Wildwood Child and Adult Care v. Colorado Dept.

• Decision Date: 02 November 2000
• Docket Number: No. Civ.A. 00-B-1901.,Civ.A. 00-B-1901.
• Parties: WILDWOOD CHILD AND ADULT CARE FOOD PROGRAM, INC., Plaintiff, v. COLORADO DEPARTMENT OF PUBLIC HEALTH AND ENVIRONMENT, Child and Adult Care Food Program Division; Patricia M. Daniluk, CDPHE-CACFP Division Director, in her official capacity; and the United States Department of Agriculture, Food and Nutrition Service, Defendants.
• Court: U.S. District Court — District of Colorado

122 F.Supp.2d 1167

WILDWOOD CHILD AND ADULT CARE FOOD PROGRAM, INC., Plaintiff, v. COLORADO DEPARTMENT OF PUBLIC HEALTH AND ENVIRONMENT, Child and Adult Care Food Program Division; Patricia M. Daniluk, CDPHE-CACFP Division Director, in her official capacity; and the United States Department of Agriculture, Food and Nutrition Service, Defendants.

No. Civ.A. 00-B-1901.

United States District Court, D. Colorado.

November 2, 2000.

COPYRIGHT MATERIAL OMITTED

Sheila H. Meer, Cage & North, P.C., Denver, CO, Diana R. Maurer, Denver, CO, for Plaintiff.

Hollyce Anne Hamilton Farrell, Attorney General's Office, General Legal Services Section, Denver, CO, William V. Allen, Attorney General's Office, Tort Litigation Section, Denver, CO, for Defendants.

MEMORANDUM OPINION AND ORDER

BABCOCK, Chief Judge.

Plaintiff Wildwood Child and Adult Care Food Program, ("Wildwood") brings claims for violation of its right to come into compliance, violation of its right to effective stay on appeal, violation of due process, and breach of contract regarding termination of its contract under the National School Lunch Act Program. It requests injunctive and declaratory relief. Defendant United States Department of Agriculture Food and Nutrition Service ("FNS") moves to dismiss for lack of subject matter jurisdiction pursuant to Fed.R.Civ.P. 12(b)(1) and failure to state a claim upon which relief can be granted pursuant to Fed.R.Civ.P. 12(b)(6). The motion is adequately briefed and oral argument would not aid its resolution. For the reasons set forth below, I deny the Department of Agriculture's motion to dismiss.

I. Facts

The following is taken from Wildwood's First Amended Complaint. Wildwood is a Colorado "sponsor" in the child day care portion of the National School Lunch Act Program (the "Program"). It has been a participant in the Program since 1978. It employs 25 people and has an annual operating budget of $9,900,000. Wildwood provides meals to approximately 2,300 Program "providers," who in turn serve the meals to children in eligible day care homes and centers. The Program is administered and funded by the United States Department of Agriculture Food and Nutrition Service. FNS contracts with the Colorado Department of Public Health and Environment Child and Adult Care Food Program Division ("CDPHE-CACFP") to administer the Program in Colorado. CDPHE-CACFP in turn contracts with sponsors like Wildwood.

Wildwood had a contract with CDPHE-CACFP prior to October 1999. That contract was automatically renewed, and the renewed contract covered the period between October 1, 1999 and September 30, 2000. Wildwood believed it was entitled to a similar renewal for October 2000 through September 2001. CDPHE-CACFP reviewed Wildwood in May 2000, and on June 13, 2000 issued a written Demand for Corrective Action concerning eleven deficient areas of performance and record-keeping. On June 28, 2000 Wildwood filed a written Corrective Action Plan, promising compliance within sixty days. The plan was approved, but CDPHE-CACFP required compliance in thirty days rather than sixty, and demanded 100% compliance in specific areas. Although Wildwood protested these changes, CDPHE-CACFP did not respond until September 14, 2000 when it terminated Wildwood's participation in the Program effective September 30, 2000. CDPHE-CACFP then distributed Wildwood's 2,300 providers among the remaining Program sponsors. Although CDPHE-CACFP concurs with Wildwood that there is a right to appeal the termination, CDPHE-CACFP asserts that it has no duty to pay Wildwood's administrative costs or reimburse it for meals during the appeals period. Wildwood alleges that the termination and the manner in which it was conducted was improper under current regulations, and that Wildwood is entitled to be paid for services rendered during the appeal. Following a hearing on September 27, 2000, I issued a Temporary Restraining Order against the state defendants, requiring that they not reassign Wildwood's providers to other sponsors, and continue to reimburse Wildwood for administrative expenses and the cost of meals supplied to its providers pending completion of the administrative appeal. That Order was converted into a Fed.R.Civ.P. 65 Preliminary Injunction on October 6, 2000.

II. Motion to Dismiss

Three of Wildwood's six claims for relief apply to FNS: the first claim, right to come into compliance pursuant to 7 C.F.R. § 226.6(c); the second claim, right to effective stay on appeal pursuant to 7 C.F.R. § 226.6(k)(9); and the sixth claim, declaratory judgment pursuant to 28 U.S.C. § 2201. FNS moves to dismiss all three claims.

