Amicus Curiae Brief — Starr International Company, Inc., Petitioner v. United States

No. 17-540

IN THE

Supreme Court of the United States

STARR INTERNATIONAL COMPANY, INC.,

v.

Petitioner,

UNITED STATES,

Respondent.

On Petition for a Writ of Certiorari

to the U.S. Court of Appeals

for the Federal Circuit

BRIEF OF WASHINGTON LEGAL FOUNDATION

AS AMICUS CURIAE IN SUPPORT OF PETITIONER

Richard A. Samp

(Counsel of Record)

Cory L. Andrews

Washington Legal Foundation

2009 Massachusetts Ave., NW

Washington, DC 20036

202-588-0302

rsamp@wlf.org

Date: November 13, 2017

QUESTION PRESENTED

Whether a private party with Article III

standing may be barred from asserting constitutional

claims for money damages against the federal

Government because of the equitable doctrine of “thirdparty prudential standing.”

iii

TABLE OF CONTENTS

Page

TABLE OF AUTHORITIES . . . . . . . . . . . . . . . . . . iv

INTERESTS OF AMICUS CURIAE . . . . . . . . . . . . 1

STATEMENT OF THE CASE . . . . . . . . . . . . . . . . . 2

SUMMARY OF ARGUMENT . . . . . . . . . . . . . . . . . . 7

REASONS FOR GRANTING THE PETITION . . . 11

I.

THE DECISION BELOW IS INCONSISTENT

WITH THIS COURT’S MANDATE THAT

FEDERAL COURTS SHOULD HEAR AND

DECIDE CASES WITHIN THEIR

JURISDICTION . . . . . . . . . . . . . . . . . . . . . . . . 11

II.

THE FEDERAL CIRCUIT’S REFUSAL TO

EXERCISE JURISDICTION WAS BASED ON A

FUNDAMENTAL MISUNDERSTANDING OF

THE THIRD-PARTY STANDING DOCTRINE . . . . 16

III.

REVIEW IS WARRANTED TO RESOLVE THE

CONFLICT BETWEEN THE DECISION BELOW

AND THIS COURT’S DECISION IN LEXMARK . . . 20

IV.

THE PETITION PROVIDES A GOOD VEHICLE

FOR ELIMINATING CONFUSION IN THE

COURT’S THIRD-PARTY STANDING CASE

LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

iv

TABLE OF AUTHORITIES

Cases:

Page(s)

Allegheny Corp. v. Breswick Co.,

353 U.S. 151 (1957) . . . . . . . . . . . . . . . . . . . . 21, 22

Allen v. Wright,

468 U.S. 737 (1984) . . . . . . . . . . . . . . . . . . . . . . . 12

Arkansas Game & Fish Comm’n v. United States,

568 U.S. 23 (2012) . . . . . . . . . . . . . . . . . . . . . . 1, 14

Bennett v. Spear,

520 U.S. 154 (1997) . . . . . . . . . . . . . . . . . . . . . 1, 19

City of Oakland v. Lynch,

798 F.3d 1159 (9th Cir. 2015) . . . . . . . . . . . . . . . 14

Cohens v. Virginia,

6 Wheat. (19 U.S.) 264 (1821) . . . . . . . . . . . . . . . 12

Craig v. Boren,

429 U.S. 190 (1976) . . . . . . . . . . . . . . . . . . . . . . . 23

DaimlerChrysler Corp. v. Cuno,

547 U.S. 332 (2006) . . . . . . . . . . . . . . . . . . . . . . . 13

Duty Free Americas, Inc. v. Estee Lauder Cos.,

797 F.3d 1248 (11th Cir. 2015) . . . . . . . . . . . . . . 14

Elk Grove Unified School District v. Newdow,

542 U.S. 1 (2004) . . . . . . . . . . . . . . . . . . . 10, 23, 24

Excel Willowbrook, L.L.C. v. JP Morgan Chase, N.A.,

758 F.3d 592 (5th Cir. 2014) . . . . . . . . . . . . . . . . 14

First English Evangelical Lutheran Church v. Los

Angeles, 482 U.S. 304 (1987) . . . . . . . . . . . . . . . . 15

Gladstone Realtors v. Village of Bellwood,

441 U.S. 91 (1979) . . . . . . . . . . . . . . . . . . . . . . . . 19

Hollingsworth v. Perry,

133 S. Ct. 2652 (2013) . . . . . . . . . . . . . . . . . . . . . 16

Horne v. Dep’t of Agriculture,

135 S. Ct. 2419 (2015) . . . . . . . . . . . . . . . . . . . . . . . 1

v

Page(s)

