Court Opinion

ID: 4546532
Source: CourtListenerOpinion
Date Created: 2020-07-07 16:00:50.923171+00
Date Added: 2024-06-11T12:50:45.457852
License: Public Domain

Case: 19-2060    Document: 48     Page: 1   Filed: 07/07/2020

        NOTE: This disposition is nonprecedential.

   United States Court of Appeals
       for the Federal Circuit
                  ______________________

                    SIN HANG LEE,
                    Plaintiff-Appellant

                             v.

                    UNITED STATES,
                    Defendant-Appellee
                  ______________________

                        2019-2060
                  ______________________

     Appeal from the United States Court of Federal Claims
 in No. 1:18-cv-00686-LKG, Judge Lydia Kay Griggsby.
                  ______________________

                   Decided: July 7, 2020
                  ______________________

     MARY ALICE LEONHARDT, Moore Leonhardt & Associ-
 ates LLC, Hartford, CT, argued for plaintiff-appellant.

     GALINA I. FOMENKOVA, Commercial Litigation Branch,
 Civil Division, United States Department of Justice, Wash-
 ington, DC, argued for defendant-appellee. Also repre-
 sented by JOSEPH H. HUNT, ROBERT EDWARD KIRSCHMAN,
 JR., LOREN MISHA PREHEIM; HEATHER HUNTLEY, Centers
 for Disease Control and Prevention, Atlanta, GA.
                   ______________________
Case: 19-2060     Document: 48     Page: 2     Filed: 07/07/2020

 2                                       LEE   v. UNITED STATES

     Before PROST, Chief Judge, REYNA and STOLL, Circuit
                           Judges.
 STOLL, Circuit Judge.
     Dr. Sin Hang Lee appeals the United States Court of
 Federal Claims’ decision dismissing his amended com-
 plaint for failure to sufficiently allege facts demonstrating
 formation of an implied-in-fact contract with the Centers
 for Disease Control and Prevention. Because we conclude
 that the trial court did not err in holding that Dr. Lee’s
 amended complaint failed to allege an offer to contract, ac-
 ceptance, or authority to contract, we affirm.
                         BACKGROUND
      Dr. Lee filed a complaint in the Court of Federal Claims
 asserting a breach of contract claim against the Centers for
 Disease Control and Prevention (CDC). Following the Gov-
 ernment’s motion to dismiss Dr. Lee’s complaint, Dr. Lee
 filed an amended complaint. Dr. Lee’s amended complaint
 alleged that he had developed a “no-false-positive DNA se-
 quencing-based molecular test for accurate diagnosis of
 Lyme disease,” and further asserted that the CDC had
 promised through various communications that “if
 [Dr. Lee’s] tests performed as expected, Dr. Lee’s testing
 would be approved as the ‘gold standard’” for diagnosis of
 early Lyme disease. Amended Complaint ¶¶ 6, 34–35, Lee
 v. United States, No. 18-686C (Fed. Cl. Oct. 1, 2018), ECF
 No. 14 (hereinafter “Am. Compl.”).
     Relevant to this appeal, the Government moved to dis-
 miss Dr. Lee’s amended complaint for failure to state a
 claim upon which relief could be granted pursuant to
 Rule 12(b)(6) of the Rules of the Court of Federal Claims
 (RCFC). The trial court granted the Government’s motion,
 holding that Dr. Lee’s amended complaint failed to state a
 claim for breach of an implied-in-fact contract because the
 amended complaint did not plausibly allege an offer to con-
 tract, acceptance, or authority to contract.
Case: 19-2060      Document: 48     Page: 3    Filed: 07/07/2020

