committed to doing.”
- • “the DNC runs an impartial primary process.”
- • “the DNC runs an impartial primary process,
- period.”
- • “the Democratic National Committee remains
- neutral in this primary, based on our rules.”
- • “even though Senator Sanders has endorsed my
- opponent, I remain, as I have been from the
- beginning, neutral in the presidential Democratic
- primary.”
- DE 8, ¶ 160.
- Plaintiffs allege that despite the DNC’s Charter and Bylaws,
- and these public statements of neutrality and impartiality, the DNC
- devoted its resources to supporting Hillary Clinton over other
- Democratic Party candidates. The DNC’s bias, according to
- Plaintiffs, came to light after computer hackers penetrated the
- DNC’s computer network. An individual identified as “Guccifer 2.0"
- took credit for the hack and posted several documents purportedly
- taken from the DNC’s servers on a publically accessible website.
- 4
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- Those documents include: excel spreadsheets containing information
- of DNC donors; spreadsheets containing information of donors to
- Hillary Clinton’s campaign; research regarding Hillary Clinton’s
- campaign, including vulnerabilities, attacks, rebuttals, policy
- positions, and opposition research on other Democratic candidates;
- and various other documents regarding Hillary Clinton’s
- presidential campaign. DE 8, ¶¶ 165 & 169.
- Also included in the documents released by “Guccifer 2.0" was
- a memorandum dated May 26, 2015, addressed to the DNC. That
- memorandum provides “a suggested strategy for positioning and
- public messaging around the 2016 Republican presidential field,”
- including use of “specific hits to muddy the waters around ethics,
- transparency and campaign finance attacks on HRC.” DE 8-1. It
- states, “Our goals in the coming months will be to frame the
- Republican field and the eventual nominee early and to provide a
- contrast between the GOP field and HRC.” Id. The memorandum
- observes that “the right wing attack machine has been building its
- opposition research on Hillary Clinton for decades. HRC’s critics
- have been telegraphing they are ready to attack and do so with
- reckless abandon.” Id. As a tactical response, the memorandum
- suggests “[w]orking with the DNC and allied groups” to “help pitch
- stories with no fingerprints and utilize reporters to drive a
- 5
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- message” and “insert our messaging into [Republican] press.” Id.
- The memorandum closes with an invitation for further discussion,
- “to answer the question of who do we want to run against and how
- best to leverage other candidates to maneuver them into the right
- place.” Id. Plaintiffs do not allege who authored this
- memorandum, but as of May 26, 2016, the Democratic presidential
- field already included both Clinton and Sanders.
- As a result of the information “Guccifer 2.0" released,
- Plaintiffs conclude that “the DNC was anything but ‘impartial,’
- ‘evenhanded,’ or ‘neutral’ with respect to the Democratic
- nominating process.” DE 8, ¶ 171. And all while Wasserman Schultz
- was the DNC’s chair. Plaintiffs bring six causes of action on
- behalf of three proposed classes. The first class comprises “[a]ll
- people or entities who have contributed to the DNC from January 1,
- 2015 through the date of this action (‘DNC Donor Class’).” DE 8,
- ¶ 175. The second, “[a]ll people or entities who have contributed
- to the Bernie Sanders campaign from January 1, 2015 through the
- date of this action (‘Sanders Donor Class’).” Id. And the third,
- “[a]ll registered members of the Democratic Party (‘Democratic
- Party Class’).” Id. The DNC Donor Class and the Sanders Donor
- Class each assert causes of action for fraud, negligent
- misrepresentation, and violation of § 28-3904 of the District of
- 6
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- Columbia Code (Counts I, II, and III, respectively). The
- Democratic Party Class asserts a cause of action for breach of
- fiduciary duty (Count V). And the DNC Donor Class also asserts
- causes of action for unjust enrichment and negligence (Counts IV
- and VI, respectively).
