Free Motion to Dismiss - Rule 12(b)(1) - District Court of Federal Claims - federal

Case 1:05-cv-01170-JFM

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS HIREL CONNECTORS, INC., Plaintiff, v. THE UNITED STATES, Defendant. ) ) ) ) ) ) ) ) )

No. 05-1170C (Judge James F. Merow)

DEFENDANT'S MOTION TO DISMISS Pursuant to Rule 12(b)(1) of the Rules of the United States Court of Federal Claims ("RCFC"), the United States respectfully requests that the Court dismiss the complaint with prejudice for lack of subject matter jurisdiction. STATEMENT OF THE ISSUE Whether this Court possesses jurisdiction over plaintiff's complaint that alleges substantially the same operative facts as does a complaint filed by plaintiff and currently pending in the United States District Court for the Central District of California. STATEMENT OF THE CASE I. Nature of the Case HiRel Connectors, Inc. ("HiRel") bought this action pursuant to the Tucker Act, 28 U.S.C. §1491(a)(1), alleging that the Government breached non-disclosure and other agreements by disclosing proprietary or trade secret information pertaining to the HiRel Connector. See Comp. ¶¶ 1-45. II. Statement of Facts HiRel is the designer and manufacturer of a connector assembly ("HiRel

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Connector") that is used to connect rail launch missiles, such as the AMRAAM, to military aircraft.1 Complaint ("Comp.") ¶¶ 1, 2, 4, 5, 6, 7., 13, 14, 15, 16, 17,18, 19, 20, 22, 23, 24, 25, 26, 27. The Government was aware of the proprietary nature of the HiRel Connector and, in fact, signed non-disclosure agreements ("NDA") with HiRel to protect HiRel's proprietary rights in the HiRel Connector. Comp. ¶¶ 9, 12, 31, 32, 33,34, 35, 38, 39. In addition, HiRel claims that the Government is bound by a contract between HiRel and Hughes (later Raytheon) that acknowledged the proprietary nature of the HiRel Connector. Comp. ¶¶ 17, 21, 30. The gravamen of HiRel's complaint is that the Government breached the NDAs and the HiRel-Hughes contract by disclosing HiRel's proprietary information that was covered by the NDAs, thereby causing financial damage to HiRel in the amount of not less than $10,000,000. See Comp. ¶¶ 36, 37, 41, 42, 43, 44, 45. SUMMARY OF THE ARGUMENT The complaint filed by HiRel in the Court of Federal Claims alleges substantially the same operative facts as those alleged in HiRel's complaint that is pending in the United States District Court for the Central District of California. Given that the same claim is pending in another court against the United States, this Court does not have jurisdiction to entertain HiRel's

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The Government assumes the truth of HiRel's allegations only for the purposes of this 2

motion.

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claim.2 28 U. S. C. §1500; Keene Corp. v. United States, 508 U.S. 200 (1993)(§ 1500 barred jurisdiction over asbestos the claims because the manufacturer, upon filing, had an action pending in the district court for or in respect to the same claims). ARGUMENT I. Standard of Review A. Standard of Review For Dismissal for Lack of Subject Matter Jurisdiction

Plaintiff bears the burden of establishing jurisdiction. See McNutt v. Gen. Motors Acceptance Corp., 298 U.S. 178, 189 (1936); Innovair Aviation, Ltd. v. United States, 58 Fed. Cl. 560, 561 (2003) (citing Alder Terrace Inc. v. United States, 161 F.3d 1372, 1377 (Fed. Cir. 1998). "Determination of jurisdiction starts with the complaint, which must be well-pleaded in that it must state the necessary elements of the plaintiff's claim, independent of any defense that may be interposed." Holley v. United States, 124 F.3d 1462, 1465 (Fed. Cir. 1997) (citing Franchise Tax Bd. v. Constr. Laborers Vacation Trust, 463 U.S. 1 (1983)). When deciding a motion to dismiss based upon lack of subject matter jurisdiction, this Court must assume that all facts alleged in the complaint are true and must draw all reasonable inferences in the non-movant's favor. See Scheuer v. Rhodes, 416 U.S. 232, 236 (1974).

The "Little Tucker Act" grants United States District Courts concurrent jurisdiction with the United States Court of Federal Claims over breach of contract claims against the United States not exceeding $10,000. See 28 U.S.C. §13.46(a.)-(2). Contract claims against the United States exceeding $10,000 are within the exclusive jurisdiction of the Court of Federal Claims. See 28 U.S.C. §1491(a)(1). 3

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II.

This Court Lacks Jurisdiction Over HiRel's Complaint Because The Same Complaint Is Pending In The United States District Court for the Central District of California. Section 1500 of Title 28 prohibits the Court of Federal Claims from exercising

jurisdiction over a claim "for or in respect to which" the plaintiff "has [a suit or process] pending" in any other court. See also Keene Corp. v. United States, 508 U.S. 200 (1993). For purpose of determining whether a plaintiff who files an action in the Court of Federal Claims has another suit pending in another court with respect to the same claim, thus depriving the Court of Federal Claims of jurisdiction, it is necessary to compare the two cases to determine whether the other suit is based on essentially the same operative facts as the Court of Federal Claims action, see 28 U.S.C.A. § 1500 and Ex parte Skinner & Eddy Corp., 265 U.S. 86 (1924); Corona Coal Co. v. United States, 263 U.S. 537 (1924), not on whether the actions are based on different legal theories. See British American Tobacco Co. v. United States, 89 Ct. Cl. 438 (1939)(per curiam). A. HiRel's Complaint Filed In The United States District Court for the Central District of California Is Based Upon The Same Operative Facts As Alleged In Its Complaint Filed in the United States Court of Federal Claims.

