Dynamic Image Technologies, Inc. v. United States

United States Court of Appeals
For the First Circuit

No. 00-1004

DYNAMIC IMAGE TECHNOLOGIES, INC., ET AL.,

Plaintiffs, Appellants,

v.

UNITED STATES OF AMERICA,

Defendant, Appellee.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF PUERTO RICO

[Hon. Daniel R. Domínguez, U.S. District Judge]

Before

Selya, Boudin and Lipez,

Circuit Judges.

Johnny Rivera and Ivan Dominguez on brief for appellants.
David W. Ogden, Acting Assistant Attorney General, Guillermo
Gil, United States Attorney, Robert S. Greenspan and E. Roy
Hawkens, Attorneys, Appellate Staff, United States Dep't of
Justice, on brief for appellee.

August 4, 2000
 SELYA, Circuit Judge. Dynamic Image Technologies, Inc.

(DIT) and Rafael Vega (DIT's principal) sued the United States

under the Federal Tort Claims Act (FTCA), 28 U.S.C. §§ 1346,

2671-2680. The district court gave their claims careful

consideration, but found them wanting. See Dynamic Image

Technologies, Inc. v. United States, 68 F. Supp. 2d 113 (D.P.R.

1999) (Dynamic II); Dynamic Image Technologies, Inc. v. United

States, 18 F. Supp. 2d 146 (D.P.R. 1998) (Dynamic I). DIT and

Vega appeal. We affirm.

I. BACKGROUND

We take the plaintiffs' version of the facts,

consistent with record support. See Pagano v. Frank, 983 F.2d

343, 347 (1st Cir. 1993) (elucidating summary judgment

standard). In the interests of fairness, however, we report

that the government disputes many of the facts.

In mid-1991, the United States Postal Service (USPS)

announced a set of requirements for obtaining bulk mail pre-sort

discounts. This innovation opened a window of opportunity for

direct-mail houses and other firms offering mail-processing

services. In an attempt to pass through this window, DIT

invested appreciable time and money in the development of a

software system capable of effecting compliance with the new

requirements. In July 1995, the USPS granted its seal of

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approval — termed, in an epitomical example of bureaucratic

doublespeak, a coding accuracy support system quality

certification (CASSQC) — to DIT's newly-developed software.

Later that month, the USPS hosted a trade show in San

Juan to enable vendors to present mail-processing products and

systems to prospective customers. The USPS's customer service

manager, Luis Peña, informed those attending the show that no

one in Puerto Rico had obtained the certification necessary for

pre-sort clearance. When Vega objected to this misstatement,

Peña ordered his forcible removal from the premises. Following

this episode, DIT claims to have suffered a severe erosion of

its customer base.

A USPS representative subsequently informed the

plaintiffs that a new (and different) test would be

administered. This test bore tangentially, if at all, on the

efficacy of techniques intended to comply with the announced

pre-sort requirements, and employed criteria that departed

radically from the CASSQC standard. Moreover, USPS employees

continued to inform DIT's actual and potential customers that it

lacked the proper credentials to obtain pre-sort discounts.

In response, the plaintiffs filed an administrative

claim with the USPS alleging negligent misrepresentation, libel,

slander, intentional interference with contractual relations,

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and discrimination under 42 U.S.C. § 1983. They averred, at

some length, that USPS personnel made false and misleading

statements anent DIT's certification status, disrupted

advantageous economic relations between DIT and its customers,

drove DIT out of business, and, in the bargain, discriminated

against Vega. Notably, however, the document — which prayed for

$5,000,000 in damages — did not mention the incident involving

Vega's ejection from the trade show.

When the matter was not resolved administratively

within the obligatory six-month waiting period, the plaintiffs

brought suit in the United States District Court for the

District of Puerto Rico. See 28 U.S.C. § 2675(a). Their

complaint mirrored their administrative claim and did not refer

to Vega's confrontation with Peña. The United States moved to

dismiss and to stay discovery. The district court granted the

stay. It later granted the motion to dismiss. See Dynamic I,

18 F. Supp. 2d at 148. Taking matters in sequence, the court

invoked an FTCA exception, 28 U.S.C. § 2680(h), to dispose of

the misrepresentation, libel, slander, and contractual

interference claims.1 See Dynamic I, 18 F. Supp. 2d at 149-51.

1
This statutory proviso exempts from the scope of waived
immunity "any claim arising out of assault, battery, false
imprisonment, false arrest, malicious prosecution, abuse of
process, libel, slander, misrepresentation, deceit or
interference with contract rights." 28 U.S.C. § 2680(h).

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The court found Vega's discrimination claim wanting for several

reasons, including the fact that the United States is not a

proper party defendant in a suit brought under 42 U.S.C. § 1983.

