Continental Service Group, Inc. v. United States
132 Fed. Cl. 570
| Fed. Cl. | 2017Background
- The Department of Education (ED) issued Solicitation No. ED-FSA-16-R-0009; awards were announced Dec. 9, 2016 to seven firms. Several disappointed offerors filed GAO protests; GAO sustained 17 protests on March 27, 2017 and recommended re-evaluation of management approach and past performance, and potential termination of awards.
- Continental Service Group and Pioneer Credit Recovery each sued in the Court of Federal Claims challenging ED’s determinations that their bids were non-responsible due to alleged inconsistencies in small-business subcontracting/participation plans; both sought declaratory and injunctive relief, including stays of the awards.
- The court entered temporary restraining orders and a preliminary injunction halting ED performance pending resolution.
- On May 19 and May 25, 2017 the Government notified the court that ED would take corrective action: amend the solicitation, allow revised proposals (including subcontracting/participation plans), re-evaluate, and issue a new source selection (with a schedule). The Government moved to dismiss both cases as moot under RCFC 12(b)(1).
- Plaintiffs opposed dismissal, arguing the corrective action did not fully remedy present harms (loss of current work and risk of work diversion) and that injunctive relief (preventing transfer of accounts) remained outstanding.
- The court denied the Government’s motion to dismiss, finding corrective action satisfied the first prong of the Davis voluntary-cessation test but did not "completely and irrevocably eradicate" plaintiffs’ injuries (ongoing economic harm and risk of account transfers), so the disputes were not moot.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the cases are moot after the agency announced corrective action | Plaintiffs: corrective action is incomplete and does not eliminate present injuries (lost accounts/revenue and risk of diversion); injunctive relief remains outstanding | Gov't: agency’s decision to take corrective action renders claims moot; completion is not required and court must presume good faith | Court: Not moot. Corrective action satisfies no-recurrence prong but does not yet "completely and irrevocably" eradicate effects; economic injury and risk of account transfer persist |
| Standard to apply when defendant voluntarily ceases challenged conduct | Plaintiffs: Davis test applies; agency must show no reasonable expectation of recurrence and eradication of effects | Gov't: relies on Chapman/other authority that relief granted or controversy ended suffices; corrective action decision is final enough | Court: Applies Davis voluntary-cessation framework (as explained in Chapman) and requires both prongs; first prong met, second not met here |
| Whether the court may assume the agency will carry out corrective action in good faith and thus dismiss | Plaintiffs: representations are insufficient because harms continue and agency has not committed to staying work | Gov't: court should assume good faith and may dismiss without awaiting completion | Court: While court assumes good faith re-evaluation, that assumption does not eliminate present economic harms—jurisdiction remains necessary |
| Whether Pioneer’s case could be dismissed given Government representations about staying performance | Pioneer: corrective action does not promise a stay of work by current awardees; thus case not moot | Gov't: represented it intends to voluntarily stay performance pending corrective action | Court: Pioneer’s case not moot absent an explicit stay; Pioneer may voluntarily dismiss if satisfied with Government’s representations |
Key Cases Cited
- U.S. Ass'n of Importers of Textiles & Apparel v. United States, 413 F.3d 1344 (Fed. Cir. 2005) (four-factor injunctive-relief framework cited by court)
- FMC Corp. v. United States, 3 F.3d 424 (Fed. Cir. 1993) (relative weight of injunctive-relief factors)
- Palmer v. United States, 168 F.3d 1310 (Fed. Cir. 1999) (RCFC 12(b)(1) motion properly raises jurisdictional challenge)
- Trusted Integration, Inc. v. United States, 659 F.3d 1159 (Fed. Cir. 2011) (pleading inferences and jurisdictional review principles)
- Cedars-Sinai Med. Ctr. v. Watkins, 11 F.3d 1573 (Fed. Cir. 1993) (court may consider evidence beyond pleadings when resolving jurisdictional facts)
- Brandt v. United States, 710 F.3d 1369 (Fed. Cir. 2013) (plaintiff’s burden to establish jurisdiction by preponderance)
- County of Los Angeles v. Davis, 440 U.S. 625 (1979) (voluntary cessation doctrine and mootness test)
- United States v. W. T. Grant Co., 345 U.S. 629 (1953) (voluntary cessation generally insufficient to moot a case)
- Chapman Law Firm Co. v. Greenleaf Const. Co., 490 F.3d 934 (Fed. Cir. 2007) (agency corrective action and mootness; court assumes good faith but recognizes Davis exception)
- System Application & Techs., Inc. v. United States, 691 F.3d 1374 (Fed. Cir. 2012) (agency decision to take corrective action can be sufficiently final for review)