B & B Trucking, Inc. v. United States Postal Service , 363 F.3d 404 ( 2004 )

RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206 2 B&B Trucking, Inc., et al. v. No. 02-1562
ELECTRONIC CITATION: 2004 FED App. 0096P (6th Cir.) United States Postal Service
File Name: 04a0096p.06
UNITED STATES POSTAL -
UNITED STATES COURT OF APPEALS SERVICE, -
Defendant-Appellee. -
FOR THE SIXTH CIRCUIT N
_________________
B&B TRUCKING , INC.; X Appeal from the United States District Court
CAUSLEY TRUCKING , INC.; - for the Eastern District of Michigan at Detroit.
No. 01-72978—Avern Cohn, District Judge.
CLIFF BLACKBURN ; FEDRIZZI, -
- No. 02-1562
INC.; FOREMAN BROS., INC.; - Argued: October 29, 2003
GEORGE E. CAMPBELL AND >
, Decided and Filed: April 2, 2004
SONS, INC.; L.R. VINCENT -
TRUCK AND SERVICE, INC.; - Before: CLAY and COOK, Circuit Judges; STAFFORD,
M.C. EIPPERLE , INC.; - District Judge.*
MASSMAN TRUCKING , INC.; -
P-D TRUCKING , INC.; ROBERT - _________________
-
M. NEFF, INC.; ROTH
- COUNSEL
TRUCKING , INC.; ROYSTER -
ENTERPRISES, INC.; SODREL - ARGUED: Sharon Ambrosia-Walt, HOUGER & WALT,
TRUCK LINES, INC.; TAYLOR - Seattle, Washington, for Appellants Sheila H. Gaskell,
POSTAL CONTRACTING , INC.; - ASSISTANT UNITED STATES ATTORNEY, Detroit,
NATIONAL STAR ROUTE MAIL - Michigan, for Appellee. ON BRIEF: Sharon Ambrosia-
- Walt, HOUGER & WALT, Seattle, Washington, Larry J.
CONTRACTO RS ASSOCIATION ; -
Saylor, Frederick A. Acomb, MILLER, CANFIELD,
B&B INDUSTRIES, INC.; B&T - PADDOCK & STONE, P.L.C., Detroit, Michigan, for
MAIL SERVICES, INC.; SHEEHY - Appellants. Sheila H. Gaskell, ASSISTANT UNITED
MAIL CONTRACT ORS , INC., - STATES ATTORNEY, Detroit, Michigan, for Appellee.
Plaintiffs-Appellants, -
- CLAY, J., delivered the opinion of the court, in which
- STAFFORD, D. J., joined. COOK, J. (pp. 31-37), delivered
v. - a separate dissenting opinion.
-
-
*
- The Honorable William Stafford, Senior United States District Judge
for the Northern District of Florida, sitting by designation.
1
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_________________ subject matter jurisdiction. On April 1, 2002, the district
court issued an order denying Plaintiffs’ motion for
OPINION reconsideration, and Plaintiffs filed a timely appeal.
_________________
Substantive Facts
CLAY, Circuit Judge. Plaintiffs, B&B Trucking, Inc., et
al., appeal from the order of the United States District Court Plaintiffs are independent contractors who transport the
for the Eastern District of Michigan, entered on January 30, mail on highways for Defendant. Plaintiffs have fixed-rate
2002, granting the motion of Defendant, United States Postal contracts: the rate that Defendant pays Plaintiffs is determined
Service (“USPS”), to dismiss for lack of subject matter with reference to Plaintiffs’ annual estimates of the cost and
jurisdiction, in this action asserting constitutional rights and amount of fuel that will be needed in transporting the mail.
rights allegedly established by postal regulations. For the If fuel costs increase during the life of a contract, rendering
reasons set forth below, we REVERSE the district court on inaccurate the estimates upon which the contract payments
all claims, except for the claim for performance of the HCR were determined, then Plaintiffs have the contractual right to
contracts. request an adjustment in the contract price. Per Clause B-65
of the contract, Defendant’s contracting officer must accede
BACKGROUND to a request for an increase in price for it to take effect.
Because the fuel prices that Plaintiffs pay are passed on to
Procedural History Defendant in pre-contract estimates and potentially in
requests that are granted for adjustments during the life of the
On August 6, 2001, Plaintiffs filed suit to enjoin the USPS contracts, Defendant has an incentive to find methods of
from demanding that Plaintiffs, as motor carriers, begin limiting Plaintiffs’ fuel costs.
complying with the USPS’ national fuel program. Defendant
filed a motion to dismiss on grounds that the Contract To reduce Plaintiffs’ fuel costs, Defendant entered into fuel
Disputes Act of 1978, 41 U.S.C. §§ 601-613 divested the supply contracts with fuel manufacturers Exxon-Mobil and
district court of jurisdiction. After hearing oral argument on BP Amoco. These contracts are referred to by Plaintiffs as
December 12, 2001, the district court held its ruling in “Exxon contracts.” Plaintiffs characterize the Exxon
abeyance, to allow Plaintiffs to amend their filings. contracts as granting Exxon-Mobil and BP Amoco
exclusivity: “[t]he Exxon contracts grant Exxon-Mobil the
On January 9, 2002, Plaintiffs filed a second amended right to be the sole fuel supplier throughout the eastern
complaint, seeking declaratory and injunctive relief for seaboard region and central region . . . and the right to BP
(1) violation of Plaintiffs’ Fifth Amendment rights, Amoco to be the sole fuel supplier in the central, midwestern
(2) violation of postal regulations, and (3) violation of the due and western regions of the United States . . . .” (Petitioners’
process clause by arbitrary agency action without statutory Br. at 9.) The Exxon contracts designate the material terms
authority. of the sale of fuel, including price, fuel grade and quality,
quantity, and timing.
The district court issued an order, entered on January 30,
2002, granting the motion of Defendant to dismiss for lack of
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In addition, the contracts give Exxon-Mobil and BP Amoco own fuel tanks at their own expense, as part of the endeavor
the right to enter certain properties to supply fuel: “[t]he of arranging for their own fuel supply. The Exxon contracts
Exxon contracts identify the motor carriers with bulk fuel gave control to Exxon-Mobil and BP Amoco over the fuel to
tanks within the specific geographic location and designate be supplied to these tanks and the pricing of the fuel.
them as ‘fuel sites’ to which the sale and delivery of fuel will
be made.” (Petitioners’ Br. at 9.) This provision appears to DISCUSSION
give Exxon-Mobil and BP Amoco the right to enter certain
Plaintiffs’ land to fill certain fuel tanks, since some or all of The only issue before this Court is whether the district court
Plaintiffs have installed their own private “bulk fuel tanks properly dismissed for lack of subject matter jurisdiction. A
(tanks that are used not just for mail transportation but for all dismissal for lack of subject matter jurisdiction is reviewed
their business needs and that were installed, on their own de novo, with the plaintiff bearing the burden of establishing
property, at their expense, and not pursuant to any terms of a jurisdiction and the court taking the allegations in the
USPS contract).” (Petitioners’ Br. at 20-21.) complaint as true. Nichols v. Muskingum Coll., 318 F.3d 674,
677 (6th Cir. 2003). See also Green v. Ameritech Corp., 200
None of Plaintiffs were privy to the Exxon contracts, and F.3d 967, 972 (6th Cir. 2000) (de novo standard of review).
