Frankel v. United States , 2014 U.S. Claims LEXIS 877 ( 2014 )

In the United States Court of Federal Claims
NO. 13-546€ FlLED
(Filed: August 27, 2014)
AUG 2 7 2014
DAVID FRANKEL, pro se, * U'S' COURT GF
* FEDERAL CLA|MS
plaintiff * Contract case; Breach of contract; Bid protest;
* Motion to dismiss under RCFC 12(b)(l) and
V- * 12(b)(6); Contest; Breach of contract; Bid
* protest - l49l(b)(2).
THE UNITED STATES, *
~)(~
Defendant. *
OPINION
David Frankel, pro se, for plaintiff.
Meen Geu Oh, Civil Division, United States Department of Justice, with whom was
Assistant Attorney General Stuart F. Delery, for defendant.
ALLEGRA, Judge:
In this action, plaintiff seeks to recover damages based on a claimed breach of contract.
That breach occurred, according to plaintiff, when the Federal Trade Commission (FTC) failed
to comply with rules it established for evaluating proposals in a contest for developing a
technological solution to the problem of automated "robocalls." According to information he
garnered through the Freedom of Information Act, 5 U.S.C. § 552, plaintiff alleges that the
FTC’s failure to comply with the rules left the substantial likelihood that plaintiffs proposal was
the winning one. Plaintiff also seeks injunctive relief, as would be applicable in a bid protest
action. Defendant has filed a motion to dismiss the complaint under RCFC l2(b)(l) and
12(b)(6). For the reasons that follow, the court GRANTS, in part, and DENIES, in part,
defendant’s motion.
I. BACKGROUND
A brief recitation of the facts provides necessary context.l
l These facts are primarily drawn from plaintiffs complaint and, for the purpose of this
motion, are assumed to be correct. See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 589 (2007).
As part of the America COMPETES Reauthorization Act of 2010 (the Act), Federal
agencies "may carry out a program to award prizes competitively to stimulate innovation that has
the potential to advance the mission of’ the agency." 15 U.S.C. § 3719 (2012). Pursuant to the
Act, the FTC created a competition - the "FTC Robocall Challenge" (the Contest) - in which the
public would "create innovative solutions that [would] block illegal robocalls on landlines and
mobile phones." The agency offered a $50,000 prize to the "Best Overall Solution." lt issued a
set of detailed rules governing how the Contest would be run and how entries would be judged.
Mr. Frankel submitted his proposal to the FTC, but he did not win the contest. lnstead,
the FTC awarded the monetary prize to two other contestants. Dissatisfied with the results, Mr.
Frankel conducted an investigation into whether the FTC complied with the Contest rules. He
concluded that this was not the case and that the proposals chosen as winners did not meet the
rules. On May 14, 2013, Mr. Frankel filed a protest with the Government Accountability Office
(GAO), asserting that the FTC’s administration of the Contest did not conform to the rules. On
June 7, 2013, GAO dismissed the protest, holding that it lacked jurisdiction because the Contest
did not involve an award or proposed award of a contract.
On August 6, 2013, Mr. Frankel filed his complaint with this court. He asserts that the
FTC’s failure to follow the Contest rules constituted a breach of contract. He also seeks
equitable relief in the form of an injunction requiring the FTC to rescore the Contest. He
requests that if a rescoring results in a different winner, the court should order the FTC to
compensate the "correctly-identified" winners.
On October 28, 2013, defendant filed a motion to dismiss plaintiff s claim for lack of
jurisdiction under RCFC l2(b)(1) and failure to state a claim under RCFC 12(b)(6). Subsequent
briefing of this motion has been completed. Oral argument is deemed unnecessary.
II. DISCUSSION
Deciding a motion to dismiss "starts with the complaint, which must be well-pleaded in
that it must state the necessary elements of the plaintiffs claim, independent of any defense that
may be interposed." Holley v. Um``ted States, 124 F.3d l462, 1465 (Fed. Cir. 1997) (citations
omitted); see also Twombly, 550 U.S. at 554-55. ln particular, the plaintiff must establish that
the court has subject-matter jurisdiction over its claims. See Trusted Im‘egratz'on, Inc. v. Unz'ted
States, 659 F.3d 1159, 1163 (Fed. Cir. 2011); Reynolds v. Army & Az``r Force Exch. Serv., 846
F.2d 746, 748 (Fed. Cir. 1988).
To survive a motion to dismiss for failure to state a claim under RCFC 12(b)(6), the
complaint must have sufficient "facial plausibility" to "allow [ ] the court to draw the reasonable
inference that the defendant is liable." Ashcroj'i‘ v. Iqbal, 556 U.S. 662, 678 (2009); see also
Klamath Trz'be Claz``ms Comm. v. Um``tea' States, 97 Fed. Cl. 203, 208 (2011), ajj"’d, 2013 WL
44943 83 (Fed. Cir. Aug. 23, 2013). The plaintiffs factual allegations must "raise a right to relief
above the speculative level" and cross "the line from conceivable to plausible." Twombly, 550
_2_
U.S. at 555, 570; see also Dobyns v. United States, 91 Fed. Cl. 4l2, 422-28 (2010) (examining
this pleading standard). Nevertheless, the Federal Circuit has reiterated that "[i]n ruling on a
12(b)(6) motion to dismiss, the court must accept as true the complaint’s undisputed factual
allegations and should construe them in a light most favorable to the plaintif ." Caml)ria'ge v.
