Sanders et al v. Army And Air Force Exchange Service et al

MOTION to Dismiss for Lack of Jurisdiction , MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM

W.D. Ky.June 2, 2017

UNITED STATES DISTRICT COURT WESTERN DISTRICT OF KENTUCKY AT LOUISVILLE MONICA SANDERS and JASON SANDERS PLAINTIFFS v. CIVIL ACTION NO.: 3:17-CV-00284-CRS (e-filed) ARMY & AIR FORCE EXCHANGE SERVICE and TOM SHULL DEFENDANTS MOTION TO DISMISS Defendants, by and through counsel of record, hereby move the Court to dismiss the above-styled action for lack of jurisdiction and for failure to state a claim upon which relief may be granted, pursuant to Fed.R.Civ.P. 12(b)(1) and 12(b)(6). In support, the Defendants submit the accompanying memorandum of law. Respectfully submitted, JOHN E. KUHN, JR. United States Attorney /s/ Michael D. Ekman Michael D. Ekman Assistant U.S. Attorney 717 W. Broadway Louisville, KY 40202 (502) 625-7102/ Fax: (502) 625-7110 Michael.Ekman@usdoj.gov Case 3:17-cv-00284-CRS Document 7 Filed 06/02/17 Page 1 of 2 PageID #: 31 2 CERTIFICATE OF SERVICE I hereby certify that on June 2, 2016, I electronically filed the foregoing with the clerk of the court by using the CM/ECF system, which will send a notice of electronic filing to the following: Robert L. Schaefer SCHAEFER & DUPREE, Attorneys at Law, PLLC 112 North Mulberry Street Elizabethtown, Kentucky 42701 /s/ Michael D. Ekman Michael D. Ekman Assistant United States Attorney Case 3:17-cv-00284-CRS Document 7 Filed 06/02/17 Page 2 of 2 PageID #: 32 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF KENTUCKY AT LOUISVILLE MONICA SANDERS and JASON SANDERS PLAINTIFFS v. CIVIL ACTION NO.: 3:17-CV-00284-CRS ARMY & AIR FORCE EXCHANGE SERVICE and TOM SHULL DEFENDANTS MEMORANDUM IN SUPPORT OF DEFENDANTS’ MOTION TO DISMISS Defendants, by and through counsel of record, for their joint Memorandum in Support of Motion to Dismiss state as follows. INTRODUCTION After the United States Department of Treasury (“Treasury”) offset Plaintiffs 2015 and then again their 2016 tax return refunds as repayment for a debt established with the Army & Air Force Exchange Service (“AAFES” or “the Exchange”), Plaintiffs initiated this case in state court claiming the debt did not belong to them and the offset was inappropriate. Plaintiffs cite many different legal principles as jurisdictional foundations for their claims. The Sanders not only named the Exchange as a defendant, but also sued the Director of the Exchange, Tom Shull, in his individual capacity. None of the legal theories for jurisdiction listed in the complaint satisfy the subject matter jurisdiction of this Court. Plaintiffs are not without a remedy, as the offset program, described below, provides them with an administrative process for contesting the offset; however, this Court cannot entertain their claims as alleged. Dismissal of this action is appropriate. Case 3:17-cv-00284-CRS Document 7-1 Filed 06/02/17 Page 1 of 26 PageID #: 33 2 FACTS ALLEGED IN THE COMPLAINT Plaintiffs claim that the AAFES gave them notice of an outstanding debt it claimed belonged to Monica Sanders, despite Plaintiffs’ claim that they have never been customers of the Exchange. Compl. at ¶ 4. In response, the Sanders “summited [sic] numerous documents to AAFES showing that the bill was not hers and that the information provided by AAFES did not match her personal information.” Id. at ¶ 5. In 2016 and then again in 2017, Treasury “seized” Plaintiff’s tax return proceeds in the total amount of $2,174.28. Id. at ¶¶ 7, 10. THE TREASURY OFFSET PROGRAM Treasury operates a centralized debt collection program known as the Treasury Offset Program (“TOP”). Through TOP, Treasury has statutory authority to collect delinquent federal and state debts owed to the government by offsetting payments made by other federal agencies. 31 U.S.C. § 3716; 31 C.F.R. § 285.5(a)(1).1 Payments made by the United States that are eligible for offset are specified in the Code of Federal Regulations as follows: Except as set forth in paragraph (e)(2) of this section, all Federal payments are eligible for offset under this section. Eligible Federal payments include, but are not limited to, Federal wage, salary, and retirement payments, vendor and expense reimbursement payments, certain benefit payments, travel advances and reimbursements, grants, fees, refunds, judgments (including those certified for payment pursuant to 31 U.S.C. § 1304), tax refunds, and other payments made by Federal agencies. 31 CFR § 285.5(e)(1). Treasury makes federal payments, such as tax refund proceeds, as the disbursing agency for other federal agencies making payments (known as “payment certifying agencies”). Federal agencies that are owed debts (referred to as “creditor agencies”) are required to refer those debts 1 See also, 5 U.S.C. § 5514(a) (federal salary offset); 26 U.S.C. §§ 6331(h) (levy to collect tax debt) and 6402 (tax refund offset for certain state and federal debts); and 31 U.S.C. § 3720A (tax refund offset for federal debts). Case 3:17-cv-00284-CRS Document 7-1 Filed 06/02/17 Page 2 of 26 PageID #: 34 3 to Treasury for inclusion in TOP after the debts become delinquent, pursuant to 31 U.S.C. § 3716(c)(6). At the time of referral, agencies certify that such debts qualify for collection by offset. See 31 U.S.C. § 3716(c) and 31 C.F.R. § 285.5(d). TOP matches payments being disbursed on behalf of payment-certifying agencies against delinquent debt information submitted by creditor agencies, and, where a match occurs, the payment is offset to collect the outstanding debt. Title 31, United States Code, Section 3701(a)(1) defines an administrative offset as “withholding funds payable by the United States [t]o satisfy a claim.” Once a debt is submitted for administrative offset, Congress mandated that Treasury, as the disbursing agency and operator of TOP, offset a payment to satisfy the debt. 31 U.S.C. § 3716(c)(1)(A). A federal agency, such as the Exchange, with a claim against a debtor must place the debt in TOP. See 31 U.S.C. § 3716(c)(6). The agency is required to certify that the debt is eligible for collection by offset. 31 U.S.C. § 3616(a); 31 C.F.R. §§ 285.5(d)(3)(ii) and (d)(6). If properly certified, Treasury “shall” administratively offset a debt against federal payments. See 31 U.S.C. § 3716(c)(1)(A) (emphasis supplied). The application of the Treasury offset to this subject payment is mandated by law and is non-discretionary. Johnson v. Dept of Treasury, 300 F.App’x 860, 863 (11th Cir. 2008) (Once the creditor agency certified the debt to Treasury, Treasury was legally obligated to offset the debtor’s payments in satisfaction of the debt.); see also Benjamin v. United States, 2014 WL 3900220, at *3 (M.D. Pa. Aug. 8, 2014) (“Therefore, absent some explicit statutory language to the contrary, there is no exception to this legal requirement that these payments be offset.”). 31 C.F.R. § 285.5(g)(3) sets forth a post-offset notification process. The post-offset notification provisions are found under 31 U.S.C. § 3716(c)(7)(A) and 31 C.F.R. § 285.5(g)(3). 31 U.S.C. § 3716(c)(7)(A) informs that Case 3:17-cv-00284-CRS Document 7-1 Filed 06/02/17 Page 3 of 26 PageID #: 35 4 [t]he disbursing official conducting an administrative offset with respect to payment to a payee shall notify the payee in writing of - - (i) the occurrence of the administrative offset to satisfy a past due legally enforceable debt, including a description of the type and amount of the payment otherwise payable to the payee against which the offset was executed; (ii) the identity of the creditor agency requesting the offset; and (iii) a contact point within the creditor agency that will handle concerns regarding the offset. (emphasis added). 