Trusted Integration Inc. v. United States

• Decision Date: 14 October 2011
• Docket Number: No. 2010–5142.,2010–5142.
• Parties: TRUSTED INTEGRATION, INC., Plaintiff–Appellant,v.UNITED STATES, Defendant–Appellee.
• Court: U.S. Court of Appeals — Federal Circuit

659 F.3d 1159

TRUSTED INTEGRATION, INC., Plaintiff–Appellant,

v.UNITED STATES, Defendant–Appellee.

No. 2010–5142.

United States Court of Appeals, Federal Circuit.

Oct. 14, 2011.

John A. Bonello, David, Brody & Dondershine, LLP, of Reston, Virginia, argued for plaintiff-appellant. With him on the brief was Thomas K. David.James R. Sweet, Trial Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice, of Washington, DC, argued for defendant-appellee. With him on the brief were Tony West, Assistant Attorney General, Jeanne E. Davidson, Director, and Deborah A. Bynum, Assistant Director.Before BRYSON, MOORE, and O'MALLEY, Circuit Judges.O'MALLEY, Circuit Judge.

This case involves the application of 28 U.S.C. § 1500, which precludes the United States Court of Federal Claims (“CFC”) from exercising subject matter jurisdiction over “any claim for or in respect to which the plaintiff or his assignee has pending in any other court any suit or process against the United States.” Applying § 1500, the CFC dismissed Trusted Integration, Inc.'s (“Trusted Integration”) three count complaint against the United States. Because we conclude that Count II, but only Count II, of Trusted Integration's complaint is not barred by § 1500, we affirm-in-part and reverse-in-part.

Background

A. Factual Background ¹

In 2002, Congress enacted the Federal Information Security Management Act (“FISMA”), Pub.L. No. 107–347, 116 Stat. 2946–2955 (2002) (codified at 44 U.S.C. §§ 3541–49 (2006)). FISMA created a comprehensive framework for the management and oversight of information security in the federal government. Trusted Integration, Inc. v. United States, 93 Fed.Cl. 94, 95 (Fed.Cl.2010). Under FISMA, federal agencies must meet certain security standards, compliance with which is monitored by the Office of Management and Budget (“OMB”). Importantly, FISMA allows agencies to use commercial products in order to achieve compliance.

Trusted Integration is a commercial supplier of FISMA compliance solutions. Its primary product, TrustedAgent, is the leading FISMA compliance product utilized by federal agencies. In December 2003, the United States Department of Justice (“DOJ”) and Trusted Integration began a pilot program using TrustedAgent to meet DOJ's FISMA obligations. Based on the results of the pilot program, in June 2004, DOJ purchased a license to use TrustedAgent as part of its FISMA solution, known as Cyber Security Assessment Management (“CSAM”). In accordance with this agreement, DOJ was licensed to use TrustedAgent for “internal business use.” Joint Appendix (“J.A.”) 25. The license also required DOJ to maintain the confidentiality of the TrustedAgent product and related documentation.

In the summer of 2006, OMB launched a new program called Information System Security Lines of Business for FISMA reporting. Under this program, every federal agency was invited to submit its FISMA compliance solution to be considered as a “Center of Excellence” (“COE”). After receipt of these solutions, OMB would designate a limited number of agencies as COEs, and all other federal agencies would be required to purchase their FISMA compliance solution from one of the designated COE agencies.

Although Trusted Integration could have partnered with other agencies that utilized TrustedAgent, Trusted Integration agreed to participate only in DOJ's submission for COE consideration. Because of limitations in its license agreement with Trusted Integration, however, DOJ needed to enter into a separate agreement with Trusted Integration to allow it to submit its CSAM solution for consideration as a COE. Trusted Integration and DOJ, thus, entered into to an agreement to utilize TrustedAgent as part of the CSAM solution it submitted to OMB. The limitations of the license agreement between Trusted Integration and DOJ otherwise remained unchanged and in force.

In September 2006, Trusted Integration and DOJ submitted a joint statement of capabilities for CSAM in response to OMB's request for COE proposals. Between September and December 2006, Trusted Integration and DOJ conducted a series of demonstrations of the CSAM product in support of DOJ's bid for COE status. All of those demonstrations included TrustedAgent. In October 2006, moreover, DOJ presented CSAM to the COE selection committee, representing that TrustedAgent would be an integral part of its CSAM proposal. Trusted Integration, 93 Fed.Cl. at 96.

