author: PAMELA HARRIS, Circuit Judge:

text:
    LORD & TAYLOR, LLC; LT Propco, LLC, Plaintiffs-Appellees, v. WHITE FLINT, L.P., f/k/a White Flint Mall, LLP, now known as White Flint Mall, LLLP, Defendant-Appellant, and Alan H. Gottlieb, Defendant. Lord & Taylor, LLC; LT Propco, LLC, Plaintiffs-Appellants, v. White Flint, L.P., f/k/a White Flint Mall, LLP, now known as White Flint Mall, LLLP, Defendant-Appellee, and Alan H. Gottlieb, Defendant.
    No. 15-1995, No. 15-2064
    United States Court of Appeals, Fourth Circuit.
    Argued: December 6, 2016
    Decided: February 28, 2017

      ARGUED: Stuart Scott Morrison, KAT-TEN MUCHIN ROSENMAN LLP, Washington, D.C., for Appellant/Cross-Ap-pellee. Michelle DeFinis Gambino, GREENBERG TRAURIG LLP, McLean, Virginia, for Appellees/Cross-Appellants. ON BRIEF: Laura Metcoff Klaus, Washington, D.C., David G. Barger, GREEN-BERG TRAURIG LLP, McLean, Virginia, for Appellees/Cross-Appellants.
    Before WILKINSON, AGEE, and HARRIS, Circuit Judges.
   PAMELA HARRIS, Circuit Judge:

Lord & Taylor, LLC, operates a retail department store along Rockville Pike in Montgomery County, Maryland. From 1977 to 2015, the store was part of the White Flint Shopping Center, an enclosed shopping mall (the “Mall”). But in 2015, the Mali’s operator, White Flint, L.P., closed the Mall and began demolition in order to make way for a mixed-use redevelopment. Lord & Taylor sued White Flint, claiming that White Flint had breached the parties’ contract by closing the Mall without Lord & Taylor’s consent.

A jury found White Flint in breach of contract and awarded Lord & Taylor $81 million in damages. Both parties appeal, arguing primarily that the damages award is too high (White Flint) or too low (Lord & Taylor). Because we find no error in the district court’s capable management of a lengthy trial, we affirm.

I.

A.

This is the latest chapter in a long-running dispute between the parties over the planned redevelopment of the Mall site. Th,e Montgomery County Council approved the redevelopment in 2012, as part of a broader plan to revitalize the surrounding area, and litigation commenced soon thereafter. We have decided one appeal already in this case, see Lord & Taylor, LLC v. White Flint, L.P., 780 F.3d 211 (4th Cir. 2015) (“White Flint /”),. and the details of the parties’ original agreement and the County’s zoning process are set out in that opinion.

We recap only briefly here. In 1975, White Flint, then planning the development of what would become the Mall, reached an agreement with Lord & Taylor: Lord & Taylor would lease land on the Mall site and serve as an “anchor” tenant for the Mall, along with co-anchor Bloomingdale’s. And in exchange, White Flint would construct an enclosed “first class” mall and then maintain it until at least 2042. The parties’ agreement required White Flint to secure Lord & Taylor’s consent before building any additional structures or making alterations to the Mall’s design or appearance.

The Mall opened in 1977 and operated successfully for many years, before more recently experiencing a drop in business. The parties, not surprisingly, disagree about the cause of this decline. According to White Flint, the Mall’s struggles reflect the weakening of the mall business generally, as consumer preferences change and e-commerce grows; for Lord & Taylor, the blame goes to White Flint, for allowing the Mall to fail and even hastening its demise by offering tenant buy-outs, all to facilitate the redevelopment plan. Whatever the cause, in 2012, Bloomingdale’s chose not to renew its lease, and by 2013, the vast majority of tenants had left the Mall.

The Mall officially closed in January 2015, leaving Lord & Taylor the sole business operating on the premises. By then, White Flint already had demolished the ''Bloomingdale’s building, with further construction to come. Ultimately, the redevelopment plan calls for transforming what once was an enclosed mall into a mixed-use development, complete with residential, retail, recreational and office space.

B.

Lord & Taylor objected to the redevelopment, arguing that the clear terms of the parties’ agreement required White Flint to maintain the Mall, and that the proposed mixed-use alternative would negatively affect its business by making customer access less convenient and denying the store the benefit of foot traffic from Mall customers. Negotiations between the parties proved fruitless, and Lord & Taylor filed its first complaint against White Flint in July 2013.

In that original complaint, what Lord & Taylor sought was not damages but an injunction, prohibiting White Flint from carrying out the proposed redevelopment and requiring it instead to continue operation of the Mall. The district court denied the requested relief. Assuming that White Flint had breached its contractual obligations, the district court reasoned, Lord & Taylor would be entitled to monetary damages for any harm that resulted. But injunctive relief, the district court concluded, would be infeasible under the circumstances, requiring the kind of ongoing judicial supervision of a major and complex commercial undertaking that is outside court competence. In our previous encounter with this case, we affirmed the denial of injunctive relief as well within the discretion of the district court. See White Flint I, 780 F.3d at 217-29.

So Lord & Taylor amended its complaint to bring the alternative claim hypothesized by the district court: one for damages resulting from White Flint’s alleged breach of contract. And for good measure, Lord & Taylor added a claim for fraud, as well. According to Lord & Taylor, Wfifite Flint’s breach and fraud had cost it somewhere between $70 and $100 million. Specifically, Lord & Taylor sought damages for lost profits during the construction phase of the redevelopment; for the costs of redesigning and reconstructing its store to conform to the new development; and for the loss of bargained-for property rights, in the form of use restrictions and easements violated by the planned redevelopment.

Not all of Lord & Taylor’s claims survived to trial. Lord & Taylor’s fraud claim, for instance, alleged that the store had been misled about White Flint’s plans by a letter in which White Flint assured Lord & Taylor that it did not “inten[d] to take any action or undertake any changes at the [M]all in violation of [the contract].” J.A. 598. The district court granted summary judgment to White Flint, deeming the fraud claim “utterly meritless,” J.A. 603, in part because White Flint’s statement of intent was not false, and in part because there wás no evidence that Lord & Taylor, a “large multi-national ... operation” with the “most sophisticated ... people running it,” had relied on or been deceived by the statement, J.A. 601-02.

The district court also rejected one of Lord & Taylor’s three damages theories, under which Lord & Taylor sought to recover for lost property rights as well as lost profits. Specifically, the court granted WTiite Flint’s motion to exclude Lord & Taylor’s proposed expert testimony on the value of its easements and use restrictions under the contract, explaining that the expert’s data was unreliable and, in any event, that the proper measure of damages for the deprivation of such property rights is lost profits alone.

The remainder of Lord & Taylor’s case went to trial, where a jury heard evidence and argument for twelve days. On the merits of its breach claim, Lord & Taylor argued that the proposed redevelopment was a clear violation of its contract with Wfiiite Flint, and that White Flint had hastened the Mall’s decline in order to reap the rewards of redevelopment. In response, White Flint argued that any breach of contract should be excused by reason of impossibility. According to White Flint, economic trends combined with the departure of co-anchor Bloomingdale’s made continued operation of the Mall impossible, and its substitute mixed-use redevelopment would be an overall economic boon to the area.

Much of the trial, however, focused on the question of damages, with Lord & Taylor presenting two distinct theories under which it sought recovery. First, Lord & Taylor claimed damages for lost profits during the demolition and construction phase of the project, when customer access would be disrupted and the store would lose the benefit of foot traffic in the area. Lord & Taylor’s expert calculated lost profits of up to $31 million, on the assumption that the construction phase would last for between ten and thirteen years, starting with the alleged breach in 2012.

White Flint took issue with Lord & Taylor’s calculations, and presented expert testimony of its own projecting a construction period of only three and a half years and estimating damages using a significantly lower profit margin than that employed by Lord & Taylor’s expert. White Flint also insisted that any damages award should reflect not only lower profits during construction, but also the greater profits that would accrue to Lord & Taylor in subsequent years, once construction was complete and the store became part of a successful mixed-use development. The district court disagreed, holding that any such future benefits were too speculative to be the basis of a damages award, and instructing the jury to that effect.

Lord & Taylor’s second damages theory centered around the costs of reconfiguring its store to take account of the fact that it no longer would be part of an enclosed mall. Lord & Taylor presented testimony from Kerry Mader, a long-time store executive responsible for renovations, who explained the extensive redesign that would be required to accommodate the shift from a multi-entrance mall store to a standalone store, and calculated construction costs of between $30 and $36 million. White Flint did not present evidence of its own regarding construction costs or argue for a different cost estimate. But it did object to the admission of Mader⅛ testimony, arguing that Mader was offering expert opinion without having been qualified as an expert under Rule 702 of the Federal Rules of Evidence. The district court rejected that argument, concluding that Mader was offering lay rather than expert testimony, based on Mader’s own previous experience and “day-to-day work with the company,” and that any shortcomings in his cost estimate should be addressed by “spirited cross-examination” of the witness. J.A. 3642-43.

After several days of jury deliberation and an agreement by the parties to accept' a non-unanimous verdict, the jury found White Flint in breach of contract, rejected White Flint’s defenses, and awarded Lord & Taylor $31 million in damages. The $31 million figure is consistent with both Lord & Taylor’s estimate of lost profits (up to $31 million) and its estimate of construction costs (between $30 and $36 million), and the jury’s general verdict form did not specify the theory on which damages were awarded.

Both parties timely appealed.

II.

A.

District courts have broad discretion to manage jury trials. Accordingly, we review a district court’s jury instructions, evidentiary rulings, and discovery rulings for abuse of discretion only. See Gen. Elec. Co. v. Joiner, 522 U.S. 136, 141, 118 S.Ct. 512, 139 L.Ed.2d 508 (1997) (evidentiary rulings); Coll. Loan Corp. v. SLM Corp., a Delaware Corp., 396 F.3d 588, 595 (4th Cir. 2005) (jury instructions); Lone Star Steakhouse & Saloon, Inc. v. Alpha of Virginia, Inc., 43 F.3d 922, 929 (4th Cir. 1995) (discovery rulings).

B.

We begin with White Flint’s appeal. White Flint does not challenge the jury’s finding that it breached its contract with Lord & Taylor. Instead, it challenges the $31 million damages award, raising two arguments, each aimed at one of Lord & Taylor’s theories of recovery. With respect to lost profits, White Flint argues that the district court erred by instructing the jury not to consider, in calculating damages, the redevelopment’s potential positive impact on Lord & Taylor’s profits. And with respect to renovation costs, White Flint argues that Mader’s construction cost estimate was improperly admitted as lay opinion testimony. For the reasons given below, we find neither argument persuasive.

