Kentera et al v. United States of America

Filing 20

ORDER signed by Judge J.P. Stadtmueller on 1/30/2017 GRANTING 15 Defendant's Motion to Dismiss for Failure to State a Claim. Action DISMISSED without prejudice. (cc: all counsel) (jm)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WISCONSIN
MILO KENTERA and LOIS KENTERA,
Plaintiffs,

Case No. 16-CV-1020-JPS

v.
UNITED STATES OF AMERICA,

ORDER
Defendant.

Plaintiffs, Milo and Lois Kentera, filed a complaint against the United
States, alleging violations of the Administrative Procedures Act (“APA”), 5
U.S.C. § 701 et seq., and their due process rights under the Fifth Amendment.
(Docket #1). This action arises from Plaintiffs’ failure to file a Report of
Foreign Bank and Financial Accounts (“FBAR”) for several tax years despite
having assets that should have been identified in that form. The Internal
Revenue Service assessed civil penalties against Plaintiffs for these failures.
Plaintiffs challenge those penalties, arguing that they are void because
Plaintiffs had reasonable cause for their failure to file the FBARs. They further
assert that the IRS’ decision to impose the penalties was arbitrary and
capricious, in violation of the APA. The government moved to dismiss the
complaint, asserting that it has not waived its sovereign immunity with
respect to Plaintiffs’ claims and, even if it had, venue is not proper in this
District. (Docket #15). The motion is fully briefed, and, for the reasons stated
below, it will be granted on the basis of sovereign immunity.1

1

Because the Court finds that the complaint should be dismissed because
of the government’s sovereign immunity, it need not reach the question of whether
this District is the proper venue for the suit.

1.

APPLICABLE LAW
1.1

Motion to Dismiss for Failure to State a Claim

Federal Rule of Civil Procedure 12(b) provides for dismissal of
complaints which fail to state a viable claim for relief or for improper venue.
Fed. R. Civ. P. 12(b)(3) and (6). To state a viable claim, a complaint must
provide “a short and plain statement of the claim showing that the pleader
is entitled to relief.” Fed. R. Civ. P. 8(a)(2). In other words, the complaint
must give “fair notice of what the. . .claim is and the grounds upon which it
rests.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citation
omitted). The allegations must “plausibly suggest that the plaintiff has a right
to relief, raising that possibility above a speculative level[.]” Kubiak v. City of
Chicago, 810 F.3d 476, 480 (7th Cir. 2016) (citation omitted). In reviewing
Plaintiffs’ complaint, the Court is required to “accept as true all of the
well-pleaded facts in the complaint and draw all reasonable inferences in
favor of the plaintiff.” Id. at 480–81.
1.2

Sovereign Immunity

“It is axiomatic that the United States may not be sued without its
consent and that the existence of consent is a prerequisite for jurisdiction.”
United States v. Mitchell, 463 U.S. 206, 212 (1983). Waivers of sovereign
immunity are narrowly construed because the immunity protects the public
fisc. See West v. Gibson, 527 U.S. 212, 222 (1999); Nelson v. Miller, 570 F.3d 868,
883–84 (7th Cir. 2009). The court must strictly construe the scope of any
alleged waiver in favor of the sovereign. Lane v. Pena, 518 U.S. 187, 192 (1996).
A court may “not enlarge the waiver beyond what the language [of the
statute] requires.” Library of Congress v. Shaw, 478 U.S. 310, 318 (1986)
(internal citations and quotation marks omitted). Consent to suit cannot be
implied, and ambiguities are construed in favor of immunity. See United States
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v. Nordic Village, 503 U.S. 30, 34 (1992). In this Circuit, a sovereign immunity
defense, if sustained, shows that the plaintiff failed to state a claim; it is not
a matter affecting the court’s subject-matter jurisdiction. Collins v. United
States, 564 F.3d 833, 837–38 (7th Cir. 2009). The plaintiff, as the party seeking
to breach the government’s sovereign immunity, bears the burden to show
that a waiver exists. See Macklin v. United States, 300 F.3d 814, 819 (7th Cir.
2002); Cole v. United States, 657 F.2d 107, 109 (7th Cir. 1981).
2.

