Three Expo Events, L.L.C. v. City of Dallas, Texas
Opinion
Plaintiff, Three Expo Events, L.L.C. (Three Expo), is a Texas limited liability company engaged in the business of producing and presenting adult love- and sex-themed conventions in major cities of the nation. After staging such an event in the City of Dallas's Convention Center in August 2015 (Exxxotica 2015), the City and Three Expo informally agreed to a second convention (Exxxotica 2016) to be held at the Convention Center on May 20-21, 2016.
Though well attended and successful economically, the 2015 event, which featured near nudity and sexually suggestive activities, drew opposition from some citizens on moral and civic grounds. Protesters gathered in the Convention Center lobby during the event, and several organizations reportedly asked Dallas's mayor to keep Exxxotica out of the Convention Center. The mayor publicly acknowledged that he was concerned about the City providing a forum for the event, but he and other city officials took the position at that time that the City could not legally and constitutionally deny use of the Convention Center to a group based on the content of its speech or expression. Consequently, the City and Three Expo proceeded to correspond and make plans for the proposed Exxxotica 2016.
Three Expo followed its usual method of operations in effectuating Exxxotica 2015 and planned to do so again with respect to the 2016 convention: Three Expo, as producer, presenter, and manager of the convention events, paid the expenses of staging a convention and likewise received a large share of its revenues. For its own business reasons, however, Three Expo formed a subsidiary "ownership entity" in each city where it brought its Exxxotica convention (e.g., Exotica Chicago, LLC; Exotica Miami, LLC; etc.). Three Expo would then have the ownership entity enter and hold the lease of the public facility for the purpose of the convention. In keeping with this standard practice, Three Expo planned to have its ownership entity, Exotica Dallas LLC, enter the lease contract with the City to stage Exxxotica 2016 at the Convention Center.
The record reflects that, as is true of Three Expo's other ownership entities, Exotica Dallas LLC is not an independent third party free of control by Three Expo-to the contrary, Exotica Dallas LLC was created by a member of Three Expo for the purpose of entering a lease with the venue for Three Expo's production and presentation of Exxxotica 2016 in Dallas. Moreover, Exotica Dallas LLC is bound by a Management and Services Agreement it entered with Three Expo wherein Exotica Dallas LLC appointed Three Expo as its agent with authority to enter into contracts in its behalf. The agreement authorizes Three Expo to "deal with[ ] any of the business and government contracts of [Exotica Dallas LLC] for all purposes, and to do, at Three Expo Events' option, all acts and things that Three Expo Events deems necessary in *337 furtherance of the [Exxxotica events]." Thus, Exotica Dallas LLC is totally integrated with and under the control and domination of Three Expo.
On January 19, 2016, the Convention Center advised Three Expo that it was in the process of drafting a contract for Exxxotica 2016. Indeed, a draft lease contract for the 2016 event was prepared by Convention Center staff. However, in early February 2016, Dallas's mayor advised the media that the he did not want the Exxxotica event to return to the Convention Center in 2016, reiterating the sentiments he expressed about the event in 2015. On February 3, 2016, the Dallas City Council, along with City Attorneys, Dallas police officers, and a representative from the Convention Center, held a private executive session concerning Exxxotica. After the meeting, the Convention Center's executive director for convention and event services, Ronald King, advised his employees to "wait" for "further information" before formally booking Exxxotica 2016. Three days later, news broke that the mayor was "trying to stop [Exxxotica] from coming to downtown Dallas."
Indeed, the mayor directed the City Attorney to draft a resolution prohibiting the City Manager from entering into a contract with Three Expo for use of the Convention Center. He acknowledged publicly his belief that the Convention Center was not the place for "the business of sex and sexual products." The mayor also said that he was contacted by "dozens of citizens" about the event. One City Council member said she "might support the ban" of Exxxotica 2016 and that she "[didn't] like them being here." On February 6, one of downtown Dallas's most high-profile property owners emailed the City Council urging it to vote to prohibit Exxxotica 2016, saying he believed it "constitute[d] an activity that runs totally counter to the values, mores[,] and beliefs of the vast majority of the citizens of the City of Dallas" and that the city's Convention Center was not "the proper venue" for the event. Some prominent women's organizations also publicly opposed the event.
