The Federal Circuit S Abrogation of the Nafi Doctrine: an En Banc Message with Implications
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The Federal Circuit’s Abrogation of the NAFI Doctrine:
An En Banc Message with Implications for Other Jurisdictional
Challenges?
By
W. Stanfield Johnson*
* W. Stanfield Johnson (wjohnson @ crowell.com) is a senior counsel in the law firm of Crowell & Moring LLP. The author thanks his assistant, Debra Richardson, for her patient efforts on this article. TABLE OF CONTENTS
I. Introduction...... 1
II. History of the NAFI Doctrine...... 65
A. The Genesis of the Rule...... 65
B. Expansion of the Doctrine...... 87
C. The Limited Congressional Correction...... 9
D. NAFI Precedents After the 1970 Act...... 1211
III. The Slattery Decision...... 2119
A. The Panel Decision...... 2119
B. The En Banc Decision...... 2321
1. The Tucker Act Waiver...... 2421
2. The Related Enactments Providing for Payment of Tucker
Act Judgments from Appropriations...... 2522
3. Review of the Kyer Line of Precedents...... 2825
4. Dealing With the Counter Arguments...... 3330
5. Resolving the Conflicting Precedents...... 4136
IV. Conclusion: A Broader Message?...... 4339
ii Error! Unknown document property name. I. Introduction
There is a widely- held perception, widely held in the gove rnment contracts bar, that the Court of Appeals for the Federal
Circuit (“Federal Circuit”) has , over the 30 years since its cr eation, changed the law of government contracts it inherited fro m its predecessor court over 30 years ago, the United States Cou rt of Claims.1 This view espouses that, expressed in law journal articles and no doubt also in this volume, finds the Federal Cir cuit’s evolving government contracts law has become stricter and more formalistic in its assessment of contractor claims and defe nses, as well as more attuned to sovereign presumptions and priv ileges.2 Consequently,Whereas whereas the U.S. Court of Claims s tated that its mandate was to serve as the nation’s “conscienc e,”3 it has been suggested that the Federal Circuit’s decisions suggestindicate that its priority is to protect the public fisc.4
The evolutionary character of government contracts law in the Federal Circuit has not occurredis perceived evolution has n 1 See, e.g., Ralph C. Nash, Jr., The Government Contract Decision s of the Federal Circuit, 78 GEO. WASH. L. REV . 586, 587-88 (201 0). 2 See e.g., Ralph C. Nash, Jr., The Government Contract Decisions of the Federal Circuit, 78 GEO. WASH. L. REV . 586, 587 (2010); Ste ven L. Schooner, A Random Walk: The Federal Circuit’s 2010 Gov ernment Contracts Decisions, 60 AM. U.L. REV. 1067, 1068-69 (201 1) (quoting John R.& Thompson, Formalism at the Federal Circuit, 52 AM. U. L. REV . 771 , 773-74 (2003)). 3 Z. WILSON COWEN ET AL., THE UNITED STATES COURT OF CLAIMS: A HISTORY 171 (1 978). 4 See W. Stanfield Johnson, The Federal Circuit’s Great Dissenter and Her “National Policy of Fairness to Contractors,” 40 PUB. CONT. L. J. 275, 3353-346 (2011). (citing OPM v. Richmond, 496 U.S. 414 (1990)). 1 Error! Unknown document property name. ot taken place through en banc decisions, which should serve as the exclusive means of overturning the court’s prior precedent t hat might have been thought to be required.,5 but ratherRather it has been the resulted from of an accretion over time of panel decisions. Indeed, the Federal Circuit’s most significant en ba nc contract decision, Winstar Corp. v. United States,6 rejected s overeign defenses based on the principle that the United States as a contracting party is generally accountable under the law of contracts between private parties7 – a jurisprudential premise ec hoed by the Supreme Court in its affirmance.8 Yet subsequent pan el decisions have disregarded this fundamental rule in rejecting contractor claims,.9 causing Professor Ralph C. Nash, Jr., aA lea ding commentator on government contracts law, to remark has said that the Federal Circuit has departed from thechanged its “decis ional attitude.” of the U.S. Court of Claims.10
In contrast to this history, in 2011 the Federal Circuit is sued its surprising and remarkable en banc decision in Slattery
5 See FED. CIR. R. 35(a)(1)(en banc determination); Ssee, e.g., S.o uth Corp. v. United States, 690 F.2d 1368, 1372 (Fed. Cir. 1982). 6 64 F.3d 1531 (Fed. Cir. 1995).Winstar Corp. v. United States, 64 F.3d 1531, 1551 (Fed. Cir. 1995). 7 Id. at 1551.Winstar Corp. v. United States, 64 F.3d 1531, 1551 (Fed. Cir. 1995). 8 United .States. v. Winstar Corp., 518 U.S. 839, 895 (1996). 9 See Johnson, “The Federal Circuit’s Great Dissenter,” supra note Error: Reference source not found3 at 343-345; see also W. Stanf ield Johnson, “Mixed Nuts and Other Humdrum Disputes: Holding th e Government Accountable Under the Law of Contracts Between Priv ate Individuals”, 31 PUB. CONT. L.J. 677, 678-79 (2003). 10 Nash, Government Contract Decisions, supra note Error: Referen ce source not found1, at 588. 2 Error! Unknown document property name. v. United States (Slattery II),11 – which boldly abrogated the lo ng-standing “NAFI Doctrine” established by the U.S. Court of Cla ims sixty years before, repeatedly endorsed in subsequent decisi ons, and acknowledged by the Supreme Court and Congress.12 Under this jurisdictional rule, the Tucker Act13 did not waive sovereig n immunity from contract claims against non-appropriated fund in strumentalities (“NAFIs”) of the United States.14 This bar was p remised on the U.S. Court of Claims’ construct that statutes pro viding for appropriations to pay Tucker Act judgments – ultimate ly the Judgment Fund15 – restricted the waiver of sovereign immun ity and thus its jurisdiction.16
Slattery, however, persuasively deconstructed the NAFI
Doctrine’s rationale through anthis connection based on analysis of the history and purposes of the appropriation statutes.17
Instead, Tthe en banc Slattery decision, in an opinion by Judge
Pauline Newman for a majority of six, held that “the jurisdictio 11 Slattery v. United States (Slattery II), 583 F.3d 800 (Fed. Cir. 2009) (“Slattery I”), reh’g. granted, opinion vacated, 369 Fed. Appx. 142, vacatedon reh., 635 F.3d 1298 (Fed. Cir. 2011) (“Slat tery III”). The government did not seek Supreme Court review. 12 See Borden v. United States, 116 F. Supp. 873, 877 (Ct. Cl. 1953); infra Part II., e.g., United States v. Mitchell, 463 U.S. 206, 212 (1983). 13 Tucker Act of 1887, 24 Stat. 505 (1887) (codified as 28 U.S.C. §§ 134628 U.S.C. § , 14911491 (2006).). 14 Borden , 116 F. Supp. at 877; infra Part II.Id. Id. at 28 U.S.C. § 1491(a)(2) . 15 28 U.S.C. § 2517 (2006). 16 See Kyer v. United States, 369 F.2d 714, 718 (Ct. Cl. 1966); infra Part II.B.Id. § 1491(a)(1). 17 Slattery v. United States (Slattery III), 635 F.3d 1298, 1301- 10 (Fed. Cir. 2011) (en banc). Slattery II, 635 F.3d atId. at 1301-101298. 3 Error! Unknown document property name. nal foundation of the Tucker Act is not limited by the appropria tion status of the agency’s funds or the source of funds by whic h any judgment may be is paid.”18 Slattery’s thereforeimportance is not just tha it ended a seemingly entrenched rule, though one recognized to be unjust, and opened the court’s doors to NAFI co ntract claims.
Additionally, Tthe Federal Circuitcourt’s opinion in
Slattery rationale extended beyond mereits statutory analysis, s uggesting a broader significance.19 Confronted by the dissenter s’ powerful argument that the NAFI Doctrinerule had been authori tatively accepted for so long and often,20 the en banc majority a lso rested its decision on fundamental principles governing Tuck er Act jurisdiction.21 The court “reaffirmed” adherence to the r ule, established by the Supreme Court in United States v. Mitche ll,22 that the “broad” Tucker Act waiver of sovereign immunity co uld not be limited except in “unambiguous,” authoritative terms.
23 In contrast, the dissenters relied on the often invoked contr ary canon of construction that waivers of sovereign immunity hav e to be “”strictly construed.””24 The majority rejected this max
18 Slattery II, 635 F.3dId. at 1321. 19 Id. 20 Id. at 1321-35 (Gajarsa, J., dissenting). 21 Id. Slattery II, 635 F.3d at 1320-21.Id. 22 463 U.S. 206 (1983). 23 Slattery III, 635 F.3d at 1320-21Id. (citing United States v. United States v. Mitchell, 463 U.S. 206, 216 (1983)Mitchell, 463 U.S. 206, 21633 (1983)). 24 Slattery III, 635 F.3dId. at 1323 (Gajarsa, J., dissenting opinion) (quoting Lane v. Pena, 518 U.S. 187, 192 (1996)). 4 Error! Unknown document property name. im as applied to the Tucker Act.25 Thus, the Federal Circuit’s e n banc decision also stands for the broader proposition that jur isdiction over claims of contract breaches by government agencie s exists “unless such jurisdiction was explicitly withheld or wi thdrawn by statute . . . .”26
This article reviews the contours of the Slattery decision in depth and concludes that the opinion not only overturned the
NAFI Doctrine but also potentially delivered a more powerful message, namely that courts hearing government contract claims should no longer swiftly dismiss them based on formulistic applications of jurisdictional rules. The next part examines the history of the NAFI Doctrine and how it became entrenched in government contracts law. Part III then discusses the Federal
Circuit’s Slattery opinion, beginning first with an overview of
Judge Newman’s panel decision in that case and then a thorough analysis of Judge Newman’s majority en banc decision and the dissenting positions to which it gave rise. Part IV then concludes this article by explaining the significance of the
Slattery opinion as delivering an arguably broader message regarding the use of jurisdictional rules to dismiss government contract claims.
25 See id. Slattery II, 635 F.3d at 1321. 26 Id. Slattery II, 635 F.3d at 1321. 5 Error! Unknown document property name. II. History of the NAFI Doctrine
A. The Genesis of the Rule
The NAFI Doctrine stemmed from a 1942 Supreme Court decisio n that did not even involve the Tucker Act. In Standard Oil Co. of California v. Johnson,27 the Court held that military post exc hanges were immune from state taxation as “arms of the g[G]overn ment,” with “whatever immunities it may have under the [C]Consti tution and federal statutes.”28 In so ruling, the also Court remarkedobserved also that “[t]he g[G]overnment assumes none of the financial obligations of the exchange[s].”29
This observation led the U.S. Court of Claims, in Borden v.
