Court Opinion

ID: 9492192
Source: CourtListenerOpinion
Date Created: 2023-08-05 14:34:23.445081+00
Date Added: 2024-06-11T17:55:09.546456
License: Public Domain

PLAGER, Circuit Judge,
dissenting-in-part and concurring-in-part.
I must respectfully dissent. The court refuses to honor an explicit mandate of an *1379unequivocal Congressional enactment. “Legislative history” cannot justify that refusal.1 A court has a responsibility to arrive at the right result in a case; it also has the obligation to explain itself in a manner that does no harm to the fabric of the law. Though the right result may eventually emerge, the route the court takes to get there has the potential for causing considerable harm to legal principles that I deem important.
In the first part of its opinion, the court describes the Government’s efforts over time to adjust the risks that are inherent in cutting-edge R & D contracts so that they are fair both to the Government and the contractor. See slip op. at 1369-70. These efforts begin at least in 1971 with DODD 5000.1, and culminate, for purposes of this case, with the enactment in 1987 of § 8118 as part of that year’s Department of Defense (“DoD”) Appropriations Act. See id. at 1370-72. As the court explains, § 8118 prohibited using Government funds for fixed price-type R & D contracts except under certain conditions.
The court then sets out the history of the R & D contract at issue in this case, and concludes, correctly, that Section 8118 applies to this DoD fixed price-type alleged contract. See id. at 1372-73. The court concludes, again correctly, that the exception provided in the statute, permitting a fixed price-type R & D contract under certain conditions, is not applicable since the DoD did not take the steps necessary to qualify for an exception. See id.
This is the same conclusion on the point reached by the Court of Federal Claims, which this court now affirms. The court rejects the Government’s various arguments to the contrary, and finally concludes this part of its analysis with the statement that: “Although the government stresses that the contract was awarded only nine days after the enactment of § 8118, this does not excuse the failure of all compliance.” Id.
Given that the court recognizes the language of the Act to expressly prohibit the use of Government funds for such a contract, the obvious and ineluctable conclusion would appear to be that there was no contract, since as a matter of law such contracts were prohibited, and since there could be no consideration offered for the contractor’s promised performance. Remarkably, the court reaches exactly the opposite conclusion, and finds the contract valid, and presumably enforceable. For the reasons I shall explain, I cannot join the court in this.
1.
Omitting the inapplicable exception language and its related provisos, the operative words of the statute are clear and to the point: “None of the funds provided for the [DoD] in this [Appropriations] Act may be obligated or expended for fixed price-type contracts.... ” It is a rule of constitutional law that, in absence of an express appropriation, agencies may not spend, and a fortiori cannot validly contract to spend, any federal dollars. See U.S. Const, art. I, § 9, cl. 7 (“No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.”). The Supreme Court earlier reversed us when in another context we failed to properly apply that principle. See Office of Personnel Management v. Richmond, 496 U.S. 414, 110 S.Ct. 2465, 110 L.Ed.2d 387 (1990).
Here, we do not have simply an omission of authorization to expend; we have an outright prohibition: “None of the funds *1380[otherwise appropriated] may be expended ...” for the precise purpose for which the DoD contracted. Surely it should not be necessary for Congress to have added: “and we mean it,” or perhaps, “and we mean it, and if you try, it won’t be any good, so don’t even bother.”
It is not uncommon for Congress to put prohibitions such as that contained in § 8118 in Acts appropriating funds to executive branch agencies.2 A recent case in point: Congress, in an Appropriations Act which included the U.S. Environmental Protection Agency,3 specified that “none of the funds made available under this heading may be used by the Environmental Protection Agency ... [for certain described activities affecting states] unless the Administrator receives a written request ... from the Governor of the State....” The EPA, on the basis of an authorizing letter from a state official, not the Governor, undertook such activity with regard to certain property in California. Affected interests appealed.
Judge Sentelle, writing for the Court of Appeals for the District of Columbia Circuit, found that the state official’s letter did not meet the terms of the statute, and readily concluded that, in the absence of a letter from the Governor himself, the EPA action was “null and void,” and “was necessarily invalid.” Harbor Gateway Commercial Property Owners’ Ass’n v. United, States Envtl. Protection Agency, 167 F.3d 602, 607 (D.C.Cir.1999).4
In response to the Government’s argument that EPA officials considered themselves to be in compliance, and in any event an invalidation of the action would require that the action be done again and would just cost the Government more money, the District of Columbia Circuit answered:
We refuse to ignore the plain language of the Act in order to avoid potential costs which would not have arisen had EPA complied with the statute’s language in the first instance. Indeed, when a statute’s meaning is clear, and the enactment is within the constitutional authority of Congress, the “sole function of the cowls is to enforce it according to its terms. ”
