from the United States Court of Federal Claims in No.
1:16-cv-00496-NBF, Senior Judge Nancy B. Firestone.
Barry Grinalds, Skadden, Arps, Slate, Meagher & Flom LLP,
New York, NY, argued for plaintiff-appellant. Also
represented by Jonathan Lerner; Bernard John Williams, Jr.,
Earl Christensen, Tax Division, United States Department of
Justice, Washington, DC, for defendant-appellee. Also
represented by Teresa E. McLaughlin, David A. Hubbert.
Newman, O'Malley, and Wallach, Circuit Judges.
WALLACH, CIRCUIT JUDGE.
New York and Presbyterian Hospital ("the
Hospital") sued Appellee the United States ("the
Government") in the U.S. Court of Federal Claims,
alleging that Internal Revenue Code § 3102(b) (2012)
entitled the Hospital to recover money paid to its medical
residents to settle related litigation in the U.S. District
Court for the Southern District of New York ("the
District Court"). The Government filed a motion to
dismiss for lack of subject matter jurisdiction pursuant to
Rule 12(b)(1) of the Rules of the Court of Federal Claims.
The Court of Federal Claims granted the Government's
Motion to Dismiss, holding that § 3102(b) is not a
money-mandating source of substantive law, as required for
the Court of Federal Claims to have jurisdiction pursuant to
28 U.S.C. § 1491(a)(1) (2012) ("the Tucker
Act"). See N.Y. & Presbyterian Hosp. v. United
States, 128 Fed.Cl. 363, 364-65 (2016); see
also J.A. 1 (Final Judgment).
Hospital appeals. We have jurisdiction pursuant to 28 U.S.C.
§ 1295(a)(3). We reverse and remand.
Relevant Statutory and Regulatory Framework
to the Federal Insurance Contributions Act
("FICA"), I.R.C. §§ 3101-3128, employees
and employers each pay taxes based on wages paid to
employees. See id. §§ 3101 (Tax on
Employees), 3111 (Tax on Employers). Generally, the
employee's FICA taxes are "collected by the employer
of the taxpayer by deducting the amount of the tax from the
wages as and when paid." Id. § 3102(a).
The subsection at issue on appeal, § 3102(b), further
provides that "[e]very employer required so to deduct
the tax shall be liable for the payment of such tax, and
shall be indemnified against the claims and demands of any
person for the amount of any such payment made by such
are certain exceptions to the FICA tax. Relevant here, under
the student exception, FICA taxes do not apply to wages for
"service performed in the employ of . . . a school,
college, or university . . . if such service is performed by
a student who is enrolled and regularly attending classes at
such school, college, or university." Id.
§ 3121(b)(10). Although the Internal Revenue Service
("IRS") determined that "medical residents
were not eligible for the student exception and required
hospitals employing medical residents to withhold the
employee share of FICA taxes from residents' paychecks
and pay the withheld amounts and the employer share to the
[G]overnment, " the scope of the student exception
became subject to litigation. N.Y. & Presbyterian
Hosp., 128 Fed.Cl. at 365 (citations omitted). During
the pendency of that litigation, the IRS allowed either
employers or medical residents to file protective refund
claims to preserve their claims for refunds of the FICA
taxes. Id.; see Treas. Reg. §
31.6402(a)-2(a), (b) (1960).
2004, the IRS implemented a regulation excluding medical
residents from the student exception for services provided
after April 1, 2005. N.Y. & Presbyterian Hosp.,
128 Fed.Cl. at 365; see Student FICA Exception, 69
Fed. Reg. 76, 404, 76, 408-10 (Dec. 21, 2004); see also
Mayo Found. for Med. Educ. & Research v. United
States, 562 U.S. 44, 60 (2011) (holding that the
"rule is a reasonable construction of what Congress has
said"). However, in 2010, "the IRS decided that . .
. medical residents could qualify for the student exception
for tax periods ending before April 1, 2005, " such that
"hospitals and [medical] residents who had filed
protective refund claims for tax periods before April 1,
2005[, ] would be able to obtain refunds of the FICA taxes
withheld from residents' wages." N.Y. &
Presbyterian Hosp., 128 Fed.Cl. at 365 (citations
omitted); see J.A. 37 (IRS News Release).
