Carragher v. Dist. of Columbia

240 A.3d 321

Dylan CARRAGHER, Appellant,

v.DISTRICT OF COLUMBIA, Appellee,

Nos. 19-CV-1100 & 19-CV-1221

District of Columbia Court of Appeals.

Decided October 22, 2020

Deahl, Associate Judge:

Dylan Carragher sued the District of Columbia challenging the validity of the Sports Wagering Procurement Practices Reform Exemption Act of 2019 ("Exemption Act"). D.C. Law 23-1, 66 D.C. Reg. 2451. This Exemption Act permitted the Office of Lottery and Gaming to award a non-competitive contract for operating the District's sports gambling system unencumbered by preexisting procurement laws, which otherwise would have required a competitive bidding process for awarding the contract. D.C. Code § 2-351.01, et seq. (2016 Repl.). Mr. Carragher argues the Exemption Act effectively amended Title IV of the Home Rule Act—also known as the District's Charter—which is something the D.C. Council is not empowered to do without ratification via a public referendum process that did not occur here. D.C. Code § 1-203.03(a) ; see also Zukerberg v. District of Columbia Bd. of Elections , 97 A.3d 1064, 1066 (D.C. 2014) (describing "two-step process" of D.C. Council passage and public referendum as one method for amending the District's Charter). The District counters that the Exemption Act simply modified procurement laws and involved no alteration of the Home Rule Act's requirements that those laws be followed. The trial court agreed with the District on the merits and granted summary judgment in its favor.

The District now argues, as it did below, that Mr. Carragher lacks standing to bring his suit. The trial court did not address this threshold standing question, but we cannot bypass it. See Grayson v. AT & T Corp. , 15 A.3d 219, 229 (D.C. 2011) (en banc) ("Standing is a threshold jurisdictional question which must be addressed prior to and independent of the merits of a party's claim.") (citation omitted). We agree with the District that Mr. Carragher lacks standing. We vacate the trial court's grant of summary judgment and remand with instructions to dismiss the suit for lack of standing.

I.

Until recently, federal law prohibited sports gambling in all but a handful of jurisdictions. While Nevada and Atlantic City, New Jersey, are the most recognized exceptions to that longstanding prohibition, a federal statute has also long carved out (via a grandfathering clause) exemptions for Montana, Delaware, and Oregon. See 28 U.S.C. § 3704(a)(1)-(2) ; Nat'l Collegiate Athletic Ass'n v. Christie , 926 F. Supp. 2d 551, 556 (D.N.J. 2013) (" ‘grandfather clause’ resulted in exceptions for four states: Delaware, Oregon, Montana, and Nevada. Additionally, New Jersey was the only state qualified to establish sports gambling within the one-year period" permitted by statute). The sweeping federal prohibition applicable to other jurisdictions was upended recently when the Supreme Court decided Murphy v. Nat'l Collegiate Athletic Ass'n , ––– U.S. ––––, 138 S. Ct. 1461, 200 L.Ed.2d 854 (2018). Murphy held that federal restrictions precluding states from authorizing sports gambling violated the anticommandeering doctrine. Id. at 1475. That doctrine, in a phrase, "withhold[s] from Congress the power to issue orders directly to the States." Id.

With Murphy in the books, many jurisdictions—including the District—raced to launch sports gambling platforms. See Legislative Tracker: Sports Betting , Legal Sports Report (visited Sept. 10, 2020), https://www.legalsportsreport.com/sportsbetting-bill-tracker/ https://perma.cc/TU2X-3PDF ("nearly 75% of US states have either legalized sports wagering or introduced legislation to do so" since Murphy ). To establish a first-to-market advantage over neighboring jurisdictions, the District sought to surmount various legal hurdles that otherwise might have delayed its efforts.

The D.C. Council's first step was to pass the Sports Wagering Lottery Amendment Act of 2018, D.C. Law 22-312, 66 D.C. Reg. 1402 (codified principally at D.C. Code § 36-621.01 et seq. (2020 Supp.) ). That Act authorized the District to establish its own online sports gambling platform "through contract with a limited number of partners" who would operate the underlying systems on behalf of the Office of Lottery and Gaming. D.C. Code § 36-621.11(a)(1-2). But impediments remained. Most notably, the Procurement Practices Reform Act of 2010 ("Procurement Act"), D.C. Code § 2-351.01 et seq. , required any contract for operating the District's gambling platform to be opened to competitive bidding, and a competitive bid process promised to delay the online platform's rapid launch. According to one estimate, a competitive bid process would have postponed any gambling platform's launch by about three years, which the Office of Lottery and Gaming figured would cost the District about $60 million in lost revenue. D.C. Council Comm. on Fin. and Revenue, Report on Bill 23–25 at 2 (Jan. 30, 2019); id. attachment C at 6 (Jan. 28, 2019, testimony of Beth Bresnahan).

