v.
Usaf
FOR PUBLICATION
UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT
UNITED AERONAUTICAL No. 21-56377 CORPORATION; BLUE AEROSPACE, LLC, D.C. No. 2:20-cv-01985- Plaintiffs-Appellants, ODW-JDE v.
UNITED STATES AIR FORCE; OPINION UNITED STATES AIR NATIONAL GUARD, Defendants-Appellees, Appeal from the United States District Court for the Central District of California Otis D. Wright II, District Judge, Presiding
Argued and Submitted December 9, 2022 Pasadena, California
Filed September 7, 2023
Before: MILAN D. SMITH, JR., DANIEL P. COLLINS, and KENNETH K. LEE, Circuit Judges.
Opinion by Judge Milan D. Smith, Jr.; Dissent by Judge Collins
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SUMMARY *
Contract Disputes Act / Jurisdiction
The panel affirmed the district court’s dismissal for lack of subject-matter jurisdiction of an Administrative Procedure Act (APA) action brought by United Aeronautical Corporation and Blue Aerospace, LLC (collectively, Aero) against the U.S. Air Force and U.S. Air National Guard (collectively, USAF) alleging that USAF improperly used Aero’s intellectual property—data relating to the Mobile Airborne Firefighting System (MAFFS)—in violation of federal procurement regulations and the Trade Secrets Act. Aero delivered a hard drive containing MAFFS-related data to the United States Forest Service and executed a Data Rights Agreement (DRA) granting the Forest Service “unlimited rights to view and use” the data. The Forest Service delivered that hard drive to USAF, and Aero sued USAF for its receipt and use of the MAFFS data. The APA waives sovereign immunity for actions in federal district court by persons suffering legal wrong because of agency action; however, when a statute vests exclusive jurisdiction over a category of claims in a specialized court, it “impliedly forbids” an APA action in district court. The panel agreed with the district court that the Contract Disputes Act “impliedly forbids” jurisdiction over Aero’s claims by vesting exclusive jurisdiction over federal-
* This summary constitutes no part of the opinion of the court. It has been prepared by court staff for the convenience of the reader.
UNITED AERONAUTICAL CORP. V. USAF 3
contractor disputes in the Court of Federal Claims. A claim falls within the scope of the CDA’s exclusive grant of jurisdiction if (1) the plaintiff’s action relates to (2) a procurement contract (3) to which the plaintiff was a party. Here, Aero’s claims that USAF improperly received and used MAFFS data (1) relate to the DRA, (2) the DRA is a procurement contract, and (3) Aero is a contractor for purposes of the DRA. The panel held that the test set forth in Megapulse, Inc. v. Lewis, 672 F.2d 959 (D.C. Cir. 1982), is limited to determining whether the Tucker Act—which grants exclusive jurisdiction to the Court of Federal Claims over breach-of contract actions for money damages—“impliedly forbids” an ADA action because Megapulse addressed implied preclusion only pursuant to the Tucker Act, not pursuant to the CDA. Dissenting, Judge Collins would reverse the district court’s dismissal for lack of subject-matter jurisdiction, and hold that the CDA does not “impliedly forbid” Aero from bringing an APA action because Aero’s claims are not based on a government contract, but instead on Aero’s independent statutory rights under the Trade Secrets Act.
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COUNSEL
David M. Almaraz (argued), Grant Shenon APLC, Sherman Oaks, California; Jonathan R. Hickman, Esquire Corporate Services LC, Encino, California; for Plaintiffs-Appellants. Paul B. Green (argued) and Joanne S. Osinoff, Assistant United States Attorneys; David M. Harris, Assistant United States Attorney, Civil Division Chief; Tracy L. Wilkison, United States Attorney; United States Attorney’s Office, Los Angeles, California, for Defendants-Appellees.