1.

In response to Lord & Taylor’s expert testimony on lost profits, White Flint presented its own expert, Scott DeCain, to testify to the future benefits of the redevelopment project for Lord & Taylor’s bottom line. DeCain acknowledged that Lord & Taylor’s sales would decline during the construction period, which he estimated at three and a half years. But according to DeCain, once construction on the redevelopment was complete, Lord & Taylor’s net profits would increase — in the amount of $10 million over five years — as a result of the “infinitely superior” new site plan, replacing an outdated enclosed mall with a more desirable mixed-use complex. J.A. 5031. And so, White Flint argued, any damages award based on lost profits should include an offset or deduction to account for these future economic benefits.

The district court disagreed. Under Maryland law, the district court explained in an oral ruling, damages must be proved with “reasonable certainty.” J.A. 5337. And White Flint’s evidence of future benefit to Lord & Taylor, the court-concluded, was “entirely too speculative” to meet that standard. J.A. 5332. Neither the timing of the redevelopment nor its ultimate success, the court held, was established with the requisite level of certainty. See, e.g., J.A. 5332 (“We don’t know what delays the development is going to endure[.]”); id. at 5333 (‘We don’t know whether this will be the rage of Montgomery County or the beached whale of Montgomery County.”). Accordingly, while the court allowed White Flint to argue the predicted economic upside of its redevelopment plan as a defense to Lord & Taylor’s breach claim, it instructed the jury not to consider “the potentially positive economic effects of the planned redevelopment” in assessing damages for lost profits. J.A. 5567.

We find no abuse of discretion in the district court’s determination. As the parties agree, this case is governed by Maryland law. See White Flint I, 780 F.3d at 215. And under Maryland law, it is clear that damages related to lost profits “may not be recovered unless they can be proved with ‘reasonable certainty.’ ” Atkinson Warehousing & Distribution, Inc. v. Ecolab, Inc., 99 F.Supp.2d 665, 668 (D. Md. 2000) (citing Impala Platinum Ltd. v. Impala Sales (U.S.A.), Inc., 283 Md. 296, 389 A.2d 887, 907 (1978)). Complete certainty is not required, and reasonable inferences may be drawn from the evidence. See M & R Contractors & Builders v. Michael, 215 Md. 340, 138 A.2d 350, 355 (1958). But “anticipated profits” must be shown “with reasonable certainty so that the evidence rises above speculation or conjecture.” John D. Copanos & Sons, Inc. v. McDade Rigging & Steel Erection Co., 43 Md.App. 204, 403 A.2d 402, 405 (1979).

The district court properly applied that standard and concluded that on the record before it, White Flint could not establish to a “reasonable certainty” whether and to what extent Lord & Taylor would benefit from the redevelopment. We have no basis for disturbing that judgment. As the district court observed, the evidence made clear that the redevelopment remained a work in progress: “We have no idea exactly where the buildings are going to be, how many there are going to be.... We don’t know what delays the development is going to endure ... I don’t know whether it’s going to lease up overnight.” J.A. 5332-33. On cross-examination, DeCain himself acknowledged that he did not know, for instance, when construction on various phases of the project would start or end, who might join the project as anchor tenants, or what other retail tenants might participate.

None of this, to be clear, is to fault DeCain or his work. A real estate development of the scale contemplated here is an inherently risky endeavor, extending years into the future and marked by significant uncertainty. Any prediction of the degree of success, no matter how sophisticated, necessarily will rest on assumptions about a long list of contingencies. At bottom, deciding when anticipated future profits from such an enterprise have been established as “reasonably certain” is a fact-intensive judgment call, within the sound discretion of a trial court. The district court did not abuse that discretion here.

2.

Lord & Taylor separately claimed damages for the cost of reconfiguring and renovating its store to accommodate the new site plan and, in particular, the loss of several entrances that had connected it to the original Mall. To support this second theory of damages, Lord & Taylor offered the testimony of Kerry Mader, an executive of Lord <& Taylor’s parent company responsible for store design, store construction, and facilities, who opined that construction costs would fall between $80 and $36 million. White Flint objected, arguing that Mader’s proposed testimony was expert in nature and that Mader had not been qualified as an expert under Federal Rule of Evidence 702.

The district court rejected that claim and allowed Mader to testify as a lay opinion witness under Federal Rule of Evidence 701. The court recognized that Rule 702’s reliability requirements may not be circumvented by allowing unqualified expert testimony in the guise of lay testimony. And the court understood that there may be a “fine line” between Rule 701 lay opinion and Rule 702 expert testimony. J.A. 3639. In this case, however, the district court concluded that because Mader’s testimony was based on Mader’s own experience — his “day-to-day work” as an officer of Lord & Taylor — it was admissible as lay testimony, without the necessity of qualifying Mader as an expert. J.A. 3642-43.

Again, we have no basis for disturbing the district court’s judgment. It is true, as White Flint argues, that Mader was not qualified as an expert under Federal Rule of Evidence 702, which governs testimony by “expert” witnesses that is based on “scientific, technical, or. other specialized knowledge.” But Federal Rule of Evidence 701 permits a lay witness— with no need for expert qualification — to give opinion testimony that is “rationally based on the witness’s perception” and helpful to determining a fact in issue, so long as it is not based on the same “scientific, technical; or other specialized knowledge” covered by Rule 702. And while the line between the two, as the district court recognized, can be “a fine one,” see United States v. Perkins, 470 F.3d 150, 155 (4th Cir. 2006) (internal quotation marks and citation omitted), the key to Rule 701 lay opinion testimony is' that it must arise from the personal knowledge or firsthand perception of the witness. See id. at 155-56; MCI Telecommunications Corp. v. Warner, 897 F.2d 703, 706 (4th Cir. 1990) (allowing lay opinion testimony under Rule 701 where it is “well founded on personal knowledge as distinguished from hypothetical facts” and based on “relevant historical or narrative facts that the witness has perceived”) (internal quotation marks omitted).

We have applied that general rule to permit business employees — like Mader— to opine on accounting projections under Rule 701, so long as their opinions are based on their first-hand experience on the job. See MCI Telecommunications, 897 F.2d at 706 (holding that business bookkeeper may give lay opinion testimony on projected profits on the “basis of facts and data perceived by him” in his role as bookkeeper). Indeed, in an unpublished opinion that is directly relevant here, we have allowed lay testimony as to projected construction costs when it is based on the witness’s personal experience with similar projects. See Lake Ridge Apartments, LLC v. Bir Lakeridge, LLC, 335 Fed.Appx. 278 (4th Cir. 2009) (unpublished).

The district court did not abuse its discretion when it concluded that under this line of authority, Mader’s testimony was admissible under Rule 701 as lay opinion testimony. With 38 years of industry experience, Mader supervises store design and construction at Lord & Taylor on a “day-to-day” basis. Drawing on personal knowledge gleaned from that on-the-job experience — including “relevant historical ... facts” regarding the more than 50 redesign projects he has overseen, see MCI Telecommunications, 897 F.2d at 706—Mader described past Lord & Taylor renovation projects, outlined the kinds of changes necessitated by the loss of mall entrances, and explained the increased construction costs customarily associated with renovations to a store that remains open for business. The district court reasonably could conclude that like the witness in Lake Ridge Apartments, Mader’s ultimate projection of construction costs was predicated on his “previous experience,” 335 Fed.Appx. at 284, and “personal knowledge and perception,” see MCI Telecommunications, 897 F.2d at 706, rather than the kind of specialized reasoning process subject to Rule 702 as expert testimony.

We note, as did the district court, that this determination is consistent not only with our precedent but also with the Advisory Committee’s Note to Rule 701. That Note recognizes that “most courts have permitted the owner or officer of a business to testify to the value or projected profits of the business, without the necessity of qualifying the witness as an accountant, appraiser, or similar expert.” Fed. R. Evid. 701 advisory committee’s note to 2000 amendment. Such testimony, the Committee explains, is admissible under Rule 701 because it is based not on “experience, training or specialized knowledge within the realm of an expert,” but on “the particularized knowledge that the witness has by virtue of his or her position in the business.” Id. It requires nothing more than acknowledgement of an accounting identity — that the “profits” referenced in the Note equal revenue minus cost — to see that the cost estimate offered by Mader, an officer at Lord & Taylor, falls squarely under this contemplated category of permissible lay testimony. See id.

White Flint argues strenuously that Mader’s hands-on experience is insufficient to substantiate his testimony because, for instance, Mader visited the store only once, and had never before estimated costs for a Maryland project. But those arguments go to the weight to be given Mad-er’s testimony, not to its lay character or admissibility. The district court expressly invited robust cross-examination of Mader about any perceived deficiencies in his testimony, and White Flint obliged. It was within the province of the jury to decide whether it found Mader’s testimony credible, and we will not revisit that determination here. See United States v. Burgos, 94 F.3d 849, 868 (4th Cir. 1996) (en banc) (determining witness credibility is for fact-finder, not reviewing court).

C.

We turn finally to Lord & Taylor’s cross-appeal. In addition to seeking damages for lost profits and renovation costs, Lord & Taylor requested damages under a third theory, for the alleged taking of its property rights under its agreement with White Flint. Specifically, Lord & Taylor argued that it had property rights — easements and use restrictions — “separate and distinct” from its right to operate a store on the site, and that it should be separately compensated for the loss of those rights. Cross-Appellants Reply Br. at 14. The district court rejected that theory when it excluded the testimony of Lord & Taylor’s property appraisal expert, William Harvey, Who attempted to quantify the value of those property rights. Lord & Taylor now argues that the district court’s decision was an abuse of discretion. We disagree.

Under Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993), district courts have a “gatekeeping responsibility” to “ensur[e] that an expert’s testimony both rests on a reliable foundation and is relevant to the task at hand.” Nease v. Ford Motor Co., 848 F.3d 219, 229 (4th Cir. 2017) (quoting Daubert, 509 U.S. at 597, 113 S.Ct. 2786) (emphasis in original). Exercising that gatekeeping function, the district court here excluded Harvey’s testimony for two independent reasons. First, the court ruled that Harvey’s data was unreliable. And second, the court held that the entire premise of Harvey’s valuation testimony was irrelevant, because Maryland law does not permit recovery for abridged property rights as distinct from and in addition to lost profits.

