['NATIONAL MOTOR FREIGHT TRAFFIC ASSOCIATION INC v. GENERAL SERVICES ADMINISTRATION'] , 25 F. Supp. 3d 52 ( 2014 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
____________________________________
)
NATIONAL MOTOR FREIGHT )
TRAFFIC ASSOCIATION, INC., et al., )
)
Plaintiffs, )
)
v. ) Civil Action No. 13-0429 (ABJ)
)
GENERAL SERVICES )
ADMINISTRATION, et al., )
)
Defendants. )
____________________________________)
MEMORANDUM OPINION
Plaintiffs National Motor Freight Association, Inc. and five of its motor carrier members 1
(collectively, “plaintiffs”) filed suit against defendants General Services Administration (“GSA”)
and Daniel M. Tangherlini, in his official capacity as the Acting Administrator, pursuant to 5
U.S.C. § 701 et seq., arguing that GSA exceeded its statutory authority under 31 U.S.C. § 3726and 49 U.S.C. § 13710 when it conducted post-payment audits and offset alleged overcharges
against amounts due to some of the plaintiffs under their government contracts. Defendants filed
a motion to dismiss the complaint for lack of subject matter jurisdiction pursuant to Federal Rule
of Civil Procedure 12(b)(1) or, in the alternative, for failure to state a claim pursuant to Rule
12(b)(6). See generally Defs.’ Mot. to Dismiss Compl. (“Defs.’ Mot.”) [Dkt. # 11]. Defendants
also argued that plaintiff New England Motor Freight should be dismissed for lack of standing.
Id. at 27–28. Plaintiffs opposed the motion and argued that the Court should enter judgment on
1 The five motor carrier organizations that appear as individual plaintiffs in this case are
ABF Freight System, Inc.; Tri-State Motor; T.F. Boyle Transportation, Inc.; New England Motor
Freight, Inc.; and YRC Inc.
the pleadings in their favor instead pursuant to Rule 12(c). Pls.’ Resp. in Opp. to Defs.’ Mot. to
Dismiss (“Pls.’ Resp.”) at 4 n.3 [Dkt. # 13]. Since the Court finds that it has concurrent subject
matter jurisdiction in this case, and that plaintiffs have alleged sufficient facts to state plausible
claims, the motion to dismiss will be denied. But because the Court also finds that plaintiff New
England Motor Freight has not alleged the necessary injury in fact, the Court will grant
defendants’ motion to dismiss its claims for lack of standing. The rest of plaintiffs’ claims may
proceed, and the Court will address the merits of the dispute in accordance with the schedule set
forth in the order that accompanies this opinion.
BACKGROUND
I. Statutory and Regulatory Background
Five of the plaintiffs in this case are motor carriers that provide government agencies
with transportation services pursuant to negotiable commercial rates. This case concerns GSA’s
authority to conduct post-payment audits of their bills up to three years after the reviewed
charges have been paid. Defendants argue that 31 U.S.C. § 3726(b), (d) provides it with
authority to conduct those audits. Defs.’ Mot. at 18–19. Plaintiffs maintain that section 3726
does not cover transportation contracts performed at negotiable commercial rates, so any
government review must be conducted pursuant to 49 U.S.C. § 13710, which requires that billing
disputes be raised within 180 days. Pls.’ Resp. at 2.
A. 31 U.S.C. § 3726 and 41 C.F.R. § 102-118.415 et seq.
Section 3726 of title 31 of the United States Code governs both pre- and post-payment
audits of bills received by the government for transportation services. 31 U.S.C. § 3726(a), (b)
(2006). Most pertinent to this case is subsection (b), which provides that “[t]he Administrator
[of General Services] may conduct pre- or post-payment audits of transportation bills of any
2
Federal Agency. The number and types of bills audited shall be based on the Administrator’s
judgment.” Id. § 3726(b). If an audit reveals that the government overpaid for the services
provided, the government may,
[n]ot later than 3 years (excluding time of war) after the time a bill is paid,
. . . deduct from an amount subsequently due a carrier or freight forwarder
an amount paid on the bill that was greater than the rate allowed under—
(1) a lawful tariff under title 49 or on file with the Secretary of
Transportation with respect to foreign air transportation . . . , the Federal
Maritime Commission, or a State transportation Authority; (2) a lawfully
quoted rate subject to the jurisdiction of the Surface Transportation Board;
or (3) sections 10721, 13712, and 15504 of title 49 or an equivalent
arrangement or an exemption.
Id. § 3726(d). If the challenged transportation charges are not billed at a rate specified in one of
the three subsections of section 3726(d), then GSA does not have authority under that section to
withhold overcharges.
