BoylstonD3 LLC v. Boylston Brookline LLC

United States District Court

District of Massachusetts

)

BOYLSTOND3 LLC, )

)

Plaintiff, )

)

v. )

) Civil Action No.

WILLIAM F. GALVIN, in his official ) 19-11489-NMG

capacity as Massachusetts )

Secretary of the Commonwealth )

)

Defendant. )

)

MEMORANDUM & ORDER

GORTON, J.

This case involves a facial challenge to the

constitutionality of Massachusetts General Laws, Chapter 156C,

Section 54 (“M.G.L. c. 156C, § 54”), a statute that requires

out-of-state (or “foreign”) limited liability companies (“LLCs”)

to register with the Commonwealth of Massachusetts (“the

Commonwealth”) and to pay a $500 fee in order to, inter alia,

prosecute suits in Massachusetts state courts.

Before this Court are the motions for judgment on the

pleadings (Docket Nos. 26 and 34) filed respectively by

plaintiff BoylstonD3 LLC (“BoylstonD3” or “plaintiff”) and

defendant William F. Galvin, the Secretary of the Commonwealth

of Massachusetts (“the Secretary” or “defendant”). For the

reasons that follow, plaintiff’s motion will be denied and

defendant’s motion will be allowed.

I. The Parties

Plaintiff is an LLC which is organized under the laws of

Minnesota and which owns property in Brookline, Massachusetts.

Defendant is the Secretary of the Commonwealth and is

responsible for administering the statutory scheme governing

LLCs, Chapter 156C of the Massachusetts General Laws. See

M.G.L. c. 156C, § 49.

II. Background

In May, 2019, Boylston Brookline LLC (“Boylston Brookline”)

received a special use permit from the Town of Brookline

(Massachusetts) Zoning Board of Appeals to develop a parcel of

land that abuts plaintiff’s property. Plaintiff, which had

neither registered with the Commonwealth nor paid the requisite

annual fee, subsequently petitioned the Massachusetts Land Court

(“Land Court”) for judicial review of the Zoning Board’s

decision.

In June, 2019, Boylston Brookline filed a motion to dismiss

the Land Court case, citing plaintiff’s failure to pay the

required annual fee pursuant to M.G.L. c. 156C, § 54.

Thereafter, plaintiff registered with the Secretary and paid the

requisite fee, causing the Land Court to deny, as moot, Boylston

Brookline’s motion to dismiss and to allow plaintiff to proceed.

In July, 2019, plaintiff brought this action against

Boylston Brookline seeking a declaratory judgment that M.G.L. c.

156C, § 54 is unconstitutional as violative of the clauses of

the Fourteenth Amendment having to do with privileges and

immunities, equal protection and due process. In December,

2019, this Court dismissed the claims against Boylston Brookline

on the grounds that there was no causal connection between the

conduct of that entity and the alleged constitutional injury

(see Docket No. 21). In that same Order, the Court allowed

plaintiff to amend its complaint to add the Secretary as a

defendant.

III. Motions for Judgment as a Matter of Law

A. Legal Standard

Although a motion for judgment on the pleadings pursuant to

Fed. R. Civ. P. 12(c) considers the factual allegations in both

the complaint and the answer, it is governed by the same

standard as a Rule 12(b)(6) motion to dismiss. See Perez-Acevedo

v. Rivero-Cubano, 520 F.3d 26, 29 (1st Cir. 2008). To survive

such a motion, the subject pleading must contain sufficient

factual matter to state a claim for relief that is actionable as

a matter of law and “plausible on its face.” Ashcroft v. Iqbal,

556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly,

550 U.S. 544, 570 (2007)).

For a claim to be facially plausible, the pleadings must

show “more than a sheer possibility that a defendant has acted

unlawfully.” Id. A plaintiff cannot merely restate

the defendant’s potential liability and the court is not

“bound to accept as true a legal conclusion couched as a factual

allegation.” Id.

In considering the merits of such a motion, the Court must

accept all factual allegations in the complaint as true and draw

all reasonable inferences in the favor of the nonmoving party.

