360training.com, Inc. v. United States

In the United States Court of Federal Claims
No. 12-197C
(Filed: June 7, 2013)
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360TRAINING.COM, INC. *
*
Plaintiff, * EAJA, 28 U.S.C. § 2412(d)(1)(A);
* substantial justification.
v. *
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THE UNITED STATES, *
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Defendant. *
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OPINION AND ORDER
On December 8, 2012, 360Training.com, Inc. (“360”), the Plaintiff in this bid protest
matter, filed an Application (the “Application”) under the Equal Access to Justice Act (“EAJA”)
and Rule 54 of the Rules of the Court of Federal Claims (“RCFC”) for an award of fees and
other expenses incurred in the litigation of the underlying matter.1 Briefing was completed on
March 25, 2013, when 360 submitted an amended application and related attachments. For the
following reasons, 360’s Application is GRANTED, in part, and DENIED, in part. The Court
will withhold the entry of judgment until it has received the filings ordered below.
I. Background
a. The Outreach Training Program, Solicitation and Award Selection2
The Occupational Safety and Health Administration (“OSHA”) issued a Request for
Applications (“RFA”) whereby it intended to authorize qualified vendors as online providers of
OSHA Outreach Training Program courses (“outreach courses”). These outreach courses are
designed to give workers an overview of the OSHA system, worker rights, and other basic safety
and hazard information. Administrative Record (“AR”) at 1.
1
Intervenor Defendant Clicksafety.com, Inc. did not take part in the briefing on the EAJA
Application.
2
Additional details are available in the Court’s opinion on the parties’ cross-motions for
judgment on the administrative record. See 360Training.com, Inc. v. United States, 106 Fed. Cl.
177 (2012) (“360Training.com II”). The Court’s recitation here of the underlying facts is made
to provide context for the following analysis only.
OSHA does not directly provide outreach courses to workers. Instead, the courses are
given by independent, OSHA-authorized trainers. Beginning in 2001, OSHA began authorizing
online outreach courses.
On March 29, 2011, OSHA issued the RFA via Notice in the Federal Register. The RFA
invited interested organizations to submit applications to be authorized to deliver outreach
courses. Successful applicants would enter into “5-year, nonfinancial cooperative agreements”
with OSHA. The RFA placed no limits on the number of awardees, but instead provided that the
number of organizations selected would be based on the quality of the applications it received.
AR at 2.
The RFA set forth eligibility requirements, and it listed the selection criteria and
evaluation process that OSHA would use to evaluate the applications and select awardees. There
were four requirements for an organization to be eligible to apply, and eligible candidates were
to be evaluated based on seven selection criteria. AR at 9. The RFA explained that OSHA
would review course applications “against the criteria listed in this notice to determine which
applicants best meet the stated requirements.” AR at 11.
OSHA received 162 responsive applications from 47 different organizations. Due to the
number of applications, OSHA opted to conduct a two-level review process, which was not
expressly provided for in the RFA. Instead, such a process “can be detected only in an internal
document, the Briefing Book.” 360Training.com II, 106 Fed. Cl. at 182. The first step in the
process (the “Level 1 Review”) required OSHA to review each application for the four eligibility
criteria described in the RFA, as well as three “critical elements.” The Level 1 Review resulted
in a finding that 80 of the 162 applications did not meet “the established criteria,” and they did
not receive further review. AR 58, 149-54. In the Level 2 Review, OSHA evaluated the
remaining applications for all of the selection criteria disclosed in the RFA.
On January 12, 2012, OSHA announced that ten different providers were being awarded
with cooperative agreements, based on 25 selected applications. None of 360’s applications
were selected. According to the Briefing Book, OSHA found 360 ineligible because it was on
probation at the time it submitted its applications.
b. Procedural Background and the Court’s Opinions
The Complaint in this matter was filed on March 27, 2012. On April 6, 2012, the
Government filed a motion to dismiss for lack of subject matter jurisdiction. The Government’s
position was that the Tucker Act, 28 U.S.C. § 1491, limited this Court’s bid protest jurisdiction
to claims “in connection with a procurement or a proposed procurement.” See 360Training.com,
Inc. v. United States, 104 Fed. Cl. 575, 577 (2012) (“360Training.com I”). The Government
argued that the cooperative agreement contemplated by the RFA was not a procurement under
the Tucker Act. Id.
