Southeast Kansas Community Action Program Inc. v. Secretary of Agriculture of U.S., 91-3088

• Decision Date: 22 June 1992
• Docket Number: No. 91-3088,91-3088
• Parties: SOUTHEAST KANSAS COMMUNITY ACTION PROGRAM INCORPORATED, Plaintiff-Appellant, v. SECRETARY OF AGRICULTURE OF THE UNITED STATES, Richard E. Lyng, in his office capacity; Secretary of the Kansas Department of Health and Environment, Stanley C. Grant, in his office capacity; Agents and Employees, and those working in concert with them, Defendants-Appellees.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1452

967 F.2d 1452

SOUTHEAST KANSAS COMMUNITY ACTION PROGRAM INCORPORATED, Plaintiff-Appellant, v. SECRETARY OF AGRICULTURE OF THE UNITED STATES, Richard E.

Lyng, in his office capacity; Secretary of the Kansas

Department of Health and Environment, Stanley C. Grant, in

his office capacity; Agents and Employees, and those

working in concert with them, Defendants-Appellees.

No. 91-3088.

United States Court of Appeals, Tenth Circuit.

June 22, 1992.

William E. Metcalf, Metcalf & Justus, Topeka, Kan., for plaintiff-appellant.

Lee Thompson, U.S. Atty., and Stephen K. Lester, Asst. U.S. Atty., Wichita, Kan., for defendant-appellee Secretary of Agriculture.

Marvin G. Stottlemire, Kansas Dept. of Health and Environment, Topeka, Kan., for defendant-appellee Stanley C. Grant.

Before SEYMOUR and ANDERSON, Circuit Judges, and SAM, ^* District Judge.

STEPHEN H. ANDERSON, Circuit Judge.

Plaintiff-appellant Southeast Kansas Community Action Program (SEK-CAP) brought this action against the State of Kansas and the Secretary of Agriculture alleging property and liberty interest deprivations resulting from Defendants' failure to renew its contract to administer a federal child nutrition program. ¹ The district court dismissed the complaint on a motion filed pursuant to Fed.R.Civ.P. 12(b)(6). Southeast Kan. Community Action Program, Inc. v. Lyng, 758 F.Supp. 1430, 1436 (D.Kan.1991). We affirm.

I.

SEK-CAP is a nonprofit corporation dedicated to implementing certain state and federal programs designed to help the poor and needy. It brought this action after the Kansas Department of Health and Environment (KDHE) failed to renew its contract to administer the Supplemental Food Program for Women, Infants and Children (WIC), which is part of the federal Child Nutrition Act. See 42 U.S.C. §§ 1771-1789; Alexander v. Polk, 750 F.2d 250, 253-55 (3d Cir.1984) (describing WIC program).

The purpose of the WIC program is to provide food and nutrition education to women, infants, and children "at special risk with respect to their physical and mental health." 42 U.S.C. § 1786(a). Although administered by state agencies, the program is federally funded. See id. § 1786(c)(1); see also 42 U.S.C. § 1786(g)(1) (outlining appropriations). The federal statute provides guidelines for the administration of the program, but allows state agencies to select the local organizations responsible for providing benefits. See 7 C.F.R. § 246.5 (1991) (outlining procedures for selection of local agencies).

KDHE first chose SEK-CAP to operate the WIC program in 1980. The most recent contract between SEK-CAP and KDHE ran from July 1, 1988, through September 30, 1988. It included a clause that allowed either party to terminate the agreement upon sixty days' notice. On July 28, 1988, KDHE drafted a letter informing SEK-CAP that the contract to administer the WIC program would not be renewed. SEK-CAP was informed that the state planned to open the bidding process to other agencies. As a consequence, although SEK-CAP was allowed to bid on the WIC program, other operators were given the same chance. ²

In its complaint, SEK-CAP alleges that the nonrenewal decision was based on findings made in a KDHE monitoring report published in 1988. In their audit, the two authors of the report found numerous problems in the implementation of the program. The state identified problems in financial management, clinic operations, food delivery and chart review procedures. The report concluded, "[w]e are greatly concerned about the quality of the WIC program as administered by SEK-CAP. There are very clear and serious deficiencies in the provision [sic] of the WIC program." Appellant's App. at 68. Information concerning this report was available to the press through the Kansas Open Records Act. The record contains two articles from local newspapers referencing the audit. See id. at 80, 169.

SEK-CAP alleges that publication of the report, and the accompanying nonrenewal, deprived it of property and liberty interests without due process of law. Further, the corporation maintains that the Child Nutrition Act requires it be granted a hearing on the nonrenewal. Finally, SEK-CAP challenges the regulations which the Secretary of Agriculture implemented to govern the program.

II.

