Fms Investment Corp. v. United States

In the United States Court of Federal Claims
Nos. 19-308C, 19-331C, 19-372C, 19-441C, 19-472C, 19-478C (consolidated)
(Filed: April 24, 2019)
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FMS INVESTMENT CORP., et al., *
Motion for Preliminary Injunction;
*
Likelihood of Success on the Merits;
Plaintiff, *
* Irreparable Harm; Balance of
v. * Hardships; Public Interest; 28 U.S.C. §
* 1491(b); RCFC 65(d); Preserve Status
UNITED STATES, * Quo; Court’s Ability to Grant
* Meaningful Relief.
Defendant, *
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David R. Johnson, with whom were Tyler E. Robinson and Ryan D. Stalnaker, Vinson &
Elkins LLP, Washington, DC, for Plaintiff FMS Investment Corp.
Todd J. Canni, with whom were Richard B. Oliver, Alexander B. Ginsberg, J. Matthew
Carter, Aaron S. Ralph, and Kevin R. Massuodi, Pillsbury Winthrop Shaw Pittman LLP,
Los Angeles, California, for Plaintiff Continental Service Group, Inc.
Townsend L. Bourne, with whom were Jonathan S. Aronie and Shaunna Bailey, Sheppard
Mullin, Richter, & Hampton LLP, Washington, DC, for Plaintiff Account Control
Technology, Inc.
William M. Jack, with whom were William MacLeod, David E. Frulla, Amba M. Datta,
and Elizabeth C. Johnson, Kelley Drye & Warren LLP, Washington, DC, for Plaintiff GC
Services Limited Partnership.
David T. Ralston, Jr., with whom were Frank S. Murray, Micah T. Zomer, and Krista A.
Nunez, Foley & Lardner LLP, Washington, DC, for Plaintiff Windham Professionals, Inc.
David R. Pehlke and Alexis J. Echols, Trial Attorneys, with whom were Jana Moses, Trial
Attorney, Joseph H. Hunt, Assistant Attorney General, Robert E. Kirschman, Jr., Director,
Patricia M. McCarthy, Assistant Director, Commercial Litigation Branch, Civil Division,
U.S. Department of Justice, Washington, DC, as well as Tracey Sasser, Assistant General
Counsel, Division of Business and Administrative Law, U.S Department of Education,
Washington, DC, for Defendant.
OPINION AND ORDER DENYING MOTION FOR PRELIMINARY INJUNCTION
WHEELER, Judge.
Once again, this Court must decide whether a group of plaintiff Private Collection
Agencies (“PCAs”) are entitled to a preliminary injunction forcing the Department of
Education (“ED”) to buy more of the PCAs’ defaulted student debt collection services until
this Court resolves their challenge to ED’s latest attempt to procure integrated student loan
administration and collection services.
The PCAs are currently servicing student loan accounts for ED under Award Term
Extensions (“ATEs”) that will expire on April 21, 2019. The PCAs ask this Court to (i)
order ED to extend their contracts until this protest is resolved and ED makes a lawful
contract award for defaulted student debt collection services and (ii) bar ED from recalling
the accounts that the PCAs currently service. For the reasons below, the PCAs’ motions
for a preliminary injunction are DENIED.
Background
The PCAs’ motions arise from a series of bid protests involving ED solicitations for
defaulted student debt collection services and other student loan administration services.
In 2015, ED issued an initial solicitation for defaulted student debt collection services. A
cycle of contract awards, protests (including this one), corrective actions, and court
decisions ensued, which have prevented ED from making and executing a contract award.
In 2017, ED began working to integrate defaulted student debt collection services
with other student loan administration services, according to a plan it dubbed “NextGen.”
ED planned to procure all of the services necessary to administer and collect on its student
loan portfolio through a single NextGen procurement. See FMS Inv. Corp. v. United
States, 139 Fed. Cl. 221 (2018) clarified by 139 Fed. Cl. 439. In May 2018, ED cancelled
the 2015 PCA solicitation, claiming that NextGen would make the PCA procurement
superfluous. Id. In September 2018, this Court enjoined the cancellation as insufficiently
supported by the administrative record. Id.
In October 2018, a group of PCAs filed protests in this Court challenging ED’s
NextGen solicitation, arguing that, after the Court’s September injunction, ED improperly
shoehorned defaulted student debt collection services into Phase II of the NextGen
procurement after already downselecting offerors from Phase I. See Navient Solutions,
LLC, et al., v. United States, 141 Fed. Cl. 181, 182-83 (2018).
In December 2018, ED decided to take corrective action to address the protest
grounds, but FMS Investment Corp. (“FMS”) (which was also a plaintiff in that protest)
still asked this Court for a preliminary injunction preventing its ATE from ending in April
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2019 and ordering ED to give it more accounts to service. Id. at 182. This Court denied
the motion, reasoning that granting FMS’s requested relief would go beyond preserving
the status quo that existed before the litigation began and would provide a remedy
exceeding the scope of relief available to FMS upon final judgment. Id. at 184-85.