The statute does not detail the procedures that GSA must follow when reviewing agency
transportation bills, and GSA has promulgated regulations establishing an audit procedure and
appeals process. See 41 C.F.R. §§ 102-118.435, 102-118.600, 102-118.625, 102-118.650, 102-
118.655 (2009). It also published questions and answers to provide additional guidance to
government agencies that contract with motor carriers. See generally 41 C.F.R. §§ 102-118.5 et
seq. Most pertinent to this case is section 102-118.435(f), which notes that, if the Audit Division
discovers an overcharge, GSA will “[i]ssue a Notice of Overcharge stating that [the motor
carrier] owes a debt to the agency” and include information regarding “the amount paid, the basis
for the proper charge for the document reference number, and cit[ing] applicable tariff or tender
along with other data relied on to support the overcharge.” Id. § 102-118.435(f). The
regulations do not require that the Notice of Overcharge (“NOC”) be sent within a specific time
period. See generally id.
3
B. 49 U.S.C. § 13710
There is another statute with potential application to this case. Section 13710 of title 49
of the U.S. Code governs, among other things, billing disputes between motor carriers and
shippers. 49 U.S.C. § 13710(a)(3) (2006). Specifically, it provides that, “[i]f a shipper seeks to
contest the charges originally billed or additional charges subsequently billed, the shipper may
request that the [Surface Transportation] Board determine whether the charges billed must be
paid.” Id. § 13710(a)(3)(B). The Board then reviews the reasonableness of the charged rates
“under section 13701 . . . based on the record before it.” Id. § 13710(a)(2). A shipper must raise
a challenge to the transportation charges “within 180 days of receipt of the bill,” otherwise its
challenge is time-barred. Id. § 13710(a)(3)(B).
Although the statute does not specifically define “shipper” or elaborate upon the term, the
statute has been applied to government agencies that contract for transportation services. The
statute defines “motor carrier” as a motor carrier of property, “other than a motor carrier
providing transportation in noncontiguous domestic trade.” Id. § 13710(a)(1), (3)(A).
II. Factual and Procedural Background
Plaintiffs are five individual motor carriers and a trade association comprised of motor
carriers. Compl. ¶¶ 4–9 [Dkt. # 1]. The membership organization, NMFTA, is a nonprofit entity
“whose membership consists of motor carriers of freight and transportation companies operating
in interstate, intrastate, and foreign commerce,” many of which “provide cargo transportation
services for the United States government.” Compl. ¶ 4; see also Compl. ¶ 20. The other five
plaintiffs are “motor carrier member[s] of NMFTA.” Compl. ¶¶ 5–9. Like most NMFTA
members, all five operate “in interstate commerce throughout the United States and Canada,”
Compl. ¶¶ 5–9, and four of the five motor carrier plaintiffs – ABF Freight, Boyle, Tri-State
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Motor, and YRC – devote “[a] significant portion of [their] business [to] the provision of general
cargo transportation services for the United States government.” 2 Compl. ¶¶ 5–6, 8–9.
Recently, NMFTA members raised concerns with the organization regarding a perceived
increase in the number of GSA “post-payment audits of transportation bills for transportation
services provided to Government shippers.” Compl. ¶ 22. The post-payment audits resulted in
the issuance of thousands of NOCs, which demanded refunds of money “between 2 and 3 years
after the Government was billed for the involved transportation services.” Compl. ¶¶ 22–23.
Specifically, the following overcharge notices were received approximately one to three years
after the government received the transportation bills:
ABF Freight: In 2009, ABF Freight received 1,483 NOCs, totaling more than $401,000
in overcharges that it must repay. In 2010, it received 2,662 NOCs, amounting to more
than $507,000 in repayments. And in 2012, it received 347 NOCs, seeking repayment of
more than $27,000. Compl. ¶ 24.
Boyle: In 2010, Boyle received 257 NOCs, totaling about $71,000 in overcharges that it
must repay. In 2011, it received 255 NOCs, amounting to approximately $186,000 in
repayments. And in 2012, it received 131 NOCs, seeking repayment of about $121,000.
Compl. ¶ 25.
Tri-State Motor: In 2009, Tri-State Motor received 27 NOCs, totaling about $71,000 in
overcharges that it must repay. In 2010, it received 524 NOCs, amounting to
approximately $160,000 in repayments. And in 2011, it received 181 NOCs, seeking
repayment of about $62,000. Compl. ¶ 27. Tri-State Motors also assert that “GSA,
without explanation, has withdrawn some of these Notices on multiple occasions.”
Compl. ¶ 27.
YRC: In 2011, YRC received 2,310 NOCs, totaling about $600,000 in overcharges that
it must repay. And in 2012, it received 1,310 NOCs, seeking repayment of about
$418,000. Compl. ¶ 28.
2 The Complaint contains contradictory information about plaintiff New England Motor
Freight. In paragraph 7, it states that a significant portion of New England Motor Freight’s
business is connected to the government, Compl. ¶ 7, but in paragraph 26, it notes that New
England Motor Freight stopped working with the government altogether in the mid-1990s and
now only does business with the government on a “very limited level.” Compl. ¶ 26.
5
Plaintiff New England Motor Freight does not allege that it has been audited by the GSA
or that it has received a NOC. Compl. ¶ 26. The complaint only notes that the company stopped
contracting with the government in the mid-1990s because “overcharge and payment issues . . .
made the traffic unprofitable.” Compl. ¶ 26. Moreover, New England Motor Freight states that
it now engages in government transport at “a very limited level,” and that “it has been reluctant
to increase that presence because of concerns regarding possible payment issues, including
overcharge issues arising out of GSA’s post-payment audits.” Compl. ¶ 26.
