ELECTRICAL WELFARE TRUST FUND et al v. USA

Filing 136

REPORTED OPINION denying 133 Plaintiffs' Motion for Reconsideration. Signed by Judge Eleni M. Roumel. (smh) Service on parties made.

In the United States Court of Federal Claims
ELECTRICAL WELFARE TRUST
FUND, et al.,
Plaintiffs,
v.
THE UNITED STATES,

No. 19-cv-353
Filed: August 18, 2023

Defendant.

MEMORANDUM AND ORDER
On July 7, 2023, this Court granted Defendant’s Motion for Partial Summary Judgment
concerning Plaintiffs’ claims brought pursuant to the Takings Clause of the Fifth Amendment.
Elec. Welfare Trust Fund v. United States, No. 19-cv-353, 2023 WL 4530118 (Fed. Cl. July 7,
2023) (EWTF II). 1 As described more fully below, as part of that opinion this Court held that
Plaintiffs had waived a particular argument by initially raising it at oral argument. Id. at *10. This
Court also held that assuming arguendo Plaintiffs’ argument was not waived, the argument would
also fail on the merits. Id. at *10–*11. On August 7, 2023, Plaintiffs timely filed a Motion for
Partial Reconsideration (Motion), requesting reconsideration of this Court’s procedural holding of
waiver; Plaintiffs do not move for reconsideration of the Court’s alternative merits holding. See
Plaintiffs’ Motion for Partial Reconsideration (ECF No. 133) (Mot.) at 4 (quoting EWTF II, 2023

1

On July 10, 2023, the Clerk of Court entered partial Judgment for Defendant on Plaintiffs’
Takings claims. ECF No. 130.

WL 4530118, at *10); Mot. at 7 n.3. 2 On August 7, 2023, this Court ordered Defendant to respond
to the Motion, and on August 17, 2023, Defendant filed its response, urging this Court to deny the
Motion because this Court’s waiver holding did not constitute clear error. Defendant’s Response
to Plaintiffs’ Motion for Partial Reconsideration (ECF No. 135) (Def. Resp.). Having carefully
considered the parties’ arguments, Plaintiffs’ Motion is DENIED for the reasons set forth below.

BACKGROUND
This action has a lengthy history, familiarity with which is presumed. See EWTF II, 2023
WL 4530118; Elec. Welfare Trust Fund v. United States, 155 Fed. Cl. 169 (2021) (EWTF I). In
summary relevant to this Motion, Plaintiffs Operating Engineers Trust Fund of Washington, D.C.
(OETF) and Stone & Marble Masons of Metropolitan Washington, D.C. Health and Welfare Fund
(Stone Masons) (collectively, Plaintiffs) are self-insured group health plans seeking just
compensation under the Takings Clause of the Fifth Amendment. See EWTF II, 2023 WL
4530118, at *1–*2; see also Plaintiffs’ Second Amended Complaint (ECF No. 59) (2d Am.
Compl.) ¶¶ 3, 23–31, 101–15. Specifically, Plaintiffs sought to recover amounts paid under United
States Department of Health and Human Services’ (HHS’s) regulations implementing the Patient
Protection and Affordable Care Act of 2010’s (ACA’s) Transitional Reinsurance Program (TRP)
for benefit years 2014 through 2016. See EWTF II, 2023 WL 4530118, at *2–*4; 2d Am. Compl.
¶¶ 101–15. Plaintiffs contend Defendant’s implementation of the TRP amounted to a Taking under
the Fifth Amendment such that Plaintiffs are owed just compensation for their mandatory, paid
contributions into the program. EWTF II, 2023 WL 4530118, at *1–*5; 2d Am. Compl. ¶¶ 13–14,
101–15.
2

Citations throughout this Memorandum and Order reference the ECF-assigned page numbers,
which do not always correspond to the pagination within the document.
2

As noted, this Court previously granted partial summary judgment in favor of Defendant,
holding Plaintiffs’ Takings claims fail because “the requirement to pay TRP contributions did not
implicate a cognizable property interest” under the Fifth Amendment. EWTF II, 2023 WL
4530118, at *12. 3 Plaintiffs ultimately advanced two arguments in favor of their claim for just
compensation under the Takings Clause. Id. at *8. First, Plaintiffs argued “each TRP contribution
was a specific fund of money in which Plaintiffs had a property interest by virtue of the trust
agreements establishing their trust funds.” Id.; see 2d Am. Compl. ¶ 103; Plaintiffs’ Opposition
to Defendant’s Motion for Partial Summary Judgment (ECF No. 116) (Opp.) at 20. Plaintiffs
directly addressed this argument in summary judgment briefing, and the Court ruled in favor of
Defendant on the merits of this argument. See EWTF II, 2023 WL 4530118, at *8–*12; Opp. at
20–30. Second, Plaintiffs alleged their respective trust accounts—rather than the assets within the
trust accounts—were the relevant “specific funds,” from which Plaintiffs “were effectively
required to pay their TRP contributions.” Id. at *10 (citing Transcript of Oral Argument, dated
May 11, 2023 (ECF No. 126) (Trans.) at 21:25–22:3, 25:24–26:2, 30:2–10). Plaintiffs initially
3