Despite these representations, and without providing notice to Trusted Integration, near the end of 2006, DOJ began developing its own alternative to the TrustedAgent component of CSAM. While developing an alternative to TrustedAgent, DOJ developers accessed the TrustedAgent Oracle database for the purpose of learning about the system's architecture. DOJ developed this alternative to increase revenue from sales of CSAM in the event DOJ was selected as a COE.

In February 2007, OMB selected DOJ as one of two FISMA COEs. In accordance with OMB directives, agencies were required to purchase a FISMA solution from one of the COEs by April 2007, implementing the purchased solution by no later than fiscal year 2009.

Shortly after its selection as a COE, DOJ began offering agencies a modified version of CSAM that substituted its newly developed alternative for the TrustedAgent software. During several presentations to agency customers, DOJ made disparaging comments about the quality of TrustedAgent. Despite these statements, however, DOJ continued to indicate to potential customers that TrustedAgent was in fact an integral component of the CSAM it would provide. These representations were made as late as March 13, 2007.

In April 2007, DOJ informed Trusted Integration that it would no longer offer TrustedAgent as part of its CSAM. DOJ indicated it had decided to use its own alternative because some of its users experienced data loss and adverse performance issues with TrustedAgent.

B. Procedural History

On May 13, 2009, Trusted Integration filed a complaint (“district court complaint”) in the United States District Court for the District of Columbia, seeking recovery against the United States, asserting three counts: (1) a Lanham Act claim for false designation of origin; (2) a common law unfair competition claim; and (3) a breach of fiduciary duty claim. Id. Trusted Integration sought $15 million in damages. Id.

On November 6, 2009, Trusted Integration filed a complaint in the CFC (“CFC complaint”), which gave rise to the present appeal. In the CFC, Trusted Integration sought relief against the United States, asserting three counts: (1) breach of an oral or implied-in-fact contract; (2) breach of the TrustedAgent license agreement; and (3) breach of the duty of good faith and fair dealing. Id. As with its district court complaint, Trusted Integration sought $15 million in damages.

After the CFC suit was filed, the United States sought dismissal of the district court action in its entirety. Specifically, the DOJ asserted that Trusted Integration's claims were either within the exclusive jurisdiction of the CFC or the United States had not waived its sovereign immunity. The district court agreed, in part, with the government's arguments. On January 20, 2010, the district court dismissed without prejudice Trusted Integration's common law unfair competition claim and breach of fiduciary duty claim for lack of subject matter jurisdiction. Trusted Integration, Inc. v. United States, 679 F.Supp.2d 70, 84 (D.D.C.2010). The court held that DOJ's alleged breach of fiduciary duty to Trusted Integration was based on an agreement between the parties and, thus, sounded in contract. Id. Because Trusted Integration sought more than $10,000 in damages, the claim was governed by the Tucker Act and fell within the exclusive jurisdiction of the CFC. Id. With respect to Trusted Integration's unfair competition claim, the court held that it was similarly beyond the court's jurisdiction because the claim was based upon an alleged misrepresentation, which is outside of the Federal Tort Claims Act's waiver of sovereign immunity. Id. at 82–83. The district court, however, denied the United States' motion to dismiss the Lanham Act claim. Id. at 81.

The United States then sought dismissal of Trusted Integration's claims in the CFC. In its motion to dismiss, the United States argued that the CFC lacked subject matter jurisdiction because Trusted Integration's claims were barred by § 1500, which generally prohibits simultaneous actions against the government in separate forums. Trusted Integration, 93 Fed.Cl. at 97. After reviewing the party's motions, the CFC held that it lacked subject matter jurisdiction because both suits sought the same relief and were “based upon the same dispute between the same parties: defendant's allegedly wrongful development of an alternative to the TrustedAgent product in contravention of its agreement to cooperate with plaintiff in the submission and promotion of its CSAM offering.” Id. at 101. Accordingly, the CFC dismissed the action without prejudice for lack of subject matter jurisdiction.

Trusted Integration timely appealed the CFC's decision. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(3).

Discussion

We review de novo the CFC's decision to dismiss a case for lack of subject matter jurisdiction. Bianchi v. United States, 475 F.3d 1268, 1273 (Fed.Cir.2007). Trusted Integration, as the plaintiff, bears the burden of establishing the court's jurisdiction over its claims by a preponderance of the evidence. See Reynolds v. Army & Air Force Exch. Serv., 846 F.2d 746, 748 (Fed.Cir.1988). In determining jurisdiction, a court must accept as true all undisputed facts asserted in the plaintiff's complaint and draw all reasonable inferences in favor of the plaintiff. Henke v. United States, 60 F.3d 795, 797 (Fed.Cir.1995).

I.

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