31 C.F.R. § 285.5(g)(3) reads (3) Offset notice. When an offset occurs under this section, the disbursing official, or Fiscal Service on behalf of the disbursing official, shall notify the payee in writing that an offset has occurred including: (i) A description of the payment and the amount of offset taken; (ii) The identity of the creditor agency requesting the offset; and (iii) The address and telephone number of the contact point within the creditor agency who will handle concerns regarding the offset. (emphasis added).2 The “post-offset” notifications inform the debtor that the offset occurred and provide the individual with sufficient information to address concerns. Because these provisions are post- offset notifications, courts have found that Treasury is not responsible to ensure that the debtor receives due process under the law when it performs its mandatory offset obligations under TOP. See Johnson v. United States Dept. of Treasury, 300 Fed. Appx. 860, 862-63 (11th Cir. 2008) (“Further, it is the creditor agency, not the disbursing agency, that is required to ensure that the debtor receives due process under the law”). After an offset occurs, persons who are dissatisfied with the application of a Treasury offset may pursue “administrative procedure[s] ‘established by statute and administered under implementing regulations, which provide due process to debtors 2 31 U.S.C. § 3716(c)(2)(B) states that “[n]either the disbursing official nor the payment certifying agency shall be liable-- … (B) for failure to provide timely notice ….” Case 3:17-cv-00284-CRS Document 7-1 Filed 06/02/17 Page 4 of 26 PageID #: 36 5 against whom offset is sought.’ Mayer, 2010 WL 4916561, at *1.” United States v. Beulke, 892 F.Supp.2d 1176, 1187 (D.S.D.2012). ARGUMENT I. Legal Standards A. Fed.R.Civ.P. 12(b)(1), Subject Matter Jurisdiction Pursuant to Federal Rule of Civil Procedure 12(b)(1), a court must dismiss an action for lack of subject-matter jurisdiction if the court lacks statutory or constitutional authority to adjudicate. See Kokkenen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994) (noting that federal courts are of limited jurisdiction). A court must dismiss the action whenever it appears that the court lacks subject matter jurisdiction. Fed.R.Civ.P. 12(h)(3). The lack of subject matter jurisdiction may be asserted by either party or the court, sua sponte, at any time during the course of an action. Clark v. Paul Gray, Inc., 306 U.S. 583 (1939). Once challenged, the burden of establishing a federal court’s subject matter jurisdiction rests on the party asserting jurisdiction. Thomason v. Gaskill, 315 U .S. 442, 62 (1942); Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992). B. Fed.R.Civ.P. 12(b)(6), Failure to State a Claim A court must grant a motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6) for failure to state a claim if a complaint fails to provide grounds of entitlement to relief. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555-57 (2007). This plausibility standard requires more than labels and conclusions. Id. Factual allegations must be substantial enough to raise the right to relief beyond the speculative level. Id. In determining a motion to dismiss under Rule 12(b)(6), a court takes as true the factual allegations of the complaint; however, a court need not accept a complaint=s legal conclusions or unwarranted factual inferences. Power & Tel. Supply Co. v. Sun Trust Banks, Inc., 447 F.3d 923, 929 (6th Cir. 2006). To survive a motion to dismiss, “a complaint must contain Case 3:17-cv-00284-CRS Document 7-1 Filed 06/02/17 Page 5 of 26 PageID #: 37 6 sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (quoting Twombly, 550 U.S. at 570). Mere conclusions, labels, or “naked assertions” will not survive a 12(b)(6) motion to dismiss. Iqbal, 129 S. Ct. at 1949. “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. Under Fed. R. Civ. P. 8(a)(2), a pleading must contain a “short and plain statement of the claim showing that the pleader is entitled to relief.” The Supreme Court has stated that although “the pleading standard Rule 8 announces does not require ‘detailed factual allegations,’ . . . it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009), citing Bell Atlantic v. Twombly, 550m U.S. 544, 555 (2007) (internal citations omitted). The Court stated that a “pleading that offers ‘labels and conclusions’ or a ‘formulaic recitation of the elements of a cause of action will not do. . . . Nor does a complaint suffice if it tenders ‘naked assertion[s]’ devoid of ‘further factual enhancement.’” Id. at 678 (quoting Twombly, 550 U.S. at 555, 557). To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to “state a claim to relief that is plausible on its face.” A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. . . . The plausibility standard is not akin to a “probability requirement,” but it asks for more than a sheer possibility that a defendant has acted unlawfully. . . . Where a complaint pleads facts that are “merely consistent with” a defendant’s liability, it “stops short of the line between possibility and plausibility of entitlement to relief.” Id. (citing Twombly, 550 U.S. at 570, 556, 557 ) (internal citations omitted). Thus, under the standards established by Twombly and Iqbal, the Supreme Court has provided two factors for district court judges to use when evaluating challenges to a complaint Case 3:17-cv-00284-CRS Document 7-1 Filed 06/02/17 Page 6 of 26 PageID #: 38 7 under Fed.R.Civ.P. 12(b)(6). “First, the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions. Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Iqbal, 129 S. Ct. at 1949. “Second, only a complaint that states a plausible claim for relief survives a motion to dismiss. . . . Determining whether a complaint states a plausible claim for relief will . . . be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Id. at 1950 (citations omitted). II. Plaintiffs Failed To Invoke The Jurisdiction Of The Federal Tort Claims Act A. The Federal Tort Claims Act It is well settled law that the United States cannot be sued without its consent.3 Where no such consent exists, a district court has no jurisdiction to entertain a suit against the United States. United States v. Mitchell, 445 U.S. 535, 538 (1980); United States v. Sherwood, 312 U.S. 584, 586 (1941); United States v. Dalm, 494 U.S. 596, reh’g denied, 495 U.S. 941 (1990). Any waiver of sovereign immunity must be strictly construed in favor of the United States. Library of Congress v. Shaw, 478 U.S. 310, 318 (1986); Ruckelshaus v. Sierra Club, 463 U.S. 680, 685-686 (1983). The Supreme Court has long held that “limitations and conditions upon which the Government consents to be sued must be strictly observed and exceptions thereto are not to be implied.” Lehman v. Nakshian, 453 U.S. 156, 161, 101 S. Ct. 2698, 2702 (1981); Soriano v. United States, 352 U.S. 270, 276, 77 S. Ct. 269, 273 (1957); see also United States v. Kubrick, 444 U.S. 3 By operation of law, the United States was substituted for the named defendants for all claims sounding in state tort law. (DN 4). This substitution did not remove the AAFES and Mr. Shull as defendants for claims not sounding in state tort. Plaintiffs’ filed an objection to the substitution; however, their objection does not comtemplate the distinction between their own claims, state tort claims versus other sorts of claims. (DN 6). For all state tort claims, the United States is the proper defendant, despite Plaintiffs’ failure to recognize that within their complaint. Case 3:17-cv-00284-CRS Document 7-1 Filed 06/02/17 Page 7 of 26 PageID #: 39 8 111, 117-118, 100 S. Ct. 352, 357 (1979); Munro v. United States, 303 U.S. 36, 41, 58 S. Ct. 421, 423-424 (1938). Thus, when an action is brought against the United States as to which there has been no waiver of immunity, or where the waiver granted has been conditioned by an exception applicable to that action, the federal court has no jurisdiction. The Federal Tort Claims Act (“FTCA”) is the exclusive remedy for suits against the United States or its agencies sounding in tort. 28 U.S.C. § 2679(a). The FTCA grants a limited waiver of sovereign immunity and allows tort claims against the United States “in the same manner and to the same extent as a private individual under like circumstances.” 