Flora v. The United States

MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM , AND FOR A STAY

W.D. Va.February 23, 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 AMENDED COMPLAINT NUMBER 16-67, AND TO STAY CIVIL ACTION NUMBER 16-66 CHAD A. READLER Acting Assistant Attorney General RICK A. MOUNTCASTLE Acting United States Attorney ROBERT E. KIRSCHMAN, JR. Director KENNETH M. DINTZER Deputy Director JOSEPH H.W. MOTT JOSHUA D. SCHNELL Assistant United States Attorney Trial Attorney Virginia State Bar No. 21852 Virginia State Bar No. 78165 P.O. Box 1709 Commercial Litigation Branch Roanoke, VA 24008-1709 Civil Division Telephone: (540) 857-2250 United States Department of Justice Facsimile: (540) 857-2283 P.O. Box 480 joseph.mott@usdoj.gov Washington, D.C. 20044 Telephone: (202) 616-0383 OF COUNSEL: Facsimile: (202) 307-0972 JESS R. PHELPS joshua.d.schnell@usdoj.gov Attorney U.S. Department of Agriculture February 23, 2017 Attorneys for Defendant Case 5:16-cv-00066-MFU Document 29 Filed 02/23/17 Page 1 of 53 Pageid#: 285 TABLE OF CONTENTS Page TABLE OF AUTHORITIES ........................................................................................................... i STATEMENT OF THE ISSUES.................................................................................................... 1 STATEMENT OF THE CASE ....................................................................................................... 2 I. Nature of the Case ................................................................................................... 2 II. Statutory and Regulatory Framework ..................................................................... 2 III. Prior Litigation in the United States Court of Federal Claims................................ 5 IV. Statement of Facts ................................................................................................... 8 A. Amended Complaint No. 16-66 .................................................................. 9 B. Amended Complaint No. 16-67 .................................................................. 9 C. Motions for Class Certification and Summary Judgment ......................... 10 D. The Government’s Motion to Dismiss The Initial Complaints ................ 10 V. Current Litigation in the United States Court of Federal Claims ......................... 12 SUMMARY OF THE ARGUMENT ........................................................................................... 13 ARGUMENT ................................................................................................................................ 13 I. Standard of Review for a Fed. R. Civ. P. 12(b)(6) Motion to Dismiss................. 13 II. The Court Should Dismiss Complaint No. 16-67 Because The Rule Against Claim-Splitting Prohibits Mr. Flora From Litigating His Claims in Separate Lawsuits ................................................................................................................ 14 III. The Court Should Stay Civil Action Number 16-66 Pending Resolution of J.M. Fogg Farms Et Al. v. United States .............................................................. 16 CONCLUSION ............................................................................................................................. 18 Case 5:16-cv-00066-MFU Document 29 Filed 02/23/17 Page 2 of 53 Pageid#: 286 i TABLE OF AUTHORITIES Page Cases Ashcroft v. Iqbal, 556 U.S. 662 (2009) .................................................................................................................. 13 Bell Atlantic Corp. v. Twombly, 550 U.S. 544, (2007) ................................................................................................................. 14 Cooper v. Federal Reserve Bank of Richmond, 467 U.S. 867 (1984) .................................................................................................................. 15 Curtis v. Citibank, N.A., 226 F.3d 133 (2nd Cir. 2000).................................................................................................... 15 Earman v. United States, 114 Fed. Cl. 81 (2013) .................................................................................................. 5, 7, 8, 17 E.I. du Pont de Nemours & Co. v. Kolon Indus., Inc., 637 F.3d 435 (4th Cir. 2011) .................................................................................................... 14 Gen. Eng’g & Mach. Works v. O’Keefe, 991 F.2d 775 (Fed. Cir. 1993)..................................................................................................... 8 Goff v. Menke, 672 F.2d 702 (8th Cir. 1982) .................................................................................................... 17 Groseclose v. Dutton 829 F.2d 581 (6th Cir. 1987) .................................................................................................... 16 Gunnells v. Healthplan Services, Inc., 348 F.3d 417 (4th Cir. 2008) .................................................................................................... 16 Lee v. Norfolk Southern Ry. Co., 802 F.3d 626 (4th Cir. 2015) .................................................................................................... 14 Meyers v. United States, 96 Fed. Cl. 34 (2010) ............................................................................................................ 7, 17 Prime Mgmt. Co., Inc. v. Steinegger, 904 F.2d 811 (2nd Cir. 1990).................................................................................................... 15 Scheuer v. Rhodes, 416 U.S. 232 (1974) .................................................................................................................. 14 Case 5:16-cv-00066-MFU Document 29 Filed 02/23/17 Page 3 of 53 Pageid#: 287 ii Sensormatic Sec. Corp. v. Sensormatic Electronics Corp., 452 F. Supp. 2d 621 (D. MD 2006) .............................................................................. 11, 14, 15 Smith v. Safeco Inc. Co., 863 F.2d 403 (5th Cir. 1989) .................................................................................................... 15 St. Christopher Assocs., L.P. v. United States, 511 F.3d 1376 (Fed. Cir. 2008)................................................................................................... 7 Talbott v. GC Services Ltd. P'ship, 191 F.R.D. 99 (W.D. Va. 2000) ................................................................................................ 16 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) .......................................................................................... 14, 15 Statutes 15 U.S.C. § 714 ............................................................................................................................... 3 15 U.S.C. § 714c ............................................................................................................................. 3 16 U.S.C. § 3838a .................................................................................................................. passim 16 U.S.C. § 3838c ................................................................................................................... 3, 4, 5 28 U.S.C. § 1346 ........................................................................................................................... 11 28 U.S.C. § 1491 ............................................................................................................................. 5 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, 122 Stat. 1651 .......................................................................................... 5 Food Security Act of 1985, Pub. L. No. 99-198, 99 Stat. 1354 .............................................................................................. 2 Rules Fed. R. Civ. P. 12 .......................................................................................................................... 13 Fed. R. Civ. P. 15 .......................................................................................................................... 11 Fed. R. Civ. P. 23 .................................................................................................................... 10, 16 Case 5:16-cv-00066-MFU Document 29 Filed 02/23/17 Page 4 of 53 Pageid#: 288 iii Regulations 7 C.F.R. § 1469.2 ............................................................................................................................ 3 7 C.F.R. § 1469.23 ...................................................................................................................... 4, 5 Interim Final Rule with Request for Comments, 69 Fed. Reg. 34,502 (Dep’t of Agriculture June 21, 2004) ........................................................ 4 Other Authorities James Wm. Moore et al., Moore's Federal Practice § 23.02 (3d ed.1999) ................................... 