Without casting any doubt on the district court’s reliability finding, we affirm on the court’s second ground: Under Maryland law, “loss of profits is the governing factor” in calculating damages stemming from a violation of a restrictive use covenant. Freedman v. Seidler, 233 Md. 39, 194 A.2d 778, 782 (1963). At least' when it comes to commercial properties like Lord & Taylor, that is, where easements and use restrictions protect the income-producing capacity of the property, damages for a violation of those easements and restrictions may be measured only in terms of lost profits. See Redner’s Markets, Inc. v. Joppatowne G.P. Ltd. P’ship, No. CIV.A. RDB-11-1864, 2013 WL 5274356, at *4 (D. Md. Sept. 17, 2013), aff'd, 594 Fed.Appx. 798 (4th Cir. 2014) (applying Maryland law). Allowing a commercial plaintiff to recover for lost damages and also for abridged property rights would amount to a double recovery — or, in the apt phrase of the district court, to “getting six or more pieces of pie out of a four-piece pie.” J.A. 2287. The district court committed no legal error or other abuse of discretion in applying long-established Maryland law to reject Lord & Taylor’s claim to separate damages for the taking of property rights.

III.

For the foregoing reasons, we affirm in full the judgment of the district court.

AFFIRMED

      . The relevant jury instruction reads in full:
      [White Flint] has presented evidence .of its plans for redevelopment of the White Flint Mall property and the potentially positive effects of that future development on the Lord & Taylor store. I have just instructed you that damages must be proved with reasonable probability or certainty. Because of the uncertainty of the evidence associated with both the timing and future financial success of the redevelopment as well as its possible impact on the net income of the Lord & Taylor store, I instruct you that in the event that you decide to make an award of damages to the plaintiffs for lost income, you may not reduce your award because of the potentially positive economic effects of the planned redevelopment.
      J.A. 5566-67.

      .' White Flint suggests that the district court applied a different legal standard, misreading Maryland law to prohibit any recovery of future profits by a new business without a financial track record. We disagree. Though the district court noted that "[t]he cases, generally speaking, reject the effort of someone to recover future profits from a business that's not operating, [and] never has operated,” J.A. 5331-32, it clearly understood the ultimate question to be whether evidence of lost profits was sufficiently certain or unduly speculative, see J.A. 5337 ('TT]he basic notion is that damages have to be proved with reasonable certainty.”); id. at 5566 (instructing jury that evidence of positive effects of development is too uncertain to consider in assessing damages). We see no conflict with Maryland law, which permits consideration of whether a business is new or old in determining whether anticipated profits can be shown with reasonable certainty. See John D. Copanos & Sons, Inc., 403 A.2d at 404-05.

      . In connection with its challenge to Lord & Taylor's estimate of lost profits, White Flint also appeals the district court’s decision not to compel discovery of financial data and profit margins for all of Lord & Taylor’s stores nationwide, limiting discovery instead to seven stores in the surrounding region. The “scope and conduct of discovery are within the sound discretion of the district court,” Lewis v. Bloomsburg Mills, Inc., 608 F.2d 971, 973 (4th Cir. 1979), and we perceive no reason to disturb the district court’s exercise of discretion on this matter.

      . Because we conclude that the district court did not abuse its discretion in admitting Mad-er's testimony under Rule 701, we need not consider Lord & Taylor's alternative argument that any error in this regard would have been harmless. We note, however, that the jury’s $31 million damages award was consistent not only with Lord & Taylor’s renovation-cost theory of recovery, but also with the evidence presented by Lord & Taylor regarding lost profits of up to $31 million. And the jury’s general verdict form — to which White Flint did not object at the close of trial — does not specify the basis for the jury’s award. With or without Mader’s testimony, in other words, the jury's verdict may well be supported by sufficient evidence of lost profits.

      . Construed generously, Lord & Taylor’s opening brief may be understood also to challenge the grant of summary judgment against Lord & Taylor on its fraud claim. Reviewing the record in the light most favorable to Lord & Taylor, we affirm for the reasons given by the district court. See supra at 598-604.


source: Caselaw Access Project

author: WILKINSON, Circuit Judge:

license: Public Domain

text:
    Wann Van ROBINSON; Mary D. Robinson; the Wann Van Robinson Revocable Trust, Plaintiffs-Appellees, v. Jason Clint WORLEY, Defendant-Appellant, and Bruce Magers, Trustee.
    No. 15-2346
    United States Court of Appeals, Fourth Circuit.
    Argued: January 26, 2017
    Decided: February 28, 2017

      ARGUED: Clinton Shepperd Morse, Jeffrey Edward Oleynik, BROOKS, PIERCE, MCLENDON, HUMPHREY & LEONARD, L.L.P., Greensboro, North Carolina, for Appellant. Rayford Kennedy Adams, III, SPILMAN THOMAS & BATTLE, PLLC, Winston-Salem, North Carolina, for Appellees. ON BRIEF: R. Scott Adams, SPILMAN THOMAS & BATTLE, PLLC, Winston-Salem, North Carolina, for Appellees.
    Before WILKINSON, NIEMEYER, and KEENAN, Circuit Judges.
   WILKINSON, Circuit Judge:

Jason Clint Worley, a Chapter 7 bankruptcy debtor, estimated the value of his interest in a real estate investment company at just 4% of his initial capital contribution. The bankruptcy court found after a bench trial that Worley intentionally low-balled his valuation and accordingly denied his discharge under the false oath provision of 11 U.S.C. § 727(a)(4). The district court agreed. We review that finding for clear error, and for the reasons that follow, we affirm.

I.

Worley has spent much of his adult life studying and working in the financial industry. In addition to earning a bachelor’s degree in finance from the University of Florida and an MBA from Emory University, he worked at Edward Jones as a financial advisor for almost a decade.

During his time at Edward Jones, Wor-ley got caught up in the heady investment environment of the early 2000s and began personally investing in a series of real estate ventures. One of those ventures was Gemini Land Trust, LLC, which Worley formed in January 2006 with his childhood friend, Joshua Crapps. Worley contributed $65,000 for a 49% interest in the company; Joshua Crapps served as managing member and had complete discretion over whether to distribute any profits or retain the proceeds for future transactions. Gemini’s sole investment was a 10% share in Pelham Land Group, LLC, which was managed by Crapps’s father, Daniel Crapps. Pelham owned 587 acres of Georgia timberland that, in 2012, was worth an estimated $2,250 per acre, or $1.32 million total. The property also generated a few thousand dollars each year from farming, hunting, and timber leases.

Many of Worley’s other investments flopped, and he filed for bankruptcy on February 14, 2013. He initially classified the filing as a “no asset” case, signaling to the bankruptcy trustee that he did not own any non-exempt assets that were worth distributing. See 11 U.S.C. § 554 (2012) (authorizing the trustee to “abandon [to the debtor] any property of the estate ... that is of inconsequential value”). On Schedule B to the petition, Worley estimated that his interest in Gemini had a market value of $2,500. He explained that he was unsure how to value the minority stake in Gemini, but sought the advice of counsel and applied the capitalization rate method. Consequently, he took the largest annual distribution he received from Gemini ($483, rounded up to $500) and multiplied by a capitalization rate of five. Wor-ley never consulted with Joshua or Daniel Crapps before estimating the value of his interest, though he admitted that Joshua Crapps would be in a better position to value the company. Worley’s Schedule K-l 2012 form for Gemini, the most recent tax return in the record, reflected an individual capital account of $67,555.

Although Worley categorized the filing as a-“no asset” case, upon learning that Gemini owned a stake in Pelham, the trustee informed creditors that assets would likely be available for distribution. On September 30, 2013, the plaintiffs here filed an adversary complaint alleging that Worley “intentionally misrepresented the value of his interest in Gemini Land Trust ... by more than 95 percent.” J.A. 314. The creditors therefore sought a denial of discharge pursuant to the false oath provision of § 727(a)(4).

The bankruptcy court held a trial on the adversary claim on September 4, 2014. Daniel Crapps explained that the illiquid nature of Gemini’s stake in Pelham complicated the valuation analysis: Because only “buzzards” were interested in minority LLC shares, Gemini would fetch no more than 20-30% of its capital account. J.A. 532-33. Nonetheless, he surmised that Gemini’s 10% share in Pelham could be sold for at least $26,000 and dismissed the idea that Worley’s interest was worth “something like 2,500 or something that low.” J.A. 534. Joshua Crapps echoed his father’s assessment. Although he had “no idea” what the value of his share of Gemini was, he agreed that its value exceeded $2,500 and depended on the appraised value of the land held by Pelham. J.A. 1047. Finally, the bankruptcy trustee testified that he did not sense that Worley was “stonewalling” him and emphasized that the values assigned to scheduled assets are just “starting points.” J.A. 191, 202. The trustee did note, however, that one day before trial he discovered that Pelham sold a large tract of land for approximately $2,100 per acre and distributed $100,000 to Gemini.

A week after the trial, the bankruptcy court denied Worley’s discharge under § 727(a)(4). The court first held that Wor-ley made a “false oath or account” by understating the value of Gemini on his schedule of assets. While it acknowledged that Gemini’s illiquid interest in Pelham might be worth less than the appraised value of the underlying timberland, the court concluded that — in light of his capital contribution and Pelham’s recent $100,000 distribution to Gemini — Worley’s $2,500 estimate was “so low as to be unrealistic.” J.A. 294. Second, the court found that Worley acted with the requisite fraudulent intent because the use of the capitalization rate method was “inconsistent” with his knowledge and “extensive background in finance.” Id.

On September 30, 2015, the district court affirmed the denial of discharge. As a threshold matter, the district court rejected Worley’s argument that a debtor’s undervaluation of a single asset is insufficient to warrant a denial. It then concluded that the bankruptcy court did not clearly err in finding that Worley intentionally “lowball[ed] his interest in Gemini.” J.A. 1432. Even though Worley claimed to rely on the advice of counsel, the bankruptcy court could plausibly have concluded that any such reliance was unreasonable given Worley’s “extensive investment history” and knowledge of the capitalization rate method. J.A. 1437.

II.

The primary benefit of filing for bankruptcy under Chapter 7 is that discharge offers the debtor “a fresh start unhampered by the pressure and discouragement of preexisting debt.” Farouki v. Emirates Bank Int’l, Ltd., 14 F.3d 244, 249 (4th Cir. 1994), This privilege, however, is reserved for the “honest but unfortunate debtor.” Grogan v. Garner, 498 U.S. 279, 287, 111 S.Ct. 654, 112 L.Ed.2d 755 (1991). Section 727(a) of the Bankruptcy Code provides that a bankruptcy court “shall grant the debtor a discharge,” but then describes twelve scenarios where a debtor is not entitled to such relief. 11 U.S.C. § 727(a) (2012).

