USCA1 Opinion
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
____________________
No. 93-1068
KENNETH ADAMS, SETH BUNKER AND
RODNEY HUDSON, ET AL.,
Plaintiffs, Appellants,
v.
GREGORY WATSON AS COMMISSIONER,
MASSACHUSETTS DEPARTMENT OF FOOD AND
AGRICULTURE, ET AL.,
Defendants, Appellees.
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APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Rya W. Zobel, U.S. District Judge]
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Before
Selya, Circuit Judge,
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Campbell, Senior Circuit Judge,
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and Cyr, Circuit Judge.
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Michael L. Altman, with whom Margaret A. Robbins and Rubin &
_________________ ___________________ _______
Rudman were on brief for appellants.
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Eric A. Smith, Assistant Attorney General, with whom Scott
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Harshbarger, Attorney General, was on brief for Commissioner of
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the Massachusetts Department of Food and Agriculture.
Robert J. Sherer, with whom Francis A. DiLuna and Roche,
_________________ __________________ ______
Carens & DeGiacomo were on brief for Massachusetts Farm Bureau
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Federation, Inc.
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December 8, 1993
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CYR, Circuit Judge. Plaintiffs-appellants, New York
CYR, Circuit Judge.
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and New Hampshire dairy farmers, instituted the present civil
rights action against the Commissioner of the Massachusetts
Department of Food and Agriculture (Commissioner) for declaratory
and injunctive relief from an alleged unconstitutional enforce-
ment of a Massachusetts milk pricing order. The district court
dismissed their complaint for lack of standing. We now reverse.
I
I
BACKGROUND
BACKGROUND
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On January 28, 1992, the Commissioner declared a state
of emergency in the Massachusetts dairy industry, see Mass. Gen.
___
L. ch. 94A, 12 (1992), based on findings that rising production
costs and flat dairy prices were devastating the industry.1 The
Commissioner determined that a price stabilization system was
necessary. The pricing order issued by the Commissioner on
February 26, 1992, forms the focus of this appeal.
The pricing order established a "Dairy Equalization
Fund" (Fund), into which each licensed milk distributor (dealer)
in Massachusetts is required to pay monthly assessments ("differ-
ential assessments") equal to one-third of the amount by which
the $15 price set by the pricing order exceeds the applicable
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1In 1991, for example, the average milk price paid Massac-
husetts dairy farmers was $12.64 per hundredweight (cwt), whereas
their average production cost was $15.50 per cwt an average
loss of $2.86 per cwt. The Commissioner specifically found that
the emergency threatened Massachusetts' local "supply of fresh
milk."
federal minimum or "blend" price per hundredweight (cwt).2 The
differential assessment applies to all milk marketed in
Massachusetts by licensed dealers, whether produced in Massa-
chusetts or elsewhere. Notwithstanding the fact that dealers
must pay the differential assessment calculated on all out-of-
state and in-state produced milk, out-of-state producers, who
supply most of the milk sold in Massachusetts,3 are not entitled
to disbursements from the Fund. The monies in the Fund are
distributed monthly among Massachusetts milk producers only, in
direct proportion to their respective percentage of the total
Massachusetts milk production, subject to a monthly payment cap
to each Massachusetts producer equal to the differential assess-
ment on 2000 cwt. Excess monies in the Fund are remitted to
dealers in direct proportion to their payments into the Fund.
Plaintiffs-appellants, out-of-state producers, sell
their entire milk production to West Lynn Creamery, Inc., a
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2The United States dairy industry is subject to extensive
price regulation. The United States Department of Agriculture
promulgates federal milk marketing orders, pursuant to the
Agricultural Marketing Agreements Act of 1937, 7 U.S.C. 601, et
__
seq., which establish minimum milk prices. The marketing order
____
in effect in Massachusetts is New England Federal Milk Marketing
Order No. 1 (Order No. 1). See 7 C.F.R. 1001 (1993). The
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minimum milk price ("blend price") is calculated monthly, using a
market-wide weighted average of the value of all milk sold during
the preceding month. No state or dealer may permit regional milk
producers to receive less than the per/cwt figure prescribed in
Order No. 1.
3Plaintiffs allege that Massachusetts is not a "producer" or
"export" state (like, for example, Vermont and Maine), but a
highly vulnerable "consumer" or "import" state capable of produc-
ing only 10% of the milk sold in the state. As a rule, out-of-
state milk commands a high premium in "consumer" states like
Massachusetts.
3
licensed Massachusetts milk dealer. Their original civil rights
complaint demanded (i) a declaratory judgment that the pricing
order violates the Commerce Clause,4 (ii) the refund of all
amounts previously disbursed from the Fund to Massachusetts
producers, and (iii) injunctive relief against further enforce-
ment of the pricing order.
The first amended complaint5 included allegations that
the pricing order caused appellants competitive injury and
economic harm.6 On defendants' motion, the district court
dismissed the first amended complaint for lack of standing,
finding its "general allegations of economic harm . . . unsup-
ported by any specific, factual allegations of injury." Adams v.
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4Commerce Clause violations may be redressed under 42 U.S.C.
