Implied Covenant Cannot Override “Immediate, For-Any-Reason” Termination Clause; Sovereign Immunity Bars District-Court Retaliation Claims Against IHS Absent a Specific Waiver

Implied Covenant Cannot Override “Immediate, For-Any-Reason” Termination Clause; Sovereign Immunity Bars District-Court Retaliation Claims Against IHS Absent a Specific Waiver

Introduction

In McIntyre v. United States Indian Health Service, No. 24-5148 (10th Cir. Oct. 21, 2025), the Tenth Circuit affirmed dismissal of a locum tenens psychiatrist’s lawsuit arising from his removal from an Indian Health Service clinic and the subsequent termination of his placement by the private staffing firm that placed him. The case sits at the intersection of private staffing contracts governed by state law and federal jurisdictional barriers rooted in sovereign immunity and the Tucker Act’s jurisdictional channeling.

The key issues were:

  • Whether the staffing company (Vista Staffing Solutions) breached either the express terms of its placement agreement or the implied covenant of good faith and fair dealing by failing to investigate IHS’s stated reasons for requesting the doctor’s removal before terminating his contract.
  • Whether the district court had subject matter jurisdiction over claims against a federal agency (IHS) for alleged retaliation and breach of contract (as a purported third-party beneficiary), in light of sovereign immunity and federal jurisdictional statutes.

The court held: (1) the physician waived his argument that Vista breached the express contract; and (2) under Utah law, the implied covenant could not be used to graft an investigative requirement onto an agreement that expressly permitted Vista to terminate “immediately” upon a client’s request “for any reason.” Separately, (3) sovereign immunity barred the district court from hearing the claims against IHS because no invoked statute provided both an unequivocal waiver and a grant of jurisdiction in the district court; the Tucker Act channeled contract claims over $10,000 to the Court of Federal Claims, and the Whistleblower Protection Act required use of the CSRA/MSPB process with review in the courts of appeals.

Summary of the Opinion

The Tenth Circuit (Matheson, J., joined by Phillips and Rossman, JJ.) affirmed in full:

  • Vista breach claims:
    • Express breach theory waived: The doctor did not pursue in his opening brief the complaint’s theory that Vista breached by failing to “inquire into” IHS’s allegations. He instead pivoted in reply to a new theory that Vista had to wait for IHS to produce evidence. The court held the original express-breach argument waived and declined to entertain the new theory raised for the first time on reply.
    • Implied covenant claim fails on the merits: Under Utah law, the implied covenant cannot create duties inconsistent with express terms. The placement agreement’s Paragraph 23 authorized Vista to terminate “immediately” upon a client’s request “for any reason,” so a judicially implied duty to investigate would “nullify” that express right. The complaint also alleged no course-of-dealing facts supporting any justified expectation that Vista would investigate before terminating.
  • IHS claims:
    • Sovereign immunity: The plaintiff failed to identify an unequivocal waiver permitting his claims against IHS in district court.
    • Tucker Act: Even assuming an IHS–Vista contract and third-party beneficiary status, the Tucker Act channels monetary contract claims exceeding $10,000 to the Court of Federal Claims; district courts lack jurisdiction.
    • Whistleblower Protection Act (WPA): WPA claims must proceed through the CSRA process—OSC and MSPB—with judicial review in the federal courts of appeals, not via a district-court civil action.
    • Other statutes: The defense-contractor and NDAA contractor whistleblower statutes authorize relief against contractors, not the United States; criminal statutes and certain regulations do not waive sovereign immunity; and general jurisdiction statutes (28 U.S.C. §§ 1331, 1337) and supplemental jurisdiction (28 U.S.C. § 1367) cannot override sovereign immunity.