R.G. Fin. Corp. v. Vergara-Nunez, 446 F.3d 178, 182 (1st Cir.

2006). The Court may also consider documents if 1) the parties

do not dispute their authenticity, 2) they are “central to the

plaintiffs’ claim” or 3) they are “sufficiently referred to in

the complaint.” Curran v. Cousins, 509 F.3d 36, 44 (1st Cir.

2007) (quoting Watterson v. Page, 987 F.2d 1, 3 (1st Cir.

1993)).

B. Plaintiff’s Arguments

BoylstonD3 asserts that M.G.L. c. 156C, § 54 infringes upon

the rights of foreign LLCs not registered in the Commonwealth to

petition Massachusetts state courts because 1) such unregistered

foreign LLCs are similarly situated to registered domestic and

foreign LLCs but 2) only unregistered foreign LLCs are denied

the opportunity to sue in Massachusetts state courts to enforce

their interests in contracts and property. That disparity,

BoylstonD3 contends, denies unregistered foreign LLCs equal

protection of the law and due process of law.

Specifically, plaintiff submits that such unequal treatment

fails to satisfy strict scrutiny, which plaintiff insists

applies because the statute allegedly 1) deprives unregistered

foreign LLCs of the fundamental right to petition courts and

2) treats unregistered foreign LLCs, as “alien corporate

entit[ies],” differently than registered foreign and domestic

LLCs. Plaintiff also submits that, in the alternative, the

statutory scheme fails to satisfy rational basis review, arguing

that preventing unregistered LLCs from suing in Massachusetts

state courts is not rationally related to the legitimate

governmental interests of regulating foreign LLCs and/or

protecting Massachusetts citizens.

C. Defendant’s Arguments

Defendant contends that BoylstonD3 abandoned Counts I and

II by not advancing arguments to affirm them in its memorandum

in support of its motion (Docket No. 27) and thus only addresses

Count III. Nevertheless, as discussed below, the Court finds

that neither Count I nor Count II states a claim for relief.

Defendant submits that unregistered foreign LLCs suffer no

greater impairment of their right to petition Massachusetts

state courts than an unregistered domestic LLC which also cannot

conduct business in the Commonwealth. The Secretary adds that

the Massachusetts statutory scheme requires all LLCs, domestic

and foreign, to register with his office and pay $500 annual

fees in order to avail themselves of access to Massachusetts

state courts.

The Secretary acknowledges that domestic and foreign LLCs

that fail to comply with the registration requirements face

different consequences but points out that they are less severe

as to the latter. In particular, when domestic LLCs fail to

register, they lose their status as a separate legal entity,

whereas when foreign LLCs fail to do so, they are simply subject

to a $500 fine and a prohibition against prosecuting suits until

the failure to register has been remedied.

Defendant also persuasively argues that the applicable

statute need only be rationally related to a legitimate

government interest which, in this case, is the reasonable

reimbursement of costs borne by the courts of the Commonwealth

in adjudicating disputes involving LLCs.

D. Application

1. Privileges or Immunities (Count I)

The Privileges or Immunities Clause of the Fourteenth

Amendment to the United States Constitution

protects all citizens against abridgement by states of

rights of national citizenship . . .

Madden v. Commonwealth of Kentucky, 309 U.S. 83, 90–91 (1940).

One such right is the right of all citizens to “petition the

Government for a redress of grievances,” as guaranteed by the

First Amendment to the United States Constitution. See U.S.

Const. amend. I; Slaughter-House Cases, 83 U.S. 36, 79 (1872).