See Dynamic I, 18 F. Supp. 2d at 151.

The district court could have stopped there, but it did

not. The court believed that the general scenario described by

the plaintiffs arguably encompassed claims for intentional

infliction of emotional distress and negligent supervision. See

id. at 151-52. Noting that such claims might be permissible

under the FTCA, the court gave the plaintiffs an opportunity to

file an amended complaint.2 See id. at 151 (citing Santiago-

Ramirez v. Secretary of the Dep't of Defense, 984 F.2d 16, 20

(1st Cir. 1993)), 153. The court cautioned, however, that any

amended complaint (a) must be consistent with the notice that

the plaintiffs previously had provided to the government via

their administrative claim, and (b) "should not merely

reformulate the contract, slander, libel and misrepresentation

claims which are dismissed herein because the court does not

2
Because corporations, unlike natural persons, have no
emotions, they cannot press claims for intentional infliction of
emotional distress. See FDIC v. Hulsey, 22 F.3d 1472, 1489
(10th Cir. 1994). Recognizing this circumstance, the district
court properly limited its references to such a claim to Vega.
See Dynamic I, 18 F. Supp. 2d at 151, 153.

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have subject matter jurisdiction over them, no matter how

Plaintiffs dress them up." Id. at 153.

The plaintiffs seized this lifeline and filed an

amended complaint. In it, they described for the first time the

altercation that allegedly occurred at the 1995 trade show and

claimed that USPS hierarchs negligently permitted their

underlings to arrest Vega without sufficient cause in front of

prospective clients and others.3 Vega also proffered a claim for

intentional infliction of emotional distress, linking that claim

to the same episode. The United States again moved to dismiss,

asserting both lack of subject matter jurisdiction and failure

to state a cognizable claim. See Fed. R. Civ. P. 12(b)(1),

12(b)(6). Because documents dehors the pleadings were presented

to (and considered by) the district court in connection with the

motion, the court converted the motion into one for summary

judgment. See Fed. R. Civ. P. 12(b) (providing for conversion

of Rule 12(b)(6) motions). Emphasizing that the plaintiffs'

administrative claim failed to mention any facts which would

have alerted the government to the possibility of litigation

3
In their amended complaint, their opposition to the
government's motion to dismiss, and their brief on appeal, the
plaintiffs refer to this vignette under two rubrics: false
arrest and false imprisonment. For convenience, we refer only
to the former — but we use the term in a broad sense that
encompasses the latter.

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based on false arrest, the court then ruled that it lacked

jurisdiction to entertain the amended complaint. See Dynamic

II, 68 F. Supp. 2d at 117-18. This appeal ensued.

II. ANALYSIS

We note, at the outset, our doubts about the district

court's procedural praxis. As a general matter, trial courts

should give Rule 12(b)(1) motions precedence. See Northeast

Erectors Ass'n of the BTEA v. Secretary of Labor, 62 F.3d 37, 39

(1st Cir. 1995). The conversion principle does not apply in

regard to such motions — and for good reason. The court,

without conversion, may consider extrinsic materials and, to the

extent it engages in jurisdictional factfinding, is free to test

the truthfulness of the plaintiff's allegations. See Mortensen

v. First Fed. Sav. & Loan Ass'n, 549 F.2d 884, 890-91 (3d Cir.

1977). Thus, the district court's decision to convert the

government's motion to a motion for summary judgment strikes us

as unnecessary.

Be that as it may, we need not pass definitively on the

propriety of the conversion for two reasons. First, neither

party objects to this aspect of the court's ruling, and any

error is therefore waived. See Attallah v. United States, 955

F.2d 776, 779 n.3 (1st Cir.1992). Second, this appeal turns on

a purely legal question — one that requires a comparison of the

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administrative claim with the amended complaint — so

characterization of the government's motion has no practical

effect. At any rate, the plaintiffs cannot be heard to

complain, inasmuch as the summary judgment standard is as

favorable to them as any other that they might reasonably

request. Cf. United States v. AVX Corp., 962 F.2d 108, 114 n.6

(1st Cir. 1992) (using parallel logic to justify application of

Rule 12(b)(6) criteria to a standing challenge). Thus, we do

not probe the point more deeply, but, rather, proceed to address

seriatim the stay of discovery and the dismissal of the amended

complaint.

A. The Stay of Discovery.

The plaintiffs asseverate that the district court erred

in denying them the opportunity to conduct discovery before it

adjudicated the government's motion for brevis disposition.

Trial courts have broad discretion in determining the timing of

pretrial discovery, and appellate courts are reluctant to

interfere unless it clearly appears that a "discovery order was

plainly wrong and resulted in substantial prejudice to the

aggrieved party." Mack v. Great Atl. & Pac. Tea Co., 871 F.2d

179, 186 (1st Cir. 1989). This discretion obtains where, as

here, the question is whether to permit discovery before

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deciding jurisdictional issues. See Crocker v. Hilton Int'l

Barbados, Ltd., 976 F.2d 797, 801 (1st Cir. 1992).

