National Industries for the Blind v. Department of Veterans Affairs

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
)
NATIONAL INDUSTRIES FOR THE )
BLIND, et al., )
)
Plaintiffs, )
)
v. )
)
DEPARTMENT OF VETERANS )
AFFAIRS, et al., )
)
Defendants. )
) No. 17-cv-0992 (KBJ)
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ALPHAPOINTE, )
)
Plaintiff, )
)
v. )
)
DEPARTMENT OF VETERANS )
AFFAIRS, et al., )
)
Defendants. )
)
MEMORANDUM OPINION AND ORDER DENYING
DEFENDANTS’ MOTION TO STAY THE INSTANT PROCEEDINGS
On May 30, 2017, the United States Court of Federal Claims resolved a dispute
about the procurement policy that Congress intended for the Department of Veterans
Affairs (“the VA”) to use when deciding whether the products of veteran-owned small
businesses will be prioritized over those made by small businesses that employ blind
and severely disabled individuals. See PDS Consultants, Inc. v. United States, 132 Fed.
Cl. 117 (Fed. Cl. 2017). The Court of Federal Claims held, in essence, that when the
VA seeks to procure goods and services, veteran-owned small businesses get preference
1
over those that employ the blind and disabled, see PDS Consultants, 132 Fed. Cl. at
128, and this ruling—which involved the resolution of an apparent conflict between the
Javits-Wagner-O’Day Act (“JWOD”), 41 U.S.C. §§ 8501–06 (requiring federal agencies
to purchase certain items from small businesses that employ blind and disabled
individuals), and the Veterans Benefits, Health Care, and Information Technology Act
of 2006 (“VBA”), 38 U.S.C. §§ 8127–28 (mandating that the VA limit competition for
its procurement to veteran-owned small businesses under certain conditions)—is
currently on appeal to the Federal Circuit.
In the instant consolidated cases, Plaintiffs National Industries for the Blind,
Bosma Industries for the Blind, Winston-Salem Industries for the Blind (collectively,
“NIB Plaintiffs”) and Plaintiff Alphapointe have brought their own, substantively
similar challenges to the VA’s procurement practices. (See generally NIB Compl., ECF
No. 1; Alphapointe Compl., ECF No. 25.) Before this Court at present is a motion that
Defendants VA, VA Secretary David Shulkin, and the United States of America have
filed—and that Defendant-Intervenor PDS Consultants (“PDS”) supports—requesting a
stay of the instant proceedings pending the Federal Circuit’s ruling in PDS Consultants.
(See Mem. in Supp. of Defs.’ Mot. to Stay Proceedings (“Mot. to Stay”), ECF No. 20-1;
see also PDS’s Resp. in Supp. of Defs.’ Mot. to Stay Proceedings (“PDS Stay Br.”),
ECF No. 29.) Defendants point out that the complaints at issue here raise similar legal
issues to those that are now pending in the case before the Federal Circuit, and that the
parties overlap; therefore, Defendants request a stay in the interest of judicial
efficiency. (See Mot. to Stay at 10; PDS Stay Br. at 3–5.) 1 In opposition to the stay
1
Page-number citations to the documents that the parties have filed refer to the page numbers that the
Court’s electronic filing system automatically assigns.
2
motion, Plaintiffs argue, among other things, that the instant cases involve claims that
are different than those in PDS Consultants, and that the parties are largely distinct;
indeed, other than the VA defendants, only two of the five parties in the consolidated
matters before this Court are also parties in the Federal Circuit case. (See Pls.’ Opp’n
to VA’s Mot. to Stay Proceedings (“NIB Opp’n”), ECF No. 22, at 4–8; Pl.
Alphapointe’s Opp’n to Defs.’ Mot. to Stay Proceedings (“Alphapointe Opp’n”), ECF
No. 28, at 10–12.)
For the reasons explained fully below, this Court has concluded that Defendants’
motion to stay the instant proceedings must be DENIED. In short, Defendants have
failed to carry their burden of demonstrating that a stay of the instant proceedings is
warranted. Moreover, given that the VA is currently implementing the challenged
procurement policy and has expressed its intention to continue to do so during the
pendency of the Federal Circuit appeal (see Defs.’ Notice, ECF No. 42), equitable
considerations weigh heavily against the requested stay.