On February 10, 2016, the City Council met to discuss whether to adopt the resolution banning Exxxotica 2016 from the Convention Center as requested by the mayor. The news reports of the controversy stirred up much public debate. At the meeting, only one speaker-Jeffrey Handy, one of Three Expo's two governing members-spoke in support of Exxxotica 2016. The other eighteen speakers, including local religious and business leaders, spoke in opposition to allowing the event to be held at the Convention Center. Many City Council members voiced their opposition to the event as well, with one equating it to "the unbridled right to allow pornography to be displayed in a public facility," and another saying she "will always say no when it comes to this type of event in the City of Dallas." Other City Council members were more hesitant because the City Attorney advised that the resolution prohibiting Exxxotica 2016 might not pass constitutional muster. From their speeches and remarks at the meeting, it was evident that the mayor and a majority of the City Council clearly understood and intended that passage of the resolution would prevent Exxxotica 2016 from being held at the Convention Center.
At the meeting, the City Council adopted Resolution No. 160308, which stated:
WHEREAS, Three Expo Events, LLC requests to contract with the City to hold a three-day adult entertainment expo at the Dallas Convention Center; Now, Therefore, *338 BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF DALLAS:
Section 1. That the City Council directs the City Manager to not enter into a contract with Three Expo Events, LLC, for the lease of the Dallas Convention Center.
Section 2. That this resolution shall take effect immediately from and after its passage in accordance with the provisions of the Charter of the City of Dallas, and it is accordingly so resolved.
Ronald King, the executive director for convention and event services for the Convention Center, testified that he understood that the resolution "would prohibit [him] from entering into a contract that would allow for" the event to return. John Johnson, the assistant director for the City's convention and event services, testified that he was "shocked" by "the vote of City Council to prohibit the [event]," and he understood the resolution to mean he was "no longer authorized to enter into a contract to book" Exxxotica 2016.
On February 24, 2016, Three Expo filed suit against the City in federal court and sought a preliminary injunction to prevent the City from enforcing the resolution. The district court denied Three Expo's motion for a preliminary injunction, and no Exxxotica event took place in Dallas in 2016.
After the denial of the injunction, Three Expo amended its complaint, alleging that the City's actions and resolution in denying Exxxotica 2016 access to the Convention Center violated the First Amendment, the Equal Protection Clause, and the Bill of Attainder Clause of the United States Constitution. After discovery, the City filed a motion to dismiss for lack of jurisdiction, contending that Three Expo lacked standing to bring suit. The district court granted the City's motion, holding that Three Expo lacked Article III standing. Three Expo appealed.
We REVERSE. The district court's decision that Three Expo lacked standing was based on: (1) clear errors in the district court's factual findings; and (2) the district court's manifest failure to apply the well-established principles of law governing Article III standing to the entire evidence of record in this case.
I.
The district court's findings of fact "must not be set aside unless clearly erroneous." FED. R. CIV. P. 52(a)(6). "A finding is 'clearly erroneous' when[,] although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed."
United States v. U.S. Gypsum Co.
,
In the district court, the City contended that Three Expo failed to establish standing, basing its argument almost entirely on the wording of the City Council's resolution and an inference from Three Expo's past business practice. In disregard of the evidence fully describing the circumstances surrounding the actions of the mayor, the City Council members, and the aroused citizens, taken to ban Exxxotica 2016 from the Convention Center, the City glibly argued that "the Resolution did not cause Three Expo to suffer an injury in fact" because the resolution prohibited only Three Expo from contracting with the City Manager, and Three Expo had planned to follow its usual practice of having its subsidiary entity, Exotica Dallas LLC, enter and hold the lease of the Convention Center for Exxxotica 2016. The district court readily and uncritically accepted the City's argument, erroneously found facts mirroring that argument, and *339 dismissed Three Expo's lawsuit for lack of standing.
We disagree. On the entire evidence, we are left with the "definite and firm conviction" that clear mistakes of facts were committed by the district court.
See
U.S. Gypsum Co.
,
On the entire evidence, we conclude that the district court was clearly mistaken in finding that the City or one of its officers would have entered a contract with Exotica Dallas LLC to use the Convention Center for Exxxotica 2016. The mayor and the City Council made clear at the City Council meeting their firm and deliberate decision to exclude Exxxotica 2016 from the Convention Center under any circumstance and regardless of the legal consequences. There is nothing in the evidence to suggest that after so affirmatively barring Exxxotica 2016 from the Convention Center that the City would have allowed one of its officers to lease the facility to Exotica Dallas LLC for the purpose of staging Exxxotica 2016. The mayor and City Council yielded to what they perceived to be overwhelming public opinion against allowing Exxxotica 2016 to be presented in the Convention Center. Consequently, it would have been a vain and futile exercise for Three Expo to attempt to persuade the City or the City Manager to enter into such a contract with Exotica Dallas LLC that would have permitted Exxxotica 2016 to be staged in the Convention Center.