Analysis

Precedents Cited and Their Influence

  • Utah implied covenant doctrine:
    • Vander Veur v. Groove Entertainment Techs., 452 P.3d 1173 (Utah 2019): Reiterates that the implied covenant cannot create new, independent duties or contradict express contract terms. This principle was decisive in rejecting an implied investigative duty where the contract allowed “immediate” termination upon client request “for any reason.”
    • Brehany v. Nordstrom, Inc., 812 P.2d 49 (Utah 1991): The implied covenant cannot “nullify” express contractual rights; used here to foreclose redefining a broad termination right into a delayed, investigation-dependent right.
    • Oakwood Village LLC v. Albertsons, Inc., 104 P.3d 1226 (Utah 2004): Justified expectations derive from the contract language and the parties’ course of dealing; the complaint alleged no course-of-dealing facts supporting an expectation of pre-termination investigation.
    • Eggett v. Wasatch Energy Corp., 94 P.3d 193 (Utah 2004); Cheney v. Hinton Burdick Hall & Spilker, PLLC, 366 P.3d 1220 (Utah Ct. App. 2015): Elaborate duties of good faith, but within the bounds of the agreed common purpose and express terms.
    • Olé Mexican Foods Inc. v. J&W Distrib. LLC, 549 P.3d 663 (Utah Ct. App. 2024): Noted tension in Utah pleading practice regarding whether breach of the implied covenant is a separate cause of action; the Tenth Circuit flagged the issue but resolved the case on substantive grounds.
  • Pleading standards and waiver:
    • Bell Atl. v. Twombly, 550 U.S. 544 (2007); Ashcroft v. Iqbal, 556 U.S. 662 (2009): Governing plausibility standard; the implied covenant theory failed as a matter of law because it would contradict express terms.
    • Platt v. Winnebago Indus., Inc., 960 F.3d 1264 (10th Cir. 2020); United States v. Leffler, 942 F.3d 1192 (10th Cir. 2019); United States v. Rodebaugh, 798 F.3d 1281 (10th Cir. 2015); United States v. McGehee, 672 F.3d 860 (10th Cir. 2012): The court applied familiar waiver and “waiver-of-waiver” doctrines to confine the appeal to arguments properly raised and preserved.
    • C1.G. ex rel. C.G. v. Siegfried, 38 F.4th 1270 (10th Cir. 2021): Abandonment by failing to respond to arguments below; illustrative of preservation pitfalls noted by the panel.
  • Sovereign immunity and jurisdiction:
    • United States v. Mitchell, 445 U.S. 535 (1980): Waivers must be unequivocally expressed; frames the sovereign immunity analysis.
    • FAA v. Cooper, 566 U.S. 284 (2012): Waiver must be clear in statutory text; undermines reliance on general jurisdiction statutes as independent waivers.
    • Lonsdale v. United States, 919 F.2d 1440 (10th Cir. 1990); Fostvedt v. United States, 978 F.2d 1201 (10th Cir. 1992): Sections 1331 and 1337 do not waive sovereign immunity.
    • Union Pac. R.R. Co. v. United States ex rel. U.S. Army Corps of Engineers, 591 F.3d 1311 (10th Cir. 2010); Normandy Apartments, Ltd. v. HUD, 554 F.3d 1290 (10th Cir. 2009): The Tucker Act waives immunity but channels monetary contract claims above $10,000 to the Court of Federal Claims; district courts lack jurisdiction over such claims.
    • Emery Worldwide Airlines, Inc. v. United States, 264 F.3d 1071 (Fed. Cir. 2001); Kansas v. SourceAmerica, 874 F.3d 1226 (10th Cir. 2017): Exclusive Court of Federal Claims jurisdiction over bid protests under the post-ADRA Tucker Act regime.
    • Steele v. United States, 19 F.3d 531 (10th Cir. 1994); McKinney v. United States, 724 F. App’x 628 (10th Cir. 2018): WPA claims are funneled through CSRA processes; district courts lack jurisdiction for collateral WPA suits.
    • Acha v. Dep’t of Agric., 841 F.3d 878 (10th Cir. 2016); Eng v. MSPB, 2023 WL 8851292 (10th Cir. Dec. 21, 2023): The CSRA/WPA exhaustion requirement is jurisdictional; judicial review lies in the courts of appeals under 5 U.S.C. § 7703.
    • Tompkins v. U.S. Dep’t of Veterans Affs., 16 F.4th 733 (10th Cir. 2021): Appellate discretion to decline to consider waived subject-matter jurisdiction arguments.