OPINION M. SMITH, Circuit Judge: United Aeronautical Corporation and Blue Aerospace, LLC (collectively, Aero) filed suit against the United States Air Force and Air National Guard (collectively, USAF) in the U.S. District Court for the Central District of California. Aero alleges that USAF has for some time violated federal procurement regulations and the Trade Secrets Act, 18 U.S.C. § 1905, by improperly using Aero’s intellectual property. The district court dismissed for lack of subject- matter jurisdiction, concluding that the Contract Disputes Act (CDA), 28 U.S.C. § 1491(a)(2), precludes jurisdiction over Aero’s action by vesting exclusive jurisdiction over federal-contractor disputes in the Court of Federal Claims. We affirm. FACTUAL AND PROCEDURAL BACKGROUND This litigation relates to the Mobile Airborne Firefighting System (MAFFS): an anti-retardant tank system UNITED AERONAUTICAL CORP. V. USAF 5 that converts cargo planes so that they can combat fires. [1] From about 1980 to 2000, Aero Union—a different company than the plaintiffs in this case—developed the original MAFFS. In 2000, Aero Union contracted with the U.S. Forest Service to develop an updated MAFFS prototype (MAFFS II), which incorporated significant amounts of Aero Union’s intellectual property that was developed from 1980 to 2000. In 2012, Aero—the plaintiffs in this case—purchased Aero Union’s intellectual property in a foreclosure sale. In 2014, to support the Forest Service’s continued use of MAFFS II, Aero delivered a hard drive containing MAFFS- related data to the Forest Service and executed a Data Rights Agreement (DRA) providing: “[A]s set forth in [2000 Contract between Aero Union and the Forest Service], the technical data produced or specifically used or related to [MAFFS II] developed pursuant to such contract shall remain the property of [Aero] (as the purchaser of assets of Aero [Union] . . . ) and [the Forest Service] shall have unlimited rights to view and use the data required for the continued operation The CDA, enacted in 1978, has since been codified as Chapter 71 of title 41 of the United States Code. See 41 U.S.C. §§ 7101–7109. By its terms, the CDA applies only to “any express or implied contract . . . made by an executive
[*1017]34 UNITED AERONAUTICAL CORP. V. USAF
agency for” (1) the “procurement of property, other than real property in being”; (2) the “procurement of services”; (3) the “procurement of construction, alteration, repair, or maintenance of real property”; or (4) the “disposal of personal property.” Id. § 7102(a)(1)–(4). The CDA establishes an administrative process under which any “claim by a contractor against the Federal Government relating to a contract shall be submitted to the contracting officer for a decision.” Id. § 7103(a)(1). The contracting officer must then issue a written decision, see id. § 7103(a)(3), (d), and if it is adverse to the contractor, then the contractor can either appeal to the appropriate agency board of contract appeals, see id. § 7104(a), or “bring an action directly on the claim” in the CFC, id. § 7104(b)(1). An adverse decision in either forum may be reviewed by the Federal Circuit. See id. § 7107(a)(1); 28 U.S.C. § 1295(a)(3). The corresponding provision of the judicial code that confers jurisdiction on the CFC to adjudicate an action filed by a contractor under § 7104(b)(1) states:
The Court of Federal Claims shall have jurisdiction to render judgment upon any claim by or against, or dispute with, a contractor arising under section 7104(b)(1) of title 41, including a dispute concerning termination of a contract, rights in tangible or intangible property, compliance with cost accounting standards, and other nonmonetary disputes on which a decision of the
UNITED AERONAUTICAL CORP. V. USAF 35 contracting officer has been issued under section 6 of that Act [41 U.S.C. § 7103].