16 Case 5:16-cv-00066-MFU Document 29 Filed 02/23/17 Page 5 of 53 Pageid#: 289 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 AMENDED COMPLAINT NUMBER 16-67, AND TO STAY CIVIL ACTION NUMBER 16-66 Pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, defendant, the United States, respectfully requests that the Court dismiss the amended complaint filed by plaintiff Mark R. Flora in civil action number 16-67 for failure to state a claim upon which relief can be granted. In addition, we respectfully request that the Court stay civil action number 16-66 pending resolution of J.M. Fogg Farms et al. v. United States (Fed. Cl. No. 17-188C), a case with identical legal issues that is pending in the United States Court of Federal Claims.1 In support of this motion, we rely on the amended complaints in civil action numbers 16-66 and 16- 67, the complaint in Fogg Farms, and this brief. STATEMENT OF THE ISSUES (1) Whether this Court should dismiss amended complaint No. 16-67 because the rule against claim- splitting bars Mr. Flora from litigating his claims in separate lawsuits. 1 The United States is filing this motion in lieu of answers to Mr. Flora’s amended 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 29 Filed 02/23/17 Page 6 of 53 Pageid#: 290 2 (2) Whether this Court should stay civil action number 16-66 pending resolution of J.M. Fogg Farms et al. v. United States, a case with identical legal issues that is pending in the United States Court of Federal Claims. 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 amended 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 amended 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 Conservation Service (NRCS), an agency within the United States Department of Agriculture Case 5:16-cv-00066-MFU Document 29 Filed 02/23/17 Page 7 of 53 Pageid#: 291 3 (USDA), using the authority and funds of the Commodity Credit Corporation (CCC).2 7 C.F.R. § 1469.2. 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 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: 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 29 Filed 02/23/17 Page 8 of 53 Pageid#: 292 4 (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 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). Case 5:16-cv-00066-MFU Document 29 Filed 02/23/17 Page 9 of 53 Pageid#: 293 5 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, 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. Case 5:16-cv-00066-MFU Document 29 Filed 02/23/17 Page 10 of 53 Pageid#: 294 6 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 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 Case 5:16-cv-00066-MFU Document 29 Filed 02/23/17 Page 11 of 53 Pageid#: 295 7 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. 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. Case 5:16-cv-00066-MFU Document 29 Filed 02/23/17 Page 12 of 53 Pageid#: 296 8 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. (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. Am. Compl. No. 16-66, at ¶ 1; Am. Compl. No. 16-67 at ¶ 1.5 On August 5, 2005, Mr. Flora and the NRCS entered into a five-year tier I CSP contract. Am. Compl. No. 16-66, at ¶ 4; Am. Compl. No. 16-67, 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 29 Filed 02/23/17 Page 13 of 53 Pageid#: 297 9 A. Amended Complaint No. 16-66 In amended 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, Am. 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.” Am. Compl. No. 16-66, at ¶ 8. Mr. Flora alleges entitlement to $3,207 for the alleged underpayments. Am. Comp. No. 16-66, at ¶ 108. B. Amended Complaint No. 16-67 In amended 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. Am. 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 Am. 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 renewal provision. Instead, like the claim rejected in Earman v. United States, he 6 He received the payments in five annual installments of $66 and $17, respectively. Id. Case 5:16-cv-00066-MFU Document 29 Filed 02/23/17 Page 14 of 53 Pageid#: 298 10 relies solely on Congress’ statutory amendments for his breach of contract claim. Mr. Flora alleges entitlement to $6,164 for the alleged failure to renew his contract. Am. Compl. No. 16- 67, at ¶ 52. 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, and 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 Am. Compl. No. 16-66, at ¶¶ 89-120 to Am. Compl. No. 16-67, at ¶¶ 32-64. 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. No. 16-66, ECF 6, and Pl. Mot. No. 16-67, ECF 6. D. The Government’s Motion to Dismiss the Initial Complaints On January 26, 2017, the Government filed a motion to dismiss Mr. Flora’s complaints for lack of jurisdiction and failure to state a claim upon which relief can be granted. See Def. Mot. to Dismiss, ECF 21.7 First, we established that the Court did not possess jurisdiction to entertain complaint no. 16-66 because Mr. Flora’s underpayment claims are barred by the Tucker Act’s six-year statute of limitations. Id. at 17-22. 7 We filed identical motions to dismiss in civil action numbers 16-66 and 16-67. Case 5:16-cv-00066-MFU Document 29 Filed 02/23/17 Page 15 of 53 Pageid#: 299 11 Second, we demonstrated that the Court should dismiss both complaints because Mr. Flora had failed to allege damages of less than $10,000, which is necessary for this Court to exercise jurisdiction under the Little Tucker Act, 28 U.S.C. § 1346(a)(2). Id. at 22.8 Third, we established that 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. Def. Mot. to Dismiss at 23; see, e.g., 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) (“a party may not pursue, in separate lawsuits, breach-of-contract claims against the same party arising out of the same contract.”). On February 9, 2017, Mr. Flora filed separate responses to our motion to dismiss.9 See Pl. Opp. No. 16-66, ECF 27; Pl. Opp. No. 16-67, ECF 27. In addition, immediately after filing his opposition briefs, he filed amended complaints in both cases. See Am. Compl. No. 16-66, ECF 28; Am. Compl. No. 16-67, ECF 28. We did not reply to Mr. Flora’s opposition briefs because the amended complaints mooted our motion to dismiss. See Fed. R. Civ. P. 15(a)(1)(b). 8 Although the amended complaints now allege damages of less than $10,000, we reserve our right to challenge jurisdiction in the event that Mr. Flora later claims entitlement to damages that exceed $10,000. 9 In his response, Mr. Flora raised a number of factual defenses related to the statute of limitations. See Pl. Opp. No. 16-66 at 2-5; 10-12. Although at least some of these factual defenses go beyond the complaint, we recognize that there appears to be a factual dispute regarding accrual of the statute of limitations. Accordingly, we elected not to renew our motion to dismiss the underpayment claims as time-barred, but we reserve our right to assert the statute of limitations as an affirmative defense. Case 5:16-cv-00066-MFU Document 29 Filed 02/23/17 Page 16 of 53 Pageid#: 300 12 V. Current Litigation in the United States Court of Federal Claims On February 8, 2017, the same law firm that represents Mr. Flora, and represented Mr. Earman, filed a putative class-action complaint in J.M. Fogg Farms et al. v. United States, Fed. Cl. No. 17-188C. The complaint in Fogg Farms is essentially identical to Mr. Flora’s amended complaint in civil action number 16-66. Compare Am. Compl. No. 16-66 with Fogg Farms Compl., App1-28.10 Specifically, both Mr. Flora and Fogg Farms argue that the Government breached their CSP contracts by paying them in accordance with their contracts’ express terms, instead of in accordance with the statutory provision that they both assert is inconsistent with their contracts. Compare Am. Comp. No. 16-66, at ¶¶ 8; 62-88 with Fogg Farm Compl., at ¶¶ 12; 65-91. The complaints identically provide as follows: “All members of the yet-to-be- certified class present the same legal questions, which relate to whether defendant is liable to them for failing to make full payments to which they were entitled, i.e., because they were not paid at the rates provided for in the statute and their CSP contracts.” Compare Am. Comp. No. 16-66, at ¶ 103 with Foggs Farm Compl., at ¶ 105. In addition, both complaints assert that they present identical “core legal questions.” Compare Am. Comp. No. 16-66, at ¶ 100 with Fogg Farms Compl., at ¶ 102. These identical legal questions are identified as follows: (1) Whether defendant is liable to members of the yet-to-be- certified class as a result of its failure to make payments in and after FY 2004 computed using the minimum rates specified by statute; and (2) In the alternative, whether defendant is liable to members of the yet-to-be-certified class as a result of its failure to make full payments in and after FY 2007 computed using the minimum rates specified by statute because NRCS continued to apply a rate reduction factor during a time when (a) NRCS was no longer subject to any annual spending limit for CSP, (b) NRCS spent nowhere near the amount which Congress had 10 “App__” refers to a page of the appendix attached to this motion. Case 5:16-cv-00066-MFU Document 29 Filed 02/23/17 Page 17 of 53 Pageid#: 301 13 given it the ability to spend on the CSP from FY 2006 through FY 2010, and (c) after May 22, 2008 was no longer subject to any multi-year suspending limit. Compare Am. Comp. No. 16-66, at ¶ 100 with Fogg Farms Compl., at ¶ 102. Further, both complaints contend that “[t]he only individual ‘factual’ issue is how much each member of the yet-to-be certified class was entitled to receive.” Compare Am. Comp. No. 16-66, at ¶ 104 with Fogg Farms Compl., at ¶ 106. In fact, the only meaningful distinction between the two complaints is that Mr. Flora and his putative class seek damages of less than $10,000 while Fogg Farms and its putative class seek damages greater than $10,000. Compare Am. Compl. No. 16- 66, at ¶¶ 91; 108 with Fogg Farms Compl., at ¶¶ 94; 110. SUMMARY OF THE ARGUMENT This Court should 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. In addition, this Court should stay civil action number 16-66 pending resolution of J.M. Fogg Farms et al. v. United States (Fed. Cl. No. 17-188C), a case with identical legal issues that is pending in the United States Court of Federal Claims. This stay will preserve judicial efficiency and integrity by avoiding competing class-action lawsuits on identical issues. ARGUMENT I. 