Id. at 606 (emphasis added). That seems to be the law on the subject; I know of no cases to the contrary, and the court here cites none.
In this case, AT & T, after due negotiation with the Navy, offered to make and sell to the Navy for an agreed fixed price a submarine-detecting piece of equipment. The Navy accepted the offer, and proposed to pay for the work using funds from the 1987 Appropriations Act that contained the express prohibition set out above. As the Harbor Gateway court explained, the Navy’s action was “null and void,” and “necessarily invalid.”
Furthermore, the Navy’s action in this case was taken for the purpose of entering into a contract. But the Navy was legally incapable of using Government funds unless it told Congress what it was up to in the manner required by the statute, which the Navy chose not to do. (It is difficult *1381not to believe that both parties were fully aware of the statute and simply chose to ignore it, though that is of no moment to the issue before us.5) Thus, not only was the act of contracting prohibited by statute, but as a matter of basic contract law no legally-binding contract could be created: offer, acceptance, and consideration remain a fundamental requirement for a legally-binding contract, whether between private parties or between a private party and the Government. See, e.g., Harbert/Lummus Agrifuels Projects v. United States, 142 F.3d 1429, 1434 (Fed.Cir.1998); Trauma Serv. Group v. United States, 104 F.3d 1321, 1325 (Fed.Cir.1997). Here, the Government could neither offer or pay consideration; no consideration, no contract, end of discussion, at least with respect to contract validity under basic contract principles.
2.
I cannot agree with the court that the “purpose” of the statute overrides its express terms. The court tells us that this statute “must be considered in light of the statutory or regulatory purpose, with recognition of the strong policy of supporting the integrity of contracts made by and with the United States.” Slip op. at 1374. Clearly, however, the purpose of this statute, expressed in no uncertain language, is exactly the opposite — it is intended to prevent contracts with the United States in contravention of its terms, not to support them.
It has been some years since a court-invented “purpose” so blatantly repealed a Congressional enactment. Last century, in Rector, etc. of Holy Trinity Church v. United States, 143 U.S. 457, 471, 12 S.Ct. 511, 36 L.Ed. 226 (1892), the Supreme Court announced that this is a “Christian nation,” and on that basis concluded that the purpose of a statute gration of foreign workers could not possibly be to prevent an English clergyman from coming to work in the United States. In this century, and certainly in recent times, purpose-inventing by judges has received the opprobrium it deserves when used as an excuse for ignoring the law.
Professor Dickerson, one of the early writers on statutory interpretation, described the process of purpose-inventing as if he had this case in mind:
As with legislative intent, the danger in presuming an actual legislative purpose beyond what is expressly or impliedly revealed is that the interpreter will either attribute to the statute a purpose of his own contriving or search for actual purpose so relentlessly that he goes beyond the limits of the appropriate available evidence.
Reed Dickerson, The Interpretation and Application of Statutes 92 (1975).
Writing more formally for the Court a half-century ago, Justice Jackson said, “we take the Act as Congress gave it to us, without attempting to conform it to any notions of what Congress would have done if the circumstances of this case had been put before it.” Western Union Tel. Co. v. Lenroot, 323 U.S. 490, 501, 65 S.Ct. 335, 89 L.Ed. 414 (1945). In the same vein, and more recently, the Supreme Court, Justice Scalia writing, said, “Courts may not create their own limitations on legislation, no matter how alluring the policy arguments for doing so,.... ” Brogan v. United States, 522 U.S. 398, 118 S.Ct. 805, 811-12, 139 L.Ed.2d 830 (1998).
In support of its position, the court cites various pieces of what it describes as legislative history. However, a prerequisite to judicial use of legislative history, even relevant legislative history, is a finding that *1382the statute at issue is ambiguous. “Our first step in interpreting a statute is to determine whether the language at issue has a plain and unambiguous meaning with regard to the particular dispute in the case. Our inquiry must cease if the statutory language is unambiguous and ‘the statutory scheme is coherent and consistent.’” Robinson v. Shell Oil Co., 519 U.S. 337, 117 S.Ct. 843, 136 L.Ed.2d 808 (1997) (Justice Thomas, writing for a unanimous Court) (quoting United States v. Ron Pair Enters., Inc., 489 U.S. 235, 240, 109 S.Ct. 1026, 103 L.Ed.2d 290 (1989)). To the court’s credit here, the majority does not pretend to find in this unequivocal statute any ambiguity. Rather, it simply concludes that committee report language, nowhere addressed to the specific problem before us, trumps statutory clarity.6