- The apparent theories for each of these causes of action merit
- further discussion. The DNC Donor Class and Sanders Donor Class
- Plaintiffs’ fraud and negligent misrepresentation causes of action
- are premised on the theory that Plaintiffs, as well as putative
- class members, donated either to the DNC or Senator Sanders’s
- campaign in reliance on the DNC’s promise of neutrality in the
- presidential primaries. According to Plaintiffs, the DNC knew or
- should have known that those promises of neutrality were false and
- intended to induce members of the DNC Donor Class and Sanders Donor
- Class’s reliance. The DNC Donor Class Plaintiffs’ unjust
- enrichment cause of action is largely coextensive with these fraud
- claims. And the DNC Donor Class and Sanders Donor Class
- Plaintiffs’ cause of action for violation of § 28-3904 of the
- District of Columbia Code presents a similar theory: that the DNC
- falsely claimed it would remain neutral in the Democratic
- presidential primaries. The Democratic Party Class Plaintiffs’
- cause of action for breach of fiduciary duty suggests that the DNC
- 7
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- owes a fiduciary duty to all registered Democrats to comply with
- the terms of the DNC’s Charter and Bylaws. By failing to maintain
- impartiality and evenhandedness in the Democratic presidential
- primaries, Plaintiffs believe that the DNC breached this fiduciary
- duty. Lastly, the DNC Donor Class Plaintiffs’ negligence cause of
- action arises from the DNC’s failure to secure from computer
- hackers Plaintiffs’ personal information.
- The DNC and Wasserman Schultz have moved to dismiss the First
- Amended Complaint (DE 8) on various grounds. The DNC and Wasserman
- Schultz argue that Plaintiffs lack standing to assert their claims,
- that they have insufficiently pled those claims, and that the class
- allegations must be stricken as facially deficient.
- II.
- This Order does not concern who should have been the
- Democratic Party’s candidate for the 2016 presidential election; it
- does not concern whether the DNC or Wasserman Schultz generally
- acted unfairly towards Senator Sanders or his supporters; indeed,
- it does not even concern whether the DNC was in fact biased in
- favor of Hillary Clinton in the Democratic primaries. At this
- stage, the Court is required to construe the First Amended
- Complaint (DE 8) in the light most favorable to Plaintiffs and
- accept its well-pled allegations as true. See Stalley ex rel. U.S.
- 8
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- v. Orlando Reg’l Healthcare Sys., Inc., 524 F.3d 1229, 1232-33
- (11th Cir. 2008). The Court thus assumes that the DNC and
- Wasserman Schultz preferred Hillary Clinton as the Democratic
- candidate for president over Bernie Sanders or any other Democratic
- candidate. It assumes that they stockpiled information useful to
- the Clinton campaign. It assumes that they devoted their resources
- to assist Clinton in securing the party’s nomination and opposing
- other Democratic candidates. And it assumes that they engaged in
- these surreptitious acts while publically proclaiming they were
- completely neutral, fair, and impartial.
- This Order therefore concerns only technical matters of
- pleading and subject-matter jurisdiction. To the extent Plaintiffs
- wish to air their general grievances with the DNC or its candidate
- selection process, their redress is through the ballot box, the
- DNC’s internal workings, or their right of free speech——not through
- the judiciary. To the extent Plaintiffs have asserted specific
- causes of action grounded in specific factual allegations, it is
- this Court’s emphatic duty to measure Plaintiffs’ pleadings against
- existing legal standards. Having done so, and for the reasons that
- follow, the Court finds that the named Plaintiffs have not
- presented a case that is cognizable in federal court.
- IV.
- 9
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- Federal courts are courts of limited jurisdiction, possessing
- “only that power authorized by Constitution and statute.” Kokkonen
- v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). In
- cases that do not present a federal claim for relief, like this
- one, that power derives from 28 U.S.C. § 1332. Section 1332
- authorizes this Court to exercise its jurisdiction in two
- circumstances pertinent here. First, this Court has “original
- jurisdiction of all civil actions where the matter in controversy
- exceeds the sum or value of $75,000, exclusive of interests and
- costs, and is between . . . citizens of different states.” 28
- U.S.C. § 1332(a). Section 1332(a) permits the exercise of
- jurisdiction only where there is complete diversity——that is, no
- plaintiff maintains citizenship in the same state as any defendant.
- See Strawbridge v. Curtiss, 7 U.S. (3 Cranch) 267 (1806); Triggs v.
- John Crump Toyota, Inc., 154 F.3d 1284, 1287 (11th Cir. 1998).
- Second, except in circumstances not present here, this Court has
- “original jurisdiction of any civil action in which the matter in
- controversy exceeds the sum or value of $5,000,000, exclusive of
- interest and costs, and is a class action in which . . . any member
- of a class of plaintiffs is a citizen of a State different from any
- Defendant.” 28 U.S.C. § 1332(d)(2) (hereinafter “CAFA
- jurisdiction”). As the text makes plain, § 1332(d) requires only
- 10
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- minimal diversity——at least one plaintiff must be diverse from one
- defendant. See Evans v. Walter Indus., Inc., 449 F.3d 1159, 1163
- (11th Cir. 2006).
- It is readily apparent that this Court lacks jurisdiction
- under § 1332(a), for the Parties are not completely diverse.
