Guest Post by Gregory C. Sisk
In this blog post, I discuss Court of Federal Claims/Tucker Act decisions by the Federal Circuit on (1) the requirement of a money-mandating statute for statutory-based money claims, (2) whether a money-mandating requirement applies as well to claims to recover illegal exactions, (3) the special case of a breach of trust claim under the Indian Tucker Act, and (4) the continued availability of a Tucker Act taking claim even when a claim could alternatively be framed in tort. These 2020 Federal Circuit decisions affirmed the continued stability of Court of Federal Claims jurisdiction through careful application and welcome clarification and extension of established and common-sense Tucker Act doctrines.
The Court of Federal Claims and the Tucker Act
The United States Court of Federal Claims maintains a diverse docket of cases involving the United States Government. The subjects range from federal contract disputes and tax refund suits to civilian and military pay claims, suits seeking compensation for taking of property, tribal assertions of breach of trust, and money claims based on federal statutes.
But what draws together most of these subjects is a single jurisdictional statute—the Tucker Act, 28 U.S.C. § 1491(a)(1). The Tucker Act, enacted in 1887, remains what Stanley Dees rightly called the “foundation stone” in the adjudication of money claims against the United States Government.
While the Tucker Act confers jurisdiction on the Court of Federal Claims and also waives the sovereign immunity of the federal government, it does not create a substantive claim. Instead, the statute authorizes money claims against the government “founded either upon the Constitution, or any Act of Congress, or any regulation of an executive department, or upon any express or implied contract with the United States . . . .” The Tucker Act points to these other sources of substantive law to identify a cognizable cause of action. The statute provides the right to file a lawsuit to obtain a monetary remedy, while leaving the content of the legal claim to the Constitution, federal statutes and regulations, and contract law.
The United States Court of Appeals for the Federal Circuit has exclusive jurisdiction over appeals from the Court of Federal Claims. 28 U.S.C. § 1295(a)(3). During 2020, the Federal Circuit returned frequently to the Tucker Act in hearing those appeals.
Money-Mandating Statutory Claims Under the Tucker Act
Much of what the federal government does causes harm to someone. The harm may be as marginal and diffuse as increasing taxes or fees to support spending programs. Or the harm may be more concrete and felt immediately by some, such as the economic harm to surrounding businesses when the federal government closes a military base or other federal facility. Even if a court were later to determine the spending was unauthorized or the federal facility closing violated a statutory directive, those who suffer consequential pecuniary harm do not ordinarily have an actionable claim for monetary compensation.
To support a Tucker claim for money, the statute must have particular elements that support an entitlement to a monetary remedy to a claimant. In the classic 1967 decision of Eastport Steamship Corp. v. United States, 372 F.2d 1002 (Ct. Cl. 1967), the Court of Claims held that a Tucker Act claimant must demonstrate that the statutory source of substantive law “can fairly be interpreted as mandating compensation by the Federal Government for the damage sustained.” Citing directly to Eastport, the Supreme Court in United States v. Testan, 424 U.S. 392 (1976), adopted this money-mandating standard for the Tucker Act.
Because the Tucker Act itself provides the waiver of sovereign immunity and the right to a court remedy, the Supreme Court explained in United States v. White Mountain Apache Tribe, 537 U.S. 465 (2003), that the statute need only “be reasonably amenable to the reading that it mandates a right of recovery in damages”; that is, “a fair inference will do.”
In 2020, the Federal Circuit thoughtfully applied these basic principles to yet another legal dispute arising out of the Affordable Care Act (ACA), commonly known as Obamacare. Sanford Health Plan v. United States, 969 F.3d 1370 (Fed. Cir. 2020). The ACA directed the states to develop certain online health insurance exchanges, in which insurers could participate if they agreed to reduce co-payments and deductibles for insureds. Recognizing the financial impact this could have on insurers, Congress encouraged insurers to participate in the exchanges by promising reimbursement for these cost-sharing reductions.
