CLIFTON, Circuit Judge:
This action challenges the constitutionality of the Jones Act's cabotage provisions, which prohibit foreign competition in the domestic shipping market. Plaintiffs allege that these provisions impair interstate trade between Hawaii and the rest of the United States to such an extent that they violate the Constitution. The district court dismissed the action with prejudice, concluding that Plaintiffs failed to satisfy what it framed as prudential standing requirements because they alleged only generalized grievances shared with all residents and businesses in Hawaii.
We affirm the dismissal of this action. Plaintiffs have alleged more than generalized grievances and have demonstrated an "injury in fact," but have not met their burden to show causation or redressability, the other two elements of Article III standing. Although it is possible that Plaintiffs could establish standing if they amended their complaint, any amendment would be futile because Plaintiffs' challenge to the Jones Act would fail on the merits. An amended complaint would, we conclude, be subject to dismissal for failure to state a claim because the enactment of the Jones Act was not beyond the authority assigned to Congress under the Commerce Clause. To the contrary, that statute is precisely the kind of legislation, a regulation of interstate commerce, that the Commerce Clause empowers Congress to enact.
Plaintiffs are six individuals and one corporation.
The purpose of the Jones Act is to support this country's merchant marine and its shipbuilding and repair facilities, at least in part so they may be available in times of war or national emergency. 46 U.S.C. § 50101. One way the statute aims to accomplish this objective is by limiting the domestic shipping market to American
According to Plaintiffs, these provisions violate the basic tenets of the Commerce Clause because they have effectively "impaired, hindered, and substantially affected and completely cut off Hawaii from interstate commerce." "In the absence of highways and railways," the complaint alleges, "the Jones Act promises to nullify interstate commerce to the State of Hawaii."
Plaintiffs' theory is that, by excluding foreign competition, the cabotage provisions have created "an essentially monopolistic Hawaiian ocean shipping market" that has resulted in "high prices" and "a de facto duopoly" of two established firms in the Hawaii-mainland shipping market. Plaintiffs contend that all Hawaii residents and businesses, including themselves, have been harmed not only by the increased shipping costs, but also by the resultant inflated cost of doing business in Hawaii because higher shipping costs lead to higher prices for imported goods. Plaintiffs assert that interstate trade between Hawaii and the rest of the United States has been significantly stifled to such an extent that the effect of the Jones Act's restrictions amounts to "an unlawful restraint of trade and interstate commerce, thereby violating the Commerce Clause of the United States Constitution." Plaintiffs filed this action against the United States, asserting a single cause of action under the Commerce Clause.
The district court granted the government's motion to dismiss the action with prejudice, holding that Plaintiffs failed to establish standing on prudential grounds because they alleged only generalized grievances. Specifically, the court concluded that "Plaintiffs assert only generalized claims on behalf of an extremely broad class of persons or entities that pay for interstate shipping or are consumers of goods that have been shipped in interstate commerce.... This type of broad, generalized allegation is simply insufficient to meet standing requirements." The court's order cited Arizonans for Official English v. Arizona, 520 U.S. 43, 64, 117 S.Ct. 1055, 137 L.Ed.2d 170 (1997), and United States v. Hays, 515 U.S. 737, 743, 115 S.Ct. 2431, 132 L.Ed.2d 635 (1995), among other authorities.
We review de novo a district court's determination on the issue of standing. Levine v. Vilsack, 587 F.3d 986, 991 (9th Cir.2009). "Where standing is raised in connection with a motion to dismiss," we "accept as true all material allegations of the complaint, and construe the complaint in favor of the complaining party." Id. (alteration, citation, and quotation marks omitted). We also "presume that general allegations embrace those specific facts that are necessary to support the claim." Jewel v. Nat'l Sec. Agency, 673 F.3d 902, 907 (9th Cir.2011) (citation and quotation marks omitted). We may affirm on any proper ground supported by the record. Hartmann v. Cal. Dep't of Corr. & Rehab., 707 F.3d 1114, 1121 (9th Cir. 2013).
The "irreducible constitutional minimum" of Article III standing consists of (1) "injury in fact," (2) "a causal connection between the injury and the conduct complained of," and (3) a likelihood "that the injury will be redressed by a favorable decision." Lujan v. Defenders of Wildlife,
1. Injury in Fact
"[A]n injury in fact" is "an invasion of a legally protected interest" that is "concrete and particularized" and "actual or imminent, not conjectural or hypothetical." Id. at 560, 112 S.Ct. 2130 (quotation marks omitted). Because a generalized grievance is not a particularized injury, a suit alleging only generalized grievances fails for lack of standing. Lexmark Int'l, Inc. v. Static Control Components, Inc., ___ U.S. ___, n. 3, 134 S.Ct. 1377, 1387 n. 3, 188 L.Ed.2d 392 (2014); Lance v. Coffman, 549 U.S. 437, 439-40, 127 S.Ct. 1194, 167 L.Ed.2d 29 (2007) (per curiam); Newdow v. Rio Linda Union. Sch. Dist., 597 F.3d 1007, 1016 (9th Cir.2010).
