Schindler Elevator Corporation v. WMATA ( 2021 )

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued September 23, 2021 Decided October 22, 2021
No. 21-7008
SCHINDLER ELEVATOR CORPORATION, A NEW JERSEY
CORPORATION,
APPELLANT
v.
WASHINGTON METROPOLITAN AREA TRANSIT AUTHORITY, AN
INTERSTATE AGENCY CREATED BY COMPACT AND KONE INC.,
APPELLEES
Appeal from the United States District Court
for the District of Columbia
(No. 1:20-cv-03157)
H. Christopher Bartolomucci argued the cause for
appellant. With him on the briefs was Lawrence M. Prosen.
Attison L. Barnes, III argued the cause for appellee
Washington Metropolitan Area Transit Authority. With him
on the brief were Stephen J. Obermeier and Jeremy J. Broggi.
Daniel W. Wolff and Lyndsay A. Gorton were on the brief
for appellee Kone Inc.
Before: HENDERSON and JACKSON, Circuit Judges, and
SENTELLE, Senior Circuit Judge.
2
Opinion for the Court filed by Circuit Judge HENDERSON.
KAREN LECRAFT HENDERSON, Circuit Judge: In response
to a Request for Proposal (RFP) from the Washington
Metropolitan Area Transit Authority (WMATA), Schindler
Elevator Corporation submitted a bid to replace the escalators
throughout WMATA’s Metro Rail System stations. WMATA
rejected the proposal, over Schindler’s protests, and awarded
the contract to another company. Schindler sued, alleging that
WMATA arbitrarily eliminated it from consideration even
though it complied with the RFP’s requirements and offered a
better value than that proposed by the awardee. The district
court dismissed sua sponte Schindler’s complaint for lack of
subject matter jurisdiction on the ground that WMATA, an
interstate compact entity, had not waived its sovereign
immunity. We agree and affirm the district court’s dismissal of
Schindler’s complaint because neither the interstate compact
creating WMATA, the Authority’s procurement documents
nor the Administrative Procedure Act (APA) waives
WMATA’s sovereign immunity for challenges to procurement
decisions like Schindler’s.
I.
Created in 1966 through an interstate compact signed by
Maryland, Virginia and the District of Columbia and approved
by the Congress, WMATA operates a mass transit system for
the District of Columbia and surrounding Virginia and
Maryland suburbs. Washington Metropolitan Area Transit
Authority Compact, Pub. L. No. 89–774, 80 Stat. 1324 (1966)
(WMATA Compact); see also U.S. CONST. art. I, § 10, cl. 3
(“No State shall, without the Consent of Congress, . . . enter
into any Agreement or Compact with another State.”); MD.
CODE TRANSP. § 10-204 (codifying WMATA Compact); VA.
CODE ANN. § 33.2-3100 (same); D.C. CODE ANN. § 9-1107.01
3
(same). Schindler is a global manufacturer and service provider
of elevators, escalators and moving walkways.1 WMATA and
Schindler have enjoyed a longstanding business relationship
and have worked together on numerous escalator maintenance
and improvement projects at stations throughout WMATA’s
Metro Rail System.
On January 30, 2020, WMATA issued its RFP soliciting
bids to replace aging escalators in the Metro Rail System. The
solicitation sought proposals to remove the existing escalators
and manufacture and install new ones along with their
associated equipment and components. The RFP also described
the required technical specifications for each part of the
removal and installation project. It explained that WMATA
intended to evaluate proposals based on technical merit and
price according to its Procurement Procedures Manual (PPM)
and then award the contract to the bidder that offered the best
value.
Schindler submitted its proposal to WMATA on May 6,
2020, to which WMATA responded shortly thereafter with a
request for clarification seeking further explanation and
documentation addressing various aspects of Schindler’s
proposal. Schindler replied a few days later, supplying the
additional requested information and answering WMATA’s
questions. Later that summer, however, WMATA informed
Schindler that its proposal did not satisfy the RFP’s
requirements and that it had been eliminated from
consideration for the award.
Following its disqualification, Schindler requested a
debriefing and filed an initial protest regarding WMATA’s
1
We accept as true all of the factual allegations contained in
the complaint. KiSKA Constr. Corp. v. WMATA, 321 F.3d 1151,
1157 (D.C. Cir. 2003).