RELEVANT FACTS
The relevant facts are drawn from Plaintiffs’ complaint. The Bank

Secrecy Act (“BSA”), 31 U.S.C. § 5311 et seq., requires U.S. citizens to keep
records and file reports when they “mak[e] a transaction or maintai[n] a
relation with a foreign financial agency.” 31 U.S.C. § 5314(a). The report must
be made in an FBAR, which is IRS Form TD F 90-22.1. The FBAR must be
filed on or before June 30 of the year following the calendar year for which
the report is made. If the individual fails to comply with the requirements of
Section 5314, the BSA provides that civil penalties may be imposed. Id. §
5321(a)(5). For non-willful violations, the penalty cannot exceed $10,000. Id.
§ 5321(a)(5)(B)(I).
In 1984, Plaintiff Milo Kentera inherited money located in a foreign
bank account at Banque Cantonale de Geneve (“BCGE”). He added his wife’s
name to the BCGE account shortly thereafter. The balance in the account
increased dramatically in 2007 due to the sale of Milo Kentera’s parents’
property in Montenegro, certain proceeds of which were distributed to Milo
and deposited in the BCGE account.
Plaintiffs have consistently disclosed the BCGE account on their
federal income tax returns since 1984. However, in 2006 their accountant
failed to prepare or file an FBAR in connection with their federal income tax
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return. Their accountant for tax years 2007, 2008, and 2009 made the same
error, despite having information from which he could have discovered the
existence of the BCGE account. In 2010, a third accountant acknowledged the
existence of the BCGE account in Plaintiffs’ return, but again seems to have
failed to prepare or file an FBAR.
In February 2011, the IRS announced a federal amnesty program for
taxpayers with foreign bank accounts—the 2011 Offshore Voluntary
Disclosure Initiative (“OVDI”). To participate, taxpayers were required to
amend their tax returns and file FBARs for tax years 2003–2010. OVDI
participants were required to pay all delinquent taxes, interest, and penalties,
and, under this program, taxpayers were subject to a 25% penalty on the
highest aggregate account balance on their previously undisclosed accounts
during those years.
In around September 2011, Plaintiffs applied to the OVDI program.
They amended their tax returns for 2006–2010 to include omitted income and
filed completed FBARs for 2005–2010. In August 2013, the IRS provided
Plaintiffs with a Form 906, Closing Agreement on Final Determination Covering
Specific Matters (the “Closing Agreement”). The Closing Agreement provided,
in relevant part, that Plaintiffs would be liable under the tax code for a
miscellaneous penalty of $90,092. Plaintiffs withdrew from the OVDI
program the next month.
After Plaintiffs withdrew from the program, IRS agent Kimberly
Nguyen (“Nguyen”), who works in Milwaukee, examined the matter and
recommended that Plaintiffs be assessed non-willful FBAR penalties pursuant
to 31 U.S.C. § 5321(a)(5). The amounts of the penalties were as follows:

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(1) Lois Kentera: $500 for calendar year 2006; and $2,500 per
year for calendar years 2007, 2008, 2009, and 2010, for a total
penalty of $10,500; and
(2) Milo Kentera: $500 for calendar year 2006; and $10,000 per
year for calendar years 2007, 2008, 2009, and 2010, for a total
penalty of $40,500.
On September 17, 2014, the government mailed each Plaintiff a letter advising
that the IRS was proposing assessment of these penalties.
On or about December 14, 2014, Plaintiffs’ counsel communicated with
Nguyen, protesting the proposed penalties. He also had a conference with
her sometime thereafter. By letter dated April 22, 2015, the government
mailed Milo Kentera a letter of an “appeals determination,” upholding the
IRS’ proposed FBAR penalties. A similar letter was sent to Lois Kentera on
April 29, 2015.
In their complaint, Plaintiffs assert that the government was wrong to
assess these penalties. First, Plaintiffs contend that the BSA prohibits the
imposition of an FBAR penalty if the violation was “due to reasonable
cause.” 31 U.S.C. § 5321(a)(5)(B)(ii)(I). According to Plaintiffs, reasonable
cause for their violations exists because the fault lay with their various
accountants. The government disregarded this defense, and Plaintiffs believe
this was a violation of their due process rights under the Fifth Amendment.
Second, Plaintiffs allege that because the IRS wrongfully rejected their
reasonable cause defense under the BSA, its assessment of the penalties was
arbitrary and capricious, in violation of the APA. See 5 U.S.C. § 706(2)(A) (a
district court may set aside agency action that is “arbitrary, capricious, an
abuse of discretion, or otherwise not in accordance with law”). Plaintiffs

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request that the Court find that the government abused its discretion in
assessing these penalties and ask that the Court declare the penalties void.
3.

