William J. Martínez, United States District Judge.
Plaintiff American Cricket Premier League, LLC ("Plaintiff"), alleges that a corrupt bidding process prevented fair consideration of its bid to create an internationally recognized cricket league in the United States. Plaintiff brings claims under federal antitrust law and related state laws against the various entities and individuals (collectively, "Defendants") that Plaintiff believes are responsible for the alleged corruption.
Currently before the Court is Defendants' Joint Motion to Dismiss. (ECF No. 56.) For the reasons explained below, the Court grants the motion without prejudice for lack of subject matter jurisdiction. More specifically, the Court lacks jurisdiction under Article III of the U.S. Constitution to adjudicate Plaintiff's federal antitrust claims because there is no prospective relief this Court can grant that will remedy Plaintiff's claimed injury; the Court lacks Article III jurisdiction to adjudicate Plaintiff's state-law claims for the same reason; and the Court otherwise lacks statutory subject matter jurisdiction to adjudicate Plaintiff's state-law claims because Plaintiff has failed to plead diversity of citizenship.
Defendants bring their motion to dismiss under Federal Rule of Civil Procedure 12(b)(1), and alternatively under Rule 12(b)(6). (See ECF No. 56 at 18-19.)
Rule 12(b)(1) permits a party to move to dismiss for "lack of subject-matter jurisdiction." "[Federal] [d]istrict courts have limited subject matter jurisdiction and may [only] hear cases when empowered to do so by the Constitution and by act of Congress." Radil v. Sanborn W. Camps, Inc., 384 F.3d 1220, 1225 (10th Cir. 2004) (internal quotation marks omitted). "A court lacking jurisdiction cannot render judgment but must dismiss the case at any stage of the proceedings in which it becomes apparent that jurisdiction is lacking." Basso v. Utah Power & Light Co., 495 F.2d 906, 909 (10th Cir. 1974).
Rule 12(b)(1) motions generally take one of two forms: a facial attack or a factual attack. Holt v. United States, 46 F.3d 1000, 1002 (10th Cir. 1995). A facial attack questions the sufficiency of the complaint as to its subject matter jurisdiction allegations. Id. In reviewing a facial attack, courts accept all well-pleaded allegations as true, as in a Rule 12(b)(6) setting. Id. A factual attack, by contrast, "may go beyond allegations contained in the complaint and challenge the facts upon which subject matter jurisdiction depends." Id. at 1003.
In this case, Defendants bring a facial attack, so the Court cannot stray from the allegations of the complaint (and any attachments, see Fed. R. Civ. P. 10(c)).
The Court accepts the following as true for purposes of resolving Defendants' motion. All "¶" citations, without more, are to Plaintiff's Corrected Complaint and Jury Demand (ECF No. 51).
The international governing body for cricket is Defendant International Cricket Council ("ICC"). (¶¶ 32, 35.) "ICC recognition is crucial for any professional cricket league to be viable and internationally recognized." (¶ 32.) "Players that want to compete in ICC-sanctioned international events, or for any of the other ICC-sanctioned events, will not participate in a league that is not sanctioned by the ICC because they risk losing their ability to play in future ICC matches." (¶ 34.) In 1965, the ICC approved the United States of America Cricket Association ("USACA") (not a party here) as the national-level governing body for cricket in the United States. (¶ 36.)
In 2016, USACA announced plans to launch a "T20 professional cricket league in the United States." (¶ 37.) T20 is short for "Twenty20," a cricket format "designed in the mid-2000s as a faster-paced, flashier version of the game." (¶ 27.) T20 "allows for a single contest to be played efficiently in about three hours," as compared to "Test matches (lasting 5 days) and One-Day Internationals (lasting on average more than 8 hours)." (¶ 28.)
Plaintiff is a Delaware LLC headquartered in Las Vegas, Nevada. (¶ 9.) One of its principals is Jay Pandya ("Pandya"). (¶ 9(a).) He is "an experienced businessperson and cricket executive," including through his ownership of a professional cricket team in St. Lucia. (Id.) Pandya is also chairman and founder of non-party Global Sports Ventures ("Global"). (Id. ¶¶ 9(a), 38.) USACA selected Global "as its partner to do the commercial development work necessary to establish and operate [a] professional U.S. T20 cricket league." (¶ 38.)