Shortly after 360 filed its bid protest, American Safety Council (“ASC”) also challenged
the same RFA. See American Safety Council v. United States, Civ. No. 12-210. Faced with the
2
same jurisdictional argument that the Government raised against 360, ASC decided to
voluntarily dismiss its case here in order to pursue its claim in district court. In its motion to
voluntarily dismiss, ASC “recognize[d] that a question exists as to whether this Court has
jurisdiction to provide complete relief under the Tucker Act, 28 U.S.C. § 1491.” ASC, Civ. No.
12-210, Docket No. 18 at 1.
The Court determined that the RFA was, in fact, a procurement. As worded in the
Court’s opinion, the Court “conclude[d] that the [RFA] was ‘in connection with’ the ‘process of
acquiring property or services’ for OSHA,” such that “jurisdiction under § 1491(b)(1) is proper.”
360Training.com I, 104 Fed. Cl. at 578. The motion to dismiss was denied and the case went
forward. Not long after the Court denied the Government’s motion to dismiss, the U.S. District
Court for the District of Columbia transferred the parallel ASC matter back to this Court.
After some minor intervening disputes, the parties filed their cross-motions for judgment
on the administrative record. Although the parties pressed a number of issues, the Court focused
heavily on the evaluation process employed by OSHA; specifically, the Court questioned
whether that process was consistent with the RFA and whether OSHA’s decisions under that
process were consistent with the evidence. 360Training.com II, 106 Fed. Cl. at 186.
The Court’s dispositive opinion provides a detailed analysis of the evaluation process, as
it is disclosed in the RFA. It discussed the four eligibility requirements, as well as the seven
selection criteria. See id. at 186-87. Based on the AR, the Court determined that the process
disclosed in the RFA could encompass a two-level review: first, OSHA would analyze the
disclosed eligibility requirements. Second, OSHA would score the applications on a 100-point
scale based on the selection criteria. See id. at 188.
The Court gave significant consideration to the question of “past performance.” The
Court found that “past performance” appeared only once in the RFA—in the “Summary” section.
Id. at 187. However, it assumed that certain “subcriteria” to one of the selection criteria
qualified as a specification of past performance. This could plausibly make “past performance”
part of the Level 2 Review, but OSHA did not treat it that way. Instead, OSHA inserted three
“critical elements” into the Level 1 Review, one of which was past performance.
Even though it found the Level 1 Review flawed, the Court went on to analyze the Level
2 Review employed by OSHA. The final outcome of this level was supposed to be a numeric
score, but the evaluations did not contain a point score assigned to each criterion, nor did the
evaluations specify the weight given to each criterion. Instead, the ratings were descriptive.
This was inconsistent with the RFA, which provided that each application would receive a score
out of 100 and that each criterion would be weighted. Id. at 190. As the Court stated: “[T]he
Court’s examination of the administrative record causes it to conclude that, not only did OSHA
not follow the RFA, but it did not even follow the process that it described in the Briefing Book;
instead, it appears that OSHA may have followed another process that is altogether mysterious.”
Id.
The Court also identified four problems with OSHA’s consideration of 360’s applications
specifically. First, OSHA had treated 360’s past performance (in particular, its probation status)
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as an eligibility requirement subject to Level 1 Review. Second, whatever evaluation OSHA had
actually given to 360’s applications, it was clear that “OSHA was focused almost exclusively on
past performance.” Third, OSHA’s evaluation was irrational because it was inconsistent with the
agency’s “Level 1 Highlights,” which indicated that 360 met all eligibility requirements to move
onto Level 2 Review.3 Finally, OSHA’s judgments regarding 360’s past performance were
unsupported by the record. Id. at 193.
Based on these findings, the Court concluded that OSHA’s review of the applications
lacked a rational basis. Id. at 197. Because OSHA had indicated a willingness to take corrective
action, the Court did not grant injunctive relief, but instead provided OSHA with a list of “major
defects” that it found in OSHA’s process. 360Training.com II, 106 Fed. Cl. at 198 (emphasis in
original). These defects included: OSHA’s heavy reliance on past performance; the lack of
“critical elements” in the RFA; and the lack of documentation in support of OSHA’s final
decision.
