Board Machine, Inc. v. United States

49 Fed. Cl. 325, 2001 U.S. Claims LEXIS 76, 2001 WL 492495
CourtUnited States Court of Federal Claims
DecidedMay 9, 2001
DocketNo. 98-504 C
StatusPublished
Cited by3 cases

This text of 49 Fed. Cl. 325 (Board Machine, Inc. v. United States) is published on Counsel Stack Legal Research, covering United States Court of Federal Claims primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Board Machine, Inc. v. United States, 49 Fed. Cl. 325, 2001 U.S. Claims LEXIS 76, 2001 WL 492495 (uscfc 2001).

Opinion

OPINION

DAMICH, Judge.

I. Introduction

This action is before the Court on Defendant’s motion to dismiss Count I of the complaint for failure to state a claim upon which relief can be granted. Plaintiffs own and operate cigarette vending machines, and seek compensation for a regulatory taking of then-property. Plaintiffs allege that the regulations promulgated by the Food and Drug Administration (FDA) in August 1996 which, inter alia, restricted the locations where the vending machines could be situated, eliminated all economically viable uses of the vending machines and impaired the vendors’ placement contracts. These restrictions were invalidated in March 2000 by the Supreme Court which ruled that the FDA lacked the jurisdiction over tobacco to issue the regulations.1 Defendant argues that because these regulations were issued without congressional authority, i.e., they were unauthorized or ultra vires (as opposed to authorized but illegal), they cannot form the basis of a com-pensable taking. For the reasons stated below, Defendant’s motion is GRANTED.

II. Background

Plaintiffs own and operate cigarette vending machines which, pursuant to placement contracts, are installed in business establishments. See Pls.’ Am. Compl. (Compl.) 112. On August 11, 1995, the FDA asserted jurisdiction over cigarettes and smokeless tobacco under the Federal Food, Drug and Cosmetics Act (FDCA), 21 U.S.C. § 301 et seq. Id. at 117. FDA concurrently issued a notice of proposed rulemaking regarding the sale of cigarettes and smokeless tobacco to minors. See FDA v. Browm & Williamson Tobacco Corp., 529 U.S. 120, 126, 120 S.Ct. 1291, 146 L.Ed.2d 121 (2000). The rule was designed to reduce youth smoking by restricting “the sale, distribution, and advertisement of tobacco products to young people.” Id. The broad-ranging impact of this rule is evidenced by the fact that during the comment period the FDA “received over 700,000 submissions, more than ‘at any other time in its history on any other subject.’ ” Id. at 126-27,120 S.Ct. 1291.

The final rale was promulgated on August 28, 1996 (“Regulations Restricting the Sale and Distribution of Cigarette and Smokeless Tobacco to Protect Children and Adolescents”). Included in the rule were provisions restricting vending machine locations which applied to “any location where any person under eighteen would have access at anytime [sic].” Pls.’ Br. in Opp’n to Def.’s Mot. to Dismiss (Opp’n) at 3 (emphasis in original).2 Plaintiffs note that every one of their customers, despite being “adult only” establishments, would fail to fit under the FDA exemption because minors do or could have access to the premises as employees or during non-business hours. Compl. ¶ 10. The regulations were to become effective August 28, 1997. 21 C.F.R. Part 897 note. The end result was that the placement agreements were “terminated en masse” and Plaintiffs were forced to remove the vending machines from public locations nationwide. Compl. ¶ 14.

[327]*327Meanwhile, commencing in 1995, a group of tobacco manufacturers, retailers, and advertisers filed suit challenging the validity of the FDA’s proposed regulatory program to restrict minors’ access to cigarettes and smokeless tobacco. See Coyne Beahm, Inc. v. FDA 966 F.Supp. 1374 (M.D.N.C.1997). The district court found the access restrictions valid on a summary judgment motion. Id. at 1400. The Court of Appeals reversed the district court’s decision in Brown & Williamson Tobacco Corp. v. FDA 153 F.3d 155, 176 (4th Cir.1998). The Supreme Court affirmed, concluding, as the Fourth Circuit had, that the FDA lacked authority under the FDCA to promulgate regulations concerning tobacco products as customarily marketed. Brown & Williamson, 529 U.S. at 156, 120 S.Ct. 1291.

Plaintiffs claim that a taking was effected from the time of the FDA’s issuance of the regulations on August 11,1995, to their invalidation on March 21, 2000 (that is, during the period when the access restrictions were in place and “enforced”3), during which time it was effectively required to remove its machines from all public locations and deprived of “all economically viable uses of [its] property ... [and] customer placement agreements and commission arrangements.” Compl. Hf 20, 21. Plaintiffs characterize this as a temporary regulatory taking for which the Fifth Amendment to the Constitution requires the payment of just compensation. Defendant argues that Brown & Williamson and other precedent absolutely dictate dismissal on the basis that unauthorized or ultra vires acts of government officials cannot be imputed to the government and therefore cannot be the basis of a compensable taking.4

III. Discussion

A. RCFC 12(b)(4)

“A motion to dismiss under Rule 12(b)(4) for failure to state a claim upon which relief can be granted is appropriate when the facts asserted by the claimant do not under the law entitle him to a remedy.... In reviewing the dismissal under Rule 12(b)(4), we are mindful that we must assume all well-pled factual allegations as true and make all reasonable inferences in favor of ... the nonmovant.” Perez v. United States, 156 F.3d 1366, 1370 (Fed.Cir.1998). “Dismissal under Rule 12(b)(4) is appropriate only when it is beyond doubt that the plaintiff can prove no set of facts in support of his claim [that] would entitled him to relief____ Because granting such a motion summarily terminates the case on its merits, courts broadly construe the complaint, particularly in light of the liberal pleading requirements under the Federal Rules of Civil Procedure.” Ponder v. United States, 117 F.3d 549, 552-53 (Fed.Cir.1997), cert. denied, 522 U.S. 1110, 118 S.Ct. 1040, 140 L.Ed.2d 106 (1998) (citations omitted; internal quotation marks omitted).

B. Compensable Takings and Requisite Authority

Plaintiffs specifically contend that the FDA effected a regulatory taking by enacting regulations “that so severely restricted the location of cigarette vending machines as to eliminate the place[ment] contracts.” Opp’n at 3. Plaintiffs seek compensation for those placement contracts allegedly abrogated during the period between the issuance of FDA’s notice of proposed rulemaking and the Supreme Court’s determination that the FDA’s regulations were invalid. Id. at 6.

[328]*328The Fifth Amendment of the United States Constitution bars the government from taking private property for public use without paying just compensation. U.S. Const, amend. V (“nor shall private property be taken for public use, without just compensation”). To obtain just compensation, a plaintiff alleging a taking of its property may bring suit against the government in the United States Court of Federal Claims pursuant to the Tucker Act, 28 U.S.C. § 1491.

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Bluebook (online)
49 Fed. Cl. 325, 2001 U.S. Claims LEXIS 76, 2001 WL 492495, Counsel Stack Legal Research, https://law.counselstack.com/opinion/board-machine-inc-v-united-states-uscfc-2001.