28 U.S.C. § 2674. Plaintiffs specifically cite the FTCA within their complaint. Compl. at ¶ 4. B. Plaintiffs Failed To Exhaust Administrative Remedies In order to maintain a lawsuit against the United States under the FTCA, a plaintiff must exhaust administrative remedies before bringing suit. 28 U.S.C. § 2675(a). 4 Only when the claim has been “finally denied by the agency in writing” or when there has been a “failure . . . to make final disposition of a claim within six months after it is filed” may a plaintiff institute an action in federal court. Id. The presentation of a timely administrative claim to the appropriate federal agency setting forth a cause of action under state law is a jurisdictional prerequisite to a claimant filing an FTCA action with a federal district court. 4 28 U.S.C. § 2675(a) reads, in part: An action shall not be instituted upon a claim against the United States for money damages for injury or loss of property or personal injury or death caused by the negligent or wrongful act or omission of any employee of the Government while acting within the scope of his office or employment, unless the claimant shall have first presented the claim to the appropriate Federal agency and his claim shall have been finally denied by the agency in writing and sent by certified or registered mail. The failure of an agency to make final disposition of a claim within six months after it is filed shall, at the option of the claimant any time thereafter, be deemed a final denial of the claim for purposes of this section. Case 3:17-cv-00284-CRS Document 7-1 Filed 06/02/17 Page 8 of 26 PageID #: 40 9 Specifically, the FTCA instructs that [a] tort claim against the United States shall be forever barred unless it is presented in writing to the appropriate Federal agency within two years after such claim accrues or unless action is begun within six months after the date of mailing, by certified or registered mail, of notice of final denial of the claim by the agency to which it was presented. 28 U.S.C. § 2401(b). Exhaustion of administrative remedies as a jurisdictional prerequisite cannot be waived. Garrett v. United States, 640 F.2d 24 (6th Cir. 1981); Allen v. United States, 517 F.2d 1328 (6th Cir. 1975); McAfee v. 5th Circuit Judges, 884 F.2d 221 (5th Cir. 1989); Henderson v. United States, 785 F.2d 121 (4th Cir. 1986); Jackson v. United States, 730 F.2d 808 (D.C. Cir. 1984); Holloman v. Watt, 708 F.2d 1399 (10th Cir. 1983); Contemporary Mission, Inc. v. U.S. Postal Service, 648 F.2d 97 (2nd Cir. 1981). The FTCA is a specific congressional exception to sovereign immunity allowing the government to be sued for tortious acts committed by its employees. Suarez. v. United States, 22 F.3d 1064 (11th Cir. 1994). The circumstances of its waiver must be scrupulously observed and may not be expanded by the courts. See, e.g., United States v. Kubrick, supra. Plaintiffs’ complaint presents allegations sounding in tort and they expressly invoke the jurisdiction of the FTCA. But, Plaintiffs failed to file an FTCA administrative claim with the Exchange. Nothing in Plaintiffs’ complaint refutes this fact. Because Plaintiffs failed to file an administrative claim with AAFES, the agency has not “finally denied” the state tort claims, nor has it failed to make final disposition of same. 28 U.S.C. § 2675(a). Thus, Plaintiffs have not exhausted their administrative remedies and, therefore, the Court has no jurisdiction over the state court tort claims. Accordingly, the state tort claims in the complaint must be dismissed. Case 3:17-cv-00284-CRS Document 7-1 Filed 06/02/17 Page 9 of 26 PageID #: 41 10 C. The Doctrine Of Derivative Jurisdiction Demands Dismissal Of FTCA Claims The FTCA informs that federal courts have exclusive jurisdiction over “claims against the United States for money damages … for injury or loss of property ….” 28 U.S.C. § 1346(b). FTCA claims therefore cannot be maintained in state court. The doctrine of derivative jurisdiction classifies removal jurisdiction as derivative of the state court's jurisdiction. Arizona v. Manypenny, 451 U.S. 232, 242 (1981); Minnesota v. United States, 305 U.S. 382, 389 (1979). Derivative jurisdiction still applies to cases removed pursuant to 28 U.S.C. § 1442. See Johnson v. Louisville Intern. Airport, 2011 WL 2710364, *2 (W.D.Ky. July 12, 2011); Cobble v. Geithner, 2011 WL 1625093, *2 (W.D.Ky. April 28, 2011). Because the state court lacked subject matter jurisdiction over this case, this Court did not acquire jurisdiction upon removal. Accordingly, dismissal is appropriate. See Taylor v. United States, 2006 WL 2037392, *2 (W.D.Ky. July 18, 2006). D. The Court Lacks Jurisdiction To Hear Plaintiffs’ Claims Of Defamation Plaintiffs claim that “Defendant did utter defamatory language about the Plaintiffs, to wit: that they owed certain sums of money.” Compl. at ¶ 20. The FTCA excepts certain torts from the United States’ waiver of sovereign immunity, including libel and slander. 28 U.S.C. § 2675(a). As the conduct alleged falls within the FTCA statutory exception, the Court lacks subject matter jurisdiction. See Siegert v. Gilley, 500 U.S. 226, 233-34 (1991) (noting that defamation based claims may not proceed against the United States pursuant to the FTCA, 28 U.S.C. § 2680(h)); Henson v. Nat’l Aeronautics and Space Admin., 14 F.3d 1143, 1147-48 (6th Cir.1994) (same). Plaintiffs’ claim of defamation must be dismissed, regardless of their failure to first exhaust the administrative requirements of the FTCA. Case 3:17-cv-00284-CRS Document 7-1 Filed 06/02/17 Page 10 of 26 PageID #: 42 11 E. Plaintiffs’ Claims Of Interference Must Be Dismissed Plaintiffs allege that “Defendants, intentionally interfered with said property (Plaintiff’s tax refund) and did so with no reasonable claim thereto.” Compl. at ¶ 17. The Treasury, as mandated by TOP, offset Plaintiffs’ return against the debt AAFES claimed Plaintiff Monica Sanders owed. Congress, however, expressly exempted from the waiver of sovereign immunity created by the FTCA “[a]ny claim for damages caused by the fiscal operations of the Treasury or by the regulation of the monetary system.” 