1983. See Dennis v. Higgins, 498 U.S. 439, 443-51 (1991).
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5Two nonproducer plaintiffs (Massachusetts milk dealers)
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voluntarily dismissed their claims, following the Commissioner's
motion to dismiss their claims on Younger and Burford abstention
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grounds. The remaining plaintiffs, appellants here, filed the
first amended complaint, which dropped the dealer-plaintiffs and
withdrew a claim for damages. West Lynn Creamery, Inc., an
original plaintiff, brought a separate state court action chal-
lenging the pricing order, under which the Commissioner threat-
ened to suspend its license to sell milk in Massachusetts for
failure to pay its monthly differential assessments to the Fund.
On April 15, 1993, the Massachusetts Supreme Judicial Court ruled
that the pricing order did not violate the Commerce Clause. See
___
West Lynn Creamery, Inc. v. Commissioner of Dep't of Food and
_________________________ ___________________________________
Agric., 415 Mass. 8, 611 N.E.2d 239, cert. granted, 62 U.S.L.W.
______ _____ _______
3244 (U.S. Oct. 4, 1993) (No. 93-141).
6The first amended complaint merely alleged that the pricing
order "has the same effect as a 'customs duty' or 'protective
tariff' on the importation of milk produced in other states,"
"subsidizes Massachusetts farmers which causes the disorderly
marketing of milk," causes out-of-state farmers, including
plaintiffs, to suffer economic harm and competitive disadvantage
because it subsidizes Massachusetts farmers, and may force out-
of-state farmers, including plaintiffs, out of business.
4
Watson, No. 92-11641-Z, 1992 U.S. Dist. LEXIS 19306, at *4 (D.
______
Mass. 1992). The district court noted that the first amended
complaint contained no allegations that the plaintiffs had sold
less milk in Massachusetts since February 26, 1992, received a
lower price for their milk, or were otherwise frustrated in their
attempt to "undersell" Massachusetts producers.
The district court denied plaintiffs' motion to recast
their first amended complaint by adding two paragraphs for the
stated purpose of alleging "with greater specificity 'injury in
fact' to meet the requirement of more 'specific, factual allega-
tions of injury.'" The district court summarily denied the
ensuing motion for relief from judgment under Fed. R. Civ. P. 60.
II
II
DISCUSSION
DISCUSSION
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A. Applicable Law of Standing.
A. Applicable Law of Standing.
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Article III of the Constitution limits federal "judi-
cial power" to the resolution of "cases" and "controversies," see
___
U.S. Const. art. III; only if it is presented with a "case or
controversy" may an Article III court entertain an action. See
___
Warth v. Seldin, 422 U.S. 490, 498 (1975); United States v. AVX
_____ ______ _____________ ___
Corp., 962 F.2d 108, 113 (1st Cir. 1992). In its constitutional
_____
formulation, the doctrine of standing is a gatekeeper of justi-
ciability, and "serves to identify those disputes which are
appropriately resolved through the judicial process." Whitmore
________
v. Arkansas, 495 U.S. 149, 155 (1990). The "irreducible consti-
________
tutional minimum of standing" entails three elements:
5
First, the plaintiff must have suffered an
"injury in fact" an invasion of a legally
protected interest which is (a) concrete and
particularized; and (b) actual or imminent,
not conjectural or hypothetical. Second,
there must be a causal connection between the
injury and the conduct complained of the
injury has to be fairly traceable to the
challenged action of the defendant, and not
the result of the independent action of some
third party not before the court. Third, it
must be "likely" as opposed to merely "specu-
lative," that the injury will be redressed by
a favorable decision.
Lujan v. Defenders of Wildlife, 112 S. Ct. 2130, 2136 (1992)
_____ ______________________
(citations and some internal quotation marks omitted); see also
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Northeastern Fla. Chapter of Associated Gen. Contractors of Am.
_________________________________________________________________
v. Jacksonville, 113 S. Ct. 2297 (1993); AVX, 962 F.2d at 113;
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Munoz-Mendoza v. Pierce, 711 F.2d 421, 424 (1st Cir. 1983).7
_____________ ______
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7Prudential limitations on the exercise of federal jurisdic-
tion self-imposed rules of judicial restraint may be
invoked even if all constitutional essentials are present. As
the Supreme Court has acknowledged, however, "it has not always
been clear in the opinions of [the] Court whether particular
features of the 'standing' requirement have been required by Art.
III ex proprio vigore, or whether they are requirements that the
__ _______ ______
Court itself has erected and which were not compelled by the
language of the Constitution." Valley Forge Christian College v.
______________________________
Americans United for Separation of Church and State, Inc., 454
____________________________________________________________
U.S. 464, 471 (1982). Nonetheless, at least three prudential
principles bear importantly on "standing". First, the litigant
must assert its own legal rights and interests, not those of
third parties. Warth, 422 U.S. at 499. Second, claimants with
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"generalized grievances" shared by a large class of citizens and
raising "abstract questions of wide public significance" normally
will be denied standing, as such questions are more appropriately
addressed to the representative branches of government. Valley
______
Forge, 454 U.S. at 475. Finally, the claim presented must come
_____
within "the zone of interests to be protected or regulated by the
statute or constitutional guarantee in question." Association of
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Data Processing Serv. Orgs., Inc. v. Camp, 397 U.S. 150, 153
___________________________________ ____
(1970).
