MobilizeGreen, Inc. v. Community Foundation for the National Capital Region

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

__________________________________

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MobilizeGreen, Inc., et al, )

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Plaintiffs, )

)

v. ) Civil Action No. 14-1698 (RMC)

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The Community Foundation for the )

National Capital Region, et al., )

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Defendants. )

_________________________________ )

OPINION

Plaintiffs MobilizeGreen and its founder, Leah Allen (collectively

MobilizeGreen), move to remand this matter to the Superior Court for the District of Columbia,

where MobilizeGreen first filed suit. Defendants The Community Foundation for the National

Capital Region and its executives, Terri Lee Freeman, Mark B. Hansen, and Angela Jones

Hackley (collectively the Community Foundation), having removed the case to federal court,

oppose remand. As explained below, the motion to remand will be granted.

I. FACTS

MobilizeGreen is a non-profit corporation organized under the laws of the District

of Columbia and located in D.C. Compl. [Dkt. 1-1] ¶ 6. Its mission is “to build the next

generation of environmental leaders, stewards, and volunteers from under-represented

communities using MobilizeGreen’s innovative internship, mentoring, career coaching, and

collaborative partnership model.” Id. Leah Green is MobilizeGreen’s Founder and serves as its

President. Id. ¶ 7. The Community Foundation is a 501(c)(3) 1 non-profit organization based in

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Certain organizations can become exempt from federal income taxation under section 501(c)(3)

of the Internal Revenue Code. “Corporations . . . organized and operated exclusively for

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the District of Columbia that “manages donor-advised funds, gives grants to non-profits, and

fiscally sponsors new organizations.” Id. ¶ 16.

In 2011, MobilizeGreen proposed to develop a “national diversity internship pilot

program” (Internship Project) for the U.S. Forest Service, an agency of the U.S. Department of

Agricultur. The Forest Service agreed to provide funding for the Internship Project. Id. ¶ 18. As

“a then new non-profit with no employees, no revenues, and no federal or state tax-exempt

status,” MobilizeGreen asked the Community Foundation to serve as its fiscal sponsor. Id.

“Fiscal sponsorship is a relationship between a tax exempt organization like [the Community

Foundation] that serves as the official recipient of charitable donations for a new or smaller

organization that is not yet recognized as tax-exempt.” Id. ¶ 16. The Community Foundation

agreed to serve as a temporary fiscal sponsor for MobilizeGreen. Id. ¶ 21. To that end, the

parties executed an Agreement to Create a Sponsored Program Fund on July 28, 2011, which

was “established to provide temporary fiscal sponsorship for a period not to exceed November 1,

2011, at which time [MobilizeGreen] will transfer to another fiscal sponsor.” See Opp’n, Ex. 1

[Dkt. 13-1] (Sponsor Agreement) at 2. As consideration for the services provided by the

Community Foundation to MobilizeGreen, MobilizeGreen agreed to pay an annual

administrative fee of two percent of monies managed under the Sponsor Agreement. See id. at 1.

Shortly after entering into the Sponsor Agreement, the Community Foundation

executed a Challenge Cost Share Agreement with the Forest Service, which awarded funds to the

Community Foundation as authorized under the Interior and Related Appropriations Act of 1992.

religious, charitable, scientific, testing for public safety, literary, or educational purposes . . . no

part of the net earnings of which inures to the benefit of any private shareholder or individual”

are eligible for exemption from taxation. 26 U.S.C. § 501(a), (c)(3).

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See Opp’n, Ex. 2 [Dkt. 13-2] (Forest Service Agreement) at 1. The stated purpose of the

agreement was:

to document the cooperation between the parties to help build the

next generation of environmental leaders, stewards, and volunteers

from under-represented and minority communities through a new

national program of the Community Foundation for National Capital

Region, a program called MobilizeGreen, in accordance with the

following provisions . . . .

Id. at 2. The Forest Service agreed to reimburse the Community Foundation for actual expenses

incurred for the Internship Project, up to a maximum of $273,805. Compl. ¶ 23. The

Community Foundation was required to submit monthly invoices to the Forest Service. See

Forest Service Agreement at 3.

As relevant to the instant motion, the Complaint alleges that the Community

Foundation failed to comply with the terms of the Sponsor Agreement by, inter alia, failing to

transfer the Internship Project to MobilizeGreen’s new fiscal sponsor, Social and Environmental

Entrepreneurs, and failing to pay legitimate Internship Project bills in a timely fashion. Compl.

