PFIZER INC. & SUBSIDIARIES v. UNITED STATES
No. 17-2307-cv
United States Court of Appeals, Second Circuit
September 16, 2019
In the
United States Court of Appeals
For the Second Circuit
AUGUST TERM, 2017
ARGUED: FEBRUARY 13, 2018
DECIDED: SEPTEMBER 16, 2019
No. 17-2307-cv
PFIZER INC. & SUBSIDIARIES,
Plaintiff-Appellant,
v.
UNITED STATES OF AMERICA,
Defendant-Appellee.
Appeal from the United States District Court
for the Southern District of New York.
No. 16-cv-01870 – Lorna G. Schofield, Judge.
Before: WALKER, HALL, and LOHIER, Circuit Judges.
Pfizer Inc. and Subsidiaries (“Pfizer”) appeals from a judgment
of the United States District Court for the Southern District of New
York (Schofield, J.) dismissing its claim against the United States for
overpayment interest on its delayed tax refund. Because jurisdiction
over Pfizer’s claim for overpayment interest lies exclusively with the
United States Court of Federal Claims, we vacate the judgment of the
district court and transfer this case to the Court of Federal Claims.
Judge Lohier concurs in a separate opinion.
ROBERT S. WALTON, (Russell R. Young, Susan E.
Ryba, on the brief), Baker & McKenzie LLP,
Chicago, IL, for Plaintiff-Appellant.
CHRISTINE S. POSCABLO, Assistant United States
Attorney (Christopher Connolly, Assistant United
States Attorney, on the brief), for Geoffrey S.
Berman, United States Attorney for the Southern
Defendant-Appellants.
Plain, MA; Carlton M. Smith, New York, NY, for
Amicus Curiae Harvard Federal Tax Clinic.
JOHN M. WALKER, JR., Circuit Judge:
Pfizer Inc. and Subsidiaries (“Pfizer”) appeals from a judgment
of the United States District Court for the Southern District of New
York (Schofield, J.) dismissing its claim against the United States for
overpayment interest on its delayed tax refund. Because jurisdiction
over Pfizer’s claim for overpayment interest lies exclusively with the
United States Court of Federal Claims, we vacate the judgment of the
district court and transfer this case to the Court of Federal Claims.
Judge Lohier concurs in a separate opinion.
BACKGROUND
Pfizer filed its 2008 federal income tax return on September 11,
2009. The return showed a tax overpayment of $769,665,651, and
Pfizer asked the Internal Revenue Service to refund $500,000,000 and
to apply the remaining balance of $269,665,651 to its estimated tax for
2009. The IRS processed Pfizer’s return and prepared six refund
checks totaling $499,528,4991 to issue on October 19, 2009.
Pfizer never received the refund checks. It contacted the IRS
multiple times between December 2009 and February 2010 to inquire
about the status of the refund. The IRS eventually canceled the checks
and, on March 19, 2010, the IRS deposited the $499,528,499
overpayment refund directly into Pfizer’s bank account.
Three years after receiving that refund, Pfizer filed a claim
requesting interest on the tax overpayment, as allowed under
Pfizer that its records indicated that Pfizer’s refund checks were
issued on October 19, 2009 and disallowed Pfizer’s claim for
overpayment interest. Pfizer unsuccessfully appealed to the IRS’s
Office of Appeals.
On March 11, 2016, Pfizer filed suit in federal district court,
invoking the district court’s subject-matter jurisdiction under
calculated from the date its return was due (March 15, 2009) to the
date it received its refund (March 19, 2010).
The district court rejected the government’s first request to
dismiss the action or, in the alternative, transfer it to the United States
Court of Federal Claims for lack of subject-matter jurisdiction. The
government again moved to dismiss Pfizer’s complaint, this time on
the grounds that Pfizer failed to file its claim within the two-year
statute of limitations the government argued applied under the tax
code. The district court granted the government’s motion to dismiss.
Pfizer moved for reconsideration; that motion was denied. Pfizer now
appeals that judgment. But because we vacate the district court’s
judgment for lack of subject-matter jurisdiction, we address only the
jurisdictional issue.
