Flora v. The United States

MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM and Lack of Jurisdiction

W.D. Va.January 26, 2017

IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF VIRGINIA HARRISONBURG DIVISION ) MARK R. FLORA ) (on behalf of himself and all others similarly situated), ) ) Plaintiff, ) ) Civil Action Nos. 5:16-CV-00066 v. ) 5:16-CV-00067 ) THE UNITED STATES, ) ) Defendant. ) ) DEFENDANT’S MOTION TO DISMISS JOYCE R. BRANDA Acting Assistant Attorney General RICK A. MOUNTCASTLE OF COUNSEL: Acting United States Attorney Jess R. Phelps Attorney ROBERT E. KIRSCHMAN, JR. U.S. Department of Agriculture Director Office of the General Counsel KENNETH M. DINTZER Deputy Director JOSHUA D. SCHNELL Trial Attorney Virginia State Bar No. 78165 Commercial Litigation Branch Civil Division Department of Justice P.O. Box 480, Ben Franklin Station Washington, D.C. 20044 Telephone: (202) 616-0383 JOSEPH W. H. MOTT Assistant United States Attorney Virginia State Bar No. 21852 P.O. Box 1709 Roanoke, VA 24008-1709 Telephone: (540) 857-2250 January 26, 2017 Attorneys for Defendant Case 5:16-cv-00066-MFU Document 21 Filed 01/26/17 Page 1 of 26 Pageid#: 197 2 TABLE OF AUTHORITIES Cases Adams v. Bain, 697 F.2d 1213 (4th Cir. 1982) .................................................................................................. 11 Alder Terrace, Inc. v. United States, 161 F.3d 1372 (Fed. Cir. 1998)................................................................................................. 14 Ariadne Fin. Servs. Pty. Ltd. v. United States, 133 F.3d 874 (Fed. Cir. 1998)............................................................................................. 14, 16 Ashcroft v. Iqbal, 556 U.S. 662 (2009) .................................................................................................................. 11 Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) .................................................................................................................. 12 Bell v. McDonald, No. 14-188, 2015 WL 3463479 (M.D. N.C. 2015) .................................................................. 17 Bray v. United States, 785 F.2d 989 (Fed. Cir. 1986)................................................................................................... 13 Bright v. United States, 603 F.3d 1273 (Fed. Cir. 2010)................................................................................................. 15 Brighton Vill. Assocs. v. United States, 52 F.3d 1056 (Fed. Cir. 1995)................................................................................................... 14 Brown Park Estates-Fairfield Dev. Co. v. United States, 127 F.3d 1449 (Fed. Cir. 1997)........................................................................................... 13, 16 Combs v. Bakker, 886 F.2d 673 (4th Cir. 1989) .................................................................................................... 11 CRV Enterprises, Inc. v. United States, 86 Fed. Cl. 758 (2009) .............................................................................................................. 14 Curtis v. Citibank, N.A., 226 F.3d 133 (2nd Cir. 2000).................................................................................................... 18 E.I. du Pont de Nemours & Co. v. Kolon Indus., Inc., 637 F.3d 435 (4th Cir. 2011) .................................................................................................... 12 Earman v. United States, Case 5:16-cv-00066-MFU Document 21 Filed 01/26/17 Page 2 of 26 Pageid#: 198 3 114 Fed. Cl. 81 (2013) ....................................................................................................... passim Evans v. B.F. Perkins Co., 166 F.3d 642 (4th Cir. 1999) .................................................................................................... 11 Fallini v. United States, 56 F.3d 1378 (Fed. Cir. 1995)................................................................................................... 14 Fisher v. United States, 402 F.3d 1167 (Fed. Cir. 2005)................................................................................................. 13 FloorPro, Inc. v. United States, 680 F.3d 1377 (Fed. Cir. 2012)................................................................................................. 14 Gen. Eng’g & Mach. Works v. O’Keefe, 991 F.2d 775 (Fed. Cir. 1993)..................................................................................................... 8 Hoffman v. United States, 266 F. Supp. 2d 27 (D.D.C. 2003) ............................................................................................ 13 Hopland Band of Pomo Indians v. United States, 855 F.2d 1573 (Fed. Cir. 1988)................................................................................................. 13 John R. Sand & Gravel Co. v United States, 552 U.S. 130 (2008) .................................................................................................................. 13 Lee v. Norfolk Southern Ry. Co., 802 F.3d 626 (4th Cir. 2015) .................................................................................................... 18 Meyers v. United States, 96 Fed. Cl. 34 (2010) .................................................................................................................. 7 Parkwood Associates Ltd. Partnership v. United States, 97 Fed. Cl. 809 (2011) .............................................................................................................. 17 Prime Mgmt. Co., Inc. v. Steinegger, 904 F.2d 811 (2nd Cir. 1990).................................................................................................... 18 Randall v. United States, 95 F.3d 339 (4th Cir. 1996) ................................................................................................ 12, 17 Reynolds v. Army and Air Force Exchange Service, 846 F.2d 746 (Fed. Cir. 1988)................................................................................................... 