Shupe v. General Services Administration

MOTION to Dismiss for Lack of Jurisdiction

D. Ariz.October 3, 2016

1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 JOHN S. LEONARDO United States Attorney District of Arizona DENNIS C. BASTRON Assistant U.S. Attorney Arizona State Bar No. 027294 United States Courthouse 405 W. Congress Street, Suite 4800 Tucson, Arizona 85701 Telephone: 520-620-7300 Dennis.Bastron@usdoj.gov Attorney for the General Services Administration UNITED STATES DISTRICT COURT DISTRICT OF ARIZONA Richard Shupe, Plaintiff, v. General Services Administration, Defendant. No. CV-16-335-TUC-RM MOTION TO DISMISS FOR LACK OF JURISDICTION Defendant General Services Administration, under Fed. R. Civ. P. 12(b)(1) and 12(b)(5), respectfully requests that this Court dismiss Plaintiff Richard Shupe’s complaint for the following reasons. First, Shupe failed to effect service of process within 90 days after filing his complaint because he never served the U.S. Attorney General. This Court therefore lacks personal jurisdiction over the GSA. Second, the United States (including its agencies) enjoys sovereign immunity over claims for misrepresentation and unjust enrichment-the only two types of claims presented in Shupe’s complaint. The GSA supports this motion with the following memorandum of points and authorities. Case 4:16-cv-00335-RM Document 13 Filed 10/03/16 Page 1 of 9 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MEMORANDUM OF POINTS AND AUTHORITIES I. INTRODUCTION A. Richard Shupe sued the GSA, alleging that the agency misrepresented the condition of two vehicles Shupe purchased through online auctions. Richard Shupe filed a complaint against the General Service Administration on June 8, 2016. See Doc. 1 at 1. His allegations concern two vehicles that he purchased from online GSA auctions. Id. at 2:27-29. Shupe claims that, after winning auctions for a 2001 Dodge van and a 1997 P-30 step van, id. at 3:1, he sent GSA a cashier’s check for $15,219.00, id. at 3:5-7. He then drove with his wife to Marion, Illinois, to pick up the two vehicles. Id. at 3:11-13. When he obtained possession of them, he saw that “[b]oth vehicles had material defects not stated in the Defendant’s web pages.” Id. at 3:17-19. According to Shupe, the Dodge van’s defects included “extensive heavy rust, holes drilled in exterior door panels, [and] holes drilled throughout vehicles interior panels and doors.” Id. at 4:9- 10. The P-30 step van had “mileage . . . in excess of 100,000 miles” and “a five digit analog odometer,” and “was not roadworthy.” Id. at 4:18-20. To Shupe, the GSA’s “failure to state obvious defects found within both vehicles,” see id. at 2:21, amounts to “willful misrepresentation,” id. at 2:13. He asserts three causes of action-a count for violation of Arizona’s consumer-fraud statute, id. at 5:9-7:13, a count for unjust enrichment, id. at 7:15-8:11, and a count for negligent misrepresentation, id. at 8:13-9:5. B. After 117 days, Shupe still has not served the Attorney General, even though his failure to serve her resulted in the dismissal of an earlier version of this lawsuit. Again, Shupe filed this lawsuit on June 8, 2016-117 days ago. See Doc. 1 at 1. During that 117 days, he has filed three certified-mail receipts as proof of service. One of those receipts is for the GSA. See Doc. 11 at 3 (bottom receipt). The other two receipts are for certified mail sent to the U.S. Attorney’s Office for the District of Columbia, see Doc. 10 at 2 (certified-mail receipt from the U.S. Attorney’s Office for the District of Columbia’s civil-process clerk); Doc. 11 at 3 (certified-mail receipt for the District of Case 4:16-cv-00335-RM Document 13 Filed 10/03/16 Page 2 of 9 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Columbia’s civil chief, Daniel F. Van Horn). When the U.S. Attorney’s Office for the District of Columbia received a copy of the complaint and summons, it promptly notified Shupe that he needed to serve the U.S. Attorney for the District of Arizona and the Attorney General. See Exhibit 1: June 22, 2016 Letter from Daniel F. Van Horn. There is no evidence that Shupe ever followed that advice and served the U.S. Attorney General.1 Shupe’s failure to serve the Attorney General doomed an earlier version of this lawsuit. Indeed, Shupe brought nearly identical claims against the GSA on November 14, 2014. See Case No. CV-14-2477-TUC-JGZ, Doc. 