According to HiRel's December 28, 2001 complaint filed in the United States District Court for the Central District of California, HiRel is the manufacturer of a connector assembly that is used to connect rail launch missiles, such as the AMRAAM and AIM-120, to military aircraft. See Order of the United States District Court denying HiRel's Motion for Leave to File a Seventh Amended Complaint ("Order"), contained in Attachment A, at 1. HiRel alleged in that complaint that the Government misappropriated HiRel's alleged trade secrets. Id. HiRel subsequently filed six amended complaints adding new defendants, new claims, and new factual

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allegations. Id. On February 24, 2004, HiRel filed its Sixth Amended Complaint. See Docket Sheet ("Docket"), Attachment B, entry 225. In that complaint, HiRel alleged that the Government breached various non-disclosure agreements that it had with HiRel. On June 15, 2005, Hirel filed a Notice of Motion and Motion for Leave to File a Motion to Amend its Sixth Claim for Relief for Breach of Written Contract to Increase the Damages Sought from the Federal Government for Violation of the Tucker Act, or, in the Alternative, Motion to Amend Said Claim for Relief and Motion to Transfer Said Claim to the Federal Court of Claims ("Motion"). Id. at 2. In its motion, HiRel sought to file another amendment to its complaint that would increase HiRel's alleged contract damages from $10,000 to $5,000,000. Id. In denying Hirel's Motion, the District Court noted that HiRel had first asserted a breach of contract claim against the Government in its May 15, 2003 Third Amended Complaint, in which HiRel alleged that the Government entered into, and breached, eight non-disclosure agreements pertaining to the HiRel Connector thereby damaging HiRel in the amount of $10,000. Id. at 5. The Court also noted that Hirel admitted that it was aware that its contract damages exceeded $10,000 by December 2002. Id. The Court determined that HiRel consciously chose to forego known damages in excess of $10,000 for more than two years. Id. In part because the amendment would defeat the District Court's jurisdiction over HiRel's contract claim, given that District Courts do not have jurisdiction over contract claims against the United States exceeding $10,000, the Court denied HiRel's motion.3 Id. at 7, 9. The Court also
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The Court also noted the near absence of excuse for the delay in seeking to amend its complaint, the lack of connection between the "new evidence" indicating that the damages suddenly increased from $10,000 to $5,000,000, and any increased calculation of damages, and 5

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noted that the fact that HiRel had always known its contract damages exceeded $10,000, but waited until the District Court issued adverse rulings before HiRel sought to amend the complaint, gave credence to the Government's "forum shopping" argument. Id. at 7. The Court concluded the HiRel's motion was made in bad faith and that the Government would be prejudiced if the Court were to grant it because the Government would likely have to re-litigate issues that had already been decided by the District Court. Id. at 8. For example, whether any information that the Government allegedly "furnished" was available to the public before the Government allegedly "furnished" it, could be an issue that the United States Court of Federal Claims would have to decide if it presides over the contract claim, an issue that was litigated extensively and decided by the District Court. Id. Because it is clear beyond cavil that HiRel has alleged the same operative facts in this matter as it alleged in the matter pending in the United States District Court for the Central District of California, that is, that the Government breached contracts that served to protect its proprietary interests in the HiRel Connector, HiRel's complaint should be dismissed for lack of jurisdiction. B. The Ends of Justice Would Not Be Served By Allowing HiRel To Pursue This Litigation In The Court Of Federal Claims.

The District Court litigation, dealing with the same factual and legal allegations that HiRel has alleged in this case, has been pending for four years. See Docket. The Government filed numerous motions for partial summary judgment, including motions that addressed whether HiRel took reasonable steps to protect its alleged trade secrets, Docket entry 320, whether

other tactics engaged in by HiRel, weighed heavily against granting leave to amend. Id. 6

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HiRel's alleged trade secrets were publicly availably, Docket entry 326, whether HiRel's purported trade secrets were valid, Docket entry 313, whether HiRel's technical date had been developed at Government expense, Docket entry 311, and whether the information HiRel claimed constituted trade secrets instead was merely form, fit and function, and thus information that the Government had the right to disclose. Docket entry 340. As of July 15, 2005, the Court had not determined what - if anything remained of HiRel's claims after the Government's motions had been resolved. Motion at 1. The Court also noted in its July 15, 2005 order that a technical advisor had been appointed to determine what HiRel information that had been disclosed by the Government constituted information that was proprietary or contained trade secrets. Id. The expert's report was subsequently submitted to the Court on November 18, 2005. Docket entry 469. In his report, the expert opines that none of the information that had been disclosed by the Government, that HiRel claimed contained trade secrets, in fact constituted trade secrets, but instead was information pertaining to "form, fit, and function," information that the Government had the right to disclose. Id. As the United States District Court correctly concluded, it would not serve the interests of justice to compel the Government to defend against nearly identical issues in two forums. Motion at 9. CONCLUSION For the foregoing reasons, we respectfully request that our motion to dismiss be granted, and that complaint be dismissed with prejudice for lack of subject matter jurisdiction. Respectfully submitted, PETER D. KEISLER Assistant Attorney General 7

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DAVID M. COHEN Director

s/ Bryant G. Snee BRYANT G. SNEE Assistant Director

s/ Leslie Cayer Ohta LESLIE CAYER OHTA Trial Attorney Commercial Litigation Branch, Civil Division Department of Justice Attn: Classification Unit, Room 8012 1100 L Street, NW Washington, D.C. 20530 (202) 307-0252 (202) 307-0972 (Fax) February 8, 2006 Attorneys for Defendant

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