 LEE   v. UNITED STATES                                       3

     Dr. Lee appeals. We have jurisdiction under 28 U.S.C.
 § 1295(a)(3).
                          DISCUSSION
      On appeal, Dr. Lee argues that the Court of Federal
 Claims erred in dismissing his amended complaint for fail-
 ure to state a claim upon which relief could be granted. We
 review de novo the Court of Federal Claims’ grant of a mo-
 tion to dismiss under RCFC Rule 12(b)(6). Frankel
 v. United States, 842 F.3d 1246, 1249 (Fed. Cir. 2016) (cit-
 ing Prairie Cty. v. United States, 782 F.3d 685, 688
 (Fed. Cir. 2015)). “To withstand a motion to dismiss under
 Rule 12(b)(6) of the RCFC, a complaint must contain
 ‘enough facts to state a claim to relief that is plausible on
 its face.’” Id. (quoting Bell Atl. Corp. v. Twombly, 550 U.S.
 544, 570 (2007)). “The facts as alleged ‘must be enough to
 raise a right to relief above the speculative level, on the as-
 sumption that all the allegations in the complaint are true
 (even if doubtful in fact).’” Kam-Almaz v. United States,
 682 F.3d 1364, 1367–68 (Fed. Cir. 2012) (quoting Twombly,
 550 U.S. at 555).
      The trial court dismissed Dr. Lee’s amended complaint
 for failure to sufficiently allege an offer to contract, ac-
 ceptance, or authority to contract. Each of these elements
 is required to state a claim for the CDC’s purported breach
 of the alleged implied-in-fact contract under which Dr. Lee
 would provide a test for accurate diagnosis of early Lyme
 disease in exchange for the CDC’s endorsement of his test.
 See id. at 1368 (“An implied-in-fact contract with the gov-
 ernment requires proof of (1) mutuality of intent, (2) con-
 sideration, (3) an unambiguous offer and acceptance, and
 (4) actual authority on the part of the government’s repre-
 sentative to bind the government in contract.” (quoting
 Hanlin v. United States, 316 F.3d 1325, 1328 (Fed. Cir.
 2003))). We address each disputed element in turn.
Case: 19-2060     Document: 48      Page: 4     Filed: 07/07/2020

 4                                        LEE   v. UNITED STATES

                                I
     An “offer is made by ‘the manifestation of willingness
 to enter into a bargain, so made as to justify another person
 in understanding that his assent to that bargain is invited
 and will conclude it.’” Anderson v. United States, 344 F.3d
 1343, 1353 (Fed. Cir. 2003) (quoting Restatement (Second)
 of Contracts § 24 (1981)). During oral argument, counsel
 for Dr. Lee argued that paragraphs 16 and 40 of the
 amended complaint allege a “formal offer by the CDC for
 Dr. Lee to be the principal researcher assisting the CDC to
 conduct the research project” that would utilize Dr. Lee’s
 test as the gold standard to establish a test for the accurate
 diagnosis of early Lyme disease. Oral Arg. at 4:02–4:54,
 http://oralarguments.cafc.uscourts.gov/default.aspx?fl=19-
 2060.mp3; see also id. at 1:42–2:49. 1
     Paragraph 16 of the amended complaint alleges that
 the CDC agreed to “provide certain testing samples for
 Dr. Lee to test,” and, if his results were “favorable, that ad-
 ditional samples would be shared by the CDC with
 Dr. Lee.” Am. Compl. ¶ 16. It further alleges that “if the
 report regarding the second set of samples was received
 and favorable, Dr. Lee would proceed to develop a protocol
 for use in a national comparative study to measure the ac-
 curacy and cost effectiveness of the then currently used

     1    Dr. Lee’s amended complaint also alleges that “the
 CDC was officially . . . offering business opportunities to
 members of the public” through certain public conference
 statements of Dr. Schriefer, Chief of the Diagnostic and
 Reference Laboratory in the Bacterial Diseases Branch in
 the Division of Vector-Borne Diseases. Am. Compl. ¶¶ 13–
 14. During oral argument, however, counsel for Dr. Lee
 clarified that these statements did not represent an offer
 by the CDC. Oral Arg. at 3:27–4:18 (“This statement in
 and of itself does not represent the CDC contract offer for
 the research project.”).
Case: 19-2060      Document: 48    Page: 5    Filed: 07/07/2020

