Employee of Subcontractor Can’t Prove He Had an Implied-in-Fact Contract with the Government; Frank Calapristi v. United States, COFC No. 18-612

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Government’s motion to dismiss claim alleging breach of implied contract is granted. The plaintiff had been the employee of a subcontractor working at a government site. The plaintiff alleged the government had breached an implied-in-fact contract to cover pension benefits for individuals working at the site. The court found that the plaintiff had failed to prove the existence of an implied-in-fact contract. The government was not a party to the pension plan, and nothing in the plan indicated that the government had intended to bind itself to cover benefits of subcontractor employees.

For several decades, the Department of Energy has managed a plutonium production facility in Washington state called the Hanford Nuclear Reservation. Over the years, DOE contracted with several companies to operate the site. When one of the prime contracts ended, employees of the old contractor would typically be hired by the new contractor.

In the 1980s, DOE noted that these changes in contractors caused administrative burdens in transferring employee pension plans. Consequently, in 1987, DOE instructed the prime contractor then operating the site to draft a multi-employer pension plan to cover all workers at the site. DOE instructed future prime contractors to implement this plan so that all employees at the Hanford site become participants. An independent pension committee administered the plan.

In 1996, DOE selected Fluor Daniel Hanford as the prime contractor to operate the Hanford site. Like other past prime contractors, Fluor employed the incumbent workforce. But Fluor assigned a portion of the workforce to new entities called Enterprise Companies, which would be Fluor’s subcontractors.

But these Enterprise Companies were no longer sponsoring employees under the 1987 pension plan. Thus, the plan was amended to provide that employees of the Enterprise Companies would remain participants in the plan. The amendment, however, stated that the benefits of the Enterprise employees would be calculated using the highest five-year salary during their service not—as was the case for individual working for the prime contractor—based on the number of years they worked for the employer.

When employees of the Enterprise Companies began to retire, they were paid benefits based on the five-year salary calculation. This apparently resulted in them receiving less than the employees of the prime contractors. Frank Calapristi, who had been an employee of one of the Enterprise Companies, brought suit in the Court of Federal Claims, alleging that the government had breached an implied-in-fact contract to make up the difference between benefits received by Enterprise employees and those received by the employees of Hanford site prime contractors.

The court noted that this case presented nearly identical facts and allegations as a case recently decided by the Federal Circuit, Turping v. United States, 913 F.3d 1060 (Fed. Cir. 2019). In that case, the plaintiffs, who were also Enterprise employees at the Hanford site, alleged that the DOE breached an implied-in-fact contract by changing the benefits they received under the Hanford pension plan. The Federal Circuit had held that the plaintiffs had failed to sufficiently plead the mutually of intent required for the existence of an implied-in-fact contract.

Calapristi, however, alleged that in a footnote in Turping decision, the Federal Circuit had set forth a test to determine whether parties had mutual assent to form a contract. Based on this footnote, Calapristi contended that to show mutuality, his pleadings only needed to show (1) that the prime contractor that drafted the pension plan in 1987 was an agency of the government, and (2) that only the government had authority to compel contractors to remain in the pension plan.

The court was not persuaded by Calapristi’s argument. As an initial matter, the court believed Calapristi was overstating the meaning of the footnote in Turping. The footnote did not create a test for demonstrating intent to contract. Rather, it simply rejected alternative arguments raised, but not sufficiently supported, by the Turping plaintiffs.

Also, even if the footnote created a test, it was not clear Calapristi had satisfied it. There was no evidence that the 1987 contractor that drafted the plan was acting as the government’s agent with the authority to bind the government. Rather, that contractor was acting in its role as a contractor. Nothing in the pension plan indicated that the government would be directly liable to participants in the pension plan.

As to the second prong of the alleged test, Calapristi pointed to a transfer agreement executed by DOE, arguing that this gave the government the ability to control the operation and enforcement of the pension plan.

But the purpose of the transfer agreement was to ensure the orderly transfer of documents and property between contractors at the Hanford site. While this agreement gave DOE some control over which contractors would assume liability under the pension plan, this degree of control was not the type of control that indicated an intent to be bound by implied-in-fact contract. Rather, this control was just a natural part of DOE’s role as the lead agency at the Hanford site.

Calapristi is represented by Douglas Edward McKinley, Jr. The government is represented by Albert Salvatore Iarossi of the Department of Justice.

COFC - Calapristi v United States