In September 2016, Global entered into the "License Agreement" with USACA. (¶ 39.) The License Agreement granted Global the "exclusive right" to establish "the only USACA sanctioned and ICC approved professional T20 league" in the United States. (¶ 41 (internal quotation marks omitted).) However, USACA was under ICC suspension at the time. (¶ 42.) The License Agreement accordingly "provide[d] that the Licensed Rights, among other rights, would not become effective `unless and until the Suspension ... is lifted, terminates or otherwise ends ... and the ICC shall have approved USACA's grant of such rights to [Global].'" (Id.)
The ICC did not want Pandya involved in any ICC-sanctioned cricket league. (¶ 46.) "The ICC's desire to exclude Global and Mr. Pandya [was] based in large part on the fact that Mr. Pandya is not part of the incumbent and traditional Indian business and social circles that dominate Indian cricket and the ICC worldwide." (¶ 47.) But the ICC knew that reinstatement of USACA would lead to Global's recognition as the USACA-sanctioned (and therefore, apparently, the ICC-sanctioned) organizer of T20 cricket in the United States. (¶ 46.)
The ICC formally expelled USACA in June 2017. (¶ 52.) This "prevent[ed] the License Agreement from going into effect." (¶ 53.) At some later (unspecified) time, Global "transferred all of the Licensed Rights granted under the USACA Licens[e] Agreement to [Plaintiff]." (Id. n.1.)
The ICC soon assisted in creating Defendant USA Cricket, a new entity headquartered in Colorado Springs that was to replace USACA as the national-level governing body for cricket in the United States. (¶¶ 54-57.) USA Cricket officially launched in September 2017 and formally applied for ICC membership in December 2017. (¶¶ 58-59.)
USA Cricket then began the process of organizing its first board of directors. (¶¶ 65-67.) The board was to have ten members, with seven to be elected. (¶ 60.) Defendants Gaje, Pisike, Rai, and Gruny ran for board membership, and Defendants Willow TV International ("Willow") and Cricket Acquisition Corporation ("CAC") "paid for substantially all of [their] campaign expenses." (¶ 68; see also ECF No. 51 at 1.) Willow and CAC are "entities owned and run by affiliates of the influential Times Group of India (a key sponsor of ICC-sanctioned events in India and elsewhere)." (¶ 68.)
Gaje, Pisike, Rai, and Gruny each won a board seat (becoming what Plaintiff calls the "Conflicted Board Members"). (¶ 70.) It is not clear who won the other three elected positions. However, the remaining three members of the ten-member board were appointed by USA Cricket's "Nominating and Governance Committee," which was beholden to ICC interests. (¶¶ 65, 70.) Those three non-elected board members were therefore similar in their loyalties to the four Conflicted Board Members, meaning "there was now a clear majority of the Board beholden to ICC-friendly interests." (¶ 70.)
In November 2018,
(¶ 71 (citations omitted).)
Plaintiff decided to bid for this opportunity, and therefore submitted a timely RFP response in January 2019. (¶ 79.) Plaintiff's RFP included, among other things, "$8 million in guaranteed compensation to USA Cricket for each of the first two years and a total of $516 million in guaranteed financial compensation over a period of 25 years." (¶ 80.)
Defendant American Cricket Enterprises ("ACE") also submitted a timely bid. (¶ 81.) ACE had "backing from ... the founder and CEO of Willow and CAC, and [from] the principals of The Times Group of India." (Id.) "USA Cricket began negotiating
In mid-March 2019, USA Cricket informed Plaintiff that it "had selected another Proposer," which turned out to be ACE. (¶ 83.)
(¶ 86.) In particular, Plaintiff learned that ACE had offered "a mere $2 million in financial contribution for each of the first two years (hundreds of millions of dollars less over the course of 25 years than [Plaintiff] guaranteed)." (¶ 87.)
(¶ 88.)