In the instant case, appellees have not suggested that the
appellant producers are asserting rights and interests other than
their own; the complaint does not allege a "generalized griev-
6
The injury-in-fact inquiry "serves to distinguish a
person with a direct stake in the outcome of a litigation even
______ _____ ____
though small from a person with a mere interest in the prob-
______ _____
lem." United States v. Students Challenging Regulatory Agency
_____________ _______________________________________
Procedures (SCRAP), 412 U.S. 669, 690 n. 14 (1973) (citing
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Kenneth C. Davis, Standing: Taxpayers and Others, 35 U. Chi. L.
______________________________
Rev. 601, 613 (1968) ("an identifiable trifle is enough for
standing to fight out a question of principle")) (emphasis
added); see Bowman v. Wilson, 672 F.2d 1145, 1151 (3d Cir. 1982)
___ ______ ______
("The contours of the injury-in-fact requirement, while not
precisely defined, are very generous," requiring only that
claimant "allege[] some specific, 'identifiable trifle' of injury
. . . ."); Tax Analysts & Advocates v. Blumenthal, 566 F.2d 130,
________________________ __________
138 (D.C. Cir. 1977) (distinct and palpable competitive injury is
injury-in-fact for standing purposes even if economic injury is
slight in magnitude), cert. denied, 434 U.S. 1086 (1978). Courts
_____ ______
"may reasonably expect that a person so harmed will, as best he
can, frame the relevant questions with specificity, contest the
issues with the necessary adverseness, and pursue the litigation
vigorously." Barlow v. Collins, 397 U.S. 159, 172 (1970).
______ _______
____________________
ance" more appropriately addressed to another branch of govern-
ment; and appellants, as milk producers who ship in interstate
commerce, would appear to be within the "zone of interests"
protected by the Commerce Clause, see Dennis, 498 U.S. at 449
___ ______
(Commerce Clause was intended to benefit those involved in
interstate commerce and is the source of a right of action on the
part of those injured by state regulation of commerce) (citing
Boston Stock Exch. v. State Tax Comm'n, 429 U.S. 318, 320 n.3
___________________ ________________
(1976)).
7
The responsibility for "clearly and specifically
set[ting] forth facts sufficient to satisfy the Article III
standing requirements" rests with the claimant. Whitmore, 495
________
U.S. at 155-56; see also Lujan, 112 S. Ct. at 2136; FW/PBS, Inc.
___ ____ _____ ____________
v. Dallas, 493 U.S. 215, 231 (1990); Warth, 422 U.S. at 518; AVX,
______ _____ ___
962 F.2d at 114. Like the trial court, we "accept as true all
material allegations of the complaint, and must construe the
complaint in favor of the complaining party." Warth, 422 U.S. at
_____
501; see AVX, 962 F.2d at 114.8 "'[E]mpirically unverifiable'
___ ___
conclusions, not 'logically compelled, or at least supported, by
the stated facts,' deserve no deference." Id. (quoting Dartmouth
__ _________
Review v. Dartmouth College, 889 F.2d 13, 16 (1st Cir. 1989)).
______ _________________
Within this analytic framework, we examine appellants' claims.
B. The District Court Decision.
B. The District Court Decision.
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The district court found that the first amended com-
plaint raised general allegations of "economic harm" or "competi-
_______
tive disadvantage" but alleged no "specific" facts which would
substantiate actual injury, such as reduced out-of-state milk
sales to Massachusetts dealers, or lower milk prices to out-of-
state producers. The court noted:
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8Although the Commissioner contends that the district court
correctly applied AVX's "heightened" requirements for pleading
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"standing," AVX, 962 F.2d at 113, we note no citation or refer-
___
ence to AVX in the district court opinion. Since we conclude
___
that the proposed second amended complaint meets either standard,
however, we need not revisit AVX in light of the Supreme Court's
___
recent decision in Leatherman v. Tarrant County Narcotics Intel-
__________ _______________________________
ligence & Coordination Unit, 113 S. Ct. 1160 (1993).
___________________________
8
In complaining that the subsidy in itself
injures out-of-state farmers, plaintiffs
assume a perfectly competitive market in
which a direct subsidy to local farmers re-
sults in their capture of a larger market
share because they can offer their milk at a
lower price. Such analysis ignores the fact
that there is [a] federal price support in
effect. Because the milk dealers must pay
the federal minimum price to any dairy farm-
___
er, there is no incentive to purchase local
rather than out-of-state milk.
Adams, No. 92-11641-Z, 1992 U.S. Dist. LEXIS 19306, at *4 n.4.
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C. Allegations of "Competitive Injury."
C. Allegations of "Competitive Injury."
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Since the proposed second amended complaint did not
address the perceived deficiencies in the first amended com-
plaint, and the district court did not elaborate on its reasons
for denying the motion to amend, we assume that the court consid-
ered the proposed amendment futile. See Correa-Martinez v.
___ _______________
Arrillaga-Belendez, 903 F.2d 49, 59 (1st Cir. 1990). According-
__________________
ly, setting to one side the first amended complaint, we inquire
whether the second amended complaint alleged an actual or immi-
nent "injury-in-fact" proximately caused by the challenged
pricing order. Id. (suggesting that denial of motion to amend
___
constitutes abuse of discretion "if no justification appears").