I. BACKGROUND
A. Factual Background
At issue in the present case is the potential tension between two federal statutes
that establish certain contracting priorities that the VA must implement when it
undertakes procurements for goods or services. (See Alphapointe Compl. ¶¶ 2–4; NIB
Compl. ¶¶ 2–3.) The JWOD, which was initially passed in 1938 and was amended in
1971, requires all government agencies (including the VA) to purchase certain products
and services from designated nonprofits that employ blind and otherwise severely
disabled people. See 41 U.S.C. §§ 8501–06. Under the JWOD’s statutory scheme, the
3
United States AbilityOne Commission, an independent agency, is charged with
maintaining a procurement list, and “[a]n entity of the federal Government intending to
procure a product or service on the procurement list . . . shall procure the product or
service” from a qualified nonprofit on that list. Id. § 8504(a). The AbilityOne
Commission also oversees the addition of items to the procurement list (hereinafter
called “the AbilityOne List”). See id. § 8503(a). Thus, by statute and regulation,
certain designated non-profit manufacturers have long been preferenced with respect to
procurements in the government-contracting realm. 2
More recently, in 2006, Congress enacted the VBA, which, among other things,
established the Veterans First Contracting Program (“VFCP”). The VFCP applies only
to procurement by the VA, and requires that agency to set goals for providing contracts
to veteran-owned small businesses. See 38 U.S.C. § 8127(a). It also directs the VA to
give procurement priority to veteran-owned small businesses under certain conditions.
Specifically, before undertaking a procurement, VA contracting officers must conduct
an analysis—commonly referred to as the “Rule of Two”—to determine whether there
are at least two veteran-owned small businesses capable of performing the work. See
id. § 8127(d). If the officer has a “reasonable expectation” that at least two such
contractors will submit offers and that “the award can be made at a fair and reasonable
price that offers best value to the United States[,]” the VA must limit competition for
that contract to veteran-owned small businesses only. Id.
Since the passage of the VBA, the VA has issued a number of regulations and
policies that guide its contracting officers in applying the respective priorities embodied
2
The regulations that implement this mandate are enshrined in the Federal Acquisition Regulations
(“FAR”). See 48 C.F.R. subpart 8.7.
4
in the JWOD and the VBA. 3 For example, when the VA initially promulgated the rule
that implements the VBA, it did so in a way that maintained AbilityOne’s priority
status. (See Alphapointe Compl. ¶ 4; NIB Compl. ¶ 3.) Then, in 2016, the Supreme
Court held that the VA must conduct the Rule of Two analysis when awarding contracts
under the Federal Supply Schedule, see Kingdomware Techs., Inc. v. United States, 136
S. Ct. 1969 (2016), and in response to that decision, the VA issued a new policy in the
form of a “Class Deviation” from the VA Acquisition Regulation (“the VAAR”) (“the
2016 Class Deviation”), but kept the policy requiring mandatory priority for the
AbilityOne program intact. (See Alphapointe Compl. ¶ 5; NIB Compl. ¶ 4.) 4
In March of 2017, the VA issued an amended Class Deviation (“the 2017 Class
Deviation”). (See Alphapointe Compl. ¶ 38; NIB Compl. ¶ 31.) The 2017 Class
Deviation requires VA contracting officers to conduct the aforementioned Rule of Two
analysis before purchasing certain items on the AbilityOne List, depending upon when
the items were added to the list. For any items added to the AbilityOne List on or after
January 7, 2010—the date on which the VA issued its initial regulations implementing
the VBA—the Rule of Two analysis is required. (See Alphapointe Compl. ¶¶ 39–40;
NIB Compl. ¶¶ 32–33.) But for items that were added to the AbilityOne List before
January 7, 2010, the 2017 Class Deviation requires VA contracting officers to continue
3
For a summary of the various policies the VA has issued over the years, see Kingdomware Techs., Inc.
v. United States, 136 S. Ct. 1969 (2016), and Angelica Textile Servs., Inc. v. United States, 95 Fed. Cl.
208 (Fed. Cl. 2010).
4
In this context, a class deviation is “[t]he issuance of policies or procedures that govern the
contracting process or otherwise control contracting relationships that are not incorporated into agency
acquisition regulations[,]” in this case the VAAR. 48 C.F.R. § 1.401; see also id. § 801.404 (granting
VA procurement leadership the authority to “authorize class deviations from the FAR and VAAR when
a class deviation is in the best interest of the Government”).
5
to purchase the items from AbilityOne nonprofits without applying the Rule of Two.
(See id.)
