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  4.  » “An Awkward Tool that Outlived its Purpose”: The Kafkaesque Jurisdictional Dance of 28 U.S.C. § 1500

“An Awkward Tool that Outlived its Purpose”: The Kafkaesque Jurisdictional Dance of 28 U.S.C. § 1500

On Behalf of | Jan 18, 2022 | Slingshots

Congress designed the United States Court of Federal Claims (“COFC”) to be the prime venue for plaintiffs to sue the United States federal government for contractual and property disputes. But subsequent interpretations of its jurisdictional statute have betrayed this design.[1] Through 28 U.S.C. § 1500 (“Section 1500”), Congress aimed to limit the jurisdiction of the COFC to avoid jurisdictional conflicts and to preclude duplicative claims in United States District Courts. Now, Section 1500 serves little purpose beyond being a statutory trap for plaintiffs suing the federal government. Section 1500 has faced severe criticism by litigants and courts alike, being described as “outdated and ill-conceived,” Low v. United States, 90 Fed. Cl. 256, 262 (2008); “unfair and unworkable,” Yankton Sioux Tribe v. United States, 84 Fed. Cl. 225, 226 (2008); and “badly drafted,” Keene Corp. v. United States, 508 U.S. 200,  222 (1993) (Stevens, J., dissenting). Despite these valid criticisms, the Supreme Court only doubled down on this jurisdictional trap in Tohono O’Odham Nation v. United States, 563 U.S. 307, 315 (2011). Because Section 1500 has outlived its usefulness, and the Supreme Court is unwilling to resolve the issue, Congress should repeal Section 1500 or amend it to facilitate the pursuit of justice by plaintiff’s wronged by the federal government.

  1. The Origins of Section 1500

Section 1500 is a Civil War-era statute, enacted in 1868, in response to the torrent of former Confederate citizen-plaintiffs who sought to recover compensation for cotton that the federal government confiscated. Several of these “cotton claimants” proceeded to cleverly sue in both (1) the Court of Claims (the predecessor to the COFC) against the United States; and (2) the relevant state or federal court against Treasury officials in personam.[2] Responding to this problem of duplicative pending suits, Vermont Senator George F. Edmunds proposed a bill “to put that class of persons to their election either to leave the Court of Claims or to leave the other courts.”[3] The legislation ultimately passed and divested the Court of Claims of jurisdiction when a plaintiff had a related action against the United States in another pending court.[4] Congress recodified Section 1500 in 1948 and has been unchanged since, reading:

The United States Court of Federal Claims shall not have jurisdiction of 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 or any person who, at the time when the cause of action alleged in such suit or process arose, was, in respect thereto, acting or professing to act, directly or indirectly under the authority of the United States.[5]

While seemingly simple and reasonable, Section 1500 has developed into a procedural trap for the unwary litigant, cutting off their ability to seek justice if they are unfortunate enough to proceed in federal district court prior to filing in the COFC..

2. Jurisdictional Bar for “Same Claims”

Congress’s original purpose in Section 1500 to prohibit duplicative suits is perfectly reasonable. However, the reality of Section 1500 today has effectively become “a flat prohibition on the maintenance of two suits against the United States.”[6] Section 1500 prevents the COFC from hearing a claim that a plaintiff also has pending in another court. In Keene v. United States, the Supreme Court of the United States interpreted this prohibition to apply when actions regard the same claim; that is, if they are “based on substantially the same operative facts,” with “at least . . . some overlap in the relief requested.”[7]

Then, in Tohono O’Odham Nation v. United States, the Supreme Court further clarified that Section 1500 deprives the COFC of jurisdiction when two claims are based on the same operative facts, even when the two claims request different relief.[8] The Court established the following rule for determining whether Section 1500 applies: “(1) whether there is an earlier-filed ‘suit or process’ pending in another court, and, if so, (2) whether the claims asserted in the earlier-filed case are ‘for or in respect to’ the same claim(s) asserted in the later-filed Court of Federal Claims action.”[9] If the answer to either question is negative, then the [COFC] retains jurisdiction. However, if both questions are answered affirmatively, then the Court of Federal Claims must dismiss the case.

The substantial effect of the Supreme Court’s broad prohibition of Section 1500 becomes apparent when one considers that different claims against the United States must be presented to different courts. For example, the COFC has exclusive jurisdiction over contract claims against the United States, whereas tort claims are exclusively heard in federal district courts.[10] If a plaintiff attempts to bring a suit, with claims of both contract or tort, or is uncertain about what the government’s conduct will be characterized as, their choice of court for an initial filing could result in dismissal of a subsequent suit because of Section 1500. No single court has jurisdiction over all claims against the government, and thus necessarily splitting the claims into multiple lawsuits may subject the suits to Section 1500 dismissal. As a result, plaintiffs are often forced to guess at which of their claims is the strongest before even beginning discovery in order to appropriately bring a suit against the United States. While this is not only frequently impossible to analyze, it also operates against the core principles of civil litigation that allow a plaintiff to pursue multiple claims against a defendant.[11] Alternatively, if plaintiffs file in one court and wait for the claim to run its course, they may face a six-year statute of limitation bar against filing in the COFC.[12] Section 1500 is an effective tool for frustrating a plaintiff’s pursuit of justice against the United States; it does little to promote judicial efficiency.

3. The Work-Around

In response to Section 1500’s burdensome prohibition, current practice permits a plaintiff to pursue multiple claims if it correctly determines which claims belong in which court, and then files those claims in the correct order. If a plaintiff first files its claim against the United States federal government in the COFC and then later files in federal district court on the same facts, both cases may proceed.[13] However, should a plaintiff proceed in the reverse, by filing first in district court and then later in the COFC, that court must dismiss the case.[14] This procedure has been coined the “Tucker Act Shuffle.”[15] The effect of the Tucker Act Shuffle is entirely illogical. It forces the validity of claims to be determined by the order they were filed rather than by their merits.

