Lee v. United States, 15-1555C
| Decision Date | 18 January 2017 |
| Docket Number | No. 15-1555C,15-1555C |
| Parties | SEH AHN LEE, et al., Plaintiffs, v. UNITED STATES, Defendant. |
| Court | Court of Federal Claims |
Motions for reconsideration and for leave to file an amended complaint; RCFC 59(e); RCFC 15(a)
John P. Pierce, Themis PLLC, Washington, D.C., for plaintiffs. With him on the briefs and at the hearing were David L. Engelhardt and Michael Cone, Themis PLLC, Washington, D.C.
Hillary A. Stern, Senior Trial Counsel, Commercial Litigation Branch, Civil Division, United States Department of Justice, Washington, D.C., for defendant. With her at the hearing was Elizabeth Parish, Interim General Counsel, Broadcasting Board of Governors, Washington, D.C. With her on the briefs were Benjamin C. Mizer, Principal Deputy Assistant Attorney General, Civil Division, and Robert E. Kirschman, Jr., Director, and Steven J. Gillingham, Assistant Director, Commercial Litigation Branch, Civil Division, United States Department of Justice, Washington, D.C.
On August 24, 2016, the court issued a decision in this case dismissing the complaint of plaintiffs Seh Ahn Lee, Irina Ryan, Ahmad Nariman, and Mark Peach under Rules 12(b)(1) and 12(b)(6) of the Rules of the Court of Federal Claims ("RCFC"). See Lee v. United States, 127 Fed. Cl. 734 (2016). In their complaint, plaintiffs had alleged that they were retained under contracts as nonpersonal service vendors by the Broadcasting Board of Governors ("Broadcasting Board" or "Board"), an independent agency of the United States ("the government"), but throughout the performance of the contracts they acted in the capacity of personal service contractors. Plaintiffs invoked a right to monetary relief under the Back Pay Act, 5 U.S.C. § 5596, or, alternatively, for breach of an implied contract. They sought to recover the compensation they believed would be appropriate for the services they provided to the government had their contracts been properly classified as personal service contracts. Plaintiffs also alleged that they were bringing suit as representatives of a class of contractors who were similarly situated to them.
On September 22, 2016, plaintiffs filed concurrent motions for reconsideration and for leave to file a second amended complaint pursuant to RCFC 59(e) and 15(a), respectively. Pls.' Mot. for Leave to File Second Am. Compl. ( ), ECF No. 29. In their proposed second amended complaint, plaintiffs would preserve their Back Pay Act claim for purposes of appeal (Count I) and bring new claims for breach of express contract (Count II), breach of implied contract (Count III), and relief in quantum meruit (Count IV). Plaintiffs now assert that their contracts with the Broadcasting Board are void because they exceed the Board's authority to issue personal service contracts, and plaintiffs again claim that they are entitled to damages in an amount commensurate with the compensation they allegedly should have been paid as personal service contractors. Plaintiffs also allege that at times they performed personal services for the Broadcasting Board without being subject to any express contract, during which times they claim that they are entitled to damages for the fair market value of the services performed. In response, the government argues that the new claims fail to cure the jurisdictional defects identified in the court's prior opinion and also fail to state claims upon which relief could be granted.
For the reasons stated, both plaintiffs' motion for reconsideration and motion to amend are denied.
The court's prior opinion set forth the pertinent facts in detail. The Broadcasting Board is an independent agency of the United States, established in 1994 to "streamline" the government's management of its international broadcasting activities through organizations such as Voice of America. Lee, 127 Fed. Cl. at 737 (citing United States International Broadcasting Act of 1994, Pub. L. No. 103-236, §§ 301-15, 108 Stat. 382 (1994) (codified at 22 U.S.C. §§ 6201-16)). Since 1999, the Board has been an independent agency under the general oversight of the Secretary of State. Id. (citing Omnibus Consolidated and Emergency Supplemental Appropriations Act of 1999, Pub. L. No. 105-277, § 1323, 112 Stat. 2681 (1998)). Plaintiffs are "four individuals who provided services to various elements of Voice of America - an organization within the Broadcasting Board - either directly through individual purchase order vendor contracts or as independent subcontractors to staffing agencies under prime contracts with the Board." Id. Plaintiffs allege that approximately 660 potential class members served under similar contracts with the Board. Id.; see also [Proposed] Second Am. Compl. ¶ 10.