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 29 Filed 02/23/17 Page 18 of 53 Pageid#: 302 14 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 Rule 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). II. The Court Should Dismiss Complaint No. 16-67 Because The Rule Against Claim-Splitting Prohibits Mr. Flora From Litigating His Claims in Separate Lawsuits The Court should dismiss amended 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 litigation.” 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 Case 5:16-cv-00066-MFU Document 29 Filed 02/23/17 Page 19 of 53 Pageid#: 303 15 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. The rule against claim-splitting, however, prohibits him from pursuing his contract claims in separate lawsuits. Therefore, the Court should dismiss amended complaint No. 16-67. Nevertheless, in his opposition to our motion to dismiss initial complaint No. 16-67, Mr. Flora argues that the Court should allow him to pursue his breach of contract claims in separate cases because, if the Court were to certify classes in each case, those classes might not have the same members. See Pl. Opp. at 5-7, ECF 27. Mr. Flora does not cite any precedent for this argument. In addition, absent class certification, he is the only party in the two cases. Further, although the Supreme Court has established a limited class-action exception to the rule against claim-splitting, that exception does not apply to Mr. Flora. In Cooper v. Federal Reserve Bank of Richmond, the Supreme Court held that, although res judicata precludes class members from re-litigating claims that were litigated and resolved in a class action, the rule against claim- splitting does not prohibit those class members from bringing a subsequent action with individual claims that were not part of the class action. 467 U.S. 867, 879-880 (1984). Here, Mr. Flora is not faced with a situation where the Court has resolved only some of his breach of contract claims through a class action. Rather, he is asserting different breaches of the same contract in separate lawsuits, which is prohibited by the rule against claim-splitting.11 11 In his opposition, Mr. Flora also asserts that, if the rule against claim-splitting prohibits him from separately litigating his claims, the Court should consolidate the cases rather than dismissing complaint No. 16-67. Pl. Opp. at 7 n.8. Although we maintain that the proper Case 5:16-cv-00066-MFU Document 29 Filed 02/23/17 Page 20 of 53 Pageid#: 304 16 III. The Court Should Stay Civil Action Number 16-66 Pending Resolution of J.M. Fogg Farms Et Al. v. United States The Court should stay civil action number 16-66 to preserve judicial economy, efficiency, and integrity by avoiding competing class-action lawsuits on identical issues in this Court and the Court of Federal Claims. Class-action lawsuits are a unique procedural device that allow a single plaintiff to pursue claims on behalf of thousands of individuals. See Fed. R. Civ. P. 23. “In addition to promoting judicial economy and efficiency, class actions also ‘afford aggrieved persons a remedy if it is not economically feasible to obtain relief through the traditional framework of multiple individual damage actions.’” Gunnells v. Healthplan Services, Inc., 348 F.3d 417, 424 (4th Cir. 2008) (quoting James Wm. Moore et al., Moore's Federal Practice § 23.02 (3d ed.1999)). “Efficiency is the primary focus to determine if a class action is the superior method to resolve a controversy, and the court looks to judicial integrity, convenience, and economy.” Talbott v. GC Services Ltd. P'ship, 191 F.R.D. 99, 106 (W.D. Va. 2000) (internal citation omitted). Here, allowing the dueling class actions filed by Mr. Flora and Fogg Farms to proceed at the same time would not promote judicial economy, efficiency, integrity, or convenience. Rather, allowing these class-actions to proceed concurrently would require this Court, the Court of Federal Claims, and the litigants to conduct simultaneous proceedings towards resolution of the same dispute. Accordingly, we respectfully submit that the better course of action, in the interest of judicial economy and efficiency, is to stay Mr. Flora’s case pending resolution of Fogg Farms. See, e.g., Groseclose v. Dutton, 829 F.2d 581, 584 (6th Cir. 1987) (citing Goff v. remedy is dismissal without prejudice, the Court has discretion to “stay the second suit, dismiss it without prejudice, enjoin the parties from proceeding with it, or consolidate the two actions.” Curtis v. Citibank, N.A., 226 F.3d 133, 139 (2nd Cir. 2000) (citations omitted). Case 5:16-cv-00066-MFU Document 29 Filed 02/23/17 Page 21 of 53 Pageid#: 305 17 Menke, 672 F.2d 702, 705 (8th Cir. 1982) (finding that dueling class actions risk creating an “‘inefficient’ situation, fraught with potential for inconsistency, confusion, and unnecessary expense.”). The stay will allow this Court to take advantage of the Court of Federal Claims’ expertise with Tucker Act claims generally, and CSP contract claims specifically. See 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); Meyers v. United States, 96 Fed. Cl. 34, 60 (2010), appeal dismissed, 420 F. App’x. 967 (Fed. Cir. 2011) (holding that the CSP statute is not a money-mandating source of law that creates Tucker Act jurisdiction.). We anticipate that Mr. Flora may argue that he would be prejudiced by a stay. Such an argument is without merit. As explained above, the only meaningful difference between Mr. Flora’s case and Fogg Farms is the amount of damages at issue. Mr. Flora and his putative class allege damages of less than $10,000 and Fogg Farms and its putative class allege damages that exceed $10,000. Compare Am. Compl. No. 16-66, at ¶ 108 with Fogg Farms Compl., at ¶ 110. Therefore, if Mr. Flora believes he will be prejudiced by a stay, he can litigate his case in the Court of Federal Claims.12 On the other hand, Fogg Farms cannot litigate its case in this Court because its alleged damages exceed the Little Tucker Act’s $10,000 jurisdictional limit. Further, given that Mr. Flora and Fogg Farms are represented by the same law firm, the putative class in Fogg Farms could be amended to include all CSP contract holders, not just those whose damages exceed $10,000. For example, the putative class in Earman v. United States included all CSP contract holders, not just those whose damages were within a certain amount. 12 In order to file suit in the Court of Federal Claims, Mr. Flora would first need to dismiss his complaints in this Court. See 28 U.S.C. § 1500. Case 5:16-cv-00066-MFU Document 29 Filed 02/23/17 Page 22 of 53 Pageid#: 306 18 CONCLUSION For these reasons, we respectfully request that the Court grant our motion to dismiss amended complaint No. 16-67 and stay civil action number 16-66. Respectfully submitted, CHAD A. READLER 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 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 P.O. Box 480 Washington, D.C. 20044 Telephone: (202) 616-0383 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 February 23, 2017 Attorneys for Defendant Case 5:16-cv-00066-MFU Document 29 Filed 02/23/17 Page 23 of 53 Pageid#: 307 19 CERTIFICATE OF SERVICE I hereby certify that on February 23, 2017, I caused the foregoing Motion to Dismiss Amended Complaint No. 16-67, and to Stay Civil Action Number 116-66 to be filed using the Court’s CM/ECF system, which will provide electronic notice to all counsel of record. /s/ Joshua D. Schnell Joshua D. Schnell Trial Attorney Case 5:16-cv-00066-MFU Document 29 Filed 02/23/17 Page 24 of 53 Pageid#: 308 20 APPENDIX TABLE OF CONTENTS Complaint, J.M. Fogg Farms et al. v. United States, Fed. Cl. No. 17-188C…………………App1 Case 5:16-cv-00066-MFU Document 29 Filed 02/23/17 Page 25 of 53 Pageid#: 309 IN THE UNITED STATES COURT OF FEDERAL CLAIMS ) J.M. FOGG FARMS, INC.; ) RICHARD M. SCHOOLS, JR.; AND ) TIMOTHY SELF (on behalf of themselves ) and all others similarly situated), ) ) Plaintiffs, ) ) v. ) Civil Action No. _____ ) THE UNITED STATES, ) ) Defendant. ) ) COMPLAINT J.M. Fogg Farms, Inc., Richard M. Schools, Jr., Timothy Self, and all other similarly situated members of a yet-to-be-certified class as specifically defined in ¶ 92 below, by and through undersigned counsel, hereby file this Complaint seeking damages against the United States as follows: THE PARTIES 1. Named Plaintiff J.M. Fogg Farms, Inc. is now and at times relevant to this Complaint, a farm located at 8299 Newton Road, Saint Stephens Church, VA 23148. 