DISCUSSION
The government contends that Plaintiffs have failed to state any claims

against it because it has not waived its sovereign immunity with respect to
Plaintiffs’ claims. The parties’ dispute focuses on the APA, which provides
a waiver of sovereign immunity when two prerequisites are met.2 First, the
action in question must “see[k] relief other than money damages and stat[e]
a claim that an agency or an officer or employee thereof acted or failed to act
in an official capacity or under color of legal authority.” See 5 U.S.C. § 702.
Second, the plaintiff must show that (1) review of the agency action in
question is authorized by a substantive statute or (2) review is made of a
“final agency action for which there is no other adequate remedy in a court.”
Id. § 704; Bowen v. Massachusetts, 487 U.S. 879, 891–93 (1988); Consol. Edison
of N.Y. v. U.S. Dep’t of Energy, 247 F.3d 1378, 1382 (Fed. Cir. 2001) (“The
Supreme Court has explained that a litigant may invoke the APA as a waiver
of sovereign immunity, thereby invoking district court jurisdiction, if the
litigant can satisfy both. . .§ 702 and. . .§ 704.”) (parentheticals omitted); see
also Blagojevich v. Gates, 519 F.3d 370, 372 (7th Cir. 2008). Both parties agree

2

The other two asserted jurisdictional bases for the suit—28 U.S.C. § 1331
and 28 U.S.C. § 2201—do not create waivers of the United States’ sovereign
immunity. See (Docket #16 at 3, 5–6). Plaintiffs admit as much with respect to
Section 1331. (Docket #17 at 3). Further, while Plaintiffs do not expressly concede
that the Declaratory Judgment Act, 28 U.S.C. § 2201, does not create a waiver of
sovereign immunity, the Act “neither provides nor denies a jurisdictional basis for
actions under federal law, but merely defines the scope of available declaratory
relief.” See McCarthy v. Marshall, 723 F.2d 1034, 1037 (1st Cir. 1983). As a result, the
Act cannot itself work a waiver of sovereign immunity.

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that none of the substantive law on which Plaintiffs rely contains a waiver of
sovereign immunity. (Docket #16 at 4); (Docket #17 at 3).
Nevertheless, the government asserts that Plaintiffs have adequate
remedies outside the instant suit. (Docket #16 at 4). In the government’s view,
Plaintiffs can pay some or all of the penalties and then file a refund suit under
the Tucker Act, 28 U.S.C. § 1491, or the Little Tucker Act, 28 U.S.C. §
1346(a)(2). Id. at 4–5. Such a suit would permit Plaintiffs to raise the
reasonable cause defense that forms the basis of this action. Id. at 5.
Alternatively, if Plaintiffs simply decline to pay the penalties, they could
assert the reasonable cause defense during a suit brought by the government
to reduce the penalties to judgment pursuant to 31 U.S.C. § 5321(b)(2). Id.3
Plaintiffs rejoin that the government’s proposed alternative avenues
are not adequate substitutes for APA review. (Docket #17). The availability
of remedies under the Tucker Act and Little Tucker Act turn on different
prerequisites, so the Court will treat them in turn.
3.1

The Tucker Act and Money Mandating Statutes

First, there is the Tucker Act, which established the Court of Federal
Claims in order to provide a forum for certain monetary claims against the
United States. Under the Tucker Act, the Court of Federal Claims has
“jurisdiction to render judgment upon any claim against the United States,
founded either upon the Constitution, or any Act of Congress or any

3

Plaintiffs believe that this is not a viable option because the government
can recoup the penalties without litigation by offsetting payments made by other
federal agencies, including Social Security benefits. (Docket #17 at 11); 31 U.S.C. §
3716; 31 C.F.R. § 285.5(a)(1). The government does not address Plaintiffs’ position
in its reply and therefore seems to have abandoned this argument. Because the
Court finds that the Tucker Act and Little Tucker Act afford Plaintiffs an adequate
alternative to a claim under the APA, the Court does not decide whether waiting
for the government to sue them would also qualify.

