Appealed from: U.S. Claims Court. Judge Yock
Before Nies, Chief Judge, Marshall, Associate Justice (Retired) of the Supreme Court of the United States, sitting by designation, and Friedman, Senior circuit Judge.
This is the latest, but unfortunately not the last, round in this protracted litigation, now in its twelfth year, through which the United States is seeking to recoup from the appellees, Doko Farms and its far individual partners (collectively "Doko"), subsidy payments made to Doko that the United States has determined resulted from a scheme or device to defeat the purpose of the Act under which the payments were made. The recoupment took the form of an offset of the overpayments against subsidy payments due to Doko for subsequent years. The United States Claims Court held that Doko was entitled to recover the withheld payments, on the ground that a 1981 district court decision that the statute of limitations barred the government's suit to collect the overpayments, was res judicata with respect to the government's claim to recover the overpayments. Doko Farms v. United States, 21 Cl. Ct. 696 (1990). We reverse, and remand the case to the Claims Court to decide the merits.
Under the Upland Cotton Price Support Program, 7 U.S.C. 1444(e) (1988), the government made subsidy payments to reflect farmers' limitations on the amount of cotton they planted and grew on their land. Following an investigation of payments made in a Texas county in 1972 and 1973 that appeared to be abnormally high and administrative proceedings (including hearings), the Department of Agriculture held that a number of farmers in that county, including Doko, had committed various violations of the governing regulations that constituted a "scheme or device" to defeat the purpose of the upland cotton program or had avoided limitations upon the amount of payments. See United States v. O'Neil, 709 F.2d 361, 364-65 (5th Cir. 1983). In each of those proceedings the government ordered the recipients of the excess payments to refund them. Id. at 365.
The farmers refused to do so. The United States then filed in 1978 and 1979 eleven suits in the United States District Court for the Northern District of Texas seeking to recover the overpayments. Each defendant filed a counterclaim seeking (1) the removal of the farmers' names from the Federal Debt Register, a listing of persons indebted to the government, the effect of which listing was that the government would withhold from amounts subsequently owing to the debtors the amount of the indebtedness, (2) release of the withheld money and (3) the return of cotton allotments that the government had cancel led as a result of its determination that the defendants had violated the upland cotton program.
On cross-motions for summary judgment, the district court, on April 3, 1981, granted summary judgment in favor of the defendants in each of the cases. The court held that the six-year statute of limitations in 15 U.S.C. 714b(c) (1988), barred the suit or, alternatively, that one of the regulations upon which the government based its refund claim was unconstitutionally vague. The separate judgment entered in the Doko case stated that the United States "take nothing of and from" Doko, dismissed the complaint against Doko with prejudice, and "severed" Doko's counterclaim from "the cause of action alleged by plaintiff" and set it for trial "separately and at a later date."
The government failed to file a timely appeal from the judgment in the Doko case and three others, in the belief that the pendency of the severed counterclaim made the judgments non-final. When the government failed to appeal the Doko judgment within sixty days, the district court granted summary judgment for Doko on its counterclaim.
The Court of Appeals for the Fifth Circuit held that the government's appeals were untimely, and "affirm[ed] the district court in the government's suits against appellees." O'Neil, 709 F.2d at 375. (O'Neil decided Doko and the three other cases.) The court reversed the summary judgments on the counterclaims, however, and remanded the counterclaims to the district court to determine whether that court had jurisdiction over them. Id.
(Shortly before its decision in O'Neil, the court of appeals had decided United States v. Batson, 706 F.2d 657 (5th Cir. 1983), involving the other seven cases in which the United States had filed timely appeals. In Batson, the court of appeals held (1) that the statute of limitations had not run on the government's suits based on the 1973 subsidy payments, but had run on the 1972 payments and (2) that the regulation was not unconstitutionally vague. Id. at 674, 677, 683.)
On remand, the district court held that it had jurisdiction over the counterclaims under the mandamus statute, 28 U.S.C. § 1361 (1988) and again held for Doko (and she three other defendants). The Fifth Circuit dismissed, holding that mandamus was improper and that the Claims Court had exclusive jurisdiction over the counterclaims, and granting Doko leave to refile in that court. United States v. O'Neil, 767 F.2d 1111, 1113 (5th Cir. 1985). Doko then filed its complaint in the Claims Court, seeking the identical relief it had sought in its counterclaim in the district court, and the government filed a counterclaim, seeking the identical relief it had sought in its complaint in the district court.
Litigation followed over whether the Claims Court or the district court had jurisdiction over the case. The Claims Court transferred the case back to the district court, which again held for Doko. On the government's appeal, this court held that under Christianson v. Colt Indus. Operating Corp., 486 U.S. 800, 100 L. Ed. 2d 811, 108 S. Ct. 2166, 7 U.S.P.Q.2D (BNA) 1109 (1988), the earlier decision of the Fifth Circuit that the Claims Court had exclusive jurisdiction was the law of the case, vacated the judgment of the district court and remanded the case to that court to transfer it to the Claims Court. Doko Farms v. United States, 861 F.2d 255, 257 (Fed. Cir. 1988). The parties then filed in the Claims Court a new complaint and a new counterclaim, seeking the same relief as in their previous filings.
The Claims Court granted Doko's motion for summary judgment, denied that of the government, and awards Doko $1,011,721.70, plus interest. Doko Farms, 21 Cl. Ct. at 713.
The court held that the 1981 district court judgment that the statute of limitations barred the government's suit was res judicata of the issues raised in the government's counterclaim. The court ruled that that judgment met the three retirements for res judicata (id. at 709): (1) it was a final judgment on the merits because "'[a] ruling based on the statute of limitations is a decision on the merits for res judicata purposes,'" id. at 703 (quoting Mathis v. Laird, 457 F.2d 926, 927 (5th Cir.), cert. denied, 409 U.S. 871, 34 L. Ed. 2d 122, 93 S. Ct. 201 (1972)); (2) the government's counterclaim was for the same cause of action as that asserted in the government's original claim that the district court held barred by limitations (id. at 706-08); and (3) the parties in the present suit were the same as those in the district court case, even though they changed roles as plaintiff and defendant (id. at 708). The court ruled that since the district court decision extinguished Doko's debt to the government, the latter had no basis for continuing to withhold Doko's funds and that Doko, therefore, was entitled to the relief it sought. Id. at 712.
The district court, with the validity of the debt at issue before it, found the actions to be barred by the statute of limitations and the regulation that Doko Farms allegedly violated to be unconstitutionally vague and overbroad. The finality of this judgment was thereafter affirmed by the Fifth Circuit as follows:
Accordingly, we affirm the district court in the government's suits against appellees [Doko Farms].
United States v. O'Neil, 709 F.2d at 375. Consequently, the Government no longer has a debt due and owing by Doko and can no longer justify maintaining Doko Farms' name on the debt register and withholding funds due the plaintiffs on this and ...