Frankel v. United States

In the United States Court of Federal Claims
No. 13-546C
(Filed Under Seal: July 23, 2015)
(Reissued for Publication: July 31, 2015)1
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DAVID FRANKEL, *
* FTC “Robocall Challenge” Contest;
Plaintiff, * Disappointed Entrant; Breach of
Contract Claim; Standard of Review;
v. * Effect of Exculpatory Clauses in
THE UNITED STATES, * Contest Rules; Summary Judgment.
Defendant. *
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David Frankel, Monte Sereno, California, pro se Plaintiff.
Meen Geu Oh, Trial Attorney, with whom were Benjamin C. Mizer, Principal Deputy
Assistant Attorney General, Robert E. Kirschman, Jr., Director, and Steven J. Gillingham,
Assistant Director, Civil Division, Commercial Litigation Branch, U.S. Department of
Justice, Washington, D.C., Theodore (Jack) Metzler, Federal Trade Commission, Of
Counsel, for Defendant.
OPINION AND ORDER ON
CROSS-MOTIONS FOR SUMMARY JUDGMENT
WHEELER, Judge.2
This case arises from a contest, the “Robocall Challenge,” sponsored by the Federal
Trade Commission (“FTC”) to develop a solution to the consumer problem of automated
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The Court issued this opinion under seal on July 23, 2015 and gave the parties until July 30, 2015, to
submit any proposed redactions of confidential or other protected information. The parties have represented
that they have no redactions. The opinion is published in its original form.
2
On June 23, 2015, Judge Wheeler received this case by random assignment following a transfer from
Judge Francis M. Allegra. In an earlier ruling, Judge Allegra allowed this case to proceed on a breach of
contract theory, but held that the contest was not a “procurement” and therefore injunctive relief was
unavailable. Frankel v. United States, 118 Fed. Cl. 332 (2014).
“robocalls.” Plaintiff David Frankel submitted an entry in the contest, and believes that his
proposed solution was superior to the two winning submissions. Mr. Frankel’s claim is
based upon a breach of contract theory, and he seeks recovery of the $50,000 prize offered
in the contest. Mr. Frankel alleges that the FTC’s designated judges failed to comply with
The Official Rules of the Challenge (“the Rules”) for evaluating and ranking submissions.
Following discovery, the parties have filed cross-motions for summary judgment.
In his April 6, 2015 motion, Mr. Frankel argues that a contract was formed when he
entered the contest. Mr. Frankel alleges that the FTC judges breached the contract by not
conducting the judging process in accordance with the Rules. Specifically, Mr. Frankel
asserts that his proposal did not receive a proper numerical score, and the two winning
proposals do not perform the “blocking” function stipulated by the Rules. Based upon the
applicable criteria, Mr. Frankel believes his submission was superior to the two entries that
won the contest. Mr. Frankel asks the Court to (1) find that the Government breached the
contract, and (2) order the Government to pay him the $50,000 prize for the best
technological solution.
In its May 4, 2015 opposition and cross-motion, the Government contends that Mr.
Frankel’s claim is foreclosed by the exculpatory release clauses in the Rules. These clauses
explicitly state that, as a condition of participating, contestants must agree to relinquish
their right to litigate claims arising from participation in the contest, and agree that
decisions of the judges are final and binding. The Government also asserts, and Mr.
Frankel concedes, that there is no evidence of any fraud, bad faith, gross mistake, or
dishonesty on the part of the judges. Evidence of this type would be the only basis on
which Mr. Frankel’s cause of action might succeed. The Court heard oral argument on
July 14, 2015.
The Court has fully considered the briefs and evidentiary record submitted by the
parties. The Court commends Mr. Frankel for being among the most able and astute pro
se plaintiffs to appear in this Court. However, for the reasons explained below, Mr.
Frankel’s motion for summary judgment is DENIED, and the Government’s cross-motion
for summary judgment is GRANTED.