In addition to their Takings Claim, Plaintiffs’ original complaint likewise raised an Illegal
Exaction Claim. See EWTF II, 2023 WL 4530118, at *4; EWTF I, 155 Fed. Cl. at 174, 181–88;
Complaint (ECF No. 1) (Compl.) at ¶¶ 11–14. On May 7, 2019, Defendant moved to dismiss
Plaintiffs’ complaint for lack of jurisdiction and for failure to state a claim, pursuant to Rules
12(b)(1) and 12(b)(6) of the Rules of the United States Court of Federal Claims (Rules), and
alternatively moved for summary judgment. See Defendant’s Motion to Dismiss or, in the
Alternative, Motion for Summary Judgment (ECF No. 6). On July 30, 2021, this Court granted in
part and denied in part Defendant's Motion to Dismiss, dismissing OETF's and Stone Masons’
illegal exaction claims and holding the ACA empowered HHS to collect TRP contributions from
entities that used third-party administrators. EWTF I, 155 Fed. Cl. at 184–88. However, the Court
denied the motion with regard to Plaintiff EWTF—a self-insured, self-administered group health
plan—as the plain text of the ACA did not provide HHS the authority to collect TRP contributions
from self-insured group health plans that did not use a third-party administrator. Id. at 181–84.
On April 8, 2022, EWTF moved to certify a class of entities eligible to recover under Illegal
Exaction claims (Illegal Exaction Class). See Plaintiff EWTF’s Motion to Certify Class (ECF No.
53). The Court granted EWTF’s motion on June 22, 2022. See Memorandum and Order granting
Motion to Certify Class (ECF No. 70). The Court entered Judgment in favor of the Illegal Exaction
Class on May 12, 2023. See ECF Nos. 123, 124.
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presented this contention at oral argument; accordingly, this Court held that Plaintiffs had waived
this second argument. Id. at *10 (citing CardSoft, LLC v. Verifone, Inc., 769 F.3d 1114, 1119
(Fed. Cir. 2014), vacated on other grounds, 576 U.S. 1049). Despite such waiver, as an alternative
ground this Court also thoroughly explained why Plaintiffs’ second argument was incorrect on the
merits, see id. at *10–*12. Plaintiffs now move for reconsideration of this Court’s “procedural
finding” regarding waiver. Mot. at 4.

STANDARD FOR RECONSIDERATION
A motion for reconsideration is governed by Rule 59(a)(1). Pursuant to Rule 59(a)(1), a
court, in its discretion, “may grant a motion for reconsideration when there has been an intervening
change in the controlling law, newly discovered evidence, or a need to correct clear factual or legal
error or prevent manifest injustice.” Biery v. United States, 818 F.3d 704, 711 (Fed. Cir. 2016)
(internal citation and quotation omitted). A motion for reconsideration must also be supported “by
a showing of extraordinary circumstances which justify relief.” Id. (quoting Caldwell v. United
States, 391 F.3d 1226, 1235 (Fed. Cir. 2004)). Such a motion “may not be used to relitigate old
matters, or to raise arguments or present evidence that could have been raised prior to the entry of
judgment.” Exxon Shipping Co. v. Baker, 554 U.S. 471, 485 n.5 (2008) (internal quotations
omitted). “The decision whether to grant reconsideration lies largely within the discretion of the
[trial] court.” Yuba Natural Res., Inc. v. United States, 904 F.2d 1577, 1583 (Fed. Cir. 1990).

DISCUSSION
As Plaintiffs acknowledge, this is a “narrow motion.” Mot. at 4. Plaintiffs “do not raise
any issues” relating to the merits of the Court’s decision granting partial summary judgment. Id.