OSHA took corrective action to address the Court’s concerns. Thereafter, the Court
entered judgment on September 10, 2012.
II. Legal Standard
The EAJA is a fee-shifting statute that allows an eligible plaintiff to recover attorney’s
fees and costs in a successful action against the United States. Davis v. Nicholson, 475 F.3d
1360, 1363 (Fed. Cir. 2007). The EAJA provides, in pertinent part:
Except as otherwise specifically provided by statute, a court shall
award to a prevailing party other than the United States fees and other
expenses, in addition to any costs awarded pursuant to subsection (a),
incurred by that party in any civil action (other than cases sounding in
tort), including proceedings for judicial review of agency action, brought
by or against the United States in any court having jurisdiction of that
action, unless the court finds that the position of the United States was
substantially justified or that special awards make an award unjust.
28 U.S.C. § 2412(d)(1)(A).
The Supreme Court has recognized that the EAJA “renders the United States liable for
attorney’s fees for which it would not otherwise be liable, and thus amounts to a partial waiver of
sovereign immunity.” Ardestani v. Immigration and Naturalization Serv., 502 U.S. 129, 137
(1991). As with any waiver of sovereign immunity, the statute must be strictly construed in
favor of the Government. Id.
The Supreme Court has clarified the statute, holding that attorney’s fees may only be
awarded if: (1) the claimant is a “prevailing party”; (2) the Government’s position was not
“substantially justified”; (3) no “special circumstances make an award unjust”; and, (4) pursuant
3
The Level 1 Highlights document was a spreadsheet created as part of OSHA’s evaluation of
the applications. See 360Training.com II, 106 Fed. Cl. at 190-91.
4
to 28 U.S.C. § 2412(d)(1)(B), that any fee statement must be submitted to the Court within 30
days of final judgment and must be supported by an itemized statement. Comm’r, Immigration
and Naturalization Serv. v. Jean, 496 U.S. 154, 158 (1990). In addition to these requirements, a
party must also be eligible—that is, the applicant must have had a net worth of less than
$7,000,000 and no more than 500 employees at the time the action was filed. See 28 U.S.C. §
2412(d)(2)(B)(ii).
III. Discussion
360’s brief in support of its Application argues, naturally, that it meets all of the elements
necessary for it to recover under the EAJA. The Government’s response is somewhat narrower:
it asserts that its position was substantially justified, but in the alternative that the fees requested
by 360 should be reduced by the Court. Because there is no dispute over a number of the issues,
the Court finds that 360 is a prevailing party that meets the size requirements of the EAJA, that
no special circumstances make an award unjust, and that this Application was timely filed. The
Court is left only to decide whether the Government’s position was substantially justified, and if
not, whether the fees requested by 360 should be reduced.
a. Substantial Justification
A plaintiff is not entitled to an award under the EAJA if “the position of the United States
was substantially justified.” See 28 U.S.C. § 2412(d)(1)(A). “The Government bears the burden
of showing that its position was substantially justified.” Freedom, N.Y., Inc. v. United States, 49
Fed. Cl. 713, 717 (2001) (Miller, J.) (citing Helfer v. West, 174 F.3d 1332, 1336 (Fed. Cir.
1999)). “[S]ubstantially justified” means “‘justified in substance or in the main’—that is,
justified to a degree that could satisfy a reasonable person.” Pierce v. Underwood, 487 U.S. 552,
565 (1988). The Government’s “position” includes “both the underlying agency action that gave
rise to the civil litigation and the arguments made during the litigation itself.” DGR Assocs., Inc.
v. United States, 690 F.3d 1335, 1340 (Fed. Cir. 2012) (citations omitted).
This standard does not raise a presumption that the Government’s conduct was not
substantially justified just because it lost the case. See Scarborough v. Principi, 541 U.S. 401,
415 (2004). As then-Judge Roberts stated, the law does not even require that the Government
establish that it entered litigation with a “substantial probability of prevailing.” Taucher v.
Brown-Hruska, 396 F.3d 1168, 1173 (D.C. Cir. 2005) (quoting Spencer v. NLRB, 712 F.2d 539,
557 (D.C. Cir. 1983)). Rather, a presiding court is to look at the totality of the Government’s
conduct and “make a judgment call whether the government’s overall position had a reasonable
basis in both law and fact.” Chiu v. United States, 948 F.2d 711, 715 (Fed. Cir. 1991).