- According to the First Amended Complaint (DE 8), two Plaintiffs
- “reside” in the District of Columbia, where the DNC maintains its
- citizenship. Seven “reside” in Florida, where Wasserman Schultz
- ostensibly maintains citizenship.2 But “[c]itizenship, not
- residence, is the key fact that must be alleged in the complaint to
- establish diversity for a natural person.” Taylor v. Appleton, 30
- F.3d 1365, 1367 (11th Cir. 1994). Plaintiffs’ failure to properly
- allege their own citizenship is, in itself, sufficient to preclude
- the exercise of the Court’s jurisdiction under 1332(a). Indeed,
- this pleading failure makes it impossible for the Court to conclude
- that the Parties are even minimally diverse for purposes of its
- CAFA jurisdiction. See Travaglio v. Am. Exp. Co., 735 F.3d 1266,
- 1268 (11th Cir. 2013) (the plaintiff “must allege facts that, if
- true, show federal subject matter jurisdiction over her case
- exists”). And even if the Court assumed that residence were the
- 2
- As with the Plaintiffs, the First Amended Complaint (DE 8)
- does not specifically allege Wasserman Schultz’s citizenship.
- Rather, it alleges that she “resides in and is a Congresswoman
- representing portions of this district.” DE 8, ¶ 1.
- 11
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- equivalent of citizenship——an assumption the Court is not permitted
- to make——Plaintiffs would still not be completely diverse from
- Defendants.
- Putting aside these pleading deficiencies, it is also apparent
- that Plaintiffs lack standing to assert each of the causes of
- action raised in this putative class action. In order to maintain
- a class action lawsuit, the class representatives——as distinct from
- the putative class members——must establish their standing to sue,
- as measured by the standard of Lujan v. Defenders of Wildlife, 504
- U.S. 555 (1992). See Allen v. Wright, 468 U.S. 737 (1984)
- (applying standing inquiry to a class action); Carter v. West Pub.
- Co., 225 F.3d 1258, 1263 (11th Cir. 2003). The standing requirement
- stems from Article III of the Constitution, which limits federal
- courts’ jurisdiction to certain “Cases” and “Controversies.” U.S.
- Const. Art. III; see Clapper v. Amnesty Int’l USA, 133 S.Ct. 1138,
- 1146 (2013). The Supreme Court has made clear that “[n]o principle
- is more fundamental to the judiciary’s proper role in our system of
- government than the constitutional limitation of federal-court
- jurisdiction to actual cases or controversies.” DaimlerChrysler
- Corp. v. Cuno, 547 U.S. 332, 341 (2006) (internal marks omitted).
- To effectuate this limitation, Lujan laid out three basic elements
- of Article III standing: “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
- 12
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- imminent, not ‘conjectural’ or ‘hypothetical.’’” Lujan, 504 U.S. at
- 560 (citations omitted). “Second, there must be a causal
- connection between the injury and the conduct complained of . . .
- .” Id. “Third, it must be ‘likely,’ as opposed to merely
- ‘speculative,’ that the injury will be ‘redressed by a favorable
- decision.’” Id. The class representatives must meet each of these
- elements to pursue not only their own claims, but the class
- members’ claims as well. See Prado-Steiman ex re. Prado v. Bush,
- 221 F.3d 1266, 1279 (11th Cir. 2000).
- a.
- As to the fraud-type claims Counts I, II, III and IV,
- Plaintiffs fail to allege any causal connection between their
- injuries and Defendants’ statements. The Plaintiffs asserting each
- of these causes of action specifically allege that they donated to
- the DNC or to Bernie Sanders’s campaign. See DE 8, ¶¶ 2-109. But
- not one of them alleges that they ever read the DNC’s charter or
- heard the statements they now claim are false before making their
- donations. And not one of them alleges that they took action in
- reliance on the DNC’s charter or the statements identified in the
- First Amended Complaint (DE 8). Absent such allegations, these
- Plaintiffs lack standing. See Lujan, 504 U.S. at 560. To be sure,
- two paragraphs of the First Amended Complaint (DE 8) assert
- generally that the “DNC Donor Class Plaintiffs, the Sanders Donor
- Class Plaintiffs, and members of the DNC Donor Class and the
- 13
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- Sanders Donor Class, relied on Defendants’ false statements and
- omissions to their injury.” DE 8, ¶¶ 188 & 195.3 But this
- boilerplate recitation, absent factual content to support it, does
- not permit the Court to “determine that at least one named class
- representative has Article III standing to raise each class claim.”