One of those exceptions, found in § 727(a)(4), provides that the court should deny discharge if “the debtor knowingly and fraudulently, in or in connection with the case[,] made a false oath or account.” 11 U.S.C. § 727(a)(4)(A). To run afoul of this provision, “the debtor must have made a statement under oath which he knew to be false, ... he must have made the statement willfully, with intent to defraud,” and the statement “must have related to a material matter.” Williamson v. Fireman’s Fund Ins. Co., 828 F.2d 249, 251 (4th Cir. 1987).

' The statute invites the bankruptcy court to strike a balance between two competing objectives. At bottom, bankruptcy is an equitable remedy that elevates “substantial justice” over “technical considerations.” Pepper v. Litton, 308 U.S. 295, 305, 60 S.Ct. 238, 84 L.Ed. 281 (1939). Given the harsh consequences of a denial of discharge, the statute is ordinarily construed liberally in the debtor’s favor. Smith v. Jordan (In re Jordan), 521 F.3d 430, 433 (4th Cir. 2008). “The reasons for denying a discharge to a bankrupt must be real and substantial, not merely technical and conjectural.” Boroff v. Tully (In re fully), 818 F.2d 106, 110 (1st Cir. 1987). In this vein, the provision — although a civil statute with civil sanctions — incorporates a classic criminal law element of mens rea that involves an assessment of whether the debtor made the false statement “knowingly and fraudulently,” as opposed to carelessly. 11 U.S.C. § 727(a)(4)(A).

At the same time, the statute reflects the equitable doctrine of unclean hands. The purpose of the false oath exception is to ensure that “those who play fast and loose with their assets or with the reality of their affairs” do not profit from the liberating shelter of the Bankruptcy Code. Farouki, 14 F.3d at 249. The implicit bargain for discharge is simple: candid, good faith disclosure of the debtor’s financial affairs in return for the freedom of a clean slate. In re Kestell, 99 F.3d 146, 149 (4th Cir. 1996). The goal is to spare trustees and creditors from having to undertake time-consuming investigations into the existence of every asset or costly audits of property whose value cannot be fixed at a glance. After all, “[t]he successful functioning of the bankruptcy act hinges upon both the bankrupt’s veracity and his willingness to make a full disclosure.” In re Mascolo, 505 F.2d 274, 278 (1st Cir. 1974).

Entrusted with issuing any order that is “necessary” to carry out the provisions of the Code, 11 U.S.C. § 105(a) (2012), the bankruptcy court is particularly suited to weigh these competing considerations, which often boil down to an assessment of a debtor’s credibility. Whether a debtor has made a false oath within the meaning of § 727(a)(4)(A) is thus a question of fact that we review for clear error. Williamson, 828 F.2d at 251. “[A] finding is ‘clearly erroneous’ when although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction- that a mistake has been committed.” Anderson v. City of Bessemer City, 470 U.S. 564, 573, 105 S.Ct. 1504, 84 L.Ed.2d 518 (1985).

III.

Against this backdrop, we turn to Wor-ley’s challenges to the bankruptcy court’s denial of discharge, each of which relates to a different element of § 727(a)(4)(A).

A.

Worley begins by asserting that he did not falsely state the value of his interest in Gemini. He contends, first, that using the capitalization rate method to value his stake was reasonable and, second, that the bankruptcy court did not properly account for his limited economic rights in the company. He claims that the bankruptcy court correctly discounted Gemini’s illiquid, minority stake in Pelham, but then it stopped short and failed to apply a successive discount to Worley’s 49% share in Gemini— an illiquid, minority interest with no right to distributions until the dissolution of the company. In view of his limited control rights, Worley argues that the $2,500 estimate cannot qualify as a false oath.

We disagree. A debtor’s sworn representation to the value of an asset in Schedule B counts as an “oath” for the purposes of the statute. See Williamson, 828 F.2d at 250 (affirming denial of discharge under § 727(a)(4)(A) based on misrepresentations in a statement of financial affairs). And a careful examination of the record, on clear error review, does not leave us with a definite impression that the bankruptcy court’s rejection of Worley’s valuation was mistaken.' On the contrary, there is ample evidence to support the court’s conclusion that the estimate was “false.”

For starters, Worley assessed his interest in Gemini using an income-based valuation method that was bound to assign a paltry figure to property such as the Pelham farmland that earned no more than incidental income. Indeed, his $2,500 estimate relied solely on the capitalization rate method, which “determines the value of an income producing property by first determining the stabilized net operating income ... and then [multiplying] by a capitalization rate.” Laconia Savings Bank v. River Valley Fitness One, L.P., 2003 WL 252111, at *1 (Bankr. D.N.H. 2003) (emphasis added). Because valuations under the capitalization rate method are a function of the income an asset generates, see In re Windsor Hotel, L.L.C., 295 B.R. 307, 310-11 (Bankr. C.D. Ill. 2003), the method is best suited to properties earning a steady stream of income, see In re Southmark Storage Assocs. L.P., 130 B.R. 9, 14 (Bankr. D. Conn. 1991) (applying the approach to a storage facility); In re First Tulsa Partners, 91 B.R. 583, 586 (Bankr. N.D. Okla. 1988) (using capitalization rates to value office buildings). Accordingly, when assets have not achieved a stabilized level of revenue, the capitalization rate method paints a “skewed and discordant picture of reality.” Union Pac. R.R. Co. v. State Tax Comm’n, 716 F.Supp. 543, 555 (D. Utah. 1988) (“[0]ne would be forced to conclude that a company with a net loss for the year or over a period of years actually had a negative value.”).

The rural farmland owned by Pelham was undeveloped and, as noted, earned only incidental income. Daniel Crapps did not pitch the property as a “cash flow deal” offering steady returns; the annual revenue from farming and hunting licenses generated just 1% of the land’s purchase price. J.A. 533. Pelham instead aimed to capitalize on market timing and flip the farmland at a premium. J.A. 1074-75. Consequently, an income-based approach could not capture the full value of the property. Because the capitalization rate method does not account for the speculative value of the undeveloped acreage, the valuation overlooked the entire basis for the investment. The bankruptcy court could reasonably find, therefore, that Worley’s capitalization rate approach was manifestly ill-suited for this sort of real estate. Although Worley may not have needed to incur the delay and expense associated with formal appraisals of the property, at a minimum he could have corroborated his estimate with either his partner or Pelham’s manager.

Beyond the valuation method itself, the record is replete with evidence supporting the bankruptcy court’s finding that Wor-ley’s share in Gemini was worth at least five times the value he reported. Three data points in particular indicate that Wor-ley’s interest was worth considerably more than $2,500. First, Daniel Crapps testified that Gemini’s minority stake in Pelham would generally sell for 20-30% of its face value (roughly $132,000) and, even taking the 20% figure, Gemini was still worth approximately $26,000. J.A. 532-34. The bankruptcy court extrapolated from the value of the company to note that Worley’s minority share was in turn worth at least $13,212.80. Second, Worley contributed $65,000 to acquire his minority interest and the 2012 Schedule K-l form reflected a capital account of $67,555. Finally, on the eve of the trial, Pelham sold a majority of its farmland and planned to distribute $100,000 to Gemini.

Worley asserts that his estimate was nonetheless reasonable given his inability to control Gemini or direct the distribution of gains. But this argument about economic rights and additional liquidity discounts misses the forest for the trees. The bankruptcy court accepted Worley’s contention that the value of a minority stake is worth a fraction of its face value, yet still found that Worley’s estimate was “so low as to be unrealistic.” J.A. 294. Simply put, the disparity between the $65,000 initial contribution and $2,500 valuation did not hang together, especially since Worley points to no calamitous event that would lead to such a steep decline in value. (Indeed, as noted, Pelham succeeded in selling a large tract of land just before trial.) On these facts, the bankruptcy court could justifiably conclude that Worley’s investment in Gemini did not depreciate to just 4% of his initial capital contribution.

We recognize, of course, that real estate valuation is as much art as science, and that measurements of intrinsic value more often involve a range of reasonable values rather than a single point estimate. But some valuation models and estimates simply fall outside the realm of common sense. Based on the particular attributes of the investment here, the bankruptcy court was entitled to hold that this was one of those instances.

B.

Worley next asserts that he did not act with fraudulent intent in estimating the value of Gemini. In addition to characterizing the dispute as a mere disagreement on value, Worley argues that he relied on the advice of counsel to arrive at the $2,500 estimate. Both contentions are unavailing. The bankruptcy court reasonably inferred fraudulent intent from Wor-ley’s background, course of conduct, and absence of credibility.

Although a false statement made by mistake or inadvertence is not a sufficient ground upon which to base the denial of a discharge, “reckless indifference to the truth constitutes the functional equivalent of fraud.” In re Arnold, 369 B.R. 266, 272 (Bankr. W.D. Va. 2007). A debtor acts with the requisite intent to deceive when his statement is “incompatible with his own knowledge.” Saslow v. Michael (In re Michael), 452 B.R. 908, 919 (Bankr. M.D.N.C. 2011). Because an adjudication of fraudulent intent “depends largely upon an assessment of the credibility and demeanor of the debtor, deference to the bankruptcy court’s factual findings is particularly appropriate.” Williamson, 828 F.2d at 252.

Here, several pieces of circumstantial evidence indicate that Worley handpicked a valuation methodology that would return a piddling estimate for his stake in Gemini. His background suggested that he knew better than to value his interest using capitalization rates. As a sophisticated financial professional with two finance degrees and nearly a decade of industry experience, Worley was doubtless familiar with valuation methods. Yet despite his extensive training, he applied an income-driven formula to an investment that generated only incidental revenue. Worley’s course of conduct was also suspect. He confessed uncertainty about how to value the interest in Gemini, but never confirmed his estimate with Joshua or Daniel Crapps. Rather, Worley proceeded with the $2,500 valuation and filed his bankruptcy petition as a “no asset” case — suggesting an effort to persuade the trustee and creditors to abandon the property. See In re Pynn, 546 B.R. 425, 481 (Bankr. C.D. Cal. 2016) (“Debtor approached his bankruptcy schedules seemingly with the idea of persuading his creditors that these assets were of no value to creditors because they were, cumulatively, worth less than the statutory exemptions.”). Finally, the bankruptcy court assessed his credibility at trial and determined that his testimony was not “forthcoming and candid.” J.A. 272. Taken together, the record does not support the conclusion that Worley’s misstatement was a result of simple carelessness.

