Orff v. U.S., No. 00-16922.

• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)
• Writing for the Court: Clifton
• Citation: 358 F.3d 1137
• Parties: Francis A. ORFF; Brooks Farms II; Brooks Farms IV; Brooks Farms V; G.S. Farms; Five-D Westside Farms, Inc.; R & S Farming; Cardella Ranch; Gramis Family Farms II; Edwin R. O'Neill, Bro Partnership; BTO Partnership; EJC Partnership; ERO Partnership; JEO Partnership; SLO Partnership; TBO Partnership; C.S. Stefanopoulos Trust; Elena Stefanopoulos Trust; Estate of Helen Stefanopoulos; D.D. Stefanopoulos Trust; Pagona Stefanopoulos; Sumner Peck Ranch, Inc.; Y. Stephen Pilibos; Pilibos Children's Trust, Plaintiffs-Appellants, Westlands Water District, Plaintiff-Intervenor, v. UNITED STATES of America; United States Department of the Interior; Bureau of Reclamation; Fish and Wildlife Service; United States Department of Commerce; National Marine Fisheries Service; Ronald H. Brown, Secretary of Commerce; Bruce Babbitt, Secretary of the Interior, Defendants-Appellees, Natural Resources Defense Council; United Anglers of California; Save San Francisco Bay Association; California Waterfowl Association; Sierra Club; Bay Institute of San Francisco; Environmental Defense Fund; California Striped Bass Association; Trout Unlimited of California; Sacramento River Council; California Sportfishing Protection Alliance; Pacific Coast Federation of Fisherman's Associations; The Wilderness Society, Defendants-Intervenors-Appellees.
• Docket Number: No. 00-16922.
• Decision Date: 18 February 2004

358 F.3d 1137 Francis A. ORFF; Brooks Farms II; Brooks Farms IV; Brooks Farms V; G.S. Farms; Five-D Westside Farms, Inc.; R & S Farming; Cardella Ranch; Gramis Family Farms II; Edwin R. O'Neill, Bro Partnership; BTO Partnership; EJC Partnership; ERO Partnership; JEO Partnership; SLO Partnership; TBO Partnership; C.S. Stefanopoulos Trust; Elena Stefanopoulos Trust; Estate of Helen Stefanopoulos; D.D. Stefanopoulos Trust;

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Pagona Stefanopoulos; Sumner Peck Ranch, Inc.; Y. Stephen Pilibos; Pilibos Children's Trust, Plaintiffs-Appellants,
Westlands Water District, Plaintiff-Intervenor,
v.
UNITED STATES of America; United States Department of the Interior; Bureau of Reclamation; Fish and Wildlife Service; United States Department of Commerce; National Marine Fisheries Service; Ronald H. Brown, Secretary of Commerce; Bruce Babbitt, Secretary of the Interior, Defendants-Appellees,
Natural Resources Defense Council; United Anglers of California; Save San Francisco Bay Association; California Waterfowl Association; Sierra Club; Bay Institute of San Francisco; Environmental Defense Fund; California Striped Bass Association; Trout Unlimited of California; Sacramento River Council; California Sportfishing Protection Alliance; Pacific Coast Federation of Fisherman's Associations; The Wilderness Society, Defendants-Intervenors-Appellees. No. 00-16922. United States Court of Appeals, Ninth Circuit. Argued and Submitted February 11, 2003. Filed February 18, 2004.

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William M. Smiland (argued) and Theodore A. Chester, Jr., Smiland & Khachigian, Los Angeles, CA, for plaintiffs-appellants Francis A. Orff, et al.

Janet K. Goldsmith, William T. Chisum and J. Port Telles, Kronick, Moskovitz, Tiedemann & Girard, Sacramento, CA; and Stuart L. Somach (argued), Somach Simmons & Dunn, Sacramento, CA, for plaintiff-intervenor-appellant Westlands Water District.

Maria A. Iizuka and Todd S. Aagaard (argued), Department of Justice, Washington, D.C., for defendants-appellees United States of America, et al.

Hamilton Candee and Michael E. Wall (argued), Natural Resources Defense Council, San Francisco, CA; and Philip F. Atkins-Pattenson, Sheppard, Mullin, Richter & Hampton, LLP, San Francisco, CA, for defendants-intervenors-appellees Natural Resources Defense Council, et al.

Appeal from the United States District Court for the Eastern District of California, Oliver W. Wanger, District Judge, Presiding. D.C. No. CV-93-05327-OWW.

Before: NOONAN, THOMAS and RICHARD R. CLIFTON, Circuit Judges.

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Opinion by Judge Clifton.

OPINION

CLIFTON, Circuit Judge:

This appeal poses the issue of whether sovereign immunity bars individual landowners and water users (collectively, "the farmers") of the Westlands Water District ("Westlands") from suing the United States for allegedly having violated a contract the United States entered into with Westlands for the delivery of water. The district court originally concluded that sovereign immunity had been waived and proceeded to rule on the merits of the farmers' claims. The court then changed its mind on reconsideration, ruling that sovereign immunity barred the farmers' claims. We affirm that ruling. We agree with the district court that sovereign immunity deprived it of jurisdiction to hear the farmers' claims. Because the district court lacked jurisdiction to entertain those claims, we vacate the district court's rulings on the merits of those claims.

