B & B Trucking, Inc. v. U.S. Postal Service

• Decision Date: 28 April 2005
• Docket Number: No. 02-1562.,02-1562.
• Citation: 406 F.3d 766
• Parties: B & B TRUCKING, INC.; Causley Trucking, Inc.; Cliff Blackburn; Fedrizzi, Inc.; Foreman Bros., Inc.; George E. Campbell and Sons, Inc.; L.R. Vincent Truck and Service, Inc.; M.C. Eipperle, Inc.; Massman Trucking, Inc.; P-D Trucking, Inc.; Robert M. Neff, Inc.; Roth Trucking, Inc.; Royster Enterprises, Inc.; Sodrel Truck Lines, Inc.; Taylor Postal Contracting, Inc.; National Star Route Mail Contractors Association; B & B Industries, Inc.; B & T Mail Services, Inc.; Sheehy Mail Contractors, Inc., Plaintiffs-Appellants, v. UNITED STATES POSTAL SERVICE, Defendant-Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 766

406 F.3d 766

B & B TRUCKING, INC.; Causley Trucking, Inc.; Cliff Blackburn; Fedrizzi, Inc.; Foreman Bros., Inc.; George E. Campbell and Sons, Inc.; L.R. Vincent Truck and Service, Inc.; M.C. Eipperle, Inc.; Massman Trucking, Inc.; P-D Trucking, Inc.; Robert M. Neff, Inc.; Roth Trucking, Inc.; Royster Enterprises, Inc.; Sodrel Truck Lines, Inc.; Taylor Postal Contracting, Inc.; National Star Route Mail Contractors Association; B & B Industries, Inc.; B & T Mail Services, Inc.; Sheehy Mail Contractors, Inc., Plaintiffs-Appellants, v. UNITED STATES POSTAL SERVICE, Defendant-Appellee.

No. 02-1562.

United States Court of Appeals, Sixth Circuit.

Argued: December 8, 2004.

Decided and Filed: April 28, 2005.

ARGUED: Sharon Ambrosia-Walt, Houger & Walt, Seattle, Washington, for Appellants. Brian M. Simkin, United States Department of Justice, Washington, D.C., for Appellee. ON BRIEF: Sharon Ambrosia-Walt, Houger & Walt, Seattle, Washington, for Appellants. Brian M. Simkin, David M. Cohen, United States Department of Justice, Washington, D.C., for Appellee.

Before: BOGGS, Chief Judge; MARTIN, BATCHELDER, DAUGHTREY, MOORE, COLE, CLAY, GILMAN, GIBBONS, ROGERS, SUTTON, and COOK, Circuit Judges.

COOK, J., delivered the opinion of the court, in which BOGGS, C. J., BATCHELDER, GILMAN, GIBBONS, ROGERS, and SUTTON, JJ., joined.

COLE, J. (pp. 770-73), delivered a separate concurring opinion, in which DAUGHTREY, J., joined.

BOYCE F. MARTIN, Jr., J. (pp. 773-78), delivered a separate dissenting opinion, in which MOORE and CLAY, JJ., joined.

OPINION

COOK, Circuit Judge.

Plaintiffs (collectively "truckers") appeal the district court's order dismissing their claims for lack of subject matter jurisdiction. At issue is whether the truckers' claims are essentially contractual and therefore must be heard in the Court of Federal Claims under the Contract Disputes Act. We hold that the claims are essentially contractual and affirm the district court's dismissal.

I. BACKGROUND AND PROCEDURAL HISTORY

Plaintiff truckers are independent contractors who transport mail for the United States Postal Service ("USPS"). Under their contracts, USPS pays the truckers based in part upon their annual estimates of the cost and amount of fuel they will use. If fuel costs increase, their contracts entitle them to an adjustment in the contract price.

In 2000, the USPS introduced a new fuel-purchasing program. Under the plan, USPS uses its buying power to negotiate fuel prices on behalf of mail transporters such as the Plaintiffs. The truckers then buy fuel directly from the fuel suppliers at the USPS-negotiated wholesale prices. USPS implemented this plan by adding "Amendment 3" to its new and renewal mail transportation contracts. That amendment requires that the truckers purchase fuel from USPS-designated suppliers, either at USPS-designated facilities or delivered to the truckers' own fueling facilities.

In their First Amended Complaint below, the truckers claimed that, by requiring them to participate in the Amendment 3 fuel plan, USPS breached its contracts with the truckers, breached an implied covenant of good faith and fair dealing, violated the truckers' constitutional liberty and property rights, and violated the Separation of Powers Clauses of the United States Constitution by engaging in "arbitrary agency action without legal authority."

USPS moved to dismiss the First Amended Complaint on lack-of-subject-matter-jurisdiction grounds. The district court responded by deciding that the truckers failed to adequately plead their claims, but gave them thirty days to amend their complaint. The truckers' Second Amended Complaint dropped the breach of contract and breach of implied covenant claims. It alleged only that the Plan violated the truckers' Fifth Amendment liberty and property rights, violated postal regulations, and constituted "arbitrary agency action without statutory authority."