Factual Background
The FTC, as part of its consumer protection mission, has long pursued a number of
approaches to stopping automatically dialed, prerecorded sales calls known as “robocalls.”
While these calls frequently are illegal, and the agency has brought hundreds of lawsuits
against companies and individuals for violations of the Do Not Call List, internet-based
telephone technology has increasingly made robocalling easier and law enforcement more
difficult. The FTC has undertaken a number of initiatives aimed at developing technology-
based solutions to the robocall problem. Under the America COMPETES Reauthorization
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Act of 2010, 15 U.S.C. § 3719, agencies are permitted to “carry out a program to award
prizes competitively to stimulate innovation that has the potential to advance the mission.”
Pursuant to this authority, the FTC conducted the Robocall Challenge. As the name
suggests, the contest challenged the public to submit innovative, technology-based
solutions that would block illegal robocalls, and the FTC offered a $50,000 prize to the
best overall solution submitted by an individual or small company.
The Rules described three criteria by which proposed solutions would be evaluated
and assigned a weight to each: (1) Does it work? (50%) (2) Is it easy to use? (25%) and
(3) Can it be rolled out? (25%). Def.’s Ex. A, 77 Fed. Reg. at 64805, ¶ 10. Each criteria
was then explained in further detail. The Rules also included a broad release absolving
the FTC of liability arising from the contestants’ participation in the contest. Under
paragraph 14 of the Rules, each contestant agreed to “[c]omply with and be bound by . . .
the decisions of the Sponsor, Administrator, and/or the Competition Judges, which Rules
and decisions are binding and final in all matters relating to this competition.” Id. at 64807,
¶ 14(a)(i). Further, the release extended to “any and all claims, expenses and liabilities”
arising from participation in the contest, and similarly extends to any claim “arising out of
or related to a Contestant’s entry.” Id. at 64807, ¶ 14(a)(ii).
The FTC received nearly 800 entries in response to the contest. After screening
those submissions deemed to be facially deficient, an FTC administrator forwarded 268
entries to the expert judges for review.  Mr. Frankel’s entry, which proposed a system of
call tracing and law enforcement to prevent calls from registered robocallers, was included
among these 268 submissions. The judges further narrowed the competition to
approximately 115 entries that employed filtering-type solutions, which the judges felt
best satisfied their contest criteria. Mr. Frankel’s submission did not employ a filtering
solution, and was therefore excluded from the final 115 entries. Seven finalists received
numerical scores, two of which were chosen as the best overall solutions and received
awards of $25,000 each.
Mr. Frankel, dissatisfied with the results of the competition, filed a protest with the
Government Accountability Office (“GAO”), arguing that “the agency failed to evaluate
his entry in accordance with the rules established for the contest.” In re David Frankel,
No. B-408319 (GAO, June 7, 2013). The GAO dismissed Mr. Frankel’s protest for lack
of jurisdiction, finding that the FTC’s contest did not involve a procurement of property
or services. Id. slip op. at 2. On August 6, 2013, Mr. Frankel filed his complaint in this
Court alleging that the FTC’s failure to adhere to the Rules constituted a breach of contract.
Standard of Review
Summary judgment is appropriate when there is “no genuine dispute as to any
material fact and the movant is entitled to judgment as a matter of law.” RCFC 56(a);
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Anderson v. Liberty Lobby, Inc. 477 U.S. 242, 247-48 (1986). A “genuine” dispute is one
that “may reasonably be resolved in favor of either party,” Anderson, 477 U.S. at 250, and
a fact is “material” if it has the potential to significantly alter the outcome of a case under
the governing law. Id. at 248. When considering cross-motions for summary judgment,
the court must evaluate each motion in its own right and resolve any reasonable inferences
against the party whose motion is being considered. First Federal Sav. Bank of Hegewisch
v. United States, 52 Fed. Cl. 774, 780 (2002).
It is settled law that entrants to a contest are bound by the official rules and terms of
a contract. E.g., Armato v. Daily News, Inc., 2006 U.S. Dist. LEXIS 2344 (D. N.J. Jan.