See
Ellison v. Connor
,
Also, the district court's clearly erroneous factual findings that Three Expo's injuries *340 were not caused by the City's actions were based on the City's highly convoluted and meritless argument. The City maintained that
[Three Expo], based on its own clear, unequivocal deposition testimony, never intends to, and never will enter into a contract for any Exxxotica event. For this reason, the Resolution did not cause Three Expo to suffer an injury in fact as to any of its claims against the City. Additionally, this means that there is no causal connection between any injury and damages and that Plaintiff has no redressable injuries. 1
Continuing to adopt facts set forth in the City's briefs, the district court found that "[b]ecause Three Expo has expressly stated that it had no intention of ever entering into a contract with the City for any Exxxotica event, ... Three Expo did not suffer an injury in fact ... as a result of the Resolution's prohibiting the City Manager from entering into a contract with [Three Expo]." "In sum," the district court concluded, "the only injuries Three Expo alleges are those resulting from the nonoccurrence of the 2016 Exxxotica expo. But Three Expo has failed to show that it was the Resolution that prevented the 2016 Exxxotica event from occurring."
However, it was not the Resolution alone that prevented the staging of Exxxotica 2016 in the Convention Center. Instead, it was the entirety of all of the actions by those who acted on behalf of the City to bar the convention from that site-including the actions of the mayor, the City Council members, the downtown property owners, and the multiple interest and civic groups who publicly declared that Exxxotica was unfit and inappropriate for expression and viewing in a public facility and called for its prohibition and suppression. The record clearly reflects that the City's actions-up to and including the resolution-prevented Exxxotica 2016 from occurring.
II.
After setting aside the district court's clearly erroneous findings of fact, we must apply the clearly established legal principles governing standing to the evidence of record. We review the district court's dismissal for lack of standing de novo.
Little v. KPMG LLP
,
Article III of the United States Constitution limits a federal court's jurisdiction to "Cases" and "Controversies." U.S. CONST. art. III. "Those two words confine 'the business of federal courts to
*341
questions presented in an adversary context and in a form historically viewed as capable of resolution through the judicial process.' "
Massachusetts v. EPA
,
Article III standing requires plaintiffs to demonstrate that they have suffered an "injury in fact" that is "fairly traceable" to the defendant's actions and will "likely ... be redressed by a favorable decision."
Lujan v. Defenders of Wildlife
,
When a plaintiff challenges the legality of government action, as Three Expo does in the present case, "the nature and extent of facts that must be averred ... in order to establish standing depends considerably upon whether the plaintiff is himself an object of the action."
When, however, as in
Lujan
, a plaintiff's injury derives from the government's allegedly unlawful action toward
someone else
, more is necessary.
Lujan
,
We conclude that the district court misinterpreted and misapplied the foregoing principles in dismissing Three Expo's suit for lack of standing. This is not a complicated case like
Lujan
, but a very simple one in which Three Expo sued the City of Dallas for denying it the use of its Convention Center to stage Exxxotica 2016, alleging a violation of its rights of freedom of speech, equal protection, and freedom from bill of attainder. Three Expo is itself the object of the injurious action by the City of Dallas that it challenges,
*342
and Exotica Dallas LLC is totally integrated with and controlled by Three Expo. Therefore this is not a case, as the dissent and the City mistakenly assume, in which prudential standing concerns are implicated or Three Expo's standing depends on the "unfettered choices made by independent actors not before the courts."
Id
. ;
see also
13A C. WRIGHT, A. MILLER & E. COOPER, FEDERAL PRACTICE & PROCEDURE § 3531.9, at 671 (3d ed. 2008). It is undisputed that because of Three Expo's inability to stage Exxxotica 2016 as planned, it suffered economic damages in loss of revenues from the convention, causing it to lose net profits and defrayal of the cost of advance publicity and other expenses.
See
K.P. v. LeBlanc
,
I concur to the extent that the opinion holds that Three Expo has sustained a direct injury, and has established causation and redressability, sufficient to establish standing, and in remanding to allow the district court to proceed further from that point.