¶¶ 24-28, 30-43. In addition, the Complaint alleges that the Community Foundation failed to

provide fiduciary oversight, financial management, and other administrative services, which

harmed MobilizeGreen. Id. ¶¶ 29-30, 44-50.

The following seven Counts are recited in the Complaint:

• Count 1: Breach of Fiduciary Duty (All Defendants)

• Count II: Fraud (Defendants Community Foundation and Brown)

• Count III: Negligence (All Defendants)

• Count IV: Breach of Contract (Defendant Community Foundation)

• Count V: Defamation (Defendant Brown)

• Count VI: Defamation Per Se (Defendant Brown)

• Count VII: Negligent Supervision (Defendants CFNCT, Freeman, Hanson,

and Jones Hackley)

Id. ¶¶ 103-140.

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The Community Foundation has not yet filed an Answer to the Complaint.

Instead, as indicated above, it filed a Notice of Removal and brought the case to federal court.

MobilizeGreen prefers to litigate in Superior Court and seeks a remand.

II. LEGAL STANDARDS

Federal courts are courts of limited jurisdiction and the law presumes “that a

cause lies outside this limited jurisdiction.” Kokkonen v. Guardian Life Ins. Co. of America, 511

U.S. 375, 377 (1994). The court must respect the jurisdiction of state courts if our system of

federalism is to work properly. See Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 108–09

(1941). The removing party bears the burden of establishing federal jurisdiction.

Kormendi/Gardner Partners v. Surplus Acquisition Venture, LLC, 606 F. Supp. 2d 114, 120

(D.D.C. 2009); see also McNutt v. Gen. Motors Acceptance Corp., 298 U.S. 178, 189 (1936).

“[I]f federal jurisdiction is doubtful, a remand to state court is necessary.” Dixon v. Coburg

Dairy, Inc., 369 F.3d 811, 815-16 (4th Cir. 2004) (en banc).

A plaintiff is normally the master of its own complaint and can select its own

court, even if it means forgoing remedies that might be available elsewhere. See Caterpillar,

Inc. v. Williams, 482 U.S. 386, 392 (1987). In addition, “federal jurisdiction exists only when a

federal question is presented on the face of the plaintiff's properly pleaded complaint.” Id.

Accordingly, it “cannot be predicated on an actual or anticipated defense: ‘It is not enough that

the plaintiff alleges some anticipated defense to his cause of action and asserts that the defense is

invalidated by some provision of [federal law].’” Vaden v. Discover Bank, 556 U.S. 49, 60

(2009). On the other hand, if a complaint satisfies the requirements of federal jurisdiction, a

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defendant has a right to have a federal court hear the matter. The Community Foundation cited

28 U.S.C. §§ 1441, 2 1442 and 1446 3 as the bases for removal.

III. ANALYSIS

The Community Foundation argues that this Court has subject matter jurisdiction

under 28 U.S.C. § 1441 because MobilizeGreen’s breach of fiduciary duty and breach of contract

claims necessarily raise substantial, disputed questions of federal law. The Community

Foundation also argues that the Federal Officer Removal Statute provides an independent basis

for federal jurisdiction because it was acting at all times under the direction of the Forest Service.

A. Federal Officer Removal Statute

The Federal Officer Removal Statute, 28 U.S.C. § 1442(a)(1), provides in relevant

part that:

A civil action . . . commenced in a State court and that is against or

directed to any of the following may be removed by them to the

district court of the United States for the district and division

embracing the place wherein it is pending: (1) The United States or

any agency thereof or any officer (or any person acting under that

officer) of the United States or of any agency thereof, sued in an

official or individual capacity.

(Emphasis added). “Four elements are required for removal under § 1442(a)(1): (1) a defendant

has acted under the direction of a federal officer, (2) there was a causal connection between the

defendant's actions and the official authority, (3) the defendant has a colorable federal defense to

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28 U.S.C. § 1441 provides that “any civil action brought in a State court of which the district

courts of the United States have original jurisdiction, may be removed by the defendant or the

defendants, to the district court of the United States for the district and division embracing the

place where such action is pending.” 28 U.S.C. § 1441(a). As relevant here, the original

jurisdiction of a federal district court is defined by 28 U.S.C. § 1331.

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28 U.S.C. § 1446 sets forth the procedures for removal. There is no dispute regarding the

procedural propriety of the Community Foundation’s notice of removal.