United States,30 decided in 1953, to deny Tucker Act jurisdiction over claims for breach of contract by the exchanges.31 The court
“reluctantly” reached this conclusion “in . . . light of the de cision of the Supreme Court”:
If this were a case of first impression, we might be i nclined to hold that the entire activity is so much an integral part of the Army’s actual operational structure as to make it a direct agency of the Governm ent, notwithstanding the funds are not ordinarily appr opriated for the operation of the exchanges.32
As a result, Chief Judge Jones, writing for the court, noted thea
“strange anomaly” created by the Supreme Court’s decision: 27 Standard Oil Co. of California v. Johnson, 316 U.S. 481, 485 (1 942). 28 Id. at 485. 29 Id. 30 116 F. Supp. 873 (Ct. Cl. 1953). 31 Id. atBorden v. United States, 116 F. Supp. 873, 877. (Ct. Cl. 1953). 32 Id. 6 Error! Unknown document property name. For the Army to contend and to provide by regulation t hat it is not liable since it did not act in its offic ial capacity would be like a man charged with extra-ma rital activity pleading that whatever he may have done was done in his individual capacity and not in his cap acity as a husband.33
Judge Whittaker dissented, stating that the majority’s conclusion “just cannot be.”34 “The question of the liability of the United States on the contracts of post exchanges,” he wrote, was “not presented to the Supreme Court” in Standard Oil Co. of
Californiaof California.35 He concluded that “Congress did not mean for this to happen” and “said so when,” in the Tucker Act,
“it gave its consent to be sued on its contracts.”36 But
Nnotwithstanding the anomaly recognized in both the majority and dissenting opinionsand the dissent, the U.S. Court of Claims establishedthus created the NAFI Doctrine as it applied to military exchanges, with the caveatthought that the unfairness of “the situation should be called to the attention of the
Congress.”37
B. Expansion of the Doctrine
Kyer v. United States,38 decided in 1966, extended the NAFI dDoctrine’s application beyond military exchanges and elaborated on the rule’sits rationale.39 In Kyer, the U.S. Court of Claims
33 Id. at 876-77. 34 Id. at 878 (Whitaker, J., dissenting). 35 Id. at 880 (Whitaker, J., dissenting).. 36 Id. (Whitaker, J., dissenting). 37 Id. at 878 (Whitaker, J., dissenting).. 38 369 F.2d 714 (Ct. Cl. 1966). 39 Kyer v. United States, 369 F.2d 714, Id. at 718 (Ct. Cl. 1966). 7 Error! Unknown document property name. held that the Grape Crush Administrative Committee of the Depart ment of Agriculture, although an “integral part” of the United S tates, was not subject to a breach of contract lawsuit because i t was a non-appropriated fund instrumentality “neither supported by appropriations nor authorized, in any manner, to obligate suc h funds.”40
To justify its decision,The more elaborate rationale provid ed by the Ccourt bridgedof Claims connected the jurisdictional e nactments, including the Tucker Act,41 with athe sequence of enac tments providing for appropriations to pay forthe judgments rend ered against the United States – i.e. – ultimately, the legislat ion creating the permanent, indefinite Judgment Fund.42 The cour t’s logic went like this: if the Tucker Act judgments must be p aid out of funds appropriated by Congress, there can be no juris diction (and no waiver of sovereign immunity) for breaches of co ntracts not supported by appropriated funds.43 Thus,Or, in the c ourt’s words:
While the terms of [the Tucker Act] are broad, its wor ds must be read in connection with and must be regarde d as limited by another statute which provides that ou r judgments are paid only from appropriated funds.44
In Kyer, there was no mention of military exchanges orand no citation to eitherof Standard Oil Co. of California or Borden, 40 Id. at 716-18. Id. at 716, 718. 41 28 U.S.C. § ¶1491. 42 Id. at 717-18 (citing Tucker Act, 28 U.S.C. § 1491 (1964); 28 U.S.C. § 2157 (1964)).28 U.S.C. ¶§ 2517. 43 Id. Kyer, 369 F.2d at 718. 44 Kyer, 369 F.2d at 718Id.. 8 Error! Unknown document property name. but the court again expressed the sentiment that “the result reached spells an unduly harsh outcome,” “ . . . sorely need[ing] congressional correction.”45
C. The Limited Congressional Correction
In 1970, Congress addressed the NAFI Doctrine and the inequitable result it fostered, but,recognizing it to be an ineq uitable “loophole” in Tucker Act jurisdiction.46 But, as it turn ed out, Congress only offered a limited correction to the jurisdictional loophole.’ correction was limited. AThe original
Senate bill would have eliminated the doctrine entirely by provi ding that “an express or implied contract with a non-appropriate d fund activity of or under the United States or a department or agency of the United States shall be considered an express or im plied contract with the United States.”47 Citing Kyer, Borden, a nd other decisions, the Senate Report explained that:
S.980 will fill a gap in the Tucker Act’s waiver of so vereign immunity of the United States to claims based upon contracts with departments or agencies of the Gov ernment . . . . …The courts have repeatedly held . . . …that the Federal Government’s liability to suit . . . …only exists with respect to contract obligations to be paid out of appropriated funds.48
45 Id. at 719. 46 Slattery II, 635 F.3d at 1323 (dissenting opinion). 47 Id. (quoting S. 980, (91stst Cong., 1stst Sess.) (1969)). 48 Id. at 1324, (quoting S. REP. NO. 91-268, at 2-3, 5 (1969) (citing Kyer v. United States, 369 F.2d 714 (Ct. Cl. 1966)Kyer, 369 F.2d at 715; Pulaski Cab Co. v. United States, 157 F. Supp. 955 (Ct. Cl. 1968); Keeutz v. United States, 168 Ct. Cl. 205 (1964); Borden v. United States, 116 F. Supp. 873 (Ct. Cl. 1953))). 9 Error! Unknown document property name. The Senate Report therefore described the NAFI Doctrinenon- appropriated fund exception as “an anachronistic and baseless distinction.” to Tucker Act jurisdiction.49
The House disagreed with S.980 and blocked the Senate’s swe eping addition to the Tucker Act.50 The House Report expressed c oncern about the unavailability of data concerning all the non-a ppropriated fund activities, the uncertainty about the definitio n of such activitiesinstrumentalities, and the potential that so me lack ofed resources to reimburse the Ggovernment should lawsuits against these activities be allowed.51 The report concl uded that “Congress oughtshould not to expose the Federal Govern ment to liability for all nonunappropriated fund activities unle ss such data is assembled.”52
Consequently, Tthe House thus changed the legislation, limi ting the correction by extendingacknowledging jurisdiction only with respect to specified military post exchanges and NASA excha nge councils.53 The House Report explained that “[t]hese types o f activities have sufficient assets . . . …to reimburse the Unit ed States in the event of any judgment incurred by them which is paid by the United States,” and thus “this proposal would result in no costs to the taxpayers.”54 Thise limited House version pas
49 S. REP. NO. 91-268, at 2-3 Id. at , 5. Id. 50 See H.R. REP. NO . 91–933, at 3 (1970). 51 Id. 52 Id. (emphasis in originalquoting H.R. Rep. No. 91-933, at 3 (19 70)). 53 Id. 54 Id. 10 Error! Unknown document property name. sed inas part of the 1970 (the “1970 Act”) and added, adding the following language to the Tucker Act:
For the purpose of this paragraph, an express or impli ed contract with the Army and Air Force Exchange Servi ce, Navy Exchanges, Marine Corps Exchanges, Coast Guar d Exchanges, or Exchange Ccouncils of the National Aer onautics and Space Administration shall be considered an express or implied contract with the United States. 55
The 1970In 1976, the Act becamewas the subject of discussio n by the Supreme Court in United States v. Hopkins,56 where the i ssue was whether athe claim against the Army and Air Force Excha nge Service arose from an “appointment,” rather than a “contrac t” of employment within the Tucker Act’s breach of contract juri sdiction.57 Based on the 1970 Act, jurisdiction existed with res pect to contracts with the military exchanges contracts, which as the Court acknowledged in its opinion.58 In the course of so doi ng so, tThe Court also acknowledged the “series of decisions by the Court of Claims to the effect that it lacked jurisdiction ov er claims concerning the activities of non-appropriated fund ins trumentalities.”59 The Court did not object to this rule, except to note it’s “the harsh result.”60
55 Act of July 23, 1970, Pub. L. No. 91-350, 84 Stat. 4499, P.L. No. 91-350 (codified at 28 U.S.C. § ¶1491 (a)(1)(2006)) (2006). 56 427 U.S. 123 (1976). 57 See id. at United States v. Hopkins, 427 U.S. 123, 124-27 (197 6). 58 See id. at 424. 59 Id. at 125. 60 Id. at 126. 11 Error! Unknown document property name. D. NAFI Precedents After the 1970 Act
Subsequent to Congress’ enactment of the 1970 Act, the U.S.
Court of Claims proceeded on the premise that the NAFI Doctrine, though limited by the statute1970 Act, remainedwas still viable, and that Kyer’s jurisdictional analysis still had to be addresse d. What emerged from the case law was a set of refinements that,
which produced differing results as applied.