Jacobs v. United States,

290 U.S. 13 (1933) . . . . . . . . . . . . . . . . . . . . . . . . 15

Kamen v. Kemper Fin. Servs., Inc.,

500 U.S. 90 (1991) . . . . . . . . . . . . . . . . . . . . . . . . 20

Kowalski v. Tesmer,

543 U.S. 125 (2004) . . . . . . . . . . . . . . . . . . . . . . . 17

Lexmark Int’l, Inc. v. Static Control

Components, Inc.,134 S. Ct. 1377 (2014) . . . passim

Lujan v. Defenders of Wildlife,

504 U.S. 555 (1992) . . . . . . . . . . . . . . . . . . . . 11, 13

Malvino v. Delluniversita,

840 F.3d 223 (5th Cir. 2016) . . . . . . . . . . . . . . . . 17

Phillips v. Washington Legal Found.,

524 U.S. 156 (1998) . . . . . . . . . . . . . . . . . . . . . . . . 1

Sessions v. Morales-Santana,

137 S. Ct. 1678 (2017) . . . . . . . . . . . . . . . . . . 17, 23

Singleton v. Wulff,

428 U.S. 106 (1976) . . . . . . . . . . . . . . . . . . . . 16, 18

Sprint Communications, Inc. v. Jacobs,

134 S. Ct. 584 (2013) . . . . . . . . . . . . . . . . . . . 11, 12

Starr Int’l Co. v. United States,

106 Fed. Cl. 50 (2012) . . . . . . . . . . . . . . . . . . . . . . . 4

Starr Int’l Co. v. United States,

111 Fed. Cl. 459 (2013) . . . . . . . . . . . . . . . . . . . . . 4

Warth v. Seldin,

422 U.S. 490 (1975) . . . . . . . . . . . . . . . . . . . . . 8, 16

Weyerhaeuser Co. v. U.S. Fish & Wildlife Serv.,

No. 17-71 (U.S., cert. petition

filed July 11, 2017) . . . . . . . . . . . . . . . . . . . . . . . . . 1

Whitmore v. Arkansas,

495 U.S. 149 (1990) . . . . . . . . . . . . . . . . . . . . . . . 17

vi

Page(s)

Statutes and Constitutional Provisions:

U.S. Const., Art. III . . . . . . . . . . . . . . . . . . . . . passim

U.S. Const., Amend. I (Free Exercise Clause) . 10, 23

U.S. Const., Amend. V . . . . . . . . . . . . . . . , 15, 20, 21

U.S. Const., Amend. V

(Due Process Clause) . . . . . . . . . . . . . . . . . . . . . . . 9

U.S. Const., Amend. V (Takings Clause) . . 1, 3, 4, 6,

9, 14, 15

Federal Reserve Act, Section 13(3),

12 U.S.C. § 357(3) . . . . . . . . . . . . . . . . . . . . . passim

Tucker Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

28 U.S.C. § 1491(a)(1) . . . . . . . . . . . . . . . . . 11

INTERESTS OF AMICUS CURIAE

The Washington Legal Foundation (WLF) is a

non-profit public interest law firm and policy center

with supporters in all 50 states.1 WLF devotes a

substantial portion of its resources to defending free

enterprise, individual rights, a limited and accountable

government, and the rule of law.

WLF has frequently appeared before this and

other federal courts in cases involving claims arising

under the Fifth Amendment’s Takings Clause. See, e.g.,

Phillips v. Washington Legal Found., 524 U.S. 156

(1998); Arkansas Game & Fish Comm’n v. United

States, 568 U.S. 23 (2012); Horne v. Dep’t of

Agriculture,135 S. Ct. 2419 (2015). WLF also regularly

opposes efforts by the federal government to invoke

“prudential” principles to prevent the adjudication of

claims asserted against the Government, reminding

federal courts of their “virtually unflagging” obligation

to hear and decide cases within their jurisdiction. See,

e.g., Weyerhaeuser Co. v. U.S. Fish & Wildlife Service,

No. 17-71 (U.S., cert. petition filed July 11, 2017);

Bennett v. Spear, 520 U.S. 154 (1997).

WLF is concerned that the decision below

undermines the right of judicial review by invoking

prudential standing to prevent adjudication of claims

1

Pursuant to Supreme Court Rule 37.6, WLF states that

no counsel for a party authored this brief in whole or in part; and

that no person or entity, other than WLF and its counsel, made a

monetary contribution intended to fund the preparation or

submission of this brief. More than 10 days prior to the due date,

counsel for WLF provided counsel for Respondent with notice of its

intent to file. All parties have consented to the filing; letters of

consent have been lodged with the Court.

2

by parties who, all concede, have suffered catastrophic

financial losses directly traceable to actions taken by

the federal government. If the decision below is

allowed to stand, the ability of citizens to seek judicial

redress from the federal government when their

property is confiscated will be substantially curtailed.

In Lexmark Int’l, Inc. v. Static Control

Components, Inc., 134 S. Ct. 1377 (2014), the Court

called into serious question the continued vitality of the

prudential standing doctrine. Lexmark eliminated

much of that doctrine but said that consideration of the

continued viability of one aspect of the doctrine—limits

on the standing of plaintiffs seeking to assert the rights

of third parties—should “await another day.” 134 S.

Ct. at 1387 n.3. WLF submits that the proper day has

arrived. WLF is concerned that the Federal Circuit has

applied third-party standing principles in a manner

that is wholly inconsistent with this Court’s case law

and that illustrates the dangers of continuing to

classify those principles as an aspect of prudential

standing.

STATEMENT OF THE CASE

The facts of the case are set out in detail in the

Petition. WLF wishes to highlight several facts of

particular relevance to the issues on which this brief

focuses.