Given what Plaintiff had learned, Plaintiff contacted USA Cricket in late March 2019 to ask how ACE's proposal could have won out over Plaintiff's. (¶ 93.) USA Cricket responded by "challeng[ing] the veracity of [Plaintiff's] financial commitments contained in the RFP Response." (¶ 94.) In other words, it appears that USA Cricket did not believe (or at least said it did not believe) Plaintiff's representations with respect to guaranteed compensation. This led to further communication in which it became clear that Plaintiff's guarantee of certain compensation was a bank guarantee. (¶ 96.)
USA Cricket then offered Plaintiff "an opportunity to re-present to the RFP committee in more detail." (¶ 99 (internal quotation marks omitted).) However, USA Cricket demanded that Plaintiff sign what were called the "New Terms of Engagement." (¶ 100.) The New Terms of Engagement were, in essence, a prospective release of any claims the bidder might have against USA Cricket based on the bidding process. (¶¶ 101-06.)
Plaintiff refused to sign the New Terms of Engagement, "effectively ending its ability to be formally considered by USA Cricket." (¶ 111.) "On May 23, 2019, USA Cricket formally announced that it had selected ACE as its strategic partner." (Id.)
Plaintiff filed this lawsuit on May 28, 2019 (ECF No. 1) alleging eight claims for relief:
(Id. at 35-50.)
In July 2019, Plaintiff filed the currently operative complaint, i.e., the Corrected Complaint and Jury Demand (ECF No. 51). It alleges the same eight causes of action. (Id. at 33-47.) The complaint is "corrected" in the sense that it substitutes the correct names for certain defendants. (See ECF No. 39.)
All Defendants have jointly moved to dismiss. (ECF No. 56.)
Section 4 of the Clayton Act authorizes private plaintiffs to sue for violations of federal antitrust laws. See 15 U.S.C. § 15(a) ("[A]ny person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws may sue therefor."). To pursue such claims, a plaintiff must have standing to sue under Article III of the U.S. Constitution (like all plaintiffs in federal court), and also have "antitrust standing." Tal v. Hogan, 453 F.3d 1244, 1253 (10th Cir. 2006). These are separate inquiries, and "the standing requirements in the antitrust context [are] more rigorous than that of the Constitution." Id.
The principles of Article III standing, although less rigorous that antitrust standing, dispose of Plaintiff's federal antitrust claims. The principles of antitrust standing —particularly "antitrust injury"—are nonetheless helpful to understanding the Article III infirmity, so the Court partially addresses antitrust standing as well.
Article III of the U.S. Constitution restricts federal courts to deciding "cases" and "controversies." See U.S. Const. art. III, § 2, cl. 1. These words have been interpreted to restrict federal courts from giving "advisory opinions," Flast v. Cohen, 392 U.S. 83, 96, 88 S.Ct. 1942, 20 L.Ed.2d 947 (1968), meaning that a federal court may not resolve questions in the abstract, but instead may only resolve "disputes arising out of specific facts when the resolution of the dispute will have practical consequences to the conduct of the parties," Columbian Fin. Corp. v. BancInsure, Inc., 650 F.3d 1372, 1376 (10th Cir. 2011).
To safeguard this restriction, the Supreme Court has articulated a three-element test for "Article III standing":
Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992) (citations omitted; certain alterations incorporated). "Article III standing is jurisdictional...." In re Peeples, 880 F.3d 1207, 1212 (10th Cir. 2018).
Plaintiff's complaint raises serious questions as to injury-in-fact as it connects to redressability. Plaintiff pleads that
(¶¶ 6-7.) In other words, Plaintiff asserts what is sometimes called "procedural injury." Lujan, 504 U.S. at 573 n.7, 112 S.Ct. 2130.
In light of Plaintiff's concessions that it can only ask for a "fair bidding process," and not for an order that USA Cricket accept Plaintiff's bid instead of ACE's, Defendants' motion specifically challenges the viability of such a procedural injury in this context, and also whether this Court can enter any order redressing it. (ECF No. 56 at 20-21.) In response, Plaintiff asserts that its burden to plead standing at this phase is a "lightened" one, and Plaintiff then reiterates that it "has lost the opportunity to fairly compete for, and likely win if judged objectively, some or all of the rights to commercially develop an ICC-sanctioned U.S. cricket league." (ECF No. 64 at 22-23.)