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at 7 n.3. Instead, Plaintiffs request reconsideration of “a single procedural finding.” Id. at 4. The
sole question, therefore, is whether this Court erred by holding Plaintiffs waived their second
argument relating to their Takings claim.
A review of the history of the underlying motion for partial summary judgment and the
parties’ arguments in support of their positions is pertinent to the adjudication of this Motion.
According to Plaintiffs, “Defendant’s implementation of the TRP amounted to a taking under the
Fifth Amendment such that Plaintiffs are owed just compensation for their mandatory, paid
contributions into the program.” EWTF II, 2023 WL 4530118, at *1 (citing 2d Am. Compl. ¶¶ 13–
14); see id. at *6 (citing 2d Am. Compl. ¶¶ 108–09); 2d Am. Compl. ¶¶ 101–10. The Takings
Clause states “private property” shall not “be taken for public use, without just compensation.”
U.S. Const. amend. V. As articulated in its decision, this Court must analyze Takings claims via
a two-step approach. See Adams v. United States, 391 F.3d 1212, 1218 (Fed. Cir. 2004); Boise
Cascade Corp. v. United States, 296 F.3d 1339, 1343 (Fed. Cir. 2002). First, the court must
“determine whether the claimant possessed a cognizable property interest in the subject of the
alleged taking for purposes of the Fifth Amendment.” Adams, 391 F.3d at 1218. This first step
necessarily includes identifying “what, if anything, was the subject of the alleged taking.”
Acceptance Ins. Cos., Inc. v. United States, 583 F.3d 849, 855 (Fed. Cir. 2009).
Normally, “the mere imposition of an obligation to pay money . . . does not give rise to a
claim under the Takings Clause of the Fifth Amendment.” Commonwealth Edison Co. v. United
States, 271 F.3d 1327, 1340 (Fed. Cir. 2001) (en banc); see E. Enters. v. Apfel, 524 U.S. 498, 540
(1998) (Kennedy, J., concurring); see also EWTF II, 2023 WL 4530118, at *7 n.9 (summarizing
Eastern Enterprises). However, “one’s property interest in a specific fund of money—e.g., the
interest or principal of an identified account—is cognizable under the Takings Clause.” EWTF II,

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2023 WL 4530118, at *8 (emphasis in original) (citing Webb’s Fabulous Pharmacies, Inc. v.
Beckwith, 449 U.S. 155, 160–65 (1980), Phillips v. Wash Legal Found., 524 U.S. 156, 163–72
(1998), and Brown v. Legal Found. of Wash., 538 U.S. 216, 231–41 (2003)); see also Adams, 391
F.3d at 1224 (characterizing “specific funds” as “legitimate property interests” under the Takings
Clause). Therefore, in situations such as this one, where the subject of the alleged taking is a sum
of money, the step one inquiry becomes whether the government appropriated a “specific fund” in
toto. See EWTF II, 2023 WL 4530118, at *8; 2d Am. Compl. ¶¶ 13–14, 103, 110. If the
government appropriated a specific fund in its entirety, then a plaintiff’s interest in that specific
fund may be cognizable under the Takings Clause. EWTF II, 2023 WL 4530118, at *8.
Plaintiffs’ inconsistent articulation of the “specific fund” at issue in this case underlies
Plaintiffs’ Motion. Plaintiffs now contest this Court’s holding that their second argument—that
the relevant “specific funds” were their overall trust accounts from which they were effectively
required to pay their TRP contributions—was waived. See Mot. at 8–10. Plaintiffs contend they
“have maintained during the entirety of this litigation that the ‘specific funds of money’ at issue
here are Plaintiffs’ trust accounts.” Mot. at 8. Plaintiffs allege this Court committed clear error in
holding otherwise. Id. at 4, 10.
This Court disagrees. Plaintiffs have consistently argued the “specific funds” in which
Plaintiffs have a cognizable property interest were the assets contained in Plaintiffs’ respective
trust accounts, not the trust accounts as a whole. Early in this litigation, this Court denied
Defendant’s motion to dismiss the complaint but requested the parties provide more information
concerning “the nature of plaintiffs’ property interest.” EWTF I, 155 Fed. Cl. at 193; see also
EWTF II, 2023 WL 4530118, at *8 n.11. Plaintiffs subsequently amended their complaint to
clarify that the “[f]unds held in self-insured health and welfare trust funds constitute identifiable