The Government does not argue strenuously that OSHA’s pre-litigation actions were
substantially justified. Nor would such a position withstand scrutiny: as the Court expressed in
360Training.com II, much of the process OSHA followed was entirely unclear, see
360Training.com II, 106 Fed. Cl. at 190 (“it appears that OSHA may have followed another
process that is altogether mysterious.”), and even when the process was clear, it was plainly
inconsistent with the process described in the RFA. See id. at 188-89 (describing the Level 1
Review and determining that factors undisclosed in the RFA had been used to determine
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eligibility). The Court’s opinion makes clear that there were substantial—and in many cases,
obvious—flaws with the process OSHA employed in reviewing the applications.
Rather, the heart of the Government’s opposition to the Application lies in its claimed
substantial justification in litigating its position. The Government’s arguments fall into two basic
grounds: first, that because this Court’s jurisdiction was unclear and such jurisdiction was a
matter of first impression, its decision to litigate was substantially justified. Second, it argues
that its position on the merits was also substantially justified. The Court holds that the
Government’s position on the issue of jurisdiction was substantially justified but not its position
on the merits of the bid protest after the Court denied the motion to dismiss.
With respect to the former, the Government points to several parts of the AR in support
of its contention that this Court’s jurisdiction was not clear at the outset of the litigation: First, it
notes that the RFA expressly stated that it was not a “procurement action.” Second, the
nonfinancial cooperative agreements expressly stated that “OSHA provides no funding to the
online training provider for the conduct of OSHA Outreach Training Program online classes or
any other purpose under this agreement.” Gov’t Resp. at 5. The overarching point at which the
Government aims is that there was some degree of uncertainty as to whether actions taken with
regard to this RFA were procurement actions reviewable pursuant to the Tucker Act.
360 argues that this is not really a case of first impression because, although the facts are
new, controlling authority exists. 360 does acknowledge, however, that the “Government’s
objections were not frivolous,” but it still concludes that “when reviewing the applicable law and
facts, [the Government’s objection] lacks reasonable basis in fact and law.” 360 Reply at 10.
The Court, in its decision on the motion to dismiss, was unable to find a case directly on
point; therefore, the question presented can fairly be characterized as one of first impression.
Specifically, the Court was unable to find a Federal Circuit decision that held that an agency’s
proposal to authorize providers of services and to enter into cooperative agreements with them
primarily for the purpose of supervision—where no funding was involved—amounted to a
procurement. Indeed, the Court itself, during a status conference in the initial stage of the
litigation, voiced some skepticism about whether it had jurisdiction. It is also significant that
ASC voluntarily dismissed its case in the Court of Federal Claims and repaired to the district
court. The fact that this Court (after delving into the law) later determined that OSHA’s RFA
was a procurement does not preclude a determination that the Government’s position was
substantially justified on this point.
As the Government has pointed out, the solicitation itself stated that it was not a
procurement and that no funding was involved. Although the Federal Circuit has recognized that
the definition of “procurement” in the Tucker Act is “very sweeping in scope,” Distributed
Solutions, Inc. v. United States, 539 F.3d 1340, 1345 (Fed. Cir. 2008), it was reasonable for the
Government to argument that the Court should look to the definition of “procurement contract”
in the Federal Grant and Cooperative Agreement Act of 1977 (“FGCAA”), 31 U.S.C. §§ 6301-
6308 (2006), in order to limit the scope of a “procurement” under the Tucker Act. Finally, 360’s
argument in support of jurisdiction—that OSHA had a statutory duty to provide programs for
education and training, see 29 U.S.C. § 670(c) (2006)—though strong, is reasonably susceptible
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to the counter argument that this duty is not necessarily fulfilled by engaging in a procurement.
So, from the time the Government filed its motion to dismiss until the Court denied the same, the
Government’s “overall position had a reasonable basis in both law and fact.” Chiu, 948 F.2d at
715.