On April 4, 2013, plaintiffs filed the instant lawsuit to press their claim that GSA acted
unlawfully in issuing NOCs to ABF Freight, Boyle, Tri-State Motor, and YRC, as well as to
NMFTA’s other members. Count I asserts that GSA acted contrary to law and exceeded its
statutory authority under 31 U.S.C. § 3726 when it invoked the post-payment audit procedures in
that provision to issue overcharge notices to the four motor carriers in this case and other
NMFTA members because the shipments covered by the NOCs involve Government freight
moving at negotiated commercial rates and therefore “do not fall into the categories of freight
still subject to GSA post-payment audits and offset pursuant to [section] 3726.” Compl. ¶¶ 30–
31. In Count II, plaintiffs allege that the overcharge notices were issued contrary to 49 U.S.C. §
13710, which requires a “shipper” to contest a transportation bill within 180 days of the bill’s
receipt. Compl. ¶¶ 32–37. And Count III, pled in the alternative, alleges that, to the extent that
section 3726 does apply in this case, GSA acted unlawfully because the 180 day limit in section
13710 also applies, and GSA did not provide the four plaintiffs notice within that time period.
Compl. ¶¶ 38–43.
Notably, plaintiffs do not dispute the accuracy of the overcharge notices. Pls.’ Resp. at
15 (“[A]s previously explained, Plaintiffs here are not disagreeing with anything contained in
6
any particular notice of overcharge.”). They only challenge GSA’s authority to “audit . . . bills
for services provided under negotiated commercial rates and . . . the long delayed issuance of
overcharge notices.” Pls.’ Resp. at 15. They request a combination of declaratory and injunctive
relief to prevent GSA from conducting post-payment audits under section 3726 and from issuing
overcharge notices outside the 180 day period set by section 13710 in the future. Compl., Prayer
for Relief, ¶¶ 1–4. They also request that this Court “[o]rder GSA to return funds improperly
deducted from carrier compensation.” Compl., Prayer for Relief, ¶ 5.
Defendants filed a motion to dismiss plaintiffs’ complaint, arguing that this Court lacks
subject matter jurisdiction and that jurisdiction instead lies with either the Civil Board of
Contract Appeals (“CBCA”) or with the Court of Federal Claims, pursuant to the Tucker Act, 28
U.S.C. § 1491 (2012). Defs.’ Mot. at 12–17. They also argue in the alternative that the
complaint fails to state a claim upon which relief may be granted; according to defendants,
GSA’s authority under section 3726 extends to contracts involving negotiated commercial rates,
and under that section and the accompanying regulations, the agency has up to three years after
payment to issue a Notice of Overcharge and offset the overcharged amount. 3 Id. at 17–27.
Defendants also moved to dismiss plaintiff New England Motor Freight’s claim for lack of
standing; it contends that the carrier has failed to allege an injury in fact or to establish causation
and redressability because it does not allege that it received a NOC or that GSA has deducted
overcharges from its current contracts. Defs.’ Mot. at 27–28.
3 For the same reason, defendants argue that, should this Court determine that it does not
have subject matter jurisdiction over this matter, it should not transfer this case to the Court of
Federal Claims because it would be futile as plaintiff’s failed to state a claim upon which relief
may be granted. Defs.’ Reply Mem. in Supp. of Defs.’ Mot. to Dismiss Compl. (“Defs.’ Reply”)
at 11 n.9 [Dkt. # 15].
7
STANDARD OF REVIEW
In evaluating a motion to dismiss under either Rule 12(b)(1) or 12(b)(6), the Court must
“treat the complaint’s factual allegations as true . . . and must grant plaintiff ‘the benefit of all
inferences that can be derived from the facts alleged.’” Sparrow v. United Air Lines, Inc., 216
F.3d 1111, 1113 (D.C. Cir. 2000), quoting Schuler v. United States, 617 F.2d 605, 608 (D.C. Cir.
1979) (citations omitted); see also Am. Nat’l Ins. Co. v. FDIC, 642 F.3d 1137, 1139 (D.C. Cir.
2011). Nevertheless, the Court need not accept inferences drawn by the plaintiff if those
inferences are unsupported by facts alleged in the complaint, nor must the Court accept
plaintiff’s legal conclusions. Browning v. Clinton, 292 F.3d 235, 242 (D.C. Cir. 2002).
A. Subject Matter Jurisdiction
Under Rule 12(b)(1), the plaintiff bears the burden of establishing jurisdiction by a
preponderance of the evidence. See Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992);
Shekoyan v. Sibley Int’l Corp., 217 F. Supp. 2d 59, 63 (D.D.C. 2002). 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 Am., 511 U.S. 375, 377 (1994); see also Gen. Motors
Corp. v. EPA, 363 F.3d 442, 448 (D.C. Cir. 2004) (“As a court of limited jurisdiction, we begin,
and end, with an examination of our jurisdiction.”). “[B]ecause subject-matter jurisdiction is ‘an
Art[icle] III as well as a statutory requirement . . . no action of the parties can confer subject-
matter jurisdiction upon a federal court.’” Akinseye v. District of Columbia, 339 F.3d 970, 971
(D.C. Cir. 2003), quoting Ins. Corp. of Ir., Ltd. v. Compagnie des Bauxites de Guinee, 456 U.S.