4
decision. WMATA explained to Schindler during the
debriefing call that its proposal was unacceptable because it
failed to meet certain criteria required by the RFP. The
deficiencies included (1) proposing work on four locations
where more than one escalator would be replaced
simultaneously, (2) recommending the modification of
WMATA’s pit size requirements to allow for the installation of
certain mechanical features and (3) failing to demonstrate that
its key personnel met the required qualifications. Schindler
pushed back and responded to each of the purported
deficiencies but WMATA kept to its previous determination
that Schindler’s proposal did not comply with the RFP.
Undeterred, Schindler filed a supplemental protest. In both
its initial and supplemental protest filings, Schindler detailed
the alleged errors WMATA made in reaching its determination
to reject the proposal and Schindler’s own efforts to respond to
WMATA’s concerns and satisfy the requirements. But
WMATA never budged. On October 2, 2020, WMATA issued
its Final Decision denying both Schindler’s initial protest and
supplemental protest. A week later, WMATA awarded the
contract to Kone, Inc., even though, according to Schindler,
Kone’s proposal neither satisfies the RFP criteria nor provides
the best value for the project.
Schindler then sued WMATA in federal district court,
alleging that WMATA improperly disqualified Schindler from
consideration for the contract and awarded the grant to Kone.
It sought a declaratory judgment, an order directing specific
performance by WMATA to cancel the Kone award and either
award the contract to Schindler or reevaluate its proposal and
other injunctive relief.
The district court denied Schindler’s motion for a
preliminary injunction and sua sponte dismissed Schindler’s
5
complaint for lack of jurisdiction. Schindler Elevator Corp. v.
WMATA, 514 F. Supp. 3d 197, 201 (D.D.C. 2020). It
recognized that WMATA is protected by sovereign immunity
as an interstate compact entity and held that neither the
WMATA Compact nor the APA waives WMATA’s sovereign
immunity for Schindler’s procurement challenge. Id. at 203,
212. More specifically, it found that the WMATA Compact’s
limited waiver of sovereign immunity does not extend to
Schindler’s procurement challenge, that WMATA’s
procurement documents do not expand the waiver and that the
APA does not waive immunity because WMATA is not a
federal agency thereunder. Id. at 206–12. Schindler appealed.
II.
Although the district court’s jurisdiction vel non is
ultimately the subject of this appeal, “a federal court always
has jurisdiction to determine its own jurisdiction.” Brownback
v. King, 141 S. Ct. 740, 750 (2021) (quoting United States v.
Ruiz, 536 U.S. 622, 628 (2002)); see also FDIC v. Meyer,
510 U.S. 471, 475 (1994) (“Sovereign immunity is
jurisdictional in nature.”). We have appellate jurisdiction
pursuant to 28 U.S.C. § 1291, as Schindler timely appealed
from a final order of the district court. We review de novo the
district court’s dismissal of Schindler’s complaint for lack of
subject matter jurisdiction. KiSKA Constr. Corp. v. WMATA,
321 F.3d 1151, 1157 (D.C. Cir. 2003).
III.
WMATA is the creation of an interstate compact entered
into by Maryland, Virginia and the District of Columbia. Id. at
1158. We have repeatedly recognized that it is accordingly
vested with the sovereign immunities, including state
sovereign immunity, of the Signatories to the WMATA
Compact. See, e.g., id.; Watters v. WMATA, 295 F.3d 36, 39
6
(D.C. Cir. 2002). And “unless WMATA’s sovereign immunity
has been waived, the district court lacks jurisdiction to enter a
judgment against” it. Watters, 295 F.3d at 39–40.
Schindler maintains there are several avenues by which
WMATA’s sovereign immunity could be waived here: the
WMATA Compact, WMATA’s procurement documents,
including the PPM, the RFP and the Final Decision denying
Schindler’s protests, and the APA. We examine each in turn,
concluding that WMATA did not waive sovereign immunity
for the type of procurement challenge at issue.
A.
“In deciding whether a State has waived its constitutional
protection under the Eleventh Amendment, we will find waiver
only where stated by the most express language or by such
overwhelming implications from the [text] as [will] leave no
room for any other reasonable construction.” Morris v.
