UNITED AERONAUTICAL CORPORATION; BLUE AEROSPACE, LLC, Plaintiffs-Appellants, v. UNITED STATES AIR FORCE; UNITED STATES AIR NATIONAL GUARD, Defendants-Appellees,
No. 21-56377
UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT
September 7, 2023
D.C. No. 2:20-cv-01985-ODW-JDE
Before: MILAN D. SMITH, JR., DANIEL P. COLLINS, and KENNETH K. LEE, Circuit Judges. Opinion by Judge Milan D. Smith, Jr.; Dissent by Judge Collins
SUMMARY*
Contract Disputes Act / Jurisdiction
The panel affirmed the district court‘s dismissal for lack of subject-matter jurisdiction of an Administrative Procedure Act (APA) action brought by United Aeronautical Corporation and Blue Aerospace, LLC (collectively, Aero) against the U.S. Air Force and U.S. Air National Guard (collectively, USAF) alleging that USAF improperly used Aero‘s intellectual property—data relating to the Mobile Airborne Firefighting System (MAFFS)—in violation of federal procurement regulations and the Trade Secrets Act.
Aero delivered a hard drive containing MAFFS-related data to the United States Forest Service and executed a Data Rights Agreement (DRA) granting the Forest Service “unlimited rights to view and use” the data. The Forest Service delivered that hard drive to USAF, and Aero sued USAF for its receipt and use of the MAFFS data.
The APA waives sovereign immunity for actions in federal district court by persons suffering legal wrong because of agency action; however, when a statute vests exclusive jurisdiction over a category of claims in a specialized court, it “impliedly forbids” an APA action in district court.
The panel agreed with the district court that the Contract Disputes Act “impliedly forbids” jurisdiction over Aero‘s claims by vesting exclusive jurisdiction over federal-
contractor disputes in the Court of Federal Claims. A claim falls within the scope of the CDA‘s exclusive grant of jurisdiction if (1) the plaintiff‘s action relates to (2) a procurement contract (3) to which the plaintiff was a party. Here, Aero‘s claims that USAF improperly received and used MAFFS data (1) relate to the DRA, (2) the DRA is a procurement contract, and (3) Aero is a contractor for purposes of the DRA.
The panel held that the test set forth in Megapulse, Inc. v. Lewis, 672 F.2d 959 (D.C. Cir. 1982), is limited to determining whether the Tucker Act—which grants exclusive jurisdiction to the Court of Federal Claims over breach-of contract actions for money damages—“impliedly forbids” an ADA action because Megapulse addressed implied preclusion only pursuant to the Tucker Act, not pursuant to the CDA.
Dissenting, Judge Collins would reverse the district court‘s dismissal for lack of subject-matter jurisdiction, and hold that the CDA does not “impliedly forbid” Aero from bringing an APA action because Aero‘s claims are not based on a government contract, but instead on
COUNSEL
David M. Almaraz (argued), Grant Shenon APLC, Sherman Oaks, California; Jonathan R. Hickman, Esquire Corporate Services LC, Encino, California; for Plaintiffs-Appellants.
Paul B. Green (argued) and Joanne S. Osinoff, Assistant United States Attorneys; David M. Harris, Assistant United
OPINION
M. SMITH, Circuit Judge:
United Aeronautical Corporation and Blue Aerospace, LLC (collectively, Aero) filed suit against the United States Air Force and Air National Guard (collectively, USAF) in the U.S. District Court for the Central District of California. Aero alleges that USAF has for some time violated federal procurement regulations and the Trade Secrets Act,
FACTUAL AND PROCEDURAL BACKGROUND
This litigation relates to the Mobile Airborne Firefighting System (MAFFS): an anti-retardant tank system
that converts cargo planes so that they can combat fires.1 From about 1980 to 2000, Aero Union—a different company than the plaintiffs in this case—developed the original MAFFS. In 2000, Aero Union contracted with the U.S. Forest Service to develop an updated MAFFS prototype (MAFFS II), which incorporated significant amounts of Aero Union‘s intellectual property that was developed from 1980 to 2000.
In 2012, Aero—the plaintiffs in this case—purchased Aero Union‘s intellectual property in a foreclosure sale. In 2014, to support the Forest Service‘s continued use of MAFFS II, Aero delivered a hard drive containing MAFFS-related data to the Forest Service and executed a Data Rights Agreement (DRA) providing:
“[A]s set forth in [2000 Contract between Aero Union and the Forest Service], the technical data produced or specifically used or related to [MAFFS II] developed pursuant to such contract shall remain the property of [Aero] (as the purchaser of assets of Aero [Union] . . .) and [the Forest Service] shall have unlimited rights to view and use the data required for the continued operation
and maintenance of [MAFFS II]” (emphasis added).