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the plaintiff's claims, and (4) the defendant is a ‘person,’ within the meaning of the statute.”

Jacks v. Meridian Resource Co., LLC, 701 F.3d 1224, 1230 (8th Cir. 2012). The burden of

establishing the existence of federal jurisdiction under section 1142(a)(1) is upon the removing

party. Winters v. Diamond Shamrock Chemical Co., 149 F.3d 387, 398 (5th Cir. 1998).

The well-pleaded complaint rule, see Caterpillar, 482 U.S. at 392, does not

preclude reliance on the Federal Officer Removal Statute if a colorable federal defense exists as

to some claims and they otherwise meet the statute’s four criteria. See Jefferson County, Ala. v.

Acker, 527 U.S. 423, 431 (1999) (“Under the federal officer removal statute, suits against federal

officers may be removed despite the nonfederal cast of the complaint; the federal-question

element is met if the defense depends on federal law.”). MobilizeGreen does not dispute that the

Community Foundation is a “person,” as corporations are deemed “persons” under the statute,

see Winters v. Diamond Shamrock Chem. Co., 149 F.3d 387, 398 (5th Cir. 1998), or that the

Community Foundation has colorable federal defenses to its claims. The points of contention are

whether the Community Foundation “acted under” the direction of a Forest Service officer and

whether a causal nexus exists between the Community Foundation’s complained-of actions and

specific Forest Service directions.

Watson v. Philip Morris Cos., Inc., 551 U.S. 142 (2007) clarified the nature of the

relationship between a federal officer and a private actor that is needed to satisfy the “acting

under” requirement. The Supreme Court held that:

[A] private firm’s compliance (or noncompliance) with federal laws,

rules, and regulations does not by itself fall within the scope of the

statutory phrase ‘acting under’ a federal ‘official,’ even if the

regulation is highly detailed and even if the private firm's activities

are highly supervised and monitored.

Id. at 143. Instead, an entity “act[s] under” a federal officer when it “assist[s], or [] help[s] carry

out, the duties or tasks of the federal superior.” Id. at 152. An express delegation of authority

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may satisfy this requirement. See Watson, 551 U.S. at 157. “Cases in which the Supreme Court

has approved removal involve defendants working hand-in-hand with the federal government to

achieve a task that furthers an end of the federal government.” Ruppel v. CBS Corp., 701 F.3d

1176, 1181 (7th Cir. 2012).

The Community Foundation argues that the “acting under” requirement of Section

1142(a)(1) is satisfied because it had a partnership relationship with the Forest Service under the

Forest Service Agreement, which involved close regulation and supervision, and it performed the

complained-of acts under comprehensive and detailed regulations. MobilizeGreen fails to

address the contractual relationship between the Community Foundation and the Forest Service.

Nonetheless, close review of the Forest Service Agreement reveals that the Community

Foundation was not assisting or helping to carry out the duties or tasks of the Forest Service. To

the contrary, the Community Foundation was helping to implement an outreach program that

was perhaps beneficial but ancillary to the Forest Service’s mandate to “manage[] 193 million

acres on 155 national forests and 20 grasslands in 44 states and Puerto Rico, and help[]

improve[] land stewardship outside the National Forest System.” Forest Service Agreement at 1.

The stated purpose of the Forest Service Agreement was to “document the

cooperation” between the Forest Service and the Community Foundation to “help build the next

generation of environmental leaders, stewards, and volunteers from under-represented and

minority communities.” Forest Service Agreement at 2. This may well have been consistent

with the Forest Service’s goal of increasing the capacity of its volunteer programs. Id. at 1.

Agreeing to a “Statement of Mutual Benefit and Interests,” the Forest Service and the

Community Foundation identified the following goals for the Internship Project:

• Increase the diversity and numbers of volunteers and

community partners engaged in each forest in each region;

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• Expose diverse college students to potential careers at the

Forest Service;

• Teach core content about environmental issues (climate,

energy, and sustainability), professional skills, and

stewardship to interns; and

• Increase youth volunteerism and stewardship.