Between 1970 and the creation of the Federal Circuit in 198
2,61 U.S. Court of Claims panels issued a series of decisions tha t distinguished Kyer and softened its inequitable impact.62 Thus,
These decisions sustained Tucker Act jurisdiction, was sustained even though the entity at issue was financially self-supporting, because the panelscourt found that Congress had not unambiguousl y separated the agency from appropriated funds.63 Perhaps the mo st important illustration of this trend is L’Enfant Plaza Proper ties, Inc. v. United States.64 This decision acknowledged Kyer, citing it and stating:
61 The Federal Circuit was established under the Federal Courts Improvement Act in 1982. See Federal Courts Improvement Act of 1982, Pub. L. No. 97-164, 96 Stat. 25. 62 63 See, eE.g., Butz Eng’g Corp. v. United States, 499 F.2d 619, 62 4-25 (Ct. Cl. 1974) (involving the United States Postal Service); Breitbeck v. United States, 500 F.2d 556, 559 (Ct. Cl. 1974) (i nvolving the Saint Lawrence Seaway Development Corporation); Con very v. United States (involving the GSA), 597 F.2d 727, 730 (Ct. Cl. 1979) (involving the U.S. General Services AdministrationGS A); L’Enfant Plaza Props., Inc. v. United States, 668 F.2d 1211, 1212 (Ct. Cl. 1982) (involving the Comptroller of the Currency). 64 L’Enfant Plaza, 668 F.2d 1211 (Ct. Cl. 1982). 12 Error! Unknown document property name. The jurisdictional grant under the Tucker Act is limit ed by the fact that judgments awarded by this court ar e to be paid out of appropriated moneys. 28 U.S.C.¶ 2 517 (1976). Jurisdiction can only be exercised, there fore, over cases in which appropriated funds can be ob ligated.65
However, the court in that case found that whether anfact that the agency had been financially self-sufficient was “not dispositive.”66 Instead, the court required “a clear expression by Congress that the agency was to be separated from general federal revenues.”67 This requirement, thus addedattached to
Kyer, and flowedfollowed from the Tucker Act itself. As the court explained:
The Tucker Act, 28 U.S.C. ¶1491 (1976), . . . is a br oad waiver of sovereign immunity granting jurisdiction to this court over contract claims against the Governm ent. If the agency involved in the dispute operates a s a governmental body and within its statutory authori ty, this court acquires jurisdiction absent a specific indication that Congress did not intend the agency to be covered.68
By requiring “a firm indication” that “ from Congress that it intended to absolve the appropriated funds of the United States from liability,” the court sought to harmonize Kyer with the
“broad waiver” of sovereign immunity” in the Tucker Act.69
The Supreme Court decision in the Regional Reorganization R ail Act Cases (the “Rail Act Cases”),70 issued four years after t 65 Id. at 1212 (citing 28 U.S.C. § 2517 (1976)). 66 Id. L’Enfant Plaza Props., Inc., 668 F.2d at 1212.Id. 67 Id. 68 Id. (citing Reg’l Rail Reorg.anization Act Cases, 419 U.S. 102, 126 (1974); Breitbach, 500 F.2d at 558)). 69 Id.L’Enfant Plaza Props., Inc., 668 F.2d at 1212.Id. 70 419 U.S. 102 (1974). 13 Error! Unknown document property name. he 1970 Actamendment, involved a takings claim founded upon the
Constitution rather than a gov ernment contract breach, but nonetheless becamewas a crucial factor in the U.S. Court of Clai ms’ tailoring of the NAFI Doctrine.71 The Court addressed whethe r limitations on federal funds beyond those expressly committed by the Rail Act72 restricted the takings jurisdiction granted by the Tucker Act.73 The Court’s answer was driven by its definitio n of the issue:
The question is not whether the Rail Act expresses an affirmative showing of congressional intent to permit recourse to a Tucker Act remedy. Rather it is whether Congress has in the Rail Act withdrawn the Tucker Act grant of jurisdiction to the Court of Claims to hear a suit involving the Rail Act “founded . . . …upon the C onstitution.”74
Subsequently, Iin Convery v. United States,75 the U.S. Court of
Claims limited Kyer by citing to the Rail Act Cases, “wherein the Supreme Court made it abundantly clear that stronger and more explicit statutory language than that relied on by defendant is required to deprive a claimant of his Tucker Act remedy.”76
71 Id. Reg’l Rail Reorganization Act Cases, 419 U.S. 102 (1974). 72 Regional Rail Reorganization Act of 1973, Pub. L. No. 93-236, 87 Stat. 985 (, Pub. L. No. 93-256 codified at (codified at 45 U. S.C. §§ 701-797M (2006)) (2006). 73 Reg’l Rail Reorganization Act Caseses [hereinafter “Rail Act Cases”Rail Act Cases], 419 U.S. at 121. 74 Id. at 126 (alterations in original) (quoting Tucker Act, 28 U.S.C. § 1491)). 75 597 F.2d 727 (Ct. Cl. 1979). 76 Id. at 730. 14 Error! Unknown document property name. However, in more recent decisions, Federal Circuit panels d eveloped a pattern of denying Tucker Act jurisdiction based upon the NAFI Doctrine.77 While these decisions cited and ostensibly followed L’Enfant Plaza Properties, Inc., they at least weakened the explicitness test the Court of Claims had derived from the R ail Act Cases.78 In Furash & Co. v. United States,79 for example, the Federal Circuitcourt foreshadowed the decision’s outcomeits conclusion with this historical recitation without reference to that takings case:
The jurisdictional grant in the Tucker Act is limited by the requirement that judgments awarded by the Court of Federal Claims must be paid out of appropriated fun ds. 28 U.S.C. ¶2517. Based on that requirement, it h as been held that absent some specific jurisdictional provision to the contrary the Court of Federal Claims lacks jurisdiction over actions in which appropriated funds cannot be used to pay any resulting judgment.80
The panel cited L’Enfant Plaza Properties, Inc., Kyer, and the
Supreme Court decision in Hopkins, which it described parenthetically as “recognizing the jurisdictional limitation for non-appropriated fund instrumentalities, but holding that disputes over contracts with military exchanges could be adjudicated by the Court of Claims because of a specific grant of jurisdiction.”81 Furash & Co. identified this
77 78 79 Furash v. United States, 252 F.3d 1336 (Fed. Cir. 2001). 80 Id. at 1339 (citing 28 U.S.C. § 2517). 81 Id. Furash & Co., 252 F.3d at 1339 (citing L’Enfant Plaza Prop s., Inc. v. United States, 668 F.2d 1211 (Ct. Cl. 1982); L’Enfant Plaza Props., Inc., 668 F.2d at 1211 Kyer v. United 15 Error! Unknown document property name. jurisdictionalthat grant as the 1970 Act, which provided only “a narrow exemption from the doctrine for certain entities
. . . .”82
In Furash & Co., the panel found a “clear expression” that the Federal Housing Finance Board’s operations were to be funded through assessments against banks, not from general fund revenue s, even though the authorizing statute did not “expressly prohib it” appropriation of funds to the Board.83; “t[T]he absence of s uch an express statement,” however, did not end the inquiry for the panel. . . does not end the inquiry.”.84 Rathhter, Wwith one
“single narrow exception,” the panel found that “Congress intend ed the Finance Board to be a financially self-sufficient instrum entality designed to operate without the benefit of general appr opriated funds.”85
Similarly, in Denkler v. United States,86 a panel concluded that the Federal Reserve was a NAFI because its enabling statute provided for financing by banks, and that such moneys did not representnot to be construed as appropriated funds, and because States, 369 F.2d 714 (Ct. Cl. 1966); Kyer, 369 F.2d at 714; United States v. Hopkins, 427 U.S. 123, 125-26 (1976)).Hopkins, 427 U.S. at 125-26)).Id. 82 Id. Furash & Co., 252 F.3d at 1339.Id. 83 Id. at 1339-40. 84 Id. at 1340. at 1340. 85 Id. at 1341. The single narrow exception the court identified was the provision in the Federal Housing Finance Board’s authorizing statute allowing for congressionally requested studies and investigations to be covered by appropriations as “nonadministrative functions.” Id. (citing 12 U.S.C. § 1438a (2000)). 86 782 F.2d 10035 (Fed. Cir. 1986). 16 Error! Unknown document property name. the enabling statute did not authorize appropriations.87 In Core
Concepts of Floridaa., Inc. v. United States,88 another Federal
Circuit panel similarly concluded that Federal Prison Industries was a NAFI, because its enabling statute made clear that its “fu nds are to be kept distinct from general federal revenues” and d id not authorize appropriations, as “‘usually found in the statu tory charters of governmental entities which may rely on such ap propriations in whole or in part.’”89
In AINS, Inc. v. United States,90 which involveding the U.S. nited States Mint, athe Federal Circuit’s panel summarized L’Enf ant Plaza Properties, Inc. as establishing a four-part test that included as a, including the fourth factor that there be “‘a cle ar expression by Congress that the agency was to be separated fr om general federal revenues.’” 91 However, the panel explained th at this factor “is “often the least obvious” and thatis “congres sional intent is “not always explicit” in statutory language.”92
Although noting that L’Enfant Plaza Properties, Inc. referred to an “explicit prohibition from receiving appropriated funds,” the
87 Denkler v. United States, 782 F.2d 1003, Id. at 1005. (Fed. Cir. 1986). 88 Core Concepts of Fla., Inc. v. United States, 327 F.3d 1331,, 1333 1333 (Fed. Cir. 2003). 89 See iId. at 1336-37 (quoting Denkler v. United States, 782 F.2d 1003, 1005 (Fed. Cir. 1986Denkler, 782 F.2d at 1005)). 90 365 F.3d 1333 (Fed. Cir. 2004) (Gajarsa J.). 91 AINS, Inc. v. United States, 365 F.3d 1333, Id. at 1342 (Fed. C ir. 2004) (opinion by Judge Gajarsa) (quoting L’Enfant Plaza Pro ps., Inc. v. United States, 668 F.2d 1211, 1212 (Ct. Cl. 198 2)L’Enfant Plaza Props., Inc., 668 F.2d at 1212)). 92 Id. AINS, Inc., 365 F.3d atId. at 1342-43. 17 Error! Unknown document property name. panel cited Denkler, Core Concepts of Florida, and Furash & Co. as allowing the court to infer Congress’ intent by implication.93
TAlthough the U.S. Mint representedwas a governmental agenc y financed by its own operations, with its receipts deposited in a “revolving fund” in the Treasury of the United States,.94 Tthe
General Accounting Office95 had characterized such revolving fundsfunds as a “‘permanent or continuing appropriation.,’”96 and
Moreover, in the case of the U.S. Mint, these funds were, by sta tute, subject to the discretion of the Secretary of the Treasury,
who could have any amount “‘determined to be in excess of the a mount required’” by the U.S. Mint “‘transferred to the Treasury for deposit as miscellaneous receipts . . . .’”97 Notwithstandin g these realties, however, the Federal Circuit’s panel was satis fied that Congress had provided the requisite “clear expression” to make the U.S. Mint a NAFI:
The Mint’s expenses are paid from its own revolving Fu nd, funded through its own activities. . . . The stat ute makes no provisions for appropriations and the leg islative history indicates Congressional initial inten t to keep the Mint self-financing and distinct from th e general fund.98 93 See id. (citing L’Enfant Plaza Props., Inc., 668 F.2d at 1212; Denkler, 782 F.2d at 1004-05; Core Concepts of Fla. Inc. v. United States, 327 F.3d 1331, 1336 (Fed. Cir. 2003)).Core Concepts of Fla., 327 F.3d at 1336) )Id. at 1343. 94 See id. AINS, Inc., 365 F.3did. at 1342-43. 95 The General Accounting Office was renamed the “Government Accou ntability Office” in 2004. GAO Human Capital Reform Act of 2004, Pub. L. No. 108-271, § 8, 118 Stat. 811, 814 (codified as amend ed at 31 U.S.C. § 702 (2006)(2010)). 96 AINS, Inc., 365 F.3d at 1340. 97 Id. at 1341 (quoting 31 U.S.C. § 5136 (2000))41-42. 98 Id.AINS, Inc., 365 F.3dId. at 1343. 18 Error! Unknown document property name. Thus as the panel explained atAt the outset of the opinion, the
U.S. Court of Federal Claims lackedpanel also explained its conclusion that there was no jurisdiction over the case
“[b]ecause Congress has not waived sovereign immunity to allow breach of contract suits against NAFIs other than in a few statutorily enumerated exceptions, and because the Mint is not among those exceptions . . . .”99
III. The Slattery Decision
A. The Panel Decision
It was against the precedential backdrop discussed above th at Slattery v. United States (Slattery II)100 came to the Federal
