Arguing That a Plaintiff Must Show Actual Injury to Establish Standing Under Article III of the United States Constitution

This case presents the issue whether Article III of the United States Constitution, which limits the federal court’s jurisdiction to “cases and controversies,” confers standing on a plaintiff who alleges a statutory violation but who cannot establish that the alleged violation caused any concrete injury. The statute at issue, the anti-kickback section of the Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. §§ 2601 et seq., provides a private right of action for any homebuyer who merely establishes a violation of the statute, regardless of whether the homebuyer has been harmed by the alleged violation.  In this case, in fact, the plaintiff homebuyer Edwards has conceded that she suffered no economic or other injury from the alleged statutory violation for which she has brought the action. After the Ninth Circuit ruled that, although Edwards had suffered no economic injury from the alleged violation of RESPA, she nevertheless had Article III standing to sue in federal court, First American Financial Corp.’s petition for certiorari was granted. In its amicus brief on the merits in support of First American, NELF, on behalf of itself and co-amici United States Chamber of Commerce and Associated Industries of Massachusetts, analyzed judicial precedent (including the landmark Marbury v. Madison), and statutory and constitutional history to argue that the Court should reject any attempt by Congress to allow individuals who have not suffered a concrete, personal harm to sue in federal court. 

Despite the fact that the Supreme Court had granted certiorari and notwithstanding the importance of the issue raised and the fact that the argument had been held, on June 29, 2012, the Court, without explanation, dismissed the writ of certiorari as improvidently granted.

Fighting Against a Retroactive Rewriting of the Terms of a Testamentary Trust

This is a declaratory judgment action brought by a beneficiary under a 1941 Massachusetts testamentary trust created by her great-grandmother. It was taken by the Massachusetts Supreme Judicial Court (“SJC”) on direct appellate review, based on a reservation and report to the Massachusetts Appeals Court from the Massachusetts Probate and Family Court.  At issue was the validity of a Massachusetts statute passed in 2010 that purports to change the meaning of the term “child” in such instruments (wills and trusts) retroactively, i.e., to cover all such instruments from the beginning of time that were in existence on the effective date of the statute. Specifically, prior to 1958 Massachusetts law provided that adopted descendants (other than the testator’s own adopted children) in Massachusetts were presumptively excluded from any bequest in a testamentary instrument, unless the contrary intent was clearly expressed in the document.  In 1958, the Massachusetts Legislature reversed this rule of construction prospectively by expanding the default definition of  “child,” and its equivalent terms, to include adopted descendants (unless defeated by the clear terms of the instrument), and by applying this default definition to instruments executed after the 1958 statute’s effective date (August 26, 1958).  The 2010 Massachusetts statute applied this change to all such instruments in existence on July 1, 2010, regardless of their date of execution.  The statute would thus retroactively change the meaning of the relevant term in the 1941 testamentary trust at issue, long after the death of the grantor, and require the proceeds under the trust to be divided among the plaintiff and her two adopted siblings (who, precisely because they were not beneficiaries under their great-grandmother’s trust, had received a separate bequest from their grandmother). The retroactive application of the 2010 statute would alter the plaintiff’s grandmother’s distribution of her property after her death and therefore has important implications for individual property rights, a core area of NELF’s concern.  

NELF accordingly filed an amicus brief in support of the plaintiff, arguing that retroactive application of the 2010 statute would violate two fundamental rights under both the United States and the Massachusetts Constitutions.  NELF argued, first, that the retroactive application of the statute violates the due process clauses of both the U.S. and the Massachusetts constitutions and, second, that it would constitute an unconstitutional taking of a property interest under both the U.S. and the Massachusetts constitutions.  With respect to due process, NELF argued that retroactive application of the statute is unconstitutional because it serves no legitimate public interest.  Briefly put, it is established that the legislature many not dictate how an individual should distribute her own private property upon her death.  See Hodel v. Irving, 481 U.S. 704, 715 (1987);Powers v. Wilkinson, 399 Mass. 650, 652-54 (1987). At most, the legislature can provide a default definition of a term such as “child” and its equivalents, which individuals are free to accept or reject in their private instruments.  Watson v. Baker, 444 Mass. 487, 495-496 (2005)   Because the grantor in this case is long dead and, therefore, cannot decide for herself whether or not to accept the more inclusive definition set forth in the 1958 and 2010 statutes, retroactive application of the broader definition, in effect, to change how she left her property clearly offends due process.  Retroactive application would also violate the takings provisions of both the state and federal constitutions, because it retroactively impairs the vested property rights of the plaintiff, without compensation.  This argument is supported by the SJC’s own decision, Boston Safe Deposit & Trust Co. v. Fleming 361 Mass. 172 (1972), which invalidated any retrospective application of the 1958 statute that first established the more inclusive presumptive definition of “child.”  Although the Court in that decision recognized the humanitarian and beneficial effect of the more inclusive definition, it nonetheless rejected the taking of established property interests.  NELF argued that, for the same reason, the retroactive aspect of the 2010 statute must be rejected.

