Acadiana Mgmt. Grp. v. United States

ACADIANA MANAGEMENT GROUP, LLC, et al., Plaintiffs, v. THE UNITED STATES, Defendant.

No. 19-496C

United States Court of Federal Claims

November 30, 2020

Motion to Dismiss; RCFC 12(b)(1); RCFC 12(b)(6); Bankruptcy Fees; Illegal Exaction; No Means of Transfer.

Bradley L. Drell, Alexandria, LA, for plaintiff. August Rantz, IV, Heather M. Matthews, Chelsea M. Tanner, of counsel.

Shari A. Rose, Trial Attorney, with whom were Joseph H. Hunt,¹ Assistant Attorney General, Robert E. Kirschman, Jr., Director, and Claudia Burke, Assistant Director, Commercial Litigation Branch, Civil Division, United States Department of Justice, Washington, DC, for defendant.

OPINION

CAMPBELL-SMITH, Judge.

Before the court is defendant's motion to dismiss pursuant to Rules 12(b)(1) and 12(b)(6) of the Rules of the United States Court of Federal Claims (RCFC). See ECF No. 18. Defendant filed its motion on October 7, 2019, and plaintiffs filed their response onNovember 26, 2019. See ECF No. 21. Defendant filed a reply on January 31, 2020, see ECF No. 26. Plaintiffs filed a sur-reply pursuant to the court's order granting their request, see ECF No. 32, on April 21, 2020. See ECF No. 33. And, defendant filed a response to plaintiffs' sur-reply on May 12, 2020. See ECF No. 36.

Plaintiffs then filed a supplemental brief in support of their response to defendant's motion on August 21, 2020. See ECF No. 39. Defendant filed a response to plaintiffs' supplemental brief on August 28, 2020. See ECF No. 40. Briefing is now complete and the motion is ripe for decision.²

For the reasons set forth below, defendant's motion to dismiss plaintiffs' complaint is GRANTED.

I. Background³

Plaintiffs filed their complaint in this court on April 3, 2019, alleging that the fees they paid during their Chapter 11 bankruptcy proceedings were higher than they would have been had plaintiffs filed their bankruptcies in a different jurisdiction, thus making the bankruptcy system non-uniform in violation of the United States Constitution. See ECF No. 1 at 3. Plaintiffs have since amended their complaint twice to add information and plaintiffs. See ECF No. 8 (first amended complaint); ECF No. 17 (second amended complaint).

Plaintiffs' complaint arises out of the United States Trustee Program (USTP) under the United States Department of Justice, which appoints and supervises bankruptcy trustees to undertake many of the administrative responsibilities of the bankruptcy system. See ECF No. 17 at 7. All bankruptcy jurisdictions participate in the program, with the exception of those in Alabama and North Carolina. See id. Those states instead implemented the Bankruptcy Administrator Program (BAP) under the Administrative Office of the United States Courts and the Judicial Conference of the United States,which performs a similar function to the USTP.⁴ See id. Both programs are funded by the debtors who utilize the bankruptcy system through the payment of quarterly fees. See id. at 7-8 (citing 28 U.S.C. § 1930).

In 2017, Congress increased the quarterly fees owed by debtors who filed for bankruptcy pursuant to Chapter 11 of the bankruptcy code, 11 U.S.C. §§ 1101-1195, and had disbursements greater than $1,000,000, to "'the lesser of 1 percent of such disbursements or $250,000.'" Id. at 8 (quoting and citing 28 U.S.C. § 1930(a)(6)(B)). The increased fees were to go into effect for "each of fiscal years 2018 through the first quarter of 2018, "in bankruptcy cases filed before October 1, 2018, inclusive of cases filed before October 26, 2017." Id. at 8-9. The BAP, however, did not implement the increased fee until the fourth quarter of 2018 and did not apply it to cases filed prior to October 1, 2018. See id. at 9.

Plaintiffs are two groups of companies that filed Chapter 11 bankruptcy cases in 2017. See id. at 4-6, 9. The first group is Acadiana Management Group, LLC; Albuquerque-AMG Specialty Hospital, LLC; Central Indiana-AMG Specialty Hospital, LLC; LTAC Hospital of Edmond, LLC; Houma-AMG Specialty Hospital, LLC; LTAC of Louisiana, LLC; and Las Vegas-AMG Specialty Hospital, LLC (AMG plaintiffs). See id. at 4-5. The AMG plaintiffs filed their bankruptcy cases on June 23, 2017, "with a joint plan of reorganization," in the United States District Court for the Western District of Louisiana. Id. at 4-5, 9. The second group of plaintiffs includes Mr. Warren L. Boegel; Boegel Farms, LLC; and Three Bo's, Inc., (Boegel plaintiffs), which each filed their Chapter 11 bankruptcy cases on February 23, 2017 in the United States District Court for the District of Kansas. See id. at 5-6, 9. The bankruptcy court entered final decrees in the AMG plaintiffs' cases on June 15, 2018, and issued structural dismissals in the Boegel plaintiffs' cases on June 18, 2018, and June 21, 2018. See id. at 9.