2. Named Plaintiff Richard M. Schools, Jr. is now and at all times relevant to this Complaint, a resident of Saint Stephens Church, VA, residing at 8299 Newton Road, Saint Stephens Church, VA 23148 where he operates a farm. Receipt number 9998-3781144 FEB 8 2017 17-188 C Case 1:17-cv-00188-TCW Document 1 Filed 02/08/17 Page 1 of 28 App1Case 5:16-cv-00066-MFU Document 29 Filed 02/23/17 Page 26 of 53 Pageid#: 310 3. Named Plaintiff Timothy Self is now and at all times relevant to this Complaint, a resident of Callao, VA 22435, residing at 1300 Ridge Road, Callao VA 22435 where he operates a farm. 4. Named Plaintiffs and all other members of a yet-to-be-certified class are the owners and/or operators of farms and ranches located in all 50 states, the Caribbean area and the Pacific Basin area, and are or were participants in the Conservation Security Program (“CSP”), a program created by Congress in 2002 and administered by the Natural Resources Conservation Service (“NRCS”), a division of the Department of Agriculture. 5. Named Plaintiffs and all other members of a yet-to-be-certified class entered into CSP contracts with defendant, acting through the Department of Agriculture. 6. J.M. Fogg Farms, Inc. of Saint Stephens Church, Virginia entered into a Tier II CSP contract on August 2, 2005. Ex. 1 hereto. The contract was for a base term of five years. 7. Richard M. Schools, Jr. entered into a Tier II CSP contract regarding his farm in Saint Stephens Church, Virginia on August 2, 2005. Ex. 2 hereto. The contract was for a base term of five years. 8. Timothy Self entered into a Tier I CSP contract regarding his farm in Callao, Virginia on September 21, 2005. Ex. 3 hereto. The contract was for a base term of five years. 9. All other members of a yet-to-be-certified class entered into their CSP contracts between 2004 and 2008. 10. The purpose of the CSP was to make payments to farmers and ranchers (“producers”) who entered into CSP contracts and agreed therein to perform various conservation practices. Case 1:17-cv-00188-TCW Document 1 Filed 02/08/17 Page 2 of 28 App2Case 5:16-cv-00066-MFU Document 29 Filed 02/23/17 Page 27 of 53 Pageid#: 311 11. As participants in the CSP, Named Plaintiffs and all members of the yet-to-be- certified class have, in fact, entered into CSP contracts, performed various conservation practices and have received payments relating thereto. 12. As described below, said payments were, however, made at rates significantly lower than were required by the CSP statute. JURISDICTION AND VENUE 13. This Court has jurisdiction pursuant to 28 U.S.C. § 1491. 14. This action is not barred by 28 U.S.C. § 2401(a). 15. In this regard, on September 15, 2010, a case was filed in the United States Court of Federal Claims entitled John Doe v. United States, No. 10-617C, alleging in part that defendant had denied Doe his contractual right to payment at rates required by the CSP statute. 16. On September 30, 2010, Doe moved to have the matter certified as a class action describing the class as follows: All farmers and ranchers (“producers”) that were at any time enrolled in the Conservation Security Program (“CSP”) as set forth in 16 U.S.C. §§ 3838a, et seq. 17. In Doe (sub. nom. Earman v. United States), the class, of which Named Plaintiffs and all members of the yet-to-be-certified class in this matter were some, but not all, of the members, was never certified. Rather, by decision of December 12, 2013, the trial judge granted defendant’s motion to dismiss and motion for summary judgment and denied plaintiffs’ motion for class certification as moot. 114 Fed. Cl. 81 (2013). Case 1:17-cv-00188-TCW Document 1 Filed 02/08/17 Page 3 of 28 App3Case 5:16-cv-00066-MFU Document 29 Filed 02/23/17 Page 28 of 53 Pageid#: 312 18. On January 12, 2015, the Court of Appeals for the Federal Circuit issued a non- precedential affirmance without opinion under Rule 36 of the Federal Circuit Rules of Practice. Earman v. United States, 589 F. App’x 991 (Fed. Cir. 2015). 19. Earman’s petition for certiorari was denied by the Supreme Court on October 5, 2015. Earman v. United States, 136 S.Ct. 54 (2015). 20. In American Pipe & Construction Co. v. Utah, 414 U.S. 538 (1974), the Supreme Court adopted the principle of “class action tolling.” The Court noted that under the Federal Rules of Civil Procedure, a class action complaint effectively begins the lawsuit and stops the running of the statute of limitations for all putative class members with respect to the asserted cause of action. Because it is unknowable at the time a class action is filed whether the class will be certified, the Court held that the statute of limitations is tolled during the pendency of a class action litigation when class certification is sought prior to the expiration of the limitations period. The Court held that the benefit of that suspension accrues not only to the named parties, but also to “all asserted members of the class who would have been parties had the suit been permitted to continue as a class action.” Id.; see also Crown, Cork & Seal Co. v. Parker, 462 U.S. 345, 353- 54 (1983). 21. Such being the case, the running of the statute of limitations for all members of the yet-to-be-certified class with respect to the asserted cause of action was tolled. BACKGROUND 22. In May 2002, Congress enacted P.L. 107-171, commonly known as the 2002 Farm Bill, herein referred to as “2002 Farm Bill” or “the statute.” Case 1:17-cv-00188-TCW Document 1 Filed 02/08/17 Page 4 of 28 App4Case 5:16-cv-00066-MFU Document 29 Filed 02/23/17 Page 29 of 53 Pageid#: 313 23. Section 2001 of P.L. 107-171 amended Subtitle D of Title XII of the Food Security Act of 1985, 16 U.S.C. § 3830 et seq., by inserting after Chapter 1 thereof provisions creating a program known as the Conservation Security Program. 16 U.S.C. § 3838a, et seq. 24. Section 3838a(a), as enacted, provided in pertinent part that: [t]he Secretary [of Agriculture] shall establish and, for each of fiscal years 2003 through 2007, carry out a conservation security program to assist producers of agricultural operations in promoting . . . conservation and improvement of the quality of soil, water, air, energy, plant and animal life, and any other conservation purposes, as determined by the Secretary. 25. The section was subsequently amended by § 1202(a) of the Deficit Reduction Act of 2005, P.L. 109-171, to require the Secretary to carry out the CSP through Fiscal Year (“FY”) 2012. Section 1241 of P.L. 107-171 provided full funding for the CSP as follows: “[f]or each of fiscal years 2002 through 2007, the Secretary shall use the funds, facilities, and authorities of the Commodity Credit Corporation to carry out the following programs under subtitle D: . . . (3) The conservation security program. . . .,” codified as 16 U.S.C. § 3841. The funding available to the Commodity Credit Corporation is virtually unlimited. The Secretary’s authority was extended to 2012 by the 2008 Farm Bill. P.L. 110-234 (May 22, 2008). 26. 16 U.S.C. § 3838c(g) provided that “For each of fiscal years 2003 through 2007, the Secretary shall provide technical assistance to producers for the development and implementation of conservation security contracts, in an amount not to exceed 15 percent of amounts expended for the fiscal year.” 27. 16 U.S.C. § 3838a(b)(1) provided that: To be eligible to participate in the conservation security program (other than to receive technical assistance under section 3838c(g) of this title for the development of conservation security contracts), a producer shall – (A) develop and submit to the Secretary, and obtain the approval of the Case 1:17-cv-00188-TCW Document 1 Filed 02/08/17 Page 5 of 28 App5Case 5:16-cv-00066-MFU Document 29 Filed 02/23/17 Page 30 of 53 Pageid#: 314 Secretary of, a conservation security plan that meets the requirements of subsection (c)(1) of this section; and (B) enter into a conservation security contract with the Secretary to carry out the conservation security plan. 28. In this regard, the statute also provided that: On approval of a conservation security plan of a producer, the Secretary shall enter into a conservation security contract with the producer to enroll the land covered by the conservation security plan in the conservation security program. 16 U.S.C. § 3838(e)(1). 29. In addition, 16 U.S.C. § 3838c(b) set forth the criteria for the rates at which eligible producers would receive annual payments pursuant to their contracts. 30. The statute provided that one component of the total annual payment to each producer, the adjusted base payments aka the stewardship (base) payments, would, depending on the scope of conservation activities to which the producer agreed (i.e., the Tier of the producer’s CSP contract), be an amount equal to 5%, 10% or 15% of either the average national per-acre rental rate for a specific land use during the 2001 crop year or another appropriate rate for the 2001 crop year that ensures regional equity. 16 U.S.C. § 3838c(b). 31. In its February 2003 Advanced Notice of Proposed Rulemaking and Request for Comment, NRCS stated that the CSP was to be a program available in all 50 states, the Caribbean area and the Pacific Basin area, and described the program as providing equitable access of benefits to all producers, regardless of the size of operation, crops produced, or geographic location. 