Plaintiff conspicuously cites no case in which its theory of injury and redressability has been accepted. Nor could the Court find any such case.
As far as the Court is aware, "procedural injury" is viable, if at all, only in unique circumstances that have no obvious application here. One is in the administrative law context, and specifically as it relates to
Another unique context in which something like "procedural injury" is a viable basis for standing is a challenge to affirmative action. In such a challenge, there is no guarantee that, e.g., the bidder for a government contract would be selected, or the applicant to a state university would be admitted, even if consideration of minority status was eliminated from the process. Rather, "an allegation that some discriminatory classification prevented the plaintiff from competing on an equal footing" is enough. Ne. Fla Chapter of Associated Gen. Contractors of Am. v. City of Jacksonville, 508 U.S. 656, 667, 113 S.Ct. 2297, 124 L.Ed.2d 586 (1993).
In both of these types of cases (NEPA and affirmative action), a major reason why redressability still exists is that the court can order the defendant to do something that will have a real-world effect. If a court finds that an agency failed to discharge its NEPA duties adequately, the court must "hold unlawful and set aside agency action." 5 U.S.C. § 706(2); see also Morris v. U.S. Nuclear Regulatory Comm'n, 598 F.3d 677, 690 (10th Cir. 2010) (NEPA enforced through the Administrative Procedure Act). At that point, if the agency still wants to go forward, it is statutorily required to redo the NEPA process. See 42 U.S.C. § 4332(C); see also 40 C.F.R. § 1501.4.
The affirmative action context is slightly more complicated because, for example, it is not always a legal requirement that a government award contracts through competitive bidding. But if a court is satisfied that that the government will continue to award contracts through competitive bidding and that the plaintiff will continue to bid for those contracts, redressability is satisfied. See, e.g., Adarand Constructors, Inc. v. Peña, 515 U.S. 200, 212, 115 S.Ct. 2097, 132 L.Ed.2d 158 (1995) (plurality op.) ("Because the evidence in this case indicates that the [government] is likely to let contracts involving guardrail work that contain a subcontractor compensation clause at least once per year in Colorado, that Adarand is very likely to bid on each such contract, and that Adarand often must compete for such contracts against small disadvantaged businesses, we are satisfied that Adarand has standing to bring this lawsuit.").
Finally, in the educational affirmative action setting, redressability is generally maintained by certifying a class of both present and future applicants to the educational institution. See Gratz v. Bollinger, 539 U.S. 244, 260-68, 123 S.Ct. 2411, 156 L.Ed.2d 257 (2003). Because there is generally no question that the institution would, or even could, stop assembling its incoming class through a competitive application process, a class action preserves the possibility of meaningful prospective relief even if—as is likely—the original plaintiffs will enroll in a different school, and perhaps even graduate, while the lawsuit is pending. Cf. Texas v. Lesage, 528 U.S. 18, 21, 120 S.Ct. 467, 145 L.Ed.2d 347 (1999) (in affirmative action cases, as elsewhere, there must be an "allegation of an ongoing or imminent constitutional violation to support a claim for forward-looking relief").
(ECF No. 51 at 47-48; see also ECF No. 64 at 24 (affirming that this is the relief that Plaintiff believes satisfies the Article III redressability requirement).)
This language is already notable for use of terms like "any current or future selection process"—seemingly an implicit admission that there might not be another selection process. But most notable is what Plaintiff does not ask for, namely, an order that Defendants re-bid the contract. Plaintiff does not ask for that relief likely because Plaintiff cannot find any authority supporting the Court's ability to enter such an order.
To be sure, Plaintiff says that "Defendants could have awarded rights to develop the cricket league without an RFP Process, but USA Cricket chose to avail itself of the benefits of an apparently competitive process." (ECF No. 64 at 31 (emphasis added).) The implication appears to be that there is some point-of-no-return, beyond which one is irrevocably committed to a bidding process that may be judicially evaluated after the fact for fairness. But Plaintiff never actually says as much, nor cites any authority supporting the implication.