The protections of the Privileges or Immunities Clause,

however, extend only to natural persons and not to corporate

entities including LLCs. See Hague v. Comm. For Indus. Org., 307

U.S. 496, 514 (1939) (“Natural persons, and they alone, are

entitled to the privileges and immunities which Section 1 of the

Fourteenth Amendment secures for ‘citizens of the United

States’”); see also Strong v. City of Athens, No. 13-cv-296,

2015 WL 418224, at *6 (E.D. Tenn. Feb. 2, 2015) (“[T]he

Privileges and Immunities Clause of the Fourteenth Amendment

only applies to natural persons and would therefore not apply to

BStrong Enterprises, LLC”). Accordingly, because plaintiff here

is an LLC and not a natural person, it cannot state a claim for

relief under the Privileges or Immunities Clause. For that

reason, the Court will grant judgment on the pleadings in favor

of defendant on Count I.

2. Due Process (Count II)

Stating a valid claim for a deprivation of procedural due

process requires the plaintiff 1) to identify a protected

liberty or property interest and 2) to allege that the defendant

deprived the plaintiff of that interest without constitutionally

adequate process. Gonzalez-Droz v. Gonzalez-Colon, 660 F.3d 1,

13 (1st Cir. 2011). In alleging that the defendant deprived

plaintiff of constitutionally adequate process, plaintiff must

plead that the defendant did so while acting under color of

state law. Id.

Constitutionally adequate process is provided if the

government has afforded the plaintiff notice and an opportunity

to be heard “at a meaningful time and in a meaningful manner.”

Amsden v. Moran, 904 F.2d 748, 753 (1st Cir. 1990) (quoting

Armstrong v. Manzo, 380 U.S. 545, 552 (1965)). Such process

seldom requires the government to ensure access to the courts by

prospective plaintiffs, however, because

resort to the courts is not usually the only available,

legitimate means of resolving private disputes.

See Boddie v. Connecticut, 401 U.S. 371, 375 (1971).

Accordingly, the imposition fees to compensate for court

access seldom violates due process and has been found to violate

it only when the fees bar a prospective, indigent plaintiff from

accessing the only means available to protect important

interests. Compare Boddie, 401 U.S. at 375–77 (holding that the

filing fee imposed on indigent plaintiffs seeking divorce

violated due process because “the state courts [was] the only

avenue” to obtain a divorce and the plaintiffs could not afford

the fees) with United States v. Kras, 409 U.S. 434, 443–46

(1973) (upholding the filing fee imposed on an indigent debtor

in bankruptcy court because bankruptcy was not the exclusive

means available for relief and the “[g]overnment’s role with

respect to the private commercial relationship is qualitatively

and quantitatively different from its role in the . . .

dissolution of marriage.”).

Here, plaintiff fails to state a claim for relief under the

Due Process Clause because it has not plausibly pled that 1) the

Secretary has deprived it of any property (or other protected

interest) without due process of the law or 2) the registration

and payment requirements under M.G.L. c. 156C, § 54 has deprived

it of any right to access the courts.1

First, under the subject statute, plaintiff is afforded

constitutionally adequate process to protect its contractual and

property interests because the statute provides unregistered

foreign LLCs the opportunity to defend any action filed against

them in Massachusetts state courts. The statute, therefore,

affords plaintiff the requisite opportunity to be heard before

1 To the extent plaintiff’s allegations in Count II are construed

as alleging a substantive due process violation, it likewise

fails to state a claim because requiring a company to pay a $500

fee in order to access state courts is in no way “so egregious

as to shock the conscience.” Gianfrancesco v. Town of Wrentham,

712 F.3d 634, 639 (1st Cir. 2013).

the government (or any other entity for that matter) can

interfere with its contracts or deprive it of its property.

Second, due process does not require that BoylstonD3 be

afforded access to Massachusetts state courts as a prospective

plaintiff because it has other legitimate means available to

resolve its contractual and property disputes, including federal

court, private mediation and negotiated agreements. See M.G.L.

c. 156C, § 54 (barring unregistered LLCs from accessing only

state courts); compare Kras, 409 U.S. 445-46 (reasoning that

“[r]esort to the court” was not the only means to relief

available to a debtor because he could “adjust his debts by

negotiated agreement with his creditors”) with Boddie, 401 U.S.

at 376 (explaining that “resort to the court” was the

plaintiffs’ only means to relief because they could not dissolve

their marriages “without invoking the State’s judicial

machinery”).