68 Fed. Reg. 7,720, 7,720 (Feb. 18, 2003). Case 1:17-cv-00188-TCW Document 1 Filed 02/08/17 Page 6 of 28 App6Case 5:16-cv-00066-MFU Document 29 Filed 02/23/17 Page 31 of 53 Pageid#: 315 FY 2004 32. This pronouncement notwithstanding, recognizing that the then-pending Omnibus Appropriations Bill for Fiscal Year 2004 contained language which, if enacted, would limit NRCS’ ability to spend more than $41.4 million on the program during FY 2004, on January 2, 2004, the NRCS issued a proposed regulation, pursuant to which, NRCS would restrict producers that could enroll in the program to only those located in watersheds specifically identified by the agency. 69 Fed. Reg. 194, 198 (Jan. 2, 2004). 33. Moreover, contrary to the statute, the proposed regulation indicated that payments under the program would be less than specified in the statute. Id. at 199. 34. After NRCS issued its proposed rule for comment, Congress did in fact pass the Consolidated Appropriations Act for 2004 (P.L. 108-199). Division A, § 752 thereof provided that “Not more than $41,443,000 for fiscal year 2004 of the funds appropriated or otherwise made available by this or any other Act shall be used to carry out the conservation security program.” 35. Of the $41,443,000, NRCS allocated $5,200,0001 to providing technical assistance to a substantial number of potential and actual program applicants. 36. In its notice of the FY 2004 sign-up period (69 Fed. Reg. at 34,533), NRCS only allowed eligible producers located in 18 of the more than 2,000 watersheds located in the United States to submit a notice of intention to enroll in the program. 37. Although, as noted, the statute provided that one component of the annual payment to each participant (i.e., adjusted base payments aka stewardship (base) payments) 1 This amounted to $1,941 for each new contract entered into in FY 2004. Case 1:17-cv-00188-TCW Document 1 Filed 02/08/17 Page 7 of 28 App7Case 5:16-cv-00066-MFU Document 29 Filed 02/23/17 Page 32 of 53 Pageid#: 316 would, depending on the scope of conservation activities to which the producer agreed (i.e., the Tier of the producer’s CSP contract), be an amount equal to 5%, 10% or 15% of either the average national per-acre rental rate for a specific land use during the 2001 crop year or another appropriate rate for the 2001 crop year that ensures regional equity, 16 U.S.C. §§ 3838c(b), both the interim final regulations adopted by NRCS, 69 Fed. Reg. 34,501, 34,530 (June 21, 2004), and the final regulations adopted on March 25, 2005, 7 C.F.R. § 1469.23(a)(iv), provided that this part of the annual payment to each CSP contractor would, depending on the scope of conservation activities to which it agreed, only be an amount equal to .25, .50 or .75 times the 2001 rates otherwise computed, further multiplied by the corresponding 5%, 10% or 15% factors set out in the statute. 38. A comparison of this part of the annual payment as required by the statute and as provided for by regulation is as follows: Tier of CSP contract Applicable percentage of the appropriate rental rate per the statute Applicable percentage of the appropriate rental rate per the regulations I 5% 1.25% II 10% 5% III 15% 11.25% 39. In the preamble to its interim final regulations, NRCS also stated: The CSP statutory provisions were written without a specific mechanism for limiting payments if the program were only partially funded. With a cap of $41.443 million for FY 2004, this interim final rule adopts provisions of the proposed rule setting forth a mechanism for limiting payments for those years when the CSP is only partially funded. In this regard, the interim final rule includes provisions to: • Limit the sign-up periods. • Limit participation to priority watersheds. Case 1:17-cv-00188-TCW Document 1 Filed 02/08/17 Page 8 of 28 App8Case 5:16-cv-00066-MFU Document 29 Filed 02/23/17 Page 33 of 53 Pageid#: 317 • Limit participation to certain enrollment categories. • Reduce stewardship (base) payments by applying a reduction factor. • Limit the number and type of existing and new practice payments. 69 Fed. Reg. at 34,503 (emphasis added). 40. In FY 2004, not only did NRCS only allow eligible producers in 18 watersheds to enroll in the program and only entered into 2,679 CSP contracts but, more importantly, it made stewardship (base) payments to CSP contractors pursuant to the regulatory mechanism it had adopted to limit payments for those years when the CSP is only partially funded rather than at the rates specified in the statute. FY 2005 41. In the Military Construction Appropriations and Emergency Hurricane Supplemental Appropriations Act, 2005, P.L. 108-324 (enacted October 13, 2004), Congress provided NRCS with the ability to spend $6.037 billion on CSP during the period FY 2005 through FY 2014. 42. However, for FY 2005, although the Consolidated Appropriations Act, 2005, P.L. 108-447 (enacted December 8, 2004), provided an indefinite amount to the Commodity Credit Corporation, it further provided that: None of the funds appropriated or otherwise made available by this or any other Act shall be used to pay the salaries and expenses of personnel to carry out a Conservation Security Program authorized by 16 U.S.C. § 3838, in excess of $202,411,000. Id. at § 799. Case 1:17-cv-00188-TCW Document 1 Filed 02/08/17 Page 9 of 28 App9Case 5:16-cv-00066-MFU Document 29 Filed 02/23/17 Page 34 of 53 Pageid#: 318 43. In its notice of the FY 2005 sign-up period (70 Fed. Reg. 15,277, 15,278 (Mar. 25, 2005)), NRCS allowed eligible producers located in an additional 202 watersheds to submit an intention to enroll in CSP and, in FY 2005, entered into a total of 14,143 new CSP contracts. 44. For FY 2005, the agency again made stewardship (base) payments to CSP contractors pursuant to the regulatory mechanism it had adopted to limit payments for those years when the CSP is only partially funded rather than at the rates specified in the statute. FY 2006 45. For FY 2006, the Agriculture, Rural Development, Food and Drug Administration and Related Agencies Appropriations Act, 2006, P.L. 109-97 (enacted on November 10, 2005), not only again provided an indefinite amount of funding to the Commodity Credit Corporation, but also provided that: None of the funds appropriated or otherwise made available by this or any other Act shall be used to pay the salaries and expenses of personnel to carry out a Conservation Security Program authorized by 16 U.S.C. § 3838, in excess of $259,000,000. Id. at § 741. 46. Of the $259,000,000, NRCS allocated $38,770,6482 to providing technical assistance to a substantial number of potential and actual program applicants. 47. In its notice for the FY 2006 sign-up period (71 Fed. Reg. 6,250 (Feb. 7, 2006)), NRCS allowed eligible producers located in an additional 50 watersheds to submit an intention to enroll in the CSP and, in FY 2006, entered into a total of 4,780 new CSP contracts. 48. On February 8, 2006, in § 1202 of the Deficit Reduction Act of 2005, P.L. 109- 171, Congress removed the limitation on NRCS’ ability to spend up to $6.037 billion during the 2 This amounted to $8,110 for each new contract entered into in FY 2006. Case 1:17-cv-00188-TCW Document 1 Filed 02/08/17 Page 10 of 28 App10Case 5:16-cv-00066-MFU Document 29 Filed 02/23/17 Page 35 of 53 Pageid#: 319 period FY 2005 through FY 2014 and instead imposed the following multi-year limits on NRCS’ ability to spend amounts on the CSP: $1,954,000,000 for the period of FY 2006 through FY 2010; and $5,650,000,000 for the period of FY 2006 through FY 2015. Deficit Reduction Act of 2005, P.L. 109-171, § 1202. 49. For FY 2006, the agency again made stewardship (base) payments to CSP contractors pursuant to the regulatory mechanism it had adopted to limit payments for those years when the CSP is only partially funded rather than at the rates specified in the statute. FY 2007 50. Congress did not pass an appropriation bill for FY 2007. Instead: a. On September 30, 2006, it passed a Continuing Resolution to last through November 18, 2006. P.L. 109-289. b. On November 18, 2006, it passed another Continuing Resolution to last through December 8, 2006. P.L. 109-369. c. On December 8, 2006, Congress approved a third Continuing Resolution to fund federal agencies through February 15, 2007. P.L. 109-383. d. On February 15, 2007, it enacted P.L. 110-5, the Revised Continuing Appropriations Resolution, 2007, § 20115 of which continued the limitation on the use of money to pay salaries, etc. to carry out the CSP in excess of $259,000,000. 51. Of the $259,000,000, NRCS allocated $25,904,0323 to providing technical assistance to a substantial number of potential and actual program applicants. 