IFONE NEDA Internet Serv. v. Army & Air Force Exch. Serv.
| Decision Date | 01 November 2022 |
| Docket Number | 4:21-cv-330 |
| Court | U.S. District Court — Southern District of Texas |
| Parties | IFONE NEDA INTERNET SERVICE, et al., Plaintiffs, v. ARMY & AIR FORCE EXCHANGE SERVICE, et al., Defendants. |
IFONE NEDA INTERNET SERVICE, et al., Plaintiffs,
v.
ARMY & AIR FORCE EXCHANGE SERVICE, et al., Defendants.
No. 4:21-cv-330
United States District Court, S.D. Texas, Houston Division
November 1, 2022
MEMORANDUM AND ORDER
Dena Hanovice Palermo United States Magistrate Judge
Pending before the Court are Defendants Army & Air Force Exchange Service (“AAFES”), Department of the Army (“Army”), and Department of Defense's (“DOD”) (collectively, “Agency Defendants”) motion to dismiss Plaintiffs' Second Amended Complaint, ECF No. 70, as well as individuals Matthew T. Adamczyk Lt. Col, Kristin Mazur, James S. Gordon, Jake Horn, J. Scott Pine, Daniel S. Roney, and Does 1-100's (“Individual Defendants”) motion to dismiss Plaintiffs' Second Amended Complaint, ECF No. 89, (the Agency Defendants and Individual Defendants are referred to collectively as “Defendants”).[1]
Plaintiffs IFONE NEDA Internet Service, Inc., IFONE, Inc., Anthony Florian, and Catheren Decosto Mariscal (collectively, “IFONE”) bring constitutional and state causes of action against Defendants. IFONE's claims stem from the termination of a contract permitting IFONE to provide internet service to U.S. troops and contractors at Kandahar Airfield in Afghanistan, as well as Defendants barring Florian and Mariscal from Kandahar Airfield. Pls.' Second Am. Compl., ECF No. 43 ¶¶19, 26, 49. IFONE alleges that Defendants' actions violated the First and Fifth Amendments to the United States Constitution and gave rise to Texas state law causes of action against the Individual Defendants for civil conspiracy, conversion, tortious interference with contracts, and tortious interference with prospective relations.
The Court held a hearing on Defendants' motions to dismiss and counsel presented their arguments. Based on a thorough review of the record, the briefing, the argument of counsel, and the applicable law, the Court determines it lacks subject matter jurisdiction over IFONE's claims. First, the Court of Federal Claims has exclusive jurisdiction over IFONE's Fifth Amendment taking claim against Agency Defendants. Second, IFONE's Administrative Procedure Act claims based on the First and Fifth Amendment and various federal regulations are moot because the
Court cannot grant IFONE the relief requested. Third, pursuant to the Westfall Act,[2]the United States of America (“USA”) is substituted for Individual Defendants as defendant in IFONE's Texas state law claims. Accordingly, because the United States does not waive sovereign immunity over state law claims, the Court lacks subject matter jurisdiction over these claims. Finally, IFONE's constitutional claims against the Individual Defendants present a new Bivens[3] context and the Court declines to extend Bivens to recognize it. Therefore, the Court does not have subject matter jurisdiction over those claims.
IFONE has raised a variety of arguments aimed at convincing the Court that it has subject matter jurisdiction. Despite these myriad and sometimes confusing arguments, however, the simple fact is that the Court of Federal Claims has exclusive jurisdiction over the claims asserted. At its heart, this is a suit against the Government for money damages. Since U.S. military forces no longer control Kandahar Airfield, the Court cannot reinstate IFONE's services contract. The only potential relief available is money damages. Because Plaintiffs claim $3.4 million in damages, the Court cannot grant IFONE that relief either because the claim is above
the statutory jurisdictional limit of $10,000 for money damages claims against the United States Government in district court. Congress has invested the Court of Federal Claims with sole jurisdiction over claims against the United States for money damages above $10,000. Therefore, this Court has no basis for subject matter jurisdiction over any of Plaintiffs constitutional or statutory claims against the Agency Defendants.
Accordingly, IFONE's Second Amended Complaint is DISMISSED.
I. BACKGROUND
On September 22, 2014, IFONE, Inc. and AAFES executed a contract for internet services (“contract”). Contract No. ATD-14-008, ECF No. 70-2 at 120. Under the contract, IFONE, Inc. was permitted to offer internet access to individual living quarters in-room, Wi-Fi hotspots, and any locations AAFES designated. Id. at 121. The contract is a concession contract, allowing authorized customers (not AAFES) to procure services from IFONE, Inc. Gordon Aff., ECF No. 70-2, at 3 ¶ 4. The contract contains a termination clause and a business risk clause. The termination clause provided that “all other[4] concession contracts may be terminated in whole or in part by either party upon a minimum of thirty (30) days' notice, in writing to the other party.” Contract No. ATD-14-008, ECF No. 70-2 at 34.