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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 tort.” See 28 U.S.C. § 1491 (a)(1). The Tucker Act waives
the government’s sovereign immunity for such actions. United States v.
Mitchell, 463 U.S. 206, 212–18 (1983); United States v. Testan, 424 U.S. 392,
397–98 (1976). Thus, says the government, Plaintiffs could pay some of the
penalties and seek a refund under the Tucker Act.
There is an additional wrinkle, however, since the Tucker Act only
confers jurisdiction and itself creates no substantive rights. Testan, 424 U.S.
at 398. As such, to assert a claim in the Court of Federal Claims under the
Tucker Act, Plaintiffs would need a source of substantive law that creates for
them a damages remedy. Mitchell, 463 U.S. at 216; Todd v. United States, 386
F.3d 1091, 1094 (Fed. Cir. 2004). This is referred to as the requirement for a
“money-mandating” source of law. See Roth v. United States, 378 F.3d 1371,
1384 (Fed. Cir. 2004) (“Because the Tucker Act itself does not provide a
substantive cause of action, a plaintiff must find elsewhere a money
mandating source upon which to base a suit.”).
According to Plaintiffs, neither the BSA nor the Due Process Clause of
the Fifth Amendment qualify. (Docket #17 at 6–7). First, although the BSA
provides the means for the government to enforce FBAR requirements, it says
nothing about the taxpayer’s ability to seek repayment of unauthorized
penalties. (Docket #17 at 6). Second, the Due Process Clause of the Fifth
Amendment has, as Plaintiffs point out, been flatly held not to be money
mandating. Id. at 7; Smith v. United States, 709 F.3d 1114, 1116 (Fed. Cir. 2013)
(“The Due Process clauses of both the Fifth and Fourteenth Amendments do
not mandate the payment of money, and thus do not provide a cause of
action under the Tucker Act.”).
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Yet Plaintiffs acknowledge that this is not the end of the story. Rather,
the Court of Federal Claims could hear Plaintiffs’ claims—statutory,
constitutional, or otherwise—under an “illegal exaction” theory. Consol.
Edison Co. of N.Y., 247 F.3d at 1384. An illegal exaction occurs when money
is “improperly paid, exacted, or taken from the claimant” in violation of the
Constitution or some statutory power. See Eastport S.S. Corp. v. United States,
178 Ct. Cl. 599, 605 (1967). The classic illegal exaction claim is a tax refund
suit alleging that taxes have been improperly collected or withheld by the
government. See, e.g., City of Alexandria v. United States, 737 F.2d 1022, 1028
(Fed. Cir. 1984). As Plaintiffs admit, “[a]lthough the [Court of Federal Claims]
ordinarily lacks jurisdiction over due process claims under the Tucker Act,
cases have held that [it] does have jurisdiction over illegal exaction claims
when the exaction is based upon an asserted statutory power.” (Docket #17
at 7) (citing Gahagan v. United States, 72 Fed. Cl. 157, 163 (2006); Aerolineas
Argentinas v. United States, 77 F.3d 1564, 1573 (Fed. Cir. 1996)). Here, that
statutory power would be the BSA itself.
Plaintiffs argue, however, that even in illegal exaction cases, a moneymandating source of law is still required to create jurisdiction under the
Tucker Act. (Docket #17 at 7–8) (citing Starr Int’l Co., Inc. v. United States, 121
Fed. Cl. 428, 464 (2015)). The government disagrees. It claims that either a
money-mandating statute or an illegal exaction, but not both, are required to
bring a claim in the Court of Federal Claims. (Docket #19 at 7) (citing
Aerolineas Argentinas, 77 F.3d at 1579).
The Court need not resolve the parties’ disagreement on this question
because it finds that the BSA qualifies as money-mandating. To prove that a
