# In the United States Court of Federal Claims

No. 15-1575C

(Filed: September 26, 2016)

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Motion to Dismiss; Conditions Subsequent; Illega l Exaction; Implie d Covenant of Good Faith and Fair Dealing * BRYNDON FISHER, *
* Plaintiff, *
*
v. *

* THE UNITED STATES, *

*
Defendant. *
*

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Noah M. Schubert , Schubert, Jonckheer & Kolbe, LLP, San Francisco, California, for
Plaintiff.

Peter A. Gwynne , with whom were Benjamin C. Mizer

, Principal Deputy Assistant Attorney General, Robert E. Kirschman, Jr.

, Director, and Steven J. Gillingham , Assistant Director, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, Washington, D.C., for Defendant.

OPINION AND ORDER DENYING

DEFENDANT’S MOTION TO DISMISS

WHEELER, Judge.

This case is a putative class action against the Government that involves the Public Access to Court Records (“PACE R”) system. Plaintiff Bryndon Fisher alleges that PACER overcharges users because of a fa ulty pricing formula. Pursuant to Rule 23 of the Court of Federal Claims (“RCFC”), he seeks to represent a proposed class of PACER users who have been similarly overcharged.

The Government moved to dismiss Fishe r’s First Amended Co mplaint pursuant to RCFC 12(b)(1) and 12(b)(6) on June 15, 2016. It argues primarily that Fisher’s failure to satisfy a condition in the alleged PACER cont ract means this Court has no subject matter jurisdiction over this case, or, alternatively, means Fisher’s Co mplaint fails to state a claim upon which relief may be granted. Fisher f iled his opposition to th e Government’s motion2 on July 13, 2016, and the Government filed its reply on August 22, 2 016. Fisher filed his sur-reply with the Court’s l eave on September 6, 2016. 1 On September 15, 2016, the Court heard oral argument on the Government’s motion.

After reviewing the parties’ arguments during oral argument and in their filings, the Court finds the Government’s position meritle ss. Accordingly, Defendant’s motion to
dismiss is DENIED.

Background 2

Fisher brought this case to recover for ov ercharges caused by a “systemic error” in the Federal Judiciary’s PACER sy stem. FAC ¶ 1, 9. The PACE R system allows the public
to access records from all federal appellate, district, and bankruptcy courts, as well as the
Court of Federal Claims. Id. ¶ 9. The Programs Division of the Administrative Office of the U.S. Courts (“AO”) maintains PACER and, “through the PACER Service Center, provides centralized billing, registration, and technical support services for the Judiciary and the public.” Id. ¶ 12. There are over two million PACER us er accounts. Id. ¶ 13.

The Judicial Conference of the United St ates sets PACER’s fees. Id. ¶ 14. According to the governing statute, codified at 28 U.S.C. § 1913, “the Judicial Conference may, only to the extent necessary, prescribe re asonable fees . . . for access to information available through automatic da ta processing equipment.” Id. ¶ 15. The current PACER fee schedule shows that access to any case document or docket sheet costs ten cents per page, up to a maximum charge of three dollars per document or docket viewed (subject to certain non-applicable exceptions). Id. ¶ 1 7–18.; 28 U.S.C. § 1914. The AO also communicates the ten-cents-per-page fee to user s when they sign up for PACER accounts. FAC ¶ 20.

Although the ten-cents-pe r-page fee structure app lies throughout the PACER system, PACER uses a formula to bill user s for access to HTML-formatted reports (as opposed to PDF-formatted reports). Id. ¶ 21– 25. For HTML-formatte d reports, “a formula determines the number of page s” per report. Id. ¶¶ 21–23 (citing the PACER website, https://pacer.psc.uscourts.gov/Pscof/regWizard.js f). For such reports, “[t]he information extracted, such as data used to create a docke t sheet, is billed using a formula based on the number of bytes extracted.” Id. The PA CER user manual elabor ates further on the formula, and shows that “[b]illable pages for dock et reports, case reports, and search results are calculated using a formula based on the number of bytes extracted (4,320 bytes = 1

1 These filings are referred to herein respectively as “M ot.,” “Opp’n,” “Reply,” and “Sur-Reply.” They may be found at Docket Numbers 11, 12, 15, and 19. Additionally, Fisher’s First Amended Complaint (Dkt. No. 8) is referred to herein as “FAC.”