In connection with an $85 billion loan granted by

the Federal Reserve Bank of New York (FRBNY) to

American International Group, Inc. (AIG) at the height

of the 2008 financial crisis, the United States obtained

a 79.9% equity share of AIG. The practical effect of

3

that transaction was to transfer 79.9% of the common

stock owned by AIG shareholders in 2008 into the

hands of the United States. The transfer was not mere

collateral for the loan; the United States retained its

equity stake in AIG even after AIG repaid the loan in

full with interest.

Petitioner Starr International Co., Inc. was, at

all relevant times, one of the largest shareholders of

AIG common stock. In 2011, it filed suit (on behalf of

itself and similarly situated shareholders) against the

United States in the U.S. Court of Federal Claims

(CFC). Starr alleged that the Government used

unlawful means to obtain its equity share in AIG. It

alleged that the transfer of the 79.9% equity interest

from shareholders to the Government amounted to an

“illegal exaction,” in violation of shareholders’ Fifth

Amendment due process rights.2 It also alleged that

the Government violated their rights under the Fifth

Amendment’s Takings Clause by failing to provide just

compensation for the transferred equity interest. Starr

sought damages of at least $25 billion.

In 2012, the Government filed a motion to

dismiss, alleging (among other things) that Starr

lacked standing because (it alleged) the interests

forming the basis for Starr’s constitutional claims

belonged to AIG, not Starr. The CFC rejected the nostanding claim, finding that “Starr has pled facts

2

Starr alleged that the exaction was “illegal” because (it

contended) Congress never authorized the Government to demand

an equity interest in the borrower in connection with a loan

extended under Section 13(3) of the Federal Reserve Act, 12 U.S.C.

§ 357(3).

4

sufficiently alleging a harm to the suing stockholders

independent of any harm to AIG.” Starr Int’l Co. v.

United States, 106 Fed. Cl. 50, 62 (2012). The court

concluded that “AIG’s shareholders were harmed

uniquely and individually to the same extent as the

Government benefited” when “the Government

extracted from the public shareholders, and

redistributed to itself” 79.9% of the equity of AIG. Id.

at 65 (citations omitted). The CFC again rejected the

no-standing claim when the Government re-raised it in

2013, concluding that shareholders “have adequately

alleged that they conveyed a portion of the economic

value and voting power to the Government, and as a

result, suffered a direct and substantial impact to their

own property rights.” Starr Int’l Co. v. United States,

111 Fed. Cl. 459, 482 (2013).

Following a 37-day trial, the CFC ruled in

Starr’s favor on the illegal exaction claim. Pet. App.

94a. It concluded that although the FRBNY possessed

authority to issue interest-bearing loans under Section

13(3) in a time of “unusual and exigent circumstances,”

“Section 13(3) did not authorize the Federal Reserve

Bank to acquire a borrower’s equity as consideration

for the loan.” Ibid. The court concluded that the

exaction violated shareholders’ due process rights

without regard to whether AIG could be deemed to

have agreed to the exaction as the necessary price for

obtaining a loan, explaining, “Voluntary acceptance ...

is not a defense to an illegal exaction claim.” Id. at

97a-98a. The court held that its ruling in Starr’s favor

on the illegal exaction claim necessarily required

rejection of Starr’s Fifth Amendment taking claim. Id.

5

at 96a.3

The CFC nonetheless concluded that Starr was

not entitled to recover any damages for the

Government’s illegal exaction. The court explained,

“[I]f the Government had done nothing to rescue AIG,

the company would have gone bankrupt, and the

shareholders’ equity interest would have been

worthless.” Pet. App. 100a.4 The court stated that it

was “troubled” by this outcome because “the

Government is able to avoid any damages

notwithstanding its plain violations of the Federal

Reserve Act.” Id. at 101a. The parties cross-appealed

from the CFC’s judgment.

The Federal Circuit never reached the merits of

Starr’s claim that the Government exceeded its powers

under Section 13(3) and violated Starr’s constitutional

rights. Instead, while accepting that Starr had

demonstrated injury-in-fact directly traceable to the

Government’s conduct and thus possessed Article III

3

The court held that a litigant cannot successfully assert

both an illegal exaction claim and a taking claim. It held that the

two claims are based on mutually exclusive findings: a taking

claim requires a showing that the Government was authorized to

appropriate private property, while an illegal exaction claim

requires a showing that the Government lacked such authority.

Ibid.

4

Although it ultimately concluded that the appropriate

compensation was zero, the Court affirmed that Starr was entitled

to seek compensation for the illegal exaction. It held that Starr is

an intended beneficiary under the Federal Reserve Act, explaining

that Congress adopted Section 13(3) to benefit all segments of the

financial system, including loan recipients. Id. at 181a.

6

standing, the appeals court ruled that Starr lacked

prudential standing to assert those claims. Pet. App.

1a-41a. It held that Starr’s injuries were “merely

incidental to injuries to AIG” and that its claims were

“exclusively derivative in nature and belong to AIG.”

Id. at 41a.

The appeals court stated that its invocation of

prudential standing was based on “the third-party

standing requirement.” Pet. App. 19a-20a. The court

held that prudential standing requires a plaintiff “to

demonstrate that it is not raising a third party’s legal

rights,” id. at 19a, and that Starr had failed to make

that showing. According to the court, the “principle of

third-party standing limits access to the federal courts

to those litigants best suited to assert a particular

claim.” Id. at 22a. Even though it had “no reason to

doubt” Starr’s injury and Article III standing, id. at 41,

the appeals court held that Starr lacked prudential

standing because AIG was the party best suited to

raise the constitutional claims at issue. Id. at 22a-41a.

