In Portland Mint v. United States, the U.S. Court of Appeals for the Federal Circuit addressed a contractual dispute between Portland Mint and the U.S. Mint over a shipment of coins submitted through the federal government's Mutilated Coin Redemption Program. The decision resulted in a partial reversal of the lower court's dismissal, allowing one of Portland Mint's claims to proceed.
Portland Mint had participated in the Redemption Program from 2012 to 2015, receiving payments for about 21 submissions. In 2018, after the program resumed, Portland Mint delivered approximately 427,000 pounds of coins to a foundry designated by the U.S. Mint. The Mint retained a sample for testing, melted the remainder, and used the resulting metal to produce new coins. Payment was not issued.
Months after the delivery, the U.S. Mint informed Portland Mint that the submission contained counterfeit coins and refused redemption. Portland Mint disputed this assessment and filed a lawsuit in the Court of Federal Claims asserting five claims: violation of the redemption regulation, breach of an implied-in-fact contract, breach of the implied duty of good faith and fair dealing, a Fifth Amendment takings claim, and a claim for attorney’s fees under the Equal Access to Justice Act.
The Claims Court dismissed all five claims. It concluded that it lacked jurisdiction over the regulatory and contract claims and that the other claims failed to state a claim.
On appeal, the Federal Circuit reversed the dismissal of the implied-in-fact contract claim. It found that the applicable regulation, 31 C.F.R. § 100.11, operated as an offer to redeem qualifying coins and that Portland Mint’s submission constituted acceptance. This created an implied-in-fact contract.
The court also held that Portland Mint's allegations about the duties of the Mint employee involved in accepting the coins were sufficient at the pleading stage to survive dismissal on authority grounds. The court emphasized that if accepting submissions and coordinating redemptions were core functions of the employee's role, it could support a finding of contracting authority.
Although the government argued the shipment included counterfeit coins, Portland Mint alleged that most coins were genuine. The court clarified that while counterfeit coins are forfeited under federal law and need not be paid for, the U.S. Mint could be obligated to pay for genuine coins if they were accepted, melted, and used to mint new currency.
The court affirmed dismissal of Portland Mint’s claims for breach of good faith and fair dealing, Fifth Amendment takings, and regulatory violations. It found these claims either redundant of the contract claim or not viable under established precedent when a contract provides the remedy.
Federal regulations that structure redemption, procurement, or reimbursement programs can result in complex disputes. Our attorneys at Whitcomb, Selinsky, PC help businesses evaluate potential contract claims, navigate compliance challenges, and resolve disputes with federal agencies.