Sekri, Inc. v. United States ( 2023 )

In the United States Court of Federal Claims
No. 21-778
Filed: June 1, 2023
FOR PUBLICATION
SEKRI, INC.,
Plaintiff,
v.
UNITED STATES,
Defendant.
Alan M. Grayson, Windermere, FL, for the plaintiff.
Rafique O. Anderson, Commercial Litigation Branch, Civil Division, U.S. Department of Justice,
Washington, DC, for the defendant, with Nicole M. Wilmoth and Gregory M. Mathews, Defense
Logistics Agency, of counsel.
MEMORANDUM OPINION AND ORDER
HERTLING, Judge
The plaintiff, SEKRI, Inc., was awarded injunctive relief in its bid protest under
28 U.S.C. § 1491(b) against the United States, acting through the Defense Logistics Agency
(“DLA”) and the U.S. AbilityOne Commission (“AbilityOne”). The plaintiff has moved for an
award of attorney’s fees and expenses pursuant to both 28 U.S.C. § 2412(b) and 28 U.S.C.
§ 2412(d) and has filed three post-judgment motions for sanctions pursuant to Rule 11 of the
Rules of the Court of Federal Claims (“RCFC”).
The plaintiff’s requests for sanctions, attorney’s fees, and expenses must be denied.
Under § 2412(b), the plaintiff has failed to demonstrate that the defendant acted in bad faith and
that the defendant’s misconduct caused the plaintiff to incur fees and expenses unnecessarily.
Because the plaintiff does not qualify as a “party” eligible to receive attorney’s fees and
expenses pursuant to § 2412(d), the request under that statute must also be denied. Finally, the
plaintiff’s three motions for sanctions pursuant to RCFC 11 are untimely and unsubstantiated.
Accordingly, the plaintiff’s motions for sanctions, attorney’s fees, and expenses are all denied.
I. BACKGROUND
The opinion on the merits of this case, SEKRI, Inc. v. United States, 165 Fed. Cl. 21(2023) (“SEKRI V”), sets forth the facts of the case and its procedural history, which are only
briefly recounted here. See also SEKRI, Inc. v. United States, 152 Fed. Cl. 742 (“SEKRI I”);
SEKRI, Inc. v. United States, 34 F.4th 1063 (Fed. Cir. 2022) (“SEKRI II”); SEKRI, Inc. v. United
States, 163 Fed. Cl. 562 (2022) (“SEKRI III”); SEKRI, Inc. v. United States, No. 21-778, 2023
WL 1428644 (Fed. Cl. Jan. 31, 2023) (“SEKRI IV”).
The plaintiff, a nonprofit agency employing the severely disabled, is a mandatory source
of supply for Advanced Tactical Assault Panels (“ATAP”) pursuant to the Javits-Wagner-O’Day
Act (“JWOD Act”), 41 U.S.C. § 8501 et seq., and related regulations promulgated by
AbilityOne. See SEKRI II, 34 F.4th at 1069. In 2019, AbilityOne added ATAP to the
procurement list, which is a list of products and services required to be purchased by government
entities from qualified nonprofit agencies employing the blind or severely disabled. See SEKRI
V, 165 Fed. Cl. at 30.
In 2020, the DLA issued a solicitation to procure ATAP from a commercial supplier.
The plaintiff filed suit in January 2021, but the case was dismissed for lack of standing and
waiver. SEKRI I, 152 Fed. Cl. at 758. The Federal Circuit reversed the dismissal and held that
the plaintiff had standing to sue and had not waived its claims. SEKRI II, 34 F.4th at 1074. The
Federal Circuit also held that SEKRI was the mandatory source of supply for the ATAP and that
the DLA had “knowingly violated its statutory and regulatory obligation under the JWOD Act
and its implementing regulations to procure ATAP from SEKRI using the AbilityOne Program.”
Id. at 1071.
Following remand of the case, the DLA initially amended the solicitation to procure
Tactical Assault Panels (“TAP”), ATAP’s predecessor, instead of ATAP. The DLA then
canceled the ATAP/TAP procurement and made no immediate decision about whether to procure
ATAP at all. See SEKRI V, 165 Fed. Cl. at 28.