The district court determined that Plaintiffs alleged only generalized grievances and consequently dismissed their action for lack of standing.
Plaintiffs' claim is not a generalized grievance because the harm they allege is not entirely "of an abstract and indefinite nature." Id. Plaintiffs allege in their complaint that each of them individually suffered "pecuniary injury and damages as a result of the Jones Act" when they "purchased domestic ocean cargo shipping services." This alleged injury is not the kind of abstract or indefinite harm that the Supreme Court has held to be insufficient to confer standing. See, e.g., Lance, 549 U.S. at 441-42, 127 S.Ct. 1194 (holding that plaintiffs lacked standing because "[t]he only injury [they] allege is that the law ... has not been followed"); Allen v. Wright, 468 U.S. 737, 754, 104 S.Ct. 3315, 82 L.Ed.2d 556 (1984) ("This Court has repeatedly held that an asserted right to have the Government act in accordance with law is not sufficient, standing alone, to confer jurisdiction on a federal court."), abrogated on other grounds by Lexmark Int'l, ___ U.S. ___, 134 S.Ct. 1377, 188 L.Ed.2d 392; Schlesinger v. Reservists Comm. to Stop the War, 418 U.S. 208, 217, 219-20, 94 S.Ct. 2925, 41 L.Ed.2d 706 (1974) (holding that the "generalized interest of all citizens in constitutional governance... is an abstract injury" that is an insufficient basis for standing).
The second required element for Article III standing is causation. This means that "there must be a causal connection between the injury and the conduct complained of." Lujan, 504 U.S. at
We dealt with a somewhat analogous issue in San Diego County Gun Rights Committee v. Reno, 98 F.3d 1121 (9th Cir. 1996). In that case, members of various gun rights groups sued the Attorney General of the United States, as well as other government officials, challenging the Violent Crime Control and Law Enforcement Act of 1994 ("VCCA"). Id. at 1124. The plaintiffs argued, among other things, that they had standing because they had suffered an economic injury. Id. at 1130. They asserted that the VCCA had caused the price of the affected firearms to increase from 40% to 100%. Id. We reasoned that "[a]lthough the [VCCA] may tend to restrict supply, nothing in the Act directs manufacturers or dealers to raise the price of regulated weapons," and that "[u]nder Lujan, plaintiffs' injury [did] not satisfy the requirements of Article III because it [was] the result of the independent action of some third party not before the court." Id.
Here, Plaintiffs suggest that the cabotage provisions of the Jones Act allowed two companies (not parties to this suit) to establish a duopoly whereby they are able to dominate the Hawaii shipping market and charge exorbitant rates. Plaintiffs' own complaint, however, also alleges that the Hawaii shipping market "has several characteristics that made it easy" for the two shipping companies in that market to keep prices high, independent of the Jones Act: "market concentration, significant barriers to entry, ease of information sharing, lack of viable alternatives to ocean shipping, and the commodity nature of ocean shipping services." In this light, Plaintiffs themselves have alleged facts showing that the two companies "may well have engaged in their injury-inflicting actions even in the absence of the government's challenged conduct." Mendia, 768 F.3d at 1013. This is fatal to Plaintiffs' effort to allege causation.
The third element of Article III standing, redressability, requires that it "be likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision." Lujan, 504 U.S. at 561, 112 S.Ct. 2130 (citation and internal quotation marks omitted). Although "[p]laintiffs need not demonstrate that there is a `guarantee' that their injuries will be redressed by a favorable decision," Graham v. Fed. Emergency Mgmt. Agency, 149 F.3d 997, 1003 (9th Cir.1998), abrogated on other grounds by Levin v. Commerce Energy, Inc., 560 U.S. 413, 130 S.Ct. 2323, 176 L.Ed.2d 1131 (2010), they do need to "show that there would be a `change in a legal status'" as a consequence of a favorable decision "and that a `practical consequence of that change
Here, Plaintiffs have not shown a likelihood that the shipping companies would lower their prices if the challenged provisions of the Jones Act were invalidated. On the contrary, as we have noted, Plaintiffs themselves have alleged several reasons — "market concentration, significant barriers to entry, ease of information sharing, lack of viable alternatives to ocean shipping, and the commodity nature of ocean shipping services," — that suggest prices might remain high even if the Jones Act were invalidated. Indeed, Plaintiffs allege that the two shipping companies serving the Hawaii market have engaged in a "conspiracy" to keep prices high. But, as Plaintiffs acknowledge in their complaint, the Jones Act "does not permit collusion, market sharing, market allocation, market manipulation or price fixing." This suggests that enjoining enforcement of the Jones Act would not redress the alleged conspiracy between the shipping companies. According to Plaintiffs' own complaint, any such conspiracy would be the result of "the unfettered choices made by independent actors not before the courts." ASARCO, 490 U.S. at 615, 109 S.Ct. 2037.
