Tuesday, March 14, 2017

No Standing

The United States Court of Appeals for the District of Columbia Circuit affirmed dismissal of a claim brought by an attorney against the Department of State.

The plaintiff is a law firm that advises clients on U.S. law that regulates the international arms trade. Concerned that the State Department might enforce arms-control regulations against it in a way that would force disclosure of confidential client information, the law firm seeks declaratory and injunctive relief. The district court dismissed the action for lack of standing and ripeness. We affirm on the ground that the plaintiff lacks standing to bring a preenforcement challenge because it faces no credible threat of enforcement.


Matthew A. Goldstein is the principal attorney in a law firm that bears his name and specializes in providing legal advice to clients involved in transactions subject to the [International Traffic in Arms Regulation Act] . Goldstein attests that his firm “regularly represents clients in the preparation of the terms and conditions of sale, user agreements, vendor certifications, and other legal documents” for ITAR-related transactions. J.A. 51-52. According to Goldstein, his firm’s clients often have not identified the foreign parties that will be involved in prospective transactions at the time the firm provides its legal advice.

Soon after the State Department promulgated its 2013 regulation explicitly excluding legal services from the ITAR’s definition of brokering activities, Goldstein sought an advisory opinion from the Department pursuant to 22 C.F.R. § 126.9(a), asking whether six categories of services his firm provides were regulated or exempt. These services include advising clients on how to structure sales of defense articles, preparing sales contracts for these items, drafting technical-assistance agreements, advising on the availability of financing, advising on and preparing sales proposals, and corresponding and meeting with U.S. government officials. However, Goldstein offered the State Department no details about any past or contemplated transactions.

Goldstein asserts that, nearly a year after he requested an advisory opinion, the head of compliance at the State Department called him to say that the services described in his request would not be subject to Part 129 so long as his clients did not pay his firm a contingency fee or a commission. Relying on this advice, Goldstein withdrew his request. The State Department responded with a letter, advising Goldstein that his initial request and the phone conversation “lacked sufficient detail for the Department to make an official determination as to whether the activities discussed constituted brokering activities.” J.A. 36 (emphasis added). The letter also referred him to the Frequently Asked Questions page on the State Department’s website.

The attorney's subsequent suit was dismissed on standing grounds.


The question before us is whether the law firm has standing to seek to enjoin the State Department from enforcing its regulations governing arms brokering. The firm has failed, however, to demonstrate its standing to seek pre-enforcement relief: it has not “suffered an ‘injury in fact[]’ that is (a) concrete and particularized and (b) actual or imminent . . . .” Sabre, Inc. v. U.S. Dep’t of Transp., 429 F.3d 1113, 1117 (D.C. Cir. 2005) (quoting Friends of the Earth, Inc. v. Laidlaw Envtl. Servs., Inc., 528 U.S. 167, 180-81 (2000)). It is true that a plaintiff is not required “to expose himself to liability before bringing suit to challenge the basis” for an enforcement action by the government...

But here, we have no facts from which to conclude that the law firm risks incurring any liability by failing to register with the State Department. Indeed, Goldstein offers only vague and general descriptions of legal activities that the firm intends to undertake, none of which the State Department views as brokering, as the Department has made abundantly clear on its website and, more particularly, at oral argument before this court. Unsurprisingly, then, the State Department has shown no intention of enforcing the brokering regulations against Goldstein’s law firm...

As long as the firm merely provides the legal services Goldstein describes, it faces no material risk of enforcement from the State Department. His firm therefore need not fear that it will have to disclose confidential client information or otherwise take steps to register.

Circuit Judge Griffith authored the opinion. (Mike Frisch)


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