2 The Court draws the facts as stated in the Backgro und section of this Opinion from the FAC. For the purposes of the pending motion, these facts are assumed to be true.3 billable page).” Id. ¶ 24 (citing PACER User Manual for ECF Courts, https://www.pacer.gov/documen ts/pacermanual.pdf.). Theref ore, PACER users would expect to be charged ten cents per 4,320 bytes extracted wh enever they vi ew an HTMLformatted docket report. Id. ¶ 25.

The Government also points to PACER mate rials in its papers. Specifically, a clause in the PACER policy states that a ll PACER users “must alert the PACER Service Center to any errors in billing within 90 days of the date of the b ill.” Mot. at 3 (citing PACER Policy, https://www.pacer.gov/docume nts/pacer_policy.pdf). Further, the PACER manual also states, “If you think there is an error on your b ill, you must submit the Credit Request Form. Request s may also be faxed to the PA CER Service Center . . . .” Id. (citing PACER User Manual, https://www. pacer.gov/documents/pacermanual.pdf). There is no dispute that Fisher did not subm it a claim in accordance with these guidelines.

Fisher is a PACER user. Id. ¶ 29. He agreed to the PACER pricing scheme when he signed up for an account. Id . For two years prior to filing his complaint, Fisher accessed
184 HTML-formatted docket reports through PACER. Id. ¶ 31. He paid $109.40 to the AO to access these reports. Id. According to th e “bytes extracted” formula, Fisher alleges that the AO should have charged him only $72.40 for access to the reports—this means that he was overcharged by $ 37.00 (about 51%). Fisher wa s only able to discover the billing inaccuracy through “an investigation by expert consultants w ith advanced degrees in computer science.” Id. ¶ 33. These expe rts found that a “systemic error” in PACER’s billing system causes PACER to count the bytes in the case caption section of an HTMLformatted docket report five times when the case caption is more than 850 characters long. Id. ¶ 37–39. A member of the putative clas s, Carl Malamud, notif ied the PACER Service Center of this problem, but there is no indicati on that the Service Center fixed it. Id. ¶ 26–

28.

Fisher reasons that if he was overcharged, ot hers likely were as well. Therefore, he seeks pursuant to RCFC 23 to represent a class of “[a]ll PACER users who, from December 28, 2009 through present, accessed a U.S. Dist rict Court, U.S. Bankruptcy Court, or the
U.S. Court of Federal Claims and were char ged for at least one docket report in HTML format that included a case cap tion containing 850 or more ch aracters.” Id. ¶ 41. The proposed class excludes certain governme nt employees and judges. Id. ¶ 42.

Fisher alleges that the Government breach ed a contract with him and the proposed class by overcharging for the do cket reports. Id. ¶¶ 50–59. He also alleges that the Government breached the implied covenant of good faith and fa ir dealing. Id. ¶¶ 60–69. Finally, Fisher alleges that the Government’s collection of excessi ve PACER user fees amounts to an illegal exaction that violates th e Due Process Clause of the Fifth Amendment to the United States Constitution. Id. ¶¶ 70–79.4 Discussion

The Government argues that this Court lacks subject matter jurisdiction over this case or, in the alternat ive, that Fisher’s complaint fails to state a claim upon which relief may be granted. To support its arguments, the Government points to language in the PACER Policy and PACER User Manual that requires PACER users to submit billing complaints via a “Credit Request Form” and to “alert the Pacer Service Center to any errors in billing within 90 days of th e date of the bill.” See Mot. at 3. This language, the Government asserts, constitutes a condition pr ecedent in the PACER contract that PACER users must satisfy before th ey are entitled to compensati on from the AO fo r inaccurate charges. See Mot. at 6–11. Alternatively, it constitutes a requirement that a plaintiff exhaust administrative remedies before filing su it. See Reply at 9–13. Because Fisher did not satisfy this condition precedent, the Governme nt’s duty to repay Fi sher never arose, so this Court has no subject matter jurisdiction (or, in the alternative, Fi sher’s complaint fails
to state a claim for breach of contract). Id.

The Government further argues that the same language also means there is no statutory remedy for Fisher’s illegal exaction claim, so there also is no subject matter jurisdiction
over that claim. Id. at 13–15. Finally, the Government argues that Fisher’s allegations as to the implied covenant of good faith and fair dealing should be di smissed for failure to state a claim because they are du plicative of Fisher’s contract claims. Id. at 11–13. The
Court will address each of the Gove rnment’s arguments in turn.

I. The PACER Policy and User Manual do not Require a Plaintiff to Exhaust Administrative Remedies Before Filing Suit

If a statute requires a plainti ff to exhaust his administra tive remedies before filing suit, “a party’s failure to exhaust administrative remedies precludes judicial review of [his] claim.” Palladian Partners, Inc. v. United States, 783 F.3d 1243, 1255 (Fed. Cir. 2015). Still, this requirement means that an adequate administrative re medy must exist. In other words, there must at bare minimum be some inkling of an adversarial process in the administrative proceeding. See Sims v. Apfel, 530 U.S. 103, 109 (2000).