DISCUSSION
“In any suit in which the United States is a defendant, there
must be a cause of action, subject matter jurisdiction,
sovereign immunity.”2 There is no dispute that
provides Pfizer with the necessary substantive waiver of sovereign
immunity to allow it to seek overpayment interest from the United
States.3
Whether the district court had subject-matter jurisdiction over
this claim, however, is another matter. When it filed suit in federal
district court, Pfizer invoked the court’s subject-matter jurisdiction
under
and the Court of Federal Claims have concurrent jurisdiction over
[a]ny civil action against the United States for the recovery of
any internal-revenue tax alleged to have been erroneously or
illegally assessed or collected, or any penalty claimed to have
been collected without authority or any sum alleged to have
been excessive or in any manner wrongfully collected under
the internal-revenue laws.
Thus, Pfizer’s claim for overpayment interest must be an action
seeking “recovery” of one of three things: (1) an “internal-revenue tax
alleged to have been erroneously or illegally assessed or collected,”
(2) a “penalty claimed to have been collected without authority,” or
(3) a “sum alleged to have been excessive or in any manner
wrongfully collected” under the tax laws. If overpayment interest is
not properly placed in one of these categories, then, under the Tucker
Act,
jurisdiction.
Overpayment interest does not fall under any of the three
categories listed in § 1346(a)(1) because each addresses types of
refund claims that are wholly different from actions seeking some sort
of refund.
1. Overpayment interest is neither an “internal-revenue tax
alleged to have been erroneously or illegally assessed or
collected” nor a “penalty claimed to have been collected
without authority”
The first two categories listed in § 1346(a)(1) plainly do not
apply in this case. First, overpayment interest cannot be an “internal-
revenue tax alleged to have been erroneously or illegally assessed or
collected” for the simple reason that overpayment interest is not a tax.
While overpayment interest is related to the tax refund, it is not itself
the subject of an action seeking a tax-related refund. Simply because
the government commits to compensating an overpaying party for
the time value of that overpayment, does not render that interest
payment a “tax.”4
Two district courts in our circuit have concluded that, under
§ 1346(a)(1), overpayment interest constitutes an “internal-revenue
tax” under the meaning of the statute.5 Of course, we are not bound
by these decades-old holdings, but, more to the point, we do not find
their reasoning persuasive. In Trustees of Bulkeley School,
of Connecticut held that “a taxpayer has not received a full refund . . .
until he has recovered not only the nominal amount of the collection
but also an amount of interest that will compensate him for the loss
of the use of his money . . . .”6 While the taxpayer is entitled to the
overpayment interest under § 6611, that reason cannot shoehorn
overpayment interest into the definition of a “tax.” Overpayment
interest is something else.
Likewise, in Triangle Corp., the district court noted that
§ 1346(a)(1)’s jurisdictional grant did not “expressly state” that the
district court had jurisdiction over overpayment suits, but
nonetheless concluded that jurisdiction must include overpayment
interest for the sole reason that “Congress, in enacting
§ 1346(a)(1), could not reasonably have intended to leave taxpayers
with no forum in which to enforce substantive rights granted by [
the plaintiff would be left without a forum in which to pursue its
claim, this decision offers little to unsettle the plain conclusion that
overpayment interest is not, in fact, a tax.
We also immediately rule out the second § 1346(a)(1) category,
“any penalty claimed to have been collected without authority,”
because overpayment interest is plainly not a penalty of any kind.
2. Overpayment interest is not “a sum alleged to have been
excessive or in any manner wrongfully collected”
The district court, relying on the Sixth Circuit’s decision in
Scripps, determined it had jurisdiction over Pfizer’s overpayment-
interest suit because Pfizer sought “recovery of . . . a sum alleged to
have been excessive.”8 The Sixth Circuit in Scripps concluded that
overpayment interest suits fell under the “any sum” category of
§ 1346(a)(1).9 Citing Congress’s purpose to allow the payment of
overpayment interest, Scripps held: “If the [g]overnment does not
compensate the taxpayer for the time-value of the tax overpayment,
the [g]overnment has retained more money than it is due, i.e., an
‘excessive sum.’”10 The decision also relied on dictum in Flora v.
