United Aeronautical Corporation v. United States Air Force

O [7] 8 United States District Court 9 Central District of California [10] 11 UNITED AERONAUTICAL Case № 2:20-CV-01985-ODW (JDEx) CORPORATION et al., [12] Plaintiffs, ORDER GRANTING MOTION TO [13] v. DISMISS [24] [14] UNITED STATES AIR FORCE et al., [15] Defendants. [17] 18 I. INTRODUCTION 19 This action arises from a dispute involving proprietary intellectual property 20 between United Aeronautical Corporation (“United”) and Blue Aerospace, LLC 21 (“Blue Aero”) (collectively, “Plaintiffs”), and the United States Air Force and the 22 United States Air National Guard (the “ANG”) (collectively, “Defendants”). 23 Defendants move to dismiss Plaintiffs’ First Amended Complaint (“FAC”) for lack of 24 subject matter jurisdiction. (Mot. to Dismiss (“Motion” or “Mot.”), ECF No. 24.) For 25 the reasons below, the Court GRANTS the Motion.1 [27] 28 1 Having carefully considered the papers filed in connection with the Motion, the Court deemed the matter appropriate for decision without oral argument. Fed. R. Civ. P. 78; C.D. Cal. L.R. 7-15. 1 II. BACKGROUND2 2 The Mobile Airborne Fire Fighting System (“MAFFS”) is a mobile 3 fire-retardant tank system designed for use in aerial firefighting. (FAC ¶¶ 3, 24, ECF 4 No. 21.) From about 1980–2000, a company called Aero Union developed designs, 5 concepts, and specifications for firefighting products and, in April 2000, contracted 6 with the United States Forest Service to design, develop, and fabricate a new MAFFS 7 prototype, the “MAFFS II” (the “2000 Contract”). (FAC ¶ 29.) According to the 8 2000 Contract, Aero Union owned the intellectual property developed thereunder 9 subject to the Forest Service’s use rights derived from the contract. (FAC ¶ 30.) Aero 10 Union’s pre-2000 MAFFS designs and data were “ultimately . . . incorporated into the 11 MAFFS II.” (FAC ¶¶ 3, 27.) Plaintiffs identify this data as the “Pre-MAFFS II 12 Proprietary Data.” (FAC ¶ 27.) 13 After Aero Union ceased operations in 2012, United purchased its MAFFS 14 intellectual property through a foreclosure sale. (FAC ¶ 31.) To support ongoing 15 MAFFS II operations, in 2014, United delivered a hard drive containing the 16 MAFFS II data to the Forest Service. (See FAC ¶¶ 32–33.) United and the Forest 17 Service executed a Data Rights Agreement (“DRA”) concerning the data on the hard 18 drive, in which they acknowledged and agreed, 19 [A]s set forth in [the 2000 Contract], the technical data produced or 20 specifically used or related to the [MAFFS II] developed pursuant to such contract shall remain the property of [United] (as the purchaser of assets [21] of Aero [Union] . . .) and [the Forest Service] shall have unlimited rights 22 to view and use the data required for the continued operation and maintenance of the [MAFFS II] product. [23] 24 (FAC Ex. 1 (“DRA”) ¶ 5, ECF No. 21-1.) The ANG received the hard drive from the 25 Forest Service and began developing an upgrade to replace the MAFFS II, called the 26 “iMAFFS.” (FAC ¶¶ 6, 35–36.) When Plaintiffs learned the United States [27] 28 2 The Court addressed the facts of this case extensively in its prior order and incorporates that discussion by reference here. (See Order Granting Mot. Dismiss (“Order”) 2–4, ECF No. 20.) 1 Government was marketing iMAFFS internationally, they objected and argued that 2 marketing the derivative iMAFFS would unlawfully disclose Plaintiffs’ 3 Pre-MAFFS II Proprietary Data. (FAC ¶¶ 44, 47.) Defendants disagreed. (FAC 4 ¶¶ 39–42, 48, 55.) Defendants found the Government “had unlimited use rights in the 5 data, which included the rights to use the data to develop the iMAFFS system for sale 6 to the international market.” (FAC ¶ 55.) 7 Accordingly, Plaintiffs initiated this action against Defendants asserting 8 violations of the Administrative Procedure Act (“APA”), 5 U.S.C. § 701 et seq., and 9 seeking declaratory and injunctive relief. (See generally Compl., ECF No. 1; FAC 10 ¶¶ 8–9.) Plaintiffs contend Defendants’ use and disclosure of the Pre-MAFFS II 11 Proprietary Data constitutes unlawful agency action in violation of the Trade Secrets 12 Act and federal procurement law. (See FAC ¶¶ 8–9.) Plaintiffs seek a determination 13 that Defendants have no ownership rights in, and may not use or disclose, the 14 Pre-MAFFS II Proprietary Data to develop or market the iMAFFS. (FAC ¶¶ 68–69.) 15 The Court granted Defendants’ first motion to dismiss for lack of subject matter 16 jurisdiction because Plaintiffs’ initial Complaint sought a determination of rights 17 related to a government contract, i.e., the 2000 Contract and DRA, and therefore were 18 subject to the exclusive jurisdiction of the Court of Federal Claims. (See Order 13.) 