Nor does Worley’s claimed reliance on the advice of counsel excuse his failure to list an accurate valuation. While reliance on counsel generally absolves a debtor of fraudulent intent, see In re Arnold, 369 B.R. at 272, the bankruptcy court must still consider whether the debtor acted in good faith, see Retz v. Samson (In re Retz), 606 F.3d 1189, 1199 (9th Cir. 2010). A debtor must demonstrate that he provided the attorney with all of the necessary facts and documentation. Kaler v. McLaren (In re McLaren), 236 B.R. 882, 897 (Bankr. D.N.D. 1999). Likewise, the advice of counsel is no defense when it should have been obvious to the debtor that his attorney was mistaken. See In re Tully, 818 F.2d at 111 (“A debtor cannot, merely by playing ostrich and burying his head deeply in the sand, disclaim all responsibility for statements which he has made under oath.”).

We have little difficulty concluding that the bankruptcy court did not clearly err in rejecting Worley’s advice-of-counsel defense. Worley testified that he made a complete disclosure of his financial affairs, but there is no evidence that he discussed his $65,000 capital contribution or subsequent K-l statements with his attorney. Given his conspicuous failure to seek the advice of knowledgeable financial professionals like Daniel Crapps, the bankruptcy court could have determined that any purported reliance on legal counsel was a ruse. And even if an attorney had advised Worley to apply the capitalization rate method and submit a $2,500 valuation, a sophisticated investor could not have relied on such patently inappropriate advice in good faith. After presiding over a bench trial, the bankruptcy court could plausibly conclude, as it did, that Worley was engaged in a pattern of outright dissemblance or cavalier indifference to the truth. J.A. 294.

Again, we emphasize that this case does not boil down to a mere difference of opinion regarding the valuation of an illiquid asset. Juxtaposing the magnitude of the undervaluation with Worley’s distinguished training and experience, the bankruptcy court determined that Worley intentionally shortchanged creditors on his Schedule B. Yet we reiterate that a debt- or’s valuation need not be infallible. There is room for reasonable disagreement, particularly in cases involving large corporate debtors where valuations are typically-fraught with uncertainty. See In re Mirant Corp., 334 B.R. 800, 848 (Bankr. N.D. Tex. 2005) (acknowledging that valuation of an enterprise is often “not much more than crystal ball gazing”); In re New York, New Haven & Hartford R.R. Co., 4 B.R. 758, 773 (Bankr. D. Conn. 1980) (“[H]ardly a material representation on valuation submitted by one party went unchallenged by another party.”). In holding that the undervaluation of Gemini constituted a false oath, we are not opening the door to a scenario in which marginal differences in valuation give rise to a denial of discharge. But Worley’s misstatement was anything but marginal.

C.

Worley concludes by arguing that a denial of discharge was unjustified because his alleged statement had no material impact on the outcome of the case. Instead, he argues, to fall within § 727(a)(4)(A) a misstatement must, at a minimum, have the potential to prejudice the rights of creditors. After disclosing the interest in Gemini on his schedules, Worley contends that any putative understatement could not have prejudiced creditors because the trustee “was going to investigate the matter regardless of the Debtor’s estimated valuation.” App. Br. at 49.

Once more, we disagree. The threshold to materiality is a low bar. As the statute makes clear, any fraudulent misstatement “in or in connection with the case” is sufficient grounds for the denial of discharge. 11 U.S.C. § 724(a)(4)(A). While courts may be “more reluctant to deny a debtor’s discharge when assets are undervalued than when they are undisclosed,” In re Zimmerman, 320 B.R. 800, 807 (Bankr. M.D. Pa. 2005), all that the provision requires for a denial of discharge is a single false account or oath, Schreiber v. Emerson (In re Emerson), 244 B.R. 1, 28 (Bankr. D.N.H. 1999). And while Worley suggests that undervaluation of a single asset is really no big deal, nothing in the Code allows a debtor one free 'falsehood on his schedules if .such is knowingly and fraudulently made.

The standard is ultimately one of pertinence rather than prejudice: a misstatement is material if it is “relevant to the debtor’s business transactioná, estate and assets.” Farouki, 14 F.3d at 251; accord Chalik v. Moorefield (In re Chalik), 748 F.2d 616, 618 (11th Cir. 1984) (per curiam) (“The subject matter of a false oath is ‘material’ ... if it bears a relationship to the bankrupt’s business transactions or estate.”).

Pursuant to this rather capacious standard, the bankruptcy court did not err in finding that Worley’s misstatement was material. Worley’s undervaluation of his only significant, non-exempt asset by many thousands of dollars is undeniably “relevant” to his estate and assets. Indeed, by lowballing his interest in Gemini, Worley sent a message to the trustee and creditors that there was no reason to conduct any further investigation into the property. As we noted earlier, this sort of concealment undermines the efficient administration of the bankruptcy estate. Neither the trustee nor the creditors should have to absorb themselves in a painstaking struggle of “digging out and conducting independent examinations to get the facts.” Mertz v. Rott, 955 F.2d 596, 598 (8th Cir. 1992).

IV.

Denial of discharge is a severe sanction and should be reserved for instances in which a debtor contravenes the basic compact underlying the Code’s promise of a “fresh start.” See Farouki, 14 F.3d at 249. After careful consideration of the evidence and Worley’s testimony at trial, the bankruptcy court determined that this was one of those rare cases: “[TJhere are very few debtors that I have denied a discharge to because it is so harsh.... And if I struggle with the issue at all, the benefit of the doubt always goes to the debtor. I did not struggle in this case.” J.A. 272. A thorough inspection of the record, on clear error review, does not leave us with the definite impression that a mistake has been made. On the contrary, the bankruptcy and district courts proceeded sensibly and carefully throughout.

The judgment is accordingly

AFFIRMED.


author: JAMES E. GRAVES, JR., Circuit Judge:

text:
    Susan L. VAUGHAN, Plaintiff-Appellant v. ANDERSON REGIONAL MEDICAL CENTER, Defendant-Appellee
    No. 16-60104
    United States Court of Appeals, Fifth Circuit.
    February 15, 2017

      Robert Nicholas Norris, Louis Hanner Watson, Jr., Esq., Watson & Norris, P.L.L.C., Jackson, MS, for Plaintiff-Appellant.
    Romney Hastings Entrekin, Esq., Peeler Grayson Lacey, Jr., Esq., Benjamin Blue Morgan, Esq., Attorney, Burson En-trekin Orr Mitchell & Lacey, P.A., Laurel, MS, for Defendant-Appellee.
    Dara S. Smith, Esq., AARP Foundation Litigation, Washington, DC, Amicus Curiae for AMERICAN ASSOCIATION OF RETIRED PERSONS, AMERICAN ASSOCIATION OF RETIRED PERSONS FOUNDATION.
    Before BENAVIDES, HAYNES, and GRAVES, Circuit Judges.
   JAMES E. GRAVES, JR., Circuit Judge:

Treating Appellant’s Petition for Rehearing En Banc as a Petition for Panel Rehearing, the Petition is DENIED. We withdraw the prior opinion and substitute the following.

This single-issue interlocutory appeal arises out of a wrongful termination lawsuit filed by Susan' Vaughan, a nurse supervisor, against Anderson Regional Medical Center. Vaughan alleges the Medical Center discharged her in retaliation for raising age-discrimination complaints. Vaughan’s claims invoke the Age Discrimination in Employment Act (ADEA), and she seeks, among other things, damages for pain and suffering and punitive damages.

The district court dismissed Vaughan’s claims for pain and suffering damages and punitive damages because Fifth Circuit precedent bars such recoveries under the ADEA. The district court’s dismissal order did, however, note divergent views held by other circuits and the Equal Employment Opportunity Commission. Finding the damages issue “a controlling question of law as to which there is substantial ground for difference of opinion,” the district court certified an appeal to this Court under 28 U.S.C. § 1292(b). We granted leave to file an interlocutory appeal.

The district court correctly concluded that Dean v. Am. Sec. Ins. Co., 559 F.2d 1036 (5th Cir. 1977) requires dismissal of Vaughan’s pain and suffering and punitive damages claims. Accordingly, we AFFIRM.

JURISDICTION

We have jurisdiction over Vaughan’s interlocutory appeal pursuant to 28 U.S.C. § 1292(b). The district court properly exercised its jurisdiction over the federal statutory claim under 28 U.S.C. § 1331.

STANDARD OF REVIEW

The district court dismissed Vaughan’s damages claims pursuant to Fed. R. Civ. P. 12(b)(6). Accordingly, this Court reviews the decision below de novo, “accepting all well-pleaded facts as true and viewing those facts in the light most favorable to the plaintiff.” True v. Robles, 571 F.3d 412, 417 (5th Cir. 2009). “Dismissal is appropriate when the plaintiff has not alleged ‘enough facts to state a claim to relief that is plausible on its face’ and has failed to ‘raise a right to relief above the speculative level.’ ” Id. (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)).

ANALYSIS

The parties dispute Dean’s applicability. The district court relied upon Dean below, but certified its ruling for interlocutory review after recognizing a circuit split regarding the availability of pain and suffering and punitive damages in ADEA retaliation cases.

This Court adheres to a “rule of orderliness,” under which a panel may not overturn a controlling precedent “absent an intervening change in law, such as by a statutory amendment, or the Supreme Court, or our en banc court. Indeed, even if a panel’s interpretation of the law appears flawed, the rule of orderliness prevents a subsequent panel from declaring it void.” Sprong v. Fidelity Nat’l Property & Cas. Ins. Co., 787 F.3d 296, 305 (5th Cir. 2015) (block quotation and citation omitted). To decide whether the rule of orderliness applies, we must therefore analyze whether: (1) Dean is distinguishable from this case; or (2) an intervening change in law justifies setting Dean aside.

We conclude that the answer to both questions is “no.”

I. Dean is not distinguishable

We perceive no basis upon which to distinguish Dean. Vaughan concedes that Dean forecloses pain and suffering and punitive recoveries for ADEA age discrimination claims, see Appellant’s Br. at 2, but suggests that Dean does not control ADEA retaliation claims. We disagree.

Dean held in unqualified terms that “neither general damages [i.e., compensatory damages for pain and suffering] nor punitive damages are recoverable in private actions posited upon the ADEA.” Dean, 559 F.2d at 1040. ADEA age discrimination and retaliation claims are equally “private actions posited upon the ADEA,” and the ADEA has contained a prohibition on employer retaliation since its inception. See Age Discrimination in Employment Act of 1967, Pub. L. 90-202 at § 4(d), 81 Stat. at 603 (1967) (“It shall be unlawful for an employer to discriminate against any of his employees or applicants for employment, for an employment agency to discriminate against any individual, or for a labor organization to discriminate against any member thereof or applicant for membership, because such individual, 'member or applicant for membership has opposed any practice made unlawful by this section, or because such individual, member or applicant for membership has made a charge, testified, assisted, or participated in any manner in an investigation, proceeding, or litigation under this Act.”) (current version at 29 U.S.C. § 623(d)). A plaintiff could file a retaliation claim under the ADEA when we decided Dean, and Dean contains no suggestion that its holding regarding damages for “private actions posited upon the ADEA” silently excluded ADEA retaliation actions. See Dean, 559 F.2d at 1036.

