Acetris Health, LLC v. United States
949 F.3d 719
Fed. Cir.2020Background
- The VA adopted a Customs and Border Protection (CBP) practice treating a pharmaceutical as a product of the country where its active pharmaceutical ingredient (API) was made (here, India), and sought to exclude Acetris’ products on that basis.
- Acetris distributes generics produced by Aurolife in Dayton, New Jersey, where final tablet manufacturing occurs using API sourced from India; Acetris certified TAA/FAR compliance but VA pressed for CBP country-of-origin rulings.
- CBP issued determinations that several Acetris products were "products of" India; VA sought alternate sources and declined to award some contracts; Acetris sued in the Court of Federal Claims (Claims Court) challenging VA’s interpretation of the TAA and FAR.
- The Claims Court ruled for Acetris, granting declaratory and injunctive relief; the government appealed to the Federal Circuit.
- The Federal Circuit: (1) held the Entecavir award challenge was moot as Acetris was not the low bidder, (2) found Acetris has standing to challenge VA’s interpretive practice for future procurements, (3) rejected §1500/divestiture, and (4) ruled the VA misinterpreted the TAA and FAR—products manufactured in the U.S. from foreign-made API are not automatically "products of" the API’s source country and may be "U.S.-made end products." The case was affirmed-in-part, vacated-in-part, and remanded for a clarified declaratory judgment and injunction.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Mootness/standing as to the Entecavir procurement | Acetris alleged injury from exclusion and bid protest; continued interest in procurement | Acetris could not be awarded Entecavir (was highest bidder), so no standing | Challenge to Entecavir procurement is moot because Acetris lacked ability to obtain the contract |
| Standing for future procurements (Article III and §1491) | VA’s definitive position and CBP rulings will disadvantage Acetris in imminent future bids; non-trivial competitive injury exists | Future injury speculative; challenge is hypothetical | Acetris has constitutional and statutory standing to challenge VA’s interpretive practice for future procurements |
| Effect of prior CIT actions and 28 U.S.C. §1500 | Acetris’ CIT suits over CBP determinations do not bar Claims Court jurisdiction | Section 1500 divests Claims Court because similar facts were pending in CIT | §1500 does not bar jurisdiction: CIT and Claims Court suits are not the same under act-or-contract or evidence tests; CIT lacked colorable jurisdiction over some procurement law claims |
| TAA country-of-origin: does foreign-made API make final pill a "product of" that foreign country? | A pill manufactured in U.S. is not a "product of" API’s source country; focus is on the final article procured | VA/CBP treated API source as determinative of country-of-origin | Held for Acetris: under 19 U.S.C. §2518(4)(B) the relevant "product" is the final article; these tablets are not "products of" India solely because their API was made there |
| FAR definition of "U.S.-made end product" and deference to CBP | FAR defines U.S.-made end product by where article is manufactured or substantially transformed; VA must determine this independently and component origin is irrelevant | Government argued CBP determinations bind VA and manufacture requires substantial transformation | Held for Acetris: FAR allows a product to be a U.S.-made end product when manufactured in U.S. even from foreign components; VA not required to defer to CBP determinations |
Key Cases Cited
- Already, LLC v. Nike, Inc., 568 U.S. 85 (2013) (actual controversy must exist throughout litigation)
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992) (Article III standing requirements)
- Adarand Constructors, Inc. v. Peña, 515 U.S. 200 (1995) (standing for prospective bidders unable to compete on equal footing)
- Ne. Fla. Chapter of Associated Gen. Contractors v. City of Jacksonville, 508 U.S. 656 (1993) (injury-in-fact for competitive disadvantage in procurement)
- United States v. Tohono O'Odham Nation, 563 U.S. 307 (2011) (§1500/first-filed suit divestiture analysis)
- Trusted Integration, Inc. v. United States, 659 F.3d 1159 (Fed. Cir. 2011) (res judicata tests applied under §1500)
- Res. Conservation Grp., LLC v. United States, 597 F.3d 1238 (Fed. Cir. 2010) (scope of "procurement" under §1491)
- Anheuser–Busch Brewing Ass'n v. United States, 207 U.S. 556 (1908) (discussion of "manufacture" and substantial transformation)
- United States v. U.S. Fid. & Guar. Co., 309 U.S. 506 (1940) (limits of res judicata where court lacked authority)
- CliniComp Int'l, Inc. v. United States, 904 F.3d 1353 (Fed. Cir. 2018) (probability of award and bidder's history of performance relevant to "interested party")