694, 702 (1982).
When considering a motion to dismiss for lack of jurisdiction, unlike when deciding a
motion to dismiss under Rule 12(b)(6), the court “is not limited to the allegations of the
complaint.” Hohri v. United States, 782 F.2d 227, 241 (D.C. Cir. 1986), vacated on other
8
grounds, 482 U.S. 64 (1987). Rather, “a court may consider such materials outside the pleadings
as it deems appropriate to resolve the question [of] whether it has jurisdiction to hear the case.”
Scolaro v. D.C. Bd. of Elections & Ethics, 104 F. Supp. 2d 18, 22 (D.D.C. 2000), citing Herbert
v. Nat’l Acad. of Scis., 974 F.2d 192, 197 (D.C. Cir. 1992); see also Jerome Stevens Pharm., Inc.
v. FDA, 402 F.3d 1249, 1253 (D.C. Cir. 2005).
B. Failure to State a Claim
“To survive a [Rule 12(b)(6)] motion to dismiss, a complaint must contain sufficient
factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009) (internal quotation marks omitted); see also Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570 (2007). A claim is facially plausible when the pleaded factual
content “allows the court to draw the reasonable inference that the defendant is liable for the
misconduct alleged.” Iqbal, 556 U.S. at 678. “The plausibility standard is not akin to a
‘probability requirement,’ but it asks for more than a sheer possibility that a defendant has acted
unlawfully.” Id. “[W]here the well-pleaded facts do not permit the court to infer more than the
mere possibility of misconduct, the complaint has alleged – but it has not ‘show[n]’ – ‘that the
pleader is entitled to relief.’” Id. at 679, quoting Fed. R. Civ. P. 8(a)(2). A pleading must offer
more than “labels and conclusions” or a “formulaic recitation of the elements of a cause of
action,” id. at 678, quoting Twombly, 550 U.S. at 555, and “the tenet that a court must accept as
true all of the allegations contained in a complaint is inapplicable to legal conclusions,” id. In
ruling upon a motion to dismiss, a court may ordinarily consider only “the facts alleged in the
complaint, documents attached as exhibits or incorporated by reference in the complaint, and
matters about which the Court may take judicial notice.” Gustave-Schmidt v. Chao, 226 F. Supp.
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2d 191, 196 (D.D.C. 2002), citing EEOC v. St. Francis Xavier Parochial Sch., 117 F.3d 621,
624–25 (D.C. Cir. 1997).
ANALYSIS
I. The Court has subject matter jurisdiction in this case.
Subject matter jurisdiction is a necessary predicate to an exercise of this Court’s Article
III power. See Kokkonen, 511 U.S. at 377. It is statutory in nature, and the party seeking federal
judicial review must establish that it has satisfied at least one of the statutory bases. See Lujan,
504 U.S. at 561. Additionally, in cases like this one where the defendant is an agency of the
United States of America, the plaintiff also bears the burden of establishing that the federal
government has waived its sovereign immunity. See Roum v. Bush, 461 F. Supp. 2d 40, 46
(D.D.C. 2006).
Here, plaintiffs aver that the Court has subject matter jurisdiction over their three count
complaint under 28 U.S.C. § 1331, which provides that “[t]he district courts shall have original
jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United
States,” because they are challenging actions taken by a federal government agency pursuant to
two federal statutes: 31 U.S.C. § 3726 and 49 U.S.C. § 13710. Compl. ¶ 2; Pls.’ Resp. at 10–11
& 11 n.5. In the alternative, they contend that, should this Court determine that this case is
contractual in nature and therefore within the jurisdiction of the Court of Federal Claims
pursuant to the Tucker Act, 28 U.S.C. § 1491, this Court retains concurrent jurisdiction over the
claims under the Little Tucker Act, 28 U.S.C. § 1346(a)(2), because the amount of each disputed
overcharge is “for an amount less than $10,000, usually significantly less.” See Pls.’ Resp. at 14.
Plaintiffs point to section 702 of the APA and to the Little Tucker Act itself to establish a waiver
of sovereign immunity. See id. at 11, 14.
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A. The Court does not have federal question subject matter jurisdiction under 28
U.S.C. § 1331 and 5 U.S.C. § 702 in this case because the Tucker Act applies.