In reaching that conclusion, the court relied

primarily on its understanding of Delaware corporation

law. Id. at 23a-30a. The court said that because it

dismissed Starr’s claims on prudential standing

grounds, “We need not reach the remaining issues on

appeal with respect to the Equity Claims, including the

question of whether the equity term was permissible

under § 13(3) of the Act.” Id. at 41a. In other words,

the appeals court deemed it unnecessary to review the

CFC’s finding that the Government had effected a

illegal exaction in violation of shareholders’ due process

rights, Starr’s claim that the Government violated the

Takings Clause, and Starr’s claim that it was entitled

7

to compensation for the violation of its constitutional

rights.

SUMMARY OF ARGUMENT

The petition raises an issue of exceptional

importance. The multi-billion dollar exaction imposed

by the Government in this case was unprecedented; the

Government had never previously demanded an equity

share in a private corporation as the price of extending

a loan under Section 13(3), nor has it done so since.

Neither the Government nor the Federal Circuit

disputes the Article III standing of Starr and its fellow

shareholders: they suffered injury-in-fact directly

traceable to the Government’s alleged wrongdoing.

Yet, the Federal Circuit invoked prudential standing to

prevent the shareholders from ever having their day in

court.

The decision below is in considerable tension

with the principle, long recognized by this Court, that

“a federal court’s obligation to hear and decide cases

within its jurisdiction is virtually unflagging.”

Lexmark, 134 S. Ct. at 1386. Indeed, it was the Court’s

recognition of that tension that caused the Court in

Lexmark to disavow much of the prudential standing

doctrine. Other federal appeals courts have recognized

that Lexmark called into question whether the

prudential standing doctrine has any appropriate

applications.

Disregarding those warning signs, the court

below applied the prudential standing doctrine as its

basis for declining to permit adjudication of

constitutional claims that, it conceded, fell within the

8

Article III jurisdiction of the federal courts. It did so

because, it concluded, Starr failed “to demonstrate that

it [was] not raising a third party’s legal rights” and

that it was among “those litigants best suited to assert

[the] particular legal claim.” Pet. App. 19a, 22a. That

conclusion was based on a fundamental

misunderstanding of this Court’s third-party standing

case law. Review is particularly warranted because

third-party standing is the one strand of the prudential

standing doctrine that Lexmark did not address. This

case provides the Court with an excellent vehicle for

addressing the issue that Lexmark expressly put off for

“another day.” 134 S. Ct. at 1387 n.3.

The Court has never understood the third-party

standing doctrine as a limitation on the prudential

standing of those, such as Starr, who profess to be

asserting their own legal rights. Rather, the Court has

simply said that a party “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.”

Warth v. Seldin, 422 U.S. 490, 499 (1975). Case law

addressing third-party standing has focused on

whether a plaintiff who concedes that he is asserting

someone else’s rights fits within an exception to the

general rule. When, as here, a well-pled complaint

asserts that the defendant has violated rights bestowed

on the plaintiff under federal law, the third-party

standing doctrine never comes into play. A court may,

of course, ultimately determine on the merits that the

defendant has not violated rights recognized by federal

law. But any such determination has nothing to do

with the plaintiff’s standing and does not justify

barring the courthouse door to the plaintiff. Indeed,

the Court so held in Lexmark when it ruled that a

9

plaintiff’s standing does not depend on whether his

claimed injury falls within the zone of interest of the

federal law on which the plaintiff relies.

Starr asserts that the Government took actions

not authorized under federal law and thereby violated

its rights under the Due Process and Takings Clauses

of the Fifth Amendment.

The Federal Circuit

concluded that, under Delaware corporation law, the

rights asserted by Starr were derivative of those

belonging to AIG and thus that Starr lacked prudential

standing under the third-party standing doctrine. But

by so ruling, the appeals court improperly shortcircuited a merits-based analysis of Starr’s claims. The

Federal Circuit never addressed whether (as held by

the CFC): (1) the Government’s actions were

unauthorized by Section 13(3) of the Federal Reserve

Act; (2) the rights of Starr and other AIG shareholders

fell within the zone of interest protected by the Act;

and (3) those injured by the Government’s actions were

authorized under federal law to seek compensation by

filing suit in the CFC. Regardless whether Starr would

ultimately have prevailed on those issues in the

Federal Circuit, case law is clear that Starr possessed

standing to press those claims. Review is warranted to

address this conflict between the decision below and

this Court’s standing case law.

Review is also warranted because the Federal

Circuit’s errors were attributable at least in part to

lack of clarity in this Court’s third-party standing case

law. In general, the Court has upheld the standing of

any litigant who could demonstrate Article III standing

and who asserted violation of his own (not some third

party’s) rights. But in one pre-Lexmark case, a closely

10

divided Court denied prudential standing to a litigant

who possessed Article III standing and who asserted a

violation of his own First Amendment rights. Elk

Grove Unified School District v. Newdow, 542 U.S. 1

(2004). The federal appeals court had upheld the

plaintiff’s prudential standing, concluding that his

claims (alleged interference with his interests in

inculcating his child with his views on religion) fell

within the zone of interest protected by the First

Amendment’s Free Exercise Clause. This Court’s

rationale for reversing that holding was opaque, at

times suggesting that a plaintiff who satisfies the zoneof-interest test may nonetheless be denied prudential

standing if the plaintiff’s interests conflict with the

interests of third parties with competing claims. See,

e.g., 542 U.S. at 17-18.