Here, the plaintiffs' "denial of discovery" claim fails

for two reasons. First, they raise it too late. When the

government moved to stay discovery in the district court, the

plaintiffs did not file an opposition. See D.P.R. Local Rule

311.5 (stating that "[i]f the respondent opposes a motion, he or

she shall file a response within ten (10) days after service of

the motion"). Nor did they present in their opposition to the

dismissal motion any developed argumentation as to how

additional discovery might advance their cause. Consequently,

they forfeited the point. See United States v. Slade, 980 F.2d

27, 30 (1st Cir. 1992) ("It is a bedrock rule that when a party

has not presented an argument to the district court, she may not

unveil it in the court of appeals."); see also Sunview Condo.

Ass'n v. Flexel Int'l, Ltd., 116 F.3d 962, 964 (1st Cir. 1997)

(holding that plaintiffs who fail to preserve their rights below

cannot appeal on the ground that they were denied jurisdictional

discovery).

In all events, the plaintiffs have not shown an

entitlement to pretrial discovery. Where, as here, a defendant

challenges a court's jurisdiction, the court has broad

discretion to defer pretrial discovery if the record indicates

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that discovery is unnecessary (or, at least, is unlikely to be

useful) in regard to establishing the essential jurisdictional

facts. See Noonan v. Winston Co., 135 F.3d 85, 94 (1st Cir.

1998); St. Clair v. City of Chico, 880 F.2d 199, 201-02 (9th

Cir. 1989). Orders staying discovery are particularly difficult

to set aside in actions against the federal government, where

uncontrolled discovery poses a special threat and compelling

public policy reasons support stringent limitations on discovery

pending the resolution of threshold jurisdictional questions.

See 6 James Wm. Moore et al., Moore's Federal Practice §

26.105[3][c], at 26-269 (3d ed. 2000); cf. Harlow v. Fitzgerald,

457 U.S. 800, 818 (1982) (suggesting that, until threshold

question of qualified immunity is settled in a suit against a

public official, unrestricted discovery should not be

permitted).

In this instance, the plaintiffs never asked for

jurisdictional discovery, nor have they explained (even at this

late date) how discovery, if allowed, would bear on the narrow

jurisdictional issue that lies on the doorstep of this case. On

this austere record, the district court did not abuse its

discretion in staying discovery pending a resolution of the

jurisdictional question.

B. The Notice-of-Claim Provision.

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 We turn now to the merits of the district court's

order. Viewing that order as a ruling on a motion for summary

judgment, see supra, we afford plenary review. See Pagano, 983

F.2d at 347. In fulfilling this responsibility, we interpret

the record in the light most agreeable to the plaintiffs (the

non-moving parties) and draw all reasonable inferences in their

favor. See id. Despite this liberal approach, however, we

eschew "conclusory allegations, improbable inferences, and

unsupported speculation." Medina-Munoz v. R.J. Reynolds Tobacco

Co., 896 F.2d 5, 8 (1st Cir. 1990).

As a sovereign nation, the United States is immune from

liability except to the extent that it consents to suit. See

Molzof v. United States, 502 U.S. 301, 304 (1992). In general,

the FTCA waives the United States's sovereign immunity for tort

liability, that is, for claims that allege a "negligent or

wrongful act or omission of any employee of the Government while

acting within the scope of his office or employment, under

circumstances where the United States, if a private person,

would be liable to the claimant in accordance with the law of

the place where the act or omission occurred." 28 U.S.C. §

1346(b). But this general waiver is far from an open-ended

panacea for would-be claimants. For one thing, it must be

strictly construed. See Reilly v. United States, 863 F.2d 149,

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170 (1st Cir. 1988). For another thing, it is hedged with a

myriad of exceptions. See, e.g., 28 U.S.C. § 2680(a)-(h).

Nor is this all. Congress has taken pains to establish

an administrative framework that claimants must follow before

they can sue under the FTCA. One important component of this

framework is the notice-of-claim provision. See 28 U.S.C. §

2675(a) (stating that "an action shall not be instituted upon a

claim against the United States . . . unless the claimant shall

have first presented the claim to the appropriate Federal agency

and his claim shall have been finally denied"); see also 28

C.F.R. § 14.2(a) (1999) (similar). This appeal requires us to

test the elasticity of the notice-of-claim protocol. On the one

hand, the United States maintains that the plaintiffs flouted

the terms of the statute and must pay the price for their

impertinence. On the other hand, the plaintiffs contend that

they complied sufficiently with the law, and that the lower

court raised the statutory bar too high. The United States has

the better of the argument.