statute is money-mandating, it “must be such that [it] ‘can fairly be
interpreted as mandating compensation by the Federal Government for the
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damage sustained.’” Jones v. United States, 122 Fed. Cl. 490, 508 (2015)
(quoting United States v. White Mountain Apache Tribe, 537 U.S. 465, 472
(2003)); Testan, 424 U.S. at 401–02. The Court of Appeals for the Federal
Circuit explained in Norman that
[t]o invoke Tucker Act jurisdiction over an illegal exaction
claim, a claimant must demonstrate that the statute or
provision causing the exaction itself provides, either expressly
or by “necessary implication,” that “the remedy for its
violation entails a return of money unlawfully exacted.” Cyprus
Amax Coal Co. v. United States, 205 F.3d 1369, 1373 (Fed. Cir.
2000) (concluding that the Tucker Act provided jurisdiction
over an illegal exaction claim based upon the Export Clause of
the Constitution because the language of that clause “leads to
the ineluctable conclusion that the clause provides a cause of
action with a monetary remedy”).
Norman v. United States, 429 F.3d 1081, 1095 (Fed. Cir. 2005).
It is not the case, as Plaintiffs believe, that the BSA is not moneymandating simply because it does not expressly provide the taxpayer a
remedy for an unauthorized FBAR penalty. Rather, the absence of moneymandating language is not fatal to jurisdiction so long as a monetary remedy
can be implied for an illegal exaction under the relevant statute. White
Mountain Apache Tribe, 537 U.S. at 477 (“To the extent that the Government
would demand an explicit provision for money damages to support every
claim that might be brought under the Tucker Act, it would substitute a plain
and explicit statement standard for the less demanding requirement of fair
inference that the law was meant to provide a damages remedy for breach of
a duty.”). In other words, “[the court] asks what would be the explicit or
implicit remedy for the Government’s violation of the statute.” Northern
California Power Agency v. United States, 122 Fed. Cl. 111, 115–16 (2015). If, “by
necessary implication, the remedy would be a return of the payments that
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were assessed. . .in violation of [the statute],” jurisdiction exists. Id. Thus, the
court in Greene found that a monetary remedy could be fairly implied for an
illegal offset against a tax refund made pursuant to 31 U.S.C. § 3720A because
the taxpayer would have no other recourse for return of those funds. Greene
v. United States, 124 Fed. Cl. 636, 641 (2015). The same logic held sway in
Starr, where the court found that if jurisdiction did not exist, the government
“could nationalize a private corporation, as it did to AIG, without fear of any
claims or reprisals.” Starr, 121 Fed. Cl. at 464–65.
The analysis is the same with respect to the BSA. The statute
authorizes the government to impose a penalty for failure to file an FBAR,
unless the failure was due to reasonable cause. 31 U.S.C. § 5321(a)(5)(B)(ii)(I).
If there was no failure to file or if the failure was due to reasonable cause,
there should be no penalty and any money the government receives as
payment of the penalty was illegally exacted in violation of the statute.
Though the BSA admittedly lacks money-mandating language, it is by
necessary implication that the taxpayer has a monetary remedy—the return
of his illegally exacted funds—when the statute is violated. Norman, 429 F.3d
at 1095; N. California Power Agency, 122 Fed. Cl. at 116; White Mountain Apache
Tribe, 537 U.S. at 477. As a result, Plaintiffs could bring their statutory and
constitutional claims in the Court of Federal Claims pursuant to the Tucker