One large class of litigants affected by the Tohono decision are regulatory takings plaintiffs. These plaintiffs must split their claims in order to receive the relief necessary to make them whole. They often pursue injunctive relief from a district court under the Administrative Procedure Act to prevent state action causing the financial loss, while also pursuing just compensation in the COFC under the Tucker Act for loss already incurred.[16] For these plaintiffs, navigating this complex jurisdictional divide can prove fatal given even a minor misstep.

4. Possible Reform

The effect of Section 1500 has outlived its purpose. Today, “cotton claimant” situations rarely appears, as many tort claims against government officers are limited or are strictly controlled by the Federal Torts Claims Act.[17]  Indeed, there have been many attorneys, legal scholars, and associations supporting a reform of this unjust system. The most supported solution is merely to repeal Section 1500.[18] Considering it is the sole source of the jurisdictional issue, this solution would allow plaintiffs to pursue all claims they might have against the United States government, without worry of picking the right venue to file in first or having to choose only the most viable claims to advance. Unfortunately, legislative attempts to repeal Section 1500 have failed, most recently in the 1990s due to objections that Section 1500 has desirable purposes of preventing duplicative litigation against the government.[19]

Other jurists have called for an amendment or replacement of Section 1500 that would permit or mandate a stay of litigation in one court, while the litigation continues in the other.[20] This would alleviate concerns regarding the government’s exposure to duplicative litigation because only one claim could proceed at a time. In support of this solution, the Judicial Conference of the United States signaled it would not oppose a repeal of Section 1500 if it was “accompanied by a provision for stay or transfer of duplicative claims.”[21]

Another popular call to amend Section 1500 is for Congress or the Supreme Court to close the “Tucker Act Shuffle” loophole.[22] However, although the Federal Circuit Court of Appeals has proposed the idea, the Supreme Court has yet to intervene. In Tohono I, the Federal Circuit leaned towards reading Section 1500 out of existence “because a party can simply file its COFC action first and avoid § 1500 entirely, [§ 1500] functions as nothing more than a ‘jurisdictional dance.’”[23] However, in Tohono II, the Supreme Court shut down the COFC’ finding that Section 1500 no longer served any modern purpose. While it criticized the order-of-filing work-around for “le[aving] the statute without meaningful force[,]”[24] the Court declined the invitation to undo the work-around, as the rule was not presented the case.[25] The Supreme Court then held that Section 1500 still serves “to save the Government from burdens of redundant litigation––and that purpose is no less significant today.”[26] Thus, until the Supreme Court rules on a suitable case that would close the loophole, the Tucker Act shuffle continues to trip up litigants.

Without any apparent signals that the Supreme Court will change course on their interpretation of Section 1500’s same claim prong, and until a suitable case appears for the Court to close the order-of-filing loophole, we anxiously await a legislative intervention––although we are not holding our breath.

If you need help pursuing litigation against the federal government, the experienced government contract attorneys at Eckland & Blando are prepared to lead you through the trap of Section 1500.

[1]           Rachel Lantz provided drafting and research assistance for this article.

[2]           81 Cong. Globe, 40th Cong., 2d Sess. 2769 (1868).

[3]           Id.

[4]           Id.

[5]           28 U.S.C. § 1500.

[6]           Nycal Offshore Dev. Corp. v. United States, 148 Fed. Cl. 1, 9 (2020).

[7]           508 U.S. 200, 201 (1993).

[8]           United States v. Tohono O’Odham Nation, 563 U.S. 307, 315 (2011)

[9]           Brandt v. United States, 710 F.3d 1369, 1374 (Fed. Cir. 2013).

[10]          28 U.S.C. § 1346(a).

[11]          Fed. R. Civ. P. 18(a), Notes. (“Rule 18(a) is now amended . . . to state clearly as a comprehensive proposition, that a party asserting a claim (an original claim, counterclaim, cross-claim, or third-party claim) may join as many claims as he has against an opposing party.”)

[12]          28 U.S.C. § 2501.

[13]          Hardwick Bros. Co. II v. United States, 72 F.3d 883, 886 (Fed. Cir. 1995).

[14]          Id.

[15]         See generally H.R. Rep No. 105-424 (1997) (report on the Tucker Act Shuffle Relief Act of 1997)

[16]          28 U.S.C. § 1346(b) (2006).

[17]          28 U.S.C. § 2679.

[18]          Emily S. Bremer & Jonathon R. Siegel, The Need to Reform 28 U.S.C. § 1500, at 43 (Sept. 12, 2012), https://www.acus.gov/sites/default/files/documents/Section-1500-Report_Final.pdf.

[19]          The Tucker Act Shuffle Relief Act of 1997, H.R. 992, 105th Cong. (1997).

[20]          Bremer & Siegel, supra note 21, at 46.

[21]          Judicial Conf. of the U.S., Report of the Proceedings, at 83 (Sept. 19, 1995), https://www.uscourts.gov/sites/default/files/1995-09.pdf.

[22]          Emily S. Bremer & Jonathan R. Siegel, Clearing the Path to Justice: The Need to Reform 28 U.S.C. § 1500, 65 Ala. L. Rev. 1, 52 (2013); Craig A. Schwartz, Footloose: How to Tame the Tucker Act Shuffle After United States v. Tohono O’odham Nation, 59 UCLA L. Rev. 2, 24 (2011).

[23]          Tohono O’Odham Nation v. United States, 559 F.3d 1284, 1291–92 (Fed. Cir. 2009).

[24]          Tohono O’Odham Nation v. United States, 563 U.S. 307, 315 (2011).

[25]          Id. at 315–16.

[26]          Id.

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