none of Plaintiffs were consulted regarding the terms of these
contracts. Plaintiffs’ original contracts with the USPS did not There are two steps to the analysis, each of which is briefly
contain terms governing the choice of fuel suppliers. The summarized here. The first step is to place this case within
fuel-cost-reduction program was expanded to reach Plaintiffs the framework of the applicable larger jurisdictional issues
through implementation of the Bulk Fuel Purchase Plan, and to set forth the appropriate legal standard. Where, as
which, in Defendant’s view–through Amendment 3 to here, the government is the defendant, the Contract Disputes
Defendant’s contracts with Plaintiffs–requires mail Act bars a district court from exercising jurisdiction over any
transporters to purchase fuel from Exxon-Mobil and BP individual claim that is contractual, when evaluated by the
Amoco. Some but not all of Plaintiffs agreed to source of the rights claimed and the relief sought (or
Amendment 3 to contracts with the USPS, without overt appropriate). Case law clearly establishes that claims are not
pressure from the USPS. Then, at some point, those Plaintiffs necessarily rendered contractual by the presence of a
whose contracts did not yet contain Amendment 3 were contractual relationship between the parties. In two
pushed to adopt the amendment, inasmuch as they were prominent cases, there was a contractual relationship between
“flatly told that [their] contracts would not be renewed plaintiffs and defendants, but nonetheless the claims were
without the clause.” (J.A. at 394) (affidavit of an officer of held to be non-contractual. Commercial Drapery
one of Plaintiffs). Contractors, Inc. v. United States, 133 F.3d 1, 3-4 (D.C. Cir.
1998); Megapulse, Inc. v. Lewis, 672 F.2d 959, 961-62, 968-
Compliance with the Exxon contracts was problematic for 69 (D.C. Cir. 1982).
Plaintiffs. Arguably, arranging for their own fuel supply for
their vehicles had allowed Plaintiffs to meet their fuel needs The second step is to determine whether the standard for
most effectively, altering the fuel supplied to their own trucks jurisdiction is satisfied. In the present case, much of the
to reflect climate, terrain, road, and truck-specific conditions determination as to whether the standard is met depends on
and variables. Some or all of Plaintiffs had installed their the relevance of Defendant’s arguments that Plaintiffs
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contractually waived the rights that they assert. Here, it is Without determining the validity of the third basis of
important to note that the applicable test (as set forth and as jurisdiction claimed, Plaintiffs’ first and second proffered
clarified in case law) is similar to the well-pleaded complaint bases for jurisdiction establish that if sovereign immunity
rule (which governs the more general jurisdictional issue of does not apply, then the district court had jurisdiction. The
whether there is federal question jurisdiction, under 28 U.S.C. question, then, is whether sovereign immunity applies. The
§ 1331). Under the Contract Disputes Act, the relevant Contract Disputes Act (“CDA”) states: “All claims by a
question is whether a claim (measured by the rights claimed contractor against the government relating to a contract shall
and the proper relief) would appear to be contractual on the be in writing and shall be submitted to the contracting officer
face of a well-pleaded complaint. As with the well-pleaded for a decision.” 41 U.S.C. § 605(a). If Plaintiffs’ claims
complaint rule, the substance of a defense is irrelevant–a against Defendant do not “relat[e] to a contract,” under the
well-taken contractual rebuttal argument has no bearing on meaning of the CDA, then sovereign immunity has been
jurisdiction, if the issue would not appear in a well-pleaded waived; otherwise, a district court would lack jurisdiction to
complaint. Applying these principles, the district court had hear the claims, which could only be brought before the Court
jurisdiction over all claims, except for the claim for of Federal Claims. 41 U.S.C. § 609(a)(1) (“Except as
enforcement of the HCR contracts. provided in paragraph (2), and in lieu of appealing the
decision of the contracting officer under section 6 [41 U.S.C.
I. § 605] to an agency board, a contractor may bring an action
directly on the claim in the United States Claims Court
Plaintiffs contend, and Defendant does not contest, that if [United States Court of Federal Claims], notwithstanding any
sovereign immunity has been waived, then the district court contract provision, regulation, or rule of law to the
would have jurisdiction over the claims in this case. Plaintiffs contrary.”).
argue that absent sovereign immunity, the district courts
would have jurisdiction through at least one of three At the outset, it is apparent that the contract itself does not
independent grants of jurisdiction, each of which would be answer the question of whether Plaintiffs’ claims “relat[e] to
sufficient. First, Plaintiffs cite the Postal Reorganization Act, a contract.” The contract in the present case contains a clause
39 U.S.C. § 401 et seq., whose section 401(1) grants the that states: “This contract is subject to the Contract Disputes
USPS the authority “to sue and be sued in its official name.” Act of 1978 (41 U.S.C. 601-613) (‘the Act’). Except as
Secondly, Plaintiffs point to 28 U.S.C. § 1339, which states: provided in the Act, all disputes arising under or relating to
“The district courts shall have original jurisdiction of any this contract must be resolved under this clause.” (J.A. at
civil action arising under any Act of Congress relating to the 327.) This language begs the question. The clause only
postal service.” See also Owen v. Mulligan, 640 F.2d 1130, applies to disputes “arising under or relating to this contract.”
1134 n.10 (9th Cir. 1981) (“if the suit is characterized as one The term “relating to a contract” is the same standard used by
requiring the Postal Service to follow its own regulations, the CDA. Thus, the contractual clause resolves nothing. If a
there is jurisdiction. 39 U.S.C. § 409(a); 28 U.S.C. § 1339.”). claim “relat[es] to a contract” then, regardless of any language
Finally, Plaintiffs point out that there may be federal question in the contract, the CDA bars the claim from being brought in
jurisdiction, under 28 U.S.C. § 1331. Plaintiffs claim that a district court. If a claim does not “relat[e] to a contract,”
Califano v. Sanders, 430 U.S. 99, 105 (1977) establishes that then neither the contract clause nor the CDA bars the claim
regulations of federal agencies are federal “laws.” from being brought in a district court. (The contractual
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phrase “arising under . . . this contract” is not sufficiently essence’ a contract action depends both on the source of
different from the phrase “relating to this contract” to alter the rights upon which the plaintiff bases its claim, and
this analysis.) upon the type of relief sought (or appropriate).”
Megapulse, supra at 968.
To resolve the question of whether the CDA bars a district
court from assuming jurisdiction over some or all of RMI Titanium Co. v. Westinghouse Elec. Corp., 78 F.3d
Plaintiffs’ claims, the analysis is rather complicated. Some 1125, 1136 (6th Cir. 1996). As RMI Titanium stated the
complexity arises from the fact that a dispute as a whole may Megapulse test (hereinafter, “the RMI Titanium/Megapulse
relate in part to a contract between the plaintiff(s) and the test”), the district court has jurisdiction over those claims, and
defendant(s)–i.e., the dispute may “relat[e] to” quite a number only those claims, that are not deemed “essentially
of issues, some of which involve a contract, perhaps as an contractual,” after a consideration of “the source of rights” of
ancillary item. The CDA makes clear that the nature of the the plaintiff’s claim and “the type of relief sought (or
dispute as a whole is irrelevant. Rather, claims must be appropriate).” This test makes clear that the determination of
examined individually to determine whether the CDA applies. whether the CDA bars jurisdiction depends on the plaintiff’s
The CDA states: “All claims by the government against a claims, as stated in the complaint–as explained in issue II,
contractor relating to a contract shall be the subject of a below, a defendant’s rebuttal points are not considered in this
decision by the contracting officer.” 41 U.S.C. § 605(a) analysis, which makes the test similar to the well-pleaded
(emphasis added); Campanella v. Commerce Exch. Bank, 137 complaint rule of federal question jurisdiction.
