Maritime Management, Inc., a Florida Corporation v. United StatesMaritime Management, Inc., a Florida Corporation v. United States
The Government appeals the district court’s award of attorneys’ fees to Maritime Management, Inc. pursuant to the Equal Access to Justice Act (EAJA),
I. FACTS AND PROCEDURAL HISTORY
In September of 1994, the Department of the Navy through Military Sealift Command solicited bids for a contract to supply layberthing facilities and services for two SL-7 Fast Sealift Ships. The SL-7s, measuring 946 feet in length and 105.6 feet in width, provide rapid sealift of military cargo for the Armed Forces from the United States to locations around the world. Because of their large size and their military charge, provision of lay-berthing facilities for these vessels requires special consideratiоns, all of which were detailed in the bid request as minimum requirements for the award of the contract; Military Sealift Command (the Agency) rated bids for cost and for conformity to these minimum requirements.
The Agency received six initial offers from five competing bidders and reviewed each for technical deficiencies. After the submission of best and final offers, only two acceptable bidders remained: Maritime Management, Inc. (Maritime) and Keystone Ship Berthing, Inc. (Keystone). The Agency awarded the contract to Keystone as the lowest acceptable bidder and Maritime protested the award to the General Accounting Office, citing technical deficiencies in Keystone’s offer. Award of the contract was suspended pending review. The Agency submitted the administrative record to the General Accounting Office (GAO), 1 which upheld the award to Keystone and lifted the contract suspension.
Maritime filed a complaint in the district court, claiming the Agency violated the Administrative Procedure Act,
The case was referred to a magistrate judge for preparation of a report and recommendation. Early in the proceedings the parties disputed the composition of the administrative record. In support of a motion for summary judgment, the Government submitted what it characterized as “the entire Administrative Record,” (R.l-21 at 1) and Carole H. Wieszek, the contracting officer responsible for procurement and administration of the contract, certified that “the decision to award the above-mentioned contract was based on these documents.” (R.l-24 at 1.) The Government’s submission consisted of two black binders, tab numbers one through thirty-four, and some site drawings — the same information that the Government had
Next, arguing that “the Court’s scope of review is limited to the Administrative Record,” the Government asked for a stay of all further discovery and requested a protective order relieving it from responding to Maritime’s outstanding interrogatories, requests for production and requests for admission. (R.l-27 at 2.) Maritime, opposing the motion, questioned whether the Government had submitted a complete record, and requested limited discovery. (R.l-32 at 6.) The magistrate judgе, stating that “[i]t appears to the Court that the United States has not submitted the entire administrative record,” directed the parties to confer and jointly determine the complete record. (R.2-34 at 2.)
After three meetings the parties failed to agree, and Maritime, asserting that in the meetings “it was determined that [the Government] failed to file several documents with its initial purported ‘record,’ ” informed the court of the impasse. (R.2-36 at 2.) The magistrate judge scheduled an evidentiary hearing on the matter. The day before the hearing the Government moved to supplement the record with the agency report and additional'materials, tab numbers thirty-five through forty-two. The additional materials were discovered after the Government “requested that the federal agency review its file and determine all documents considered by the agency in making its decision to award the contract in question.” (R.2-39 at 2.) No explanation was offered for' their prior omission from the record. At the hearing, responding to allegations from Maritime and repeated questions from the magistrate judge, counsel for the Government admitted that tab numbers thirty-five through forty-two had not previously been included in the binders submitted to both the GAO and to the court. The Government also acknowledged that the Agency bore responsibility for compiling the record. 2 The Government continued to oppose inclusion of certain items, including the protest letter Maritime filed with the GAO, as well as several other post-award documents. 3
Following the hearing, the magistrate judge issued an order including tabs thirty-five through forty-two, the agency report, Maritime’s initial protest document, and certain post-award documents in the administrative record.
4
The magistrate
The Government filed a Rule 72 objection to the magistrate judge’s order with the district court.