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Act. This, in turn, compels the Court to conclude that APA review is
unavailable here, since Plaintiffs have an adequate remedy to replace it.4
3.2

The Little Tucker Act

Plaintiffs could not only assert a claim under the Tucker Act in the
Court of Federal Claims, they could also raise a claim under the Little Tucker
Act in either the district court or the Court of Federal Claims. The Little
Tucker Act provides concurrent jurisdiction in the district courts and the
Court of Federal Claims over suits against the United States for $10,000 or
less founded upon “the Constitution, or any Act of Congress,. . .or upon any
express or implied contract with the United States” and waives sovereign
immunity for those claims. 28 U.S.C. § 1346(a)(2); Mitchell, 463 U.S. at
212–218. However, the Tucker Act limits the Court of Federal Claims to
awarding damages and not granting injunctive or declaratory relief.
Richardson v. Morris, 409 U.S. 464, 465–66 (1973). This limitation applies to
district courts when they exercise jurisdiction under the Little Tucker Act,
since the district court is essentially sitting in place of the Court of Federal
Claims. United States v. Sherwood, 312 U.S. 584, 589–91 (1941).5

4

The Court notes that the parties have not cited, and it has not located,
specific guidance on whether APA review of FBAR penalties should be permitted
to proceed or be rejected in favor of a Tucker Act claim. The Court found only one
case coming close: Moore v. United States, No. C13–2063RAJ, 2015 WL 1510007
(W.D. Wash. Apr. 1, 2015). The court in Moore heard (and rejected on the merits)
an APA challenge to the imposition of an FBAR penalty. See id. at *3. Nevertheless,
the government appears not to have raised sovereign immunity in Moore, so the
Court does not find Moore helpful on the specific question raised here.
5

The Little Tucker Act also subsumes the requirement in the Tucker Act that
there be a money-mandating statute or an illegal exaction. (Docket #19 at 7 n.5).
Because that point was addressed above, see supra Part 4.1, the Court need not
repeat its analysis here.

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This limitation, Plaintiffs contend, undermines the government’s
contention that the Little Tucker Act is an adequate substitute for their APA
claim. Plaintiffs argue first that because the FBAR penalties against them total
$51,000, their claims exceed the jurisdictional reach of the Little Tucker Act.
(Docket #17 at 9–10). However, the $10,000 limitation applies per claim, not
per case, and because none of the individual FBAR penalties exceeds $10,000,
the Little Tucker Act provides jurisdiction. See Baker v. United States, 722 F.2d
517, 518 (9th Cir. 1983); United States v. Louisville & Nashville R.R. Co., 221
F.2d 698, 703 (6th Cir. 1955); Zumerling v. Devine, 769 F.2d 745, 748 (Fed. Cir.
1985); Commonwealth of Pa. v. National Ass’n of Flood Ins., 520 F.2d 11, 25 (3d
Cir. 1975).
Second, Plaintiffs assert that the inability of the court to grant
equitable relief when exercising jurisdiction under the Act is problematic. Id.
at 10–11. They reason as follows:
If the government declined to answer or counterclaim,
plaintiffs could theoretically obtain a default judgment for
refund of the $10,000. However, since the Tucker Act does not
empower the district court to render declaratory relief, and a
default judgment is not given preclusive effect under the
doctrine of collateral estoppel, plaintiffs would remain liable
for the balance of the civil penalty assessment. As such the
United States would be able to offset any federal benefits to
which plaintiffs may be entitled, including social security
benefits.
Id. (internal citations omitted). The government claims that Plaintiffs’ fear “is
entirely theoretical and also incorrect.” (Docket #19 at 4).
The Court agrees that Plaintiffs’ argument is speculative. Moreover,
the argument has been rejected by other courts. See Briggs v. United States, 564
F. Supp. 2d 1087, 1093 (N.D. Cal. 2008). If Plaintiffs were successful in

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achieving a refund of even a partial payment of the FBAR assessments, the
government would be barred by res judicata from seeking to collect the
remainder of the assessments. See id. at 1092–93; Consol. Edison Co. of N.Y.,
247 F.3d at 1384–85 (if the plaintiff succeeded in obtaining a partial refund,
one “cannot imagine that the United States would continue to require the
[plaintiff] to pay unlawful exactions”). This Court agrees with Briggs
inasmuch as once Plaintiffs were repaid, “it would be unlikely (and
inappropriate) for defendan[t] to continue with wrongful offsets.” Briggs, 564
F. Supp. 2d at 1094. Thus, the fact that a district court could not grant a
prospective, equitable ban on future collection of the FBAR assessments
under the Little Tucker Act is of no moment. See Telecare Corp. v. Leavitt, 409
F.3d 1345, 1349 (Fed. Cir. 2005) (noting that “[t]he availability of an action for
money damages under the Tucker Act. . .is presumptively an ‘adequate
remedy’ for § 704 purposes” and “a final decision in a Little Tucker Act case.
. .will finally resolve the issue and as a practical matter make repeated suits
unnecessary”). Thus, Plaintiffs could bring their claims in this case under the
Little Tucker Act.6