In 2013, the Department of State's Office of the Inspector General ("OIG") conducted an investigation into the Board's contracting practices. See Lee, 127 Fed. Cl. at 737-39; [Proposed] Second Am. Compl. Ex. A (Audit of the Broadcasting Board of Governors Administration and Oversight of Acquisition Functions (June 2014) ("OIG Report")), ECF No. 29-4. In this investigation, the OIG determined that the Broadcasting Board most likely exceeded its statutory authority to award personal service contracts. Lee, 127 Fed. Cl. at 738 (citing OIG Report at 15). Pursuant to the Foreign Relations Authorization Act, Fiscal Year 2003, Pub. L. No. 107-228, § 504, 116 Stat. 1350 (2002) (codified at 22 U.S.C. § 6206 note), the Board was authorized to hire up to 60 individuals under personal service contracts, but the OIG concluded that the Board likely exceeded this limit "by awarding an overwhelming majority of all service[] contracts as nonpersonal service[] contracts, though they were personal in nature." Lee, 127 Fed. Cl. at 738 (citing OIG Report at 15). The Board disagreed with the OIG's determination that the Board had exceeded its statutory authority, but it indicated that it would shift away from using nonpersonal service "purchase order vendor" contracts and towards hiring subcontractors through staffingagencies to perform the same functions as the purchase order vendor contractors. See id. at 739 (citing OIG Report at 16-17).
Following the OIG investigation and report, plaintiffs filed their original complaint on December 21, 2015 and an amended complaint on March 7, 2016. In the amended complaint, plaintiffs alleged "that their contracts with the Broadcasting Board, as well as those of other potential class members, fall within the type of contracts that, according to the OIG's analysis, should have been classified as personal service contracts." Lee, 127 Fed. Cl. at 739. They therefore claimed an entitlement to higher salaries and greater benefits commensurate with the amounts paid to contractors performing under personal service contracts, and brought claims to recover those amounts under the Back Pay Act and under a theory of breach of implied contract. Id.
In its prior opinion, the court dismissed the Back Pay Act claim for lack of jurisdiction, determining that plaintiffs did not fall within the class of individuals covered by the Back Pay Act because they were never appointed to the civil service. See Lee, 127 Fed. Cl. at 740-43. Plaintiffs' assertion that they "should have been" appointed because they were purportedly performing personal services was deemed insufficient to create jurisdiction under the Back Pay Act. See id. The court held that plaintiffs were serving under express contracts at the relevant time, so plaintiffs could not "plausibly allege[] that they were federal employees during the relevant time period" because work under a contract and employment by appointment are "mutually exclusive." Id. at 742-43 (quoting Calvin v. United States, 63 Fed. Cl. 468, 472 (2005), in turn citing Collier v. United States, 56 Fed. Cl. 354, 356-57 (2003), aff'd, 379 F.3d 1330 (Fed. Cir. 2004)).
The court also dismissed plaintiffs' breach of implied contract claim for lack of jurisdiction and for failure to state a claim. As to lack of jurisdiction, the court held that there was "no basis" on which to find an implied contract between plaintiffs and the Broadcasting Board for services and compensation beyond the scope of their express contracts. Lee, 127 Fed. Cl. at 745 (citing Atlas Corp. v. United States, 895 F.2d 745, 754-56 (Fed. Cir. 1990); Algonac Mfg. Co. v. United States, 428 F.2d 1241, 1255 (Ct. Cl. 1970)). Further, the court held that it lacked jurisdiction to consider plaintiffs' quantum meruit theory, through which plaintiffs argued that the government received the benefit of plaintiffs' performance of personal services without adequately compensating them. See id. at 745-46. This court generally lacks jurisdiction over quantum meruit or implied-in-law contract claims, except in circumstances where "a contractor provided goods or services to the government in good faith under an express contract, but that contract was later rescinded for invalidity." Id. at 746 (citing United States v. Amdahl Corp., 786 F.2d 387, 393 (Fed. Cir. 1986)). The court determined that the exception identified in Amdahl did not apply to plaintiffs' quantum meruit claim because plaintiffs did not allege that they were paid less than the rate specified in the express contracts, and the express contracts had not been found to be invalid. Id. at 746. Therefore, the court lacked jurisdiction over the quantum meruit claim. Finally, the court dismissed the claim for breach of implied contract for failure to state a claim upon which relief could be granted. Construing the claim to allege that certain compensation terms (i.e., for personal-services compensation) were omitted from the express contracts, the court found that plaintiffs had not plausibly alleged that such terms were "essential" to their express contracts such that the court could properly supplant the express compensation terms in their contracts with terms reflecting plaintiffs' "preferred" compensation...
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