52. On May 25, 2007, Congress amended § 20115 of P.L. 110-5 and removed the $259,000,000 spending limitation on the CSP for FY 2007: 3 This amounted to $454,457 for each new contract entered into in FY 2007. Case 1:17-cv-00188-TCW Document 1 Filed 02/08/17 Page 11 of 28 App11Case 5:16-cv-00066-MFU Document 29 Filed 02/23/17 Page 36 of 53 Pageid#: 320 SEC. 20115. The following sections of title VII of the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act, 2006 shall not apply for fiscal year 2007: section 741 [precluding the use of money to pay salaries and such to carry out a Conservation Security Program in excess of $259,000,000]; paragraphs (1) and (2) of section 754; section 768; section 785; and section 789. The U.S. Troop Readiness, Veterans’ Care, Katrina Recovery, and Iraq Accountability Appropriations Act of 2007, P.L. 110-28 (May 25, 2007). 53. However, even though: (a) P.L. 110-28 eliminated the restriction on what NRCS could spend on the CSP in FY 2007, (b) NRCS had only spent $259,000,000 on the CSP in FY 2006, and (c) $1,695,000,000 out of the $1,954,000,000 that the Deficit Reduction Act of 2005 enabled NRCS to spend on the CSP during the period FY 2006 through FY 2010 remained unspent, in FY 2007, NRCS continued to utilize “its mechanism for limiting payments [in] those years when the CSP was only partially funded,” i.e., NRCS continued to make stewardship (base) payments to CSP participants pursuant to the mechanism for limiting payments for those years when the CSP is only partially funded rather than at the rates specified in the statute. 54. As of the close of FY 2007: a. NRCS had spent only a total of $550,000,000 on the CSP in FY 2006 and FY 2007; b. Three full fiscal years remained before the FY 2006 through FY 2010 period expired; and c. $1,404,000,000 out of the $1,954,000,000 that the Deficit Reduction Act of 2005 enabled NRCS to spend on the CSP during the period FY 2006 through FY 2010 remained unspent. Case 1:17-cv-00188-TCW Document 1 Filed 02/08/17 Page 12 of 28 App12Case 5:16-cv-00066-MFU Document 29 Filed 02/23/17 Page 37 of 53 Pageid#: 321 FY 2008 and Thereafter 55. In FY 2008, Congress again provided an indefinite amount to the Commodity Credit Corporation and again did not include any language limiting NRCS’ spending on CSP in FY 2008. Consolidated Appropriations Act, 2008, P.L. 110-161 (enacted Dec. 26, 2007). 56. Throughout FY 2008, there remained no impediment to NRCS’ making full payments to CSP participants at the rates required by the statute rather than based on the reduced rates provided for in the regulation. 57. This became even more the case on May 22, 2008, when Congress enacted the Food, Conservation, and Energy Act of 2008, commonly referred to as the 2008 Farm Bill. P.L. 110-234. 58. Among other things, in the 2008 Farm Bill, Congress amended 16 U.S.C. § 3841 to read: (1) In general For each of fiscal years 2002 through 2012, the Secretary shall use the funds, facilities, and authorities of the Commodity Credit Corporation to carry out the following programs under subchapter IV (including the provision of technical assistance): (3)(A) The conservation security program under subpart A of part II, using such sums as are necessary to administer contracts entered into before September 30, 2008. 59. In the latter regard, Congress also removed the multi-year limits imposed by the Deficit Reduction Act that had previously restricted NRCS’ ability to spend money on CSP. Id. 60. Accordingly, after May 22, 2008, there were no annual limits or additional multi- year limitations on NRCS’ spending on the CSP. Rather, NRCS had unfettered access to the Case 1:17-cv-00188-TCW Document 1 Filed 02/08/17 Page 13 of 28 App13Case 5:16-cv-00066-MFU Document 29 Filed 02/23/17 Page 38 of 53 Pageid#: 322 virtually unlimited funds of the Commodity Credit Corporation to carry out the CSP and to make the payments to contractors in full as required by the statute. 61. The above notwithstanding, in FY 2008, NRCS continued to utilize “its mechanism for limiting payments [in] those years when the CSP was only partially funded,” i.e., although NRCS entered into only 2,052 new CSP contracts, it continued to make stewardship (base) payments to CSP contract holders pursuant to the mechanism for limiting payments for those years when the CSP is only partially funded rather than at the rates specified in the statute. 62. In the 2008 Farm Bill, Congress also added the following to 16 U.S.C. § 3838a: (g) PROHIBITION ON CONSERVATION SECURITY PROGRAM CONTRACTS; EFFECT ON EXISTING CONTRACTS.— “(1) PROHIBITION.—A conservation security contract may not be entered into or renewed under this subchapter after September 30, 2008. “(2) EXCEPTION.—This subchapter, and the terms and conditions of the conservation security program, shall continue to apply to— “(A) conservation security contracts entered into on or before September 30, 2008; … “(3) EFFECT ON PAYMENTS.—The Secretary shall make payments under this subchapter with respect to conservation security contracts described in paragraph (2) during the remaining term of the contracts. (Emphasis added). 63. In FY 2009 and each year thereafter, there were no annual limits or additional multi-year limitations on NRCS’ spending on the CSP. Rather, NRCS had unfettered access to the virtually unlimited funds of the Commodity Credit Corporation to carry out the CSP and to make the payments to CSP contractors in full as required by the statute. Case 1:17-cv-00188-TCW Document 1 Filed 02/08/17 Page 14 of 28 App14Case 5:16-cv-00066-MFU Document 29 Filed 02/23/17 Page 39 of 53 Pageid#: 323 64. The above notwithstanding, in FY 2009 and each year thereafter, NRCS has continued to utilize “its mechanism for limiting payments [in] those years when the CSP was only partially funded.” Count I (The Payment Rates Utilized By Defendant Were Contrary To The Minimum Rates Required By the CSP Statute And As Such Defendant Breached All CSP Contracts Each and Every Year) 65. Plaintiffs restate paragraphs 1 through 64. 66. With regard to the stewardship (base) component of the total annual payment to each CSP contract holder, Congress limited the ability of NRCS to impose rates that were below a specified minimum. 67. Despite Congress’ specification of these minimum contract rates, NRCS nonetheless adopted regulations, which simply “reduce[d] stewardship (base) payments [as provided for in the CSP statute] by applying a reduction factor.” 69 Fed. Reg. at 34,503; see also 7 C.F.R. § 1469.23(a)(2)(iv). 68. These regulations notwithstanding, the minimum rates specified by Congress remained the proper rates at which stewardship (base) payments were and still are required to be calculated. 69. This fact is confirmed by NRCS’ own regulations, which state that “[a CSP] contract must . . . [i]ncorporate all provisions as required by law or statute.” 7 C.F.R. § 1469.21(e). 70. At all times relevant, NRCS has made stewardship (base) payments to Named Plaintiffs and all other CSP contractors in a yet-to-be-certified class computed using rates that are below the minimum rates specified by Congress. Case 1:17-cv-00188-TCW Document 1 Filed 02/08/17 Page 15 of 28 App15Case 5:16-cv-00066-MFU Document 29 Filed 02/23/17 Page 40 of 53 Pageid#: 324 71. NRCS’ making contract payments computed using these reduced rates was/is contrary to the statute, unauthorized, inconsistent with each holder’s CSP contract and a breach of contract. 72. Not only did NRCS substantially underpay the stewardship (base) component of the total annual payment due under CSP contracts, but compounded the underpayment because, in each of the notices that NRCS issued for producers to sign up for the CSP, it stated that “Existing practice payments will be calculated as a flat rate of 25% of the stewardship payment.” As a result, the rate per acre at which NRCS has paid CSP contractors for their continued performance of existing conservation practices has also been too low. 73. As noted, using improper, reduced rates to compute and make both the stewardship (base) and the existing practice components of the annual payment provided for under the CSP contract breached the CSP contracts held by Named Plaintiffs and each of the contracts held by similarly situated members of a yet-to-be-identified class in every year of each contract’s existence. 74. Defendant’s breach in this regard was ongoing in that in each subsequent year defendant continued to use reduced rates to make both the stewardship (base) and the existing practice components of the annual payment provided for under the CSP contract. Count II (In The Alternative To Count I, The Payment Rates Utilized By Defendant In FY 2007 And Thereafter Were Contrary To The Minimum Rates Required By The CSP Statute And Breached All CSP Contracts) 75. Plaintiffs restate paragraphs 1 through 64. Case 1:17-cv-00188-TCW Document 1 Filed 02/08/17 Page 16 of 28 App16Case 5:16-cv-00066-MFU Document 29 Filed 02/23/17 Page 41 of 53 Pageid#: 325 76. As noted, prior to May 25, 2007, NRCS was subject to annual limitations on its ability to make CSP payments. 77. Those annual limitations, however, ceased to exist on May 25, 2007, when P.L. 110-28 was enacted. 78. NRCS’ failure after May 25, 2007 (at which time NRCS was no longer subject to any annual spending limit on CSP and had not paid out anywhere near the amount which Congress enabled NRCS to spend on CSP from FY 2006 through FY 2010) to make payments due Named Plaintiffs and all other similarly situated CSP contractors in a yet-to-be-certified class according to the rates specified in the statute constitutes a breach of their contracts. 