The second amended complaint, paraphrased, alleges that
the following chain of economic events will result in appellants'
loss of future income, profits, and business opportunities:
All milk currently produced by appellants is
sold in the Massachusetts milk market in
direct competition with Massachusetts milk
producers. As a direct consequence of the
differential assessments Massachusetts milk
dealers must pay into the Fund for each cwt
9
purchased from producers,9 consumer milk
prices in Massachusetts will rise since
dealers, in all likelihood, will pass along
at least some portion of their increased
costs to Massachusetts consumers.10
Consumer demand will decrease as prices
increase. In this shrinking market, Massa-
chusetts dealers will continue to buy all
available milk produced in Massachusetts,
because of their "preference" for local sup-
__________ ___ _____ ____
plies, due to the lower transportation costs
_____
and lesser producer-to-consumer delivery time
(perishability being a major industry con-
cern). Higher milk prices and increased dis-
bursements from the Fund will induce greater
milk production by Massachusetts producers,
thereby lowering the current 90% Massachu-
setts market share enjoyed by out-of-state
producers. Moreover, even if Massachusetts
milk prices were to remain relatively stable,
individual Massachusetts producers would have
a strong incentive to increase production
over their fellow home state dairy farmers,
since Fund disbursements are based on each
producer's relative share of overall Massa-
________
chusetts milk production.
__________
As Massachusetts producers increase their
market share, out-of-state milk will be dis-
placed, and "overflow" into interstate
commerce. These resulting surplus "inter-
state" supplies will deflate the federal
"blend" or minimum price under Order No. 1.
Since appellants previously sold their entire
milk production in Massachusetts, some of
their out-of-state milk will be "displaced"
by Massachusetts-produced milk. As Massachu-
setts consumer demand decreases, out-of-state
producers will no longer be able to command
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9Appellants concede that the Fund's collection mechanism, by
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itself, does not injure them. Since Massachusetts dealers must
pay an assessment on every cwt purchased, whether produced
locally or out-of-state, dealers could not reduce their assess-
ments to the Fund by avoiding out-of-state purchases.
10By proscribing "unconscionable" consumer price increases,
section VIII(b) of the pricing order merely places an outer limit
on the total amount of differential assessment costs dealers may
pass along to consumers.
10
the same premium prices (in excess of the
federal "blend price") received before the
challenged pricing order. See supra note 3.
___ _____
Massachusetts producers will be insulated
from any federal blend-price deflation, be-
cause, under the Fund's collection formula
the greater the gap between $15 and the fed-
___
eral blend price, the larger the differential
assessments Massachusetts dealers must pay
into the Fund, and therefore, the larger the
Fund disbursements to Massachusetts producers
(but not to out-of-state producers). Unless
remedied, the challenged pricing order event-
ually would lead to the failure and closure
of appellants' businesses.11
D. "Imminence" and "Particularity" of Economic Injury.
D. "Imminence" and "Particularity" of Economic Injury.
_________________________________________________
The district court correctly noted that appellants'
current income and profits do not substantiate their allegations
of economic injury. As of the district court dismissal order,
appellants continued to sell their entire milk production to West
Lynn Creamery, and neither the volume nor the price had abated
since the pricing order went into effect. For their part, appel-
lees cite to several cases holding that the "injury-in-fact"
requirement is satisfied at the pleading stage by allegations
that the plaintiffs sustained actual financial loss, fairly
traceable to the challenged regulation, between its effective
date and the filing of the complaint. See, e.g., Minnesota Milk
___ ____ ______________
Producers Ass'n v. Madigan, 956 F.2d 816, 818-19 (8th Cir. 1992)
_______________ _______
("The producers have alleged that the provisions of the Sec-
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11The Commissioner characterizes these dire forecasts as
speculative. Nevertheless, the affidavit of West Lynn Creamery's
president attests that the dairy industry's economic woes are not
restricted to Massachusetts, and that out-of-state milk producers
likewise are in precarious financial straits.
11
retary's orders directly cause a reduction in the price they
receive for their milk.").12
Although at the pleading stage "injury-in-fact" need
not entail currently realized economic loss, Article III standing
________
in the commercial context must be premised, at a minimum, on
particularized future economic injury which, though latent,
nonetheless qualifies as "imminent." See Lujan, 112 S. Ct. at
___ _____
2136. Our review of the pertinent authorities satisfies us that
the proposed second amended complaint alleges particularized
future economic injury sufficient to support Article III stand-
______
ing.
In Rental Hous. Ass'n of Greater Lynn v. Hills, 548
_____________________________________ _____
F.2d 388 (1st Cir. 1977), the Department of Housing and Urban
Development (HUD) approved funding to convert factories into
housing for the elderly. While the project was still in process,
an association of local landlords brought suit in federal dis-
trict court, complaining that the grant contravened Section 8 of
the Housing and Community Development Act of 1974, and threatened
"competitive injury" to the plaintiff association's members, who
"will lose tenants to the new project." Id. at 389. Finding the
___
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12The parties to the present appeal debate whether cases
like AVX, dealing with "associational standing," have any bearing
___
on the question of the individual appellants' "injury-in-fact."
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An essential element of "associational standing" is injury-in-
fact to some member of the association. See AVX, 962 F.2d at
______ ___ ___
116. Thus, insofar as these associational standing cases deal
with the requirements of "injury-in-fact," we cite them through-
out this opinion, as appropriate.