Thereafter, the Forest Service delivered that hard drive to USAF, which developed an upgraded system (iMAFFS) and marketed that system internationally.
Aero sued USAF, not the Forest Service, for its receipt and use of the MAFFS data. Specifically, Aero brought a claim pursuant to the Administrative Procedure Act (APA),
JURISDICTION AND STANDARD OF REVIEW
We have jurisdiction pursuant to
ANALYSIS
The district court correctly held that it lacked subject-matter jurisdiction over Aero‘s action. A private party may sue the United States only if the United States has waived sovereign immunity. Esquivel v. United States, 21 F.4th 565, 572 (9th Cir. 2021). If the United States has not waived sovereign immunity, then the court where the suit is filed
must dismiss the case for lack of subject-matter jurisdiction. Id. at 572-73.
The APA waives sovereign immunity for actions in federal district court by “person[s] suffering legal wrong because of agency action.”
This appeal concerns only the third limitation: The parties dispute whether the CDA forbids Aero from maintaining its APA claim in district court because it falls within the category of claims that the CDA requires to be litigated in the Court of Federal Claims.2 We hold that it
does and affirm the district court‘s dismissal for lack of subject-matter jurisdiction.
I. The CDA “impliedly forbids” jurisdiction over Aero‘s claims
The CDA serves two related functions. First, it establishes an administrative system for disputes relating to federal procurement contracts: Federal contractors can submit written claims to agency contracting officers, receive written decisions regarding their claims within a specified timeframe, and administratively appeal adverse decisions. See
Through
Because the scope of the CDA‘s administrative system dictates the scope of the CDA‘s “arising under” jurisdictional grant, we look to the contours of the
administrative system to determine whether a particular claim is covered by the CDA and thus must be litigated in the Court of Federal Claims. First, the CDA applies to “claim[s] . . . relating to a contract.”
So, to summarize: a claim falls within the scope of the CDA‘s exclusive grant of jurisdiction if (1) the plaintiff‘s action “relat[es] to” (2) a procurement contract (3) to which the plaintiff was a party. Aero‘s action meets each requirement, and thus the CDA “impliedly forbids” it.
A. Aero‘s APA action “relat[es] to” the DRA
First, we must examine whether Aero‘s claim “relat[es] to” a contract.
We find the Federal Circuit‘s reasoning to be persuasive and adopt it here. In Todd, the Federal Circuit reasoned that Congress‘s “overall purpose to confer comprehensive jurisdiction under the CDA” in the Court of Federal Claims
counsels in favor of broadly interpreting “relating to.” Id. at 1311-12; see also United States v. Suntip Co., 82 F.3d 1468, 1474 (9th Cir. 1996) (“The intent behind [the CDA] is to confine these government contract disputes to expert tribunals created expressly for that purpose. That intent is defeated if a contracting party may . . . compel the government to litigate the merits of its contracting officers’ decisions in district court.“). It then turned to dictionary definitions, finding that they treat “relating to” as a “term of substantial breadth.” Todd, 656 F.3d at 1312. Finally, it looked to Supreme Court precedent broadly interpreting “related to” in other statutes, including in a similar jurisdiction-conferring provision. Id. The Todd court soundly applied traditional tools of statutory interpretation, and we see no reason to depart from the result it reached. Indeed, Aero concedes that Todd Construction “properly analyzed” this “relating to” language.
To be sure, Todd presented a slightly different question. Here, we are tasked with interpreting the statutory phrase “claim . . . relating to a contract.”
The dissent argues that we should make the relief sought the focal point of our “relating to” analysis—instead of asking whether a plaintiff‘s cause of action more generally “relat[es] to” a contract. We need not decide in this case which is the proper focal point: the cause of action generally or the relief sought specifically. Here, our analysis under both leads to the same result.
Starting with Aero‘s cause of action generally, it has “some relationship to the terms or performance” of the DRA. Todd, 656 F.3d at 1312 (quoting Applied Cos., 144 F.3d at 1478). Aero brings an APA claim that USAF acted contrary to law by violating the Trade Secrets Act. That Act, in turn, simply prohibits government employees from disclosing trade secrets “in any manner or to any extent not authorized by law.”
Turning specifically to the relief that Aero sought, that too has “some relationship to the terms or performance” of the DRA. Todd, 656 F.3d at 1312 (quoting Applied Cos., 144 F.3d at 1478). Aero, among other things, seeks a declaration that the United States government generally “has no ownership rights” in the MAFFS data and that USAF does “not have the right to use” the MAFFS data “to develop the iMAFFS system for . . . procurement to the international market.” It blinks reality to argue that this requested relief lacks “some relationship” to the DRA‘s “unlimited rights to view and use” clause. Such a declaration, which defines the scope of the government‘s MAFFS-data use rights,
necessarily relates to the DRA, which grants the Forest Service “unlimited rights to view and use” MAFFS data.3
B. The DRA is a procurement contract
Second, we must examine whether the contract at issue is one for “the procurement of property, other than real property in being.”