Circuit. The Government appealed the U.S. Court of Federal Clai ms decision that the Federal Deposit Insurance Corporation (“FDI
C”) was not a NAFI and therefore sovereign immunity did not bart he sovereign had consented to Slattery’s suit for damages.101 The 99 Id. at 1335. Federal Circuit panels havealso disagreed about these “enumerated exceptions” in the 1970 Act. Id. In McDonald’s Corp. v. United States, 926 F.2d 1126, 1132-33 (Fed. Cir. 1991), a panel heldallowed that the exceptions could extend beyond the exchanges specifically named in the statute, based on the legislative history’s concern that unidentified exchanges might not have sufficient financial capacity to reimburse the Treasury. Thus, an exchange with sufficient capacity might not be deemed a NAFI. See id. Subsequently, another panel disagreeddivided over whether such an exchange also had to be “closely associated” with an exchange specified in the 1970 Act. Pacrim Pizza Co. v. PirieUnited States, 304 F.3d 1291, 1298-99 (Fed. Cir. 2002) (Newman, JJudge., Newman dissenting); see also Johnson, “The Federal Circuit’s Great Dissenter”, supra, note Error: Reference source not found,3 at 307-10. 100 583 F.3d 800 (Fed. Cir. 2009). 101 Slattery v. United States (Slattery I), 53 Fed. Cl. 258, 272 (2002).Slattery I , 583 F.3d 800, 803, 808 (Fed. Cir. 2009)Slatt 19 Error! Unknown document property name. panel majority, in an opinion by Judge Newman, had acknowledged the NAFI Doctrine, but concluded that the U.S. Court of Federal
ClaimsCOFC had correctly foundconcluded, under the precedents, t hat it did not apply.102 The U.S. Court of Federal Claimstrial co urt held that “the determinative factor was not whether the FDI
C’s insurance fund has been adequate to meet its obligations, bu t whether . . . the Congress intended that the United States ca nnot be called upon if needed to meet the obligations of the FDI
C.”103 As Judge Newman’s opinion summarized,
The court observed that Congress did appropriate star t-up funds to the FDIC upon its creation in 1933, and pointed to the frequent congressional affirmations tha t federally insured deposits are backed by the full fa ith and credit of the United States, stating that “Con gress passed several resolutions which clearly articul ate that Congress would appropriate funds in the futur e if the [insurance fund] ran out . . . .” The court cited 12 U.S.C. § 1824(a), which authorizes the FDIC t o borrow from the Treasury, up to $30 billion, if need ed, to meet FDIC obligations.104
The Government argued that these facts were unreliable indicators and maintained that “the lack of explicit provision of appropriated funds, and the segregation of the FDIC’s insurance fund from the general fund of the Treasury for accounting purposes, provided sufficient evidence that Congress intended to exclude the FDIC from access to appropriated
ery II, 635 F.3d at 1298.. 102 Slattery II, 583 F.3d Id.Slattery I, 583 F.3d at at 81200. 103 Id. at 810. 104 Id. at 808 (quoting Slattery v. United StatesI, 53 Fed. Cl. at 518, 274 (2002)).. 20 Error! Unknown document property name. funds.”105 The panel rejected this argument, however, and by relying on L’Enfant Plaza Properties, Inc., held thatbecause
“[n]o provision of the [FDIC’s] enacting legislation bars the
FDIC from access to appropriated funds.”106
Judge Gajarsa dissented, relying on Denkler, Furash & Co.,
Core Concepts of Florida, Inc., and AINS, Inc. as establishing t hat the “clear expression” required by L’Enfant Plaza
Properties, Inc. does not have to be “explicit.”107 Thus, according to Judge Gajarsa, “the fact that the FDIC makes assess ments upon Deposit Insurance Fund member banks to provide suffic ient funds for its operation, combined with the fact there is no statutory language authorizing appropriation of general funds fo r FDIC usage,” should have beenwas sufficient to make the FDIC a
NAFI.108 The dissent therefore would have put the burden of expli citness on Slattery, onby citing the principle that “a waiver of sovereign immunity ‘cannot be implied but must be unequivocally expressed.’. . . .”109
105 Id. Slattery I, 583 F.3dId at 811. 106 Id. at 811. 107 Id. at 830 (citing Denkler v. United States, 782 F.2d 1003 (F ed. Cir. 1986)Denkler, 782 F.2d at 1003; Furash & Co. v. United States, 252 F.3d 1336 (Fed. Cir. 2001); Core Concepts of Fla., Inc. vV. United States, Inc., 327 F.3d 1331, 1333 ,, 1333 1333 (Fed. Cir. 2003)). 108 Id. Slattery I, 583 F.3d at 830.Id. at 829-32. 109 Id. at 832 (quoting College Sav. Bank v. Fla. Prepaid Postsecondary Educ. Expense Bd., 527 U.S. 666, 682 (1999)). 21 Error! Unknown document property name. B. The En Banc Decision
The Government sought en banc review of Judge Newman’s deci sion, requestingseeking a resolution in line with the more recen t panel decisions cited by Judge Gajarsa in his dissent.110 No do ubt to its surprise, the review did not address the narrow quest ion of whether the FDIC was a NAFI under the Kyer line of preced ents.111 Instead the Circuit, by a 6-to-4 majority, decided to ab rogate Kyer and the NAFI doctrine altogether, in favor of a broa d view of the pre-existing Tucker Act’s waiver of sovereign immu nity, unrestricted by implications drawn from the statutes estab lishing the funding source for payment of Tucker Act judgments a gainst the United States.112 Thus, the Government’s request set t he stage for the Federal Circuit’s review of the long standing N
AFI Doctrine.
1. The Tucker Act Waiver
The fundamental premise of Judge Newman’s en banc opinion w as the Tucker Act itself, the terms of which waived sovereign im munity for “any claim against the United States founded either u pon the Constitution, or any Act of Congress, or any regulation of an executive department, or upon any express or implied contr act with the United States . . . .”113 The opinion emphasized Uni
110 See Slattery IISlattery v. United States (Slattery III), 635 F.3d 1298, at 1300 (Fed. Cir. 2011).Id. at 1298. 111 See Iid. at 1300-01. 112 IdSlattery II, 635 F.3d at 1298. 113 28 U.S.C. § 1491(a)(1) (2006). 22 Error! Unknown document property name. ted States v Mitchell,114 in which the Supreme Court observed that
“[g]overnment liability in contract is viewed as perhaps ‘the wi dest and most unequivocal waiver of federal immunity from suit s.’”.115 In abrogating the Kyer rule, the Federal Circuit in the en banc Slattery III opinion specifically relied on the related
Supreme Court “guidance” in Mitchell providing that “‘[i]f a cla im falls within the terms of the Tucker Act, the United States h as presumptively consented to suit,’” and that jurisdictionalcon cluded that “‘exceptions require an unambiguous statement by Con gress.’”116
2. The Related Enactments Providing for Payment of T
ucker Act Judgments from Appropriations
With this wide and unequivocal waiver as a foundation, Judg e Newman reviewed the history of the enactments providing approp riations for the payment of Tucker Act judgments.117 This review confronted the basic premise of Kyer and the NAFI dDoctrine that these enactments, and their references to “appropriated funds,” were intended to and had the effect of limiting Tucker Act juris diction.118 However, Judge Newman’sThis review demonstrated that,
114 United States v. Mitchell, 463 U.S. 206, 215 (1983). 115 Id. Mitchell, 463 U.S. at 215 (quoting Developments in the Law – Remedies Against the United States and its Officials, 70 HARV. L. REV . 827, 876 (1957)); see Slattery III, 635 F.3d at 13041303 (, quoting United States v. Mitchell, 463 U.S. 206, 215 (1983)Mi tchell, 463 U.S. at 215-216).. 116 Slattery III, 635 F.3dId. at 1320-21 (, quoting Mitchell, 463 U.S. at 216).. 117 Id. Slattery II, 635 F.3dId. at 1301-04. 118 See Iid. at 1304-10. 23 Error! Unknown document property name. from the beginning, the Kyer premise was historically wrong and logically flawed.119
As recounted in the majority opinion, the Tucker Act jurisd iction began when in 1855 when Congress created the U.S. Court o f Claims to replace the required procedure of direct petitions t o Congress.120 However, in this early stage, the court’s judgment s were subject to review by Congress, and “[a]ny payment . . . was implemented by specific legislative enactment.”121 In 1861,
“President Lincoln recommended that the Court of Claims “be empo wered to render final judgments . . . .”122 Thusand, in the Amend ed Court of Claims Act of 1863 (the “1863 Act”), the court’ssuch judgments were made final, subject to appeal to the Supreme Cour t.123 The 1863 Act also replaced the requirement for a specific l egislative enactment to pay the judgments, which Congress also t hought to be inconsistent with the concept of finality.124 Instea d, the statute provided that the judgments would be paid out of a “general appropriation” for that purpose.125 The court noted that the legislative history of this “general appropriation” con
119 See Iid. at 1316-17. 120 Id. at 1301 (citing Court of Claims Act, ch. 122, § 1, 10 Stat. 612 (1855)).. 121 Id. at 1301. 122 Id. 123 Amended Court of Claims Act of 1863, ch. 92, 12 Stat. 765. Id. (, referring to the Amended Court of Claims Act of 1863 (the “1863 Act”), ch. 92, 12 Stat. 765 (1863)). 124 Id. at 766. See Slattery, II, 635 F.3dId. at 1302 (, referring to the 1863 Act, 12 Stat. 765, at 766). 125 Id. See Slattery, II, 635 F.3d at 1302 (referring to the 1863 Act, 12 Stat. 765, 766).Id. 24 Error! Unknown document property name. templated “‘a general fund appropriated by Congress from year to year to pay the private C[c]laims that may be found due against the Government.’”126 Following the 1863 Actenactment, Congress ma de “periodic general appropriations . . . ” on an annualized bas is.”127
In 1957, Congress, by a “standing appropriation,” “created a Judgment Fund to pay all Court of Claims judgments for which a specific appropriation did not exist . . . .”128 This standing ge neral fund had been limited to payments of up to $100,000 or less,
129 but in 1977 Congress removed this ceiling so that the Judgment
Fund covers claims of any claim amount.130 The Judgment Fund was described in the court’s history as a “permanent and indefinite appropriation” that fulfilled the purpose of the Act of 1863 Act
126 Slattery v. United States (Slattery III), 635 F.3d 1298, 1302 (Fed. Cir. 2011) (en banc) Slattery II, 635 F.3dId., at 1302 (, quoting CONG. GLOBE , 37th Cong., 3d Sess. 304, 398 (1863) (Sen. Doolittle)12 Stat. 765, at 766). The 1863 Act of 1863 also provided that no money would be paid “[‘un]til[] after an appropriation therefor[e]e shall be estimated for by the Secretary of the Treasury.’” Amended Court of Claims Act of 1863,Slattery II, 635 F.3d at 1302 (quoting the 1863 Act, ch. 91 § 14). This caveat was seen by the Supreme Court as compromising finality and thus precluding its review, so it was repealed in 1866. Slattery III, 635 F.3d at 1302. 127 Slattery III, 635 F.3d atId. 1302-03. 128 Id. at 1303. The Act creating the standing appropriation was the (, referring to the Supplemental Appropriation Act, 1957, P ub. L. No. 84-814, ch. 13, § 1302, 70 Stat. 678, 694-95 (1956) (1956). 129 Supplemental Appropriation Act, 1957, ch. 13 § 1302. 130 Slattery II, 635 F.3d at 1303Id. (referring to the Supplementa l Appropriations Act of, 1977, Pub. L., No. 95-26, ch. 15, 91 St at. 61, 96-97). 25 Error! Unknown document property name. to make Tucker Act judgments “final in every meaningful respec t.”131
Based on this legislative history of the “appropriated fund” enactments and their legislative history, none of which made ref erence to jurisdiction, the Slattery III en banc majority conclu ded: that
[t]These enactments concerning payment of judgments di d not deal with the jurisdiction of the Court of Claim s; the Judgment Fund was designed to facilitate the pa yment by the United States of its obligations, along w ith the grant of authority to the Court of Claims to r ender final judgments. There is no indication that th is mode of payment of judgments of the Court of Claims affected the Ccourt’s jurisdiction, or was intended f or thisthat purpose.132
3. Review of the Kyer Line of Precedents
Even though this review of the statutory history would appe ar sufficient to cut the underpinnings out from under Kyer and t he NAFI Doctrine, Judge Newman’s opinion also reviewed the somew hat confused and conflicting precedents that began long after th e Act of 1863 Act.133
This review began with Standard Oil Co. ofv. California v.