Legal Reasoning

1) Vista: No Express Breach Preserved; Implied Covenant Cannot Re-Write An Immediate Termination Clause

The physician’s complaint asserted that Vista had a duty to investigate IHS’s allegations of “lack of professionalism” and “failure to maintain a positive work environment” before terminating the placement. On appeal, he did not defend that express theory in his opening brief, and pivoted to a new argument in reply—that Vista should have waited until IHS produced evidence under Paragraph 4 of the client-facing provisions. The court deemed the express breach theory waived and declined to entertain the new theory raised only in reply, emphasizing the importance of preservation and adversarial briefing.

On the implied covenant claim, Utah law was dispositive. Paragraph 23 granted Vista the power to terminate the contract “immediately” upon a client’s request to remove the physician “for any reason.” The implied covenant cannot:

  • “Establish new, independent rights or duties” that the parties did not agree to at the outset; or
  • Create rights “inconsistent with express contractual terms,” or “nullify” an expressly granted right.

Imposing a pre-termination investigative duty would conflict with, and effectively dilute, the contract’s explicit immediate-termination authority and “for any reason” breadth. The complaint also lacked factual allegations about the parties’ course of dealing that might ground any justified expectation of investigation. Given the strong express termination clause and the thin course-of-dealing allegations, the implied covenant claim failed as a matter of law.

2) IHS: Sovereign Immunity and Jurisdictional Channeling Defeat District-Court Claims

The physician advanced multiple statutory bases for jurisdiction, none sufficient to keep his suit against a federal agency in district court.

  • Tucker Act (28 U.S.C. § 1491; Little Tucker Act § 1346(a)(2)):
    • Assuming an IHS–Vista contract and third-party beneficiary standing, monetary contract claims are within the Tucker Act’s waiver, but jurisdiction is channeled: the Court of Federal Claims has exclusive jurisdiction for claims exceeding $10,000; district courts share jurisdiction only for claims at or below $10,000.
    • Here, alleged damages exceeded $75,000. Thus, the district court lacked jurisdiction; the proper forum would be the Court of Federal Claims. The panel also noted that any transfer issue under 28 U.S.C. § 1631 was “invited error,” as the plaintiff opposed transfer below.
    • Section 1491(b)’s bid-protest jurisdiction did not apply; in any event, district courts no longer share concurrent bid-protest jurisdiction.
  • Whistleblower Protection Act (5 U.S.C. § 2302(b)(8)) and CSRA:
    • WPA provides a limited waiver, but claims “generally may only be brought” via CSRA processes—initially to the Office of Special Counsel and then to the MSPB, with judicial review ordinarily in the courts of appeals. The plaintiff neither exhausted nor was in the right forum.
  • Contractor Whistleblower Statutes (41 U.S.C. § 4712; 10 U.S.C. § 4701):
    • These protect employees of federal contractors/subcontractors and authorize relief against those private entities. They do not authorize civil damages suits against the United States and therefore do not waive sovereign immunity for claims against IHS.
  • Criminal statutes and regulations (18 U.S.C. § 242; 25 C.F.R. § 11.448):
    • Criminal provisions and the cited Indian country regulation do not create private rights of action for damages against the federal government and do not waive sovereign immunity.
  • General and supplemental jurisdiction (28 U.S.C. §§ 1331, 1337, 1367):
    • These statutes confer jurisdictional categories but do not waive sovereign immunity. Supplemental jurisdiction cannot bootstrap a claim against the United States absent an independent waiver.