The plaintiff filed a motion to enforce the decision of the Federal Circuit, and the
defendant filed a motion to dismiss. The defendant’s motion to dismiss was granted because,
without a solicitation pending or planned procurement for ATAP, no relief was available on the
plaintiff’s claims. The plaintiff’s motion to enforce the decision of the Federal Circuit was
denied, but the plaintiff was allowed to file an amended complaint alleging new claims it had
raised during briefing and oral argument. SEKRI III, 163 Fed. Cl. at 591.
Two days before the plaintiff’s amended complaint was due, the defendant filed a notice
that the DLA would issue a solicitation to SEKRI for 50 percent of its ATAP requirement and a
solicitation to Federal Prison Industries (“FPI”) for the other 50 percent of its ATAP
requirement. See SEKRI IV, 2023 WL 1428644, at *1-2.
In its amended complaint, the plaintiff alleged that it was entitled to supply 100 percent
of the DLA’s ATAP requirement, that the DLA’s failure to accept SEKRI’s proposed price was
contrary to law, and that the DLA had acted in bad faith. The plaintiff filed a motion for a
preliminary injunction to prohibit the DLA from awarding a contract to FPI while the case was
pending. See id. The plaintiff’s motion for a preliminary injunction was denied, but the
plaintiff’s claims challenging the legality of an award to FPI were deemed “colorable.” See id. at
*2-3.
2
The day after the issuance of the preliminary-injunction decision, FPI withdrew its
proposal to supply ATAP to the DLA. The defendant indicated that AbilityOne had corrected
the procurement list to reflect that SEKRI was the mandatory source of supply for only 50
percent of the DLA’s ATAP requirement. The defendant represented that the DLA would
withdraw and reissue a solicitation to SEKRI for 50 percent of its ATAP requirement and that
the DLA would solicit the remaining 50 percent of its ATAP requirement from commercial
sources in a competitive procurement. See SEKRI V, 165 Fed. Cl. at 30.
The parties filed cross-motions for judgment on the administrative record regarding
whether the DLA had to accept SEKRI’s proposed price for the ATAP and whether the scope
limitation of 50 percent of the DLA’s ATAP requirement in the solicitation issued to SEKRI was
lawful. See id. The plaintiff chose not to address its bad-faith claim in its motion for judgment
on the administrative record and requested that the claim be dismissed without prejudice. See id.
at 42. That claim was therefore dismissed.
The plaintiff’s pricing claim was held to be unripe because the JWOD Act and
AbilityOne regulations contemplate the periodic revision of prices on the procurement list, and
the parties had not engaged in mandatory AbilityOne price-negotiation procedures.
Additionally, the plaintiff had failed to state a claim upon which relief could be granted because
the facts did not plausibly suggest that the DLA had violated the law by seeking to negotiate a
different price for ATAP. Id. at 34-36.
The plaintiff’s allocation claim, however, was found to be justiciable on the merits. Id. at
36-37. Although the record was unclear as to whether AbilityOne had added ATAP to the
procurement list in full or in part, AbilityOne regulations required AbilityOne to add ATAP to
the procurement list in full. A failure to do so would have been contrary to law. Id. at 38-39.
Additionally, the purported correction to the procurement list contravened AbilityOne’s
regulations implementing the JWOD Act and the decision in Goodwill Industries of South
Florida, Inc. v. United States, 162 Fed. Cl. 160, 200-03 (2022). SEKRI V, 165 Fed. Cl. at 39-41.
The solicitation issued to SEKRI for only 50 percent of the DLA’s requirement was thus
unlawful. Id. at 41-42. Because the plaintiff had demonstrated prejudice from the defendant’s
unlawful actions, injunctive relief was appropriate. Id. at 42-44.
Although the plaintiff’s pricing and bad-faith claims were dismissed, AbilityOne was
directed to update SEKRI’s status to be the mandatory source for 100 percent of the ATAP
requirement on the procurement list, and the unlawful solicitation issued by the DLA to SEKRI
was enjoined. Id. at 44. Judgment was entered for the plaintiff on March 13, 2023. (ECF 117.)