6
See
The magistrate judge’s Report and Recommendation advised the district court to enter judgment in favor оf Maritime and award it the contract, or, in the alternative, to allow full discovery on whether there was good faith review of the proposals. (R.4-100 at 58-59.) The magistrate judge determined that the Agency had improperly relaxed the bid requirement regarding security, thereby prejudicing Maritime’s opportunity to compete for the contract. The district court agreed that the Agency had violated federal regulations by relaxing the bid requirement, but concluded that there was no showing of prejudice to Maritime. (R.4-104 at 2.) Instead of awarding the contract to Maritime, the district court ordered a rebidding of the contract.
Bоth parties appealed to this court. Maritime argued that the contract should not be rebid but should be awarded to Maritime, and the Government argued that without a showing of prejudice the contract should neither be rebid nor awarded to Maritime. This court affirmed the district court’s decision, agreeing with the no-prejudice finding and stating that because the Contracting Officer had violated the law, the district court did not err in setting aside the contract.
See Maritime Management v. United States,
II.ISSUES ON APPEAL
On appeal the Government argues that the district court erred because (1) its position was substantially justified, making any award of fees improper; (2) no evidence supports the bad faith finding; (3) the award included fees incurred during the GAO proceedings that are not compen-sable under the EAJA; and (4) that the portion of the award that reimbursed expenses incurred by Maritime’s president were purely personal in nature and therefore improper.
III.STANDARD OF REVIEW
This court reviews the decision to grant or deny attorneys’ fees under the EAJA for abuse of discretion.
National Treasury Employees Union v. Internal Revenue Service,
IV.DISCUSSION
A. The Equal Access to Justice Act
In 1981 Congress enacted the Equal Access to Justice Act, amending 28 U.S.
The statutory framework of
Also, where
B. Substantial Justification
The Government argues that an award of attorneys’ fees is improper because its position in the litigation was substantially justified.
See
The first citation to the EAJA in the district court’s order is to
The Government points to this allusion to
From this we conclude that the district court determined attorneys’ feеs could be awarded on either of the EAJA’s alternative bases, but held that the Government’s bad faith made
C. The Bad Faith Finding
The main focus of the Government’s appeal is to challenge the district court’s bad faith finding. As noted above, the EAJA allows courts to use their inherent power to assess attorneys’ fees when the government has acted in bad faith. The bad faith exception to the American Rule is not limited to suits that are filеd in bad faith; the exception also encompasses bad faith acts preceding and during litigation.
Kreager v. Solomon and Flanagan, 775
F.2d 1541, 1543 (11th Cir.1985) (citing
Roadway Express, Inc. v. Piper,
In the Government’s version of events, the magistrate judge’s May 6th order did not conclude that the Government demоnstrated bad faith by delivering an incomplete administrative record to the GAO. Rather, the magistrate judge determined that the record was incomplete; that limited discovery was necessary to investigate the relevance of specific documents excluded by the Agency from its submission to the GAO and to the court, exclusion of which might evidence bad faith on the part of the Government; and that while the district court’s order of May 22, 1996 included language that appeared to prejudge the question of possible bad faith, 9 the facts uncovered by the ordered discovery actually exonerated the Government. In suрport of this argument, the Government notes that the magistrate judge’s Report and Recommendation and the district court’s merits decision, while ultimately agreeing with Maritime’s allegation that the Agency had improperly relaxed the safety provision in its award of the contract, are devoid of any discussion of bad faith on the part of the Government.
The premise of the Government’s argument is that the district court’s bad faith
As noted above, the original submission of the administrative record, both to the GAO and to the district court, consisted of two black binders divided by thirty-four consecutively numbered tabs. On April 17, 1996, after the scope of the administrative record had been called into question, the Government moved to suрplement these two binders with additional documents. These additional items were eventually numbered as tabs thirty-five through forty-two. It was at this juncture that Maritime pressed for inclusion of, among other items, the three documents that were later the subject of limited discovery.