23, 2006) (despite misprinting of multiple winning game cards, plaintiffs were bound by
the limit on number of prizes); Furgiele v. Disabled Am. Veterans Serv. Found., 116 F.
Supp. 375, 376, (S.D.N.Y. 1952), aff’d 207 F.2d 957 (2d Cir. 1953) (participant in word
puzzle contest was bound by award committee’s decisions). Where, as here, a contract
delegates matters of quality or value to a third person, and provides that the decision will
be final, the decision may not be overturned without evidence of gross mistake or
irregularity that “necessarily impl[ies] bad faith or failure to exercise an honest judgment.”
E.g., American Pipe & Constr. Co. v. Westchester County, 292 F. 941, 948 (2d Cir. 1923);
Kihlberg v. United States, 97 U.S. 398 (1878).
Discussion
The parties agree that a unilateral contract was formed between Mr. Frankel and the
FTC when Mr. Frankel accepted the offer embodied in the competition by submitting an
entry. The main issue to be decided is whether Mr. Frankel can avoid the exculpatory
clauses found in the contract which state that the FTC is released from liability in disputes
arising from contestants’ participation in the challenge, and also that the decisions of the
judges are final and binding. For Mr. Frankel to prevail, there must be a material breach
in the form of fraud, bad faith, gross mistake or irregularity.
A. The Judging Process
Mr. Frankel maintains that the Rules provided specific criteria by which every
contest entrant would be judged by a panel of three experts. He states that each submittal
was to be assigned a numerical rating for each of the three categories comprising the
criteria, adding up to a total overall score. For example, an entrant that only proposed to
block calls on one type of phone would receive a lower numerical rating than one which
proposed to block calls on multiple types of phones. The submission with the highest final
score would then receive the $50,000 prize. Mr. Frankel contends that there is no provision
in the Rules stating that the pool of submissions to be scored would first be winnowed
down to a particular type or category of solution. He supports this contention by quoting
the Rules at paragraph 9.A, which states that “all submissions will be judged by an expert
panel of impartial judges.” (emphasis added).
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As recounted above, not all submissions were given a numerical score. Rather, the
entries were first narrowed to a pool of 268 entries that were determined to be technical
proposals worthy of consideration by the judges. The judges, perhaps overwhelmed by the
large number of submissions for review, decided to proceed with only filtering-type
solutions. From a remaining pool of 115 entries, the judges analyzed and identified the
most sophisticated and comprehensive overall proposals. Mr. Frankel argues that in failing
to give his submission proper consideration, the FTC materially breached the contract.
The Government argues that, even disregarding the release language in the contract,
its conduct does not constitute a material breach because there was no rule explicitly
requiring that each submission receive a numerical score, and nothing in the Rules
restricted how the judges would apply the scoring criteria. According to the Government,
Mr. Frankel’s argument that every entry was entitled to receive a numerical score is merely
an attempt to inject ambiguity into the contract and must be rejected. See Alaska Lumber
& Pulp Co. v. Madigan, 2 F.3d 389, 392 (Fed. Cir. 1993) (finding that provisions that are
clear and unambiguous must be given their plain and ordinary meaning). Furthermore, the
Government contends that the judges had broad discretion in deciding how they would
judge the contest, and that their choice to narrow the submissions to a specific category of
filtering solutions, which they felt would provide the best solution, was well within the
contest rules.
None of the events which occurred during the course of the judging process indicate
the contest was conducted unfairly or with malicious intent. The FTC representatives acted
within their discretion when electing to narrow the submissions to those that they felt best
satisfied the criteria, and when evaluating and selecting the winning proposals. As Mr.
Frankel concedes, their conduct does not amount to fraud, bad faith, gross mistake, or
irregularity which would warrant a finding of material breach. The fact that there might
have been a different or more comprehensive way to evaluate the many proposals received
does not give rise to a legal action. As long as the expert judges reasonably and properly
exercised their discretion, the Court must refrain from second-guessing the contest’s
outcome.
