Free Response to Motion - District Court of Federal Claims - federal

Case 1:05-cv-00776-MMS

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS

) AG-INNOVATIONS, INC., LARRY FAILLACE, ) LINDA FAILLACE, and HOUGHTON ) FREEMAN, ) ) Plaintiffs, ) ) v. ) ) THE UNITED STATES OF AMERICA, ) ) Defendant. ) )

No. 05-776-C Judge Eric G. Bruggink

PLAINTIFFS' OPPOSITION TO DEFENDANT'S MOTION TO SUSPEND PROCEEDINGS The Government has moved to stay this litigation pending the outcome of a related action proceeding before the United States District Court for the District of Vermont, Civil Case No.: 1:02-CV-332. No stay, however, is required for two reasons. First, the resolution of the district court matter has no bearing whatsoever on whether a taking occurred here. Indeed, the district court litigation has absolutely nothing to do with the taking of plaintiffs' sheep and other chattel. At most, it relates only to the procedures that the United States Department of Agriculture ("USDA") followed in quarantining a piece of real property that was used by some of the Plaintiffs. None of the claims in the district court, however, challenge the authority of the USDA to kill Plaintiffs' sheep or to take their property. There is no doubt that the USDA had the statutory authority to discharge its duty ­ its officials did not act ultra vires. As a result, this case falls squarely within the distinction articulated in Del-Rio Drilling Programs, Inc. v. United States, 146 F.3d 1358 (Fed. Cir. 1998), that a Tucker Act takings claim is not precluded, and thus

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need not be stayed, pending a district court action that does not challenge the authority of the Government to take the property in question. Second, a stay makes no sense. This case involves the USDA's seizure and slaughter of hundreds of prize sheep, its confiscation and destruction of related semen and cheese products, and its four-year quarantine of Plaintiffs' farmlands. The district court litigation concerns only the procedures that the USDA followed when it quarantined one of the two pieces of property in question in the instant action. That litigation has nothing to do with the USDA's seizure and slaughter of Plaintiffs' sheep and related products, it does not involve one of the Plaintiffs, and its impact becomes vanishingly small in view of the fact that both quarantine orders expire of their own force in March 2006. The only impact that the district court litigation can possibly have here is if the district court enters an order in the next few months lifting the quarantine, and even that would only marginally affect the duration of the taking of the farmlands. In sum, staying this case pending resolution of the district court matter accomplishes nothing except to delay just compensation. Plaintiffs, therefore, respectfully request that the Court deny the stay and reset the date for filing the Joint Preliminary Status Report ("JPSR") as soon as possible. BRIEF FACTUAL BACKGROUND This case arose after the Government seized and slaughtered hundreds of healthy, valuable, purebred sheep worth millions of dollars on the premise that the sheep were infected with what the USDA has termed "an atypical [transmissible spongiform encephalopathy (TSE)] of foreign origin." (Compl. ¶¶ Intro., 8) The Government also confiscated hundreds of semen straws, multiple stocks of specialty cheese, and other related cheesemaking equipment that belonged to Plaintiffs. (Compl. ¶¶ 25-26) Thereafter, the USDA issued two separate quarantine

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orders over the barn, paddock area, and pastures owned and leased by Plaintiffs. (Compl. ¶¶ 2930) These quarantine orders expire March 23, 2006. (Id.) As described in Defendant's Motion,1 Plaintiffs tried to stop the killing of their sheep, but that effort ended after the agency slaughtered the animals, prompting the United States Court of Appeals for the Second Circuit to determine that the matter was moot. (Def.'s Mot. 2 n.1) As a result, no claim with respect to Plaintiffs' sheep or their related business chattel remains pending before the district court. In addition, Plaintiff Freeman is not a party to the district court action and has no claims before it. The only matter yet undecided by the district court concerns a challenge brought by Plaintiff Ag-Innovations, Inc. and Plaintiffs Larry and Linda Faillace (collectively the "Ag-Innovations Plaintiffs") to the procedures followed by the USDA in imposing one of the quarantine orders. ARGUMENT A. Plaintiffs' District Court Challenge To The USDA's Quarantine Order Has No Bearing on Whether A Taking Occurred. The Government is wrong in claiming that the "legality" of the USDA's conduct must first be determined by the district court before the present action can proceed. Whatever the district court decides, the Government effected a taking of Plaintiffs' sheep that it killed, the chattel that it confiscated, and the farmlands that it quarantined. The district court action has nothing to do with the taking of the sheep and chattel. And as for the quarantine orders, they constitute a taking regardless of how the district court rules on the Ag-Innovations Plaintiffs' challenge to the procedures that USDA followed in imposing one of those orders. The district

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Plaintiffs will refer to Defendant's Motion to Suspend Proceedings herein as "Defendant's Motion" and will cite it as "Def.'s Mot. ___."