This lack of clarity may have contributed to the

Federal Circuit’s misunderstanding of the third-party

standing doctrine, including its conclusion that the

allegedly superior claims of a third party (AIG) were

sufficient to deny prudential standing to Starr. Review

is warranted to provide much-needed clarification of

the third-parity standing doctrine, whose requirements

(the Court has candidly admitted) “are harder to

classify.” Lexmark, 134 S. Ct. at 1387 n.3.

11

REASONS FOR GRANTING THE PETITION

I.

THE DECISION BELOW IS INCONSISTENT WITH

THIS COURT’S MANDATE THAT FEDERAL

COURTS SHOULD HEAR AND DECIDE CASES

WITHIN THEIR JURISDICTION

For purposes of its decision, the Federal Circuit

conceded that “Starr has satisfied the requirements of

constitutional standing derived from Article III” of the

Constitution. Pet. App. 19a. That is, Starr has

demonstrated that its claims properly invoke the

Article III jurisdiction of the federal courts by

adequately demonstrating an “actual or imminent”

“injury in fact” that is fairly traceable to the challenged

action of the Government and likely to be redressed by

a favorable judicial decision. Lujan v. Defenders of

Wildlife, 504 U.S. 555, 560-61 (1992). Moreover,

Congress has explicitly waived the Government’s

sovereign immunity from claims of this nature. 28

U.S.C. § 1491(a)(1) (“The United States Court of

Federal Claims shall have jurisdiction to render

judgment upon any claim against the United States

founded either upon the Constitution, or any Act of

Congress.”) The Federal Circuit nonetheless declined

to exercise jurisdiction over Starr’s claims, citing

“prudential” reasons.

That refusal to exercise jurisdiction is

inconsistent with this Court’s repeated admonitions

that “[j]urisdiction existing, ... a federal court’s

obligation to hear and decide a case is virtually

unflagging.” Sprint Communications, Inc. v. Jacobs,

134 S. Ct. 584, 591 (2013) (internal quotations

omitted). “Federal courts, it was early and famously

12

said, have ‘no more right to decline the exercise of

jurisdiction which is given, than to usurp that which is

not given.’” Id. at 590 (quoting Cohens v. Virginia, 6

Wheat. (19 U.S.) 264, 404 (1821)). Review is warranted

to resolve the inconsistency between the decision below

and the Court’s case law, particularly in light of the

unprecedented nature of the exaction imposed upon

AIG shareholders and the huge amount of damages at

issue.

Indeed, Lexmark explicitly recognized the

“tension” between the “obligation” of federal courts to

exercise their jurisdiction when properly invoked and

any refusal to do so on the basis of prudential standing

principles. Lexmark, 134 S. Ct. at 1386. In recognition

of that tension, Lexmark disavowed much of the

prudential standing doctrine. Id. at 1386-88. The

petition provides the Court with an appropriate

opportunity to consider whether to jettison the doctrine

entirely.

The Court has explained that “prudential

standing” embodies “judicially self-imposed limits on

the exercise of federal jurisdiction.” Allen v. Wright,

468 U.S. 737, 751 (1984). It has identified three

strands of the prudential standing doctrine: “the

general prohibition on a litigant’s raising another

person’s legal rights, the rule barring adjudication of

generalized grievances more appropriately addressed

in the representative branches, and the requirement

that a plaintiff’s complaint fall within the zone of

interests protected by the law invoked.” Ibid. For only

the first of those three strands—the limitation on

raising the rights of third parties—is it even arguably

still appropriate to engage in a prudential standing

13

analysis.

While at one time the Court grounded its

reluctance to hear “generalized grievances” on

“prudential” grounds, it has more recently concluded

that such grievances do not constitute Article III

“Cases” or “Controversies” and thus that federal courts

are constitutionally barred from exercising jurisdiction

over them. See, e,g., DaimlerChrysler Corp. v. Cuno,

547 U.S. 332, 344-46 (2006); Lujan, 504 U.S. at 573-74.

In Lexmark, the Court concluded that whether

a plaintiff’s complaint falls within the zone of interests

protected by the law invoked does not raise a standing

question at all. It explained, “‘[P]rudential standing’ is

a misnomer as applied to the zone-of-interests analysis,

which asks whether this particular class of persons has

a right to sue under the substantive statute.” 134 S.

Ct. at 1387 (citations omitted). The zone-of-interest

analysis requires a court to closely examine the statute

or constitutional provision at issue to determine

whether it provides a cause of action to the plaintiff.

Whether a cause of action exists is a question of

statutory interpretation: “[w]e do not ask whether in

our judgment Congress should have authorized [the

plaintiff’s suit] but whether Congress in fact did so.”

Id. at 1388 (emphasis in original). A federal court

“cannot limit a cause of action that Congress has

created merely because ‘prudence’ dictates.” Ibid.