Johnson and the cases following it involving military post excha nges.134 Standard Oil Co. of California, the en banc majority 131 Slattery III, 635 F.3d at 1303 (quoting Cowen, supra note Err or: Reference source not foundError: Reference source not found2, at 161-62). 132 Id. Slattery II, 635 F.3d, at 1303. 133 Id. at 1304-10. 134 Id. at 1304. 26 Error! Unknown document property name. explainedit was noted, stated that exchanges are “‘integral part s of the War Department’” and “‘partake of whatever immunities i t may have under the constitution and federal statutes,’” includ ing specifically immunity from California’s tax laws taxation.135
Judge Newman’s opinion commented that “[t]he Court stated this c onclusion even as it observed that ‘the government assumes none of the financial obligations of the exchange,’”136 an observation which was the basis for the U.S. Court of Claims’ decisions nega ting Tucker Act jurisdiction of claims for breach of contract by the exchanges. 137
As the majority of the Federal Circuit’s en banc decision a pparently saw it, this inequity threatened to spread as “governm ental challenges to jurisdiction began to appear in wider contex ts” that did not involve military exchanges.138 For example,Two d ecisions in 1966 stood in conflict. I in National State Bank of
Newark v. United States,139 involving the Federal Housing Authorit y (“FHA”), which could issue debentures but not obligate Treasur y funds, the U.S. Court of Claims rejected the government’s juri sdictional challenge because the FHA was “‘doing work of the gov
135 Id. (quoting Standard Oil Co. of Calif. v. Johnson, 316 U.S. 481, 485 (1942)). 136 Id. Slattery II, 635 F.3d at 1304Id. at 1305, (quoting Standar d Oil Co. of Cal.ifornia of California, 316 U.S. at 485107-108). 137 Id. at 1304. Slattery II, 635 F.3d at 1304Id. ( referring to, e.g.,, e.g., to Borden v. United States v. United States, 116 F. Supp. at 873 (Ct. Cl. 1953)). 138 Id. Slattery II, 635 F.3dId.at 1306. 139 Nat’ional State Bank of Newark v. United States, 357 F.2d 704, 708-10711-12 (Ct. Cl. 1966). 27 Error! Unknown document property name. ernment.’”140 The court said, as Judge Newman noted that, “‘B[b]y using the FHA to carry out [the purposes of the National Housing
Act], the United States submits itself to suit under the Tucker
Act unless there is some specific provision to the contrary.’”141
But, in the same year, the U.S. Court of Claims denied jurisdict ion in Kyer v. United States, by applying the NAFI Doctrinenon- appropriated fund theory to the Department of Agriculture’s Grap e Crush Committee, which was “neither supported by appropriation s nor authorized, in any manner, to obligate such funds.” 142 As
Judge Newman pointed out,noted Kyer’s broad rationale held that,:
“‘W[w]hile the terms of [the Tucker Act] are broad, its words must be read, in conjunction with and must be regarded as limite d by another statute which provides that our judgments are paid only from appropriated funds,’” i.e.,referring to 28 U.S.C. § ¶2
517 (1964), the law providing the general fund for such payments.
143 From this, the U.S. Court of Claims in Kyer concluded, And th en in what appeared as a non-sequitur to the majority (particula rly given the historical purpose of that statute as previously e xplained in Judge Newman’s opinion), the Kyer decision added: “T hus, to remain within the framework of our jurisdiction, it is e
140 Id. at 708, 711-12. (quoting Keifer & Keifer v. Reconstr.uction Fin. Corp., 306 U.S. 381, 389 (1939)). 141 Slattery III, 635 F.3d at 1306 (alterations in original) (quoting Nat’l State Bank of Newark v. United States, 357 F.2dId. 704, 706-07 (1966)). 142 Kyer v. United States, 369 F.2d ,714, at 7187 (1966). 143 Slattery III, 635 F.3d at 1307 (quoting Kyer, 369 F.2d at 718). Id. 28 Error! Unknown document property name. ssential that the contract sued on be one which could have been satisfied out of appropriated funds.”144
The Slattery en banc decision then reviewed the many cases where the court struggled with jurisdictional challenges based o n the Kyer precedent and its “description of the Judgment Fund a s ‘limiting’ Tucker Act jurisdiction . . . .”145 “In most cases,” the opinion observed,” “Tucker Act jurisdiction was sustained, d espite the entity’sies’ self-supporting activity or fee-based in come, because the court found that Congress had not separated th e agency from appropriated funds.”146 However, other U.S. Court of Claims decisionsIn contrast, as the Slattery en banc opinion explained, differed from this approachit:
In other cases in which the Federal Circuit applied th e Kyer statement that the Judgment Fund statute is a “limitation” on the Tucker Act, the court found no jur isdiction based on the fact that the agencies in quest ion were not supported by appropriated funds.147
These varying decisions created a conflict in the precedents applying the NAFI rule.
That conflict centered on whether the separation from appro priated funds had to be explicit or could be implied from less c onclusive circumstances.148 The requirement for an explicit prohi bition of appropriated funds, established in L’Enfant Plaza
Properties, Inc. and followed in all cases denying the jurisdict 144 Kyer, 369 F.2d at 718.Id. at 718. 145 Slattery III, 635 F.3d, at 1307. 146 IdSlattery II, 635 F.3d, at 1307. 147 Id. at 1310. 148 See Iid. at 1310. 29 Error! Unknown document property name. ional challenge, derived from the Regional Rail Reorganization A ct Cases, a Supreme Court decision rejecting a government challe nge to jurisdiction over a takings claim “founded upon the Const itution of the United States.”149 Not only did this decision prov ide a basis for resolving the conflicts in the post-Kyer precede nts, it provided the Slattery en banc majority an independent ba sis – in addition to the review of the Tucker Act history – for rejecting Kyer and its NAFI Doctrine altogether.150 As Judge Newm an’s opinion statedsaid, the Rail Act Cases held that “there is
Tucker Act jurisdiction of claims against the United States base d on activities of a governmental entity, unless Congress specif ically stated its intention to withdraw Tucker Act jurisdictio n.”151 Conversely, thatThat, of course, could not be said of the enactments relied on in Kyer.152
Indeed, as the Supreme Court had observed, although the Rai l Act supposedlywas “said plainly to “evince[s] Congress’ determ ination that no federal funds beyond those expressly committed b y the Act were to be paid for the rail properties,” the statute nonetheless “suggests that Congress… . . . gave no consideration to withdrawal of the Tucker Act remedy.”153 Thus theis Supreme Co 149 Regional Rail Reorganization Act Cases, 419 U.S. 102, at10 2, 126 (1974).) (citing United States v. Causby, 328 U.S. 256, 2 67 (1946)). 150 See Slattery III, 635 F.3d, at 1309-15.1298; see Kyer, 369 F.2d at 718.. 151 Id. at 1309Slattery II, 635 F.3d , note 9, at 1308-9, n.9. 152 See Iid. at 13101298. 153 Regional Rail Reorganization Act CasesRail Act Cases, 419 U.S. at 127, 129; see Slattery III, 635 F.3d at 1309.Id. at 1309. 30 Error! Unknown document property name. urt decision applied the rule that “‘repeals by implication are disfavored,’” and held that ““a partial repeal of the Tucker Act could not be inferred.””154 In the view of Judge Newman’sthe majo rity decision, the “Kyer line of cases” breached these rules and were in conflict with over-arching precedents concerning the Tuc ker Act waiver of sovereign immunity.155
4. Dealing With the Counter Arguments
The majority opinion did not restrict itself towas not rest ricted to its affirmative grounds for abrogating the NAFI Doctri ne, as discussed abovesummarized previously.156 Judge Newman also anticipated the dissent by responding to the gGovernment’s argum ents.157 In contrastHowever, these dissenting positions did not c onfront the majority’s Tucker Act analysis, but rather focused o n the long-standing recognition and acceptance of the NAFI Doctr
154 See Slattery III, 635 F.3d at 1309 (quoting R egional Rail Reo rganization Act CasesRail Act Cases, 419 U.S. at 127, 129, 133). 155 Id. Slattery II, 635 F.3d at 1309-10. The en banc majority Aalso cited in this connection were Preseault v. Interstate Commerce Comm’ission, 484 U.S. 1, 12110 S. Ct. 914, 917 (1990) (“‘unambiguous intention’” to withdraw the Tucker Act remedy that is “necessary”); Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1017 (1984) (“repeals by implication disfavored”); Lion Raisions, Inc. v. United States, 416 F.3d 1356, 13653-68 (Fed. Cir. 2005) (rejecting non-appropriated funds challenge to takings claim); and and El-Sheikh v. United States, 177 F.3d 1321, 1324-25 (Fed. Cir. 1999), to support the proposition that inferring intention to withdraw a Tucker Act claim is a disfavored approach. See Slattery III, 635 F.3d at 1309. (rejecting non-appropriated fund challenges to statutory violation claim). 156 See Slattery III, 635 F.3d at 1310. 157 See supra Part II.B.3.Id. 31 Error! Unknown document property name. ine, including by the Congress and the Supreme Court.158 The diss enting positions were impressively and forcefully presented in J udge Gajarsa’s opinions:
It has been settled law for more than half a century t hat the Tucker Act’s waiver of sovereign immunity does not apply to contracts entered into by non-appropriate d fund instrumentalities . . . (“NAFI’s”) of the [F]e deral g[G]overnment. This settled law is recognized a nd endorsed by Congress and the Supreme Court. It is also settled law that no federal court may enlarge its jurisdiction; only Congress may do so. Nevertheless, the court today overturns and eviscerates the vast bod y of NAFI law in one fell swoop.159
The dissent thus relied on anthe interpretation of the Tucker Act that had long been recognized and, in the dissenters’ view, had been conclusively established.160
To support their approach (and thereby avoid the majority’s analysis), the dissenters briefly posited that the question before the en banc Federal Circuit“the question here” wasis not what the stated or intended purpose of the appropriation enactme nts were, but rather whether NAFIs were “are included in the phr ase ‘the United States’” as used in the Tucker Act’s reference t o claims founded “‘upon any express or implied contract with the
United States.’”161 Asserting that “[t]he term ‘United States’ is
158 Slattery III, 635 F.3dId. at 1321-22 (Gajarsa, J., dissenting). 159 Id. at 1321 (Gajarsa, J., dissenting). (dissenting opinion). 160 Id. (Gajarsa, J., dissenting). 161 Id. (Gajarsa, J., dissenting) (quoting Tucker Act, 28 U.S.C. § 1491(a)(1) (2006)). 32 Error! Unknown document property name. ambiguous” in that regard, the dissent concluded that “more than sixty years” of law should have settled the issue.162
The NAFI Doctrine’s longevityis timeline led to the dissent ers’ brief recounting of the rule’sNAFI history, beginning with
Standard Oil Co. of California, followed by both Borden v.