Id. at 2. Although the Forest Service Agreement stated that the Forest Service needed to improve

its infrastructure for managing volunteer programs, the Community Foundation does not argue

that the Forest Service is directed by Congress (or the Secretary) to increase the diversity of its

volunteers or teach them core content concerning environmental issues. The Agreement gives no

indication that the Forest Service delegated authority to the Community Foundation to complete

the Internship Project or that the Forest Service would have independently undertaken the

Internship Project without the involvement of MobilizeGreen or the Community Foundation. 4

See Ruppel, 701 F.3d at 1181 (“‘Acting under’ covers situations . . . where the federal

government uses a private corporation to achieve an end it would have otherwise used its own

agents to complete.”).

In support of its argument, the Community Foundation cites directives from a

Forest Service Handbook 5 that characterize “challenge cost share agreements.” These directives,

however, reinforce the Court’s conclusion that the Community Foundation was not fulfilling

congressionally-assigned Forest Service duties or tasks under the Forest Service Agreement. To

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MobilizeGreen emphasizes that it—not the Community Foundation—ran the Internship

Project; the Community Foundation functioned only as an intermediary between the Forest

Service and MobilizeGreen to receive and disburse funds. See Reply [Dkt. 14] at 8 n. 8.

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“Forest Service Handbooks (FSH) are the principal source of specialized guidance and

instruction for carrying out the direction issued in the FSM (Forest Service Manuals). Specialists

and technicians are the primary audience of Handbook direction. Handbooks may also

incorporate external directives with related USDA and Forest Service directive supplements.”

Forest Service Directives, http://www.fs.fed.us/im/directives/ (last visited Apr. 10, 2015).

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the contrary, the Forest Service Handbook states that “Challenge Cost-share Agreements (CS)

are the instruments used when the Forest Service cooperatively develops, plans, and implements

projects with other parties that are mutually beneficial to the parties and that enhance Forest

Service activities.” FSH 1509.11 § 72.31.1 (emphasis added). With a Challenge Cost-share

Agreement, the “Forest Service and the cooperator(s) shall share mutual interests and benefit in

the same qualitative way from the objective of the agreement.” Id. § 70.3 (emphasis added).

Successful execution of the Internship Project could well have benefited the Forest Service and

enhanced its activities, as well as those of MobilizeGreen, but such accomplishments do not

satisfy the statute’s “acting under” requirement, which requires direction to fulfill an agency’s

specific purpose. See, e.g., Maryland v. Soper (No. 1), 270 U.S. 9, 30 (1926) (chauffeur acting

under orders of federal prohibition agents in distillery raid “has the same right to the benefit” of

the federal officer removal statute as the agents); Winters, 149 F.3d at 389-99 (private defense

contractor satisfies “acting under” requirement when it produced Agent Orange, pursuant to

strict governmental specifications, control and inspection, to help the government conduct a

war); Jacks, 701 F.3d at 1234 (concluding that “[Federal Employees Health Benefits Act]

program carriers contracting with the federal government to provide health care insurance for

federal employees . . . conduct business under the delegation of the federal government”).

Simply put, providing a benefit to a federal agency is not equivalent to fulfilling one of the

federal agency’s duties or tasks.

The Community Foundation identifies e-mail correspondence with the Forest

Service’s program manager as evidence that it was closely monitored and supervised by the

Forest Service in its administration of federal funds to MobilizeGreen. See Opp’n at 28. This

evidence reveals that on May 24, 2012, a Forest Service program manager e-mailed the

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Community Foundation to notify the Community Foundation of its noncompliance with the

requirements of the Forest Service Agreement, requiring the Community Foundation to submit

signed monthly invoices and quarterly program performance reports. See Opp’n, Ex. 3; Compl.

¶ 41. The Forest Service asked to be updated immediately and proposed biweekly calls to

increase Forest Service’s confidence that the Community Foundation and the Forest Service

could accomplish their goals. See Opp’n, Ex. 3. Subsequent emails from June 20, 2012 and

June 26, 2012 between the Community Foundation and the Forest Service demonstrate that the

Community Foundation submitted a financial report, performance report and invoices for

February, March, April and May 2012, but that the invoices were not sent by the appropriate

method and that the Community Foundation and Leah Allen had not joined a scheduled biweekly

call. See, Opp’n, Ex. 4 at 1-2. An exchange of three e-mails in the course of a thirteen-month

contract period 6 is hardly suggestive of close supervision and monitoring. The Forest Service

Agreement was executed on August 29, 2011 and the Internship Project began on September 1,

2011, almost nine months before the first e-mail. See Compl. ¶¶ 23, 31. There is no other

evidence that the Forest Service provided direct oversight to the Community Foundation.