In January 2019, ED completed its corrective action and reissued three separate
NextGen solicitations, including one calling for proposals on defaulted debt collection
work. Inevitably, a group of PCAs challenged the three solicitations (the current protest)
alleging, among other defects, illegal bundling of defaulted debt collection services with
other student loan administration services. On March 6, 2019, ED cancelled the 2015 PCA
solicitation—again—and the protesters modified their claims to allege that ED’s second
attempt to cancel that procurement is also illegal.
Five PCAs filed motions for a preliminary injunction. The PCAs claim that they
will suffer irreparable harm if their ATEs end, as scheduled, on April 21, 2019, while their
protests are pending. The Government responds that the PCAs are unlikely to win on the
merits and that the Court lacks jurisdiction to enjoin the ATEs from expiring because they
lack a sufficient nexus to the underlying protest.
Analysis
This Court has broad authority to order injunctive relief in bid protest cases. See 28
U.S.C. § 1491(b). But a “preliminary injunction is an extraordinary and drastic remedy”
that is not “routinely granted.” Akal Sec., Inc. v. United States, 87 Fed. Cl. 311, 316 (2009).
In deciding whether to grant a preliminary injunction, the Court weighs four factors: (1)
the likelihood of plaintiff’s success on the merits; (2) the prospect of irreparable harm to
the plaintiff in the absence of injunctive relief; (3) the balance of hardships; and (4) the
public interest. KWV, Inc. v. United States, 108 Fed. Cl. 448, 455 (2013).
A court usually issues a preliminary injunction to preserve the status quo that existed
before the litigation began until the court can make a final decision on the merits. Cont’l
Serv. Grp., Inc. v. United States, 722 Fed. App’x 986, 994 (Fed. Cir. 2018) (citing Litton
Sys., Inc. v. Sunstrand Corp., 750 F.2d 952, 961 (Fed. Cir. 1984)). A court may also issue
a preliminary injunction to preserve the court’s ability to grant meaningful relief upon
reaching a final decision. See id. at 995 (citing 11A Wright & Miller, Fed. Practice and
Procedure § 2948 3d ed. 1998). Preliminary injunctions can compel affirmative acts if
necessary to achieve either end. See, e.g., id. (citing 11A Wright & Miller § 2948); Canal
Auth. of State of Fla. v. Callaway, 489 F.2d 567, 576 (5th Cir. 1974) (citations omitted).
The PCAs ask this Court to (i) order ED to extend their contracts until the protest is
resolved and ED makes a lawful contract award for defaulted student debt collection
services and (ii) bar ED from recalling the accounts that the PCAs currently service. This
relief would serve neither valid purpose for granting a preliminary injunction.
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When the litigation began, ED was free to let the PCAs’ ATEs expire on April 21,
2019. That is still the case. Ordering ED to funnel more business to the PCAs—an option
committed to ED’s discretion under the ATEs’ terms—merely because the PCAs are
protesting a different ED solicitation to procure defaulted student debt collection services,
would alter the status quo, not preserve it. See Cont’l Serv. Grp., Inc., 722 Fed. App’x at
994; Navient Solutions, LLC, et al., 141 Fed. Cl. at 184-85.
A preliminary injunction is also unnecessary to preserve the Court’s ability to grant
meaningful relief in the underlying protest. If the PCAs succeed on the merits, denying
the motions for preliminary injunction here will have no impact on the Court’s power to
enjoin ED from cancelling the PCA solicitation and moving ahead with the NextGen
solicitations. This is the case because the PCAs’ claimed irreparable harm of going out of
business arises from the ATEs expiring, not the underlying protest grounds.
The PCAs also argue that this Court can provide the relief they request because “ED
has abandoned any pretense of conducting the PCA solicitation in good faith.” FMS Reply
at 5-6 (citing Cont’l Serv. Grp., 722 Fed. App’x at 995-96 (finding no evidence of bad faith
in ED’s conduct of the procurement at issue)). Agency bad faith can be evidence of
likelihood of success on the merits of the underlying protest, but it cannot expand the
Court’s power to grant injunctive relief. Regardless, the PCAs’ requested relief has nothing
to do with the performance and expiration of the ATEs according to their terms, or with
the relief the PCAs would be entitled to if they won the underlying protest.
Conclusion
Applying the above analysis to the four-factor test, the Court concludes that (1) the
PCAs’ likelihood of success on the merits of the underlying protest is irrelevant to the
preliminary relief that they seek, and (2) the PCAs’ claimed irreparable harm does not stem
from the lack of injunctive relief, but from their ATEs in a different procurement expiring
as scheduled. Thus, factors (1) and (2) wholly favor the Government, and the Court need
not address factors (3) and (4).
As this Court previously noted, “[the PCAs] chose to depend upon ED contracts to
survive.” Navient Solutions, LLC, 141 Fed. Cl. 181, 185 (2018). “The Court’s power to
issue a preliminary injunction does not exist to remedy” harm arising from the PCAs’ own
business decisions. Id. The Plaintiffs’ motions for a preliminary injunction are DENIED.
IT IS SO ORDERED.
s/ Thomas C. Wheeler
THOMAS C. WHEELER
Judge
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