Aero responds to USAF‘s argument by analogizing the DRA to a bailment contract, which one Court of Federal Claims decision suggests does not constitute a procurement contract covered by the CDA. See Telenor Satellite Servs., Inc. v. United States, 71 Fed. Cl. 114, 119 (2006) (“The
parties agree that this case is not governed by the Contract Disputes Act because it does not involve a contract for the procurement of goods or services. Rather, it involves an alleged bailment contract for the possession and use of certain electronic transmission equipment.“). We are not persuaded by this analogy. To begin, Aero does not discuss whether bailment (the granting of possession of personal property to another for a temporary amount of time) applies to intellectual property. But more critically, Aero does not allege that it only temporarily granted intellectual property rights to the Forest Service—an essential element of bailment under the case law it cites. See Telenor, 71 Fed. Cl. at 119 (bailment relationship “includes a return of the goods to the owner” (quotation omitted)).
C. Aero is a contractor for purposes of the DRA
Third, we must examine whether Aero is a “contractor,” which the CDA defines as “a party to a Federal Government contract other than the Federal Government.”
* * *
Because Aero‘s action satisfies each of the prerequisites of the CDA‘s exclusive-jurisdiction provision and sovereign-immunity waiver, we hold that the CDA “impliedly forbids” Aero from invoking the otherwise-applicable waiver of sovereign immunity contained in the APA.
II. The Megapulse test for implied preclusion pursuant to the Tucker Act does not apply to the CDA
Aero resists dismissal by arguing that Megapulse, Inc. v. Lewis, 672 F.2d 959 (D.C. Cir. 1982), requires that its claim
may be brought in district court. The Megapulse test, however, is limited to determining only whether the Tucker Act, not the CDA, “impliedly forbids” an APA action. The CDA was not yet in effect when the parties in Megapulse contracted with each other. And while the Tucker Act and CDA share a common core, each statute confers a distinct grant of exclusive jurisdiction to the Court of Federal Claims. See Winter v. FloorPro, Inc., 570 F.3d 1367, 1372-73 (Fed. Cir. 2009). Courts, therefore, must separately analyze whether each statute “impliedly forbids” an APA action. We use the Megapulse test to determine implied preclusion pursuant to the Tucker Act, but we use the analysis conducted above to determine implied preclusion pursuant to the CDA. Here, we need not decide whether Aero satisfies the Tucker Act‘s Megapulse test because, even if it does, the CDA still “impliedly forbids” bringing this action in federal district court.
money damages for the breach of a government contract. See, e.g., Boaz Hous. Auth. v. United States, 994 F.3d 1359, 1364-65 (Fed. Cir. 2021).
Therefore, we interpret the Tucker Act to “impliedly forbid” an APA action seeking injunctive and declaratory relief only if that action is a “disguised” breach-of-contract claim. Megapulse, 672 F.2d at 968. To determine whether that is the case, we use a two-part test derived from the D.C. Circuit‘s Megapulse decision, which looks to (1) “the source of the rights upon which the plaintiff bases its claims” and (2) “the type of relief sought (or appropriate).” Doe v. Tenet, 329 F.3d 1135, 1141 (9th Cir. 2003) (quoting Megapulse, 672 F.2d at 968); N. Star Alaska v. United States, 14 F.3d 36, 37 (9th Cir. 1994) (same). If rights and remedies are statutorily or constitutionally based, then districts courts have jurisdiction; if rights and remedies are contractually based then only the Court of Federal Claims does, even if the plaintiff formally seeks injunctive relief. This test imposes something akin to a well-pleaded complaint rule for Tucker Act-adjacent APA actions. The Tucker Act does not bar an APA action if the plaintiff‘s rights and remedies, as alleged, are noncontractual—even if it is inevitable that the government will raise a contract provision as a defense. Cf. City of Oakland v. BP PLC, 969 F.3d 895, 903 (9th Cir. 2020) (explaining that federal-question jurisdiction‘s well-pleaded complaint rule “depends solely on the plaintiff‘s claims for relief and not on anticipated defenses to those claims” (quotation omitted)).
