United States District Court, E.D. Louisiana
THE UNITED STATES and THE ADMINISTRATORS OF THE TULANE EDUCATIONAL FUND, Plaintiffs
v.
CYTOGEL PHARMA, LLC, Defendant
SECTION:
“E”
ORDER AND REASONS
SUSIE
MORGAN, UNITED STATES DISTRICT JUDGE
Before
the Court is a motion to dismiss pursuant to Rule 12(b)(1) of
the Federal Rules of Civil Procedure filed by
Counterclaim-Defendant The United States of
America.[1]Counterclaim-Plaintiff Cytogel Pharma, LLC
(“Cytogel”) opposes the Government's
motion.[2]
BACKGROUND
On
August 19, 2016, Plaintiffs, the United States of America and
The Administrators of the Tulane Educational Fund, filed
their complaint against Cytogel in an action for declaratory
judgments of (1) patent ownership and (2) patent inventorship
from Cytogel's repeated claims to sole ownership of U.S.
Patent No. 8, 716, 436 B2 (the ‘436
Patent).[3] On September 7, 2016, Cytogel filed
counterclaims against the Plaintiffs and Dr. James
Zadina.[4] On November 7, 2016, the United States
filed its motion to dismiss Counts 2, 3 and 8-13 of
Cytogel's Counterclaims against it for lack of
subject-matter jurisdiction pursuant to Rule 12(b)(1) of the
Federal Rules of Civil Procedure.[5] On December 9, 2016,
Counterclaim-Plaintiff Cytogel Pharma, LLC, filed its
opposition to the United States' motion to
dismiss.[6]
LEGAL
STANDARD
“Federal
courts are courts of limited jurisdiction; without
jurisdiction conferred by statute, they lack the power to
adjudicate claims.”[7] A motion to dismiss under Federal Rules
of Civil Procedure 12(b)(1) challenges a federal court's
subject-matter jurisdiction.[8] Under Rule 12(b)(1), “[a]
case is properly dismissed for lack of subject matter
jurisdiction when the court lacks the statutory or
constitutional power to adjudicate the
case.”[9] “Lack of subject-matter jurisdiction
may be found in the complaint alone, the complaint
supplemented by the undisputed facts as evidenced in the
record, or the complaint supplemented by the undisputed facts
plus the court's resolution of the disputed
facts.”[10]“When, as here, grounds for
dismissal may exist under both Rule 12(b)(1) and Rule
12(b)(6), the Court should, if necessary, dismiss only under
the former without reaching the question of failure to state
a claim.”[11]
ANALYSIS
I.
Counts 2 and 3 of Cytogel's Counterclaim Against the
Government
In
Counts 2 and 3 of its Counterclaims, Cytogel alleges claims
against Dr. Zadina, Tulane and the United States for
infringement of the ‘958 Patent and the ‘578
Patent under 35 U.S.C. § 271(a).[12] In its motion
to dismiss, the Government argues Section 271 does not create
a cause of action against the government and that, although
28 U.S.C. § 1498 does create an infringement action for
“reasonable and entire compensation” against the
Government, Rule 13 does not permit an affirmative
counterclaim seeking more than mere recoupment.[13] In its
response to the Government's motion, Cytogel states it
does not oppose the dismissal of Counts 2 and 3 against the
Government but argues these claims should not be dismissed as
to Tulane or Dr. Zadina.[14] Accordingly, the Government's
motion to dismiss[15] Counts 2 and 3 is granted.
II.