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property interests in specific funds of money protected by the Takings Clause of the Fifth
Amendment.” 2d Am. Compl. ¶ 103; see id. ¶¶ 104, 105 (“Plaintiffs . . . had cognizable property
interests in the funds held in the self-insured multiemployer health and welfare trust funds at issue
. . . .”); id. ¶ 108 (“Defendant’s requirement that administrators of SMPs relinquish funds held in
self-insured health and welfare trust funds to pay the Contribution is akin to the government’s own
invasion into and taking of the funds and constitutes a per se taking.”). Plaintiffs’ operative
complaint consistently reflects that the relevant “specific funds” in which Plaintiffs assert a
cognizable property interest are the assets or money “held in” Plaintiffs’ respective trust accounts
(i.e., their first argument), not the trust accounts themselves (i.e., their second argument). See 2d
Am. Compl. ¶¶ 103–08.
Defendant’s Motion for Partial Summary Judgment likewise defined Plaintiffs’ property
interest as “tied to the specific amount plaintiffs contributed into the TRP,” rather than “a general
right to the trust accounts” themselves. Def. Resp. at 4; see Defendant’s Motion for Partial
Summary Judgment (ECF No. 105) at 31–32. If Plaintiffs disputed Defendant’s characterization
of the relevant property interest, they had an obligation to make a contrary argument in their
briefing opposing partial summary judgment. See Pandrol USA, LP v. Airboss Ry. Prods., Inc.,
320 F.3d 1354, 1366–67 (Fed. Cir. 2003) (concluding argument “was waived when it was not
raised in response to the motion for summary judgment”). Yet, Plaintiffs did not make a different
argument. Instead, Plaintiffs simply reiterated that the source of their cognizable property interest
was the assets within the trust accounts, rather than the trust accounts themselves. See Opp. at 11
(“Plaintiffs have an identifiable property interest in funds held in trust . . . .”); id. at 21 (“Plaintiffs
have a property interest in the funds held in trust . . . .”); id. (“Plaintiffs’ property interest in the
‘specific funds of money’ held in trust . . . .”); id. at 23 (“As soon as funds were transferred to the

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trusts, Plaintiffs[] had a ‘legal interest in th[at] property’” and “[i]t is this property interest that
Plaintiffs assert here.”); id. at 24 (“Under the Trust Agreements, as well as contract and trust law,
Plaintiffs have a cognizable property interest in the funds held in trust, which the Government
invaded when it required those funds be taken for public use.”). These statements clearly evince
Plaintiffs’ assertion that the relevant “specific funds” are the assets held within the trust accounts,
rather than the trust accounts themselves. Curiously, Plaintiffs’ Motion cites these same statements
to now contend that Plaintiffs have always asserted their second argument, i.e., that the relevant
“specific funds” are the respective trust accounts themselves. See Mot. at 8–9. However, these
statements do not support Plaintiffs’ second argument, as each statement references the interest
Plaintiffs have in monetary assets held within trust accounts, as opposed to the interest Plaintiffs
have in their respective trust accounts as a whole.
In support of their Motion, Plaintiffs cite a single statement from their Opposition in which
Plaintiffs argued they “have a property interest in a specific fund of money (i.e., the trusts created
by their Trust Agreements).” Mot. at 8 (quoting Opp. at 28) (emphasis removed). While this
statement may appear at first to support Plaintiffs’ assertion that they advanced their second
argument prior to oral argument, this statement is contradicted by numerous other statements and
conclusions in the Second Amended Complaint and the Opposition, statements that clearly express
a contrary theory. See 2d Am. Compl. ¶¶ 103–05, 108–10; Opp. at 11, 21, 23, 24. This single
statement in the Opposition, absent from the Second Amended Complaint and at odds with
Plaintiffs’ “specific funds” theory presented elsewhere in their Opposition, is therefore insufficient
to avoid waiver. See Pandrol, 320 F.3d at 1366–67 (concluding argument “was waived when it
was not raised in response to the motion for summary judgment”); CardSoft, 769 F.3d at 1119
(“Arguments that are not appropriately developed in a party’s briefing may be deemed waived.”);

