Oral argument: Nov. 1, 2010
Appealed from: United States Court of Appeals for the Federal Circuit (Mar. 16, 2009)
28 U.S.C. § 1500, INDIAN LAND TRUST, INDIAN TUCKER ACT, SOVEREIGN IMMUNITY
Tohono O’odham Nation, an Indian Tribe from Southern Arizona, filed suit against the United States in the District Court for the District of Columbia, alleging that the United States had breached its fiduciary duties to the Tribe by poorly managing the Tribe’s trust assets. The Tribe asked for an accounting and other equitable relief. The Tribe subsequently filed suit in the Court of Federal Claims seeking monetary damages for the earnings shortfall in the Tribe’s trust accounts. The United States argued that 28 U.S.C. § 1500 barred the Court of Federal Claims from hearing the case because the same claim was already before the District Court for the District of Columbia. The Court of Federal Claims agreed with the United States and dismissed the Tribe’s second suit. The Court of Appeals for the Federal Circuit, however, held that separate claims for equitable and monetary relief would not be barred by 28 U.S.C. § 1500. The Supreme Court’s decision will determine the extent to which parallel claims must be related before 28 U.S.C. § 1500 bars jurisdiction in the Court of Federal Claims, and in so doing, will establish what separation exists between claims for monetary and equitable relief against the United States.
Under 28 U.S.C. § 1500, the Court of Federal Claims (CFC) does not have jurisdiction over “any claim for or in respect to which the plaintiff . . . has . . . any suit or process against the United States” or its agents “pending in any other court.” The question presented is:
Whether 28 U.S.C. § 1500 deprives the CFC of jurisdiction over a claim seeking monetary relief for the government’s alleged violation of fiduciary obligations if the plaintiff has another suit pending in federal district court based on substantially the same operative facts, especially when the plaintiff seeks monetary relief or other overlapping relief in the two suits.
Where a federal statute provides that the Court of Federal Claims lacks jurisdiction to hear a suit against the Federal Government when a claim is being litigated against the government in another court, may a plaintiff bring a lawsuit in both the Court of Federal Claims and another court based on essentially the same set of facts if the plaintiff seeks different forms of relief in the two cases?
The Tohono O’odham Nation (“the Tribe”) of Southern Arizona consists of 26,000 members. Numerous executive orders and Congressional acts formed the Tribe's 3-million-acre reservation, the second largest in the United States. As the land's trustee, the United States is responsible for generating income by selling natural resources and conveying partial-land interests to third parties. The United States is also responsible for managing the entire trust, which includes the land, the income derived from the land, and prior judgments and settlements paid to the Tribe by the federal government.
On December 28, 2006, the Tribe brought its first action against the United States in the District Court for the District of Columbia naming federal government agents as defendants. In this action, the Tribe alleged that the United States breached its fiduciary duties related to the trust's management. Specifically, the Tribe alleged that the United States inadequately accounted for trust assets; kept a substandard accounting system with insufficient records; mismanaged trust assets preventing a maximum return on investment; neither collected, invested, nor disbursed trust funds; and inappropriately used trust funds for its own benefit. Based on these allegations, the Tribe sought an accounting of the trust's assets to determine what belonged to it, and a correction to the trust's balance to reflect the accounting results.
One day later, on December 29, 2006, the Tribe filed a second suit in the Court of Federal Claims (“CFC”) regarding the same trust. The Tribe's CFC complaint closely paralleled its District Court complaint because it contained identical operative facts. Moreover, like the District Court complaint, the CFC complaint alleged that the United States administered the trust contrary to the Tribe's best interest; kept inaccurate accounts of trust assets; lost trust assets; neither collected nor deposited trust funds; failed to maximize investment returns; and self-dealt with trust assets. In this action, however, the Tribe sought legal damages for losses allegedly caused by the mismanagement of the trust.
The CFC dismissed the Tribe’s second action on the grounds that it lacked jurisdiction based on 28 U.S.C. § 1500, which barred the CFC from hearing claims based on identical “operative facts,” and where the plaintiff sought the “same relief” that was pending in the District Court. On appeal, the Court of Appeals for the Federal Circuit reversed and remanded the CFC’s decision. The divided court found that the Tribe’s two claims did not seek the same relief because in the District Court action, the Tribe requested equitable relief whereas in the CFC action it asked for legal damages. The Federal Circuit made this finding despite noting that the equitable relief requested by the Tribe in the District Court action was actually monetary relief. The United States Supreme Court granted certiorari to determine whether Section 1500 bars the CFC from exercising jurisdiction over the Tribe's claim.
Petitioner, the United States of America argues that the Court of Appeals for the Federal Circuit erred by allowing a Court of Federal Claims (“CFC”) lawsuit to continue, despite a pending parallel claim in the District Court for the District of Columbia on the same “operative facts.” The United States contends that 28 U.S.C. § 1500 bars parallel suits within the CFC whenever they contain identical “operative facts.” Respondent, the Tohono O'odham Nation (“the Tribe”), disagrees, arguing that Section 1500 only bars suits seeking relief for the same injury. The Supreme Court’s decision in this case will determine the proper balance between protecting the government from duplicative litigation, on the one hand, and allowing plaintiffs to bring parallel CFC and District Court actions on the other.
