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Federal Circuit Analyzes Bar Against Duplicative Actions

The Court of Appeals for the Federal Circuit partially affirmed and reversed the Court of Federal Claims' dismissal of claims for lack of jurisdiction because two of the three claims were based on the same operative facts as the contractor's federal district court claims. After filing suit in district court seeking relief under the Federal Tort Claims Act and $15 million in damages under the Lanham Act and common law theories of unfair competition and breach of fiduciary duty, the contractor filed suit in the CFC seeking $15 million in damages for alleged breach of an oral or implied-in-fact contract, a license agreement, and the government's duty of good faith and fair dealing. The CFC's dismissed all claims ( 54 CCF ¶79,349) under 28 USC 1500, which precludes the CFC's jurisdiction if a suit pending in another court is based on the same operative facts.

Contracts and Conduct

In its first application of Section 1500 since the Supreme Court clarified that "[t]wo suits are for or in respect to the same claim ... if they are based on substantially the same operative facts, regardless of the relief sought in each suit," ( U.S. v. Tohono O'dham Nation, 131 SCt 1723), the Federal Circuit affirmed the dismissal of the two CFC claims not based on the license agreement. Those claims were based on the fiduciary duty that allegedly arose from an oral or implied-in-fact contract, whereas the district court breach claim was based on the fiduciary duty that arose from the joint venture relationship between the contractor and the government. This distinction was not relevant in determining whether the claims arose from the same operative facts, and the same conduct gave rise to the claims. However, the Federal Circuit concluded the CFC licensing agreement claim was based on different conduct and a distinct contract that was the only source for the contractor's allegation the government was unlawfully using its property. Moreover, facts that would give rise to breach of either the joint venture or licensing agreement were "not legally operative for establishing breach of the other." The CFC therefore erred in concluding the breach of license agreement claim arose from the same operative facts as the district court claims. ( Trusted Integration, Inc. v. U.S., CA-FC, 55 CCF ¶79,670)

(The news featured above is a selection from the news covered in the Government Contracts Report Letter, which is published weekly and distributed to subscribers of the Government Contracts Reporter. )

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