A. Standards for Dismissal

1. Rule 12(b)(1)

Rule 12(b)(1) empowers a court to dismiss a complaint for "lack of jurisdiction over the subject matter." Fed.R.Civ.P. 12(b)(1). As courts of limited jurisdiction, federal courts may only adjudicate cases that the Constitution and Congress have granted them authority to hear. See U.S. CONST. art. III, § 2; Morris v. City of Hobart, 39 F.3d 1105, 1110 (10th Cir.1994). Statutes conferring jurisdiction on federal courts are to be strictly construed. See F & S Const. Co. v. Jensen, 337 F.2d 160, 161 (10th Cir.1964). A Rule 12(b)(1) motion to dismiss "must be determined from the allegations of fact in the complaint, without regard to mere conclusory allegations of jurisdiction." Groundhog v. Keeler, 442 F.2d 674, 677 (10th Cir.1971). The burden of establishing subject matter jurisdiction is on the party asserting jurisdiction. See Basso v. Utah Power and Light Co., 495 F.2d 906, 909 (10th Cir.1974).

Motions to dismiss pursuant to Rule 12(b)(1) may take two forms. First, if a party attacks the facial sufficiency of the complaint, the court must accept the allegations of the complaint as true. See Holt v. United States, 46 F.3d 1000, 1002-03 (10th Cir.1995). Second, if a party attacks the factual assertions regarding subject matter jurisdiction through affidavits and other documents, the court may make its own findings of fact. Id. at 1003. A court's consideration of evidence outside the pleadings will not convert the motion to dismiss to a motion for summary judgment under Rule 56. Id. Here, FNS attacks the sufficiency of the First Amended Complaint. Therefore all properly pleaded allegations will be taken as true.

2. Rule 12(b)(6)

Under Rule 12(b)(6), a district court may dismiss a complaint for failure to state a claim upon which relief can be granted if it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief. See Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). If the plaintiff has pled facts that would support a legally cognizable claim for relief, a motion to dismiss should be denied. See id. In evaluating a 12(b)(6) motion to dismiss, "all well-pleaded factual allegations in the amended complaint are accepted as true and viewed in the light most favorable to the nonmoving party." Sutton v. Utah State Sch. for Deaf and Blind, 173 F.3d 1226, 1236 (10th Cir.1999).

Fed.R.Civ.P. 12(b)(6) does not provide a procedure for resolving a contest about the facts or the merits of the case. Thus, one must read Fed.R.Civ.P. 12(b)(6) in conjunction with Fed.R.Civ.P 8(a), which sets forth the requirements for pleading a claim in federal court. Fed. R.Civ.P 8(a) requires "a short and plain statement of the claim showing that the pleader is entitled to relief." The statement need not contain detailed facts, but it must "give the defendant fair notice of what the plaintiff's claim is and the grounds upon which it rests." Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). A plaintiff is not required to state precisely each element of the claim. See 5 Charles A. Wright and Arthur R. Miller, FEDERAL PRACTICE AND PROCEDURE § 1216, at 154-59 (1990). Nonetheless, a plaintiff must "set forth factual allegations, either direct or inferential, respecting each material element necessary to sustain recovery under some actionable legal theory." Gooley v. Mobil Oil Corp., 851 F.2d 513, 515 (1st Cir.1988).

B. Applicability of 42 U.S.C. § 1983

FNS first argues that Wildwood's claims under 42 U.S.C. § 1983 cannot be brought against the federal government. Wildwood has amended its complaint to delete any 42 U.S.C. § 1983 claims against FNS. Therefore, it is unnecessary to examine this contention further.

C. Waiver of Sovereign Immunity

FNS next argues that no claims may be brought against the federal government absent a waiver of sovereign immunity, which has not occurred in this case. I disagree.

FNS is a division of the United States government. The United States may not be sued without its consent. See Fostvedt v. United States, 978 F.2d 1201, 1202 (10th Cir.1992). A waiver of sovereign immunity must be strictly construed in favor of the sovereign and may not be extended beyond the explicit language of the statute. See id.; United States v. Nordic Village, Inc., 503 U.S. 30, 33-35, 112 S.Ct. 1011, 117 L.Ed.2d 181 (1992). The waiver cannot be implied. See Fostvedt, 978 F.2d at 1203. Consequently, a plaintiff must show an express waiver of sovereign immunity authorizing an action against the government. See Lonsdale v. United States, 919 F.2d 1440, 1444 (10th Cir.1990). If waiver does not exist, the district court must dismiss the action for lack of subject matter jurisdiction. See Atkinson v. O'Neill, 867 F.2d 589, 590 (10th Cir.1989).

Sovereign immunity applies if "the judgment sought would expend itself on the public treasury or domain, or interfere with the public administration, or if the effect of the judgment would be to restrain the Government from acting or compel it to act." Crowther v. Seaborg, 312 F.Supp. 1205, 1219 (D.Colo.1970) (citing Dugan v. Rank, 372 U.S. 609, 620, 83 S.Ct. 999, 10 L.Ed.2d 15 (1963)). An exception to the federal government's immunity exists when the plaintiff seeks declaratory...