The Court of Federal Claims entertained a challenge to the 2017 Class Deviation
in the context of a bid protest that a veteran-owned small business brought in PDS
Consultants, Inc. v. United States, 132 Fed. Cl. 117 (Fed. Cl. 2017). 5 In that case, PDS
(the Defendant-Intervenor in the instant consolidated cases) filed a bid protest action
against the VA to challenge the agency’s purchase of eyewear from Winston-Salem
Industries for the Blind (a nonprofit that intervened as a defendant in the PDS
Consultants matter and is one of the plaintiffs here). See id. at 119–20. On May 30,
2017, the Court of Federal Claims issued an opinion finding that the VA should have
applied the Rule of Two to all procurements that had taken place after the passage of
the VBA in 2006, regardless of when the product or service was placed on the
AbilityOne List. See id. at 126. That court thus concluded that the 2017 Class
Deviation was “contrary to the VBA statute” insofar as that policy suggested that
“items added to the List prior to 2010 are forever excepted from the VBA’s
requirements[,]” and as a result, the court rejected the VA’s application of the 2017
Class Deviation to the eyewear contracts at issue. Id. at 128.
Winston-Salem noticed an appeal in the PDS Consultants case on July 28, 2017.
(See Ex. 1 to Resp. of NIB Pls. to Defs.’ Notice, Docketing Statement, PDS
Consultants, Inc. v. United States, No. 17-2379 (Fed. Cir. Sept. 1, 2017) (“PDS Appeal
Docketing Statement”), ECF No. 45-1, at 2.) And because the Court of Federal Claims
5
Although the bid protest action was initially brought in 2016, the court in PDS Consultants ultimately
addressed the 2017 Class Deviation because that policy was issued while that litigation was pending.
See PDS Consultants, 132 Fed. Cl. at 124–25.
6
has granted a stay of its judgment pending appeal, see PDS Consultants, Inc. v. United
States, No. 16-1063C, 2017 WL 3821803, at *1 (Fed. Cl. Sept. 1, 2017), the VA has
continued to implement the 2017 Class Deviation with respect to its procurements, even
as the parties are presently litigating issues related to that policy in the Federal Circuit.
(See Defs.’ Notice at 2; see also PDS Appeal Docketing Statement at 3 (stating that
whether the VA must perform the Rule of Two analysis under the VBA before it
purchases items from AbilityOne nonprofits is one of the issues to be decided on
appeal).)
B. Procedural History
On May 24, 2017, the NIB Plaintiffs filed a complaint in this Court that claimed
that the 2017 Class Deviation is both substantively unlawful and procedurally defective
under the Administrative Procedure Act (“APA”). (See NIB Compl. ¶ 6.) The NIB
Plaintiffs argue that the 2017 Class Deviation reflects “an unreasonable interpretation
of the VBA that ignores the mandatory language of the JWOD Act[,]” and these
Plaintiffs also allege that the VA issued the 2017 Class Deviation without complying
with the notice-and-comment requirements of the APA, the Office of Federal
Procurement Policy Act (“OFPPA”), and the FAR. (See id.) As relief, the NIB
Plaintiffs seek a declaration that the 2017 Class Deviation violates the APA, the
OFPPA, and the FAR (see id., Request for Relief, ¶ 1), as well as a permanent
injunction prohibiting enforcement of the 2017 Class Deviation (see id., Request for
Relief, ¶ 2).
Plaintiff Alphapointe filed its complaint on July 28, 2017. (See Alphapointe
Compl. (originally filed in Civ. No. 17 – 1528); see also Notice of Related Case, ECF
No. 23.) Alphapointe challenges the 2017 Class Deviation, as well as an alleged newer
7
VA procurement policy that is purportedly reflected in a June 2017 email that
Alphapointe received from the VA. (See Alphapointe Compl. ¶¶ 44–46.) Alphapointe
argues that the VA’s policy regarding government-contracting preferences violates the
APA because the agency has arbitrarily and capriciously ignored the requirements of
the JWOD, and because the agency has failed to adhere to the notice-and-comment
requirements of the APA. (See id. ¶¶ 54–57.) As relief, Alphapointe seeks a
declaration that the 2017 Class Deviation violates the APA, as well as preliminary and
permanent injunctions prohibiting the VA from enforcing the 2017 Class Deviation.
(See id., Request for Relief, ¶¶ 1–3.) 6 This Court consolidated the NIB Plaintiffs’ and
Alphapointe’s cases on August 4, 2017.
In a motion filed on July 17, 2017, Defendants have asked this Court to stay the
instant proceedings pending the Federal Circuit’s resolution of the PDS Consultants
case. (See generally Mot. to Stay.) Defendants argue that, because PDS Consultants is
factually related to the matters at hand, “considerations of consistency and judicial
efficiency warrant application of the court-developed rule of practice by which the
second-filed case is stayed[.]” (Id. at 1.) Defendant-Intervenor PDS also supports the
stay on the grounds of judicial efficiency, and it further argues that both it and the
government would suffer hardship in the absence of a stay. (See PDS Stay Br. at 2, 5.)