Megapulse involved facts similar to this case. The plaintiff brought an APA action alleging that the Coast Guard violated its intellectual-property rights and sought injunctive relief preventing further disclosure. Megapulse, 672 F.2d at 961-63. The merits inevitably turned on an intellectual-
property licensing clause in a contract between the plaintiff and the Coast Guard. See id. at 961. Nonetheless, the court held that the plaintiff‘s rights were derived not from the contract but from the Trade Secrets Act and that the relief sought (an injunction preventing disclosure) was not akin to the traditional remedies available for breach of contract (damages or specific performance). id. at 968-970. As such, the Tucker Act did not “impliedly forbid” the plaintiff‘s APA action brought in district court.
Aero relies on Megapulse to argue that the district court has jurisdiction here because (1) its rights come but from federal procurement regulations and the Trade Secrets Act, not the contract; and (2) it seeks injunctive relief preventing further use of its intellectual property and a declaration that the USAF lacks any rights to the MAFFS data, not the breach-of-contract remedies of money damages or specific performance. USAF contends that this case is distinguishable from Megapulse because the plaintiff in that case
We need not decide whether these differences warrant a different jurisdictional decision pursuant to the Tucker Act‘s Megapulse test. That decision addressed implied preclusion only pursuant the Tucker Act; it did not consider implied preclusion pursuant to the CDA. Indeed, the contracts at issue in Megapulse were not subject to the CDA. The last contract in that case was formed in 1975, id. at 399-400, but the CDA applies only to contracts formed after 1978, and a key amendment to the CDA did not take effect until 1992, see
Congress passed the CDA in 1978, adding subsection 1491(a)(2)‘s second sentence that originally read: “The Court of Claims shall have jurisdiction to render judgment upon any claim by or against, or dispute with, a contractor arising under the Contract Disputes Act of 1978.”
Given these legislative amendments, the court in Megapulse simply did not have the question before it that we do: whether the CDA‘s jurisdictional grant, separate from that of the Tucker Act, “impliedly forbids” application of the APA‘s sovereign-immunity waiver. Nor do we see any reason to adopt Megapulse as the test for determining whether the CDA precludes district court jurisdiction over an APA claim. The Tucker Act and CDA confer exclusive jurisdiction over different sets of claims, so they necessarily preclude different sets of APA claims—even if an implied-preclusion analysis pursuant to each will often lead to the same result.
The Tucker Act grants exclusive jurisdiction to the Court of Federal Claims over breach-of-contract actions for money damages. Therefore, the Megapulse test asks whether an APA action is simply a disguised breach-of-contract action.
The CDA, by contrast, grants exclusive jurisdiction to the Court of Federal Claims over actions “relating to” a procurement contract—some of which will look a lot like Tucker Act claims. But unlike the Tucker Act, the CDA also empowers the Court of Federal Claims to hear “nonmonetary dispute[s]” and issue declaratory relief therein. Therefore, to determine whether there is implied preclusion pursuant to the CDA, we must ask whether an APA action is a disguised CDA action. To do so, we employ the analysis conducted in the previous section that determines whether an APA litigant could bring a similar action pursuant to the CDA and obtain similar relief.
For the reasons explained in the previous section, Aero‘s action satisfies each of the criteria necessary to fall within the CDA‘s exclusive-jurisdiction provision and waiver of sovereign immunity. Indeed, had Aero exhausted its administrative remedies, it could have maintained a remarkably similar action in the Court of Federal Claims—substituting the Forest Service as a defendant.5 Aero asks the
III. The Dissent‘s Remaining Arguments Do Not Alter This Conclusion
The dissent offers several other arguments for why the CDA does not deprive the district court of jurisdiction over Aero‘s APA action, even though Aero could have brought a remarkably similar action in the Court of Federal Claims. None displaces the conclusion that we reached in this decision.
A. The Well-Pleaded Complaint Rule Has No Bearing On Whether the United States Has Waived Its Sovereign Immunity
First, the dissent argues that our reading of the CDA “erase[s] the distinction between a claim and a defense,” and thus cannot be squared with the well-pleaded complaint rule, which allows a plaintiff to avoid bringing a matter within the jurisdiction of a particular forum by limiting the types of claims it asserts. However, the well-pleaded complaint rule is an interpretation applicable to a single statute:
rule. By alleging violations of federal statutes and regulations pursuant to the APA‘s cause of action, Aero‘s complaint asserts a federal question and satisfies
As the dissent acknowledges,
Indeed, the two inquires have very different background presumptions that counsel against the reflexive use of the well-pleaded complaint rule in sovereign-immunity analyses. Section 1331 analyses
claim (state or federal court) because each is competent to hear it.
