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Wilding v. DNC Services Corp.

United States Court of Appeals, Eleventh Circuit

October 28, 2019

CAROL WILDING, STANLEY RIFKEN, SHARON CRAWFORD, WILLIAM SCOTT FRANZ, DAVID PULASKI, MARY JASMINE WELCH, JOSE ALBERTO GONZALEZ, JANE ELLEN PLATTNER, KIM MARIE HOULE, et al., Plaintiffs - Appellants,
v.
DNC SERVICES CORPORATION, DEBORAH WASSERMAN SCHULTZ, Defendants - Appellees.

          Appeal from the United States District Court for the Southern District of Florida D.C. Docket No. 0:16-cv-61511-WJZ

          Before JORDAN, GRANT and HULL, Circuit Judges.

          JORDAN, Circuit Judge.

         In his classic treatise on the United States and its political system, Alexis de Tocqueville famously remarked that "[t]here is almost no political question in the United States that is not resolved sooner or later into a judicial question." Alexis de Tocqueville, Democracy in America, Vol. I, at 257 (U. Chicago Press 2000) [1835]. This case, which pits a political party against some of its supporters, confirms de Tocqueville's reputation as an astute observer of American life.

         The plaintiffs in this putative class action are donors to the Democratic National Committee, donors to the 2016 presidential campaign of Senator Bernie Sanders, and voters affiliated with the Democratic Party in various states. The defendants are the DNC and its former chairwoman (and current U.S. Representative) Deborah Wasserman Schultz. The plaintiffs essentially allege that during the 2016 Democratic presidential primaries the DNC and Ms. Wasserman Schultz improperly tipped the scales in favor of former Secretary of State Hillary Clinton, who was challenging Senator Sanders for the Democratic presidential nomination.

         In their complaint against the DNC and Ms. Wasserman Schultz, the plaintiffs asserted a number of common-law and statutory claims, including fraud, negligent misrepresentation, and unjust enrichment. The district court dismissed all of their claims for lack of Article III standing, see Wilding v. DNC Services Corp., 2017 WL 6345492 (S.D. Fla. 2017), and the plaintiffs appealed.

         I

         We set out the facts as alleged in the operative complaint, and accept them as true for purposes of our discussion. See Wood v. Moss, 572 U.S. 744, 755 n.5 (2014).

         A

         The Democratic Party charter states that its chair "shall exercise impartiality and evenhandedness as between the Presidential candidates and campaigns," and is "responsible for ensuring" that the DNC's national officers and staff also "maintain impartiality and evenhandedness during the Democratic Party Presidential nominating process." First Amended Complaint at ¶ 159.

         From September of 2015 through May of 2016, Ms. Wasserman Schultz and Holly Shulman, the DNC's spokesperson, made public statements promising that the DNC would conduct a neutral and impartial primary process. First, on September 3, 2015, Ms. Wasserman Schultz was quoted in a Politico article as saying that she was committed to running a "neutral primary process." Second, in Daily Beast and Daily Mail Online articles appearing in September and October of 2015, Ms. Shulman was quoted as saying that the DNC "runs an impartial primary process[.]" Third, in May of 2016, Ms. Wasserman Schultz told CNN and the Associated Press that she and the DNC remained neutral in the primary process. See id. at ¶ 160(a)-(d).

         B

         These statements of impartiality, according to the complaint, were false. The DNC was allegedly "biased in favor of one candidate-[Secretary] Clinton [ ]-from the beginning and throughout the process. The DNC devoted its considerable resources to supporting [Secretary] Clinton above any of the other Democratic candidates." Id. at ¶ 161. And "[t]hrough its public claims of being neutral and impartial, the DNC actively concealed its bias from its own donors as well as donors to the campaigns of [Secretary] Clinton's rivals, including [Senator] Sanders[.]" Id.