Although all three counts in plaintiffs’ complaint arise under federal law, 28 U.S.C. §
1331 cannot serve as the basis for the Court’s jurisdiction in this case because when a case is
filed against the United States, there must also be a waiver of sovereign immunity. The APA
often serves as the necessary waiver of sovereign immunity, and it waives that immunity for any
claim brought by an individual who “suffer[ed] legal wrong because of agency action, or [was]
adversely affected or aggrieved by agency action.” 5 U.S.C. § 702. But that waiver is not
unlimited. See 5 U.S.C. §§ 702, 704; Spectrum Leasing Corp. v. United States, 764 F.2d 891,
892–93 (D.C. Cir. 1985); Cartwright Int’l Van Lines, Inc. v. Doan, 525 F. Supp. 2d 187, 194
(D.D.C. 2007) (“While it is true that the APA has ‘broadened the avenues for judicial review of
agency action,’ this Court’s jurisdiction is strictly limited by the terms of the APA itself.”),
quoting Bowen v. Massachusetts, 487 U.S. 879, 891–92 (1988). The waiver of immunity under
the APA does not apply to cases where a party seeks monetary damages, 4 and Congress
expressly “restricted section 702’s waiver of sovereign immunity by stating that nothing in the
APA ‘confers authority to grant relief if any other statute that grants consent to suit expressly or
impliedly forbids the relief which is sought.’” Spectrum, 764 F.2d at 892–93, quoting 5 U.S.C. §
702. Moreover, judicial review of an agency action under the APA is only appropriate when
“there is no other adequate remedy in a court.” 5 U.S.C. § 704.
4 The parties dispute whether the APA’s restriction on suits for monetary damages impacts
jurisdiction in this case. But the Court need not reach that issue because, as discussed more fully
below, this is a case “founded upon a contract” within the meaning of the Tucker Act but the
amount in controversy is less than $10,000, which means this Court can grant monetary relief
pursuant to its concurrent jurisdiction under the Little Tucker Act. See Alaska Airlines, Inc. v.
Johnson, 8 F.3d 791, 797 (Fed. Cir. 1993).
11
The Tucker Act, 28 U.S.C. § 1491, acts as one of the limitations on section 702’s waiver
of sovereign immunity for cases that are “based on contracts with the federal government.”
Spectrum, 764 F.2d at 893; Megapulse, Inc. v. Lewis, 672 F.2d 959, 967 (D.C. Cir. 1982);
Cartwright, 525 F. Supp. 2d at 194. The Tucker Act also provides a limited waiver of sovereign
immunity, but it vests exclusive jurisdiction over contract-based claims in excess of $10,000
against the federal government in the Court of Federal Claims. 28 U.S.C. §§ 1346(a)(2),
1491(a)(1); Cartwright, 525 F. Supp. 2d at 194. Where “an action against the United States . . .
is at its essence a contract claim,” it “lies within the Tucker Act and . . . a district court has no
power to grant injunctive relief in such a case.” Megapulse, 672 F.2d at 967. The APA does not
permit a plaintiff to circumvent the Tucker Act and the jurisdiction of the Court of Federal
Claims. Spectrum, 764 F.2d at 893; Megapulse, 672 F.2d at 967; Cartwright, 525 F. Supp. 2d at
194.
Here, defendants argue that this Court lacks subject matter jurisdiction because the APA
does not apply and the case falls within the Tucker Act’s grant of exclusive jurisdiction to the
Court of Federal Claims. Plaintiffs argue that their case does not fall within the ambit of the
Tucker Act because their three claims are not based on a contract within the meaning of that Act,
and second, that even if the claims are based on a contract, the Court of Federal Claims cannot
provide an adequate remedy in this case because it cannot grant declaratory or injunctive relief.
The Court finds that the Tucker Act is implicated, but it need not reach the second question since
it concludes that it has concurrent jurisdiction as well.
A case is not based on a contract within the meaning of the Tucker Act simply because
the case “requir[es] some reference to or incorporation of a contract.” Megapulse, 672 F.2d at
968. Instead, a court must look to “both . . . the source of the rights upon which the plaintiff
12
bases its claims, and upon the type of relief sought (or appropriate)” in order to determine if a
claim is one “founded upon” a contract. Cartwright, 525 F. Supp. 2d at 194–95, quoting
Megapulse, 672 F.2d at 959 (internal quotation marks omitted); see also Spectrum, 764 F.2d at
893. In conducting this inquiry, “[c]ourts have not hesitated to look beyond the pleadings of a
case brought in district court to determine if it involves a claim over which the Court of [Federal]
Claims has exclusive jurisdiction.” Megapulse, 672 F.2d at 967.
In Megapulse, Inc. v. Lewis, the plaintiff filed suit to enjoin the U.S. Coast Guard from
releasing technical data in order to protect the company’s claimed proprietary interests in that
data, and the government disputed the district court’s subject matter jurisdiction. 672 F.2d at
962. The D.C. Circuit concluded that there was subject matter jurisdiction because the case was
not based on a contract. The proprietary interests or rights at issue did not arise out of the
contract; they were created by virtue of the company’s work and research, making them wholly
independent of the contract. Id. at 968–70. The contract’s only relevance to the case arose in
connection with one of the government’s defenses, and therefore, the Megapulse court was
“convinced that Megapulse’s claims against the Government [were] not ‘disguised’ contract
claims.’” Id. at 969.