Dean’s holding therefore controls this case if, as we will conclude below, no intervening changes in law undermine its continued vitality.

l{. No intervening change in law justifies setting Dean aside

Vaughan’s effort to undermine Dean relies heavily upon the 1977 amendments to the remedies provided for retaliatory discharges under the Fair Labor Standards Act (FLSA), a statute we interpret to provide ' remedies “consistent” with the ADEA. Vaughan’s argument that the 1977 FLSA amendments enlarged the remedies available for ADEA retaliation claims finds support in the decisions of at least one circuit, and the EEOC endorses that interpretation. See Moskowitz v. Trustees of Purdue Univ., 5 F.3d 279, 284 (7th Cir. 1993) (indicating that the 1977 FLSA amendments “enlarge[d] the remedies ... beyond those standardly available for ... ADEA ... violations” when a plaintiff brings retaliation claims); see also EEOC Directive No. 915.004, EEOC Enforcement Guidance on Retaliation and Related Issues, at n.186 (Aug. 25, 2016) (“The FLSA, as amended in 1977, 29 U.S.C. § 216(b), authorizes compensatory and punitive damages for retaliation claims under ... the ADEA.”), available at https://www. eeoc.gov/laws/guidance/retaliation-guidance.cfm#_ftnref!86 (last accessed Dec. 12, 2016).

We conclude, however, that Vaughan’s argument fails to recognize the 1977 FLSA amendments incorporated remedial language substantively identical to passages already provided in the ADEA. Put simply, the 1977 FLSA amendments do not disturb our holding in Dean, because they added language to the FLSA that we have already construed in the context of the ADEA — in Dean.

We issued our opinion in Dean on September 23, 1977, more than a month prior to the 1977 FLSA amendments. Compare Dean, 559 F.2d at 1036, with Fair Labor Standards Amendments of 1977, Pub. L. No. 95-151, 91 Stat. 1245 (Nov. 1, 1977) (current version at 29 U.S.C. §§ 201-219). By the time we interpreted it in Dean, the ADEA had for nearly ten years “au-thori[zed] a court to grant such ‘legal or equitable relief as may be appropriate to effectuate the purposes of this chapter, including without limitation judgments compelling employment, reinstatement or promotion, or enforcing the liability for amounts deemed to be unpaid minimum wages or unpaid overtime compensation under this section.’ ” Dean, 559 F.3d at 1037-38; see also Age Discrimination in Employment Act of 1967, Pub. L. No. 90-902 at § 7(b), 81 Stat. 604-05 (1967) (current version at 29 U.S.C. § 626(b)). Several weeks after we decided Dean, Congress added the following similar remedial language to the FLSA: “Any employer who violates the provisions of section 15(a)(3) of this Act, 29 USC 215, shall be liable for such legal or equitable relief as may be appropriate to effectuate the purposes of section 15(a)(3), including without limitation employment, reinstatement, promotion, and the payment of wages lost and an additional equal amount as liquidated damages.” 91 Stat. 1245 at 1252 (current version at 29 U.S.C. § 216(b)). Dean held that similar language in the ADEA’s remedy provision did not make pain and suffering damages available, because such damages would frustrate the ADEA’s preference for administrative resolutions. See Dean, 559 F.2d at 1038-39. That preference remains in the ADEA, and requires the same result we reached in Dean for all “private actions posited upon the ADEA.” See id. at 1040. We express no view on how the remedial language discussed above should be applied in FLSA retaliation cases.

Our interpretation is buttressed by our history of applying Dean long after the 1977 FLSA amendments. See Smith v. Berry Co., 165 F.3d 390, 396 (5th Cir. 1999) (citing Dean for the proposition that “punitive damages and damages for mental pain and suffering ... are not available” for age discrimination claims under the ADEA). The Eleventh Circuit, which views Fifth Circuit precedents predating Sept. 30, 1981, as binding precedent, has also continued to cite Dean. See Snapp v. Unlimited Concepts, Inc., 208 F.3d 928, 938 (11th Cir. 2000) (“We ... feel some constraint to exclude punitive damages from the ‘legal relief provided in the [FLSA] by the former Fifth Circuit’s decision in Dean.”), see also Goldstein v. Manhattan Industries, Inc., 758 F.2d 1435, 1446 (11th Cir. 1985) (citing Dean for the proposition that “neither punitive damages nor compensatory damages for pain and suffering are recoverable under the ADEA.”).

Having concluded that the 1977 FLSA amendments’ borrowing of the ADEA’s remedial language does not constitute an intervening change in the ADEA warranting our departure from Dean, we address two other points raised by Vaughan’s briefing.

First, the fact that the EEOC believes the ADEA permits pain and suffering and punitive recoveries does not constitute an intervening legal change sufficient to displace Dean. The EEOC has stated its interpretation of the ADEA’s remedial provisions in a policy directive and at least three sections of its Compliance Manual, and we are mindful that the EEOC’s interpretations of the ADEA reflect “a body of experience and informed judgment to which courts and litigants may properly resort for guidance.” Fed. Exp. Corp. v. Holowecki, 552 U.S. 389, 399, 128 S.Ct. 1147, 170 L.Ed.2d 10 (2008) (quoting Bragdon v. Abbott, 524 U.S. 624, 642, 118 S.Ct. 2196, 141 L.Ed.2d 540 (1998)). The EEOC’s interpretation merits Skidmore deference “to the extent that ... interpretation!] ha[s] the power to persuade.” Nat’l R.R. Passenger Corp. v. Morgan, 536 U.S. 101, 111 n.6, 122 S.Ct. 2061, 153 L.Ed.2d 106 (2002) (quotations and citations omitted); see also Holowecki, 552 U.S. at 399, 128 S.Ct. 1147. In this case, the EEOC’s interpretation of the ADEA’s remedial provision appears to depend almost entirely upon Moskowitz, an opinion we find unpersuasive. Even if we found the EEOC’s interpretation persuasive, however, it would not provide a sufficient basis for departing from an established precedent. See Spong v. Fid. Nat. Prop. & Cas. Ins. Co., 787 F.3d 296, 306 (5th Cir. 2015) (noting that “[a]n intervening change in law must be binding on this court,” and “merely persuasive, not binding” interpretations do not overcome the rule of orderliness).

Second, the transfer of ADEA functions previously performed by the Secretary of Labor to the EEOC does not constitute an intervening change in law sufficient to displace Dean. When we decided Dean, the ADEA gave certain roles and powers to the Secretary of Labor. See Dean, 559 F.2d at 1038-40. As Vaughan notes, the current version of the statute gives those roles and powers to the EEOC. The transfer of ADEA functions occurred pursuant to Reorganization Plan No. 1 of 1978, which called for a straightforward substitution of the EEOC in place of certain statutory references to the Secretary of Labor. Vaughan fails to demonstrate that the transfer 'of functions created any significant differences for ADEA plaintiffs.

For example, Vaughan argues that “[i]n the past private suits for age discrimination were secondary to administrative proceedings by the Secretary of Labor, which did not allow for compensatory damages.” Appellant’s Br. at 5. The ADEA’s current text demonstrates no less of a preference for administrative proceedings than the version Dean interpreted. In Dean, we concluded that the ADEA “patently encouraged and preferred ... administrative remedies and suits brought by the Secretary of Labor ... to private actions.” Dean, 559 F.2d at 1038. As evidence of this preference, we noted two specific aspects of the statute: (1) its requirement that private individuals give the Secretary of Labor 60 days’ advance notice of their intention to file a private ADEA claim, and (2) the Secretary of Labor’s ability to cut off an individual’s right to maintain a private ADEA suit by commencing an enforcement action within the notice period. See id. Those aspects of the statute remain the same, other than the substitution of the EEOC for the Secretary of Labor. See 29 U.S.C. § 626(d)(1) (notice requirement); § 626(c)(1) (termination of private right of action upon commencement of EEOC action).

CONCLUSION

Our opinion in Dean applies to all “private actions posited upon the ADEA,” Dean, 559 F.2d at 1040, including Vaughan’s ADEA retaliation claim. Under Dean, Vaughan may not invoke the ADEA as a basis for general compensatory damages for pain and suffering or punitive damages. Id. Perceiving no intervening change in law that would lead us to set Dean aside, we AFFIRM.

      . To avoid any confusion of terms, this opinion uses the phrase “pain and suffering damages” as a more precise method of referencing the "general compensatory damages” Dean foreclosed. Dean's convention of referring to pain and suffering damages, which a plaintiff may not recover under the ADEA, as "general compensatory damages” does not prevent other types of ADEA recoveries our precedents sometimes label "compensatory,” such as back pay awards. See Dean, 559 F.2d at 1039 (recognizing availability of ADEA back pay awards); see also Tyler v. Union Oil Co. of Cal., 304 F.3d 379, 400-02 (5th Cir. 2002) (referring to a permissible ADEA back pay award as "compensatory damages”).
      The Medical Center’s motion below sought dismissal of all "compensatory” damages claims, "including. but not limited to deep pain, humiliation, anxiety and emotional distress,” and its appellate briefing phrases the question before this court as “whether a plaintiff can be awarded general compensatory (e.g., pain and suffering) and/or punitive damages for an ADEA retaliation claim,” Ap-pellee’s Br. at 1. We emphasize that the examples of damages the Medical Center identifies — damages we hold Dean forecloses in all private ADEA actions — should not be read to limit the availability of other types of monetary damages the ADEA plainly permits, such as back pay awards.

      . See Lubke v. City Of Arlington, 455 F.3d 489, 499 (5th Cir. 2006) (“Because the remedies available under the ADEA and the FMLA both track the FLSA, cases interpreting remedies under the statutes should be consistent.").

      . See Bonner v. City of Prichard, Ala., 661 F.2d 1206, 1207 (11th Cir. 1981) (en banc) (stating that Fifth Circuit decisions handed down prior to the close of business of Sept. 30, 1981, serve as binding precedent within the Eleventh Circuit).

      . In the Snapp litigation, the district court denied defendant’s motion to dismiss a claim for pain and suffering damages. See Appellees Br. at *2, Snapp v. Unlimited Concepts, No. 98-2936-GG, 1999 WL 33617525 (11th Cir. 1999). The Eleventh Circuit never analyzed the substance of that ruling, as the jury "awarded ... no money in compensatory damages.” Id. at *4.