The panel majority opinion says that this case is a "very simple one." In reaching the conclusion that the plaintiff has standing, however, the panel majority opinion ignores the text of the City's resolution. It ignores the fact that the plaintiff never tried to contract with the City after the resolution was passed. It ignores the fact that the plaintiff, by its own admission, never even intended to contract with the City. It ignores the proper application of the Supreme Court's prudential-standing jurisprudence. And it ignores the district court's well-supported factual findings and instead substitutes its own evaluation of the facts.
I.
We review a district court's rulings on the issue of standing
de novo
.
Superior MRI Servs., Inc. v. All. Healthcare Servs., Inc.
,
*343
district court's factual findings, including those on which the court based its legal conclusions, are reviewed for clear error."
This appeal arises from a factual attack on subject matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1), and Three Expo bore the burden to establish standing by a preponderance of the evidence.
See
Paterson v. Weinberger
,
II.
Article III of the U.S. Constitution "grants the federal courts jurisdiction over claims between plaintiffs and defendants only if they present a 'case or controversy.' "
Doe v. School Bd. of Ouachita Par.
,
"[S]tanding is not dispensed in gross," and "a plaintiff must demonstrate standing for each claim [it] seeks to press and for each form of relief that is sought."
Town of Chester v. Laroe Estates, Inc.
, --- U.S. ----,
III.
The district court made three critical findings of fact that should have led us to conclude that Three Expo lacked standing on its claim for monetary relief: (1) that the resolution did not cause the non-occurrence of the convention; (2) that Three Expo has no intention of contracting with the City; and (3) that Three Expo and Exotica Dallas are distinct legal entities.
The panel majority opinion reaches its contrary conclusion, that the plaintiff has standing, by discarding the first finding and substituting its own evaluation of the facts. Under the panel majority's view of the facts, the resolution prohibited even Exotica Dallas from contracting with the City. Thus, because the resolution put the brakes on the convention, Three Expo itself had standing to sue because the resolution caused it to lose the money it would have made from the convention.
*344
This is a mistake. In the instant case, the experienced district court judge found that Three Expo had not met its burden to show that the City would refuse to contract with Exotica Dallas. The district court considered the text of the resolution, which clearly forbids only a contract between the City and Three Expo, not with the entity (Exotica Dallas) that planned to enter the contract. It emphasized that neither Three Expo nor Exotica Dallas ever attempted to contract with the City after the resolution was passed. It looked to the City's statements that Exotica Dallas has never requested a contract to lease convention center space and, as a result, the City has never denied such a request. The record, furthermore, is devoid of any evidence that Three Expo or Exotica Dallas communicated with anyone from the convention after the resolution was passed. Even assuming that both views of the evidence-that the resolution prevented the convention or that it did not-may be permissible, it is well-established by the Supreme Court that when "there are two permissible views of the evidence, the factfinder's choice between them cannot be clearly erroneous."
Anderson v. Cty. of Bessemer Cty., N.C.
,
With this factual finding properly left undisturbed, we should have concluded that Three Expo lacks standing. This is where the district court's two other critical findings-that Three Expo never intended to contract with the City and that Three Expo and Exotica Dallas are distinct legal entities-come into play. An alleged injury is too speculative to establish standing "when the injury's existence depends on the decisions of third parties."
Hotze v. Burwell
,
There is no reason to question the district court's basis for finding these last two facts. In reaching its conclusion that Three Expo never intended, and never will intend, to contract with the City, the district *345 court relied on Three Expo's own admission to this effect. In reaching its conclusion that Three Expo and Exotica Dallas are distinct legal entities, the district court relied on the statements of Jeffery Handy, one of Three Expo's governing members. Handy insisted that the contract be written to Exotica Dallas, and Exotica Dallas would have owned any future Exxxotica events in Dallas. 2 And because, as explained, the panel majority opinion is wrong to discard the first fact, it should have concluded that the plaintiffs lacked standing. Three Expo has not borne its burden.
The panel majority opinion turns to futility in an attempt to excuse Exotica's decision not to attempt to contract with the City. But that does not save Three Expo's claims, either. "[S]tanding cannot be conferred by a self-inflicted injury."
Zimmerman
,
Three Expo's claim that it is "ready, able, and willing" to enter into a contract with the City, a statement it made long after litigation had begun, also fails to establish standing. This statement stands in contrast to its prior assertion that it did not intended to contract with the city and never would intend to do so. "[W]e assess standing as of the time a [lawsuit] is filed."
Clapper
,
IV.
In addition to monetary relief, Three Expo seeks declaratory and injunctive relief on its First Amendment and Equal Protection Clause claims. Although the analysis differs under these two provisions because they protect against different injuries, standing under both of them requires an intent to engage in constitutionally protected conduct.