Sovereign immunity analysis, on the other hand, begins with a presumption of government immunity: “An action can be brought by a party against the United States only to the extent that the Federal Government waives its sovereign immunity.” Esquivel, 21 F.4th at 572 (citation omitted). “[I]t rests with Congress to determine not only whether the United States may be sued, but in what courts the suit may be brought.” McGuire v. United States, 550 F.3d 903, 913 (9th Cir. 2008) (emphasis added) (quoting Minnesota v. United States, 305 U.S. 382, 388 (1939)). Waivers of sovereign immunity are, in turn, “construed strictly in favor of the sovereign.” McGuire v. United States, 550 F.3d 903, 912 (9th Cir. 2008). Thus, where the government‘s waiver includes a limitation about “what courts” may hear a claim against it, we cannot defer to the plaintiff‘s choice of court; instead, we must “strictly” construe the waiver to effectuate Congress‘s limitation on it.
Our analysis of the APA‘s waiver followed the latter sovereign-immunity-specific approach—not the section-1331-specific approach that the dissent urges. The APA waives sovereign immunity over certain claims in district court unless “any other statute . . . impliedly forbids the relief which is sought.”
B. Our Opinion Follows Circuit Precedent
Second, the dissent argues that our holding “ignores our prior caselaw.” However, our opinion is wholly consistent with the decisions that the dissent contends are contrary to our interpretation of the CDA as it currently stands. The dissent quotes Concrete Tie of San Diego Inc. v. Liberty Constr., Inc., 9 F.3d 800 (9th Cir. 1993) for the proposition that we have “narrowly construed” the “CDA‘s preclusive effect.” But that case concerned the pre-1992-amendment CDA‘s impact on jurisdiction conferred by the Small Business Act‘s sue-and-be-sued clause. See id. at 801-02. That case said nothing about how the availability of declaratory relief pursuant to the post-1992-amendment CDA affects whether an APA action is “impliedly forbid[den].” See
C. Our Opinion Considers a Different Kind of Claim Than Sister-Circuit Precedent Has
Third, the dissent argues that our decision “creates a circuit split with at least four circuits that expressly apply Megapulse in assessing whether the CDA impliedly forbids reliance on the APA.” But the sister-circuit decisions that the dissent cites are, after further inspection, distinguishable.
If depicted as a Venn diagram, the Tucker Act and CDA‘s two circles would have a large common area. A classic Tucker Act action is a breach-of-contract claim for money damages. E.g., Boaz Hous. Auth., 994 F.3d at 1364-65. Similarly, CDA claims often involve the “seeking, as a matter of right, the payment of money in a sum certain” for the breach of a contract.
Each of the sister-circuit decisions that the dissent cites falls within the large overlapping area of the Tucker Act-CDA Venn diagram and all involved claims that were easily-spotted breach-of-contract claims. The D.C. Circuit considered claims that the plaintiff framed as “flow[ing] from their performing [of] contracts,” and even expressly sought damages—notwithstanding that damages are unavailable pursuant to the APA. A & S Council Oil Co. v. Lader, 56 F.3d 234, 240 (D.C. Cir. 1995). The Second Circuit decision was similar; the plaintiff expressly sought “an injunction directing the Army to execute the facility lease“—a thinly veiled request for specific performance. Up State Fed. Credit Union v. Walker, 198 F.3d 372, 374, 376-77 (2d Cir. 1999). Similarly, in the Third Circuit decision, the government brought suit “seeking rescission of the contract“—yet another breach-of-contract remedy. United States v. J & E Salvage Co., 55 F.3d 985, 987-89 (4th Cir. 1995). And in the Sixth Circuit decision, the plaintiffs asserted rights and regulatory violations that were wholly “depend[ent] upon whether contracts with [the Postal Service] afford[ed] such a right.” B & B Trucking, Inc. v. U.S. Postal Serv., 406 F.3d 766, 769-70 (6th Cir. 2005) (en banc). Each of these decisions followed the Tucker Act‘s Megapulse test with little to no discussion of the CDA‘s statutory text. Though doing so was imprecise, it was ultimately immaterial in those cases because each involved a claim that fell squarely within the two statute‘s common overlap: breach-of-contract actions. In each case, whether the implied-preclusion analysis was rooted in the Tucker Act or the CDA, the result was the same: dismissal of the plaintiffs’ claims.
Here by contrast, this case implicates an area that the CDA covers but the Tucker Act does not; in other words, it falls outside of the Venn diagram‘s middle-ground overlap. We do not understand our sister circuits’ decisions to require blind adherence to the Megapulse test in such a situation. Indeed, doing so would directly contradict the CDA‘s text. The CDA, unlike the Tucker Act, extends to “nonmonetary
D. Aero Can Seek Declaratory Relief in the Court of Federal Claims
Fourth, the dissent argues that our decision “could seriously impede the ability of plaintiffs to obtain injunctive relief.” That may be correct as a factual matter—depending on how the Federal Circuit resolves the question it reserved in Todd, 656 F.3d at 1311 n.3 (reserving the question of whether the Court of Federal Claims may issue injunctive relief in addition to declaratory relief in CDA cases). But we are unsure what legal significance that observation has, since the government is free to waive its immunity only for certain forms of relief.
