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Cecile Industries Inc. v. United States

June 16, 1986

CECILE INDUSTRIES, INC. AND JOHN MILLER, APPELLANTS,
v.
UNITED STATES OF AMERICA



On Appeal from the United States District Court for the Eastern District of Pennsylvania, D.C. Civil No. 84-6293

Author: Sloviter

Before: ALDISERT, Chief Judge, GARTH, and SLOVITER, Circuit Judges

Opinion OF THE COURT

SLOVITER, Circuit Judge.

This case comes before this court on appeal from the district court's dismissal of the complaint on the ground that it lacked jurisdiction under 28 U.S.C. § 1346(b). Plaintiffs Cecile Industries, Inc. ("Cecile"), a manufacturer of clothing and equipment for agencies of the United States Government, and John Miller, the President and sole shareholder of Cecile, brought an action against the United States under the Federal Tort Claims Act, 28 U.S.C. §§ 1346(b), 2671-2680, and the United States Constitution.

Plaintiffs alleged that the Defense Personnel Support Center ("DPSC"), an agency of the Department of Defense located in Philadelphia, Pennsylvania, subjected them to a de facto debarment from bidding for contracts. They asserted that the DPSC rejected five of their contract bids between November 1982 and August 1983, even though they were the lowest bids received, on the ground that they lacked integrity, perserverence and tenacity. Plaintiffs alleged that they were not provided notice or an opportunity to present evidence concerning the debarment in violation of the Defense Acquisition Regulations, 32 C.F.R. §§ 1-600 et seq. (1983), the applicable statute and the requirements of due process. Cecile seeks $5,000,000 in damages from the United States in lost profits and Miller seeks $1,250,000 in lost earnings.

On approximately August 2, 1983, the Defense Logistics Agency, which embraces the DPSC as a field activity, formally debarred Cecile and Miller for three years, retroactive to November 1982. After filing a claim with the United States Army Claims Service, which was rejected, Cecile and Miller brought this lawsuit in federal district court.

The government filed a motion to dismiss for lack of subject matter jurisdiction and for failure to state a claim upon which relief can be granted. In support, the government argued that the plaintiffs' claims could not be brought under the Federal Tort Claims Act (1) because a de facto debarment is not a common law tort in Pennsylvania, and therefore is not cognizable under 28 U.S.C. § 1346(b); and (2) because debarment is a discretionary function subject to the exception under 28 U.S.C. § 2680(a).

The Tort Claims Act provides that the district courts shall have jurisdiction over civil actions on claims against the United States for money damages,

for injury or loss of property . . . caused by the negligent or wrongful act or omission of any employee of the Government while acting within the scope of his office or employment, under circumstances where the United States, if a private person, would be liable to the claimant in accordance with the law of the place where the act or omission occurred.

28 U.S.C. § 1346(b). It thus requires that the court inquire whether Cecile's and Miller's claims state a claim under Pennsylvania tort law. As our colleague Judge Becker pointed out when he was on the district court, "plaintiffs may not based their claims [under Federal Tort Claims Act] on alleged breaches of a duty arising solely out of federal law when there is no corresponding duty under state tort law". Blessing v. United States, 447 F. Supp. 1160, 1186 n.37 (E.D. Pa. 1978).

Cecile and Miller argue that the DPSC's violation of the applicable federal procurement regulations constitutes negligence per se. The failure to follow a federal regulation may be negligence per se "if, under state law criteria, it may be considered the kind of . . . regulation violation of which is negligence per se ". Schindler v. United States, 661 F.2d 552, 560-61 (6th Cir. 1981). Plaintiffs here rely on the opinion in Karle v. National Fuel Gas Distribution Corp., 448 F. Supp. 753, 767 (W.D. Pa. 1978), where the court stated:

The violation of a federal statute or regulation may provide the basis for a finding of liability under Pennsylvania law provided three elements are present: 1) the statute or regulation must clearly apply to the conduct of the defendant; 2) the defendant must violate the statute or regulation; and 3) the violation of the statute must proximately cause the plaintiff's injuries, see Kaplan v. Kaplan, 404 Pa. 147, 171 A.2d 166 [1961]; Steele v. Peoples Natural Gas Co., 386 Pa. 439, 127 A.2d 96 [1956]; Listino v. Union Paving Co., 386 Pa. 32, 124 A.2d 83 [1956]; Moore v. Sylvania Electric Products, Inc., 454 F.2d 81 [3d Cir. 1972]; Millard v. Municipal Sewer Authority of Township of Lw. Makefield, 442 F.2d 539 [3d Cir. 1971].

However, the cases cited in Karle do not suggest that the three elements set forth there are always enough to support a holding of negligence per se. To the contrary, in Ennis v. Atkin, 354 Pa. 165, 168-69, 47 A.2d 217, 219 (1946), the Pennsylvania Supreme Court stated the additional requirement that before violation of a statute will be deemed to constitute negligence, the court must find that the intent of the ...


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