As a threshold matter, we must consider whether this court has subject matter jurisdiction to consider the claims which SEK-CAP asserts against the federal defendant. See Tuck v. United Servs. Auto Ass'n, 859 F.2d 842, 844 (10th Cir.1988) (appellate court may examine jurisdiction sua sponte), cert. denied, 489 U.S. 1080, 109 S.Ct. 1534, 103 L.Ed.2d 839 (1989). After this appeal was filed, the court ordered the parties to submit supplemental briefs addressing whether the Claims Court has exclusive jurisdiction to consider the issues presented because SEK-CAP has requested relief which, if granted, would deplete the federal treasury. As a corollary, we must also consider whether the requested relief takes this suit outside the waiver of immunity found in 5 U.S.C. § 702. We address these issues below.

The Tucker Act provides that the United States Claims Court has exclusive jurisdiction to render judgment upon any claim against the United States exceeding $10,000 "founded either upon the Constitution, or any Act of Congress or any regulation of an executive department, or upon any express or implied contract with the United States or for liquidated or unliquidated damages in cases not sounding in tort." Exclusive jurisdiction therefore rests in the Claims Court if three conditions are satisfied: (1) the action is against the United States; (2) the action seeks monetary relief in excess of $10,000; and (3) the action is founded upon the Constitution, federal statute, executive regulation, or government contract.

Rogers v. Ink, 766 F.2d 430, 433 (10th Cir.1985) (citations and footnote omitted). In this case, it is undisputed that prongs one and three of the test are met. Consequently, the focus is necessarily on whether SEK-CAP's complaint seeks monetary relief in excess of $10,000. ³

SEK-CAP's complaint does not seek compensatory damages from the federal defendant. The request is for declaratory and injunctive relief. The manner of relief requested is not, however, dispositive of whether the Claims Court has jurisdiction. "The test for determining if a case belongs in the Claims Court is whether or not 'the "prime objective" or "essential purpose" of the complaining party is to obtain money from the federal government.' " Eagle-Picher Indus., Inc. v. United States, 901 F.2d 1530, 1532 (10th Cir.1990) (quoting New Mexico v. Regan, 745 F.2d 1318, 1322 (10th Cir.1984), cert. denied, 471 U.S. 1065, 105 S.Ct. 2138, 85 L.Ed.2d 496 (1985)). "A party may not circumvent the Claims Court's exclusive jurisdiction by framing a complaint in the district court as one seeking injunctive, declaratory, or mandatory relief where the thrust of the suit is to obtain money from the United States." Rogers, 766 F.2d at 434. Consequently, the Claims Court question focuses on the substance of the relief requested, rather than the language used to define it in the complaint.

In addition, the Administrative Procedure Act plays an important role in our consideration of this issue. The APA contains the waiver of sovereign immunity which allows SEK-CAP to seek review of the Secretary of Agriculture's actions. ⁴ 5 U.S.C. § 702. That waiver is limited, however to those cases "seeking relief other than money damages." ⁵ As a consequence, if SEK-CAP's complaint is construed as one seeking "money damages," sovereign immunity bars the action. Our determination whether this suit seeks "money damages" from the federal government is, therefore, a threshold consideration.

In Bowen v. Massachusetts, 487 U.S. 879, 108 S.Ct. 2722, 101 L.Ed.2d 749 (1988), the Supreme Court defined that term for purposes of considering immunity from suit under 5 U.S.C. § 702. The Court held that the statute allows the grant of injunctive relief, even where it results in payment from the federal treasury. Id. at 910, 108 S.Ct. at 2740. The Court adopted the following language:

The term 'money damages,' we think, normally refers to a sum of money used as compensatory relief. Damages are given to the plaintiff to substitute for a suffered loss, whereas specific remedies "are not substitute remedies at all, but attempt to give the plaintiff the very thing to which he was entitled." Thus, while in many instances an award of money is an award of damages, "[o]ccasionally a money award is also a specie remedy." Courts frequently describe equitable actions for monetary relief under a contract in exactly those terms.

Id. at 895, 108 S.Ct. at 2732 (quoting Maryland Dep't of Human Resources v. Department of Health & Human Servs., 763 F.2d 1441, 1446 (D.C.Cir.1985)) (citations omitted).

The Bowen court rejected the argument that the Claims Court should retain jurisdiction in all suits where Plaintiff's requested relief would have an impact on the federal treasury. It stated, "[t]he Claims Court does not have the general equitable powers of a district court to grant prospective relief. Indeed, we have stated categorically that 'the Court of Claims has no power to grant equitable relief.' " Id. at 905, 108 S.Ct. at 2737 (quoting Richardson v. Morris, 409 U.S. 464, 465, 93 S.Ct. 629, 631, 34 L.Ed.2d 647 (1973)). Thus, although the immunity waiver only allows suits seeking relief other than money damages, injunctive relief, such as that requested here, is available and does not bar suit.

SEK-CAP's prayer for relief against the federal defendant seeks declaratory and injunctive relief. Specifically, SEK-CAP seeks invalidation of the federal regulations, a hearing on the nonrenewal, and an order requiring funding of the program until that hearing. The corporation argues that the Tucker Act is inapplicable because the primary purpose of the lawsuit is to receive a...