Impact

The decision, though designated nonprecedential, offers persuasive guidance with practical consequences in several domains:

  • Staffing and locum tenens agreements:
    • Broad termination provisions—especially those permitting “immediate” action on client request “for any reason”—will generally foreclose implied covenant arguments that seek to add pre-termination investigative or corroboration requirements. Parties desiring investigation, corroboration, or notice-and-cure protocols must negotiate them expressly.
    • Longstanding relationships (e.g., “12 years” of placements) do not, without pleaded course-of-dealing facts, create justified expectations that contradict an explicit termination clause.
    • Pleading tip: If the implied covenant is pursued, allege specific course-of-dealing facts and practices showing a mutually understood expectation consistent with (not contrary to) the contract’s text.
  • Litigation against federal agencies:
    • Retaliation or whistleblower theories against federal agencies must fit within a specific, unequivocal waiver and the correct procedural channel. WPA/CSRA claims belong in the OSC/MSPB framework with judicial review in the courts of appeals.
    • Third-party beneficiary contract claims seeking money damages against the United States are Tucker Act claims. If over $10,000, the exclusive forum is the Court of Federal Claims; district courts cannot retain such cases through supplemental or general federal question jurisdiction.
    • Contractor whistleblower statutes do not create damages actions against the United States; they regulate contractor conduct and agency remedial orders, not sovereign liability.
  • Appellate practice and preservation:
    • Arguments not pressed in the opening brief are typically waived; raising new theories in a reply is rarely permitted.
    • Positions taken below can “invite” error and foreclose relief on appeal (e.g., opposing transfer under 28 U.S.C. § 1631).

Complex Concepts Simplified

  • Implied covenant of good faith and fair dealing (Utah law): A background promise read into every contract requiring parties to act in good faith and respect the other party’s justified expectations. It cannot create new duties or contradict the contract’s text. It fills gaps; it does not rewrite bargains.
  • Sovereign immunity: The United States and its agencies cannot be sued unless Congress has clearly said so in a statute. Even when Congress waives immunity, the statute will also define the proper forum and procedures.
  • Tucker Act: A statute that both waives immunity for certain monetary claims (notably contract claims) against the United States and channels them to the Court of Federal Claims if they exceed $10,000. District courts share jurisdiction only for $10,000 or less.
  • CSRA/WPA exhaustion: Federal employees (and certain categories of workers) alleging prohibited personnel practices, including retaliation, must first complain to the Office of Special Counsel and then may proceed to the MSPB. Judicial review is typically in a federal court of appeals, not district court.
  • General vs. specific jurisdictional statutes: General jurisdictional grants (e.g., § 1331) let federal courts hear certain types of cases, but they do not waive the government’s immunity. A plaintiff needs a specific waiver that authorizes suit against the United States and specifies the forum.
  • Supplemental jurisdiction (§ 1367): Allows federal courts to hear related claims once they have a claim within their original jurisdiction. It cannot be used to overcome sovereign immunity for claims against the United States that lack an independent waiver.
  • “Waiver” on appeal: If a party does not raise an argument in its opening brief, or abandons it below, courts typically will not consider it. New arguments in reply are generally ignored to preserve fair adversarial process.

Conclusion

McIntyre reinforces two enduring principles. First, under Utah law, the implied covenant of good faith and fair dealing cannot be used to restrict an expressly broad termination right. A staffing agreement that authorizes “immediate” termination on a client’s request “for any reason” leaves little room for implied pre-termination process duties. Parties who want investigation, notice, or cure built into the relationship must draft for it.

Second, sovereign immunity and jurisdictional channeling remain formidable barriers to district-court suits against federal agencies. Contract claims for more than $10,000 belong in the Court of Federal Claims under the Tucker Act, and WPA/CSRA retaliation claims must go through OSC/MSPB with judicial review in the courts of appeals. General federal question or supplemental jurisdiction cannot supply the missing waiver. Contractor whistleblower statutes target contractor conduct and remedies; they do not authorize damages suits against the sovereign.

For practitioners, the opinion underscores the importance of careful contract drafting, precise pleading (especially of implied covenant and course-of-dealing facts), and rigorous attention to jurisdictional pathways when federal defendants are involved. Even as a nonprecedential disposition, McIntyre offers a clear, persuasive roadmap for similar disputes in the Tenth Circuit and beyond.

Case Details

Year: 2025
Court: Court of Appeals for the Tenth Circuit

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