In any event, Aero could seek declaratory relief in a CDA action that would not be materially different from the injunctive relief it would be able to seek in an APA action. Indeed, “there is little practical difference between injunctive and declaratory relief.” California v. Grace Brethren Church, 457 U.S. 393, 394 (1982). The primary difference is that declaratory relief “is a much milder form” of relief because it is not backed by the power of contempt. Steffel v. Thompson, 415 U.S. 452, 471 (1974) (quoting Perez v. Ledesma, 401 U.S. 82, 125-26 (1971) (Brennan, J., concurring in part)). But in suits against government officials and departments, we generally assume that they will comply with declaratory judgments. See Poe v. Gerstein, 417 U.S. 281, 281 (1974) (per curiam) (“[T]here was ‘no allegation here and no proof that respondents would not, nor can we assume that they will not, acquiesce in the [declaratory judgment] decision. . . .‘” (citation omitted)).
E. We Lack Jurisdiction to Consider the Government‘s Signature-Based Argument
Finally, the dissent expressed concern that “the Government—while vigorously arguing for CDA preclusion—also argues that the DRA is invalid and unenforceable on the grounds that it was not signed by a ‘contracting’ officer.” We share the dissent‘s concern that the government appears to have taken a heads-I-win, tails-you-lose approach to arguing this appeal. We also note that in the two pages the government dedicates to its signature-based argument, it cites no CDA-specific precedent for its novel argument that technical non-compliance with a contracting regulation would vitiate a CDA cause of action even if an agreement is otherwise an “express or implied contract.”
CONCLUSION
For the foregoing reasons, the district court‘s dismissal for lack of subject-matter jurisdiction is AFFIRMED.
COLLINS, Circuit Judge, dissenting:
Plaintiffs filed this suit under § 702 of the Administrative Procedure Act (“APA“),
I
The intellectual property at issue in this case relates to the Mobile Airborne Firefighting System (“MAFFS“), which is fire-retardant tank system used to convert cargo planes into fire-fighting aircraft. From about 1980 to 2000, Aero Union, a separate company from Plaintiffs, developed the original MAFFS through its own privately funded research and development. In 2000, Aero Union contracted with the U.S. Forest Service (“USFS“) to develop an updated MAFFS prototype, called “MAFFS II.” MAFFS II relied significantly on Aero Union‘s independently developed intellectual property, which Plaintiffs refer to as the “Pre-MAFFS II Proprietary Data.” Under the terms of the 2000 contract, Aero Union retained ownership of the Pre-MAFFS II Proprietary Data, subject to the USFS‘s limited use rights. The contract terminated in 2012.
Following the termination of the 2000 contract, Plaintiffs purchased Aero Union‘s intellectual property, including the Pre-MAFFS II Proprietary Data, in a foreclosure sale. To support the USFS‘s ongoing use of MAFFS II, Plaintiffs executed a Data Rights Agreement (“DRA“) in 2014, which provided that the USFS “shall have unlimited rights to view and use the data required for the continued operation and maintenance of the [MAFFS II] product.” The DRA also reaffirmed, however, that the “Pre-MAFFS II Proprietary Data, and the technical data produced or specifically used or related to the [MAFFS II system] developed pursuant to [the 2000] contract shall remain the property of [Plaintiffs] (as the purchaser of assets of Aero [Union] . . . ).” Pursuant to the DRA, Plaintiffs provided the USFS with a hard drive containing Pre-MAFFS II Proprietary Data. The USFS subsequently delivered that hard drive to Defendants, which developed a
Plaintiffs then sued Defendants (but not the USFS) under the APA, challenging Defendants’ unlawful use of the MAFFS data. The district court dismissed Plaintiffs’ claims for lack of subject matter jurisdiction, holding that any such claims had to be brought before the Court of Federal Claims (“CFC“). Plaintiffs timely appealed.
II
As a general matter, no suit may be brought against the United States unless it has waived its sovereign immunity. See Esquivel v. United States, 21 F.4th 565, 572 (9th Cir. 2021). The APA provides a limited waiver of sovereign immunity that allows plaintiffs who have “suffer[ed] legal wrong because of agency action” to file suit against the United States in federal district court.
A
First, the Tucker Act grants the CFC jurisdiction over, inter alia, “any claim against the United States founded . . . upon any express or implied contract with the United States.”