28 U.S.C. § 2680(i). The TOP is a mandated fiscal operation of the Treasury. Plaintiffs’ claims resulting from a Treasury offset should be dismissed. Furthermore, Kentucky recognizes the tort of “intentional interference with prospective contractual relation,” as described in the Restatement (Second) of Torts § 766B. See Cullen v. South East Coal Co., 685 S.W.2d 187 (Ky.App. 1983). The Restatement (Second) sets for the elements of the tort: One who intentionally and improperly interferes with another's prospective contractual relation (except a contract to marry) is subject to liability to the other for the pecuniary harm resulting from loss of the benefits of the relation, whether the interference consists of (a) inducing or otherwise causing a third person not to enter into or continue the prospective relation or (b) preventing the other from acquiring or continuing the prospective relation In order to be successful with such a claim, the plaintiff must not only prove interference was intentional, but must demonstrate that the motive to interfere was based upon malice. Cullen v. South East Coal Co., 685 S.W.2d 187 (Ky.App. 1983). Even if Plaintiffs’ claims that there was intentional interference with their tax refund could be construed as a tort recognized by Kentucky and the Court determined that Plaintiffs’ Treasury offset claim was not barred by the 28 U.S.C. § 2680(i), subsection (h) of 28 U.S.C. § 2680 also provides an exception to the United States’ waiver of sovereign immunity for “[a]ny claim arising Case 3:17-cv-00284-CRS Document 7-1 Filed 06/02/17 Page 11 of 26 PageID #: 43 12 out of … interference with contract rights.” Federal law governs the scope of the exception. United States v. Neustadt, 366 U.S. 696, 705-706 (1961). The “arising out of” language of the exception supports a broad interpretation of its scope. See Neustadt, 366 U.S. at 703, 711. Courts have found that the exception is broad and includes claims of interference with “prospective advantage.” Art Metal-U.S.Z., Inc. v. United States, 753 F.2d 1151, 1155 (D.C. Cir. 1985) (refusing claim that interference with prospective advantage is distinct common law and therefore not barred by the exception); see also Dupree v. United States, 264 F.2d 140 (3rd Cir.), cert. denied 361 U.S. 823 (1959); Moessmer v. United States, 760 F.2d 236 (8th Cir. 1985); Small v. United States, 333 F.2d 702, 704 (3rd Cir. 1964) (suit for damages to dental practice caused when plaintiff was erroneously called up to active military duty dismissed as unlawful interference with prospective contractual relations). Courts have also construed the exception beyond the concept of “prospective advantage.” See Aktiebolaqet Bofors v. United States, 194 F.2d 145, 148 (D.C. Cir. 1951) (barring an action for damages arising out of an alleged unauthorized use by the United States of an unpatented trade secret); United States v. Mullins, 228 F.Supp. 748 (W.D. Va. 1964) (barring a counterclaim against the United States which alleged that the Government had unlawfully frozen the assets of the counterclaimant and forced it into bankruptcy); Pargament v. Fitzgerald, 272 F.Supp. 553, 556 (S.D. N.Y. 1967), affirmed, 391 F.2d 934 (2d Cir. 1968) (an action alleging that the an IRS district director conspired with the purchaser of property at a tax sale to prevent the plaintiff from enforcing his chattel mortgage); Contemporary Mission. Inc. v. U.S. Postal Service, 648 F.2d 97, 105, n.9 (2d Cir. 1981) (barring a claim by a purported religious and charitable organization challenging the Postal Service’s actions in revoking its nonprofit bulk mail permit and putting a “hold” on its mail); Kessler v. General Services Administration, 341 F.2d 275 (2d Cir. 1964) Case 3:17-cv-00284-CRS Document 7-1 Filed 06/02/17 Page 12 of 26 PageID #: 44 13 (barring recovery for damages for interfering with plaintiff’s performance of her work as a GSA employee); and Segarra Ocasio v. Banco Regional de Bayamon, 581 F.Supp. 1255 (D.C.Puerto Rico 1984) (Plaintiff’s claim of damages against the Federal Deposit Insurance Corporation for withholding his certificate of deposit, precluding him from investing somewhere else at a higher yielding interest rate, fell within “interference with contract rights” exception of the FTCA). Because the United States has retained its sovereign immunity with respect to tort claims arising out of an interference with contract rights, which should be construed to include Plaintiffs’ claims, and related to claims for damages caused by the fiscal operations of the Treasury, this Court should dismiss Plaintiffs’ claims for lack of subject matter jurisdiction, even if the Court concludes Plaintiffs somehow exhausted their FTCA administrative remedies. F. Plaintiffs’ Claim Of Replevin Must Be Dismissed Plaintiffs further allege that this action is one sounding in “replevin to compel the return of the property and for damages related to the taking thereof.” Compl. at ¶ 6.5 Plaintiffs’ replevin claim is essentially a claim for a refund of the tax return that was the subject of the Treasury offset. Plaintiffs’ complaint alleges that the Treasury’s offset of their tax refund was wrongful, suggesting a claim in conversion rather than in replevin. See Mac’Avoy v. The Smithsonian Inst., 757 F.Supp 60, 67 (D.C.Cir. 1991). If this Court views an action in replevin as Plaintiffs’ attempt to seek a refund of a “sum alleged to have been … wrongfully collected” within the meaning of 26 U.S.C. § 7422, Plaintiffs failed to exhaust their administrative remedies under section 7422. See Ross v. United States, 460 F.Supp.3d 139, 152 (D.C.Cir. 2006). If the Court views an action sounding in replevin as one sounding in tort, this Court lacks jurisdiction over the claim for the reasons stated above, Plaintiffs’ failure to exhaust their administrative FTCA remedy and Congress’ express 5 Plaintiffs claim jurisdiction under KRS § 413.125. That statute is merely a statute of limitations. Case 3:17-cv-00284-CRS Document 7-1 Filed 06/02/17 Page 13 of 26 PageID #: 45 14 exemption from the FTCA waiver of sovereign immunity of “[a]ny claim for damages caused by the fiscal operations of the Treasury or by the regulation of the monetary system.” 28 U.S.C. § 2680(i); 28 U.S.C. § 2401(b). If the Court views an action sounding in replevin under Kentucky law as one seeking an equitable remedy, rather than sounding in tort, the United States has not waived sovereign immunity for such claims and this Court would not have jurisdiction. See 28 U.S.C. § 1346(b)(1); see also United States v. Sims, 376 F.3d 705, 708 (7th Cir. 2004) (“[The FTCA] provides a damages remedy, and [the defendant] is not seeking damages; he is seeking the return of the seized property itself, an equitable remedy.”). The Supreme Court recognized a difference between money damages and equitable relief: “The fact that a judicial remedy may require one party to pay money to another is not a sufficient reason to characterize the relief as ‘money damages.’” Bowen v. Massachusetts, 487 U.S. 879, 893 (1988). The Court viewed money damages as “intended to provide a victim with monetary compensation for an injury to his person, property, or reputation,” while equitable relief could “include an order providing for the reinstatement of an employee with backpay, or for ‘the recovery of specific property or monies, ejectment from land, or injunction either directing or restraining the defendant officer’s actions.’” Id. The difference does not hinge on whether money is the requested relief but rather if it is specific relief or substitute relief. Dep’t of the Army v. Blue Fox, 525 U.S. 255, 262 (1999). To the extent that Plaintiffs are requesting