On April 11, 2023, the plaintiff filed three motions for sanctions pursuant to RCFC 11.
(ECF 118; ECF 119; ECF 120.) On April 12, 2023, the plaintiff filed a motion for attorney’s
fees under 28 U.S.C. §§ 2412(b) and 2412(d). (ECF 121.) Pursuant to a Scheduling Order, the
defendant filed a consolidated response to all four motions on May 12, 2023. (ECF 135.) The
plaintiff filed its reply brief on May 29, 2023. (ECF 138.) The plaintiff also filed a motion to
curtail further briefing in response to the defendant’s argument regarding the timeliness of the
plaintiff’s motions. (ECF 137.) Oral argument is not necessary to resolve the motions.
3
II. DISCUSSION
The plaintiff requests attorney’s fees and expenses pursuant to 28 U.S.C. §§ 2412(b) and
2412(d) and sanctions pursuant to RCFC 11.
A. 28 U.S.C. § 2412(b)
Under 28 U.S.C. § 2412(b), “a court may award reasonable fees and expenses of
attorneys . . . to the prevailing party in any civil action brought by or against the United
States . . . .” “The United States shall be liable for such fees and expenses to the same extent that
any other party would be liable under the common law or under the terms of any statute which
specifically provides for such an award.” 28 U.S.C. § 2412(b). Pursuant to § 2412(b), attorney’s
fees may be assessed according to the common-law “bad faith,” “common fund,” and “common
benefit” exceptions to the default American rule against fee-shifting. See Gavette v. Off. Pers.
Mgmt., 808 F.2d 1456, 1460 (Fed. Cir. 1986); Athey v. United States, No. 2020-2291, 2021 WL
4282593, at *2 (Fed. Cir. Sept. 21, 2021).
The plaintiff argues that the defendant has litigated in bad faith and committed
“vexatious, wanton or oppressive acts” justifying the award of attorney’s fees and expenses
under § 2412(b). (ECF 121 at 15.) The plaintiff perceives that many of the defendant’s actions
during the litigation were taken in and constitute bad faith, including: AbilityOne’s correction to
limit the scope of the ATAP requirement on the procurement list, the defendant’s supposed
mischaracterization of the Federal Circuit’s decision in SEKRI II, the DLA’s refusal to agree on a
quantity and price for ATAP in negotiations with SEKRI, the defendant’s justiciability
arguments, the DLA’s engagement with FPI for an ATAP procurement that was ultimately
canceled, and the now-rescinded solicitation to replace ATAP with TAP. The plaintiff seeks
attorney’s fees and expenses for the entirety of the litigation.
“‘Bad faith is not simply bad judgment or negligence, but rather it implies the conscious
doing of a wrong because of dishonest purpose or moral obliquity; it contemplates a state of
mind affirmatively operating with furtive design or ill will.’” Level 3 Commc’ns, LLC v. United
States, 724 F. App’x 931, 934-35 (Fed. Cir. 2018) (cleaned up) (quoting United States v. Gilbert,
198 F.3d 1293, 1299 (11th Cir. 1999)). A specific factual finding of bad faith is required to
assess attorney’s fees under § 2412(b). See Monsanto Co. v. E.I. Du Pont de Nemours & Co.,
748 F.3d 1189, 1200 (Fed. Cir. 2014). Assessment of attorney’s fees is inappropriate when a
party merely bases its arguments on an “‘erroneous view of the law or on a clearly erroneous
assessment of the evidence.’” Level 3 Commc’ns, 724 F. App’x at 934 (quoting Precision
Specialty Metals, Inc. v. United States, 315 F.3d 1346, 1354 (Fed. Cir. 2003)). The applicant for
attorney’s fees bears the burden of establishing entitlement to an award. Rumsey v. Dep’t of
Just., 866 F.3d 1375, 1379 (Fed. Cir. 2017).