WMATA, 781 F.2d 218, 221 (D.C. Cir. 1986) (second alteration
in original) (internal quotation marks omitted) (quoting
Edelman v. Jordan, 415 U.S. 651, 673 (1974)). Maryland,
Virginia and the District of Columbia undoubtedly waived
WMATA’s sovereign immunity in the Compact—but in only
a narrow set of circumstances which do not include Schindler’s
procurement challenge.
Section 80 of the WMATA Compact provides that
WMATA “shall be liable for its contracts and for its torts . . .
committed in the conduct of any proprietary function, . . . but
shall not be liable for any torts occurring in the performance of
a governmental function.” 80 Stat. 1350. We have repeatedly
recognized that this waiver of WMATA’s sovereign immunity
is “limited.” Banneker Ventures, LLC v. Graham, 798 F.3d
1119, 1138 (D.C. Cir. 2015); KiSKA Constr. Corp., 321 F.3d
at 1158. Moreover, we have emphasized that this limited
7
waiver is exclusively “contained in” Section 80. Morris,
781 F.2d at 221. And we are not alone, as our sister circuit that
reviews claims brought against WMATA has also recognized.
See, e.g., Lizzi v. Alexander, 255 F.3d 128, 133 (4th Cir. 2001)
(scope of WMATA’s consent to be sued is “specifically and
expressly delineate[d]” in section 80), overruled in part on
other grounds by Nev. Dep’t of Hum. Res. v. Hibbs, 538 U.S.
721 (2003). Schindler acknowledges that its challenge sounds
in neither contract nor tort. Therefore, section 80’s limited
waiver of sovereign immunity is inapplicable and cannot
provide subject matter jurisdiction for Schindler’s challenge.
Contrary to Schindler’s assertions, no other provision of
the WMATA Compact waives WMATA’s sovereign
immunity or expands the limited waiver contained in
section 80 to include these types of procurement challenges.
Consider section 12 of the Compact, which provides that
WMATA may “[s]ue and be sued.” 80 Stat. 1328. It gives no
aid to Schindler because “we have held that provision to extend
only as far as the more specific (and partial) waiver of
sovereign immunity contained in section 80,” which, as we
have just noted, does not apply here. Watters, 295 F.3d at 40
(citing Morris, 781 F.2d at 221 n.3 (“reliance on the ‘sue and
be sued’ clause would be particularly inappropriate in this case
where another section of the Compact, section 80, specifically
and expressly delineates the scope of WMATA’s consent to be
sued”)).
Section 81 specifies that “[t]he United States District
Courts shall have original jurisdiction, concurrent with the
Courts of Maryland and Virginia, of all actions brought by or
against the Authority.” 80 Stat. 1350. But this provision does
not rescue Schindler because it is not a waiver of immunity.
We explained in Morris that “[s]ections 80 and 81 should be
read as parts of a coherent whole.” 781 F.2d at 221. In other
8
words, section 81’s grant of jurisdiction extends only to claims
for which sovereign immunity is waived in section 80. The
only purpose of section 81 is to confer on federal courts
jurisdiction of suits against WMATA that otherwise, in the
absence of diversity jurisdiction, would be limited to state
court. It does not expand section 80’s waiver.
We can say the same about section 73, which addresses
WMATA’s procurement policies. 80 Stat. 1348–49. Waiver is
found “only where stated by the most express language or by
such overwhelming implications from the [text] as [will] leave
no room for any other reasonable construction.” Morris,
781 F.2d at 221 (second alteration in original) (internal
quotation marks omitted) (quoting Edelman, 415 U.S. at 673).
This test is a “stringent one” and waiver must be conveyed
through a “‘clear declaration’ of [an] intent to submit to federal
court jurisdiction.” Barbour v. WMATA, 374 F.3d 1161, 1163
(D.C. Cir. 2004) (citation omitted). Section 73 makes no
reference to a waiver of sovereign immunity or amenability to
suit for WMATA’s procurement decisions, nor does it indicate
that WMATA can be held liable for its procurement decisions
as it can be for the contract and tort actions listed in section 80.
Thus, section 73 fails to meet the “stringent” test for an express
waiver.