 LEE   v. UNITED STATES                                      5

 tests against Dr. Lee’s” diagnostic technology. Id.; see also
 id. ¶ 40 (alleging that the parties “agreed that Dr. Lee
 would draft a protocol on behalf of Therapeutic Research
 Foundation . . . to be further reviewed, edited, modified
 and finalized for implementation”).
      Contrary to Dr. Lee’s assertions, paragraphs 16 and 40
 fail to allege any offer by the CDC to endorse Dr. Lee’s test,
 or even any action that the CDC promised to take to imple-
 ment Dr. Lee’s test in a national comparative study. In-
 deed, the only CDC action these paragraphs allege is that
 the CDC would “provide certain testing samples” to
 Dr. Lee, and that it would provide “additional samples” if
 Dr. Lee’s initial results were favorable. Id. ¶ 16; see id.
 ¶ 40. The remaining allegations of these paragraphs re-
 quire action only from Dr. Lee. Specifically, assuming the
 results from Dr. Lee’s tests on the second set of samples
 were “favorable, Dr. Lee would proceed to develop a protocol
 for use in a national comparative study.” Id. ¶ 16 (empha-
 sis added); see also id. ¶ 40. In any event, the CDC fulfilled
 its alleged obligations by providing Dr. Lee with samples
 under two material transfer agreements (MTAs). Id.
 ¶¶ 17, 23. Dr. Lee acknowledges that the CDC’s provision
 of those samples under the MTAs does not suffice to allege
 any intent by the CDC to enter into a broader agreement.
 Appellant’s Br. 26 (“[T]he execution and performance of the
 MTAs is a separate concern from whether the parties had
 entered into a larger implied-in-fact contract.”). Addition-
 ally, both MTAs explicitly require that “Recipient agrees
 not to claim, infer, or imply Governmental endorsement of
 the Research Project, the institution or personnel conduct-
 ing the Research Project or any resulting product(s).”
 J.A. 902 ¶ 7; see also J.A. 916 ¶ 7.
     Furthermore, each alleged CDC promise beyond
 providing samples pursuant to the first MTA is contingent
 on Dr. Lee’s testing “perform[ing] as expected” and produc-
 ing “favorable” results “to the satisfaction of” the CDC, and
 Dr. Lee pleads insufficient facts to plausibly support that
Case: 19-2060    Document: 48      Page: 6     Filed: 07/07/2020

 6                                       LEE   v. UNITED STATES

 this condition had been met. E.g., Am. Compl. ¶¶ 16, 34–
 35. Dr. Lee alleges that he reported results from his test-
 ing of MTA samples to the CDC, but he does not sufficiently
 plead that his results were favorable or that the CDC was
 satisfied with them. Id. ¶¶ 19, 26. As evidence of the
 CDC’s satisfaction with Dr. Lee’s results, the amended
 complaint cites an email exchange between Dr. Lee and the
 CDC after Dr. Lee reported results from the first MTA
 samples. Id. ¶ 22. But in the cited exchange, the CDC does
 not mention Dr. Lee’s results, let alone assess them.
 J.A. 911–13. With respect to Dr. Lee’s results from the sec-
 ond MTA samples, the amended complaint cites only the
 report Dr. Lee sent to the CDC and makes a conclusory al-
 legation that the CDC was satisfied with the results, with-
 out pleading any further detail as to how or when the CDC
 communicated its “satisfaction” with the results.
 Am. Compl. ¶ 26; J.A. 921–27.
      Given these deficiencies, we conclude that Dr. Lee’s al-
 legation that the CDC made him an offer to enter into an
 implied-in-fact contract under which Dr. Lee would provide
 a test for accurate diagnosis of early Lyme disease in ex-
 change for the CDC’s endorsement of his test “stops short
 of the line between possibility and plausibility.” Twombly,
 550 U.S. at 557. Accordingly, the trial court did not err in
 holding that Dr. Lee failed to plead sufficient facts to sup-
 port the alleged offer by the CDC.
                              II
     Acceptance requires a “manifestation of assent to the
 terms” of the offer “made by the offeree in a manner invited
 or required by the offer.” Anderson, 344 F.3d at 1355 (quot-
 ing Restatement (Second) of Contracts § 50(1)). “[T]o be
 effective, an acceptance must objectively manifest the of-
 feree’s assent.” Linear Tech. Corp. v. Micrel, Inc., 275 F.3d
 1040, 1053 (Fed. Cir. 2001) (citing Superior Boiler Works,
 Inc. v. R.J. Sanders, Inc., 711 A.2d 628, 633 (R.I. 1998)).
Case: 19-2060      Document: 48     Page: 7   Filed: 07/07/2020

 LEE   v. UNITED STATES                                      7

 The question, therefore, is whether the CDC “could reason-
 ably believe” that Dr. Lee had accepted its alleged offer. Id.
     Dr. Lee contends he adequately pled acceptance of the
 parties’ larger agreement by pleading “[t]he continuing
 work done between” him and CDC scientists following “di-
 rect authorization of the MTAs” by Dr. Bell, the Director of
 the National Center for Emerging and Zoonotic Infectious
 Diseases. Appellant’s Br. 28 (emphasis omitted) (quoting
 Am. Compl. ¶ 33); see also Am. Compl. ¶¶ 4, 34–38. 2 But
 Dr. Lee has not alleged that he ever communicated to any-
 one at the CDC that his continued research was part of a
 larger agreement, as opposed to reflecting his independent
 work enabled by the transfer of samples under the MTAs.
 Indeed, the MTAs expressly disavow “Governmental en-
 dorsement of the Research Project, the institution or per-
 sonnel conducting the Research Project or any resulting
 product(s).” J.A. 902 ¶ 7; J.A. 916 ¶ 7. Accordingly, we
 conclude that the trial court did not err in concluding that
 Dr. Lee failed to plausibly allege acceptance.
                              III
    “An employee of the Government has implied actual
 authority to enter an agreement only when that authority

