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People for the Ethical Treatment of Animals, Inc. v. Stein

United States District Court, M.D. North Carolina

May 2, 2017

JOSH STEIN, in his official capacity as Attorney General of North Carolina; and CAROL L. FOLT, in her official capacity as Chancellor of the University of North Carolina-Chapel Hill, [1]Defendants.


          THOMAS D. SCHROEDER, District Judge.

         This case involves a pre-enforcement challenge to the North Carolina Property Protection Act, 2015 N.C. Sess. Laws 50, codified at N.C. Gen. Stat. § 99A-2 (“Property Protection Act” or “Act”), which in relevant part creates a civil cause of action for a North Carolina employer against an employee who “captures or removes” documents from the employer's premises or records images or sound on the employer's premises and uses the documents or recordings to breach the employee's duty of loyalty to the employer. N.C. Gen. Stat. §§ 99A-2(b)(1), (2). Plaintiffs are eight organizations that claim the Act stifles their ability to investigate North Carolina employers for illegal or unethical conduct and restricts the flow of information those investigations provide, in violation of the First (count I) and Fourteenth (count II) Amendments to the United States Constitution and provisions of the North Carolina Constitution (Free Speech under Art. I, § 14 (count III); Right to Petition under Art. I, § 12 (count IV); and Equal Protection under Art. 1, § 19 (count V)). Defendants are Josh Stein, Attorney General of North Carolina, and Carol Folt, Chancellor of the University of North Carolina at Chapel Hill (“UNC/Chapel Hill”).

         Before the court is Defendants' motion to dismiss. (Doc. 30.) The motion has been fully briefed, and the court held oral argument on April 4, 2017. With leave of court, amici law professors Erwin Chemerinsky and Jack Preis have filed a brief in support of Plaintiffs' arguments. (Doc. 45.) Because the amended complaint fails to allege that Plaintiffs have yet suffered an Article III injury-in-fact, the court finds that it lacks jurisdiction over Plaintiffs' claims. The motion to dismiss will therefore be granted, and the first amended complaint will be dismissed without prejudice.

         I. BACKGROUND

         Viewed in the light most favorable to Plaintiffs, the relevant facts are as follows:

         On June 3, 2015, the North Carolina General Assembly overrode a veto to pass the Property Protection Act. In relevant part, the Act allows the owner or operator of a premises to recover against any person who “intentionally gains access to the nonpublic areas[2]of [its] premises and engages in an act that exceeds the person's authority to enter those areas.” N.C. Gen. Stat. § 99A-2(a). “An act that exceeds a person's authority to enter the nonpublic area of another's premises” is defined in the Act as follows:

(1) An employee who enters the nonpublic areas of an employer's premises for a reason other than a bona fide intent of seeking or holding employment or doing business with the employer and thereafter without authorization captures or removes the employer's data, paper, records, or any other documents and uses the information to breach the [employee's] duty of loyalty to the employer[;]
(2) An employee who intentionally enters the nonpublic areas of an employer's premises for a reason other than a bona fide intent of seeking or holding employment or doing business with the employer and thereafter without authorization records images or sound occurring within an employer's premises and uses the recording to breach the [employee's] duty of loyalty to the employer[;]
(3) Knowingly or intentionally placing on the employer's premises an unattended camera or electronic surveillance device and using that device to record images or data[;]
(4) Conspiring in organizing retail theft, as defined in Article 16A of Chapter 14 of the General Statutes[;] [or]
(5) An act that substantially interferes with the ownership or possession of real property.

N.C. Gen. Stat. § 99A-2(b). “Any person who intentionally directs, assists, compensates, or induces another person to violate this section” can be jointly liable with the employee or actor. Id. § 99A-2(c).

         The Act provides for the recovery of equitable and compensatory relief, as well as costs, attorneys' fees, and “[e]xemplary damages as otherwise allowed by State or federal law in the amount of five thousand dollars ($5, 000) for each day, or portion thereof, that a defendant has acted in violation of subsection (a) of this section.” Id. § 99A-2(d). Finally, the Act provides that nothing in it may be construed “to diminish the protections provided to employees under Article 21 of Chapter 95 or Article 14 of Chapter 126 of the General Statutes, nor may any party who is covered by these Articles be liable under this section.” Id. § 99A-2(e).

         Plaintiffs are eight organizations dedicated to exposing illegal and unethical conduct in private and public industries. (Doc. 21.) Plaintiffs allege that three of the organizations, People for the Ethical Treatment of Animals (“PETA”), Animal Legal Defense Fund (“ALDF”), and Farm Sanctuary, engage in undercover investigations to expose animal cruelty. (Id. ¶¶ 15, 27, 34.) They further allege that PETA and ALDF wish to continue their undercover investigations in North Carolina and are “deterred” from doing so by fear of liability under the Act. (Id. ¶¶ 16, 28.)

         To conduct these investigations, the organizations direct their members to obtain employment with employers they believe are engaged in illegal or unethical conduct. After such investigators obtain employment, they collect information and record the employer's conduct. Such persons “may also be instructed to leave recording devices unattended to capture images and sound over a longer duration.” (Id. ¶ 29.) Plaintiffs allege that, among others, PETA's and ALDF's investigators have recorded activities in non-public areas. (Id. ¶¶ 21, 29.)

         PETA uncovered unethical conduct at animal laboratories at UNC/Chapel Hill from 2001 to 2003, and Plaintiffs allege on information and belief that the laboratories continue to engage in illegal and unethical treatment of animals. (Id. ¶¶ 21-22.) In that investigation, investigators made recordings in non-public areas of the laboratories “showing that workers disregarded animal care protocols and government orders.” (Id. ¶ 21.) PETA publicized its findings and filed a report with the National Institute of Health. (Id.) Plaintiffs allege that PETA “would conduct” another investigation at UNC/Chapel Hill but that because “PETA fears liability under the [Act]” and “because of the chill created by the [Act], PETA has chosen not to undertake this investigation.” (Id. ¶ 22.)