1. Several months after Shupe filed his complaint, Judge Zipps reviewed the record and advised Shupe that he still needed to serve the Attorney General. See Case No. CV-14-2477-TUC-JGZ, Doc. 18 at 1:25-2:2. When Shupe failed to comply with Judge Zipps’ order, Judge Zipps dismissed the lawsuit without prejudice. See Case No. CV-14-2477-TUC-JGZ, Doc. 22 at 2:4-11. II. ARGUMENT A. This Court should dismiss Shupe’s lawsuit for failure to effect service of process within 90 days. This Court should dismiss Shupe’s complaint for insufficient service of process. See Fed. R. Civ. P. 12(b)(5). Service of process is necessary for a federal court to acquire personal jurisdiction over a defendant. Omni Capital Intl. Ltd. v. Rudolf Wolff & Co., 484 U.S. 97, 104 (1987); see also Murphy Bros. Inc. v. Michetti Pipe Stringing Inc., 526 U.S. 344, 350 (1999) (“In the absence of service of process . . . , a court ordinarily may not exercise power over a party the complaint names as defendant.”). Thus, if a plaintiff does not properly serve a defendant within 90 days after the complaint is filed, the court may dismiss the defendant, unless the plaintiff demonstrates good cause for his failure to timely effect service. Fed. R. Civ. P. 4(m). The burden of proof on this issue rests with the plaintiff, Brockmeyer v. May, 383 F.3d 798, 801 (9th Cir. 2004), who must show substantial compliance with Rule 4, see Crowley v. Bannister, 734 F.3d 967, 975 (9th Cir. 1 Although Shupe did not file proof of service for the U.S. Attorney for the District of Arizona, the GSA acknowledges that the local U.S. Attorney was served. Case 4:16-cv-00335-RM Document 13 Filed 10/03/16 Page 3 of 9 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 2013) (“Neither actual notice, nor simply naming the person in the caption of the complaint, will subject the defendants to personal jurisdiction if service was not made in substantial compliance with Rule 4.” (internal brackets and quotation marks omitted)). That Shupe is self-represented does not relieve him of the obligation to follow Rule 4. See e.g. Ghazali v. Moran, 46 F.3d 52, 54 (9th Cir. 1995) (per curiam) (“Although we construe pleadings liberally in their favor, pro se litigants are bound by the rules of procedure.”). Shupe cannot meet his burden of establishing that he substantially complied with Rule 4. Under Rule 4, a plaintiff who sues a federal agency, like the GSA, must “send a copy of the summons and of the complaint by registered or certified mail to the agency.” Fed. R. Civ. P. 4(i)(2). But that is not enough; a plaintiff must also “serve the United States.” Id. Serving the United States is itself a two-step process. See Fed. R. Civ. P. 4(i)(1). A plaintiff must both (1) personally deliver (or mail, using registered or certified mail) a copy of the complaint and a summons to the U.S. Attorney for the district where the action is brought, see Fed. R. Civ. P. 4(i)(1)(A), and (2) mail, using registered or certified mail, a copy of the complaint and a summons to the Attorney General of the United States in Washington D.C., see Fed. R. Civ. P. 4(i)(1)(B). Neither of those steps is optional. See Tuke v. U.S., 76 F.3d 155, 156-57 (7th Cir. 1996) (rejecting the plaintiff’s argument that serving only the local U.S. Attorney was sufficient); McGregor v. U.S., 933 F.2d 156, 159-60 (2d Cir. 1991) (affirming the district court’s dismissal of an FTCA complaint for the plaintiff’s failure to timely serve the Attorney General) superseded on other grounds by Zapata v. City of N.Y., 502 F.3d 192 (2d Cir. 2007). Here, Shupe can show that he served the GSA. (The GSA acknowledges that Shupe also mailed a copy of the summons and complaint to the U.S. Attorney for the District of Arizona, even though Shupe did not file any proof of service.) But there is no evidence that Shupe has served the Attorney General of the United States in Washington D.C. Instead, Shupe mailed copies of the complaint and summons to the U.S. Attorney for the District of Columbia. See Doc. 10 at 1; Doc. 11 at 3. That public official, though, is not the same as the Attorney General of the United States, see Tuke, 76 F.3d at 156 (noting Case 4:16-cv-00335-RM Document 13 Filed 10/03/16 Page 4 of 9 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 that the plaintiff improperly mailed the U.S. Attorney for the District of Columbia), who still has not been properly served. Moreover, Shupe cannot