Following the evidentiary hearing, the magistrate judge on May 6th ordered that tabs thirty-five through forty-two would be included as a part of the record. Significantly, the magistrate judge also concluded that the Government had failed to fulfill the statutory duty imposed by
The magistrate judge’s conclusion that “obviously relevant” documents had been omitted from the Agency’s submission to the GAO was not limited to the three documents that became the subject of limited discovery. The omission certainly included, at a minimum, all documents tabbed as thirty-five through forty-two. This alone contradicts the Government’s premise — that the bad faith finding related only to the three subjects of limited discovery. 11
The magistrate judge also ultimately included in the administrative record at least one of the items that had been the subject of limited discovery.
12
As explained in the May 6th order, a court’s review of a decision to award a contract is normally limit
Thus, if we were to restrict our inquiry to the proceedings before the magistrate judge, we would conclude that the Government is wrong about the meaning of the magistrate judge’s order and about the outcome of limited discovery. The Government omitted several documents from the record that were never the subject of limited discovery, and, in any event, items that were the subject of limited discovery were ultimately included in the record. It is impossible to conclude that limited discovery exonerated the Government.
However, we do not need to reconstruct the gradual unraveling of the Government’s position before the magistrate judge to understand the district court’s bad faith analysis. 13 The district court clearly states in both the order approving limited discovery and in the order awarding attorneys’ fees that the Government demonstrated bad faith by submitting an incomplete administrative record. 14
Other circuits have recognized bad faith where “a party, confronted with a clear statutory or judicially-imposed duty towards another, is so recalcitrant in performing that duty that the injured party is forced to undertake otherwise unnecessаry litigation to vindicate plain legal rights.”
American Hospital v. Sullivan,
The Government asserts that Maritime should not have been compensated for fees incurred during the GAO proceedings as they are not compensable under the EAJA. The Government contends that these proceedings constitute administrative consideration of a claim, and therefore are not associated with the pursuit of a civil action as required by
The EAJA only permits assessment of fees against the Government to a prevailing party in a civil action.
See
However, where administrative proceedings are intimately tied to the resolution of the judicial action, the administrative proceeding may sometimes be considered a part of the civil case for which fees are awarded.
Pollgreen v. Morris,
E. ' Award of Fees Reimbursing Expenses Incurred by Maritime’s President
The Government also argues that the portion of the fee award that reimbursed the expenses of Maritime’s president was improper because the expenses were purely personal in nature. The Government contends that approximately
V. CONCLUSION
For the foregoing reasons, we vacate the award of fees and remand with instructions to delete from the award an amount corresponding to the sum of the fees incurred during the GAO proceedings and the expenses incurred by Maritime’s president. The award is otherwise affirmed.
AFFIRMED IN PART; VACATED AND REMANDED WITH INSTRUCTIONS.
Notes
.
. The exchange between counsel for the Government and the court was as follows:
MR. LUSTER: ... I can just simply state to the Court that the records that I am tendering at this time should have been a part of the two black binders which have been filed to the Court.
THE COURT: And do you also agree that they were not given to GAO or you just don't know that?
MR. LUSTER: They were not a part of the agency report, so I would think that they were not presented to GAO, that's correct. They were not a part of the report. And the agency prepares the report and submits those documents it thinks it should submit in order to sustain the agency’s action. (R.8 at 10-11.)
. The post-award documents included: a November 22, 1995 letter and handwritten notes concerning a post-award site inspection; a two-page memorandum dated March 13, 1995 from the Contracting Officer concerning the Keystone facility, which was a followup to a February 10, 1995 e-mail; a March 27, 1995 report from Reynolds, Smith, and Hills, Inc.; a March 27, 1995 memorandum from Captain David R. Kelly; and a March 27, 1995 fax containing Corps of Engineer definitions.