17 Richmond, Fredericksburg & Potomac R. Co. v. United States, 945 F.2d 765 (4th Cir. 1991) .................................................................................................... 11 Case 5:16-cv-00066-MFU Document 21 Filed 01/26/17 Page 3 of 26 Pageid#: 199 4 Roedler v. Dep’t of Energy, 255 F.3d 1347 (Fed. Cir. 2001)................................................................................................. 17 Scheuer v. Rhodes, 416 U.S. 232 (1974) .................................................................................................................. 12 Sensormatic Sec. Corp. v. Sensormatic Electronics Corp., 452 F. Supp. 2d 621 (D. MD 2006) .......................................................................................... 18 Smith v. Orr, 855 F.2d 1544 (Fed. Cir. 1988)................................................................................................. 17 Smith v. Safeco Inc. Co., 863 F.2d 403 (5th Cir. 1989) .................................................................................................... 18 St. Christopher Assocs., L.P. v. United States, 511 F.3d 1376 (Fed. Cir. 2008)................................................................................................... 7 Terteling v. United States, 334 F.2d 250 (Ct. Cl. 1964) ...................................................................................................... 14 Texas v. United States, 537 F.2d 466 (Ct. Cl. 1976) ........................................................................................................ 7 Trustmark Insur. Co. v. ESLU, Inc., 299 F.3d 1265 (11th Cir. 2002) ................................................................................................ 18 United States v. Mitchell, 463 U.S. 206 (1983) .................................................................................................................. 13 United States v. Testan, 424 U.S. 392 (1976) .................................................................................................................. 13 Statutes And Regulations 15 U.S.C. § 714 ............................................................................................................................... 3 16 U.S.C. § 3838a .................................................................................................................. passim 16 U.S.C. § 3838c(b) ............................................................................................................. passim 28 U.S.C. § 1295(a)(2) .................................................................................................................. 14 28 U.S.C. § 1491 ............................................................................................................................. 5 Case 5:16-cv-00066-MFU Document 21 Filed 01/26/17 Page 4 of 26 Pageid#: 200 5 28 U.S.C. § 1491(a)(1) .................................................................................................................. 12 28 U.S.C. § 1346(a)(2) ........................................................................................................... passim 7 C.F.R. § 1469 ............................................................................................................................... 3 7 C.F.R. § 1469.23(a)............................................................................................................. passim Other Authorities Food Security Act of 1985, Pub. L. No. 99-198, 99 Stat. 1354 ...................................................... 2 Farm Security and Rural Investment Act of 2002, Pub. L. No. 107-171, 116 Stat. 134 ................ 2 Food, Conservation, and Energy Act of 2008 Pub. L. No. 110-246, 112 Stat. 1651 ..................... 5 69 Fed. Reg. 34,502, Dep't of Agriculture (June 21, 2004) ...................................................... 4, 15 U.S. Gov’t Accountability Office, GAO-06-312, Conservation Security Program: Despite Cost Controls, Improved USDA Management Is Needed to Ensure Proper Payments and Reduce Duplication with Other Programs (2006) ............................................. 3 Case 5:16-cv-00066-MFU Document 21 Filed 01/26/17 Page 5 of 26 Pageid#: 201 6 IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF VIRGINIA HARRISONBURG DIVISION ) MARK R. FLORA ) (on behalf of himself and all others similarly situated), ) ) Plaintiff, ) ) Civil Action Nos. 5:16-CV-00066 v. ) 5:16-CV-00067 ) THE UNITED STATES, ) ) Defendant. ) ) DEFENDANT’S MOTION TO DISMISS Pursuant to Rules 12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure, defendant, the United States, respectfully requests that the Court dismiss the complaints filed by plaintiff Mark R. Flora for lack of subject-matter jurisdiction and for failure to state a claim upon which relief can be granted.1 In addition, we respectfully request that the Court stay our responses to Mr. Flora’s two summary judgment motions and two motions for class certification for 45 days from the date of the Court’s resolution of this motion. In support of this motion, we rely on the complaints filed by Mr. Flora in civil action numbers 16-66 and 16-67 and this brief. STATEMENT OF THE ISSUES (1) Whether Mr. Flora’s underpayment claims in complaint No. 16-66 are barred by the Little Tucker Act’s six-year statute of limitations. 