demonstrate good cause for his failure to timely serve the Attorney General. He knew he was required to serve the Attorney General, because his first attempt to bring this lawsuit was dismissed due to his failure to serve her. See Case No. CV-14-2477-TUC-JGZ, Doc. 22 at 2:4-11. Shupe also had notice that the U.S. Attorney for the District of Columbia, to whom he twice mailed copies of the complaint and a summons, was not a proper party to serve in this case. Upon receiving a copy of the complaint and a summons, an attorney from the District of Columbia promptly returned a letter to Shupe. See Exhibit 1. The letter clarified that the U.S. Attorney for the District of Columbia was the wrong party to serve. See id. Because Shupe failed to serve the U.S. Attorney General, this Court lacks personal jurisdiction over the GSA. Further, Shupe cannot demonstrate good cause for his failure to serve the Attorney General within 90 days after filing his compliant, so this Court should dismiss the complaint under Rule 4(m). B. This Court lacks subject-matter jurisdiction over the claims in Shupe’s complaint because the United States retains sovereign immunity for misrepresentation and unjust-enrichment claims. If this Court declines to dismiss Shupe’s complaint for failure to effect service of process, it should dismiss his complaint for another reason-lack of subject-matter jurisdiction. This Court lacks subject-matter jurisdiction over Shupe’s claims because, as explained below, the United States retains sovereign immunity over misrepresentation and unjust-enrichment claims. 1. The United States, in the Federal Tort Claims Act, did not waive sovereign immunity for misrepresentation claims; a plaintiff cannot pursue such claims, even if the claims are disguised as negligence claims or claims under a state’s consumer-fraud statute. This Court lacks subject-matter jurisdiction over count one and count three of Shupe’s complaint (Shupe’s misrepresentation claims) because the United States has not consented to be sued for misrepresentation. Case 4:16-cv-00335-RM Document 13 Filed 10/03/16 Page 5 of 9 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 The United States is a sovereign; it is therefore “immune from suit unless it has expressly waived such immunity and consented to be sued.” Dunn & Black P.S. v. U.S., 492 F.3d 1084, 1087-88 (9th Cir. 2007) (quoting Gilbert v. DaGrossa, 756 F.2d 1455, 1458 (9th Cir. 1985)). The waiver of immunity cannot be implied but “must be unequivocally expressed in statutory text.” Lane v. Pena, 518 U.S. 187, 192 (1996). Without such an unequivocal expression of a waiver, courts lack jurisdiction over the suit. U.S. v. White Mt. Apache Tribe, 537 U.S. 465, 472 (2003). Shupe bears the burden of establishing that his “action falls within an unequivocally expressed waiver of sovereign immunity.” See Dunn & Black, 492 F.3d at 1088 (observing that Dunn & Black had the burden of proof). Shupe cannot meet his burden of establishing that count one or count three “falls within an unequivocally expressed waiver of sovereign immunity.” See id. The waiver of sovereign immunity that merits discussion here is the Federal Tort Claims Act. That act authorizes private tort actions against the United States. 2 See 28 U.S.C. § 1346(b)(1). But certain claims, identified in 28 U.S.C. § 2680, are excluded from the Federal Tort Claims Act’s waiver-in other words, the United States retains sovereign immunity over those claims. Among the claims over which the United States retains its sovereign immunity are claims “arising out of . . . misrepresentation.” 28 U.S.C. § 2680(h). This exception to the FTCA’s waiver of sovereign immunity “is broadly construed.” Frigard v. U.S., 862 F.2d 201, 202 (9th Cir. 1988) (per curiam). Recognizing that “the essence of an action for misrepresentation . . . is the communication of misinformation on which the recipient relies,” see Block v. Neal, 460 U.S. 289, 296 (1983), courts have applied the misrepresentation exception to the FTCA to “bar claims arising from commercial 2 Only the United States-not a federal agency, like the GSA-may be named as a defendant under the Federal Tort Claims Act. See e.g. Allen v. Vets. Admin., 749 F.2d 1386, 1388 (9th Cir. 1984). Although Shupe’s failure to name the correct defendant could be cured by amendment, allowing Shupe to amend his complaint here would be futile because, as explained in this