79. In promulgating the regulations applicable to CSP, NRCS stated that: The CSP statutory provisions were written without a specific mechanism for limiting payments if the program were only partially funded. With a cap of $41.443 million for FY 2004, this interim final rule adopts provisions of the proposed rule setting forth a mechanism for limiting payments for those years when the CSP is only partially funded. In this regard, the interim final rule includes provisions to: • Limit the sign-up periods. • Limit participation to priority watersheds. • Limit participation to certain enrollment categories. • Reduce stewardship (base) payments by applying a reduction factor. • Limit the number and type of existing and new practice payments. 69 Fed. Reg. at 34,503 (emphasis added). 80. Because in FY 2007 and all fiscal years thereafter, the CSP was fully, rather than partially, funded, the circumstances underlying the agency’s admitted rationale for adopting regulations that exceeded the express language of the CSP statute ceased to exist. At a Case 1:17-cv-00188-TCW Document 1 Filed 02/08/17 Page 17 of 28 App17Case 5:16-cv-00066-MFU Document 29 Filed 02/23/17 Page 42 of 53 Pageid#: 326 minimum, for FY 2007 through FY 2011, defendant is liable to Named Plaintiffs and all other similarly situated CSP contractors in a yet-to-be-certified class for all contract payments due, but not fully made. 81. The amount of defendant’s liability in this regard is the difference between stewardship (base) payments and existing practice payments (each calculated using the rates specified in the statute) and the amount that Named Plaintiffs and each similarly situated CSP contractor in a yet-to-be-certified class were actually paid for these components of the total annual payment made. 82. Defendant’s breach in this regard was ongoing in that, in each subsequent year, defendant continued to use reduced rates to make both the stewardship (base) and the annual existing practice components of the annual payment provided for under the CSP contract. Count III (In The Alternative To Counts I and II, The Payment Rates Utilized By Defendant In FY 2008 And Thereafter Were Contrary To The Minimum Rates Required By The CSP Statute And Breached All CSP Contracts) 83. Plaintiffs restate paragraphs 1 through 64. 84. As noted, prior to May 22, 2008, NRCS was subject to the multi-year limits on NRCS’ spending on the CSP imposed by the Deficit Reduction Act. 85. However, after May 22, 2008, there were no annual limits or additional multi- year limitations on NRCS’ spending on the CSP. Rather, NRCS had unfettered access to the virtually unlimited funds of the Commodity Credit Corporation to carry out the CSP and to make the payments to contractors in full as required by the statute. Case 1:17-cv-00188-TCW Document 1 Filed 02/08/17 Page 18 of 28 App18Case 5:16-cv-00066-MFU Document 29 Filed 02/23/17 Page 43 of 53 Pageid#: 327 86. The above notwithstanding, in FY 2008 and every year thereafter, NRCS continued to utilize “its mechanism for limiting payments [in] those years when the CSP was only partially funded.” 87. NRCS’ failure in FY 2008 and every fiscal year thereafter (at which time NRCS was no longer subject to any annual spending limits or additional multi-year limitations on spending on the CSP) to make payments due Named Plaintiffs and all other similarly situated CSP contractors in a yet-to-be-certified class according to the rates specified in the statute constitutes a breach of their contracts. 88. In promulgating the regulations applicable to CSP, NRCS stated that: The CSP statutory provisions were written without a specific mechanism for limiting payments if the program were only partially funded. 69 Fed. Reg. at 34,503. 89. Because in FY 2008 and all fiscal years thereafter, the CSP was fully, rather than partially, funded, the circumstances underlying the agency’s admitted rationale for adopting regulations that exceeded the express language of the CSP statute ceased to exist. At a minimum, for FY 2008 and thereafter, defendant is liable for all contract payments due, but not fully made. 90. The amount of defendant’s liability in this regard is the difference between stewardship (base) payments and existing practice payments (each calculated using the rates specified in the statute) and the amount that each producer was paid. 91. Defendant’s breach in this regard is ongoing to the extent that defendant continues to use reduced rates to make both the stewardship (base) and the existing practice components of the annual payment provided for under the CSP contract. Case 1:17-cv-00188-TCW Document 1 Filed 02/08/17 Page 19 of 28 App19Case 5:16-cv-00066-MFU Document 29 Filed 02/23/17 Page 44 of 53 Pageid#: 328 THE REQUIREMENTS FOR CLASS CERTIFICATION ARE SATISFIED HERE A. Numerosity 92. Plaintiffs’ class description is as follows: Each farmer and rancher (“producer”) that was at any time enrolled in the Conservation Security Program (“CSP”) as set forth in 16 U.S.C. §§ 3838a, et seq. (and thus at any time held a CSP contract with the defendant) whose total underpayment for stewardship and existing practice payments thereunder exceeds $10,000, whose claim has not already been adjudicated. 93. The 2004 and 2005 enrollments in the program resulted in 15,000 farmers and ranchers entering into CSP contracts with defendant, while 4,323 contracts were entered into in 2006, 58 were entered into in 2007 and 1,967 were entered into in 2008. 94. The putative class consists of a significant portion of the approximately 23,711 farmers and ranchers who held CSP contracts. More specifically, members of the yet-to-be- certified class consist of those producers holding CSP contracts who (1) never received stewardship (base) payments and existing practice payments computed using the rates provided for in the statute, and (2) whose resulting damages exceed $10,000. 95. The names of members of the yet-to-be-certified class are already known to defendant, as the NRCS maintains records of those enrolled in the CSP and the amounts that each was paid for stewardship (base) and existing practice payments each year and the precise manner in which those payments were computed. 96. Additionally, members of the yet-to-be-certified class are also reachable indirectly through notices to organizations like local conservation districts and/or by notices contained in various farm and ranch industry publications. Case 1:17-cv-00188-TCW Document 1 Filed 02/08/17 Page 20 of 28 App20Case 5:16-cv-00066-MFU Document 29 Filed 02/23/17 Page 45 of 53 Pageid#: 329 97. As such, members of the yet-to-be-certified class constitute a large, but manageable, size for the purpose of serving notice. 98. The members of the putative class are geographically dispersed, being located in all 50 states, as well as the Caribbean and Pacific Basin areas. B. Individual Claims Are Small 99. The vast majority of members of the yet-to-be-certified class are small farmers and ranchers with small to modest sized claims who do not realistically have the resources or the financial incentive to pursue those claims individually. 100. The average size of each claim is approximately $15,000. Given the small size of members of the yet-to-be-certified class’ individual claims, the average member of the yet-to-be- certified class could not and would not pursue a case to conclusion before this Court to recover such a modest amount. 101. The average size of all 23,700 CSP contracts actually entered into is only approximately $6,200 per year. C. Commonality 102. The claim of each member of the yet-to-be-certified class involves common questions of law. Here, the core legal questions are: (1) Whether defendant is liable to members of the yet-to-be-certified class as a result of its failure to make payments in and after FY 2004 computed using the minimum rates specified by statute; and (2) In the alternative, whether defendant is liable to members of the yet-to-be-certified class as a result of its failure to make full Case 1:17-cv-00188-TCW Document 1 Filed 02/08/17 Page 21 of 28 App21Case 5:16-cv-00066-MFU Document 29 Filed 02/23/17 Page 46 of 53 Pageid#: 330 payments in and after FY 2007 computed using the minimum rates specified by statute because NRCS continued to apply a rate reduction factor during a time when (a) NRCS was no longer subject to any annual spending limit for CSP, (b) NRCS spent nowhere near the amount which Congress had given it the ability to spend on the CSP from FY 2006 through FY 2010, and (c) after May 22, 2008 was no longer subject to any multi-year suspending limit. 103. The defenses to the claims reflected in these core legal questions would not vary significantly, if at all, among all members of the yet-to-be-certified class with the exception of the amount of payment due to each – something that is determined by formula. 16 U.S.C. § 3838c(b); 7 C.F.R. § 1469.23 (2004). 104. The basic obligation of defendant toward each member of the yet-to-be-certified class under the CSP and the standard CSP contract entered into thereunder is identical. D. The Common Legal Issues Predominate Over Individual Factual Issues 105. All members of the yet-to-be-certified class present the same legal questions, which relate to whether defendant is liable to them for failing to make full payments to which they were entitled, i.e., because they were not paid at the rates provided for in the statute and their CSP contracts. 