There is no evidence, and the plaintiff offers none, that the defendant has acted “because
of dishonest purpose or moral obliquity,” or that the defendant was operating with ill will
towards the plaintiff. See Level 3 Commc’ns, 724 F. App’x at 934-35. The plaintiff’s claim that
the defendant had acted in bad faith was dismissed at the plaintiff’s request on the parties’ cross-
motions for judgment on the administrative record. SEKRI V, 165 Fed. Cl. at 42. Although the
4
timing of some of the defendant’s actions regarding the FPI procurement hints at possible
gamesmanship, the evidence does not support a specific factual finding of bad faith. See
Monsanto, 748 F.3d at 1200.
Throughout the litigation, the defendant has acted according to its understanding that
SEKRI was not legally entitled to 100 percent of the DLA’s ATAP requirement. The defendant
first premised that position on the fact that SEKRI had not submitted a bid for the competitive
DLA procurement. The defendant then relied on a supposed administrative error in the addition
of ATAP to the procurement list and posited that AbilityOne had the legal authority to limit the
scope of the ATAP’s addition to the procurement list under the circumstances described in the
administrative record. The defendant’s arguments were based on erroneous views of the law, as
the Federal Circuit held in SEKRI II and as was explained in SEKRI V. The actions listed by the
plaintiff as supposed evidence of bad faith merely constitute mistakes premised on the
defendant’s misunderstanding of the law. Those mistakes do not rise to the level of bad-faith
conduct required to levy fees against the defendant. See Level 3 Commc’ns, 724 F. App’x at
934.
In addition, an order assessing fees for bad-faith conduct “is limited to the fees the
innocent party incurred solely because of the misconduct.” Goodyear Tire & Rubber Co. v.
Haeger, 581 U.S. 101, 103-04 (2017). A “causal link” “between the litigant’s misbehavior and
legal fees paid by the opposing party” is required. Id. at 108. Fees for the entirety of the
litigation are available only in “exceptional cases,” such as when the entire course of a party’s
conduct was part of a “‘sordid scheme’” to defeat a claim by “‘fraudulent and brazenly unethical
efforts.’” Id. at 110 (quoting Chambers v. Nasco, Inc., 501 U.S. 32, 57, 58 (1991)).
The plaintiff has failed to demonstrate that the entirety of its fees was incurred as a result
of the defendant’s misconduct. Although the plaintiff ultimately prevailed in the litigation, that
result was not predestined at the outset. The plaintiff’s third complaint, on which it ultimately
prevailed, alleged claims distinct from the claims in the plaintiff’s first two complaints. (See
ECF 77.) The plaintiff’s first two complaints were dismissed, and the plaintiff’s motion to
enforce the decision of the Federal Circuit was denied. See SEKRI III, 163 Fed. Cl. at 591. The
fees the plaintiff incurred in pursuit of those unviable legal arguments have no possible “causal
link” to any potential misconduct by the defendant in this case. See Goodyear, 581 U.S. at 108.
Even if the plaintiff had demonstrated that some of the defendant’s actions were taken in bad
faith, the cursory fee records provided by the plaintiff leave unclear how much of the plaintiff’s
fees would be attributable to that bad faith.
The plaintiff has failed to demonstrate that the defendant acted in bad faith and that a
causal connection between the defendant’s supposed misconduct and the plaintiff’s requested
fees and expenses exists. The plaintiff’s motion for attorney’s fees and expenses pursuant to
28 U.S.C. § 2412(b) is therefore denied.
B. 28 U.S.C. § 2412(d)
Under the Equal Access to Justice Act (“EAJA”), a court shall award reasonable fees and
expenses incurred in a civil action brought against the United States to a “prevailing party”
5
unless the position of the United States was “substantially justified” or “special circumstances
make an award unjust.” 28 U.S.C. § 2412(d)(1)(A).1
For the purposes of § 2412(d), a “party” is defined in the statute to include:
any partnership, corporation, association, unit of local government,
or organization, the net worth of which did not exceed $7,000,000
at the time the civil action was filed, and which had not more than
500 employees at the time the civil action was filed; except that an
organization described in section 501(c)(3) of the Internal Revenue
Code of 1986 (26 U.S.C. 501(c)(3)) exempt from taxation under
section 501(a) of such Code [(“tax-exempt organization”)] . . . may
be a party regardless of the net worth of such organization . . . .