12
"competitive injury" allegations sufficient to survive a motion
to dismiss, we stated:
While the [] project is not yet completed,
and hence specific proof of competitive inju-
________ _____
ry is not possible, it could hardly be
thought that administrative action likely to
cause harm cannot be challenged until it is
too late. We see no insurmountable obstacles
__ ______________ _________
to proof of the likelihood that [plaintiff's]
__ _____
members will lose tenants to the [] project.
Id. (citation omitted) (emphasis added). We noted that many
___
cases uphold "competitor standing" based on "unadorned allega-
tions" of latent economic injury. Id. at 390; see, e.g., Associ-
___ ___ ____ _______
ation of Data Processing Serv. Orgs. v. Camp, 397 U.S. 150, 152,
____________________________________ ____
154 (1970) (sellers of data processing services "no doubt" had
standing to test ruling allowing national banks to sell data
processing services; injury-in-fact element met by allegations
that competition from national banks "might entail some future
loss of profits" and that respondent bank was preparing to
perform data processing services for two of plaintiffs' custom-
ers); Arnold Tours, Inc. v. Camp, 400 U.S. 45, 45-46 (1970)
___________________ ____
(holding that travel agents had "competitor standing" to test
ruling allowing national banks to provide travel services);
Investment Co. Inst. v. Camp, 401 U.S. 617, 620-21 (1971) (find-
____________________ ____
ing "competitor standing," on the part of investment companies,
to test a regulatory ruling authorizing national banks to operate
collective investment funds).13
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13See also, e.g., Associated Gas Distribs. v. Federal Energy
___ ____ ____ ________________________ ______________
Regulatory Comm'n, 899 F.2d 1250, 1258 (D.C. Cir. 1990) (holding
_________________
that, even if no "specific instances of existing competition" had
been asserted, FERC's decision authorizes transportation and sale
13
The proposed second amended complaint meets the bench-
mark for "competitor standing" established by these authorities.
____________________
of gas which "threaten AGD's members competitively, because AGD's
members include local distribution companies who may lose busi-
___ ____
ness to allegedly illegal transactions") (emphasis added);
Securities Indus. Ass'n v. Clarke, 885 F.2d 1034, 1038 (2d Cir.
_______________________ ______
1989) (securities dealers sufficiently alleged competitive
injury-in-fact for "standing" to test regulatory ruling allowing
banks to sell mortgage pass-through certificates), cert denied,
____ ______
493 U.S. 1070 (1990); Bullfrog Films, Inc. v. Wick, 847 F.2d 502,
____________________ ____
506 (9th Cir. 1988) (film distributors and exporters alleged
sufficient injury-in-fact to test custom duties that "put[] their
films at a competitive disadvantage in the international market-
place . . . ., [a]lthough plaintiffs did not produce evidence
that the payment of custom duties . . . caused decreased sales or
profits"); National Coal Ass'n v. Hodel, 825 F.2d 523, 526 (D.C.
___________________ _____
Cir. 1987) (holding that Secretary of Interior's decision to
allow land exchange so that plaintiff's competitor could mine "a
large tract of previously unmineable land . . . undoubtedly
___________
satisf[ies] constitutional standing requirements") (emphasis
added); Investment Co. Inst. and Securities Indus. Ass'n v.
_____________________________________________________
Federal Deposit Ins. Corp., 815 F.2d 1540, 1543 (D.C. Cir.)
____________________________
(holding that FDIC ruling allowing insured nonmember banks to
enter securities field will deal petitioners, who represent
mutual fund companies and investment bankers, a "competitive
injury"), cert denied, 484 U.S. 847 (1987); Sea-Land Serv., Inc.
____ ______ ____________________
v. Dole, 723 F.2d 975, 977 (D.C. Cir. 1983) (concluding that
____
plaintiff, which operated vessels on nonsubsidized trade routes,
had alleged sufficient "competitive harm" to test a decision by
Department of Transportation allowing subsidized carrier to call
on ports off its subsidized route), cert. denied, 469 U.S. 824
_____ ______
(1984); Peoples Gas, Light & Coke Co. v. U.S. Postal Serv., 658
_____________________________ _________________
F.2d 1182, 1194 & n.9 (7th Cir. 1981) (finding that plaintiff, a
gas company, which alleged "a loss of future revenue" from postal
service's plan to install electric instead of gas system, had
suffered a non-"speculative" competitive injury; judicial invali-
dation of first bidding procedure "offer[s] at least a likeli-
hood" that plaintiff, a potential bidder, would ultimately be
awarded the government contract); P.A.M. News Corp. v. Hardin,
_________________ ______
440 F.2d 255, 257 (D.C. Cir. 1971) (concluding that plaintiff
alleged competitive injury from Department of Agriculture's
decision to allow free access to agricultural data, since plain-
tiffs previously compiled and sold information to public); cf.
___
Simmons v. Interstate Commerce Comm'n, 900 F.2d 1023, 1026 (7th
_______ ___________________________
Cir. 1990) (holding that rival shippers alleged sufficient
injury-in-fact to contest ICC decision to permit abandonment of
rail line, where plaintiffs' competitor's line remains open,
although injury was not ultimately redressable by judicial
action), cert. denied, 499 U.S. 919 (1991).