the return of money they claim was withheld improperly, the relief sought is specific and should be available under the Administrative Procedure Act (“APA”). See generally 5 U.S.C. § 500 et seq. Like the FTCA, judicial review under the APA is only available once all administrative remedies, that are expressly prescribed by statute or agency rule, have been exhausted. See Darby v. Cisneros, 509 U.S. 137, 153 (1993). Case 3:17-cv-00284-CRS Document 7-1 Filed 06/02/17 Page 14 of 26 PageID #: 46 15 Regardless of how the Court views Plaintiffs’ replevin claim, dismissal is appropriate. III. The Claims Against Individual Defendant Thomas Shull Must Be Dismissed A. Plaintiffs Cannot Prove Shull Was Personally Involved While the complaint does not specify which claims are directed at which named defendants, Plaintiffs purport to sue Thomas Shull, Director/CEO of the Exchange, in his individual capacity under a constitutional tort theory.6 See DN 6 (citing for the first time Bivens v. Six Unknown Named Agents, 403 U.S. 388 (1971)). The complaint fails as to Defendant Shull, because it is clear that Director Shull was not actually involved in the actions the complaint alleges. Plaintiffs cannot plausibly argue they have stated any valid Bivens claims against Shull upon which the Court could grant relief. See Merriweather v. Zamora, 569 F.3d 307, 319 (6th Cir. 2009) (a Bivens complaint “must allege that the defendants were personally involved in the alleged deprivation of federal rights”) (emphasis added). The Sanders’ vague complaint lacks any degree of specificity about the actions of CEO Shull that would demonstrate to the Court that he was personally involved in any of the alleged violations of their constitutional rights. Id. Moreover, officials are not vicariously liable under Bivens for the constitutional torts of their subordinates. See Jones v. City of Memphis, 586 F.2d 622, 625 (6th Cir. 1978); see also Dunn v. Tennessee, 697 F.2d 121, 128 (6th Cir.1982). The Sixth Circuit has clarified this argument, finding that “[t]he clear intendment of Bivens . . . is that those directly responsible for unconstitutional behavior may 6 Plaintiffs claim that AAFES began sending Mrs. Sanders collection letters in 2011 for an account she never opened. Compl. at ¶ 4. Conspicuously, Shull began his Director/CEO of the Exchange in June 2012. Despite the fact that Plaintiffs fail to properly allege that Shull played an active role in the decisions they allege in their complaint, he did not attain the position for which they name him as a defendant until after the identity mistake Plaintiffs themselves claim instigated the setoff by the Treasury. See Compl. at ¶ 3; see also Decl. of Joyce A. Bowers attached hereto as Exhibit “A”. It is not enough that Plaintiffs generally and vaguely plead that AAFES “employees performed on his instruction and policies.” Compl. at ¶ 3; see Ashcroft v. Iqbal, 556 U.S. at 678. Shull must be dismissed. Case 3:17-cv-00284-CRS Document 7-1 Filed 06/02/17 Page 15 of 26 PageID #: 47 16 be called to task for their wrongful acts.” Jones, 586 F.2d at 625 (emphasis added). In this case, Plaintiffs have asserted no allegation that Defendant Shull, the Director/CEO of the Exchange, personally was “directly responsible” for any of the “unconstitutional behavior” in the complaint. Id. Accordingly, the Court must dismiss all claims against him. Fed.R.Civ.P. 12(b)(6). B. The Court Should Decline to Imply a Bivens Remedy The Sanders’ claim against Mr. Shull is presumably based upon Bivens v. Six Unknown Named Agents, 403 U.S. 388 (1971). (DN 6). Constitutional torts against federal officials acting in their individual capacities under color of their federal authority are known as Bivens actions. In Bivens, the Supreme Court “recognized for the first time an implied private action for damages against federal officers alleged to have violated a citizen's constitutional rights.” Ashcroft v. Iqbal, 556 U.S. 662, 675 (2009). Specifically, the Court in Bivens allowed a plaintiff to bring a damages action in federal court against individual federal officials for violating the Fourth Amendment, despite the absence of any federal statute authorizing such an action. Bivens at 397. A Bivens remedy “is not an automatic entitlement . . . and in most instances … unjustified.” Wilkie v. Robbins, 551 U.S. 537, 550 (2007); see also Krafsur v. Davenport, 736 F.3d 1032, 1035 (6th Cir. 2013) (“Bivens actions do not cover every constitutional right and do not apply in every context.”); and Lerner v. Shinseki, 2013WL1758752, *4 (W.D.Ky. April 24, 2013) (“But a Bivens claim will not lie for every alleged violation of a constitutional right.”). With Wilkie, the Court revealed a two-step analysis for determining congressional intent as to the appropriateness of the court-created Bivens remedy. See id. at 550. Courts may imply a remedy directly under the Constitution only if: “(1) there are no ‘alternative, existing process[es]’ for protecting a constitutional interest and, (2) even in the absence of an alternative, there are no ‘special factors counselling hesitation.’” Left Fork Min. Co. v. Hooker, 775 F.3d 768, 774 (6th Cir. 2014) (quoting Case 3:17-cv-00284-CRS Document 7-1 Filed 06/02/17 Page 16 of 26 PageID #: 48 17 Wilkie, 551 U.S. at 550). This case involves both a legislated alternative process and special factors which preclude a Bivens remedy. 1. Wilkie Step One: Alternative, Existing Process First, the Court determines whether there is “any alternative, existing process for protecting” the plaintiff’s interests. Wilkie at 550. Such an alternative remedy would raise the inference that Congress “expected the Judiciary to stay its Bivens hand” and “refrain from providing a new and freestanding remedy in damages.” Id. The “alternative, existing process” inquiry requires no ‘foray into the meaningfulness of’ the remedies (if any) provided by such processes.” Jones v. Tennessee Valley Authority, 948 F.2d 258, 264 (6th Cir. 1991); see also Schweiker v. Chilicky, 487 U.S. 412, 425 (1988) (“The absence of statutory relief for a constitutional violation … does not by any means necessarily imply the courts should award money damages against the officers responsible for the violation.”). Instead, it involves consideration of “the comprehensive nature of the … system protecting the rights of the plaintiff, as well as Congress’ expertise and authority in the field in question.” Jones, 948 F.2d. at 264. The Supreme Court has explained that, “[w]hen the design of a Government program suggests that Congress has provided what it considers adequate remedial mechanisms for constitutional violations that may occur in the course of its administration, we have not created additional Bivens remedies.” Chilicky at 423. The Court has refrained from creating a judicially implied remedy even when the available statutory remedies “do not provide complete relief” for a plaintiff that has suffered a constitutional violation. See Corr. Servs. Corp. v. Malesko, 534 U.S. 61, 69 (2001) (quoting Bush v. Lucas, 462 U.S. 367, 388 (1983)). “So long as the plaintiff ha[s] an avenue for some redress, bedrock principles of separation of powers foreclose[s] judicial imposition of a new substantive liability.” Id. Case 3:17-cv-00284-CRS Document 7-1 Filed 06/02/17 Page 17 of 26 PageID #: 49 18 In this case, Congress has separately provided a meaningful alternative remedy under the APA. Therefore, this Court should decline to infer a Bivens cause of action. See generally 5 U.S.C. § 500 et seq. The APA provides persons the general right of judicial review when they are aggrieved by an agency action. 