171 F. Supp. 3d 1145
D. Kan.2016Background
- Kansas (the State Licensing Agency under the Randolph‑Sheppard Act, RSA) has historically provided Full Food Service (FFS) and Dining Facility Attendant (DFA) services at Fort Riley under RSA-priority contracts; the incumbent blind vendor is Elliott Smith teamed with FSIG.
- The Army decided the new Fort Riley contract would be DFA-only (no FFS) and solicited AbilityOne (JWOD) involvement; AbilityOne/SourceAmerica pursued adding DFA services at Fort Riley to the Procurement List.
- Kansas filed an RSA complaint with the DOE Secretary seeking arbitration (20 U.S.C. §107d‑1) and then sued in district court seeking an injunction to preserve its RSA priority pending arbitration.
- DOE/its delegate indicated it would convene an RSA arbitration panel to decide whether the RSA governs the DFA contract; the AbilityOne Commission nevertheless published the Procurement List entry effective Feb 21, 2016.
- The district court granted a preliminary injunction staying Army procurement at Fort Riley except as permitted under the RSA, denied the Army’s Rule 12(b)(6) motion, struck Kansas’s unauthorized surreply, and granted Kansas leave to file an amended complaint; the case is stayed pending arbitration.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether DOE must convene arbitration under RSA (20 U.S.C. §§107d‑1, 107d‑2) | Kansas: DOE‑convened arbitration is mandatory whenever a State Licensing Agency files a complaint that a federal agency failed to comply; arbitration should decide whether RSA applies. | Army: Court should decide as a matter of law whether RSA applies (and thus whether arbitration is appropriate); CO decision that RSA does not apply merits deference. | Court: DOE must convene arbitration and the arbitrability/merits question is for the DOE panel; court defers to statutory arbitration scheme. |
| Whether preliminary injunction pending arbitration is warranted | Kansas: irreparable harm (loss of blind vendor job and program funds, sovereign‑immunity bars monetary relief), balance of harms, public interest, and likelihood of success favor injunction. | Army: economic injury is not irreparable; AbilityOne Procurement List requires procurement now and injunction harms Army and AbilityOne vendor. | Court: Granted injunction — irreparable harm shown (sovereign immunity), balance favors maintaining status quo pending arbitration, public interest neutral, and under lenient standard Kansas raised serious merits questions. |
| Motion to dismiss under Rule 12(b)(6) arguing RSA does not apply | Kansas: Dismissal improper because arbitration is pending and required; merits must be decided by arbitration panel. | Army: Complaint sought permanent injunctive relief, so court can decide merits and dismiss because DFA contracts fall under JWOD, not RSA. | Court: Denied dismissal — complaint states claim and arbitration process governs merits; court will not usurp arbitration. |
| Procedural motions: Motion to strike surreply; motion to amend complaint | Kansas: sought leave to delete permanent‑injunction language; surreply was filed without leave. | Army: surreply improper; amendment untimely, prejudicial, and futile. | Court: Struck surreply; granted leave to amend (remove permanent‑injunction request) — no undue prejudice or futility. |
Key Cases Cited
- Univ. of Tex. v. Camenisch, 451 U.S. 390 (1981) (purpose of preliminary injunction is to preserve positions until trial)
- Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7 (2008) (preliminary injunction standard requiring balance of harms and public interest)
- Prairie Band of Potawatomi Indians v. Pierce, 253 F.3d 1234 (10th Cir. 2001) (lenient likelihood‑of‑success standard when other factors favor movant)
- Gen. Motors Corp. v. Urban Gorilla, LLC, 500 F.3d 1222 (10th Cir. 2007) (factors for preliminary injunction)
- Dominion Video Satellite v. Echostar Satellite Corp., 356 F.3d 1256 (10th Cir. 2004) (irreparable harm as critical prerequisite)
- Kentucky v. United States, 759 F.3d 588 (6th Cir. 2014) (RSA covers cafeterias on military bases; discussion of interplay between RSA and JWOD)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading standard for Rule 12(b)(6))
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility pleading standard)