6

The government argues, for the first time in its reply, that 28 U.S.C. § 1355
also affords an adequate alternative to the present request for APA review. (Docket
#19 at 2). Section 1355 provides that federal district courts have original
jurisdiction “of any action or proceeding for the recovery or enforcement of any
fine, penalty, or forfeiture, pecuniary or otherwise, incurred under any Act of
Congress, except matters within the jurisdiction of the Court of International
Trade.” 28 U.S.C. § 1355(a). Whether or not this statute provides an adequate
alternative, Plaintiffs were not given a chance to respond to the government’s
position. The Court will, therefore, disregard it. Studio & Partners v. KI, No.
06-C-0628, 2008 WL 426496, at *6 (E.D. Wis., Feb. 14, 2008) (citing TAS Distributing
Co., Inc. v. Cummins Engine Co., Inc., 491 F.3d 625, 630–31 (7th Cir. 2007)).

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3.3

Plaintiffs Have Not Established a Waiver of Sovereign
Immunity
The parties’ present dispute requires the Court to assess the nuances
of Tucker Act and Little Tucker Act jurisdiction. But recall that the ultimate
inquiry here is whether the United States has waived its sovereign immunity
as to Plaintiffs’ claims. This does not occur by implication; instead, waiver
must be unmistakable. Nelson, 570 F.3d at 883–84. Waiver in this case must
be decided by reference to the APA, which waives immunity only when the
plaintiff lacks another adequate remedy elsewhere. 5 U.S.C. § 704. The
question is not whether Plaintiffs might have a better chance of success in the
present suit; rather, dismissal is required merely if they have an adequate
remedy in another proceeding. See Walsh v. Dep’t of Veterans Affairs, 400 F.3d
535, 537–38 (7th Cir. 2005); Consol. Edison Co. of N.Y., 247 F.3d at 1383.
Considering these principles together, the Court is obliged to conclude
that Plaintiffs have failed to meet their burden to show that sovereign
immunity has been waived. Macklin, 300 F.3d at 819. Plaintiffs have an
adequate alternative to this lawsuit in either the Tucker Act or the Little
Tucker Act. Moreover, to the extent Plaintiffs believe that they should not be
required to pay any of the FBAR assessments before filing suit, either by
preemptively paying them to create jurisdiction under the statutes discussed
above, or by waiting for the government to offset their funds from them
administratively, this is merely a complaint that APA review might be better
for them financially in the short term. It does not, standing alone,
demonstrate that paying some or all of the assessments and filing a refund
suit in the Court of Federal Claims is inherently inadequate. Cf. Greene v.
United States, 124 Fed. Cl. 636, 641 (2015) (noting that illegal exaction claim
does not require the taxpayer to first fully pay the tax liability). In any event,

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Plaintiffs never expressly assert that there is a problem with Tucker Act or
Little Tucker Act claims simply because they require a prepayment of the
allegedly illegal penalty in order to create jurisdiction. As such, the Court
remains unconvinced that the government has waived its sovereign immunity
and it must dismiss Plaintiffs’ claims.
4.

CONCLUSION
Plaintiffs have not met their substantial burden to show that the

government waived its sovereign immunity with respect to the claims they
assert in this action. As a result, the complaint must be dismissed for failure
to state a claim. The dismissal is without prejudice so that Plaintiffs may avail
themselves of whatever other avenues for relief they deem appropriate,
including potential claims under the Tucker Act or Little Tucker Act. See
Sorrentino v. Godinez, 777 F.3d 410, 414–15 (7th Cir. 2015).
Accordingly,
IT IS ORDERED that the United States’ motion to dismiss for failure
to state a claim (Docket #15) be and the same is hereby GRANTED; and
IT IS FURTHER ORDERED that this action be and the same is hereby
DISMISSED without prejudice.
The Clerk of Court is directed to enter judgment accordingly.
Dated at Milwaukee, Wisconsin, this 30th day of January, 2017.
BY THE COURT:

J.P. Stadtmueller
U.S. District Judge

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