The third-party standing strand of the

prudential standing doctrine remains in place, but it is

hanging by a thread. The Court in Lexmark stated

that because the case did not address any issue of

third-party standing, “consideration of that doctrine’s

14

place in the standing firmament can await another

day.” Id. at 1387 n.3.5 Numerous federal appeals court

decisions have, in light of Lexmark, questioned

whether it ever remains appropriate for a federal

appeals court to decline to exercise jurisdiction over a

case on “prudential standing” grounds. See, e.g., City

of Oakland v. Lynch, 798 F.3d 1159, 1163 n.1 (9th Cir.

2015); Duty Free Americas, Inc. v. Estee Lauder Cos.,

797 F.3d 1248, 1273 n.6 (11th Cir. 2015); Excel

Willowbrook, L.L.C. v. JP Morgan Chase, N.A., 758

F.3d 592, 603 (5th Cir. 2014). Only the Federal Circuit

has swum against that tide, expansively interpreting

the third-party standing doctrine to prevent Starr from

litigating its constitutional claims.

The Federal Circuit’s invocation of a prudentialstanding bar is particularly problematic with respect to

Starr’s Taking Clause claim. The Court recently

reiterated that when the Government takes private

property, it has a “categorical duty” to provide “just

compensation” to the former owner. Arkansas Game

and Fish Comm’n, 568 U.S. at 31. Starr alleges that

the Government has taken its property and that it is

entitled to compensation. The federal courts may

ultimately determine on the merits that no taking

occurred or that the “just compensation” is zero, but

they are not authorized to decline to exercise their

jurisdiction over Starr’s taking claim based on

prudential considerations.

5

Lexmark’s brief discussion of third-party standing

doctrine noted the Court’s own inconsistent treatment of that

issue, ibid, thereby implicitly recognizing the need to revisit the

issue in an appropriate case.

15

Indeed, Starr’s right under the Tucker Act to

seek compensation from the Government for its losses

is not dependent on whether Congress has explicitly

authorized such a cause of action. The Court has

explicitly held that the Fifth Amendment’s “just

compensation” guarantee does not depend on the good

graces of Congress, explaining:

[A] landowner is entitled to bring an

action in inverse condemnation as a

result of the self-executing character of

the constitutional provision with respect

to compensation. ... [I]t has been

established at least since Jacobs v. United

States, 290 U.S. 13 (1933), that claims for

just compensation are grounded in the

Constitution itself. “The right [to just

compensation] was guaranteed by the

Constitution. ... Statutory recognition was

not necessary. A promise to pay was not

necessary. Such a promise was implied

because of the duty to pay imposed by the

Fifth Amendment. ...” Id. at 16. Jacobs,

moreover, does not stand alone, for the

Court has frequently repeated the view

that, in the event of a taking, the

compensation remedy is required by the

Constitution.

First English Evangelical Lutheran Church v. Los

Angeles, 482 U.S. 304, 315-16 (1987) (citations

omitted). Review is warranted to resolve the sharp

conflict between the decision below and this Court’s

repeated admonitions that federal courts must not

refrain from exercising the jurisdiction granted to

16

them.

II.

THE FEDERAL CIRCUIT’S REFUSAL TO

EXERCISE JURISDICTION WAS BASED ON A

FUNDAMENTAL MISUNDERSTANDING OF THE

THIRD-PARTY STANDING DOCTRINE

The Court has repeatedly stated that “the

plaintiff [in a federal court proceeding] must assert his

own legal rights and interests, and cannot rest his

claim to relief on the legal rights or interests of third

parties.”

Warth, 422 U.S. at 499.

See, e.g.,

Hollingsworth v. Perry, 133 S. Ct. 2652 (2013) (group

opposing same-sex marriage lacked standing to appeal

a decision striking down a California law as

unconstitutional; group not permitted to assert

California’s interests in defending the law). The Court

has advanced two rationales for that rule:

First, the courts should not adjudicate

[the] rights [of third persons not parties

to the litigation] unnecessarily, and it

may be that in fact the holders of those

rights do not wish to assert them, or will

be able to enjoy them regardless of

whether the in-court litigant is successful

or not. ... Second, third parties

themselves usually will be the best

proponents of their own rights. The

courts depend on effective advocacy, and

therefore should prefer to construe legal

rights only when the most effective

advocates of those rights are before them.

Singleton v. Wulff, 428 U.S. 106, 113-14 (1976).

17

The third-party standing doctrine creates

several very limited exceptions to the bar against

litigating someone else’s legal rights. The most

frequently invoked exception requires a showing that

“the party asserting the right has a close relationship

with the person who possesses the right and there is a

hindrance to the possessor’s ability to protect his own

interests.” Sessions v. Morales-Santana, 137 S. Ct.

1678, 1689 (2017) (quoting Kowalski v. Tesmer, 543

U.S. 125, 130 (2004)).6 Almost invariably, case law

addressing the third-party standing doctrine arises in

the context of a plaintiff who concedes that the legal

rights at issue belong to another but contends that he

nonetheless ought to be permitted to litigate those

rights.