As part of its ongoing attempts to unravel the ACA, the Trump Administration in 2017 suspended the reimbursement payments to insurers. Insurers that had not yet been reimbursed for the costs of reductions in co-payments and deductibles they had made before the 2017 suspension brought suit under the Tucker Act in the Court of Federal Claims.
Affirming the Court of Federal Claims, the Federal Circuit in Sanford found that the right to the reimbursements followed from a straight-forward application of established money-mandating protocols. The ACA reimbursement provision stated that the Secretary “shall make periodic and timely payments to the issuer equal to the value of the reductions.” 42 U.S.C. § 18071(c)(3). The Federal Circuit correctly, indeed inevitably, ruled that this created an obligation by the federal government to reimburse the insurers who granted cost-sharing reductions to insureds in reliance on this promise.
The ACA’s “payment command” is more than “reasonably amendable” to the reading that it demands compensation be paid. While the ACA included no permanent appropriation to cover these payments, the Tucker Act presumptively grants the right to a damages remedy absent some superseding statutory direction to the contrary.
As the Federal Circuit recognized in Sanford, the payment mandate here not only was plainly stated, but comfortably falls into the distinct category of Tucker Act claims that compensate for a past loss, as contrasted with attempts to enjoin a future lost opportunity (which is beyond the remedial authority of the Court of Federal Claims). The traditional character of a Tucker Act claim is “looking backward to pay for expenses already incurred.”
Nor did the Sanford case fall into the two general exceptions to the Tucker Act remedy. First, if the obligation-creating statute creates its own set of judicial remedies, then the claimant of course must follow that specific alternative approach. No such remedies were provided for in the ACA. Second, a claim seeking a prospective remedy for an ongoing series of financial transactions should instead be pursued under the Administrative Procedure Act. The insurers in Sanford sought specific sums for a past-due payment obligation by the United States, the very purpose of the Tucker Act.
Illegal Exactions Under the Tucker Act
In the venerable 1967 Eastport decision, the Court of Claims identified a claim to recover payments that the government had improperly taken as falling under the jurisdiction of the Tucker Act. From the beginning, this “illegal exaction” category of claims had been regarded as something of an exception to the “money-mandating” requirement of the Tucker Act. If the government illegally exacted payments, the claimant automatically had a Tucker Act remedy for the return of the money, whether or not the statute that precluded the government’s taking of the money could be read as mandating compensation for the wrong.
Although the Federal Circuit had previously upheld recovery of wrongfully-exacted funds regardless of whether the statute was money-mandating, the question has persisted. Indeed, at least one Federal Circuit decision could be read as demanding the same money-mandating inquiry for illegal exaction cases. Norman v. United States, 429 F.3d 1081 (Fed. Cir. 2005).
In its 2020 decision in Boeing Company v. United States, 968 F.3d 1371 (Fed. Cir. 2020), the Federal Circuit dispelled any doubt and unequivocally removed illegal exactions from the money-mandating requirement for the Tucker Act.
After entering into contracts to build aircraft for the Department of Defense, the Boeing Company made changes in its cost accounting practices. Some of those changes resulted in higher costs charged against the government, while some resulted in lower costs. Overall, Boeing’s accounting changes saved the government more than $1 million. Nonetheless, under Federal Acquisition Regulation 30.606, the government demanded that Boeing pay the amount of the higher costs charged against the government, without any off-setting reduction for the lower costs achieved through the same changes in cost accounting practices.
Boeing contended the regulation contradicted the governing statute, which directs that the government may recover only the “aggregate increased cost,” 41 U.S.C. § 1503(b). In other words, the government is entitled to reimbursement only for the net difference between those accounting changes that raise costs and those that lower costs. Boeing filed suit in the Court of Federal Claims alleging both breach of contract and an illegal exaction. The Court of Federal Claims ruled that the contract claim had been waived and that it lacked jurisdiction over the illegal exaction claim because it was not based on a money-mandating statute.