Here, the Government points to the PACE R Policy and PACER User Manual, which require parties to submit notice of billing errors to PACER for review within ninety days of discovering such errors. First, it is not even clear from the language in the PACER documents that parties must s ubmit claims before filing suit. The documents merely state
that all PACER users “must alert the PACER Serv ice Center to any erro rs in billing within 90 days of the date of the bill,” and that if a party discovers a billing error, he “must submit the Credit Request Form.” See Mot. at 3. Se cond, there is plainly no administrative remedy in place here. There is no adversarial proc ess after a PACER user submits the Credit Request Form, and there is no review process in place for the AO’s d ecisions. In sum,5 nothing in the two sentences the Government cites qualifies as an administrative remedy, so the Court may review Fisher’s claims.

II. This Court has Subject Matter Jurisdic tion Over Fisher’s Contract Claims

A. Standard of Review

Under the Tucker Act, 28 U.S.C. § 1 491(a)(1), this Court has subject matter jurisdiction to hear claims ag ainst the Government “founded . . . upon any express or implied contract with the United States.” Where a plaintiff alleges that he entered into a contract with the Government, the plain tiff need only allege a “non-frivolous allegation of a contract with the government.” Mendez v. United States, 121 Fed. Cl. 370, 378 (2015) (quoting Engage Learning, Inc. v. Sala zar, 660 F.3d 1346, 1353 (Fed. Cir. 2011)) (emphasis in original). Therefore, a plaintiff me rely must allege that “either an express or implied-in-fact contract underlies [his] claim. ” Id. (quoting Trauma Serv. Grp. v. United States, 104 F.3d 1321, 1352 (F ed. Cir. 1997)) (collecting add itional cases). Accordingly, to show jurisdiction, a plaintiff must plead th e elements of a contract: “(1) mutuality of intent to contract; (2) consideration; (3) an unambiguous offer a nd acceptance; and (4) actual authority on the part of the government ’s representative to bi nd the government.” Biltmore Forest Broad. FM, Inc. v. United States, 555 F.3d 1375, 1380 (Fed. Cir. 2009) (citation omitted).

B. Fisher has Met His Burden of Pleading Subject Matter Jurisdiction Over his
Contract Claims

Here, Fisher has met his burden of pleading jurisdiction. Th e contract at issue is the
contract all PACER users enter into with th e Government when they sign up for PACER accounts. According to this contract, PACER users a nd the Government agree (mutual agreement, offer, and acceptance) that the users will pay ten cents per page for access to court records (consideration). Further, the AO, which operates under the Judicial Conference of the United States, is specifica lly authorized by statute to administer the PACER program, so it has actual authority to contract on behalf of the Government. See 28 U.S.C. § 1913. Thus, Fisher has sufficiently alleged that a contract with the
Government underlies his claims.

The existence of any alleged condition in the contract is irrelevant to this Court’s jurisdiction because it is a meri ts issue in this case. See Mendez, 121 Fed. Cl. at 379 (collecting cases in which “a merits inquiry ha s bled inappropriately into a jurisdictional inquiry”). The existence of a condition determines whether Fish er may or may not recover. This issue goes to whether his complaint states a cl aim upon which relief may be granted, not whether this Court may exercise jurisdicti on. Therefore, this Court has subject matter jurisdiction over Fisher’s contract claims.6 III. Fisher’s Contract Claims State a Cl aim Upon Which Relief may be Granted

A. Standard of Review

A complaint fails to state a claim upon which relief may be granted within the meaning of RCFC 12(b)(6 ) “when the facts asserted by th e claimant do not entitle him to a legal remedy.” Briseno v. Un ited States, 83 Fed. Cl. 630, 6 32 (2008) (citation omitted). The Court also must construe allegations in the complaint favorably to the plaintiff. See Extreme Coatings, Inc. v. Un ited States, 109 Fed. Cl. 450, 4 53 (2013). Still, “a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Id. (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citation omitted)). Further, a plaintiff may not simp ly plead “labels and conclusions” or “a
formulaic recitation of the elements of a cause of action.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citations omitted).