Because the Tucker Act authorizes the CFC to grant “equitable relief” only “in limited circumstances,” the general rule is that “the Tucker Act does not permit the [CFC] to grant equitable or declaratory relief in a contract dispute case.” North Star Alaska v. United States, 9 F.3d 1430, 1432 (9th Cir. 1993) (en banc) (North Star I).2 We have held that, because “the Tucker Act ‘impliedly forbids’ declaratory and injunctive relief” in suits founded on Government contracts, it “precludes” invocation of the waiver of sovereign immunity in § 702 of the APA, which applies only to equitable relief. North Side Lumber, 753 F.2d at 1485; see also North Star I, 9 F.3d at 1432. However, because the Tucker Act‘s relevant grant of jurisdiction is limited
In determining whether a claim is “founded upon” a contract within the meaning of the Tucker Act—and thus impliedly forbidden to be asserted under the APA—we have long applied the test set forth by the D.C. Circuit in Megapulse, Inc. v. Lewis, 672 F.2d 959 (D.C. Cir. 1982). As we have explained, that test requires us to determine whether the suit is “‘at its essence’ a contract action” by considering both “the source of the rights upon which the plaintiff bases its claims” and “the type of relief sought (or appropriate).” North Star Alaska v. United States, 14 F.3d 36, 37 (9th Cir. 1994) (North Star II) (quoting Megapulse, 672 F.2d at 968). Here, consideration of these factors confirms that Plaintiffs’ claim is not “founded upon” a contract with the Government.
In considering how the Megapulse test applies here, I begin by reviewing the D.C. Circuit‘s decision in that case, which involved somewhat similar facts. In Megapulse, the plaintiff contractor filed suit in the district court to enjoin the Government from disclosing data that the plaintiff had independently developed prior to executing its first contract with the Government and prior to its delivery of the data to the Government under that contract. Megapulse, 672 F.2d at 961-62. The plaintiff alleged that disclosure of the data by the Government to other entities would violate the Trade Secrets Act, see
In determining the source of the plaintiff‘s rights, Megapulse emphasized that the plaintiff there had carefully limited its claim to a discrete set of documents reflecting “proprietary technology developed prior” to its contracts with the Government and that the plaintiff relied solely on the theory that the Government was violating its property rights and the Trade Secrets Act. Megapulse, 672 F.2d at 969 (simplified). As the court explained, it was “actually the Government, and not Megapulse, which is relying on the contract” by claiming in defense that its actions were authorized under the contract. Id. The court specifically rejected the Government‘s argument that “the mere existence of such contract-related issues must convert this action to one based on the contract.” Id. As to the relief sought, the court noted that Megapulse did not seek “monetary damages,” nor could its claim be “properly characterized as one for specific performance” of any contract. Id. On the latter score, the court expressly rejected the Government‘s argument that the existence of parallel contractual duties that matched the Government‘s statutory obligations should be sufficient to convert Megapulse‘s claim into one for specific performance of a contract. Id. at 971.
Under Megapulse, this is an easy case. Here, as in Megapulse, Plaintiffs have carefully limited the factual predicate of their claims to proprietary data that preceded Aero Union‘s first contract with the Government in 2000. Here, as in Megapulse, Plaintiffs are relying upon their rights under trade secret law, including the Trade Secrets Act, and it is the Government
Because, under the Megapulse test, Plaintiffs’ claims are not “founded . . . upon any express or implied contract,”
B
The second potentially relevant grant of jurisdiction to the CFC is the CDA. In my view, the CDA does not impliedly forbid Plaintiff‘s claims here.
1
The CDA, enacted in 1978, has since been codified as Chapter 71 of title 41 of the United States Code. See
The corresponding provision of the judicial code that confers jurisdiction on the CFC to adjudicate an action filed by a contractor under § 7104(b)(1) states:
The Court of Federal Claims shall have jurisdiction to render judgment upon any claim by or against, or dispute with, a contractor arising under section 7104(b)(1) of title 41, including a dispute concerning termination of a contract, rights in tangible or intangible property, compliance with cost accounting standards, and other nonmonetary disputes on which a decision of the contracting officer has been issued under section 6 of that Act [41 U.S.C. § 7103].
The question, then, is whether Plaintiffs were required to submit their claim in this case to a contracting officer in accordance with the CDA. As noted earlier, the CDA requires that any “claim by a contractor against the Federal Government relating to a contract” governed by the CDA “shall be submitted to the contracting officer for a decision.”