The Federal Circuit reversed in Boeing, holding both that the breach of contract claim had not been waived and that jurisdiction lay over the illegal exaction claim. Focusing here on the illegal exaction claim, the Federal Circuit stated forthrightly that the requirement of a “money-mandating” statute applies “only to claims for money damages for government action different from recovery of money paid over to the United States under an illegal exaction.” All that is necessary, the Federal Circuit explained, is for the plaintiff who seeks the recovery of money paid to the government to “make a non-frivolous allegation that the government, in obtaining the money, has violated the Constitution, a statute, or a regulation.”
If the government improperly insisted on a payment, then the unlawful nature of the exaction suffices to establish the claim. While a constitutional provision, statute, or regulation must have been contravened, that source of law need only be used to demonstrated the illegality of the exaction, without further speaking in terms of payment, reimbursement, or compensation to those who were the victims of the improper government collection of funds. Thus, since the government forced payment by Boeing, and Boeing insisted that exaction violated a statute, Boeing stated a claim and Tucker Act jurisdiction attached.
While the Federal Circuit reached exactly the right conclusion here, I continue to question the path that the Federal Circuit has long taken to explain the category of illegal exactions. The Federal Circuit has repeatedly characterized an “illegal exaction” as a violation of the Due Process Clause of the Fifth Amendment because the government had no legal authority to exact the funds or property. Norman v. United States, 429 F.3d 1081 (Fed. Cir. 2005); Amax Coal Co. v. United States, 205 F.3d 1369 (Fed. Cir. 2000); Aerolineas Argentinas v. United States, 77 F.3d 1564 (Fed. Cir. 1996). But that questionable description raises as many questions as it answers, given that the Due Process Clause has never been understood to authorize a Tucker Act claim against the federal government for the very reason that this constitutional clause is not money-mandating in nature. See Mullenberg v. United States, 857 F.2d 770 (Fed. Cir. 1988). Indeed, a concurring opinion in Starr Int’l Co. v. United States, 856 F.3d 953 (Fed. Cir. 2017) (Wallach, J.), rightly highlighted the inconsistency between the reasoning in the Federal Circuit’s illegal exaction decisions and the unavoidable holding that the Due Process Clause is not money-mandating. However, that concurrence sought to resolve the contradiction by requiring illegal exaction claims to be supported by explicit money-mandating language, like any other statute-based Tucker Act claim.
I suggest that the illegal exaction problem has a simpler answer that does not dispense with the Tucker Act money-mandating requirement, but ends up at the same place by a different analytical path and an alternative source for the money remedy.
As I’ve argued in my hornbook, the division of Tucker Act claims into separate money-mandating and illegal exaction categories may be too clever by half—and unnecessarily complicated. The Court of Federal Claims in Starr International Co. v. United States, 121 Fed. Cl. 428 (2015), rev’d on other grounds, supra, accurately outlined the Federal Circuit’s classification as seeing “taking claims [as] based upon authorized actions by government officials, whereas illegal exaction claims are based upon unauthorized actions of government officials.”
But when a federal agency or officer acting under color of federal law affirmatively demands, procures, importunes, exacts, or seizes private funds or other private property for the government’s benefit, it is neither here nor there that the agency or officer may claim general authority as a federal agency or officer.
In either event, the government has taken private property without just compensation in violation of the Fifth Amendment. And the Fifth Amendment Takings Clause is manifestly a money-mandating provision.
Breach of Fiduciary Trust Duties Under the Indian Tucker Act
Native American tribes and nations were originally excluded from the Tucker Act remedy, leaving Congress to periodically enact special Indian claims statutes. Congress eventually moved to a more permanent remedial mechanism by enacting what is commonly known as the Indian Tucker Act, 28 U.S.C. § 1505. In substance, the Tucker Act and the Indian Tucker are congruous, with the latter extending the Tucker Act remedy to Native American tribes, bands, and groups.