.Specifically, the magistrate judge included the two-page memorandum dated March 13, 1995 from the Contracting Officer concerning the Keystone facility. Noting the omission from the administrative record of this document and the e-mail to which it refers, the magistrate judge noted "[njeither the February 10, 1995 cc mail nor this March 13, 1995 memorandum were included in the documents sent to the GAO ... despite the statutory requirement that the agency report contain all relevant documents. The Court finds that the March 13, 1995 memorandum should be made part of the Administrative Record.” (R.2-44 at 7-8.)
. Discovery was limited as to "(1) the change in the solicitation reflected at Tab 42, (2) the existence and subject matters of the February 10, 1995 ‘cc mail’, and (3) the subject matters of the March 13, 1995 memorandum by the Contracting Officer.” (R.2-44 at 10.)
. The Government contended that the magistrate judge erred by concluding thаt
.This included Maritime’s February 2, 1995 protest letter and its attachments, as well as the March 13, 1995 memorandum by the Contracting Officer.
. Much of this discussion is made academic by the conclusion infra that (lie Government was guilty of bad faith. Bad faith is generally considered to be a higher standard than substantial justification, in the context of the EAJA,
see, e.g. Perales v. Casillas,
. In the May 22 order, the district court held that "discovery is proper in this case in light of Defendant’s failure to include relevant documents in the report to the GAO and in light of the negative nature of those documents purposefully excluded from the report. Such evidence constitutes a showing of bad faith or improper behavior on the part of Defendant justifying additional discovery.” (R.2-50 at ' 2.)
. As noted above, discovery was limited to the following areas: "(1) the change in the solicitation reflected at Tab 42, (2) the existence and subject matters of the February 10, 1995 ‘cc mail', and (3) the subject matters of the March 13, 1995 memorandum by the Contracting Officer.” (R.2-44 at 10.)
. Of course, the Government had already admitted that tabs thirty-five through forty-two were not submitted to the GAO at the evidentiary hearing. In the face of objections by Maritime that the Agency had compiled an incomplete administrative record, the Government urged the magistrate judge to add tabs thirty-five through forty-two. This was a clear retreat from the Government’s previous representation that tabs one through thirty-four constituted "the entire Administrative Record.” (R.l-21 at 1.)
.The magistrate judge's determination of the administrative record speсifically included the March 13, 1995 memorandum by the Contracting Officer, the third subject of limited discoveiy. Apparently the February 10, 1995 e-mail, item number two, was excluded. As to the first discovery issue, while the Government argues that it ultimately disproved Maritime's contention that Tab 42 reflected a change in the solicitation, Tab 42 was also included in the administrative record. (R.3-74 at 4.)
. The Government also contends that the district court's award of attorneys' fees was in error because it failed to make specific findings justifying such an award, citing this court’s decision in
Rothenberg v. Security Management Co.,
. In the order approving discovery, the district court held that "discovery is proper in this case in light of Defendant's failure to include relevant documents in the report to the GAO and in light of the negative nature of those documents purposefully excluded from the report. Such evidence constitutes a showing of bad faith or improper behavior on the part of Defendant justifying additional discovery.” (R.2-50 at 2.) In the order awarding attorneys' fees, the district court found “that the Government acted with bad faith because it clearly failed to submit the complete administrative record.” (R.4-133 at 2.)
.As noted supra, in support of its motion for summary judgment, the Government submitted what it characterized as "the entire Administrative Record,” (R.l-21 at 1) and Carole H. Wieszek, the contracting officer responsible for procurement and administration of the contract, certified in her declaration that "the decision to award the above-mentioned contract was based on these documents.” (R.l-24.)
.
Pollgreen
allowed plaintiffs to recover feеs for administrative proceedings conducted on remand from the district court where "plaintiffs were denied the opportunity for an appropriate post-deprivation hearing at the administrative level, [such that] they were forced to seek their initial relief from federal court.”
Pollgreen v. Morris,