Turning to the merits phase of the case, the Court finds that the Government’s position
was completely unjustified. In support of its position on the instant Application, the Government
highlights that 360 was a poor performer prior to issuance of the RFA. See Gov’t Resp. at 9
(“Central to our position is the fact that 360 had a demonstrated record of poor performance as
an online training provider.”). It also argues that 360 still would not have scored favorably on a
number of factors, including “organizational experience” and “staff experience and
qualifications.” 360, in turn, argues that the Government’s litigation position was not supported
by the facts, such that there was no substantial justification in pursuing litigation.
The Government’s merits position centered on OSHA’s use of an eligibility requirement
that was, at best, disclosed in the RFA as a criterion, not an eligibility requirement. The
Government’s other major basis for argument was that 360 would have received poor ratings on
a few other selection criteria, but this tells the Court nothing because OSHA completely failed to
identify how those criteria were weighted in its analysis. For all the Court knows (since the AR
lacks any indication), OSHA may have given the absolute lowest weight possible to the
“organizational experience” and “staff experience and qualifications” criteria, such that they
would have a negligible impact on the analysis, at most. This point highlights the extremely
troubling problem that pervades this entire case: OSHA’s review process was undertaken in a
black box, from which the Court was only able to extract minimal pertinent evidence. The
Government had to know, going into this litigation, that it had little to no substantive evidence in
support of its position (with the scale tipping to the latter).
In sum, from the beginning, OSHA ignored its own RFA almost entirely. After the Court
denied the Government’s motion to dismiss, the Government continued to litigate the case with
no reasonable basis in law or fact. The RFA was eventually withdrawn after the Court issued its
decision in favor of 360; OSHA should have done this a lot earlier and saved itself, this Court,
360 and the public the time and expense of litigation. For these reasons, the Court will disallow
fees pertaining to the motion to dismiss—during which time, the Government’s overall position
was substantially justified—but it will allow all other fees.
b. 360’s Requested Fees4
360 requests an award of $228,656.80 for fees associated with this bid protest. The
Government contends that the requested fees should be reduced. Insofar as the Court has already
disallowed fees for the motion to dismiss, the Court agrees with the Government. But the
4
In its initial Application, 360 requested a total award of $280,301.57. Among the
Government’s arguments was a claim that 360 has applied the wrong Consumer Price Index
(“CPI”) multiplier to adjust for inflation. 360 evidently agreed with the Government’s argument
(the Court did too), because 360 applied the correct modifier in its amended application. Its new
total request is for $241,703.11, costs inclusive. Thus, the Court does not address the CPI
argument in the body of the opinion.
7
Government also contests a number of unsuccessful motions that relate to the merits phase of the
case. In addition, the Government argues that 360 is not entitled to the fees it seeks for work
pertaining to a “separate case involving a different plaintiff,” referring to ASC’s case.
As to its unsuccessful motions, 360 counters that the emphasis should not be on the
success or failure of each motion, but on the totality of the lawsuit. 360 cites Hensley v.
Eckerhart, 461 U.S. 424 (1983). Hensley states, in relevant part:
Where a plaintiff has obtained excellent results, his attorney should recover a
fully compensatory fee. Normally this will encompass all hours reasonably
expended on the litigation, and indeed in some cases of exceptional success an
enhanced award may be justified. In these circumstances the fee award should
not be reduced simply because the plaintiff failed to prevail on every contention
raised in the lawsuit. Litigants in good faith may raise alternative legal grounds
for a desired outcome, and the court’s rejection of or failure to reach certain
grounds is not a sufficient reason for reducing a fee. The result is what matters.
Hensley, 461 U.S. at 435. That excerpt ends with a footnote that reads, in part: “[A] plaintiff
who failed to recover damages but obtained injunctive relief, or vice versa, may recover a fee
award based on all hours reasonably expended if the relief obtained justified that expenditure of
attorney time.” Id. at 435 n.11.
Based on the reasoning in Hensley, the Court finds that 360 is entitled to an award of fees
for its unsuccessful motion to supplement and its two motions for clarification, all of which
related to the merits phase of the case. Although 360 did not obtain the relief sought in each of
these motions, the Court does not believe they were frivolous. Instead, the hours invested in
these motions were “reasonably expended on the litigation” of the matter. The motions were
filed in the pursuit of what was, ultimately, the precise result 360 sought. That 360’s attorneys
didn’t bat 1.000 doesn’t mean that they lost.