But in a later case, Spectrum Leasing Corp. v. United States, the D.C. Circuit affirmed
the district court’s determination that it did not have subject matter jurisdiction either to issue an
order declaring that GSA violated the Debt Collection Act when it returned Spectrum’s invoices
unpaid or to enjoin GSA from withholding the money due under the contract. 764 F.2d at 892–
93. The court found that case to be based on a contract – and therefore within the Tucker Act –
because the right to the money withheld was “created in the first instance by the contract, not by
the Debt Collection Act,” and because Spectrum sought an order compelling the government to
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pay money owed in exchange for goods procured under a contract. Id. at 894. Thus, the Court
of Appeals found Spectrum to be distinguishable from Megapulse.
It also focused on the differences between the remedies being requested in the two cases:
Unlike Megapulse, in which the plaintiff sought an order enjoining the
dissemination of information in which it had an extra-contractual
proprietary interest, Spectrum seeks an order compelling the government
to pay money owed in exchange for goods procured under an executory
contract. In other words, Spectrum seeks the classic contractual remedy of
specific performance.
Spectrum, 764 F.2d at 894.
Here, plaintiffs’ case is more akin to Spectrum than to Megapulse. As in Spectrum, the
plaintiffs’ rights in this case are contractual in origin. All three counts of the complaint allege
that GSA acted unlawfully when it audited bills submitted to the government pursuant to
transportation contracts, and plaintiffs demand a return of money withheld under other contracts.
They also seek an order prohibiting interference with future payments due for services performed
pursuant to shipping contracts. In other words, plaintiffs’ claims – although couched in terms of
GSA’s authority to conduct post-payment audits – are at bottom a request to be made whole
under a series of government contracts, both right now and in the future. See Compl., Prayer for
Relief, ¶¶ 1–5. Neither section 3726 nor some independent act of plaintiffs establishes the right
to payment from the government; instead, that right arises “only upon creation and satisfaction of
14
[their] contract[s] with the government.” 5 Spectrum, 764 F.2d at 894; see also Cartwright, 525
F. Supp. 2d at 195 (“Plaintiffs’ right to any payment from the government at all, whether in full
as charged, or in a lesser amount reduced by offset, is created in the first instance by their
contracts, not by GSA’s regulations.”).
Moreover, a review of the complaint reveals that, fundamentally, this is an action for
monetary relief. The complaint is replete with references to money withheld by GSA, Compl. ¶¶
22, 24–28, 31, and in their prayer for relief, plaintiffs explicitly request that this Court “[o]rder
GSA to return funds improperly deducted from carrier compensation.” 6 Id., Prayer for Relief, ¶
5.
The fact that plaintiffs make other requests does not alter the conclusion that this is a case
based on contract. Although plaintiffs describe their claims in declaratory and injunctive terms,
a plaintiff may not “avoid the jurisdictional (and hence remedial) restrictions of the Tucker Act
by casting its pleadings in terms that would enable a district court to exercise jurisdiction under a
separate statute and enlarged waivers of sovereign immunity, as under the APA.” Megapulse,
672 F.2d at 967. Plaintiffs’ request for declaratory and injunctive relief simply asks this Court to
5 Plaintiffs point to Alaska Airlines, Inc. v. Austin, 801 F. Supp. 760 (D.D.C. 1992), in
support of its argument that its claims are not contractual in nature. But, in addition to being not
binding on this Court, that case provides little guidance on whether plaintiffs’ claims are founded
upon a contract. Unlike in this case, the complaint in Austin included separate counts alleging
unlawful government conduct and claims for monetary relief, and the court conducted its
jurisdictional inquiry in the isolated context of each count without looking behind the pleadings
to see what the case was really about. See 801 F. Supp. at 762–64. The court also made only
limited effort to distinguish precedent that is binding on this district, such as Spectrum and
Megapulse. Id. As a result, this Court respectfully declines to follow Austin on the question of
whether the claims in this case are founded upon a contract.
6 For this reason, the Court rejects plaintiffs’ contention that the thrust of their complaint is
about defining GSA’s power under section 3726, and that it is not about recouping withheld
funds or preventing funds from being withheld in the future. See Pls.’ Resp. at 10–11.
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tell GSA that it may not interfere with plaintiffs’ contractually secured rights to payments in the
future, and they are accompanied by an unequivocal request for what has been withheld in the
past. Although the equitable claims are not a request for monetary “damages” as that term is
typically used, see Bowen, 487 U.S. at 893, the underlying implication of the relief obtained is
the protection of a right to money that is secured by contract. See Cartwright, 525 F. Supp. 2d at
195. Thus, plaintiffs seek “contractual remed[ies]” that would prevent an unlawful interference
with plaintiffs’ contractual rights. See Spectrum, 764 F.2d at 894–95 (finding that Spectrum’s
requested relief was contractual in nature even though the company also requested a declaration
that the government had violated the Debt Collector Act); Cartwright, 525 F. Supp. 2d at 195.