1 The United States is filing this motion in lieu of answers to Mr. Flora’s complaints. Should the Court deny this motion, we respectfully request that the Court provide the Government with 30 days after any such denial to file answers to the complaints. Case 5:16-cv-00066-MFU Document 21 Filed 01/26/17 Page 6 of 26 Pageid#: 202 7 (2) Whether this Court should dismiss complaints No. 16-66 and 16-67 because Mr. Flora has failed to establish that this Court possesses jurisdiction under the Little Tucker Act. (3) Whether this Court should dismiss complaint No. 16-67 because the rule against claim- splitting bars Mr. Flora from litigating his claims in separate lawsuits. STATEMENT OF THE CASE I. Nature of the Case This case is a breach of contract action in which Mr. Flora seeks money damages based on the Government’s alleged violation of two requirements in his Conservation Security Program (CSP) contract. First, in complaint No. 16-66, Mr. Flora argues that the Government breached his CSP contract by paying him in accordance with the contract’s express terms, instead of in accordance with a statutory provision that Mr. Flora asserts is inconsistent with his contract. Second, in complaint No. 16-67, Mr. Flora contends that 2008 amendments to the CSP statute breached his CSP contract by eliminating his purportedly unilateral right to renew his contract. II. Statutory and Regulatory Framework The CSP is a voluntary conservation program that provides Federal financial and technical assistance to help farmers and ranchers adopt, maintain, and improve conservation practices on their land. 16 U.S.C. § 3838a(a). Conservation practices that are eligible for assistance under the CSP include those aimed at conserving water, soil, and energy, as well as practices that restore wildlife habitat, control invasive species, and manage air quality. 16 U.S.C. § 3838a(d)(4). Congress established the CSP in the Farm Security and Rural Investment Act of 2002, Pub. L. No. 107-171, 116 Stat. 134, 223-233, amending the Food Security Act of 1985, Pub. L. No. 99-198, 99 Stat. 1354. The CSP is administered by the Natural Resources Case 5:16-cv-00066-MFU Document 21 Filed 01/26/17 Page 7 of 26 Pageid#: 203 8 Conservation Service (NRCS), an agency within the United States Department of Agriculture (USDA), using the authority and funds of the Commodity Credit Corporation (CCC).2 7 C.F.R. § 1469. To participate in the CSP, a farmer or rancher first submits a conservation security plan to the NRCS for approval. 16 U.S.C. § 3838a(b)(1)(A). A typical conservation security plan: (1) identifies the land and resources that will be conserved under the plan; (2) describes the conservation practices that will be implemented, maintained, or improved; and (3) establishes a schedule for carrying out the required conservation practices. 16 U.S.C. § 3838a(c). If the NRCS approves an applicant’s conservation security plan, the parties enter into a CSP contract. 16 U.S.C. § 3838a(e)(1). Depending on the extent of conservation required, each contract is classified as Tier I, II, or III. See 16 U.S.C. § 3838a(d)(5)(A)-(C). Under the CSP contracts, the NRCS makes annual payments to farmers in exchange for implementation of their plans. See 16 U.S.C. § 3838a(b)(1)(B),(e). Those payments include three components: (1) adjusted base payments; (2) cost-sharing payments; and (3) enhanced payments. 16 U.S.C. § 3838c(b). In general, the adjusted base payments reward farmers and ranchers for conservation efforts already undertaken in the past, whereas the cost-sharing and enhanced payments compensate them for current and future conservation efforts mandated by their respective plans.3 2 The CCC is a Federal corporation within USDA that, among other things, finances conservation programs. 15 U.S.C. §§ 714, 714c(g). 3 See U.S. Gov’t Accountability Office, GAO-06-312, Conservation Security Program: Despite Cost Controls, Improved USDA Management Is Needed to Ensure Proper Payments and Reduce Duplication with Other Programs, at 44 n.59 (2006). Case 5:16-cv-00066-MFU Document 21 Filed 01/26/17 Page 8 of 26 Pageid#: 204 9 This case involves the proper calculation of adjusted base payments. The CSP statute grants the NRCS discretion in determining how to calculate an initial “base payment.” 16 U.S.C. § 3838c(b)(1)(A). Specifically, it provides as follows: (A) A base payment under this paragraph shall be (as determined by the Secretary) — (i) the average national per-acre rental rate for a specific land use during the 2001 crop year; or (ii) another appropriate rate for the 2001 crop year that ensures regional equity. 16 U.S.C. § 3838c(b)(1)(A)(i)-(ii). Under the statute, the adjusted base-payment rate is equal to a specified percentage of the base payment—5 percent for Tier I contracts, 10 percent for Tier II contracts, and 15 percent for Tier III contracts. 16 U.S.C. § 3838c(b)(1)(C)(i), (D)(i), and (E)(i). In June 2004, the NRCS promulgated, through notice-and-comment rulemaking, a regulation that sets forth the agency’s methodology for calculating adjusted base payments. 7 C.F.R. § 1469.23(a); Interim Final Rule with Request for Comments, 69 Fed. Reg. 34,502, (Dep’t of Agriculture, June 21, 2004). Exercising the authority conferred by section 3838c(b)(1)(A)(ii), the agency declined to calculate the “average national per-acre rental rate for a specific land use during the 2001 crop year,” instead choosing to develop “another appropriate rate for the 2001 crop year that ensures regional equity.” 16 U.S.C. § 3838c(b)(1)(A)(i)-(ii). Under the regulation, the NRCS begins its calculation of a base-payment rate by averaging 2001 land rental rates, using data from the Agriculture Foreign Investment Disclosure Act Land Value Survey, the National Agriculture Statistics Service, and the Conservation Reserve Program. 7 C.F.R. § 1469.23(a)(2)(i). The NRCS then makes any necessary adjustments to ensure local and regional consistency and equity, in consultation with NRCS state offices. Id. at § 1469.23(a)(2)(ii)-(iii). Finally, the NRCS applies a reduction factor to the Case 5:16-cv-00066-MFU Document 21 Filed 01/26/17 Page 9 of 26 Pageid#: 205 10 adjusted regional rates, multiplying them by 0.25, 0.50, or 0.75 for Tier I, II, or III contracts, respectively. Id. at § 1469.23(a)(2)(iv). After the NRCS determines an initial base-payment rate under section 1469.23(a), the agency then follows a two-step process to determine the adjusted base payment that an agricultural producer will receive under his contract. First, the NRCS multiplies the number of acres under contract by the base-payment rate. Id. at § 1469.23(a)(3). Second, the NRCS adjusts that amount by the percentages for Tier I, II, and III contracts that are mandated by the CSP statute. See 16 U.S.C. § 3838c(b)(1)(C)(i), (D)(i), and (E)(i). This case also involves the rules governing renewal of CSP contracts. The CSP statute originally allowed for renewals in certain circumstances. See 16 U.S.C. § 3838a(e)(4). As relevant here, section 3838a(e)(4)(A) provides that, “at the option of a producer, the conservation security contract of the producer may be renewed for an additional period of not less than 5 nor more than 10 years.” In 2008, however, Congress passed the Food, Conservation, and Energy Act of 2008 (2008 Farm Bill), Pub. L. No. 110-246, 122 Stat. 1651, which replaced the CSP with the Conservation Stewardship Program. See Tit. II, Subtit. D, 122 Stat. 1768. The 2008 Farm Bill amended Section 3838a to prohibit the NRCS from entering into or renewing CSP contracts after September 30, 2008. 