F.3d 885, 891 (6th Cir. 1998) (“We must next decide which
of the plaintiffs’ claims constitute ‘contract’ claims within the Under the RMI Titanium/Megapulse test, the presence of a
meaning of the CDA.”). contractual relationship between plaintiffs and defendants
does not in itself render all claims “essentially contractual;”
In determining whether the CDA applies to a given claim, rather, the presence of a contract is relevant only insofar as it
an individual claim may appear to relate only in part to a provides the source of the legal rights being claimed or the
contract between the parties, creating difficulty in basis for relief. Thus, in the D.C. Circuit’s Megapulse case
determining whether the claim as a whole “relat[es] to a itself, and in another ruling by the same circuit, the plaintiffs
contract.” Furthermore, it is not wholly obvious what it had contracts with the government, but, based upon analysis
means to “relat[e]” to a contract, in the first place. of the rights claimed and the relief requested, the court held
Fortunately, the standard has been defined through case law. that the CDA did not bar jurisdiction. Commercial Drapery
In RMI Titanium Co. v. Westinghouse Elec. Corp., this Court Contractors, Inc. v. United States, 133 F.3d 1, 3-4 (D.C. Cir.
provided the applicable standard, which was adopted from the 1998); Megapulse, Inc. v. Lewis, 672 F.2d 959, 961-62, 968-
D.C. Circuit’s ruling in Megapulse, Inc. v. Lewis: 69 (D.C. Cir. 1982).1
[F]or the CDA to apply, it must first be determined that
the claims asserted are “essentially contractual” in nature. 1
Megapulse, Inc. v. Lewis, 217 U.S. App. D.C. 397, 672 The two cases are discussed in more detail, below. The D.C.
F.2d 959, 967 (D.C. Cir. 1982). . . . “The classification Circuit’s rulings on this issue are of great importance, considering that
this Court adopted the applicab le legal standard from the D .C. Circuit’s
of a particular action as one which is or is not ‘at its Megapulse ruling.
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The RMI Titanium/Megapulse test for whether the CDA requirement for a contract to fall under the scope of the CDA,
bars a district court from exercising jurisdiction, then, meaning that the first category of contracts are excluded–i.e.,
examines the legal basis for a plaintiff’s well-pleaded the Exxon contracts cannot be contracts to which Plaintiffs’
complaint. The test looks at the totality of both the source of claims “relat[e].”
the rights in a given claim and the type of relief sought (or
appropriate) for that claim. If an individual claim appears A. The type of relief sought (or appropriate) for
contractual after a consideration of the totality of the source Plaintiffs’ claims
of the rights and the relief, then the CDA bars a district court
from exercising jurisdiction over that claim. If, after this The district court did not consider the question of relief in
analysis, the claim does not appear to be contractual, then a the present case,2 and so this Court must be the first to
district court maintains jurisdiction over the claim. examine it. Plaintiffs argue that for their claims they seek
non-contractual damages: “They ask neither for damages nor
II. specific performance, but to enjoin the USPS from acting
outside its authority.” (Petitioners’ Br. at 25.)
The RMI Titanium/Megapulse test can be applied to the
present case. Plaintiffs’ second amended complaint asserted Defendant cites Ingersoll-Rand Co. v. United States, 780
three causes of action. Plaintiffs sought declaratory and F.2d 74 (D.C. Cir. 1985), in an apparent attempt to argue that
injunctive relief for (a) violation of the mail transporters’ the type of relief alone is not dispositive. Defendant states
Fifth Amendment rights, (b) violation of postal regulations, that “[e]ven though IR sought only declaratory and injunctive
and (c) violation of the due process clause by arbitrary agency relief . . . , the court followed the framework of Megapulse
action without statutory authority. The first “cause of action” . . . concluding that the source of rights at stake was
asserted multiple claims. essentially contractual and IR could not avoid the
jurisdictional bar of the CDA.” (Respondent’s Br. at 29.)3
As stated above, each of Plaintiffs’ claims must be
examined individually, in order to determine whether each If Defendant cites Ingersoll as an illustration of a case in
claim is “essentially contractual.” Yet because the relief which the (contractual) source of rights trumped the (non-
sought (or appropriate) for most of the claims in this case is contractual) relief requested, then Defendant is mistaken. In
identical–declaratory and injunctive relief–most of the Ingersoll, the plaintiff had a contract to supply air
analysis of relief can be done without treating the claims
separately. After examining relief, the analysis will look at
the source of the rights for each individual claim, revisiting 2
Despite properly stating that the “essentially contractual” test
the issue of relief only as needed. demands consideration of both the rights and relief at stake, the district
court never examined the relief sought (or appropriate) to determine
Before proceeding to the analysis of relief, there is a point whether or not the claims we re “essentially contractual.”
of clarification. There are two categories of contracts in this 3
case: first, the Exxon contracts (between the USPS and In Ingersoll, the rights that served as the basis for the claim were
Exxon-Mobil and BP Amoco) and, secondly, those between viewed as contractual; the claim was characterized as essentially one of
the USPS and Plaintiffs. It is not disputed that privity is a breach of contract. 780 F.2d at 77-78. The rights arose from a contract
to supply the A ir Force with air com pressors. Id. a 76.
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compressors to the Air Force, but the Air Force terminated the much as he reasonably deserved to have for his labor.”)
contract. 780 F.2d at 75. The plaintiff sought declaratory and (citation and internal quotation marks omitted). These
injunctive relief that would prevent the Air Force from circumstances are not similar to those in the present case.
soliciting new bids–thus, the plaintiff sought to prevent the
Air Force from replacing the plaintiff’s contract. Id. The By contrast to Ingersoll and Campanella, it is difficult in
court concluded that essentially the plaintiff was seeking the present case to characterize as essentially contractual any
contractual relief, in the form of specific performance of the of the relief sought or otherwise appropriate. Plaintiffs had
Air Force’s contract with the plaintiff. Id. at 79-80 (“we find contracts with Defendant which, through Amendment 3,
that the essence of I-R’s claim is a request for specific appear to contain terms binding Plaintiffs to purchase fuel
performance of the original contract. From the outset, I-R has from the parties to the Exxon contracts. But Plaintiffs do not
requested an order reinstating the original award of the seek specific performance of this contract. In fact,
contract.”).4 Amendment 3 is the apparent cause of Plaintiffs’ frustration.
Thus, as in the Megapulse case itself (from which the legal
Nor does another case cited by Defendant, Campanella v. standard was adopted by this Court), “It is actually the
Commerce Exchange Bank, 137 F.3d 885 (6th Cir. 1998), Government, and not Megapulse [the plaintiff], which is
prove relevant to the relief requested in the present case. In relying on the contract . . . .” Megapulse, Inc. v. Lewis, 672
Campanella, the plaintiff was due payment on a contract to F.2d 959, 969 (D.C. Cir. 1982); see also id. (“[the plaintiff]
which the Small Business Administration was a guarantor. does not claim a breach of contract, . . . it seeks no monetary
Id. at 888. Two of the plaintiff’s claims were “to enforce damages against the United States, and its claim is not
payment,” i.e., to seek specific performance of a contract properly characterized as one for specific performance. . . .”).
where payment was due–it was so clear that the relief The government seeks to enforce Amendment 3, to the
requested for these claims was contractual that the plaintiff frustration of Plaintiffs.
did not even contest this point. Id. at 888, 889 (describing the
claims for rent and fees in commercial transactions as “two Perhaps it could be argued that Plaintiffs really seek
straight contract claims”), 891-92 (stating that the plaintiff did specific performance of the original, unamended
not dispute that two of the claims were contract claims). contracts–thus the case would be similar to Ingersoll, in
Another claim, based on quantum meruit, was clearly which the court determined that the plaintiff sought specific
attempting to enforce a contract, as well. Id. at 892 (“The performance of the original contract. 780 F.2d at 79-80. But
equitable doctrine of quantum meruit is based on an implied the original, unamended contract did not contain any terms
promise on the part of the defendant to pay the plaintiff as guaranteeing Plaintiffs freedom to choose fuel suppliers. If
anything, the original, unamended contract contained
language stating that so long as it adjusts the contract price
4 accordingly, Defendant has the right to dictate which fuel
Not only was the type of relief sought, specific performance, related
directly to the contract between the plaintiff and the Air Force; but also,
other types of relief “appropriate” presumably would have included
money damages–com puted to place the plaintiffs in a position equal to
that for which they had contracted. See RMI Titanium, 78 F.3d at 1136
(“‘the type of relief sought (or ap propriate).’ Meg apulse, supra at 968”)
(emphasis added).
