In Portland Mint v. United States, Case No. 22-2154, the Court of Appeals for the Federal Circuit reinstated the Portland Mint's claim that the government breached an implied-in-fact contract to pay the Portland Mint for coins tendered under the government's Mutilated Coin Redemption Program. The Court's decision is a reminder of the jurisdictional importance in pleading a contract as implied-in-fact rather than implied-in-law.
Under the Mutilated Coin Redemption Program (Redemption Program), the U.S. Mint is obligated to pay for mutilated coins tendered, which it then melts down and uses to mint new coins. The Portland Mint's claims stemmed from the U.S. Mint's refusal to pay for damaged coins, which it had previously accepted, on the basis that they were mostly counterfeit. The Portland Mint claimed that the government's acceptance of the coins and subsequent refusal to pay for them breached an implied-in-fact contract, breached the implied duty of good faith and fair dealing, violated 31 C.F.R. § 100.11, and/or constituted a taking under the Fifth Amendment. The Court of Federal Claims (COFC) initially dismissed all of the Portland Mint's claims.
The COFC dismissed the contract claims, holding that the alleged contract was an implied-in-law contract over which the COFC lacks jurisdiction. The COFC further explained, "implied-in-law contracts impose duties that are deemed to arise by operation of law in order to prevent an injustice, whereas implied-in-fact contracts are founded upon a meeting of the minds, which, although not embodied in an express contract, is inferred."
The Federal Circuit, however, held that the Redemption Program constituted an offer by the government and that tendering damaged coins constituted an acceptance of that offer. Together, these elements formed an implied-in-fact contract, over which the COFC does have jurisdiction. The Federal Circuit then found that the U.S. Mint is obligated to pay for any genuine coins it accepts and that the Portland Mint sufficiently plead that the employee accepting the coins had authority to do so.
With respect to the other theories of recovery, the Federal Circuit affirmed the COFC's dismissal of the claims for violation of 31 C.F.R. § 100.11 and the Fifth Amendment because the implied-in-fact contract defined the Portland Mint's rights. The Federal Circuit also affirmed dismissal of the claim for breach of the duty of good faith and fair dealing, finding that it was redundant to the breach claim.
This case serves as a reminder of how certain transactions or agreements can actually form implied-in-fact contracts with the government. It also provides a refresher on distinguishing implied-in-fact contracts from implied-in-law contracts—with critical import to the court's jurisdiction. For an examination of implied-in-law contracts and how historical errors have perpetuated into axioms, see Crowell articles here and here.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.