United States’’s reading that the Court had thus “impos[ed] a li mitation on Tucker Act jurisdiction,” and then Kyer’s holding th at the jurisdiction “‘must be regarded as limited by’ 28 U.S.C.
§ ¶2517, which ‘provides that [Court of Claims] judgments are pa id only from appropriated funds.’ . . . .”163 This line of cases representedwas the “backdrop” toof the 1970 Act amending t he Tucker Act “to include a provision directly relevant to the N
AFI d[D]octrine” and to “today’s ruling.”164
The limited nature of Congress’ corrective action in the
1970 Act – to declare only contracts of identified military exch anges as contracts with “the United States” while considering an d rejecting a Senate proposal to eliminate the NAFI Doctrine alt ogether – was the centerpiece of the dissent.165 Judge Gajarsa po inted out that the House had opposed the Senate bill in order to
162 Id. (Gajarsa, J., dissenting).Slattery II, 635 F.3d at 1321 (Gajarsa, J., dissenting). Id. 163 Id. at 1322-23 (Gajarsa, J., dissenting) (alterations in original) (quoting 28 U.S.C. § 2517 (2006); Kyer v. United States, 369 F.2d 714, 717-18 (Ct. Cl. 1966)) Kyer, 369 F.2d at 717-18) (citing Borden v. United States, 116 F. Supp. 873, 877 (Ct. Cl. 1953)Borden, 116 F. Supp. at 877). 164 Id.Slattery II, 635Id. at 1322-23 (Gajarsa, J., dissenting(Gajarsa, J., dissenting)). 165 Id. at 13267-28 (Gajarsa, J., dissenting). 33 Error! Unknown document property name. protect the taxpayers from the cost of judgments against non-app ropriated fund activitiesy.166 The dissent invoked a recognized c anon of statutory construction, expressio unius est exclusio alt erius,167 to support the conclusion that “‘when legislation expres sly provides a particular remedy or remedies, courts should not expand the coverage of the statute to subsume other remedies.’”168
Thus the dissent concluded that the 1970 Act should be interpret ed as it was in Furash & Co. as a “‘narrow exemption” from the
[NAFI] d[D]octrine . . . ,’ which left “‘the doctrine intact for all other non-appropriated fund instrumentalities activities unr elated to the post exchanges and exchange councils.’”169 As furth er support, the dissent referred to anotheradded the recognized canon of statutory construction specific toof statutes waiving s overeign immunity:
166 Id. at 1324 (Gajarsa, J., dissenting). 167 “[T]he express mention of one thing excludes all others.” Id. at 1323 (Gajarsa, J., dissenting)3. 168 Id. (Gajarsa, J., dissenting) (quoting Nat’l R.R. Passenger Corp. v. Nat’l Ass’n of R.R. Passengers, 414 U.S. 453, 458 (1974)). at 1323. 169 Id. Slattery II, 365 F.3dId. at 1325, (Gajarsa, J., dissenting) (alterations in original) (quoting Furash & Co. v. United States, 252 F.3d 1336, 1339 (Fed. Cir. 2001) Furash, 252 F.32d at 1339). The The dissent also cited the Contract Disputes Act, then 41 U.S.C. §§ 601-613 (1978), recently recodified at 41 U.S.C. §§ 7101-7109 (Supp. IV 2010), and its legislative history, as confirming that the NAFI dDoctrine applies to the CDA and also the view in Furash & Co. that the 1970 Act was a “narrow exemption,..” 635 F.3d at 1326-27. See id. at 1325-28 (Gajarsa, J., dissenting) (quoting Furash & Co. v. United States, 252 F.3d 1336, 1339 (Fed. Cir. 2001)). Slattery II, 635 F.3d at 1325-28 (Gajarsa, J., dissenting). 34 Error! Unknown document property name. This appropriately narrow construction is further cons istent with the general rule that “a waiver of the Gov ernment’s sovereign immunity will be strictly construe d, in terms of its scope, in favor of the sovereign” a nd that such a waiver “must be unequivocally expressed in the statutory text . . . .”170
The dissenters then turned to the Supreme Court’s decision in United States v. Hopkins171 for an additional justification of the NAFI Doctrinesupport.172 In that case involving the issue whe ther an employee of a military exchange identified in the 1970 A ct had a “contract” with the exchange, the Court had summarized the history and development of the NAFI doctrine.173 As noted byi n the dissent, the Court in Hopkins acknowledged the doctrine, m aking no objection to the Standard Oil Co. of California decisio
170 Slattery III, 635 F.3d at 1323 (Gajarsa, J., dissenting) Id.Fu rash, 635 F.3d at 1323, (quoting Lane v. Pena, 518 U.S. 187, 192 (1996)). 171 427 U.S. 123 (1976). 172 Slattery III, 635 F.3d at 1326 (Gajarsa, J., dissenting). United States v. Hopkins, 427 U.S. 123. When discussing the specifics of the Federal Deposit Insurance Company’sFDIC’s status in the Slattery case, Judge Gajarsa identifiednoted the footnoted definition of a NAFI in Hopkins, 427 U.S. at 125 n.2, as “‘one which does not receive its monies by congressional appropriation’” and further argued that, “[t]o the extent ourthat prior cases have departed from the Supreme Court’s standard for determining NAFI status, I believe those cases were incorrectlydecided decidedincorrectly.” Id. Slatterly II, 635 F.3d at 1328 (Gajarsa, J., dissenting) (Gajarsa, J., dissenting) (quotingciting United States v. Hopkins, 427 U.S. 123,at 125 n.2 (1976)). Referring to AINS, Inc. v. United States, 365 F.3d 1333,at 1342-43 (Fed. Cir. 2004), Judge Gajarsa also wrote, that “to the extent that it has been read to set forthurther a new rigid test for NAFI status, such a reading sweeps too broadly.” Slattery III, 635 F.3d at 1328 (Gajarsa, J., dissenting).Id.635 F.3d at 1328. 173 Id. 35 Error! Unknown document property name. n and citing to Borden and Kyer.174, Furthermore, the Courtand st ated that, under those decisions, “‘[t]he non-appropriated fund status of the exchanges places them in a position whereby the Fe deral Government, absent special legislation, does not assume th e obligations of those exchanges in the same manner that contrac ts entered into by of appropriated fund agencies are assumed’ .
. . .”175 TheThen, as the dissent further noted, the Court then i ndicated, as the dissent notedwithout objection, that the 1970 A ct was such “‘special legislation’” waiving sovereign immunity i n the case of the identified military exchanges.176 Based on thes e grounds, the dissent concluded that Congress and the Supreme C ourt had ratified the NAFI dDoctrine, consistently with a strict construction of waivers of sovereign immunity, had been ratified by Congress and the Supreme Court.177
The majority’s responses to these dissenting positions178 see m particularly dismissive when viewed apart from its previously stated conclusions that, from the beginning, Kyer misread the ap propriations statutes funding the court’s judgments and improper ly narrowed the broad, unequivocal waiver granted by the Tucker 174 Slattery III, 635 F.3d at 1326 (Gajarsa, J., dissentin g)Slattery II, 635 F.3d at 1326 (Gajarsa, J., dissenting) (citing Hopkins, 427 U.S. at 125). 175 Id. (Gajarsa, J., dissenting) Slattery II, 635 F.3dSlattery II, Id. 635 F.3d at 1326, (quoting Hopkins, 427 U.S. at 127)..
176 Id. (Gajarsa, J., dissenting) Slattery II, 635 F.3d at 1326 (Gajarsa, J., dissenting) (quoting Hopkins, 427 U.S. at 127).Id. 177 Id. at 1323 (Gajarsa, J., dissenting). Slattery II, 635 F.3d at 1323 (Gajarsa, J., dissenting).Id. at 1323. 178 Id. at 1311-14. 36 Error! Unknown document property name. Act itself.179 But, the majority evaluated both the 1970 Act and the Supreme Court’s decisionrecognition in Hopkins and still refused to allowin that context, doubting that the long-standing tenure of the NAFI Doctrine tocould correct its fundamental flaw s orand affect an implied partial repeal of the Tucker Act juris diction, contrary to Supreme Court guidance.180 So, wWith respect to the 1970 Act, the majority acknowledged that “[b]roader langu age had . . . been proposed during the legislative inquiry,” but responded that “this history does not support the g[G]overnment’ s theory that Congress intended to narrow, rather than restore, the Tucker Act’s scope.”181 The enactment’s history indicated, to the majority, legislative recognition of the “‘injustice and ine quity’” of the “‘loophole,’” and thatbut broader remedial action was only stymied by “concern about the absence of a definition.” of NAFIs.182 The majority thus rejected the dissent’s positionLat in implication that “[l]egislative action to close a much-critic ized loophole” could “reasonably be understood as an endorsement of the loophole itself . . . .”183 In other words, by the 1970 Ac t, “Congress did not abrogate the Kyer line, but that is not to say that it approved of that line of authority . . ., much less adopted it.”184 The majority similarly dismissed United States v. 179 See id. Slattery II , 635 F.3d Id . at 1320 (Gajarsa, J., dissen ting). 180 Id. at 13011-14. 181 Id. at 1311. 182 Id. at 1311-12 (quoting S. REP. NO. 91-268, at 2 (1969))3-14. 183 See id. Slattery II, 635 F.3dId. at 1313. 184 Id. at 1314.. at 1313-143. 37 Error! Unknown document property name. Hopkins. was similarly dismissed; According toas seen by the ma jority, the decision did not “depart from the 1970 amendment or apply it to activities other than the military exchanges.”185 The issue before the Hopkins Court was “whether Tucker Act contract actions include employment contracts with exchanges,” and the Co urt held that it did.186 There, there was no holding relating to or “discussion of the status of other non-appropriated fund inst rumentalities under the Tucker Act.”187 As such, according to the en banc Slattery III court, Hopkins merely acknowledged Kyer, but did not hold that it was good law.188
5. Resolving the Conflicting Precedents
The Federal Circuit’s en banc majority decided that the Kye r line of cases presented conflicts, not just among themselves, but also with fundamental Supreme Court decisions controlling th e construction of the Tucker Act’s waiver of sovereign immunity.