28 U.S.C. § 1491(a)(2). The majority describes this provision as conferring “exclusive” jurisdiction in the CFC, see Opin. at 17, but that is not exactly correct. As noted earlier, there are two possible routes for review of a contracting officer’s determination of a claim under the CDA, and the other option (review by an agency board of contract appeals, followed by review in the Federal Circuit) bypasses the CFC altogether. To the extent that the CDA impliedly forbids invocation of the APA here, that is attributable, not so much to any “exclusive” jurisdiction of the CFC, but rather to the CDA’s “mandatory administrative process for resolving contract disputes.” Menominee Indian Tribe v. United States, 577 U.S. 250, 252 (2016). If the CDA applies here, then Plaintiffs were required to present their claim to the relevant contracting officer before invoking one of the CDA’s two paths to judicial review. That would, in my view, impliedly forbid them from invoking the APA as an end-run around the CDA’s administrative process and the specific methods of judicial review applicable to that process. The question, then, is whether Plaintiffs were required to submit their claim in this case to a contracting officer in accordance with the CDA. As noted earlier, the CDA requires that any “claim by a contractor against the Federal Government relating to a contract” governed by the CDA “shall be submitted to the contracting officer for a decision.” 41 U.S.C. § 7103(a)(1) (emphasis added). And, generally speaking, the only contracts that are governed by the CDA are “procurement” contracts. Id. § 7102(a)(1)–(3). On that basis, I agree that, if Plaintiffs’ “claim” here is one “relating”
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to a procurement contract, then they were required to invoke the CDA’s processes, and any resort to the APA as a substitute is impliedly forbidden. [5] U.S.C. § 702.
[*1018]Whether this case may proceed in the district court thus turns on whether Plaintiffs’ claim is one “relating to” a procurement contract within the meaning of § 7103(a)(1) of the CDA. The majority concludes that the Megapulse test that is used for distinguishing between claims “founded upon” a contract in the Tucker Act context does not apply to the similar inquiry, in the CDA context, as to whether a claim “relat[es] to a contract.” See Opin., § II. According to the majority, any cause of action that, broadly speaking, has “some relationship to the terms or performance” of a procurement contract is a claim “relating to a contract” for purposes of the CDA and therefore may not be the subject of a suit under § 702 of the APA. See Opin. at 9 (quoting Todd Constr., L.P. v. United States, 656 F.3d 1306, 1312 (Fed. Cir. 2011)). And that remains true, according to the majority, even if the only “relationship” between the plaintiff’s claims and the procurement contract is that the Government has invoked contract-based defenses to the plaintiff’s non- contract-based claims. See Opin. at 11–12, 16–20. For multiple reasons, the majority is wrong in holding that the Megapulse test is limited to the Tucker Act context and does not apply to the CDA. First, the majority overlooks the meaning, in context, of the entire relevant phrase in the CDA, and in doing so the majority misreads the Todd case on which it primarily relies. In describing what must be submitted to a contracting officer, § 7103(a)(1) refers to a “claim by a contractor against the Federal Government relating to a contract.” 41
UNITED AERONAUTICAL CORP. V. USAF 37
U.S.C. § 7103(a)(1) (emphasis added). As the Federal Circuit noted in Todd, the CDA does not define the crucial word “claim.” 656 F.3d at 1311. Todd held, however, that under the Federal Circuit’s prior decision in H.L. Smith, Inc. v. Dalton, 49 F.3d 1563 (Fed. Cir. 1995), “the definition of the term ‘claim’ in the FAR [Federal Acquisition Regulations] governs.” 656 F.3d at 1311. As Todd explained, “[t]he FAR defines ‘claim’ as ‘a written demand or written assertion by one of the contracting parties seeking, as a matter of right, the payment of money in a sum certain, the adjustment or interpretation of contract terms, or other relief arising under or relating to the contract.’” Id. (emphasis omitted) (quoting 48 C.F.R. § 2.101). The types of “claims” governed by the CDA are thus limited to those seeking “relief arising under or relating to the contract.” Id. (emphasis added). This focus on contract-based rights and contract-related relief is not materially different from the Megapulse test, which requires consideration of the same factors. See Megapulse, 672 F.2d at 968. Moreover, the “claim” at issue in Todd—which challenged the “quality of the contractor’s performance under the terms of the contract,” Todd, 656 F.3d at 1313 (emphasis added)— readily qualifies as “at its essence a contract claim” under Megapulse, 672 F.2d at 967. Second, even setting aside Todd’s particular definition of a “claim,” the majority’s analysis still fails. According to the majority, a contractor’s “claim” “relat[es] to” a contract if the Government’s defenses to that claim relate to the contract. See Opin. at 11–12. The majority cites no authority that supports this rewriting of the statute, which focuses on the “claim” asserted and not the defenses raised against it. The majority notes that Plaintiffs cannot prevail on their claim without defeating those defenses and that