16 U.S.C. § 3838a(g)(1). Congress nonetheless directed the NRCS to satisfy its payment obligations under existing CSP contracts. 16 U.S.C. § 3838a(g)(3). III. Prior Litigation in the United States Court of Federal Claims On September 24, 2010, Kenneth Earman filed a putative class action complaint in the United States Court of Federal Claims under the Tucker Act, 28 U.S.C. § 1491, alleging that the Government breached his CSP contract. Earman v. United States, 114 Fed. Cl. 81 (2013), aff'd, Case 5:16-cv-00066-MFU Document 21 Filed 01/26/17 Page 10 of 26 Pageid#: 206 11 589 F. App’x. 991 (Fed. Cir. 2015), cert denied, 136 S. Ct. 54 (2015). Mr. Earman was represented by the same law firm as Mr. Flora. In his complaint, Mr. Earman asserted, among other things, breach of contract claims that are virtually identical to the ones in Mr. Flora’s complaint. Specifically, in Count Two of his complaint, Mr. Earman alleged that the Government had breached his CSP contract “by paying lower base payments than were required by his contract.” Id. at 100. Mr. Earman did not deny that the Government had paid him the precise amounts he was due under both the express terms of his contract and the methodology set forth in the CSP regulations. Id. Instead, he argued that the payments were insufficient under the terms of the CSP statute itself, which he claimed were incorporated into his contract either expressly or by operation of law. Id. In the alternative, Mr. Earman argued that the methodology set forth in the regulations (and incorporated into the contract) violated the CSP statute, and that the court should reform the contract to mandate a higher payment based on Mr. Earman’s interpretation of the statute. Id. at 104 n.12. In addition, in Count Four of his complaint, Mr. Earman argued that section 3838a(e)(4)(A) of the CSP statute gave him a unilateral right to renew his CSP contract at his sole option. Id. at 110-11. Mr. Earman argued that this alleged statutory right was incorporated into his CSP contract, and that the Government had anticipatorily breached that right when the 2008 Farm Bill amended the CSP to prohibit such renewals. Id.; see 16 U.S.C. § 3838a(g)(1). On December 12, 2013, the Court of Federal Claims granted the Government’s motions to dismiss Count Two and for summary judgment on Count Four. With respect to Count Two, the court rejected Mr. Earman’s contention that the Government had breached his CSP contract by making base payments lower than his contract required. Id. at 100-104. The court noted that “there [was] no dispute that Mr. Earman and similarly situated CSP participants have received Case 5:16-cv-00066-MFU Document 21 Filed 01/26/17 Page 11 of 26 Pageid#: 207 12 payments in accordance with the express terms of their contracts.” Id. at 100. The court held that the CSP statutory provisions addressing the calculation of adjusted base payments, which in Mr. Earman’s view called for payments greater than those specified in the contract itself, had not been incorporated into the CSP contracts, either expressly or by implication. Id. at 100-101. The court explained that, “under binding precedent, this court may not read provisions of the CSP statute into [Mr. Earman’s] contract unless those provisions are expressly incorporated into his contract.” Id. at 103 (citing St. Christopher Assocs., L.P. v. United States, 511 F.3d 1376, 1384 & n.4 (Fed. Cir. 2008), and Texas v. United States, 537 F.2d 466, 471 (Ct. Cl. 1976)). The court concluded that, because “the CSP statute is not incorporated into [Mr. Earman’s] contract,” id., he had “failed to identify a contractual provision which plausibly entitles him to the additional payments he seeks in Count II,” id. at 104. The court also rejected Mr. Earman’s alternative argument, which sought reformation of his CSP contract on the theory that the contract’s calculation of the adjusted base payments was “based on regulations which are contrary to the CSP statute.” Id. at 104 n.12 (incorporating subsequent discussion appearing at id. at 105-106). The court held that it lacked jurisdiction to consider Mr. Earman’s argument because “there is no money-mandating source of law which would allow the court to reach the predicate issue of whether the [NRCS’s] methodology for calculating base payments and adjusted base payments, as expressed in the implementing regulations and in [Mr. Earman’s] contract, violates the CSP statute.” Id. at 104 n.12. In reaching that conclusion, the court relied on its prior decision in Meyers v. United States, 96 Fed. Cl. 34 (2010), appeal dismissed, 420 F. App’x. 967 (Fed. Cir. 2011), which held that the CSP statute does not “constitute a money-mandating source of law that provides a sufficient basis for the exercise of subject matter jurisdiction over plaintiffs’ suit under the Tucker Act.” Id. at 43. Case 5:16-cv-00066-MFU Document 21 Filed 01/26/17 Page 12 of 26 Pageid#: 208 13 With respect to Count Four, the court held that Mr. Earman’s contract did not incorporate the CSP statutory provision authorizing contract renewals, 16 U.S.C. § 3838a(e)(4)(A). 