189 In a concluding section entitled “Resolution of Conflicts,” t he opinion set out thisits holding and the basis for it.190
It is interesting – and perhaps of significance beyond the
NAFI issue – that Judge Newman began by relying on Supreme Court decisions cautioning against “‘less than meticulous’ uses of the
185 Id. at 1314. 186 Id. (citing United States v. HopkinsHopkins, 427 U.S. 123, at 124 (1976)). 187 Id. 188 Id.Slattery II, 635 F.3d at 1314Id. at 1314. 189 See id. at 1320. 190 Id. at 1320. 38 Error! Unknown document property name. term ‘jurisdictional.’”191 She noted the Court’s instruction that
“‘when Congress does not rank a statutory limitation on coverage as jurisdictional, courts should treat the restriction as non-ju risdictional in character.’”192 Jurisdictional statutes must “‘sp eak in jurisdictional terms.’”193 She emphasized that the Court’s
“‘recent casesdecisions evince a marked desire to curtail . . .
‘drive-by jurisdictional rulings’’” that “miss the ‘critical dif ference[s]’ between true jurisdictional conditions and non-juris dictional limitations on causes of action,’” such as “‘the impor tant distinctions between jurisdictional prescriptions and claim processing rules.’”194
Using these principles to resolve the conflicts or “confusi on,”195 the majority opinion stated:
Applying these precepts, the overreach of the statemen t in Kyer is apparent, for the Judgment Fund statute d oes not speak in jurisdictional terms. Section 2517 (a) originated in the Amended Court of Claims Act of 1 863, for the purpose of removing the need for a specif ic congressional appropriation to pay each judgment. This statute neither restricted nor enlarged the juris diction of the Court of Claims; it is applied after th e court has entered judgment, to provide a mechanism w hereby that judgment “shall be paid out of any general appropriation therefor.e…”196 191 Id. (quoting Id., (quoting Eberhart v. United States, 546 U.S. 12, 16 (2005)).; see Slattery II, 635 F.3d at 1320. 192 Id. Slattery II, 635 F.3d at 1320Id. (, quoting Arbaugh v. Y & H Corp., 546 U.S. 500, 515-16 (2006)). 193 See id. Slattery II, 635 F.3d at 1320Id., (quoting Zipes v. Tr ans World Airlines, Inc., 455 U.S. 385, 394 (1982)). 194 Id. Slattery II, 635 F.3d at 1320Id., (alterations in original) (quoting Reed Elsevier, Inc. v. Muchnick, 130 S. Ct. 1 237__ U.S. ___, 1244___ (2010))). 195 Id. 196 Id. (quoting 28 U.S.C § 2517(a) (2006)). 39 Error! Unknown document property name. Thus, the majority decided that Kyer was “devoid of support” and
“shall no longer be applied as precedent.”197 The majority then turned to an additional Supreme Court decision, United States v.
Mitchell, for further support support for its conclusions.198:
Specifically, the majority stated that itWe “reaffirm[ed] the guidance of Mitchell . . . that “‘[i]f a claim falls within the terms of the Tucker Act, the United States has presumptively consented to suit’”; exceptions require an unambiguous statement by Congress.”199 The Judgment Fund enactments relied on in Kyer simply did not constitute the kind of unambiguous statements necessary to withdraw the Tucker Act’s waiver of sovereign immunity. “did not exhibit the type of ‘unambiguous intention to withdraw the Tucker Act remedy’ that is necessary to preclude a
Tucker Act claim.”200 With theseis Supreme Court mandates in hand, the Federal Circuit therefore held:
On this en banc review, we hold that (1) when a govern ment agency is asserted to have breached an express or implied contract that it entered on behalf of the Unit ed States, there is Tucker Act jurisdiction of the cau se unless such jurisdiction was explicitly withheld or withdrawn by statute, and (2) the jurisdictional found ation of the Tucker Act is not limited by the appropri
197 Id. Slattery II, 635 F.3d at 1320 (quoting 28 U.S.C. § 2517 (2006))Id. 198 Id. Slattery II, 635 F.3d at 1320-21. 199 Id. at 1320-21, (quoting United States v. Mitchell, 463 U.S. 206, at 216 (1983)) , and (citing Regional Rail Reorganization A ct Cases, 418 U.S. 102, at 126-36 (1974);, and Preseault v. Interstate Commc’n Comm’n, 494 U.S 1,. at 12 (1990)). 200 Id. See Slattery II, 635 F.3dId. at 1321 (, quoting Ruckelshau s, 467 U.S. at 1019). 40 Error! Unknown document property name. ation status of the agency’s funds or the source of fu nds by which any judgment may be paid.201
IV. Conclusion: – A Broader Message?
And so, the Federal Circuit ended the NAFI Doctrine. As re markable as that was, the en banc decision in Slattery may have signaled more than the demise of this long-standing restriction on Tucker Act jurisdiction.202 Rather, Tthe Circuit’s reasoning h as the potential to alter the jurisdictional debate at the court.
To begin with, the Slattery en banc majority’s reliance on
Supreme Court decisions cautioning against uncritical invoking o f “jurisdictional” bars203 may have an effect on Federal Circuit j urisprudence that goes beyond NAFI cases and the Tucker Act. Wh ile these Supreme Court decisions may not havedid not involved i ssues of sovereign immunity, it is important that a majority of the Federal Circuit, deciding such issues en banc, considered th em relevant and instructive, if not binding. Attention must now be given to whether a particular requirement speaks in terms of or bears explicitly on jurisdiction, as distinguished from the m
201 Id. at 1321. 202 In Mineseon Co. v. McHugh, 671 F.3d 1332, 1336-1337 (Fed. Cir. 2012), the Justice Department argued that Slattery did not also establish Contract Disputes Act (“CDA”) jurisdiction over NAFI c laims. A panel majority declined to address that jurisdictional issue, resolving the case on substantive grounds. Id671 F.3d at 1336-37. However, Judge Bryson, who joined in the Slattery en b anc decision, opined in a dissent that “its holding appliesd equ ally to claims brought under that Act, because the reach of the CDA is tied to the waiver of sovereign immunity in the Tucker Ac t.” Id. at 1344 (Bryson, J., dissenting). 203 Slattery III, 635 F.3d at 1320. 41 Error! Unknown document property name. erits or even mere “‘claims-processing’ . . . .”204 Judge Newman may have included these Supreme Court decisions not just with th e NAFI Doctrine in mind, but with controversial jurisdictional d ecisions involving claims-processing regulations under the Contr act Disputes Act,205 which has beensome the subject of some of her own dissents in other Federal Circuit decisions.206
The reference to “‘claims-processing rules’”207 immediately b rings to mind one such decision, the much-criticized panel decis ion in M. Maropakis Carpentry, Inc. v. United States,208 in which a Federal Circuit panel majority held that failure to submit a f ormal claim for time extension barred jurisdiction of a contract or’s defense to thea gGovernment’s liquidated damages claim for delay in performance.209 It seems very unlikely, given the en ban c Slattery analysis, that the M. Maropakis Capentry, Inc. decisi on would have withstood en banc review. Similarly, the Supreme
Court’s caution may have reminded Judge Newman of United States v. Grumman Aerospace Corp.,210 in which she joined in a dissent fr
204 Id. (quoting Reed Elsesvier, Inc. v. Muchnick, 130 S. Ct. 1237, 1244 (2010)). 205 Contract Disputes Act, Pub. L. No. 111-350, §3, 124 Stat. 3817 (codified at 41 U.S.C. §§ 7101-7109 (Supp IV 2010).3)41 U.S.C. § 7103 (2012). 206 See Johnson, supra note Error: Reference source not found, at 278-332. 207 Slattery III, 635 F.3d at 1320 (quoting Reed Elesvier, Inc., v. Muchnick, 130 S. Ct. at1237, 1244 (2010)). 208 609 F.3d 1323 (Fed. Cir. 2010). 209 Id. at M. Maropakis Carpentry, Inc. v. United States, 609 F.3d 132 1323, 1325 -26, 1329-30 (Fed. Cir. 2010). 210 927 F.2d, 575 (Fed. Cir. 1991). 42 Error! Unknown document property name. om the Circuit’s refusal to rehear the panel decision en banc.211
The dissenters stated that it was a mistake to link claim proces sing requirements with jurisdiction under the Contract Disputes
Act and observed that “[t]his whole area could benefit from a th orough re-examination [e]n banc.”212
Even more significant is the attention Slattery directs to
United States v. Mitchell.213 Over the years, the Federal Circuit panels have intoned that “‘a waiver of the Government’s sovereig n immunity will be strictly construed, in terms of its scope, in favor of the sovereign’” and that such a waiver ‘must be unequiv ocally expressed in [the] statutory text’ . . . .”214 It can read ily be seen that the Slattery en banc decision transposed that p roposition, putting the burden of unambiguous proof on those ass erting exceptions to Tucker Act jurisdiction. As the Slattery m ajority explained, this reversal was established by United State
s v. Mitchell United States v. Mitchell established this reversal.