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court may uphold USDA's actions and leave the order in place or find the USDA's procedures wanting and lift the quarantine. Either way, the farmlands were taken. As the United States Court of Appeals for the Federal Circuit held in Del-Rio Drilling Programs, Inc.: If the government appropriates property without paying just compensation, a plaintiff may sue in the Court of Federal Claims on a takings claim regardless of whether the government's conduct leading to the taking was wrongful, and regardless of whether the plaintiff could have challenged the government's conduct as wrongful in another forum. 146 F.3d at 1363. That only makes sense ­ a taking of property through lawful means is compensable; a taking through unlawful means just compounds the injury: [I]f the government has taken property and has done so in a legally improper manner, it has committed two violations of the property owner's rights. The two separate wrongs give rise to two separate causes of action, and the property-owner may elect to sue for just compensation or to seek relief for the legal improprieties in the course of the taking. 146 F.3d at 1363-64. Thus, the Government has it wrong. "[A] court's conclusion that government agents acted unlawfully does not defeat a Tucker Act takings claim if the elements of a taking are otherwise satisfied." Id. Contrary to the Government's assertion, this Court need not await a decision by the district court about whether the Government acted lawfully in issuing one of the quarantine orders before proceeding to discovery on the Ag-Innovations Plaintiffs' taking claim. The flaw in the Government's argument is that it confuses conduct that is "unauthorized," which cannot form the basis of a takings claim, and conduct that is "illegal" or "unlawful," which can give rise to a takings claim. If the Government's conduct is actually unauthorized, or ultra vires, the official committing the action is not said to represent the United States, for "what he does or omits to do, without the authority of Congress, cannot create a claim against the

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Government `founded upon the Constitution.'" Hooe v. United States, 218 U.S. 322, 335 (1910). See also Florida Rock Indus., Inc. v. United States, 71 F.2d 893, 898 (Fed. Cir. 1986); Armijo v. United States, 229 Ct. Cl. 34, 40-41, 663 F.2d 90, 95 (1981). However, as the Federal Circuit has explained, In holding that ultra vires conduct cannot give rise to a Fifth Amendment Taking, the courts have drawn an important distinction between conduct that is "unauthorized" and conduct that is authorized but nonetheless unlawful. Merely because a government agent's conduct is unlawful does not mean that it is unauthorized; a government official may act within his authority even if his conduct is later determined to have been contrary to law. Del-Rio Drilling Programs, Inc., 146 F.3d at 1363. "Unauthorized" or ultra vires conduct, the court noted, is either conduct that is "explicitly prohibited or [falls] outside the normal scope of the government officials' duties." Id. See also Ramirez de Arellano v. Weinberger, 724 F.2d 143, 151 (D.C. Cir. 1983) (takings claim available when government officer "is acting within the normal scope of his duties . . . unless Congress has expressed a positive intent to prevent the taking or to exclude government liability."), rev'd, 745 F.2d 1500 (D.C. Cir. 1984) (en banc), vacated on other grounds, 471 U.S. 1113 (1985). But, conduct that is alleged to be unlawful or illegal may still form the basis of a takings claim. Del-Rio Drilling Programs, Inc., 146 F.3d at 1363. See also Eyherabide v. United States, 170 Ct. Cl. 598, 606, 345 F.2d 565, 570 (1965) (takings claim established when government agents' actions were "mistaken, imprudent or wrongful"). In the case at bar, an examination of the amended complaint filed in the district court litigation reveals that that action does not involve a challenge to the USDA's authority to impose the quarantine order but rather only to the lawfulness of that order. The Ag-Innovations Plaintiffs' action against the USDA consists of the following claims: (1) the USDA did not follow the procedures required by Sections 8306 and 8315 of Title 7 of the United States Code; 5

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(2) the administrative record contains no evidence of a deliberative process; (3) the USDA acted arbitrarily and capriciously by failing to consider and follow governing regulations; and (4) the USDA departed from established testing protocol in seeking to obtain the desired laboratory results. (Pl. Mem. 3-9, App. 12-18)2 None of these claims involve allegations that the Government engaged in unauthorized or ultra vires conduct. Indeed, the Government concedes as much, stating at least twice that the district court litigation only questions the lawfulness of the USDA's actions. (See Def.'s Mot. 1 ("The Ag-Innovations plaintiffs have recently filed a motion for judgment in the Vermont district court in which they challenged the lawfulness of the USDA's actions"); 2 ("the Ag-Innovations plaintiffs filed an amended complaint . . ., which challenged the legality of USDA's quarantine of their real property") (emphasis added)). As a result, a prior determination by the district court as to the lawfulness or unlawfulness of the USDA's procedures in issuing the quarantine orders will not impact the Ag-Innovations Plaintiffs' ability to pursue their takings claims. The district court action, therefore, warrants no stay. B. It Makes No Sense to Stay This Action. A stay is inappropriate in this matter. This takings case is based on the slaughter of hundreds of Plaintiffs' sheep, the destruction of their related business assets, and the imposition of two quarantine orders imposed on certain real property. The district court litigation, on the other hand, involves only one aspect of the takings case: the legality of one quarantine order affecting one group of Plaintiffs for another few months. It has no bearing on any of the claims raised here by Plaintiff Freeman and will have no effect on most of the claims alleged by the AgInnovations Plaintiffs. In fact, the only impact that the district court action can possibly have on
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This reference is in the form adopted by the Government, to documents included in the Appendix attached to its Motion. (Def.'s Mot. 3 n.2)