What is distinctive about the Native American claimant under the Indian Tucker Act is the availability of another source of substantive law when seeking a monetary remedy—the Trust Doctrine. Neither the “general trust” relationship that historically describes the uneasy relationship between indigenous peoples and the United States Government, nor the basic common law of trusts, can alone give rise to a cognizable Indian Tucker Act claim. Rather, the tribal claimant must show a “fiduciary” relationship created by a statute or regulation. In this sense, then, like the money-mandating inquiry for a general Tucker Act-based statutory money claim, the Indian Tucker Act fiduciary relationship “analysis must train on specific rights-creating or duty-imposing statutory or regulatory prescriptions.” United States v. Navajo Nation, 537 U.S. 488 (2003).
The unique trust relationship does come into play in determining the appropriate remedy for government breach of trust. Where the statute or regulation does create a fiduciary relationship, then the trust doctrine directs the court to assume the tribal claimant has a right to money damages (whether or not the statute that describes the fiduciary duty in money-mandating language).
In Inter-Tribal Council of Arizona, Inc. v. United States, 956 F.3d 1328 (Fed. Cir. 2020), the Federal Circuit found that the pertinent land-exchange statute established a specific fiduciary duty between the United States and Indian tribes. Under the statute, Congress authorized a private entity, Collier’s, to purchase the Phoenix Indian School in Arizona through an exchange of land owned by the Collier’s in Florida, together with additional payment of $34.9 million to be held in trust for tribes. If Collier’s chose to pay the additional amount in annual installments, the United States was obliged by statute to obtain security for future payments.
The United States obtained a deed of trust on the Phoenix school and on additional downtown Phoenix property on which Collier’s had development rights. When Collier’s eventually defaulted on its payments, the security collateral proved to be worth millions less than the payments still owed.
The Federal Circuit in Inter-Tribal Council agreed that the plaintiffs’ “failure-to-maintain-sufficient-security” portion of its claim was sufficient to state a claim for jurisdiction under the Indian Tucker Act. The statute said the government “shall hold in trust the security” and defined the security to be held and its purpose. The deed of trust confirmed the expectation by specifying that collateral was to be maintained at or above 130 percent of the owed amount. Together with the government’s discretionary control over the collateral and how it was released, the court concluded the statute expressly defined a fiduciary relationship.
Turning to the appropriate remedy for a breach of that fiduciary trust, the Federal Circuit rightly concluded in Inter-Tribal Council that, because a fiduciary relationship had been established, it then can be fairly inferred that the victims of the breach are entitled to compensation. As the Supreme Court has said, “principles of trust law might be relevant in drawing the inference that Congress intended damages to remedy a breach.” United States v. Navajo Nation, 556 U.S. 287, 288 (2009).
Although the Federal Circuit in Inter-Tribal Council described the remedial analysis as the money-mandating step of the jurisdictional test, it is important to emphasize that this analysis for an Indian breach of trust context is not the same as that applying to the ordinary Tucker Act claim founded on statute.
For a non-tribal claimant asserting a Tucker Act right to recover money based on a statute, the claimant must directly adduce a right to payment from the language of the statute, that is, the traditional requirement that the statute be money-mandating in nature. Breach of a governmental duty does not alone give rise to a premise that money is the proper remedy, but only if the statute speaks in the language of payment or compensation. If the statute is devoid of any text referring to money or financial consequences, then the money-mandating requirement is not satisfied, meaning that the Tucker Act provides no remedy for claimant’s allegation that a statute was contravened by government action.
By contrast, for a Native American claim that establishes a fiduciary duty under the pertinent statutes, the breach of trust alone gives rise to a presumptive right to damages as the remedy under the Indian Tucker Act. The common-law trust doctrine assumes a major role in the legal mix by supplying the “inference” that Congress intended a money damages remedy.
Thus, in Inter-Tribal Council, when the government breached the duty to maintain adequate collateral for the trust in favor of the tribal plaintiffs, the government became liable for damages regardless of whether the statute went beyond reference to collateral to also speaking about the payment of money for the government’s default in securing it.