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suppliers Plaintiffs use.5 This case contrasts with the B. The sources of the rights upon which Plaintiffs base
Ingersoll case, which dealt with a narrow set of facts relating their claims
to competitive bidding–as explained in issue II, below, the
facts and the court’s rationale are distinguishable from the Plaintiffs assert three causes of action, the first of which
present case, and one relevant part of Ingersoll is not good encompasses multiple claims.
law in the D.C. Circuit. On the issue of relief requested, the
present case is more analogous to Commercial Drapery 1. Plaintiffs’ numerous claims for declaratory and
Contractors, Inc. v. United States, 133 F.3d 1 (D.C. Cir. injunctive relief for violation of the mail
1998), which is described below; in that case, the plaintiffs transporters’ Fifth Amendment rights
challenged the government’s termination of a contract, but
nevertheless, the court determined that the CDA did not bar Plaintiffs’ first cause of action is an amalgam of numerous
the claims. Id. at 3-4.6 Fifth Amendment claims for deprivation of liberty and
property interests without due process of law. (J.A. at 17-18)
Although the relief requested does not initially appear to be (Plaintiffs’ Second Amended Complaint, paragraphs 6.1, 6.2,
contractual, the RMI Titanium/Megapulse test demands a and 6.3). There are three types of claims here. Plaintiffs
consideration of both relief and the source of rights upon claim a violation of the property right to control use of
which each claim is based. Thus, before reaching any final Plaintiffs’ fuel tanks. Plaintiffs also claim the freedom to
conclusions, the source of rights must be considered for each contract with fuel suppliers of their own choosing. In
claim. addition, Plaintiffs assert various liberty rights to control the
manner of the operation of Plaintiffs’ business. Each of the
three categories is examined here.
a. Deprivation of property interests
In one claim, Plaintiffs assert a deprivation of property
interests. Plaintiffs assert that the USPS violated “Plaintiffs’
freedom to use their bulk fuel tanks for fuel products of their
5 choosing, to limit and exclude products not of their choosing,
Clause B-65(d) states, “Should the Postal Service introduce
procedures which affect the supplier’s obligations with respect to the costs and to control the use of their tanks and the surrounding
of fuel or taxes, the contract price will be adjusted . . . .” (J.A. at 290.)
6
The present case cannot be analogized to Ingersoll, based upon
vague, general similarities, such as the presence of a contract. As
Ingersoll stated, “As to whether the relief sough t was esse ntially
contractual, the [Megapulse] court recognized that the question ‘may be
resolved only against the fac ts of each case.’ [Megapu lse, 672 F.2d] at
970.” 780 F.2d at 76-77. Hence, it is not surprising that there was a
different ruling on jurisdiction in Com mercia l Drap ery Contractors,
which also involved a contract but which had different facts than
Ingersoll.
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property.”7 The Exxon contracts grant Exxon-Mobil and BP to the merits of the claim, not to the jurisdictional issue of the
Amoco the right to enter certain properties to supply fuel. source of the rights upon which the claim is based.
Plaintiffs’ asserted right to protect their property from being It is well-established that the existence of contractual
entered and used is not a contractual right. Plaintiffs were not rebuttal points does not render a claim “essentially
parties to any contract with Exxon-Mobil or BP Amoco. The contractual,” in CDA analysis. The D.C. Circuit–the very
rights upon which this claim is ultimately based8 arise from circuit that devised the CDA test adopted by this Court–has
these Plaintiffs’ title over the property upon which they have ruled that a claim is not rendered “essentially contractual”
installed their own fuel tanks. Plaintiffs’ Complaint describes merely because a contract issue may prove dispositive to the
this claim as “deprivation . . . of Plaintiffs’ liberty and claim. In Commercial Drapery Contractors, Inc. v. United
property interests, including . . . Plaintiffs’ freedom to use States, 133 F.3d 1 (D.C. Cir. 1998), a business, Commercial
their bulk fuel tanks for the fuel products of their choosing, to Drapery Contractors (“Commercial”), had contracts with the
limit and exclude products not of their choosing, and to federal government’s General Services Administration
control the use of their tanks and the surrounding property.” (“GSA”). Id. at 3. After a grand jury returned a fraud
The title to the property is not a contractual right. indictment against Commercial and its president, the GSA
terminated its contract with Commercial and suspended future
The only contract issues relating to the fuel tanks are contracting with Milford Acquisition Corporation
Defendant’s rebuttal points, which are not “the source of the (“Milford”), a company that was owned by Commercial’s
rights upon which the plaintiff bases its claim.” RMI president and his wife. Id. Commercial and Milford brought
Titanium, 78 F.3d at 1136. Perhaps the Fifth Amendment suit, “claiming that GSA’s cancellation and suspension
property right claim of Plaintiffs who own fuel tanks has no decisions violated multiple government procurement statutes
merit because, by signing Amendment 3, Plaintiffs bargained and regulations, and constituted ‘de facto debarment’ or
away their Fifth Amendment rights–but this argument speaks ‘blacklisting,’ thereby depriving them of due process.” Id.
The D.C. Circuit ruled that the CDA did not bar
7 jurisdiction:
This claim is found in Plaintiffs’ Complaint at paragraph 6.2,
subpart (c). (J.A. at 18.) Plaintiffs assert that the USPS violated property
rights, “including but not limited to 1) protecting their dominion over Among other things, Commercial and Milford complain
their privately owned bulk fuel tanks (tanks that are used not just for mail about the termination clause in their contracts. That
transportation but for all their business needs and that were installed, on sounds like a claim founded on a contract. But
their property, at the ir expe nse, and not pursuant to any terms of a USPS
contract) . . . .” (Petitioners’ Br. at 20-21.)
“classification of a particular action as one which is or is
not ‘at its essence’ a contract action depends both on the
8
The due process clause itself does not provide the source of property source of the rights upon which the plaintiff bases its
rights. See Bd. of Regen ts v. Ro th, 408 U.S. 564 , 577 (1972) (“Pro perty claim, and upon the type of relief sought (or
interests, of course, are not created by the Constitution. Rather, they are appropriate).” Megapulse, Inc. v. Lewis, 672 F.2d 959,
created and their dimensions are defined by existing rules or 968 (D.C.Cir.1982). The basis of Commercial’s and
understandings that stem from an independent source such as state law -- Milford’s claim is that GSA’s repeated attempts to
rules or und erstand ings that secure certain benefits and that support claims
of entitlement to those benefits.”).
extricate the government from financial dealings with
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them constituted unlawful “blacklisting.” The dispute Id. at 968. Applying this general principle, the court
over the termination clause in their contracts is determined that the CDA did not bar jurisdiction, because,
embedded within this broader claim, and is not an “Appellant’s position is ultimately based, not on breach of
independent cause of action. . . . The claim and the type contract, but on an alleged governmental infringement of
of relief requested thus reveal that this is not “at its property rights and violation of the Trade Secrets Act. It is
essence” a contract action. Accordingly, we have actually the Government, and not Megapulse, which is relying
jurisdiction. on the contract . . . .” Id. at 969. As in Megapulse, so too in
the present case, it is the government–and not any of the
Id. at 4. This ruling made clear that the mere existence of a plaintiffs–that is attempting to assert contractual rights (those
contract issue within a broader claim does not make the claim purportedly in Amendment 3).
