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Starting in March 2018, Ravi Teja Tiyagurra paid thousands of dollars to the “University of Farmington” to enroll as a student, expecting to take classes. At the time of his enrollment, Ravi was unaware that the University was not a university at all but had been formed and advertised to offer educational services for money—but not to actually provide educational services—as an undercover operation of the United States Department of Homeland Security to target fraud involving student visas. The Government’s undercover operation eventually came to light, but the Government neither provided the paid-for education nor gave Ravi his money back.

Ravi sued for a breach of contract in the U.S. Court of Federal Claims on behalf of himself and others similarly situated. The Government defended the claim, in part, by arguing that it is not liable for a contract breach because it never had any intent to fulfill its contractual agreement. The Government contended that an enforceable contract cannot be formed without an intent to do so, or “as long as the offeror had its fingers crossed behind its back when making the offer and accepting the money.”

The U.S. Court of Federal Claims dismissed his claim for lack of jurisdiction, based on the Government’s argument that it was acting in a sovereign, law-enforcement capacity—and had immunity for the claim.

Reversing, the Federal Circuit held that the complaint was within the CFC’s Tucker Act jurisdiction because a contract to provide an education is the kind a private party might make, and thus not within the narrow exception for criminal prosecution cases (e.g., agreement to prosecute someone if the plaintiff would testify). Writing for the Court, Judge Taranto states:

We avoid the “sovereign capacity doctrine” label that the Claims Court used and that the government uses. Neither the Supreme Court nor this court has used the label to name the exception at issue, and the label is potentially misleading. Almost everything the federal government does, including renting office space, is in the service of some sovereign function. The label “sovereign capacity doctrine” risks disregarding, and in any event is not helpful in performing, what is the essential task: identifying the particular contractual acts of the government that fall outside the strong general rule that the federal government’s contracts create obligations whose breach is remediable through monetary relief under the Tucker Act.

Read full decision here.