Schindler points to several cases in the District of
Columbia area federal courts for the proposition that these
courts have jurisdiction to entertain challenges to WMATA
procurement decisions. It relies primarily on Elcon
Enterprises, Inc. v. WMATA, 977 F.2d 1472 (D.C. Cir. 1992),
and Seal & Company, Inc. v. WMATA, 768 F. Supp. 1150 (E.D.
Va. 1991). In Elcon, we considered a challenge to a WMATA
procurement decision without questioning the district court’s
jurisdiction or suggesting WMATA’s sovereign immunity
barred the suit. 977 F.2d at 1475, 1478–80. And in Seal, the
9
district court asserted subject matter jurisdiction over a
challenge to a WMATA contract award under section 81 of the
WMATA Compact. 768 F. Supp. at 1151–52. But the Elcon
court neither analyzed nor discussed WMATA’s sovereign
immunity and the district court in Seal did not mention the
limited waiver of sovereign immunity in section 80. What’s
more, neither case examines our extensive reasoning in Morris.
781 F.2d at 221. We cannot consider these cases persuasive,
much less binding, authority on the issue of federal court
jurisdiction over WMATA procurement decision challenges.
To do so would contravene the longstanding principle that
“[w]hen a potential jurisdictional defect is neither noted nor
discussed in a federal decision, the decision does not stand for
the proposition that no defect existed.” Ariz. Christian Sch.
Tuition Org. v. Winn, 563 U.S. 125, 144 (2011); see also, e.g.,
Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 91 (1998)
(“We have often said that drive-by jurisdictional rulings . . .
have no precedential effect.”); United States v. L.A. Tucker
Truck Lines, Inc., 344 U.S. 33, 38 (1952) (“Even as to our own
judicial power or jurisdiction, this Court has followed the lead
of Chief Justice Marshall who held that this Court is not bound
by a prior exercise of jurisdiction in a case where it was not
questioned and it was passed sub silentio.”).
The same can be said with respect to Otis Elevator Co. v.
WMATA, 432 F. Supp. 1089 (D.D.C. 1976), The Bootery, Inc.
v. WMATA, 326 F. Supp. 794 (D.D.C. 1970), and other more
recent district court decisions cited by Schindler that rely on
Elcon and Seal. Accordingly, Schindler’s argument that the
Congress ratified its interpretation of these cases when it
amended the WMATA Compact in 1996 fails because these
cases did not hold that WMATA waived its sovereign
immunity for procurement challenges. We thus conclude that
the WMATA Compact does not waive WMATA’s sovereign
immunity for Schindler’s claim.
10
WMATA asserts that this conclusion resolves the case.
But our inquiry does not end there. Next, we consider whether
WMATA waived its sovereign immunity through its PPM,
RFP or Final Decision denying Schindler’s protests.
As an initial matter, the parties dispute whether and how
WMATA can waive its sovereign immunity apart from the
waiver contained in the text of the WMATA Compact. But we
need not decide the extent to which WMATA can waive its
sovereign immunity for claims beyond the narrow set of
contract and tort actions expressly delineated in section 80,
because assuming WMATA may waive immunity for claims
beyond those delineated in section 80, it did not do so here.
Schindler contends that WMATA waived its sovereign
immunity in three separate documents. First, Chapter 17 of
WMATA’s PPM establishes the procedures for the
administrative resolution of protests during the procurement
process and provides that federal and local courts in Maryland,
Virginia and the District of Columbia “have jurisdiction over
court actions concerning protest decisions.” PPM § 17-10(d).
Second, the RFP at issue states that the federal and local courts
in these jurisdictions are the “judicial authorities having
jurisdiction over court actions concerning protest decisions.”
RFP § 00 20 01(T)(5). WMATA’s solicitation also included a
“Choice of Law” provision instructing that “any and all claims”
against WMATA and arising under the RFP “shall be heard and
determined” in either the federal or local courts “that maintain
jurisdiction over such claims.” RFP § 00 79 00(b). Third,
WMATA’s Final Decision denying Schindler’s protests
advises that “jurisdiction in any matter contesting WMATA’s
procurement decisions is governed by” section 81 of the
WMATA Compact.
11
We require a “clear declaration” of an intent to waive
sovereign immunity. Barbour, 374 F.3d at 1163. But the
jurisdiction-granting language in these three documents falls
far short of this “stringent” requirement. Id. Each of the
provisions closely resembles the jurisdiction-granting language
of section 81 of the WMATA Compact, which again specifies
that “[t]he United States District Courts shall have original
jurisdiction, concurrent with the Courts of Maryland and
Virginia, of all actions brought by or against the Authority.”