The e-mails further suggest that the Forest Service decided to monitor the

Community Foundation only because the Community Foundation failed to comply with the

terms of the Forest Service Agreement. Critically, some of the issues that prompted the Forest

Service to scrutinize the Community Foundation’s actions are those that form the allegations in

the Complaint. See, e.g., Forest Service Agreement at 3 (requirement to submit monthly

invoices to Forest Service); Compl. ¶¶ 40, 42, 43 (alleging the Community Foundation’s delay in

6

The Complaint alleges that the Community Foundation submitted its final accounting to the

Forest Service to close out funding for the Internship Project on September 30, 2012, the

project’s end date. Compl. ¶¶ 57, 60.

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paying bills after receiving MobilizeGreen’s expense reimbursement invoice). The Community

Foundation has not shown that it acted on the subjects of MobilizeGreen’s Complaint at the

direction of the Forest Service. See Watson, 551 U.S. at 147 (“The federal statute permits

removal only if [Defendant], in carrying out the ‘act[s]’ that are the subject of the petitioners'

complaint, was ‘acting under’ any ‘agency’ or ‘officer’ of ‘the United States.’”).

Jacks identifies four factors that must be satisfied before a district court may

exercise subject matter jurisdiction under Section 1142(a)(1). Because the Court’s analysis of

the first factor is dispositive, the Court does not reach the other factors of the test. The Federal

Officer Removal Statute does not provide an independent basis for jurisdiction in this case.

B. Federal Question Jurisdiction

Subject matter jurisdiction may exist for removal purposes where a case involves

a federal question “arising under the Constitution, laws, or treaties of the United States.”

28 U.S.C. § 1331. A suit will arise under federal law “when the plaintiff’s statement of his own

cause of action shows that it is based upon [federal law.]” Vaden, 556 U.S. at 60 (citing

Louisville & Nashville R. Co. v. Mottley, 211 U.S. 149, 152 (1908)); see also Steele v. Salb, 681

F. Supp. 2d 34, 36 (D.D.C. 2010). “But even where a claim finds its origins in state rather than

federal law,” the Supreme Court has “identified a special and small category of cases in which

arising under jurisdiction still lies.” Gunn v. Minton, 133 S. Ct. 1059, 1064 (2013). “[F]ederal

jurisdiction over a state law claim will lie if a federal issue is: (1) necessarily raised, (2) actually

disputed, (3) substantial, and (4) capable of resolution in federal court without disrupting the

federal-state balance approved by Congress.” Id. at 1065 (referencing Grable & Sons Metal

Products, Inc. v. Darue Engineering and Mfg., 545 U.S. 308 (2005)). A federal issue is

“necessarily raised” when an essential element of a plaintiff’s case “will necessarily require the

application of [federal] law to the facts of [plaintiff’s] case.” Gunn, 133 S. Ct. at 1064. For a

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federal issue to be “actually disputed,” there must be a “dispute respecting the effect of federal

law.” Id. at 1065-66. To show that the federal issue is “substantial,” “it is not enough that the

federal issue be significant to the particular parties in the immediate suit.” Id. at 1066. The

substantiality inquiry “looks instead to the importance of the issue to the federal system as a

whole.” Id. This last requirement seeks to ensure that resolving an issue in federal court “would

not materially affect, or threaten to affect, the normal currents of litigation” in the federal system.

Grable, 545 U.S. at 319. Federal jurisdiction is favored in cases that present “a nearly pure issue

of law, the resolution of which would establish a rule applicable to numerous [other] cases.”

Empire Healthchoice Assur., Inc. v. McVeigh, 547 U.S. 677, 681 (2006) (characterizing Grable).

In contrast, “‘fact-bound and situation-specific’ effects are not sufficient to establish federal

arising under jurisdiction.” Gunn, 133 S. Ct. at 1068 (citing Empire, 547 U.S. at 701).

The Community Foundation argues that this Court has original subject matter

jurisdiction under 28 U.S.C. § 1331 over the claim that it breached its fiduciary duty and

breached the contract—both quintessential state law claims—because both claims implicate

substantial questions of federal law and satisfy the inquiry set forth in Grable, which Gunn

distilled into four factors. This argument must be resolved by an analysis of each claim to

determine if it “necessarily raise[s] a stated federal issue, actually disputed and substantial,

which a federal forum may entertain without disturbing any congressionally approved balance of

federal and state judicial responsibilities.” Grable, 545 U.S. at 314.