106. The only individual factual “issue” is how much each member of the yet-to-be- certified class was entitled to receive. Case 1:17-cv-00188-TCW Document 1 Filed 02/08/17 Page 22 of 28 App22Case 5:16-cv-00066-MFU Document 29 Filed 02/23/17 Page 47 of 53 Pageid#: 331 107. The computation of damages, although necessarily individualized, should be relatively formulaic. E. Defendant Has Refused To Act On Grounds Generally Applicable To The Proposed Class 108. Defendant’s failure to make full payments to CSP contractors in strict accordance with 16 U.S.C. §§ 3838a, et seq. and the terms of the standard conservation contract has affected the entire class. F. Typicality, Named Plaintiffs’ Claims Vis-à-Vis The Claims Of Other Members Of The Yet-To-Be-Certified Class 109. The Named Plaintiffs’ claims are legally identical to claims held by all of the other members of the yet-to-be-certified class. Defendant has treated each member of the yet-to- be-certified class similarly in that, notwithstanding NRCS’ duty to make payments as provided for by the statute and by contract, the Named Plaintiffs and all other members of the yet-to-be- certified class did not receive full payments as specified by the statute or their CSP contracts. Such being the case, the claims of the representative party are typical of the claims of the members of the yet-to-be-certified class, satisfying FRCP 23(a)(3)’s typicality requirement. 110. J.M. Fogg Farms, Inc.’s claims for the government’s failure to make payments as provided for by the statute and by contract total $16,294.90, i.e., just as the case with the underpayment claim of every other member of the yet-to-be-certified class, more than $10,000. 111. Richard M. Schools, Jr.’s claims for the government’s failure to make payments as provided for by the statute and by contract total $20,451.75, i.e., just as the case with the underpayment claim of every other member of the yet-to-be-certified class, in excess of $10,000. Case 1:17-cv-00188-TCW Document 1 Filed 02/08/17 Page 23 of 28 App23Case 5:16-cv-00066-MFU Document 29 Filed 02/23/17 Page 48 of 53 Pageid#: 332 112. Timothy Self’s claims for the government’s failure to make payments as provided for by the statute and by contract total $10,742.09, i.e., just as the case with the underpayment claim of every other member of the yet-to-be-certified class, in excess of $10,000. G. Named Plaintiffs Adequately Represent The Interest Of Members Of The Yet-To-Be-Certified Class 113. The Named Plaintiffs are seeking for themselves precisely the same relief that they will seek for the other members of the yet-to-be-certified class – payment of the amount, which NRCS should have paid them pursuant to the statute and the CSP contracts entered into thereunder. 114. The interests of the Named Plaintiffs will not diverge in any way from the interests of any other member of the yet-to-be-certified class as the Named Plaintiffs fit directly within the proposed class. 115. The Named Plaintiffs are also represented by a well-respected law firm, Smith, Currie & Hancock LLP. Smith Currie has experience in handling class actions. The lawyers at Smith Currie also have extensive experience and expertise in matters involving government obligations and attempts to limit those obligations through the appropriations process and otherwise. See, e.g., Earman v. United States, 589 Fed. Appx. 991 (Fed. Cir. 2015), cert. denied, 136 S. Ct. 54 (2015); Prairie County, Mt. v. United States, 782 F.3d 685 (Fed. Cir. 2015), cert. denied, 136 S. Ct. 319 (2015); Greenlee County, Az. v. United States, 487 F.3d 871 (Fed. Cir. 2007), cert. denied, 552 U.S. 1142 (2008). This firm also has the economic resources to pursue the litigation as outlined herein. 116. Prior to filing the Complaint in this case, Smith Currie lawyers performed many hours of legal and factual research to determine if potential claims existed. They have also Case 1:17-cv-00188-TCW Document 1 Filed 02/08/17 Page 24 of 28 App24Case 5:16-cv-00066-MFU Document 29 Filed 02/23/17 Page 49 of 53 Pageid#: 333 obtained a large quantity of material pursuant to the Freedom of Information Act, including data on those enrolled in CSP. H. A Class Action Is Superior To Other Methods Of Adjudication 117. The Named Plaintiffs have demonstrated that they are similarly situated to the other members of the yet-to-be-certified class they seek to represent, as there are common questions of law and fact among them. 118. It is unlikely that other individuals will proceed on their own if this action were not certified as a class action. 119. Conducting this case as a class action will likely achieve efficiencies in the use of resources of both the parties and of the court. I. Class Certification Would Be In the Interests Of Justice 120. Certification of this case as a class action will serve the interests of justice because a class action will decrease the chances of duplicative litigation and will be more cost effective for all parties involved. CSP CONTRACTORS HAD NO OBLIGATION TO (AND, IN FACT, COULD NOT) PURSUE THE REMEDIES SOUGHT HERE AT THE ADMINISTRATIVE LEVEL 121. Regulations implementing the CSP at 7 C.F.R. § 1469.31 provide a CSP participant with the ability to seek agency review of certain administrative decisions; however, the regulation provides that no such administrative appeal can involve the following: (1) Payment rates, payment limits, and cost-share percentages; (2) Eligible conservation practices; or (3) Other matters of general applicability. Case 1:17-cv-00188-TCW Document 1 Filed 02/08/17 Page 25 of 28 App25Case 5:16-cv-00066-MFU Document 29 Filed 02/23/17 Page 50 of 53 Pageid#: 334 Id. 122. Thus, by its terms, the CSP appeal regulations preclude the Named Plaintiffs and all members of a yet-to-be-certified class from obtaining administrative review of the precise legal issues relating to payment rates as well as other matters of general applicability that have been raised in this Complaint. 123. This conclusion is bolstered by the fact that, in a publically issued notice adopting the regulations implementing CSP, NRCS explained that: The regulations at § 1469.31 sets forth provisions regarding appeals. These provisions do not allow appeal of payment rates. Commenters asserted that appeals should be allowed regarding payment rates. NRCS made no changes based on these comments. As indicated in Section 1469.31, participants are not allowed to appeal matters of general applicability. Such appeals would affect all participants and would be administratively unworkable. 70 Fed. Reg. 15,201, 15,207 (Mar. 25, 2005) (emphasis added). 124. Because administrative review of the very legal issues raised herein is foreclosed by the agency and the agency has further acknowledged that it is not equipped to handle claims affecting large numbers of CSP participants, Named Plaintiffs and the other members of the yet-to-be-certified class had no obligation to seek, nor could they have sought, administrative review of their claims. 125. The only available avenue of relief for Named Plaintiffs and the other members of the yet-to-be-certified class is proceeding directly in Court and nothing in the CSP appeal regulation affects this Court’s jurisdiction to decide the issues raised in this Complaint. WHEREFORE, the Named Plaintiffs and the other members of the yet-to-be-certified class respectfully request that this Court: Case 1:17-cv-00188-TCW Document 1 Filed 02/08/17 Page 26 of 28 App26Case 5:16-cv-00066-MFU Document 29 Filed 02/23/17 Page 51 of 53 Pageid#: 335 a. Find that defendant’s actions in making contract payments at reduced rates was a breach of contract 1. in FY 2004 and each year thereafter, or in the alternative 2. in FY 2007 and each year thereafter, or in the alternative 3. in FY 2008 and each year thereafter, and award the Named Plaintiffs and all other members of a yet-to-be-certified class the amount by which they were underpaid; b. Award the Named Plaintiffs and all other members of a yet-to-be-certified their costs and attorney’s fees incurred in pursuing their claims; and c. Grant the Named Plaintiffs and all other members of a yet-to-be-certified such further relief as this Court deems just and proper. Respectfully submitted, s/Alan I. Saltman Alan I. Saltman SMITH, CURRIE & HANCOCK LLP 1025 Connecticut Avenue, N.W. Suite 600 Washington, D.C. 20036 (202) 452-2140 (202) 775-8217 – facsimile email: aisaltman@smithcurrie.com Counsel for Plaintiff Case 1:17-cv-00188-TCW Document 1 Filed 02/08/17 Page 27 of 28 App27Case 5:16-cv-00066-MFU Document 29 Filed 02/23/17 Page 52 of 53 Pageid#: 336 OF COUNSEL: Kathleen Y. Hsu SMITH, CURRIE & HANCOCK LLP 1025 Connecticut Avenue, N.W. Suite 600 Washington, D.C. 20036 (202) 452-2140 (202) 775-8217 – facsimile email: khsu@smithcurrie.com Richard W. Goeken SMITH, CURRIE & HANCOCK LLP 1025 Connecticut Avenue, N.W. Suite 600 Washington, D.C. 20036 (202) 452-2140 (202) 775-8217 – facsimile email: rwgoeken@smithcurrie.com Dated: February 8, 2017 Case 1:17-cv-00188-TCW Document 1 Filed 02/08/17 Page 28 of 28 App28Case 5:16-cv-00066-MFU Document 29 Filed 02/23/17 Page 53 of 53 Pageid#: 337