.United States, 362 U.S. 145 (1960), where the Supreme Court observed
that “any sum” in § 1346(a)(1) “may refer to amounts which
neither taxes nor penalties . . . [o]ne obvious example of such a ‘sum’
is interest.”11
We disagree with the Sixth Circuit’s analysis in Scripps. First,
the Supreme Court’s decision in Flora is inapplicable to the question
we face. In Flora the Court considered whether § 1346(a)(1) conferred
jurisdiction on the district courts over refund suits where the taxpayer
had paid only part of a deficiency assessment and sought a refund of
that partial payment.12 In rejecting the taxpayer’s argument that “any
sum” in § 1346(a)(1) captured a suit to recover a refund of a partial tax
payment, the Court held that “any sum” was not “related to ‘any
internal-revenue tax’ and ‘any penalty,’” but that “any sum” “may
refer to amounts which are neither taxes nor penalties . . . [o]ne
obvious example of such a ‘sum’ is interest.”13 The Court went on to
explain: “many old tax statutes described the amount which was to
be assessed under certain circumstances as a ‘sum’ to be added to the
tax.”14 Read properly in context, the Flora court plainly had additional
tax assessments in view when it mentions “interest” as a “sum” under
§ 1346(a)(1). And deficiency interest—not overpayment interest—fits
squarely into the types of assessments that may be added to a payment
that are not strictly a “penalty” or a “tax.”
The tax laws also reflect this distinction between deficiency
interest and overpayment interest.
“interest on underpayment, nonpayment, or extensions of time for
payment of tax,” directs that “[i]nterest prescribed under this section
on any tax shall be . . . assessed, collected, and paid in the same
manner as taxes.”15 Overpayment interest, on the other hand, is
governed by § 6611, which does not contemplate such interest as “an
integral part of the tax.”16 Thus, deficiency interest is treated as part
of the underlying tax, while overpayment interest “is simply a general
debt of the government.”17
Thus, upon close examination, Flora’s passing statement that
“one obvious example of such a ‘sum’ is interest” has no relevance
here, and we arrive at what ought to have been the beginning of our
inquiry: the text of the statute.18 To find that overpayment interest
qualifies as the type of “sum” encompassed by § 1346(a)(1) strains the
plain text of the statute beyond what it can bear. This statute
contemplates an amount of money—a “sum”—previously assessed
(citing Proudfoot, 454 F.2d at 1384).or retained by the government—“alleged to have been”—which
exceeded the proper amount—“excessive.”
The first two categories listed in § 1346(a)(1)—“internal-
revenue tax” and “penalty”—both address types of taxpayer claims
that seek to recover funds that the taxpayer has already paid to the
IRS. As the more general term, “any sum” is properly construed in
harmony with these more specific terms. An expansive construction
of “any sum” in § 1346(a)(1) would violate the canon of construction
noscitur a sociis, or, ”a word is known by the company it keeps.”19 And
“any sum” finds itself in fellowship with terms that plainly refer to
which the taxpayer now seeks to recover. Overpayment interest is not
such an amount, and so it does not fall with the meaning of “any sum”
in this jurisdictional provision.20
Moreover, the expanded phrase of this provision—“any sum
alleged to have been excessive or in any manner wrongfully
collected”—supports the interpretation that the term “any sum,” just
like “tax” and “penalty,” refers to an amount previously paid to the
IRS by the taxpayer. The use of the present-perfect tense in the
language of the statute indicates that the “sum” must have been
“excessive” or “wrongfully collected” at some point in the past
(known or unknown) and that that condition touches the present.21
This, like a tax or a penalty, indicates that a “sum alleged to have been
excessive” or “wrongfully collected” is an assessment previously paid
by the taxpayer. By its nature, overpayment interest is not a sum that,
at some point in the past, was either excessive or wrongfully collected.