The district court dismissed the case, holding that because the truckers' constitutional and regulatory claims were essentially contractual, jurisdiction was properly in the Court of Federal Claims, not the United States District Court.

II. ANALYSIS

A. The Jurisdictional Test

Under the Contract Disputes Act ("CDA"), 41 U.S.C. §§ 601-613, the Court of Federal Claims has exclusive jurisdiction for judicial review over any dispute relating to a contract for goods and services between an executive agency of the United States government and an independent contractor. Id. § 609(a)(1). The CDA bars district court jurisdiction if the court determines that a plaintiff's claims against a government agency are "essentially contractual" in nature. RMI Titanium Co. v. Westinghouse Elec. Corp., 78 F.3d 1125, 1136 (6th Cir.1996). "`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).'" Id. (quoting Megapulse, Inc. v. Lewis, 672 F.2d 959, 968 (D.C.Cir. 1982)). "The plaintiff's title or characterization of its claims is not controlling. `[A] plaintiff may not avoid the jurisdictional bar of the CDA merely by alleging violations of regulatory or statutory provisions.'" Id. (alteration in original) (quoting Ingersoll-Rand Co. v. United States, 780 F.2d 74, 77 (D.C.Cir.1985)).

Thus if, as USPS argues, the truckers' claims are essentially contractual, then the Court of Federal Claims has exclusive subject matter jurisdiction. But if, as the truckers contend, their claims are genuinely based on constitutional and statutory rights, then the district court has subject matter jurisdiction. We agree with the district court that all of the claims are essentially contractual, and therefore affirm its dismissal of the case.

B. The Fifth Amendment Claims

The truckers argue that by interfering with their right to control their fuel supply, USPS deprived them of their property without due process or just compensation. But whether the truckers have a right to control their fuel supply depends upon whether their contracts with USPS afford such a right—in particular, whether Amendment 3 validly requires the truckers to comply with the fuel plan. The truckers, in effect, seek specific performance of the contracts as they stood before any amendment. Their objection to the contract amendments is the essence of their claims; both the source of the rights upon which the Plaintiffs base their claims (contracts with USPS to transport mail), and the type of relief appropriate (reformation of the contracts to bar enforcement of Amendment 3) manifest the claims' contractual nature. The district court appropriately determined that the truckers' characterization of their claims as non-contractual was an effort to obscure the claims' true nature.

Additionally, if the truckers contend correctly that the contracts do not validly restrict their right to control their fuel supply, and USPS nevertheless abridged that right, then the proper recourse would be a breach-of-contract claim, not a takings claim. See Hughes Communications Galaxy, Inc. v. United States, 271 F.3d 1060, 1070 (Fed.Cir.2001) ("[T]he concept of a taking as a compensable claim theory has limited application to the relative rights of party litigants when those rights have been voluntarily created by contract. In such instances, interference with such contractual rights generally gives rise to a breach claim not a taking claim." (citations and internal punctuation omitted)).

C. The Regulatory Claims

The truckers further argue that USPS lacked authority to develop the fuel plan because USPS regulations prohibit USPS from interfering with the operation of its contractors' businesses, and that in the absence of regulatory authority, USPS's insistence that the truckers comply with the fuel plan violates their right to due process. Specifically, the truckers cite two regulations that they contend render the fuel plan invalid: USPS's Purchasing Manual (stating that "[t]he objective of any purchasing action is to meet contract objectives, not control the supplier's business") and its Management Instructions (stating that "[p]urchases of fuel may be made from any source at the option of the fuel contractor").

This argument, however, conflicts with the truckers' position that the amendments to their contracts do not obligate them to purchase fuel from the designated suppliers: the amendments cannot be both contractually invalid (as the truckers contend in advancing their Fifth Amendment claim, arguing that the amendments do not constitute consent to the fuel plan) and contractually valid (as the truckers contend when arguing that the amendments are inconsistent with USPS regulations). If the amendments are contractually invalid and therefore do not compel the truckers to comply with the fuel plan, then the amendments cannot also violate USPS regulations by compelling the truckers to comply with the fuel plan.

This inconsistency, although perfectly acceptable as an alternative-pleading strategy, nevertheless highlights the contractual nature of the truckers' claims, because their contracts with USPS are at the core of both sides of the truckers' argument. Regardless of whether the truckers argue that the new fuel-purchase requirements violate the contracts, or that the contracts violate USPS regulations, their claims are contractual. That the fuel plan might violate USPS regulations does not transform a claim into one that is regulatory and not contractual. See Ingersoll-Rand Co., 780 F.2d at 78 ("The question presented by the complaint could be phrased as whether the contract forbids termination under these conditions. That the termination also arguably violates certain other regulations does not transform the action into one based solely on those regulations.") Otherwise, because every government agency is bound to follow some set of regulations,...