1. Count I: Fiduciary Duty Claim

The Community Foundation contends that the allegation that it had a fiduciary

duty to MobilizeGreen is based on allegations that the Community Foundation was entrusted to

manage money “belonging to” MobilizeGreen. See Opp’n at 14-15 (citing Compl. ¶¶ 2, 18, 20,

29, 105). From this starting point, the Community Foundation argues that its alleged breach of

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fiduciary duty turns on whether MobilizeGreen had a valid claim to “ownership” of Forest

Service funds intended for its performance on the Internship Project, which necessarily implicate

regulations governing federal financial awards. See Opp’n at 15. The Community Foundation

further argues that these allegations assert a substantial, disputed question of federal law. In

response, MobilizeGreen argues that a fiduciary relationship existed between the parties “by

virtue of the facts and circumstances of their relationship” and not by federal law or regulation.

Mot. to Remand at 9. MobilizeGreen emphasizes that the Community Foundation acted only as

fiscal sponsor for MobilizeGreen and that it is “axiomatic that fiscal sponsors have a fiduciary

duty to the non-profits they sponsor.” Id. at 9-10.

“Whether a fiduciary relationship exists is a fact-intensive question, and the fact-

finder must consider the nature of the relationship, the promises made, the type of services or

advice given and the legitimate expectations of the parties.” Millennium Square Residential

Ass'n v. 2200 M Street LLC, 952 F. Supp. 2d 234, 248-49 (D.D.C. 2013) (internal quotation

marks and citation omitted). 7 “Fiduciary relationships arise when parties develop a certain

amount of trust between themselves.” Cordoba Initiative Corp. v. Deak, 900 F. Supp. 2d 42, 49

(D.D.C. 2012).

By focusing exclusively on whether MobilizeGreen “owned” funds disbursed by

the Forest Service, the Community Foundation ignores the Complaint’s additional factual

allegations that, if proved, could enable a fact-finder to conclude that a fiduciary relationship

existed between the parties irrespective of federal actors. In particular, the Complaint alleges

that the Community Foundation served as fiscal sponsor and that “fiscal sponsorships by their

nature are relationships of good faith, demanding trust and confidence.” Compl. ¶¶ 20, 21.

7

The Community Foundation does not dispute application of District of Columbia law.

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These broader allegations of a fiduciary relationship are not dependent on whether

MobilizeGreen “owned” Forest Service funds disbursed to the Community Foundation. The

Coutr finds that the alleged fiduciary relationship does not “necessarily depend[] on resolution of

a substantial question of federal law” and does not provide a basis for federal jurisdiction under

28 U.S.C. § 1331. Bender v. Jordan, 623 F.3d 1128, 1130 (D.C. Cir. 2010).

2. Count IV: Breach of Contract Claim

The Complaint alleges that the Sponsor Agreement “constituted a valid and

enforceable contract under which the Foundation promised to allow MobilizeGreen to transfer to

another fiscal sponsor and manage MobilizeGreen’s Project Funds.” Compl. ¶ 121. The

Complaint further alleges that the Community Foundation breached the Sponsor Agreement by,

inter alia, failing to transfer the Internship Project to MobilizeGreen’s new fiscal sponsor, Social

and Environmental Entrepreneurs. Id. ¶¶ 26, 123. The Community Foundation argues that

whether the transfer provision in the Sponsor Agreement was valid and enforceable necessarily

raises a substantial and disputed question of federal law and regulation. It cites the Anti-

Assignment Act, 41 U.S.C. § 6305, which provides that “[t]he party to whom the Federal

Government gives a contract or order may not transfer the contract or order, or any interest in the

contract or order, to any party,” and a Department of Agriculture regulation, which requires a

recipient to obtain prior approval from the Forest Service for the “transfer or contracting out of

any work under an award,” 7 C.F.R. § 3019.25. Based on these authorities, the Community

Foundation argues impossibility of performance due to federal law. MobilizeGreen responds

that the Community Foundation has merely raised a federal defense, which cannot provide a

basis for removal. MobilizeGreen is right.

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The Community Foundation cites Grable & Sons Metal Products, which involved

claims of title to land obtained at a federal tax sale; the only disputed issue was a question of

federal law that constituted an essential element of the plaintiff’s state law claim:

Grable’s state complaint must specify “the facts establishing the

superiority of [its] claim,” Mich. Ct. Rule 3.411(B)(2)(c) (West

2005), and Grable has premised its superior title claim on a failure

by the IRS to give it adequate notice, as defined by federal law.