“essentially contractual,” where the source of the rights
claimed and the relief are not contractual. The rule that a rebuttal issue cannot alter the nature of the
claims is analogous to the well-pleaded complaint rule that
The ruling in Commercial Drapery Contractors cited governs federal question jurisdiction under 28 U.S.C. § 1331.
Megapulse, the very case that defined the applicable legal Under the well-pleaded complaint rule, “‘[W]hether a case is
standard. In Megapulse, the plaintiff, Megapulse, had one arising under [federal law], in the sense of the
contracts with the Coast Guard, pursuant to which Megapulse jurisdictional statute, . . . must be determined from what
had developed proprietary data. 672 F.2d at 961-62. When, necessarily appears in the plaintiff’s statement of his own
based on the Coast Guard’s determination that the data had claim in the bill or declaration, unaided by anything alleged
not been developed solely at Megapulse’s expense, the Coast in anticipation of avoidance of defenses which it is thought
Guard decided to release the data to other parties, Megapulse the defendant may interpose.’ Taylor v. Anderson, 234 U.S.
brought suit for an injunction to prevent the release of data. 74, 75-76 (1914); Louisville & Nashville R. Co. v. Mottley,
Id. at 962. The D.C. Circuit made clear that the existence of 211 U.S. 149 (1908).” Okla. Tax Comm’n v. Graham, 489
relevant contractual issues did not render all claims U.S. 838, 840-41 (1989) (emphasis added). The RMI
“essentially contractual”: Titanium/Megapulse test is similar to the well-pleaded
complaint rule in that both tests evaluate jurisdiction by the
Contract issues may arise in various types of cases where underlying rights upon which a plaintiff bases its claims,
the action itself is not founded on a contract. A license, without reference to any rebuttal points. This similarity is
for example, may be raised as a defense in an action for logical. Both tests concern the issue of jurisdiction.
trespass, or a purchase contract may be raised to counter Jurisdiction is generally established by a plaintiff, through the
an action for conversion. But the mere fact that a court complaint. E.g., Nichols v. Muskingum Coll., 318 F.3d 674,
may have to rule on a contract issue does not, by 677 (6th Cir. 2003) (the plaintiff bears the burden of
triggering some mystical metamorphosis, automatically establishing jurisdiction with the court taking the allegations
transform an action based on trespass or conversion into in the complaint as true).
one on the contract and deprive the court of jurisdiction
it might otherwise have. In the present case, a well-pleaded complaint would not
necessarily even mention the very term of the contract that
Defendant considers dispositive, i.e., Amendment 3. A well-
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pleaded complaint would not refer to the contracts between almost entirely on the Exxon contracts, as violating Plaintiffs’
Plaintiffs and Defendant. Rather, the complaint would only property rights, without Plaintiffs’ consent. Nowhere in
refer to the Exxon contracts–which were made without Plaintiffs’ actual complaint is there any mention of Plaintiffs’
Plaintiffs’ consent, and which Plaintiffs seek to nullify.9 A contracts with Defendant12–even though Amendment 3 to
complaint would allege that the Exxon contracts had violated these contracts might rebut Plaintiffs’ claims, on the merits.
Plaintiffs’ property rights, by granting Exxon-Mobil and BP A well-pleaded complaint does not refute itself. Defendant’s
Amoco the right to enter Plaintiffs’ land. The Exxon rebuttal does not bear on the source of rights upon which
contracts are a key part of the factual basis for the complaint. Plaintiffs base their property rights claim.
But source of the rights upon which Plaintiffs base their claim
is not the Exxon contracts or any other contract. It is Absent the contractual rebuttal points, there are no
undisputed that Plaintiffs were not privy to the Exxon contractual issues relating to the claim for deprivation of
contracts.10 The property rights claim attempts to void the property–the source of the rights asserted in this claim is not
Exxon contracts due to violation of Plaintiffs’ constitutional found in any contract. The source of the rights asserted is the
rights. The contractual relationship between Plaintiffs and title to Plaintiffs’ land.
Defendant is not the source of the rights upon which Plaintiffs
base their property rights claim–this is similar to Commercial b. Freedom to contract with fuel suppliers of
Drapery Contractors and Megapulse, in which the rights Plaintiffs’ choosing
claimed did not stem from the contractual relationship
between the parties. Moving on to other claims in the first “cause of action,”
Plaintiffs also claim a liberty interest in the “freedom to
Plaintiffs actual complaint is consistent with this analysis contract with fuel suppliers of their own choosing.”13 On
of a well-pleaded complaint.11 The actual complaint focuses rebuttal, it is possible that Defendant would establish that
Plaintiffs chose to forfeit this freedom, in order to maintain
their USPS contracts. If Plaintiffs had chosen not to sign
9 Amendment 3 to their USPS contracts, the USPS would not
There may be some confusion here, because there are two sets of
contracts, first, those b etween Plaintiffs and Defendant and, secondly, the have interfered with their fuel dealings; instead the USPS
Exxon contracts between Defendant and Exxon-Mobil and BP Amoco. merely would have declined to renew its contracts with
Yet Plaintiffs’ claim here is not founded upon the rights in either class of Plaintiffs. But, as stated directly above, contract issues that
contracts.
10
For a claim to be contra ctual–and thus fall within the realm of the
Court of Fed eral Claims–the claim must attempt to enforc e a co ntract to
which the plaintiff was a party. E.g., Katz v. Cisne ros, 16 F.3d 1204, Plaintiffs’ claims.
1210 (Fed. Cir. 1994) (“Absent privity between Hollywood Associates 12
and the go vernmen t, there is no case [in the Court of Federal Claims].”). Even if, in describing the factual background, Plaintiffs’ complaint
had referenced Plaintiffs’ co ntracts with Defendant, this would not alter
11 the nature of P laintiffs’ claims.
Plaintiffs’ actual complaint is relevant only insofar as it confirms
our analysis of a we ll-pleaded comp laint. That is, even if Plaintiffs’ 13
actual complaint was not well-pleaded but, rather, set forth rebuttal This claim is found in Plaintiffs’ Complaint at paragraph 6.2,
argum ents to contractual defenses, this would not alter the nature of subpart (a). (J.A. at 18.)
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would arise only in rebuttal do not render contractual an perform HCR contracts is “essentially contractual.” This
otherwise non-contractual claim. Commercial Drapery claim provides a striking contrast to all of the other claims in
Contractors, 133 F.3d at 4; Megapulse, 672 F.2d at 968. this case, which are not based on rights found in a contract
and which do not seek contractual relief, in the form of
c. Other liberty interests specific performance (or money damages).