For all these reasons, the Court finds this to be a case that is founded upon a contract within the
meaning of the Tucker Act and that jurisdiction lies in the Court of Federal Claims. 7
B. This Court has concurrent jurisdiction under the Little Tucker Act.
A finding that the Tucker Act applies does not end this Court’s jurisdictional inquiry.
Although the Tucker Act provides exclusive jurisdiction to the Court of Federal Claims for
claims of monetary relief against the United States in excess of $10,000, the Little Tucker Act,
28 U.S.C. § 1346 (2012), provides federal district courts with original jurisdiction, concurrent
with the Court of Federal Claims, over any “civil action or claim against the United States, not
exceeding $10,000 in amount, founded . . . upon any express or implied contract with the United
States.” 28 U.S.C. § 1346(a)(2). Consequently, a plaintiff’s contract claim against the United
7 Plaintiffs also challenged the adequacy of the relief available in the Court of Federal
Claims, Pls.’ Resp. at 15–16, but at least one other court in this jurisdiction has found the
remedies available in that court to be adequate. See Cartwright, 525 F. Supp. 2d at 196–97. In
this case, the Court need not reach that question because it will exercise its concurrent
jurisdiction to hear the case.
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States may be heard in federal district court so long as the amount of the claim does not exceed
$10,000. Id.; Wright v. Foreign Serv. Grievance Bd., 503 F. Supp. 2d 163, 179 (D.D.C. 2007).
Here, the Court finds that plaintiffs’ claims fall well within the $10,000 limit. Although
their complaint alleges that hundreds of thousands of dollars have been improperly withheld
from them by GSA, see Compl. ¶¶ 24–25, 27–28, the Court finds it inappropriate to aggregate
the overcharge assessments when calculating the amount in controversy for purposes of
determining whether there is subject matter jurisdiction in this case. See Austin, 801 F. Supp. at
762 (noting that the airline tickets giving rise to the contested overcharges were individual
contracts and that the amount in controversy should be analyzed by viewing each ticket
independently).
The contracts at issue here – known as bills of lading – are a series of individual contracts
in which motor carriers agreed to provide transportation services for particular shipments to a
government agency. Pls.’ Notice of Filing in Resp. to Jan. 10, 2014 Minute Order (“Pls.’ Not.”)
at 2–3 [Dkt. # 20]; Decl. of George Thomas, Ex. 1 to Defs.’ Notice of Filing ¶¶ 4–5 [Dkt. # 19-
1]. There is no larger, overarching contract at play: each bill of lading covers a specified
transaction, results in its own invoice, and is the product of an offer of tender, which sets the
price at which the carrier is willing to provide the requested transportation services. Decl. of
David Bennett, Ex. 1 to Pls.’ Not. ¶¶ 3, 6–7 [Dkt. # 20-1]; Decl. of Marc Boyle, Ex. 2 to Pls.’
Not. ¶¶ 3, 6–7 [Dkt. # 20-2]; Decl. of Mark Johnson, Ex. 3 to Pls.’ Not. ¶¶ 3, 6–7 [Dkt. # 20-3];
Decl. of Danny Loe, Ex. 4 to Pls.’ Not. ¶¶ 3, 6–7 [Dkt. # 20-4]. It is those individual contracts
that have been subjected to GSA’s post-payment audit.
Here, plaintiffs claim to have suffered multiple distinct wrongs connected to individual
contracts, and they have filed suit to recover funds that were withheld from those separate
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contracts. Under these circumstances, it is the Court’s view that the aggregate amount sought in
the complaint is not the appropriate measure for deciding whether there is subject matter
jurisdiction under the Little Tucker Act, and that the Court must look to the amount of
overcharge noticed in connection with each of the audited contracts. Austin, 801 F. Supp. at 762.
As plaintiffs’ supplemental filings make clear, none of the individual overcharges that prompted
this action exceed $10,000. Decl. of Bennett ¶ 9 (noting overcharges between $13.72 and
$995.19); Decl. of Boyle ¶ 9 (noting overcharges between $14.42 and $8,144.46); Decl. of
Johnson ¶ 10 (noting overcharges between $4.94 and $7,025.51; Decl. of Loe ¶ 9 (noting
overcharges of $0.73 and $4,085.89). Consequently, this Court has concurrent jurisdiction with
the Court of Federal Claims over this case under the Little Tucker Act, and it finds that dismissal
for lack of subject matter jurisdiction is therefore unwarranted.
II. Plaintiffs’ complaint provides sufficient facts to state a claim upon which relief
may be granted.
Defendants also argue that plaintiffs’ complaint should be dismissed for failure to state a
claim under Federal Rule of Civil Procedure 12(b)(6) on the grounds that the facts as alleged
demonstrate that plaintiffs are not entitled to relief as a matter of law. Defs.’ Mot. at 17–27.