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Kimble v. United States, 991 F.3d 1238, 1244 (Fed. Cir. 2021) (“[D]istinct claims are waived if
not pled in a complaint.”); Casa de Cambio Comdiv S.A., de C.V. v. United States, 291 F.3d 1356,
1366 (Fed. Cir. 2002) (“[W]e need not address Casa's agency theory because . . . [n]o mention of
this theory appears in Casa's complaint. Under the circumstances, we hold that [plaintiff] waived
any claim it may have against the government based on such a theory.”).
Accordingly, Plaintiffs have consistently alleged the “specific funds” relevant to the
Takings Clause analysis are the assets within Plaintiffs’ respective trust accounts. See 2d Am.
Compl. ¶¶ 103–05, 108; Opp. at 11, 21, 23, 24. Plaintiffs did not raise their distinct second theory
until oral argument on Defendant’s Motion for Partial Summary Judgment. See EWTF II, 2023
WL 4530118, at *10–*11. Claims not presented in the complaint nor developed during briefing
are properly deemed waived. Kimble, 991 F.3d at 1244; CardSoft, 769 F.3d at 1119. Therefore,
this Court did not clearly err in holding that Plaintiffs’ second argument—that the “specific funds”
in which Plaintiffs have a cognizable property interest are the respective trust accounts as a
whole—was waived. See Biery, 818 F.3d at 711 (stating a court, in its discretion, may grant a
motion for reconsideration when there is “a need to correct clear factual or legal error”).
Plaintiffs separately argue “the specific points made by counsel at oral argument . . . were
made in direct response to new arguments raised by the Government . . . in its Reply.” Mot. at 10.
In its Reply, Defendant argued that the ACA did not identify “the particular fund of money from
which” Plaintiffs must pay the TRP contributions. Defendant’s Reply in Support of its Motion for
Partial Summary Judgment (ECF No. 121) (Reply) at 12. Defendant thus argued Plaintiffs’ case
was different than prior “interest follows principal” cases—such as Webb’s, Phillips, and Brown—
where a statute expressly identified a specific fund of money to appropriate. Id. At oral argument,
Plaintiffs countered that this case is no different from the “interest follows principal” cases because

9

Plaintiffs were “effectively required to pay their TRP contributions” from their trust accounts
based on the structure of the ACA and related federal laws. See EWTF II, 2023 WL 4530118, at
*10 (citing Trans. at 21:25–22:3, 25:24–26:2, 30:2–10); see also 2d Am. Compl. ¶ 36; Mot. at 4
(stating “federal law requires Plaintiffs to hold 100% of their assets in [their] trust accounts”). In
their Motion, Plaintiffs now contend that their counterargument made at oral argument was a
proper rebuttal argument. Mot. at 12; see EWTF II, 2023 WL 4530118, at *10–*11. And because
Defendant posed a “new” argument in its Reply, Plaintiffs say, oral argument was Plaintiffs’ only
opportunity to respond. 4 Mot. at 13.
It is correct that parties may respond to arguments first raised in a reply brief during oral
argument. See, e.g., Novosteel SA v. U.S., Bethlehem Steel Corp., 284 F.3d 1261, 1274 (Fed. Cir.
2002) (observing “the non-moving party ordinarily has no right to respond to the reply brief, at
least not until oral argument”). In the limited context of Defendant’s argument that the “interest
follows principal” cases are not analogous to this case, Plaintiffs’ counterargument—that federal
laws effectively required Plaintiffs to pay TRP contributions using assets from their trust
accounts—was a proper rebuttal argument.
In summary, Plaintiffs waived any argument that they have a cognizable property interest
in their respective trust accounts as a whole. See EWTF II, 2023 WL 4530118, at *10–*11.
Consequently, to the extent Plaintiffs argue the structure of the ACA and other federal laws
effectively identified the trust accounts as a whole as the relevant “specific funds” for purposes of

4

In the Motion, Plaintiffs argue that Defendant, “by not presenting this argument until its Reply, .
. . waived [the] argument.” Mot. at 13. That is not correct. Defendant included this “new”
argument in its Reply only to rebut Plaintiffs’ argument that the “interest follows principal” line
of precedent controls this case. See Reply at 11–13; see also Opp. at 24–26. Defendant’s
argument in its Reply simply reflects the point-counterpoint nature of briefing. See Novosteel, 284
F.3d at 1274 (observing “reply briefs reply to arguments made in the response brief”) (emphasis
in original).
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the Takings Clause, that argument is waived. However, the Court clarifies that Plaintiffs’
argument that federal laws effectively required Plaintiffs to pay TRP contributions using assets
from their trust accounts was a proper rebuttal to an argument Defendant advanced in its Reply.
See Mot. at 10–13. Plaintiffs therefore did not waive their rebuttal argument that the structure of
the ACA and other federal laws, including the Taft-Hartley Act and ERISA, effectively required
Plaintiffs to pay TRP contributions using assets from their trust accounts. See id. This accords
with Plaintiffs’ long-held—though incorrect—theory that the relevant “specific funds” are the
assets paid as TRP contributions, rather than the respective trust accounts as a whole. See 2d Am.
Compl. ¶¶ 103–05; EWTF II, 2023 WL 4530118, at *8.

CONCLUSION
For the reasons explained above, Plaintiffs’ Motion for Reconsideration is DENIED.

IT IS SO ORDERED.

Eleni M. Roumel
ELENI M. ROUMEL
Judge

August 18, 2023
Washington, D.C.

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