114 Fed. Cl. at 110-112. In reaching this holding, the court rejected Mr. Earman’s argument that his contract should be construed as impliedly incorporating those statutory provisions. Id. at 111- 112. The court acknowledged that, under the “Christian Doctrine,” parties to a government procurement contract are deemed to have incorporated “mandatory contract clauses which express a significant or deeply ingrained strand of public procurement policy.” Id. at 111-112 (quoting Gen. Eng’g & Mach. Works v. O’Keefe, 991 F.2d 775, 779 (Fed. Cir. 1993)). The court found that doctrine inapplicable, however, because “the CSP involves financial assistance agreements, not procurement contracts.” Id. at 112. Finally, the court dismissed Mr. Earman’s class petition as moot because all of his claims had been dismissed. Id. at 113. Mr. Earman appealed, and on January 12, 2015, the United States Court of Appeals for the Federal Circuit affirmed the trial court’s decision in a one-sentence unpublished decision. 589 F. App’x. 991 (2015). Mr. Earman then filed a petition for a writ of certiorari, which the United States Supreme Court denied on October 5, 2015. See 136 S. Ct. 54 (2015). IV. Statement of Facts4 Mr. Flora operates a farm in Grottoes, Virginia. Compl. No. 16-66, at ¶ 1.5 On August 5, 2005, Mr. Flora and the NRCS entered into a five-year tier I CSP contract. Compl. No. 16-66, at ¶ 4. 4 For purposes of this motion only, unless otherwise indicated, the United States accepts as true the factual allegations set forth in the complaint. Should the Court deny this motion, we respectfully reserve the right to contest all factual allegations in the complaint. 5 “Compl.” refers to plaintiff’s complaints filed with the Court in this case. Case 5:16-cv-00066-MFU Document 21 Filed 01/26/17 Page 13 of 26 Pageid#: 209 14 A. Complaint No. 16-66 In complaint No. 16-66, which is a putative class-action complaint filed on behalf of Mr. Flora and all others similarly situated, Mr. Flora alleges that the Government breached his CSP contract by improperly calculating his base payment and existing practice payment rates. See Counts I to III, Compl. No. 16-66, at ¶¶ 62-88. Mr. Flora’s contract provided that he would be paid $330 in base payments and $85 in existing practice payments.6 Compl. No. 16-66, Ex. 1, at 5. He does not dispute that the Government paid him the amounts expressly set forth in his contract. He also does not contend that he signed his contract or accepted the payments under protest or duress. Further, in his complaint, Mr. Flora does not identify any provision of his contract that the Government allegedly breached. Rather, like the claim rejected in Earman v. United States, he argues that the Government breached his contract by setting his payments “at rates significantly lower than were required by the CSP statute.” Compl. No. 16-66, at ¶ 8. Mr. Flora’s complaint does not identify the amount of damages he suffered because of the Government’s alleged underpayments. B. Complaint No. 16-67 In complaint No. 16-67, which is also a putative class-action complaint, Mr. Flora asserts that he had a unilateral right to renew his CSP contract for an additional five to ten years. Compl. No. 16-67, at ¶ 27. Mr. Flora alleges that the Government breached this purported unilateral renewal right when Congress amended the CSP statute in 2008. See Compl. No. 16- 67, at ¶¶ 28-31. Mr. Flora does not identify any provision of his CSP contract that he believes was breached by Congress’ amendment of the CSP statute, and his contract does not contain a 6 He received the payments in five annual installments of $66 and $17, respectively. Id. Case 5:16-cv-00066-MFU Document 21 Filed 01/26/17 Page 14 of 26 Pageid#: 210 15 renewal provision. Instead, like the claim rejected in Earman v. United States, he relies solely on Congress’ statutory amendments for his breach of contract claim. Mr. Flora’s complaint does not identify the amount of damages he suffered because of the Government’s alleged breach of his renewal right. C. Motions for Class Certification and Summary Judgment Mr. Flora has filed two motions for class certification and two motions for summary judgment. In his class certification motions, as well as his complaints, Mr. Flora asserts that the putative classes meet the class-certification requirements in Fed. R. Civ. P. 23. See Mot. for Class Cert., No. 16-66, ECF 3 and Mot. for Class Cert., No 16-67, ECF 3. These assertions are virtually identical in both cases, with the primary difference being that each complaint alleges different breaches of the same contract. Compare Compl. No. 16-66, at ¶¶ 89-120 to Compl. No. 16-67, at ¶¶ 32-63. In his motions for summary judgment, Mr. Flora asks the Court to find that the Government breached his contract by (1) underpaying him and (2) failing to renew his contract. See Pl. Mot. Summ. J., No. 16-66, ECF 6, and Pl. Mot. Summ. J., No. 16-67, ECF 6. SUMMARY OF THE ARGUMENT In complaint No. 16-66, Mr. Flora alleges that the Government breached his CSP contract by unlawfully calculating his base payment and existing practice payment rates. In complaint No. 16-67, he claims that the Government breached his contract by failing to renew its term. This Court does not possess jurisdiction to consider Mr. Flora’s claims. First, his underpayment claims are time-barred because they accrued beyond the Little Tucker Act’s six-year statute limitations. This is true regardless of whether the Court accepts Mr. Flora’s class-action tolling argument. Second, Mr. Flora has failed to establish that this Court possesses jurisdiction under the Little Tucker Act. The Little Tucker Act gives this Court concurrent jurisdiction with the Case 5:16-cv-00066-MFU Document 21 Filed 01/26/17 Page 15 of 26 Pageid#: 211 16 Court of Federal Claims to decide contract claims that do not exceed $10,000. Mr. Flora’s complaint, however, does not identify the amount of damages he is seeking. Because he has not alleged damages of less than $10,000, this Court does not possess jurisdiction to entertain his claims. This Court should also dismiss complaint No. 16-67 for failure to state a claim upon which relief can be granted. The rule against claim-splitting prohibits Mr. Flora from litigating his breach of contract claims in separate lawsuits. Therefore, the