80 Stat. 1350. But we know from our earlier discussion of the
Compact that this alone does not achieve a waiver of sovereign
immunity. See supra III.A. WMATA’s sovereign immunity
was waived in the Compact only through the “clear
declaration” of waiver in section 80.
The PPM, the RFP and the Final Decision all lack such a
“clear declaration.” Schindler insists that a clear waiver exists
because each of these documents expressly references “protest
decisions” or “procurement decisions.” We believe that
Schindler’s emphasis is misplaced. The mere inclusion of these
terms does not constitute a “clear declaration” of a waiver of
sovereign immunity for all aspects of WMATA procurement
decisions. Compare the language of the procurement
documents to the waiver in section 80, providing that WMATA
“shall be liable for its contracts and for its torts . . . committed
in the conduct of any proprietary function.” 80 Stat. 1350
(emphasis added). We attach no talismanic significance to the
particular phrase “shall be liable” but Schindler cannot point to
anything nearly as direct in the three WMATA procurement
documents. Rather, a more logical interpretation of these
documents would view the listed courts as having jurisdiction
of claims as to which WMATA has clearly waived sovereign
immunity and which implicate its procurement decisions. The
Final Decision supports this reading because it states expressly
that “jurisdiction in any matter contesting WMATA’s
12
procurement decisions is governed by” section 81 of the
WMATA Compact,” which, as we know, leads directly back
to the limited waiver in section 80.
In sum, we do not find a clear declaration of an intent to
waive sovereign immunity in WMATA’s PPM, RFP or Final
Decision denying Schindler’s protests.
B.
We turn finally to the Administrative Procedure Act. The
APA waives the immunity of the federal government and
provides for judicial review of agency action in federal court.
See 5 U.S.C. § 702 (“A person suffering legal wrong because
of agency action . . . is entitled to judicial review thereof.”);
Trudeau v. Fed. Trade Comm’n, 456 F.3d 178, 186 (D.C. Cir.
2006) (APA waives sovereign immunity for “[a]n action in a
court of the United States seeking relief other than money
damages.” (quoting 5 U.S.C. § 702)); Chamber of Com. v.
Reich, 74 F.3d 1322, 1328 (D.C. Cir. 1996) (holding the
“APA’s waiver of sovereign immunity applies to any suit
whether under the APA or not”). The statute defines “agency”
as “each authority of the Government of the United States,
whether or not it is within or subject to review by another
agency” and provides a nonexclusive list of entities—such as
the Congress, the courts of the United States and the
government of the District of Columbia—that do not fall under
this definition. 5 U.S.C. § 701(b)(1). The APA “waives
immunity only when the defendant falls within that category.”
Trudeau, 456 F.3d at 187.
We must therefore answer the question whether WMATA
is a federal agency under the APA. Our court has been less than
clear on this issue but we hold today that WMATA, as an
interstate compact entity, is not a federal agency within the
scope of the APA.
13
This should come as no surprise because we and our sister
circuits have reached the same conclusion with respect to other
entities created under the Constitution’s Interstate Compact
Clause. The Washington Metropolitan Area Transit
Commission (WMATC) “was established by the Washington
Metropolitan Area Transit Regulation Compact . . . to regulate
private transportation service in the metropolitan area.” Old
Town Trolley Tours of Wash., Inc. v. WMATC, 129 F.3d 201,
203 (D.C. Cir. 1997). Granted, recognizing that congressional
approval of the compact “transforms an interstate compact . . .
into a law of the United States” and thus confers on it the status
of federal law, “it does not follow that the Commission is a
federal agency governed by the [APA].” Id. at 204 (quoting
Cuyler v. Adams, 449 U.S. 433, 438 (1981)). In reaching this
conclusion, we emphasized that the WMATC “is an authority,
not of the federal government, but of Virginia, Maryland, and
the District of Columbia”—the Signatories to the Compact. Id.That the District of Columbia, a federal territory ultimately
controlled by the Congress, is a Signatory did nothing to alter
this result.2 That rationale applies with equal force to
WMATA. Cf. Archdiocese of Wash. v. WMATA, 897 F.3d 314,
333 (D.C. Cir. 2018) (observing that WMATA “is an
instrumentality and agency of states” in the context of the
Religious Freedom Restoration Act).