The committee report language the court cites includes certain 1988 House and Senate reports. In the first place, this so-called legislative history is not history - that is, the House and Senate Reports the court cites with such authority (see maj. op. at 1374-75) were written after § 8118 was enacted in 1987, and relate to later-considered legislation. How the views of a later Congress, not contained in actual legislation, can be seen as amending or modifying prior legislative acts, is not explained. And, even assuming that any of that legislative history is relevant to understanding the 1987 Act, the only consistent thread in all of it is the expression of congressional irritation and frustration with the DoD’s (or at least the Navy’s) stubborn insistence on doing what Congress wanted stopped.
Further, when examined, even the terms in which the language of the 1988 Senate Report was written, heavily relied upon by the court to support its conclusion, see maj. op. at 1375, fail to support the court’s view. The Report states that “this section [not § 8118 of the 1987 Act, but a later-proposed section] not be used as the basis for litigating the propriety of an otherwise valid contract.” S.Rep. No. 100-326, at 105 (1988). Since by its terms a contract in direct violation of § 8118 is not “otherwise valid,” the statement proves nothing with regard to § 8118, whether it be the 1987 version or the proposed 1988 version. And in case a court should miss that point, the very next sentence in the Report is: “Nothing in this section shall be construed to affect the requirements of section 8118 of the Department of Defense Appropriations Act, 1988.” Id.
3.
The court finds further justification for its emasculation of the statute by opining that “Congress can not have intended to charge the contracting partner with adverse consequences depending on whether the Defense Department carried out the internal responsibilities and filed the reports that Congress required.” Slip op. at 1375. The response to that observation is that that would appear to be exactly what Congress intended. AT & T, one of the country’s leading government contractors,7 could be expected to be familiar with government contracting laws. It is difficult to imagine that AT & T was unaware of the battle between Congress and the DoD *1383over these fixed price-type contracts. At the least, it is not irrational for Congress to have assumed that a contractor, like AT & T, proposing to undertake a major R & D contract would know who in the .DoD to contact regarding the requirements for the contract they were negotiating, and that the DoD’s lawyers would know the relevant law.
What the court seems to have in mind here, though it does not say so, is the rule, sometimes called the “Golden Rule,” that a statute should not be understood to call for an absurd result. Just as finding a statute ambiguous permits a court to go beyond the terms of the statute, in searching for meaning, the Golden Rule permits a court to go beyond the apparent meaning of a statute when its application would be absurd.
Justice Kennedy described the Rule thusly:
Where the plain language of the statute would lead to “patently absurd consequences,” that “Congress could not possibly have intended,” we need not apply the language in such a fashion.... This exception remains a legitimate tool of the Judiciary, however, only as long as the Court acts with self-discipline by limiting the exception to situations where the result of applying the plain language would be, in a genuine sense, absurd, i.e., where it is quite impossible that Congress could have intended the result, and where the alleged absurdity is so clear as to be obvious to most anyone.
Public Citizen v. United States Dep’t of Justice, 491 U.S. 440, 470, 109 S.Ct. 2558, 105 L.Ed.2d 377 (1989) (Kennedy, J., concurring). > a statute that orders the DoD not to spend money in a wasteful way is “absurd” within the definition set forth by Justice Kennedy.
Emphasizing the narrow scope of the absurdity exception, Justice Kennedy went on -to note:
Where it is clear that the unambiguous language of a statute embraces certain conduct, and it would not be patently absurd to apply the statute to such conduct, it does not foster a democratic exegesis for this Court to rummage through unauthoritative materials to consult the spirit of the legislation in order to discover an alternative interpretation of the statute with which the Court is more comfortable.... The problem with spirits is that they tend to reflect less the views of the world whence they come than the views of those who seek their advice.
Id. at 473,109 S.Ct. 2558 (internal citations omitted) (Kennedy, J., concurring).8
4.
AT & T has no rightful claim to another penny of public money. It agreed to build and sell a product to the Government for a fixed price. It performed its end of the deal, and delivered the goods. The Government likewise performed its part of the deal; it' paid AT & T the agreed-upon price (actually more, as a result of negotiated add-ons).
If the contract had been valid under governing law, AT & T would have no basis for claiming more money; our precedents are unequivocal that full payment *1384under a valid fixed price-type contract is all to which a contracting party is entitled.9 The risk of loss for misjudging what it takes to perform, or for deliberately underbidding, is on the contractor, not the Government.10
AT & T now seeks to take advantage of the fact that the deal it made with the Government did not result in an enforceable contract, which it likely knew (and certainly should have known) when it proposed to enter into the agreement. AT & T demands more money for what it has been fully paid to do. The answer to that facially nonsensical demand is, in a word, “no.”