- Prado-Steiman, 221 F.3d at 1279; cf. Ashcroft v. Iqbal, 556 U.S.
- 662, 678 (2009) (“A pleading that offers ‘labels and conclusions’
- or ‘a formulaic recitation of the elements of a cause of action
- will not do.’”).
- Nor do these Plaintiffs’ donations to the DNC or to Bernie
- Sanders’s campaign create standing. The act of donating to an
- organization does not, of itself, create a legally protected
- interest in the organization’s operations. Pearson v. Garrett-
- Evangelical Theological Seminary, Inc., 790 F. Supp. 2d 759, 763
- (N.D. Ill. 2011) (“donating money to a charitable fund does not
- confer standing to challenge the administration of that fund”);
- Orient v. Linus Pauling Inst. of Sci. and Med., 936 F. Supp. 704,
- 707 (D. Ariz. 1996) (“Funding research does not automatically
- confer a legally protected interest in that organization’s assets
- on a donor”); cf. Leonard v. Campbell, 189 So. 839, 840 (Fla. 1939)
- (observing that delivery of a gift “divest[s] the donor of all
- present control and dominion over [the gift], absolutely and
- irrevocably”). Just as donating to Sanders’s campaign would not
- 3
- Paragraph 195 alleges “justifiable reliance” but is
- otherwise the same as paragraph 188.
- 14
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- entitle the donor to dictate the campaign’s platform, donating to
- the DNC or to Bernie Sanders’s campaign does not entitle Plaintiffs
- to challenge the manner in which the DNC has conducted its affairs.
- A donor may suffer a cognizable injury from the violation of an
- independent duty, such as if the donation was procured by fraud.
- But, for the reasons just explained, Plaintiffs do not allege the
- causal connection between their donations and the DNC’s statements
- necessary to give them standing to assert that type of claim.
- b.
- The Plaintiffs who assert the breach of fiduciary duty cause
- of action in Count V of the First Amended Complaint (DE 8) are
- simply alleged to be “registered Democrat[s],” residing in nineteen
- states. Ostensibly this means that they are registered voters who
- have publically declared allegiance with their state’s Democratic
- Party, which in turn follows guidelines established by the DNC.
- See DE 8, ¶¶ 156-57. They contend that the DNC owes (and Wasserman
- Schultz owed) all registered Democrats a fiduciary duty to comply
- with the DNC’s charter, which the DNC and Wasserman Schultz
- breached by favoring Hillary Clinton during the Democratic
- primaries. Other than labeling their claim as a common-law tort,
- these Plaintiffs have done little to make out a concrete injury,
- particularized to them. See DE 48, 7-8. For their part, the DNC
- and Wasserman Schultz have characterized the DNC charter’s promise
- of “impartiality and evenhandedness” as a mere political
- 15
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- promise——political rhetoric that is not enforceable in federal
- courts. The Court does not accept this trivialization of the DNC’s
- governing principles. While it may be true in the abstract that
- the DNC has the right to have its delegates “go into back rooms
- like they used to and smoke cigars and pick the candidate that
- way,” DE 54, at 36:22-24, the DNC, through its charter, has
- committed itself to a higher principle. Nevertheless, it is
- apparent that these Plaintiffs cannot satisfy Lujan’s test, and
- therefore lack standing to assert Count V of the First Amended
- Complaint (DE 8).
- The Supreme Court has long made clear that “when the asserted
- harm is a ‘generalized grievance’ shared in substantially equal
- measure by all or a large class of citizens, that harm alone
- normally does not warrant exercise of jurisdiction.” Warth v.
- Seldin, 422 U.S. 490, 499 (1975) (quoting Schlesinger v. Reservists
- to Stop the War, 418 U.S. 208 1974)). To that end, courts have
- routinely concluded “that a voter fails to present an injury-in-
- fact when the alleged harm is abstract and widely shared or is only
- derivative of a harm experienced by a candidate.” Crist v. Comm’n
- on Presidential Debates, 262 F.3d 193, 195 (2d Cir. 2001); see also
- Gottlieb v. Fed. Election Comm’n, (concluding that voters’
- “supposed injury to their ‘ability to influence the political
- process’” was “too vague to constitute an injury-in-fact”). For
- example, in Crist, a voter sued the sponsor of presidential
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- debates, the Commission on Presidential Debates (“CPD”), contending
- that the CPD’s policy of limiting participation in its debates to
- candidates with demonstrated popularity violated the voter’s First
- Amendment Rights. Crist, 262 F.3d at 194. The Second Circuit held
- that the voter’s claimed injury was too abstract and generalized to
- invoke the court’s jurisdiction. Id. at 195. Similarly, in Becker
- v. Fed. Election Comm’n, several supporters of Ralph Nader sued the
- Federal Election Commission (“FEC”), claiming that FEC regulations
- permitting corporate sponsorship of presidential debates corrupted
- the political process. 230 F.3d 381, 383-84 (1st Cir. 2000). Just
- as in Crist, the Becker Court held that the Nader supporters’
- alleged harm was not sufficiently concrete or personalized to
- establish standing. Id. at 389-90.