_____ ______
14
The Camp triad and Rental Housing cases are all premised on a
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plaintiff's status as a direct competitor whose position in the
______ ______ __________
relevant marketplace would be affected adversely by the chal-
lenged governmental action. Cf. Energy Transp. Group, Inc. v.
___ ___________________________
Maritime Admin., 956 F.2d 1206, 1215 (D.C. Cir. 1992) (finding
_______________
that a disgruntled contract bidder, although generally engaged in
_________
the fuel transportation business, failed to allege sufficient
"competitive injury" where it could not presently, or within
prescribed future period, perform the particular types of servic-
es required by the contract at issue). The Supreme Court found
"competitor standing" in the Camp cases based on an alleged
____
potential for heightened competition in a national marketplace.
________
Thus, arguably at least, the narrower the relevant marketplace,
________
as in Rental Housing (municipality) and here (state), the greater
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the likelihood that a plaintiff will experience future economic
loss as a consequence of the competitive advantage bestowed on
its direct competitor. In some "direct competitor"
cases, future injury-in-fact is viewed as "obvious" since govern-
ment action that removes or eases only the competitive burdens on
the plaintiff's rivals plainly disadvantages the plaintiff's
______
competitive position in the relevant marketplace. However,
"[w]here 'injury' and 'cause' are not obvious, the plaintiff must
___ _______
plead their existence in his complaint with a fair degree of
specificity." Munoz-Mendoza, 711 F.2d at 425 (emphasis added).
_____________
There can be no question but that out-of-state milk
producers are in direct competition with Massachusetts milk
15
producers. At the very least, out-of-state producers have to
defend their current 90% share of the Massachusetts milk market
and may even elect to compete with Massachusetts producers for
the remaining 10% market share.14 If, as alleged, see supra
___ _____
pp. 9-11, Massachusetts producers were to realize sufficient
infusions of capital to increase their milk production and their
Massachusetts market share, it is "obvious" that appellants would
sustain direct economic harm commensurate with the diminution of
their current market share.
Even assuming, however, for discussion purposes, that
the causal nexus between the challenged pricing order and appel-
lants' alleged competitive injury is not sufficiently "obvious,"
we are not persuaded by the Commissioner's contention that the
sequence of economic events projected in the second amended
complaint is too conclusory, speculative or attenuated. See,
___
e.g., United Transp. Union v. Interstate Commerce Comm'n, 891
____ _____________________ ___________________________
F.2d 908, 912 (D.C. Cir. 1989) ("When considering any chain of
allegations for standing purposes, we may reject as overly
speculative . . . predictions of future events (especially future
______
actions by third parties) . . . .") (emphasis added), cert.
_______ __ _____ _______ _____
denied, 497 U.S. 1024 (1990). In order to demonstrate "stand-
______
ing," "pleadings must be something more than an ingenious academ-
____________________
14The Commissioner points out that appellants do not allege
that they can increase their future milk production so as to
displace the Massachusetts producers from their current 10%
market share. Even assuming that this omission undermines their
claimed "injury-in-fact" with respect to the 10% share, there is
no requirement that a plaintiff plead multiple forms of future
________
injury-in-fact.
16
ic exercise in the conceivable"; a plaintiff may not simply
assert "that he can imagine circumstances in which he could be
affected by the agency's action." SCRAP, 412 U.S. at 689. The
_____
more remote in time the alleged injury-in-fact, the less obvious
the "concreteness of the controversy." Thus, where the complaint
relies only on prospective harm, it "'must demonstrate a realis-
tic danger of sustaining a direct injury.'" United Transp.
_______________
Union, 891 F.2d at 913. On the other hand, "competitor standing"
_____
cases necessarily turn on degrees of probability, see Mount
___________ _______ __ ___________ ___ _____
Wilson FM Broadcasters, Inc. v. Federal Communications Comm'n,
_____________________________ ______________________________
884 F.2d 1462, 1465 (D.C. Cir. 1989) ("If an[] agency's act
creates 'a substantial probability' of an 'injury in fact,' the
causation requirement of Article III is satisfied.") (quoting
Warth, 422 U.S. at 504), a measurement "not easily susceptible to
_____
concrete definitions or mechanical application," AVX, 962 F.2d at
___
113.
All predictions are conjectural to a degree. Somewhere
along the spectrum of probability, between tomorrow's sunrise and
"unadorned speculation," see, e.g., Diamond v. Charles, 476 U.S.
___ ____ _______ _______
54, 66 (1986) (pediatrician's allegations of injury-in-fact based
on assertion that aborted fetuses might otherwise have become
fee-paying patients), lie appellants' allegations of "imminent"
injury-in-fact based on the laws of economics. Economics is a
cross between an art and a science, which is to say, both an
imperfect art and an imperfect science. While the law of supply
and demand may sometimes be suspended by unpredictable market-
17
place decisions, and even lesser fortuities like bovine obstina-
cy, basic economic theory quite consistently transcends utter
randomness by positing elemental laws of cause and effect predi-
cated on actual market experience and probable market behavior.