Court should dismiss complaint No. 16-67, which alleges a different breach of the same contract at issue in complaint No. 16-66. ARGUMENT I. Standard of Review for a Fed. R. Civ. P. 12(b)(1) Motion to Dismiss Subject matter jurisdiction is a threshold requirement that must be determined at the outset of a case. Evans v. B.F. Perkins Co., 166 F.3d 642, 647 (4th Cir. 1999). When considering a motion to dismiss for lack of subject-matter jurisdiction, the Court will normally consider the facts alleged in the complaint to be true and correct. See Adams v. Bain, 697 F.2d 1213, 1219 (4th Cir. 1982). The plaintiff, however, bears the burden of establishing jurisdiction by a preponderance of the evidence, Combs v. Bakker, 886 F.2d 673, 676 (4th Cir. 1989), and the Court may review evidence extrinsic to the pleadings. Richmond, Fredericksburg & Potomac R. Co. v. United States, 945 F.2d 765, 768 (4th Cir. 1991). “If the court determines at any time that it lacks subject-matter jurisdiction, the court must dismiss the action.” Fed. R. Civ. P. 12(h)(3). II. Standard of Review for a Fed. R. Civ. P. 12(b)(6) Motion to Dismiss A complaint should be dismissed under Fed. R. Civ. P. 12(b)(6) when a plaintiff fails to allege facts that state a plausible claim for relief. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). When considering a motion to dismiss under this rule, “the allegations of the complaint should Case 5:16-cv-00066-MFU Document 21 Filed 01/26/17 Page 16 of 26 Pageid#: 212 17 be construed favorably to the pleader.” Scheuer v. Rhodes, 416 U.S. 232, 236 (1974). “[W]hen the allegations in a complaint, however true, could not raise a claim of entitlement to relief,” dismissal is warranted under FRCP 12(b)(6). Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 558, (2007). To survive a motion to dismiss for failure to state a claim, a complaint must contain “more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Id. at 555. While a complaint is not required to contain detailed factual allegations, it must provide “enough facts to state a claim to relief that is plausible on its face.” Id. at 570. When considering a motion to dismiss under Fed. R. Civ. P. 12(b)(6), the Court “evaluates the complaint in its entirety, as well as documents attached or incorporated into the complaint.” E.I. du Pont de Nemours & Co. v. Kolon Indus., Inc., 637 F.3d 435, 448 (4th Cir. 2011) (citation omitted). III. Mr. Flora’s Underpayment Claims are Barred by the Statute of Limitations A. Mr. Flora’s Claims are Subject to the Tucker Act’s Waiver of Sovereign Immunity The Tucker Act waives sovereign immunity for non-tort based claims for money damages against the United States founded upon: (1) the Constitution; (2) an Act of Congress; (3) a Federal regulation; or (4) an express or implied contract with the United States. 28 U.S.C. § 1491(a)(1). The Tucker Act includes two statutes, which are frequently referred to as the Big Tucker Act and the Little Tucker Act. Under the Big Tucker Act, the United States Court of Federal Claims possesses exclusive jurisdiction over claims seeking more than $10,000 in damages. Id. The Little Tucker Act gives district courts concurrent jurisdiction with the Court of Federal Claims over claims that do not exceed $10,000. See 28 U.S.C. §1346(a)(2); Randall v. United States, 95 F.3d 339, 347 (4th Cir. 1996). Case 5:16-cv-00066-MFU Document 21 Filed 01/26/17 Page 17 of 26 Pageid#: 213 18 The Tucker Act “does not create a substantive cause of action.” Fisher v. United States, 402 F.3d 1167, 1172 (Fed. Cir. 2005) (citing United States v. Mitchell, 463 U.S. 206, 216 (1983) and United States v. Testan, 424 U.S. 392, 398 (1976)). Rather, to establish Tucker Act jurisdiction, “a plaintiff must identify a separate source of substantive law that creates the right to money damages.” Id. Here, Mr. Flora alleges entitlement to money damages based on the Government’s alleged breaches of his CSP contract. B. The Tucker Act’s Six-Year Statute of Limitations Is Jurisdictional In his complaint, Mr. Flora relies on the Little Tucker Act, 28 U.S.C. §1346(a)(2), as the basis for this Court’s jurisdiction. Compl. No. 16-66, at ¶ 9. “Under the Little Tucker Act, ‘every civil action commenced against the United States shall be barred unless the complaint is filed within six years after the right of action first accrues.’” Hoffman v. United States, 266 F. Supp. 2d 27, 40 (D.D.C. 2003) (quoting 28 U.S.C. § 2401(a) (1994)). “The Little Tucker Act's six-year statute of limitations is jurisdictional in nature” and not subject to equitable tolling. See Hoffman v. United States, 266 F. Supp. 2d at 40 (citing Bray v. United States, 785 F.2d 989, 992 (Fed. Cir. 1986) (other citations omitted); see also John R. Sand & Gravel Co. v United States, 552 U.S. 130, 134-136 (2008); Hopland Band of Pomo Indians v. United States, 855 F.2d 1573, 1577, n.3 (Fed. Cir. 1988). C. Mr. Flora’s Underpayment Claims Accrued Beyond the Statute of Limitations Mr. Flora’s underpayment claims are untimely. Generally, a claim accrues when “all the events have occurred which fix the alleged liability of the defendant and entitle the plaintiff to institute an action.” Brown Park Estates-Fairfield Dev. Co. v. United States, 127 F.3d 1449, Case 5:16-cv-00066-MFU Document 21 Filed 01/26/17 Page 18 of 26 Pageid#: 214 19 1455 (Fed. Cir. 1997).7 Thus, a breach of contract claim accrues when a plaintiff “should have known that it had been damaged by the government's breach.” Ariadne Fin. Servs. Pty. Ltd. v. United States, 133 F.3d 874, 878 (Fed. Cir. 1998); see also Brighton Vill. Assocs. v. United States, 52 F.3d 1056, 1060 (Fed. Cir. 1995) (finding a breach of contract claim accrues at the time of the breach) (citation omitted). Although “a claim does not accrue until the claimant has suffered damages,” Terteling v. United States, 334 F.2d 250, 254 (Ct. Cl. 1964), it is “not necessary for purposes of claim accrual that the claimant be able to calculate the precise, final quantum of damages.” Alder Terrace, Inc. v. United States, 161 F.3d 1372, 