Additionally, Plaintiffs attempt to assert multiple liberty The contractual claim for performance of HCR contracts
interests, in asserting a deprivation of “freedom from does not pollute the non-contractual assertions of Fifth
interference to operate their business, perform their HCR Amendment rights. It would be absurd to characterize
contracts, and to make business decisions concerning the Plaintiffs’ entire first “cause of action” as one “claim.” The
terms and conditions of the purchase of supplies such as first “cause of action” contains three sub-parts. Hence, it is
fuel.”14 Plaintiffs “freedom from interference . . . and to likely that there are at least three claims under this “cause of
make business decisions” is not rooted in contract. It is action,” and in fact there are probably even more, since one
possible that Plaintiffs bargained away the freedoms being of the sub-parts (asserting, inter alia, the HCR contract
claimed, but again that is merely a rebuttal point. argument) asserts numerous legal rights. The definition of a
Commercial Drapery Contractors, 133 F.3d at 4; Megapulse, claim, within the CDA context, comes from the RMI
672 F.2d at 968. Titanium/Megapulse test–a claim is distinct if it is founded
upon distinct legal rights. In stating that the characterization
The only rights asserted in this “cause of action” that are of a claim as “essentially contractual” depends on “the source
based upon contractual sources are Plaintiffs’ rights to of the rights upon which the plaintiff bases its claim,”15 RMI
“perform their HCR contracts.” The HCR contracts are the Titanium indicated that claims are defined by their underlying
original contracts between Plaintiffs and Defendant as they rights; thus, by definition, in CDA analysis, an assertion of
existed prior to Amendment 3–here, Plaintiffs assert that non-contractual legal rights would be a distinct “claim” from
subsequent acts by the USPS breached that contract. Clearly, an assertion of contractual legal rights. See also BLACK’S
a claim to enforce the original contracts is grounded in rights LAW DICTIONARY 240 (7th ed. 1999) (one definition of a
whose source is contractual–this claim is identical to the “claim” is “the assertion of an existing right”). (If, arguendo,
attempt to enforce the original contract (by requesting specific the entire first “cause of action” were somehow viewed as a
performance) in Ingersoll, where the plaintiff sought single “claim,” then it is doubtful that there would be a valid
declaratory and injunctive relief to prevent the Air Force from basis for dismissing the entire “claim,” on the basis of the
soliciting new bids in a process that would replace the small part of the claim that is based upon the rights in the
plaintiff’s contract. 780 F.2d at 79-80. That this claim is HCR contracts. This question, though, need not be
based on a contract is clear from the fact that the very rights considered.)
at stake can only be identified with reference to the HCR
contracts. As in Ingersoll, the relief requested here is specific
performance of the original contract. The claim of a right to
14 15
(J.A. at 18) (Plaintiffs’ Com plaint, paragraph 6.2, subpart (b )). 78 F.3d at 1136.
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The rights upon which Plaintiffs base their claims are not named plaintiff “alleg[ed] that the government’s decision to
contractual with respect to any Fifth Amendment claim other terminate I-R’s contract to supply air compressors and to
than the claim of liberty to perform HCR contracts. resolicit bids for the contract was . . . contrary to several
federal acquisition regulations.” 780 F.2d at 74. Yet
2. Plaintiffs’ claim for declaratory and injunctive Ingersoll does not govern the present case. In Ingersoll, the
relief for violation of postal regulations court, in addition to classifying the relief sought as
contractual, offered three reasons for ruling that the source of
Plaintiffs’ second cause of action is the claim that the rights in the claim for violation of regulations was
Defendant has violated its own regulations. Plaintiffs state contractual. The court stated:
that regulations forbid the USPS from limiting Plaintiffs’
freedom to purchase fuel from any source that Plaintiffs wish. First, it is possible to conceive of this dispute as entirely
Plaintiffs cite a regulation that “[t]he postal service is not contained within the terms of the contract. The contract
permitted to tell a contractor how or when to purchase included a termination-for-convenience clause. . . .
supplies . . . .” (J.A. at 209) (quoting USPS Management
Instruction PO-530-97-1). Plaintiffs also cite a regulation that Second, the issues raised by plaintiff's complaint are
“[p]urchases of fuel may be made from any source at the within the unique expertise of the Court of Claims. The
option of the contractor.” (J.A. at 216) (quoting USPS substance of I-R's complaint is that the Air Force had no
Management Instruction PO-530-97-1). good reason to terminate the contract and begin
resolicitation. This complaint, unlike a complaint based,
On the merits, a question arises as to whether these for example, on a violation of the civil rights of the
regulations vest private rights of action to enforce the contractor, calls for knowledge of the government
regulations. The question is whether mail transporters contracting process. . . .
(Plaintiffs) and/or fuel suppliers (e.g., those other than Exxon-
Mobil and BP Amoco) have the right to sue to force the USPS Finally, despite I-R’s characterization, see Br. for
to comply with the regulations.16 But this question is not Appellant at 34, we find that I-R is not a “frustrated
relevant to a ruling on jurisdiction. The “essentially bidder.” I-R asserts that its action is no different from a
contractual” test of RMI Titanium, from Megapulse, examines bid protest action. See Scanwell Laboratories, Inc. v.
“the source of the rights upon which the plaintiff bases its Shaffer, 137 U.S. App. D.C. 371, 424 F.2d 859 (D.C.
claim,” without requiring that those claimed rights even exist. Cir. 1970).
If the rights do not exist, then the court will grant a motion to
dismiss for failure to state a claim–but the court will not deny Id. at 78. None of these three reasons prove controlling in the
its jurisdiction over the claim. present case.
The district court and Defendant attempt to deem this claim Setting aside the first reason momentarily, it is clear that
contractual, by likening it to Ingersoll. In Ingersoll, the the other two reasons do not apply to the present dispute. The
second reason from Ingersoll is not applicable to the present
dispute, because Plaintiffs claim in the present case does not
16 relate to the contracting process. Ingersoll was a case
See Alexander v. Sandoval, 532 U.S. 275 (2001).
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involving the rules and process of competitive bidding for the above, the D.C. Circuit’s second and third reasons given for
awarding of government contracts. Id. at 75. The present determining the source of the Ingersoll claim to be contractual
case does not involve the awarding of contracts among are not applicable to the present dispute. Also, as discussed
competitors; thus, the third reason in Ingersoll clearly does above, the Ingersoll court ruled that the relief sought was
not apply to the present case, which does not involve a specific performance, a contractual remedy–the relief issue
“frustrated bidder.” alone is sufficient to distinguish Ingersoll from the present
case. Finally, the many differences between the present case
The first reason given in Ingersoll might apply to the and Ingersoll are quite important–Ingersoll itself stressed the
present case: by signing Amendment 3, Plaintiffs might have case-specific nature of the CDA inquiry. 780 F.2d at 76-77
contractually waived any rights that vested under the (“As to whether the relief sought was essentially contractual,
regulations. Nonetheless, the present dispute is not governed the [Megapulse] court recognized that the question ‘may be
by Ingersoll. It appears that the D.C. Circuit’s first reason for resolved only against the facts of each case.’ [Megapulse,
ruling that the source of the rights was contractual never was 672 F.2d] at 970.”).
good law within that circuit. In ruling that the source of the
rights in the claim was contractual because “it is possible to The claim for violation of postal regulations is not a claim
conceive of this dispute as entirely contained within the terms “relating to a contract,” under the CDA, but rather is a claim
of the contract,” the D.C. Circuit classified the claim on the based upon rights established in government regulations. The
basis of a rebuttal point embedded within a larger claim–the claim is analogous to that in Commercial Drapery
D.C. Circuit thus ran afoul of the principle that the mere Contractors, where the CDA did not bar jurisdiction over the
existence of a contract issue within a broader claim does not plaintiffs’ claims “that GSA’s cancellation and suspension
make the claim “essentially contractual,” where the source of decisions violated multiple government procurement statutes
the rights claimed and the remedies are not contractual. and regulations.” 133 F.3d at 3.
Commercial Drapery Contractors, 133 F.3d at 4; Megapulse,
672 F.2d at 968. Since the “within the terms of the contract” This claim should be decided on the merits. If the
point in Ingersoll, a 1985 opinion, is contrary to the same regulations do not vest any rights in mail transporters, then
circuit’s 1982 ruling in Megapulse (and the same circuit’s the district court should grant a motion to dismiss this claim.
1998 ruling in Commercial Drapery Contractors), it appears But if a regulation does vest a right of action in the mail
that this point from Ingersoll never was good law in the D.C. transporters, then the source of this right is the regulation,
Circuit.17 notwithstanding that a contract issue arises in rebuttal.
Ingersoll is not controlling, and there is no other valid
Moreover, even if the “within the terms of the contract” argument for classifying the rights found in the regulation as
point were good law, this one similarity is not enough to contractual.
make the present dispute similar to Ingersoll. As discussed
17
LaShawn A. v. Barry, 87 F.3d 1389, 1395 (D.C. Cir. 1996) (en
banc) (“One three-judge panel . . . does not have the authority to o verrule
another three-judge panel of the court.”).