      . See EEOC Directive No. 915.004, EEOC Enforcement Guidance on Retaliation and Related Issues, at n. 186 (Aug. 25, 2016) ("The FLSA, as amended in 1977, 29 U.S.C. § 216(b), authorizes compensatory and punitive damages for retaliation claims under ... the ADEA.”), available at https://www.eeoc. gov/laws/guidan.ce/retaliation-guidance.cfm#_ ftnref!86 (last accessed Dec. 12, 2016); see also EEOC Compliance Manual § 8, Charge-Processing Outline at IV(B), 2006 WL 4672791; EEOC Compliance Manual § 8-III, Special Remedial Issues at B(l), 2006 WL 4672794; EEOC Compliance Manual § 10, Compensation Discrimination, 2006 WL 4672894.

        .Moskowitz suggested that the 1977 FLSA amendments "enlarge[d] the remedies ... beyond those standardly available for ... ADEA ... violations” when a plaintiff brings retaliation claims. 5 F.3d at 284. Because the ADEA already permitted retaliation claims before the 1977 FLSA amendments, and appears to have supplied the 1977 FLSA’s remedial text, we decline to view Moskowitz as persuasive authority.

      . See Reorganization Plan No. 1 of 1978, 92 Stat. 3781 at § 2 (1978) (“All functions vested in the Secretary of Labor or in the Civil Service Commission pursuant to Sections 2, 4, 7, 8, 9, 10, 11, 12, 13, 14, and 15 of the Age Discrimination in Employment Act of 1967, as amended, (29 U.S.C. 621, 623, 626, 627, 628, 629, 630, 631, 632, 633, and 633a) are -hereby transferred to the Equal Employment Opportunity Commission. All functions related to age discrimination administration and enforcement pursuant to Sections 6 and 16 of the Age Discrimination in Employment Act of 1967, as amended, (29 U.S.C. 625 and 634) are hereby transferred to the Equal Employment Opportunity Commission.”).


author: JERRY E. SMITH, Circuit Judge:

text:
    David CRUZ; Valentin Reyes; Jonathan Ryan; Bishop Enrique San Pedro Ozanam Center, Incorporated, Plaintiffs-Appellees, v. Greg ABBOTT, in His Official Capacity as Governor of the State of Texas; Steven C. McCraw, in His Official Capacity as Director of Public Safety; Cynthia Leon, In Her Official Capacity as Member of the Texas Public Safety Commission, Also Known as Cindy; Faith Johnson, in Her Official Capacity as Member of the Texas Public Safety Commission; Manny Flores, in His Official Capacity, as Member of the Texas Public Safety Commission; Steven P. Mach, in His Official Capacity as Member of the Texas Public Safety Commission; Randy Watson, in His Official Capacity as Member of the Texas Public Safety Commission, Defendants-Appellants.
    No. 16-50519
    United States Court of Appeals, Fifth Circuit.
    Filed February 23, 2017

      Nina Perales, Esq., Marisa Bono, John Paul Salmon, Mexican-American Legal Defense & Educational Fund, San Antonio, TX, for Plaintiffs-Appellees.
    Matthew Hamilton Frederick, Deputy Solicitor General, Office of the Solicitor General for the State of Texas, Adam Nicholas Bitter, Esq., Assistant Attorney General, Office of the Attorney General, General Litigation Division, Austin, TX, for Defendants-Appellants.
    Before JOLLY, SMITH, and PRADO, Circuit Judges.
   JERRY E. SMITH, Circuit Judge:

Defendants, who are state officials, appeal a preliminary injunction against the enforcement of a Texas statute prohibiting the harboring of illegal aliens. Because the plaintiffs lack Article III standing, we reverse and render a judgment of dismissal.

I.

In 2015, Texas enacted legislation modifying a section of the Texas Penal Code that deals with human smuggling. Before the 2015 amendments, the Penal Code provided,

Sec. 20.05. SMUGGLING' OF PERSONS. (a) A person commits an offense if the person intentionally uses a motor vehicle, aircraft, or watercraft to transport an individual with the intent to:
(1) conceal the individual from a peace officer or special investigator; or
(2) flee from a person the actor knows is a peace officer or special investigator attempting to lawfully arrest or detain the actor.

The 2015 amendments, part of House Bill 11 (“HB 11”), added a new basis of liability while limiting the statute’s reach to those who smuggle persons with “the intent to obtain a pecuniary benefit.” The Penal Code now provides,

Sec. 20.05. SMUGGLING OF PERSONS. (a) A person commits an offense if the person, with the intent to obtain a pecuniary benefit, knowingly:
(1) uses a motor vehicle, aircraft, watercraft, or other means of conveyance to transport an individual with the intent to:
(A) conceal the individual from a peace officer or special investigator; or
(B) flee from a person the actor knows is a peace officer or special investigator attempting to lawfully arrest or detain the actor; or
(2) encourages or induces a person to enter or remain in this country in violation of federal law by concealing, harboring, or shielding that person from detection

That text, which we refer to as HB 11 § 14(a), is the focus of this dispute.

Plaintiffs claim that HB 11 exposes them to possible criminal liability. Two of them, David Cruz and Valentin-Reyes, rent residential property to persons regardless of immigration status. The other two plaintiffs, Jonathan Ryan and Bishop Enrique San Pedro Ozanam Center, Incorporated (“the Ozanam Center”), provide social services to low-income individuals. Ryan is the Executive Director of the Refugee and Immigrant Center for Education and Legal Services (“RAICES”), which offers temporary shelter and legal assistance to people in need, including illegal aliens. The Ozanam Center is a homeless shelter in Brownsville, Texas, that houses persons regardless of immigration status. Ryan and the Ozanam Center expect the individuals they help to perform routine chores, such as sweeping the floor or taking out the trash.

Plaintiffs sued, claiming that the provisions are preempted by federal immigration law and violate the Fourteenth Amendment’s Due Process and Equal Protection Clauses. Plaintiffs immediately moved for a preliminary injunction to prevent defendants from enforcing HB ll’s anti-smuggling provisions. Defendants opposed the motion and moved to dismiss the complaint for lack of jurisdiction under Federal Rule of Civil Procedure 12(b)(1) and for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6).

At the hearing, the district court opined that plaintiffs’ conduct “falls right in the heartland of this statute. I mean particularly the individual who rents to and admits that he rents to people that he knows are undocumented aliens.... He could be arrested tomorrow.” The court instructed defendants to provide a statement explaining the statute’s scope and whether it applied to plaintiffs. Defendant Steven McCraw, the Director of the Texas Department of Public Safety (“DPS”), responded that based on the facts in the pleadings, “DPS officials would not investigate, file criminal charges, or otherwise engage in enforcement activity pursuant to the present version of Section 20.05 of the Texas Penal Code against individuals engaged in such conduct.”

The court dismissed the Fourteenth Amendment claims but granted a preliminary injunction on the ground that plaintiffs’ preemption arguments were likely to succeed on the merits. Defendants filed this interlocutory appeal under 28 U.S.C. § 1292(a)(1).

II.

The Constitution limits the jurisdiction of the federal courts to “Cases” and “Controversies.” U.S. Const., Art III, § 2. “The doctrine of standing gives meaning to these constitutional limits by ‘identifying] those disputes which are appropriately resolved through the judicial process.’ ” Susan B. Anthony List v. Driehaus, — U.S. -, 134 S.Ct. 2334, 2341, 189 L.Ed.2d 246 (2014) (footnote omitted) (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 560, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992)). “To establish standing, a plaintiff must show: (1) it has suffered, or imminently will suffer, a. concrete and particularized injury-in-fact; (2) the injury is fairly traceable to the defendant’s conduct; and (3) a favorable judgment is likely to redress the injury.” Hous. Chronicle Publ’g Co. v. City of League City, 488 F.3d 613, 617 (5th Cir. 2007).

To satisfy the injury-in-fact requirement, a plaintiff must allege an injury that is “actual or imminent, not conjectural or hypothetical.” Whitmore v. Arkansas, 495 U.S. 149, 155, 110 S.Ct. 1717, 109 L.Ed.2d 135 (1990) (citation and internal quotation marks omitted). “An allegation of future injury may suffice if the threatened injury is certainly impending, or there is a substantial risk that the harm will occur.” Susan B. Anthony List, 134 S.Ct. at 2341 (citation and internal quotation marks omitted). But where a plaintiff “has alleged an intention to engage in a course of conduct arguably affected with a constitutional interest ... and there exists a credible threat of prosecution thereunder, he ‘should not be required to await and undergo a criminal prosecution as the sole means of seeking relief.’ ” Babbitt v. United Farm, Workers Nat’l Union, 442 U.S. 289, 298, 99 S.Ct. 2801, 60 L.Ed.2d 895 (1979) (quoting Doe v. Bolton, 410 U.S. 179, 188, 93 S.Ct. 789, 35 L.Ed.2d 201 (1973)).

Here, standing is reduced to a question of statutory interpretation. The statute says that a person cannot “knowingly ... encourage[ ] or induce[ ] a person to enter or remain in this country in violation of federal law by concealing, harboring, or shielding that person from detection” in exchange for a “pecuniary benefit.” HB 11 § 14(a)(2). Plaintiffs urge us to read “harboring ... from detection” to mean “house” or “shelter” and claim that the provision applies to anyone who “knowingly provid[es] shelter to undocumented immigrants” and receives a “pecuniary benefit” in return. Because the plaintiffs shelter persons without regard to immigration status (and therefore could well be harboring illegal aliens) in return for either money (in the case of the landlords) or labor (in the case of the social-service providers), they say that Section 14(a)(2) applies to them. The defendants counter that plaintiffs are not violating the statute and therefore face no credible threat of prosecution. Defendants maintain that the statute applies to persons or entities that hide illegal aliens from authorities, not to those who merely shelter them.

We begin with the plain meaning of the statutory text. It is obvious from the structure that “harboring” and “from detection” must be read together. As used in the statute, “harboring” is a transitive verb — it requires an object, and its object is “that person.” The phrase “from detection” modifies “that person.” Therefore, “from detection” modifies and is an element of the offense of “harboring that person.” Although the definition of “harbor” may be ambiguous in isolation, when paired with “from detection” it requires some level of covertness well beyond merely renting or providing a place to live.

Plaintiffs advance several theories. They note that though Section 14(a)(1) criminalizes flight from “a peace officer or special investigator,” Section 14(a)(2) does not include ■ similarly specific language. That is easily explained, however: The drafters of HB 11 modeled Section 14(a)(2) after 8 U.S.C. § 1324(a)(l)(A)(iii), which has the less-specific “from detection” wording. Section 14(a)(1), which predates HB 11, is not modeled on Section 1324.