The court below applied the third-party standing

doctrine in an entirely different context. Starr has

never asserted that it ought to be permitted to assert

someone else’s legal rights. Rather, Starr alleges that

its injuries were directly traceable to the Government’s

violation of its own constitutional rights. The Federal

Circuit did not accept that allegation. Instead, based

on its analysis of Delaware corporation law, the

appeals court concluded that Starr’s injuries were

6

Encompassed within that exception is “next friend”

standing, which “has long been an accepted basis for jurisdiction

in certain circumstances.” Whitmore v. Arkansas, 495 U.S. 149,

162 (1990). “Most frequently, ‘next friends’ appear in court on

behalf of detained prisoners who are unable, usually because of

mental incompetence or inaccessibility, to seek relief themselves.”

Ibid. Similarly, estates are routinely granted standing to assert

non-penal civil claims based on the deceased’s rights. See, e.g.,

Malvino v. Delluniversita, 840 F.3d 223 (5th Cir. 2016).

18

attributable to an exaction of property belonging to

AIG, not to Starr and other AIG shareholders; and thus

that the constitutional rights at issue belong to AIG

alone. Application of the third-party standing doctrine

in these circumstances is wholly inconsistent with the

Court’s third-party standing case law, discussed above.

Review is warranted to resolve the tension between

that case law and the decision below, as well as to

determine whether third-party standing issues ought

to continue to be analyzed within a “prudential

standing” framework.

WLF notes that the Court’s two stated reasons

for barring a litigant from asserting a third party’s

rights are inapplicable to this case. Singleton noted

that the third party might oppose the assertion of his

rights. 428 U.S. at 113-14. But if, as here, the plaintiff

asserts that the rights being asserted are his own, the

third party cannot possibly be adversely affected by the

litigation. The court’s consideration of the merits will

require it to assess whether the plaintiff actually

possesses the rights he asserts. If not, the claim will

fail; and if so, the third party has no basis for objecting.

Singleton also observed that those who possess the

rights at issue are likely to be the best proponents of

those rights. Ibid. But if, as the litigant claims, the

rights at issue belong to him, then he is the best

proponents of those rights. The correctness of that

claim should be determined in a merits-based

proceeding, not based on a federal court’s decision not

to exercise jurisdiction for prudential reasons.

Review is warranted as a follow-up to Lexmark,

to determine whether limitations on a litigant’s ability

to assert the rights of a third party should continue to

19

be viewed through a prudential-standing lens. There

are good reasons to follow Lexmark’s lead and to

determine that, instead, those limitations should be

policed by examining the plaintiff’s Article III standing

as well as whether Congress intended to encompass the

plaintiff within the class of plaintiffs authorized to

assert the cause of action it created. WLF notes that

many plaintiffs asserting the rights of third parties will

not be able to establish Article III standing—that is,

the causal chain will be too attenuated and they will

not be able to establish that their injuries are directly

traceable to the violation of someone else’s rights. If

they can establish Article III standing, then the

standing issue is more appropriately analyzed as a

matter of statutory interpretation rather than

prudential standing.

As this Court has repeatedly held, Congress is

entitled to grant statutory standing that is “as broad as

is permitted by Article III of the Constitution,” even

when the claims asserted by the plaintiff might not

otherwise seem to fall within the zone of interest

protected by the statute. Gladstone Realtors v. Village

of Bellwood, 441 U.S. 91, 109 (1979); Bennett v. Spear,

520 U.S. at 1162-63. Granting review will permit the

Court to determine whether it is ever appropriate for a

federal court to decline to exercise its jurisdiction based

on discretionary third-party grounds when the relevant

right of action extends to the plaintiff’s claims and

perhaps even to anyone who can establish the requisite

Article III standing.

The petition provides a good vehicle for resolving

the issue left open by Lexmark. The petition raises the

prudential standing issue cleanly; there are no

20

disputed issues of fact. Rather, the only issue is one of

law that has not been, but should be, resolved by this

Court: whether a party with Article III standing may

be barred from asserting Fifth Amendment monetary

claims against the Government based solely on an

alleged absence of third-party prudential standing.

III.

REVIEW IS WARRANTED TO RESOLVE THE

CONFLICT BETWEEN THE DECISION BELOW AND

THIS COURT’S DECISION IN LEXMARK

Review is also warranted because the Federal

Circuit’s decision directly conflicts with Lexmark.

Although the appeals court framed its prudentialstanding decision as one based on the third-party

standing doctrine, its analysis was incompatible with

Lexmark, which warned courts against declining to

exercise their jurisdiction for discretionary reasons.

134 S. Ct. at 1386.

Lexmark directed federal courts to look to

congressional intent when determining whether those

possessing Article III standing can state a cause of

action for violation of an alleged right. Id. at 1387-88.

The Federal Circuit never undertook that analysis.

Instead, despite acknowledging that “[b]ecause Starr

presses the Equity Claims under federal law, federal

law dictates whether Starr has direct standing,” Pet

App. 22a,7 the court relied exclusively on Delaware law

7

In making that acknowledgment, the appeals court cited

this Court’s statement that “any common law rule necessary to

effectuate a private cause of action ... is necessarily federal in

character.” Ibid (citing Kamen v. Kemper Fin. Servs., Inc., 500

U.S. 90, 97 (1991)).