B. No Condition in the Contract Pr events Fisher from Recovering

To plead a breach of contract claim, a pl aintiff must allege (1) a valid contract between the parties, (2) an obligation or duty arising out of the contract, (3) a breach of that duty, and (4) damages caus ed by the breach.” San Carl os Irrigation & Drainage Dist. v. United States, 877 F.2d 957, 959 (Fed. Cir. 1989). The issue of wh ether or not Fisher has sufficiently alleged a breach of contract claim therefore rests on elemental principles of contract law, so it is necessary to clarif y the nature of Fisher’s alleged contract.

First, Fisher alleges that the parties ente red into a bilateral contract. A bilateral contract exists where both parties exchange pr omises, whereas a unilateral contract results where one party exchanges a pr omise for another party’s performance—that is, one party may only accept the contractual offer by performi ng in full. See Rest atement (Second) of Contracts § 50 (Am. Law Inst. 1981) (“Restatement”); see al so Lucas v. United States, 25 Cl. Ct. 298, 304 (1992) (explaining that a priz e competition is a unilateral contract because it requires participants to submit entries in re turn for a promise to consider those entries and award a prize). Here, Fisher alleges that the AO promised him ac cess to court records in return for Fisher’s promise to pay ten ce nts per page (or, per 4,320 extracted bytes) for this access. See FAC ¶ 57. 3 Therefore, the PACER contract is bilateral.

This exchange of promises also means that the AO cannot char ge more than ten cents per page. In doctrinal terms, if the Government charged more than the agreed-upon amount, it would essentially be forcing a c ontract modification on Fisher without his knowledge or assent. See Union Pac. R.R. Co . v. Chicago, Milkwaukee, St. Paul. & Pac.

3 During oral argument, the Government asserted that it did not concede the existence of a contract in this case. It is difficult to understand why, as it seems clear that Fisher would need some sort of contract to obtain access to court records in exchange for money.7 R.R. Co., 549 F.2d 114, 118 (9th Cir. 1976) (“One party ca nnot unilaterally modify a contract without the consent of the other pa rty, or without consideration.”) (citations omitted); see also Restatement § 89 (listing requirements for contract modification). Therefore, Fisher essentially has alleged th at the Government has breached the PACER contract through its unilatera l modification without notice.

The question next becomes whether a cond ition subsequent in the PACER contract extinguished the Government’s duty to perform in this case. Parties generally may include
conditions in a contract that extinguish one party’s duty to remedy a breach if a certain

event occurs. See Rest atement § 230. This type of condition is sometimes known as a “condition subsequent.” Id. cmt. a. 4 The Government argues thatit included just such a term in the PACER contract. It points to language in the PACER policy and manual, and argues that “the submission of claims to th e PACER Service Center is, by the plain terms of the alleged contract, a condition [subsequent] to any duty to refund billing errors.” Mot. at 7. The exact language the Government cite s is: (1) that all PACER users “must alert the PACER Service Center to any erro rs in billing within 90 days of the date of the bill,” Mot. at 3 (citing PACER Policy, https://www.pacer.g ov/documents/pacer_policy.pdf); and (2) “If you think there is an error on your bill, you must submit the Credit Request Form. Requests may also be faxed to the PACER Serv ice Center . . . .” Id. (citing PACER User Manual, https://www.pacer.gov/documents/pa cermanual.pdf). Thus, according to the Government, if Fisher did not submit cl aims to the PACER Service Center, the Government’s duty to remedy its breach of contract by refunding any billing errors is extinguished.

However, courts dislike cond itions because they lead to forfeitures, so they generally will not construe contractual languag e as a condition unless the language leaves no room for doubt. See RT Computer Graphics, Inc. v. United States, 44 Fed. Cl. 747, 756 (1999). Thus, conditions must expressly be stat ed in conditional langua ge; i.e., if party A does not do X, then party B is not required to do Y. For example, in Park Properties Assocs., L.P. v. United States, the Court fou nd that a condition existed where contractual language stated, “If the owner fails to subm it the information requir ed by this Notice at least 60 days before the contract anniversary date, then the rent levels will not be adjusted on the contract anniversary date . . . .” 82 Fed. Cl. 162, 166, 169–170 (2008). This language indicates both a cond ition and the event that will not happen if the other party does not satisfy the condition. Requiring partie s to spell out conditional language in this

4 A condition subsequent is different from a condition preced ent (the term both parties use in their briefs). For a condition to be a condition precedent, it must di scharge one party’s duty to perform under the contract in the first place. See Restatement § 224. Conditi ons subsequent operate to excuse one party’s further performance after the parties have begun performing. Fo r example, they may discharge a party’s obligation to remedy a breach. See id. § 230.8 way makes sense, as the parties to a contr act should explicitly be made aware that the possibility of forfeiture exists.