District Court Litigation
August 2013, former medical residents ("the District
Court Plaintiffs") sued the Hospital in the District
Court, alleging that the Hospital had not filed protective
refund claims between January 1995 and June 2001, and
asserting claims of fraud, constructive fraud, breach of
fiduciary duty, negligent misrepresentation, negligence,
breach of contract, and unjust enrichment. See Childers
v. N.Y. & Presbyterian Hosp., 36 F.Supp.3d 292, 298,
300 (S.D.N.Y. 2014); see J.A. 38-74. The Hospital
filed a motion to dismiss, see J.A. 75-102, arguing
that, inter alia, the District Court Plaintiffs' claims
were "disguised tax refund suits, "
Childers, 36 F.Supp.3d at 303, and Internal Revenue
Code § 7422 "bars any suit to recover a tax unless
a timely refund claim has been made, " id. at
302; see I.R.C. § 7422(a) (providing, in
relevant part, that "[n]o suit or proceeding shall be
maintained in any court for the recovery of any internal
revenue tax alleged to have been erroneously or illegally
assessed or collected . . . until a claim for refund or
credit has been duly filed" with the IRS). The District
Court denied the Hospital's Motion to Dismiss, holding
that the District Court Plaintiffs' claims "do not
arise out of the Hospital's collection of taxes and
therefore do not implicate the rationale for excusing the
employer as tax collector from liability for tax
refunds" but rather out of "independent actions and
omissions" like failing "to file protective refund
claims." Childers, 36 F.Supp.3d at 303.
the District Court declined the Hospital's request to
certify its denial of the Hospital's Motion to Dismiss
for immediate appeal, see id. at 315, the Hospital
petitioned for writs of mandamus, e.g., J.A. 117,
each of which the U.S. Court of Appeals for the Second
Circuit denied, J.A. 157. The Hospital decided to pursue
settlement and, in November 2015, the Hospital and the
District Court Plaintiffs entered into a settlement
agreement, whereby the Hospital agreed to pay the District
Court Plaintiffs $6, 632, 000. See J.A. 346, 348;
see also J.A. 261. Relevant here, the Settlement
Agreement provides that the settlement award "can be
appropriately characterized as a refund for the amount of
FICA taxes previously withheld by the Hospital." J.A.
275. Upon approving the the Settlement Agreement, the
District Court dismissed the District Court Plaintiffs'
claims. See J.A. 358.
The Court of Federal Claims Litigation
April 2016, the Hospital filed its Complaint in the Court of
Federal Claims,  arguing that § 3102(b) indemnified
the Hospital from the District Court Plaintiffs' claims
and seeking, inter alia, reimbursement of the $6, 632, 000
paid to the District Court Plaintiffs under the Settlement
Agreement. J.A. 34-35. The Government filed its Motion to
Dismiss, arguing that "the phrase 'shall be
indemnified' in [§] 3102(b) is not properly read to
require the [G]overment to reimburse an employer that is sued
in connection with the collection of FICA taxes."
N.Y. & Presbyterian Hosp., 128 Fed.Cl. at 369.
The Court of Federal Claims analyzed FICA's statutory
framework and agreed with the Government, holding that
"[§] 3102(b) is . . . an immunity provision and
that a contrary reading would undermine the statutory refund
scheme contrary to Congress' intent." Id.
Standard of Review and Legal Standard
review the Court of Federal Claims' dismissal of an
action for lack of subject matter jurisdiction de novo,
Coast Prof'l, Inc. v. United States, 828 F.3d
1349, 1354 (Fed. Cir. 2016), and its attendant factual
findings for clear error, see Hymas, 810 F.3d at
to the Tucker Act, the Court of Federal Claims has
to render judgment upon any claim against the United States
founded either upon the Constitution, or any Act of Congress
or any regulation of an executive department, or upon any
express or implied contract with the United States, or for
liquidated or unliquidated damages in cases not sounding in
28 U.S.C. § 1491(a)(1). The Tucker Act is "only a
jurisdictional statute; it does not create any
substantive right enforceable against the United States for
money damages. . . . [T]he Act merely confers jurisdiction
upon [the Court of Federal Claims] whenever the substantive
right exists." United States v. Testan, 424
U.S. 392, 398 (1976) (emphasis added) (citation omitted).
Therefore, "a plaintiff must identify a separate source
of substantive law that creates the right to money damages. .
. . [T]hat source must be 'money-mandating.'"
Fisher v. United States, 402 F.3d 1167, 1172 (Fed.
Cir. 2005) (en banc in relevant part) (citations omitted).
the waiver of sovereign immunity must be unequivocal, see
United States v. White Mountain Apache Tribe, 537 U.S.
465, 472 (2003), the money-mandating source of substantive
law may be express or implied, see United States v.
Mitchell, 463 U.S. 206, 217 n.16 (1983). In
Mitchell, the Supreme Court reaffirmed that a
plaintiff "must demonstrate that the source of
substantive law . . . relie[d] upon can fairly be
interpreted as mandating compensation by the Federal
Government for the damages sustained." Id. at
216-17 (emphasis added) (internal quotation marks, citation,
and footnote omitted). Subsequently, the Supreme Court
clarified the "fairly be interpreted" standard:
This fair interpretation rule demands a showing
demonstrably lower than the standard for the initial
waiver of sovereign immunity. . . . It is enough, then, that
a statute creating a Tucker Act right be reasonably
amenable to the reading that it mandates a right of
recovery in damages. While the premise to a Tucker Act claim
will not be lightly inferred, a fair inference will do.