Um``tea’ Slates, 558 F.3d l331, 1335 (Fed. Cir. 2009); see also Bank ofGuam v. United States,
578 F.3d 1318, 1326 (Fed. Cir. 2009), cert clem``ecl, 130 S. Ct. 3468 (2010); Petro-Hunt, LLC v.
United States, 90 Fed. Cl. 5l, 68 (2009).
This court recognizes that plaintiff is acting pro se, and thus it will hold the form of
plaintiffs submissions to a less stringent standard than those drafted by an attomey. See Reea' v.
Um'tea’ States, 23 Cl. Ct. 517, 521 (1991) (citing Estelle v. Gamble, 429 U.S. 97, 106 (1976)); see
also Haines v. Kerner, 404 U.S. 519, 520 (1972) (per curiam). Having reviewed plaintiffs
complaint, defendant’s motion, and the briefing on that motion, this court believes that it has
jurisdiction to consider plaintiff s breach of contract claim, which also appears to state a claim
under RCFC 12(b)(6), but lacks jurisdiction to consider plaintiff s requests for injunctive relief.
ln the court’s view, plaintiff has demonstrated that this court has jurisdiction over his
breach of contract claim. ln plaintiffs view, the competition constituted a unilateral contract
which was accepted by plaintiff when he submitted an entry in the competition. Since the
court’s jurisdiction extends to "express or implied contract[s] with the United States," 28 U.S.C.
§ 1491, plaintiff believes that he is properly in this court. An express contract "‘must be
manifested by words, either oral or written, which contains agreement and/ or mutual assent.
Essen Mall Props. v. United States, 21 Cl. Ct. 430, 439 (1990) (quoting Wel)ster Unz``v. v. United
States, 20 Cl. Ct. 429, 432 (1990)).
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The basic elements of contract formation are offer and acceptance. Essen Mall, 21 Cl.
Ct. at 439; Restatement (Second) of Contracts § 22 (1981). An "offer" is "the manifestation of
willingness to enter into a bargain, so made as to justify another person in understanding that his
assent to that bargain is invited and will conclude it." Restatement (Second) of Contracts § 24.
An offer is accepted by "manifestation of assent to the terms thereof made by the offeree in a
manner invited or required by the offer." Restatement (Second) of Contracts § 50. ln a situation
such as a contest or competition, "[w]here an offer invites an offeree to accept by rendering a
performance and does not invite a promissory acceptance, an option contract is created when the
offeree tenders or begins the invited performance or tenders a beginning of it." Lucas v. United
States, 25 Cl. Ct. 298, 304 (1992) (quoting Restatement (Second) of Contracts § 45); see also
Simmons v. United States, 308 F.2d 160, 164 (4th Cir. 1962). The Restatement (Second) of
Contract refers to such an offer as offer for a unilateral contract,"’ adding that "typical
illustrations are found in offers of rewards or prizes . . . ." Restatement (Second) of Contracts §
45 comment a.
¢CC
The process of contract formation in a contest or competition has been described as
follows:
The offer of a prize for the performance of a specified act in a contest . . .
constitutes the first part of the normal offer-acceptance consideration equation for
the formation of an enforceable contract. By competing in the contest, a
competit[or] accepts the offer; by performing the specified act required for
winning the contest, he provides the necessary consideration.
Lacas, 25 Cl. Ct. at 304 (quoting Nat'l Amateur Bowlers, Inc. v. Tass0s, 715 F. Supp. 323, 325
(D. Kan. 1989)).2 Stated in more general terms, "[t]he offer by one party of specified
compensation for the performance of a certain act to any or all persons who may accept and
comply with its conditions constitutes a promise by the offeror, and the performance of that act is
the consideration for the promise. The result is an enforceable contract." 7 Williston on
Contracts § 17:6 (4"' ed. 2014) (citing cases); see also Lucas, 25 Cl. Ct. at 304.
Further support for this conclusion may be found in Robertson v. Unitea' States, 343 U.S.
711 (1952). ln that case, a composer won a prize for the best unpublished symphonic work
written by a native born composer. The taxpayer submitted a symphony written by him and won
an award of $25,000. Ia'. at 712-13, ln holding that the prize money from the competition was
taxable as gross income (26 U.S.C. §6l), the Supreme Court stated: "In the legal sense payment
of a prize to a winner of a contest is the discharge of a contractual obligation. The acceptance by
the contestants of the offer tendered by the sponsor of the contest creates an enforceable
contract." Ia’. at 713 (1952) (citing 6 Corbin on Contracts § 1489; Restatement of Contracts
§ 521 (1932)); accord United States v. Amirikian, 197 P.2d 442, 443 (4"‘ Cir. 1952); Glasg0w v.
Sherman-Williams, Inc., 901 F. Supp. 1185, 1194-95 (N.D. Miss. 1995); see also Chenard v.