19 Plaintiffs amended their Complaint and Defendants move again to dismiss Plaintiffs’ 20 claims on the same jurisdictional grounds. 21 III. LEGAL STANDARD 22 Pursuant to Federal Rule of Civil Procedure (“Rule”) 12(b)(1), a party may 23 move to dismiss a case for lack of subject matter jurisdiction. Fed. R. Civ. P. 24 12(b)(1). “Federal courts are courts of limited jurisdiction.” Kokkonen v. Guardian 25 Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). “They possess only that power 26 authorized by Constitution or a statute, which is not to be expanded by judicial 27 decree.” Id. (internal citations omitted). “It is to be presumed that a cause lies outside 28 this limited jurisdiction, and the burden of establishing the contrary rests upon the 1 party asserting jurisdiction.” Id. (internal citations omitted). Once a party has moved 2 to dismiss for lack of subject matter jurisdiction under Rule 12(b)(1), the plaintiff 3 bears the burden of demonstrating that the court has jurisdiction. Id. 4 Where the United States is a defendant, a mere showing of federal jurisdiction 5 does not suffice because “the United States, as sovereign, is immune from suit save as 6 it consents to be sued.” Lehman v. Nakshian, 453 U.S. 156, 160 (1981) (internal 7 quotation marks omitted); Gabriel v. Gen. Servs. Admin., 547 F. App’x 829 , 830 8 (9th Cir. 2013) (“The United States is immune from suit unless it has expressly 9 waived its sovereign immunity by consenting to be sued; the existence of such consent 10 is a prerequisite for jurisdiction.” (internal quotation marks omitted)). Absent a 11 waiver of sovereign immunity, courts have no subject matter jurisdiction over cases 12 against the government. United States v. Mitchell, 463 U.S. 206, 212 (1983). The 13 party suing the United States bears the burden to identify an unequivocal waiver of 14 immunity. Holloman v. Watt, 708 F.2d 1399, 1401 (9th Cir. 1983). 15 IV. DISCUSSION 16 Defendants again move to dismiss for lack of subject matter jurisdiction on the 17 ground that Plaintiffs’ claims arise from a government contract over which the 18 Contract Disputes Act (“CDA”) vests exclusive jurisdiction in the Court of Federal 19 Claims. (Mot. 1, 6–10.) Plaintiffs again respond that their claims are not contract 20 disputes, but rather concern Defendants’ unlawful use and disclosure of Plaintiffs’ 21 proprietary data. (Opp’n 1–2, 8–17, ECF No. 25.) Plaintiffs contend their claims are 22 cognizable under the APA and, accordingly, the APA’s waiver of sovereign immunity 23 together with 28 U.S.C. § 1331’s grant of federal jurisdiction provide this Court with 24 subject matter jurisdiction. (Id. at 8–10.) 25 The APA provides a limited waiver of sovereign immunity for claims against 26 the government seeking review of agency action. 5 U.S.C. §§ 701–06; Chrysler Corp. 27 v. Brown, 441 U.S. 281 , 317–18 (1979). This waiver applies “only if three conditions 28 are met: (1) [the plaintiff’s] claims are not for money damages, (2) an adequate 1 remedy for [the] claims is not available elsewhere[,] and (3) [the plaintiff’s] claims do 2 not seek relief expressly or impliedly forbidden by another statute.” Tucson Airport 3 Auth. v. Gen. Dynamics Corp., 136 F.3d 641, 645 (9th Cir. 1998); Suburban Mortg. 4 Assocs., Inc. v. HUD, 480 F.3d 1116, 1122 (Fed. Cir. 2007). “The application of any 5 one [of § 702’s limitations] is enough to deny a district court jurisdiction under the 6 APA.” Suburban, 480 F.3d at 1126 ; see Tucson, 136 F.3d at 647 (finding the district 7 court lacked federal jurisdiction where only one of the three limitations applied). 8 Relevant to the third limitation, the Ninth Circuit has repeatedly held that “[t]he 9 Tucker Act, 28 U.S.C. § 1491 , impliedly forbids declaratory and injunctive relief and 10 precludes the APA § 702 waiver of sovereign immunity for any claim founded upon 11 an express or implied contract with the United States.” Cooper v. Haase, [12] 750 F. App’x 600 , 601 (9th Cir. 2019) (brackets and internal quotation marks omitted); 13 see, e.g., Tucson, 136 F.3d at 645–46. This is because the Tucker Act, which permits 14 only money damages, grants the Court of Federal Claims jurisdiction and expressly 15 divests district courts of jurisdiction over any claim against the United States that is 16 related to a government contract. 28 U.S.C. § 1491 (a)(1); Raytheon Co. v. United 17 States, 146 Fed. Cl. 469 , 474 (2020). 