2
Schindler cites Old Town Trolley for the proposition that APA
standards of review should apply to challenges to WMATA
procurement decisions like this one. That is of no moment here
because Old Town Trolley expressly held that the WMATC is not a
federal agency under the APA. 129 F.3d at 204. The court did not
rely on the APA to find a waiver of the WMATC’s sovereign
immunity. Rather, the interstate compact creating the WMATC
explicitly provided for judicial review of the WMATC orders in
question, distinguishing it from the WMATA Compact we examine
today. Id.
14Other courts agree, having held that interstate compact
entities are not federal agencies under the APA. In arriving at
this conclusion, they relied heavily on the fact that the entities
were created through an interstate compact. See, e.g., Kerpen
v. Metro. Wash. Airports Auth., 907 F.3d 152, 159–60 (4th Cir.
2018) (the entity in question is a “textbook example of an
interstate compact” and “[i]nterstate compacts . . . are not
federal entities”), cert. denied 140 S. Ct. 132 (2019); New York
v. Atl. States Marine Fisheries Comm’n, 609 F.3d 524, 532–33
(2d Cir. 2010) (recognizing that an interstate compact entity is
not a federal agency under the APA despite the Congress’s role
in approving the compact and the absence of interstate
compacts from the list of entities exempted from the APA’s
definition of “agency”). We see no reason to depart from this
reasoning.
Once again, Schindler leans on the dual lampposts of
Elcon and Seal for support. However, as before, Elcon and Seal
are far from illuminating. Elcon treated WMATA as if it were
a federal agency in a challenge to a WMATA procurement
decision. 977 F.2d at 1480. But the court there did so without
reasoned analysis, instead “assum[ing] arguendo” that
WMATA was a federal agency under the APA “for the
purposes of this appeal.” Id. It expressly found it “unnecessary
to resolve the issue.” Id. Similarly, Seal concluded that
“Congress intended WMATA to conduct its procurements as a
federal agency would.” 768 F. Supp. at 1157. But it also made
clear that WMATA “is not a federal agency. Rather, it is ‘an
instrumentality and agency of each of the signatory parties—
the District of Columbia, Maryland, and Virginia’” and thus
“not subject to the APA.” Id. at 1154 (quoting WMATA v. One
Parcel of Land, 706 F.2d 1312, 1314 (4th Cir. 1983), cert.
denied, 464 U.S. 893 (1983)). Accordingly, as the district court
explained, Schindler’s reliance on more recent district court
cases that in turn rely heavily on Elcon and Seal lends little, if
15
any, support to its cause. See Schindler Elevator Corp., 514 F.
Supp. 3d at 205. WMATA, created through an interstate
compact, is therefore an instrumentality and agency of its
Signatories. It is not a federal agency under the APA. As such,
WMATA’s sovereign immunity has not been waived.3
Fashioned under the Constitution’s Interstate Compact
Clause, WMATA has since its inception been vested with the
sovereign immunity of the Signatories that agreed to create it—
including Maryland’s and Virginia’s state sovereign immunity.
Absent a waiver of WMATA’s sovereign immunity, a district
court lacks jurisdiction over claims brought against it. This
much is clear. Although the WMATA Compact waives
sovereign immunity for a narrow set of claims not applicable
here, nothing in WMATA’s procurement documents purports
to expand that waiver to challenges to procurement decisions
like the one Schindler presses. Nor does the APA effect a
waiver because WMATA is not a federal agency under that
statute. Accordingly, the district court correctly dismissed
Schindler’s complaint for lack of subject matter jurisdiction.
We affirm.
So ordered.
3
In its opening brief on appeal, Schindler argues that it has a
cause of action under the Maryland, Virginia and District of
Columbia analogues to the federal APA. It concedes, however, that
it “did not expressly refer” to these statutes in its complaint and did
not bring them to the district court’s attention until its reply brief.
Schindler has thus forfeited this argument. Solomon v. Vilsack,
763 F.3d 1, 13 (D.C. Cir. 2014) (recognizing that an argument made
for the first time in a reply brief in district court is forfeited).