Plaintiffs claim that “detection” does not necessarily mean detection by law-enforcement personnel. But that reading renders “from detection” superfluous, given that housing someone always conceals him from detection in the broadest sense of “detection,” insofar as outsiders cannot perceive who is inside a given building. Plaintiffs reason that they “harbor” illegal aliens “from detection” by failing to report them to authorities after learning of their immigration status. But, as defendants note, there is a middle ground between actively hiding someone and reporting him to law enforcement.

This court interprets the words “harbor, shield, or conceal,” which appear in a federal immigration statute, to mean that “something is being hidden from detection.” United States v. Varkonyi, 645 F.2d 453, 456 (5th Cir.1981). We recently reaffirmed our understanding of that language in Villas at Parkside Partners v. City of Farmers Branch, 726 F.3d 524, 529 (5th Cir. 2013) (en banc). Although our precedent is not binding on Texas courts when interpreting Texas statutes, it is reasonable to assume that the legislature was aware of these decisions. A number of other circuits have interpreted similar language to suggest that something is being hidden from detection.

Furthermore, defendant McCraw stated in an affidavit that his agency “would not investigate, file criminal charges, or otherwise engage in enforcement activity” against plaintiffs for “harboring” illegal aliens. As the district court observed, McCraw’s statement “does not bind county prosecutors or local law enforcement officers who may choose to enforce section 20.05.” Nevertheless, DPS has a major role in the administration of HB 11, and testimony from its head confirming that plaintiffs would not be subject to prosecution under HB 11 carries some weight.

Two recent circuit court holdings support plaintiffs’ position. In Valle del Sol Inc. v. Whiting, 732 F.3d 1006, 1015 (9th Cir. 2013), the court held that a pastor who provided shelter and transportation to illegal aliens had standing to challenge an Arizona statute that prohibited both transporting an illegal alien and “concealing], harboring] or shielding] ... an alien from detection.” In dictum, the court noted that merely sheltering an alien would have been enough to establish standing. Id. at 1017. In Georgia Latino Alliance for Human Rights v. Governor of Georgia, 691 F.3d 1250, 1256-58 (11th Cir. 2012) (“GLAHR”), the court held that an immigration lawyer who “regularly transports undocumented immigrants to and from court hearings, meets with immigrant clients in his law office, gives legal advice to undocumented immigrants who wish to remain in Georgia, and helps undocumented immigrants to enter Georgia for court business and hearings” had standing to challenge a statute that criminalized transporting illegal aliens and “concealing], harbor[ing] or shielding] an illegal alien from detection.”

But Valle del Sol and GLAHR are distinguishable from the present case. They concerned statutes that are significantly different from HB 11, and in both cases, the courts relied in part on statutory language not present in HB ll. Moreover, in Valle del Sol, the court interpreted 8 U.S.C. § 1324’s harboring language in a way that is inconsistent with this court’s more narrow construction, pointing to a larger interpretive disagreement.

III.

In sum, plaintiffs cannot demonstrate a credible threat of prosecution. On the state of this record, they have not hampered authorities from finding any of the illegal aliens they rent to or serve, nor have they taken steps to help the aliens evade “detection” by the authorities. Because there is no reasonable interpretation by which merely renting housing or providing social services to an illegal alien constitutes “harboring ... that person from detection,” we REVERSE the injunction and RENDER a judgment of dismissal for want of jurisdiction.

      1. Act of May 23, 2011, 82nd Leg., R.S., ch. 223, § 2, sec. 20.05, 2011 Tex. Gen. Laws 799, 799.

      2. Act of May 28, 2015, 84th Leg., R.S., ch. 333, § 14, sec. 20.05, 2015 Tex. Gen. Laws 1508, 1514 (codified at Tex. Penal Code § 20.05).

      . HB 11 also created an offense for “continuous smuggling of persons” (HB 11 § 15(a) (codified at Tex. Penal Code § 20.06) (“A person commits an offense if, during a period that is 10 or more days in duration, the person engages two or more times 'in conduct that constitutes an offense under Section 20.05.”)) and deemed both “smuggling of persons” and "continuous smuggling of persons” to be prosecutable as "organized criminal activity” if committed "with the intent to establish, maintain, or participate in a combination or in the profits of a combination or as a member of a criminal street gang” (HB 11 § 16(a)(17) (codified at Tex. Penal Code § 71.02(a))).

      . Because we dismiss on standing, we reach none of the substantive issues. One or more parties who have standing are therefore not precluded from bringing these or other claims, on whose merits we express no opinion.

      . Defendants' brief claims appellate jurisdiction under 28 U.S.C. § 1291(a)(1), but there is no such subsection.

      . More specifically, according to the plaintiffs' brief, Cruz and Reyes "have rented to undocumented immigrants and intend to rent to undocumented immigrants in the future.’’ Ryan's refugee center "provides free and low-cost legal services to underserved immigrants].” The Ozanam Center "provides ... shelter and ... housing ... regardless of ... immigration status.”

      . Although concluding that Section 14(a)(2) applies to plaintiffs, the court noted that plaintiffs would lack standing if defendants’ interpretation of the statute is correct.

      . Texas courts aim to give effect to legislative intent, and they "rely on the plain meaning of the text as expressing legislative intent.” Tex. Lottery Comm’n v. First State Bank of De-Queen, 325 S.W.3d 628, 635 (Tex. 2010) (citation omitted). See Wright v. Ford Motor Co., 508 F.3d 263, 269 (5th Cir. 2007) (citations omitted) ("When we interpret a Texas statute, we follow the same rules of construction that a Texas court would apply — and under Texas law the starting point of our analysis is the plain language of the statute.”).

      .”[H]arboring an illegal alien” is ”[t]he act of providing concealment from detection by law-enforcement authorities or shelter, employment, or transportation to help a nonciti-zen remain in the United States unlawfully, while knowing about or recklessly disregarding the noncitizen's illegal immigration status.” Black’s Law Dictionary 831 (10th ed. 2014).

      . Texas courts “presume the Legislature selected language in a statute with care and that every word or phrase was used with a purpose in mind.” Tex. Lottery Comm’n, 325 S.W.3d at 635 (citations omitted).

      . Like the Texas statute, the federal statute includes the phrase “from detection.” But the placement of "from detection” in the federal statute suggests it may not be modifying “harbor.” It imposes penalties on anyone who
      knowing or in reckless disregard of the fact that an alien has come to, entered, or remains in the United States in violation of law, conceals, harbors, or shields from detection, or attempts to conceal, harbor, or shield from detection, such alien in any place, including any building or any means of transportation....
      8 U.S.C. § 1324(a)(l)(A)(iii). Nevertheless, we read the federal statute as a prohibition on hiding aliens from authorities rather than as a prohibition against housing them.

      . At issue in Varkonyi and Villas at Parkside was 8 U.S.C. § 1324, the statute from which HB ll’s "harboring ... from detection” phrasing is drawn (though the language is not identical). Texas courts presume that when the legislature adopts statutory language from another jurisdiction, it does so with the full knowledge of how that language has been interpreted by courts in that jurisdiction. See Tex. Dep't of Pub. Safety v. Gilbreath, 842 S.W.2d 408, 412 (Tex. App.-Austin 1992, no writ) ("When the legislature adopts a statute from another jurisdiction it is presumed that the legislature intended to adopt the settled construction given to the statute by the courts of that jurisdiction.”) (citing State v. Wiess, 141 Tex. 303, 171 S.W.2d 848 (1943)).

        . See United States v. McClellan, 794 F.3d 743, 751 (7th Cir. 2015) ("[HJarboring 'connotes] ... deliberately safeguarding members of a specified group from the authorities, whether through concealment, movement to a safe location, or physical protection.' ”) (quoting United States v. Costello, 666 F.3d 1040, 1044 (7th Cir. 2012)); United States v. Vargas-Cordon, 733 F.3d 366, 382 (2d Cir. 2013) (“The mere act of providing shelter to an alien, when done without intention to help prevent the alien’s detection by immigration authorities or police, is thus not an offense under § 1324(a)(l)(A)(iii).”); DelRio-Mocci v. Connolly Props., Inc., 672 F.3d 241, 246 (3d Cir. 2012) (“[T]o the extent that they simply rented apartments to aliens not lawfully present, the Property Managers cannot be said to have committed the crime of harboring.”); United States v. Ozcelik, 527 F.3d 88, 100 (3d Cir. 2008) ("We agree with the Fifth Circuit that the terms ‘shielding,’ ‘harboring,’ and ‘concealing’ under § 1324 encompass conduct 'tending to substantially facilitate an alien’s remaining in the United States illegally' and to prevent government authorities from detecting the alien’s unlawful presence.”) (quoting United States v. Rubio-Gonzalez, 674 F.2d 1067, 1073 (5th Cir. 1982)). But cf. United States v. Acosta de Evans, 531 F.2d 428, 430 (9th Cir. 1976) (“We believe that [Section 1324’s] purpose is best effectuated by construing ‘harbor’ to mean 'afford shelter to’ and so hold.”) (footnote omitted).

      . Defendants make the colorable argument that there is no redressability because, they contend, plaintiffs did not sue parties with enforcement power. Because we find no standing, there is no need to decide redressa-bility, about which we express no view.

      . The statute in Valle del Sol made it unlawful for a person to “[cjonceal, harbor or shield ... an alien from detection” but also made it unlawful for a person to "[transport or move or attempt to transport or move an alien in this state, in furtherance of the illegal presence of the alien in the United States” or “[ejncourage or induce an alien to come to or reside in this state” when that person knows or recklessly disregards the fact that the alien is in the country illegally. Valle del Sol, 732 F.3d at 1013. The court found that the plaintiffs had standing because they had provided “transportation and shelter” to illegal aliens. Id. at 1015, 1018.
      The statute in GLAHR imposed criminal liability on any person who "knowingly and intentionally transports or moves an illegal alien in a motor vehicle for the purpose of furthering the illegal presence of the alien,” “knowingly conceals, harbors, or shields an illegal alien from detection in any place in [Georgia],” or "knowingly induces, entices, or assists an illegal alien to enter into [Georgia].” GLAHR, 691 F.3d at 1256. The court found that an immigration lawyer had standing because he transported aliens, gave them legal advice on how to stay in Georgia, and helped them enter Georgia for court business and hearings. Id. at 1258.

      . See Valle del Sol, 732 F.3d at 1017 (suggesting that sheltering an alien in a church would violate 8 U.S.C. § 1324).