18 A claim relates to a government contract, for purposes of establishing 19 subject-matter jurisdiction under the Tucker Act provision granting the Court of 20 Federal Claims jurisdiction over claims arising under the Contract Disputes Act 21 (“CDA”), “if it has ‘some relationship to the terms or performance of a government 22 contract.’” Raytheon, 146 Fed. Cl. at 474 (quoting Todd Const., L.P. v. United States, [23] 656 F.3d 1306, 1312 (Fed. Cir. 2011)). To be covered by the CDA, a claim “need not 24 be based on the contract itself . . . as long as it relates to . . . the contract.” Id. (quoting 25 Todd Const., 656 F.3d at 1314 (explaining that “related to” should be read broadly 26 under the CDA)). To determine whether a claim is “founded upon a contract for the 27 purposes of the Tucker Act,” courts consider “the source of the rights upon which the 28 plaintiff bases its claims, and . . . the type of relief sought (or appropriate).” Gabriel, [1] 547 F. App’x at 831 . A claim is considered contractually based where the plaintiff 2 seeks a determination of contract rights. See Tucson, 136 F.3d at 647 (finding claim 3 contractually based where the plaintiff was “asking the district court to decide what its 4 contract rights [were]”). 5 The Court previously found it lacked jurisdiction over Plaintiffs’ claims because 6 “Plaintiffs seek a determination of rights under the [2000 Contract and the DRA]” and 7 their claims for declaratory and injunctive relief therefore “relate to and are concerned 8 solely with the rights articulated in” those government contracts. (Order 10.) 9 Plaintiffs amended their initial Complaint to expand on Aero Union’s development of 10 the disputed intellectual property before it entered the 2000 Contract. (FAC ¶¶ 27– 11 29.) Plaintiffs argue Aero Union developed the Pre-MAFFS II Proprietary Data 12 “independently” and so the relief Plaintiffs seek here—a declaration that Defendants 13 have no right to use the Pre-MAFFS II Proprietary Data to develop and market 14 iMAFFS—does not “relate to” the contracts. (See Opp’n 9–16.) 15 Plaintiffs’ allegations again belie their assertions. Plaintiffs allege Aero Union 16 developed the Pre-MAFFS II Proprietary Data in the years before it contracted with 17 the Forest Service to develop a MAFFS II prototype. (FAC ¶ 27.) Plaintiffs also 18 allege that all Pre-MAFFS II Proprietary Data was “incorporated into the MAFFS II,” 19 and “subject to the [Forest Service’s] use rights derived from the [2000 Contract].” 20 (FAC ¶¶ 27, 29, 34.) The Court previously determined that Defendants’ right to use 21 the hard drive and MAFFS II data derives from the DRA and 2000 Contract. (Order 22 10.) Therefore, as the Pre-MAFFS II Proprietary Data was “incorporated into the 23 MAFFS II” and “subject to the . . . use rights derived from the contract,” Plaintiffs’ 24 request for a finding defining Defendants right to use the Pre-MAFFS II Proprietary 25 Data still requires the Court to determine Defendants’ rights under the contracts. (See 26 Order 10–11.) Consequently, district court jurisdiction is not available. Tucson, [27] 136 F.3d at 647 . [28] 1 Although leave to amend is generally warranted, Fed. R. Civ. P. 15(a), 2 || Plaintiffs’ amended allegations are largely identical to those in the initial Complaint 3 || and fail for the same reasons. Plaintiffs do not suggest what further amendment could remedy the lack of jurisdiction, (see Opp’n 24), and the Court finds that the allegation 5 || of additional facts consistent with the FAC “could not possibly cure the deficiency,” 6 || see Schreiber Distrib. Co. v. Serv-Well Furniture Co., 806 F.2d 1393 , 1401 (9th Cir. 1986). Therefore, amendment would be futile and the Court DENIES leave to amend. 8 || See Carrico v. City & Cnty. of San Francisco, 656 F.3d 1002, 1008 (9th Cir. 2011). 9 While this result may be less than satisfying, the Ninth Circuit has made clear 10 || that “the concept of make-whole relief inherent in much of the common-law tradition 11 || does not apply in the context of actions brought against the United States.” Tucson, 12 || 136 F.3d at 644 . “[T]hat a plaintiff against the United States may receive less than 13 | complete relief in the federal courts should not necessarily be viewed as an 14 | inappropriate result... .” Jd. at 647. 15 CONCLUSION 16 For the reasons discussed above, the Court GRANTS Defendants’ Motion and 17 | DISMISSES Plaintiffs’ FAC without leave to amend. (ECF No. 24.) Judgment will 18 | issue. [19] 20 IT IS SO ORDERED. [21] 22 October 25, 2021 ee 5 OTIS D. IGHT, I UNITED STATES DISTRICT JUDGE