28 U.S.C. § 2412(d)(2)(B)(ii).
In its motion for attorney’s fees, the plaintiff provided no evidence regarding either its net
worth or the number of its employees. In its response brief, the defendant does not contest that
the plaintiff is a tax-exempt organization, but the defendant argues that the plaintiff is ineligible
for attorney’s fees because it failed to submit evidence that it employed fewer than 500
employees when it filed its complaint. (ECF 135 at 10-11.) In its reply brief, the plaintiff argues
that because it is a tax-exempt organization, it need not satisfy the employee-number limitation
to qualify for an award of attorney’s fees under the EAJA.2 (ECF 138 at 8.)
1
The defendant argues that the plaintiff’s request for attorney’s fees pursuant to 28 U.S.C.
§ 2412(d) fails because it is premature. (ECF 135 at 10.) The Federal Circuit has held that “the
premature nature of [an EAJA] application is inconsequential. An EAJA application that is filed
before a judgment becomes final is properly treated as timely.” Robinson v. Wilkie, 842 F.
App’x 572, 578 (Fed. Cir. 2021). Accordingly, the fact that the plaintiff’s motion was premature
is insufficient to defeat the motion. Additionally, the parties have consented to curtail further
briefing on attorney’s fees to moot the question of whether the plaintiff’s motion was timely.
(ECF 137.)
2
The Internal Revenue Service has published past tax filings by Southeastern Kentucky
Rehabilitation Industries, Inc. (“SEKRI”) reflecting SEKRI’s status as a nonprofit entity exempt
from taxation pursuant to § 501(c)(3) of the Internal Revenue Code. See
https://apps.irs.gov/app/eos/details/ (last visited May 22, 2023).
A court may take judicial notice of a fact when it is “‘accurately and readily discernible
from sources whose accuracy cannot reasonably be questioned.’” Apple Inc. v. Qualcomm Inc.,
992 F.3d 1378, 1384 (Fed. Cir. 2021) (cleaned up) (quoting Fed. R. Evid. 201(b)).
6
Whether tax-exempt organizations can receive attorney’s fees under § 2412(d) when they
employ more than 500 individuals presents a question of first impression in the Court of Federal
Claims.
“In statutory interpretation disputes, a court’s proper starting point lies in a careful
examination of the ordinary meaning and structure of the law itself.” Food Mktg. Inst. v. Argus
Leader Media, 139 S. Ct. 2356, 2364 (2019). When “‘Congress includes particular language in
one section of a statute but omits it in another section of the same Act, it is generally presumed
that Congress acts intentionally and purposely in the disparate inclusion or exclusion.’” KP
Permanent Make-Up, Inc. v. Lasting Impression I, Inc., 543 U.S. 111, 118 (2004) (quoting
Russello v. United States, 464 U.S. 16, 23 (1983)). Relatedly, courts should avoid interpretations
of a statute that render words or clauses “wholly superfluous.” Duncan v. Walker, 533 U.S. 167,
174 (2001).
A “party” eligible to receive fees under § 2412(d) includes an entity with a net worth less
than $7,000,000 and fewer than 500 employees, or a tax-exempt organization “regardless of the
net worth of the organization.” 28 U.S.C. § 2412(d)(2)(B)(ii). If Congress had intended tax-
exempt organizations to be excused from meeting both the net-worth and employee-number
requirements, it would have included both requirements in the carveout for tax-exempt
organizations. See KP Permanent Make-Up, 543 U.S. at 118. Congress did not do so. Rather, it
excluded tax-exempt organizations only from the limit on the net worth of applicants for fees;
the statute contains no exclusion from the limit on the number of an applicant’s employees.
The plaintiff’s proposed reading of the statute renders the phrase “regardless of the net
worth of the organization” wholly superfluous; if tax-exempt organizations were excused from
meeting both requirements, Congress did not need to specify that tax-exempt organizations did
not need to meet the net-worth requirement. 28 U.S.C. § 2412(d)(2)(B)(ii); see Duncan, 533
U.S. at 174.