1377 (Fed. Cir. 1998) (citation omitted). Thus, “the obligation to sue arises once the permanent nature of the government action is evident, regardless of whether damages are complete and fully calculable.” CRV Enterprises, Inc. v. United States, 86 Fed. Cl. 758, 767 (2009) (citing Fallini v. United States, 56 F.3d 1378, 1382 (Fed. Cir. 1995)). Accrual of a claim is “determined under an objective standard,” and a plaintiff does not have to possess actual knowledge of all the relevant facts in order for a cause of action to accrue. FloorPro, Inc. v. United States, 680 F.3d 1377, 1381 (Fed. Cir. 2012) (quoting Fallini, 56 F.3d at 1380). In his complaint, Mr. Flora alleges that the base payment and existing practice payment rates set forth in his contract are lower than the rates he claims were required under the CSP statute. See, e.g., Compl. No. 16-66, at ¶ 6. These underpayment claims accrued on August 5, 2005, when Mr. Flora executed his CSP contract. Compl. No. 16-66, at ¶ 4. As of that date, the permanent nature of the Government’s action was evident, and the two events necessary to fix the Government’s alleged liability had occurred. First, the Government was contractually 7 This motion relies on precedent from the United States Court of Appeals for the Federal Circuit because the Federal Circuit has exclusive jurisdiction over appeals in which any part of a district court’s decision was based on the Little Tucker Act. See 28 U.S.C. § 1295(a)(2). Case 5:16-cv-00066-MFU Document 21 Filed 01/26/17 Page 19 of 26 Pageid#: 215 20 obligated to pay Mr. Flora at the rates provided in his contract. Compl. No. 16-66, Ex. 1, at 5. Second, the Government had calculated these rates using 7 C.F.R. § 1469.23(a), which is part of Mr. Flora’s contract and contains the NRCS’s methodology for calculating base and existing practice payment rates. Section 1769.23, which was promulgated through notice-and-comment rulemaking, implements the statutory provision that Mr. Flora alleges conflicts with his contract. See 69 Fed. Reg. 34,502, Dep’t of Agriculture (June 21, 2004); 16 U.S.C. § 3838c(b)(1)(A). Mr. Flora’s breach of contract argument is that the payment rates in his contract are unlawful because they allegedly conflict with the CSP statute. If that were true, which it is not, his claims accrued at the time of contract formation, when he knew, or should have known, that the payment rates in his contract were inconsistent with his interpretation of the CSP statute. Given that his underpayment claims accrued on August 5, 2005, the six-year statute of limitations period for those claims would have expired on August 5, 2011. In his complaint, however, Mr. Flora asserts that his statute of limitations was tolled during the pendency of the Earman v. United States litigation. Compl. 16-66, at ¶¶ 11-18. That litigation ran from the filing of Mr. Earman’s complaint on September 14, 2010, to the Supreme Court’s denial of his certiorari petition on October 5, 2015. See Compl., Earman v. United States, No. 10-617 (Fed. Cl. 2010), ECF 1; 136 S. Ct. 54 (2015). Thus, assuming Mr. Flora’s tolling argument is correct, his statute of limitations was tolled for five years and 21 days.8 Nevertheless, even accounting for that alleged tolling period, his underpayment claims are still time-barred. Specifically, five years and 41 days elapsed from the date Mr. Flora executed his contract (August 5, 2005) to the 8 In Bright v. United States, 603 F.3d 1273, 1274 (Fed. Cir. 2010), the Court held that “when a class action complaint is filed in the Court of Federal Claims and class certification is sought prior to expiration of the [] limitations period, the limitations period is tolled.” Case 5:16-cv-00066-MFU Document 21 Filed 01/26/17 Page 20 of 26 Pageid#: 216 21 date Mr. Earman filed his complaint (September 14, 2010). Another one year and 7 days elapsed from the date the Supreme Court denied Mr. Earman’s cert petition (October 5, 2015) to the date Mr. Flora filed his complaint in this Court (October 11, 2016). Therefore, this Court does not possess jurisdiction to entertain Mr. Flora’s underpayment claims because he filed his complaint at least 48 days beyond the Little Tucker Act’s six-year statute limitations. D. Mr. Flora’s Claims Are Not Continuing Claims Mr. Flora may argue that his payment claims are not time-barred because they are “continuing claims.” The continuing claim doctrine applies to claims that are “inherently susceptible to being broken down into a series of independent and distinct events or wrongs, each having its own associated damages.” Brown Park Estates–Fairfield Dev. Co. v. United States, 127 F.3d 1449, 1456 (Fed. Cir. 1997). Thus, “the continuing claims doctrine operates to save later arising claims even if the statute of limitations has lapsed for earlier events.” Ariadne Fin. Servs. Pty. Ltd. v. United States, 133 F.3d 874, 878 (Fed. Cir. 1998) (citations omitted). Nevertheless, “a claim based upon a single distinct event, which may have continued ill effects later on, is not a continuing claim.” Brown Park Estates-Fairfield Dev. Co, 127 F.3d at 1456. Mr. Flora’s underpayment claims are not continuing claims. Rather, they are based on a single distinct event; his August 5, 2005 decision to accept $330 in base payments and $85 in existing practice payments. See Compl. No. 16-66, Ex. 1, at 5. We acknowledge that the NRCS did not make these payments to Mr. Flora on August 5, 2005. Instead, he received the payments in five annual installments of $85 and $17, respectively. Id. The fact that he received these payments annually, however, does not render Mr. Flora’s claims continuing. The crux of Mr. Flora’s complaint is that the NRCS breached his contract by unlawfully setting his payment rates too low. As explained above, the NRCS established Mr. Flora’s payment rates using the Case 5:16-cv-00066-MFU Document 21 Filed 01/26/17 Page 21 of 26 Pageid#: 217 22 methodology in 7 C.F.R. § 1469.23(a). These rates did not fluctuate during the contract’s term, and the contract did not require Mr. Flora to provide