But the Court finds the Government’s arguments with respect to ASC to be generally,
although not entirely, persuasive. It appears that most of 360’s bills relating to ASC were
expended either in response to the motion to dismiss, or in preparation for filing in another court.
With respect to the former, the Court has already denied fees relating to the motion to dismiss
because the Government’s position—at that time—was substantially justified. That ruling
extends to any review of ASC files related to the motion to dismiss. With respect to the latter,
the Court is persuaded by the Government’s citation to Lundin v. Mecham, 980 F.2d 1450 (D.C.
Cir. 1992), in which the D.C. Circuit rejected EAJA fees for work in related cases because those
related cases “were neither an essential step in connection with, nor in any way controlling, in
the prosecution of the suit” before it. Id. at 1461. This reasoning applies equally here, where
ASC’s district court case was “neither an essential step…, nor in any way controlling” on the
instant litigation.
Some fees related to the ASC matter may, however, survive the Court’s ruling. The
Court has rejected fees pertaining to two categories of ASC-related fees: those which clearly
pertain to the district court, and those which clearly pertain to the motion to dismiss. The Court
8
suspects, having reviewed the billing records, that a third category can be distilled from the ASC
billings: 360’s review of any ASC papers in this Court which do not pertain to the motion to
dismiss. A party with knowledge that another case in the same court is addressing similar (or the
same) issues reasonably expends hours on his own litigation by following the parallel case.
IV. Bill of Costs—Other Fees and Expenses
RCFC Rule 54(d) provides that “[c]osts—other than attorney’s fees—should be allowed
to the prevailing party to the extent permitted by law.” 360 requests $13,046.31 for expenses
reasonably incurred in connection with the litigation. The Government has not raised any
objection to the reimbursement of costs, fees or expenses claimed by 360.
“To tax a requested cost, the judge, or the clerk as the court’s designee, must find that it
is a necessary litigation expense and that the amount to be taxed is reasonable.” Metropolitan
Van and Storage, Inc. v. United States, 101 Fed. Cl. 173, 202 (2011) (Horn, J.) (citing Soler v.
Waite, 989 F.2d 251, 255 (7th Cir.), reh’g denied (7th Cir. 1993). A prevailing party is obligated
to provide documentation of the costs it requests. See Asphalt Supply & Serv., Inc. v. United
States, 75 Fed. Cl. 598, 602 (2007) (Horn, J.). RCFC 54(d)(1)(A) requires vouchers, receipts or
invoices to be attached as exhibits.
360 has submitted numerous invoices and receipts in support of its request. These
documents reflect that the costs requested all pertain to filing fees, travel, delivery services,
research, telephone services or transcript production, all of which are taxable. See Hopi Tribe v.
United States, 55 Fed. Cl. 81, 100 (“Under the EAJA, this court has awarded administrative
expenses and costs such as recovery of copying, delivery services, travel, research services,
telephone, and postage costs, as well as other expenses routinely incurred by attorneys, assuming
they are documented and reasonably necessary to prosecution of the claim.”). The Court
concludes that 360’s request for $13,046.31 in costs is reasonable.
V. Conclusion
In accord with the foregoing, 360’s Application is GRANTED, in part, and DENIED, in
part. First, the Court grants the Application for costs in the amount of $13,046.31. Second, the
Court grants the Application for attorney’s fees, except for fees associated with the
Government’s motion to dismiss and for fees pertaining to ASC’s district court litigation. The
Court denies 360’s Application for attorney’s fees associated with the Government’s motion to
dismiss and for fees associated with ASC’s district court litigation.
As the parties are in a better position than the Court to quantify 360’s attorney’s fees
associated with the merits of the case (i.e., excepting fees associated with the motion to dismiss
or ASC’s district court litigation), 360 and the Government shall meet and confer with a view to
reaching an agreement between them on the dollar amount of the attorney’s fees remaining in
360’s Application after the excepted fees have been subtracted. The parties are also ORDERED
to file a report to the Court indicating either their agreement along with the dollar amount agreed
upon, or indicating their disagreement along with a statement including the amounts disagreed
upon and an explanation of the reasons for the disagreement on or before July 1, 2013.
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s/ Edward J. Damich
EDWARD J. DAMICH
Judge
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