- The Plaintiffs asserting Count V of the First Amended
- Complaint (DE 8) suffer an analogous standing deficiency. Their
- association with the DNC is voluntary and their relationship to it
- indirect. The harm they suffered from the DNC’s alleged bias is,
- as their claim makes explicit, undifferentiated from all other
- registered Democrats. But it also sweeps more broadly. In states
- with open primaries, where voters unaffiliated with a political
- party may vote in the Democratic presidential primary, the harm as
- between unaffiliated voters and those affiliated with their state’s
- Democratic party is undifferentiated. And under Plaintiffs’
- theory, “the Democratic Party is a custodian of a fair and
- impartial election process.” DE 54, at 63:15-17. If the DNC
- 17
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- failed to take proper care of the election process, as Plaintiffs’
- theory goes, then their injury is also undifferentiated from the
- voting public at large. Labeling this type of injury as a common-
- law tort does nothing to alter the generalized nature of
- Plaintiffs’ grievance. For, if the tort harm is failure to act as
- a proper “custodian of this country’s democracy,” DE 54, at 18:8-9,
- then the measure of Plaintiffs’ damages must be the extent to which
- the DNC’s actions corrupted the election process. But just like a
- voter’s interest in diverse political discourse (Crist), or in
- untainted presidential debates (Becker), “the harm done to the
- general public by corruption of the political process is not a
- sufficiently concrete, personalized injury to establish standing.”
- Becker, 230 F.3d at 389.
- The Court also entertains serious doubts about whether it
- could redress the harm asserted in Count V. In addition to
- damages, Plaintiffs seek declaratory and injunctive relief that
- would bind the DNC to the present iteration of its charter. But “a
- political party’s determination of the structure which best allows
- it to pursue its political goals is protected by the Constitution.”
- Eu v. S.F. Cnty. Democratic Cent. Comm., 489 U.S. 214, 229 (1989)
- (internal marks omitted) (quoting Tashjian v. Republican Party of
- Conn., 479 U.S. 208, 224 (1986)). So, the choice——and attendant
- consequences——between “impartiality and evenhandedness” and Tammany
- Hall politics lies in the province of the DNC, not the judiciary.
- Cf. O’Brien v. Brown, 409 U.S. 1, (1972) (“It has been understood
- 18
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- since our national political parties first came into being as
- voluntary associations of individuals that the convention itself is
- the proper forum for determining intra-party disputes as to which
- delegates shall be seated.”). Grave questions regarding the DNC’s
- right of association would undoubtedly arise if this Court were to
- enjoin the DNC to a particular manner of governance. And those
- same concerns would arise with respect to any award of damages,
- which would impose liability for the DNC’s alleged decision to
- associate with a particular standard-bearer in a manner not
- otherwise prohibited by law.
- c.
- Finally, with respect to their negligence claim in Count VI of
- the First Amended Complaint (DE 8), the six named DNC Donor Class
- Plaintiffs claim they suffered an injury-in-fact from the data
- breach of the DNC’s servers. Two of them, Cridde and Berners-Lee,
- donated to the DNC “by check.” DE 8, ¶¶ 108 & 109. Two others,
- Lynch and Young, allege they contributed to the DNC “online,” but
- do not specify where. DE 8, ¶¶ 105 & 106. Davis donated money to
- the DNC in “various ways, including online at www.democrats.org.”
- DE 8, at ¶ 107. And Cork gave to the DNC but does not specify
- where or how. Their cause of action is premised on a security
- breach of the DNC’s computer servers, which Plaintiffs allege was
- perpetrated by two Russian hacking groups having “a long history of
- successfully targeting sensitive government and industry computer
- networks in both the United States and other countries, often using
- 19
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- ‘sophisticated phishing attacks.’” DE 8, ¶ 164. A computer hacker
- known as “Guccifer 2.0" claimed credit for the security breach and
- posted several documents from the DNC’s servers online. Those
- documents include “Excel spreadsheets containing the names and
- personal information of donors to the Democratic Party” and other
- “spreadsheets of donors to the DNC . . . containing personal
- information such as names, email addresses, and phone numbers.” DE
- 8, ¶¶ 164, 165 & 170. Although these Plaintiffs do not
- specifically so allege, their theory is that this security breach
- of the DNC’s servers places them at a heightened risk of identity
- theft. According to these Plaintiffs, “data breaches engender
- injury sufficient to confer Article III standing based solely on
- increased risk of identity theft in the future.” DE 48, at 8.