2
Whether this case may proceed in the district court thus turns on whether Plaintiffs’ claim is one “relating to” a procurement contract within the meaning of § 7103(a)(1) of the CDA. The majority concludes that the Megapulse test that is used for distinguishing between claims “founded upon” a contract in the Tucker Act context does not apply to the similar inquiry, in the CDA context, as to whether a claim “relat[es] to a contract.” See Opin., § II. According to the majority, any cause of action that, broadly speaking, has “some relationship to the terms or performance” of a procurement contract is a claim “relating to a contract” for purposes of the CDA and therefore may not be the subject of a suit under § 702 of the APA. See Opin. at 9 (quoting Todd Constr., L.P. v. United States, 656 F.3d 1306, 1312 (Fed. Cir. 2011)). And that remains true, according to the majority, even if the only “relationship” between the plaintiff‘s claims and the procurement contract is that the Government has invoked contract-based defenses to the plaintiff‘s non-contract-based claims. See Opin. at 11-12, 16-20. For multiple reasons, the majority is wrong in holding that the Megapulse test is limited to the Tucker Act context and does not apply to the CDA.
First, the majority overlooks the meaning, in context, of the entire relevant phrase in the CDA, and in doing so the majority misreads the Todd case on which it primarily relies. In describing what must be submitted to a contracting officer, § 7103(a)(1) refers to a ”claim by a contractor against the Federal Government relating to a contract.”
Second, even setting aside Todd‘s particular definition of a “claim,” the majority‘s analysis still fails. According to the majority, a contractor‘s “claim” “relat[es] to” a contract if the Government‘s defenses to that claim relate to the contract. See Opin. at 11-12. The majority cites no authority that supports this rewriting of the statute, which focuses on the “claim” asserted and not the defenses raised against it. The majority notes that Plaintiffs cannot prevail on their claim without defeating those defenses and that Plaintiffs’ complaint itself anticipates those defenses. See Opin. at 11-12. But that does not erase the distinction between a claim and a defense, cf. Caterpillar Inc. v. Williams, 482 U.S. 386, 393 (1987) (holding that the rule that a federal defense does not suffice to show that a claim arises under federal law applies “even if the defense is anticipated in the plaintiff‘s complaint, and even if both parties concede that the federal defense is the only question truly at issue“), and the CDA requires that the claim—not an anticipated defense—relate to the contract.
Third, the majority‘s expansive reading of the CDA ignores our prior caselaw holding that the CDA‘s preclusive effect on the availability of other jurisdictional statutes should be “narrowly” construed. Concrete Tie, Inc. v. Liberty Constr., Inc. (In re Liberty Constr.), 9 F.3d 800, 801 (9th Cir. 1993). In Liberty Construction, we invoked that narrow-construction rule in rejecting the Government‘s argument that our construction of the statute “vest[ing] jurisdiction in the district court over claims against the SBA [Small Business Administration]” had been “implicitly overruled” by the CDA. Id.; see also Wright v. U.S. Postal Serv., 29 F.3d 1426, 1429 (9th Cir. 1994) (expressly rejecting the view that “the CDA ‘pre-empt[s] the entire field of government contract remedies‘“).4
Fifth, the majority‘s holding could seriously impede the ability of plaintiffs to obtain injunctive relief against Government misconduct, even for statutory violations such as those at issue here, if the plaintiffs’ claims can be said, in some broad sense, to “relate” to a contract the plaintiff assertedly has with the Government. The majority dismisses this concern, even while acknowledging that the Federal Circuit itself expressly declined to decide in Todd whether the CFC had authority to issue injunctive relief in that case. See Opin. at 25 (citing 656 F.3d at 1311 n.3). The majority hopes that declaratory relief—which the majority concedes could not be enforced by contempt authority—would be sufficient. Id. But if not, well, then too bad, according to the majority, because “the government is free to waive its immunity only for certain forms of relief.” Id. The majority‘s overbroad rule threatens to seriously thwart the critical role served by APA § 702‘s waiver of sovereign immunity in cases seeking injunctive relief against the Government. See Transohio Sav. Bank v. Director, Off. of Thrift Supervision, 967 F.2d 598, 611-12 (D.C. Cir. 1992) (“[W]e are mindful of the warning that federal courts not subvert the congressional objectives underlying the enactment of § 702 of the APA by allowing the government to give an overly expansive scope to the notion of claims ‘founded upon’ a contract” (simplified)).
For all of these reasons, the majority seriously errs in rejecting the Megapulse test in assessing whether the CDA impliedly forbids a claim for injunctive relief under § 702 of the APA. Because I would apply Megapulse in assessing the limits of the CDA, I necessarily conclude that Plaintiffs’ claims are not impliedly forbidden by the CDA.
III
Finally, I cannot let pass without comment an additional troubling feature of this case that the majority brushes aside. In finding that the CDA impliedly forbids invocation of the APA here, the majority holds that the DRA qualifies as a procurement contract within the meaning of the
IV
For the reasons I have explained, neither the Tucker Act nor the CDA impliedly forbid invocation of the APA here. Accordingly, the district court erred in dismissing this action for lack of jurisdiction, and its judgment should be reversed. I respectfully dissent.