Additional Litigation: Net Cost or Net Benefit?
The United States argues that a holding for the Tribe will create duplicative litigation, exposing the federal government to the burden of defending multiple lawsuits with identical facts. Unlike suits involving private parties, the United States notes that the public finances suits involving the government. Accordingly, it maintains that allowing duplicate lawsuits will lead to greater and unnecessary public expenditure in defending such litigation.
On the other hand, the Tribe asserts that litigation involving the federal government provides an important check to government power. Agreeing with the Tribe, the National Association of Home Builders (“NAHB”) contends that a decision for the United States will force plaintiffs to choose between receiving monetary damages and challenging the validity of government action. Indeed, the NAHB argues that in some situations—including regulatory takings—it would force plaintiffs to choose between monetary relief and raising a constitutional issue, which it sees as an unsound result.
Making Plaintiffs Whole or Encouraging Gamesmanship?
The United States Chamber of Commerce contends that making a plaintiff “whole” often requires combining equitable relief along with legal damages. The Chamber of Commerce argues that because plaintiffs cannot bring claims for both types of relief in a single court, a ruling in favor of the United States will force plaintiffs to choose between the two, even when each claim can remedy a different type of injury, ultimately under-compensating the plaintiff. The Colorado River Indian Tribes and National Congress of American Indians further contend that finding for the United States would prevent plaintiffs from being “made whole” because often the same operative facts lead to multiple injuries that require different forms of relief, such as employment reinstatement and damages for back pay.
In contrast, the United States argues that a decision in favor of the Tribe would force courts to distinguish between equitable and legal remedies, immersing them in a line-drawing labyrinth. The United States contends that because courts would make this line drawing based on the plaintiff’s complaint, any ambiguity in the complaint itself would encourage plaintiffs to game the system by allowing them to bring a single claim before two different courts through strategic pleading. Besides being inequitable, the United States argues that having parallel actions with identical operative facts could possibly lead to inconsistent decisions in each court.
Equivalent Result Regardless of Who Wins?
Professor Gregory C. Sisk states that this lawsuit asks the wrong question. He argues that the District Court lacks jurisdiction because a monetary judgment by the CFC can remedy the entire trust claim, and thus, the District Court should transfer its suit to the CFC. Therefore, he contends that this action’s outcome makes no difference to the parties; either (1) the Supreme Court holds for the United States and the District Court transfers its suit to the CFC, or (2) the Supreme Court holds for the Tribe and the District Court transfers its action to the CFC, where it is combined with the existing CFC lawsuit. Consequently, Sisk argues that the Supreme Court should take this opportunity to clarify the jurisdictional line between the District Court and the CFC, preventing future wasteful litigation such as forum shopping. Hence, the Supreme Court’s decision in this case will clarify the line between potentially duplicative litigation and necessary parallel lawsuits in both the CFC and a District Court.
The United States of America argues that when a plaintiff sues the federal government in any other court, 28 U.S.C. § 1500 bars the Court of Federal Claims (“CFC”) from hearing any claims based the same operative facts. Tohono O’odham Nation (“the Tribe”) contends that Section 1500 bars only separate suits on the same claim seeking the same relief. The Court of Appeals for the Federal Circuit held, under its own precedent, that the CFC would not be divested of jurisdiction by Section 1500, so long as either the operative facts of the claims or the form of relief sought were different. The Federal Circuit found the relief in both cases sufficiently distinguishable for the CFC to decide the case. Alternatively, the United States argues that the CFC is barred from hearing the case because the operative facts and the form of relief sought are the same in both cases. The Tribe, however, asserts that both its claims and its desired relief are different.
The United States argues that the principles of sovereign immunity would bar any claim against the government unless waived. In this case, the United States cites two waivers of sovereign immunity: the Administrative Procedure Act (“APA”), 5 U.S.C. § 702, creating a cause of action against federal agencies—here, the Department of the Interior, Bureau of Indian Affairs—and the Indian Tucker Act (“ITA”), 28 U.S.C. § 1505, directing American Indian tribes to sue for damages against the United States in the CFC. The Tribe brought its action in the CFC under the ITA and its action in the district court under the APA. The ITA allows relief only in the form of monetary damages in the CFC.
The United States finds support for its objection from Section 1500, which it argues denies the CFC’s jurisdiction “over ‘any claim for or in respect to which the plaintiff . . . has . . . any suit or process against the United States’ or its agents ‘pending in any other court.’” The United States argues that any case based on the same operative facts is essentially the same claim. In response, the Tribe argues that sharing operative facts alone is not enough to conclude that the two cases are based on the same claim. Rather, the Tribe argues that a claim is composed of both the operative facts of a case and the relief sought. The Tribe further argues that the relief component is particularly relevant in cases involving money claims against the government because while the CFC cannot grant equitable relief, district courts cannot grant monetary relief.