Plainly the sum was never “wrongfully collected.” Neither was it
“excessive,” which means “exceeding the usual, proper, or normal.”22
“Excessive” assumes that there exists a sum that is not excessive that
may not be recovered, which is not the case here. Thus, consistent
with a “tax” and a “penalty,” the “sum” category of § 1346(a)(1)
encompasses only previously assessed amounts of money.
To be sure, overpayment interest bears a relationship to Pfizer’s
tax overpayment which, if that overpayment had been assessed,
would have fit within the language of § 1346(a)(1). But the two
amounts are different in a crucial way: the overpayment was assessed
and either “excessive” or “wrongfully collected,” or both, but the
interest on the overpayment was not. So the fact that the two are
related does not bring the latter within § 1346(a)(1).
Thus, overpayment interest is a straightforward claim against
the federal government and is therefore covered by the Tucker Act,
which vests exclusive jurisdiction in the United States Court of
Federal Claims to hear any non-tort “claim against the United States
founded . . . upon . . . any Act of Congress . . . .”23
CONCLUSION
The judgment of the district court is VACATED, and this case
is TRANSFERRED to the United States Court of Federal Claims
under
LOHIER, Circuit Judge, concurring:
I agree with the majority that this case should be dismissed and
transferred to the Court of Federal Claims. I write separately to note that, in my
view, Pfizer would
jurisdiction and addressed the merits. This is because its suit is barred by the
applicable two-year statute of limitations period contained in
contained in
1. Relevant Law
As the majority opinion makes clear, the central provision in this case,
concurrent jurisdiction over
[a]ny civil action against the United States for the recovery of any internal-
revenue tax alleged to have been erroneously or illegally assessed or
collected, or any penalty claimed to have been collected without authority
or any sum alleged to have been excessive or in any manner wrongfully
collected under the internal-revenue laws[.]
limited by three provisions of the Internal Revenue Code, which together
“qualify a taxpayer’s right to bring a refund suit upon compliance with certain
conditions.” United States v. Dalm, 494 U.S. 596, 601 (1990). The first of these
provisions,
forecloses a suit for a tax refund unless an administrative claim for the refund is
first filed with the Secretary of the Treasury:
No suit or proceeding shall be maintained in any court for the recovery of
any internal revenue tax alleged to have been erroneously or illegally
assessed or collected, or of any penalty claimed to have been collected
without authority, or of any sum alleged to have been excessive or in any
manner wrongfully collected, until a claim for refund or credit has been
duly filed with the Secretary, according to the provisions of law in that
regard, and the regulations of the Secretary established in pursuance
thereof.
that a refund claim be filed with the Secretary “within 3 years from the time the
return [for the relevant tax] was filed or 2 years from the time the tax was paid,
whichever of such periods expires the later, or if no return was filed by the
taxpayer, within 2 years from the time the tax was paid.”
The third and final provision,
proceeding under section 7422(a) for the recovery of any internal revenue tax,
penalty, or other sum, shall be begun . . . after the expiration of 2 years from the
date of mailing by certified mail or registered mail by the Secretary to the
taxpayer of a notice of the disallowance of the part of the claim to which the suit
or proceeding relates.”
Any plaintiff who invokes jurisdiction under § 1346(a)(1) must first file a
refund claim under § 7422(a) within the time period prescribed by § 6511(a). If
that claim is rejected, § 6532(a)(1) generally gives the plaintiff two years to file
suit in a district court or the Court of Federal Claims. For any claim against the
Government for non-tort damages exceeding $10,000 that does not fall within
§ 1346(a)(1) jurisdiction, the Court of Federal Claims has jurisdiction, and the
statute of limitations is six years.1 See
2004).
2. Applicable Statute of Limitations
At Pfizer’s urging, the District Court held (wrongly, as the majority
opinion points out) that it had jurisdiction under § 1346(a)(1) because a suit for
overpayment interest is a suit for the recovery of “a sum alleged to have been
excessive or in any manner wrongfully collected under the internal-revenue
laws.” App’x 35–36; see App’x 42. Even if the District Court had been right
about its jurisdiction, Pfizer, having affirmatively invoked the District Court’s
jurisdiction under § 1346(a)(1), would then have been subject to the two-year
statute of limitations imposed by
under § 1346(a)(1). A brief review of
conclusion.