Perhaps the court thought it could not get there if, in accordance with the statute, it held the contract invalid. Actually, the right answer is not that difficult, even accepting the fact that there is no legally-enforceable contract between the parties. AT & T argues that, since the contract it made is unenforceable, it should be treated as having an “implied-in-fact” contract, a key term of which would be different from that to which the parties actually agreed. The different term would be that the contract would not be for a fixed price, but instead would be a cost-plus contract. That would take the contract outside the scope of § 8118, and give AT & T a rightful claim to all the money for which it asks.
That would also make nonsense out of the concept of an implied-in-fact contract. An implied-in-fact contract is a form of consensual contract, reflecting the basic requirements for such a contract including that of a meeting of the minds. It differs from the usual express contract only in that the terms, instead of being expressly stated by the parties, are derived from their conduct. Nothing here in the conduct of the parties suggests an agreement to have a cost-plus contract; on the contrary, the parties specifically stipulated to a fixed price-type contract.
If AT & T is to have any remedy entitling it to more than what it has been paid, its claim must be based on some sort of equitable claim for payment for goods sold and delivered, a quantum valebat claim.11 Even assuming for discussion purposes that the Court of Federal Claims could exercise the powers of a court of equity, AT & T has no equity on its side, and therefore is not entitled to the intervention of a court of equity.
AT & T comes to the court with unclean hands. AT & T is not an innocent bystander being taken advantage of by a predator government. Both the Government and AT & T knew exactly what they *1385were doing when they entered into this deal. It simply defies belief that AT & T was unaware of § 8118 when it purported to contract with the Government or was unaware that the Navy was proceeding with the contract in the manner the Navy did.
In any event, that does not matter. The most that AT & T would be entitled to under any equitable theory is the fair value of the goods sold, and that value was agreed to by AT & T when it made the deal with the Navy. The goods are one-of-a-kind, not to be found on the shelf at your usual military equipment supermarket. There can be no better method for determining a fair price for the goods than to see what a willing seller would sell them for to a willing buyer.
AT & T does not allege that it was coerced by the Government, or that it was caused to enter into the deal by fraud. It simply wants more money for a product it agreed to provide for a price that proved, according to AT & T, too low. An inefficient, wasteful, or simply ignorant contractor cannot foist off on the other contracting party the consequences of its own incompetence.12 The law in a case like this leaves the parties where it found them.13
The en appears give AT & T any more money on its so-called non-contract claim. As I said at the beginning, a court has a responsibility to arrive at the right result, but also an obligation to do no harm to the fabric of the law. A wrong result is an injustice to one party; distorting important legal principles is a disservice to the entire legal system.
It is true that statutory interpretation does not occur in a vacuum. Words take meaning from the context in which they are used, and, when text and context yield genuine doubt, courts may seek guidance from accepted canons, from history, and from legislative purpose when it can be authoritatively known. In many cases, construing Congressionally-mandated language is as much an art as it is linguistic science. But it is not an art in which the picture that emerges is without constraints, or is limited only by the imagination of the artist.
There is an established methodology that courts employ in construing statutes. As the quoted excerpts from the Supreme Court show, the methodology is well-recognized, even if judges do not always agree on how much weight to give to its various parts in a given case.14 The methodology is designed to provide guidance *1386for the exercise of judicial self-discipline, the self-discipline that produces principled decisions.
This court has in the past expressly recognized the governing principles: “A statute is by definition the law to be followed — not disregarded, effectively repealed, rewritten, or overruled (unless unconstitutional) — in the federal courts,” In re Mark Indus., 751 F.2d 1219, 1224 (Fed.Cir.1984), and recently reiterated the point: “This court is empowered to rewrite neither statutes nor regulations, however unwise, nor does it have the information base nor expertise to do so effectively,” Newport News Shipbuilding & Dry Dock Co. v. Garrett, 6 F.3d 1547, 1558 (Fed.Cir.1993).
In sum, since the statute before us is not ambiguous and its application to the ease would not require an absurd result, there is neither reason nor justification for reaching beyond the statute to legislative history or supposed purpose in order to find a different answer. Further, what little known legislative history there is I find inapposite and unpersuasive. Accordingly, I believe it is our duty to apply the statute as it has been given to us by Congress.
Thus, my answers to the questions certified are: (1) yes, the contract is null, void, and necessarily invalid, as the Court of Federal Claims correctly concluded; and (2) no, AT & T is not entitled to any equitable or other remedy on the facts presented, even if the Court of Federal Claims had power to grant such a remedy. I respectfully dissent from the court’s contrary view.