White Mountain, 537 U.S. at 472-73 (emphases added)
(internal quotation marks and citations omitted). The Supreme
Court also explained that "explicit authorization of a
damages remedy" may be required when there are
"strong indications that Congress did not intend to
mandate money damages, " such that "a fair
inference will require an express provision when the legal
current is otherwise against the existence of a cognizable
claim." Id. at 478.
Court of Federal Claims Erred in Concluding that It Lacked
Subject Matter Jurisdiction over the Hospital's Complaint
sole issue on appeal is whether § 3102(b)'s
"shall be indemnified" language is a
money-mandating source of substantive law. See
Appellant's Br. 2; Appellee's Br. 3. The Hospital
argues that § 3102(b) is money-mandating because
"the words 'shall be indemnified' can be fairly
interpreted to require the Government to pay monetary
compensation, " Appellant's Br. 27 (capitalization
modified), whereas the Government argues "§ 3102(b)
cannot 'fairly be interpreted' to mandate
compensation by the [F]ederal [G]overnment for damages
sustained" because "§ 3102(b) is an immunity
provision, not a reimbursement provision, "
Appellee's Br. 24. Because § 3102(b) is reasonably
amenable to an interpretation that it mandates the Government
to reimburse FICA taxes paid by an employer, we hold that
§ 3102(b) is money-mandating and that the Court of
Federal Claims erred in concluding that it lacked subject
matter jurisdiction over the Hospital's
Plain Language of § 3102(b)
begin with the plain language of § 3102(b). See
BedRoc Ltd. v. United States, 541 U.S. 176, 183 (2004)
("[O]ur inquiry begins with the statutory text and
ends there as well if the text is unambiguous."
(citations omitted)). "It is a fundamental canon of
statutory construction that . . . words will be interpreted
as taking their ordinary, contemporary, common meaning,
" which may be derived from "[d]ictionaries from
the era of [the statutory provision]'s enactment."
Sandifer v. U.S. Steel Corp., 134 S.Ct. 870, 876
(2014) (internal quotation marks and citation omitted).
Because the common meaning of
"indemnified" at the time of § 3102(b)'s
enactment contemplated reimbursement, § 3102(b) is
"reasonably amenable to the reading that it mandates a
right of recovery in damages." White Mountain,
537 U.S. at 473.
contemporaneous dictionaries support the conclusion that the
plain meaning of "indemnified" includes monetary
compensation. First, the 1933 Oxford English Dictionary
defined "indemnify" to mean, inter alia: "1. .
. . To preserve, protect, or keep free from, secure against
(any hurt, harm, or loss); to secure against legal
responsibility for past or future actions or events; to give
an indemnity to. . . . 2. To compensate (a person, etc.) for
loss suffered, expenses incurred, etc."
Indemnify, The Oxford English Dictionary (1st ed.
1933) (italics omitted); see Indemnification, The
Oxford English Dictionary (1st ed. 1933) (defining
"indemnification" to mean, inter alia, "[t]he
action of compensating for actual loss or damage sustained;
also the fact of being compensated");
Indemnity, The Oxford English Dictionary (1st ed.
1933) (defining "indemnity" to mean, inter alia,
"[a] legal exemption from the penalties or liabilities
incurred by any course of action" and
"[c]ompensation for loss or damage incurred, "
i.e., "[a] sum paid by way of compensation").
both the 1917 and 1942 editions of Webster's New
International Dictionary of the English Language defined
"indemnify" similarly, with the 1917 version
definining the term to mean: "1. To save harmless; to
secure against loss or damage. . . . 2. To make restitution
or compensation to, as for a loss, damage, etc.; to make
whole; to reimburse; to compensate; also, to make good (a
loss)." Indemnify, Webster's New Int'l
Dictionary of the English Language (1st ed. 1917); see
Indemnify, Webster's New Int'l Dictionary of the
English Language (2d ed. 1942) (similar); see also
Indemnification, Webster's New Int'l Dictionary
of the English Language (1st ed. 1917) (defining
"indemnification" to mean, inter alia, a
"process of indemnifying, preserving, or securing
against loss, damage, or penalty; reimbursement of loss,
damage, or penalty; the state of being indemnified" and
defining "indemnity" to mean, inter alia,
"[i]ndemnification, compensation, or remuneration for
loss, damage, or injury sustained");
Indemnification, Webster's New Int'l
Dictionary of the English Language (2d ed. 1942) (similar).
and finally, the 1933 version of Black's Law Dictionary
defined "indemnify" to mean: "To save
harmless; to secure against loss or damage; to give security
for the reimbursement of a person in case of an anticipated
loss falling upon him. . . . Also to make good; to
compensate; to make reimbursement to one of a loss already
incurred by him." Indemnify, Black's Law
Dictionary (3d ed. 1933); see Indemnity, Black's
Law Dictionary (3d ed. 1933) (stating that
"indemnity" "is ...