The business risk clause stated:
The contractor understands and agrees that all business risk remains with the contractor. Business risk includes, but is not limited to, contractor's investment in equipment and supplies, permit and license fees, employee wages, and lost sales and income resulting from all operational changes or contract termination. The military sites envisioned under this contract are part of military operations. As such, the military will make appropriate decisions in the prosecution of the military operations with limited or no consideration of contract activities. Military decisions about the necessity, location, and duration of any services may change over time and are not controlled by the Exchange. It is expressly understood and agreed that neither the Exchange nor any other agency or instrumentality of the United States is or will be liable to concessionaire for costs of concessionaire's investment in equipment and infrastructure for this contract.
Id. at 122. The contract also contains a disputes clause requiring the contractor to submit claims to the contracting officer for a written decision. Id. at 35. That decision can be appealed within 30 calendar days to the Armed Services Board of Contract Appeals. Id. The contract was amended seven times. Gordon Aff., ECF No. 70-2, at 5 ¶ 6.
On January 15, 2021, acting Defense Secretary Christopher Miller announced that U.S. force levels in Afghanistan had been reduced to 2,500.[5] This reduction was part of the Department of Defense's overall plan to remove all troops from
Afghanistan no later than May 2021.[6]
On January 26, 2021, AAEFS terminated the contract and ordered IFONE Inc. to remove their equipment from Kandahar Airfield within thirty days. ECF No. 43 ¶ 26. Plaintiffs allege that AAEFS's stated reason for the termination was that Kandahar Airfield was reducing its boundaries and IFONE Inc.'s equipment was located outside of the new boundaries. Id. ¶¶ 25-26. Plaintiffs further allege that, on February 27, 2021, Mariscal and Florian were barred from Kandahar Airfield for taking pictures of operations there. Id. ¶ 48. IFONE's remaining personnel departed Kandahar Airfield on March 11, 2021. Id. ¶ 46.
On August 30, 2021, Secretary of Defense Lloyd Austin III announced that all U.S. forces had been withdrawn from Afghanistan.[7]
II. THE LEGAL STANDARD FOR MOTIONS TO DISMISS.
Article III requires a federal court to “satisfy itself of its jurisdiction over the subject matter before it considers the merits of a case.” Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 583 (1999) (citing Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 87 (1998)). “A case is properly dismissed for lack of subject matter jurisdiction when the court lacks the statutory or constitutional power to adjudicate
the case.” Krim v. PCOrder.com, 402 F.3d 489, 494 (5th Cir. 2005) (quoting Home Builders Ass'n of Miss., Inc. v. City of Madison, 143 F.3d 1006, 1010 (5th Cir. 1998)).
The burden of proof for a 12(b)(1) motion to dismiss is on the party asserting jurisdiction, who must prove by a preponderance of the evidence that the court has jurisdiction based on the complaint and evidence. Gilbert v. Donahoe, 751 F.3d 303, 307 (5th Cir. 2014). A court can find that subject matter jurisdiction is lacking based on “(1) the complaint alone; (2) the complaint supplemented by undisputed facts evidenced in the record; or (3) the complaint supplemented by undisputed facts plus the court's resolution of disputed facts.” Ballew v. Cont'l Airlines, Inc., 668 F.3d 777, 781 (5th Cir. 2012). In ruling on a Rule 12(b)(1) motion, courts must “accept all factual allegations in the plaintiff's complaint as true.” Vof Den Norske Stats Oljeselskap As v. HeereMac, 241 F.3d 420, 424 (5th Cir. 2001). Nevertheless, “a motion to dismiss for lack of subject matter jurisdiction should be granted only if it appears certain that the plaintiff cannot prove any set of facts in support of his claim that would entitle plaintiff to relief.” Id. (quoting Ramming v. United States, 281 F.3d 158, 161 (5th Cir. 2001)).
III. THE COURT LACKS SUBJECT MATTER JURISDICTION OVER IFONE'S CLAIMS.
IFONE asserts four causes of action. First, IFONE asserts that the Government's decision to terminate its contract and, by extension, its subcontracts,
violated IFONE's rights under the Fifth Amendment of the United States Constitution (“Takings Claim”). ECF No. 43 ¶¶ 51-56. IFONE seeks $3,400,000 in damages and declaratory relief from Agency Defendants for its Takings Claim. Id. ¶¶ 83, 85. Second, invoking the Administrative Procedures Act (the “APA”),[8]IFONE alleges that the decision to retract its permit authorizing it to provide services at Kandahar Airfield violated various laws and regulations, including the First and Fifth Amendments to the United States Constitution, the Competition in Contracting Act, FAR Subparts 6.3, 44.2 and 9.4, COMKAF's own regulations (“APA claim”). Id. ¶¶ 57-64, 85-91. For its APA claim, IFONE seeks an order compelling Agency Defendants to vacate their...
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