To prevent such delay, the D.C. Council's next step was to exempt the initial launch of a sports gambling platform from the Procurement Act's competitive bid requirements. In early 2019, the Council passed the Exemption Act, supra , which rendered the Procurement Act's competitive bid requirements inapplicable to "[t]he initial procurement contract" for sports gaming. 66 D.C. Reg. 2451. Shortly after the Exemption Act took effect, the District signed a sole-source contract with Intralot without ever opening that contract up to competitive bidding. Under the contract's terms, Intralot would run the District's sports gambling platform in exchange for a sizable percentage of the gambling proceeds.

Mr. Carragher brought suit in D.C. Superior Court claiming the D.C. Council, through the Exemption Act, impermissibly amended Section 424b of the Home Rule Act; that is something the D.C. Council is not empowered to do without ratification via a public referendum process. D.C. Code § 1-203.03(a). The Home Rule Act provision in question requires the District's Chief Financial Officer—who oversees the Office of Lottery and Gaming's procurement of goods and services—to follow statutory procurement requirements. D.C. Code § 1-204.26 (2016 Repl.). The District did not dispute that it was obliged by the Home Rule Act to follow statutory procurement requirements, but maintained that the Exemption Act merely amended the District's procurement laws rather than the Home Rule Act's mandate that those laws be followed.

The trial court agreed with the District that the Exemption Act did not amend the Home Rule Act so that it did not require ratification via public referendum. The court further noted the Procurement Act itself expressly allows the District to deviate from competitive bidding requirements when "otherwise authorized by law," D.C. Code § 2-354.01, and held the Exemption Act was one such authorized deviation. The court thus concluded the Exemption Act lawfully altered the Procurement Act's requirements for the initial launch of a sports gambling platform, granted the District's motion for summary judgment, and dismissed Mr. Carragher's complaint with prejudice. The trial court's summary judgment order did not address whether Mr. Carragher had standing to bring his suit, though the District had repeatedly argued he did not.

II.

On appeal the District renews its argument that Mr. Carragher lacks standing to maintain his suit. Although the District's courts were established under Article I of the Constitution, D.C. Code §§ 1-204.31(a), 11-101, "this court has followed consistently the constitutional standing requirement embodied in Article III" of the Constitution. Grayson , 15 A.3d at 224. That means Mr. Carragher had the burden to demonstrate, among other things, that the conduct complained of caused him to suffer an "injury in fact" that is "concrete and particularized," "actual or imminent," and "fairly traceable to the challenged action." Id. at 246 (quoting Lujan v. Defenders of Wildlife , 504 U.S. 555, 560-61, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992) ).

Mr. Carragher advanced two distinct theories of standing in the trial court, though he now relies almost exclusively on the second theory. First, he argued that he has "competitor standing" because of his interest in operating his own gambling platform in the District, an interest that he contends was thwarted by the District's award of a non-competitive contract to Intralot. See generally District of Columbia v. Group Ins. Admin. , 633 A.2d 2, 19 (D.C. 1993) (discussing competitor standing for the award of government contracts). Second, he argued that he has "municipal taxpayer standing" because, as a District resident and taxpayer, he has a cognizable interest in seeing that his tax dollars are not used unlawfully. See generally District of Columbia Common Cause v. District of Columbia , 858 F.2d 1, 8-9 (D.C. Cir. 1988). We disagree on both points and conclude that Mr. Carragher does not have standing because, even if he were correct that the Exemption Act illegally amends the Home Rule Act, he has suffered no injury as a result of that alleged illegality.

A.

We start with Mr. Carragher's argument that he has competitor standing because, had the District followed preexisting procurement laws, he might have submitted his own potentially successful bid. That is a recognized theory of standing, but it is one that required Mr. Carragher to show that he was in a position to submit a viable bid to operate the District's gaming platform had the contract been opened to competitive bidding. See generally Group Ins. Admin. , 633 A.2d at 19 ("[A] disappointed bidder need demonstrate only that if its bid had been fairly and honestly considered, there was substantial chance that it would receive an award.") (citations, alterations, and internal quotations omitted). Mr. Carragher never made such an allegation below—much less one supported "through ‘specific facts’ set forth ‘by...