5 U.S.C. § 702. Simply put, the APA leaves no room for Bivens claims based upon agency action or inaction. See Western Radio Services, Co. v. U.S. Forest Service, 578 F.3d 1116, 1123 (9th Cir. 2009) (“The design of the APA raised the inferences that Congress ‘expected the Judiciary to stay its Bivens hand’ and provides ‘a convincing reason for the Judicial Branch to refrain from providing a new and freestanding remedy in damages’” (quoting Wilkie v. Robbins, 551 U.S. 537, 550, 554 (2007))); see also Topping v. United States Dep’t of Educ., 510 F. App’x 816, 819 (11th Cir. 2013) (The existence of a right to judicial review under the APA is sufficient to preclude an individual from bringing a Bivens action) and LaMarca v. United States, 34 F.Supp.3d 796, 808-09 (N.D.Ohio 2014) (“The case law is replete with cases concluding that the availability of an administrative process to address a plaintiff’s complaint regarding an agency action, such as termination of benefits or incorrect calculations of sums due, precludes a Bivens action…. Accordingly, the Court concludes that in light of the HEA’s comprehensive statutory scheme to provide administrative relief for plaintiffs’ claims concerning Pell Grant participation and other remedies available to plaintiffs, a Bivens action is precluded.”); see also St. Catharine College, Inc. v. King, 2017 WL 1097205, *5 (W.D.Ky. March 22, 2017) (adopting reasoning of LaMarca). While Plaintiffs’ hodge podge pleading does not raise the jurisdictional foundation that Congress provided them via the APA, the APA is the proper mechanism for contesting the agency action Plaintiffs’ protest with the current action. A post-offset administrative appeal is available Case 3:17-cv-00284-CRS Document 7-1 Filed 06/02/17 Page 18 of 26 PageID #: 50 19 to Plaintiffs. See United States v. Beulke, 892 F.Supp.2d 1176, 1189 (D.S.D.2012). Because the APA is available to Plaintiffs, this Court should dismiss the Bivens claim against Defendant Shull. 2. Special Factors Counseling Hesitation As the Supreme Court explained in Wilkie, even when there is no alternative remedy, “a Bivens remedy is a subject of judgment: ‘the federal courts must make the kind of remedial determination that is appropriate for a common-law tribunal, paying particular heed, however, to any special factors counseling hesitation before authorizing a new kind of federal litigation.’” 551 U.S. at 548 (quoting Bush, 462 U.S. at 378). The term “special factors” derives from Bivens itself, in which the Supreme Court suggested that an implied constitutional remedy should not be implied where “special factors counsel[] hesitation in the absence of affirmative action by Congress.” Bivens, 403 U.S. at 396. It is “an embracing category, not easily defined.” Arar v. Ashcroft, 585 F.3d 559, 573-574 (2d Cir. 2009). “The only relevant threshold-that a factor ‘counsels hesitation’-is remarkably low . . . Hesitation is a pause, not a full stop, or an abstention; and to counsel is not to require. ‘Hesitation’ is ‘counseled’ whenever thoughtful discretion would pause even to consider.” Id. At its core, the question of whether to imply a remedy in general, and the special factors doctrine in particular, is a question of separation of powers. See Lebron v. Rumsfeld, 670 F.3d 540, 548 (4th Cir.), cert. denied, 132 S. Ct. 2751 (2012) (“[p]reserving the constitutionally prescribed balance of powers is . . . [a] special factor counseling hesitation” in implying a Bivens remedy). This is not a case involving a claim that a law enforcement officer wrongly detained or searched a citizen. Rather, this case merely alleges that a government agency wrongly certified a debt to the Treasury pursuant to TOP. Before this Court creates new Bivens law in the area of the Treasury Offset Program, hesitation is counseled. To the undersigned’s knowledge, no court has Case 3:17-cv-00284-CRS Document 7-1 Filed 06/02/17 Page 19 of 26 PageID #: 51 20 ever applied a Bivens remedy to such a matter against the Director of a government agency. Bivens law should not be created and expanded to include the context alleged in Plaintiffs’ complaint. C. Defendant Shull Is Afforded Qualified Immunity For Plaintiffs’ Claims Further, the doctrine of qualified immunity insulates Defendant Shull from litigation stemming from the allegations of the complaint. Qualified immunity gives public officials the benefit of the doubt as long as the law at the time of their conduct did not clearly prohibit their actions. See Hunter v. Bryant, 502 U.S. 224, 229 (1991) (per curiam) (describing qualified immunity as “accommodation for reasonable error”). Qualified immunity protects “all but the plainly incompetent or those who knowingly violate the law.” Malley v. Briggs, 475 U.S. 335, 341 (1986). The Supreme Court stated that qualified immunity “gives government officials breathing room to make reasonable but mistaken judgments about open legal questions.” Ashcroft v. al-Kidd, 563 U.S. C, 2011 WL 2119110, at *9 (May 31, 2011).7 The doctrine provides a true “immunity from suit rather than a mere defense to liability[.]” Mitchell v. Forsyth, 472 U.S. 511, 526 (1985) (emphasis original). The purpose of qualified immunity is to allow government officials to carry out their duties without fear of personal liability or harassing litigation. Anderson v. Creighton, 483 U.S. 635, 638 (1987); McCullough, 559 F.3d at 1205. Qualified immunity is “an entitlement not to stand trial or face the other burdens of litigation” including discovery. Mitchell, 472 U.S. at 526. Therefore, the Supreme Court has “repeatedly . . . stressed the importance of resolving immunity questions at the earliest possible stage in litigation.” Hunter v. Bryant, 502 U.S. 224, 227 (1991). See also, 7 An official remains immune even if his conduct violated other, non-constitutional standards such as internal guidelines, ethical principles, or regulations. See Davis v. Scherer, 468 U.S. 183, 194- 96 & n.12 (1984). Case 3:17-cv-00284-CRS Document 7-1 Filed 06/02/17 Page 20 of 26 PageID #: 52 21 Johnson v. Breeden, 280 F.3d 1308, 1317 (11th Cir. 2002) (“[b]ecause of the purpose served by the doctrine of qualified immunity, a valid defense based upon it must be recognized as soon as possible, preferably at the motion to dismiss or summary judgment stage”). The Sixth Circuit uses a “two-step inquiry” to assess qualified immunity: “(1) whether, considering the allegations in a light most favorable to the party injured, a constitutional right has been violated; and (2) whether that right was clearly established.” Heyne v. Metropolitan Nashville Public Schools, 655 F.3d 556, 562 (6th Cir. 2011) (internal quotations omitted). Courts are free to consider the two-part test in whatever order is appropriate in light of the issues before them and may begin with the second step. Id. Here, the Court must necessarily answer the first prong of this test as to Defendant Shull in the negative. Even taking every allegation and inference in favor of Plaintiffs, the complaint is utterly devoid of any allegation that Defendant Shull took or engaged in any action whatsoever that caused the Sanders to suffer a violation of any constitutional right. First, as stated above, the Court could not hold Defendant Shull personally liable for actions he did not take. See Iqbal, 129 S. Ct. at 