- Although the Eleventh Circuit has held that a party who has
- actually suffered identity theft as a result of a data breach has
- standing, it has expressly left open the question whether the mere
- threat of future identity theft creates Article III standing.
- See Resnick v. AvMed, Inc., 693 F.3d 1317, 1323 n.1 (11th Cir.
- 2012). The Supreme Court requires that a “threatened injury must
- be certainly impeding to constitute an injury in fact, and that
- allegations of possible future injury are not sufficient.”
- Clapper, 133 S. Ct. at 1147 (quoting Whitmore v. Arkansas, 495 U.S.
- 149, 158 (1990)) (internal quotation marks omitted). Theories of
- standing that “rel[y] on a highly attenuated chain of possibilities
- do[] not satisfy the requirement that threatened injury must be
- 20
- Case 0:16-cv-61511-WJZ Document 62 Entered on FLSD Docket 08/25/2017 Page 21 of 28
- certainly impending.” Id. To some measure, three circuits have
- held that a risk of future identity theft can constitute an injury
- in fact. Galaria v. Nationwide Mut. Ins. Co., 663 F. App’x 384,
- 387-89 (6th Cir. 2016); Krottner v. Starbucks Corp., 628 F.3d 1139,
- 1142-43 (9th Cir. 2010); Pisciotta v. Old Nat’l Bancorp, 499 F.3d
- 629, 632-34 (7th Cir. 2007). Three others have held that it does
- not. Beck v McDonald, 848 F.3d 262, 274-76 (4th Cir. 2017); Katz
- v. Pershing, 672 F.3d 64, 80 (1st Cir. 2012); Reilly v. Ceridian
- Corp., 664 F.3d 38, 40 (3d Cir. 2011). The cases on both sides of
- this apparent circuit split are largely reconcilable, and each
- proves instructive here.
- In Krottner, current and former Starbucks employees brought
- suit after a laptop containing the names, addresses, and Social
- Security numbers of 97,000 Starbucks employees was stolen from
- Starbucks. 628 F.3d at 1140. Following the theft, one of the
- employees alleged that someone tried to open a bank account in his
- name, but his bank closed the account before he suffered any loss.
- Id. at 1142. The Ninth Circuit held that the employees faced “a
- credible threat of harm” from the theft of the laptop containing
- their personal information, constituting an injury-in-fact for
- purposes of Article III. Id. at 1343.
- In Pisciotta, the defendant operated an online marketing
- service though which individuals could complete applications for
- banking services. 499 F.3d at 631. Upon completion of the
- applications, the defendant was privy to the individuals’ name,
- 21
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- address, Social Security number, driver’s license number, date of
- birth, mother’s maiden name, and credit card and other financial
- account numbers. Id. The plaintiffs had provided this type of
- personal information to the defendant and brought suit after the
- defendant’s online hosting facility suffered a “sophisticated,
- intentional and malicious” security breach. Id. at 631-32. The
- plaintiffs did not allege “any completed direct financial loss to
- their accounts” or “that they or any other member of the putative
- class already had been the victim of identity theft as a result of
- the breach.” Id. (emphasis in original). But the Seventh Circuit
- nevertheless concluded that the plaintiffs had standing, reasoning
- that “the injury-in-fact requirement can be satisfied by a threat
- of future harm or by an act which harms the plaintiff only by
- increasing the risk of future harm that the plaintiff would have
- otherwise faced, absent the defendant’s actions.” Id. at 634.
- In Galaria, an insurance company maintained sensitive personal
- information of current customers, as well as prospective customers
- who had applied for quotes on insurance products. 663 F. App’x at
- 386. The information retained by the insurance company, including
- names, dates of birth, marital status, gender, occupation,
- employer, Social Security numbers, and driver’s license numbers,
- was stolen by computer hackers. Id. Two plaintiffs brought suit
- as a result of the breach. Id. The Sixth Circuit held that the
- plaintiffs had standing because they alleged that “their data has
- already been stolen and is now in the hands of ill-intentioned
- 22
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- criminals.” According to the Sixth Circuit, “[w]here a data breach
- targets personal information, a reasonable inference can be drawn
- that the hackers will use the victims’ data for the fraudulent
- purposes alleged in Plaintiffs’ complaints.” Id. at 389.