Conceivably, Congress could "loosen the strictures of the redressability prong" by granting a procedural right in the antitrust context, as it has in the environmental context. Summers v. Earth Island Inst., 555 U.S. 488, 497, 129 S.Ct. 1142, 173 L.Ed.2d 1 (2009). But Congress has not done so. Indeed, case law about "antitrust injury" makes fairly clear that the antitrust laws were not designed eliminate bidding processes where the party soliciting the bids predetermined the outcome. "[O]ther laws [besides the Sherman Act], for example, unfair competition laws, business tort laws, or regulatory laws, provide remedies for various competitive practices thought to be offensive to proper standards of business morality." NYNEX Corp. v. Discon, Inc., 525 U.S. 128, 137, 119 S.Ct. 493, 142 L.Ed.2d 510 (1998) (internal quotation marks omitted); see also JetAway Aviation, LLC v. Bd. of Cnty. Comm'rs of Cnty. of Montrose, 754 F.3d 824, 828-31, 835-36 (10th Cir. 2014) (Holmes, J., concurring); id. at 858 (Tymkovich, J., concurring).
In the same vein, the purpose of federal antitrust laws is to remedy harm to "competition, not competitors." Brown Shoe Co. v. United States, 370 U.S. 294, 320, 82 S.Ct. 1502, 8 L.Ed.2d 510 (1962). "[A] plaintiff can recover [under the antitrust
The only prospective relief this Court might award that would certainly remedy Plaintiff's injury is to order USA Cricket to accept Plaintiff's bid instead of ACE's— but this Court has no power to make such an award, and Plaintiff does not request it anyway. And assuming the viability of a mere "procedural right" to a fair shot at winning the bidding war, the only prospective relief this Court might award that would guarantee that right is to order USA Cricket to redo the bidding—but this Court has no power to require that, and, again, Plaintiff does not request it in any event.
So the Court is left with Plaintiff's request to enjoin Defendants from "taking any further action to support or implement their selection of a winner in connection with the corrupted RFP Bid Process." (ECF No. 51 at 47-48.) If the Court were to enter such an injunction, effectively vacating the RFP award, USA Cricket would remain free to unilaterally invite ACE to develop the T20 league, and Plaintiff would be left just as empty-handed as before.
Perhaps Plaintiff means to head off this outcome through its requests that the Court enjoin Defendants from "excluding [Plaintiff] from, or failing to give objective and unbiased consideration to [Plaintiff] in, any current or future selection process," and "using unfair practices in any selection process or implementation of their programs in connection with a professional T20 cricket league in the U.S." (Id. at 48.) More specifically, perhaps Plaintiff chose the phrase "selection process" to cover all possible methods of selecting a partner to establish a T20 league, including a unilateral
In sum, there is no prospective relief this Court has power to order that would remedy Plaintiff's alleged injury. Accordingly, Plaintiff lacks Article III standing to bring its federal antitrust claims.
The Court must address two additional issues to ensure itself that Article III standing does not exist here.
Late in the complaint, Plaintiff inserts an unelaborated allegation that the allegedly corrupt RFP process "allowed others to take business from [Plaintiff]— business that [Plaintiff] would have competed fairly for and secured if it were competing on a legitimate playing field." (¶ 134 (emphasis added).) Defendants' motion challenges this allegation as a "feint[ ]" that is "fatally" contradicted by Plaintiff's earlier concession that "`it was not guaranteed to be selected as a commercial business partner of USA Cricket and the ICC.'" (ECF No. 56 at 20 (quoting ¶ 7).) Plaintiff's 40-page response brief entirely ignores this attack. In fact, Plaintiff does not cite ¶ 134 for any purpose. (See generally ECF No. 64.) The Court thus deems Plaintiff to have forfeited any argument that a business opportunity which was certainly lost is a monetary injury traceable to Defendants' conduct and redressable through a money judgment— therefore creating Article III standing.