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3. Plaintiffs’ claim for declaratory and injunctive claims. Again, the existence of contract issues as rebuttal
relief for arbitrary agency action without points does not change the nature of the source of the rights
statutory authority claimed. Commercial Drapery Contractors, 133 F.3d at 4;
Megapulse, 672 F.2d at 968.
Plaintiffs’ third cause of action is the claim that the Exxon
contracts created third-party obligations, obligating Plaintiffs CONCLUSION
to certain fuel supply provisions, and that because the USPS
lacks statutory authority to obligate third parties, such In summary, the “essentially contractual” standard requires
obligations were arbitrary and capricious. Plaintiffs assert analysis of both the source of rights and the relief sought (or
that arbitrary and capricious action violates due process. appropriate), for each of Plaintiffs’ claims. The relief
Tolchin v. Supreme Court, 111 F.3d 1099, 1115 (3rd Cir. requested is non-contractual, in seeking declaratory and
1997) (“Due process may also be violated if the government injunctive measures to enforce (1) property rights whose
acts arbitrarily or capriciously. Grayned, 408 U.S. at 109.”). source is found in the title to land, and various claimed liberty
Plaintiffs assert irreparable harm. rights (with the exception of the right to perform HCR
contracts); (2) rights whose source is USPS regulations (if
Nothing in this claim relates to the contractual relationship these rights are vested at all), and (3) rights whose source is
between Plaintiffs. The claim itself is structured and argued the due process entitlement to be free from arbitrary and
such that it would be the same if, hypothetically, Plaintiffs capricious government action that harms Plaintiffs’ interests.
had no contractual relationship with the USPS: i.e., if, The only “essentially contractual” claim is the liberty right to
hypothetically, the USPS attempted to obligate all gas stations perform the HCR contracts–for this claim, the source of the
to give discounts to mail transporters, and gas stations had no rights claimed and the relief sought are contractual. The
contractual relationship with the USPS, then the gas stations district court has jurisdiction over all of the claims in this case
could assert the exact same legal rights. except for the claim of liberty to perform HCR contracts.
The source of the rights in this claim is not distinguishable For the aforementioned reasons, we REVERSE the
from the source of rights in claims over which the CDA did judgment of the district court on all claims, except for the
not bar jurisdiction in Commercial Drapery Contractors. 133 claim for performance of the HCR contracts.
F.3d at 3 (holding that the CDA did not bar jurisdiction over
the plaintiffs’ claims “that GSA’s cancellation and suspension
decisions . . . constituted ‘de facto debarment’ or
‘blacklisting,’ thereby depriving them of due process.”).
On the merits, contract issues certainly may be relevant:
Plaintiffs’ contracts with the USPS may be considered in
determining disputed factual issues concerning whether
Plaintiffs agreed to abide by the Exxon contracts. But the
contract issues would arise only in rebuttal, not in setting
forth the source of rights upon which Plaintiffs base their
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_________________ federal question jurisdiction exists only if the federal element
is part of the plaintiff’s claim, Gully v. First Nat’l Bank, 299
DISSENT U.S. 109 (1936), the plaintiff is not free to manipulate
_________________ jurisdiction by omitting necessary federal elements from its
claim. Rivet v. Regions Bank, 522 U.S. 470, 475 (1998) (“As
COOK, Circuit Judge, dissenting. This appeal concerns the a corollary to the well-pleaded defense rule, a plaintiff may
sole issue of which court—the district court or the Court of not defeat removal by omitting to plead necessary federal
Federal Claims—has subject matter jurisdiction over the questions. If the plaintiff thus ‘artfully pleads’ a claim, a
truckers’ claims against the United States Postal Service court may uphold removal even though no federal question
(USPS). If, as USPS argues, the claims are essentially appears on the face of the complaint.” (citation and internal
contractual, then the Contract Dispute Act (CDA) governs punctuation omitted)); Franchise Tax Bd. v. Constr. Laborers
them and the Court of Federal Claims has exclusive subject Vacation Trust, 463 U.S. 1, 13 (1983) (stating that when a
matter jurisdiction. 41 U.S.C. §§ 601-13 (governing all plaintiff pleads only state causes of action, “original federal
contracts that an executive agency enters into for procuring jurisdiction is unavailable unless it appears that some
goods and services). But if, as the truckers contend, their substantial, disputed question of federal law is a necessary
claims are based on constitutional and statutory rights, then element of one of the well-pleaded state claims, or that one or
the district court has subject matter jurisdiction. the other claim is ‘really’ one of federal law” (emphasis
added)); Federated Dep’t Stores, Inc. v. Moitie, 452 U.S. 394,
The district court concluded that the claims are essentially 397 n.2 (1981) (agreeing that removal was proper when
contractual and granted USPS’s motion to dismiss for lack of “respondents had attempted to avoid removal jurisdiction by
subject matter jurisdiction. The majority, accepting almost ‘artful[ly]’ casting their ‘essentially federal law claims’ as
completely the truckers’ characterization of their claims as state-law claims”). In short, the artful-pleading doctrine
constitutional and regulatory, concludes that the district court requires a court to “look[] past the surface allegations to make
has subject matter jurisdiction over most of the claims. its own assessment of what law the claim arises under.” Int’l
Because the district court correctly determined that all of the Armor & Limousine Co. v. Moloney Coachbuilders, Inc., 272
claims are essentially contractual, I respectfully dissent. F.3d 912, 914 (7th Cir. 2001).
I Courts apply the artful pleading doctrine not only in federal
question cases but also in a variety of other cases, when
The majority proposes that in deciding whether the CDA plaintiffs attempt to manipulate procedural rules. See, e.g.,
governs the truckers’ claims, the district court should have Harrow v. Prudential Ins. Co., 279 F.3d 244, 253 (3d Cir.
followed the well-pleaded-complaint rule and based its 2002) (“Plaintiffs cannot circumvent the exhaustion
decision only on the truckers’ pleadings, without evaluating requirement by artfully pleading benefit claims as breach of
any issue USPS raised in defense. But a corollary to the well- fiduciary duty claims.”); Hartz v. Liberty Mut. Ins. Co., 269
pleaded complaint rule—the artful-pleading doctrine—not F.3d 474, 476 (4th Cir. 2001) (“By styling her complaint as
only allows but requires courts to look beyond the pleadings one for breach of contract, Hartz attempts to avoid the
to ascertain the source of a plaintiff’s claims. Although the Maryland bar against tort actions. No amount of artful
majority is correct that under the well-pleaded-complaint rule, pleading such as terming the damages ‘consequential’ can
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disguise what Hartz is seeking—extra-contractual damages Cir. 1985)). Thus, the truckers’ characterization of their
for additional medical expenses, business losses, and claims as constitutional and statutory has no bearing on
emotional distress.”); Ford v. NYLCare Health Plans, 141 whether the claims are contractual. Up State Fed. Credit
F.3d 243, 250 (5th Cir. 1998) (“Basing the arbitrability of an Union v. Walker, 198 F.3d 372, 377 (2d Cir. 1999) (rejecting
action merely on the legal label attached to it would allow plaintiff’s “attempts to characterize this action as an APA
artful pleading to dodge arbitration of a dispute otherwise challenge rather than a contract dispute”); A & S Council Oil
‘arising out of or relating to’ (or legally dependent on) the Co. v. Lader, 56 F.3d 234, 241 (D.C. Cir. 1995) (finding
underlying contract.”); Lambert v. Kysar, 983 F.2d 1110, claims were contractual and noting, “It is true that plaintiffs
1121 (1st Cir. 1993) (“We cannot accept the invitation to have disavowed the notion that they are making contract
reward attempts to evade enforcement of forum selection claims. Instead, they say, the damages they have suffered
agreements through artful pleading of tort claims in the flow from unlawful agency action. . . . In any event,
context of a contract dispute.” (internal punctuation omitted)); plaintiffs’ labeling is of little importance.”).