Taking Jurisdiction Under the Tucker Act When Claim Could Be Framed as Tort
When the Tucker Act was originally enacted in 1887, ch. 359, 24 Stat. 505 (1887), creating a venue for judicial review of takings claims under the Fifth Amendment of the U.S. Constitution was most clearly within the contemplation of Congress. With its express constitutional command for payment of just compensation when property is taken by the federal government, the Fifth Amendment Taking Clause plainly meets the money-mandating requirement. Cases seeking just compensation under the Fifth Amendment fall into one of the most common categories of Tucker Act litigation in the Court of Federal Claims.
Governmental action that interferes with property rights often may be alternatively framed as a taking under the Fifth Amendment or as a common-law tort. If treated as a taking (and seeking $10,000 or more), the remedy lies under the Tucker Act for compensation in the Court of Federal Claims. If harm to property is treated as a tort by the government, a remedy could be found under the Federal Tort Claims Act (FTCA) in the District Courts, although the FTCA is subject to significant limitations and exceptions. Indeed, the Tucker Act is explicitly limited to “cases not sounding in tort.” 28 U.S.C. § 1491(a)(1).
Suppose that the same set of circumstances do indeed give rise to both a taking claim and a tort allegation. The next question is whether the plaintiff has the choice of remedy and thus perhaps the choice of forum as well.
In Taylor v. United States, 959 F.3d 1081 (Fed. Cir. 2020), the Federal Circuit confirmed that a claimant may pursue a taking claim under the Tucker Act, even if the governmental conduct could alternatively have been framed as a tort.
The Taylors entered into a contract with a company to build and operate wind energy structures on their land in New Mexico. Having conducted low-flying training missions over the Taylors’ land which was located near an air base, the Air Force allegedly warned the wind energy company that the government would not issue a “No Hazard” designation for wind energy structures on the Taylors’ land. The wind energy company then terminated the contract. The Taylors filed suit in the Court of Federal Claims, alleging a regulatory taking of the contract with the wind energy company and a physical taking of the land by the Air Force flyovers. The Court of Federal Claims held it lacked jurisdiction over the regulatory taking claim and rejected the physical taking claim on the merits.
In that part of their complaint asserting a regulatory taking, the Taylors said that the Air Force’s communications to the wind energy company also amounted to tortious interference with contract. That a tort claim could also have been stated on the alleged facts did not, the Federal Circuit held, “remove the taking claim from the jurisdiction of the Court of Federal Claims under the Tucker Act.”
Citing to prior decisions, the Federal Circuit held that a “tort-taking overlap” was subject to a “dual-wrong rationale” by which the plaintiff may properly choose to pursue the matter as a taking under the Fifth Amendment. A contract is a form of property, so the government’s alleged interference with that property right was sufficient to bring the matter under Tucker Act jurisdiction (although the Federal Circuit concluded that the regulatory-taking claim failed on the merits).
In the Taylor case, although the interference with contract claim could theoretically be framed as a either a taking or a tort, Tucker Act jurisdiction for a taking was the exclusive venue for this particular claim. The FTCA explicitly excludes claims for “interference with contract rights.” 28 U.S.C. § 2680(h). So for the Taylors, it was a Tucker Act remedy in the Court of Federal Claims or it was nothing.
However, other cases will arise in which a taking of property could also be pled as a type of tort that might be cognizable under the FTCA, such as trespass or negligent harm. In that event, the plaintiff may have the option of shopping for the preferred forum—either pursuing a taking claim under the Tucker Act in the Court of Federal Claims or instead bring the tort claim under the FTCA in District Court.
The Federal Circuit’s approach suggests that the availability of a tort remedy, even one cognizable under another statute in another court, does not prevent the claimant from making the deliberate choice of a taking remedy through the Tucker Act.
Gregory C. Sisk holds the Laghi Distinguished Chair of Law at the University of St. Thomas School of Law (Minnesota). A former appellate attorney with the U.S. Department of Justice, Sisk is the author of the West Academic hornbook on Litigation With the Federal Government (2016) and of dozens of articles on federal government civil litigation including the jurisdiction of the Court of Federal Claims (accessible here and here).