Whether Grable was given notice within the meaning of the federal

statute is thus an essential element of its quiet title claim, and the

meaning of the federal statute is actually in dispute; it appears to be

the only legal or factual issue contested in the case.

Grable, 545 U.S. at 314-15. Under D.C. law, a plaintiff alleging breach of contract must

establish four elements: “(1) a valid contract between the parties; (2) an obligation or duty

arising out of the contract; (3) a breach of that duty; and (4) damages caused by breach.”

Tsintolas Realty Co.v. Mendez, 984 A.2d 181, 187 (D.C. 2009). To prevail on its breach of

contract claim, MobilizeGreen must show that the transfer provision of the Sponsor Agreement

was a valid clause. The Community Foundation contends that the enforceability of the transfer

provision depends on whether the Anti-Assignment Act and the Department of Agriculture

regulation render it void.

The Department of Agriculture regulation, which by its terms anticipates the

possibility of a transfer, does not appear to be so forbidding. See 7 C.F.R. § 3019.25

(“[R]ecipients shall request prior approvals from Federal awarding agencies for [the] . . . transfer

or contracting out of any work under an award.”). The Community Foundation could have, in

good faith, asked to transfer the Forest Service grant to MobilizeGreen’s new fiscal sponsor.

The Anti-Assignment Act generally prohibits a contracting party from

transferring a government contract to another party. See 41 U.S.C. § 6305. However,

MobilizeGreen’s breach of contract claim does not depend on the Community Foundation’s

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failure to transfer a government contract, i.e., the Forest Service Agreement, to its new fiscal

sponsor. To the contrary, the Complaint alleges that to transfer the Internship Project to the new

fiscal sponsor without harming the Internship Project, the Community Foundation only had to re-

grant the funds to the new fiscal sponsor so that it could administer the Internship Project. See

Compl. ¶ 26. This theory of recovery demonstrates that MobilizeGreen’s breach of contract

claim does not “necessarily” turn on analysis of the Anti-Assignment Act. See Mulcahey v.

Columbia Organic Chems Co., Inc., 29 F.3d 148 (4th Cir. 1994) (“[I]f a claim is supported not

only by a theory establishing federal subject matter jurisdiction but also by an alternative theory

which would not establish such jurisdiction, then federal subject matter jurisdiction does not

exist.”).

Finally, the Community Foundation’s reliance on Bender v. Jordan, 623 F.3d

1128, 1130 (D.C. Cir. 2010) is also inapt. Bender held that a breach of contract claim that is

premised on an agreement based in federal law belongs in federal court:

Although breach of contract is a state law cause of action, the

agreements themselves are ‘creatures of federal law,’ in the sense of

being intended to implement the scheme designed by 12 C.F.R.

§ 545.121. The [parties] entered into the agreements because federal

law requires the execution of such contracts before legal fees can be

advanced to defendant officers and directors. And the parties’ legal

duties turn almost entirely on the proper interpretation of that

regulation.

Id. at 1131. By contrast, federal law did not mandate that MobilizeGreen and the Community

Foundation execute the Sponsor Agreement. The Forest Service Agreement is a federal

contract, 8 but it is not the focus of the dispute here. Notably, the Community Foundation does

8

The Interior and Related Appropriations Act of 1992 (Pub. L. 102-154) authorizes the Forest

Service to enter into challenge cost-share agreements. See FSH 1509.11 §§ 70.1, 71.2.

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not cite the terms of the Forest Service Agreement or identify federal regulations that purportedly

governed the Sponsor Agreement. Bender does not control here.

The Community Foundation’s over-reading of the Department of Agriculture

regulation and the Anti-Assignment Act is insufficient to demonstrate that the Complaint

necessarily raises a substantial federal issue. The Court need not reach the remaining Gunn

factors. See Gunn, 133 S. Ct. at 1064. Remand is appropriate because no federal question

jurisdiction arises from MobilizeGreen’s breach of contract claim.

IV. CONCLUSION

For the foregoing reasons, the Court concludes that MobilizeGreen’s Motion to

Remand should be granted. This case will be remanded to the Superior Court for the District of

Columbia. A memorializing Order accompanies this Opinion.

Date: April 29, 2015

/s/

ROSEMARY M. COLLYER

United States District Judge

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