B. Leave to Amend
We must next decide whether Plaintiffs should be granted leave to amend in order to correct the deficiencies we have identified. Under Rule 15(a) of the Federal Rules of Civil Procedure, leave to amend a party's pleading "should [be] freely give[n] ... when justice so requires," because the purpose of the rule is "to facilitate decision on the merits, rather than on the pleadings or technicalities." Chudacoff v. Univ. Med. Ctr. of S. Nev., 649 F.3d 1143, 1152 (9th Cir.2011) (alterations in original) (citation and quotation marks omitted). Nevertheless, the "general rule that parties are allowed to amend their pleadings ... does not extend to cases in which any amendment would be an exercise in futility or where the amended complaint would also be subject to dismissal." Steckman v. Hart Brewing, Inc., 143 F.3d 1293, 1298 (9th Cir.1998) (citations omitted). Futility alone can justify a court's refusal to grant leave to amend. See Bonin v. Calderon, 59 F.3d 815, 845 (9th Cir.1995).
We decline to order that leave be granted to amend the complaint. We conclude that amendment would be an exercise in futility because even if Plaintiffs established standing, they would still fail to state a claim.
Plaintiffs' complaint is aimed squarely at a regulation of commerce among the several states, specifically shipping between Hawaii and the other states. Indeed, Plaintiffs allege that the Jones Act violates the Commerce Clause because its cabotage provisions constitute "an unlawful restraint of trade and interstate commerce." Thus, they acknowledge that the regulation at issue here concerns interstate commerce.
That the regulation may be a "restraint of trade" does not matter. As noted above, the Commerce Clause does not limit the power of Congress to regulate interstate commerce. Id. Quite the opposite, it is well established that, by virtue of the Commerce Clause, Congress has broad authority to regulate the channels and instrumentalities of interstate commerce, as well as any activity substantially relating to interstate commerce. See, e.g., United States v. Lopez, 514 U.S. 549, 558, 115 S.Ct. 1624, 131 L.Ed.2d 626 (1995); Prudential Ins., 328 U.S. at 423, 66 S.Ct. 1142.
It is true that the purpose of the Commerce Clause is to encourage and promote interstate commerce. Bos. Stock Exch. v. State Tax Comm'n, 429 U.S. 318, 328, 97 S.Ct. 599, 50 L.Ed.2d 514 (1977). But the Supreme Court has made clear that this means the Clause prevents states from burdening interstate commerce. See General Motors Corp. v. Tracy, 519 U.S. 278, 287, 117 S.Ct. 811, 136 L.Ed.2d 761 (1997) ("The negative or dormant implication of the Commerce Clause prohibits state taxation or regulation that discriminates against or unduly burdens interstate commerce and thereby impedes free private trade in the national marketplace.") (citations, alteration, and quotation marks omitted). As to Congress, however, it is solely a grant of power to regulate the realm of interstate commerce, not a restriction.
Plaintiffs do contend that the Jones Act is discriminatory because its effects on Hawaii commerce are disproportionate as compared to the rest of the United States. But that alleged discrimination does not support a viable cause of action, whether framed as a matter of due process or as an attempt to enforce a supposed structural limitation on federal power under the Commerce Clause. "There is no requirement of uniformity in connection with the commerce power." Currin v. Wallace, 306 U.S. 1, 14, 59 S.Ct. 379, 83 L.Ed. 441 (1939); see also Am. Trucking Ass'ns v. United States, 344 U.S. 298, 322 & n. 20, 73 S.Ct. 307, 97 L.Ed. 337 (1953) (explaining that the Due Process Clause is not violated even where a regulatory scheme causes some businesses to fail); Sec'y of Agric. v. Cent. Roig Ref. Co., 338 U.S. 604, 616-19, 70 S.Ct. 403, 94 L.Ed. 381 (1950) (explaining that legislation did not offend the Due Process Clause even where it set different quotas for sugar from refiners in island territories than from refiners on the mainland, thereby creating inequalities); see generally Thomas B. Colby, Revitalizing the Forgotten Uniformity Constraint on the Commerce Power, 91 Va. L.Rev. 249 (2005) (considering historical arguments in favor of an inherent uniformity constraint on the commerce power, but recognizing that the Supreme Court has for decades consistently stated that no such constraint exists).