Young v. Anthony’s Fish Grottos, Inc., 830 F.2d 993, 997 (9th
Cir. 1987) (finding that the district court “properly looked Furthermore, in this case the contractual foundation of the
beyond the face of the complaint to determine whether the truckers’ claims is evident from the truckers’ pleadings, not
contract claim was in fact a section 301 claim for breach of a just from USPS’s “rebuttal points.” The truckers’ complaint
collective bargaining agreement artfully pleaded to avoid raises the indisputably contractual (as well as dispositive)
federal jurisdiction”). In a case involving the CDA, the D.C. issue of the validity of the amendments to the truckers’
Circuit Court of Appeals observed, “Courts have not hesitated contracts with USPS, alleging that “Plaintiffs were never
to look beyond the pleadings of a case brought in district consulted regarding the terms and conditions of these
court to determine if it involves a claim over which the Court contracts [between USPS and the fuel suppliers], nor did they
of Claims has exclusive jurisdiction.” Megapulse, Inc. v. consent to be bound thereby” (Second Amended Compl.
Lewis, 672 F.2d 959, 967 (D.C. Cir. 1982). ¶ 5.4), and that USPS “is attempting to compel Plaintiffs . . .
to comply with those contracts without Plaintiffs’ permission”
In this case, the majority fails to recognize the truckers’ (Second Amended Compl. ¶ 8.3).
artful pleading of their contract claims as constitutional and
regulatory claims; this failure in effect sanctions the truckers’ II
attempts to evade the jurisdictional mandate of the CDA. A
proper analysis of the truckers’ claims must begin with the A. The Fifth Amendment Claims
understanding that “[t]he plaintiff’s title or characterization of
its claims is not controlling. . . . Rather, it is the determination The truckers argue that by interfering with their right to
of whether the action is essentially a contract dispute that control their fuel supply, USPS deprived them of their
controls.” Campanella, 137 F.3d at 892 (quoting RMI property without due process or just compensation. But
Titanium, 78 F.3d at 1136) (alteration in original). Moreover, whether the truckers have a right to control their fuel supply
“a plaintiff may not avoid the jurisdictional bar of the CDA depends upon whether their contracts with USPS afford such
merely by alleging violations of regulatory or statutory a right—in particular, whether the amendments to their
provisions.” RMI Titanium, 78 F.3d at 1136 (quoting contracts validly require the truckers to comply with the fuel
Ingersoll-Rand Co. v. United States, 780 F.2d 74, 77 (D.C. plan. As the majority recognizes, “Amendment 3 is the
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apparent cause of Plaintiffs’ frustration.” And while it is true This argument, however, conflicts with the truckers’
that “Plaintiffs do not seek specific performance of this position that the amendments to their contracts do not
[amended] contract” (emphasis added), they are in effect obligate them to purchase fuel from the designated suppliers:
seeking specific performance of their pre-amendment the amendments cannot be both contractually invalid (as the
contracts. The truckers’ objection to the contract amendments truckers contend when arguing that the amendments do not
is the essence of their claims; everything else is a smoke-and- constitute consent to the fuel plan) and contractually valid (as
mirrors effort to obscure the claims’ contractual nature. the truckers contend when arguing that the amendments are
inconsistent with USPS regulations). If the amendments are
Additionally, if the truckers contend correctly that the contractually invalid and therefore do not compel the truckers
contracts do not validly restrict their right to control their fuel to comply with the fuel plan, then the amendments cannot
supply, and USPS nevertheless has abridged that right, then also violate USPS regulations by compelling the truckers to
the proper recourse would be a breach of contract claim, not comply with the fuel plan.
a takings claim. See Hughes Communications Galaxy, Inc. v.
United States, 271 F.3d 1060, 1070 (Fed. Cir. 2001) (“[T]he This inconsistency, although perfectly acceptable as an
concept of a taking as a compensable claim theory has limited alternative-pleading strategy, nevertheless highlights the
application to the relative rights of party litigants when those contractual nature of truckers’ claims because their contracts
rights have been voluntarily created by contract. In such with USPS are at the core of both sides of the truckers’
instances, interference with such contractual rights generally argument. Regardless of whether the truckers argue that
gives rise to a breach claim not a taking claim.” (citations and USPS’s attempts to require them to purchase fuel from the
internal punctuation omitted)). designated suppliers violate the contracts, or that the contracts
violate USPS regulations, their claims are contractual. The
B. The Regulatory Claims possibility that USPS’s attempts to require the truckers to
adhere to the fuel plan might violate USPS regulations does
The truckers further argue that USPS lacked authority to not transform a claim into one that is regulatory and not
develop the fuel plan because USPS regulations prohibit contractual. See Ingersoll-Rand Co. v. United States, 780
USPS from interfering with the operation of its contractors’ F.2d 74, 78 (D.C. Cir. 1985) (“The question presented by the
businesses, and that in the absence of regulatory authority, complaint could be phrased as whether the contract forbids
USPS’s insistence that the truckers comply with the fuel plan termination under these conditions. That the termination also
violates their right to due process. Specifically, the truckers arguably violates certain other regulations does not transform
cite two regulations that they contend render the fuel plan the action into one based solely on those regulations.”).
invalid: USPS’s Purchasing Manual (stating that “[t]he Otherwise, because every government agency is bound to
objective of any purchasing action is to meet contract follow some set of regulations, every government contractor
objectives, not control the supplier’s business”) and its could recast its contract claims as regulatory claims, thereby
Management Instructions (stating that “[p]urchases of fuel nullifying the CDA. Cf. United States v. J & E Salvage Co.,
may be made from any source at the option of the 55 F.3d 985, 988 (4th Cir. 1995) (“Effective enforcement of
contractor”). the jurisdictional limits of the CDA mandates that courts
recognize contract actions that are dressed in tort clothing.”);
Melanson v. United Air Lines, Inc., 931 F.2d 558, 561 n.1
No. 02-1562 B&B Trucking, Inc., et al. v. 37
United States Postal Service
(9th Cir. 1991) (“Nearly any contract claim can be restated as
a tort claim. The RLA’s grievance procedure would become
obsolete if it could be circumscribed by artful pleading.”).
C. Relief Available from the Court of Federal Claims
Finally, the truckers contend that the district court has
jurisdiction because the Court of Federal Claims cannot grant
the injunctive relief they seek. While the truckers correctly
assert that the Court of Federal Claims cannot grant this relief
outright, the court can achieve the same result—freedom from
compliance with the fuel plan—if the court finds that such a
result is appropriate, by granting a contractual remedy such as
reforming the truckers’ contracts with USPS. See Ho v.
United States, 49 Fed. Cl. 96, 100 (2001) (“Reformation of a
contract is an equitable remedy that may be invoked in this
court . . . when the contract contains . . . provisions that are
contrary to law.” (citing Am. Tel. & Tel. Co. v. United States,
177 F.3d 1368, 1376 (Fed. Cir. 1999); McClure Elec.
Constructors, Inc. v. Dalton, 132 F.3d 709, 711 (Fed. Cir.
1997); Dairyland Power Coop. v. United States, 16 F.3d
1197, 1202 (Fed. Cir. 1994))).
III
Because all of the truckers’ claims relate to their contracts
with USPS, the CDA governs the claims, and exclusive
subject matter jurisdiction therefore lies in the Court of
Federal Claims. Thus, I dissent from the majority’s decision
reversing the district court’s dismissal of the truckers’ claims
for lack of subject matter jurisdiction.