Accordingly, the plain language of the statute unambiguously bars tax-exempt
organizations employing more than 500 people from receiving attorney’s fees and expenses
under § 2412(d).
The clarity of the statutory language is no accident. The current definition of “party” was
enacted in 1985. See Pub. L. No. 99-80, § 2(c)(1)(B), 99 Stat. 183, 183 (1985). In interpreting
the prior definition of “party” shortly before the 1985 amendments to the EAJA were adopted,
the U.S. Court of Appeals for the D.C. Circuit had held that, notwithstanding its status as a tax-
exempt organization, a religious organization was ineligible for an award of attorney’s fees
because it employed more than 500 people. Unification Church v. INS, 762 F.2d 1077, 1083-91
(D.C. Cir. 1985). While Congress was considering amendments to the EAJA, a bill that would
have held tax-exempt organizations to the same net-worth and employee-number requirements as
for-profit corporations was introduced in the Senate. See S. 919, 98th Cong. (1983). In enacting
the current version of § 2412(d) in 1985, the report of the House Judiciary Committee clarified,
however, that under the enacted legislation, only the net-worth limitation did not apply to tax-
exempt organizations. H.R. Rep. No. 99-120, pt. 1, at 14 (1985).
7
Congress therefore specifically considered the eligibility standards for tax-exempt
organizations to recover attorney’s fees under § 2412(d). Congress ultimately decided to enact
the current law that expressly excuses tax-exempt organizations from meeting the net-worth
requirement but not the limitation on the number of their employees. This decision was
consistent with previous interpretations of the definition of “party.” See Unification Church,
762 F.2d at 1083-91.
Since the enactment of the current version of § 2412(d)(2)(B)(ii) in 1985, no federal court
has held that a tax-exempt organization with more than 500 employees is eligible for attorney’s
fees under the EAJA. To the contrary, federal courts have consistently declined to find that tax-
exempt organizations employing more than 500 people are eligible for an award of attorney’s
fees and expenses under § 2412(d).
For example, the D.C. Circuit has explained that an “association, corporation, or other
organization with 500 or more employees is ineligible for EAJA attorneys’ fees, regardless of
whether it is a tax exempt, non-profit entity or a cooperative association.” Am. Ass’n of Retired
Pers. v. EEOC, 873 F.2d 402, 404 (D.C. Cir. 1989); see also Nat. Res. Def. Council, Inc. v.
Winter, No. CV 06-4131 FMC (JCx), 2007 WL 9754340, at *1 (C.D. Cal. Jan. 3, 2007) (noting
that a tax-exempt organization “may not have had more than 500 employees at the time of
filing”). The U.S. District Court for the Western District of Michigan found a tax-exempt
hospital ineligible for fees under § 2412(d) when it employed approximately 2,000 individuals.
Mason Gen. Hosp. v. Sullivan, No. 1:83-CV-313, 1991 WL 340329, at *6-7 (W.D. Mich. Aug. 2,
1991). In a case with 27 plaintiffs, the U.S. District Court for the Western District of Virginia
found that 17 of the plaintiffs were eligible for attorney’s fees as tax-exempt organizations
employing fewer than 500 people. Bedford Cnty. Mem’l Hosp. v. Bowen, No. 83-0386-R, 1986
WL 68496, at *2 (W.D. Va. Oct. 1, 1986); see also Alexandria Hosp. v. Bowen, No. 83-0233-R,
1986 WL 68494, at *6 (E.D. Va. Aug. 7, 1986) (finding 14 of 24 plaintiffs eligible as “parties”
when they were tax-exempt and employed fewer than 500 employees).
In support of its argument that SEKRI is a “party” eligible for an award of fees under
§ 2412(d) regardless of its number of employees, the plaintiff cites no authority other than a
report from the Congressional Research Service (“CRS”). That CRS report asserts: “Nonprofits
exempt from taxation under Section 501(c)(3) of the Internal Revenue Code are not subject to
the size and net worth caps.” Joanna R. Lampe, Cong. Rsch. Serv., IF11246, Attorney’s Fees
and the Equal Access to Justice Act: Legal Framework (2023). The report cites no legal
authority for this proposition, does not engage in any statutory analysis in support of the
assertion, and fails to acknowledge or distinguish any of the judicial authority to the contrary.