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this taking claim ­ a minimal one at that ­ is if the district court lifts the quarantine order before the March 2006 expiration. And at this point, in December 2005, the most that such a decision would do is reduce the duration of the taking of the property subject to that order by a few months, resulting in a small difference in the amount of damages associated with the temporary taking. Plaintiffs have waited over four-and-one-half years to receive adequate and appropriate compensation for the property the Government seized and destroyed. Plaintiffs should have to wait no further. At a minimum, discovery should proceed on those claims that are no longer pending before the district court. The cases that the Government cites in its Motion to justify a stay do not apply to the facts and procedural posture of the instant case. Creppel v. United States, 41 F.3d 627, 629 (Fed. Cir. 1994), addresses issues concerning the statute of limitations governing suits filed in the Court of Federal Claims and certain jurisdictional issues that are not contested before this Court. Loveladies Harbor, Inc. v. United States, 27 F.3d 1545, 1547-48 (Fed. Cir. 1994), also addresses jurisdictional questions, pursuant to 28 U.S.C. § 1500,3 that again are not implicated in the instant matter. And finally, the last two cases cited by the Government, Pennsylvania Railroad Co. v. United States, 363 U.S. 202 (1960), and Aulston v. United States, 823 F.2d 510 (Fed. Cir.
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Section 1500 provides, The United States Court of Federal Claims shall not have jurisdiction of any claim for or in respect to which the plaintiff or his assignee has pending in any other court any suit or process against the United States or any person who, at the time when the cause of action alleged in such suit or process arose, was, in respect thereto, acting or professing to act, directly or indirectly under the authority of the United States.

28 U.S.C. § 1500. This provision is not at issue as the Plaintiffs herein are not seeking the same relief as that being sought in the district court litigation. See Loveladies Harbor, Inc., 27 F.3d at 1551 ("For the Court of Federal Claims to be precluded from hearing a claim under § 1500, the claim pending in another court must arise from the same operative facts, and must seek the same relief.").

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1987), predate Del-Rio Drilling Programs, Inc., and neither case includes any discussion of the "important distinction between conduct that is `unauthorized' and conduct that is authorized but nonetheless unlawful." Del-Rio Drilling Programs Inc., 146 F.3d at 1362. Because Plaintiffs have not argued before the district court that the USDA's actions were ultra vires but rather only that they were unlawful, these legal precedents do not support staying the proceedings. CONCLUSION No one can deny that the lambs have been silenced. Plaintiffs deserve and are entitled to compensation based upon the USDA's seizure and slaughter of their animals, related business assets, and for the quarantines imposed over their property. The Government should not be allowed to stall this case any further. Plaintiffs respectfully request that the Court deny Defendant's Motion to Suspend Proceedings and set a deadline for the filing of the JPSR as soon as possible. Respectfully submitted,

By:

s/ Jonathan L. Abram _ Jonathan L. Abram

HOGAN & HARTSON, L.L.P. 555 Thirteenth Street, N.W. Washington, DC 20004 (202) 637-5681 (direct) (202) 637-5910 (facsimile) Attorney of Record for Plaintiffs Ag-Innovations, Inc., Larry Faillace, Linda Faillace and Houghton Freeman OF COUNSEL: Raymond S. Calamaro Kevin S. Willen HOGAN & HARTSON, L.L.P. 8

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555 Thirteenth Street, N.W. Washington, DC 20004 (202) 637-5600 (202) 637-5910 (facsimile) Dated: December 6, 2005

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS

) AG-INNOVATIONS, INC., LARRY FAILLACE, ) LINDA FAILLACE, and HOUGHTON ) FREEMAN, ) ) Plaintiffs, ) ) v. ) ) THE UNITED STATES OF AMERICA, ) ) Defendant. ) )

No. 05-776-C Judge Eric G. Bruggink

ORDER DENYING DEFENDANT'S MOTION TO SUSPEND PROCEEDINGS The Court having considered Defendant's Motion to Suspend Proceedings and Plaintiffs' Opposition thereto, it is this _____ day of ____________________, 200__, ORDERED: (1) (2) Defendant's Motion to Suspend Proceedings is DENIED; and The parties shall file a Joint Preliminary Status Report by

____________________________.

ERIC G. BRUGGINK JUDGE

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CERTIFICATE OF SERVICE The undersigned certifies under penalty of perjury that on this 6th day of December, 2005, I caused a true and correct copy of the foregoing Plaintiffs' Opposition to Defendant's Motion to Suspend Proceedings to be filed with the Court and to be served via the Court's electronic filing system on the following: Sheryl L. Floyd, Senior Trial Counsel Commercial Litigation Branch Civil Division Department of Justice Attn: Classification Unit, 8th Floor 1100 L Street, N.W. Washington, DC 20530

s/ Jonathan L. Abram _ Jonathan L. Abram