the Government with goods or services in exchange for each annual payment. Thus, Mr. Flora’s claims are not continuing because there is no significance to the fact that the NRCS paid Mr. Flora in installments instead of one lump-sum payment. See Parkwood Associates Ltd. Partnership v. United States, 97 Fed. Cl. 809, 817 (2011) (finding a plaintiff cannot avoid the statute of limitations “by the simple expediency of making another request for the same performance.”). IV. The Court Should Dismiss Both Complaints Because Mr. Flora has Failed to Allege Facts Demonstrating that this Court Possesses Jurisdiction Over His Claims Mr. Flora’s complaints should be dismissed because he has not established this Court’s jurisdiction by a preponderance of the evidence. See Reynolds v. Army and Air Force Exchange Service, 846 F.2d 746, 748 (Fed. Cir. 1988). To pursue his Little Tucker Act claims in this Court, Mr. Flora’s claims for relief cannot exceed $10,000. 28 U.S.C. § 1346(a)(2); Smith v. Orr, 855 F.2d 1544, 1553 (Fed. Cir. 1988). Alternatively, he can waive his right to recover any damages that exceed $10,000 in order to bring his claims within this Court’s jurisdiction. See Roedler v. Dep’t of Energy, 255 F.3d 1347, 1351 (Fed. Cir. 2001); Randall v. United States, 95 F.3d 339, 347, n.8 (4th Cir. 1996). Neither of his complaints, however, specify the amount of damages that Mr. Flora is seeking from the Government. Further, Mr. Flora has not waived damages above $10,000. Therefore, his complaints should be dismissed because he has failed to establish that this Court possesses jurisdiction under the Little Tucker Act. Id.; see also Bell v. McDonald, No. 14-188, 2015 WL 3463479 (M.D. N.C. 2015) (dismissing Little Tucker Act complaint without prejudice because plaintiff failed to specify damages.). Case 5:16-cv-00066-MFU Document 21 Filed 01/26/17 Page 22 of 26 Pageid#: 218 23 V. The Court Should Dismiss Complaint No. 16-67 to Prevent Claim-Splitting The Court should dismiss complaint No. 16-67 for failure to state a claim upon which relief can be granted because the rule against claim-splitting prohibits Mr. Flora from litigating his breach of contract claims in separate lawsuits. See Lee v. Norfolk Southern Ry. Co., 802 F.3d 626, 635 (4th Cir. 2015). The rule against claim-splitting falls under the res judicata doctrine, and it bars a second suit that “involves the same parties or their privies and ‘arises out of the same transaction or series of transactions’ as the first claim.” Sensormatic Sec. Corp. v. Sensormatic Electronics Corp., 452 F. Supp. 2d 621, 626 (D. MD 2006), aff'd in relevant part, 273 F. App’x. 256, 264-66 (4th Cir. 2008) (quoting Trustmark Insur. Co. v. ESLU, Inc., 299 F.3d 1265, 1269–70 (11th Cir. 2002). The purpose of the rule is to ensure judicial economy and prevent “vexatious and expensive legation.” Curtis v. Citibank, N.A., 226 F.3d 133, 138 (2nd Cir. 2000). With regards to breach of contract claims, courts have repeatedly “held that a party may not pursue, in separate lawsuits, breach-of-contract claims against the same party arising out of the same contract.” Sensormatic, 452 F. Supp. 2d at 626 (citing Trustmark Insur., 299 F.3d at 1269-70); see also Prime Mgmt. Co., Inc. v. Steinegger, 904 F.2d 811, 815-16 (2nd Cir. 1990); Smith v. Safeco Inc. Co., 863 F.2d 403, 404 (5th Cir. 1989); Curtis, 226 F.3d at 138-39. Here, Mr. Flora filed dual lawsuits in this Court alleging that the Government committed different breaches of the same contract. Given the unfavorable precedent in Earman v. United States, 114 Fed. Cl. 81 (2013), aff'd, 589 F. App’x. 991 (Fed. Cir. 2015), cert denied, 136 S. Ct. 54 (2015), it appears as though Mr. Flora may have split his claims in an attempt to avoid the Court of Federal Claims’ exclusive jurisdiction to address claims above $10,000. Regardless of why Mr. Flora split his claims, however, the rule against claim-splitting prohibits him from Case 5:16-cv-00066-MFU Document 21 Filed 01/26/17 Page 23 of 26 Pageid#: 219 24 pursuing his contract claims in separate lawsuits. Therefore, the Court should dismiss complaint two. VI. The Court Should Stay Our Responses to Mr. Flora’s Motions for Summary Judgment and Class Certification Pending Resolution of this Motion If the Court grants our motion to dismiss, it will not need to reach Mr. Flora’s two motions for class certification and two motions summary judgment. Accordingly, we respectfully request that the Court stay the Government’s responses to those motions for 45 days from the date of the Court’s resolution of this motion. CONCLUSION For these reasons, we respectfully request that the Court grant our motion to dismiss Mr. Flora’s complaints. Respectfully submitted, JOYCE R. BRANDA Acting Assistant Attorney General RICK A. MOUNTCASTLE Acting United States Attorney ROBERT E. KIRSCHMAN, JR. Director /s/ Franklin E. White, Jr. For KENNETH M. DINTZER Deputy Director OF COUNSEL: /s/ Joshua D. Schnell Jess R. Phelps JOSHUA D. SCHNELL Attorney Trial Attorney U.S. Department of Agriculture Virginia State Bar No. 78165 Office of the General Counsel Commercial Litigation Branch Civil Division United States Department of Justice PO Box 480 Washington, D.C. 20044 Telephone: (202) 616-0383 Case 5:16-cv-00066-MFU Document 21 Filed 01/26/17 Page 24 of 26 Pageid#: 220 25 Facsimile: (202) 307-0972 joshua.d.schnell@usdoj.gov /s/ Joseph W. H. Mott Joseph W. H. Mott Assistant United States Attorney Virginia State Bar No. 21852 P. O. Box 1709 Roanoke, VA 24008-1709 Telephone: (540) 857-2250 Facsimile: (540) 857-2283 joseph.mott@usdoj.gov January 26, 2017 Attorneys for Defendant Case 5:16-cv-00066-MFU Document 21 Filed 01/26/17 Page 25 of 26 Pageid#: 221 26 CERTIFICATE OF SERVICE I hereby certify that on January 26, 2017, I caused the foregoing Defendant’s Motion to Dismiss to be filed using the Court’s CM/ECF system, which will provide electronic notice to all counsel of record. /s/ Joseph W. H. Mott Joseph W. H. Mott Assistant United States Attorney Case 5:16-cv-00066-MFU Document 21 Filed 01/26/17 Page 26 of 26 Pageid#: 222