In any event, plaintiff has not alleged that it cannot

afford the $500 registration fee and has, therefore, not been

deprived of any right of access to the courts. Cf. Cox v. State

of New Hampshire, 312 U.S. 569, 574-77 (1941) (finding as

constitutional a municipal ordinance that required protestors to

obtain a license and pay a fee). Indeed, plaintiff did

ultimately register with the Commonwealth and pay the $500 fee

and, thereafter, was permitted to proceed in the Massachusetts

Land Court. Accordingly, defendant is entitled to a judgment on

the pleadings with respect to Count II.

3. Equal Protection (Count III)

The Equal Protection Clause of the Fourteenth Amendment

requires that “all persons similarly situated . . . be treated

alike.” Rocket Learning, Inc. v. Rivera-Sanchez, 715 F.3d 1, 10

(1st Cir. 2013) (quoting City of Cleburne v. Cleburne Living

Ctr., 473 U.S. 432, 439 (1985)). Unless a fundamental right or

a suspect classification is at issue,

courts will uphold legislation that provides for

differential treatment upon a mere showing of a rational

relationship between the disparate treatment and legitimate

government objective.

Starlight Sugar, Inc. v. Soto, 253 F.3d 137, 145 (1st Cir. 2001)

(citation omitted).

Rational basis review simply requires that there be “any

reasonably conceivable set of facts” justifying the disparate

treatment. FCC v. Beach Commc’ns, Inc., 508 U.S. 307, 313–14

(1993). Although the Commonwealth of Massachusetts

may not rely on a classification whose relationship to an

asserted goal is so attenuated as to render the distinction

arbitrary or irrational

City of Cleburne, 473 U.S. at 446, the basis for the legislation

need not be supported by evidence in the record. Beach Commc’ns,

508 U.S. at 315.

Here, M.G.L. c. 156C, § 54 is subject to rational basis

review because 1) plaintiff, as an out-of-state LLC, is not a

member of a suspect class and 2) regardless of whether the right

to petition the courts is fundamental, as previously explained,

plaintiff has not been deprived of that right. For the reasons

that follow, the Court finds that the statute survives such

review.

Accepting as true plaintiff’s allegations that unregistered

foreign LLCs are similarly situated to registered foreign and

domestic LLCs, plaintiff has nevertheless failed to negate the

purported justification for the enactment of M.G.L. c. 156C, §

54. See Beach Commc’ns, 508 U.S. at 315 (placing the burden on

plaintiffs to refute every possible legitimate basis for the

subject legislation). For instance, defendant contends that one

objective in requiring LLCs to pay an annual fee before being

granted access to state courts is to

defray costs borne by the Commonwealth’s courts in

adjudicating disputes involving LLCs.

Defraying public costs is certainly a legitimate government

objective, which plaintiff implicitly acknowledges in noting

that “Massachusetts citizens . . . incur the expenses of

litigation” when unregistered LLCs are parties to a litigation

in Massachusetts state courts. See LCM Enterprises, Inc. v. Town

of Dartmouth, 14 F.3d 675, 680-83 (finding that the equitable

distribution of public costs is a legitimate governmental

interest).

Furthermore, the attendant rule limiting court access to

LLCs that have paid the requisite fee and, therefore, have

helped to defray court costs is rationally related to that

objective because it incentivizes LLCs to pay the fee, thereby

distributing the burden of funding the courts more equitably.

Because the subject statute is rationally related to a

legitimate government objective, the Court will also grant

defendant judgment on the pleadings with respect to Count III.

ORDER

For the foregoing reasons, plaintiff’s motion for judgment

on the pleadings (Docket No. 26) is DENIED and defendant’s

cross-motion for judgment on the pleadings (Docket No. 34) is

ALLOWED. Accordingly, plaintiff’s complaint is hereby

DISMISSED.

So ordered.

\s\ Nathaniel M. Gorton

Nathaniel M. Gorton

United States District Judge

Dated October 22, 2020