The closest that Plaintiffs come to identifying legal support for their due process theory is to quote, in both their opening brief and their reply brief, from the Supreme Court's 1939 decision in Currin, specifically the first sentence of the following paragraph:
Currin, 306 U.S. at 14, 59 S.Ct. 379. The first sentence might acknowledge that there could be a due process limitation on some exercises of power, but it does not support Plaintiffs' claim that the Jones Act crosses the line. The rest of the paragraph provides the most telling response,
Likewise, although it is true that "[t]he liberty protected by the Fifth Amendment's Due Process Clause contains within it the prohibition against denying to any person the equal protection of the laws," United States v. Windsor, ___ U.S. ___, 133 S.Ct. 2675, 2695, 186 L.Ed.2d 808 (2013), "equal protection is not a license for courts to judge the wisdom, fairness, or logic of legislative choices," FCC v. Beach Commc'ns, Inc., 508 U.S. 307, 313, 113 S.Ct. 2096, 124 L.Ed.2d 211 (1993). Where, as here, rational basis review applies and "there are plausible reasons for Congress' action, our inquiry is at an end." Id. at 313-14, 113 S.Ct. 2096 (quotation marks omitted). This is not, for instance, a case involving invidious racial discrimination, e.g., Bolling v. Sharpe, 347 U.S. 497, 500, 74 S.Ct. 693, 98 L.Ed. 884 (1954), or indeed a case of intentional, invidious discrimination of any kind, see generally Vill. of Arlington Heights v. Metro. Hous. Dev. Corp., 429 U.S. 252, 265, 97 S.Ct. 555, 50 L.Ed.2d 450 (1977) (holding that a "discriminatory intent or purpose is required to show a violation of the Equal Protection Clause").
Thus, we decline to order that leave be granted for Plaintiffs to amend their complaint because, for the reasons discussed above, it would be futile to do so.
C. Procedural Due Process
Plaintiffs also assert that the district court violated their right to procedural due process by ruling on the government's motion to dismiss without an oral hearing. We reject this argument. Plaintiffs admit they "had [an] opportunity to present arguments counter to Defendant's motion," but they do not explain why that opportunity to present arguments in writing was inaedquate for purposes of due process. It was sufficient. See Cleveland Bd. of Educ. v. Loudermill, 470 U.S. 532, 546, 105 S.Ct. 1487, 84 L.Ed.2d 494 (1985) ("The essential requirements of due process ... are notice and an opportunity to respond. The opportunity to present reasons, either in person or in writing, why [a] proposed action should not be taken is a fundamental due process requirement." (emphasis added)). The district court did not err in ruling on the government's motion without an oral hearing.
Plaintiffs' complaint fails to make the showing necessary to establish Article III standing. We affirm the dismissal of the action and we decline to grant leave to amend the complaint.
FRIEDLAND, Circuit Judge, concurring:
I concur in Judge Clifton's thoughtful opinion, which faithfully applies our circuit precedent. I write separately to express my view that San Diego County Gun Rights Committee v. Reno, 98 F.3d 1121 (9th Cir.1996), which drives the opinion's conclusion that Plaintiffs lack Article III standing, should be reconsidered in an appropriate case.
Gun Rights ignores one of the most basic rules of microeconomics. According to Gun Rights, the fact that a law "restrict[s]
In accordance with basic economics, plaintiffs should be able to show that a challenged statute has caused an increase in price by showing that it has decreased supply. But Gun Rights prevents plaintiffs from establishing causation in this manner unless they can show that the statute actually "directs manufacturers or dealers to raise the price of regulated" goods. 98 F.3d at 1130. This contravenes the rule that causation may be indirect: "causation may be found even if there are multiple links in the chain connecting the defendant's unlawful conduct to the plaintiff's injury." Mendia v. Garcia, 768 F.3d 1009, 1012 (9th Cir.2014). As long as plaintiffs can show, "without relying on speculation or guesswork," that challenged governmental conduct is "at least a substantial factor" behind an injury, they can establish causation. Id. at 1013. The law of supply and demand requires no speculation or guesswork, so there should be little doubt that a statute reducing supply is at least a substantial factor behind a rise in price.
Were it not for Gun Rights, I would conclude that Plaintiffs have standing to challenge the Jones Act. At a minimum, Plaintiffs allege that the Jones Act limits the supply of vessels available to serve the Hawaii shipping market. This alone should be sufficient to establish that the Jones Act causes prices in that market to be higher than they otherwise would be. But, regrettably, Gun Rights requires more.
That said, this case is a poor vehicle for revisiting Gun Rights because, as Judge Clifton's opinion explains, Plaintiffs have failed to state a claim whether or not they have established standing. I expect the day will come, however, when it will be necessary to reconsider how plaintiffs injured by high prices can show that a defendant's challenged conduct caused those prices to increase. When it does, we should overrule Gun Rights and bring the law of our circuit into conformity with fundamental principles of economics.