Specifically, defendants contend that the complaint demonstrates that plaintiffs’ transportation
services fall within the purview of section 3726, and that GSA lawfully notified plaintiffs of
overcharges within the three year statutory period. Id.But this is not a case that can properly be resolved under Rule 12(b)(6). The complaint
states a plausible claim for relief that turns on two questions: first, whether section 3726 applies
to contracts of motor carriers that provide transportation under negotiated rates, and second,
whether Congress intended the time limitations contained in section 13710 to apply to section
3726. Both of these issues present questions of law, and neither can be resolved simply by
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referring to the operative statutes and plaintiffs’ complaint, so Federal Rule of Civil Procedure
56 will provide the proper framework. Defendants’ motion to dismiss pursuant to Rule 12(b)(6)
will therefore be denied without prejudice, and for the same reason, the Court will not grant
plaintiffs’ request that these motions be treated as a motion for judgment on the pleadings. See
Longwood Vill. Rest., Ltd. v. Ashcroft, 157 F. Supp. 2d 61, 66 (D.D.C. 2001) (noting that “[t]he
standard of review for . . . a motion [for judgment on the pleadings] is essentially the same as the
standard for a motion to dismiss brought pursuant to Federal Rule of Civil Procedure 12(b)(6)”).
A schedule for further briefing shall be set out in the order that accompanies this memorandum
opinion.
III. Plaintiff New England Motor Freight does not have standing in this case.
Defendants’ final argument in its motion to dismiss is that plaintiff New England Motor
Freight does not have standing in this case. Defs.’ Mot. at 27–28. Specifically, defendants argue
that New England lacks a cognizable injury because it does not identify any alleged untimely
overcharge notice and instead states only that it has been reluctant to increase the amount of
business it conducts with the government because of the potential that it will receive overcharge
notices in the future. Id., citing Compl. ¶ 26. Defendants also argue that plaintiff New England
Motor Freight cannot establish the causation and redressability prongs of standing. Id. at 28.
The Court agrees.
To establish constitutional standing, a plaintiff must demonstrate that (1) he has suffered
an “injury-in-fact” that is “concrete and particularized” and “actual or imminent”; (2) the injury
is “fairly traceable” to the challenged action of the defendant; and (3) it is “likely, as opposed to
merely speculative, that the injury will be redressed by a favorable decision.” Lujan v.
Defenders of Wildlife, 504 U.S. 555, 560–61 (1992) (internal quotation marks omitted); see also
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Friends of the Earth, Inc. v. Laidlaw Envtl. Servs., 528 U.S. 167, 180–81 (2000). The party
invoking federal jurisdiction bears the burden of establishing standing. Lujan, 504 U.S. at 561.
Here, plaintiff New England Motor Freight alleges that it has declined to increase the
amount of business it does with government agencies out of fear that future audits could ruin its
business. Compl. ¶ 26; see also Pls.’ Resp. at 30–31. But plaintiff fails to allege facts that
would show that injury to be concrete and particularized or actual or imminent, and the
company’s concern that it could be issued a notice of overcharge is merely speculative at this
time. 8 The fact that plaintiff has engaged in some business with the government over the last
four years and has not yet received a notice of overcharge at the time this case was filed only
strengthens that conclusion. The Court finds that plaintiff New England Motor Freight has not
established that it has suffered a cognizable injury and it therefore does not have standing in this
case. 9
8 For this reason, plaintiffs’ reliance on North Carolina Right to Life Committee Fund for
Independent Political Expenditures v. Leake, 524 F.3d 427 (4th Cir. 2008), is misplaced. That
case dealt with a challenge to North Carolina’s campaign financing law that provided matching
funds to a participating candidate when his or her opponent spent more than the amount specified
in the statute. Id. at 433. Although certain plaintiffs had not actually made payments to political
candidates for fear of triggering the matching funds provision, the court found that they
nonetheless had suffered an injury in fact because “‘conditional statements’ of intent, which
allege that a plaintiff would engage in a course of conduct but for the defendants’ allegedly
illegal action, may be sufficient” to establish the injury prong of standing. Id. at 435. But that
case is distinguishable from the instant case: If the plaintiffs in Leake had funded political
candidates as they intended, the matching funds provision would have automatically been
triggered and their injury would be concrete. But here, one cannot be certain that overcharge
notices and withholdings would necessarily flow from New England’s decision to engage in
government contracting.
9 Because a plaintiff must establish all three prongs of standing to avoid dismissal on that
ground, the Court need to address whether plaintiff New England Motor Freight can satisfy the
second two prongs of the standing inquiry. See Lujan, 504 U.S. at 560–61.
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CONCLUSION
For the reasons stated above, the Court finds that it has concurrent jurisdiction over this
case pursuant to the Little Tucker Act and that plaintiffs’ complaint states a plausible claim for
relief with respect to GSA’s post-payment audits. Additionally, the Court finds that plaintiff
New England Motor Freight does not have standing in this case, and its claim will be dismissed.
The Court will therefore grant in part and deny in part defendants’ motion to dismiss.
Furthermore, as the dispute in this case turns on questions of law and statutory
interpretation, the Court’s order accompanying this opinion will set a schedule for the filing of
summary judgment motions. The parties may choose to rely upon the memoranda of points and
authorities that have already been filed in support of those motions. A separate order will issue.
AMY BERMAN JACKSON
United States District Judge
DATE: March 12, 2014
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