1948 (“[A] plaintiff must show that each Government-official defendant, through the defendant=s own individual actions, has violated the constitution.”); see also Mueller v. Gallina, 137 Fed. Appx. 847, 850 (6th Cir. 2005); Nwaebo v. Hawk-Sawyer, 100 Fed. Appx. 367, 369 (6th Cir. 2004) (finding a defendant must have been “personally involved in or responsible for the alleged deprivation of [the plaintiff=s] federal rights” to sustain a Bivens claim); Kesterson v. Moritsugu, 149 F.3d 1183 (6th Cir. 1998) (finding same); see also Mitchell at 472 U.S. at 526. Plaintiffs cannot show that CEO Tom Shull was personally involved in making the alleged determinations that lead to Treasury offsetting any tax return refund. The idea that the Director of Case 3:17-cv-00284-CRS Document 7-1 Filed 06/02/17 Page 21 of 26 PageID #: 53 22 an agency personally involved himself with Plaintiffs and this alleged debt is nonsensical and a claim not even pleaded. Second, Plaintiffs claim the Treasury “seized” their 2015 and 2016 tax returns “without due process and violated the Plaintiffs’ civil rights.” Compl. at && 7, 10.8 Plaintiffs’ Fifth Amendment due process claims against Shull, assuming Shull is the target for these claims, fails the first prong of the qualified immunity analysis because they cannot establish that anyone violated their constitutional rights. Heyne at 562. The Fifth Amendment provides that “[n]o person shall be . . . deprived of life, liberty, or property without due process of law.” U.S. Const. Amend. V. Although not specified, it appears from the allegations in the complaint that Plaintiffs are attempting to state a procedural due process claim. “A party alleging denial of procedural due process rights must prove as an essential element of the claim that state procedural remedies are inadequate.” Doe v. Board of Educ. Of Elyria City Schools, 1998 WL 344061, * 5 (6th Cir., May 27, 1998) (citing Honig v. Doe, 484 U.S. 305, 327 (1988) (dealing with the Fourteenth Amendment). The purpose of procedural due process is to protect individuals against arbitrary action by the government. County of Sacramento v. Lewis, 523 U.S. 833, 845-46 (1998). “In order to establish a procedural due process claim, a plaintiff must show that (1) he had a life, liberty, or property interest protected by the Due Process Clause; (2) he was deprived of this protected interest; and (3) the state did not afford him adequate procedural rights prior to depriving him of the [protected] interest.” Waeschle v. Dragovic, 576 8 Federal agencies cannot be sued for constitutional violations. See F.D.I.C. v. Meyer, 510 U.S. 471, 486 (1994); Platsky v. C.I.A., 953 F.2d 26, 28 (2d Cir.1991); and Federal Exp. Corp. v. U.S. Postal Service, 151 F.3d 536, 540 (6th Cir. 1998); American Premier Underwriters, Inc. v. National R.R. Passenger Corp., 709 F.3d 584, 588-590 ( 6th Cir. 2013). Case 3:17-cv-00284-CRS Document 7-1 Filed 06/02/17 Page 22 of 26 PageID #: 54 23 F.3d 539, 544 (6th Cir. 2009) (quoting Women’s Med. Prof=l Corp. v. Baird, 438 F.3d 595, 611 (6th Cir. 2006)). In this case, Plaintiffs admit they received pre-offset due process in the form of their contest to the agency once they received notice that the Exchange contended Monica Sanders owed a debt. Post-offset, the proper mechanism for the Sanders to contest the current offset is via an administrative proceeding with the Exchange, the creditor agency which apparently certified that Monica Sanders owed the delinquent debt. See, e.g., Johnson v. U.S. Dep’t of Treasury, 300 F. App’x at 862 (upholding district court’s 12(b)(6) dismissal and holding that plaintiff was required to seek relief against the state agency to which he owed the debt rather than Treasury); Lepelletier v. U.S. Dep’t of Education, 2009 WL 4840153 at *1 (D.D.C. 2009) (holding that to the extent plaintiff disputed his outstanding debt, he must proceed against the creditor agency and not Treasury); United States v. Mayer, 2010 WL 4916561, *1 (D.N.H., December 3, 2010); and Edwards v. Colvin, 2014 WL 5493473, at *3-4 (W.D. Pa. Oct. 30, 2014). Once they have exhausted that administrative remedy, if the final agency action is not to their liking, they may file a claim with this Court under the APA, as mentioned above. See Benjamin v. United States, 2014 WL 3900220, *7 (M.D.Penn., August 8, 2014) (“[T]he statute and regulations creating the Treasury Offset Program provide ample due process protections to a [] plaintiff prior to an offset, and allow for administrative agency review of any offset decisions, followed by judicial review of particular offsets, if necessary.”); See also United States v. Beulke, 892 F.Supp.2d 1176, 1189 (D.S.D.2012) (holding that if a person is dissatisfied with a TOP offset, administrative remedies are available to provide due process to debtors against whom offset is sought). Due process is available to Plaintiffs. Case 3:17-cv-00284-CRS Document 7-1 Filed 06/02/17 Page 23 of 26 PageID #: 55 24 Plaintiffs have failed to state a claim upon which this Court may grant relief against Defendant Shull. D. The Bivens Claim Is, At Least In Part, Barred By The Limitations Period This Court lacks subject matter jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(1) because Sanders’ Bivens claims are barred, at least in part, by Kentucky’s one-year statute of limitations. The state statute of limitations for personal injuries governs claims under Bivens. Owens v. Okure, 488 U.S. 235, 239-40 (1998). Federal courts sitting in Kentucky “borrow” Kentucky’s one-year statute of limitations for personal injury claims, K.R.S. § 413.140(1). Accordingly, because Plaintiffs allege Bivens as the source of their claims of constitutional harm (see DN 6), this Court must adopt Kentucky’s one-year statute of limitations. Plaintiffs claim that AAFES began sending Mrs. Sanders collection letters in 2011 for an account she never opened, one year before Shull assumed his position with the Exchange. Compl. at ¶ 4; Ex. A. They disputed those claims prior to filing their tax returns in 2016, presumably as early as 2011.9 Compl. at ¶ 5. They further claim that they knew in 2016 that their 2015 tax return proceeds in the amount of $300.28 were the subject of a Treasury setoff. Compl. at ¶ 7. It is only after they learn of a second Treasury setoff of their tax returns in 2017 that they brought the current action. Id. at ¶ 10. Therefore, if Plaintiffs could properly articulate a Bivens action, the accrual of that action was more than one year from the date of the filing and their claims are not timely. Defendant Shull must be dismissed. 