215 Indeed, the dissenters in Mitchell, like the dissenters in the en banc Slattery decision, complained that the Court “has ef fectively reversed the presumption that ‘absent ‘affirmative sta tutory authority’ . . . the United States has not consented to b
211 Id. atUnited States v. Grumman Aerospace Corp., 927 F.2d, 575, 577-78, 581-842 (Fed. Cir. 199188) (Plager, J., dissenting). 212 Id. at 584 (Plager, J., dissenting).. 213 See Slattery III, 635 F.3d at 1315-1316, 1320-21. 214 Id. at 1323 (Gajarsa, J., dissenting) (quoting Lane v. Pena, 518 U.S. 187, 192 (1996)). 215 See id. See Slattery II, 635 F.3d at 1303.Mitchell, 463 U.S. 2 06at, 229 (1983). 43 Error! Unknown document property name. e sued for damages.”216 Thus dissenters in Bboth decisions compla ined of a “departure from long-settled principles.”217
Mitchell presented the issue of whether various statutes re quiring governmental management of Indian tribal lands afforded the tribes the right to bring actions cognizable under the Tucke r Act.218 The Supreme Court noted: that
[t]The terminology employed in some of our prior decis ions has unfortunately generated some confusion as to whether the Tucker Act constitutes a waiver of soverei gn immunity. The time has come to resolve this confus ion.219
Based on its analysis, the Court clarified that the Tucker Act,
“by giving the Court of Claims jurisdiction over specified types of claims against the United States,” waived sovereign immunity with respect to those claims.220 Even though the Mitchell case involved a claim founded upon statutes, the Court began its analysis by referring to contract claims under the Tucker Act:
The existence of a waiver is readily apparent in claim s founded upon “any express or implied contract with t he United States.” 28 U.S.C. ¶1491. The Court of Cla ims’ jurisdiction over contract claims against the Gov ernment has long been recognized, and Government liabi 216 United States v. Mitchell, 463 U.S. 206, at 229 (1983) (Powell, J., dissenting) (quoting United States v. U.S. Fid. & Guar. Co., 309 U.S. 506, 514 (1940)). Mitchell, 463 U.S. at 22 9Id. (citation omitted). 217 See idMitchell, 463 U.S.Id. at 22130 (Powell, J., dissenting); see also Slattery III, 635 F.3d at 1321 (Gajarsa, J., dissenting). 218 Mitchell, 463 U.S.Id. at 207. 219 Id. at 212. 220 Id. The terminology thus repudiated appeared in United States v. Testan, 424 U.S. 392, 398, 400 (1976), and, ironically, Justi ce Marshall’s initial opinion in United States v. Mitchell (Mitchell I), 445 U.S. 535, 538 (1980). 44 Error! Unknown document property name. lity in contract is viewed as perhaps “the widest and most unequivocal waiver of federal immunity from sui t.”221
Because “the Act makes absolutely no distinction” between contract claims and other claims specified in the Tucker Act, the Court concluded that “[i]f a claim falls within the terms of the Tucker Act, the United States has presumptively consented to suit.”222 That presumption thus switched the strict construction obligation.223 such that Eexceptions to the waiver had to be unambiguous.224
Nevertheless, as Mitchell acknowledged, the Tucker Act requ ires that “[a] “substantive right” to recover damages “must be
“found in some other source of law, such as ‘the Constitution, o r any Act of Congress, or any regulation of an executive departm ent.’”225 Such a claimant must demonstrate that “the source of su bstantive law [relied upon]he relies upon can be fairly be inter preted as mandating compensation by the Federal Government for t he damage sustained.”226 And Mitchell made this clear distinction:
“the separate statutes and or regulations need not provide a s econd waiver of sovereign immunity, nor need they be construed i
221 Mitchell, 463 U.S.Id. at 215 (quoting Tucker Act, 28 U.S.C. § 1491; Developments in the Law – Remedies Against the United States and its Officials, supra note Error: Reference source not found, at70 HARV. L. REV .827, 876 (1957)). 222 Id.Mitchell, 463 U.S.Id. at 216. 223 See id. 224 See id. 225 Id. (quoting Tucker Act, 28 U.S.C. § 1491). 226 Id. Mitchell, 463 U.S. atId. at 2186-17. 45 Error! Unknown document property name. n the manner appropriate to waivers of sovereign immunity.”227 Fu rthermore, Mitchell made no mention of such a requirement for co ntract claims under the Tucker Act, apparently because damages a re the recognized default remedy for breach of contract.228 Thus, the opinion indicated that the “substantive right” to damages co uld be found in the general law of contracts.229 Indeed, in
United States v. Winstar Corp.,230 a plurality of the Supreme Cour t later observed that “damages are always the default remedy for breach of contract.”231
Mitchell’s’s evident exemption of breach of contract claims from the requirement to point to a specific money-mandating sour ce of law was inexplicably missed in Rick’s Mushroom Service, In c. v. United States.232 There a panel of the Federal Circuit, sta ted: that
Rick’s breach of contract claim arises from its cost-s hare agreement with the g[G]overnment; however the cos t-share agreement does not provide a substantive right to recover money damages, and Rick’s does not point to a money-mandating source of law to establish jurisdict
227 IdSee iId-19. at 218-19. 228 RESTATEMENT (SECOND) OF CONTRACTS ¶§ 346, Ccmt. a (1981). 229 This distinction between contract claims and other claims with in Tucker Act jurisdiction of grant was previously drawn by Unit ed States v. Testan, 424 U.S. 392, 400 (1976) and by Eastport St eamship Corp. v. United States, 3721 F.2d 1002, 1008-09 (Ct. Cl. 1967). 230 518 U.S. 839 (1996). 231 Id. atUnited States v. Winstar Corp., 518 U.S. 839,at 885;. sS ee also San Juan City Coll. v. United States, 391 F.3d 1357, 136 1 (Fed. Cir. 2004) (presumption of contract damage remedy in a c ivil context). 232 Rick’s Mushroom Service, Inc., 521 F.3d at 1338 (Fed. Cir. 200 8). 46 Error! Unknown document property name. ion under 28 U.S.C. § 1491(a)(1) for its breach of con tract claim.233
Misciting Mitchell, the panel denied jurisdiction.234 It see ms unlikely that the panel decision in Rick’s Mushroom Serv ice would withstand en banc review after Slattery.
The subsequent panel decision in Holmes v. United States235 p resents an interesting post-Slattery discussion of this issue.236
There, a panel acknowledged that precedents “exempted “contract claims from . . . the money-mandating requirement,” which applie s only where a plaintiff rest its claim upon the Constitution, s tatutes, or regulations.237 The panel also acknowledged that “[t] he Supreme Court has shown continued support for this distinctio n by excluding [contract claims] from its subsequent discussion of the money-mandating requirement.”238 However, the panel reject ed Holmes’ argument that, having made a contract claim, he was n ot required additionally to point to provisions fairly interpret ed as providing for monetary relief, in order to establish juris diction. 239 To reach this result, the panel characterized the ex emption as a mere “presumption,” which was “the likely basis for
233 Id. at 1343. 234 Id. at 1343-44 (citing United States v. Mitchell, 463 U.S. 206, 216 (1983))Mitchell, 463 U.S. at 216). 235 657 F.3d 13013 (Fed. Cir. 2011). 236 Id. atHolmes v. United States, 6757 F.3d 1303, 1313-15 .(Fed. Cir. 2011) . This decision did not acknowledge Slattery. 237 Id. at 1313. 238 Id. at 1313. 239 Id. at 1315. The panel decided that Holmes agreement satisfie d the money-mandatory requirement. Id. 47 Error! Unknown document property name. the disparate discussion” of the different types of claims.240 Th e panel did not address why the “presumption” itself would not e stablish a “fair interpretation” for jurisdictional purposes (or why it would not make a prima facie case on the merits, shifting the burden to the gGovernment to show why recovering for damages damages relief was not available).241
Then, nNoting precedents involving agreements entirely conc erned with the conduct of parties in a criminal case,”242 the Holm es decision declared that Tucker Act jurisdiction does not exten d to every government contract and required athe further “fair-i nterpretation” showing of a specific contract right to money dam ages.243 For this, the panel surprisingly cited Rick’s Mushroom S ervice with approval.244 Although the panel found that Holmes’ ag reements could “fairly be interpreted as contemplating money dam ages,” it is difficult to square a jurisdictional requirement fo r such a showing with Mitchell – or the en banc decision in Slat tery.245
In sum, the Slattery decision sets forth fundamental propos itions governing Tucker Act jurisdiction. First, the “reaffirma
240 Id. at 1314. 241 Id. at 1313-14. at 1314. 242 See id. at 1314 (citing Sanders v. United States, 252 F.3d 132 9, 1334 (Fed. Cir. 2001); and Kanian v. United States, 650 F.2d 264, 268-269 (Ct. Cl. 1981)). 243 Id. Holmes, 657 F.3d at 1309, 1313.Rick’s Mushroom Service, 52 1 F.3d at 1314. 244 Id. at 1314-15 (citing Rick’s Mushroom Service, Inc. v. United States, 521 F.3d 1338, at 1343 (Fed. Cir. 2008)). 245 Id. Holmes, 657 F.3dId. at 1315. 48 Error! Unknown document property name. tion” of Mitchell confirms the “‘widest and most unequivocal wai ver’” of sovereign immunity from contract claims.246 Second, the decision admonishes that any asserted limitations must speak exp licitly in jurisdictional terms, be unambiguous, and not be conf used with procedural rules or merit issues.247 Third, the decisio n establishes that the statutory canon of strict construction of waivers of sovereign immunity does not apply to the Tucker Act; indeed, the Mitchell presumption of jurisdiction requires a stri ct construction against the sovereign.248 Set by the en banc cour t, these fundamentals would seem to stand as the law of the Fede ral Circuit.
In these ways, Slattery v. United States may have an effect beyond its extraordinary rejection of the seemingly entrenched N
AFI Doctrine limitation on jurisdiction, by sending an en banc m essage to the U.S. Court of Federal Claims and future panels of the Circuit, as well as to claimants considering whether to peti 246 Slattery v. United States (Slattery III), 635 F.3d 1298, 1320- 21 (Fed. Cir. 2011) Slattery II, 635 F.3d at 1303, 1320-21 (quoting United States v. Mitchell, 463 U.S. 206, 215 (1983)Mitchell, 463 U.S. at 215). In System Fuels, Inc. v. Unit ed States, 666 F.3d 1306, 1314-15 (Fed. Cir. 2012) (Newman, J., dissenting), Judge Newman, dissenting, relied on the same combin ation of Mitchell and Winstar to argue that a claim for financin g costs incurred as damages in mitigation of the gGovernment’s b reach were recoverable within Tucker Act jurisdiction, notwithst anding the bar against interest on a claim in 28 U.S.C. § 2516 (2006). The panel majority rejected this argument despite its S upreme Court support, by citing prior panel precedent that “‘[t] he no interest rule is an aspect of the basic rule of sovereign immunity.’” Id. at 1310 (quoting Eng.land v. Contel Advanced Sy s., Inc., 384 F.3d 1372, 1379 (Fed. Cir. 2004)). 247 Slattery III, 635 F.3d at 13201. 248 Id. at 1321. 49 Error! Unknown document property name. tion for en banc review of panel decisions denying jurisdiction.
Whether the judges of these courts will follow this messagethe r easoning of the Slattery decision, or resist its import, remains to be seen, but it does seem that the message is unmistakably th ere. And it is not a new one. As the en banc decision noted, J ustice Holmes long agobefore hailed the Tucker Act’s grant of ju risdiction as “‘a great act of justice.’”249 Like Justice Holmes before her, Judge Newman has reducedcould have added Justice Hol mes’ accompanying dismissal of the gGovernment’s argument that t he jurisdiction “is to be construed strictly and read with an ad verse eye” toas “an inadmissible premise.”250
249 Id. at 1303 (quoting United States v. Emery, Bird, Thayer Real ty Co., 237 U.S. 28, 32 (1915)). 250 Id. at 1304; United States v. Emery, Bird, Thayer Realty Co., 237 U.S. at28, 32 (1915). 50 Error! Unknown document property name.