Plaintiffs paid the increased quarterly fees in the first and second quarters of 2018. See id. at 9-11. Had plaintiffs filed their bankruptcy cases in the BAP jurisdictions—Alabama or North Carolina—the AMG plaintiffs would have paid $216,784.69 less in fees, and the Boegel plaintiffs would have paid $140,845 less in fees, because thosejurisdictions did not implement the increased fees for cases filed prior to October 1, 2018. See id. at 9, 11. Plaintiffs therefore filed suit in this court alleging that the difference amounted to an illegal exaction in violation of the Constitution and by way of a misapplication of the fee statute. See id. at 11. Plaintiffs seek class certification for similarly situated plaintiffs. See id. at 11-19.

Defendant moved to dismiss plaintiffs' complaint for lack of jurisdiction and, in the alternative, for failure to state a claim. See ECF No. 18. After extensive briefing, this matter is ripe for decision by the court.

II. Legal Standards

A. Subject Matter Jurisdiction

Plaintiffs bear the burden of establishing the court's subject matter jurisdiction by a preponderance of the evidence. See Brandt v. United States, 710 F.3d 1369, 1373 (Fed. Cir. 2013). To determine whether plaintiffs have carried this burden, the court must accept "as true all undisputed facts asserted in the plaintiff's complaint and draw all reasonable inferences in favor of the plaintiff." Trusted Integration, Inc. v. United States, 659 F.3d 1159, 1163 (Fed. Cir. 2011) (citing Henke v. United States, 60 F.3d 795, 797 (Fed. Cir. 1995)). If the court does not have jurisdiction over the matter, the court must dismiss it, see RCFC 12(h)(3), or, if it is in the interests of justice, transfer the case to a court that has jurisdiction, see 28 U.S.C. § 1631.

The Tucker Act delineates this court's jurisdiction. See 28 U.S.C. § 1491. That statute "confers jurisdiction upon the Court of Federal Claims over the specified categories of actions brought against the United States." Fisher v. United States, 402 F.3d 1167, 1172 (Fed. Cir. 2005) (en banc) (citations omitted). Specifically, the statute provides:

The United States Court of Federal Claims shall have jurisdiction to render judgment upon any claim against the United States founded either upon the Constitution, or any Act of Congress or any regulation of an executive department, or upon any express or implied contract with the United States, or for liquidated or unliquidated damages in cases not sounding in tort.

28 U.S.C. § 1491(a)(1). The Tucker Act "waives the Government's sovereign immunity for those actions." See Fisher, 402 F.3d at 1172. The statute does not, however, create a substantive cause of action or right to recover money damages in the Court of Federal Claims. See id. "[T]o come within the jurisdictional reach and the [sovereign immunity] waiver of the Tucker Act, a plaintiff must identify a separate source of substantive law that creates the right to money damages." Id. (citations omitted). In other words, the source underlying the cause of action must be money mandating, in that it "'can fairly beinterpreted as mandating compensation by the Federal Government for the damage sustained.'" United States v. Testan, 424 U.S. 392, 400 (1976) (quoting Eastport S.S. Corp. v. United States, 372 F.2d 1002, 1009 (Ct. Cl. 1967), and citing Mosca v. United States, 417 F.2d 1382, 1386 (Ct. Cl. 1969)).

B. Failure to State a Claim

When considering a motion to dismiss brought under RCFC 12(b)(6), the court "must presume that the facts are as alleged in the complaint, and make all reasonable inferences in favor of the plaintiff." Cary v. United States, 552 F.3d 1373, 1376 (Fed. Cir. 2009) (citing Gould, Inc. v. United States, 935 F.2d 1271, 1274 (Fed. Cir. 1991)). It is well-settled that a complaint should be dismissed under RCFC 12(b)(6) "when the facts asserted by the claimant do not entitle him to a legal remedy." Lindsay v. United States, 295 F.3d 1252, 1257 (Fed. Cir. 2002). "To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)).

III. Analysis

A. This Court Has Jurisdiction to Hear Plaintiffs' Claims

In its motion to dismiss, defendant argues that this court does not have jurisdiction over this matter: (1) because plaintiffs' claims arise under Title 11, which is committed to the bankruptcy courts; (2) because this court may not review bankruptcy court orders; and (3) because the statute at issue is not money mandating. See ECF No. 18 at 10-11. Plaintiffs respond that this court does have jurisdiction: (1) because the fee issue arises in a case brought pursuant to Title 11, but not directly under Title 11, and therefore is not committed to the bankruptcy court's exclusive jurisdiction, see ECF No. 21 at 12-16; (2) because the court does not need to review any bankruptcy court orders to resolve the complaint, see id. at 16-19; and (3) because the United States Court of Appeals for the Federal Circuit determined that "there is no need to find a separate,...