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Novak v. United States

United States Court of Appeals, Ninth Circuit

July 30, 2015

PATRICK NOVAK; DANIEL ROCHA; LARRY KENNER, DBA Kenner, Inc., a Hawaii corporation; KEN SCHOOLLAND; BJORN ARNTZEN; PHILIP R. WILKERSON; WILLIAM AKINA, PH.D., Individually and as Representatives of a Class of Similarly Situated Persons, Plaintiffs-Appellants,
v.
UNITED STATES OF AMERICA; DOES 1-1000, Defendants-Appellees

Argued and Submitted, February 19, 2015, Honolulu, Hawaii

Appeal from the United States District Court for the District of Hawaii. D.C. No. 1:12-cv-00638-LEK-RLP. Leslie E. Kobayashi, District Judge, Presiding.

SUMMARY[*]

Jones Act

The panel affirmed the district court's dismissal of an action challenging the constitutionality of the Jones Act's cabotage provisions, which prohibit foreign competition in the domestic shipping market.

Plaintiffs alleged that the Jones Act's provisions impaired interstate trade between Hawaii and the rest of the United States to such an extent that they violated the Constitution. Plaintiffs are individuals and a corporation who reside in Hawaii and claim to have suffered pecuniary injury when they purchased domestic ocean cargo shipping services on west coast Hawaii routes.

The panel held that plaintiffs did not meet their burden to show causation or redressability, two requisite elements for Article III standing. The panel further held that although it was possible that plaintiffs could establish standing if they amended their complaint, any amendment would be futile because plaintiffs' Commerce Clause challenge to the Jones Act would fail on the merits. The panel held that an amended complaint would 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. The panel also rejected plaintiffs' claim alleging that the Jones Act violated protections guaranteed under the Due Process Clause of the Fifth Amendment. Finally, the panel held that the district court did not violate plaintiffs' procedural due process by ruling on the government's motion to dismiss without an oral hearing.

Judge Friedland concurred. She wrote separately to express her view that San Diego County Gun Rights Committee v. Reno, 98 F.3d 1121 (9th Cir. 1996), which drove the majority opinion's conclusion that plaintiffs lacked Article III standing, should be reconsidered in an appropriate case.

John S. Carroll (argued), Honolulu, Hawaii, for Plaintiffs-Appellants.

Rachel S. Moriyama (argued), Assistant United States Attorney, and Florence T. Nakakuni, United States Attorney, Honolulu, Hawaii, for Defendant-Appellee.

Before: Richard R. Clifton, N. Randy Smith, and Michelle T. Friedland, Circuit Judges.

OPINION

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.

I. Background

Plaintiffs are six individuals and one corporation.[1] All reside in Hawaii and claim to have suffered pecuniary injury when they purchased " domestic ocean cargo shipping services on west coast Hawaii routes." They sued the United States, claiming that the root of their problem is found in the cabotage provisions of the Jones Act, formally known as the Merchant Marine Act of 1920. Cabotage is the transport of goods or passengers between two points in the same country. Black's Law Dictionary 243 (10th ed. 2014).

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 companies, excluding foreign competitors. Under the cabotage provisions, any ship carrying cargo between two points in the United States must have been " built in the United States," 46 U.S.C. § 12112(a)(2)(A), and be " wholly owned by citizens of the United States," id. § 55102(b)(1).

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 ...


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