21

in concluding that Starr lacked prudential standing; it

determined that under Delaware law the rights

asserted by Starr actually belonged to AIG. The

appeals court challenged neither Starr’s Article III

standing nor that at least someone possessed

constitutionally protected property rights. Yet it never

explained why—despite Lexmark’s clear direction to

the contrary—it was appropriate to examine the causeof-action issue through a prudential-standing lens.

Starr was highly prejudiced by the Federal

Circuit’s approach.

By dismissing the case on

prudential standing grounds, the Federal Circuit never

addressed whether (as asserted by Starr and held by

the CFC): (1) the Government’s actions were

unauthorized by Section 13(3) of the Federal Reserve

Act; (2) the rights of Starr and other AIG shareholders

fell within the zone of interest protected by the Act;

and (3) those injured by the Government’s actions were

authorized under federal law to seek compensation by

filing suit in the CFC. Regardless whether Starr would

ultimately have prevailed on those issues in the

Federal Circuit, Lexmark makes clear that

consideration of those issues fell within the jurisdiction

of the federal courts. Starr has stated a cause of action

alleging violation of its Fifth Amendment rights;

federal courts “cannot limit a cause of action that

Congress has created merely because ‘prudence’

dictates.” Lexmark, 134 S. Ct. at 1388.

The Federal Circuit’s holding also conflicts with

Allegheny Corp. v. Breswick Co., 353 U.S. 151 (1957).

The Court held there that shareholders possessed

standing to challenge Interstate Commerce

Commission (ICC) orders that resulted in issuance of

22

new corporate stock (and thereby diminished the

plaintiffs’ equity share in the corporation). 353 U.S. at

160 (stating that “the threatened ‘dilution’ of the equity

of the common shareholders provided sufficient

financial interest to give them standing.”). The appeals

court’s efforts to distinguish Allegheny, Pet. App. 34a36a, are unavailing; at no point did this Court suggest

that whether it could appropriately exercise

jurisdiction over the shareholders’ claims should turn

on an examination of state corporation law.

Indeed, the Court in Allegheny ultimately denied

the shareholders’ claim, finding that the shareholders

had failed to state a claim for violation of the Interstate

Commerce Act because the ICC possessed the statutory

authority to issue the orders in question. Id. at 163171. Yet the Court’s ruling that the shareholders had

failed to state a cause of action did not affect its

conclusion that they possessed standing to assert their

claim. In contrast, the Federal Circuit’s holding that

Starr lacked prudential standing—and thus that it

should not exercise jurisdiction over Starr’s

claims—was based in large measure on its analysis of

Delaware law and what it viewed as the effect of that

law on the viability of Starr’s cause of action.

IV.

THE PETITION PROVIDES A GOOD VEHICLE FOR

ELIMINATING CONFUSION IN THE COURT’S

THIRD-PARTY STANDING CASE LAW

Review is also warranted because the Federal

Circuit’s errors may have been attributable at least in

part to lack of clarity in this Court’s third-party

standing case law. As Lexmark candidly conceded, that

case law has rendered “[t]he limitations on third-party

23

standing ... harder to classify.” 134 S. Ct. at 1387 n.3.

As described above, the Court’s prudential

limitations on third-party standing have focused

almost exclusively on litigants who concede that they

are asserting another’s rights but nonetheless seek an

exception to the general rule against such claims. See,

e.g., Sessions, 137 S. Ct. at 1689; Craig v. Boren, 429

U.S. 190 (1976). In general, the third-party standing

doctrine has not been thought to restrict the prudential

standing of litigants who plausibly allege the violation

of their own rights.

But in one pre-Lexmark case, a closely divided

Court denied prudential standing to a litigant who

possessed Article III standing and who asserted a

violation of his own First Amendment rights. Elk

Grove Unified School District v. Newdow, 542 U.S. 1

(2004). The federal appeals court had upheld the

plaintiff’s prudential standing, concluding that his

claims (alleged interference with his interests in

inculcating his child with his views on religion) fell

within the zone of interest protected by the First

Amendment’s Free Exercise Clause.8

This Court’s rationale for reversing that holding

was opaque. Language in the opinion can be read as

holding that the plaintiff lacked prudential standing

because his claims fell outside the zone of interest

protected by the First Amendment. See, e.g., 542 U.S.

8

The plaintiff alleged that his noncustodial daughter’s

school district, by mandating that its kindergartens begin each day

with a recitation of the Pledge of Allegiance, infringed his right to

expose his daughter to his religious views.

24

at 16-17. Other language in the opinion, however,

suggests that a plaintiff who satisfies the zone-ofinterest test may nonetheless be denied prudential

standing if the plaintiff’s interests conflict with the

interests of third parties with competing claims. See,

e.g., 542 U.S. at 17-18.

This lack of clarity may have contributed to the

Federal Circuit’s misunderstanding of the third-party

standing doctrine, including its conclusion that the

allegedly superior claims of a third party (AIG) were

sufficient to deny prudential standing to Starr. Review

is warranted to provide much-needed clarification of

the third-parity standing doctrine.

CONCLUSION

The Court should grant the Petition.

Respectfully submitted,

November 13, 2017

Richard A. Samp

(Counsel of Record)

Cory L. Andrews

Washington Legal Found.

2009 Massachusetts Ave., NW

Washington, DC 20036

202-588-0302

rsamp@wlf.org