Chained-clock-with-gray-gradiant-background

Most litigation in the U.S. Court of Federal Claims proceeds under rules of civil procedure that most lawyers are familiar with as the rules are similar to used in federal district courts. But there are peculiarities in the procedural requirements applicable only to the Court of Federal Claims, some of which are even referred to as “traps for the unwary.”

In 2015, Plaintiffs—Defense Distributed (a company that distributes firearms-related information to its customers) and the Second Amendment Foundation (a non-profit organization that promotes Second Amendment rights to keep and bear arms)—filed eight claims against the U.S. State Department in federal district court for the Western District of Texas. After years of litigation all but one of the claims, a contract claim, were dismissed. The contract count was transferred to the U.S. Court of Federal Claims.

The Government moved to dismiss the contract claim, arguing that 28 U.S.C. §1500 deprived the CFC of jurisdiction over the claim. Defense/Foundation argued that to apply §1500 in the context of §1631, the transfer statute, would be punitive and defeat the remedial nature of §1631.

The Court began its analysis of the Government’s motion by stating that Section 1500 provides that the CFC shall not have jurisdiction over “any claim for or in respect to which the plaintiff . . . has pending in any other court any suit or process against the United States” based on the same alleged conduct. Whether another claim is pending for Section 1500 is determined at the time the claim is filed in the CFC.

To determine if Section 1500 applies, the court applies a two-pronged analysis: (1) whether an earlier filed proceeding is pending in another court and (2) whether claims in that proceeding are “for or in respect to” the same claim (based on substantially the same operative facts).

Stating that Section 1500 “has been roundly criticized as unnecessary” and serves as a “trap for the unwary,” the Court noted that the “interplay” between Section 1500 and Section 1631 inadvertently adds another “punitive wrinkle.” This is because a case transferred to the CFC is considered filed in the CFC on the date it was originally filed in the transferring court. Here, the contract claim was considered filed in the CFC on the date that claim, and other seven claims that were dismissed, were filed in the Western District of Texas.

The Court concluded that “[t]his means that prong one” of the “Section 1500 analysis is satisfied.” And because Defense/Foundation did not contest that the claims were related, the Court also stated that “prong two is also satisfied.”

Since all eight claims were filed in a single complaint years ago, the other claims were pending at the time of the transferred claim—and Section 1500 kicked in to deprive the CFC of jurisdiction over the contract claim—which the trial judge dismissed.

Read Judge Bruggink’s full decision here.