         ALDF has conducted at least a dozen undercover investigations in North Carolina. (Id. ¶ 28.) It “wishes to continue to conduct such investigations in North Carolina, but it has been deterred from doing so for fear of being sued for damages under the [Act].” (Id.) Plaintiffs allege that ALDF has an investigative team capable of conducting such investigations, that it has recruited investigators ready, willing, and able to investigate North Carolina facilities, and that it has spent several thousand dollars on radio advertisements in North Carolina to recruit more investigators. Plaintiffs further allege that ALDF has created a list of animal facilities in North Carolina, including “a number of” governmental facilities, and has collected applications for employment at some of these facilities. (Id. ¶ 30.)

         Plaintiffs allege that all eight organizations rely on information from such undercover investigations in order to build support for their missions and to cultivate public pressure to pass legislation and effectuate other reforms. At least one of the organizations, Governmental Accountability Project (“GAP”), defends and provides legal services to whistleblowers who disclose information about various threats to public welfare. (Id. ¶¶ 40-42.) The organizations' missions vary, but they all involve the distribution of information obtained through undercover investigations.

         Defendant Stein is responsible for appearing in court to represent the State of North Carolina and its agencies. N.C. Gen. Stat. § 114-1.2. Defendant Folt exercises executive authority over UNC/Chapel Hill, id. § 116-34(a), which operates the facility PETA has investigated in the past and wishes to investigate again. (See Doc. 21, ¶¶ 21-22.)

         Plaintiffs brought this action on January 13, 2016, less than two weeks after the law became effective (Doc. 1, ¶¶ 55, 58), and amended their complaint shortly thereafter to add two Plaintiffs. They allege that facially and as applied to Plaintiffs, the Act violates the First and Fourteenth Amendments because it constitutes a content-based restriction on speech and cannot pass strict scrutiny. They also allege that the Act violates free-press protections and the Petitions Clause and that it is overbroad and unconstitutionally vague. Finally, they argue that the Act violates various provisions of the North Carolina Constitution. Plaintiffs seek an injunction against enforcement of the Act by anyone and a judgment requiring Defendants “to provide public notice, including in the official and online editions of the North Carolina statutes, that the [Act] is unconstitutional and will not be enforced.” (Doc. 21, ¶ 142.)

         Defendants move to dismiss the amended complaint on three grounds: Eleventh Amendment State sovereign immunity;[3] standing; and on the merits.[4] (Doc. 30.) Because the standing argument presents a challenge to this court's subject matter jurisdiction, it presents a threshold issue the court must resolve first. See Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 89-101 (1998) (holding that a federal court cannot address the merits of a case without first determining that it has jurisdiction over the case); Constantine v. Rectors & Visitors of George Mason Univ., 411 F.3d 474, 482 (4th Cir. 2005) (applying Steel Co. to Eleventh Amendment immunity and concluding that it is not a threshold jurisdictional issue (citing Wis. Dep't of Corr. v. Schacht, 524 U.S. 381, 394 (1998) (Kennedy, J., concurring))).

         On the question of standing, Defendants argue first that Plaintiffs' fears of liability are hypothetical and conjectural, failing to constitute an injury-in-fact for standing purposes. (Doc. 31 at 18.) They point out that nowhere in the amended complaint do Plaintiffs allege that either Defendant is likely to enforce the Act against them through a civil cause of action. (Id. at 19.) Defendants also argue that Plaintiffs fail to satisfy the causation and redressability prongs of the Article III standing inquiry. (Id. at 19-21.)

         To Defendants' arguments regarding the injury-in-fact requirement, Plaintiffs respond that they fear employers will sue investigators like PETA pursuant to the Act, chilling their investigations. (Doc. 35 at 18-19.) They argue further that the non-investigator Plaintiffs - those whose alleged injury is the interrupted receipt of recordings and documents covered by the Act - have “‘standing to assert a right to receive speech' for which a plaintiff only must allege that ‘there exists a speaker willing to convey the information to her, ' which has been constrained by the potential for the defendant's action.” (Doc. 35 at 19 (quoting Stephens v. Cty. Of Albemarle, 524 F.3d 485, 492 (4th Cir. 2008)).)

         The motion to dismiss is fully briefed and ready for decision.

         II. ANALYSIS

         A. Standard of Review

         Upon a motion to dismiss under Federal Rule of Civil Procedure 12(b)(1), a plaintiff bears the burden of establishing standing to bring its claims. White Tail Park, Inc. v. Stroube, 413 F.3d 451, 458-59 (4th Cir. 2005). Because standing is “an indispensable part of the plaintiff's case, ” a plaintiff must support each element “in the same way as any other matter on which the plaintiff bears the burden of proof, i.e., with the manner and degree of evidence required at the successive stages of litigation.” Id. (quoting Lujan v. Defs. of Wildlife, 504 U.S. 555, 561 (1992)). At the pleading stage, “general factual allegations of injury resulting from defendant's conduct may suffice, ” which the court views in the light most favorable to Plaintiffs. Id. (quoting Lujan, 504 U.S. at 561). In deciding a motion to dismiss under Rule 12(b)(1), this court may consider evidence outside the pleadings. Id. (citing Richmond, Fredericksburg & Potomac R.R. Co. v. United States, 945 F.2d 765, 768 (4th Cir. 1991)).

         B. Injury-in-Fact

         To satisfy Article III's case-or-controversy requirement, a plaintiff must establish that its claim meets the ...

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