I. BACKGROUND

This is another in a long line of cases involving the Central Valley Project (the "CVP"), the nation's largest federal water management project. Westlands receives water from the San Luis Unit of the CVP pursuant to a 1963 contract (the "1963 contract") with the United States.¹ The validity and enforceability of the 1963 contract was upheld in 1986 pursuant to a stipulated judgment in Stipulated Judgment, Barcellos & Wolfsen, Inc. v. Westlands Water Dist., (E.D.Cal.) (No. CV 79-106-EDP) ("Barcellos"), which resolved litigation that arose out of the government's assertion in 1978 that the 1963 contract was invalid. The Barcellos judgment required the government to perform the 1963 contract.

In 1990, the Sacramento River winter-run chinook salmon was listed as a threatened species under the Endangered Species Act (the "ESA"), 16 U.S.C. §§ 1531-1545. In 1993, the delta smelt of the Sacramento-San Joaquin Delta was also designated as a threatened species. The National Marine Fisheries Service determined that both species were jeopardized by the continued operation of the CVP. In response, the Bureau of Reclamation (the "Bureau") reduced Westlands' allocation of CVP water for 1993 to fifty percent of its contractual supply. The Bureau made this reduction pursuant to the ESA, which required federal agencies to avoid jeopardizing threatened species, and pursuant to the Central Valley Project Improvement Act (the "CVPIA"), which sought to protect the requirements of fish and wildlife in the use of CVP water. See generally O'Neill v. United States, 50 F.3d 677, 680-82 (9th Cir.1995) (discussing the aforementioned events more thoroughly).

Landowners and water users within the Westlands district then brought suit in district court, claiming that the reduction violated the 1963 contract as upheld by Barcellos. The district court held that Article 11 of the 1963 contract freed the government from liability for the reduction. Barcellos & Wolfsen v. Westlands Water Dist., 849 F.Supp. 717, 721-23 (E.D.Cal.1993) ("Barcellos III"). We affirmed, holding that Article 11(a) of the Contract "unambiguously absolves the government from liability for its failure to deliver the full contractual amount of water where there is a shortage caused by statutory mandate." O'Neill, 50 F.3d at 689. We noted, however, that the Westlands members could challenge the merits of the Bureau's compliance with the ESA and CVPIA in a separate case. Id.

Westlands instituted the present action in May 1993. The Natural Resources Defense Council ("NRDC") and the farmers

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subsequently intervened. In 1995, Westlands dismissed its complaint without prejudice. The farmers remained as plaintiffs and filed a second amended complaint.

On June 5, 1998, the district court filed an order that wiped out most of the farmers' claims. The court dismissed the statutory claims for lack of subject matter jurisdiction pursuant to the Tucker Act, although it noted that the farmers may be able to bring those claims in the Court of Federal Claims. The court rejected the farmers' contention that the reclamation statutes constituted contracts and dismissed those claims for lack of subject matter jurisdiction.

That left remaining: (1) the farmers' claim that the reduction violated appropriative water rights; (2) the farmers' claim that the reduction violated trust law; (3) the farmers' claim that certain CVPIA surcharges violated the 1963 contract and the Constitution; and (4) the farmers' claim that the reduction was in breach of the 1963 contract. With regard to the first two claims, the farmers asserted that the 1963 contract incorporated appropriative water rights and trust obligations. The farmers argued that all four of their remaining claims therefore arose under the 1963 contract, to which the government's waiver of sovereign immunity under 43 U.S.C. § 390uu allegedly applied. The court agreed with the farmers that it had jurisdiction to consider these claims because the farmers were "a contracting entity" under § 390uu. But the court ruled against the farmers on the merits of the first three claims, granting summary judgment for the government. The farmers managed to keep their case alive when the court ruled that they had raised triable issues of fact with regard to the fourth claim.

Those issues would never be tried, however. On April 12, 2000, the court altered its ruling on sovereign immunity pursuant to a motion for reconsideration by the government. The court ruled that, in light of our decision in Klamath Water Users Protective Ass'n v. Patterson, 204 F.3d 1206 (9th Cir.1999), the farmers were only incidental, not intended, third-party beneficiaries of the 1963 contract. As such, they were not "a contracting entity" under § 390uu toward whom the government had waived sovereign immunity. Finding no other basis for a waiver of sovereign immunity, the court entered final judgment for the government on August 1, 2000.

The farmers timely appealed. Though it had previously dismissed its claims as a plaintiff, Westlands returned to the litigation as an intervenor, out of concern that its rights could be affected. Both Westlands and the NRDC filed briefs in this appeal as intervenors.

II. SOVEREIGN IMMUNITY BARS THE FARMERS' SUIT

The government argues that the farmers' claims are barred by sovereign immunity. We review issues of sovereign immunity and subject matter jurisdiction de novo. Clinton v. Babbitt, 180 F.3d 1081, 1086 (9th Cir.1999). "It is well settled that the United States is a sovereign, and, as such, is immune from suit unless it has expressly waived such immunity and consented to be sued." Gilbert v. DaGrossa, 756 F.2d 1455, 1458 (9th Cir.1985). We strictly construe in favor of the government the scope of any waiver of sovereign immunity. Dep't of the Army v. Blue Fox, Inc., 525 U.S. 255, 261, 119 S.Ct. 687, 142 L.Ed.2d 718 (1999). Any claim for which sovereign immunity has not been waived must be dismissed for lack of jurisdiction. Gilbert, 756 F.2d at 1458.

As a preliminary matter, we reject the farmers' claim that the government's sovereign immunity defense is barred by issue and claim preclusion pursuant to the decision in Barcellos & Wolfsen,

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Inc. v. Westlands Water Dist., 491 F.Supp. 263 (E.D.Cal.1980) ("Barcellos I"). For issue preclusion to apply, "the issues litigated must not be `merely similar,' but must be `identical.'" Central Delta Water Agency v. United States, 306...