________
Indeed, most "competitor standing" cases depend on such core
economic postulates. See United Transp. Union, 891 F.2d at 913
___ ____________________
(noting that in "garden variety competitor standing cases,"
courts routinely credit causal connections "firmly rooted in the
basic laws of economics" or "basic economic logic"); see also
___ ____
American Soc'y of Travel Agents, Inc. v. Blumenthal, 566 F.2d
_______________________________________ __________
145, 157 (D.C. Cir. 1977) ("[A]ll claims of competitive injury
are to some extent speculative [and] predicated on the indepen-
dent decisions of third parties, i.e. customers. However,
economics is the science of predicting these economic decisions
. . . .") (Bazelon, J., dissenting), cert. denied, 435 U.S. 947
_____ ______
(1978).
In Rental Housing, we credited at face value an allega-
______________
tion that the plaintiff landlords, representing slightly more
than one-third of the renters in the relevant housing market,
would "lose tenants" to the HUD-subsidized project, even though
their economic prediction plainly depended on the decisions of
any number of independent parties inter alia, elderly tenants
_____ ____
seeking suitable housing, local zoning and planning boards, other
federal and state agencies, and lending institutions not to
mention less predictable factors such as disasters, e.g., fire.
____
Two rational economic assumptions nonetheless combined to make it
18
sufficiently "probable" that the landlords would sustain "con-
crete" future injury: by increasing the volume of available
housing in a defined market, both consumer demand and prices were
likely to fall. Similar economic principles impelled the Camp
____
triad decisions on "competitor standing." See also supra note
___ ____ _____
13.
The second amended complaint, much like that in Rental
______
Housing, is based on standard principles of "supply and demand"
_______
routinely credited by courts in a variety of contexts. See,
___
e.g., Minneapolis Star & Tribune Co. v. Minnesota Comm'r of
____ ________________________________ ____________________
Revenue, 460 U.S. 575, 590 (1983) (price or sales tax increase
_______
"presumably will cause a decrease in demand" for product) (citing
Paul A. Samuelson, Economics 381-83, 389-90 (10th ed. 1976));
Competitive Enter. Inst. v. National Highway Traffic Safety
_________________________ __________________________________
Admin., 901 F.2d 107, 125 (D.C. Cir. 1990) ("Since the demand for
______
a product is decreased as its price is increased . . . ."); Alcan
_____
Sales, Div. of Alcan Aluminum Corp. v. United States, 693 F.2d
_____________________________________ _____________
1089, 1092 (Fed. Cir. 1982) (nonrefundable federal surcharges are
likely to be more effective in decreasing demand for imported
goods because importers are more likely "to pass along the cost
of the surcharge through to consumers . . . ."), cert. denied,
_____ ______
461 U.S. 943 (1983). In the present case, the more industry-
specific allegations such as Massachusetts dealers' preference
for indigenous milk supplies are confirmed by the affidavit of
Dr. Ronald Knutson, a national expert in dairy industry econom-
ics, see supra pp. 9-11. We conclude, therefore, that rather
___ _____
19
than "empirically unverifiable" conclusions, see Dartmouth
___ _________
Review, 889 F.2d at 16, the economic "facts" alleged in the
______
proposed second amended complaint set forth adequate grounds to
demonstrate, at the pleading stage, a sufficient likelihood that
__ ___ ________ _____
the challenged pricing order will result in reduced out-of-state
milk sales to Massachusetts dealers at lower prices.
Even assuming that out-of-state producers, as a class,
__ _ _____
might be injured under appellants' forecasts, the Commissioner
contends that these individual appellants failed to demonstrate
__________
either injury-in-fact or that West Lynn Creamery will buy less
than 100% of their milk production in the event Massachusetts
production is increased in the future. Once again, we cannot
agree. Like other Massachusetts dealers with whom it must
compete, West Lynn's self-interest (in lower transportation costs
and reduced perishability) will be served by purchasing milk from
nearby producers, which at least in many, perhaps most, cases
will be producers located in Massachusetts. In that eventuality,
the out-of-state producers' current 97% share of West Lynn's milk
business would decline. Nor is there anything in the appellate
record to suggest that West Lynn has a non-economic motive to
____________
spare these individual appellants at the expense of other out-of-
state producers. Furthermore, even if the alleged reductions in
out-of-state milk purchases were minimal at the outset, appel-
lants would no longer be able to command as high a premium for
_______
their milk, because they would then have to compete with other
out-of-state producers to supply a diminished share of West
20
Lynn's import needs. Finally, as out-of-state milk is displaced
in the Massachusetts marketplace and "overflows" into interstate
commerce, the federal blend price will deflate, lowering the
"safety net" for all milk producers including appellants. For
these reasons, we cannot agree with the conclusion that the
federal "blend" price insulates appellants from all cognizable
injury-in-fact, see supra pp. 8-9, or renders inconsequential all
___ _____
other alleged injury-in-fact (e.g., loss of premium paid out-of-
____
state producers prior to pricing order).
Similarly, the Commissioner cannot carry the day on the
claim that appellants' injury-in-fact is shared with so large a
class (all out-of-state producers selling to Massachusetts deal-
ers) that their respective shares of the aggregate injury will be
minimal. "To deny standing to persons who are in fact injured
simply because many others are also injured, would mean that the
most injurious and widespread Government actions could be ques-
tioned by nobody." SCRAP, 412 U.S. at 687; see also AVX, 962
_____ ___ ____ ___
F.2d at 113 ("While the requisite injury may be common to many,
it may not be shared by all.") (citations omitted). Even if
appellants' market "displacement" estimates were grossly exag-
gerated, a relatively small economic loss even an "identifi-
able trifle" is enough to confer standing, as it affords a
constitutionally cognizable stake sufficient to ensure their
vigorous prosecution of the litigation. See Rental Hous. Ass'n,
___ __________________
548 F.2d at 389 (although plaintiffs collectively owned 7000 of
18,000 rental units in relevant marketplace, and HUD-subsidized
21
competitor would develop only 183 units, "the injury required for
standing need not be substantial, it need only exist") (emphasis
__ ____ ____ _____
added).