- In Beck, a Veterans Affairs Medical Center lost two sets of
- patient data. 848 F.3d at 266-67. The first data set, stored on
- a laptop that was misplaced or stolen, held the names, dates of
- birth, partial Social Security numbers, and physical descriptions
- of 7,400 patients. Id. at 267. The second, kept in four storage
- boxes that were misplaced or stolen, contained the names, Social
- Security numbers, and medical diagnoses of 2,000 patients. Id. at
- 268. Three patients whose personal information was kept on the
- laptop or in the storage boxes sued as a result of the Medical
- Center’s mishandling of their data. But the Fourth Circuit
- rejected as “too speculative” the patients’ argument that their
- risk of future harm constituted an injury-in-fact. Id. at 274.
- The Fourth Circuit reasoned that the patients’ theory of standing
- relied on an “attenuated chain of possibilities”: that the thief
- targeted the stolen items for the information they contained;
- selected, from thousands of others, the three patients’
- information; and attempted successfully to use that information to
- steal the patients’ identities. Id. at 275. The Fourth Circuit
- also concluded that the patients had not established a “substantial
- risk” of harm. Id.
- In Reilly, a payroll processing firm’s systems were penetrated
- 23
- Case 0:16-cv-61511-WJZ Document 62 Entered on FLSD Docket 08/25/2017 Page 24 of 28
- by a computer hacker, potentially exposing the personal and
- financial information of 27,000 employees from 1,900 different
- companies. 664 F.3d at 40. The nature of the payroll processing
- firm’s business meant that it held information regarding its
- customers’ employees, including their names, addresses, Social
- Security numbers, dates of birth, and bank account information.
- Id. Two employees whose employers utilized the payroll processing
- firm’s services sued the payroll processing firm based on their
- belief that they were at an increased risk of identity theft. Id.
- The Third Circuit held that the employees lacked standing to sue
- because they failed to allege an injury that was “certainly
- impending.” Id. at 42. Like in Beck, the Third Circuit reasoned
- that the employees’ theory of standing rested on a speculative
- chain of “ifs”——“that the hacker: (1) read, copied, and understood
- their personal information; (2) intends to commit future criminal
- acts by misusing the information; and (3) is able to use such
- information to the detriment of Appellants by making unauthorized
- transactions in Appellants’ names.” Id.
- And in Katz, the defendant sold various finance-related
- products and services to investment advisers and broker-dealers,
- who in turn traded securities on behalf of their clients. 672 F.3d
- at 69. One of the defendant’s services was an online platform that
- allowed the advisers and broker-dealers to obtain research and
- manage brokerage accounts. Id. If authorized, end users of that
- platform were able to view the clients’ private information,
- 24
- Case 0:16-cv-61511-WJZ Document 62 Entered on FLSD Docket 08/25/2017 Page 25 of 28
- including Social Security and taxpayer identification numbers. Id.
- at 69-70. Some of the defendant’s employees also had access to
- that information. Id. at 70. The plaintiff maintained a brokerage
- account with a firm that used the defendant’s platform. She sued,
- concerned that the defendant’s platform left her private
- information vulnerable to abuse. Id. The plaintiff did not allege
- that any specific data breach occurred; only that many must have
- occurred. Id. at 79. The First Circuit concluded that this claim
- fell short of establishing an injury-in fact. Id. Because the
- plaintiff did not allege that her information had actually been
- accessed, the court reasoned that “[h]er cause of action rests
- entirely on the hypothesis that at some point an unauthorized, as-
- yet unidentified, third party might access her data and attempt to
- purloin her identity.” Id.
- One common thread runs through each of these cases that is
- not present here. The defendant in each had a practice of
- retaining the plaintiffs’ sensitive personal information, for one
- reason or another. In Krottner and Reilly, it was for purposes of
- employment; in Pisciotta and Katz for financial services; and in
- Galaria and Beck for insurance or medical purposes. There is no
- allegation here that the DNC retains private information of its
- donors that is not mandated to be disclosed to the Federal Election
- Commission and thus publically available.4 That is, unlike
- 4
- Federal law mandates that political parties report any
- donation over $200.00 to the Federal Election Commission, as well
- as the donor’s name, mailing address, occupation, name of
- 25
- Case 0:16-cv-61511-WJZ Document 62 Entered on FLSD Docket 08/25/2017 Page 26 of 28
- Krottner, Pisciotta, Galaria, Beck, Reilly, and Katz, Plaintiffs do
- not allege that the DNC has access to and stores information from
- its donors, such as their Social Security or credit card numbers.
