On April 25, 2016, the United States District Court for the Southern District of Ohio, Western Division, dismissed a challenge that had been brought by United States Senator Rand Paul and several other plaintiffs in Crawford, No. 3:15-CV-00250 (S.D. Ohio 4/26/16) that had sought a declaratory and injunctive relief against enforcement of the US Foreign Account Tax Compliance Act (FATCA), the Canadian, Czech, Israeli, French, Danish, and Swiss intergovernmental agreements (IGAs) entered into under FATCA, and the Report of Foreign Bank and Financial Accounts (FBAR) administered by the US Treasury’s Financial Crimes Enforcement Network (FinCEN). We previously reported on an earlier related development.
Judge Thomas M. Rose granted a motion to dismiss in favour of the United States Department of the Treasury, the United States Internal Revenue Service and FinCEN, (collectively, the Defendants) on the basis that the plaintiffs lacked standing to institute the proceedings, with the result that the Court did not address the merits of the lawsuit.
Specifically Judge Rose stated that standing contains three elements:
“First, plaintiffs must have suffered an injury in fact—an invasion of a legally protected interest which is (a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical. Second, there must be a causal connection between the injury and the conduct complained of—the injury has to be fairly traceable to the challenged action of the defendant, and not the result of the independent action of some third party not before the court. Third, it must be likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision.”
Referring to plaintiff Senator Paul, who was a party to the lawsuit in his capacity as senator, the Court concluded that Senator Paul had neither been authorized to sue on behalf of the Senate nor could he base his standing on a more generalized interest in “vindication of the rule of law”. Instead, Senator Paul had an adequate remedy to challenge the reporting requirements and penalties that he opposed in this lawsuit by working to repeal these laws through the legislative process.
Also included amongst the other plaintiffs was Mark Crawford, who objected to the law’s effect on him because his brokerage firm did business with a non-US bank that was refusing to take US citizens as clients. He also lacked standing because the action of a third party (the foreign bank) was not part of the lawsuit.
The other plaintiffs were US citizens and former US citizens currently living in Canada, the Czech Republic, Israel, and/or Switzerland. However, similar to Crawford, each of these plaintiffs lacked standing because they failed to establish the concrete, particular injury each had suffered.
“Here, analyzing each Plaintiff individually, the Court finds that none of the Plaintiffs has standing to sue Defendants. No individual Plaintiff has suffered an invasion of a legally protected interest, which is concrete and particularized, and actual or imminent, not conjectural or hypothetical. Moreover, no alleged injury is fairly traceable to the actions of the Defendants, but rather, the actions of an independent third party. Finally, there are no allegations that it is likely that the alleged injury will be redressed by a favorable decision. ... Accordingly, all claims are DISMISSED for lack of subject-matter jurisdiction under Fed. R. Civ. P. 12(b)(1), against all Defendants, without prejudice.”