       2 Dr. Lee’s opening brief asserts that another re-
 searcher’s post-conference communications with the CDC
 “urging the CDC to endorse Dr. Lee’s” test constituted
 Dr. Lee’s acceptance of Dr. Schriefer’s public conference of-
 fer. Appellant’s Br. 6 (citing J.A. 841). Counsel’s oral ar-
 gument clarification that Dr. Schriefer’s public conference
 statements do not represent an offer moots this argument.
 See Oral Arg. at 3:27–4:18. Regardless, this allegation does
 not explain how a third-party researcher’s communications
 with the CDC urging it to endorse Dr. Lee’s testing meth-
 odology made clear to Dr. Schriefer that Dr. Lee was ac-
 cepting an offer to contract.
Case: 19-2060    Document: 48      Page: 8     Filed: 07/07/2020

 8                                       LEE   v. UNITED STATES

 is an ‘integral part of the duties assigned to [the] govern-
 ment employee.’” Liberty Ammunition, Inc. v. United
 States, 835 F.3d 1388, 1402 (Fed. Cir. 2016) (alteration in
 original) (quoting H. Landau & Co. v. United States,
 886 F.2d 322, 324 (Fed. Cir. 1989)).
      Dr. Lee asserts that he has sufficiently pled actual au-
 thority because the CDC employees with whom he inter-
 acted are “the only CDC employees with the materials and
 ability to evaluate tests for Lyme disease,” and “[t]hey
 acted under the authority and direction of Dr. Bell, who
 signed the MTAs.” Appellant’s Br. 10; see also Am. Compl.
 ¶¶ 29–30, 32. The amended complaint further alleges that
 “Dr. Bell’s signature as the Authorized Official for Provider
 on both MTAs did not only indicate that she was approving
 of the MTAs, but it also represented the official approval of
 the overall contractual arrangement between the CDC and
 Dr. Lee.” Am. Compl. ¶ 32.
     Taken as true, none of Dr. Lee’s allegations plausibly
 support the notion that any of the CDC employees with
 whom he interacted had actual authority to bind the CDC.
 Dr. Lee does not allege that any of these CDC employees
 are contracting officers. Nor does Dr. Lee explain how the
 CDC employees’ “ability to evaluate new tests for Lyme dis-
 ease” renders entering into contracts to develop and en-
 dorse new diagnostic technology an “integral part of the
 duties assigned to [these] government employee[s].” Lib-
 erty Ammunition, 835 F.3d at 1402 (quoting Landau,
 886 F.2d at 324). Indeed, the document cited in the
 amended complaint to support Dr. Schriefer’s authority
 (Attachment 13 to the amended complaint) suggests that
 Dr. Schriefer did not have the authority to enter into con-
 tracts to develop and endorse new diagnostic technology.
 See Am. Compl. ¶ 29. Instead, Attachment 13 indicates
 that the “CDC recommends that laboratory tests cleared or
 approved by FDA be used to aid in the routine diagnosis of
 Lyme disease,” and notes that the “CDC encourages re-
 searchers to work with FDA to develop new or improved
Case: 19-2060      Document: 48    Page: 9    Filed: 07/07/2020

 LEE   v. UNITED STATES                                     9

 tests for the diagnosis of Lyme disease.” Attachment 13 to
 Am. Compl. at A074, Lee v. United States, No. 18-686C
 (Fed. Cl. Oct. 1, 2018), ECF No. 14-1. Finally, Dr. Bell’s
 signature on the MTAs does not plausibly suggest that she
 possessed authority beyond the scope of the MTAs, because
 the MTAs are a separate concern from any larger implied-
 in-fact contract and expressly disavow “Governmental en-
 dorsement of the Research Project.” J.A. 902 ¶ 7; J.A. 916
 ¶ 7.
     We therefore conclude that the trial court did not err in
 holding that Dr. Lee’s amended complaint fails to allege
 that a CDC employee had the requisite actual authority to
 enter into the alleged implied-in-fact contract.
                          CONCLUSION
     We have considered the parties’ remaining arguments
 and do not find them persuasive. For the foregoing rea-
 sons, we affirm the Court of Federal Claims’ decision that
 Dr. Lee failed to plausibly allege an implied-in-fact con-
 tract with the CDC.
                          AFFIRMED