Counts 8 to 13 of Cytogel's Counterclaim Against the
Government
The
Government argues Counts 8 to 13 of Cytogel's
Counterclaim improperly allege tort claims against the
Government and should be dismissed for lack of subject-matter
jurisdiction.[16]
In its
Opposition, Cytogel states it does not oppose the dismissal
of Count 12 against the Government.[17] With respect to Counts
8-11 and 13, the Government argues claims which sound in tort
are actionable against the United States only under the
Federal Tort Claims Act (FTCA).[18] The Government maintains
Counterclaims 8 to 11 and 13 allege claims only under state
law and therefore the Court lacks jurisdiction to hear these
claims.[19] Cytogel responds it is unnecessary to
state that its claims are brought under the FTCA as
“the FTCA does not create liability, it merely
waives sovereign immunity to the extent that state-law would
impose liability on a private individual in similar
circumstances.”[20] As a result, in its opposition,
Cytogel states, “[I]f the Court determines that
Cytogel's counterclaims should more explicitly state that
they are brought pursuant to the waiver of sovereign immunity
effected by the Federal Tort Claims Act, any such defect is
easily cured by amendment, and Cytogel requests that the
Court allow an opportunity for such an
amendment.”[21]
The
Court should “freely give” leave to amend
“when justice so requires.”[22] “When
it is apparent, however, that amendment will be futile,
dismissal without leave to amend is
appropriate.”[23] The Government, in its motion to
dismiss, states other arguments for dismissal of these claims
which demonstrate that Cytogel's request for leave to
amend its counterclaim with respect to these claims would be
futile.
The
Government correctly argues that Cytogel cannot properly
assert tort counterclaims under the FTCA in response to the
Complaint filed by the Government and Tulane.[24] It is
uncontested that Cytogel did not exhaust its administrative
remedies with respect to its counterclaims. It is also
uncontested that compulsory counterclaims are an exception to
the exhaustion of administrative remedies requirement of the
FTCA, 28 U.S.C. § 2675(a).[25] The parties disagree,
however, with respect to the meaning of compulsory
counterclaims as it pertains to claims against the
Government. Cytogel argues, “Generally, a counterclaim
is compulsory if it ‘arises out of the subject matter
of plaintiff's legal claim.'”[26] More
specifically, Cytogel maintains the Fifth Circuit has
explained that a counterclaim is compulsory if any of the
following are true: (1) the issues of fact and law raised by
the claim and counterclaim are largely the same; (2) res
judicata would bar a subsequent suit on defendant's
claim absent the compulsory counterclaim rule; (3)
substantially the same evidence will support or refute
plaintiff's claim as well as defendant's
counterclaim; or (4) there is any logical relationship
between the claim and the counterclaim.[27]
Rule
13(d) of the Federal Rules of Civil Procedure, however,
“reaffirms the sovereign immunity principle by
providing that it does not expand the right of a party to sue
the United States.”[28] “The United States
cannot be sued, however, unless it specifically consents to
be sued, either by statutory consent, or by instituting a
suit to which a defendant may plead matters in
recoupment.”[29] “The sole exception to the
requirement of administrative exhaustion applies ‘to
such claims as may be asserted under the Federal Rules of
Civil Procedure by third party complaint, cross-claim, or
counterclaim.”[30] “This exception has been narrowly
construed. With respect to counterclaims, the exception only
applies to compulsory counterclaims filed in response to
affirmative suits by the government which sound in
tort.”[31] In Frederick, the Fifth Circuit
explained:
Our conclusion is that when the sovereign sues it waives
immunity as to claims of the defendant which assert maters in
recoupment - arising out of the same transaction or
occurrence which is the subject matter of the
government's suit, and to the extent of defeating the
government's claim but not to the extent of a judgment
against the government which is affirmative in the sense of
involving relief different in kind or nature to that sought
by the government's claims; but the sovereign does not
waive immunity as to claims which do not meet the ‘same
transaction or occurrence test' nor to claims of a
different form or nature than that sought by it as plaintiff
nor to claims exceeding in amount that sought by it as
plaintiff.[32]
In
Texas v. Caremark, Inc., the Fifth Circuit,
interpreting Frederick, explained:
The [government] waives its sovereign immunity only to those
compulsory counterclaims, however; that is those
“arising out of the same transaction or occurrence
which is the subject matter of the government's
suit.” Sovereign immunity is not waived as to
permissive counter-claims, “which do not meet the
‘same transaction or occurrence test' nor
to [counter-] claims of a different form or nature than that
...