Any action that falls within the scope of § 1346(a)(1) right away implicates
§ 7422(a), “which, tracking the language of § 1346(a)(1), limits a taxpayer’s right
to bring a refund suit . . . .” Dalm, 494 U.S. at 601; see id. (“Despite its spacious
terms, § 1346(a)(1) must be read in conformity with other statutory provisions
which qualify a taxpayer’s right to bring a refund suit upon compliance with
certain conditions.”); EC Term of Years Tr. v. United States, 550 U.S. 429, 431 &
n.2 (2007). Specifically, § 7422(a) prohibits the filing of a suit for the “recovery of
. . . any sum alleged to have been excessive or in any manner wrongfully
collected”—the same language as § 1346(a)(1)—until after an administrative
claim has been filed.
§ 6532(a)(1) requires the taxpayer to file suit within two years “from the date of
mailing by certified mail or registered mail . . . of a notice of the disallowance of
the part of the claim to which the suit or proceeding relates.”
have had to conclude that the suit was properly dismissed because Pfizer failed
to file suit within two years of May 10, 2013, when the IRS sent a notice
disallowing Pfizer’s claim.
Citing Exxon Mobil Corp. & Affiliated Cos. v. Commissioner, 689 F.3d 191
(2d Cir. 2012), Pfizer insists that this Court has already held that the period of
limitations for an allowable interest claim under
See id. at 198 n.9. But Exxon Mobil arose on appeal from the United States Tax
Court, see Exxon Mobil Corp. & Affiliated Cos. v. Comm’r., 136 T.C. 99, 110
(2011), and we did not there address jurisdiction over a suit under § 1346(a)(1).
Pfizer also points out that the IRS’s relevant revenue rulings assert that a suit for
overpayment interest under § 6611(a) is subject to the general six-year statute of
limitations. See Rev. Rul. 57-242, 1957-1 C.B. 452; Rev. Rul. 56-506, 1956-2 C.B.
959. But none of these rulings refers to cases brought under § 1346(a)(1).
Finally, relying on the Sixth Circuit’s decision in E.W. Scripps Co. & Subsidiaries
v. United States, 420 F.3d 589 (6th Cir. 2005), Pfizer also argues that § 7422 does
not even apply to suits filed under § 1346(a)(1). In E.W. Scripps, the Sixth Circuit
explained that § 1346(a)(1) and § 7422(a) “serve different functions”
notwithstanding their “parallel language.” Id. at 597–98. Accordingly, the Sixth
Circuit suggested in dicta that a taxpayer could bring suit to collect overpayment
interest under § 1346(a)(1) without satisfying § 7422(a)’s administrative claim
requirement.2 Id. at 598. But E.W. Scripps nowhere addressed whether the two-
year limitations period of § 6532(a)(1) should apply. And, in any event, it
contradicts the Supreme Court’s subsequent statement, in EC Term of Years
Trust, that a “tax-refund action under
administrative claim . . . and may be brought to court within another two [years]
after an administrative denial.” 550 U.S. at 431; see also id. at 431 n.2 (“A
taxpayer may bring . . . an action [under § 1346(a)(1)] within two years after the
IRS disallows the taxpayer’s administrative refund claim.” (citing
Ultimately, even if the District Court had jurisdiction in this case, Pfizer
cannot have it both ways by exploiting the jurisdiction of the district court under
§ 1346(a)(1) without meeting the two-year statute of limitations applicable to that
provision.3
Because I ultimately agree that the District Court lacked jurisdiction over
Pfizer’s claim, I concur in the majority’s decision to transfer this case to the Court
of Federal Claims as required under
chance to recover its overpayment interest. Had we reached the merits of
Pfizer’s appeal, it would have been, as I said at the beginning, out of luck and
unable to recover anything at all.