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Plaintiffs’ complaint itself anticipates those defenses. See Opin. at 11–12. But that does not erase the distinction between a claim and a defense, cf. Caterpillar Inc. v. Williams, 482 U.S. 386, 393 (1987) (holding that the rule that a federal defense does not suffice to show that a claim arises under federal law applies “even if the defense is anticipated in the plaintiff’s complaint, and even if both parties concede that the federal defense is the only question truly at issue”), and the CDA requires that the claim—not an anticipated defense—relate to the contract. 41 U.S.C. § 7103(a)(1). The Megapulse test honors that distinction between claims and defenses, because Megapulse specifically held that the Government’s decision to raise a contract-based defense does not make a plaintiff’s claim a contract claim. 672 F.2d at 969. 3 Third, the majority’s expansive reading of the CDA ignores our prior caselaw holding that the CDA’s preclusive effect on the availability of other jurisdictional statutes should be “narrowly” construed. Concrete Tie, Inc. v. Liberty Constr., Inc. (In re Liberty Constr.), 9 F.3d 800, 801 (9th Cir. 1993). In Liberty Construction, we invoked that narrow-construction rule in rejecting the Government’s argument that our construction of the statute “vest[ing] jurisdiction in the district court over claims against the SBA
3 The majority insists that this distinction between claims and defenses is an artifact of the jurisprudence governing 28 U.S.C. § 1331 and does not apply outside that context. See Opin. at 19–20. But the provision of the CDA that the majority says impliedly forbids invocation of the APA applies, by its terms, only if the “claim” is one “arising under section 7104(b)(1) of title 41,” 28 U.S.C. § 1491(a)(2), and § 7104(b)(1) in turn authorizes an “action directly on the claim” raised by the contractor. The statute’s focus here is on the claim asserted by the contractor and not the defenses asserted by the Government.
UNITED AERONAUTICAL CORP. V. USAF 39
[Small Business Administration]” had been “implicitly overruled” by the CDA. Id.; see also Wright v. U.S. Postal Serv., 29 F.3d 1426, 1429 (9th Cir. 1994) (expressly rejecting the view that “the CDA ‘pre-empt[s] the entire field of government contract remedies’”). 4 Fourth, the majority creates a circuit split with at least four circuits that expressly apply Megapulse in assessing whether the CDA impliedly forbids reliance on the APA. See B & B Trucking, Inc. v. U.S. Postal Serv., 406 F.3d 766, 768 (6th Cir. 2005) (en banc) (“The CDA bars district court jurisdiction if the court determines that a plaintiff’s claims against a government agency are ‘essentially contractual’ in nature. ‘The classification of a particular action as one which is or is not [essentially contractual] depends both on the source of the rights upon which the plaintiff bases its claim, and upon the type of relief sought (or appropriate).’” (quoting Megapulse, 672 F.2d at 968) (other internal citations omitted)); A&S Council Oil Co. v. Lader, 56 F.3d 234, 239–40 (D.C. Cir. 1995) (applying Megapulse test in determining whether a claim is one “relating to a contract” within the meaning of the CDA); Up State Fed. Credit Union v. Walker, 198 F.3d 372, 374–76 (2d Cir. 1999) (applying Megapulse in determining whether claims were contract
4 Indeed, we have gone so far as to hold that the CDA does not bar invoking other bases of jurisdiction even in the context of claims that would qualify as contract-based under the Megapulse test. See, e.g., Wright, 29 F.3d at 1429; Liberty Construction, 9 F.3d at 801–02; North Side Lumber, 753 F.2d at 1485–86. That further rule has provoked a split with the Second Circuit. See Cohen v. Postal Holdings, LLC, 873 F.3d 394, 401–02 (2d Cir. 2017) (holding that the claim at issue was a contract claim under Megapulse and that the CDA was the exclusive vehicle for relief, expressly rejecting contrary Ninth Circuit authority). Because this case does not involve a contract claim within the meaning of Megapulse, this case does not implicate that distinct split of authority.