Barbour
,
V.
Three Expo further contends that it has standing because the resolution is an impermissible Bill of Attainder creating a reputational injury. Under our reputational-injury precedent, Three Expo might be able to establish standing on this claim. However, although Three Expo argued in one sentence that the resolution was generally a Bill of Attainder in response to the City's motion to dismiss, it did not raise its reputational-injury argument before the district court. Therefore, I would affirm the district court because Three Expo forfeited this argument.
See
Davis v. Fort Bend Cnty.
,
VI.
In the alternative, I would also hold that Three Expo lacks prudential standing on the First Amendment and Equal Protection claims because it seeks to assert the rights of a third party, Exotica Dallas.
4
Our standing jurisprudence consists of "two strands: Article III standing, which enforces the Constitution's case-or-controversy requirement; and prudential standing, which embodies 'judicially self-imposed limits on the exercise of federal jurisdiction.' "
Elk Grove Unified Sch. Dist. v. Newdow
,
*347
Warth v. Seldin
,
As explained, to establish prudential standing, "a plaintiff generally must assert his own legal rights and interests, and cannot rest his claim to relief on the legal rights or interests of third parties."
Superior MRI Servs.
,
Three Expo was not the party seeking access to the convention center. Three Expo's right of access under its intended plan always would have existed only vis-à-vis the third party, Exotica Dallas, which would have been the party in privity with the City. Even assuming,
arguendo
, that Three Expo could establish the first two prongs of prudential standing, it would fail on the third.
5
The panel majority opinion goes to great lengths to establish a close relationship between Three Expo and Exotica Dallas: they have overlapping ownership and governance, as well as a Management & Services Agreement between them. But nothing about this relationship hinders Exotica Dallas's "ability to protect [its] own interest,"
VII.
Standing goes to the core of our power to hear a case, precluding us from taking up cases that are beyond the boundaries set by Article III. We cannot transgress those boundaries by ignoring facts and substituting our own findings for those of the able district court. Instead, our duty here is to apply the law to the facts as the district court has found them. On those facts, Three Expo lacks both Article III and prudential standing. I therefore must dissent.
Before the City filed its motion challenging Three Expo's standing, Jeffrey Handy, one of Three Expo's two governing members, responded to general questions in his deposition about the company's operations by saying that Three Expo always had its subsidiary LLC enter leases with venues for its Exxxotica conventions and that Three Expo would never enter such a lease directly. However, Handy was not asked if Three Expo would have made an exception for the purpose of accessing the Dallas Convention Center for Exxxotica 2016. Patrick Perrino, the other governing member of Three Expo, who is a lawyer and the legal spokesman for the company, declared under oath subsequently that the company would have made an exception. He said Three Expo would have entered a lease with the City directly if it had been offered the option of doing so in order to stage Exxxotica 2016 in the Convention Center as the parties had initially planned. The record does not suggest any reason that Three Expo would not have found it practicable to make such an exception under the circumstances. However, we decline to dwell on this factual debate because we ultimately find that the City prevented Exxxotica 2016 from occurring because of public opinion adverse to that convention regardless of which party's name was on the contract.
Though Three Expo has not pointed us to any direct evidence of the effect of the resolution on its reputation, we have previously inferred constitutionally cognizable reputational injury from a party's profession and the challenged action alone.
See
Walker v. City of Mesquite
,
The panel majority's citation to
Duarte v. Cty. of Lewisville
,
The panel majority opinion errs to the extent that it implies that, because Exotica Dallas was "totally integrated with and controlled by Three Expo," the two entities had an alter-ego relationship. At oral argument, Three Expo's counsel argued the entities were alter egos, but this was never pleaded or argued below. In fact, throughout this litigation, Three Expo has emphasized that the two entities are distinct. The district court found that Three Expo and Exotica Dallas were distinct entities, and we must defer to that finding.
"The 'injury in fact' in an equal protection case of this variety is the denial of equal treatment resulting from the imposition of the barrier, not the ultimate inability to obtain the benefit."
Jacksonville
,
Though the district court did not reach the question of prudential standing, the City raised the issue in the district court.
For the reasons discussed above, Three Expo would also fail on the first prong because it cannot establish an injury-in-fact.
Reference
- Full Case Name
- THREE EXPO EVENTS, L.L.C., Plaintiff-Appellant v. CITY OF DALLAS, TEXAS, Defendant-Appellee
- Cited By
- 12 cases
- Status
- Published