For their part, the NIB Plaintiffs and Alphapointe vigorously oppose staying the instant
proceedings; they argue that this case should go forward despite the Federal Circuit
appeal because PDS Consultants involves different parties, different facts, and different
causes of action. (See Alphapointe Opp’n at 4; NIB Opp’n at 5.) Plaintiffs also
6
This Court denied Alphapointe’s motion for a preliminary injunction in an oral ruling during a hearing
that the Court held on September 15, 2017. (See Hr’g Tr., ECF No. 41, at 66:10–74:20.)
8
contend that a stay is not warranted because the government Defendants have not shown
that they would suffer any hardship if the action is allowed to proceed. (See
Alphapointe Opp’n at 4; NIB Opp’n at 2.)
At a motion hearing on September 15, 2017, this Court heard the parties’
arguments regarding the motion to stay and subsequently asked counsel for the
government Defendants to clarify whether the VA would continue to implement the
2017 Class Deviation during the pendency of the Federal Circuit appeal. The
government Defendants filed a notice on September 29, 2017, informing the Court that
“after considering the issues involved, the VA currently intends to continue applying
the March 2017 Class Deviation with respect to items on the AbilityOne List while the
PDS appeal is pending in the Federal Circuit.” (Defs.’ Notice at 2.) In response to this
notice, Plaintiffs filed supplemental oppositions to the motion to stay. (See
Alphapointe’s Reply to Defs.’ Notice, ECF No. 44; Response of NIB Pls. to Defs.’
Notice (“NIB Resp. to Defs.’ Notice”), ECF No. 45.)
II. MOTIONS TO STAY PROCEEDINGS PENDING LEGAL ACTION
ELSEWHERE
District courts have broad discretion to stay all proceedings in an action pending
the resolution of independent legal proceedings. See Landis v. N. Am. Co., 299 U.S.
248, 254 (1936). The authority to stay proceedings stems from “the power inherent in
every court to control the disposition of the causes on its docket with economy of time
and effort for itself, for counsel, and for litigants.” Air Line Pilots Ass’n v. Miller, 523
U.S. 866, 879 n.6 (1998) (internal quotation marks and citation omitted). In
considering a stay, courts must “weigh competing interests and maintain an even
balance between the court’s interests in judicial economy and any possible hardship to
9
the parties.” Belize Soc. Dev. Ltd. v. Gov’t of Belize, 668 F.3d 724, 732–33 (D.C. Cir.
2012) (quoting Landis, 299 U.S. at 254–55) (internal quotation marks omitted). In
other words, hardship to the parties and benefits to judicial economy are the key
interests to consider in evaluating a motion for a stay. See Hulley Enters. Ltd. v.
Russian Fed’n, 211 F. Supp. 3d 269, 276 (D.D.C. 2016).
Despite the broad discretion afforded to the courts in granting a stay, it is well
established that a stay pending the resolution of unrelated legal proceedings is an
extraordinary remedy. “Only in rare circumstances will a litigant in one cause be
compelled to stand aside while a litigant in another settles the rule of law that will
define the rights of both.” Landis, 299 U.S. at 255. Thus, the party seeking a stay
bears the burden of showing that the stay is needed and warranted. If there is “even a
fair possibility” that a stay would adversely affect another party, the movant for the stay
must demonstrate a “clear case of hardship or inequity in being required to go forward.”
Id. Moreover, and notably, “[a] stay is not a matter of right, even if irreparable injury
might otherwise result.” Indiana State Police Pension Trust v. Chrysler LLC, 129 S.
Ct. 2275, 2776 (2009).
III. ANALYSIS
The government Defendants and the Defendant-Intervenor essentially make three
arguments in support of the motion to stay proceedings: (1) that the first-filed rule
applies and requires this Court to stand down pending the Federal Circuit’s decision;
(2) that in the balance of the equities, there would be more hardship from continuing the
proceedings than from staying them; and (3) that judicial economy considerations
justify the stay. As explained below, in this Court’s view, none of these arguments is
10
persuasive, and at the end of the day, Defendants have failed to carry their burden of
demonstrating that a stay of proceedings is warranted.
A. The First-Filed Rule Does Not Apply
Defendants’ opening salvo is to invoke the ‘first-filed’ rule and to argue that the
overlap between the parties in this case and the PDS Consultants case means that the
instant action should be held in abeyance while PDS Consultants proceeds. (See Mot.
to Stay at 2 (maintaining that the instant situation “fits squarely within the ‘first-filed’
rule, making a stay of this second-filed case appropriate”).) But the first-filed rule has
a long, distinguished pedigree in this Circuit, and it is deemed to apply only when “two
cases between the same parties [and] on the same cause of action are commenced in
two different Federal courts[.]” Wash. Metro. Area Transit Auth. v. Ragonese, 617 F.2d
828, 830 (D.C. Cir. 1980) (emphasis added); see also UtahAmerican Energy, Inc. v.
Dep’t of Labor, 685 F.3d 1118, 1124 (D.C. Cir. 2012) (explaining that “[c]onsiderations
of comity and orderly administration of justice dictate that two courts of equal authority
should not hear the same case simultaneously” (internal quotation marks and citations
omitted)).
Thus, the first-filed rule is inapposite here, as the instant case generally involves
neither the same parties nor the same causes of action as PDS Consultants. In fact, the
party-related overlap upon which Defendants rely pertains only to two of the non-
government entities—Winston-Salem Industries for the Blind and PDS—while the other
three Plaintiffs in the instant case—National Industries for the Blind, Bosma Industries
for the Blind, and Alphapointe—are not parties in PDS Consultants. (See NIB Opp’n at
11
6; Alphapointe Opp’n at 10–11.) 7 It is also clear that the instant matter and PDS
Consultants arise under entirely different causes of action and require distinct remedies.
Specifically, PDS Consultants is a bid protest action brought under 28 U.S.C.
§ 1491(b)(1), and that case involves several specific VA contracts for eyewear;
therefore, the Court of Federal Claims ultimately ordered the VA “not to enter into any
new contracts for eyewear” before performing Rule of Two analysis. See PDS
Consultants, 132 Fed. Cl. at 129 (emphasis added). By contrast, the present
consolidated action is a direct challenge to the 2017 Class Deviation brought under the
APA (see NIB Compl. ¶¶ 38–43; Alphapointe Compl. ¶¶ 52–57), and as such, involves
requested remedies that transcend specific contracts, such as broad injunctive relief
prohibiting the application of the 2017 Class Deviation to all VA procurements (see
NIB Compl., Request for Relief, ¶¶ 1–2; Alphapointe Compl., Request for Relief, ¶¶ 1–
3). The NIB Plaintiffs’ complaint also alleges that the 2017 Class Deviation violates
the OFPPA and the FAR, in addition to the APA (see NIB Compl. ¶ 6; see also NIB
Opp’n at 6), none of which is claimed in the PDS Consultants case. And notably,
because the PDS Consultants appeal contains a threshold jurisdictional question (see
PDS Appeal Docketing Statement at 3), it is also entirely possible that the Federal
Circuit might not even have occasion to address the viability of the 2017 Class
Deviation under the JWOD and VBA, which is the only common legal issue between
the PDS Consultants case and the consolidated matters before this Court. (See infra
Part III.C.)
7
Defendants point to the fact that the National Industries for the Blind is an amicus in PDS Consultants
(see Mot. to Stay at 10), but submitting an amicus brief in a case is not equivalent to participating in
the case as a party, and thus, the amicus status of one of the pertinent entities has no bearing on the
Court’s analysis here.
12
This all means that the instant action and the PDS Consultants matter are far
from being substantially the “same case,” as is necessary for the first-filed rule to
apply. UtahAmerican Energy, 685 F.3d at 1124. Consequently, this Court easily
concludes that the ‘first-filed’ analysis that Defendants undertake in their motion to
stay briefing (see, e.g., Mot. to Stay at 8–12) finds no application here.
B. The Balance Of Hardships Weighs Heavily In Favor Of Proceeding
With The Instant Case
Nor can Defendants credibly claim that they will suffer more hardship if the
instant consolidated cases proceed during the pendency of the Federal Circuit appeal
than Plaintiffs will suffer if this Court issues a stay. See Landis, 299 U.S. at 255.
1. Plaintiffs Face More Than A Fair Possibility Of Harm From A Stay
First, it must be acknowledged that there is more than “a fair possibility” that
Plaintiffs would suffer harm if the case is stayed. Id. This is because the government
Defendants have notified the Court that the VA does not intend to suspend the
application of the 2017 Class Deviation during the pendency of the appeal before the
Federal Circuit (see Defs.’ Notice at 2), which means that any delay in this Court’s
resolution of Plaintiffs’ challenge risks prolonging the policy-related injuries that
Plaintiffs decry in their complaints (see, e.g., Alphapointe Compl. ¶ 8 (alleging that
Alphapointe “suffer[s] direct, substantial injury because the VA’s action will reduce, if
not eliminate, the VA’s orders for Alphapointe’s products”). What is more, it appears
that the government has sought additional time to brief the issues on appeal, thereby
extending the appellate process. (See Notice Regarding Request for Extension of Br.
Sched. in PDS Consultants, ECF No. 46.) As a result, if this Court stays the instant
proceedings for the duration of the (potentially extended) appeals process, Plaintiffs
13
will be subjected to the very procurement policy that they allege causes them harm—
i.e., the policy that they say causes them to “lose contracts the VA would otherwise be
obligated to award to them” (see NIB Opp’n at 2)—all the while.
It is also clear to the Court that the alleged harm to Plaintiffs is significant:
Plaintiffs aver that they hold VA contracts that will expire and are subject to renewal
within the likely timeframe for the resolution of the PDS Consultants appeal (see NIB
Resp. to Defs.’ Notice at 3; Alphapointe Opp’n at 8), and that these include contracts
for items that were added to the AbilityOne List after 2010, which are newly subject to
the Rule of Two under the 2017 Class Deviation (see NIB Resp. to Defs.’ Notice at 3).
Thus, even before this Court undertakes to consider Plaintiffs’ legal challenge,
Plaintiffs would face a potential loss of VA contracts, and corresponding harm to their
businesses, while waiting for the Federal Circuit appeal to run its course—likely for
more than a year. (See NIB Opp’n at 8; Alphapointe Opp’n at 8.)
To be sure, Plaintiffs have not shown that each and every one of the party
business organizations will necessarily suffer the feared loss of business during the
pendency of the Federal Circuit appeal, but the burden of demonstrating a hardship that
warrants staying properly filed legal proceedings is on the movant, see Landis, 299 U.S.
at 255, and when a stay is so requested, the relevant inquiry under Landis is whether
there is a fair possibility that the stay of proceedings “will work damage to some one
else[,]” id. (emphasis added). This Court has little doubt that the VA’s unabated
implementation of the procurement policy that Plaintiffs seek to challenge during the
pendency of a prolonged appeals process qualifies as damage, and in this Court’s view,
14
it creates more than a fair possibility that the proposed delay in the instant litigation
will harm Plaintiffs’ interests.
To be clear: it is the VA’s voluntary decision to continue to implement the policy
that Plaintiffs are challenging in the instant litigation that makes it next to impossible
for Defendants to maintain that there is no possibility that Plaintiffs will suffer harm
from a stay. (See Hr’g Tr. at 93:6-14 (counsel for the NIB Plaintiffs arguing that
Plaintiffs will suffer harm because it will likely be a year and a half until the Federal
Circuit comes to a decision, during which time there will be “additional contract
decisions that will come up involving post-2010 additions to the procurement list” that
will be subject to the 2017 Class Deviation).) And PDS’s answer—that there is no
harm to Plaintiffs because the VA will not, in fact, be implementing the 2017 Class
Deviation anytime soon due to the Court of Federal Claims’ decision in PDS
Consultants (see PDS Stay Br. at 6)—is plainly misguided. Not only has the VA now
expressly announced its intention to continue to implement the 2017 Class Deviation
for at least the duration of the pendency of the Federal Circuit appeal (see Defs.’ Notice
at 2), but the Court of Federal Claims has stayed its own judgment invalidating that
policy, see PDS Consultants, 2017 WL 3821803, at *1, which means that the VA has
every right to continue to implement the 2017 Class Deviation now. 8 What the VA
cannot do, consistent with equity principles, is to both opt to implement the policy that
8
Insofar as Plaintiffs seem to challenge the VA’s announced implementation in the context of the
instant action, their claims are ripe, and are certainly not “currently moot[,]” as PDS maintains. (PDS
Stay Br. at 7.) Mootness requires federal courts to refrain from deciding a matter “if events have so
transpired that the decision will neither presently affect the parties’ rights nor have a more-than-
speculative chance of affecting them in the future[,]” Clarke v. United States, 915 F.2d 699, 701 (D.C.
Cir. 1990) (en banc) (internal quotation marks and citation omitted), and PDS simply cannot show that
“there is no reasonable expectation that the alleged violation will recur[,]” Cnty. of Los Angeles v.
Davis, 440 U.S. 625, 631 (1979) (internal quotation marks, alteration, and citation omitted), where, as
here, the alleged violation is currently ongoing.
15
is allegedly harmful to Plaintiffs and simultaneously seek an indefinite delay of the
proceedings that Plaintiffs have brought to challenge the policy—at least without good
reason. (See Hr’g Tr. at 109:8 (the Court admonishing the government Defendants for
trying to “have it both ways” by refusing to agree to suspend the challenged policy at
the same time they seek an extended delay of the litigation pending appeal).) Put
another way, having created the conditions by which Plaintiffs now credibly claim that
there is a fair possibility that the stay will injure them, equity demands that Defendants
demonstrate clearly a justification for the potential harm to the Plaintiffs (presumably
rooted in Defendants’ own hardship), which, as explained below, Defendants have
failed to do.
2. Defendants Have Not Met Their Burden Of Showing A Clear Case
Of Hardship Or Inequity If The Instant Proceedings Continue
In their motion for a stay, the government Defendants do not even hint at any
true hardship that they would have the potential of facing in the absence of a stay of the
instant proceedings. (See Mot. to Stay at 1 (claiming, without elaboration, that the
consolidated proceedings should be stayed based on “considerations of consistency”);
see also Reply in Supp. of Defs.’ Mot. to Stay (“Defs.’ Reply”), ECF No. 31, at 2
(asserting that parallel litigation is inefficient).) The farthest that the government goes
in this regard is to state, as government counsel did at the motion hearing, that if the
consolidated cases proceed, the VA would be harmed by “the possibility of inconsistent
results[,]” which “would cause significant uncertainty and disruption” to the
procurement decisions that VA contracting officers make on a daily basis. (Hr’g Tr. at
83:8-9.) At least one other court in this district has rejected this line of argument; it
held that the “possibility of inconsistencies in rulings on the same issue”—without
16
more—is insufficient to constitute a clear case of hardship, Hisler v. Gallaudet Univ.,
344 F. Supp. 2d 29, 35 (D.D.C. 2004), and under the circumstances presented here, this
Court is inclined to agree.
For one thing, the government Defendants have not provided a cogent theory of
how the VA would face hardship on the basis of potentially inconsistent legal rulings on
the issue of its procurement policies, and this omission is especially glaring when there
is a realistic possibility that at least one of the hypothesized inconsistent judgments
would be stayed until the entire appellate review process runs its course. Cf. PDS
Consultants, 2017 WL 3821803, at *1. It is also seemingly incumbent upon the
government Defendants to explain why, in our federal system, inconsistent judgments
from courts in different jurisdictions should be considered inherently problematic.
There are no doubt countless examples of inconsistent legal rulings in the various
federal circuits that impact agency decision making; yet, somehow, the government
soldiers on. See, e.g., Ctr. for Regulatory Reasonableness v. EPA, 849 F.3d 453, 454
(D.C. Cir. 2017) (acknowledging that the Environmental Protection Agency might
employ policies with respect to publicly owned water treatment facilities in the Eighth
Circuit that are different than the agency’s policies in other circuits). And this Court is
unaware of any case in which the government has successfully persuaded a court in one
circuit to suspend pending litigation simply and solely because of the potential of an
inconsistent ruling rendered in the context of a similar case in another jurisdiction;
indeed, with certiorari at stake, this Court imagines that the government might actually
relish the opportunity that such inconsistent judgments can provide. See, e.g., Pet. for
Writ of Cert., U.S. Forest Serv. v. Cottonwood Envtl. Law Ctr., No. 15-1387, 2016 WL
17
2866086, at *17–18 (U.S. May 13, 2016); Pet. for Writ of Cert., U.S. Army Corps of
Eng’rs v. Hawkes Co., No. 15-290, 2015 WL 5265284, at *12–13 (U.S. Sept. 8, 2015).
Thus, the government Defendants have not made a clear showing that the possibility of
inconsistent judgments is a hardship, nor have they not articulated any other hardship or
inequity to them if this case proceeds. Thus, the balance of the harms clearly weighs in
Plaintiffs’ favor vis-à-vis the government.
For its part, PDS asserts that it will face significant hardship if the consolidated
cases in this Court continue, because PDS is a small business that will would be forced
to “spend time and resources litigating the same issues in two forums unnecessarily.”
(PDS Stay Br. at 5.) But if PDS is burdened by the instant litigation, it has only itself
to blame. That is, PDS is involved in the instant consolidated actions only because it
sought to intervene in the matters before this Court (see PDS Mot. to Intervene, ECF
No. 7)—i.e., PDS voluntarily jumped into the fray that it now says should be halted on
the grounds that its participation is too burdensome to maintain. Needless to say, this
argument is patently insubstantial. Moreover, and in any event, there is no question
that the purported hardship to PDS in bearing additional litigation costs pales in
comparison to the hardship Plaintiffs might suffer if they lose VA contracts for the next
year or more while the instant consolidated actions are put on hold.
Thus, the Court finds that the VA’s plan to continue applying the 2017 Class
Deviation through the pendency of the Federal Circuit appeal creates a fair probability
that Plaintiffs will be harmed by the delay in litigating their claims in this Court, and no
Defendant has credibly claimed any cognizable harm to itself if the instant consolidated
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action moves forward. Therefore, the balance of the equities weighs heavily in favor of
permitting the consolidated cases to proceed.
C. Considerations of Judicial Economy Do Not Require A Stay
Finally, this Court declines to accept Defendants’ most potent contention in
support of the motion to stay, which is their insistence that a stay of the instant
proceedings would conserve judicial resources. (See Mot. to Stay at 8–11; see also
PDS Stay Br. at 3–5, 7–9.) There is no question that “parallel litigation of factually
related cases in separate fora is inefficient” and should be avoided. Handy v. Shaw,
Bransford, Veilleux & Roth, 325 F.3d 346, 349 (D.C. Cir. 2003). But it is not at all
clear that there would be any gains in judicial economy under the circumstances
presented here, for two reasons.
First, there is considerable uncertainty regarding whether or not the Federal
Circuit will actually reach the legal issue that is common to these cases. See Dellinger
v. Mitchell, 442 F.2d 782, 787 (D.C. Cir. 1971) (holding that a court can proceed
without waiting for another court of coordinate jurisdiction when it “cannot be certain
that the other [court] would determine the issue”). This is because, as previously
mentioned, the PDS Consultants appeal raises a threshold question regarding the
jurisdiction of the Court of Federal Claims (see PDS Appeal Docketing Statement at 3
(indicating that the first issue noticed for appeal is “[w]hether [the] Court exceeded its
jurisdiction by considering a bid protest that did not challenge a new contract award or
new solicitation, and by reviewing the validity of underlying statutes and regulations”)),
and, thus, the Federal Circuit might very well dispose of the case before it without
reaching the merits of the legal claims. If that is the result, then this case would begin
again on square one after having been held in abeyance for a year or more for the
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conclusion of that appeal, and no efficiency gains would have been realized from
having required Plaintiffs to “stand aside[.]” Landis, 299 U.S. at 255.
Second, it is also the case that, even if the Federal Circuit undertakes to reach
the merits of the case before it, the appeal that is pending is unlikely to resolve all of
the issues that Plaintiffs raise in the instant consolidated matters, primarily because
PDS Consultants involves an entirely different cause of action. Although the substance
may be similar, the instant cases involve a cause of action that challenges agency
decision making in a manner that is distinct from the bid protest action that is pending
in the Federal Circuit. (See supra Part III.A.) Likewise, Plaintiffs’ claims here that the
VA employed defective procedures when it adopted the 2017 Class Deviation (see
Alphapointe Compl. ¶ 6; NIB Compl. ¶ 6) would not be addressed in any Federal
Circuit opinion, and require a wholly separate inquiry that falls on this Court to
conduct. Under these circumstances, Defendants have failed to make a clear showing
that a stay would necessarily result in any efficiency gains at all, much less the
significant savings that would warrant the imposition of such a substantial delay.
IV. ORDER
As much as this Court would love to have the benefit of the Federal Circuit’s
decision prior to its own consideration of the thorny legal issue presented in the instant
matters, this Court takes seriously its obligation to “maintain an even balance between
the court’s interests in judicial economy and any possible hardship to the parties[.]”
Belize Soc. Dev. Ltd., 668 F.3d at 732 (internal quotation marks and citation omitted).
To this end, in order to succeed in its request for a delay of proceedings, Defendants
must make a clear showing that the stay is warranted, Landis, 299 U.S. at 255, and this
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Court finds that Defendants have fallen far short of demonstrating that the current
interest in judicial economy (such as it is) and the hardship to Defendants from
proceeding with this consolidated action (whatever it may be) outweighs the harm that a
stay of proceedings inflicts upon Plaintiffs (who will purportedly be subjected to the
policy they seek to challenge each day that the various cases proceed). Accordingly, it
is hereby
ORDERED that Defendants’ motion to stay the instant proceedings pending the
resolution of the PDS Consultant appeal (ECF No. 20) is DENIED. It is
FURTHER ORDERED that, because time is of the essence with respect to
resolving the matters at hand, the stay of Defendants’ obligation to answer or otherwise
respond to the complaints in this case (see Minute Order of July 19, 2017) is LIFTED,
and Defendants are instructed to answer or otherwise respond on or before November
23, 2017.
DATE: November 7, 2017 Ketanji Brown Jackson
KETANJI BROWN JACKSON
United States District Judge
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