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claims subject to the CDA); United States v. J & E Salvage Co., 55 F.3d 985, 987–88 (4th Cir. 1995) (same). Although the majority tries to distinguish these cases on their specific facts, see Opin. at 23–24, it cannot deny that these other circuit decisions explicitly apply to the CDA the Megapulse test that the majority rejects. Fifth, the majority’s holding could seriously impede the ability of plaintiffs to obtain injunctive relief against Government misconduct, even for statutory violations such as those at issue here, if the plaintiffs’ claims can be said, in some broad sense, to “relate” to a contract the plaintiff assertedly has with the Government. The majority dismisses this concern, even while acknowledging that the Federal Circuit itself expressly declined to decide in Todd whether the CFC had authority to issue injunctive relief in that case. See Opin. at 25 (citing 656 F.3d at 1311 n.3). The majority hopes that declaratory relief—which the majority concedes could not be enforced by contempt authority—would be sufficient. Id. But if not, well, then too bad, according to the majority, because “the government is free to waive its immunity only for certain forms of relief.” Id. The majority’s overbroad rule threatens to seriously thwart the critical role served by APA § 702’s waiver of sovereign immunity in cases seeking injunctive relief against the Government. See Transohio Sav. Bank v. Director, Off. of Thrift Supervision, 967 F.2d 598, 611–12 (D.C. Cir. 1992) (“[W]e are mindful of the warning that federal courts not subvert the congressional objectives underlying the enactment of § 702 of the APA by allowing the government to give an overly expansive scope to the notion of claims ‘founded upon’ a contract” (simplified)). For all of these reasons, the majority seriously errs in rejecting the Megapulse test in assessing whether the CDA
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impliedly forbids a claim for injunctive relief under § 702 of the APA. Because I would apply Megapulse in assessing the limits of the CDA, I necessarily conclude that Plaintiffs’ claims are not impliedly forbidden by the CDA. III Finally, I cannot let pass without comment an additional troubling feature of this case that the majority brushes aside. In finding that the CDA impliedly forbids invocation of the APA here, the majority holds that the DRA qualifies as a procurement contract within the meaning of the CDA. See Opin. § II(b). But the majority nonetheless declines to address the fact that the Government—while vigorously arguing for CDA preclusion—also argues that the DRA is invalid and unenforceable on the grounds that it was not signed by a “contracting” officer. The extraordinary result of the majority’s decision is that Plaintiffs’ loss of their ability to file a district court action seeking injunctive relief to enforce their statutory rights against the Government is attributable to the Government’s assertion of a contract- based defense under a contract that the Government simultaneously contends is invalid. This cannot be right. See Crewzers Fire Crew Trans., Inc. v. United States, 741 F.3d 1380, 1382 & n.3 (Fed. Cir. 2014) (holding that the plaintiff’s contract with the Government was unenforceable and therefore could not “be used to invoke” the jurisdiction of the CFC under the Tucker Act or the CDA); Ridge Runner Forestry v. Veneman, 287 F.3d 1058, 1060–61 (Fed. Cir. 2002) (holding that, because the “Tender Agreement” upon which CDA jurisdiction was predicated was not a valid
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contract, the CFC properly concluded that it lacked jurisdiction under the CDA). 5 IV For the reasons I have explained, neither the Tucker Act nor the CDA impliedly forbid invocation of the APA here. Accordingly, the district court erred in dismissing this action for lack of jurisdiction, and its judgment should be reversed. I respectfully dissent.