         In June of 2016, someone using the name "Guccifer 2.0" published a number of DNC documents on a publicly accessible website. See id. at ¶ 165. The DNC claimed that those documents had been obtained by Russian government hackers who had penetrated its computer network. See id. at ¶¶ 163-64. Among the documents was a two-page memorandum (marked "confidential" and dated May 26, 2015) written to the DNC regarding the 2016 Republican presidential candidates. See id. at ¶ 166. This memorandum stated that the DNC's goals in the coming months were to "frame the Republican field and the eventual nominee early and to provide a contrast between the GOP field and HRC [Secretary Clinton]." Id. at ¶¶ 166-67. The memorandum also suggested a strategy to "muddy the waters around ethics, transparency, and campaign finance attacks on [Senator Clinton]." Id. at ¶ 167. At the time this memorandum was purportedly written, the field for the Democratic presidential nomination included Secretary Clinton and Senator Sanders (who had announced his candidacy in April of 2015), and there was "widespread speculation" that a number of others (e.g., Senator Elizabeth Warren) would soon enter the race. Id. at ¶ 168.

         This memorandum, the plaintiffs claim, was not the only document showing the DNC's favoritism towards Secretary Clinton. Other documents obtained by hackers included research apparently prepared by DNC staff and Secretary Clinton's campaign staff relating to Secretary Clinton's vulnerabilities, potential attacks, and policy positions, as well as "opposition research on the other Democratic candidates." Id. at ¶ 170. In sum, the complaint alleges that, "in spite of" the Democratic Party's charter and multiple public statements, the "DNC devoted its resources to propelling [Secretary] Clinton's candidacy ahead of all of her rivals, even if it meant working directly against the interests of Democratic Party members, including [Senator] Sanders' supporters." Id. at ¶ 171.

          C

         A number of the named plaintiffs made donations to the DNC in 2015 and 2016. Some of these plaintiffs donated money after at least some of the statements of impartiality made by Ms. Wasserman Schultz and Ms. Shulman and before the hacked documents were published in June of 2016. For example, Emma Young made donations to the DNC in December of 2015 and January of 2016, and Phyllis Criddle made donations to the DNC in May of 2016. See id. at ¶¶ 105, 109. All of the plaintiffs who donated money to the DNC or the Sanders campaign expressly alleged that they relied on the defendants' false statements and omissions "to their injury." Id. at ¶¶ 188, 195.

         Senator Sanders endorsed Secretary Clinton as the Democratic Party's presidential nominee on July 12, 2016. This allegation is not in the complaint, but we take judicial notice of this undisputed historical and political fact under Federal Rule of Evidence 201(b) (providing that a court "may judicially notice a fact that is not subject to reasonable debate"). See Shahar v. Bowers, 120 F.3d 211, 214 (11th Cir. 1997) (en banc) (explaining that a court can judicially notice "matters of political history, such as who was president in 1958").

         D

         The plaintiffs filed suit against the DNC and Ms. Wasserman Schultz, invoking jurisdiction under the Class Action Fairness Act, 28 U.S.C. § 1332(d). They asserted six state-law claims on behalf of three proposed classes: donors to the DNC (the DNC donor class); donors to the Sanders campaign (the Sanders donor class); and voters who registered as Democrats (the Democratic voter class). Both of the proposed donor classes alleged fraud (Count I), negligent misrepresentation (Count II), and violations of the District of Columbia Consumer Protection Procedures Act (CPPA), D.C. Code § 28-3904, which prohibits various unfair or deceptive trade practices (Count III). The proposed DNC donor class also alleged unjust enrichment (Count IV) and negligence (Count VI), the latter based on the DNC's alleged failure to provide donors with a secure computer system and network for the storing of their personal and financial information. And the proposed voter class separately alleged breach of fiduciary duty (Count V). The plaintiffs sought various forms of relief, including compensatory and punitive damages, attorney's fees and costs, and a judgment declaring illegal and enjoining the defendants' alleged violations of the Democratic Party charter.

         The DNC and Ms. Wasserman Schultz moved to dismiss the claims, arguing both that the plaintiffs lacked Article III standing and that they failed to state claims for relief. See Fed. R. Civ. P. 12(b)(1) & (6). The district court dismissed all six claims. It concluded that the plaintiffs had not satisfied the injury-in-fact element of Article III standing as to their negligence claim, the causation element as to their fraud, negligent ...


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