Marcel Motors, 387 A.2d 596, 601 (Me. l978) (promise to give new car to golfer who shot hole
in one in golf tournament constituted an offer for a unilateral contract that was accepted when
plaintiff shot hole in one).
The materials before the court indicate that a contract was formed between the FTC and
each of the competitors when the competitors accepted the offer embodied in the competition by
submitting entries. The FTC was obligated to provide the winner of the competition - who
followed the rules - the $50,000 first place cash prize. See Robertson, 343 U.S. at 713; Lucas,
25 Cl. Ct. at 304; see also Stone v. Comm ’r of]nternal Revenue, 23 T.C. 254, 263 (1954); cf
Roberson v. Um'tea’ States, ll5 Fed. Cl. 234, 242 (2014) (no contract formed in FTC competition
where contest entrant did not follow rules). While defendant asserts that there is nothing in the
rules of the Contest that legally binds the FTC to pay for the solutions, the detailed rules of the
Contest (which go on for 18 pages) plainly suggest otherwise and instead anticipate that the
FTC’S selection of winning submissions would give rise to a binding contract.3 ln the court’s
2 See also Englert v. Nutritional Scz'ences, LLC, 2008 WL 4416597 (Ohio App. Sept. 30,
2008); Bellows v. Del. McDonala"s Corp., 522 N.W.2d 707 (l\/Iich. Ct. App. 1994); Las Vegas
Haciena'a, Inc. v. Gibson, 359 P.2d 85 (Nev. 1961).
3 The Contest rules, which were attached to plaintiffs complaint, provided, in pertinent
part, that: (i) all submissions would be judged by an expert panel of impartial judges; (ii) the
submissions would be judged by the criteria identified in the rules; (iii) the contestant whose
_4_
view, plaintiff has properly alleged that that contract has been breached, potentially providing
him with monetary compensation. This requires the court to deny defendant’s motion to that
extent.
But is plaintiff entitled to the injunctive relief he seeks under the bid protest provisions of
28 U.S.C. § l49l(b)(2)? The court thinks not.
Section l49l(b)(l) provides, in pertinent part, that an "interested party [may object] to a
solicitation . . . for bids or proposals for a proposed contract" or to "any alleged violation of
statute or regulation in connection with a procurement or proposed procurement."
(Emphasis added). The Federal Circuit has construed the bolded phrase to "signify the act of
obtaining or acquiring something, in the context of acquiring goods or services." Res.
Conservation Group, LLC v. Um``z‘ea’ Stcztes, 597 F.3d l238, 1244 (Fed. Cir. 2010); see also
Bz``l/z``nger Berger AG Sede Secondaria Italiana v. United Stales, 97 Fed. Cl. 96, 150 n. 78 (2010).
In Resource Conservation Group, the Federal Circuit, after reviewing the legislative history of
the statute in question, rejected the argument that section l49l(b)(l) grants this court protest
jurisdiction over non-procurement disputes (there a dispute over a lease of government property).
597 F.3d at 1244-45; see also Sys. Applicatz'on & Techs., Inc. v. Um'ted States, 691 F.3d 1374,
1381 (Fed. Cir. 2012); Distrib. Solulz``ons, Inc. v. Um``ted Sz‘ates, 539 F.3d 1340, 1345 (Fed. Cir.
2008). Consistent with these rulings, in Lucas, 25 Cl. Ct. at 307, which also involved a contest,
this court opined "cornpeting in a contest and winning the same may well serve to create a
contract, but such a contract does not constitute [a] procurement."
Based upon these cases, the court finds that the Contest in question was not a
"procurement" within the meaning of 28 U.S.C. § l49l(b)(l) and thus that plaintiff is unable to
obtain the injunctive relief that is available under 28 U.S.C. § l491(b)(2).
The court will not gild the lily. For the reasons stated, the court hereby GRANTS, in
part, and DENIES, in part, defendant’s motion. On or before September 26, 20l4, the parties
submission earned the highest overall score would become the potential winner of the prize; and
(iv) that the winning proposal would be awarded $50,000. In addition, the Contest rules
provided that "[b]y entering the Submission to this Competition, Contestant grants to the
Sponsor and the Administrator, and any third parties acting on behalf of the Sponsor and/or the
Administrator, a non-exclusive, irrevocable, royalty-free and worldwide license to use the
Submission, any information and content submitted by the Contestant, and any portion thereof,
and to display the Solution name, text description, video, and images (but not the Proposal), on
the Competition Website, during the Competition and for 36 months after its conclusion."
4 Contrary to defendant’s claims, the court believes that a reasonable reading of the
complaint anticipates the possibility of monetary relief. See Complaint 11 34-35 (anticipating
that the FTC would pay compensation if plaintiff were to prevail). lt is conceivable, however,
that damages may be limited, perhaps solely to bid preparation costs. That issue, however, is not
resolved by defendant’s motion and may require discovery.
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shall file a joint status report indicating how this case should proceed, including, as appropriate, a
proposed schedule for discovery. Before that date, plaintiff and defendant shall have at least one
discussion regarding settlement of this case.
IT IS SO ORDERED.