On August 28, 2012, the SJC issued its decision, agreeing with NELF that the 2010 amendment could not be applied retroactively to any pre-1958 trusts.  The Court invalidated the statute on state due process grounds, applying its own balancing test.  Among the factors mentioned by the Court was “the bedrock principle that a testator is entitled to rely on the state of law at the time of execution of a testamentary instrument.” 

Opposing a Town’s Attempt to Pay For Its Sewer System’s Repair By Imposing an Illegal Tax on Property Developers

The question raised by this Massachusetts Supreme Judicial Court (“SJC”) appeal was whether a town could exact from property developers a costly monetary “contribution” towards payment for the town’s state-ordered repair of its dilapidated sewer system. The state of the sewer system is a result of the town’s longstanding neglect, and is not connected in any way with property development in the town. Apparently other cities and towns in the Commonwealth have imposed “fees” similar to those at issue in this case, thereby widening the impact of this case on the rights of Massachusetts property owners.  After the town of Saugus failed for a number of years to repair its defective sewer system, the Massachusetts Department of Environmental Protection (“DEP”) in 2005 entered into an administrative consent order with the town, under which Saugus agreed to make the necessary repairs. This case results from the town’s attempt to defray its cost of compliance with the consent decree by subjecting certain property developers to a mandatory contribution for the town’s sewer repair, which the town terms a “fee,” as a condition of being connected to the town’s sewer system. The developers have challenged this “fee” on the ground that it is actually an illegal tax, rather than a valid fee, under Emerson College v. Boston, 391 Mass. 415 (1984), in which  the SJC announced a three-part test to guide courts in determining whether local government is exacting an unlawful tax in the guise of a permissible fee. The inquiry asks whether local government is providing a particular service that benefits the party subject to the monetary exaction (hence a valid fee), or whether local government is in fact requiring a small class of individuals to pay for government’s discharge of its general duties (hence an unlawful tax). Applying the Emerson College test, both the Massachusetts Superior Court and Appeals Court held that Saugus’s mandatory contribution is an unlawful tax. The town obtained further appellate review from the SJC and NELF, joined by co-amicus NAIOP Massachusetts, filed an amicus brief supporting the developers. NELF argued in its brief that Saugus’s disputed “fee” fails the Emerson College test, and other applicable state law, because the town is not providing a “service” to the plaintiffs. Instead, the town is merely fulfilling its duties owed to DEP in the 2005 consent order, and the town’s attempt to defray the cost of compliance with those public duties in fact functions as a tax, which the SJC has defined as “[‘]an enforced contribution to provide for the support of government.[’]” Doe v. Sex Offender Registry Bd., 459 Mass. 603, 610 (Mass. 2011).  NELF also argued that the town’s exaction of a “fee” as a condition for property development violates the Takings Clause under Nollan v. California Coastal Comm’n, 483 U.S. 825 (1987), and Dolan v. City of Tigard, 512 U.S. 374 (1994). Since there is no connection between the “fee” and any likely public impact caused by the plaintiffs, Saugus’s action fails under Nollan-Dolan and the Takings Clause. 

In a decision issued on June 29, 2012, the SJC disagreed with both NELF and the lower courts and held that the charge at issue was a valid proprietary fee.  The Court based its decision on its view of the 2005 consent order, which it said required a moratorium on any new connections to the sewer system unless Saugus established a “sewer bank.”  Since, without the sewer bank, there would have been a complete moratorium and the Court concluded that the amounts paid by the developer in this case were connected to the sewer bank, it concluded that the fee was a sufficiently particularized benefit to pass muster under Emerson College.  In reaching this result the Court held that “[a] precise balancing or weighing of public benefits against a particularized benefit is not part of the first Emerson College.”  Rather, the Court held, the relevant inquiry is “whether the limited group [here property developers] is receiving a benefit that is, in fact sufficiently specific and special to its members.”  As the Court pointed out, it was the maintenance of the “sewer bank” that made the development at issue possible.  Unlike both the Superior Court and the Appeals Court, the SJC apparently ignored the fact that the “fees” were used to benefit the entire population of Saugus and were used to fix a sewer system that the town itself had allowed to deteriorate.