We start this portion of our discussion by delineating

which causes of action are at issue here. On appeal, the

plaintiffs have not challenged the district court's dismissal of

their original complaint, i.e., the court's rejection of the

plaintiffs' misrepresentation, libel, slander, contractual

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interference, and discrimination claims. With one

inconsequential exception, see infra note 5, they did not

attempt either to resurrect or to preserve those claims in their

amended complaint. Thus, they have forgone any opportunity to

revive them. See Ferdik v. Bonzelet, 963 F.2d 1258, 1262 (9th

Cir. 1992) (explaining that "an amended pleading supersedes the

original [which] . . . is treated thereafter as non-existent")

(citations and internal quotation marks omitted). For this

reason, we train our sights exclusively on the way in which the

plaintiffs' administrative claim relates (or, more precisely

put, fails to relate) to their amended complaint.

This court has refused to interpret the notice-of-claim

requirement woodenly. We have attempted instead to achieve a

balance, recognizing that persons wishing to hold the federal

sovereign liable in tort must satisfy the strictures of the law,

but also recognizing that Congress did not intend to shield the

federal fisc behind an impenetrable thicket of lawyerly

technicalities. See Santiago-Ramirez, 984 F.2d at 19; Lopez v.

United States, 758 F.2d 806, 809 (1st Cir. 1985). The test is

an eminently pragmatic one: as long as the language of an

administrative claim serves due notice that the agency should

investigate the possibility of particular (potentially tortious)

conduct and includes a specification of the damages sought, it

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fulfills the notice-of-claim requirement. See Santiago-Ramirez,

984 F.2d at 20.

Insofar as the events comprising the alleged false

arrest are concerned, the plaintiffs' administrative claim fails

this test. Though prolix, that claim did not contain so much as

a hint about the alleged false arrest or the incident that

spawned it. To that extent, then, the amended complaint

exceeded the scope of the administrative claim. See, e.g.,

Orlando Helicopter Airways v. United States, 75 F.3d 622, 625-26

(11th Cir. 1996); Deloria v. Veterans Admin., 927 F.2d 1009,

1011-12 (7th Cir. 1991). Because a federal court cannot

entertain a suit under the FTCA in circumstances in which the

plaintiff has failed to satisfy the administrative notice-of-

claim requirement, the district court appropriately dismissed

the false arrest cause of action.4

The plaintiffs have a fallback position. As they point

out, it may well be possible to find the rudiments of claims for

intentional infliction of emotional distress and negligent

supervision in the penumbra of their administrative claim.

4We hasten to add that, even had the plaintiffs provided
adequate notice, claims arising out of false arrest and
imprisonment are not viable under the FTCA. See 28 U.S.C. §
2680(h).

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Consequently, those causes of action may appear to stand on a

somewhat different footing.

However, appearances can be deceiving. Cf. Aesop, The

Wolf in Sheep's Clothing (circa 550 B.C.). To the extent that

the amended complaint advances claims for intentional infliction

of emotional distress and negligent supervision, those claims

are inextricably intertwined with the incident involving the

false arrest. In other words, regardless of the labels employed

in the amended complaint, that complaint, in substance, seeks

recovery based solely on an incident that was not mentioned in

the plaintiffs' administrative claim.

That ends the matter. The short of it is that the

plaintiffs, with one inconsequential exception,5 have not alleged

any injury sustained independent of the false arrest incident.

The injuries for which the plaintiffs now seek to recover

occurred when Vega was forcibly removed from the convention hall

and humiliated in front of onlookers (including customers and

family members). Calling a false arrest claim by another name

is nothing more than a poorly-disguised effort to achieve by

5
In addition to alleging false arrest, the amended complaint
reiterated that USPS's customer service manager misrepresented
to the plaintiffs' clientele that DIT had not achieved proper
certification. These averments lead nowhere, because the claim
that they portend is barred by 28 U.S.C. § 2680(h). See Dynamic
I, 18 F. Supp. 2d at 150.

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indirection what cannot be achieved directly. Courts must guard

zealously against such attempts to circumvent sections 2675(a)

and 2680(h). See United States v. Neustadt, 366 U.S. 696, 703

(1961).

We need go no further.6 Since the plaintiffs' amended

complaint and their administrative claim did not jibe, the

district court appropriately dismissed the amended complaint for

want of subject matter jurisdiction.

Affirmed.

6As the plaintiffs have not alleged any basis for a
negligent supervision claim independent of the arrest incident,
we need not pass upon the government's assertion that such a
claim would be barred by the FTCA's discretionary function
exception, 28 U.S.C. § 2680(a). See generally Irving v. United
States, 162 F.3d 154, 162-69 (1st Cir. 1998) (en banc)
(discussing that exception).

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