9 Plaintiffs’ complaint is deficiently pleaded with regard to when they “summited [sic] numerous documents to AAFES showing the bill was not hers and that the information provided by AAFES did not match her personal information;” however, it is implied that their dispute happened well before 2016. Case 3:17-cv-00284-CRS Document 7-1 Filed 06/02/17 Page 24 of 26 PageID #: 56 25 E. Plaintiffs Have No Fourteenth Amendment Or ' 1983 Remedy This Court must also dismiss all Fourteenth Amendment and 42 U.S.C. ' 1983 claims against Defendant Shull.10 Even taking as true every allegation of the complaint, the Sanders cannot dispute that Shull was at all relevant times a federal official who was acting within the scope and course of his employment with the Exchange, a component of a federal agency. A “§ 1983 action is against state officers,” while “a Bivens action is against federal officers.” Carlson v. Green, 446 U.S. 14, 51 at FN 14 (1980); see also Robertson v. Lucas, 753 F.3d 606, 614 (6th Cir. 2014) (explaining the difference between § 1983 and Bivens) and Haines v. Federal Motor Carrier Safety Admin., 814 F.3d 417 (6th Cir. 2016). Likewise, Plaintiffs mistakenly asserts Fourteenth Amendment due process violations. Because the Fourteenth Amendment is applicable only to state actors, Plaintiffs’ due process claims under the Fourteenth Amendment must be dismissed. See Bybee v. City of Paducah, 46 Fed. Appx. 735, 737-38 (6th Cir. 2002) (“… Fourteenth Amendment’s Due Process Clause restricts the activities of the states and their instrumentalities); but see Medial Mut. v. deSoto, 245 F.3d 561, 575 (6th Cir. 2001) (Gilman, R., concurring) (“[T]he language and policies behind the Due Process Clause of the Fourteenth Amendment are essentially the same as those behind the Due Process Clause of the Fifth Amendment.”). 10 Plaintiffs also cite 28 U.S.C. § 1343 which is simply the jurisdictional predicate for 42 U.S.C. § 1983. Section 1343 of Title 28 confers jurisdiction upon a district court to hear cases brought under 42 U.S.C. § 1983. In order to state a claim under § 1983, a plaintiff must allege a violation or deprivation of a right secured by the Constitution and the laws of the United States, and that the alleged deprivation was committed by a person “acting under color of State law.” West v. Atkins, 487 U.S. 42, 48 (1988). Because none of the defendants were “acting under color of State law,” within the meaning of § 1983, Plaintiff's claims cannot be premised upon that statute. Therefore, subject matter jurisdiction in this case cannot be based upon 28 U.S.C. § 1343. Case 3:17-cv-00284-CRS Document 7-1 Filed 06/02/17 Page 25 of 26 PageID #: 57 26 F. Plaintiffs Failed Proper Service Pursuant To The Federal Rules Fed.R.Civ.P. 12(b)(4) provides for dismissal for insufficiency of process. Fed.R.Civ.P. 4(m) requires a plaintiff to serve the summons and complaint upon the defendant within 90 days after the complaint is filed. Williams v. Smith, 1999 WL 777654 (6th Cir. Sept. 17, 1999) (citing Fed.R.Civ.P. 4(m)). Plaintiffs did not properly serve Defendant Shull with a copy of the state court complaint or a summons prior to the removal of this case. Plaintiffs’ complaint was reportedly filed on April 3, 2017. While Plaintiffs still have time within Fed.R.Civ.P. 4(m) to properly serve Defendant Shull, Shull does not waive proper service in this case. Should Plaintiffs not achieve proper service, dismissal will be appropriate. CONCLUSION Plaintiffs’ complaint fails to properly allege the Court’s jurisdiction and fails to state any claim upon which relief may be granted. Plaintiffs’ remedy is an administrative action with the agency they claim incorrectly included them within the Treasury’s Offset Program. This Court must dismiss the current action. WHEREFORE, the United States, on behalf of the named federal defendants, respectfully request a proper order of dismissal with prejudice. A proposed order is hereto attached. Respectfully submitted, JOHN E. KUHN, JR. United States Attorney /s/ Michael D. Ekman Michael D. Ekman Assistant U.S. Attorney 717 W. Broadway Louisville, KY 40202 (502) 625-7102/ Fax: (502) 625-7110 Michael.Ekman@usdoj.gov Case 3:17-cv-00284-CRS Document 7-1 Filed 06/02/17 Page 26 of 26 PageID #: 58 EXHIBIT A Case 3:17-cv-00284-CRS Document 7-2 Filed 06/02/17 Page 1 of 3 PageID #: 59 MONICA SANDERS v. UNITED STATES DISTRICT COURT WESTERN DISTRICI' OF KEN-IUCKY AT LOUISVILLE ANd JASON SAN}ERS PLAIN'fII.FS ARMY & AIR FORCE CffIL ACTION NO. EXCHANGE SERVICE and TOM SHULL DECI,ARATION OF JOYCE A. BOWERS DEFENDANTS I, Joyce A. Borvers, do hereby state and declare as f'ollows: 1. I am authorized to make this declaration pursuant to 28 U.S.C. $1746. I am an employee of the Army and Air Force Exchange Service (AAFES/Exchange). a joint non- appropriated fund instrumentality of the U.S. Army and U.S. Air Force rvithin the Departmeat of Defense. Its dual missions are to provide quality merchandise and services of necessity and convenience to authorized customers {primarily nrilitary personnel) at uniform low prices. and to generate reasonable eamings to supplement appropriated tirnds for the support of United States Army and Air Force Morale, Wellbre and Recrealion programs. The Exchange is headqua:tered in Dallas County'. Texas. 2. Exchange operates more :han 2.500 facilities rvorldr.vide, in more than 33 countries, 50 states. 5 U.S. territories and the District of Columbia. Exchange operates approximately 123 main saores, 168 Military Clothing stores, nearly 500 convenience stores and 67 theaters. The Exchange has nearly 1.500 quick-serve restaurants as well as more than 3,300 concession opera{ions. The Exchange operates 49 conringency locations in Afghanistan. Kuu,ait" Iraq. Saud! Arabia, Jordan, Qatar, United Arab Emirates, Romania. Cyprus. Bosnia and Kosovo. In addition. the Exchange offers credit programs tailored 1o active duty military. reservists. national guard. retired-service members and their family's credit needs. Exchange's credit accounts allow. among other things. cardholders to purchase and charge goods and services at Exchange fbcilities worldr,r'ide. Case 3:17-cv-00284-CRS Document 7-2 Filed 06/02/17 Page 2 of 3 PageID #: 60 3. Thomas C. Shull. Director/CEo hired 4 June 2012, exercises full and complete responsibility tbr the strategic direction, management, and technical control of all Exchange programs. Primary responsibility is to fulfill the mission of the Exchange which is to provide quality merchandise and services to its customers at competitively low prices and to generate earnings which provide a dividend to support morale, welfare, and recrealion programs. The major duties include the following: ' Develops the organization's vision and strategic direction above and beyond the tactical/operational level for fulfilling the exchange mission and achieving its goals. . Creates and sets the lone for a corporate culture that is in alignment with it value system, mission, and goals. . Provides leadership. coaching and development to all associates. Builds and develops a high performance maragement team. . Formulates, oversees, and enforces Department of Defense (DoD)/Exchange policy. ' Develops and maintains collaborative relations with other DoD entities to reduce costs through improving combined operational effi ciencies. ' Appoint trustees for exercising fiduciary responsibilities over investments. 4. I declare under penalty of perjury under the laws of the United States of America that the foregoing is true and correct. Executed this 31st day of May 2Ar7, at Dallas, Texas Case 3:17-cv-00284-CRS Document 7-2 Filed 06/02/17 Page 3 of 3 PageID #: 61 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF KENTUCKY AT LOUISVILLE MONICA SANDERS and JASON SANDERS PLAINTIFFS v. CIVIL ACTION NO.: 3:17-CV-00284-CRS ARMY & AIR FORCE EXCHANGE SERVICE and TOM SHULL DEFENDANTS ORDER Upon motion of the Defendants, to dismiss the above-styled action pursuant to Fed.R.Civ.P. 12(b)(1) and 12(b)(6), and the Court being otherwise sufficiently advised; IT IS HEREBY ORDERED that Defendants’ motion is GRANTED; accordingly, the Complaint in the above-styled action is DISMISSED. TENDERED BY: Michael D. Ekman Assistant U.S. Attorney 717 W. Broadway Louisville, KY 40202 (502) 625-7102 Case 3:17-cv-00284-CRS Document 7-3 Filed 06/02/17 Page 1 of 1 PageID #: 62