B. Whether Mr. Frankel is Bound by the Exculpatory Clauses of the Rules
Mr. Frankel maintains that in failing to give his entry a numerical score, and in
choosing winning submissions not meeting criteria stated in the Rules, the FTC materially
breached the contract. When a material breach occurs, Mr. Frankel argues that he is not
bound by the exculpatory clauses of the Rules. The Government, on the other hand, relies
heavily on the Rules to support its contention that Mr. Frankel is barred from litigating his
contest complaints, as he accepted the decisions of the judges to be final and binding.
The Government first argues that Mr. Frankel’s participation in the contest
constitutes full and unconditional agreement to the Rules which are final and binding in all
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matters relating to the competition. The Government supports this argument with Mr.
Frankel’s own statements acknowledging that he read the contest rules carefully, and he
understood that by submitting his entry he was agreeing to be bound by these rules in their
entirety. Where contest terms state that decisions by the judges are final and binding, courts
should not interfere with the decision of the judges unless there is evidence of fraud,
intentional or gross mistake, irregularity, or lack of good faith. Gillmore v. Proctor &
Gamble Co., 417 F.2d 615 (6th Cir. 1969). Mr. Frankel admits that he has no evidence of
bad faith, malicious intent or fraud, and that he does not believe the judges intended to be
unfair. The Government therefore argues that in the absence of any evidence of fraud or
bad faith, Mr. Frankel is contractually bound to accept the judges’ decisions as final.
The Government further alleges that by entering the contest, Mr. Frankel absolved
the FTC of any liability in connection with his participation in the contest. The Rules state
that participants agree to “release, indemnify, defend and hold harmless the [FTC] . . . from
and against any and all claims, expenses and liabilities.” 77 Fed. Reg. at 64807. This
release covers all claims related to a contestant’s participation in the contest, including
prizes and technical or human error that may occur in administration of the competition.
Id. at 64807 ¶ 14(B)(iv). Just as with the provision regarding the finality of the judges’
decisions, the Government contends that Mr. Frankel is bound by these releases. See, e.g.
Bunting v. Atl. Refining & Mktg. Corp., 1991 U.S. Dist. LEXIS 11543 at *4-5 (E.D. Pa.
1991) (holding contest entrants bound to releases that “discharge the defendant . . . from
any further claims arising out of the sweepstakes.”).
Without any evidence of fraud or bad faith required to sustain a claim for material
breach, Mr. Frankel has failed to meet his burden of proof. By entering the contest, Mr.
Frankel agreed to be bound by the decisions of the judges, and understood that the FTC
would not be subject to liability for issues arising from his participation in the contest. To
allow Mr. Frankel to proceed with his claims absent such evidence would not only negate
the explicit terms of the contract, but would also open the door for every other participant
to challenge the decisions of judges in future contests. Mr. Frankel’s argument that his
submission to the Robocall Challenge is superior to those submissions ultimately deemed
the winners is thus precluded by the contractual releases. There is no need to explore
further Mr. Frankel’s complaints about the judges’ evaluation of proposals.
Conclusion
Upon consideration of the motions before the Court, Plaintiff’s motion for summary
judgment is DENIED, and Defendant’s cross-motion for summary judgment is
GRANTED. As explained, the outcome of this case turns on the legal standard that absent
evidence of fraud, bad faith, gross mistake or irregularity, the decisions of the judges are
final and binding. Accordingly, Mr. Frankel’s complaint is dismissed with prejudice.
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This decision is issued under seal. On or before July 30, 2015, the parties shall
carefully review this opinion for confidential information, and submit to the Court
proposed redactions to this opinion, if any, before it is released for publication. The parties
are requested to minimize their requested redactions so that the Court may publish as much
of the decision as possible.
IT IS SO ORDERED.
s/Thomas C. Wheeler
THOMAS C. WHEELER
Judge
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