. A similar reaction was eloquently expressed by Chief Judge Joseph of the Oregon Court of Appeals in an award to his colleagues. See Western Communications, Inc. v. Deschutes County, 100 Or.App. 706, 788 P.2d 1013, 1017 (Or.App.1990) (Joseph, C.J., dissenting-in-part, concurring-in-part).

. Cf. Rust v. Sullivan, 500 U.S. 173, 111 S.Ct. 1759, 114 L.Ed.2d 233 (1991) (construing the phrase "method of family planning” in an Act appropriating funds to the Department of Health and Human Services, subject to a proviso that stated: "None of the funds appropriated under this subchapter shall be used in programs where abortion is a method of family planning.”).

. See Omnibus Consolidated Rescissions and Appropriations Act of 1996, Pub.L. No. 104-134, 110 Stat. 1321-298.

. Judge Wald dissented. She did not disagree with the court's understanding of the consequences of noncompliance with the statute, but dissented on the grounds that the state official's letter was “the functional equivalent” of a governor's letter. See Harbor Gateway, 167 F.3d at 607 (Wald, J., dissenting).

. As my colleagues know, I spent some years of my life as a sea-going officer in the U.S. Navy; it is not easy for me to be critical of the Service, but the facts are what they are.

. The concurring opinion stays within established statutory interpretation principles by attempting to redefine the scope of § 8118. Unfortunately, for the reasons well-explicated in the opinion of the court majority, the attempt to have this contract escape the clutches of § 8118 fails.