The assertion in the CRS report cannot contravene the clear statutory language and the case law
interpreting it that require tax-exempt organizations to meet the employee-number requirement
of § 2412(d)(2)(B)(ii). The plaintiff’s reliance on the unsupported assertions of the CRS report
must be rejected.
In sum, under § 2412(d)(2)(B)(ii), a tax-exempt organization must employ fewer than
500 people at the time the case was initiated to be eligible for attorney’s fees and expenses. The
plaintiff bears the evidentiary burden of showing that it satisfies the eligibility criteria for an
8
award of fees under § 2412(d). See Rumsey, 866 F.3d at 1379. The plaintiff has submitted no
evidence at all. It has failed to meet its burden.
The plaintiff probably did not attempt to satisfy its burden because it could not meet the
statutory criteria. SEKRI filed its first complaint in this case on January 21, 2021. Publicly
available tax filings indicate that in the 2020 calendar year or the fiscal year beginning on
October 1, 2020, and ending on September 30, 2021, SEKRI had 1,198 employees.3
Additionally, the plaintiff’s website advertises that it currently employs more than 700
individuals.4
Accordingly, the plaintiff does not qualify as a “party” under 28 U.S.C.
§ 2412(d)(2)(B)(ii). The plaintiff’s request for attorney’s fees and expenses pursuant to
§ 2412(d) is therefore denied.
C. RCFC 11
RCFC 11(b) requires a party filing a document with the court to certify “to the best of the
person’s knowledge, information and belief” that the document “is not being presented for any
improper purpose,” that the “legal contentions are warranted by existing law,” and that “the
factual contentions have evidentiary support.” Pursuant to RCFC 11(c)(2), a party may file a
motion for sanctions when RCFC 11(b) has been violated.
The plaintiff has filed three motions for sanctions pursuant to RCFC 11. The first motion
addresses a statement a DLA contracting officer made on February 8, 2023. The contracting
officer stated that FPI had withdrawn its proposal to provide ATAP and that the DLA would
issue one solicitation to SEKRI for 50 percent of its ATAP requirement and a competitive
solicitation to commercial sources for the remaining 50 percent of its ATAP requirement. (ECF
118; see AR 530.)5 The second motion addresses a notice filed by the defendant on February 12,
2023. That notice shared the same information as the contracting officer’s statement regarding
the DLA’s plan to procure ATAP. (ECF 119; see ECF 89.) The third motion takes issue with
the entirety of the defendant’s final motion for judgment on the administrative record, filed on
March 6, 2023. (ECF 120; see ECF 110.)
The plaintiff argues that the defendant’s contentions in those documents were presented
for an improper purpose, were unwarranted by existing law, and lacked evidentiary support. The
3
ProPublica, Southeastern Kentucky Rehabilitation Industries Inc.: Full text of “Full Filing”
for fiscal year ending Sept. 2021,
https://projects.propublica.org/nonprofits/organizations/610725475/202220469349300507/full
(last visited May 17, 2023).
4
SEKRI, About Us, https://www.sekri.org/aboutus/ (last visited May 17, 2023).
5
Citations to the administrative record (ECF 45, supplemented by ECF 57-1, ECF 87, and
ECF 97) are cited as “AR” with the pagination reflected in that record as filed.
9
plaintiff argues that the Federal Circuit’s ruling in this case and the decision in Goodwill already
foreclosed the defendant’s arguments. See SEKRI II, 34 F.4th at 1071; Goodwill, 162 Fed. Cl. at
200-03. The plaintiff characterizes the defendant’s statements as a ploy to continue violating the
JWOD Act.
Although RCFC 11 does not impose a deadline for the filing of motions for sanctions, the
“time when sanctions are to be imposed rests in the discretion of the trial judge.” Fed. R. Civ. P.
