Opinion
No. 07-2409-cv.
November 24, 2008.
Appeal from the United States District Court for the Southern District of New York (Shirley W. Kram,Judge).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED AND DECREED that the appeal be, and it hereby is, DISMISSED for want of standing.
Appearing for Appellant: Robert J. Yorio, Carr Ferrell LLP, Palo Alto, CA (Tab Rosenfeld, Steven Kaplan, Rosenfeld Kaplan, LLP, New York, NY, on the brief).
Appearing for Appellee: Dylan J. McFarland, Heins Mills Olson, P.L.C. (Samuel D. Heins, Lori A. Johnson, of counsel), Minneapolis, MN.
PRESENT: HON. CHESTER J. STRAUB, HON. ROBERT D. SACK, HON. RICHARD C. WESLEY, Circuit Judges.
BizProLink, LLC, appeals from an order granting, over BizProLink's objection, a motion to distribute money from a fund established by the settlement of this consolidated shareholder action. BizProLink is neither a party nor a class member with respect to this action. It therefore stands to receive no money from the settlement fund in connection with this litigation. BizProLink argues that it nevertheless has a legal claim to money in the settlement fund that was rolled over from an earlier fund established by a deferred prosecution agreement ("DPA") between AOL Time Warner, Inc. and the United States ("the DOJ Fund"). We assume the parties' familiarity with the facts and procedural history of this case.
The matter of BizProLink's standing was not addressed by the district court. We nonetheless consider the issue on appeal.See Steel Co. v. Citizens for a Better Environment, 523 U.S. 83, 95 (1998). To establish its Article III standing, BizProLink must satisfy a three-part test: It must show that it suffered (1) an "injury in fact" (2) that is "fairly traceable to the challenged action" and (3) that "it [is] likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision."Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992) (citation and internal quotation marks omitted).
BizProLink claims to have been injured in fact by the alleged fraudulent accounting practices at issue in this action, alleging that it "was never compensated by AOL for the costs or value of [certain] content and tools [it] provided" and "monies" it paid to AOL. We conclude that these alleged injuries are neither traceable to the challenged action nor redressable by a favorable decision of the district court.
As BizProLink concedes, its alleged injuries are different in kind from the injuries alleged by the shareholders who instituted this action. They are not harms traceable to a violation of the securities laws; they are, if anything, harms traceable to, if anything, breach of contract. They are therefore not fairly traceable to the challenged action.
Nor can BizProLink's alleged injuries be redressed by a favorable decision in this shareholder action. BizProLink has no legal claim to the money it seeks from the DOJ Fund. BizProLink argues that it "was an intended beneficiary of the DOJ fund" with a "legal right to share in [that fund's] recovery." But the text of the DPA provides no such right. The DPA provides only that its money is "to be used [by AOL] for either the settlement of shareholder securities law litigation or for purposes of any compensation fund established by any federal or state agency, related to or arising from [the allegedly fraudulent transaction at issue]." By those terms, because BizProLink lacks a claim to money from any predicate fund — whether a shareholder securities litigation fund (i.e., the securities fund to which BizProLink submitted its claim) or any another fund — BizProLink has no claim to money from the DOJ Fund.
BizProLink suggests that the terms of the settlement of its own action against AOL establish a "contractual right to make a claim to the DOJ Funds." Not so. Those terms are carefully worded so as not to acknowledge, let alone establish, the existence of a legal right to recovery from the DPA Fund.See Mutual Release and Settlement Agreement ¶ 2 (providing that settlement "will not prejudice [BizProLink's] rights, if any, to make a claim in connection with the settlement funds established by AOL under the [DPA]," and that "AOL takes no position on putative claims that [BizProLink] may have against the funds [sic]" (emphases added)).
BizProLink therefore lacks standing to apply for the relief it seeks in this action. The district court was correct to deny its objection to the motion to distribute funds from the settlement. BizProLink suggests the district court's decision was unfair, because this action is BizProLink's "only remedy for its losses." Irrespective of the legal weight of such an argument, we note that BizProLink had another remedy: to sue AOL directly. That it did, eventually settling the claim. Under those circumstances, we are not persuaded that denying BizProLink recovery under the DPA is unfair.
For the foregoing reasons, the appeal is hereby DISMISSED for want of standing.