. For the year 1987, AT & T was listed as 15th among the Top 100 Federal Contractors, with 1,438 procurement actions worth something over $2 billion. See Federal Procurement Data Center, Governmentwide Information Systems Division, MVS, GSA, Central Office, Top 100 Federal Contractors 14 (Jan. 25, 1988). AT & T was 16th in 1988. See Federal Procurement Data Center, Government-wide Information Systems Division, MVS, GSA, Central Office, Top 100 Federal Contractors 14 (Feb. 2, 1989).

. Justice Rehnquist expressed the same sentiment in United Steelworkers of America v. Weber, 443 U.S. 193, 254, 99 S.Ct. 2721, 61 L.Ed.2d 480 (1979) (Rehnquist, J., dissenting) ("Finding the desired result hopelessly foreclosed by these conventional sources, the Court turns to a third source -the 'spirit' of the Act. But close examination of what the Court proffers as the spirit of the act reveals it as the spirit animating the present majority, not the 88th Congress.").

. See, e.g., Loral Corp. v. United States, 193 Ct.Cl. 473, 434 F.2d 1328, 1330 (1970) ("[T]he type of contracts in question are firm fixed-price contracts and once the price was agreed upon, that price remains fixed and it is not subject to further negotiation, unless otherwise provided in the contract.”); see also 48 C.F.R. § 16.202-1 ("A firm fixed-price contract provides for a price that is not subject to any adjustment on the basis of the contractor's cost experience in performing the contract.”); cf. ITT Fed. Servs. Corp. v. Widnall, 132 F.3d 1448, 1451 (Fed.Cir.1997) (holding that ITT was not entitled to recovery of normal severance costs because in a firm, fixed-price contract situation, the contractor assumes responsibility for all such costs that may be incurred).

. See, e.g., ITT, 132 F.3d at 1451 (Fed.Cir.1997) (agreeing with the ASBCA that in a firm fixed-price contract situation, the contractor "assumes maximum risk and full responsibility for all such costs that may be incurred”); see also 48 C.F.R. § 16.202-1 (placing upon the contractor "maximum risk and full responsibility for all costs and resulting profit or loss”); cf. Emerald Maintenance, Inc. v. United States, 925 F.2d 1425, 1430 (Fed.Cir.1991) (noting that the risk of loss was on the contractor who "should not be compensated for incurring added expenses resulting from assuming that risk”).

.An action for goods sold and delivered, "founded on an implied assumpsit or promise, on the part of the defendant, to pay the plaintiff as much as the goods were reasonably worth.” Black’s Law Dictionary 1244 (6th ed. 1990).

. It should be obvious that, just as AT & T could not claim additional payment for goods for which it has been fully paid, it could not claim ownership of the goods for purposes of recovering them, for example, in a replevin action. A suggestion to the contrary could not be taken seriously. Even if the law would contemplate it, it is hard to imagine a major American contractor, whose fiscal lifeblood comes in substantial measure from contracts with the United States Government, even thinking about replevying a secret government weapon for resale elsewhere. Money is one thing; fiscal suicide is another.

. See, e.g., Keystone Driller Co. v. General Excavator Co., 290 U.S. 240, 245, 54 S.Ct. 146, 78 L.Ed. 293 (1933) ("A court of equity acts only when and as conscience commands; and, if the conduct of the plaintiff be offensive to the dictates of natural justice, then, whatever may be the rights he possesses, ... he will be held remediless in a court of equity.” (internal quotations omitted) (quoting Deweese v. Reinhard, 165 U.S. 386, 390, 17 S.Ct 340, 41 L.Ed. 757 (1897))).

.The methodology of statutory interpretation, with all its ramifications, has become one of the darlings of academic discourse, and is offered as a proper subject of study in many of the leading law schools, taught from modern-day casebooks. See, e.g., William D. Popkin, Materials On Legislation: Political Language and the Political Process (Found. Press 2d ed.1997); William Eskridge & Philip Frickey, Cases and Materials on Legislation— Statutes and the Creation of Public Policy (West Pub. Co.2d ed.1995); Abner Mikva & Eric Lane, Legislative Process (Little, Brown 1995).