894 F. Supp. 2d 71
D.D.C.2012Background
- MDD alleges its Fifth Amendment due process rights were violated via de facto debarment by Navy officials and actions of four former MDD employees.
- MDD’s government work centered on CSC SeaPort-e OPLOG tasks under NAVSEA, and MSC contract N00033-10-802 with a potential FY2012 work flow.
- Between Mar–Jul 2011, four key MDD employees left, forming new ventures and allegedly diverting OPLOG work; rumors of fraudulent billing circulated.
- In 2011–2012, Navy actions pulled back OPLOG funds, ceased OPLOG work for MDD in FY2012, and blocked TPOC appointments, effectively sidelining MDD from contracts.
- On Dec 7, 2011, the parties entered a consent preliminary injunction to prevent further de facto debarment and to restore MDD’s ability to compete; subsequent Navy communications and actions were evaluated for compliance with that injunction.
- Plaintiffs filed an Amended Complaint asserting counts for due process, fiduciary breaches, civil conspiracy, defamation, and tortious interference; federal defendants and three former employees moved to dismiss; plaintiffs sought enforcement of the injunction.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| De facto debarment viability | Phillips argues Navy broadly barred MDD from future work. | Defendants contend no de facto debarment occurred. | Plaintiff states plausible de facto debarment claim. |
| Sovereign immunity and FTCA scope | APA waiver applies to Count I; FTCA substitution possible for Count IX. | Sovereign immunity bars official-capacity claims; FTCA exceptions apply. | Count I survives; limited discovery allowed on scope issue for Count IX; summary judgment denied without prejudice. |
| Standing and mootness | Injury in fact from loss of work and future opportunities supports standing. | Mootness and redressability arguments; post-filing compliance not dispositive. | Plaintiff has standing and request for declaratory relief viable; not moot. |
| Qualified immunity for Traugh and Bosworth | Actions could violate clearly established rights by de facto debarment. | Actions within discretionary authority; complex scope issues. | Qualified immunity denied at pleading stage; factual development required. |
Key Cases Cited
- Trifax Corp. v. District of Columbia, 314 F.3d 641 (D.C. Cir. 2003) (de facto debarment requires systemic agency action to preclude future contracts)
- TLT Constr. Corp. v. United States, 50 Fed. Cl. 212 (Fed. Cl. 2001) (de facto debarment standards; agency conduct can suffice)
- CRC Marine Servs. v. United States, 41 Fed. Cl. 66 (Fed. Cl. 1988) (statutory and regulatory context for debarment implications)
- Leslie & Elliott Co. v. Garrett, 732 F. Supp. 191 (D.D.C. 1990) (preclusion from government work can indicate de facto debarment)
- Reeve Aleutian Airways, Inc. v. United States, 982 F.2d 594 (D.C. Cir. 1993) (broad preclusion from government contracting as cognizable injury)
- Dynamic Aviation v. Dep’t of Interior, 898 F. Supp. 11 (D.D.C. 1995) (de facto debarment may be justiciable absent bid after revocation)