Nor can the Commissioner sustain the dismissal on the
ground that significant increases in Massachusetts milk produc-
tion may be slow to materialize. The meaning of the term "immi-
nent" depends on the particular circumstances, and in the highly
competitive environment of the dairy industry, governmental
actions often have intractable, long-term consequences. Particu-
larly apt here is our earlier observation in Rental Housing: "it
______________
could hardly be thought that [State] action likely to cause harm
cannot be challenged until it is too late." Rental Hous. Ass'n,
__________________
548 F.2d at 389. Although the "emergency" pricing order protect-
ed Massachusetts milk producers from immediate erosion of their
remaining 10% share of the Massachusetts milk market by out-of-
state producers, an actual increase in Massachusetts milk produc-
tion may take months or even years to materialize since it would
depend upon long-term capital investments in dairy herd and farm
expansions and infrastructure improvements. Once realized,
however, the Massachusetts producers' newfound competitive edge
would likely continue for an extended period. See, e.g., Sabine
___ ____ ______
River Auth. v. United States Dep't of Interior, 951 F.2d 669, 675
___________ _______________________________
(5th Cir.) (plaintiff's challenge to government's acquisition of
perpetual easement to wetlands area alleged sufficient non-
speculative injury by projecting water shortage "some forty years
in the future"), cert. denied, 113 S. Ct. 75 (1992).
_____ ______
22
We in no way suggest, of course, that the second
amended complaint's portrayal of milk industry economics is
beyond refutation either on summary judgment or at trial. See
___
SCRAP, 412 U.S. at 689 (where plaintiff alleges a "perceptible
_____
harm," the defendant should move "for summary judgment on the
_______ ________
standing issue and demonstrate[] to the District Court that the
allegations were sham . . . .") (emphasis added); see also
___ ____
Bullfrog Films, Inc. v. Wick, 847 F.2d 502, 506 (9th Cir. 1988)
____________________ ____
(holding that film distributor-exporters alleged sufficient
injury-in-fact to challenge custom duties which allegedly "put[]
their films at a competitive disadvantage in the international
marketplace; "[a]lthough plaintiffs did not produce evidence that
the payment of custom duties . . . caused decreased sales or
profits, at the summary judgment stage, a plaintiff's allegations
need not be proven but merely provable"); Citizens for Envtl.
____________________
Quality v. United States, 731 F. Supp. 970, 973 (D. Colo. 1989)
_______ _____________
(noting that opposing party could refute "general rule in econom-
ics [] that price decreases with increasing supply," by explain-
ing "in highly technical terms that local timber markets depart
from the general economic rule . . . .").15 As we noted in
____________________
15We think appellants were entitled, at the pleading stage,
__ ___ ________ _____
to presume that the milk industry would be subject to the basic
economic laws at work in other competitive markets. See supra p.
___ _____
9:
The Supreme Court [in Camp] did not ... require plain-
____
tiffs to allege in their complaint facts sufficient to
__ ______ __ _____ _________
refute every possible anomaly of the marketplace such
as the existence of voluntary labor or ideologically
committed consumers. The Court assumed the marketplace
would function in a normal, predictable fashion, for to
23
Rental Housing, at this stage of appellants' litigation, "[w]e
_______________
see
no insurmountable obstacles to proof." Rental Hous. Ass'n, 548
__ ______________ _________ __ _____ ___________________
F.2d at 389 (emphasis added).16
III
III
CONCLUSION
CONCLUSION
__________
As the proposed second amended complaint was sufficient
to survive the motion to dismiss based on lack of standing, the
motion to amend was not futile and the order granting the motion
to dismiss must be vacated.
The judgment is vacated and the case is remanded for
The judgment is vacated and the case is remanded for
_______________________________________________________
____________________
assume otherwise would be to foreclose the very possi-
bility of ever satisfactorily alleging a competitive
injury.
American Soc'y, 566 F.2d at 158 (emphasis added). We nonetheless
________ _____
recognize, of course, as did the district court, that the milk
industry is subject to federal marketing orders. Consequently,
where such economic anomalies are material, they may be tested at
summary judgment.
16We take no position respecting the merits of the Commerce
Clause challenge, which implicates questions of interstate
commerce "burdens" analytically distinct from the "injury-in-
fact" determination that is central to standing. As noted above,
the Supreme Court has decided to review the underlying Commerce
Clause claim. See West Lynn Creamery, Inc. v. Commissioner of
___ _________________________ _______________
Dep't of Food and Agric., 415 Mass. 8, 611 N.E.2d 239, cert.
__________________________ _____
granted, 62 U.S.L.W. 3244 (U.S. Oct. 4, 1993) (No. 93-141).
_______
24
further proceedings consistent with this opinion.
further proceedings consistent with this opinion.
________________________________________________
25