- Without such an allegation, the DNC donor Plaintiffs’ claimed
- threat of injury is too speculative to support an Article III
- injury-in-fact. Plaintiffs Young, Lynch, and Davis’ threat of
- injury rests on speculation that the DNC, rather than some third
- party not before the Court, processed and stored information from
- their online donations. Plaintiffs Cork, Berners-Lee, and
- Criddle’s threat of injury is even more attenuated. For Criddle
- and Berners-Lee, the Court must speculate that the DNC copied and
- stored the account and routing numbers from their checks onto the
- servers that were attacked. And for Cork, the Court must speculate
- she provided sensitive personal information to the DNC and that it
- was stored on the compromised servers. These “what ifs” push their
- alleged injury near sheer conjecture.
- And even if the Court assumed that the DNC did store the named
- DNC Donor Class Plaintiffs’ sensitive personal information on the
- hacked servers, Plaintiffs’ First Amended Complaint (DE 8) still
- would not make out an injury that is “certainly impending.” Lujan,
- 504 U.S. at 565. If Krottner, Pisciotta, Galaria, Beck, Reilly,
- and Katz represent a sliding scale——arranged from least speculative
- harm to most——this case falls far closer to Katz than it does
- employer, and the date of contribution. 11 C.F.R. § 104.8. The
- Federal Election Commission in turn makes that information
- available for public consumption.
- 26
- Case 0:16-cv-61511-WJZ Document 62 Entered on FLSD Docket 08/25/2017 Page 27 of 28
- Krottner. Unlike Krottner, none of the DNC donor Plaintiffs have
- suggested they were the victim of a failed identity theft attempt.
- And unlike Pisciotta and Galaria, these Plaintiffs do not allege
- that their personal information was targeted for the purpose of
- future criminal misuse. The First Amended Complaint (DE 8) instead
- paints a picture that hackers were generally rummaging the DNC’s
- files for information pertinent to the presidential election. The
- named DNC Donor Plaintiffs do not allege that hackers targeted
- their information, took it, or would be able to make use of it to
- inflict some harm in the future. See Clapper, 133 S. Ct. at 1150
- (observing courts’ “usual reluctance to endorse standing theories
- that rest on speculation about the decisions of independent
- actors.”). As a result, this case mirrors Reilly and Beck, in
- which the Third and Fourth Circuits held that the plaintiffs’
- claimed injury lacked the degree of immediacy necessary to
- establish an injury-in-fact. Thus, absent an “actual or imminent”
- injury, the named DNC Donor Class Plaintiffs lack standing, and
- this Court lacks jurisdiction over their claim in Count VI of the
- First Amended Complaint (DE 8). Lujan, 504 U.S. at 560.
- V. Conclusion
- “Federal Courts cannot exercise jurisdiction over cases where
- the parties lack standing.” Florida Wildlife Fed’n, Inc. v. S.
- Fla. Water Mgmt. Dist., 647 F.3d 1296, 1302 (11th Cir. 2012).
- Because Plaintiffs do not allege a causal link between their
- donations and the DNC’s statements, they lack standing to assert
- 27
- Case 0:16-cv-61511-WJZ Document 62 Entered on FLSD Docket 08/25/2017 Page 28 of 28
- the fraud-type claims in Counts I, II, III, and IV of the First
- Amended Complaint (DE 8). Their breach of fiduciary duty claim in
- Count V relies on a harm far too diffuse to constitute an injury-
- in-fact in federal court. And their negligence claim in Count VI
- is buffered by too many layers of speculation and conjecture to
- create the immediacy of harm necessary to unlock this Court’s
- jurisdiction. That being so, Plaintiffs have not “present[ed] a
- live case or controversy,” and the Court “must dismiss the case for
- lack of subject matter jurisdiction.” Id.
- Accordingly, after due consideration, it is
- ORDERED AND ADJUDGED as follows:
- 1. Defendants’ Motion To Dismiss Plaintiffs’ First Amended
- Complaint (DE 44) be and the same is hereby GRANTED; and
- 2. The above-styled cause be and the same is hereby DISMISSED
- without prejudice for lack of subject matter jurisdiction.
- DONE AND ORDERED in Chambers at Fort Lauderdale, Broward
- County, Florida, this 25th day of August, 2017.
- WILLIAM J. ZLOCH
- Sr. United States District Judge
- Copies furnished:
- All Counsel of Record
- 28
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