Summary of a Recent
Judicial Development in
Farm Programs

Court of Federal Claims Lacks Jurisdiction
over Boll Weevil Eradication Foundation

Gaby R. Jabbour
National AgLaw Center Research Assistant

An owner of a crop-dusting service who entered into a contract with a non-profit organization brought an action for breach of contract against the United States when the non-profit organization terminated the contract entered into between it and the crop-dusting service owner. Morgan v. United States, 55 Fed.Cl. 706, 708-9 (Fed. Cl. 2003). The United States Court of Federal Claims dismissed the crop-dusting owner's complaint for lack of jurisdiction because there was no privity of contract between the owner and the United States even though the non-profit organization complied with a federally-mandated regulatory scheme in spending federal monies pursuant to a boll weevil eradication program. See id. at 708-9.

Johnny C. Morgan, plaintiff, owned a crop-dusting service in Mississippi. See id. at 707. He entered into several contracts for crop-dusting services with the Southeastern Boll Weevil Eradication Foundation, Inc. ("Foundation"), a non-profit corporation organized under the laws of the state of Alabama. See id. The Foundation "ha[d] its roots in 7 U.S.C. § 1444a(d) (2000), which authorize[d] the Secretary of Agriculture to 'carry out programs to destroy and eliminate cotton boll weevils in infested areas of the United States.'" Id. The statutory scheme that authorized the boll weevil eradication program "envisage[d] federal money granted to state and local entities . . . [that would] be 'responsible for the authority necessary to carry out the operations or measures.'" Id. (citation omitted). The boll weevil eradication program was administered by the Animal and Plant Health Inspection Service ("APHIS"). See id.

The APHIS entered into a Cooperative Agreement with the Foundation that outlined the APHIS' and the Foundation's respective rights and duties. See id. The APHIS "provide[d] thirty percent of the Foundation's costs," and its role was "limited to monitoring progress, providing technical advice, and giving guidance regarding use of federal funds." Id. Although the APHIS transferred federal property to the Foundation, it did not supervise how that property was used by the Foundation. See id. Morgan's crop-dusting service contract "was with the Foundation, and not the Department of Agriculture or APHIS" and the APHIS was not "involved in decisions made by the Foundation in connection with plaintiff's services." Id.

After the Foundation terminated its contract with Morgan, he brought an action against the Foundation and Hardeman County in the United States District Court for the Western District of Tennessee "pursuant to 42 U.S.C. § 1983 (2000), alleging violations of rights under the Fifth and Fourteenth Amendments to the Constitution, and alleging breach of contract by the Foundation." Id. The Foundation "sought dismissal of the contract claim on the ground that it should be brought in . . . [the Federal Claims Court] and sought dismissal of the § 1983 claim because the Foundation was allegedly a federal agency, not amenable to suit." Id.

The district court ruled in favor of the Foundation on both counts and dismissed Morgan's complaint for lack of jurisdiction. See id. It determined that "'[b]ecause [the Foundation] [was] furthering a Congressional mandate and [was] under Federal government control as to how that mandate [was] carried out' it was a federal agency for purposes of eradication activities" and "was thus entitled to protection under § 1983 as 'the sovereign.'" Id. It also dismissed Morgan's breach of contract claim because it was within the Federal Claims Court's exclusive jurisdiction pursuant the Contract Disputes Act ("CDA"), 41 U.S.C. §§ 601-613. See id.

Morgan subsequently filed a new complaint for breach of contract in the Federal Claims Court against the Foundation. See id. The Foundation filed a motion to dismiss claiming "that the suit lack[ed] jurisdiction because it [was] not directed against the United States, as it must be in . . . [the Federal Claims Court]." Id. (citation omitted). After the Foundation filed its motion to dismiss, Morgan "sought leave to file an amended complaint which, it assert[ed], would cure any potential jurisdictional shortcomings of the first complaint." Id.

The Federal Claims Court stated that for purposes of evaluating Morgan's breach of contract claim, it would "assume that the grounds for jurisdiction have been restated as set out in [Morgan's] . . . proposed amended complaint." Id. It explained that "[t]he proposed amended complaint [was] properly captioned against the United States, and asserte[d] that it acted through the Foundation." Id. It also explained that "[t]o the extent the contract is not subject to the CDA and the claim is for damages in excess of $10,000, as is the case here, . . . [this court] is the exclusive judicial forum." Id. It also noted that "[i]f the contract is subject to the CDA, irrespective of the amount sought," the Federal Circuit "is the only judicial forum, although the appropriate board of contract appeals would have concurrent jurisdiction." Id. at 708 (citing 28 U.S.C. § 1346(a)(2) and 41 U.S.C. §§ 607, 609).

The court stated that "[t]he subject matter of the contract-crop dusting services-would, indeed, seem to fall within the sweep of the CDA" and that "[i]f that were the case, [the] plaintiff would face a preliminary obstacle-he would first have to obtain a decision by a contracting officer, presumably of the Department of Agriculture." Id. (citing 41 U.S.C. §§ 602(a)(2), 605). It also stated that "[a]s defendant points out, this is a jurisdictional requirement. Such a decision was not obtained and the case would need to be dismissed without prejudice until a decision was obtained. We decline to rely on that ground . . . as it does not address the more basic problem with the suit," which is whether there was privity of contract between Morgan and the United States. Id.

The court explained that for it to exercise jurisdiction, privity of contract "must be found in a direct contractual relationship between two parties, one of whom is the United States." Id. It noted that "[t]he only two possible candidates for such a contract are the Cooperative Agreement between the Department of Agriculture and the Foundation and the crop-dusting contract between [the] plaintiff and the Foundation." Id. The court stated that "[t]he Cooperative Agreement containe[d] the proper defendant . . . but [the] plaintiff [was] not a party to that agreement" and that "[t]he second contract-between [the] plaintiff and the Foundation-[was] the more promising candidate, but only if the Foundation is an agency of the United States." Id.

Turning to the question of whether the Foundation was "'the United States' for purposes of § 1491(a)(1)," the court ruled that it was not. Id. It stated that

The Foundation is a non-profit corporation organized under the laws of the State of Alabama. It is not a federally chartered corporation. The fact that the Foundation complies with a federally-mandated regulatory scheme in spending federal monies does not convert it into an agency of the government. As defendant correctly points out, it is well settled that federal control and supervision do not convert a private entity or an instrumentality of local government into the United States for purposes of determining privity of contract.

Id. (citations omitted).

The court concluded that the contract between Morgan and the Foundation did not establish a privity of contract with the United States, and it therefore dismissed Morgan's action for lack of jurisdiction. See id. at 709. It added that

[w]hat we have said should not be taken to imply our disagreement with the district court's assessment that it did not have jurisdiction over a contract claim against the United States. In that respect we agree. If this were a contract claim against the United States, it would not properly be brought in district court, as plaintiff sought more than $10,000, and, in any event, the subject would seem to fall within the CDA. For that reason, transfer . . . would be pointless.

Id.

The case was decided on March 25, 2003; this summary was posted August, 2003