11 advisory committee’s note to 1983 amendment.6 “Ordinarily [a motion for sanctions] should
be served promptly after the inappropriate paper is filed, and, if delayed too long, may be viewed
as untimely.” Fed. R. Civ. P. 11 advisory committee’s note to 1993 amendment. “[A] party
cannot delay serving its Rule 11 motion until conclusion of the case (or judicial rejection of the
offending contention).” Id.
The plaintiff’s motions are untimely. The plaintiff filed its motions on April 11, 2023,
approximately one month after the close of the case. The defendant’s contentions regarding the
legality of a solicitation for ATAP to commercial sources through a competitive procurement
had already been considered and rejected. See SEKRI V, 165 Fed. Cl. at 38-42. Although the
plaintiff asked the defendant to withdraw its prior statements and contentions, it is unclear what
purpose such a withdrawal would serve when those statements and contentions had already been
rejected in the decision, and the plaintiff has received all relief to which it is entitled.
Moreover, the plaintiff’s arguments are unsubstantiated. As discussed above, there is no
evidence that the defendant presented statements and contentions for an improper purpose or
without factual support, and the plaintiff has not proffered any such evidence. The defendant
pursued multiple strategies to attempt to procure ATAP from a source other than SEKRI,
including from FPI and from commercial sources. The pursuit of multiple unsuccessful
procurement strategies, however, does not alone justify sanctions. “Sanctionable conduct must
be shown by clear and convincing evidence.” Taurus IP, LLC v. DaimlerChrysler Corp.,
726 F.3d 1306, 1344 (Fed. Cir. 2013). The plaintiff has failed to satisfy its evidentiary burden.
Additionally, the plaintiff has not demonstrated that the defendant’s arguments were so
unwarranted by existing law as to justify finding a violation of RCFC 11. The defendant’s
arguments presented issues of first impression regarding whether AbilityOne had made an
administrative error when placing ATAP on the procurement list and the lawfulness of the scope
limitation under AbilityOne’s regulations. Neither SEKRI II nor Goodwill fully foreclosed the
defendant’s argument. See SEKRI III, 163 Fed. Cl. at 589 (“The Federal Circuit’s decision does
not address the specific issues raised by the plaintiff on this motion.”); SEKRI V, 165 Fed. Cl. at
38-39 (evaluating AbilityOne’s addition of ATAP to the procurement list primarily based on
AbilityOne regulations).
6
RCFC 11 incorporates the Federal Rules of Civil Procedure advisory committee notes by
reference. See RCFC 11 Rules Committee notes to the 2002 revision.
10
“[T]he imposition of sanctions . . . depends not on which party wins the lawsuit, but on
how the parties conduct themselves during the litigation.” Chambers, 501 U.S. at 53. It would
be inappropriate to sanction the defendant for no reason other than because the defendant
presented arguments that were ultimately rejected and in the absence of any evidence from the
plaintiff that the defendant otherwise violated RCFC 11.
Accordingly, the plaintiff’s motions for sanctions pursuant to RCFC 11 are both untimely
and unsubstantiated. They are therefore denied.
III. CONCLUSION
The plaintiff’s requests for attorney’s fees, expenses, and sanctions must be denied.
Under 28 U.S.C. § 2412(b), the plaintiff has failed to demonstrate that the defendant acted in bad
faith and that the plaintiff incurred fees and expenses as a result of that misconduct. The plaintiff
also does not qualify as a “party” under 28 U.S.C. § 2412(d). The plaintiff’s motions for
sanctions pursuant to RCFC 11 are both procedurally and substantively defective.
Accordingly, the plaintiff’s motions for sanctions pursuant to RCFC 11 (ECF 118; ECF
119; ECF 120) and the plaintiff’s motion for attorney’s fees under 28 U.S.C. §§ 2412(b) and
2412(d) (ECF 121) are DENIED.7
It is so ORDERED.
s/ Richard A. Hertling
Richard A. Hertling
Judge
The plaintiff’s motion (ECF 137) to curtail further briefing on its motions for fees and
7
sanctions is DENIED as moot.
11