Additionally, both parties look to the plain text of the statute to support their respective positions. The United States argues that the phrase “claim or claim in respect to which” in Section 1500 bars any claim that “relates in any way” to a claim before another court. According to the government’s interpretation, claims based on the same operative facts are related and therefore barred. Moreover, the United States contends that Congress intended Section 1500 to be a broad bar of jurisdiction because limitation includes the broad language “any other court” and “any suit or process.” On the other hand, the Tribe contends that the word “claim” as used in Section 1500 has a narrow meaning, so that the phrase “demand for relief” bars multiple suits seeking the same relief for the same harm, but would not bar suits seeking different relief.
The United States counters by claiming that under the principles of sovereign immunity, any waiver must be construed narrowly. . Therefore, the United States argues that if Section 1500 is ambiguous that ambiguity must be resolved to reduce the CFC’s jurisdiction, rather than to expand it. On the other hand, the Tribe argues that once a waiver has been identified, as in the ITA here, the court’s role is merely to identify what circumstances meet any exceptions, without undue prejudice in either direction. To do otherwise, the Tribe argues, would undermine Congress’s intent to waive sovereign immunity.
The Tribe also notes that Congress first enacted Section 1500 after the Civil War to prevent southern cotton farmers from recovering twice for improperly seized cotton. However, the United States counters by maintaining that because relief for the cotton farmers in the CFC was limited to funds held in trust, the relief sought by the Tribe in the District Court would not have been the same, and as a result, Section 1500’s intended targets were suits based on the same operative facts. The Tribe points out that the definitions for relief in both courts were essentially the same and that it was certainly relief for the same injury.
In deciding this case, the Federal Circuit based its decision on its own precedent in Loveladies Harbor, Inc. v. United States, interpreting the Supreme Court’s decision in Keene Corp. v. United States. Where Keene held that Section 1500 barred claims based on the same operative facts with at least some overlap in relief, the Supreme Court left open whether Section 1500 barred claims for plaintiffs seeking different relief.
The Tribe’s Claims
The United States contends that the Tribe’s claims as essentially the same, while the Tribe argues that the claims are based on different breaches of the government’s fiduciary obligations. The Federal Circuit held that because the Tribe sought different relief from each court, the restrictions of Section 1500 did not apply.
The Tribe argues that it had been asking the courts to consider two distinct harms. According to the Tribe, it is first asking the District Court to decide whether its trust accounts are correct and, if not, to order the federal government to correct those accounts. Second, the Tribe asserts that it is asking the CFC to determine whether the government failed to responsibly manage the Tribe’s trust assets, thereby reducing the money owed to the Tribe, and if so, to award monetary damages to the Tribe for any loss suffered. The United States argues that because the operative facts—how the government managed the Tribe’s trust assets—are the same in both cases, the courts must decide the same issues and, thus, the claims are essentially the same.
The Tribe describes the relief it seeks as “old money”—money that should be in the trust accounts but is missing due to accounting errors—which it argues is different from “new money”—funds that the government would have collected for the Tribe had it properly managed the trust assets. The Federal Circuit concluded that old money, which the Tribe sought in the District Court, would be subject to equitable relief, either through disgorgement or some other kind of equitable restitution. The Tribe argues that because the CFC cannot grant equitable relief, limiting their claim to equitable relief in the District Court would produce inherently different types of relief. The Tribe points out that only the CFC can award money damages against the United States.
The United States counters these points by asserting that the relief sought by the Tribe is the same in two ways: first, at least one of the forms of equitable relief the Tribe is seeking would result in a monetary judgment against the United States; and second, both actions by the Tribe require that the federal government perform a full accounting of the Tribe’s trust accounts. On the other hand, the Tribe contends that the CFC is not empowered to grant a full accounting as a form of relief, instead, in the Tribe’s view, the CFC can only require an accounting as part of the damages phase of a trial. Moreover, the Tribe asserts that such post-liability accounting relief cannot, as a matter of law, be considered part of any relief demanded.
The United States Supreme Court’s decision in this case will determine how different related claims against the United States must be in order for the Court of Federal Claims ("CFC") to retain jurisdiction to hear the case. Tohono O’odham Nation ("the Tribe") argues that the essential question is whether the forms of relief requested are distinct, and that any other requirement would deny plaintiffs the opportunity to seek complete relief. By contrast, the United States claims that if the operative facts are the same, parallel suits are barred. Moreover, the United States argues that allowing the CFC to hear the case results in duplicative legal proceedings concerning the same claim. A decision for the Tribe may allay concerns of plaintiff under-compensation, and allow more parallel claims in both the CFC and the district courts, which provide a stronger check on the federal government. Alternatively, a decision for the United States could reduce the possibility of duplicative litigation; limit the federal government's need to spend public funds to defend itself against such litigation; and avoid concerns of plaintiffs engaging in gamesmanship and courts rendering inconsistent decisions.
Edited by: Catherine Suh
· Department of the Interior: Fiduciary Trust Model: Executive Summary (2004).
· National Congress of American Indians: Trust Reform.