Abulhawa v. United States Department of the Treasury

239 F. Supp. 3d 24, 119 A.F.T.R.2d (RIA) 1042, 2017 U.S. Dist. LEXIS 30743, 2017 WL 883609
CourtDistrict Court, District of Columbia
DecidedMarch 4, 2017
DocketCivil Action No. 2015-2186
StatusPublished
Cited by47 cases

This text of 239 F. Supp. 3d 24 (Abulhawa v. United States Department of the Treasury) is published on Counsel Stack Legal Research, covering District Court, District of Columbia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Abulhawa v. United States Department of the Treasury, 239 F. Supp. 3d 24, 119 A.F.T.R.2d (RIA) 1042, 2017 U.S. Dist. LEXIS 30743, 2017 WL 883609 (D.D.C. 2017).

Opinion

MEMORANDUM OPINION

RANDOLPH D. MOSS, United States District Judge

Plaintiffs, a group of individuals sharing “mutual concerns” about Israeli settlements in the West Bank and East Jerusalem, bring this “declaratory judgment” action against the Department of the Treasury and Secretary of the Treasury Steven Mnuchin. 1 They allege that the Treasury Department has granted tax-exempt status under - 26 U.S.C. § 501(c)(3) to “approximately 200 U.S. pro-Israeli-settlement” organizations that “either fund[ ] or engag[e] in ... criminal activities abroad,” and that, despite this “criminal conduct,” the Department has failed to “challeng[e] or [to] revok[e] [the organizations’] tax-exempt status.” Dkt. 7 at 4-5 (Am. Compl.). According to Plaintiffs, this failure by the Treasury Department has led to—and, absent correction, will continue to lead to—the infliction of an array of wrongs against the Palestinian people. Id. As a remedy, Plaintiffs seek an order requiring the Treasury Department “to ... initiate an investigation into any and all tax-exempt entities based in America which transmit $20,000 or more on an annual basis to any country in the world;” to “revoke the entities’] tax-exempt status” where “appropriate;” and to “refer all tax fraud and money laundering findings to the [Internal Revenue Service] and/or U.S. Department of Justice for criminal prosecution.” Id. at 74-75.

Three motions are currently before the Court. First, Defendants move to dismiss *28 the first amended complaint for lack of Article III standing and for failure to state a claim. Dkt. 10 at 1-2. Second, Plaintiffs seek leave to file a second amended complaint, which would join five additional plaintiffs and detail the harms that they have' allegedly suffered (or will allegedly suffer) due to Defendants’ failure to monitor the actions of the U.S.-based tax-exempt entities. Dkt. 18. Finally, Sam Abrams, a U.S. taxpayer and resident of New York State, moves to intervene, asserting that, if the Treasury Department is required “to investigate pro-Israel charities,” it should “also investigate ,.. charities .... hostile to Israel.” Dkt. 13 at 2-3. In opposing the latter two motions, Defendants extend their jurisdictional defense to the claims that the five additional putative plaintiffs and Abrams seek to assert.

As explained below, the Court agrees that the existing Plaintiffs, the five additional putative plaintiffs, and Abrams all lack Article III standing. The Court, accordingly, will grant Defendants’ motion to dismiss thé first amended complaint for lack of jurisdiction, will deny Plaintiffs’ motion to file a second amended complaint as futile, and will deny Abrams’ motion for leave to intervene on the ground that neither he nor any other party has standing to assert his proposed claim.

I. BACKGROUND

Because Defendants “challenge[ ] the adequacy of [the first amended] complaint and [exhibits] to support [Plaintiffs’] standing,” the Court “accept[s] [their] well-pleaded factual allegations as true and draw[s] all reasonable inferences from those allegations in [Plaintiffs’] favor.” Arpaio v. Obama, 797 F.3d 11, 19 (D.C. Cir. 2015); see also West v. Lynch, 845 F.3d 1228, 1231 (D.C. Cir. 2017). The same standard applies, moreover, to the Court’s consideration of whether Plaintiffs’ proposed second amended complaint contains allegations sufficient to establish Article III standing, or whether, instead, the proposed amendment is futile. See Williams v. Lew, 819 F.3d 466, 471-73 (D.C. Cir. 2016). Because the issues presented in Defendants’ motion to dismiss and in their opposition to Plaintiffs’, motion for leave to amend overlap, and because the proposed second amended complaint is identical to the first amended complaint, save for the addition of one paragraph that details the allegations of thé five plaintiffs seeking to join the suit, compare Dkt. 7 with Dkt. 18-2, the Court will focus on (and cite to) the factual allegations set forth in the proposed second amended complaint.

A. Factual Allegations

Plaintiffs, a group of thirty-seven individuals, “jointed] in this litigation” due to their “concerns” over the “explosive settlement expansion” by Israelis in the West Bank and East Jerusalem. Dkt. 18-2 at 1-3,. 8 (Second Am. Compl. ¶ 6). They allege that organizations in the United States that were granted tax-exempt status under 26 U.S.C. § 501(c)(3) based on their “ ‘charitable’ or ‘educational’ ... nature[s]” actually serve as “financial ‘pass-throughs’ ” from “wealthy U.S. donors” to Israeli entities committed to “the forcible expulsion of indigenous non-Jewish Palestinians,” the “theft of private property,” the malicious destruction of private property, and the “murder[ ]” of Palestinians. Id. at 4-5. Plaintiffs allege that the actions of these U.S. nonprofit organizations “violate[ ] numerous ... [§ ] 501(c)(3) regulations” and “at least eight federal criminal statutes.” Id. at 5-6. Plaintiffs also allege that, [d]espite the[se] rampant” violations of law, the Treasury Department has “not challenged or revoked the[] tax-exempt status” of the “approximately 200 U.S. pro-Israeli-settlement [§ ] 501(c)(3) [organizations].” Id. at 4-5. And Plaintiffs further *29 allege that, because the Treasury Department has failed to “investigate the criminal activities that these tax-exempt entities have been funding or engaging in for at least the last [forty] years,” the entities continue “to openly solicit[ ] tax-deductible contributions” in order to fund “the various settlements they have chosen to adopt.” Id. at 6.

Of the thirty-seven plaintiffs, the proposed second amended complaint contains specific allegations about only eight of them. As they also alleged in the first amended complaint, Plaintiffs allege that “John Doe” “has been concerned about [the Treasury Department’s] failure to monitor” the § 501(c)(3) organizations described above “for a number of yeárs” and has “heard from various Palestinian friends and neighbors” about “the atrocities that are being committed” which, he asserts, are being “largely subsidized by the American taxpayer.” Id. at 9 (Second Am. Compl. ¶ 7). Plaintiffs allege that Susan Abulhawa is also “concerned about [the Treasury Department’s] ongoing failure to ... prevent the criminal, activities engaged in by th[e] pro-settlement tax-exempt entities,”, and, more significantly, that Israel “[has] dislocat[ed]” her from the “patch of earth” in Jerusalem “where [her] family ha[d] dwelt for centuries.” Id. at 10 (Second Am. Compl. ¶ 9). They further allege that Michael Several “has visited Israel on many occasions and [has] seen first-hand what settlement expansion has meant to the ordinary Palestinian citizen.” Id. (Second Am. Compl. ¶ 10). And, they allege that Several, who has performed “significant research on U.S.

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239 F. Supp. 3d 24, 119 A.F.T.R.2d (RIA) 1042, 2017 U.S. Dist. LEXIS 30743, 2017 WL 883609, Counsel Stack Legal Research, https://law.counselstack.com/opinion/abulhawa-v-united-states-department-of-the-treasury-dcd-2017.