motion, claims for misrepresentation are excepted from the FTCA’s waiver of sovereign immunity. Case 4:16-cv-00335-RM Document 13 Filed 10/03/16 Page 6 of 9 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 decisions based on false or inadequate information provided by the government,” see Frigard, 862 F.2d at 202. To be sure, the misrepresentation exception bars claims for both intentional and negligent misrepresentation. See U.S. v. Neustadt, 366 U.S. 696, 702 (1961) (holding that “[section] 2680(h) comprehends claims arising out of negligent, as well as willful, misrepresentation”). And plaintiffs cannot avoid the misrepresentation bar by casting their claims as claims under a state’s consumer-fraud statute. See Moon v. Takisaki, 501 F.2d 389, 390 (9th Cir. 1974) (per curiam) (relying on § 2680(h) to affirm the district court’s dismissal of the plaintiff’s claim under the Washington Consumer Protection Act). Shupe’s claims in count one and count three are barred by 28 U.S.C. § 2680(h). The gravamen of those claims is that a United States agency misrepresented the condition of two vehicles that it sold through online auctions. See Doc. 1 at 7:1-13 (count one) and 8:28-30 (count three). Those are precisely the type of claims that the misrepresentation exception is intended to bar. See Frigard, 862 F.2d at 202. It makes no difference that Shupe invokes Arizona’s consumer-fraud statute in count one and casts count three as a negligence claim. Again, the misrepresentation exception bars claims even when they are presented as claims under a state’s consumer-fraud act, see Moon, 501 F.2d at 390, and it bars intentional as well as negligent misrepresentation claims, see Neustadt, 366 U.S. at 702. Accordingly, this Court lacks jurisdiction to consider Shupe’s claims in count one and count three. 2. The United States, in the Tucker Act (and Little Tucker Act), did not waive sovereign immunity over unjust-enrichment claims. This Court also lacks jurisdiction over Shupe’s claim in count two (his unjust- enrichment claim) because the United States has not consented to be sued for unjust enrichment. The waivers of sovereign immunity that warrant consideration here are the Tucker Act and Little Tucker Act.3 The Tucker Act, codified at 28 U.S.C. § 1491(a)(1), 3 Like the Federal Tort Claims Act, the Tucker Act (and Little Tucker Act) only authorizes suits against the United States-not against federal agencies. See 28 U.S.C. §§ 1346(a)(2) Case 4:16-cv-00335-RM Document 13 Filed 10/03/16 Page 7 of 9 8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 provides a waiver of sovereign immunity for claims “founded . . . upon any express or implied contract with the United States.” 28 U.S.C. § 1491(a)(1); see also McGuire v. U.S., 550 F.3d 903, 910 (9th Cir. 2008). While it confers jurisdiction over those claims only to the United States Court of Federal Claims, see 28 U.S.C. § 1491(a)(1) (“The United States Court of Federal Claims shall have jurisdiction . . . .”), the Little Tucker Act grants concurrent jurisdiction over those claims to United States District Courts when the plaintiff seeks $10,000 or less,4 see 28 U.S.C. § 1346(a)(2). The Court of Federal Claims has repeatedly recognized, though, that the Tucker Act’s waiver of sovereign immunity relating to claims “founded . . . upon any express or implied contract with the United States” does not extend to claims for unjust enrichment. See e.g. Lea v. U.S., 120 Fed. Cl. 440, 445 (2015); BioFunction LLC v. U.S., 92 Fed. Cl. 167, 174 (2010). As the Court of Claims explained in 1984, a claim for unjust enrichment “is not based upon a contract, but upon equitable doctrines.” Penn Towne Builders Inc. v. U.S., 4 Cl. Ct. 677, 681 (1984). Such a claim is “derived from notions of fairness which dictate that ‘a party ought to be bound rather than from the conclusion that a party has agreed to be bound.’” Id. at 681-82 (quoting Aetna Casaulty and Surety Co. v. U.S., 228 Ct.Cl. 146, 164 (1981). In other words, unjust-enrichment claims arise from contracts implied in law, which fall outside the scope of the Tucker Act’s waiver of sovereign immunity. See id. at 682. The Little Tucker Act, which bestows jurisdiction on this Court, is not a separate waiver of sovereign immunity; it simply extends concurrent jurisdiction to district courts when the plaintiff seeks less than $10,000. See 28 U.S.C. § 1346(a)(2). Thus, this Court lacks jurisdiction over Shupe’s unjust-enrichment claim. * * * Because the United States has not waived sovereign immunity and consented to be sued for misrepresentation or unjust enrichment, this Court lacks jurisdiction over Shupe’s and 1491(a)(1). But, again, allowing Shupe to amend his complaint to name the United States as the defendant would be futile. 