In reviewing Plaintiff's allegations, one passingly familiar with antitrust concepts might think of the term "bid-rigging." Bid-rigging, however, is the sort of antitrust claim that USA Cricket could have brought against bidders in the RFP process if those bidders (such as ACE and Plaintiff) had conspired amongst themselves regarding the bids each would submit, e.g., to ensure that no one offered more than a certain amount of compensation to USA Cricket. See United States v. Mobile Materials, Inc., 881 F.2d 866, 869 (10th Cir. 1989) ("Any agreement between competitors pursuant to which contract offers are to be submitted or withheld from a third party constitutes bid rigging [and is] per se violative of 15 U.S.C. [§] 1.").
In a rhetorical passage, Plaintiff accuses Defendants of "rigging competition" —an allegation meant to create an ironic contrast between international cricket's commitment to fair play on the pitch and lack of fair play in business dealings. (¶¶ 1-3.) But Plaintiff never actually accuses Defendants of bid-rigging. Plaintiff instead describes Defendants' conduct as "sham bidding." (¶ 122; see also ¶ 156(b); ECF No. 64 at 19.) Plaintiff's choice of words is somewhat surprising. "Sham bidding" is the name used by one decision from this District to distinguish antitrust-prohibited bid-rigging from antitrust-neutral allegations that the party soliciting the bid did not conduct the bid process fairly. See L-3 Commc'ns Corp. v. Jaxon Eng'g & Maint., Inc., 863 F.Supp.2d 1066, 1089-90 (D. Colo. 2012) (citing Sitkin Smelting & Refining Co. v. FMC Corp., 575 F.2d 440
For the foregoing reasons, Counts 1-2 must be dismissed for lack of Article III subject matter jurisdiction.
Plaintiff's state-law claims are grounded in the same theory underlying the federal antitrust claims, namely, that Plaintiff has been "procedurally" injured by the allegedly corrupt bidding process. Thus, these claims also fail for lack of Article III standing, unless the relevant state laws grant rights and remedial powers not available under federal antitrust law (Plaintiff has not established that they do). But even if Plaintiff has Article III standing under one or more of its state-law claims (such as a straightforward claim for damages under the contractual interference claim, Count 7), another jurisdictional problem prevents the Court from reaching the merits of those claims.
Due to the Article III infirmity in Counts 1 and 2, the Court has no original jurisdiction over the federal antitrust claims. Yet they are the only claims Plaintiff pleads that arise under federal law. See 28 U.S.C. § 1331. Accordingly, the Court can exercise jurisdiction over the state-law claims only if Plaintiff shows that diversity jurisdiction exists under 28 U.S.C. § 1332. See Penteco Corp. v. Union Gas Sys., Inc., 929 F.2d 1519, 1521 (10th Cir. 1991) ("The party seeking the exercise of jurisdiction in his favor must allege in his pleading the facts essential to show jurisdiction." (internal quotation marks omitted)); see also Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826, 829, 109 S.Ct. 2218, 104 L.Ed.2d 893 (1989) ("When a plaintiff sues more than one defendant in a diversity action, the plaintiff must meet the requirements of the diversity statute for each defendant or face dismissal." (emphasis in original)).
As relevant here, § 1332 requires that the parties be "citizens of different States." 28 U.S.C. § 1332(a)(1). When one of the parties is an LLC—as Plaintiff is— then the plaintiff fails to plead facts sufficient to show diversity unless the plaintiff pleads the citizenship of all the LLC members and shows that no member is a citizen of the same state as any defendant. See Siloam Springs Hotel, L.L.C. v. Century Sur. Co., 781 F.3d 1233, 1237-1238 (10th Cir. 2015) (an LLC takes the citizenship of all its members; "only those state-created entities that are corporations, in the traditional understanding of that word, will be treated as a person for purposes of diversity jurisdiction"). If the LLC members are themselves non-corporate business entities (other LLCs, LLPs, etc.), then the plaintiff must examine the members' members until the plaintiff "bottoms out" at a natural person or a corporation. The citizenship of those natural persons and corporations is what counts in the diversity analysis.
For the reasons set forth above, the Court ORDERS as follows: