Xp Vehicles, Inc. v. U.S. Department of Energy

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
)
XP VEHICLES, INC., et al., )
)
Plaintiffs, )
)
v. ) Civil Action No. 13-cv-0037 (KBJ)
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DEPARTMENT OF ENERGY, et al., )
)
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Defendants. )
)
MEMORANDUM OPINION
Congress has authorized the Department of Energy (“the DOE”) to offer direct
financial support to the manufacturers of clean energy vehicles and related componen ts.
See 42 U.S.C. § 17013 (2012). In accordance with this statutory mandate, the DOE
administers various loan programs, including the Advanced Technology Vehicle
Manufacturing (“ATVM”) Loan Program, which is designed to provide direct loans to
manufacturers of energy-efficient vehicles. The DOE also administers the Section 1703
Loan Guarantee Program (“LG Program”), pursuant to which the agency guarantees
loans for advanced technology projects that result in the avoidance or reduction of air
pollutants. Plaintiff XP Vehicles, Inc. (“XPV”) is a now-dissolved California-based
corporation that applied to the DOE in November of 2008 for an ATVM loan for the
manufacture of a light-weight, energy-efficient sport utility vehicle. XPV partnered
with Plaintiff Limnia, Inc. (“Limnia”), a Delaware-based corporation that developed an
energy storage system to power XPV’s proposed vehicle. Limnia, too, applied to the
DOE for loan assistance, seeking both an ATVM loan and an LG Program loan
guarantee in February of 2009. The DOE denied both Plaintiffs’ loan requests, and
XPV and Limnia have now filed a seven-count complaint against the DOE, its Secretary
Ernest Moniz in his official capacity, former Secretary of Energy Steven Chu in his
individual capacity, and former Director of the ATVM Loan Program Lachlan Seward
in his individual capacity (collectively, “Defendants”), alleging that the DOE’s
decisionmaking process with respect to these loan programs was infused with cronyism
and political favoritism and that their applications were denied unfairly and arbitrarily. 1
In essence, Plaintiffs maintain that, instead of reviewing applications impartially and on
the merits, Defendants used the ATVM Loan Program and LG Program to reward
political patrons, in violation of the Constitution’s due process and equal protection
guarantees and in contravention of the Administrative Procedure Act (“APA”), 5 U.S.C.
§§ 701–706 (2012).
Before this Court at present are two motions to dismiss Plaintiffs’ complaint: one
from the DOE and Moniz (“the Official Capacity Defendants”), and one from Chu and
Seward (the “Individual Capacity Defendants”). The Official Capacity Defendants
make various threshold jurisdictional arguments, including sovereign immunity, lack of
standing, and ripeness; on the merits, they argue both that XPV lacks the capacity to
sue because it is a dissolved corporation and that Plaintiffs have failed to state a claim
upon which relief can be granted. The Individual Capacity Defendants adopt the
Official Capacity Defendants’ dismissal arguments, and further argue that XPV’s claims
1
Plaintiffs’ complaint not only names Seward in his individual capacity, it also names him in his
official capacity as “Director of the ATVM Loan Program.” However, Seward has stepped down from
this position since the complaint in this matter was filed, and it a ppears that the title of Director of the
ATVM Loan Program no longer exists. Accordingly, this Court has dismissed Plaintiffs’ claims
brought against Seward in his official capacity. Thus, Seward is characterized througho ut this
Memorandum opinion solely as an “Individual Capacity Defendant.”
2
are barred by the statute of limitations; that no Bivens action exists for the alleged
constitutional violations; and that, even if a remedy did exist, Chu and Seward are
protected by qualified immunity.
As explained further below, this Court concludes that, although it does have
jurisdiction over the claims Plaintiffs make in their complaint, all of XPV ’s claims and
most of Limnia’s claims must be dismissed in their entirety. XPV ’s claims against the
Official Capacity Defendants must be dismissed because, as a dissolved corporation,
XPV does not have the capacity to sue for injunctive relief, and XPV’s claims against
the Individual Capacity Defendants must be dismissed because no Bivens action exists
that will permit XPV to recover monetary damages from those defendants. Limnia’s
constitutional claims fail in a similar fashion, both because there is no Bivens action
and also because Limnia has not alleged facts that are sufficient to state a constitutional
claim. But Limnia’s two APA claims—which arise out of the denial of its ATVM loan
application, on the one hand, and the processing of its LG Program application, on the
other—survive the pending motions to dismiss because Limnia has adequately alleged
that the DOE’s denials of Limnia’s ATVM Loan Program and LG Program applications
were the result of arbitrary and capricious agency action in violation of the APA.
Consequently, the Official Capacity Defendants’ motion to dismiss will be GRANTED
IN PART and DENIED IN PART, and the Individual Capacity Defendants’ motion to
dismiss will be GRANTED in full. A separate order consistent with this opinion will
follow.
3
I. BACKGROUND
A. The DOE’s Implementation Of The ATVM Loan Program And The
LG Program
1. The ATVM Loan Program
In 2007, Congress enacted the Energy Independence and Security Act (“EISA”),
Pub. L. 110-140, § 136, 121 Stat. 1492, 1514–16, with the express purpose of
“mov[ing] the United States toward greater energy independence and security” and
“increas[ing] the efficiency of products, buildings, and vehicles[.]” Id. at 1492. To this
end, the EISA imposed heightened fuel economy standards, see id. § 102, and it also
introduced several new financial assistance programs designed to further the objective
of promoting the efficient use of energy resources, see, e.g., id. § 131 (providing grants
to encourage the use of electric vehicles); id. § 135 (providing loan guarantees for the
domestic manufacture of vehicle batteries). The Advanced Technology Vehicle
Manufacturing Loan Program—referred to throughout this opinion as “the ATVM Loan
Program”—was one of these initiatives. See id. § 136.
Under the ATVM Loan Program, the DOE provides a total of $25 billion in
direct loans to the manufacturers of “advanced technology vehicles” and the “qualifying
components” of such vehicles, so long as these manufacturers are engaged in certain
eligible activities. 42 U.S.C. § 17013(d)(1). 2 The EISA specifies that ATVM loan
applicants must submit applications to the Secretary of the DOE, and that upon
2
The statute defines an “advanced technology vehicle” as “an ultra efficient vehicle or a light duty
vehicle that meets” certain fuel economy and emission standards. Id. § 17013(a)(1). “Qualifying
components” are those that “the Secretary [of Energy] determines to be . . . designed for advanced
technology vehicles” and “installed for the purpose of meeting the performance requirements” of such
vehicles—i.e., products designed to meet the EISA’s fuel economy and emission standards. Id.
§ 17013(a)(4). The eligible activities include “requipping, expanding, or establishing a manufacturing
facility in the United States” or “engineering integration” of the manufactured product. Id. § 17013(b).
4
receiving such loan applications, “[t]he Secretary shall select eligible projects” using
criteria listed in the statute. Id. § 17013(d)(2)–(3). Specifically, by statute, a
successful “award recipient”—
(A) is financially viable without the receipt of additional
Federal funding associated with the proposed project;
(B) will provide sufficient information to the Secretary for
the Secretary to ensure that the qualified investment is
expended efficiently and effectively; and
(C) has met such other criteria as may be established and
published by the Secretary.
42 U.S.C. § 17013(d)(3). Furthermore, under the DOE’s implementing regulations, an
ATVM loan applicant must be “[a]n automobile manufacturer that can demonstrate an
improved fuel economy” or “[a] manufacturer of a qualifying component[ ,]” 10 C.F.R.
§ 611.100(a) (2015), and the regulations also require such applicants to provide, inter
alia, a description of “the nature and scope of the proposed project [,]” which must
include “key milestones and [the] location of the project” and a “detailed explanation of
how the proposed project qualifies” for loan assistance, id. § 611.101.
The DOE has adopted a two-step procedure for evaluating ATVM loan
applications. First, the agency engages in “eligibility screening”—i.e., it determines
whether the application contains the required information; whether the applicant
satisfies the eligibility criteria; and whether the terms of the requested loan comport
with the applicable statutory requirements. Id. § 611.103(a). The regulations state in
no uncertain terms that the DOE “can at any time reject an application, in whole or in
part, that does not meet these [eligibility] requirements.” Id. If the application
survives eligibility screening, the DOE will then move on to the second stage of the
application process, which consists of a substantive merits review of the application.
5
Id. § 611.103(b). The regulations establish that this review will be based on factors
such as the project’s “technical merit” and whether the proposed loan conditions
adequately protect the government investment by providing sufficient security, priority
of lien position, and percentage of the project to be financed with the loan. Id.
Significantly, the regulations that govern the ATVM Loan Program also state
that “[o]nly an Agreement executed by a duly authorized DOE Contracting Officer can
contractually obligate the government to make a loan” under the program. Id.
§ 611.105(a). And the regulations make clear that the “DOE is not bound by oral
representations made during the Application stage, or during any negotiation process.”
Id. § 611.105(b).
2. The LG Program
The Section 1703 Loan Guarantee Program was established as part of the Energy
Policy Act of 2005. See Pub. L. No. 109-58, § 1701–04, 119 Stat. 594, 1117–22
(codified at 42 U.S.C. §§ 16511–14). The statute is aimed at promoting new and
improved technologies that “avoid, reduce, or sequester air pollutants or anthropogenic
emissions of greenhouse gases[,]” 42 U.S.C. § 16513(a), and it authorizes the DOE to
guarantee loans for certain environmentally-friendly, energy-efficient projects, id.Among the categories of projects that are specified as qualifying for this loan program
are “[h]ydrogen fuel cell technology” and “production facilities for the manufacture of
fuel efficient vehicles or parts of those vehicles, including electric drive vehicles[ .]”
Id. § 16513(b).
Like the regulations that govern the ATVM Loan Program, the LG Program
regulations set out a comprehensive but non-exhaustive list of “information and
materials” that must be submitted as part of an application, including “[a] description of
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how and to what measurable extent the project avoids, reduces, or sequesters air
pollutants and/or anthropogenic emissions of greenhouse gases, . . . [a] description of
the nature and scope of the proposed project, . . . [and a] detailed description of the
overall financial plan for the proposed project[.]” 10 C.F.R. § 609.6(b). Moreover,
similar to the ATVM Loan Program, the regulations specify that “[o]nly a Loan
Guarantee Agreement executed by a duly authorized DOE Contracting Officer can
contractually obligate DOE to guarantee loans or other debt obligations [,]” id.§ 609.10(a), and that the “DOE is not bound by oral representations made” at any stage
in the application process, id. § 609.10(b).
However, unlike the ATVM Loan Program application process, the LG Program
regulations require“[p]ayment of [an] Application filing fee” as part of an LG Program
application, and the regulations specifically state that the “DOE will not consider any
Application complete” until the application fee is paid. Id. § 609.6(b)(2), (c).
Moreover, LG Program applications that satisfy all of the applicable requirements are
ultimately subjected to “a competitive process” in which all applications are evaluated
according to a series of factors and compared to each other. Id. § 609.7(a)–(b). To
facilitate this process, prior to accepting applications for a loan guarantee, the DOE
issues public solicitations for specific types of projects that it is looking to support , and
it entertains LG Program applications pursuant to that solicitation . Id. § 609.3(a). For
example, Plaintiff Limnia submitted the LG Program application that is at issue in the
instant case in response to a DOE solicitation in June of 2008 for loan guarantee
applications related to “projects in the United States that employ energy efficiency,
renewable energy, and advanced transmission and distribution technologies[.]” U.S.
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Dep’t of Energy, DE-FOA-0000005, Loan Guarantee Solicitation Announcement 2
(2008) (“LG Solicitation Announcement”). The solicitation set a deadline of February
26, 2009, for any such applications, and noted that “[a]ll applicants must remit twenty-
five percent (25%) of the application fee . . . upon submission of their applications to
[the] DOE.” Id. at 7. The solicitation also provided a schedule to determine the
particular fee amount for each applicant, advising applicants “to make proper
arrangements to assure that Treasury receives such fees on behalf of DOE by the dates
specified[,]” and including instructions for the wire transfer. Id. at 9; see also id. at 59
(providing details for wire transfer). 3
B. The Facts Of The Instant Case
Plaintiffs’ complaint makes various assertions of fact regarding the
circumstances surrounding the DOE’s consideration and processing of XPV’s ATVM
loan application and Limnia’s ATVM Loan Program and LG Program applications.
These allegations, many of which are related below, must be accepted as true for the
purpose of evaluating Defendants’ motions to dismiss.
1. XPV’s ATVM Loan Application
XPV is a now-dissolved “green technology” company that applied for an ATVM
loan in December of 2008, seeking to fund the research and development of “an
advanced technology, family-friendly SUV-style vehicle[.]” (Am. Compl., ECF No. 26,
¶¶ 1, 3, 14.) XPV’s application asserted that its proposal fulfilled the requirements of
3
The application fee for this specific solicitation varied according to the size of the loan guarantee
being requested. See LG Solicitation Announcement at 12. According to the solicitation, the
application fee for a loan guarantee up to $150 million was $75,000. See id. Thus, an applicant for a
loan guarantee of this size would need to remit at least $18,750 (totaling 25% of the total application
fee owed) at the time the application was submitted. See id.
8
the DOE’s ATVM Loan Program because XPV planned to used “polymer plastics and
skinned expanded foam pressure membranes to replace metal doors, body panels, hoods
and roofs on a lightweight alloy frame[,]” and in so doing, XPV would produce an
extremely light-weight vehicle that was also safe in operation because it employed
“wraparound, pre-deployed ‘airbag’” technology. (Id. ¶ 17.)
According to the complaint, on December 2, 2008, Defendant Seward—the
director of the ATVM Loan Program at that point in time—“acknowledged receipt” of
XPV’s application and “requested additional information[,]” which XPV provided. ( Id.
¶ 22.) Then, on December 31, 2008, Seward allegedly sent a letter to XPV indicating
that XPV’s application was “substantially complete” (id. ¶ 22; Ex. 2 to Am. Compl.,
ECF No. 26-1, at 11), which led XPV to believe that the DOE had deemed XPV a
“qualified applicant” such that the agency “would begin processing XPV’s ATVM Loan
Program application . . . no later than the end of December 2008, and that the review
would take a matter of weeks, consistent with normal commercial lending practices”
(Am. Compl. ¶¶ 23–24). Instead, XPV alleges that its application was “‘set-aside’ in
favor of applications from politically-connected government cronies [because]
Defendants had ‘fixed’ the ATVM Loan Program process to benefit political donors”
(id. ¶ 26), as explained further below.
The complaint asserts that, beginning in the spring of 2009—approximately four
months after XPV submitted its ATVM loan application—XPV had a series of
interactions with the DOE relating to the status of XPV’s ATVM loan application.
First, Plaintiffs allege that, on April 23, 2009, the DOE’s Chief of Staff and Senior
Investment Officer, Jason Gerbsman, notified XPV that its “substantially complete”
9
application had “been assigned to both a technical eligibility and merit review team , as
well as a financial viability analysis team[,]” and that “[t]he technical team is very
close to finishing their evaluations on both eligibility and project merit, and the
financial team will be launching a more detailed and interactive due diligence phase of
the XPV application review very soon.” (Id. ¶ 27 (alteration omitted).) This
communication was allegedly followed by an offer of an in-person meeting to “discuss
‘next steps’” (id. ¶ 28); then, on May 28, 2009, Gerbsman purportedly met with an XPV
representative, at which point Gerbsman allegedly told XPV that “‘everything looked
good’” and that its application was “‘fully compliant and [had] passed technical
review’” (id. ¶¶ 29). Furthermore, according to the complaint, the DOE also declined
to provide XPV with the same types of “special assistance” with the application process
that it gave XPV’s competitors during this period because, “as DOE staff put it, XPV’s
application was so good that special assistance was unnecessary.” (Id. ¶ 31; see also id.
¶ 36 (alleging that the DOE staff made optimistic statements to XPV over a seven-week
period beginning in June of 2009).)
Notwithstanding the reassurances that members of the DOE staff allegedly
provided to XPV during the application process, the DOE denied XPV’s ATVM loan
request on August 21, 2009. (Id. ¶ 37.) The rejection letter, which Defendant Seward
signed (and which XPV has filed as an exhibit to the complaint) asserted that the DOE
was “not in a position to [make an] award [to] every eligible application[,]” and
suggested that the XPV’s application did not pass the DOE’s merit review. (Ex. 3 to
Am. Compl., ECF No. 26-1, at 13; see also Am. Compl. ¶ 38.) 4 Seward further
4
Page numbers throughout this Opinion refer to those that the Court ’s electronic filing system assigns.
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explained generally that “the program [must] choose applications that are mostly likely
to use the limited loan proceeds in a way that will best achieve the goals of the
program.” (Ex. 3 to Am. Compl. at 13.)
XPV alleges that it immediately requested both a statement regarding the
specific grounds for the agency’s denial of its application and a copy of the DOE’s
merit review documents. (Am. Compl. ¶¶ 39, 40.) XPV also allegedly placed a phone
call to the DOE within five days of the denial (id. ¶ 42); according to the complaint, the
DOE staff person with whom the XPV representative spoke pulled the company’s
application file and orally provided myriad reasons for the denial, none of which XPV
believed was valid (id. ¶¶ 43–45). 5 The complaint also alleges that, during this phone
conversation, Defendant Seward entered the room and cut the conversation off abruptly,
directing the staff person to tell XPV that the DOE would send a letter to XPV outlining
more fully the reasons that its loan application was denied. (Id. ¶ 52.)
The complaint alleges that no such letter was forthcoming. (Id. ¶ 53.) Thus, on
September 21, 2009—approximately one month after the denial letter issued—XPV sent
the DOE a written request for reconsideration of the denial of its ATVM loan
application. (Id. ¶ 54; Ex. 4 to Am. Compl., ECF No. 26-1, at 15.) In this written
request, XPV pointed out that the reasons for the denial that the DOE staffer had
provided on the phone were contrary to the information in XPV ’s application (Ex. 4 to
Am. Compl. at 15), and XPV also asked the DOE to respond to a list of fifteen specific
questions pertaining to its review of XPV’s application (id. at 16–18).
5
The complaint states that a variety of reasons were provided for the denial of XPV’s application,
including that XPV’s proposed vehicle did not use E85 gasoline; XPV did not plan for government fleet
sales; and XPV’s advanced technology was “too futuristic” and not adequately developed. ( Id.)
11
Approximately one month later, on October 23, 2009, Seward responded in
writing to XPV’s reconsideration request, providing a more detailed explanation for the
denial of XPV’s application. (See Am. Compl. ¶¶ 55–63; Ex. 5 to Am. Compl., ECF
No. 26-1, at 21.) The Seward letter did not claim that XPV had failed to meet any of
the eligibility requirements set forth in the ATVM Loan Program’s regulations (Am.
Compl. ¶ 64), and it thus seemingly addressed the merits of XPV’s proposal. Seward
explained that XPV’s proposed technology “appeared from the application to be at a
development stage and not yet ready for commercialization[,]” which was a “significant
weakness[.]” (Ex. 5 to Am. Compl. at 21.) Moreover, the project’s “impact on fuel
economy . . . was determined to be weak”; the storage system for hydrogen was
“unproven and potentially impractical for a consumer vehicle”; and the company’s
“claims for reductions in petroleum use . . . were deemed to be unrealistic[.]” (Id.)
2. Limnia’s ATVM Loan Application
Limnia is a green technology company that, unlike XPV, is still in operation.
(Id. ¶¶ 2–3.) Limnia filed a loan application through the ATVM Loan Program in
February of 2009 to produce an “advanced technology vehicle energy storage system”—
i.e., a vehicle battery. (Id. ¶ 68.) Limnia and XPV are sister companies, and Limnia’s
proposed energy storage system was the power source for XPV’s proposed lightweight
SUV. (Id. ¶¶ 3, 12, 68.)
The DOE rejected Limnia’s ATVM application on April 10, 2009, on the ground
that Limnia’s energy storage system was a stand-alone charging station, not equipment
to be installed in a vehicle, and thus was not a “qualifying component” under 42 U.S.C.
§ 17013(d)(1). (Id. ¶ 69; Ex. 6 to Am. Compl., ECF No. 26-1, at 24.) Limnia requested
reconsideration of this determination, noting that its energy storage system did, in fact,
12
have to be installed inside a vehicle in order to be used, and that it actually was
designed for this purpose. (Id. ¶ 70.) On May 13, 2009, the DOE rejected Limnia’s
ATVM loan application for a second time, giving Limnia the same reason that it had
proffered in the first denial. (Id. ¶ 71.) The DOE did, however, request further
information from Limnia that would allow it to reevaluate Limnia’s application. (Id.;
Ex. 8 to Am. Compl., ECF No. 26-1, at 30–31.) According to the complaint, Limnia
responded to this letter on June 3, 2009, by providing the requested information and
seeking reconsideration of its application once again. (Am. Compl. ¶ 72.) Plaintiffs
allege that, as of the time the instant complaint was filed, the DOE had not responded to
Limnia’s request for another review. (Id. ¶¶ 71–73.)
3. Limnia’s LG Program Application
Around the same time that Limnia applied for an ATVM loan, it also applied for
an LG Program loan guarantee, pursuant to the aforementioned solicitation that the
DOE published in June of 2008. (Id. ¶ 77.) Plaintiffs allege that, prior to Limnia’s
submission of its application in February of 2009, then-Secretary Chu had stated in a
conference call that the graduated LG Program fees “were unduly onerous and
burdensome[,]” and had “promised to waive the application fee.” (Id. ¶ 76.) Due to
that representation, Limnia did not submit the fee (or any portion thereof) along with its
LG Program application. (Id. ¶ 77.)
According to the complaint, on February 26, 2009—the day of the application
deadline—a DOE official called Limnia to warn that the DOE would not consider
Limnia’s application without the fee. (Id. ¶ 78.) Limnia was unable to remit the fee by
the midnight deadline (id. ¶ 79), and according to the complaint, the following day,
another DOE official told Limnia that there were “a few days of flexibility” to send in
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the fee, and promised to send written instructions for sending the fee (id. ¶¶ 80–81).
That official allegedly never got back to Limnia, despite Limnia’s best efforts to follow
up. (Id.) Then, on April 9, 2009, the DOE sent Limnia an email informing Limnia that
its LG Program application would not be considered because Limnia failed to pay the
required application fee. (Id. ¶ 82; Ex. 10 to Am. Compl., ECF No. 26-1, at 39.)
4. Plaintiffs’ Allegations Regarding Political Favoritism And The GAO
Report
At the heart of the complaint is Plaintiffs’ contention that the various reasons the
DOE provided for denying XPV’s and Limnia’s loan applications were “baseless
pretexts” for political cronyism. (Am. Compl. ¶ 118(i).) In a nutshell, Plaintiffs assert
that “[p]olitics and political pressure infected [the ATVM and LG] programs, shaping,
in whole or in part, the judgment of the agency’s ultimate decision makers, including
Defendants Chu and Seward, their staffs, advisors and consultants. ” (Id. ¶ 84.)
Plaintiffs maintain that they became aware of the inequitable manner in which
the agency was operating these loan programs in a variety of ways—and even prior to
the denials at issue. For example, according to the complaint, Plaintiffs first got wind
of possible unfair dealing during a June 2009 conversation with an unnamed corporate
executive, who allegedly said his company had “been ‘screwed over’ by DOE” and
asserted that DOE employees were “playing favorites with government money.” ( Id.¶¶ 32–33.) Plaintiffs also allegedly watched as the DOE appeared to provide XPV’s
competitors Tesla Motors, Inc. and Fisker Motors, Inc. “special assistance” with the
application process—e.g., giving Fisker “extraordinary access to DOE staff time” and
providing “offices and conference rooms in DOE’s headquarters at no charge”—while
denying XPV these same resources. (Id. ¶¶ 30–31.) Additionally, Plaintiffs claim that
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a member of Tesla’s board, who was also a “major campaign contributions ‘bundler’ for
the White House[,]” was on “a key DOE advisory board” (id. ¶ 91), and another
“accomplished campaign contribution ‘bundler’” was a “Tesla investor and advisor”
who had a “primary role” in the DOE’s Loan Program Office (id. ¶ 92). According to
the complaint, the political contributions of these two “patrons” purportedly resulted in
Tesla’s “favorable treatment” by the DOE with respect to the loan application process
(id. ¶ 93); therefore, Plaintiffs suggest that it was no wonder that the DOE ultimately
“gave Tesla $465 million of taxpayer funds at an interest rate of 1.6% and on extremely
favorable, below-market terms[.]” (Id. ¶ 34.) Plaintiffs also allege that similar
preferential treatment was afforded to Fisker, a company whose “patrons” allegedly had
made large donations to the Obama campaign and other Democratic causes . (Id. ¶ 100.)
The complaint suggests that these donations effectively purchased political influence,
which was allegedly a “material factor[]” in the DOE’s decision to grant an ATVM loan
to Fisker despite a litany of Fisker failures. (Id. ¶¶ 101, 103–09.)
Plaintiffs also point to a number of emails from DOE officials , and assert that
this correspondence indicates that the DOE was under political pressure to approve
particular loan applications. (See id. ¶¶ 112–13.) For example, one email suggests that
the DOE’s review of a loan applicant was sped up as a result of pressure from then -
House Majority Leader Steny Hoyer. (See Ex. 19 to Am. Compl., ECF No. 26-1, at
200.) Another email indicates that the White House made an effort to encourage the
DOE to hasten review of another loan application. (See Ex. 14 to Am. Compl., ECF
No. 26-1, at 189.) Plaintiffs claim that these and other emails demonstrate that
“Defendants bent the rules for political favorites[.]” (Am. Compl. ¶ 113.)
15
Finally, Plaintiffs insist that this anecdotal evidence of political favoritism
regarding the DOE’s loan practices was confirmed in February of 2011 and March of
2012, when the Government Accountability Office (“GAO”) issued two reports
regarding the DOE’s implementation of the ATVM Loan Program and LG Programs.
(See U.S. Gov’t Accountability Office, Department of Energy: Advanced Technology
Vehicle Loan Program Implementation Is Under Way, But Enhanced Technical
Oversight And Performance Measures Are Needed (“GAO ATVM Report”), Ex. 11 to
Am. Compl., ECF No. 26-1, at 42–80; U.S. Gov’t Accountability Office, DOE Loan
Guarantees: Further Actions Are Needed to Improve Tracking and Review of
Applications (“GAO LG Program Report”), Ex. 13 to Am. Compl., ECF No. 26 -1, at
130–187.) 6 The GAO ATVM Report, which is attached to Plaintiffs’ complaint,
concluded that the ATVM Loan Program had successfully “injected significant funds
into the U.S. automotive industry” (GAO ATVM Report at 70), but the report also
flagged two areas of concern: first, that the DOE lacked the necessary technical
expertise to oversee the progress of companies that had received ATVM loans (id.), and
second, that the DOE lacked certain “quantifiable performance measures[,]” particularly
in the context of fuel economy standards (id. at 70–71). Both of these GAO-identified
deficiencies related to the back-end of the ATVM Loan Program—i.e., they were
concerns regarding the DOE’s monitoring of successful loan applicants, rather than its
selection of loan recipients in the first place.
6
The GAO is “the audit, evaluation, and investigative arm of Congress” that “exists to support
Congress in meeting its constitutional responsibilities and to help improve the performance and
accountability of the federal government for the American people.” (GAO ATVM Report at 80.)
16
By contrast, the GAO’s LG Program report focused on implementation problems
related to the application stage. The GAO noted that the DOE did not have access to
consolidated data about past and present LG Program applications , which made it
difficult for the DOE to review and identify problems within the application process.
(GAO LG Program Report at 152–54.) Additionally, the GAO found that although the
DOE had established a comprehensive process for reviewing and granting LG Program
applications, that process had been applied inconsistently in practice. (Id. at 155.) For
example, the GAO had reviewed the application process for a number of successful
applicants, and it found that the agency’s actual application review practices differed in
at least one respect from the process outlined in the DOE’s LG Program guidance
manuals in almost every case. (See id. at 156–60.) The GAO acknowledged the DOE’s
contention that these apparent inconsistencies were caused by out-of-date manuals and
were not due to any error or intentional action on the part of DOE staff, but the GAO
cautioned that the disconnect between the published review processes and the actual
review practices could undermine the DOE’s assurance that all LG Program applicants
are “treated . . . consistently and equitably.” (Id. at 163.)
The instant complaint seizes on the GAO’s critiques, repeatedly referencing the
two reports and asserting that the GAO’s conclusions support Plaintiffs’ cronyism
accusations. (See Am. Compl. ¶¶ 85–88, 110–11.) According to Plaintiffs, the
problems that the GAO identified in the ATVM report in particular—e.g., the DOE’s
lack of technical expertise and its use of inadequate performance measures in evaluating
the performance of successful ATVM applicants—“facilitated the politicization of
DOE’s loan programs.” (Id. ¶ 88.) And, in Plaintiffs’ view, the GAO’s LG Program
17
report establishes that the DOE treated applicants inconsistently, by “favoring some
[applicants] and disadvantaging others[.]” (Id. ¶ 111.)
C. Procedural History
Plaintiffs filed the initial complaint in the instant case on January 10, 2013; an
amended complaint followed, on August 20, 2013. 7 Plaintiffs bring seven claims for
relief: two Fifth Amendment Due Process claims (one against the DOE and Muniz, i.e.,
the “Official Capacity Defendants,” and another against Chu and Seward, i.e., the
“Individual Capacity Defendants”); two Fifth Amendment Equal Protection claims (also
one against each of the two defendant types); and three APA claims (one brought by
XPV related to the DOE’s processing of its ATVM loan application, and two brought b y
Limnia related to the agency’s consideration of each of its two loan applications).
With respect to the four constitutional claims, Plaintiffs contend that the DOE’s
failure to engage in a fair merits review of Plaintiffs’ applications and its improper
consideration of political contributions and influence resulted in the deprivation of a
constitutionally-protected property interest—the requested ATVM loans—and subjected
Plaintiffs to discriminatory treatment, in violation of their Fifth Amendment rights to
7
This is the second lawsuit that these plaintiffs have filed in federal court arising out of the DOE ’s
denial of their loan applications—the first was an action brought against the United States that was
filed in the U.S. Court of Federal Claims on November 14, 2012. (See Compl., XP Vehicles, Inc. v.
United States, No. 12-cv-774 (Fed. Cl. Nov. 14, 2012), ECF No. 1.) In the complaint filed in that case,
as amended, Plaintiffs sought $450 million in damages (see Am. Compl., XP Vehicles, Inc. v. United
States, No. 12-cv-774 (Fed. Cl. Oct. 16, 2013), ECF No. 35, ¶ 30), and brought claims for equitable
estoppel against the United States with respect to XPV and Limnia ’s ATVM loan applications (id.
¶¶ 119–28); promissory estoppel against the United States regarding Limnia ’s LG Program application
arising out of Limnia’s reliance on Chu’s alleged promise to waive the application fee ( id. ¶¶ 129–34);
breach of an implied-in-fact contract for the fair review of both companies ’ ATVM loan applications
(id. ¶¶ 135–42); and breach of the duty of good faith and fair dealing ( id. ¶¶ 143–46). The United
States moved to dismiss the action in its entirety (see Def.’s Mot. to Dismiss Am. Compl., XP Vehicles,
Inc. v. United States, No. 12-cv-774 (Fed. Cl. Dec. 16, 2013), ECF No. 36), and the court granted this
motion on June 5, 2014, see XP Vehicles, Inc. v. United States, No. 12-774C, 2015 WL 3543629, at *16
(Fed. Cl. June 5, 2015).
18
due process and equal protection. (See id. ¶¶ 130–32, 145, 148; see also Am. Compl.
¶¶ 121–36 (Claim 1); id. ¶¶ 137–141 (Claim 2); id. ¶¶ 142–48 (Claim 3); id. ¶¶ 149–154
(Claim 4).) As noted, Plaintiffs make these constitutional claims against both groups of
Defendants, requesting injunctive relief with respect to the Official Capacity
Defendants and seeking $225 million in damages from the Individual Capacity
Defendants for these alleged civil rights violations (id. at 32–33).
As for the APA claims, Plaintiffs argue that the Official Capacity Defendants
acted arbitrarily and capriciously when the DOE denied XPV’s ATVM loan application
(id. ¶¶ 155–60 (Claim 5)), Limnia’s ATVM loan application (id. ¶¶ 161–66 (Claim 6)),
and Limnia’s LG Program application (id. ¶¶ 167–71 (Claim 7)). Plaintiffs allege that
the DOE’s rejection of each application constituted “final agency action” for the
purposes of the APA (id. ¶¶ 156, 162, 168), and that its decision making process was
“impermissibly infected with political pressure, which shaped, in whole or in part,” the
ultimate agency decision (id. ¶¶ 157, 163, 169). Plaintiffs seek an order declaring that
their loan applications were wrongfully denied and directing the DOE to reconsider
their applications. (Id. at 33.)
On September 18, 2013, Defendants filed two separate motions to dismiss—one
on behalf of the Official Capacity Defendants and the other on behalf of the Individual
Capacity Defendants. (See Official Capacity Defs.’ Mot. to Dismiss (“Off. Defs.’
Mot.”), ECF No. 28; Individual Fed. Defs.’ Mot. to Dismiss & Inc. Mem. of Law
(“Indiv. Defs.’ Mot.”), ECF No. 27.) These motions seek dismissal under Federal Rules
of Civil Procedure 12(b)(1) and 12(b)(6). Defendants’ first line of attack challenges
this Court’s jurisdiction to reach the merits of a number of Plaintiffs’ claims. First,
19
Defendants argue that, to the extent that Plaintiffs are attempting to recover monetary
damages against a government agency or government officials in their official capacity,
such damages are barred by sovereign immunity. (See Official Capacity Defs.’ Mem. in
Supp. of Off. Defs.’ Mot. (“Off. Defs.’ Mem.”), ECF No. 28, at 19–20.) Defendants
also argue that Limnia’s ATVM Loan Program claims (both the constitutional and the
APA variety) are unripe (see id. at 23–27), and that both Plaintiffs lack standing to
bring certain claims (see id. at 20–23, 27–28). With respect to the merits of Plaintiffs’
four constitutional claims, Defendants maintain that Plaintiffs have failed to state a
claim for a violation of their Fifth Amendment rights to due process or equal protection.
(Off. Defs.’ Mem. at 30–33; Indiv. Defs.’ Mot. at 43–47.) Defendants also argue that
XPV lacks the capacity to sue for injunctive relief. (See Off. Defs.’ Mem. at 28–29;
Indiv. Defs.’ Mot. at 25 n.16.) And the Individual Capacity Defendants argue that
Plaintiffs constitutional claims against them are barred by the statute of limitations (see
Indiv. Defs.’ Mot. at 25–29); that a Bivens action (permitting the recovery of damages
from public officials for constitutional violations) has not yet been established in this
context and should not be extended to encompass Plaintiffs’ constitutional claims (see
id. at 29–31); and that, in any event, the Individual Capacity Defendants are protected
from liability by qualified immunity (id. at 41–43). Finally, with respect to Plaintiffs’
APA claims in particular, the Official Capacity Defendants assert that there has been no
final agency action with respect to Limnia’s ATVM loan application (see Off. Defs.’
Mem. at 29–30), and that Plaintiffs have not adequately alleged a violation of the APA
with respect to Limnia’s LG Program application (see id. at 33–35).
20
This Court held oral argument on Defendants’ motions to dismiss on April 3,
2014, and it took the motions under advisement at that time.
II. LEGAL STANDARDS
A. Motions To Dismiss Under Rule 12(b)(1)
The defense of sovereign immunity relates to a federal court ’s jurisdiction, see
Tri-State Hosp. Supply Corp. v. United States, 341 F.3d 571, 575 (D.C. Cir. 2003); thus,
a request for dismissal on sovereign immunity grounds is properly evaluated under Rule
12(b)(1), see Mullen v. Bureau of Prisons, 843 F. Supp. 2d 112, 116 (D.D.C. 2012).
Similarly, when a plaintiff lacks standing, or when the plaintiff’s claims are not ripe,
dismissal under Rule 12(b)(1) for lack of subject matter jurisdiction is the proper
course. See Haase v. Sessions, 835 F.2d 902, 906 (D.C. Cir. 1987) (“[T]he defect of
standing is a defect in subject matter jurisdiction.”); Sierra Club v. U.S. Dep’t of
Energy, 825 F. Supp. 2d 142, 154 (D.D.C. 2011) (“The issue of ripeness falls under
Rule 12(b)(1).”).
In response to a Rule 12(b)(1) motion to dismiss, “the plaintiff bears the burden
of establishing jurisdiction by a preponderance of the evidence.” Moran v. U.S. Capitol
Police Bd., 820 F. Supp. 2d 48, 53 (D.D.C. 2011) (citing Lujan v. Defenders of Wildlife,
504 U.S. 555, 561 (1992)); Halcomb v. Office of the Senate Sergeant-at-Arms of the
U.S. Senate, 209 F. Supp. 2d 175, 176 (D.D.C. 2002). The court “may consider such
materials outside the pleadings as it deems appropriate to resolve the question 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); see also Jerome Stevens Pharms., Inc. v. FDA, 402 F.3d
1249, 1253 (D.C. Cir. 2005). Moreover, the court must accept as true all of the factual
21
allegations in the complaint and draw all reasonable inferences in favor of the plaintiff,
see Brown v. District of Columbia, 514 F.3d 1279, 1283 (D.C. Cir. 2008), but it need
not “accept inferences unsupported by the facts alleged or legal conclusions that are
cast as factual allegations[,]” Rann v. Chao, 154 F. Supp. 2d 61, 64 (D.D.C. 2001).
Furthermore, “[t]he court must scrutinize the plaintiff’s allegations more closely when
considering a motion to dismiss pursuant to Rule 12(b)(1) than it would under a motion
to dismiss pursuant to Rule 12(b)(6).” Schmidt v. U.S. Capitol Police Bd., 826 F. Supp.
2d 59, 65 (D.D.C. 2011).
B. Legal Standard On A Motion To Dismiss Under Rule 12(b)(6)
“A Rule 12(b)(6) motion tests the legal sufficiency of a complaint [.]” Browning
v. Clinton, 292 F.3d 235, 242 (D.C. Cir. 2002). “To survive a motion to dismiss, a
complaint must contain sufficient factual matter, accepted as true, to ‘state a claim for
relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)
(quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). Plausibility “is
not akin to a probability requirement, but it asks for more than a sheer possibility that a
defendant has acted unlawfully.” Id. The plausibility standard is satisfied “when the
plaintiff pleads factual content that allows the court to draw the reasonabl e inference
that the defendant is liable for the misconduct alleged.” Id. “[W]hile ‘detailed factual
allegations’ are not necessary, the plaintiff must provide ‘more than an unadorned, the-
defendant-unlawfully-harmed-me accusation.’” Schmidt, 826 F. Supp. 2d at 65 (quoting
Iqbal, 556 U.S. at 678).
In deciding whether to dismiss a complaint for failure to state a claim under Rule
12(b)(6), the court generally does not consider matters beyond the pleadings, which
differs from the court’s treatment of a motion to dismiss under Rule 12(b)(1). See Ward
22
v. D.C. Dep’t of Youth Rehab. Servs., 768 F. Supp. 2d 117, 119–20 (D.D.C. 2011). In
the Rule 12(b)(6) context, the court only considers “the facts alleged in the complaint,
documents attached as exhibits or incorporated by reference in the complaint, or
documents upon which the plaintiff’s complaint necessarily relies[.]” Id. at 119(internal quotation marks and citation omitted). The court “must treat the complaint’s
factual allegations—including mixed questions of law and fact—as true and draw all
reasonable inferences therefrom in the plaintiff’s favor.” Epps v. U.S. Capitol Police
Bd., 719 F. Supp. 2d 7, 13 (D.D.C. 2010) (citing Holy Land Found. for Relief & Dev. v.
Ashcroft, 333 F.3d 156, 165 (D.C. Cir. 2003)). However, the court need not accept as
true inferences unsupported by the facts set out in the complaint or legal conclusions
cast as factual allegations. See Browning, 292 F.3d at 242.
III. ANALYSIS
As explained above, XPV and Limnia allege that impermissible political
favoritism and cronyism infected the DOE’s implementation of the ATVM Loan
Program and the LG Program, and resulted in the unwarranted and arbitrary denial or
rejection of their respective loan applications in a manner that violated Plaintiffs’ Fifth
Amendment rights to due process and equal protection and that also transgressed the
APA. Defendants’ first line of attack against the advancement of these claims is a
series of jurisdictional arguments. (See, e.g., Off. Defs.’ Mem. at 23–27 (asserting that
Limnia’s ATVM Loan Program claims are unripe); id. at 27–28 (asserting that Limnia
lacks standing to bring its ATVM Loan Program claims); id. at 20–23 (asserting that
XPV lacks standing to sue for injunctive relief because it is a dissolved corporation) .)
For the reasons explained below, however, this Court concludes that none of the
23
asserted jurisdictional roadblocks prevents the Court from reaching the merits of
Plaintiffs’ claims.
Nevertheless, the Court has determined that all of XPV’s claims and most of
Limnia’s claims must be dismissed pursuant to Rule 12(b)(6), for a variety of reasons.
XPV’s due process, equal protection, and APA claims against the Official Capacity
Defendants must be dismissed because XPV is a dissolved corporation that lacks the
capacity to sue for injunctive relief. In addition, XPV’s due process and equal
protection claims against the Individual Capacity Defendants fail as a matter o f law
because no Bivens action is available for these alleged civil rights violations under the
circumstances presented here, and as a result, claims for monetary damages cannot be
brought against these defendants. Limnia’s constitutional claims suffer a similar fate:
the lack of a Bivens action requires dismissal of Limnia’s constitutional claims against
the Individual Capacity Defendants, and the constitutional claims against the Official
Capacity Defendants must be dismissed because Limnia fails to state facts that
adequately support any such claim. However, this Court concludes that Limnia may
proceed with its APA claims regarding the denial of both its ATVM loan application
and its LG Program application because the complaint contains allegations that, if true,
are sufficient to establish that the Official Capacity Defendants acted arbitrarily and
capriciously in handling those applications.
A. This Court Has Jurisdiction Over The Claims In Plaintiffs’ Complaint
When a defendant challenges a federal court’s jurisdiction, the court is obligated
to consider the jurisdictional objections before reaching the merits of any claim. See
Bancoult v. McNamara, 445 F.3d 427, 432 (D.C. Cir. 2006) (“The first and fundamental
question that we are bound to ask and answer is whether the court has jurisdiction to
24
decide the case.” (internal quotation marks and citation omitted)); see also Steel Co. v.
Citizens for a Better Env’t, 523 U.S. 83, 94–95 (1998) (“The requirement that
jurisdiction be established as a threshold matter ‘spring[s] from the nature and limits of
the judicial power of the United States’ and is ‘inflexible and without exception.’”
(alteration in original) (quoting Mansfield, C. & L.M. Ry. Co. v. Swan, 111 U.S. 379,
382 (1884))). As mentioned above, Defendants make several jurisdictional arguments
in this case. Setting aside Defendants’ sovereign immunity argument (see Off. Defs.’
Mem. at 19–20)—the inapplicability of which was made clear when Plaintiffs’ counsel
clarified during this Court’s hearing that monetary damages were not being sought
against the Official Capacity Defendants—Defendants’ jurisdictional contentions are
(1) that Limnia’s claims with respect to the administration of the ATVM Program are
not ripe (see id. at 23–27); (2) that Limnia lacks standing to seek relief related to the
denial of its ATVM loan application because it has not been injured by that denial (see
id. at 27–28); and (3) that XPV lacks standing to bring claims for injunctive relief (see
id. at 20–23). These jurisdictional arguments are unavailing for the reasons that follow.
1. Limnia’s ATVM Loan Program Claims Are Ripe
The reasons that Defendants give for challenging on ripeness grounds the
constitutional and APA claims that Limnia brings with respect to its ATVM loan
application are easy to summarize: Defendants maintain, first, that because the DOE
rejected Limnia’s application at the initial screening stage of the review process and did
not consider the merits of Limnia’s ATVM application, Limnia’s claims regarding the
DOE’s treatment of its application are not yet ripe—in other words, that any legal
claims challenging the agency’s determination regarding an applicant’s ATVM loan
application ripen only when the agency addresses the application’s merits (see id. at
25
25–27)—and second, that Limnia has requested that the DOE reconsider its denial of
Limnia’s LG Program application, and that request is still pending before the DOE, so
any attempt to challenge the DOE’s actions at this point is “incurably premature” (id. at
23–25). These arguments invite this Court to examine Limnia’s claims through the lens
of the “ripeness” doctrine, which is a jurisdictional principle “designed ‘to prevent the
courts, through avoidance of premature adjudication, from entangling themselves in
abstract disagreements over administrative policies, and also to protect the agencies
from judicial interference until an administrative decision has been formalized and its
effects felt in a concrete way by the challenging parties.’” Nat’l Park Hospitality Ass’n
v. Dep’t of Interior, 538 U.S. 803, 807–08 (2003) (quoting Abbott Labs. v. Gardner,
387 U.S. 136, 148–49 (1967)).
It is well established that, to determine whether or not a claim is ripe, a court
must “evaluate (1) the fitness of the issues for judicial decision [,] and (2) the hardship
to the parties of withholding court consideration.” Nat’l Park Hospitality Ass’n, 538
U.S. at 808. The “fitness” prong is often the heart of the matter, and whether or not a
claim is fit for judicial determination turns on three factors: “whether [the issue] is
purely legal, whether consideration of the issue would benefit from a more concrete
setting, and whether the agency’s action is sufficiently final.” Am. Petroleum Inst. v.
EPA, 683 F.3d 382, 387 (D.C. Cir. 2012) (internal quotation marks and citation
omitted). Here, it is clear that the questions Limnia raises—i.e., whether the DOE’s
rejection of its ATVM loan application violated the Fifth Amendment, and/or was
arbitrary and capricious—are purely legal inquiries. See Atl. States Legal Found. v.
EPA, 325 F.3d 281, 284 (D.C. Cir. 2003) (“Claims that an agency’s action is arbitrary
26
and capricious or contrary to law present purely legal issues. ”); Beach Commc’ns, Inc.
v. FCC, 959 F.2d 975, 986 (D.C. Cir. 1992) (holding that an equal protection claim
presents a purely legal question). And Defendants cannot credibly contend that these
legal issues would benefit from further development such that another setting would be
more appropriate for the resolution of Liminia’s claims than this Court. See Gen. Elec.
Co. v. EPA, 290 F.3d 377, 381 (D.C. Cir. 2002) (finding a challenge to agency action
ripe where “nothing would be gained by delaying review”); see also State Farm Mut.
Auto. Ins. Co. v. Dole, 802 F.2d 474, 484 (D.C. Cir. 1986) (finding a case not yet ripe
because “it would be helpful to the court to see” the way in which the challenged rule
“actually operates in practice”). Therefore, it is clear that what is actually animating
Defendants’ ripeness argument with respect to Limnia’s claims is Defendants’ ardent
assertion that the agency’s consideration of Limnia’s ATVM loan application has never
reached the merits review stage and thus is not yet “final” (the third fitness factor).
(See Off. Defs.’ Mem. at 26 (“At this stage, however, claims regarding Limnia’s ATVM
loan application are not ‘sufficiently final,’ and therefore are not fit for judicial
review.”).)
Specifically, as mentioned, Defendants maintain that the “final agency action”
factor of the ripeness inquiry is a hurdle that has not been cleared with respect to the
agency’s treatment of Limnia’s ATVM application because the DOE has not made a
decision on the merits of Limnia’s application and also because there is a pending
motion for reconsideration of the DOE’s initial denial. (See id. at 23–27.) Thus, in
essence, Defendants’ argument requires this Court to address two related aspects of the
DOE’s determination, each of which implicates the ultimate “final agency action”
27
inquiry—first, has there really been cognizable agency “action” for ripeness purposes,
if the DOE’s determination relates only to the initial (screening) stage of the loan
application review process and not the merits?; and if so, second, can the DOE’s action
with respect to Limnia’s application properly be characterized as “final” given the fact
that Limnia has requested further consideration by the agency? For the reasons that
follow, this Court finds that the answer to both of these questions is yes, and it
therefore concludes that Limnia has satisfied the final agency action factor of the
ripeness test.
a. The DOE’s Denial Of Limnia’s ATVM Loan Application Is
Sufficiently Final Even Though The DOE Did Not Consider
The Merits Of That Application
Defendants argue that the DOE’s decision to reject Limnia’s ATVM loan
application is not “sufficiently final” because the DOE has not yet “ conducted a
substantive review of Limnia’s application.” (Off. Defs.’ Mem. at 26.) But ripeness
doctrine does not require that an agency reach and determine the underlying merits of
an application or petition—as distinguished from making a determination regarding
initial eligibility criteria—so long as the agency has made a final and unequivocal
decision with respect to what it does review, such that its determination represents the
consummation of the agency’s decision making process and establishes legal rights and
obligations or fixes a legal relationship. See Nat’l Mining Ass’n, 758 F.3d 243, 250
(D.C. Cir. 2014) (“An agency action is final only if it is both ‘the consummation of the
agency’s decisionmaking process’ and a decision by which ‘rights or obligations have
been determined’ or from which ‘legal consequences will flow.’” (quoting Bennett v.
28
Spear, 520 U.S. 154, 177–78 (1997))). 8 An agency action reflects the consummation of
the agency’s decision making process when the action is “definitive[,]” Fourth Branch
Assocs. (Mechanicville) v. FERC, 253 F.3d 741, 746 (D.C. Cir. 2001) (quoting Ciba-
Geigy Corp. v. U.S. EPA, 801 F.2d 430, 436 (D.C. Cir. 1986)), and is not “tentative,
open to further consideration, or condition[ed] on future agency action[,]” City of Dania
Beach, Fla. v. FAA, 485 F.3d 1181, 1188 (D.C. Cir. 2007). Furthermore, it is clear
beyond cavil that the rejection of a request for a government benefit—such a loan or a
loan guarantee—“fixes some legal relationship” between a private party and the
government. Meredith v. Fed. Mine Safety & Health Review Comm’n, 177 F.3d 1042,
1047 (D.C. Cir. 1999); see also Detroit Int’l Bridge Co. v. Canada, No. 10-cv-476,
2014 WL 2257137, at *13 (D.D.C. May 30, 2014) (noting that denial of a permi t
application constitutes final agency action).
The DOE’s denial of Limnia’s ATVM loan application plainly satisfies these
requirements, notwithstanding the fact that, according to the complaint, the denial
occurred at the initial stage of the DOE’s application review process. Plaintiffs allege
that the DOE first rejected Limnia’s application for an ATVM loan on April 10, 2009
(see Am. Compl. ¶ 69), based on the agency’s allegedly mistaken determination that
Limnia’s “proposed project cannot, as a matter of law, be funded under the Program”
because it is a component that “do[es] not appear to be designed for installation in an
advanced technology vehicle” (Ex. 6 to Am. Compl. at 24–25). After Limnia requested
8
Courts typically have considered whether or not agency action is “final” in the context of an
evaluation of the APA’s “final agency action” requirement. See 5 U.S.C. § 704. However, this same
jurisprudence has been adopted as applicable to the fitness prong of the ripeness analysis. See Abbott
Labs. v. Gardner, 387 U.S. 136, 149–50 (1967) (considering final agency action in the context of
ripeness); Sprint Corp. v. FCC, 331 F.3d 952, 956 (D.C. Cir. 2003) (“Final agency action pursuant to
the [APA] is a crucial prerequisite to ripeness[.]” (internal quotation marks and citation omitted)) .
29
reconsideration and provided additional documentation, the DOE sent Limnia a letter
dated May 13, 2009, in which the agency stated that “the additional information has not
changed our determination that your proposed project cannot, as a matter of law, be
funded under the Advanced Technology Vehicles Manufacturing Incentive Program[.]”
(Ex. 8 to Am. Compl. at 30.) In this same correspondence, the agency asked Liminia
for more information (id. at 31; Am. Compl. ¶ 71), which Limnia apparently provided,
but the additional material apparently failed to satisfy the DOE’s staff—more than two
years later, in October of 2011, the agency “sent Limnia a letter . . . stating that
Limnia’s application was [nevertheless] not substantially complete[,]” (Ex. 5 to Pls.’
Off. Opp’n, ECF No. 30-6, at 2). 9 Then, continuing the saga, the DOE sent yet another
letter to Limnia the following year, on October 23, 2012, in which the agency stated
that it had reviewed additional documents and information, and had found once again
that Limnia’s application “is not substantially complete as required” by the applicable
regulations. (Id.) The agency further reiterated its obviously cemented position
regarding the status of Limnia’s application in March of 2013, when it sent yet another
letter to Limnia providing “clarification on the deficiencies that rendered Limnia, Inc. ’s
ATVM[ Loan Program] application not substantially complete.” (Ex. C to Off. Defs.’
Mem., ECF No. 28-1, at 8.)
This Court finds that all of these letters and statements plainly constitute a final
decision of the DOE rejecting Limnia’s ATVM loan application for the purpose of the
9
The letter that the DOE purportedly sent to Limnia in October of 2011 is referenced in two DOE
documents, one that the Official Capacity Defendants submitted for this Court’s consideration as an
attachment to their motion to dismiss and one that Plain tiffs submitted as an attachment to their
opposition to the Official Capacity Defendants’ motion to dismiss. ( See Ex. 5 to Pls.’ Off. Opp’n at 2;
Ex. C to Off. Defs.’ Mem., ECF No. 28-1, at 8.) This Court is permitted to look beyond the complaint
because ripeness is a jurisdictional issue. See Scolaro, 104 F. Supp. 2d at 22.
30
ripeness doctrine. The DOE stated in no uncertain terms in its letter of April 10, 2009,
that it had “carefully reviewed” Limnia’s application and had “determined” that the
proposed project was not eligible to receive an ATVM loan “as a matter of law.” (Ex. 6
to Am. Compl. at 24.) Furthermore, the agency also apparently determined that
Limnia’s application was not substantially complete, and it stated that the DOE would
“take no further action with respect to your application until such time as you have
submitted an application that is substantially complete.” (Ex. 5 to Pls.’ Off. Opp’n at
2.) The series of letters from the DOE to Limnia provide no indication that the DOE’s
determination regarding the status of Limnia’s application is at all tentative or open to
any further reconsideration; indeed, the most recent correspondence unmistakably
pushes the ball into Limnia’s court, suggesting steps that Limnia might take “[t]o aid in
completing” its application, and thereby clearly indicating that the agency would not
proceed to continue to evaluate its submission otherwise. (Ex. C to Off. Defs.’ Mem. at
8.)
To the extent that Defendants here are suggesting that the DOE’s determination
that Limnia’s submission was “not substantially complete” is not tantamount to a final,
substantive denial of Limnia’s loan request (Off. Defs.’ Mem. at 26), they have two
problems—first, the mandate that this Court must construe the facts alleged in the
complaint in the light most favorable to the Plaintiffs to the extent those allegations are
consistent with evidence presented means that, at least for the purpose of the instant
motion to dismiss, it must be presumed that the DOE did, in fact, “carefully review[]”
Limnia’s application as it expressly stated it had done (Ex. 6 to Am. Compl. at 24), and
that the agency “denied” that application for the substantive reasons expressed in its
31
letters. (See Am. Compl. ¶ 69; Ex. 6 to Am. Compl. at 24–25; Ex. 8 to Am. Compl. at
30–31.) Second, and perhaps even more important, Defendants have not provided this
Court with any reason to draw any distinction between an initial completeness
determination, on the one hand, and a substantive decision to deny an ATVM loan
application (e.g., for lack of eligibility or on the merits), on the other—and no reason is
apparent, given that a rejection for lack of completeness and a substantive denial of an
ATVM loan application are both the end of the road from the applicant’s standpoint and
have the same practical effect on the applicant’s rights. To find otherwise, as
Defendants would have this Court do, would be to presume that there is some
jurisdictional significance to the agency’s decision to deny a loan application on the
merits, as opposed to rejecting the application on some other ground that is antecedent
to a merits determination, when federal courts routinely consider challenges to agency
determinations regarding antecedent matters such as an agency’s own ability to reach
the merits of a particular dispute. See, e.g., Daiichi Sankyo Co., Ltd. v. Rea, 12 F.
Supp. 3d 8, 14–15 (D.D.C. 2013) (reviewing Patent and Trademark Office decision that
the agency could not review plaintiff’s request for reconsideration because it was
untimely filed); Adirondack Med. Ctr. v. Sebelius, No. 11-cv-313, 2012 WL 285142, at
*2 (D.D.C. Jan. 31, 2012) (holding that an agency’s finding that it lacks jurisdiction
“constitutes final agency action, and it is properly before this Court ”).
In short, Defendants fail to identify a single case that supports distinguishing
between the DOE’s decision regarding the completeness of Limnia’s application and a
substantive decision on the merits as far as final agency action is concerned, and this
Court sees no good reason to draw any such line, especially when the evidence indicates
32
that the DOE considered Limnia’s application numerous times and repeatedly expressed
its determination that (for whatever reason) the proposed project would not be funded.
Thus, the mere fact that the DOE apparently did not base its rejection on the merits of
Limnia’s application is not determinative of the ripeness issue; regardless, in light of
the allegations and evidence presented, the DOE’s unequivocal rejection of Limnia’s
ATVM loan application was a “final” action on the part of the agency.
b. The Fact That Limnia Requested Reconsideration Of The
DOE’s Determination Regarding Its ATVM Loan Application
Does Not Render Limnia’s Challenge Unripe
Undaunted, Defendants raise another finality objection as part of their ripeness
challenge: they maintain that there is no final agency action because Limnia has
requested reconsideration of the agency’s decision and, according to the complaint, that
request is still pending; therefore, the claims that Limnia has brought here are
“incurably premature[.]” (See Off. Defs.’ Mem. at 23; see also Am. Compl. ¶¶ 70–73
(alleging that Limnia repeatedly requested reconsideration of the DOE ’s initial
determination that its project was ineligible for funding, and that “Defendants never
responded” to Limnia’s second reconsideration request).) A line of D.C. Circuit case
law does stand for the proposition that a request for reconsideration requires a litigant
to wait for the agency to act before that litigant is permitted to file suit, see Clifton
Power Corp. v. FERC, 294 F.3d 108, 110 (D.C. Cir. 2002), and this doctrine holds that,
even if the agency completes its reconsideration before the litigant’s lawsuit is heard on
the merits, the premature lawsuit cannot proceed—hence, the “incurable” part of the
incurably premature doctrine, see TeleSTAR, Inc. v. FCC, 888 F.2d 132, 134 (D.C. Cir.
1989) (“We hold therefore that when a petition for review is filed before the challenged
action is final and thus ripe for review, subsequent action by the agency on a motion for
33
reconsideration does not ripen the petition for review or secure appellate jurisdiction.”) ;
see also Pen Peninsula Commc’ns, Inc. v. FCC, No. 00-1079, 2000 WL 1225776, at *1
(D.C. Cir. July 11, 2000) (expressly referring to “[t]he incurably premature doctrine”).
However, it is far from clear that this doctrine applies to the sort of agency decision
making at issue in this case. 10 And even if the incurably premature doctrine is
applicable to the instant circumstances, this Court concludes that that doctrine does not
render Limnia’s ATVM Loan Program claims unripe for the very simple reason that the
record in this case clearly demonstrates that the DOE completed the requested
reconsideration before Limnia filed the complaint at issue here.
Specifically, as noted above, the DOE first rejected Limnia’s ATVM loan
application on April 10, 2009. (Am. Compl. ¶ 69; Ex. 6 to Am. Compl. at 24–25.)
Limnia responded by asking for an explanation and reconsideration. (Am. Compl.
¶ 70.) In response to this, the DOE affirmed its decision but gave Limnia the
opportunity to submit additional information and to request reconsideration (Ex. 8 to
Am. Compl. at 31), which Limnia subsequently did on June 3, 2009 (Am. Compl.
¶¶ 71–72). Plaintiffs claim that the DOE failed to respond at all to this second request
for reconsideration. (Id. ¶ 73.) And although the complaint ends the story there, the
documentation that the parties have submitted establishes that the DOE did, in fact,
10
The First Circuit has noted that the incurably premature analysis, which appears to have developed in
the context of the types of agency action that are subject to direct review by the D.C. Circuit, has only
been applied where “either the governing statute or the implementing r egulations expressly provided
for agency reconsideration.” Craker v. DEA, 714 F.3d 17, 24 (1st Cir. 2013). Furthermore, the main
concerns underlying the doctrine—“the judicial economy concerns” arising from concurren t
jurisdiction—“are considerably diminished in cases . . . in which reconsideration may or may not have
been permitted in the agency’s discretion[,]” id. at 25, and thus, according to the First Circuit, the
incurably premature doctrine should not be employed “where the reconsideration process is ad hoc,” id.Because the ATVM Loan Program regulations do not provide for any formal reconsideration process , it
is thus at least conceivable that the incurably premature doctrine does not even apply in cases such as
this one.
34
respond to Limnia’s 2009 reconsideration request; thereafter, it sent multiple letters,
stating repeatedly that it had “thoroughly reviewed all information that was provided”
to the agency, and that Limnia’s application was still “not substantially complete.” (Ex.
5 to Pls.’ Off. Opp’n at 2.) Nothing in the record indicates that Limnia sought a further
round of reconsideration, despite the DOE’s repeated characterization of its application
as incomplete and its suggestion to Limnia that the company research the program
requirements and try again. (See Ex. C to Off. Defs.’ Mem. at 8.) Thus, there is no
factual basis for concluding that the agency was still engaged in any reconsideration
process at the time that the complaint in this case was filed. See TeleSTAR, Inc., 888
F.2d at 134. In other words, even if the Official Capacity Defendants are correct that
Limnia’s request for reconsideration in 2009 rendered the DOE’s decision non-final at
that time, the DOE’s subsequent rejection of Limnia’s ATVM application again—in
2012—constituted a new final agency decision with respect to which no reconsideration
request apparently was made, such that Plaintiffs’ filing of the instant complaint in
January of 2013 was not at all premature, much less “incurably” so.
In sum, this Court concludes that Limnia’s claims are fit for review because they
present purely legal questions that would not benefit from resolution in a more concrete
setting, and based on the evidence submitted, the DOE unequivocally rejected Limnia’s
ATVM loan application in a manner that constitutes final agency action despite
Limnia’s prior requests for reconsideration of that decision. As a result, Limnia’s
ATVM Loan Program claims are sufficiently ripe. 11
11
Having found that the fitness prong of the ripeness test is satisfied, this Court need not proceed to
consider the second prong of the ripeness analysis. See Nat’l Mining Ass’n v. Fowler, 324 F.3d 752,
756–57 (D.C. Cir. 2003) (stating that, where “there are no significant agency or judicial interests
militating in favor of delay”—i.e., where the first prong of the ripeness analysis raises no concerns —
35
2. Plaintiffs Have Standing To Bring Their ATVM Loan Program Claims
Defendants have also questioned whether the Plaintiffs have Article III standing
to file a lawsuit challenging the manner in which the DOE handled their ATVM loan
applications. Lack of standing is a jurisdictional issue because Article III of the
Constitution authorizes the federal courts to consider only “Cases” and
“Controversies[,]” U.S. Const. art. 3, § 2, and to demonstrate a case qualifies as such, a
plaintiff must allege an “injury in fact” that is “fairly traceable to the challenged action
of the defendant” and that is capable of being “redressed” by the Court. Lujan v.
Defenders of Wildlife, 504 U.S. 555, 560–61 (1992) (internal quotation marks,
alterations, and citations omitted). Defendants maintain that Limnia lacks standing
because the complaint alleges that the DOE provided Limnia with specific reasons for
its rejection of Limnia’s ATVM loan application and thus establishes that Limnia has
not been injured. (See Off. Defs.’ Mem. at 28.) Defendants also assert that XPV’s
alleged injury is not redressible by a decision of this Court because, as a dissolved
corporation, XPV lacks the capacity to sue for injunctive relief. (See Off. Defs.’ Mem.
at 20–23.)
Defendants’ standing arguments are not persuasive. First of all, the denial of
Limnia’s ATVM loan application clearly qualifies as a concrete injury-in-fact, see Care
Net Pregnancy Ctr. of Windham Cnty. v. U.S. Dep’t of Agric., 896 F. Supp. 2d 98, 108
(D.D.C. 2012), and Plaintiffs’ complaint adequately alleges that this denial was caused
by Defendants (see Am. Compl. ¶¶ 68–71). Moreover, this injury is capable of being
then the second prong “cannot tip the balance against judicial review” ) (internal quotation marks and
citation omitted)).
36
redressed by court order, if the Court orders either reconsideration or reversal of the
DOE’s decision, as Limnia requests. See Am. Petroleum Tankers Parent, LLC v. United
States, 943 F. Supp. 2d 59, 66 (D.D.C. 2013) (finding “vacatur of the Administrator’s
denial and remand for further consideration” would adequately redress improper denial
of a loan guarantee application). The Official Capacity Defendants’ argument that
Limnia has already received the remedy it requests because the DOE reconsidered its
rejection of Limnia’s application and provided “an explanation of the information
needed to submit a substantially complete application[,]” and thus Limnia has not been
injured (Off. Defs.’ Mem. at 28), misunderstands Limnia’s complaint, and is also belied
by the very record documents that the Official Capacity Defendants rely so heavily
upon in making their jurisdictional arguments. That is, Limnia maintains that the
DOE’s reasons for rejecting its application are, in essence, a pretext for improper
political cronyism (see Pls.’ Mem. in Opp’n to Off. Defs.’ Mot. (“Pls.’ Off. Opp’n”),
ECF No 30, at 34); consequently, the DOE’s “explanation” is arguably a part of
Limnia’s alleged rejection injury, and it is certainly not the cure for that alleged harm,
as Defendants suggest. Moreover, even if one could say that Limnia’s initial rejection
was remedied (and thus redressed) when the DOE reconsidered its ATVM application
upon request, to the extent that recent correspondence between the parties demonstrates
that the DOE has now refused to continue to process Limnia’s current ATVM Loan
application (see Ex. 5 to Pls.’ Off. Opp’n at 2), the challenged agency action is
ongoing, and the alleged injury to Limnia persists.
Defendants’ argument that XPV lacks standing to bring any claims against the
Official Capacity Defendants because XPV is a dissolved corporation—and as such, it
37
does not have the capacity to sue for injunctive relief (see Off. Defs.’ Mem. at 20–23)—
fails because that argument relies on the mistaken premise that lack of capacity
necessarily means that an injury is not redressable for Article III standing purposes (see
id.). In actuality, redressability does not involve consideration of whether a plaintiff
actually will, or even could, receive the requested relief, as Defendants’ maintain;
rather, it is a theoretical concept that assumes that the plaintiff can and will prevail and
get relief, and considers only the extent to which requested remedy relates to the
alleged harm. See Fla. Audubon Soc’y v. Bentsen, 94 F.3d 658, 663–64 (D.C. Cir.
1996) (en banc) (“Redressability examines whether the relief sought, assuming that the
court chooses to grant it, will likely alleviate the particularized injury alleged by the
plaintiff.” (emphasis added) (footnote omitted)). Morevoer, it is clear that arguments
related to a plaintiff’s capacity to sue are not jurisdictional, and instead, relate to the
merits of a plaintiff’s claims. See In re Krause, 546 F.3d 1070, 1072 n.2 (9th Cir.
2008) (distinguishing the question of capacity from the question of standing); E.R.
Squibb & Sons, Inc. v. Accident & Cas. Ins. Co., 160 F.3d 925, 936 (2d Cir. 1998)
(“Lack of capacity is generally not considered jurisdictional[.]”); In re Thornburgh, 869
F.2d 1503, 1511 (D.C. Cir. 1989) (“We examine below the petitioners’ assertion that no
relief is available in this case; we decline, however, to conduct that analysis under the
rubric of standing doctrine.”); see also 6A Charles Alan Wright, Arther R. Miller &
Mary Kay Kane, Federal Practice and Procedure § 1559 (3d ed. 1998) (“To treat
capacity problems as subject-matter jurisdiction defects seems to exaggerate their
significance[.]”). This means that XPV is not disqualified from having Article III
standing on the basis of its purported lack of capacity, and this Court finds that
38
Plaintiffs’ complaint satisfies the criteria for XPV’s standing for the same reasons that
Limnia has standing—XPV is alleged to have suffered a concrete injury-in-fact that was
caused by the Defendants and is (theoretically) redress able by an action of this Court,
without regard to the fact that XPV is no longer a going concern. 12
B. XPV’s Claims Must Be Dismissed In Their Entirety
Nevertheless, as mentioned, when the Court considers the merits of XPV’s
claims in light of the allegations in Plaintiffs’ complaint, the Court concludes that
XPV’s claims must be dismissed in their entirety. As explained below, in the instant
action XPV makes five claims against two different groups of defendants: it argues that
it is due injunctive relief from the Official Capacity Defendants because their actions
violated XPV’s Fifth Amendment right to due process (Claim 1) and equal protection
(Claim 3) and because the Official Capacity Defendants’ denial of XPV’s ATVM loan
application was arbitrary and capricious in violation of the APA (Claim 5). XPV also
argues that it is entitled to monetary damages from the Individual Capacity Defendants
for these due process (Claim 2) and equal protection (Claim 4) violations. This Court
has determined, however, that XPV does not have the capacity to sue the Official
Capacity Defendants for injunctive relief, and that there is no Bivens action that permits
monetary damages to be recovered from the Individual Capacity Defendants for the
alleged constitutional violations under the circumstances presented here . Therefore, all
of XPV’s claims in this action must be dismissed.
12
This Court will address Defendants’ capacity argument as part of its evaluation of the other Rule
12(b)(6) arguments that Defendants’ have raised in their motions to dismiss. See infra Part III.B.1.
39
1. XPV Does Not Have The Capacity To Sue For Injunctive Relief
The Official Capacity Defendants argue that XPV cannot obtain the injunctive
relief it seeks from them because, as a dissolved corporation, XPV can only sue for
purposes of “winding up” its business operations, and it is not in a position to receive
the relief of reconsideration or approval of its ATVM loan application as if it were
operating as a going concern. (See Off. Defs.’ Mem. at 28.) This Court agrees with
Defendants.
Federal Rule of Civil Procedure 17 governs a party’s capacity to sue or be sued,
and applies to dissolved corporations. See Ripalda v. Am. Operations Corp., 977 F.2d
1464, 1468 (D.C. Cir. 1992). Rule 17(b)(2) dictates that a corporation’s capacity to sue
is determined “by the law under which it was organized[,]” Fed. R. Civ. P. 17(b)(2);
thus, because XPV was incorporated in California (see Am. Compl. ¶ 1), its capacity to
sue as a dissolved corporation is controlled by California law. Notably, under
California law, “the effect of dissolution is not so much a change in the corporation ’s
status as a change in its permitted scope of activity.” Penasquitos, Inc. v. Superior
Court, 812 P.2d 154, 160 (Cal. 1991). California Corporations Code section 2010
states that a dissolved corporation “continues to exist for the purpose of winding up its
affairs, [and] prosecuting and defending actions by or against it . . . but not for the
purpose of continuing business except so far as necessary for the winding up thereof .”
Cal. Corp. Code § 2010(a) (emphasis added). “Winding up” involves paying or making
provision for the payment of debts; distributing remaining assets to shareholders; and
filing a certificate of dissolution. See Trahan v. Trahan, 120 Cal. Rptr. 2d 814, 821
(Cal. Ct. App. 2002). Consequently, the key question here is whether or not the
injunctive relief that XPV has requested in the instant action is “necessary for the
40
winding up” of its operations. See Cal. Corp. Code § 2010(a). (See also Pls.’ Off.
Opp’n at 16–17 (citing the California code law).)
From the allegations of the complaint, it appears that, quite to the contrary, XPV
has brought the claims for injunctive relief in the instant action for the purpose of
restarting—in effect, revitalizing—its business operations, rather than winding them up.
Specifically, XPV seeks an injunction to require the DOE to reconsider an d/or grant
XPV’s loan application (Am. Compl. at 33) and, as noted at the outset, the ATVM Loan
Program grants loans to businesses for a very specific purpose: for the future
development and manufacture of advanced technology vehicles and certain component s
of those vehicles, see 42 U.S.C. § 17013(d)(1). Thus, if this Court orders the DOE to
reconsider XPV’s loan application, or orders the DOE to grant the application as XPV
requests, XPV would have to restart its operations to comply with the terms of any
resulting ATVM loan. This means that the relief XPV seeks here would necessarily
support the continuation of its operations, and is thus plainly contrary to section 2010’s
express limitation on a dissolved corporation’s right to sue. See Boyle v. Lakeview
Creamery Co., 68 P.2d 968, 970 (Cal. 1937) (noting that this provision’s “only purpose
. . . is to stop further doing of business as a going concern, and limit cor porate activities
to winding up”).
Similar circumstances arose in the case of Catalina Investments, Inc. v. Jones,
119 Cal. Rptr. 2d 256 (2002). In Catalina Investments, a dissolved corporation filed
suit seeking a writ of mandamus to compel California’s Secretary of State to reinstate
the corporation as a going concern. Id. at 258–59. The California Court of Appeal held
that California law only permits a dissolved corporation to sue for purposes of winding
41
up its affairs, id. at 260–61, and to the extent that the corporation in that case was suing
not to wind up but to reinstate its corporate existence, it lacked the capacity to sue, id.So it is here. XPV has brought claims against the Official Capacity Defendants to
secure an injunction requiring the consideration and granting of a loan application that
would, ultimately, serve to reactivate XPV’s dissolved business concern. Although
XPV may be correct that “winding up” activities under California law includes lawsuits
“for injuries arising before dissolution[,]” (Pls.’ Off. Opp’n at 16), Plaintiffs have not
provided any case in which a dissolved corporation has been granted injunctive relief
for such injuries—as opposed to monetary damages—much less a case that holds that,
under California law, courts are permitted to grant injunctions that have the effect of
reviving a dissolved business rather than shutting it down.
XPV’s argument that the relief it seeks is not really about restarting its business
because XPV could immediately assign to a third party any potential ATVM loan it
receives pursuant to the Court’s injunction, and thus accepting the loan would not
necessarily violate section 2010 (see Pls.’ Off. Opp’n at 17), is doubly flawed. First,
given the nature of ATVM loans and the fact that any assignment would require prior
written approval of both the DOE and the (non-party) Federal Financing Bank, see 10
C.F.R. § 611.110, an ATVM loan provided to XPV by the DOE pursuant to an order of
the Court may not, in fact, be assignable. Moreover, and in any event, in the absence of
any allegations of fact regarding how the dissolved company would utilize the
assignment proceeds, the possibility of assignment does not in itself satisfy the
requirement that the dissolved company’s lawsuit be “necessary for the winding up” of
its operations, Cal. Corp. Code § 2010(a), and Plaintiffs have made no such allegations
42
in this case; indeed, Plaintiffs have failed to identify any connection whatsoever
between the relief it seeks in this lawsuit and XPV’s process of winding up.
Accordingly, this Court concludes that, under California law, XPV lacks the
capacity to sue the Official Capacity Defendants to obtain the reconsideration and
granting of its ATVM loan application (i.e., the injunctive relief it seeks).
Consequently, XPV’s interest in Claims 1 and 3 of Plaintiff’s complaint (i.e., XPV’s
due process and equal protection claims against the Official Capacity Defendants) and
also Claim 5 of the complaint (XPV’s APA claim) must be dismissed.
2. Plaintiffs’ Claims Against The Individual Capacity Defendants Fail As
A Matter Of Law Because There Is No Bivens Action
XPV’s constitutional claims against the Individual Capacity Defendants fare no
better than its claims for injunctive relief brought against the Official Capacity
Defendants because, as the Individual Capacity Defendants point out and as explained
fully below, no cause of action exists that would permit the recovery of monetary
damages from the Individual Capacity Defendants due to the constitutional violations
that Plaintiffs allege. (Indiv. Defs.’ Mot. at 29–31.)
Although Plaintiffs do not say so expressly in their complaint, by filing claims
for monetary damages against the Individual Capacity Defendants based on those
officials’ alleged violation of Plaintiffs’ constitutional rights, Plaintiffs are seeking to
maintain a Bivens action—that is, an implied cause of action for damages as a result of
constitutional violations by federal government officials . See Bivens v. Six Unknown
Named Agents of the Federal Bureau of Narcotics, 403 U.S. 388, 395–97 (1971); see
also Patterson v. United States, 999 F. Supp. 2d 300, 308 (D.D.C. 2013) (reciting the
elements of a Bivens action: “(1) the defendant violated a federal constitutional right of
43
the plaintiff; (2) the right was clearly established; (3) the defendant was a federal actor
by virtue of acting under color of federal law; and (4) the defendant was personally
involved in the alleged violation” (citations omitted)). However, it is well established
that a Bivens action is not available for each and every type of constitutional infraction.
See Corr. Servs. Corp. v. Malesko, 534 U.S. 61, 68 (2001) (explaining that the universe
of claims for which Bivens liability is available is limited, and that, for the past thirty
years, the Supreme Court has “consistently refused to extend Bivens liability to any new
context or new category of defendants”). To date, an implied private cause of action
has been recognized under the Bivens doctrine for the violation of certain constitutional
amendments—including the Fifth Amendment—under specified circumstances,
Patterson, 999 F. Supp. 2d at 308–09, but that does not mean that a Bivens action is
necessarily available for the particular Fifth Amendment violations that Plaint iffs allege
in the present case. See FDIC v. Meyer, 510 U.S. 471, 484 n.9 (1994) (“[A] Bivens
action alleging a violation of the Due Process Clause of the Fifth Amendment may be
appropriate in some contexts, but not in others.”); Wilson v. Libby, 498 F. Supp. 2d 74,
86 (D.D.C. 2007) (“[I]t is not enough for [the] plaintiffs to point to cases recognizing
Bivens actions under the . . . Fifth Amendment[] generally.”), aff’d, 535 F.3d 697 (D.C.
Cir. 2008). And Plaintiffs have not identified (nor has this Court found) any case in
which a court recognizes an implied Fifth Amendment due process or equal protection
Bivens claim arising out of the denial of a federal loan application. 13 Thus, when
13
This is apparently not for lack of trying; indeed, Plaintiffs do point to one case—Hornsby v. Allen,
326 F.2d 605 (5th Cir. 1964)—in which the plaintiff alleged that a city liquor board violated her
Fourteenth Amendment right to procedural due process and equal protection by denying her application
for a liquor license because of politically-motivated decision making. (See Pls.’ Mem. in Opp’n to
Indiv. Defs.’ Mot. (“Pls.’ Indiv. Opp’n”), ECF No. 29, at 23–24.) But Hornsby was a Section 1983
case, not a Bivens action; consequently, the action and the remedy existed by statute, and there was no
44
evaluating whether or not Plaintiffs have stated a claim against the Individual Capacity
Defendants as a matter of law, this Court must first determine whether a Bivens action
is even available given the facts alleged in Plaintiffs’ complaint.
In making this determination, the Court must be cognizant of two circumstances
in which Bivens liability is ordinarily not extended: (1) if “any alternative, existing
process” provides good reason “to refrain from providing a new and freestanding
remedy in damages” (for example, if there is an alternative scheme for relief that makes
a Bivens action unnecessary), and (2) if there are “special factors counseling hesitation”
against extending a Bivens action to the new context. Wilkie v. Robbins, 551 U.S. 537,
550 (2007). With respect to the first of these circumstances, the Individual Capacity
Defendants argue that the APA provides an alternative, existing process by which
Plaintiffs can vindicate their rights (Indiv. Defs.’ Mot. at 31), but this Court agrees with
Plaintiffs that the APA—whether viewed alone or in conjunction with another statute—
does not provide the sort of process that would preclude a Bivens action (Pls.’ Mem. in
Opp’n to Indiv. Defs.’ Mot. (“Pls.’ Indiv. Opp’n”), ECF No. 29, at 25), because the
APA does not provide for monetary damages, see 5 U.S.C. § 702, and because it is
obviously directed toward agency action rather than the conduct of individual actors.
See Minneci v. Pollard, 132 S. Ct. 617, 625 (2012) (explaining that, to preclude a
Bivens action, the alternative scheme must “provide roughly similar incentives for
potential defendants to comply with the [Constitution] while also providing roughly
similar compensation to victims of violations”); see also Carlson v. Green, 446 U.S. 14,
21 (1980) (noting that “[i]t is almost axiomatic that the threat of damages has a
question about whether the cause of action should be implied .
45
deterrent effect,” and emphasizing that statutes that are focused on agency misconduct
create different incentives against constitutional violations than a Bivens action, which
is “recoverable against individuals” and thus “is a more effective deterrent” with
respect to such individuals).
Be that as it may, in this Court’s view, Plaintiffs’ bid to extend Bivens to the
constitutional claims they seek to bring against the Individual Capacity Defendants
clearly falters on the second of the established grounds—because there are at least two
“special factors” that convince this Court that a Bivens action should not be made
available under the circumstances presented here. See Munsell v. Dep’t of Agric., 509
F.3d 572, 591 (D.C. Cir. 2007) (stating that the second step in determining whether a
Bivens action should be permitted involves engaging in a “ ‘familiar’ common-law
balancing test, paying special heed to ‘special factors counseling hesitation.’” (quoting
Wilkie, 551 U.S. at 550)). First, a Bivens action is considered inappropriate “where
Congress has adopted a comprehensive remedial scheme.” Davis v. Billington, 681 F.3d
377, 381 (D.C. Cir. 2012) (internal quotation marks and citation omitted). 14 The APA
authorizes a litigant to challenge “arbitrary and capricious” agency action as well as
agency action that is “contrary to constitutional right, power, privilege, or immunity[,]”
5 U.S.C. § 706(2), and it contains “generous review provisions” that “serv[e] a broadly
remedial purpose.” Ass’n of Data Processing Serv. Orgs., Inc. v. Camp, 397 U.S. 150,
14
This factor is similar to, but less strict than, the first step of the Bivens analysis. Unlike the sort of
“alternative, existing process” necessary to satisfy the first step, Wilkie, 551 U.S. at 550, the type of
scheme considered under this special factor need not create the same sort of incentives or offer the
same sort of relief as a Bivens action, see, e.g., Schweiker v. Chilicky, 487 U.S. 412, 417–18 (1988)
(finding that relief afforded by Social Security Act is a special factor that counsels against extending
Bivens to wrongful withholding of benefits claim) ; Bush v. Lucas, 462 U.S. 367, 388–89 (1983)
(finding that relief afforded by Civil Service Reform Act is a special factor that counsels against
extending Bivens to a First Amendment violation in the federal employment context).
46
156 (1970). To be sure, the APA itself does not create substantive rights, see Navab-
Safavi v. Broad. Bd. of Governors, 650 F. Supp. 2d 40, 71 (D.D.C. 2009), aff’d sub
nom., Navab-Safavi v. Glassman, 637 F.3d 311 (D.C. Cir. 2011), but, here, those
substantive rights emerge from the EISA and relevant regulations, and through a
combination of the APA and the EISA, Plaintiffs are permitted to seek relief for any
allegedly unconstitutional action taken by Defendants in the course of running the
ATVM Loan Program. Thus, when taken together, the APA and the substantive
statutory and regulatory provisions that govern the ATVM Loan Program are plainly
sufficient to constitute the sort of comprehensive remedial scheme that courts have
found weighs against permitting a Bivens action to proceed. See Davis, 681 F.3d. at
383 (noting that a comprehensive remedial scheme is one “that reflects a considered
congressional judgment about which remedies should be available for claims that fall
within its ambit”); see also, e.g., Miller v. U.S. Dep’t of Agric. Farm Servs. Agency, 143
F.3d 1413, 1416–17 (11th Cir. 1998) (finding government employee’s Bivens action
precluded by the availability of the APA); Moore v. Glickman, 113 F.3d 988, 994 (9th
Cir. 1997) (same). 15
15
This Court does not, and need not, reach or resolve the question of whether the APA constitutes a
“comprehensive remedial scheme” within the meaning of the “special factors” analysis in the absence
of substantive statutory or regulatory provisions. See Munsell, at 589–90 (casting doubt on the ability
of the APA to displace a Bivens action on its own). Defendants have argued that “the APA . . . plus the
statutes and implementing regulations [with respect to the ATVM Loan Program] . . . preclude the
application of Bivens remedy here” (Indiv. Defs.’ Reply in Supp. of Indiv. Defs.’ Mot., ECF No. 32, at
14), and that contention is the basis for the “special factor” determination here. Moreover, with respect
to the comprehensiveness of the statutory remedy, it is of no moment that the APA does not permit
Plaintiffs to recover monetary damages from the Individual Capacity Defendants in addition to
injunctive relief with respect to the agency’s allegedly arbitrary conduct. The D.C. Circuit has held
that a comprehensive remedial scheme may counsel against recognizing a Bivens action even where that
scheme deprives a plaintiff of any remedy. See Davis, 681 F.3d at 386–88 (rejecting argument that the
lack of any remedy with respect to a comprehensive scheme supports a Bivens action); Wilson v. Libby,
535 F.3d 697, 709 (D.C. Cir. 2008) (“The special factors analysis does not turn on whether the statute
provides a remedy to the particular plaintiff for the particular claim he or she wishes to pursue.”); see
also Spagnola v. Mathis, 859 F.2d 223, 227 (D.C. Cir. 1988) (en banc) (explaining that what matters is
47
Second, courts should be reluctant to allow a Bivens action to proceed where the
precise scope of that action remains uncertain. See Wilkie, 551 U.S. at 560–61. In
extending Bivens, a court must be mindful that it is essentially “fashion[ing] a new,
judicially crafted cause of action[,]” Malesko, 534 U.S. at 68, and such a responsibility
must be undertaken with caution because, otherwise, “the[re is a] reasonable fear that a
general Bivens cure would be worse than the disease,” Wilkie, 551 U.S. at 561 & n.11;
see also id. at 561 n.11 (warning of dangers associated with Bivens actions where “the
elements of a claim are so unclear that no one can tell in advance what claim might
qualify or what might not”). In the Supreme Court’s Wilkie case, for example, a
plaintiff who was the owner and operator of a ranch in Wyoming alleged that federal
employees of the Bureau of Land Management violated his Fifth Amendment rights by
harassing him until he gave the government an easement. 551 U.S. at 543–47. In
attempting to clarify the scope of the requested Bivens action, the Court was concerned
about “the difficulty of devising a ‘too much’ standard that could guide an [agency]
employee’s conduct and a judicial factfinder’s conclusion[,]” id. at 561, and it
recognized that permitting an amorphous Bivens action “would invite claims in every
sphere of legitimate governmental action affecting property interests, from negotiating
tax claim settlements to enforcing Occupational Safety and Health Administration
regulations[,]” id. And the Court openly struggled to identify any “limiting principle”
with respect to the plaintiff’s claim that would prevent such an outcome. Id. at 561
n.11.
“the comprehensiveness of the statutory scheme involved, not the adequacy of specific remedies
extended thereunder” (internal quotation marks and citation omitted)).
48
The Bivens claims here, too, present “difficulty in defining a workable cause of
action[,]” id. at 555, because they are grounded in amorphous allegations of political
“cronyism” in the context of the administration of government loan programs. (See
Am. Compl. ¶¶ 137–41; 149–54.) The precise contours of the proposed Bivens action
are unclear—the requested Fifth Amendment action might relate only to a denial of a
government loan on the alleged basis of impermissible political considerations, or it
could cover a wide range of interactions between the government and private citizens in
the context of government benefits and contracting—and Plaintiffs do not suggest a
clear limiting principle. In addition, there appears to be no obvious way to draw a line
between official action that reflects legitimate and acceptable preferences in the
political sphere and impermissible favoritism. Consequently, the fact that this Court
would have difficulty determining the precise scope of the implied cause of action that
Plaintiffs seek to rely upon weighs heavily against recognizing a Bivens action under
these circumstances.
The Court is not persuaded by Plaintiffs’ arguments to the contrary—i.e.,
Plaintiffs’ contentions that the APA and EISA do not provide a comprehensive remedial
scheme and that permitting a Bivens action would not overly expand the availability of
such actions. To the extent that Plaintiffs seek to rely on Navab-Safavi v. Broadcasting
Board of Governors, 650 F. Supp. 2d at 69–73, for the proposition that the APA is not
the sort of comprehensive scheme that can preclude a Bivens action (see Pls.’ Indiv.
Opp’n at 25–26), that case does not compel this conclusion; at most, the Navab-Safavi
court held that the APA on its own was not the sort of comprehensive remedial scheme
that would constitute a special factor under the second step of the Bivens analysis, see
49
Navab-Safavi, 650 F. Supp. 2d at 71–73. Moreover, although Plaintiffs struggle
mightily to persuade the Court that permitting a Bivens action “ would not willy-nilly
trigger a flood of lawsuits for damages against any and all individual agency officials for
mere loan denials” (id. at 32), they have not provided any meaningful or practical guidance
regarding how to formulate a suitably narrow cause of action that could effectively avoid
this result.
This Court also concludes that the outcome of the “special factors” analysis
above outweighs Plaintiffs’ concern that a Bivens action might be the only avenue of
relief for XPV due to its dissolution. (See Pls.’ Indiv. Opp’n at 27–28.) See also
Munsell, 509 F.3d at 591 (noting that the “special factors” part of the Bivens analysis
involves a “common-law balancing test”). The Supreme Court and the D.C. Circuit
have evaluated similar concerns, see, e.g., Bivens, 403 U.S. at 410 (Harlan, J.,
concurring) (noting that, for plaintiffs, “it [wa]s damages or nothing”), and have
consistently determined that, even when a remedial scheme provides no or only limited
relief to a plaintiff, if the scheme is comprehensive or if it would be difficult to craft a
workable Bivens action, such remedy should not be recognized, see Davis, 681 F.3d at
387–88 (finding that a comprehensive scheme can preclude a Bivens action even where
no damages are available to the plaintiff under that scheme); Wilkie, 551 U.S. at 561–62
(refusing to recognize a Bivens action despite the patent inadequacy of the plaintiff ’s
remedies). Such is the case here.
In the final analysis, then, this Court is not willing to find that a Bivens action is
available to permit the recovery of monetary damages against the Individual Capacity
Defendants on the grounds that those officials were motivated by political favoritism
with respect to their administration of government loan programs in a manner that
50
violated the Plaintiffs’ constitutional rights. Therefore, the constitutional claims
against the Individual Capacity Defendants must be dismissed as a matter of law. 16
C. Limnia’s Constitutional Claims Against The Official Capacity
Defendants Must Be Dismissed, But Its APA Claims Can Proceed
What remains of the complaint at this point are the constitutional claims against
the Official Capacity Defendants with respect to Limnia’s ATVM loan application
(Claims 1 and 3 regarding Limnia) and the contention that the DOE acted arbitrarily
and capriciously in violation of the APA when it processed Limnia’s ATVM and LG
Program applications. 17 Defendants argue that these constitutional and APA claims are
subject to dismissal under Rule 12(b)(6), for failure to state a claim up on which relief
can be granted. (See Off. Defs.’ Mem. at 30–33 (asserting that the complaint fails to
state a claim for a violation of Limnia’s right to due process or equal protection); id. at
29–30 (asserting that Limnia’s ATVM Loan Program APA claim must be dismissed for
failure to allege final agency action); id. at 33–35 (asserting that the complaint contains
insufficient allegations of arbitrary or capricious agency action with respect to the
DOE’s rejection of Limnia’s LG Program application). As explained below, this Court
concludes that Limnia’s due process and equal protection claims against the Official
Capacity Defendants must be dismissed because Limnia has no property interest in an
ATVM loan and because there was a rational basis for the DOE’s denial of Limnia’s
ATVM loan application. However, the Court finds that Plaintiffs have stated a claim
for an APA violation with respect to the denial of Limnia’s ATVM Loan Program and
16
This Court’s analysis of the Bivens claims applies to—and disposes of—both XPV’s and Limnia’s
constitutional claims against the Individual Capacity Defendants (Claims 2 and 4).
17
It appears from the complaint that Plaintiffs’ constitutional challenge to Defendants’ conduct extends
only to Limnia’s ATVM loan application, not Limnia’s LG Program application.
51
LG Program applications, and thus, that Plaintiffs’ case may proceed with respect to
these two claims.
1. Plaintiffs’ Due Process Claim Fails Because The Complaint Does Not
Allege A Cognizable Property Interest
A due process challenge such as the one Plaintiffs seek to advance here must be
based on an allegation that the defendant “wrongfully deprive[d] a person of life,
liberty, or property[.]” Moses v. District of Columbia, 741 F. Supp. 2d 123, 126
(D.D.C. 2010); see also Ralls Corp. v. Comm. on Foreign Inv. in U.S., 758 F.3d 296,
315 (D.C. Cir. 2014). Plaintiffs’ complaint asserts that the DOE denied Limnia’s
ATVM loan application in a manner that violated Limnia ’s right to due process;
therefore, Plaintiffs’ due process claim is premised on the assumption that Limnia has a
constitutionally protected “property” interest in an ATVM loan. However, a
government benefit (such as a government loan) can only qualify as a constitutionally
protected property interest when a plaintiff has “more than an abstract need or desire
and more than a unilateral expectation of it” and “instead, ha[s] a legitimate claim of
entitlement to it.” Town of Castle Rock, Colo. v. Gonzales, 545 U.S. 748, 756 (2005)
(internal quotation marks and citation omitted). Put another way, “w hen a statute
leaves a benefit to the discretion of a government official, no protected property interest
in that benefit can arise.” Bloch v. Powell, 348 F.3d 1060, 1069 (D.C. Cir. 2003).
It is clear on the facts as Plaintiffs have alleged them that an ATVM loan is not a
protected property interest for due process purposes. Under the statute that establishes
the ATVM Loan program and its operative regulations, no applicant has a “legitimate
claim of entitlement” to such a loan, and in fact, the DOE plainly has considerable
discretion with respect to both what selection criteria are to be applied and also which
52
particular applicants will be funded. To be specific, the applicable statute plainly states
that the DOE “shall select” successful applicants, 42 U.S.C. § 17013(d)(3); see also
New Oxford Am. Dictionary 1536 (2nd ed. 2005) (defining “select” as “carefully
choose as being the best or most suitable”), and it expressly provides that a loan
application must be submitted “in such manner, and containing such information as the
Secretary [of Energy] may require,” 42 U.S.C. § 17013(d)(2). Moreover, other than
mandating that successful applicants be financially viable and be able to ensure that the
funds will be spent appropriately, Congress has left the selection criteria almost entirely
up to the DOE, specifying that applicants must satisfy “such other criteria as may be
established and published by the Secretary [of Energy].” Id. § 17013(d)(3).
The applicable regulations similarly indicate that the DOE has the discretion to
choose who has met the selection criteria and who ultimately will be awarded a loan .
See 10 C.F.R. §§ 611.100–611.112. For example, during the eligibility screening stage
of the loan process, the DOE evaluates whether an applicant meets all of the program
requirements, including the requirement of financial viability, see id. § 611.100(a)(2),
and although the regulations provide a list of considerations for the DOE in making the
financial viability determination, they also state that the list is non-exhaustive,
suggesting that the DOE may, in its discretion, consider other factors relevant to this
determination, see id. § 611.100(c). Similarly, the regulations provide a list of what
must be included in the loan application itself, but they also make clear that an
applicant must provide any “[o]ther information, as determined necessary by DOE.” Id.
§ 611.101(o). It is clear, then, that in addition to setting the eligibility requirements,
53
the DOE also has the authority to make case-by-case determinations as to whether the
initial criteria have been satisfied.
The DOE exercises discretion with respect to the consideration of ATVM loan
applications at the merits review stage as well. The relevant provision of the
application regulations lists a number of considerations that are taken into account as
part of the merits review, but also states clearly that the merits review is “not limited
to” those factors. Id. § 611.103(b). Moreover, many of the merits factors that are listed
in the regulations require the DOE to exercise judgment and consider how an
application fits within the broader purpose of the ATVM Loan Program. For example,
with respect to the ultimate award, the DOE may consider “diversity in technology,
company, risk, and geographic location[,]” id. § 611.103(b)(2)—which suggests that the
DOE may decline to approve a loan application even when the applicant has satisfied
all of the technical requirements, if the DOE has already funded applicant project that
uses the same type of technology or is located in the same geographic area. 18
The bottom line is this: the relevant statutory and regulatory provisions establish
that the DOE has the authority to make discretionary judgment calls and to move
beyond strict technical requirements when assessing ATVM Loan applications at
various stages in the application process. Thus, the DOE has been granted the sort of
discretion that prevents an ATVM loan from becoming the type of government
entitlement that creates a property interest in an applicant. See Ferrone v. Onorato, 298
18
Of course, notwithstanding the fact that the DOE has broad discretion to administer the ATVM loan
program by statute and thus applicants have no constitutionally protected property interest in receiving
such a loan, the agency is not immune from a suit for injunctive relief that challenges its operation of
the loan program. Discretion or no, the DOE must act in a manner that is consistent with the
requirements of the APA. See infra, Part III.C.3.
54
F.App’x 138, 139–40 (3d Cir. 2008) (holding that no property interest arises from
application for an economic development loan because the local gove rnment “had the
discretion to grant or deny disbursement of funds”); Snow Pallet, Inc. v. Clinton Cnty.
Indus. Dev. Auth., 46 F.App’x 787, 791–92 (6th Cir. 2002) (affirming dismissal of a due
process claim because no property interest arose out of the defendant’s decision to
reduce the amount received as a loan).
Plaintiffs appear to accept that the DOE has some discretion in administering the
ATVM Loan Program, but they argue nevertheless that this discretion is “substantially
limit[ed,]” such that a property interest still exist. (Pls.’ Indiv. Opp’n at 37–38.) The
“substantially limited” standard is derived from George Washington University v.
District of Columbia, 318 F.3d 203 (D.C. Cir. 2003), in which the D.C. Circuit noted
that, “in the land use arena[,]” most due process cases involved either “virtually
unlimited discretion” or “rather absolute entitlement[ ,]” id. at 207, and concluded that
the exception to the zoning regulation at issue in that case fell closer to the absolute
entitlement side (i.e., government discretion was substantially limited) because, under
the governing law, the exception plaintiff sought “must be issued as a matter of right if
the qualifying criteria are met[,]” id. at 208 (emphasis added). To the extent that
George Washington University even applies outside of the land use context, the law at
issue in that case clearly placed a far more severe restriction on government discretion
than exists in the context of the ATVM Loan Program. Here, the key statutory and
regulatory provisions reveal that the DOE can refuse to grant a loan to an applicant who
satisfies the enumerated requirements, and in fact, the DOE even has the ability to
create additional eligibility requirements of its own. Consequently, unlike the land use
55
plaintiffs, Limnia did not have a protected property interest in receiving a loan from the
DOE within the meaning of a proper due process claim, and as a result, Limnia’s due
process claim against the Official Capacity Defendants (Claim 1) must be dismissed.
See, e.g., Edwards v. Aurora Loan Servs., LLC, 791 F. Supp. 2d 144, 155 (D.D.C. 2011)
(rejecting applicability of George Washington University where the existence of
multiple “discretionary points . . . render[ed] any borrower’s expectation and
entitlement to a [loan] modification too uncertain to warrant protection under the Due
Process Clause”).
2. The Official Capacity Defendants Have Offered A Rational Basis For
The Denial Of Limnia’s ATVM Loan Application
Plaintiffs also fail to allege adequately that the denial of Limnia’s ATVM loan
application violated its Fifth Amendment right to equal protection ( Claim 3).
The Fifth Amendment’s guarantee of equal protection “requires state actors to
treat similarly situated persons alike.” Grissom v. District of Columbia, 853 F. Supp.
2d 118, 126 (D.D.C. 2012). Although a typical equal protection claim involves a claim
that the government is impermissibly discriminating against a particular group, see Bell
v. Duperrault, 367 F.3d 703, 709 (7th Cir. 2004) (Posner, J., concurring) (describing
the “usual equal protection case”), there is another type of equal protection claim that is
known as a “class of one” claim, see Kelley v. District of Columbia, 893 F. Supp. 2d
115, 122 (D.D.C. 2012), which is the kind of equal protection claim that Plaintiffs seek
to advance here (Pls.’ Indiv. Opp’n at 42). A “class of one” equal protection claim may
be maintained “where the plaintiff alleges that she has been intentionally treated
differently from others similarly situated and that there is no rational basis for the
difference in treatment.” Vill. of Willowbrook v. Olech, 528 U.S. 562, 564 (2000) (per
56
curiam); see also 3883 Connecticut LLC v. District of Columbia, 336 F.3d 1068, 1075
(D.C. Cir. 2003) (holding that there are “two essential elements of [a] ‘class of one’
equal protection claim: (1) disparate treatment of similarly situated parties (2) on no
rational basis.”). The first requirement—that there be another party that is similarly
situated to the plaintiff—“is not a mere formality[; r]ather, it serves to distinguish
claims to [obtain] the treatment that was afforded others, which can be cognizable under
principles of equal protection, from bare complaints of governmental unfairness, which
cannot.” Quezada v. Marshall, 915 F. Supp. 2d 129, 135 (D.D.C. 2013). Moreover,
there is a “presumption of rationality” that applies whenever rational basis review is the
operative standard, id., and in order to overcome it, a plaintiff must “negative any
reasonably conceivable state of facts that could provide a rational basis for the
classification[,]” Bd. of Trs. of Univ. of Ala. v. Garrett, 531 U.S. 356, 367 (2001)
(internal quotation marks and citation omitted). In effect, this means that the rational
basis inquiry is “highly deferential” to the government, Dixon, 666 F.3d at 1342, and
that an equal protection claim fails under Rule 12(b)(6) if the complaint itself suggests
a rational basis for the government action, see Miller v. City of Monona, 784 F.3d 1113,
1121 (7th Cir. 2015) (“[I]t is possible for plaintiffs to plead themselves out of court if
their complaint reveals a potential rational basis for the actions of local officials. ”); see
also Jackson v. Vill. of W. Springs, No. 14-3641, 2015 WL 2262703, at *4 (7th Cir.
May 15, 2015) (“[E]ven at the pleading stage a class-of-one plaintiff must negate any
reasonably conceivable state of facts that could provide a rational basis. ” (internal
quotation marks and citation omitted)); cf. Sparrow v. United Air Lines, Inc., 216 F.3d
1111, 1116 (D.C. Cir. 2000) (“In some cases, it is possible for a plaintiff to plead too
57
much: that is, to plead himself out of court by alleging facts that render success on the
merits impossible.”).
In the complaint at issue here, Plaintiffs assert that Limnia was treated
differently from “similarly[-]situated . . . crony companies like Tesla and Fisker”
because its ATVM loan application was denied despite being “equally as qualified to
receive ATVM Loan Program funds[.]” (Am. Compl. ¶ 144.) Furthermore, according
to the complaint, the DOE’s ostensible reason for denying Limnia’s loan application
was “mere pretext to preserve ATVM Loan Program funds for government -favored
companies and/or to protect those companies from competition. ” (Am. Compl. ¶ 69.)
The first of these assertions—that Limnia’s ATVM loan application was equally as
meritorious as the applications of Tesla and Fisker (see Am. Compl. ¶ 145)—must be
accepted as true at this point in the litigation, see Epps, 719 F. Supp. 2d at 13, and this
Court finds that (for the purpose of the motion to dismiss) it manifestly suffices to
establish that Limnia is similarly situated to other ATVM loan applicants.
However, with respect to the rational basis prong of the equal protection inquiry,
this Court concludes that Plaintiffs’ contentions regarding the pretextual nature of the
DOE’s reasons for denying Limnia’s application are not sufficient to support an
inference that the DOE’s decision was irrational. Specifically, as alleged in the
complaint, the DOE’s purported reason for rejecting Limnia’s ATVM loan application
in 2009 was that the energy storage system Limnia was developing did not constitute a
“qualifying component” under the terms of the EISA. (See Ex. 6 to Am. Compl. at 24–
25.) 19 The EISA defines “qualifying components” as components that are “ designed for
19
Plaintiffs cite to, and directly quote from, this letter in the complaint. ( See Am. Compl. ¶ 69.) The
letter is also central to Plaintiffs’ claim that the DOE’s reasons for rejecting Limnia’s ATVM loan
58
advanced technology vehicles; and . . . installed for the purpose of meeting the
performance requirements of advanced technology vehicles.” 42 U.S.C. § 17013(a)(4).
According to the DOE, Limnia’s energy storage system did not satisfy this definition
because it appeared to be “a stand alone recharging station” that was not “designed for
installation in an advanced technology vehicle” as required by the EISA (see Ex. 6 to
Am. Compl. at 25), and this explanation for rejecting Limnia’s application is plainly
enough to survive rational basis review. Moreover, and significantly, it appears that
even if the DOE was wrong about what the statute means or what Limnia’s product
does, the agency’s otherwise rational decision would still pass constitutional muster.
See Highway Materials, Inc. v. Whitemarsh Twp., 386 F. App’x 251, 259–60 (3d Cir.
2010) (holding that a township’s incorrect interpretation of its own ordinances “is not
material to [the plaintiff’s] equal protection claim”); Izquierdo Prieto v. Mercado Rosa,
894 F.2d 467, 471 (1st Cir. 1990) (noting that the central question on rational basis
review is not whether the governmental action “was right or wrong but whether some
rational basis for it can be discerned”).
This would normally be the end of the analysis—the DOE articulated a rational
explanation for its action ergo there can be no equal protection claim. See Hettinga v.
United States, 677 F.3d 471, 479 (D.C. Cir. 2012) (dismissing equal protection claim
upon finding that there was a rational basis). Plaintiffs allege, however, that the reason
the DOE provided for the agency’s rejection of the Limnia’s application is not the real
reason, and instead, is a mere pretext. (See Am. Compl. ¶ 69; see also Pls.’ Indiv.
application (as contained in that letter) are pretextual. ( See id.) This Court is therefore permitted to
consider the letter “without converting the motion to dismiss to a motion for summary judgment.”
Langer v. George Washington Univ., 498 F. Supp. 2d 196, 202 n.1 (D.D.C. 2007) .
59
Opp’n at 43 (“Defendants’ explanations cannot satisfy rational basis review since they
are nothing more than post hoc rationalizations.” (citations omitted)).) The D.C.
Circuit has not yet addressed the issue of the impact of a pretext allegation on the
rational basis analysis, and other circuits are divided regarding whether or not an
allegation of pretext in the context of a “class of one” equal protection claim is
sufficient to render an otherwise rational decision irrational. The Ninth Circuit has held
that a pretext contention may suffice to overcome an asserted rational basis where a
plaintiff alleges that she has been treated differently from similarly situated parties.
See Squaw Valley Dev. Co. v. Goldberg, 375 F.3d 936, 944 (9th Cir. 2004); see also
Fortress Bible Church v. Feiner, 694 F.3d 208, 224 (2d Cir. 2012) (finding that a
conclusion of no rational basis is “bolstered where . . . the evidence demonstrates that
the government’s stated concerns were pretextual”). By contrast, the Third, Seventh,
and Tenth Circuits have held that pretext allegations are irrelevant , so long as the
proffered basis for the decision is rational. See Highway Materials, Inc., 386 F. App’x
at 260 (finding allegation of pretext insufficient to establish equal protection violation );
Jicarilla Apache Nation v. Rio Arriba Cnty., 440 F.3d 1202, 1211 (10th Cir. 2006)
(“Because a class-of-one plaintiff must show that the official action was objectively
irrational and abusive, however, pretext is not an issue. ”); Smith v. City of Chicago, 457
F.3d 643, 651 (7th Cir. 2006) (rejecting argument that lack of rational basis can be
established by proof of pretext).
This Court finds that the Third, Seventh, and Tenth Circuits have the better of
the argument in light of existing law, and thus that a pretext allegation alone is not
sufficient to undermine an otherwise rational basis for government conduct in the
60
context of a “class of one” equal protection claim. The Court’s conclusion in this
regard is based primarily on the fact that there is no indication that the Supreme Court
intended a “class of one” equal protection claim to be a departure from more typical
equal protection claims, and in fact, it appears to be merely another “application” of
“the principle that the Equal Protection Clause is concerned with arbitrary government
classification[.]” Engquist v. Oregon Dep’t of Agr., 553 U.S. 591, 602 (2008). In
traditional equal protection contexts, the subjective motivations of the government actor
are not considered. See FCC v. Beach Commc’ns, Inc., 508 U.S. 307, 315 (1993)
(“[B]ecause we never require a legislature to articulate its reasons for enacting a statute,
it is entirely irrelevant for constitutional purposes whether the conceived reason for the
challenged distinction actually motivated the legislature.”); Women Involved in Farm
Econ. v. U.S. Dep’t of Agric., 876 F.2d 994, 1005 (D.C. Cir. 1989) (“Ordinarily, there is
no necessity in rational-basis scrutiny for a separate inquiry into the legislature’s actual
motivation, for the legislature’s subjective motivation does not undermine a
classification’s validity provided legitimate motivations are conceivable.” (emphasis in
original)). And refusing to credit allegations that the government’s actual motivation
was something other than the articulated basis when conducting rational basis review of
“class of one” claims is also consistent with the principle that even unstated bases for
government distinctions—and/or bases that the government did not actually rely upon —
satisfy the Equal Protection Clause if they are rational. See Waters v. Rumsfeld, 320
F.3d 265, 269 (D.C. Cir. 2003); Mitchell v. Yates, 402 F. Supp. 2d 222, 232 (D.D.C.
2005). 20
20
Where the government otherwise asserts a rational basis for its conduct, it appears that the only
circumstances in which pretext assertions are routinely deemed relevant are when a plaintiff alleges
61
Applying these principles here, this Court concludes that Plaintiffs ’ pretext
contention does not negate the otherwise rational basis that exists for the denial of
Limnia’s ATVM application. That is, even if Plaintiffs are correct that the real impetus
behind the DOE’s decision to reject Limnia’s ATVM loan application was the
Defendants’ desire to “preserve ATVM Loan Program funds for government-favored
companies and/or to protect those companies from competition” (Am. Compl. ¶ 69),
this motivation does not implicate a suspect classification or demonstrate intentional
discriminatory animus towards ATVM applicants that lacked political connections, and
therefore it does not overcome the rationality of the explanation the government has
provided for the purpose of the Court’s equal protection analysis. 21
Accordingly, the complaint in this case does not contain sufficient allegations to
make plausible Plaintiffs’ contention that, with respect to the DOE’s administration of
the ATVM Loan Program, Limnia was similarly situated to another party who was
treated differently, and that there was no rational basis for this differential treatment.
See 3883 Connecticut LLC, 336 F.3d at 1075. Thus, Limnia’s equal protection claim
against the Official Capacity Defendants (Claim 3) must be dismissed.
that the true reason for the government action triggers heightened scrutiny , see, e.g., Hernandez v. New
York, 500 U.S. 352, 363 (1991) (accepting evidence that peremptory challenges were actually race -
based); Pers. Adm’r of Mass. v. Feeney, 442 U.S. 256, 275 (1979) (addressing and rejecting a claim
that a statute giving hiring preference to veterans was “a pretext for gender discrimination”), or when
there is evidence that discriminatory animus infected a particular government action, see, e.g., City of
Cleburne v. Cleburne Living Ctr., 473 U.S. 432, 450 (1985) (rejecting city’s justification for imposing
stricter permit requirements for housing for those wi th intellectually disabilities because the
requirement was based upon “irrational prejudice”). No such allegations have been made in the instant
case.
21
See supra n.20.
62
3. Plaintiffs Have Stated A Claim Under The APA With Respect To The
DOE’s Denial Of Limnia’s ATVM And LG Program Applications
Finally, this Court concludes that the two remaining claims—the APA claims
against the Official Capacity Defendants arising out of the DOE ’s denial of Limnia’s
ATVM loan application (Claim 6) and LG Program application (Claim 7)—can proceed
because Plaintiffs’ complaint adequately alleges the sort of arbitrary and capricious
agency action that potentially justifies judicial review under the APA. The APA
authorizes judicial review of final agency action that is “arbitrary, capricious, an abuse
of discretion, or otherwise not in accordance with law[.]” 5 U.S.C. §§ 704, 706. To
state a claim for arbitrary and capricious agency action under the APA, a plaintiff must
allege that an agency “has relied on factors which Congress has not intended it to
consider, entirely failed to consider an important aspect of the problem, offered an
explanation for its decision that runs counter to the evidence before the agency, or is so
implausible that it could not be ascribed to a difference in view or the product of
agency expertise.” Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State Farm Mut. Auto.
Ins. Co., 463 U.S. 29, 43 (1983). An agency also acts arbitrarily and capriciously if it
fails to “treat similar cases in a similar manner unless it can provide a legitimate reason
for failing to do so.” Indep. Petroleum Ass’n of Am. v. Babbitt, 92 F.3d 1248, 1258
(D.C. Cir. 1996).
Here, Plaintiffs claim that the DOE did not evaluate Limnia’s ATVM loan
application “in good faith and in accordance with [the] DOE’s regulations, policies and
promises.” (Am. Compl. ¶ 114.) Instead, according to Plaintiffs, Limnia’s application
was sidelined in favor of those submitted by competitor companies with political
connections. (See id. ¶ 115.) Moreover, Plaintiffs allege that when the DOE articulated
63
its reasons for rejecting Limnia’s ATVM loan application, the agency’s explanation was
a “mere pretext to preserve ATVM Loan Program funds for government -favored
companies and/or to protect those companies from competition. ” (Am. Compl. ¶ 69.)
Taken as true, these allegations are sufficient to support Plaintiffs’ contention that the
DOE’s decision with respect to Limnia’s ATVM application was arbitrary and
capricious because the DOE relied on impermissible considerations that ran counter to
the evidence before it and the applicable regulations, and because Limnia was treated
differently from other applicants without any legitimate justification.
The Official Capacity Defendants do not directly challenge the conclusion that
the complaint sufficiently alleges arbitrary and capricious action on the part of the
agency; rather, they contend that the complaint nevertheless fails to state and APA
claim because that there has been no final agency action with respect to Limnia’s
ATVM loan application. (See Off. Defs.’ Mem. at 29–30.) This Court has already
addressed—and rejected—this argument in the context of the Official Capacity
Defendants’ objections to ripeness. See supra Part III.A.1. Therefore, the final agency
action requirement imposes no impediment to the Court’s conclusion that Plaintiffs’
complaint states a claim under the APA regarding the DOE’s treatment of Limnia’s
application for the ATVM Loan Program, and thus that Claim 6 can proceed.
A similar analysis pertains to Plaintiffs’ APA claims regarding Limnia’s LG
Program application. Plaintiffs allege that the DOE twice reneged on promises made to
Limnia related to the submission of its LG Program application —first, by promising to
waive an application fee and then demanding payment of that fee, and second by
promising to give Limnia information about how to rectify this deficiency but then not
64
providing that information—and that these failed promises resulted in the rejection of
Limnia’s LG Program application. (See Am. Compl. ¶ 118(j).) Although Plaintiffs
refer in passing to political favoritism in the context of the LG Program (see, e.g., Am.
Compl. ¶¶ 116, 119), the real focus appears to be on the alleged inconsistency of the LG
Program application process (see Pls.’ Off. Opp’n at 36). Plaintiffs’ fact-based
contention that the LG Program was run in an ad hoc manner is sufficient to state a
claim under the APA for arbitrary and capricious agency action. See Indep. Petroleum
Ass’n of Am., 92 F.3d at 1258.
The Official Capacity Defendants rail against the conclusion that the complaint
adequately alleges a violation of the APA because, in Defendants’ view, the allegations
in the complaint make clear that the DOE denied Limnia’s LG Program application for
a legitimate reason: Limnia had failed to pay the required application fee. (See Pls.’
Off. Opp’n at 33–35.) Defendants argue that, even if Secretary Chu made an oral
statement waiving the LG Program’s application fee, DOE’s regulations make clear that
the DOE is not bound by oral representations in connection with applications for LG
Program backing (see id. at 34); see also 10 C.F.R. § 609.10(b), and therefore the
DOE’s decision to enforce that fee provision cannot be arbitrary and capricious,
regardless of any oral statements that were made. But this argument homes in on only
one aspect of Limnia’s multifaceted APA claim—the assertion that the DOE acted
arbitrarily in requiring an application fee when it previously indicated that such a fee
would be waived (see Am. Compl. ¶¶ 76–78)—and thus construes Plaintiffs’ claim too
narrowly. In addition to the allegations regarding Secretary Chu’s statements waiving
the LG Program application fee and the DOE’s subsequent refusal to honor that
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promise, Plaintiffs also allege that the DOE only notified Limnia that their application
was deficient on the day the application was due, rendering it impossible to rectify any
deficiencies by the deadline. (Id. ¶¶ 78–79.) Then, the day after the deadline, a DOE
representative allegedly told Limnia that it may still be possible to pay the application
fee and have its application considered notwithstanding the passage of the deadline , and
that agency agent allegedly promised to provide wire instructions. (Id. ¶ 80.) Limnia
alleges that when it attempted to follow up on this communication, the DOE simply did
not respond, and that Limnia’s application was rejected shortly thereafter. (Id. ¶ 81.)
Thus, even if the DOE’s enforcement of the fee requirement (and thus its failure
to abide by Secretary Chu’s promise to waive the application fee ) cannot be considered
“arbitrary” in light of applicable regulations, that allegation alone does not capture the
full thrust of Limnia’s APA claim—the real gravamen of the Plaintiffs’ allegations with
respect to the DOE’s administration of the LG Program is that Secretary Chu “operated
[the LG] program on the fly, and the [DOE] made up the rules as it moved through the
loan award process.” (Pls.’ Off. Opp’n at 36; see also Am. Compl. ¶ 111 (claiming that
the GAO LG Program Report “found that DOE treated LGP applicants inconsistently,
favoring some and disadvantaging others; lacked systematic mechanisms for LGP
applicants to administratively appeal adverse decisions; often ignored its own
underwriting standards and skipped review steps; and re-reviewed rejected applications
on an ad hoc basis”).) And, as noted above, allegations of this kind are sufficient to
state a claim for a violation of the APA.
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IV. CONCLUSION
As set forth in the accompanying order, the Official Capacity Defendants’
motion to dismiss is GRANTED IN PART and DENIED IN PART, and the Individual
Capacity Defendants’ motion to dismiss is GRANTED in full. This Court finds that
there are no jurisdictional obstacles preventing consideration of Plaintiffs’ claims on
the merits; however, all of the claims brought by XPV and most of the claims brought
by Limnia nevertheless must be dismissed. XPV’s constitutional and APA claims
against the Official Capacity Defendants—each of which seeks injunctive relief—must
be dismissed because, as a dissolved corporation, XPV lacks the capacity to sue for
such relief. Furthermore, neither XPV nor Limnia can maintain their claims against the
Individual Capacity Defendants because there is no implied cause of action for
monetary damages arising from the allegedly unconstitutional conduct of individual
officials under the circumstances alleged here. Plaintiffs’ constitutional claims against
the Official Capacity Defendants with respect to Limnia’s ATVM loan application must
also be dismissed because the complaint fails to state a claim for any due process or
equal protection violation. However, for the reasons provided above, Plaintiffs have
made sufficient allegations to support plausible APA claims arising out of the denial of
Limnia’s ATVM loan application and LG Program application, and thus, those claims
may proceed.
DATE: July 14, 2015 Ketanji Brown Jackson
KETANJI BROWN JACKSON
United States District Judge
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