4 Shupe purports to invoke the jurisdiction of the Little Tucker Act by seeking only $9,999.00. See Doc. 1 at 9:23-27. Case 4:16-cv-00335-RM Document 13 Filed 10/03/16 Page 8 of 9 9 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 claims. Accordingly, this Court should dismiss Shupe’s complaint for lack of subject- matter jurisdiction. III. CONCLUSION This Court should dismiss Shupe’s complaint. The Court lacks personal jurisdiction over the GSA because Shupe, by failing to serve the Attorney General, has not properly effected service under Rule 4(i)(2). If this Court declines to dismiss Shupe’s complaint for his failure to properly serve the GSA, it should nevertheless dismiss the complaint lack of subject-matter jurisdiction. The United States has not waived sovereign immunity and consented to be sued for misrepresentation or unjust enrichment-the only two types of claims presented in Shupe’s complaint. Thus, this Court should dismiss Shupe’s complaint. Respectfully submitted on October 3, 2016. JOHN S. LEONARDO United States Attorney District of Arizona By s/ Dennis C. Bastron DENNIS C. BASTRON Assistant United States Attorney Attorney for the United States of America CERTIFICATE OF SERVICE I hereby certify that on October 3, 2016, I electronically transmitted the attached document to the Clerk’s Office using the CM/ECF System for filing and transmittal of a Notice of Electronic Filing to the following CM/ECF registrants: Richard Shupe 3657 S Double Echo Rd Tucson, AZ 85735 Plaintiff By s/ Dennis C. Bastron Case 4:16-cv-00335-RM Document 13 Filed 10/03/16 Page 9 of 9 EXHIBIT 1 June 22, 2016 Letter from Daniel F. Van Horn Case 4:16-cv-00335-RM Document 13-1 Filed 10/03/16 Page 1 of 3 U.S. Department of Justice Charming D. Phillips United States Attorney District of Columbia Judiciary Center 555 Fourth St., Washington, D.C. 20530 June 22, 2016 Richard Shupe 3657 S. Double Echo Rd Tucson, AZ 85735 Re: Richard Shupe v. GSA, C.A. No. 16-0335 TUC RM Dear Mr. Shupe: Our Office recently received a Summons and Complaint, in the above-captioned case. We are returning those documents herewith because they appear to have been sent to our Office in error. Rule 4(i) of the Federal Rules of Civil Procedure prescribes the procedure for proper service of a civil action on the United States and its agencies, corporations, officers, and employees. Pursuant to that rule, service must be effected upon "the United States attorney for the district where the action is brought." The above-captioned case has been brought in the United States District Court for the District of Arizona, not the District of Columbia. Consequently, service must be effected on the United States Attorney for the District of Arizona. In this connection, please note that Fed. R. Civ. P. 4(d), which imposes a duty on certain defendants to avoid unnecessary expense of serving summons, does not apply to federal defendants, who must be served with a copy of the summons and complaint as prescribed in Fed. R. Civ. P. 4(i). Please note that United States Attorneys' offices are not authorized to accept service on behalf of the Attorney General of the United States, or other federal agencies, corporations, officers, or employees. Thus, to the extent that you are attempting to serve the Attorney General or the Department of Justice, the summons and complaint must be sent by registered or certified mail to the Department, addressed as follows: U.S. Department of Justice 950 Pennsylvania Avenue, N.W. Washington, D.C. 20530-0001 Case 4:16-cv-00335-RM Document 13-1 Filed 10/03/16 Page 2 of 3 Charming D. Phillips United States A • mey 3 Accordingly, service on the United States Attorney's Office for the District of Columbia is insufficient to effect proper service on the United States under Fed. R. Civ. P. 4(i)(I). The time for the defendants to respond to the complaint will not begin to run until after the summons and complaint have been properly served. Sincerely, By: DANIEL F. VAN HORN Chief, Civil Division Case 4:16-cv-00335-RM Document 13-1 Filed 10/03/16 Page 3 of 3