Here, however, the case is not close, and th ere is plenty of room for doubt. The language in the PACER documents cannot be construed as conditional. The closest it comes is “if you think there is an error on your bill, you must submit the Credit Request Form.” Still, there is no indication in this sentence that submitting a claim in a different way (other than via the Cred it Request Form) means that PA CER users must forfeit their overpaid money. The sentence is not conditional. Had the Government written “you must submit the Credit Request Form or else you will not be paid,” th en the sentence would have been a condition. As no such language ap pears in the PACER do cuments, however, the
Government’s claim that a cond ition subsequent prevents Fishe r’s recovery in this case fails. Therefore, Fisher has stated a claim for breach of contract.

IV. Fisher’s Implied Covenant of Good Faith and Fair Dealing Claims are Not Duplicative of his Contract Claims

The Government also argues that Fisher cannot maintain clai ms for both breach of contract and breach of an implie d covenant of good fa ith and fair dealing. See Mot. at 11– 13. In response, Fisher argues that his br each of contract claim “addresses Defendant’s overcharges in violation of the express term s of the PACER contract,” but his “claim for breach of the implied covenant addresses defendant’s knowled ge and concealment of the manner in which certain bytes were calculat ed for billing purposes.” Opp’n at 15 (citing FAC ¶¶ 58, 68).

The Court finds that Fisher’s implied covenant claims merely supplement his express contract claims. The implied covenant of good faith and fair dealing “is implied as a supplement to the express contractual c ovenants, to prevent a contracting party from engaging in conduct which (while not tec hnically transgressing the express covenants) frustrates the other party’s rights to the benefits of the contract.” Metcalf Const. Co. v. United States, 742 F.3d 984, 99 4 (Fed. Cir. 2014) (citations omitted). Applied to the contract at issue here, this me ans that an implied covenant existed in the PACER contract pursuant to which the Government agreed not to frustrate Fisher’s ability to detect billing errors. This implied covenant is not duplicative of Fisher’s express contract claims, which allege that the overcharges themselves viol ate the PACER contract’s express terms. Therefore, Fisher’s complaint does not fail to state a claim on these grounds.

V. The Court has Subject Matter Juri sdiction over Fisher’s Illegal
Exaction Claims

The Government argues that this Cour t lacks subject-matter jurisdiction over Fisher’s illegal exaction clai ms because Fisher has not a lleged a statutory remedy that supports an illegal exaction claim. Specifica lly, the Government argues that Fisher’s ten-9 cents-per-4,320-bytes allegation stems from the “policies and procedures of the AO,” which makes those policies part of the govern ing statute for purposes of determining a statutory remedy. See Mot. at 15. These sa me policies require claimants to submit claim forms within 90 days, and Fish er did not do this; therefore, Defendant argues, his illegal
exaction claims must fail.

The Court does not agree. Un der the Tucker act, 28 U.S.C. § 1491(a)(1), this Court may adjudicate claims “made for recovery of monies that the government has required to be paid contrary to law.” Aerolineas Argentin as v. United States, 77 F.3d 1564, 1572 (Fed. Cir. 1996) (citation omitted). A plaintiff may maintain a claim for illegal exaction if he “has paid money over to the Government, directly or in effect, and seeks return of all or part of that sum that was improperly paid , exacted, or taken from the claimant in
contravention of the Constitutio n, a statute, or a regulation.” Id. at 1572–73 (citation omitted).

Here, Fisher alleges that PACER’s governin g statutes, codified at 28 U.S.C. § 1913– 14, and its policies require the AO to charge no more than ten cents per page (or, per 4,320 bytes extracted) for access to PA CER. Under Fisher’s theory , any money charged over ten cents per page would be paid “contrary to law.” Id. at 1 572. As noted above, the AO’s requirements for claim submissi on do not constitute a condition s ubsequent that discharges the Government’s duty to refund any overcharged amount. See Part III, supra. Therefore, Fisher has sufficiently alleged that the Gove rnment illegally overcharged him contrary to PACER’s governing statutes a nd policies, and his complaint states a claim for illegal
exaction.

Conclusion

The Court finds that it has subject matter ju risdiction over all of Plaintiff’s claims,
and that Plaintiff’s First Am ended Complaint states clai ms upon which relief may be granted. Accordingly, Defendant’s motion to dismiss is DENIED. De fendant is directed
to file its Answer to the Am ended Complaint within 14 days , on or before October 11,

2016.

IT IS SO ORDERED.

s/ Thomas C. Wheeler

THOMAS C. WHEELER Judge